Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)General outline and financial impact
Restructuring of certain managed investment schemes
This Bill amends the Income Tax (Transitional Provisions) Act 1997 to provide further taxation relief to members of managed investment schemes.
Date of effect : 1 July 1998.
Proposal announced : The proposal was originally announced by the Assistant Treasurer in Press Releases No. 37 on 27 July 1998 and No. 10 on 12 March 1999.
Financial impact : None.
Compliance cost impact : The net impact of these measures will reduce compliance costs.
Summary of Regulation Impact Statement
Impact : Low.
Main points :The amendments in this Bill do not change the regulation impact statement contained in the explanatory memorandum to Taxation Laws Amendment Act (No. 7) 1999 (TLAA 7).
Amendments to the Film Licensed Investment Company Scheme
Schedule 2 to this Bill will amend the Film Licensed Investment Company Act 1998 , the Income Tax Assessment Act 1936 and Income Tax Assessment Act 1997 to allow a Film Licensed Investment Company (FLIC) to make returns of concessional capital as frankable dividends.
This Bill also proposes some technical amendments that will improve the clarity of the legislative structure governing FLICs.
Date of effect : The amendments will apply from 7 December 1998.
Proposal announced : Assistant Treasurers Press Release No. 11 of 19 March 1999.
Financial Impact :This measure will not affect the original revenue cost of the FLIC pilot scheme which is capped by the amount of concessional share capital that may be raised by FLICs a total of $40 million over the 2 income years 1998-1999 and 1999-2000.
Compliance Cost Impact :The measure is not expected to produce any significant compliance costs.
Summary of Regulation Impact Statement
The amendments do not require a Regulation Impact Statement.
Income tax deductions for gifts etc.
This Bill amends the income tax law to:
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- allow income deductions for gifts made to The Linton Trust; and
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- extend the period of time within which gifts to The National Nurses Memorial Trust are tax deductible.
Date of effect : The amendments apply to gifts made to:
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- The Linton Trust after 2 December 1998 and before 3 December 2000; and
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- The National Nurses Memorial Trust before 4 January 2000.
Proposal announced : The Linton Trust: announced by the Assistant Treasurer in Press Release No. 23 of 27 May 1999.
The National Nurses Memorial Trust: announced by the Assistant Treasurer in Press Release No. 37 of 10 August 1999.
Financial impact : The impact on revenue will be insignificant.
Compliance cost impact : Compliance costs will be insignificant.
Summary of Regulation Impact Statement
The amendments do not require a Regulation Impact Statement.
Cyclones Elaine and Vance Trust Account etc.
This Bill will amend the income tax law to allow an exemption from tax for non-profit organisations which promote the development of fishing and/or aquacultural resources.
This Bill will also exempt from income tax business recovery grants paid to eligible businesses by the Cyclones Elaine and Vance Trust Account.
Date of effect : Fishing and/or aquacultural resource bodies will be exempt from income tax for the 1999-2000 and later years of income.
Grants paid by the Cyclones Elaine and Vance Trust Account will be exempt from income tax for the 1998-1999 and 1999-2000 years of income.
Proposal announced : Fishing and aquacultural organisations: not previously announced.
Cyclones Elaine and Vance Trust Account: announced by the Assistant Treasurer in Press Release No. 32 of 7 July 1999.
Financial impact : The impact on revenue will be insignificant.
Compliance cost impact : Compliance costs will be insignificant.
Summary of Regulation Impact Statement
The amendments do not require a Regulation Impact Statement.
Mining and quarrying: balancing adjustments
This Bill amends the Income Tax Assessment Act 1997 (ITAA 1997) to confine the amount of capital expenditure, which is allowable as a deduction when a mining property is disposed of, to that expenditure which is specifically allowable under the mining provisions of the ITAA 1997. The amendment is in response to the decision of the Full Federal Court decision in Esso Australia Resources Ltd v FC of T (Esso).
Date of effect : This amendment will apply to disposals of mining property which occur after 4 pm Australian Eastern Standard Time on 3 December 1998.
Proposal announced : Treasurers Press Release No. 120 of 3 December 1998.
Financial impact : This measure closes off a potential loss to the revenue estimated to be $100 million for each of the next 3 years. An additional cost to the revenue of $300 million could result from the amendment of past assessments.
Compliance cost impact : Nil.
Summary of Regulation Impact Statement
Impact : Low.
Main points : There is only one implementation option to achieve the policy objective and that is to amend the disposal of mining property provisions in the income tax law. The amendment will not increase a taxpayers compliance costs beyond those incurred prior to the amendment.
Policy objective : To restore the tax treatment on disposal of mining property to that which applied prior to the decision of the Full Federal Court in Esso. Mining taxpayers will receive deductions for the full amount of capital expenditure which is allowable under the mining provisions.
Petroleum Resources Rent Tax
Makes a technical amendment to the Petroleum Resources Rent Tax Assessment Act 1987 (PRRT Act) to ensure the Act operates as intended to permit taxpayers who abandon or walk away from a PRRT project, to take with them their share of any undeducted exploration expenditures.
Date of effect : This amendment will apply to persons who abandon or walk away from a project after the date of Royal Assent.
Proposal announced : Unannounced.
Financial impact : Minimal.
Compliance cost impact : Nil.
Summary of Regulation Impact Statement
The Office of Regulation Review has advised that a Regulation Impact Statement is not required.