PART II—AMENDMENT OF THE FRINGE BENEFITS TAX ASSESSMENT ACT 1986
Principal Act
3. In this Part, “Principal Act” means the Fringe Benefits Tax Assessment Act 19861.
Reduction of taxable value—remote area housing
4. Section 60 of the Principal Act is amended by adding at the end the following subsections:
“(4) Where:
(a) the recipient of an expense payment fringe benefit in relation to an employer in relation to a year of tax is an employee of the employer; and
(b) the recipients expenditure is in respect of remote area residential property;
the amount that, but for this subsection, would be the taxable value of the fringe benefit in relation to the year of tax shall be reduced by 50%.
“(5) Where:
(a) the recipient of a property fringe benefit in relation to an employer in relation to a year of tax is an employee of the employer; and
(b) the recipients property is a remote area residential property option fee;
the amount that, but for this subsection, would be the taxable value of the fringe benefit in relation to the year of tax shall be reduced by 50%.
“(6) Where:
(a) the recipient of a property fringe benefit in relation to an employer in relation to a year of tax is an employee of the employer; and
(b) the recipients property is remote area residential property repurchase consideration;
the amount that, but for this subsection, would be the taxable value of the fringe benefit in relation to the year of tax shall be reduced by 50%.
“(7) Where:
(a) subsection (6) applies to a property fringe benefit; and
(b) the amount paid by the provider of the fringe benefit by way of consideration for the purchase of the estate or interest concerned exceeds both:
(i) the market value of the estate or interest at the time of the purchase; and
(ii) the guideline price of the estate or interest at the time of the purchase;
a reference in subsection (6) to the taxable value of the fringe benefit is a reference to so much of the taxable value as is attributable to the amount of the guideline price.”.
5. After section 60 of the Principal Act the following section is inserted:
Guideline price for repurchase of remote area residential property
“60aa. (1) In this section:
‘index number’, in relation to a quarter, means the All Groups Consumer Price Index number, being the weighted average of the 8 capital cities, published by the Australian Statistician in respect of that quarter.
“(2) Subject to subsection (3), if at any time, whether before or after the commencement of this section, the Australian Statistician has published or publishes an index number in respect of a quarter in substitution for an index number previously published by the Australian Statistician in respect of that quarter, the publication of the later index number shall be disregarded for the purposes of this section.
“(3) If at any time, whether before or after the commencement of this section, the Australian Statistician has changed or changes the reference base for the Consumer Price Index, then, for the purposes of the application of this section after the change took place or takes place, regard shall be had only to index numbers published in terms of the new reference base.
“(4) A reference in subsection 60 (7) to the guideline price of an estate or interest in land is a reference to:
(a) if the factor ascertained in accordance with subsections (5) and (6) in relation to the market value of the estate or interest as at the time the estate or interest was acquired by the employee is greater than 1—the market value as at that time multiplied by that factor; or
(b) in any other case—the market value as at that time.
“(5) The factor to be ascertained for the purposes of subsection (4) in relation to the market value of the estate or interest in land as at the time of the acquisition of the estate or interest by the employee is the number (calculated to 3 decimal places) ascertained by dividing the index number in respect of the quarter of the year in which the employee sold the estate or interest to the provider by the index number in respect of the quarter of the year in which the estate or interest was acquired by the employee.
“(6) Where the factor ascertained in accordance with subsection (5) would, if it were calculated to 4 decimal places, end with a number greater than 4, that factor shall be taken to be the factor calculated to 3 decimal places in accordance with that subsection and increased by 0.001.”.
6. After section 65c of the Principal Act the following Divisions are inserted:
“Division 14a—Amortisation of Taxable Value of Fringe Benefits relating to Remote Area Home Ownership Schemes
Amortisation of taxable value of fringe benefits relating to remote area home ownership schemes
“65ca. (1) Where:
(a) the recipient of any of the following fringe benefits in relation to an employer in relation to a year of tax (in this section called the ‘benefit year of tax’) is an employee of the employer:
(i) a property fringe benefit where the recipients property is remote area residential property;
(ii) a property fringe benefit where the recipients property is a remote area residential property option fee;
(iii) an expense payment fringe benefit where the recipients expenditure is in respect of remote area residential property;
(b) in the case of a property fringe benefit where the recipients property is remote area residential property—at or before the provision time, the employee entered into a recognised remote area housing obligation restricting the disposal of the estate or interest concerned;
(c) in the case of an expense payment fringe benefit—at or before the time when the employee acquired the estate or interest concerned, the employee entered into a recognised remote area housing obligation restricting the disposal of the estate or interest concerned; and
(d) in all cases—the period (in this section called the ‘overall amortisation period’) commencing at whichever of the following times is applicable:
(i) if subparagraph (a) (i) or (ii) applies—the provision time;
(ii) if subparagraph (a) (iii) applies—the time when the recipients expenditure was incurred;
(which time is in this section called the ‘benefit time’) and ending at the earliest of the following later times:
(iii) the time when the employee ceases or first ceases to be subject to the recognised remote area housing obligation referred to in paragraph (b) or (c) of this subsection or in paragraph 142 (2a) (e), as the case requires;
(iv) the time when the employee ceases or first ceases to be employed by the employer;
(v) the time when the employee ceases or first ceases to occupy or use the dwelling concerned as his or her usual place of residence;
(vi) the time of the death of the employee;
(vii) the end of the period of 7 years after the benefit time;
commences and ends in different years of tax;
the fringe benefit is an amortised fringe benefit.
“(2) The notional amortisation period in relation to the amortised fringe benefit is the period commencing at the benefit time and ending at the earlier of the following times:
(a) the end of the period specified in the contract to which the recognised remote area housing obligation concerned relates, being the period during which the employee is to be subject to that obligation;
(b) the end of the period of 7 years after the benefit time.
“(3) If the overall amortisation period has not come to an end before the end of a particular year of tax (in this subsection called the ‘current year of tax’), the amortised amount, in relation to the current year of tax, of the amortised fringe benefit is the amount calculated in accordance with the formula:
where:
Taxable value is the taxable value, in relation to the benefit year of tax, of the fringe benefit;
Current amortisation period is the whole number of months (or part months) in the current year of tax that are included in the notional amortisation period;
Notional amortisation period is the whole number of months (or part months) that are included in the notional amortisation period.
“(4) If the overall amortisation period comes to an end during a particular year of tax (in this subsection called the ‘current year of tax’), the amortised amount, in relation to the current year of tax, of the amortised fringe benefit is the amount calculated in accordance with the formula:
Taxable value − Previously amortised amounts
where:
Taxable value is the taxable value, in relation to the benefit year of tax, of the fringe benefit;
Previously amortised amounts is the sum of the amortised amounts, in relation to each year of tax preceding the current year of tax, of the fringe benefit.
“(5) Where the recipients expenditure in relation to an expense payment fringe benefit was incurred before 1 July 1986, paragraph (1) (d) applies in relation to the fringe benefit as if the recipients expenditure had been incurred on 1 July 1986.
Amendment of assessments
“65cb. Nothing in section 74 prevents the amendment at any time of an assessment for the purposes of giving effect to this Division.
“Division 14b—Reducible Fringe Benefits relating to Remote Area Home Repurchase Schemes
Reducible fringe benefits relating to remote area home repurchase schemes
“65cc. (1) Where:
(a) the recipient of a property fringe benefit in relation to an employer in relation to a year of tax is an employee of the employer;
(b) the recipients property is remote area residential property repurchase consideration;
(c) the taxable value of the fringe benefit in relation to the year of tax is nil; and
(d) the market value of the estate or interest purchased by the provider of the fringe benefit exceeds the amount paid by the provider by way of consideration for the purchase of the estate or interest;
the fringe benefit is a reducible fringe benefit.
“(2) The reduction amount, in relation to the year of tax, of the reducible fringe benefit is 50% of the amount of the excess referred to in paragraph (1) (d).”.
Interpretation
7. Section 136 of the Principal Act is amended:
(a) by omitting from subsection (1) the definition of “fringe benefits taxable amount” and substituting the following definition:
“ ‘fringe benefits taxable amount’, in relation to an employer in relation to a year of tax (in this definition called the ‘current year of tax’), means the sum of the following amounts:
(a) the sum of the taxable values, in relation to the current year of tax, of all the fringe benefits (other than amortised fringe benefits) in relation to the employer in relation to the current year of tax;
(b) the sum of the amortised amounts, in relation to the current year of tax, of all the amortised fringe benefits in relation to the employer in relation to the current year of tax and any other year of tax;
reduced by the sum of the reduction amounts, in relation to the current year of tax, of all the reducible fringe benefits in relation to the employer in relation to the current year of tax;”;
(b) by inserting in subsection (1) the following definitions:
“ ‘amortised fringe benefit’ has the meaning given by section 65ca;
‘reducible fringe benefit’ has the meaning given by section 65cc;”.
Remote area housing
8. Section 142 of the Principal Act is amended:
(a) by omitting paragraphs (1) (b) and (c) and (1a) (b) and (c) and substituting the following paragraph:
“(b) the common conditions set out in subsection (2e) are satisfied in relation to the occupation period; and”;
(b) by omitting from subsection (2) “in land on which is situated a dwelling occupied or used by the employee immediately after the provision time as his or her usual place of residence where —” and substituting the following words and paragraphs:
“in land:
(aa) on which is situated a dwelling occupied or used by the employee immediately after the provision time as his or her usual place of residence; or
(ab) on which the employee proposes, as at the provision time, to construct, or complete the construction of, a dwelling to be occupied or used by the employee as his or her usual place of residence;
where:
(ac) if paragraph (ab) applies—the Commissioner is satisfied that the employee has pursued sustained reasonable efforts to:
(i) commence the construction, or commence the completion of the construction, of the dwelling within 6 months after the provision time; and
(ii) occupy or use the dwelling as his or her usual place of residence within 18 months after the provision time;”;
(c) by omitting from subparagraph (2) (a) (i) “dwelling” and substituting “land”;
(d) by omitting paragraphs (2) (b) and (c) and substituting the following paragraph:
“(b) the common conditions set out in subsection (2e) are satisfied in relation to the provision time; and”;
(e) by adding at the end of subparagraph (2) (d) (ii) “or Division 14a of Part III”;
(f) by inserting after subsection (2) the following subsections;
“(2a) In this Act, a reference, in relation to a property fringe benefit in relation to a year of tax in relation to an employee of an employer, to a remote area residential property option fee is a reference to property that consists of a fee paid to the employee by way of consideration in respect of the grant of an option to purchase an estate or interest in land:
(a) held by the employee; and
(b) on which:
(i) there is a dwelling occupied or used by the employee immediately after the provision time as his or her usual place of residence; or
(ii) the employee proposes, as at the provision time, to construct, or complete the construction of, a dwelling to be occupied or used by the employee as his or her usual place of residence;
where:
(c) if subparagraph (b) (ii) applies—the Commissioner is satisfied that the employee has pursued sustained reasonable efforts to:
(i) commence the construction, or commence the completion of the construction, of the dwelling within 6 months after the provision time; and
(ii) occupy or use the dwelling as his or her usual place of residence within 18 months after the provision time;
(d) at the provision time:
(i) the land was situated in a State or internal Territory and was not at a location in, or adjacent to, an eligible urban area; and
(ii) the employee was a current employee of the employer and the usual place of employment of the employee was not at a location in, or adjacent to, an eligible urban area;
(e) the option was granted at or before the time the employee acquired the estate or interest and constituted a recognised remote area housing obligation restricting the disposal of the estate or interest concerned;
(f) the common conditions set out in subsection (2e) are satisfied in relation to the provision time; and
(g) the property was not provided to the employee under:
(i) a non-arm’s length arrangement; or
(ii) an arrangement that was entered into by any of the parties to the arrangement for the purpose, or for purposes that included the purpose, of enabling the employer to obtain the benefit of the application of section 60 or Division 14a of Part III.
“(2b) In this Act, a reference, in relation to a property fringe benefit in relation to a year of tax in relation to an employee of an employer, to remote area residential property repurchase consideration is a reference to property that consists of an amount paid to the employee by way of consideration for the purchase of an estate or interest in land:
(a) held by the employee; and
(b) on which:
(i) there is a dwelling occupied or used by the employee immediately before the provision time as his or her usual place of residence; or
(ii) the employee proposed, as at the time the employee acquired the estate or interest, to construct, or complete the construction of, a dwelling to be occupied or used by the employee as his or her usual place of residence;
where:
(c) if subparagraph (b) (ii) applies—the Commissioner is satisfied that the employee has pursued sustained reasonable efforts to:
(i) commence the construction, or commence the completion of the construction, of the dwelling within 6 months after the time the employee acquired the estate or interest; and
(ii) occupy or use the dwelling as his or her usual place of residence within 18 months after the time the employee acquired the estate or interest;
(d) at the provision time:
(i) the land was situated in a State or internal Territory and was not at a location in, or adjacent to, an eligible urban area; and
(ii) the employee was a current employee of the employer and the usual place of employment of the employee was not at a location in, or adjacent to, an eligible urban area;
(e) at or before the time the employee acquired the estate or interest, the employee entered into a recognised remote area housing obligation restricting the disposal of the estate or interest concerned;
(f) the purchase by the provider of the fringe benefit of the estate or interest is in accordance with that obligation;
(g) the common conditions set out in subsection (2e) are satisfied in relation to the provision time; and
(h) the property was not provided to the employee under:
(i) a non-arm’s length arrangement; or
(ii) an arrangement that was entered into by any of the parties to the arrangement for the purpose, or for purposes that included the purpose, of enabling the employer to obtain the benefit of the application of section 60 or Division 14b of Part III.
“(2c) In this Act, a reference, in relation to an expense payment fringe benefit in relation to a year of tax in relation to an employee
of an employer, to recipients expenditure in respect of remote area residential property is a reference to recipients expenditure that is incurred wholly:
(a) to enable the employee to acquire an estate or interest in land on which a dwelling was subsequently to be constructed or to acquire an estate or interest in land and construct, or complete the construction of, a dwelling on the land;
(b) to enable the employee to construct, or complete the construction of, a dwelling on land in which the employee holds an estate or interest;
(c) to enable the employee to acquire an estate or interest in land on which there is a dwelling; or
(d) to enable the employee to extend a dwelling, being a dwelling constructed on land in which the employee holds an estate or interest, by adding a room or part of a room to the dwelling, as the case may be;
where:
(e) if paragraph (a) or (b) applies:
(i) at the time the recipients expenditure was incurred, the employee proposed to occupy or use the dwelling as his or her usual place of residence; and
(ii) the Commissioner is satisfied that the employee has pursued sustained reasonable efforts to:
(a) commence the construction, or commence the completion of the construction, of the building constituting or containing the dwelling within 6 months after the time the recipients expenditure was incurred; and
(b) occupy or use the dwelling concerned as his or her usual place of residence within 18 months after the time the recipients expenditure was incurred;
(f) if paragraph (c) or (d) applies—as soon as reasonably practicable after the time the recipients expenditure was incurred, the dwelling concerned was occupied or used by the employee as his or her usual place of residence;
(g) at the time the recipients expenditure was incurred:
(i) the land was situated in a State or internal Territory and was not at a location in, or adjacent to, an eligible urban area; and
(ii) the employee was a current employee of the employer and the usual place of employment of the employee was not at a location in, or adjacent to, an eligible urban area;
(h) the common conditions set out in subsection (2e) are satisfied in relation to the time the recipients expenditure was incurred; and
(j) the fringe benefit was not provided to the employee under:
(i) a non-arm’s length arrangement; or
(ii) an arrangement that was entered into by any of the parties to the arrangement for the purpose, or for purposes that included the purpose, of enabling the employer to obtain the benefit of the application of section 60 or Division 14a of Part III.
“(2d) In this Act, a reference, in relation to a property fringe benefit or an expense payment fringe benefit in relation to a year of tax in relation to an employee of an employer, to a recognised remote area housing obligation restricting the disposal of an estate or interest in land is a reference to a contractual obligation entered into by the employee with the employer or an associate of the employer not to dispose of the estate or interest concerned except:
(a) to the employer or an associate of the employer; and
(b) for a price specified in, or ascertained in accordance with, the contract concerned;
at any time during a period specified in the contract concerned, being a period that ends not earlier than 5 years after:
(c) in the case of a property fringe benefit where the recipients property is remote area residential property repurchase consideration—the time the employee acquired the estate or interest concerned;
(d) in the case of any other property fringe benefit—the provision time; or
(e) in the case of an expense payment fringe benefit—the time the recipients expenditure was incurred.
“(2e) For the purposes of the application of this section to a fringe benefit in relation to a year of tax in relation to an employee of an employer, the common conditions in relation to a particular period or in relation to a particular time are as follows:
(a) it is customary for employers in the industry in which the employee was employed during that period or at that time, as the case may be, to provide housing assistance for their employees;
(b) it would be concluded that it was necessary for the employer, during the year of tax, to provide or arrange for the provision of housing assistance for employees of the employer because:
(i) the nature of the employer’s business was such that employees of the employer were liable to be frequently required to change their places of residence;
(ii) there was not, at or near the place or places at which the employees of the employer were employed, sufficient suitable residential accommodation for those employees (other than residential accommodation provided by or on behalf of the employer); or
(iii) it is customary for employers in the industry in which the employee was employed during that period or at that time, as the case may be, to provide housing assistance for their employees.”;
(g) by omitting “or” from the end of paragraph (3) (c);
(h) by adding at the end of subsection (3) the following paragraphs:
“(e) the making of payments in discharge or reimbursement of expenditure incurred by a person in acquiring or constructing residential property; or
(f) the provision of a residential property ownership scheme involving:
(i) the granting by employees of options to purchase employees’ residential property; or
(ii) the purchase of employees’ residential property.”;
(j) by adding at the end the following subsection:
“(4) Nothing in section 74 prevents the amendment of an assessment at any time for the purpose of giving effect to paragraph (1) (ac), (2a) (c), (2b) (c) or (2c) (e).”.
Application of amendments
9. (1) Subject to this section, the amendments made by this Part apply to assessments of the fringe benefits taxable amount of an employer of the transitional year of tax and of each subsequent year of tax.
(2) Subsection 60 (7) of the Principal Act as amended by this Act does not apply to:
(a) a purchase that occurred before 1 August 1987; or
(b) a purchase that occurred on or after that date pursuant to a contractual obligation in existence before that date.
(3) The amendments made by this Part do not apply to instalments of tax in respect of the transitional year of tax.
Amendment of assessments
10. Nothing in section 74 of the Principal Act prevents the amendment of an assessment made before the commencement of this section for the purpose of giving effect to this Act.
PART III—AMENDMENT OF THE INCOME TAX ASSESSMENT ACT 1936
Principal Act
11. In this Part, “Principal Act” means the Income Tax Assessment Act 19362.
Where consideration not in cash
12. Section 21 of the Principal Act is amended by adding at the end the following subsection:
“(2) This section has effect subject to section 21a.”.
13. After section 21 of the Principal Act the following section is inserted:
Non-cash business benefits
“21a. (1) For the purposes of this Act, in determining the income derived by a taxpayer, a non-cash business benefit that is not convertible to cash shall be treated as if it were convertible to cash.
“(2) For the purposes of this Act, if a non-cash business benefit (whether or not convertible to cash) is income derived by a taxpayer:
(a) the benefit shall be brought into account at its arm’s length value reduced by the recipient’s contribution (if any); and
(b) if the benefit is not convertible to cash—in determining the arm’s length value of the benefit, any conditions that would prevent or restrict the conversion of the benefit to cash shall be disregarded.
“(3) Where:
(a) a non-cash business benefit is income derived by a taxpayer in a year of income; and
(b) if the taxpayer had, at the time the benefit was provided, incurred and paid unreimbursed expenditure in respect of the provision of the benefit equal to the amount of the arm’s length value of the benefit—a once-only deduction would, or would but for section 82a, and Subdivisions F and G of Division 3, have been allowable to the taxpayer in respect of a percentage (in this subsection called the ‘deductible percentage’) of the expenditure;
the amount that, apart from this subsection, would be applicable under subsection (2) of this section in respect of the benefit shall be reduced by the deductible percentage.
“(4) Where:
(a) a non-cash business benefit is income derived by a taxpayer in a year of income; and
(b) a percentage (in this subsection called the ‘non-deductible entertainment percentage’) of any expenditure incurred by the provider in respect of the provision of the benefit is non-deductible entertainment expenditure;
the amount that, apart from this subsection, would be applicable under subsection (2) in respect of the benefit shall be reduced by the nondeductible entertainment percentage.
“(5) In this section:
‘arm’s length value’, in relation to a non-cash business benefit, means:
(a) the amount that the recipient could reasonably be expected to have been required to pay to obtain the benefit from the provider under a transaction where the parties to the transaction are dealing with each other at arm’s length in relation to the transaction; or
(b) if such an amount cannot be practically determined—such amount as the Commissioner considers reasonable;
‘income derived by a taxpayer’ means income derived by a taxpayer in carrying on a business for the purpose of gaining or producing assessable income;
‘non-cash business benefit’ means property or services provided after 31 August 1988:
(a) wholly or partly in respect of a business relationship; or
(b) wholly or partly for or in relation directly or indirectly to a business relationship;
‘non-deductible entertainment expenditure’ means expenditure to the extent to which:
(a) subsection 51ae (4) applies to the expenditure; and
(b) but for that subsection, the expenditure would be deductible under section 51;
‘once-only deduction’, in relation to expenditure, means a deduction in a year of income in respect of a percentage of the expenditure where no deduction is allowable in respect of a percentage of the expenditure in any other year of income;
‘provide’:
(a) in relation to property—includes dispose of (whether by assignment, declaration of trust or otherwise); and
(b) in relation to services—includes allow, confer, give, grant or perform;
‘recipient’s contribution’, in relation to a non-cash business benefit, means the amount of any consideration paid to the provider by the recipient in respect of the provision of the benefit, reduced by the amount of any reimbursement paid to the recipient in respect of that consideration;
‘services’ includes any benefit, right (including a right in relation to, and an interest in, real or personal property), privilege or facility and, without limiting the generality of the foregoing, includes a right, benefit, privilege, service or facility that is, or is to be, provided under:
(a) an arrangement for or in relation to:
(i) the performance of work (including work of a professional nature), whether with or without the provision of property;
(ii) the provision of, or of the use of facilities for, entertainment, recreation or instruction; or
(iii) the conferring of rights, benefits or privileges for which remuneration is payable in the form of a royalty, tribute, levy or similar exaction;
(b) a contract of insurance; or
(c) an arrangement for or in relation to the lending of money.
“(6) Notwithstanding section 21, the consideration referred to in the definition of ‘recipient’s contribution’ in subsection (5) of this section is consideration in money.”.
Exemption of certain pensions
14. Section 23ad of the Principal Act is amended:
(a) by omitting “or” from the end of paragraph (e) of the definition of “excepted payment” in subsection (1);
(b) by adding at the end of the definition of “excepted payment” in subsection (1) the following word and paragraph:
“or (g) an amount of pension to which subsection 65 (7) of the Veterans’ Entitlements Act 1986 applies;”;
(c) by inserting after paragraph (3) (a) the following paragraph:
“(aaa) payments of special temporary allowances under section 65 of the Veterans’ Entitlements Act 1986”;
(d) by omitting “and” from the end of paragraph (3) (c);
(e) by adding at the end of subsection (3) the following word and paragraph:
“; and (e) payments of special temporary allowances under section 172 of the Social Security Act 1947”.
Exemption of certain benefits in the nature of income
15. Section 23l of the Principal Act is amended by adding at the end the following subsection:
“(2) Where:
(a) in a year of income, a taxpayer derives income consisting of one or more non-cash business benefits (within the meaning of section 21a); and
(b) the total amount that is applicable under section 21a in respect of those benefits does not exceed $300;
the income is exempt income.”.
Assessable income from property purchased and sold within 12 months (on or before 25 May 1988)
16. Section 26aaa of the Principal Act is amended by inserting before subsection (1) the following subsection:
“(1a) This section does not apply to a sale of property, or of an interest in property, that occurs after 25 May 1988 (including a sale that occurs after that date but is required by subsection (3) or (3a) to be treated as if it had occurred on or before that date).”.
Cost price of natural increase
17. Section 34 of the Principal Act is amended:
(a) by omitting “or” from the end of subparagraph (1) (a) (i);
(b) by omitting “and” from the end of subparagraph (1) (a) (ii) and substituting “or”;
(c) by omitting paragraph (1) (b) and substituting the following subparagraph and paragraph:
“(iii) if:
(a) the taxpayer elects that this subparagraph apply in relation to live stock of that class; and
(b) the actual cost price per head of natural increase of that class is less than the minimum cost price prescribed in respect of live stock of that class;
the actual cost price; and
(b) where the cost price of natural increase of that class has not been previously taken into account under this Act by the taxpayer:
(i) the cost price selected by the taxpayer, not being less than the minimum cost price prescribed in respect of live stock of that class; or
(ii) if:
(a) the taxpayer elects that this subparagraph apply in relation to live stock of that class; and
(b) the actual cost price per head of natural increase of that class is less than the minimum cost price prescribed in respect of live stock of that class;
the actual cost price.”;
(d) by omitting subsection (2) and substituting the following subsections:
“(2) For the purposes of paragraph (1) (b), where:
(a) a taxpayer does not select, as mentioned in subparagraph (1) (b) (i), within the time and in the manner prescribed; and
(b) subparagraph (1) (b) (ii) does not apply;
the taxpayer shall be taken to have selected, as the cost price, the prescribed minimum cost price.
“(2a) An election by a taxpayer under subparagraph (1) (a) (iii) or (b) (ii):
(a) shall be made by notice in writing to the Commissioner; and
(b) shall be lodged with the Commissioner on or before the date of lodgment of the return of income of the taxpayer for the year of income to which the election relates, or before such later date as the Commissioner allows.”.
Rebate on dividends
18. Section 46 of the Principal Act is amended by adding at the end the following subsection:
“(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 paragraph 23 (d), (e), (ea) or (f).”.
Rebate on dividends paid as part of dividend stripping operation
19. Section 46a of the Principal Act is amended by adding at the end the following subsection:
“(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 paragraph 23 (d), (e), (ea) or (f).”.
20. After section 46e of the Principal Act the following section is inserted:
Rebate not allowable for certain unfranked dividends paid to private company
“46f. (1) In this section:
‘group company’ has the same meaning as in section 160afe;
‘unfranked part’, in relation to a dividend (including a dividend that is not a frankable dividend within the meaning of section 160apa), means so much of the dividend as has not been franked in accordance with section 160aqf.
“(2) Subject to this section, a shareholder that is a private company in relation to a year of income is not entitled to, and shall not be allowed, a rebate under section 46 or 46a in respect of the unfranked part of a dividend paid to the shareholder in the year of income.
“(3) Subsection (2) does not apply if the shareholder is a group company in relation to the company paying the dividend in relation to the year of income in which the dividend is paid.
“(4) Subsection (2) does not apply to dividends to the extent of the amount of phasing-out dividends included in the distributable income of the shareholder of the year of income concerned for the purposes of Division 7.”.
Calculation of taxable income
21. Section 50c of the Principal Act is amended:
(a) by omitting paragraph (2) (d) and substituting the following paragraph:
“(d) if a full-year deduction is, or full-year deductions are, allowable to the company in relation to the year of income, being a full-year deduction or full-year deductions:
(i) allowable under section 51 in respect of a bad debt or under section 63 or Subdivision ba of Division 3; or
(ii) to which paragraph 50f (1) (aa) applies;
the amount of that full-year deduction or the sum of the amounts of those full-year deductions, as the case may be; and”;
(b) by omitting from paragraph (3) (b) “year of income otherwise than under section 51, section 63 or Subdivision ba of Division 3” and substituting “year of income, not being a full-year deduction or full-year deductions:
(i) allowable under section 51 in respect of a bad debt or under section 63 or Subdivision ba of Division 3; or
(ii) to which paragraph 50f (1) (aa) applies”;
(c) by omitting from paragraph (3) (c) all the words from and including “in a case” to and including “Division 3” and substituting “in a case where there is only one full-year deduction to which paragraph (b) applies”.
Divisible amounts of assessable income
22. Section 50e of the Principal Act is amended:
(a) by inserting after paragraph (1) (g) the following paragraph:
“(ga) any amount included in the assessable income of the company of the year of income under subsection 70a (5);”;
(b) by inserting after paragraph (2) (h) the following paragraphs:
“(ha) where:
(i) a divisible amount is included in the assessable income of the company of the year of income under subsection 70a (5) by virtue of a recoupment or recoupments in respect of expenditure of a capital nature incurred by the company on the connection of mains electricity facilities;
(ii) the year of income is the first year of income in which the company incurred expenditure of a capital nature on that connection; and
(iii) before the commencement of, or during, the relevant period, the company incurred expenditure of a capital nature on that connection;
a proportion of that divisible amount equal to the proportion that the number of whole days (if any) in the relevant period (being whole days occurring after the time when the company first incurred expenditure of a capital nature on that connection) bears to the number of whole days in the year of income (being whole days occurring after the time when the company first incurred expenditure of a capital nature on that connection) shall be deemed to be included in the assessable income of the company of the relevant period;
(hb) where:
(i) a divisible amount is included in the assessable income of the company of the year of income under subsection 70a (5) by virtue of a recoupment or recoupments in respect of expenditure of a capital nature incurred by the company on the connection of mains electricity facilities; and
(ii) the year of income is not the first year of income in which the company incurred expenditure of a capital nature on that connection;
a proportion of that divisible amount equal to the proportion that the number of whole days (if any) in the relevant period bears to 365 shall be deemed to be included in the assessable income of the company of the relevant period;”.
Full-year deductions and partnership deductions
23. Section 50f of the Principal Act is amended by inserting after paragraph (1) (a) the following paragraph:
“(aa) the whole or part of any deduction under section 51, where that whole or part is, because Subdivision h of Division 3 applies, allowable to the company in relation to the year of income;”.
Divisible deductions
24. (1) Section 50g of the Principal Act is amended:
(a) by omitting from paragraph (1) (a) “57ae, 57ah, 57aj, 57ak, 57al” and substituting “57aj, 57ak”;
(b) by omitting from paragraph (2) (a) “, 57ae, 57ah”;
(c) by omitting from subparagraph (2) (ba) (i) “57ae, 57ah or”;
(d) by omitting from subparagraph (2) (ba) (ii) “57ae, 57ah or 57am, as the case may be” and substituting “57am”;
(e) by omitting from paragraph (2) (bb) “57ae, 57ah or”.
(2) Section 50g of the Principal Act is amended:
(a) by omitting from paragraph (1) (a) “or 70” and substituting “, 70 or 70a (as in force at any time after the commencement of section 41 of the Taxation Laws Amendment Act (No. 4) 1988)”;
(b) by inserting after paragraph (2) (e) the following paragraphs:
“(ea) where:
(i) a divisible deduction is allowable to the company in relation to the year of income under section 70a in respect of expenditure of a capital nature incurred by the company on the connection of mains electricity facilities;
(ii) the year of income is the first year of income in which the company incurred expenditure of a capital nature on that connection; and
(iii) before the commencement of, or during, the relevant period, the company incurred expenditure of a capital nature on that connection;
a proportion of that divisible deduction equal to the proportion that the number of whole days (if any) in the relevant period (being whole days occurring after the time when the company first incurred expenditure of a capital nature on that connection) bears to the number of whole days in the year of income (being whole days occurring after the time when the company first incurred expenditure of a capital nature on that connection) shall be deemed to be an allowable deduction in respect of that relevant period;
(eb) where:
(i) a divisible deduction is allowable to the company in relation to the year of income under section 70a in respect of expenditure of a capital nature incurred by the company on the connection of mains electricity facilities; and
(ii) the year of income is not the first year of income in which the company incurred expenditure of a capital nature on that connection;
a proportion of that divisible deduction equal to the proportion that the number of whole days (if any) in that relevant period bears to 365 shall be deemed to be an allowable deduction in respect of that relevant period;”.
25. After section 51aj of the Principal Act the following section is inserted:
Agreements for the provision of non-deductible non-cash business benefits
“51ak. (1) Subject to this section, where:
(a) under an agreement:
(i) a taxpayer incurs expenditure; and
(ii) a non-cash business benefit is provided to the taxpayer or another person; and
(b) that benefit is not exclusively for use or application for the purpose of producing assessable income of the taxpayer;
the taxpayer shall be treated, for the purposes of this Act, as if so much of the expenditure as does not exceed the arm’s length value of the benefit had been incurred by the taxpayer exclusively in respect of that benefit.
“(2) This section does not apply so as to treat particular expenditure, or the cost of particular property, to be a particular amount for a particular purpose if there is another provision of this Act that deems that expenditure, or the cost of that property, to be a lesser amount for that purpose.
“(3) A reference in this section to producing assessable income includes a reference to:
(a) gaining assessable income; or
(b) carrying on a business for the purpose of gaining or producing assessable income.
“(4) Expressions used in this section and in section 21a have the same respective meanings in this section as they have in that section.
“(5) In this section:
‘agreement’ means any agreement, arrangement or understanding, whether formal or informal, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings;
‘expenditure’ includes a loss or outgoing.”.
Calculation of depreciation
26. Section 56 of the Principal Act is amended:
(a) by omitting paragraph (1) (b) and substituting the following paragraph:
“(b) if the taxpayer has elected under subsection (1aa) that this paragraph be applied to the unit of property—the percentage fixed, by or under section 55, of the cost of the unit.”;
(b) by inserting after subsection (1) the following subsections:
“(1aa) A taxpayer may elect that paragraph (1) (b) be applied to all the units of property in respect of which depreciation is first allowable to the taxpayer in a particular year of income.
“(1ab) The election:
(a) shall be exercised by notice in writing to the Commissioner;
(b) shall be lodged with the Commissioner on or before the date of lodgment of the return of income of the taxpayer for the year of income in which depreciation is first allowable to the taxpayer in respect of those units, or within such further time as the Commissioner allows; and
(c) has effect for the purposes of determining the depreciation allowable to the taxpayer in respect of each of those units for the year of income referred to in paragraph (b) and for all subsequent years of income.”.
Repeal of section 56a
27. Section 56a of the Principal Act is repealed.
Repeal of section 57
28. Section 57 of the Principal Act is repealed.
Special depreciation allowance to primary producers
29. Section 57aa of the Principal Act is amended by omitting from subsection (1) “55, 56, 56a and 57” and substituting “55 and 56”.
Depreciation on property used for primary production in the Northern Territory
30. Section 57ab of the Principal Act is amended by omitting from subsection (2) “, 56a, 57”.
Special depreciation on manufacturing plant and plant used in primary production
31. Section 57ac of the Principal Act is amended by omitting from subsection (2) “, subsection 56 (1), or section 56a or 57” and substituting “or subsection 56 (1)”.
Special depreciation on new plant first used or installed on or after 1 July 1975 and before 1 July 1976
32. Section 57ad of the Principal Act is amended by omitting from subsection (3) “, subsection 56 (1), or section 56a or 57” and substituting “or 56(1)”.
Repeal of section 57ae
33. Section 57ae of the Principal Act is repealed.
Special depreciation on plant
34. Section 57ag of the Principal Act is amended:
(a) by omitting from paragraph (2) (b) “57ae, 57ah, 57aj, 57ak, 57al” and substituting “57aj, 57ak”;
(b) by omitting from subsection (3) “, or section 56a or 57”;
(c) by omitting paragraph (3) (a) and substituting the following paragraph:
“(a) where any of the following subparagraphs applies to the property:
(i) the property was acquired by the taxpayer under a contract entered into on or before 30 April 1981;
(ii) the property was constructed by the taxpayer and commenced to be constructed on or before 30 April 1981;
(iii) the property was acquired by the taxpayer under a contract entered into after 25 May 1988;
(iv) both of the following sub-subparagraphs apply:
(a) the property was constructed by the taxpayer and commenced to be constructed after 25 May 1988;
(b) the construction was not under a contract entered into on or before 25 May 1988 nor under 2 or more contracts any of which was entered into on or before that date;
(v) before 1 July 1991, the property was not:
(a) used by the taxpayer for the purpose of producing assessable income; or
(b) installed ready for use for that purpose and held in reserve by the taxpayer;
20% of the percentage actually fixed; or”.
Repeal of section 57ah
35. Section 57ah of the Principal Act is repealed.
Special depreciation on storage facilities for petroleum fuel
36. Section 57aj of the Principal Act is amended:
(a) by omitting from subsection (4) “56a, 57,”;
(b) by omitting subsection (6).
Special depreciation on property used for basic iron or steel production
37. Section 57ak of the Principal Act is amended by omitting from subsection (4) “55, 56, 56a and 57” and substituting “55 and 56”.
Repeal of section 57al
38. Section 57al of the Principal Act is repealed.
Special depreciation on trading ships
39. Section 57am of the Principal Act is amended by omitting from subsection (5) “55, 56, 56a and 57” and substituting “55 and 56”.
Depreciation on pipe-lines for transporting petroleum
40. Section 58 of the Principal Act is amended by omitting from subsection (4) “, 56 and 57” and substituting “and 56”.
Cost of mains electricity connections
41. Section 70a of the Principal Act is amended:
(a) by omitting from subsection (1) “on or after 1 October 1980” and substituting “after 25 May 1988 (other than under a contract entered into on or before that day)”;
(b) by omitting subsection (3) and substituting the following subsection:
“(3) Subject to this section, where a taxpayer incurs expenditure to which this section applies, an amount equal to 10% of that expenditure is an allowable deduction in the assessment of the taxpayer in respect of income of:
(a) the year of income in which the expenditure is incurred; and
(b) each of the succeeding 9 years of income.”;
(c) by omitting subsection (5) and substituting the following subsection:
“(5) Where the taxpayer is recouped (whether by a government body or otherwise) in a year of income in respect of the whole or part of an amount of expenditure to which this section applies, the following provisions have effect:
(a) the assessable income of the taxpayer of the year of income shall include so much of the total amount (in this subsection called the ‘year’s recoupment amount’) by which the taxpayer is recouped in that year (including by virtue of any application of paragraph (b)) as does not exceed the amount (in this subsection called the ‘overall net deduction’) ascertained in accordance with the formula:
Total deductions — Total assessments
where:
Total deductions is the sum of all deductions allowed or allowable under this section from the assessable income of the taxpayer of the year of income, and of all preceding years of income, in relation to the expenditure;
Total assessments is the sum of all amounts included under this section in the assessable income of the taxpayer of all preceding years of income in relation to the expenditure;
(b) if the year’s recoupment amount exceeds the overall net deduction—the amount of the excess shall, for the purposes of this section, be taken to be an amount in respect of which the taxpayer is recouped (whether by a government body or otherwise) in the next following year of income in respect of a part of an amount of expenditure to which this section applies.”;
(d) by omitting subsection (7) and substituting the following subsection:
“(7) The reference in subsection (6) to the taxpayer’s right to be recouped in respect of any expenditure to which this section applies includes a reference to the interest of the taxpayer in a partnership to the extent to which the interest includes a right to be recouped in respect of any such expenditure.”;
(e) by omitting from subsection (9) “an amount of expenditure” and substituting “the whole or part of any expenditure”;
(f) by omitting from subsection (9) “in respect of that expenditure” and substituting “in respect of the whole or any part of that expenditure”;
(g) by omitting subsection (10) and substituting the following subsection:
“(10) For the purposes of this Act, where a partnership has incurred expenditure to which this section would apply if the partnership were a taxpayer:
(a) each partner, instead of the partnership, shall be taken to have incurred:
(i) so much of that expenditure as the partners have agreed is to be borne by that partner; or
(ii) if the partners have not so agreed—a proportion of that expenditure equal to the proportion of the net income or partnership loss of the partnership of the year of income in which the expenditure was incurred that is represented by the individual interest of that partner in the net income or partnership loss; and
(b) if the partnership is recouped in respect of the whole or part of the expenditure that a partner was taken by paragraph (a) to have incurred—the partner, instead of the partnership, shall be taken to have been so recouped.”.
Gifts, pensions etc.
42. Section 78 of the Principal Act is amended by omitting subparagraph (1) (a) (xvi) and substituting the following subparagraph:
“(xvi) H.R.H. The Duke of Edinburgh’s Commonwealth Study Conferences (Australia) Incorporated;”.
Deduction in respect of new plant installed on or after 1 January 1976
43. Section 82ab of the Principal Act is amended by omitting from paragraph (5b) (b) “, 57al”.
Interpretation
44. Section 82kt of the Principal Act is amended:
(a) by omitting “car” (wherever occurring) and “cars” from paragraph (e) of the definition of “car” in subsection (1) and substituting “motor vehicle” and “motor vehicles” respectively;
(b) by inserting in subsection (1) the following definition:
“ ‘car records’, in relation to a taxpayer in relation to a year of income, means records that are maintained by the taxpayer in relation to the year of income for the purposes of the provisions of this Subdivision that refer to car records and that:
(a) in the case of the year of income commencing on 1 July 1988 or an earlier year of income—are in writing in the English language or are in a form that enables them to be readily accessible and convertible into writing in the English language; or
(b) in the case of a later year of income—are maintained in a form approved by the Commissioner;”.
45. After section 82ktb of the Principal Act the following section is inserted:
Car records to be completed before lodgment date of return etc.
“82ktba. (1) For the purposes of this Act (other than section 223a), a matter shall not be taken to have been specified or nominated in car records of a taxpayer for a year of income unless the matter was included in those records before the date of lodgment of the taxpayer’s return for the year of income, or before such later date as the Commissioner allows.
“(2) Subsection (1) is subject to any other provision of this Subdivision that requires a particular matter to be treated as if it had been specified or nominated in car records of a taxpayer.”.
46. After Subdivision G of Division 3 of Part III of the Principal Act the following Subdivision is inserted in Division 3 of Part III:
“Subdivision H—Period of deductibility of certain advance expenditure
Interpretation
“82kzl. (1) In this Subdivision, unless the contrary intention appears:
‘agreement’ means any agreement, arrangement, understanding or scheme, whether formal or informal, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings;
‘eligible service period’, in relation to an amount of expenditure incurred under an agreement, means the period from the beginning of:
(a) the day, or the first day, on which the thing to be done under the agreement in return for the amount of expenditure is required, or permitted, as the case may be, to commence being done; or
(b) if the expenditure is incurred on a later day—the day on which the expenditure is incurred;
until the end of:
(c) the day, or the last day, on which the thing to be done under the agreement in return for the amount of expenditure is required, or permitted, as the case may be, to cease being done; or
(d) if that day or last day ends more than 10 years after the beginning of the period—10 years after the beginning of the period;
‘excluded expenditure’ means an amount of expenditure:
(a) less than $1,000;
(b) required to be incurred by a law, or by an order of a court, of the Commonwealth, a State or a Territory;
(c) under a contract of service; or
(d) to the extent that it is of a capital, private or domestic nature;
‘transfer’ includes assign.
“(2) Without otherwise limiting the generality of references in this Subdivision to expenditure being incurred under an agreement in return for the doing of a thing under the agreement:
(a) where expenditure incurred under an agreement consists of a payment of loan interest or a payment of a similar kind, the expenditure shall, for the purposes of this Subdivision, be taken to be incurred in return for the making available or continued making available, as the case requires, of the loan principal, or other amount of a similar kind, under the agreement during the period to which the payment relates;
(b) where expenditure incurred under an agreement consists of a payment of rent, a lease payment or a payment of a similar kind, the expenditure shall, for the purposes of this Subdivision, be taken to be incurred in return for the making available or continued making available, as the case requires, of the thing rented or leased, or other thing of a similar kind, under the agreement during the period to which the payment relates; and
(c) where expenditure incurred under an agreement consists of a payment of an insurance premium or a payment of a similar kind, the expenditure shall, for the purposes of this Subdivision, be taken to be incurred in return for the provision or continued provision, as the case requires, of insurance against the risk concerned, or of a thing of a similar kind, under the agreement during the period to which the payment relates.
Period of deductibility of certain advance expenditure
“82kzm. Where:
(a) a taxpayer incurs expenditure under an agreement entered into after 25 May 1988;
(b) the expenditure is:
(i) incurred in return for the doing of a thing under the agreement that is not to be wholly done within 13 months after the day on which it is incurred; and
(ii) not excluded expenditure; and
(c) a deduction under section 51 in respect of the expenditure would, apart from this section, be allowable from the assessable income of the taxpayer of the year of income in which the expenditure is incurred;
then, for the purposes of this Act, instead of the deduction under section 51 being allowable as mentioned in paragraph (c), a proportion of the deduction is allowable from the assessable income of the taxpayer of each year of income during which the whole or part of the eligible service period in relation to the expenditure occurs, being a proportion ascertained in accordance with the formula:
where:
Period in year is the number of days in the whole or the part of the eligible service period that occurs in the year of income;
Eligible service period is the number of days in the eligible service period.
Transfer etc. of rights under agreement
“82kzn. Where:
(a) under an agreement entered into either before or after the commencement of this section, a taxpayer (in this section called the ‘original taxpayer’) incurs expenditure in return for the doing of a thing during a period after the incurring of the expenditure; and
(b) either:
(i) the original taxpayer transfers to another taxpayer (in this section called the ‘recipient taxpayer’) all of his or her rights under the agreement in relation to the doing of the thing during the remainder of the period; or
(ii) the agreement is discharged (whether by performance or otherwise) in so far as it relates to the doing of the thing during the remainder of the period;
the following provisions have effect for the purposes of this Subdivision:
(c) if the whole or part of a deduction under section 51 in respect of the expenditure is, because of this Subdivision, allowable from the assessable income of the original taxpayer of any year of income occurring after the year of income in which the transfer or discharge occurs—that deduction is instead allowable from the assessable income of the year of income in which the transfer, assignment or discharge occurs;
(d) if the recipient taxpayer incurs expenditure in return for the transfer—the recipient taxpayer shall be taken to have incurred, under an agreement entered into at the time of the transfer, so much of that expenditure as is not of a capital, private or domestic nature in return for the doing of the thing during the remainder of the period.
Partnership changes where entire interest in agreement rights is not transferred
“82kzo. Where:
(a) under an agreement entered into after 25 May 1988, a person (in this section called the ‘original person’), or the partners in a partnership (in this section called the ‘original partnership’), incurs or incur expenditure in return for the doing of a thing during a period after the incurring of the expenditure;
(b) either of the following (in this section called a ‘partnership change’) happens:
(i) a partnership is formed or the original partnership is dissolved, or both; or
(ii) the constitution of the original partnership, or the interests of the partners in the original partnership, is or are varied;
with the result that, after the partnership change:
(iii) a person (in this section called the ‘later person’), or the partners in a partnership (in this section called the ‘later partnership’), holds or hold all of any rights under the agreement to have the thing done during the period after the partnership change; and
(iv) the original person, or one or more of the partners in the original partnership, has an interest in the rights after the partnership change; and
(c) the whole or part of a deduction under section 51 in respect of the expenditure (which whole or part is in this section called a ‘spread deduction’) is, because of the application of this Subdivision, allowable from the assessable income of the original person or the original partnership of the year of income in which the partnership change happens or a subsequent year of income;
the following provisions have effect:
(d) if a spread deduction is allowable in relation to the year of income in which the partnership change occurs—the entitlement to the deduction shall, for the purposes of this Act but subject to any later application of this section, be apportioned between the original person or original partnership and the later person or later partnership according to the portions of the eligible service period in the year of income (or, if the case requires, of so much of the period as occurs after a partnership change resulting from a previous
application of this section) that occur before and after the partnership change;
(e) if a spread deduction relates to a subsequent year of income—the later person or later partnership, instead of the original person or original partnership, shall, for the purposes of this Act but subject to any later application of this section, be entitled to the deduction;
(f) for the purposes of any later application of this section or section 82kzn, the later person or later partnership, instead of the original person or original partnership, shall be taken to have incurred the expenditure under the agreement.”.
Interpretation
47. Section 102m of the Principal Act is amended by omitting subparagraph (b) (v) of the definition of “eligible investment business” and substituting the following subparagraphs:
“(v) futures contracts;
(vi) forward contracts;
(vii) interest rate swap contracts;
(viii) currency swap contracts;
(ix) forward exchange rate contracts;
(x) forward interest rate contracts;
(xi) life assurance policies;
(xii) a right or option in respect of such a loan, security, share, unit, contract or policy;
(xiii) any similar financial instruments;”.
Allowable capital expenditure
48. Section 122a of the Principal Act is amended by inserting after subsection (1a) the following subsections:
“(1b) Subsection (1) does not apply to expenditure on property (being plant or articles for the purposes of section 54) unless:
(a) either of the following conditions is satisfied:
(i) the property was acquired by the taxpayer under a contract entered into on or before 25 May 1988;
(ii) the property was constructed by the taxpayer and:
(a) the construction commenced on or before 25 May 1988; or
(b) the construction was under a contract entered into on or before 25 May 1988, or under 2 or more contracts any of which was entered into on or before that date; and
(b) before 1 July 1991, the property:
(i) was used by the taxpayer for the purpose of producing assessable income; or
(ii) was installed ready for use for that purpose and held in reserve by the taxpayer.”.
“(1c) Notwithstanding section 170, the Commissioner may at any time amend an assessment for the purpose of giving effect to subsection (1b) of this section.”.
Allowable capital expenditure
49. Section 124aa of the Principal Act is amended by inserting after subsection (2) the following subsections:
“(2a) Expenditure on property (being plant or articles for the purposes of section 54) is not allowable capital expenditure for the purposes of this Division unless:
(a) either of the following conditions is satisfied:
(i) the property was acquired by the taxpayer under a contract entered into on or before 25 May 1988;
(ii) the property was constructed by the taxpayer and:
(a) the construction commenced on or before 25 May 1988; or
(b) the construction was under a contract entered into on or before 25 May 1988, or under 2 or more contracts any of which was entered into on or before that date; and
(b) before 1 July 1991, the property:
(i) was used by the taxpayer for the purpose of producing assessable income; or
(ii) was installed ready for use for that purpose and held in reserve by the taxpayer.
“(2b) Notwithstanding section 170, the Commissioner may at any time amend an assessment for the purpose of giving effect to subsection (2a) of this section.”.
Qualifying expenditure
50. Section 124zg of the Principal Act is amended by omitting from subsection (3) “or 57ae”.
51. After Division 16f of Part III of the Principal Act the following Division is inserted:
“Division 16g—Debt Creation Involving Non-residents “Subdivision A—Interpretation
Interpretation
“159gzy. In this Division, unless the contrary intention appears:
‘asset’ means any form of property and includes:
(a) an option, a debt, a chose in action, any other right, goodwill and any other form of incorporeal property; and
(b) any form of property created or constructed;
‘associate’ has the same meaning as in Division 16f, except that the references in section 159gzc to 15% shall be read as references to 50%;
‘capital entitlement factor’ has the meaning given by section 159gzz;
‘foreign controller’ has the meaning given by section 159gzza;
‘interest’ means interest within the meaning of subsection 128a (1);
‘scheme’ has the same meaning as in Division 16f.
Capital entitlement factor
“159gzz. (1) For the purposes of this Division, the capital entitlement factor of a person in respect of a company at a particular time is the percentage that the person (together with any associates of the person who are non-residents) would be beneficially entitled to receive, directly or indirectly, of any distribution of capital that is, or may be, made by the company at that time.
“(2) For the purposes of subsection (1):
(a) a person shall be taken to be beneficially entitled to receive indirectly a particular percentage of a distribution of capital of a company; or
(b) 2 or more persons shall be taken together to be beneficially entitled to receive indirectly a particular percentage of a distribution of capital of a company;
if, in the event of a distribution of capital of the company, the person or persons would (otherwise than as a shareholder or shareholders in the company or as a trustee or trustees) receive or have received that percentage of that distribution of capital, on the assumption that there had been successive distributions of the relative parts of that distribution of capital to and by each of any companies, partnerships or trustees interposed between the company making the distribution of capital and that person or those persons.
Foreign controller
“159gzza. For the purposes of this Division, a person is a foreign controller of a company if:
(a) the person is a non-resident; and
(b) the capital entitlement factor of the person in respect of the company is at least 50%.
Acquisition of asset not previously in existence
“159gzzb. For the purposes of this Division, where a person or persons have acquired an asset (other than a debt) that did not previously exist:
(a) the asset shall be taken to have existed immediately before the acquisition and to have been acquired from the person or persons who created the asset; and
(b) if the asset is taken to have been acquired from more than one person—the respective interests of those persons in the asset immediately before the acquisition shall be taken to have been:
(i) if consideration was payable to those persons in respect of the acquisition and subparagraph (ii) does not apply— proportional to their entitlements to that consideration;
(ii) if consideration was payable to those persons in respect of the acquisition but the Commissioner considers that it is not appropriate for subparagraph (i) to apply—in such proportions as the Commissioner considers reasonable in the circumstances; or
(iii) in any other case—in such proportions as the Commissioner considers reasonable in the circumstances.
Acquisition of asset through interposed persons
“159gzzc. Where, under a scheme, an asset is acquired by a person or persons (in this section called the ‘final buyer’), indirectly through one or more interposed persons, from another person or persons (in this section called the ‘original seller’), the Commissioner may, for the purposes of this Division, treat the acquisition of the asset as if it had been directly by the final buyer from the original seller.
“Subdivision B—Application of Division
Application of Division
“159gzzd. This Division applies to interest incurred in respect of an amount owing in connection with the acquisition of an asset if:
(a) the interest was incurred on or after 1 July 1987; and
(b) the acquisition occurred on or after 1 July 1987 (otherwise than under a contract entered into before that date).
“Subdivision C—Reduction of Interest Deductions
Reduction or extinction of interest deduction in case of certain created debt
“159gzze. (1) Where:
(a) apart from this Division and Division 16f, an amount of interest is allowable as a deduction from the assessable income of a taxpayer that:
(i) is a company; and
(ii) is not a taxpayer in the capacity of trustee;
(b) the interest is in respect of an amount owing in connection with the acquisition of an asset by the taxpayer, either alone or together with another person or persons, from another company (in this section called the ‘eligible seller’), either alone or together with another person or persons; and
(c) any of the following subparagraphs applies in relation to the acquisition:
(i) the eligible seller:
(a) was a foreign controller of the taxpayer immediately after the acquisition; or
(b) later became a foreign controller of the taxpayer under a scheme of which the acquisition was a part;
(ii) the taxpayer:
(a) was a foreign controller of the eligible seller immediately before the acquisition; or
(b) earlier ceased to be a foreign controller of the eligible seller under a scheme of which the acquisition was a part;
(iii) in a case to which neither subparagraph (i) nor (ii) applies— the following conditions are satisfied in relation to a person (in this section called the ‘common foreign controller’):
(a) the person was a foreign controller of the eligible seller immediately before the acquisition, or earlier ceased to be a foreign controller of the eligible seller under a scheme of which the acquisition was a part;
(b) the person was a foreign controller of the taxpayer immediately after the acquisition, or later became a foreign controller of the taxpayer under a scheme of which the acquisition was a part;
the deduction so allowable shall be reduced in accordance with this section.
“(2) If there are 2 or more eligible sellers in relation to the acquisition of the asset by the taxpayer, subsection (1) applies successively to each combination of the taxpayer and each of those eligible sellers.
“(3) Where:
(a) subsection (1) applies, because of subparagraph (1) (c) (iii), in relation to the taxpayer and a particular eligible seller; and
(b) there are 2 or more common foreign controllers in connection with that application of subsection (1);
the amount calculated for the purposes of that application of subsection (1) shall be the aggregate of the amounts that would be calculated in relation to each of those common foreign controllers.
“(4) In respect of each application of subsection (1) in relation to the same acquisition of an asset, the deduction shall be reduced by the amount calculated in accordance with the formula:
Deduction × Asset ownership factor × Capital entitlement factor
where:
Deduction is the amount of the deduction that would be allowable apart from this Division and Division 16f;
Asset ownership factor is the eligible seller’s interest in the asset immediately before the acquisition, expressed as a proportion of the total interests in the asset;
Capital entitlement factor is:
(a) where subparagraph (1) (c) (i) applies—the capital entitlement factor of the eligible seller in respect of the taxpayer:
(i) if sub-subparagraph (1) (c) (i) (a) applies— immediately after the acquisition; or
(ii) if sub-subparagraph (1) (c) (i) (b) applies— immediately after the eligible seller became a foreign controller of the taxpayer;
(b) where subparagraph (1) (c) (ii) applies—the capital entitlement factor of the taxpayer in respect of the eligible seller:
(i) if sub-subparagraph (1) (c) (ii) (a) applies— immediately before the acquisition; or
(ii) if sub-subparagraph (1) (c) (ii) (b) applies— immediately before the taxpayer ceased to be a foreign controller of the eligible seller; or
(c) where subparagraph (1) (c) (iii) applies—the smaller of the following percentages:
(i) the capital entitlement factor of the common foreign controller in respect of the eligible seller:
(a) if the common foreign controller was a foreign controller of the eligible seller immediately before the acquisition—immediately before the acquisition; or
(b) if the common foreign controller earlier ceased to be a foreign controller of the eligible seller as mentioned in sub-subparagraph (1) (c) (iii) (a)—immediately before that occurred;
(ii) the capital entitlement factor of the common foreign controller in respect of the taxpayer:
(a) if the common foreign controller was a foreign controller of the taxpayer immediately after the acquisition—immediately after the acquisition; or
(b) if the common foreign controller later became a foreign controller of the taxpayer as mentioned in sub-subparagraph (1) (c) (iii) (b)—immediately after that occurred.
“(5) Where the interest is only partly in respect of the amount owing as mentioned in paragraph (1) (b), this section applies to the deduction to a corresponding extent.
“(6) In the application of this section to the acquisition of an asset, an entitlement to receive, directly or indirectly, a particular percentage of a distribution of capital of a company shall not be counted to the extent to which that entitlement has previously been counted in the application of this section to that acquisition.
Section 159gzze not to apply in certain cases
“159gzzf. (1) Section 159gzze does not apply to the acquisition of an asset if:
(a) the asset is cash; and
(b) the acquisition was not, and was not part of, the acquisition of a business or of part of a business.
“(2) Section 159gzze does not apply to the acquisition of an asset if:
(a) immediately before the acquisition, the asset was trading stock of the eligible seller (or of all of the eligible sellers, as the case requires); and
(b) the acquisition was not, and was not part of, the acquisition of a business or of part of a business.
“(3) Section 159gzze does not apply to the acquisition of an asset if the asset is a share in a company and had not previously been issued.
“(4) Section 159gzze does not apply to the acquisition of an asset if:
(a) before the acquisition, the asset had not previously been used, held or applied by any person:
(i) for the purpose of gaining or producing assessable income; or
(ii) in carrying on a business for the purpose of gaining or producing assessable income; and
(b) the eligible seller (or each of the eligible sellers, as case requires) was a non-resident immediately before the acquisition.
“(5) Section 159gzze does not apply to the acquisition of an asset if the Commissioner is satisfied that the acquisition has not, and will not, result directly or indirectly in:
(a) an increase in the overall indebtedness of the group constituted by:
(i) each affected taxpayer; and
(ii) the eligible seller (or each of the eligible sellers, as the case requires); or
(b) an increase in the ability of:
(i) the eligible seller (or any of the eligible sellers, as the case requires); or
(ii) any associate of the eligible seller (or of any of the eligible sellers, as the case requires);
to pay an amount (other than an amount assessable under section 44 or liable to tax under subsection 128b (4)) to:
(iii) a foreign controller of the eligible seller (or of any of the eligible sellers, as the case requires); or
(iv) an associate of a foreign controller of the eligible seller (or of any of the eligible sellers, as the case requires).
“(6) In this section:
‘affected taxpayer’, in relation to the acquisition of an asset, means a taxpayer to whom section 159gzze would apply (apart from this section) in relation to the acquisition;
‘eligible seller’, in relation to the acquisition of an asset, means a person who is an eligible seller for the purposes of section 159gzze in relation to that acquisition.”.
Rebate in respect of certain pensions
52. Section 160aaa of the Principal Act is amended:
(a) by omitting from paragraphs (1) (g) and (h) “$6,142—$250” and substituting “$6,892—$430”;
(b) by omitting from subparagraphs (2) (d) (i) and (ii) “$10,350— $430” and substituting “$11,059—$600”;
(c) by omitting from subparagraphs (2) (e) (i) and (ii) “$5,850—$180” and substituting “$6,184—$260”.
Amendments relating to car records
53. The Principal Act is amended as set out in the Schedule.
Application of amendments
54. (1) In this section:
“amended Act” means the Principal Act as amended by this Part.
(2) The amendments made by section 17 apply to natural increase occurring after 30 June 1988.
(3) Regulations that were in force for the purposes of section 34 of the Principal Act immediately before the commencement of this subsection have effect as if they had been made for the purposes of section 34 of the amended Act.
(4) Subject to subsection (5), the amendments made by sections 18 and 19 apply to dividends paid after 25 May 1988, other than dividends paid in respect of shares issued on or before that date.
(5) In the case of dividends paid on shares issued on or before 25 May 1988, the amendments made by sections 18 and 19 apply if the dividends are paid after the date of commencement of this subsection.
(6) The amendment made by section 20 applies to dividends paid after 25 May 1988, other than:
(a) dividends declared on or before that date; or
(b) dividends that are deemed by section 108 of the amended Act to be paid after that date because of an amount having been paid or credited on or before that date.
(7) The amendments made by subsection 24 (1), sections 26 to 33 (inclusive), paragraphs 34 (a) and (b), section 35, paragraph 36 (a), sections 37 to 40 (inclusive) and sections 43 and 50 apply to a unit of property if:
(a) the property was acquired by the taxpayer under a contract entered into after 25 May 1988;
(b) both of the following subparagraphs apply:
(i) the property was constructed by the taxpayer and commenced to be constructed after 25 May 1988;
(ii) the construction was not under a contract entered into on or before 25 May 1988 nor under 2 or more contracts any of which was entered into on or before that date; or
(c) on or before 30 June 1991, the property was not:
(i) used by the taxpayer for the purpose of producing assessable income; or
(ii) installed ready for use for that purpose by the taxpayer and held in reserve.
(8) Notwithstanding the repeal of section 57ah, and the omission of subsection 57aj (6), of the Principal Act, that subsection continues to have effect as if the amendments made by this Part had not been made.
(9) Subparagraph 78 (1) (a) (xvi) of the amended Act applies to gifts made on or after 24 April 1986.
(10) Notwithstanding the amendment of section 78 of the Principal Act made by this Act, subparagraph 78 (1) (a) (xvi) of the Principal Act continues to apply to gifts made before 1 January 1989 as if that amendment had not been made.
(11) The amendment made by paragraph 44 (a) applies in relation to an expense incurred by a taxpayer in a year of income commencing on or after 1 July 1988.
(12) Section 82kzm of the amended Act does not apply to expenditure:
(a) incurred by a partnership under an agreement as a result of another agreement entered into:
(i) before the formation of the partnership; and
(ii) on or before 25 May 1988;
under which the partnership, when formed, would incur the expenditure under the first-mentioned agreement; or
(b) incurred on or before 30 June 1988 in subscribing for or purchasing a prescribed interest, within the meaning of the Companies Act 1981 or a corresponding provision of a law in force in a State or Territory, in relation to which a prospectus was registered under that Act or that law on or before 25 May 1988.
(13) Subject to subsections (14), (15), (16) and (17), the amendments made by paragraph 44 (b) and sections 45 and 53 apply in relation to an expense incurred by a taxpayer in a year of income commencing on or after 1 July 1986.
(14) Subject to subsections (15), (16) and (17), section 223a of the Principal Act shall be taken never to have applied in relation to percentages specified, or purporting to be specified, in returns.
(15) Section 223a of the amended Act applies to the specification, or purported specification, of a percentage in car records of a taxpayer only if:
(a) the specification, or purported specification, occurs after the commencement of this subsection (whether or not the specification is deemed by subsection (16) of this section to have occurred before the commencement of this subsection);
(b) the percentage is deemed by subsection (17) of this section to have been specified in the car records; or
(c) because of the application of section 82ktc of the amended Act in relation to a document lodged after the commencement of this subsection, the percentage is deemed to have been specified in the car records.
(16) Where, not later than one month after the commencement of this subsection, a taxpayer specifies or nominates a particular in car records of the taxpayer for a year of income ending before the commencement of this subsection, that particular shall be deemed to have been specified or nominated in those car records before the date of lodgment of the taxpayer’s return for that year of income.
(17) Where, in a return for a year of income lodged before the commencement of this subsection, a taxpayer specified, or purported to specify, (including a specification that is treated as having occurred because of section 82ktc of the Principal Act) a percentage as mentioned in paragraph 223a (1) (a) of the Principal Act, that percentage shall be deemed, for the purposes of section 223a of the amended Act, to have been specified in car records of the taxpayer for that year of income.
(18) The amendment made by section 47 applies to a business carried on at any time during the year of income commencing on 1 July 1987 or any subsequent year of income.
(19) Division 16g of Part III of the amended Act applies to an acquisition of an asset that occurred on or after 1 July 1987 and before 20 June 1988 as if the reference in section 159gzza of the amended Act to 50% were a reference to 100%.
(20) The amendment made by section 23 of the Taxation Laws Amendment Act (No. 2) 1988 has effect for all purposes of Division 16g of Part III of the amended Act.
(21) The amendments made by sections 14 and 52 apply to assessments in respect of income of the year of income commencing on 1 July 1988 and of all subsequent years of income.
Special transitional provisions—non-cash business benefits provided on or before 31 August 1988
55. (1) This section applies to non-cash business benefits provided on or before 31 August 1988.
(2) If:
(a) a non-cash business benefit is income derived by a taxpayer in a year of income;
(b) the taxpayer is:
(i) a company;
(ii) a trustee of a trust estate; or
(iii) a partnership; and
(c) the recipient of the benefit is:
(i) if subparagraph (b) (i) applies—a shareholder in, or a director of, the company;
(ii) if subparagraph (b) (ii) applies—a person who benefits or is capable of benefiting under the trust concerned; or
(iii) if subparagraph (b) (iii) applies—a partner in the partnership;
the amended Act and the other provisions of this section apply as if the benefit were income derived by the recipient instead of by the taxpayer.
(3) If:
(a) a non-cash business benefit is income derived by a taxpayer in a year of income (in this subsection called the “derivation year of income”); and
(b) the benefit is utilised by the recipient in another year of income (which other year of income is in this subsection called the “utilisation year of income”);
the amended Act and the other provisions of this section apply as if the benefit were income derived by the taxpayer in the utilisation year of income instead of in the derivation year of income.
(4) Subject to subsection (5), where:
(a) a non-cash business benefit is income derived by a taxpayer in a year of income; and
(b) the benefit consists of a unit of property in respect of which depreciation is allowable to the taxpayer under the amended Act in relation to any year of income;
then, for the purpose of calculating the depreciation allowable to the taxpayer, the cost of that unit of property shall be taken to be the amount of its arm’s length value.
(5) Subsection (4) does not apply so as to treat the cost of a unit of property to be a particular amount for the purpose of calculating depreciation allowable to the taxpayer if there is a provision of the amended Act that deems the cost of that unit to be a lesser amount for that purpose.
(6) Expressions used in this section and in section 21a of the amended Act have the same respective meanings in this section as they have in that section.
(7) In this section, “amended Act” means the Principal Act as amended by this Act.
Transitional—section 70a
56. Notwithstanding the amendments made by section 41, section 70a of the Principal Act as in force immediately before the commencement of that amendment continues to apply in relation to expenditure of a kind referred to in subsection (1) of that section as so in force if the expenditure was or is incurred:
(a) on or before 25 May 1988; or
(b) after 25 May 1988 under a contract entered into on or before that day.
Provisional tax for 1988-89 year
57. (1) For the purposes of the application of subsection 221yc (1) of the Income Tax Assessment Act 1936 (in this section called the “Assessment Act”) in ascertaining the amount of provisional tax payable by a taxpayer in respect of the year of income that commenced on 1 July 1988 (in this section called the “current year of income”), being a taxpayer who would, apart from this section and subsection 221yba (5) of the Assessment Act, be liable to pay provisional tax calculated in accordance with subsection 221yc (1) or (1a) of the Assessment Act in respect of the current year of income:
(a) if paragraph 221yc (1) (a) of the Assessment Act applies to the taxpayer—the amount of provisional tax payable by the taxpayer in respect of the current year of income by virtue of that paragraph is the amount ascertained by deducting from the amount of income tax that would have been assessed in respect of the amount that would have been the taxable income of the taxpayer of the year of income that commenced on 1 July 1987 (in this section called the “preceding year of income”) if:
(i) the taxable income of the taxpayer of the preceding year of income had, except for the purpose of determining the notional income for the purpose of section 59ab or 86 of the Assessment Act, been increased by 12%;
(ii) where, for the purposes of Division 6aa of Part III of the Assessment Act:
(a) in the case of a taxpayer to whom Subdivision C of Division 3 of Part II of the Income Tax Rates Act 1986 applied—the taxpayer’s eligible taxable income of the preceding year of income exceeded $416; or
(b) in the case of a taxpayer to whom Subdivision D of Division 3 of Part II of the Income Tax Rates Act 1986 applied—the taxpayer had an eligible taxable income of the preceding year of income;
that eligible taxable income had been increased by 12%;
(iii) for the purposes of Division 16a of Part III of the Assessment Act (other than the purpose of calculating the average eligible taxable income of the taxpayer of the current year of income), the eligible taxable income of the taxpayer of the preceding year of income had been increased by 12%;
(iv) for the purposes of section 156 of the Assessment Act, the deemed taxable income from primary production of the taxpayer of the preceding year of income had been increased by 12%;
(v) the Income Tax Rates Act 1986, other than Division 4 of Part II, as that Act applies to assessments in respect of the current year of income, had been in force and applied to assessments in respect of the preceding year of income;
(vi) the Medicare Levy Act 1986, as that Act applies to assessments in respect of the current year of income, had been in force and applied to assessments in respect of the preceding year of income;
(vii) where Division 16 of Part III of the Assessment Act applied in the taxpayer’s assessment in respect of the preceding year of income—that Division had applied as if the conditions set out in subparagraphs (i) to (vi) (inclusive) were applicable for the purposes of making that assessment other than for the purpose of determining the average income of the taxpayer for the purposes of the application of that Division;
(viii) the taxpayer had not been entitled to any rebate (other than a rebate under section 156 of the Assessment Act applicable in relation to the taxpayer in accordance with subparagraph (vii)) or credit in the taxpayer’s assessment; and
(ix) the assessable income of the taxpayer of the preceding year of income had not included any net capital gain within the meaning of Part IIIa of the Assessment Act;
the sum of:
(x) the rebates (other than a rebate under section 156, 160acd, 160aqu, 160aqx, 160aqy or 160aqz of the Assessment Act) and credits to which the taxpayer was entitled in the
taxpayer’s assessment in respect of income of the preceding year of income; and
(xi) where the taxpayer was entitled to a rebate under section 160aqu, 160aqx, 160aqy or 160aqz of the Assessment Act in the taxpayer’s assessment in respect of the income of the preceding year of income—the amount of that rebate increased by 12%; and
(b) if paragraph 221yc (1) (b) of the Assessment Act applies to the taxpayer—the amount of provisional tax payable by the taxpayer in respect of the current year of income by virtue of that paragraph is:
(i) in a case where:
(a) paragraph 221yc (1) (a) of the Assessment Act would apply to the taxpayer in relation to the current year of income but for subsection 221ya (5) of that Act; and
(b) the taxpayer is a taxpayer to whom paragraph 221ya (5) (a) of the Assessment Act applies, but paragraph 221ya (5) (b) of that Act does not apply, in relation to the current year of income;
the amount that would be payable by the taxpayer under paragraph 221yc (1) (a) of the Assessment Act (as affected by paragraph (a) of this subsection) if subsection 221ya (5) were not included in that Act and Division 16c of Part III of that Act were not applicable in relation to the preceding year of income;
(ii) in a case where:
(a) paragraph 221yc (1) (a) of the Assessment Act would apply to the taxpayer in relation to the current year of income but for subsection 221ya (5) of that Act; and
(b) the taxpayer is a taxpayer to whom paragraph 221ya (5) (b) of the Assessment Act applies, but paragraph 221ya (5) (a) of that Act does not apply, in relation to the current year of income;
the amount that would be payable by the taxpayer under paragraph 221yc (1) (a) of the Assessment Act (as affected by paragraph (a) of this subsection) if subsection 221ya (5) were not included in that Act and the taxable income of the taxpayer of the preceding year of income had been increased by the sum of the deductions allowed or allowable to the taxpayer under sections 77f, 124zaf and 124zafa of that Act in the taxpayer’s assessment in respect of the preceding year of income;
(iii) in a case where:
(a) paragraph 221yc (1) (a) of the Assessment Act would apply to the taxpayer in relation to the current year of income but for subsection 221ya (5) of that Act; and
(b) the taxpayer is a taxpayer to whom paragraphs 221ya (5) (a) and (b) of the Assessment Act apply in relation to the current year of income;
the amount that would be payable by the taxpayer under paragraph 221yc (1) (a) of the Assessment Act (as affected by paragraph (a) of this subsection) if:
(c) subsection 221ya (5) were not included in the Assessment Act;
(d) Division 16c of Part III of the Assessment Act were not applicable in relation to the preceding year of income; and
(e) the amount that, but for this sub-subparagraph, would have been the taxable income of the taxpayer of the preceding year of income had been increased by the sum of the deductions allowed or allowable to the taxpayer under sections 77f, 124zaf and 124zafa of the Assessment Act in the taxpayer’s assessment in respect of the preceding year of income; and
(iv) in any other case—the amount that would be payable by the taxpayer under paragraph (a) of this subsection if the provisions of that paragraph applied to the taxpayer in relation to the taxpayer’s income of the current year of income and:
(a) the taxable income of the taxpayer of the preceding year of income had been equal to the amount that the Commissioner estimates would have been the provisional income of the taxpayer if Division 16c of Part III of the Assessment Act were not applicable in relation to the preceding year of income increased by the sum of the deductions (if any) allowed or allowable to the taxpayer under sections 77f, 124zaf and 124zafa of the Assessment Act in the taxpayer’s assessment in respect of the preceding year of income;
(b) for the purposes of Division 16 of Part III of the Assessment Act, the deemed taxable income from primary production of the taxpayer of the preceding year of income were such amount (if any) as the Commissioner determines;
(c) for the purposes of Division 6aa of Part III of the Assessment Act, the amount of the eligible taxable income of the taxpayer of the preceding year of income
were such amount (if any) as the Commissioner determines; and
(d) for the purposes of Division 16a of Part III of the Assessment Act, the amount of the eligible taxable income of the taxpayer of the preceding year of income were such amount (if any) as the Commissioner determines.
(2) A reference in this section to the amount of provisional tax payable by a taxpayer includes a reference to the amount that, but for subsection 221yba (5) of the Assessment Act, would be the provisional, tax payable by the taxpayer.
Amendment of assessments
58. Nothing in section 170 of the Principal Act prevents the amendment of an assessment made before the commencement of this section for the purpose of giving effect to this Act.
PART IV—AMENDMENT OF THE TAXATION ADMINISTRATION ACT 1953
Principal Act
59. In this Part, “Principal Act” means the Taxation Administration Act 19533.
Repeal of section 14zka
60. Section 14zka of the Principal Act is repealed.
–––––––––––
SCHEDULE Section 53
AMENDMENTS OF THE INCOME TAX ASSESSMENT ACT 1936 RELATING TO CAR RECORDS
Subsection 82kt (1) (subparagraphs (b) (v) and (c) (ii) of the definition of “applicable log book period”):
Omit “his or her return”, substitute “the taxpayer’s car records”.
Section 82ktc:
Repeal the section, substitute the following section:
Deemed specification of matters in car records
“82ktc. Where a taxpayer fails, through inadvertence, to specify any or all of the following matters in car records of the taxpayer for a year of income:
(a) a period of a kind mentioned in the definition of ‘applicable log book period’ in subsection 82kt (1);
(b) a nomination of the kind mentioned in subsection 82ktj (1) or particulars of such a nomination;
(c) a percentage of a kind mentioned in section 82kub or 82kuc; the Commissioner may determine that a period, nomination, particular or percentage of that kind specified by the taxpayer in a document lodged with the Commissioner shall be treated, for the purposes of this Subdivision, as if it had been specified by the taxpayer in those car records.”.
Subsection 82ktj (1):
Omit “his or her return”, substitute “the taxpayer’s car records”.
Paragraph 82kub (a):
Omit “his or her return”, substitute “the taxpayer’s car records”.
Sub-subparagraph 82kub (b) (i) (D):
Omit “his or her return”, substitute “the taxpayer’s car records”.
Sub-subparagraph 82kub (b) (ii) (D):
Omit “his or her return”, substitute “the taxpayer’s car records”.
Subparagraph 82kub (b) (iv):
Omit “his or her return”, substitute “the taxpayer’s car records”.
Subparagraph 82kub (c) (ii):
Omit “his or her return”, substitute “the taxpayer’s car records”.
Paragraph 82kuc (b):
Omit “his or her return”, substitute “the taxpayer’s car records”.
SCHEDULE—continued
Sub-subparagraphs 82kuc (b) (i) (B) and (ii) (B):
Omit “return”, substitute “car records”.
Paragraphs 82kud (a) and (b):
Omit “return”, substitute “car records”.
Paragraph 82kue (1) (a):
Omit “his or her return”, substitute “the taxpayer’s car records”.
Paragraph 82kue (1) (c):
Omit “return”, substitute “car records”.
Paragraph 82kue (1) (d):
(a) Omit “his or her return”, substitute “the taxpayer’s car records”.
(b) Omit “the return”, substitute “the car records”.
Paragraph 82kue (2) (b):
Omit “his or her return”, substitute “the taxpayer’s car records”.
Subsection 82kue (2):
Omit “the return”, substitute “the car records”.
Paragraph 223a (1) (a):
Omit “his or her return”, substitute “the taxpayer’s car records”.
NOTES
1. No. 39, 1986, as amended. For previous amendments, see Nos. 48 and 112, 1986; Nos. 23 and 145, 1987; No. 139, 1987 (as amended by Nos. 11 and 78, 1988); and Nos. 6, 78 and 97, 1988.
2. No. 27, 1936, as amended. For previous amendments, see No. 88, 1936; No. 5, 1937; No. 46, 1938; No. 30, 1939; Nos. 17 and 65, 1940; Nos. 58 and 69, 1941; Nos. 22 and 50, 1942; No. 10, 1943; Nos. 3 and 28, 1944; Nos. 4 and 37, 1945; No. 6, 1946; Nos. 11 and 63, 1947; No. 44, 1948; No. 66, 1949; No. 48, 1950; No. 44, 1951; Nos. 4, 28 and 90, 1952; Nos. 1, 28, 45 and 81, 1953; No. 43, 1954; Nos. 18 and 62, 1955; Nos. 25, 30 and 101, 1956; Nos. 39 and 65, 1957; No. 55, 1958; Nos. 12, 70 and 85, 1959; Nos. 17, 18, 58 and 108, 1960; Nos. 17, 27 and 94, 1961; Nos. 39 and 98, 1962; Nos. 34 and 69, 1963; Nos. 46, 68, 110 and 115, 1964; Nos. 33, 103 and 143, 1965; Nos. 50 and 83, 1966; Nos. 19, 38, 76 and 85, 1967; Nos. 4, 70, 87 and 148, 1968; Nos. 18, 93 and 101, 1969; No. 87, 1970; Nos. 6, 54 and 93, 1971; Nos. 5, 46, 47, 65 and 85, 1972; Nos. 51, 52, 53, 164 and 165, 1973; No. 216, 1973 (as amended by No. 20, 1974); Nos. 26 and 126, 1974; Nos. 80 and 117, 1975; Nos. 50, 53, 56, 98, 143, 165 and 205, 1976; Nos. 57, 126 and 127, 1977; Nos. 36, 57, 87, 90, 123, 171 and 172, 1978; Nos. 12, 19, 27, 43, 62, 146, 147 and 149, 1979; Nos. 19, 24, 57, 58, 124, 133, 134 and 159, 1980; Nos. 61, 92, 108, 109, 110, 111, 154 and 175, 1981; Nos. 29, 38, 39, 76, 80, 106 and 123, 1982; Nos. 14, 25, 39, 49, 51, 54 and 103, 1983; Nos. 14, 42, 47, 63, 76, 115, 124, 165 and 174, 1984; No. 123, 1984 (as amended by No. 65, 1985); Nos. 47, 49, 104, 123, 168 and 174, 1985; No. 173,
NOTES—continued
1985 (as amended by No. 49, 1986); Nos. 41, 46, 48, 51, 109, 112 and 154, 1986; No. 49, 1986 (as amended by No. 141, 1987); No. 52, 1986 (as amended by No. 141, 1987); No. 90, 1986 (as amended by No. 141, 1987); Nos. 23, 58, 61, 120, 145 and 163, 1987; No. 62, 1987 (as amended by No. 108, 1987); No. 108, 1987 (as amended by No. 138, 1987); No. 138, 1987 (as amended by No. 11, 1988); No. 139, 1987 (as amended by Nos. 11 and 78, 1988); and Nos. 8, 11, 59, 75, 78, 80 and 87, 1988.
3. No. 1, 1953, as amended. For previous amendments, see Nos. 28, 39, 40 and 52, 1953; No. 18, 1955; No. 39, 1957; No. 95, 1959; No. 17, 1960; No. 75, 1964; No. 155, 1965; No. 93, 1966; No. 120, 1968; No. 216, 1973; No. 133, 1974; No. 37, 1976; Nos. 19 and 59, 1979; Nos. 39 and 117, 1983; No. 123, 1984; No. 65, 1985 (as amended by No. 193, 1985); Nos. 4, 47, 104, 123 and 168, 1985; No. 41, 46, 48, 112, 144 and 154, 1986; No. 49, 1986 (as amended by No. 141, 1987); Nos. 120 and 145, 1987; No. 62, 1987 (as amended by No. 108, 1987); No. 108, 1987 (as amended by No. 138, 1987); and No. 138, 1987 (as amended by No. 11, 1988).
[Minister’s second reading speech made in—
House of Representatives on 31 August 1988
Senate on 4 November 1988]
