Commonwealth Numbered Regulations - Explanatory Statements

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INCOME TAX AMENDMENT REGULATIONS 2002 (NO. 3) 2002 NO. 101

STATUTORY RULES 2002 No. 101

Issued by authority of the Minister for Revenue and Assistant Treasurer

Income Tax Assessment Act 1936

Income Tax Amendment Regulations 2002 (No. 3)

Section 266 of the Income Tax Assessment Act 1936 (the Act) provides that the GovernorGeneral may make regulations prescribing matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act.

The purpose of the proposed Regulations is to provide that payments made to temporary residents permanently departing Australia be classified as 'departing Australia superannuation payments' under subsection 27A(1) of the Act. As a result they will be subject to the special taxation treatment that applies to such payments (in most cases taxed at 30%).

Recent amendments to the Superannuation Industry (Supervision) Regulations (SIS Regulations) and the Retirement Savings Account Regulations (RSA Regulations) allow superannuation benefits that are normally required to be preserved until retirement to instead be paid to a temporary resident after they have permanently departed Australia.

As these payments will not be preserved until retirement it is not appropriate that they receive concessional taxation treatment. Accordingly the payments are to be subject to special taxation arrangements under the Act.

Details of the amending Regulations are set out in the attachment.

The amending Regulations commenced on 1 July 2002.

ATTACHMENT

Income Tax Amendment Regulations 2002 (No. 3)

Explanation of the amendments

Regulation 1 - specifies the name of the Regulations as the Income Tax Amendment Regulations 2002 (No. 3).

Regulation 2 - provides that the Regulations commenced on 1 July 2002.

Regulation 3 - provides that Schedule 1 amends the Income Tax Regulations 1936.

Schedule 1 amendments

Item 1 of Schedule 1 - provides that for the purposes of the definition of 'departing Australia superannuation payment' in subsection 27A(1) of the Act the following regulations are prescribed:

(a)       Regulations 6.20A, 6.20B and 6.24A of the SIS Regulations; and

(b)       Regulation 4.23A of the RSA Regulations.

Both the SIS and RSA Regulations that are specified deal with the circumstances in which a payment may be made to a temporary resident permanently departing Australia. This will mean that where a benefit is paid in accordance with these SIS and RSA Regulations then the benefit will be treated as a 'departing Australia superannuation payment' under subsection 27A(1) of the Act and thus subject to special taxation treatment.