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TAXATION LEGISLATION (MISCELLANEOUS AMENDMENTS) ACT 2006 (NO. 40 OF 2006) - SECT 34

Part 11, Division 3A inserted

After section 113 of the Principal Act , the following Division is inserted in Part 11:
Division 3A - Tax avoidance

113A.     Purpose and operation of Division 3A

(1)  The purpose of this Division is to deter artificial, blatant or contrived schemes to reduce liability to pay tax.
(2)  No provision of this Act or a taxation law limits the operation of this Division unless that provision expressly provides otherwise.

113B.     Application of Division 3A

(1)  This Division applies if –
(a) a person has obtained, or would apart from this Division obtain, a tax benefit –
(i) from a scheme which was entered into after the commencement of this Division; or
(ii) from a scheme the carrying out of which was started after the commencement of this Division; and
(b) the tax benefit is not, or would not be, attributable to an exemption or concession under a taxation law; and
(c) taking into account the matters set out in section 113C , it is reasonable to conclude that a person, whether alone or with other persons, who entered into or carried out the scheme, or part of the scheme, did so for the sole or dominant purpose of enabling that person to obtain such a, or another, tax benefit from the scheme.
(2)  For the purposes of subsection (1) , it does not matter –
(a) whether the scheme, or any part of the scheme, is entered into or carried out in Tasmania or elsewhere; or
(b) whether or not the tax benefit that the person obtained, or would have obtained, is the same kind of tax benefit referred to in subsection (1)(a) .

113C.     Matters to be considered when determining purpose of scheme

For the purposes of section 113B(1)(c) , the following matters are to be taken into account in determining whether it is reasonable to conclude that the sole or dominant purpose of a person entering into or carrying out a scheme of a kind referred to in section 113B(1) , or a part of such a scheme, is to enable that person to obtain a tax benefit from the scheme:
(a) the manner in which the scheme, or part of the scheme, was entered into or carried out by the person;
(b) the form and substance of the scheme or part of the scheme, including –
(i) the legal rights and obligations of the person under the scheme or part; and
(ii) the economic and commercial substance of the scheme or part;
(c) the time when the person entered into or carried out the scheme or part of the scheme and the length of the period during which the person was involved in carrying out the scheme or part of the scheme;
(d) the purpose of –
(i) this Act; and
(ii) any taxation law that is relevant to the scheme or part of the scheme; and
(iii) a provision of this Act or such a taxation law –
whether or not that purpose is expressly stated in this Act, the taxation law or the provision;
(e) the effect that this Act, other than this Division, or a taxation law would have in relation to the scheme or part of the scheme;
(f) any change in the person's financial position that has resulted, will result or may reasonably be expected to result from the person entering into or carrying out the scheme or part of the scheme;
(g) any change in the financial position of any other person who is or has been connected with the person, through business or family or in any other manner, that has resulted, will result or may reasonably be expected to result from the person's connection with the scheme or part of the scheme;
(h) any other consequence for the person, or another person referred to in paragraph (g) , that results, will result or may reasonably be expected to result from entering into or carrying out the scheme or part of the scheme or from the person's or other person's connection with the scheme or part of the scheme;
(i) the nature of the connection between another person referred to in paragraph (g) and the person;
(j) the circumstances surrounding the scheme or part of the scheme;
(k) the circumstances surrounding the entry of the person into the scheme or part of the scheme or the carrying out by the person of the scheme or part of the scheme.

113D.     When tax benefit obtained

A person obtains a tax benefit if an amount of tax payable by the person under a taxation law is, or could reasonably be expected to be, less than it would have been if the person had not entered into or carried out a scheme of a kind referred to in section 113B(1) or part of such a scheme.

113E.     Amount of tax benefit

The amount of the tax benefit obtained by a person who entered into or carried out a scheme of a kind referred to in section 113B(1) , or part of such a scheme, is the difference between the amount of tax payable and the amount of tax that would have been payable had that person not entered into or carried out that scheme or that part of such a scheme.

113F.     Assessments and reassessments if tax benefit obtained from scheme

(1)  If a person has obtained, or would but for this Division obtain, a tax benefit from entering into or carrying out a scheme of a kind referred to in section 113B(1) , or part of such a scheme, the Commissioner may –
(a) in making an assessment of tax liability under section 18 , include as part of the person's tax liability the amount of the tax benefit obtained or that would be obtained; or
(b) reassess the person's tax liability under section 19 so that the person's tax liability includes the amount of the tax benefit obtained.
(2)  If the Commissioner takes action under subsection (1) , the Commissioner must notify the person, in writing, that he or she has done so and his or her reasons for doing so.


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