House of Representatives

Taxation Laws Amendment Bill (No. 5) 1987

Taxation Laws Amendment Act 1988

Income Tax (Offshore Banking Units)(Withholding Tax Recoupment) Bill 1987

Income Tax (Offshore Banking Units) (Withholding Tax Recoupment) Act 1988

Explanatory Memorandum

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

FINANCIAL IMPACT

Taxation Laws Amendment Bill (No.5) 1987

The direct revenue cost of the exemption from interest withholding tax for offshore banking is estimated at S2 million. This cost may be offset to some extent by higher company tax collections from any increase in the level of offshore banking business profits.

The nature of the proposed amendments of the capital gains and capital losses roll-over provisions contained in this Bill are such that a reliable estimate of the potential revenue effect cannot be made.

The package of measures affecting the taxation of eligible termination payments and annuities is expected to result in a net revenue gain of $4 million in 1986-87 and $30 million in a full year.

The amendments of the research and development concession are estimated to produce revenue savings of $5 million in a full year.

The amendments proposed in relation to the satisfaction of the common ownership test by a shelf company should have a negligible revenue impact.

Extending the scope of existing income tax exemptions for certain territory residents is not expected to have any effect on revenue.

Unquantifiable revenue losses will be prevented by extending Australia's income tax coverage of the offshore areas.

Restoration of the exemption from income tax of dividend income derived by Australian branches of non-resident life assurance companies, where that income is attributable to superannuation and certain life assurance policies, will have a negligible effect on the previously estimated net cost of the imputation system and related measures.

The revenue forgone by allowing the income tax rebate in respect of certain life assurance policies issued by the State Government Insurance Corporation of Western Australia will be offset by amounts which the Western Australian Government has agreed to pay to the Commonwealth as reimbursement for the rebate.

The amendments of the provisional tax instalment provisions are not expected to have any significant effect on revenue.

The cost of modifying transitional provisions of the thin capitalisation legislation is expected to be minimal.

The revenue forgone by abolishing ACT stamp duty and tax on transfers of debentures is estimated to be less than $250,000 in a full year.

Income Tax (Offshore Banking Units)(Withholding Tax Recoupment) Bill 1987

The revenue gain flowing from this measure is expected to be minimal. This is because the penal rate of tax which the Bill imposes is such as to discourage the dealings which would attract the tax.


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