Commonwealth of Australia Explanatory Memoranda Commonwealth of Australia Explanatory Memoranda[Index] [Search] [Download] [Bill] [Help]
2008-2009
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
Tax Bonus for Working australians bill 2009
tax bonus for working australians (consequential amendments) bill 2009
EXPLANATORY MEMORANDUM
(Circulated by the authority of the
Treasurer, the Hon Wayne Swan MP)
Table of contents
Glossary 1
General outline and financial impact 3
Chapter 1 Payment to taxpayers 5
Do not remove section break.
The following abbreviations and acronyms are used throughout this
explanatory memorandum.
|Abbreviation |Definition |
|ATO |Australian Taxation Office |
|Commissioner |Commissioner of Taxation |
|Bonus |Tax Bonus for Working |
| |Australians |
|ITAA 1936 |Income Tax Assessment Act |
| |1936 |
|ITAA 1997 |Income Tax Assessment Act |
| |1997 |
|TAA 1953 |Taxation Administration Act |
| |1953 |
General outline and financial impact
Payment to taxpayers
These Bills authorise the Commissioner of Taxation (Commissioner)
to pay the Tax Bonus for Working Australians to eligible taxpayers.
Eligible taxpayers will be those who paid tax in the 2007-08 year
of income after taking into account available tax offsets and
credits; and who have a taxable income of $100,000 or less.
Date of effect: These Bills will commence on Royal Assent.
Payments made by the Commissioner will be in relation to the
assessment of the taxpayer's 2007-08 income tax return where the
taxpayer has lodged their tax return with the Australian Taxation
Office by 30 June 2009.
Proposal announced: This measure was announced on
3 February 2009 as part of a package of measures to give effect to
the Government's Nation Building and Jobs Plan.
Financial impact: This measure will have these fiscal
implications:
|2008-09 |2009-10 |2010-11 |2011-12 |
|-$8,150m |-$1m |Nil |Nil |
Compliance cost impact: There will be a minimal impact on
businesses as these Bills provide for a payment to individuals.
Chapter 1
Payment to taxpayers
Outline of chapter
1. These Bills authorise the Commissioner of Taxation (Commissioner)
to pay the Tax Bonus for Working Australians (Bonus) to eligible
taxpayers. The chapter outlines the rules for determining
eligibility for receiving the Bonus, how much will be paid, as well
as administrative arrangements relating to the payment.
2. References in this explanatory memorandum are to the Tax Bonus for
Working Australians Bill 2009 unless otherwise indicated.
Context of the Bill
3. These Bills give effect to the the Government's Nation Building and
Jobs Plan announced on 3 February 2009. The plan was introduced to
assist the Australian people deal with the most significant
economic crisis since the Second World War and provide immediate
economic stimulus to boost demand and support jobs. This measure,
at a cost of $8.2 billion, provides financial support to around 8.7
million taxpayers.
Summary of new law
4. The Commissioner will pay the Bonus to eligible taxpayers where the
taxpayer is an individual, an Australian resident for taxation
purposes, and where they have an adjusted tax liability.
5. An adjusted tax liability occurs where the taxpayer's basic income
tax liability plus their Medicare levy for the year and their
Medicare levy surcharge for the year (if any), less any tax offsets
and franking credits for the year (if any), is greater than zero.
6. The payment amount depends on the eligible taxpayer's taxable
income for 2007-08. Eligible taxpayers will receive:
. $950 where their taxable income is up to and including
$80,000;
. $650 where their taxable income exceeds $80,000 and does
not exceed $90,000; or
. $300 where their taxable income exceeds $90,000 and does
not exceed $100,000.
7. Taxpayers must lodge their 2007-08 income tax return by
30 June 2009 to be eligible for the payment. However, payments
will be made to eligible taxpayers who, under an arrangement
already approved by the Commissioner at the commencement of this
Act, are able to submit a late tax return.
8. Special rules will apply to limit the entitlement of children to
the Bonus. Only minors who are an excepted person or who have
excepted assessable income will be eligible for the payment. These
rules are consistent with the tax treatment of the income of minors
found in the Income Tax Assessment Act 1936 (ITAA 1936).
Detailed explanation of new law
9. Item 3 provides for the Commissioner to administer the Bonus.
[Item 3, section 3]
10. Item 4 sets out definitions used in the Bill generally by reference
to other Acts administered by the Commissioner. [Item 4,
subsection 4(1)]
11. Item 4 also sets out the method for determining a taxpayer's
adjusted tax liability, which is necessary in deciding whether the
taxpayer will qualify for the payment. [Item 4, subsection 4(2)]
12. The adjusted income tax liability is determined by the sum of the
taxpayer's income tax liability, plus the Medicare levy and the
Medicare levy surcharge reduced by any tax offsets and imputation
credits available to the taxpayer. [Item 4, subsection 4(2)]
Taxpayer eligibility
13. Payments will be made to individuals who are Australian residents
for taxation purposes in the 2007-08 income year. [Item 5,
subsection 5(1), paragraphs 5(1)(a) and (b)]
14. Item 5 also sets out further criteria which the Commissioner will
use to determine eligibility of the taxpayer for the payment. The
taxpayer must have an adjusted tax liability of greater than zero
and the taxpayer must have a taxable income for 2007-08 of $100,000
or less. [Item 5, paragraphs 5(1)(c) and (d)]
15. Item 5 prescribes that in addition to the other eligibility
criteria for the payment, taxpayers must lodge their income tax
return by 30 June 2009 to be eligible for the payment. However,
the Commissioner has allowed some tax agents to lodge a late tax
return in respect of some taxpayers (through the application of
section 388-55 of the Taxation Administration Act 1953 (TAA 1953).
To avoid disadvantaging those taxpayers, the Bill allows the Bonus
to be made to those taxpayers who at the commencement of these
provisions were the subject of that arrangement.
[Item 5, subparagraph 5(1)(e)(ii)]
Minor's eligibility
16. There are special rules for the tax treatment of income of certain
minors (in general a person who is less than 18 years of age) which
are prescribed in Division 6AA of the ITAA 1936. Under these rules
income may be taxed at higher rates. These rules were introduced
to discourage adults from splitting their income and diverting it
to their children, but also apply to certain unearned (or
'passive') income such as dividends, interest, rent, and other
income from property.
17. However certain individuals are excluded from the rules because
they may, for example, be permanently blind; or they may be in
receipt of a double orphan pension. These taxpayers are considered
to be an 'excepted person' and are taxed at normal rates.
18. Certain categories of income (called 'excepted assessable income')
are also excluded from the special rules. For instance, employment
income; certain compensation payments; or certain Government
pension payments. In these circumstances, the income is taxed at
normal rates.
19. This measure maintains these principles. This means that minors
who are an excepted person or who have excepted assessable income
will be eligible for the payment (where they otherwise meet the
payment criteria). Minors who do not fall into these categories
will not be eligible for the payment. [Item 5, subsection 5(2)]
Amount of payment
20. Item 6 sets out the amount that will be paid by the Commissioner.
The amount is determined by the taxpayer's taxable income for the
2007-08 income year:
. Where the taxpayer's taxable income does not exceed
$80,000 the taxpayer will receive a payment of $950.
. Where the taxpayer's taxable income exceeds $80,000 but
does not exceed $90,000 the taxpayer will receive a
payment of $650.
. Where the taxpayer's taxable income exceeds $90,000 and
does not exceed $100,000 the taxpayer will receive a
payment of $300.
[Item 6, section 6]
Other items
21. The remaining items prescribe the administrative arrangements that
the Commissioner will apply to pay the Bonus.
22. The Commissioner must make the payment as soon as practicable after
he is satisfied that the taxpayer is entitled to the payment. The
Commissioner may make the payment by electronic funds transfer or
by cheque. These rules are consistent with the TAA 1953. [Item 7,
section 7]
23. Consistent with the general administration of tax law a person who
received a payment to which they were not entitled, or a payment
that was greater than their entitlement, will be required to pay
that money back to the Commissioner [item 8, section 8]. Any debts
arising from an overpayment would also be subject to the general
interest charge [item 9, section 9].
Consequential amendments
24. The Tax Bonus for Working Australians (Consequential Amendments)
Bill 2009 makes consequential amendments to a number of Acts.
References in the following paragraphs are to this Bill.
25. Subsection 159J(6) of the ITAA 1936 is amended to ensure that the
Bonus is not included for the purpose of calculating separate net
income. [Schedule 1, item 1, paragraph 159J(6)(d) of the ITAA
1936]
26. Item 2 amends the list of non-assessable non-exempt income
provisions to include the Bonus. [Schedule 1, item 2, section 11-
55 of the ITAA 1997]
27. Division 59 of the Income Tax Assessment Act 1997 (ITAA 1997) is
also amended to provide that the payment is not assessable and not
exempt income. [Schedule 1, item 3, section 59-45 of the ITAA
1997]
28. A number of amendments are made to the TAA 1953. Firstly, the TAA
1953 is amended to provide that the payment is subject to the
general interest charge [Schedule 1, item 5, subsection 8AAB(5) of
the TAA 1953]. Second, the TAA 1953 is also amended to ensure that
the payment is not considered a credit that can be used to offset
other tax debts or liabilities [Schedule 1, item 6, section 8AAZA
of the TAA 1953]. Third, the index of tax-related liability under
other Acts administered by the Commissioner is amended to include
this Bill [Schedule 1, item 7, subsection 250-10 in Schedule 1 to
the TAA 1953].
29. Consequential amendments are included to the Social Security Act
1991 and to the Veterans' Entitlement Act 1986 to exempt the
payment from inclusion in the person's income for the purposes of
those Acts. [Schedule 1, items 4 and 8, paragraph 8(8)(yaa) of the
Social Security Act 1991 and paragraph 5H(8)(zzaaa) of the
Veterans' Entitlements Act 1986]
Application provisions
30. Both these Bills commence on the day of Royal Assent. [Item 2,
section 2]
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