Revised Explanatory Memorandum
(Circulated by the authority of the Deputy Prime Minister and Treasurer, the Hon Wayne Swan MP)General outline and financial impact
Disallow deductions against rebatable benefits
Schedule 1 to this Bill amends the Income Tax Assessment Act 1997 to implement the 2011-12 Budget measure to disallow deductions against government assistance payments from 1 July 2011.
Date of effect: These amendments apply from 1 July 2011.
To ensure taxpayers who incurred expenses in qualifying for a government assistance payment during the 2010-11 income year were not disadvantaged, the Government allowed these taxpayers to claim a deduction when they completed their 2010-11 tax return.
Proposal announced: This measure was announced in the 2011-12 Budget on 10 May 2011.
Financial impact: Nil.
Human rights implications: This Schedule does not raise any human rights issue. See Statement of Compatibility with Human Rights - Chapter 1, paragraphs 1.34 to 1.37.
Compliance cost impact: Nil.
Limiting the trading stock exception for superannuation funds
Schedule 2 to this Bill amends the Income Tax Assessment Act 1997 to remove access to the trading stock exception to the capital gains tax primary code rule for certain assets (primarily shares, units in a trust and land) owned by a complying superannuation entity.
Date of effect: This measure applies after 7.30 pm (by legal time in the Australian Capital Territory) on 10 May 2011. Assets owned by a relevant entity and held as trading stock prior to that time can continue to be treated as trading stock of the entity.
These amendments apply retrospectively from the time of announcement to promote certainty regarding the appropriate tax treatment of certain assets owned by a complying superannuation entity.
Proposal announced: This measure was announced in the 2011-12 Budget on 10 May 2011.
Financial impact: This measure has these revenue implications:
| 2011-12 | 2012-13 | 2013-14 | 2014-15 |
| Nil | $5m | $5m | $5m |
Human rights implications: This Schedule does not raise any human rights issue. See Statement of Compatibility with Human Rights - Chapter 2, paragraphs 2.17 to 2.20.
Compliance cost impact: Low overall, comprising a low implementation impact and a decrease in ongoing compliance costs.
Tax exemption for ex-gratia payments to New Zealand non-protected special category visa holders
Schedule 3 to this Bill amends the Income Tax Assessment Act 1997 to exempt from income tax ex-gratia payments to New Zealand non-protected special category visa holders for the floods that occurred in New South Wales and Queensland in early 2012.
Date of effect: 6 February 2012.
Proposal announced: This measure has not previously been announced.
Financial impact: Nil. Human rights implications: This Schedule does not raise any human rights issue. See Statement of Compatibility with Human Rights - Chapter 3, paragraphs 3.16 to 3.19.
Compliance cost impact: Nil.
Phasing out the dependent spouse tax offset
Schedule 4 to this Bill amends the Income Tax Assessment Act 1936 (ITAA 1936) to phase out, from 1 July 2012, the dependent spouse tax offset for taxpayers who maintain a dependent spouse born on or after 1 July 1952.
This Schedule also amends the ITAA 1936 so a taxpayer eligible for an amount of offset in respect of an invalid or carer spouse is not also entitled to the equivalent amount of dependent spouse tax offset as a component of their zone, overseas forces or overseas civilian tax offset.
Date of effect: The provisions in this Schedule apply from various dates. Extending the phase out of the dependent spouse tax offset will apply from 1 July 2012.
Amendments to ensure that taxpayers who maintain a dependent spouse are not able to claim more than one offset in respect of the same spouse when calculating their zone, overseas forces or overseas civilian offset entitlement will apply from 1 July 2011.
As the zone, overseas forces and overseas civilian offsets are paid on assessment, no taxpayers are disadvantaged from these amendments.
Proposal announced: This measure was announced in the 2011-12 Mid-Year Economic and Fiscal Outlook on 29 November 2011.
Financial impact: This measure has a positive impact of $370 million over the forward estimates.
| 2011-12 | 2012-13 | 2013-14 | 2014-15 |
| Nil | Nil | $180m | $190m |
Human rights implications: This Schedule does not raise any human rights issue. See Statement of Compatibility with Human Rights - Chapter 4, paragraphs 4.48 to 4.52
Compliance cost impact: This measure is expected to have a low over-all compliance cost, relative to the size of the affected group.
Miscellaneous amendments to the taxation laws
Schedule 5 makes miscellaneous amendments to the taxation laws as part of the Government's commitment to uphold the integrity of the taxation system.
Date of effect: Most of these amendments will commence on 1 July 2012. The other amendments either commence from Royal Assent, or from an as yet undetermined date (which is reliant on the enactment of other legislative provisions). These commencement dates are explained in Chapter 5 of this explanatory memorandum.
Proposal announced: These amendments were all foreshadowed by release in draft form on the Treasury website on 13 February 2012.
Financial impact: These amendments will have a negligible impact on revenue over the forward estimates.
Human rights implications: This Schedule does not raise any human rights issue. See Statement of Compatibility with Human Rights - Chapter 5, paragraphs 5.48 to 5.51.
Compliance cost impact: Negligible.