Supplementary Explanatory Memorandum
General Outline and Financial Impact of the Amendments
The amendments will amend Taxation Laws Amendment Bill 1992 [originally introduced into Parliament on 19 December 1991 as Taxation Laws Amendment Bill (No.4) 1991] to:
Dividend rebate for company beneficiaries
- allow the intercorporate dividend rebate to a company that receives income attributable to dividends either directly from a trust or partnership, or indirectly through one or more interposed trusts or partnerships; and
- change the date on which the amendments relating to private company dividends received by corporate unit trusts and public unit trusts that are taxed as companies apply to the date on which the Bill receives Royal Assent.
Deferral of deductions for trading stock purchases involving prepayments
- ensure that there is not an unintended mismatch of expenditure on stock intended to be used as trading stock and income derived in relation to the disposal of the stock before the stock becomes trading stock on hand.
- correct a technical deficiency in the proposed new definition of effective life for depreciable plant in relation to second-hand plant; and
- provide an option for taxpayers to adopt the Commissioner's published depreciation rates in lieu of those based on the proposed new effective life rules.
Rehabilitation of mining, quarrying and petroleum sites
- allow taxpayers deductions for the rehabilitation of sites where they have conducted certain ancillary activities to their mining, quarrying or petroleum operations. The cost of these ancillary activities is deductible under the specific mining provisions.
Widely distributed finance shares
- make a technical correction to ensure that all paragraphs of the public company test for widely distributed finance shares under the foreign source income measures are consistent; ie.75% or more.
The amendments to the depreciation measures make it certain that the law will be consistent with the Government's announced intentions and will have no impact on the revenue.
The amendments to the remaining measures will have no impact on the revenue.