Issued by authority of the Minister for Revenue
and Assistant Treasurer

Income Tax Assessment Act 1997

Income Tax Assessment Amendment Regulations 2006 (No. 4)

Subsection 909-1(1) of the Income Tax Assessment Act 1997 (the Act) provides that the Governor-General may make regulations prescribing matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act.

The purpose of the Regulations is to amend the Income Tax Assessment Regulations 1997 (the Principal Regulations) to prescribe a religious institution as being exempt from income tax.

Section 50-5 of the Act lists various types of charitable, religious, scientific and educational entities that are exempt from income tax subject to the special conditions listed in section 50-50 of the Act.

Paragraph 50-50(c) of the Act provides that a charitable or religious institution is not exempt from income tax unless it is a prescribed institution that is located outside Australia and is exempt from income tax in the country in which it is resident.

Regulation 50-50.01 of the Principal Regulations provides that an institution is a prescribed institution on and after the date mentioned in the item listed under that regulation.

Government practice has been that bona fide charitable institutions based in Australia that pursue their activities outside Australia should generally continue to be exempt from income tax. Since 1 July 1997 eight Pacific Catholic Dioceses have been approved for prescription in the proposed Regulations.

The Diocese of Honiara Registered Trustees (Incorporated) has been prescribed for the purposes of paragraph 50-50(c) of the Act, to ensure that it will be exempt from income tax.

The Regulations would be taken to have commenced on the date Government approval for tax exempt status for Honiara was granted, 10 June 2005. While this date would be retrospective, the proposed Regulations would not contravene subsection 12(2) of the Legislative Instruments Act 2003 since they are beneficial to the institution funds and to taxpayers making donations to them.

Details of the new Regulations are set out in Attachment A.

The Act specifies no conditions that need to be met before the power to make the new Regulations may be exercised.

The Regulations are administrative in nature, rather than regulatory, so are of a minor or machinery of government nature and do not substantially alter existing arrangements. Accordingly, a Regulation Impact Statement is not mandatory and has not been prepared.

As the Regulations are a machinery of government and do not substantially alter existing arrangements consultation was not required.

The Minute recommends that Regulations be made in the form proposed.

ATTACHMENT A

The Income Tax Assessment Amendment Regulations 2006 (No. 4)

Details of the regulations are as follows:

Regulation 1:       Names the regulations.

Regulation 2:       Provides that the regulations commence on gazettal.

Regulation 3:       Provides that Schedule 1 amends the Income Tax Assessment Regulations 1997.

Schedule 1:       Amendments

Item 1 lists one new institution as a prescribed institution in regulation 50-50.01 for the purposes of paragraph 50-50(c). The institution and its date of effect is: