Explanatory Memorandum(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)
Chapter 1 - Bonuses for Older Australians
1.1 Schedule 1 to the Bill will amend the Income Tax Assessment Act 1997 (the Act) so that:
- bonuses paid to older Australians are exempt from income tax; and
- such bonuses are treated as excluded exempt income for the purposes of the carry forward loss provisions of the Act.
1.2 The amendments will give effect to the Governments announcement in its tax reform policy document, Tax Reform: not a new tax, a new tax system : The Howard Governments Plan for a New Tax System , to provide special payments to older Australians pensioners and self-funded retirees who have income from savings.
1.3 Clause 2 of the Bill provides that this Act commences, or is taken to have commenced, after all of the GST-related Acts have received the Royal Assent. This reflects the integration of the measures that will give effect to the Governments plan for a new tax system.
1.4 Eligible persons will be entitled to claim the bonuses from 1 July 2000.
1.5 The Government, as part of its tax reform plan, announced its intention to provide special payments to older Australians pensioners and self-funded retirees who have income from savings. The Aged Persons Savings Bonus and the Self-funded Retirees Supplementary Bonus will help maintain the value of the savings and retirement income of those older Australians.
1.6 These amendments are complementary to the A New Tax System (Bonuses for Older Australians) Bill 1998 which implements the Governments policy to provide bonus payments to older Australians.
1.7 Specifically, Schedule 1 to this Bill will ensure that a bonus payment made directly to an eligible person:
- will be treated as exempt income [Item 3] ; and
- will not be taken into account in calculating their net exempt income for the purpose of determining whether or not tax losses of earlier income years are deductible. [Item 2]
1.8 The list of classes of exempt income will also be updated to include the bonus payments. [Item 1]