Supplementary Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)Chapter2 - Tax-related expenses
Amendment 1
Purpose of the amendment
2.1 The amendment will ensure that the rewrite of the law allowing a deduction for expenditure on managing a taxpayers tax affairs correctly reflects the existing law.
Background to the amendment
2.2 The Bill includes a rewrite of the provision (section 69) of the 1936 Act that allows a taxpayer to deduct expenditure on managing their tax affairs, provided the expenditure is not capital [Schedule 1: section 25-5] .
2.3 The 1936 Act (subsection 69(4)) provides that expenditure is not to be regarded as capital in nature just because the taxpayers tax affairs relate to matters of a capital nature . In rewriting the law, the clarification has incorrectly referred to income tax affairs that relate to matters of capital expenditure .
Explanation of the amendment
2.4 Amendment 1 will ensure that the new provision correctly reflects the existing law. Expenditure will not be taken to be capital expenditure merely because the taxpayers tax affairs relate to matters of a capital nature.
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