Commonwealth Numbered Regulations - Explanatory Statements

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Select Legislative Instrument 2010 No. 7


Income Tax Assessment Act 1936


Income Tax Amendment Regulations 2010 (No. 1)


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 required or permitted by those Acts to be prescribed, or necessary or convenient to be prescribed, for carrying out or giving effect to those Acts.


Item 87 in Schedule 1 to the Tax Laws Amendment (2009 Budget Measures No. 2) Act 2009 (the Budget Measures Act) provides that regulations made for the purposes of or relating to Division 83A of the ITAA 1997 may take retrospective effect from any time on or after 1 July 2009, provided the regulations are made within three months of the commencement of the Budget Measures Act (14 December 2009).


The purpose of these Regulations is to preserve the effect of a table item in the Income Tax Regulations 1936 (the Principal Regulations), by updating references to reflect the terminology in the new employee share scheme legislation.


The Treasurer announced in the 2009 Budget that the Australian Government (the Government) would better target eligibility for the employee share scheme tax concessions and reduce opportunities for tax avoidance.


On 1 July 2009, the Government issued a policy statement setting out the final policy for the taxation of employee share schemes. On 14 December 2009, the Bills to give effect to this policy received Royal Assent – the Budget Measures Act and the Income Tax (TFN Withholding Tax (ESS)) Act 2009.


These Regulations preserve the effect of table item 4 in regulation 20 to the Principal Regulations. Table item 4 provides that the Commissioner of Taxation (the Commissioner) may amend an individual taxpayer’s income tax assessment for up to four years (rather than two), if an employee share scheme integrity rule about share trading and investment companies is not met (subsection 83A-35(5) of the ITAA 1997). This ensures that the period over which the Commissioner can amend the taxpayer’s income tax assessment is aligned with the period over which he can amend the taxpayer’s employer’s income tax assessment.


No consultation was required for these Regulations are they are mechanical in nature, required to preserve the effect of an existing item in the Principal Regulations.


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


These Regulations are taken to have commenced on 1 July 2009, and when read with the ITAA 1997 apply to employee share scheme interests in relation to which an amount must be included in a taxpayer’s assessable income on or after 1 July 2009. As noted above, item 87 in Schedule 1 to the Budget Measures Act provides that the Regulations may take retrospective effect, despite subsection 12(2) of the Legislative Instruments Act 2003.



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