On 26 March 2015 the Commonwealth Assistant Minister for Infrastructure and Regional Development introduced into the House of Representatives a package of Bills which will amend taxation and superannuation legislation to fully apply Australia’s income tax, Medicare Levy and superannuation guarantee system to Norfolk Island. The Bills are:
- Norfolk Island Legislation Amendment Bill 2015
- Tax and Superannuation Laws Amendment (Norfolk Island Reforms) Bill 2015
- A New Tax System (Medicare Levy Surcharge — Fringe Benefits) Amendment Bill 2015
- Health and Other Services (Compensation) Care Charges Amendment (Norfolk Island) Bill 2015
- Health Insurance (Approved Pathology Specimen Collection Centres) Tax Amendment (Norfolk Island) Bill 2015
- Health Insurance (Pathology) (Fees) Amendment (Norfolk Island) Bill 2015
- Private Health Insurance (Risk Equalisation Levy) Amendment (Norfolk Island) Bill 2015
- Aged Care (Accommodation Payment Security) Levy Amendment (Norfolk Island) Bill 2015.
There are two principal objectives of this package of Bills. The first is amendment of the Norfolk Island Act 1979 (Cth) to reform governance arrangements of Norfolk Island. The second is the extension of many mainland social security, immigration, and health arrangements to Norfolk Island, as well as changes to the tax system.
The Bills will see the taxation system apply to Norfolk Island in the same way it currently applies to mainland Australia, with the exception of indirect taxes including the GST, customs duty and excise duties.
The primary Bill is the Tax and Superannuation Laws Amendment (Norfolk Island Reforms) Bill 2015. This Bill will establish transitional arrangements which phase in the superannuation guarantee over the next twelve years.
The Bill also establishes transitional arrangements in respect of capital gains tax. This will ensure that Norfolk Islanders are only taxed on capital gains that accrue from 1 July 2016.
The Bill will amend the Income Tax Assessment Act 1936, Income Tax Assessment Act 1997 and Superannuation Guarantee (Administration) Act 1992 to repeal the:
- income tax exemptions that apply to Norfolk Island resident individuals, companies and trustees in relation to their Norfolk Island sourced income and their foreign sourced income, bringing them fully into Australia’s income tax system
- Medicare levy exemptions that apply to Norfolk Island residents, bringing them fully into Australia’s Medicare levy system, and
- superannuation guarantee charge exemptions that apply to Norfolk Island employers and employees in relation to work performed on Norfolk Island, bringing them fully into Australia’s superannuation guarantee system.
The A New Tax System (Medicare Levy Surcharge - Fringe Benefits) Amendment Bill 2015 supports this measure by making consequential amendments to the A New Tax System (Medicare Levy Surcharge - Fringe Benefits) Act 1999 as a result of the repeal of the Medicare levy exemptions.
The taxation and superannuation reforms generally apply from 1 July 2016, with transitional arrangements applying in relation to capital gains tax and superannuation guarantee charge.