Bills Digest No. 175 2002-03
Taxation Laws Amendment
Bill (No. 6) 2003
WARNING:
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
consulted to determine the subsequent official status of the
Bill.
CONTENTS
Passage History
Purpose
Glossary
Background
Main Provisions
Endnotes
Contact Officer & Copyright Details
Passage
History
Taxation Laws
Amendment Bill (No. 6)
2003
Date Introduced:
29 May 2003
House: House of Representatives
Portfolio: Treasury
Commencement:
While the majority of the Bill commences
on Royal Assent, the various measures apply from different dates as
detailed below.
To:
- Increase the income thresholds for the Medicare levy and
Medicare levy surcharge under the
Medicare Levy Act 1986 and A New Tax System (Medicare
Levy Surcharge-Fringe Benefits) Act 1999
- Provide an exemption from the general value shifting rules
under the Income Tax Assessment Act 1997 ('ITAA
1997') to help companies convert to the new consolidation
regime
- Refine the consolidation regime by:
- limiting the
extent to which a linked asset s tax cost can change when it comes
into a consolidated group
- modifying the cost setting rules to ensure that they apply
appropriately to a partner s interest in a partnership, and
- aligning the membership rules for multiple entry consolidation
groups with the current membership rules for consolidated
groups
- Amend Commonwealth taxation legislation and the
Administrative Appeals Tribunal Act 1975 to simplify
the process for obtaining release from taxation on the grounds of
serious hardship
- Remove double taxation from Australian and New Zealand
shareholders by allowing New Zealand companies to enter the
Australian imputation system under ITAA 1997 (as part of a
reciprocal arrangement with New Zealand)
- Amend the A New Tax System (Goods and Services Tax) Act
1999 ('the GST Act') and the A New Tax
System (Goods and Services Tax Transition) Act 1999
('the GST Transition Act') to apply the Goods and
Services Tax ('GST') insurance provisions to
payments and supplies made in settlement of claims arising under a
third party scheme,(1) and
- Amend ITAA 1997 to include 'harm prevention charities' as
'deductible gift recipients'.
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AAT
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Administrative Appeals Tribunal
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ATO
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Australian Taxation Office
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CGT
|
Capital Gains Tax
|
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CTP
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Compulsory Third
Party
|
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DGR
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Deductible Gift
Recipient
|
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GST
|
Goods and Services Tax
|
|
GST Act
|
A New Tax System (Goods and Services Tax) Act
1999
|
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GST Transition Act
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A New Tax System (Goods and Services Tax Transition) Act
1999
|
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ITAA 1997
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Income Tax Assessment Act 1997
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IT(TP) Act
|
Income Tax (Transitional Provisions) Act
1997
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MEC group
|
Multiple entry consolidated group
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TAA
1953
|
Taxation Administration
Act 1953
|
As there is no central theme to the Bill the
background to the various measures will be discussed below.
The
Bill will increase the income thresholds for the
Medicare levy and Medicare levy surcharge. This proposal was
announced in the 2003-04 Federal Budget.
The Medicare
Levy Act 1986 provides that no Medicare levy is payable where
taxable income or combined family taxable income does not exceed
stated threshold amounts. The basic rate of the Medicare levy is
1.5% of the taxpayer s taxable income. Relief from the Medicare
levy is provided to certain low income earners. The Medicare levy
shades in at a rate of 20 cents in the dollar where the taxable
income or combined family taxable income exceeds the threshold
amounts.
Schedule 1 Increasing Medicare Levy Thresholds
Schedule 1 amends the
Medicare Levy Act by increasing the Medicare levy thresholds for
individuals, married couples and sole parents for the 2002-2003
year of income and subsequent years.
Item 4 of Schedule 1
increases the individual threshold amount specified in
subsection 3(1) of the Medicare Levy Act from $14 539 to
$15 062. Items 5, 7 and 8 increase the
family income threshold referred to in
subsections 8(5) to (7) of the Act from
$24 534 to $25 417. Item 6 amends
subsection 8(5) of the Act by raising the family
income threshold by a further $2334 for each dependent child or
student instead of the previous amount of $2253.
According to the
Explanatory Memorandum, these increases are in line with
movements in the Consumer Price Index.(2)
Schedule 1 Item 3 amends
subsection 3(1) of the Medicare Levy Act by
increasing the threshold amount for pensioners below age pension
age from $16 570 to $17 164. The increase ensures that
such pensioners do not have a Medicare levy liability until they
are liable for income tax. This
complements a similar measure for senior Australians
introduced in Taxation Laws
Amendment (Personal Income Tax Reduction) Bill 2003.(3)
Application: From the 2002-2003 year of
income onwards (Item 15).
The Medicare Levy
Act also applies a Medicare levy surcharge of 1 per cent where
taxpayers do not have private patient hospital cover and where the
taxpayer s taxable income and reportable fringe benefits exceed
certain thresholds. Under A New Tax System (Medicare Levy
Surcharge-Fringe Benefits) Act 1999 (the
'Medicare Levy Surcharge-Fringe Benefits Act'),
this surcharge also applies to reportable fringe benefits in
certain cases. A married person is not required to pay the
surcharge where the total of the person s taxable income and
reportable fringe benefits do not exceed the individual low income
medicare threshold amount.
Schedule 1 Increasing the Medicare Levy Surcharge
Threshold
Schedule 1 Items 9 to
12 increase the
individual threshold for the Medicare levy surcharge in
sections 8D and 8G of the Medicare Levy
Act from $14 539 to $15 062. The individual
threshold for the surcharge on reportable fringe benefits in
sections 15 and 16 of the Medicare Levy
Surcharge-Fringe Benefits Act is also
increased from $14 539 to $15 062.
Application: From the 2002-2003 year of
income onwards (Item 15).
The introduction of a general value shifting
regime was a key recommendation of the Ralph Review of Business
Taxation(4) in order to overcome deficiencies in the
former value shifting rules. The Review noted that value shifting
provides taxpayers with the opportunity to defer or avoid tax
liabilities. It is possible, for example, to bring forward losses
and defer gains by shifting value out of assets that are due to be
realised in the short term and into assets that are not due to be
realised until some time later.
Value shifts that happen on or after 1 July
2002 are subject to a general value shifting regime under ITAA
1997.
The general value shifting rules mainly affect
interests in companies and trusts that are not consolidated but
meet control or common ownership tests. Entities dealing at arm's
length or on market value terms are not subject to the value
shifting rules.
There are three main areas covered by the
value shifting rules:
- direct value shifting involving equity or loan interests in
companies and trusts
- direct value shifting creating rights in respect of
non-depreciating assets, and
- indirect value shifting involving non-arm's length
dealings.
The general value shifting regime may apply to
value shifting schemes even if there is no tax avoidance
purpose.(5)
Schedule 2 Modifying the Value Shifting Regime
Schedule 2 amends the
Income Tax (Transitional Provisions) Act 1997
('IT(TP) Act') to modify the general value
shifting regime in ITAA 1997. The amendments are part of special
transitional rules intended to assist the conversion of companies
to the consolidation regime (see 'Consolidation Regime' section
below).
This measure was announced by the Minister for
Revenue and Assistant Treasurer on 6 March
2003.(6)
Schedule 2 Item 1
inserts proposed subsection 727-230(1) in the
IT(TP) Act to provide that most indirect value shifts, where at
least 95 per cent of the market value of the benefits provided by
the losing entity are services, will be excluded from the
consequences of the general value shifting regime if those value
shifts occur before:
- the beginning of a losing entity s 2003-2004 income year,
or
- if a losing entity s 2002-2003 income year ends before
30 June 2003, the beginning of the losing entity s
2004-2005 income year.
Application: as described in previous
paragraph.
The aim of the Commonwealth Government's new
consolidation regime is to allow wholly-owned groups of companies
to consolidate and be treated as a single entity for income tax
purposes.
For general background on the consolidation
regime refer to the Bills Digests for the New Business Tax System (Consolidation) Bill 2002
(No.
173, of 2001 02) and the New
Business Tax System (Consolidation, Value Shifting, Demergers and
Other Measures) Bill 2002 (No. 56,
of 2002 03).
The final of four bills dealing with the
consolidation regime passed through Parliament on
6 March 2003 and received Royal Assent on
11 April 2003. The measures in Schedules 3 to
8 of this Bill provide refinements to what is a very
technical and complex area of tax legislation. The consolidation
regime has applied from 1 July 2002 and the measures in
Schedules 3 to 7 will also apply from
1 July 2002. The technical amendments in
Schedule 8 will commence from the date this
Bill receives Royal Assent.
The refinements included in this Bill were
foreshadowed in a press release from the Minister for Revenue and
Assistant Treasurer when the last piece of legislation relating to
the consolidation regime, the New Business Tax System
(Consolidation and Other Measures) Bill 2003, was passed by
Parliament on 6 March 2003. It stated:
While [the New Business Tax System (Consolidation
and Other Measures) Bill 2003] is the final consolidation bill,
some further interactions are still to be finalised including
assets previously owned by exempt entities, finance leases,
partners and partnerships, commercial debt forgiveness, bad debts
and demergers.(7)
Given the very technical nature of the
consolidation legislation and the willingness of the Parliament to
pass previous consolidation legislation while noting that it would
need later rectification, some of which is contained in this Bill,
this Digest will only provide a broad overview of the measures
contained in the Bill. It may also be noted that the six Schedules
in this Bill that relate to the consolidation regime contain no
major changes to the consolidation regime. However, while not all
the amendments in Schedules 3 to 8 in this Bill
were announced in the press release, the refinements of the
consolidation regime they implement are the result of extensive
consultation with the industry to ensure that the transition to the
consolidation regime is as smooth and practical as possible.
Schedule
3 amends the application
of a capital gains tax (CGT) event and inserts two new sections
into ITAA 1997 which effect the application of that CGT event. The
proposed sections 705-58 and 705-59 in
item 3 stipulate the cost setting rules for the
application of CGT Event L3 where the accounting standards allow
assets and liabilities to be set off against each other with only
the net value of the linked assets and liabilities being shown in
the balance sheet of the consolidated group.
The amendment to
paragraph 104-510(1)(a) in item 1 refines the
application of CGT Event L3 so the cost setting rules for CGT Event
L3 better reflect the accounting standards that relate to linked
assets and liabilities.
Application: from 1 July 2002.
Item 1 of
Schedule 4 inserts a new
subdivision into Division 713 of ITAA 1997 to deal
with a partner in a partnership or a partnership itself becoming
part of a consolidated group. Partnerships are taxed differently in
the tax system to other forms of corporate entities. A partnership
is not taxed as an entity, but rather, a partner is taxed
individually on their share of the net partnership income (or able
to claim a deduction for a net partnership loss).
As a result the
normal rules in the consolidation regime are not suited for dealing
with a partner or partnership entering a consolidated group.
Proposed Subdivision 713-E modifies the tax cost
setting rules in the consolidation regime to take account of the
characteristics of partnerships where one of two situations
occurs:
- a partner in a partnership becomes a subsidiary of a
consolidated group, or
- the partnership becomes a subsidiary of the consolidated
group.
The consequences are:
- where a partner becomes a subsidiary of a consolidated group
the head company is treated as the partner, i.e. the partner s
share of the assets of a partnership becomes the consolidated
groups share of the assets of the partnership, and
- where a partnership becomes a subsidiary of a consolidated
group the partnership losses its separate tax identity and the
assets of the partnership become the assets of the head
company.
While the rules in proposed sections
713-210 to 713-230 apply to both a partner joining a
consolidated group and a partnership joining a consolidated group
the rules in proposed sections 713-235 to 713-245
apply specifically to situations where a partnership joins the
consolidated group.
The Explanatory Memorandum mentions
that the provisions introduced in the proposed Subdivision
713-E do not deal with the consequences of a partner or
partnership leaving a consolidated group and that further
refinements dealing with these situations will be
required.(8)
Item 2 in Schedule 4 inserts
into subsection 995-1(1) of ITAA 1997 the
definition of partnership cost setting interest. The definition
refers to the meaning given in proposed section
713-210.
Application: from 1 July 2002.
Items 1 to 3 of Schedule 5
make amendments to section 719-10 of ITAA 1997 by
amending references to and moving the tests for a foreign entity to
be part of a multiple entry consolidated group (a MEC group) from
the ITAA 1997 to the IT(TP) Act.
Items 4 to 6 of Schedule 5
align the membership rules of MEC groups with the consolidated
group membership rules in the IT(TP) Act 1997. In
particular the amendments clarify that the membership rules for
consolidated groups that include non‑resident entities
interposed between a subsidiary member and other members of the
consolidated group also apply to MEC groups.
As part of the transitional process
item 10 inserts proposed section
719-10 to prevent MEC groups formed after
1 July 2004 from having non-resident entities interposed
between a subsidiary member and other members of the MEC group.
Items 6 to 9 make minor
technical amendments to sections 710C-30 and
710C-35 to ensure consistency of terms used in Subdivision
710C-C of the IT(TP) Act.
Application: from 1 July 2002.
Item 1 of Schedule 6 inserts
proposed subsection 719-2(3) so that application
of Part 3‑90 of the IT(TP) Act affects MEC
groups in the same way as consolidated groups.
Application: from 1 July 2002.
Item 1 of Schedule 7 repeals
subsection 700-1(1) of the IT(TP) Act and replaces it
with proposed subsection 700-1(1) to ensure
that the provisions in Part 3‑90 of the ITAA 1997 as
inserted by the New Business Tax System (Consolidation) Act
(No. 1) 2002 and subsequently amended by other Acts and this
Bill apply from 1 July 2002.
Application: from 1 July 2002.
Item 1 of Schedule 8 makes
some minor technical amendments to Schedule 15 of
the New Business Tax System (Consolidation, Value
Shifting, Demergers and Other Measures) Act
2002.
Application: from Royal Assent.
The Bill amends Commonwealth taxation
legislation and the Administrative Appeals Tribunal
Act 1975 to streamline the procedures under which an
individual taxpayer can be released from a tax liability where
payment would entail serious hardship.
The existing authority to grant release will
be transferred from tax relief boards to the Commissioner of
Taxation. The amendments will also introduce a new right to have
tax relief decisions reviewed internally under the ATO objections
process, and externally by the Administrative Appeals Tribunal
sitting as the Small Taxation Claims Tribunal.
The current tax relief boards comprise the
Commissioner, the Secretary of the Department of Finance and
Administration and the Chief Executive Officer of the Australian
Customs Service. According to the Explanatory Memorandum:
The current arrangements, with their requirement
for convening regular meetings of tax relief boards, are unduly
resource intensive and inflexible. A significant ongoing commitment
by the 3 represented agencies is required in order to avoid the
recurrence of backlogs and the associated delays in responding to
applicants.
Further, the single stage relief board process is
out of step with contemporary review practices. The interests of
applicants are better served by a genuinely independent merits
review.(9)
Schedule 9 Refining the Serious Hardship Procedure
Schedule 9 Item 1 inserts
new Part 4-50 into
Schedule 1 of the Taxation
Administration Act 1953 ('TAA
1953') to provide a new process by which individuals
facing serious hardship can seek release from certain tax
liabilities.
Item 1 proposed
section 340-10 in TAA 1953 adds
fringe benefits tax and PAYG ('Pay As You Go') instalments to the
existing liabilities from which an individual may be released,
i.e:
- income tax including Medicare levy, Medicare levy surcharge,
withholding tax and tax payable where an infrastructure borrowing
certificate is cancelled
- penalties associated with the above liabilities, and
- charges associated with the above liabilities.
Release from liabilities arising from an
assessment is final (subject to the overriding power of the
Commissioner to amend assessments). However, where an individual is
released (wholly or in part) from instalment liabilities, permanent
release will require further consideration of the full year s
assessment against the taxpayer s circumstances at the time of the
assessment (Item 1, proposed
sections 340-20 and 340-25 TAA 1953).
Schedule 9 Item 3 amends the
Administrative Appeals Tribunal Act to allow the
AAT, sitting as the Small Taxation Claims Tribunal, to review the
Commissioner's refusal to grant release for serious hardship.
Application: The later of 1 September 2003 or
the date of Royal Assent.
The Explanatory Memorandum notes that
Australian shareholders of New Zealand companies that earn
Australian income are currently unable to access Australian
franking credits arising from company tax paid on that income. The
same problem exists with New Zealand shareholders of Australian
companies that earn New Zealand income. In effect, both groups of
shareholders are taxed twice on such income. This is known as
triangular taxation . The problem arises because Australia and New
Zealand allow only resident companies to maintain imputation
accounts.(10)
In a joint statement on 19 February 2003,
the Australian Treasurer and the New Zealand Minister for Finance
and Revenue announced measures to resolve the triangular tax
issue:
To resolve this problem, Australia and
New Zealand will extend their imputation systems to include
companies resident in the other country.
Under this reform, Australian and New Zealand
shareholders of trans-Tasman companies that choose to take up these
reforms will be allocated imputation credits, representing
New Zealand tax paid, and franking credits, representing
Australian tax paid, in proportion to their ownership of the
company. However, each country's credits will be able to be claimed
only by its residents. (11)
The proposal is also designed to further
strengthen the bilateral relationship between Australia and New
Zealand formalised under the Closer Economic Relations
agreement.
The triangular reform proposal arose directly
from a recommendation of the Review of Business
Taxation.(12) On 6 March 2002, the Australian
and New Zealand governments jointly released a
Trans-Tasman Triangular Tax Discussion Paper (13)
to serve as a basis for business consultation on the feasibility of
implementing a pro-rata solution to triangular taxation.
The Explanatory Memorandum estimates that
between 500 to 1,000 New Zealand companies will choose to enter the
Australian imputation system, and about 50 to 100 large Australian
companies may benefit from reciprocal New Zealand
reforms.(14)
Schedule 10 Including New Zealand Companies in the Australian
Imputation System
Schedule 10 amends
ITAA 1997 by applying Australian imputation rules
to New Zealand companies that choose to enter the imputation
system. New Zealand will make reciprocal changes to its imputation
system to allow Australian companies to maintain a New Zealand
imputation account.(15)
Schedule 10 Item 1 inserts
new Division 220 in ITAA 1997
providing that the imputation rules in Part 3-6 of ITAA 1997 will
generally apply to a New Zealand company that has chosen to enter
the Australian imputation system in the same way as the rules apply
to a company that is an Australian resident. There are some
modifications to these rules for New Zealand companies, set out in
new Subdivision 220-C.
Proposed section 220-35
requires a New Zealand company that wishes to enter the Australian
imputation system to notify the Commissioner.
Proposed section 220-50
enables the Commissioner to cancel a New Zealand company s choice
to enter the Australian imputation system if the company does not
pay its franking deficit tax or over-franking tax liability by the
due date or fails to provide a franking return to the
Commissioner.
Proposed section
220-800 imposes joint and several
liability on Australian and New Zealand companies in a wholly-owned
trans-Tasman group for the payment of franking-related tax
obligations. This means that the Commissioner will be able to
recover the franking-related liability of the New Zealand company
directly from an Australian entity or another New Zealand company
that is a member of the same wholly-owned group.(16)
Application: From 1 April 2003 (Item
24 proposed section 220-1).
The amendments in this Bill to the GST Act
remove compulsory third party insurance schemes (CTP schemes) and
the settlement sharing arrangements that are associated with CTP
schemes from the application of the provisions in Division 78 of
the GST Act. Since the commencement of the GST Act the application
of the GST to the supply of and payments from CTP schemes has been
governed by Division 78 of the GST Act, which deals with the
application of the GST to insurance premiums and payments.
However it has become evident that the GST
provisions for insurance do not cover the peculiarities associated
with CTP schemes and settlement sharing arrangements. The
Explanatory Memorandum notes that
after consultation with members of the CTP
industry, it has been established that the GST insurance provisions
do not apply as intended to some payments or supplies made in
settlement of claims under a CTP scheme. Furthermore, there are a
number of other insurance related payments or supplies made by CTP
insurers that should be subject to the GST insurance provisions.
For example, these include payments of hospital and ambulance
charges that arise for services that have been provided directly to
injured persons involved in motor vehicle accidents, that are paid
by an insurer via CTP scheme wide bulk-billing
arrangements.(17)
Consequently, the amendments in this Bill
remove CTP schemes and settlement sharing arrangements from the GST
insurance provisions in Division 78 and insert two new divisions
into the GST Act intended to result in the GST provisions correctly
applying to CTP schemes and settlement sharing arrangements.
Items 1 to 11 in Schedule 11
insert into various tables, which highlight the existence of
special rules in the GST Act, items that direct the reader to
proposed Division 79 for CTP schemes and to
proposed Division 80 for settlement sharing
arrangements.
Items 12 and 13 amend
provisions in Division 72 of the GST Act, which
deal with the application of the GST to supplies made between
associates, so that exclusions that apply to insurance policies
will also apply to CTP scheme policies and claims.
Items 14 to 17 amend
provisions in Division 78 of the GST Act so that
payments and supplies associated with CTP schemes compensation
matters are excluded from the application of the Division 78 and
instead proposed Divisions 79 and 80 will apply to
those payments and supplies.
Item 18 of Schedule 11
inserts into the GST Act proposed Divisions 79 and
80 which aim to apply the GST insurance provisions to CTP
schemes in the way intended from the commencement of the GST on
1 July 2000.
Division 79 - Compulsory third party schemes
Proposed Subdivision 79-A
modifies the application of Division 78 to some CTP scheme payments
and supplies made under an insurance policy. The provisions in
proposed Division 79 use provisions and concepts
in Division 78 and alter them so they correctly reflect way the GST
is supposed to apply to certain insurance policy payments and
supplies made under a CTP scheme.
Proposed Subdivision 79-B
extends the application of Division 78, as modified by
proposed Subdivision 79-A, to CTP hybrid payments
or supplies. Proposed section 79‑25 defines
a CTP hybrid payment or supply as a payment or supply that is made
in settlement of a claim for compensation under a CTP scheme where
the claim would not have been made if there was no insurance policy
and was not made under the insurance policy.
Proposed Subdivision 79-C
applies to CTP compensation payments or supplies and to CTP
ancillary payments or supplies.
Proposed subsection 79-35(2)
defines a CTP compensation payment or supply as:
- a payment or supply under a CTP scheme, and
- made in settlement of a claim for compensation under the CTP
scheme
but not where:
- the entity making the payment was required to do so because of
the bankruptcy or insolvency of the entity who was the insurer
- Division 78 applies to the payment or supply, or
- proposed Subdivision 79-A and proposed
Subdivision 79-B apply to the payment or supply.
Proposed subsection 79-35(3)
defines a CTP ancillary payment or supply as one made under a CTP
scheme specified in the regulations and could include payments made
under an agreement between the entity making the payment or supply
and other entities even though no actual claim is made under the
CTP policy. The example given in the Explanatory
Memorandum is a bulk billing arrangement between the entity
operating the CTP scheme and hospital or ambulance providers. In
these situations the entity operating the CTP scheme is required to
make a payment even where no actual claim has been made by an
injured person in the accident.(18)
The rest of proposed Subdivision
79‑C deals with special rules relating to the
application of the GST to CTP compensation payments or supplies and
to CTP ancillary payments or supplies.
Proposed Subdivision 79-D
sets out the method and formula for calculating a decreasing
adjustment under proposed sections 79-15 and
79-50.
Division 80 - Settlement sharing arrangements
Settlement sharing arrangements occur as a
result of the operations of State or Territory CTP systems. Under
the arrangements, in relation to accidents that involve more than
one vehicle and more than one insurer, one of the insurers is
required to manage all claims arising from the accident with the
other insurers being required to contribute a share of the
settlement payment.(19)
Proposed subdivision 80-A
defines:
- an 'insurance policy settlement sharing arrangement'
- the parties involved
- how Division 78 and proposed Division 79 apply
to the payments and supplies provided by the various parties,
and
- the treatment of any adjustments relating to the payments made
by the parties involved in the arrangement.
Proposed Subdivision 80-B
defines:
- a 'nominal defendant settlement sharing arrangement'
- the parties involved, other than the uninsured party
- how Division 78 and proposed Division 79 apply
to the payments and supplies provided by the various parties,
and
- the treatment of any adjustments relating to the payments made
by the parties involved in the arrangement.
The difference between an 'insurance policy
settlement sharing arrangement' and a 'nominal defendant settlement
sharing arrangement' is that the latter involves the settlement of
a claim against a driver not covered by an insurance
policy.(20)
Proposed Subdivision 80-C
defines:
- a 'hybrid settlement sharing arrangement'
- the parties involved, and
- how proposed Subdivisions 80-A and 80-B are
affected by a hybrid settlement sharing arrangement.
Item 19 of Schedule 11 amends
section 188-22 of the GST Act so that settlements
under proposed Divisions 79 and 80 are excluded
from the annual turnover provisions in Division 188 of the GST
Act.
Items 20, 21, 23 to 31 and 34 to
39 insert new definitions into the dictionary of the GST
Act (section 195-1).
Items 22, 32 and 33 make
amendments to existing definitions in the dictionary of the GST
Act.
Item 42 amends
section 22 of the A New Tax System (Goods and Services
Tax Transition) Act 1999 to extend its application to
events that occurred prior to 1 July 2000 to which
proposed Divisions 79 and 80 apply.
Application: From 1 July 2000
(Item 43).
As part of the Government's response to the
Report of the
Inquiry into the Definition of Charities and Related
Organisations,(21) the Treasurer announced in August
2002 that:
The Government has decided to establish a new
category of deductible gift recipient for charities whose principal
activities promote the prevention and control of harmful and
abusive behaviour among humans. This will assist these charities in
attracting public support for their activities.(22)
Australian taxpayers can claim income tax
deductions for certain gifts to 'Deductible Gift Recipients'
('DGRs'). To be a DGR, an organisation must fall
within a category of organisations set out in Division 30 of
ITAA 1997. Categories currently listed in Division 30 include
Health, Education, Research, Welfare and Rights, Defence, the
Environment and Cultural Organisations. Specific organisations
qualifying as DGRs are listed under each category.
In addition, there
are special registers for Environmental and Cultural Organisations.
Donations to organisations on these registers are tax
deductible.
Schedule 12 Harm Prevention Charities as Deductible Gift
Recipients
Schedule 12 amends
Subdivision 30 of ITAA 1997 to
include harm prevention charities as DGRs.
Schedule 12
Item 4 inserts
proposed section 30-287 in ITAA 1997 which
requires the Secretary of the Department of Family and Community
Services to keep a register of harm prevention charities.
Proposed section 30-289 states that 'harm
prevention charities' are charitable institutions whose principal
activity is to promote the prevention or the control of 'behaviour
that is harmful or abusive to human beings'.
Schedule 12 Item
6 inserts
proposed subsection 995-1(1)
which defines behaviour that is harmful
or abusive as one or more of the following:
- emotional abuse
- sexual abuse
- physical abuse
- suicide
- self-harm
- substance abuse, or
- harmful gambling.
Application: applies
to gifts made on or after 1 July
2003 (Schedule 12 Item
3).
- Hon. Peter Slipper MP, Second Reading Speech,
29 May 2003, House Hansard, p. 14926.
- Explanatory Memorandum, p. 10.
- Passed House of Representatives, 4 June
2003.
- http://www.rbt.treasury.gov.au/,
pp. 261 266.
- See: 2003 Australian Master
Tax Guide at [13-800].
- Senator Helen Coonan, Minister for Revenue
and Assistant Treasurer, 'Consolidation Legislation Passed',
Press
Release No. C014/03, 6 March 2003.
- ibid.
- Explanatory Memorandum, p. 34.
- ibid., p. 60.
- ibid., p. 72.
-
Treasurer s Press Release No. 7 of 19 February 2003, at:
http://www.treasurer.gov.au/tsr/content/pressreleases/2003/007.asp.
- http://www.rbt.treasury.gov.au/,
Recommendation 20.6.
-
http://www.treasury.gov.au/contentitem.asp?pageId=022&ContentID=304.
- Explanatory Memorandum, p. 94.
- ibid., p. 6.
- ibid., p. 86.
- ibid., p. 98.
- ibid., p. 110.
- ibid., p. 99.
- ATP, Weekly Tax Bulletin No. 23, p.
828.
- http://www.cdi.gov.au/html/report.htm.
-
Treasurer's Press Release No 49 of 2002
Graeme Selleck and Peter Prince
17 June 2003
Bills Digest Service
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