Income Tax Assessment Amendment Regulations 1999 (No. 3) 1999 No. 114
EXPLANATORY STATEMENT
STATUTORY RULES 1999 NO. 114
Issued by the Authority of the Assistant Treasurer
Income Tax Assessment Act 1936
Income Tax Assessment Amendment Regulations 1999 (No. 3)
Section 266 of the Income Tax Assessment Act 1936 (the Act) provides that the GovernorGeneral may make regulations prescribing matters required to give effect to the Act.
Purpose
The amending regulations require employers to specify on group certificates the income support component of wages paid to Community Development Employment Projects (CDEP) participants sourced from CDEP wage grants provided by the Aboriginal and Torres Strait Islander Commission (ATSIC) and the Torres Strait Regional Authority (TSRA). The amendments ensure that participants know exactly how much of the CDEP wages they receive during a year of income is rebatable.
Background
The CDEP scheme is administered by the ATSIC and the TSRA to enable Indigenous Australian communities and organisations to manage their own economic and social development and to provide employment for people in their communities.
To participate in the scheme, unemployed members of Indigenous communities choose to give up their entitlements to social security payments, for example, the Newstart Allowance. In place of the social security payments forgone, the community organisations pay wages to participants to undertake community managed activities out of the income support component of wages grants provided by the ATSIC and the TSRA.
It was announced in the 1998 Federal Budget that section 160AAA of the Act would be amended to enable participants in the CDEP scheme to claim the beneficiary tax rebate in respect of the income support component of CDEP wages paid on or after 1 July 1998.
The rebatable income support component of CDEP wages is paid by either CDEP community organisations or by third parties engaged by the community organisations for the provision of training to participants. CDEP wages may consist of amounts paid from sources other than the rebatable income support component paid out of the wages grant from the ATSIC or TSRA. For example, CDEP wages may consist of "top-up" amounts from profits made by the community organisations or from other Government sources. Payments may also be made from the operational funds grant from ATSIC and TRSA.
Under the current tax law CDEP employers are required to provide CDEP participants with a group certificate detailing the gross amount of salary or wages. In order for participants in the CDEP scheme to claim their rebate entitlement they need to know what part of their CDEP wage is rebatable.
Explanation of amendments
Subregulation 119(3) specifies what particulars an employer must include in group certificates. Items 1 and 2 in Schedule 1 of the Amendment Regulations insert new paragraph 119(3)(f) which requires employers, who pay wages to CDEP participants, to specify the amount of the income support component on group certificates. The proposed amendments ensure that participants know how much of their CDEP wage is rebatable when completing their personal income tax returns.
Application
The regulations commenced on 1 July 1999 (item 2) and apply to group certificates issued in respect of payments of wages made on or after 1 July 1999 (item 4).
Overview
The Income Tax Assessment Amendment Regulations 1999 (No. 3) were enacted to address a specific gap in the taxation system concerning the Community Development Employment Projects (CDEP) scheme. The regulations were introduced by the Parliament of Australia, authorised by the Assistant Treasurer, and are designed to give effect to the Income Tax Assessment Act 1936. The primary objective of these regulations is to ensure that employers of CDEP participants clearly specify the income support component of wages paid to these participants on group certificates. This amendment was crucial to enable CDEP participants to accurately claim the beneficiary tax rebate in respect of the income support component of their wages, which became rebatable from 1 July 1998 as announced in the 1998 Federal Budget. This legislative change aimed to provide clarity and fairness in tax obligations for CDEP participants, ensuring they are fully informed of their rebatable income when lodging their tax returns.
Scope and Application
The Income Tax Assessment Amendment Regulations 1999 (No. 3) primarily apply to employers who pay wages to participants in the Community Development Employment Projects (CDEP) scheme, which is administered by the Aboriginal and Torres Strait Islander Commission (ATSIC) and the Torres Strait Regional Authority (TSRA). These regulations necessitate that employers specify the income support component of wages paid to CDEP participants on group certificates, thereby ensuring that participants are aware of the rebatable portion of their wages for income tax purposes. This requirement takes effect from payments made on or after 1 July 1999, as stipulated by the regulations which commenced on the same date. The purpose of these regulations is to give effect to amendments in the Income Tax Assessment Act 1936, ensuring that participants can correctly claim their tax rebates for the income support component of their CDEP wages.
Key Provisions
The main operative sections of the Income Tax Assessment Amendment Regulations 1999 (No. 3) include subregulation 119(3), which requires employers to specify the income support component of wages paid to Community Development Employment Projects (CDEP) participants on group certificates (subregulation 119(3)(f)). This addition ensures that participants are aware of the amount of their CDEP wage that is rebatable for income tax purposes (section 160AAA of the Income Tax Assessment Act 1936). Employers are mandated to provide this detail to ensure that CDEP participants can accurately claim their beneficiary tax rebate when completing their personal income tax returns.
These regulations impose obligations on employers who pay wages to CDEP participants. Specifically, they must include the amount of the income support component in the group certificates issued to the participants. This requirement ensures transparency and accuracy in the reporting of wages, facilitating the correct calculation of taxable income and the subsequent claim for tax rebates. Employers must comply with these provisions by ensuring that the specified information is clearly and accurately reflected in the group certificates for each relevant payment period.
Breaches of these regulations may lead to civil or criminal consequences. Employers who fail to specify the income support component of wages on group certificates may be subject to penalties. Although the specific penalties are not detailed in the explanatory statement, under the Income Tax Assessment Act 1936, penalties for non-compliance with tax regulations can include fines and other administrative sanctions. These penalties serve as a deterrent to ensure that employers adhere to the requirements set out in the regulations.