Explanatory Memorandum
(Circulated by the authority of the Deputy Prime Minister and Treasurer, the Hon Wayne Swan MP)General outline and financial impact
Reduction in 2011-12 pay as you go instalments
Schedule 1 to this Bill amends Schedule 1 to the Taxation Administration Act 1953 to set the gross domestic product (GDP) adjustment for pay as you go (PAYG) instalment taxpayers who use the GDP adjustment method at 4 per cent for the 2011-12 income year, instead of 8 per cent.
Date of effect: This measure applies to PAYG instalment amounts for the 2011-12 income year that become due on or after the day after this Bill receives Royal Assent. It does not apply where a taxpayer's 2011-12 income year commenced before 1 April 2011.
Proposal announced: This measure was announced in the 2011-12 Budget and in the Treasurer, the Assistant Treasurer and Minister for Financial Services and Superannuation and the Minister for Small Business' joint Media Release No. 049 of 10 May 2011.
Financial impact: This measure will have the following revenue implications:
| 2010-11 | 2011-12 | 2012-13 | 2013-14 | 2014-15 |
| Nil | -$700m | $700m | Nil | Nil |
Compliance cost impact: Nil to Low.
Low-income taxpayer rebate
Schedule 2 to this Bill amends the Income Tax Assessment Act 1936 to remove the ability of minors (children under 18 years of age) to use the low income tax offset to offset tax due on their unearned income, such as dividends, interest, rent, royalties and other income from property. This will reduce the benefits of income splitting between adults and children and protect the integrity of the income tax system.
Date of effect: This measure applies to assessments for the 2011-12 income year and later income years.
Proposal announced: These amendments were announced in the Assistant Treasurer and Minister for Financial Services and Superannuation's Media Release No. 072 of 10 May 2011.
Financial impact: This measure has these revenue implications:
| 2011-12 | 2012-13 | 2013-14 | 2014-15 |
| ? | $240m | $250m | $250m |
Compliance cost impact: Low. This measure removes the ability of a particular group of taxpayers to claim an offset on part of their income.
Disability superannuation benefits
Schedule 3 to this Bill allows the percentage of insurance costs for certain total and permanent disability (TPD) policies that can be claimed as deductions by superannuation funds to be specified in regulations. These amendments will streamline the operation of the law for superannuation funds and insurance providers.
This Schedule and Clause 4 also extend the current transitional relief for the deductibility of TPD insurance premiums to funds that self insure their liability to provide disability benefits.
Date of effect: The changes allowing the deductible proportion of insurance costs for certain TPD policies to be specified in regulations will have effect from the 2011-12 income year.
The extension of transitional relief to self-insured funds will apply to the income years 2004-05 to 2010-11. This extension will benefit these funds by providing them with greater scope to deduct the notional cost of insurance cover commonly regarded as TPD insurance for these income years.
Proposal announced: This measure has not been previously announced.
Financial impact: Nil.
Compliance cost impact: Nil.
Amendments to reportable employer superannuation contributions definition
Schedule 4 to this Bill amends the Taxation Administration Act 1953 to exclude from the 'reportable employer superannuation contributions' definition certain employer contributions to superannuation made pursuant to a requirement that employees cannot influence.
Date of effect: This measure applies to the 2009-10 income year and later income years. The retrospective application of these amendments has no adverse implications for taxpayers as the amendments exclude particular contributions that would otherwise have been caught by the reportable employer superannuation contributions definition and assessed as income for certain means-tested tax and transfer system programs.
Proposal announced: This measure was announced in the former Minister for Financial Services, Superannuation and Corporate Law's Media Release No. 080 of 30 June 2010.
Financial impact: Nil.
Compliance cost impact: Low.