EXPLANATORY STATEMENT

Select Legislative Instrument 2007 No. 106

Issued by the authority of the Minister for Revenue and Assistant Treasurer

Taxation Administration Act 1953

Taxation Administration Amendment Regulations 2007 (No. 2)

The purpose of these regulations is to support the implementation of the Government’s Simplified Superannuation reforms announced in the 5 September 2006 statement A Plan to Simplify and Streamline Superannuation – Outcomes of Consultation. These regulations complement other regulations supporting the reforms which were registered on 2 April 2007 and 13 April 2007.

The Tax Laws Amendment (Simplified Superannuation) Act 2007 and related Acts give effect to the Simplified Superannuation reforms, making superannuation easier to understand, improving incentives to work and save, and providing greater flexibility over how superannuation savings can be drawn down in retirement.

Section 18 of the Taxation Administration Act 1953 (Administration Act) provides, in part, that the Governor-General may make regulations, not inconsistent with the Administration Act, prescribing all matters required or permitted by the Administration Act to be prescribed, or necessary or convenient to be prescribed, for carrying out or giving effect to the Administration Act.

The Taxation Administration Regulations 1976, among other things, prescribe when an individual must give an entity a declaration in relation to withholding amounts and the taxation treatment of certain payments to prescribed individuals when a tax file number is not quoted.

The Regulations replace several redundant references and terms.

Details of the Regulations are set out in the Attachment.

The Administration Act specifies no conditions that need to be met before the power to make the Regulations may be exercised.

The Regulations commence on 1 July 2007.

The Regulations outlined are legislative instruments for the purposes of the Legislative Instruments Act 2003.

ATTACHMENT

Details of the Taxation Administration Amendment Regulations 2007 (No. 2)

Regulation 1 specifies the name of the regulations as the Taxation Administration Amendment Regulations 2007 (No. 2).

Regulation 2 provides that the regulations commence on 1 July 2007.

Subregulation 3(1) provides that Schedule 1 amends the Taxation Administration Regulations 1976 (Administration Regulations) as amended by the Taxation Administration Amendment Regulations 2007 (No. 1).

Subregulation 3(2) provides that the amendments made by Schedule 1 apply in relation to financial years commencing on or after 1 July 2007.

Schedule 1 Amendments

Item 1

The Superannuation Legislation Amendment (Simplification) Act 2007 repeals sections 159SA, 159SM and 159SU of the Income Tax Assessment Act 1936 (1936 Tax Act). Item 1 amends paragraph 24(c) of the Administration Regulations to replace references to these sections to the equivalent sections in the Income Tax Assessment Act 1997 (1997 Tax Act).

Item 2

Item 2 amends the heading for regulation 36 of the Administration Regulations to include ‘superannuation lump sums’ which are now also dealt with in regulation 36.

Item 3

Item 3 inserts a new subregulation 36(1A) to ensure that where the exception under subsection 12-1(1A) of Schedule 1 to the Administration Act applies, an individual who has not quoted his or her tax file number will not be subject to the withholding rates specified in regulation 36.

Items 4, 5, 6 and 7

The Tax Laws Amendment (Simplified Superannuation) Act 2007 amends the 1997 Tax Act to introduce the concept of an ‘employment termination payment’ and a ‘superannuation lump sum’. These concepts replace the concept of an ‘eligible termination payment’ in the 1936 Tax Act.

The Taxation Administration Amendment Regulations 2007 (No. 1) amend regulation 36 of the Administration Regulations to update the references to an ‘eligible termination payment’ with ‘employment termination payments’ and ‘superannuation lump sums’.

Items 4, 5, 6 and 7 amend regulation 36 to ensure that where a prescribed non‑resident or a non-prescribed non‑resident does not quote a tax file number, the entity paying the superannuation lump sum withholds the prescribed rate of tax from the payment.