Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Peter Costello MP)Chapter 11 - Technical correction to the Taxation Laws Amendment Act (No. 8) 2003
Outline of chapter
11.1 Schedule 11 to this bill corrects a technical defect in the commencement provision applying to the franking deficit tax (FDT) offset provisions for life insurance companies in Schedule 7 to the Taxation Laws Amendment Act (No. 8) 2003.
Context of amendments
11.2 Schedule 7 to the Taxation Laws Amendment Act (No. 8) 2003 amended Part 3-6 of the Income Tax Assessment Act 1997 to insert rules in the simplified imputation system for offsetting of FDT against company tax. Rules were inserted for both ordinary companies and life insurance companies.
11.3 The FDT offset rules that applied to life insurance companies, as currently drafted, commence immediately after the commencement of Schedule 7 to the Taxation Laws Amendment Act (No. 7) 2003 (this Schedule was to introduce imputation rules for life insurance companies). However, the life company imputation rules, which were introduced into Parliament as part of the Taxation Laws Amendment Bill (No. 7) 2003, were later enacted as part of the Taxation Laws Amendment Act (No. 1) 2004.
11.4 Therefore, the citation to the Taxation Laws Amendment Act (No. 7) 2003 in a commencement provision for the Taxation Laws Amendment Act (No. 8) 2003 is incorrect. It should instead refer to Taxation Laws Amendment Act (No. 1) 2004.
Detailed explanation of new law
11.5 Item 1 replaces the citation in item 5 in the table of subsection 2(1) in the Taxation Laws Amendment Act (No. 8) 2003 to the Taxation Laws Amendment Act (No. 7) 2003 with the correct reference to the Taxation Laws Amendment Act (No. 1) 2004. This will ensure that the FDT offset provisions for life insurance companies in the Taxation Laws Amendment Act (No. 8) 2003 commence appropriately following the enactment of the imputation rules for life insurance companies in the Taxation Laws Amendment Act (No. 1) 2004. [Schedule 11, item 1, item 5 in the table in subsection 2(1)]
Application and transitional provisions
11.6 This amendment made by Schedule 11 will commence immediately after the Taxation Laws Amendment Act (No. 8) 2003 received Royal Assent (21 October 2003).