Income Tax Assessment Amendment Act (No. 2) 1985

Overview

The Income Tax Assessment Amendment Act (No. 2) 1985 was enacted to amend the law relating to income tax, specifically addressing the tax deductions for expenditure on conserving or conveying water. This Act was passed by the Queen, with the assent of the Senate and the House of Representatives of the Commonwealth of Australia, on 16 December 1985. The primary objective of this legislation was to modify the allowable deductions for certain water-related expenses by altering the depreciation rates and the period over which these deductions could be claimed. The amendments applied to expenditure incurred on or after 20 September 1985, ensuring that taxpayers would be aware of the changes and could plan accordingly. The Income Tax Assessment Amendment Act (No. 2) 1985 is an amendment to the Income Tax Assessment Act 1936, which forms the foundation of Australia's income tax legislation. The Act was brought into effect immediately after the amendments to section 75b of the Income Tax Assessment Act 1936, made by the Taxation Laws Amendment Act (No. 4) 1985, came into operation. This legislative approach ensures that the changes to tax deductions are implemented in a timely and coordinated manner, reflecting the evolving needs of the taxation system and the broader economic context.

Scope and Application

The Income Tax Assessment Amendment Act (No. 2) 1985 applies to entities subject to income tax under the Income Tax Assessment Act 1936, specifically amending the law to modify the deduction rules for expenditure on conserving or conveying water. The Act increases the allowable deduction from one-fifth to one-third and reduces the qualifying period from four years to two years for certain expenditures incurred on or after 20 September 1985. This Act operates within the Commonwealth of Australia, and its amendments extend to any relevant territories under Australian jurisdiction. There are no stated exclusions, exemptions, or specific thresholds outlined in the Act itself, but it may be subject to further clarification or extension through subordinate instruments or regulations as deemed necessary by the relevant authorities.

Key Provisions

The Income Tax Assessment Amendment Act (No. 2) 1985 amends the Income Tax Assessment Act 1936, primarily modifying the tax deductions available for expenditure on conserving or conveying water. Section 3(1) of the Act alters subsection (3b) of section 75b of the Principal Act, increasing the allowable deduction for such expenditures from one-fifth to one-third and reducing the number of years over which this deduction can be claimed from four to two. These changes apply to expenditure incurred on or after 20 September 1985. The Act imposes specific obligations on entities that incur expenditure on water conservation or conveyance. They must ensure that their claims for deductions under section 75b are based on the new limits set by the amended legislation. This means that entities must document and substantiate their claims in accordance with the updated provisions to ensure compliance with the tax law. Failure to adhere to these requirements could result in the disallowance of the deductions by the Australian Taxation Office. Breaches of the provisions of this Act can lead to significant consequences. While the Act itself does not explicitly detail the penalties for non-compliance, the general framework provided by the Income Tax Assessment Act 1936 applies. Under this Act, penalties may be imposed for making false or misleading statements, failing to lodge returns, or otherwise contravening the tax laws. The penalties can include fines and, in severe cases, criminal prosecution. The exact penalties would depend on the nature and extent of the non-compliance but can be substantial, reflecting the seriousness with which tax law breaches are treated in Australia.