Explanatory Memorandum(Circulated by authority of the Treasurer. the Hon. P.J. Keating, M.P.)
The Income Tax Assessment Amendment (Capital Gains) Bill 1986 will amend the Income Tax Assessment Act 1936:
- to introduce a tax on capital gains in relation to assets acquired on or after 20 September 1985 (September 1985 Tax Reform announcement); and
- to modify provisions relating to the taxation of benefits associated with employee share acquisition schemes, in consequence of the introduction of the tax on capital gains (proposal announced on 28 November 1985).
The Income Tax (Rates) Amendment (Capital Gains) Bill 1986 will amend the Income Tax (Rates) Act 1982 to insert provisions allowing for the calculation of the rates of tax applicable to taxpayers who derive assessable income which comprises or includes a capital gain. The amendments will provide a form of averaging under which, broadly, the tax payable in respect of a capital gain will be determined by adding one-fifth of the gain to a reduced taxable income (that is, after deducting the capital gains component of the taxable income) and then multiplying by five the additional tax attributable to that amount.