INCOME TAX ASSESSMENT AMENDMENT
ACT (No. 3) 1978
No. 171 of 1978
An Act to amend the law relating to income tax.
BE IT ENACTED by the Queen, and the Senate and House of Representatives of the Commonwealth of Australia, as follows:
Short title, &c.
1. (1) This Act may be cited as the Income Tax Assessment Amendment Act (No. 3) 1978.
(2) The Income Tax Assessment Act 1936 is in this Act referred to as the Principal Act.
Commencement
2. This Act shall come into operation on the day on which it receives the Royal Assent.
Losses and outgoings
3. (1) Section 51 of the Principal Act is amended by adding at the end thereof the following sub-section:
“(3) A deduction is not allowable under sub-section (1) in respect of long service leave, annual leave, sick leave or other leave except in respect of an amount paid to the person to whom the leave relates or, where that person is deceased, to a dependant or personal representative of that person and, for the purposes of that sub-section, the amount paid shall be deemed to be a loss or outgoing incurred at the time when the payment is made.”.
(2) The amendment made by sub-section (1) applies to assessments in respect of income of the year of income that commenced on 1 July 1977 and to assessments in respect of income of all subsequent years of income, other than assessments made before 28 September 1978.
(3) It is hereby declared that the amendment made by sub-section (1) is enacted for the avoidance of doubt and, in particular, shall not be taken as implying that a deduction is or was allowable under section 51 of the Income Tax Assessment Act 1936 in an assessment in respect of income of a year of income preceding the year of income that commenced on 1 July 1977 or in an assessment made before 28 September 1978 in respect of income of the year of income that commenced on 1 July 1977 that, if the amendment made by sub-section (1) applied or had applied to the assessment, would not be or would not have been allowable by virtue of that amendment.
Gifts, calls on afforestation shares, pensions, &c.
4. Section 78 of the Principal Act is amended by inserting after sub-paragraph (xlvii) of paragraph (a) of sub-section (1) the following sub-paragraph:
“; (xlviii) The Sir Robert Menzies Memorial Trust,”.
Overview
The Income Tax Assessment Amendment Act (No. 3) 1978 was enacted to address gaps in the application of income tax laws, particularly regarding deductions for leave and certain trusts. Enacted by the Queen and the Parliament of Australia, the Act aims to provide clarity and certainty in the interpretation and application of the Income Tax Assessment Act 1936. The policy objective of the Act is to amend the Principal Act to specifically disallow deductions for payments related to long service leave, annual leave, sick leave, or other leave, except where the payment is made directly to the person to whom the leave relates or, in the case of their death, to a dependant or personal representative. Additionally, the Act seeks to include the Sir Robert Menzies Memorial Trust within the scope of non-assessable non-exempt income.
Scope and Application
The Income Tax Assessment Amendment Act (No. 3) 1978 applies to taxpayers subject to the Income Tax Assessment Act 1936, encompassing individuals and entities, and pertains to their income tax liabilities. The Act modifies specific provisions of the Principal Act, namely Section 51 concerning allowable deductions for leave payments and Section 78 to include a new entity, the Sir Robert Menzies Memorial Trust, in the list of deductible gift recipients. The Act's provisions are effective from the year of income commencing on 1 July 1977, with a specific application timeline for assessments made after 28 September 1978. The Act operates on a national level within Australia, given its Commonwealth jurisdiction, and applies to all taxpayers subject to the Income Tax Assessment Act 1936. There are no explicit exclusions or exemptions stated within the text of the Act, though the specific amendments indicate a restriction on the deductibility of certain leave payments and an expansion of deductible gift recipients. The Act may be further elaborated or clarified through subordinate legislation, though no such detail is provided within the given text.
Key Provisions
The Income Tax Assessment Amendment Act (No. 3) 1978 amends the Income Tax Assessment Act 1936, introducing specific changes to the tax treatment of certain deductions and gifts. Section 3 of the Act modifies section 51 of the Principal Act by adding a new sub-section (3), which specifies that deductions are not allowable in respect of long service leave, annual leave, sick leave, or other leave unless an amount is paid to the person to whom the leave relates or, in the case of their death, to a dependant or personal representative. This amendment applies to assessments for the income year commencing 1 July 1977 and subsequent years, except for assessments made before 28 September 1978. The Act clarifies that this change does not imply any retrospective allowance of deductions for earlier income years.
Entities and individuals governed by the Principal Act must ensure compliance with the new provisions regarding the deductibility of leave payments. Specifically, they must verify that any deductions claimed for leave are in accordance with the amended section 51(3), which mandates that the amount paid must be treated as a loss or outgoing at the time of payment. This requirement imposes an obligation on taxpayers to maintain accurate records and documentation to substantiate any deductions claimed in relation to leave payments.
Breach of the provisions outlined in the Act could result in significant consequences. Although specific offences and penalties are not detailed within the text of this excerpt, it is understood that non-compliance with income tax laws generally can lead to both civil and criminal penalties. Civil penalties may include interest on unpaid taxes and fines, while criminal penalties might involve imprisonment, depending on the severity and intent of the breach. The precise penalties would be determined in accordance with other relevant sections of the Income Tax Assessment Act 1936 and other applicable legislation.