Senate

Tax Law Improvement Bill 1997

Supplementary Explanatory Memorandum

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

Chapter2 - Tax-related expenses

Amendment 1

Purpose of the amendment

2.1 The amendment will ensure that the rewrite of the law allowing a deduction for expenditure on managing a taxpayers tax affairs correctly reflects the existing law.

Background to the amendment

2.2 The Bill includes a rewrite of the provision (section 69) of the 1936 Act that allows a taxpayer to deduct expenditure on managing their tax affairs, provided the expenditure is not capital [Schedule 1: section 25-5] .

2.3 The 1936 Act (subsection 69(4)) provides that expenditure is not to be regarded as capital in nature just because the taxpayers tax affairs relate to matters of a capital nature . In rewriting the law, the clarification has incorrectly referred to income tax affairs that relate to matters of capital expenditure .

Explanation of the amendment

2.4 Amendment 1 will ensure that the new provision correctly reflects the existing law. Expenditure will not be taken to be capital expenditure merely because the taxpayers tax affairs relate to matters of a capital nature.


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