Commonwealth Numbered Acts

TAXATION LAWS AMENDMENT ACT (No. 4) 1986 No. 154 of 1986 - SECT 46

46. After section 221YHZ of the Principal Act the following Division is
inserted: "Division 3B-Collection of Tax in Respect of Certain Natural
Resource Payments
and Royalty Payments Interpretation

"221YHZA. (1) In this Division-
'government body' means the Commonwealth, a State, a Territory or an authority
of the Commonwealth or a State or Territory;
'natural resource payment' means a payment that is calculated, in whole or in
part, by reference to the value or quantity of natural resources produced,
recovered or produced and recovered, in Australia after 7 April 1986, but does
not include a royalty payment;
'royalty payment' means a payment of, or by way of, royalty, but does not
include a payment of income to which section 136A applies.

"(2) For the purposes of this Division, where money is not actually paid to a
non-resident but is reinvested, accumulated, capitalised or otherwise dealt
with on behalf of the non-resident, or as the non-resident directs, the money
shall be deemed to have been paid to the non-resident.

"(3) For the purposes of this Division, where one or more of the partners in a
partnership is a non-resident, the partnership shall be deemed to be a
non-resident. Person making natural resource payment, or royalty payment, to
non-resident to ascertain amount to be deducted in respect of tax

"221YHZB. (1) Subject to sub-section (4), a person who is liable to make a
natural resource payment, or a royalty payment, to a non-resident shall not
make such a payment to the non-resident unless-

   (a)  the person has given to the Commissioner a statement in writing
        setting out the amount of the natural resource payment, or royalty
        payment, as the case may be, due to the non-resident; and

   (b)  the Commissioner has subsequently given to the person a notice in
        writing setting out the amount (if any) required to be deducted from
        the payment in respect of tax due, or which may become due, by the
        non-resident.
Penalty: $2,000.

"(2) In a prosecution of a person for an offence against sub-section (1) in
relation to a payment made to a non-resident, it is a defence if the person
proves that, at the time of making the payment, the person-

   (a)  did not know; and

   (b)  could not reasonably have been expected to have known, that the
        payment was a payment made to a non-resident.

"(3) Where a person (in this sub-section referred to as the 'convicted
person') is convicted before a court of an offence against sub-section (1) in
relation to a payment, the court may, in addition to imposing a penalty on the
convicted person for the offence, order the convicted person to pay to the
Commissioner an amount not exceeding the amount that, in the opinion of the
court, might reasonably have been expected to be required to be deducted from
that payment.

"(4) The Commissioner may issue to a person a certificate exempting the person
from compliance with sub-section (1) in respect of a specified payment, or
payments included in a specified class of payments, to a non-resident.

"(5) A certificate issued to a person under sub-section (4) exempting the
person from compliance with sub-section (1) in respect of a specified payment,
or payments included in a specified class of payments, to a non-resident is
subject to the following conditions:

   (a)  a condition that the person shall, before making such a payment,
        deduct from the payment an amount (if any) ascertained in accordance
        with the certificate, in respect of tax due, or which may become due,
        by the non-resident;

   (b)  such other conditions (if any) as are specified in the certificate,
        but a person is not guilty of an offence against sub-section (1) by
        reason of a contravention of such a condition.

"(6) The Commissioner may, by notice in writing served on the holder of a
certificate issued under sub-section (4)-

   (a)  revoke the certificate;

   (b)  impose one or more further conditions to which the certificate is
        subject;

   (c)  vary the condition referred to in paragraph (5) (a); or

   (d)  vary or revoke a condition referred to in paragraph (5) (b).

"(7) Without limiting the generality of sub-section (6), where the holder of a
certificate issued under sub-section (4) contravenes a condition of the
certificate, the Commissioner may revoke the certificate under sub-section
(6).

"(8) A contravention of sub-section (1) does not constitute an offence against
section 8C of the Taxation Administration Act 1953. Duty of payer to deduct
amount in respect of tax

"221YHZC. (1) Where a person who is liable to make a natural resource payment,
or a royalty payment, to a non-resident-

   (a)  ascertains under sub-section 221YHZB (1) the amount required to be
        deducted from a payment to the non-resident; or

   (b)  is required, as a condition of a certificate issued to the person
        under sub-section 221YHZB (4), to deduct an amount from a payment to
        the non-resident, the person shall, at the time of making the payment,
        deduct from the payment the amount required to be deducted.
Penalty: $1,000.

"(2) Where a person (in this sub-section referred to as the 'convicted
person') is convicted before a court of an offence against sub-section (1) in
relation to the refusal or failure of the convicted person or any other person
to deduct an amount from a payment, the court may, in addition to imposing a
penalty on the convicted person for the offence, order the convicted person to
pay to the Commissioner an amount not exceeding the amount required to be
deducted.

"(3) Where a person other than a government body refuses or fails, at the time
of making a payment to a non-resident, to deduct from the payment the amount
required to be deducted under sub-section (1), the person is liable to pay to
the Commissioner, by way of penalty-

   (a)  an amount (in this sub-section referred to as the 'undeducted amount')
        equal to the amount that the person refused or failed to deduct; and

   (b)  an amount equal to 20% per annum of so much of the undeducted amount
        as remains unpaid, computed from the end of the period within which
        the person, had the person deducted the amount required to be deducted
        under sub-section (1), would have been required to pay the amount
        deducted to the Commissioner.

"(4) Where a person, being a government body other than the Commonwealth,
refuses or fails, at the time of making a payment to a non-resident, to deduct
from the payment the amount required to be deducted under sub-section (1), the
person is liable to pay to the Commissioner, by way of penalty, an amount
equal to 20% per annum of the amount that the person refused or failed to
deduct in respect of the period commencing at the end of the period within
which the person, had it deducted the amount required to be deducted under
sub-section (1), would have been required to pay the amount deducted to the
Commissioner and ending on the day on which the whole of the amount payable by
the person under this sub-section in respect of the first-mentioned amount is
paid. Duty of payer to pay deducted amount to Commissioner

"221YHZD. (1) A person who deducts, or purports to deduct, under sub-section
221YHZC (1), an amount from a payment to a non-resident, shall-

   (a)  pay the amount to the Commissioner; and

   (b)  notify the Commissioner in writing of the date on which the amount was
        so deducted, within 14 days after the end of the month in which the
        person makes the payment to the non-resident.
Penalty: $5,000 or imprisonment for 12 months, or both.

"(2) Where an amount (in this sub-section referred to as the 'principal
amount') payable to the Commissioner by a person other than the Commonwealth
by virtue of sub-section (1) remains unpaid after the end of the period within
which it is required to be paid-

   (a)  the principal amount continues to be payable by the person to the
        Commissioner; and

   (b)  the person is liable to pay to the Commissioner, by way of penalty-

        (i)    in a case where the person is a government body-an amount at
               the rate of 20% per annum on so much of the principal amount as
               remains unpaid, computed from the end of that period; and

        (ii)   in any other case-

                (A)  an amount (in this sub-paragraph referred to as the
                     'relevant penalty amount') equal to 20% of the principal
                     amount; and

                (B)  an amount at the rate of 20% per annum of the sum of so
                     much of the principal amount as remains unpaid and so
                     much of the relevant penalty amount as remains unpaid,
                     computed from the end of that period.

"(3) Where-

   (a)  an amount deducted from a payment is payable to the Commissioner under
        sub-section (1) by a person; and

   (b)  the property of that person has become vested in, or the control of
        the property of that person has passed to, a trustee, the trustee is
        liable to pay the amount to the Commissioner.

"(4) Notwithstanding anything contained in any other law of the Commonwealth,
or in any law of a State or of the Northern Territory-

   (a)  an amount payable to the Commissioner by a trustee under sub-section
        (3) has priority over all other debts (other than amounts payable
        under sub-section 221P (1) or 221YHJ (3)), whether preferential,
        secured or unsecured; and

   (b)  where an amount is payable by a trustee to the Commissioner under
        sub-section 221P (1) or 221YHJ (3), an amount payable by the trustee
        under sub-section (3) of this section ranks equally with the amount
        payable under sub-section 221P (1) or 221YHJ (3), as the case
        requires, in priority to all other debts, whether preferential,
        secured or unsecured.

"(5) Where a trustee, being a trustee of an estate of a bankrupt or the
liquidator of a company that is being wound up, is liable to pay an amount to
the Commissioner under this section, sub-section (4) does not have the effect
that the amount is payable in priority to any costs, charges or expenses of
the administration of the estate or of the winding up of the company
(including costs of a creditor or other person upon whose petition the
sequestration order or the winding up order (if any) was made and remuneration
of the trustee) that are lawfully payable out of the assets of the estate or
of the company except where, in the case of the winding up of a company, the
Crown in right of a State or of the Northern Territory or any other creditor
is entitled to the payment of a debt by the liquidator, in priority to all or
any of those costs, charges and expenses and has not waived that priority.
Remission of certain amounts

"221YHZE. (1) Where an amount (in this section referred to as the 'late
payment penalty') is payable by a person under paragraph 221YHZC (3) (b),
sub-paragraph 221YHZD (2) (b) (i) or sub-sub-paragraph 221YHZD (2) (b) (ii)
(B), in relation to another amount that has not been paid (in this section
referred to as the 'principal amount') and-

   (a)  the Commissioner is satisfied that-

        (i)    the circumstances that contributed to the delay in payment of
               the principal amount were not due to, or caused directly or
               indirectly by, an act or omission of the person; and

        (ii)   the person has taken reasonable action to mitigate, or mitigate
               the effects of, those circumstances;

   (b)  the Commissioner is satisfied that-

        (i)    the circumstances that contributed to the delay in payment of
               the principal amount were due to, or caused directly or
               indirectly by, an act or omission of the person;

        (ii)   the person has taken reasonable action to mitigate, or mitigate
               the effects of, those circumstances; and

        (iii)  having regard to the nature of those circumstances, it would be
               fair and reasonable to remit the late payment penalty or part
               of the late payment penalty; or

   (c)  the Commissioner is satisfied that there are special circumstances by
        reason of which it would be fair and reasonable to remit the late
        payment penalty or part of the late payment penalty, the Commissioner
        may remit the late payment penalty or part of the late payment
        penalty.

"(2) The Commissioner may, in any case, for reasons that the Commissioner
thinks sufficient, remit the whole or any part of any amount payable by a
person under paragraph 221YHZC (3) (a), sub-section 221YHZC (4) or
sub-sub-paragraph 221YHZD (2) (b) (ii) (A).

"(3) Where the Commissioner makes a decision to remit part only of an amount
payable as mentioned in sub-section (2), or not to remit any part of such an
amount, the Commissioner shall give notice in writing of the decision to the
person by whom the amount is, or but for the remission would be, payable.
Reduction of late payment penalty where judgment debt carries interest

"221YHZF. (1) Where judgment is given by, or entered in, a court for the
payment of-

   (a)  the whole or a part of a principal amount; or

   (b)  an amount that includes the whole or a part of a principal amount,
        then-

   (c)  the principal amount or the part of the principal amount, as the case
        may be, shall not be taken, for the purposes of paragraph 221YHZC (3)
        (b), sub-paragraph 221YHZD (2) (b) (i) or sub-sub-paragraph 221YHZD
        (2) (b)(ii) (B), as the case requires, to have ceased to be due and
        payable by reason only of the giving or entering of the judgment; and

   (d)  if the judgment debt carries interest, the amount that would, but for
        this paragraph, be payable by virtue of paragraph 221YHZC (3) (b),
        sub-paragraph 221YHZD (2) (b) (i) or sub-sub-paragraph 221YHZD (2) (b)
        (ii) (B), as the case may be, in relation to the principal amount or
        the part of the principal amount, as the case may be, shall, by force
        of this paragraph, be reduced by-

        (i)    in a case to which paragraph (a) applies-the amount of the
               interest; or

        (ii)   in a case to which paragraph (b) applies-an amount calculated
               in accordance with the formula AB, where-
---
C
A is the amount of the interest;
B is the principal amount or the part of the principal amount, as the case may
be; and
C is the amount of the judgment debt.

"(2) In sub-section (1), 'principal amount' means-

   (a)  an amount of the kind referred to in sub-section 221YHZC (3) as the
        undeducted amount;

   (b)  an amount of the kind referred to in sub-section 221YHZD (2) as the
        principal amount; or

   (c)  an amount of the kind referred to in sub-paragraph 221YHZD (2) (b)
        (ii) as the relevant penalty amount. Penalties to be alternative to
        prosecution for certain offences

"221YHZG. (1) Where-

   (a)  but for this sub-section, an amount is payable, by way of penalty, by
        a person to the Commissioner under this Division by reason of an act
        or omission of the person; and

   (b)  a prosecution is instituted against the person for an offence against
        this Division constituted by the act or omission, the amount is not
        payable unless and until the prosecution is withdrawn.

"(2) Where-

   (a)  a person is liable to pay, by way of penalty, an amount (in this
        sub-section referred to as the 'penalty amount') to the Commissioner
        under this Division by reason of an act or omission of the person;

   (b)  an amount (in this sub-section referred to as the 'applied amount') is
        paid, or applied by the Commissioner, in total or partial discharge of
        the liability; and

   (c)  a prosecution is instituted against the person for an offence against
        this Division constituted by the act or omission, the applied amount
        shall be refunded to the person or applied by the Commissioner in
        total or partial discharge of a tax liability of the person, but, if
        the prosecution is withdrawn, the person shall again become liable to
        pay the penalty amount.

"(3) In sub-section (2), 'tax liability' means tax liability as defined in
section 2 of the Taxation Administration Act 1953. Persons discharged from
liability in respect of deducted amounts

"221YHZH. Where a person has deducted an amount from a payment and that
deduction was made, or purports to have been made, for the purposes of
sub-section 221YHZC (1), the person is discharged from all liability to pay or
to account for the deducted amount to a person other than the Commissioner.
Recovery of amounts by Commissioner

"221YHZJ. (1) An amount payable to the Commissioner under this Division by a
person other than the Commonwealth is a debt due to the Commonwealth and
payable to the Commissioner and-

   (a)  that amount may be sued for and recovered in a court of competent
        jurisdiction by the Commissioner or a Deputy Commissioner suing in his
        or her official name; or

   (b)  a court before which proceedings are taken against that person for an
        offence against a provision of this Division may order that person to
        pay that amount to the Commissioner.

"(2) The provisions of section 8ZL of the Taxation Administration Act 1953
apply in proceedings for the recovery of an amount payable to the Commissioner
under this Division in the same manner as those provisions apply in relation
to a prosecution for a prescribed taxation offence within the meaning of Part
III of that Act.

"(3) Where-

   (a)  2 or more amounts payable to the Commissioner by a person would, but
        for this sub-section, be debts due to the Commonwealth under
        sub-section (1);

   (b)  an amount (in this sub-section referred to as the 'debt payment') is
        paid to the Commissioner in respect of one or more of those amounts;
        and

   (c)  the sum of the amounts payable exceeds the debt payment, the
        Commissioner may, notwithstanding any direction to the contrary by or
        on behalf of the person by whom the amounts are payable or the person
        making the debt payment, apply the debt payment in partial discharge
        of the sum of the amounts payable and recover as a debt due to the
        Commonwealth the amount by which the sum of the amounts payable
        exceeds the debt payment. Credits in respect of deducted amounts

"221YHZK. (1) Where-

   (a)  the Commissioner is satisfied that an amount or amounts (in this
        sub-section referred to as the 'deducted amounts') were deducted, or
        were purportedly deducted, during a year of income, under sub-section
        221YHZC (1), from a payment or payments to a person, not being a
        partnership or the trustee of a trust estate; and

   (b)  an assessment has been made of the tax payable, or the Commissioner is
        satisfied that no tax is payable, by the person in relation to the
        year of income, the person is entitled to a credit of an amount equal
        to the deducted amounts.

"(2) Where-

   (a)  the Commissioner is satisfied that an amount or amounts (in this
        sub-section referred to as the 'deducted amounts') were deducted, or
        were purportedly deducted, during a year of income, under sub-section
        221YHZC (1), from a payment or payments to a person, being a
        partnership (in this sub-section referred to as the 'partnership
        payments'); and

   (b)  an assessment has been made of the tax payable, or the Commissioner is
        satisfied that no tax is payable, in relation to the year of income by
        a partner in the partnership whose individual interest in the net
        income or partnership loss of the partnership is wholly or partly
        attributable to the partnership payments, the partner is entitled to a
        credit of an amount equal to so much of the deducted amounts as the
        Commissioner is satisfied is attributable to that individual interest.

"(3) Where the Commissioner is satisfied that an amount or amounts (in this
sub-section referred to as the 'deducted amounts') were deducted, or were
purportedly deducted, during a year of income, under sub-section 221YHZC (1),
from a payment or payments to a person, being a trustee of a trust estate (in
this sub-section referred to as the 'trust payments'), the following
provisions have effect:

   (a)  where-

        (i)    a share of the net income of the trust estate is included in
               the assessable income of a beneficiary of the trust estate
               under section 97, being a share that is wholly or partly
               attributable to the trust payments; and

        (ii)   an assessment has been made of the tax payable, or the
               Commissioner is satisfied that no tax is payable, by the
               beneficiary in relation to the year of income,
the beneficiary is entitled to a credit of an amount equal to so much of the
deducted amounts as the Commissioner is satisfied is attributable to that
share of the net income of the trust estate;

   (b)  where-

        (i)    the trustee is liable to be assessed under section 98 in
               respect of a share of the net income of the trust estate to
               which a beneficiary is presently entitled, being a share that
               is wholly or partly attributable to the trust payments; and

        (ii)   an assessment has been made of the tax payable, or the
               Commissioner is satisfied that no tax is payable, by the
               trustee in respect of that share,
the trustee is entitled to a credit of an amount equal to so much of the
deducted amounts as the Commissioner is satisfied is attributable to that
share of the net income of the trust estate;

   (c)  where-

        (i)    the trustee is liable to be assessed under section 99 or 99A in
               respect of the net income, or a part of the net income, of the
               trust estate and that net income or part is wholly or partly
               attributable to the trust payments; and

        (ii)   an assessment has been made of the tax payable, or the
               Commissioner is satisfied that no tax is payable, by the
               trustee under those sections in respect of that net income or
               part,
the trustee is entitled to a credit of an amount equal to so much of the
deducted amounts as the Commissioner is satisfied is attributable to the net
income or the part of the net income of the trust estate;

   (d)  where there is no net income of the trust estate of the year of
        income, the trustee is entitled to a credit of an amount equal to the
        deducted amounts. Application of credits

"221YHZL. (1) Subject to this section, the amount of a credit to which a
person is entitled by virtue of this Division is a debt due and payable to
that person by the Commissioner on behalf of the Commonwealth.

"(2) Where, in a case to which none of sub-sections (3), (4) and (5) applies,
a person is entitled to a credit under section 221YHZK, the Commissioner
shall-

   (a)  if the amount of the credit does not exceed the tax payable by the
        person under an assessment in relation to the year of income in which
        the deductions to which the credit relates were made-apply the amount
        of the credit in payment or part payment of that tax; and

   (b)  if the amount of the credit exceeds the tax payable-apply-

        (i)    so much of the amount of the credit as does not exceed the tax
               in payment of the tax; and

        (ii)   so much of the excess as does not exceed the amount of any
               other tax payable by the person in payment or part payment of
               that other tax.

"(3) Where the trustee of a trust estate is entitled to a credit under
paragraph 221YHZK (3) (b) in relation to a share of a beneficiary of the net
income of the trust estate of a year of income, the Commissioner shall-

   (a)  if the amount of the credit does not exceed the tax payable in respect
        of that share-apply the amount of the credit in payment or part
        payment of that tax; and

   (b)  if the amount of the credit exceeds the tax payable in respect of that
        share-apply-

        (i)    so much of the amount of the credit as does not exceed the tax
               payable in respect of that share in payment of the tax; and

        (ii)   so much of the excess as does not exceed the amount of any tax
               payable by the trustee under section 98 in respect of a share
               of the beneficiary of the net income of the trust estate of any
               other year of income in payment or part payment of that other
               tax.

"(4) Where the trustee of a trust estate is entitled to a credit under
paragraph 221YHZK (3) (c) in relation to the net income or a part of the net
income of the trust estate, the Commissioner shall-

   (a)  if the amount of the credit does not exceed the tax payable under
        section 99 or 99A in respect of that net income or part-apply the
        amount of the credit in payment or part payment of that tax; and

   (b)  if the amount of the credit exceeds the tax payable under section 99
        or 99A in respect of that net income or part-apply-

        (i)    so much of the amount of the credit as does not exceed that tax
               in payment of that tax; and

        (ii)   so much of the excess as does not exceed the amount of any tax
               payable by the trustee under section 99 or 99A in respect of
               the net income or a part of the net income of the trust estate
               of any other year of income in payment or part payment of that
               other tax.

"(5) Where the trustee of a trust estate is entitled to a credit under
paragraph 221YHZK (3) (d) in relation to amounts deducted during a year of
income out of payments made to the trustee, the Commissioner shall-

   (a)  if the amount of the credit does not exceed the amount of any tax
        payable by the trustee under section 99 or 99A in respect of the net
        income or a part of the net income of the trust estate of any other
        year of income-apply the amount of the credit in payment or part
        payment of that tax; and

   (b)  if the amount of the credit exeeds the amount of any tax payable by
        the trustee under section 99 or 99A in respect of the net income or a
        part of the net income of the trust estate of any other year of
        income-apply so much of the amount of the credit as does not exceed
        that tax in payment of that tax.

"(6) Where, under sub-section (2), (3), (4) or (5), the Commissioner has
applied an amount of a credit in payment of an amount of tax payable by a
person, the person shall be deemed to have paid the amount so applied in
payment of the tax and at the time at which it was so applied or at such
earlier time as the Commissioner determines.

"(7) Where the amount, or the sum of the amounts, applied or paid by the
Commissioner as a credit to which a person is entitled under this Division
exceeds the amount of the credit to which the person is so entitled, the
Commissioner may recover the amount of the excess as if it were income tax due
and payable by that person.

"(8) In this section-

   (a)  a reference to tax payable by a person other than a trustee is a
        reference to an amount payable by the person to the Commonwealth
        under, or by virtue of, this Act;

   (b)  a reference to tax payable by the trustee of a trust estate in respect
        of a share of a beneficiary of the net income of the trust estate of a
        year of income is a reference to any amount payable by the trustee to
        the Commonwealth under, or by virtue of, this Act in relation to the
        beneficiary in relation to the year of income; and

   (c)  a reference to tax payable by the trustee of a trust estate under
        section 99 or 99A in respect of the net income or a part of the net
        income of the trust estate of a year of income is a reference to any
        amount payable by the trustee to the Commonwealth under, or by virtue
        of, this Act in relation to the trust estate in relation to the year
        of income, not being an amount payable by the trustee in relation to a
        particular beneficiary. Review of decisions

"221YHZM. (1) Where a person who has been notified of a decision of the
Commissioner made under sub-section 221YHZE (2) (other than in relation to an
amount payable under sub-section 221YHZC (4)) is dissatisfied with the
decision, the person may, within 60 days after service on the person of notice
of the decision of the Commissioner, lodge with the Commissioner an objection
in writing against the decision stating fully and in detail the grounds on
which the person relies.

"(2) The provisions of Division 2 of Part V (other than section 185) apply in
relation to an objection made under sub-section (1) in the same manner as
those provisions apply in relation to an objection against an assessment.
Application of Division to partnerships

"221YHZN. (1) Subject to this section, this Division applies to a partnership
as if the partnership were a person.

"(2) Where, but for this sub-section, an obligation would be imposed on a
partnership by virtue of the operation of sub-section (1), the obligation is
imposed on each partner, but may be discharged by any of the partners.

"(3) Where, by virtue of the operation of sub-section (1), an amount is
payable under this Division by a partnership, the partners are jointly and
severally liable to pay that amount.

"(4) Where, by virtue of the operation of sub-section (1), an offence against
this Division is deemed to have been committed by a partnership, that offence
shall be deemed to have been committed by each of the partners.

"(5) In a prosecution of a person for an offence by virtue of this section, it
is a defence if the person proves that the person-

   (a)  did not aid, abet, counsel or procure the act or omission by virtue of
        which the offence is deemed to have been committed; and

   (b)  was not in any way, by act or omission, directly or indirectly,
        knowingly concerned in, or party to, the act or omission by virtue of
        which the offence is deemed to have been committed.

"(6) A reference in this section to this Division includes a reference to Part
III of the Taxation Administration Act 1953 to the extent to which that Part
of that Act relates to this Division.".