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Taxation Laws Amendment Act 1986

Act No. 46 of 1986 as amended, taking into account amendments up to Act No. 75 of 2010
An Act to amend the law relating to taxation
Administered by: Treasury
Registered 13 Sep 2010
Start Date 29 Jun 2010
End Date 10 Dec 2015
Date of repeal 10 Dec 2015
Repealed by Amending Acts 1980 to 1989 Repeal Act 2015

Taxation Laws Amendment Act 1986

Act No. 46 of 1986 as amended

This compilation was prepared on 13 September 2010
taking into account amendments up to Act No. 75 of 2010

The text of any of those amendments not in force
on that date is appended in the Notes section

The operation of amendments that have been incorporated may be
affected by application provisions that are set out in the Notes section

Prepared by the Office of Legislative Drafting and Publishing,
Attorney-General’s Department, Canberra

  

  


TABLE OF PROVISIONS

 

PART I - PRELIMINARY 

Section

1. Short title [see Note 1]

2. Commencement [see Note 1]

PART II - AMENDMENTS OF THE INCOME TAX ASSESSMENT ACT 1936  

3. Principal Act 

4. Officers to observe secrecy 

5. Dividends 

6. Rebate on dividends 

7. Rebate on dividends paid as part of dividend stripping operation 

8. Rebate not allowable in certain circumstances 

9. Losses and outgoings 

10. Gifts, pensions, &c. 

11. Insertion of new Subdivision -

    Subdivision G - Limitation on deductions for interest on money borrowed

    to finance rental property investments

    82KZC. Interpretation

    82KZD. Limitation on deductions for rental property loan

           interest

    82KZE. Carry forward of excess rental property loan interest

    82KZF. Transfer of excess rental property loan interest within

           company group

    82KZG. Special provision relating to partnerships

    82KZH. Deemed acquisition of property

    82KZJ. When property acquired

12. Amendment of heading 

13. Interpretation 

14. Certain income transferred for short periods to be included in assessable income

    of transferor 

15. Insertion of new section -

    102CA. Consideration in respect of transfer to be included in

           assessable income of transferor in certain cases

16. Qualifying expenditure 

17. Interpretation 

18. Qualifying expenditure 

19. Insertion of new section -

    169A. Reliance by Commissioner on return

20. Amendment of assessments 

21. Insertion of new section -

    170AA. Payment of interest by taxpayer where assessment amended

22. Refunds of amounts overpaid 

23. Adjustment of tax after appeal 

24. Commissioner may collect tax from person owing money to taxpayer 

25. Application of amendments 

PART III - AMENDMENTS OF THE INCOME TAX (INTERNATIONAL AGREEMENTS) ACT

1953  

27. Principal Act 

28. Interpretation

29. Insertion of new section -

    11Q. Airline profits agreement with the People's Republic of China

30. Schedule 

PART IV - AMENDMENTS OF THE PAY-ROLL TAX (TERRITORIES) ASSESSMENT ACT

1971  

31. Principal Act 

32. Interpretation 

33. General exemption 

34. Refund or rebate of tax on annual adjustment 

35. Tax payable on annual basis 

36. Registration 

37. Insertion of new Part -

    PART IVA - GROUPING PROVISIONS

    21A. Interpretation

    21B. Grouping of corporations

    21C. Grouping where employees used in another business

    21D. Grouping of commonly controlled businesses

    21E. Smaller groups subsumed into larger groups

    21F. Exclusion of persons from groups

    21G. Designated group employer

    21H. Nominated deduction

    21J. Annual adjustments

    21K. Part-year adjustments

38. Time for payment of tax 

39. Assessments 

40. Regulations 

41. Application of amendments 

PART V - AMENDMENT OF THE TAXATION ADMINISTRATION ACT 1953  

42. Principal Act 

43. Interpretation 

PART VI - AMENDMENTS OF THE TAXATION (INTEREST ON OVERPAYMENTS) ACT

1983  

44. Principal Act 

45. Interpretation 

46. Amount of interest 

47. Application of amendments 

SCHEDULE

SCHEDULE TO BE ADDED AT END OF INCOME TAX (INTERNATIONAL AGREEMENTS) ACT 1953


TAXATION LAWS AMENDMENT ACT 1986No. 46, 1986 - LONG TITLE

 

                  An Act to amend the law relating to taxation

 

PART I - PRELIMINARY 

 

TAXATION LAWS AMENDMENT ACT 1986No. 46, 1986

- SECT 1

Short title [see Note 1]

 

  1. This Act may be cited as the Taxation Laws Amendment Act 1986.

 

TAXATION LAWS AMENDMENT ACT 1986No. 46, 1986

- SECT 2

Commencement [see Note 1]

 

  2. (1) Subject to this section, this Act shall come into operation on the

day on which it receives the Royal Assent.

  (2) Part IV shall come into operation on the first day of the month next

following the month in which this Act receives the Royal Assent.

  (3) Part V shall be deemed to have come into operation on 28 October 1985.

 

PART II - AMENDMENTS OF THE INCOME TAX ASSESSMENT ACT 1936

 

TAXATION LAWS AMENDMENT ACT 1986No. 46, 1986

- SECT 3

Principal Act

 

  3. The Income Tax Assessment Act 1936*1* is in this Part referred to as the

Principal Act.

*1* No. 27, 1936, as amended. For previous amendments, see No. 88, 1936; No.

5, 1937; No. 46, 1938; No. 30, 1939; Nos. 17 and 65, 1940; Nos. 58 and 69,

1941; Nos. 22 and 50, 1942; No. 10, 1943; Nos. 3 and 28, 1944; Nos. 4 and 37,

1945; No. 6, 1946; Nos. 11 and 63, 1947; No. 44, 1948; No. 66, 1949; No. 48,

1950; No. 44, 1951; Nos. 4, 28 and 90, 1952; Nos. 1, 28, 45 and 81, 1953; No.

43, 1954; Nos. 18 and 62, 1955; Nos. 25, 30 and 101, 1956; Nos. 39 and 65,

1957; No. 55, 1958; Nos. 12, 70 and 85, 1959; Nos. 17, 18, 58 and 108, 1960;

Nos. 17, 27 and 94, 1961; Nos. 39 and 98, 1962; Nos. 34 and 69, 1963; Nos. 46,

68, 110 and 115, 1964; Nos. 33, 103 and 143, 1965; Nos. 50 and 83, 1966; Nos.

19, 38, 76 and 85, 1967; Nos. 4, 60, 70, 87 and 148, 1968; Nos. 18, 93 and

101, 1969; No. 87, 1970; Nos. 6, 54 and 93, 1971; Nos. 5, 46, 47, 65 and 85,

1972; Nos. 51, 52, 53, 164 and 165, 1973; No. 216, 1973 (as amended by No. 20,

1974); Nos. 26 and 126, 1974; Nos. 80 and 117, 1975; Nos. 50, 53, 56, 98, 143,

165 and 205, 1976; Nos. 57, 126 and 127, 1977; Nos. 36, 57, 87, 90, 123, 171

and 172, 1978; Nos. 12, 19, 27, 43, 62, 146, 147 and 149, 1979; Nos. 19, 24,

57, 58, 124, 133, 134 and 159, 1980; Nos. 61, 92, 108, 109, 110, 111, 154 and

175, 1981; Nos. 29, 38, 39, 76, 80, 106 and 123, 1982; Nos. 14, 25, 39, 49,

51, 54 and 103, 1983; Nos. 14, 42, 47, 63, 76, 115, 124, 165 and 174, 1984;

No. 123, 1984 (as amended by No. 65, 1985); Nos. 47, 49, 104, 123, 129, 168,

173 and 174, 1985; and No. 41, 1986.

 

TAXATION LAWS AMENDMENT ACT 1986No. 46, 1986

- SECT 4

Officers to observe secrecy

 

  4. Section 16 of the Principal Act is amended by omitting from sub-paragraph

(4FB) (c) (i) "on" and substituting "or".

 

TAXATION LAWS AMENDMENT ACT 1986No. 46, 1986

- SECT 5

Dividends

 

  5. Section 44 of the Principal Act is amended by omitting sub-section (2e).

 

TAXATION LAWS AMENDMENT ACT 1986No. 46, 1986

- SECT 6

Rebate on dividends

 

  6. Section 46 of the Principal Act is amended by omitting sub-section (5).

 

TAXATION LAWS AMENDMENT ACT 1986No. 46, 1986

- SECT 7

Rebate on dividends paid as part of dividend stripping operation

 

  7. Section 46a of the Principal Act is amended by omitting paragraph (14)

        (a).

 

TAXATION LAWS AMENDMENT ACT 1986No. 46, 1986

- SECT 8

Rebate not allowable in certain circumstances

 

  8. Section 46b of the Principal Act is amended by omitting sub-section (9)

and substituting the following sub-section:

  "(9) Notwithstanding anything in any other provision of this Act, the

Commissioner may at any time amend an assessment for the purpose of taking

into account an acquisition of shares or a beneficial interest in a trust

estate by a person that, by virtue of sub-section (4), is deemed to have taken

place before the end of the year of income to which the assessment relates,

but nothing in this sub-section limits the power of the Commissioner to amend

an assessment in accordance with any other provision of this Act.".

 

TAXATION LAWS AMENDMENT ACT 1986No. 46, 1986

- SECT 9

Losses and outgoings

 

  9. Section 51 of the Principal Act is amended by adding at the end the

following sub-section:

  "(5) A deduction is not allowable under sub-section (1) in respect of an

amount of interest payable under section 170aa.".

 

TAXATION LAWS AMENDMENT ACT 1986No. 46, 1986

- SECT 10

Gifts, pensions, &c.

 

  10. Section 78 of the Principal Act is amended by inserting after

sub-paragraph (1) (a) (lxxxiii) the following sub-paragraph:

  "; (lxxxiv) the Australian Sports Aid Foundation,".

 

TAXATION LAWS AMENDMENT ACT 1986No. 46, 1986

- SECT 11

 

  11. After section 82KZB of the Principal Act the following Subdivision is

inserted in Division 3 of Part III:

"Subdivision G-Limitation on deductions for interest on money borrowed to

                      finance rental property investments

Interpretation

  "82KZC. (1) In this Subdivision, unless the contrary intention appears-

  'commencement date' means 17 July 1985;

  'company title interest', in relation to land, means a right of occupancy of

the land, or of a building or part of a building erected on the land, arising

by virtue of the holding of shares, or by virtue of a contract to purchase

shares, in a company that owns the land or building;

  'eligible rental property deductions', in relation to the taxpayer in

relation to a year of income, means-

     (a)  deductions allowed or allowable to the taxpayer in the year of

income

that relate exclusively to rental property income of the taxpayer;

     (b)  rental property partnership deductions allowed or allowable to the

taxpayer in the year of income; and

     (c)  so much of any other deductions allowed or allowable to the taxpayer

in the year of income as, in the opinion of the Commissioner, may

appropriately be related to rental property income of the taxpayer,

    but does not include-

     (d)  deductions allowed or allowable, or that would, but for this

Subdivision, be allowed or allowable, to the taxpayer in the year of income

under section 51 in respect of rental property loan interest; or

     (e)  deductions allowed or allowable to the taxpayer in the year of income

under Division 10C or 10D;

  'exempt residential land', in relation to a person, means land that is used

by the person for the provision of residential accommodation as mentioned in-

     (a)  paragraph (a) of the definition of 'housing and welfare' in

sub-section 122 (1);

     (b)  paragraph 124AA (2) (c); or

     (c)  paragraph 124JA (1) (a);

  'improvement', in relation to land, includes the construction or extension

of, or the making of an alteration, improvement or addition to, a building or

other structure on the land;

  'interest', in relation to borrowed money, includes a payment in the nature

of interest;

  'interest', in relation to land, means-

     (a)  a legal or equitable estate or interest (including a leasehold

interest) in the land;

     (b)  a company title interest in the land; or

     (c)  a right to receive income from the land,

    but, except in the definitions of 'majority underlying interests', 'net

value' and 'underlying interest', sub-sections (6) and (8) and sections 82KZH

and 82KZJ, does not include-

     (d)  a beneficial interest of a beneficiary of a trust estate; or

     (e)  an interest of a partner in partnership property;

  'interest in a partnership' includes an interest in a partnership held

otherwise than as a partner;

  'lease' includes sub-lease and, in relation to a company title interest in

land, includes an agreement similar to a lease or sub-lease;

  'loan' includes the provision of credit or any other form of financial

accommodation and 'borrowed' has a corresponding meaning;

  'majority underlying interests', in relation to property, means more than

one-half of-

     (a)  the beneficial interests held by natural persons (whether directly or

through one or more interposed companies, partnerships or trusts) in the

property; and

     (b)  the beneficial interests held by natural persons (whether directly or

through one or more interposed companies, partnerships or trusts) in any

income that may be derived from the property;

  'natural person' does not include a natural person in the capacity of trustee;

  'net rental value', in relation to an interest in land that is used at the

end of a year of income for rent producing purposes, means so much of the net

value of the interest as the Commissioner considers appropriate having regard

to the extent to which the land was so used at the end of the year of income;

  'net value', in relation to an interest held by a person in land, means the

value of the interest as reduced by so much of the liabilities of the person

or of any interposed company, partnership or trust that holds an interest in

the land as, in the opinion of the Commissioner, may appropriately be related

to that first-mentioned interest;

  'net worth', in relation to a company, partnership or trust estate, means

the total value of the assets of the company, partnership or trust estate as

reduced by the total liabilities of the company, partnership or trust estate;

  'partner's portion', in relation to an amount (in this definition referred

to as the 'full amount') in relation to a partner in relation to a year of

income, means-

     (a)  so much of the full amount as the partners have agreed is to be

allocated to that partner; or

     (b)  if the partners have not agreed as to the part of the full amount

that is to be allocated to that partner, the amount

 calculated in accordance with the formula AB , where-

        A  is the full amount;

        B  is the individual interest of that partner in the net income of the

partnership of the year of income or in the partnership loss for the year of

income, as the case requires; and

        C  is the net income of the partnership of the year of income or the

partnership loss for the year of income, as the case requires;

  'post commencement date improvement', in relation to land, means an

improvement to the land (whether or not any expenditure was incurred in making

the improvement) except where-

     (a)  the making of the improvement commenced on or before the commencement

date;

     (b)  the improvement was made pursuant to a contract entered into on or

before the commencement date; or

     (c)  the following conditions are satisfied:

         (i) money was borrowed and used by a person to make the improvement;

        (ii) all money so borrowed and used was borrowed under a contract or

contracts entered into on or before the commencement date;

        (iii) the person-

           (A) held an interest in the land at the end of the commencement

date; or

           (B) acquired an interest in the land after the commencement date

under a contract entered into on or before the commencement date;

  'rent' means any payment (in this definition referred to as a 'rental

payment') made by a lessee under a lease and includes a payment (whether made

by a lessee or another person) in the nature of a rental payment;

  'rental property company equity investment', in relation to the taxpayer in

relation to a year of income, means a share held by the taxpayer at any time

during the year of income in a company that is a rental property company in

relation to the year of income;

  'rental property company security investment', in relation to the taxpayer

in relation to a year of income, means a security of a company held by the

taxpayer at any time during the year of income, being a security of a company

that is a rental property company in relation to the year of income;

  'rental property income', in relation to the taxpayer in relation to a year

of income, means-

     (a)  any assessable income derived by the taxpayer in the year of income

by way of rent in respect of land (other than exempt residential land) where-

         (i) the taxpayer acquired an interest in the land after the

commencement date; or

        (ii) the taxpayer or another person made a post commencement date

improvement to the land;

     (b)  any amount included in the assessable income of the taxpayer of the

year of income under sub-section 25 (1) or section 25A or 26AAA in respect of

the sale of an interest in land that was used by the taxpayer at any time for

rent producing purposes where-

         (i) the taxpayer acquired an interest in the land after the

commencement date; or

        (ii) the taxpayer or another person made a post commencement date

improvement to the land;

     (c)  any amount included in the assessable income of the taxpayer of the

year of income in respect of a dividend paid to the taxpayer in respect of a

rental property company equity investment acquired by the taxpayer after the

commencement date;

     (d)  any amount included in the assessable income of the taxpayer of the

year of income in respect of a rental property partnership equity investment

of the taxpayer acquired by the taxpayer after the commencement date;

     (e)  in a case where-

         (i) a deduction is allowable to a rental property partnership in the

year of income under Division 10C or 10D;

        (ii) the taxpayer is a partner in the partnership;

        (iii) the taxpayer became a partner after the commencement date; and

        (iv) the amount (if any) included in the assessable income of the

taxpayer of the year of income under section 92 is less than the amount that

would have been so included in that assessable income if no deduction had been

allowable as mentioned in sub-paragraph (i),

       the amount of the deficiency referred to in sub-paragraph (iv);

     (f)  any amount included in the assessable income of the taxpayer of the

year of income under section 97 or 100 in respect of a rental property trust

estate equity investment acquired by the taxpayer after the commencement date;

     (g)  any amount included in the assessable income of the taxpayer of the

year of income in respect of a unit trust dividend in respect of a rental

property trust estate equity investment of the taxpayer acquired by the

taxpayer after the commencement date;

     (h)  any amount included in the assessable income of the taxpayer of the

year of income under sub-section 25 (1) or section 25A or 26AAA in respect of

the sale of-

         (i) a share in a company acquired by the taxpayer after the

commencement date where the company is a rental property company in relation to-

           (a) the year of income; or

           (b) a preceding year of income, being a year of income during the

whole or any part of which the share was held by the taxpayer;

        (ii) an interest in a partnership acquired by the taxpayer after the

commencement date where the partnership is a rental property partnership in

relation to-

           (a) the year of income; or

           (b) a preceding year of income, being a year of income during the

whole or any part of which the interest was held by the taxpayer; or

        (iii) an interest in a trust estate  acquired by the taxpayer after the

commencement date where the trust estate is a rental property trust estate in

relation to-

           (a) the year of income; or

           (b) a preceding year of income, being a year of income during the

whole or any part of which the interest was held by the taxpayer;

     (j)  any assessable income derived by the taxpayer in the year of income

by way of interest under-

         (i) a rental property company security investment;

        (ii) a rental property partnership security investment; or

        (iii) a rental property trust estate security investment,

       acquired by the taxpayer after the commencement date;

     (k)  any amount (not being an amount to which paragraph 26 (e) applies)

included in the assessable income of the taxpayer of the year of income being

an amount received by way of insurance, indemnity, recoupment, recovery or

reimbursement for or in respect of any loss or outgoing which is an eligible

rental property deduction;

     (m)  any amount included in the assessable income of the taxpayer of the

year of income under sub-section 63 (3) in respect of a debt that has been

brought to account as rental property income; and

     (n)  so much of any amount included in the assessable income of the

taxpayer of the year of income under sub-section 59 (2) or (2C) in respect of

the disposal, loss or destruction of property any depreciation of which is or

was an eligible rental property deduction as, in the opinion of the

Commissioner, may appropriately be related to the use of the property for the

purpose of producing rental property income of the taxpayer;

  'rental property loan interest', in relation to the taxpayer in relation to

a year of income, means-

     (a)  interest incurred by the taxpayer in the year of income to the extent

to which it is incurred-

         (i) in respect of money borrowed and used by the taxpayer to acquire

an interest in land, being an interest acquired after the commencement date; and

        (ii) in respect of the use of the land by the taxpayer for rent

producing purposes;

     (b)  interest incurred by the taxpayer in the year of income to the extent

to which it is incurred-

         (i) in respect of money borrowed and used by the taxpayer to make a

post commencement date improvement to land; and

        (ii) in respect of the use of the land by the taxpayer for rent

producing purposes;

     (c)  interest incurred by the taxpayer in the year of income to the extent

to which it is incurred-

         (i) in respect of money borrowed and used by the taxpayer-

           (A) to acquire a share in a company after the commencement date;

           (B) to acquire a security of a company after the commencement date;

or

           (C) to pay a call made after the commencement date in respect of a

share in a company, being a share acquired by the taxpayer after the

commencement date; and

        (ii) in respect of a time when the company is a rental property company;

     (d)  interest incurred by the taxpayer in the year of income to the extent

to which it is incurred-

         (i) in respect of money borrowed and used by the taxpayer-

            (A) to acquire an interest in a partnership after the commencement

date; or

           (B) to acquire a security of a partnership after the commencement

date; and

        (ii) in respect of a time when the partnership is a rental property

partnership; and

     (e)  interest incurred by the taxpayer in the year of income to the extent

to which it is incurred-

         (i) in respect of money borrowed and used by the taxpayer-

           (A) to acquire a beneficial interest in a trust estate after the

commencement date; or

           (B) to acquire a security of a trust estate after the commencement

date; and

        (ii) in respect of a time when the trust estate is a rental property

trust estate,

   being interest in respect of which a deduction would, but for this

Subdivision, be allowable to the taxpayer under section 51;

  'rental property partnership deduction', in relation to the taxpayer in

relation to a year of income, means-

     (a)  where paragraph (b) does not apply-any deduction allowable to the

taxpayer in the year of income under section 92 in respect of a partnership

loss incurred by a rental property partnership in which the taxpayer became a

partner after the commencement date; or

     (b)  where-

         (i)  a deduction is allowable to the taxpayer in the year of income

under section 92 in respect of a partnership loss incurred by a rental

property partnership in which the taxpayer became a partner after the

commencement date; and

        (ii)  deductions were allowed to the partnership in the year of

income

under Division 10C or 10D,

       the amount (if any) that would have been allowable as a deduction to the

taxpayer under section 92 if no deduction had been allowed to the partnership

under those Divisions;

  'rental property partnership equity investment', in relation to the taxpayer

in relation to a year of income, means an interest held by the taxpayer at any

time during the year of income in a partnership that is a rental property

partnership in relation to the year of income;

  'rental property partnership security investment', in relation to the

taxpayer in relation to a year of income, means a security of a partnership

held by the taxpayer at any time during the year of income, being a security

of a partnership that is a rental property partnership in relation to the year

of income;

  "(6) Subject to sub-section (7), a company, partnership or trust estate

shall be taken, for the purposes of this Subdivision, to be a rental property

company, rental property partnership or rental property trust estate, as the

case may be, in relation to a year of income, if-

  (a)  at the end of the year of income, the company, partnership or the

trustee of the trust estate held (whether through one or more interposed

companies, partnerships or trusts or otherwise) an interest or interests in

one or more parcels of land that, at the end of the year of income, was used

(whether or not by the first-mentioned company, partnership or trustee) for

rent producing purposes; and

  (b)  at the end of the year of income, the net rental value of the interest,

or the aggregate of the net rental values of the interests, is not less than

75% of the net worth of the first-mentioned company, partnership or trust

estate.

  "(7) Where-

  (a)  at any time (in this sub-section referred to as the 'disposal time')

during a year of income (in this sub-section referred to as the 'current year

of income'), the taxpayer disposed of a share in, or security of, a company;

  (b)  if the current year of income had ended immediately before the disposal

time, the company would not be taken, for the purposes of this Subdivision, to

be a rental property company in relation to the current year of income;

  (c)  the taxpayer did not, after the disposal time and during the current

year of income, hold any share in, or security of, the company; and

  (d)  having regard to the purpose or object underlying this Subdivision, it

would be reasonable for this Subdivision to apply in relation to the taxpayer

as if the company were not a rental property company in relation to the

current year of income, for the purposes of the application of this

Subdivision in relation to the taxpayer in relation to the current year of

income or any other year of income, the company shall not be taken to be a

rental property company in relation to the current year of income.

  "(8) In calculating for the purposes of this Subdivision the net worth of a

company, partnership or trust estate, or the net value of an interest held by

a person in land, the Commissioner shall, if the Commissioner is satisfied

that anything was done for the purpose, or for purposes that included the

purpose, of ensuring that section 82KZD would not apply in relation to the

taxpayer, disregard the doing of that thing.

Limitation on deductions for rental property loan interest

  "82KZD. (1) A deduction is not allowable to the taxpayer under section 51 in

a year of income in respect of rental property loan interest incurred after

the commencement date unless the rental property income derived by the

taxpayer during the year of income exceeds the eligible rental property

deductions of the taxpayer in relation to the year of income.

  "(2) Where the rental property income derived by the taxpayer during a year

of income exceeds the eligible rental property deductions of the taxpayer in

relation to the year of income (which excess is in this sub-section referred

to as the 'interest deduction limit')-

  (a)  the amount, or the total of the amounts, of the deduction or deductions

allowable to the taxpayer under section 51 in the year of income in respect of

rental property loan interest incurred after the commencement date shall not

exceed the interest deduction limit; and

  (b)  where the total of the amounts of 2 or more deductions that would be so

allowable but for this sub-section exceeds the interest deduction limit, those

deductions shall be reduced respectively by amounts proportionate to those

deductions and equal in total to the last-mentioned excess.

Carry forward of excess rental property loan interest

  "82KZE. Where the rental property loan interest of the taxpayer in relation

to a year of income exceeds the amount (if any) of the deduction allowable to

the taxpayer under section 51 in the year of income in respect of that rental

property loan interest, the excess amount shall, for the purposes of section

51 and this Subdivision, be deemed to have been incurred by the taxpayer at

the beginning of the next succeeding year of income.

Transfer of excess rental property loan interest within company group

  "82KZF. (1) Where-

  (a)  the rental property loan interest of a resident company (in this

section referred to as the 'transferor') in relation to a year of income

exceeds the amount (if any) of the deduction allowable to the transferor under

section 51 in the year of income in respect of that rental property loan

interest; and

  (b)  the transferor and another resident company (in this section referred

to as the 'transferee') that is a group company in relation to the transferor

in relation to the year of income give to the Commissioner, on or before the

date of lodgment of the return of income of the transferor for the year of

income or within such further time as the Commissioner allows, a notice in

writing signed by the public officer of each of the companies stating that the

whole or a specified part of the excess referred to in paragraph (a) should be

transferred to the transferee, the amount to which the notice relates shall be

deemed, for the purposes of section 51 and this Subdivision-

  (c)  to be rental property loan interest incurred by the transferee-

      (i)  in a case where the year of income is the transitional year of

income-in that year of income and immediately after the commencement date;

and

     (ii)  in any other case-at the beginning of the year of income,

    in gaining or producing assessable income; and

  (d)  not to have been incurred by the transferor.

  "(2) For the purposes of this section, a company shall be taken to be a

group company in relation to another company in relation to a year of income

if the company is a group company in relation to that other company in

relation to the year of income for the purposes of section 80G.

  "(3) A notice under paragraph (1) (b) purporting to transfer an amount

specified in the notice to a transferee in relation to a year of income has no

effect to the extent that the sum of-

  (a)  the amount so specified; and

  (b)  any amounts specified in notices previously given under paragraph (1)

        (b) by any transferor and deemed by sub-section (1) to be rental property loan

interest incurred by the transferee in the year of income, exceeds the amount

by which the rental property income of the transferee of that year of income

exceeds the sum of-

  (c)  the eligible rental property deductions of the transferee in relation

to the year of income; and

  (d)  the rental property loan interest of the transferee in relation to the

year of income (other than amounts deemed by sub-section (1) to be rental

property loan interest incurred by the transferee in the year of income).

  "(4) A notice by the transferor under paragraph (1) (b) in relation to a

year of income has no effect if the sum of-

  (a)  the amount specified in the notice under that paragraph; and

  (b)  any amounts specified in notices previously given under that paragraph

by the transferor and deemed by sub-section (1) to be rental property loan

interest incurred by any transferee in the year of income, exceeds the amount

of the excess referred to in paragraph (1) (a) in relation to the transferor

in relation to the year of income.

  "(5) Where-

  (a)  the whole or a part of an excess is transferred to the transferee

pursuant to sub-section (1); and

  (b)  that excess, or a part of that excess, was not available to be

transferred by the transferor, nothing in section 170 prevents the amendment

of an assessment in respect of the transferee to disallow the whole or a part

of a deduction in respect of the excess or part, as the case may be.

Special provision relating to partnerships

  "82KZG. Section 82KZE does not apply in relation to a taxpayer being a

partnership but, where the rental property loan interest of the partnership in

relation to a year of income exceeds the amount (if any) of the deduction

allowable to the partnership under section 51 in relation to the year of

income in respect of that rental property loan interest, each partner in the

partnership shall be deemed, for the purposes of section 51 and this

Subdivision, to have incurred-

  (a)  in a case where the year of income is the transitional year of

income-in that year of income and immediately after the commencement date;

and

  (b)  in any other case-at the beginning of the year of income, in gaining or

producing assessable income, rental property loan interest equal to the

partner's portion of the excess.

Deemed acquisition of property

  "82KZH. Subject to section 82KZJ, where, for any reason, including-

  (a) the formation or dissolution of a partnership; or

  (b) a variation in the constitution of a partnership, or in the interests of

the partners, a change has occurred in the ownership of, or in the interests

of persons in, property and the person, or one or more of the persons, who

owned the property before the change, has or have an interest in the property

after the change, this Subdivision applies as if the person or persons who

owned the property before the change had, on the day on which the change

occurred, disposed of the whole of the property to the person, or all the

persons, by whom the property is owned after the change.

When property acquired

  "82KZJ. (1) For the purposes of the application of this Subdivision in

relation to the taxpayer in relation to an eligible year of income, property

acquired by the taxpayer on or before the commencement date and held by the

taxpayer during the whole or a part of the eligible period shall be deemed to

have been acquired by the taxpayer after the commencement date unless the

Commissioner is satisfied, or considers it reasonable to assume, that, at all

times during the eligible period when the property was held by the taxpayer,

majority underlying interests in the property were held by natural persons

who, immediately before the transitional date, held majority underlying

interests in the property.

  "(2) For the purposes of this Subdivision, but subject to sub-section (1),

where, by reason of-

  (a)  the formation or dissolution of a partnership; or

  (b)  a variation in the constitution of a partnership, or in the interests

of the partners, property is deemed by section 82KZH to have been acquired by

the taxpayer after the commencement date and before the transitional date, the

property shall be deemed to have been acquired by the taxpayer before the

commencement date if the Commissioner is satisfied that-

  (c)  immediately after the property was acquired by the taxpayer, an

underlying interest in the property was held by a natural person who held an

underlying interest in the property at the end of the commencement date; and

  (d)  the person or persons from whom the taxpayer acquired the property

acquired the property on or before the commencement date.

  "(3) For the purposes of this Subdivision, but subject to sub-section (1),

where, in a case to which sub-section (2) does not apply, property is acquired

by the taxpayer after the commencement date and before the transitional date

by reason of the death of another person, the property shall be deemed to have

been acquired by the taxpayer at the time when it was acquired by the deceased

person.

  "(4) For the purposes of this Subdivision but subject to sub-section (1),

property acquired by the taxpayer on or after the transitional date shall be

deemed to have been acquired by the taxpayer before the commencement date if-

  (a)  the Commissioner is satisfied that-

       (i)  immediately after the property was acquired by the taxpayer,

majority underlying interests in the property were held by natural persons

who, immediately before the transitional date, held majority underlying

interests in the property; and

      (ii)  the person or persons from whom the taxpayer acquired the property

acquired the property on or before the commencement date;

  (b)  where the person or persons from whom the taxpayer acquired the

property did not borrow and use money to acquire the property-the taxpayer did

not borrow and use money to acquire the property; and

  (c)  where the person or persons from whom the taxpayer acquired the

property borrowed and used money to acquire the property-the amount of that

borrowed money outstanding immediately before the acquisition of the property

by the taxpayer was not less than the amount (if any) borrowed and used by the

taxpayer to acquire the property.

  "(5) For the purposes of this section, where, by reason of the death of a

person, a natural person acquires a percentage (in this sub-section referred

to as the 'acquired percentage') of the total underlying interests in

property, the natural person shall be deemed to have held (in addition to any

other part of the total underlying interests that the person held or is deemed

to have held), at any time when the deceased person held a percentage (in this

sub-section referred to as the 'deceased person's percentage') of the total

underlying interests in the property, a percentage of the total underlying

interests in the property equal to the acquired percentage, or the deceased

person's percentage at that time, whichever is the less.

  "(6) For the purposes of the application of this section in relation to a

year of income, 'eligible period' means the period commencing on the

transitional date and ending at the end of the year of income.

  "(7) In this section, 'eligible year of income' means the year of income in

which the transitional date occurred or a subsequent year of income.".

 

TAXATION LAWS AMENDMENT ACT 1986No. 46, 1986

- SECT 12

Amendment of heading

 

  12. The heading to Division 6A of Part III of the Principal Act is amended

by omitting "for Short Periods".

 

TAXATION LAWS AMENDMENT ACT 1986No. 46, 1986

- SECT 13

Interpretation

 

  13. Section 102A of the Principal Act is amended-

  (a)  by inserting before the definition of "interest" in sub-section (1) the

following definition:

     " 'associate', in relation to a person, means any person who is an

associate, within the meaning of sub-section 26AAB (14), in relation to the

person;"; and

  (b)  by adding at the end the following sub-section:

     "(6) In this Division, unless the contrary intention appears-

     (a)  a reference to the arm's length consideration in respect of a

transfer of a right to receive income from property is a reference to the

consideration that might reasonably be expected to have been received or

receivable in respect of the transfer if the right had been transferred under

an agreement between independent parties dealing at arm's length with each

other in relation to the agreement and transfer; and

     (b)  a reference to the amount of consideration is, in a case where

consideration is paid or given otherwise than in cash, a reference to the

money value of the consideration.".

 

TAXATION LAWS AMENDMENT ACT 1986No. 46, 1986

- SECT 14

Certain income transferred for short periods to be included in assessable

income of transferor

 

  14. Section 102B of the Principal Act is amended-

  (a)  by omitting sub-sections (1), (2) and (3) and substituting the

following sub-sections:

     "(1) Subject to this section, where a right to receive income from

property is transferred, otherwise than by a will or codicil, by a person (in

this sub-section referred to as the 'transferor') to an associate of the

transferor for a period that will, or may for any reason other than the death

of any person or the associate becoming under a legal disability, terminate

before the prescribed date, any income that-

     (a)  is derived from the property;

     (b)  is paid to, or applied or accumulated for the benefit of-

         (i)  the associate; or

        (ii)  any other associate of the transferor to whom a right to receive

income from the property has been transferred (whether by the first-mentioned

associate or any other person) after the first-mentioned transfer; and

     (c)  would, if the first-mentioned transfer had not been made, have been

included in the assessable income of the transferor,

    shall be treated for the purposes of this Act as if the first-mentioned

transfer had not been made.

     "(2) Sub-section (1) (other than sub-paragraph (1) (b) (ii)) does not

apply in relation to a transfer of a right to receive income from property

where-

     (a)  the right was not a right that arose from the ownership by the

transferor of an interest in the property;

     (b)  the right arose from the ownership by the transferor of an interest

in the property and, before or at the time of the first-mentioned transfer,

the transferor transferred that interest to the transferee or another person;

or

     (c) consideration has been received or is receivable in respect of the

transfer and the amount of that consideration is not less than the arm's

length consideration in respect of the transfer.

     "(3) Where, on a particular day, a person who has transferred to another

person a right to receive income from property-

     (a)  in any case-transfers to the other person or to a third person an

interest in the property, being the interest from the ownership of which by

the transferor the right arose;

     (b)  in the case of a natural person-dies; or

     (c)  in the case of a company-ceases to exist,

    sub-section (1) (other than sub-paragraph (1) (b) (ii)) does not apply, in

relation to the transfer of the right to receive income, in relation to income

that is derived from the property after that day.";

  (b)  by omitting from sub-section (4) "This section does not apply to" and

substituting "Sub-section (1) does not apply in relation to"; and

  (c)  by inserting after sub-section (4) the following sub-section:

     "(4A) Where-

     (a)  sub-section (1) (other than sub-paragraph (1) (b) (ii)) applies in

relation to a transfer by a person of a right to receive income from property;

and

     (b)  consideration has been received or is receivable in respect of the

transfer,

    then, notwithstanding any other provision of this Act (other than a

provision of Part IVa), the amount of the consideration shall not be included

in the assessable income of the person of a year of income.".

 

TAXATION LAWS AMENDMENT ACT 1986No. 46, 1986

- SECT 15

 

  15. After section 102c of the Principal Act the following section is

inserted in Division 6A of Part III:

Consideration in respect of transfer to be included in assessable income of

transferor in certain cases

  "102ca. (1) Subject to this section, where-

  (a)  a right to receive income from property is transferred, otherwise than

by a will or codicil, by a person to another person;

  (b)  consideration has been received or is receivable in respect of the

transfer; and

  (c)  immediately after the transfer, sub-section 102B (1) (other than

sub-paragraph 102B (1) (b) (ii))  does not apply in relation to the transfer,

the assessable income of the transferor of the year of income in which the

right is transferred shall include the amount of the consideration.

  "(2) Sub-section (1) does not apply in relation to a transfer of a right to

receive income from property where-

  (a)  the right was not a right that arose from the ownership by the

transferor of an interest in the property; or

  (b)  the right arose from the ownership by the transferor of an interest in

the property and, before or at the time of the first-mentioned transfer, the

transferor transferred that interest to the transferee.

  "(3) Where, by reason of the proviso to paragraph 23 (l), income derived by

a person pursuant to a transfer to the person of a right to receive income

from property is not exempt from tax under that paragraph, sub-section (1)

does not apply in relation to the transfer.".

 

TAXATION LAWS AMENDMENT ACT 1986No. 46, 1986

- SECT 16

Qualifying expenditure

 

  16. Section 124ZB of the Principal Act is amended by inserting in paragraphs

(1) (c) and (2) (b) "and before 18 July 1985" after "21 August 1979".

 

TAXATION LAWS AMENDMENT ACT 1986No. 46, 1986

- SECT 17

Interpretation

 

  17. Section 124ZF of the Principal Act is amended-

  (a)  by inserting before the definition of "construct" in sub-section (1)

the following definitions:

     " 'agreement' means any agreement, arrangement or understanding-

        (a)  whether formal or informal or partly formal and partly informal;

        (b)  whether written or oral or partly written and partly oral; and

        (c)  whether or not having legal or equitable force and whether or not

based on legal or equitable rights;

     'associate', in relation to a person, means-

        (a)  in a case where the person is a private company in relation to the

year of income concerned-a director or member of the company, or a spouse,

parent or child of such a director or member;

        (b)  in a case where the person is a partnership-a partner in the

partnership, or a spouse, parent or child of such a partner;

        (c)  in a case where the person is a trustee of a private trust

estate-another trustee, or a beneficiary, of the trust estate, or a spouse,

parent or child of a trustee or beneficiary of the trust estate; or

        (d)  in a case where the person is a natural person-a spouse, parent or

child of the person;";

  (b)  by inserting after the definition of "eligible building" in sub-section

(1) the following definitions:

     " 'parent', in relation to a person, means a person of whom the

first-mentioned person is a child;

      'private trust estate' has the same meaning as that expression has in

section 26AAA;";

  (c)  by omitting from the definition of "residential accommodation" in

sub-section (1) "nature." and substituting "nature;";

  (d)  by adding at the end of sub-section (1) the following definition:

     " 'spouse', in relation to a person, includes another person who,

although

not legally married to the first-mentioned person, lives with the

first-mentioned person as the husband or wife of the first-mentioned person on

a bona fide domestic basis.";

  (e)  by inserting after sub-section (1) the following sub-sections:

     "(1a) For the purposes of this Division, an agreement to which a person

and an associate of the person are parties is an exempt agreement if, and only

if, the Commissioner is satisfied, having regard to all the relevant

circumstances, that-

     (a)  the parties to the agreement could reasonably be expected to have

entered into the agreement if those parties had been independent parties each

of whom was, in relation to the agreement, dealing at arm's length with each

of the others; and

     (b)  none of the parties to the agreement entered into the agreement for

the purpose of obtaining a deduction under this Division.

     "(1b) Without limiting the generality of paragraph (1a) (b), a person

shall be taken, for the purposes of that paragraph, to have entered into an

agreement for a particular purpose if-

     (a)  the person entered into the agreement for purposes including that

purpose; and

     (b)  that purpose was not merely an incidental purpose of the entering

into, by the person, of the agreement.";

  (f)  by omitting sub-section (4) and substituting the following sub-sections:

     "(4) For the purposes of the application of this Division in determining

the amount of any deduction allowable under section 124ZH or 124ZK, or the

amount of the residual capital expenditure, in respect of an amount of

qualifying expenditure in respect of a building (in this sub-section referred

to as the 'relevant building'), a person shall not be taken to have used, at a

particular time, property, being the whole or a part of the prescribed part,

or of a part of the prescribed part, of the relevant building, for the purpose

of producing assessable income, if, at that time-

     (a)  in a case where the building, or the extension, alteration or

improvement, in respect of the construction of which the amount of qualifying

expenditure was incurred commenced to be constructed before 18 July 1985-the

property-

         (i)  was used or available for use (whether by that person or by

another person or other persons) wholly or principally for, or in association

with, residential accommodation; or

        (ii)  was used or for use (whether by that person or by another person

or other persons) wholly or principally for exhibition or display in

connection with-

           (A) the sale of the whole or any part of the relevant building or

any other building; or

           (B) the lease of the whole or any part of the relevant building or

any other building for use (whether by that person or by another person or

other persons) wholly or principally for, or in association with, residential

accommodation; or

     (b)  in any other case-the property was used or for use (whether by that

person or by another person or other persons) wholly or principally for

exhibition or display in connection with the sale of the whole or any part of

the relevant building or any other building.

     "(4a)  Where-

     (a)  there is an amount of qualifying expenditure in respect of a

building

(in this sub-section referred to as the 'relevant building');

     (b)  the building, or the extension, alteration or improvement, in respect

of the construction of which the amount of qualifying expenditure was incurred

commenced to be constructed on or after 18 July 1985; and

     (c)  at a particular time, property, being the whole or a part of the

prescribed part, or of a part of the prescribed part, of the relevant building-

         (i)  was used or for use by a person (in this sub-section referred to

as the 'relevant person') wholly or principally for, or in association with,

residential accommodation; or

        (ii)  was, pursuant to an agreement (other than an exempt agreement) to

which a person (in this sub-section also referred to as the 'relevant person')

and an associate of the relevant person were parties, used or for use by the

associate wholly or principally for, or in association with, residential

accommodation,

    then, for the purposes of the application of this Division (other than this

sub-section) in determining the amount of any deduction allowable under

section 124ZH or 124ZK, or the amount of the residual capital expenditure, in

respect of the amount of qualifying expenditure, use by the relevant person at

that time of the whole or a part of the property for the purpose of producing

assessable income, other than assessable income consisting of payments made to

the relevant person solely in consideration of the whole or a part of the

property-

     (d)  being used or available for use by a person, being neither the

relevant person nor an associate of the relevant person; or

     (e)  being used or available for use by an associate of the relevant

person pursuant to an exempt agreement to which the relevant person and the

last-mentioned associate are parties,

    shall be deemed not to be use by the relevant person for the purpose of

producing assessable income.";

  (g)  by omitting from sub-section (5) "this Division" and substituting

"paragraph (4) (a) of this section and sub-section 124ZG (2)";

  (h)  by omitting from paragraph (5) (a) "is used" and substituting "is

used,";

  (j)  by omitting from sub-section (6) "this Division" and substituting

"paragraph (4) (a) of this section and sub-section 124ZG (2)";

  (k)  by inserting after sub-section (6) the following sub-section:

     "(6a) For the purposes of sub-section (4a) of this section and

sub-section

124ZG (2b), where, at a particular time, property, being the whole or a part

of a building, is a part of a person's home and would, but for this

sub-section, be taken not to be, at that time, used or for use by that person

wholly or principally for, or in association with, residential accommodation,

the property shall be taken to be, at that time, used or for use by that

person wholly or principally for, or in association with, residential

accommodation."; and

  (m)  by inserting in sub-section (7) ", for use" after "used" (first

occurring).

 

TAXATION LAWS AMENDMENT ACT 1986No. 46, 1986

- SECT 18

Qualifying expenditure

 

  18. Section 124ZG of the Principal Act is amended-

  (a)  by inserting in paragraph (1) (c) "and before 18 July 1985" after "19

July 1982";

  (b)  by inserting after sub-section (2) the following sub-sections:

     "(2A) Subject to this section, where-

     (a)  a person has incurred expenditure of a capital nature in respect of

the construction of a building in Australia, or in respect of the construction

of an extension, alteration or improvement to a building in Australia;

     (b)  at the time when that expenditure was incurred-

         (i)  the building, or the extension, alteration or improvement, as the

case may be, was to be owned or leased by that person; or

        (ii)  a part only of the building, or of the extension, alteration or

improvement, as the case may be, was to be owned or leased by that person;

     (c)  the building, or the extension, alteration or improvement, as the

case may be, commenced to be constructed after 17 July 1985 and construction

of the building, or of that extension, alteration or improvement, as the case

may be, has been completed; and

     (d)  at the time of completion of construction of the building, or of the

extension, alteration or improvement, as the case may be-

         (i)  in a case to which sub-paragraph (b) (i) applies-

           (A) the building, or the extension, alteration or improvement, as

the case may be, was for use by that person for the purpose of producing

income, was for disposal by that person to another person for use by that

other person for the purpose of producing income, or was for residential use;

or

           (B) a part (in this sub-sub-paragraph referred to as the 'relevant

part') of the building, or of the extension, alteration or improvement, as the

case may be, was for use by that person, or disposal by that person, as

described in sub-sub-paragraph (A), or was for residential use; or

        (ii)  in a case to which sub-paragraph (b) (ii) applies-

           (A) the whole (in this sub-sub-paragraph referred to as the

'relevant part') of the part of the building, extension, alteration or

improvement, as the case may be, to which that sub-paragraph applies was for

use by that person, or disposal by that person, as described in

sub-sub-paragraph (i) (A), or was for residential use; or

           (B) a part (in this sub-sub-paragraph referred to as the 'relevant

part') of the part of the building, extension, alteration or improvement, as

the case may be, to which that sub-paragraph applies was for use by that

person, or disposal by that person, as described in sub-sub-paragraph (i) (A),

or was for residential use,

    then, for the purposes of this Division-

     (e)  in a case to which sub-sub-paragraph (d) (i) (A) applies-the amount

of the capital expenditure referred to in paragraph (a) shall be taken to be

an amount of qualifying expenditure in respect of the building; and

     (f)  in a case to which sub-sub-paragraph (d) (i) (B), (ii) (A) or (ii)

            (B) applies-so much of the amount of the capital expenditure referred to in

paragraph (a) as is attributable to the relevant part referred to in whichever

of those sub-sub-paragraphs is applicable shall be taken to be an amount of

qualifying expenditure in respect of the building.

     "(2B) For the purposes of paragraph (2A) (d), a building, extension,

alteration or improvement, or a part of a building, extension, alteration or

improvement, shall be taken to be for residential use if, and only if, the

building, extension, alteration or improvement, or the part of the building,

extension, alteration or improvement, as the case may be, is for use by a

person or persons wholly or principally for, or in association with,

residential accommodation."; and

  (c)  by omitting from sub-section (3) "sub-section (1)" and substituting

"sub-sections (1) and (2A)".

 

TAXATION LAWS AMENDMENT ACT 1986No. 46, 1986

- SECT 19

 

  19. After section 169 of the Principal Act the following section is

inserted:

Reliance by Commissioner on return

  "169A. (1) Where a return of income of a taxpayer of a year of income is

furnished to the Commissioner (whether or not by the taxpayer), the

Commissioner may, for the purposes of making an assessment in relation to the

taxpayer under this Act, accept, either in whole or in part, a statement in

the return of the assessable income derived by the taxpayer and of any

allowable deductions or rebates to which it is claimed that the taxpayer is

entitled and any other statement in the return relevant to the assessment.

  "(2)  Notwithstanding sub-section (1), where, in a document furnished with a

return of income of a taxpayer of a year of income and signed by or on behalf

of the taxpayer, a question is raised that is relevant to the liability of the

taxpayer to tax in respect of the year of income, the Commissioner shall give

attention to that question.

  "(3) In determining whether an assessment is correct, any determination,

opinion or judgment of the Commissioner made, held or formed in connection

with the consideration of an objection against the assessment shall be deemed

to have been made, held or formed when the assessment was made.".

 

TAXATION LAWS AMENDMENT ACT 1986No. 46, 1986

- SECT 20

Amendment of assessments

 

  20. Section 170 of the Principal Act is amended-

  (a)  by omitting from sub-section (2) "an error in calculation or a mistake

of fact or to prevent avoidance of tax as the case may be" and substituting

"the assessment";

  (b)  by omitting from sub-section (3) "except to correct an error in

calculation or a mistake of fact; and no such amendment shall be made";

  (c)  by omitting from sub-section (4) "except to correct an error in

calculation or a mistake of fact; and no such amendment shall be made"; and

  (d)  by omitting sub-sections (8), (10A) and (12).

 

TAXATION LAWS AMENDMENT ACT 1986No. 46, 1986

- SECT 21

 

  21. After section 170A of the Principal Act the following section is

inserted:

Payment of interest by taxpayer where assessment amended

  "170AA. (1) Subject to this section, where an amendment of an assessment

increasing the liability of a taxpayer to tax is made, the taxpayer is liable

to pay interest to the Commissioner, calculated in accordance with sub-section

(4), on the amount (in this section referred to as the 'principal amount') by

which the tax payable by the taxpayer under the amended assessment exceeds the

tax payable by the taxpayer under the assessment that was amended.

  "(2) Where-

  (a)  but for this sub-section, interest would be payable by a taxpayer under

sub-section (1) in respect of the principal amount; and

  (b)  a person being-

      (i)  the taxpayer;

     (ii)  a partner in a partnership in which the taxpayer is or

was a partner; or

     (iii) a trustee of a trust estate of which the taxpayer is or

was a beneficiary,

    is liable to pay, or would but for sub-section 8ZE (1) of the Taxation

Administration Act 1953 or sub-section 227 (3) of this Act, be liable to pay,

additional tax under Part VII (other than section 222) of this Act in respect

of the matter to which the principal amount, or part of the principal amount,

relates, interest is not payable by the taxpayer under sub-section (1) in

respect of the principal amount or the part of the principal amount, as the

case may be.

  "(3) Where-

  (a)  a taxpayer is liable to pay or would, but for sub-section (11), be

liable to pay, interest under sub-section (1) on an amount (in this

sub-section referred to as the 'base amount'), being the whole or a part of

the principal amount; and

  (b)  as a result of the amendment by virtue of which the interest became

payable, an amendment of an assessment is made increasing-

      (i)  the liability of the taxpayer (in this sub-section referred to as

the 'penalty payer') to additional tax under Part VII;

     (ii)  the liability of a partner (in this sub-section also referred to

as

the 'penalty payer') in a partnership in which the taxpayer is or was a

partner to additional tax under sub-section 223 (2); or

     (iii)  the liability of the trustee (in this sub-section also referred to

as the 'penalty payer') of a trust estate of which the taxpayer is or was a

beneficiary to additional tax under sub-section 223 (4), the penalty payer is

liable to pay interest to the Commissioner, calculated in accordance with

sub-section (4), on the amount ascertained in accordance with the formula AB,

where-

             C

  A  is so much of the additional tax payable by the penalty payer under the

amended assessment as is attributable to the amendment by virtue of which the

interest referred to in paragraph (a) became payable;

  B  is the number of whole dollars in the base amount; and

  C  is the number of whole dollars in the principal amount.

  "(4) Interest payable by a taxpayer under sub-section (1) or (3) in relation

to an amended assessment (in this sub-section referred to as the 'current

amended assessment') in respect of a year of income shall be calculated-

  (a) in respect of the period commencing on-

      (i)  in a case to which sub-section (1) applies-the day on which tax

became due and payable by the taxpayer under the first assessment in respect

of income of the taxpayer of the year of income; or

     (ii)  in a case to which sub-section (3) applies-the day on which

additional tax under Part VII became due and payable by the taxpayer under the

assessment referred to in paragraph (3) (b) or, if that assessment was

previously amended on one or more occasions, under that assessment before any

amendment,

    and ending on the day on which the current amended assessment is made; and

  (b)  at such rate of interest as is, or such rates of interest as are,

applicable under regulations made for the purposes of paragraph 10 (1) (b) of

the Taxation (Interest on Overpayments) Act 1983.

  "(5) Where, under section 206, the Commissioner-

  (a)  has granted an extension of time for payment of tax or of additional

tax under Part VII; or

  (b)  has permitted payment of tax, or additional tax under Part VII, to be

made by instalments, that tax or additional tax shall be deemed, for the

purposes of this section, to have become due and payable on such date as the

Commissioner determines, not being a date before the date on which the tax or

additional tax was originally due and payable.

  "(6) Where-

  (a)  the Commissioner has served notice in respect of a taxpayer to the

effect that the taxable income of the taxpayer of the year of income is nil or

that no tax is payable on the taxable income of the taxpayer of a year of

income; and

  (b)  the Commissioner subsequently makes an assessment of the taxable income

of the taxpayer of the year of income and of the tax payable on that taxable

income, the following provisions have effect for the purposes of this section:

  (c)  the notice referred to in paragraph (a) shall be deemed to be an

assessment (in this sub-section referred to as the 'notional assessment') on

which a nil amount of tax became due and payable at the end of 30 days after

the date of service of the notice; and

  (d)  the assessment referred to in paragraph (b) shall be deemed to be an

amendment of the notional assessment.

  "(7) Until regulations are made for the purposes of paragraph 10 (1) (b) of

the Taxation (Interest on Overpayments) Act 1983, interest payable by a

taxpayer under this section shall be calculated at the rate of 14.026% per

annum.

  "(8) Where, but for this sub-section, the amount of interest that would be

payable under sub-section (1) or (3) by a taxpayer is less than 50 cents,

interest is not payable by the taxpayer under that sub-section.

  "(9) Where the taxpayer is liable to pay to the Commissioner an amount of

interest under this section, the Commissioner shall serve on the taxpayer

notice in writing specifying-

  (a)  the period in respect of which the taxpayer is liable to pay the

interest;

  (b)  the amount of the interest; and

  (c)  a date, being a date not less than 30 days after the day of service of

the notice, as the due date for payment of the interest, and the amount is due

and payable on that date.

  "(10) A notice for the purposes of sub-section (9) may be incorporated in a

notice of assessment.

  "(11) The Commissioner may, in his or her discretion, remit the whole or any

part of the interest payable by a taxpayer under this section.

  "(12) Unless the contrary intention appears, in sections 172, 201, 202, 205,

206, 208, 209, 214, 215, 216, 254, 255, 258, 259 and 265, but not in any other

section of this Act, 'income tax' or 'tax' includes interest payable under

this section.

  "(13) The ascertainment of an amount of interest under this section shall be

deemed not to be an assessment within the meaning of any of the provisions of

this Act.

  "(14) In this section, unless the contrary intention appears-

  'tax' does not include additional tax payable under section 104;

  'taxpayer' includes a penalty payer referred to in sub-section (3) of this

section.".

 

TAXATION LAWS AMENDMENT ACT 1986No. 46, 1986

- SECT 22

Refunds of amounts overpaid

 

  22. Section 172 of the Principal Act is amended by omitting from paragraph

(1) (a) "section 207" and substituting "sections 170AA and 207".

 

TAXATION LAWS AMENDMENT ACT 1986No. 46, 1986

- SECT 23

Adjustment of tax after appeal

 

  23. Section 202 of the Prinicpal Act is amended by omitting from paragraph

(1) (a) "section 207" and substituting "sections 170AA and 207".

 

TAXATION LAWS AMENDMENT ACT 1986No. 46, 1986

- SECT 24

Commissioner may collect tax from person owing money to taxpayer

 

  24. Section 218 of the Principal Act is amended-

  (a)  by inserting after paragraph (b) of the definition of "tax" in

sub-section (6B) the following paragraph:

     "(ba)  an amount of interest that a person is liable to pay to the

Commissioner under section 170AA;";

  (b)  by omitting from sub-paragraph (c) (ii) of the definition of "tax" in

sub-section (6B) "or"; and

  (c)  by inserting after sub-paragraph (c) (iii) of the definition of "tax"

in sub-section (6B) the following word and sub-paragraph:

     "; or (iv) an amount of interest that a taxpayer is liable to pay to the

Commissioner under section 170AA;".

 

TAXATION LAWS AMENDMENT ACT 1986No. 46, 1986

- SECT 25

Application of amendments

 

  25. (1) The amendments made by sections 5 to 9 (inclusive) and 19 to 24

        (inclusive) apply to-

  (a)  assessments (not being amended assessments) made on or after 1 July

1986 in respect of income of the year of income that commenced on 1 July 1985

or of any subsequent year of income; and

  (b)  the first and any subsequent amendment of such an assessment.

  (2) Sub-section 170AA (6) of the Principal Act applies for the purposes of

sub-section (1) of this section.

  (3) The amendment made by  section 10 applies to gifts made on or after 18

February 1986.

  (4) The amendment made by section 11 applies to assessments in respect of

income of the year of income in which 17 July 1985 occurred and of all

subsequent years of income.

  (5) The amendments made by sections 12, 13, 14 and 15 apply-

  (a)  in relation to a transfer, after 9 October 1985, of a right to receive

income from property, other than a transfer of such a right pursuant to a

contract that was made on or before 9 October 1985; and

  (b)  in relation to income derived after 9 October 1985.

  (6) Section 102A of the Principal Act applies for the purposes of

sub-section (5) of this section and so applies as if that sub-section were a

provision of Division 6A of Part III of the Principal Act.

 

PART III - AMENDMENTS OF THE INCOME TAX (INTERNATIONAL AGREEMENTS) ACT 1953

 

TAXATION LAWS AMENDMENT ACT 1986No. 46, 1986

- SECT 27

Principal Act

 

  27. The Income Tax (International Agreements) Act 1953*2* is in this Part

referred to as the Principal Act. Interpretation

*2* No. 82, 1953, as amended. For previous amendments, see No. 25, 1958; No.

88, 1959; Nos. 19 and 29, 1960; No. 71, 1963; No. 112, 1964; No. 105, 1965;

No. 17, 1966; Nos. 39 and 86, 1967; No. 3, 1968; No. 24, 1969; No. 48, 1972;

Nos. 11 and 216, 1973; No. 129, 1974; No. 119, 1975; Nos. 52, 55 and 143,

1976; No. 134, 1977; No. 87, 1978; Nos. 23 and 127, 1980; Nos. 28, 110, 143

and 154, 1981; Nos. 51 and 57, 1983; Nos. 123 and 125, 1984; and Nos. 168 and

173, 1985.

 

TAXATION LAWS AMENDMENT ACT 1986No. 46, 1986

- SECT 28

 

  28. Section 3 of the Principal Act is amended by inserting after the

definition of "the Canadian convention" in sub-section (1) the following

definition:

  " 'the Chinese airline profits agreement' means the Agreement between the

Government of Australia and the Government of the People's Republic of China

for the avoidance of double taxation of income and revenues derived by air

transport enterprises from international air transport, being the agreement a

copy of which in the English language is set out in Schedule 26;".

 

TAXATION LAWS AMENDMENT ACT 1986No. 46, 1986

- SECT 29

 

  29. (1) After section 11P of the Principal Act the following section is

inserted:

Airline profits agreement with the People's Republic of China

  "11Q. (1) Subject to this Act, on and after the date of entry into force of

the Chinese airline profits agreement, the provisions of the agreement, so far

as those provisions affect Australian tax, have, and shall be deemed to have

had, the force of law in relation to tax in respect of income derived on or

after 1 July 1984 and in relation to which the agreement remains effective.

  "(2) As soon as practicable after the entry into force of the Chinese

airline profits agreement in accordance with Article 4 of the agreement, the

Treasurer shall cause to be published in the Gazette a notice specifying the

date on which the agreement entered into force.".

  (2) The Commissioner may amend an assessment made before the date of entry

into force of the Chinese airline profits agreement for the purpose of giving

effect to sub-section 11Q (1) of the Principal Act as amended by this Act.

 

TAXATION LAWS AMENDMENT ACT 1986No. 46, 1986

- SECT 30

Schedule

 

  30. The Principal Act is amended by adding at the end the Schedule set out

in the Schedule to this Act.

 

PART IV - AMENDMENTS OF THE PAY-ROLL TAX (TERRITORIES) ASSESSMENT ACT 1971

 

TAXATION LAWS AMENDMENT ACT 1986No. 46, 1986

- SECT 31

Principal Act

 

  31. The Pay-roll Tax (Territories) Assessment Act 1971*3* is in this Part

referred to as the Principal Act.

*3* No. 77, 1971, as amended. For previous amendments, see No. 66, 1972; No.

216, 1973; No. 172, 1976; Nos. 55 and 62, 1978; Nos. 10, 19 and 64, 1979; Nos.

11 and 134, 1980; No. 69, 1981; Nos. 122 and 128, 1982; No. 39, 1983; No. 123,

1984; Nos. 47, 65 and 123, 1985; and No. 41, 1986.

 

TAXATION LAWS AMENDMENT ACT 1986No. 46, 1986

- SECT 32

Interpretation

 

  32. Section 4 of the Principal Act is amended-

  (a) by inserting after the definition of "employer" in sub-section (1) the

following definition:

     " 'group' means a group constituted under Part IVA;";

  (b) by omitting from sub-section (1) the definition of "tax" and

substituting the following definition:

     " 'tax' means-

        (a) tax referred to in section 10;

        (b) tax referred to in section 15A;

        (c) tax referred to in sub-section 21J (5); and

        (d) tax referred to in sub-section 21K (6);"; and

  (c)  by adding at the end the following sub-sections:

     "(4) A reference in this Act to wages paid or payable by a member of a

group is a reference to wages paid or payable by that member while a member of

the group.

     "(5) Unless the contrary intention appears, a reference in Part V, VI,

VII

or IX to an employer includes a reference to a person who is not an employer

but is liable to pay-

     (a)  tax referred to in sub-section 21J (5); or

     (b)  tax referred to in sub-section 21K (6).".

 

TAXATION LAWS AMENDMENT ACT 1986No. 46, 1986

- SECT 33

General exemption

 

  33. Section 12 of the Principal Act is amended by adding at the end of

sub-section (9) the following definition:

  " 'wages' does not include wages paid or payable by a member of a group.".

 

TAXATION LAWS AMENDMENT ACT 1986No. 46, 1986

- SECT 34

Refund or rebate of tax on annual adjustment

 

  34. Section 14 of the Principal Act is amended by omitting sub-section (9)

and substituting the following sub-section:

  "(9) In this section-

  'employer in Australia' does not include an employer in Australia who is a

member of a group;

  'tax' means tax referred to in section 10 that is payable in respect of

wages;

  'wages' does not include wages paid or payable by a member of a group.".

 

TAXATION LAWS AMENDMENT ACT 1986No. 46, 1986

- SECT 35

Tax payable on annual basis

 

  35. Section 15A of the Principal Act is amended by adding at the end of

sub-section (3) the following definition:

  " 'taxable wages' does not include wages paid or payable by a member of a

group.".

 

TAXATION LAWS AMENDMENT ACT 1986No. 46, 1986

- SECT 36

Registration

 

  36. Section 16 of the Principal Act is amended-

  (a) by omitting from sub-section (1) "An employer" and substituting "Subject

to sub-section (1a), an employer";

  (b) by omitting from sub-section (1) "at a rate in excess of $2,250 per week

or such higher rate as is prescribed, being wages"; and

  (c) by inserting after sub-section (1) the following sub-section:

     "(1a) An employer who is not, at any time during a month, a member of a

group is not required to apply for registration under sub-section (1) within 7

days after the close of the month unless, during the month, the employer pays

or is liable to pay, anywhere, wages at a rate in excess of $3,269.23 per week

or such higher rate as is prescribed, being wages that, in whole or in part,

are taxable wages.".

 

TAXATION LAWS AMENDMENT ACT 1986No. 46, 1986

- SECT 37

 

  37. After Part IV of the Principal Act the following Part is inserted:

                      "PART IVA - GROUPING PROVISIONS

Interpretation

  "21A. In this Part, unless the contrary intention appears-

  'business', in relation to a person, includes-

     (a)  a profession or trade;

     (b)  any other activity carried on for fee, gain or reward; and

     (c)  the activity, carried on by the person, of employing persons to

perform duties for or in connection with another business,

    whether carried on by the person alone or together with other persons;

  'corporation' has the same meaning as in the Companies Act 1981;

  'deductible amount', in relation to a group in relation to a financial year,

means the amount calculated in accordance with the formula-

 A

 B          CD- 2H   , where-

                3

     A  is the number of whole dollars in the total amount of the taxable wages

paid or payable during the financial year by members of the group;

     B  is the number of whole dollars in the total amount of the taxable wages

and the interstate wages paid or payable during the financial year by the

members of the group;

     C  is-

       (a)  in the case of the financial year that commenced on 1 July

1985-$170,000; or

       (b)  in the case of a subsequent financial year-

           (i) in a case where the relevant amount for the purposes of section

14 in relation to the financial year is ascertained in accordance with

sub-section 14 (4d) or (4e) and sub-section 14 (4f) does not apply-that

relevant amount; or

          (ii) in a case where there are, in accordance with sub-section 14

(4f), 2 or more relevant amounts for the purposes of section 14 applicable to

periods in that year-the sum of the amounts calculated in accordance with

sub-paragraph 14 (4a) (h) (i);

     D  is the factor calculated in accordance with the formula

      E-F , where-

        G

         E  is-

          (c)  in the case of the financial year that commenced on 1 July

1985-the number of whole days in the initial period during which there was a

designated group employer in respect of the group; or

          (d)  in the case of a subsequent financial year-the number of whole

days in the financial year during which there was a designated group employer

in respect of the group;

         F  is-

          (e)  in the case of the financial year that commenced on 1 July

1985-the number of days in the initial period in respect of which no taxable

or interstate wages were paid or payable by any member of the group; or

          (f)  in the case of a subsequent financial year-the number of days in

the financial year in respect of which no taxable or interstate wages were

paid or payable by any member of the group; and

         G  is the number of days in the financial year; and

     H  is so much of the total amount of the taxable wages and the interstate

wages paid or payable during the financial year by the members of the group as

exceeds the amount calculated by multiplying the amount represented by

component C by the factor represented by component D;

  'designated group employer', in relation to a group, means the member of the

group who is for the time being the designated group employer in respect of

the group pursuant to section 21G;

  'financial year' means the financial year that commenced on 1 July 1985 or a

subsequent financial year;

  'initial period' means the period commencing on the day on which this

section comes into operation and ending on 30 June 1986;

  'interstate wages' means wages that are taxable wages within the meaning of

a corresponding law;

  'return period', in relation to an employer, means the period in relation to

which the employer is required to furnish a return under section 17 or 18.

Grouping of corporations

  "21b. For the purposes of this Act, 2 corporations constitute a group if, by

virtue of sub-section 7 (5) of the Companies Act 1981, they are related to

each other for the purposes of that Act.

Grouping where employees used in another business

  "21c. (1) For the purposes of this Act, where-

  (a)  an employee of an employer performs duties wholly or principally for or

in connection with a business carried on by another person (whether carried on

together with the employer or otherwise); or

  (b)  an employer has, in respect of the employment of, or the performance of

duties by, an employee of the employer, an agreement with another person

relating to a business carried on by that other person, that employer and each

of the other persons carrying on that business constitute a group.

  "(2) In this section, 'agreement' means an agreement, arrangement or

understanding, whether formal or informal, express or implied and whether or

not enforceable, or intended to be enforceable, by legal proceedings.

Grouping of commonly controlled businesses

  "21d. (1) For the purposes of this Act, where a person has, or 2 or more

persons together have, a controlling interest in each of 2 businesses, the

persons who carry on those businesses constitute a group.

  "(2) For the purposes of this section, a person, or 2 or more persons

together, shall be taken to have a controlling interest in a business if, and

only if-

  (a)  in the case of a business carried on by a corporation-

      (i)  any one or more of the directors of the corporation,

being a director or directors who is or are entitled to exercise a majority in

voting power at meetings of the directors, is or are accustomed or under an

obligation, whether formal or informal, to act in accordance with the

directions, instructions or wishes of that person or of those persons acting

together; or

     (ii)  that person or those persons acting together may (whether

directly or indirectly) exercise, control the exercise of, or substantially

influence the exercise of, 50% or more of the voting power attached to voting

shares issued by the corporation;

  (b)  in the case of a business carried on by a partnership, that person or

those persons-

      (i)  owns, or own together (whether or not beneficially), 50% or more of

the capital of the partnership; or

     (ii)  is, or are together, entitled (whether or not beneficially) to 50%

or more of any profits of the partnership;

  (c)  in the case of a business carried on by the trustee of a trust-that

person (whether or not as the trustee of another trust) is the beneficiary, or

those persons (whether or not as the trustees of another trust) are together

the beneficiaries, in respect of 50% or more of the value of the interests in

the first-mentioned trust; or

  (d)  in any case-

      (i)  whether or not that person is a trustee of a trust, that person is

the sole owner of the business; or

     (ii)  whether or not those persons are trustees of a trust, those persons

are the owners of the business.

  "(3) A corporation that has a controlling interest in a business shall be

deemed, for the purposes of this section, to have a controlling interest in

any other business in which another corporation that is, by virtue of

sub-section 7 (5) of the Companies Act 1981, related to the first-mentioned

corporation for the purposes of that Act, has a controlling interest.

  "(4) Where-

  (a)  a person has, or persons have together, a controlling interest in a

business; and

  (b)  the person or persons who carries on or carry on that business has or

have such a controlling interest in another business, the person or persons

referred to in paragraph (a) shall, for the purposes of this section, be

deemed to have a controlling interest in the business referred to in paragraph

        (b).

  "(5) Where-

  (a)  a person is a beneficiary under a trust; or

  (b)  2 or more persons together are beneficiaries under a trust, in respect

of 50% or more of the value of the interests in that trust and the trustee or

trustees of that trust has or have a controlling interest in a business, that

beneficiary or those beneficiaries shall, for the purposes of this section, be

deemed to have a controlling interest in that business.

  "(6) A reference in this section to 2 businesses does not include a

reference to 2 businesses both of which are owned by the same person, not

being a trustee, or by the trustee or trustees of a trust.

  "(7) A person who, as the result of the exercise of a power or discretion by

the trustee of a discretionary trust, or by any other person or by that

trustee and another person, may benefit under that trust shall be deemed, for

the purposes of this section, to be a beneficiary in respect of 50% or more of

the value of the interests in that trust.

Smaller groups subsumed into larger groups

  "21e. (1) Subject to sub-section (2), where a person is, whether or not by

virtue of this sub-section, a member of 2 or more groups (each of which is in

sub-section (2) referred to as a 'smaller group'), all of the members of those

groups constitute, for the purposes of this Act, one group.

  "(2) A group which, but for this sub-section, would be a smaller group

ceases to be a group if its members are members of a group by virtue of

sub-section (1).

Exclusion of persons from groups

  "21f. (1) Where-

  (a)  a person (in this sub-section referred to as the 'independent person')

is a member of a group; and

  (b)  the Commissioner is satisfied, having regard to-

      (i)  the nature and degree of ownership or control of each of the

businesses carried on by members of the group;

     (ii)  the nature of those businesses; and

     (iii)  any other matters that the Commissioner considers relevant,

    that the business, or each of the businesses, carried on by the independent

person is carried on substantially independently of, and is not substantially

connected with the carrying on of, a business carried on by any other member

of that group, the Commissioner may, by order in writing served on the

independent person, exclude the independent person from, or deem the

independent person to have been excluded from, that group with effect from

such date, not being a date later than the date of the order, as is specified

in the order and, if the Commissioner does so, the Commissioner may specify in

the order such circumstances in relation to the making of the order as the

Commissioner considers appropriate.

  "(2) The Commissioner shall not make an order under sub-section (1)

excluding a corporation from a group of which another corporation is or was a

member with effect from a date specified in the order if the first-mentioned

corporation is or was, by virtue of sub-section 7 (5) of the Companies Act

1981, related to the second-mentioned corporation for the purposes of that Act

on that date.

  "(3) Where-

  (a)  an order under sub-section (1) excluding a person from a group

specifies circumstances in relation to the making of the order; and

  (b)  any of those circumstances changes in a material respect, the person

shall notify the Commissioner in writing within 7 days after that change.

  "(4) A person who contravenes sub-section (3) is, in respect of each day on

which the person so contravenes that sub-section (including the day of a

conviction of an offence against this sub-section or a subsequent day), guilty

of an offence punishable on conviction by a fine not exceeding $50.

  "(5) Where-

  (a)  a person has been excluded from a group pursuant to an order under

sub-section (1); and

  (b)  the Commissioner is no longer satisfied as mentioned in paragraph (1)

        (b), the Commissioner may, by notice in writing served on the person, revoke

the order with effect from-

  (c)  in a case to which paragraph (d) does not apply-the date of service of

the notice; or

  (d)  in a case where-

      (i)  the order specifies circumstances in relation to the making of the

order; and

     (ii)  the reason, or one of the reasons, for the revocation of the order

is a change in a material respect in any of those circumstances,

    the date on which that change occurred or, if there are 2 or more such

changes, the date on which the earliest of those changes occurred.

Designated group employer

  "21g. (1) The members of a group may lodge with the Commissioner a notice in

writing, in a form approved by the Commissioner, signed by or on behalf of

each member of the group, designating one of the members of the group to be

the designated group employer in respect of the group for the purposes of this

Act.

  "(2) The designated member of the group commences to be the designated group

employer in respect of the group on the first day of-

  (a)  the return period that last commenced before the date of lodgment of

the notice; or

  (b)  such later return period as is specified in the notice.

  "(3) The designated group employer in respect of a group ceases to be the

designated group employer in respect of that group on and from the first day

of the return period relating to the designated group employer during which-

  (a)  the composition of the group alters; or

  (b)  the members of the group lodge with the Commissioner a notice in

writing, signed by or on behalf of each of them who is known to the

Commissioner to be a member of the group, revoking the designation, whichever

first occurs.

  "(4) A notice under paragraph (3) (b) lodged by the members of a group has

no effect unless-

  (a)  before the notice is lodged, the Commissioner gives a written consent

to the lodgment; or

  (b)  the members of the group, at the time the notice is lodged, lodge a

further notice under sub-section (1) designating another of the members of the

group to be the designated group employer.

Nominated deduction

  "21h. (1) For the purpose of ascertaining the tax payable by a designated

group employer, there shall, subject to this section, be deducted, from the

amount of wages included in a return furnished in accordance with section 17

or 18, or from the amount of wages assessed by the Commissioner pursuant to

section 23, being an amount of wages payable during the return period that

last commenced before the date of lodgment of the notice under sub-section 21g

(1) designating the employer-

  (a)  where the return or assessment relates to a period of one month-the

statutory amount;

  (b)  where the return or assessment relates to a part of a month-the

    amount calculated in accordance with the formula A B , where-

                                                      C

     A  is the statutory amount;

     B  is the number of whole days in that part of the month; and

     C  is the whole number of days in the month; and

  (c)  where the return or assessment relates to a period of more than a

month-the amount calculated in accordance with the formula

    A B + A C , where-

        D

     A  is the statutory amount;

     B  is the number of whole months in the period;

     C  is the number of whole days in any part of a month included in the

period; and

     D  is the number of days in the last-mentioned month.

  "(2) For the purposes of sub-section (1), the statutory amount in relation

to a designated group employer is the amount specified in a nomination

referred to in sub-section (3) or, if there is no such nomination, nil.

  "(3) A notice under sub-section 21g (1) may contain a nomination of the

amount (being an amount calculated in the manner specified in the form

approved for the purposes of that sub-section but not exceeding the relevant

amount as defined in sub-section 12 (9)) of the deduction claimed to be made

on behalf of the group by the designated group employer in respect of each

month.

  "(4) The Commissioner may, at any time-

  (a) on an application in writing signed by or on behalf of each person known

to the Commissioner to be a member of a group; or

  (b) of the Commissioner's own motion, make a determination specifying an

amount, not exceeding the relevant amount as defined in sub-section 12 (9),

that may be claimed by the designated group employer in respect of that group

as the statutory amount, and the amount so specified shall, with effect from

such date as is specified in the determination (which may be a date earlier

than the date of the determination), notwithstanding any other provision of

this section, be deemed to be the statutory amount in relation to the

designated group employer.

  "(5) The Commissioner shall, as soon as practicable after making a

determination under sub-section (4), cause notice in writing of the

determination to be served on the designated group employer concerned.

  "(6) The Commissioner may, by notice in writing served on the designated

group employer concerned, revoke or vary a determination under sub-section (4)

with effect from such date as is specified in the notice (which may be a date

earlier than the date of the notice).

Annual adjustments

  "21J. (1) This section applies in relation to a group at least one member of

which paid or was liable to pay taxable wages or interstate wages for the

whole of a financial year.

  "(2) A reference in this section to the annual amount of tax paid or payable

by the members of a group in respect of a financial year is a reference to the

amount ascertained by applying the appropriate rate or rates of tax prescribed

by the Pay-roll Tax (Territories) Act 1971 to the amount calculated in

accordance with the formula A-B, where-

  A  is the total amount of the taxable wages paid or payable by the members

of the group during the financial year; and

  B  is so much of the deductible amount (if any) in relation to the group in

relation to the financial year as does not exceed the total amount of taxable

wages paid or payable by the members of the group during the financial year.

  "(3) A reference in this section to the actual amount of tax paid or payable

in respect of a financial year by the members of a group is a reference to the

amount of tax referred to in section 10 that is payable by members of the

group in respect of taxable wages paid or payable during that year.

  "(4) Where the actual amount of tax paid or payable in respect of a

financial year by the members of a group exceeds the annual amount of tax paid

or payable by the members of that group in respect of that year, the

Commissioner shall, upon application made before the end of the next

succeeding financial year by the person who is the designated group employer

in respect of the group on 30 June in the first-mentioned financial year-

  (a)  refund to the person the amount of the excess; or

  (b)  apply the amount of the excess against any liability of the person to

the Commonwealth, being a liability arising under, or by virtue of, this Act

or any other Act of which the Commissioner has the general administration, and

refund any part of the amount not so applied.

  "(5) Where the annual amount of tax paid or payable in respect of a

financial year by the members of a group exceeds the actual amount of tax paid

or payable in respect of that year by the members of the group-

  (a)  the person who is the designated group employer in respect of that

group on 30 June in that year; and

  (b)  the members of the group who paid or were liable to pay taxable wages

during that year, are jointly and severally liable to pay, in addition to tax

referred to in section 10, tax equal to the amount of the excess, being tax in

respect of those wages.

Part-year adjustments

  "21K. (1) This section applies in relation to a group at least one member of

which paid or was liable to pay taxable wages or interstate wages for a

continuous part of a financial year and no member of which paid or was liable

to pay any such wages during the whole of that year.

  "(2) In this section, 'group period', in relation to a group, in relation to

a financial year, means a continuous part of a financial year for which at

least one member of the group paid or was liable to pay taxable wages or

interstate wages.

  "(3) A reference in this section to the total amount of tax paid or payable

by the members of a group in respect of a group period in a financial year is

a reference to the amount ascertained by applying the appropriate rate or

rates of tax prescribed by the Pay-roll Tax (Territories) Act 1971 to the

amount calculated in accordance with the formula A-B, where-

  A  is the total amount of the taxable wages paid or payable by the members

of the group during that period; and

  B  is so much of the deductible amount in relation to the group in relation

to the financial year as does not exceed the total amount of taxable wages

paid or payable by the members of the group during the group period.

  "(4) A reference in this section to the actual amount of tax paid or payable

in respect of a group period by the members of a group is a reference to the

amount of tax referred to in section 10 that is payable by members of the

group in respect of that period.

  "(5) Where the actual amount of tax paid or payable in respect of a group

period in a financial year by the members of a group exceeds the total amount

of tax paid or payable by the members of that group in respect of that period,

the Commissioner shall, upon application made before the end of the next

succeeding financial year by the person who is the designated group employer

in respect of the group at the end of the group period-

  (a)  refund to the person the amount of the excess; or

  (b)  apply the amount of the excess against any liability of the person to

the Commonwealth, being a liability arising under, or by virtue of, this Act

or any other Act of which the Commissioner has the general administration, and

refund any part of the amount not so applied.

  "(6) Where the total amount of tax paid or payable in respect of a group

period in a financial year by the members of a group exceeds the actual amount

of tax paid or payable in respect of that period by the members of the group-

  (a)  the person who is the designated group employer in respect of that

group at the end of the group period; and

  (b)  the members of the group who paid, or were liable to pay, taxable wages

during the group period, are jointly and severally liable to pay, in addition

to tax referred to in section 10, tax equal to the amount of the excess, being

tax in respect of those wages.".

 

TAXATION LAWS AMENDMENT ACT 1986No. 46, 1986

- SECT 38

Time for payment of tax

 

  38. Section 22 of the Principal Act is amended-

  (a)  by omitting from paragraph (3) (a) "and" (last occurring); and

  (b)  by adding at the end of sub-section (3) the following paragraphs:

     "(c) tax referred to in sub-section 21J (5) in respect of a financial year

is due and payable on the twenty-second day after the end of the financial

year; and

     (d)  tax referred to in sub-section 21K (6) in respect of a period is due

and payable on the eighth day after the end of the period.".

 

TAXATION LAWS AMENDMENT ACT 1986No. 46, 1986

- SECT 39

Assessments

 

  39. Section 23 of the Principal Act is amended by inserting after

sub-section (2) the following sub-section:

  "(3) The Commissioner may make an assessment of the amount of-

  (a)  tax referred to in section 15A;

  (b)  tax referred to in sub-section 21J (5); or

  (c)  tax referred to in sub-section 21K (6), payable by an employer.".

 

TAXATION LAWS AMENDMENT ACT 1986No. 46, 1986

- SECT 40

Regulations

 

  40. Section 70 of the Principal Act is amended by omitting from paragraph

(1) (c) "16 (1)" and substituting "16 (1a)".

 

TAXATION LAWS AMENDMENT ACT 1986No. 46, 1986

- SECT 41

Application of amendments

 

  41. The amendments made by this Part apply in relation to wages paid or

payable by an employer on or after the date of commencement of this section.

 

PART V - AMENDMENT OF THE TAXATION ADMINISTRATION ACT 1953

 

TAXATION LAWS AMENDMENT ACT 1986No. 46, 1986

- SECT 42

Principal Act

 

  42. The Taxation Administration Act 1953*4* is in this Part referred to as

the Principal Act.

*4* No. 1, 1953, as amended. For previous amendments, see Nos. 28, 39, 40 and

52, 1953; No. 18, 1955; No. 39, 1957; No. 95, 1959; No. 17, 1960; No. 75,

1964; No. 155, 1965; No. 93, 1966; No. 120, 1968; No. 216, 1973; No. 133,

1974; No. 37, 1976; Nos. 19 and 59, 1979; Nos. 39 and 117, 1983; No. 123,

1984; Nos. 4, 47, 65, 104 and 123, 1985; and No. 41, 1986.

 

TAXATION LAWS AMENDMENT ACT 1986No. 46, 1986

- SECT 43

Interpretation

 

  43. Section 8J of the Principal Act is amended by inserting in paragraph (2)

(p) "13G (1) (c) or" before "14I (1) (c)".

 

PART VI - AMENDMENTS OF THE TAXATION (INTEREST ON OVERPAYMENTS) ACT 1983

 

TAXATION LAWS AMENDMENT ACT 1986No. 46, 1986

- SECT 44

Principal Act

 

  44. The Taxation (Interest on Overpayments) Act 1983*5* is in this Part

referred to as the Principal Act.

*5* No. 12, 1983, as amended. For previous amendments, see No. 123, 1984; Nos.

4, 47, 49 and 123, 1985; and No. 41, 1986.

 

TAXATION LAWS AMENDMENT ACT 1986No. 46, 1986

- SECT 45

Interpretation

 

  45. Section 3 of the Principal Act is amended by inserting after paragraph

        (c) of the definition of "decision to which this Act applies" in sub-section

(1) the following paragraph:

  "(ca) in a case where the expression is used in relation to relevant tax of

a kind referred to in paragraph (a) of the definition of 'relevant tax'-a

decision of the Commissioner to amend an assessment made in relation to a

taxpayer reducing the liability of the taxpayer to tax, other than-

       (i)  a decision to give effect to an application or request

by or on behalf of the taxpayer for an amendment of the assessment; or

      (ii)  a decision made in consequence of another decision of

the Commissioner to amend another assessment (whether of the taxpayer or of

another person), being another decision that was made to give effect to an

application or request by or on behalf of the taxpayer or the other person, as

the case may be, for the amendment of the other assessment;".

 

TAXATION LAWS AMENDMENT ACT 1986No. 46, 1986

- SECT 46

Amount of interest

 

  46. Section 10 of the Principal Act is amended-

  (a)  by inserting in sub-sub-paragraph (1) (a) (iii) (A) "and

sub-sub-paragraph (AA) does not apply" after "sub-section 3 (1)";

  (b)  by inserting after sub-sub-paragraph (1) (a) (iii) (A) the following

sub-sub-paragraph:

     "(AA) the relevant tax is relevant tax of a kind referred to in

paragraph

        (a) of the definition of 'relevant tax' in sub-section 3 (1) and the decision

to which this Act applies is a decision of the kind referred to in paragraph

        (ca) of the definition of 'decision to which this Act applies' in that

sub-section-1 July 1986;"; and

  (c)  by omitting from sub-sub-paragraph (1) (a) (iii) (D)

"sub-sub-paragraphs (A), (B) and (C)" and substituting "the preceding

sub-sub-paragraphs".

 

TAXATION LAWS AMENDMENT ACT 1986No. 46, 1986

- SECT 47

Application of amendments

 

  47. (1) The amendments made by sections 45 and 46 apply to-

  (a)  assessments (not being amended assessments) made on or after 1 July

1986 in respect of income of the year of income that commenced on 1 July 1985

or of any subsequent year of income; and

  (b)  the first and any subsequent amendment of such an assessment.

  (2) Sub-section 170AA (6) of the Income Tax Assessment Act 1936 applies for

the purposes of sub-section (1) of this section.

 

TAXATION LAWS AMENDMENT ACT 1986No. 46, 1986 - SCHEDULE

 

                                    SCHEDULE

                                                                      Section 30

 SCHEDULE TO BE ADDED AT END OF INCOME TAX (INTERNATIONAL AGREEMENTS) ACT 1953

                                 "SCHEDULE 26

                                                                       Section 3

                                   AGREEMENT

                                    BETWEEN

                          THE GOVERNMENT OF AUSTRALIA

                                      AND

                THE GOVERNMENT OF THE PEOPLE'S REPUBLIC OF CHINA

                                      FOR

THE AVOIDANCE OF DOUBLE TAXATION OF INCOME AND REVENUES DERIVED BY AIR TRANSPORT

                  ENTERPRISES FROM INTERNATIONAL AIR TRANSPORT

The Government of Australia and the Government of the People's Republic of

China,

Desiring to conclude an Agreement for the avoidance of double taxation of income

and revenues derived by air transport enterprises from international air

transport,

Have agreed as follows:

                                   ARTICLE 1

                                 Taxes Covered

  The taxes to which this Agreement shall apply are:

  (a)  in the case of Australia:

    the income tax imposed under the federal law of the Commonwealth of

Australia, including the additional tax upon the undistributed amount of the

distributable income of a private company;

  (b)  in the case of the People's Republic of China:

      (i)  the income tax concerning foreign enterprises; and

     (ii)  the consolidated industrial and commercial tax including any

additional tax on that tax,

and any identical or substantially similar taxes which are imposed after the

date of signature of this Agreement in addition to, or in place of, the taxes

referred to in sub-paragraph (a) or (b).

                                   ARTICLE 2

                              General Definitions

  (1) In this Agreement:

  (a)  the terms 'Contracting State', 'one of the Contracting States' and 'other

Contracting State' mean Australia or the People's Republic of China, the

Governments of which have concluded this Agreement;

  (b)  the term 'enterprise of one of the Contracting States' means an

enterprise that is designated, under an Agreement made between the Governments

of the Contracting States, to operate authorised scheduled air services between

those States and that has its place of effective management in Australia or in

the People's Republic of China; and

  (c)  the term 'tax' means the taxes to which this Agreement applies by virtue

of Article 1 and which are imposed by Australia or by the People's Republic of

China,

as the context requires.

  (2) In the application of this Agreement by a Contracting State, any term not

defined in this Agreement shall, unless the context otherwise requires, have the

meaning which it has under the laws of that State relating to the taxes to

which this Agreement applies.

                                   ARTICLE 3

                       Air Transport Profits and Revenues

  (1) Profits and revenues from the operation of aircraft, including sales of

tickets and documents relating to such operations, derived by an enterprise of

one of the Contracting States shall be exempt from tax in the other Contracting

State.

  (2) Notwithstanding the provisions of paragraph (1), such profits and revenues

may be taxed in the other Contracting State where they are profits and revenues

derived from the carriage by aircraft of passengers, livestock, mail, goods

or merchandise solely from one place in that other Contracting State to another place in

that State.

  (3) The provisions of paragraphs (1) and (2) shall apply in relation to the

share of the profits and revenues from the operation of aircraft derived by an

enterprise of one of the Contracting States through participation in a pool

service, in a joint transport operating organisation or in an international

operating agency.

                                   ARTICLE 4

                                Entry Into Force

  The Government of each of the Contracting States shall give to the Government

of the other Contracting State through the diplomatic channel written notice

of the completion of the procedures required by its law to give this Agreement

the force of law in Australia or in the People's Republic of China as the case

may be. This Agreement shall enter into force on the date of the later of

those notifications and thereupon shall have effect in respect of profits and

revenues derived on or after 1 July 1984.

                                   ARTICLE 5

                                  Termination

  This Agreement shall continue in effect indefinitely but the Government of

either of the Contracting States may give to the Government of the other

Contracting State through the diplomatic channel six months prior written

notice of termination and, in that event, this Agreement shall cease to be

effective in relation to profits and revenues derived on or after 1 January in

the calendar year next following that in which that period of six months

expires.

 

  IN WITNESS WHEREOF the undersigned, duly authorised thereto by their

respective Governments, have signed this Agreement.

 

  DONE in duplicate at Beijing this twenty-second day of November one thousand

nine hundred and eighty-five in the English and Chinese languages, both texts

being equally authentic.

 

FOR THE GOVERNMENT OF                    FOR THE GOVERNMENT OF

     AUSTRALIA                       THE PEOPLE'S REPUBLIC OF CHINA

 

     D. T. IRVINE                        LIN RONGSHENG".


Notes to the Taxation Laws Amendment Act 1986

Note 1

The Taxation Laws Amendment Act 1986 as shown in this compilation comprises
Act No. 46, 1986 amended as indicated in the Tables below.

Table of Acts

Act

Number
and year

Date
of Assent

Date of commencement

Application, saving or transitional provisions

Taxation Laws Amendment Act 1986

46, 1986

24 June 1986

See s. 2

 

Tax Laws Amendment (2010 Measures No. 2) Act 2010

75, 2010

28 June 2010

Schedule 6 (item 22): 29 June 2010


Table of Amendments

ad. = added or inserted    am. = amended     rep. = repealed   rs. = repealed and substituted

Provision affected

How affected

S. 26.........................................

rep. No. 75, 2010