House of Representatives

Tax Laws Amendment (2012 Measures No. 6) Bill 2012

Explanatory Memorandum

(Circulated by the authority of the Deputy Prime Minister and Treasurer, the Hon Wayne Swan MP)

Chapter 8 - Miscellaneous amendments

Outline of chapter

8.1 Schedule 8 to this Bill makes miscellaneous amendments to various taxation laws.

Context of amendments

8.2 Amendments to the taxation laws, such as these, are periodically made to correct technical or drafting defects, remove anomalies and correct unintended outcomes in the tax legislation. Progressing such amendments gives priority to the care and maintenance of the tax system, as supported by a 2008 recommendation from the Tax Design Review Panel.

Summary of new law

8.3 These miscellaneous amendments address minor technical deficiencies and legislative uncertainties which have been identified in the regulations affecting superannuation, and the tax legislation more generally.

Detailed explanation of new law

Part 1 - Amendments of superannuation regulations

Table 8.2 : Amendments to the Retirement Savings Accounts Regulations 1997 and the Superannuation Industry (Supervision) Regulations 1994
Regulations being amended What the amendments do
Retirement Savings Accounts Regulations 1997

4A.04(1)(b)

4A.05(6A)(b)

4A.08(1)(b)

4A.15(1)(b)(ii)

4A.18(1)(b)

4A.27(1)(b)

4A.28(1)(b)

[Schedule 8, items 1 to 7]

Superannuation Industry (Supervision) Regulations 1994

7A.03A(1)(b)

7A.03B(6A)(b)

7A.03E(b)(i)

7A.04(1)(b)(ii)

7A.07(1)(b)

7A.16(1)(b)

7A.16(4)

7A.17(1)(b)

7A.18(1)(b)

[Schedule 8, items 8 to 16]

Ensure that account-based pensions are also subject to splitting for Family Law Act 1975 purposes, and are taken to have been so since 1 July 2007.

Part 2 - >Other amendments of taxation laws

GST margin scheme and subdivided land

Table 8.3 : Amendments to the A New Tax System (Goods and Services Tax) Act 1999
Provisions being amended What the amendments do
A New Tax System (Goods and Services Tax) Act 1999

75-15

195-1 (notes)

[Schedule 8, items 17 and 18]

Confirm that when determining the margin for a taxable supply of an interest, unit or lease where the real property supplied has been subdivided from land or premises previously acquired by the supplier, the margin can be determined by reference to the corresponding proportion of (as applicable):

·
the consideration for the acquisition or supply (depending upon the specific statutory requirements) of the interest, unit or lease;
·
the approved valuation of that interest, unit or lease as at the specified date; or
·
the GST inclusive market value of that interest, unit or lease as at the specified day or time.

Example 8.1: Using the GST inclusive market value to calculate the margin on subdivided land John carries on a property development enterprise and is registered for GST. In July 2012, John makes a taxable supply of real property by selling a newly developed residential lot to Patrick for $400,000. The residential lot sold to Patrick was subdivided from land that John acquired from his father, Aston, on 10 August 2010 for no consideration. Aston held the land for private purposes and at the time that John acquired the land, Aston was not registered for GST. The GST inclusive market value of the land at 10 August 2010 was $1,800,000.John and Patrick agreed in writing that the margin scheme was to apply to the sale of the residential lot to Patrick. John acquired the land from his father who is his associate for the purposes of the A New Tax System (Goods and Services Tax) Act 1999, and subsection 75-11(7) applies for the purposes of calculating John's margin for the sale of the residential lot to Patrick. The margin for John's sale to Patrick is equal to the difference between the sale price of $400,000 and the relevant proportion of the $1,800,000 GST inclusive market value of the land that John acquired from Aston at 10 August 2010.Assuming the land that John acquired from Aston on 10 August 2010 was subdivided into twelve lots of equal size and value, then the margin for the sale of the residential lot to Patrick may be calculated as being: $400,000 - ($1,800,000/ 12) = $250,000.

Certain records are to be kept and preserved

Table 8.4 : Amendments to the Fringe Benefits Tax Assessment Act 1986
Provisions being amended What the amendments do
Fringe Benefits Tax Assessment Act 1986

132(1) (before the note)

132(2)

132(3)

132(5) (penalty)

132(5) (notes)

132(6)

[Schedule 8, items 20 to 25]

Make it a strict liability offence to fail to keep or provide certain fringe benefits tax records. Only such offences committed after the commencement of this amending Act will be strict liability offences.

Treating the failure to keep or provide certain fringe benefits tax records as a strict liability offence aligns these offence provisions with others in the taxation laws which impose strict liability on entities to maintain and or produce records that can be used for ascertaining an entity's liability to tax.

Urban water tax offset

Table 8.5 : Amendments to the Income Tax Assessment Act 1997 and Tax Laws Amendment (2009 Measures No. 2) Act 2009
Provisions being amended What the amendments do
Income Tax Assessment Act 1997

13-1 (table item headed 'water')

67-23 (table item 25)

Division 402

[Schedule 8, items27, 28 and 32]

Tax Laws Amendment (2009 Measures No. 2) Act 2009

Part 2 of Schedule 4

[Schedule 8, item 38]

Repeal Division 402 because the only operative subdivision (Subdivision 402-W - Urban water tax offset) has not been, nor will it be, utilised prior to its scheduled sunset date of 1 July 2014. The Water Minister has advised that no legislative guidelines (about the issuing and revoking of tax offset certificates) will be prescribed.

The amendments also remove references to the urban water tax offset elsewhere in the taxation laws, as well as the provisions which would have enabled the sunset of Subdivision 402-W.

Meaning of affiliate

Table 8.6 : Amendment to the Income Tax Assessment Act 1997
Provision being amended What the amendment does
Income Tax Assessment Act 1997

328-130(2) (example)

[Schedule 8, item 29]

Fixes a technical error in the Example, as a trustee cannot be an affiliate of another entity.

Farm management deposit scheme

Table 8.7 : Amendments to the Income Tax Assessment Act 1997
Provisions being amended What the amendments do
Income Tax Assessment Act 1997

393-40(1)

393-40(2)

[Schedule 8, items30 and 31]

Put beyond doubt that a deposit is still taken to be a Farm Management Deposit (FMD) even if it is repaid on the last day of the 12 month period (that is, on the one year anniversary date of the deposit).

The amendments apply in relation to assessments for the 2010-11 and subsequent income years, but also ensure that former FMD provisions (in Schedule 2G to the Income Tax Assessment Act 1936 (ITAA 1936)) are taken to have applied in the same way (that is, a deposit is still a FMD if it is repaid on the one year anniversary date).

Correcting a reference

Table 8.8 : Amendment to the Taxation Administration Act 1953
Provision being amended What the amendment does
Taxation Administration Act 1953

45-630 of Schedule 1 (note 1)

[Schedule 8, item 33]

Corrects a reference which should be 'income tax law'.

Extra-territorial application of promoter penalty provisions

Table 8.9 : Amendments to the Taxation Administration Act 1953
Provisions being amended What the amendments do
Taxation Administration Act 1953

290-A of Schedule 1 (heading)

290-10 of Schedule 1

[Schedule 8, items 34 and 35]

Extend the application of the provisions in Division 290 of Schedule 1, so as to include conduct that occurs outside Australia. This ensures that an entity involved in the promotion of tax exploitation schemes is subject to Division 290 of Schedule 1, irrespective of where the conduct occurs.

Updating a reference

Table 8.10 : Amendment to the Taxation Administration Act 1953
Provision being amended What the amendment does
Taxation Administration Act 1953

355-70(1) of Schedule 1 (table item 3)

[Schedule 8, item 37]

Following the Government's decision to extend Project Wickenby until 30 June 2015, this amendment extends the period in which a record or disclosure can be made to a Project Wickenby officer or a court or tribunal, to before 1 July 2015.

Commencement and application arrangements

8.4 The amendments in Part 1 of Schedule 8 commence on 1 July 2007. These amendments correct a technical oversight in the law that has existed since then, but are not expected to have any practical impact on the operation of the law in this area.

8.5 Although the amendments in Part 2 of Schedule 8 all commence on Royal Assent, some have individual application provisions.

8.6 The amendments made by items 17 and 18 apply in relation to supplies made on or after the start of the first quarterly tax period starting on or after Royal Assent. It does not matter whether the taxpayer has quarterly tax periods or other tax periods. [Schedule 8, item 19]

8.7 The amendments made by item 25only apply in relation to offences committed on or after Royal Assent. [Schedule 8, item 26]

8.8 The amendments made by item 30 apply to assessments for the 2010-11 and subsequent income years, whereas the amendments made by subitems 31(2) and (3) apply to assessments for income years prior to the 2010-11 income year. These amendments require retrospective application to ensure the current FMD provisions (in Division 393 of the Income Tax Assessment Act 1997 ) and the former FMD provisions (in Schedule 2G to the ITAA 1936) allow for any deposit, which is repaid on the one year anniversary date of the deposit, to be considered a FMD. [Schedule 8, item 31]

8.9 The amendment made by item 35only applies in relation to acts and omissions happening on or after Royal Assent. [Schedule 8, item 36]

STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Miscellaneous amendments

8.10 This Schedule is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 .

Overview

8.11 This Schedule makes miscellaneous amendments to the taxation laws and regulations as part of the Government's commitment to uphold the integrity of the taxation system.

Human rights implications

8.12 Part 1 of this Schedule makes amendments to superannuation regulations to provide equitable treatment of superannuation interests in the retirement phase that are subject to splitting for Family Law Act 1975 purposes. The amendments merely correct a technical oversight in the law that has existed since 2007, and do not engage any of the applicable rights or freedoms.

8.13 Part 2 of this Schedule makes a variety of technical and machinery amendments to other taxation laws.

8.14 These include amendments affecting the Farm Management Deposit scheme, all of which have retrospective application. However, all these amendments can only operate to the benefit of people seeking to claim a Farm Management Deposit, and as such, these amendments do not engage any of the applicable rights or freedoms.

Presumption of innocence

8.15 Part 2 of this Schedule also includes amendments to section 132 of the Fringe Benefits Tax Assessment Act 1986 , which make it a strict liability offence to fail to keep or provide certain records. The creation of a strict liability offence technically engages Article 14(2) of the International Covenant on Civil and Political Rights, which protects the right of a person charged with a criminal offence to be presumed innocent until proved guilty.

8.16 However, treating this offence as one of strict liability simply aligns it with many other offence provisions in the taxation laws, where it is reasonable, necessary and proportionate to require certain entities which ought to be responsible for maintaining and or producing certain taxation records, to be able to maintain and or produce them when requested.

Conclusion

8.17 This Schedule is compatible with human rights as it does not encroach upon any applicable rights or freedoms.

Assistant Treasurer, the Hon David Bradbury


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