Taxation Laws Amendment Bill (No. 2) 1994

Explanatory Memorandum

(Circulated by the authority of the Treasurer the Hon Ralph Willis, M.P.)

Chapter 22 - Outdated references


22.1 The Bill will amend section 23AA of the Income Tax Assessment Act 1936 to correct outdated references to certain provisions of United States income tax law for technical accuracy purposes.

Summary of proposed amendments

Purpose of amendment

22.2 To update the now redundant references to United States income tax law in section 23AA [Clause 120].

Date of effect

22.3 The amendments will be deemed to have had effect on or after 22 October 1986 [Subclause 2(2)].

Background to the legislation

22.4 Section 23AA was first introduced as part of the Income Tax Assessment Act 1936 in 1963. It applies to certain United States personnel in Australia deriving income connected with an approved project. The provision operates to give the personnel exemption from Australian income tax in certain circumstances.

22.5 The exemption is conditional on the income not being exempt from United States tax under certain provisions of the United States Internal Revenue Code of 1954. That Code has been succeeded by the Internal Revenue Code of 1986, which was enacted into United States law on 22 October 1986.

Explanation of proposed amendments

22.6 The proposed amendments will update the references to United States income tax legislation contained in section 23AA. This is to be achieved by replacing references to the Internal Revenue Code of 1954 in paragraphs 23AA(5)(b) and (6)(b) with references to the Internal Revenue Code of 1986 [Clause 121].

22.7 The amendments are necessary to ensure the technical accuracy of the Australian income tax law and will have no practical effect on the application of the section.

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