TREASURY LAWS AMENDMENT (MAKING SURE FOREIGN INVESTORS PAY THEIR FAIR SHARE OF TAX IN AUSTRALIA AND OTHER MEASURES) BILL 2018

2016-2017-2018

The Parliament of the

Commonwealth of Australia

HOUSE OF REPRESENTATIVES

Presented and read a first time

Treasury Laws Amendment (Making

Sure Foreign Investors Pay Their Fair

Share of Tax in Australia and Other

Measures) Bill 2018

No. , 2018

(Treasury)

A Bill for an Act to amend the law relating to

taxation, and for related purposes

No. , 2018

Treasury Laws Amendment (Making Sure Foreign Investors Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

Contents

Short title ........................................................................................... 1

Commencement ................................................................................. 1

Schedules ........................................................................................... 2

Schedule 1--Non-concessional MIT income

Part 1--Main amendments

Income Tax Assessment Act 1997

Taxation Administration Act 1953

Part 2--Definitions

Income Tax Assessment Act 1997

Part 3--Other amendments

Administrative Decisions (Judicial Review) Act 1977

Income Tax Assessment Act 1936

Part 4--Application and transitional provisions

Schedule 2--Thin capitalisation

Income Tax Assessment Act 1997

Schedule 3--Superannuation funds for foreign residents

withholding tax exemption

Part 1--Amendments

Income Tax Assessment Act 1936

Part 2--Application provisions

Schedule 4--Sovereign immunity

Part 1--Amendments

Income Tax Assessment Act 1936

Income Tax Assessment Act 1997

Part 2--Application and transitional provisions

Income Tax (Transitional Provisions) Act 1997

Part 3--Definitions

Treasury Laws Amendment (Making Sure Foreign Investors Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

No. , 2018

Income Tax Assessment Act 1997

Schedule 5--Contingent amendments relating to definition of

provide affordable housing

Part 1--Main amendments

Income Tax Assessment Act 1997

Taxation Administration Act 1953

Part 2--Other amendments

Treasury Laws Amendment (Reducing Pressure on Housing

Affordability Measures No. 2) Act 2018

No. , 2018

Treasury Laws Amendment (Making Sure Foreign Investors Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

A Bill for an Act to amend the law relating to

taxation, and for related purposes

The Parliament of Australia enacts:

1 Short title

This Act is the Treasury Laws Amendment (Making Sure Foreign

Investors Pay Their Fair Share of Tax in Australia and Other

Measures) Act 2018.

2 Commencement

(1) Each provision of this Act specified in column 1 of the table

commences, or is taken to have commenced, in accordance with

column 2 of the table. Any other statement in column 2 has effect

according to its terms.

Treasury Laws Amendment (Making Sure Foreign Investors Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

No. , 2018

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. Schedules 1 to

The first 1 January, 1 April, 1 July or

1 October to occur after the day this Act

receives the Royal Assent.

3. Schedule 5,

Part 1

At the same time as the provisions covered

by table item 2.

However, the provisions do not commence

at all if Schedule 3 to the Treasury Laws

Amendment (Reducing Pressure on Housing

Affordability Measures No. 2) Act 2018

commences on or before that time.

4. Schedule 5,

Part 2

Immediately after the commencement of

Schedule 3 to the Treasury Laws

Amendment (Reducing Pressure on Housing

Affordability Measures No. 2) Act 2018.

However, the provisions do not commence

at all if that Schedule commences on or

before the time the provisions covered by

table item 2 commence.

Note:

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

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

this Act.

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

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

may be edited, in any published version of this Act.

3 Schedules

Legislation that is specified in a Schedule to this Act is amended or

repealed as set out in the applicable items in the Schedule

Schedule 1 Non-concessional MIT income

Part 1 Main amendments

Treasury Laws Amendment (Making Sure Foreign Investors Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

No. , 2018

Schedule 1--Non-concessional MIT income

Part 1--Main amendments

Income Tax Assessment Act 1997

1 Section 12-

5 (after table item headed "copyrights")

Insert:

cross staple arrangements

rent from land investment .................................................. 25-115, 25-120

2 At the end of Division 25

Add:

25-115 Deduction for payment of rent from land investment by

operating entity to asset entity in relation to approved

economic infrastructure facility

(1) An entity that is an

operating entity in relation to a

cross staple

arrangement can deduct an amount, for an income year, of

rent

from land investment if:

(a) another entity derives or receives the amount from the

operating entity:

(i) in the income year; and

(ii) on or after 27 March 2018; and

(b) the cross staple arrangement was entered into in relation to:

(i) a facility that is covered by section 12-439 in

Schedule 1 to the Taxation Administration Act 1953 at a

time in the income year; or

(ii) an improvement to a facility that is covered by that

section at a time in the income year; and

asset entity in relation to the cross

staple arrangement; and

(d) apart from this subsection, the operating entity could

otherwise deduct the amount under this Act; and

Non-concessional MIT income Schedule 1

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Treasury Laws Amendment (Making Sure Foreign Investors Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

(e) the amount is

excepted MIT CSA income of the asset entity

for the income year; and

(f) each entity that is a

stapled entity in relation to the cross

staple arrangement has made a choice in accordance with

subsection (3).

(2) If the

asset entity is not a

managed investment trust in relation to

the income year, for the purposes of paragraph (1)(e), treat it as a

managed investment trust in relation to the income year.

(3) An entity makes a choice in accordance with this subsection if:

(a) the entity makes the choice in the

approved form; and

(b) the entity makes the choice before:

(i) the start of the income year in which the asset is first put

to use; or

(ii) a later time allowed by the Commissioner; and

days after the entity makes the choice.

(4) The choice cannot be revoked.

25-120 Transitional--deduction for payment of rent from land

investment by operating entity to asset entity

(1) This section applies if the requirements in subsection 12-440(1) or

(2) in Schedule 1 to the Taxation Administration Act 1953 are

satisfied in relation to a

cross staple arrangement.

(2) An entity that is an

operating entity in relation to the

cross staple

arrangement can deduct, for an income year, an amount of

rent

from land investment if:

(a) another entity derives or receives the amount from the

operating entity at a time that:

(i) is in the income year; and

(ii) is on or after 27 March 2018; and

(iii) meets the requirements in subsection 12-440(4) of

Schedule 1 to the Taxation Administration Act 1953;

and

(b) the other entity is an

asset entity in relation to the cross

staple arrangement; and

Schedule 1 Non-concessional MIT income

Part 1 Main amendments

Treasury Laws Amendment (Making Sure Foreign Investors Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

No. , 2018

otherwise deduct the amount under this Act; and

(d) the amount is

excepted MIT CSA income of the asset entity

for the income year.

(3) If the

asset entity is not a

managed investment trust in relation to

the income year, for the purposes of paragraph (2)(d), treat it as a

managed investment trust in relation to the income year.

3 After subsection 275-610(1)

Insert:

(1A) Disregard subparagraph (1)(c)(ii) if the amount of

ordinary

income or

statutory income is

excepted MIT CSA income.

4 After subsection 275-615(1)

Insert:

(1A) Disregard paragraphs (1)(b) and (c) if the amount of

non-arm's

length income is

excepted MIT CSA income.

5 Section 960-265 (after table item 13)

Insert:

13A

Concessional cross staple rent cap--existing lease

with specified rent

section 12-443 in

Schedule 1 to the

Taxation Administration

Act 1953

Taxation Administration Act 1953

6 Paragraph 12-385(3)(a) in Schedule 1

Repeal the paragraph, substitute:

(a) if the address or place for payment of the recipient is in an

information exchange country:

(i) 15% for

fund payments (except to the extent mentioned

in subparagraph (ii) or (iii)); or

(ii) 10% for fund payments, to the extent that they are, or

are attributable to, fund payments from a

clean building

Non-concessional MIT income Schedule 1

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Treasury Laws Amendment (Making Sure Foreign Investors Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

managed investment trust (except to the extent

mentioned in subparagraph (iii)); or

(iii) 30% for fund payments, to the extent that they are

attributable to

non-concessional MIT income (see

section 12-435); or

7 Paragraph 12-390(3)(a) in Schedule 1

Repeal the paragraph, substitute:

(a) if the address or place for payment of the recipient is in an

information exchange country:

(i) 15% for

fund payments (except to the extent mentioned

in subparagraph (ii) or (iii)); or

(ii) 10% for fund payments, to the extent that they are, or

are attributable to, fund payments from a

clean building

managed investment trust (except to the extent

mentioned in subparagraph (iii)); or

(iii) 30% for fund payments, to the extent that they are

attributable to

non-concessional MIT income (see

section 12-435); or

8 Paragraph 12-390(6)(a) in Schedule 1

Repeal the paragraph, substitute:

(a) if the recipient is a resident of an

information exchange

country:

(i) 15% for

fund payments (except to the extent mentioned

in subparagraph (ii) or (iii)); or

(ii) 10% for fund payments, to the extent that they are, or

are attributable to, fund payments from a

clean building

managed investment trust (except to the extent

mentioned in subparagraph (iii)); or

(iii) 30% for fund payments, to the extent that they are

attributable to

non-concessional MIT income (see

section 12-435); or

9 After paragraph 12-395(3)(aa) in Schedule 1

Insert:

Schedule 1 Non-concessional MIT income

Part 1 Main amendments

Treasury Laws Amendment (Making Sure Foreign Investors Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

No. , 2018

(ab) must specify the extent (if any) to which the payment is, or is

attributable to,

non-concessional MIT income (see

section 12-435); and

10 After paragraph 12-395(6)(aa) in Schedule 1

Insert:

(ab) must specify the extent (if any) to which the payment is, or is

attributable to,

non-concessional MIT income (see

section 12-435); and

11 At the end of Subdivision 12-H of Part 2-5 in Schedule 1

Add:

12-435 Meaning of non-concessional MIT income

Non-concessional MIT income means any of the following:

(a)

MIT cross staple arrangement income;

(b)

MIT trading trust income;

(c)

MIT agricultural income;

(d)

MIT residential housing income.

12-436 Meaning of asset entity, operating entity, cross staple

arrangement and stapled entity

(1) An asset entity in relation to an income year is a trust or

partnership that is not covered by subsection 275-10(4) of the

Income Tax Assessment Act 1997 in relation to the income year.

(2) An operating entity in relation to an income year is a trust,

partnership or company that is covered by subsection 275-10(4) of

the Income Tax Assessment Act 1997 in relation to the income year.

(3) For the purposes of this section, in determining whether a

partnership or company is covered by subsection 275-10(4) of the

Income Tax Assessment Act 1997, treat the partnership or company

as a trust.

(4) A cross staple arrangement is an

arrangement that is entered into

by 2 or more entities (the arrangement entities) if:

(a) at least one of the arrangement entities is an

asset entity; and

Non-concessional MIT income Schedule 1

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(b) at least one of the arrangement entities is an

operating entity;

and

(i) one or more other entities (the external entities) each

hold a

total participation interest in each arrangement

entity;

(ii) the sum of the total participation interests held by the

external entities in each arrangement entity is 80% or

more.

(5) For the purposes of subparagraph (4)(c)(ii), in working out the sum

of the

total participation interests held by the external entities in

each arrangement entity, take into account:

(a) a particular

direct participation interest; or

(b) a particular

indirect participation interest;

held in the arrangement entity only once if it would otherwise be

counted more than once.

(6) Subsection (7) applies if:

(a) an external entity holds

total participation interests in 2 or

more arrangement entities; and

(b) either:

(i) the amount (the lowest participation interest amount)

of one of those participation interests falls short of the

amount of each of the other participation interests; or

(ii) the amount (the lowest participation interest amount)

of 2 or more of those participation interests is the same

but falls short of the amount of each of the other

participation interests.

(7) For the purposes of paragraph (4)(c), treat the amount of the

total

participation interest held by the external entity in each of the

arrangement entities as being equal to the lowest participation

interest amount.

(8) Each of the entities that entered into the

cross staple arrangement

is a stapled entity in relation to the cross staple arrangement.

Schedule 1 Non-concessional MIT income

Part 1 Main amendments

Treasury Laws Amendment (Making Sure Foreign Investors Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

No. , 2018

12-437 Meaning of MIT cross staple arrangement income

(1) This section applies if:

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

year of a

managed investment trust in relation to the income

year (worked out for the purposes of determining the trust's

net income, or in the case of an

AMIT, the trust's total

assessable income, for the income year); and

(b) the amount mentioned in paragraph (a) is, or is attributable

to, an amount derived, received or made from another entity

(the second entity); and

mentioned in paragraph 12-405(1)(a), (b), (c), (d) or (e).

(2) The amount is MIT cross staple arrangement income of the

managed investment trust if:

(a) either:

(i) the

managed investment trust is an

asset entity in

relation to the income year and is a

stapled entity in

relation to a

cross staple arrangement; or

(ii) the second entity is an asset entity in relation to the

income year and is a stapled entity in relation to a cross

staple arrangement; and

(b) either:

(i) if subparagraph (a)(i) applies--the second entity is an

operating entity in relation to the income year and is a

stapled entity in relation to the cross staple arrangement;

(ii) if subparagraph (a)(ii) applies--another entity (the third

entity) is an operating entity in relation to the income

year and is a stapled entity in relation to the cross staple

arrangement; and

(i) if subparagraph (a)(i) applies--the amount is derived,

received or made by the managed investment trust from

the second entity; or

(ii) if subparagraph (a)(ii) applies--the amount is

attributable to an amount derived, received or made by

the second entity from the third entity.

Non-concessional MIT income Schedule 1

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Fair Share of Tax in Australia and Other Measures) Bill 2018

(3) The amount is not MIT cross staple arrangement income of the

managed investment trust under subsection (2) to the extent that it

is attributable to an amount that satisfies the following

requirements:

(a) the amount is derived, received or made by a

stapled entity

in relation to the

cross staple arrangement from an entity that

is not a stapled entity in relation to the cross staple

arrangement;

(b) the amount mentioned in paragraph (a) is

rent from land

investment.

(4) The amount is not MIT cross staple arrangement income of the

managed investment trust under subsection (2) to the extent that it

is, or is attributable to, an amount covered by

subsection 12-438(1).

Note:

The managed investment trust may be an asset entity in relation to the

cross staple arrangement. If so, it may have no MIT cross staple

arrangement income for the income year as a result of the operation of

this subsection.

(5) The amount is not MIT cross staple arrangement income of the

managed investment trust under subsection (2) to the extent that it

is, or is attributable to,

rent from land investment that is:

(a) attributable to a facility, or an improvement to a facility; and

(b) referable to a time in the income year when the facility, or the

improvement to the facility, is covered by section 12-439.

(6) Subsection (7) applies if:

(a) an

asset entity in relation to the income year mentioned in

paragraph (1)(a) makes a

capital gain because an

operating

entity in relation to the income year

acquires an asset from

the asset entity; and

(b) the asset entity and the operating entity are

stapled entities in

relation to the

cross staple arrangement.

(7) The amount is not MIT cross staple arrangement income of the

managed investment trust under subsection (2) to the extent that it

is attributable to the

capital gain.

Schedule 1 Non-concessional MIT income

Part 1 Main amendments

Treasury Laws Amendment (Making Sure Foreign Investors Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

No. , 2018

12-438 MIT cross staple arrangement income--de minimis

exception

(1) For the purposes of subsection 12-437(4), this subsection covers an

amount if:

(a) the amount is

MIT cross staple arrangement income for the

income year of an

asset entity in relation to the

cross staple

arrangement; and

(b) the MIT cross staple arrangement income of the asset entity

for the previous income year does not exceed 5% of the

amount mentioned in subsection (3).

(2) For the purposes of subsection (1), in working out the

MIT cross

staple arrangement income of the

asset entity for the previous

income year, disregard subsections 12-437(4) and (5).

(3) The amount is:

(a) if the

asset entity is not an

AMIT for the income year--the

assessable income of the asset entity for the previous income

year (worked out for the purposes of determining the

net

income of the asset entity for the income year); or

(b) if the asset entity is an AMIT for the income year--the total

assessable income (as mentioned in subsection 276-265(2) of

the Income Tax Assessment Act 1997) of the asset entity for

the previous income year.

(4) For the purposes of subsection (3), in working out the assessable

income, or the total assessable income, of the

asset entity for the

previous income year, disregard any

net capital gain of the asset

entity for that year.

(5) If the

asset entity did not exist in the previous income year:

(a) treat references in this section to the previous income year as

instead being references to the income year; and

(b) treat references in this section to the

MIT cross staple

arrangement income of the asset entity as instead being

references to a reasonable estimate of the MIT cross staple

arrangement income of the asset entity; and

Non-concessional MIT income Schedule 1

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asset entity as instead being references to a reasonable

estimate of the assessable income of the asset entity; and

(d) treat references in this section to the total assessable income

of the asset entity as instead being references to a reasonable

estimate of the total assessable income of the asset entity.

(6) If the

asset entity exists in an income year, but is not a

managed

investment trust in relation to that income year, for the purposes of

this section, treat it as a managed investment trust in relation to that

income year that is not an

AMIT for that income year.

12-439 MIT cross staple arrangement income--approved economic

infrastructure facility exception

(1) This section covers a facility at a time if:

(a) the facility is covered by an approval of the Treasurer under

this section that is in force at that time; and

(b) that time is no later than the end of the period of 15 years

beginning on the day on which an asset that is part of the

facility is first put to use.

(2) This section covers an improvement to a facility at a time if:

(a) the improvement to the facility is covered by an approval of

the Treasurer under this section that is in force at that time;

and

(b) that time is no later than the end of the period of 15 years

beginning on the day on which an asset that is part of the

facility is first put to use after it has been improved under the

improvement.

(3) An

Australian government agency (other than the

Commonwealth) may make an application to the Treasurer in

respect of a facility, or an improvement to a facility, specified in

the application.

(4) The Treasurer may approve the facility, or the improvement to the

facility, specified in the application under subsection (2) if the

Treasurer is satisfied that the following criteria are met:

(a) the facility is an

economic infrastructure facility;

Schedule 1 Non-concessional MIT income

Part 1 Main amendments

Treasury Laws Amendment (Making Sure Foreign Investors Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

No. , 2018

(b) in the case of an application in respect of a facility:

(i) the estimated capital expenditure on the facility is $500

million or more; and

(ii) the facility is yet to be constructed; and

(iii) the facility will significantly enhance the long-term

productive capacity of the economy; and

(iv) approving the facility is in the national interest;

a facility:

(i) the estimated capital expenditure on the improvement is

$500 million or more; and

(ii) the improvement is yet to be constructed; and

(iii) the improvement will significantly enhance the

long-term productive capacity of the economy; and

(iv) approving the improvement is in the national interest.

(5) An economic infrastructure facility is a facility that is any of the

following:

(a) transport infrastructure;

(b) energy infrastructure;

(d) water infrastructure.

(6) An approval under subsection (4):

(a) must be in writing; and

(b) must specify the facility, or the improvement, that is

approved; and

force; and

(d) may contain any other information that the Treasurer

considers appropriate.

(7) The Treasurer may publish an approval under subsection (4) in any

way that he or she considers appropriate.

(8) If the Treasurer decides not to approve the facility, or the

improvement to a facility, specified in the application under

subsection (3), the Treasurer must notify the applicant of the

Non-concessional MIT income Schedule 1

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decision, in writing, as soon as practicable after making the

decision.

12-440 Transitional--MIT cross staple arrangement income

(1) This section applies if:

(a) before 27 March 2018, an

Australian government agency:

(i) decided to approve the

acquisition, creation or lease of

a facility; and

(ii) publicly announced that decision; and

(iii) took significant preparatory steps to implement that

decision; and

(b) either:

(i) a

cross staple arrangement was entered into in relation

to the facility before 27 March 2018; or

(ii) it was reasonable on 27 March 2018 to conclude that a

cross staple arrangement will be entered into in relation

to the facility; and

stapled entities in relation to the cross

staple arrangement already existed before 27 March 2018;

and

(d) each entity that is a stapled entity in relation to the cross

staple arrangement has made a choice in accordance with

subsection (5).

(2) This section also applies if:

(a) any of the following applies:

(i) an entity entered into a contract before 27 March 2018

for the

acquisition, creation or lease of a facility;

(ii) an entity owns, or is the lessee of, a facility at a time

before 27 March 2018; and

(b) either:

(i) a

cross staple arrangement was entered into in relation

to the facility before 27 March 2018; or

(ii) it was reasonable on 27 March 2018 to conclude that a

cross staple arrangement will be entered into in relation

to the facility; and

Schedule 1 Non-concessional MIT income

Part 1 Main amendments

Treasury Laws Amendment (Making Sure Foreign Investors Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

No. , 2018

stapled entities in relation to the cross

staple arrangement already existed before 27 March 2018;

and

(d) each entity that is a stapled entity in relation to the cross

staple arrangement has made a choice in accordance with

subsection (5).

(3) An amount included in the assessable income for an income year

of a

managed investment trust is not MIT cross staple

arrangement income of the managed investment trust if:

(a) the amount is, or is attributable to, an amount derived,

received or made from another entity (the second entity); and

(b) the amount relates to the facility; and

stapled entity in relation to the

cross

staple arrangement; and

(d) either:

(i) if subparagraph 12-437(2)(a)(i) applies--the amount is

rent from land investment paid from an

operating

entity in relation to the cross staple arrangement to the

managed investment trust; or

(ii) if subparagraph 12-437(2)(a)(ii) applies--the amount is

attributable to rent from land investment paid from an

operating entity in relation to the cross staple

arrangement to an

asset entity in relation to the cross

staple arrangement; and

(e) the time when the amount was derived, received or made by

the managed investment trust meets the requirements in

subsection (4).

(4) The time meets the requirements in this subsection if:

(a) where the facility to which the

cross staple arrangement

relates is not an

economic infrastructure facility--the time is

before 1 July 2031 and before the later of:

(i) 1 July 2026; and

(ii) the end of the period of 7 years beginning on the earliest

day on which an asset that is part of that facility is first

put to use for the purpose of producing assessable

income; or

Non-concessional MIT income Schedule 1

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(b) where the facility to which the cross staple arrangement

relates is an economic infrastructure facility--the time is

before 1 July 2039 and before the later of:

(i) 1 July 2034; and

(ii) the end of the period of 15 years beginning on the

earliest day on which an asset that is part of that facility

is first put to use for the purpose of producing

assessable income.

(5) An entity makes a choice in accordance with this subsection if:

(a) the entity makes the choice in the

approved form; and

(b) the entity makes the choice no later than:

(i) 30 June 2019; or

(ii) a later time allowed by the Commissioner; and

days after the entity makes the choice.

(6) The choice cannot be revoked.

12-441 Integrity rule--concessional cross staple rent cap

(1) This section applies if:

(a) a

managed investment trust in relation to an income year

derives, receives or makes an amount of

excepted MIT CSA

income for the income year; and

(b) if the amount is excepted MIT CSA income because of

subsection 12-440(3)--paragraph 12-440(4)(b) applies (15

year concession); and

attributable to,

rent from land investment under a lease (the

cross staple lease) entered into by:

(i) the

asset entity mentioned in paragraph 12-437(2)(a)

(the relevant asset entity); and

(ii) the

operating entity mentioned in

paragraph 12-437(2)(b) (the relevant operating entity).

(2) To the extent (if any) that the amount of the relevant asset entity's

excepted MIT CSA income exceeds its

concessional cross staple

rent cap for the income year, the following provisions do not apply

Schedule 1 Non-concessional MIT income

Part 1 Main amendments

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Fair Share of Tax in Australia and Other Measures) Bill 2018

No. , 2018

to the amount of the

managed investment trust's excepted MIT

CSA income mentioned in paragraph (1)(a):

(a) subsection 12-437(5);

(b) subsection 12-440(3).

(3) If the relevant asset entity is not a

managed investment trust in

relation to the income year, for the purposes of subsection (2), treat

it as a managed investment trust in relation to the income year.

12-442 Meaning of excepted MIT CSA income

An amount is excepted MIT CSA income of a

managed

investment trust in relation to an income year if it would be

MIT

cross staple arrangement income of the managed investment trust

but for any of the following provisions:

(a) subsection 12-437(5);

(b) subsection 12-440(3).

12-443 Concessional cross staple rent cap--existing lease with

specified rent or rent method

(1) This section applies if:

(a) the amount mentioned in subsection 12-441(1) is

excepted

MIT CSA income because of subsection 12-440(3); and

(b) the cross staple lease was entered into before 27 March 2018;

and

of the following before 27 March 2018:

(i) the amount of annual rent under the lease for the first

year of the lease that ends after 27 March 2018;

(ii) an objective method for determining the amount of

annual rent under the lease; and

(d) if subparagraph (c)(ii) applies--the method is set out in the

cross staple lease, or the associated documents, before

27 March 2018.

(2) If subparagraph (1)(c)(ii) applies, the concessional cross staple

rent cap for an income year of the

managed investment trust is the

Non-concessional MIT income Schedule 1

Main amendments Part 1

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Treasury Laws Amendment (Making Sure Foreign Investors Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

amount of annual rent determined for the income year under the

method mentioned in that subparagraph.

(3) If subparagraph (1)(c)(ii) does not apply, the concessional cross

staple rent cap for an income year of the

managed investment

trust is:

(a) for an income year where the lease, or the associated

documents, specify the amount of annual rent for the

corresponding year of the lease under subsection (4)--that

amount; or

(b) for an income year where that amount is not so specified--

the amount worked out under paragraph (a) in relation to the

most recent year of the lease for which an amount is so

specified, indexed annually in accordance with

Subdivision 960-M of the Income Tax Assessment Act 1997.

(4) An income year and a year of the lease correspond to each other

under this subsection if both of those years end:

(a) after a particular 27 March; and

(b) on or before the next 27 March.

12-444 Concessional cross staple rent cap--general

(1) This section applies if section 12-443 does not apply.

(2) The concessional cross staple rent cap for an income year of the

managed investment trust is worked out as follows:

(a) first, work out a reasonable estimate of whichever of the

following is applicable:

(i) if the relevant asset entity is a trust that is not an

AMIT--the relevant asset entity's

net income, or

tax

loss, for the income year;

(ii) if the relevant asset entity is an AMIT--the sum of the

relevant asset entity's

trust components with the

character of assessable income, or the relevant asset

entity's tax loss, for the income year;

(iii) if the relevant asset entity is a partnership--the relevant

asset entity's net income, or partnership loss (within the

meaning of section 90 of the Income Tax Assessment

Act 1936), for the income year;

Schedule 1 Non-concessional MIT income

Part 1 Main amendments

Treasury Laws Amendment (Making Sure Foreign Investors Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

No. , 2018

(b) next, work out a reasonable estimate of whichever of the

following is applicable:

(i) if the relevant operating entity is a trust that is not an

AMIT--the operating asset entity's net income, or tax

loss, for the income year;

(ii) if the relevant operating entity is a partnership--the

relevant operating entity's net income, or partnership

loss (within the meaning of section 90 of the Income

Tax Assessment Act 1936), for the income year;

(iii) otherwise--the relevant operating entity's taxable

income or tax loss for the income year;

(d) next, multiply the result of paragraph (c) by 0.8;

(e) next, subtract the result of paragraph (a) from the result of

paragraph (d);

(f) next, add the amount of

excepted MIT CSA income

mentioned in subsection 12-441(1) to the result of

paragraph (e).

If the result of paragraph (f) is a positive number, the concessional

cross staple rent cap is that result. Otherwise, the concessional

cross staple rent cap is nil.

(3) For the purposes of paragraphs (2)(a) and (b):

(a) treat the amount of a

tax loss, or of a partnership loss (within

the meaning of section 90 of the Income Tax Assessment Act

1936), as a negative number; and

(b) disregard any

tax loss for a previous income year of the

relevant asset entity or relevant operating entity.

12-445 Asset entity to allocate deductions first against rental income

that is not MIT cross staple arrangement income

(1) This section applies if:

(a) an entity is an

asset entity in relation to an income year and

is a

stapled entity in relation to a

cross staple arrangement;

and

(b) the entity is entitled to a deduction for the income year

against its assessable income that arises from

rent from land

investment that it derives or receives in the income year; and

Non-concessional MIT income Schedule 1

Main amendments Part 1

No. , 2018

Treasury Laws Amendment (Making Sure Foreign Investors Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

excepted

MIT CSA income in the income year (disregarding this

section and subsection 12-441(2)); and

(d) the amount of that excepted MIT CSA income exceeds the

entity's

concessional cross staple rent cap for the income

year.

(2) The amount of the deduction can only be deducted against an

amount of assessable income of the

asset entity as follows:

(a) first, the amount can only be deducted against an amount of

assessable income that is

excepted MIT CSA income, to the

extent that the excepted MIT CSA income does not exceed

the entity's

concessional cross staple rent cap for the income

year;

(b) next, if an amount of the deduction remains after applying the

rule in paragraph (a), the amount can only be deducted

against an amount of assessable income that is

MIT cross

staple arrangement income;

rules in paragraphs (a) and (b), the amount can be deducted

against an amount of assessable income in accordance with

other provisions of this Act.

(3) If the

asset entity is not a

managed investment trust in relation to

the income year, for the purposes of determining whether an

amount of its assessable income for the income year is

MIT cross

staple arrangement income, treat it as a managed investment trust

in relation to the income year.

12-446 Meaning of MIT trading trust income

(1) This section applies if:

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

year of a

managed investment trust in relation to the income

year (worked out for the purposes of determining the trust's

net income, or in the case of an

AMIT, the trust's total

assessable income, for the income year); and

(b) the amount mentioned in paragraph (a) is, or is attributable

to, an amount derived, received or made from another entity

(the second entity); and

Schedule 1 Non-concessional MIT income

Part 1 Main amendments

Treasury Laws Amendment (Making Sure Foreign Investors Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

No. , 2018

mentioned in paragraph 12-405(1)(a), (b), (c), (d) or (e).

(2) The amount is MIT trading trust income of the

managed

investment trust if:

(a) the managed investment trust holds a

total participation

interest in the second entity of greater than nil; and

(b) the amount arises because of that total participation interest;

and

(i) is a trading trust for the purposes of Division 6C of

Part III of the Income Tax Assessment Act 1936 in

relation to the income year; or

(ii) is a partnership or a trust that is not a unit trust, but

would be such a trading trust in relation to the income

year if it were a unit trust throughout the income year;

and

(d) the second entity is not a

public trading trust in relation to

the income year.

(3) The amount is not MIT trading trust income of the

managed

investment trust under subsection (2) to the extent that it is

attributable to a

capital gain made from

CGT event E4 or

CGT

event E10.

12-447 Transitional--MIT trading trust income

(1) This section applies if:

(a) an amount (the relevant amount) included in the assessable

income for an income year of a

managed investment trust is

MIT trading trust income of the managed investment trust

(disregarding this section); and

(b) immediately before 27 March 2018, the managed investment

trust held a

total participation interest (the

pre-announcement TPI) of greater than nil in the second

entity mentioned in subsection 12-446(1) (the second entity);

and

managed investment trust before 1 July 2026.

Non-concessional MIT income Schedule 1

Main amendments Part 1

No. , 2018

Treasury Laws Amendment (Making Sure Foreign Investors Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

(2) Treat part of the relevant amount as not being

MIT trading trust

income of the

managed investment trust.

(3) That part is equal to the relevant amount multiplied by the fraction

worked out under subsections (4) and (5).

(4) If the

total participation interest (the post-announcement TPI)

held by the

managed investment trust in the second entity at the

end of the most recent income year ending before it derived,

received or made the relevant amount exceeds the

pre-announcement TPI, work out that fraction by dividing:

(a) the pre-announcement TPI;

by:

(b) the post-announcement TPI.

(5) Otherwise, the fraction is 1.

12-448 Meaning of MIT agricultural income, Australian agricultural

land for rent and Division 6C land

(1) This section applies if:

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

year of a

managed investment trust in relation to the income

year (worked out for the purposes of determining the trust's

net income, or in the case of an

AMIT, the trust's total

assessable income, for the income year); and

(b) the amount mentioned in paragraph (a) is not an amount

mentioned in paragraph 12-405(1)(a), (b), (c), (d) or (e).

(2) The amount is MIT agricultural income of the

managed

investment trust to the extent that it is attributable to an asset that is

Australian agricultural land for rent (whether or not held by the

managed investment trust).

(3) Australian agricultural land for rent is

Division 6C land situated

in Australia that:

(a) is used, or could reasonably be used, for carrying on a

primary production business; and

(b) is held primarily for the purposes of deriving or receiving

rent.

Schedule 1 Non-concessional MIT income

Part 1 Main amendments

Treasury Laws Amendment (Making Sure Foreign Investors Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

No. , 2018

(4) For the purposes of this section, if an

economic infrastructure

facility is a fixture on

Australian agricultural land for rent:

(a) treat the economic infrastructure facility as being separate

from the Australian agricultural land for rent; and

(b) treat the economic infrastructure facility as not being

Australian agricultural land for rent.

(5) Division 6C land is land (within the meaning of Division 6C of

Part III of the Income Tax Assessment Act 1936), and includes a

thing if an investment in the thing would be an investment in land

under subsection 102MB(1) of that Act.

12-449 Transitional--MIT agricultural income

(1) This section applies if:

(a) an amount (the relevant amount) is included in the

assessable income for an income year of a

managed

investment trust in relation to the income year (worked out

for the purposes of determining the trust's

net income, or in

the case of an

AMIT, the trust's total assessable income, for

the income year); and

(b) the relevant amount would be

MIT agricultural income

(disregarding this section) of the managed investment trust

because it is attributable to an asset that is

Australian

agricultural land for rent; and

relevant amount before 1 July 2026; and

(d) if the managed investment trust derived, received or made the

relevant amount because the managed investment trust held

the asset:

(i) the managed investment trust held the asset just before

27 March 2018; or

(ii) before 27 March 2018, the managed investment trust

entered into a contract for the

acquisition or lease of

the asset; and

(e) if the managed investment trust derived, received or made the

relevant amount because another entity (the second entity)

held the asset:

Non-concessional MIT income Schedule 1

Main amendments Part 1

No. , 2018

Treasury Laws Amendment (Making Sure Foreign Investors Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

(i) the second entity held the asset just before 27 March

2018; or

(ii) before 27 March 2018, the second entity entered into a

contract for the acquisition or lease of the asset; and

(f) if paragraph (e) applies--immediately before 27 March 2018,

the managed investment trust held a

total participation

interest (the pre-announcement TPI) of greater than nil in

the second entity.

(2) If paragraph (1)(d) applies, treat the relevant amount as not being

MIT agricultural income of the

managed investment trust.

(3) If paragraph (1)(e) applies, treat part of the relevant amount as not

being

MIT agricultural income of the

managed investment trust.

(4) That part is equal to the relevant amount multiplied by the fraction

worked out under subsections (5) and (6).

(5) If the

total participation interest (the post-announcement TPI)

held by the

managed investment trust in the second entity at the

end of the most recent income year ending before it derived,

received or made the relevant amount exceeds the

pre-announcement TPI, work out that fraction by dividing:

(a) the pre-announcement TPI;

by:

(b) the post-announcement TPI.

(6) Otherwise, the fraction is 1.

12-450 Meaning of MIT residential housing income

(1) This section applies if:

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

year of a

managed investment trust in relation to the income

year (worked out for the purposes of determining the trust's

net income, or in the case of an

AMIT, the trust's total

assessable income, for the income year); and

(b) the amount mentioned in paragraph (a) is not an amount

mentioned in paragraph 12-405(1)(a), (b), (c), (d) or (e).

Schedule 1 Non-concessional MIT income

Part 1 Main amendments

Treasury Laws Amendment (Making Sure Foreign Investors Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

No. , 2018

(2) The amount is MIT residential housing income of the

managed

investment trust to the extent that it is attributable to a

residential

dwelling asset (whether or not held by the managed investment

trust).

Asset used to provide affordable housing

(3) The amount is not MIT residential housing income of the

managed investment trust under subsection (2) to the extent that it

is referable to the use of the

residential dwelling asset to

provide

affordable housing.

(4) If the amount is, or is attributable to, a

capital gain from a

CGT

event, subsection (3) applies only if:

(a) the entity that held the

residential dwelling asset just before

the time (the CGT event time) when the CGT event happened

had held it for at least 3,650 days (consecutive or not); and

(b) each of those days satisfies the following requirements:

(i) the day is on or after 1 July 2017 and before the CGT

event time;

(ii) the residential dwelling asset was used on the day to

provide affordable housing.

12-451 Transitional--MIT residential housing income

(1) This section applies if:

(a) an amount (the relevant amount) is included in the

assessable income for an income year of a

managed

investment trust in relation to the income year (worked out

for the purposes of determining the trust's

net income, or in

the case of an

AMIT, the trust's total assessable income, for

the income year); and

(b) the relevant amount would be

MIT residential housing

income (disregarding this section) of the

managed

investment trust because it is attributable to a facility that

consists of or contains a

residential dwelling asset; and

relevant amount before 1 October 2027; and

Non-concessional MIT income Schedule 1

Main amendments Part 1

No. , 2018

Treasury Laws Amendment (Making Sure Foreign Investors Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

(d) if the managed investment trust derived, received or made the

relevant amount because the managed investment trust held

the facility:

(i) the managed investment trust held the facility just

before the time mentioned in subsection (7); or

(ii) before the time mentioned in subsection (7), the

managed investment trust entered into a contract for the

acquisition, creation or lease of the facility; and

(e) if the managed investment trust derived, received or made the

relevant amount because another entity (the second entity)

held the facility:

(i) the second entity held the facility just before the time

mentioned in subsection (7); or

(ii) before the time mentioned in subsection (7), the second

entity entered into a contract for the acquisition, creation

or lease of the facility; and

(f) if paragraph (e) applies--immediately before the time

mentioned in subsection (7), the managed investment trust

held a

total participation interest (the pre-announcement

TPI) of greater than nil in the second entity.

(2) If paragraph (1)(d) applies, treat the relevant amount as not being

MIT residential housing income of the

managed investment trust.

(3) If paragraph (1)(e) applies, treat part of the relevant amount as not

being

MIT residential housing income of the

managed

investment trust.

(4) That part is equal to the relevant amount multiplied by the fraction

worked out under subsections (5) and (6).

(5) If the

total participation interest (the post-announcement TPI)

held by the

managed investment trust in the second entity at the

end of the most recent income year ending before it derived,

received or made the relevant amount exceeds the

pre-announcement TPI, work out that fraction by dividing:

(a) the pre-announcement TPI;

by:

(b) the post-announcement TPI.

Schedule 1 Non-concessional MIT income

Part 1 Main amendments

Treasury Laws Amendment (Making Sure Foreign Investors Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

No. , 2018

(6) Otherwise, the fraction is 1.

(7) The time is:

(a) unless paragraph (b) applies--4.30 pm, by legal time in the

Australian Capital Territory, on 14 September 2017; or

(b) if the

residential dwelling asset is premises described in

subparagraph 12-452(1)(c)(ii)--the start of the day on which

the Bill that became the Treasury Laws Amendment (Making

Sure Foreign Investors Pay Their Fair Share of Tax in

Australia and Other Measures) Act 2018 was introduced into

the House of Representatives.

12-452 Meaning of residential dwelling asset

(1) A residential dwelling asset is an asset that:

(a) is a

dwelling; and

(b) is

taxable Australian real property; and

(i)

residential premises (other than

commercial

residential premises);

(ii) premises used primarily to provide accommodation for

students (other than in connection with a school (within

the meaning of the

GST Act)).

(2) Section 118-120 (Extension to adjacent land) applies in relation to

this section in the same way as it applies in relation to

Subdivision 118-B.

(3) To avoid doubt, for the purposes of applying section 118-120 in

relation to this section, a

dwelling's

adjacent land may include

land used primarily for private or domestic purposes in association

with the dwelling and with one or more other dwellings.

12-453 MIT agricultural income and MIT residential housing

income--capital gains in relation to membership interests

(1) Subsection (2) applies if:

(a) any of the following provisions apply in relation to an

amount:

(i) section 12-448;

Non-concessional MIT income Schedule 1

Main amendments Part 1

No. , 2018

Treasury Laws Amendment (Making Sure Foreign Investors Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

(ii) section 12-450; and

(b) the amount is, or is attributable to, a

capital gain from a

CGT event in relation to an asset that is a

membership

interest in an entity; and

or indirectly, one or more assets that are any of the following;

(i)

Australian agricultural land for rent;

(ii) a

residential dwelling asset.

(2) For the purposes of subsections 12-448(2) and 12-450(2):

(a) in a case where the

membership interest mentioned in

subsection (1) passes the principal asset test in section 855-30

of the Income Tax Assessment Act 1997 immediately before

the time the

CGT event happens:

(i) if the assets mentioned in paragraph (1)(c) are all

Australian agricultural land for rent--treat the

capital

gain as being wholly attributable to the Australian

agricultural land for rent; or

(ii) if the assets mentioned in paragraph (1)(c) are all

residential dwelling assets--treat the capital gain as

being wholly attributable to residential dwelling assets;

(iii) if all the assets mentioned in paragraph (1)(c) are

Australian agricultural land for rent and residential

dwelling assets, and the

market value of the

membership interest that is attributable to Australian

agricultural land for rent equals or exceeds the market

value of the membership interest that is attributable to

residential dwelling assets--treat the capital gain as

being wholly attributable to Australian agricultural land

for rent; or

(iv) if all the assets mentioned in paragraph (1)(c) are

Australian agricultural land for rent and residential

dwelling assets, and the market value of the

membership interest that is attributable to Australian

agricultural land for rent falls short of the market value

of the membership interest that is attributable to

residential dwelling assets--treat the capital gain as

Schedule 1 Non-concessional MIT income

Part 1 Main amendments

Treasury Laws Amendment (Making Sure Foreign Investors Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

No. , 2018

being wholly attributable to residential dwelling assets;

(b) in any other case--treat the capital gain:

(i) as not being attributable to Australian agricultural land

for rent; and

(ii) as not being attributable to residential dwelling assets.

(3) For the purposes of subsection (2), in determining whether the

membership interest passes the principal asset test, treat references

in section 855-30 of the Income Tax Assessment Act 1997 to

taxable Australian real property as instead being references to an

asset that is any of the following:

(a)

Australian agricultural land for rent;

(b) a

residential dwelling asset.

(4) For the purposes of this section, in working out the

market value

of an asset, work out that market value just before the time the

CGT event mentioned in paragraph (1)(b) happens.

Non-concessional MIT income Schedule 1

Definitions Part 2

No. , 2018

Treasury Laws Amendment (Making Sure Foreign Investors Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

Part 2--Definitions

Income Tax Assessment Act 1997

12 Subsection 995-1(1)

Insert:

asset entity has the meaning given by section 12-436 in Schedule 1

to the Taxation Administration Act 1953.

Australian agricultural land for rent has the meaning given by

section 12-448 in Schedule 1 to the Taxation Administration Act

1953.

concessional cross staple rent cap has the meaning given by

sections 12-443 and 12-444 in Schedule 1 to the Taxation

Administration Act 1953.

cross staple arrangement has the meaning given by section 12-436

in Schedule 1 to the Taxation Administration Act 1953.

Division 6C land has the meaning given by section 12-448 in

Schedule 1 to the Taxation Administration Act 1953.

economic infrastructure facility has the meaning given by

section 12-439 in Schedule 1 to the Taxation Administration Act

1953.

excepted MIT CSA income has the meaning given by

section 12-442 in Schedule 1 to the Taxation Administration Act

1953.

MIT agricultural income has the meaning given by

sections 12-448 and 12-449 in Schedule 1 to the Taxation

Administration Act 1953.

MIT cross staple arrangement income has the meaning given by

sections 12-437 and 12-440 in Schedule 1 to the Taxation

Administration Act 1953.

Schedule 1 Non-concessional MIT income

Part 2 Definitions

Treasury Laws Amendment (Making Sure Foreign Investors Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

No. , 2018

MIT residential housing income has the meaning given by

sections 12-450 and 12-451 in Schedule 1 to the Taxation

Administration Act 1953.

MIT trading trust income has the meaning given by

sections 12-446 and 12-447 in Schedule 1 to the Taxation

Administration Act 1953.

non-concessional MIT income has the meaning given by

section 12-435 in Schedule 1 to the Taxation Administration Act

1953.

operating entity has the meaning given by section 12-436 in

Schedule 1 to the Taxation Administration Act 1953.

rent from land investment means rent that is derived or received

from investments in Division 6C land.

residential dwelling asset has the meaning given by section 12-452

in Schedule 1 to the Taxation Administration Act 1953.

13 Subsection 995-1(1) (definition of stapled entity)

Repeal the definition, substitute:

stapled entity:

(a) in relation to a

cross staple arrangement--has the meaning

given by section 12-436 in Schedule 1 to the Taxation

Administration Act 1953; or

(b) otherwise--has the meaning given by section 124-1045.

Non-concessional MIT income Schedule 1

Other amendments Part 3

No. , 2018

Treasury Laws Amendment (Making Sure Foreign Investors Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

Part 3--Other amendments

Administrative Decisions (Judicial Review) Act 1977

14 After paragraph (gaa) of Schedule 1

Insert:

(gaaa) decisions of the Treasurer under section 12-439 in Schedule 1

to the Taxation Administration Act 1953;

Note:

Section 12-439 in that Schedule empowers the Treasurer to

approve economic infrastructure facilities.

Income Tax Assessment Act 1936

15 Subsection 6(1)

Insert:

industrial, commercial or scientific equipment means industrial,

commercial or scientific equipment to the extent that an amount

paid or credited as consideration for the use of the equipment, or

for the right to use the equipment, is not rent from land (including

rent from an interest in land or rent from fixtures on land).

Schedule 1 Non-concessional MIT income

Part 4 Application and transitional provisions

Treasury Laws Amendment (Making Sure Foreign Investors Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

No. , 2018

Part 4--Application and transitional provisions

16 Application

(1)

The amendments made by this Schedule apply to a fund payment made

by a managed investment trust in relation to an income year if:

(a) the fund payment is made on or after 1 July 2019; and

(b) the income year is the 2019-20 income year or a later income

year.

(2)

To avoid doubt, the amendments made by this Schedule also apply for

the purposes of working out the MIT cross staple arrangement income

of a managed investment trust for a previous income year as mentioned

in section 12-438 in Schedule 1 to the Taxation Administration Act

1953 (as inserted by this Schedule).

(3)

Despite subitem (1):

(a) section 25-115 of the Income Tax Assessment Act 1997, as

inserted by item 2 of this Schedule, applies in relation to an

amount of rent from land investment that is derived or

received in relation to the 2019-20 income year or a later

income year; and

(b) section 25-120 of the Income Tax Assessment Act 1997, as

inserted by item 2 of this Schedule, applies in relation to an

amount of rent from land investment that is derived or

received on or after 27 March 2018.

(4)

To avoid doubt, for the purposes of paragraph (3)(b), the amendments

made by this Schedule also apply for the purposes of working out

whether an entity can deduct an amount of rent from land investment

under section 25-120 of the Income Tax Assessment Act 1997 for an

income year that is before the 2019-20 income year.

(5)

Despite subitem (1), the amendment made by item 15 of this Schedule

(which relates to the definition of industrial, commercial or scientific

equipment in the Income Tax Assessment Act 1936) applies in relation

to amounts paid or credited on or after 1 July 2019.

Thin capitalisation Schedule 2

No. , 2018

Treasury Laws Amendment (Making Sure Foreign Investors Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

Schedule 2--Thin capitalisation

Income Tax Assessment Act 1997

1 At the end of paragraph 820-105(3)(g)

Add:

(iv) each other entity in which the entity has a direct or

indirect interest;

2 At the end of paragraph 820-215(3)(g)

Add:

(iv) each other entity in which the entity has a direct or

indirect interest;

3 After subsection 820-905(2A)

Insert:

(2B) For the purposes of sections 820-910, 820-915 and 820-920, if the

first entity mentioned in subsection (1) or (2A) is a trust (other than

public trading trust) or a partnership:

(a) treat the reference in paragraph (1)(a) or (2A)(a) to 50% as

instead being a reference to 10%; and

(b) if subsection (2C) applies--treat the other entity mentioned

in subsection (1) or (2A) as holding an

associate interest in

the first entity mentioned in that subsection of 10%; and

Act 1936; and

(d) if subsection (2D) applies--in determining whether an entity

is an

associate of another entity, treat the benefiting entity

mentioned in that subsection as being a partner in the

partnership.

(2C) This subsection applies if:

(a) the other entity mentioned in subsection (1) or (2A) holds an

associate interest in the first entity mentioned in that

subsection of less than 10%; and

Schedule 2 Thin capitalisation

Treasury Laws Amendment (Making Sure Foreign Investors Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

No. , 2018

(b) it is reasonable to conclude that the entity, or one of the

entities, who created the circumstance described in

paragraph (a) of this subsection did so for the principal

purpose of, or for more than one principal purpose that

included the purpose of, ensuring that the first entity will not

be an

associate entity of the other entity.

(2D) This subsection applies if:

(a) a trust (other than a

public trading trust) is a partner in a

partnership; and

(b) another entity (the benefiting entity) benefits under the trust

(as determined in accordance with paragraph 318(6)(a) of the

Income Tax Assessment Act 1936).

4 Application

The amendments made by this Schedule apply to income years starting

on or after 1 July 2018.

Superannuation funds for foreign residents withholding tax exemption Schedule 3

Amendments Part 1

No. , 2018

Treasury Laws Amendment (Making Sure Foreign Investors Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

Schedule 3--Superannuation funds for

foreign residents withholding tax

exemption

Part 1--Amendments

Income Tax Assessment Act 1936

1 At the end of paragraph 128B(3)(jb)

Add:

Note:

See subsection (3CA) for extra requirements relating to this

paragraph.

2 After subsection 128B(3C)

Insert:

(3CA) Paragraph (3)(jb) applies to income derived by the superannuation

fund mentioned in subparagraph (3)(jb)(i) only if:

(a) the superannuation fund satisfies the portfolio interest test in

subsection (3CC) in relation to the entity mentioned in

subsection (3CB) (the test entity):

(i) at the time the income was derived; and

(ii) throughout any 12 month period that began no earlier

than 24 months before that time and ended no later than

that time; and

(b) the superannuation fund does not, at the time the income was

derived, have influence of a kind described in

subsection (3CD) in relation to the test entity; and

superannuation fund because of:

(i) Subdivision 880-C of the Income Tax Assessment Act

1997; or

(ii) Division 880 of the Income Tax (Transitional

Provisions) Act 1997.

(3CB) For the purposes of subsection (3CA), the test entity is:

Schedule 3 Superannuation funds for foreign residents withholding tax exemption

Part 1 Amendments

Treasury Laws Amendment (Making Sure Foreign Investors Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

No. , 2018

(a) unless paragraph (b) applies--the entity that paid the interest,

dividends or non-share dividends as mentioned in

subparagraph (3)(jb)(ii); or

(b) if subsection 128A(3) applies in relation to a resident trust

estate (within the meaning of Division 6)--the trust estate.

(3CC) A superannuation fund satisfies the portfolio interest test in this

subsection in relation to the test entity at a time if, at that time, the

total participation interest (within the meaning of the Income Tax

Assessment Act 1997) the superannuation fund holds in the test

entity:

(a) is less than 10%; and

(b) would be less than 10% if, in working out the direct

participation interest (within the meaning of that Act) that

any entity holds in a company:

(i) an equity holder were treated as a shareholder; and

(ii) the total amount contributed to the company in respect

of non-share equity interests were included in the total

paid-up share capital of the company.

(3CD) A superannuation fund has influence of a kind described in this

subsection in relation to the test entity at a time if any of the

following requirements are satisfied at that time:

(a) the superannuation fund:

(i) is directly or indirectly able to determine; or

(ii) in acting in concert with others, is directly or indirectly

able to determine;

the identity of at least one of the persons who, individually or

together with others, make (or might reasonably be expected

to make) the decisions that comprise the control and direction

of the test entity's operations;

(b) at least one of those persons is accustomed or obliged to act,

or might reasonably be expected to act, in accordance with

the directions, instructions or wishes of the superannuation

fund (whether those directions, instructions or wishes are

expressed directly or indirectly, or through the

superannuation fund acting in concert with others).

(3CE) However, a superannuation fund does not have influence of a kind

described in subsection (3CD) if, disregarding any breach of terms

Schedule 3 Superannuation funds for foreign residents withholding tax exemption

Part 2 Application provisions

Treasury Laws Amendment (Making Sure Foreign Investors Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

No. , 2018

Part 2--Application provisions

3 Application

(1)

Subject to subitems (2) and (3), the amendments made by this Schedule

apply in relation to income that is derived on or after 1 July 2019.

(2)

The amendments made by this Schedule apply to income that is derived

by a superannuation fund on or after 1 July 2026 if:

(a) the income was derived by the superannuation fund in respect

of an asset; and

(b) subsection 128A(3) of the Income Tax Assessment Act 1936

does not apply in relation to that income; and

27 March 2018.

(3)

The amendments made by this Schedule apply to income that is derived

by a superannuation fund on or after 1 July 2026 if:

(a) because of the operation of subsection 128A(3) of the Income

Tax Assessment Act 1936, a superannuation fund derived the

income because it holds an interest in a trust estate; and

(b) the superannuation fund started to hold that interest on or

before 27 March 2018; and

in the income of the trust estate as mentioned in that

subsection was so included in respect of an asset; and

(d) the trustee of the trust estate acquired the asset on or before

27 March 2018.

Sovereign immunity Schedule 4

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No. , 2018

Treasury Laws Amendment (Making Sure Foreign Investors Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

Schedule 4--Sovereign immunity

Part 1--Amendments

Income Tax Assessment Act 1936

1 After section 99G

Insert:

99GA Amounts covered by sovereign immunity exemption

Subsection 98(3) does not apply to so much of the net income of a

trust estate as represents income to which a beneficiary is presently

entitled and gives rise to an amount that is non-assessable

non-exempt income because of:

(a) Division 880 of the Income Tax Assessment Act 1997; or

(b) Division 880 of the Income Tax (Transitional Provisions) Act

1997.

2 At the end of subsection 128B(3)

Add:

; or (n) income that is non-assessable non-exempt income because of

Division 880 of the Income Tax Assessment Act 1997 or

Division 880 of the Income Tax (Transitional Provisions) Act

1997.

Income Tax Assessment Act 1997

3 Section 9-1 (after table item 8)

Insert:

A sovereign entity

section 880-55

4 Section 11-55 (table)

After:

small business assets

income arising from CGT event, company or trust

owned asset continuously for 15 years .........................

152-110(2)

Schedule 4 Sovereign immunity

Part 1 Amendments

Treasury Laws Amendment (Making Sure Foreign Investors Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

No. , 2018

insert:

sovereign entities ........................................................................ Subdivision 880-C

5 At the end of section 840-805

Add:

(9) Subsections (2), (3) and (4) do not apply to you to the extent that

the fund payment part relates to an amount that is

non-assessable

non-exempt income of yours because of:

(a) Division 880; or

(b) Division 880 of the Income Tax (Transitional Provisions) Act

1997.

6 At the end of Part 4-5

Add:

Division 880--Sovereign entities and activities

Table of Subdivisions

880-A Basic concepts

880-B Basic tax treatment of sovereign entities

880-C Sovereign immunity

880-D Consular activities

Subdivision 880-A--Basic concepts

Guide to Subdivision 880-A

880-10 What this Subdivision is about

This Subdivision defines several terms that are fundamental to the

operation of this Division, such as sovereign entity and sovereign

entity group.

Table of sections

Operative provisions

Sovereign immunity Schedule 4

Amendments Part 1

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Treasury Laws Amendment (Making Sure Foreign Investors Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

880-15

Meaning of sovereign entity

880-20

Meaning of sovereign entity group

Operative provisions

880-15 Meaning of sovereign entity

A sovereign entity is any of the following:

(a) a body politic of a foreign country, or a part of a foreign

country;

(b) a

foreign government agency;

(i) in which an entity covered by paragraph (a) or (b) holds

total participation interest of 100%; and

(ii) that is not an Australian resident; and

(iii) that is not a resident trust estate for the purposes of

Division 6 of Part III of the Income Tax Assessment Act

1936.

880-20 Meaning of sovereign entity group

(1) Each of the following is part of a sovereign entity group:

(a) a body politic of a foreign country (other than a body politic

of a part of that foreign country);

(b) a

foreign government agency in relation to that foreign

country (other than a foreign government agency in relation

to a part of that foreign country);

(i) in which an entity covered by paragraph (a) or (b) holds

total participation interest of 100%; and

(ii) that is not an Australian resident; and

(iii) that is not a resident trust estate for the purposes of

Division 6 of Part III of the Income Tax Assessment Act

1936.

(2) Each of the following is part of a sovereign entity group:

(a) a body politic of a part of a foreign country;

(b) a

foreign government agency in relation to that part of that

foreign country;

Schedule 4 Sovereign immunity

Part 1 Amendments

Treasury Laws Amendment (Making Sure Foreign Investors Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

No. , 2018

(i) in which an entity covered by paragraph (a) or (b) holds

total participation interest of 100%; and

(ii) that is not an Australian resident; and

(iii) that is not a resident trust estate for the purposes of

Division 6 of Part III of the Income Tax Assessment Act

1936.

(3) Each entity that is part of a

sovereign entity group is a member of

the group.

Subdivision 880-B--Basic tax treatment of sovereign entities

Guide to Subdivision 880-B

880-50 What this Subdivision is about

This Subdivision provides that a sovereign entity is liable to pay

tax. It also provides that a body politic (or a foreign government

agency) of a foreign country, or part of a foreign country, is treated

as being a person that is not a resident of Australia, but is a resident

of the foreign country.

Table of sections

Operative provisions

880-55

Sovereign entity liable to pay tax

880-60

Bodies politic of foreign countries and foreign government agencies treated

as foreign residents

Operative provisions

880-55 Sovereign entity liable to pay tax

sovereign entity is liable to pay

tax.

Note:

The actual amount of tax payable may be nil.

Sovereign immunity Schedule 4

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Treasury Laws Amendment (Making Sure Foreign Investors Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

880-60 Bodies politic of foreign countries and foreign government

agencies treated as foreign residents

(1) For the purposes of this Act, treat a body politic of a foreign

country, or a part of a foreign country:

(a) as being a person that is not a resident of Australia; and

(b) as being a resident of the foreign country.

(2) For the purposes of this Act, treat a

foreign government agency in

relation to a foreign country (including a foreign government

agency in relation to a part of a foreign country):

(a) as being a person that is not a resident of Australia; and

(b) as being a resident of the foreign country.

Subdivision 880-C--Sovereign immunity

Guide to Subdivision 880-C

880-100 What this Subdivision is about

This Subdivision provides a tax exemption for certain sovereign

entities in respect of certain returns on membership interests (etc.)

in entities that are Australian resident companies or managed

investment trusts. To obtain this exemption, the relevant sovereign

entity group can hold only a portfolio interest in the entity, and

cannot have relevant influence over the entity.

Table of sections

Operative provisions

880-105 Sovereign entity's income from membership interest etc. in trust or

company--non-assessable non-exempt income

880-110 Sovereign entity's deduction from membership interest etc.--loss not

deductible

880-115 Sovereign entity's capital gain from membership interest etc.--gain

disregarded

880-120 Sovereign entity's capital loss from membership interest etc. in trust or

company--loss disregarded

880-125 Covered sovereign entities

880-130 Meaning of public non-financial entity and public financial entity

Schedule 4 Sovereign immunity

Part 1 Amendments

Treasury Laws Amendment (Making Sure Foreign Investors Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

No. , 2018

Operative provisions

880-105 Sovereign entity's income from membership interest etc. in

trust or company--non-assessable non-exempt income

(1) An amount of

ordinary income or

statutory income of a

sovereign entity is not assessable income and is not

exempt

income if:

(a) the sovereign entity is covered by section 880-125; and

(b) the amount is a return on any of the following kinds of

interest that the sovereign entity holds in another entity (the

test entity):

(i) a

membership interest;

(ii) a

debt interest;

(iii) a

non-share equity interest; and

(i) a company that is an Australian resident at the time (the

income time) when the amount becomes ordinary or

statutory income of the sovereign entity; or

(ii) a

managed investment trust in relation to the income

year in which the income time occurs; and

(d) the

sovereign entity group of which the sovereign entity is a

member satisfies the portfolio interest test in subsection (4) in

relation to the test entity:

(i) at the income time; and

(ii) throughout any 12 month period that began no earlier

than 24 months before that time and ended no later than

that time; and

(e) the sovereign entity group of which the sovereign entity is a

member does not have influence of a kind described in

subsection (6) in relation to the test entity at the income time.

(2) For the purposes of paragraph (1)(b), treat an interest that a

sovereign entity holds in another entity as a partner in a

partnership as not being an interest that the sovereign entity holds

in the other entity.

(3) If the amount is a

fund payment, subsection (1) does not apply to

the extent that the amount is attributable to:

Sovereign immunity Schedule 4

Amendments Part 1

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Treasury Laws Amendment (Making Sure Foreign Investors Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

(a)

non-concessional MIT income (see section 12-435 in

Schedule 1 to the Taxation Administration Act 1953); or

(b) an amount that would be non-concessional MIT income if the

following provisions were disregarded:

(i) subsection 12-437(5) in that Schedule;

(ii) sections 12-440, 12-447, 12-449 and 12-451 in that

Schedule.

Portfolio interest test

(4) A

sovereign entity group satisfies the portfolio interest test in this

subsection in relation to the test entity at a time if, at that time, the

sum of the

total participation interests that each

member of the

group holds in the test entity:

(a) is less than 10%; and

(b) would be less than 10% if, in working out the

direct

participation interest that any entity holds in a company:

(i) an

equity holder were treated as a shareholder; and

(ii) the total amount contributed to the company in respect

non-share equity interests were included in the total

paid-up share capital of the company.

(5) For the purposes of subsection (4), in working out the sum of the

total participation interests held by each

member of the group in

the test entity, take into account:

(a) a particular

direct participation interest; or

(b) a particular

indirect participation interest;

held in the entity only once if it would otherwise be counted more

than once.

Influence test

(6) A

sovereign entity group has influence of a kind described in this

subsection in relation to the test entity at a time if any of the

following requirements are satisfied at that time:

(a) a

member of the group:

(i) is directly or indirectly able to determine; or

(ii) in acting in concert with others, is directly or indirectly

able to determine;

Schedule 4 Sovereign immunity

Part 1 Amendments

Treasury Laws Amendment (Making Sure Foreign Investors Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

No. , 2018

the identity of at least one of the persons who, individually or

together with others, make (or might reasonably be expected

to make) the decisions that comprise the control and direction

of the test entity's operations;

(b) at least one of those persons is accustomed or obliged to act,

or might reasonably be expected to act, in accordance with

the directions, instructions or wishes of a member of the

group (whether those directions, instructions or wishes are

expressed directly or indirectly, or through the member

acting in concert with others).

(7) However, a

sovereign entity group does not have influence of a

kind described in subsection (6) if, disregarding any breach of

terms of a

debt interest by any entity, the sovereign entity group

would not have influence of that kind.

(8) For the purposes of subsection (6), in working out whether an

entity is a

member of a

sovereign entity group, treat the

references in paragraphs 880-20(1)(c) and (2)(c) to 100% as

instead being references to more than 50%.

880-110 Sovereign entity's deduction from membership interest

etc.--loss not deductible

sovereign entity cannot deduct an amount if:

(a) the sovereign entity is covered by section 880-125; and

(b) the amount is a loss in respect of any of the following kinds

of interest that the sovereign entity holds in another entity:

(i) a

membership interest;

(ii) a

debt interest;

(iii) a

non-share equity interest; and

would be satisfied, on the assumptions that:

(i) the amount were

ordinary income or

statutory income;

and

(ii) the amount became ordinary income or statutory income

of the sovereign entity at the time it arose; and

Sovereign immunity Schedule 4

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Treasury Laws Amendment (Making Sure Foreign Investors Pay Their

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(iii) references in those paragraphs to the test entity were

references to the other entity mentioned in paragraph (b)

of this section.

880-115 Sovereign entity's capital gain from membership interest

etc.--gain disregarded

Disregard a

capital gain of a

sovereign entity from a

CGT event

that happens in relation to a

CGT asset if:

(a) the sovereign entity is covered by section 880-125; and

(b) the CGT asset is a

membership interest,

non-share equity

interest or

debt interest in another entity; and

would be satisfied, on the assumptions that:

(i) the capital gain were an amount of

ordinary income or

statutory income; and

(ii) the amount mentioned in subparagraph (i) became

ordinary income or statutory income of the sovereign

entity immediately before the time the CGT event

happened; and

(iii) references in those paragraphs to the test entity were

references to the other entity mentioned in paragraph (b)

of this section.

880-120 Sovereign entity's capital loss from membership interest

etc. in trust or company--loss disregarded

Disregard a

capital loss of a

sovereign entity from a

CGT event

that happens at a time if, on the assumption that the loss were a

capital gain that happened at that time, the capital gain would be

disregarded because of section 880-115.

880-125 Covered sovereign entities

sovereign entity is covered by this section if it satisfies all of the

following requirements:

(a) the entity is funded solely by public monies;

(b) all returns on the entity's investments are public monies;

Schedule 4 Sovereign immunity

Part 1 Amendments

Treasury Laws Amendment (Making Sure Foreign Investors Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

No. , 2018

(d) the entity is not any of the following:

(i) a

public non-financial entity;

(ii) a

public financial entity (other than a public financial

entity that only carries on central banking activities).

880-130 Meaning of public non-financial entity and public financial

entity

(1) An entity is a public non-financial entity if its principal activity is

either or both of the following:

(a) producing or trading non-financial goods;

(b) providing services that are not financial services.

(2) An entity is a public financial entity if any of the following

requirements are satisfied:

(a) it trades in financial assets and liabilities;

(b) it operates commercially in the financial markets;

financial services:

(i) financial intermediary services, including deposit-taking

and insurance services;

(ii) financial auxiliary services, including brokerage, foreign

exchange and investment management services;

(iii) capital financial institution services, including financial

services in relation to assets or liabilities that are not

available on open financial markets.

Subdivision 880-D--Consular activities

Guide to Subdivision 880-D

880-200 What this Subdivision is about

This Subdivision provides a tax exemption for income of an entity

that arises from its consular functions.

Table of sections

Sovereign immunity Schedule 4

Amendments Part 1

No. , 2018

Treasury Laws Amendment (Making Sure Foreign Investors Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

Operative provisions

880-205 Income from consular functions--non-assessable non-exempt income

Operative provisions

880-205 Income from consular functions--non-assessable

non-exempt income

An amount of

ordinary income or

statutory income of an entity is

not assessable income and is not

exempt income if the income

arises from the entity's consular functions.

Schedule 4 Sovereign immunity

Part 2 Application and transitional provisions

Treasury Laws Amendment (Making Sure Foreign Investors Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

No. , 2018

Part 2--Application and transitional provisions

Income Tax (Transitional Provisions) Act 1997

7 At the end of Part 4-5

Add:

Division 880--Sovereign entities and activities

Table of sections

880-1

Application of Division 880 of the Income Tax Assessment Act 1997

880-5

Certain income of sovereign entity in respect of a scheme is non-assessable

non-exempt income if covered by a private ruling

880-10

Certain amounts of sovereign entity in respect of a scheme are not

deductible if covered by a private ruling

880-15

Sovereign entity's capital gain from membership interest etc.--gain

disregarded

880-20

Sovereign entity's capital loss from membership interest etc.--loss

disregarded

880-25

Asset of sovereign entity--deemed sale and purchase

880-1 Application of Division 880 of the Income Tax Assessment Act

1997

Division 880 of the Income Tax Assessment Act 1997 applies to the

2019-20 income year and later income years.

880-5 Certain income of sovereign entity in respect of a scheme is

non-assessable non-exempt income if covered by a private

ruling

An amount of ordinary income or statutory income of a sovereign

entity for an income year is not assessable income and is not

exempt income if:

(a) the amount is a return on an investment asset under a scheme;

and

(b) the sovereign entity acquired the investment asset on or

before 27 March 2018 under the scheme; and

Sovereign immunity Schedule 4

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Treasury Laws Amendment (Making Sure Foreign Investors Pay Their

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a private ruling in relation to the scheme; and

(d) before 1 July 2026, the Commissioner gave the entity a

private ruling confirming that income from the investment

asset was not subject to income tax, or withholding tax,

because of the doctrine of sovereign immunity; and

(e) the private ruling applied during at least part of the period:

(i) starting on 27 March 2018; and

(ii) ending before 1 July 2026;

regardless of whether the private ruling started to apply

before 27 March 2018, or ceased to apply before 1 July 2026;

and

(f) the scheme carried out is not materially different to the

scheme specified in the private ruling; and

(g) the income year is:

(i) unless subparagraph (ii) applies--the 2025-26 income

year or an earlier income year; or

(ii) if the last income year to which the private ruling relates

is a later income year than the 2025-26 income year--

that later income year, or an earlier income year.

880-10 Certain amounts of sovereign entity in respect of a scheme

are not deductible if covered by a private ruling

A sovereign entity cannot deduct an amount for an income year if:

(a) the amount is a loss in respect of an investment asset under a

scheme; and

(b) the requirements in paragraphs 880-5(b) to (g) are satisfied.

880-15 Sovereign entity's capital gain from membership interest

etc.--gain disregarded

Disregard a capital gain of a sovereign entity from a CGT event

that happens in relation to a CGT asset if:

(a) the capital gain arises under a scheme; and

(b) the CGT asset is a membership interest, non-share equity

interest or debt interest in another entity; and

Schedule 4 Sovereign immunity

Part 2 Application and transitional provisions

Treasury Laws Amendment (Making Sure Foreign Investors Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

No. , 2018

(on the assumption that references in those paragraphs to the

investment asset were references to the CGT asset).

880-20 Sovereign entity's capital loss from membership interest

etc.--loss disregarded

Disregard a capital loss of a sovereign entity from a CGT event

that happens at a time if, on the assumption that the loss were a

capital gain that happened at that time, the capital gain would be

disregarded because of section 880-15.

880-25 Asset of sovereign entity--deemed sale and purchase

(1) This section applies if:

(a) a sovereign entity acquired an asset (other than money) on or

before 27 March 2018 under a scheme; and

(b) on or before 27 March 2018, the sovereign entity applied for

a private ruling in relation to the scheme; and

private ruling confirming that income from the asset was not

subject to income tax, or withholding tax, because of the

doctrine of sovereign immunity; and

(d) the private ruling applied during at least part of the period:

(i) starting on 27 March 2018; and

(ii) ending before 1 July 2026;

regardless of whether the private ruling started to apply

before 27 March 2018, or ceased to apply before 1 July 2026;

and

(e) the sovereign entity holds the asset on the day mentioned in

subsection (5).

(2) For the purposes mentioned in subsection (3), the sovereign entity

is taken:

(a) to have disposed of the asset, immediately before the day

mentioned in subsection (5), for a consideration equal to its

market value; and

Sovereign immunity Schedule 4

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(b) to have acquired the asset again, immediately after the

disposal mentioned in paragraph (a), for a consideration

equal to the higher of the following:

(i) its market value immediately before that disposal;

(ii) its cost base immediately before that disposal.

(3) The purposes are as follows:

(a) the purposes of Parts 3-1 and 3-3 of the Income Tax

Assessment Act 1997;

(b) if the asset is a revenue asset--determining whether an

amount is included in, or can be deducted from, the

assessable income of the entity.

(4) Despite subsection (3):

(a) disregard any capital gain or capital loss the sovereign entity

makes because of the disposal mentioned in paragraph (2)(a);

(b) if the asset is a revenue asset--disregard any amount that

could (apart from this subsection) be included in, or be

deducted from, the assessable income of the entity as a result

of that disposal.

(5) For the purposes of paragraphs (1)(e) and (2)(a), the day is:

(a) unless paragraph (b) applies--the later of the following days:

(i) 1 July 2026;

(ii) the day before the private ruling ceases to apply; or

(b) a day earlier than the day mentioned in paragraph (a), if:

(i) the scheme mentioned in paragraph (1)(a) is not, when it

is first carried out, materially different to the scheme

specified in the private ruling; and

(ii) it becomes, on the earlier day, materially different to the

scheme specified in the private ruling.

Schedule 4 Sovereign immunity

Part 3 Definitions

Treasury Laws Amendment (Making Sure Foreign Investors Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

No. , 2018

Part 3--Definitions

Income Tax Assessment Act 1997

8 Subsection 995-1(1) (before paragraph (c) of the definition

of member)

Insert:

(be) in relation to a

sovereign entity group--has the meaning

given by section 880-20; and

9 Subsection 995-1(1)

Insert:

public financial entity has the meaning given by section 880-130.

public non-financial entity has the meaning given by

section 880-130.

sovereign entity has the meaning given by section 880-15.

sovereign entity group has the meaning given by section 880-20.

Contingent amendments relating to definition of provide affordable housing Schedule

Main amendments Part 1

No. , 2018

Treasury Laws Amendment (Making Sure Foreign Investors Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

Schedule 5--Contingent amendments relating

to definition of provide affordable

housing

Part 1--Main amendments

Income Tax Assessment Act 1997

1 At the end of Part 6-1

Add:

Division 980--Affordable housing

Table of Subdivisions

Guide to Division 980

980-A Providing affordable housing

Guide to Division 980

980-1 What this Division is about

A dwelling is used to provide affordable housing if certain

conditions are met, including that the dwelling is tenanted or

available to be tenanted, and that tenancies of the dwelling are

exclusively managed by a community housing provider.

Subdivision 980-A--Providing affordable housing

Table of sections

Operative provisions

980-5

Providing affordable housing

980-10

Eligible community housing providers

980-15

Affordable housing certificates

Schedule 5 Contingent amendments relating to definition of provide affordable

housing

Part 1 Main amendments

Treasury Laws Amendment (Making Sure Foreign Investors Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

No. , 2018

Operative provisions

980-5 Providing affordable housing

dwelling is used to provide affordable housing on a particular

day (the test day) if:

(a) on the test day, the dwelling is

taxable Australian real

property and is

residential premises that:

(i) are tenanted or available to be tenanted; and

(ii) are not

commercial residential premises; and

(b) on the test day, the tenancy or prospective tenancy of the

dwelling is exclusively managed by an

eligible community

housing provider; and

entity that holds an

ownership interest in the dwelling a

certificate under section 980-15 that covers the dwelling for

the test day; and

(d) no entity is entitled to receive an incentive, under the Scheme

prescribed for the purposes of Part 2 of the National Rental

Affordability Scheme Act 2008, for the dwelling for the

NRAS year (within the meaning of that Scheme) that

includes the test day; and

(e) in the case of a

managed investment trust holding an

ownership interest in the dwelling on the test day--none of

the tenants or occupants of the dwelling on that day holds an

interest in the trust that passes the

non-portfolio interest test

at any time during that day.

980-10 Eligible community housing providers

(1) An eligible community housing provider is:

(a) an entity registered (however described) under an

Australian

law as a provider of community housing services; or

(b) an entity registered (however described) by an

Australian

government agency as a provider of community housing

services.

Contingent amendments relating to definition of provide affordable housing Schedule

Main amendments Part 1

No. , 2018

Treasury Laws Amendment (Making Sure Foreign Investors Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

(2) However, an entity that ceases to be covered by subsection (1)

continues to be an eligible community housing provider for the

90-day period starting on the day of the cessation.

980-15 Affordable housing certificates

For the purposes of paragraph 980-5(c), a certificate must:

(a) include a declaration that the

eligible community housing

provider reasonably believes paragraphs 980-5(a) and (b) to

be satisfied for the

dwelling for the test day; and

(b) be given in the

approved form on or before the 31st day after

the end of the income year that contains the test day.

2 Subsection 995-1(1)

Insert:

eligible community housing provider has the meaning given by

section 980-10.

provide affordable housing has the meaning given by

section 980-5.

Taxation Administration Act 1953

3 Subsection 355-65(8) in Schedule 1 (at the end of the table)

Add:

Australian government

agency that administers an

Australian law referred to in

paragraph 980-10(1)(a) of the

Income Tax Assessment Act 1997

is for the purpose of administering that

Australian law in relation to whether

an entity should be, or should continue

to be, covered by that Australian law in

the way described in that paragraph.

Australian government

agency that registers entities as

described in

paragraph 980-10(1)(b) of the

Income Tax Assessment Act 1997

is for the purpose of determining

whether an entity should be, or should

continue to be, registered as described

in that paragraph.

4 Section 396-55 in Schedule 1 (after table item 9)

Insert:

Schedule 5 Contingent amendments relating to definition of provide affordable

housing

Part 1 Main amendments

Treasury Laws Amendment (Making Sure Foreign Investors Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

No. , 2018

eligible

community housing

provider

the issuing by the provider of a certificate under

section 980-15 of the Income Tax Assessment Act

1997

5 Application of amendments

(1)

Division 980 of the Income Tax Assessment Act 1997 (as added by this

Schedule) applies in relation to tenancies starting before, at or after

1 January 2018.

(2)

The amendment of subsection 355-65(8) in Schedule 1 to the Taxation

Administration Act 1953 made by this Schedule applies in relation to

records and disclosures of information made at or after the

commencement of this Schedule, whether the information was obtained

before, at or after the commencement of this Schedule.

Contingent amendments relating to definition of provide affordable housing Schedule

Other amendments Part 2

No. , 2018

Treasury Laws Amendment (Making Sure Foreign Investors Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

Part 2--Other amendments

Treasury Laws Amendment (Reducing Pressure on Housing

Affordability Measures No. 2) Act 2018

6 Items 3, 4, 5 and 6 of Schedule 3

Repeal the items.

7 Subitems 7(2) and (3) of Schedule 3

Repeal the subitems.

Commonwealth of Australia Bills

TREASURY LAWS AMENDMENT (MAKING SURE FOREIGN INVESTORS PAY THEIR FAIR SHARE OF TAX IN AUSTRALIA AND OTHER MEASURES) BILL 2018