EXPLANATORY STATEMENT
STATUTORY RULES 1988 NO. 196
ISSUED BY THE AUTHORITY OF THE TREASURER
INCOME TAX REGULATIONS (AMENDMENT)
This regulation repeals a redundant regulation, regulation 4AB of the Income Tax Regulations. Regulation 4AB prescribes those (international) organizations which are exempted from Australian income tax liability and the extent to which officials of such organizations are also exempt from Australian income tax on their official salaries and emoluments under paragraphs 23(x) and (y) of the Income Tax Assessment Act 1936
In 1985, the Government agreed to Australia’s accession, without reservation, to the Convention on the Privileges and Immunities of the Specialized Agencies and to Australia’s acceptance of the Agreement on the Privileges and Immunities of the International Atomic Energy Agency, also without reservation. Regulations were made in April 1986 under the International Organizations (Privileges and Immunities) Act 1963 to give full effect to Australia’s obligations under the two agreements. Those Regulations provide, amongst other things, for the exemption from Australian income tax of prescribed organizations and of the official salaries and emoluments of officials employed by such organizations. The exemptions they provide embrace those given by paragraphs 23(x) and (y) of the Income Tax Assessment Act 1936 and regulation 4AB.
The regulations made under the International Organizations (Privileges and Immunities) Act 1963 therefore render regulation 4AB redundant and it is therefore appropriate for regulation 4AB to be repealed.
Overview
The Income Tax Regulations (Amendment) Statutory Rules 1997, issued by the authority of the Treasurer, were enacted to address the redundancy of regulation 4AB in the Income Tax Regulations. This regulation, which previously exempted certain international organizations and their officials from Australian income tax liability, became redundant following Australia's accession to the Convention on the Privileges and Immunities of the Specialized Agencies and the Agreement on the Privileges and Immunities of the International Atomic Energy Agency in 1985. These international agreements, which Australia accepted without reservation, were implemented through regulations under the International Organizations (Privileges and Immunities) Act 1963. These new regulations provided comprehensive exemptions from Australian income tax, thereby making regulation 4AB obsolete. The policy objective of repealing regulation 4AB is to streamline and update the legislative framework to reflect Australia's current international obligations and commitments.
Scope and Application
The Income Tax Regulations (Amendment) Statutory Rules 1988 No. 196, issued by the authority of the Treasurer, pertain to the repeal of regulation 4AB of the Income Tax Regulations. This regulation, which previously prescribed the organizations exempt from Australian income tax liability and the extent of tax exemptions for their officials’ salaries and emoluments, is rendered redundant following Australia’s accession to the Convention on the Privileges and Immunities of the Specialized Agencies and the Agreement on the Privileges and Immunities of the International Atomic Energy Agency in 1985. The subsequent regulations made under the International Organizations (Privileges and Immunities) Act 1963 encompass the exemptions previously outlined in regulation 4AB, thus making it obsolete. This amendment ensures that the regulatory framework aligns with Australia’s international commitments and obligations, effectively streamlining the tax exemptions applicable to prescribed international organizations and their officials.
Key Provisions
The key provisions of this regulation, specifically Statutory Rule 1988 No. 196, pertain to the repeal of regulation 4AB of the Income Tax Regulations (paragraph 1). Regulation 4AB, which was previously responsible for prescribing exemptions from Australian income tax for certain international organizations and their officials, has been rendered redundant following Australia's accession to the Convention on the Privileges and Immunities of the Specialized Agencies and the Agreement on the Privileges and Immunities of the International Atomic Energy Agency in 1985. This means that regulation 4AB's role in exempting these organizations and their officials from Australian income tax has been superseded by the regulations made under the International Organizations (Privileges and Immunities) Act 1963 in April 1986.
The obligations and requirements imposed by this regulation on the parties or entities it governs include the cessation of the application of regulation 4AB (paragraph 3). This repeal effectively transfers the responsibility for the tax exemptions of the specified international organizations and their officials from regulation 4AB to the regulations made under the International Organizations (Privileges and Immunities) Act 1963. Entities previously exempt under regulation 4AB must now comply with the newer regulations to maintain their tax exemption status.
Regarding offences, penalties, or consequences for breach, the regulation does not explicitly outline such provisions (paragraph 4). However, the underlying principle is that compliance with the tax regulations is mandatory. Failure to adhere to the correct tax exemption regulations could result in financial penalties and legal consequences for both the international organizations and their officials. The specific penalties would be determined by the provisions of the Income Tax Assessment Act 1936 and the relevant tax regulations, which could include fines or back payment of taxes owed.