Income Tax Amendment Regulations 1999 (No. 1)

Overview

The Income Tax Amendment Regulations 1999 (No. 1) were enacted to amend the subregulation 119(3) of the Income Tax Regulations 1936, which governs the information that a group employer must include on an employee's group certificate. This legislative amendment was introduced to address the need for employers to report fringe benefits on group certificates as a consequence of the A New Tax System (Fringe Benefits Reporting) Act 1999. The latter act is a part of the Government's broader tax reform initiative, aimed at implementing the first phase of reforms to fringe benefits tax (FBT). The policy objective of these regulations is to ensure the equity of the tax and social security systems by taking into account the total remuneration of an employee, including fringe benefits, when determining their liability to tax surcharges, entitlement to income-tested government benefits and concessions, child support obligations, and HECS repayments. The regulations apply to group certificates issued from the 1999-2000 income year onwards and commenced upon gazettal.

Scope and Application

The Income Tax Amendment Regulations 1999 (No. 1) amends subregulation 119(3) of the Income Tax Regulations 1936 to require group employers to include certain fringe benefits information on employees' group certificates. This amendment is a direct response to the A New Tax System (Fringe Benefits Reporting) Act 1999, which mandates that employers report fringe benefits on group certificates from the 1999-2000 fringe benefits tax year. Specifically, the regulations now require group employers to list an employee's reportable fringe benefits amount on their group certificate for an income year if the total taxable value of benefits received exceeds $1,000. The stated purpose of this measure is to enhance the fairness of both the tax and social security systems by ensuring that fringe benefits are factored into an employee's total remuneration when assessing their tax surcharge liability, entitlement to government benefits and concessions, child support obligations, and higher education contributions scheme repayments. These regulations apply to group certificates issued for the 1999-2000 income year and all subsequent years.

Key Provisions

The main operative sections of the Income Tax Amendment Regulations 1999 (No. 1) are found in subregulation 119(3) of the Income Tax Regulations 1936. This subregulation has been amended to require group employers to include the employee's reportable fringe benefits amount on a group certificate issued for the corresponding income year (section 119(3)). An employee will have a reportable fringe benefits amount if the total taxable value of benefits they receive in a fringe benefits tax (FBT) year exceeds $1000. This change is intended to align with the new FBT reporting legislation under the A New Tax System (Fringe Benefits Reporting) Act 1999, which mandates that employers report fringe benefits on employees' group certificates from the 1999-2000 FBT year of tax onwards. The regulations impose specific obligations on group employers. They must ensure that the group certificate issued for the 1999-2000 year of income and all subsequent years includes the reportable fringe benefits amount for each employee. This amount should reflect the total taxable value of benefits received by the employee in the corresponding FBT year, provided it exceeds $1000. The information provided must be accurate and comply with the new FBT reporting requirements. Employers must also be aware that failure to include this information correctly could result in non-compliance with tax regulations, potentially leading to penalties or other legal consequences. The regulations do not explicitly outline specific offences, penalties, or civil/criminal consequences for non-compliance in the provided explanatory statement. However, the Income Tax Assessment Act 1936 and the Fringe Benefits Tax Assessment Act 1986 provide a framework under which non-compliance can result in penalties. For instance, failure to report fringe benefits correctly can lead to penalties under section 284 of the Income Tax Assessment Act 1936, which may include fines up to the maximum amount specified by the Act. Additionally, the A New Tax System (Fringe Benefits Reporting) Act 1999 may impose additional penalties for incorrect or non-reporting of fringe benefits, which could include fines or other civil consequences as stipulated in the relevant sections of the Act.