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This is a Bill, not an Act. For current law, see the Acts databases.
2004
The Parliament of
the
Commonwealth of
Australia
HOUSE OF
REPRESENTATIVES
Presented and read a first
time
Tax
Laws Amendment (2004 Measures No. 6) Bill
2004
No. ,
2004
(Treasury)
A Bill
for an Act to amend the law relating to taxation, and for related
purposes
Contents
Part 1—Application 4
Part 2—Membership rules and insolvency
etc. 5
Income Tax Assessment Act
1997 5
Part 3—Finance
leases 6
Income Tax Assessment Act
1997 6
Part 4—Expenditure relating to mining or
quarrying 9
Income Tax Assessment Act
1997 9
Income Tax (Transitional Provisions) Act
1997 9
Part 5—Low-value and software development
pools 16
Income Tax Assessment Act
1997 16
Income Tax (Transitional Provisions) Act
1997 24
Part 6—Notice requirements for inter-entity loss multiplication
rules 26
Income Tax Assessment Act
1997 26
Income Tax (Transitional Provisions) Act
1997 27
Part 7—Source of certain distributions for allocable cost amount
purposes 29
Income Tax Assessment Act
1997 29
Part 8—Certain losses not taken into account under step 3 of
allocable cost amount 31
Income Tax Assessment Act
1997 31
Part 9—Transitional treatment of tax liabilities for allocable
cost amount and CGT
purposes 32
Income Tax (Transitional Provisions) Act
1997 32
Part 10—Entry and exit history rules and
choices 33
Income Tax Assessment Act
1997 33
Income Tax (Transitional Provisions) Act
1997 46
Part 11—Trusts 49
Income Tax Assessment Act
1997 49
Income Tax Assessment Act
1997 50
Income Tax (Transitional Provisions) Act
1997 54
Taxation Administration Act
1953 55
Part 1—Anti-avoidance rules in relation to exempt
institutions 57
Income Tax Assessment Act
1997 57
Part 2—Miscellaneous consequential and technical
amendments 71
Income Tax Assessment Act
1936 71
Income Tax Assessment Act
1997 79
Taxation Administration Act
1953 83
Taxation Laws Amendment Act (No. 8)
2003 85
Part 3—Application
provisions 86
Income Tax Assessment Act
1997 88
Income Tax Assessment Act
1997 94
Income Tax Assessment Act
1997 95
Fringe Benefits Tax Assessment Act
1986 99
Income Tax Assessment Act
1997 101
A New Tax System (Goods and Services Tax) Act
1999 104
Income Tax Assessment Act
1997 105
Taxation Laws Amendment Act (No. 8)
2003 111
Income Tax Assessment Act
1997 112
Income Tax (Transitional Provisions) Act
1997 118
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 Tax Laws Amendment (2004 Measures
No. 6) Act 2004.
(1) Each provision of this Act specified in column 1 of the table
commences, or is taken to have commenced, in accordance with column 2 of the
table. Any other statement in column 2 has effect according to its
terms.
|
Commencement information |
||
|---|---|---|
|
Column 1 |
Column 2 |
Column 3 |
|
Provision(s) |
Commencement |
Date/Details |
|
1. Sections 1 to 4 and anything in this Act not elsewhere covered by
this table |
The day on which this Act receives the Royal Assent. |
|
|
2. Schedules 1 and 2 |
The day on which this Act receives the Royal Assent. |
|
|
3. Schedule 3, item 1 |
The day on which this Act receives the Royal Assent. |
|
|
4. Schedule 3, items 2 and 3 |
Immediately after the commencement of the provisions covered by table
item 3. |
|
|
5. Schedule 3, item 4 |
Immediately after the commencement of the provisions covered by table
item 4. |
|
|
6. Schedule 3, items 5 to 114 |
The day on which this Act receives the Royal Assent. |
|
|
7. Schedules 4 to 10 |
The day on which this Act receives the Royal Assent. |
|
|
8. Schedule 11 |
Immediately after the Taxation Laws Amendment Act (No. 8) 2003
received the Royal Assent. |
21 October 2003 |
|
9. Schedule 12, item 1 |
1 July 2000. |
1 July 2000 |
|
10. Schedule 12, items 2 to 6 |
The day on which this Act receives the Royal Assent. |
|
|
11. Schedule 12, items 7 and 8 |
1 July 2000. |
1 July 2000 |
|
12. Schedule 12, item 9 |
1 July 2001. |
1 July 2001 |
|
13. Schedule 12, item 10 |
1 July 2000. |
1 July 2000 |
|
14. Schedule 12, item 11 |
The day on which this Act receives the Royal Assent. |
|
Note: This table relates only to the provisions of this Act
as originally passed by the Parliament and assented to. It will not be expanded
to deal with provisions inserted in this Act after assent.
(2) Column 3 of the table contains additional information that is not part
of this Act. Information in this column may be added to or edited in any
published version of this Act.
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.
1 Application
Except as provided otherwise, the amendments made by this Schedule apply on
and after 1 July 2002.
Part 2—Membership
rules and insolvency etc.
Income Tax Assessment Act
1997
2 At the end of section 703-30 (after the
note)
Add:
(3) For the purposes of this section, one entity is not prevented
from being the beneficial owner of a
*membership interest in another entity merely
because the first entity is or becomes:
(a) an externally-administered body corporate within the meaning of the
Corporations Act 2001; or
(b) an entity with a status under a
*foreign law similar to the status of an
externally-administered body corporate under the Corporations Act
2001.
Income Tax Assessment Act
1997
3 Subsection 705-25(5) (note)
Omit “Note”, substitute “Note 1”.
4 At the end of subsection 705-25(5) (after the
note)
Add:
Note 2: The joining entity’s right to receive lease
payments under a finance lease is treated as a retained cost base asset in some
circumstances (see paragraph 705-56(3)(b)).
5 After section 705-55
Insert:
(1) This section applies if, just before the joining time:
(a) the joining entity is the lessor or lessee under a lease of a
*depreciating asset (the underlying
asset) to which Division 40 applies; and
(b) the joining entity classifies the lease, in accordance
with *accounting standards, or statements of
accounting concepts made by the Australian Accounting Standards Board, as a
finance lease.
Joining entity is lessor
(2) If the joining entity is the lessor under the lease and
*holds the underlying asset just before the
joining time, subsection (5) applies, in relation to the joining entity, to
the asset that is the joining entity’s right to receive lease
payments.
Note: In this situation, the underlying asset will have its
tax cost set at the joining time because it would be an asset of the joining
entity at that time if the single entity rule did not apply (see
section 701-10).
(3) If the joining entity is the lessor under the lease and does not
*hold the underlying asset just before the
joining time:
(a) subsection (5) applies to the underlying asset in relation to the
joining entity; and
(b) for the purposes of this Division:
(i) the joining entity’s right to receive lease payments is taken to
be a *retained cost base asset; and
(ii) the *tax cost setting amount of that
retained cost base asset is taken to be equal to its
*market value just before the joining
time.
Note: In this situation, the asset that is the joining
entity’s right to receive lease payments will have its tax cost set at the
joining time because it would be an asset of the joining entity at that time if
the single entity rule did not apply (see section 701-10).
Joining entity is lessee
(4) If the joining entity is the lessee under the lease and does not
*hold the underlying asset just before the
joining time:
(a) subsection (5) applies to the underlying asset in relation to the
joining entity; and
(b) the liability that is the lessee’s obligation to make lease
payments is not taken into account under subsection 705-70(1).
Note: If the joining entity is the lessee under the lease
and holds the underlying asset just before the joining time:
(a) the underlying asset will have its tax cost set at the
joining time because it would be an asset of the joining entity at that time if
the single entity rule did not apply (see section 701-10);
and
(b) the liability that is the lessee’s obligation to
make lease payments is taken into account under subsection
705-70(1).
Tax cost of certain assets set at nil
(5) If this subsection applies to an asset, in relation to the joining
entity:
(a) the asset is not taken into account under paragraph
705-35(1)(b) or (c); and
(b) the asset’s *tax cost setting
amount is taken to be nil.
6 At the end of
section 711-30
Add:
(3) However, that amount is the asset’s
*market value at the leaving time if:
(a) the asset (the receivable) is a right to receive lease
payments under a lease; and
(b) the receivables *tax cost was set
when an entity (whether the leaving entity or another entity) became a
*subsidiary member of the old group;
and
(c) the receivable was taken to be a
*retained cost base asset for the purposes of
Division 705 when its tax cost was set, because of paragraph
705-56(3)(b).
7 After subsection 711-45(2)
Insert:
Exclusion where liability is obligation to make finance lease
payments
(2A) An amount is not to be added for an accounting liability that is the
leaving entity’s obligation as lessee to make lease payments under a
lease, if:
(a) subsection 705-56(4) applied in relation to the liability, at a time
when an entity (whether the leaving entity or another entity) became a
*subsidiary member of the old group;
and
(b) the liability was not taken into account under subsection
705-70(1) at that time, because of paragraph 705-56(4)(b).
Part 4—Expenditure
relating to mining or quarrying
Income Tax Assessment Act
1997
8 Section 716-100 (link
note)
Repeal the link note, substitute:
Table of sections
716-300 Prime cost method of working
out decline in value
(1) This section has effect if:
(a) an entity (the joining entity) becomes a
*subsidiary member of a
*consolidated group at a time (the
joining time); and
(b) because of subsection 40-80(1), the joining entity could (or did)
deduct for a period before the joining time the
*cost of a
*depreciating asset that became an asset of the
*head company of the group at the joining time
because section 701-1 (Single entity rule) applied to the joining entity;
and
(c) the joining entity could not deduct an amount under
Subdivision 40-B (except because of subsection 40-80(1)) for the income
year that includes the joining time for that cost.
Note: Subdivision 40-B allows deductions for the
decline in value of depreciating assets. Subsection 40-80(1), which is in that
Subdivision, provides that the decline in value of certain assets used for
exploration and prospecting equals their cost.
(2) Subsection 701-55(2) has effect as if the
*prime cost method for working out the decline
in value of the *depreciating asset applied
just before the joining time.
Note: This may affect both the method of working out the
decline in value of the asset and the asset’s effective
life.
Income Tax (Transitional
Provisions) Act 1997
9 Section 703-30 (link
note)
Repeal the link note, substitute:
Table of Subdivisions
705-E Expenditure relating to exploration, mining or quarrying
Table of sections
705-300 Application and object of this
Subdivision
705-305 Rules affecting depreciating assets
705-310 Adjustable value of head company’s notional
assets
(1) If an entity (the joining entity) to which
section 40-75 of this Act applied becomes a subsidiary member of a
consolidated group at a time (the joining time), this Subdivision
applies in relation to:
(a) depreciating assets that:
(i) caused section 40-75 of this Act to apply to the joining entity;
and
(ii) became assets of the head company of the group at the joining time
because of section 701-1 (Single entity rule) of the Income Tax
Assessment Act 1997 operating in relation to the joining entity;
and
(b) notional assets that sections 40-35, 40-37, 40-40 and 40-43 of
this Act treat an entity as holding because of expenditure relating to such
depreciating assets;
to affect the operation of Division 40, section 701-55 and
Division 705 of that Act.
(2) The main object of this Subdivision is to ensure that entities are
allowed only an appropriate amount of deductions in connection with such
depreciating assets and such expenditure.
(1) The main object of this section is to ensure that a depreciating
asset’s tax cost is set, and other matters relevant to working out the
deductions of the head company of the consolidated group for the decline in
value of the asset are dealt with, so as to:
(a) ensure that the head company does not get excessive deductions on
account of expenditure (by any entity) relating to the asset; and
(b) reflect the deductions of an entity for a period ending before the
joining time for expenditure relating to the asset; and
(c) ensure that the effective life of the asset for the head company
reflects the rate or rates at which the joining entity was able to deduct
expenditure relating to the asset (whether or not the expenditure formed part of
the cost of the asset).
Prime cost method of working out decline in value of asset
(2) If the joining entity could not deduct an amount under
Subdivision 40-B of the Income Tax Assessment Act 1997 for the
income year that includes the joining time for the decline in value of a
depreciating asset, subsection 701-55(2) of that Act has effect as if the prime
cost method for working out the decline in value of the asset applied just
before the joining time.
Note: This may affect both the method of working out the
decline in value of the asset and the asset’s effective
life.
Adjustable value of asset
(3) Division 705 of the Income Tax Assessment Act 1997 has
effect as if the adjustable value of a depreciating asset just before and at the
joining time were increased by the amount described in subsection (4), if
section 40-35, 40-37, 40-40 or 40-43 treated the joining entity as holding
a notional asset.
Note: This affects not only the adjustable value of the
depreciating asset but also the joining entity’s terminating value for the
asset (which section 705-30 of that Act defines as being equal to the
asset’s adjustable value just before the joining time).
(4) The amount of the increase is so much of the adjustable value of the
notional asset just before the joining time as reasonably relates to the
depreciating asset.
Cost of asset
(5) Division 705 of the Income Tax Assessment Act 1997 has
effect as if the cost of a depreciating asset were increased by expenditure
incurred that did not form part of the asset’s cost worked out under
Division 40 of that Act but would have if it had been incurred just before
the joining time under a contract entered into after 30 June
2001.
Earlier deductions for decline in value of asset
(6) Division 705 of the Income Tax Assessment Act 1997 has
effect as if deductions relating to expenditure described in subsection (5)
were deductions for the decline in value of the depreciating asset.
Example: Such deductions include:
(a) deductions under former Subdivision 330-A, 330-C or
330-H of the Income Tax Assessment Act 1997, or a corresponding previous
law, for the expenditure; and
(b) deductions under Division 40 of that Act for the
decline in value of a notional asset that section 40-35, 40-37, 40-40 or
40-43 of this Act treated an entity as holding because of the
expenditure.
Effective life of asset
(7) If a depreciating asset’s tax cost setting amount does not
exceed the joining entity’s terminating value for the asset,
Division 40 of the Income Tax Assessment Act 1997 has effect as if
the effective life of the asset were such period as is reasonable, having regard
to the following:
(a) the remainder of the effective life of the asset, worked out just
before the joining time;
(b) the remainder of the effective life, worked out just before the
joining time, of each notional asset (which section 40-35, 40-37, 40-40 or
40-43 of this Act treats an entity as holding wholly or partly because of
expenditure relating to the depreciating asset);
(c) any other relevant matters.
Subsection 701-55(2) of that Act has effect subject to this
subsection.
Note 1: The effective life of the depreciating asset was set
on 1 July 2001 by subsection 40-75(4) of this Act, but may have been reset
since under Subdivision 40-B of the Income Tax Assessment Act
1997.
Note 2: The effective life of a notional asset is specified
by whichever one of sections 40-35, 40-37, 40-40 and 40-43 of this Act is
relevant to the notional asset.
Choosing to reduce tax cost setting amount of asset
(8) If:
(a) a depreciating asset’s tax cost setting amount would be greater
than the joining entity’s terminating value for the asset; and
(b) the head company of the consolidated group chooses to apply this
subsection to the asset;
the asset’s tax cost setting amount is reduced so that it equals the
terminating value.
Note 1: A consequence of the choice is that
subsection (7) applies to the asset.
Note 2: The amount of the reduction is not re-allocated
among other assets.
(9) Section 705-55 of the Income Tax Assessment Act 1997 has
effect as if subsection (8) of this section were included in
section 705-45 of that Act.
Note: This affects the order of reductions in the
asset’s tax cost setting amount under subsection (8) of this section
and sections 705-40 and 705-50 of the Income Tax Assessment Act
1997.
Application
(1) If:
(a) section 40-35, 40-37, 40-40 or 40-43 of this Act treats the head
company of the consolidated group as holding a notional asset at the joining
time because expenditure is taken under section 701-5 (Entry history rule)
of the Income Tax Assessment Act 1997 to be expenditure of the head
company; and
(b) section 40-35, 40-37, 40-40 or 40-43 of this Act treated the
joining entity as holding a notional asset just before the joining time because
of the expenditure;
this section affects the adjustable value of the head company’s
notional asset.
Object
(2) The object of this section is to ensure, by reducing the adjustable
value of a notional asset of the head company, that the head company cannot get
both:
(a) a deduction for the notional asset reflecting the amount of the
expenditure relating to depreciating assets; and
(b) a deduction for that amount because of the decline in value of those
depreciating assets.
Reduction at joining time for expenditure on depreciating
assets
(3) The opening adjustable value of the head company’s notional
asset for the income year that includes the joining time is so much of the
adjustable value of the joining entity’s notional asset just before the
joining time as does not reasonably relate to any depreciating asset.
Note: This offsets the increases in adjustable value of the
head company’s depreciating assets under subsection
705-305(3).
10 Section 707-405 (link
note)
Repeal the link note, substitute:
Table of Subdivisions
712-E Expenditure relating to exploration, mining or quarrying
Table of sections
712-305 Reducing adjustable value of head company’s
notional asset
(1) This section reduces the adjustable value of a notional asset that
section 40-35, 40-37, 40-38, 40-40 or 40-43 treats the head company of a
consolidated group as holding, if:
(a) an entity (the leaving entity) ceases to be a subsidiary
member of the group at a time (the leaving time); and
(b) that section treats the leaving entity as holding a notional asset
because of section 701-40 (Exit history rule) of the Income Tax
Assessment Act 1997.
Note: Section 701-40 (Exit history rule) of the
Income Tax Assessment Act 1997 treats as expenditure of the leaving
entity certain expenditure incurred before the leaving time in relation to an
asset or business that was an asset or business of the leaving entity at the
leaving time.
(2) The adjustable value of the head company’s notional asset is
reduced at the leaving time by the adjustable value of the leaving
entity’s notional asset at that time.
Part 5—Low-value
and software development pools
Income Tax Assessment Act
1997
11 Before
Subdivision 716-Z
Insert:
Table of sections
Assets in joining entity’s low-value pool
716-330 Head company’s deductions for decline in value
of assets in joining entity’s low-value pool
Entity leaving group with asset allocated to head company’s
low-value pool
716-335 Entity leaving group with asset allocated to head
company’s low-value pool
Depreciating assets arising from expenditure in joining entity’s
software development pool
716-340 Depreciating assets arising from expenditure in
joining entity’s software development pool
Software development pools if entity leaves consolidated
group
716-345 Head company taken not to have incurred
expenditure
(1) This section modifies the operation of sections 40-430, 40-435,
40-440, 40-445, 701-10 and 701-60 and Division 705 for the head company
core purposes mentioned in section 701-1 if:
(a) an entity (the joining entity) becomes a
*subsidiary member of a
*consolidated group at a time (the
joining time); and
(b) there are one or more *depreciating
assets (the previous pool assets) that:
(i) were allocated to the joining entity’s low-value pool;
and
(ii) become assets of the *head company
of the group at the joining time because section 701-1 applies to the
joining entity; and
(c) none of the previous pool assets was an asset to which
Division 58 applied to affect the joining entity’s deductions
relating to the asset.
Note 1: Sections 40-430, 40-435 and 40-440 are relevant
to allocating depreciating assets to a low-value pool and to working out the
decline in value of assets allocated to a low-value pool. Section 40-445
affects the closing pool balance, and may give rise to assessable income, if a
balancing adjustment event happens to such an asset.
Note 2: Section 701-10 provides that, for each asset
the joining entity has at the joining time, the asset’s tax cost is set at
the joining time at the asset’s tax cost setting amount, which is defined
by section 701-60 as the amount worked out under
Division 705.
Note 3: Division 58 is about capital allowances for
depreciating assets previously owned by an exempt entity.
Objects
(2) The main objects of this section are:
(a) to clarify how sections 40-430, 40-435 and 40-440 operate in
relation to the previous pool assets; and
(b) to reduce compliance costs by providing that the
*tax cost is set for all the previous pool
assets in one operation, rather than individually for each such asset.
Time of allocation of assets to head company’s low-value
pool
(3) Sections 40-430, 40-435, 40-440 and 40-445 operate as if the
*head company of the
*consolidated group allocated the previous pool
assets to a low-value pool for the income year that includes the joining time.
Section 701-5 has effect subject to this subsection.
Note 1: Under section 40-435, the head company must
make a reasonable estimate of the taxable use percentage for each
asset.
Note 2: This subsection affects the percentages and amounts
to be taken into account for working out under section 40-440 the decline
in value of assets in the pool and the closing pool balance.
Allocating other low-cost assets to head company’s low-value
pool
(4) Subsection 40-430(1) operates as if the previous pool assets were
*low-cost assets.
Note: This has the effect that the head company must
allocate to the low-value pool each low-cost asset it starts to hold in the
income year that includes the joining time or a later income year, whether or
not the head company starts to hold the asset because of
section 701-1.
If joining time was in first day of joining entity’s income
year
(5) If the joining time was in the first day of the joining entity’s
income year, section 40-440 operates as if:
(a) all the previous pool assets were
*low-value assets; and
(b) the sum of the previous pool assets’
*opening adjustable values for the income year
that includes the joining time equalled the
*tax cost setting amount for the hypothetical
asset worked out on the basis described in subsections (7), (8) and (9) of
this section.
If joining time was not in first day of joining entity’s income
year
(6) If the joining time was not in the first day of the joining
entity’s income year, section 40-440 operates as if:
(a) all the previous pool assets were
*low-cost assets; and
(b) the sum of the previous pool assets’
*costs equalled the total of:
(i) the *tax cost setting amount for the
hypothetical asset worked out on the basis described in subsections (7),
(8) and (9) of this section; and
(ii) the expenditure (if any) that was incurred after the joining time
(but in the income year that includes that time) and included in the second
element of the costs (ignoring this paragraph) of the previous pool
assets.
Tax cost is set for assets collectively not individually
(7) Sections 701-10 and 701-60 and Division 705 operate as if
all the previous pool assets formed a single
*depreciating asset (the hypothetical
asset), and were not separate assets.
Modified operation of Division 705 for hypothetical
asset
(8) Sections 705-40 and 705-57 operate as if the joining
entity’s *terminating value for the
hypothetical asset were the amount worked out using the table:
|
Modification of basis on which sections 705-40 and 705-57
operate |
||
|---|---|---|
|
|
If the joining time is: |
Sections 705-40 and 705-57 operate as if the joining entity’s
terminating value for the hypothetical asset were: |
|
1 |
In the first day of an income year of the joining entity |
The *closing pool balance for the joining
entity’s low-value pool for the previous income year |
|
2 |
In another day |
The *closing pool balance for the joining
entity’s low-value pool for the non-membership period described in
section 701-30 that ends just before the joining time |
Note: Sections 705-40 and 705-57 are about reduction of
an asset’s tax cost setting amount to an amount that may be affected by
the joining entity’s terminating value for the asset.
(9) Division 705 operates in relation to the hypothetical asset as if
section 705-50 had not been enacted.
Note: Section 705-50 is about reduction of an
asset’s tax cost setting amount for over-depreciation of the
asset.
(1) This section sets out rules affecting the
*head company of a
*consolidated group and an entity (the
leaving entity) that ceases to be a
*subsidiary member of the group at a time (the
leaving time) in an income year (the leaving year),
if:
(a) a *depreciating asset becomes an
asset of the leaving entity at the leaving time because section 701-1
(Single entity rule) ceases to apply to the leaving entity; and
(b) the asset was in the head company’s low-value pool.
Note: Section 701-40 (Exit history rule) treats the
asset as having been allocated to the leaving entity’s low-value pool,
with the taxable use percentage estimated by the head company, for the income
year for which the head company allocated the asset to the head company’s
low-value pool.
Objects
(2) The main objects of this section are:
(a) to ensure that the decline in value of assets in the
*head company’s low-value pool and the
decline in value of assets in the leaving entity’s low-value pool are
worked out so that:
(i) for the leaving year, the
*depreciating asset is taken into account in
working out the decline in value of assets in the head company’s
low-value pool only; and
(ii) for later income years, the depreciating asset is taken into account
in working out the decline in value of assets in the leaving
entity’s low-value pool only; and
(b) to specify the *adjustable value of
the depreciating asset just before and at the leaving time.
Reduced decline in value for leaving entity for leaving
year
(3) The decline in value worked out for the leaving year under subsection
40-440(1) for assets in the leaving entity’s low-value pool is reduced by
such amount as is reasonable to prevent duplication of deductions for the
leaving year in respect of the *depreciating
asset by the *head company and the leaving
entity.
Reduced closing pool balance for head company’s pool for leaving
year
(4) The *closing pool balance of the
*head company’s low-value pool for the
leaving year is reduced by so much of the balance as reasonably relates to the
*depreciating asset.
Cost of head company’s membership interests in leaving entity
etc.
(5) Sections 701-15, 701-40 and 701-60 and Division 711 have
effect as if the *adjustable value of the
*depreciating asset for the
*head company just before and at the leaving
time were such amount as is reasonable, having regard to:
(a) the reduction described in subsection (4) of this section;
and
(b) the taxable use percentage estimated for the depreciating asset by the
head company under section 40-435.
Note 1: Section 701-15 provides that, for each
membership interest the head company holds in the leaving entity, the
interest’s tax cost is set just before the leaving time at the
interest’s tax cost setting amount, which is defined by
section 701-60 as the amount worked out under certain sections of
Division 711.
Note 2: Division 711 sets the interest’s tax cost
setting amount by reference to the head company’s terminating value of the
asset, which is to be worked out under section 711-30 by reference to the
adjustable value of the asset for the head company just before the leaving
time.
Note 3: Section 701-40 has the effect that the
adjustable value of the asset for the leaving entity at the leaving time is the
same as the adjustable value of the asset for the head company
then.
(1) This section modifies the basis on which Subdivision 40-B and
sections 40-455, 701-10, 701-55 and 701-60 and Division 705 operate
if:
(a) an entity (the joining entity) becomes a
*subsidiary member of a
*consolidated group at a time (the
joining time); and
(b) the joining entity had incurred before the joining time expenditure
that it allocated to a software development pool; and
(c) some or all of the expenditure is reasonably related to
*in-house software that:
(i) is a *depreciating asset;
and
(ii) became an asset of the *head company
of the consolidated group at the joining time because section 701-1 (Single
entity rule) applied to the joining entity.
Note 1: Subdivision 40-B allows deductions for the
decline in value of a depreciating asset, but only if expenditure on the asset
has not been allocated to a software development pool. Section 40-455
provides for deduction of expenditure allocated to such a pool.
Section 701-5 (Entry history rule) treats the head company as having
incurred the expenditure that was allocated to the pool.
Note 2: Section 701-10 provides that, for each asset
the joining entity has at the joining time, the asset’s tax cost is set at
the joining time at the asset’s tax cost setting amount, which is defined
by section 701-60 as the amount worked out under Division 705, which
in turn depends on the adjustable value of the asset worked out under
section 40-85.
Note 3: Section 701-55 affects matters relevant to
working out the head company’s deductions for the decline in value of
depreciating assets that became assets of the head company at the joining time
because section 701-1 (Single entity rule) applied to the joining
entity.
Note 4: This section operates whether or not the joining
entity’s deductions under section 40-455 for the period before the
joining time for expenditure allocated to the pool total 100% of the expenditure
allocated to the pool.
Object
(2) The main object of this section is to ensure that:
(a) the *head company’s deductions
for the *in-house software:
(i) are not worked out under section 40-455 on the basis of
section 701-5 (Entry history rule) treating the expenditure relating to the
software as being the head company’s expenditure; and
(ii) are instead worked out under Subdivision 40-B, using the
*prime cost method with the
*effective life given by subsection 40-95(7)
and taking account of the *tax cost setting
amount for the software; and
(b) the tax cost setting amount is worked out in a way that takes account
of deductions for the period before the joining time for the expenditure
reasonably related to the in-house software.
Joining entity taken not to have incurred certain
expenditure
(3) Subdivision 40-B and section 40-455 operate for the head
company core purposes mentioned in section 701-1 (Single entity rule) as if
the expenditure reasonably related to the
*in-house software had not been incurred by the
joining entity.
Note 1: This has the effects that:
(a) subsection 40-50(2) does not apply because of
section 701-5 (Entry history rule) to deny the head company deductions
under Subdivision 40-B for the decline in value of the software;
and
(b) the head company cannot deduct the expenditure under
section 40-455 as it operates because of
section 701-5.
Note 2: This does not prevent the head company from
deducting under section 40-455 expenditure that is not reasonably
related to the in-house software and that the head company is treated by
section 701-5 as having incurred and allocated to a software development
pool because the joining entity did.
Prime cost method of working out decline in value of
software
(4) Subsection 701-55(2) operates as if the
*prime cost method of working out the decline
in value of the *in-house software applied just
before the joining time.
Note: This affects the method of working out the decline in
value of the software for the head company of the consolidated
group.
Effective life of software
(5) Subdivision 40-B operates as if the
*effective life of the
*in-house software were the period specified
for in-house software in subsection 40-95(7). Subsection 701-55(2) is subject to
this subsection.
Cost of in-house software
(6) Sections 701-10 and 701-60 and Division 705 (and
section 40-85, so far as it affects that Division) operate as if the
*cost of the
*in-house software were the total amount of the
joining entity’s expenditure that reasonably related to the software and
was allocated to a software development pool.
Earlier decline in value of the in-house software
(7) Sections 701-10 and 701-60 and Division 705 (and
section 40-85, so far as it affects that Division) operate as if the
decline in value, and deductions for the decline in value, of the
*in-house software for a period before the
joining time were the amount worked out under subsection (8).
(8) Work out the amount by:
(a) working out, for each software development pool to which expenditure
relating to the *in-house software was
allocated, the amount of the joining entity’s deductions under
section 40-455 that reasonably relates to the software; and
(b) adding up each of those amounts if there are 2 or more such
pools.
Note: Subsections (6), (7) and (8) can affect the
working out of the tax cost setting amount for the in-house software in these
ways:
(a) one way is by affecting the adjustable value of the
software, which may be worked out under section 40-85 by reference to the
decline in value of the software, and which is relevant to section 705-50
(which reduces the tax cost setting amount for over-depreciated
assets);
(b) another way is by affecting the joining entity’s
terminating value for the software, which section 705-30 defines as being
the adjustable value of the software just before the joining time, and which is
relevant to sections 705-40, 705-50 and 705-57 (which may reduce the tax
cost setting amount for the software);
(c) another way is by affecting section 705-50, whose
operation depends on the decline in value, and deductions for the decline in
value, of the software (among other things).
(1) This section has effect if:
(a) an entity (the leaving entity) ceases to be a
*subsidiary member of a
*consolidated group at a time in an income year
(the leaving year); and
(b) under section 701-40 (Exit history rule), expenditure is taken to
have been allocated by the leaving entity to a software development
pool.
Note: Section 701-40 treats expenditure incurred by the
head company of the consolidated group and allocated by that company to a
software development pool as having been incurred by the leaving entity and
allocated by it to a software development pool.
(2) Work out deductions of the *head
company of the *consolidated group for income
years after the leaving year as if the head company had not incurred the
expenditure.
(3) The leaving entity cannot deduct an amount for the leaving year for
the expenditure it is taken to have allocated to the software development
pool.
Income Tax (Transitional
Provisions) Act 1997
12 After Division 713
Insert:
Table of Subdivisions
716-G Software development pools
Table of sections
716-340 Expenditure incurred before 1 July 2001 and
allocated to a software pool
Sections 716-340 and 716-345 of the Income Tax Assessment Act
1997 operate in relation to a thing mentioned in column 1 of an item of the
table in the same way as they operate in relation to a thing mentioned in column
2 of the item.
|
Extended operation of sections of the Income Tax Assessment Act
1997 |
||
|---|---|---|
|
|
Column 1 |
Column 2 |
|
1 |
Former section 46-90 of that Act |
Section 40-455 of that Act |
|
2 |
A software pool created under former Subdivision 46-D of that
Act |
A software development pool |
|
3 |
Expenditure in a software pool under former Subdivision 46-D of that
Act |
Expenditure allocated to a software development pool |
|
4 |
Software, expenditure on which was in a software pool under former
Subdivision 46-D of that Act |
In-house software, expenditure on the development of which is allocated to
a software development pool |
Part 6—Notice
requirements for inter-entity loss multiplication rules
Income Tax Assessment Act
1997
13 At the end of subsection
165-115ZC(1)
Add:
Note: Section 165-115ZC of the Income Tax
(Transitional Provisions) Act 1997 affects the operation of this
section.
14 Subsection 165-115ZC(4)
Omit “later”, substitute “latest”.
15 After paragraph
165-115ZC(4)(b)
Insert:
(c) the time (if any) specified by the Commissioner;
16 Subsection 165-115ZC(5)
Omit “6 months after the later”, substitute “6 months
after the latest”.
17 After paragraph
165-115ZC(5)(d)
Insert:
(e) the time (if any) specified by the Commissioner;
18 After subsection
165-115ZC(7)
Insert:
Commissioner’s power to specify a later time for giving
notice
(7A) The Commissioner may, by written notice given to an entity, or
*loss company, that is required to give a
notice under subsection (4) or (5), specify a time later than the
alteration time as the start of the 6 months mentioned in the
subsection.
Commissioner’s power to waive requirement for notice
(7B) The Commissioner may give an entity or
*loss company a written declaration that
subsection (4) or (5) does not apply to require the entity or company to
give a notice relating to the alteration time. If the Commissioner does so, the
subsection does not apply in relation to the alteration time.
Considerations relating to Commissioner’s powers
(7C) In deciding whether to specify a time for the purposes of
subsection (4) or (5) or declare that the subsection does not apply, the
Commissioner must consider:
(a) the consequences of doing so for each entity to which notice must be
given under the subsection (apart from any such declaration); and
(b) any other matters that the Commissioner considers relevant.
19 Application
The amendments of section 165-115ZC of the Income Tax Assessment
Act 1997 made by this Part apply if the alteration time mentioned in that
section is after 10 November 1999.
Income Tax (Transitional
Provisions) Act 1997
20 At the end of
section 165-115ZC
Add:
Special rules for consolidatable groups and potential MEC
groups
(4) Subsections (5) and (6) have effect if:
(a) the alteration time mentioned in section 165-115ZC of the
Income Tax Assessment Act 1997 is after 10 November 1999 and before
1 July 2004; and
(b) apart from this section, subsection 165-115ZC(4) or (5) of that Act
would require an entity (the notifying entity) to give a notice to
another entity (the receiving entity) in relation to the
alteration time; and
(c) just before the alteration time, the notifying entity and the
receiving entity were both members of the same consolidatable group or potential
MEC group.
(5) Subsections 165-115ZC(4) and (5) of the Income Tax Assessment Act
1997 do not apply to the notifying entity if both it and the receiving
entity became members of the same consolidated group or MEC group before
1 July 2004.
(6) Even if subsection (5) does not apply, the notifying entity is
not required to give the notice to the receiving entity before the end of 6
months after the commencement of this subsection.
(7) Subsections (1) and (3) have effect subject to
subsections (5) and (6).
Part 7—Source
of certain distributions for allocable cost amount purposes
Income Tax Assessment Act
1997
21 After subsection 705-50(3)
Insert:
(3A) A way in which the extent to which dividends were paid out of profits
that were not subject to income tax may be worked out is by:
(a) assuming that dividends were paid out of profits of income years in
order from the most recent to the earliest; and
(b) assuming that, for any income year for which dividends were paid out
of profits in accordance with paragraph (a), they were, to the extent they
were not *franked distributions, paid out of
profits of that income year that were not subject to income tax before they were
paid out of such profits that were subject to income tax.
22 At the end of
section 705-90
Add:
(10) Without limiting paragraph (9)(b), a way in which, for the
purposes of subsection (7), the amount of a profit that accrued to the
joined group during a particular period may be worked out is by:
(a) assuming that profits of income years were distributed in order from
the most recent to the earliest; and
(b) assuming that, for any income year for which distributions were paid
out of profits in accordance with paragraph (a), they were, to the extent
they were not *franked distributions, paid out
of profits of that income year that were not subject to income tax before they
were paid out of such profits that were subject to income tax.
23 At the end of paragraph
705-95(b)
Add:
Note: As well as subsection 705-90(7), paragraph
705-90(9)(b) and subsection 705-90(10) are relevant to working out whether or
not profits accrued to the joined group before the joining
time.
Part 8—Certain
losses not taken into account under step 3 of allocable cost
amount
Income Tax Assessment Act
1997
24 After subsection 705-90(2)
Insert:
(2A) However, if a loss that did not accrue to the joined group before the
joining time (subsection (8) states what it means for a loss to accrue to
the joined group before the joining time) would be taken into account in working
out the undistributed profits, the loss is not so taken into
account.
Part 9—Transitional
treatment of tax liabilities for allocable cost amount and CGT
purposes
Income Tax (Transitional
Provisions) Act 1997
25 After section 701-30
Insert:
(1) This section has effect for the purposes of applying
section 705-70 (step 2 of allocable cost amount) of the Income Tax
Assessment Act 1997 in relation to a transitional entity.
(2) In spite of subsection 705-70(1A) of that Act, if the amount of an
accounting liability of the transitional entity would be different when it
becomes an accounting liability of the transitional group, that difference is
not taken into account in working out the amount of the liability.
CGT event L7 does not happen if the liability mentioned in
section 104-530 of the Income Tax Assessment Act 1997 is one that
satisfies the conditions in section 701-32 of this Act.
Part 10—Entry
and exit history rules and choices
Income Tax Assessment Act
1997
26 After Subdivision 715-H
Insert:
Table of sections
Head company’s choice overriding entry history rule
715-660 Head company’s choice overriding entry history
rule
Choices head company can make ignoring entry history rule to override
inconsistencies
715-665 Head company’s choice to override
inconsistency
Choices with ongoing effect
715-670 Ongoing effect of choices made by entities before
joining group
715-675 Head company adopting choice with ongoing
effect
Application
(1) This section has effect if an entity becomes a
*subsidiary member of a
*consolidated group at a time (the
joining time) and either:
(a) the question whether the entity had made a choice (however described)
under a provision (the choice provision) listed in the table was
relevant to working out the entity’s liability (if any) for income tax, or
the entity’s loss (if any) of a particular
*sort, calculated by reference to an income
year starting before the joining time; or
(b) before the joining time, the entity made a choice that:
(i) is described in paragraph (a); and
(ii) would, if the entity had not become a subsidiary member of a
consolidated group, have started to have effect for working out the
entity’s liability (if any) for income tax, or the entity’s loss (if
any) of a particular *sort, calculated by
reference to the first income year starting after the joining
time.
|
List |
||
|---|---|---|
|
Item |
Provision |
Subject of provision |
|
1 |
A provision of Part X or XI of the Income Tax Assessment Act
1936 for an irrevocable declaration, election, choice or selection |
Attribution of income in respect of controlled foreign companies (if the
provision is in Part X), or foreign investment funds and foreign life
assurance policies (if the provision is in Part XI) |
|
2 |
Section 70-70 |
Valuing interests in *FIFs that are
trading stock |
|
3 |
Item 1 of the table in subsection 960-60(1) |
Choosing to use an *applicable functional
currency |
|
4 |
A provision that: (a) provides for a choice (however described); and (b) is a provision of regulations made for the purposes of this Act, other
than this item; and (c) is prescribed by regulations made for the purposes of this
item |
Choice about a matter described in the regulations |
Note: Declarations, elections and selections made under the
choice provision by the entity are all examples of choices under that provision
(even though the provision does not call them choices), because the entity has
chosen to make them.
Objects
(2) The main objects of this section are:
(a) to override section 701-5 (Entry history rule) in relation to a
choice (however described) by the entity under the choice provision or the
absence of such a choice; and
(b) to extend, in some cases, the time for the
*head company of the
*consolidated group to make a choice (however
described) under the choice provision after the joining time; and
(c) to modify, in some cases, the time at which such a choice by the head
company starts to have effect.
Overriding the entry history rule
(3) For the head company core purposes set out in section 701-1
(Single entity rule), ignore a choice (however described) made by the entity
under the choice provision or the absence of such a choice.
Extension of time for head company to make choice
(4) If:
(a) because of:
(i) the fact that the entity became a
*subsidiary member of the
*consolidated group; and
(ii) section 701-1 (Single entity rule);
the question whether the *head company
of the group has made a choice (however described) under the choice provision
becomes relevant for the head company core purposes set out in that section;
and
(b) there is a limit (outside this section) on the period within which the
head company may make such a choice;
the head company has until the later of these times to make such a
choice:
(c) the last time the head company may make the choice (apart from this
subsection);
(d) the end of 90 days after the Commissioner is given notice under
Division 703 that the entity has become a
*member of the group or, if the Commissioner
allows a later time for the purposes of this paragraph, that later
time.
When head company’s choice starts to have effect
(5) If the *head company of the
*consolidated group makes a choice (however
described) under the choice provision as a result of becoming able to make the
choice because the entity became a *subsidiary
member of the group at the joining time, the choice starts to have
effect:
(a) at the joining time; or
(b) if the choice relates (explicitly or implicitly) to one or more whole
income years—for the income year in which the joining time
occurs.
Note: Subsection (5) has effect whether or not
subsection (4) contributed to the head company becoming able to make the
choice.
Relationship with other provisions
(6) Section 701-5 (Entry history rule) and the choice provision have
effect subject to this section.
Application
(1) This section has effect if:
(a) an entity (the joining entity) becomes a
*subsidiary member of a
*consolidated group at a time (the
joining time); and
(b) for each of the following entities, the question whether the entity
had made a choice (however described) under a provision (the choice
provision) listed in the table was relevant to working out the
entity’s liability (if any) for income tax, or the entity’s loss (if
any) of a particular *sort, calculated by
reference to an income year starting before the joining time:
(i) the joining entity;
(ii) another entity that was a *member of
the group at the joining time; and
(c) there was an inconsistency because, just before the joining time, such
a choice had effect for one of the entities but not for the other.
|
List |
||
|---|---|---|
|
Item |
Provision |
Subject of provision |
|
1 |
Section 148 of the Income Tax Assessment Act 1936 |
Reinsurance with non-residents |
|
2 |
Section 775-80 |
Choosing not to have sections 775-70 and 775-75 apply to deal with
*forex realisation gains and
*forex realisation losses |
|
3 |
A provision that: (a) provides for a choice (however described); and (b) is a provision of regulations made for the purposes of this Act, other
than this item; and (c) is prescribed by regulations made for the purposes of this
item |
Choice about a matter described in the regulations |
Note 1: The other entity mentioned in
subparagraph (1)(b)(ii) may have become a member of the group either before
or at the joining time. That other entity may be either another subsidiary
member of the group or the head company of the group.
Note 2: An election by an entity under section 148 of
the Income Tax Assessment Act 1936 is an example of a choice under that
provision (even though that section does not call the election a choice) because
the entity has chosen to make the election.
Object
(2) The main objects of this section are:
(a) to override the inconsistency; and
(b) to displace section 701-5 (Entry history rule), so far as it
relates to the inconsistency; and
(c) to allow the *head company of the
*consolidated group to make a choice (however
described) under the choice provision.
Overriding the inconsistency
(3) Neither of these things relating to an entity that becomes a
*member of the
*consolidated group at the joining time has
effect for the head company core purposes set out in section 701-1 (Single
entity rule):
(a) a choice (however described) by the entity having effect under the
choice provision before that time;
(b) the absence of such a choice.
Note: This affects all entities that become members of the
consolidated group at the joining time, including the head company if the
joining time is the time at which the group comes into
existence.
(4) However, if the choice provision is section 148 of the Income
Tax Assessment Act 1936 (Reinsurance with non-residents):
(a) subsection (3) of this section does not apply in relation to
reinsurance under contracts made before the joining time (but does apply in
relation to reinsurance under contracts made at or after that time);
and
(b) that section applies for the head company core purposes in relation to
reinsurance under a contract made before the joining time by an entity (the
contracting party) that became a
*member of the
*consolidated group at or before the joining
time:
(i) as if the *head company of the
consolidated group had made an election under that section, if the contracting
party had made such an election that was relevant to working out the
party’s liability (if any) for income tax, or the party’s
*tax loss (if any), for an income year in
connection with the contract; or
(ii) as if the head company had not made such an election, if the
contracting party had not made such an election that was relevant to working out
the party’s liability (if any) for income tax, or the party’s tax
loss (if any), for an income year in connection with the contract.
Choice replacing inconsistency
(5) If:
(a) the question whether the *head
company of the *consolidated group has made a
choice (however described) under the choice provision is relevant for the head
company core purposes set out in section 701-1 (Single entity rule);
and
(b) there is a limit (outside this section) on the period within which the
head company may make such a choice;
the head company has until the later of these times to make such a
choice:
(c) the last time the head company may make the choice (apart from this
subsection);
(d) the end of 90 days after the Commissioner is given notice under
Division 703 that the joining entity has become a
*member of the group or, if the Commissioner
allows a later time for the purposes of this paragraph, that later
time.
Note: If the joining time is when the consolidated group is
formed, the Commissioner should be given notice under Division 703 that the
joining entity has become a member of the group when the approved form of the
choice to form the group is given to the Commissioner.
When head company’s choice starts to have effect
(6) If the *head company of the
*consolidated group makes a choice (however
described) under the choice provision as a result of becoming able to make the
choice because the joining entity became a
*member of the group, the choice starts to have
effect:
(a) at the joining time; or
(b) if the choice relates (explicitly or implicitly) to one or more whole
income years—for the income year in which the joining time
occurs.
(7) However, if:
(a) the *head company of the
*consolidated group makes a choice as described
in subsection (6); and
(b) the choice is an election under section 148 of the Income Tax
Assessment Act 1936 (Reinsurance with non-residents);
the election has effect only for the purposes of that section applying in
relation to reinsurance under contracts made after the joining time and in an
income year for which the election applies under that section.
Note: Subsection (4) explains how section 148 of
the Income Tax Assessment Act 1936 applies in relation to reinsurance
under contracts made before the joining time.
Relationship with other provisions
(8) Section 701-5 (Entry history rule) and the choice provision have
effect subject to this section.
(1) This section has effect if the question whether the
*head company of a
*consolidated group has made a choice (however
described) under a provision listed in the table is relevant for the head
company core purposes set out in section 701-1 (Single entity rule) because
of something happening in relation to a thing:
(a) that is an asset, right, liability or obligation of the head company;
and
(b) that the head company started to have, at the time (the joining
time) an entity (the joining entity) became a
*subsidiary member of the group, because of
that section and the fact that (ignoring that section) the entity had the thing
at the joining time.
|
List |
||
|---|---|---|
|
Item |
Provision |
Subject of provision |
|
1 |
Section 775-150 |
Choice to apply rules about disregarding certain
*forex realisation gains and
*forex realisation losses |
(2) The *head company is taken to have
made such a choice if the joining entity had one in effect before the joining
time.
(3) The *head company is taken not to
have made the choice if the joining entity did not have one in effect before the
joining time.
(1) This section has effect, despite section 715-670, if:
(a) an entity that becomes a *member of a
*consolidated group had a choice (however
described) in effect under a provision (the choice provision)
listed in that section before becoming a member of the group; and
(b) the time at which the entity becomes a member of the group is the
first time at which an entity that had a choice (however described) in effect
under the choice provision before becoming a member of the group became a member
of the group; and
(c) the *head company of the group
chooses in writing, before:
(i) the end of 90 days after the Commissioner is given notice under
Division 703 that the entity has become a member of the group; or
(ii) a later time allowed by the Commissioner;
to be treated as if the head company had made a choice under the choice
provision.
(2) The *head company is taken to have
made a choice under the choice provision for these purposes:
(a) the head company core purposes set out in section 701-1 (Single
entity rule);
(b) the purposes of the application of section 715-670 and
paragraph (1)(a) in relation to another
*consolidated group of which the company later
becomes a *subsidiary member.
Table of sections
Choices leaving entity can make ignoring exit history rule
715-700 Choices leaving entity can make ignoring exit
history rule
Choices leaving entity can make ignoring exit history rule to overcome
inconsistencies
715-705 Choices leaving entity can make ignoring exit
history rule to overcome inconsistencies
Application
(1) This section has effect if:
(a) an entity ceases to be a *subsidiary
member of a *consolidated group at a time (the
leaving time); and
(b) the question whether the *head
company of the group had made a choice (however described) under a provision
(the choice provision) listed in the table in subsection
715-660(1) was relevant to working out that company’s liability (if any)
for income tax, or the entity’s loss (if any) of a particular
*sort, calculated by reference to an income
year starting before the leaving time.
Note: Declarations, elections and selections made under the
choice provision at the option of a company are all examples of choices under
that provision (even though it does not call them choices) because the company
has chosen to make them.
Objects
(2) The main objects of this section are:
(a) to override section 701-40 (Exit history rule) and let the entity
make a choice (however described) under the choice provision with effect after
the leaving time; and
(b) to extend, in some cases, the time for the entity to make such a
choice after the leaving time; and
(c) to modify, in some cases, the rules about when such a choice by the
entity starts to have effect.
Overriding the exit history rule
(3) For the entity core purposes set out in section 701-1 (Single
entity rule) relating to income years ending after the leaving time, ignore a
choice (however described) made by the *head
company of the *consolidated group under the
choice provision or the absence of such a choice.
Fresh choice by the entity
(4) The entity may make a choice (however described) under the provision
if the question whether the entity has made such a choice is relevant to working
out the entity’s liability (if any) for income tax, or loss (if any) of a
particular *sort, calculated by reference to an
income year ending after the leaving time.
Extension of time for fresh choice by the entity
(5) If there is a time limit (apart from this subsection) on the entity
making such a choice, the entity has until the later of these times to make the
choice:
(a) the last time it may make the choice under the provision (apart from
this section);
(b) the end of 90 days after the leaving time or, if the Commissioner
allows a later time for the purposes of this paragraph, that later
time.
Start of effect of choice
(6) If the entity makes a choice because of this section, the choice
starts to have effect:
(a) at the leaving time; or
(b) if the choice relates (explicitly or implicitly) to one or more whole
income years—for the income year in which the leaving time
occurs.
Relationship with other provisions
(7) Section 701-40 (Exit history rule) and the choice provision have
effect subject to this section.
Application
(1) This section has effect if an entity ceases to be a
*subsidiary member of a
*consolidated group at a time (the
leaving time) and there is an inconsistency because
either:
(a) both of these conditions are met:
(i) a choice (however described) under a provision (the choice
provision) listed in the table in subsection 715-665(1) by the entity
had effect just before the entity became a
*member of the group;
(ii) there was not such a choice by the
*head company of the group having effect just
before the leaving time; or
(b) both of these conditions are met:
(i) there was not a choice (however described) under the choice provision
by the entity having effect just before the entity became a member of the
group;
(ii) such a choice by the head company had effect just before the leaving
time.
Note: An election by the entity or head company under the
choice provision is an example of a choice under that provision (even though the
provision does not call the election a choice) because the entity or company has
chosen to make the election.
Object
(2) The main objects of this section are:
(a) to displace section 701-40 (Exit history rule), so far as it
relates to the inconsistency; and
(b) to allow the entity to make a choice (however described) under the
choice provision with effect after the leaving time.
Displacing the exit history rule
(3) For the entity core purposes set out in section 701-1 (Single
entity rule) relating to income years ending after the leaving time, ignore a
choice (however described) made by the *head
company of the *consolidated group under the
choice provision or the absence of such a choice.
(4) However, if the choice provision is section 148 of the Income
Tax Assessment Act 1936 (Reinsurance with non-residents):
(a) subsection (3) of this section does not apply in relation to
reinsurance under contracts made before the leaving time (but does apply in
relation to reinsurance under contracts made at or after that time);
and
(b) that section applies, for the entity core purposes relating to income
years ending after the leaving time, in relation to reinsurance under a contract
made before the leaving time:
(i) as if the entity had made an election under that section, if the
*head company of the
*consolidated group made, or was treated as
having made, such an election that was relevant to working out that
company’s liability (if any) for income tax, or that company’s
*tax loss (if any), for an income year in
connection with the contract; or
(ii) as if the entity had not made such an election, if the head company
had not made, and was not treated as having made, such an election that was
relevant to working out that company’s liability (if any) for income tax,
or that company’s tax loss (if any), for an income year in connection with
the contract.
Note: In some cases, subsection 715-665(4) treats the head
company of a consolidated group as having made an election under
section 148 of the Income Tax Assessment Act 1936 in relation to
reinsurance under contracts made before an entity becomes a member of the
group.
Fresh choice by the entity
(5) The entity may make a choice (however described) under the choice
provision if the question whether the entity has made such a choice is relevant
to working out the entity’s liability (if any) for income tax, or loss (if
any) of a particular *sort, calculated by
reference to an income year ending after the leaving time.
Extension of time for fresh choice by the entity
(6) If there is a time limit (apart from this subsection) on the entity
making such a choice, the entity has until the later of these times to make the
choice:
(a) the last time it may make the choice under the choice provision (apart
from this section);
(b) the end of 90 days after the leaving time or, if the Commissioner
allows a later time for the purposes of this paragraph, that later
time.
Start of effect of choice
(7) If the entity makes a choice because of this section, the choice
starts to have effect:
(a) at the leaving time; or
(b) if the choice relates (explicitly or implicitly) to one or more whole
income years—for the income year in which the leaving time
occurs.
(8) However, if:
(a) the entity makes a choice because of this section; and
(b) the choice is an election under section 148 of the Income Tax
Assessment Act 1936 (Reinsurance with non-residents);
the election has effect only for the purposes of that section applying in
relation to reinsurance under contracts made at or after the leaving time and in
an income year for which the election applies under that section.
Note: Subsection (4) explains how section 148 of
the Income Tax Assessment Act 1936 applies in relation to reinsurance
under contracts made before the joining time.
Relationship with other provisions
(9) Section 701-40 (Exit history rule) and the choice provision have
effect subject to this section.
27 Subdivisions 717-F and
717-G
Repeal the Subdivisions.
Income Tax (Transitional
Provisions) Act 1997
28 After Division 713
Insert:
Table of Subdivisions
715-J Entry history rule and choices
715-K Exit history rule and choices
Table of sections
715-658 Application
715-659 Extension of time for making choice if joining time
was before commencement
Subdivision 715-J of the Income Tax Assessment Act 1997
applies on and after 1 July 2002.
(1) This section extends the time given by each of the following
provisions of the Income Tax Assessment Act 1997 for making a choice
because an entity becomes a member of a consolidated group, if, before the
commencement of the provision, the Commissioner is given notice under
Division 703 that the entity has become a member of the group:
(a) subsection 715-660(4);
(b) subsection 715-665(5);
(c) paragraph 715-675(1)(c).
(2) A reference in each of those provisions to the end of 90 days after
the Commissioner is given notice under Division 703 that the entity has
become a member of the group has effect as if it were a reference to the end of
90 days after the commencement of the provision.
Table of sections
715-698 Application
715-699 Extension of time for making choice if leaving time
was before commencement
Subdivision 715-K of the Income Tax Assessment Act 1997
applies on and after 1 July 2002.
(1) This section extends the time given by each of the following
provisions of the Income Tax Assessment Act 1997 for making a choice
because an entity ceases to be a subsidiary member of a consolidated group at
the leaving time, if the leaving time is before the commencement of the
provision:
(a) subsection 715-700(5);
(b) subsection 715-705(6).
(2) A reference in each of those provisions to the end of 90 days after
the leaving time has effect as if it were a reference to the end of 90 days
after the commencement of the provision.
Income Tax Assessment Act
1997
29 Section 705-60 (table item 3, column
headed “What the step requires”)
Omit “in respect of discretionary interests”.
30 Section 705-60 (table item 3, column
headed “Purpose of the step”)
Omit “in respect of discretionary interests”.
31 Section 713-25
(heading)
Repeal the heading, substitute:
32 Subparagraph
713-25(1)(c)(ii)
Omit “not be taken into account”, substitute “be
disregarded”.
Income Tax Assessment Act
1997
1 Section 10-5 (after table item dealing with
partnerships)
Insert:
|
payments to members of copyright collecting societies |
|
|
payments by copyright collecting societies |
15-22 |
2 Section 11-15 (before table item dealing with
credit unions)
Insert:
|
copyright collecting societies |
|
|
copyright income |
51-43(2)(a) |
|
non-copyright income up to certain limits |
51-43(2)(b) |
3 Section 15-20
Before “Your”, insert “(1)”.
4 At the end of
section 15-20
Add:
(2) Subsection (1) does not apply to an amount of a payment to which
section 15-22 applies.
5 After section 15-20
Insert:
(1) This section, instead of Division 6 of Part III of the
Income Tax Assessment Act 1936, applies to a payment that a
*copyright collecting society, to which
section 51-43 applies, makes to you as a
*member of the society.
(2) Your assessable income includes the amount of the payment, except to
the extent that the payment represents an amount on which the directors of the
society are or have been assessed, and are liable to pay tax, under
section 98, 99 or 99A of the Income Tax Assessment Act
1936.
Note: Section 410-5 of this Act requires a copyright
collecting society to give you a notice at the time of payment.
6 After section 51-40
Insert:
(1) This section applies to a *copyright
collecting society if Division 6 of Part III of the Income Tax
Assessment Act 1936 applies to the income of the society.
(2) The following are exempt from income tax:
(a) *copyright income collected or
*derived by the society in an income
year;
(b) *non-copyright income derived by the
society in an income year to the extent that it does not exceed the lesser
of:
(i) 5% of the total amount of the copyright income and non-copyright
income collected and derived by the society in the income year; and
(ii) $5 million or such other amount as is prescribed by the regulations
for the purposes of this subparagraph.
7 Section 405-50 (link
note)
Repeal the link note, substitute:
This Division sets out rules that apply whenever a copyright collecting
society to which section 51-43 applies makes a payment to a member of the
society.
Table of sections
Operative provision
410-5 Copyright collecting society must give a notice to a
member of the society
(1) This section applies to a *copyright
collecting society to which section 51-43 applies.
(2) If the society makes a payment to a
*member of the society, the society must give
the member a notice, in writing, that states:
(a) the name of the society and the member; and
(b) the total amount of the payment; and
(c) the amount of the payment on which the directors of the society are or
have been assessed, and are liable to pay tax, under section 98, 99 or 99A
of the Income Tax Assessment Act 1936; and
(d) the amount of the payment that is to be included in the member’s
assessable income under section 15-22 of this Act.
Note 1: Under section 288-75 in Schedule 1 to the
Taxation Administration Act 1953 a society is liable to an administrative
penalty for failing to give a notice required under this
section.
Note 2: The amount mentioned in paragraph (2)(c) is not
included in the member’s assessable income—see
section 15-22.
(3) The society must give the notice at the time of the payment.
8 Subsection 995-1(1)
Insert:
copyright collecting society means either of the following
bodies:
(a) a body that satisfies all of the following conditions:
(i) a declaration under the Copyright Act 1968 is in force in
respect of the body;
(ii) the body is a company whose
*constitution contains provisions about the
distribution of amounts collected or *derived
by it, including a requirement that a *member
of the society cannot direct the body to pay an amount at a particular
time;
(iii) other conditions prescribed by the regulations (if any) for the
purposes of this subparagraph are met;
(b) a company that satisfies all of the following conditions:
(i) the company is incorporated under a law in force in a State or
Territory relating to companies;
(ii) the company has and maintains the purpose of collective
administration of copyrights;
(iii) if the company has other purposes—these purposes are
incidental to the purpose described in subparagraph (ii);
(iv) the company collects or derives, and distributes,
*copyright income;
(v) the company’s constitution allows any copyright owner, or his or
her agent, to be a member of the society, or allows all copyright owners of a
particular type to be members;
(vi) the company’s constitution prohibits the payment of
*dividends;
(vii) the company’s constitution contains provisions about the
payment, out of amounts collected or derived by it, of the administrative costs
of collecting those amounts;
(viii) the company’s constitution contains provisions about the
distribution of amounts collected or derived by it, including a requirement that
an amount must be paid to a member as soon as is reasonably possible after the
allocation of the amount to the member, as well as a requirement that a member
cannot direct the company to pay an amount at a particular time;
(ix) the company’s constitution, or contracts with members, contains
such other provisions as are prescribed by the regulations (if any), being
provisions necessary to ensure that the interests of members or their agents are
protected adequately;
(x) the company’s constitution requires the company to hold amounts
on trust for copyright owners who are not members, or for members pending the
payment of amounts to them;
(xi) the company’s constitution, or contracts with members, allows
all members to access the company’s records;
(xii) other conditions prescribed by the regulations (if any) for the
purposes of this subparagraph are met.
9 Subsection 995-1(1)
Insert:
copyright income of a
*copyright collecting society means
*ordinary income, or
*statutory income, of the following
kinds:
(a) *royalties, and interest on
royalties, collected or *derived by the
society;
(b) such other amounts relating to copyright that are derived by the
society as are prescribed by the regulations for the purposes of this
paragraph.
10 Subsection 995-1(1)
Insert:
member of a *copyright
collecting society means:
(a) any person who has been admitted as a member under the
society’s *constitution; or
(b) any person who has authorised the society to license the use of his or
her copyright material.
11 Subsection 995-1(1)
Insert:
non-copyright income of a
*copyright collecting society means
*ordinary income and
*statutory income derived by the society, but
does not include *copyright income.
Income Tax (Transitional
Provisions) Act 1997
12 Section 405-1 (link
note)
Repeal the link note, substitute:
Table of sections
410-1 Application of section 51-43 of the Income Tax
Assessment Act 1997
(1) A copyright collecting society to which section 51-43 of the
Income Tax Assessment Act 1997 applies, may elect that, from 1 July
2004, the section apply to all copyright income, and non-copyright income,
collected or derived by the society on or after 1 July 2004.
(2) A society makes a valid election if:
(a) the election is in writing; and
(b) the election is given to the Commissioner within 28 days after the day
on which this section commences.
Taxation Administration Act
1953
13 At the end of Division 288 of Part 4-25
in Schedule 1 (before the link note)
Add:
A *copyright collecting society is
liable to an administrative penalty of 20 penalty units if the society fails to
give a notice to a *member as required by
section 410-5 of the Income Tax Assessment Act 1997.
Note: See section 4AA of the Crimes Act 1914 for
the current value of a penalty unit.
14 Application
(1) The amendments made by items 1 to 6 and 8 to 11 of this Schedule
apply to copyright income, and non-copyright income, collected or derived by a
copyright collecting society on or after 1 July 2002, unless the society
has made an election in accordance with section 410-1 of the Income Tax
(Transitional Provisions) Act 1997.
Note: If the society has made an election, then from
1 July 2004, the amendments listed above apply to all copyright income, and
non-copyright income, collected or derived by the society on or after
1 July 2004.
(2) The amendments made by items 7 and 13 of this Schedule apply to
payments of copyright income or non-copyright income made by a copyright
collecting society in an income year after the income year in which this item
commences.
Part 1—Anti-avoidance
rules in relation to exempt institutions
Income Tax Assessment Act
1997
1 At the end of
section 207-130
Add:
(7) This section has effect subject to sections 207-119 to
207-136.
2 Section 207-130
Renumber as section 207-115.
3 Section 207-135
Renumber as section 207-117.
4 At the end of
Subdivision 207-E
Add:
For the purposes of this Act:
(a) an entity must not be treated as an
*exempt institution that is eligible for a
refund in relation to a *franked distribution
if section 207-120, 207-122 or 207-124 applies to the entity in relation to
the distribution; and
(b) a beneficiary of a trust must not be treated as an exempt institution
that is eligible for a refund in relation to a franked distribution made in an
income year if section 207-126 applies to the beneficiary in relation to
that income year.
(1) This section applies to an entity (the ineligible
entity) if:
(a) a *franked distribution is made, or
*flows indirectly under subsection 207-50(3) or
(4), to the entity; and
(b) subsection (2) of this section applies because of a
*distribution event in relation to the
distribution.
(2) Subject to subsection (3) and to section 207-128, this
subsection applies if, because of a
*distribution event in relation to the
*franked distribution:
(a) the ineligible entity or another entity:
(i) makes, becomes liable to make, or may reasonably be expected to make
or to become liable to make, a payment to any entity; or
(ii) transfers, becomes liable to transfer, or may reasonably be expected
to transfer or to become liable to transfer, any property to any entity;
or
(iii) incurs, becomes liable to incur, or may reasonably be expected to
incur or to become liable to incur, any other detriment, disadvantage, liability
or obligation; or
(b) if the distribution is made to the ineligible entity—the amount
or value of the benefit derived by the ineligible entity from the distribution
is, will be, or may reasonably be expected to be, less than the amount or value
of the distribution as at the time the distribution is made; or
(c) if the distribution *flows indirectly
to the ineligible entity—the amount or value of the benefit derived by the
ineligible entity from the ineligible entity’s
*trust share amount in relation to the
distribution is, will be, or may reasonably be expected to be, less than the
amount or value of the ineligible entity’s trust share amount in relation
to the distribution as at the time when that amount arises; or
(d) any of the following entities has obtained, will obtain or may
reasonably be expected to obtain, a benefit, advantage, right or
privilege:
(i) the entity making the distribution;
(ii) an entity through which the distribution flows indirectly to
the ineligible entity;
(iii) an *associate of any of those
entities.
Note: For when paragraph (d) is satisfied, see also
subsection 207-132(2).
Exception to paragraph (2)(b) or (c)
(3) Paragraph (2)(b) or (c) does not apply if:
(a) that paragraph would otherwise apply only because of expenses the
ineligible entity has incurred, will incur, or may reasonably be expected to
incur, for the purpose of obtaining the
*franked distribution or
*trust share amount mentioned in that
paragraph; and
(b) the Commissioner considers the expenses to be reasonable.
Trust share amount
(4) An entity’s trust share amount in relation to a
*franked distribution that
*flows indirectly to the entity under
subsection 207-50(3) or (4) is the entity’s share amount that is mentioned
in that subsection.
Distribution event
(5) A distribution event in relation to a
*franked distribution is an act, transaction or
circumstance that has happened, will happen, or may reasonably be expected to
happen, as part of, in relation to or as a result of:
(a) the payment or receipt of the distribution; or
(b) if the distribution *flows indirectly
to an entity under subsection 207-50(3) or (4)—the arising of, or the
distribution or receipt of, the entity’s
*trust share amount in relation to the
distribution; or
(c) an *arrangement entered into in
association with a matter mentioned in paragraph (a) or (b).
This section applies to an entity (the ineligible entity)
to whom a *franked distribution is made, or
*flows indirectly under subsection 207-50(3) or
(4), if:
(a) one of the following is in the form of property other than
money:
(i) if the distribution is made to the ineligible entity—all or part
of the distribution;
(ii) if the distribution flows indirectly to the ineligible entity through
the trustee of a trust under subsection 207-50(3) or (4)—all or a part of
a distribution (the trust distribution) made by the trustee of the
trust that relates to the ineligible entity’s
*trust share amount in relation to the franked
distribution; and
(b) the terms and conditions on which the franked distribution or trust
distribution is made are such that the ineligible entity:
(i) does not receive immediate custody and control of the property;
or
(ii) does not have the unconditional right to retain custody and control
of the property in perpetuity; or
(iii) does not obtain an immediate, indefeasible and unencumbered legal
and equitable title to the property.
Subject to section 207-128, this section applies to an entity (the
ineligible entity) to whom a
*franked distribution is made, or
*flows indirectly under subsection 207-50(3) or
(4), if:
(a) the ineligible entity or another entity has entered into an
*arrangement as part of, or in association
with:
(i) the distribution; or
(ii) if the distribution flows indirectly to the ineligible
entity—the ineligible entity’s
*trust share amount in relation to the
distribution; and
(b) because of the arrangement, the ineligible entity or another entity
has acquired or will acquire (whether directly or indirectly) money or property,
other than money or property comprising the distribution or the ineligible
entity’s trust share amount, from:
(i) the entity making the distribution; or
(ii) an entity through which the distribution flows indirectly to
the ineligible entity; or
(iii) an *associate of any of those
entities (other than the ineligible entity).
(1) This section applies to a beneficiary of a trust in relation to an
income year if:
(a) the sum of the distributions:
(i) made to the beneficiary during the income year by the trustee of the
trust; and
(ii) that relate to the beneficiary’s
*trust share amount in relation to a
*franked distribution made during the income
year;
is less than:
(b) that trust share amount.
Commissioner’s power to treat trust share amount as having been
distributed during the income year
(2) Subsection (1) does not apply if the Commissioner, having regard
to all the circumstances, considers that it would be reasonable to treat the
*trust share amount as having been distributed
to the beneficiary in the income year.
(1) If, apart from this section, paragraph 207-120(2)(a) or (d) or
section 207-124 would apply to an entity (the receiving
entity) to whom a *franked distribution
is made or *flows indirectly, that paragraph or
section is taken not to apply to the receiving entity if:
(a) instead of receiving the distribution, or the
*trust share amount concerned, by a payment of
money, the receiving entity chooses to be issued with:
(i) if the distribution is made to the receiving
entity—*shares in the
*corporate tax entity making the distribution;
or
(ii) if the distribution flows indirectly to the receiving entity—a
fixed interest in the trust in relation to which the trust share amount arises;
and
(b) the choice is genuine and furthers the purpose for which the entity
was established; and
(c) the choice is not made for the purpose, or purposes that include the
purpose, of benefiting the corporate tax entity, trust or any of their
*associates (other than the receiving entity);
and
(d) any benefit derived by the corporate tax entity, trust or any of their
associates (other than the receiving entity) because of that choice is one which
is an ordinary incident of issuing the shares or interests to the receiving
entity or of the receiving entity’s holding of those shares or interests;
and
(e) the parties that were involved in the
*distribution event or
*arrangement concerned deal with one another on
an arm’s length basis in relation to the event or arrangement.
A vested and indefeasible interest constitutes a fixed
interest
(2) The receiving entity’s interest in a trust is a fixed interest
if the interest is a vested and indefeasible interest in the trust’s
capital.
Special rule about whether interests in unit trusts are
defeasible
(3) If:
(a) the trust is a unit trust and the receiving entity holds units in the
unit trust; and
(b) the units are redeemable or further units are able to be issued;
and
(c) the units held by the receiving entity will be redeemed, or any
further units will be issued:
(i) if units in the unit trust are listed for quotation in the official
list of an *approved stock exchange—for
the price at which other units of the same kind in the unit trust are offered
for sale on the exchange at the time of the redemption or issue; or
(ii) if the units are not listed as mentioned in
subparagraph (i)—for their market value at the time of the redemption
or issue;
then the mere fact that the units are redeemable, or that the further units
are able to be issued, does not mean that the receiving entity’s interest,
as a unit holder, in the trust’s capital is defeasible.
Commissioner’s power to treat an interest in a trust as being a
fixed interest
(4) If:
(a) the receiving entity has an interest in the trust’s capital;
and
(b) apart from this subsection, the interest would not be a vested or
indefeasible interest; and
(c) the Commissioner considers that the interest should be treated as
being vested and indefeasible, having regard to:
(i) the circumstances in which the interest is capable of not vesting, or
the defeasance can happen; and
(ii) the likelihood of the interest not vesting or the defeasance
happening; and
(iii) the nature of the trust; and
(iv) any other matter the Commissioner thinks relevant;
the Commissioner may determine that the interest is to be taken to be
vested and indefeasible.
(5) A determination made under subsection (4) has effect according to
its terms.
(1) A *controller (for imputation
purposes) of an entity (the controlled entity) is liable to pay an
amount under this section in respect of a refund paid to the controlled entity
under Division 67 if:
(a) the controlled entity claimed the refund wholly or partly on the basis
that:
(i) the controlled entity was entitled to a
*tax offset under section 207-20, 207-45
or 207-110 in relation to a *franked
distribution; and
(ii) the controlled entity was an *exempt
institution that is eligible for a refund; and
(b) because of the operation of section 207-120, 207-122, 207-124 or
207-126 in respect of a *distribution event or
an *arrangement in relation to the
distribution, the controlled entity is not entitled to the tax offset;
and
(c) the controller or an *associate of
the controller benefited from that event or arrangement; and
(d) some or all of the amount that the controlled entity is liable to pay
in respect of the refund remains unpaid after the day on which the amount
becomes due and payable; and
(e) the Commissioner gives the controller written notice:
(i) stating that the controller is liable to pay an amount under this
section; and
(ii) specifying that amount.
Except as provided for in subsection (5), this subsection does not
affect any liability the controlled entity has in relation to the
refund.
Note 1: Section 207-134 also provides that the
controlled entity’s present entitlement to a trust share amount is
disregarded for the purposes of Division 6 of Part III of the
Income Tax Assessment Act 1936.
Note 2: For when paragraph (c) is satisfied, see also
subsection 207-132(3).
(2) The amount that the *controller (for
imputation purposes) is liable to pay under subsection (1):
(a) is the amount specified under subparagraph (1)(e)(ii);
and
(b) becomes due and payable at the end of the period of 14 days that
starts on the day on which the notice mentioned in paragraph (1)(e) is
given.
(3) The amount that the *controller (for
imputation purposes) is liable to pay under subsection (1) must not exceed
the total amount or value of the benefit that the controller and its
*associates obtained from the
*distribution event or
*arrangement.
(4) The total of:
(a) the amounts that the Commissioner recovers under subsection (1)
in relation to the refund from all of the controlled entity’s
*controllers (for imputation purposes);
and
(b) the amounts that the Commissioner recovers in relation to the refund
from the controlled entity;
must not exceed the amount that the controlled entity was liable to pay as
mentioned in paragraph (1)(d).
Controller of a company
(5) An entity is a controller (for imputation purposes) of a
company if the entity is a *controller of the
company (for CGT purposes).
Controller of an entity other than a company—basic
meaning
(6) Subject to subsections (7) and (8), an entity is a
controller (for imputation purposes) of an entity other than a
company (the controlled entity) if:
(a) a group in relation to the entity has the power, by means of the
exercise of a power of appointment or revocation or otherwise, to obtain
beneficial enjoyment (directly or indirectly) of the capital or income of the
controlled entity; or
(b) a group in relation to the entity is able (directly or indirectly) to
control the application of the capital or income of the controlled entity;
or
(c) a group in relation to the entity is capable, under a
*scheme, of gaining the beneficial enjoyment
mentioned in paragraph (a) or the control mentioned in paragraph (b);
or
(d) the controlled entity or, if the controlled entity is a trust, the
trustee of the trust:
(i) is accustomed; or
(ii) is under an obligation; or
(iii) might reasonably be expected;
to act in accordance with the directions, instructions or wishes of a
group in relation to the entity; or
(e) if the controlled entity is a trust—a group in relation to the
entity is able (directly or indirectly) to remove or appoint the trustee of the
trust; or
(f) a group in relation to the entity has more than a 50% stake in the
income or capital of the controlled entity; or
(g) entities in a group in relation to the entity are the only entities
that, under the terms of:
(i) the constitution of the controlled entity or the terms on which the
controlled entity is established; or
(ii) if the controlled entity is a trust—the terms of the
trust;
can obtain the beneficial enjoyment of the income or capital of the
controlled entity.
Group in relation to an entity
(7) For the purposes of subsection (6), each of the following
constitutes a group in relation to an entity:
(a) the entity acting alone;
(b) an *associate of the entity acting
alone;
(c) the entity and one or more associates of the entity acting
together;
(d) 2 or more associates of the entity acting together.
Commissioner’s power to take an entity not to be a controller (for
imputation purposes)
(8) If:
(a) at a particular time, an entity (the first entity)
would, but for this subsection, be a
*controller (for imputation purposes) of an
entity other than a company (the second entity); and
(b) the Commissioner, having regard to all relevant circumstances,
considers that it is reasonable that the first entity be taken not to be such a
controller of the second entity at the particular time;
the first entity is taken not to be a controller (for imputation
purposes) of the second entity at the particular time.
(9) Without limiting paragraph (8)(b), if the second entity is a
trust, the Commissioner may have regard under that paragraph to the identity of
the beneficiaries of the trust at any time (whether before or after the first
entity began to be a *controller (for
imputation purposes) of the second entity).
(1) This section applies in relation to a benefit (the relevant
benefit) given by an entity to a
*controller (for imputation purposes) of the
entity, or to an *associate of such a
controller, if:
(a) the controller or associate:
(i) makes a *franked distribution to the
entity; or
(ii) is the trustee of the trust in relation to which a
*trust share amount of the entity arises in
relation to a franked distribution that *flows
indirectly to the entity; and
(b) the benefit is, or was, given to the controller or associate at any
time during the period that starts 3 years before, and ends 3 years after, the
distribution is made or the trust share amount arises (as
appropriate).
(2) For the purposes of paragraph 207-120(2)(d), the controller or
*associate is taken to have obtained the
relevant benefit because of a *distribution
event in relation to the *franked distribution
or *trust share amount.
(3) For the purposes of paragraph 207-130(1)(c), and at least to the
extent of the relevant benefit, the controller or
*associate is taken to have benefited from a
*distribution event or
*arrangement that caused section 207-120
to apply in relation to the *franked
distribution or *trust share amount.
Commissioner’s power not to apply subsection (2) or
(3)
(4) Subsection (2) or (3) does not apply in relation to a benefit if
the Commissioner is satisfied, having regard to all the circumstances, that it
would be unreasonable to apply that subsection.
The present entitlement of a beneficiary of a trust to a share of trust
income is disregarded for the purposes of Division 6 of Part III of
the Income Tax Assessment Act 1936 if:
(a) the beneficiary has claimed a *tax
offset under section 207-45 or 207-110 of this Act on the basis that the
beneficiary was an *exempt institution that was
eligible for a refund in relation to a *trust
share amount that is that share of trust income; but
(b) the beneficiary was not entitled to that tax offset because of the
operation of section 207-120, 207-122, 207-124 or 207-126 in respect of a
*distribution event, or an
*arrangement, to which the trust share amount
is related.
Note: This means that the trustee of the trust is liable to
pay income tax on that share of the trust income.
An entity that is dissatisfied with a decision of the Commissioner under
any of the following provisions may object against it in the manner set out in
Part IVC of the Taxation Administration Act 1953:
(a) paragraph 207-120(3)(b);
(b) subsection 207-126(2);
(c) subsection 207-128(4);
(d) paragraph 207-130(1)(e);
(e) paragraph 207-130(8)(b);
(f) subsection 207-132(4).
5 At the end of
Subdivision 975-A
Add:
An entity (the first entity) is a controller (for CGT
purposes) of a company if:
(a) the first entity has an
*associate-inclusive control interest in the
company of at least 50%; or
(b) the first entity has an associate-inclusive control interest in the
company of at least 40% and entities other than the first entity or associates
of the first entity do not control the company; or
(c) the first entity controls the company (alone or with an
*associate).
(1) An entity has an associate-inclusive control interest in
a company in the circumstances set out in Subdivision A of Division 3 of
Part X of the Income Tax Assessment Act 1936.
(2) However, in working out whether an entity has an associate-inclusive
control interest of a particular percentage for the purposes of
section 975-155, there are these modifications to the way Part X of
that Act operates:
(a) that Part is applied to any company, including one acting as a
trustee; and
(b) subsection 349(4) applies in all cases in working out which entity
holds a direct control interest or a control tracing interest equal to 100%;
and
(c) subsections 350(6) and (7) and 355(1) are ignored; and
(d) despite subsection 352(2), an interposed entity may be taken into
account in calculating an indirect control interest if the interposed entity
is:
(i) a company of which the first entity or an
*associate is a controller; or
(ii) a partnership or a trust; and
(e) section 354 applies as if it referred to partnerships rather than
CFP’s; and
(f) section 355 applies as if it referred to trusts rather than
CFT’s.
Note 1: Part X of the Income Tax Assessment Act
1936 defines company to exclude a company in the capacity of a
trustee.
Note 2: The terms direct control interest and control
tracing interest are relevant to working out associate-inclusive control
interests in a company: see sections 350, 351, 353, 354 and 355 of that
Act.
Note 3: Under subsection 349(4) of that Act, if 2 or more
entities would have a direct control interest or a control tracing interest in a
company or trust equal to 100%, only one of them holds the
interest.
Note 4: Subsections 350(6) and (7) of that Act deal with
direct control interests in a company. They deal with interests held by
Australian entities. Under subsection 355(1), certain entities are taken to hold
a control tracing interest in a trust equal to 100%.
Note 5: Paragraphs (2)(d), (e) and (f) of this section
are necessary because Part X of the Income Tax Assessment Act 1936
applies only to CFE’s (which comprise CFC’s, CFP’s and
CFT’s).
6 Subsection 995-1(1)
Insert:
associate-inclusive control interest in a company has the
meaning given by section 975-160.
7 Subsection 995-1(1) (definition of controller
(for CGT purposes))
Omit “140-20”, substitute “975-155”.
8 Subsection 995-1(1)
Insert:
controller (for imputation purposes) has the meaning given by
subsections 207-130(5) and (6).
9 Subsection 995-1(1)
Insert:
distribution event has the meaning given by subsection
207-120(5).
10 Subsection 995-1(1) (definition of exempt
institution that is eligible for a refund)
Omit “207-130”, substitute “207-115”.
11 Subsection 995-1(1) (at the end of the definition
of exempt institution that is eligible for a refund)
Add:
Note: This definition is affected by sections 207-119
to 207-136.
12 Subsection 995-1(1) (paragraph (d) of the
definition of residency requirement)
Omit “207-135”, substitute “207-117”.
13 Subsection 995-1(1)
Insert:
trust share amount has the meaning given by subsection
207-120(4).
Part 2—Miscellaneous
consequential and technical amendments
Income Tax Assessment Act
1936
14 Subsection 6(1)
Insert:
corporate tax entity has the same meaning as in the Income
Tax Assessment Act 1997.
15 Subsection 6(1)
Insert:
corporate tax rate has the same meaning as in the Income
Tax Assessment Act 1997.
16 Subsection 6(1)
Insert:
distribution, when used in a franking context, has the same
meaning as in the Income Tax Assessment Act 1997.
17 Subsection 6(1)
Insert:
frankable distribution has the same meaning as in the
Income Tax Assessment Act 1997.
18 Subsection 6(1)
Insert:
franking credit has the same meaning as in the Income Tax
Assessment Act 1997.
19 Subsection 6(1)
Insert:
franking debit has the same meaning as in the Income Tax
Assessment Act 1997.
20 Subsection 6(1)
Insert:
franking deficit tax has the same meaning as in the Income
Tax Assessment Act 1997.
21 Subsection 6(1)
Insert:
franking surplus has the same meaning as in the Income Tax
Assessment Act 1997.
22 Subsection 6(1)
Insert:
franks with an exempting credit has the same meaning as in
the Income Tax Assessment Act 1997.
23 Subsection 6(1)
Insert:
over-franking tax has the same meaning as in the Income
Tax Assessment Act 1997.
24 Subsection 6(1)
Insert:
venture capital deficit tax has the same meaning as in the
Income Tax Assessment Act 1997.
25 Section 43A
Repeal the section, substitute:
This Subdivision has effect subject to the provisions of
Division 216 of the Income Tax Assessment Act 1997 (which describes
cum dividend sales in which a distribution to a member of a corporate tax entity
is treated as having been made to someone else).
26 Paragraph 46FB(4)(c)
After “but for”, insert “subsection 46AB(1) or 46AC(2)
or”.
27 Paragraph 102AAM(10)(a)
Omit “general company tax rate (within the meaning of
Part IIIAA)”, substitute “corporate tax rate”.
28 Subparagraph
102AAU(1)(c)(iii)
Omit “so much of a frankable dividend (within the meaning of
Part IIIAA) as has been franked in accordance with section 160AQF or
160AQFA”, substitute “the franked part of a distribution, or the
part of a distribution that has been franked with an exempting
credit”.
29 Subparagraph
102AAU(1)(c)(iv)
Omit “section 160AQT”, substitute “subsection
207-35(1) or (3) of the Income Tax Assessment Act 1997”.
30 Subsection 105A(4AA)
Omit “to the extent that the whole, or a part, of the dividend has
been franked in accordance with section 160AQF”, substitute “to
the extent of the franked part of the dividend”.
31 Paragraph 108(2)(c)
Omit “other than Part IIIAA”, substitute “, other
than Part 3-6 of the Income Tax Assessment Act
1997”.
32 Paragraph 108(2)(d)
Omit “sections 160APP and 160AQT”, substitute
“Part 3-6 of the Income Tax Assessment Act
1997”.
33 At the end of paragraph
108(3)(a)
Add “and”.
34 Paragraph 108(3)(b)
Repeal the paragraph.
35 Section 109B
Omit “for reducing the company’s franking account credit (under
section 160AQCNC)”, substitute “for a debit arising in the
company’s franking account (under item 8 of the table in
section 205-30 of the Income Tax Assessment Act
1997)”.
36 Subsection 109Y(2) (subparagraph (b)(i) of
the definition of repayments of non-commercial
loans)
Omit “to the extent that the dividend has not been franked under
section 160AQF”, substitute “to the extent of the unfranked
part of the dividend”.
37 Subsection 109ZC(2)
Omit “except Part IIIAA (which deals with franking of
dividends)”, substitute “, except Part 3-6 of the Income Tax
Assessment Act 1997 (which deals with franking of
distributions)”.
38 Subsection 109ZC(2)
Omit “that has not been franked under section 160AQF or
160AQFA”, substitute “that is not either the franked part of that
dividend, or the part of that dividend that has been franked with an exempting
credit”.
39 Section 121AT (table item 12, column
headed “Event”)
Omit “a class A franking surplus, a class B franking surplus or a
class C franking surplus (all within the meaning of Part IIIAA)”,
substitute “a franking surplus”.
40 Section 121AT (table item 12, column
headed “Modifications”)
Omit “class A franking surplus, class B franking surplus or class C
franking surplus (all within the meaning of Part IIIAA)”, substitute
“franking surplus”.
41 Section 121AT (table item 13, column
headed “Modifications”)
Omit “(within the meaning of Part IIIAA)”.
42 Subsection 121EG(4) (definition of eligible
fraction)
Omit “general company tax rate (within the meaning of
section 160APA)”, substitute “corporate tax
rate”.
43 Paragraph 128B(3)(ga)
Repeal the paragraph, substitute:
(ga) income that consists of:
(i) the franked part of a dividend; or
(ii) in relation to a dividend that is paid by a former exempting entity
(within the meaning of the Income Tax Assessment Act 1997) on a share
acquired under an employee share scheme (within the meaning of that
Act)—the part of the dividend that is franked with an exempting credit;
or
(iii) in relation to a dividend that is paid by a former exempting entity
(within the meaning of the Income Tax Assessment Act 1997) to an eligible
continuing substantial member (within the meaning of that Act)—the part of
the dividend that is franked with an exempting credit;
other than a dividend in respect of which a determination is made under
paragraph 204-30(3)(c) of the Income Tax Assessment Act 1997 or a
dividend or a part of a dividend in respect of which a determination is made
under paragraph 177EA(5)(b) of this Act; or
44 Subsection 128TD(2)
Omit “section 160AQH”, substitute
“section 202-75 of the Income Tax Assessment Act
1997”.
45 Subsection 128TD(3)
Omit “section 160AQH”, substitute “subsection
202-80(2) of the Income Tax Assessment Act 1997”.
46 Subsection 128TE(1)
Omit “section 160AQH”, substitute
“section 202-75 of the Income Tax Assessment Act
1997”.
47 Subsection 128TE(2)
Repeal the subsection.
48 Before paragraph
159GZZZQ(8)(a)
Insert:
(aa) the seller is a corporate tax entity; and
49 Paragraph 159GZZZQ(8)(b)
Omit “a rebatable amount”, substitute “an offsetable
amount”.
Note: The heading to subsection 159GZZZQ(8) is replaced by
the heading “Offsetable amount excluded from reduction where
loss”.
50 Paragraph 159GZZZQ(8)(e)
Omit “rebatable amount”, substitute “offsetable
amount”.
51 Subsection 159GZZZQ(9)
Repeal the subsection, substitute:
Meaning of offsetable amount
(9) For the purposes of subsection (8), if the seller is entitled to
a tax offset under Division 207 of the Income Tax Assessment Act 1997
in the seller’s assessment for a year of income in respect of the
dividend, the dividend consists of an offsetable amount worked out
using the formula:
52 Subsection 160AN(3A)
Omit “Division 2 of Part IIIAA (which deals with franking
credits and debits)”, substitute “Division 205 of the Income
Tax Assessment Act 1997 (which deals with franking
accounts)”.
53 Subsection 170BA(1) (paragraph (b) of the
definition of ruling affected tax)
Repeal the paragraph, substitute:
(b) franking deficit tax; or
(ba) venture capital deficit tax; or
(bb) over-franking tax; or
54 Paragraph 276(4)(b)
Repeal the paragraph, substitute:
(b) the amount of the tax offsets (if any) to which the trustee of the
fund, or the RSA provider, is entitled under Part 3-6 of the Income Tax
Assessment Act 1997 in relation to the notice year; and
55 Paragraph 365(3)(b)
Omit “frankable dividend, within the meaning of Part IIIAA, that
has been franked in accordance with section 160AQF or 160AQFA”,
substitute “frankable distribution that has been franked in accordance
with section 202-5 of the Income Tax Assessment Act 1997, or that
has been franked with an exempting credit in accordance with section 208-60
of that Act”.
56 Paragraph 389(b)
Omit “Part IIIAA”, substitute “Part 3-6 of the
Income Tax Assessment Act 1997”.
57 Paragraph 402(2)(b)
Repeal the paragraph, substitute:
(b) so much of a frankable distribution, paid to the eligible CFC in the
eligible period, as is either the franked part of the distribution, or the part
of the distribution that has been franked with an exempting credit;
58 Paragraph 436(1)(d)
Repeal the paragraph, substitute:
(d) so much of a frankable distribution as is either the franked part of
the distribution, or the part of the distribution that has been franked with an
exempting credit;
59 Subsection 57-120(1) in
Schedule 2D
Omit “class A franking surplus, a class B franking surplus or a class
C franking surplus”, substitute “franking surplus”.
60 Paragraph 57-120(3)(a) in
Schedule 2D
Omit “class A franking debits, class B franking debits or class C
franking debits”, substitute “franking debits”.
61 Subparagraph 57-120(3)(c)(i) in
Schedule 2D
Repeal the subparagraph, substitute:
(i) there was a franking surplus of the transition taxpayer that was less
than the total of the pre-transition time components of all of the debits;
or
62 Subparagraph 57-120(3)(c)(ii) in
Schedule 2D
Omit “class A franking surplus, there was no class B franking surplus
or there was no class C franking surplus”, substitute “franking
surplus”.
63 Paragraph 57-120(3)(d) in
Schedule 2D
Omit “or surpluses concerned”.
64 Paragraph 57-120(3)(e) in
Schedule 2D
Omit “of the class or classes concerned”.
65 Paragraph 57-120(4)(a) in
Schedule 2D
Omit “class A franking debits, class B franking debits or class C
franking debits”, substitute “franking debits”.
66 Subparagraph 57-120(4)(c)(i) in
Schedule 2D
Repeal the subparagraph, substitute:
(i) there was a franking surplus of the subsidiary that was less than the
total of the pre-transition time components of all of the debits; or
67 Subparagraph 57-120(4)(c)(ii) in
Schedule 2D
Omit “class A franking surplus, there was no class B franking surplus
or there was no class C franking surplus”, substitute “franking
surplus”.
68 Paragraph 57-120(4)(d) in
Schedule 2D
Omit “or surpluses concerned”.
69 Paragraph 57-120(4)(e) in
Schedule 2D
Omit “of the class or classes concerned”.
70 Subsection 57-120(5) in
Schedule 2D
Repeal the subsection.
71 Subsection 326-120(1) in
Schedule 2H
Omit “class C”.
72 Subsection 326-130(2) in Schedule 2H
(definition of value of franking surplus)
Omit “class C”.
73 Subsection 326-170(4) in
Schedule 2H
Omit “class C”.
74 Subsection 326-170(5) in
Schedule 2H
Omit “class C”.
Income Tax Assessment Act
1997
75 Section 10-5 (table item headed
“dividends”)
Omit:
|
franked dividends, credits on |
160AQT |
substitute:
|
franked dividends, credits on |
207-20(1), 207-35(1), 207-35(3) |
76 Section 12-5 (table item headed
“dividends”)
Omit:
|
franking credits, companies and non-residents |
160AR, 160ARD |
substitute:
|
franking credits, companies and non-residents |
207-95(2), 207-95(3), 220-405(3) |
77 Section 12-5 (table item headed “tax
avoidance schemes”)
Omit:
|
dividend stripping |
46A, 177E |
substitute:
|
dividend stripping |
177E |
78 Section 12-5 (table item headed “tax
avoidance schemes”)
After:
|
gifts |
78A |
insert:
|
imputation, manipulation of |
207-150(2), 207-150(3) |
79 Section 13-1 (table item headed
“dividends”)
Repeal the item, substitute:
|
dividends |
|
|
general |
207-20(2), 207-45, 207-110(2)(c), 210-170(1) |
80 Section 67-30
After “got those tax offsets”, insert “and any tax offset
under section 205-70”.
81 Subsection 70-45(2) (table
item 1)
Repeal the item.
82 Before paragraph
110-55(7)(a)
Insert:
(aa) you are a *corporate tax entity;
and
83 Paragraph 110-55(7)(c)
Repeal the paragraph, substitute:
(c) you are entitled to a *tax offset
under Division 207 on the part of the distribution that is a
*dividend (the dividend amount);
and
84 Subsection 110-55(8)
Repeal the subsection, substitute:
(8) The amount of the reduction is:
85 Subsections 110-60(5) and
(6)
Repeal the subsections.
86 Paragraph 118-20(1B)(b)
Omit “section 160AQT of that Act (which relates to franked
dividends)”, substitute “subsection 207-20(1), 207-35(1) or
207-35(3) of this Act (which relate to franked distributions)”.
87 Section 208-115 (table item 2, column
headed “A credit of:”)
Omit “section 208-165”, substitute “subsection
208-165(1)”.
88 Section 208-115 (table item 3, column
headed “A credit of:”)
Omit “section 208-170”, substitute “subsection
208-170(1)”.
89 Section 208-130 (table item 2, column
headed “A credit of:”)
Omit “section 208-165”, substitute “subsection
208-165(1)”.
90 Section 208-130 (table item 3, column
headed “A credit of:”)
Omit “section 208-170”, substitute “subsection
208-170(1)”.
91 Section 208-130 (table item 5, column
headed “A credit of:”)
Omit “section 208-165”, substitute “subsection
208-165(2)”.
92 Section 208-130 (table item 6, column
headed “A credit of:”)
Omit “section 208-170”, substitute “subsection
208-170(2)”.
93 Paragraph 208-165(b)
Omit “or 5”.
94 At the end of
section 208-165
Add:
(2) Use the following formula to work out the amount of a
*franking credit arising under item 5 of
the table in section 208-130 because an
*exempting entity receives a
*distribution
*franked with an exempting credit:
95 Paragraph 208-170(b)
Omit “or 6”.
96 Section 208-170
(formula)
Omit the formula, substitute:
97 At the end of
section 208-170
Add:
(2) Use the following formula to work out the amount of a
*franking credit arising under item 6 of
the table in section 208-130 because an
*exempting entity receives
*a distribution
*franked with an exempting credit:
98 Paragraph 210-170(1)(e)
Omit “not”.
99 Subsection 995-1(1)
Insert:
franked part of a
*distribution has the meaning given by
section 976-1.
100 Subsection 995-1(1)
Insert:
part of a distribution that is franked with an exempting
credit has the meaning given by section 976-10.
101 Subsection 995-1(1)
Insert:
part of a distribution that is franked with a venture capital
credit has the meaning given by section 976-15.
102 Subsection 995-1(1)
Insert:
unfranked part of a
*distribution has the meaning given by
section 976-5.
Taxation Administration Act
1953
103 Section 14ZAAA (paragraph (b) of the
definition of income tax law)
Repeal the paragraph, substitute:
(b) franking deficit tax, venture capital deficit tax, or over-franking
tax, within the meaning of the Income Tax Assessment Act 1997.
104 Paragraph 14ZW(1)(aa)
Omit “or section 160AL, 160AQQ, 160ART or 175A of the Income
Tax Assessment Act 1936”, substitute “, section 160AL or
175A of the Income Tax Assessment Act 1936 or subsection 202-85(6) of the
Income Tax Assessment Act 1997”.
105 Paragraphs 12-165(b) and (c) in
Schedule 1
Repeal the paragraphs, substitute:
(b) the payment is a *distribution that
has been franked in accordance with section 202-5 of the Income Tax
Assessment Act 1997; and
(c) the *franking percentage for the
distribution is 100%.
106 After paragraph 360-85(a) in
Schedule 1
Insert:
(aa) subsection 207-20(2) of the Income Tax Assessment Act 1997;
or
107 Section 360-85 in Schedule 1 (table
item 15)
Repeal the item.
108 Section 360-115 in
Schedule 1
Omit “This section covers a *tax
offset to which you are entitled because of a provision of the Income Tax
Assessment Act 1936 listed in the table.”, substitute:
This section covers a *tax offset to
which you are entitled because of:
(a) section 207-45 of the Income Tax Assessment Act 1997, but
only so far as it applies in relation to a person as a beneficiary of a trust;
or
(b) a provision of the Income Tax Assessment Act 1936 listed in the
table.
109 Section 360-115 in Schedule 1 (table
item 5)
Repeal the item.
Taxation Laws Amendment Act
(No. 8) 2003
110 Item 16 of
Schedule 7
Repeal the item.
111 Application of amendments
(1) Subject to the rules on the application of Part 3-6 of the
Income Tax Assessment Act 1997 set out in the Income Tax (Transitional
Provisions) Act 1997, the amendments made by Part 1 of this Schedule
(other than items 5, 6 and 7) apply to events that occur on or after
1 July 2002.
(2) The amendments made by items 5, 6 and 7 of this Schedule
apply to assessments for the 2002-03 year of income and later years of
income.
(3) The amendments made by Part 2 of this Schedule, other than
items 26 and 110, apply in relation to events that occur on or after
1 July 2002.
(4) Subject to subitem (5), the amendment made by item 26 of this
Schedule applies to dividends paid on or after 1 July 2003.
(5) For a taxpayer to which section 46AC of the Income Tax
Assessment Act 1936 applies, the amendment made by item 26 of this
Schedule applies to dividends paid on or after the consolidation day referred to
in that section.
112 Modified application of section 109ZC in
2002-03
Section 109ZC of the Income Tax Assessment Act 1936, as it
applies in relation to assessments for the 2002-03 income year, has effect as
if subsection 109ZC(3) were replaced by the following
subsection:
(3) Subsection (2) does not cause the amount taken not to be a
dividend to be exempt income for the purposes of Part 3-6 of the Income
Tax Assessment Act 1997.
113 Modified application of section 128TB in
2002-03 and 2003-04
Section 128TB of the Income Tax Assessment Act 1936, as it
applies in relation to dividends paid in the period starting on 1 July 2002
and ending on 30 June 2004, has effect as if the definition of Co.
tax rate in subsection 128TB(2) were amended by omitting “general
company tax rate, within the meaning of section 160APA,” and
substituting “corporate tax rate”.
114 Modified application of section 377 in
2002-03 and 2003-04
Section 377 of the Income Tax Assessment Act 1936, as it
applies in relation to dividends paid in the period starting on 1 July 2002
and ending on 30 June 2004, has effect as if paragraph 377(1)(e) were
replaced by the following paragraph:
(e) so much of a frankable distribution, paid to the company in the
qualifying period, as is either the franked part of the distribution, or the
part of the distribution that has been franked with an exempting
credit;
Income Tax Assessment Act
1997
1 Subsection 30-25(1) (at the end of the
table)
Add:
|
2.1.12 |
a government school that: (a) provides special education for students each of whom has a disability
that is permanent or is likely to be permanent; and (b) does not provide education for other students |
none |
2 Application for item 1
The amendment made by item 1 of this Schedule applies to gifts made on
or after 1 April 2004.
3 Subsection 30-25(2) (at the end of the
table)
Add:
|
2.2.32 |
The Clontarf Foundation Inc. |
the gift must be made after 30 August 2004 |
4 Subsection 30-45(2) (at the end of the
table)
Add:
|
4.2.28 |
International Social Service - Australian Branch |
the gift must be made after 17 March 2004 |
|
4.2.29 |
the Victorian Crime Stoppers Program |
the gift must be made after 22 April 2004 |
5 Subsection 30-50(2) (table
item 5.2.1)
Omit “1 July 2005”, substitute “1 July
2007”.
6 Subsection 30-50(2) (table
item 5.2.9)
Omit “20 October 2003”, substitute “20 October
2005”.
7 Subsection 30-50(2) (table
item 5.2.17)
Omit “31 January 2004”, substitute “31 January
2006”.
8 Subsection 30-50(2) (table
item 5.2.19)
Omit “15 August 2004”, substitute “15 August
2005”.
9 Subsection 30-50(2) (table
item 5.2.21)
Omit “3 July 2004”, substitute “1 July
2006”.
10 Subsection 30-50(2) (at the end of the
table)
Add:
|
5.2.22 |
the Coolgardie Honour Roll Committee Fund |
the gift must be made after 1 June 2004 and before 2 June
2006 |
|
5.2.23 |
the Tamworth Waler Memorial Fund |
the gift must be made after 19 April 2004 and before 20 April
2006 |
|
5.2.24 |
City of Onkaparinga Memorial Gardens Association Inc |
the gift must be made after 28 April 2004 and before 25 April
2005 |
|
5.2.25 |
The Finding Sydney Foundation |
the gift must be made after 26 August 2004 and before 27 August
2006 |
11 Section 30-65 (at the end of the
table)
Add:
|
7.2.5 |
Australian Business Week Limited |
the gift must be made after 8 December 2003 |
12 Subsection 30-80(2) (at the end of the
table)
Add:
|
9.2.12 |
Lowy Institute for International Policy |
the gift must be made after 13 August 2003 |
13 After section 30-100
Insert:
This table sets out specific fire and emergency services
recipients.
|
Fire and emergency services—Specific |
|||
|---|---|---|---|
|
Item |
Authority or institution |
Established under legislation of the following State or
Territory |
Special conditions |
|
12A.2.1 |
State Emergency Service |
New South Wales |
the gift must be made after 22 December 2003 |
|
12A.2.2 |
Country Fire Authority |
Victoria |
the gift must be made after 22 December 2003 |
|
12A.2.3 |
Victoria State Emergency Service |
Victoria |
the gift must be made after 22 December 2003 |
|
12A.2.4 |
CFA & Brigades Donations Fund |
Victoria |
the gift must be made after 30 June 2004 |
|
12A.2.5 |
Queensland Fire and Rescue Service |
Queensland |
the gift must be made after 22 December 2003 |
|
12A.2.6 |
State Emergency Service |
Queensland |
the gift must be made after 22 December 2003 |
|
12A.2.7 |
Fire and Emergency Services Authority of Western Australia |
Western Australia |
the gift must be made after 22 December 2003 |
|
12A.2.8 |
State Emergency Service South Australia |
South Australia |
the gift must be made after 22 December 2003 |
|
12A.2.9 |
Tasmania Fire Service |
Tasmania |
the gift must be made after 22 December 2003 |
|
12A.2.10 |
State Emergency Service |
Tasmania |
the gift must be made after 22 December 2003 |
|
12A.2.11 |
Rural Firefighting Service |
Australian Capital Territory |
the gift must be made after 22 December 2003 and before 1 July
2004 |
|
12A.2.12 |
ACT Emergency Service |
Australian Capital Territory |
the gift must be made after 22 December 2003 and before 1 July
2004 |
|
12A.2.13 |
ACT Rural Fire Service |
Australian Capital Territory |
the gift must be made after 30 June 2004 |
|
12A.2.14 |
ACT State Emergency Service |
Australian Capital Territory |
the gift must be made after 30 June 2004 |
14 Section 30-105 (table
item 13.2.1)
Omit “25 February 2004”, substitute “1 July
2004”.
15 Section 30-105 (table
item 13.2.5)
Omit “23 April 2004”, substitute “23 April
2006”.
16 Section 30-105 (at the end of the
table)
Add:
|
13.2.7 |
Lord Somers Camp and Power House |
the gift must be made after 4 March 2004 |
|
13.2.8 |
St George’s Cathedral Restoration Fund |
the gift must be made after 27 September 2004 and before
28 September 2006 |
17 Subsection 30-315(2) (after table
item 2)
Insert:
|
2AA |
ACT Emergency Service |
item 12A.2.12 |
|
2AB |
ACT Rural Fire Service |
item 12A.2.13 |
|
2AC |
ACT State Emergency Service |
item 12A.2.14 |
18 Subsection 30-315(2) (after table
item 17A)
Insert:
|
17B |
Australian Business Week Limited |
item 7.2.5 |
19 Subsection 30-315(2) (after table
item 30)
Insert:
|
30A |
CFA & Brigades Donations Fund |
item 12A.2.4 |
20 Subsection 30-315(2) (after table
item 31)
Insert:
|
31A |
City of Onkaparinga Memorial Gardens Association Inc |
item 5.2.24 |
|
31B |
Clontarf Foundation Inc. |
item 2.2.32 |
21 Subsection 30-315(2) (after table
item 38)
Insert:
|
38A |
Coolgardie Honour Roll Committee Fund |
item 5.2.22 |
22 Subsection 30-315(2) (after table
item 40A)
Insert:
|
40AA |
Country Fire Authority (Victoria) |
item 12A.2.2 |
23 Subsection 30-315(2) (after table
item 49)
Insert:
|
49A |
Finding Sydney Foundation |
item 5.2.25 |
|
49B |
Fire and emergency services |
section 30-102 |
|
49C |
Fire and Emergency Services Authority of Western Australia |
item 12A.2.7 |
24 Subsection 30-315(2) (after table
item 63)
Insert:
|
63A |
International Social Service - Australian Branch |
item 4.2.28 |
25 Subsection 30-315(2) (after table
item 68)
Insert:
|
68AA |
Lord Somers Camp and Power House |
item 13.2.7 |
|
68AB |
Lowy Institute for International Policy |
item 9.2.12 |
26 Subsection 30-315(2) (after table
item 94)
Insert:
|
94AA |
Queensland Fire and Rescue Service |
item 12A.2.5 |
27 Subsection 30-315(2) (after table
item 104B)
Insert:
|
104C |
Rural Firefighting Service (ACT) |
item 12A.2.11 |
28 Subsection 30-315(2) (after table
item 112AA)
Insert:
|
112AB |
State Emergency Service (New South Wales) |
item 12A.2.1 |
|
112AC |
State Emergency Service (Queensland) |
item 12A.2.6 |
|
112AD |
State Emergency Service South Australia |
item 12A.2.8 |
|
112AE |
State Emergency Service (Tasmania) |
item 12A.2.10 |
|
112AF |
St George’s Cathedral Restoration Fund |
item 13.2.8 |
29 Subsection 30-315(2) (after table
item 112C)
Insert:
|
112D |
Tamworth Waler Memorial Fund |
item 5.2.23 |
|
112E |
Tasmania Fire Service |
item 12A.2.9 |
30 Subsection 30-315(2) (after table
item 121)
Insert:
|
121A |
Victorian Crime Stoppers Program |
item 4.2.29 |
|
121B |
Victoria State Emergency Service |
item 12A.2.3 |
Income Tax Assessment Act
1997
1 Subsection 974-75(4)
(heading)
Omit “31 December 2002”, substitute
“30 June 2005”.
2 Paragraph 974-75(4)(d)
Omit “on or after 21 February 2001”, substitute “on
or before 30 June 2005”.
3 Subsection 974-75(4)
Omit “1 January 2003”, substitute “1 July
2005”.
Income Tax Assessment Act
1997
1 After section 40-50
Insert:
(1) These things are not the same
*depreciating asset for the purposes of
section 40-50 and Subdivision 40-F:
(a) a depreciating asset; and
(b) a repair of a capital nature, or an alteration, addition or extension,
to that asset that would, if it were a separate depreciating asset, be a
*water facility.
(2) These things are not the same
*depreciating asset for the purposes of
section 40-50 and Subdivision 40-G:
(a) a depreciating asset; and
(b) a repair of a capital nature, or an alteration, addition or extension,
to that asset that would, if it were a separate depreciating asset, be a
*landcare operation.
2 At the end of
section 40-515
Add:
(5) Paragraph (4)(a) does not apply to a
*water facility if the expenditure incurred on
the construction, manufacture, installation or acquisition of the water facility
was incurred by an *irrigation water
provider.
Meaning of irrigation water provider
(6) An irrigation water provider is an entity whose
*business is primarily and principally the
supply (otherwise than by using a *motor
vehicle) of water to entities for use in
*primary production businesses on land in
Australia.
3 Subsection 40-520(1)
Repeal the subsection, substitute:
(1) A water facility is:
(a) *plant or a structural improvement,
or a repair of a capital nature, or an alteration, addition or extension, to
plant or a structural improvement, that is primarily and principally for the
purpose of conserving or conveying water; or
(b) a structural improvement, or a repair of a capital nature, or an
alteration, addition or extension, to a structural improvement, that is
reasonably incidental to conserving or conveying water.
Example: Examples of a water facility include a dam, tank,
tank stand, bore, well, irrigation channel, pipe, pump, water tower and
windmill. Examples of things reasonably incidental to conserving or conveying
water include a culvert, a fence to prevent livestock entering an irrigation
channel and a bridge over an irrigation channel.
4 Subsection 40-525(1)
Repeal the subsection, substitute:
Water facilities
(1) The capital expenditure you incurred on the construction, manufacture,
installation or acquisition of the *water
facility must have been incurred:
(a) primarily and principally for the purpose of conserving or conveying
water for use in a *primary production business
that you conduct on land in Australia; or
(b) for expenditure incurred by an
*irrigation water provider—primarily and
principally for the purpose of conserving or conveying water for use in primary
production businesses conducted by other entities on land in Australia, being
entities supplied with water by the irrigation water provider.
5 At the end of subsection
40-555(1)
Add:
Note: A depreciating asset and a repair of a capital nature
or an alteration, addition or extension to that asset that is a water facility
are not the same depreciating asset for the purposes of section 40-50 and
this Subdivision: see section 40-53.
6 Subsection 40-555(2)
Repeal the subsection.
7 After subsection 40-630(1)
Insert:
(1A) A *rural land irrigation water
provider can deduct capital expenditure it incurs at a time in an income year on
a *landcare operation for:
(a) land in Australia that other entities use at the time for carrying on
*primary production businesses; or
(b) rural land in Australia that other entities use at the time for
carrying on *businesses for a
*taxable purpose from the use of that land
(except a business of *mining
operations);
being entities supplied with water by the rural land irrigation water
provider.
(1B) A rural land irrigation water provider is:
(a) an *irrigation water provider;
or
(b) an entity whose *business is
primarily and principally the supply (otherwise than by using a
*motor vehicle) of water to entities for use in
carrying on *businesses (except businesses of
*mining operations) using rural land in
Australia.
8 After subsection 40-630(2)
Insert:
(2A) In applying paragraph (2)(b) to capital expenditure incurred by
a *rural land irrigation water provider on a
dam or structural improvement, the requirement in paragraph 45-40(1)(c) that the
land on which the dam or structural improvement is situated be used for
agricultural or pastoral operations is to be disregarded.
Exception: deduction available under Subdivision 40-F
(2B) A *rural land irrigation water
provider cannot deduct an amount under this Subdivision for capital expenditure
if the entity can deduct an amount for that expenditure under
Subdivision 40-F.
9 At the end of
section 40-630
Add:
(4) Subsection (3) does not apply to expenditure incurred by a
*rural land irrigation water provider. Instead,
a rural land irrigation water provider must reduce its deduction in relation to
particular land by a reasonable amount to reflect an entity’s use of the
land in the income year after the rural land irrigation water provider incurred
the expenditure for a purpose other than a
*taxable purpose.
10 Paragraph 40-635(1)(f)
Omit “an extension, alteration or addition”, substitute
“a repair of a capital nature, or an alteration, addition or
extension,”.
11 At the end of subsection
40-635(1)
Add:
; or (g) constructing a structural improvement, or a repair of a capital
nature, or an alteration, addition or extension, to a structural improvement,
that is reasonably incidental to an asset described in paragraph (c) or
(d).
Note: A depreciating asset and a repair of a capital nature
or an alteration, addition or extension to that asset are not the same asset for
the purposes of section 40-50 and this Subdivision: see
section 40-53.
12 Subsection 995-1(1)
Insert:
irrigation water provider has the meaning given by
section 40-515.
13 Subsection 995-1(1)
Insert:
rural land irrigation water provider has the meaning given by
section 40-630.
14 Application
The amendments made by this Schedule apply to expenditure incurred on or
after 1 July 2004.
Fringe Benefits Tax
Assessment Act 1986
1 Paragraph 58C(1)(b)
After “sells”, insert “, or proposes to
sell,”.
2 Paragraphs 58C(1)(d) and (e)
Repeal the paragraphs, substitute:
and (d) at the notice time, the employee occupied, or proposed to occupy,
the dwelling, or proposed to occupy the proposed dwelling, as his or her usual
place of residence;
3 After paragraph 58C(2)(a)
Insert:
(aa) the employee or associate entered into a contract for the sale of the
interest or right within 2 years after the day (the new employment
day) on which the employee commenced to perform the duties of that
employment at the employee’s new place of employment;
4 Paragraph 58C(3)(c)
Repeal the paragraph, substitute:
(c) the employee or associate entered into a contract for the acquisition
of the interest or right on a day (the contract day) within 4
years after the new employment day;
(ca) if, on the contract day, the employee or associate holds an interest
or right in another dwelling in a situation where:
(i) if that interest or right were sold within 2 years after the new
employment day; and
(ii) if a benefit of a kind referred to in subsection (2) were
provided in relation to that interest or right;
the benefit would be an exempt benefit under
subsection (2)—not more than 2 years have elapsed since the new
employment day;
5 At the end of
section 58C
Add:
(5) If:
(a) a benefit is an exempt benefit in relation to a year of tax under
subsection (3); and
(b) paragraph (3)(ca) applied to the employee; and
(c) the employee or associate does not enter into a contract for the sale
of the interest or right in the other dwelling referred to in that paragraph
within 2 years after the new employment day;
this Act has effect as if:
(d) a benefit equivalent to the exempt benefit were provided in respect of
the employment of the employee in, or in respect of, the year of tax in which
that period of 2 years expired; and
(e) that equivalent benefit were not an exempt benefit.
6 Application
The amendments made by this Schedule apply to benefits provided in a year
of tax that begins on or after 1 April 2004.
Income Tax Assessment Act
1997
1 Section 104-5 (table item dealing with CGT
event G3)
Repeal the item, substitute:
|
G3 Liquidator or administrator declares shares or financial instruments
worthless |
when declaration was made |
no capital gain |
shares’ or financial instruments’ reduced cost base |
2 Section 104-145
Repeal the section, substitute:
(1) CGT event G3 happens if you own
*shares in a company, or financial instruments
issued by or created by or in relation to a company, and a liquidator or
administrator of the company declares in writing that the liquidator or
administrator has reasonable grounds to believe (as at the time of the
declaration) that:
(a) for shares—there is no likelihood that shareholders in the
company, or shareholders of the relevant class of shares, will receive any
further distribution for their shares; or
(b) for financial instruments—the instruments, or a class of
instruments that includes instruments of that kind, have no value or have only
negligible value.
(2) The time of the event is when the declaration was made.
(3) Examples of financial instruments referred to in subsection (1)
are:
(a) *debentures, bonds or promissory
notes issued by the company; and
(b) loans to the company; and
(c) futures contracts, forward contracts or currency swap contracts
relating to the company; and
(d) rights or options to acquire an asset referred to in a preceding
paragraph of this subsection; and
(e) rights or options to acquire *shares
in the company.
(4) You can choose to make a capital loss equal to the
*reduced cost base of your
*shares or financial instruments (as at the
time of the declaration).
(5) If you make the choice, the *cost
base and *reduced cost base of the
*shares or financial instruments are reduced to
nil just after the declaration was made.
Note: This is for the purpose of working out if you make a
capital gain or loss from any later CGT event in relation to the shares or
financial instruments.
Exceptions
(6) You cannot choose to make a *capital
loss if:
(a) you *acquired the shares or financial
instruments before 20 September 1985; or
(b) the shares or financial instruments were
*revenue assets at the time when the
declaration was made.
(7) You cannot choose to make a *capital
loss for a *qualifying share if:
(a) you did not make an election for the
*share under section 139E of the Income
Tax Assessment Act 1936 for the income year in which you acquired (within
the meaning of Subdivision C of Division 13A of Part III of that Act)
the share; and
(b) the declaration was made no later than 30 days after the
*cessation time for the share.
(8) You cannot choose to make a *capital
loss for a financial instrument that is a right you acquired (within the meaning
of Subdivision C of Division 13A of Part III of the Income Tax
Assessment Act 1936), or would have so acquired apart from
section 139DD of that Act, under an
*employee share scheme.
3 Section 112-45 (table item dealing with CGT
event G3)
Omit “A liquidator declares shares to be worthless”, substitute
“A liquidator or administrator declares shares or financial instruments to
be worthless”.
4 Section 136-10 (table item dealing with CGT
event G3)
Repeal the item, substitute:
|
G3 |
Liquidator or administrator declares shares or financial instruments
worthless |
the shares or financial instruments |
3, 5, 7, 8, 9 |
5 Paragraph 165-115GB(1)(b)
Repeal the paragraph, substitute:
(b) a liquidator or administrator of the company declares that shares or
financial instruments are worthless (CGT event G3).
6 Subsection 165-115H(2)
After “declaration by a liquidator”, insert “or
administrator”.
7 Section 165-115N
Repeal the section, substitute:
If a liquidator or administrator makes a declaration referred to in
section 104-145 in relation to a company, the time of the declaration is
also an alteration time in respect of the company.
8 Application
The amendments made by this Schedule apply to declarations by liquidators
or administrators made after the day on which this Act receives the Royal
Assent.
A New Tax System (Goods and
Services Tax) Act 1999
1 After subsection 38-190(2)
Insert:
(2A) A supply covered by any of items 2 to 4 in the table in
subsection (1) is not *GST-free if
the acquisition of the supply relates (whether directly or indirectly, or wholly
or partly) to the making of a supply of *real
property situated in Australia that would be, wholly or partly,
*input taxed under Subdivision 40-B or
40-C.
Note: Subdivision 40-B deals with the supply of
premises (including a berth at a marina) by way of lease, hire or licence.
Subdivision 40-C deals with the sale of residential premises and the supply
of residential premises by way of long-term lease.
2 Subsection 38-190(3)
After “(2)”, insert “or (2A)”.
3 Application
(1) The amendments made by this Schedule apply to a supply covered by any
of items 2 to 4 in the table in subsection 38-190(1) of the A New Tax
System (Goods and Services Tax) Act 1999 made on or after the first day of
the first quarterly tax period that commences after the day on which this Act
receives the Royal Assent.
(2) In this item:
quarterly tax period means a period of 3 months that
commences on 1 January, 1 April, 1 July or
1 October.
Income Tax Assessment Act
1997
1 At the end of
section 61-350
Add:
If you are entitled to a tax offset because you adopt a child, you might
also be entitled to an offset if the child was in your care before the
adoption.
2 Group heading before
section 61-355
Repeal the heading, substitute:
3 Section 61-355 (heading)
Repeal the heading, substitute:
4 At the end of subsection
61-355(1)
Add:
Note: If you are entitled to a tax offset because you adopt
a child, you might also be entitled to an offset if the child was in your care
before the adoption (see section 61-440).
5 Section 61-365
After “*tax offset”, insert
“under section 61-355”.
6 Section 61-370
After “*tax offset”, insert
“under section 61-355”.
7 Paragraph 61-370(b)
Omit “the offset”, substitute “a tax
offset”.
8 Subsection 61-375(2)
After “*tax offset”, insert
“under section 61-355”.
9 Subsection 61-380(1)
After “*tax offset”, insert
“under section 61-355”.
10 Group heading before
section 61-385
Repeal the heading, substitute:
11 Section 61-385
(heading)
Repeal the heading, substitute:
12 Subsection 61-385(1)
After “61-355”, insert “or 61-440”.
13 After subsection 61-385(1)
Insert:
(1A) However, if you are entitled to a
*tax offset for a child for a particular income
year under both of sections 61-355 and 61-440, you may only transfer one of
those entitlements to another person if you also transfer the other entitlement
to the same person.
14 Group heading before
section 61-405
Repeal the heading, substitute:
15 Group heading before
section 61-415
Repeal the heading, substitute:
16 Section 61-415
After “*tax offset”, insert
“under sections 61-355 and 61-440”.
17 Subsections 61-425(1) and
(2)
After “*tax offset”, insert
“under either or both of sections 61-355 and 61-440”.
18 At the end of subsection
61-430(1)
Add:
Note: If a child is in your care before you adopt the child,
your base year can instead be the year the child was first in your care or the
year before that (see section 61-450).
19 Subsection 61-430(3)
Repeal the subsection, substitute:
(3) A choice cannot be made:
(a) after you have claimed the *tax
offset under section 61-355 for any income year; or
(b) after you have transferred your entitlement to the tax offset under
section 61-355 for any income year.
20 Section 61-430 (link
note)
Repeal the link note, substitute:
(1) You are entitled to a *tax offset for
a child for an income year if:
(a) you meet the conditions in paragraph (3)(a) at any time in the
income year; and
(b) you meet the conditions in paragraphs (3)(b), (c) and
(d).
Note: You are not entitled to a tax offset under this
section if section 61-455 applies to you.
(2) To meet those conditions for a child at a given time is to have a
primary entitlement to the *tax
offset for the child at that time.
(3) The conditions are that:
(a) at the time:
(i) the child is less than 5; and
(ii) the child is in your care (but you are not legally responsible for
the child); and
(iii) you are an Australian resident; and
(b) you meet the conditions in subsection 61-355(3) in relation to the
child in that year or a later income year; and
(c) you have become legally responsible for the child by adopting the
child; and
(d) the time is on or after 1 July 2001 and before 1 July
2004.
Note: See section 61-445 for when a child is first in
your care.
For the purposes of sections 61-440 and 61-450, a child is first in
your care on the date evidenced in writing by a court or relevant
department of the relevant State or Territory.
Your base year can relate to a year during which a child was in your
care before you adopted the child
(1) This section defines your base year if you are entitled
to a *tax offset for a child under
section 61-440 (which is where a child is in your care before you legally
adopt the child).
Primary entitlement
(2) Your base year for a
*tax offset under sections 61-355 and
61-440 is:
(a) if you were an Australian resident at any time in the income year (the
previous income year) just before the income year in which the
child was first in your care—the later of the following years:
(i) the previous income year;
(ii) the income year commencing on 1 July 2000; and
(b) otherwise—the later of the following years:
(i) the earliest income year in which you were an Australian resident and
the child was in your care;
(ii) the income year commencing on 1 July 2001.
Note: See section 61-445 for when a child is first in
your care.
(3) If paragraph (2)(a) applies to you, you may choose, in the
*approved form, the later of the following
years to be your base year:
(a) the year the child was first in your care;
(b) the income year commencing on 1 July 2001.
A choice cannot be revoked.
(4) A choice cannot be made:
(a) after you have claimed the *tax
offset under section 61-440 for any income year; or
(b) after you have transferred your entitlement to the tax offset under
section 61-440 for any income year.
Transferred entitlement
(5) Your base year for an entitlement transferred to you
under section 61-385 is the income year before the first income year for
which the entitlement for the child was transferred to you.
This Subdivision as in force on 30 June 2004 (instead of this
Subdivision as amended by Schedule 8 to the Tax Laws Amendment (2004
Measures No. 5) Act 2004) continues to apply to you if the amount of
all *tax offsets to which you would be entitled
under this Subdivision as in force on that date is more than the amount of all
tax offsets to which you would be entitled under the amended
Subdivision.
Note: The effect of this is that:
(a) you are only entitled to a tax offset in respect of days
for which you are legally responsible for the child (and not days during which
the child is in your care); and
(b) your base year is the income year in which the child
event happened or the year before.
21 Subsection 995-1(1) (both definitions of base
year)
Repeal the definitions, substitute:
base year:
(a) for an entitlement to a *tax offset
under Subdivision 61-I—has the meaning given by sections 61-430
and 61-450; and
(b) otherwise—has the meaning given by sections 45-320 and
45-470 in Schedule 1 to the Taxation Administration Act
1953.
22 Subsection 995-1(1) (definition of primary
entitlement)
Omit “subsection 61-355(2)”, substitute “subsections
61-355(2) and 61-440(2)”.
23 Application of amendments
The amendments made by this Schedule apply to assessments for income years
that commence on or after 1 July 2001.
Taxation Laws Amendment Act
(No. 8) 2003
1 Subsection 2(1) (table
item 5)
Repeal the item, substitute:
|
5. Schedule 7, items 6 to 8 |
Immediately after the commencement of Schedule 7 to the Taxation
Laws Amendment Act (No. 1) 2004. |
30 June 2003 |
Income Tax Assessment Act
1997
1 After section 138-20
Insert:
For the purposes of applying this Division, if the trigger event happens
because all or part of the *life insurance
business of a *life insurance company (the
originating company) is transferred to another life insurance
company (the recipient company):
(a) in accordance with a scheme confirmed by the Federal Court of
Australia under Part 9 of the Life Insurance Act 1995; or
(b) under the Financial Sector (Transfers of Business) Act
1999;
an amount equal to the *market value of
any liabilities assumed by the recipient company in respect of the transfer is
taken to be money received by the originating company in respect of the transfer
(except to the extent that the amount is otherwise taken into account as
*capital proceeds in respect of the
transfer).
2 At the end of subsection
320-30(1)
Add:
Note: The effect of this section is modified when the life
insurance business of a life insurance company is transferred to another life
insurance company: see section 320-340.
3 At the end of subsection
320-37(1)
Add:
Note: The effect of this section is modified when the life
insurance business of a life insurance company is transferred to another life
insurance company: see section 320-325.
4 At the end of subsection
320-40(1)
Add:
Note: The effect of this section is modified when the life
insurance business of a life insurance company is transferred to another life
insurance company: see section 320-345.
5 At the end of
Division 320
Add:
This Subdivision contains special rules that apply when all or part of the
life insurance business of a life insurance company is transferred to another
life insurance company under the Life Insurance Act 1995 or the
Financial Sector (Transfers of Business) Act 1999.
Table of sections
Operative provisions
320-305 When this Subdivision applies
320-310 Special deductions and amounts of assessable
income
320-315 Virtual PST and segregated exempt
assets
320-320 Certain amounts treated as life insurance
premiums
320-325 Friendly societies
320-330 Immediate annuities
320-335 Parts of assets treated as separate
assets
320-340 Continuous disability policies
320-345 Exemption of management fees
The rules in this Subdivision have effect if all or part of the
*life insurance business of a
*life insurance company (the originating
company) is transferred to another life insurance company (the
recipient company):
(a) in accordance with a scheme confirmed by the Federal Court of
Australia under Part 9 of the Life Insurance Act 1995; or
(b) under the Financial Sector (Transfers of Business) Act
1999.
Deduction for originating company
(1) If the originating company pays an amount to the recipient company in
respect of liabilities under the *net risk
components of *life insurance policies
transferred to the recipient company, the originating company can deduct that
amount for the income year in which the transfer took place.
Amount included in originating company’s assessable
income
(2) If the originating company receives an amount from the recipient
company in respect of liabilities under the
*net risk components of
*life insurance policies transferred to the
recipient company, that amount is included in the assessable income of the
originating company for the income year in which the transfer took
place.
Deduction for recipient company
(3) If the recipient company pays an amount to the originating company in
respect of liabilities under the *net risk
components of *life insurance policies
transferred to the recipient company, the recipient company can deduct that
amount for the income year in which the transfer took place.
(1) Assets that were *virtual PST assets
of the originating company just before the transfer took place and that are
transferred to the recipient company become virtual PST assets of the recipient
company.
(2) Assets that were *segregated exempt
assets of the originating company just before the transfer took place and that
are transferred to the recipient company become segregated exempt assets of the
recipient company.
(1) This Division applies to the recipient company as if the amount or
value of any consideration received by the recipient company in respect of
liabilities under *life insurance policies
transferred to the company were *life insurance
premiums paid to the company at the time the transfer took place.
(2) However, subsection (1) does not apply to
consideration:
(a) that relates to liabilities that, just before the transfer took place,
were discharged out of the originating company’s
*virtual PST assets or
*segregated exempt assets; or
(b) that relates to the part of a *life
insurance policy that has been reinsured under a
*contract of reinsurance (except consideration
that relates to a risk, or part of a risk, in relation to which subsection
148(1) of the Income Tax Assessment Act 1936 applies).
(1) This section has effect if the originating company and the recipient
company were *friendly societies just before
the transfer took place.
(2) For the purposes of paragraph 320-37(1)(d), an
*income bond,
*funeral policy,
*sickness policy or
*scholarship plan issued by the recipient
company in substitution for an income bond, funeral policy, sickness policy or
scholarship plan (the original policy) transferred from the
originating company is taken to have been issued at the time the original policy
was issued if the terms of the substituted policy are not materially different
from those of the original policy.
For the purposes of section 320-246, a
*life insurance policy that provides for an
*immediate annuity issued by the recipient
company in substitution for a policy (also the original policy)
transferred from the originating company is taken to have been issued at the
time the original policy was issued if the terms of the substituted policy are
not materially different from those of the original policy.
If:
(a) an asset is transferred to the recipient company from the originating
company; and
(b) parts of that asset were, under section 320-170 or 320-225 of the
Income Tax (Transitional Provisions) Act 1997, treated as separate assets
of the originating company just before the transfer took place;
those parts of that asset are also treated as separate assets of the
recipient company.
(1) This section has effect if:
(a) the originating company and the recipient company were members of the
same *wholly-owned group just before the
transfer took place; and
(b) all of the liabilities under the
*continuous disability policies of the
originating company are transferred to the recipient company; and
(c) the transfer took place before the income year in which 1 July
2005 occurs; and
(d) an amount (the section 320-30 amount) would have
been included in the assessable income of the originating company under
section 320-30 for the income year in which the transfer took place if the
transfer had not taken place.
(2) Section 320-30 does not apply to the originating company for the
income year in which the transfer took place or a later income year.
(3) The amount worked out using this formula is included in the assessable
income of the originating company for the income year in which the transfer took
place:
where:
continuous disability policy days means the number of days
during the income year in which the transfer took place that the originating
company held *continuous disability
policies.
(4) The section 320-30 amount, reduced by the amount included in the
assessable income of the originating company under subsection (3), is
included in the assessable income of the recipient company for the income year
in which the transfer took place.
(5) For each income year after the year in which the transfer took place
and that is a relevant income year for the purposes of section 320-30, the
recipient company’s assessable income includes the amount that would have
been included in the originating company’s assessable income under that
section for that year if the transfer had not taken place.
(1) This section has effect if:
(a) the originating company and the recipient company were members of the
same *wholly-owned group just before the
transfer took place; and
(b) a *life insurance policy (also the
original policy):
(i) is constituted by a contract made with the originating company before
1 July 2000; and
(ii) is transferred to the recipient company before 1 July
2005.
(2) For the purposes of section 320-40, a
*life insurance policy issued by the recipient
company in substitution for the original policy is taken to have been
constituted by a contract made with the recipient company before 1 July
2000 if the terms of the substituted policy are not materially different from
those of the original policy.
(3) Subsection 320-40(4) applies to so much of the sum of the amounts
applicable in respect of the substituted policy under subsections 320-40(5), (6)
and (7) as does not exceed any fees or charges made by the recipient company
that the originating company would have been entitled to make under the terms of
the original policy as applying just before 1 July 2000.
6 Subsection 995-1(1) (at the end of the definition
of life insurance premium)
Add:
Note: Certain other amounts are treated as life insurance
premiums when the life insurance business of a life insurance company is
transferred to another life insurance company: see
section 320-320.
Income Tax (Transitional
Provisions) Act 1997
7 Division 126 (heading)
Repeal the heading, substitute:
8 At the end of
Division 126
Add:
Table of sections
126-150 Roll-over on transfer of life insurance
business
126-155 When there is a roll-over
126-160 Effects of roll-over
126-165 References to Subdivision 126-B of the
Income Tax Assessment Act 1997
(1) There may be a roll-over if:
(a) a CGT event happens because all or part of the life insurance business
of a life insurance company (the originating company) is
transferred to another life insurance company (the recipient
company):
(i) in accordance with a scheme confirmed by the Federal Court of
Australia under Part 9 of the Life Insurance Act 1995; or
(ii) under the Financial Sector (Transfers of Business) Act 1999;
and
(b) the originating company and the recipient company were members of the
same wholly-owned group just before the transfer; and
(c) one of these happens:
(i) a CGT asset (the original asset) of the originating
company becomes an asset of the recipient company; or
(ii) a CGT asset of the originating company ends and the recipient company
acquires an equivalent replacement asset; or
(iii) the originating company creates a CGT asset in the recipient
company; and
(d) the transfer takes place:
(i) before 30 June 2004; or
(ii) if the originating company and the recipient company are members of
the same consolidated group or consolidatable group and the head company of that
group has a substituted accounting period—before the end of the head
company’s income year in which 30 June 2004 occurs.
(2) The CGT asset involved (the roll-over asset) must not be
trading stock of the recipient company just after the time of the
transfer.
(3) If:
(a) the roll-over asset is a right or convertible note referred to in
Division 130, or an option referred to in Division 134, of the
Income Tax Assessment Act 1997; and
(b) the recipient company acquires another CGT asset by exercising the
right or option or by converting the convertible note;
the other asset cannot become trading stock of the recipient company just
after the recipient company acquired it.
(1) There is a roll-over if:
(a) either:
(i) the CGT event would have resulted in the originating company making a
capital gain, or making no capital loss and not being entitled to a deduction;
or
(ii) the originating company acquired the roll-over asset before
20 September 1985; and
(b) the originating company and recipient company both choose in writing
to obtain a roll-over.
(2) There is also a roll-over if the CGT event would have resulted in the
originating company making a capital loss and the originating company and
recipient company both choose in writing to obtain a roll-over.
(3) Any such choice must be made by the later of:
(a) 12 months after the day on which the Tax Laws Amendment (Transfer
of Life Insurance Business and Other Measures) Act 2004 received the Royal
Assent; and
(b) a later day allowed by the Commissioner.
(1) A capital gain or capital loss the originating company makes from the
CGT event is disregarded.
(2) The first element of the cost base of the original asset or the
replacement asset for the recipient company is the cost base of the original
asset for the originating company just before the time of the CGT
event.
(3) The first element of the reduced cost base of the original asset or
the replacement asset for the recipient company is worked out
similarly.
(4) For a case where the originating company creates a CGT asset in the
recipient company, the first element of the asset’s cost base (in
the hands of the recipient company) is the amount applicable under this table.
The first element of its reduced cost base is worked out similarly.
|
Creating a CGT asset |
|
|---|---|
|
CGT event |
Applicable amount |
|
D1 |
the incidental costs the originating company incurred that relate to the
CGT event |
|
D2 |
the expenditure the originating company incurred to grant the
option |
|
D3 |
the expenditure the originating company incurred to grant the
right |
|
F1 |
the expenditure the originating company incurred on the grant, renewal or
extension of the lease |
The expenditure can include giving property: see section 103-5 of
the Income Tax Assessment Act 1997.
(5) If the originating company acquired the original asset before
20 September 1985, the recipient company is taken to have acquired the
original asset or the replacement asset before that day.
A reference in an Act to a roll-over under Subdivision 126-B of the
Income Tax Assessment Act 1997 includes a reference to a roll-over under
this Subdivision.
Example: Examples of the operation of this provision
include:
(a) CGT event J1 may happen if the recipient company stops
being a 100% subsidiary of a member of a company group after a roll-over under
this Subdivision; and
(b) a tax cost setting amount may be affected under
section 705-50 because of a roll-over under this Subdivision;
and
(c) an allocable cost amount may be affected under
section 705-150 because of a roll-over under this
Subdivision.
9 Subsection 126-150(3)
Repeal the subsection, substitute:
(3) If:
(a) the roll-over asset is a right or convertible interest referred to in
Division 130, or an option referred to in Division 134, of the
Income Tax Assessment Act 1997 or an exchangeable interest; and
(b) the recipient company acquires another CGT asset by exercising the
right or option or by converting the convertible interest or in exchange for the
disposal or redemption of the exchangeable interest;
the other asset cannot become trading stock of the recipient company just
after the recipient company acquired it.
10 At the end of
Division 170
Add:
If:
(a) all or part of the life insurance business of a life insurance company
(the originating company) is transferred to another life insurance
company (the recipient company):
(i) in accordance with a scheme confirmed by the Federal Court of
Australia under Part 9 of the Life Insurance Act 1995; or
(ii) under the Financial Sector (Transfers of Business) Act 1999;
and
(b) the originating company makes a capital loss from a CGT asset as a
result of the transfer; and
(c) that capital loss is disregarded because of Subdivision 126-B of
this Act;
Subdivision 170-C of the Income Tax Assessment Act 1997 has
effect as if:
(d) that capital loss were a net capital loss transferred by the
originating company to the recipient company by an agreement under
section 170-150 of that Act; and
(e) the application year referred to in section 170-225 of that Act
were the year in which the transfer of life insurance business took
place.
11 Application
(1) The amendments made by this Schedule (except the amendment made by
item 9) apply to transfers of life insurance business that take place on or
after 1 July 2000.
(2) The amendment made by item 9 of this Schedule applies to the
conversion of a convertible interest, or the disposal or redemption of an
exchangeable interest, on or after 1 July 2001.