Explanatory Memorandum(Circulated by authority of the Treasurer, the Hon. P.J. Keating, M.P.)
The amendments proposed in relation to the capital gains tax treatment of partnerships will merely clarify the application of the existing law and therefore will have no revenue impact.
The amendments proposed to the capital gains tax rollover provisions, which apply to asset transfers between group companies, modify some technical requirements for the availability of the concession and therefore should have negligible revenue impact.
Significant but unquantifiable revenue losses will be prevented by the capital gains tax anti-avoidance amendments proposed in relation to asset transfers between companies sharing common ownership.
The revenue savings that will result from modifying the dividend imputation arrangements for life assurance companies to restrict the franking credits arising to those capable of being passed on to shareholders cannot be quantified. Nevertheless, there are significant potential revenue savings because new shareholders of life assurance companies that cease to be mutual companies will not be able to gain access to franking credits accumulated before the cessation.
The estimated cost to revenue of the amendments in respect of the various bereavement payments is less than $500,000 in a full year.
The estimated cost of the reduction in the personal tax rate of 21 per cent to 20 per cent from 1 January 1991 is $430 million in 1990-91 and $1 billion in a full year.
The gain to revenue from the reduction of the level of rebate for net medical expenses is estimated to be $2 million in a full year.
The revenue cost of extending special deductions to mining activities outside Australia that generate assessable income is estimated to be less than $15 million in 1991-92 and subsequent years.
The cost of the amendments relating to extending the special deductions to industrial property and buildings outside Australia that generate assessable income is not expected to have any significant effect on revenue.
The amendments relating to bad debts are not expected to have any effect on revenue. However, the measure could be significant in protecting the revenue.
The likely direct revenue gain resulting from the introduction of the amendments relating to the taxation of foreign source income cannot be quantified.
The amendments to the Taxation Administration Act 1953 dealing with secrecy will have no impact on revenue and the amendment to the Fringe Benefits Tax Act will be revenue neutral.