House of Representatives

Tax Laws Amendment (2014 Measures No. 1) Bill 2014

Explanatory Memorandum

(Circulated by the authority of the Treasurer, Hon J. B. Hockey MP)

General outline and financial impact

Improvements to the Farm Management Deposit Scheme

Schedule 1 to this Bill amends the Income Tax Assessment Act 1997 (ITAA 1997) and the Banking Act 1959 (Banking Act) to improve the operation of the Farm Management Deposit (FMD) Scheme by:

·
allowing taxpayers to consolidate multiple FMDs that they might hold with different providers;
·
raising the non-primary production income threshold; and
·
limiting the rules in the Banking Act for unclaimed moneys to prevent them applying to FMDs.

Date of effect: The increase in the non-primary income threshold and the changes to allow taxpayer to consolidate FMDs apply to income years commencing on or after 1 July 2014.

The amendments to the Banking Act exempting FMDs deposits from becoming unclaimed moneys under the Banking Act apply from the day after Royal Assent.

Proposal announced: The amendments to allow consolidation and increase the non-primary production income threshold were announced on 27 April 2013 by the former government. In the Treasurer and Assistant Treasurer's Media Release titled 'Restoring integrity in the Australian tax system' of 6 November 2013, the Government announced it would proceed with this measure.

The amendments to the Banking Act were announced in the Assistant Treasurer's Media Release titled 'Amendments to the Farm Management Deposits Scheme' of 12 February 2014.

Financial impact: The elements of the measure that increase the non-primary production income threshold and allow consolidation of FMDs are estimated to reduce revenue by a total of $13 million over the forward estimates period, comprising:

2013-14 2014-15 2015-16 2016-17
Nil Nil -$7.0m -$6.0m

The amendments exempting FMDs deposits from becoming unclaimed moneys under the Banking Act are expected to result in an unquantifiable, but expected to be small, cost to the budget over the forward estimates period.

Human rights implications: This Schedule does not raise any human rights issue. See Statement of Compatibility with Human Rights - Chapter 1, paragraphs 1.68 to 1.75.

Compliance cost impact: These amendments result in a small reduction in compliance costs for individuals and business by eliminating restrictions on consolidating FMDs and by exempting FMDs from the reporting and payment regimes for unclaimed moneys under the Banking Act.

Refunding excess GST

Schedule 2 to this Bill amends the A New Tax System (Goods and Services Tax) Act 1999 and the Taxation Administration Act 1953 to ensure that overpaid GST is refundable only in certain circumstances. The amendments allow taxpayers to determine their entitlement to a refund of excess GST rather than having to rely on the Commissioner of Taxation exercising a discretion to refund an overpaid amount of GST.

Date of effect: These amendments in Schedule 2 apply generally in working out the net amount for a tax period starting on or after the day following Royal Assent.

Proposal announced: The Treasurer and the Assistant Treasurer announced that the Government would proceed with this measure in a joint Media Release titled 'Restoring integrity in the Australian tax system' of 6 November 2013.

Financial impact: This measure has the following revenue implications:

2013-14 2014-15 2015-16 2016-17
Income tax - .. -$2m -$2m

- nil .. not zero, but rounded to zero

This revenue impact does not include the following estimated increase in GST collections:

2013-14 2014-15 2015-16 2016-17
GST - $6m $6m $6m

Human rights implications: This Schedule does not raise any human rights issues. See Statement of Compatibility with Human Rights -paragraphs 2.101 to 2.104.

Compliance cost impact: The amendments are expected to impose low implementation costs on the affected group of taxpayers (for example, in relation to learning and education about the changes), but result in a medium decrease in ongoing compliance costs for these taxpayers by allowing them to determine their entitlement to a GST refund by reference to objective criteria.


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