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This is a Bill, not an Act. For current law, see the Acts databases.
TAX LAWS AMENDMENT (INVESTMENT MANAGER REGIME) BILL 2012
2010-2011-2012
The Parliament of the
Commonwealth of Australia
HOUSE OF REPRESENTATIVES
Presented and read a first time
Tax Laws Amendment (Investment
Manager Regime) Bill 2012
No. , 2012
(Treasury)
A Bill for an Act to amend the law relating to
taxation, and for related purposes
i Tax Laws Amendment (Investment Manager Regime) Bill 2012 No. , 2012
Contents
1 Short
title
...........................................................................................
1
2 Commencement
.................................................................................
1
3 Schedule(s)
........................................................................................
3
Schedule 1--Investment manager regime
4
Income Tax Assessment Act 1997
4
Tax Laws Amendment (Cross-Border Transfer Pricing) Act (No. 1)
2012
23
Schedule 2--FIN 48
24
Income Tax (Transitional Provisions) Act 1997
24
A Bill for an Act to amend the law relating to
1
taxation, and for related purposes
2
The Parliament of Australia enacts:
3
1 Short title
4
This Act may be cited as the Tax Laws Amendment (Investment
5
Manager Regime) Act 2012.
6
2 Commencement
7
(1) Each provision of this Act specified in column 1 of the table
8
commences, or is taken to have commenced, in accordance with
9
column 2 of the table. Any other statement in column 2 has effect
10
according to its terms.
11
12
2 Tax Laws Amendment (Investment Manager Regime) Bill 2012 No. , 2012
Commencement information
Column 1
Column 2
Column 3
Provision(s)
Commencement
Date/Details
1. Sections 1 to 3
and anything in
this Act not
elsewhere covered
by this table
The day this Act receives the Royal Assent.
2. Schedule 1,
item 1
The day this Act receives the Royal Assent.
3. Schedule 1,
item 2
The later of:
(a) immediately after the commencement of
the provision(s) covered by table item 2;
and
(b) the time item 10 of Schedule 1 to the Tax
Laws Amendment (Cross-Border
Transfer Pricing) Act (No. 1) 2012
commences.
However, the provision(s) do not commence
at all if the event mentioned in paragraph (b)
does not occur.
4. Schedule 1,
item 3
The day this Act receives the Royal Assent.
However, the provision(s) do not commence
at all if item 9 of Schedule 1 to the Tax Laws
Amendment (Cross-Border Transfer
Pricing) Act (No. 1) 2012 commences on or
before that day.
5. Schedule 1,
items 4 to 15
The day this Act receives the Royal Assent.
6. Schedule 1,
item 16
Immediately after the commencement of
item 9 of Schedule 1 to the Tax Laws
Amendment (Cross-Border Transfer
Pricing) Act (No. 1) 2012.
However, the provision(s) do not commence
at all if that item 9 commences on or before
the day this Act receives the Royal Assent.
7. Schedule 1,
item 17
The day this Act receives the Royal Assent.
8. Schedule 2
The day this Act receives the Royal Assent.
Tax Laws Amendment (Investment Manager Regime) Bill 2012 No. , 2012 3
Note:
This table relates only to the provisions of this Act as originally
1
enacted. It will not be amended to deal with any later amendments of
2
this Act.
3
(2) Any information in column 3 of the table is not part of this Act.
4
Information may be inserted in this column, or information in it
5
may be edited, in any published version of this Act.
6
3 Schedule(s)
7
Each Act that is specified in a Schedule to this Act is amended or
8
repealed as set out in the applicable items in the Schedule
9
concerned, and any other item in a Schedule to this Act has effect
10
according to its terms.
11
12
Schedule 1 Investment manager regime
4 Tax Laws Amendment (Investment Manager Regime) Bill 2012 No. , 2012
Schedule 1--Investment manager regime
1
2
Income Tax Assessment Act 1997
3
1 At the end of Division 842
4
Add:
5
Subdivision 842-I--Investment manager regime
6
Guide to Subdivision 842-I
7
842-200 What this Subdivision is about
8
This Subdivision includes rules about the taxation of certain
9
foreign funds with investment income or losses which are treated
10
as being attributable to a permanent establishment in Australia
11
solely because the fund retains the services of an Australian based
12
agent, manager or service provider.
13
Where the conditions in this Subdivision are satisfied:
14
·
returns or gains relating to financial arrangements (known as
15
IMR income) are non-assessable non-exempt income or
16
disregarded; and
17
·
deductions and losses relating to financial arrangements
18
(known as IMR deductions) are disregarded; and
19
·
capital gains relating to financial arrangements (known as
20
IMR capital gains) are disregarded; and
21
·
capital losses relating to financial arrangements (known as
22
IMR capital losses) are disregarded.
23
These amounts are also disregarded if a foreign resident
24
beneficiary of a trust, or a foreign resident partner in a partnership,
25
receives them (or amounts attributable to them) through one or
26
more interposed trusts or partnerships.
27
Investment manager regime Schedule 1
Tax Laws Amendment (Investment Manager Regime) Bill 2012 No. , 2012 5
Table of sections
1
Operative provisions
2
842-205 Objects of this Subdivision
3
842-210 Treatment of IMR foreign fund that is a corporate tax entity
4
842-215 Treatment of foreign resident beneficiary that is not a trust or partnership
5
842-220 Treatment of foreign resident partner that is not a trust or partnership
6
842-225 Treatment of trustee of an IMR foreign fund
7
842-230 IMR foreign fund
8
842-235 Wind-down
phases
9
842-240 Widely held test and concentration test
10
842-245 Financial
arrangements
11
842-250 IMR income and IMR deduction
12
842-255 IMR capital gain and IMR capital loss
13
842-260 Non-IMR net income, non-IMR Division 6E net income and non-IMR net
14
capital gain
15
842-265 Non-IMR partnership net income and non-IMR partnership loss
16
842-270 Pre-2012 IMR income and pre-2012 IMR capital gain
17
Operative provisions
18
842-205 Objects of this Subdivision
19
(1) The objects of this Subdivision are to ensure that:
20
(a) foreign funds are not subject to Australian income tax in
21
respect of certain
*
financial arrangements solely because they
22
engage the services of an Australian based agent, manager or
23
service provider; and
24
(b) Australian resident taxpayers continue to be subject to tax on
25
their worldwide income; and
26
(c) the benefits of the tax concessions in this Subdivision are
27
only available where foreign funds are widely held and are
28
not owned by a small group of investors.
29
(2) This is achieved by:
30
(a)
treating
certain
*
ordinary income and
*
statutory income as
31
*
non-assessable non-exempt income; and
32
(b) disregarding certain deductions; and
33
(c)
disregarding
certain
*
capital gains and
*
capital losses; and
34
(d) requiring foreign funds that seek to benefit from the tax
35
concessions in this Subdivision to pass a widely held test and
36
Schedule 1 Investment manager regime
6 Tax Laws Amendment (Investment Manager Regime) Bill 2012 No. , 2012
a concentration test to show that they are not controlled by a
1
small group of investors.
2
842-210 Treatment of IMR foreign fund that is a corporate tax
3
entity
4
Objects
5
(1) The objects of this section are to ensure that:
6
(a)
a
*
corporate tax entity that is an
*
IMR foreign fund in relation
7
to an income year is not subject to any Australian income tax
8
in respect of its
*
IMR income and
*
IMR capital gain for that
9
income year; and
10
(b) the corporate tax entity's
*
IMR deduction or
*
IMR capital
11
loss in relation to an income year cannot be applied against
12
the corporate tax entity's other income and gains; and
13
(c) this section does not provide any tax concession to an
14
Australian resident who invests in the corporate tax entity
15
(whether directly or indirectly through one or more
16
interposed entities).
17
Application
18
(2) This section applies to a
*
corporate tax entity that is an
*
IMR
19
foreign fund in relation to an income year.
20
Certain amounts disregarded
21
(3) In working out the
*
corporate tax entity's taxable income,
*
tax loss
22
or
*
net capital loss for the income year:
23
(a)
treat
its
*
IMR income in relation to the income year as
24
*
non-assessable non-exempt income; and
25
(b)
disregard
its
*
IMR deduction in relation to the income year;
26
and
27
(c)
disregard
its
*
IMR capital gain in relation to the income year;
28
and
29
(d)
disregard
its
*
IMR capital loss in relation to the income year.
30
Certain losses disregarded
31
(4)
The
*
corporate tax entity cannot
*
utilise a
*
tax loss or
*
net capital
32
loss in relation to the income year, or in any future income year, to
33
Investment manager regime Schedule 1
Tax Laws Amendment (Investment Manager Regime) Bill 2012 No. , 2012 7
the extent the loss is attributable to
*
IMR income, an
*
IMR capital
1
gain, an
*
IMR deduction or an
*
IMR capital loss.
2
842-215 Treatment of foreign resident beneficiary that is not a trust
3
or partnership
4
Objects
5
(1) The objects of this section are to ensure that:
6
(a) a foreign resident beneficiary of an
*
IMR foreign fund in
7
relation to an income year is not subject to Australian income
8
tax in respect of
*
IMR income or an
*
IMR capital gain of the
9
fund (or in respect of an amount that is referable to IMR
10
income or an IMR capital gain of the fund) for the income
11
year; and
12
(b) the foreign resident beneficiary of the fund is not able to
13
claim a deduction or
*
utilise a
*
tax loss in relation to the
14
income year to the extent that the deduction or tax loss was
15
incurred or made in respect of an amount that is:
16
(i) IMR income of the fund (or referable to IMR income of
17
the fund); or
18
(ii) an IMR capital gain of the fund (or referable to an IMR
19
capital gain of the fund); and
20
(c) this section does not provide any tax concession to an
21
Australian resident that invests in the fund (whether directly
22
or indirectly through one or more interposed entities).
23
Application
24
(2) This section applies to a beneficiary of a trust in relation to an
25
income year if the beneficiary:
26
(a) is not a resident of Australia at any time during the income
27
year; and
28
(b) is not a trust or partnership at any time during the income
29
year (other than a
*
foreign superannuation fund).
30
Note:
A trust that is an IMR foreign fund is subject to the general tax rules
31
that apply to trusts, subject to the modifications in this Subdivision:
32
see Division 6 of Part III of the Income Tax Assessment Act 1936.
33
Also see section 842-225 of this Act, which deals with trustees of
34
IMR foreign funds.
35
Schedule 1 Investment manager regime
8 Tax Laws Amendment (Investment Manager Regime) Bill 2012 No. , 2012
Adjustments to calculation of taxable income, tax loss or net
1
capital loss
2
(3) In working out the beneficiary's taxable income,
*
tax loss or
*
net
3
capital loss for the income year:
4
(a) for the purposes of applying Division 6 of Part III of the
5
Income Tax Assessment Act 1936 to the beneficiary, replace
6
the references in that Division to share of the net income with
7
references to share of the non-IMR net income (within the
8
meaning of subsection 842-260(1) of the Income Tax
9
Assessment Act 1997); and
10
(b) for the purposes of applying subsections 98A(1) and (3) of
11
Division 6 of Part III of the Income Tax Assessment Act 1936
12
to the beneficiary, replace the references in those subsections
13
to individual interest of the beneficiary in the net income
14
with references to individual interest of the beneficiary in the
15
non-IMR net income (within the meaning of subsection
16
842-260(1) of the Income Tax Assessment Act 1997); and
17
(c) for the purposes of applying Division 6E of Part III of the
18
Income Tax Assessment Act 1936 to the beneficiary, replace
19
the references in that Division to Division 6E net income
20
with references to non-IMR Division 6E net income (within
21
the meaning of subsection 842-260(2) of the Income Tax
22
Assessment Act 1997); and
23
(d) for the purposes of applying subsection 115-215(3) to the
24
beneficiary, replace the reference in that subsection to each
25
*
capital gain of the trust estate with a reference to each
26
capital gain of the trust estate that is a
*
non-IMR net capital
27
gain (or is referable to a non-IMR net capital gain of the trust
28
estate); and
29
(e) for the purposes of applying section 115-225 to the
30
beneficiary:
31
(i) replace references in that section to net income of the
32
trust estate with references to
*
non-IMR net income of
33
the trust estate; and
34
(ii) replace the reference in that section to
*
net capital gain
35
(if any) with a reference to
*
non-IMR net capital gain (if
36
any).
37
(4) For the purposes of applying paragraph 115-225(1)(a) to the
38
beneficiary:
39
Investment manager regime Schedule 1
Tax Laws Amendment (Investment Manager Regime) Bill 2012 No. , 2012 9
(a)
disregard
a
*
capital gain of the
*
IMR foreign fund to the
1
extent the capital gain is an
*
IMR capital gain; and
2
(b)
disregard
an
*
IMR capital loss of the IMR foreign fund for
3
the purposes of determining the amount of the capital gain
4
remaining after applying steps 1 to 4 of the method statement
5
in subsection 102-5(1); and
6
(c)
disregard
a
*
net capital loss of the IMR foreign fund to the
7
extent that it is attributable to an IMR capital loss for the
8
purposes of determining the amount of the capital gain
9
remaining after applying steps 1 to 4 of the method statement
10
in subsection 102-5(1).
11
842-220 Treatment of foreign resident partner that is not a trust or
12
partnership
13
Objects
14
(1) The objects of this section are to ensure that:
15
(a) a foreign resident partner of an
*
IMR foreign fund in relation
16
to an income year is not subject to any Australian income tax
17
in respect of
*
IMR income or an
*
IMR capital gain (or in
18
respect of an amount that is referable to IMR income or an
19
IMR capital gain) for the income year; and
20
(b) the foreign resident partner of the fund is not able to claim a
21
deduction or
*
utilise a
*
tax loss in relation to the income year
22
to the extent that the deduction or tax loss was incurred or
23
made in respect of an amount that is:
24
(i) IMR income of the fund (or referable to IMR income of
25
the fund); or
26
(ii) an IMR capital gain (or referable to an IMR capital
27
gain); and
28
(c) this section does not provide any tax concession to an
29
Australian resident that invests in the fund (whether directly
30
or indirectly through one or more interposed entities).
31
Application
32
(2) This section applies to a partner in a partnership in relation to an
33
income year if the partner:
34
(a) is not an Australian resident at any time during the income
35
year; and
36
Schedule 1 Investment manager regime
10 Tax Laws Amendment (Investment Manager Regime) Bill 2012 No. , 2012
(b) is not a trust or a partnership at any time during the income
1
year (other than a
*
foreign superannuation fund).
2
Note:
A partnership that is an IMR foreign fund is subject to the general tax
3
rules that apply to partnerships, subject to the modifications set out in
4
this Subdivision: see Division 5 of Part III of the Income Tax
5
Assessment Act 1936.
6
Adjustments to calculation of taxable income, tax loss or net
7
capital loss
8
(3) In working out the partner's taxable income,
*
tax loss or
*
net
9
capital loss for the income year:
10
(a) for the purposes of applying Division 5 of Part III of the
11
Income Tax Assessment Act 1936 to the partner, replace the
12
references in that Division to the individual interest of the
13
partner in the net income of the partnership with references to
14
the individual interest of the partner in the non-IMR
15
partnership net income (within the meaning of
16
section 842-265 of the Income Tax Assessment Act 1997) of
17
the partnership; and
18
(b) for the purposes of applying Division 5 of Part III of the
19
Income Tax Assessment Act 1936 to the partner, replace the
20
references in that Division to the individual interest of the
21
partner in the partnership loss with references to the
22
individual interest of the partner in the non-IMR partnership
23
loss (within the meaning of section 842-265 of the Income
24
Tax Assessment Act 1997); and
25
(c) disregard an amount to the extent that it is referable to an
26
*
IMR capital gain or an
*
IMR capital loss.
27
842-225 Treatment of trustee of an IMR foreign fund
28
Objects
29
(1) The object of this section is to ensure that the following provisions
30
interact appropriately with the tax concessions mentioned in
31
paragraphs 842-210(1)(a) and (b), paragraphs 842-215(1)(a) and
32
(b) and paragraphs 842-220(1)(a) and (b):
33
(a)
subsection
115-220(2);
34
(b)
section
115-225;
35
(c) section 98 of the Income Tax Assessment Act 1936;
36
(d) section 99E of the Income Tax Assessment Act 1936.
37
Investment manager regime Schedule 1
Tax Laws Amendment (Investment Manager Regime) Bill 2012 No. , 2012 11
Note:
Division 6 of Part III of the Income Tax Assessment Act 1936,
1
Division 115 of Part 3-1 of this Act, and all other provisions of those
2
Acts apply to the trustee of an IMR foreign fund, subject to the
3
modifications in this section.
4
Applying subsection 115-220(2)
5
(2) For the purposes of applying subsection 115-220(2) to the
6
beneficiary:
7
(a)
disregard
a
*
capital gain of the
*
IMR foreign fund to the
8
extent the capital gain is an
*
IMR capital gain; and
9
(b)
disregard
an
*
IMR capital loss of the IMR foreign fund for
10
the purposes of determining the amount of the capital gain
11
remaining after applying steps 1 to 4 of the method statement
12
in subsection 102-5(1); and
13
(c)
disregard
a
*
net capital loss of the IMR foreign fund to the
14
extent that it is attributable to an IMR capital loss for the
15
purposes of determining how much of a capital gain that is
16
not an IMR capital gain remains after applying steps 1 to 4 of
17
the method statement in subsection 102-5(1).
18
Note:
The effect of this subsection is that the increase to the assessable
19
amount which occurs as a result of section 115-220 is calculated with
20
reference to the capital gains of the IMR foreign fund that are not IMR
21
capital gains or amounts referable to IMR capital gains (rather than by
22
calculating the increase with reference to all capital gains of the fund).
23
Modifications to section 115-225
24
(3) For the purposes of applying section 115-225 in respect of
25
section 115-220, make the following assumptions:
26
(a) replace the references in section 115-225 to the net income of
27
the trust estate with references to the
*
non-IMR net income of
28
the trust estate;
29
(b) replace the reference in section 115-225 to net capital gain (if
30
any) with a reference to
*
non-IMR net capital gain (if any).
31
Modifications to section 98 of the Income Tax Assessment Act 1936
32
(4) For the purposes of applying section 98 of the Income Tax
33
Assessment Act 1936, replace references in that section to net
34
income with references to non-IMR net income (within the
35
meaning of subsection 842-260(1) of the Income Tax Assessment
36
Act 1997).
37
Schedule 1 Investment manager regime
12 Tax Laws Amendment (Investment Manager Regime) Bill 2012 No. , 2012
Note:
The effect of this subsection is that where section 98 of the Income
1
Tax Assessment Act 1936 applies to the trustee of a trust that is an
2
IMR foreign fund, the trustee is only assessed and made liable to pay
3
tax in respect of non-IMR net income of the fund (rather than in
4
respect of all net income of the fund to which section 98 would
5
otherwise apply).
6
Modifications to section 99E of the Income Tax Assessment Act
7
1936
8
(5) For the purposes of applying section 99E of the Income Tax
9
Assessment Act 1936:
10
(a) replace the reference in that section to so much of the net
11
income with a reference to so much of the net income or
12
non-IMR net income (within the meaning of subsection
13
842-260(1) of the Income Tax Assessment Act 1997) as the
14
case may be; and
15
(b) replace the reference in that section to a part of the net
16
income of another trust estate with a reference to a part of the
17
non-IMR net income (within the meaning of subsection
18
842-260(1) of the Income Tax Assessment Act 1997) of
19
another trust estate.
20
Note:
The effect of this subsection is that the trustee of a trust that receives a
21
distribution of non-IMR net income from another trust is not required
22
to apply section 98, 99 or 99A of the Income Tax Assessment Act 1936
23
to those amounts.
24
Certain losses disregarded
25
(6) The trust cannot
*
utilise a
*
tax loss or
*
net capital loss in relation to
26
an income year, or any future income year, to the extent the loss is
27
attributable to
*
IMR income, an
*
IMR capital gain, an
*
IMR
28
deduction or an
*
IMR capital loss.
29
842-230 IMR foreign fund
30
An entity is an IMR foreign fund in relation to an income year if:
31
(a)
the
entity:
32
(i) is not an Australian resident at any time during the
33
income year; and
34
(ii) is not a resident trust estate for the purposes of
35
subsection 95(2) of the Income Tax Assessment Act
36
1936 at any time during the income year; and
37
Investment manager regime Schedule 1
Tax Laws Amendment (Investment Manager Regime) Bill 2012 No. , 2012 13
(b) the entity does not carry on a trading business (within the
1
meaning of section 102M of the Income Tax Assessment Act
2
1936) at any time during the income year; and
3
(c) subject to section 842-235, the entity:
4
(i) satisfies the widely held test at all times during the
5
income year (see subsection 842-240(1)); and
6
(ii)
does
not breach the concentration test in subsection
7
842-240(4) at any time during the income year.
8
842-235 Wind-down phases
9
If:
10
(a) the entity ceases to exist during the income year; and
11
(b) the entity was an
*
IMR foreign fund in relation to the
12
preceding income year;
13
treat the requirements in paragraph 842-230(c) as being satisfied.
14
842-240 Widely held test and concentration test
15
Widely held test
16
(1) The entity satisfies the widely held test for the purposes of
17
subparagraph 842-230(c)(i) if:
18
(a) units or shares in the entity are listed for quotation in the
19
official list of an
*
approved stock exchange; or
20
(b) the entity has at least 25
*
members (ignoring objects of a
21
trust); or
22
(c) one or more of the entities covered by subsection (3) have a
23
*
total participation interest in the entity of more than 25%; or
24
(d) all the membership interests in the entity are held, directly or
25
indirectly, by one or more entities that satisfy the
26
requirements in paragraph (a), (b) or (c); or
27
(e) the entity is an entity of a kind specified in the regulations
28
made for the purposes of this paragraph.
29
(2) For the purposes of subsection (1):
30
(a) treat the following entities as together being one entity:
31
(i)
an
individual;
32
(ii) each of his or her relatives;
33
Schedule 1 Investment manager regime
14 Tax Laws Amendment (Investment Manager Regime) Bill 2012 No. , 2012
(iii) each entity acting in the capacity of nominee of an
1
individual mentioned in subparagraph (i) or (ii); and
2
(b) treat the following entities as together being one entity:
3
(i) an entity that is not an individual;
4
(ii) each entity acting in the capacity of nominee of the
5
entity mentioned in subparagraph (i).
6
Foreign widely held entities
7
(3) An entity is covered by this subsection if:
8
(a) it is a life insurance company that is not an Australian
9
resident at any time during the income year; or
10
(b) it is a
*
foreign superannuation fund, being a fund that has at
11
least 50
*
members; or
12
(c) it is an entity that is a fund established by an
*
exempt foreign
13
government agency for the principal purposes of funding
14
pensions (including disability and similar benefits) for the
15
citizens or other contributors of a foreign country.
16
Concentration test
17
(4) The entity breaches the concentration test if 10 or fewer entities
18
have a
*
total participation interest in the entity of 50% or more.
19
(5) In determining the number of entities for the purposes of
20
subsection (4), do not count the following:
21
(a)
an
*
IMR foreign fund in relation to the income year;
22
(b) an entity that satisfies the requirement in paragraph (1)(d),
23
(3)(a), (3)(b) or (3)(c);
24
(c) an entity that holds an
*
indirect participation interest in the
25
entity through one or more entities covered by paragraph (a)
26
or (b) of this subsection.
27
842-245 Financial arrangements covered by this section
28
(1)
A
*
financial arrangement is covered by this section unless
29
subsection (2), (3) or (4) applies.
30
(2) A
*
financial arrangement is not covered by this section if:
31
(a)
the
*
IMR foreign fund has a
*
total participation interest in
32
another entity of 10% or more; and
33
Investment manager regime Schedule 1
Tax Laws Amendment (Investment Manager Regime) Bill 2012 No. , 2012 15
(b) the financial arrangement is:
1
(i)
a
*
debt interest or an
*
equity interest in the entity; or
2
(ii) the result of a
*
financing arrangement for the entity that
3
is neither a debt interest nor an equity interest; or
4
(iii)
a
*
derivative financial arrangement that relates to a
5
financial arrangement to which subparagraph (i) or (ii)
6
applies.
7
(3) A
*
financial arrangement is not covered by this section if:
8
(a) the financial arrangement is a
*
derivative financial
9
arrangement that relates to a
*
CGT asset; and
10
(b) the CGT asset is:
11
(i)
*
taxable Australian real property (see section 855-20);
12
or
13
(ii)
an
*
indirect Australian real property interest (see
14
section 855-25).
15
(4)
A
*
financial arrangement is not covered by this section if its terms
16
allow the
*
IMR foreign fund to:
17
(a) vote at a meeting of the Board of Directors (or other
18
governing body) of the issuer of the financial arrangement; or
19
(b) participate in making financial, operating or policy decisions
20
in respect of the operation of the issuer of the financial
21
arrangement; or
22
(c) deal with the assets of the issuer of the financial arrangement.
23
(5) Subsection (4) does not apply if that subsection applies solely
24
because the issuer of the
*
financial arrangement breached a term of
25
the financial arrangement.
26
842-250 IMR income and IMR deduction
27
IMR income
28
(1)
The
IMR income for an income year of an
*
IMR foreign fund in
29
relation to the income year is the sum of the fund's assessable
30
income for the income year to the extent that:
31
(a) the assessable income is attributable to a return or gain from
32
a
*
financial arrangement covered by section 842-245; and
33
(b) the fund has a
*
permanent establishment in Australia solely
34
as a result of engaging an entity that is a resident of Australia
35
Schedule 1 Investment manager regime
16 Tax Laws Amendment (Investment Manager Regime) Bill 2012 No. , 2012
to habitually exercise a general authority to negotiate and
1
conclude contracts on its behalf; and
2
(c) amounts are included in the assessable income of the fund
3
only because:
4
(i) in respect of a fund that is resident in a country that has
5
entered into an agreement (within the meaning of the
6
International Tax Agreements Act 1953) with Australia
7
containing a
*
business profits article--amounts included
8
in the assessable income of the fund are treated as
9
having a source in Australia because they are
10
attributable to a permanent establishment of the fund in
11
Australia; or
12
(ii) in respect of a fund that is resident in a country that has
13
not entered into an agreement (within the meaning of
14
the International Tax Agreements Act 1953) with
15
Australia containing a business profits article--the
16
Commissioner makes a determination under
17
section 136AE of the Income Tax Assessment Act 1936;
18
or
19
(iii) the financial arrangement is a
*
CGT asset covered by
20
item 3 of the table in section 855-15; or
21
(iv) the financial arrangement is a CGT asset covered by
22
item 4 of the table in section 855-15 because it is an
23
option or right to
*
acquire a CGT asset covered by
24
item 3 of that table.
25
IMR deduction
26
(2)
The
IMR deduction for an income year of an
*
IMR foreign fund in
27
relation to the income year is the sum of the fund's deductions for
28
the income year to the extent to which they are attributable to
29
gaining
*
IMR income, an
*
IMR capital gain,
*
pre-2012 IMR
30
income or a
*
pre-2012 IMR capital gain.
31
(3) Disregard the following provisions for the purposes of calculating
32
an
*
IMR foreign fund's
*
IMR income or
*
IMR deduction:
33
(a) subsection 842-210(3) (which is about certain amounts of an
34
IMR foreign fund being disregarded);
35
(b) paragraph 842-260(1)(a) (which is about non-IMR net
36
income);
37
Investment manager regime Schedule 1
Tax Laws Amendment (Investment Manager Regime) Bill 2012 No. , 2012 17
(c) section 842-265 (which is about non-IMR partnership net
1
income and non-IMR partnership loss).
2
842-255 IMR capital gain and IMR capital loss
3
IMR capital gain
4
(1)
The
IMR capital gain for an income year of an
*
IMR foreign fund
5
in relation to the income year is the sum of the fund's
*
capital gains
6
made in the income year to the extent that:
7
(a) the fund has a
*
permanent establishment in Australia solely
8
as a result of engaging an entity that is a resident of Australia
9
to habitually exercise a general authority to negotiate and
10
conclude contracts on its behalf; and
11
(b) the capital gains are made in respect of
*
CGT assets covered
12
by subsection (3) which are also
*
financial arrangements
13
covered by section 842-245.
14
IMR capital loss
15
(2)
The
IMR capital loss for an income year of an
*
IMR foreign fund
16
for an income year is the sum of the fund's
*
capital losses made in
17
relation to the income year to the extent that:
18
(a) the fund has a
*
permanent establishment in Australia solely
19
as a result of engaging an entity that is a resident of Australia
20
to habitually exercise a general authority to negotiate and
21
conclude contracts on its behalf; and
22
(b) the capital losses are made in respect of
*
CGT assets covered
23
by subsection (3) which are also
*
financial arrangements
24
covered by section 842-245.
25
(3)
A
*
CGT asset of an
*
IMR foreign fund is covered by this
26
subsection if:
27
(a) it is covered by item 3 of the table in section 855-15 in
28
relation to the fund; or
29
(b) it is covered by item 4 of the table in section 855-15 in
30
relation to the fund because it is an option or right to
*
acquire
31
a CGT asset covered by item 3 of that table in relation to the
32
fund.
33
Schedule 1 Investment manager regime
18 Tax Laws Amendment (Investment Manager Regime) Bill 2012 No. , 2012
Partner's IMR capital gain or IMR capital loss
1
(4)
Where
the
*
IMR foreign fund is a partnership, a
*
capital gain or
2
*
capital loss of a partner that arises in respect of the partner's
3
interest in the fund is treated as an
*
IMR capital gain or an
*
IMR
4
capital loss (as the case may be) to the extent that the capital gain
5
or capital loss is made in respect of
*
CGT assets covered by
6
subsection (3) which are also
*
financial arrangements covered by
7
section 842-245.
8
842-260 Non-IMR net income, non-IMR Division 6E net income and
9
non-IMR net capital gain
10
(1)
A
trust's
non-IMR net income in relation to an income year is
11
determined by calculating the
*
net income of the trust as follows:
12
(a)
disregard
the
*
IMR income and
*
IMR deduction of the trust
13
for the income year;
14
(b) disregard any amount that is included in the trust's assessable
15
income under subsection 207-35(1) to the extent that the
16
amount is attributable to IMR income of the trust for the
17
income year;
18
(c) if the trust is a beneficiary of another trust--then:
19
(i) for the purposes of applying Division 6 of Part III of the
20
Income Tax Assessment Act 1936 to the beneficiary,
21
replace the references in that Division to share of the net
22
income with references to share of the non-IMR net
23
income (within the meaning of subsection 842-260(1) of
24
the Income Tax Assessment Act 1997); and
25
(ii) for the purposes of applying Division 6E of Part III of
26
the Income Tax Assessment Act 1936 to the beneficiary,
27
replace references in that Division to Division 6E net
28
income with references to non-IMR Division 6E net
29
income (within the meaning of subsection 842-260(2) of
30
the Income Tax Assessment Act 1997);
31
(d) if the trust is a partner in a partnership--for the purposes of
32
applying Division 5 of Part III of the Income Tax Assessment
33
Act 1936 to the partner, replace references in that Division to
34
the individual interest of the partner in the partnership net
35
income or partnership loss with references to the individual
36
interest of the partner in the non-IMR partnership net income
37
or non-IMR partnership loss (within the meaning of those
38
Investment manager regime Schedule 1
Tax Laws Amendment (Investment Manager Regime) Bill 2012 No. , 2012 19
terms in section 842-265 of the Income Tax Assessment Act
1
1997).
2
Note:
The net income of a trust may include a share of the net income of
3
another trust. Where there is a chain of trusts these calculations are
4
applied to each trust in the chain.
5
Non-IMR Division 6E net income
6
(2)
A
trust's
non-IMR Division 6E net income in relation to an
7
income year is determined by calculating the Division 6E net
8
income (within the meaning of subsection 102UY(3) of the Income
9
Tax Assessment Act 1936) of the trust as follows:
10
(a)
disregard
the
*
IMR income and
*
IMR deduction of the trust
11
in relation to the income year;
12
(b) disregard the things mentioned in subparagraphs
13
102UW(b)(i) to (iii) of the Income Tax Assessment Act 1936
14
(which are about adjustments of Division 6 assessable
15
amounts) in relation to the income year.
16
Non-IMR net capital gain
17
(3)
A
trust's
non-IMR net capital gain in relation to an income year is
18
determined by calculating the
*
net capital gain of the trust as
19
follows:
20
(a) disregard the trust's
*
IMR capital gain and
*
IMR capital loss
21
in relation to the income year;
22
(b) disregard any capital gain of the trust that is referable to an
23
IMR capital gain of another
*
IMR foreign fund that is a trust.
24
842-265 Non-IMR partnership net income and non-IMR partnership
25
loss
26
A
partnership's
non-IMR partnership net income or non-IMR
27
partnership loss in relation to an income year is determined by
28
calculating the
*
net income or
*
partnership loss of the partnership
29
as follows:
30
(a)
disregard
the
*
IMR income and
*
IMR deduction of the
31
partnership for the income year;
32
(b) disregard any amount included in the partnership's assessable
33
income under subsection 207-35(1) to the extent that the
34
amount is attributable to IMR income of the partnership for
35
the income year;
36
Schedule 1 Investment manager regime
20 Tax Laws Amendment (Investment Manager Regime) Bill 2012 No. , 2012
(c) if the partnership is a beneficiary of a trust--then:
1
(i) for the purposes of applying Division 6 of Part III of the
2
Income Tax Assessment Act 1936 to the beneficiary,
3
replace the references in that Division to share of the net
4
income with references to share of the non-IMR net
5
income (within the meaning of subsection 842-260(1) of
6
the Income Tax Assessment Act 1997); and
7
(ii) for the purposes of applying Division 6E of Part III of
8
the Income Tax Assessment Act 1936 to the beneficiary,
9
replace references in that Division to Division 6E net
10
income with references to non-IMR Division 6E net
11
income (within the meaning of subsection 842-260(2) of
12
the Income Tax Assessment Act 1997);
13
(d) if the partnership is a partner in another partnership--for the
14
purposes of applying Division 5 of Part III of the Income Tax
15
Assessment Act 1936 to the partnership that is a partner,
16
replace the references in that Division to the individual
17
interest of the partner in the partnership net income or
18
partnership loss with references to the individual interest of
19
the partner in the non-IMR partnership net income or
20
non-IMR partnership loss (within the meaning of those terms
21
in section 842-265 of the Income Tax Assessment Act 1997).
22
Note:
The net income of a partnership may include a share of the net income
23
of another partnership. Where there is a chain of partnerships, these
24
calculations are applied to each partnership in the chain.
25
842-270 Pre-2012 IMR income and pre-2012 IMR capital gain
26
Pre-2012 IMR income
27
(1)
The
pre-2012 IMR income for an income year that is the 2010-11
28
income year or an earlier income year of an
*
IMR foreign fund is
29
the sum of the fund's assessable income made in the income year
30
in respect of
*
financial arrangements covered by section 842-245.
31
(2) Disregard subsection 842-210(3) (which is about certain amounts
32
of an IMR foreign fund being disregarded) for the purposes of
33
determining the
*
pre-2012 IMR income of the fund.
34
Investment manager regime Schedule 1
Tax Laws Amendment (Investment Manager Regime) Bill 2012 No. , 2012 21
Pre-2012 IMR capital gain
1
(3)
The
pre-2012 IMR capital gain for an income year that is the
2
2010-11 income year or an earlier income year of an
*
IMR foreign
3
fund is the sum of the fund's
*
capital gains made in the income
4
year in respect of
*
CGT assets that are
*
financial arrangements
5
covered by section 842-245.
6
2 Subparagraphs 842-250(1)(c)(i) and (ii)
7
Repeal the subparagraphs, substitute:
8
(i) in respect of an entity that is resident in a country that
9
has entered into an
*
international tax agreement with
10
Australia containing a
*
business profits article--
11
amounts included in the assessable income of the fund
12
are treated as having a source in Australia because they
13
are attributable to a permanent establishment of the fund
14
in Australia; or
15
(ii) in respect of an entity that has not entered into an
16
international tax agreement with Australia--the
17
Commissioner makes a determination under
18
section 136AE of the Income Tax Assessment Act 1936;
19
or
20
3 Subsection 995-1(1)
21
Insert:
22
business profits article means:
23
(a) Article 7 of the United Kingdom convention (within the
24
meaning of the International Tax Agreements Act 1953); or
25
(b) a corresponding provision of another agreement (within the
26
meaning of that Act).
27
4 Subsection 995-1(1)
28
Insert:
29
IMR capital gain has the meaning given by subsection 842-255(1).
30
5 Subsection 995-1(1)
31
Insert:
32
IMR capital loss has the meaning given by subsection 842-255(2).
33
Schedule 1 Investment manager regime
22 Tax Laws Amendment (Investment Manager Regime) Bill 2012 No. , 2012
6 Subsection 995-1(1)
1
Insert:
2
IMR deduction has the meaning given by subsection 842-250(2).
3
7 Subsection 995-1(1)
4
Insert:
5
IMR foreign fund has the meaning given by section 842-230.
6
8 Subsection 995-1(1)
7
Insert:
8
IMR income has the meaning given by subsection 842-250(1).
9
9 Subsection 995-1(1)
10
Insert:
11
non-IMR Division 6E net income has the meaning given by
12
subsection 842-260(2).
13
10 Subsection 995-1(1)
14
Insert:
15
non-IMR net capital gain has the meaning given by subsection
16
842-260(3).
17
11 Subsection 995-1(1)
18
Insert:
19
non-IMR net income has the meaning given by subsection
20
842-260(1).
21
12 Subsection 995-1(1)
22
Insert:
23
non-IMR partnership loss has the meaning given by
24
section 842-265.
25
13 Subsection 995-1(1)
26
Insert:
27
Investment manager regime Schedule 1
Tax Laws Amendment (Investment Manager Regime) Bill 2012 No. , 2012 23
non-IMR partnership net income has the meaning given by
1
section 842-265.
2
14 Subsection 995-1(1)
3
Insert:
4
pre-2012 IMR capital gain has the meaning given by subsection
5
842-270(3).
6
15 Subsection 995-1(1)
7
Insert:
8
pre-2012 IMR income has the meaning given by subsections
9
842-270(1) and (2).
10
Tax Laws Amendment (Cross-Border Transfer Pricing) Act
11
(No. 1) 2012
12
16 Item 9 of Schedule 1
13
Repeal the item, substitute:
14
9 Subsection 995-1(1) (definition of business profits article)
15
Repeal the definition, substitute:
16
business profits article has the meaning given by subsection
17
815-15(6).
18
17 Application
19
(1)
The amendments made by this Schedule apply to assessments for the
20
2010-11 income year and later income years.
21
(2)
In addition, sections 842-230 to 842-270 of the Income Tax Assessment
22
Act 1997 (inserted by this Schedule) apply in relation to another
23
amendment (the primary amendment) made by this Act in the same
24
way as the primary amendment applies.
25
26
Schedule 2 FIN 48
24 Tax Laws Amendment (Investment Manager Regime) Bill 2012 No. , 2012
Schedule 2--FIN 48
1
2
Income Tax (Transitional Provisions) Act 1997
3
1 At the end of Part 4-5:
4
Add:
5
Division 842--Exempt Australian source income and gains
6
of foreign residents
7
Subdivision 842-I--Investment manager regime
8
Table of sections
9
Operative provisions
10
842-210 Treatment of IMR foreign fund that is a corporate tax entity
11
842-215 Treatment of foreign resident beneficiary that is not a trust or partnership
12
842-220 Treatment of foreign resident partner that is not a trust or partnership
13
842-225 Treatment of trustee of an IMR foreign fund
14
842-230 Pre-2012 IMR deduction
15
842-235 Pre-2012 IMR capital loss
16
842-240 Pre-2012 non-IMR net income, pre-2012 non-IMR Division 6E net
17
income and pre-2012 non-IMR net capital gain
18
842-245 Pre-2012 non-IMR partnership net income and pre-2012 non-IMR
19
partnership loss
20
842-210 Treatment of IMR foreign fund that is a corporate tax
21
entity
22
Objects
23
(1) The object of this section is to disregard, for the purpose of
24
calculating the assessable income of a corporate tax entity that is
25
an IMR foreign fund, certain gains and losses that arise in the
26
2010-11 income year, or an earlier income year, in respect of
27
certain kinds of financial arrangements.
28
FIN 48 Schedule 2
Tax Laws Amendment (Investment Manager Regime) Bill 2012 No. , 2012 25
Application
1
(2) This section applies to a corporate tax entity that is an IMR foreign
2
fund in relation to an income year if:
3
(a) the income year is the 2010-11 income year or an earlier
4
income year; and
5
(b) the corporate tax entity has pre-2012 IMR income, a
6
pre-2012 IMR deduction, a pre-2012 IMR capital gain or a
7
pre-2012 IMR capital loss in relation to the income year; and
8
(c) the corporate tax entity has not lodged an income tax return
9
in relation to the 2010-11 income year, or any earlier income
10
year, before the day that item 1 of Schedule 1 to the Tax
11
Laws Amendment (Investment Manager Regime) Act 2012
12
commences; and
13
(d) the Commissioner did not, before 18 December 2010, make
14
an assessment of the taxable income of the corporate tax
15
entity for any income year.
16
Note 1:
For the purposes of this Act, pre-2012 IMR income is defined in
17
subsections 842-270(1) and (2) of the Income Tax Assessment Act
18
1997 and pre-2012 IMR capital gain is defined in subsection
19
842-270(3) of that Act.
20
Note 2:
Pre-2012 IMR deduction is defined in subsections 842-230(1) and (2)
21
of this Act and pre-2012 IMR capital loss is defined in
22
section 842-235 of this Act.
23
Certain amounts disregarded
24
(3) In working out the corporate tax entity's taxable income, tax loss
25
or net capital loss for the income year:
26
(a) treat the corporate tax entity's pre-2012 IMR income for the
27
income year as non-assessable non-exempt income; and
28
(b) disregard the corporate tax entity's pre-2012 IMR deduction
29
for the income year; and
30
(c) disregard the corporate tax entity's
pre-2012 IMR capital
31
gain for the income year; and
32
(d) disregard the corporate tax entity's pre-2012 IMR capital loss
33
for the income year.
34
Schedule 2 FIN 48
26 Tax Laws Amendment (Investment Manager Regime) Bill 2012 No. , 2012
Fraud
1
(4) Subsection (3) does not apply if the Commissioner has reason to
2
believe that there has been fraud by the corporate tax entity in
3
relation to any income year.
4
Audit or compliance review
5
(5) Subsection (3) does not apply if before 18 December 2010 the
6
Commissioner notified the corporate tax entity that an audit or
7
compliance review would be undertaken in relation to any income
8
year.
9
842-215 Treatment of foreign resident beneficiary that is not a trust
10
or partnership
11
Objects
12
(1) The objects of this section are to ensure that:
13
(a) a foreign resident beneficiary of an IMR foreign fund in
14
relation to the 2010-11 income year or an earlier income year
15
is not subject to Australian income tax in respect of pre-2012
16
IMR income or a pre-2012 IMR capital gain of the fund (or
17
in respect of an amount that is referable to pre-2012 IMR
18
income or a pre-2012 IMR capital gain of the fund) for the
19
income year; and
20
(b) the foreign resident beneficiary of the fund is not able to
21
claim a deduction or utilise a tax loss in relation to the
22
income year to the extent that the deduction or tax loss was
23
incurred or made in respect of an amount that is:
24
(i) pre-2012 IMR income of the fund (or referable to
25
pre-2012 IMR income of the fund); or
26
(ii) a pre-2012 IMR capital gain of the fund (or referable to
27
a pre-2012 IMR capital gain of the fund); and
28
(c) this section does not provide any tax concession to an
29
Australian resident that invests in the fund (whether directly
30
or indirectly through one or more interposed entities).
31
Application
32
(2) This section applies to a beneficiary of a trust in relation to the
33
2010-11 income year, or an earlier income year, if:
34
FIN 48 Schedule 2
Tax Laws Amendment (Investment Manager Regime) Bill 2012 No. , 2012 27
(a) the beneficiary is not a resident of Australia at any time
1
during the income year; and
2
(b) the beneficiary is not a trust or partnership at any time during
3
the income year (other than a foreign superannuation fund);
4
and
5
(c) neither the trust nor the beneficiary has lodged an income tax
6
return in relation to the 2010-11 income year, or any earlier
7
income year, before the day that item 1 of Schedule 1 to the
8
Tax Laws Amendment (Investment Manager Regime) Act
9
2012 commences; and
10
(d) the Commissioner did not, before 18 December 2010, make
11
an assessment of the beneficiary for any income year.
12
Note:
A trust that is an IMR foreign fund is generally subject to the general
13
tax rules that apply to trusts, subject to the modifications in this
14
Subdivision: see Division 6 of Part III of the Income Tax Assessment
15
Act 1936. Also see section 842-225 of this Act, which deals with
16
trustees of IMR foreign funds.
17
Adjustments to calculation of taxable income, tax loss or net
18
capital loss
19
(3) In working out the beneficiary's taxable income, tax loss or net
20
capital loss for the income year:
21
(a) for the purposes of applying Division 6 of Part III of the
22
Income Tax Assessment Act 1936 to the beneficiary, replace
23
the references in that Division to share of the net income with
24
references to share of the pre-2012 non-IMR net income
25
(within the meaning of subsection 842-240(1) of the Income
26
Tax (Transitional Provisions) Act 1997); and
27
(b) for the purposes of applying subsections 98A(1) and (3) of
28
Division 6 of Part III of the Income Tax Assessment Act 1936
29
to the beneficiary, replace the references in those subsections
30
to individual interest of the beneficiary in the net income
31
with references to individual interest of the beneficiary in the
32
pre-2012 non-IMR net income (within the meaning of
33
subsection 842-240(1) of the Income Tax (Transitional
34
Provisions) Act 1997); and
35
(c) for the purposes of applying Division 6E of Part III of the
36
Income Tax Assessment Act 1936 to the beneficiary, replace
37
the references in that Division to Division 6E net income
38
with references to pre-2012 non-IMR Division 6E net income
39
Schedule 2 FIN 48
28 Tax Laws Amendment (Investment Manager Regime) Bill 2012 No. , 2012
(within the meaning of subsection 842-240(2) of the Income
1
Tax (Transitional Provisions) Act 1997); and
2
(d) in applying subsection 115-215(3) of the Income Tax
3
Assessment Act 1997 to the beneficiary, replace the reference
4
in that subsection to each capital gain of the trust estate with
5
a reference to each capital gain of the trust estate that is a
6
pre-2012 non-IMR net capital gain (or is referable to a
7
pre-2012 non-IMR net capital gain of the trust estate) (within
8
the meaning of subsection 842-240(3) of the Income Tax
9
(Transitional Provisions) Act 1997); and
10
(e) in applying section 115-225 of the Income Tax Assessment
11
Act 1997 to the beneficiary:
12
(i) replace references in that section to net income of the
13
trust estate with references to pre-2012 non-IMR net
14
income of the trust estate (within the meaning of
15
subsection 842-240(1) of the Income Tax (Transitional
16
Provisions) Act 1997); and
17
(ii) replace the reference in that section to net capital gain
18
(if any) with a reference to pre-2012 non-IMR net
19
capital gain (if any) (within the meaning of subsection
20
842-240(3) of the Income Tax (Transitional Provisions)
21
Act 1997).
22
(4) For the purposes of applying paragraph 115-225(1)(a) of the
23
Income Tax Assessment Act 1997 to the beneficiary in respect of
24
the income year:
25
(a) disregard a capital gain of the trust to the extent the capital
26
gain is a pre-2012 IMR capital gain (or is referable to a
27
pre-2012 IMR capital gain of the fund); and
28
(b) disregard a pre-2012 IMR capital loss of the trust for the
29
purposes of determining the amount of the capital gain
30
remaining after applying steps 1 to 4 of the method statement
31
in subsection 102-5(1) of that Act; and
32
(c) disregard a net capital loss of the trust to the extent that it is
33
attributable to a pre-2012 IMR capital loss for the purposes
34
of determining the amount of the capital gain remaining after
35
applying steps 1 to 4 of the method statement in subsection
36
102-5(1).
37
FIN 48 Schedule 2
Tax Laws Amendment (Investment Manager Regime) Bill 2012 No. , 2012 29
Fraud
1
(5) Subsections (3) and (4) do not apply if the Commissioner has
2
reason to believe that there has been fraud by the trust in relation to
3
any income year.
4
Audit or compliance review
5
(6) Subsections (3) and (4) do not apply if before 18 December 2010
6
the Commissioner notified the trust that an audit or compliance
7
review would be undertaken in relation to any income year.
8
842-220 Treatment of foreign resident partner that is not a trust or
9
partnership
10
Objects
11
(1) The objects of this section are to ensure that:
12
(a) a foreign resident partner of an IMR foreign fund in relation
13
to the 2010-11 income year, or an earlier income year, is not
14
subject to any Australian income tax in respect of pre-2012
15
IMR income or a pre-2012 IMR capital gain (or in respect of
16
an amount that is referable to pre-2012 IMR income or a
17
pre-2012 IMR capital gain) for the income year; and
18
(b) the foreign resident partner of the fund is not able to claim a
19
deduction or utilise a tax loss in relation to the income year to
20
the extent that the deduction or tax loss was incurred or made
21
in respect of an amount that is:
22
(i) pre-2012 IMR income of the fund (or referable to
23
pre-2012 IMR income of the fund); or
24
(ii) a pre-2012 IMR capital gain (or referable to a pre-2012
25
IMR capital gain); and
26
(c) this section does not provide any tax concession to an
27
Australian resident that invests in the fund (whether directly
28
or indirectly through one or more interposed entities).
29
Application
30
(2) This section applies to a partner in a partnership in relation to the
31
2010-11 income year, or an earlier income year, if:
32
(a) the partner is not an Australian resident at any time during
33
the income year; and
34
Schedule 2 FIN 48
30 Tax Laws Amendment (Investment Manager Regime) Bill 2012 No. , 2012
(b) the partner is not a trust or a partnership at any time during
1
the income year (other than a foreign superannuation fund);
2
and
3
(c) neither the partnership nor the partner has lodged an income
4
tax return in relation to the 2010-11 income year, or any
5
earlier income year, before the day that item 1 of Schedule 1
6
to the Tax Laws Amendment (Investment Manager Regime)
7
Act 2012 commences; and
8
(d) the Commissioner did not, before 18 December 2010, make
9
an assessment of the taxable income of the partner for any
10
income year.
11
Note:
A partnership that is an IMR foreign fund is generally subject to the
12
general tax rules that apply to partnerships, subject to the
13
modifications set out in this Subdivision: see Division 5 of Part III of
14
the Income Tax Assessment Act 1936.
15
Adjustments to calculation of taxable income, tax loss or net
16
capital loss
17
(3) In working out the partner's taxable income, tax loss or net capital
18
loss for the income year:
19
(a) for the purposes of applying Division 5 of Part III of the
20
Income Tax Assessment Act 1936 to the partner, replace the
21
references in that Division to the individual interest of the
22
partner in the net income of the partnership with references to
23
the individual interest of the partner in the pre-2012 non-IMR
24
partnership net income (within the meaning of
25
section 842-245 of the Income Tax (Transitional Provisions)
26
Act 1997); and
27
(b) for the purposes of applying Division 5 of Part III of the
28
Income Tax Assessment Act 1936 to the partner, replace the
29
references in that Division to the individual interest of the
30
partner in the partnership loss with references to the
31
individual interest of the partner in the pre-2012 non-IMR
32
partnership loss (within the meaning of section 842-245 of
33
the Income Tax (Transitional Provisions) Act 1997); and
34
(c) disregard the partner's pre-2012 IMR capital gain or an
35
amount that is referable to a pre-2012 IMR capital gain
36
(within the meaning of subsection 842-270(3) of the Income
37
Tax Assessment Act 1997) or pre-2012 IMR capital loss or an
38
amount that is referable to a pre-2012 IMR capital loss
39
FIN 48 Schedule 2
Tax Laws Amendment (Investment Manager Regime) Bill 2012 No. , 2012 31
(within the meaning of that term in section 842-235 of this
1
Act).
2
Fraud
3
(4) Subsection (3) does not apply if the Commissioner has reason to
4
believe that there has been fraud by the partnership in relation to
5
any income year.
6
Audit or compliance review
7
(5) Subsection (3) does not apply if before 18 December 2010 the
8
Commissioner notified the partnership that an audit or compliance
9
review would be undertaken in relation to any income year.
10
842-225 Treatment of trustee of an IMR foreign fund
11
Objects
12
(1) The object of this section is to ensure that the following provisions
13
interact appropriately with the tax concessions mentioned in
14
subsection 842-210(1), paragraphs 842-215(1)(a) and (b) and
15
paragraphs 842-220(1)(a) and (b) in respect of the 2010-11 income
16
year or an earlier income year:
17
(a) subsection 115-220(2) of the Income Tax Assessment Act
18
1997;
19
(b) section 115-225 of the Income Tax Assessment Act 1997;
20
(c) section 98 of the Income Tax Assessment Act 1936;
21
(d) section 99E of the Income Tax Assessment Act 1936.
22
Note:
Division 6 of Part III of the Income Tax Assessment Act 1936,
23
Division 115 of the Income Tax Assessment Act 1997, and all other
24
provisions of those Acts apply to the trustee of an IMR foreign fund,
25
subject to the modifications in this section.
26
Application
27
(2) This section applies to the 2010-11 income year or an earlier
28
income year of a trustee of a trust that is an IMR foreign fund in
29
relation to that income year.
30
Schedule 2 FIN 48
32 Tax Laws Amendment (Investment Manager Regime) Bill 2012 No. , 2012
Applying subsection 115-220(2) of the Income Tax Assessment Act
1
1997
2
(3) For the purposes of applying subsection 115-220(2) of the Income
3
Tax Assessment Act 1997 to the beneficiary:
4
(a) disregard a capital gain of the IMR foreign fund to the extent
5
that the capital gain is a pre-2012 IMR capital gain; and
6
(b) disregard a pre-2012 IMR capital loss of the IMR foreign
7
fund for the purposes of determining the amount of the
8
capital gain remaining after applying steps 1 to 4 of the
9
method statement in subsection 102-5(1); and
10
(c) disregard a net capital loss of the IMR foreign fund to the
11
extent that it is attributable to a pre-2012 IMR capital loss for
12
the purposes of determining how much of a capital gain that
13
is not a pre-2012 IMR capital gain remains after applying
14
steps 1 to 4 of the method statement in subsection 102-5(1).
15
Note:
The effect of this subsection is that the increase to the assessable
16
amount which occurs as a result of section 115-220 of the Income Tax
17
Assessment Act 1997 is calculated with reference to the capital gains
18
of the IMR foreign fund that are not IMR capital gains or amounts
19
referable to IMR capital gains (rather than by calculating the increase
20
with reference to all capital gains of the fund).
21
Modifications to section 115-225 of the Income Tax Assessment
22
Act 1997
23
(4) For the purposes of applying section 115-225 of the Income Tax
24
Assessment Act 1997 in respect of section 115-220, make the
25
following assumptions:
26
(a) replace the references in section 115-225 to the net income of
27
the trust estate with references to the pre-2012 non-IMR net
28
income (within the meaning of subsection 842-240(1) of the
29
Income Tax (Transitional Provisions) Act 1997) of the trust
30
estate;
31
(b) replace the references in section 115-225 to net capital gain
32
(if any) with a reference to pre-2012 non-IMR net capital
33
gain (if any) (within the meaning of subsection 842-240(3) of
34
the Income Tax (Transitional Provisions) Act 1997).
35
Modifications to section 98 of the Income Tax Assessment Act 1936
36
(5) For the purposes of applying section 98 of the Income Tax
37
Assessment Act 1936 in respect of an income year that is the
38
FIN 48 Schedule 2
Tax Laws Amendment (Investment Manager Regime) Bill 2012 No. , 2012 33
2010-11 income year or an earlier income year, replace references
1
in that section to net income with references to pre-2012 non-IMR
2
net income (within the meaning of subsection 842-240(1) of the
3
Income Tax (Transitional Provisions) Act 1997).
4
Note:
The effect of this subsection is that where section 98 of the Income
5
Tax Assessment Act 1936 applies to the trustee of a trust that is an
6
IMR foreign fund, the trustee is only assessed and made liable to pay
7
tax in respect of pre-2012 non-IMR net income of the fund (rather
8
than in respect of all net income of the fund to which section 98 would
9
otherwise apply).
10
Modifications to section 99E of the Income Tax Assessment Act
11
1936
12
(6) For the purposes of applying section 99E of the Income Tax
13
Assessment Act 1936 in respect of an income year that is the
14
2010-11 income year or an earlier income year:
15
(a) replace the reference to so much of the net income with a
16
reference to so much of the net income or pre-2012 non-IMR
17
net income (within the meaning of subsection 842-240(1) of
18
the Income Tax (Transitional Provisions) Act 1997) as the
19
case may be; and
20
(b) replace the reference to a part of the net income of another
21
trust estate with a reference to a part of the pre-2012
22
non-IMR net income (within the meaning of subsection
23
842-240(1) of the Income Tax (Transitional Provisions) Act
24
1997) of another trust estate.
25
Note:
The effect of this subsection is that the trustee of a trust that receives a
26
distribution of pre-2012 non-IMR net income from another trust is not
27
required to apply section 98, 99 or 99A of the Income Tax Assessment
28
Act 1936 to those amounts.
29
Certain losses disregarded
30
(7) The IMR foreign fund cannot utilise a tax loss or net capital loss in
31
relation to the income year, or in any future income year, to the
32
extent the loss is attributable to pre-2012 IMR income, a pre-2012
33
IMR capital gain, a pre-2012 IMR deduction or a pre-2012 IMR
34
capital loss.
35
Schedule 2 FIN 48
34 Tax Laws Amendment (Investment Manager Regime) Bill 2012 No. , 2012
842-230 Pre-2012 IMR deduction
1
(1)
The
pre-2012 IMR deduction of an IMR foreign fund for an
2
income year is the amount of the fund's deductions for the income
3
year to the extent to which they:
4
(a) are attributable to gaining the fund's pre-2012 IMR income;
5
and
6
(b) relate to the 2011-12 income year, or an earlier income year.
7
(2) Disregard the following provisions for the purposes of determining
8
the pre-2012 IMR deduction of the fund:
9
(a) subsection 842-210(3) (which is about certain amounts of an
10
IMR foreign fund being disregarded);
11
(b) paragraph 842-240(1)(b) (which is about pre-2012 non-IMR
12
net income);
13
(c) paragraph 842-245(a) (which is about pre-2012 non-IMR
14
partnership net income).
15
842-235 Pre-2012 IMR capital loss
16
The
pre-2012 IMR capital loss of an IMR foreign fund for an
17
income year is the sum of the fund's capital losses made in the
18
income year that are attributable to CGT assets that are financial
19
arrangements covered by section 842-245 of the Income Tax
20
Assessment Act 1997.
21
842-240 Pre-2012 non-IMR net income, pre-2012 non-IMR
22
Division 6E net income and pre-2012 non-IMR net capital
23
gain
24
(1)
A
trust's
pre-2012 non-IMR net income in relation to an income
25
year is determined by calculating the net income of the trust as
26
follows:
27
(a) for income years prior to the 2010-11 income year--
28
disregard the pre-2012 IMR capital gain and pre-2012 IMR
29
capital loss;
30
(b) disregard the pre-2012 IMR income and pre-2012 IMR
31
deduction of the trust for the income year;
32
(c) disregard any amount that is included in the trust's assessable
33
income under subsection 207-35(1) to the extent that the
34
FIN 48 Schedule 2
Tax Laws Amendment (Investment Manager Regime) Bill 2012 No. , 2012 35
amount is attributable to pre-2012 IMR income of the trust
1
for the income year;
2
(d) if the trust is a beneficiary of another trust--then:
3
(i) for the purposes of applying Division 6 of Part III of the
4
Income Tax Assessment Act 1936 to the trust that is a
5
beneficiary, replace the references in that Division to
6
share of the net income with references to share of the
7
pre-2012 non-IMR net income (within the meaning of
8
subsection 842-240(1) of the Income Tax (Transitional
9
Provisions) Act 1997); and
10
(ii) for the purposes of applying Division 6E of Part III of
11
the Income Tax Assessment Act 1936 to the trust that is
12
a beneficiary, replace references in that Division to
13
Division 6E net income with references to pre-2012
14
non-IMR Division 6E net income (within the meaning
15
of subsection 842-240(1) of the Income Tax
16
(Transitional Provisions) Act 1997);
17
(e) if the trust is a partner in a partnership--for the purposes of
18
applying Division 5 of Part III of the Income Tax Assessment
19
Act 1936 to the partner, replace the references to the
20
individual interest of the partner in the partnership net
21
income or partnership loss with references to the individual
22
interest of the partner in the pre-2012 non-IMR partnership
23
net income or pre-2012 non-IMR partnership loss (within the
24
meaning of subsection 842-240(1) of the Income Tax
25
(Transitional Provisions) Act 1997).
26
Note:
The net income of a trust may include a share of the net income of
27
another trust. Where there is a chain of trusts, these calculations are
28
applied to each trust in the chain.
29
Pre-2012 non-IMR Division 6E net income
30
(2)
A
trust's
pre-2012 non-IMR Division 6E net income in relation to
31
an income year is determined by calculating the Division 6E net
32
income (within the meaning of subsection 102UY(3) of the Income
33
Tax Assessment Act 1936) of the trust as follows:
34
(a) disregard the pre-2012 IMR income and pre-2012 IMR
35
deduction of the trust in relation to the income year;
36
(b) disregard the things mentioned in subparagraphs
37
102UW(b)(i) to (iii) of the Income Tax Assessment Act 1936
38
Schedule 2 FIN 48
36 Tax Laws Amendment (Investment Manager Regime) Bill 2012 No. , 2012
(which is about adjustments of Division 6 assessable
1
amounts) in relation to the income year.
2
Pre-2012 non-IMR net capital gain
3
(3)
A
trust's
pre-2012 non-IMR net capital gain in relation to an
4
income year is determined by calculating the net capital gain of the
5
trust as follows:
6
(a) disregard the trust's pre-2012 IMR capital gain and
pre-2012
7
IMR capital loss in relation to the income year;
8
(b) disregard any capital gain of the trust in relation to the
9
income year that is referable to a pre-2012 IMR capital gain
10
of another IMR foreign fund that is a trust.
11
842-245 Pre-2012 non-IMR partnership net income and pre-2012
12
non-IMR partnership loss
13
A
partnership's
pre-2012 non-IMR partnership net income or
14
pre-2012 non-IMR partnership loss in relation to an income year
15
is determined by calculating the net income or partnership loss of
16
the partnership as follows:
17
(a) disregard the pre-2012 IMR income and pre-2012 IMR
18
deduction of the partnership for the income year;
19
(b) disregard any amount included in the partnership's assessable
20
income under subsection 207-35(1) to the extent that the
21
amount is attributable to pre-2012 IMR income of the
22
partnership for the income year;
23
(c) if the partnership is a beneficiary of a trust--then:
24
(i) for the purposes of applying Division 6 of Part III of the
25
Income Tax Assessment Act 1936 to the beneficiary,
26
replace the references in that Division to share of the net
27
income with references to share of the pre-2012
28
non-IMR net income (within the meaning of subsection
29
842-240(1) of the Income Tax (Transitional Provisions)
30
Act 1997); and
31
(ii) for the purposes of applying Division 6E of Part III of
32
the Income Tax Assessment Act 1936 to the beneficiary,
33
replace references in that Division to Division 6E net
34
income with references to pre-2012 non-IMR
35
Division 6E net income (within the meaning of
36
FIN 48 Schedule 2
Tax Laws Amendment (Investment Manager Regime) Bill 2012 No. , 2012 37
subsection 842-240(1) of the Income Tax (Transitional
1
Provisions) Act 1997);
2
(d) if the partnership is a partner in another partnership--for the
3
purposes of applying Division 5 of Part III of the Income Tax
4
Assessment Act 1936 to the partner, replace the references in
5
that Division to the individual interest of the partner in the
6
partnership net income or partnership loss with references to
7
the individual interest of the partner in the pre-2012 non-IMR
8
partnership net income or pre-2012 non-IMR partnership loss
9
(within the meaning of subsection 842-240(1) of the Income
10
Tax (Transitional Provisions) Act 1997).
11
Note:
The net income of a partnership may include a share of the net income
12
of another partnership. Where there is a chain of partnerships, these
13
calculations are applied to each partnership in the chain.
14