Commonwealth Numbered Regulations - Explanatory Statements

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Issued by authority of the Assistant Treasurer

Income Tax Assessment Act 1936

Income Tax Amendment Regulations 1999 (No. 1)

Section 266 of the Income Tax Assessment Act 1936 (the Act) provides that the GovernorGeneral may make regulations for giving effect to the Act.

The purpose of the regulations is to amend subregulation 119(3) of the Income Tax Regulations 1936 (the regulations) which lists the information that a group employer must include on an employee's group certificate.

The need for the amendment arises from the A New Tax System (Fringe Benefits Reporting) Act 1999, which implements the first phase of reforms to fringe benefits tax (FBT) as part of the Government's broader tax reform initiative. Under the legislation all employers are required, from the 1999-2000 FBT year of tax, to report fringe benefits on employees' group certificates.

At present, the group certificate provisions within the regulations do not require employers to disclose employee fringe benefits on group certificates. This reflects the previous FBT law which did not require employers to apportion fringe benefits to individual employees. To supplement the new FBT reporting legislation, subregulation 119(3) now requires an employee's reportable fringe benefits amount for a FBT year of tax to be shown on a group certificate issued for the corresponding income year. An employee will have a reportable fringe benefits amount where the total taxable value of benefits they receive in a FBT year exceeds $1000.

The rationale for this measure is to improve the equity of the tax and social security systems. By reporting most fringe benefits received by an employee on their group certificate, the employee's total remuneration will be taken into account when determining their liability to tax surcharges, entitlement to income-tested government benefits and concessions, child support obligations and higher education contributions scheme (HECS) repayments.

The regulations apply to group certificates issued for the 1999-2000 year of income and all later years.

The regulations commenced on gazettal.

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