Overview

The Income Tax Amendment Regulation 2013 (No. 3), issued under the authority of the Assistant Treasurer, amends the Income Tax Regulations 1936 to extend the income tax exemption for Australian Defence Force (ADF) members serving with the United Nations Assistance Mission in Afghanistan, known as Operation Palate II, until 31 December 2014. This regulation was enacted to address the gap caused by the extension of Operation Palate II, ensuring that ADF members continue to receive the same tax benefits as initially provided. The regulation was issued by the relevant legislature, the Parliament of Australia, to facilitate the necessary adjustments in taxation laws to accommodate the extended duration of ADF operations in Afghanistan. The policy objective of this amendment is to provide clarity and continuity for ADF members and their tax obligations, reflecting the commitment of the Australian government to support its defence personnel engaged in overseas missions.

Scope and Application

The Income Tax Amendment Regulation 2013 (No. 3) pertains to the Income Tax Assessment Act 1936 and specifically targets Australian Defence Force (ADF) members who are engaged in overseas duty, more precisely under Operation Palate II, which is Australia's contribution to the United Nations Assistance Mission in Afghanistan. The Regulation updates the Income Tax Regulations 1936 to extend the income tax exemption for ADF members on duty with Operation Palate II until 31 December 2014. This extension applies to those ADF members whose service qualifies as 'eligible duty' under section 23AD of the Act, provided a written certificate from the Chief of the Defence Force attests to this eligibility. The geographic scope of the Regulation is limited to ADF members serving in Afghanistan under Operation Palate II, and it does not extend to any other operations or jurisdictions. No specific exclusions or exemptions are outlined within the Regulation itself, although it operates within the framework set by the Income Tax Assessment Act 1936. The Regulation is a minor amendment and does not require consultation, as it is deemed to be beneficial to taxpayers. The Regulation will come into effect on the day following its registration on the Federal Register of Legislative Instruments.

Key Provisions

The Income Tax Amendment Regulation 2013 (No. 3) amends the Income Tax Regulations 1936 to extend the end date of the income tax exemption for Australian Defence Force (ADF) members on duty with the United Nations Assistance Mission in Afghanistan (Operation Palate II) from 31 December 2013 to 31 December 2014. This extension is pursuant to section 23AD of the Income Tax Assessment Act 1936 (the Act), which allows for an exemption from income tax for ADF members on eligible duty, as certified by the Chief of the Defence Force (sections 23AD(1) and 23AD(2)). Regulation 7A of the Income Tax Regulations 1936, as amended by this Regulation, now includes duty with Operation Palate II until 31 December 2014 as eligible duty. Under the amended Regulation, ADF members serving in Operation Palate II from the date of commencement of the Regulation up until 31 December 2014 will be exempt from income tax on their pay and allowances. The Act does not specify any conditions that need to be met before the power to make this Regulation can be exercised. The Regulation is considered a legislative instrument under the Legislative Instruments Act 2003. Given the minor and machinery nature of the amendments, no consultation was undertaken on this Regulation. The Regulation will come into effect on the day after it is registered on the Federal Register of Legislative Instruments. The Regulation imposes no new obligations on the parties it governs beyond what is already required by section 23AD of the Act. The ADF members on eligible duty, as defined by the amended Regulation, will continue to receive the income tax exemption on their pay and allowances. The Chief of the Defence Force remains responsible for issuing the necessary certificates to confirm that the members are on eligible duty, as required by section 23AD(1) of the Act. The Act and the amended Regulation do not specify any offences or penalties for breaches related to this income tax exemption. However, any breach of the requirements to issue the certificate in writing by the Chief of the Defence Force or any other breach of the Act or the Regulation could result in the ADF member being subject to the standard tax provisions, potentially leading to retrospective tax assessments and penalties.