Commonwealth Numbered Regulations - Explanatory Statements

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INCOME TAX REGULATIONS (AMENDMENT) 1995 NO. 356

Statutory Rules 1995 No. 356

Issued by the Authority of the Assistant Treasurer

Income Tax Assessment Act 1936

Income Tax Regulations (Amendment)

The Governor-General may make regulations under section 266 of the Income Tax Assessment Act 1936 (the Act) for the purposes of the Act.

Australian Federal Police

Section 23AB of the Act applies to a person or a class of persons who have been prescribed for the purposes of the section by the Regulations, have performed United Nations (UN) services, other than as a member of the Australian Defence Forces, outside Australia and whose salaries and allowances are paid, given or granted by the Commonwealth or by the UN as an agent for the Commonwealth.

Section 23AB provides certain concessions, including, a rebate of tax in respect of a year of income in which the taxpayer performed UN service and derived income by way of salary, wages or other allowances in respect of that service. The maximum rebate allowable per annum (for 199394 and later years of income) is $338, plus 50 per cent of certain other rebates to which the taxpayer is entitled.

Regulation 6 of the Income Tax Regulations (the Principal Regulations) prescribes a class of person for the purposes of section 23AB. This regulation currently prescribes Australian Federal Police (AFP) performing peace keeping duties in Cyprus.

From 27 March 1994 to 10 December 1994 certain members of the AFP served with the United Nations Operation in Mozambique (UNOMOZ) as official police observers following the ceasefire in Mozambique's civil war.

Regulation 6 will be amended to provide the abovementioned concessions to the AFP members that served in Mozambique,

Australian Defence Forces

Section 23AC of the Act provides a tax exemption for the pay and allowances of Australian Defence Force (ADF) personnel derived from "operational service" performed in a declared "operational area". The date from which an area becomes an "operational area" is defined within section 23AC itself. However, section 23AC requires that the termination date from which an area ceases to be an "operational area" be prescribed by regulation.

Cambodia

In 1991 the Government sent deployments of ADF personnel to Cambodia as part of the United Nations Advance Mission in Cambodia (UNAMIC) and the United Nations Transitional Authority in Cambodia (UNTAC). The Government agreed to provide the exemption from income tax available under section 23AC to ADF personnel serving as part of these deployments. Accordingly, the abovementioned operations were prescribed as "operational service" and Cambodia was prescribed as an "operational area" from 20 October 1991.

The Government decided that from 7 October 1993 Cambodia ceased to be an "operational area" for the purposes of section 23AC. From 8 October 1993 the ADF personnel remaining in Cambodia were entitled to the Overseas Defence Force Rebate under section 79B of the Act rather than the income tax exemption under section 23AC. The maximum rebate allowable per annum under section 79B, for 1993-94 and later years of income, is $338 plus 50 per cent of certain other rebates to which the taxpayer is entitled.

Somalia

In 1992 the Government sent deployments of ADF personnel to Somalia to serve as part of Operation Restore Hope and the United Nations Operation in Somalia (UNOSOM). The Government agreed to provide the exemption from income tax available under section 23AC to ADF personnel serving as part of these deployments. As a consequence, the abovementioned operations were prescribed as "operational service" and Somalia was prescribed as an "operational area" from 20 October 1992, ADF personnel served in Somalia until 30 November 1994.

The Government decided that from 30 November 1994 Somalia ceased to be an "operational area" for the purposes of section 23AC.

New regulation 7 will prescribe dates from which Cambodia and Somalia cease to be operational areas.

Details of the Regulations are as follows.

Regulation 1 provides that Regulation 3 will operate retrospectively from 27 March 1994 which was the date that AFP members first served in Mozambique. The change will benefit taxpayers and will not impose any retrospective liability on any taxpayer. Therefore, they will not contravene subsection 48(2) of the Acts Interpretation Act 1901 which prohibits the retrospective operation of regulations which affect the rights of, or impose liabilities on, taxpayers. The remaining regulations commence on Gazettal.

Regulation 2 provides that the Regulations will amend the Principle Regulations.

Regulation 3 will prescribe, for the purposes of section 23AB, AFP members who performed service with the UNOMOZ from 27 March 1994 to 10 December 1994 (inclusive). This will extend the concessions available under section 23AB to the AFP members that served with the UNOMOZ.

Regulation 4 will prescribe, for the purposes of section 23AC, the following termination dates:

•       7 October 1993 in respect of Cambodia; and

•       30 November 1994 in respect of Somalia.

This will prescribe dates from which Cambodia and Somalia ceased to be operational areas.