House of Representatives

Tax and Superannuation Laws Amendment (2015 Measures No. 5) Bill 2015

Explanatory Memorandum

(Circulated by the authority of the Minister for Small Business and Assistant Treasurer, the Hon Kelly O'Dwyer MP)


Not-for-profit Tax Concession Working Group, Fairer, Simpler and More Effective Tax Concessions for The Not-for-profit Sector: Final Report, May 2013, http://www.treasury.gov.au/~/media/Treasury/Access%20to%20Information/Disclosure%20Log/2014/1447/Downloads/PDF/NFP%20Sector%20WG%20Final%20Report.ashx


2 Productivity Commission, Contribution of the Not-for-profit Sector, January 2010, http://www.pc.gov.au/inquiries/completed/not-for-profit


Section 135Y increases the capping threshold for certain years to compensate for the temporary budget repair levy. During the temporary budget repair levy years the $30,000 capping threshold is increased to $31,177 and the $17,000 capping threshold is increased to $17,667.


See note 3.


Section 6A of the Fringe Benefits Tax Act 1986 increases this rebate rate to 49 per cent for certain years to compensate for the temporary budget repair levy.


Paragraph 1.28 of the Explanatory Memorandum to A New Tax System (Fringe Benefits Reporting) Bill 1998.


The employer (a public hospital) provides benefits exempt under subsection 57A(3) and the benefits would have a taxable value if subsection 57A(3) was disregarded.


Note: during the 2016-2017 FBT year, the FBT rate of tax is 49%; the FBT 'cap' for hospitals is $17,667 general cap plus a $5,000 entertainment cap.


'GST creditable' indicates entitlement to GST input tax credits (type 1 gross-up applies) and 'not GST creditable' indicates no entitlement to GST input tax credits (type 2 gross-up applies).


The example assumes the benefit does not meet the definition of 'entertainment' in subsection 32-10(1) of the Income Tax Assessment Act 1997.


Salary packaged restaurant meals for $1,800 constitute the provision of meal entertainment as defined in subsection 37AD(1) and forms part of the employee's individual fringe benefits amount under subsection 5E(2).


Salary packaged holiday accommodation for $1,200 has a taxable value which is wholly or partly attributable to entertainment facility leasing expenses and forms part of the employee's individual fringe benefits amount under subsection 5E(2).


Non-salary packaged food and drink for $400 constitute the provision of meal entertainment as defined in subsection 37AD(1) and are excluded fringe benefits under subsection 5E(3) and are also excluded from the employers taxation liability under subsection 5B(1L).


see note 13.


As this is a temporary budget repair levy year the standard $17,000 cap has been increased to $17,667.


If the Step F result if zero or negative, then the aggregate non-exempt amount under subsection 5B(1E) for that particular employee is also zero.


One way to do this is to:

·
determine the benefits provided under a salary packaging arrangement by way of meal entertainment benefits or entertainment facility leasing expense benefits in the step 3 and step 4 subsection 5B(1K) amounts;
·
gross-up the resultant step 3 of subsection 5B(1K) amount using the type 1 gross-up rate;
·
gross-up the resultant step 4 of subsection 5B(1K) amount using the type 2 gross-up rate; and
·
add the two grossed-up amounts together.


These caps do not take into account the temporary increase in these caps associated with the Temporary Budget Repair Levy.


Note: A regulatory offset has been identified from within the Treasury portfolio, relating to the alignment of the legal frameworks for personal and corporate insolvency practitioners.


United Nations Human Rights Committee, CCPR General Comment No. 16: Article 17 (Right to Privacy), The Right to Respect of Privacy, Family, Home and Correspondence, and Protection of Honour and Reputation, 8 April 1988, available at: http://www.refworld.org/docid/453883f922.html.


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