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This is a Bill, not an Act. For current law, see the Acts databases.
1998-1999-2000-2001
The
Parliament of the
Commonwealth of
Australia
HOUSE OF
REPRESENTATIVES
Presented and read a first
time
Taxation Laws
Amendment Bill (No. 6) 2001
No. ,
2001
(Treasury)
A Bill
for an Act to amend the law relating to taxation
Contents
Part 1—Sales
gas 3
Petroleum Resource Rent Tax Assessment Act
1987 3
Part 2—The 5 year
rule 6
Petroleum Resource Rent Tax Assessment Act
1987 6
Petroleum (Submerged Lands) Act
1967 6
Income Tax Assessment Act
1936 8
Income Tax Assessment Act
1936 9
Income Tax Assessment Act
1997 12
Part 1—Income tax
consequences 20
Income Tax Assessment Act
1997 20
Part 2—Goods and services tax
consequences 23
A New Tax System (Goods and Services Tax) Act
1999 23
Part 1—Agents 26
Income Tax Assessment Act
1997 26
Part 2—Personal services business
tests 29
Income Tax Assessment Act
1997 29
Part 3—Personal services business
determinations 32
Income Tax Assessment Act
1997 32
Part 4—Other
amendments 34
Income Tax Assessment Act
1997 34
Taxation Administration Act
1953 35
Part 5—Application 37
A Bill for an Act to amend the law relating to
taxation
The Parliament of Australia enacts:
This Act may be cited as the Taxation Laws Amendment Act (No. 6)
2001.
(1) Subject to this section, this Act commences on the day on which it
receives the Royal Assent.
(2) Subject to subsection (3), Part 1 of Schedule 1
commences on a day to be fixed by Proclamation.
(3) If Part 1 of Schedule 1 does not commence under
subsection (2) within the period of 6 months beginning on the day on which
this Act receives the Royal Assent, it commences on the first day after the end
of that period.
(4) Items 4 and 5 of Schedule 4 commence, or are taken to have
commenced, immediately after the commencement of Schedule 3 to the
Taxation Laws Amendment Act (No. 5) 2001.
(5) Item 5 of Schedule 6 commences:
(a) if Schedule 1 to the Taxation Laws Amendment Act (No. 5)
2001 commences before the day on which this Act receives the Royal
Assent—immediately after the commencement of item 4 of
Schedule 6 to this Act; or
(b) if paragraph (a) does not apply—immediately after the
commencement of Schedule 1 to that Act.
Subject to section 2, each Act that is specified in a Schedule to
this Act is amended or repealed as set out in the applicable items in the
Schedule concerned, and any other item in a Schedule to this Act has effect
according to its terms.
Section 170 of the Income Tax Assessment Act 1936 does not
prevent the amendment of an assessment made before the commencement of this
section for the purposes of giving effect to this Act.
Petroleum Resource Rent
Tax Assessment Act 1987
1 Section 2 (definition of sales
gas)
Repeal the definition, substitute:
sales gas means a substance:
(a) which is in a gaseous state when at the temperature of 15°C and a
pressure of one atmosphere; and
(b) which consists of naturally occurring hydrocarbons, or a naturally
occurring mixture of hydrocarbons and non-hydrocarbons; and
(c) the principal constituent of which is methane; and
(d) which:
(i) if it is to be used as a feedstock for conversion to another
product—has been processed so that it is suitable for that use;
or
(ii) in any other case—has been processed so that it is suitable for
direct consumption as energy.
2 At the end of paragraph
24(a)
Add “and”.
3 Paragraph 24(b)
After “marketable petroleum commodity”, insert “(other
than sales gas)”.
4 Paragraph 24(c)
After “marketable petroleum commodity”, insert “(other
than sales gas)”.
5 At the end of
section 24
Add:
; and (d) where any sales gas produced from petroleum recovered from the
area or areas to which paragraph (a) applies becomes or became an excluded
commodity by virtue of being sold:
(i) if the sale is a non-arm’s length transaction—the amount
worked out in accordance with the regulations; and
(ii) in any other case—the consideration receivable, less any
expenses payable, by the person in relation to the sale; and
(e) where any sales gas produced from petroleum recovered from the area or
areas to which paragraph (a) applies becomes or became an excluded
commodity otherwise than by virtue of being:
(i) sold; or
(ii) treated or processed, or moved, for re-injection or destruction or
for use in carrying on or providing operations, facilities or other things of a
kind referred to in section 37, 38 or 39 in relation to the petroleum
project;
the amount worked out in accordance with the regulations.
(2) In this section:
non-arm’s length transaction means a transaction where
the Commissioner, having regard to any connection between the parties to the
transaction or to any other relevant circumstances, is satisfied that the
parties to the transaction are not dealing with each other at arm’s length
in relation to the transaction.
6 Section 26
Omit “24(c)”, substitute “24(1)(c),
24(1)(e)”.
7 At the end of
section 57
Add:
(3) This section does not apply to receipts determined under subparagraph
24(1)(d)(i).
8 After subsection 97(1A)
Insert:
(1AA) If the whole or a part of the assessable petroleum receipts that
would be taken into account in working out the current period liability were
determined under subparagraph 24(1)(d)(i) or paragraph 24(1)(e) (the
special calculation provisions), then, in calculating the current
period liability under subsection (1A):
(a) any assessable petroleum receipts determined under the special
calculation provisions are to be excluded; and
(b) the amount worked out in accordance with the regulations in respect of
those assessable petroleum receipts is to be included.
9 After section 106
Insert:
A person who is dissatisfied with a decision made under this Act or the
regulations in relation to the person, being a decision that is prescribed for
the purposes of this section, may object against it in the manner set out in
Part IVC of the Taxation Administration Act 1953.
Petroleum Resource Rent
Tax Assessment Act 1987
10 Paragraph 34A(1)(a)
Omit “the production licence in relation to the project came into
force”, substitute “the date specified in the notice issued under
subsection 41(3) of the Petroleum (Submerged Lands) Act 1967 in relation
to the project”.
11 Clause 1 of Schedule 1
(paragraph (a) of the definition of relevant pre-commencement
day)
Omit “the issue of the production licence in relation to the
project”, substitute “the date specified in the notice issued under
subsection 41(3) of the Petroleum (Submerged Lands) Act 1967 in relation
to the project”.
12 Clause 1 of Schedule 1
(paragraph (b) of the definition of relevant pre-commencement
day)
Omit “before the issue of the oldest production licence to which the
project relates”, substitute “the earliest date specified in a
notice issued under subsection 41(3) of the Petroleum (Submerged Lands) Act
1967 in relation to a production licence to which the project
relates”.
Petroleum (Submerged
Lands) Act 1967
13 At the end of
section 41
Add:
(3) If the Designated Authority receives an application, or further
information, the Designated Authority must, within 28 days, determine whether or
not sufficient information has been received to determine the application. If
the Designated Authority considers that sufficient information has been
provided, the Designated Authority must issue the applicant with a notice to
that effect specifying the last date on which information was
provided.
(4) The issuing of a notice under subsection (3) does not prevent the
Designated Authority from later requiring further information under
subsection (2). However, the later request does not affect the notice under
subsection (3).
(5) If an application is finalised without a licence being granted, any
notice issued under subsection (3) in relation to that application is taken
never to have been issued.
Examples: An application may be finalised because it is
withdrawn or because it is refused.
14 Transitional
If, before the commencement of this item, a notice was issued by a
Designated Authority stating that sufficient information had been received to
determine an application made under section 39A, 40 or 40A of the
Petroleum (Submerged Lands) Act 1967, then, for the purposes of that Act
as amended by this Act:
(a) that notice is taken to have been issued under subsection 41(3) of
that Act; and
(b) the date that the notice was issued is taken to be the date specified
in the notice.
15 Application
The amendments made by this Part apply to projects in respect of which an
application was made under section 39A, 40 or 40A of the Petroleum
(Submerged Lands) Act 1967 after 23 December 1998.
Income Tax Assessment Act
1936
1 Section 24AT (paragraph (b) of the
definition of excluded STB)
Omit “paragraph 23(d)”, substitute “section 50-25 of
the Income Tax Assessment Act 1997”.
2 Section 24AT (after paragraph (b) of
the definition of government entity)
Insert:
(ba) a municipal corporation or other local governing body (within the
meaning of section 50-25 of the Income Tax Assessment Act 1997);
or
Note: The effect of this paragraph is that some bodies owned
or controlled by a municipal corporation or other local governing body may be an
STB even though the municipal corporation or other local governing body is an
excluded STB.
3 Application
The amendments made by this Schedule apply in relation to income derived
after 30 June 2000.
Income Tax Assessment Act
1936
1 Paragraph 6E(1)(c)
Repeal the paragraph, substitute:
(c) at the relevant time:
(i) the central management and control of the fund is in Australia;
or
(ii) the fund satisfies subsection (1A) or (1B); and
2 After subsection 6E(1)
Insert:
(1A) A fund satisfies this subsection at the relevant time if the trustees
of the fund are individuals and at that time:
(a) a trustee or trustees of the fund are temporarily absent from
Australia; and
(b) the central management and control of the fund would be in Australia
if that trustee or those trustees were in Australia; and
(c) the continuous period for which that trustee or each of those trustees
has, at that time, been outside Australia does not exceed:
(i) 2 years; or
(ii) such longer period as is applicable to the circumstances in
accordance with the regulations.
(1B) A fund satisfies this subsection at the relevant time if the trustee
of the fund is a company and at the relevant time:
(a) a director or directors of the company are temporarily absent from
Australia; and
(b) the central management and control of the fund would be in Australia
if that director or those directors were in Australia; and
(c) the continuous period for which the director or each of those
directors has, at that time, been outside Australia does not exceed:
(i) 2 years; or
(ii) such longer period as is applicable to the circumstances in
accordance with the regulations.
(1C) In applying subsections (1A) and (1B), a person who:
(a) is outside Australia at a particular time; and
(b) returns to Australia for a continuous period of 28 days or less;
and
(c) then leaves Australia;
is treated as having been outside Australia for the period referred to in
paragraph (b).
3 After subsection 6E(4)
Insert:
Active member of fund
(4A) A member of a fund is an active member of a fund at the
relevant time if:
(a) the member is a contributor to the fund at that time; or
(b) another person has made before that time, or makes at or after that
time, contributions to the fund on the member’s behalf in respect of the
year of income in which that time occurs.
(4B) A member of a fund is not an active member of the fund
at the relevant time under paragraph (4A)(b) if:
(a) the member is not a resident of Australia at the relevant time;
and
(b) the member has ceased to be a contributor to the fund at the relevant
time; and
(c) the only contributions that have been made to the fund on the
member’s behalf after the member ceased to be a resident of Australia have
been payments in respect of a time when the member was a resident.
4 Subsection 6E(5) (definition of active
member)
Repeal the definition.
Income Tax Assessment Act
1997
1 Section 10-5 (table item headed
“dividends”)
Insert:
|
benefit of LIC capital gain through a trust or partnership |
115-280 |
|
2 Section 12-5 (table item headed
“dividends”)
Insert:
|
dividends including LIC capital gain component |
115-280 |
|
3 At the end of subsection
102-3(2)
Add:
Note: Shareholders in a listed investment company can also
receive a concession equivalent to a discount capital gain: see
Subdivision 115-D.
4 Subsection 104-70(7)
(heading)
Omit “Exception”, substitute
“Exceptions”.
5 At the end of
section 104-70
Add:
(8) CGT event E4 does not happen to the extent that the
payment is reasonably attributable to a *LIC
capital gain.
6 Subsection 110-25(8) (after table
item 3)
Insert:
|
4 |
A listed investment company |
The company |
7 Subsection 114-5(2) (after table
item 3)
Insert:
|
4 |
A listed investment company |
The company |
8 At the end of
section 115-1
Add:
Special rules apply to certain capital gains made by listed investment
companies to enable shareholders receiving dividends that include these gains to
obtain benefits similar to those conferred by the CGT discount.
9 At the end of subsection
115-20(1)
Add:
Note: A listed investment company must also calculate
capital gains without reference to indexation in order to allow its shareholders
to access the concessions in Subdivision 115-D.
10 At the end of
Division 115
Add:
This Subdivision allows shareholders of certain listed companies to obtain
benefits similar to those conferred by discount capital gains.
The benefits accrue where dividends paid by those companies represent
capital gains that would be discount capital gains had they been made by an
individual, a trust or a complying superannuation entity.
Table of sections
Operative provisions
115-280 Deduction for certain dividends
115-285 Meaning of LIC capital gain
115-290 Meaning of listed investment
company
115-295 Maintaining records
[This is the end of the Guide.]
(1) You can deduct an amount for a
*dividend paid to you by a company (the
payment company) if:
(a) you are:
(i) an individual, a *complying
superannuation entity, a trust or a partnership; or
(ii) a *life insurance company where the
dividend is in respect of *shares that are
*virtual PST assets; and
(b) you are an Australian resident when the dividend is paid;
and
(c) all or some part of the dividend is reasonably attributable to a
*LIC capital gain made by a
*listed investment company; and
(d) in a case where the LIC capital gain was made by a company other than
the payment company—the payment company was a listed investment company
when it received a dividend part of which is attributable to the LIC capital
gain.
Note: The concession is available for LIC capital gains made
directly by a listed investment company, and for LIC capital gains that company
receives as a dividend through one or more other listed investment
companies.
(2) The amount you can deduct is:
(a) 50% of your share of the amount (the attributable part)
worked out under subsection (3) if you are an individual, a trust (except a
trust that is a *complying superannuation
entity) or a partnership; or
(b) 331/3% of your
share of the attributable part if you are a complying superannuation entity or a
*life insurance company.
Note 1: The listed investment company will advise you of
your share of the attributable part.
Note 2: If a shareholder in a listed investment company is a
trust or partnership, a beneficiary of the trust or a partner in the partnership
has no share of the attributable part.
(3) The attributable part is worked out using this formula:
where:
after tax gain is the after tax
*LIC capital gain.
Example: A listed investment company disposes of a CGT asset
for $30,000. The asset had a cost base of $10,000. The capital gain is therefore
$20,000. The company applies a capital loss of $10,000 against the gain. Its net
capital gain is $10,000.
The net capital gain is subject to tax at 30%. The after
tax gain is therefore $7,000.
The
company pays a fully franked dividend to Daryl, one of its shareholders. It
advises Daryl that his share of the attributable part of the dividend
is:
Daryl, being an individual, can deduct 50% of $10, which is
$5.
(4) An amount is included in your assessable income if:
(a) a deduction is allowed under subsection (1) to a trust or a
partnership; and
(b) you are a beneficiary of the trust or a partner in the partnership and
you are not an individual; and
(c) the income of the trust or partnership is reduced by an amount because
of that deduction; and
(d) a part of the deduction (the reduction amount) is
reflected in your share of the net income of the trust or partnership.
(5) The amount included is:
(a) the reduction amount if you are a company, a trust (except a trust
that is a *complying superannuation entity) or
a partnership; or
(b) one-third of the reduction amount if you are a complying
superannuation entity or a *life insurance
company.
Example: The Burnett Partnership received a dividend from a
listed investment company. The dividend statement advised that the dividend
included a $100 attributable part. The partnership deducted $50 under this
section in calculating its net income.
The partnership has 2 equal partners, Amy Burnett and
Burnett Consulting Pty Ltd.
Burnett Consulting’s assessable income includes its
share of the net income of the partnership plus $25 (being that part of the $50
deduction allowed to the partnership that is reflected in the company’s
share of the partnership net income).
Subsections (4) and (5) do not apply to Amy because
she is an individual.
(1) A LIC capital gain is a
*capital gain:
(a) from a *CGT event that happens on or
after 1 July 2001; and
(b) that is made by a company that is a
*listed investment company from a
*CGT asset that is an investment to which
paragraph 115-290(1)(c) applies; and
(c) that meets the requirements of sections 115-20 and 115-25;
and
(d) that is not a capital gain that could not be a
*discount capital gain had it been made by an
individual because of section 115-40 or 115-45; and
(e) that is included in the *net capital
gain of the company; and
(f) that is reflected in the taxable income of the company for the income
year in which the company had the net capital gain.
Note 1: The listed investment company must be able to
demonstrate that at least some part of the LIC capital gain, whether made by the
company itself or by another listed investment company, remains after claiming
deductions and losses against that income for the income year.
Note 2: Section 115-30 may affect the date of
acquisition of a CGT asset for the purposes of sections 115-25, 115-40 and
115-45.
(2) However, a *capital gain made by a
company is not a LIC capital gain if the company:
(a) became a *listed investment company
after 1 July 2001; and
(b) *acquired the
*CGT asset concerned before the day on which it
became a listed investment company.
(3) In applying subsection (2), a
*CGT asset is treated as if it had been
*acquired by the company before it
became a *listed investment company if the
asset would otherwise be treated as being acquired after that time
because of one of these provisions:
(a) section 70-110 (about trading stock);
(b) Subdivision 124-E or 124-F (replacement asset roll-overs for
exchange of *shares, units, rights or
options);
(c) Subdivision 126-B (same-asset roll-over for transfers within a
wholly-owned group).
(1) A listed investment company is a company:
(a) that is an Australian resident; and
(b) *shares in which are listed for
quotation on the official list of the Australian Stock Exchange Limited or of a
body corporate that is approved as a stock exchange under section 769 of
the Corporations Act 2001; and
(c) at least 90% of the *market value of
whose *CGT assets consists of investments
permitted by subsection (4).
(2) A company is also a listed investment company
if:
(a) it is a 100% subsidiary of a company that is a
*listed investment company because of
subsection (1); and
(b) the subsidiary would be a listed investment company because of
subsection (1) if it were able to comply with
paragraph (1)(b).
(3) This Subdivision applies to a company that does not comply with
paragraph (1)(c) as if it did comply if the failure:
(a) was of a temporary nature only; and
(b) was caused by circumstances outside its control.
(4) The permitted investments are:
(a) *shares, units, options, rights or
similar interests to the extent permitted by subsections (5), (6), (7) and
(8); or
(b) financial instruments (such as loans, debts, debentures, bonds,
promissory notes, futures contracts, forward contracts, currency swap contracts
and a right or option in respect of a share, security, loan or contract);
or
(c) an asset whose main use by the company in the course of carrying on
its *business is to derive interest, an
annuity, rent, royalties or foreign exchange gains unless:
(i) the asset is an intangible asset and has been substantially developed,
altered or improved by the company so that its market value has been
substantially enhanced; or
(ii) its main use for deriving rent was only temporary; or
(d) goodwill.
(5) The company can own a *100%
subsidiary if the subsidiary is a listed investment company because of
subsection (2).
(6) The company can own (directly or indirectly) any percentage of another
*listed investment company that is not the
company’s *100% subsidiary.
(7) Otherwise, the company cannot own (directly or indirectly) more than
10% of another company or trust.
(8) In working out whether a company indirectly owns any part of another
company or trust:
(a) disregard any ownership it has indirectly through a
*listed public company or a
*publicly traded unit trust; and
(b) if the company owns not more than 50% of another
*listed investment company—disregard any
ownership it has indirectly through the other company.
A *listed investment company must
maintain records showing the balance of its
*LIC capital gains available for
distribution.
11 At the end of subsection
320-205(3)
Add:
; and (f) amounts included in the company’s assessable income for
the income year under subsection 115-280(4).
12 At the end of subsection
320-205(4)
Add:
; and (f) the proportion of the amount that the company can deduct for the
income year under subsection 115-280(1) that is attributable to a
*dividend paid to the company by a
*listed investment company in respect of
virtual PST assets that are *shares in the
listed investment company.
13 Subsection 995-1(1)
Insert:
LIC capital gain has the meaning given by
section 115-285.
14 Subsection 995-1(1)
Insert:
listed investment company has the meaning given by
section 115-290.
15 Application
The amendments made by this Schedule apply to LIC capital gains made by
listed investment companies on or after 1 July 2001.
Part 1—Income
tax consequences
Income Tax Assessment Act
1997
1 Section 11-5 (after table item headed
“health”)
Insert:
|
HIH rescue package |
|
|
HIH Claims Support Trust |
322-10 |
2 Subsection 104-10(5)
(note)
Omit “Note”, substitute “Note 1”.
3 At the end of subsection
104-10(5)
Add:
Note 2: A capital gain or loss you make because you assign a
right under or in relation to a general insurance policy you held with an HIH
company to the Commonwealth, the trustee of the HIH Trust or a prescribed entity
is also disregarded: see section 322-15.
4 Part 3-35 (heading)
Repeal the heading, substitute:
5 Section 320-255 (link
note)
Repeal the link note.
6 After Division 320
Insert:
This Division sets out special measures to assist in the rescue package
provided in response to the collapse of the HIH group.
Table of sections
Operative provisions
322-5 Rescue payments treated as insurance payments by
HIH
322-10 HIH Trust exempt from tax
322-15 Certain capital gains and capital losses
disregarded
[This is the end of the Guide.]
(1) This Act applies to you as if a payment you receive from the
Commonwealth, the *HIH Trust or a prescribed
entity for assignment of your rights under or in relation to a
*general insurance policy you held with an
*HIH company:
(a) had been made by the HIH company; and
(b) had been made under the terms and conditions of the general insurance
policy you held with the HIH company.
(2) The HIH Trust is the HIH Claims Support Trust
(established on 6 July 2001).
(3) An HIH company is:
(a) CIC Insurance Limited; or
(b) FAI General Insurance Company Limited; or
(c) FAI Reinsurances Pty Limited; or
(d) FAI Traders Insurance Company Pty Limited; or
(e) HIH Casualty and General Insurance Limited; or
(f) HIH Underwriting and Insurance (Australia) Pty Limited; or
(g) World Marine and General Insurances Pty Limited; or
(h) another related company specified in writing by the
Commissioner.
The total *ordinary income and
*statutory income of:
(a) the HIH Trust; and
(b) an entity prescribed for the purposes of this Division;
is exempt from income tax.
A *capital gain or
*capital loss you make because you assign a
right under or in relation to a *general
insurance policy you held with an *HIH company
to the Commonwealth, the trustee of the *HIH
Trust or a prescribed entity is disregarded.
[The next Part is Part 3-45.]
7 Subsection 995-1(1)
Insert:
HIH company has the meaning given by
section 322-5.
8 Subsection 995-1(1)
Insert:
HIH Trust has the meaning given by
section 322-5.
9 Application
The amendments made by this Part apply to things done on or after
15 May 2001.
Part 2—Goods
and services tax consequences
A New Tax System (Goods
and Services Tax) Act 1999
10 At the end of
Subdivision 78-F
Add:
(1) If a payment of *money, a supply or
both a payment of money and a supply are received by an entity from an
*HIH rescue entity as
*consideration for:
(a) the entity transferring or surrendering rights under an
*insurance policy held with an
*HIH company; or
(b) the entity transferring or surrendering rights against another entity
that is insured under an insurance policy held with an HIH company; or
(c) the entity transferring or surrendering rights against another entity
in relation to a matter in relation to which the entity also has or had rights
under an insurance policy held with an HIH company;
this Division (other than sections 78-10, 78-15 and 78-40) applies to
the payment or supply as if the HIH rescue entity made the payment or supply as
the insurer in settlement of a claim under the insurance policy.
(2) In particular:
(a) this Division (other than sections 78-10, 78-15 and 78-40,
subsection 78-50(1) and this section) applies as if:
(i) references to an insurer were references to the
*HIH rescue entity; and
(ii) references to a claim under an
*insurance policy were references to a request
or claim to the HIH rescue entity for such a payment or supply; and
(iii) references to a settlement of such a claim were references to the
agreement to make such a payment or supply as consideration for the transfer or
surrender; and
(b) sections 78-18, 78-42 and 78-55 apply as if references in those
sections to payments of excess to the insurer under the policy were references
to payments to the HIH rescue entity corresponding to such payments of excess;
and
(c) section 78-30 applies as if references in that section to
settling a claim were references to providing the consideration for the transfer
or surrender; and
(d) section 78-100 applies as if references in that section to a
claim for compensation under a *statutory
compensation scheme were references to a claim made to the HIH rescue entity
corresponding to a claim for compensation under the scheme.
(3) This section does not affect the operation of sections 78-10,
78-15 and 78-40.
11 Section 188-22
Omit all the words after
“*consideration,”,
substitute:
for the supply:
(a) is a payment of *money, or a supply,
by an insurer in settlement of a claim under an
*insurance policy; or
(b) is a payment of money, or a supply, by an
*HIH rescue entity in the circumstances
referred to in subsection 78-120(1).
12 Section 195-1
Insert:
HIH company has the meaning given by section 322-5 of
the *ITAA 1997.
13 Section 195-1
Insert:
HIH rescue entity means:
(a) the HIH Claims Support Trust (established on 6 July 2001);
or
(b) the Commonwealth; or
(c) an entity prescribed for the purposes of subsection 322-5(1) of the
*ITAA 1997.
14 Application
The amendments made by this Part apply, and are taken to have
applied:
(a) in relation to net amounts for tax periods starting, or that started,
on or after 15 March 2001; and
(b) in relation to payments and supplies, of a kind referred to in
section 78-120 of the A New Tax System (Goods and Services Tax) Act
1999, that are, or have been, made on or after 15 March 2001 to an
entity that is neither registered nor required to be registered.
Income Tax Assessment Act
1997
1 At the end of subsection
87-20(1)
Add:
Note: Sections 87-35 and 87-40 affect the operation of
paragraph (1)(a) in relation to Australian government agencies and certain
agents.
2 After section 87-35
Insert:
Object of this section
(1) The object of this section is to modify the operation of this Division
for agents who bear entrepreneurial risk in the way they provide
services.
Agents covered by this section
(2) Subsection 87-15(3) and section 87-20 apply, in the manner
specified in this section, to an individual or
*personal services entity if:
(a) the individual or personal services entity is an agent of another
entity (the principal) but not the principal’s employee;
and
(b) the agent receives income from the principal that is for services that
the agent provides to other entities (customers) on the
principal’s behalf; and
(c) at least 75% of that income is commissions, or fees, based on the
agent’s performance in providing services to the customers on the
principal’s behalf; and
(d) the agent actively seeks other entities to whom the agent could
provide services on the principal’s behalf; and
(e) the agent does not provide any services to the customers, on the
principal’s behalf, using premises:
(i) that the principal or an *associate
of the principal owns; or
(ii) in which the principal or an associate of the principal has a
leasehold interest;
unless the agent uses the premises under an arrangement entered into at
arm’s length.
Whether personal services income is from one source
(3) If the agent is an individual, in applying subsection 87-15(3) to the
*personal services income of the agent during
an income year, any part of the agent’s personal services income from the
principal that:
(a) the agent gains or produces during the income year; and
(b) is for services that the agent provided to a customer on the
principal’s behalf in the income year or an earlier income year;
is treated as if it were personal services income from the customer, and
not personal services income from the principal.
(4) If the agent is a *personal services
entity, in applying subsection 87-15(3) to an individual’s
*personal services income that is included in
the entity’s *ordinary income or
*statutory income during an income year, any
part of the individual’s personal services income from the principal
that:
(a) the agent gains or produces during the income year; and
(b) is for services that the individual or the agent provided to a
customer on the principal’s behalf in the income year or an earlier income
year;
is treated as if it were personal services income from the customer, and
not personal services income from the principal.
The unrelated clients test for a personal services
business
(5) In determining whether, during an income year, the agent meets the
unrelated clients test under section 87-20, any services the agent provided
in the income year or an earlier income year:
(a) for which the agent gains or produces, during the income year,
personal services income from the principal; and
(b) that were provided to a customer on the principal’s
behalf;
are treated for the purposes of paragraph 87-20(1)(a) as if the agent, and
not the principal, provided them to the customer.
3 Subsection 995-1(1) (definition of
agent)
After “(the principal)”, insert “, except
in section 87-40,”.
Part 2—Personal
services business tests
Income Tax Assessment Act
1997
4 Section 87-15
Repeal the section, substitute:
(1) An individual or *personal services
entity conducts a personal services business if:
(a) for an individual—a *personal
services business determination is in force relating to the individual’s
*personal services income; or
(b) for a personal services entity—a personal services business
determination is in force relating to an individual whose personal services
income is included in the entity’s
*ordinary income or
*statutory income; or
(c) in any case—the individual or entity meets at least one of the 4
*personal services business tests in the income
year for which the question whether the individual or entity is conducting a
personal services business is in issue.
Note 1: For personal services business determinations, see
Subdivision 87-B.
Note 2: Under subsection (3), the personal services
business tests, apart from the results test under section 87-18, do not
apply if 80% or more of your personal services income is from one source (but
they can still be used in deciding whether to make a personal services business
determination).
(2) The 4 personal services business tests are:
(a) the results test under section 87-18; and
(b) the unrelated clients test under section 87-20; and
(c) the employment test under section 87-25; and
(d) the business premises test under section 87-30.
(3) However, if 80% or more of an individual’s
*personal services income during an income year
is income from the same entity (or one entity and its
*associates), and:
(a) the individual’s personal services income is not included in a
*personal services entity’s
*ordinary income or
*statutory income during an income year, and
the individual does not meet the results test under section 87-18 in that
income year; or
(b) the individual’s personal services income is included in a
personal services entity’s ordinary income or statutory income during an
income year, and the entity does not, in relation to the individual, meet the
results test under section 87-18 in that income year;
the individual’s personal services income is not taken to be
from conducting a *personal services business
unless:
(c) when the personal services income is gained or produced, a
*personal services business determination is in
force relating to the individual’s personal services income; and
(d) if the determination was made on the application of a personal
services entity—the individual’s personal services income is income
from the entity conducting the personal services business.
Note: Sections 87-35 and 87-40 affect the operation of
subsection (3) in relation to Australian government agencies and certain
agents.
(1) An individual meets the results test in an income year if:
(a) the individual’s *personal
services income (not including income referred to in subsection (2)) during
the income year is for producing a result; and
(b) the individual is required to supply the
*plant and equipment, or tools of trade, needed
to perform the work from which the individual produces the result; and
(c) the individual is, or would be, liable for the cost of rectifying any
defect in the work performed.
(2) Paragraph (1)(a) does not apply to income:
(a) that the individual receives as an employee; or
(b) that the individual receives as an individual referred to in paragraph
12-45(1)(a), (b), (c), (d) or (e) (payments to office holders) in
Schedule 1 to the Taxation Administration Act 1953.
(3) A *personal services entity meets the
results test in an income year if:
(a) the personal services entity’s
*ordinary income or
*statutory income, that is an
individual’s *personal services income,
is income for producing a result; and
(b) the personal services entity is required to supply the
*plant and equipment, or tools of trade, needed
to perform the work from which the personal services entity produces the result;
and
(c) the personal services entity is, or would be, liable for the cost of
rectifying any defect in the work performed.
(4) For the purposes of paragraph (1)(a), (b) or (c) or (3)(a), (b)
or (c), regard is to be had to whether it is the custom or practice, when work
of the kind in question is performed by an entity other than an
employee:
(a) for the *personal services income
from the work to be for producing a result; and
(b) for the entity to be required to supply the
*plant and equipment, or tools of trade, needed
to perform the work; and
(c) for the entity to be liable for the cost of rectifying any defect in
the work performed;
as the case requires.
5 At the end of subsection
87-18(2)
Add:
; or (c) to the extent that it is a payment referred to in
section 12-47 (payments to *religious
practitioners) in that Schedule.
6 Section 87-55
Repeal the section.
Part 3—Personal
services business determinations
Income Tax Assessment Act
1997
7 Subparagraph
87-60(3)(a)(i)
Repeal the subparagraph, substitute:
(i) could reasonably be expected to meet, or met, the results test under
section 87-18, the employment test under section 87-25, the business
premises test under section 87-30 or more than one of those tests;
or
8 Subparagraph
87-60(3)(a)(ii)
Omit “3”, substitute “4”.
9 Subparagraphs 87-60(3)(b)(i) and
(ii)
Repeal the subparagraphs, substitute:
(i) if subparagraph (a)(i) applies—the results test under
section 87-18, the employment test under section 87-25, the business
premises test under section 87-30 or more than one of those tests;
or
(ii) if subparagraph (a)(ii) applies—at least one of the 4
personal services business tests.
10 Paragraph 87-60(3)(c)
Repeal the paragraph.
11 Subsections 87-60(5), (6) and
(7)
Repeal the subsections.
12 Subparagraph
87-65(3)(a)(i)
Repeal the subparagraph, substitute:
(i) could reasonably be expected to meet, or met, the results test under
section 87-18, the employment test under section 87-25, the business
premises test under section 87-30 or more than one of those tests;
or
13 Subparagraph
87-65(3)(a)(ii)
Omit “3”, substitute “4”.
14 Subparagraphs 87-65(3)(b)(i) and
(ii)
Repeal the subparagraphs, substitute:
(i) if subparagraph (a)(i) applies—the results test under
section 87-18, the employment test under section 87-25, the business
premises test under section 87-30 or more than one of those tests;
or
(ii) if subparagraph (a)(ii) applies—at least one of the 4
personal services business tests.
15 Paragraph 87-65(3)(c)
Repeal the paragraph.
16 Subsections 87-65(5), (6) and
(7)
Repeal the subsections.
Income Tax Assessment Act
1997
17 Sections 87-1 and
87-5
Repeal the sections, substitute:
Divisions 85 and 86 do not apply to personal services income that is
income from conducting a personal services business.
It is not intended that the Divisions apply to independent
contractors.
A personal services business exists if there is a personal services
business determination or if one or more of 4 tests for what is a personal
services business are met.
Regardless of how much of your personal services income is paid from one
source, you can self-assess against the results test to determine whether you
are an independent contractor. The results test is based on the traditional
tests for determining independent contractors and it is intended that it apply
accordingly.
However, you cannot “self-assess” whether you meet any of the
other 3 tests if 80% or more of your personal services income is from one
source. In these cases, you need a personal services business determination in
order to be treated as conducting a personal services business.
This diagram shows how this Division operates to ascertain whether
personal services income is income from conducting a personal services
business.
Taxation Administration
Act 1953
18 Subsection 13-15(3) in
Schedule 1
Omit all the words after “if”, substitute:
it is reasonable to expect that:
(a) the entity will receive at least 80% of that income from the same
entity (or one entity and its *associates);
and
(b) the entity will not meet the results test under section 87-18 of
the Income Tax Assessment Act 1997.
19 Application
(1) The amendments made by this Schedule (other than item 18) apply,
and are taken to have applied, to assessments for the 2000-2001 income year and
later income years.
(2) However, a declaration made under subitem 26(2) of Schedule 1 to
the New Business Tax System (Alienation of Personal Services Income) Act
2000 has effect, and is taken to have had effect, in relation to the
amendments made by this Schedule in the same way that it has, and had, effect in
relation to the amendments made by Part 1 of that Schedule.
(3) Item 18 applies, and is taken to have applied, to an amount
received, or a non-cash benefit provided, on or after 1 July
2000.