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Thursday, 26 March 1998
Page: 1661


Mr DEPUTY SPEAKER (Mr Jenkins) —My attention has been drawn to the alterations proposed by Senate amendments 10 and 11. I understand that the alteration in amendment 10 will extend the scope of a definition in the bill. One result would apparently be that some taxpayers will have tax deductions and other benefits disallowed, so that they would be liable to pay more tax. Amendment 11 is consequential. It appears that both of these alterations were prepared and circulated in the Senate as requests rather than amendments. This reflected advice received by the government in terms of compliance with the third paragraph of section 53 of the constitution.

Following a statement by the chairman of committees in the Senate, these alterations were, however, treated as amendments. On their face, the alterations fail the test proposed by our legal and constitutional affairs committee as to the type of amendments open to the Senate—the committee referred, inter alia, to a request being required where an alteration moved in the Senate will make an increase in the total tax payable legally possible. I note, however, that the supplementary explanatory memorandum presented stated:

The amendments to the bill will not affect the financial impact outlined in paragraph 1.45 of the explanatory memorandum to the bill.

Matters such as these often raise difficult questions of interpretation. Having drawn attention to this matter, I acknowledge the House may choose not to take any objection and proceed to consider the Senate amendments. On this occasion the House may wish to follow that course.

Ordered that the amendments be taken into consideration forthwith.

Senate's amendments—

(1) Schedule 1, item 1, page 45 (line 19), omit "family", substitute "excepted".

(2) Schedule 1, item 1, page 45 (line 25), omit "a family", substitute "an excepted".

(3) Schedule 1, item 1, page 73 (lines 14 and 15), omit subparagraph (iii), substitute:

(iii) the trustees of one or more family trusts, provided the individual is specified in the family trust election of each of those family trusts;

(4) Schedule 1, item 1, page 85 (line 4), after "primary", insert "interposed".

(5) Schedule 1, item 1, page 85 (line 6), after "primary", insert "interposed".

(6) Schedule 1, item 1, page 85 (line 8), after "primary", insert "interposed".

(7) Schedule 1, item 1, page 108 (lines 16 to 32), omit subsection (1), substitute:

Trusts

(1) A trust in respect of which a family trust election or an interposed entity election is proposed to be made passes the family control test if:

(a) the requirement in any of the paragraphs of subsection (2) is satisfied in relation to a group consisting of:

(i) the individual (the primary individual ) who is to be specified in the family trust election or, in the case of an interposed entity election, who is specified in the family trust election to which the interposed entity election will relate; or

(ii) one or more members of the primary individual's family (see section 272-95); or

(iii) the primary individual and one or more members of the primary individual's family; or

(b) the requirement in any of paragraphs (a) to (e) of subsection (2) is satisfied in relation to a group consisting of a person or persons covered by subparagraph (a)(i), (ii) or (iii) of this subsection and one or more legal or financial advisers to the primary individual or to a member of the primary individual's family; or

(c) the requirement in paragraph (f) of subsection (2) is satisfied in relation to a group consisting of:

(i) the trustees of one or more family trusts, provided the primary individual is specified in the family trust election of each of those family trusts; or

(ii) such trustees and a person or persons covered by subparagraph (a)(i), (ii) or (iii).

(8) Schedule 1, item 1, page 109 (lines 28 and 29), omit paragraph (3)(c), substitute:

(c) the trustees of one or more family trusts, provided the individual is specified in the family trust election of each of those family trusts; or

(d) any persons covered by any combination of the above paragraphs;

(9) Schedule 1, item 1, page 110 (lines 29 and 30), omit paragraph (c), substitute:

(c) the trustees of one or more family trusts, provided the primary individual is specified in the family trust election of each of those family trusts;

(10) Schedule 1, item 1, page 114 (lines 7 to 11), omit subsection (2), substitute:

Closely held,income test

(2) A trust is closely held if:

(a) an individual has, or up to 20 individuals have between them; or

(b) no individual has, or no individuals have between them;

directly or indirectly and for their own benefit, fixed entitlements to a 75% or greater share of the income of the trust.

Closely held,capital test

(2A) A trust is also closely held if:

(a) an individual has, or up to 20 individuals have between them; or

(b) no individual has, or no individuals have between them;

directly or indirectly and for their own benefit, fixed entitlements to a 75% or greater share of the capital of the trust.

(11) Schedule 1, item 1, page 114 (line 13), after "subsection (2)", insert "or (2A)".

(12) Schedule 1, item 11, page 126 (lines 10 to 12), omit the item, substitute:

11 After paragraph 170(13)(b)

Insert:

(c) Division 270 of Schedule 2F to this Act;

11A After subsection 262A(4AK)

Insert:

(4AL) A person who makes an election in accordance with subitem 21(2A) or 22(3) of the Taxation Laws Amendment (Trust Loss and Other Deductions) Act 1998 must retain the election until the end of 5 years after the election was made.

(13) Schedule 1, item 13, page 128 (lines 15 to 17), omit ", required to be taken into account as mentioned in paragraph (a) of this subitem,", substitute "(whether taking place before or after 1995 Budget time), required to be taken into account in determining whether the trust meets the condition in subsection 267-30(2),".

(14) Schedule 1, item 13, page 128 (lines 20 to 22), omit ", required to be taken into account as mentioned in paragraph (a) of this subitem,", substitute "(whether taking place before or after 1995 Budget time), required to be taken into account in determining whether the trust meets the condition in subsection 267-30(2),".

(15) Schedule 1, item 14, page 130 (lines 30 to 32), omit ", required to be taken into account as mentioned in paragraph (a) of this subitem,", substitute "(whether taking place before or after 1996 Budget time), required to be taken into account in determining whether the trust meets the condition in subsection 267-30(2),".

(16) Schedule 1, item 14, page 131 (lines 2 to 4), omit ", required to be taken into account as mentioned in paragraph (a) of this subitem,", substitute "(whether taking place before or after 1996 Budget time), required to be taken into account in determining whether the trust meets the condition in subsection 267-30(2),".

(17) Schedule 1, item 18, page 133 (lines 2 to 4), omit ", required to be taken into account as mentioned in paragraph (a) of this subitem,", substitute "(whether taking place before, on or after 1 October 1997), required to be taken into account in determining whether the trust meets the condition in subsection 267-30(2),".

(18) Schedule 1, item 18, page 133 (lines 7 to 9), omit ", required to be taken into account as mentioned in paragraph (a) of this subitem,", substitute "(whether taking place before, on or after 1 October 1997), required to be taken into account in determining whether the trust meets the condition in subsection 267-30(2),".

(19) Schedule 1, item 21, page 134 (lines 12 to 14), omit paragraph (2)(a), substitute:

(a) a family trust election can, in accordance with subitem (1), be made specifying the 1997-98 year of income; and

(20) Schedule 1, item 21, page 134 (after line 21), after subitem (2), insert:

(2A) If a family trust election can, in accordance with this item, specify the 1997-98 year of income or an earlier year of income:

(a) subsection 272-80(2) of the trust loss etc. Schedule does not apply to the making of the election; and

(b) the election must be in writing in a form approved by the Commissioner; and

(c) the election must be made:

(i) if the trustee is required to furnish a return for the 1997-98 year of income,by the time when the trustee furnishes the return; or

(ii) if the trustee is not required to furnish a return for that year of income,before the end of 2 months after the end of that year of income or before the end of such later day as the Commissioner allows.

(2B) If a family trust election is made in accordance with subitem (2A) specifying the 1997-98 year of income or an earlier year of income:

(a) if the trustee is required to furnish a return for the 1998-99 year of income,such information about the election as is required by the return must be included in the return; and

(b) if the trustee is not required to furnish a return for that year of income,the trustee must, before the end of 2 months after the end of the 1998-99 year of income or before the end of such later day as the Commissioner allows, give the Commissioner such information about the election as the Commissioner, by notice in the Gazette , requires.

(21) Schedule 1, item 21, page 134 (after line 34), at the end of the item, add:

(4) If the revocation of a family trust election is proposed to specify a time under subsection 272-80(8) that is before the beginning of the 1998-99 year of income, then:

(a) subsection 272-80(7) of the trust loss etc. Schedule does not apply to the revocation; and

(b) if the trustee is required to furnish a return for the 1998-99 year of income,the revocation must be made in the trust's return of income for that year of income; and

(c) if the trustee is not required to furnish a return for that year of income,the revocation must:

(i) be in writing in a form approved by the Commissioner; and

(ii) be given to the Commissioner by the end of 2 months after the end of that year of income or before the end of such later day as the Commissioner allows.

(22) Schedule 1, item 22, page 135 (lines 6 to 8), omit paragraph (2)(a), substitute:

(a) an interposed entity election can, in accordance with subitem (1), be made specifying a day in the 1997-98 year of income; and

(23) Schedule 1, item 22, page 135 (after line 20), at the end of the item, add:

(3) If an interposed entity election can, in accordance with this item, specify a day in the 1997-98 year of income or a day in an earlier year of income:

(a) subsection 272-85(2) of the trust loss etc. Schedule does not apply to the making of the election; and

(b) the election must be in writing in a form approved by the Commissioner; and

(c) the election must be made:

(i) if the company, the partners or the trustee is required to furnish a return for the 1997-98 year of income,by the time when the company, partners or trustee furnishes the return; or

(ii) if not,before the end of 2 months after the end of the 1997-98 year of income or before the end of such later day as the Commissioner allows.

(4) If an interposed entity election is made in accordance with subitem (3) specifying a day in the 1997-98 year of income or a day in an earlier year of income:

(a) if the company, the partners or the trustee is required to furnish a return for the 1998-99 year of income,such information about the election as is required by the return must be included in the return; and

(b) if the company, the partners or the trustee is not required to furnish a return for that year of income,the company, the partners or the trustee must, before the end of 2 months after the end of the 1998-99 year of income or before the end of such later day as the Commissioner allows, give the Commissioner such information about the election as the Commissioner, by notice in the Gazette , requires.

(24) Schedule 1, item 32, page 142 (lines 4 to 8), omit the item, substitute:

32 Section 43 (after paragraph (a) of the definition of adjusted taxable income )

Insert:

(aa) the amount (if any) by which the amount worked out under paragraph (a) would be increased if it were instead worked out ignoring subsection 271-105(1) of Sched ule 2F to the Income Tax Assessment Act; and

Motion (by Mrs Bishop) proposed:

That the amendments be agreed to.