Commonwealth Numbered Regulations - Explanatory Statements

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INCOME TAX AMENDMENT REGULATIONS 2003 (NO. 1) 2003 NO. 204

STATUTORY RULES 2003 No. 204

Issued by authority of the Minister for Revenue and Assistant Treasurer

Income Tax Assessment Act 1936

Income Tax Amendment Regulations 2003 (No. 1)

Section 266 of the Income Tax Assessment Act 1936 (the Act) provides that the Governor-General may make regulations not inconsistent with the Act or the Income Tax Assessment Act 1997, prescribing all matters which by the 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 the 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 Income Tax Regulations 1936 (the Principal 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 as declared in the Principal Regulations. The certificate comes into force at the later of either the time specified in the certificate or the time the person arrives for duty in the specified area. The certificate continues to be in force until the earliest of the time of departure from the specified area, the date of revocation of the certificate 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.

Regulation 7A of the Principal Regulations specifies duty with various organisations in various areas outside Australia and declares that to be eligible duty for the purposes of section 23AD of the Act.

The amending regulations declare that:

•       duty with the United Nations Mission of Support in East Timor (UNMISET) in the specified area of operations (generally in East Timor) is eligible duty on or after 20 May 2002; and

•       duty with Operation Falconer in the specified area of operations (generally in the Persian Gulf) is eligible duty on or after 18 March 2003.

The ADF members serving in East Timor were previously deployed in support of the United Nations Transitional Administration in East Timor (UNTAET) and the International Force for East Timor (INTERFET). Exemptions for eligible duty with UNTAET and INTERFET were declared for ADF members so deployed. The amending regulations that declare duty with UNMISET as eligible duty is necessary as a consequence of East Timor becoming independent on 20 May 2002 and as a consequence of the change in name of the UN mission in East Timor.

The ADF members serving in the Persian Gulf were deployed in March 2003 on Operation Falconer in support of the coalition forces. The amending regulations that declare duty with Operation Falconer as eligible duty is necessary because the Minister for Defence declared that service with Operation Falconer in the specified area of operations (generally in the Persian Gulf) to be `warlike' service for the purposes of section 23AD of the Act.

Eligible duty for ADF members deployed with UNMISET commences on or after 20 May 2002. Similarly, eligible duty for ADF members deployed with Operation Falconer commences on or after 18 March 2003. Subsection 48(2) of the Acts Interpretation Act 1901 (AIA) 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. Exemption from income tax for ADF members on eligible duty is clearly to their advantage. Therefore the amending regulations are not subject to subsection 48(2) of the AIA and are validly made.

Details of regulations are as follows.

Regulation 1: Names regulations.

Regulation 2: Provides that regulations commence on gazettal.

Regulation 3: Provides that the Income Tax Regulations are amended as set out in these regulations, by inserting Regulation 7A(f) to prescribe the following duty to be eligible duty:

(f)       duty with the UNMISET in either or both of:

(i)       East Timor; and

(ii)       the territorial sea of East Timor;

on or after 20 May 2003;

(g)       duty with Operation Falconer, on or after 18 March 2003 within the area bounded by the following geographical coordinates:

•       38 00'N 68 00'E

•       38 00'N 32 00'E

•       10 00'N 32 00'E

•       10 00'N 68 00'E

The regulations commenced on gazettal.