Commonwealth Numbered Regulations - Explanatory Statements

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INCOME TAX ASSESSMENT AMENDMENT REGULATIONS 2008 (NO. 4) (SLI NO 131 OF 2008)

EXPLANATORY STATEMENT Select Legislative Instrument 2008 No. 131

 

Issued by authority of the Assistant Treasurer

Income Tax Assessment Act 1997

Income Tax Assessment Amendment Regulations 2008 (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 proposed Regulations is to update the requirements relating to private health insurance statements as a consequence of the enactment of the Private Health Insurance Act 2007 (the PHI Act). These amendments would apply for the 2007‑08 income year and later income years.

The PHI Act replaced and updated the regulatory regime for the private health insurance sector previously set out in the Private Health Insurance Incentives Act 1998.

Individuals who purchase private health insurance policies from private health insurers, defined in the Private Health Insurance Act 2007, are able to claim a reduction in the cost of their premiums. There are three different ways this reduction can occur — as an upfront reduction in a private health insurance premium; as a direct cash payment at Medicare offices; or through the Private Health Insurance Tax Offset (PHITO). The calculation and eligibility criteria of the three methods are designed to be consistent with each other.

Subdivision 61-G (formerly 61-H) of the Act gives effect to the PHITO. For individuals to receive the PHITO, a health fund must issue a written statement to the policy holder. That requirement is set out in Division 61 of the Income Tax Assessment Regulations 1997 (the Principal Regulations).

Regulation 61-330.01 of the Principal Regulations currently sets out the requirements for written statements to policy holders issued by private health insurers and the relevant penalties for providing incorrect and/or incomplete information. In order to maintain consistency in the numbering of the Principal Regulations and the Act, the proposed Regulations would repeal regulation 61-330.01 and replace it with 61‑220.01. The new regulation would have the same effect as the previous regulation, except that it would reflect the consequential changes resulting from the PHI Act.

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

The Regulations would be a legislative instrument for the purposes of the Legislative Instruments Act 2003. The Regulations would commence on 1 July 2008.


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