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2003-04 Budget

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Appendix A:
Policy decisions taken since the 2003-04 Budget

Revenue measures

Attorney-General’s

Australia-Thailand Closer Economic Relations — Free Trade Agreement

Revenue ($m)

  2003-04 2004-05 2005-06 2006-07
Australian Customs Service
- -90.0 -100.0 -100.0

On 19 October 2003, the Prime Ministers of Australia and Thailand announced the Australia-Thailand Closer Economic Relations — Free Trade Agreement. The agreement is expected to come into force in the second half of 2004. As part of the comprehensive agreement, both nations have agreed to eliminate tariffs on the majority of each other’s goods. This will result in a reduction in tariff revenue collected in Australia.

Closer Economic Relations — Free Trade Agreement builds on Australia’s strong economic partnership with Thailand and will provide significant benefits to the Australian economy. Specific sectors to benefit from the agreement will include the agriculture sector (including exporters of beef, sheep meat, dairy products, wheat and other grains), processed food and wine producers, and the manufacturing sector (especially the automotive sector). The agreement provides a strong foundation for expansion in the services sector including increased access for Australian investors in the mining sector and a range of services exporters.

Further information can be found in the press release of 20 October 2003 issued by the Minister for Trade.

Customs duty — changes to Australia's duty free concessions

Revenue ($m)

  2003-04 2004-05 2005-06 2006-07
Australian Customs Service
.. .. .. ..

The Government will make changes to the duty free concessions available to passengers and Australian-domiciled crew members. The measure will have effect from the date of commencement of the Customs by-laws.

These changes will simplify Customs processes and streamline passenger and crew processing. The changes include:

  • an increase in the general concession from $400 to $900 for adult travellers and from $200 to $450 for minors;
  • an increase in the alcohol concession from 1.125 litres to 2.25 litres;
  • the carriage of one carton (being the current concession) and one opened packet (maximum 25 sticks) without the requirement for duty collection within the tobacco concession; and
  • the adoption of the same concession regime for crew members as for passengers, but with a general concession amount of $450.

The $50 waiver provision for all passengers will be replaced with a requirement that goods and services tax and/or duty be payable on the full value of goods within any category where the concession limit for that category is exceeded.

Further information can be found in the joint press release of 18 September 2003 issued by the Minister for Justice and Customs and the Minister for Small Business and Tourism.

Customs duty — extension of concessions for goods used in the oil and gas sector

Revenue ($m)

  2003-04 2004-05 2005-06 2006-07
Australian Customs Service
.. .. .. ..

The Government has made amendments to the Customs laws to extend the duty-free treatment of goods used in the oil and gas sector to accommodate recent changes in technology, with effect from 18 October 2003.

Previously, goods for use in connection with the exploration for oil or natural gas or in the development of oil or natural gas wells were duty-free.

The amendments extend duty-free treatment to goods that are used in the process of re-entering an existing well, extending the well into a new oil or natural gas zone and workovers for the maintenance of the well. To address industry concerns, the concession will apply only to goods that have no identified Australian producers of substitutable goods.

The additional equipment that will be eligible for duty-free treatment is the ‘christmas tree’ — a set of valves, spools and fittings connected to the top of an oil or natural gas well to direct and control the flow of formation fluids from the well.

Customs duty — textile, clothing and footwear tariff reductions

Revenue ($m)

  2003-04 2004-05 2005-06 2006-07
Australian Customs Service
- - - -

The Government will reduce customs duty tariffs for most textile and footwear products to 5 per cent, with effect from 1 January 2010. Tariffs on clothing and certain finished textiles will be reduced to 10 per cent from 1 January 2010 and then to 5 per cent from 1 January 2015.

In addition, the Government will implement a long-term package of initiatives costing $747 million, for the period 2005-06 to 2015-16, to assist the textile, clothing and footwear industry adjust to the lower tariff environment and to become more internationally competitive.

Further information can be found in the press release of 27 November 2003 issued by the Minister for Industry, Tourism and Resources.

See also the related expense measure titled Textile, clothing and footwear assistance package post-2005 in the Industry, Tourism and Resources portfolio.

Health and Ageing

Medical Indemnity — Incurred-But-Not-Reported Indemnity Scheme Levy

Revenue ($m)

  2003-04 2004-05 2005-06 2006-07
Department of Health and Ageing
* * * *

As part of a package of measures to help address difficulties in medical indemnity insurance, the Prime Minister announced on 23 October 2002 that the Government would assume the unfunded Incurred-But-Not-Reported (IBNR) liabilities of medical defence organisations (MDOs) and then recoup the amounts from members of those organisations. The Minister for Health and Ageing determined that UMP/AMIL would be the only MDO to participate in the IBNR Scheme in 2003-04. Levy notices were issued to members of UMP/AMIL in August 2003.

On 3 October 2003, the Government announced an 18 month moratorium on payments of annual IBNR indemnity contribution payments over $1,000 and a Medical Indemnity Policy Review on broader medical indemnity issues. This Review will report to the Prime Minister by 10 December 2003. On 10 October 2003, the Government announced the withdrawal of the current IBNR indemnity contribution invoices and the refund of contributions already paid, and stated that new levy notices will not be issued until after completion of the Review.

The Government also announced a range of further exemptions from the IBNR contributions for:

  • all doctors aged 65 and over;
  • all doctors employed by public hospitals or where their private medical income is returned to those hospitals;
  • all doctors who retire early due to disability or permanent injury; and
  • the estates of deceased doctors.

Costs associated with these announcements will be finalised following the Government’s response to the Review.

Further information can be found in the press release of 1 August 2003 issued by the Minister for Revenue and Assistant Treasurer, the joint press release of 3 October 2003 issued by the Hon. Tony Abbott MP and the Minister for Revenue and Assistant Treasurer and the press releases of 10 and 16 October 2003 issued by the Minister for Health and Ageing.

Transport and Regional Services

Air Passenger Ticket Levy — discontinuation

Revenue ($m)

  2003-04 2004-05 2005-06 2006-07
Department of Transport and Regional Services
-96.7 - - -
Related expense(a) ($m)
       
Department of Employment and Workplace Relations
-0.2 - - -
  1. A negative number for expenses indicates an increase in the fiscal balance.

 

On 10 June 2003, the Government announced the discontinuation from 1 July 2003 of the $10 Air Passenger Ticket Levy. This announcement followed the receipt of advice that the Government would be likely to receive sufficient funds from the Ansett Group of Companies (subject to a Deed of Company Arrangement) to repay the shortfall between levy collections to date and monies provided to former Ansett staff under the Special Employee Entitlements Scheme for Ansett (SEESA). This measure results in a reduction in revenue estimates of $96.7 million in 2003-04.

The Government established SEESA to ensure that former employees of the companies in the Ansett Group received all of their basic entitlements — including unpaid wages, annual leave, long service leave, pay-in-lieu of notice and redundancy entitlements up to the community standard of eight weeks — earlier than would otherwise have occurred under normal insolvency arrangements.

Under the Air Passenger Ticket Levy (Collection) Act 2001, the Department of Employment and Workplace Relations met costs incurred in administering the levy. The discontinuation of the levy results in a reduction in administrative expenses of $0.2 million in 2003-04.

Further information can be found in the press release of 1 July 2003 issued by the Minister for Transport and Regional Services.

Treasury

Income tax

Asset financing arrangements involving tax-preferred entities

Revenue ($m)

  2003-04 2004-05 2005-06 2006-07
Australian Taxation Office
- * * *

The Government will replace the current rules that apply to asset financing arrangements involving tax-preferred entities (such as government and non-resident entities). The new rules will deny capital allowance deductions for asset financing arrangements where the tax-preferred entity has the predominant level of economic risk in the asset. The measure will have effect from the date of Royal Assent of the enabling legislation.

Currently a complex set of tests determines the tax treatment that applies to asset financing arrangements involving tax-preferred entities. The measure will clarify the circumstances under which deductions will be denied, such as where the owner of the asset does not bear sufficient risk in the asset. Taxpayers who are denied deductions will be eligible for a ‘notional loan treatment’.

Further information can be found in the press release of 26 June 2003 issued by the Minister for Revenue and Assistant Treasurer.

Capital gains tax — demutualisation of friendly societies

Revenue ($m)

  2003-04 2004-05 2005-06 2006-07
Australian Taxation Office
.. .. .. ..

The Government will allow friendly societies that principally carry on life insurance business to qualify for the capital gains tax (CGT) concessions that apply to other insurance companies that demutualise, with effect from 1 July 2000. These concessions set a cost base for shares received in the demutualised entity and allow a CGT roll-over until the disposal of the shares.

Further information can be found in the press release of 16 October 2003 issued by the Minister for Revenue and Assistant Treasurer.

Capital gains tax — preservation of pre-CGT interests in entities that demerge

Revenue ($m)

  2003-04 2004-05 2005-06 2006-07
Australian Taxation Office
- - - -

The Government will modify the capital gains tax (CGT) provisions in the income tax law to preserve the pre-CGT interests of shareholders who hold interests in entities that demerge, with effect from 1 July 2002.

The measure will ensure that a CGT liability does not arise on the disposal of interests acquired in a demerged entity if it would not have arisen from disposal of the corresponding interests before the demerger.

Further information can be found in the press release of 16 October 2003 issued by the Minister for Revenue and Assistant Treasurer.

Capital gains tax — small business concessions and discretionary trusts

Revenue ($m)

  2003-04 2004-05 2005-06 2006-07
Australian Taxation Office
* * * *

The Government will modify the control test for access to the small business capital gains tax (CGT) concessions where a small business operates through a discretionary trust, with effect from 21 September 1999. 

Broadly, from the 2002-03 income year, an entity will be taken to control a discretionary trust if the distributions made by the trust to the entity during the year amount to at least 40 per cent of the trust’s total distributions for that year. Transitional provisions will apply for earlier income years.

Distributions to tax exempt entities and tax deductible gift recipients will be ignored for the purposes of applying the new control test.

This will ensure that small businesses that operate through a discretionary trust can more readily benefit from the small business CGT concessions.

Further information can be found in the press release of 16 October 2003 issued by the Minister for Revenue and Assistant Treasurer.

Company tax loss recoupment rules

Revenue ($m)

  2003-04 2004-05 2005-06 2006-07
Australian Taxation Office
- - - -

The Government will change the company tax loss recoupment rules to take account of recent reforms to the regulation of the medical indemnity industry, with effect from 1 July 2003.

This change will enable medical defence organisations to recoup prior year losses by applying the same business test despite changes made to their business prior to 1 July 2003 in order to satisfy the requirements of the Medical Indemnity (Prudential Supervision and Product Standards) Act 2003.

The Government has also introduced new rules to ensure that companies are not prevented from accessing the same business test because they cannot determine a date on which the continuity of ownership test was failed. These rules have effect from the 1997-98 income year. The Government will amend these rules to clarify that they will apply to companies that do not have shares, and that they will not deny losses deducted under established administrative practices of the Australian Taxation Office.

Further information can be found in the press release of 11 September 2003 issued by the Minister for Revenue and Assistant Treasurer.

Concessions for Australian Defence Force personnel serving overseas

Revenue ($m)

  2003-04 2004-05 2005-06 2006-07
Australian Taxation Office
-11.0 - - -

Since the 2003-04 Budget, the Minister for Defence has declared duty for a number of Australian Defence Force (ADF) operations to be ‘warlike’. As a result, ADF personnel certified as serving in a specified area of operation will be eligible for an income tax exemption for their ADF pay and allowances during the period of the operation.

These operations are:

  • Operation Palate — the ADF contribution to the United Nations Assistance Mission in Afghanistan (from 18 April 2003); and
  • Operation Catalyst — the ADF contribution to the coalition to disarm Iraq (from 16 July 2003).

In addition, the Government has authorised a tax offset for eligible ADF personnel serving in other specified areas of operation. The tax offset is set at the same level as the remote area Zone A offset.

These operations are:

  • Operation Paladin — the ADF contribution to the United Nations Truce Supervision Organisation in the Middle East; and
  • Operation Anode — the ADF contribution to the Australian-led Regional Assistance Mission to the Solomon Islands.

Further information can be found in the press release of 15 July 2003 issued by the Minister Assisting the Minister for Defence and the press release of 1 August 2003 issued by the Minister for Defence.

Deductible gift recipients — changes to eligible organisations

Revenue ($m)

  2003-04 2004-05 2005-06 2006-07
Australian Taxation Office
* * * *

Since the 2003-04 Budget, the Government has announced that donations and gifts of $2 or more to the following organisations have been made tax deductible:

  • Crime Stoppers Australia Limited;
  • Crime Stoppers South Australia Incorporated;
  • The Alcohol Education and Rehabilitation Foundation Limited;
  • The Constitution Education Fund;
  • The Country Education Foundation of Australia Limited;
  • The Lowy Institute for International Policy; and
  • The Dunn and Lewis Youth Development Foundation.

In addition, since the 2003-04 Budget there have been:

  • 58 additions to the Register of Cultural Organisations and 10 deletions; and
  • 13 admissions to the Register of Environmental Organisations and 6 removals.

The Register of Cultural Organisations can be found on the Department of Communications, Information Technology and the Arts website at www.dcita.gov.au. The Register of Environmental Organisations can be found on the Department of Environment and Heritage website at www.ea.gov.au.

Deductible gift recipients — deductions for contributions with an associated minor benefit

Revenue ($m)

  2003-04 2004-05 2005-06 2006-07
Australian Taxation Office
- - -3.0 -3.0

The Government will broaden the range of tax concessions available to assist the fund raising efforts of deductible gift recipients (DGRs), with effect from 1 July 2004.

Currently, no tax deduction is available where a benefit is received in return for a contribution to a DGR. This measure will allow taxpayers to claim an income tax deduction for the net amount of contributions made to a DGR where the taxpayer receives an associated minor benefit. Under this measure, deductions for contributions with associated minor benefits are limited to:

  • contributions of property purchased more than 12 months before the contribution and worth more than $5,000; or
  • contributions of cash and other property above $250.

To be eligible for a deduction, the market value of the benefit received by the donor cannot be more than 10 per cent of the contribution or $100, whichever is less. The deduction available is the contribution less the market value of the minor benefit.

This measure will benefit the charitable sector and will ensure that a minor advantage or benefit received by donors when making a contribution does not prevent their eligibility to claim a tax deduction.

Further information can be found in the press release of 9 September 2003 issued by the Prime Minister.

Farm Management Deposits scheme — clarifying eligibility rules

Revenue ($m)

  2003-04 2004-05 2005-06 2006-07
Australian Taxation Office
- - - -

The Government has clarified the eligibility criteria of the Farm Management Deposit (FMD) scheme to allow primary producers to more easily determine whether the financial institution is eligible to accept a FMD, with effect from 1 July 2003.

Under the new criteria, authorised deposit-taking institutions (ADIs) for the purposes of the Banking Act 1959 and institutions with a State or Territory guarantee will be eligible to accept a FMD.

Under the transitional arrangements, deposits made with any non-ADIs before 1 July 2003 are deemed to be FMDs, provided all other requirements of the FMD scheme are met and they are transferred to an eligible financial institution within the transfer period (between 1 July 2003 and 1 July 2007). This amendment protects primary producers who have made deposits with non-ADIs in good faith, and allows for a managed transfer of funds to an eligible financial institution.

Further information can be found in the press release of 17 June 2003 issued by the Minister for Revenue and Assistant Treasurer.

Foreign Investment Fund rules — additional approved stock exchange

Revenue ($m)

  2003-04 2004-05 2005-06 2006-07
Australian Taxation Office
.. .. .. ..

The Government has added the Stock Exchange of Newcastle Limited to the list of stock exchanges approved for the purposes of the Foreign Investment Fund (FIF) rules in the income tax law, with effect from 1 July 2002.

The list of approved stock exchanges assists Australian investors in foreign companies to comply with the FIF rules. The addition of the Newcastle Stock Exchange will assist it to compete with other exchanges for the listing of foreign companies.

Further information can be found in the press release of 13 June 2003 issued by the Minister for Revenue and Assistant Treasurer.

Imputation — simplified rules for life insurance companies

Revenue ($m)

  2003-04 2004-05 2005-06 2006-07
Australian Taxation Office
.. .. .. ..

The Government has simplified and improved the imputation rules relating to life insurance companies, with effect from 1 July 2002.

These changes have corrected a number of minor defects in the imputation rules for life insurance companies and removed the penalty for the over-estimation of franking credits. These improvements were made in response to anomalies in the current law identified during consultation between Treasury, the Australian Taxation Office and industry and will significantly reduce compliance costs for industry.

International taxation — not proceeding with the foreign income tax exemption for temporary residents

Revenue ($m)

  2003-04 2004-05 2005-06 2006-07
Australian Taxation Office
40.0 40.0 45.0 45.0

The Government will not proceed with the measure to provide a four-year income tax exemption for temporary residents for most foreign source income, including capital gains, as a result of the failure of the relevant legislation to achieve passage through Parliament.

The original measure, announced as part of The New Business Tax System, aimed to make it easier for Australian companies to draw on global markets for highly skilled labour by reducing the compliance and tax burden on first-time temporary residents for the defined types of foreign income. The original measure also included removing interest withholding tax obligations for temporary residents, and making temporary residents exempt from the Foreign Investment Fund rules regardless of the period of residence.

The Government has twice introduced legislation into the Parliament to implement the arrangements. However, on both occasions the relevant legislation failed to achieve passage through the Senate. Against this background, and to provide certainty for taxpayers, the Government has decided not to proceed with the measure.

Superannuation — changes to the taxation of overseas superannuation transfers

Revenue ($m)

  2003-04 2004-05 2005-06 2006-07
Australian Taxation Office
- 1.1 0.1 0.1

The Government will treat the growth in superannuation transferred from an overseas superannuation fund to an Australian superannuation fund, since the individual became an Australian resident, as a taxable contribution to the Australian fund. The measure will have effect from the date of Royal Assent of the enabling legislation.

Currently, the growth in an overseas superannuation fund is taxable at the taxpayer’s marginal tax rate if transferred into Australia more than six months after the individual becomes an Australian resident, and the tax liability is paid without access to the superannuation benefit.

This change will encourage the transfer of superannuation into Australia by reducing the tax burden on individuals who make such transfers.

Transfers made within six months of residency will remain tax-free.

Further information can be found in the press release of 30 September 2003 issued by the Minister for Revenue and Assistant Treasurer.

Superannuation — deferral of pension and annuity changes by three months

Revenue ($m)

  2003-04 2004-05 2005-06 2006-07
Australian Taxation Office
* * * *

The Government has deferred the commencement of changes to superannuation pension and annuity regulations by three months to 1 October 2003. The deferral applies to the measures Modify 6 month rule for complying pensions and annuities and Require a minimum payment from a commuted pension or annuity announced in the Mid-Year Economic and Fiscal Outlook 2002-03.

The commencement of the measures was deferred, as a result of consultations with industry representatives, to provide industry with reasonable time to implement systems changes necessary to comply with the new rules.

Further information can be found in the press release of 27 June 2003 issued by the Minister for Revenue and Assistant Treasurer.

Superannuation — delayed replacement of the personal superannuation contributions rebate

Revenue ($m)

  2003-04 2004-05 2005-06 2006-07
Australian Taxation Office
-10.0 - - -

The Government has delayed the replacement of the existing superannuation rebate for low income earners with the Government superannuation co-contribution from 1 July 2002 to 1 July 2003. This delay reflects the failure of certain superannuation legislation to achieve passage through Parliament prior to 30 June 2003.

The 2002-03 Budget included the replacement of the low income earner rebate with a more generous Government co-contribution for low income earners, with effect from 1 July 2002.

Low income earners are entitled to a maximum rebate of $100 in respect of personal undeducted superannuation contributions made prior to 1 July 2003. Eligible persons are still able to claim the rebate in respect of those contributions made up to 30 June 2003.

Further information can be found in the press release of 7 September 2003 issued by the Minister for Revenue and Assistant Treasurer.

See also the related expense measure titled Superannuation — extended Government superannuation co-contribution for low income earners in the Treasury portfolio.

Superannuation — smaller reduction in the Superannuation Surcharge rate

Revenue ($m)

  2003-04 2004-05 2005-06 2006-07
Australian Taxation Office
65.0 145.0 205.0 175.0

The 2002-03 Budget included the Government’s 2001 election commitment to reduce the maximum surcharge rates to 10.5 per cent over three years commencing from 1 July 2002. However, in negotiations to obtain passage of the relevant legislation through the Senate, the Government could only obtain agreement to reduce the maximum surcharge rates to 14.5 per cent in 2003-04, 13.5 per cent in 2004-05 and 12.5 per cent in 2005-06 and succeeding years.

Further information can be found in the press release of 7 September 2003 issued by the Minister for Revenue and Assistant Treasurer.

Tax administration — amendments to the Crimes (Taxation Offences) Act 1980

Revenue ($m)

  2003-04 2004-05 2005-06 2006-07
Australian Taxation Office
- - - -

The Government will correct certain provisions of the Crimes (Taxation Offences) Act 1980 (the Act) to ensure they operate effectively with The New Tax System. The provisions concerned enable the prosecution of persons who enter into arrangements to avoid, or aid and abet persons to avoid, payment of certain taxes and charges. The measure will have effect from the day following Royal Assent of the enabling legislation.

The amendments ensure that the existing provisions in the Act, which extend offence provisions relevant to the previous sales tax regime to other taxes and charges, will operate as intended.

The Act will also be amended to harmonise the offence provisions with the Criminal Code, which provides a uniform interpretation for offence provisions in all Commonwealth legislation. The amendments will ensure that the application of the Criminal Code will not change the interpretation of any of the offence provisions contained in the Act.

Tax administration — changes to hardship provisions

Revenue ($m)

  2003-04 2004-05 2005-06 2006-07
Australian Taxation Office
.. .. .. ..

The Government has streamlined the procedures under which an individual taxpayer can be released from a tax liability where payment would entail serious hardship. In addition, the scope of relief has been broadened to include Pay As You Go instalments and fringe benefits tax instalments. The measure has effect from 1 September 2003.

These changes transfer the authority to grant relief from a tax liability from the tax relief boards to the Commissioner of Taxation. As part of this measure, the Government also introduced a new right to have tax relief decisions reviewed internally by the Australian Taxation Office and by the Administrative Appeals Tribunal sitting as the Small Taxation Claims Tribunal.

The streamlining of these procedures was undertaken to increase the efficiency and flexibility of the system for taxpayers to seek relief from tax debts. Prior to 1 September 2003, the release arrangements applied principally to tax assessment debt and did not apply to debt arising from unpaid instalments.

Tax administration — new civil penalty to deter the promotion of tax avoidance schemes

Revenue ($m)

  2003-04 2004-05 2005-06 2006-07
Australian Taxation Office
- - 15.0 25.0

The Government will introduce a civil penalty regime to deter the promotion of tax avoidance and tax evasion schemes. The civil penalty will apply to lead promoters of tax schemes that are first offered to investors on or after 1 July 2004.

Currently there are no civil or administrative penalties in the tax laws that apply to promoters in their capacity of designing, marketing, selling or implementing tax avoidance schemes.

The new penalty will apply to any person who:

  • is the lead promoter of a tax avoidance or tax evasion scheme; or
  • implements a tax scheme that has been promoted on the basis of its conformity with a taxation product ruling in a materially different way to that described in its product ruling.

The Government will also allow the Commissioner of Taxation to apply to a court for an injunction, or to enter into voluntary out of court arrangements with promoters, to counter the promotion of tax avoidance schemes.

Tax treatment of a payment out of the National Guarantee Fund

Revenue ($m)

  2003-04 2004-05 2005-06 2006-07
Australian Taxation Office
- - - -

As a part of arrangements to restructure the investor protection and clearing support roles of the National Guarantee Fund (NGF), the Government will ensure that no taxation consequences will arise from a payment from the NGF to a prescribed body that will undertake clearing and settlement facility support. This measure will apply to a payment made on or after the date of introduction into Parliament of the enabling legislation.

The Corporations Act 2001 provides a mechanism for the Minister to direct a payment out of the NGF to a newly created fund responsible for clearing and settlement facility support operations. The NGF will then only remain responsible for funding investor protection operations.

Taxation of financial arrangements — backdating elections under the foreign currency rules

Revenue ($m)

  2003-04 2004-05 2005-06 2006-07
Australian Taxation Office
- .. - -

As a transitional measure, the Government will allow elections made under the foreign currency rules to be backdated to 1 July 2003 or, for some elections, a later date. The measure will apply to elections made within 30 days of Royal Assent of the enabling legislation for the foreign currency rules.

The elections in the foreign currency rules permit taxpayers to access concessional regimes designed to reduce their compliance costs. The elections were originally required to be made either before the concessional regime could be utilised or, depending on the election, within 90 days of the rules’ applicable commencement date (1 July 2003 for most taxpayers). The measure allows taxpayers to access the foreign currency concessions between 1 July 2003 and the date of Royal Assent.

Further information can be found in the press release of 13 October 2003 issued by the Minister for Revenue and Assistant Treasurer.

Taxation of financial arrangements — deferral of reforms to commodity hedging taxation arrangements

Revenue ($m)

  2003-04 2004-05 2005-06 2006-07
Australian Taxation Office
* * * *

The Government has deferred the commencement of proposed reforms to commodity hedging taxation arrangements.

The deferral takes into account issues raised in consultations undertaken with industry and recognises that the proposed reforms may be affected by the forthcoming transition by companies to international accounting standards.

A revised commencement date for the reforms, which comprise the third stage of the taxation of financial arrangements reforms recommended by the Ralph Review of Business Taxation, will be announced after further consultation with industry.

Further information can be found in the press release of 21 November 2003 issued by the Minister for Revenue and Assistant Treasurer.

Fringe benefits tax

Transition arrangements for payments to worker entitlement funds

Revenue ($m)

  2003-04 2004-05 2005-06 2006-07
Australian Taxation Office
- - - -

The Government has provided a twelve month transitional period, from 1 April 2003 to 31 March 2004, during which fringe benefits tax (FBT) is not payable by employers on certain payments into existing non-approved worker entitlement funds, where the payments are made in accordance with existing industrial practice.

In the Mid-Year Economic and Fiscal Outlook 2002-03, the Government reported that certain payments to approved worker entitlement funds would be exempt from FBT from 1 April 2003. For the exemption to apply, the payments into the fund and the fund itself must satisfy certain criteria. The transitional measure allows a further twelve months for some employers to adjust their existing arrangements to satisfy the requirements for the FBT exemption.


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