House of Representatives

Taxation Laws Amendment Bill (No. 5) 2002

Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)

General outline and financial impact

Special transitional provision for some oyster farmers

Schedule 1 to this bill amends the IT(TP) Act 1997 and the ITAA 1997 to provide special transitional arrangements for oyster farmers capturing oyster spat by the traditional stick farming method.

Oyster farmers using the traditional stick farming method will be able to value certain stock at the start of the 2001-2002 income year based on an amount per stick used to capture the spat. The amount per stick is set out in the bill and depends on the type of stick used.

Date of effect: The proposed change applies to the valuation of certain oyster trading stock on hand at the start of the 2001-2002 income year.

Proposal announced: The measure was announced in former Assistant Treasurers Press Release No. 40 of 24 August 2001.

Financial impact: The amendments are expected to have an overall revenue cost of less than $5 million over a 4 year period commencing with the 2002-2003 income year.

Compliance cost impact: The measure will not increase compliance costs, or record keeping costs, for eligible oyster farmers. They are already required to comply with the trading stock rules.

Summary of regulation impact statement

Regulation impact on business

Impact: The eligible oyster farmers can comply with the trading stock rules from the 2001-2002 income year without having a large one-off increase in taxable income. This could have caused serious financial hardship for some farmers.

Main points:

The amendments do not create any new obligations or requirements for the taxpayers impacted. Therefore, there will be no increase in compliance costs for eligible oyster farmers.
The valuation method for oyster trading stock covered by the measure is the easiest for the industry. Amounts per stick were chosen after sample costings were prepared by the industry representatives.

Work in progress

Schedule 2 to this bill amends the ITAA 1997 to prevent the possibility of double taxation where an amount is paid in respect of work in progress (partially completed work for which a recoverable debt has not yet arisen).

The amendments will provide a specific deduction where a payment is made for a work in progress amount. They will also confirm that receipt of a work in progress amount is assessable income.

Date of effect: The amendments will apply to amounts paid on or after 23 September 1998.

Proposal announced: The measure was announced in former Assistant Treasurers Press Release No. 8 of 8 March 2001.

Financial impact: The revenue impact is unquantifiable, but is expected to be minimal because the amendments prevent an unintended gain to the revenue. The amendments are beneficial to taxpayers as they prevent the potential for double taxation.

Compliance cost impact: The amendments are expected to reduce compliance costs for business.

Capital allowances

Schedule 3 to this bill makes a number of technical corrections and amendments to the ITAA 1936, the ITAA 1997, IT(TP) Act 1997 and the New Business Tax System (Capital Allowances - Transitional and Consequential) Act 2001 . The amendments all relate, directly or indirectly, to the capital allowances system.

Date of effect: These amendments have various dates of effect, but will generally apply from 1 July 2001.

Proposal announced: These amendments have not previously been announced.

Financial impact: There is no revenue impact as a result of these amendments as the amendments ensure that the capital allowance system operates as intended and as originally costed. However, there would be a significant but unquantifiable revenue cost if these amendments were not made.

Compliance cost impact: These amendments will involve no additional compliance costs.

Recovery of PAYG withholding amounts

Schedule 4 to this bill amends the ITAA 1936 to enable the Commissioner to recover all outstanding PAYG withholding amounts by making an estimate of the debt. The amendment will also allow a taxpayer to have the estimate of any PAYG withholding amount reduced or revoked by giving the Commissioner a statutory declaration.

Date of effect: The amendments in Schedule 4 will apply to PAYG withholding amounts that are due and payable in the year ended 30 June 2002 and in subsequent years.

Proposal announced: The amendments have not been announced.

Financial impact: The amendments will allow $50 million to be collected in 2002-2003 and in subsequent years.

Compliance cost impact: The amendments do not have any compliance cost impacts.


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