Commonwealth of Australia Explanatory Memoranda Commonwealth of Australia Explanatory Memoranda[Index] [Search] [Download] [Bill] [Help]
2008
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
SENATE
TAX LAWS AMENDMENT (2008 MEASURES No. 1) BILL 2008
SUPPLEMENTARY EXPLANATORY MEMORANDUM
Amendments to be Moved on Behalf of the Government
(Circulated by the authority of the
Treasurer, the Hon Wayne Swan MP)
Glossary
The following abbreviations are used throughout this supplementary
explanatory memorandum.
|Abbreviation |Definition |
|GST Act |A New Tax System (Goods and |
| |Services Tax) Act 1999 |
|GST |goods and services tax |
|ITAA 1997 |Income Tax Assessment Act |
| |1997 |
General outline and financial impact
Amendment 2 - maintaining existing GST concessions for political parties,
independent members and independent candidates
Amendment 2 amends Schedule 1 to the Bill to ensure that political
parties, independent members and independent candidates will not
lose certain goods and services tax (GST) concessions as a
consequence of the removal of income tax deductibility for gifts or
contributions to these entities.
Date of effect: The changes made by Amendment 2 will commence when
Schedule 1 commences.
Proposal announced: Announced in Budget Paper No. 2 of the 2008-09
Budget.
Financial impact: This amendment has no financial impact.
Compliance cost impact: Low.
Amendments 1 and 3 - removal of Schedules 2 to 6
Amendment 3 removes Schedules 2 to 6 to the Bill. The amendments
in these Schedules were added to Tax Laws Amendment (2008 Measures
No. 2) Bill 2008 as Schedules 7 to 11 by amendment in the House of
Representatives on 14 May 2008.
Amendment 1 makes a consequential change to the commencement
provision of the Bill.
Date of effect: Not applicable.
Proposal announced: Not previously announced.
Financial impact: These amendments have no financial impact.
Compliance cost impact: Nil.
Chapter 1
Amendments to the Tax Laws Amendment (2008 Measures No. 1) Bill 2008
Explanation of amendments
Amendments 1 and 3
1. Amendment 3 opposes Schedules 2 to 6.
2. Amendment 1 omits the Commencement Table, which is replaced with
the words 'This Act commences on the day on which it receives the
Royal Assent'.
3. There is no longer a need for the Commencement Table, given
amendment 3, which opposes Schedules 2 to 6 to the Bill. The new
commencement provision preserves the effect of the existing
commencement provision for Schedule 1 (Political contributions and
gifts), namely the date on which the Bill receives Royal Assent.
Amendment 2
1. Items 3 and 9 of Schedule 1 to the Bill remove income tax
deductibility for donations to political parties and independent
members and independent candidates. As a result political parties,
independent members and independent candidates no longer meet the
definition of a 'gift-deductible entity' in section 195-1 of the A
New Tax System (Goods and Services Tax) Act 1999 (GST Act). As a
consequence political parties, independent members and independent
candidates lose certain goods and services tax (GST) concessions
available to gift-deductible entities in the GST Act. This
amendment restores the ability of political parties, independent
members and independent candidates to avail themselves of these GST
concessions.
2. The GST concessions in question enable gift-deductible entities to:
. hold GST-free raffles or bingo games;
. treat certain other fund-raising events as input-taxed;
. receive input tax credits for certain reimbursements made
to volunteer workers of the gift-deductible entity;
. make GST-free supplies for nominal consideration in
certain circumstances;
. make GST-free supplies of second-hand goods (where the
goods were donated to, or supplied to, the gift-deductible
entity GST-free by another gift-deductible entity);
. prevent donors requiring adjustments to their input tax
credits for making supplies to the entity;
. account for GST on a cash basis, regardless of turnover;
. treat branches of a gift-deductible entity, where the gift-
deductible entity is a non-profit body, as separate non-
profit sub-entities. This enables the branches to be
treated as separate entities for GST purposes. As a
result one or more sub-entities may fall below the GST
registration threshold for non-profit organisations when
the complete entity would exceed the registration
threshold; and
. assist a trust to form a GST group with other entities.
If a trust only makes distributions to a gift-deductible
entity or certain other entities, the trust may be able to
form a GST group with other entities. Intra group
transactions are generally ignored for GST purposes.
12. This amendment replaces the term 'gift-deductible entity' with the
term 'concessional entity' in the GST Act and defines a
concessional entity as an entity to which a taxpayer may make a
gift or contribution that is deductible to the taxpayer under
Division 30 of the Income Tax Assessment Act 1997 (ITAA 1997) or a
political party, independent member or independent candidate.
Concessional entities become entitled to the same GST concessions
under the GST Act as gift-deductible entities.
13. This amendment also inserts definitions of 'independent member' and
'independent candidate' into section 195-1 of the GST Act. These
definitions are intended to have a similar scope to the definitions
of 'independent member' and 'independent candidate' in Subdivision
30-DA of the ITAA 1997 that are repealed.
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