Income Tax Assessment Amendment Act (No. 5) 1984

Overview

The Income Tax Assessment Amendment Act (No. 5) 1984 was enacted to address the issue of taxing certain benefits received from or in connection with section 23f superannuation funds. This Act amends the Income Tax Assessment Act 1936, ensuring that the value of benefits received from such funds is included in the assessable income of the taxpayer, thereby closing a loophole that had previously allowed certain benefits to escape taxation. This legislation was passed by the Queen, in accordance with the Senate and the House of Representatives of the Commonwealth of Australia, with the policy objective of ensuring equitable taxation of superannuation benefits by including all benefits received from section 23f funds in the assessable income of the taxpayer. The Act specifically targets benefits received from section 23f funds, particularly those that are not rightfully due to the taxpayer or are deemed excessive, and mandates their inclusion in assessable income. By doing so, the Act aims to prevent the avoidance of tax through the receipt of benefits from superannuation funds that are not properly accounted for under the existing tax laws. This amendment applies to assessments made in respect of the income of the year in which 7 December 1983 occurred and all subsequent years of income, ensuring that the new rules are retrospectively applied where necessary.

Scope and Application

The Income Tax Assessment Amendment Act (No. 5) 1984 is an Australian Commonwealth Act that amends the Income Tax Assessment Act 1936 by inserting a new section, 26afa, to address the inclusion of certain benefits received from or in connection with section 23f superannuation funds in the assessable income of a taxpayer. The Act applies to taxpayers who receive benefits from section 23f funds, which are funds to which section 23f applies, or has applied, in relation to any year of income, after 7 December 1983. This includes benefits that the taxpayer has a right to receive from the fund, as well as excessive benefits and valuable consideration received in respect of the transfer of a right to receive a benefit from such a fund. The Act also provides for the Commissioner of Taxation to determine if it would be unreasonable to apply the inclusion to the whole or part of the benefit. The Act applies nationally and extends its reach through subordinate instruments as needed to implement the specified amendments. The Act specifies that the amendments apply to assessments in respect of income of the year of income in which 7 December 1983 occurred and all subsequent years of income. It also allows for the amendment of assessments made before the commencement of this section to give effect to the changes introduced by the Act. The Act does not explicitly mention any exclusions, exemptions, or thresholds; however, it provides the Commissioner with the discretion to decide the reasonableness of applying the inclusion to certain benefits, thereby potentially excluding some benefits from being included in assessable income under specific circumstances.

Key Provisions

The Income Tax Assessment Amendment Act (No. 5) 1984 introduces amendments to the law relating to income tax, specifically targeting the inclusion of certain benefits from superannuation funds within assessable income. The main operative sections, particularly section 26afa, require that where a taxpayer receives or obtains a benefit from a section 23f superannuation fund, the value of that benefit is included in the taxpayer's assessable income. This applies to benefits received on or after 7 December 1983, and covers benefits that are not rightfully the taxpayer's or are excessive in amount or value. Furthermore, the Act includes the value of any consideration received for transferring a right to such benefits as part of the taxpayer’s assessable income. The Act imposes several obligations on taxpayers and entities involved with superannuation funds. Taxpayers must accurately report any benefits received from section 23f funds in their assessable income. This includes not only direct benefits but also any consideration received for transferring rights to such benefits. The Commissioner of Taxation has the authority to determine whether a benefit is excessive or whether it would be unreasonable to include it entirely in the assessable income, based on the nature of the fund and the circumstances of the benefit's receipt. Breach of these provisions can lead to significant consequences. While the Act does not explicitly detail the offences or penalties, taxpayers found to have incorrectly reported benefits from superannuation funds may face tax assessments, interest charges, and potential penalties under the general provisions of the Income Tax Assessment Act 1936. The penalties for non-compliance can include fines and, in severe cases, criminal prosecution. The specific penalties depend on the nature and extent of the non-compliance, but they can be substantial, reflecting the seriousness with which tax evasion and incorrect reporting are treated under Australian law.