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A New Tax System (Tax Administration) Bill (No. 1) 2000
Schedule 1 PAYG instalments and trusts

   

Taxation Administration Act 1953

1  Section 45-10 in Schedule 1 (note)

Repeal the note, substitute:

Note 1:       Section 45-450 provides for how this Part applies to a trustee covered by any of items 6 to 12 of the table in section 9-1 of the Income Tax Assessment Act 1997 . In most respects, the trust is treated like a company.

Note 2:       This Part also applies to a trustee covered by item 5 of the table in section 9-1 of the Income Tax Assessment Act 1997 , but only to the extent set out in section 45-455, and the rest of Subdivision 45-N, in this Schedule.

2  Paragraph 45-115(1)(b) in Schedule 1

Omit “under subsection 45-320(5)”.

3   Subsection 45-120(1) in Schedule 1 (note 1)

Omit “An amount of statutory income is not”, substitute “No other amount is”.

4   Subsection 45-120(1) in Schedule 1 (note 2)

After “the period”, insert “(except in some cases)”.

5  Subparagraph 45-215(1)(b)(ii) in Schedule 1

Omit “the amount notified to you by the Commissioner”, substitute “worked out”.

6  At the end of section 45-260 in Schedule 1

Add:

Exception for corporate limited partnerships

             (4)  Your instalment income for the current period does not include an amount for a partnership that is a * corporate limited partnership for the income year that is or includes that period.

Note:          Your instalment income will still include a distribution by the partnership that is ordinary income. See section 45-120.

7  Subdivision 45-I in Schedule 1 (heading)

Repeal the heading, substitute:

Subdivision 45-I Trust income included in instalment income of beneficiary

8  Group heading before section 45-280 in Schedule 1

Repeal the heading.

9  Subsection 45-280(2) in Schedule 1

Repeal the subsection, substitute:

             (2)  For the purposes of the formula in subsection (1):

your assessable income from the trust for the last income year means so much of a share of the trust’s net income for an income year as:

                     (a)  Division 6 of Part III of the Income Tax Assessment Act 1936 included in your assessable income for the most recent income year:

                              (i)  that ended before the start of the current period; and

                             (ii)  for which you have an assessment, or for which the Commissioner has notified you that you do not have a taxable income; and

                     (b)  is not attributable to a * capital gain made by the trust.

Note:          For exceptions to paragraph (b), see section 45-290.

10  At the end of section 45-280 in Schedule 1

Add:

Exception for corporate unit trusts and public trading trusts

             (4)  Your instalment income for the current period does not include an amount for a trust if the trustee is liable to be assessed, and to pay tax, under section 102K or 102S of the Income Tax Assessment Act 1936 for the income year that is or includes that period.

Note:          Your instalment income will still include a distribution by the trust that is ordinary income. See section 45-120.

11  After section 45-280 in Schedule 1

Insert:

45-290   Exceptions to exclusion of trust capital gains from beneficiary’s instalment income

             (1)  This section sets out cases where paragraph (b) of the definition of your assessable income from the trust for the last income year in subsection 45-280(2) does not apply.

             (2)  It does not apply in the case of:

                     (a)  an eligible ADF (as defined in section 267 of the Income Tax Assessment Act 1936 ) for the income year that is or includes the current period; or

                     (b)  an eligible superannuation fund (as defined in that section) for that year; or

                     (c)  a pooled superannuation trust (as defined in that section) for that year.

             (3)  It does not apply in the case of a * life insurance entity or * registered organisation to the extent that the share of the trust’s net income is included in the * CS/RA class of its assessable income for the income year that is or includes the current period.

Note:          The CS/RA class relates to the Complying Superannuation/Roll-over Annuity aspect of the entity’s business.

12  Group heading before section 45-300 in Schedule 1

Repeal the heading.

13  Section 45-300 in Schedule 1

Repeal the section.

14  Subsection 45-405(1) in Schedule 1

Omit “under Subdivision 45-J”.

15  Subsection 45-405(2) in Schedule 1

Omit “in applying Subdivision 45-J”.

16  At the end of Division 45 in Schedule 1

Add:

Subdivision 45-N How this Part applies to the trustee of a trust

Table of sections

Trustees to whom this Part applies

45-450      Trustees to whom a single instalment rate is given

45-455      Trustees to whom several instalment rates are given

45-460      Rest of Subdivision applies only to multi-rate trustees

45-465      Meaning of instalment income

45-468      Multi-rate trustee may pay quarterly instalments on the basis of GDP-adjusted notional tax

How Commissioner works out instalment rate and notional tax for a multi-rate trustee

45-470      Working out instalment rate

45-473      Commissioner must notify you of notional tax

45-475      Working out your notional tax

45-480      Working out your adjusted taxable income

45-483      Meaning of reduced beneficiary’s share and reduced no beneficiary’s share

45-485      Working out your adjusted withholding income

How Commissioner works out benchmark instalment rate and benchmark tax for a multi-rate trustee

45-525      When Commissioner works out benchmark instalment rate and benchmark tax

45-530      How Commissioner works out benchmark instalment rate

45-535      Working out your benchmark tax

Trustees to whom this Part applies

45-450   Trustees to whom a single instalment rate is given

             (1)  This Part (except Subdivision 45-D) applies to a trustee covered by any of items 6 to 12 of the table in section 9-1 of the Income Tax Assessment Act 1997 .

Note:          Subdivision 45-D is about quarterly payers who pay on the basis of GDP-adjusted notional tax.

             (2)  Such a trustee is called a single-rate trustee .

             (3)  This Part (except Subdivision 45-D) applies to the trustee of a trust that is a * corporate unit trust, or a * public trading trust, for an income year as if the trustee had a taxable income for the income year equal to the net income of the trust for the income year.

45-455   Trustees to whom several instalment rates are given

Trustee previously assessed in respect of beneficiary

             (1)  This Part also applies for an income year (the current year ), to the trustee of a trust, in respect of a beneficiary of the trust, if for a previous income year the trustee of the trust was liable to be assessed, and to pay tax, under subsection 98(1) or (2) of the Income Tax Assessment Act 1936 in respect of that beneficiary.

             (2)  However, this Part does not apply for the current year to the trustee in respect of that beneficiary if:

                     (a)  for that previous income year the trustee was liable to be assessed, and to pay tax, under subsection 98(1) of the Income Tax Assessment Act 1936 in respect of that beneficiary; and

                     (b)  that beneficiary will no longer be under a legal disability, or it is reasonable to expect that he or she will no longer be under a legal disability, at the end of the current year.

Trustee previously assessed under section 99 or 99A

             (3)  This Part also applies for an income year to the trustee of a trust if for a previous income year the trustee was liable to be assessed, and to pay tax, under section 99 or 99A of the Income Tax Assessment Act 1936 .

Multiple applications of this Part to the same trustee for the same income year

             (4)  The application of this Part for an income year, to the trustee of a trust, in respect of a beneficiary of the trust, because of subsection (1), is distinct from, and additional to, each of the following:

                     (a)  the application of this Part for that income year, to the trustee of the trust, in respect of another beneficiary;

                     (b)  the application of this Part for that income year, to the trustee of the trust, because of subsection (3);

                     (c)  the application of this Part for that income year to a beneficiary of the trust.

             (5)  The application of this Part for an income year, to the trustee of a trust, because of subsection (3), is distinct from, and additional to, each of the following:

                     (a)  the application of this Part for that income year, to the trustee of the trust, in respect of a beneficiary of the trust, because of subsection (1);

                     (b)  the application of this Part for that income year to a beneficiary of the trust.

             (6)  A multi-rate trustee is a trustee to whom this Part applies because of this section.

45-460   Rest of Subdivision applies only to multi-rate trustees

                   The rest of this Subdivision applies to you if, and only if, you are a * multi-rate trustee. (It applies instead of Subdivisions 45-J and 45-K.)

Note:          Except as provided in the rest of this Subdivision or elsewhere, this Part applies according to its terms to a multi-rate trustee. For example, a multi-rate t rustee can become an annual payer under Subdivision 45-E.

45-465   Meaning of instalment income

                   Your instalment income for a period is the whole of the trust’s * instalment income for that period.

45-468   Multi-rate trustee may pay quarterly instalments on the basis of GDP-adjusted notional tax

                   Subdivision 45-D (about quarterly payers who pay on the basis of GDP-adjusted notional tax) applies to you in the same way as it applies to an individual.

How Commiss ioner works out instalment rate and notional tax for a multi-rate trustee

45-470   Working out instalment rate

             (1)  An instalment rate that the Commissioner gives you must be the percentage worked out to 2 decimal places (rounding up if the third decimal place is 5 or more) using the formula:

However, the instalment rate must be a nil rate if either component of the formula is nil.

             (2)  For the purposes of the formula in subsection (1):

base assessment instalment income means so much of the assessable income of the trust, as worked out for the purposes of the * base assessment, as the Commissioner determines is * instalment income of the trust for the * base year.

             (3)  The base assessment is the latest assessment for the most recent income year for which an assessment has been made of the tax payable by you:

                     (a)  under subsection 98(1) or (2) of the Income Tax Assessment Act 1936 in respect of the same beneficiary; or

                     (b)  under section 99 or 99A of the Income Tax Assessment Act 1936 ;

as appropriate.

             (4)  However, if the Commissioner is satisfied that there is a later income year for which no tax is payable as mentioned in subsection (3), the base assessment is the latest return or other information from which an assessment of tax so payable for that income year would have been made.

             (5)  The base year is the income year to which the * base assessment relates.

45-473   Commissioner must notify you of notional tax

             (1)  When the Commissioner gives you the instalment rate, he or she must also notify you of the amount of your * notional tax , as worked out for the purposes of working out the instalment rate.

             (2)  The Commissioner may incorporate notice of the instalment rate and the amount of your * notional tax in notice of your assessment.

45-475   Working out your notional tax

Notional tax if no withholding income

             (1)  Your notional tax is your * adjusted tax (worked out under section 45-340) on your * adjusted taxable income (worked out under section 45-480) for the * base year.

Notional tax if trust has withholding income

             (2)  However, your notional tax (as worked out under subsection (1)) is reduced if the trust’s assessable income for the * base assessment includes amounts in respect of * withholding payments (except * non-quotation withholding payments).

             (3)  It is reduced (but not below nil) by your * adjusted tax (worked out under section 45-340) on your * adjusted withholding income (worked out under section 45-485) for the * base year.

Commissioner may take into account actual and proposed changes to the law

             (4)  Subsections 45-325(4) and (5) apply for the purposes of working out your * notional tax under this section.

45-480   Working out your adjusted taxable income

             (1)  Your adjusted taxable income for the * base year is worked out using the formula:

             (2)  For the purposes of the formula in subsection (1):

adjusted net income of the trust means the net income of the trust, as worked out for the purposes of the * base assessment and:

                     (a)  reduced by any * net capital gain included in the trust’s assessable income as so worked out; and

                     (b)  increased by any deductions for * tax losses that were made in so working out that net income; and

                     (c)  reduced by the amount of any tax loss, to the extent that it can be carried forward for working out the trust’s net income for the next income year.

reduced net income of the trust means the net income of the trust, as worked out for the purposes of the * base assessment and reduced by any * net capital gain included in the trust’s assessable income as so worked out.

relevant share means the * reduced beneficiary’s share, or the * reduced no beneficiary’s share, as appropriate, of the net income of the trust, as worked out for the purposes of the * base assessment.

45-483   Meaning of reduced beneficiary’s share and reduced no beneficiary’s share

             (1)  If the trustee of a trust is liable to be assessed, and to pay tax, for an income year under subsection 98(1) or (2) of the Income Tax Assessment Act 1936 in respect of a particular beneficiary, the reduced beneficiary’s share of the net income is the amount on which the trustee is so liable to be assessed and to pay tax, except so much of that amount as is attributable to a * net capital gain included in the trust’s assessable income for that income year.

             (2)  If the trustee of a trust is liable to be assessed, and to pay tax, for an income year under section 99 or 99A of the Income Tax Assessment Act 1936 , the reduced no beneficiary’s share of the net income is the amount on which the trustee is so liable to be assessed and to pay tax, except so much of that amount as is attributable to a * capital gain made by the trust during that income year.

45-485   Working out your adjusted withholding income

             (1)  Your adjusted withholding income for the * base year is worked out using the formula:

             (2)  For the purposes of the formula in subsection (1):

net withholding income of the trust means:

                        •  the total of the amounts included in the trust’s assessable income for the * base assessment in respect of * withholding payments (except * non-quotation withholding payments);

reduced by:

                        •  the trust’s deductions for that year, as used in making that assessment, to the extent that they reasonably relate to those amounts.

reduced net income of the trust has the meaning given by subsection 45-480(2).

relevant share has the meaning given by subsection 45-480(2).

How Commissioner works out benchmark instalment rate and benchmark tax for a multi-rate trustee

45-525   When Commissioner works out benchmark instalment rate and benchmark tax

             (1)  The Commissioner may work out your * benchmark instalment rate for an income year (the variation year ) if, under section 45-205, you choose an instalment rate to work out the amount of your instalment for an * instalment quarter in that year.

             (2)  The Commissioner may work out your * benchmark tax for an income year (the variation year ) if, under paragraph 45-112(1)(b) or (c), the amount of your instalment for an * instalment quarter in an income year is worked out on the basis of your estimate of your * benchmark tax for that income year.

             (3)  The Commissioner may work out your * benchmark tax for an income year (the variation year ) if, under paragraph 45-115(1)(c) or 45-175(1)(b), you estimate the amount of your annual instalment for that year.

45-530   How Commissioner works out benchmark instalment rate

             (1)  Your benchmark instalment rate for the variation year is the percentage worked out to 2 decimal places (rounding up if the third decimal place is 5 or more) using the formula:

However, your benchmark instalment rate is a nil rate if either component of the formula is nil.

             (2)  For the purposes of the formula in subsection (1):

variation year instalment income means so much of the trust’s assessable income for the variation year as the Commissioner determines is * instalment income for that year.

45-535   Working out your benchmark tax

Benchmark tax if no withholding income

             (1)  Your benchmark tax is your * adjusted assessed tax (worked out under section 45-375) on the * reduced beneficiary’s share, or the * reduced no beneficiary’s share, as appropriate, of the net income of the trust for the variation year.

Benchmark tax if you had withholding income

             (2)  However, your benchmark tax (as worked out under subsection (1)) is reduced if the trust’s assessable income for the variation year includes amounts in respect of * withholding payments.

             (3)  It is reduced (but not below nil) by the total amount of the credits to which you are entitled for the variation year under section 18-25 (for amounts withheld from the withholding payments).