House of Representatives

Explanatory Memorandum

(Circulated by authority of the Minister for Housing and Assistant Treasurer, the Hon. Michael Sukkar MP)

General outline and financial impact

International monetary agreements

Schedule 1 to the Bill amends the IMA Act to authorise the Minister, on behalf of Australia, to enter into loan agreements with the IMF. The amendments will also allow Australia to meet its funding obligations under any such agreements, as well as under the existing 'New Arrangements to Borrow' with the IMF.

Date of effect: The amendments generally commence on the day after they receive the Royal Assent.

However, certain amendments in relation to the New Arrangements to Borrow commence no earlier than 1 January 2021.

Proposal announced: The amendments in this Schedule have not been previously announced.

Financial impact: There are no financial impacts associated with this Schedule. Financial impacts will result from any loan agreements the Minister, on behalf of Australia, enters into.

Human rights implications: This Schedule does not raise any human rights issue. See Statement of Compatibility with Human Rights - Chapter 7.

Compliance cost impact: Not applicable.

Deductible gift recipients

Schedule 2 to the Bill amends the ITAA 1997 to allow the following entities to be deductible gift recipients under the income tax law:

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The Samuel Griffith Society Inc. (ABN 50 670 165 165);

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Friends of Myall Creek Memorial Incorporated (ABN 87 040 729 116); and

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Toy Libraries Australia Inc. (ABN 40 557 982 129).

Date of effect: The amendments apply to gifts made on and after 1 July 2019 to:

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The Samuel Griffith Society Inc. (ABN 50 670 165 165);

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Friends of Myall Creek Memorial Incorporated (ABN 87 040 729 116); and

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Toy Libraries Australia Inc. (ABN 40 557 982 129).

Proposal announced: This Schedule partially implements the measure 'Philanthropy - updates to the list of specifically listed deductible gift recipients' from the 2019-20 MYEFO.

Financial impact: The component of the MYEFO measure being implemented by this Schedule was estimated to have a cost to revenue of $0.3 million over the forward estimates period at the time of the 2019-20 MYEFO.

Human rights implications: This Schedule does not raise any human rights issue. See Statement of Compatibility with Human Rights - Chapter 7.

Compliance cost impact: Nil.

International financial assistance

Schedule 3 to the Bill updates existing provisions of the IMA Act to ensure that the Treasurer can, on behalf of Australia, continue to enter into agreements with other countries to provide them with financial assistance in support of a program of the IMF.

Date of effect: The amendments in this Schedule commence from the day after they receive the Royal Assent.

Proposal announced: The amendments in this Schedule have not been previously announced.

Financial impact: There are no financial impacts associated with this Bill. Financial impacts will result from any agreements the Treasurer, on behalf of Australia, enters into.

Human rights implications: This Schedule does not raise any human rights issue. See Statement of Compatibility with Human Rights - Chapter 7.

Compliance cost impact: Not applicable.

Extending the instant asset write-off

Schedule 4 to the Bill amends the income tax law to allow a business with an aggregated turnover for the income year of less than $500 million to immediately deduct the cost of a depreciating asset (instant asset write-off). The asset must cost less than a threshold of $150,000 and be first used or installed ready for use for a taxable purpose by 31 December 2020. Without the amendments the $150,000 instant asset write-off would end on 30 June 2020.

Date of effect: 1 July 2020.

Proposal announced: The Government announced this measure in June 2020.

Financial impact: This measure is estimated to have the following revenue impact over the forward estimates period ($m):

Human rights implications: This Schedule does not raise any human rights issues. See Statement of Compatibility with Human Rights-Chapter 7.

Compliance cost impact: This measure is expected to have minimal regulatory impact.

Reduction in 2020-21 PAYG instalments

Schedule 5 to the Bill will amend the TAA 1953 to reduce the GDP adjustment factor for the 2020-21 income year to nil. The GDP adjustment factor is applied by the Commissioner to work out the amount of PAYG instalments payable by a taxpayer in certain circumstances.

Date of effect: This measure will apply for the purposes of working out the amount of PAYG instalments for instalment quarters that commence:

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if the Bill receives Royal Assent before 21 August 2020 - on or after 1 July 2020; or

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otherwise - on or after 1 October 2020.

Proposal announced: The amendments in this Schedule have not been previously announced..

Financial impact: This measure is estimated to have the following financial impact over the forward estimates period ($m).

Human rights implications: This Schedule does not raise any human rights issue. See Statement of Compatibility with Human Rights - Chapter 7.

Compliance cost impact: Nil.

Cash flow boost

Schedule 6 to the Bill makes minor amendments to the Boosting Cash Flow for Employers (Coronavirus Economic Response Package) Act 2020 to clarify that the payments for which an entity can receive a cash flow boost payment include those for which an amount must be paid to the Commissioner under the special obligations applying to certain personal service income payments under Division 13 in Schedule 1 to the TAA 1953.

Date of effect: These amendments have effect from the commencement of the cash flow boost.

Proposal announced: The amendments in this Schedule have not been previously announced..

Financial impact: These amendments do not materially change the estimated financial impact of the cash flow boost that was included in the Explanatory Memorandum to the Coronavirus Economic Response Package Omnibus Bill 2020 and the Boosting Cash Flow for Employers (Coronavirus Economic Response Package) Bill 2020.

Human rights implications: This Schedule does not raise any human rights issue. See Statement of Compatibility with Human Rights - Chapter 7.

Compliance cost impact: These amendments are estimated to have a minor compliance cost impact.