Income Tax Regulations (Amendment) 1996 No. 185
EXPLANATORY STATEMENT
STATUTORY RULES 1996 No. 185
Issued By Authority Of The Assistant Treasurer
Income Tax Assessment Act 1936
Income Tax Regulations (Amendment)
Section 266 of the Income Tax Assessment Act 1936 (the Act) provides that the GovernorGeneral may make regulations prescribing matters required to give effect to the Act.
These regulations amend the Income Tax Regulations by inserting amended regulation 14E, which prescribes Government schemes for the purposes of subsection 160L(6A) of the capital gains tax (CGT) provisions of the Act.
Subsection 1601(6A) provides that CGT will not apply to payments and reimbursements made under certain government schemes. A scheme covered by subsection 160L(6A) must be established by the Commonwealth, a State or a Territory or by an authority of the Commonwealth, a State or a Territory. In addition, the scheme must be prescribed in the regulations.
Amended regulation 14E, proposed by regulation , contains the following changes:
* The General Practice Rural Incentives Program, previously administered by the Commonwealth Department of Human Services and Health, is now administered by the Commonwealth Department of Health and Family Services (paragraph 14E(1)(a)). The aim of this program is to attract and retain general practitioners in rural communities in Australia. Relocation grants, in the form of a reimbursement, are one form of assistance available under this program. As stated above, the right to reimbursement is an asset under the COT provisions and thus can attract a CGT liability. By subregulation 14E(2), paragraph 14E(1)(a) will apply to disposals of assets on or after 1 July 1992;
* The Sydney Aircraft Noise Insulation Project, administered by the Commonwealth Department of Administrative Services and the Department of Transport and Regional Development, is prescribed as a scheme to which subsection 160L(6A) applies (paragraph 14E(1)(b)). The scheme provides acoustic insulation treatment for residences in areas most affected by aircraft noise. Under this scheme, a home owner has the right to have their expenses paid by the relevant Department. This right is again an asset under the CGT provisions and thus can attract a CGT liability. By subregulation 14E(3), paragraph 14E(1)(b) will apply to disposals of assets on or after 8 December 1994.
Overview
The Income Tax Regulations (Amendment) 1996 No. 185 was enacted to amend the Income Tax Regulations by inserting amended regulation 14E, which prescribes government schemes for the purposes of subsection 160L(6A) of the capital gains tax (CGT) provisions in the Income Tax Assessment Act 1936. The regulation was introduced to address the issue of CGT liabilities on payments and reimbursements made under certain government schemes. The policy objective of this amendment is to exempt certain government schemes from CGT, thereby ensuring that individuals participating in these schemes are not subjected to a CGT liability. The amendment was issued by authority of the Assistant Treasurer and applies to disposals of assets on or after specific dates for each scheme.
Scope and Application
The Income Tax Regulations (Amendment) 1996 No. 185 pertains to amendments made to the Income Tax Regulations under the Income Tax Assessment Act 1936. These amendments specifically modify regulation 14E to prescribe certain government schemes for the purposes of subsection 160L(6A) of the Act, which pertains to the capital gains tax (CGT) provisions. Subsection 160L(6A) stipulates that CGT will not apply to payments and reimbursements made under specified government schemes. The regulation applies to schemes established by the Commonwealth, a State or a Territory, or by an authority of these entities, provided they are prescribed in the regulations. The amendment includes the General Practice Rural Incentives Program, now administered by the Department of Health and Family Services, which provides relocation grants to attract and retain general practitioners in rural communities, and the Sydney Aircraft Noise Insulation Project, administered by the Department of Administrative Services and the Department of Transport and Regional Development, which provides acoustic insulation for residences affected by aircraft noise. These amendments ensure that certain assets related to these government schemes are exempt from CGT liability under specific conditions and timeframes.
Key Provisions
The Income Tax Regulations (Amendment) 1996 No. 185 introduces specific amendments to the Income Tax Regulations by modifying regulation 14E. This regulation is concerned with the exemption of certain government schemes from the application of capital gains tax (CGT) under subsection 160L(6A) of the Income Tax Assessment Act 1936 (the Act). These amendments ensure that certain payments and reimbursements made under prescribed government schemes are not subject to CGT, provided the schemes meet the criteria outlined in the Act.
The key operative sections, such as section 266 of the Act, empower the Governor-General to make regulations necessary to give effect to the Act. The amendment to regulation 14E introduces two new schemes that are exempt from CGT: the General Practice Rural Incentives Program and the Sydney Aircraft Noise Insulation Project. Regulation 14E(1)(a) specifies that the General Practice Rural Incentives Program, which is now administered by the Commonwealth Department of Health and Family Services, is exempt from CGT for disposals of assets on or after 1 July 1992. Regulation 14E(1)(b) similarly provides that the Sydney Aircraft Noise Insulation Project is exempt from CGT for disposals of assets on or after 8 December 1994.
The obligations imposed by this Act on the parties or entities it governs are primarily to ensure that they comply with the specific regulations regarding the exemption from CGT. For example, the Commonwealth Department of Health and Family Services must administer the General Practice Rural Incentives Program in accordance with the prescribed regulations to ensure that it remains exempt from CGT. Similarly, the Commonwealth Department of Administrative Services and the Department of Transport and Regional Development must manage the Sydney Aircraft Noise Insulation Project to maintain its exemption status. These obligations include maintaining accurate records and ensuring that any payments or reimbursements made under the schemes comply with the specified dates and conditions.
Any breach of the provisions of the Act could result in significant consequences. While the specific offences and penalties are not detailed in the explanatory statement, under the Income Tax Assessment Act 1936, penalties for non-compliance can include substantial fines. For example, penalties for making a false or misleading statement could amount to up to $22,200 for individuals and $111,000 for corporations. Additionally, failure to comply with the CGT provisions could result in the taxpayer being liable for the tax and additional interest. These penalties underscore the importance of adhering to the regulations to avoid severe financial repercussions.