EXPLANATORY STATEMENT
Select Legislative Instrument 2013 No. 129
Issued by authority of the Assistant Treasurer
Income Tax Assessment Act 1936
Income Tax Amendment Regulation 2013 (No. 2)
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 or permitted to be prescribed, or necessary or convenient to be prescribed for giving effect to the Act.
The Regulation updates the Income Tax Regulations 1936 in respect of tax arrangements for overseas defence service by extending the end date of the income tax exemption for Operation Slipper to 30 June 2014. The previous end date was 30 June 2013.
Section 23AD of the Act provides an exemption from income tax of pay and allowances of Australian Defence Force (ADF) members performing certain overseas duty. Subsection 23AD(1) of the Act exempts the pay and allowances earned by ADF members from income tax where there is a certificate in force, issued in writing by the Chief of the Defence Force, to the effect that the members are on ‘eligible duty’. Subsection 23AD(2) of the Act provides that the regulations may declare that duty with a specified organisation, in a specified area outside Australia, and after a specified day, is ‘eligible duty’ for the purposes of that section.
Regulation 7A of the Income Tax Regulations 1936 specifies duty with various organisations in various areas outside Australia and declares that duty to be ‘eligible duty’ for the purposes of section 23AD of the Act.
Operation Slipper is the ADF contribution to the international campaign against terrorism and maritime security in the Middle East Area of Operations and countering piracy in the Gulf of Aden. Operation Slipper was previously approved until 30 June 2013. It has been extended to 30 June 2014.
The Regulation extends the period for which service as part of Operation Slipper is ‘eligible duty’ for the purposes of section 23AD of the Act to 30 June 2014.
A Statement of Compatibility with Human Rights has been completed for the Regulation, in accordance with the Human Rights (Parliamentary Scrutiny) Act 2011. The Statement’s assessment is that the measures in the Regulation are compatible with human rights. A copy of the Statement is at Attachment A.
The Act specifies no conditions that need to be met before the power to make the Regulation may be exercised.
The Regulation is a legislative instrument for the purposes of the Legislative Instruments Act 2003.
The amendments in this Regulation are minor and machinery in nature, and are beneficial to taxpayers. As such, no consultation was undertaken on this Regulation.
The Regulation commences on the day after it was registered on the Federal Register of Legislative Instruments.
ATTACHMENT A
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Income Tax Amendment Regulation 2013 (No. 2)
This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the Legislative Instrument
The Regulation amends the Income Tax Regulations 1936 to extend the end date of the income tax exemption for Operation Slipper to 30 June 2014.
Human rights implications
This Legislative Instrument does not engage any of the applicable rights or freedoms.
Conclusion
This Legislative Instrument is compatible with human rights as it does not raise any human rights issues.
Overview
The Income Tax Amendment Regulation 2013 (No. 2) was enacted to update the Income Tax Regulations 1936 with respect to the tax arrangements for overseas defence service. This regulation was introduced to address the need to extend the end date of the income tax exemption for Operation Slipper from 30 June 2013 to 30 June 2014. Operation Slipper is the Australian Defence Force's (ADF) contribution to the international campaign against terrorism, maritime security in the Middle East Area of Operations, and countering piracy in the Gulf of Aden. The regulation was issued by the Assistant Treasurer and aims to provide a seamless continuation of the tax exemption for ADF members engaged in this operation, ensuring that there is no gap in the tax treatment of their income. The regulation was prepared in accordance with the Human Rights (Parliamentary Scrutiny) Act 2011, with a Statement of Compatibility confirming that the measures in the regulation are compatible with human rights.
Scope and Application
The Income Tax Amendment Regulation 2013 (No. 2) applies to the Australian Defence Force (ADF) members who are participating in Operation Slipper, which is Australia's contribution to the international campaign against terrorism and maritime security in the Middle East Area of Operations and countering piracy in the Gulf of Aden. The Regulation updates the Income Tax Regulations 1936 to extend the exemption from income tax for pay and allowances earned by ADF members on eligible duty until 30 June 2014. This extension applies to all ADF personnel involved in Operation Slipper, ensuring that they continue to benefit from the tax exemption that was initially set to expire on 30 June 2013. The Regulation is made under the authority of section 266 of the Income Tax Assessment Act 1936, and its provisions are consistent with the Act. No consultation was undertaken for these amendments as they are considered minor and beneficial to taxpayers. The Regulation commenced on the day after its registration on the Federal Register of Legislative Instruments.
Key Provisions
The Income Tax Amendment Regulation 2013 (No. 2) amends the Income Tax Regulations 1936, extending the end date of the income tax exemption for Operation Slipper to 30 June 2014. This amendment is made under Section 266 of the Income Tax Assessment Act 1936, which allows the Governor-General to make regulations that are necessary or convenient to give effect to the Act. The Regulation updates the Income Tax Regulations 1936 by extending the exemption from income tax for Australian Defence Force (ADF) members serving in Operation Slipper, which is the ADF's contribution to the international campaign against terrorism and maritime security in the Middle East Area of Operations and countering piracy in the Gulf of Aden. This change extends the exemption period from 30 June 2013 to 30 June 2014.
The Regulation imposes certain obligations on ADF members and the Chief of the Defence Force. ADF members must ensure they are serving on 'eligible duty' as defined by the updated Regulation to be eligible for the income tax exemption. The Chief of the Defence Force is responsible for issuing the necessary written certificates to confirm that ADF members are on 'eligible duty'. This certification is a prerequisite for the exemption to apply to the pay and allowances of these members.
The Act does not explicitly outline offences, penalties, or civil/criminal consequences for non-compliance with the Regulation. However, any failure to correctly apply or comply with the Regulation's provisions could potentially lead to reassessment of tax liabilities for ADF members, interest on unpaid taxes, and other financial penalties. The Regulation itself does not stipulate maximum penalties, but the Income Tax Assessment Act 1936 provides a framework for penalties related to tax non-compliance, which could be applied in such cases. It is crucial for ADF members and the Chief of the Defence Force to adhere to the Regulation to avoid any potential tax implications and ensure compliance with tax laws.