Commonwealth of Australia Explanatory Memoranda

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TAX LAWS AMENDMENT (POLITICAL CONTRIBUTIONS AND GIFTS) BILL 2010

2008-2009




               THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA








                          HOUSE OF REPRESENTATIVES








      Tax Laws amendment (political contributions and gifts) 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)






Table of contents


General outline and financial impact    5


Chapter 1    Amendments to the Tax Laws Amendment (Political Contributions
              and Gifts) Bill 2008 7






General outline and financial impact

Amendments to the Tax Laws Amendment (Political Contributions and Gifts)
Bill 2008


         These amendments will maintain the effect of the existing law for
         individuals who make a political gift or contribution, but not
         those individuals who make the gift or contribution in the course
         of carrying on a business.  Those non-business individuals will
         continue to be able to claim a deduction for political gifts or
         contributions up to $1,500.


         These amendments have the effect of adjusting the Bill so that it
         only removes deductions for political donations made by businesses
         or made by individuals in the course of carrying on a business.


         Date of effect:  The amendments apply from the beginning of the
         2008-09 income year.


         Proposal announced:  Not previously announced.


         Financial impact:  The amendments have the following revenue
         impact:

|2007-08   |2008-09   |2009-10   |2010-11   |2011-12   |
|Nil       |Nil       |-$6.5m    |-$6.6m    |-$7.2m    |


         Compliance cost impact:  Nil.






Chapter 1
Amendments to the Tax Laws Amendment (Political Contributions and Gifts)
Bill 2008

Amendment 1


      1. Amendment 1 removes the proposed amendments to the A New Tax System
         (Goods and Services Tax) Act 1999.  As the amendments reinstate the
         ability of non-business individuals to claim deductions for gifts
         or contributions to political parties and independent members and
         candidates, the amendments to goods and services tax rules are no
         longer required.  The Income Tax Assessment Act 1997 will retain
         the definitions and concepts that were being replicated in the A
         New Tax System (Goods and Services Tax) Act 1999.


      2. Amendment 1 will also remove a consequential amendment to the
         Income Tax Assessment Act 1936.  These amendments are no longer
         necessary as non-business individuals will still be able to claim
         deductions for gifts or contributions to political parties and
         independent members and candidates.


Amendments 2 to 5


      3. Amendments 2 to 5 reverse the repeal of Subdivision 30-DA of the
         Income Tax Assessment Act 1997 (about deductions for political
         gifts and contributions) and the associated consequential
         amendments to the Income Tax Assessment Act 1997.


      4. Amendment 4 amends Subdivision 30-DA to limit its application.
         Gifts or contributions to political parties and independent members
         and candidates will only be tax deductible for individuals.


      5. However, those individuals will not get a deduction if the gift or
         contribution is made in the course of them carrying on a business.
         That is, the gift or contribution must be made in their personal
         capacity.


      6. Amendment 3 alters the proposed section 26-22 of the Income Tax
         Assessment Act 1997 (about denying general deductions for political
         gifts or contributions) to ensure that it does not prevent a
         deduction that is allowed under the amended Subdivision 30-DA.