Income Tax Rates Amendment Act 1987

Overview

The Income Tax Rates Amendment Act 1987 (No. 60 of 1987) was enacted by the Queen, and the Senate and the House of Representatives of the Commonwealth of Australia to modify the Income Tax Rates Act 1986. The primary objective of the Act was to adjust the tax rates applicable to various entities, including companies, trustees of corporate unit trusts, public trading trusts, superannuation funds, ineligible approved deposit funds, and trustees of trust estates subject to specific subsections of the Assessment Act. The amendments to the tax rates were designed to be effective from the financial year commencing on 1 July 1987 for most entities, with an earlier application for trustees subject to subsection 98 (3) of the Assessment Act. This legislation aimed to address the need for updated tax rates to reflect economic changes and policy adjustments.

Scope and Application

The Income Tax Rates Amendment Act 1987 is a piece of Commonwealth legislation that amends the Income Tax Rates Act 1986. This Act applies to various entities and individuals, including companies, trustees of corporate unit trusts, public trading trusts, superannuation funds, and trustees of ineligible approved deposit funds. It adjusts the tax rates payable by these entities and individuals for the financial year commencing on 1 July 1987 and all subsequent financial years. The Act also applies to trustees of a trust estate who are liable to be assessed and to pay tax under a specific subsection of the Assessment Act for the financial year commencing on 1 July 1986 and all subsequent financial years. The amendments extend to the rates of tax payable by these entities and individuals as specified in the Act, and they are applicable nationwide across Australia. There are no stated exclusions, exemptions, or thresholds in the Act itself, although the application of these tax rates may be further defined or modified through subordinate instruments or regulations.

Key Provisions

The Income Tax Rates Amendment Act 1987 primarily focuses on modifying the income tax rates for various entities, as outlined in the Income Tax Rates Act 1986 (Principal Act). Section 3 of the Act ensures that the amended rates of tax are applicable for all subsequent financial years. Specifically, Section 4 amends the tax rate for companies from 46% to 49% and increases the tax offset from $2,542 to $3,813. Similarly, Sections 5 and 6 modify the tax rates for trustees of corporate unit trusts and public trading trusts, respectively, both being adjusted from 46% to 49%. Section 7 makes further amendments to the tax rates for trustees of superannuation funds, lowering the rate from 50% to 49%, and adjusting the tax offset from 24.42% to 24%. Additionally, Section 8 reduces the tax rate for trustees of ineligible approved deposit funds from 44.25% to 40%. Finally, Section 9 introduces a new tax rate of 49% for trustees of trust estates subject to assessment under subsection 98(3) of the Assessment Act. The Act imposes clear obligations on various entities to comply with the new tax rates set forth. Companies, corporate unit trusts, public trading trusts, superannuation funds, and ineligible approved deposit funds must all adhere to the new tax rates starting from the specified financial years. Trustees of these entities must ensure that the correct tax rates are applied when calculating and paying taxes for the respective financial years. Additionally, trustees subject to the new provisions under subsection 98(3) of the Assessment Act must now account for a tax rate of 49% for their share of the net income. Failure to comply with the new tax rates as stipulated in the Act can result in civil or criminal consequences. While the Act does not explicitly detail the penalties, breaches of tax laws generally attract penalties under the Income Tax Assessment Act 1997. These penalties can include fines and, in severe cases, imprisonment for wilful or negligent breaches. The specific penalties depend on the nature and extent of the breach, but they can be significant, reflecting the seriousness of non-compliance with tax laws.