Taxation Laws Amendment Act (No. 6) 1992


Medicare Levy Amendment Act (No. 2) 1992

Explanatory Memorandum

(Circulated by the authority of the Treasurer,the Hon. John Dawkins, M.P.)

General Outline and Financial Impact

The Taxation Laws Amendment Bill (No. 6) 1992 will amend various Acts (unless otherwise indicated all amendments refer to the Income Tax Assessment Act 1936 ) by making the following changes:

Expenditure on non-compulsory uniform or wardrobe

Denies a tax deduction for expenses incurred by employees in relation to a non-compulsory uniform or wardrobe.

Date of effect: 1 January 1993

Proposal announced: 1992-93 Budget.

Financial impact: The savings are expected to be $2 million per annum.

Gift Provisions - Royal College of Pathologists of Australasia

Reflects a change of name for the College of Pathologists of Australia which is listed in the income tax gift provisions.

Date of effect: On or after 16 January 1980.

Proposal announced: Not previously announced.

Financial impact: This change will have no impact on revenue.

Dividend Streaming Arrangements Amendment

Enables resident companies to take into account dividends that will be paid under international dividend streaming arrangements when determining the required franking amount for a related dividend.

Date of effect: The amendment will apply to dividends paid by resident companies on or after the date the Bill receives Royal Assent.

Proposal announced: 1992-93 Budget.

Financial impact: Insignificant.

Taxation of limited partnerships as companies

Subjects limited partnerships to taxation as companies, and treats them as companies for the purposes of the income tax law, with corresponding treatment of partners in such partnerships.

Date of effect: The amendments will apply to all limited partnerships formed on or after 19 August 1992. All limited partnerships formed prior to 19 August 1992 will be subject to the new arrangements in the 1995-96 year of income and subsequent years. If a limited partnership formed before 19 August 1992 is unable to satisfy a continuity of business test or a continuity of majority ownership test, the partnership will be taxed as a company for the year of income in which it ceases to satisfy the test, and all later years.

Proposal announced: 1992-93 Budget.

Financial impact: The amendment is likely to have some revenue benefit. However, a reliable estimate cannot be made.

Exemption from Income Tax: Family Payment Advance

Exempts from income tax the Family Payment Advance made under Part 2.17 of the Social Security Act 1991.

Date of effect: On or after 1 January 1993.

Proposal announced: Not announced.

Financial impact: Nil.

Prescribed Payments System (PPS) Simplification

Simplifies the administration of the PPS by:

replacing the current monthly reporting arrangements for payers of prescribed payments with annual reporting; and
modifying the current arrangements for deduction variation certificates, deduction exemption certificates, and approvals to quote reporting exemption numbers.

Date of effect: The amendments will apply on or after 1 January 1993 with the exception of those relating to deduction variation certificates which will apply on or after 1 July 1992.

Proposal announced: Treasurer's Press Release No.111 of 1 July 1992

Financial impact: The direct revenue impact from these measures is not significant. However, implementation of these measures will enable current Taxation Office resources to be directed from administration to enforcement activities.

Medicare Levy Rate Increase and Technical Amendment of the Act

Increase in Rate of Levy

The Medicare Levy Amendment Bill (No.2) 1992 will amend the Medicare Levy Act 1986 to raise the rate of Medicare levy from 1.25 per cent to 1.4 per cent.

Date of effect: 1 July 1993

Proposal announced: 1992-93 Budget

Financial Impact: The benefit to revenue in 1993-94 is estimated to be $300million.

Technical amendment

Makes a minor technical amendment to the Medicare Levy Act consequential on amendment of the Social Security Act 1986.

Date of effect: 1 January 1993.

Proposal announced: Not previously announced.

Financial Impact: Nil.

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