Explanatory Memorandum(Circulated by authority of the Treasurer, the Hon. P.J. Keating, M.P.)
The nature of the proposed amendments of the capital gains and losses provisions, and the anti-avoidance provisions contained in this Bill, are such that a reliable estimate of the potential revenue effect cannot be made.
The revenue cost of extending the income tax gift provisions to admit the Lionel Murphy Foundation is estimated at nil for 1986-87, $80,000 in 1987-88 and rising to $400,000 in 1988-89 and subsequent years. The revenue cost of providing deductibility for gifts to the Australian Hellenic Memorial Trust Fund is estimated at nil in 1986-87, $60,000 in 1987-88 and $70,000 in both 1988-89 and 1989-90.
The amendments of the income tax gift provisions to reflect name changes of certain organisations currently listed will have no effect on revenue.
The potential effect on the revenue arising from the various taxing arrangements associated with the Assistance for Isolated Children Scheme and Veterans' Children Education Scheme is estimated to be negligible.
The changes to the levels of rebates available for recipients of certain social security benefits and Commonwealth educational allowances will have no cost in 1987-88 and are estimated to cost $8 million in a full year.
The clarification of section 14ZKA of the Taxation Administration Act 1953 will guard against a potential total loss of revenue of the order of $250 million.
The estimated revenue cost of the reductions in the personal income tax rates made as part of the tax reform exercise are $4,480m in 1987-88 and $4,560m in a full year.
The estimated gain to revenue by increasing the rate of Medicare levy to 1.25 per cent, first effective from 1 December 1986, is $370m in 1987-88.
The increase in the Medicare levy low income thresholds is estimated to cost $10m in 1987-88, $70m in 1988-89 and $40m in a full year. The higher cost in 1988-89 reflects the full application of the thresholds in the assessment of 1987-88 income, in lieu of the application through the PAYE system in that year.