Commonwealth Numbered Regulations - Explanatory Statements

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EXPLANATORY STATEMENT Select Legislative Instrument 2007 No. 178


Issued by authority of the Minister for Revenue
and Assistant Treasurer

Income Tax Assessment Act 1997

Income Tax Assessment Amendment Regulations 2007 (No. 5)

Income Tax Assessment Act 1936

Income Tax Amendment Regulations 2007 (No. 2)

Section 909-1 of the Income Tax Assessment Act 1997 (the 1997 Act) and section 266 of the Income Tax Assessment Act 1936 (the 1936 Act) provide, in part, that the Governor-General may make regulations prescribing matters required or permitted by those Acts to be prescribed, or necessary or convenient to be prescribed, for carrying out or giving effect to those Acts.


The 1997 Act provides for cases where taxable income is to be worked out in a special way. Division 328 of that Act deals with entities who are carrying on a business with a small turnover and low amounts of depreciating assets (simplified tax system (STS) taxpayers). Subsection 328-375(4) of the 1997 Act allows the regulations to provide a different calculation of STS group turnover from that in the Act. Under subsection 170(1) of the 1936 Act, STS taxpayers have a two-year period for amendments of assessments unless otherwise prescribed in the regulations, or other exceptions apply.


The Tax Laws Amendment (Small Business) Bill 2007 (the Bill) proposes to repeal the STS and the concept of an STS taxpayer, and replace them with the concept of a small business entity. A small business entity will be eligible for a range of small business concessions, including those previously available to STS taxpayers.


The Regulations have made make minor changes to the Income Tax Assessment Regulations 1997 and Income Tax Regulations 1936 as a consequence of these proposed changes.


The Bill proposes to repeal the regulation-making authority of subsection 328-375(4) of the 1997 Act and replace it with a new subsection 328-120(3) which will have a similar effect. As a result, the Regulations have removed Division 328 of Part 2, made under subsection 328-375(4) from the Income Tax Assessment Regulations 1997 because it will be redundant.


The regulations made under subsection 170(1) of the 1936 Act contain a reference to ‘an STS taxpayer’. Since the Bill proposes to repeal the STS taxpayer concept and replace it with the concept of a small business entity, the Regulations have made one minor update to the terminology in the Income Tax Regulations 1936.


The Regulations are a legislative instrument for the purposes of the Legislative Instruments Act 2003.

The Regulations will commence on the commencement of the Tax Laws Amendment (Small Business) Act 2007 if they are registered before Schedule 1 to 8 of that Act commences, or on the day after they are registered on the Federal Register of Legislative Instruments if they are registered after that Act commences.

The Regulations also include transitional arrangements so that the changes only apply from the 2007-08 income year and later income years.

The Regulations are of a minor or machinery of government nature. Accordingly, the Office of Best Practice Regulation has advised that a Regulation Impact Statement is not mandatory, and has not been prepared.Delete RIS if not required.


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