House of Representatives

Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon. P.J. Keating, M.P.)

GENERAL OUTLINE

INCOME TAX ASSESSMENT AMENDMENT BILL 1989

This Bill will amend the Income Tax Assessment Act 1936 -

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to require, from December 1989, instalments of tax deducted from the salary or wages of employees to be remitted to the Commissioner of Taxation twice-monthly where, in the financial year ended 30 June 1989, and/or a later financial year -

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the total of the deductions made by the employer exceeds $5 million; or

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in the case of a company/employer which is part of a wholly-owned group of companies, the total of the deductions made by the companies in the group exceeds $5 million (1989-90 Budget announcement);

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to raise, from $5,000 to $8,000, for the 1989-90 and subsequent years of income, the threshold for general exemption from the quarterly instalment system of paying provisional tax (1989-90 Budget announcement);

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to ensure that excess provisional tax credits are not offset against quarterly instalments of provisional tax not yet due for payment (1989-90 Budget announcement);

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to provide the method of calculating provisional tax for the 1989-90 income year.

INCOME TAX AMENDMENT BILL (No.2) 1989

This Bill will formally impose tax payable for the 1989-90 and, until the Parliament otherwise provides, the 1990-91 financial year.

MEDICARE LEVY AMENDMENT BILL 1989

This Bill will amend the Medicare Levy Act 1986 -

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to impose a basic rate of Medicare levy of 1.25 per cent for the 1989-90 and, until Parliament otherwise provides the 1990-91 financial year; and

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to exempt from the levy individuals with taxable incomes of $10,330 or less and families and sole parents with family incomes of $17,400 or less; the family or sole parent threshold is raised by a further $2,100 for each dependent child or student (1989-90 Budget announcement).