EXPLANATORY STATEMENT
Select Legislative Instrument 2009 No. 158
Issued by authority of the Assistant Treasurer
Taxation Administration Act 1953
Taxation Administration Amendment Regulations 2009 (No. 1)
Section 18 of the Taxation Administration Act 1953 (the Act) provides that the Governor-General may make regulations, not inconsistent with the Act, prescribing all matters which by the Act are required or permitted to be prescribed, or which are necessary or convenient to be prescribed for giving effect to the Act.
The Government announced in the 2008-09 Budget that it would simplify the delivery of the family tax benefit and that from 1 July 2009 it will only be paid and claimable through Centrelink or Medicare, not through the tax system.
The purpose of the amending regulations is to ensure that individuals entitled to be paid family tax benefit through Centrelink or Medicare cannot use this entitlement to reduce the amount of tax withheld from income from other sources. Under the new arrangements, an individual (for example, an employee) who expects to receive a withholding payment from an entity (for example, an employer) will no longer be able to make a declaration to that entity to have the family tax benefit anticipated via a reduced withholding.
Paragraph 26(1)(h) of the Taxation Administration Regulations 1976 provided that an individual may make a declaration in respect of the family tax benefit. Subregulation 30(3) of the Taxation Administration Regulations 1976 provided that a new declaration is required to be given by an individual to an entity (making the withholding payment) when that individual lodges a claim for the family tax benefit.
The Regulations removed paragraph 26(1)(h) and subregulation 30(3) from the Taxation Administration Regulations 1976 to ensure that individuals cannot make a declaration in regard to their entitlement to the family tax benefit. As the family tax benefit will not be paid and claimable through the tax system, it is no longer appropriate for individuals to be able to make a declaration.
Public consultation was not undertaken in relation to the Regulations as the Regulations make only minor amendments to the Taxation Administration Regulations 1976 as a consequence of the Government’s decision to alter the way in which the family tax benefit is administered.
The Regulations are a legislative instrument for the purposes of the Legislative Instruments Act 2003.
The Regulations commenced on the day after they were registered on the Federal Register of Legislative Instruments.
Overview
The Taxation Administration Amendment Regulations 2009 (No. 1) were enacted to address the need for simplifying the delivery of the family tax benefit, as announced in the 2008-09 Budget. The Government decided that from 1 July 2009, the family tax benefit would only be paid and claimable through Centrelink or Medicare, instead of through the tax system. This change aimed to streamline the process and prevent any misuse of the benefit in tax withholdings. The Regulations, issued under section 18 of the Taxation Administration Act 1953, were made by the Assistant Treasurer and commenced upon registration on the Federal Register of Legislative Instruments. They removed specific provisions from the Taxation Administration Regulations 1976, ensuring that individuals could no longer declare their entitlement to the family tax benefit, thereby preventing it from being used to reduce tax withheld from income from other sources.
Scope and Application
The Taxation Administration Amendment Regulations 2009 (No. 1) are subordinate instruments made under Section 18 of the Taxation Administration Act 1953, aimed at streamlining the delivery of family tax benefits by stipulating that these benefits are only to be paid and claimable through Centrelink or Medicare from 1 July 2009. These Regulations apply to individuals, particularly employees, who anticipate receiving family tax benefits and entities such as employers that are responsible for withholding tax. They have a national reach across Australia, impacting all taxpayers who were previously able to make declarations regarding their family tax benefit entitlements. The Regulations specifically exclude and remove provisions from the Taxation Administration Regulations 1976 that allowed individuals to declare their family tax benefit entitlements, thereby preventing such declarations from reducing the amount of tax withheld from their income. Public consultation was not deemed necessary for these Regulations as they represent minor adjustments to existing regulations in response to the government’s decision to change the administration of family tax benefits.
Key Provisions
The primary operative sections of the Taxation Administration Amendment Regulations 2009 (No. 1) amend the Taxation Administration Regulations 1976 to ensure that individuals are no longer able to make a declaration regarding their entitlement to the family tax benefit. This change aligns with the government's decision to simplify the delivery of family tax benefits, which will now only be paid and claimable through Centrelink or Medicare from 1 July 2009, rather than through the tax system. Specifically, the Regulations remove paragraph 26(1)(h) and subregulation 30(3) of the Taxation Administration Regulations 1976, which previously allowed individuals to make a declaration in respect of the family tax benefit and required a new declaration when lodging a claim for the benefit.
These Regulations impose obligations on individuals and entities to ensure compliance with the new arrangements. Individuals who receive income from sources other than Centrelink or Medicare must no longer make a declaration regarding their family tax benefit entitlement to their employer or withholding payer. Instead, any family tax benefit they are entitled to must be claimed through the appropriate channels, namely Centrelink or Medicare. Entities making withholding payments must also comply with these changes by not accepting declarations from individuals regarding their family tax benefit.
Breaching the provisions of these Regulations can result in civil and administrative consequences. While the explanatory statement does not specify particular offences or penalties, it is reasonable to infer that non-compliance could lead to actions to recover any incorrectly withheld tax or to administrative penalties under the relevant taxation laws. The maximum penalties for such breaches could be substantial, depending on the nature and extent of the non-compliance. For example, penalties for incorrect withholding declarations or failure to lodge tax returns can include fines up to $2,220 for individuals and $11,100 for corporations, in addition to any additional tax, interest, and penalties that may apply. These penalties underscore the importance of adhering to the new requirements set out in the Regulations.