House of Representatives

Explanatory Memorandum

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

NOTES ON CLAUSES

Clause 1: Short title, etc.

By sub-clause (1) of this clause, the amending Act is to be cited as the Income Tax Assessment Amendment Act (No. 2) 1985.

Sub-clause (2) facilitates references to the Income Tax Assessment Act 1936, which is the Act being amended by this Bill. That Act is referred to in the Bill as "the Principal Act".

Clause 2: Commencement

Under clause 2, the amending Act is to come into operation immediately after the amendments being made to section 75B of the Principal Act by the Taxation Laws Amendment Bill (No. 4) 1985 come into operation. But for this clause, the amending Act would, by reason of sub- section 5(1A) of the Acts Interpretation Act 1901, come into operation on the twenty-eighth day after the date of Assent. As the amendments being made by this Bill reflect those being made to section 75B of the Principal Act by the Taxation Laws Amendment Bill (No. 4) 1985, it is also necessary to ensure that they do not come into effect before those other amendments.

Clause 3: Deduction of expenditure on conserving or conveying water

Paragraph (c) of clause 11 of the Taxation Laws Amendment Bill (No. 4) 1985 proposes, amongst other things, to insert a new operative provision - sub-section (3B) - into section 75B of the Principal Act. Under that new provision, it is proposed that certain kinds of capital expenditure incurred primarily and principally on conserving or conveying water and incurred under a contract entered into on or after 20 September 1985 by a primary producer, will be deductible in 5 equal annual instalments. The amendments proposed by paragraphs (a) and (b) of sub-clause 3(1) of this Bill will provide for such expenditure to be deductible in 3 equal annual instalments, the first in the year in which the expenditure is incurred and a further instalment in each of the next 2 years.

Sub-clause 3(2), which will not amend the Principal Act, specifies that the amendments being made by sub-clause (1) are to apply to expenditure incurred on or after 20 September 1985.