Explanatory Memorandum
Ms O'Dwyer (Minister for Small Business and Assistant Treasurer)General outline and financial impact
Norfolk Island capital gains tax exemption
This Bill amends the Income Tax (Transitional Provisions) Act 1997 to exempt assets held by Norfolk Island residents before 24 October 2015 from capital gains tax (CGT).
However, this change will not apply to assets held by Norfolk Island residents that would not have been exempt from CGT before Norfolk Island was fully brought within Australian's income tax system.
Assets acquired by Norfolk Island residents on or after 24 October 2015 will be subject to the normal operation of the CGT rules from 1 July 2016.
Date of effect: This applies from 1 July 2016.
Proposal announced: This measure was announced in the Minister for Territories, Local Government and Major Projects' Media Release titled 'New Minister brings momentum to Norfolk Island reforms' of 23 October 2015.
Financial impact: Negligible cost to revenue over the forward estimates period.
Human rights implications: This Bill does not raise any human rights issues. See Statement of Compatibility with Human Rights - Chapter 2, paragraphs 2.1 to 2.6.
Compliance cost impact: Low. This measure will reduce compliance costs for Norfolk Island residents that held assets before 24 October 2015 that have been made exempt from CGT because they will not need to keep records or calculate gains or losses made on those assets. Further regulatory details on the reforms, see the Explanatory Memorandum to the Norfolk Island Legislation Amendment Bill 2015.
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