Explanatory Memorandum
(Circulated by the authority of the Treasurer,the Hon. J. Kerin, M.P.)Chapter 2 Exemption of the pay and allowances of members of the Defence Force serving in Iraq and Kuwait
Overview
Exempts from income tax the pay and allowances of members of the Australian Defence Forces allotted for duty in Iraq and Kuwait in response to Iraq's invasion of Kuwait.
Summary of proposed amendments
2.1. The proposed amendments will exempt from income tax the pay and allowances of members of the Australian Defence Forces (ADF) allotted for duty in Iraq and Kuwait in response to Iraq's invasion of Kuwait.
2.2. The amendments will also cease the exemption after 9 June 1991.
Background to the legislation
2.3. The existing provisions exempt the pay of ADF personnel serving in specific areas of the Middle East (see subsection 23AC(6)) from 2 August 1990. The amendments extend this exemption from 23 February 1991 to ADF personnel serving in Iraq and Kuwait as a result of Iraq's invasion of Kuwait.
Explanation of the proposed amendments
2.4. The specific areas of the Middle East covered by the Section 23AC exemption are presently defined as "the operational area". The amendment proposed by paragraph (a) of clause 10 will change the term "the operation area" to "an operational area". This allows for the operational area to be extended to include the countries of Iraq and Kuwait. This is done by paragraph (f), which inserts a new operational area effective from 23 February 1991. [Subclause 10(a) and 10(f)]
2.5. Paragraph (g) includes the new operational area in the definition of "operational area" in subsection 23AC(7). [Subclause 10(g)]
2.6. The amendment proposed by paragraph (b) is to ensure that the original requirements for eligibility for the Section 23AC exemption are also to apply to the new operational area. [Subclause 10(b)]
2.7. Paragraph (c) will insert a requirement that ADF members serving in the new operational area must have a written certificate from the Chief of the Defence Force. This certificate must state that the allotment for duty to the operational area was in response to Iraq's invasion of Kuwait. The purpose of this requirement is to exclude from the exemption ADF personnel who may be allotted for duty in the operational area for reasons unconnected with the invasion. [Subclause 10(c)]
2.8. Paragraph (d) effectively ceases the exemption after the end of 9 June 1991. [Subclause 10(d)]
2.9. Paragraph (e) ensures that the existing delegation and review procedures apply to the new operational area. [Subclause 10(e)]
Commencement date
2.10. The amendments of s23AC apply to the 1990-91 year of income. The exemption ceases after 9 June 1991.
Clauses involved in the proposed amendments
Clause 10 : amends section 23AC to
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- extend the operational area for the exemption to include Iraq and Kuwait.
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- effectively cease the exemption after 9 June 1991.