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This is a Bill, not an Act. For current law, see the Acts databases.
1998-99
The Parliament of
the
Commonwealth of
Australia
HOUSE OF
REPRESENTATIVES
Presented and read a first
time
New Business
Tax System (Miscellaneous) Bill 1999
No.
, 1999
(Treasury)
A
Bill for an Act to implement the New Business Tax System by amending the law
relating to taxation, and for related purposes
ISBN: 0642
426465
Contents
Income Tax Assessment Act
1936 3
Income Tax Assessment Act
1997 7
Income Tax Assessment Act
1997 9
Income Tax Assessment Act
1936 12
Part 1—Amendments commencing on 1 July
2000 25
Income Tax Assessment Act
1936 25
Part 2—Amendments commencing on 1 July
2001 26
Income Tax Assessment Act
1936 26
Income Tax Assessment Act
1936 27
Income Tax Assessment Act
1997 51
Income Tax Assessment Act
1936 56
A Bill for an Act to implement the New Business Tax
System by amending the law relating to taxation, and for related
purposes
The Parliament of Australia enacts:
This Act may be cited as the New Business Tax System (Miscellaneous)
Act 1999.
(1) Subject to subsections (2), (3) and (4), this Act commences on the day
on which it receives the Royal Assent.
(2) Schedules 1, 2 and 3, Part 1 of Schedule 4 and Schedule 6 commence on
1 July 2000.
(3) Part 2 of Schedule 4 commences on 1 July 2001.
(4) Schedule 5 is taken to have commenced immediately after Schedule 3 to
the New Business Tax System (Capital Gains Tax) Act 1999
commences.
Subject to section 2, each Act that is specified in a Schedule to this
Act is amended or repealed as set out in the applicable items in the Schedule
concerned, and any other item in a Schedule to this Act has effect according to
its terms.
Section 170 of the Income Tax Assessment Act 1936 does not prevent
the amendment of an assessment made before the commencement of this section for
the purposes of giving effect to this Act.
Income
Tax Assessment Act 1936
1 Subsections 46F(2), (2A) and
(2B)
Repeal the subsections, substitute:
(2) Subject to this section, a shareholder is not entitled to, and must
not be allowed, a rebate under section 46 or 46A in respect of:
(a) if a dividend was paid to the shareholder by a company other than an
exempting company, or by an exempting company and section 160APPA applies in
relation to the dividend:
(i) the unfranked part of the dividend; or
(ii) any part of the dividend in respect of which a determination is made
under paragraph 160AQCBA(3)(b) or 177EA(5)(b); or
(b) if a dividend was paid to the shareholder by an exempting company and
section 160APPA does not apply in relation to the dividend—any part of the
dividend.
Note: The heading to section 46F is replaced by the heading
“Rebate not allowable for certain
dividends”.
2 After section 46F
Insert:
Allowable deduction
(1) An amount is allowable as a deduction from the assessable income of a
company (the resident company) if:
(a) the resident company is paid a dividend (the original
dividend) that:
(i) is paid by a company that is a resident; and
(ii) is a non-portfolio dividend; and
(iii) is not a fully-franked dividend; and
(b) the resident company is not a group company in relation to the company
that paid the original dividend in relation to the year of income in which the
dividend is paid; and
(c) but for subparagraph 46F(2)(a)(i), the resident company would be
entitled to a rebate under section 46 in respect of the unfranked amount of the
original dividend; and
(d) the resident company pays a dividend (the flow-on
dividend) to a company that is not a resident (the non-resident
company); and
(e) the flow-on dividend is not a fully-franked dividend; and
(f) the resident company declares that the unfranked amount of the flow-on
dividend is an on-payment of the unfranked amount of the original dividend to
the extent of a specified percentage (not exceeding 100%); and
(g) when the original dividend is paid, when the declaration is made and
when the flow-on dividend is paid, the resident company is:
(i) a resident; and
(ii) wholly owned by the non-resident company.
The deduction is from assessable income of the year of income in which the
flow-on dividend is paid. The amount of the deduction is equal to the flow-on
amount worked out using subsection (2).
(2) The flow-on amount is:
Flow-on declarations
(3) The declaration under paragraph (1)(f) (the flow-on
declaration) must be made:
(a) in writing; and
(b) before the flow-on dividend is paid.
The declaration cannot be revoked or varied.
(4) The flow-on declaration is effective only to the extent to which the
flow-on amount does not exceed the surplus in the resident company’s
unfranked non-portfolio dividend account immediately before the declaration is
made.
Note: See section 46FB for the unfranked non-portfolio
dividend account.
Effect of flow-on declaration on required franking amounts
(5) For the purposes of section 160APX, the class A and class C franked
amounts of the flow-on dividend are taken to be increased as follows:
(a) if there is a class A required franking amount, but no class C
required franking amount, for the flow-on dividend—the class A franked
amount is taken to be increased by an amount equal to the flow-on
amount;
(b) if there is a class C required franking amount, but no class A
required franking amount, for the flow-on dividend—the class C franked
amount is taken to be increased by an amount equal to the flow-on
amount;
(c) if there are both a class A required franking amount and a class C
required franking amount for the flow-on dividend:
(i) the class A franked amount is taken to be increased by an amount equal
to so much of the flow-on amount as is necessary to have the flow-on dividend
franked to the class A required franking amount; and
(ii) the class C franked amount is taken to be increased by an amount
equal to the remainder (if any) of the flow-on amount.
For the purposes of this section, there is no class A or class C required
franking amount if that amount is nil.
Wholly owned by non-resident company
(6) The resident company is wholly owned by the non-resident company if
all the shares in the resident company are held by and beneficially owned by the
non-resident company.
(7) However, the company is not wholly owned by the non-resident company
if a person is in a position to affect rights, in relation to the resident
company, of the non-resident company.
(8) The resident company is also not wholly owned by the non-resident
company if at some future time a person will be in a position to affect rights
as described in subsection (7).
A person in a position to affect rights
(9) A person is in a position to affect rights of a company in relation to
another company if the person has a right, power or option:
(a) to acquire those rights from one or other of those companies;
or
(b) to do something that would prevent one or other of those companies
from exercising its rights for its own benefit, or from receiving any benefit
arising from having those rights.
(10) It does not matter whether the person has the right, power or option
because of the constitution of one or other of those companies, any agreement or
otherwise.
Definitions
(11) In this section:
fully-franked dividend means a dividend whose franking
percentage (within the meaning of section 160APA) is 100%.
group company has the same meaning as in section
160AFE.
non-portfolio dividend has the same meaning as in section
317.
non-resident company means a company that is not a
resident.
unfranked amount for a dividend (including a dividend that is
not a frankable dividend within the meaning of section 160APA) means so much of
the dividend as has not been franked in accordance with section 160AQF or
160AQFA.
Company may establish account
(1) A company may establish an unfranked non-portfolio dividend
account.
Account surplus
(2) An unfranked non-portfolio dividend account surplus exists for a
company at a particular time if the company’s total unfranked
non-portfolio dividend credits arising before that time exceed its total
unfranked non-portfolio dividend debits arising before that time.
(3) The amount of the surplus is equal to the amount of the
excess.
Credits
(4) An unfranked non-portfolio dividend credit arises for a company
if:
(a) the company is paid an unfranked non-portfolio dividend; and
(b) the company is not a group company in relation to the company that
paid the dividend in relation to the year of income in which the dividend is
paid; and
(c) but for subparagraph 46F(2)(a)(i), the company would be entitled to a
rebate under section 46 in respect of the unfranked amount of the
dividend.
The amount of the credit is the unfranked amount of the dividend. The
credit arises when the dividend is paid to the company.
Debits
(5) An unfranked non-portfolio dividend debit arises for a company if the
company makes a declaration under paragraph 46FA(1)(f) in relation to a dividend
paid on a particular day. The amount of the debit is the flow-on amount under
subsection 46FA(2). The debit arises when the declaration is made.
Definitions
(6) In this section:
group company has the same meaning as in section
160AFE.
non-portfolio dividend has the same meaning as in section
317.
unfranked amount for a dividend (including a dividend that is
not a frankable dividend within the meaning of section 160APA) means so much of
the dividend as has not been franked in accordance with section 160AQF or
160AQFA.
Income
Tax Assessment Act 1997
3 Section 12-5 (at the end of the table item
relating to dividends)
Add:
|
unfranked non-portfolio dividends |
46FA |
4 Application of amendments
(1) The amendment made by item 1 applies to dividends paid on or after 1
July 2000.
(2) The amendments made by items 2 and 3 apply to unfranked non-portfolio
dividends paid to the resident company on or after 1 July 2000.
Income
Tax Assessment Act 1997
1 Subsection 4-10(3A) (first
sentence)
Repeal the sentence, substitute “If you have
*tax offsets that are subject to the refundable
tax offset rules and the total of those offsets exceeds your basic income tax
liability, you can, after allowing certain other tax offsets, get a refund of
the excess under section 67-30.”.
2 Subsection 4-10(3A)
(note)
Omit “Note”, substitute “Note 1”.
3 At the end of subsection
4-10(3A)
Add:
Note 2: Division 67 sets out the refundable tax offset
rules.
4 Subsection 61-335(6)
Repeal the subsection.
5 Section 61-335 (note)
Repeal the note, substitute:
Note: In certain circumstances you can get a refund of the
tax offset under Division 67.
6 Division 67
Repeal the Division, substitute:
This Division sets out the rules about refunds of tax offsets.
Table of sections
Operative provisions
67-20 Which tax offsets this Division applies
to
67-25 Tax offsets that are subject to the refundable tax
offset rules
67-30 When you can get a refund of a tax
offset
67-35 Amount of refund
[This is the end of the Guide]
This Division only applies to a *tax
offset if it is stated to be subject to the refundable tax offset
rules.
Franked dividends
(1) *Tax offsets available under any of
the following provisions of Part IIIAA of the Income Tax Assessment Act 1936
are subject to the refundable tax offset rules:
(a) section 160AQU (general);
(b) section 160AQX (beneficiaries of a trust);
(c) section 160AQY (trustees);
(d) section 160AQYA (superannuation funds, approved deposit funds (ADFs)
and pooled superannuation trusts (PSTs));
(e) section 160AQZ (partners);
(f) section 160AQZA (life assurance companies);
(g) section 160ASEP (venture capital).
The tax offset referred to in paragraph (c) is subject to the refundable
tax offset rules only if the trustee entitled to the rebate is liable to be
assessed under section 98 or 99 of the Income Tax Assessment Act
1936.
Private health insurance
(2) Private health insurance tax offsets under Subdivision 61-H are
subject to the refundable tax offset rules.
You can get a refund of *tax offsets
that are subject to the refundable tax offset rules if the total of those
offsets exceeds the amount of income tax that you would have to pay if you had
not got those tax offsets (but had got all your other tax offsets).
The amount of the refund of *tax offsets
is the amount of the excess referred to in section 67-30.
7 Application of amendments
The amendments made by this Schedule that relate to tax offsets under Part
IIIAA of the Income Tax Assessment Act 1936 apply to offsets that relate
to dividends paid on or after 1 July 2000.
Income
Tax Assessment Act 1936
1 Section 160APA (paragraph (baa) of the
definition of applicable general company tax rate)
Omit “36%”, substitute “34%”.
2 Section 160APA (paragraph (cb) of the
definition of applicable general company tax rate)
Omit “36%”, substitute “34%”.
3 At the end of section
160AQG
Add:
(4) If a company has a franking year that includes, but does not start on,
1 July 2000, subsections (1) to (3) apply to the company as if the following
periods were separate franking years:
(a) the period starting at the start of the company’s franking year
and ending on 30 June 2000;
(b) the period starting on 1 July 2000 and ending at the end of the
franking year.
4 Subparagraph
160AQH(1)(b)(iva)
Repeal the subparagraph, substitute:
(iva) if the dividend is a class C franked dividend—the amount
worked out in relation to the dividend using the formula in subsection
160AQT(1AB) (whether or not that subsection applies to the dividend) and a
statement to the effect that the applicable general company tax rate used in
that formula was 34%; and
5 Subsection 160AQJC(4)
(formula)
Repeal the formula, substitute:
6 Before section 160ASF
Insert:
The following provisions of this Division do not apply to an event that
occurs on or after 1 July 2000:
|
Provisions ceasing to apply from 1 July 2000 |
||
|---|---|---|
|
Item |
Provision |
Event |
|
1 |
section 160ASI [see instead section 160ATD] |
a class A or class B franking credit or debit arises after class C
conversion time |
|
2 |
section 160ASJ [see instead section 160ATE] |
a company ceases to be a life assurance company |
7 Paragraph 160ASK(1)(e)
(formula)
Repeal the formula, substitute:
8 Paragraph 160ASK(2)(e)
(formula)
Repeal the formula, substitute:
9 Paragraph 160ASL(2)(a)
(formula)
Repeal the formula, substitute:
10 Paragraph 160ASL(2)(b)
(formula)
Repeal the formula, substitute:
11 Paragraph 160ASL(3)(a)
(formula)
Repeal the formula, substitute:
12 Paragraph 160ASL(3)(b)
(formula)
Repeal the formula, substitute:
13 At the end of Part IIIAA
Add:
(1) On 1 July 2000, a company’s franking accounts are dealt with as
follows:
(a) first:
(i) the company’s class C franking account balance (if any) at the
start of that day is converted under section 160ATB to reflect the new company
tax rate; and
(ii) the company’s venture capital sub-account balance (if any) at
the start of that day is converted under section 160ATB to reflect the new
company tax rate;
(b) then, any other credits and debits that occur on that day are
processed.
(2) For the purposes of this Division, if 1 July 2000 is the first day of
a franking year for the company, the balance in a franking account or
sub-account of the company at the start of that day includes any credit arising
for that account on that day under section 160APL (carry forward of surplus from
previous franking year) or 160ASEE (carry forward of venture capital sub-account
surplus from previous franking year).
(3) Section 160ATD tells you how to deal with franking credits and debits
that arise on or after 1 July 2000 but reflect tax paid at the old company tax
rates.
(1) If a company has a class C franking surplus at the start of 1 July
2000:
(a) a class C franking debit of the company arises equal to that surplus;
and
(b) a class C franking credit of the company arises equal to the amount of
that debit multiplied by the conversion factor in subsection (5).
(2) If a PDF has a venture capital sub-account surplus at the start of 1
July 2000:
(a) a venture capital debit of the PDF arises equal to that surplus;
and
(b) a venture capital credit of the PDF arises equal to the amount of that
debit multiplied by the conversion factor in subsection (5).
(3) If a company has a class C franking deficit at the start of 1 July
2000:
(a) a class C franking credit of the company arises equal to that deficit;
and
(b) a class C franking debit of the company arises equal to the amount of
that credit multiplied by the conversion factor in subsection (5).
(4) If a PDF has a venture capital sub-account deficit at the start of 1
July 2000:
(a) a venture capital credit of the PDF arises equal to that deficit;
and
(b) a venture capital debit of the PDF arises equal to the amount of that
credit multiplied by the conversion factor in subsection (5).
(5) The conversion factor is:
(1) If:
(a) any of the events specified in the event column of the following table
occurs in relation to a company on or after 1 July 2000; and
(b) the event:
(i) is not a franking credit or debit arising under this Division;
and
(ii) is not a franking credit arising under section 160APL; and
(iii) is not a franking debit arising under section 160APX, 160AQB,
160AQCB, 160AQCBA, 160AQCC, 160AQCNA, 160AQCNB or 160AQCNC;
the adjustments specified in the adjustments column for that item are made
to the company’s franking accounts:
|
Certain credits and debits arising on or after 1 July 2000 |
||
|---|---|---|
|
Item |
Event |
Adjustments |
|
1 |
a class A franking credit of the company arises under this Part and the
company is not a life assurance company |
(a) a class A franking debit arises equal to the amount of the class A
franking credit; and |
|
2 |
a class A franking debit of the company arises under this Part and the
company is not a life assurance company |
(a) a class A franking credit arises equal to the amount of the class A
franking debit; and |
|
3 |
a class B franking credit of a company arises under this Part |
(a) a class B franking debit arises at that time equal to the amount of the
class B franking credit; and
|
|
4 |
a class B franking debit of a company arises under this Part |
(a) a class B franking credit arises at that time equal to the amount of
the class B franking debit; and |
|
5 |
a class C franking credit of a company arises under this Part and the
amount of the credit reflects an applicable general company tax rate of
36% |
(a) a class C franking debit arises at that time equal to the amount of the
class C franking credit; and
|
|
6 |
a class C franking debit of a company arises under this Part and the amount
of the debit reflects an applicable general company tax rate of 36% |
(a) a class C franking credit arises at that time equal to the amount of
the class C franking debit; and
|
|
7 |
a venture capital credit of the PDF arises under this Part and the amount
of the credit reflects an applicable general company tax rate of 36% |
(a) a venture capital debit of the PDF arises at that time equal to the
amount of the venture capital credit; and
|
|
8 |
a venture capital debit of a PDF arises under this Part and the amount of
the debit reflects an applicable general company tax rate of 36% |
(a) a venture capital credit of the PDF arises at that time equal to the
amount of the venture capital debit; and
|
(2) For the purposes of items 5, 6, 7 and 8 of the table in subsection
(1), the amount of a credit or debit reflects an applicable general
company tax rate of 36% if:
(a) the applicable general company tax rate used to calculate the amount
of the debit or credit is 36%; or
(b) the credit or debit arises in relation to an estimated debit
determination and the determination is made on the basis of:
(i) action seeking a reduction in an amount of company tax for a year of
income for which the general company tax rate is 36%; or
(ii) a payment of an initial payment of tax or a company tax instalment in
relation to a year of income for which the general company tax rate is 36%;
or
(c) the debit arises under subsection 160AQC(3) or section 160ASEI and the
amount specified in the application for the estimated debit concerned is taken
to be based on a 36% general company tax rate under section 160ATI; or
(d) the credit or debit is equal to the amount of an earlier debit or
credit and the earlier debit or credit reflected an applicable general company
tax rate of 36%.
Note 1: Paragraph (a)—the applicable general company
tax rate will always be involved in the calculation of a credit or debit if an
“adjusted amount” is used in the calculation.
Note 2: Paragraph (d) covers provisions such as sections
160APV, 160APVB, 160APVF, 160AQCA, 160AQCCB and 160AQCM.
Conversion of class A franking surplus
(1) If:
(a) a company is a life assurance company on 1 July 2000; and
(b) at a particular time (the transition time) after 1 July
2000, the company ceases to be a life assurance company (other than by ceasing
to be a company); and
(c) at the transition time the company has a class A franking
surplus;
then, immediately after the transition time:
(d) a class A franking debit of the company equal to that class A franking
surplus arises; and
(e) a class C franking credit of the company also arises that is worked
out using the formula:
Conversion of class A franking deficit
(2) If:
(a) a company is a life assurance company on 1 July 2000; and
(b) at a particular time (the transition time) after 1 July
2000, the company ceases to be a life assurance company (other than by ceasing
to be a company); and
(c) at the transition time the company has a class A franking
deficit;
then, immediately after the transition time:
(d) a class A franking credit of the company arises equal to that class A
franking deficit; and
(e) a class C franking debit of the company also arises that is worked out
using the formula:
(1) This section deals with the situation in which:
(a) a company pays a number of class C franked dividends under a
resolution made before 1 July 2000; and
(b) some of the dividends (the first series dividends) are
paid before 1 July 2000; and
(c) some of the dividends (the second series dividends) are
paid on or after 1 July 2000.
(2) For the purposes of this Part:
(a) the first series dividends and the second series dividends are to be
taken to have been made under separate resolutions; and
(b) any declaration (the original declaration) made under
section 160AQF or 160ASEL in relation to the dividends is taken to have effect
only in relation to the first series dividends; and
(c) if the company does not make a declaration under section 160AQF or
160ASEL in relation to the second series dividends before the reckoning day for
the second series dividends, then:
(i) in a case where the first series dividends were class C franked
dividends—the company is to be taken to have made a declaration under
section 160AQF that each dividend in the second series is a class C franked
dividend to the extent of the same percentage as in the original declaration;
and
(ii) in a case where the first series dividends were also franked with a
venture capital franked amount—the company is to be taken to have made a
declaration under section 160ASEL that each dividend in the second series is a
venture capital dividend to the extent of the same percentage as in the original
declaration.
Note 1: Paragraph (a) means that the 2 series of dividends
will have separate reckoning days (see the definition of reckoning day
in section 160APA). The reckoning day for the second series dividends
will be the day on which the first of the second series dividends is paid. This
in turn affects the calculation of the required franking amount for the second
series dividends.
Note 2: Paragraph (b) means that the company may make a
fresh declaration under section 160AQF in relation to the second series
dividends. The company may wish to do this to ensure that the second series
dividends are franked to the new required franking amount that will need to be
calculated under Division 4. It will also mean that the company may make a fresh
declaration under section 160ASEL.
(1) This section deals with the situation in which:
(a) a company pays a class C franked dividend or class C franked dividends
under a resolution made before 1 July 2000; and
(b) no dividend is paid under the resolution before 1 July 2000.
(2) For the purposes of this Part:
(a) despite subsection 160AQF(2), the company may:
(i) vary any declaration it made under section 160AQF or 160ASEL in
relation to the dividend or dividends; or
(ii) revoke any declaration it made under section 160AQF or 160ASEL in
relation to the dividend or dividends and make a fresh declaration under that
section in relation to the dividend or dividends;
before the reckoning day for the dividend or dividends; and
(b) a declaration varied, or a fresh declaration made, under this section
cannot itself be varied or revoked.
When this section applies
(1) This section deals with the situation in which:
(a) subsection 160AQE(3) is applied to work out the provisional required
franking amount for a dividend (the current dividend) paid on or
after 1 July 2000; and
(b) the earlier franked dividend referred to in that subsection was paid
before 1 July 2000.
Effect on required franking amount—companies other than life
assurance companies
(2) If the company is not a life assurance company at the beginning of the
reckoning day for the current dividend, the component EFA in the
formula in subsection 160AQE(3) is worked out using the following
formula:
where:
class C franked amount is the amount that is the class C
franked amount of the earlier dividend.
Effect on required franking amount—life assurance
companies
(3) If the company is a life assurance company at the beginning of the
reckoning day for the current dividend, the component EFA in the
formula in subsection 160AQE(3) is worked out using the following
formula:
where:
class A franked amount is the amount (if any) that is the
class A franked amount of the earlier dividend.
class C franked amount is the amount (if any) that is the
class C franked amount of the earlier dividend.
An application made under section 160AQDAA or 160ASEK on or after 9 June
2000 and before 1 July 2000 may specify whether the amount specified in the
application is based on a 36% or a 34% general company tax rate. If no rate is
specified, the application is taken to specify that the amount specified in the
application is based on a 36% general company tax rate.
14 Application of
amendments
(1) The amendment made by item 1 applies to:
(a) franking deficit tax for franking years ending on or after 1 July
2000; and
(b) deficit deferral tax in relation to instalments under section 221AZK
paid during a franking year ending on or after 1 July 2000.
(2) The amendment made by item 2 applies to:
(a) the payment of a class C franked dividend to a shareholder in a
company on or after 1 July 2000; and
(b) a trust amount or partnership amount that relates, directly or
indirectly, to the payment of a class C franked dividend to a shareholder in a
company on or after 1 July 2000.
(3) The amendment made by item 4 applies to dividends paid on or after 1
July 2000.
(4) The amendment made by item 5 applies to deficit deferral tax in
relation to instalments under section 221AZK paid during a franking year ending
on or after 1 July 2000.
(5) The amendments made by items 7 and 8 apply to dividends paid on or
after 1 July 2000.
(6) The amendments made by items 9 to 12 apply to dividends that are
current dividends for the purposes of section 160ASL of the Income Tax
Assessment Act 1936 and are paid on or after 1 July 2000.
Part
1—Amendments commencing on 1
July 2000
Income
Tax Assessment Act 1936
1 Paragraph 159GZZZZG(1)(d)
Omit “36%”, substitute “34%”.
2 Paragraph 159GZZZZG(2)(e)
Omit “36%”, substitute “34%”.
3 Paragraph 159GZZZZG(3)(e)
Omit “36%”, substitute “34%”.
4 Paragraph 159GZZZZG(4)(e)
Omit “36%”, substitute “34%”.
5 Application of amendments
The amendments made by this Part apply to assessments for the 2000-01 year
of income and later years of income.
Part
2—Amendments commencing on 1
July 2001
Income
Tax Assessment Act 1936
6 Paragraph 159GZZZZG(1)(d)
Omit “34%”, substitute “30%”.
7 Paragraph 159GZZZZG(2)(e)
Omit “34%”, substitute “30%”.
8 Paragraph 159GZZZZG(3)(e)
Omit “34%”, substitute “30%”.
9 Paragraph 159GZZZZG(4)(e)
Omit “34%”, substitute “30%”.
10 Application of
amendments
The amendments made by this Part apply to assessments for the 2001-02 year
of income and later years of income.
Income
Tax Assessment Act 1936
1 Subsections 124ZM(1), (2) and
(3)
Repeal the subsections, substitute:
(1) If a company pays a dividend to a shareholder at a time when the
company is a PDF, so much (if any) of the dividend as has not been franked in
accordance with section 160AQF is exempt from income tax.
(1A) The rest of this section applies to so much of the dividend as has
been franked.
Usual case
(1B) Subsections (2) to (8) (inclusive) apply if the assessable income of
a year of income of a taxpayer who or that is:
(a) a company or a natural person (other than a company or natural person
in the capacity of a trustee); or
(b) a corporate unit trust in relation to that year of income;
or
(c) a public trading trust in relation to that year of income;
or
(d) an eligible entity within the meaning of Part IX in relation to that
year of income;
would (apart from subsection (2)) include:
(e) the franked amount of the dividend; or
(f) a trust amount or partnership amount in relation to the dividend in
relation to which there would be a flow-on franking amount.
This subsection does not apply to cases dealt with in subsections (1C) and
(1D).
Taxpayers who qualify for venture capital franking rebate
(1C) If a taxpayer (other than a life assurance company) is entitled to a
venture capital franking rebate in relation to the dividend under section
160ASEP, then:
(a) so much of the franked amount of the dividend as is venture capital
franked is exempt income of the taxpayer; and
(b) the remaining franked amount is, subject to subsection (3), exempt
income of the taxpayer.
(1D) If a life assurance company is entitled to a venture capital franking
rebate in relation to the dividend under section 160ASEP, then:
(a) the amount worked out using the following formula is exempt income of
the life assurance company:
where:
CS/RA income is the amount of the life assurance
company’s assessable income for the year of income in which the dividend
is received that is allocated to the CS/RA class of business under subsection
116CE(4).
total income is the life assurance company’s
assessable income for the year of income in which the dividend is
paid.
venture capital franked amount has the meaning given by
subsection (9); and
(b) the remaining franked amount is, subject to subsection (3), exempt
income of the life assurance company.
(2) Subject to subsection (3), the following is exempt income of the
taxpayer:
(a) if paragraph (1B)(e) applies—the franked amount;
(b) if paragraph (1B)(f) applies—so much of the trust amount or
partnership amount as would constitute the flow-on franking amount.
(3) Paragraphs (1C)(b) and (1D)(b) and subsection (2) do not exempt, and
are taken never to have exempted, an amount if the taxpayer’s return of
income of the year of income is prepared on the basis that the amount is
included in the taxpayer’s assessable income of that year.
2 Subsection 124ZM(9)
Insert:
remaining franked amount means:
(a) in a case where the taxpayer is not a life assurance company—so
much of the franked amount of the dividend as exceeds the venture capital
franked amount; and
(b) in a case where the taxpayer is a life assurance company—so much
of the franked amount of the dividend as exceeds the amount worked out under
paragraph (1D)(a).
3 Subsection 124ZM(9)
Insert:
venture capital franked amount for a dividend means so much
of the dividend as has been venture capital franked in accordance with section
160ASEL.
4 Section 160APA (at the end of paragraph (a) of
the definition of applicable general company tax
rate)
Add:
(iv) the calculation of a venture capital debit under section 160ASEH in
relation to a year of income;
5 Section 160APA (after paragraph (aa) of the
definition of applicable general company tax rate)
Insert:
(ab) in relation to the class C franking credit that arises under section
160APVI on the payment of venture capital deficit tax by a PDF in respect of a
franking year—the general company tax rate used to work out the amount of
the venture capital deficit tax;
6 Section 160APA (definition of class C
franking account assessment)
Repeal the definition, substitute:
class C franking account assessment means:
(a) the ascertainment of the class C franking account balance and of any
class C franking deficit tax payable; or
(b) the ascertainment of the venture capital sub-account balance within
the class C franking account and of any venture capital deficit tax
payable.
7 Section 160APA (definition of estimated
debit)
Repeal the definition, substitute:
estimated debit means:
(a) an estimated class A debit; or
(b) an estimated class B debit; or
(c) an estimated class C debit; or
(d) an estimated venture capital debit.
8 Section 160APA (definition of estimated
debit determination)
Repeal the definition, substitute:
estimated debit determination means:
(a) an estimated class A debit determination; or
(b) an estimated class B debit determination; or
(c) an estimated class C debit determination; or
(d) an estimated venture capital debit determination.
9 Section 160APA
Insert:
estimated venture capital debit means an estimated venture
capital debit specified in an estimated venture capital debit
determination.
10 Section 160APA
Insert:
estimated venture capital debit determination means a
determination made by the Commissioner under section 160ASEK.
11 Section 160APA (definition of franking
deficit tax)
Repeal the definition, substitute:
franking deficit tax means:
(a) class A franking deficit tax; or
(b) class B franking deficit tax; or
(c) class C franking deficit tax; or
(d) venture capital deficit tax.
12 Section 160APA
Insert:
qualifying SME investment means an SME investment that is
made in accordance with Division 1 of Part 4 of the Pooled Development Funds
Act 1992.
13 Section 160APA
Insert:
section 124ZZB SME assessable income for a PDF for a year of
income is the assessable income allocated to the PDF’s SME assessable
income for the year of income under section 124ZZB.
14 Section 160APA
Insert:
SME investment has the same meaning as in section
124ZS.
15 Section 160APA
Insert:
venture capital deficit tax means tax payable in accordance
with the Venture Capital Deficit Tax Act.
Note: See also section 160ASEN.
16 Section 160APA
Insert:
Venture Capital Deficit Tax Act means the New Business Tax
System (Venture Capital Deficit Tax) Act 1999.
17 Section 160APA
Insert:
venture capital franked amount for a dividend means so much
of the dividend as has been venture capital franked in accordance with section
160ASEL.
18 Section 160APA
Insert:
venture capital franked dividend means a dividend the whole
or a part of which has been venture capital franked in accordance with section
160ASEL.
19 Section 160APA
Insert:
venture capital sub-account means a venture capital
sub-account that a PDF maintains within its class C franking account.
Note: See section 160ASEB.
20 Section 160APA
Insert:
venture capital sub-account balance, in relation to a
PDF, means:
(a) if the PDF has a venture capital sub-account surplus—the amount
of that surplus; and
(b) if the PDF has a venture capital sub-account deficit—the amount
of that deficit; and
(c) in any other case—nil.
21 Section 160APA
Insert:
venture capital sub-account deficit means a deficit
calculated under subsection 160ASEC(2).
22 Section 160APA
Insert:
venture capital sub-account surplus means a surplus
calculated under subsection 160ASEC(1).
23 After section 160APVH
Insert:
(1) There arises, on the day on which a PDF pays venture capital deficit
tax for a franking year, a class C franking credit equal to the adjusted amount
in relation to:
(a) the amount paid; or
(b) if the amount paid was calculated under subsection 5(2) of the Venture
Capital Deficit Tax Act—the amount worked out using the
formula:
(2) The credit under subsection (1) is reduced by the amount (if any) of
the class C franking deficit at the end of the franking year.
24 After subsection
160AQCBA(2)
Insert:
(2A) This section applies to the streaming of venture capital franking
rebate benefits as if:
(a) references to a franking debit include references to a venture capital
debit; and
(b) references to the franked amount of the dividend include references to
the venture capital franked amount of the dividend.
25 Paragraph
160AQCBA(16)(c)
Omit “or 160AQY”, substitute “, 160AQY or
160ASEP”.
26 Subparagraph
160AQCBA(17)(a)(ii)
Omit “or 160AQY”, substitute “, 160AQY or
160ASEP”.
27
At the end of subsection 160AQCBA(17)
Add:
; (c) if the relevant franking benefit is a franking rebate under section
160ASEP—the first shareholder qualifies for franking rebates under
Subdivision G of Division 12A in relation to the year of income and the other
shareholder does not.
28 Subparagraph
160AQH(1)(b)(i)
Omit “and the class C franked amount of the dividend (if any)”,
substitute “, the class C franked amount of the dividend (if any) and, if
the company is a PDF, the venture capital franked amount of the dividend (if
any)”.
29 At the end of paragraph
160AQH(1)(b)
Add:
(vii) if the dividend is a venture capital franked dividend—a
statement to the effect that the venture capital franking is only relevant for a
taxpayer who is:
(A) the trustee of a fund that is a complying superannuation fund for the
purposes of Part IX in relation to the year of income; or
(B) the trustee of a fund that is a complying ADF for the purposes of Part
IX in relation to the year of income; or
(C) the trustee of a unit trust that is a pooled superannuation trust for
the purposes of Part IX in relation to the year of income; or
(D) a life assurance company; or
(E) a registered organisation; and
30 After subsection
160AQJ(1B)
Insert:
(1C) The amount of tax that a PDF would otherwise be liable to pay under
subsection (1B) in relation to a franking year is reduced by the amount (if any)
of the venture capital deficit tax the PDF is liable to pay in relation to that
franking year under section 160ASEN.
31
After subsection 160AQJC(2)
Insert:
(2A) If the company is a PDF, the class C deficit deferral amount is
reduced by the extent (if any) to which the refund gives rise to, or increases,
a liability of the PDF to venture capital deficit tax because of the operation
of subsection 4(2) of the Venture Capital Deficit Tax Act. The reduction under
this subsection is reduced by the extent (if any) to which the refunds produced
a reduction in the PDF’s class C franking deficit tax under subsection
160AQJ(1C).
32 At the end of section
160AQT
Add:
(6) For the purposes of this section, if:
(a) because of subsection 124ZM(3), an amount of a dividend paid to a
shareholder by a company is not exempt income of the shareholder under paragraph
124ZM(1C)(b) or 124ZM(1D)(b); and
(b) the dividend is not otherwise exempt income of the
shareholder;
then:
(c) the dividend is taken not to be exempt income of the shareholder;
and
(d) subsections (1AB) and (1C) apply to the dividend as if references to
the franked amount of the dividend in those subsections were references to the
remaining franked amount as defined in section 124ZM.
33 Subsection 160ARXA(1) (subparagraph (a)(iii)
of the definition of franking tax shortfall)
Repeal the subparagraph, substitute:
(iii) the class C franking tax shortfall in relation to the company and
the franking year; or
(iv) the venture capital franking tax shortfall in relation to the company
and the franking year; and
34 Subsection 160ARXA(1) (at the end of the
definition of statement franking tax)
Add:
; or (d) the venture capital statement franking tax in relation to the
company, the franking year and the time.
35 Subsection 160ARXA(1)
Insert:
venture capital franking tax shortfall, in relation to a PDF
and a franking year, means the amount (if any) by which the PDF’s venture
capital statement franking tax for that year at the time at which it was lowest
is less than the PDF’s venture capital proper franking tax for that
year.
36 Subsection 160ARXA(1)
Insert:
venture capital proper franking tax, in relation to a PDF and
a franking year, means the venture capital deficit tax properly payable by the
PDF in respect of that year.
37 Subsection 160ARXA(1)
Insert:
venture capital statement franking tax, in relation to a PDF,
a franking year and a time, means the venture capital deficit tax that would
have been payable by the PDF in respect of that year if the tax were assessed at
that time taking into account taxation statements by the PDF.
38
Subparagraph 160ARY(1)(a)(ii)
After “160AQU”, insert “or 160ASEP”.
39 Paragraph 160ARY(1)(b))
After “160AQU” (twice occurring), insert “or
160ASEP”.
40
At the end of subsection 160ARZ(1)
Add:
; and (d) the venture capital deficit tax (if any) payable by the company
for the franking year.
41
After sub-subparagraph 160ARZD(1)(c)(ii)(BA)
Insert:
(BB) if the shortfall is a venture capital franking tax
shortfall—the venture capital deficit tax that would have been payable by
the company for that year if the tax were assessed on the basis of the
company’s return under subsection 160ARE(1) or 160ARF(1) in relation to
that year;
Repeal the paragraph, substitute:
(b) a reference to income and expenditure were a reference to matters
relevant to ascertaining:
(i) the class A franking account balance; or
(ii) the class B franking account balance; or
(iii) the class C franking account balance; or
(iv) the venture capital sub-account balance;
and, if the company is a former exempting company, includes a reference
to matters relevant to working out the class A exempting account balance or the
class C exempting account balance; and
43
At the end of section 160ASC
Add:
(2) A PDF does not need to maintain records under this section in relation
to a venture capital sub-account if the PDF does not establish a venture capital
sub-account.
44 After Division 12 of Part
IIIAA
Insert:
A PDF may establish a venture capital sub-account within its class C
franking account.
(1) The surplus in a PDF’s venture capital sub-account at a
particular time in a franking year is the excess calculated using the
formula:
where:
venture capital credits at that time has the meaning given by
subsection (4).
venture capital debits at that time has the meaning given by
subsection (4).
(2) The deficit in a PDF’s venture capital sub-account at a
particular time in a franking year is the excess calculated using the
formula:
where:
venture capital credits at that time has the meaning given by
subsection (4).
venture capital debits at that time has the meaning given by
subsection (4).
(3) The venture capital sub-account may be in deficit even though the
class C franking account as a whole is in surplus. Similarly, the venture
capital sub-account may be in surplus even though the class C franking account
as a whole is in deficit.
Note: This can happen because:
(a) only amounts coming from particular sources can be
credited or debited to the venture capital sub-account; and
(b) the PDF may anticipate future venture capital credits to
a greater or lesser extent than it anticipates future class C franking credits
generally; and
(c) the venture capital credits and debits do not
necessarily arise at the same time as the relevant class C franking credits and
debits (see subsections 160ASED(4) and (9)).
(4) In this section:
venture capital credits at a particular time in a franking
year is the total of the PDF’s venture capital credits
arising in the franking year and before that time.
venture capital debits at a particular time in a franking
year is the total of the PDF’s venture capital debits arising in the
franking year and before that time.
Venture capital credits
(1) A class C franking credit of a PDF is a venture capital credit of the
PDF to the extent to which it is reasonably attributable to a payment of tax by
the PDF in relation to a CGT event in relation to a qualifying SME investment of
the PDF. This subsection does not apply to a class C franking credit that arises
under subsection 160APL(3).
Note 1: Venture capital credits also arise
under:
(a) section 160ASEE (carry-forward of surplus from previous
franking year); and
(b) section 160ASEF (lapsing of estimated venture capital
debit determinations); and
(c) subsection 160ASEN(3) (receipt of refund that creates or
increases venture capital sub-account deficit).
Note 2: Subsection 160APL(3) exclusion—the venture
capital sub-account has its own provision for the carrying forward of end of
franking year surpluses (see section 160ASEE).
(2) In determining the extent to which the class C franking credit is
reasonably attributable to a payment of tax by the PDF in relation to the CGT
event, have regard to:
(a) the extent to which the credit can reasonably be attributed to a
payment of tax by the PDF in relation to its section 124ZZB SME assessable
income for a year of income; and
(b) the extent to which the section 124ZZB SME assessable income can
reasonably be attributed to the CGT event.
(3) Subject to subsection (4), the venture capital credit arises at the
same time as the class C franking credit arises.
(4) Before a PDF’s assessment day (the assessment day)
for a year of income, the PDF may elect to have the venture capital credits that
would otherwise arise under subsection (1) during that year of income arise on
the assessment day. If the PDF makes this election, the venture capital
credits:
(a) are taken not to have arisen on the day on which the relevant class C
franking credits arose; and
(b) are taken to arise on the assessment day.
(5) The PDF’s assessment day for a year of income is
the earlier of:
(a) the day on which the PDF furnishes its return of income for the year
of income; or
(b) the day on which the Commissioner makes an assessment of the amount of
the PDF’s taxable income for that year of income under section
166.
Venture capital debits
(6) A class C franking debit of a PDF is a venture capital debit of the
PDF to the extent to which it is reasonably attributable to a reduction amount
in relation to a venture capital credit of the PDF.
Note: Venture capital debits also arise
under:
(a) section 160ASEG (declaration is made attaching venture
capital credits to a dividend); and
(b) section 160ASEI (estimated venture capital debit
determinations); and
(c) subsection 160ASEM(2) (failure to empty the sub-account
in certain circumstances); and
(d) section 160AQCBA (streaming venture capital franking
rebate benefits) (see section 160ASEJ); and
(e) section 160ASEH (PDF’s total venture capital
credits for the franking year exceeding the PDF’s CGT limit for the
relevant year of income).
(7) A reduction amount in relation to a venture
capital credit of the PDF is:
(a) an amount received as a refund of a payment of tax; or
(b) an amount, in respect of a credit under paragraph 221AZM(1)(b) or (c),
applied by the Commissioner against a liability of the PDF; or
(c) an amount applied by the Commissioner against a liability of the PDF;
or
(d) a reduction mentioned in section 160APZ;
to the extent to which the amount or reduction is attributable to a payment
of tax that gives rise to a venture capital credit of the PDF.
(8) Subject
to subsection (9), the venture capital debit arises at the same time as the
relevant class C franking debit arises.
(9) If the venture capital credit referred to in subsection (7) does not
arise until after the relevant class C franking debit arises, the venture
capital debit arises when the venture capital credit arises.
Note: This subsection deals with the situation in which the
PDF elects under subsection (4) to have its venture capital credits arise on its
assessment day. It brings the related intervening venture capital debits to
account on the same day.
If a PDF has a venture capital sub-account surplus at the end of a
franking year, there arises at the beginning of the next franking year a venture
capital credit of the PDF equal to that venture capital sub-account
surplus.
(1) On the day on which the termination time in relation to an estimated
venture capital debit of a PDF occurs, there arises a venture capital credit of
the PDF equal to the estimated venture capital debit.
(2) If, on a particular day, the Commissioner serves on a PDF a notice of
an estimated venture capital debit determination that is in substitution for an
earlier determination, there arises on that day a venture capital credit of the
PDF equal to the amount of the venture capital debit that arose because of the
earlier determination.
A venture capital debit of a PDF arises when the PDF makes a declaration
under section 160ASEL that a dividend is a venture capital franked dividend to a
specified extent. The amount of the debit is the venture capital franked amount
of the dividend.
Note: The debit occurs as soon as the declaration is made
(and not when the dividend is later paid). By way of contrast, the debit made to
the class C franking account under section 160AQB only occurs when the dividend
is paid.
(1) A venture capital debit of a PDF arises on the last day of a year of
income if the PDF’s net venture capital credits for the year of income
exceeds whichever is the lesser of:
(a) the adjusted amount of the PDF’s CGT limit for that year of
income; and
(b) the adjusted amount of the tax paid by the PDF on its SME income
component for that year of income.
The amount of the debit is equal to the excess.
(2) The PDF’s net venture
capital credits for the year of income is:
where:
venture capital credits is the total venture capital credits
of the PDF that arise under subsection 160ASED(1) and relate to tax in relation
to taxable income of that year of income.
venture capital debits is the total venture capital debits of
the PDF that relate to tax in relation to taxable income of that year of
income.
Note: The venture capital credits that are counted for the
purposes of this subsection do not include the credit that carries over the
surplus in the venture capital sub-account from one franking year to the next.
This arises under section 160ASEE and not under subsection
160ASED(1).
(3) The PDF’s CGT limit for the year of income is
worked out using the formula:
where:
ordinary capital gains from all SME CGT events means the
total of the ordinary capital gains for the year of income for CGT events in
relation to SME investments of the PDF.
ordinary capital gains from venture capital CGT events means
the total of ordinary capital gains for the year of income for CGT events in
relation to shares in companies that are qualifying SME investments.
SME tax rate is the tax rate applicable to the SME income
component of the PDF for the year of income.
Note: Section 124ZZB SME assessable income is
defined in section 160APA.
(4) The tax paid by the PDF on its SME income component for
the year of income is the tax paid by the PDF on its SME income component after
allowing tax offsets referred to in section 4-10 of the Income Tax Assessment
Act 1997.
(5) In this section:
ordinary capital gain has the meaning given by section
124ZW.
SME income component has the same meaning as in section
124ZU.
SME investment has the meaning given by section
124ZW.
If, on a particular day, the Commissioner serves on a PDF notice of an
estimated venture capital debit determination, there arises on that day a
venture capital debit of the PDF equal to the estimated venture capital debit
specified in the notice.
Under section 160AQCBA, a venture capital debit of a PDF arises
if:
(a) the PDF streams the payment of dividends, or the payment of dividends
and the giving of other benefits, to its shareholders in a way mentioned in
subsection 160AQCBA(2); and
(b) the Commissioner makes a determination under paragraph 160AQCBA(3)(a)
in respect of a dividend paid or other benefit given by the PDF; and
(c) the franking credit benefit obtained relates to rebates allowable
under section 160ASEP.
(1) If a PDF:
(a) has taken liability reduction action in relation to a payment of tax
for which a venture capital credit arises under subsection 160ASED(1);
or
(b) has paid a company tax instalment for which a venture capital credit
arises under subsection 160ASED(1);
the PDF may lodge an application with the Commissioner for:
(c) the determination of an estimated venture capital debit in relation to
the liability reduction action or the company tax instalment; or
(d) the determination of such an estimated venture capital debit in
substitution for an earlier determination.
(2) An estimated venture capital debit in relation to a company tax
instalment must relate to the refund of that instalment under section 221AZL or
221AZQ.
(3) The application must:
(a) be made before the termination time; and
(b) be in the approved form; and
(c) specify the amount of the estimated venture capital debit applied
for.
(4) The Commissioner:
(a) may determine an estimated venture capital debit not greater than the
amount specified in the application; and
(b) must serve notice of any such determination on the PDF.
(5) If:
(a) a PDF lodges an application with the Commissioner on a particular day
(the application day); and
(b) at the end of the 21st day after the application day, the Commissioner
has neither:
(i) served notice of an estimated venture capital debit determination on
the PDF; nor
(ii) refused to make an estimated venture capital debit
determination;
the Commissioner is taken, on the 22nd day after the application day, to
have:
(c) determined an estimated venture capital debit in accordance with the
application; and
(d) served notice of the determination on the PDF.
(6) A notice of an estimated venture capital debit determination has no
effect if it is served after the termination time.
(1) A PDF that has a venture capital sub-account may frank a dividend paid
by the PDF as a venture capital franked dividend in accordance with this section
if:
(a) the dividend is a class C franked dividend; and
(b) the dividend is paid under a resolution under which:
(i) dividends are to be paid to all shareholders in the PDF; and
(ii) the amount of the dividend per share is the same for each of those
dividends.
(2) The dividend is venture capital franked to the extent of the amount
worked out using the formula in subsection (3) if:
(a) the PDF declares the dividend to be a venture capital franked dividend
to a specified extent in the declaration that it makes under subsection
160AQF(1AAA) in relation to the dividend; and
(b) the extent to which the dividend is declared to be a venture capital
franked dividend is the same for all dividends to be paid under the
resolution.
Note 1: Section 160ASEM requires the PDF to declare the
dividend to be a venture capital franked dividend if the venture capital
sub-account is in surplus when the subsection 160AQF(1AAA) declaration is
made.
Note 2: The PDF may anticipate future credits to the
sub-account by making a declaration under this subsection even though the
sub-account is in deficit or by making a declaration under this subsection that
will put the sub-account into deficit.
Note 3: If this subsection is not satisfied, the dividend is
not a venture capital franked dividend.
(3) Subject to subsection (4), the extent to which the dividend is venture
capital franked is worked out using the formula:
(4) If the amount worked out under subsection (3) exceeds the class C
franked amount of the dividend, the extent to which the dividend is venture
capital franked is reduced by the amount of the excess.
(1) If a PDF:
(a) pays dividends under a resolution under which the dividends are to be
paid to all shareholders in the PDF; and
(b) makes a declaration under subsection 160AQF(1AAA) in relation to the
dividends; and
(c) has a surplus in its venture capital sub-account immediately before it
makes the declaration;
the PDF must make a declaration under section 160ASEL so that:
(d) the dividend is venture capital franked to the same extent to which it
is class C franked; or
(e) there is a nil surplus, or a deficit, in the sub-account immediately
after the declaration is made.
(2) A venture capital debit of the PDF arises when a dividend is paid if
the PDF does not venture capital frank the dividend to the extent required by
subsection (1). The amount of the debit is:
where:
actual franked amount is the venture capital franked amount
of the dividend.
subsection (1) franked amount is the amount that would have
been the venture capital franked amount of the dividend if it had been franked
in accordance with subsection (1).
(1) A PDF is liable to pay venture capital deficit tax if it has a venture
capital sub-account deficit at the end of a franking year.
Note 1: Venture capital deficit tax is imposed by the
Venture Capital Deficit Tax Act.
Note 2: Under subsection 4(2) of that Act, for the purposes
of working out the PDF’s liability for venture capital deficit tax, a
refund of income tax in relation to the PDF’s taxable income for a year of
income that is received within 6 months after the end of the franking year that
ends in or at the same time as the year of income is taken to have been received
on the last day of the franking year.
(2) The Commissioner may, in the Commissioner’s discretion, remit
part of the venture capital deficit tax if the amount of the venture capital
deficit tax is worked out under subsection 5(2) of the Venture Capital Deficit
Tax Act. The amount remitted must not exceed the difference between:
(a) the amount of the venture capital deficit tax; and
(b) the amount that would have been the amount of that tax if it had been
calculated under subsection 5(1) of the Venture Capital Deficit Tax
Act.
(3) If:
(a) a PDF receives a refund of income tax in relation to the PDF’s
taxable income for a year of income; and
(b) the receipt of the refund creates or increases a deficit in the
PDF’s venture capital sub-account under subsection 4(2) of the Venture
Capital Deficit Tax Act;
a venture capital credit of the PDF arises equal to the extent to which the
receipt of the refund creates or increases that deficit. The credit arises when
the refund is received.
(1) To qualify for franking rebates under this Subdivision in relation to
dividends that a PDF pays in a year of income, a taxpayer must be:
(a) the trustee of a fund that is a complying superannuation fund for the
purposes of Part IX in relation to the year of income; or
(b) the trustee of a fund that is a complying ADF for the purposes of Part
IX in relation to the year of income; or
(c) the trustee of a unit trust that is a pooled superannuation trust for
the purposes of Part IX in relation to the year of income; or
(d) a life assurance company; or
(e) a registered organisation.
(2) A trustee of a fund does not qualify under paragraph (1)(a) or (b) if
the fund is a self managed superannuation fund (within the meaning of the
Superannuation Industry Supervision Act 1993).
General rule for rebate
(1) Subject to subsections (2) and (3), if:
(a) a PDF pays a dividend to a shareholder in a year of income;
and
(b) the dividend is a venture capital franked dividend to a particular
extent; and
(c) the dividend is not exempt income of the shareholder (disregarding
section 124ZM); and
(d) the dividend is not paid as part of a dividend stripping operation;
and
(e) the shareholder is a resident at the time the dividend is paid;
and
(f) the shareholder qualifies for franking rebates under this Subdivision
in relation to the dividends paid by the PDF in that year of income;
and
(g) the shareholder is not:
(i) a partnership; or
(ii) a trustee (other than the trustee of an eligible entity within the
meaning of Part IX); and
(h) the shareholder is a qualified person in relation to the dividend for
the purposes of Division 1A; and
(i) if the shareholder is a life assurance company—the assets of the
shareholder from which the dividend was derived were included in the insurance
funds of the shareholder at any time during the period:
(i) starting at the beginning of the year of income of the shareholder in
which the dividend was paid; and
(ii) ending at the time when the dividend was paid;
the shareholder is entitled to a rebate of tax in the shareholder’s
assessment in respect of income of the year of income equal to the amount worked
out using the following formula:
where:
company tax rate means the applicable general company tax
rate.
Amount of the rebate for life assurance companies
(2) If the shareholder is a life assurance company, the rebate the
shareholder is entitled to is worked out using the formula:
where:
CS/RA income is the amount of the shareholder’s
assessable income for the year of income that is allocated to the CS/RA class of
business under subsection 116CE(4).
subsection (1) rebate is the rebate that the shareholder
would otherwise be entitled to under subsection (1).
total income is the shareholder’s assessable income for
the year of income.
Rebate for registered organisations
(3) If the shareholder is a registered organisation within the meaning of
section 116E, the shareholder is entitled to the rebate under subsection (1) in
relation to a dividend only if the dividend is income derived from the
shareholder’s CS/RA business.
45 Application of
amendments
The amendments made by this Schedule apply to CGT events in relation to a
qualifying SME investment of a PDF that happen on or after the day on which
Schedule 3 to the New Business Tax System (Capital Gains Tax) Act 1999
commences.
Income
Tax Assessment Act 1997
1 Section 10-5 (table item headed
“depreciation”)
Repeal the item, substitute:
|
depreciation |
|
|
excess of termination value over written down value generally |
|
|
for some cars |
42-240 |
|
lesser of termination value or cost (plant pooled under Subdivision
42-L) |
|
|
excess of termination value over pool closing balance (low-value
pools) |
|
|
leased plant or lease, disposal of |
45-5 |
|
leasing entity, disposal of |
45-15, 45-20 |
|
partnership interest, disposal of |
45-10 |
2 Subsection 42-20(1)
After “*pool”, insert
“or a *low-value pool”.
3 Subsection 42-20(1)
After “Subdivision 42-L”, insert “or Subdivision
42-M”.
4 At the end of subsection
42-30(2)
Add:
; or (d) section 42-475 for plant in a
*low-value pool.
5 After subsection 42-90(3)
Insert:
(3A) If the last entity had the *plant in
a *low-value pool for the income year in which
the *balancing adjustment event occurred, its
cost may be limited to its *termination
value.
6 Section 42-167
Repeal the section, substitute:
(1) Despite sections 42-160 and 42-165, your deduction is the
*plant’s
*cost for the income year in which you become
its owner or *quasi-owner if:
(a) that cost does not exceed $300; and
(b) you:
(i) became the owner or quasi-owner of the plant under a contract entered
into before 1 July 2000; or
(ii) constructed it and the construction started before that day;
or
(iii) acquired it in some other way before that day.
(2) Despite sections 42-160 and 42-165, your deduction is the
*plant’s
*cost for the income year in which you become
its owner or *quasi-owner (regardless of when
you acquired or constructed it) if:
(a) that cost does not exceed $300; and
(b) you are a *small business taxpayer
for that income year.
7 At the end of Division 42
Add:
This Subdivision allows you to calculate your depreciation deductions for
certain plant through a low-value pool.
Table of sections
Operative provisions
42-450 Creating a low-value pool
42-455 Allocating plant to low-value pools
42-460 Rules for plant in low-value pools
42-465 Private or exempt use of plant
42-470 Deductions for plant in low-value
pools
42-475 Balancing adjustment events
[This is the end of the Guide.]
You may choose to create a low-value pool by recording in
writing the first income year in which you allocate
*plant to it.
(1) You may choose to allocate *low-cost
plant to a *low-value pool for the income year
in which you become its owner or
*quasi-owner.
(2) Low-cost plant is
*plant whose
*cost is less than $1,000.
(3) You
may also choose to allocate *plant to a
*low-value pool for an income year
if:
(a) you have deducted or can deduct an amount for depreciation of the
plant for a previous income year using the
*diminishing value method; and
(b) the *undeducted cost of the plant at
the start of the income year is less than $1,000.
(1) Once you have made a choice to allocate
*low-cost plant to a
*low-value pool for an income year, you must
allocate all low-cost plant of which you become the owner or
*quasi-owner in that income year or a later one
to such a pool.
(2) However, you cannot allocate any
*plant to a
*low-value pool for an income year if you are a
*small business taxpayer for that
year.
(3) Once you allocate *plant to a
*low-value pool, it must remain in the
pool.
(4) You cannot allocate *low-cost plant
to a *low-value pool if:
(a) its *cost does not exceed $300;
and
(b) you:
(i) became the owner or *quasi-owner of
the plant under a contract entered into before 1 July 2000; or
(ii) constructed it and the construction started before that day;
or
(iii) acquired it in some other way before that day.
(5) You cannot allocate *plant to a
*low-value pool if you have allocated it to a
pool under Subdivision 42-L.
(1) When you allocate *plant to a
*low-value pool, you must make an estimate of
the percentage (if any) of your proposed use of the plant that will be for
purposes other than the *purpose of producing
assessable income.
(2) For *low-cost plant, you must reduce
its *cost by an amount representing the
percentage (if any) you estimated for it under subsection (1).
(3) For *plant referred to in subsection
42-455(3), you must reduce its *undeducted cost
at the start of the income year by that percentage.
(1) You calculate your depreciation deduction for
*plant in a
*low-value pool for an income year in this
way:
(a) take 183/4% of
the *costs of
*low-cost plant you allocated to the pool for
that year; and
(b) add to it
371/2% of the sum
of:
(i) the *pool closing balance for the
previous income year; and
(ii) the *undeducted costs of plant, at
the start of the income year, that you allocated to the pool for that year under
subsection 42-455(3).
(2) The pool closing balance of a
*low-value pool for an income year is the sum
of:
(a) the *pool closing balance of the pool
for the previous income year; and
(b) the *costs of
*low-cost plant you allocated to the pool for
that year; and
(c) the *undeducted costs of any
*plant you allocated to the pool for that year
under subsection 42-455(3) as at the start of that year;
less the depreciation deductions for the pool worked out under subsection
(1).
Note: The pool closing balance may be reduced under section
42-475 if a balancing adjustment event happens.
(1) If a *balancing adjustment event
happens to *plant in a
*low-value pool in an income year, the
*pool closing balance for that year is reduced
by the *termination value of the
plant.
(2) If you had made an estimate for that
*plant under section 42-465, the
*pool closing balance for that year is reduced
by that part of the *termination value of the
plant that represents the percentage of your use of the plant you estimated
would be for the *purpose of producing
assessable income.
(3) If the sum of the *termination
values, or the part of it, applicable under subsection (1) or (2) exceeds the
*pool closing balance of the pool for that
year, the excess is included in your assessable income.
8 Section 46-60
After “Subdivision 42-L”, insert “or Subdivision
42-M”.
9 Subsection 995-1(1)
Insert:
low-cost plant has the meaning given by section
42-455.
10 Subsection 995-1(1)
Insert:
low-value pool has the meaning given by section 42-450.
11 Subsection 995-1(1)
Insert:
pool closing balance has the meaning given by section 42-470.
Income
Tax Assessment Act 1936
12 Subsection 102AAZ(3)
Omit “Subdivision 42-L”, substitute “Subdivisions 42-L
and 42-M”.
13 Section 317 (definition of depreciation
provision)
Omit “Subdivision 42-L”, substitute “Subdivisions 42-L
and 42-M”.
14 Subsection 398(3)
Omit “Subdivision 42-L”, substitute “Subdivisions 42-L
and 42-M”.
15 Application of
amendments
(1) The amendments made by this Schedule, to the extent that they relate
to:
(a) plant whose cost does not exceed $300; or
(b) low-cost plant (plant whose cost is less than $1,000);
apply to assessments for the income year in which 1 July 2000 occurs and
later income years.
(2) The amendments made by this Schedule, to the extent that they relate to
plant that you can allocate to a low-value pool under subsection 42-455(3) of
the Income Tax Assessment Act 1997, apply to assessments for the 2000-01
income year and later income years.
