Commonwealth Numbered Regulations - Explanatory Statements

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INCOME TAX AMENDMENT REGULATIONS 2002 (NO. 2) 2002 NO. 45

EXPLANATORY STATEMENT

STATUTORY RULES 2002 No. 45

Issued by authority of the Minister for Revenue and Assistant Treasurer

Income Tax Assessment Act 1936

Income Tax Amendment Regulations 2002 (No. 2)

The Governor-General may make regulations under section 266 of the Income Tax Assessment Act 1936 (the Act) for the purposes of the Act.

The Regulations have maintained the increases in the rebate amounts for senior Australians provided for the 2000-2001 year of income and made technical amendments.

The regulations provide a rebate amount of $2,230 for all single senior Australians, $2,040 for senior Australians who are taken to be a member of a couple but separated due to illness and $1,602 for senior Australians taken to be a member of a couple (the difference between the two latter rebates is due to differing pension levels).

Given current tax rates and thresholds, and together with the low income rebate, these rebate amounts mean that single senior Australians will continue to pay no income tax provided their taxable income does not exceed $20,000. Similarly, senior Australians who are taken to be a member of a couple but separated due to illness, will continue to pay no income tax provided they each have taxable income that does not exceed $18,882. Senior Australians taken to be a member of a couple will continue to pay no income tax provided they each have taxable income of $16,306 or less.

The Regulations have also made technical amendments. Regulation 150 of the Income Tax Regulations 1936 (the principal Regulations) was originally inserted to provide a rebate for taxpayers who were of age pension age but did not receive an age or service pension (selffunded retirees). The Government announced its intention in the 2001-2002 Federal Budget to significantly increase the rebate available to senior Australians with effect from the 2000-2001 year of income. This involved amending the principal Regulations to move age and service pensioners to regulation 150.

Regulation 150 still referred to the equivalent circumstances income limit which referred to pensioners who were not originally covered by this regulation. Since the taxpayers affected by the regulation expanded to include those pensioners, the reference to the equivalent circumstances income limit was no longer appropriate.

The Regulations commence on gazettal and apply to the 2001-2002 year of income and later years of income. As the regulations apply to the 2001-2002 year of income they have a retrospective effect. Subsections 160AAAA(5) and 160AAAB(6) of the Act provide that the Regulations may apply to a year of income any part of which occurred before the notification of this regulation.

Details of the Regulations are in the Attachment.

ATTACHMENT

Income Tax Amendment Regulations 2002 (No. 2)

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 Regulations 1936.

Schedule 1: The regulations have removed the redundant term 'equivalent circumstances income limit' and provided actual rebate amounts for senior Australians.

Item 1

The references to equivalent circumstances income limit and rebate amount are no longer required and are therefore removed.

Item 2

The reference in subregulation 150AB(1) to subsection 160AAA(3) of the Act has been replaced by subsection 160AAAB(3) of the Act to correct an error in numbering.

Item 3

Subregulations 150AB(2) and (2A) have been removed so that the various amounts of the rebate do not require a series of additions to calculate the total rebate amounts. The rebate amounts are now specified in a table in substituted subregulation 150AB(2). Substituted subregulation 150AB(2A) provides definitions of the classes of persons listed in the table in subregulation 150AB(2). Subregulation 150AB(2B) provides the greatest rebate entitlement for a taxpayer who is a member of more than one class in the table.

Item 4

The definition of rebate amount for the purposes of subregulation 150AB(3) is contained solely in substituted subregulation 150AB(2). The reference to subregulation 150AB(2A) is omitted.

Item 5

Regulation 150AC has been removed as it refers to equivalent circumstances income limits for senior Australians. The regulation was originally inserted to provide a rebate for low income taxpayers who were of age pension age but did not receive an age or service pension. Now that the rebate also applies to age and service pensioners the reference to equivalent circumstances income limits is no longer appropriate.

Items 6 and 7

Subregulations 150AE(8) and (9) and 150AF(8) and (9) are omitted as a consequence of the removal of regulation 150AC which referred to the equivalent circumstances income limit.


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