EXPLANATORY STATEMENT
Select Legislative Instrument 2009 No. 30
Issued by authority of the Assistant Treasurer
Income Tax Assessment Act 1936
Income Tax Amendment Regulations 2009 (No. 1)
Section 266 of the Income Tax Assessment Act 1936 (the Act) provides 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 are necessary or convenient to be prescribed for giving effect to the Act.
The purpose of this amendment is to enable uniform penalty provisions to apply to late lodgment of annual investment income reports. This will ensure that investment bodies that lodge their annual investment income reports after the due date may be liable to pay an administrative penalty as an alternative to being prosecuted through the court system under section 8C of the Taxation Administration Act 1953.
Subregulation 56(1) of the Income Tax Regulations 1936 is being amended to make it clear that annual investment income reports are ‘approved forms’ as defined by section 388-50 of Schedule 1 to the Taxation Administration Act 1953 (via subsection 6(1) of the Income Tax Assessment Act 1936). The amendment applies to reports due for the 2009-10 financial year onwards.
Annual investment income reports are prepared by investment bodies to provide the Commissioner of Taxation with details of investment income paid to investors (for example, dividends and interest) and movements in Farm Management Deposit amounts (deposits, transfers and repayments). They also provide details of amounts withheld from those payments where the investor has not quoted a tax file number, Australian Business Number or an exemption from quoting a tax file number. The types of investments are mentioned in section 202D of the Income Tax Assessment Act 1936.
Subsection 286-75(1) of Schedule 1 to the Taxation Administration Act 1953 imposes an administrative penalty for late lodgment of an ‘approved form’.
The penalty provisions in the tax law were tied to the uniform penalty regime through the expression ‘approved form’, but it was unclear whether the Commissioner of Taxation could impose an administrative penalty on investment bodies that fail to lodge annual investment income reports. This is because the phrase ‘in a form approved by the Commissioner’ is not the phrase ‘the approved form’.
The Regulations are a legislative instrument for the purposes of the Legislative Instruments Act 2003.
The Regulations commence on 1 October 2010.
Overview
The Income Tax Amendment Regulations 2009 (No. 1) were enacted to address the ambiguity in the application of administrative penalties to investment bodies that fail to lodge their annual investment income reports by the due date. This legislative instrument was issued by the Assistant Treasurer under the authority of the Income Tax Assessment Act 1936. The primary objective is to align the penalty provisions for late lodgment of annual investment income reports with the uniform penalty regime, ensuring that investment bodies can be liable to pay an administrative penalty instead of facing prosecution through the court system under section 8C of the Taxation Administration Act 1953. This amendment applies to reports due for the 2009-10 financial year and subsequent years, clarifying that annual investment income reports are considered 'approved forms' as defined by the Taxation Administration Act 1953.
Scope and Application
The Income Tax Amendment Regulations 2009 (No. 1) primarily aim to clarify and enforce the penalty provisions for the late lodgment of annual investment income reports under the Income Tax Assessment Act 1936. This legislative instrument applies to investment bodies that are required to prepare and lodge annual investment income reports with the Commissioner of Taxation. These reports include details such as investment income paid to investors, movements in Farm Management Deposit amounts, and amounts withheld from payments due to the absence of a tax file number, Australian Business Number, or exemption from quoting such numbers. The regulation applies to reports due for the 2009-10 financial year and onwards. The amendment seeks to ensure that investment bodies that fail to lodge their reports by the due date may be subject to administrative penalties, thereby providing an alternative to prosecution under section 8C of the Taxation Administration Act 1953. The amendment clarifies that annual investment income reports are considered 'approved forms' as defined by section 388-50 of Schedule 1 to the Taxation Administration Act 1953, ensuring that the Commissioner of Taxation can impose penalties for late lodgment of these reports. This legislative instrument operates within the Commonwealth jurisdiction and is intended to enhance compliance and administrative efficiency in the taxation system.
Key Provisions
The Income Tax Amendment Regulations 2009 (No. 1) clarify the application of administrative penalties for the late lodgment of annual investment income reports under section 266 of the Income Tax Assessment Act 1936 (the Act). This amendment specifically modifies subregulation 56(1) of the Income Tax Regulations 1936, ensuring that annual investment income reports are recognised as 'approved forms' as defined by section 388-50 of Schedule 1 to the Taxation Administration Act 1953. This change applies to reports due for the 2009-10 financial year and subsequent years. Annual investment income reports, prepared by investment bodies, include details of investment income, movements in Farm Management Deposit amounts, and amounts withheld due to the absence of a tax file number or exemption. These reports are crucial for informing the Commissioner of Taxation about various financial transactions and withholdings.
The Regulations impose clear obligations on investment bodies to lodge their annual investment income reports by the specified due dates. By recognising these reports as 'approved forms,' the Regulations enable the Commissioner of Taxation to apply administrative penalties for late lodgment. This recognition aligns with the broader tax law's uniform penalty regime, ensuring consistency in penalty application. Investment bodies must ensure their reports are accurate and submitted on time to avoid penalties. The requirement to detail investment income, Farm Management Deposit movements, and withheld amounts is stringent, necessitating meticulous record-keeping and timely reporting.
Breaches of the Regulations' requirements can lead to significant consequences. Subsection 286-75(1) of Schedule 1 to the Taxation Administration Act 1953 imposes administrative penalties for the late lodgment of 'approved forms.' While the specific penalty amounts are not detailed in the Explanatory Statement, it is clear that penalties serve as a deterrent against non-compliance. Non-compliance could also lead to civil or criminal consequences, including potential prosecution under section 8C of the Taxation Administration Act 1953. The imposition of penalties and potential legal action underscores the importance of adhering to the stipulated deadlines and reporting requirements.