House of Representatives

Tax Laws Amendment (2009 Measures No. 3) Bill 2009

Explanatory Memorandum

(Circulated by the authority of the Treasurer, the Hon Wayne Swan MP)

General outline and financial impact

Reduction in 2009-10 PAYG instalments

Schedule 1 to this Bill amends section 45-405 of Schedule 1 to the Taxation Administration Act 1953 to set the GDP adjustment (GDP refers to gross domestic product) for the 2009-10 income year at 2 per cent.

Date of effect : This measure applies in relation to pay as you go (PAYG) instalment amounts for the 2009-10 income year that become due on or after the date of commencement.

Proposal announced : This measure was announced jointly by the Treasurer and the Minister for Small Business, Independent Contractors and the Service Economy in Media Release No. 030 of 28 March 2009.

Financial impact : This measure will have the following revenue implications:

2008-09 2009-10 2010-11 2011-12 2012-13
Nil -$720m $720m Nil Nil

Compliance cost impact : Low. This measure will not require increased compliance activity on behalf of eligible taxpayers. There is no ongoing compliance cost impact and a minimal transitional impact.

Annual PAYG instalments when voluntarily registered for the goods and services tax

Schedule 2 to this Bill amends Division 45 of Schedule 1 to the Taxation Administration Act 1953 to allow taxpayers who are voluntarily registered for the goods and services tax (GST) and who choose to remit GST annually to choose to make their pay as you go (PAYG) instalments annually if they satisfy the other eligibility tests for annual PAYG instalments. In some cases these taxpayers are currently prevented from making PAYG instalments annually solely due to their voluntary GST registration. The alignment of these annual obligations will reduce compliance costs for eligible taxpayers.

Date of effect : This measure applies from the 2009-10 income year.

Proposal announced : This measure was announced jointly by the Treasurer and Assistant Treasurer and Minister for Competition Policy and Consumer Affairs in Media Release No. 053 of 13 May 2008.

Financial impact : This measure will have the following revenue implications:

2008-09 2009-10 2010-11 2011-12 2012-13
Nil -$155m -$25m -$25m -$25m

Compliance cost impact : Low. This measure will affect only a small proportion of individuals and businesses. There is no ongoing compliance cost impact and a minimal transitional impact, reflecting the need for some taxpayers to be aware of the amendment.

Petroleum resource rent tax: minor changes

Schedule 3 to this Bill amends the Petroleum Resource Rent Tax Assessment Act 1987 by:

·
introducing a functional currency rule into the petroleum resource rent tax (PRRT), along similar lines to the functional currency rule in the Income Tax Assessment Act 1997 ;
·
introducing a modified 'look-back' rule for exploration expenditure related to a production licence derived from an exploration permit and a retention lease;
·
introducing internal petroleum provisions (similar to the external petroleum provisions) to deal with the case where project petroleum is processed for a tolling fee, or acquired for processing, by a person who has an interest in the project for (if processed), or from (if acquired), another person who has an interest in the same project; and
·
extending the offshore exploration incentive for designated frontier areas by one year so it applies to the 2009 annual offshore acreage release.

Date of effect : 1 July 2008. The commencement date of 1 July 2008 has no adverse implications for PRRT taxpayers.

Proposal announced : The first three measures mentioned above were announced jointly by the Treasurer and the Assistant Treasurer and Minister for Competition Policy and Consumer Affairs in Media Release No. 053 of 13 May 2008. The fourth measure mentioned above was announced jointly by the Treasurer and the Minister for Resources and Energy on 12 May 2009.

Financial impact : The first three measures mentioned above have no fiscal cost over the forward estimates period. The fourth measure mentioned above has no fiscal cost in 2009-10 and 2010-11 and a small but unquantifiable fiscal cost in 2011-12 and 2012-13.

Compliance cost impact : The measures introducing a functional currency rule into the PRRT and the internal petroleum provisions are expected to reduce compliance costs, while the measure introducing a modified 'look-back' rule for exploration expenditure related to a production licence derived from an exploration permit and a retention lease has no impact on compliance costs. The measure extending the offshore exploration incentive by one year has no implications for compliance costs.

Deductible gift recipients

Schedule 4 to this Bill amends the Income Tax Assessment Act 1997 to update the list of deductible gift recipients (DGRs) to include three new organisations.

Tax deductions are provided to donors to organisations that are endorsed as DGRs, subject to certain conditions. Organisations which do not fall under the general DGR categories may seek specific listing in the income tax law.

Date of effect : The date of effect for each of the organisations is listed in Table 4.1.

Proposal announced : The addition of these three organisations has not been announced.

Financial impact : This measure will have the following revenue implications:

Organisation 2009-10 2010-11 2011-12 2012-13
Royal Institution of Australia Incorporated -$57,500 -$122,400 -$124,848 -$127,345
Diplomacy Training Program Limited -$33,750 -$46,125 -$47,278 -$48,460
Leeuwin Ocean Adventure Foundation Limited -$1,500,000 -$1,500,000 -$300,000 -$307,500
Total - $1,591,250 - $1,668,525 - $472,126 - $483,305

Compliance cost impact : Negligible.


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