The Assistant Treasurer, Senator Rod Kemp, today announced that the Government will introduce amendments to the taxation law designed to benefit Australian Defence Force (ADF) members who are injured while on duty. These amendments will also benefit taxpayers who have to repay income on which they previously paid tax.
In recognition of the valuable service which members of the ADF provide to the Australian community, the Government considers that compensation payments which members receive for loss of exempt pay and allowances should also be exempt from tax. The amendments will ensure that payments to ADF members to compensate for the loss of deployment allowance will be exempt from tax where the allowance ceases to be paid as a result of injuries sustained during service in a warlike situation.
The amendments will also ensure that compensation payments to Reserve Force members who have to resign as a result of injuries sustained while on duty will be exempt from tax. This reflects the Government's view that, as the pay and allowances of Reserve Force members are already exempt from tax, compensation payments for loss of that income should also be exempt from tax.
The amendment in respect of income which has to be repaid will allow taxpayers to seek an amended assessment for the year in which that income was included in their tax return. This measure will not apply where worker's compensation or sickness allowance has to be repaid as a result of a lump sum settlement. These settlements already compensate recipients for the tax originally paid on income that has to be repaid.
The Government proposes that the amendments to the law will commence from to-day's date and will apply to assessments for the 1996-97 and later years of income.
MELBOURNE
1 August 2001
Contacts:
Mark O'Connor Australian Taxation Office (02) 6279 6889
Richard Wise Assistant Treasurer's Office (02) 6277 7340