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House of Representatives

Taxation Laws Amendment Bill (No. 2) 1988

Taxation Laws Amendment Act (No. 2) 1988

Supplementary Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon. P.J. Keating, M.P.)


This supplementary explanatory memorandum explains the amendment proposed to the Bill as introduced into the House of Representatives.


The amendment will insert a new clause into the Bill. New clause 55A proposes to modify the operation of the Income Tax Assessment Act 1936 ("the Assessment Act") to increase the level of the pensioner rebate for the 1987-88 year of income from $250 to $308 for service pensioners.


The estimated cost in 1988-89 of increasing the pensioner rebate for service pensioners is $17 million.


Clause 55A, as proposed to be inserted in the Bill by the amendment, will modify the operation of subsection 160AAA(l) of the Assessment Act. That subsection authorises a rebate of income tax, known as a pensioner rebate, for a taxpayer whose assessable income includes a social security or repatriation pension that is taxable in Australia. The maximum rebate allowed is $250, available to a taxpayer whose taxable income does not exceed $6142. The rebate shades out at the rate of 12.5 cents for each $1 of taxable income in excess of $6142.

Clause 55A will apply to a taxpayer whose assessable income in the 1987-88 income year includes a service pension paid under Part III of the Veterans' Entitlements Act 1986. For such a taxpayer, the clause provides that the maximum pensioner rebate for the 1987-88 income year is to be $308 if the taxpayer's taxable income in that year does not exceed $6384. Where the taxpayer's taxable income exceeds $6384, the rebate is to be reduced by 12.5 cents for each $1 of taxable income in excess of $6384. No rebate will be available for a service pensioner whose taxable income in 1987-88 exceeds $8847.

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