Income Tax Amendment Regulation 2012 (No. 1)

Administered by Department of the Treasury

Legislation au F2012L01090 Regulations Not in force Legislative Instrument

Select Document

EXPLANATORY STATEMENT

Select Legislative Instrument 2012 No. 91

Issued by authority of the Treasurer

Income Tax Assessment Act 1936

Income Tax Amendment Regulation 2012 (No. 1)

Section 266 of the Income Tax Assessment Act 1936 (the Act) provides, in part, that the Governor-General may make regulations not inconsistent with the Act, prescribing all matters which by the Act are required to be prescribed, or necessary or convenient to be prescribed for giving effect to the Act.

The purpose of the amending Regulation was to take account of the legislative amendments to the personal income tax rates and thresholds, which were part of the Government’s Clean Energy Future Plan.

The amending Regulation amended the Income Tax Regulations 1936 (the Principal Regulations) to: reflect the merger of the pensioner tax offset (PTO) and the senior Australians tax offset (SATO) into the new seniors and pensioners tax offset (SAPTO); amend the way in which the offset amount for the beneficiary tax offset (BTO) is calculated; and amend the way in which the amount of SAPTO that can be transferred between one eligible member of a couple and another is determined.

This change means that from 1 July 2012: taxpayers who received the SATO or PTO will instead receive the SAPTO; taxpayers who are eligible for BTO will receive the same amount of BTO under the new personal income tax rates and thresholds in 2012‑13 as under the current personal income tax rates and thresholds; and the maximum amount of SAPTO that one eligible member of a couple can transfer to another will remain the same.

Section 160AAA of the Income Tax Assessment Act 1936 (ITAA 1936) provides for the PTO and BTO. Subsection 160AAA(2) allows recipients of certain pensions, allowances and benefits under the Social Security Act 1991 and the Veterans’ Entitlements Act 1986, which are known as ‘rebatable pensions’, to receive the PTO. Subsection 160AAA(3) provides for the BTO, which is an offset for recipients of particular allowances that fall within the definition of ‘rebatable benefit’ in subsection 160AAA(1).

The amount of PTO a person is entitled to receive is determined under Division 2 of Part 8 of the Principal Regulations. The amount varies depending on the person’s ‘rebate income’ and the rate of pension they are receiving.

The amount of SATO an individual is entitled to receive is determined under Regulations 150AB and 150AD of the Principal Regulations. Regulations 150AE and 150AF of the Principal Regulations allow unused amounts of the offset to be transferred to a person’s spouse if that spouse is entitled to the SATO.

The amount of BTO a person is entitled to receive is determined under Division 3 of Part 8 of the Principal Regulations.

Section 160AAAA of the ITAA 1936 allows a person qualified for the Age Pension under the Social Security Act 1991, who is not in jail for the whole year, to receive the SATO. The maximum amounts of SATO that a person can claim are specified in Subregulation 150AB(2) of the Principal Regulations. The amount of SATO a person is entitled to receive is determined under Division 1A of Part 8 of the Principal Regulations. Pursuant to Regulations 150AE and 150AF of the Principal Regulations, unused amounts of SATO can be transferred to a person’s spouse if that spouse is also entitled to the SATO.

The Clean Energy (Tax Laws Amendments) Act 2011 amended the ITAA 1936 to merge the PTO and the SATO into the new SAPTO. The Clean Energy (Income Tax Rates Amendments) Act 2011 amended the Income Tax Rates Act 1986 to increase the tax-free threshold and the first two marginal tax rates. The amending Regulation amended the Income Tax Regulations 1936 to ensure that taxpayers who receive the SAPTO or the BTO do not pay any more tax as a result of these changes to the Income Tax Rates Act 1986 and the ITAA 1936.

The details of the amending Regulation are given in Attachment A.

As a result of the amending Regulation: a part‑rate pensioner who is below Age Pension age, and who has taxable income of $40,000 will pay around $280 less tax in 2012‑13 compared to 2011‑12; there will be no change to the amount of BTO that a person can claim in 2012‑13 compared to 2011‑12; and there will be no change to the maximum amount of unused offset that a senior Australian can transfer to their spouse in 2012‑13 compared to 2011‑12.

No consultation was undertaken as the amendments are minor and machinery in nature.

The Regulation Impact Statement (RIS) for the mechanism, entitled Australia’s plan for a clean energy future, is available at http://ris.finance.gov.au. The RIS was prepared by the Department of Climate Change and Energy Efficiency and has been assessed as adequate by the Office of Best Practice Regulation.

A statement of compatibility with human rights is provided at Attachment B.

The amending Regulation commenced on the commencement of Schedule 3 of the Clean Energy (Tax Laws Amendments) Act 2011.

ATTACHMENT A

The details of the amending Regulation are as follows:

Section 1 — Name of regulation

This provides that the Regulation is called the Income Tax Amendment Regulation 2012 (No. 1).

Section 1 — Commencement

This provides that these Regulations will commence on the commencement of Schedule 3 to the Clean Energy (Tax Laws Amendments) Act 2011.

Section 1 — Amendment of Income Tax Regulations 1936

This provides that Schedule 1 amends the Income Tax Regulations 1936 (the Principal Regulations).

Schedule 1 Amendments

Item 1

Item 1 of the amending Regulation changed the heading of Part 8 of the Principal Regulations to indicate that this Part concerns the SAPTO and the BTO.

Items 2, 3 and 4

Items 2 and 3 of the amending Regulation amended Regulation 148 of the Principal Regulations to omit definitions for ‘illness-separated-rate social security pension’, ‘member of a couple’, and ‘partner and partnered-rate social security pension’, and to substitute the current definition for ‘rebatable benefit and rebatable pension’ with a definition for ‘rebatable benefit’, because these definitions pertained to provisions used to calculate the amount of PTO that have been repealed by this Regulation.

Item 4 of the amending Regulation amended Regulation 148 of the Principal Regulations to update the definition for ‘tax‑free threshold’ so that it has the same meaning as in the Income Tax Rates Act 1986.

Item 5

Item 5 of the amending Regulation amended Subregulation 149(2) to omit the reference to Division 2 of Part 8 of the Principal Regulations, as Division 2 has been omitted by the Regulation.

Items 6, 11, 13 and 14

Items 6, 11, 13 and 14 of the amending Regulation amended Regulation 150AA, paragraph 150AE(1)(a)(ii), paragraph 150AE(1)(aa)(ii), 150AE(2)(a)(ii), and paragraph 150AE(3)(a)(ii) to simplify and improve the readability of the Principal Regulations. These amendments will not alter the operation of the Principal Regulations.

Item 7

Item 7 of the amending Regulation amended Subregulation 150AB (3A) to take account of the changes to the second marginal tax rate threshold and the changes to the low-income tax offset (LITO), as amended by the Clean Energy (Tax Laws Amendment) Act 2011 and the Clean Energy (Income Tax Rates Amendments) Act 2011. This means that the rebate threshold for the SAPTO will continue to be the determined so that the SAPTO is not withdrawn before the effective tax‑free threshold is reached.

Item 8

Item 8 of the amending Regulation amended Subregulation 150AB(5) to change the definitions of ‘illness separated couple’ and ‘member of a couple’, so that they have the same meaning as in the Social Security Act 1991 and in the Veterans’ Entitlement Act 1986.

Item 9

Item 9 of the amending Regulation changed the heading of Regulation 150AD to reflect the merger of the PTO and SATO into the SAPTO.

Items 10, 16 and 20

Items 10, 16 and 20 of the amending Regulation repealed paragraph 150AD(a), Subregulation 150AE(5), Subregulation 150AE(6), Subregulation 150AF(5), and Subregulation 150AF(6), as these provisions are in relation to prior income years that are significantly outside the amended income tax assessment period.

Items 12, 15, 17, 18, 19 and 21

Items 12, 15, 17, 18, 19 and 21 of the amending Regulation amended paragraph 150AE(2)(b), paragraph 150AE(4)(b), paragraph 150AF(2)(b) and paragraph 150AF(4)(b), and inserted Subregulation 150AE(11), Subregulation 150AE(12), Subregulation 150AF(8), and Subregulation 150AF(9) to take account of the changes to the personal income tax rates and thresholds and the changes to the LITO, as amended by the Clean Energy (Tax Laws Amendment) Act 2011 and the Clean Energy (Income Tax Rates Amendments) Act 2011. This means that the amount of unused offset that one SAPTO recipient can transfer to their spouse in future income years will be the same as the amount of unused offset that one SATO recipient can currently transfer to their spouse in 2011‑12.

Item 22

Item 22 of the amending Regulation omitted Division 2 of Part 8 of the Principal Regulations, as this Division relates to the calculation of entitlement to the PTO, which is being merged into the SAPTO.

Item 23

Item 23 of the amending Regulation changed the heading of Division 3 of Part 8 of the Principal Regulations to make it consistent with the heading of Division 1A, which directly refers to the relevant provision in the ITAA 1936.

Item 24

Item 24 of the amending Regulation amended Subregulation 152(2) and Subregulation 152(3) to take account of the changes to the personal income tax rates and thresholds and the changes to the LITO, as amended by the Clean Energy (Tax Laws Amendment) Act 2011 and the Clean Energy (Income Tax Rates Amendments) Act 2011. This means that taxpayers who are eligible for BTO will receive the same amount of BTO under the new personal income tax rates and thresholds in 2012‑13 as under the current personal income tax rates and thresholds.

ATTACHMENT B

Overview

The Income Tax Amendment Regulation 2012 (No. 1) was enacted to address the legislative amendments to personal income tax rates and thresholds that were introduced as part of the Government’s Clean Energy Future Plan. This regulation was issued under the authority of the Treasurer and made pursuant to section 266 of the Income Tax Assessment Act 1936, which allows the Governor-General to make regulations necessary or convenient to give effect to the Act. The objective of this regulation was to ensure that the changes to the tax rates and thresholds did not adversely affect the tax outcomes for recipients of the seniors and pensioners tax offset (SAPTO) and the beneficiary tax offset (BTO). Specifically, the regulation aimed to merge the pensioner tax offset (PTO) and the senior Australians tax offset (SATO) into the new SAPTO, revise the calculation of the BTO, and determine the amount of SAPTO that can be transferred between eligible members of a couple. The regulation also aimed to maintain the tax-free threshold and the first two marginal tax rates, ensuring that taxpayers who receive the SAPTO or BTO would not pay more tax as a result of the legislative changes. This was achieved by amending the Income Tax Regulations 1936 to reflect these changes and ensure consistency with the new tax rates and thresholds. The regulation took effect from the commencement of Schedule 3 of the Clean Energy (Tax Laws Amendments) Act 2011, and the amendments were considered minor and of a machinery nature, thus no formal consultation was undertaken. The Regulation Impact Statement for the Clean Energy Future Plan is available for review, and the regulation was deemed compatible with human rights.

Scope and Application

The Income Tax Amendment Regulation 2012 (No. 1) applies to taxpayers and their representatives who are affected by the changes to the personal income tax rates and thresholds, particularly those who receive the seniors and pensioners tax offset (SAPTO) or the beneficiary tax offset (BTO). These regulations are applicable nationally across Australia, aligning with the legislative amendments enacted under the Clean Energy Future Plan. The regulations amend the Income Tax Regulations 1936 to reflect the merger of the pensioner tax offset (PTO) and the senior Australians tax offset (SATO) into the SAPTO, adjust the calculation of the offset amount for the BTO, and determine the amount of SAPTO that can be transferred between eligible members of a couple. Notably, the regulation ensures that taxpayers who received the SATO or PTO will instead receive the SAPTO, and that the maximum amount of SAPTO that one eligible member of a couple can transfer to another will remain unchanged. The amendments ensure that taxpayers who are eligible for BTO will receive the same amount of BTO under the new personal income tax rates and thresholds in 2012-13 as under the current personal income tax rates and thresholds.

Key Provisions

The Income Tax Amendment Regulation 2012 (No. 1) amends the Income Tax Regulations 1936 to reflect legislative changes pertaining to the personal income tax rates and thresholds as part of the Clean Energy Future Plan. These changes include the merger of the pensioner tax offset (PTO) and the senior Australians tax offset (SATO) into the new seniors and pensioners tax offset (SAPTO), adjustments to the calculation of the beneficiary tax offset (BTO), and changes to the transferability of SAPTO between eligible members of a couple. The Regulation ensures that taxpayers receiving the SAPTO or the BTO will not face increased tax liabilities as a result of these changes. Under the amending Regulation, taxpayers who were previously eligible for the PTO or SATO will now receive the SAPTO. The amount of SAPTO an individual is entitled to is determined by their 'rebate income' and the rate of pension they are receiving. Furthermore, the Regulation allows for the transfer of unused SAPTO between eligible members of a couple, with the maximum amount of offset that can be transferred remaining unchanged. The BTO amount is also adjusted to reflect the new personal income tax rates and thresholds, ensuring that eligible taxpayers receive the same BTO amount in 2012-13 as they would under the current rates. The amending Regulation imposes specific obligations on taxpayers and the ATO. Taxpayers must ensure they are aware of their entitlement to the SAPTO or BTO and correctly calculate their tax liability under the new provisions. The ATO is responsible for administering the amended Regulations and ensuring compliance by taxpayers. This includes updating relevant forms, guidelines, and systems to reflect the new provisions and providing necessary information to taxpayers. Breaches of the amended Regulations may lead to civil or criminal penalties, depending on the nature and severity of the violation. For instance, providing false or misleading information to the ATO, which may result in an incorrect assessment or a tax benefit, could lead to criminal charges under the Income Tax Assessment Act 1936. The maximum penalty for such an offence is 25 penalty points, or imprisonment for up to 12 months, or both, for individuals, and 125 penalty points, or a fine of up to $21,000, or both, for corporations. Additionally, taxpayers who fail to lodge a tax return or provide the required information may be subject to civil penalties, including a fine of up to $1,100 for individuals and $5,500 for corporations. The specific penalties depend on the nature and extent of the non-compliance.

Area of Law: Taxation Law
Instrument: Regulation
Concepts: Definitions & Interpretation; Repeal & Amendment; Reporting & Disclosure Obligations; Regulatory Standards

Interactions

Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.

Legislation content