Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
New Business Tax System (Former Subsidiary Tax Imposition) Bill 1999



Download PDFDownload PDF

Department of the

Parliamentary Library

I N F O R M A T I O N A N D R E S E A R C H S E R V I C E S

Bills Digest No. 81 1999-2000

New Business Tax System (Former Subsidiary Tax Imposition) Bill 1999

ISSN 1328-8091

 Copyright Commonwealth of Australia 1999

Except to the extent of the uses permitted under the Copyright Act 1968, no part of this publication may be reproduced or transmitted in any form or by any means including information storage and retrieval systems, without the prior written consent of the Department of the Parliamentary Library, other than by Senators and Members of the Australian Parliament in the course of their official duties.

This paper has been prepared for general distribution to Senators and Members of the Australian Parliament. While great care is taken to ensure that the paper is accurate and balanced, the paper is written using information publicly available at the time of production. The views expressed are those of the author and should not be attributed to the Information and Research Services (IRS). Advice on legislation or legal policy issues contained in this paper is provided for use in parliamentary debate and for related parliamentary purposes. This paper is not professional legal opinion. Readers are reminded that the paper is not an official parliamentary or Australian government document. IRS staff are available to discuss the paper's contents with Senators and Members and their staff but not with members of the public.

Inquiries

Members, Senators and Parliamentary staff can obtain further information from the Information and Research Services on (02) 6277 2439.

A full list of current Information and Research Services publications is available on the ISR of the Parliamentary database. On the Internet the Information and Research Services can be found at http://www.aph.gov.au/library/

A list of IRS publications may be obtained from the

IRS Publications Office Telephone: (02) 6277 2760

Published by the Department of the Parliamentary Library, 1999

I N F O R M A T I O N A N D R E S E A R C H S E R V I C E S

Bills Digest

No. 81 1999-2000

New Business Tax System (Former Subsidiary Tax Imposition) Bill 1999

Chris Field Law and Bills Digest Group 16 November 1999

Contents

Purpose ....................................................................................................................................... 1

Background ................................................................................................................................ 1

Main Provisions ......................................................................................................................... 2

Warning:

This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments.

This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

New Business Tax System (Former Subsidiary Tax Imposition) Bill 1999

Date Introduced: 21 October 1999

House: House of Representatives

Portfolio: Treasury

Commencement: Royal Assent

Purpose

To impose formally a tax on the former owners of certain subsidiary companies disposed of as part of a tax minimisation scheme.

Background

This Bill is necessary to satisfy the requirements of section 55 of the Constitution which states, in part:

Laws imposing taxation shall deal only with the imposition of taxation, and any provision therein dealing with any other matter shall be of no effect.

To meet this requirement, it is necessary to have a separate Bill imposing formally a tax, while the assessment and administration of the tax is dealt with in another Bill.

For further information on the tax on former subsidiaries imposed by this Bill refer to the Digest for the New Business Tax System (Integrity and Other Measures) Bill 1999 under Integrity - Disposal of Leases and Leased Plant.

2 New Business Tax System (Former Subsidiary Tax Imposition) Bill 1999

Warning:

This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments.

This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

Main Provisions

Clause 3 will impose a tax relating to former subsidiaries in a company group liable to pay tax under proposed section 45-25 of the Income Tax Assessment Act 1997, which is introduced by the New Business Tax System (Integrity and Other Measures) Bill 1999. The proposed section provides that members of the same company group as the subsidiary prior to its disposal will be jointly and severably liable to pay the tax owed by a former subsidiary where the disposal of certain leases through the subsidiary, or the disposal of the subsidiary, has been used for tax minimisation

The amount of tax payable is calculated by reference to the New Business Tax System (Integrity and Other Measures) Bill 1999, and will be the lesser of the amount payable by the subsidiary under that Bill and the remaining amount payable by the group of companies involved (clause 4).