(1) Schedule 1, item 3, page 4 (lines 17 to 23), omit paragraph (7)(b), substitute:

(b) the company has information from which it would be reasonable to conclude that less than 50% of the *tax loss has been reflected in deductions, capital losses, or reduced assessable income, that occurred, or could occur in future, because of the happening of any *CGT event in relation to any direct or indirect equity interests in the company during the *ownership test period.

(2) Schedule 1, item 3, page 4 (lines 24 to 29), omit subsection (8), substitute:

(8) The happening of a *CGT event in relation to a direct or indirect equity interest in the company that results in the failure of the company to satisfy a condition in subsection (2), (3) or (4) is taken, for the purposes of paragraph (7)(b), to have occurred during the *ownership test period.

(3) Schedule 1, item 5, page 5 (lines 18 to 25), omit paragraph (4)(b), substitute:

(b) the company has information from which it would be reasonable to conclude that less than 50% of the *notional loss for the *ownership test period has been reflected in deductions, capital losses, or reduced assessable income, that occurred, or could occur in future, because of the happening of any *CGT event in relation to any direct or indirect equity interests in the company during that period.

(4) Schedule 1, item 5, page 5 (lines 26 to 30), omit subsection (5), substitute:

(5) The happening of a *CGT event in relation to a direct or indirect equity interest in the company that results in the failure of the company to satisfy a condition in subsection (1) is taken, for the purposes of paragraph (4)(b), to have occurred during the *ownership test period.

(5) Schedule 1, item 8, page 8 (lines 7 to 18), omit subsection (1D), substitute:

(1D) A company is taken to have made a trading stock loss in respect of an asset that is an item of *trading stock if, and only if:

(a) one of the following applies:

(i) the company *disposes of the item;

(ii) the item stops being trading stock (within the meaning of section 70-80);

(iii) the item is revalued under Division 70; and

(b) if subparagraph (a)(i) or (ii) applies—the item's market value at the time when it is disposed of or stops being trading stock is less than:

(i) in respect of an item that has been valued under Division 70—its latest value under the Division; or

(ii) otherwise—its cost at that time; and

(c) if subparagraph (a)(iii) applies—the item's value under the revaluation is less than:

(i) in respect of an item that has previously been valued under Division 70—its latest value under that Division before the revaluation; or

(ii) otherwise—its cost at the time of the revaluation.

The difference worked out under paragraph (b) or (c), as the case may be, constitutes the amount of the *trading stock loss.

(6) Schedule 1, item 15, page 13 (lines 5 to 12), omit paragraph (4)(b), substitute:

(b) the company has information from which it would be reasonable to conclude that less than 50% of the company's unrealised net loss at the test time has been reflected in deductions, capital losses, or reduced assessable income, that occurred, or could occur in future, because of the happening of any *CGT event in relation to any direct or indirect equity interests in the company during the period from the reference time to the test time.

(7) Schedule 1, item 15, page 13 (lines 13 to 17), omit subsection (5), substitute:

(5) The happening of any *CGT event in relation to a direct or indirect equity interest in the company that results in the time of the happening of the event being a changeover time in respect of the company is taken, for the purposes of paragraph (4)(b), to have occurred during the period referred to in that paragraph.

(8) Schedule 1, item 20, page 47 (lines 15 to 20), omit paragraph (7)(b), substitute:

(b) the company has information from which it would be reasonable to conclude that less than 50% of the debt or of the part of a debt has been reflected in deductions, capital losses, or reduced assessable income, that occurred, or could occur in future, because of the happening of any *CGT event in relation to any direct or indirect equity interests in the company during the *ownership test period.

(9) Schedule 1, item 20, page 47 (lines 21 to 26), omit subsection (8), substitute:

(8) The happening of any *CGT event in relation to a direct or indirect equity interest in the company that results in the failure of the company to satisfy a condition in subsection (2), (3) or (4) is taken, for the purposes of paragraph (7)(b), to have occurred during the *ownership test period.

(10) Schedule 1, item 34, page 58 (lines 28 and 29), omit “the holding company”, substitute “the same persons”.

(11) Schedule 1, item 34, page 61 (lines 3 to 9), omit all the words after subparagraph (8)(b)(iv), substitute:

as the case requires, has been reflected in deductions, capital losses, or reduced assessable income, that occurred, or could occur in future, because of the happening of any *CGT event in relation to any direct or indirect equity interests held by the holding company in the subsidiary during the *test period.

(12) Schedule 1, item 34, page 61 (lines 16 to 20), omit subsection (10), substitute:

(10) The happening of any *CGT event in relation to a direct or indirect equity interest in the subsidiary that results in the failure of the subsidiary to satisfy a condition in section 166-145 is taken, for the purposes of paragraph (8)(b), to have occurred during the *test period.

(13) Schedule 1, item 48, page 64 (lines 5 to 7), omit paragraph (ab).

(14) Schedule 1, item 62, page 66 (line 18), omit “(c)”, substitute “(e)”.

(15) Schedule 1, item 65, page 68 (line 9), omit “(c)”, substitute “(e)”.

(16) Schedule 1, page 68 (after line 29), after item 65, insert:

65A Subsection 170-280(3)

(17) Schedule 1, item 68, page 70 (lines 13 to 15), omit subitem (4), substitute:

(18) Schedule 2, item 24, page 77 (lines 1 and 2), omit “life assurance”.

(19) Schedule 2, item 43, page 80 (after line 15), after subsection (1), insert:

(1A) Except as provided by section 273J, an asset is taken not to be included in the segregated assets under this Division unless the whole of the asset is included among the segregated assets.

(20) Schedule 2, item 43, page 80 (lines 20 to 23), omit subsection (3), substitute:

(3) The assets segregated must have, at the time of the segregation, a total transfer value that does not exceed the sum of:

(a) the current pension liabilities of the fund or the exempt superannuation liabilities of the PST, as the case may be, at that time; and

(b) any reasonable provision made by the trustee of the fund or PST at that time in the accounts of the fund or PST, as the case may be, for liability for tax on unrealised gains in respect of the assets segregated.

(21) Schedule 2, item 43, page 80 (line 26), after “1 October 2000”, insert “or such later date as the Commissioner approves”.

(22) Schedule 2, item 43, page 81 (lines 30 and 31), omit “60 days”, substitute “90 days (or such greater number of days as the Commissioner approves)”.

(23) Schedule 2, item 43, page 81 (line 33) to page 82 (line 13), omit subsections (1) and (2), substitute:

(1) If the total transfer value of the segregated current pension assets of a complying superannuation fund, or the segregated exempt superannuation assets of a PST, at a valuation time exceeds the sum of:

(a) the current pension liabilities of the fund or the exempt superannuation liabilities of the PST, as the case may be, at that time; and

(b) any reasonable provision made by the trustee of the fund or PST at that time in the accounts of the fund or PST, as the case may be, for liability for tax on unrealised gains in respect of the assets segregated;

(2) If the total transfer value of the segregated current pension assets of a complying superannuation fund, or the segregated exempt superannuation assets of a PST, at a valuation time is less than the sum of:

(a) the current pension liabilities of the fund or the exempt superannuation liabilities of the PST, as the case may be, at that time; and

(b) any reasonable provision made by the trustee of the fund or PST at that time in the accounts of the fund or PST, as the case may be, for liability for tax on unrealised gains in respect of the assets segregated;

(24) Schedule 2, item 43, page 82 (lines 24 to 31), omit subsection (1), substitute:

(1) If the trustee of a complying superannuation fund or of a PST determines, at a time other than a valuation time, that the total transfer value of the segregated current pension assets of the fund, or the total transfer value of the segregated exempt superannuation assets of the PST, as the case may be, is less than the sum of:

(a) the current pension liabilities of the fund or the exempt superannuation liabilities of the PST, as the case may be; and

(b) any reasonable provision made by the trustee of the fund or PST in the accounts of the fund or PST, as the case may be, for liability for tax on unrealised gains in respect of the segregated assets;

(25) Schedule 2, item 43, page 82 (line 32), to page 83 (line 11), omit subsections 273D(2) and (3), substitute:

(2) If:

(a) a current pension begins to be paid to a member of a complying superannuation fund otherwise than because of the roll-over of an eligible termination payment; and

(b) the trustee of the fund elects to discharge the liability for the pension out of the fund's segregated current pension assets;

(3) If:

(a) a unit in a PST that is held by a complying superannuation fund becomes an exempt unit because of subsection (2) or a unit in a PST that is held by a life assurance company becomes an exempt unit because of subsection 320-195(1) of the Income Tax Assessment Act 1997; and

(b) the trustee of the PST elects to discharge the liability for the pension payable by the fund, or the liability of the company under the life assurance policy, in respect of which the unit is held, out of the segregated exempt superannuation assets of the PST;

(26) Schedule 2, item 43, page 83 (lines 18 to 27), omit subsection (5), substitute:

(5) When an eligible termination payment is paid to a complying superannuation fund for the purchase of a current pension, the trustee of the fund must transfer assets having a total transfer value equal to the amount of the payment to the fund's segregated current pension assets.

(27) Schedule 2, item 43, page 84 (line 23), after “PST's”, insert “segregated”.

(28) Schedule 2, item 43, page 85 (lines 27 to 32), omit paragraph 273G(2)(c), substitute:

(c) determines, at a time other than a valuation time, that the total transfer value of the segregated current pension assets of the fund, or the total transfer value of the segregated exempt superannuation assets of the PST, as the case may be, exceeds the sum of:

(i) the current pension liabilities of the fund or the exempt superannuation liabilities of the PST, as the case may be; and

(ii) any reasonable provision made by the trustee of the fund or PST in the accounts of the fund or PST, as the case may be, for liability for tax on unrealised gains in respect of the segregated assets;

(29) Schedule 2, item 43, page 86 (after line 12), at the end of section 273G, add:

(4) The trustee of a complying superannuation fund or of a PST can pay from the segregated current pension assets of the fund or from the segregated exempt superannuation assets of the PST, as the case may be, any liability for tax on realised gains in respect of assets transferred to those segregated assets under subsection 273D(2) or (3).

(30) Schedule 2, item 43, page 90 (line 6), omit “life insurance company”, substitute “trustee of the fund or of the PST”.

(31) Schedule 2, item 49, page 92 (line 18), omit “because of section 273H”.

(32) Schedule 2, item 49, page 92 (after line 35), at the end of section 281A, add:

(4) If:

(a) a complying superannuation fund had fewer than 5 members at 1 July 2000; and

(b) an asset (other than money) (the relevant asset) that was acquired by the fund before that date is transferred to the segregated current pension assets of the fund under subsection 273D(2) after that date and before 1 July 2005;

(5) However, if:

(a) subsection (4) has effect; and

(b) an amount would have been included in the assessable income of the fund if section 273H had applied to the relevant asset at the time of the transfer of that asset to the segregated current pension assets of the fund; and

(c) that amount exceeds the amount (if any) that would have been included in the assessable income of the fund if the relevant asset had been transferred to those segregated assets on 1 July 2000 and section 273H had applied to that asset on that date;

(33) Schedule 2, item 49, page 93 (lines 11 and 12), omit “because of section 273H”.

(34) Schedule 2, item 49, page 93 (after line 26), at the end of section 281AA, add:

(3) If:

(a) a complying superannuation fund had fewer than 5 members at 1 July 2000; and

(b) an asset (other than money) (the relevant asset) that was acquired by the fund before that date is transferred to the segregated current pension assets of the fund under subsection 273D(2) before 1 July 2005;

(4) However, if:

(a) subsection (3) has effect; and

(b) an amount would have been included in the assessable income of the fund if the relevant asset had been transferred to the segregated current pension assets of the fund on 1 July 2000 and section 273H had applied to that asset on that date; and

(c) that amount exceeds the amount (if any) that would have been included in the assessable income of the fund if section 273H had applied to the relevant asset at the time of the transfer of that asset to those segregated assets;

(35) Schedule 2, page 93 (after line 36), after item 49, insert:

49A After section 282B

(1) This section applies to a defined benefit superannuation scheme (within the meaning of the Superannuation Guarantee (Administration) Act 1992) in respect of a year of income if:

(a) the scheme is a complying superannuation fund for the year of income; and

(b) at the end of the year of income the current pension liabilities of the scheme are less than 1% of the total liabilities of the scheme; and

(c) no persons can be admitted to membership of the scheme after 30 June 2000; and

(d) the trustee of the scheme has not, before or during the year of income, segregated assets of the scheme under Division 1A.

(2) The part of the normal assessable income of the scheme for the year of income that is worked out using the following formula is exempt from income tax:

average current pension liabilities means the average value during the year of income of the current pension liabilities of the scheme.

average total liabilities means the average value during the year of income of all the liabilities of the scheme.

normal assessable income means the normal assessable income of the scheme for the year of income.

(36) Schedule 2, item 50, page 94 (line 7), omit “Division 1”, substitute “Division 1A”.

(37) Schedule 2, item 50, page 94 (line 24), omit “Division 1”, substitute “Division 1A”.

(38) Schedule 2, item 50, page 95 (after line 3), at the end of section 283, add:

(4) An amount that is exempt from income tax under this section is taken to be assessable income of the complying superannuation fund for the purposes of section 8-1 of the Income Tax Assessment Act 1997.

(39) Schedule 2, item 51, page 95 (line 27), omit “because of section 273H”.

(40) Schedule 2, item 51, page 96 (lines 19 and 20), omit “because of section 273H”.

(41) Schedule 2, item 52, page 97 (line 21), omit “Division 1”, substitute “Division 1A”.

(42) Schedule 2, item 52, page 98 (line 9), omit “Division 1”, substitute “Division 1A”.

(43) Schedule 2, item 52, page 98 (after line 19), at the end of section 297BA, add:

(4) An amount that is exempt from income tax under this section is taken to be assessable income of the PST for the purposes of section 8-1 of the Income Tax Assessment Act 1997.

(44) Schedule 2, item 69, page 101 (line 21), after “business”, insert “(other than business relating to the issuing of *income bonds, *funeral policies or *scholarship plans)”.

(45) Schedule 2, item 71, page 102 (line 4), omit “virtual CGT”, substitute “virtual PST”.

(46) Schedule 2, item 78, page 104 (line 17), omit “*virtual CGT”, substitute “*virtual PST”.

(47) Schedule 2, page 105 (after line 11), after item 79, insert:

79A Subsection 118-300(1) (table items 3, 4 and 5)

79B Subsection 118-300(1) (example 2)

(48) Schedule 2, item 80, page 105 (after line 14), omit “*life insurance policy or an annuity”, substitute “policy of insurance on the life of an individual or an *annuity”.

(49) Schedule 2, page 106 (after line 13), after item 83, insert:

83A Subparagraph 152-20(2)(b)(v)

(v) a policy of insurance on the life of an individual.

(50) Schedule 2, item 84, page 113 (line 1), after “amounts”, insert “of ordinary income and statutory income”.

(51) Schedule 2, item 84, page 115 (after line 25), at the end of section 320-40, add:

(8) An amount that is exempt from income tax under this section is taken to be assessable income of the *life insurance company for the purposes of section 8-1.

(52) Schedule 2, item 84, page 121 (after line 3), after section 320-85, insert:

If an asset (other than money) is transferred from a *virtual PST under subsection 320-180(1) or 320-195(2) or (3), or is transferred to a virtual PST under subsection 320-180(2) or section 320-185, the *life insurance company can deduct the amount (if any) that it can deduct because of section 320-200.

(53) Schedule 2, item 84, page 127 (after line 29), after subsection (1), insert:

(1A) Except as provided by section 320-170 of the Income Tax (Transitional Provisions) Act 1997, an asset is taken not to be included in the *virtual PST assets unless the whole of the asset is included among those assets.

(54) Schedule 2, item 84, page 131 (line 31), omit “not exceed the company's liabilities in respect of the policy”, substitute:

(c) the company's liabilities in respect of the policy; and

(d) any reasonable provision made by the company at that time in its accounts for liability for tax on unrealised gains in respect of the assets transferred under this subsection.

(55) Schedule 2, item 84, page 132 (lines 32 to 35), omit paragraph (4)(c), substitute:

(c) there are any unpaid *PAYG instalments relating to the *virtual PST component of the *complying superannuation class of a life insurance company's taxable income for the income year;

(56) Schedule 2, item 84, page 133 (line 24), after “subsection”, insert “and section 320-55”.

(57) Schedule 2, item 84, page 134 (line 33), omit “130-185(3)”, substitute “320-185(3)”.

(58) Schedule 2, item 84, page 135 (after line 9), after paragraph (c), insert:

(ca) if an asset (other than money) is transferred from a virtual PST under subsection 320-180(1) or 320-195(2) or (3)—the amount (if any) that the company can deduct because of section 320-87; and

(59) Schedule 2, item 84, page 135 (lines 14 to 16), omit paragraph (e), substitute:

(e) the proportion of the amount that the company can deduct under subsection 115-215(6) for the income year that is attributable to capital gains that the company is taken to have under subsection 115-215(3) in respect of virtual PST assets that are interests in trust estates; and

(60) Schedule 2, item 84, page 137 (after line 8), after subsection (1), insert:

(1A) Except as provided by section 320-225 of the Income Tax (Transitional Provisions) Act 1997, an asset is taken not to be included in the segregated assets under this Subdivision unless the whole of the asset is included among the segregated assets.

(61) Schedule 2, item 84, page 137 (lines 16 to 18), omit subsection (3), substitute:

(3) The assets segregated must have, at the time of the segregation, a total *transfer value that does not exceed the sum of:

(a) the company's *exempt life insurance policy liabilities at that time; and

(b) any reasonable provision made by the company at that time in its accounts for liability for tax on unrealised gains in respect of assets transferred to its *segregated exempt assets under subsection 320-195(1).

(62) Schedule 2, item 84, page 138 (lines 16 to 26), omit subsections 320-235(1) and (2), substitute:

(1) If the total *transfer value of the company's *segregated exempt assets at a valuation time exceeds the sum of:

(a) the company's *exempt life insurance policy liabilities at that time; and

(b) any reasonable provision made by the company at that time in its accounts for liability for tax on unrealised gains in respect of assets transferred to its segregated exempt assets under subsection 320-195(1);

(2) If the total *transfer value of the company's *segregated exempt assets at a valuation time is less than the sum of:

(a) the company's *exempt life insurance policy liabilities at that time; and

(b) any reasonable provision made by the company at that time in its accounts for liability for tax on unrealised gains in respect of assets transferred to its segregated exempt assets under subsection 320-195(1);

(63) Schedule 2, item 84, page 139 (lines 3 to 8), omit subsection 320-240(1), substitute:

(1) If a *life insurance company determines, at a time other than a valuation time, that the total *transfer value of its *segregated exempt assets is less than the sum of:

(a) the company's *exempt life insurance policy liabilities; and

(b) any reasonable provision made by the company at that time in its accounts for liability for tax on unrealised gains in respect of assets transferred to its segregated exempt assets under subsection 320-195(1);

(64) Schedule 2, item 84, page 141 (lines 1 to 3), omit paragraph (c), substitute:

(c) determines, at a time other than a valuation time, that the total *transfer value of the segregated exempt assets exceeds the sum of:

(i) the company's *exempt life insurance policy liabilities; and

(ii) any reasonable provision made by the company at that time in its accounts for liability for tax on unrealised gains in respect of assets transferred to its segregated exempt assets under subsection 320-195(1);

(65) Schedule 2, item 84, page 141 (after line 16), at the end of section 320-250, add:

(4) A *life insurance company can pay from its *segregated exempt assets any liability for tax on realised gains in respect of assets transferred to the segregated exempt assets under subsection 320-195(1).

(66) Schedule 2, item 87, page 147 (after line 32), at the end of section 320-85, add:

(2) In working out the amount that a life insurance company can deduct, in respect of life insurance policies (other than policies to which subsection (1) applies) under subsection 320-85(1) of the Income Tax Assessment Act 1997 for the income year in which 1 July 2000 occurs, the value of the company's liabilities under the net risk components of the policies at the end of the previous income year is taken to be the value of the company's liabilities as at the end of 30 June 2000 under the net risk components relating to those policies as calculated under subsection 320-85(4) of that Act.

(67) Schedule 2, item 87, page 148 (line 22), omit the heading to section 320-175, substitute:

(68) Schedule 2, item 87, page 148 (after line 30), at the end of section 320-175, add:

(2) If a life insurance company that is a friendly society establishes a virtual PST in the 2000-01 income year, the calculation of the transfer values of the company's virtual PST assets as at the end of that income year is to be made not later than 90 days after the end of that income year.

(69) Schedule 2, item 87, page 149 (lines 23 and 24), omit the heading to section 320-230, substitute:

(70) Schedule 2, item 87, page 150 (after line 2), at the end of section 320-230, add:

(2) If a life insurance company that is a friendly society segregates any of its assets in accordance with section 320-225 of the Income Tax Assessment Act 1997 in the 2000-01 income year, the calculation of the transfer values of the company's segregated exempt assets as at the end of that income year is to be made not later than 90 days after the end of that income year.

(71) Schedule 3, item 78, page 205 (line 6), omit “paragraph 320-15(1)(b) and subparagraph 320-15(1)(f)(ii)”, substitute “paragraph 320-35(1)(b) and subparagraph 320-35(1)(f)(ii)”.

(72) Schedule 3, item 79, page 205 (line 14), omit “paragraph 320-15(1)(b) and subparagraph 320-15(1)(f)(ii)”, substitute “paragraph 320-35(1)(b) and subparagraph 320-35(1)(f)(ii)”.

(73) Schedule 3, item 80, page 205 (line 21), omit “paragraph 320-15(1)(b) and subparagraph 320-15(1)(f)(ii)”, substitute “paragraph 320-35(1)(b) and subparagraph 320-35(1)(f)(ii)”.

(74) Schedule 3, item 81, page 205 (lines 30 and 31), omit “paragraph 320-15(1)(b) and subparagraph 320-15(1)(f)(ii)”, substitute “paragraph 320-35(1)(b) and subparagraph 320-35(1)(f)(ii)”.

(75) Schedule 3, item 82, page 206 (lines 7 and 8), omit “paragraph 320-15(1)(b) and subparagraph 320-15(1)(f)(ii)”, substitute “paragraph 320-35(1)(b) and subparagraph 320-35(1)(f)(ii)”.

(76) Schedule 9, item 11, page 252 (lines 24 to 29), omit the definition of continuous disability policy, substitute:

continuous disability policy has the meaning given by section 9A of the Life Insurance Act 1995.

(77) Schedule 9, item 72, page 264 (lines 9 to 11), omit paragraph (b), substitute:

(b) is held by an individual and:

(i) provides for a *deferred annuity that was purchased out of an *eligible termination payment; or

(ii) is so held in the benefit fund of a *friendly society, being a fund that is a regulated superannuation fund under the Superannuation Industry (Supervision) Act 1993; or