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A New Tax System (Closely Held Trusts) Bill 1999
Schedule 2 Consequential amendments

Part 1 Income Tax Assessment Act 1936

1  Paragraph 26(b)

Omit “and” (last occurring).

2  At the end of paragraph 26(b)

Add:

                       or (iii)  amounts on which ultimate beneficiary non-disclosure tax is payable under Division 6D; and

3  At the end of subparagraph 47A(18)(d)(ii)

Add:

                                    or (G)  the trustee of a trust estate where ultimate beneficiary non-disclosure tax is payable under Division 6D on the whole or part of the net income of the trust estate;

4  At the end of paragraph 47A(18)(d)

Add:

                            (vi)  if sub-subparagraph (ii)(G) applies:

                                        (A)  the trust estate was a resident trust estate (within the meaning of Division 6) in relation to the assessment year of income; and

                                        (B)  the whole or a part (which whole or part is in this subsection also called the actual taxpayer’s portion of the original assessable amount ) of the whole or the part of the share of the net income is attributable (either directly or indirectly through one or more interposed partnerships or trusts) to the original assessable amount;

5  After subsection 86(2)

Insert:

          (2A)  This section does not apply in working out a share of the net income of a closely held trust for the purposes of applying paragraph 102UK(2)(a) or 102UM(2)(a) (which deals with ultimate beneficiary non-disclosure tax). However, this subsection does not as a result affect the way in which a share of the net income of a closely held trust is worked out for the purposes of applying paragraph 102UK(2)(b) or 102UM(2)(b).

6  Subsection 102AAE(2)

Omit “either of”, substitute “one of”.

7  After paragraph 102AAE(2)(b)

Insert:

                     (c)  both of the following conditions are satisfied:

                              (i)  ultimate beneficiary non-disclosure tax is payable under Division 6D on the whole or part (the net income amount ) of a share of the net income of the trust estate of the trust’s year of income;

                             (ii)  the whole or part of the net income amount is attributable to the item part;

8  After subsection 102AAM(4)

Insert:

          (4A)  If:

                     (a)  paragraph 102UK(2)(b) or 102UM(2)(b) has the effect that the whole or a part of a share of the net income of a trust estate (the first trust estate ) is not included in the assessable income of the trustee of another trust estate (the second trust estate ); and

                     (b)  the whole or the part of the share (which whole or part is in this subsection called the taxpayer’s portion of the distributed amount of the non-resident trust’s year of income ) is attributable (either directly or indirectly through one or more interposed partnerships or trusts) to the distributed amount of the non-resident trust’s year of income; and

                     (c)  if paragraph 102UK(2)(b) or 102UM(2)(b) were ignored, the second trust estate would be an interposed trust mentioned in applying subparagraph (4)(b)(iii) or (iv) of this section; and

                     (d)  this subsection does not also apply to the trustee of a trust interposed between the first trust estate and the non-resident trust;

the trustee of the first trust estate is liable to pay interest to the Commissioner in respect of the taxpayer’s portion of the distributed amount of the non-resident trust’s year of income, calculated under subsection (5), on the amount calculated using the formula:

where:

applicable rate of tax has the meaning given by subsection (10).

FTC [Foreign tax credit] means so much of any credit under Division 18 to which the trustee of the first trust would be entitled, in respect of the taxpayer’s portion of the distributed amount of the non-resident trust’s year of income, if the taxpayer’s portion of the distributed amount of the non-resident trust’s income were an amount in respect of which the trustee were liable to be assessed and to pay tax under section 99A.

taxpayer’s portion of the distributed amount means the taxpayer’s portion of the distributed amount of the non-resident trust’s year of income.

9  At the end of subparagraph 102AAU(1)(c)(i)

Add:

                                        (C)  on which ultimate beneficiary non-disclosure tax is payable under Division 6D; or

10  At the end of subsection 128B(3)

Add:

                ; or (l)  income derived by a trustee that, because of paragraph 102UK(2)(b) or 102UM(2)(b), is not included in the assessable income of a trustee beneficiary of the trust estate.

11  Subsection 170(10)

After “section 100A,”, insert “Subdivision C of Division 6D of Part III, section”.

12  Application

(1)       The amendments made by items 1 to 7 and 9 apply to ultimate beneficiary non-disclosure tax that becomes payable at any time after the commencement of this Part.

(2)       The amendment made by item 8 applies to net income of a trust estate of the year of income in which 13 August 1998 occurred, and all later years of income.

(3)       The amendment made by item 10 applies to income derived either before or after the commencement of this Part.



 

Part 2 Income Tax Assessment Act 1997

13  After paragraph 42-295(3)(b)

Insert:

                   (ba)  you are the trustee of a trust, ultimate beneficiary non-disclosure tax is payable under Division 6D of Part III of that Act (provisions relating to certain closely held trusts) on the whole or a part of a share of the net income of the trust and the amount mentioned in paragraph (2)(b) is included in that whole or part; or

14  Application

The amendment made by this Part applies to assessments for the income year in which 13 August 1998 occurred, and all later income years.



 

Part 3 Superannuation Contributions Tax (Assessment and Collection) Act 1997

15  Section 43 (paragraph (aa) of the definition of adjusted taxable income )

Omit “subsection 271-105(1) of Schedule 2F to”, substitute “paragraphs 102UK(2)(b) and 102UM(2)(b) of, and subsection 271-105(1) of Schedule 2F to,”.

16  Application

The amendment made by this Part applies to the calculation of adjusted taxable income for the financial year that began on 1 July 1998 or a later financial year.