EXPLANATORY STATEMENT

Issued by authority of the Assistant Treasurer

Tax Laws Amendment (2013 Measures No. 2) Commencement Proclamation 2013

Subsection 2(1) of the Tax Laws Amendment (2013 Measures No. 2) Act 2013 (the Act) provides that Parts 1 to 3 of Schedule 2 to the Act commence on a day to be fixed by proclamation.  However, if any of the provisions of Parts 1-3 of Schedule 2 do not commence within six months of the date the Act receives the Royal Assent, then those provisions commence on the first day after the end of that six month period.  The Act received Royal Assent on 29 June 2013.

The Proclamation fixed 11 July 2013 as the day on which Parts 1 to 3 of Schedule 2 to the Act commenced.

Infrastructure projects often involve a long lead time between when expenditure is incurred during the construction phase and when income is generated during the operational phase.  Schedule 2 enables the losses generated in the construction phase to be increased on an annual basis to counter the effect of the passage of time from when the losses are incurred to when they can be used against income generated in the operational phase. 

Past year losses can usually only be used by an entity if it has the same owners that it had when the losses were incurred or carries on the same business it was carrying on when the losses were incurred.  Schedule 2 allows an entity that carries on a qualifying infrastructure project to use past year losses against current year income despite a change in ownership, even if it does not carry on the same business.

Part 1 of Schedule 2 to the Act provides the framework for who can access the incentive and how it operates.  Part 2 of Schedule 2 to the Act makes consequential amendments and Part 3 of Schedule 2 to the Act deals with the application of the provisions.  Part 4 of Schedule 2 to the Act makes minor technical amendments that are appropriate to give effect to the measure.  Division 1 of Part 4 of Schedule 2 to the Act commences on Royal Assent.  Division 2 of Part 4, which repealed a provision made unnecessary by the Tax and Superannuation Laws Amendment (2013 Measures No. 1) Act 2013, has already commenced.

The provisions apply to income years starting on or after 1 July 2012 and therefore have a concessional retrospective element.  Parts 1 to 3 of Schedule 2 to the Act were commenced by Proclamation to ensure that the legislative instruments that support the administrative processes for access to the incentive (such as the process for applying for designation) were made.

The Proclamation is a legislative instrument for the purposes of the Legislative Instruments Act 2003.