Commonwealth Numbered Regulations - Explanatory Statements

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INCOME TAX AMENDMENT REGULATIONS 2002 (NO. 1) 2002 NO. 44

EXPLANATORY STATEMENT

STATUTORY RULES 2002 No. 44

Issued by authority of the Minister for Revenue and Assistant Treasurer

Income Tax Assessment Act 1936

Income Tax Amendment Regulations 2002 (No. 1)

Section 266 of the Income Tax Assessment Act 1936 (the Act) provides that the GovernorGeneral may make regulations not inconsistent with this Act or the Income Tax Assessment Act 1997, prescribing all matters which by this Act or the Income Tax Assessment Act 1997 are required or permitted to be prescribed, or which are necessary or convenient to be prescribed for giving effect to this Act or the Income Tax Assessment Act 1997.

Section 23AD of the Act provides an exemption from income tax of pay and allowances of Australian Defence Force (ADF) members performing certain overseas duty.

Subsection 23AD(2) of the Act provides that the Regulations may declare that duty with a specified organisation in a specified area outside Australia after a specified day is eligible duty for the purposes of section 23AD.

Subsection 23AD(1) of the Act exempts the pay and allowances earned by ADF members where there is a certificate in force, issued in writing by the Chief of the Defence Force, that the members are on eligible duty. The certificate comes into force at the later of the time specified in the certificate and the time the person arrives for duty in the specified area. The certificate continues to be in force until the earliest of either the time of departure from the specified area, the date of revocation or a time prescribed by regulation (subsection 23AD(3)) and is in force during any period of hospital treatment during the person's eligible duty.

The purpose of the amending Regulations is to amend the Income Tax Regulations 1936 (the Principal Regulations) to declare eligible duty to enable the pay and allowances received by ADF members, recently deployed to Afghanistan and related areas as part of the US-led coalition forces, to be exempt from income tax under section 23AD of the Act.

In October 2001, ADF members were deployed to Afghanistan at sea or in air space outside the land area of operations as part of the US-led coalition forces on Operation Slipper. The Government agreed to provide an exemption from income tax under section 23AD of the Act for the pay and allowances earned by ADF members deployed on Operation Slipper within certain specified areas. The amending Regulations amend Regulation 7A of the Principal Regulations to declare that duty with Operation Slipper within certain specified areas on or after 11 October 2001 is eligible duty for the purposes of subsection 23AD(2).

Similar regulations were made in relation to ADF members who served in East Timor with the International Force East Timor (INTERFET) and the United Nations Transitional Administration East Timor (UNTAET).

This amendment to the Income Tax Regulations 1936 prescribes eligible duty.

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 the Income Tax Regulations are amended as set out in these Regulations, by inserting Regulation 7A(e) to prescribe the following duty to be eligible duty.

Duty with Operation Slipper within at least 1 of the following specified areas, on or after 11 October 2001:

(i)       the area bounded by the following geographical coordinates:

•       48°00'N      81°00'E;

•       48°00'N      35°00'E;

•       12°00'N      35°00'E;

•       12°00'N      81°00'E;

(ii)       the Diego Garcia land mass and territorial waters; and

(iii)       the greater of:

(A)       the airspace of Diego Garcia for a radius of 250 nautical miles from Reference Point Point 07°18.6'S 072°24.6'E; and

(B)       the declared Air Defence Identification Zone for Diego Garcia.


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