Overview

The Income Tax Amendment Regulation 2012 (No. 2) was enacted to update the Income Tax Regulations 1936, addressing the need to align tax arrangements for overseas defence services with the extended durations of certain military operations. This legislative instrument was issued by the Assistant Treasurer and commenced on the day after its registration. The primary objective of this regulation is to ensure that tax exemptions and eligibility for certain operations continue as these operations extend their timelines. Specifically, it recognises service as part of Operation Slipper until 30 June 2013, Operation Palate II and Operation Riverbank until 31 December 2013, and duty with the multinational force under the United Nations Security Council Resolutions 1970 and 1973 concerning Libya until 31 October 2011. The regulation was enacted without consultation due to its minor and technical nature, and it has been deemed compatible with human rights as it does not engage any of the rights or freedoms recognised under the Human Rights (Parliamentary Scrutiny) Act 2011.

Scope and Application

The Income Tax Amendment Regulation 2012 (No. 2) pertains to the Income Tax Regulations 1936 and is issued under the authority of the Assistant Treasurer. This regulation updates the existing regulations to address tax arrangements for Australian Defence Force personnel engaged in overseas operations. Specifically, the regulation extends the tax exemption for 'eligible duty' to include service with the multinational force established under the United Nations Security Council Resolutions 1970 and 1973 to enforce a no-fly-zone in relation to Libya. Additionally, it extends the exemption period for three ongoing operations: Operation Slipper until 30 June 2013, Operation Palate II until 31 December 2013, and Operation Riverbank until 31 December 2013. The regulation applies to Australian Defence Force personnel who serve in these specified operations, ensuring that their service qualifies for the tax exemptions provided under section 23AD of the Income Tax Assessment Act 1936. The regulation commenced on the day after it was registered, and no consultation was undertaken as the changes are minor and of a machinery nature. The regulation is compatible with human rights as it does not engage any of the applicable rights or freedoms.

Key Provisions

The main operative sections of the Income Tax Amendment Regulation 2012 (No. 2) (the Regulation) concern the amendment of the Income Tax Regulations 1936 (the Principal Regulations) (sections 3 and Schedule 1). The Regulation updates the Principal Regulations to align with the extensions of various Australian Defence Force (ADF) operations and the introduction of a new operation. Specifically, Schedule 1 to the Regulation extends the end date of the tax exemptions for Operation Slipper (to 30 June 2013), Operation Palate II and Operation Riverbank (both to 31 December 2013), and includes duty with the multinational force established under the United Nations Security Council Resolutions 1970 and 1973 to enforce a no-fly-zone in relation to Libya as ‘eligible duty’ for the purposes of section 23AD. The Regulation imposes specific obligations on parties affected by the amended tax arrangements. Service personnel involved in the specified ADF operations are required to ensure that their service is recognised as 'eligible duty' for the purposes of section 23AD of the Income Tax Assessment Act 1936. This recognition affects their tax obligations, particularly in relation to the exemption from income tax on certain payments made for their service overseas. The Regulation also imposes a responsibility on the Australian Taxation Office (ATO) to administer these tax arrangements effectively, ensuring that the correct tax treatment is applied to the eligible income of service personnel. There are no explicit offences, penalties, or civil/criminal consequences mentioned in the Regulation for breach of the amended tax arrangements. However, failure to comply with the tax obligations, such as not correctly claiming the tax exemptions, could result in the service personnel being liable for income tax on the payments received for their overseas service. Additionally, the ATO may take action to recover any unpaid tax, which could include issuing notices of assessment, penalties, or interest charges. The exact penalties would be determined under the Income Tax Assessment Act 1936 and the Income Tax Assessment Act 1997, but these are not detailed in the Regulation itself.