TAX LAW IMPROVEMENT ACT 1997 NO. 121, 1997 - SCHEDULE 3

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TAX LAW IMPROVEMENT ACT 1997 NO. 121, 1997 - SCHEDULE 3

- Exempt income

Part 1—Amendment of the Income Tax (Transitional Provisions) Act 1997
1 Section 43-105 (link note)

Repeal the link note, substitute:

[The next Part is Part 2-15.]

2 At the end of Chapter 2

Add:

Part 2-15—Exempt income
Division 50—Exempt entities

Table of sections

50-1 Application of Division 50 of the Income Tax Assessment Act 1997

Division 50 of the Income Tax Assessment Act 1997 applies to assessments for the 1997-98 income year and later income years.

Division 51—Exempt amounts

Table of sections

51-1 Application of Division 51 of the Income Tax Assessment Act 1997
51-5 Keeping in force old regulations about exempt allowances and bounties

51-1 Application of Division 51 of the Income Tax Assessment Act 1997

Division 51 of the Income Tax Assessment Act 1997 applies to assessments for the 1997-98 income year and later income years.

51-5 Keeping in force old regulations about exempt allowances and bounties

Any regulations made for the purposes of subparagraph 23(t)(iii) of the Income Tax Assessment Act 1936 that are in force at the end of the 1996-97 income year have effect in the 1997-98 income year and later income years as if they were regulations made for the purposes of items 1.1 and 1.2 of the table in section 51-5 of the Income Tax Assessment Act 1997 .

Note: Subparagraph 23(t)(iii) of the Income Tax Assessment Act 1936 and items 1.1 and 1.2 of the table in section 51-5 of the Income Tax Assessment Act 1997 exempt from income tax prescribed allowances and bounties payable to, or in respect of, a member of the Defence Force.

Division 52—Certain pensions, benefits and allowances are exempt from income tax

Table of sections

52-1 Application of Division 52 of the Income Tax Assessment Act 1997

Division 52 of the Income Tax Assessment Act 1997 applies to assessments for the 1997-98 income year and later income years.

Division 53—Various exempt payments

Table of sections

53-1 Application of Division 53 of the Income Tax Assessment Act 1997

Division 53 of the Income Tax Assessment Act 1997 applies to assessments for the 1997-98 income year and later income years.

[The next Division is Division 55.]

Division 55—Payments that are not exempt from income tax

Table of sections

55-1 Application of Division 55 of the Income Tax Assessment Act 1997

Division 55 of the Income Tax Assessment Act 1997 applies to assessments for the 1997-98 income year and later income years.

[The next Part is Part 2-25.]

Part 2—Consequential amendment of the Income Tax Assessment Act 1997
3 Section 11-5 (table)

Repeal the table, substitute:

charity, education, religion or science
charitable fund, public	50-5
charitable institution	50-5
educational institution, public	50-5
religious institution	50-5
scientific institution	50-5
scientific research fund	50-5
scientific society etc.	50-5
community service
community service society etc.	50-10
employees and employers
employee association	50-15
employer association	50-15
trade union	50-15
film
Australian Film Finance Corporation	50-45
finance
friendly society	50-20
government
local governing body	50-25
municipal corporation	50-25
public authority	50-25
state/territory bodies	24AK to 24AZ
health
health benefits organisation	50-30
hospital	50-30
medical benefits organisation	50-30
mining
British Phosphate Commissioners Banaba Contingency Fund	50-35
Phosphate Mining Company of Christmas Island	50-35
primary or secondary resources, and tourism
agricultural society etc.	50-40
aviation society etc.	50-40
horticultural society etc.	50-40
industrial society etc.	50-40
manufacturing society etc.	50-40
pastoral society etc.	50-40
tourism society etc.	50-40
viticultural society etc.	50-40
sports, culture or recreation
animal racing society etc.	50-45
art society etc.	50-45
game society etc.	50-45
literature society etc.	50-45
music society etc.	50-45
sport society etc.	50-45

4 Section 11-10 (table item headed "foreign aspects of income taxation")

Omit "23(za)", substitute "51-10".

5 Section 11-15 (table item headed "defence")

Repeal the item, substitute:

defence
Defence Force member, allowances	51-5
Emergency Defence Force member, pay and allowances	51-5
Reserve Defence Force member, pay and allowances	51-5

6 Section 11-15 (table item headed "education")

Repeal the item, substitute:

education
bursary, educational allowance etc.	23(z)
CRAFT scheme, employer's income from	51-10
foreign student, scholarship and bursary to	23(ya)
full-time student, income from a scholarship, bursary, other educational allowance or educational assistance	23(z)
isolated child, income for the provision of education of	23(zaa)
secondary student, income for the provision of education of	23(zaa)

7 Section 11-15 (table item headed "health")

Repeal the item.

8 Section 11-15 (table item headed "mining")

Repeal the item, substitute:

mining
Aboriginal and Torres Strait Islander, mining payment	51-25 and 51-45
distributing body, mining payment	51-25 and 51-45
rights to mine, sale of	330-60

9 Section 11-15 (table item headed "social security or like payments")

Repeal the item, substitute:

social security or like payments
disability services payment	53-10
domiciliary nursing care benefit	53-10
drought relief, payment for	53-10 and 53-15
persecution victim, pension etc. for	23(kc)
resistance fighter and victim of wartime persecution, pension and etc. for	23(kca)
social security, payment to	Subdivision 52-A
veteran, Australian and United Kingdom, payment to	53-20
veteran, payment to	Subdivisions 52-B and 52-C
wounds and disability pension	53-10
youth training allowance, payment of	24ABZE and 24ABZF

10 Section 11-15 (table item headed "vice regal")

Repeal the item, substitute:

vice-regal
Governor-General, official salary and foreign income	51-15
State Governor, official salary and foreign income	51-15

11 Section 11-15 (table item headed "welfare")

Repeal the item, substitute:

welfare
Handicapped Persons Assistance Act 1974 , bonus from	51-30
maintenance payment	51-30 and 51-50
rent subsidy	51-30

12 Subparagraph 43-55(1)(a)(i)

Repeal the subparagraph, substitute:

(i): an entity to which section 50-5, 50-10, 50-15, 50-20, 50-25, 50-30, 50-40 or 50-45 (dealing with ^*exempt income) applies; or

13 Subparagraph 43-55(1)(a)(ii)

Omit "that Act", substitute "the Income Tax Assessment Act 1936 ".

14 Paragraph 330-375(2)(b)

Omit "a ^*public body's", substitute "an ^*exempt Australian government agency's".

15 Subsection 330-375(3)

Omit "a ^*public body's", substitute "an ^*exempt Australian government agency's".

16 Subsection 330-380(2)

Repeal the subsection.

Note: The heading to section 330-380 is altered by omitting "and public body ".

17 Subsection 995- 1(1)

Insert:

"Aboriginal" has the meaning given by section 128U of the Income Tax Assessment Act 1936 .

18 Subsection 995- 1(1)

Insert:

"Australian government agency" means:

(a): the Commonwealth, a State or a Territory; or
(b): an authority of the Commonwealth or of a State or a Territory.

19 Subsection 995- 1(1)

Insert:

"bereavement Subdivision" has the meaning given by section 52-20.

20 Subsection 995- 1(1)

Insert:

"distributing body" has the meaning given by section 128U of the Income Tax Assessment Act 1936 .

21 Subsection 995- 1(1) (definition of exempt Australian government agency )

Repeal the definition, substitute:

"exempt Australian government agency" means:

(a): the Commonwealth, a State or a Territory; or
(b): an authority of the Commonwealth or of a State or a Territory whose ^*ordinary income and ^*statutory income is exempt from income tax because of Division 50; or
(c): an STB (within the meaning of Division 1AB of Part III of the Income Tax Assessment Act 1936 ) whose ^*ordinary income and ^*statutory income is exempt from income tax under that Division of that Part.

22 Subsection 995- 1(1)

Insert:

"friendly society" means a society registered as a friendly society under an ^*Australian law.

23 Subsection 995- 1(1)

Insert:

"friendly society dispensary" means an approved pharmacist (within the meaning of Part VII of the National Health Act 1953 ) that is:

(a): a ^*friendly society; or
(b): a body carrying on ^*business for the benefit of members of a ^*friendly society.

24 Subsection 995- 1(1)

Insert:

"member of the Forces" has the meaning given by section 52-105.

25 Subsection 995- 1(1)

Insert:

"mining payment "has the meaning given by section 128U of the Income Tax Assessment Act 1936 .

26 Subsection 995- 1(1)

Insert:

"ordinary payment" has the meaning given by sections 52-10 and 52-65.

27 Subsection 995- 1(1)

Insert:

"pension age" has the meaning given by sections 52-65 and 52-105.

28 Subsection 995- 1(1) (definition of public body )

Repeal the definition.

29 Subsection 995- 1(1)

Insert:

supplementary amount of a payment is defined as set out in this table:

Supplementary amount of a payment
Supplementary amount of this kind of payment:	has the meaning given by:
1	Drought relief payment	section 53-15
2	Payment made because of the Veterans' Entitlements (Transitional Provisions and Consequential Amendments) Act 1986	section 52-105
3	Social security payment	section 52-15
4	Veterans' affairs payment	section 52-70

30 Subsection 995- 1(1)

Insert:

tax-free amount of a payment is defined as set out in this table:

Tax-free amount of a payment
Tax-free amount of this kind of payment:	has the meaning given by:
1	Social security payment	sections 52-20, 52-25, 52-30 and 52-35

Part 3—Consequential amendment of the Income Tax Assessment Act 1936
31 After section 22

Insert:

22A Limits on application of certain exempt income provisions

A provision of this Act set out in the second column of the table does not apply to an assessment for the 1997-98 year of income or a later year of income.

Note: The last column of the table shows the provision of the Income Tax Assessment Act 1997 that applies instead.

Old exempt income provisions that no longer apply
Item	Provision of this Act	Corresponding provision of the Income Tax Assessment Act 1997
1	Subparagraph 23(a)(i)	section 51-15
2	Paragraph 23(d)	section 50-25
3	Paragraph 23(e)	items 1.1, 1.2, 1.3 and 1.4 of the table in section 50-5
4	Paragraph 23(ea)	items 6.1 and 6.2 of the table in section 50-30
5	Paragraph 23(eb)	item 6.3 of the table in section 50-30
6	Paragraph 23(f)	section 50-15
7	Paragraph 23(g)	item 1.7 of the table in section 50-5; sections 50-10 and 50-20; and items 9.1 and 9.2 of the table in section 50-45
8	Paragraph 23(h)	section 50-40
9	Paragraph 23(j)	items 1.5 and 1.6 of the table in section 50-5
10	Paragraph 23(jc)	item 2.2 of the table in section 51-10
11	Paragraph 23(je)	item 7.1 of the table in section 50-35
12	Paragraph 23(jf)	item 7.2 of the table in section 50-35
13	Paragraph 23(k)	item 9.3 of the table in section 50-45
14	Paragraph 23(kba)	item 5.3 of the table in section 51-30
15	Paragraph 23(ke)	item 5.2 of the table in section 51-30
16	Paragraph 23(l)	item 5.1 of the table in section 51-30
17	Paragraph 23(s)	item 1.4 of the table in section 51-5
18	Paragraph 23(sa)	item 1.3 of the table in section 51-5
19	Paragraph 23(t)	items 1.1 and 1.2 of the table in section 51-5
20	Paragraph 23(za)	item 2.1 of the table in section 51-10

32 Section 23

Omit "The following income", substitute "Subject to section 22A, the following income".

33 Paragraph 23(ec)

Repeal the paragraph.

34 Before subsection 23AE(1)

Insert:

(1A): This section does not apply to an assessment for the 1997-98 year of income or a later year of income.

Note: Section 51- 25 of the Income Tax Assessment Act 1997 applies instead.

35 Section 24

Repeal the section.

36 Before Subdivision A of Division 1AA of Part III

Insert:

Subdivision AA—Application of this Division
24 Application of this Division

This Division (except Subdivision BA) does not apply to an assessment for the 1997-98 year of income or a later year of income.

Note: For the law applying to the 1997-98 year of income and later years of income, see Divisions 52, 53 and 55 of the Income Tax Assessment Act 1997 .

37 Subsection 46(9)

Repeal the subsection, substitute:

(9): A shareholder in a company is not entitled to a rebate under this section in its assessment in respect of dividends paid to it by the company if the income of the company is exempt from tax under:

(a): Division 1AB of this Part; or
(b): item 1.1, 1.2, 1.3 or 1.4 of the table in section 50-5, section 50-15 or 50-25 or item 6.1 or 6.2 of the table in section 50-30 of the Income Tax Assessment Act 1997 .

38 Subsection 46A(16)

Repeal the subsection, substitute:

(16): A shareholder in a company is not entitled to a rebate under this section in its assessment in respect of dividends paid to it by the company if the income of the company is exempt from tax under:

(a): Division 1AB of this Part; or
(b): item 1.1, 1.2, 1.3 or 1.4 of the table in section 50-5, section 50-15 or 50-25 or item 6.1 or 6.2 of the table in section 50-30 of the Income Tax Assessment Act 1997 .

39 Subparagraph 97(3)(c)(i)

After "section 23", insert "of this Act or Subdivision 50-A or section 51-5, 51-10, 51-15 or 51-30 of the Income Tax Assessment Act 1997 ".

40 Subsection 102AAE(2)

After "section 23", insert "of this Act or Subdivision 50-A or section 51-5, 51-10, 51-15 or 51-30 of the Income Tax Assessment Act 1997 ".

41 Subsection 102B(4)

Omit "the proviso to paragraph 23(l)", substitute " subsection 51-50(3) of the Income Tax Assessment Act 1997 ".

42 Subsection 102B(4)

Omit "that paragraph", substitute "section 51-30 of that Act".

43 Subsection 102CA(3)

Omit "the proviso to paragraph 23(l)", substitute " subsection 51-50(3) of the Income Tax Assessment Act 1997 ".

44 Subsection 102CA(3)

Omit "that paragraph", substitute "section 51-30 of that Act".

45 Section 102M (paragraph (a) of the definition of exempt entity )

Repeal the paragraph, substitute:

(a): a body or association to which item 1.1, 1.2, 1.3, 1.4 or 1.7 of the table in section 50-5 or section 50-10, 50-15, 50-20, 50- 25, 50-30, 50-40 or 50- 45 of the Income Tax Assessment Act 1997 applies;

46 Section 102M (subparagraph (b)(ii) of the definition of exempt entity )

Omit "paragraph 23(j)", substitute "item 1.5 or 1.6 of the table in section 50-5 of the Income Tax Assessment Act 1997 ".

47 Application of amendments of section 102M

The amendments made by items 45 and 46 apply for the purpose of determining whether a trust is a public trading trust or a public unit trust in relation to the 1997-98 income year or a later income year.

48 Section 111E

Omit "Paragraph 23(d)", substitute "Section 50- 25 of the Income Tax Assessment Act 1997 ".

49 Subsection 116E(1) (definition of registered organization )

Omit "by virtue of paragraph 23(f) or subparagraph 23(g)(i)", substitute "because of section 50-15 or 50-20 of the Income Tax Assessment Act 1997 ".

50 Subsection 121F(1) (paragraph (a) of the definition of relevant exempting provision )

Repeal the paragraph, substitute:

(a): paragraph 23(jb) of this Act;
(aa): section 50-5, 50-10, 50-15, 50-20, 50- 25, 50-30, 50-40 or 50- 45 of the Income Tax Assessment Act 1997 ;

51 Paragraph 128B(3)(a)

Repeal the paragraph, substitute:

(a): income derived by a non-resident that is:

(i): exempt from income tax because of paragraph 23(jb) of this Act or section 50-5, 50-10, 50-15 or 50-20, item 6.1 or 6.2 of the table in section 50-30, section 50-40 or item 9.1 or 9.2 of the table in section 50- 45 of the Income Tax Assessment Act 1997 ; and
(ii): exempt from income tax in the country in which the non-resident resides;

52 Application of amendment of paragraph 128B(3)(a)

The amendment made by item 51 applies to income derived on or after 1 July 1997.

53 Paragraph 159J(5E)(e)

Omit "under paragraph 24ABXB(2)(b) of this Act", substitute "because of paragraph (e) of the item dealing with `Parenting allowance (benefit parenting allowance)' in section 52-15 of the Income Tax Assessment Act 1997 ".

54 Subsection 159J(6) (paragraph (aaa) of the definition of separate net income )

55 Subsection 159ZR(1) (paragraph (e) of the definition of eligible income )

Repeal the paragraph, substitute:

(e): a payment that is covered by Subdivision BA of Division 1AA of this Part or Division 52, 53 or 55 of the Income Tax Assessment Act 1997 , but that is not exempt from income tax under that Subdivision or Division.

56 Application of amendment of subsection 159ZR(1) (paragraph (e) of the definition of eligible income )

The amendment made by item 55 applies for the purpose of determining whether a lump sum payment is eligible income in the 1997-98 income year or a later income year.

57 Subsection 160K(1) (paragraph (a) of the definition of relevant exempting provision )

Repeal the paragraph, substitute:

(a): section 50-5, 50-10, 50-15, 50-20, 50- 25, 50-30, 50-40 or 50- 45 of the Income Tax Assessment Act 1997 ;

58 Subsection 221A(1) (definition of salary or wages )

Omit "Division 1AA of Part III", substitute "Subdivision BA of Division 1AA of Part III of this Act or Division 52, 53 or 55 of the Income Tax Assessment Act 1997 ".

59 Application of amendment of subsection 221A(1) (definition of salary or wages )

Section 4 of this Act does not apply to the amendment made by item 58.

60 Subsection 221YCAA(2) (sub-subparagraph (pa)(iv)(A) of the definition of qualifying reductions )

After "paragraph 24ABXB(2)(b)", insert "of this Act or because of paragraph (e) of the item dealing with `Parenting allowance (benefit parenting allowance)' in section 52-15 of the Income Tax Assessment Act 1997 ".

61 Subsection 269B(1)

Repeal the subsection, substitute:

(1): Nothing in:

(a): sections 23G and 24AM of this Act; and
(b): sections 50-5, 50-10, 50-15, 50-20, 50- 25, 50-30, 50-40 and 50- 45 of the Income Tax Assessment Act 1997 ;

exempts a trustee of an eligible entity from liability to tax as provided by this Part.

Part 4—Consequential amendments of other Acts

Australian Industry Development Corporation Act 1970

62 Subsection 27(2)

After " Income Tax Assessment Act 1936 ", insert "or section 50- 25 of the Income Tax Assessment Act 1997 ".

Australian National Railways Commission Act 1983

63 Subsection 67(5)

After " Income Tax Assessment Act 1936 ", insert "or section 50- 25 of the Income Tax Assessment Act 1997 ".

Australian Postal Corporation Act 1989

64 Subsection 63(2)

After " Income Tax Assessment Act 1936 ", insert "or section 50- 25 of the Income Tax Assessment Act 1997 ".

Australian Trade Commission Act 1985

65 Subsection 83(4)

After " Income Tax Assessment Act 1936 ", insert "or section 50- 25 of the Income Tax Assessment Act 1997 ".

Development Allowance Authority Act 1992

66 Subsection 93D(1) (paragraph (b) of the definition of government body )

Omit "paragraph 23(d) of the Tax Act", substitute "section 50- 25 of the Income Tax Assessment Act 1997 ".

67 Subsection 93D(1) (paragraph (c) of the definition of government body )

Omit "Tax Act", substitute " Income Tax Assessment Act 1936 ".

Export Finance and Insurance Corporation Act 1991

68 Subsection 63(4)

After " Income Tax Assessment Act 1936 ", insert "or section 50- 25 of the Income Tax Assessment Act 1997 ".

Federal Airports Corporation Act 1986

69 Subsection 45(1AB)

After " Income Tax Assessment Act 1936 ", insert "or section 50- 25 of the Income Tax Assessment Act 1997 ".

Health Insurance Commission Act 1973

70 Subsection 39(2)

After " Income Tax Assessment Act 1936 ", insert "or section 50- 25 of the Income Tax Assessment Act 1997 ".

Legislative Instruments Act 1997

71 Schedule 2 (table item dealing with the Income Tax Assessment Act 1997 )

Repeal the item, substitute:

Income Tax Assessment Act 1997

the whole Act other than:

* items 1.1 and 1.2 of the table in section 51-5; and

* subsection 30-85(2); and

* subsection 900-35(2).

National Rail Corporation Agreement Act 1992

72 Paragraph 8(d)

After " Income Tax Assessment Act 1936 ", insert "or section 50- 25 of the Income Tax Assessment Act 1997 ".

Social Security Act 1991

73 Subsection 23(1) (definition of exempt spousal maintenance income )

After "paragraph 23(l)", insert "or item 5.1 of the table in section 51-30".

74 Subsection 23(1) (note at the end of the definition of exempt spousal maintenance income )

After "paragraph 23(l)", insert "or item 5.1 of the table in section 51-30".

Superannuation Guarantee (Administration) Act 1992

75 Section 29

After " Income Tax Assessment Act 1936 ", insert "or item 1.4 of the table in section 51-5 of the Income Tax Assessment Act 1997 ".

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