TREASURY LAWS AMENDMENT (ENTERPRISE TAX PLAN) BILL 2016

2016

The Parliament of the

Commonwealth of Australia

HOUSE OF REPRESENTATIVES

Presented and read a first time

Treasury Laws Amendment (Enterprise

Tax Plan) Bill 2016

No. , 2016

(Treasury)

A Bill for an Act to amend the law relating to

taxation, and for related purposes

No. , 2016

Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016

Contents

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

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

Schedules ........................................................................................... 4

Schedule 1--Reducing the corporate tax rate

Part 1--Amendments commencing 1 July 2016

Income Tax Rates Act 1986

Part 2--Amendments commencing 1 July 2017

Income Tax Rates Act 1986

Part 3--Amendments commencing 1 July 2018

Income Tax Rates Act 1986

Part 4--Amendments commencing 1 July 2019

Income Tax Rates Act 1986

Part 5--Amendments commencing 1 July 2020

Income Tax Rates Act 1986

Part 6--Amendments commencing 1 July 2021

Income Tax Rates Act 1986

Part 7--Amendments commencing 1 July 2022

Income Tax Rates Act 1986

Part 8--Amendments commencing 1 July 2023

Income Tax Rates Act 1986

Part 9--Amendments commencing 1 July 2024

Income Tax Rates Act 1986

Part 10--Amendments commencing 1 July 2025

Income Tax Rates Act 1986

Part 11--Amendments commencing 1 July 2026

Income Tax Rates Act 1986

Part 12--Application of amendments

Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016

No. , 2016

Schedule 2--Amount of tax discount for unincorporated small

businesses

Part 1--Amendments commencing 1 July 2016

Income Tax Assessment Act 1997

Part 2--Amendments commencing 1 July 2024

Income Tax Assessment Act 1997

Part 3--Amendments commencing 1 July 2025

Income Tax Assessment Act 1997

Part 4--Amendments commencing 1 July 2026

Income Tax Assessment Act 1997

Part 5--Application of amendments

Schedule 3--Access to small business concessions, etc.

Part 1--Amendments

Income Tax Assessment Act 1997

Part 2--Application of amendments

Schedule 4--Main consequential amendments relating to

imputation

Part 1--Amendments commencing 1 July 2016

Income Tax Assessment Act 1997

Part 2--Amendments commencing 1 July 2023

Income Tax Assessment Act 1997

Part 3--Application of amendments

Schedule 5--Other consequential amendments

Part 1--Amendments commencing 1 July 2016

Income Tax Assessment Act 1997

Part 2--Amendments commencing 1 July 2017

Income Tax Assessment Act 1997

Part 3--Amendments commencing 1 July 2023

No. , 2016

Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016

iii

Income Tax Assessment Act 1936

Income Tax Assessment Act 1997

Part 4--Amendments commencing 1 July 2024

Income Tax Assessment Act 1997

Part 5--Amendments commencing 1 July 2025

Income Tax Assessment Act 1997

Part 6--Amendments commencing 1 July 2026

Income Tax Assessment Act 1997

No. , 2016

Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016

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 (Enterprise Tax Plan)

Act 2016.

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 (Enterprise Tax Plan) Bill 2016

No. , 2016

Commencement information

Column 1

Column 2

Column 3

Provisions

Commencement

Date/Details

1. Sections 1 to 3

and anything in

this Act not

elsewhere covered

by this table

The day this Act receives the Royal Assent.

2. Schedule 1,

Part 1

1 July 2016.

1 July 2016

3. Schedule 1,

Part 2

1 July 2017.

1 July 2017

4. Schedule 1,

Part 3

1 July 2018.

1 July 2018

5. Schedule 1,

Part 4

1 July 2019.

1 July 2019

6. Schedule 1,

Part 5

1 July 2020.

1 July 2020

7. Schedule 1,

Part 6

1 July 2021.

1 July 2021

8. Schedule 1,

Part 7

1 July 2022.

1 July 2022

9. Schedule 1,

Part 8

1 July 2023.

1 July 2023

10. Schedule 1,

Part 9

1 July 2024.

1 July 2024

11. Schedule 1,

Part 10

1 July 2025.

1 July 2025

12. Schedule 1,

Part 11

1 July 2026.

1 July 2026

13. Schedule 1,

Part 12

The day this Act receives the Royal Assent.

14. Schedule 2,

Part 1

1 July 2016.

1 July 2016

15. Schedule 2,

Part 2

1 July 2024.

1 July 2024

16. Schedule 2,

Part 3

1 July 2025.

1 July 2025

No. , 2016

Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016

Commencement information

Column 1

Column 2

Column 3

Provisions

Commencement

Date/Details

17. Schedule 2,

Part 4

1 July 2026.

1 July 2026

18. Schedule 2,

Part 5

The day this Act receives the Royal Assent.

19. Schedule 3,

Part 1

1 July 2016.

1 July 2016

20. Schedule 3,

Part 2

The day this Act receives the Royal Assent.

21. Schedule 4,

Part 1

1 July 2016.

1 July 2016

22. Schedule 4,

Part 2

1 July 2023.

1 July 2023

23. Schedule 4,

Part 3

The day this Act receives the Royal Assent.

24. Schedule 5,

Part 1

1 July 2016.

1 July 2016

25. Schedule 5,

Part 2

1 July 2017.

1 July 2017

26. Schedule 5,

Part 3

1 July 2023.

1 July 2023

27. Schedule 5,

Part 4

1 July 2024.

1 July 2024

28. Schedule 5,

Part 5

1 July 2025.

1 July 2025

29. Schedule 5,

Part 6

1 July 2026.

1 July 2026

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.

Reducing the corporate tax rate Schedule 1

Amendments commencing 1 July 2016 Part 1

No. , 2016

Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016

Schedule 1--Reducing the corporate tax rate

Part 1--Amendments commencing 1 July 2016

Income Tax Rates Act 1986

1 Paragraph 23(2)(a)

Omit "28.5%", substitute "27.5%".

2 Paragraph 23(3)(b)

Repeal the paragraph, substitute:

(b) in respect of the standard component:

(i) if the company is a small business entity for a year of

income--27.5%; or

(ii) otherwise--30%.

3 Paragraph 23(4)(c)

Repeal the paragraph, substitute:

PDF component:

(i) if the company is a small business entity for a year of

income--27.5%; or

(ii) otherwise--30%.

4 Subparagraph 23(6)(b)(i)

Omit "$863", substitute "$832".

5 Paragraph 23(7)(a)

Omit "42.75%", substitute "41.25%".

6 Paragraph 25(a)

Omit "28.5%", substitute "27.5%".

Schedule 1 Reducing the corporate tax rate

Part 2 Amendments commencing 1 July 2017

Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016

No. , 2016

Part 2--Amendments commencing 1 July 2017

Income Tax Rates Act 1986

7 Subsection 3(1)

Insert:

base rate entity has the meaning given by section 23AA.

8 Paragraph 23(2)(a)

Omit "small business entity", substitute "base rate entity".

9 Subparagraph 23(3)(b)(i)

Omit "small business entity", substitute "base rate entity".

10 Subparagraph 23(4)(c)(i)

Omit "small business entity", substitute "base rate entity".

11 Subparagraph 23(6)(b)(i)

Omit "small business entity", substitute "base rate entity".

12 Paragraph 23(7)(a)

Omit "small business entity", substitute "base rate entity".

13 After section 23

Insert:

23AA Meaning of base rate entity

An entity is a base rate entity for a year of income if:

(a) it carries on a business (within the meaning of the Income

Tax Assessment Act 1997) in the year of income; and

(b) its aggregated turnover (within the meaning of that Act) for

the year of income, worked out as at the end of that year, is

less than $25 million.

14 Paragraph 25(a)

Omit "small business entity", substitute "base rate entity".

Reducing the corporate tax rate Schedule 1

Amendments commencing 1 July 2023 Part 8

No. , 2016

Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016

Part 8--Amendments commencing 1 July 2023

Income Tax Rates Act 1986

21 Subsection 3(1) (definition of base rate entity)

Repeal the definition.

22 Subsection 12(10)

Omit "30%", substitute "27.5%".

23 Subsection 23(2)

Repeal the subsection, substitute:

(2) The rate of tax in respect of the taxable income of a company is

27.5%, if subsections (3) to (5) and section 23A do not apply to the

company.

24 Paragraph 23(3)(b)

Repeal the paragraph, substitute:

(b) in respect of the standard component--27.5%.

25 Paragraph 23(4)(c)

Repeal the paragraph, substitute:

PDF component--27.5%.

26 Paragraph 23(6)(b)

Repeal the paragraph, substitute:

(b) the taxable income is not greater than $832.

27 Subsection 23(7)

Repeal the subsection, substitute:

(7) The amount of tax payable by a company (before applying any

rebate, credit or other tax offset (within the meaning of the Income

Tax Assessment Act 1997)) must not be greater than 41.25% of the

amount by which the taxable income of the company exceeds

Schedule 1 Reducing the corporate tax rate

Part 8 Amendments commencing 1 July 2023

Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016

No. , 2016

$49,999, if the company is a recognised medium credit union in

relation to the year of income.

28 Section 23AA

Repeal the section.

29 Paragraph 23A(a)

Omit "30%", substitute "27.5%".

30 Section 25

Repeal the section, substitute:

25 Rate of tax payable by trustees of public trading trusts

The rate of tax payable by a trustee of a public trading trust in

respect of the net income of the public trading trust in respect of

which the trustee is liable, under section 102S of the Assessment

Act, to be assessed and to pay tax is 27.5%.

31 Paragraph 28(a)

Repeal the paragraph, substitute:

(a) if paragraph 98(3)(b) of the Assessment Act (about

beneficiaries that are companies) applies--the rate specified

in subsection 23(2) of this Act; and

32 Paragraph 28A(a)

Omit "paragraph 23(2)(b)", substitute "subsection 23(2)".

Reducing the corporate tax rate Schedule 1

Amendments commencing 1 July 2024 Part 9

No. , 2016

Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016

Part 9--Amendments commencing 1 July 2024

Income Tax Rates Act 1986

33 Subsection 12(10)

Omit "27.5%", substitute "27%".

34 Subsection 23(2)

Omit "27.5%", substitute "27%".

35 Paragraph 23(3)(b)

Omit "27.5%", substitute "27%".

36 Paragraph 23(4)(c)

Omit "27.5%", substitute "27%".

37 Paragraph 23(6)(b)

Omit "$832", substitute "$817".

38 Subsection 23(7)

Omit "41.25%", substitute "40.5%".

39 Paragraph 23A(a)

Omit "27.5%", substitute "27%".

40 Section 25

Omit "27.5%", substitute "27%".

Schedule 1 Reducing the corporate tax rate

Part 10 Amendments commencing 1 July 2025

Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016

No. , 2016

Part 10--Amendments commencing 1 July 2025

Income Tax Rates Act 1986

41 Subsection 12(10)

Omit "27%", substitute "26%".

42 Subsection 23(2)

Omit "27%", substitute "26%".

43 Paragraph 23(3)(b)

Omit "27%", substitute "26%".

44 Paragraph 23(4)(c)

Omit "27%", substitute "26%".

45 Paragraph 23(6)(b)

Omit "$817", substitute "$788".

46 Subsection 23(7)

Omit "40.5%", substitute "39%".

47 Paragraph 23A(a)

Omit "27%", substitute "26%".

48 Section 25

Omit "27%", substitute "26%".

Reducing the corporate tax rate Schedule 1

Amendments commencing 1 July 2026 Part 11

No. , 2016

Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016

Part 11--Amendments commencing 1 July 2026

Income Tax Rates Act 1986

49 Subsection 12(10)

Omit "26%", substitute "25%".

50 Subsection 23(2)

Omit "26%", substitute "25%".

51 Paragraph 23(3)(b)

Omit "26%", substitute "25%".

52 Paragraph 23(4)(c)

Omit "26%", substitute "25%".

53 Paragraph 23(6)(b)

Omit "$788", substitute "$762".

54 Subsection 23(7)

Omit "39%", substitute "37.5%".

55 Paragraph 23A(a)

Omit "26%", substitute "25%".

56 Section 25

Omit "26%", substitute "25%".

Schedule 1 Reducing the corporate tax rate

Part 12 Application of amendments

Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016

No. , 2016

Part 12--Application of amendments

57 Application of amendments

(1)

Subject to the following subitems, the amendments made by Part 1 of

this Schedule apply to the 2016-17 year of income and later years of

income.

(2)

Subject to the following subitems, the amendments made by Part 2 of

this Schedule apply to the 2017-18 year of income and later years of

income.

(3)

Subject to the following subitems, the amendments made by Part 3 of

this Schedule apply to the 2018-19 year of income and later years of

income.

(4)

Subject to the following subitems, the amendments made by Part 4 of

this Schedule apply to the 2019-20 year of income and later years of

income.

(5)

Subject to the following subitems, the amendments made by Part 5 of

this Schedule apply to the 2020-21 year of income and later years of

income.

(6)

Subject to the following subitems, the amendments made by Part 6 of

this Schedule apply to the 2021-22 year of income and later years of

income.

(7)

Subject to the following subitems, the amendments made by Part 7 of

this Schedule apply to the 2022-23 year of income and later years of

income.

(8)

Subject to the following subitems, the amendments made by Part 8 of

this Schedule apply to the 2023-24 year of income and later years of

income.

(9)

Subject to the following subitems, the amendments made by Part 9 of

this Schedule apply to the 2024-25 year of income and later years of

income.

(10)

Subject to the following subitem, the amendments made by Part 10 of

this Schedule apply to the 2025-26 year of income and later years of

income.

Schedule 2 Amount of tax discount for unincorporated small businesses

Part 5 Application of amendments

Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016

No. , 2016

Part 5--Application of amendments

5 Application of amendments

(1)

Subject to the following subitems, the amendments made by Part 1 of

this Schedule apply to the 2016-17 income year and later income years.

(2)

Subject to the following subitems, the amendments made by Part 2 of

this Schedule apply to the 2024-25 income year and later income years.

(3)

Subject to the following subitem, the amendments made by Part 3 of

this Schedule apply to the 2025-26 income year and later income years.

(4)

The amendments made by Part 4 of this Schedule apply to the 2026-27

income year and later income years.

Access to small business concessions, etc. Schedule 3

Amendments Part 1

No. , 2016

Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016

Schedule 3--Access to small business

concessions, etc.

Part 1--Amendments

Income Tax Assessment Act 1997

1 Section 152-5

Omit:

(a)

the entity must be a small business entity or a partner in

a partnership that is a small business entity, or the net

value of assets that the entity and related entities own

must not exceed $6,000,000;

substitute:

(a)

the entity must be a CGT small business entity or a

partner in a partnership that is a CGT small business

entity, or the net value of assets that the entity and

related entities own must not exceed $6,000,000;

2 Subparagraph 152-10(1)(c)(i)

Omit "

small business entity", substitute "

CGT small business entity".

3 Subparagraph 152-10(1)(c)(iii)

Omit "small business entity", substitute "CGT small business entity".

4 Paragraph 152-10(1)(c) (note)

Repeal the note.

5 After subsection 152-10(1)

Insert:

CGT small business entity

(1AA) You are a CGT small business entity for an income year if:

(a) you are a

small business entity for the income year; and

Schedule 3 Access to small business concessions, etc.

Part 1 Amendments

Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016

No. , 2016

(b) you would be a small business entity for the income year if

each reference in section 328-110 to $10 million were a

reference to $2 million.

Note:

For the purposes of subsection (1A) or (1B), in determining whether

an entity would be a small business entity, see also sections 152-48

and 152-78.

6 Paragraph 152-10(1A)(a)

Omit "

small business entity", substitute "

CGT small business entity".

7 Paragraph 152-10(1A)(d)

Omit "small business entity", substitute "CGT small business entity".

8 Subsection 152-10(1A) (note 2)

Repeal the note.

9 Paragraph 152-10(1B)(b)

Omit "

small business entity", substitute "

CGT small business entity".

10 Subsection 152-10(1B) (note 1)

Repeal the note.

11 Subsection 152-10(1B) (note 2)

Omit "Note 2", substitute "Note".

12 Subsection 152-48(1)

Omit "

small business entity", substitute "

CGT small business entity".

13 Section 152-100

Omit "small business entity", substitute "CGT small business entity".

14 At the end of subsection 328-10(1)

Add:

Note 1:

The CGT concessions mentioned in items 1, 2, 3 and 4 of the table

apply only if you are a CGT small business entity (see

section 152-10).

Note 2:

The small business income tax offset mentioned in item 6A of the

table applies only if you are a small business entity as defined for the

purposes of Subdivision 328-F (see section 328-357).

Access to small business concessions, etc. Schedule 3

Amendments Part 1

No. , 2016

Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016

15 Paragraph 328-110(1)(b)

Omit "$2 million" (wherever occurring), substitute "$10 million".

16 Subsection 328-110(3) (heading)

Repeal the heading, substitute:

Exception: aggregated turnover for 2 previous income years was

$10 million or more

17 Paragraph 328-110(3)(b)

Omit "$2 million", substitute "$10 million".

18 Paragraph 328-110(4)(b)

Omit "$2 million", substitute "$10 million".

19 Section 328-350

Repeal the section, substitute:

328-350 What this Subdivision is about

You may be entitled to a tax offset if you are an individual:

(a)

who is a small business entity; or

(b)

whose assessable income includes a share of the net

small business income of an unincorporated small

business entity; or

(c)

whose assessable income includes an amount because

you are a partner in a partnership, or a beneficiary in a

trust, that is a small business entity.

In working out whether you are or another entity is a small

business entity, a special $5 million turnover threshold applies (see

section 328-357).

20 After section 328-355

Insert:

Schedule 3 Access to small business concessions, etc.

Part 1 Amendments

Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016

No. , 2016

328-357 Special meaning of small business entity for the purposes of

this Subdivision--$5 million turnover threshold

For the purposes of this Subdivision, in working out whether you

are a

small business entity for an income year, assume that each

reference in section 328-110 to $10 million were a reference to $5

million.

21 Subsection 995-1(1)

Insert:

CGT small business entity has the meaning given by

subsection 152-10(1AA).

Access to small business concessions, etc. Schedule 3

Application of amendments Part 2

No. , 2016

Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016

Part 2--Application of amendments

22 Application of amendments

(1)

Subject to the following subitems, the amendments made by Part 1 of

this Schedule apply to the 2016-17 income year and later income years.

(2)

The following apply to CGT events happening on or after the start of

the 2016-17 income year:

(a) the amendments made by items 1 to 13 of this Schedule;

(b) any other amendments made by this Schedule, to the extent

that they relate to the amendments mentioned in

paragraph (a).

(3)

The amendments made by items 15 to 18 of this Schedule, to the extent

that they relate to the operation of the Fringe Benefits Tax Assessment

Act 1986, apply to the FBT year starting on 1 April 2017 and to later

FBT years.

Schedule 4 Main consequential amendments relating to imputation

Part 1 Amendments commencing 1 July 2016

Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016

No. , 2016

Schedule 4--Main consequential amendments

relating to imputation

Part 1--Amendments commencing 1 July 2016

Income Tax Assessment Act 1997

1 Subsection 36-55(2) (method statement, step 2)

Omit "the

standard corporate tax rate", substitute "the entity's

corporate tax rate for imputation purposes for that year".

2 Subsection 197-45(2) (formula)

Repeal the formula, substitute:

Applicable franking percentage

Transferred amount

Applicable gross-up rate



3 Subsection 197-45(2)

Insert:

applicable gross-up rate means the company's

corporate tax

gross-up rate for the income year in which the franking debit

arises.

4 Subsection 197-60(3) (paragraph (a) of the definition of

applicable tax rate)

Omit "the

standard corporate tax rate", substitute "the company's

corporate tax rate for imputation purposes for the income year in which

the choice is made".

5 Subsection 197-60(4) (formula)

Repeal the formula, substitute:

Tainting amount at time

of choice to untaint

Applicable gross-up rate



6 At the end of subsection 197-60(4)

Add:

Main consequential amendments relating to imputation Schedule 4

Amendments commencing 1 July 2016 Part 1

No. , 2016

Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016

where:

applicable gross-up rate means the company's

corporate tax

gross-up rate for the income year in which the choice is made.

7 Subsection 197-65(3) (formula)

Repeal the formula, substitute:

Applicable franking percentage

Transferred amount

Applicable gross-up rate



8 Subsection 197-65(3)

Insert:

applicable gross-up rate means the company's

corporate tax

gross-up rate for the income year in which the franking debit

arises.

9 Subsection 200-25(1)

Omit "the standard corporate tax rate", substitute "the entity's corporate

tax rate for imputation purposes for the income year in which the

distribution is made".

10 Section 202-55

Omit "the current standard corporate tax rate", substitute "the entity's

corporate tax rate for imputation purposes for the income year in which

the distribution is made".

11 Subsection 202-60(2) (formula)

Repeal the formula, substitute:

Amount of the frankable distribution

Applicable gross-up rate



12 At the end of subsection 202-60(2)

Add:

where:

Schedule 4 Main consequential amendments relating to imputation

Part 1 Amendments commencing 1 July 2016

Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016

No. , 2016

applicable gross-up rate means the

corporate tax gross-up rate of

the entity making the distribution for the income year in which the

distribution is made.

13 Subsection 203-50(2) (formula)

Repeal the formula, substitute:

Franking % differential

Amount of the frankable distribution

Applicable gross-up rate



14 Subsection 203-50(2)

Insert:

applicable gross-up rate means the

corporate tax gross-up rate of

the entity making the distribution for the income year in which the

distribution is made.

15 Subsection 215-20(2) (formula)

Repeal the formula, substitute:

Franking credit on the dividend

Applicable gross-up rate



16 At the end of subsection 215-20(2)

Add:

where:

applicable gross-up rate means the

corporate tax gross-up rate of

the entity making the distribution for the income year in which the

distribution is made.

17 Subsection 705-90(3) (formula)

Repeal the formula, substitute:

Balance of franking account (worked

Applicable gross-up rate

out on assumptions in subsection (4))



18 At the end of subsection 705-90(3)

Add:

where:

Main consequential amendments relating to imputation Schedule 4

Amendments commencing 1 July 2016 Part 1

No. , 2016

Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016

applicable gross-up rate means the joining entity's

corporate tax

gross-up rate for the income year that ends, or, if section 701-30

applies, for the income year that is taken by subsection (3) of that

section to end, at the joining time.

19 Paragraph 707-310(3A)(c) (formula)

Repeal the formula, substitute:

Franking offsets

Transferee's *corporate tax rate for imputation purposes

for the income year



20 Section 976-1 (formula)

Repeal the formula, substitute:

Franking credit on the dividend

Applicable gross-up rate



21 At the end of section 976-1

Add:

where:

applicable gross-up rate means the

corporate tax gross-up rate of

the entity making the distribution for the income year in which the

distribution is made.

22 Section 976-10 (formula)

Repeal the formula, substitute:

Exempting credit on the distribution

Applicable gross-up rate



23 At the end of section 976-10

Add:

where:

applicable gross-up rate means the

corporate tax gross-up rate of

the entity making the distribution for the income year in which the

distribution is made.

Schedule 4 Main consequential amendments relating to imputation

Part 1 Amendments commencing 1 July 2016

Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016

No. , 2016

24 Section 976-15 (formula)

Repeal the formula, substitute:

Venture capital credit on the distribution

Applicable gross-up rate



25 At the end of section 976-15

Add:

where:

applicable gross-up rate means the

corporate tax gross-up rate of

the entity making the distribution for the income year in which the

distribution is made.

26 Subsection 995-1(1) (definition of corporate tax gross-up

rate)

Repeal the definition, substitute:

corporate tax gross-up rate, of an entity for an income year, means

the amount worked out using the following formula:

Corporate tax rate for imputation purposes

100%

of the entity for the income year

Corporate tax rate for imputation purposes

of the entity for the income year

�-

27 Subsection 995-1(1) (definition of corporate tax rate)

Repeal the definition, substitute:

corporate tax rate:

(a) in relation to a company to which paragraph 23(2)(a) of the

Income Tax Rates Act 1986 applies--means the rate of tax in

respect of the taxable income of a company covered by that

paragraph; or

(b) in relation to another entity--means the rate of tax in respect

of the taxable income of a company covered by

paragraph 23(2)(b) of that Act.

28 Subsection 995-1(1)

Insert:

Main consequential amendments relating to imputation Schedule 4

Amendments commencing 1 July 2016 Part 1

No. , 2016

Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016

corporate tax rate for imputation purposes, of an entity for an

income year, means:

(a) unless paragraph (b) applies--the entity's

corporate tax rate

for the income year, worked out on the assumption that the

entity's

aggregated turnover for the income year is equal to

its aggregated turnover for the previous income year; or

(b) if the entity did not exist in the previous income year--the

rate of tax in respect of the taxable income of a company

covered by paragraph 23(2)(a) of the Income Tax Rates Act

1986.

29 Subsection 995-1(1) (definition of standard corporate tax

rate)

Repeal the definition.

Schedule 4 Main consequential amendments relating to imputation

Part 2 Amendments commencing 1 July 2023

Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016

No. , 2016

Part 2--Amendments commencing 1 July 2023

Income Tax Assessment Act 1997

30 Subsection 36-55(2) (method statement, step 2)

Omit "the entity's

corporate tax rate for imputation purposes for that

year", substitute "the

corporate tax rate".

31 Subsection 197-45(2) (formula)

Repeal the formula, substitute:

Applicable franking percentage

Transferred amount

Corporate tax gross-up rate



32 Subsection 197-45(2) (definition of applicable gross-up

rate)

Repeal the definition.

33 Subsection 197-60(3) (paragraph (a) of the definition of

applicable tax rate)

Omit "

the company's

corporate tax rate for imputation purposes for

the income year in which the choice is made", substitute "the

corporate

tax rate".

34 Subsection 197-60(4) (formula)

Repeal the formula, substitute:

Tainting amount at time

of choice to untaint

Corporate tax gross-up rate



35 Subsection 197-60(4)

Omit all the words after the formula.

36 Subsection 197-65(3) (formula)

Repeal the formula, substitute:

Main consequential amendments relating to imputation Schedule 4

Amendments commencing 1 July 2023 Part 2

No. , 2016

Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016

Applicable franking percentage

Transferred amount

Corporate tax gross-up rate



37 Subsection 197-65(3) (definition of applicable gross-up

rate)

Repeal the definition.

38 Subsection 200-25(1)

Omit "the entity's corporate tax rate for imputation purposes for the

income year in which the distribution is made", substitute "the

corporate tax rate".

39 Section 202-55

Omit "the entity's corporate tax rate for imputation purposes for the

income year in which the distribution is made", substitute "the

corporate tax rate".

40 Subsection 202-60(2) (formula)

Repeal the formula, substitute:

Amount of the frankable distribution

Corporate tax gross-up rate



41 Subsection 202-60(2)

Omit all the words after the formula.

42 Subsection 203-50(2) (formula)

Repeal the formula, substitute:

Franking % differential

Amount of the frankable distribution

Corporate tax gross-up rate



43 Subsection 203-50(2) (definition of applicable gross-up

rate)

Repeal the definition.

Schedule 4 Main consequential amendments relating to imputation

Part 2 Amendments commencing 1 July 2023

Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016

No. , 2016

44 Subsection 215-20(2) (formula)

Repeal the formula, substitute:

Franking credit on the dividend

Corporate tax gross-up rate



45 Subsection 215-20(2)

Omit all the words after the formula.

46 Subsection 705-90(3) (formula)

Repeal the formula, substitute:

Balance of franking account (worked

Corporate tax gross-up rate

out on assumptions in subsection (4))



47 Subsection 705-90(3)

Omit all the words after the formula.

48 Paragraph 707-310(3A)(c) (formula)

Repeal the formula, substitute:

Franking offsets

Corporate tax rate

for the income year



49 Section 976-1 (formula)

Repeal the formula, substitute:

Franking credit on the distribution

Corporate tax gross-up rate



50 Section 976-1

Omit all the words after the formula.

51 Section 976-10 (formula)

Repeal the formula, substitute:

Exempting credit on the distribution

Corporate tax gross-up rate



52 Section 976-10

Omit all the words after the formula.

Main consequential amendments relating to imputation Schedule 4

Amendments commencing 1 July 2023 Part 2

No. , 2016

Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016

53 Section 976-15 (formula)

Repeal the formula, substitute:

Venture capital credit on the distribution

Corporate tax gross-up rate



54 Section 976-15

Omit all the words after the formula.

55 Subsection 995-1(1) (definition of corporate tax gross-up

rate)

Repeal the definition, substitute:

corporate tax gross-up rate means the amount worked out using

the following formula:

100%

Corporate tax rate

�-

56 Subsection 995-1(1) (definition of corporate tax rate)

Repeal the definition, substitute:

corporate tax rate means the rate of tax in respect of the taxable

income of a company under subsection 23(2) of the Income Tax

Rates Act 1986.

57 Subsection 995-1(1) (definition of corporate tax rate for

imputation purposes)

Repeal the definition.

Schedule 5 Other consequential amendments

Part 2 Amendments commencing 1 July 2017

Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016

No. , 2016

Part 2--Amendments commencing 1 July 2017

Income Tax Assessment Act 1997

3 Subsection 36-17(5) (example)

Omit "For the 2015-16 income year, Company A (which is not a small

business entity)", substitute "For the 2017-18 income year, Company A

(which is not a base rate entity)".

4 Subsection 36-55(1) (example)

Omit "For the 2015-16 income year, Company E (which is not a small

business entity)", substitute "For the 2017-18 income year, Company E

(which is not a base rate entity)".

5 Subsection 36-55(2) (example)

Omit "2002-2003", substitute "2017-2018".

6 Paragraph 65-30(2)(a)

Omit "

small business entity", substitute "base rate entity (within the

meaning of the Income Tax Rates Act 1986)".

7 Paragraph 65-35(3A)(a)

Omit "

small business entity", substitute "base rate entity (within the

meaning of the Income Tax Rates Act 1986)".

8 Subsection 115-280(3) (example)

Omit "A listed investment company (which is not a small business

entity)", substitute "A listed investment company (which is not a base

rate entity)".

Other consequential amendments Schedule 5

Amendments commencing 1 July 2023 Part 3

No. , 2016

Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016

Part 3--Amendments commencing 1 July 2023

Income Tax Assessment Act 1936

9 Subsection 160AAB(1) (definition of statutory percentage)

Repeal the definition, substitute:

statutory percentage means:

(a) if the year of income is the 2002-03 year of income or a later

year of income before the 2024-25 year of income--30%; or

(b) if the year of income is the 2024-25 year of income--27.5%;

(d) if the year of income is the 2026-27 year of income--26%; or

(e) if the year of income is the 2027-28 year of income or a later

year of income--25%.

Income Tax Assessment Act 1997

10 Subsection 36-17(5) (example)

Repeal the example, substitute:

Example: For the 2023-24 income year, Company A has:



a tax loss of $150 from a previous income year; and



assessable income of $200 (franked distribution of $72.50,

franking credit of $27.50 and $100 of income from other

sources); and



no deductions; and



no net exempt income.

The tax offset of $27.50 from the franking credit is not stated in

Division 67 to be subject to the refundable tax offset rules.

Company A would not have an amount of excess franking offsets for

that year if the tax loss were disregarded (see section 36-55). This is

because the tax offset of $27.50 is less than $55, the amount of income

tax that Company A would have to pay if it did not have the tax offset

and the tax loss. Paragraph (a) therefore does not apply.

Schedule 5 Other consequential amendments

Part 3 Amendments commencing 1 July 2023

Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016

No. , 2016

If Company A chooses to deduct the full amount of the tax loss, it

would have an amount of excess franking offsets of $13.75:

$27.50

$200

$150

27.5%









�-



















Company A therefore cannot make this choice because of

paragraph (b).

However, if Company A chooses to deduct $100 of the tax loss, it

would not have an amount of excess franking offsets:

$27.50

$200

$100

27.5%











�-



















Company A therefore can choose to deduct $100 of the tax loss.

11 Subsection 36-55(1) (example)

Repeal the example, substitute:

Example: For the 2023-24 income year, Company E has:



assessable income of $200 (franked distribution of $145 and

franking credit of $55); and



$100 of deductions that are allowable.

The tax offset of $55 from the franking credit is not stated in

Division 67 to be subject to the refundable tax offset rules.

Disregarding the tax offset of $55 from the franking credit, the amount

of income tax that Company E would have to pay is $27.50:

$145

$55

$100

27.5%











�-



















This amount is $27.50 less than the tax offset of $55. Company E

therefore has an amount of excess franking offsets of $27.50 for that

year.

12 Subsection 36-55(2) (example)

Omit "2017-2018", substitute "2023-2024".

13 Subsection 36-55(2) (example)

Omit "$30", substitute "$27.50".

14 Subsection 65-30(2)

Repeal the subsection, substitute:

Other consequential amendments Schedule 5

Amendments commencing 1 July 2023 Part 3

No. , 2016

Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016

(2) However, reduce the

tax offset by the amount worked out by

multiplying your

net exempt income by 0.275, if you have a

taxable income for the income year.

15 Subsection 65-35(3A)

Repeal the subsection, substitute:

(3A) In reducing

net exempt income for an income year under

subsection (3), each 27.5 cents of

tax offset reduces the net

exempt income by $1.

16 Subsection 115-280(3) (example)

Repeal the example, substitute:

Example: A listed investment company disposes of a CGT asset for $30,000.

The asset had a cost base of $10,000. The capital gain is therefore

$20,000. The company applies a capital loss of $10,000 against the

gain. Its net capital gain is $10,000.

The net capital gain is subject to tax at 27.5%. The after tax gain is

therefore $7,250.

The company pays a fully franked dividend to Daryl, one of its

shareholders. It advises Daryl that his share of the attributable part of

the dividend is:

$7.25

0.275

$10



















�-



























Daryl, being an individual, can deduct 50% of $10, which is $5.

Schedule 5 Other consequential amendments

Part 4 Amendments commencing 1 July 2024

Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016

No. , 2016

Part 4--Amendments commencing 1 July 2024

Income Tax Assessment Act 1997

17 Subsection 36-17(5) (example)

Repeal the example, substitute:

Example: For the 2024-25 income year, Company A has:



a tax loss of $150 from a previous income year; and



assessable income of $200 (franked distribution of $73,

franking credit of $27 and $100 of income from other

sources); and



no deductions; and



no net exempt income.

The tax offset of $27 from the franking credit is not stated in

Division 67 to be subject to the refundable tax offset rules.

Company A would not have an amount of excess franking offsets for

that year if the tax loss were disregarded (see section 36-55). This is

because the tax offset of $27 is less than $54, the amount of income

tax that Company A would have to pay if it did not have the tax offset

and the tax loss. Paragraph (a) therefore does not apply.

If Company A chooses to deduct the full amount of the tax loss, it

would have an amount of excess franking offsets of $13.50:

$27

$200

$150

27%









�-



















Company A therefore cannot make this choice because of

paragraph (b).

However, if Company A chooses to deduct $100 of the tax loss, it

would not have an amount of excess franking offsets:

$27

$200

$100

27%











�-



















Company A therefore can choose to deduct $100 of the tax loss.

18 Subsection 36-55(1) (example)

Repeal the example, substitute:

Example: For the 2024-25 income year, Company E has:



assessable income of $200 (franked distribution of $146 and

franking credit of $54); and

Other consequential amendments Schedule 5

Amendments commencing 1 July 2024 Part 4

No. , 2016

Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016



$100 of deductions that are allowable.

The tax offset of $54 from the franking credit is not stated in

Division 67 to be subject to the refundable tax offset rules.

Disregarding the tax offset of $54 from the franking credit, the amount

of income tax that Company E would have to pay is $27:

$146

$54

$100

27%











�-



















This amount is $27 less than the tax offset of $54. Company E

therefore has an amount of excess franking offsets of $27 for that year.

19 Subsection 36-55(2) (example)

Omit "2023-2024", substitute "2024-2025".

20 Subsection 36-55(2) (example)

Omit "$27.50", substitute "$27".

21 Subsection 65-30(2)

Omit "0.275", substitute "0.27".

22 Subsection 65-35(3A)

Omit "27.5", substitute "27".

23 Subsection 115-280(3) (example)

Repeal the example, substitute:

Example: A listed investment company disposes of a CGT asset for $30,000.

The asset had a cost base of $10,000. The capital gain is therefore

$20,000. The company applies a capital loss of $10,000 against the

gain. Its net capital gain is $10,000.

The net capital gain is subject to tax at 27%. The after tax gain is

therefore $7,300.

The company pays a fully franked dividend to Daryl, one of its

shareholders. It advises Daryl that his share of the attributable part of

the dividend is:

$7.30

0.27

$10



















�-



























Daryl, being an individual, can deduct 50% of $10, which is $5.

Schedule 5 Other consequential amendments

Part 5 Amendments commencing 1 July 2025

Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016

No. , 2016

Part 5--Amendments commencing 1 July 2025

Income Tax Assessment Act 1997

24 Subsection 36-17(5) (example)

Repeal the example, substitute:

Example: For the 2025-26 income year, Company A has:



a tax loss of $150 from a previous income year; and



assessable income of $200 (franked distribution of $74,

franking credit of $26 and $100 of income from other

sources); and



no deductions; and



no net exempt income.

The tax offset of $26 from the franking credit is not stated in

Division 67 to be subject to the refundable tax offset rules.

Company A would not have an amount of excess franking offsets for

that year if the tax loss were disregarded (see section 36-55). This is

because the tax offset of $26 is less than $52, the amount of income

tax that Company A would have to pay if it did not have the tax offset

and the tax loss. Paragraph (a) therefore does not apply.

If Company A chooses to deduct the full amount of the tax loss, it

would have an amount of excess franking offsets of $13:

$26

$200

$150

26%









�-



















Company A therefore cannot make this choice because of

paragraph (b).

However, if Company A chooses to deduct $100 of the tax loss, it

would not have an amount of excess franking offsets:

$26

$200

$100

26%











�-



















Company A therefore can choose to deduct $100 of the tax loss.

25 Subsection 36-55(1) (example)

Repeal the example, substitute:

Example: For the 2025-26 income year, Company E has:



assessable income of $200 (franked distribution of $148 and

franking credit of $52); and

Other consequential amendments Schedule 5

Amendments commencing 1 July 2025 Part 5

No. , 2016

Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016



$100 of deductions that are allowable.

The tax offset of $52 from the franking credit is not stated in

Division 67 to be subject to the refundable tax offset rules.

Disregarding the tax offset of $52 from the franking credit, the amount

of income tax that Company E would have to pay is $26:

$148

$52

$100

26%











�-



















This amount is $26 less than the tax offset of $52. Company E

therefore has an amount of excess franking offsets of $26 for that year.

26 Subsection 36-55(2) (example)

Omit "2024-2025", substitute "2025-2026".

27 Subsection 36-55(2) (example)

Omit "$27", substitute "$26".

28 Subsection 65-30(2)

Omit "0.27", substitute "0.26".

29 Subsection 65-35(3A)

Omit "27", substitute "26".

30 Subsection 115-280(3) (example)

Repeal the example, substitute:

Example: A listed investment company disposes of a CGT asset for $30,000.

The asset had a cost base of $10,000. The capital gain is therefore

$20,000. The company applies a capital loss of $10,000 against the

gain. Its net capital gain is $10,000.

The net capital gain is subject to tax at 26%. The after tax gain is

therefore $7,400.

The company pays a fully franked dividend to Daryl, one of its

shareholders. It advises Daryl that his share of the attributable part of

the dividend is:

$7.40

0.26

$10



















�-



























Daryl, being an individual, can deduct 50% of $10, which is $5.

Schedule 5 Other consequential amendments

Part 6 Amendments commencing 1 July 2026

Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016

No. , 2016

Part 6--Amendments commencing 1 July 2026

Income Tax Assessment Act 1997

31 Subsection 36-17(5) (example)

Repeal the example, substitute:

Example: For the 2026-27 income year, Company A has:



a tax loss of $150 from a previous income year; and



assessable income of $200 (franked distribution of $75,

franking credit of $25 and $100 of income from other

sources); and



no deductions; and



no net exempt income.

The tax offset of $25 from the franking credit is not stated in

Division 67 to be subject to the refundable tax offset rules.

Company A would not have an amount of excess franking offsets for

that year if the tax loss were disregarded (see section 36-55). This is

because the tax offset of $25 is less than $50, the amount of income

tax that Company A would have to pay if it did not have the tax offset

and the tax loss. Paragraph (a) therefore does not apply.

If Company A chooses to deduct the full amount of the tax loss, it

would have an amount of excess franking offsets of $12.50:

$25

$200

$150

25%









�-



















Company A therefore cannot make this choice because of

paragraph (b).

However, if Company A chooses to deduct $100 of the tax loss, it

would not have an amount of excess franking offsets:

$25

$200

$100

25%











�-



















Company A therefore can choose to deduct $100 of the tax loss.

32 Subsection 36-55(1) (example)

Repeal the example, substitute:

Example: For the 2026-27 income year, Company E has:



assessable income of $200 (franked distribution of $150 and

franking credit of $50); and

Other consequential amendments Schedule 5

Amendments commencing 1 July 2026 Part 6

No. , 2016

Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016



$100 of deductions that are allowable.

The tax offset of $50 from the franking credit is not stated in

Division 67 to be subject to the refundable tax offset rules.

Disregarding the tax offset of $50 from the franking credit, the amount

of income tax that Company E would have to pay is $25:

$150

$50

$100

25%











�-



















This amount is $25 less than the tax offset of $50. Company E

therefore has an amount of excess franking offsets of $25 for that year.

33 Subsection 36-55(2) (example)

Omit "2025-2026", substitute "2026-2027".

34 Subsection 36-55(2) (example)

Omit "$26", substitute "$25".

35 Subsection 65-30(2)

Omit "0.26", substitute "0.25".

36 Subsection 65-35(3A)

Omit "26", substitute "25".

37 Subsection 115-280(3) (example)

Repeal the example, substitute:

Example: A listed investment company disposes of a CGT asset for $30,000.

The asset had a cost base of $10,000. The capital gain is therefore

$20,000. The company applies a capital loss of $10,000 against the

gain. Its net capital gain is $10,000.

The net capital gain is subject to tax at 25%. The after tax gain is

therefore $7,500.

The company pays a fully franked dividend to Daryl, one of its

shareholders. It advises Daryl that his share of the attributable part of

the dividend is:

$7.50

0.25

$10



















�-



























Daryl, being an individual, can deduct 50% of $10, which is $5.

Commonwealth of Australia Bills

TREASURY LAWS AMENDMENT (ENTERPRISE TAX PLAN) BILL 2016