Commonwealth Numbered Regulations - Explanatory Statements

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INCOME TAX ASSESSMENT AMENDMENT REGULATIONS 1999 (NO. 3) 1999 NO. 114

STATUTORY RULES 1999 NO. 114

Issued by the Authority of the Assistant Treasurer

Income Tax Assessment Act 1936

Income Tax Assessment Amendment Regulations 1999 (No. 3)

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.

Purpose

The amending regulations require employers to specify on group certificates the income support component of wages paid to Community Development Employment Projects (CDEP) participants sourced from CDEP wage grants provided by the Aboriginal and Torres Strait Islander Commission (ATSIC) and the Torres Strait Regional Authority (TSRA). The amendments ensure that participants know exactly how much of the CDEP wages they receive during a year of income is rebatable.

Background

The CDEP scheme is administered by the ATSIC and the TSRA to enable Indigenous Australian communities and organisations to manage their own economic and social development and to provide employment for people in their communities.

To participate in the scheme, unemployed members of Indigenous communities choose to give up their entitlements to social security payments, for example, the Newstart Allowance. In place of the social security payments forgone, the community organisations pay wages to participants to undertake community managed activities out of the income support component of wages grants provided by the ATSIC and the TSRA.

It was announced in the 1998 Federal Budget that section 160AAA of the Act would be amended to enable participants in the CDEP scheme to claim the beneficiary tax rebate in respect of the income support component of CDEP wages paid on or after 1 July 1998.

The rebatable income support component of CDEP wages is paid by either CDEP community organisations or by third parties engaged by the community organisations for the provision of training to participants. CDEP wages may consist of amounts paid from sources other than the rebatable income support component paid out of the wages grant from the ATSIC or TSRA. For example, CDEP wages may consist of "top-up" amounts from profits made by the community organisations or from other Government sources. Payments may also be made from the operational funds grant from ATSIC and TRSA.

Under the current tax law CDEP employers are required to provide CDEP participants with a group certificate detailing the gross amount of salary or wages. In order for participants in the CDEP scheme to claim their rebate entitlement they need to know what part of their CDEP wage is rebatable.

Explanation of amendments

Subregulation 119(3) specifies what particulars an employer must include in group certificates. Items 1 and 2 in Schedule 1 of the Amendment Regulations insert new paragraph 119(3)(f) which requires employers, who pay wages to CDEP participants, to specify the amount of the income support component on group certificates. The proposed amendments ensure that participants know how much of their CDEP wage is rebatable when completing their personal income tax returns.

Application

The regulations commenced on 1 July 1999 (item 2) and apply to group certificates issued in respect of payments of wages made on or after 1 July 1999 (item 4).