Issued by authority of the Minister for Revenue
and Assistant Treasurer

Income Tax Assessment Act 1997

Income Tax Assessment Amendment Regulations 2006 (No. 5)

Section 909-1 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 are necessary or convenient to be prescribed for carrying out or giving effect to the Act.

The purpose of the Regulations is to amend regulation 51-5.01 to reflect the updated allowances contained in Defence Determination 2005/15 that are exempt from income tax.

Division 51 of the Act provides that certain items of ordinary and statutory income are exempt from income tax. Section 51‑5 contains a table that lists various payments in respect of members of the Defence Force that are exempt from income tax. Items 1.1 and 1.2 cover exempt amounts for members of the Defence Force of a kind prescribed in the Income Tax Assessment Regulations 1997 (the Principal Regulations).

Regulation 51-5.01 lists those allowances or bounties that are prescribed for the purposes of items 1.1 and 1.2 in section 51-5 of the Act. The descriptions of the allowances and bounties refer to Defence Determination under the Defence Act 1903 under which the allowance or bounty is payable, and the dates of application of the Determination.

Defence Determination 2005/15, issued on 20 May 2005, commenced on 31 May 2005 and replaced Defence Determination 2003/21. Defence Determination 2005/15 contains all the income tax exempt allowances currently available to Defence Force members. No new allowances have been created, although the allowance ‘reimbursement of education costs for a child’ has been split in Defence Determination 2005/15 and consequently is reflected in the Regulations as: ‘reimbursement of education costs for a child educated at the location of a members’ long-term posting overseas’, ‘reimbursement of education costs for a child educated in Australia while the member is on a long-term posting overseas’ and ‘reimbursement of education costs for a child while the member is resident in Australia’.

As a result, there are now nine allowances listed in the Principal Regulations rather than the seven previously listed.

1) separation allowance;

2) disturbance allowance;

3) rent allowance paid to a member without dependants or a member with dependants (separated) within the meaning of that Determination;

4) reimbursement of education costs for a child while the member is resident in Australia;

5) reimbursement in place of a child’s scholarship;

6) transfer allowance;

7) reimbursement of education costs for a child educated at the location of a member’s long-term posting overseas;

8) reimbursement of education costs for a child educated in Australia while the member is on a long-term posting overseas; and

9) deployment allowance.

Subsection 12(2) of the Legislative Instruments Act 2003 provides that a regulation, or a provision of regulations, has no effect if it would take effect before the date of notification, unless the rights or liabilities of a person (other than the Commonwealth) would not be disadvantaged. The Office of Legislative Drafting and Publishing has advised that the Regulations would not contravene subsection 12(2) and, therefore, the Regulations may be validly made.

Details of Regulations are as follows.

Regulation 1: Names Regulations.

Regulation 2: Provides that Regulations commence the day after they are registered.

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

Regulation 4 – Transitional: States that the Regulations do not affect an entitlement of a person that was created under regulation 51-5.01 of the Income Tax Assessment Regulations 1997 before the commencement of these Regulations.

Schedule 1 – Amendments (regulation 3)

Item 1 – Regulation 51‑5.01

Item 1 substitutes Regulation 51‑5.01 to prescribe the following allowances, paid on or after 31 May 2005:

1) separation allowance paid under Division 1 of Part 1 of Chapter 6;

2) disturbance allowance paid under Division 2 of Part 1 of Chapter 6;

3) rent allowance to a member without dependants or a member with dependants (separated) within the meaning of that Determination paid under Part 6 of Chapter 7;

4) reimbursement of education costs for a child while the member is resident in Australia paid under Part 4 of Chapter 8;

5) reimbursement in place of a child’s scholarship paid under Division 3 of Part 4 of Chapter 8;

6) transfer allowance paid under Division 3 of Part 3 of Chapter 14;

7) reimbursement of education costs for a child educated at the location of a member’s long-term posting overseas paid under Part 6 of Chapter 15;

8) reimbursement of education costs for a child educated in Australia while the member is on a long-term posting overseas paid under Part 6 of Chapter 15; and

9) deployment allowance paid under Division 1 of Part 9 of Chapter 17.

Item 1 also defines the meaning of Determination as Defence Determination 2005/15, Conditions of Service under the Defence Act 1903, as in force on 31 May 2005.

The Department of Defence and the Australian Taxation Office were consulted in the drafting of these Regulations.

The Regulations commenced the day after they were registered.

Delete RIS if not required.