Explanatory Memorandum(Circulated by authority of the Acting Treasurer, the Hon J.S. Dawkins, MP)
As stated in the May 1988 Economic Statement, the proposal to tax formerly exempt superannuation funds and approved deposit funds (amendments contained in the Taxation Laws Amendment Bill (No.6) 1988) together with the proposal to tax the Superannuation and rollover annuity business income of life assurance companies and registered organisations is expected to generate additional revenue of $980 million in 1989-90 and $1400 million in 1990-91. The net revenue gain will be smaller because of the reductions in tax payable on superannuation and other retirement benefits and the increase in the ceiling for deductible superannuation contributions by the self-employed and unsupported employees (amendments contained in the Taxation Laws Amendment Bill (No.6) 1988).
The changes to the taxation treatment of life assurance companies, (other than to tax the superannuation business of such companies), including the changes made in the Taxation Laws Amendment Bill (No.6) 1988, the lower rate of company tax and the increased rebate for bonuses received in respect of short term life policies, are estimated to cost $50 million in the 1988-89 year due to the effect on tax instalments paid by early balancing companies. It is estimated that revenue gains of $35 million will be made in the 1989-90 year.
The revenue gain from the changes to the taxation treatment of registered organisations, other than the changes to tax the superannuation business of such companies, are estimated at $30 million per annum commencing in the 1989-90 year.
This Bill will impose the tax on the taxable income of life assurance companies and registered organisations. It complements the relevant measures introducing the liability to tax in the Taxation Laws Amendment (Superannuation) Bill 1989, the financial impact of which is noted above.