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Taxation Laws Amendment Act (No. 4) 1994

Authoritative Version
  • - C2004A04854
  • In force - Superseded Version
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Act No. 181 of 1994 as made
An Act to amend the law relating to taxation
Administered by: Treasury
Date of Assent 19 Dec 1994

Commonwealth Coat of Arms of Australia

Taxation Laws Amendment Act (No. 4) 1994

No. 181 of 1994

TABLE OF PROVISIONS

Section

1.         Short title

2.         Commencement

3.         Schedules

SCHEDULE 1

AMENDMENTS OF THE INCOME TAX ASSESSMENT ACT 1936

PART 1—MINING AND PETROLEUM CASH BIDDING

PART 2—CHILDREN'S INCOME

PART 3—DIVIDEND IMPUTATION

PART 4—RETURN OF DEDUCTED SUPERANNUATION CONTRIBUTIONS

PART 5—CREDIT UNIONS

PART 6—ASSESSMENTS


 

TABLE OF PROVISIONScontinued

SCHEDULE 2

AMENDMENTS RELATING TO POOLED DEVELOPMENT FUNDS

PART 1—INCOME TAX RATES ACT 1986

PART 2—INCOME TAX ASSESSMENT ACT 1936

SCHEDULE 3

AMENDMENTS RELATING TO SUPERANNUATION

PART 1—FRINGE BENEFITS TAX ASSESSMENT ACT 1986

PART 2—INCOME TAX ASSESSMENT ACT 1936

Division 1Resident and non-resident superannuation funds

Division 2Residency assumptions relating to superannuation funds, approved deposit funds and pooled superannuation trusts

Division 3Non-complying superannuation funds that were previously complying superannuation funds

Division 4Resident superannuation funds that were previously non-resident superannuation funds

Division 5Withholding tax exemptions for certain interest, dividend and royalty income of overseas superannuation funds

Division 6Deductions to employers etc. for certain contributions made to non-complying superannuation funds

Division 7Definition of taxable contributions

Division 8Deductions for taxable contributions to certain entities

Division 9Cost of collecting non-taxable contributions by non-resident superannuation funds

Division 10Lump sum payments made in consequence of the termination of overseas projects or overseas employment

Division 11Lump sum payments made from resident non-complying superannuation funds

Division 12Lump sum payments from certain non-resident superannuation funds

Division 13To make certain amendments to Subdivision AA of Division 2 of Part III in consequence of the amendments made by Divisions 11 and 12

Division 14—Pension or annuity paid from non-complying superannuation fund

Division 15Roll-over annuities bought from life assurance companies

Division 16—Amounts paid by Part IX entities that are subject to tux under Part XI

Division 17Assessments

PART 3—INCOME TAX ACT 1986

PART 4—SUPERANNUATION INDUSTRY (SUPERVISION) ACT 1993

Division 1—Amendments relating to the residency of superannuation funds and approved deposit funds

Division 2—Amendments relating to contraventions that are taken into account in determining "complying superannuation fund" status

TABLE OF PROVISIONScontinued

Division 3—Amendments relating to the equal representation rules

PART 5—SUPERANNUATION GUARANTEE (ADMINISTRATION) ACT 1992

SCHEDULE 4

AMENDMENTS RELATING TO RESEARCH AND DEVELOPMENT ACTIVITIES

PART 1—INDUSTRY RESEARCH AND DEVELOPMENT ACT 1986

PART 2—INCOME TAX ASSESSMENT ACT 1936

SCHEDULE 5

AMENDMENTS RELATING TO PAYMENT OF INTEREST ON OVERPAYMENTS AND EARLY PAYMENTS

PART 1—OBJECT

PART 2—TAXATION (INTEREST ON OVERPAYMENTS) ACT 1983

PART 3—OTHER ACTS

Division 1—Income Tax Assessment Act 1936

Division 2—Fringe Benefits Tax Assessment Act 1986

Division 3—Superannuation Guarantee (Administration) Act 1992

Division 4Training Guarantee (Administration) Act 1990

Division 5—Australian Capital Territory Taxation (Administration) Act 1969

Division 6—Freedom of Information Act 1982

Division 7—Pay-roll Tax (Territories) Assessment Act 1971

Division 8—Petroleum Resource Rent Tax Assessment Act 1987

Division 9—Swimming Pools Tax Refund Act 1992

PART 4—APPLICATION AND TRANSITIONAL

SCHEDULE 6

AMENDMENTS OF THE DEVELOPMENT ALLOWANCE AUTHORITY ACT 1992


Commonwealth Coat of Arms of Australia

Taxation Laws Amendment Act (No. 4) 1994

No. 181 of 1994

 

An Act to amend the law relating to taxation

[Assented to 19 December 1994]

The Parliament of Australia enacts:

Short title

1. This Act may be cited as the Taxation Laws Amendment Act (No. 4) 1994.

Commencement

2.(1) Subject to subsection (2), this Act commences on the day on which it receives the Royal Assent.

(2) Part 3 of Schedule 1, apart from item 86 of that Schedule, is taken to have commenced on 13 October 1994.

Schedules

3. The Acts specified in the Schedules to this Act are amended in accordance with the applicable items in the Schedules, and the other items in the Schedules have effect according to their terms.

____________


 

                                                                  SCHEDULE 1                                                   Section 3

AMENDMENTS OF THE INCOME TAX ASSESSMENT ACT 1936

PART 1—MINING AND PETROLEUM CASH BIDDING

1. Object

The object of this Part is:

(a)  to provide for deductibility of cash bidding payments to acquire exploration or prospecting authorities and mining authorities; and

(b)  to extend to on-shore areas the coverage of the existing provisions relating to deductibility of cash bidding payments to acquire petroleum exploration permits and production licences.

2. Paragraphs 122A(1)(a), (b) and (c):

Add at the end "or".

3. After paragraph 122A(1)(d):

Insert:

"(da) expenditure that the taxpayer is taken to have incurred by section 122BA; or".

4. Subsection 122B(1):

Add at the end "that has not been the subject of an agreement made under subsection 122BA(5)".

5. After section 122B:

Insert:

Allowable capital expenditure in respect of cash bidding payments to acquire exploration or prospecting authorities or mining authorities

Summary of section

"122BA.( 1) This section provides for certain exploration or prospecting cash bidding payments and mining cash bidding payments to be capital expenditure incurred by a taxpayer for the purposes of this Division.

Mining cash bidding payments

"(2) Each mining cash bidding payment paid by a taxpayer is, for the purposes of this Division, expenditure of a capital nature incurred by the taxpayer:

(a)  if the amount is paid before the grant of the mining authority concerned—at the time of the grant; and

(b)  in any other case—at the time the payment is made.

Exploration or prospecting cash bidding payments made when mining authority has been granted

"(3) If:


 

SCHEDULE 1—continued

(a)  a taxpayer makes an exploration or prospecting cash bidding payment in relation to the grant of an exploration or prospecting authority; and

(b)  the payment is made at or after the time of the grant of a mining authority that is related to the exploration or prospecting authority;

the amount of the payment is, for the purposes of this Division, expenditure of a capital nature incurred by the taxpayer at the time of payment.

Exploration or prospecting cash bidding payments made before mining authority has been granted

"(4) If:

(a)  a mining authority is granted; and

(b)  it is the first or only mining authority that is related to a particular cash bidding exploration or prospecting authority; and

(c)  immediately before the grant of the mining authority a taxpayer who has a qualifying interest or qualifying interests in relation to the exploration or prospecting authority also has an entitlement to an eligible cash bidding amount in relation to the exploration or prospecting authority;

the taxpayer is taken for the purposes of this Division to have incurred, at the time the mining authority is granted, expenditure of a capital nature in relation to the qualifying interest or qualifying interests of an amount equal to the eligible cash bidding amount.

Transfer of entitlement to an eligible cash bidding amount

"(5) If:

(a)  at any time before the grant of the first or only mining authority that is related to a cash bidding exploration or prospecting authority, a person (the 'purchaser') incurs expenditure in acquiring a qualifying interest in relation to the exploration or prospecting authority from another person (the 'vendor'); and

(b)  the vendor has an entitlement to an eligible cash bidding amount in relation to the exploration or prospecting authority;

the purchaser and vendor may agree to transfer to the purchaser so much of the vendor's entitlement to the eligible cash bidding amount as is specified in the agreement.

Form and content of agreement

"(6) An agreement under subsection (5) must:

(a)  be in writing signed by or on behalf of the vendor and the purchaser; and

(b)  specify as the amount of the entitlement that is to be transferred to the purchaser an amount that does not exceed:


 

SCHEDULE 1—continued

(i)   the expenditure incurred by the purchaser in acquiring the qualifying interest in relation to the exploration or prospecting authority;

reduced by:

(ii)  any amount of that expenditure specified in an agreement previously made under subsection 122B(1) in relation to the acquisition; and

(c)  be made not later than 2 months after the end of the year of income of the purchaser in which the acquisition occurred, or within such further time as the Commissioner allows.

Definition of entitlement to an "eligible cash bidding amount"

"(7) If at a particular time (the 'test time'):

(a)  a person is the holder of a qualifying interest or qualifying interests in relation to a cash bidding exploration or prospecting authority; and

(b)  the sum of:

(i)   if the exploration or prospecting authority was granted to the person (whether or not the person holds the authority at the test time)—the exploration or prospecting cash bidding payment, or the sum of the exploration or prospecting cash bidding payments, paid before the test time in relation to the grant of the authority; and

(ii)  in any case—all amounts (if any) specified in agreements made (including at a time after the test time) under subsection (5) in relation to the acquisition by the person of qualifying interests in relation to the authority before the test time;

exceeds:

(iii) the sum of all amounts (if any) specified in agreements made (including at a time after the test time) under subsection (5) in relation to the acquisition from the person of qualifying interests in relation to the authority before the test time;

the person is taken to have at the test time in relation to the authority an entitlement to an 'eligible cash bidding amount' equal to the amount of the excess referred to in paragraph (b).

When a mining authority is "related" to an exploration or prospecting authority

"(8) A mining authority is 'related' to an exploration or prospecting authority if:


 

SCHEDULE 1—continued

(a)  because of the grant of the mining authority, the exploration or prospecting authority ceases to be in force in respect of the whole or part of the area in respect of which the mining authority is granted; or

(b)  because of the grant of the mining authority, a retention authority that is related to the exploration or prospecting authority ceases to be in force in respect of the whole or part of the area in respect of which the mining authority is granted.

When a retention authority is "related" to an exploration or prospecting authority

"(9) A retention authority is 'related' to an exploration or prospecting authority if, because of the grant of the retention authority, the exploration or prospecting authority ceases to be in force in respect of the whole or part of the area in respect of which the retention authority is granted.

Effect of renewal of authority

"(10) If an exploration or prospecting authority (the 'original authority') or a retention authority (also the 'original authority') is renewed, the renewed authority is taken to be a continuation of the original authority, even if the renewal is not granted in respect of all of the area in respect of which the original authority was granted.

Definition of "qualifying interest"

"(11) A person has a 'qualifying interest' in relation to an exploration or prospecting authority if the person is the holder of, or of an interest in, the authority or a retention authority that is related to it.

Definitions

"(12) In this section:

'cash bidding exploration or prospecting authority' means an exploration or prospecting authority in respect of which an exploration or prospecting cash bidding payment is or was made;

'exploration or prospecting authority' means any permit, licence, lease or other authority (other than a mining authority) that:

(a)  is granted under a law of the Commonwealth, a State, a Territory or a foreign country; and

(b)  authorises exploration or prospecting for minerals other than petroleum, whether or not it also authorises other things;

'exploration or prospecting cash bidding payment' means an amount paid for the grant of an exploration or prospecting authority, if:

(a)  the authority was auctioned or tendered for, or was granted to a person who responded to a public invitation to apply for it within a specified period or by a specified day; and


 

SCHEDULE 1—continued

(b)  the amount is not an application fee or a deposit, except to the extent that the amount is applied in payment for the grant of the exploration or prospecting authority; and

(c)  the amount is incurred in carrying on prescribed mining operations or for the purpose of exploring or prospecting for minerals obtainable by prescribed mining operations;

'mining authority' means any permit, licence, lease or other authority that:

(a)  is granted under a law of the Commonwealth, a State, a Territory or a foreign country; and

(b)  authorises the carrying on of mining operations for the extraction (other than merely by taking samples) of minerals other than petroleum from their natural site, whether or not it also authorises other things;

'mining cash bidding payment' means an amount paid for the grant of a mining authority, where:

(a)  the mining authority was auctioned or tendered for, or was granted to a person who responded to a public invitation to apply for it within a specified period or by a specified day; and

(b)  the amount is not an application fee or a deposit, except to the extent that the amount is applied in payment for the grant of the mining authority; and

(c)  the amount is incurred in carrying on prescribed mining operations or for the purpose of exploring or prospecting for minerals obtainable by prescribed mining operations;

'retention authority' means any permit, licence, lease or other authority in relation to an area (other than a mining authority) that:

(a)  is granted under a law of the Commonwealth, a State, a Territory or a foreign country; and

(b)  is only permitted to be granted to a person who is the holder of, or of an interest in, an exploration or prospecting authority, or a retention authority, in relation to the area.".

6. After paragraph 122JAA(4)(d):

Insert:

"(da) if:

(i)   the property is a qualifying interest in relation to a cash bidding exploration permit (within the meaning of section 122BA); and

(ii)  immediately before the disposal, the transferor had an entitlement to an eligible cash bidding amount (within the meaning of that section) in relation to that permit;


 

SCHEDULE 1—continued

the following were the case:

(iii) an agreement under section 122BA in respect of the acquisition of the property had been made by the transferor and the transferee; and

(iv) the amount specified in the agreement were equal to the whole of the transferor's entitlement to the eligible cash bidding amount; and".

7. Paragraphs 124ABA(5)(a) and (b):

Omit the paragraphs, substitute:

"(a) a production licence is related to an exploration permit if:

(i)   because of the grant of the production licence, the exploration permit ceases to be in force in respect of:

(A)   in the case of a production licence under Part III of the Petroleum Act—the block or blocks in respect of which the production licence is granted; or

(B)    in any other case—the whole or part of the area in respect of which the production licence is granted; or

(ii)    because of the grant of the production licence, a retention lease that is related to the exploration permit ceases to be in force in respect of:

(A)   in the case of a production licence under Part III of the Petroleum Act—a block or blocks in respect of which a production licence is granted; or

(B)    in any other case—the whole or part of the area in respect of which the production licence is granted;

(b)  a retention lease is related to an exploration permit if, because of the grant of the retention lease, the exploration permit ceases to be in force in respect of:

(i)   in the case of a retention lease under Part III of the Petroleum Act—the block or blocks in respect of which the retention lease is granted; or

(ii)  in any other case—the whole or part of the area in respect of which the retention lease is granted;".

8. Paragraph 124ABA(5)(c):

After "blocks", insert "or other area".

9. Subsection 124ABA(6) (definition of "licence cash bidding payment"):

Add at the end:


 

SCHEDULE 1—continued

"; or (c) an amount paid for the grant of a production licence (other than one granted under Part III of the Petroleum Act), if:

(i)   the licence was auctioned or tendered for, or was granted to a person who responded to a public invitation to apply for it within a specified period or by a specified day;and

(ii)  the amount is not an application fee or a deposit, except to the extent that the amount is applied in payment for the grant of the production licence; and

(iii) the amount is incurred in carrying on prescribed petroleum operations or for the purpose of exploring or prospecting for petroleum obtainable by prescribed petroleum operations;".

10. Subsection 124ABA(6) (definition of "permit cash bidding payment"):

Add at the end:

"; or (c) an amount paid for the grant of an exploration permit (other than one issued under Part III of the Petroleum Act), if:

(i)   the permit was auctioned or tendered for, or was granted to a person who responded to a public invitation to apply for it within a specified period or by a specified day; and

(ii)  the amount is not an application fee or a deposit, except to the extent that the amount is applied in payment for the grant of the exploration permit; and

(iii) the amount is incurred in carrying on prescribed petroleum operations or for the purpose of exploring or prospecting for petroleum obtainable by prescribed petroleum operations;".

11. Subsection 124ABA(6) (definitions of "exploration permit", "production licence" and "retention lease"):

Omit the definitions, substitute respectively the following definitions:

" 'exploration permit' means:

(a)  an exploration permit for petroleum under Part III of the Petroleum Act; or

(b)  any permit, licence, lease or other authority (other than a production licence) that:


 

SCHEDULE 1—continued

(i)   is granted under a law of the Commonwealth, a State, a Territory or a foreign country (other than a law of a foreign country declared by the regulations as mentioned in paragraph (7)(a)); and

(ii)  authorises exploration or prospecting for petroleum, whether or not it also authorises other things;

'production licence' means:

(a)  a production licence for petroleum under Part III of the Petroleum Act; or

(b)  any permit, licence, lease or other authority that:

(i)   is granted under a law of the Commonwealth, a State, a Territory or a foreign country (other than a law of a foreign country declared by the regulations as mentioned in paragraph (7)(a)); and

(ii)  authorises the carrying on of mining operations for the extraction (other than merely by taking samples) of petroleum from its natural site, whether or not it also authorises other things;

'retention lease' means:

(a)  a retention lease under Part III of the Petroleum Act; or

(b)  any permit, licence (other than a production licence), lease or authority in relation to an area that:

(i)   is granted under a law of the Commonwealth, a State, a Territory or a foreign country (other than a law of a foreign country declared by the regulations as mentioned in paragraph (7)(a)); and

(ii)  is only permitted to be granted to a person who is the holder of, or of an interest in, an exploration permit, or retention lease, in relation to the area.".

12. Subsection 170(10):

Omit "subsection 122JD(2)", substitute "122BA(7) or 122JD(2)".

13. Application

(1) The amendments made by items 2 to 6 and 12 apply to exploration or prospecting cash bidding payments and mining cash bidding payments made on or after 1 July 1993.

(2) The amendments made by items 7 to 11 apply to licence cash bidding payments and permit cash bidding payments made on or after 13 October 1994.


 

SCHEDULE 1—continued

PART 2—CHILDREN'S INCOME

14. Object

The object of this Part is:

(a)  to replace provisions in Division 6AA of Part III of the Income Tax Assessment Act 1936 relating to transfers of property on family breakdown; and

(b)  to clarify certain anti-avoidance provisions in that Division.

15. Subparagraph 102AE(2)(b)(viii):

Omit the subparagraph, substitute:

"(viii) as the result of a family breakdown (see section 102AGA);".

16. Subsection 102AE(6):

Omit the subsection, substitute:

"(6) Subject to subsection (7), if any 2 or more parties to:

(a)  the derivation of the excepted assessable income mentioned in subsection (2); or

(b)  any act or transaction directly or indirectly connected with the derivation of that excepted assessable income;

were not dealing with each other at arm's length in relation to the derivation, or in relation to the act or transaction, the excepted assessable income is only so much (if any) of that income as would have been derived if they had been dealing with each other at arm's length in relation to the derivation, or in relation to the act or transaction.".

17. Subparagraph 102AG(2)(c)(viii):

Omit the subparagraph, substitute:

"(viii) as the result of a family breakdown (see section 102AGA);".

18. After subsection 102AG(2):

Insert:

"(2A) Paragraph (2)(c) or subparagraph (2)(d)(ii) does not apply unless the beneficiary of the trust concerned will, under the terms of the trust, acquire the trust property (other than as a trustee) when the trust ends.".

19. Subsection 102AG(3):

Omit the subsection, substitute:

"(3) Subject to subsection (4), if any 2 or more parties to:

(a)  the derivation of the excepted trust income mentioned in subsection (2); or


 

SCHEDULE 1—continued

(b)  any act or transaction directly or indirectly connected with the derivation of that excepted trust income;

were not dealing with each other at arm's length in relation to the derivation, or in relation to the act or transaction, the excepted trust income is only so much (if any) of that income as would have been derived if they had been dealing with each other at arm's length in relation to the derivation, or in relation to the act or transaction.".

20. After section 102AG:

Insert the following section:

Transfer of property as the result of a family breakdown

"102AGA.(1) For the purposes of subparagraph 102AE(2)(b)(viii) or 102AG(2)(c)(viii), the transfer of property (the 'subject property') by a person (the 'transferor'):

(a)  to the minor mentioned in subparagraph 102AE(2)(b)(viii); or

(b)  to the trustee mentioned in subparagraph 102AG(2)(c)(viii) for the benefit of the beneficiary mentioned in that subparagraph;

is 'as the result of a family breakdown' if the requirements of subsection (2) or (3) of this section are met.

"(2) The transfer will be as the result of a family breakdown if:

(a)  a person ceases to live with another person as the spouse of that person on a genuine domestic basis (whether or not legally married to that person); and

(b)  at least one of the persons:

(i)   is the natural parent; or

(ii)  is the adoptive parent; or

(iii) is the step-parent; or

(iv) has legal custody or guardianship;

of the minor or the beneficiary; and

(c)  an order, determination or assessment of a court, person or body (whether or not in Australia) is made wholly or partly because the person has ceased to live as the spouse of the other person on a genuine domestic basis; and

(d)  the effect of the order, determination or assessment is that a person (whether one of the spouses, the transferor or any other person) becomes subject to a legal obligation to maintain, transfer property to, or do some other thing for the benefit of, the minor or beneficiary or one of the spouses; and


 

SCHEDULE 1—continued

(e)  the transferor transfers the subject property to the minor, or to the trustee for the benefit of the beneficiary, in giving effect to the legal obligation (including in discharging the legal obligation if it falls on someone else, and whether or not the legal obligation could have been given effect in some other way).

"(3) The transfer will also be as a result of a family breakdown if:

(a)  when the minor or beneficiary is born, his or her natural parents are not living together as spouses on a genuine domestic basis (whether or not legally married); and

(b)  an order, determination or assessment of a court, person or body (whether or not in Australia) is made wholly or partly because the natural parents are not living together as mentioned in paragraph (a); and

(c)  the effect of the order, determination or assessment is that a person (whether one of the natural parents, the transferor or any other person) becomes subject to a legal obligation to maintain, transfer property to, or do some other thing for the benefit of, the minor or beneficiary or one of the natural parents of the minor or beneficiary; and

(d)  the transferor transfers the subject property to the minor, or to the trustee for the benefit of the beneficiary, in giving effect to the legal obligation (including in discharging the legal obligation if it falls on someone else, and whether or not the legal obligation could have been given effect in some other way).".

21. Application

(1) The amendments made by items 15, 17 and 20 apply in relation to the year of income that commenced on 1 July 1979 and in relation to all later years of income.

(2) The amendments made by items 16, 18 and 19 apply in relation to income derived on or after 7 March 1994.

PART 3—DIVIDEND IMPUTATION

22. Object

The object of this Part is:

(a)  to amend the provisions of Part IIIAA (the dividend imputation provisions) of the Income Tax Assessment Act 1936 to take account of the revised company tax instalment system; and

(b)  to ensure, through the introduction of deficit deferral tax, that the amended provisions can not be used to defer franking deficit tax; and


 

SCHEDULE 1—continued

(c)  to make a transitional amendment that is consequential upon the change in the general company tax rate from 39% to 33%.

23. Section 160APA (before subparagraph (a)(ia) of the definition of "applicable general company tax rate"):

Insert:

"(iaa)    the paying of an instalment by a company in respect of a year of income under section 221AZK;

(iab)     the making of any other payment by a company in respect of a year of income under Division 1C of Part VI;

(iac)     the payment of a refund to a company in respect of a year of income under Division 1C of Part VI;

(iad)     the payment of a refund to a company of an amount paid by the company in respect of a year of income where the refund is covered by section 160APY or 160APYA;

(iae)     the crediting by the Commissioner of an amount paid by a company in respect of a year of income where the crediting is covered by section 160APYA;".

24. Section 160APA (paragraph (b) of the definition of "applicable general company tax rate"):

Omit "for a franking year", substitute "or class A deficit deferral tax".

25. Section 160APA (paragraph (ba) of the definition of "applicable general company tax rate"):

Omit "for a franking year", substitute "or class B deficit deferral tax".

26. Section 160APA (definition of "franking assessment"):

Add at the end:

"or (c) a deficit deferral tax assessment;".

27. Section 160APA (after paragraph (a) of the definition of "termination time"):

Insert:

"(aa) in relation to the payment of a company tax instalment in respect of a year of income—the earlier of:

(i)   the time at which the company receives an amount as a refund of that payment under section 221AZL or 221AZQ; and

(ii)  whichever of the following is applicable:

(A)   if the company is required to make a payment under section 221AZT in respect of the year of income—the day on which that payment is made;


 

SCHEDULE 1—continued

(B)    in any other case—the day that would have been applicable under paragraph 166A(2)(b) if the company had been required to make such a payment under section 221AZT; or".

28. Section 160APA (sub-subparagraph (b)(ii)(B) of the definition of "termination time"):

Omit "166A(a)(i)'\ substitute "166A(1)(a)(i)"-

29. Section 160APA (paragraph (c) of the definition of "termination time"):

After "paragraph (a)", insert ", (aa)".

30. Section 160APA:

Insert:

" 'class A deficit deferral tax' means tax payable in accordance with section 160AQJA;

'class B deficit deferral tax' means tax payable in accordance with section 160AQJB;

'company tax instalment' means an instalment, or other amount, payable under Division 1C of Part VI;

'deficit deferral amount' means a class A deficit deferral amount (see subsection 160AQJA(2)) or a class B deficit deferral amount (see subsection 160AQJB(2));

'deficit deferral tax' means class A deficit deferral tax or class B deficit deferral tax;

'deficit deferral tax assessment' means the ascertainment, under section 160ARHA or 160ARK, of deficit deferral tax payable by a company;".

31. After section 160APL:

Insert:

Payment of company tax instalment

"160APM. If a company tax instalment payable by a company under section 221AZK is paid on a particular day, a class B franking credit of the company equal to the adjusted amount in relation to the amount paid arises on that day.

Payment of additional amount on upwards estimate

"I60APMAA. If an amount payable by a company under subsection 221AZR(1) is paid on a particular day, a class B franking credit of the company equal to the adjusted amount in relation to the amount paid arises on that day.


 

SCHEDULE 1—continued

Deficit deferral amount

Class A deficit deferral amount

"160APMAB.(1) If a company receives a refund in relation to which a class A deficit deferral amount arises (see subsection 160AQJA(2)) on a particular day, a class A franking credit of the company equal to the adjusted amount in relation to the class A deficit deferral tax payable in relation to the refund (see subsection 160AQJA(3)) arises on that day.

Class B deficit deferral amount

"(2) If a company receives a refund in relation to which a class B deficit deferral amount arises (see subsection 160AQJB(2)) on a particular day, a class B franking credit of the company equal to the adjusted amount in relation to the class B deficit deferral tax payable in relation to the refund (see subsection 160AQJB(3)) arises on that day.".

32. Paragraph 160APMD(b):

After "section" insert "160APM, 160APMAA, ".

33. After section 160APV:

Insert:

Life assurance companies—credit reducing section 160APY or 160APYA debit

"160APVA.(1) If:

(a)  on a particular day, a class B franking debit of a life assurance company arises under section 160APY in relation to a refund received by the company in respect of an instalment for a year of income (the 'current year of income'); and

(b)  a notice of an original company tax assessment for the current year of income has not been served, or been taken to have been served, on the company on or before that day;

then a class B franking credit of the company worked out under subsection (2) of this section arises on that day.

"(2) The amount of the franking credit is equal to the adjusted amount in relation to the amount calculated for the current year of income using the formula:

 


 

SCHEDULE 1—continued

where:

'Statutory factor' means 1.0;

Note:   Statutory factor is used and modified in section 160AQCN.

'Preceding year's company tax' means the company tax assessed to the company for the year of income (the 'preceding year of income') that immediately preceded the current year of income;

'Non-fund component of preceding year's company tax' means so much of the company tax assessed to the company for the preceding year of income as is attributable to the non-fund component.

"(3) If:

(a)  on a particular day, a class B franking debit of a life assurance company arises:

(i)   under section 160APY in relation to a refund received by the company in respect of an instalment for a year of income (the 'current year of income'); or

(ii)  under section 160APYA in relation to a refund received by the company, or an amount credited against a liability of the company, in respect of an instalment for a year of income (also the 'current year of income'); and

(b)  either:

(i)   before that day, a notice of an original company tax assessment for the current year of income has been served, or is taken to have been served, on the company; or

(ii)  on or after that day, a notice of an original company tax assessment for the current year of income is served, or taken to be served, on the company;

then a class B franking credit of the company worked out under subsection (4) of this section arises on the later of the particular day and the day on which the notice is served or taken to be served.

"(4) The amount of the franking credit is equal to the adjusted amount in relation to the amount calculated using the formula:

where:


 

SCHEDULE 1—continued

'Statutory factor' means 1.0;

Note:   Statutory factor is used and modified in section 160AQCN.

'Current year's company tax' means the company tax assessed to the company for the current year of income;

'Non-fund component of current year's company tax' means so much of the company tax assessed to the company for the current year of income as is attributable to the non-fund component.

Life assurance companies—credit reversing subsection 160AQCCAU) debit

"160APVB. If:

(a)  on a particular day, a class B franking debit of a life assurance company arises under subsection 160AQCCA(1) in relation to:

(i)     an instalment that the company is required to pay under section 221AZK in respect of a year of income (the 'current year of income'); or

(ii)    an amount that the company is required to pay under subsection 221AZR(1) in respect of a year of income (also the 'current year of income'); and

(b)  on or after that day, a notice of an original company tax assessment for the current year of income is served, or taken to be served, on the company;

then a class B franking credit of the company equal to the amount of the class B franking debit arises on the day on which the notice is served, or taken to be served.".

34. Before paragraph 160APVH(1)(a):

Insert:

"(aa) subsection 160AQCCA(1);

(ab)  subsection 160AQCCA(3);".

35. Paragraph 160APVH(3)(a):

After "paragraph", insert "(aa) or".

36. After section 160APXA:

Insert:

Refunds of company tax instalment

"160APY. If a company receives an amount as a refund under subsection 221AZL(2) or 221AZQ(1), a class B franking debit of the company equal to the adjusted amount in relation to the amount received arises on the day on which the company receives the amount.


 

SCHEDULE 1—continued

Refunds of company tax

"160APYA. If:

(a)  a company makes a payment covered by section 160APM or 160APMAA; and

(b)  either:

(i)   the company receives an amount as a refund of that payment (not being a refund covered by section 160APY); or

(ii)  the Commissioner credits the payment under paragraph 221AZM(1)(b) or (c) against a liability of the company; and

(c)  the amount refunded or credited, as the case may be, is not attributable to a reduction of company tax covered by section 160APZ;

then a class B franking debit of the company equal to the adjusted amount in relation to the amount received or credited arises on the day on which the company receives the refund, or on the day on which that payment is credited.".

37. Subparagraph 160APYBB(b)(ii):

After "IB", insert "or 1C".

38. After section 160AQCC:

Insert:

Life assurance companies—debit reducing section 160APM or 160APMAA credit

"160AQCCA.(1) If:

(a)  on a particular day, a class B franking credit of a life assurance company arises:

(i)     under section 160APM in relation to an instalment that the company is required to pay under section 221AZK in respect of a year of income (also the 'current year of income'); or

(ii)    under section 160APMAA in relation to an amount that the company is required to pay under subsection 221AZR(1) in respect of a year of income (also the 'current year of income'); and

(b)  a notice of an original company tax assessment for the current year of income has not been served, or been taken to have been served, on the company on or before that day;

then a class 13 franking debit of the company worked out under subsection (2) of this section arises on that day.

"(2) The amount of the franking debit is equal to the adjusted amount in relation to the amount calculated for the current year of income using the formula:


 

SCHEDULE 1—continued

where:

'Statutory factor' means 1.0;

Note:   Statutory factor is used and modified in section 160APVH.

'Preceding year's company tax' means the company tax assessed to the company for the year of income (the 'preceding year of income') that immediately preceded the current year of income;

'Non-fund component of preceding year's company tax' means so much of the company tax assessed to the company for the preceding year of income as is attributable to the non-fund component.

"(3) If:

(a)  on a particular day, a class B franking credit of a life assurance company arises under:

(i)     section 160APM in relation to an instalment that the company is required to pay under section 221AZK in respect of a year of income (the 'current year of income'); or

(ii)    under section 160APMAA in relation to an amount that the company is required to pay under subsection 221AZR(1) in respect of a year of income (also the 'current year of income'); and

(b)  either:

(i)   before that day, a notice of an original company tax assessment for the current year of income has been served, or is taken to have been served, on the company; or

(ii)  on or after that day, a notice of an original company tax assessment for the current year of income is served, or taken to be served, on the company;

then a class B franking debit of the company worked out under subsection (4) of this section arises on the later of the particular day and the day on which the notice is served or taken to be served.

"(4) The amount of the franking debit is equal to the adjusted amount in relation to the amount calculated using the formula:


 

SCHEDULE 1—continued

where:

'Statutory factor' means 1.0;

Note:   Statutory factor is used and modified in section 160APVH.

'Current year's company tax' means the company tax assessed to the company for the current year of income;

'Non-fund component of current year's company tax' means so much of the company tax assessed to the company for the current year of income as is attributable to the non-fund component.

Life assurance companies—debit reversing subsection 160APVA(1) credit

"160AQCCB. If:

(a)  on a particular day, a class B franking credit of a life assurance company arises under subsection 160APVA(1) in relation to a refund received by the company in respect of an instalment for a year of income (the 'current year of income'); and

(b)  on or after that day, a notice of an original company tax assessment for the current year of income is served, or taken to be served, on the company;

then a class B franking debit of the company equal to the amount of the class B franking credit arises on the day on which the notice is served, or taken to be served.".

39. Before paragraph 160AQCN(1)(a):

Insert:

"(aa) subsection 160APVA(1);

(ab)  subsection 160APVA(3);".

40. After subsection 160AQCN(2):

Insert:

"(2A) If:

(a)  on a particular day, a class A franking credit of a company arises under subsection 160APVH(1) because of paragraph (aa) of that subsection in relation to a company tax instalment in respect of a year of income; and


 

SCHEDULE 1—continued

(b)  on or after that day, a notice of an original company tax assessment for the year of income is served, or taken to be served, on the company;

then a class A franking debit of the company equal to the amount of the class A franking credit arises on the day on which the notice is served or taken to be served.".

41. After paragraph 160AQD(1)(b):

Insert:

"or (ba) has paid a company tax instalment;".

42. Paragraph 160AQD(1)(c):

After "tax", insert "or the company tax instalment".

43. After subsection 160AQD(1A):

Insert:

"(1B) An estimated class A debit in relation to a company tax instalment must relate to the refund of that instalment under section 221AZL or 221AZQ.".

44. After paragraph 160AQDA(1)(b):

Insert:

"or (ba) has paid a company tax instalment;".

45. Paragraph 160AQDA(1)(c):

After "tax", insert "or the company tax instalment".

46. After subsection 160AQDA(2):

Insert:

"(2A) An estimated class B debit in relation to a company tax instalment must relate to the refund of that instalment under section 221AZL or 221AZQ.".

47. After Subdivision B of Division 5 of Part IIIAA:

Insert:

"Subdivision BA—Deficit deferral tax

Class A deficit deferral tax

Situation that gives rise to liability

"160AQJA.(1) If:


 

SCHEDULE 1—continued

(a)  during a franking year (the 'first franking year') a life assurance company pays one or more instalments under section 221AZK for a year of income; and

(b)  at a particular time during the next franking year (the 'second franking year') the company receives a refund of the whole or a part of the instalment, or one or more of the instalments, under section 221AZL or 221AZQ; and

(c)  assuming that the refund, together with any previous refund of one or more instalments, for the year of income, had been received by the company on the last day of the first franking year, the company would have had a class A franking deficit, or an increased class A franking deficit, at the end of the first franking year;

a class A deficit deferral amount (defined in subsection (2)) arises in relation to the company and the refund.

Class A deficit deferral amount

"(2) The 'class A deficit deferral amount' is the amount of the class A franking deficit, or the amount of the increase in the class A franking deficit, referred to in paragraph (1)(c).

Amount of class A deficit deferral tax

"(3) If a class A deficit deferral amount arises in relation to a company and a refund, the company is liable to pay class A deficit deferral tax in relation to the refund. The amount of the tax is the gross class A deficit deferral amount (see subsection (4)) reduced by any class A deficit deferral tax already payable by the company in relation to refunds received in the second franking year.

Gross class A deficit deferral amount

"(4) The 'gross class A deficit deferral amount' is worked out using the following formula:

Additional amounts taken to be part of instalment

"(5) If an amount is paid under subsection 221 AZR(1) in the same year as the instalment mentioned in that subsection, then, for the purposes of this section, the amount is to be treated as being part of the instalment.

Class B deficit deferral tax

Situation that gives rise to liability

"160AQJB.(1) If:


 

SCHEDULE l—continued

(a)  during a franking year (the 'first franking year') a company pays one or more instalments under section 221AZK for a year of income; and

(b)  at a particular time during the next franking year (the 'second franking year') the company receives a refund of the whole or a part of the instalment, or one or more of the instalments, under section 221AZL or 221AZQ; and

(c)  assuming that the refund, together with any previous refund of one or more instalments for the year of income, had been received by the company on the last day of the first franking year, the company would have had a class B franking deficit, or an increased class B franking deficit, at the end of the first franking year;

a class B deficit deferral amount (defined in subsection (2)) arises in relation to the company and the refund.

Class B deficit deferral amount

"(2) The 'class B deficit deferral amount' is the amount of the class B franking deficit, or the amount of the increase in the class B franking deficit, referred to in paragraph (1)(c).

Amount of class B deficit deferral tax

"(3) If a class B deficit deferral amount arises in relation to a company and a refund, the company is liable to pay class B deficit deferral tax in relation to the refund. The amount of the tax is the gross class B deficit deferral amount (see subsection (4)) reduced by any class B deficit deferral tax already payable by the company in relation to refunds received in the second franking year.

Gross class B deficit deferral amount

"(4) The 'gross class B deficit deferral amount' is worked out using the following formula:

Additional amounts taken to be part of instalment

"(5) If an amount is paid under subsection 221 AZR(1) in the same year as the instalment mentioned in that subsection, then, for the purposes of this section, the amount is to be treated as being part of the instalment.".

48. Heading to Subdivision C of Division 5 of Part HIAA:

After "Deficit Tax", insert "and Deficit Deferral Tax".


 

SCHEDULE 1—continued

49. Paragraph 160AQK(1)(a):

Omit the paragraph, substitute:

"(a)   a company has become liable to pay:

(i)   class A franking deficit tax for a franking year; or

(ii)  class B franking deficit tax for a franking year; or

(iii) class A deficit deferral tax in relation to the refund of one or more instalments paid during a franking year; or

(iv) class B deficit deferral tax in relation to the refund of one or more instalments paid during a franking year;

or any combination of these taxes in respect of the same franking year; and".

50. Paragraph 160AQK(1)(c):

Omit "and the class B franking deficit tax", substitute ", the class B franking deficit tax, the class A deficit deferral tax and the class B deficit deferral tax".

51. After section 160ARE:

Insert:

Deficit deferral tax returns

"160AREA. If a class A deficit deferral amount (see subsection 160AQJA(2)) or a class B deficit deferral amount (see subsection 160AQJB(2)) arises in relation to a company in relation to a refund, the company must lodge a return in relation to the deficit deferral amount within 14 days after receiving the refund.".

52. Paragraph 160ARH(1)(a):

Omit "under this Part", substitute "under section 160ARE or 160ARF".

53. After section 160ARH:

Insert:

Deficit deferral tax return taken to be an assessment

"160ARHA. If, at a particular time (the 'return time'), a return (the 'deficit deferral tax return') under section 160AREA is lodged by a company, the following provisions have effect:

(a)  the Commissioner is taken, at the return time, to have made an assessment (the 'deficit deferral tax assessment') of any deficit deferral tax payable by the company, being the amount as specified in the deficit deferral tax return;


 

SCHEDULE 1—continued

(b)  the deficit deferral tax return is taken to be a notice of the deficit deferral tax assessment and to be signed by the Commissioner;

(c)  the notice of the deficit deferral tax assessment is taken to have been served on the company at the return time.".

54. Section 160ARK:

Add at the end:

"(3) If a company has not lodged a return in relation to a deficit deferral amount within the time specified in section 160AREA, the Commissioner may make an assessment of deficit deferral tax payable by the company in relation to the deficit deferral amount.".

55. Subsection 160ARN(8):

Add at the end "or a deficit deferral tax assessment.".

56. Section 160ARR:

Insert ", deficit deferral tax" after "franking deficit tax".

57. After section 160ARU:

Insert:

Due date for payment of deficit deferral tax

"160ARUA. Deficit deferral tax assessed in relation to a refund becomes due and payable, or is taken to have become due and payable, 14 days after the refund is received.".

58. Subsection 160ARWÜ):

Insert ", deficit deferral tax" after "franking deficit tax".

59. Subsection 160ARXA(1) (definition of "franking tax law"):

After "tax", insert "or deficit deferral tax".

60. Subsection 160ARXA(1) (definitions of "franking tax shortfall" and "proper franking tax"):

Omit the definitions, substitute:

" 'franking tax shortfall' means:

(a)  in relation to a company and a franking year:

(i)   the class A franking tax shortfall in relation to the company and the franking year; or

(ii)  the class B franking tax shortfall in relation to the company and the franking year; and


 

SCHEDULE 1—continued

(b)  in relation to a company and a refund:

(i)   the class A deficit deferral tax shortfall in relation to the company and the refund; or

(ii)  the class B deficit deferral tax shortfall in relation to the company and the refund;

'proper franking tax' means:

(a)  in relation to a company and a franking year:

(i)   the class A proper franking tax in relation to the company and the franking year; or

(ii)  the class B proper franking tax in relation to the company and the franking year; and

(b)  in relation to a company and a refund:

(i)   the proper class A deficit deferral tax in relation to the company and the refund; or

(ii)  the proper class B deficit deferral tax in relation to the company and the refund;".

61. Subsection 160ARXA(1):

Insert:

" 'class A deficit deferral tax shortfall', in relation to a company and a refund, means any amount by which the company's class A statement deficit deferral tax for that refund at the time at which it was lowest is less than the company's class A proper deficit deferral tax for that refund;

'class B deficit deferral tax shortfall', in relation to a company and a refund, means any amount by which the company's class B statement deficit deferral tax for that refund at the time at which it was lowest is less than the company's class B proper deficit deferral tax for that refund;

'class A proper deficit deferral tax', in relation to a company and a refund, means the class A deficit deferral tax properly payable by the company in relation to the refund;

'class B proper deficit deferral tax', in relation to a company and a refund, means the class B deficit deferral tax properly payable by the company in relation to the refund;

'class A statement deficit deferral tax', in relation to a company, a refund, and a time, means the class A deficit deferral tax that would have been payable by the company in relation to the refund if the tax were assessed at that time taking into account taxation statements by the company;

'class B statement deficit deferral tax', in relation to a company, a refund and a time, means the class B deficit deferral tax that would have been payable by the company in relation to the refund if the tax were assessed at that time taking into account taxation statements by the company;


 

SCHEDULE 1—continued

'deficit deferral tax shortfall', in relation to a company and a refund, means class A deficit deferral tax shortfall or class B deficit deferral tax shortfall;

'statement deficit deferral tax', in relation to a company and a refund, means class A statement deficit deferral tax or class B statement deficit deferral tax;".

62. Section 160ARXC:

Add at the end "or 2 or more refunds".

63. After section 160ARX:

Insert:

Class A deficit deferral tax—penalty

"160ARYA. A company is liable to pay, by way of penalty, additional tax equal to 30% of the class A deficit deferral tax that is payable by the company in relation to a refund if the class A deficit deferral amount that arises under subsection 160AQJA(2) in relation to the refund is greater than 10% of the amount worked out using the following formula:

Class B deficit deferral tax—penalty

"160ARYB. A company is liable to pay, by way of penalty, additional tax equal to 30% of the class B deficit deferral tax that is payable by the company in relation to a refund if the class B deficit deferral amount that arises under subsection 160AQJB(2) in relation to the refund is greater than the amount worked out using the following formula:

64. Section 160ARZ:

Add at the end:


 

SCHEDULE 1—continued

"(2) If a company refuses or fails to furnish, when and as required under this Act to do so, a return, or any information, relating to a refund, being a return relating to or information relating to, or to the affairs of, the company, the company is liable to pay, by way of penalty, additional tax equal to double any deficit deferral tax payable in relation to the refund.".

65. Paragraph 160ARZA(a):

After "a franking year", insert "or a refund".

66. Paragraph 160ARZB(a):

After "a franking year", insert "or a refund".

67. Paragraph 160ARZC(a):

After "a franking year", insert "or a refund".

68. Paragraph 160ARZD(1)(a):

After "a franking year", insert "or a refund".

69. Sub-subparagraph 160ARZD(1)(c)(ii)(B):

Omit "and".

70. After sub-subparagraph 160ARZD(1)(c)(ii)(B):

Insert:

"(C)      if the shortfall is a class A deficit deferral tax shortfall—the class A deficit deferral tax that would have been payable by the company in relation to that refund if the tax were assessed on the basis of the company's return under section 160AREA in relation to that refund;

(D)       if the shortfall is a class B deficit deferral tax shortfall—the class B deficit deferral tax that would have been payable by the company in relation to that refund if the tax were assessed on the basis of the company's return under section 160AREA in relation to that refund; and".

71. Paragraph 160ARZE(1)(a):

After "a franking year", insert "or a refund".

72. Paragraph 160ARZE(1)(b):

After "the year", insert ", or the refund, ".

73. Paragraph 160ARZF(a):

After "a franking year", insert "or a refund".


 

SCHEDULE 1—continued

74. Paragraph 160ARZF(b):

After "the year", insert ", or the refund, ".

75. Paragraph 160ARZF(c):

After "the year", insert ", or the refund, ".

76. Paragraph 160ARZG(a):

After "a franking year", insert "or a refund".

77. Subparagraph 160ARZI(b)(H):

After "the franking year", insert ", or the company's statement deficit deferral tax in relation to the refund, ".

78. Subparagraph 160ARZI(b)(iii):

Omit "year of income", substitute "franking year or refund, ".

79. Subparagraph 160ARZI(b)(iv):

After "franking year", insert "or refund".

80. Paragraph 160ARZJ(a):

After "a franking year", insert "or a refund".

81. Paragraph 160ARZJ(b):

After "the year", insert ", or the refund, ".

82. Paragraph 160ARZK(a):

After "a franking year", insert "or a refund".

83. Paragraph 160ARZK(b):

After "the year", insert ", or the refund, ".

84. Section 160ARZL:

After "a year", insert "or a refund".

85. Section 160ARZL:

After "that year", insert ", or that refund, ".

86. Transitional—modification of dividend imputation provisions resulting from reduction in the company tax rate

(1) If, after 17 February 1994, any of the following events occurs:

(a)  a company makes a payment of tax, other than an initial payment under section 221AP of the Principal Act, in respect of the 1993-94 year of income during the 1993-94 franking year of the company; or


 

SCHEDULE 1—continued

(b)  a company receives a refund under Division 1B of Part VI of the Principal Act in respect of an amount to which paragraph (a) applies; or

(c)  a company receives a refund of an amount to which paragraph (a) applies where the refund is covered by section 160APYBA of the Principal Act; or

(d)  the Commissioner applies an amount paid by a company and the application is covered by section 160APYBA of the Principal Act in respect of an amount to which paragraph (a) applies; or

(e)  an amendment is made to an assessment of the company tax payable by a company for the 1993-94 year of income that was made before the end of the 1993-94 franking year of the company, other than an amendment where:

(i)   the assessment was made on or before 17 February 1994; and

(ii)  the amendment effects a reduction in the liability of the company; or

(f)  an amount is calculated, as a result of an event covered by a preceding paragraph, using a formula in any of the following provisions:

(i)   section 160APVBA or 160APVD of the Principal Act;

(ii)  sections 160AQCE to 160AQCK (inclusive) of the Principal Act;

then in applying Part IIIAA of the Principal Act in relation to the event, despite paragraphs (a) and (aa) of the definition of "applicable general company tax rate" in section 160APA of that Act, a reference to the general company tax rate is, and is taken to have always been, a reference to 39%.

(2) If subitem (1) would result in a company having a franking deficit, or an increased franking deficit, at the end of the 1993-94 franking year, subitem (1) does not apply in relation to the company, but:

(a)  the class A franking account balance of the company at the start of the 1994-95 franking year is taken to be nil; and

(b)  a class A franking debit of the company equal to the amount of the franking deficit, or the amount of the increase in the franking deficit, arises on the day when this item commences.

(3) In this item:

"Principal Act" means the Income Tax Assessment Act 1936;

"1993-94 franking year", in relation to a company, means:

(a)  if a franking year of the company:

(i)   is covered by paragraph (a) or (b) of the definition of "franking year" in section 160APA of the Principal Act; and

(ii)  begins after 31 December 1992 and before 1 July 1993;


 

SCHEDULE 1—continued

that franking year; or

(b)  if a franking year of the company:

(i)   is covered by paragraph (c) of that definition; and

(ii)  begins on 1 July 1993;

that franking year.

"1994-95 franking year", in relation to a company, means the franking year of the company immediately following the 1993-94 franking year.

PART 4—RETURN OF DEDUCTED SUPERANNUATION CONTRIBUTIONS

87. Section 82AAQ:

Add at the end:

"(2) If:

(a)  a taxpayer has, under this Act or the previous Act, been allowed in an assessment in respect of income of any year of income a deduction in respect of an amount set apart or paid as or to a fund (the 'original fund') for the purpose of making provision for superannuation benefits for, or for dependants of, an employee; and

(b)  either:

(i)     a person (the 'recipient') other than the taxpayer receives in the year of income a payment or benefit from the original fund or a successor fund of the original fund, other than in the capacity as a member of the fund; or

(ii)    the taxpayer (also the 'recipient') receives in the year of income a payment or benefit from a successor fund of the original fund, other than in the capacity as a member of the fund; and

(c)  the making of the payment or providing of the benefit reasonably represents the return to any extent of the amount, or earnings on the amount, set apart or paid as mentioned in paragraph (a);

the amount of the payment, or value of the benefit, is, to the extent that it reasonably represents the return as mentioned in paragraph (c), included in the recipient's assessable income of the year of income.

"(3) A fund that provides superannuation benefits (the 'test fund') is a 'successor fund' of the original fund if:

(a)  the original fund, or any other fund that is a successor fund of the original fund because of another application of this subsection, has transferred any of its assets to the test fund; or


 

SCHEDULE 1—continued

(b)  an eligible termination payment (within the meaning of section 27A) made in relation to a member of:

(i)   the original fund; or

(ii)  any other fund that is a successor fund of the original fund because of another application of this subsection;

is, because of the payment of an amount to the test fund, taken to be rolled-over within the meaning of that section.".

88. Application

The amendment made by this Part applies to payments or benefits received on or after 1 July 1988.

PART 5—CREDIT UNIONS

89. Subsection 6H(5):

Omit the subsection, substitute:

"(5) For the purposes of this section, the notional taxable income of a credit union of a year of income is the amount that would be its taxable income of the year of income if:

(a)  section 23G did not apply to income derived by it in the 1994-95 year of income or any later year of income; and

(b)  Division 9 of Part III had not been enacted.".

90. Application

The amendment made by this Part applies to assessments in respect of income of the 1994-95 year of income and of all later years of income.

PART 6—ASSESSMENTS

91. Amendment of assessments

Section 170 of the Income Tax Assessment Act 1936 does not prevent the amendment of an assessment made before the commencement of this item for the purpose of giving effect to this Act.

____________


 

                                                                  SCHEDULE 2                                                   Section 3

AMENDMENTS RELATING TO POOLED DEVELOPMENT FUNDS

PART 1—INCOME TAX RATES ACT 1986

1. Object

The object of this Part is to reduce the rate of tax payable by a pooled development fund ("PDF") in respect of its "SME income component" from 25% to 15%. The "SME income component" is based on income derived by the PDF from investments in certain small and medium enterprises.

2. Subsection 3(1):

Insert:

" 'SME income component' has the same meaning as in Subdivision B of Division 10E of Part III of the Assessment Act;

'unregulated investment component' has the same meaning as in Subdivision B of Division 10E of Part III of the Assessment Act.".

3. Subsections 23 (4C) and (4D):

Omit the subsections, substitute:

"(4C) The rates of tax in respect of the taxable income of a company that becomes a PDF during a year of income and is still a PDF at the end of the year of income are:

(a)  in respect of the SME income component—15%; and

(b)  in respect of the unregulated investment component—25%; and

(c)  in respect of so much of the taxable income as exceeds the PDF component—33%.

"(4D) The rates of tax in respect of the taxable income of a company that is a PDF throughout the year of income are:

(a)  in respect of the SME income component—15%; and

(b)  in respect of the unregulated investment component—25%.".

4. Application

The amendments made by this Part apply to assessments in respect of income of the 1994-95 year of income and of all later years of income.

PART 2—INCOME TAX ASSESSMENT ACT 1936

5. Objects

The objects of this Part are:


 

SCHEDULE 2—continued

(a)  to provide for the intercorporate dividend rebate for a pooled development fund ("PDF") to be calculated by reference to the rate of tax applicable to the SME income component of its taxable income; and

(b)  to set out rules for working out the various components of the taxable income of a PDF; and

(c)  to make certain adjustments to the tax treatment of capital gains and capital losses of PDFs.

6. Subsection 46(1):

Insert:

" 'PDF dividend' means a dividend paid to a shareholder that is a PDF;

'SME income component' has the same meaning as in Subdivision B of Division 10E.".

7. After subsection 46(1):

Insert:

"(1AAA) This section does not apply to a PDF dividend if the dividend is paid in respect of an unregulated investment (within the meaning of the Pooled Development Funds Act 1992).”.

8. Subsection 46(2):

Insert "(other than PDF dividends)" after "dividends" (wherever occurring).

9. After subsection 46(2):

Insert:

"(2A) Subject to this section, if:

(a)  one or more PDF dividends were paid in a year of income to a shareholder; and

(b)  the shareholder is a resident;

the shareholder is entitled to a rebate in its assessment in respect of income of the year of income. The amount of the rebate is obtained by applying the rate of tax payable by the shareholder in respect of the SME income component of its taxable income to the part of any PDF dividends that is included in its taxable income.".

10. After subsection 46(7):

Insert:

"(7AA) For the purposes of subsection (2A), the part of any PDF dividends that is included in the taxable income of a shareholder of the year of income is:


 

SCHEDULE 2—continued

(a)  if the SME income component of the taxable income is equal to or less than the amount of the PDF dividends included in the shareholder's assessable income of the year of income—the whole of the SME income component of the taxable income; or

(b)  in any other case—so much of the SME income component of the taxable income as equals the amount (if any) of the PDF dividends included in the shareholder's assessable income of the year of income.".

11. Subsection 46(7A):

Insert "or (2A)" after "(2)" (wherever occurring).

12. Paragraph 46(7A)(a):

Insert "(other than PDF dividends)" after "dividends" (wherever occurring).

13. Subsection 46(7A):

Add at the end:

"; and (c) a reference in this section to the part of any PDF dividends that is included in the shareholder's taxable income is to be read as a reference to the part of any PDF dividends that would have been included in the shareholder's taxable income if the option had been exercised in such a way that the value of the article that would have been taken into account at the end of the year of income would have been the lowest amount at which the value of that article could have been taken into account at that time in accordance with subsection 31(1).".

14. Subsection 46A(1):

Insert:

" 'PDF dividend' means a dividend paid to a shareholder that is a PDF;

'SME income component' has the same meaning as in Subdivision B of Division 10E.".

15. After subsection 46A(1):

Insert:

"(1 AA) This section does not apply to a PDF dividend if the dividend is paid in respect of an unregulated investment (within the meaning of the Pooled Development Funds Act 1992).".

16. Subsection 46A(5):

Insert "(other than PDF dividends)" after "dividends" (wherever occurring).


 

SCHEDULE 2—continued

17. After subsection 46A(5):

Insert:

"(5A) Subject to this section, if:

(a)  one or more PDF dividends were paid in a year of income to a shareholder; and

(b)  the shareholder is a resident;

the shareholder is entitled to a rebate in its assessment in respect of income of the year of income. The amount of the rebate is obtained by applying the rate of tax payable by the shareholder in respect of the SME income component of its taxable income to the net income derived from PDF dividends by the shareholder.".

18. After subsection 46A(9):

Insert:

"(9A) For the purposes of subsection (5A), the net income derived from PDF dividends by a shareholder is the amount remaining after deducting from the amount of the PDF dividends included in the assessable income of the shareholder of the year of income the deductions allowed or allowable to the shareholder under this Act in respect of those dividends.".

19. Subsection 46A(10):

Omit "subsection (9)", substitute "subsections (9) and (9A)".

20. Subsection 46A(10):

Omit "in respect of the dividends", substitute "in respect of particular dividends".

21. Heading to Division 10E of Part III:

Omit "Shares in PDFs", substitute "PDFs (pooled development funds)".

22. Before section 124ZM:

Insert the following heading:

"Subdivision AShares in PDFs".

23. After section 124ZR:

Insert the following Subdivisions:

"Subdivision BComponents of the taxable income of PDFs

Definitions

"124ZS. In this Subdivision:


 

SCHEDULE 2            continued

'non-CGT assessable income' means an amount included in assessable income otherwise than under Part IIIA or Subdivision C of this Division;

'SME investment' means an investment other than an unregulated investment;

Note:   'SME' stands for small and medium enterprises.

'unregulated investment' has the same meaning as in the Pooled Development Funds Act 1992.

SME assessable income

SME assessable income

"124ZT.(1) A company's SME assessable income of a year of income is the sum of:

(a)  so much of the company's non-CGT assessable income of the year of income as was derived:

(i)   from, or from the disposal of, an SME investment of the company; and

(ii)  at a time when the company was a PDF; and

(b)  any assessable income allocated to the company's SME assessable income under section 124ZZB.

Note:   Section 124ZZB deals with capital gains etc.

When assessable income derived

"(2) For the purposes of paragraph (1)(a), if an amount is derived by a company during, but not at a particular time during, a year of income, the amount is taken to have been derived by the company on the last day of the year of income.

SME income component

Full-year PDFs

"124ZU.(1) The SME income component of a year of income of a company that is a PDF throughout the year of income is so much of the company's taxable income of the year of income as does not exceed the amount (if any) remaining after deducting from the company's SME assessable income of the year of income any deductions allowable to the company in relation to the year of income.

Part-year PDFs

"(2) The SME income component of a year of income of a company that becomes a PDF during the year of income and is still a PDF at the end of the year of income is so much of the company's adjusted taxable income of the year of income as does not exceed the amount (if any) remaining after deducting from the company's SME assessable income of the year of income any deductions where both of the following conditions are satisfied:


 

SCHEDULE 2—continued

(a)  the deductions were allowable to the company in relation to the year of income;

(b)  the deductions were taken into account in working out the company's PDF component of the year of income.

For this purpose, 'adjusted taxable income' means so much of the company's taxable income of the year of income as does not exceed its PDF component of the year of income.

Unregulated investment component

Full-year PDFs

"124ZV.(1) The unregulated investment component of a year of income of a company that is a PDF throughout the year of income is the amount (if any) remaining after deducting from the company's taxable income of the year of income the company's SME income component of the year of income.

Part-year PDFs

"(2) The unregulated investment component of a year of income of a company that becomes a PDF during the year of income and is still a PDF at the end of the year of income is the amount (if any) remaining after deducting from the company's adjusted taxable income of the year of income the company's SME income component of the year of income. For this purpose, 'adjusted taxable income' means so much of the company's taxable income of the year of income as does not exceed its PDF component of the year of income.

"Subdivision C—Adjustments of the tax treatment
of capital gains and capital losses of PDFs

Definitions

"124ZW. In this Subdivision:

'class', in relation to assessable income, means a class specified in section 124ZY;

'company' does not include a company in a capacity of trustee;

'non-CGT assessable income' means an amount included in assessable income otherwise than under Part IIIA or this Subdivision;

'ordinary 160Z gain amount', in relation to the disposal of an asset, means any capital gain that would (apart from this Subdivision) be deemed for the purposes of Part IIIA to have accrued in respect of the disposal of the asset;

'ordinary 160Z loss amount', in relation to a disposal of an asset, means any capital loss that would (apart from this Subdivision) be deemed for the purposes of Part IIIA to have been incurred in respect of the disposal of the asset;


 

SCHEDULE 2            continued

'overall 160Z gain', in relation to a class of assessable income, means:

(a)  the amount by which the total ordinary 160Z gain amount for that class exceeds the total ordinary 160Z loss amount for that class; or

(b)  if an amount has been applied under subsection 124ZZB(2) in reduction of an overall 160Z gain previously calculated under this definition—the amount by which that previous overall 160Z gain exceeds the amount so applied under that subsection;

'overall 160Z loss', in relation to a class of assessable income, means the amount by which the total ordinary 160Z gain amount for that class is less than the total ordinary 160Z loss amount for that class;

'prior year Part IIIA loss', in relation to a year of income (the 'loss year'), means the amount (if any) by which the sum of:

(a)  the total of the overall 160Z losses for all the classes of assessable income for the loss year; and

(b)  any prior year Part IIIA loss calculated under this definition for the year of income immediately preceding the loss year;

exceeds the total of the overall 160Z gains (before any application of section 124ZZB) for all the classes of assessable income;

'residual overall 160Z gain' means so much of an overall 160Z gain as remains after the application of subsection 124ZZB(2);

'SME assessable income' has the meaning given by Subdivision B;

'SME investment' means an investment other than an unregulated investment;

'total ordinary 160Z gain amount', in relation to a class of assessable income, means the total of so much of any ordinary 160Z gains amounts as has been allocated to that class under section 124ZZA;

'total ordinary 160Z loss amount', in relation to a class of assessable income, means the total of so much of any ordinary 160Z loss amounts as has been allocated that class under section 124ZZA;

'unregulated investment' has the same meaning as in the Pooled Development Funds Act 1992.

Companies to which this Subdivision applies

"124ZX. This Subdivision applies to a company in relation to a year of income if:

(a)  the company is a PDF throughout the year of income; or

(b)  the company becomes a PDF during the year of income and is still a PDF at the end of the year of income.


 

SCHEDULE 2—continued

Classes of assessable income

Classes

"124ZY.(1) The classes of assessable income of the company are as follows:

(a)  SME assessable income (see section 124ZT);

(b)  other assessable income (see subsection (2)).

Other assessable income

"(2) The company's other assessable income of the year of income is the sum of:

(a)  so much of the company's non-CGT assessable income of the year of income as is not included in the company's SME assessable income of the year of income; and

(b)  any assessable income allocated to the company's other assessable income under section 124ZZB.

Section 160ZO does not apply

"124ZZ. Nothing is to be included in the company's assessable income of the year of income under section 160ZO.

Allocation of gain amounts and loss amounts to classes of assessable income

Disposals of SME investments

"124ZZA.(1) If:

(a)  there is an ordinary 160Z gain amount, or an ordinary 160Z loss amount, in respect of a disposal of an SME investment of the company; and

(b)  the company was a PDF at the time of the disposal;

the ordinary 160Z gain amount or ordinary 160Z loss amount, as the case may be, is taken into account in determining the overall 160Z gain or overall 160Z loss for the class known as SME assessable income.

Disposals of assets other than SME investments

"(2) If:

(a)  there is an ordinary 160Z gain amount, or an ordinary 160Z loss amount, in respect of a disposal of an asset of the company; and

(b)  subsection (1) does not apply to the disposal;

the ordinary 160Z gain amount or the ordinary 160Z loss amount, as the case may be, is taken into account in determining the overall 160Z gain or overall 160Z loss for the class known as other assessable income.


 

SCHEDULE 2—continued

Assessable income etc. in relation to 160Z gain amounts

Assessable income after reduction of overall 160Z gain

"124ZZB.(1) The assessable income of each class includes the amount (if any) that is left over after the overall 160Z gain for that class has been reduced in accordance with this section.

Reduction—overall 160Z loss

"(2) If there is an overall 160Z loss for a particular class of assessable income, the loss is to be applied in reduction of overall 160Z gains for the remaining class.

Reduction—prior year Part IIIA loss

"(3) Any prior year Part IIIA loss for the immediately preceding year of income is to be applied in reduction of residual overall 160Z gains for the classes of assessable income in the following order:

(a)  SME assessable income;

(b)  other assessable income.

References to section 160ZO

"124ZZC. A reference in section 51AAA to an amount included in assessable income under section 160ZO includes a reference to an amount included in assessable income under subsection 124ZZB(1).

Net capital loss not to be incurred

"124ZZD. For the purposes of Part IIIA, the company is taken not to have incurred any net capital loss in respect of the year of income under section 160ZC.".

23. Application

The amendments made by this Part apply to assessments in respect of income of the 1994-95 year of income and of all later years of income.

____________


 

                                                                  SCHEDULE 3                                                   Section 3

AMENDMENTS RELATING TO SUPERANNUATION

PART 1—FRINGE BENEFITS TAX ASSESSMENT ACT 1986

1. Object

The object of this Part is to deny an exemption from fringe benefits tax in respect of superannuation contributions by an employer unless the contributions are paid to a fund that the employer reasonably believes to be a complying superannuation fund.

2. Subsection 136(1) (definition of "fringe benefit"):

(a)  Omit paragraph (j), substitute:

"(j)    a benefit constituted by:

(i)     the making of a payment of money to a superannuation fund (as defined by subsection 6(1) of the Income Tax Assessment Act 1936) that the person making the payment had reasonable grounds for believing was a complying superannuation fund (as defined by subsection 267(1) of the Income Tax Assessment Act 1936); or

(ii)    the making of a payment of money to a non-resident superannuation fund (within the meaning of section 6E of the Income Tax Assessment Act 1936) in respect of a person who is an exempt visitor to Australia for the purposes of section 517 of that Act in relation to the year of income in which the payment is made;".

(b)  Insert after paragraph (k):

"(ka) an 'exempt resident foreign termination payment', or an 'exempt non-resident foreign termination payment', as defined by subsection 27A(1) of the Income Tax Assessment Act 1936;

(kb)  a payment to which section 27CAA or 27CE of the Income Tax Assessment Act 1936 applies;".

3. Subsection 136 (1) (definition of "superannuation fund"):

Omit the definition.

4. After section 136AA:

Insert:


 

SCHEDULE 3—continued

What constitutes reasonable belief that a superannuation fund is a complying superannuation fund

"136AJ3.(1) Subject to subsection (2), if a person makes a payment to a superannuation fund, the person is taken, for the purposes of paragraph (j) of the definition of 'fringe benefit' in subsection 136(1), to have reasonable grounds for believing that the fund is a complying superannuation fund (as defined by subsection 267(1) of the Income Tax Assessment Act 1936) if, at or before the time when the payment is made, the person has obtained a written statement, provided by or on behalf of the trustee of the fund, that the fund:

(a)  is a resident regulated superannuation fund within the meaning of the Superannuation Industry (Supervision) Act 1993; and

(b)  is not subject to a direction under section 63 of that Act.

"(2) A person who makes a payment to a superannuation fund is taken not to have reasonable grounds for believing that the fund is a complying superannuation fund if, when the payment is made:

(a)  the person:

(i)   is the trustee or the manager of the fund; or

(ii)  is an associate of the trustee or the manager of the fund; and

(b)  the person has reasonable grounds for believing that the fund is not a resident regulated superannuation fund within the meaning of the Superannuation Industry (Supervision) Act 1993 or is operating while in breach of that Act or regulations under that Act.

"(3) Section 39 of the Superannuation Industry (Supervision) Act 1993 applies for the purposes of subsection (2) of this section in a corresponding way to the way in which it applies for the purposes of Division 2 of Part 5 of that Act.".

5. Application

The amendments made by this Part apply in respect of benefits provided on or after 1 July 1994.

PART 2—INCOME TAX ASSESSMENT ACT 1936

Division 1Resident and non-resident superannuation funds

6. Object

The object of this Division is to define resident and non-resident superannuation funds and to make other related provisions.

7. Subsection 6(1):

Insert:


 

SCHEDULE 3—continued

" 'non-resident superannuation fund' has the meaning given by section 6E;

'resident superannuation fund' has the meaning given by section 6E;".

8. Subsection 6(1) (definition of "foreign superannuation fund"):

After "means", insert ", subject to subsection (7A), ".

9. Subsection 6(1) (definition of "superannuation fund"):

Omit the definition, substitute:

" 'superannuation fund' means:

(a)  a scheme for the payment of superannuation benefits upon retirement or death; or

(b)  a superannuation fund within the definition of 'superannuation fund' in section 10 of the Superannuation Industry (Supervision) Act 1993;".

10. After subsection 6(7):

Insert:

"(7A) A provident, benefit, superannuation or retirement fund does not fail to meet the requirement set out in paragraph (b) of the definition of 'foreign superannuation fund' in subsection (1) merely because pensions are paid out of the fund to residents of Australia or of a Territory.*'.

11. Before section 6F:

Insert:

Resident superannuation funds and non-resident superannuation funds

Resident superannuation fund at a particular time

"6E. (1) For the purposes of this Act, a fund is a resident superannuation fund at a particular time (the 'relevant time') if. and only if:

(a)  the fund is a provident, benefit, superannuation or retirement fund at the relevant time; and

(b)  either of the following conditions is satisfied:

(i)   the fund was established in Australia;

(ii)  any asset of the fund at the relevant time is situated in Australia; and

(c)  at the relevant time, the central management and control of the fund is in Australia; and


 

SCHEDULE 3—continued

(d)  in respect of a fund that, at the relevant time, has at least one active member—the percentage worked out using the following formula is not less than 50%:

Total of accumulated entitlements of resident
active members at the relevant time

× 100

Total of accumulated entitlements of active
members at the relevant time

where:

'accumulated entitlement', in relation to an active member of the fund at the relevant time, means:

(a)  in respect of a member who, at that time, is an active member without defined benefits—so much of the value of the assets of the fund at that time as is attributable to:

(i)   contributions made to the fund before that time by or in respect of that member; and

(ii)  income or accretions arising from those contributions; or

(b)  in respect of a member who, at that time, is an active member with defined benefits—the amount that would be payable at that time to or in respect of that member if he or she voluntarily ceased to be a member.

Non-resident superannuation fund at a particular time

"(2) For the purposes of this Act, a fund is a non-resident superannuation fund at a particular time if, and only if, the fund:

(a)  is a provident, benefit, superannuation or retirement fund at that time; and

(b)  is not a resident superannuation fund at that time.

Resident superannuation fund in relation to a year of income

"(3) For the purposes of this Act, a fund is a resident superannuation fund in relation to a year of income if, and only if:

(a)  the fund is a provident, benefit, superannuation or retirement fund at all times during the year of income when the fund is in existence; and

(b)  the fund is a resident superannuation fund at any time during the year of income when the fund is in existence.

Non-resident superannuation fund in relation to a year of income

"(4) For the purposes of this Act, a fund is a non-resident superannuation fund in relation to a year of income if, and only if, the fund:

(a)  is a provident, benefit, superannuation or retirement fund at all times during the year of income when the fund is in existence; and


 

SCHEDULE 3—continued

(b)  is not a resident superannuation fund in relation to the year of income.

Definitions

"(5) In this section:

'active member', in relation to a fund at the relevant time, means:

(a)  a member of the fund who at that time is a contributor to the fund; or

(b)  a member of the fund on behalf of whom another person has made before that time, or makes at or after that time, contributions to the fund in respect of the year of income in which that time occurs;

'active member with defined benefits', in relation to a fund at the relevant time, means an active member of the fund at that time in relation to whom the fund is a defined benefit scheme;

'active member without defined benefits', in relation to a fund at the relevant time, means an active member of the fund at that time in relation to whom the fund is not a defined benefit scheme;

'contributions', in relation to a fund, includes:

(a)  payments of shortfall components within the meaning of the Superannuation Guarantee (Administration) Act 1992: and

(b)  amounts paid to the fund that are taken to be rolled over for the purposes of Subdivision AA of Division 2 of Part III;

'defined benefit scheme' has the meaning that 'defined benefit superannuation scheme' would have for the purposes of the Superannuation Guarantee (Administration) Act 1992 if subsections 6A(2) to (4) of that Act had not been enacted;

'value' has the same meaning as in the Superannuation Industry (Supervision) Act 1993".

12. Section 477:

Repeal the section, substitute:

Resident Part IX entity

"477. For the purposes of this Part, a trust is a resident Part IX entity at a particular time if at that time the trust is:

(a)  a resident superannuation fund; or

(b)  a complying ADF, or a PST, as defined by subsection 267(1).".

13. Application

The amendments made by this Division apply in relation to a fund for the 1994-95 year of income of the fund and for each later year of income.


 

SCHEDULE 3—continued

Division 2Residency assumptions relating to superannuation funds, approved deposit funds and pooled superannuation trusts

14. Object

The object of this Division is to make provision relating to the residency assumptions made in working out the taxable income of superannuation funds, approved deposit funds and pooled superannuation trusts.

15. Subsection 267(1) (definition of "foreign approved deposit fund"):

Omit the definition.

16. Section 272:

Omit all the words after "taxpayer", substitute:

"and:

(a)  if the eligible entity is a non-resident superannuation fund in relation to the year of income concerned—a non-resident; or

(b)  otherwise—a resident.".

17. Application

The amendments made by this Division apply in relation to a fund for the 1994-95 year of income of the fund and for each later year of income.

Division 3Non-complying superannuation funds that were previously complying superannuation funds

18. Object

The object of this Division is to provide for a non-complying superannuation fund that was previously a complying superannuation fund to be liable for tax on the value of its assets less any undeducted contributions in the fund.

19. After subsection 6AB(1):

Insert:

"(1A) A reference in this Act to foreign income includes a reference to net previous income referred to in subsection 288A(2).".

20. After subsection 160AF(1):

Insert:

"(1A) References in subsection (1) to a taxpayer include references to the trustee of a non-complying superannuation fund referred to in subsection 288A(2).


 

SCHEDULE 3—continued

"(1B) If:

(a)  the assessable income of a year of income (the 'current year of income') of a superannuation fund that is a resident superannuation fund in relation to the current year of income includes the fund's net previous income in respect of previous years of income (as defined by subsection 288A(2)); and

(b)  the trustee of the fund has paid foreign tax in respect of that net previous income;

the trustee is not entitled to a credit of any part of the foreign tax that was paid before the beginning of the current year of income.".

21. After subsection 160ZA(4A):

Insert:

"(4AA) If:

(a)  apart from this subsection a capital gain (the 'notional capital gain') would be taken for the purposes of this Part to have accrued during the year of income to a taxpayer that is the trustee of a superannuation fund in respect of the disposal of an asset; and

(b)  the market value of the asset was taken into account in determining the fund's net previous income in respect of previous years of income under section 288A;

the following paragraphs have effect:

(c)  if the notional capital gain exceeds the amount that, apart from this subsection, would have been taken for the purposes of this Part to have accrued during the year of income to the taxpayer in respect of the disposal of the asset if the consideration in respect of the disposal had been equal to the market value referred to in paragraph (b)—the amount of the capital gain that is taken for the purposes of this Part to have accrued to the taxpayer during the year of income in respect of the disposal of the asset is an amount equal to the excess;

(d)  in any other case—no capital gain is taken for the purposes of this Part to have accrued to the taxpayer during a year of income in respect of the disposal of the asset.".

22. After section 288:

Insert in Division 4 of Part IX:

Liability to taxation of non-complying fund that was previously a complying fund

"288A.(1) If a superannuation fund that is a non-complying superannuation fund in relation to the year of income (the 'current year of income') was a complying superannuation fund in relation to the


 

SCHEDULE 3—continued

immediately preceding year of income, the fund's assessable income of the current year of income includes the fund's net previous income in respect of previous years of income.

"(2) The fund's net previous income in respect of previous years of income is taken to be the amount worked out using the formula:

Asset values less Undeducted contributions

where:

'Asset values' means the sum of the market values of the fund's assets immediately before the start of the current year of income;

'Undeducted contributions' means the amount in the fund immediately before the start of the current year of income that represented the total undeducted contributions (as defined in section 27A) made by current members of the fund.".

23. Application

The amendments made by this Division apply in relation to a fund for the 1995-96 year of income of the fund and for each later year of income.

Division 4Resident superannuation funds that were previously
non-resident superannuation funds

24. Object

The object of this Division is to provide for a resident superannuation fund that was previously a non-resident superannuation fund to be liable for tax on the value of its assets less any members contributions in the fund.

25. Before subsection 6AB(2):

Insert:

"(1B) A reference in this Act to foreign income includes a reference to net previous income referred to in subsection 288B(2).".

26. Before subsection 160AF(2):

Insert:

"(1C) References in subsection (1) to a taxpayer include references to the trustee of a resident superannuation fund referred to in subsection 288B(2).

"(1D) If:

(a)  the assessable income of a year of income (the 'current year of income') of a superannuation fund that is a resident superannuation fund in relation to the current year of income includes the fund's net previous income in respect of previous years of income (as defined by subsection 288B(2)); and


 

SCHEDULE 3—continued

(b)  the trustee of the fund has paid foreign tax in respect of that net previous income;

the trustee is not entitled to a credit of any part of the foreign tax that was paid before the beginning of the current year of income.".

27. Before subsection 160ZA(5):

Insert:

"(4B) If:

(a)  apart from this subsection a capital gain (the 'notional capital gain') would be taken for the purposes of this Part to have accrued during the year of income to a taxpayer that is the trustee of a superannuation fund in respect of the disposal of an asset; and

(b)  the market value of the asset was taken into account in determining the fund's net previous income in respect of previous years of income under section 288B;

the following paragraphs have effect:

(c)  if the notional capital gain exceeds the amount that, apart from this subsection, would have been taken for the purposes of this Part to have accrued during the year of income to the taxpayer in respect of the disposal of the asset if the consideration in respect of the disposal had been equal to the market value referred to in paragraph (b)—the amount of the capital gain that is taken for the purposes of this Part to have accrued to the taxpayer during the year of income in respect of the disposal of the asset is an amount equal to the excess;

(d)  in any other case—no capital gain is taken for the purposes of this Part to have accrued to the taxpayer during a year of income in respect of the disposal of the asset.".

28. Before Division 5 of Part IX:

Insert:

"Division 4AResident superannuation fund that was previously a non-resident superannuation fund

Liability to taxation of resident fund that was previously a non-resident fund

"288B. (1) If a superannuation fund that is a resident superannuation fund in relation to the year of income (the 'current year of income') was a non-resident superannuation fund in relation to the immediately preceding year of income, the fund's assessable income of the current year of income includes the fund's net previous income in respect of previous years of income.


 

SCHEDULE 3—continued

"(2) The fund's net previous income in respect of previous years of income is taken to be the amount worked out using the formula:

Asset values less Members contributions

where:

'Asset values' means the sum of the market values of the fund's assets immediately before the start of the current year of income;

'Members contributions' means the amount in the fund immediately before the start of the current year of income that represented the total contributions made by current members of the fund.".

29. Application

The amendments made by this Division apply in relation to a fund for the 1995-96 year of income of the fund and for each later year of income.

Division 5Withholding tax exemptions for certain interest, dividend and royalty income of overseas superannuation funds

30. Object

The object of this Division is to abolish withholding tax exemptions for certain interest, dividend and royalty income of overseas superannuation funds.

31. Section 128A:

Add at the end:

"(10) For the purposes of this Division, the trustee of a provident, benefit, superannuation or retirement fund is a non-resident at a particular time if, and only if, the fund is a non-resident superannuation fund at that time.

"(11) If, apart from this subsection, there is, in relation to a fund, no person who is a trustee of the fund for the purposes of this Division, the person, or each of the persons, who manages the fund is taken, for the purposes of this Division, to be the trustee, or a trustee, as the case requires, of the fund.".

32. Paragraph 128B(3)(f):

Omit the paragraph.

33. Section 221YK:

Add at the end:

"(4) For the purposes of this Division the trustee of a provident, benefit, superannuation or retirement fund is a non-resident at a particular time if, and only if, the fund is a non-resident superannuation fund at that time.


 

SCHEDULE 3—continued

"(5) If, apart from this subsection, there is, in relation to a fund, no person who is a trustee of the fund for the purposes of this Division, the person, or each of the persons, who manages the fund is taken, for the purposes of this Division, to be the trustee, or a trustee, as the case requires, of the fund.".

34. Application

The amendments made by this Division apply in relation to income derived by a fund after whichever is the later of the commencement of this Division or the beginning of the 1994-95 year of income of the fund.

Division 6Deductions to employers etc. for certain contributions made to non-complying superannuation funds

35. Object

The object of this Division is to deny deductions to employers etc. for certain contributions made to non-complying superannuation funds.

36. Paragraph 67AAA(1)(b):

Insert "or 82AAE" after "section 82AAC".

37. Subsection 73B(1) (definition of "contributions to superannuation funds"):

Insert "or 82AAE" after "section 82AAC".

38. Paragraph 82AAC(1)(b):

Omit "eligible", substitute "complying".

39. After section 82AAC:

Insert:

Deduction for contribution to non-complying superannuation fund that taxpayer reasonably believes to be a complying superannuation fund

"82AAD.(1) If:

(a)  a taxpayer pays an amount as a contribution to a non-complying superannuation fund (as defined by subsection 267(1)) for the purpose of making provision for superannuation benefits for an eligible employee; and

(b)  when the contribution is made the taxpayer has reasonable grounds for believing that the superannuation fund is a complying superannuation fund;


 

SCHEDULE 3—continued

the amount is taken, for the purposes of section 82AAC, to be paid to a complying superannuation fund.

"(2) Subject to subsection (3), a taxpayer who makes a contribution to a superannuation fund is taken, for the purposes of subsection (1), to have reasonable grounds for believing that the fund is a complying superannuation fund if, at or before the time when the contribution is made, the taxpayer has obtained a written statement, provided by or on behalf of the trustee of the fund, that the fund:

(a)  is a resident regulated superannuation fund within the meaning of the Superannuation Industry (Supervision) Act 1993; and

(b)  is not subject to a direction under section 63 of that Act.

"(3) A taxpayer who makes a contribution to a superannuation fund is taken, for the purposes of subsection (1), not to have reasonable grounds for believing that the fund is a complying superannuation fund if, when the contribution is made:

(a)  the taxpayer:

(i)     is the trustee or the manager of the fund; or

(ii)    is an associate (within the meaning of subsection 26AAB(14)) of the trustee or the manager of the fund; and

(b)  the taxpayer has reasonable grounds for believing that the fund is not a resident regulated superannuation fund within the meaning of the Superannuation Industry (Supervision) Act 1993 or is operating while in breach of that Act or regulations under that Act.

"(4) Section 39 of the Superannuation Industry (Supervision) Act 1993 applies for the purposes of subsection (3) of this section in a corresponding way to the way in which it applies for the purposes of Division 2 of Part 5 of that Act.

Deduction for contribution to non-complying superannuation fund

"82AAE. A deduction is allowable under this Subdivision in respect of an amount paid by a taxpayer as a contribution to a non-complying superannuation fund (as defined by subsection 267(1)) for the purpose of making provision for superannuation benefits for an eligible employee other than such an employee who is an exempt visitor to Australia for the purposes of section 517 in relation to the year of income in which the amount is paid.".

40. Subsection 82AAR(1):

Insert "superannuation" before "fund".


 

SCHEDULE 3—continued

41. Application

The amendments made by this Division apply in relation to contributions made to a fund in the 1994-95 year of income of the fund or in a later year of income.

Division 7Definition of taxable contributions

42. Object

The object of this Division is to make amendments relating to the definition of "taxable contributions".

43. Subsection 267(1):

Omit the definitions of "Commission's superannuation principles", "eligible superannuation contributions", "industrial tribunal", "superannuation agreement", "superannuation agreement contribution" and "tax-exempt entity".

44. Paragraph 274(1)(a):

Omit the paragraph, substitute:

"(a)   if the eligible entity is a resident superannuation fund in relation to the year of income in which the contributions are made:

(i)   contributions made for the purpose of making provision for superannuation benefits for another person, other than contributions made by a person that is, when the contributions are made, a trustee of:

(A)   an exempt life assurance fund (within the meaning of Division 6C of Part III); or

(B)    a complying superannuation fund, a complying ADF or a PST;

(ii)  a specified roll-over amount;

(aa)   if the eligible entity is a non-resident superannuation fund in relation to the year of income in which the contributions are made—contributions made for the purpose of making provision for superannuation benefits for another person (other than a person who is an exempt visitor to Australia for the purposes of section 517 in relation to the year of income to which the contributions relate) to the extent that the contributions relate to a period in which the other person is or was:

(i)   a resident of Australia; or

(ii)  a non-resident who derives assessable income that consists of or includes salary or wages (within the meaning of Division 2 of Part VI);".


 

SCHEDULE 3—continued

45. Paragraph 274(1)(b):

After "complying superannuation fund", insert "in relation to the year of income in which the contributions are paid".

46. Subsection 274(7):

Omit "subparagraph (1)(a)(i), (ii) or (iii)", substitute "subparagraph (1)(a)(i)".

47. Paragraph 275B(2)(b):

Omit "274(1)(a)(i), (ii) or (iii)", substitute "274(1)(a)(i)".

48. Application

The amendments made by this Division apply in relation to amounts paid to an eligible entity during the 1994-95 year of income of the entity or during a later year of income.

Division 8Deductions for taxable contributions to certain entities

49. Object

The object of this Division is to allow deductions to ADFs, superannuation funds and PSTs for taxable contributions that are fringe benefits.

50. After section 277:

Insert in Division 2 of Part IX:

Deduction for taxable contributions that are fringe benefits

"277A. A deduction is allowable from the assessable income of an eligible entity of a year of income of an amount equal to the total of any taxable contributions included in that assessable income that are fringe benefits (within the meaning of the Fringe Benefits Tax Assessment Act 1986).”.

51. Application

The amendment made by this Division applies to assessments in respect of income of the 1994-95 year of income and each later year of income.

Division 9Cost of collecting non-taxable contributions by non-resident superannuation funds

52. Object

The object of this Division is to deny a deduction to a non-resident superannuation fund for the cost of collecting non-taxable contributions.


 

SCHEDULE 3—continued

53. Section 277:

Repeal the section, substitute:

Contributions treated as assessable in determining deductions for ADFs and resident superannuation funds

"277. In determining the deductions allowable from the assessable income of an eligible entity that is:

(a)  an eligible ADF; or

(b)  a resident superannuation fund in relation to the year of income concerned;

any amount that is paid to the entity as mentioned in subsection 274(1), or is a contribution to which subsection 82AAT(1) applies, is taken to be assessable income of the entity (whether or not it is a taxable contribution).".

54. Application

The amendment made by this Division applies to assessments in respect of income of the 1994-95 year of income and each later year of income.

Division 10Lump sum payments made in consequence of the termination of overseas projects or overseas employment

55. Object

The object of this Division is to provide for a tax exemption for certain lump sum payments made in consequence of the termination of an overseas project or overseas employment.

56. Paragraph 23AF(17)(a):

Add at the end "or".

57. After paragraph 23AF(17)(a):

Insert:

"(aa) the income is a payment, consideration or amount that:

(i)   is included in assessable income under Subdivision AA of Division 2; or

(ii)  is excluded from the definition of 'eligible termination payment' in subsection 27A(1) because of paragraph (ja), (k), (ka), (m), (ma), (n) or (p) of that definition; or".

58. Subsection 23AF(17A) (definition of "notional gross tax"):

Insert after paragraph (a):


 

SCHEDULE 3—continued

"(aa) if the exempt amount is an exempt resident foreign termination payment (within the meaning of Subdivision AA of Division 2)— the exempt amount (excluding any part of that amount that represented contributions made by the taxpayer) were assessable income of the taxpayer; and".

59. After subsection 23AF(17B):

Insert:

"(17C) Subsection (17A) applies to a taxpayer in respect of income of a year of income as if any exempt resident foreign termination payment (within the meaning of Subdivision AA of Division 2) that related to the termination of qualifying service (within the meaning of that Division) that was made in respect of the taxpayer during that year of income were income of the taxpayer of that year of income that is exempt from tax under this section.".

60. Subsection 23AG(3) (definition of "notional gross tax"):

Insert after paragraph (a):

"(aa) if the exempt amount is an exempt resident foreign termination payment (within the meaning of Subdivision AA of Division 2)— the exempt amount (excluding any part of that amount that represented contributions made by the taxpayer) were assessable income of the taxpayer; and".

61. After subsection 23AG(4):

Insert:

"(5) Subsection (3) applies to a taxpayer in respect of income of a year of income as if any exempt resident foreign termination payment (within the meaning of Subdivision AA of Division 2) that related to the termination of employment that was made in respect of the taxpayer during that year of income were income of the taxpayer of that year of income that is exempt from tax under this section.".

62. Subsection 23AG(7) (definition of "foreign earnings"):

Add at the end:

"but does not include any payment, consideration or amount that:

(a)  is included in assessable income under Subdivision AA of Division 2; or

(b)  is excluded from the definition of 'eligible termination payment' in subsection 27A(1) because of paragraph (ja), (k), (ka), (m), (ma), (n) or (p) of that definition;".


 

SCHEDULE 3—continued

63. Subsection 27A(1) (definition of "eligible termination payment"):

Insert after paragraph (k):

"(ka) an exempt resident foreign termination payment or an exempt non-resident foreign termination payment;".

64. Subsection 27A(1):

Insert:

" 'approved project' has the same meaning as in section 23AF;

'eligible foreign remuneration' has the same meaning as in section 23AF;

'exempt resident foreign termination payment', in relation to a taxpayer, means a payment made in respect of the taxpayer:

(a)  that:

(i)   is made otherwise than from a superannuation fund (as defined by subsection 6(1)), in consequence of the termination of the taxpayer's employment or the termination of the qualifying service in relation to a project (whether or not the qualifying service was terminated in consequence of the termination of the project); and

(ii)  would, apart from paragraphs (ka) and (ma) of the definition of 'eligible termination payment', be an eligible termination payment; or

(b)  that:

(i)   is made from an eligible non-resident non-complying superannuation fund within 6 months after the termination of the employment or qualifying service mentioned in subparagraph (a)(i); and

(ii)  had the fund been a superannuation fund, would, apart from paragraphs (ka) and (ma) of the definition of 'eligible termination payment', be an eligible termination payment;

where:

(c)  if the payment related to the termination of employment:

(i)   the employment was service in a foreign country as the holder of an office or in the capacity of an employee; and

(ii)  the taxpayer was a resident of Australia throughout the period of the employment; and

(iii) the taxpayer's foreign earnings from the employment (other than the payment) are exempt from tax under section 23AG; and


 

SCHEDULE 3—continued

(iv) the payment related solely to the period of the employment; and

(v)  the payment is not exempt from taxation under the law of the foreign country; or

(d)  if the payment related to the termination of qualifying service:

(i)   the project was an approved project; and

(ii)  the taxpayer was a resident of Australia throughout the period of the qualifying service; and

(iii) eligible foreign remuneration (other than the payment) derived by the taxpayer that was attributable to the qualifying service is exempt from tax under section 23AF; and

(iv) the payment related solely to the period of the qualifying service; and

(v)  the payment is not exempt from taxation under the law of the country from sources in which the eligible foreign remuneration in relation to the qualifying service was derived;

'exempt non-resident foreign termination payment', in relation to a taxpayer, means:

(a)  a payment made in respect of the taxpayer to which the following subparagraphs apply:

(i)   the payment is made otherwise than from a superannuation fund (as defined by subsection 6(1)) in consequence of the termination of the taxpayer's employment;

(ii)  the payment would, apart from paragraphs (ka) and (ma) of the definition of 'eligible termination payment', be an eligible termination payment;

(iii) the employment was service in a foreign country as a holder of an office or in the capacity of an employee;

(iv) the payment related solely to a period of the employment during which the taxpayer was not a resident of Australia; or

(b)  a payment made in respect of the taxpayer to which the following subparagraphs apply:

(i)   the payment is made from an eligible non-resident non-complying superannuation fund within 6 months after the taxpayer became a resident of Australia;

(ii)  had the fund been a superannuation fund, the payment would, apart from paragraphs (ka) and (ma) of the definition of 'eligible termination payment' in subsection 27A(1), have been an eligible termination payment;


 

SCHEDULE 3—continued

(iii) the period to which the payment relates does not include any period other than a period in which the taxpayer was a non-resident or a period between the time when the taxpayer became a resident and the time when the taxpayer received the payment;

(iv) the benefit does not exceed the amount that was properly payable out of the fund to the taxpayer at the time when the payment was made;

'foreign earnings' has the same meaning as in section 23AG;

'qualifying service' has the same meaning as in section 23AF;".

65. Subsection 27A(3):

Omit "definition of 'eligible termination payment'", substitute "definitions of 'eligible termination payment', 'exempt resident foreign termination payment' and 'exempt non-resident foreign termination payment'".

66. After section 27CC:

Insert:

Exemption from tax—exempt resident foreign termination payment

"27CD. If an exempt resident foreign termination payment or an exempt non-resident foreign termination payment is made in relation to a taxpayer, the taxpayer's assessable income does not include that payment.".

67. Application

The amendments made by this Division apply in relation to payments made on or after 1 July 1994.

Division 11Lump sum payments made from resident non-complying superannuation funds

68. Object

The object of this Division is to provide for a tax exemption for certain lump sum payments made from resident non-complying superannuation funds.

69. Subsection 27A(1):

Insert:

" 'eligible resident non-complying superannuation fund', at a particular time (the 'relevant time'), means a fund:


 

SCHEDULE 3—continued

(a)  that:

(i)   is a continuously non-complying superannuation fund (as defined by subsection 267(1)) at the relevant time; or

(ii)  is a non-complying superannuation fund at the relevant time and ceased, or last ceased, to be a complying superannuation fund on or after 1 July 1995; and

(b)  that:

(i)   is a resident superannuation fund at the relevant time, or was a resident superannuation fund at any previous time in the year of income in which the relevant time occurred, and has always been a resident superannuation fund in relation to the years of income preceding that year of income; or

(ii)  is a resident superannuation fund at the relevant time, or was a resident superannuation fund at any previous time in the year of income in which the relevant time occurred, and ceased, or last ceased, to be a non-resident superannuation fund in relation to a previous year of income on or after 1 July 1995;".

70. Subsection 27A(1) (definition of "eligible termination payment"):

Insert after paragraph (m):

"(ma)  a payment from a fund that is an eligible resident non-complying superannuation fund, or an eligible non-resident non-complying superannuation fund, when the payment is made;".

71. Before section 27D:

Insert:

Exemption from tax—payment from eligible resident non-complying superannuation fund

"27CE.(1) If:

(a)  a lump sum payment (including a payment made as a result of the commutation of a superannuation pension or of an annuity) is made from a fund that is an eligible resident non-complying superannuation fund in respect of a taxpayer when the payment is made; and

(b)  had the fund been a superannuation fund, the payment would, apart from paragraph (ma) of the definition of 'eligible termination payment' in subsection 27A(1), have been an eligible termination payment;

the taxpayer's assessable income does not include that payment.


 

SCHEDULE 3—continued

"(2) Subsection 27A(3) applies for the purposes of this section in a corresponding way to the way in which it applies for the purposes of the definition of 'eligible termination payment' in subsection 27A(1).".

72. Application

The amendments made by this Division apply in relation to payments made on or after 1 July 1994.

Division 12Lump sum payments from certain non-resident superannuation funds

73. Object

The object of this Division is to include in assessable income lump sum payments made from certain non-resident superannuation funds and to allow credits for foreign tax paid on, and to exempt from tax contributions included in, such lump sum payments.

74. Subsection 6AB(1):

(a)  Insert "(including eligible termination payments as defined in subsection 27A(1))" before "derived".

(b)  Insert: "27CAA, " before "102AAZD".

75. Subsection 27A(1):

Insert:

" 'eligible non-resident non-complying superannuation fund' means a non-resident superannuation fund that:

(a)  is a continuously non-complying superannuation fund (as defined in subsection 267(1)); or

(b)  is a non-complying superannuation fund that ceased, or last ceased, to be a complying superannuation fund on or after 1 July 1995;".

76. After section 27C:

Insert:

Assessable income to include component of lump sum payment from an eligible non-resident non-complying superannuation fund

"27CAA.(1) If:

(a)  a payment (the 'relevant payment') of a lump sum (including a payment made as a result of the commutation of a superannuation pension or of an annuity but not including an 'exempt resident foreign termination payment' or an 'exempt non-resident foreign termination payment') is made from a fund that is an eligible non-resident non-complying superannuation fund in relation to a taxpayer when the relevant payment is made; and


 

SCHEDULE 3—continued

(b)  had the fund been a superannuation fund, the relevant payment would, apart from paragraph (ma) of the definition of 'eligible termination payment' in subsection 27A(1), have been an eligible termination payment; and

(c)  the amount (the 'gross amount') that was properly payable on the day on which the relevant payment was made before any deduction was made from that amount exceeds the amount worked out using the formula:

Accumulated entitlement plus Additional contributions;

then the taxpayer's assessable income of the year of income in which the relevant payment is made includes the amount of the excess.

"(2) For the purposes of the formula in subsection (1):

'Accumulated entitlement' means the amount properly payable to the taxpayer out of the fund on the day immediately before the relevant day;

'Additional contributions' means so much (if any) of the gross amount as represented contributions paid by the taxpayer, or an employer of the taxpayer, on or after the relevant day;

'relevant day' means the day on which the taxpayer became a member of the fund or the first day during the period to which the relevant payment relates on which the taxpayer became a resident of Australia, whichever is the later.

"(3) Subsection 27A(3) applies for the purposes of this section in a corresponding way to the way in which it applies for the purposes of the definition of "eligible termination payment" in subsection 27A(1).".

77. After subsection 160AF(5):

Insert:

"(6) If:

(a)  a payment is made from a superannuation fund in respect of a taxpayer; and

(b)  an amount (the 'assessable component') is included in the taxpayer's assessable income under section 27CAA in respect of the payment; and

(c)  the taxpayer has paid foreign tax in respect of the assessable component for which the taxpayer was personally liable;

then, for the purposes of subsection (1), the amount of that foreign tax is taken to be the amount worked out using the formula:


 

SCHEDULE 3—continued

where:

'Actual foreign tax' means the amount of the foreign tax actually paid by the taxpayer in respect of the payment referred to in paragraph (a);

'Assessable component' means the assessable component;

'Gross amount of payment' means the amount of the payment referred to in paragraph (a) that was due to be made before any deduction was made from that amount.".

78. After paragraph 160AF(7)(b):

Insert:

"(ba) an amount included in assessable income under section 27CAA;".

79. Subsection 274(10):

At the end of the subsection add:

"(c) a transfer of an amount from an eligible non-resident non-complying superannuation fund to a resident superannuation fund other than so much of the amount as was properly payable out of the first-mentioned fund to a member of that fund on the day on which the transfer took place.".

80. Application

The amendments made by this Division apply to assessments in respect of income of the 1994-95 year of income and each later year of income.

Division 13To make certain amendments to Subdivision AA of Division 2 of Part III in consequence of the amendments made by Divisions 11 and 12

81. Objects

The objects of this Division are:

(a)  to exclude eligible resident non-complying superannuation funds and eligible non-resident non-complying superannuation funds from the operation of Subdivision AA of Division 2 of Part III; and

(b)  to ensure that payments from a non-resident superannuation fund that is not an eligible non-resident non-complying superannuation fund are treated as eligible termination payments made from an untaxed source.

82. Subsection 27A(1) (definition of "superannuation fund"):

(a)  Omit subparagraph (ia) of paragraph (a), substitute:

"(ia)  a fund that is or has been a non-resident superannuation fund in relation to any year of income;".


 

SCHEDULE 3—continued

(b)  Add at the end (but not as part of paragraph (b) of the definition) "but does not include an eligible resident non-complying superannuation fund or an eligible non-resident non-complying superannuation fund".

83. Subsection 27A(1) (definition of "taxed superannuation fund"):

Add at the end:

"and (c) is a resident superannuation fund in relation to the year of income in which the ETP was made;".

84. After subsection 27A(12B):

Insert:

"(12BA) Despite subsection (12), a payment from a non-resident superannuation fund is not a qualifying eligible termination payment.".

85. Application

The amendments made by this Division apply to assessments in respect of income of the 1994-95 year of income and each later year of income.

Division 14Pension or annuity paid from non-complying superannuation fund

86. Object

The object of this Division is to include in assessable income pensions and annuities paid from certain non-complying superannuation funds.

87. Subsection 27H(1):

Omit "The assessable income", substitute "Subject to subsection (1A), the assessable income".

88. After subsection 27H(1):

Insert:

"(1A) An annuity paid from a fund that is an eligible resident non-complying superannuation fund when the payment is made is exempt from income tax.".

89. Subsection 27H(4) (definition of "annuity"):

Omit the definition, substitute:

" 'annuity' includes:

(a)  a superannuation pension; and

(b)  a pension or annuity paid from a fund that is an eligible non-resident non-complying superannuation fund when the payment is made;


 

SCHEDULE 3—continued

but does not include an annuity that is a qualifying security for the purposes of Division 16E;".

90. Application

The amendments made by this Division apply to assessments in respect of income of the 1994-95 year of income and each later year of income.

Division 15Roll-over annuities bought from life assurance companies

91. Object

The object of this Division is to require roll-over annuities bought from life assurance companies to be in the form of Australian policies.

92. Subparagraph 27A(12)(c)(ii):

Omit "death of the taxpayer.", substitute "death of the taxpayer; and".

93. Paragraph 27A(12)(c):

Add at the end:

"(iii) if the annuity is purchased from a life assurance company—is an Australian policy (as defined by subsection 110(1)).".

94. Application

The amendments made by this Division apply in relation to amounts paid to a life assurance company on or after 1 July 1994.

Division 16—Amounts paid by Part IX entities that are subject to tax under Part XI

95. Object

The object of this Division is to exempt from tax amounts paid by Part IX entities that are subject to tax under Part XL

96. Subparagraph 23AK(1)(a)(i):

Omit "or (g)", substitute ", (g) or (h)".

97. Subsection 23AK(1):

Add at the end:

"(i) if the payment is of a kind referred to in paragraph 603(1)(h)—the payment is exempt from tax to the extent of the debit.".

98. Subsection 603(1):

Add at the end:


 

SCHEDULE 3—continued

"(h)            an amount that is included in assessable income under Subdivision AA of Division 2 of Part III.".

99. Application

The amendments made by this Division apply, or are taken to have applied, in relation to amounts paid on or after 1 January 1993.

Division 17Assessments

100. Amendment of assessments

Section 170 of the Income Tax Assessment Act 1936 does not prevent the amendment of an assessment made before the commencement of this Part for the purpose of giving effect to this Part.

PART 3—INCOME TAX ACT 1986

101. Object

The object of this Part is to make amendments relating to non-complying superannuation funds that were previously complying superannuation funds, and to resident superannuation funds that were previously non-resident superannuation funds.

102. Section 5:

Add at the end:

"(5) This Act does not impose tax upon the taxable income of a non-complying superannuation fund within the meaning of Part IX of the Assessment Act, to the extent that the taxable income is attributable to the inclusion of an amount in the fund's assessable income under section 288A of that Act.

"(6) This Act does not impose tax upon the taxable income of a resident superannuation fund, to the extent that the taxable income is attributable to the inclusion of an amount in the fund's assessable income under section 288B of that Act.".

PART 4—SUPERANNUATION INDUSTRY (SUPERVISION) ACT 1993

Division 1Amendments relating to the residency of superannuation funds
and approved deposit funds

103. Objects

The objects of this Division are:


 

SCHEDULE 3—continued

(a)  to restrict "complying superannuation fund" status to resident superannuation funds; and

(b)  to restrict "complying approved deposit fund" status to resident approved deposit funds.

104. Section 10:

Insert:

" 'resident approved deposit fund' has the meaning given by section 20A;

'resident regulated superannuation fund' means a regulated superannuation fund that is a resident superannuation fund within the meaning of subsection 6E(1) of the Income Tax Assessment Act 1936;".

105. After section 20:

Insert:

Resident approved deposit funds

Resident approved deposit funds

"20A. (1) For the purposes of this Act, an approved deposit fund is a resident approved deposit fund at a particular time if, and only if:

(a)  either:

(i)   the fund was established in Australia; or

(ii)  at that time, any asset of the fund is situated in Australia; and

(b)  at that time, the central management and control of the fund is in Australia; and

(c)  at that time, the percentage worked out using the following formula is not less than 50%:

where:

'Accumulated entitlements of resident members' means the sum of so much of the value of the assets of the fund at that time as is attributable to:

(i)   deposits made to the fund before that time by or in respect of members of the fund who are residents at that time; and

(ii)  income or accretions arising from those deposits;

'Total assets of fund' means the value of the assets of the fund at that time.


 

SCHEDULE 3—continued

Definitions

"(2) In this section:

'Australia' has the same meaning as in the Income Tax Assessment Act 1936;

'member' includes depositor;

'resident' has the same meaning as in the Income Tax Assessment Act 1936.".

106. Paragraph 42(1)(a):

Before "regulated superannuation fund" insert "resident".

107. Paragraph 43(a):

Omit "an approved deposit fund", substitute "a resident approved deposit fund".

108. Application

The amendments made by this Division apply in relation to the 1994-95 year of income and each later year of income.

Division 2Amendments relating to contraventions that are taken into account in determining "complying superannuation fund" status

109. Object

The object of this Division is to limit the circumstances in which contraventions are taken into account in determining "complying superannuation fund" status.

110. Paragraph 42(1)(b):

Omit the paragraph, substitute:

"(b)            either of the following conditions is satisfied:

(i)   the trustee did not contravene this Act or the regulations in relation to the entity in respect of the year of income;

(ii)  both:

(A) the trustee contravened this Act or the regulations in relation to the entity in respect of the year of income on one or more occasions; and

(B)  the entity did not fail the culpability test set out in subsection (1A) in relation to any of those contraventions.".

111. After subsection 42(1):

Insert:


 

SCHEDULE 3—continued

"(1A) For the purposes of subparagraph (1)(b)(ii), an entity fails the culpability test in relation to a particular contravention of this Act or the regulations if:

(a)  both:

(i)   all of the members of the entity were in any way directly or indirectly knowingly concerned in, or party to, the contravention; and

(ii)  the Commissioner, after considering:

(A) the taxation consequences that would arise if the entity were to be treated as a non-complying superannuation fund for the purposes of Part IX of the Income Tax Assessment Act 1936 in relation to the year of income concerned; and

(B)  the seriousness of the contravention; and

(C)  all other relevant circumstances;

thinks that a notice should be given stating that the entity is not a complying superannuation fund in relation to the year of income concerned; or

(b)  all of the following conditions are satisfied:

(i)   one or more members of the entity were in any way directly or indirectly knowingly concerned in, or party to, the contravention;

(ii)  one or more members of the entity (the 'innocent members') were not in any way directly or indirectly knowingly concerned in, or party to, the contravention;

(iii) none of the innocent members would suffer any substantial financial detriment if the entity were to be treated as a non-complying superannuation fund for the purposes of Part IX of the Income Tax Assessment Act 1936 in relation to the year of income concerned;

(iv) the Commissioner, after considering:

(A) the taxation consequences that would arise if the entity were to be treated as a non-complying superannuation fund for the purposes of Part IX of the Income Tax Assessment Act 1936 in relation to the year of income concerned; and


 

SCHEDULE 3—continued

(B)  the seriousness of the contravention; and

(C)  all other relevant circumstances;

thinks that a notice should be given stating that the entity is not a complying superannuation fund in relation to the year of income concerned.

"(1B) For the purposes of subsection (1A), if there is a question whether a person was in any way directly or indirectly knowingly concerned in, or party to, a particular contravention, that question may be decided on the balance of probabilities.".

112. Application

The amendments made by this Division apply in relation to the 1994-95 year of income and each later year of income.

Division 3Amendments relating to the equal representation rules

113. Object

The object of this Division is to abolish the rule that allows contraventions of the "equal representation" provisions of Part 9 of the Superannuation Industry (Supervision) Act 1993 to be taken into account in determining "complying superannuation fund" status.

114. Subsection 39(1):

Omit "(other than Part 9)".

115. Subsection 42(2):

Omit the subsection.

116. Section 87:

Omit "not being a complying superannuation fund for the purposes of Part IX of the Income Tax Assessment Act (see Part 5 of this Act)", substitute "being directed under section 63 not to accept any contributions made to the fund by an employer-sponsor (see subsection 63(6))".

117. Application

The amendments made by this Division apply in relation to the 1994-95 year of income and each later year of income.

PART 5—SUPERANNUATION GUARANTEE (ADMINISTRATION) ACT 1992

118. Object

The object of this Part is to make some minor amendments consequential on amendments to the Superannuation Industry (Supervision) Act 1993.


 

SCHEDULE 3—continued

119. Subparagraph 24(1)(a)(i):

Before "regulated", insert "resident".

120. Subsection 24(4):

Before "regulated" (wherever occurring), insert "resident".

121. Subsection 25(1):

Before "the time", insert "or before".

122. Paragraph 25(1)(a):

Before "regulated", insert "resident".

123. Paragraph 25(2)(b):

Before "regulated", insert "resident".

124. Paragraph 65(2)(a):

Before "regulated", insert "resident".

125. Application

1. The amendments made by items 119 and 120 apply to a scheme in relation to so much of a contribution period as occurs after the beginning of the scheme's 1994-95 year of income.

2. The amendments made by items 121 and 122 apply to contributions made to a superannuation fund at or after the beginning of the fund's 1994-95 year of income.

3. The amendments made by items 123 and 124 apply to a payment to a superannuation fund at or after the beginning of the fund's 1994-95 year of income.

____________


 

                                                                  SCHEDULE 4                                                   Section 3

AMENDMENTS RELATING TO RESEARCH AND DEVELOPMENT ACTIVITIES

PART 1—INDUSTRY RESEARCH AND DEVELOPMENT ACT 1986

1. Objects

The objects of this Part are:

(a)  to empower the Industry Research and Development Board to formulate guidelines, and give certificates, for the purpose of enabling certain companies engaging in overseas research and development activities to obtain taxation concessions; and

(b)  to reduce the expenditure threshold for those concessions in respect of companies registering jointly.

2. Subsection 39E(1):

Insert "Australian" before "research".

3. After section 39EA:

Insert:

Guidelines concerning overseas research and development activities

"39EB. (1) The Board must, as soon as practicable (and, in any event, within 90 days) after the commencement of this section, formulate written guidelines setting out the criteria to be met by eligible companies wishing to obtain a provisional certificate under section 39ED in relation to overseas research and development activities proposed to be carried on by them as part of projects of research and development activities.

"(2) The Board must cause the guidelines to be:

(a)  published in the Gazette; and

(b)  made available on request, without charge, to any eligible company.

"(3) The criteria to be set out in the guidelines must include the following criteria:

(a)  it must be shown that the proposed overseas research and development activities cannot be carried out in Australia or the external Territories;

(b)  it must be shown that the results of the overseas research and development activities will be exploited by the eligible company concerned for the benefit of the Australian economy;

(c)  it must be shown that the expenditure:

(i)   that is proposed to be incurred by the eligible company in respect of the overseas research and development activities; and


 

SCHEDULE 4—continued

(ii)    in respect of which the company proposes to claim a deduction under section 73B of the Income Tax Assessment Act 1936;

will not exceed 10% of the total expenditure that the company has incurred or proposes to incur on the project of research and development activities.

"(4) An instrument formulating guidelines under subsection (1) is a disallowable instrument for the purposes of section 46A of the Acts Interpretation Act 1901.

Applications for provisional certificates

"39EC. (1) An eligible company that proposes to incur expenditure in carrying on overseas research and development activities in respect of which it proposes to claim a deduction under section 73B of the Income Tax Assessment Act 1936 may apply to the Board for a provisional certificate in respect of the activities.

"(2) The application must:

(a)  be in writing; and

(b)  describe the project to which the proposed activities relate; and

(c)  describe the proposed activities; and

(d)  state the respective amounts of expenditure proposed to be incurred by the company on the project that relate to:

(i)   Australian research and development activities; and

(ii)  overseas research and development activities; and

(iii) if the company proposes to claim a deduction under section 73B of the Income Tax Assessment Act 1936 in respect of part only of the expenditure on overseas research and development activities—the amount of that part of the expenditure; and

(e)  be accompanied by any other information that the Board reasonably requires.

Board's decision on application for provisional certificate

"39ED. (1) After considering an application under section 39EC, the Board must decide to:

(a)  grant the application; or

(b)  refuse the application.

"(2) If the Board has not made a decision under subsection (1) before whichever time (the 'eligible time') is the later of the following times:

(a)  the end of the period (the 'original 90-day period') of 90 days after the day on which the application was received by the Board;


 

SCHEDULE 4—continued

(b)  if the Board, by written notice given to the applicant within the original 90-day period, requests the applicant to give further information about the application—the end of the period of 90 days after the Board receives the further information;

then, at the eligible time, the Board is taken to have made a decision under subsection (1) to refuse the application.

"(3) If the Board makes a decision under subsection (1) before the eligible time, the Board must give written notice of the decision to the applicant.

"(4) A notice under subsection (3) relating to a refusal must set out the reasons for the refusal.

"(5) The Board must not grant the application unless the Board is satisfied that the applicant meets the criteria set out in the guidelines formulated under section 39EB.

"(6) If the Board grants the application, it must give to the applicant a provisional certificate in respect of the activities to which the application relates.

Matters to be contained in provisional certificate

"39EE. (1) A provisional certificate given to an eligible company under section 39ED must:

(a)  describe the overseas research and development activities to which the certificate relates; and

(b)  contain a description of the project of research and development activities to which those overseas research and development activities relate; and

(c)  state the amount of proposed expenditure on overseas research and development activities in respect of which the company proposes to claim a deduction under section 73B of the Income Tax Assessment Act 1936; and

(d)  contain any other matters that the Board considers relevant.

"(2) After a provisional certificate is given to a company under section 39ED, the company may apply in writing to the Board for the certificate to be amended so as to vary either or both of the following:

(a)  the description of the overseas research and development activities;

(b)  the amount of the proposed expenditure on overseas research and development activities in respect of which the company proposes to claim a deduction under section 73B of the Income Tax Assessment Act 1936.


 

SCHEDULE 4—continued

"(3) If:

(a)  such an application is made; and

(b)  the provisional certificate is produced to the Board; and

(c)  the Board is satisfied that it is appropriate to amend the certificate having regard to the criteria set out in the guidelines formulated under subsection 39EB(1);

the Board may amend the certificate accordingly and return the amended certificate to the company.".

4. Section 39F:

Insert "Australian" before "research" (wherever occurring).

5. After section 39L:

Insert:

Certificate as to overseas research and development activities

"39LAA. (1) The Board may, and must if requested in writing by the Commissioner to do so, give to the Commissioner a certificate stating whether particular activities that have been or are being carried on by or on behalf of an eligible company in respect of a project are the overseas research and development activities described in the provisional certificate given to the company.

"(2) If the Board gives a certificate under subsection (1), the Board must give to the company concerned:

(a)  a copy of the certificate; and

(b)  if the Board decided that particular activities were not the overseas research and development activities described in the provisional certificate—a statement of the reasons for its decision.".

6. Paragraph 39P(3)(c):

Omit "$1,000,000", substitute "$500,000".

7. Subsection 39S(1):

(a)  After "under", insert "section 39ED, subsection 39EE(3), ".

(b)  Insert ", 39LAA" after "39L".

8. Application

The amendment made by item 6 applies to the joint registration of companies on or after 1 July 1994 in respect of a proposed project or proposed projects comprising or including research and development activities starting on or after that date.


 

SCHEDULE 4—continued

PART 2—INCOME TAX ASSESSMENT ACT 1936

9. Object

The object of this Part is to broaden the research and development taxation concession by reducing the expenditure threshold and extending the concession to activities conducted outside Australia and the external Territories.

10. Subsection 73B(1) (definition of "aggregate research and development amount"):

Add at the end (but not as part of paragraph (d)) "but does not include expenditure on overseas research and development activities that is not certified expenditure".

11. Subsection 73B(1) (definition of "deduction acceleration factor"):

Omit the definition.

12. Subsection 73B(1):

Insert:

" 'Australian research and development activities' means research and development activities that are carried on in Australia or in an external Territory;

'certified expenditure' means expenditure that was incurred by an eligible company on overseas research and development activities in respect of which the Board gave a provisional certificate under section 39ED of the Industry Research and Development Act 1986 before the expenditure was incurred;

'overseas research and development activities' means research and development activities that are carried on outside Australia and the external Territories;".

13. Subsection 73B(1) (definition of "research and development activities"):

Omit the definition, substitute:

" 'research and development activities' means:

(a)  systematic, investigative or experimental activities that involve innovation or technical risk and are carried on for the purpose of:

(i)   acquiring new knowledge (whether or not that knowledge will have a specific practical application); or

(ii)  creating new or improved materials, products, devices, processes or services; or


 

SCHEDULE 4—continued

(b)  other activities that are carried on for a purpose directly related to the carrying on of activities of the kind referred to in paragraph (a);".

14. Subsection 73B(14):

Omit "the deduction acceleration factor in relation to the company in relation to the year of income", substitute "1.5".

15. Paragraph 73B(15)(a):

Omit "the deduction acceleration factor in relation to the company in relation to the year of income", substitute "1.5".

16. After subsection 73B(17):

Insert:

"(17A) An amount is not allowable as a deduction under subsection (12), (13), (14), (15) or (17) from a company's assessable income of a year of income in respect of expenditure on overseas research and development activities unless the expenditure is certified expenditure.".

17. Subparagraph 73B(23)(e)(i):

Omit "the deduction acceleration factor in relation to the company in relation to the year of income", substitute "1.5".

18. Paragraph 73B(24)(e):

Omit "the deduction acceleration factor in relation to the company in relation to the year of income", substitute " 1.5".

19. After subsection 73B(34):

Insert:

"(34A) If the Board gives to the Commissioner a certificate stating whether particular activities that have been or are being carried on by or on behalf of an eligible company in respect of a project are the overseas research and development activities described in the provisional certificate given by the Board to the company under section 39ED of the Industry Research and Development Act 1986, the certificate is binding on the Commissioner for the purpose of making an assessment of the company's taxable income of any year of income in which any research and development activities included in the project were carried on.".

20. Subsection 73C(9):

Omit the subsection, substitute:

"(9) If clawback applies to expenditure (other than contracted expenditure) incurred on or after 21 November 1987, subsection 73B(14) and paragraph 73B(15)(a) have effect as if 'multiplied by 1.5' were omitted from that subsection and that paragraph.".


 

SCHEDULE 4—continued

21. Subsection 124ZF(1) (definition of "research and development activities"):

Omit subparagraph (a)(ii), substitute:

"(ii)   would be research and development activities for the purposes of that section if subsection (2A) of that section were amended so that references in that subsection to an eligible company included references to a person other than an eligible company; and".

22. Application

The amendments made by this Part apply to deductions claimed for the 1994-95 year of income, or any later year of income, in respect of expenditure related to research and development activities.

23. Amendment of assessments

Section 170 of the Income Tax Assessment Act 1936 does not prevent the amendment of an assessment made before the commencement of this Part for the purpose of giving effect to this Part.

____________


 

                                                                  SCHEDULE 5                                                   Section 3

AMENDMENTS RELATING TO THE PAYMENT OF INTEREST ON OVERPAYMENTS
AND EARLY PAYMENTS

PART 1—OBJECT

1. Object

The object of this Schedule is:

(a)  to extend the cases where interest is payable on overpayments under the Taxation (Interest on Overpayments) Act 1983; and

(b)  to provide that interest is payable under that Act on certain early payments; and

(c)  to change the basis for setting the rate of interest payable under that Act and under other Acts that adopt that rate for their purposes.

PART 2—TAXATION (INTEREST ON OVERPAYMENTS) ACT 1983

2. Title:

After "overpayments" insert "and early payments".

3. Section 1:

After "Overpayments" insert "and Early Payments".

4. Subsection 3(1) (paragraph (ca) of the definition of "decision to which this Act applies"):

Omit all the words after "taxpayer to tax".

5. Subsection 3(1) (definition of "income tax"):

Omit "Income Tax Assessment Act 1936" (wherever occurring), substitute "Tax Act".

6. Subsection 3(1) (definition of "provisional tax"):

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

7. Subsection 3(1) (paragraphs (a), (b), (ba), (bb), (be), (c) and (caa) of the definition of "relevant tax"):

Omit "Income Tax Assessment Act 1936" (wherever occurring), substitute "Tax Act".

8. Subsection 3(1) (definition of "year of income"):

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


 

SCHEDULE 5—continued

9. Subsection 3(1):

Insert:

" 'double tax agreement' means an agreement within the meaning of the Income Tax (International Agreements) Act 1953;

'final instalment day' means:

(a)  in relation to a year of income of a relevant entity—the day by which the final payment of tax in respect of income of the year of income:

(i)   is required to be made under section 221AZD of the Tax Act (as affected by sections 221AN and 221AU of that Act); or

(ii)  would be required to be made under that section (as so affected) if the requirements of paragraph (b) of that section were met; and

(b)  in relation to a year of income of an instalment taxpayer—the day by which the final instalment for the year of income is liable to be paid under section 221AZK;

'income tax crediting amount', in relation to income tax payable by a person for a year of income, means any amount that is required or permitted to be credited or applied against the income tax under:

(a)  section 159GDA, 160AQK, 220AZC, 221AZF, 221AZM, 221H, 221K, 221 YE, 221YHG, 221YHZL, 221YT, 221ZG or 221ZTof the Tax Act; or

(b)  section 160AN of the Tax Act, provided that, only in the case where the applying of the amount is to provide correlative relief in respect of the taxing of an amount under a law of a foreign country, the following requirements are met:

(i)   the law of the foreign country requires the payment of late payment interest in respect of the amount taxed; and

(ii)  the late payment interest was paid by the time the applying of the amount took place;

'FS assessment debt' has the meaning given by subsection 3(1) of the Student Assistance Act 1973;

'HEC assessment debt' has the meaning given by subsection 34(1) of the Higher Education Funding Act 1988;

'instalment taxpayer' means an instalment taxpayer within the meaning of section 221AZH of the Tax Act;

'late payment interest', in respect of an amount, means interest payable solely to compensate for the time value of the amount;

'provide correlative relief has the meaning given by section 3A;

'relevant entity' means a relevant entity within the meaning of section 221AK of the Tax Act;


 

SCHEDULE 5—continued

'Tax Act' means the Income Tax Assessment Act 1936.".

10. After section 3:

Insert in Part I:

Provision of correlative relief

"3A.(1) For the purposes of this Act, a decision to which this Act applies is made, or the applying of an income tax crediting amount takes place, to ‘provide correlative relief’ in respect of the taxing of an amount under a law of a foreign country if:

(a)  there is a double tax agreement between Australia and the foreign country; and

(b)  a provision of the double tax agreement has been prescribed, or the manner of operation of a provision of the double tax agreement has been prescribed, for the purposes of this paragraph; and

(c)  the decision is made, or the applying of the income tax crediting amount takes place, in giving effect, or in circumstances that would enable effect to be given, to the provision mentioned in paragraph (b), or to that provision in its operation in the prescribed manner, as a result of the taxing of the amount under the law of the foreign country.

"(2) For the purposes of this Act, a decision to which this Act applies is also made, or the applying of an income tax crediting amount also takes place, to ‘provide correlative relief’ in respect of the taxing of an amount under a law of a foreign country (the 'primary foreign country') if:

(a)  there is no double tax agreement between Australia and the primary foreign country; and

(b)  a provision of a double tax agreement between Australia and a foreign country other than the primary foreign country has been prescribed, or the manner of operation of a provision of such an agreement has been prescribed, for the purposes of this paragraph: and

(c)  the decision is made, or the applying of the income tax crediting amount takes place, in circumstances that would enable effect to be given to the provision mentioned in paragraph (b), or to that provision in its operation in the prescribed manner, as a result of the taxing of the amount under the law of the primary foreign country, if the double tax agreement had instead been entered into between Australia and the primary foreign country.".

11. After Part II:

Insert:


 

SCHEDULE 5—continued

"PART IIA—INTEREST ON EARLY PAYMENTS

Entitlement to interest

"8A.(1) If:

(a)  a person makes a payment of, or on account of:

(i)   income tax; or

(ii)  HEC assessment debt; or

(iii) FS assessment debt; or

(iv) additional tax under Part VII of the Tax Act; or

(v)  interest under section 102AAM of the Tax Act; or

(vi) provisional tax; or

(vii)   an instalment of provisional tax within the meaning of section 221YAof the Tax Act; or

(viii)  an amount mentioned in subsection 221AP(1) of the Tax Act; or

(ix) an amount mentioned in paragraph 221 AZD(b) of the Tax Act; or

(x)  an instalment under subsection 221AZK(2) of the Tax Act; and

(b)  the payment is made more than 14 days before:

(i)   if subparagraph (ii) does not apply—the day (the 'appropriate due day') on which the tax, debt, interest, amount or instalment concerned becomes due and payable; or

(ii)  if the person is a relevant entity or an instalment taxpayer and the payment is of, or on account of, income tax—the final instalment day (also the 'appropriate due day') in respect of the year of income in respect of which the income tax is payable;

interest is payable by the Commissioner to the person on the payment, calculated in respect of the period applicable under section 8B at the rate specified in section 8C.

"(2) A reference in paragraph (1)(a) to a person making a payment of, or on account of:

(a)  income tax; or

(b)  HEC assessment debt; or

(c)  FS assessment debt;

does not include a reference to the making of a deduction or payment under Part VI (other than Division 1) of the Tax Act or section 20B of the Loan (Income Equalisation Deposits) Act 1976.


 

SCHEDULE 5—continued

"(3) A reference in paragraph (1)(a) to a person making a payment of, or on account of, any thing listed in any of the subparagraphs of that paragraph does not include a reference to the person being deemed or taken, by the Tax Act or any other Act, to have paid the thing because of the crediting or applying of any relevant tax, income tax crediting amount or other payment.

Interest period

"8B.(1) Subject to subsection (2), interest under section 8A is payable to a person for the period:

(a)  if the person is neither a relevant entity nor an instalment taxpayer—from the beginning of the later of the following days:

(i)   the day on which the payment is made;

(ii)  the day on which the notice notifying the tax, debt, interest or instalment concerned is issued; and

(b)  if the person is a relevant entity or an instalment taxpayer—from the beginning of the day on which the payment is made;

until the end of the appropriate due day.

"(2) If the payment is to any extent refunded before the appropriate due day, interest is not payable on the payment to that extent in respect of any period after the day on which the refund takes place.

Rate of interest

"8C. Interest under section 8A is payable at such annual rate or rates as are provided for by section 214A of the Tax Act, less 4 percentage points.

No double entitlement to interest

"8D. If:

(a)  interest is payable under this Part on a payment in respect of a period; and

(b)  interest is also payable under Part III A on the whole or part of the payment in respect of the whole or part of the period;

then interest is not payable under this Part on the whole or part of the payment in respect of the whole or part of the period.".

"PART IIB—INTEREST ON OVERPAYMENTS RESULTING FROM ASSESSMENTS

Entitlement to interest—ordinary taxpayers

"8E.(1) If:

(a)  a person who is neither a relevant entity nor an instalment taxpayer furnishes a return of income for a year of income; and


 

SCHEDULE 5—continued

(b)  an assessment is made of the income tax payable by the person for the year of income; and

(c)  the notice of assessment notifies that the Commissioner has credited, applied or refunded (which crediting, applying or refunding is the 'notice crediting') one or more income tax crediting amounts in relation to the income tax payable by the person for the year of income; and

(d)  the sum of the income tax crediting amounts in paragraph (c) exceeds the sum of the following amounts:

(i)   income tax payable under the assessment (after allowing any rebate or deduction under subsection 100(2) of the Tax Act and before allowing any crediting, applying or other payment);

(ii)  additional tax for the year of income payable by the person under Part VII of the Tax Act immediately before the notice crediting;

(iii) an HEC assessment debt that is notified in the notice of assessment;

(iv) an FS assessment debt that is notified in the notice of assessment;

(v)  interest for the year of income payable by the person under section 102AAM of the Tax Act immediately before the notice crediting; and

(e)  the notice crediting occurs more than 30 days or more after the day on which the person furnishes the return of income;

interest is payable by the Commissioner to the person on the excess mentioned in paragraph (d), calculated in respect of the period applicable under section 8F at the rate specified in section 81.

"(2) If:

(a)  a person who is neither a relevant entity nor an instalment taxpayer furnishes a return of income for a year of income; and

(b)  an assessment is made of the income tax payable by the person for the year of income; and

(c)  after the notice of assessment is issued to the person, the Commissioner credits, applies or refunds (which crediting, applying or refunding is a 'post-notice crediting') one or more income tax crediting amounts in relation to the income tax payable by the person for the year of income; and

(d)  the sum of the income tax crediting amounts in paragraph (c) exceeds the sum of the following amounts:


 

SCHEDULE 5—continued

(i)   income tax payable for the year of income by the person immediately before the post-notice crediting;

Note:   This is the amount payable under the assessment for the year of income as reduced by any rebate, deduction under subsection 100(2) of the Tax Act. crediting, applying or other payment made before the post-notice crediting.

(ii)  additional tax for the year of income payable by the person under Part VII of the Tax Act immediately before the post-notice crediting;

(iii) an HEC assessment debt, worked out by reference to the person's taxable income of the year of income, payable by the person immediately before the post-notice crediting;

(iv) an FS assessment debt, worked out by reference to the person's taxable income of the year of income, payable by the person immediately before the post-notice crediting;

(v)  interest for the year of income payable by the person under section 102AAM of the Tax Act immediately before the post-notice crediting;

interest is payable by the Commissioner to the person on the excess mentioned in paragraph (d), calculated in respect of the period applicable under section 8F at the rate specified in section 81.

Interest period—ordinary taxpayers

"8F.(1) If subsection 8E(1) applies, the interest is payable on the excess mentioned in paragraph 8E(1)(d) for the period from the beginning of the 30th day after the day on which the person furnishes the return of income until the end of the day on which the notice of assessment is issued.

"(2) If subsection 8E(2) applies and subsection (3) of this section does not apply, the interest is payable on the excess mentioned in paragraph 8E(2)(d) for the period from the beginning of the day on which the notice of assessment is issued until the end of the day on which the post-notice crediting occurs.

"(3) If:

(a)  subsection 8E(2) applies; and

(b)  one or more payments have been made (including any taken to have been made because of the crediting or applying of any amount) of any amounts mentioned in subparagraphs 8E(1)(d)(i) to (v) (including those amounts as increased or decreased for any reason) after the notice of assessment is issued and before the post-notice crediting;

the interest is payable:


 

SCHEDULE 5—continued

(c)  on so much of the excess as is attributable to a particular payment mentioned in paragraph (b)—for the period from the beginning of the day on which the payment was made until the end of the day on which the post-notice crediting occurs; and

(d)  on so much of the excess as is not attributable to payments mentioned in paragraph (b)—for the period from the beginning of the day on which the notice of assessment is issued until the end of the day on which the post-notice crediting occurs.

"(4) For the purposes of subsection (3), but subject to subsection (5), the excess is attributable to a particular payment to the extent that it would be set off against that payment if it were set off in succession against each of the payments in the reverse of the order in which they were made.

"(5) For the purposes of subsection (4), any payment is to be disregarded to the extent that:

(a)  it consists of an amount on which interest is payable under section 9; or

(b)  it has been taken into account in any previous application of subsection (4) of this section in relation to a post-notice crediting occurring before the current post-notice crediting.

Entitlement to interest—relevant entities and instalment taxpayers

"8G.(1) If:

(a)  a person who is a relevant entity or an instalment taxpayer furnishes a return of income for a year of income; and

(b)  after the person furnishes the return, the Commissioner credits, applies or refunds (which crediting, applying or refunding is the 'first crediting') one or more income tax crediting amounts in relation to the income tax payable by the person for the year of income; and

(c)  the Commissioner has not previously credited, applied or refunded any income tax crediting amount in relation to the income tax payable by the person for the year of income; and

(d)  the sum of the income tax crediting amounts in paragraph (b) exceeds the sum of the following amounts:

(i)   income tax payable by the person for the year of income (after allowing any rebate or deduction under subsection 100(2) of the Tax Act and before any crediting, applying or other payment);

(ii)  additional tax for the year of income payable by the person under Part VII of the Tax Act immediately before the first crediting;


 

SCHEDULE 5—continued

(iii) interest for the year of income payable by the person under section 102AAM of the Tax Act immediately before the first crediting; and

(e)  if the person furnishes the return of income for the year of income 30 days or more before the final instalment day in relation to the year of income—the first crediting occurs 30 days or more after the day on which the person furnishes the return; and

(f)  if the person furnishes the return of income for the year of income after the 30th day before the final instalment day in relation to the year of income—the first crediting occurs on or after the final instalment day;

interest is payable by the Commissioner to the person on the excess mentioned in paragraph (d), calculated in respect of the period applicable under section 8H at the rate specified in section 81.

"(2) If:

(a)  a person who is a relevant entity or an instalment taxpayer furnishes a return of income for a year of income; and

(b)  after the first crediting, the Commissioner credits, applies or refunds (which crediting, applying or refunding is a 'later crediting') one or more income tax crediting amounts in relation to the income tax payable by the person for the year of income; and

(c)  the sum of the income tax crediting amounts in paragraph (b) exceeds the sum of the following amounts:

(i)   income tax payable for the year of income by the person immediately before the later crediting;

Note:   This is the income tax payable for the year of income as reduced by any rebate, deduction under subsection 100(2) of the Tax Act. crediting, applying or other payment made before the later crediting.

(ii)  additional tax for the year of income payable by the person under Part VII of the Tax Act immediately before the later crediting;

(iii) interest for the year of income payable by the person under section 102AAM of the Tax Act immediately before the later crediting; and

interest is payable by the Commissioner to the person on the excess mentioned in paragraph (c), calculated in respect of the period applicable under section 8H at the rate specified in section 81.

Interest period—relevant entities and instalment taxpayers

"8H.(1) If subsection 8G(1) applies, the interest is payable on the excess mentioned in paragraph 8G(1)(d) for the period from the beginning of the earlier of the following days:


 

SCHEDULE 5—continued

(a)  the 30th day after the day on which the person furnishes the return of income for the year of income;

(b)  the final instalment day in relation to the year of income; until the end of the day on which the first crediting occurs.

"(2) If subsection 8G(2) applies and subsection (3) of this section does not apply, the interest is payable on the excess mentioned in paragraph 8G(2)(c) for the period from the beginning of the final instalment day until the end of the day on which the later crediting occurs.

"(3) If:

(a)  subsection 8G(2) applies; and

(b)  one or more payments have been made (including any taken to have been made because of the crediting or applying of any amount) of any amounts mentioned in subparagraphs 8G(1)(d)(i) to (iii) after the first crediting and before the later crediting;

the interest is payable:

(c)  on so much of the excess as is attributable to a particular payment mentioned in paragraph (b)—for the period from the beginning of the day on which the payment was made until the end of the day on which the later crediting occurs; and

(d)  on so much of the excess as is not attributable to payments mentioned in paragraph (b)—for the period from the beginning of the final instalment day until the end of the day on which the later crediting occurs.

"(4) For the purposes of subsection (3), but subject to subsection (5), the excess is attributable to a particular payment to the extent that it would be set off against that payment if it were set off in succession against each of the payments in the reverse of the order in which they were made.

"(5) For the purposes of subsection (4), any payment is to be disregarded to the extent that:

(a)  it consists of an amount on which interest is payable under section 9; or

(b)  it has been taken into account in any previous application of subsection (4) of this section in relation to a later crediting occurring before the current later crediting.

Rate of interest

"8I. Interest under this Part is payable at such annual rate or rates as are provided for by section 214A of the Tax Act, less 4 percentage points.

Limit on interest where correlative relief in respect of foreign tax

"8J.(1) If:


 

SCHEDULE 5—continued

(a)  apart from this section, interest is payable on an excess resulting from the crediting, applying or refunding of one or more income tax crediting amounts; and

(b)  at least one (the 'correlative relief amount') of the income tax crediting amounts was applied to provide correlative relief in respect of the taxing of an amount under a law of a foreign country; and

(c)  the interest on the excess, to the extent that it is attributable to the correlative relief amount, exceeds by an amount (the 'reduction amount') the lesser of:

(i)     the amount of the late payment interest mentioned in subparagraph (b)(i) of the definition of 'income tax crediting amount' in subsection 3(1), expressed in Australian currency at the exchange rate applicable at the time when the taxing of the amount under the law of the foreign country takes place;

(ii)    the correlative relief amount;

then the interest payable is reduced by the reduction amount.

"(2) For the purposes of paragraph (1)(c), so much of the interest payable on the excess mentioned in paragraph (1)(a) as is worked out using the following formula is taken to be attributable to the correlative relief amount:

Interpretation

"8K.(1) If the Commissioner is satisfied that no tax is payable by a person for a year of income, the Commissioner is taken for the purposes of this Part to have made an assessment that a nil amount of income tax is payable by the person for the year of income.

"(2) If the Commissioner issues a notice to a person that no tax is payable by the person for a year of income, the Commissioner is taken for the purposes of this Part to have issued a notice of assessment to the person that a nil amount of income tax is payable by the person for the year of income.

"(3) If the crediting, applying or refunding of an income tax crediting amount takes place at different times, the whole of the income tax crediting amount is taken for the purposes of this Part to have been credited, applied or refunded at the earlier or earliest of those times.


 

SCHEDULE 5—continued

"(4) Subsections 221AZF(2) and 221AZM(3) of the Tax Act are to be disregarded for the purposes of this Part.".

12. Heading to Part III:

Omit the heading, substitute:

"PART III—INTEREST ON OVERPAYMENTS RESULTING
FROM DECISIONS TO WHICH THIS ACT APPLIES".

13. After subsection 9(1):

Insert:

"(1A) If:

(a)  apart from this subsection, subsection (1) would apply to an overpayment; and

(b)  the decision to which this Act applies mentioned in that subsection was made wholly or partly to provide correlative relief in respect of the taxing of an amount under a law of a foreign country; and

(c)  either:

(i)   the law of the foreign country did not require the payment of late payment interest in respect of the amount; or

(ii)  the law of the foreign country did require the payment of late payment interest but the payment had not been made by the time the decision to which this Act applies was made;

subsection (1) does not apply to the overpayment to the extent to which it is attributable to the provision of the correlative relief.".

14. Paragraph 9(5)(a):

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

15. Subsection 9(7):

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

16. Paragraph 10(1)(a):

Before "in respect of" insert "if paragraph (aa) does not apply—".

17. After paragraph 10(1)(a):

Insert:

"(aa)     if the person is a relevant entity or an instalment taxpayer and the relevant tax is a relevant tax of a kind referred to in paragraph (a) of the definition of 'relevant tax' in subsection 3(1)—in respect of the period that commenced on the final instalment day in relation to the


 

SCHEDULE 5—continued

year of income for which the relevant tax was payable and ended on the day on which the amount of the relevant tax or the part of the amount of the relevant tax, as the case may be, was so refunded or applied; and".

18. Paragraph 10(1)(b):

Omit the paragraph, substitute:

"(b)   at such annual rate or rates as are provided for by section 214A of the Tax Act, less 4 percentage points.".

19. Subsections 10(2), (3) and (4):

Omit the subsections.

20. Sections 11 and 11 A:

Repeal the sections, substitute:

Limit on overpayment of interest where correlative relief in respect of foreign tax

"11. If:

(a)  apart from this section, interest is payable in respect of the whole or part (which whole or part is the 'overpayment') of an amount of relevant tax; and

(b)  the decision to which this Act applies mentioned in subsection 9(1) was made wholly or partly to provide correlative relief in respect of the taxing of an amount under a law of a foreign country; and

(c)  as a result, the whole or part (which whole or part is the 'correlative relief amount') of the overpayment is attributable to the provision of the correlative relief; and

(d)  the interest on the overpayment, to the extent that it is attributable to the correlative relief amount, exceeds the lesser of:

(i)     the amount of the late payment interest paid in respect of the amount taxed under the law of the foreign country, expressed in Australian currency at the exchange rate applicable at the time when the taxing of the amount under the law of the foreign country takes place;

Note:   Such interest must have been paid or subsection 9(1 A) would prevent the correlative relief amount from attracting interest under this Part.

(ii)    the correlative relief amount;

the interest otherwise payable on the overpayment is reduced by the amount of the excess in paragraph (d).".


 

SCHEDULE 5—continued

21. Subparagraph 12(1)(a)(i):

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

22. After Part III:

Insert:

"PART IIIA—INTEREST ON OVERPAYMENTS RESULTING FROM CERTAIN REMISSIONS, REFUNDS AND CREDITS

Entitlement to interest

"12A.(1) If:

(a)  the Commissioner, as a result of a request by a person:

(i)   remits, under subsection 207(1A), 207A(4), 221AY(5), 221AZE(5), 221AZP(4) or 221YDB(4) of the Tax Act, the whole or part of an amount that has been paid to the Commissioner; or

(ii)  refunds the whole or part of an amount under subsection 221AQ(3), 221AR(6), 221AU(4), 221AV(4), 221AW(5), 221AX(14), 221AZL(2) or 221 AZQ(1) of the Tax Act; or

(iii) refunds or credits the whole or part of an amount under subsection 221 YBA(6), 221 YCA(2) or 221 YG(2) of the Tax Act; or

(iv) refunds the whole or part of a payment made by the person on account of:

(A)   income tax; or

(B)    HEC assessment debt; or

(C)    FS assessment debt; or

(D)   additional tax under Part VII of the Tax Act; or

(E)    interest under section 102AAM of the Tax Act; or

(F)    provisional tax; or

(G)   an instalment of provisional tax within the meaning of section 221YA of the Tax Act; or

(H)   an amount mentioned in subsection 221AP(1) of the Tax Act; or

(I)     an amount mentioned in paragraph 221AZD(b) of the Tax Act; or

(J)     an instalment under subsection 221 AZK(2) of the Tax Act; and

(b)  the remission, refund or crediting takes place more than 30 days after the day on which the request is made;


 

SCHEDULE 5—continued

interest is payable by the Commissioner to the person on the amount remitted, refunded or credited, calculated in respect of the period applicable under section 12B at the rate specified in section 12C.

"(2) A reference in subparagraph (1)(a)(iv) to a person making a payment on account of:

(a)  income tax; or

(b)  HEC assessment debt; or

(c)  FS assessment debt;

does not include a reference to the making of a deduction or payment under Part VI of the Tax Act or section 20B of the Loan (Income Equalisation Deposits) Act 1976.

Period of interest

"12B. The interest is payable for the period from the beginning of the 30th day after the day on which the request was made until the end of the day on which the remission, refund or crediting takes place.

Rate of interest

"12C. Interest under this Part is payable at such annual rate or rates as are provided for by section 214A of the Tax Act, less 4 percentage points.

"PART IIIB—ADJUSTMENT OF INTEREST

Interest to be in multiples of 1 cent

"12D. If an amount of interest calculated under this Act is not a multiple of 1 cent, the amount of interest is to be:

(a)  if the amount of interest is a multiple of 0.5 cent—increased by 0.5 cent; or

(b)  in any other case—increased or decreased, as the case requires, to the nearest multiple of 1 cent.

Small amounts of interest not to be paid

"12E. If, apart from this section, an amount of interest:

(a)  would be payable to a person under this Act; and

(b)  is less than 50 cents;

the amount is not payable to the person.

Adjustment where amount to be paid by, or refunded to, person does not exceed 49 cents

"12F. If:


 

SCHEDULE 5—continued

(a)  an amount of interest payable to a person under this Act is applied in discharge of a liability of the person to the Commonwealth; and

(b)  the amount (if any) remaining to be paid (the 'net amount') by the person in relation to that liability is less than 50 cents;

the net amount is not payable by the person.".

23. Section 13:

Omit "this Act", substitute "Part IIB, Part III or Part IIIA".

24. Section 13:

Add at the end:

"(2) The Commissioner may apply an amount of interest payable under Part IIA (other than an amount to which subsection (3) applies) to a person who is neither a relevant entity nor an instalment taxpayer in payment of the following, in order:

(a)  income tax payable by the person for the year of income following the eligible year of income;

(b)  HEC assessment debt worked out by reference to the person's taxable income of the year of income following the eligible year of income;

(c)  FS assessment debt worked out by reference to the person's taxable income of the year of income following the eligible year of income;

(d)  additional tax under Part VII of the Tax Act payable by the person for the year of income following the eligible year of income;

(e)  interest under section 102AAM of the Tax Act payable by the person for the year of income following the eligible year of income;

(f)  any other liability of the person to the Commonwealth.

"(3) The Commissioner may apply an amount of interest, payable under Part IIA to a person in respect of a payment of or on account of provisional tax mentioned in subparagraph 8A(1)(a)(vi) or an instalment of provisional tax mentioned in subparagraph 8A(1)(a)(vii), in payment of the following, in order:

(a)  income tax payable by the person for the eligible year of income;

(b)  HEC assessment debt worked out by reference to the person's taxable income of the year of income;

(c)  FS assessment debt worked out by reference to the person's taxable income of the year of income;


 

SCHEDULE 5—continued

(d)  additional tax under Part VII of the Tax Act payable by the person for the year of income;

(e)  interest under section 102AAM of the Tax Act payable by the person for the year of income;

(f)  any other liability of the person to the Commonwealth.

"(4) The Commissioner may apply an amount of interest payable under Part IIA to a person who is a relevant entity or an instalment taxpayer in payment of the following, in order:

(a)  income tax payable by the person for the eligible year of income;

(b)  additional tax under Part VII of the Tax Act payable by the person for the eligible year of income;

(c)  interest under section 102AAM of the Tax Act payable by the person for the eligible year of income;

(d)  any other liability of the person to the Commonwealth.

"(5) In this section:

'eligible year of income', in relation to interest payable under Part IIA, means the year of income in respect of which the tax, debt, interest, amount or instalment mentioned in the applicable subparagraph of paragraph 8A(1)(a) is payable.".

PART 3—OTHER ACTS

Division 1—Income Tax Assessment Act 1936

25. Paragraph 26(jb):

After "Overpayments" insert "and Early Payments".

26. Section 102AAB (definition of "basic statutory interest rate"):

Omit the definition, substitute:

" 'basic statutory interest rate', in relation to a year of income, means such annual rate or rates of interest as are provided for by section 214A, less 4 percentage points, for the year of income or for periods included in the year of income, as the case may be;".

27. Paragraph 102AAM(5)(b):

Omit the paragraph, substitute:

"(b)   at such annual rate or rates as are provided for by section 214A, less 4 percentage points.".


 

SCHEDULE 5—continued

28. Subsection 214A(2):

Omit the subsection, substitute:

"(2) The annual rate at which interest is calculated or computed under:

(a)  section 102AAB, 102AAM, 170AA, 207A, 555 or 592 of this Act; or

(b)  section 93 of the Fringe Benefits Tax Assessment Act 1986; or

(c)  section 65 of the Petroleum Resource Rent Tax Assessment Act 1987; or

(d)  section 75 of the Training Guarantee (Administration) Act 1990; or

(e)  section 8C, 81, 10 or 12C of the Taxation (Interest on Overpayments and Early Payments) Act 1983;

for any period of, or within, a month is the rate of interest for that month.".

29. Subsection 555(2) (definition of "basic statutory interest rate"):

Omit the definition, substitute:

" 'basic statutory interest rate', in relation to a year of income, means such annual rate or rates of interest as are provided for by section 214A, less 4 percentage points, for the year of income or for periods included in the year of income, as the case may be;".

30. Subsection 592(2) (definition of "basic statutory interest rate"):

Omit the definition, substitute:

" 'basic statutory interest rate', in relation to a year of income, means such annual rate or rates as are provided for by section 214A, less 4 percentage points, for the year of income or for periods included in the year of income, as the case may be;".

Division 2Fringe Benefits Tax Assessment Act 1986

31. Subsection 93(2):

Omit the words after "reference to such", substitute "annual rate or rates as are provided for by section 214A of the Income Tax Assessment Act 1936, less 4 percentage points.".

32. Subsection 93(3):

Omit the subsection.

Division 3Superannuation Guarantee (Administration) Act 1992

33. Subsection 31(1):

Omit "regulations made for the purposes of paragraph 10(1)(b) of the Taxation (Interest on Overpayments) Act 1983", substitute "the regulations for the purposes of this subsection".


 

SCHEDULE 5—continued

34. Subsection 31(2):

Omit the subsection.

35. Subsection 49(2):

Omit "regulations made for the purposes of paragraph 10(1)(b) of the Taxation (Interest on Overpayments) Act 1983", substitute "the regulations for the purposes of this subsection".

36. Subsection 49(3):

Omit the subsection.

Division 4Training Guarantee (Administration) Act 1990

37. Subsection 75(2):

Omit the words after "reference to", substitute "such annual rate or rates as are provided for by section 214A of the Income Tax Assessment Act 1936, less 4 percentage points".

38. Subsection 75(3):

Omit the subsection.

Division 5Australian Capital Territory Taxation (Administration) Act 1969

39. Paragraph 5A(1)(e):

After "Overpayments" insert "and Early Payments".

Division 6Freedom of Information Act 1982

40. Schedule 3:

Omit "Taxation (Interest on Overpayments) Act 1983", substitute "Taxation (Interest on Overpayments and Early Payments) Act 1983".

Division 7Pay-roll Tax (Territories) Assessment Act 1971

41. Paragraph 5A(1)(e):

After "Overpayments" insert "and Early Payments".


 

SCHEDULE 5—continued

Division 8Petroleum Resource Rent Tax Assessment Act 1987

42. Paragraph 65(4)(b):

Omit the paragraph, substitute:

"(b)   at such annual rate or rates as are provided for by section 214A of the Income Tax Assessment Act 1936, less 4 percentage points.".

43. Subsection 65(7):

Omit the subsection.

Division 9Swimming Pools Tax Refund Act 1992

44. Subsection 5(4):

After "Overpayments'''' insert "and Early Payments".

45. Subsection 6(3):

After "Overpayments" insert "and Early Payments".

PART 4—APPLICATION AND TRANSITIONAL

46. Application

(1) The amendment made by item 4 applies to any decision made on or after 1 July 1994 in relation to an assessment in respect of income of the 1993-94 year of income or any later year of income.

(2) The first regulation made for the purposes of paragraph 3A(1)(b) or (2)(b) of the amended Act (see item 10) has effect in relation to the making of any decision, or the applying of any income tax crediting amount, as mentioned in subsection 3A(1) or (2) of that Act where:

(a)  the decision is made on or after 1 July 1994 and relates to an assessment in respect of income of any year of income; or

(b)  the applying of the income tax crediting amount takes place on or after 1 July 1994 and relates to income tax payable for the 1993-94 year of income or any later year of income.

(3) Part IIA of the amended Act (see item 11) applies to any payment of, or on account of, a tax, a debt, interest, an amount or an instalment mentioned in paragraph 8A(1)(a) of that Act payable in respect of the 1993-94 year of income or any later year of income, where the payment is made on or after 1 July 1994.

(4) Part IIB of the amended Act (see item 11) applies to the crediting, applying or refunding of any income tax crediting amount where:


 

SCHEDULE 5—continued

(a)  the income tax crediting amount relates to income tax payable for the 1993-94 year of income or any later year of income; and

(b)  the crediting, applying or refunding takes place on or after 1 July 1994.

However, if interest would be payable under that Part in respect of any period before 1 July 1994, the interest is not payable in respect of that period.

(5) Subsection 9(1A) (see item 13) and section 11 (see item 20) of the amended Act apply to any decision made on or after 1 July 1994 in relation to an assessment in respect of income of any year of income.

Note:   Because of subitem (1), the amendment broadening the definition of "decision to which this Act applies" made by item 4 only applies from the 1993-94 year of income. Subsection 9(1 A) and section 11 of the amended Act will therefore apply not only to those decisions, but also to decisions covered by the narrower definition of the term for years of income before 1993-94.

(6) The amendments made by items 16 and 17 apply to interest that becomes payable on or after 1 July 1994 in respect of relevant tax that relates to the 1993-94 year of income or any later year of income.

(7) The amendment made by item 18 applies to interest in respect of periods beginning on or after 1 July 1994, or in respect of periods to the extent that they continue after 30 June 1994.

(8) Part IIIA of the amended Act (see item 22) applies to the remission, refund or crediting of an amount paid in relation to a tax, a debt, interest, an amount or an instalment payable for the 1993-94 year of income or for any later year of income, where the remission, refund or crediting takes place on or after 1 July 1994. However, if interest would be payable under that Part in respect of any period before 1 July 1994, the interest is not payable in respect of that period.

(9) Part IIIB (see item 22) and section 13 (see item 24) of the amended Act apply to interest that becomes payable on or after 1 July 1994.

(10) The amendments made by items 26 to 32, 37, 38 and 42 to 45 apply to interest payable in respect of periods beginning on or after 1 July 1994, or in respect of periods to the extent that they continue after 30 June 1994.

(11) The amendments made by items 33 and 34 apply to the calculation of the nominal interest component under the Superannuation Guarantee (Administration) Act 1992 in relation to an employer for any year (whether commencing before or after the commencement of this Schedule) in respect of any period that commences, or in respect of any period to the extent that it continues, after the commencement of this Schedule.


 

SCHEDULE 5—continued

(12) The amendments made by items 35 and 36 apply to the calculation of additional superannuation guarantee charge under the Superannuation Guarantee (Administration) Act 1992 in respect of any period that commences, or in respect of any period to the extent that it continues, after the commencement of this Schedule.

(13) In this item:

"amended Act" means the Taxation (Interest on Overpayments) Act 1983 as amended by this Schedule.

47. Transitional—Superannuation Guarantee (Administration) Act 1992

(1) For the purposes of:

(a)  calculating under subsection 31(1) of the Superannuation Guarantee (Administration) Act 1992 the nominal interest component in relation to an employer for any year commencing before the commencement of this Schedule; or

(b)  calculating under subsection 49(2) of that Act additional superannuation charge;

in respect of:

(c)  the period that:

(i)     commences on 1 July 1994; and

(ii)    ends immediately before the commencement of the first or only regulations made for the purposes of that subsection; or

(d)  any other period to the extent that it consists of or includes the period in paragraph (c);

the rate applicable under that subsection in respect of that period, or that period to that extent, is, and is taken always to have been, in spite of anything in that Act, 10% per annum.

(2) Subitem (1) does not have the effect of making a person liable to:

(a)  a penalty under Part 7 of the Superannuation Guarantee (Administration) Act 1992; or

(b)  a penalty for an offence under any other Act;

for any act or omission happening before the 28th day after the day on which this Schedule commences.

(3) Subitem (2) does not relieve a person from liability to a penalty of a kind mentioned in that subsection to the extent to which the liability would have existed if this item had not been enacted.

____________


 

                                                                  SCHEDULE 6                                                   Section 3

AMENDMENTS OF THE DEVELOPMENT ALLOWANCE AUTHORITY ACT 1992

1. Object

The object of this Schedule is to change, or introduce, signature requirements in respect of applications and reports to the Development Allowance Authority.

2. Subsection 28(3):

Omit the subsection.

3. After subsection 28(6):

Insert:

"(6A) The application and accompanying report must be signed by the applicant if the applicant is a natural person. If the applicant is not a natural person, they must be signed on behalf of the applicant by whichever of the following natural persons is applicable:

(a)  if the applicant is an incorporated body that has a board of directors (however described)—the chairperson (however described) of the board;

(b)  in any other case—the natural person designated by the form as the signatory.".

4. After subsection 37(5):

Insert:

"(5A) The application and accompanying report must be signed by the applicant if the applicant is a natural person. If the applicant is not a natural person, they must be signed on behalf of the applicant by whichever of the following natural persons is applicable:

(a)  if the applicant is an incorporated body that has a board of directors (however described)—the chairperson (however described) of the board;

(b)  in any other case—the natural person designated by the form as the signatory.".

5. Section 43:

Add at the end:

"(6) The application and accompanying report must be signed by the applicant if the applicant is a natural person. If the applicant is not a natural person, they must be signed on behalf of the applicant by whichever of the following natural persons is applicable:


 

SCHEDULE 6—continued

(a)  if the applicant is an incorporated body that has a board of directors (however described)—the chairperson (however described) of the board;

(b)  in any other case—the natural person designated by the form as the signatory.".

6. Section 50:

Add at the end:

"(5) The application and accompanying report must be signed by the applicant if the applicant is a natural person. If the applicant is not a natural person, they must be signed on behalf of the applicant by whichever of the following natural persons is applicable:

(a)  if the applicant is an incorporated body that has a board of directors (however described)—the chairperson (however described) of the board;

(b)  in any other case—the natural person designated by the form as the signatory.".

7. After subsection 60(5):

Insert:

"(5A) The application and accompanying report must be signed by the applicant if the applicant is a natural person. If the applicant is not a natural person, they must be signed on behalf of the applicant by whichever of the following natural persons is applicable:

(a)  if the applicant is an incorporated body that has a board of directors (however described)—the chairperson (however described) of the board;

(b)  in any other case—the natural person designated by the form as the signatory.".

8. Section 70:

Add at the end:

"(6) The application and accompanying report must be signed by the applicant if the applicant is a natural person. If the applicant is not a natural person, they must be signed on behalf of the applicant by whichever of the following natural persons is applicable:

(a)  if the applicant is an incorporated body that has a board of directors (however described)—the chairperson (however described) of the board;

(b)  in any other case—the natural person designated by the form as the signatory.".


 

SCHEDULE 6—continued

9. Application

The amendments made by this Schedule apply to applications, and reports accompanying applications, where the applications are made after the commencement of this Schedule.

 

NOTES ABOUT SECTION HEADINGS

1.     On the commencement of Part 3 of Schedule 1 of this Act, the heading to section 160ARXC of the Income Tax Assessment Act 1936 is altered by adding at the end "or different refunds".

2.     On the commencement of Part 4 of Schedule 1 of this Act, the heading to section 82AAQ of the Income Tax Assessment Act 1936 is altered by omitting "to taxpayer to be included in his assessable income" and substituting "to be included in recipient's assessable income".

[Minister's second reading speech made in—

House of Representatives on 14 November 1994

Senate on 5 December 1994]