Income Tax Regulations (Amendment)

Administered by Department of the Treasury

Legislation au F1997B02702 Regulations Not in force Legislative Instrument

Legislation content

Income Tax Regulations (Amendment) 1997 No. 197

EXPLANATORY STATEMENT

Statutory Rules 1997 No. 197

Issued by the Authority of the Assistant Treasurer

Income Tax Assessment Act 1936

Income Tax Assessment Act 1997

Income Tax Regulations (Amendment)

Income Tax Assessment Regulations

The Governor-General may make regulations under:

* section 266 of the Income Tax Assessment Act 1936; and

* section 909-1 of the Income Tax Assessment Act 1997;

for the purposes of those Acts. Each of those sections allows the Governor-General to make regulations for the purposes of both Acts.

Background

The income tax law is being progressively rewritten by the Tax Law Improvement Project to give it a better structure and make it easier to understand.

The first instalment of that rewrite is the Income Tax Assessment Act 1997 (the 1997 Act), which came into operation on 1 July 1997 and will apply from the 19971998 income year.

The 1997 Act establishes the structure and framework of the new income tax law. The Act will, by instalments, progressively rewrite and replace the Income Tax Assessment Act 1936 (the 1936 Act). As each instalment is enacted, the rewritten provisions of the 1936 Act will be closed off (that is, they will cease to apply from the start of that instalment). The rewritten provisions in the new law will apply as soon as each instalment of new law is enacted. Until the 1936 Act is completely rewritten, there will be two Income Tax Assessment Acts, but only one set of operative provisions for each area of the law.

'The second instalment of the rewrite is the Tax Law Improvement Act 1997 (the TLI Act), which came into operation on 1 July 1997 and will apply from the 19971998 income year. The TLI Act includes further rewrites of provisions of the 1936 Act for incorporation in the 1997 Act.

Reason for amendments and new regulations

The Income Tax Regulations (Amendment) and the Income Tax Assessment Regulations are consequential on the enactment of the TLI Act.

As the 1936 and 1997 Acts will apply concurrently until the 1936 Act is fully rewritten:

*       the 1997 Act will need its own regulations (the Income Tax Assessment Regulations) to progressively replace the Income Tax Regulations made under the 1936 Act (Regulations 51-05.01 and 70-55.01);

*       the Income Tax Regulations need to be amended to make changes consequential on the rewrite (for example, to change references to rewritten provisions or to insert notes directing the reader to the provisions that will replace a particular regulation) (Regulations 3, 4, 5, 6, 7 and 8).

Both sets of regulations will commence on 1 July 1997.

The amending and new regulations will make no substantive changes to the law.

Details of the amendments are attached.

Section 48 of the Acts Interpretation Act 1901 provides that a regulation will have no effect if it would take effect before the date of notification in the Gazette if the rights of a person would be affected so as to disadvantage that person or liabilities would be imposed on a person in respect of anything done or omitted to be done before the date of notification. These regulations do not fall into either of those categories, and hence they may commence operation before the date of notification.

ATTACHMENT

Details

Details of the regulations are as follows.

Regulation 1 provides that the regulations will commence on 1 July 1997. The TLI Act commences on 1 July 1997.

Regulation 2 provides that the proposed regulations will amend the Income Tax Regulations (the principal regulations).

Regulation 3 will insert a note after regulation 5 signposting the reader to the new provisions in the 1997 Act and the Income Tax Assessment Regulations that provide for allowances and bounties prescribed for the 1997-98 or a later income year. Regulation 5 lists allowances and bounties payable to, or in respect of, a member of the Defence Force that are exempt income by virtue of subparagraph 23(t)(iii). That subparagraph has been rewritten as items 1.1 and 1.2 of section 51-5 of the 1997 Act. Regulation 51-5.01 of the Income Tax Assessment Regulations will list the same allowances and bounties for the purposes of the 1997 Act.

Regulation 4 will omit subregulation 10(1) of the principal regulations. That subregulation deals with the value of livestock for the purposes of the trading stock provisions of the 1936 Act. The trading stock provisions have been rewritten as part of the TLI Act (see Schedule 1, Division 70 of that Act).

Subregulation 10(1) prescribes the period within which a taxpayer can exercise the option, in subsection 32(7) of the 1936 Act, for valuing livestock. However, subsection 32(7) was repealed in 1992 and the subregulation has no current application.

Regulation 4 will also insert a note explaining that for working out the cost of natural increase of livestock occuring in the 1997-98 or a later income year, section 7055 of the 1997 Act and the Income Tax Assessment Regulations will apply. Regulation 7055.01 will rewrite subregulation 10(3), which sets out a minimum cost for natural increase.

Regulation 5 will insert a note after regulation 11 of the principal regulations explaining that if the date of death is during the 1997-98 or a later income year, section 70-105 of the 1997 Act will apply. Regulation 11 prescribes the time within which a trustee of a deceased estate and its beneficiaries can agree to modify the value of trading stock which has devolved to the beneficiaries from the deceased. This provision has been incorporated in the rewrite of the trading stock provisions (see Schedule 1, subsection 70-105(7) of the TLI Act).

Regulation 6 will amend regulation 80 of the principal regulations, which sets out the prescribed rate of deductions by employers from the salary or wages of an employee for certain amounts listed in regulation 80. One of the amounts listed is an amount in paragraph 26 (eb) of the 1936 Act - broadly, a return to work payment that is part of a taxpayer's assessable income. The assessable income provisions of the 1936 Act have been rewritten and return to work payments are now included in section 15-3 (Return to work payments) in the 1997 Act. The amendment will substitute a reference to an amount under section 15-3.

Regulation 7 will amend paragraph (b) of subregulation 151(7) of the principal regulations. Regulation 151 deals with rebates in respect of certain pension payments. Paragraph (7)(b), which is part of the calculation of the amount of the rebate, refers to an amount of pension that has not been included in a taxpayer's assessable income because of the operation of Division 1AA of Part Ill of the 1936 Act. Division 1AA exempts certain pensions and similar payments. The relevant parts have been rewritten as Subdivisions 52-A and 52-B in the 1997 Act. The amendment will substitute a reference to those Subdivisions.

Regulation 8 will amend subregulation 152L(3) of the principal regulations. Regulation 152L is part of the foreign income fund (FIF) provisions of the 1936 Act and allows notional deductions from the notional income of a FIF. These deductions extend to certain expenditure on a prescribed class of property. Regulation 152L specifies capital works to be a prescribed class of property and subregulation (3) defines capital works, in part, as excluding plant or articles within the meaning of section 54 of the 1936 Act, which is part of the depreciation provisions. The depreciation provisions have been rewritten and the definition of plant (including articles) is now set out in section 42-18 of the 1997 Act. The amendment will substitute a reference to that section.

 

Overview

The Income Tax Regulations (Amendment) 1997 No. 197 is an amendment to the existing Income Tax Regulations, enacted to facilitate the transition and implementation of the Income Tax Assessment Act 1997. The amendment was introduced by the Tax Law Improvement Project to progressively rewrite the income tax law, improving its structure and clarity. This rewrite is being done in instalments, with the first being the Income Tax Assessment Act 1997, which came into effect on 1 July 1997. The Income Tax Regulations (Amendment) 1997 No. 197, issued by the authority of the Assistant Treasurer, ensures that the regulations align with the new legislative framework and address the transitional needs arising from the concurrent application of the 1936 Act and the 1997 Act until the former is fully rewritten. The purpose of these regulations is to make necessary amendments to the existing Income Tax Regulations, ensuring they reflect the changes introduced by the new Income Tax Assessment Act 1997 and the Tax Law Improvement Act 1997. This includes updating references to new provisions and ensuring consistency across the regulatory framework. The amendments do not introduce any substantive changes to the law but are essential for the smooth implementation of the new legislative regime. The regulations aim to guide taxpayers and practitioners through the transition, signposting new provisions and explaining changes in the regulatory framework.

Scope and Application

The Income Tax Regulations (Amendment) 1997 No. 197, issued under the authority of the Assistant Treasurer, serves to amend the Income Tax Regulations in response to the enactment of the Tax Law Improvement Act 1997. These amendments are essential to align the existing regulations with the progressive rewrite of the income tax law, which commenced with the introduction of the Income Tax Assessment Act 1997. Both the 1936 Act and the 1997 Act will operate concurrently until the 1936 Act is fully rewritten, necessitating these amendments to ensure continuity and consistency in the application of the law. The regulations apply to all entities and individuals subject to income tax under the relevant Acts and cover the entire Commonwealth of Australia. They make no substantive changes to the law but ensure that references and provisions within the regulations correspond with the newly rewritten sections of the 1997 Act. The regulations commence on 1 July 1997, aligning with the effective date of the TLI Act and the new regulations, and they do not disadvantage any person by imposing liabilities for actions taken prior to their notification.

Key Provisions

The main operative sections of the Income Tax Regulations (Amendment) 1997 No. 197 are contained in Regulations 3, 4, 5, 6, 7 and 8. These regulations amend the Income Tax Regulations made under the Income Tax Assessment Act 1936 to make them consistent with the new Income Tax Assessment Act 1997. The amendments include inserting notes that direct readers to the new provisions in the 1997 Act and the Income Tax Assessment Regulations that replace certain rewritten provisions of the 1936 Act. For example, Regulation 3 inserts a note after regulation 5 signposting the reader to the new provisions in the 1997 Act and the Income Tax Assessment Regulations that provide for allowances and bounties prescribed for the 1997-98 or a later income year. Similarly, Regulation 4 omits subregulation 10(1) of the principal regulations, which deals with the value of livestock for the purposes of the trading stock provisions of the 1936 Act, as these provisions have been rewritten as part of the Tax Law Improvement Act 1997. The obligations and requirements imposed by the Income Tax Regulations (Amendment) 1997 No. 197 on the parties or entities it governs are to ensure that the Income Tax Regulations made under the Income Tax Assessment Act 1936 are amended to make them consistent with the new Income Tax Assessment Act 1997. This includes inserting notes that direct readers to the new provisions in the 1997 Act and the Income Tax Assessment Regulations that replace certain rewritten provisions of the 1936 Act. The amendments must also ensure that the regulations do not take effect before the date of notification in the Gazette if they would disadvantage a person or impose liabilities on a person in respect of anything done or omitted to be done before the date of notification. Any offences, penalties, or civil/criminal consequences for breach of the Income Tax Regulations (Amendment) 1997 No. 197 are not explicitly stated in the explanatory statement. However, it is likely that breaches of the regulations could result in penalties under the Income Tax Assessment Act 1936 or the Income Tax Assessment Act 1997, depending on the nature of the breach. The maximum penalties for breaches of the Income Tax Assessment Act 1936 can be found in section 270-10 of that Act, while the maximum penalties for breaches of the Income Tax Assessment Act 1997 can be found in section 286-10 of that Act. These penalties can include fines and imprisonment, depending on the seriousness of the breach.

Legal classification tags

Area of Law
Taxation Law
Instrument
Regulation
Concepts
Definitions & Interpretation
Commencement Provisions
Repeal & Amendment

Interactions

Authorises

All Versions

Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.