Commonwealth Numbered Regulations - Explanatory Statements

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INCOME TAX ASSESSMENT AMENDMENT REGULATIONS 1999 (NO. 3) 1999 NO. 147

EXPLANATORY STATEMENT

STATUTORY RULES 199R NO. 147

Issued by the Authority of the Assistant Treasurer

Income Tax Assessment Act 1997

Income Tax Assessment Amendment Regulations 1999 (No. 3)

The Governor-General may make regulations under section 909-1 of the Income Tax Assessment Act 1997 (the 1997 Act) for the purposes of that Act.

Purpose

The purpose of the regulations is to insert into the Income Tax Assessment Regulations, for the purposes of Subdivision 61-H of the 1997 Act, a regulation that will require registered health funds to provide to policy holders certain information about premium amounts paid under the policies. The regulation will require a health fund to issue a written statement to each individual policy holder before 15 July of each year.

Background

The Government's tax reform policy document, "Tax Reform: Not a New Tax, a New Tax System: the Howard Government's plan for a New Tax System ", announced, as part of its commitment to make private health insurance more affordable and more accessible for all Australians, a new 30% rebate on private health insurance.

The rebate came into effect on 1 January 1999, replacing the Private Health Insurance Incentive Scheme (PHIIS). The rebate is 30% of contributions paid to a registered health fund for an 'appropriate private health insurance policy' that provides cover for a period on or after 1 January 1999. Under the new scheme, taxpayers who were registered or were eligible to be registered under PHIIS during the period from 1 July 1998 to 31 December 1998 will continue to receive the benefit they were entitled to under the PHIIS scheme, if it exceeds the benefit they are entitled to under the new 30% rebate scheme.

The rebate will be provided as a refundable tax offset through the tax system, as a direct payment through Medicare offices, or as a reduced premium through health insurance funds. The rebate will also be available through a combination of the above methods. The rebate will not be means tested and will provide a 30% reduction in the cost of private health insurance. The rebate can be claimed only by an individual who has paid, or whose employer has paid on their behalf as a fringe benefit, a premium, or an amount in respect of a premium, under an appropriate private health insurance policy.

Persons entitled to the rebate will require information from their health insurance funds in support of claims for the rebate. The regulations will require health insurance funds to issue a written statement to each individual policy holder, before 15 July of each year, providing certain information about premium amounts paid under the policy for the previous income year.

This statement will provide each policy holder with details of the amount they may be entitled to claim as a rebate, making it easier for taxpayers to work out their entitlement. Where a policy holder has not received a reduced premium or direct payment and wishes to claim the rebate as a refundable tax offset, they should only need to include in their return form the amount shown on the statement.

A regulation has also been made under the Private Health Insurance Incentives Act 1998 which will ensure a statement is produced for health fund members who elect to receive the Government's 30% rebate as reduced premiums. However, this statement is not suitable for tax purposes, because it does not provide the information needed by policy holders who opt for a tax rebate rather than reduced premiums.

The regulations commenced on 1 July 1999, but they require health funds to provide a statement to policy holders for the period from 1 January 1999 to 30 June 1999.


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