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House of Representatives

Taxation Laws Amendment Bill (No. 3) 1986

Taxation Laws Amendment Act (No. 3) 1986

Bank Account Debits Tax Amendment Bill 1986

Bank Account Debits Tax Amendment Act 1986

Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon. P.J. Keating, M.P.)

GENERAL OUTLINE

Taxation Laws Amendment Bill (No. 3) 1986

This Bill will amend -

·
the Income Tax Assessment Act 1936 -

· .
to allow income tax deductions for cash bids paid for certain off-shore petroleum exploration permits (proposal announced on 15 January 1986);
· .
to provide for profit arising from the death or destruction of certain live stock to be offset, on a herd basis over up to 10 years, against the cost of replacement stock (proposal announced on 15 April 1986);
· .
to remove the requirement that, to qualify for an interest withholding tax (IWT) exemption for widely-spread issues overseas, relevant borrowings and interest payments be in a currency other than Australian currency;
· .
to withdraw the IWT exemption relating to borrowings outside Australia by the States and by Commonwealth and State authorities (proposal announced on 1 July 1986), but give those bodies access to an alternative exemption relating to interest paid on certain public or widely-spread debenture issues outside Australia;
· .
to make it clear that loan roll-overs and loan extensions cannot be used to circumvent the 1983 withdrawal of IWT exemption for off-shore borrowings by so-called 'Australian entities' (proposal announced on 1 July 1986), nor the 1983 withdrawal of IWT exemption for the Australian Industry Development Corporation (AIDC) or the withdrawal, proposed by this Bill, of the exemption for the States and Commonwealth and State authorities. IWT exemption will be precluded in respect of interest paid after the measures become law in relation to a borrowing resulting from such a roll-over or extension effected after the date of introduction of the Bill in the case of the IWT exemption for the AIDC and after 1 July 1986 for the other amendments;
· .
to require that service fees incurred in the acquisition of horses by natural increase be taken into account in the trading stock valuation of such horses (1986-87 Budget announcement);
· .
to provide that the special trading stock valuation option in respect of breeding horses is not available until the year in which horses reach 3 years of age (1986-87 Budget announcement);
· .
to reinstate full tax exemption which applied prior to 1 December 1983 for the pay and allowances of members of the Defence Force Reserves and Emergency Reserves in respect of their part time service on or after 1 January 1987 (1986-87 Budget announcement);
· .
to provide the method of calculating provisional tax for the 1986-87 income year;
· .
to allow income tax deductions for gifts to the Australian Academy of Technological Sciences and the Australian College of Occupational Medicine (1986-87 Budget announcement); and
· .
to enable the Secretary to the Department of Science to approve a body as "an approved research institute" for income tax purposes;

·
the Income Tax Assessment Act 1936 and the Income Tax Regulations to correct a technical deficiency in relation to the minimum cost prices prescribed in respect of natural increase of certain classes of live stock;
·
the Income Tax (International Agreements) Act 1953 to give the force of law in Australia -

· .
to a second protocol amending the existing agreement and protocol between Australia and the Netherlands. The second protocol was signed in Canberra on 30 June 1986; and
· .
to a comprehensive taxation agreement between Australia and Austria covering all forms of income flowing between the two countries. The agreement was signed in Vienna on 8 July 1986; and

·
the Administrative Decisions (Judicial Review) Act 1977

· .
to delete references to a now repealed Act and to the Taxation Boards of Review which have been abolished.

The Bill will also amend the burden of proof provisions in the various taxation laws to ensure that, in taxation appeals under those laws to the Federal Court and High Court, the burden of proof that applied before, and which was unintentionally altered by, the Taxation Boards of Review (Transfer of Jurisdiction) Act 1986 is restored.

Bank Account Debits Tax Amendment Bill 1986

This Bill will increase the rates of tax on debits made to cheque accounts kept with banks outside the Australian Capital Territory (1986-87 Budget announcement).


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