Commonwealth Consolidated Acts

TAXATION ADMINISTRATION ACT 1953 - SCHEDULE 1

Note:   See section   3AA.

Chapter   2 -- Collection, recovery and administration of income tax

Part   2 - 1 -- Introduction to the Pay as you go (PAYG) system

Division   6 -- Guide to Parts   2 - 5 and 2 - 10

6 - 1   What Parts   2 - 5 and 2 - 10 are about

Table of sections

6 - 5   The Pay as you go (PAYG) system

6 - 10   How the amounts collected are dealt with

6 - 5   The Pay as you go (PAYG) system

  (1)   Parts   2 - 5 and 2 - 10 establish the PAYG system, which has 2 components:

  •   PAYG withholding (Part   2 - 5)

  •   PAYG instalments (Part   2 - 10).

PAYG withholding

  (2)   Under PAYG withholding, amounts are collected in respect of particular kinds of payments or transactions. Usually, someone who makes a payment to you is required to withhold an amount from the payment, and then to pay the amount to the Commissioner.

For a list of the payments and other transactions to which
PAYG withholding applies, see Division   10

PAYG instalments

  (3)   You pay PAYG instalments directly to the Commissioner. These are usually based on your GDP - adjusted notional tax or your ordinary income for a past period, but excluding:

  •   income subject to PAYG withholding (with certain exceptions)

  •   exempt income, or income that is otherwise not assessable.

An instalment is usually paid after a quarter, but some taxpayers are eligible to pay an annual instalment after the end of the income year.

6 - 10   How the amounts collected are dealt with

    You are entitled to credits for the amounts of your income that are collected under the PAYG system. The credits are applied under Division   3 of Part   IIB against your tax debts, and any excess is refunded to you.

Part   2 - 5 -- Pay as you go (PAYG) withholding

Division   10 -- Guide to Part   2 - 5

10 - 1   What this Part   is about

10 - 5   Summary of withholding payments

  (1)   The payments and other transactions covered by PAYG withholding are called withholding payments. They are summarised in the table.

Note:   The obligation to pay an amount to the Commissioner is imposed on the entity making the withholding payment (except for items   17, 19, 22 and 27, and 26 (to the extent that it covers subsection   12 - 390(4))).

  (2)   These can also be treated as withholding payments:

  (aa)   a payment that arises because of the operation of section   12A - 205 (see Division   12A);

  (a)   alienated personal services payments (see Division   13);

  (b)   non - cash benefits, and capital proceeds involving foreign residents and certain kinds of taxable Australian property (see Division   14).

Note:   The obligation to pay an amount to the Commissioner is imposed on the entity receiving the alienated personal services payment or providing the non - cash benefit or capital proceeds.

Division   11 -- Preliminary matters

Table of sections

11 - 1   Object of this Part

11 - 5   Constructive payment

11 - 1   Object of this Part

    The object of this Part   is to ensure the efficient collection of:

  (a)   income tax; and

  (b)   * Medicare levy; and

  (ca)   amounts of liabilities to the Commonwealth under Chapter   4 of the Higher Education Support Act 2003 ; and

  (caa)   amounts of liabilities to the Commonwealth under Part   3A of the VET Student Loans Act 2016 ; and

  (cb)   amounts of liabilities to the Commonwealth under Chapter   2AA of the Social Security Act 1991 ; and

  (cc)   amounts of liabilities to the Commonwealth under Part   2 of the Student Assistance Act 1973 ; and

  (cd)   amounts of liabilities to the Commonwealth under Chapter   3 of the Australian Apprenticeship Support Loans Act 2014 ; and

  (da)   amounts of liabilities to the Commonwealth under Part   2B.3 of the Social Security Act 1991 ; and

  (db)   amounts of liabilities to the Commonwealth under Division   6 of Part   4A of the Student Assistance Act 1973 ; and

  (d)   * withholding tax; and

  (e)   * mining withholding tax; and

  (f)   * TFN withholding tax; and

  (h)   * petroleum resource rent tax.

11 - 5   Constructive payment

  (1)   In working out whether an entity has paid an amount to another entity, and when the payment is made, the amount is taken to have been paid to the other entity when the first entity applies or deals with the amount in any way on the other's behalf or as the other directs.

  (2)   An amount is taken to be payable by an entity to another entity if the first entity is required to apply or deal with it in any way on the other's behalf or as the other directs.

Division   12 -- Payments from which amounts must be withheld

Table of Subdivisions

12 - A   General rules

12 - B   Payments for work and services

12 - C   Payments for retirement or because of termination of employment

12 - D   Benefit and compensation payments

12 - E   Payments where TFN or ABN not quoted

12 - F   Dividend, interest and royalty payments

12 - FA   Departing Australia superannuation payments

12 - FAA   Excess untaxed roll - over amount

12 - FB   Payments to foreign residents etc.

12 - FC   Labour mobility programs

12 - G   Payments in respect of mining on Aboriginal land, and natural resources

12 - H   Distributions of withholding MIT income

12 - J   FHSS released amounts

Subdivision   12 - A -- General rules

Table of sections

12 - 1   General exceptions

12 - 5   What to do if more than one provision requires a withholding

12 - 7   Division does not apply to alienated personal services payments

12 - 10   Division does not apply to non - cash benefits

12 - 20   Application of Division and regulations to non - share dividends

12 - 1   General exceptions

Exempt income of recipient

  (1)   An entity need not withhold an amount under section   12 - 35, 12 - 40, 12 - 45, 12 - 47, 12 - 50, 12 - 55, 12 - 60, 12 - 80, 12 - 85, 12 - 90, 12 - 120 or 12 - 190 from a payment if the whole of the payment is * exempt income of the entity receiving the payment.

Non - assessable non - exempt income of recipient

  (1A)   An entity need not withhold an amount under Subdivision   12 - B, Subdivision   12 - C or section   12 - 120 or 12 - 190 from a payment if the whole of the payment is not assessable income and is not * exempt income of the entity receiving the payment.

Living - away - from - home allowance benefit

  (2)   In working out how much to withhold under section   12 - 35, 12 - 40, 12 - 45, 12 - 47, 12 - 115, 12 - 120, 12 - 315 or 12 - 317 from a payment, disregard so much of the payment as is a living - away - from - home allowance benefit as defined by section   136 of the Fringe Benefits Tax Assessment Act 1986 .

Expense payment benefit

  (3)   In working out how much to withhold under section   12 - 35, 12 - 40, 12 - 45, 12 - 47, 12 - 115, 12 - 120, 12 - 315 or 12 - 317 from a payment, disregard so much of the payment as:

  (a)   is an expense payment benefit as defined by section   136 of the Fringe Benefits Tax Assessment Act 1986 ; and

  (b)   is not an exempt benefit under section   22 of that Act (about reimbursement of car expenses on the basis of distance travelled).

Capped defined benefit income stream

  (4)   This section does not apply in relation to a payment if the whole of the payment is a * superannuation income stream benefit that is paid from a * capped defined benefit income stream.

Note:   For withholding amounts from a superannuation income stream, see section   12 - 80.

12 - 5   What to do if more than one provision requires a withholding

  (1)   If more than one provision in this Division covers a payment, only one amount is to be withheld from the payment.

  (2)   The provision to apply is the one that is most specific to the circumstances of the payment. However, this general rule is subject to the specific rules in the table, and the specific rule in subsection   (3).

  (3)   Apply a provision in this Division (apart from a provision in Subdivision   12 - FB) that covers a payment in priority to a provision in Subdivision   12 - FB that also covers the payment.

Note:   Some provisions of this Division clearly do not cover a payment covered by some other provisions. For example:

• Section   12 - 55 (about voluntary agreements) covers a payment only if no other provision requires the payer to withhold an amount from the payment.

12 - 7   Division does not apply to alienated personal services payments

  (1)   This Division (other than the provisions mentioned in subsection   (2)) does not apply to a payment in so far as the payment:

  (a)   is an * alienated personal services payment; or

  (b)   was received, by the entity making the payment, as an * alienated personal services payment.

Note:   An entity that receives an alienated personal services payment may be obliged to pay an amount to the Commissioner: see Division   13.

  (2)   The provisions are:

  (a)   Subdivision   12 - FB; and

  (b)   any other provisions in this Division to the extent that they apply in relation to that Subdivision.

12 - 10   Division does not apply to non - cash benefits

    This Division does not apply to a payment in so far as it consists of providing a * non - cash benefit.

Note:   If a non - cash benefit is provided in circumstances where a payment would give rise to a withholding obligation, the provider must pay an amount to the Commissioner: see Division   14.

12 - 20   Application of Division and regulations to non - share dividends

    This Division and the regulations made for the purposes of this Division:

  (a)   apply to a non - share equity interest in the same way as it applies to a share; and

  (b)   apply to an equity holder in the same way as it applies to a shareholder; and

  (c)   apply to a non - share dividend in the same way as it applies to a dividend.

Subdivision   12 - B -- Payments for work and services

Table of sections

12 - 35   Payment to employee

12 - 40   Payment to company director

12 - 45   Payment to office holder

12 - 47   Payment to religious practitioners

12 - 50   Return to work payment

12 - 55   Voluntary agreement to withhold

12 - 60   Payment under labour hire arrangement, or specified by regulations

12 - 35   Payment to employee

    An entity must withhold an amount from salary, wages, commission, bonuses or allowances it pays to an individual as an employee (whether of that or another entity).

For exceptions, see section   12 - 1.

12 - 40   Payment to company director

    A company must withhold an amount from a payment of remuneration it makes to an individual:

  (a)   if the company is incorporated--as a director of the company, or as a person who performs the duties of a director of the company; or

  (b)   if the company is not incorporated--as a member of the committee of management of the company, or as a person who performs the duties of such a member.

For exceptions, see section   12 - 1.

12 - 45   Payment to office holder

  (1)   An entity must withhold an amount from salary, wages, commission, bonuses or allowances it pays to an individual as:

  (a)   a member of an * Australian legislature; or

  (b)   a person who holds, or performs the duties of, an appointment, office or position under the Constitution or an * Australian law; or

  (c)   a member of the Defence Force, or of a police force of the Commonwealth, a State or a Territory; or

  (d)   a person who is otherwise in the service of the Commonwealth, a State or a Territory; or

  (e)   a member of a * local governing body where there is in effect, in accordance with section   446 - 5, a unanimous resolution by the body that the remuneration of members of the body be subject to withholding under this Part.

For exceptions, see section   12 - 1.

  (2)   This section does not require an amount to be withheld from a payment to an individual as a member of a * local governing body unless it is one to which paragraph   (1)(e) applies.

12 - 47   Payment to religious practitioners

    An entity must withhold an amount from a payment it makes to a * religious practitioner for an activity, or a series of activities, if:

  (a)   the activity, or series of activities, is done by the religious practitioner in pursuit of his or her vocation as a religious practitioner; and

  (b)   the activity, or series of activities, is done by the religious practitioner as a member of a religious institution; and

  (c)   the payment is made by the entity in the course or furtherance of an * enterprise that the entity * carries on.

12 - 50   Return to work payment

    An entity must withhold an amount from a payment it makes to an individual if the payment is included in the individual's assessable income under section   15 - 3 of the Income Tax Assessment Act 1997 (return to work payments).

For exceptions, see section   12 - 1.

12 - 55   Voluntary agreement to withhold

  (1)   An entity must withhold an amount from a payment it makes to an individual if:

  (a)   the payment is made under an * arrangement the performance of which, in whole or in part, involves the performance of work or services (whether or not by the individual); and

  (b)   no other provision of this Division requires the entity to withhold an amount from the payment; and

  (c)   the entity and the individual are parties to an agreement (the voluntary agreement ) that is in the * approved form and states that this section covers payments under the arrangement mentioned in paragraph   (a), or under a series of such arrangements that includes that arrangement; and

  (d)   the individual has an * ABN that is in force and is * quoted in that agreement.

For exceptions, see section   12 - 1.

  (2)   Each party must keep a copy of the voluntary agreement from when it is made until 5 years after the making of the last payment covered by the agreement.

Penalty:   30 penalty units.

Note:   See section   4AA of the Crimes Act 1914 for the current value of a penalty unit.

  (2A)   An offence under subsection   (2) is an offence of strict liability.

Note:   For strict liability , see section   6.1 of the Criminal Code .

  (3)   A party to the voluntary agreement may terminate it at any time by notifying the other party in writing.

12 - 60   Payment under labour hire arrangement, or specified by regulations

  (1)   An entity that * carries on an * enterprise must withhold an amount from a payment that it makes to an individual in the course or furtherance of the enterprise if:

  (a)   the enterprise is a * business of arranging for persons to perform work or services directly for clients of the entity, or the enterprise includes a business of that kind that is not merely incidental to the main activities of the enterprise; and

  (b)   the payment is made under an * arrangement the performance of which, in whole or in part, involves the performance of work or services by the individual directly for a client of the entity, or directly for a client of another entity.

For exceptions, see section   12 - 1.

Example 1:   Staffprovider Ltd keeps a database of skilled persons who are willing for their services to be provided to third parties. Staffprovider arranges with Corporate Pty Ltd to provide to it the services of a computer programmer in return for payment. Staffprovider arranges with Jane for her to do computer programming for Corporate. Staffprovider must withhold amounts under this section from payments it makes to Jane under the arrangement with her.

Example 2:   Ian is a solicitor who regularly briefs barristers to represent his clients. Briefing barristers is merely incidental to Ian's main activities as a solicitor, so he does not have to withhold amounts under this section from payments he makes to barristers.

  (2)   An entity that carries on an * enterprise must withhold an amount from a payment that it makes to an individual in the course or furtherance of the enterprise if the payment is, in whole or in part, for work or services and is of a kind prescribed by the regulations.

For exceptions, see section   12 - 1.

Subdivision   12 - C -- Payments for retirement or because of termination of employment

12 - 80   Superannuation income streams and annuities

    An entity must withhold an amount from any of the following payments it makes to an individual:

  (a)   a * superannuation income stream;

  (b)   an * annuity.

For exceptions, see section   12 - 1.

12 - 85   Superannuation lump sums and payments for termination of employment

    An entity must withhold an amount from any of the following payments it makes to an individual:

  (a)   a * superannuation lump sum;

  (b)   a payment that is an * employment termination payment or would be one except that it is received more than 12 months after termination of employment.

For exceptions, see section   12 - 1.

12 - 90   Unused leave payments

    An entity must withhold an amount from any of the following payments it makes to an individual:

  (a)   an * unused annual leave payment;

  (b)   an * unused long service leave payment, to the extent that the payment is included in the individual's assessable income.

For exceptions, see section   12 - 1.

Subdivision   12 - D -- Benefit and compensation payments

Table of sections

12 - 110   Social Security or other benefit payment

12 - 115   Commonwealth education or training payment

12 - 120   Compensation, sickness or accident payment

12 - 110   Social Security or other benefit payment

  (1)   An entity must withhold an amount from a payment it makes to an individual if the payment is:

  (a)   specified in an item of the table in section   52 - 10 of the Income Tax Assessment Act 1997 (Social Security payments); or

  (b)   specified in an item of the table in section   52 - 65 of that Act (Veterans' Affairs payments); or

  (ba)   specified in an item of the table in section   52 - 114 of that Act (Military Rehabilitation and Compensation Act payments); or

  (c)   specified in section   52 - 105, 53 - 10, 55 - 5 or 55 - 10 of that Act; or

Note:   Payments specified in those provisions of the Income Tax Assessment Act 1997 are made under various Commonwealth laws.

  (ca)   * parental leave pay.

  (2)   In working out the amount to be withheld, disregard so much of the payment as is * exempt income of the individual.

12 - 115   Commonwealth education or training payment

  (1)   An entity must withhold an amount from a * Commonwealth education or training payment it makes to an individual.

For exceptions, see subsection   (2) and section   12 - 1.

  (2)   In working out the amount to be withheld, disregard so much of the payment as is * exempt income of the individual.

12 - 120   Compensation, sickness or accident payment

    An entity must withhold an amount from a payment of compensation, or of sickness or accident pay, it makes to an individual if the payment:

  (a)   is made because of that or another individual's incapacity for work; and

  (b)   is calculated at a periodical rate; and

  (c)   is not a payment made under an insurance policy to the policy owner.

For exceptions, see section   12 - 1.

Subdivision   12 - E -- Payments where TFN or ABN not quoted

Table of sections

Payment in respect of investment

12 - 140   Recipient does not quote tax file number

12 - 145   Investor becoming presently entitled to income of a unit trust

12 - 150   Limited application of section   12 - 140 to payment under financial arrangement

12 - 152   Limited application of section   12 - 140 to payment covered by section   12A - 205

12 - 155   When investor may quote ABN as alternative

12 - 160   Investment body unaware that exemption from quoting TFN has stopped applying

12 - 165   Exception for fully franked dividend

12 - 170   Exception for payments below thresholds set by regulations

Payment of income of closely held trust where TFN not quoted

12 - 175   Trustee distributes income of closely held trust

12 - 180   Beneficiary becomes presently entitled to income of closely held trust

12 - 185   Exception for payments below thresholds set by regulations

Payment for a supply

12 - 190   Recipient does not quote ABN

Payment in respect of investment

12 - 140   Recipient does not quote tax file number

  (1)   An * investment body must withhold an amount from a payment it makes to another entity in respect of a * Part   VA investment if:

  (a)   all or some of the payment is * ordinary income or * statutory income of the other entity; and

  (b)   if the investment is non - transferable--the other entity did not * quote its * tax file number in connection with the investment before the time when the payment became payable; and

  (c)   if the investment is transferable--the other entity did not quote its tax file number in connection with the investment before the time when the other entity had to be registered with the investment body as the * investor to be entitled to the payment.

Note:   If the investment body is an AMIT, under subsection   12A - 205(2) amounts may be treated, for the purposes of this Part, as having been paid to the other entity by the investment body.

Payment in respect of units in a trust or investment - related betting chance

  (2)   If a * Part   VA investment consists of:

  (a)   units in a unit trust (as defined in section   202A of the Income Tax Assessment Act 1936 ); or

  (b)   an investment - related betting chance;

an entity (including the * investment body) must withhold an amount from a payment it makes to another entity in respect of the investment if the conditions in subsection   (1) of this section are met.

For exceptions to the rules in this section, see sections   12 - 150 to 12 - 170.

  (3)   If:

  (a)   because of subsection   12A - 205(2), an entity is treated as having made a payment to another entity; and

  (b)   under subsection   (2) of this section, the entity has withheld an amount from that payment, and paid the amount to the Commissioner;

the entity may recover from the other entity, as a debt, the amount withheld.

  (4)   The entity is entitled to set off an amount that the entity can recover from the other entity under subsection   (3) against debts due by the entity to the other entity.

12 - 145   Investor becoming presently entitled to income of a unit trust

  (1)   This section applies if:

  (a)   a * Part   VA investment consists of units in a unit trust (as defined in section   202A of the Income Tax Assessment Act 1936 ); and

  (b)   the * investor becomes presently entitled, for the purposes of Division   6 of Part   III of the Income Tax Assessment Act 1936 , to a share of income of the trust at a time (the entitlement time ) before any of that share is paid to the investor.

  (2)   The entity (including the * investment body) that would have to pay that share to the * investor if the share were due and payable at the entitlement time must withhold from the share, at that time, the amount (if any) that subsection   12 - 140(2) would have required it to withhold if it had paid the share to the investor at that time.

For exceptions to the rules in this section, see sections   12 - 155 to 12 - 170.

  (3)   This Part (except section   12 - 140 and this section) applies as if that entity had paid that share to the * investor at the entitlement time.

  (4)   If that entity withholds an amount from that share as required by subsection   (2), subsection   12 - 140(2) does not require an amount to be withheld from a payment of all or part of that share to the * investor.

12 - 150   Limited application of section   12 - 140 to payment under financial arrangement

  (1)   This section limits the extent to which section   12 - 140 applies to a payment in respect of a * Part   VA investment if the investment is a qualifying security (within the meaning of Division   16E of Part   III of the Income Tax Assessment Act 1936 (about gains accruing on securities)) and:

  (a)   is of a kind mentioned in item   1 or 2 of the table in subsection   202D(1) of that Act; or

  (b)   is of a kind mentioned in item   3 of that table and is non - transferable.

Note:   Section   202D of the Income Tax Assessment Act 1936 lists the investments in connection with which tax file numbers are to be quoted.

  (2)   Section   12 - 140 applies to the payment only to the extent that is covered by one or both of these paragraphs:

  (a)   so much of the payment as consists of periodic interest (within the meaning of Division   16E of Part   III of the Income Tax Assessment Act 1936 );

  (b)   if the payment became payable at the end of the term (within the meaning of that Division) of the investment--so much of the payment as does not exceed what section   159GQ of that Act would include in the * investor's assessable income for the income year in which that term ended.

Note:   This limitation ensures that an amount is not withheld from payment of an amount in respect of which TFN withholding tax is payable. See Subdivision   14 - B.

  (3)   The adoption (under section   18 of the Income Tax Assessment Act 1936 ) of an accounting period ending on a day other than 30   June is disregarded for the purposes of:

  (a)   paragraph   (2)(b) of this section; and

  (b)   the application of Division   16E of Part   III of that Act for the purposes of that paragraph.

12 - 152   Limited application of section   12 - 140 to payment covered by section   12A - 205

  (1)   If a payment is treated under section   12A - 205 as having been made, section   12 - 140 does not apply to the payment to the extent that it covers a * pre - AMMA actual payment from which section   12 - 140 has required an amount to be withheld.

  (2)   If a payment is a * post - AMMA actual payment, section   12 - 140 does not apply to the payment to the extent that it covers either or both of the following:

  (a)   a * pre - AMMA actual payment from which section   12 - 140 has required an amount to be withheld;

  (b)   a payment that is treated under section   12A - 205 as having been made from which section   12 - 140 has required an amount to be withheld.

12 - 155   When investor may quote ABN as alternative

    Section   12 - 140 or 12 - 145 does not require an amount to be withheld if:

  (a)   the other entity made the investment in the course or furtherance of an * enterprise * carried on by it; and

  (b)   the other entity has an * ABN, and has * quoted it to the investment body, by the time referred to in paragraph   12 - 140(1)(b) or (c).

12 - 160   Investment body unaware that exemption from quoting TFN has stopped applying

    Section   12 - 140 or 12 - 145 does not require an amount to be withheld if:

  (a)   a provision of Division   5 of Part   VA of the Income Tax Assessment Act 1936 has applied to the other entity in relation to the investment, but no longer applies when the payment is made; and

  (b)   when the payment is made, the * investment body has not been informed of anything that resulted in the provision no longer applying.

Note:   Division   5 of Part   VA of that Act provides, in certain cases, that even though an entity has not quoted its tax file number it is taken to have done so.

12 - 165   Exception for fully franked dividend

    Section   12 - 140 does not require an amount to be withheld if:

  (a)   the investment consists of * shares in a public company (as defined in section   202A of the Income Tax Assessment Act 1936 ); and

  (b)   the payment is a * distribution that has been franked in accordance with section   202 - 5 of the Income Tax Assessment Act 1997 ; and

  (c)   the * franking percentage for the distribution is 100%.

12 - 170   Exception for payments below thresholds set by regulations

  (1)   Section   12 - 140 or 12 - 145 does not require an amount to be withheld if the payment is less than the amount worked out under the regulations.

  (2)   Regulations made for the purposes of this section may deal differently with different payments.

Payment of income of closely held trust where TFN not quoted

12 - 175   Trustee distributes income of closely held trust

Scope

  (1)   This section applies if:

  (a)   the trustee of a trust makes a distribution to a beneficiary of the trust at a time (the distribution time ) during an income year of the trust; and

  (b)   some or all of the distribution is from the * ordinary income or * statutory income of the trust; and

  (c)   the trust is:

  (i)   a resident trust estate (within the meaning of subsection   95(2) of the Income Tax Assessment Act 1936 ) in relation to the income year; and

  (ii)   a closely held trust (within the meaning of section   102UC of that Act); and

  (iii)   not prescribed by the regulations for the purposes of this subparagraph; and

  (d)   the beneficiary is:

  (i)   an Australian resident; and

  (ii)   not an * exempt entity; and

  (iii)   not under a legal disability for the purposes of section   98 of that Act.

Trustee must withhold

  (2)   The trustee must withhold an amount from the distribution, if:

  (a)   the beneficiary did not * quote the beneficiary's * tax file number to the trustee before the distribution time; and

  (b)   the trustee is not liable to pay tax under section   98 of the Income Tax Assessment Act 1936 in connection with the distribution; and

  (c)   the trustee is not required to make a correct TB statement under Division   6D of Part   III of that Act (about trustee beneficiary non - disclosure tax) in connection with the distribution; and

  (d)   family trust distribution tax is not payable under Schedule   2F to that Act in connection with the distribution.

Note 1:   If the trust is a unit trust, the trustee may be required to withhold under section   12 - 140 in priority to this section: see section   12 - 5.

Note 2:   The trustee commits an offence if the trustee fails to withhold an amount as required by this section: see section   16 - 25.

Application of rest of Part

  (3)   If the distribution is not a payment, this Part applies as if the trustee paid the amount of the distribution to the beneficiary at the distribution time.

Trust income of earlier income years

  (4)   Subsections   (2) and (3) do not apply to the distribution, to the extent that:

  (a)   the beneficiary is presently entitled, for the purposes of Division   6 of Part   III of the Income Tax Assessment Act 1936 , to a share of the income of the trust of an earlier income year; and

  (b)   the distribution is a distribution of some or all of that share.

Note:   The trustee may have been required to withhold from that share under section   12 - 180.

12 - 180   Beneficiary becomes presently entitled to income of closely held trust

Scope

  (1)   This section applies if:

  (a)   at the end of an income year of a trust, a beneficiary of the trust is presently entitled, for the purposes of Division   6 of Part   III of the Income Tax Assessment Act 1936 , to a share of the income of the trust of that year; and

  (b)   paragraph   12 - 175(1)(c) in this Schedule applies to the trustee of the trust; and

  (c)   paragraph   12 - 175(1)(d) applies to the beneficiary.

Trustee must withhold

  (2)   The trustee must withhold an amount from that share of the * net income of the trust, if:

  (a)   the beneficiary did not * quote the beneficiary's * tax file number to the trustee before the end of the year; and

  (b)   the trustee is not liable to pay tax in respect of that share under section   98 of the Income Tax Assessment Act 1936 ; and

  (c)   the trustee is not required to make a correct TB statement about that share under Division   6D of Part   III of that Act (about trustee beneficiary non - disclosure tax); and

  (d)   family trust distribution tax is not payable on that share of the income of the trust under Schedule   2F to that Act.

Note 1:   If the trust is a unit trust, the trustee may be required to withhold under section   12 - 145 in priority to this section: see section   12 - 5.

Note 2:   The trustee commits an offence if the trustee fails to withhold an amount as required by this section: see section   16 - 25.

Application of rest of Part

  (3)   This Part (other than section   12 - 175) applies as if the trustee had paid that share of the * net income of the trust to the beneficiary at the end of the income year.

Entitlements already paid

  (4)   Subsections   (2) and (3) do not apply to that share of the * net income of the trust to the extent that the trustee distributed any of that share to the beneficiary during the income year.

Note:   The trustee may have been required to withhold from that distribution under section   12 - 175.

Trusts that end during the year

  (5)   This section applies as if each reference to the end of an income year were a reference to the time occurring just before the trust ends, if the trust ends during the income year.

12 - 185   Exception for payments below thresholds set by regulations

  (1)   Section   12 - 175 or 12 - 180 does not require an amount to be withheld if the payment (including the payment mentioned in subsection   12 - 180(3)) is less than the amount worked out under the regulations.

  (2)   Regulations made for the purposes of this section may deal differently with different payments.

Payment for a supply

12 - 190   Recipient does not quote ABN

  (1)   An entity (the payer ) must withhold an amount from a payment it makes to another entity if:

  (a)   the payment is for a * supply that the other entity has made, or proposes to make, to the payer in the course or furtherance of an * enterprise * carried on in Australia by the other entity; and

  (b)   none of the exceptions in this section applies.

ABN correctly quoted

  (2)   The payer need not withhold an amount under this section if, when the payment is made:

  (a)   the other entity has given the payer an * invoice that relates to the * supply and * quotes the other entity's * ABN; or

  (b)   the payer has some other document relating to the supply on which the other entity's ABN is * quoted.

  (2A)   The payer need not withhold an amount under this section if the other entity has made the * supply, or proposes to make the supply, through an agent and, when the payment is made:

  (a)   the agent has given the payer an * invoice that relates to the supply and * quotes the agent's * ABN; or

  (b)   the payer has some other document relating to the supply on which the agent's ABN is * quoted.

Payer has no reason to believe that ABN has been incorrectly quoted

  (3)   The payer need not withhold an amount under this section if, when the payment is made:

  (a)   the other entity has given the payer an * invoice that relates to the * supply and purports to * quote the other entity's * ABN, or the payer has some other document that relates to the supply and purports to * quote the other entity's ABN; and

  (b)   the other entity does not have an ABN, or the invoice or other document does not in fact quote the other entity's ABN; and

  (c)   the payer has no reasonable grounds to believe that the other entity does not have an ABN, or that the invoice or other document does not quote the other entity's ABN.

  (3A)   The payer need not withhold an amount under this section if the other entity has made the * supply, or proposes to make the supply, through an agent and, when the payment is made:

  (a)   the agent has given the payer an * invoice that relates to the supply and purports to * quote the agent's * ABN, or the payer has some other document that relates to the supply and purports to * quote the agent's ABN; and

  (b)   the agent does not have an ABN, or the invoice or other document does not in fact quote the agent's ABN; and

  (c)   the payer has no reasonable grounds to believe that the agent does not have an ABN, or that the invoice or other document does not quote the agent's ABN.

No need to quote ABN

  (4)   The payer need not withhold an amount under this section if:

  (a)   the payment is made otherwise than in the course or furtherance of an * enterprise * carried on in Australia by the payer; or

  (b)   the payment (disregarding so much of it as relates to * GST payable on the * supply) or, if the payer has also made, or proposes to make, one or more other payments to the other entity for the supply, the total of all the payments (disregarding so much of them as relates to * GST payable on the supply) does not exceed $50 or such higher amount as is specified in regulations in force for the purposes of subsection   29 - 80(1) of the * GST Act; or

  (c)   the supply is made in the course or furtherance of an activity, or series of activities, done as a member of a local governing body established by or under a * State law or * Territory law; or

  (d)   the supply is wholly * input taxed.

  (5)   The payer need not withhold an amount under this section if the payment:

  (a)   is covered by section   12 - 140 or 12 - 145 (about not quoting * tax file number in respect of an investment in respect of which the payment is made); or

  (b)   would be covered by section   12 - 140 or 12 - 145 if the other entity had not quoted as mentioned in subsection   12 - 140(1) or section   12 - 155; or

  (c)   would be covered by section   12 - 140 or 12 - 145 apart from section   12 - 160, 12 - 165 or 12 - 170 (which are exceptions to sections   12 - 140 and 12 - 145); or

  (d)   is covered by section   12 - 175 or 12 - 180 (Payment of income of closely held trust where TFN not quoted); or

  (e)   would be covered by section   12 - 175 or 12 - 180 if the other entity had not quoted as mentioned in paragraph   12 - 175(2)(a) or 12 - 180(2)(a); or

  (f)   would be covered by section   12 - 175 or 12 - 180 apart from section   12 - 185 (which is an exception to sections   12 - 175 and 12 - 180).

  (6)   The payer need not withhold an amount under this section if, when the payment is made:

  (a)   the other entity is an individual and has given the payer a written statement to the effect that:

  (i)   the * supply is made in the course or furtherance of an activity, or series of activities, done as a private recreational pursuit or hobby; or

  (ii)   the supply is, for the other entity, wholly of a private or domestic nature; and

  (b)   the payer has no reasonable grounds to believe that the statement is false or misleading in a material particular.

  (7)   In working out, for the purposes of this section, whether an enterprise is * carried on in Australia, ignore any part of Australia that is not in the indirect tax zone (within the meaning of the * GST Act).

Note:   The effect of this subsection is to treat an enterprise as carried on in Australia only where it would be treated as carried on in the indirect tax zone under the A New Tax System (Australian Business Number) Act 1999 .

Subdivision   12 - F -- Dividend, interest and royalty payments

Table of sections

Dividends

12 - 210   Dividend payment to overseas person

12 - 215   Dividend payment received for foreign resident

12 - 220   Application to part of a dividend

12 - 225   Application to distribution by a liquidator or other person

Interest

12 - 245   Interest payment to overseas person

12 - 250   Interest payment received for foreign resident

12 - 255   Interest payment derived by lender in carrying on business through overseas permanent establishment

12 - 260   Lender to notify borrower if interest derived through overseas permanent establishment

Royalties

12 - 280   Royalty payment to overseas person

12 - 285   Royalty payment received for foreign resident

General

12 - 300   Limits on amount withheld under this Subdivision

Dividends

12 - 210   Dividend payment to overseas person

    A company that is an Australian resident must withhold an amount from a * dividend it pays if:

  (a)   according to the register of the company's members, the entity, or any of the entities, holding the * shares on which the dividend is paid has an address outside Australia; or

  (b)   that entity, or any of those entities, has authorised or directed the company to pay the dividend to an entity or entities at a place outside Australia.

For limits on the amount to be withheld, see section   12 - 300.

12 - 215   Dividend payment received for foreign resident

  (1)   An entity that receives a payment of a * dividend of a company that is an Australian resident must withhold an amount from the dividend if:

  (a)   the entity is a person in Australia or an * Australian government agency; and

  (b)   a foreign resident is or becomes entitled:

  (i)   to receive the dividend or part of it from the entity, or to receive the amount of the dividend or of part of it from the entity; or

  (ii)   to have the entity credit to the foreign resident, or otherwise deal with on the foreign resident's behalf or as the foreign resident directs, the dividend or part of it, or the amount of the dividend or of part of it.

For limits on the amount to be withheld, see section   12 - 300.

  (2)   The entity must withhold the amount:

  (a)   if the foreign resident is so entitled when the entity receives the payment--immediately after the entity receives the payment; or

  (b)   if the foreign resident becomes so entitled after the entity receives the payment--immediately after the foreign resident becomes so entitled.

12 - 220   Application to part of a dividend

    This Part applies to a part of a * dividend in the same way as to a dividend.

12 - 225   Application to distribution by a liquidator or other person

    This Part applies to a distribution that section   47 of the Income Tax Assessment Act 1936 treats as a * dividend paid by a company, in the same way as this Part applies to a dividend paid by the company, and as if the liquidator or other person making the distribution were the company.

Interest

12 - 245   Interest payment to overseas person

    An entity must withhold an amount from interest (within the meaning of Division   11A of Part   III of the Income Tax Assessment Act 1936 ) it pays to an entity, or to entities jointly, if:

  (a)   the recipient or any of the recipients has an address outside Australia according to any record that is in the payer's possession, or is kept or maintained on the payer's behalf, about the transaction to which the interest relates; or

  (b)   the payer is authorised to pay the interest at a place outside Australia (whether to the recipient or any of the recipients or to anyone else).

For limits on the amount to be withheld, see section   12 - 300.

12 - 250   Interest payment received for foreign resident

  (1)   An entity that receives a payment of interest (within the meaning of Division   11A of Part   III of the Income Tax Assessment Act 1936 ) must withhold an amount from the payment if:

  (a)   the entity is a person in Australia or an * Australian government agency; and

  (b)   a foreign resident is or becomes entitled:

  (i)   to receive the interest or part of it from the entity, or to receive the amount of the interest or of part of it from the entity; or

  (ii)   to have the entity credit to the foreign resident, or otherwise deal with on the foreign resident's behalf or as the foreign resident directs, the interest or part of it, or the amount of the interest or of part of it.

For limits on the amount to be withheld, see section   12 - 300.

  (2)   The entity must withhold the amount:

  (a)   if the foreign resident is so entitled when the entity receives the payment--immediately after the entity receives the payment; or

  (b)   if the foreign resident becomes so entitled after the entity receives the payment--immediately after the foreign resident becomes so entitled.

12 - 255   Interest payment derived by lender in carrying on business through overseas permanent establishment

    An entity must withhold an amount from interest (within the meaning of Division   11A of Part   III of the Income Tax Assessment Act 1936 ) it pays if it has been notified under section   12 - 260 of this Act that this section applies to the interest.

Note:   For limits on the amount to be withheld, see section   12 - 300.

12 - 260   Lender to notify borrower if interest derived through overseas permanent establishment

  (1)   If:

  (a)   interest (within the meaning of Division   11A of Part   III of the Income Tax Assessment Act 1936 ) is payable to:

  (i)   an entity that is, or entities at least one of whom is, an Australian resident; or

  (ii)   an * Australian government agency; and

  (b)   the entity liable to pay the interest is authorised to pay it at a place in Australia (whether to any of those entities or the agency, or to anyone else); and

  (c)   the interest is or will be * derived by any of those entities or the agency in carrying on business in a country outside Australia at or through a * permanent establishment it has in that country;

those entities, or the agency, must notify the entity liable to pay the interest that section   12 - 255 applies to the interest.

  (2)   The notice must be given in writing, before the entities, or the agency, enter into the transaction in relation to which the interest is payable, or within one month afterwards.

  (3)   Immediately after giving the notice, those entities, or the agency, must notify the Commissioner of:

  (a)   the particulars of the transaction (including the dates on which interest is payable under it); and

  (b)   the day when the notice was given to the entity liable to pay the interest.

Failure to comply with this section may contravene section   8C of this Act.

Royalties

12 - 280   Royalty payment to overseas person

    An entity must withhold an amount from a * royalty it pays to an entity, or to entities jointly, if:

  (a)   the recipient or any of the recipients has an address outside Australia according to any record that is in the payer's possession, or is kept or maintained on the payer's behalf, about the transaction to which the royalty relates; or

  (b)   the payer is authorised to pay the royalty at a place outside Australia (whether to the recipient or any of the recipients or to anyone else).

For limits on the amount to be withheld, see section   12 - 300.

12 - 285   Royalty payment received for foreign resident

  (1)   An entity that receives a payment of a * royalty must withhold an amount from the payment if:

  (a)   the entity is a person in Australia or an * Australian government agency; and

  (b)   a foreign resident is or becomes entitled:

  (i)   to receive the royalty or part of it from the entity, or to receive the amount of the royalty or of part of it from the entity; or

  (ii)   to have the entity credit to the foreign resident, or otherwise deal with on the foreign resident's behalf or as the foreign resident directs, the royalty or part of it, or the amount of the royalty or of part of it.

For limits on the amount to be withheld, see section   12 - 300.

  (2)   The entity must withhold the amount:

  (a)   if the foreign resident is so entitled when the entity receives the payment--immediately after the entity receives the payment; or

  (b)   if the foreign resident becomes so entitled after the entity receives the payment--immediately after the foreign resident becomes so entitled.

General

12 - 300   Limits on amount withheld under this Subdivision

    This Subdivision does not require an entity:

  (a)   to withhold an amount from a * dividend, from interest (within the meaning of Division   11A of Part   III of the Income Tax Assessment Act 1936 ) or from a * royalty if no * withholding tax is payable in respect of the dividend, interest or royalty; or

  (b)   to withhold from a dividend, from interest (within the meaning of that Division) or from a royalty more than the withholding tax payable in respect of the dividend, interest or royalty (reduced by each amount already withheld from it under this Subdivision).

Note:   Section   128B of the Income Tax Assessment Act 1936 deals with withholding tax liability.

Subdivision   12 - FA -- Departing Australia superannuation payments

Table of sections

12 - 305   Departing Australia superannuation payment

12 - 310   Limits on amount withheld under this Subdivision

12 - 305   Departing Australia superannuation payment

    An entity must withhold an amount from a * departing Australia superannuation payment it pays to an entity.

12 - 310   Limits on amount withheld under this Subdivision

    This Subdivision does not require an entity:

  (a)   to withhold an amount from a * departing Australia superannuation payment if no * withholding tax is payable in respect of the payment; or

  (b)   to withhold from a departing Australia superannuation payment more than the withholding tax payable in respect of the payment (reduced by each amount already withheld from it under this Subdivision).

Note:   Section   301 - 175 of the Income Tax Assessment Act 1997 deals with the withholding tax liability.

Subdivision   12 - FAA -- Excess untaxed roll - over amount

Table of sections

12 - 312   Untaxed roll - over superannuation benefits

12 - 313   Limits on amount withheld under this Subdivision

12 - 312   Untaxed roll - over superannuation benefits

    An entity must withhold an amount from an * excess untaxed roll - over amount it pays to an entity.

Note:   An excess untaxed roll - over amount is an amount that may form part of a roll - over superannuation benefit that includes an element untaxed in the fund: see section   306 - 15 of the Income Tax Assessment Act 1997 .

12 - 313   Limits on amount withheld under this Subdivision

    This Subdivision does not require an entity:

  (a)   to withhold an amount from an * excess untaxed roll - over amount if no * withholding tax is payable on the amount; or

  (b)   to withhold from an excess untaxed roll - over amount more than the withholding tax payable on the amount (reduced by each amount already withheld from the excess untaxed roll - over amount under this Subdivision).

Note:   Section   306 - 15 of the Income Tax Assessment Act 1997 deals with liability to this form of withholding tax.

Subdivision   12 - FB -- Payments to foreign residents etc.

Table of sections

12 - 315   Payment to foreign resident etc.

12 - 317   Payment received for foreign resident etc.

12 - 319   Exemptions from withholding obligations under this Subdivision

12 - 315   Payment to foreign resident etc.

  (1)   An entity (the payer ) that * carries on an * enterprise must withhold an amount from a payment it makes to another entity, or to other entities jointly, in the course or furtherance of the enterprise if:

  (a)   the entity receiving the payment, or any of the entities receiving the payment, is an entity covered by subsection   (2); and

  (b)   the payment is of a kind set out in the regulations; and

  (c)   the payment is not:

  (i)   a * dividend of a company; or

  (ii)   interest (within the meaning of Division   11A of Part   III of the Income Tax Assessment Act 1936 ); or

  (iii)   a * royalty; or

  (iv)   a * departing Australia superannuation payment; or

  (v)   a payment worked out wholly or partly by reference to the value or quantity of * natural resources produced or recovered in Australia; or

  (vi)   a * mining payment; or

  (vii)   an amount represented by or reasonably attributable to a * fund payment; and

  (d)   the entity receiving the payment is not covered by an exemption in force under subsection   12 - 319(1), or at least one of the entities receiving the payment is not covered by an exemption in force under that subsection.

  (2)   An entity is covered by this subsection if any of the following conditions is satisfied:

  (a)   the entity is a foreign resident;

  (b)   the payer believes, or has reasonable grounds to believe, that the entity is a foreign resident;

  (c)   the payer has no reasonable grounds to believe that the entity is an Australian resident, and either:

  (i)   the entity has an address outside Australia (according to any record that is in the payer's possession, or is kept or maintained on the payer's behalf, about the transaction to which the payment relates); or

  (ii)   the payer is authorised to make the payment at a place outside Australia (whether to the entity or to anyone else);

  (d)   the entity has a connection outside Australia of a kind set out in the regulations.

  (3)   Before the Governor - General makes a regulation for the purposes of paragraph   (1)(b), the Minister must be satisfied that each payment set out in the regulation is a payment of a kind that could reasonably be related to assessable income of foreign residents.

12 - 317   Payment received for foreign resident etc.

  (1)   An entity (the intermediary ) that receives a payment meeting the requirements set out in paragraphs 12 - 315(1)(b) and (c) must withhold an amount from the payment if:

  (a)   the intermediary is a person in Australia or an * Australian government agency; and

  (b)   another entity (the likely foreign recipient ) is or becomes entitled:

  (i)   to receive the payment or part of it from the intermediary, or to receive the amount of the payment or of part of it from the intermediary; or

  (ii)   to have the intermediary credit to the likely foreign recipient, or otherwise deal with on the likely foreign recipient's behalf or as the likely foreign recipient directs, the payment or part of it, or the amount of the payment or of part of it; and

  (c)   the likely foreign recipient is covered by subsection   (3); and

  (d)   the likely foreign recipient is not covered by an exemption in force under subsection   12 - 319(1).

  (2)   The intermediary must withhold the amount:

  (a)   if the likely foreign recipient is so entitled when the intermediary receives the payment--just after the intermediary receives the payment; or

  (b)   if the likely foreign recipient becomes so entitled after the intermediary receives the payment--just after the likely foreign recipient becomes so entitled.

  (3)   The likely foreign recipient is covered by this subsection if any of the following conditions is satisfied:

  (a)   the likely foreign recipient is a foreign resident;

  (b)   the intermediary believes, or has reasonable grounds to believe, that the likely foreign recipient is a foreign resident;

  (c)   the intermediary has no reasonable grounds to believe that the likely foreign recipient is an Australian resident, and either:

  (i)   the likely foreign recipient has an address outside Australia (according to any record that is in the intermediary's possession, or is kept or maintained on the intermediary's behalf); or

  (ii)   the intermediary is authorised to forward the payment to a place outside Australia (whether to the likely foreign recipient or to anyone else);

  (d)   the likely foreign recipient has a connection outside Australia of a kind set out in the regulations.

12 - 319   Exemptions from withholding obligations under this Subdivision

  (1)   The Commissioner may grant an entity an exemption in writing for the purposes of paragraphs 12 - 315(1)(d) and 12 - 317(1)(d) if the Commissioner is satisfied that:

  (a)   the entity has an established history of compliance with its obligations under * taxation laws; and

  (b)   the entity is likely to continue to comply with those obligations in the future.

  (2)   The exemption is in force during the period:

  (a)   beginning when the Commissioner grants the exemption; and

  (b)   ending at the time specified in the exemption.

  (3)   Without limiting the matters to which the Commissioner may have regard in deciding whether to grant an entity an exemption, the Commissioner may have regard to the following:

  (a)   whether the entity is or was liable to pay an instalment under Division   45 at any time in:

  (i)   the income year in which the exemption is proposed to be granted; and

  (ii)   the previous 2 income years;

  (b)   the amount (if any) of the entity's * tax - related liabilities that are currently due and payable;

  (c)   the extent to which the entity and its * associates (if any) have complied with their obligations under * taxation laws during:

  (i)   the income year in which the exemption is proposed to be granted; and

  (ii)   the previous 2 income years.

  (4)   The Commissioner must give a copy of the exemption to the entity to which it relates.

  (5)   A failure to comply with subsection   (4) does not affect the validity of the exemption.

Subdivision   12 - FC -- Labour mobility programs

Table of sections

12 - 319A   Payment to employee

12 - 319A   Payment to employee

    An entity must withhold an amount from salary, wages, commission, bonuses or allowances it pays to an individual:

  (a)   as an employee of an Approved Employer (whether the entity or another entity) under a program covered by section   840 - 906 of the Income Tax Assessment Act 1997 (about labour mobility programs); and

  (b)   at a time when the employee is a foreign resident and:

  (i)   the employee holds a Temporary Work (International Relations) Visa (subclass 403); or

  (ii)   the employee holds a Temporary Activity Visa (subclass 408) having previously held a Temporary Work (International Relations) Visa (subclass 403); or

  (iii)   the employee holds a visa of a kind prescribed by regulations made under the Income Tax Assessment Act 1997 for the purposes of subparagraph   840 - 905(b)(iii) of that Act.

Subdivision   12 - G -- Payments in respect of mining on Aboriginal land, and natural resources

Table of sections

Mining on Aboriginal land

12 - 320   Mining payment

Natural resources

12 - 325   Natural resource payment

12 - 330   Payer must ask Commissioner how much to withhold

12 - 335   Commissioner may exempt from section   12 - 330, subject to conditions

Mining on Aboriginal land

12 - 320   Mining payment

  (1)   An entity must withhold an amount from a * mining payment that:

  (a)   it makes to another entity; or

  (b)   it applies for the benefit of another entity.

  (2)   Subsection   (1) does not require the entity to withhold more than the * mining withholding tax payable in respect of the * mining payment.

Note:   Section   128V of the Income Tax Assessment Act 1936 deals with mining withholding tax liability.

Natural resources

12 - 325   Natural resource payment

  (1)   An entity must withhold an amount from a payment it makes to a foreign resident, or to 2 or more entities at least one of which is a foreign resident, if the payment is worked out wholly or partly by reference to the value or quantity of * natural resources produced or recovered in Australia.

  (2)   The amount to be withheld is:

  (a)   the amount notified by the Commissioner under section   12 - 330; or

  (b)   the amount worked out under a certificate in force under section   12 - 335 that covers the payment;

as appropriate.

Exception

  (3)   Subsection   (1) does not apply if:

  (a)   the Commissioner has notified the entity under section   12 - 330 that the entity does not need to withhold an amount from the payment; or

  (b)   a certificate in force under section   12 - 335 covers the payment and does not require the entity to withhold an amount from it.

12 - 330   Payer must ask Commissioner how much to withhold

  (1)   An entity must not intentionally make a payment from which section   12 - 325 requires it to withhold an amount, unless:

  (a)   the entity has notified the Commissioner in writing of the amount of the proposed payment; and

  (b)   the Commissioner has later notified the entity in writing of the amount (if any) that the entity must withhold from the payment in respect of tax or * petroleum resource rent tax that is or may become payable by a foreign resident to whom the payment is made;

or the payment is covered by a certificate in force under section   12 - 335.

Penalty:   20 penalty units.

Note:   See section   4AA of the Crimes Act 1914 for the current value of a penalty unit.

Failure to notify not an offence against section   8C

  (2)   An entity that fails to notify the Commissioner as required by subsection   (1) does not commit an offence against section   8C.

12 - 335   Commissioner may exempt from section   12 - 330, subject to conditions

  (1)   The Commissioner may give an entity a written certificate exempting the entity from complying with section   12 - 330 for specified payments.

  (2)   A certificate is subject to:

  (a)   a condition that the entity must withhold from a payment covered by the certificate the amount (if any) worked out in accordance with the certificate in respect of tax or * petroleum resource rent tax that is or may become payable by a foreign resident to whom the payment is made; and

  (b)   such other conditions as the certificate specifies.

However, the entity does not contravene subsection   12 - 330(1) because it contravenes a condition.

  (3)   The Commissioner may, by written notice given to the entity:

  (a)   revoke a certificate, whether or not a condition of it has been contravened; or

  (b)   vary a certificate by revoking, changing or adding to its conditions.

Note:   A person who is dissatisfied with a decision under this section may object against the decision in the manner set out in Part   IVC.

Subdivision   12 - H -- Distributions of withholding MIT income

Guide to Subdivision   12 - H

12 - 375   What this Subdivision is about

Table of sections

Operative provisions

12 - 383   Meaning of withholding MIT

12 - 385   Withholding by withholding MITs

12 - 390   Withholding by custodians and other entities

12 - 395   Requirement to give notice or make information available

12 - 405   Meaning of fund payment --general case

12 - 410   Entity to whom payment is made

12 - 415   Failure to give notice or make information available: administrative penalty

12 - 420   Agency rules

12 - 425   Meaning of clean building managed investment trust

12 - 430   Meaning of clean building

12 - 435   Meaning of non - concessional MIT income

12 - 436   Meaning of asset entity , operating entity , cross staple arrangement and stapled entity

12 - 437   Meaning of MIT cross staple arrangement income

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

12 - 439   MIT cross staple arrangement income--approved economic infrastructure facility exception

12 - 440   Transitional--MIT cross staple arrangement income

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

12 - 442   Meaning of excepted MIT CSA income

12 - 443   Concessional cross staple rent cap--existing lease with specified rent or rent method

12 - 444   Concessional cross staple rent cap--general

12 - 445   Asset entity to allocate deductions first against rental income that is not MIT cross staple arrangement income

12 - 446   Meaning of MIT trading trust income

12 - 447   Transitional-- MIT trading trust income

12 - 448   Meaning of MIT agricultural income , Australian agricultural land for rent and Division   6C land

12 - 449   Transitional--MIT agricultural income

12 - 450   Meaning of MIT residential housing income

12 - 451   Transitional--MIT residential housing income

12 - 452   Meaning of residential dwelling asset

12 - 453   MIT agricultural income and MIT residential housing income--capital gains in relation to membership interests

Operative provisions

12 - 383   Meaning of withholding MIT

  (1)   A trust is a withholding MIT in relation to an income year if:

  (a)   it is a * managed investment trust in relation to that income year because of paragraph   275 - 10(1)(a) or subsection   275 - 10(2) of the Income Tax Assessment Act 1997 ; and

  (b)   a substantial proportion of the investment management activities carried out in relation to the trust in respect of all of the following assets of the trust are carried out in Australia throughout the income year:

  (i)   assets that are situated in Australia at any time in the income year;

  (ii)   assets that are * taxable Australian property at any time in the income year;

  (iii)   assets that are * shares, units or interests listed for quotation in the official list of an * approved stock exchange in Australia at any time in the income year.

  (2)   For the purposes of ascertaining whether a trust is a * managed investment trust in relation to that income year for the purposes of paragraph   (1)(a), treat as a * fund payment by the trustee of the trust any amount that, under subsection   12A - 205(2), would be treated as a payment by the trustee if the trust were an * AMIT.

Note:   The making of a fund payment is a requirement for the trust to be a managed investment trust under paragraph   275 - 10(1)(a) and subsection   275 - 10(3) of the Income Tax Assessment Act 1997 .

12 - 385   Withholding by withholding MITs

  (1)   A trustee of a trust that is a * withholding MIT in relation to an income year that makes a * fund payment in relation to that income year to an entity covered by section   12 - 410 must withhold an amount from the payment.

Note 1:   An entity may be covered by section   12 - 410 if the entity has an address outside Australia or payment is authorised to be made to a place outside Australia.

Note 2:   If the payment is made to a recipient not covered by section   12 - 410, the trustee is required to give a notice to the recipient or publish information on a website setting out certain details about the payment: see section   12 - 395.

  (2)   The amount the trustee must withhold is:

  (3)   The rate is:

  (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

  (b)   otherwise--30%.

  (4)   An information exchange country is a foreign country or foreign territory specified in the regulations for the purposes of this section.

  (5)   This section does not apply to an amount paid by a * withholding MIT to the extent that no * managed investment trust withholding tax is payable in respect of the payment or an amount reasonably attributable to the payment.

12 - 390   Withholding by custodians and other entities

Withholding by custodians

  (1)   A * custodian must withhold an amount from a payment (the later payment ) it makes if:

  (a)   all or some of the later payment (the covered part ) is reasonably attributable to the part of an earlier payment received by the custodian that was covered by a notice or information under section   12 - 395; and

  (b)   the later payment is made to an entity covered by section   12 - 410.

Note 1:   The covered part referred to in paragraph   (1)(a) is attributable to a fund payment made by a withholding MIT, or 2 or more fund payments made by one or more withholding MITs. One or more of those withholding MITs may be AMITs.

Note 2:   An entity may be covered by section   12 - 410 if the entity has an address outside Australia or payment is authorised to be made to a place outside Australia.

Note 3:   If the payment is made to a recipient not covered by section   12 - 410, the custodian is required to give a notice to the recipient or publish information on a website setting out certain details about the payment: see section   12 - 395.

  (2)   The amount the * custodian must withhold is:

  (3)   The rate is:

  (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

  (b)   otherwise--30%.

Withholding by other entities

  (4)   An entity that is not a * withholding MIT or a * custodian must withhold an amount from a payment it receives if:

  (a)   the payment or part of it (the covered part ) was covered by a notice or information under section   12 - 395; and

  (b)   a foreign resident (the recipient ) is or becomes entitled:

  (i)   to receive from the entity; or

  (ii)   to have the entity credit to the recipient, or otherwise deal with on the recipient's behalf or as the recipient directs;

    an amount (the attributable amount ) reasonably attributable to the covered part.

Note 1:   The covered part referred to in paragraph   (4)(a) is attributable to a fund payment made by a withholding MIT, or 2 or more fund payments made by one or more withholding MITs. One or more of those withholding MITs may be AMITs.

Note 2:   If the recipient is not a foreign resident, the entity is required to give a notice to the recipient or publish information on a website setting out certain details about the payment: see section   12 - 395.

  (5)   The amount the entity must withhold is:

  (6)   The rate is:

  (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

  (b)   otherwise--30%.

  (7)   An entity is a resident of an * information exchange country if:

  (a)   the entity is a resident of that country for the purposes of the taxation laws of that country; or

  (b)   if there are no taxation laws of that country applicable to the entity or the entity's residency status cannot be determined under those laws:

  (i)   for an individual--the individual is ordinarily resident in that country; or

  (ii)   for another entity--the entity is incorporated or formed in that country and is carrying on a business in that country.

  (8)   An amount required to be withheld under subsection   (4) must be withheld:

  (a)   if the recipient is so entitled when the entity receives the payment--immediately after receipt; or

  (b)   if the recipient becomes so entitled at a later time--immediately after the later time.

Meaning of custodian

  (9)   An entity is a custodian if:

  (a)   the entity is * carrying on a * business that consists predominantly of providing a custodial or depository service (within the meaning of the Corporations Act 2001 ) pursuant to an * Australian financial services licence; or

  (b)   the entity is acting on behalf of an entity that is carrying on such a business pursuant to such a licence.

Exceptions

  (10)   This section does not apply:

  (a)   to a company unless the company would, apart from section   12 - 420, be acting in the capacity as * agent for the recipient; or

  (b)   to an amount paid or received by an entity to the extent that no * managed investment trust withholding tax is payable in respect of the amount or an amount reasonably attributable to the amount.

12 - 395   Requirement to give notice or make information available

Withholding MITs and custodians

  (1)   An entity that is a * withholding MIT or a * custodian must comply with subsection   (2) if:

  (a)   the entity makes a payment to another entity (the recipient ) from which an amount would have been required to be withheld under section   12 - 385 or subsection   12 - 390(1) if the payment had been made to an entity covered by section   12 - 410; and

  (b)   an amount is not required to be withheld from the payment because the recipient is not an entity covered by section   12 - 410.

Note:   An entity may be covered by section   12 - 410 if the entity has an address outside Australia or payment is authorised to be made to a place outside Australia.

  (2)   The entity must:

  (a)   give to the recipient a written notice containing the details specified in subsection   (3); or

  (b)   make those details available on a website in a way that the details are readily accessible to the recipient for not less than 5 continuous years.

  (3)   The notice must be given, or the details must be made available on a website, before or at the time when the payment is made and:

  (a)   must specify the part of the payment from which an amount would have been so required to have been withheld; and

  (aa)   must specify the extent (if any) to which the payment is, or is attributable to, a * fund payment from a * clean building managed investment trust; and

  (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

  (ac)   must specify the extent (if any) to which the payment is, or is attributable to, an amount that would be non - concessional MIT income if the following provisions were disregarded:

  (i)   subsection   12 - 437(5);

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

  (ad)   must specify the extent (if any) to which the payment is, or is attributable to, an amount that would be non - concessional MIT income only if subsection   12 - 450(5) were disregarded; and

  (b)   must specify the income year of the * withholding MIT to which that part relates.

Note:   Failure to give the notice or make the details available as required by this section incurs an administrative penalty: see section   12 - 415.

Other entities

  (4)   An entity that is not a * withholding MIT or a * custodian must comply with subsection   (5) if:

  (a)   the entity receives a payment; and

  (b)   another entity (also the recipient ) is or becomes entitled:

  (i)   to receive from the entity; or

  (ii)   to have the entity credit to the recipient, or otherwise deal with on the recipient's behalf or as the recipient directs;

    an amount attributable to the payment; and

  (c)   the entity would have been required to withhold an amount from the payment under subsection   12 - 390(4) if the recipient had been a foreign resident; and

  (d)   an amount is not required to be withheld from the payment because the recipient is not a foreign resident.

  (5)   The entity must:

  (a)   give to the recipient a written notice containing the details specified in subsection   (6); or

  (b)   make those details available on a website in a way that the details are readily accessible to the recipient for not less than 5 continuous years.

  (6)   The notice must be given, or the details must be made available on a website, before or at the time when the amount is paid or credited to the recipient, or is dealt with on the recipient's behalf or as the recipient directs, and:

  (a)   must specify the part of the payment referred to in paragraph   (4)(a) from which an amount would have been so required to have been withheld; and

  (aa)   must specify the extent (if any) to which the payment is, or is attributable to, a * fund payment from a * clean building managed investment trust; and

  (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

  (ac)   must specify the extent (if any) to which the payment is, or is attributable to, an amount that would be non - concessional MIT income if the following provisions were disregarded:

  (i)   subsection   12 - 437(5);

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

  (ad)   must specify the extent (if any) to which the payment is, or is attributable to, an amount that would be non - concessional MIT income only if subsection   12 - 450(5) were disregarded; and

  (b)   must specify the income year of the * withholding MIT to which that part relates.

Note:   Failure to give the notice or make the details available as required by this section incurs an administrative penalty: see section   12 - 415.

12 - 405   Meaning of fund payment --general case

  (1)   The object of this section is to ensure that the total of the * fund payments that the trustee of a trust makes in relation to an income year equals, as nearly as practicable, the net income of the trust for the income year, disregarding these amounts ( excluded amounts ):

  (a)   a dividend (as defined in Division   11A of Part   III of the Income Tax Assessment Act 1936 ) that is subject to, or exempted from, a requirement to withhold under Subdivision   12 - F;

  (b)   interest (as so defined) that is subject to, or exempted from, such a requirement;

  (c)   a * royalty that is subject to, or exempted from, such a requirement;

  (d)   a * capital gain or * capital loss from a * CGT event that happens in relation to a * CGT asset that is not * taxable Australian property;

  (e)   amounts that are not from an * Australian source;

and disregarding deductions relating to excluded amounts.

  (1A)   This section applies to a trust that is not an * AMIT for an income year.

Note:   For the definition of fund payment in respect of a trust that is an AMIT for an income year, see section   12A - 110.

  (2)   Work out as follows how much of a payment (the actual payment ) made by the trustee of a trust in relation to an income year is a fund payment in relation to that year:

  (2A)   If:

  (a)   during an income year, a * capital loss from a * CGT event happens in relation to a * CGT asset that is not * taxable Australian property; and

  (b)   in relation to that income year, some or all of the capital loss is applied against a * capital gain from a CGT event that happens in relation to a CGT asset that is taxable Australian property;

this subsection applies, for that income year, to the amount that is so applied.

  (2B)   If:

  (a)   the trust has a * net capital loss for an income year; and

  (b)   one or more of the * capital losses the trust made during that income year were from * CGT events that happened in relation to * CGT assets that were not * taxable Australian property; and

  (c)   in relation to a later income year, some or all of the net capital loss is applied against a * capital gain from a CGT event that happens in relation to a CGT asset that is taxable Australian property;

this subsection applies, for the later income year, to an amount equal to so much of the net capital loss that is so applied as related to capital losses mentioned in paragraph   (b).

  (3)   The expected * net income of the trust and the expected amounts of future * fund payments are to be worked out on the basis of the trustee's knowledge when the actual payment is made.

  (4)   However, an amount is not a fund payment in relation to the income year unless it is paid:

  (a)   during the income year; or

  (b)   within 3 months after the end of the income year; or

  (c)   within a longer period (starting at the end of the period referred to in paragraph   (b) and not exceeding 3 months) allowed by the Commissioner.

  (5)   The Commissioner may allow a longer period as mentioned in paragraph   (4)(c) only if the Commissioner is of the opinion that the trustee was unable to make the payment during the income year, or within 3 months after the end of the income year, because of circumstances beyond the influence or control of the trustee.

12 - 410   Entity to whom payment is made

  (1)   An entity (the recipient ) is covered by this section for a payment made to it by another entity (the payer ) if:

  (a)   according to any record that is in the payer's possession, or is kept or maintained on the payer's behalf, the recipient has an address outside Australia; or

  (b)   the payer is authorised to make the payment to a place outside Australia.

  (2)   However, a recipient is not covered by this section for a payment if, at the time the payment was made, a * business the recipient carries on is carried on at or through an * Australian permanent establishment and the payment is attributable to that establishment.

12 - 415   Failure to give notice or make information available: administrative penalty

    An entity that:

  (a)   is required to give a notice, or make details available on a website, under section   12 - 395 in relation to:

  (i)   a payment made to another entity; or

  (ii)   an amount paid or credited to, or dealt with on behalf of or as directed by, another entity; and

  (b)   fails to comply with that section;

is liable to pay to the Commissioner a penalty equal to the amount that would have been required to be withheld under this Subdivision (disregarding subsection   12 - 385(5) and paragraph   12 - 390(10)(b)) in relation to amounts attributable to the payment or amount if the notice had been given or the details had been made available.

Note:   Division   298 in this Schedule contains machinery provisions for administrative penalties.

12 - 420   Agency rules

  (1)   This section applies to:

  (a)   a payment (the first payment ) made to an entity (the first entity ) in the capacity as * agent for another entity; and

  (b)   another payment made by the first entity to the extent that it is reasonably attributable to the first payment.

  (2)   This Subdivision has effect as if the first entity were not an * agent in relation to the payments.

Note:   As a result of subsection   (2), an agent may be required to withhold amounts under this Subdivision.

12 - 425   Meaning of clean building managed investment trust

  (1)   A trust is a clean building managed investment trust in relation to an income year if during the income year:

  (a)   it is a * withholding MIT in relation to the income year; and

  (b)   it holds one or more * clean buildings (including the land on which the buildings are situated); and

  (c)   it does not derive assessable income from any * taxable Australian property (other than from the clean buildings or assets that are reasonably incidental to those buildings).

5% safe harbour for certain income reasonably incidental to a clean building

  (2)   A trust is not a * clean building managed investment trust in relation to an income year if the assessable income of the trust that is derived from assets that are reasonably incidental to * clean buildings is greater than 5% of the assessable income of the trust that is derived from clean buildings.

  (3)   The regulations may specify kinds of assets that are, or are not, reasonably incidental to * clean buildings for the purposes of this section.

12 - 430   Meaning of clean building

  (1)   A building is a clean building if:

  (a)   the construction of the building commenced on or after 1   July 2012; and

  (b)   it satisfies the requirements in subsections   (3) and (4).

  (2)   For the purpose of subsection   (1):

  (a)   the construction of the building is taken to have commenced at the time the works on the lowest level (including any basement level) of the building commence; and

  (b)   the construction of the building is not taken to have commenced merely because works preparing the site for construction, or works undertaken below the lowest level of the building (including any basement level), have commenced.

  (3)   A building satisfies the requirements in this subsection if:

  (a)   the building is a commercial building that is any of the following (or is a combination of any of the following):

  (i)   an office building;

  (ii)   a hotel for use wholly or mainly to provide short - term accommodation for travellers;

  (iii)   a shopping centre; or

  (b)   the building satisfies the requirements prescribed by the regulations for the purposes of this paragraph.

  (4)   A building satisfies the requirements in this subsection if:

  (a)   the building:

  (i)   has, and continues to maintain at all times during the income year, at least a 5 Star Green Star rating as certified by the Green Building Council of Australia; or

  (ii)   has, and continues to maintain at all times during the income year, at least a 5.5 star energy rating as accredited by the National Australian Built Environment Rating System ( NABERS ); or

  (b)   the building satisfies the requirements prescribed by the regulations for the purposes of this paragraph.

  (5)   For the purposes of subsection   (4), if:

  (a)   a building has previously satisfied the requirements in that subsection; and

  (b)   the building then fails to satisfy the requirements for a period (the non - compliance period ); and

  (c)   within 180 days after the first day of that failure, the building again satisfies the requirements;

treat the building as having satisfied the requirements during the non - compliance period.

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

  (b)   at least one of the arrangement entities is an * operating entity; and

  (c)   the following conditions are satisfied:

  (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.

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

  (c)   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 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; or

  (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

  (c)   either:

  (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.

  (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.

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

  (c)   treat references in this section to the assessable income of the 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   (3) if the Treasurer is satisfied that the following criteria are met:

  (a)   the facility is an * economic infrastructure facility;

  (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;

  (c)   in the case of an application in respect of an improvement to 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;

  (c)   communications 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

  (c)   must specify the date on which the approval comes into 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 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

  (c)   all the entities that are * 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