Senate

Explanatory Memorandum

(Circulated by authority of the Treasurer,the Hon. Peter Costello, MP)

Chapter 12 - Miscellaneous Amendments

This chapter explains amendments to the following legislation:

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the Income Tax Assessment Act 1997;

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the Income Tax Assessment Act 1936;

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the Income Tax (Consequential Amendments) Act 1997; and

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other Commonwealth legislation.

These amendments make minor consequential amendments to these Acts to take account of changes to the 1936 Act not discussed in earlier chapters.

Overview of this chapter

This chapter covers the provisions in Schedule 12 to the Tax Law Improvement Bill 1997. It explains the amendments that need to be made to the 1997 Act, the 1936 Act, the Income Tax (Consequential Amendments) Act 1997 and other Commonwealth legislation, because of changes to the 1936 Act.

Amendments of the Income Tax Assessment Act 1997

Part 1 of Schedule 12 will amend the 1997 Act to:

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adjust very minor technical issues of drafting and expression [Schedule 12, Part 1: items 1, 2, 3, 5, 6, 8, 9 and 13] ; and

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account for the passage of rules for commercial debt forgiveness as enacted by the Taxation Laws Amendment Act (No. 2) 1996. [Schedule 12, Part 1: items 4, 7, 10 to 12]

Amendments of the Income Tax Assessment Act 1936

Part 2 of Schedule 12 will amend the 1936 Act to:

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substitute a new subsection 124ZZJ(5) to ensure that expenditure that is either qualifying expenditure within the meaning of Division 10D of the 1936 Act or is part of a pool of construction expenditure within the meaning of Division 43 of the 1997 Act is taken not to be establishment expenditure of a horticultural plant. [Schedule 12, Part 2: item 14]

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account for the passage of rules for commercial debt forgiveness as enacted by the Taxation Laws Amendment Act (No. 2) 1996. [Schedule 12, Part 2: items 15 to 22]

Amendments of the Income Tax (Consequential Amendments) Act 1997

Part 3 of Schedule 12 will amend the Income Tax (Consequential Amendments) Act 1997 to accord with amendments of the 1936 Act.

The Income Tax (Consequential Amendments) Act 1997 will amend some provisions now being rewritten by the Tax Law Improvement Bill 1997. For provisions that, as a result, will have no ongoing operation after the Bill is passed, the amendments are to be repealed. [Schedule 12, Part 3: items 23, 24, 25, 26, 27, 28]

Sub-section 51(7) of the 1936 Act prevents deductions for payments of training guarantee charge. The Income Tax (Consequential Amendments) Act 1997 amends the sub-section to refer to deductions under section 8-1 of the 1997 Act. Because the Training Guarantee legislation has been repealed, such a deduction could not now arise under the 1997 Act. Therefore, the amendment will be omitted [Schedule 12, Part 3: item 26] .

The Income Tax (Consequential Amendments) Act 1997 will also amend provisions in other Commonwealth legislation that refer to provisions of the 1936 Act that have been rewritten. In some cases, those provisions in the other legislation have been repealed, so that the related amendments are now not required [Schedule 12, Part 3: item 29] .

Amendments of other Commonwealth legislation

Part 4 of Schedule 12 will amend Commonwealth legislation to:

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insert a new provision, clause 54A, in the Airports (Transitional) Act 1996 to ensure that deductions allowable to the Federal Airports Corporation under Division43 of the Income Tax Assessment Act 1997 are transferred to the new operators of Australia's federal airports [Schedule 12, Part 4: item 30] ; and

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adjust the Legislative Instruments Act 1996, the Social Security Act 1991, the Student and Youth Assistance Act 1973 and the Veterans Entitlements Act 1986 to correct minor errors and update references due to the Income Tax Assessment Act 1997. [Schedule 12 Part 4: items 31 to 35]