TAX LAWS AMENDMENT (2012 MEASURES NO. 2) BILL 2012

i Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012

Contents

1 Short

title

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

2 Commencement

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

3 Schedule(s)

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

Amendment of assessments ............................................................... 3

Schedule 1--Companies' non-compliance with PAYG

withholding and superannuation guarantee

obligations

Part 1--Recovery of penalties

Division 1--Amendments applying to future and undischarged

penalties

Taxation Administration Act 1953

Division 2--Penalties for new directors

Taxation Administration Act 1953

Division 3--Remission of penalties

Taxation Administration Act 1953

Part 2--Credits

Income Tax Assessment Act 1997

Taxation Administration Act 1953

Taxation (Interest on Overpayments and Early Payments) Act 1983

Part 3--Superannuation guarantee charge

Division 1--Estimates

Corporations Act 2001

Superannuation Guarantee (Administration) Act 1992

Taxation Administration Act 1953

Division 2--Penalties

Superannuation Guarantee (Administration) Act 1992

Taxation Administration Act 1953

Schedule 2--Consolidation and TOFA

Income Tax Assessment Act 1997

Tax Laws Amendment (Taxation of Financial Arrangements) Act 2009

Schedule 3--Consolidation

Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012 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 (2012

Measures No. 2) Act 2012.

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 (2012 Measures No. 2) Bill 2012 No. , 2012

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 this Act receives the Royal Assent.

2. Schedule 1,

Part 1

The day after this Act receives the Royal

Assent.

3. Schedule 1,

Part 2

The later of:

(a) the day after this Act receives the Royal

Assent; and

(b) the day the Pay As You Go Withholding

Non-compliance Tax Act 2012 receives

the Royal Assent.

However, the provision(s) do not commence

at all if the event mentioned in paragraph (b)

does not occur.

4. Schedule 1,

Part 3, Division 1

The day after this Act receives the Royal

Assent.

5. Schedule 1,

Part 3, Division 2

Immediately after the commencement of the

provision(s) covered by table item 3.

6. Schedule 2

Immediately after the commencement of

Parts 1, 2 and 3 of Schedule 1 to the Tax

Laws Amendment (Taxation of Financial

Arrangements) Act 2009.

26 March 2009

7. Schedule 3,

Part 1

The day this Act receives the Royal Assent.

8. Schedule 3,

Part 2

Immediately after the commencement of the

provision(s) covered by table item 7.

9. Schedule 3,

Part 3

Immediately after the commencement of the

provision(s) covered by table item 8.

10. Schedule 3,

Part 4

The day this Act receives the Royal Assent.

11. Schedule 4

At the same time as the Income Tax

(Managed Investment Trust Withholding

Tax) Amendment Act 2012 commences.

Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012 3

Note:

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

enacted. It will not be amended to deal with any later amendments of

this Act.

(2) Any information in column 3 of the table is not part of this Act.

Information may be inserted in this column, or information in it

may be 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.

4 Amendment of assessments

Section 170 of the Income Tax Assessment Act 1936 does not

prevent the amendment of an assessment if:

(a) the assessment was made before the commencement of this

section; and

(b) the amendment is made within 2 years after that

commencement; and

Schedule 2 or 3 to this Act.

Schedule 1 Companies' non-compliance with PAYG withholding and superannuation

guarantee obligations

Part 1 Recovery of penalties

4 Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012

Schedule 1--Companies' non-compliance with

PAYG withholding and superannuation

guarantee obligations

Part 1--Recovery of penalties

Division 1--Amendments applying to future and

undischarged penalties

Taxation Administration Act 1953

1 At the end of section 8AAZL

Add:

(4) Furthermore, the Commissioner does not have to treat an amount

using either of those methods if:

(a) doing so would require the Commissioner to apply the

amount against a tax debt; and

(b) the tax debt is a penalty that is due and payable under

section 269-20 in Schedule 1 (penalties for directors of

non-complying companies).

2 Subsections 269-35(1) to (4) in Schedule 1

Repeal the subsections, substitute:

Illness

(1) You are not liable to a penalty under this Division if, because of

illness or for some other good reason, it would have been

unreasonable to expect you to take part, and you did not take part,

in the management of the company at any time when:

(a) you were a director of the company; and

(b) the directors were under the relevant obligations under

subsection 269-15(1).

All reasonable steps

(2) You are not liable to a penalty under this Division if:

Companies' non-compliance with PAYG withholding and superannuation guarantee

obligations Schedule 1

Recovery of penalties Part 1

Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012 5

(a) you took all reasonable steps to ensure that one of the

following happened:

(i) the directors caused the company to comply with its

obligation;

(ii) the directors caused an administrator of the company to

be appointed under section 436A, 436B or 436C of the

Corporations Act 2001;

(iii) the directors caused the company to begin to be wound

up (within the meaning of that Act); or

(b) there were no reasonable steps you could have taken to

ensure that any of those things happened.

(3) In determining what are reasonable steps for the purposes of

subsection (2), have regard to:

(a) when, and for how long, you were a director and took part in

the management of the company; and

(b) all other relevant circumstances.

When you can rely on this section

(4) For the purposes of:

(a) proceedings in a court to recover from you a penalty payable

under this Division; or

(b) proceedings in a court against you in relation to a right

referred to in paragraph 269-45(2)(b) (directors jointly and

severally liable as guarantors);

subsection (1) or (2) of this section does not apply unless you

prove the matters mentioned in that subsection.

(4A) For the purpose of the Commissioner recovering from you a

penalty payable under this Division (other than as mentioned in

subsection (4)), subsection (1) or (2) does not apply unless:

(a) you provide information to the Commissioner during the

period of 60 days starting on the day the Commissioner:

(i) in the case of the Commissioner recovering the penalty

under section 260-5 (Commissioner may collect

amounts from third party)--gives you a notice under

subsection 260-5(6) in relation to the penalty; or

(ii) otherwise--notifies you in writing that he or she has

recovered any of the penalty; and

Schedule 1 Companies' non-compliance with PAYG withholding and superannuation

guarantee obligations

Part 1 Recovery of penalties

6 Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012

(b) the Commissioner is satisfied of the matters mentioned in

subsection (1) or (2) of this section on the basis of that

information.

3 After section 269-50 in Schedule 1

Insert:

269-52 Copies of notices

(1)

If:

(a) the Commissioner gives you a notice under section 269-25 in

accordance with section 269-50; and

(b) you have given the address of a

registered tax agent to the

Commissioner as your address for service for the purposes of

any

taxation law;

the Commissioner may also give you a copy of the notice.

(2) The Commissioner may do so by leaving the copy at, or posting

the copy to, the address of the

registered tax agent.

(3) To avoid doubt, this section does not affect:

(a) whether the Commissioner has given you the actual notice; or

(b) how the Commissioner may give you the actual notice.

4 Application of amendments

The amendments made by this Division apply to penalties that are:

(a) payable under Subdivision 269-B in Schedule 1 to the

Taxation Administration Act 1953 (including penalties in

relation to which subitem 65(4) of Schedule 1 to the Tax

Laws Amendment (Transfer of Provisions) Act 2010 applies);

and

(b)

due:

(i) at or after the commencement of this item; or

(ii) before the commencement of this item, to the extent the

penalties are not paid, remitted or discharged before the

commencement of this item.

Note:

Subitem 65(4) of Schedule 1 to the Tax Laws Amendment (Transfer of Provisions) Act

2010 applies in relation to penalties that were payable under Division 9 of former

Part VI of the Income Tax Assessment Act 1936.

Companies' non-compliance with PAYG withholding and superannuation guarantee

obligations Schedule 1

Recovery of penalties Part 1

Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012 7

Division 2--Penalties for new directors

Taxation Administration Act 1953

5 Paragraph 269-20(3)(b) in Schedule 1

Omit "14 days", substitute "30 days".

6 Subsection 269-20(4) in Schedule 1

Omit "14th day", substitute "30th day".

7 Application of amendments

The amendments made by this Division apply to you, in relation to an

obligation under section 269-15 in Schedule 1 to the Taxation

Administration Act 1953, if you:

(a) become a director of the relevant company; and

(b) begin to be under the obligation;

on or after the commencement of this item.

Division 3--Remission of penalties

Taxation Administration Act 1953

8 Section 269-30 in Schedule 1

Repeal the section, substitute:

269-30 Effect on penalty of directors' obligation ending before end

of notice period

(1) Subject to subsection (2), a penalty of yours under this Division is

remitted if the directors of the company stop being under the

relevant obligation under section 269-15:

(a) before the Commissioner gives you notice of the penalty

under section 269-25; or

(b) within 21 days after the Commissioner gives you notice of

the penalty under that section.

(2) The following table has effect:

Schedule 1 Companies' non-compliance with PAYG withholding and superannuation

guarantee obligations

Part 1 Recovery of penalties

8 Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012

When appointing administrator or winding up company does not affect penalty

Item Column

If the company's

obligation is to pay

to the

Commissioner, on

or before the due

day ...

Column 2

and, because of

paragraph

269-15(2)(b) or (c) (an

administrator is

appointed or the

company begins to be

wound up), the

directors stop being

under the relevant

obligation after the

last day of the 3

months after ...

Column 3

subsection (1) does not

apply ...

an amount in

accordance with

Subdivision 16-B

(obligation to pay

withheld amounts to

the Commissioner),

the due day,

to the extent the

company does not, on or

before the last day

mentioned in column 2,

notify the Commissioner

under section 16-150 of

the amount the company

is obliged to pay.

the amount of an

estimate under

Division 268

(estimates of PAYG

withholding

liabilities and

superannuation

guarantee charge),

the day by which the

company was obliged

to pay the underlying

liability to which the

estimate relates,

to any extent.

Note:

An administrator of the company being appointed, or the company

beginning to be wound up, after the last day mentioned in column 2

will, to the extent mentioned in column 3, have no effect on the

penalty.

(3) If you become a director of the company during or after the 3

months mentioned in column 2, treat the reference in the column to

the 3 months as being a reference to the 3 months after the day you

become a director of the company.

9 Application of amendment

Companies' non-compliance with PAYG withholding and superannuation guarantee

obligations Schedule 1

Recovery of penalties Part 1

Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012 9

The amendment made by this Division applies, in relation to a penalty

under Division 269 in Schedule 1 to the Taxation Administration Act

1953, if the directors of the relevant company stop being under the

relevant obligation under section 269-15 in that Schedule on or after the

commencement of this item.

Schedule 1 Companies' non-compliance with PAYG withholding and superannuation

guarantee obligations

Part 2 Credits

10 Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012

Part 2--Credits

Income Tax Assessment Act 1997

10 Subsection 86-40(2) (note 2)

Omit "and PAYG credits (see Subdivisions 16-C and 18-A", substitute

", PAYG credits and PAYG withholding non-compliance tax (see

Subdivisions 16-C, 18-A and 18-D".

11 Subsection 995-1(1)

Insert:

PAYG withholding non-compliance tax means the Pay as you go

withholding non-compliance tax imposed under the Pay As You Go

Withholding Non-compliance Tax Act 2012.

Taxation Administration Act 1953

12 Subsection 8AAB(4) (after table item 38)

Insert:

38A 18-150

Schedule 1

Taxation Administration Act

1953

PAYG withholding

non-compliance tax

13 At the end of section 18-5 in Schedule 1

Add:

Note:

See also Subdivision 18-D (PAYG withholding non-compliance tax,

which can reverse the economic benefit of a credit of a director, or an

associate of a director, of a company that does not comply with its

obligations under subsection 16-70(1)).

14 At the end of Division 18 in Schedule 1

Add:

Subdivision 18-D--Directors etc. of non-complying companies

Table of sections

Object of Subdivision

18-120

Object of Subdivision

Companies' non-compliance with PAYG withholding and superannuation guarantee

obligations Schedule 1

Credits Part 2

Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012 11

PAYG withholding non-compliance tax

18-125

Directors of non-complying companies

18-130

Directors of non-complying companies--tax reduced in certain

circumstances

18-135

Associates of directors of non-complying companies

18-140 Notices

18-145

When PAYG withholding non-compliance tax must be paid

18-150

General interest charge payable on unpaid PAYG withholding

non-compliance tax

18-155

Validity of decisions and evidence

18-160

Rights of indemnity and contribution

Credits for later compliance

18-165

Credits for later compliance--scope

18-170

Credits for later compliance--Commissioner must give notice in certain

circumstances

18-175

Credits for later compliance--Commissioner may give notice

18-180

Effect of earlier credits

Other provisions

18-185

When Commissioner may give notice

18-190

Review of decisions

Object of Subdivision

18-120 Object of Subdivision

The object of this Subdivision is to reverse the economic benefit of

a credit under section 18-15 (Tax credit for recipient of

withholding payment) of a director, or an

associate of a director,

of a company if:

(a) the company does not comply with its obligations under

subsection 16-70(1) (obligation to pay amounts withheld to

the Commissioner); and

(b) the credit is attributable to

amounts withheld from

withholding payments made by the company to the director

or associate;

until the company complies with its obligations.

Schedule 1 Companies' non-compliance with PAYG withholding and superannuation

guarantee obligations

Part 2 Credits

12 Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012

PAYG withholding non-compliance tax

18-125 Directors of non-complying companies

Liability to pay PAYG withholding non-compliance tax

(1) An individual must pay

PAYG withholding non-compliance tax in

relation to a company for an income year of the individual if:

(a) the individual is or has been a director (within the meaning of

the Corporations Act 2001) of the company; and

(b) the company was required to pay to the Commissioner under

subsection 16-70(1) in this Schedule amounts:

(i) the company withheld from

withholding payments the

company made to any entities during the income year of

the individual; and

(ii) to which subsection (2) applies; and

Commissioner on or before the last day (the non-compliance

day) on or before which the company was required to pay

any of those amounts to the Commissioner in accordance

with subsection 16-70(1); and

(d) a credit to which the individual is entitled under

section 18-15 is attributable to an extent to

amounts

withheld by the company under Division 12 from

withholding payments made to the individual during the

income year of the individual.

Note:

For the purposes of paragraph (1)(d), it does not matter whether

the company pays the amounts withheld from the withholding

payments made to the individual to the Commissioner under

subsection 16-70(1).

(2) This subsection applies to

amounts withheld that the company was

required to pay to the Commissioner on or before a particular day

(the payment day) under subsection 16-70(1), if:

(a) both of the following subparagraphs apply:

(i) the individual was a director (within the meaning of the

Corporations Act 2001) of the company on the payment

day;

(ii) the company did not pay the total of those amounts to

the Commissioner in accordance with subsection

16-70(1) on or before the payment day; or

Companies' non-compliance with PAYG withholding and superannuation guarantee

obligations Schedule 1

Credits Part 2

Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012 13

(b) all of the following subparagraphs apply:

(i) the individual became a director of the company after

the payment day;

(ii) the individual was still a director of the company 30

days after becoming a director;

(iii) the company did not pay the total of those amounts to

the Commissioner in accordance with subsection

16-70(1) on or before the last of those 30 days.

Amount of tax

(3) The amount of the

PAYG withholding non-compliance tax the

individual must pay is the lesser of:

(a) the extent of the credit mentioned in paragraph (1)(d); and

(b) the total amount the company did not pay to the

Commissioner as mentioned in paragraph (1)(c).

18-130 Directors of non-complying companies--tax reduced in

certain circumstances

(1) The amount of the

PAYG withholding non-compliance tax the

individual must pay as mentioned in section 18-125 is reduced if

the Commissioner gives a notice to the individual under this

section.

Notice

(2) The Commissioner must give a written notice to the individual on a

day (the reduction notice day) (whether before, on or after the day

(if any) the Commissioner gives the individual the relevant notice

under section 18-140), if the Commissioner is satisfied that:

(a) because of illness or for some other good reason, it would

have been unreasonable to expect the individual to take part,

and the individual did not take part, in the management of the

company at any time during the period:

(i) starting on a day on or by which the company was

required to pay any of the total mentioned in paragraph

18-125(1)(c) to the Commissioner under subsection

16-70(1); and

(ii) ending on the reduction notice day; or

Schedule 1 Companies' non-compliance with PAYG withholding and superannuation

guarantee obligations

Part 2 Credits

14 Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012

(b) the individual took all reasonable steps to ensure that one of

the following happened:

(i) the directors (within the meaning of the Corporations

Act 2001) of the company caused the company to pay

the total of the amounts mentioned in paragraph

18-125(1)(c) to the Commissioner;

(ii) the directors caused an administrator of the company to

be appointed under section 436A, 436B or 436C of the

Corporations Act 2001;

(iii) the directors caused the company to begin to be wound

up (within the meaning of that Act);

or there were no reasonable steps the individual could have

taken to ensure that any of those things happened.

(3) In determining what are reasonable steps for the purposes of

paragraph (2)(b), the Commissioner must have regard to:

(a) when, and for how long, the individual was a director and

took part in the management of the company; and

(b) all other relevant circumstances.

Amount of reduction

(4) The amount of the reduction is the amount stated in the notice.

(5) In determining the amount to state in the notice, the Commissioner

must have regard to:

(a) in a case to which paragraph (2)(a) applies--when, and for

how long, the individual could not have been expected to

take part, and did not take part, in the management of the

company; and

(b) in a case to which paragraph (2)(b) applies--when, and for

how long, the individual was a director and took part in the

management of the company; and

circumstances.

Effect of reduction

(6) The amount of the

PAYG withholding non-compliance tax the

individual must pay is treated as always having been that amount

as reduced under this section.

Companies' non-compliance with PAYG withholding and superannuation guarantee

obligations Schedule 1

Credits Part 2

Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012 15

18-135 Associates of directors of non-complying companies

Liability to pay PAYG withholding non-compliance tax

(1) An individual must pay

PAYG withholding non-compliance tax in

relation to a company for an income year of the individual if:

(a) at a time when another individual (the director) was a

director (within the meaning of the Corporations Act 2001)

of the company, the first individual was an

associate of the

director; and

(b) the company was required to pay to the Commissioner under

subsection 16-70(1) in this Schedule amounts:

(i) the company withheld from

withholding payments the

company made to any entities during the income year of

the individual; and

(ii) to which subsection (2) of this section applies; and

Commissioner on or before the last day (the non-compliance

day) on or before which the company was required to pay

any of those amounts to the Commissioner in accordance

with subsection 16-70(1); and

(d) subsection (3) or (6) of this section applies; and

(e) a credit to which the individual is entitled under

section 18-15 is attributable to an extent to

amounts

withheld by the company under Division 12 from

withholding payments made to the individual during the

income year of the individual.

Note:

For the purposes of paragraph (1)(e), it does not matter whether

the company pays the amounts withheld from the withholding

payments made to the individual to the Commissioner under

subsection 16-70(1).

(2) This subsection applies to

amounts withheld that the company was

required to pay to the Commissioner on or before a particular day

(the payment day) under subsection 16-70(1), if:

(a) all of the following subparagraphs apply:

(i) the director was a director (within the meaning of the

Corporations Act 2001) of the company on the payment

day;

(ii) the individual was an

associate of the director on the

payment day;

Schedule 1 Companies' non-compliance with PAYG withholding and superannuation

guarantee obligations

Part 2 Credits

16 Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012

(iii) the company did not pay the total of those amounts to

the Commissioner in accordance with subsection

16-70(1) on or before the payment day; or

(b) all of the following subparagraphs apply:

(i) the director became a director of the company after the

payment day;

(ii) the director was still a director of the company 30 days

after becoming a director;

(iii) the individual was an

associate of the director

throughout that 30 day period;

(iv) the company did not pay the total of those amounts to

the Commissioner in accordance with subsection

16-70(1) on or before the last of those 30 days.

(3) This subsection applies if the Commissioner is satisfied that:

(a)

because

of:

(i) the individual's relationship with the director; or

(ii) a relationship of the individual with the company;

the individual knew, or could reasonably have been expected

to know, of the company's failure to pay the total of the

amounts mentioned in paragraph (1)(c) to the Commissioner;

and

(b) none of the following subparagraphs applies:

(i) the individual took all reasonable steps to influence the

director to cause the company to notify the

Commissioner under Subdivision 18-C of the relevant

amounts withheld;

(ii) the individual took all reasonable steps to influence the

director to cause one of the events mentioned in

subsection (4) to happen, or there were no reasonable

steps the individual could have taken to influence the

director to cause any of those events to happen;

(iii) the individual reported the company's non-payment to

the Commissioner or to another authority with

responsibilities relevant to the operation of the

company.

Example: Other authorities with responsibilities relevant to the operation of

the company could include the Minister, the police, the

Australian Securities and Investments Commission or the

Building and Construction Industry Commissioner.

Companies' non-compliance with PAYG withholding and superannuation guarantee

obligations Schedule 1

Credits Part 2

Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012 17

(4) The following are the events:

(a) the company pays the total of the amounts mentioned in

paragraph (1)(c) to the Commissioner;

(b) an administrator of the company is appointed under

section 436A, 436B or 436C of the Corporations Act 2001;

that Act).

(5) In determining what are reasonable steps for the purposes of

paragraph (3)(b), have regard to:

(a) when, and for how long, the individual was an

associate of

the director; and

(b) when, and for how long, the director was a director and took

part in the management of the company; and

(6) This subsection applies if:

(a) the individual was an employee of the company; and

(b) the Commissioner is satisfied that the company treated the

individual more favourably than it treated other employees of

the company.

Amount of tax

(7) The amount of the

PAYG withholding non-compliance tax the

individual must pay is the lesser of:

(a) the extent of the credit mentioned in paragraph (1)(e); and

(b) the total amount the company did not pay to the

Commissioner as mentioned in paragraph (1)(c).

18-140 Notices

Notices

(1) The Commissioner must not commence proceedings to recover:

(a)

the

PAYG withholding non-compliance tax an individual

must pay for an income year in relation to a company as

mentioned in section 18-125 or 18-135; or

(b)

any

general interest charge payable under

section 18-150;

Schedule 1 Companies' non-compliance with PAYG withholding and superannuation

guarantee obligations

Part 2 Credits

18 Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012

unless, after the non-compliance day mentioned in section 18-125

or 18-135, the Commissioner gives a written notice to the

individual under this section.

(2) The Commissioner may only give the notice if the Commissioner

is satisfied, on the basis of information available to the

Commissioner, that it is fair and reasonable for the individual to

pay

PAYG withholding non-compliance tax in relation to the

company for the income year.

(3) The Commissioner must not give the notice on a day if, on that

day:

(a) the individual; or

(b) in a case to which section 18-135 applies--the director

mentioned in that section;

is liable to pay to the Commissioner a penalty under Division 269

because the company has not complied with the obligation

mentioned in item 1 of the table in subsection 269-10(1) to pay to

the Commissioner an

amount withheld to which paragraph

18-125(1)(b) or 18-135(1)(b) applies.

(4) The notice must specify:

(a) the company; and

(b) the income year; and

PAYG withholding non-compliance tax

the individual must pay.

Effect of compliance between non-compliance day and notice day

(5) Subsections (6) and (7) apply if:

(a) the company's liability to pay the total of the amounts

mentioned in paragraph 18-125(1)(c) or 18-135(1)(c) to the

Commissioner is discharged to any extent during the period:

(i) starting on the day after the non-compliance day; and

(ii) ending on the day before the day the Commissioner

gives the notice under this section to the individual; and

(b) had all discharges of the company's liability occurring during

that period occurred before the non-compliance day:

(i) the individual would not have been required to pay the

PAYG withholding non-compliance tax in relation to

the company for the income year; or

Companies' non-compliance with PAYG withholding and superannuation guarantee

obligations Schedule 1

Credits Part 2

Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012 19

(ii) the amount of PAYG withholding non-compliance tax

the individual would have been required to pay would

have been less than the actual amount of PAYG

withholding non-compliance tax.

(6) The amount of the

PAYG withholding non-compliance tax the

individual must pay is reduced:

(a) in a case to which subparagraph (5)(b)(i) applies--to nil; or

(b) otherwise--to the amount of PAYG withholding

non-compliance tax the individual would have been required

to pay as mentioned in subparagraph (5)(b)(ii).

(7) The amount of the

PAYG withholding non-compliance tax the

individual must pay is treated as always having been that amount

as reduced under subsection (6).

18-145 When PAYG withholding non-compliance tax must be paid

(1)

The

PAYG withholding non-compliance tax an individual must

pay for an income year is due and payable at the earliest time any

of the income tax the individual must pay for the

financial year to

which the income year relates is due and payable.

Note:

Division 5 of the Income Tax Assessment Act 1997 explains how to

work out when to pay your income tax.

(2) For the purposes of subsection (1), if the individual is not required

to pay income tax for the

financial year:

(a) treat the individual as being required to pay income tax for

the financial year; and

(b) if the Commissioner has made an assessment that the income

tax the individual is required to pay is nil--treat that

assessment as being for an amount greater than nil.

Note:

See Part 4-15 in this Schedule for collection and recovery provisions.

18-150 General interest charge payable on unpaid PAYG

withholding non-compliance tax

If an amount of

PAYG withholding non-compliance tax that an

individual must pay to the Commissioner remains unpaid after the

time by which it is due to be paid, the individual is liable to pay

general interest charge on the unpaid amount of tax for each day

in the period that:

Schedule 1 Companies' non-compliance with PAYG withholding and superannuation

guarantee obligations

Part 2 Credits

20 Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012

(a) started at the beginning of the day by which the unpaid

amount of tax was due to be paid; and

(b) finishes at the end of the last day, at the end of which, any of

the following remains unpaid:

(i) the unpaid amount of tax;

(ii) general interest charge on any of the unpaid amount of

tax.

18-155 Validity of decisions and evidence

(1) Section 175 of the Income Tax Assessment Act 1936 (validity)

applies to a decision of the Commissioner under section 18-140 in

this Schedule in the same way as it applies to an assessment.

(2) Section 177 of the Income Tax Assessment Act 1936 (Evidence)

applies to a notice under section 18-140 in this Schedule in the

same way as it applies to a notice of assessment.

18-160 Rights of indemnity and contribution

(1) This section applies if an individual must pay

PAYG withholding

non-compliance tax as mentioned in section 18-125 or 18-135

because a company did not pay an amount to the Commissioner as

mentioned in paragraph 18-125(1)(c) or 18-135(1)(c).

(2) The individual has the same rights (whether by way of indemnity,

subrogation, contribution or otherwise) against the company or

anyone else as if:

(a) the individual had made a payment equal to the amount of the

PAYG withholding non-compliance tax under a guarantee

of the liability of the company to pay the amount to the

Commissioner; and

(b)

under

the

guarantee:

(i) the individual; and

(ii) every individual to whom subsection (3) applies;

were jointly and severally liable as guarantors (but only, in

the case of an individual to whom subparagraph (ii) of this

paragraph applies, to the extent to which subsection (3)

applies to the individual); and

subsection (1) is entitled under section 18-170 or 18-175 in

Companies' non-compliance with PAYG withholding and superannuation guarantee

obligations Schedule 1

Credits Part 2

Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012 21

relation to the amount of PAYG withholding non-compliance

tax were a repayment of the payment mentioned in

paragraph (a) of this subsection.

(3) This subsection applies to an individual to the extent that:

(a) the individual was a director (within the meaning of the

Corporations Act 2001) of the company on the day (the

payment day) on or by which the company was required to

pay the amount mentioned in subsection (1) to the

Commissioner; or

(b) both of the following subparagraphs apply:

(i) the individual became a director of the company after

the payment day;

(ii) the individual was still a director of the company 30

days after becoming a director.

(4) However, subsection (3) does not apply to an individual to the

extent that the amount of the

PAYG withholding non-compliance

tax the individual must pay in relation to the company for the

income year as mentioned in section 18-125 is reduced under

section 18-130.

Credits for later compliance

18-165 Credits for later compliance--scope

Sections 18-170, 18-175 and 18-180 apply if:

(a) an individual must pay

PAYG withholding non-compliance

tax in relation to a company for an income year because the

company did not pay to the Commissioner the total of the

amounts mentioned in paragraph 18-125(1)(c) or

18-135(1)(c); and

(b) the Commissioner gives to the individual a notice under

section 18-140 on a particular day (the tax notice day) in

relation to the PAYG withholding non-compliance tax the

individual must pay; and

the total of the amounts to the Commissioner is discharged to

any extent.

Schedule 1 Companies' non-compliance with PAYG withholding and superannuation

guarantee obligations

Part 2 Credits

22 Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012

18-170 Credits for later compliance--Commissioner must give

notice in certain circumstances

Commissioner must give notice to director or associate in certain

circumstances

(1) The Commissioner must give a written notice to the individual on a

particular day (the credit notice day) if, had the discharge

mentioned in paragraph 18-165(c) (and all previous discharges of

the company's liability mentioned in that paragraph) occurred

before the tax notice day:

(a) the individual would not have been required to pay the

PAYG withholding non-compliance tax in relation to the

company for the income year; or

(b) the amount of PAYG withholding non-compliance tax the

individual would have been required to pay would have been

less than the actual amount of PAYG withholding

non-compliance tax.

Note 1:

Subsection 18-180(2) provides that the Commissioner must not give a

notice to the individual in certain circumstances.

Note 2:

The amount of PAYG withholding non-compliance tax may be limited

by:

(a) the conditions in subsections 18-125(1) and (2) or 18-135(1) to

(6); or

(b) the limits on the amount of the tax in subsection 18-125(3) or

18-135(7).

Note 3:

In working out the actual amount of the tax for the purposes of

paragraph (1)(b), have regard to other credits to which the individual

is entitled under this section or section 18-175. See subsection

18-180(1).

Director or associate entitled to credit if Commissioner gives

notice

(2) The individual is entitled to a credit if the Commissioner gives a

written notice to the individual under subsection (1).

(3) The individual becomes entitled to the credit on the day the

Commissioner gives the notice to the individual.

Amount of credit

(4) The amount of the credit is the amount stated in the notice.

Companies' non-compliance with PAYG withholding and superannuation guarantee

obligations Schedule 1

Credits Part 2

Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012 23

(5) In a case to which paragraph (1)(a) applies, the amount stated must

be the amount of the

PAYG withholding non-compliance tax.

(6) In any other case, the amount stated:

(a) must not exceed the amount of the

PAYG withholding

non-compliance tax; and

(b) must not exceed the amount of the discharge mentioned in

paragraph 18-165(c); and

(i) the amount of the PAYG withholding non-compliance

tax; exceeds

(ii) the amount that would have been the amount of the

PAYG withholding non-compliance tax had the

discharge mentioned in paragraph 18-165(c) (and all

previous discharges of the company's liability

mentioned in that paragraph) occurred before the tax

notice day.

(7) In determining the amount to state in the notice in a case to which

paragraph (1)(a) does not apply, the Commissioner must have

regard to what is fair and reasonable in the circumstances.

18-175 Credits for later compliance--Commissioner may give notice

Commissioner may give notice to director or associate

(1) The Commissioner may give a written notice to the individual on a

particular day (the credit notice day).

Note:

Subsection 18-180(2) provides that the Commissioner must not give a

notice to the individual in certain circumstances.

Director or associate entitled to credit if Commissioner gives

notice

(2) The individual is entitled to a credit if the Commissioner gives a

written notice to the individual under subsection (1).

(3) The individual becomes entitled to the credit on the day the

Commissioner gives the notice to the individual.

Amount of credit

(4) The amount of the credit is the amount stated in the notice.

Schedule 1 Companies' non-compliance with PAYG withholding and superannuation

guarantee obligations

Part 2 Credits

24 Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012

(5) The amount stated:

(a) must not exceed the amount of the

PAYG withholding

non-compliance tax; and

Note:

In working out the amount of the tax for the purposes of

paragraph (5)(a), have regard to other credits to which the

individual is entitled under section 18-170 or this section. See

subsection 18-180(1).

(b) must not exceed the amount of the discharge mentioned in

paragraph 18-165(c).

Commissioner's discretion

(6)

determining:

(a) whether to give a notice under this section; or

(b) the amount to state in the notice;

the Commissioner must have regard to what is fair and reasonable

in the circumstances.

18-180 Effect of earlier credits

(1) A reference in section 18-170 or 18-175, or subsection (2) of this

section, to the amount of the

PAYG withholding non-compliance

tax is treated as being a reference to:

(a) the amount of the PAYG withholding non-compliance tax;

less

Note:

The amount of the PAYG withholding non-compliance tax may,

in a case to which section 18-125 applies, be affected by

reductions under section 18-130.

(b) the total of any credits to which the individual is entitled in

relation to the amount of PAYG withholding non-compliance

tax because of notices given to the individual under

section 18-170 or 18-175 before the credit notice day.

(2) The Commissioner must not give a written notice to the individual

under section 18-170 or 18-175 if, on the day before the credit

notice day, the amount of the

PAYG withholding non-compliance

tax is nil.

Companies' non-compliance with PAYG withholding and superannuation guarantee

obligations Schedule 1

Credits Part 2

Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012 25

Other provisions

18-185 When Commissioner may give notice

The Commissioner may give a notice to the individual on a day

(the notice day) under section 18-130, 18-140, 18-170 or 18-175 if:

(a) on the notice day, the Commissioner has not given a notice of

assessment to the individual for the income year mentioned

in section 18-125 or 18-135; or

(b) if the notice would:

(i) in the case of a notice under section 18-130--result in

the individual being liable to pay

PAYG withholding

non-compliance tax or an increased amount of PAYG

withholding non-compliance tax; or

(ii) in the case of a notice under section 18-140--result in

the Commissioner being able to commence proceedings

to recover PAYG withholding non-compliance tax, or

an increased amount of PAYG withholding

non-compliance tax, from the individual; or

(iii) in the case of a notice under section 18-170 or 18-175--

reduce the amount of a credit or disentitle the individual

to a credit;

the Commissioner gives the notice no later than 2 years after

first giving a notice of assessment to the individual for the

income year mentioned in section 18-125 or 18-135; or

(i) in the case of a notice under section 18-130--result in

the individual being liable to pay no PAYG withholding

non-compliance tax, or a reduced amount of PAYG

withholding non-compliance tax; or

(ii) in the case of a notice under section 18-140--result in

the Commissioner no longer being able to commence

proceedings to recover PAYG withholding

non-compliance tax, or result in the Commissioner

being able to commence proceedings to recover a

reduced amount of PAYG withholding non-compliance

tax, from the individual; or

(iii) in the case of a notice under section 18-170 or 18-175--

increase the amount of a credit or entitle the individual

to a credit;

Schedule 1 Companies' non-compliance with PAYG withholding and superannuation

guarantee obligations

Part 2 Credits

26 Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012

the Commissioner gives the notice no later than 4 years after

first giving a notice of assessment to the individual for the

income year mentioned in section 18-125 or 18-135; or

(d) in any case--the Commissioner gives the notice:

(i) to give effect to a decision on a review or appeal; or

(ii) as a result of an objection made by the individual or

pending a review or appeal.

18-190 Review of decisions

An individual to whom the Commissioner gives a notice under

section 18-140 in relation to an amount of

PAYG withholding

non-compliance tax may object, under Part IVC of this Act, against

a decision of the Commissioner under section 18-130, 18-140,

18-170 or 18-175 in relation to the PAYG withholding

non-compliance tax if the individual is dissatisfied with the

decision.

15 Subsection 250-10(2) in Schedule 1 (after table item 105)

Insert:

110 PAYG

withholding

non-compliance tax

18-145 in

Schedule 1

Taxation Administration Act 1953

Taxation (Interest on Overpayments and Early Payments)

Act 1983

16 Subsection 3(1) (after paragraph (caa) of the definition of

decision to which this Act applies)

Insert:

(cab) in a case where the expression is used in relation to relevant

tax of a kind referred to in item 91 of the table in section 3C

(Pay as you go withholding non-compliance tax)--a decision

of the Commissioner under section 18-130 in Schedule 1 to

the Taxation Administration Act 1953; or

Note:

Section 18-130 in Schedule 1 to the Taxation Administration Act

1953 requires the Commissioner to give a notice to a director of a

company if the Commissioner is satisfied of certain matters.

17 Subsection 3(1) (note at the end of the definition of

income tax crediting amount)

Companies' non-compliance with PAYG withholding and superannuation guarantee

obligations Schedule 1

Credits Part 2

Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012 27

Omit "Note", substitute "Note 1".

18 Subsection 3(1) (at the end of the definition of income tax

crediting amount)

Add:

Note 2:

For credits that arise under section 18-170 or 18-175 in Schedule 1 to

the Taxation Administration Act 1953, see subsection (3) of this

section.

19 At the end of section 3

Add:

Credits under section 18-170 or 18-175 in Schedule 1 to the

Taxation Administration Act 1953

(3) To avoid doubt, for the purposes of this Act, a credit of an

individual that arises under section 18-170 or 18-175 in Schedule 1

to the Taxation Administration Act 1953 relates to the income tax

payable by the individual for the year of income in which the

individual becomes entitled to the credit.

Note:

Subdivision 18-D in Schedule 1 to the Taxation Administration Act

1953 provides that a director, or an associate of a director, of a

company that does not comply with its obligations under Part 2-5 (Pay

as you go (PAYG) withholding) must pay Pay as you go withholding

non-compliance tax in certain circumstances. Sections 18-170 and

18-175 entitle the director or associate to a credit if the company

subsequently complies with its obligations.

20 Section 3C (after table item 90 of the definition of relevant

tax)

Insert:

Pay as you go withholding non-compliance tax

21 Section 10

Before "Interest payable", insert "(1)".

22 At the end of section 10

Add:

(2) For the purposes of subparagraph (1)(a)(i), if the decision to which

this Act relates is a decision of the Commissioner under

section 18-130 in Schedule 1 to the Taxation Administration Act

Schedule 1 Companies' non-compliance with PAYG withholding and superannuation

guarantee obligations

Part 2 Credits

28 Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012

1953 in relation to an amount of Pay as you go withholding

non-compliance tax, the notice of the decision in relation to which

that decision was made is the notice the Commissioner gives to the

person under section 18-140 in that Schedule in relation to that

amount of tax.

23 Application of amendments

The amendments made by this Part apply to an individual in relation to

amounts withheld by a company, if:

(a) the amounts are withheld during an income year of the

individual starting on or after 1 July 2011; and

(b) the company is required to pay the amounts withheld to the

Commissioner on or after the commencement of this item.

Companies' non-compliance with PAYG withholding and superannuation guarantee

obligations Schedule 1

Superannuation guarantee charge Part 3

Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012 29

Part 3--Superannuation guarantee charge

Division 1--Estimates

Corporations Act 2001

24 Paragraph 553AB(1)(a)

After "superannuation guarantee charge", insert ", or by way of a

liability to pay the amount of an estimate under Division 268 in

Schedule 1 to the Taxation Administration Act 1953".

25 Paragraph 553AB(1)(b)

After "superannuation guarantee charge", insert "or estimate liability".

26 Paragraph 553AB(3)(a)

After "superannuation guarantee charge", insert ", or by way of a

liability to pay the amount of an estimate under Division 268 in

Schedule 1 to the Taxation Administration Act 1953".

27 Paragraph 553AB(3)(b)

After "superannuation guarantee charge", insert "or estimate liability".

28 Paragraph 556(1)(e)

Repeal the paragraph, substitute:

(e) subject to subsection (1A)--next:

(i) wages, superannuation contributions and

superannuation guarantee charge payable by the

company in respect of services rendered to the company

by employees before the relevant date; or

(ii) liabilities to pay the amounts of estimates under

Division 268 in Schedule 1 to the Taxation

Administration Act 1953 of superannuation guarantee

charge mentioned in subparagraph (i);

29 Before subsection 556(1A)

Insert:

Schedule 1 Companies' non-compliance with PAYG withholding and superannuation

guarantee obligations

Part 3 Superannuation guarantee charge

30 Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012

Superannuation guarantee charge

30 After subsection 556(1AF)

Insert:

(1AG) Subsections (1AC) to (1AF) apply to a liability to pay the amount

of an estimate of superannuation guarantee charge for a quarter in

the same way as they apply to superannuation guarantee charge

payable for the quarter.

31 Before subsection 556(1B)

Insert:

Leave amounts

32 Before subsection 556(1C)

Insert:

Retrenchment payments

33 Before subsection 556(2)

Insert:

Definitions

34 Subsection 588FGA(1)

Repeal the subsection, substitute:

(1) This section applies if the Court makes an order under

section 588FF against the Commissioner of Taxation because of

the payment of an amount in respect of a liability:

(a) under any of the following provisions:

(i) former section 220AAE, 220AAM or 220AAR of the

Income Tax Assessment Act 1936;

(ii) former section 221F (except subsection 221F(12)),

former section 221G (except subsection 221G(4A)) or

former section 221P of the Income Tax Assessment Act

1936;

(iii) former subsection 221YHDC(2) of the Income Tax

Assessment Act 1936;

Companies' non-compliance with PAYG withholding and superannuation guarantee

obligations Schedule 1

Superannuation guarantee charge Part 3

Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012 31

(iv) former subsection 221YHZD(1) or (1A) of the Income

Tax Assessment Act 1936;

(v) former subsection 221YN(1) of the Income Tax

Assessment Act 1936;

(vi) section 222AHA of the Income Tax Assessment Act

1936;

(vii) Subdivision 16-B in Schedule 1 to the Taxation

Administration Act 1953; or

(b) to pay the amount of an estimate of unpaid superannuation

guarantee charge under Division 268 in Schedule 1 to the

Taxation Administration Act 1953.

Superannuation Guarantee (Administration) Act 1992

35 At the end of section 63A

Add:

Estimates under the Taxation Administration Act 1953

(3) For the purposes of this Part, an amount paid to the

Commonwealth is treated as being a payment of superannuation

guarantee charge:

(a) in respect of an employee or employees; and

(b) made by or on behalf of an employer;

to the extent that, as a result of the amount being paid to the

Commonwealth, a liability of the employer to pay superannuation

guarantee charge in respect of that employee or those employees is

discharged under subsection 268-20(3) in Schedule 1 to the

Taxation Administration Act 1953.

Note:

Under Division 268 in that Schedule, the Commissioner may make an

estimate of the unpaid and overdue amount of an employer's

superannuation guarantee charge for a quarter.

(4) However, subsection (3) does not apply to the amount until the

Commissioner knows which employee or employees the liability to

pay the superannuation guarantee charge was in respect of.

Taxation Administration Act 1953

36 Division 268 in Schedule 1 (heading)

Schedule 1 Companies' non-compliance with PAYG withholding and superannuation

guarantee obligations

Part 3 Superannuation guarantee charge

32 Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012

Repeal the heading, substitute:

Division 268--Estimates and recovery of PAYG

withholding liabilities and superannuation

guarantee charge

37 Section 268-1 in Schedule 1

Omit:

This Division enables the Commissioner to make an estimate of

amounts not paid as required by Part 2-5 (Pay as you go (PAYG)

withholding), and to recover the amount of the estimate.

substitute:

This Division enables the Commissioner to make an estimate of:

(a)

amounts not paid as required by Part 2-5 of this

Act (Pay as you go (PAYG) withholding); or

(b)

unpaid superannuation guarantee charge;

and to recover the amount of the estimate.

38 Section 268-1 in Schedule 1

After "amounts required by Part 2-5", insert "or the Superannuation

Guarantee (Administration) Act 1992".

39 Section 268-1 in Schedule 1

After "that Part", insert "or Act".

40 Section 268-5 in Schedule 1

Repeal the section, substitute:

268-5 Object of Division

The object of this Division is to enable the Commissioner to take

prompt and effective action to recover:

Companies' non-compliance with PAYG withholding and superannuation guarantee

obligations Schedule 1

Superannuation guarantee charge Part 3

Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012 33

(a) amounts not paid as required by Part 2-5 (Pay as you go

(PAYG) withholding); or

(b) unpaid superannuation guarantee charge that has not been

assessed.

41 Subsection 268-10(1) in Schedule 1

Repeal the subsection, substitute:

Estimate

(1) The Commissioner may estimate the unpaid and overdue amount

of a liability (the underlying liability) of yours:

(a) under section 16-70 in this Schedule (requirement to pay to

the Commissioner amounts you have withheld under the Pay

as you go withholding rules); or

(b) to pay superannuation guarantee charge for a

quarter under

section 16 of the Superannuation Guarantee (Administration)

Act 1992, to the extent the superannuation guarantee charge

has not been assessed before the Commissioner makes the

estimate.

(1A) For the purposes of this Division, your superannuation guarantee

charge for a

quarter is treated as being payable on the day by

which you must lodge a superannuation guarantee statement for the

quarter under section 33 of the Superannuation Guarantee

(Administration) Act 1992, even if, on that day, the charge has not

been assessed under that Act.

42 Subsection 268-10(3) in Schedule 1 (example)

Repeal the example, substitute:

Example 1: In the case of an underlying liability under section 16-70 (requirement

to pay to the Commissioner amounts you have withheld under the Pay

as you go withholding rules), the Commissioner may have regard to

information about amounts you withheld under the Pay as you go

rules before the period in relation to which the underlying liability

arose.

Example 2: In the case of an underlying liability to pay superannuation guarantee

charge for a quarter, the Commissioner may have regard to

information about your contributions to RSAs and complying

superannuation funds for earlier quarters.

43 Subsection 268-75(1) in Schedule 1

Schedule 1 Companies' non-compliance with PAYG withholding and superannuation

guarantee obligations

Part 3 Superannuation guarantee charge

34 Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012

Repeal the subsection, substitute:

(1) This section applies if:

(a) your liability to pay the amount of the estimate remains

undischarged at the end of 7 days after the Commissioner

gives you notice of the estimate; and

(b) the underlying liability is not a liability to pay superannuation

guarantee charge.

44 Subsection 268-90(2) in Schedule 1

Omit "The statutory", substitute "In a case covered by paragraph

268-10(1)(a) (estimate of liability under requirement to pay to the

Commissioner amounts you have withheld under the Pay as you go

withholding rules), the statutory".

45 After subsection 268-90(2) in Schedule 1

Insert:

(2A) In a case covered by paragraph 268-10(1)(b) (estimate of liability

to pay superannuation guarantee charge), the statutory declaration

or affidavit must verify the following facts:

(a) your name and address;

(b) for each employee for whom you have an

individual

superannuation guarantee shortfall for the relevant

quarter:

(i) the employee's name and postal address and, if the

employee has

quoted the employee's

tax file number

to you, the employee's tax file number; and

(ii) the amount of the shortfall;

relevant superannuation guarantee charge to the

Commissioner.

Note:

The amount of the individual superannuation guarantee shortfall

mentioned in paragraph (b) is a factor in determining the amount of

the superannuation guarantee charge mentioned in paragraph

268-10(1)(b). The lesser amount mentioned in subsection 268-40(2)

may therefore differ from the amount of that shortfall.

46 Saving provision--estimates

An estimate:

(a) made under section 268-10 in Schedule 1 to the Taxation

Administration Act 1953; and

Companies' non-compliance with PAYG withholding and superannuation guarantee

obligations Schedule 1

Superannuation guarantee charge Part 3

Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012 35

(b) in force just before the commencement of this item;

has effect, from that commencement, as if it had been made under that

section as amended by this Schedule.

47 Application of amendments

The amendments made by this Division apply to superannuation

guarantee charge for a quarter if the day by which you must lodge a

superannuation guarantee statement for the quarter occurs on or after

the day this item commences.

Division 2--Penalties

Superannuation Guarantee (Administration) Act 1992

48 Subsection 63A(3)

After "subsection 268-20(3)", insert ", or section 269-40,".

Taxation Administration Act 1953

49 Section 269-1 in Schedule 1

After "Division 268", insert "in this Schedule and Part 3 of the

Superannuation Guarantee (Administration) Act 1992 (obligation to

pay superannuation guarantee charge)".

50 Paragraph 269-5(a) in Schedule 1

Repeal the paragraph, substitute:

(a) meets its obligations under:

(i) Subdivision 16-B (obligation to pay withheld amounts

to the Commissioner); and

(ii) Division 268 (estimates of PAYG withholding liabilities

and superannuation guarantee charge); and

(iii) Part 3 of the Superannuation Guarantee

(Administration) Act 1992 (obligation to pay

superannuation guarantee charge); or

51 Subsection 269-10(1) in Schedule 1 (table)

Repeal the table, substitute:

Schedule 1 Companies' non-compliance with PAYG withholding and superannuation

guarantee obligations

Part 3 Superannuation guarantee charge

36 Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012

Obligations that directors must cause company to comply with

Item Column

This Division applies if, on a

particular day (the initial day), a

company is a company

registered under the

Corporations Act 2001, and on

the initial day ...

Column 2

and the company is obliged to pay to

the Commissioner on or before a

particular day (the due day) ...

the company withholds an amount

under Division 12

that amount in accordance with

Subdivision 16-B.

the company receives an

alienated personal services

payment

an amount in respect of that alienated

personal services payment in

accordance with Division 13 and

Subdivision 16-B.

the company provides a

non-cash

benefit

an amount in respect of that benefit in

accordance with Subdivision 16-B.

the company is given notice of an

estimate under Division 268

the amount of the estimate.

quarter ends

superannuation guarantee charge for

the quarter in accordance with the

Superannuation Guarantee

(Administration) Act 1992.

52 At the end of section 269-10 in Schedule 1

Add:

Superannuation guarantee charge

(3) For the purposes of this Division, the company's superannuation

guarantee charge for a

quarter under the Superannuation

Guarantee (Administration) Act 1992 is treated as being payable

on the day by which the company must lodge a superannuation

guarantee statement for the quarter under section 33 of that Act,

even if the charge is not assessed under that Act on or before that

day.

53 Subsection 269-30(2) in Schedule 1 (table)

At the end of the table, add:

3 superannuation

guarantee charge for

the due day,

(a) if the company, on or

before the last day

Companies' non-compliance with PAYG withholding and superannuation guarantee

obligations Schedule 1

Superannuation guarantee charge Part 3

Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012 37

quarter,

mentioned in column

2, lodges under

section 33 of the

Superannuation

Guarantee

(Administration) Act

1992 a

superannuation

guarantee statement

for the quarter--the

extent (if any) to

which the sum

mentioned in

paragraph 35(1)(e) of

that Act is less than

the amount of the

superannuation

guarantee charge the

company is obliged

to pay for the quarter;

(b) otherwise--to any

extent.

54 Subsection 269-30(2) in Schedule 1 (note)

Omit "Note", substitute "Note 1".

55 At the end of subsection 269-30(2) in Schedule 1

Add:

Note 2:

The sum mentioned in paragraph 35(1)(e) of the Superannuation

Guarantee (Administration) Act 1992 is the sum of:

(a) the total of the company's individual superannuation guarantee

shortfalls; and

(b) the company's nominal interest component; and

specified in the superannuation guarantee statement.

56 After subsection 269-35(3) in Schedule 1

Insert:

Schedule 1 Companies' non-compliance with PAYG withholding and superannuation

guarantee obligations

Part 3 Superannuation guarantee charge

38 Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012

Superannuation guarantee charge--reasonably arguable position

(3A) You are not liable to a penalty under this Division to the extent that

the penalty resulted from the company treating the Superannuation

Guarantee (Administration) Act 1992 as applying to a matter or

identical matters in a particular way that was

reasonably arguable,

if the company took reasonable care in connection with applying

that Act to the matter or matters.

57 Application of amendments

The amendments made by this Division apply to a company's liability

to pay superannuation guarantee charge for a quarter if the day by

which the company must lodge a superannuation guarantee statement

for the quarter occurs on or after the day this item commences.

Consolidation and TOFA Schedule 2

Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012 39

Schedule 2--Consolidation and TOFA

Income Tax Assessment Act 1997

1 Paragraph 715-375(1)(b)

After "of the joining entity at the joining time", insert "(disregarding

subsection 701-1(1) (the single entity rule))".

2 Paragraph 715-375(1)(c)

Repeal the paragraph, substitute:

Division 230

financial arrangement of the head company at the joining

time (because of subsection 701-1(1) (the single entity rule)).

3 Subsections 715-375(2), (3) and (4)

Repeal the subsections, substitute:

(2) For the purposes of Division 230 and Schedule 1 to the Tax Laws

Amendment (Taxation of Financial Arrangements) Act 2009, treat

the

head company of the group as starting to have the accounting

liability at the joining time for receiving a payment equal to:

(a) if the liability is or is part of a

Division 230 financial

arrangement of the head company at the joining time

(because of subsection 701-1(1) (the single entity rule)):

(i) to which Subdivision 230-B (accruals method or

realisation method) applies; or

(ii) to which Subdivision 230-E (hedging financial

arrangements method) applies;

the

amount of the liability, as determined in accordance with:

(iii) the joining entity's

accounting principles for tax cost

setting; or

(iv) if the amount of the liability cannot be determined in

accordance with the joining entity's accounting

principles for tax cost setting--comparable standards

for accounting made under a

foreign law; or

(b)

otherwise--the

liability's

Division 230 starting value at the

joining time.

4 After section 715-375

Schedule 2 Consolidation and TOFA

40 Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012

Insert:

715-378 Cost setting--head company's right to receive or obligation

to provide payment

(1) This section applies in relation to an asset or a liability if:

(a) an entity (the joining entity) becomes a subsidiary member of

a consolidated group at a time (the joining time); and

(b) the asset or liability becomes that of the head company of the

group because subsection 701-1(1) (the single entity rule)

applies at the joining time; and

relation to the asset at the joining time; and

(d) in the case of a liability--subsection 715-375(2) applies in

relation to the liability at the joining time.

(2) In the case of an asset, for the purposes of section 230-60, assume

that the

head company of the group acquired the asset at the

joining time (as mentioned in subsection 701-55(5A)) in return for

the head company starting to have an obligation to provide the

payment mentioned in that subsection.

(3) In the case of a liability, for the purposes of section 230-60, assume

that the

head company of the group started to have the liability at

the joining time (as mentioned in subsection 715-375(2)) in return

for the head company starting to have a right to receive the

payment mentioned in that subsection.

Tax Laws Amendment (Taxation of Financial Arrangements)

Act 2009

5 After item 104 of Schedule 1

Insert:

104B Asset or liability of entity joining pre-TOFA

consolidated group etc.

(1)

This item applies in relation to an asset or liability if:

(a) an entity (the joining entity) becomes a subsidiary member of

a consolidated group or MEC group at a time (the joining

time); and

Consolidation and TOFA Schedule 2

Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012 41

(b) the asset or liability becomes that of the head company of the

group because subsection 701-1(1) of the Income Tax

Assessment Act 1997 (the single entity rule) applies when the

joining entity becomes a subsidiary member of the group;

and

at the start of the head company's first applicable income

year; and

(d) the head company's first applicable income year starts after

the joining time; and

(e) the head company has the asset or liability (whether or not

because of subsection 701-1(1) of the Income Tax

Assessment Act 1997 (the single entity rule)) throughout the

period:

(i) starting at the joining time; and

(ii) ending at the start of the head company's first

applicable income year; and

(f) the head company elects to have subitem 104(2) apply to

itself; and

(g) the joining entity is not a chosen transitional entity (within

the meaning of Division 701 of the Income Tax (Transitional

Provisions) Act 1997).

Note:

Item 104C prevents the application of this item in relation to certain

assets and liabilities.

(2)

For the purposes of subitem 104(13) and Division 230 of the Income

Tax Assessment Act 1997:

(a) in the case of an asset--assume that subsection 701-55(5A)

of that Act applies in relation to the asset at the joining time;

and

(b) in the case of a liability--assume that section 715-375 of that

Act applies as if the liability is, or is part of, a Division 230

financial arrangement at the joining time.

(3)

Subitems 104(14) and (15) do not apply in relation to the asset or

liability.

(4)

In the case of an asset, subitems (5), (6) and (7) apply if, on the

assumption that subsection 701-55(5A) of the Income Tax Assessment

Act 1997 applies in relation to the asset at the joining time, paragraph

701-55(5A)(b) of that Act would apply in relation to the asset.

Schedule 2 Consolidation and TOFA

42 Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012

(5)

Work out if the Division 230 starting value for the asset at the joining

time exceeds or falls short of its tax cost setting amount.

(6)

If there is an excess, an amount equal to 25% of that excess is included

in the head company's assessable income for:

(a) the head company's first applicable income year; and

(b) each of the 3 subsequent income years.

(7)

If there is a shortfall, the head company is entitled to a deduction equal

to 25% of that shortfall for:

(a) the head company's first applicable income year; and

(b) each of the 3 subsequent income years.

(8)

In the case of a liability, subitem (9) applies if Subdivision 705-B of the

Income Tax Assessment Act 1997 (group formation) has effect in

relation to the joining entity becoming a subsidiary member of the

group.

(9)

Treat the amount of the payment mentioned in subsection 715-375(2) of

that Act as being the amount of consideration that the joining entity

would need to provide, if it were to cease holding the liability just

before the joining time, without an amount being assessable income of,

or deductible to, the joining entity.

104C Exception to item 104B

(1)

Subitem (2) applies if:

(a) assuming that item 51 of Schedule 3 to the Tax Laws

Amendment (2012 Measures No. 2) Act 2012 commenced at

the same time as this item, that item would apply in relation

to a ruling or advice; and

(b) to the extent that the ruling or advice has effect in relation to

the application of subsection 701-55(5C) or (6) of the

original 2010 law (within the meaning of that Schedule) in

respect of the joining entity mentioned in item 50 of that

Schedule, that ruling or advice is in relation to an asset of an

entity for an income year; and

of the income year; and

(d) the requirements in subitem 104B(1) are satisfied in relation

to the asset; and

Consolidation and TOFA Schedule 2

Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012 43

(e) the entity is the head company mentioned in subitem

104B(1); and

(f) the income year is the head company's first applicable

income year mentioned in subitem 104B(1).

(2)

Item 104B does not apply in relation to the asset.

(3)

Subitem (4) applies if:

(a) subitem (2) applies; and

(b) a liability is, or is part of, a financial arrangement at the start

of the income year mentioned in subitem (1); and

arrangement mentioned in paragraph (1)(c); and

(d) the requirements in subitem 104B(1) are satisfied in relation

to the liability; and

(e) the head company mentioned in subitem 104B(1) is the same

entity as the head company mentioned in paragraph (1)(e) of

this item.

(4)

Item 104B does not apply in relation to the liability.

6 Application

Items 1, 2 and 3 of this Schedule apply in the same way as Part 2 of

Schedule 1 to the Tax Laws Amendment (Taxation of Financial

Arrangements) Act 2009 applies.

Note:

The application of the amendments made by Part 2 of Schedule 1 to the Tax Laws

Amendment (Taxation of Financial Arrangements) Act 2009 is set out in Part 3 of that

Schedule.

Schedule 3 Consolidation

Part 1 Pre rules

44 Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012

Schedule 3--Consolidation

Part 1--Pre rules

Income Tax Assessment Act 1997

1 Subsection 701-55(5C)

Repeal the subsection, substitute:

Rights to future amounts

(5C)

If:

(a) the asset's tax cost is set because an entity becomes a

subsidiary member of a

consolidated group at the particular

time; and

(b) section 716-410 (rights to amounts that are expected to be

included in assessable income) covers the asset at the

particular time; and

non-deductible right to future income;

the expression means that section 716-405 may apply in relation to

the asset after the particular time.

Consumable stores

(5D)

If:

(a) the asset's tax cost is set because an entity becomes a

subsidiary member of a

consolidated group at the particular

time; and

(b) the asset is consumable stores;

the expression means that, for the purposes of section 8-1, the

head company of the group is taken to have incurred an outgoing

at the particular time in acquiring the asset equal to the asset's

tax

cost setting amount.

2 Subsection 701-55(6)

Repeal the subsection, substitute:

Consolidation Schedule 3

Pre rules Part 1

Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012 45

Other provisions

(6) If any provision of this Act that is not mentioned above is to apply

in relation to the asset, the expression means that the provision

applies as if the asset's cost at that time were equal to its

tax cost

setting amount.

Note:

For specific clarifications of the operation of this subsection in

relation to bad debts, see Subdivision 716-S.

3 Section 701-56 (heading)

Repeal the heading, substitute:

701-56 Non-application of subsection 701-55(6) to certain assets

4 Subsections 701-56(1) and (2)

Repeal the subsections.

5 Subsection 701-58(2)

Omit ", (5C)", substitute ", (5C), (5D)".

6 After section 701-61

Insert:

701-63 Asset forming part of goodwill, right to future income, etc.

(1) Subsection (2) applies if an entity (the joining entity) became a

subsidiary member of a

consolidated group at a time (the joining

time).

(2) For the purposes of this Part (other than this section):

(a) treat goodwill of a business of the joining entity as a single

asset; and

(b) treat an asset of that business of the joining entity that is an

asset forming part of goodwill as being part of that single

asset; and

business of the joining entity that is an asset forming part of

goodwill as a separate asset.

(3)

asset forming part of goodwill means any of the following:

Schedule 3 Consolidation

Part 1 Pre rules

46 Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012

(a) an intangible asset, the value of which is attributable to

expected future profits from

life insurance policies or

general insurance policies;

(b) a customer relationship asset, know-how asset or other

accounting intangible asset, that is not any of the following:

(i)

CGT asset;

(ii)

revenue asset;

(iii)

depreciating asset;

(iv)

trading stock;

(v) a thing that is or is part of a

Division 230 financial

arrangement;

(vi)

goodwill;

(vii) an excluded asset for the purposes of section 705-35;

(c)

non-deductible right to future income.

(4)

non-deductible right to future income is a

right to future

income that is not an

unbilled income asset.

(5)

right to future income is a valuable right (including a contingent

right) to receive an amount for the performance of work or services

or the provision of goods if:

(a) the valuable right forms part of a contract or agreement; and

(b)

the

market value of the valuable right (taking into account

all the obligations and conditions relating to the right) is

greater than nil; and

Division 230 financial

arrangement nor part of a Division 230 financial

arrangement.

(6) An asset that is a

right to future income

is an unbilled income

asset if:

(a)

the

asset:

(i) is in respect of work (but not goods) that has been

performed, or partially performed, by an entity for

another entity; or

(ii) is in respect of goods (other than

trading stock) or

services that have been provided, by an entity to another

entity; and

(b) a recoverable debt has not yet arisen in respect of the work,

goods or services.

Consolidation Schedule 3

Pre rules Part 1

Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012 47

7 Section 701-90

Repeal the section.

8 Paragraph 705-25(5)(d)

Omit "a right that is an asset covered by section 716-410 (rights to

future amounts that are expected to be included in assessable income)",

substitute "a right that is an

unbilled income asset".

9 Section 716-405

Repeal the section, substitute:

716-405 Tax cost setting and rights to future income--deduction

(1) This section applies if:

(a) an entity (the joining entity) became a subsidiary member of

consolidated group at a time (the joining time); and

(b) subsection 701-55(5C) applies in relation to the asset at the

joining time.

Note:

Subsection 701-55(5C) deals with assets covered by section 716-410

(Rights to amounts that are expected to be included in assessable

income after joining time).

(2) An entity qualified for a deduction under subsection (5) for the

asset for an income year ending after the joining time:

(a) if the entity is the

head company of the group and the entity

expects that a recoverable debt will arise in respect of the

work, goods or services mentioned in subsection 701-63(6) in

relation to the asset within 12 months after the joining time--

can deduct, for that income year, the

unexpended tax cost

setting amount for the asset; or

(b) if paragraph (a) does not apply and one or more recoverable

debts arise, in that income year, in respect of the work, goods

or services mentioned in subsection 701-63(6) in relation to

the asset--can deduct, for that income year, the lesser of:

(i) the unexpended tax cost setting amount for the asset for

that income year; and

(ii) the total of those recoverable debts; or

amount under this section in respect of the asset for that

income year.

Schedule 3 Consolidation

Part 1 Pre rules

48 Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012

(4)

The

unexpended tax cost setting amount for the asset for an

income year is the

tax cost setting amount for the asset, reduced

by:

(a) the amounts (if any) of all deductions under this section in

respect of the asset for previous income years ending after

the joining time; and

(b) in determining the amount of a deduction under this section

in respect of the asset for that income year for an entity that

ceased to be a

subsidiary member of the group in that

income year--the amount (if any) that the

head company of

the group can deduct under this section in respect of the asset

for that income year.

(5) An entity is qualified for a deduction under this subsection for an

income year for the asset if:

(a)

the

entity:

(i)

the

head company of the group; and

(ii) held the asset at a time in that income year (whether or

not because of the operation of subsection 701-1(1) (the

single entity rule)); or

(b)

the

entity:

(i) held the asset at a time in that income year; and

(ii) ceased to be a

subsidiary member of the group in that

income year or an earlier income year.

(6) An amount deducted under this section:

(a) is not to be deducted under any other provision of this Act;

and

(b) is not to be taken into account in determining an amount that

is included in the assessable income of any entity qualified

for a deduction under subsection (5) for any income year for

the asset; and

deduction of any entity qualified for a deduction under

subsection (5) for any income year for the asset; and

(d) despite paragraphs (b) and (c), is taken never to have been

included in any of the elements of the

cost base of the asset.

10 Section 716-410

Repeal the section, substitute:

Consolidation Schedule 3

Pre rules Part 1

Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012 49

716-410 Rights to amounts that are expected to be included in

assessable income after joining time

This section covers an asset at a time if:

(a) the asset is a

right to future income; and

(b) the asset is held by an entity just before the time (the joining

time) it became a

subsidiary member of a

consolidated

group; and

asset will be included in the assessable income of the entity

or any other entity after the joining time; and

(d) Division 230 does not apply in relation to the asset

(disregarding section 230-455).

11 Subsection 995-1(1)

Insert:

asset forming part of goodwill has the meaning given by

subsection 701-63(3).

12 Subsection 995-1(1)

Insert:

non-deductible right to future income has the meaning given by

subsection 701-63(4).

13 Subsection 995-1(1)

Insert:

right to future income has the meaning given by subsection

701-63(5).

14 Subsection 995-1(1)

Insert:

unbilled income asset has the meaning given by subsection

701-63(6).

Schedule 3 Consolidation

Part 2 Interim rules

50 Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012

Part 2--Interim rules

Income Tax Assessment Act 1997

15 Subsection 701-55(5C)

Repeal the subsection, substitute:

Rights to future amounts

(5C)

If:

(a) the asset's tax cost is set because an entity becomes a

subsidiary member of a

consolidated group at the particular

time; and

(b) section 716-410 (rights to amounts that are expected to be

included in assessable income) covers the asset at the

particular time; and

non-deductible right to future income in

relation to the entity;

the expression means that section 716-405 may apply in relation to

the asset after the particular time.

16 Subsection 701-55(6)

Repeal the subsection, substitute:

Other provisions

(6) If any provision of this Act that is not mentioned above is to apply

in relation to the asset by including an amount in assessable

income, or by allowing an amount as a deduction, in a way that

brings into account (directly or indirectly) any of the following

amounts:

(a) the cost of the asset;

(b) outgoings incurred, or amounts paid, in respect of the asset;

(d) an amount of a similar kind in respect of the asset;

the expression means that the provision applies, for the purpose of

determining the amount included in assessable income or the

amount of the deduction, as if the cost, outgoing, expenditure or

other amount had been incurred or paid to acquire the asset at the

particular time for an amount equal to its

tax cost setting amount.

Consolidation Schedule 3

Interim rules Part 2

Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012 51

Note 1:

This subsection modifies the application of the provision only for the

purpose of determining the amount included in assessable income or

the amount of the deduction. Therefore:

(a) the acquisition mentioned in this subsection is recognised only

for that purpose; and

(b) apart from the things mentioned in subsection 701-56(1), that

acquisition does not affect the operation of section 701-5 (the

entry history rule) in relation to the asset for other purposes.

Note 2:

For specific clarifications of the operation of this subsection in

relation to bad debts, see Subdivision 716-S.

17 Section 701-56 (heading)

Repeal the heading, substitute:

701-56 Setting the tax cost of an asset--subsection 701-55(6)

18 Before subsection 701-56(3)

Insert:

Entry history rule

(1) To avoid doubt, if subsection 701-55(6) applies in relation to an

asset at the time (the joining time) an entity (the joining entity)

became a

subsidiary member of a

consolidated group, the things

that are taken to have happened in relation to the

head company of

the group under section 701-5 (the entry history rule) do not

include:

(a) the cost, outgoing, expenditure or other amount incurred or

paid to acquire the asset by the joining entity; and

(b) whether the cost, outgoing, expenditure or other amount

incurred or paid by the joining entity to acquire the asset has

been deducted by the joining entity before the joining time.

Trading stock

(2) Subsection 701-55(6) does not apply in relation to an asset if it is

trading stock.

19 Section 701-63

Repeal the section, substitute:

Schedule 3 Consolidation

Part 2 Interim rules

52 Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012

701-63 Asset forming part of goodwill, right to future income, etc.

(1) Subsection (2) applies if an entity (the joining entity) became a

subsidiary member of a

consolidated group at a time (the joining

time).

(2) For the purposes of this Part (other than this section):

(a) treat goodwill of a business of the joining entity as a single

asset; and

(b) treat an asset of that business of the joining entity that is an

asset forming part of goodwill as being part of that single

asset; and

business of the joining entity that is an asset forming part of

goodwill as a separate asset.

(3)

asset forming part of goodwill means any of the following:

(b) a customer relationship asset, know-how asset or other

accounting intangible asset, that is not any of the following:

(i)

CGT asset;

(ii)

revenue asset;

(iii)

depreciating asset;

(iv)

trading stock;

(v) a thing that is or is part of a

Division 230 financial

arrangement;

(vi)

goodwill;

(vii) an excluded asset for the purposes of section 705-35;

(c)

non-deductible right to future income.

(4)

right to future income that is a right of an entity under a

contract or agreement with another entity (the customer) is a

non-deductible right to future income in relation to the entity to

the extent that the value of the right to future income:

(a) is contingent on the renewal of the contract or agreement; or

(b) is attributable to a period (if any) during which the customer

can unilaterally cancel the contract or agreement without

paying compensation or a penalty; or

cancel the contract or agreement, but must pay compensation

Consolidation Schedule 3

Interim rules Part 2

Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012 53

or a penalty--is attributable to that period, but not to that

compensation or penalty.

(5)

right to future income is a valuable right (including a contingent

right) to receive an amount for the performance of work or services

or the provision of goods (other than

trading stock) if:

(a) the valuable right forms part of a contract or agreement; and

(b)

the

market value of the valuable right (taking into account

all the obligations and conditions relating to the right) is

greater than nil; and

Division 230 financial

arrangement nor a part of a Division 230 financial

arrangement.

20 At the end of Division 701

Add:

701-90 Right to future income treated as separate asset

(2) Subject to subsection 701-63(2), for the purposes of this Part, treat

right to future income as a separate asset.

(3) For the purposes of this Part, if:

(a)

right to future income is treated as a separate asset under

subsection (2); and

(b) the contract or agreement mentioned in subsection 701-63(5)

in respect of the right to future income also includes one or

more other rights;

for the purposes of this Part, treat the contract or agreement

(excluding the right to future income) as a separate asset.

(4) For the purposes of this Part:

(a) take into account all the obligations and conditions relating to

right to future income treated as a separate asset under

subsection (2) in working out the

market value of that

separate asset; and

(b) if a contract or agreement (excluding the right to future

income) is treated as a separate asset under subsection (3)--

take into account all the obligations and conditions relating to

each right (other than the right to future income) that forms

Schedule 3 Consolidation

Part 2 Interim rules

54 Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012

part of the contract or agreement in working out the market

value of that separate asset.

21 Paragraph 705-25(5)(d)

Omit "a right that is an

unbilled income asset", substitute "a right that

is an asset covered by section 716-410 (rights to amounts that are

expected to be included in assessable income)".

22 After section 705-56

Insert:

705-56A Modification for tax cost setting in relation to certain rights

to future income

(1) This section applies if, just before the joining time:

(a) the joining entity

holds an asset; and

(b) under the terms of a contract or agreement, the joining entity

holds a

right to future income arising from the asset; and

non-deductible right to

future income in relation to the joining entity.

(2) Subsection (3) applies if the sum of:

(a)

the

market value of the asset at the joining time (having

regard to the

right to future income); and

(b) the market value of the right to future income at the joining

time;

exceeds the market value of the asset at the joining time

(disregarding the right to future income).

(3) For the purposes of paragraph 705-35(1)(c), treat the

market value

of the

right to future income as the excess mentioned in

subsection (2).

(4) If subsection (3) does not apply:

(a)

the

right to future income is not taken into account under

paragraph 705-35(1)(b) or (c); and

(b) the right to future income's

tax cost setting amount is taken

to be nil.

23 Section 716-405

Consolidation Schedule 3

Interim rules Part 2

Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012 55

Repeal the section, substitute:

716-405 Tax cost setting and rights to future income--deduction

(1) This section applies if:

(a) an entity (the joining entity) became a subsidiary member of

consolidated group at a time (the joining time); and

(b) subsection 701-55(5C) applies in relation to the asset at the

joining time.

Note:

Subsection 701-55(5C) deals with assets covered by section 716-410

(Rights to amounts that are expected to be included in assessable

income after joining time).

(2) An entity qualified for a deduction under subsection (5) for the

asset for an income year ending after the joining time can deduct,

for that income year:

(a) unless paragraph (b) applies--the amount determined under

subsection (3A); or

(b) if it is reasonable to expect that no amount will be included in

the assessable income of an entity qualified for a deduction

under subsection (5) for the asset for any later income year--

the

unexpended tax cost setting amount for the asset for that

income year.

(3) Paragraph (2)(b) does not apply in relation to an entity qualified for

a deduction under subsection (5) for the asset for that income year

if:

(a) the entity is the

head company of the group; and

(b) another entity ceased to be a

subsidiary member of the group

in that income year; and

for that income year because it is also qualified for a

deduction under subsection (5) for the asset for that income

year.

(3A) For the purposes of paragraph (2)(a), the amount is the lesser of the

following:

(a)

the

unexpended tax cost setting amount for the asset for that

income year;

Schedule 3 Consolidation

Part 2 Interim rules

56 Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012

(b) the unexpended tax cost setting amount for the asset for the

first income year ending after the joining time, divided by the

lesser of:

(i)

10;

(ii) if the contract or agreement giving rise to the

right to

future income mentioned in paragraph 716-410(a) is for

a specified period--the number of days in that period

that end after the joining time, divided by 365 and

rounded upwards to the nearest whole number.

(4)

The

unexpended tax cost setting amount for the asset for an

income year is the

tax cost setting amount for the asset, reduced

by:

(a) the amounts (if any) of all deductions under this section in

respect of the asset for previous income years ending after

the joining time; and

(b) in determining the amount of a deduction under this section

in respect of the asset for that income year for an entity that

ceased to be a

subsidiary member of the group in that

income year--the amount (if any) that the

head company of

the group can deduct under this section in respect of the asset

for that income year.

(5) An entity is qualified for a deduction under this subsection for an

income year for the asset if:

(a)

the

entity:

(i)

the

head company of the group; and

(ii) held the asset at a time in that income year (whether or

not because of the operation of subsection 701-1(1) (the

single entity rule)); or

(b)

the

entity:

(i) held the asset at a time in that income year; and

(ii) ceased to be a

subsidiary member of the group in that

income year or an earlier income year.

(6) An amount deducted under this section:

(a) is not to be deducted under any other provision of this Act;

and

(b) is not to be taken into account in determining an amount that

is included in the assessable income of any entity qualified

Consolidation Schedule 3

Interim rules Part 2

Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012 57

for a deduction under subsection (5) for any income year for

the asset; and

deduction of any entity qualified for a deduction under

subsection (5) for any income year for the asset; and

(d) despite paragraphs (b) and (c), is taken never to have been

included in any of the elements of the

cost base of the asset.

24 At the end of paragraph 716-410(a)

Add:

Note:

Such a right might be treated as a separate asset for the purposes

of this Part (see subsection 701-90(2)).

25 Subsection 995-1(1) (definition of unbilled income asset)

Repeal the definition.

Schedule 3 Consolidation

Part 3 Prospective rules

58 Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012

Part 3--Prospective rules

Income Tax Assessment Act 1997

26 Section 12-5 (table item headed "consolidated groups and

MEC groups")

Omit:

rights to future income ....................................................... 716-405

27 Subsection 701-10(7)

Repeal the subsection.

28 Subsection 701-55(5C)

Repeal the subsection, substitute:

WIP amount assets

(5C)

If:

(a) the asset's tax cost is set because an entity becomes a

subsidiary member of a

consolidated group at the particular

time; and

(b) the asset is a

WIP amount asset;

the expression means that section 25-95 applies as if the

head

company had paid a

work in progress amount for the income year

in which the particular time occurs equal to the

tax cost setting

amount of the asset.

29 Subsection 701-55(6) (note 1)

Repeal the note.

30 Section 701-56 (heading)

Repeal the heading, substitute:

701-56 Application of subsection 701-55(6)

31 Subsections 701-56(1) and (2)

Repeal the subsections, substitute:

Consolidation Schedule 3

Prospective rules Part 3

Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012 59

(1) Subsection (2) applies in relation to each asset that would be an

asset of an entity at the time (the joining time) it becomes a

subsidiary member of a

consolidated group, assuming that

subsection 701-1(1) (the single entity rule) did not apply.

(1A) Subsection (2) applies only to the extent necessary for the purposes

of subsection 701-55(6) to determine whether a provision of this

Act is to apply in relation to each of those assets on and after the

joining time.

(1B) Subsection (2) applies despite section 701-5 (the entry history

rule).

(2)

Treat

the

head company as having acquired each of those assets at

the joining time as part of acquiring the business of the joining

entity as a going concern.

32 Paragraph 701-56(3)(d)

Omit ", other than section 40-880 (Business related costs)".

33 Section 701-63

Repeal the section, substitute:

701-63 Right to future income and WIP amount asset

(5)

right to future income is a valuable right (including a contingent

right) to receive an amount if:

(a) the valuable right forms part of a contract or agreement; and

(b)

the

market value of the valuable right (taking into account

all the obligations and conditions relating to the right) is

greater than nil; and

Division 230 financial

arrangement nor a part of a Division 230 financial

arrangement; and

(d) it is reasonable to expect that an amount attributable to the

right will be included in the assessable income of any entity

at a later time.

(6) WIP amount asset means an asset that is in respect of work (but

not goods) that has been partially performed by a recipient

mentioned in paragraph 25-95(3)(b) for a third entity but not yet

Schedule 3 Consolidation

Part 3 Prospective rules

60 Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012

completed to the stage where a recoverable debt has arisen in

respect of the completion or partial completion of the work.

34 After section 701-65

Insert:

701-67 Assets in this Part are CGT assets, etc.

This Part applies to an asset only if the asset is one or more of the

following:

(a)

CGT asset;

(b)

revenue asset;

(c)

depreciating asset;

(d)

trading stock;

(e) a thing that is or is part of a

Division 230 financial

arrangement.

35 Section 701-90

Repeal the section.

36 Paragraph 705-25(5)(d)

Repeal the paragraph, substitute:

(d)

right to future income (other than a

WIP amount asset).

37 Subsection 705-35(1)

Omit "or an asset (an excluded asset) covered by subsection (2)".

38 Paragraph 705-35(1)(c)

Omit "(other than excluded assets)".

39 Subsection 705-35(2)

Repeal the subsection.

40 Subsection 705-40(2)

Omit "other than excluded assets".

41 Paragraph 705-40(3)(c)

Omit "(other than excluded assets)".

Consolidation Schedule 3

Prospective rules Part 3

Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012 61

42 Section 705-56A

Repeal the section.

43 Section 716-405

Repeal the section.

44 Section 716-410

Repeal the section.

45 Subsection 995-1(1) (definition of asset forming part of

goodwill)

Repeal the definition.

46 Subsection 995-1(1) (definition of non-deductible right to

future income)

Repeal the definition.

47 Subsection 995-1(1) (definition of unexpended tax cost

setting amount)

Repeal the definition.

48 Subsection 995-1(1)

Insert:

WIP amount asset has the meaning given by subsection 701-63(6).

Schedule 3 Consolidation

Part 4 Application

62 Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012

Part 4--Application

49 Interpretation

In this Part:

2010 Act means the Tax Laws Amendment (2010 Measures No. 1) Act

2010.

interim rules means the amendments made by Parts 1 and 2 of this

Schedule.

original 2002 law means the Income Tax Assessment Act 1997

(disregarding amendments to that Act made by Division 1 of Part 1 and

Division 2 of Part 11 of Schedule 5 to the 2010 Act and by this

Schedule).

original 2010 law means the Income Tax Assessment Act 1997 (as

amended by the 2010 Act, but disregarding amendments made by this

Schedule).

pre rules means the amendments made by Part 1 of this Schedule.

prospective rules means the amendments made by Parts 1, 2 and 3 of

this Schedule.

50 Main application rules

(1)

The pre rules, interim rules or prospective rules apply to an assessment

of the head company of a consolidated group or MEC group for an

income year in respect of an entity (the joining entity) that becomes a

member of the group at a time (the joining time), in accordance with

subitems (2), (3), (4) and (5).

(2)

The pre rules apply, for the income year in respect of the joining entity,

if:

(a) the joining time is before 12 May 2010; or

(b) the arrangement under which the joining entity joined the

group commenced (see item 52) before 10 February 2010.

(3)

Despite subitem (2), the interim rules apply, for the income year in

respect of the joining entity, if:

(a) both of these conditions are satisfied:

(i) apart from this subitem, the pre rules would apply, for

the income year in respect of the joining entity, in

accordance with subitem (2);

Consolidation Schedule 3

Application Part 4

Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012 63

(ii) the head company's latest notice of assessment, for the

income year, that relates to the application of the

original 2010 law in respect of the joining entity, was

served on the head company by the Commissioner on or

after 12 May 2010 and on or before 30 March 2011; or

(b) both of these conditions are satisfied:

(i) the joining time is on or after 12 May 2010;

(ii) the arrangement under which the joining entity joined

the group commenced (see item 52) on or after

10 February 2010 and on or before 30 March 2011.

(4)

The prospective rules apply, for the income year in respect of the

joining entity, if:

(a) the joining time is on or after 31 March 2011; and

(b) neither subitem (2) nor (3) applies.

(5)

Despite subitems (2) and (3), the original 2002 law applies, for the

income year in respect of the joining entity, if the head company's latest

notice of assessment, for the income year, that relates to the application

of subsection 701-55(6) of the original 2002 law in respect of the

joining entity, was served on the head company by the Commissioner

before 12 May 2010.

(6)

Subitem (5) does not apply if:

(a) the head company requests an amendment of the assessment

and the amendment relates to the application of subsection

701-55(6) of the original 2002 law in respect of the joining

entity; or

(b) the amendment of the assessment, if made:

(i) would relate to an asset of a kind mentioned in

paragraph 701-63(3)(b) of the original 2010 law as

amended by the pre rules; and

(ii) would not be consistent with the outcome that arises

under the pre rules for assets of that kind.

51 Special rule for private rulings etc.

(1)

This item applies to:

(a) a private ruling issued before 31 March 2011; or

(b) a written advice given by the Commissioner before 31 March

2011 under an Annual Compliance Arrangement;

Schedule 3 Consolidation

Part 4 Application

64 Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012

to the extent that the ruling or advice has effect in relation to the

application of subsection 701-55(5C) or (6) of the original 2010 law in

respect of the joining entity mentioned in item 50.

(2)

Item 50 does not affect that effect of the ruling or advice.

(3)

However, if the head company requests an amendment of the

assessment mentioned in item 50 after the issue of the ruling or the

giving of the advice, this item does not apply to the extent that the

request is inconsistent with or contrary to the ruling or advice.

52 Commencement of arrangement

(1)

Subitems (2), (3) and (4) specify, for the purpose of this Part, the time

of commencement of the arrangement under which the joining entity

mentioned in item 50 joined the group.

(2)

If the arrangement is or relates to a takeover bid (within the meaning of

the Corporations Act 2001) the time is when:

(a) for an off-market bid (within the meaning of that Act)--step

4 of the table in subsection 633(1) of that Act is completed;

(b) for a market bid (within the meaning of that Act)--step 2 of

the table in subsection 635(1) of that Act is completed.

(3)

If a court orders, under subsection 411(1) of the Corporations Act 2001:

(a) a meeting or meetings of a company's members about the

arrangement; or

(b) a meeting or meetings of one or more classes of a company's

members about the arrangement;

the time is when the application for the order was made.

(4)

If subitem (2) or (3) does not apply, the time is when the decision to

enter into the arrangement was made.

MIT withholding tax rate Schedule 4

Tax Laws Amendment (2012 Measures No. 2) Bill 2012 No. , 2012 65

Schedule 4--MIT withholding tax rate

Taxation Administration Act 1953

1 Subparagraph 12-385(3)(a)(iii) in Schedule 1

Repeal the subparagraph, substitute:

(iii) 7.5% for fund payments in relation to later income years

starting before 1 July 2012; or

(iv) 15% for fund payments in relation to later income years

starting on or after 1 July 2012; or

2 Subparagraph 12-390(3)(a)(iii) in Schedule 1

Repeal the subparagraph, substitute:

(iii) 7.5% for fund payments in relation to later income years

starting before 1 July 2012; or

(iv) 15% for fund payments in relation to later income years

starting on or after 1 July 2012; or

3 Subparagraph 12-390(6)(a)(iii) in Schedule 1

Repeal the subparagraph, substitute:

(iii) 7.5% for fund payments in relation to later income years

starting before 1 July 2012; or

(iv) 15% for fund payments in relation to later income years

starting on or after 1 July 2012; or

Commonwealth of Australia Bills

TAX LAWS AMENDMENT (2012 MEASURES NO. 2) BILL 2012