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This is a Bill, not an Act. For current law, see the Acts databases.
2016-2017
The Parliament of the
Commonwealth of Australia
HOUSE OF REPRESENTATIVES
Presented and read a first time
Treasury Laws Amendment (Combating
Multinational Tax Avoidance) Bill 2017
No. , 2017
(Treasury)
A Bill for an Act to amend the law relating to
taxation, and for related purposes
No. , 2017
Treasury Laws Amendment (Combating Multinational Tax Avoidance)
Bill 2017
i
Contents
1
Short title ........................................................................................... 1
2
Commencement ................................................................................. 1
3
Schedules ........................................................................................... 2
Schedule 1--Diverted profits tax
3
Administrative Decisions (Judicial Review) Act 1977
3
Income Tax Assessment Act 1936
3
Income Tax Assessment Act 1997
13
Taxation Administration Act 1953
19
Taxation (Interest on Overpayments and Early Payments) Act 1983
26
Schedule 2--Increasing penalties for significant global entities
27
Taxation Administration Act 1953
27
Schedule 3--Transfer pricing guidelines
31
Income Tax Assessment Act 1997
31
No. , 2017
Treasury Laws Amendment (Combating Multinational Tax Avoidance)
Bill 2017
1
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 is the Treasury Laws Amendment (Combating
5
Multinational Tax Avoidance) Act 2017.
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
Treasury Laws Amendment (Combating Multinational Tax Avoidance)
Bill 2017
No. , 2017
Commencement information
Column 1
Column 2
Column 3
Provisions
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,
items 1 to 6
The first 1 January, 1 April, 1 July or
1 October to occur after the day this Act
receives the Royal Assent.
3. Schedule 1,
item 7
At the same time as Part 2 of Schedule 4 to
the Treasury Laws Amendment (Enterprise
Tax Plan) Act 2017 commences.
However, the provisions do not commence
at all if that Part does not commence.
4. Schedule 1,
items 8 to 52
The first 1 January, 1 April, 1 July or
1 October to occur after the day this Act
receives the Royal Assent.
5. Schedules 2
and 3
The first 1 January, 1 April, 1 July or
1 October to occur after the day this Act
receives the Royal Assent.
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 Schedules
7
Legislation 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
Diverted profits tax Schedule 1
No. , 2017
Treasury Laws Amendment (Combating Multinational Tax Avoidance)
Bill 2017
3
Schedule 1--Diverted profits tax
1
2
Administrative Decisions (Judicial Review) Act 1977
3
1 Paragraph (e) of Schedule 1
4
After "Taxation Administration Act 1953, but only so far as the
5
decisions are made under Part 2-35, 3-10", insert ", 3-30".
6
Income Tax Assessment Act 1936
7
2 Subsection 6(1) (at the end of the definition of assessment)
8
Add:
9
; or (k) the ascertainment of the amount payable under
10
subsection 177P(1) (diverted profits tax).
11
3 Subsection 6(1)
12
Insert:
13
diverted profits tax has the meaning given by the Income Tax
14
Assessment Act 1997.
15
4 After subsection 170(11)
16
Insert:
17
(12) Nothing in this section prevents the amendment, at any time, of an
18
assessment to increase the liability of a taxpayer if:
19
(a) the Commissioner amends a DPT assessment to decrease the
20
liability of the taxpayer to diverted profits tax; and
21
(b) that increase is attributable to that decrease.
22
5 Subsection 170(14)
23
Insert:
24
DPT assessment has the meaning given by the Income Tax
25
Assessment Act 1997.
26
Schedule 1 Diverted profits tax
4
Treasury Laws Amendment (Combating Multinational Tax Avoidance)
Bill 2017
No. , 2017
6 Subsection 177A(1)
1
Insert:
2
DPT base amount has the meaning given by subsection 177P(2).
3
DPT provisions means sections 177H, 177J, 177K, 177L, 177M,
4
177N, 177P, 177Q and 177R.
5
DPT tax benefit has the meaning given by subsection 177J(1).
6
standard corporate tax rate means the rate of tax in respect of the
7
taxable income of a company covered by paragraph 23(2)(b) of the
8
Income Tax Rates Act 1986.
9
7 Subsection 177A(1) (definition of standard corporate tax
10
rate)
11
Omit "covered by paragraph 23(2)(b)", substitute "under
12
subsection 23(2)".
13
Note:
This item commences on 1 July 2023, at the same time as Part 2 of Schedule 4 to the
14
Treasury Laws Amendment (Enterprise Tax Plan) Act 2017.
15
8 Subsection 177A(5)
16
Omit "section 177DA", substitute "sections 177DA and 177J".
17
9 Paragraph 177CB(5)(a)
18
Omit "section 177DA", substitute "section 177DA or 177J".
19
10 Paragraph 177CB(5)(b)
20
Omit "section 177DA", substitute "section 177DA or 177J".
21
11 Subsection 177F(3)
22
After "in relation to a scheme to which this Part applies,", insert "or the
23
Commissioner has made a DPT assessment in respect of a taxpayer in
24
relation to a scheme to which this Part applies,".
25
12 After subsection 177F(5)
26
Insert:
27
(5A) Subsection (5B) applies if the taxpayer considers that the
28
Commissioner ought to make the determination under
29
Diverted profits tax Schedule 1
No. , 2017
Treasury Laws Amendment (Combating Multinational Tax Avoidance)
Bill 2017
5
subsection (3) because the Commissioner has made a DPT
1
assessment in respect of a taxpayer in relation to a scheme to which
2
this Part applies.
3
(5B) Despite subsection (5), the request may be posted to or lodged with
4
the Commissioner only after the end of the period of review
5
(within the meaning of section 145-15 in Schedule 1 to the
6
Taxation Administration Act 1953) for the DPT assessment.
7
13 At the end of Part IVA
8
Add:
9
177H Diverted profits tax--objects
10
(1) The primary objects of the DPT provisions are:
11
(a) to ensure that the Australian tax payable by significant global
12
entities properly reflects the economic substance of the
13
activities that those entities carry on in Australia; and
14
(b) to prevent those entities from reducing the amount of
15
Australian tax they pay by diverting profits offshore through
16
contrived arrangements between related parties.
17
(2) In addition, the DPT provisions (in combination with Division 145
18
in Schedule 1 to the Taxation Administration Act 1953) have the
19
object of encouraging significant global entities to provide
20
sufficient information to the Commissioner to allow for the timely
21
resolution of disputes about Australian tax.
22
177J Diverted profits tax--application
23
Scheme for a purpose including obtaining a tax benefit etc.
24
(1) This Part also applies to a scheme, in relation to a tax benefit (the
25
DPT tax benefit) if:
26
(a) a taxpayer (a relevant taxpayer) has obtained, or would but
27
for section 177F obtain, the DPT tax benefit in connection
28
with the scheme, in a year of income; and
29
(b) it would be concluded (having regard to the matters in
30
subsection (2)) that the person, or one of the persons, who
31
entered into or carried out the scheme or any part of the
32
Schedule 1 Diverted profits tax
6
Treasury Laws Amendment (Combating Multinational Tax Avoidance)
Bill 2017
No. , 2017
scheme did so for a principal purpose of, or for more than
1
one principal purpose that includes a purpose of:
2
(i) enabling the relevant taxpayer to obtain a tax benefit, or
3
both to obtain a tax benefit and to reduce one or more of
4
the relevant taxpayer's liabilities to tax under a foreign
5
law, in connection with the scheme; or
6
(ii) enabling the relevant taxpayer and another taxpayer (or
7
other taxpayers) each to obtain a tax benefit, or both to
8
obtain a tax benefit and to reduce one or more of their
9
liabilities to tax under a foreign law, in connection with
10
the scheme;
11
whether or not that person who entered into or carried out the
12
scheme or any part of the scheme is the relevant taxpayer or
13
is the other taxpayer or one of the other taxpayers; and
14
(c) the relevant taxpayer is a significant global entity for the year
15
of income mentioned in paragraph (a); and
16
(d) a foreign entity is an associate (within the meaning of
17
section 318) of the relevant taxpayer at any time in the year
18
of income mentioned in paragraph (a); and
19
(e) that foreign entity:
20
(i) is the person, or one of the persons, who entered into or
21
carried out the scheme or any part of the scheme; or
22
(ii) is otherwise connected with the scheme or any part of
23
the scheme; and
24
(f) the relevant taxpayer is not any of the following:
25
(i) a managed investment trust (within the meaning of the
26
Income Tax Assessment Act 1997);
27
(ii) an entity covered by paragraph 275-20(4)(f) of that Act
28
(foreign collective investment vehicle with a wide
29
membership);
30
(iii) an entity covered by paragraph 275-20(4)(h) of that Act
31
(entity owned by foreign government etc.) that is a
32
foreign entity;
33
(iv) a complying superannuation entity (within the meaning
34
of that Act);
35
(v) a foreign pension fund (within the meaning of that Act);
36
and
37
Diverted profits tax Schedule 1
No. , 2017
Treasury Laws Amendment (Combating Multinational Tax Avoidance)
Bill 2017
7
(g) it is reasonable to conclude that none of the following
1
sections apply in relation to the relevant taxpayer, in relation
2
to the DPT tax benefit:
3
(i) section 177K ($25 million income test);
4
(ii) section 177L (sufficient foreign tax test);
5
(iii) section 177M (sufficient economic substance test).
6
Have regard to certain matters
7
(2) For the purposes of paragraph (1)(b), have regard to the following
8
matters:
9
(a) the matters in subsection 177D(2);
10
(b) without limiting subsection 177D(2), the extent to which
11
non-tax financial benefits that are quantifiable have resulted,
12
will result, or may reasonably be expected to result, from the
13
scheme;
14
(c) the result, in relation to the operation of any foreign law
15
relating to taxation, that (but for this Part) would be achieved
16
by the scheme;
17
(d) the amount of the tax benefit mentioned in paragraph (1)(b).
18
Deferral of foreign tax liabilities
19
(3) For the purposes of paragraph (1)(b), a deferral of a taxpayer's
20
liabilities to tax under a foreign law is taken to be a reduction of
21
those liabilities, unless there are reasonable commercial grounds
22
for the deferral.
23
Modification where thin capitalisation provisions apply
24
(4) Subsection (5) applies if:
25
(a) Division 820 of the Income Tax Assessment Act 1997 (about
26
thin capitalisation) applies to the relevant taxpayer for the
27
year of income mentioned in paragraph (1)(a); and
28
(b) the DPT tax benefit includes all or part of a debt deduction
29
(within the meaning of that Act); and
30
(c) the calculation of the amount of the DPT tax benefit involves
31
applying a rate to a debt interest (within the meaning of that
32
Act).
33
Schedule 1 Diverted profits tax
8
Treasury Laws Amendment (Combating Multinational Tax Avoidance)
Bill 2017
No. , 2017
(5) For the purposes of the DPT provisions, in calculating the amount
1
of the DPT tax benefit, apply the rate to the debt interest the entity
2
actually issued (rather than the debt interest that would have
3
existed if the scheme had not been entered into or carried out).
4
Modification where foreign entity is CFC
5
(6) If the foreign entity mentioned in paragraph (1)(d) is a CFC (within
6
the meaning of Part X), disregard the DPT tax benefit to the extent
7
that it arises from attributable income (within the meaning of that
8
Part) of the foreign entity in respect of:
9
(a) the relevant taxpayer; or
10
(b) an associate (within the meaning given by section 318) of the
11
relevant taxpayer.
12
Schemes outside Australia
13
(7) This section applies whether or not the scheme has been or is
14
entered into or carried out in Australia or outside Australia or
15
partly in Australia and partly outside Australia.
16
Non-limitation in relation to other provisions in this Part
17
(8) This section:
18
(a) does not limit section 177D, 177DA, 177E, 177EA or
19
177EB; and
20
(b) is not limited by those sections.
21
177K Diverted profits tax--$25 million income test
22
(1) This section applies in relation to the relevant taxpayer, in relation
23
to the DPT tax benefit, if the sum of the following does not exceed
24
$25 million:
25
(a) the assessable income of the relevant taxpayer for the year of
26
income mentioned in paragraph 177J(1)(a);
27
(b) the exempt income of the relevant taxpayer for that year of
28
income;
29
(c) the non-assessable non-exempt income of the relevant
30
taxpayer for that year of income;
31
Diverted profits tax Schedule 1
No. , 2017
Treasury Laws Amendment (Combating Multinational Tax Avoidance)
Bill 2017
9
(d) the assessable income of each entity covered by
1
subsection (2) for that year of income;
2
(e) if the DPT tax benefit is a tax benefit mentioned in
3
paragraph 177C(1)(a)--the amount of the DPT tax benefit.
4
(2) An entity is covered by this subsection if for the year of income
5
mentioned in paragraph 177J(1)(a):
6
(a) the entity is an associate (within the meaning given by
7
section 318) of the relevant taxpayer; and
8
(b) both the entity and the relevant taxpayer:
9
(i) are members of the same global group; and
10
(ii) are significant global entities because they are members
11
of that group.
12
177L Diverted profits tax--sufficient foreign tax test
13
(1) This section applies in relation to the relevant taxpayer, in relation
14
to the DPT tax benefit, if the amount worked out under
15
subsection (2) (foreign tax liability) equals or exceeds 80% of the
16
amount worked out under subsection (6) (reduced Australian tax
17
liability).
18
Foreign tax liability
19
(2) The amount is the total of the increases in liability for foreign
20
income tax (within the meaning of the Income Tax Assessment Act
21
1997) of each entity covered by subsection (5) that results, will
22
result, or may reasonably be expected to result, from the scheme
23
during a foreign tax period that corresponds to the year of income
24
mentioned in paragraph 177J(1)(a).
25
(3) The regulations may provide for a method of working out increases
26
in foreign tax liability for the purposes of subsection (2):
27
(a) for all situations; or
28
(b) for specified situations.
29
(4) If the regulations provide for such a method, apply that method in
30
working out increases in foreign tax liability for the purposes of
31
subsection (2) in relevant situations.
32
(5) An entity is covered by this subsection if:
33
Schedule 1 Diverted profits tax
10
Treasury Laws Amendment (Combating Multinational Tax Avoidance)
Bill 2017
No. , 2017
(a) the entity is a foreign entity; and
1
(b) the entity is the relevant taxpayer or an associate (within the
2
meaning given by section 318) of the relevant taxpayer; and
3
(c) the entity:
4
(i) is the person, or one of the persons, who entered into or
5
carried out the scheme or any part of the scheme; or
6
(ii) is otherwise connected with the scheme or any part of
7
the scheme.
8
Reduced Australian tax liability
9
(6) The amount is:
10
(a) if the DPT tax benefit is a tax benefit mentioned in
11
paragraph 177C(1)(a), (b), (ba) or (bc)--the amount of the
12
tax benefit multiplied by the standard corporate tax rate; or
13
(b) otherwise--the amount of the DPT tax benefit.
14
(7) If the relevant taxpayer must withhold an amount in respect of
15
withholding tax as a result of the tax benefit, reduce the amount
16
worked out under subsection (6) by the amount withheld.
17
177M Diverted profits tax--sufficient economic substance test
18
(1) This section applies in relation to the relevant taxpayer, in relation
19
to the DPT tax benefit, if the profit made as a result of the scheme
20
by each entity covered by subsection (2) reasonably reflects the
21
economic substance of the entity's activities in connection with the
22
scheme.
23
(2) This subsection covers an entity if:
24
(a) the entity is the relevant taxpayer or an associate (within the
25
meaning given by section 318) of the relevant taxpayer; and
26
(b) any of the following apply:
27
(i) the entity entered into or carried out the scheme or any
28
part of the scheme;
29
(ii) the entity is otherwise connected with the scheme or any
30
part of the scheme.
31
(3) However, subsection (2) does not cover an entity if the entity's role
32
in the scheme is minor or ancillary.
33
Diverted profits tax Schedule 1
No. , 2017
Treasury Laws Amendment (Combating Multinational Tax Avoidance)
Bill 2017
11
(4) In determining whether the profit made as a result of the scheme by
1
an entity reasonably reflects the economic substance of the entity's
2
activities in connection with the scheme, have regard to:
3
(a) the functions that the entity performs in connection with the
4
scheme, taking into account assets used and risks assumed by
5
the entity in connection with the scheme; and
6
(b) the documents covered by section 815-135 of the Income Tax
7
Assessment Act 1997, to the extent that they are relevant to
8
the matters mentioned in paragraph (a) or to any other aspect
9
of the determination; and
10
(c) any other relevant matters.
11
177N Diverted profits tax--consequences
12
If this Part applies to a scheme because of section 177J:
13
(a) section 177P applies to the relevant taxpayer mentioned in
14
section 177J; and
15
(b) the Commissioner cannot make a determination under
16
subsection 177F(1) or (2A) in relation to the scheme merely
17
because of section 177J.
18
177P Diverted profits tax--liability
19
(1) The relevant taxpayer is liable to pay tax at the rate declared by the
20
Parliament on:
21
(a) if this Part applies to a scheme in respect of the relevant
22
taxpayer for the year of income mentioned in
23
paragraph 177J(1)(a), in relation to one DPT tax benefit--the
24
DPT base amount for that DPT tax benefit; or
25
(b) if this Part applies to a scheme in respect of the relevant
26
taxpayer for the year of income mentioned in
27
paragraph 177J(1)(a), in relation to more than one DPT tax
28
benefit--the sum of the DPT base amounts for those DPT tax
29
benefits.
30
Note:
The tax is imposed by the Diverted Profits Tax Act 2017 and the rate
31
of the tax is set out in that Act.
32
(2) The DPT base amount for a DPT tax benefit is:
33
Schedule 1 Diverted profits tax
12
Treasury Laws Amendment (Combating Multinational Tax Avoidance)
Bill 2017
No. , 2017
(a) if the DPT tax benefit is a tax benefit mentioned in
1
paragraph 177C(1)(a), (b), (ba) or (bc)--the amount of the
2
DPT tax benefit; or
3
(b) otherwise--the amount of the DPT tax benefit divided by the
4
standard corporate tax rate.
5
(3) The tax is due and payable at the end of 21 days after the
6
Commissioner gives the relevant taxpayer notice of the assessment
7
of the amount of the tax for the year of income mentioned in
8
paragraph 177J(1)(a).
9
Note:
For assessments of the amount of the tax see Divisions 145 and 155 in
10
Schedule 1 to the Taxation Administration Act 1953.
11
177Q Diverted profits tax--general interest charge on unpaid
12
diverted profits tax or shortfall interest charge
13
If an amount of diverted profits tax or shortfall interest charge that
14
an entity is liable to pay remains unpaid after the time by which it
15
is due to be paid, the entity is liable to pay the general interest
16
charge on the unpaid amount for each day in the period that:
17
(a) starts at the beginning of the day by which the amount was
18
due to be paid; and
19
(b) finishes at the end of the last day on which, at the end of the
20
day, any of the following remains unpaid:
21
(i) the diverted profits tax or shortfall interest charge;
22
(ii) general interest charge on any of the diverted profits tax
23
or shortfall interest charge.
24
Note:
The general interest charge is worked out under Part IIA of the
25
Taxation Administration Act 1953.
26
177R Diverted profits tax--when shortfall interest charge is payable
27
An amount of shortfall interest charge that an entity is liable to pay
28
under section 280-102C in Schedule 1 to the Taxation
29
Administration Act 1953 is due and payable 21 days after the day
30
on which the Commissioner gives the entity notice of the charge.
31
Diverted profits tax Schedule 1
No. , 2017
Treasury Laws Amendment (Combating Multinational Tax Avoidance)
Bill 2017
13
Income Tax Assessment Act 1997
1
14 Subsection 205-15(1) (at the end of the table)
2
Add:
3
8
the entity
*
pays diverted
profits tax; and
the entity satisfies the
*
residency requirement
for the income year for
which the tax is paid; and
the entity is a
*
franking
entity for the whole or
part of that income year
that part of the payment
that is attributable to the
period during which the
entity was a franking
entity, multiplied by the
proportion worked out
under subsection (5)
on the day on which
the payment is made
15 At the end of section 205-15
4
Add:
5
(5) The proportion is the standard corporate tax rate (within the
6
meaning of Part IVA of the Income Tax Assessment Act 1936)
7
divided by 40%.
8
16 Section 205-20 (heading)
9
Repeal the heading, substitute:
10
205-20 Paying a PAYG instalment, income tax or diverted profits
11
tax
12
17 After subsection 205-20(3)
13
Insert:
14
(3A) An entity pays diverted profits tax if and only if:
15
(a) the entity has a liability to pay the
*
diverted profits tax; and
16
(b) either:
17
(i) the entity makes a payment to satisfy the liability (in
18
whole or in part); or
19
(ii) a credit, or an
*
RBA surplus, is applied to discharge or
20
reduce the liability.
21
Schedule 1 Diverted profits tax
14
Treasury Laws Amendment (Combating Multinational Tax Avoidance)
Bill 2017
No. , 2017
18 Subsection 205-20(4)
1
Omit "Subparagraphs (1)(b)(ii) and (3)(b)(ii)", substitute
2
"Subparagraphs (1)(b)(ii), (3)(b)(ii) and (3A)(b)(ii)".
3
19 Subsection 205-30(1) (at the end of the table)
4
Add:
5
13
the entity
*
receives a
refund of diverted profits
tax; and
the entity satisfies the
*
residency requirement
for the income year to
which the refund relates;
and
the entity was a
*
franking entity during
the whole or part of the
income year to which the
refund relates
that part of the refund
that is attributable to the
period during which the
entity was a franking
entity, multiplied by the
proportion worked out
under subsection (3)
on the day on which
the refund is received
20 At the end of section 205-30
6
Add:
7
(3) The proportion is the standard corporate tax rate (within the
8
meaning of Part IVA of the Income Tax Assessment Act 1936)
9
divided by 40%.
10
21 Section 205-35 (heading)
11
Repeal the heading, substitute:
12
205-35 Refund of income tax or diverted profits tax
13
22 After subsection 205-35(1)
14
Insert:
15
(1A) An entity receives a refund of diverted profits tax if and only if:
16
(a) either:
17
(i) the entity receives an amount as a refund; or
18
Diverted profits tax Schedule 1
No. , 2017
Treasury Laws Amendment (Combating Multinational Tax Avoidance)
Bill 2017
15
(ii) the Commissioner applies a credit, or an
*
RBA surplus,
1
against a liability or liabilities of the entity; and
2
(b) the refund of the amount, or the application of the credit,
3
represents in whole or in part a return to the entity of an
4
amount paid or applied to satisfy the entity's liability to pay
5
*
diverted profits tax.
6
23 Subsection 205-35(2)
7
Omit "paragraph (1)(b)", substitute "paragraph (1)(b) or (1A)(b)".
8
24 Section 208-115
9
Before "The following table", insert "(1)".
10
25 Section 208-115 (at the end of the table)
11
Add:
12
9
the entity
*
pays diverted
profits tax; and
the entity satisfies the
*
residency requirement
for the income year for
which the tax is paid; and
the entity was an
*
exempting entity for the
whole or part of that
income year
an amount equal to that
part of the payment that
is attributable to the
period during which the
entity was an exempting
entity, multiplied by the
proportion worked out
under subsection (2)
on the day on which
the payment is made
26 At the end of section 208-115
13
Add:
14
(2) The proportion is the standard corporate tax rate (within the
15
meaning of Part IVA of the Income Tax Assessment Act 1936)
16
divided by 40%.
17
27 Section 208-120
18
Before "The following table", insert "(1)".
19
28 Section 208-120 (at the end of the table)
20
Add:
21
Schedule 1 Diverted profits tax
16
Treasury Laws Amendment (Combating Multinational Tax Avoidance)
Bill 2017
No. , 2017
8
the entity
*
receives a
refund of diverted profits
tax; and
the entity was an
*
exempting entity during
all or part of the income
year to which the refund
relates; and
the entity satisfies the
*
residency requirement
for the income year to
which the refund relates
an amount equal to that
part of the refund that is
attributable to the period
during which the entity is
an exempting entity,
multiplied by the
proportion worked out
under subsection (2)
on the day on which
the refund is received
29 At the end of section 208-120
1
Add:
2
(2) The proportion is the standard corporate tax rate (within the
3
meaning of Part IVA of the Income Tax Assessment Act 1936)
4
divided by 40%.
5
30 Section 208-130 (table item
9, column headed "If:")
6
Omit "item 3 or 5", substitute "item 3, 5 or 8".
7
31 Section 208-145 (table item
3, column headed "If:")
8
Omit "item 5 or 6", substitute "item 5, 6 or 9".
9
32 Paragraph 214-45(1)(a)
10
After "
*
receives a refund of income tax", insert "or
*
receives a refund of
11
diverted profits tax".
12
33 Paragraph 214-45(2)(a)
13
After "
*
receives a refund of income tax", insert "or
*
receives a refund of
14
diverted profits tax".
15
34 Paragraph 214-150(4)(a)
16
After "
*
receives a refund of income tax", insert "or
*
receives a refund of
17
diverted profits tax".
18
Diverted profits tax Schedule 1
No. , 2017
Treasury Laws Amendment (Combating Multinational Tax Avoidance)
Bill 2017
17
35 Subsection 219-15(2) (at the end of the table)
1
Add:
2
9
the company
*
pays
diverted profits tax; and
the company satisfies the
*
residency requirement
for the income year for
which the tax is paid; and
the company is a
*
franking entity for the
whole or part of that
income year
that part of the payment
that is attributable to:
(a) the
*
shareholders'
share of the income
tax liability of the
company for that
income year; and
(b) the period during
which the company
was a franking entity;
multiplied by the
proportion worked out
under subsection (4)
on the day on which
the payment is made
36 At the end of section 219-15
3
Add:
4
(4) The proportion is the standard corporate tax rate (within the
5
meaning of Part IVA of the Income Tax Assessment Act 1936)
6
divided by 40%.
7
37 Subsection 219-30(2) (at the end of the table)
8
Add:
9
4
the company
*
receives a
refund of diverted profits
tax; and
the company satisfies the
*
residency requirement
for the income year to
which the refund relates;
and
the company was a
*
franking entity for the
whole or part of that
income year
that part of the refund
that is attributable to:
(a) the
*
shareholders'
share of the income
tax liability of the
company for that
income year; and
(b) the period during
which the company
was a franking entity;
multiplied by the
proportion worked out
under subsection (3)
on the day on which
the refund is received
Schedule 1 Diverted profits tax
18
Treasury Laws Amendment (Combating Multinational Tax Avoidance)
Bill 2017
No. , 2017
38 At the end of section 219-30
1
Add:
2
(3) The proportion is the standard corporate tax rate (within the
3
meaning of Part IVA of the Income Tax Assessment Act 1936)
4
divided by 40%.
5
39 Paragraph 709-100(1)(b)
6
After "
*
receives a refund of income tax", insert "or
*
receives a refund of
7
diverted profits tax,".
8
40 Subsection 721-10(2) (at the end of the table)
9
Add:
10
11
115
Subsection 177P(3) of the Income Tax
Assessment Act 1936 (diverted profits
tax)
the income year to which the
diverted profits tax relates
41 Subsection 995-1(1)
12
Insert:
13
diverted profits tax means tax imposed by the Diverted Profits Tax
14
Act 2017.
15
DPT assessment has the meaning given by section 145-10 in
16
Schedule 1 to the Taxation Administration Act 1953.
17
pays diverted profits tax has the meaning given by
18
subsection 205-20(3A).
19
42 Subsection 995-1(1) (at the end of the definition of period
20
of review)
21
Add:
22
Note:
For the purposes of diverted profits tax, this definition is modified in
23
respect of a DPT assessment (see section 145-15 in Schedule 1 to the
24
Taxation Administration Act 1953).
25
43 Subsection 995-1(1)
26
Insert:
27
Diverted profits tax Schedule 1
No. , 2017
Treasury Laws Amendment (Combating Multinational Tax Avoidance)
Bill 2017
19
receives a refund of diverted profits tax has the meaning given by
1
subsection 205-35(1A).
2
restricted DPT evidence has the meaning given by
3
subsection 145-25(2) in Schedule 1 to the Taxation Administration
4
Act 1953.
5
Taxation Administration Act 1953
6
44 At the end of Chapter 3 in Schedule 1
7
Add:
8
Part 3-30--Diverted profits tax
9
Division 145--Assessments of diverted profits tax
10
Guide to Division 145
11
145-1 What this Division is about
12
The Commissioner can make an assessment of diverted profits tax.
13
The entity that is the subject of the assessment can appeal to the
14
Federal Court against the Commissioner's decision to make the
15
assessment. Such an appeal can be made generally no earlier than
16
12 months after the day on which the Commissioner first gives
17
notice of the assessment to the entity.
18
Table of sections
19
145-5
DPT assessments--modified application of Division 155
20
145-10
When DPT assessments can be made
21
145-15
Period of review of DPT assessments
22
145-20
Review of assessments
23
145-25
Restricted DPT evidence
24
145-5 DPT assessments--modified application of Division 155
25
In applying Division 155 in relation to an amount of
*
diverted
26
profits tax:
27
Schedule 1 Diverted profits tax
20
Treasury Laws Amendment (Combating Multinational Tax Avoidance)
Bill 2017
No. , 2017
(a) apply the provisions of that Division with the modifications
1
set out in sections 145-10 to 145-25; and
2
(b) disregard sections 155-15, 155-20, 155-25, 155-30, 155-40,
3
155-45, 155-50, 155-55 and 155-70.
4
145-10 When DPT assessments can be made
5
Despite subsection 155-5(1), the Commissioner can make an
6
assessment (the DPT assessment) of the amount of
*
diverted
7
profits tax
only at a time in the period:
8
(a) starting on the day on which the Commissioner first gives the
9
entity that is the subject of the assessment a notice of
10
assessment under Part IV of the Income Tax Assessment Act
11
1936 for the income year mentioned in paragraph 177J(1)(a)
12
of the Income Tax Assessment Act 1936 (as that paragraph
13
applies in relation to the amount of diverted profits tax); and
14
(b) ending on the last day of the period of 7 years starting the day
15
after that day.
16
145-15 Period of review of DPT assessments
17
(1) Despite subsection 155-35(2), the period of review, for the
*
DPT
18
assessment, is:
19
(a) the period:
20
(i) starting on the day on which the Commissioner first
21
gives notice of the assessment to the entity that is the
22
subject of the assessment under section 155-10; and
23
(ii) ending on the last day of the period of 12 months
24
starting the day after that day; or
25
(b) if:
26
(i) the entity, by written notice given to the Commissioner,
27
specifies a shorter period in accordance with
28
subsection (2); and
29
(ii) the Federal Court of Australia has not made an order
30
under subsection (3) in respect of the written notice;
31
that shorter period; or
32
(c) if the period of review is extended under
33
subsection 155-35(3) or (4)--the period as so extended.
34
Diverted profits tax Schedule 1
No. , 2017
Treasury Laws Amendment (Combating Multinational Tax Avoidance)
Bill 2017
21
(2) For the purposes of subparagraph (1)(b)(i), the shorter period must:
1
(a) start on the day mentioned in subparagraph (1)(a)(i); and
2
(b) end on a day that is at least 30 days after the day on which
3
the entity gives the written notice to the Commissioner.
4
(3) For the purposes of subparagraph (1)(b)(ii), the Federal Court of
5
Australia may make an order under this subsection in respect of the
6
written notice if:
7
(a) the Commissioner has started to examine the entity's affairs
8
in relation to the assessment; and
9
(b) the Commissioner has not completed the examination within
10
the shorter period specified in the written notice; and
11
(c) the Commissioner, within 30 days after the day on which the
12
entity gives the written notice to the Commissioner, applies
13
to the Court for the order; and
14
(d) the Court is satisfied that it was not reasonably practicable, or
15
it was inappropriate, for the Commissioner to complete the
16
examination within the shorter period specified in the written
17
notice, because of:
18
(i) any action taken by the entity; or
19
(ii) any failure by the entity to take action that it would have
20
been reasonable for the entity to take.
21
(4) Despite subsection 155-35(5), in relation to the
*
DPT assessment:
22
(a) an order may be made under subsection 155-35(3) only once;
23
and
24
(b) consent may be given under subsection 155-35(4) only once.
25
145-20 Review of assessments
26
(1) Section 155-90 does not apply during the
*
period of review
27
mentioned in section 145-15.
28
(2) In applying Part IVC of this Act as a result of section 155-90 after
29
the end of that
*
period of review:
30
(a) have regard only to the provisions of that Part mentioned in
31
subsection (3); and
32
(b) apply those provisions with the modifications set out in
33
subsection (4); and
34
Schedule 1 Diverted profits tax
22
Treasury Laws Amendment (Combating Multinational Tax Avoidance)
Bill 2017
No. , 2017
(c) disregard the other provisions of that Part; and
1
(d) apply section 145-25 (restricted DPT evidence).
2
(3) For the purposes of paragraph (2)(a), the provisions of that Part are
3
as follows:
4
(a) sections 14ZL and 14ZP;
5
(b) subsection 14ZR(1);
6
(c) subsection 14ZZ(1);
7
(d) Division 5 (apart from section 14ZZS).
8
(4) For the purposes of paragraph (2)(b), the modifications are as
9
follows:
10
(a) treat the Commissioner's decision to make the
*
DPT
11
assessment as an objection decision;
12
(b) treat subsection 14ZZ(1) as reading "The entity that is the
13
subject of the DPT assessment may appeal to the Federal
14
Court of Australia against the objection decision.";
15
(c) treat the reference in section 14ZZN to "within 60 days after
16
the person appealing is served with notice of the decision" as
17
being a reference to "within 60 days after the end of the
18
period of review mentioned in section 145-15 in Schedule 1";
19
(d) disregard paragraph 14ZZO(a);
20
(e) treat paragraph 14ZZO(b) as reading "the appellant has the
21
burden of proving that the DPT assessment is excessive or
22
otherwise incorrect and what the DPT assessment should
23
have been";
24
(f) treat the reference in section 14ZZR to a taxation decision as
25
being a reference to the Commissioner's decision to make the
26
DPT assessment.
27
145-25 Restricted DPT evidence
28
(1)
*
Restricted DPT evidence is not admissible in evidence in
29
proceedings under Part IVC on an appeal to the Federal Court of
30
Australia related to the
*
DPT assessment.
31
(2) Restricted DPT evidence means information or documents that:
32
(a) the entity that is the subject of the
*
DPT assessment (or an
33
associate (within the meaning of section 318 of the Income
34
Diverted profits tax Schedule 1
No. , 2017
Treasury Laws Amendment (Combating Multinational Tax Avoidance)
Bill 2017
23
Tax Assessment Act 1936) of that entity), had in its custody
1
or under its control at a time before, during or after the
2
*
period of review; and
3
(b) the Commissioner did not have in his or her custody or under
4
his or her control at any time in the period of review.
5
(3) Subsection (1) does not prevent
*
restricted DPT evidence from
6
being admissible in evidence in the proceedings if:
7
(a) the Commissioner consents to the admission of the restricted
8
DPT evidence in accordance with subsection (4); or
9
(b) the court in which the proceedings take place considers that
10
the admission of the restricted DPT evidence is necessary in
11
the interests of justice; or
12
(c) the restricted DPT evidence is expert evidence that:
13
(i) comes into existence after the
*
period of review; and
14
(ii) is based on evidence that the Commissioner had in his
15
or her custody or under his or her control at any time in
16
the period of review.
17
(4) For the purposes of paragraph (3)(a), the Commissioner may give
18
the consent if the Commissioner considers that it is reasonable to
19
do so.
20
(5) In making a decision under paragraph (3)(a) or (b), the
21
Commissioner or the court must have regard to:
22
(a) whether, if the
*
restricted DPT evidence were not admissible
23
in evidence in the proceedings, the remaining information or
24
documents that are relevant to the proceedings are, or are
25
likely to be, misleading; and
26
(b) whether it would have been reasonable for the entity that is
27
the subject of the
*
DPT assessment (or the associate of that
28
entity mentioned in paragraph (2)(a)) to have given the
29
Commissioner the restricted DPT evidence within the
*
period
30
of review.
31
(6) The Commissioner must give a consent for the purposes of
32
paragraph (3)(a) if failure to do so would have the effect, for the
33
purposes of the Constitution, of making any tax or penalty
34
incontestable.
35
(7) A consent for the purposes of paragraph (3)(a) is to be in writing.
36
Schedule 1 Diverted profits tax
24
Treasury Laws Amendment (Combating Multinational Tax Avoidance)
Bill 2017
No. , 2017
(8) If the Commissioner gives a consent for the purposes of
1
paragraph (3)(a), the Commissioner must give the entity that is the
2
subject of the
*
DPT assessment a copy of the consent as soon as
3
practicable afterwards.
4
45 At the end of subsection 155-5(2) in Schedule 1
5
Add:
6
; (j) an amount of
*
diverted profits tax.
7
Note:
This Division has a modified operation in relation to diverted
8
profits tax (see Division 145).
9
46 Subsection 250-10(1) in Schedule 1 (after table item 70)
10
Insert:
11
80
diverted profits tax
subsection 177P(3)
85
shortfall interest charge for diverted
profits tax
section 177R
47 Section 280-1 in Schedule 1
12
Omit "or Division 293 tax", substitute ", Division 293 tax or diverted
13
profits tax".
14
48 Section 280-50 in Schedule 1
15
Omit "or
*
Division 293 tax", substitute ",
*
Division 293 tax or
*
diverted
16
profits tax".
17
49 After section 280-102B in Schedule 1
18
Insert:
19
280-102C Liability to shortfall interest charge--diverted profits tax
20
(1) Subsection (2) applies if:
21
(a) the Commissioner has given an entity an assessment of
22
income tax for an income year; and
23
(b) the Commissioner subsequently gives the entity a
*
DPT
24
assessment for that income year.
25
(2) The entity is liable to pay
*
shortfall interest charge equal to the
26
amount of shortfall interest charge that the entity would be liable to
27
pay under section 280-100 if:
28
Diverted profits tax Schedule 1
No. , 2017
Treasury Laws Amendment (Combating Multinational Tax Avoidance)
Bill 2017
25
(a) the Commissioner amended the assessment of income tax
1
mentioned in paragraph (1)(a) on the day that the
2
Commissioner gave the entity the
*
DPT assessment
3
mentioned in paragraph (1)(b); and
4
(b) the entity were liable to pay an additional amount of income
5
tax because of that amendment; and
6
(c) the Commissioner made that amendment on the basis that the
7
*
tax benefit or tax benefits to which the DPT assessment
8
related were cancelled.
9
(3) An entity is also liable to pay
*
shortfall interest charge on an
10
additional amount of
*
diverted profits tax that the entity is liable to
11
pay because the Commissioner amends the entity's
*
DPT
12
assessment in respect of an income year.
13
(4) The liability is for each day in the period:
14
(a) beginning at the start of the day on which
*
diverted profits
15
tax under the entity's first
*
DPT assessment for that income
16
year was due to be paid, or would have been due to be paid if
17
there had been any; and
18
(b) ending at the end of the day before the day on which the
19
Commissioner gave the entity notice of the amended
*
DPT
20
assessment.
21
(5) However, if an amended
*
DPT assessment reinstates all or part of a
22
liability in relation to a particular that had been reduced by an
23
earlier amended DPT assessment, the period for the reinstated
24
liability begins at the start of the day on which
*
diverted profits tax
25
under the earlier amended DPT assessment was due to be paid.
26
Note 1:
See subsection 177P(3) of the Income Tax Assessment Act 1936 for
27
when the amount of diverted profits tax becomes due and payable.
28
Note 2:
Section 177Q of the Income Tax Assessment Act 1936 provides for
29
general interest charge on any part of the additional amount (plus any
30
shortfall interest charge) that remains unpaid after the additional
31
amount is due and payable.
32
Note 3:
See section 177R of the Income Tax Assessment Act 1936 for when
33
the amount of shortfall interest charge becomes due and payable.
34
Schedule 1 Diverted profits tax
26
Treasury Laws Amendment (Combating Multinational Tax Avoidance)
Bill 2017
No. , 2017
Taxation (Interest on Overpayments and Early Payments)
1
Act 1983
2
50 Subsection 3(1)
3
Insert:
4
diverted profits tax has the same meaning as in the Income Tax
5
Assessment Act 1997.
6
51 Section 3C (after table item 25)
7
Insert:
8
30
Diverted profits tax
52 Application
9
The amendments made by this Schedule apply in relation to DPT tax
10
benefits for a year of income that starts on or after 1 July 2017 (whether
11
or not the DPT tax benefit arises in connection with a scheme that was
12
entered into, or was commenced to be carried out, before 1 July 2017).
13
Increasing penalties for significant global entities Schedule 2
No. , 2017
Treasury Laws Amendment (Combating Multinational Tax Avoidance)
Bill 2017
27
Schedule 2--Increasing penalties for
1
significant global entities
2
3
Taxation Administration Act 1953
4
1 Subsection 3CA(2)
5
After "give to the Commissioner", insert "in the approved form".
6
2 Subsection 284-90(1) in Schedule 1
7
After "using this table", insert "and subsections (1A) to (2),".
8
3 After subsection 284-90(1) in Schedule 1
9
Insert:
10
(1A) The
*
base penalty amount in an item of the table in subsection (1)
11
that applies to you is taken to be doubled if:
12
(a) on or before the day (your trigger day) applying to you under
13
subsection (4) for that table item:
14
(i) the Commissioner has made an assessment of your
15
income tax for one or more income years; or
16
(ii) the Commissioner has made a determination under
17
subsection 960-555(3) of the Income Tax Assessment
18
Act 1997 in relation to you, or in relation to the
*
global
19
parent entity for the group of which you are a member,
20
for a period; or
21
(iii) you have given the Commissioner statements in
22
accordance with Subdivision 815-E of that Act for an
23
income year or another 12 month period; and
24
(b) you were a
*
significant global entity for:
25
(i) whichever of those income years or periods that ends on
26
the most recent day; or
27
(ii) if more than one of them ends on that most recent day--
28
any of those income years or periods that ends on that
29
most recent day.
30
Note:
For subparagraph (a)(iii), you may be allowed to give statements for a
31
12 month period other than an income year (see section 815-360 of the
32
Income Tax Assessment Act 1997).
33
Schedule 2 Increasing penalties for significant global entities
28
Treasury Laws Amendment (Combating Multinational Tax Avoidance)
Bill 2017
No. , 2017
(1B) However, subsection (1A) is taken never to have applied to you in
1
relation to your trigger day if:
2
(a) the Commissioner makes an assessment of your income tax
3
for the income year that includes your trigger day; and
4
(b) you are not a
*
significant global entity for that income year.
5
4 At the end of section 284-90 in Schedule 1
6
Add:
7
(4) For the purposes of paragraph (1A)(a), the following day applies to
8
you for the relevant item of the table in subsection (1):
9
(a) for any of table items 1 to 3C--the day you made the
10
statement referred to in that item;
11
(b) for any of table items 4 to 6--the day you made the statement
12
to which that item relates and that is referred to in
13
subsection 284-75(2);
14
(c) for table item 7--the day the return, notice or other document
15
to which that item relates, and that is referred to in
16
subsection 284-75(3), was required to be given.
17
5 Paragraph 286-80(1)(b) in Schedule 1
18
Omit "subsection (3) or (4)", substitute "subsection (3), (4) or (4A)".
19
6 After subsection 286-80(4) in Schedule 1
20
Insert:
21
(4A) Neither subsection (3) nor (4) applies to the entity, and the
*
base
22
penalty amount is multiplied by 500, if:
23
(a) the failure referred to in subsection (2) is a failure to give a
24
return, notice or other document on time or in the
*
approved
25
form, as mentioned in subsection 286-75(1); and
26
(b) on or before the day the return, notice or other document is
27
required to be given:
28
(i) the Commissioner has made an assessment of the
29
entity's income tax for one or more income years; or
30
(ii) the Commissioner has made a determination under
31
subsection 960-555(3) of the Income Tax Assessment
32
Act 1997 in relation to the entity, or in relation to the
33
Increasing penalties for significant global entities Schedule 2
No. , 2017
Treasury Laws Amendment (Combating Multinational Tax Avoidance)
Bill 2017
29
*
global parent entity for the group of which the entity is
1
a member, for a period; or
2
(iii) the entity has given the Commissioner statements in
3
accordance with Subdivision 815-E of that Act for an
4
income year or another 12 month period; and
5
(c) the entity was a
*
significant global entity for:
6
(i) whichever of those income years or periods that ends on
7
the most recent day; or
8
(ii) if more than one of them ends on that most recent day--
9
any of those income years or periods that ends on that
10
most recent day.
11
Note:
For subparagraph (b)(iii), an entity may be allowed to give statements
12
for a 12 month period other than an income year (see section 815-360
13
of the Income Tax Assessment Act 1997).
14
(4B) However, subsection (4A) is taken never to have applied to the
15
entity in relation to the day the return, notice or other document is
16
required to be given if:
17
(a) the Commissioner makes an assessment of the entity's
18
income tax for the income year that includes that day; and
19
(b) the entity is not a
*
significant global entity for that income
20
year.
21
7 Application of amendments
22
(1)
The amendment made by item 1 of this Schedule applies in relation to
23
general purpose financial statements required to be given to the
24
Commissioner at or after the application time.
25
(2)
The amendments made by items 2, 3 and 4 of this Schedule apply in
26
relation to any of the following:
27
(a) statements referred to in section 284-75 in Schedule 1 to the
28
Taxation Administration Act 1953 that are made at or after
29
the application time;
30
(b) returns, notices or other documents referred to in that section
31
that are required to be given at or after the application time.
32
(3)
The amendments made by items 5 and 6 of this Schedule apply in
33
relation to any returns, notices or other documents referred to in
34
Schedule 2 Increasing penalties for significant global entities
30
Treasury Laws Amendment (Combating Multinational Tax Avoidance)
Bill 2017
No. , 2017
subsection 286-75(1) in Schedule 1 to the Taxation Administration Act
1
1953 that are required to be given at or after the application time.
2
(4)
In this item:
3
application time means the start of the day that is the later of:
4
(a) 1 July 2017; and
5
(b) the day this Schedule commences.
6
Transfer pricing guidelines Schedule 3
No. , 2017
Treasury Laws Amendment (Combating Multinational Tax Avoidance)
Bill 2017
31
Schedule 3--Transfer pricing guidelines
1
2
Income Tax Assessment Act 1997
3
1 Paragraph 815-135(2)(a)
4
Before "the Transfer Pricing Guidelines", insert "subject to
5
paragraph (aa),".
6
2 After paragraph 815-135(2)(a)
7
Insert:
8
(aa) the Aligning Transfer Pricing Outcomes with Value Creation,
9
Actions 8-10 - 2015 Final Reports, of the Organisation for
10
Economic Cooperation and Development, published on
11
5 October 2015;
12
3 Subsection 815-135(3)
13
After "paragraph (2)(a)", insert "or (aa)".
14
4 Application of amendments
15
The amendments made by this Schedule apply in relation to income
16
years starting on or after 1 July 2016.
17