Commonwealth Numbered Regulations - Explanatory Statements

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INCOME TAX AMENDMENT REGULATIONS 2009 (NO. 1) (SLI NO 30 OF 2009)

EXPLANATORY STATEMENT Select Legislative Instrument 2009 No. 30 Issued by authority of the Assistant Treasurer

Income Tax Assessment Act 1936

Income Tax Amendment Regulations 2009 (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, prescribing all matters which by the Act are required or permitted to be prescribed, or are necessary or convenient to be prescribed for giving effect to the Act.

The purpose of this amendment is to enable uniform penalty provisions to apply to late lodgment of annual investment income reports. This will ensure that investment bodies that lodge their annual investment income reports after the due date may be liable to pay an administrative penalty as an alternative to being prosecuted through the court system under section 8C of the Taxation Administration Act 1953.

Subregulation 56(1) of the Income Tax Regulations 1936 is being amended to make it clear that annual investment income reports are ‘approved forms’ as defined by section 388-50 of Schedule 1 to the Taxation Administration Act 1953 (via subsection 6(1) of the Income Tax Assessment Act 1936). The amendment applies to reports due for the 2009-10 financial year onwards.

Annual investment income reports are prepared by investment bodies to provide the Commissioner of Taxation with details of investment income paid to investors (for example, dividends and interest) and movements in Farm Management Deposit amounts (deposits, transfers and repayments). They also provide details of amounts withheld from those payments where the investor has not quoted a tax file number, Australian Business Number or an exemption from quoting a tax file number. The types of investments are mentioned in section 202D of the Income Tax Assessment Act 1936.

Subsection 286-75(1) of Schedule 1 to the Taxation Administration Act 1953 imposes an administrative penalty for late lodgment of an ‘approved form.

The penalty provisions in the tax law were tied to the uniform penalty regime through the expression ‘approved form’, but it was unclear whether the Commissioner of Taxation could impose an administrative penalty on investment bodies that fail to lodge annual investment income reports. This is because the phrase ‘in a form approved by the Commissioner’ is not the phrase ‘the approved form’.

The Regulations are a legislative instrument for the purposes of the Legislative Instruments Act 2003.

The Regulations commence on 1 October 2010.


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