Commonwealth Numbered Regulations - Explanatory Statements

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INCOME TAX AMENDMENT REGULATIONS 2003 (NO. 3) 2003 NO. 262

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

The purpose of the Regulations is to align the calculation of the beneficiary rebate, allowed under section 160AAA of the ITAA 1936, with the new personal income tax thresholds applying to the 2003-2004 year of income and later years of income.

The payments to which the beneficiary rebate applies are listed in the definition of 'rebatable benefit' in subsection 160AAA(1) of the ITAA 1936 and include a number of Centrelink payments and allowances and Commonwealth education allowances, for example Newstart allowance, sickness allowance and Austudy payments. The beneficiary rebate is calculated in accordance with Regulation 152 of the Income Tax Regulations 1936 (the Principal Regulations).

It is the Government's intention that the rates and thresholds used in the calculation of the beneficiary rebate are aligned with the personal income tax rates and thresholds. The Government, in the 2003-2004 Federal Budget, announced its intention to increase all personal income tax thresholds, other than the tax-free threshold, with effect from 1 July 2003. The personal income tax thresholds were increased in the Taxation Laws Amendment (Personal Income Tax Reduction) Act 2003.

The amending Regulations amend Subregulation 152(1) of the Principal Regulations to ensure that the new personal income tax thresholds are used in the calculation of the beneficiary rebate for the 2003-2004 year of income and later years of income.

The proposed Regulations commenced on 1 July 2003 and apply for the 2003-2004 income year and later years. Subsection 160AAA(5) of the ITAA 1936 allows the amending Regulations to be notified at any time during an income year to which the Principal Regulations will apply. As the beneficiary rebate is only available on assessment, i.e. after 30 June 2004, and provides a benefit, taxpayers will not be adversely affected by the retrospective commencement of the proposed Regulations.

The retrospective commencement of the proposed Regulations do not contravene subsection 48(2) of the Acts Interpretation Act 1901 (AIA 1901). Subsection 48(2) of the AIA 1901 prohibits the retrospective operation of regulations, or a provision of regulations, which adversely affect the rights of, or impose liabilities on, a person other than the Commonwealth in respect of anything done or omitted to be done before the date of notification.