TAX LAWS AMENDMENT (2010 MEASURES NO. 2) BILL 2010

i Tax Laws Amendment (2010 Measures No. 2) Bill 2010 No. , 2010

Contents

1 Short

title

...........................................................................................

2 Commencement

.................................................................................

3 Schedule(s)

........................................................................................

Schedule 1--Distributions to entities connected with a private

company

Income Tax Assessment Act 1936

Income Tax Assessment Act 1997

Schedule 2--Extending the TFN withholding arrangements to

closely held trusts, including family trusts

Part 1--Main amendments

Income Tax Assessment Act 1936

Taxation Administration Act 1953

Part 2--Amendments contingent on the Tax Laws Amendment

(2010 Measures No. 1) Act 2010

Income Tax Assessment Act 1997

Schedule 3--Exemption of HECS-HELP benefit

Income Tax Assessment Act 1997

Schedule 4--Deductible gift recipients

Income Tax Assessment Act 1997

Schedule 5--Global Carbon Capture and Storage Institute Ltd

Part 1--Amendments commencing on Royal Assent

Division 1--Main amendment

Income Tax Assessment Act 1997

Division 2--Consequential amendments

Income Tax Assessment Act 1936

Income Tax Assessment Act 1997

Part 2--Sunsetting on 1 January 2018

Income Tax Assessment Act 1997

Tax Laws Amendment (2010 Measures No. 2) Bill 2010 No. , 2010 ii

Schedule 6--Repeal of certain unlimited periods for amending

assessments

A New Tax System (Pay As You Go) Act 1999

Income Tax Assessment Act 1936

Income Tax Assessment Act 1997

New Business Tax System (Capital Gains Tax) Act 1999

New Business Tax System (Consolidation) Act (No. 1) 2002

New Business Tax System (Consolidation and Other Measures) Act

2003

New Business Tax System (Consolidation and Other Measures) Act

(No. 1) 2002

New Business Tax System (Consolidation, Value Shifting, Demergers

and Other Measures) Act 2002

New Business Tax System (Income Tax Rates) Act (No. 2) 1999

New Business Tax System (Miscellaneous) Act (No. 1) 2000

New Business Tax System (Miscellaneous) Act (No. 2) 2000

New Business Tax System (Taxation of Financial Arrangements) Act

(No. 1) 2003

Petroleum (Timor Sea Treaty) (Consequential Amendments) Act 2003

Taxation Laws Amendment Act 1985

Taxation Laws Amendment Act 1986

Taxation Laws Amendment Act 1987

Taxation Laws Amendment Act 1988

Taxation Laws Amendment Act 1989

Taxation Laws Amendment Act 1990

Taxation Laws Amendment Act 1991

Taxation Laws Amendment Act 1992

Taxation Laws Amendment Act 1993

Taxation Laws Amendment Act 1994

Taxation Laws Amendment Act (No. 1) 1995

Taxation Laws Amendment Act (No. 1) 1996

Taxation Laws Amendment Act (No. 1) 1997

Taxation Laws Amendment Act (No. 1) 1998

Taxation Laws Amendment Act (No. 1) 1999

iii Tax Laws Amendment (2010 Measures No. 2) Bill 2010 No. , 2010

Taxation Laws Amendment Act (No. 1) 2004

Taxation Laws Amendment Act (No. 2) 1985

Taxation Laws Amendment Act (No. 2) 1986

Taxation Laws Amendment Act (No. 2) 1987

Taxation Laws Amendment Act (No. 2) 1988

Taxation Laws Amendment Act (No. 2) 1989

Taxation Laws Amendment Act (No. 2) 1990

Taxation Laws Amendment Act (No. 2) 1991

Taxation Laws Amendment Act (No. 2) 1992

Taxation Laws Amendment Act (No. 2) 1993

Taxation Laws Amendment Act (No. 2) 1994

Taxation Laws Amendment Act (No. 2) 1995

Taxation Laws Amendment Act (No. 2) 1996

Taxation Laws Amendment Act (No. 2) 1997

Taxation Laws Amendment Act (No. 2) 1999

Taxation Laws Amendment Act (No. 2) 2000

Taxation Laws Amendment Act (No. 2) 2003

Taxation Laws Amendment Act (No. 2) 2004

Taxation Laws Amendment Act (No. 3) 1985

Taxation Laws Amendment Act (No. 3) 1987

Taxation Laws Amendment Act (No. 3) 1989

Taxation Laws Amendment Act (No. 3) 1990

Taxation Laws Amendment Act (No. 3) 1991

Taxation Laws Amendment Act (No. 3) 1992

Taxation Laws Amendment Act (No. 3) 1993

Taxation Laws Amendment Act (No. 3) 1994

Taxation Laws Amendment Act (No. 3) 1995

Taxation Laws Amendment Act (No. 3) 1997

Taxation Laws Amendment Act (No. 3) 1998

Taxation Laws Amendment Act (No. 3) 2002

Taxation Laws Amendment Act (No. 3) 2003

Taxation Laws Amendment Act (No. 4) 1985

Taxation Laws Amendment Act (No. 4) 1986

Tax Laws Amendment (2010 Measures No. 2) Bill 2010 No. , 2010 iv

Taxation Laws Amendment Act (No. 4) 1987

Taxation Laws Amendment Act (No. 4) 1988

Taxation Laws Amendment Act (No. 4) 1989

Taxation Laws Amendment Act (No. 4) 1990

Taxation Laws Amendment Act (No. 4) 1992

Taxation Laws Amendment Act (No. 4) 1994

Taxation Laws Amendment Act (No. 4) 1995

Taxation Laws Amendment Act (No. 4) 1997

Taxation Laws Amendment Act (No. 4) 1999

Taxation Laws Amendment Act (No. 4) 2000

Taxation Laws Amendment Act (No. 4) 2002

Taxation Laws Amendment Act (No. 4) 2003

Taxation Laws Amendment Act (No. 5) 1988

Taxation Laws Amendment Act (No. 5) 1989

Taxation Laws Amendment Act (No. 5) 1990

Taxation Laws Amendment Act (No. 5) 1992

Taxation Laws Amendment Act (No. 5) 2000

Taxation Laws Amendment Act (No. 5) 2001

Taxation Laws Amendment Act (No. 5) 2002

Taxation Laws Amendment Act (No. 5) 2003

Taxation Laws Amendment Act (No. 6) 1992

Taxation Laws Amendment Act (No. 6) 2000

Taxation Laws Amendment Act (No. 6) 2001

Taxation Laws Amendment Act (No. 6) 2003

Taxation Laws Amendment Act (No. 7) 2000

Taxation Laws Amendment Act (No. 8) 2003

Taxation Laws Amendment (Company Distributions) Act 1987

Taxation Laws Amendment (Earlier Access to Farm Management

Deposits) Act 2002

Taxation Laws Amendment (Foreign Income) Act 1990

Taxation Laws Amendment (Foreign Income Measures) Act 1997

Taxation Laws Amendment (Fringe Benefits and Substantiation) Act

1987

v Tax Laws Amendment (2010 Measures No. 2) Bill 2010 No. , 2010

Taxation Laws Amendment (Medicare Levy and Medicare Levy

Surcharge) Act 2002

Taxation Laws Amendment (Software Depreciation) Act 1999

Taxation Laws Amendment (Structured Settlements and Structured

Orders) Act 2002

Taxation Laws Amendment (Superannuation) Act 1989

Taxation Laws Amendment (Superannuation) Act 1992

Taxation Laws Amendment (Superannuation) Act 1993

Taxation Laws Amendment (Superannuation) Act (No. 2) 2002

Taxation Laws Amendment (Trust Loss and Other Deductions) Act

1998

Taxation Laws (Technical Amendments) Act 1998

Tax Laws Amendment (2004 Measures No. 1) Act 2004

Tax Laws Amendment (2004 Measures No. 2) Act 2004

Tax Laws Amendment (2004 Measures No. 3) Act 2004

Tax Laws Amendment (2004 Measures No. 6) Act 2005

Tax Laws Amendment (2004 Measures No. 7) Act 2005

Tax Laws Amendment (Medicare Levy and Medicare Levy Surcharge)

Act 2004

Tax Laws Amendment (Medicare Levy and Medicare Levy Surcharge)

Act 2005

Tax Laws Amendment (2010 Measures No. 2) Bill 2010 No. , 2010 1

A Bill for an Act to amend the law relating to

taxation, and for related purposes

The Parliament of Australia enacts:

1 Short title

This Act may be cited as the Tax Laws Amendment (2010

Measures No. 2) Act 2010.

2 Commencement

(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.

2 Tax Laws Amendment (2010 Measures No. 2) Bill 2010 No. , 2010

Commencement information

Column 1

Column 2

Column 3

Provision(s)

Commencement

Date/Details

1. Sections 1 to 3

and anything in

this Act not

elsewhere covered

by this table

The day this Act receives the Royal Assent.

2. Schedule 1

The day after this Act receives the Royal

Assent.

3. Schedule 2,

Part 1

The later of:

(a) the day this Act receives the Royal

Assent; and

(b) 1 July 2010.

4. Schedule 2,

item 26

The latest of:

(a) the start of the day this Act receives the

Royal Assent; and

(b) the start of 1 July 2010; and

Schedule 6 to the Tax Laws Amendment

(2010 Measures No. 1) Act 2010

commences.

However, the provision(s) do not commence

at all if the event mentioned in paragraph (c)

does not occur.

5. Schedule 2,

item 27

The later of:

(a) the day this Act receives the Royal

Assent; and

(b) 1 July 2010.

However, if item 153 of Schedule 6 to the

Tax Laws Amendment (2010 Measures

No. 1) Act 2010 commences at or before that

time, the provision(s) do not commence at

all.

6. Schedules 3

and 4

The day this Act receives the Royal Assent.

7. Schedule 5,

Part 1

The day this Act receives the Royal Assent.

8. Schedule 5,

1 January 2018.

1 January 2018

Tax Laws Amendment (2010 Measures No. 2) Bill 2010 No. , 2010 3

Commencement information

Column 1

Column 2

Column 3

Provision(s)

Commencement

Date/Details

Part 2

9. Schedule 6

The day after this Act receives the Royal

Assent.

Note:

This table relates only to the provisions of this Act as originally

passed by both Houses of 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.

3 Schedule(s)

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.

Schedule 1 Distributions to entities connected with a private company

4 Tax Laws Amendment (2010 Measures No. 2) Bill 2010 No. , 2010

Schedule 1--Distributions to entities

connected with a private company

Income Tax Assessment Act 1936

1 Subsection 6(1)

Insert:

corporate limited partnership has the meaning given by

section 94D.

2 Subsection 6(1)

Insert:

dwelling has the meaning given by the Income Tax Assessment Act

1997.

3 Subsection 6(1)

Insert:

foreign tax has the meaning given by section 6AB.

4 Subsection 6(1)

Insert:

once-only deduction: a deduction in a year of income in respect of

a percentage of expenditure is a once-only deduction, in relation to

the expenditure, if no deduction is allowable in respect of a

percentage of the expenditure in any other year of income.

5 Subsection 21A(5) (definition of once-only deduction)

Repeal the definition.

6 Subsection 26AJ(11) (definition of once-only deduction)

Repeal the definition.

7 Section 94B (definition of corporate limited partnership)

Repeal the definition.

Distributions to entities connected with a private company Schedule 1

Tax Laws Amendment (2010 Measures No. 2) Bill 2010 No. , 2010 5

8 At the end of section 94N

Add:

Note: Division

(Distributions

to entities connected with a private

company) applies to certain corporate limited partnerships in the same

way as it applies to private companies: see section 109BB.

9 Section 109B

After:

An amount may be treated as a dividend even if it is paid or lent by

the company to the shareholder or associate through one or more

interposed entities. (See Subdivision E.)

Insert:

An amount may also be included in the assessable income of a

shareholder or shareholder's associate if:

(a)

a company has an unpaid present entitlement to

income of a trust; and

(b)

the trustee makes a payment or loan to, or forgives

a debt of, the shareholder or associate.

(See Subdivisions EA and EB.)

10 Subdivision AA of Division 7A of Part III (heading)

Repeal the heading, substitute:

Subdivision AA--Application of Division

11 At the end of Subdivision AA of Division 7A of Part III

Add:

109BB Application of Division to closely-held corporate limited

partnerships

This Division applies to a corporate limited partnership in relation

to a year of income in the same way as it applies to a private

Schedule 1 Distributions to entities connected with a private company

6 Tax Laws Amendment (2010 Measures No. 2) Bill 2010 No. , 2010

company in relation to a year of income, if, any time during the

year of income:

(a) the partnership has fewer than 50 members; or

(b) any entity has, directly or indirectly, and for the entity's own

benefit, an entitlement to a 75% or greater share of the

income or capital of the partnership.

Example: Michael has an entitlement to an 80% share of the income of 2 fixed

trusts. The 2 fixed trusts have, between them, an entitlement to 100%

of the income of a corporate limited partnership. For the purposes of

paragraph (b), Michael has, indirectly, and for his own benefit, an

entitlement to a 75% or greater share of the income of the partnership.

109BC Application of Division to non-resident companies

(1) This Division applies, in relation to a payment, loan or debt

forgiveness, in relation to a private company that is a non-resident

as if:

(a) references in this Division to a year of income of the

company were references to a tax accounting period in

relation to the company in relation to a foreign tax imposed

by a tax law of:

(i) if the company is a resident of only one foreign

country--that foreign country; or

(ii) otherwise--the foreign country to which subsection (2)

applies; and

(b) references in this Division to the lodgment day for the year of

income were references to the due date for lodgment of the

company's return of income for the tax accounting period

under that tax law.

(2) For the purposes of subparagraph (1)(a)(ii), this subsection applies

to a foreign country (the relevant country) if:

(a) the company is a resident of the relevant country; and

(b) of all the tax accounting periods:

(i) in relation to the company in relation to the foreign

taxes imposed by the tax laws of the foreign countries of

which the company is resident; and

(ii) during which the payment, loan or debt forgiveness is

made;

the tax accounting period under the tax law of the relevant

country ends first; and

Distributions to entities connected with a private company Schedule 1

Tax Laws Amendment (2010 Measures No. 2) Bill 2010 No. , 2010 7

paragraph (b) end first--the due date for lodgment of the

company's return of income for the tax accounting period

under the tax law of the relevant country is not later than the

due date for lodgment for any of the other tax accounting

periods that end first.

(3) In this section:

tax accounting period has the meaning given by section 317.

tax law has the meaning given by section 317.

Note:

Section 109L prevents amounts from being included in assessable

income under this Division if the amounts are included in, or excluded

from, assessable income under another provision of this Act, such as

the rules relating to CFCs and FIFs.

12 At the end of subsection 109C(3)

Add:

Note:

See also section 109CA (Payment includes provision of asset).

13 After section 109C

Insert:

109CA Payment includes provision of asset

(1) In this Division, payment to an entity includes the provision of an

asset for use by the entity.

Note:

This includes provision under a lease or licence.

Example: Yacht builder Mainbrace Enterprises Pty Ltd owns a yacht for the

purpose of sales demonstrations. With the private company's

permission, one of its shareholders uses the yacht on weekends. The

company has made a payment to the shareholder, unless one of the

exceptions to subsection (1) applies.

(2) The time the payment is made is the time the entity first:

(a) uses the asset with the permission of the provider of the asset;

(b) has a right to use the asset (whether alone or together with

other entities), at a time when the provider of the asset does

not have a right:

(i) to use the asset; or

Schedule 1 Distributions to entities connected with a private company

8 Tax Laws Amendment (2010 Measures No. 2) Bill 2010 No. , 2010

(ii) to provide the asset for use by another entity.

Example: Paragraph (a) could apply if a shareholder were driving a company car

with the company's permission. Paragraph (b) could apply if the

shareholder had the car parked at his or her house or at another place

of his or her choosing.

(3) However, if the use or right continues into another income year of

the entity, treat the provision of the asset for use in the other

income year as being a separate payment made at the start of that

year.

Exceptions

(4) Subsection (1) does not apply if the provision of the asset would, if

done in respect of the employment of an employee, be a minor

benefit under section 58P of the Fringe Benefits Tax Assessment

Act 1986.

(5) Subsection (1) does not apply to the extent that, if the entity had

incurred and paid expenditure in respect of the provision of the

asset, a once-only deduction would have been allowable to the

entity in respect of the expenditure, ignoring:

(a) section 82A (Deductions for expenses of self-education); and

(b) Divisions 28 (Car expenses) and 900 (Substantiation rules) of

the Income Tax Assessment Act 1997.

(6) Subsection (1) does not apply to the provision of a dwelling, if:

(a) the entity, or associate of the entity, carries on a business; and

(b) the entity or associate:

(i)

uses;

(ii) is granted or has a lease, licence or other right to use;

land, water or a building for the purpose of carrying on the

business; and

that use or with that lease, licence or other right.

Note:

For the meaning of land, see paragraph 22(1)(c) of the Acts

Interpretation Act 1901.

(7) Subsection (1) does not apply to the provision of a dwelling, if:

(a) the dwelling is the main residence of the entity; and

(b) the provider of the dwelling is a private company; and

Distributions to entities connected with a private company Schedule 1

Tax Laws Amendment (2010 Measures No. 2) Bill 2010 No. , 2010 9

2009; and

(d) the private company would meet the conditions in

section 165-12 of the Income Tax Assessment Act 1997

(which is about the company maintaining the same owners)

if, despite subsection 165-12(1), the ownership test period

were the period:

(i) starting when the company acquired the dwelling; and

(ii) ending at the time of payment, worked out under

subsection (2) of this section.

(8) Section 118-120 of the Income Tax Assessment Act 1997

(Extension to adjacent land) applies in relation to subsections (6)

and (7) of this section in the same way as it applies in relation to

Subdivision 118-B of that Act.

(9) Subsection (1) does not apply if the provision of the asset to the

entity is a transfer of property to the entity.

Note:

For transfers of property, see paragraph 109C(3)(c).

Value of payment

(10) Subject to subsection (11), the amount of the payment is:

(a) the amount that would have been paid for the provision of the

asset by the parties dealing at arm's length; less

(b) any consideration given for the provision of the asset by the

entity.

(11) The amount of the payment is nil if the consideration given by the

entity equals or exceeds the amount that would have been paid at

arm's length for the provision of the asset.

14 At the end of subsection 109D(6)

Add:

Note:

For the lodgment day for a private company that is a non-resident, see

section 109BC.

15 Subsection 109R(2)

Repeal the subsection, substitute:

(2) A payment must not be taken into account if:

Schedule 1 Distributions to entities connected with a private company

10 Tax Laws Amendment (2010 Measures No. 2) Bill 2010 No. , 2010

(a) a reasonable person would conclude (having regard to all the

circumstances) that, when the payment was made, the entity

intended to obtain a loan or loans from the private company

of a total amount similar to, or larger than, the payment; or

(b) both of the following subparagraphs apply:

(i) the entity obtained, before the payment was made, a

loan or loans from the private company of a total

amount similar to, or larger than, the amount of the

payment;

(ii) a reasonable person would conclude (having regard to

all the circumstances) that the entity obtained the loan

or loans in order to make the payment.

16 Paragraph 109XA(1)(a)

After "a payment", insert "(including a payment through an interposed

entity as described in section 109XF)".

17 At the end of paragraph 109XA(1)(c)

Add:

Note:

For entitlements through interposed trusts, see section 109XI.

18 After subsection 109XA(1)

Insert:

Loan repayments

(1A) Disregard paragraph (1)(b) if:

(a) subsection (1) has previously applied because the trustee

made a payment (the original transaction) to the

shareholder, or to an associate of the shareholder, during a

previous year of income; and

(b) the shareholder, or an associate of the shareholder, makes a

loan or loans to the trustee on or after 1 July 2009; and

(c)

either:

(i) a reasonable person would conclude (having regard to

all the circumstances) that at the time the original

transaction took place the shareholder, or an associate of

the shareholder, intended to make the loan or loans to

the trustee; or

Distributions to entities connected with a private company Schedule 1

Tax Laws Amendment (2010 Measures No. 2) Bill 2010 No. , 2010 11

(ii) the shareholder, or an associate of the shareholder, made

the loan or loans to the trustee before the time the

original transaction took place and a reasonable person

would conclude (having regard to all the circumstances)

that the trustee obtained the loan or loans in order to

make the payment; and

(d) the actual transaction is applied to repay all or a part of the

loan or loans.

(1B) For the purposes of applying section 109XB in a case covered by

subsections (1) and (1A) of this section, disregard section 109J

(Payments discharging pecuniary obligations not treated as

dividends).

19 Paragraph 109XA(2)(a)

After "a loan", insert "(including a loan through an interposed entity as

described in section 109XG)".

20 At the end of paragraph 109XA(2)(b)

Add:

Note:

For entitlements through interposed trusts, see section 109XI.

21 At the end of paragraph 109XA(3)(b)

Add:

Note:

For entitlements through interposed trusts, see section 109XI.

22 Subsection 109XB(1)

After "dividend", insert "paid by the company at the end of the year of

income of the company in which the actual transaction took place".

23 Subsection 109XC(8)

Omit "paragraphs 109R(3)(a), (b) and (ba)", substitute "paragraph

109R(3)(a)".

24 At the end of Subdivision EA of Division 7A of Part III

Add:

Schedule 1 Distributions to entities connected with a private company

12 Tax Laws Amendment (2010 Measures No. 2) Bill 2010 No. , 2010

109XD Forgiveness of loan debt does not give rise to assessable

income if loan gives rise to assessable income

An amount is not included in the assessable income for a year of

income of the shareholder or associate referred to in subsection

109XA(3) because of the forgiveness of an amount of a debt

resulting from a loan if, because of the loan, an amount was

included in the assessable income of the shareholder or associate

under section 109XB (or former section 109UB) in that or an

earlier year of income.

25 After Subdivision EA of Division 7A of Part III

Insert:

Subdivision EB--Unpaid present entitlements--interposed

entities

109XE Simplified outline of this Subdivision

The following is a simplified outline of this Subdivision:

Payments and loans

This Subdivision allows an amount to be included in an entity's

(the target entity's) assessable income under Subdivision EA if an

entity interposed between a trustee and the target entity makes a

payment or loan to the target entity under an arrangement

involving the trustee.

This result is achieved by treating the trustee as making a payment

or loan of an amount determined by the Commissioner to the target

entity.

The arrangement must involve the trustee and one or more

interposed entities in making payments or loans for the purpose of

the target entity receiving a payment or loan from an interposed

entity.

If the target entity repays a fraction of the loan made by the

interposed entity, the target entity is treated as repaying the same

fraction of the loan taken to have been made by the trustee.

Distributions to entities connected with a private company Schedule 1

Tax Laws Amendment (2010 Measures No. 2) Bill 2010 No. , 2010 13

Some provisions that prevent payments or loans from giving rise to

assessable income do not apply to payments or loans this

Subdivision treats a trustee as making.

Present entitlements

This Subdivision similarly allows an amount to be included in an

entity's assessable income under Subdivision EA if a private

company is or becomes presently entitled to an amount from the

net income of a trust estate interposed between the private

company and another trust estate (the target trust) under an

arrangement involving the target trust.

109XF Payments through interposed entities

(1) For the purposes of paragraphs 109XA(1)(a) and (1A)(a), a trustee

is taken to have made a payment to a shareholder, or to an

associate of a shareholder, (the target entity) of a private company

if:

(a) the trustee makes a payment or loan to another entity (the

first interposed entity) that is interposed between:

(i) the trustee; and

(ii) the target entity; and

(b) a reasonable person would conclude (having regard to all the

circumstances) that the trustee made the payment or loan

solely or mainly as part of an arrangement involving a

payment to the target entity; and

(c)

either:

(i) the first interposed entity makes a payment to the target

entity; or

(ii) another entity interposed between the trustee and the

target entity makes a payment to the target entity.

(2) For the purposes of this section, it does not matter:

(a) whether the interposed entity made the payment to the target

entity before, after or at the same time as the first interposed

entity received the payment or loan from the trustee; or

(b) whether or not the interposed entity paid the target entity the

same amount as the trustee paid or lent the first interposed

entity.

Schedule 1 Distributions to entities connected with a private company

14 Tax Laws Amendment (2010 Measures No. 2) Bill 2010 No. , 2010

(3) Treat the reference in paragraph 109XA(1)(b) to a payment as

being a reference to the payment to the target entity mentioned in

paragraph (1)(c) of this section.

109XG Loans through interposed entities

Loans by a trustee through interposed entities

(1) For the purposes of paragraph 109XA(2)(a), a trustee is taken to

have made a loan (the notional loan) to a shareholder, or to an

associate of a shareholder, (the target entity) of a private company

if:

(a) the trustee makes a payment or loan to another entity (the

first interposed entity) that is interposed between:

(i) the trustee; and

(ii) the target entity; and

(b) a reasonable person would conclude (having regard to all the

circumstances) that the trustee made the payment or loan

solely or mainly as part of an arrangement involving a loan to

the target entity; and

(c)

either:

(i) the first interposed entity makes a loan to the target

entity; or

(ii) another entity interposed between the trustee and the

target entity makes a loan to the target entity.

(2) For the purposes of this section, it does not matter:

(a) whether the interposed entity made the loan to the target

entity before, after or at the same time as the first interposed

entity received the payment or loan from the trustee; or

(b) whether or not the interposed entity lent the target entity the

same amount as the trustee paid or lent the first interposed

entity.

Notional loans

(3) When working out whether an amount is included in the assessable

income of the target entity under section 109XB as a result of the

notional loan under subsection (1) of this section, and the amount

included in assessable income, assume that the target entity repays

Distributions to entities connected with a private company Schedule 1

Tax Laws Amendment (2010 Measures No. 2) Bill 2010 No. , 2010 15

an amount of the notional loan equal to the amount worked out

using the formula:

Amount of notional loan

Repayment made by target

entity to lender

Amount actually lent to target entity

�

where:

amount actually lent to target entity is the amount the interposed

entity lent to the target entity.

repayment made by target entity to lender is the amount of any

repayment made by the target entity of the loan the interposed

entity made to the target entity.

(4) For the purposes of section 109E (Amalgamated loan from a

previous year treated as dividend if minimum repayment not

made):

(a) treat the notional loan as an amalgamated loan from the

private company to the target entity; and

(b) treat the amount of the notional loan worked out under

section 109XH as the amount of the amalgamated loan; and

the agreement under which the amalgamated loan was made;

and

(d) treat repayments by the target entity of the amount of the

notional loan worked out under subsection (3) of this section

as payments by the target entity to the private company in

relation to the amalgamated loan.

(5) For the purposes of section 109N (about certain loans not being

treated as dividends), treat the agreement under which the actual

loan was made as the agreement under which the notional loan was

made.

109XH Amount and timing of payment or loan through interposed

entities

Amount of payment or loan

(1) The amount the trustee is taken under section 109XF or 109XG to

have paid or lent the target entity is the amount (if any) determined

by the Commissioner.

Schedule 1 Distributions to entities connected with a private company

16 Tax Laws Amendment (2010 Measures No. 2) Bill 2010 No. , 2010

(2) In determining the amount of the payment or loan, the

Commissioner must take account of:

(a) the amount the interposed entity paid or lent the target entity;

and

(b) how much (if any) of that amount the Commissioner believes

represented consideration payable to the target entity by:

(i) the trustee; or

(ii) any of the interposed entities;

for anything (assuming that the consideration payable equals

that for similar transactions at arm's length).

(3) The total of the amounts determined under subsection (1) for

payments and loans in relation to which section 109XB applies

because of the same present entitlement mentioned in paragraph

109XA(1)(c), (2)(b) or (3)(b) must not exceed the unpaid present

entitlement mentioned in subsection 109XA(4).

Timing of payment or loan

(4) The trustee is taken under section 109XF or 109XG to have made

the payment or loan at the time the interposed entity made the

payment or loan mentioned in paragraph 109XF(1)(c) or

109XG(1)(c) to the target entity.

109XI Entitlements to trust income through interposed trusts

Entitlements through interposed trusts

(1) For the purposes of paragraphs 109XA(1)(c), (2)(b) and (3)(b), a

private company is taken to be or to become entitled to an amount

from the net income of a trust estate (the target trust) if:

(a) the company is or becomes presently entitled to an amount

from the net income of another trust estate (the first

interposed trust) that is interposed between the target trust

and the company; and

(b) a reasonable person would conclude (having regard to all the

circumstances) that the company is or becomes so entitled

solely or mainly as part of an arrangement involving an

entitlement to an amount from the target trust; and

(c)

either:

Distributions to entities connected with a private company Schedule 1

Tax Laws Amendment (2010 Measures No. 2) Bill 2010 No. , 2010 17

(i) the first interposed trust is or becomes presently entitled

to an amount from the net income of the target trust; or

(ii) another trust interposed between the target trust and the

company is or becomes presently entitled to an amount

from the net income of the target trust.

This section operates regardless of certain factors

(2) For the purposes of this section, it does not matter:

(a) whether the company became or becomes entitled to the

amount from the net income of the first interposed trust

before, after or at the same time as the interposed trust

became or becomes presently entitled to an amount from the

net income of the target trust; or

(b) whether or not the company became presently entitled to the

same amount as the amount to which the interposed trust

become entitled.

This section does not operate to the extent Subdivision EA would

otherwise apply

(3) Subsection (1) does not apply to the extent that an amount is

included in the assessable income of a shareholder, or an associate

of a shareholder, of the company under Subdivision EA (as it

applies apart from this section) as a result of the present

entitlement of any interposed trust.

Amount of entitlement

(4) The amount the private company is taken to be or to become

entitled to from the net income of the target trust is the amount (if

any) determined by the Commissioner.

(5) The total amount determined under subsection (4) for present

entitlements to which that subsection applies because of the same

present entitlement to an amount from the net income of the target

trust mentioned in paragraph (1)(c) must not exceed that amount.

(6) In determining the amount of the entitlement, the Commissioner

must take account of:

(a) the amount the private company is or becomes entitled to

from the net income of the first interposed trust; and

Schedule 1 Distributions to entities connected with a private company

18 Tax Laws Amendment (2010 Measures No. 2) Bill 2010 No. , 2010

(b) how much (if any) of that amount the Commissioner believes

represented consideration payable to the private company by:

(i) the target trust; or

(ii) any of the interposed trusts;

for anything (assuming that the consideration payable equals

that for similar transactions at arm's length).

Timing of entitlement

(7) The company is taken to be or to become entitled to the amount

from the net income of the target trust at the time the company is or

becomes entitled to the amount from the net income of the first

interposed trust mentioned in paragraph (1)(a).

26 Subsection 109Y(2) (formula)

Repeal the formula, substitute:

Repayments

Division Non-

Paid-up

Net of

non-

commercial share

assets

commercial

amounts

loans

value

loans

27 Subsection 109Y(2)

Insert:

Division 7A amounts is the total of any amounts the company is

taken under section 109C or 109F to have paid as dividends in the

year of income apart from this section.

28 Subsection 109Y(2) (definition of non-commercial loans)

Repeal the definition, substitute:

non-commercial loans means the total of:

(a) any amounts that:

(i) the company is taken under former section 108, or

section 109D or 109E, to have paid as dividends in

earlier years of income; and

(ii) are shown as assets in the company's accounting

records at the end of year of income; and

(b) any amounts that are included in the assessable income of

shareholders, or associates of shareholders, of the company

Distributions to entities connected with a private company Schedule 1

Tax Laws Amendment (2010 Measures No. 2) Bill 2010 No. , 2010 19

under section 109XB as if the amounts were dividends paid

by the company in earlier years of income.

Note:

The total amount worked out under paragraph (b) might be reduced

under subsection (2A).

29 Subsection 109Y(2) (paragraphs (a) and (b) of the

definition of repayments of non-commercial loans)

Omit "109E", substitute "109E,".

30 After subsection 109Y(2)

Insert:

(2A) Reduce the total of the amounts worked out under paragraph (b) of

the definition of non-commercial loans in subsection (2) by the

total of the unfranked parts of any dividends:

(a) that are distributed by the company; and

(b) to which section 109ZCA applies.

31 At the end of Subdivision F of Division 7A of Part III

Add:

109ZCA Treatment of dividend that is reduced on account of an

amount included in assessable income under Subdivision

(1) This section sets out special rules for dealing with a dividend (the

later dividend) distributed by a private company if:

(a) an amount is included in the assessable income of a

shareholder, or an associate of a shareholder, of the company

under section 109XB because of a loan made to the

shareholder or associate by a trustee in relation to a present

entitlement of the company to an amount from the net

income of the trust estate; and

(b) subsection 109XA(2) applied to the loan; and

part of the loan.

(2) The amount of the later dividend applied is taken not to be a

dividend for the purposes of this Act, except Part 3-6 of the Income

Tax Assessment Act 1997 (which deals with franking of

distributions).

Schedule 1 Distributions to entities connected with a private company

20 Tax Laws Amendment (2010 Measures No. 2) Bill 2010 No. , 2010

(3) However, if the amount set off or applied exceeds the amount of

the later dividend that is neither:

(a) the franked part of that dividend; nor

(b) the part of that dividend that has been franked with an

exempting credit;

the excess is still a dividend.

Note:

This prevents double taxation by ensuring that the entity's assessable

income does not include the amount of the later dividend that is not

paid to the entity (except to the extent that that amount is franked).

(4) An amount that is taken not to be a dividend under subsection (2)

is not assessable income and is not exempt income.

32 Section 109ZD (at the end of the definition of payment)

Add "and section 109CA".

33 Subparagraph 485AA(1)(a)(i)

Omit "for the purposes of Division 5A of Part III".

Income Tax Assessment Act 1997

34 Section 11-55 (table item headed "dividends")

Omit:

later dividend set off against amount taken to be dividend .

109ZC(3)

Substitute:

later dividend set off against amount taken to be dividend .

109ZC(3),

109ZCA(4)

35 Application provision

The amendments made by this Schedule apply in relation to:

(a) payments made; and

(b) loans made; and

(c)

debts

forgiven;

on or after 1 July 2009.

Extending the TFN withholding arrangements to closely held trusts, including family

trusts Schedule 2

Main amendments Part 1

Tax Laws Amendment (2010 Measures No. 2) Bill 2010 No. , 2010 21

Schedule 2--Extending the TFN withholding

arrangements to closely held trusts,

including family trusts

Part 1--Main amendments

Income Tax Assessment Act 1936

1 After Division 4A of Part VA

Insert:

Division 4B--Quotation of tax file numbers in connection

with certain closely held trusts

202DN Application of Division

This Division applies to both the trustee of a trust and to a

beneficiary of the trust, if:

(a) paragraph 12-175(1)(c) in Schedule 1 to the Taxation

Administration Act 1953 applies to the trust; and

Note:

That paragraph applies to certain closely held trusts.

(b) paragraph 12-175(1)(d) in that Schedule applies to the

beneficiary.

202DO Quotation of tax file numbers

(1) The beneficiary may quote the beneficiary's tax file number to the

trustee.

(2)

The

beneficiary

quotes the beneficiary's tax file number to the

trustee if the beneficiary, or another person acting for the

beneficiary, informs the trustee of the number in a manner

approved by the Commissioner.

202DP Trustee must report quoted tax file numbers

(1) The trustee must report the beneficiary's tax file number to the

Commissioner, in the approved form, if:

Schedule 2 Extending the TFN withholding arrangements to closely held trusts,

including family trusts

Part 1 Main amendments

22 Tax Laws Amendment (2010 Measures No. 2) Bill 2010 No. , 2010

(a) the beneficiary quotes the beneficiary's tax file number to the

trustee during a quarter (within the meaning of the Income

Tax Assessment Act 1997); and

(b) the beneficiary has not quoted the beneficiary's tax file

number to the trustee in connection with an investment to

which this Part applies; and

beneficiary's tax file number to the Commissioner under

Division 6D of Part III of this Act (about trustee beneficiary

non-disclosure tax).

(2) The trustee must give the report to the Commissioner within:

(a) one month after the end of the quarter to which it relates; or

(b) within such further time as the Commissioner allows.

(3) The Commissioner may, by notice in writing given to the trustee,

inform the trustee that the period specified in the notice (being a

period greater than 3 months) is to be the trustee's reporting period

for the purposes of this section. If the Commissioner does so, a

reference in this section to a quarter is taken to be a reference to the

period specified in the notice.

(4) For the purposes of this section, disregard subsection 202DR(3).

Note:

Refusal or failure to report to the Commissioner as required by this

section is an offence under section 8C of the Taxation Administration

Act 1953.

202DR Effect of incorrect quotation of tax file number

Commissioner may notify trustee of correct tax file number

(1) If the Commissioner is satisfied:

(a) that the tax file number quoted to the trustee:

(i) has been cancelled or withdrawn since it was quoted; or

(ii) is otherwise wrong; and

(b) that the beneficiary has a tax file number;

the Commissioner may give the trustee notice in writing of the

beneficiary's correct tax file number.

(2) The notice give under subsection (1) is taken to have taken effect

on the day on which the cancelled or withdrawn tax file number

was quoted to the trustee as mentioned in paragraph (1)(a).

Extending the TFN withholding arrangements to closely held trusts, including family

trusts Schedule 2

Main amendments Part 1

Tax Laws Amendment (2010 Measures No. 2) Bill 2010 No. , 2010 23

(3) On and from the day on which the notice given under

subsection (1) took effect, the beneficiary is taken to have quoted

the beneficiary's correct tax file number to the trustee.

Commissioner may notify trustee if beneficiary does not have a tax

file number etc.

(4)

If:

(a) the Commissioner is satisfied that the tax file number quoted

to the trustee:

(i) has been cancelled or withdrawn since it was quoted; or

(ii) is for any other reason not the beneficiary's tax file

number; and

(b) the Commissioner is not satisfied that the beneficiary has a

tax file number;

the Commissioner must give the trustee written notice accordingly.

(5) The Commissioner must give the beneficiary a copy of the notice

given under subsection (4), together with a written statement of the

reasons for the decision to give the notice.

(6) The notice given under subsection (4) takes effect on the day

specified in the notice, being a day not earlier than the day on

which the copy of the notice is given to the beneficiary.

(7) On and from the day on which the notice given under

subsection (4) takes effect, the beneficiary is taken not to have

quoted the beneficiary's tax file number to the trustee.

Note:

The trustee may be required to withhold an amount from a payment to

the beneficiary if the beneficiary has not quoted the beneficiary's tax

file number to the trustee at the time the payment is made: see

sections 12-175 and 12-180 in Schedule 1 to the Taxation

Administration Act 1953.

As such, the trustee may be required to withhold if a notice under

subsection (4) of this section is in effect on the day on which the

payment is made.

2 After paragraph 202F(1)(da)

Insert:

(db) a decision to give a notice under subsection 202DR(4);

Schedule 2 Extending the TFN withholding arrangements to closely held trusts,

including family trusts

Part 1 Main amendments

24 Tax Laws Amendment (2010 Measures No. 2) Bill 2010 No. , 2010

Taxation Administration Act 1953

3 Subsection 10-5(1) in Schedule 1 (after table item 14)

Insert:

14A

A trustee of a closely held trust distributing an amount

from the trust income to a beneficiary, where the

beneficiary does not quote its tax file number

12-175

14B

A beneficiary of a closely held trust becoming presently

entitled to income of the trust, where the beneficiary does

not quote its tax file number

12-180

4 Subsection 12-5(2) in Schedule 1 (table item 5, column

headed "In priority to:")

Before "section", insert "section 12-175 or 12-180 (Payment of income

of closely held trust where TFN not quoted) or".

5 After section 12-170 in Schedule 1

Insert:

Payment of income of closely held trust where TFN not quoted

12-175 Trustee distributes income of closely held trust

Scope

(1) This section applies if:

(a) the trustee of a trust makes a distribution to a beneficiary of

the trust at a time (the distribution time) during an income

year of the trust; and

(b) some or all of the distribution is from the

ordinary income or

statutory income of the trust; and

(i) a resident trust estate (within the meaning of subsection

95(2) of the Income Tax Assessment Act 1936) in

relation to the income year; and

(ii) a closely held trust (within the meaning of

section 102UC of that Act, disregarding paragraphs (c),

(d) and (e) of the definition of excluded trust in

subsection (4) of that section); and

Extending the TFN withholding arrangements to closely held trusts, including family

trusts Schedule 2

Main amendments Part 1

Tax Laws Amendment (2010 Measures No. 2) Bill 2010 No. , 2010 25

(iii) not prescribed by the regulations for the purposes of this

subparagraph; and

(d) the beneficiary is:

(i) an Australian resident; and

(ii)

not

exempt entity; and

(iii) not under a legal disability for the purposes of

section 98 of that Act.

Trustee must withhold

(2) The trustee must withhold an amount from the distribution, if:

(a) the beneficiary did not

quote the beneficiary's

tax file

number to the trustee before the distribution time; and

(b) the trustee is not liable to pay tax under section 98 of the

Income Tax Assessment Act 1936 in connection with the

distribution; and

under Division 6D of Part III of that Act (about trustee

beneficiary non-disclosure tax) in connection with the

distribution; and

(d) family trust distribution tax is not payable under Schedule 2F

to that Act in connection with the distribution.

Note 1:

If the trust is a unit trust, the trustee may be required to withhold under

section 12-140 in priority to this section: see section 12-5.

Note 2:

The trustee commits an offence if the trustee fails to withhold an

amount as required by this section: see section 16-25.

Application of rest of Part

(3) If the distribution is not a payment, this Part applies as if the trustee

paid the amount of the distribution to the beneficiary at the

distribution time.

Trust income of earlier income years

(4) Subsections (2) and (3) do not apply to the distribution, to the

extent that:

(a) the beneficiary is presently entitled, for the purposes of

Division 6 of Part III of the Income Tax Assessment Act

1936, to a share of the income of the trust of an earlier

income year; and

Schedule 2 Extending the TFN withholding arrangements to closely held trusts,

including family trusts

Part 1 Main amendments

26 Tax Laws Amendment (2010 Measures No. 2) Bill 2010 No. , 2010

(b) the distribution is a distribution of some or all of that share.

Note:

The trustee may have been required to withhold from that share under

section 12-180.

12-180 Beneficiary becomes presently entitled to income of closely

held trust

Scope

(1) This section applies if:

(a) at the end of an income year of a trust, a beneficiary of the

trust is presently entitled, for the purposes of Division 6 of

Part III of the Income Tax Assessment Act 1936, to a share of

the income of the trust of that year; and

(b) paragraph 12-175(1)(c) in this Schedule applies to the trustee

of the trust; and

Trustee must withhold

(2) The trustee must withhold an amount from that share of the

net

income of the trust, if:

(a) the beneficiary did not

quote the beneficiary's

tax file

number to the trustee before the end of the year; and

(b) the trustee is not liable to pay tax in respect of that share

under section 98 of the Income Tax Assessment Act 1936; and

about that share under Division 6D of Part III of that Act

(about trustee beneficiary non-disclosure tax); and

(d) family trust distribution tax is not payable on that share of the

income of the trust under Schedule 2F to that Act.

Note 1:

If the trust is a unit trust, the trustee may be required to withhold under

section 12-145 in priority to this section: see section 12-5.

Note 2:

The trustee commits an offence if the trustee fails to withhold an

amount as required by this section: see section 16-25.

Application of rest of Part

(3) This Part (other than section 12-175) applies as if the trustee had

paid that share of the

net income of the trust to the beneficiary at

the end of the income year.

Extending the TFN withholding arrangements to closely held trusts, including family

trusts Schedule 2

Main amendments Part 1

Tax Laws Amendment (2010 Measures No. 2) Bill 2010 No. , 2010 27

Entitlements already paid

(4) Subsections (2) and (3) do not apply to that share of the

net

income of the trust to the extent that the trustee distributed any of

that share to the beneficiary during the income year.

Note:

The trustee may have been required to withhold from that distribution

under section 12-175.

Trusts that end during the year

(5) This section applies as if each reference to the end of an income

year were a reference to the time occurring just before the trust

ends, if the trust ends during the income year.

12-185 Exception for payments below thresholds set by regulations

(1) Section 12-175 or 12-180 does not require an amount to be

withheld if the payment (including the payment mentioned in

subsection 12-180(3)) is less than the amount worked out under the

regulations.

(2) Regulations made for the purposes of this section may deal

differently with different payments.

6 At the end of subsection 12-190(5) in Schedule 1

Add:

; or (d) is covered by section 12-175 or 12-180 (Payment of income

of closely held trust where TFN not quoted); or

(e) would be covered by section 12-175 or 12-180 if the other

entity had not quoted as mentioned in paragraph 12-175(2)(a)

or 12-180(2)(a); or

(f) would be covered by section 12-175 or 12-180 apart from

section 12-185 (which is an exception to sections 12-175 and

12-180).

7 Subsection 15-15(1) in Schedule 1

Omit "or 12-145", substitute ", 12-145, 12-175 or 12-180".

8 Subsection 15-15(1) in Schedule 1 (note)

Repeal the note, substitute:

Schedule 2 Extending the TFN withholding arrangements to closely held trusts,

including family trusts

Part 1 Main amendments

28 Tax Laws Amendment (2010 Measures No. 2) Bill 2010 No. , 2010

Note 1:

Section 12-140 is about a payment arising from an investment where

the recipient does not quote its tax file number (or, in some cases, its

ABN).

Note 2:

Sections 12-175 and 12-180 are about a payment of the income of a

closely held trust to a beneficiary, where the beneficiary does not

quote the beneficiary's tax file number.

Note 3:

Section 12-145 is about an investor becoming presently entitled to

income of a unit trust.

Note 4:

Subdivision 12-H is about distributions of managed investment trust

income.

9 Section 16-5 in Schedule 1 (after note 1)

Insert:

Note 1A: A trustee of a closely held trust is required to withhold an amount

under section 12-180 when a beneficiary is presently entitled to

unpaid income of the trust.

10 Subsections 16-75(1) to (4) in Schedule 1

After "Division 12", insert "(other than section 12-175 or 12-180)".

11 At the end of section 16-75 in Schedule 1

Add:

Payment of income of closely held trust

(5) A trustee must pay to the Commissioner an amount the trustee

withholds under section 12-175 or 12-180 from a payment made

during an income year. The trustee must do so:

(a) by the end of the 28th day of the next month following the

day by which the trustee was required to give to the

Commissioner a report under subsection 16-152(1) for the

income year; or

(b) within a longer period allowed by the Commissioner.

12 After section 16-150 in Schedule 1

Insert:

Extending the TFN withholding arrangements to closely held trusts, including family

trusts Schedule 2

Main amendments Part 1

Tax Laws Amendment (2010 Measures No. 2) Bill 2010 No. , 2010 29

16-152 Annual reports--Withholding payments covered by

section 12-175

Reports about withholding payments

(1) A trustee must give a report to the Commissioner in the

approved

form if the trustee made any

withholding payments covered by

section 12-175 or 12-180 (about payments from the income of

certain closely held trusts) during an income year.

(2) The trustee must give the report under subsection (1) to the

Commissioner:

(a) not later than 3 months after the end of the income year; or

(b) within such further period (if any) as the Commissioner

allows.

Reports about trust distributions

(3) A trustee must give a report to the Commissioner in the

approved

form if the trustee would be taken to have made any

withholding

payments covered by section 12-175 or 12-180 during an income

year if the relevant beneficiary had not

quoted the beneficiary's

tax file number as mentioned in paragraph 12-175(2)(a) or

12-180(2)(a).

Note:

The effect of subsection (3) is that the trustee must report amounts

distributed to beneficiaries even if the trustee was not required to

withhold from those distributions.

(4) The trustee must give the report under subsection (3) to the

Commissioner:

(a) by the end of the day on which the trustee lodges the trust's

income tax return for the income year; or

(b) within such further period (if any) as the Commissioner

allows.

Miscellaneous

(5) Subsections 16-153(5), (6) and (7) apply to this section in the same

way as they apply to section 16-153.

13 Section 16-153 in Schedule 1 (heading)

Repeal the heading, substitute:

Schedule 2 Extending the TFN withholding arrangements to closely held trusts,

including family trusts

Part 1 Main amendments

30 Tax Laws Amendment (2010 Measures No. 2) Bill 2010 No. , 2010

16-153 Annual reports--other payments

14 Paragraph 16-155(1)(a) in Schedule 1

After "12-85,", insert "12-175, 12-180,".

15 After section 16-155 in Schedule 1

Insert:

16-156 Annual payment summary for sections 12-175 and 12-180

(1) A trustee must give a

payment summary to a beneficiary of the

trust, if the trustee made any

withholding payments covered by

section 12-175 or 12-180 to the beneficiary during the income

year.

(2)

The

payment summary:

(a) must cover each of the

withholding payments mentioned in

subsection (1); and

(b) may be in electronic form; and

(i) not later than 14 days after the day by which the trustee

was required to give the Commissioner a report under

subsection 16-152(1) for the income year; or

(ii) within a longer period allowed by the Commissioner.

16 Subsection 16-170(1) in Schedule 1

Before "Subdivision 12-H", insert "section 12-175 or 12-180 or".

17 After subsection 16-170(1) in Schedule 1

Insert:

(1AAA)

payment summary relating to section 12-175 or 12-180 is a

statement that:

(a) names the trustee and the beneficiary; and

(b) states the total of the

withholding payments (if any) that it

covers, and the total of the

amounts withheld by the trustee

from those withholding payments; and

(d) is in the

approved form.

Extending the TFN withholding arrangements to closely held trusts, including family

trusts Schedule 2

Main amendments Part 1

Tax Laws Amendment (2010 Measures No. 2) Bill 2010 No. , 2010 31

18 Subsection 16-170(3) in Schedule 1

After "section 16-155,", insert "16-156,".

19 Subsection 16-170(4) in Schedule 1

After "subsection (1),", insert "(1AAA),".

20 Subsection 16-175(1) in Schedule 1

After "section 16-155,", insert "16-156,".

21 Subsection 16-175(1) in Schedule 1

After "subsection 16-170(1),", insert "(1AAA),".

22 Subparagraph 18-65(3)(d)(iv) in Schedule 1

Omit "and".

23 At the end of paragraph 18-65(3)(d) in Schedule 1

Add:

(v) section 12-175 or 12-180 (Payment of income of closely

held trust where TFN not quoted); and

24 Application provision

(1)

Subject to subitem (2), the amendments made by this Schedule apply to

income of a trust of an income year starting on or after 1 July 2010.

(2)

Subsection 12-175(4) in Schedule 1 to the Taxation Administration Act

1953, inserted by this Schedule, applies to income of a trust of any

income year.

25 Application provision--tax file number reporting

Section 202DP of the Income Tax Assessment Act 1936, inserted by this

Act, applies to a quarter in relation to a trust if the quarter commences

during an income year of the trust starting on or after 1 July 2010.

Schedule 2 Extending the TFN withholding arrangements to closely held trusts,

including family trusts

Part 2 Amendments contingent on the Tax Laws Amendment (2010 Measures No. 1)

Act 2010

32 Tax Laws Amendment (2010 Measures No. 2) Bill 2010 No. , 2010

Part 2--Amendments contingent on the Tax Laws

Amendment (2010 Measures No. 1) Act 2010

Income Tax Assessment Act 1997

26 Subsection 995-1(1) (at the end of the definition of quote)

Add:

;

(c)

quote a tax file number to a trustee: the beneficiary of a trust

quotes the beneficiary's tax file number to the trustee of the

trust if:

(i) Division 4B of Part VA of the Income Tax Assessment

Act 1936 applies to the trustee and to the beneficiary;

and

(ii) the beneficiary is taken, for the purposes of that Part, to

have quoted the beneficiary's tax file number to the

trustee.

27 Subsection 995-1(1) (definition of quoted)

Repeal the definition, substitute:

quoted:

(a) an entity has quoted its

tax file number in connection with a

Part VA investment if the entity is taken, for the purposes of

Part VA of the Income Tax Assessment Act 1936, to have

quoted its tax file number in connection with the investment;

and

(b) the beneficiary of a trust has quoted the beneficiary's tax file

number to the trustee of the trust if:

(i) Division 4B of Part VA of the Income Tax Assessment

Act 1936 applies to the trustee and to the beneficiary;

and

(ii) the beneficiary is taken, for the purposes of that Part, to

have quoted the beneficiary's tax file number to the

trustee.

Exemption of HECS-HELP benefit Schedule 3

Tax Laws Amendment (2010 Measures No. 2) Bill 2010 No. , 2010 33

Schedule 3--Exemption of HECS-HELP

benefit

Income Tax Assessment Act 1997

1 Section 11-15 (table item headed "education and training")

After:

full-time student, income from a scholarship, bursary,

other educational allowance or educational

assistance .......................................................................

51-10 and 51-35

Insert:

HECS-HELP benefit, recipient of ......................................

51-10

2 Section 51-10 (at the end of the table)

Add:

2.9

a recipient of a

HECS-HELP benefit

the benefit

none

3 Subsection 995-1(1)

Insert:

HECS-HELP benefit has the same meaning as in the Higher

Education Support Act 2003.

4 Application provision

The amendments made by this Schedule apply to assessments for:

(a) the 2008-09 income year; and

(b) later income years.

Schedule 4 Deductible gift recipients

34 Tax Laws Amendment (2010 Measures No. 2) Bill 2010 No. , 2010

Schedule 4--Deductible gift recipients

Income Tax Assessment Act 1997

1 Subsection 30-25(2) (table item 2.2.34, column headed

"Special conditions")

Omit "1 July 2009", substitute "1 July 2012".

2 Subsection 30-80(2) (at the end of the table)

Add:

9.2.22

Sichuan Earthquake Surviving

Children's Education Fund

the gift must be made after

11 May 2008 and before

13 May 2010

9.2.23

Bali Peace Park Association Inc

the gift must be:

(a) made after 15 December

2009 and before

17 December 2011; and

(b) used for the purpose of

establishing the Bali Peace

Park

3 Subsection 30-315(2) (after table item 27)

Insert:

27AAA Bali Peace Park Association Inc

item 9.2.23

4 Subsection 30-315(2) (after table item 109)

Insert:

110

Sichuan Earthquake Surviving

Children's Education Fund

item 9.2.22

5 Application provision

The amendments made by this Schedule apply to assessments for:

(a) the 2007-08 income year; and

(b) later income years.

Global Carbon Capture and Storage Institute Ltd Schedule 5

Amendments commencing on Royal Assent Part 1

Tax Laws Amendment (2010 Measures No. 2) Bill 2010 No. , 2010 35

Schedule 5--Global Carbon Capture and

Storage Institute Ltd

Part 1--Amendments commencing on Royal Assent

Division 1--Main amendment

Income Tax Assessment Act 1997

1 Section 50-5 (at the end of the table)

Add:

1.8

Global Carbon Capture and Storage

Institute Ltd

only amounts included in

assessable income:

(a) on or after 1 July 2009; and

(b) before 1 July 2013

Division 2--Consequential amendments

Income Tax Assessment Act 1936

2 Section 102M (definition of eligible policy)

Repeal the definition.

3 Section 102M (definition of exempt entity)

Repeal the definition.

4 Section 102M (definition of exempt life assurance fund)

Repeal the definition.

5 Section 102M (definition of trustee)

Repeal the definition.

6 After section 102MC

Insert:

Schedule 5 Global Carbon Capture and Storage Institute Ltd

Part 1 Amendments commencing on Royal Assent

36 Tax Laws Amendment (2010 Measures No. 2) Bill 2010 No. , 2010

102MD Application of Division to trustees etc. of exempt life

assurance funds and superannuation funds

This Division applies to the person in whom the assets of a fund

are vested (whether or not as trustee) in the same way as this

Division applies to an exempt entity, if the fund is:

(a) a fund maintained by a life assurance company solely in

respect of a class of life assurance business that consists of

business of, or in relation to, the issuing of, or the

undertaking of liability under:

(i) exempt life insurance policies (within the meaning of

the Income Tax Assessment Act 1997); or

(ii) complying superannuation/FHSA life insurance policies

(within the meaning of that Act); or

(b) a complying superannuation fund, a complying approved

deposit fund or a pooled superannuation trust.

Income Tax Assessment Act 1997

7 Section 11-5 (table item headed "charity, education,

religion or science")

Omit "religion or science", substitute "science or religion".

8 Section 11-5 (table item headed "charity, education,

religion or science")

After:

educational institution, public .............................................

50-5

Insert:

Global Carbon Capture and Storage Institute Ltd ...............

50-5

9 Paragraph 295-173(b)

Repeal the paragraph, substitute:

(b) covered by section 102MD of the Income Tax Assessment Act

1936 because of paragraph (a) of that section (trustees etc. of

exempt life assurance funds).

Global Carbon Capture and Storage Institute Ltd Schedule 5

Sunsetting on 1 January 2018 Part 2

Tax Laws Amendment (2010 Measures No. 2) Bill 2010 No. , 2010 37

Part 2--Sunsetting on 1 January 2018

Income Tax Assessment Act 1997

10 Section 11-5 (table item headed "charity, education,

science or religion")

Omit:

Global Carbon Capture and Storage Institute Ltd ...............

50-5

11 Section 50-5 (table item 1.8)

Repeal the item.

Schedule 6 Repeal of certain unlimited periods for amending assessments

38 Tax Laws Amendment (2010 Measures No. 2) Bill 2010 No. , 2010

Schedule 6--Repeal of certain unlimited

periods for amending assessments

A New Tax System (Pay As You Go) Act 1999

1 Section 4

Repeal the section.

Income Tax Assessment Act 1936

2 Subsection 23AG(6G)

Repeal the subsection.

3 Subsection 170(10) (table items 12 and 13)

Repeal the items.

4 Subsection 170(10AA) (table items 1, 20 and 180)

Repeal the items.

5 Subsection 454(1)

Omit "(1) Where", substitute "If".

6 Subsection 454(2)

Repeal the subsection.

Income Tax Assessment Act 1997

7 Subsection 26-35(5)

Repeal the subsection.

8 Section 214-130

Repeal the section.

9 Subsection 900-240(1)

Omit "(1)".

10 Subsection 900-240(2)

Repeal of certain unlimited periods for amending assessments Schedule 6

Tax Laws Amendment (2010 Measures No. 2) Bill 2010 No. , 2010 39

Repeal the subsection.

New Business Tax System (Capital Gains Tax) Act 1999

11 Section 4

Repeal the section.

New Business Tax System (Consolidation) Act (No. 1) 2002

12 Section 4

Repeal the section.

New Business Tax System (Consolidation and Other

Measures) Act 2003

13 Section 4

Repeal the section.

New Business Tax System (Consolidation and Other

Measures) Act (No. 1) 2002

14 Section 4

Repeal the section.

New Business Tax System (Consolidation, Value Shifting,

Demergers and Other Measures) Act 2002

15 Section 4

Repeal the section.

New Business Tax System (Income Tax Rates) Act (No. 2)

1999

16 Section 4

Repeal the section.

Schedule 6 Repeal of certain unlimited periods for amending assessments

40 Tax Laws Amendment (2010 Measures No. 2) Bill 2010 No. , 2010

New Business Tax System (Miscellaneous) Act (No. 1) 2000

17 Section 4

Repeal the section.

New Business Tax System (Miscellaneous) Act (No. 2) 2000

18 Section 4

Repeal the section.

New Business Tax System (Taxation of Financial

Arrangements) Act (No. 1) 2003

19 Section 4

Repeal the section.

Petroleum (Timor Sea Treaty) (Consequential Amendments)

Act 2003

20 Section 4

Repeal the section.

Taxation Laws Amendment Act 1985

21 Section 39

Repeal the section.

Taxation Laws Amendment Act 1986

22 Section 26

Repeal the section.

Taxation Laws Amendment Act 1987

23 Section 33

Repeal the section.

Repeal of certain unlimited periods for amending assessments Schedule 6

Tax Laws Amendment (2010 Measures No. 2) Bill 2010 No. , 2010 41

Taxation Laws Amendment Act 1988

24 Section 40

Repeal the section.

Taxation Laws Amendment Act 1989

25 Section 53

Repeal the section.

Taxation Laws Amendment Act 1990

26 Section 41

Repeal the section.

Taxation Laws Amendment Act 1991

27 Sections 90 and 99

Repeal the sections.

Taxation Laws Amendment Act 1992

28 Section 75

Repeal the section.

Taxation Laws Amendment Act 1993

29 Division 18 of Part 3

Repeal the Division.

Taxation Laws Amendment Act 1994

30 Division 11 of Part 3

Repeal the Division.

Schedule 6 Repeal of certain unlimited periods for amending assessments

42 Tax Laws Amendment (2010 Measures No. 2) Bill 2010 No. , 2010

Taxation Laws Amendment Act (No. 1) 1995

31 Part 12 of Schedule 1

Repeal the Part.

Taxation Laws Amendment Act (No. 1) 1996

32 Section 4

Repeal the section.

Taxation Laws Amendment Act (No. 1) 1997

33 Section 4

Repeal the section.

Taxation Laws Amendment Act (No. 1) 1998

34 Section 4

Repeal the section.

Taxation Laws Amendment Act (No. 1) 1999

35 Section 4

Repeal the section.

Taxation Laws Amendment Act (No. 1) 2004

36 Section 4

Repeal the section.

Taxation Laws Amendment Act (No. 2) 1985

37 Section 36

Repeal the section.

Repeal of certain unlimited periods for amending assessments Schedule 6

Tax Laws Amendment (2010 Measures No. 2) Bill 2010 No. , 2010 43

Taxation Laws Amendment Act (No. 2) 1986

38 Section 28

Repeal the section.

Taxation Laws Amendment Act (No. 2) 1987

39 Section 48

Repeal the section.

Taxation Laws Amendment Act (No. 2) 1988

40 Section 57

Repeal the section.

Taxation Laws Amendment Act (No. 2) 1989

41 Section 15

Repeal the section.

Taxation Laws Amendment Act (No. 2) 1990

42 Section 65

Repeal the section.

Taxation Laws Amendment Act (No. 2) 1991

43 Subsection 84(1)

Repeal the subsection.

44 Subsection 84(2)

Omit "(2)".

Taxation Laws Amendment Act (No. 2) 1992

45 Section 75

Repeal the section.

Schedule 6 Repeal of certain unlimited periods for amending assessments

44 Tax Laws Amendment (2010 Measures No. 2) Bill 2010 No. , 2010

Taxation Laws Amendment Act (No. 2) 1993

46 Division 9 of Part 3

Repeal the Division.

Taxation Laws Amendment Act (No. 2) 1994

47 Division 14 of Part 3

Repeal the Division.

Taxation Laws Amendment Act (No. 2) 1995

48 Part 8 of Schedule 3

Repeal the Part.

Taxation Laws Amendment Act (No. 2) 1996

49 Section 4

Repeal the section.

Taxation Laws Amendment Act (No. 2) 1997

50 Section 4

Repeal the section.

Taxation Laws Amendment Act (No. 2) 1999

51 Section 4

Repeal the section.

Taxation Laws Amendment Act (No. 2) 2000

52 Section 4

Repeal the section.

Repeal of certain unlimited periods for amending assessments Schedule 6

Tax Laws Amendment (2010 Measures No. 2) Bill 2010 No. , 2010 45

Taxation Laws Amendment Act (No. 2) 2003

53 Section 4

Repeal the section.

Taxation Laws Amendment Act (No. 2) 2004

54 Section 4

Repeal the section.

Taxation Laws Amendment Act (No. 3) 1985

55 Section 43

Repeal the section.

Taxation Laws Amendment Act (No. 3) 1987

56 Section 40

Repeal the section.

Taxation Laws Amendment Act (No. 3) 1989

57 Section 23

Repeal the section.

Taxation Laws Amendment Act (No. 3) 1990

58 Section 35

Repeal the section.

Taxation Laws Amendment Act (No. 3) 1991

59 Section 103

Repeal the section.

Schedule 6 Repeal of certain unlimited periods for amending assessments

46 Tax Laws Amendment (2010 Measures No. 2) Bill 2010 No. , 2010

Taxation Laws Amendment Act (No. 3) 1992

60 Division 12 of Part 2

Repeal the Division.

Taxation Laws Amendment Act (No. 3) 1993

61 Division 11 of Part 4

Repeal the Division.

Taxation Laws Amendment Act (No. 3) 1994

62 Division 15 of Part 2

Repeal the Division.

Taxation Laws Amendment Act (No. 3) 1995

63 Part 7 of Schedule 1

Repeal the Part.

Taxation Laws Amendment Act (No. 3) 1997

64 Section 4

Repeal the section.

Taxation Laws Amendment Act (No. 3) 1998

65 Section 4

Repeal the section.

Taxation Laws Amendment Act (No. 3) 2002

66 Section 4

Repeal the section.

Repeal of certain unlimited periods for amending assessments Schedule 6

Tax Laws Amendment (2010 Measures No. 2) Bill 2010 No. , 2010 47

Taxation Laws Amendment Act (No. 3) 2003

67 Section 4

Repeal the section.

Taxation Laws Amendment Act (No. 4) 1985

68 Section 24

Repeal the section.

Taxation Laws Amendment Act (No. 4) 1986

69 Section 50

Repeal the section.

Taxation Laws Amendment Act (No. 4) 1987

70 Sections 52 and 62

Repeal the sections.

Taxation Laws Amendment Act (No. 4) 1988

71 Section 58

Repeal the section.

Taxation Laws Amendment Act (No. 4) 1989

72 Section 32

Repeal the section.

Taxation Laws Amendment Act (No. 4) 1990

73 Section 37

Repeal the section.

Schedule 6 Repeal of certain unlimited periods for amending assessments

48 Tax Laws Amendment (2010 Measures No. 2) Bill 2010 No. , 2010

Taxation Laws Amendment Act (No. 4) 1992

74 Division 7 of Part 2

Repeal the Division.

Taxation Laws Amendment Act (No. 4) 1994

75 Part 6 of Schedule 1

Repeal the Part.

Taxation Laws Amendment Act (No. 4) 1995

76 Section 4

Repeal the section.

Taxation Laws Amendment Act (No. 4) 1997

77 Section 4

Repeal the section.

Taxation Laws Amendment Act (No. 4) 1999

78 Section 4

Repeal the section.

Taxation Laws Amendment Act (No. 4) 2000

79 Section 4

Repeal the section.

Taxation Laws Amendment Act (No. 4) 2002

80 Section 4

Repeal the section.

Repeal of certain unlimited periods for amending assessments Schedule 6

Tax Laws Amendment (2010 Measures No. 2) Bill 2010 No. , 2010 49

Taxation Laws Amendment Act (No. 4) 2003

81 Section 4

Repeal the section.

Taxation Laws Amendment Act (No. 5) 1988

82 Division 7 of Part III

Repeal the Division.

Taxation Laws Amendment Act (No. 5) 1989

83 Section 50

Repeal the section.

Taxation Laws Amendment Act (No. 5) 1990

84 Section 33

Repeal the section.

Taxation Laws Amendment Act (No. 5) 1992

85 Division 19 of Part 2

Repeal the Division.

Taxation Laws Amendment Act (No. 5) 2000

86 Section 4

Repeal the section.

Taxation Laws Amendment Act (No. 5) 2001

87 Section 4

Repeal the section.

Schedule 6 Repeal of certain unlimited periods for amending assessments

50 Tax Laws Amendment (2010 Measures No. 2) Bill 2010 No. , 2010

Taxation Laws Amendment Act (No. 5) 2002

88 Section 4

Repeal the section.

Taxation Laws Amendment Act (No. 5) 2003

89 Section 4

Repeal the section.

Taxation Laws Amendment Act (No. 6) 1992

90 Division 8 of Part 2

Repeal the Division.

Taxation Laws Amendment Act (No. 6) 2000

91 Section 4

Repeal the section.

Taxation Laws Amendment Act (No. 6) 2001

92 Section 4

Repeal the section.

Taxation Laws Amendment Act (No. 6) 2003

93 Section 4

Repeal the section.

Taxation Laws Amendment Act (No. 7) 2000

94 Section 4

Repeal the section.

Repeal of certain unlimited periods for amending assessments Schedule 6

Tax Laws Amendment (2010 Measures No. 2) Bill 2010 No. , 2010 51

Taxation Laws Amendment Act (No. 8) 2003

95 Section 4

Repeal the section.

Taxation Laws Amendment (Company Distributions) Act

1987

96 Section 19

Repeal the section.

Taxation Laws Amendment (Earlier Access to Farm

Management Deposits) Act 2002

97 Section 4

Repeal the section.

Taxation Laws Amendment (Foreign Income) Act 1990

98 Section 61

Repeal the section.

Taxation Laws Amendment (Foreign Income Measures) Act

1997

99 Section 4

Repeal the section.

100 Subitems 128(4) and 129(8) of Schedule 1

Repeal the subitems.

Taxation Laws Amendment (Fringe Benefits and

Substantiation) Act 1987

101 Section 75

Repeal the section.

Schedule 6 Repeal of certain unlimited periods for amending assessments

52 Tax Laws Amendment (2010 Measures No. 2) Bill 2010 No. , 2010

Taxation Laws Amendment (Medicare Levy and Medicare

Levy Surcharge) Act 2002

102 Section 4

Repeal the section.

Taxation Laws Amendment (Software Depreciation) Act 1999

103 Section 4

Repeal the section.

Taxation Laws Amendment (Structured Settlements and

Structured Orders) Act 2002

104 Section 4

Repeal the section.

Taxation Laws Amendment (Superannuation) Act 1989

105 Section 66

Repeal the section.

Taxation Laws Amendment (Superannuation) Act 1992

106 Division 12 of Part 2

Repeal the Division.

Taxation Laws Amendment (Superannuation) Act 1993

107 Division 8 of Part 2

Repeal the Division.

Taxation Laws Amendment (Superannuation) Act (No. 2)

2002

108 Section 4

Repeal of certain unlimited periods for amending assessments Schedule 6

Tax Laws Amendment (2010 Measures No. 2) Bill 2010 No. , 2010 53

Omit "and section 170 of the Income Tax Assessment Act 1936 do",

substitute "does".

Taxation Laws Amendment (Trust Loss and Other

Deductions) Act 1998

109 Section 4

Repeal the section.

Taxation Laws (Technical Amendments) Act 1998

110 Section 4

Repeal the section.

Tax Laws Amendment (2004 Measures No. 1) Act 2004

111 Section 4

Repeal the section.

Tax Laws Amendment (2004 Measures No. 2) Act 2004

112 Section 4

Repeal the section.

Tax Laws Amendment (2004 Measures No. 3) Act 2004

113 Section 4

Repeal the section.

Tax Laws Amendment (2004 Measures No. 6) Act 2005

114 Section 4

Repeal the section.

Tax Laws Amendment (2004 Measures No. 7) Act 2005

115 Section 4

Commonwealth of Australia Bills

TAX LAWS AMENDMENT (2010 MEASURES NO. 2) BILL 2010