EXPLANATORY STATEMENT

Select Legislative Instrument 2006 No. 59

 

Issued by authority of the Minister for Revenue
and Assistant Treasurer

Income Tax Assessment Act 1936

Income Tax Amendment Regulations 2006 (No. 1)

Section 266 of the Income Tax Assessment Act 1936 (the Act) provides in part, that the Governor-General may make regulations not inconsistent with the Act, prescribing all 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.

Subsection 23AD(1) of the Act exempts the pay and allowances earned by Australian Defence Force (ADF) members from income tax where there is a certificate in force, issued in writing by the Chief of the Defence Force, to the effect that the members are on eligible duty.  The certificate comes into force at the later of either the time specified in the certificate or the time the person arrives for duty in the specified area.  The certificate continues to be in force until the earliest of the time of departure from the specified area, the date of revocation of the certificate or a time prescribed by regulation and is in force during any period of hospital treatment during the person’s eligible duty (subsection 23AD(3) of the Act).

Subsection 23AD(2) of the Act provides that the regulations may declare that duty with a specified organisation in a specified area outside Australia and after a specified day is eligible duty for the purposes of section 23AD of the Act.

Prior to the Chief of the Defence Force issuing the certificate, the Minister for Defence declares service on an operation to commence or cease to be ‘warlike’ or ‘non-warlike’ service and sets out the area of operations.

The purpose of the Regulations is to close off the period of eligible duty with Operation PALATE within the area of operations (generally in Afghanistan) so that the period of eligible duty is 18 April 2003 to 5 July 2004.  This is necessary because the Minister for Defence has declared service with these operations in the specified areas of operation to no longer be ‘warlike’ service for the purposes of section 23AD of the Act.  Whilst the effective date of the Regulation is retrospective, ADF members will not be adversely affected because no ADF members were in the area of operations on or after 5 July 2004.

The Regulations also declare duty on Operation PALATE II to be eligible duty to enable the pay and allowances received by ADF members deployed on Operation PALATE II to be exempt from income tax under section 23AD from 27 June 2005.  Whilst the effective date of the Regulation is retrospective, ADF members will not be adversely affected because the Regulations benefit ADF members serving on Operation PALATE II by providing them with a tax exemption.

The Regulations also make consistent the specified area of operations for Operation PALATE and Operation PALATE II, and specify the name of the organisation with which the duty is performed, the United Nations Assistance Mission in Afghanistan, to ensure compliance with section 23AD. 

Subsection 12(2) of the Legislative Instruments Act 2003 prohibits the retrospective operation of regulations, or a provision of regulations, which adversely affect the rights of, or impose liabilities on, a person other than the Commonwealth in respect of anything done or omitted to be done before the date of notification.  The Office of Legislative Drafting and Publishing has advised that the Regulations do not contravene subsection 12(2).

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

Consultation was not undertaken in relation to this instrument because it is a minor in nature and does not substantially change the law.

The Regulations commenced on the day after registration.