The Rudd Government has today introduced a Bill that brings Australia a step closer to having a single Income Tax Assessment Act.
The Tax Laws Amendment (Transfer of Provisions) Bill 2010 rewrites 149 pages of the 1936 Income Tax Assessment Act into the 1997 Income Tax Assessment Act and the Taxation Administration Act.
"I'm pleased to see that after almost twenty years, we are getting close to the aim of having a single income tax assessment Act, that's easier to understand and simpler to use," the Assistant Treasurer said.
"The rewriting process began in 1993 under the Keating Government and, as part of the Rudd Government's commitment to slashing red-tape and reducing complexity, we are pushing the job forward."
"The Government's approach to achieving a single assessment Act is to rewrite provisions of the 1936 Act when they undergo any significant reform."
This rewrite will remove 149 pages from the 1936 Act and rewrite them into the 1997 Act and Taxation Administration Act in only 101 pages1. This is a reduction of over 30%.
The rewrite covers the following provisions of the Income Tax Assessment Act 1936:
- Schedule 2C, which contains the rules for the income tax treatment of the gain debtors make when one of their commercial debts is forgiven;
- Schedule 2E, which ensures that a lessor and lessee of a luxury car get the same income tax treatment as if the lessor sold the car to the lessee and lent the lessee the money for the purchase;
- Schedule 2G, which establishes the farm management deposit scheme that allows eligible primary producers to set aside pre-tax income in profitable years for subsequent withdrawal in low-income years; and
- Schedule 2J, which ensures that general insurance companies are taxed on premium income received, and can deduct liabilities for outstanding claims, over the period of risk under the policies to which the income and deductions relate.
"The rewrite has been undertaken with no intention to change the interpretation of the law, but some minor changes have been made to modernise the law and to provide more certainty in some areas," the Assistant Treasurer said.
The transfer Bill also rewrites the remaining rules in the 1936 Act concerning the collection and recovery of income tax.
1 Not counting transitional and consequential changes.