A package of 8 Bills were [introduced on Thur 26.3.2015] in the House of Reps. The Bills propose to make substantial changes to the governance arrangements for Norfolk Island. They also propose to extend the federal taxation and social welfare systems to Norfolk Island.

The Tax and Superannuation Laws Amendment (Norfolk Island Reforms) Bill 2015 proposes to amend the ITAA 1936, ITAA 1997 and the 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;
  • 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; and
  • Medicare levy exemptions that apply to Norfolk Island residents, bringing them fully into Australia’s Medicare levy system.

The package of Bills include:

DATE OF EFFECT: The taxation and superannuation changes are proposed to generally apply from 1 July 2016; with transitional arrangements applying in relation to CGT and superannuation guarantee charge.

[LTN 58, 26/3/15] [IT 26/3/15]

Norfolk Island to become subject to Australian taxes (but not GST) from 1 July 2016 when residents will get the same benefits as other Australian residents

The government has announced that the self-governing status of Norfolk Island will end from 1 July 2016. The Norfolk Island Act 1979 (Cth) will be amended to transition the Norfolk Island Legislative Assembly to a Norfolk Island Regional Council, with elections to be held in the first half of 2016.

Residents of Norfolk Island, who are Australian citizens, will be given the same access to government services and entitlements as those residing on the mainland and other external territories.

They will be required to pay taxes, including all personal and business taxes but not the GST. However, they will also be entitled to social security payments, Medicare and the Pharmaceutical Benefits Scheme. Access to those latter benefits is currently denied.

Source: Assistant Minister for Infrastructure and Regional Development media release, 19 March 2015.

CCH Note: income tax position – Currently, an integrity measure prevents the use of Norfolk Island residence to avoid Australian tax by treating Norfolk Island residents as if they are residents of Australia, thus exposing them to Australian tax on Norfolk Island and foreign source income. However, special exemptions are granted to genuine residents of Norfolk Island (ITAA 1936 s 24B to 24P).

[IT 19/3/15]