Income Tax Amendment Regulations 2000 (No. 1) 2000 No. 39
EXPLANATORY STATEMENT
STATUTORY RULES 2000 No. 39
Issued by authority of the Assistant Treasurer
Income Tax Assessment Act 1936
Income Tax Amendment Regulations 2000 (No. 1)
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.
The purpose of the Regulations is to prescribe eligible duty for the purposes of section 23AD of the Act. This enables the pay and allowances received by Australian Defence Force (ADF) personnel from their duty with the International Force East Timor (INTERFET) in East Timor to be exempt from income tax.
Subsection 23AD(2) of the Act provides that the Regulations may declare that duty with a specified organisation in a specified area outside Australia after a specified day, is eligible duty for the purposes of section 23AD.
Subsection 23AD(1) of the Act exempts the pay and allowances earned by ADF personnel where there is a certificate in force, issued in writing by the Chief of the Defence Force, that the personnel are on eligible duty.
The certificate comes into force at the later of the time specified in the certificate and the time the person arrives for duty in the specified area. The certificate continues to be in force until the earliest of either the time of departure from the specified area, the date of revocation or a time prescribed by regulation.
In September 1999, ADF personnel were deployed to East Timor as part of INTERFET. The Government has agreed to provide an exemption from income tax under section 23AD of the Act for the-pay and allowances earned by ADF personnel deployed on INTERFET. The exemption is to apply after 15 September 1999.
This amendment to the Income Tax Regulations 1936 prescribes eligible duty.
Details of the regulations are as follows.
Regulation 1: Names the Regulations.
Regulation 2: Provides that the Regulations commence on gazettal
Regulation 3: Provides that the Income Tax Regulations are amended as set out in these Regulations, by inserting regulation 7A to prescribe the following duty to be eligible duty:
Duty with INTERFET, in East Timor and the territorial sea of Indonesia adjacent to East Timor, after 15 September 1999.
Overview
The Income Tax Amendment Regulations 2000 (No. 1), issued under the authority of the Assistant Treasurer, were enacted to address the need for tax exemptions for Australian Defence Force (ADF) personnel deployed to East Timor as part of the International Force East Timor (INTERFET) operation. This was done through the Income Tax Assessment Act 1936, with the specific purpose of prescribing eligible duty to allow for the exemption of pay and allowances received by ADF personnel from income tax. The Regulations were a response to the government’s commitment to exempt such income from tax, effective from 15 September 1999. The policy objective was to ensure that ADF personnel deployed in INTERFET operations were not subject to income tax for their service in East Timor, thereby alleviating some of the financial burdens associated with military deployment.
Scope and Application
The Income Tax Amendment Regulations 2000 (No. 1) apply to the income tax obligations of Australian Defence Force personnel who were deployed to East Timor as part of the International Force for East Timor (INTERFET) after 15 September 1999. The Regulations amend the Income Tax Regulations 1936 to exempt the pay and allowances received by ADF personnel from duty with INTERFET in East Timor from income tax, pursuant to section 23AD of the Income Tax Assessment Act 1936. The exemption requires a certificate issued by the Chief of the Defence Force to confirm that the personnel are on eligible duty, and the certificate governs the commencement and cessation of the exemption. The Regulations specify that duty with INTERFET in East Timor and the territorial sea of Indonesia adjacent to East Timor after 15 September 1999 qualifies as eligible duty. These Regulations have a national reach, as they apply to ADF personnel and their income tax liabilities under Commonwealth legislation.
Key Provisions
The Income Tax Amendment Regulations 2000 (No. 1) (the Regulations) are designed to provide a tax exemption for Australian Defence Force (ADF) personnel deployed in East Timor as part of the International Force East Timor (INTERFET). This is achieved by prescribing eligible duty under section 23AD of the Income Tax Assessment Act 1936 (the Act). According to section 23AD(2) of the Act, the Regulations declare that duty with INTERFET in East Timor and the territorial sea of Indonesia adjacent to East Timor after 15 September 1999 is eligible duty. The exemption applies to the pay and allowances of ADF personnel where a certificate is issued by the Chief of the Defence Force, confirming that the personnel are on eligible duty.
The Regulations impose several obligations on the parties involved. For the ADF personnel, it is essential to ensure that they have the necessary certificate from the Chief of the Defence Force, which confirms that their duty in East Timor is eligible for tax exemption. This certificate must be in force from the later of the time specified in the certificate or the time the person arrives for duty in the specified area. The certificate remains in effect until the earliest of either the time of departure from the specified area, the date of revocation, or a time prescribed by regulation. The Government, through the Assistant Treasurer, is responsible for issuing these regulations to implement the exemption as agreed upon.
Failure to comply with the provisions of these Regulations can lead to civil and criminal consequences. If ADF personnel do not have the required certificate from the Chief of the Defence Force, their pay and allowances may not be exempt from income tax, leading to potential financial repercussions. Additionally, any misrepresentation or fraudulent claims regarding eligibility for duty can result in criminal charges. The Act does not explicitly state maximum penalties for breaches, but penalties can vary based on the nature and severity of the breach, potentially including fines and imprisonment for more serious offences. It is crucial for all parties to adhere to the regulations to avoid these consequences.