Commonwealth Numbered Regulations - Explanatory Statements

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INCOME TAX REGULATIONS (AMENDMENT) 1996 NO. 185

EXPLANATORY STATEMENT

STATUTORY RULES 1996 No. 185

Issued By Authority Of The Assistant Treasurer

Income Tax Assessment Act 1936

Income Tax Regulations (Amendment)

Section 266 of the Income Tax Assessment Act 1936 (the Act) provides that the GovernorGeneral may make regulations prescribing matters required to give effect to the Act.

These regulations amend the Income Tax Regulations by inserting amended regulation 14E, which prescribes Government schemes for the purposes of subsection 160L(6A) of the capital gains tax (CGT) provisions of the Act.

Subsection 1601(6A) provides that CGT will not apply to payments and reimbursements made under certain government schemes. A scheme covered by subsection 160L(6A) must be established by the Commonwealth, a State or a Territory or by an authority of the Commonwealth, a State or a Territory. In addition, the scheme must be prescribed in the regulations.

Amended regulation 14E, proposed by regulation , contains the following changes:

*       The General Practice Rural Incentives Program, previously administered by the Commonwealth Department of Human Services and Health, is now administered by the Commonwealth Department of Health and Family Services (paragraph 14E(1)(a)). The aim of this program is to attract and retain general practitioners in rural communities in Australia. Relocation grants, in the form of a reimbursement, are one form of assistance available under this program. As stated above, the right to reimbursement is an asset under the COT provisions and thus can attract a CGT liability. By subregulation 14E(2), paragraph 14E(1)(a) will apply to disposals of assets on or after 1 July 1992;

*       The Sydney Aircraft Noise Insulation Project, administered by the Commonwealth Department of Administrative Services and the Department of Transport and Regional Development, is prescribed as a scheme to which subsection 160L(6A) applies (paragraph 14E(1)(b)). The scheme provides acoustic insulation treatment for residences in areas most affected by aircraft noise. Under this scheme, a home owner has the right to have their expenses paid by the relevant Department. This right is again an asset under the CGT provisions and thus can attract a CGT liability. By subregulation 14E(3), paragraph 14E(1)(b) will apply to disposals of assets on or after 8 December 1994.