Commonwealth Numbered Acts

TAXATION LAWS AMENDMENT ACT (NO. 4) 1997 NO. 174 OF 1997 - SCHEDULE 5--Charitable

Income Tax Assessment Act 1936

1 At the end of paragraph 23(e)

Add:

which:

(i) has a physical presence in Australia and, to that extent, incurs its expenditure and pursues its objectives principally in Australia; or

(ii) is an institution to which a gift by a taxpayer is an allowable deduction because the institution is referred to in a table in subsection 78(4); or

(iii) is a prescribed institution which is located outside Australia and is exempt from income tax in the country in which it is resident; or

(iv) is a prescribed charitable or religious institution that has a physical presence in Australia but which incurs its expenditure and pursues it objects principally outside Australia;

Add:

and which:

(i) has a physical presence in Australia and, to that extent, incurs its expenditure and pursues its objectives principally in Australia; or

(ii) is an institution to which a gift by a taxpayer is an allowable deduction because the institution is referred to in a table in subsection 78(4); or

(iii) is a prescribed institution which is located outside Australia and is exempt from income tax in the country in which it is resident;

Add:

, and which is located in Australia and incurs its expenditure and pursues its objectives principally in Australia;

Repeal the paragraph, substitute:

(g) the income of a society, association or club that:

(i) is a friendly society, not being a friendly society dispensary; or

(ii) is established for musical purposes, or for the encouragement of music, art, science or literature; or

(iii) is established for the encouragement or promotion of a game or sport; or

(iv) is established for the encouragement or promotion of animal races; or

(v) is established for community service purposes (not being political purposes or lobbying purposes);

and is a society, association or club not carried on for the purposes of profit or gain to its individual members which:

(vi) has a physical presence in Australia and, to that extent, incurs its expenditure and pursues its objectives principally in Australia; or

(vii) is a society, association or club to which a gift by a taxpayer is an allowable deduction because the society, association or club is referred to in a table in subsection 78(4); or

(viii) is a prescribed society, association or club which is located outside Australia and is exempt from income tax in the country in which it is resident;

Omit "or instrument of trust", substitute "before 1 July 1997".

6 After subparagraph 23(j)(ii)

Insert:

(iia) a fund established in Australia by will or instrument of trust for public charitable purposes which:

(B) is a fund to which a gift by a taxpayer is an allowable deduction because it is referred to in a table in subsection 78(4) or is an ancillary fund as defined in subsection 78(5); or

(C) distributes solely, and has at all times since 1 July 1997 distributed solely, to a charitable fund, foundation or institution which, to the best of the trustee's knowledge, is located in Australia and incurs its expenditure principally in Australia and pursues its objects solely in Australia; or

(D) distributes solely, and has at all times since 1 July 1997 distributed solely, to a charitable fund, foundation or institution which, to the best of the trustee's knowledge, is a charitable fund, foundation or institution to which a gift by a taxpayer is an allowable deduction because it is referred to in a table in subsection 78(4) or is an ancillary fund as defined in subsection 78(5); and

7 Subparagraph 23(j)(iii)

Repeal the subparagraph, substitute:

(iii) a fund that is located in, and which incurs its expenditure principally in, Australia and that is established for the purpose of enabling scientific research to be conducted principally in Australia by or in conjunction with a public university or public hospital; or

(iv) a scientific research fund that is referred to in subsection 78(4) or 78(5);

Insert:

SECT 23AAAA Certain distributions may be made overseas (1) In determining for the purposes of paragraphs 23(e), (ea), (f), (g) or subparagraph 23(j)(iii) whether an institution, fund or other body incurs its expenditure or pursues its objectives principally in Australia, distributions of any amount received by the institution as a gift whether of money or other property or by way of government grant are to be disregarded.

(2) In determining for the purposes of paragraph 23(e), (ea) or (g) whether an institution or other body incurs its expenditure or pursues its objectives principally in Australia, distributions of any amount from a fund that is referred to in subsection 78(4) and operated by the institution or other body are to be disregarded.

(3) In determining for the purposes of subparagraph 23(j)(iia) whether a fund:

(a) incurs, and has at all times since 1 July 1997 incurred, its expenditure principally in Australia and pursues, and has at all times since 1 July 1997, pursued its charitable purpose solely in Australia; or

(b) distributes solely, and has at all times since 1 July 1997 distributed solely, to a charitable fund, foundation or institution described in sub-subparagraph 23(j)(iia)(C) or (D);

SECT 23AAAB Testamentary trusts may be treated as 2 trusts (1) If:

(a) a trust (the existing trust ) covered by subparagraph 23(j)(ii) is in existence immediately before 1 July 1997; and

(b) on or after 1 July 1997 one or more assets are given to the existing trust (other than in return for valuable consideration) or become part of the trust property under a will;

(c) the new trust is taken to be a trust created after the start of 1 July 1997 that consists of so much of the trust property as consists of those assets together with any income derived from those assets; and

(d) the old trust is taken to be a trust created before 1 July 1997 that consists of the remainder of the trust property.

(3) Where an asset is received in substitution for another asset, subsection (1) applies as if the substituted asset were the other asset.

9 Paragraph 128B(3)(a)

Omit "paragraph 23(e), (ea), (f), (g), (h), (j) or (jb)", substitute "paragraph 23(e), (ea), (g), (h) or (jb) or subparagraph 23(j)(ii)".

10 After subsection 262A(1B)

Insert:

(1C) Without limiting subsection (1), if a trust is taken to be 2 separate trusts under section 23AAAB, the trustee must maintain accounting records in respect of, and separately account for, those 2 trusts.

11 Application

The amendments of the Income Tax Assessment Act 1936 made by items 1 to 4 and 6 to 10 of this Schedule apply in relation to income derived on or after 1 July 1997.