Bank Account Debits Tax Amendment Act 1987

Overview

The Bank Account Debits Tax Amendment Act 1987 was enacted to modify the Bank Account Debits Tax Act 1982, addressing issues related to the imposition and calculation of tax on debits made to bank accounts. The Act was passed by the Queen, with the assent of the Senate and the House of Representatives of the Commonwealth of Australia, on 5 June 1987. The principal objective of the amendment is to expand the scope of the tax to include debits made to accounts kept outside Australia, particularly those that might be used to circumvent the tax liability that would apply if the debits were made to accounts within Australia. This is achieved by broadening the definition of relevant accounts and adjusting the tax rates and brackets applicable to different amounts of debits. The amendments ensure the tax remains effective in preventing tax avoidance by applying to a wider range of financial transactions.

Scope and Application

The Bank Account Debits Tax Amendment Act 1987 amends the Bank Account Debits Tax Act 1982, extending the application of the tax to financial institutions other than banks, including building societies and credit unions, where certain conditions are met. This Act applies to debits made to accounts held by financial institutions, including those kept outside Australia, provided that the account is linked to an account held with a bank and a cheque can be drawn on the bank by the financial institution. The tax applies to debits of $1 or more made to taxable accounts, exempt accounts, and accounts kept outside Australia under specific conditions, such as when the account holder is an Australian resident and the account is used to avoid tax liability. The tax rates are set out in the Schedule to the Principal Act, with rates varying from 15 cents for debits less than $100 to $2.00 for debits of $10,000 or more. The amendments apply to debits made after the specified commencement dates outlined in the Act.

Key Provisions

The Bank Account Debits Tax Amendment Act 1987 primarily amends the Bank Account Debits Tax Act 1982 by updating the terminology and scope of the original Act. Section 1 of the Amendment Act cites it as the Bank Account Debits Tax Amendment Act 1987, while section 2 sets out its commencement schedule, with various sections coming into effect on different dates. The title of the Principal Act is altered in section 3 by changing "banks" to "financial institutions," thus broadening the scope of the Act to cover a wider range of financial entities. Section 4 modifies the short title of the Principal Act by omitting the word "Bank Account." The core changes introduced by this Amendment Act are found in sections 5 and 6, which insert a new section 3a into the Principal Act, defining a "non-bank account" as one held outside Australia with entities such as building societies or credit unions, provided certain conditions are met. This amendment broadens the scope of accounts subject to the tax to include those held outside Australia, provided they meet specific criteria. Section 7 repeals and replaces sections 4, 5, and 6 of the Principal Act, restructuring the imposition of tax to apply to taxable debits, eligible debits, and debits to accounts kept outside Australia under specific conditions. Section 8 introduces a new schedule detailing the tax rates for different ranges of debit amounts. The obligations imposed by this Act on financial institutions and individuals include maintaining records of debits and ensuring compliance with the tax provisions. Financial institutions must identify and report debits that fall within the specified ranges and categories as outlined in the new sections. Individuals and entities whose accounts are subject to the tax must ensure that any debits made to accounts kept outside Australia, particularly those meeting the criteria in section 3a, are appropriately reported and taxed. The Act also outlines specific penalties and consequences for non-compliance. Section 9 specifies that any failure to comply with the tax obligations or reporting requirements can result in civil or criminal penalties. The maximum penalties for tax evasion or failure to report debits as required can be severe, reflecting the importance of compliance with these provisions. For instance, individuals or entities found guilty of wilfully evading the tax or providing false information could face substantial fines or imprisonment, as determined by the relevant courts. These penalties serve as a deterrent against non-compliance and ensure the effective collection of the tax.