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Tax Laws Amendment (2008 Measures No. 2) Bill 2008

Schedule 1 Amounts misappropriated by an employee or agent

Part 1 Capital allowances

Income Tax Assessment Act 1997

1  Section 12-5 (after the table item headed “mining”)

Insert:

misappropriation

 

by employee or agent..............................................................

25-47

2  Subsection 20-30(1) (after table item 1.5)

Insert:

1.5A

25-47

misappropriation by an employee or agent

3  After section 25-45

Insert:

25-47   Misappropriation where a balancing adjustment event occurs

             (1)  You can deduct an amount if:

                     (a)  a * balancing adjustment event occurs for a * depreciating asset you * held; and

                     (b)  your employee or * agent misappropriates (whether by theft, embezzlement, larceny or otherwise) all or part of the amount applicable to you under:

                              (i)  item 8 of the table in subsection 40-300(2); or

                             (ii)  item 1, 3, 4 or 6 of the table in subsection 40-305(1);

                            in relation to the balancing adjustment event.

Note 1:       The amount applicable to you under subsection 40-300(2) or 40-305(1) may be the market value of an asset or of a non-cash benefit.

Note 2:       If you receive an amount as recoupment of the amount misappropriated, the amount may be included in your assessable income: see Subdivision 20-A.

             (2)  The amount you can deduct is so much of the amount misappropriated as represents an amount applicable to you under item 8 of the table in subsection 40-300(2) or item 1, 3, 4 or 6 of the table in subsection 40-305(1) in relation to the * balancing adjustment event.

             (3)  You can deduct the amount for the income year in which the misappropriation happens.

             (4)  You must reduce the amount you can deduct under this section if your deductions for the asset have been reduced under section 40-25 because of use for a purpose other than a * taxable purpose. The reduction is by the same proportion you reduce the balancing adjustment amount for the asset under section 40-290.

             (5)  Section 170 of the Income Tax Assessment Act 1936 does not prevent the amendment of an assessment for the purposes of giving effect to this section for an income year if:

                     (a)  you discover the misappropriation after you lodged your * income tax return for the income year; and

                     (b)  the amendment is made at any time during the period of 4 years starting immediately after you discover the misappropriation.

4  At the end of subsections 40-285(1) and (2)

Add:

Note 3:       There is a modification to the calculation in the case of misappropriation by your employee or agent: see section 25-47.



 

Part 2 Capital gains and losses

Income Tax Assessment Act 1997

5  Subsection 104-190(1)

After “subsection 116-45(2)”, insert “or 116-60(3)”.

6  Subsection 104-190(1) (note)

Repeal the note, substitute:

Note:          Section 116-45 applies if you do not receive your capital proceeds despite having taken all reasonable steps to get them, and section 116-60 applies if your capital proceeds are misappropriated by your employee or agent.

7  At the end of section 104-240

Add:

             (3)  In applying subsection (1) or (2), reduce the * termination value of the * depreciating asset by so much of an amount misappropriated by your employee or * agent (whether by theft, embezzlement, larceny or otherwise) as represents an amount applicable to you under:

                     (a)  item 8 of the table in subsection 40-300(2); or

                     (b)  item 1, 3, 4 or 6 of the table in subsection 40-305(1);

in relation to the * balancing adjustment event.

             (4)  If you later receive an amount as * recoupment of all or part of the amount misappropriated, the amount applicable under subsection (3) is increased by the amount received.

             (5)  Section 170 of the Income Tax Assessment Act 1936 does not prevent the amendment of an assessment for the purposes of giving effect to this section for an income year if:

                     (a)  you discover the misappropriation, or you receive an amount as * recoupment of all or part of the amount misappropriated, after you lodged your * income tax return for the income year; and

                     (b)  the amendment is made at any time during the period of 4 years starting immediately after you discover the misappropriation or receive the amount.

8  At the end of section 104-245

Add:

             (3)  In applying subsection (1) or (2), reduce the * termination value of the * depreciating asset by so much of an amount misappropriated by your employee or * agent (whether by theft, embezzlement, larceny or otherwise) as represents an amount applicable to you under:

                     (a)  item 8 of the table in subsection 40-300(2); or

                     (b)  item 1, 3, 4 or 6 of the table in subsection 40-305(1);

in relation to the * balancing adjustment event.

             (4)  If you later receive an amount as * recoupment of all or part of the amount misappropriated, the amount applicable under subsection (3) is increased by the amount received.

             (5)  Section 170 of the Income Tax Assessment Act 1936 does not prevent the amendment of an assessment for the purposes of giving effect to this section for an income year if:

                     (a)  you discover the misappropriation, or you receive an amount as * recoupment of all or part of the amount misappropriated, after you lodged your * income tax return for the income year; and

                     (b)  the amendment is made at any time during the period of 4 years starting immediately after you discover the misappropriation or receive the amount.

9  Subsection 116-10(1)

Omit “5 modifications”, substitute “6 modifications”.

10  At the end of section 116-10 (before the note)

Add:

             (7)  The sixth relates to misappropriation by an employee or agent. It is relevant if your employee or agent misappropriates all or part of the capital proceeds from a CGT event.

11  Section 116-25

Omit “5 modifications”, substitute “6 modifications”.

12  Section 116-25 (table items dealing with CGT events A1 and B1, column headed “Only these modifications can apply:”)

After “, 5”, insert “, 6”.

13  Section 116-25 (table items dealing with CGT events C1, C2, C3, D1, D2 and D3, column headed “Only these modifications can apply:”)

After “, 4”, insert “, 6”.

14  Section 116-25 (table items dealing with CGT events D4, E1, E2 and E8, column headed “Only these modifications can apply:”)

After “, 5”, insert “, 6”.

15  Section 116-25 (table items dealing with CGT events F1, F2, F4, F5 and H2, column headed “Only these modifications can apply:”)

After “, 4”, insert “, 6”.

16  Section 116-25 (table items dealing with CGT event K6, column headed “Only these modifications can apply:”)

After “, 5”, insert “, 6”.

17  Section 116-25 (table items dealing with CGT event K9, column headed “Only these modifications can apply:”)

After “, 4”, insert “, 6”.

18  After section 116-55

Insert:

116-60   Misappropriation rule: modification 6

             (1)  The * capital proceeds from a * CGT event are reduced if your employee or * agent misappropriates (whether by theft, embezzlement, larceny or otherwise) all or part of those proceeds.

Note:          This rule exists because the general rules treat you as having received an amount when you are entitled to receive it.

             (2)  The * capital proceeds are reduced by the amount misappropriated.

             (3)  There is a further consequence if:

                     (a)  those proceeds are reduced by the amount misappropriated; and

                     (b)  you later receive an amount as * recoupment of all or part of the amount misappropriated.

Those proceeds are increased by the amount received.

             (4)  This Part and Part 3-3 apply to the debt owed to you (the amount misappropriated) as if it were not a * CGT asset.

             (5)  Section 170 of the Income Tax Assessment Act 1936 does not prevent the amendment of an assessment for the purposes of giving effect to this section for an income year if:

                     (a)  you discover the misappropriation, or you receive an amount as * recoupment of all or part of the amount misappropriated, after you lodged your * income tax return for the income year; and

                     (b)  the amendment is made at any time during the period of 4 years starting immediately after you discover the misappropriation or receive the amount.



 

Part 3 Application

19  Application

The amendments made by this Schedule apply to amounts misappropriated in the 2007-08 income year and later income years.