Overview

The Income Tax Assessment Amendment (Exempt Entities) Regulation 2013 was enacted to provide a specific exemption from income tax for the International Cricket Council Development International Limited (IDI) for a period of five years from 1 July 2013 to 30 June 2018. This regulation was introduced to address the need for a tax exemption to support the IDI in their efforts to organise and promote the staging of the 2015 Cricket World Cup in Australia. The regulation was issued by the Assistant Treasurer under the authority granted by the Income Tax Assessment Act 1997, which allows the Governor-General to make regulations necessary or convenient to carry out or give effect to the Act. The policy objective was to facilitate the smooth organisation of the international sporting event by providing the IDI with the financial relief of an income tax exemption, recognising their role and the benefits of hosting such an event. The regulation was subject to targeted consultation with the IDI, and in accordance with the Legislative Instruments Act 2003, no further public consultation was deemed necessary as the regulation was considered minor and of a machinery nature. It was also assessed under the Human Rights (Parliamentary Scrutiny) Act 2011, with the conclusion that the measures in the regulation are compatible with human rights, as detailed in the Statement of Compatibility with Human Rights provided as Attachment A.

Scope and Application

The Income Tax Assessment Amendment (Exempt Entities) Regulation 2013, issued under the authority of the Assistant Treasurer, amends the Income Tax Assessment Regulations 1997 to exempt the International Cricket Council Development International Limited (IDI) from income tax for a specified period of five years from 1 July 2013 to 30 June 2018. This legislative instrument applies to the IDI, a sporting entity based in the British Virgin Islands, which is exempt from income tax in that jurisdiction. The exemption is granted to support the IDI's role in organising and promoting the 2015 Cricket World Cup in Australia. The regulation is made under the power provided by the Income Tax Assessment Act 1997, which allows the Governor-General to make regulations necessary or convenient for carrying out or giving effect to the Act. Despite certain conditions stipulated in Section 50-70 of the Act, the IDI qualifies for exemption as it is located outside Australia and meets the exemption criteria prescribed in the Principal Regulation. The regulation is minor and machinery in nature, hence no further public consultation was undertaken, though targeted consultation was conducted with the IDI. The regulation is subject to the Legislative Instruments Act 2003 and includes a Statement of Compatibility with Human Rights, confirming its alignment with human rights.

Key Provisions

The Income Tax Assessment Amendment (Exempt Entities) Regulation 2013 (the Regulation) is designed to exempt the International Cricket Council Development International Limited (IDI) from income tax for a specified period. According to section 50-70 of the Income Tax Assessment Act 1997 (the Act), entities like the IDI can be granted tax exemptions if certain conditions are met, or if they are prescribed in the Income Tax Assessment Regulations 1997 (the Principal Regulation). The Regulation achieves this by prescribing the IDI as exempt from income tax for a five-year period, from 1 July 2013 to 30 June 2018, under the authority granted by subsection 909-1(1) of the Act. This exemption is contingent on the IDI being located outside Australia and being exempt from income tax in its country of residence, which is the British Virgin Islands. The Regulation imposes specific obligations on the IDI to ensure that it remains compliant with the conditions set out for its tax exemption. Primarily, the IDI must maintain its status as a non-Australian entity and continue to be exempt from income tax in the British Virgin Islands for the duration of the exemption period. These conditions are critical for the Regulation to remain valid and for the IDI to continue enjoying its tax-exempt status. Failure to meet these conditions could potentially lead to the revocation of the tax exemption. For any breach of the conditions or non-compliance with the obligations stipulated in the Regulation, the IDI may face significant consequences. While the Regulation itself does not specify particular offences or penalties, non-compliance with tax regulations in general can lead to civil and criminal penalties under the Act. For instance, under section 178 of the Act, entities found to be non-compliant may be subject to penalties that include fines and imprisonment. The severity of these penalties can vary depending on the nature and extent of the breach, but they serve as a deterrent to ensure adherence to the tax laws.