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This is a Bill, not an Act. For current law, see the Acts databases.
2002-2003
The Parliament of
the
Commonwealth of
Australia
HOUSE OF
REPRESENTATIVES
Presented and read a first
time
New
International Tax Arrangements Bill 2003
No.
, 2003
(Treasury)
A
Bill for an Act to amend the law relating to taxation, and for related
purposes
Contents
Income Tax Assessment Act
1936 3
Income Tax Assessment Act
1936 7
Income Tax Assessment Act
1936 12
Income Tax Assessment Act
1936 13
A Bill for an Act to amend the law relating to taxation,
and for related purposes
The Parliament of Australia enacts:
This Act may be cited as the New International Tax Arrangements Act
2003.
This Act commences on the day on which it receives the Royal
Assent.
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repealed as set out in the applicable items in the Schedule concerned, and any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.
Income Tax Assessment Act
1936
1 Paragraph 96A(1)(c)
After “Division 8”, insert “or 11A”.
2 Section 470
Insert:
complying superannuation entity has the same meaning as in
the Income Tax Assessment Act 1997.
3 Section 470
Insert:
fixed entitlement has the same meaning as in the Income
Tax Assessment Act 1997.
4 Section 470
Insert:
fixed trust has the same meaning as in the Income Tax
Assessment Act 1997.
5 Section 470
Insert:
segregated exempt assets has the same meaning as in the
Income Tax Assessment Act 1997.
6 Section 470
Insert:
trustee, in relation to a fund that has no trustee, means a
person who is a trustee of the fund for the purposes of Part IX.
7 Section 470
Insert:
virtual PST asset has the same meaning as in the Income
Tax Assessment Act 1997.
8 After Division 11 of
Part XI
Insert:
The objects of this Division are:
(a) to exempt taxpayers from taxation under this Part in respect of
foreign investment fund income that would otherwise be taken to accrue from
virtual PST assets or segregated exempt assets; and
(b) to exempt taxpayers who are trustees of complying superannuation
entities or certain fixed trusts from taxation under this Part in respect of
foreign investment fund income.
Virtual PST assets and segregated exempt assets
(1) The operative provision does not apply to a taxpayer in respect of an
interest in a FIF that is a virtual PST asset or a segregated exempt asset of
the taxpayer.
Complying superannuation entities
(2) If a taxpayer is the trustee of a complying superannuation entity in
relation to a year of income, the operative provision does not apply to the
taxpayer in relation to a FIF in respect of the notional accounting period of
the FIF that ends in the year of income.
Fixed trusts with various fixed entitlements
(3) If:
(a) a taxpayer is the trustee of a fixed trust (an
interposed fixed trust) at the end of a year of
income; and
(b) one of the following subparagraphs (whether or not the same
subparagraph) applies in relation to each of the fixed entitlements to shares of
the income and capital of the trust at the end of the year of income:
(i) it is a virtual PST asset;
(ii) it is a segregated exempt asset;
(iii) it is held by the trustee of a complying superannuation
entity;
(iv) it is held by the trustee of an interposed fixed trust within the
meaning of this subsection or subsection (4);
the operative provision does not apply to the taxpayer in relation to a FIF
in respect of the notional accounting period of the FIF that ends in the year of
income.
Fixed trusts with some fixed entitlements held by former complying
superannuation entities
(4) If a taxpayer is the trustee of a fixed trust (an interposed
fixed trust) at the end of a year of income, where:
(a) some of the fixed entitlements to shares of the income and capital of
the trust are held by the trustees of entities that:
(i) are not complying superannuation entities in relation to the year of
income; but
(ii) acquired their fixed entitlements in previous years of income and
were complying superannuation entities in relation to those years; and
(b) one of the following subparagraphs (whether or not the same
subparagraph) applies in relation to each of the other fixed entitlements to
shares of the income and capital of the trust at the end of the year of
income:
(i) it is a virtual PST asset;
(ii) it is a segregated exempt asset;
(iii) it is held by the trustee of a complying superannuation
entity;
(iv) it is held by the trustee of an interposed fixed trust within the
meaning of this subsection or subsection (3); and
(c) the market value at the end of the year of income of the fixed
entitlements to which paragraph (a) applies is not more than 5% of the
market value at that time of all of the fixed entitlements to income and capital
of the trust;
the operative provision does not apply to the taxpayer in relation to a FIF
in respect of the notional accounting period of the FIF that ends in the year of
income.
(5) In determining for the purposes of subparagraph (4)(a)(ii)
whether an entity was a complying superannuation entity in relation to the year
of income in which it acquired the fixed entitlements mentioned in that
subparagraph, disregard any notice issued after the end of that year of income
under section 40 of the Superannuation Industry (Supervision) Act
1993 to the effect that the entity was not a complying superannuation entity
in relation to the year of income.
9 Division 14 of Part XI
(heading)
Repeal the heading, substitute:
10 Section 524
Omit “5%”, substitute “10%”.
11 Paragraph 525(1)(c)
Omit “5%”, substitute “10%”.
12 Paragraph (f) of
Schedule 4
Repeal the paragraph.
13 Application
(1) The amendments made by items 1 to 11 apply to assessments for
years of income beginning on or after 1 July 2003.
(2) The amendment made by item 12 applies in relation to notional
accounting periods beginning on or after 1 July 2003.
Income Tax Assessment Act
1936
1 Subsection 25(2)
After “company”, insert “or an eligible unit trust within
the meaning of section 128FA”.
2 After paragraph 128AAA(2)(b)
Insert:
(ba) section 128FA; and
3 Subparagraph 128B(3)(h)(iv)
After “128F,”, insert “128FA,”.
4 Section 128D
After “section 128F,”, insert
“section 128FA,”.
5 After section 128F
Insert:
Interest to which this section applies
(1) This section applies to interest paid by the trustee of an eligible
unit trust in respect of a debenture issued by the trustee if the issue of the
debenture satisfies the public offer test (see subsection (6)).
(2) If:
(a) some or all of the transfer price (within the meaning of
section 128AA) of a debenture issued by the trustee of an eligible unit
trust is taken under that section to be income that consists of interest;
and
(b) the issue of the debenture satisfies the public offer test (see
subsection (6));
this section applies to the interest.
Note: Subsection (4) does not apply to the interest
because that subsection deals only with interest paid on a debenture by the
issuing eligible unit trust.
Tax not payable
(3) Tax is not payable under this Division in respect of interest to which
this section applies.
No exemption for interest paid to certain associates of the issuing
trustee
(4) This section does not apply to interest paid by the trustee of an
eligible unit trust to a person in respect of the debenture if, at the time of
the payment, the trustee knows, or has reasonable grounds to suspect,
that:
(a) the person is an associate of the trustee; and
(b) either:
(i) the associate is a non-resident and the payment is not received by the
associate in respect of a debenture that the associate acquired in carrying on a
business in Australia at or through a permanent establishment of the associate
in Australia; or
(ii) the associate is a resident of Australia and the payment is received
by the associate in respect of a debenture that the associate acquired in
carrying on a business in a country outside Australia at or through a permanent
establishment of the associate in that country; and
(c) the associate does not receive the payment in the capacity of a
clearing house, paying agent, custodian, funds manager or responsible entity of
a registered scheme.
Debentures issued through certain non-resident subsidiaries can also get
the exemption
(5) If:
(a) the trustee of an eligible unit trust holds all of the issued shares
in the capital of a company that is not a resident of Australia; and
(b) the company’s only business is raising finance for the purposes
of the eligible unit trust; and
(c) the company raises finance in a country specified in the regulations
(but not Australia) by issuing a debenture in that country; and
(d) when the debenture is issued, the company is treated as a resident of
that country for the purposes of the tax law (see subsection (8)) of the
country;
then this section has effect as if the trustee had raised the finance and
issued the debenture.
When the issue of a debenture satisfies the public offer
test
(6) For the purposes of working out under this section whether the issue
of a debenture by the trustee of an eligible unit trust satisfies the
public offer test, subsections 128F(3) to (5) apply to the trustee of
the eligible unit trust in a corresponding way to the way in which those
subsections apply to a company, subject to subsection (7) of this
section.
(7) For the purposes of applying subsections 128F(3) to (5) as mentioned
in subsection (6) of this section:
(a) a reference in any of those subsections to a company knowing,
suspecting or having reasonable grounds to suspect something, or it being
reasonable for a company to have regarded something, is taken to be a reference
to the trustee of the eligible unit trust knowing, suspecting or having
reasonable grounds to suspect that thing, or it being reasonable for the trustee
of the eligible unit trust to have regarded that thing; and
(b) a reference in any of those subsections to an associate is taken to be
a reference to an associate within the meaning of this section; and
(c) a reference in any of those subsections to a global bond is taken to
be a reference to a global bond within the meaning of subsection
128F(10).
Definitions
(8) In this section:
associate has the meaning given by section 318, except
that:
(a) paragraphs (1)(b), (2)(a) and (4)(a) of that section must be
disregarded; and
(b) subsection (5) of that section applies to a unit trust mentioned
in paragraph (b) of the definition of eligible unit trust in
this subsection in the same way as that subsection applies in relation to a
public unit trust.
clearing house has the same meaning as in
section 128F.
company has the same meaning as in
section 128F.
debenture:
(a) in relation to the trustee of an eligible unit trust, includes
debenture stock, bonds, promissory and other notes, bills of exchange and any
other securities issued by the trustee, whether constituting a charge on the
assets of the eligible unit trust or not; and
(b) in relation to a company, has the same meaning as in
section 128F.
eligible unit holder means:
(a) the trustee of a public unit trust; or
(b) the trustee (within the meaning of Part IX) of a complying
superannuation fund, within the meaning of the Income Tax Assessment Act
1997, that has 50 or more members; or
(c) the trustee of a pooled superannuation trust within the meaning of the
Income Tax Assessment Act 1997; or
(d) the trustee (within the meaning of Part IX) of a complying
approved deposit fund within the meaning of the Income Tax Assessment Act
1997; or
(e) a life insurance company within the meaning of the Income Tax
Assessment Act 1997; or
(f) a public company within the meaning of section 103A; or
(g) the trustee of a unit trust in which all of the issued units are held
by 2 or more entities that are eligible unit holders because of:
(i) the application of another paragraph of this definition (whether or
not the same paragraph); or
(ii) a previous application of this paragraph; or
(iii) any combination of subparagraphs (i) and (ii).
eligible unit trust means:
(a) a public unit trust; or
(b) a unit trust in which all of the issued units are held by 2 or more
eligible unit holders.
public unit trust has the same meaning as in
section 102G.
registered scheme has the same meaning as in
section 128F.
responsible entity has the same meaning as in
section 128F.
tax law has the same meaning as in
section 128F.
(9) For the purposes of this section, a trust or fund of a kind mentioned
in any of paragraphs (a) to (d) of the definition of eligible unit
holder in subsection (8) in relation to a year of income is taken
to be a trust or fund of that kind at all times during the year of
income.
Note: The heading to section 128F is amended by
inserting “company” after “publicly
offered”.
6 Application
The amendments made by this Schedule apply to debentures issued on or after
the day on which this Act commences.
Income Tax Assessment Act
1936
1 Subparagraphs 385(2)(a)(ii) and
(d)(ii)
After “income or other amounts”, insert “, of a kind
specified in the regulations,”.
2 Application
The amendments made by this Schedule apply in relation to statutory
accounting periods beginning on or after 1 July 2004.
Income Tax Assessment Act
1936
1 Paragraph 136AF(3)(b)
After “interest”, insert “or royalties”.
2 Application
The amendment made by this Schedule applies to an application of
section 136AD of the Income Tax Assessment Act 1936 that occurs on
or after the day on which this Act receives the Royal Assent.