Commonwealth Numbered Regulations - Explanatory Statements
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TAXATION ADMINISTRATION AMENDMENT REGULATION 2012 (NO. 3) (SLI NO 152 OF 2012)
EXPLANATORY STATEMENT
Select Legislative Instrument 2012 No. 152
Issued by authority of the Assistant Treasurer
Taxation Administration Act 1953
Taxation Administration Amendment Regulation 2012 (No. 3)
Section 18 of the Taxation Administration Act 1953 (the Act) provides that the Governor-General may make regulations prescribing matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act.
This Regulation sets the rate of withholding tax that applies to income derived by Seasonal Workers from participating in the Seasonal Labour Mobility Program (Program) at a flat rate of 15 per cent.
The Program is designed to:
• assist Australian horticulturalists to source Seasonal Workers;
• encourage both skills transfer between Australia and East Timor and the Pacific Islands, and remittances home to East Timor and the Pacific Islands; and
• support Australia's Pacific engagement strategy and partnership by providing access to the Australian labour market for workers from East Timor and the Pacific Islands.
In the 2012 Budget, the Government announced that it will reduce the marginal tax rate for non-resident individuals participating in the Program to 15 per cent, administered as a final withholding tax, and accordingly, this will mean that participants will not be required to lodge income tax returns.
Schedule 1 to the Tax Laws Amendment (2012 Measures No. 3) Act 2012 creates a new final withholding tax regime that applies to income derived by non-resident workers participating in the Program.
The formal imposition of income tax, and the establishment of the applicable rate of tax, is provided for by means of the Income Tax (Seasonal Labour Mobility Program Withholding Tax) Act 2012.
Subsection 15-10(2) of Schedule 1 to the Act provides that the amount required to be withheld from a payment under Subdivision 12-FC is to be worked out under the Regulation.
This Regulation specifies the rate for withholding on amounts paid to employees participating under the Program to be 15 per cent. Under a final withholding tax regime, the rate of tax does not increase (or decrease) with the amount of income earned from participating in the Program.
Details of the Regulation are set out in the Attachment.
The Act specifies no conditions that need to be satisfied before the power to make the Regulation may be exercised.
This Regulation is a legislative instrument for the purposes of the Legislative Instrument Act 2003.
A Regulation Impact Statement was not required as the changes are machinery-of-government in nature.
Consultation was not necessary in relation to this instrument because the Regulation is minor or machinery in nature and does not substantially change the law. Secondly, the Regulation does not affect the public at large as it only applies to Seasonal Workers participating in the Seasonal Labour Mobility Program and their approved employers.
The Regulation commenced to coincide with the commencement of Schedule 1 to the Tax Laws Amendment (2012 Measures No. 3) Act 2012.
Authority: Section 18 of the Taxation
Administration Act 1953
Statement of Compatibility with Human Rights
Prepared in accordance with part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Taxation Administration Amendment Regulation 2012 (No. 3)
This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the Legislative Instrument
The purpose of the Legislative Instrument is to set out the rate of withholding tax that applies to income derived by Seasonal Workers from participating in the Program at a flat rate of 15 per cent.
Human rights implications
This Legislative Instrument does not engage any of the applicable rights or freedoms.
Conclusion
This Legislative Instrument is compatible with human rights as it does not raise any human rights issues.
ATTACHMENT
Details of the Taxation Administration Amendment Regulation 2012 (No. 3)
Section 1 - Name of Regulation
This section provides that the title of the Regulation is the Taxation Administration Amendment Regulation 2012 (No. 3).
Section 2 - Commencement
This section provides for the Regulation to coincide with the commencement of Schedule 1 to the Tax Laws Amendment (2012 Measures No. 3) Act 2012.
Section 3 - Amendment of Taxation Administration Regulations 1976
This section provides that the Taxation Administration Regulations 1976 are amended as set out in the Schedule.
Schedule - Amendment
Item 1 - Regulation 44DA
Regulation 44DA specifies the rate of withholding tax to be 15 per cent on amounts paid as salary, wages, commission, bonuses or allowances under section 12-319A of Schedule 1 to the Act. This rate will only apply to a holder of a Special Program Visa (subclass 416) who is employed by an Approved Employer under the Seasonal Labour Mobility Program. This Regulation applies in relation to payments made on or after 1 July 2012.
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