House of Representatives

A New Tax System (Income Tax Laws Amendment) Bill 1998

Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)

General Outline

Bonuses for Older Australians

Inserts new Subdivision 52-E in the Income Tax Assessment Act 1997 (the Act) to provide that bonus payments made to certain older Australians will be exempt from income tax. The bonus payments will also be treated as excluded exempt income for the purposes of the carry forward loss provisions of the Act.

Date of Effect: 1 July 2000.

Proposal announced: 13 August 1998.

Financial impact: Nil.

Compliance cost impact: Compliance costs will be negligible.

Repeal of Savings Tax Offset

Repeals Subdivision 61-A of the Income Tax Assessment Act 1997 , which provides for a savings tax offset designed to give assistance to individual taxpayers who save or invest, and encourage potential savers or investors.

Date of Effect: Will apply to assessments for the 1999-2000 income year and later income years.

Proposal announced: 13 August 1998.

Financial impact: The measure will increase revenue by $0.79 billion in 1999-2000, $2.04 billion in 2000-2001, $2.14 billion in 2000-2002 and $2.24 billion in 2002-2003.

Compliance cost impact: Compliance costs will be negligible.

Increase in rebates for low income aged persons and certain pensioners

Amends the Income Tax Regulations to provide for an increase in the maximum rebate available to low income aged persons and certain pensioners by $250 a year (for a single person) and $175 a year (for each of a couple). The higher rebates will ensure that an extra 70,000 pensioners and self-funded retirees are not required to pay tax, and will provide an extra tax cut to 330,000 older people.

Date of effect: Will apply to assessments for the 2000-2001 year of income and later years of income.

Proposal announced: 13 August 1998.

Financial impact: The total budgetary cost of the measure is $0.08 billion in 2000-2001, $0.08 billion in 2001-2002 and $0.08 billion in 2002-2003.

Compliance cost impact: Compliance costs will be negligible.


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