Commonwealth Numbered Regulations - Explanatory Statements

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TAXATION (INTEREST ON OVERPAYMENTS) REGULATIONS (AMENDMENT) 1992 NO.178

STATUTORY RULES 1992 No. 178

ISSUED BY THE AUTHORITY OF THE TREASURER

Taxation (Interest on Overpayments) Act 1983

Taxation (Interest on Overpayments) Regulations (Amendment)

These Regulations are made under the Taxation (Interest on Overpayments) Act 1983 (the Overpayments Act) and amend the Taxation (Interest on Overpayments) Regulations by inserting new Regulations 1 to 4.

The Regulations vary the rate at which interest is paid, under section 9 of the Overpayments Act, from 14.026 per cent to 10 per cent. This new rate will also apply to certain underpayments of tax under the Taxation (Interest on Underpayments) Act 1986 (the Underpayments Act).

Section 9 of the Overpayments Act entitles a taxpayer who receives a refund of tax as a result of a successful objection, review or appeal to interest on the amount of the refund. Interest may also be payable on a refund where the Commissioner decides of his own motion to amend an assessment to reduce a taxpayer's liability.

Interest is also payable on certain underpayments calculated under section 170AA of the Income Tax Assessment Act 1936 (the Assessment Act), where an assessment is amended to increase a taxpayer's liability to tax. The interest is payable at the same rate as interest on overpayments.

Interest accrues for the period during which the tax was found to have been overpaid or underpaid, as the case may be. Subsection 10(3) of the Overpayments Act sets the rate at 14.026 per cent per annum. This rate is to apply until a Regulation to vary the rate is made. The same rate applies to certain underpayments of tax under the Underpayments Act.

The purpose of the proposed Regulations is to vary the rate at which interest is paid under section 9 of the Overpayments Act down to 10 per cent to reflect substantial changes in the benchmark rate. The benchmark rate is based on the weighted average yield of certain Treasury Bonds. The varied rate will, by virtue of paragraph 170AA(4)(b) of the Assessment Act, also apply in calculating interest on certain underpayments of tax.