2016-2017-2018

 

The Parliament of the

Commonwealth of Australia

 

THE SENATE

 

 

 

Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017

 

 

(Government)

(1)     Clause  2 , page 2 (after table item 9), insert:

 

9A.  Schedule 1, Part 8A

The first 1 January, 1 April, 1 July or 1 October to occur after the day this Act receives the Royal Assent.

[commencement]

(2)     Clause  2 , page 3 (table item  17 ), omit the table item.

[commencement]

(3)     Schedule  1 , page 8 (after line 4) , after item  5 , insert:

5A  Subsection 3(1)

Insert:

large ADI has the same meaning as in the Income Tax Assessment Act 1997 .

Note:          For a consolidated group, the head company is the large ADI.

[large ADIs]

(4)     Schedule  1 , page 8 (after line 6) , after item  6 , insert:

6A  Subsection 23(1A)

Omit “section 23A”, substitute “sections 23A and 24”.

[large ADIs]

(5)     Schedule  1 , item  7 , page 8 (line 10) , omit “ section 23A ”, substitute “ sections 23A and 24 ”.

[large ADIs]

(6)     Schedule  1 , item  8 , page 8 (lines 12 to 14) , omit the item, substitute:

8  Paragraph 23(3)(b)

Repeal the paragraph, substitute:

                     (b)  in respect of the standard component:

                              (i)  unless subparagraph (ii) applies—27.5%; or

                             (ii)  if the company is a large ADI for the year of income—30%.

[large ADIs]

(7)     Schedule  1 , item  13 , page 9 (lines 5 and 6) , omit the item, substitute:

13  Paragraph 23A(a)

Repeal the paragraph, substitute:

                     (a)  in respect of the ordinary class:

                              (i)  unless subparagraph (ii) applies—27.5%; or

                             (ii)  if the company is a large ADI for the year of income—30%; and

[large ADIs]

(8)     Schedule  1 , page 9 (after line 6) , after item  13 , insert:

13A  After section 23A

Insert:

24   Rate of tax payable by large ADIs

                   The rate of tax in respect of the taxable income of a company (other than a life insurance company or an RSA provider) that is a large ADI for the year of income is 30%.

[large ADIs]

(9)     Schedule  1 , item  15 , page 9 (lines 14 to 18) , omit the item, substitute:

15  Paragraph 28(a)

Repeal the paragraph, substitute:

                     (a)  if paragraph 98(3)(b) of the Assessment Act (about beneficiaries that are companies) applies:

                              (i)  unless subparagraph (ii) applies—the rate specified in subsection 23(2); or

                             (ii)  if the beneficiary is a large ADI for the year of income—the rate specified in section 24; and

[large ADIs]

(10)   Schedule 1, item 19, page 10 (line 7), omit “ Paragraph 23(3)(b) ”, substitute “ Subparagraph 23(3)(b)(i) ”.

[consequential—large ADIs]

(11)   Schedule 1, item 23, page 10 (line 15), omit “ Paragraph 23A(a) ”, substitute “ Subparagraph 23A(a)(i) ”.

[consequential—large ADIs]

(12)   Schedule 1, item 27, page 11 (line 7), omit “ Paragraph 23(3)(b) ”, substitute “ Subparagraph 23(3)(b)(i) ”.

[consequential—large ADIs]

(13)   Schedule 1, item 31, page 11 (line 15), omit “ Paragraph 23A(a) ”, substitute “ Subparagraph 23A(a)(i) ”.

[consequential—large ADIs]

(14)   Schedule 1, item 35, page 12 (line 7), omit “ Paragraph 23(3)(b) ”, substitute “ Subparagraph 23(3)(b)(i) ”.

[consequential—large ADIs]

(15)   Schedule 1, item 39, page 12 (line 15), omit “ Paragraph 23A(a) ”, substitute “ Subparagraph 23A(a)(i) ”.

[consequential—large ADIs]

(16)   Schedule  1 , page 12 (after line 18) , after Part  8 , insert:

Part 8A — Amendment of the Income Tax Assessment Act 1997

Income Tax Assessment Act 1997

40A  Section 960-265 (at the end of the table)

Add:

15

* Large ADI threshold

definition of large ADI threshold in subsection 995-1(1)

40B  Subsection 960-270(3)

After “item 14”, insert “or 15”.

40C  Subsection 960-275(6)

After “item 14”, insert “or 15”.

40D  Subsection 960-280(6)

After “item 14”, insert “or 15”.

40E  Section 960-290 (heading)

Omit “ levy threshold for the major bank levy ”, substitute “ thresholds for major bank levy and large ADIs ”.

40F  Subsection 960-290(1)

Omit “the amount mentioned in the provision listed at item 14”, substitute “an amount mentioned in a provision listed at item 14 or 15”.

40G  Subsection 995-1(1)

Insert:

applicable reporting standard has the same meaning as in the Major Bank Levy Act 2017 .

40H  Subsection 995-1(1) (paragraph (aa) of the definition of indexation factor )

Omit “for the amount mentioned in the provision listed at item 14”, substitute “for an amount mentioned in a provision listed at item 14 or 15”.

40J  Subsection 995-1(1) (paragraph (b) of the definition of index number )

Omit “the amount mentioned in the provision listed at item 14”, substitute “the amounts mentioned in the provisions listed at items 14 and 15”.

40K  Subsection 995-1(1)

Insert:

large ADI : an Australian resident company is a large ADI for an income year if:

                     (a)  disregarding subsection 701-1(1) (the single entity rule) both of the following apply:

                              (i)  the company is an * ADI;

                             (ii)  the amount equal to the total liabilities of the ADI for any * quarter in the income year, as reported under an * applicable reporting standard, exceeds the * large ADI threshold for the quarter; or

                     (b)  the company is the * head company of a * consolidated group and paragraph (a) applies to one or more * subsidiary members of the group for the income year.

Note:          The effect of this definition for a consolidated group is that, if paragraph (a) applies to any member, the head company is a large ADI. The head company’s status as a large ADI affects the rate of tax payable on the head company’s taxable income (worked out on the basis that subsidiary members are part of the head company): see subsection 701-1(1) (the single entity rule) and the Income Tax Rates Act 1986 .

large ADI threshold : the large ADI threshold for the * quarter starting on 1 July 2017 is $500 billion. The amount is indexed quarterly.

Note:          Subdivision 960-M shows how to index amounts.

[large ADIs]

(17)   Schedule  1 , page 13 (after line 25) , after subitem  41(8) , insert:

(9)       The amendments made by Part 8A of this Schedule apply to the 2023-24 year of income and later years of income.

(10)     The amendments made by Parts 5 and 8A of this Schedule also apply for the purposes of determining the corporate tax rate for imputation purposes for the 2023-24 income year.

Note:       This ensures the amendments made by Parts 5 and 8A can be applied to the 2022-23 income year for the purposes of working out the corporate tax rate for imputation purposes for the 2023-24 income year.

[large ADIs]

(18)   Schedule  2 , Part  1 , page 14 (line 3) to page 17 (line 20) , omit the Part, substitute:

Part 1 — Amendments commencing 1 July 2023

Income Tax Assessment Act 1997

1  Subsection 995-1(1) (definition of corporate tax rate )

Repeal the definition, substitute:

corporate tax rate :

                     (a)  in relation to a company that is a * large ADI—means the rate of tax in respect of the taxable income of a company covered by section 24 of that Act; or

                     (b)  in relation to another entity—means the rate of tax in respect of the taxable income of a company covered by subsection 23(2) of that Act.

2  Subsection 995-1(1) (definition of corporate tax rate for imputation purposes )

Repeal the definition, substitute:

corporate tax rate for imputation purposes , of an entity for an income year, means:

                     (a)  unless paragraph (b) applies—the rate of tax for the income year in respect of the taxable income of a company covered by subsection 23(2) of the Income Tax Rates Act 1986 ; or

                     (b)  if the entity was a * large ADI for the previous income year—the rate of tax for the income year in respect of the taxable income of a company covered by section 24 of that Act.

[consequential—large ADIs]

(19)   Schedule  3 , item  1 , page 19 (lines 5 to 15) , omit the item, substitute:

1  Subsection 160AAB(1) (definition of statutory percentage )

Repeal the definition, substitute:

statutory percentage means:

                     (a)  if the year of income is the 2002-03 year of income or a later year of income before the 2024-25 year of income—30%; or

                     (b)  if the year of income is the 2024-25 year of income or a later year of income and the policy concerned was issued by a company that is a large ADI (within the meaning of the Income Tax Assessment Act 1997 ) for the year of income—30%; or

                     (c)  otherwise:

                              (i)  if the year of income is the 2024-25 year of income—27.5%; or

                             (ii)  if the year of income is the 2025-26 year of income—27%; or

                            (iii)  if the year of income is the 2026-27 year of income—26%; or

                            (iv)  if the year of income is the 2027-28 year of income or a later year of income—25%.

1A  Subsection 177A(1) (definition of standard corporate tax rate )

Repeal the definition, substitute:

standard corporate tax rate means:

                     (a)  unless paragraph (b) applies—the rate of tax in respect of the taxable income of a company covered by subsection 23(2) of the Income Tax Rates Act 1986 ; or

                     (b)  if the relevant taxpayer is a large ADI (within the meaning of the Income Tax Assessment Act 1997 ) for a year of income in which the DPT tax benefit is obtained, or would be obtained—the rate of tax in respect of the taxable income of a company covered by section 24 of the Income Tax Rates Act 1986 .

[consequential—large ADIs]

(20)   Schedule 3, item 2, page 19 (line 19), after “Company A”, insert “(which is not a large ADI)”.

[consequential—large ADIs]

(21)   Schedule 3, item 3, page 20 (line 12), after “Company E”, insert “(which is not a large ADI)”.

[consequential—large ADIs]

(22)   Schedule 3, items 6 and 7, page 20 (line 28) to page 21 (line 8), omit the items, substitute:

6  Subsection 65-30(2)

Repeal the subsection, substitute:

             (2)  However, reduce the * tax offset by the amount worked out by multiplying your * net exempt income by:

                     (a)  unless paragraph (b) applies—0.275; or

                     (b)  if you are a * large ADI for the income year—0.3;

if you have a taxable income for the income year.

7  Subsection 65-35(3A)

Repeal the subsection, substitute:

          (3A)  In reducing * net exempt income for an income year under subsection (3):

                     (a)  unless paragraph (b) applies—each 27.5 cents of * tax offset reduces the net exempt income by $1; or

                     (b)  if you were a * large ADI for the year—each 30 cents of tax offset reduces the net exempt income by $1.

[consequential—large ADIs]

(23)   Schedule  3 , Part  1 , page 21 (after line 21) , at the end of the Part, add:

8A  Subsection 713-545(6) (definition of ordinary class tax rate )

Omit “a life insurance company”, substitute “the life insurance company”.

[consequential—large ADIs]

(24)   Schedule 3, item 9, page 22 (line 5), after “Company A”, insert “(which is not a large ADI)”.

[consequential—large ADIs]

(25)   Schedule 3, item 10, page 22 (line 30), after “Company E”, insert “(which is not a large ADI)”.

[consequential—large ADIs]

(26)   Schedule  3 , item  13 , page 23 (line 13) , omit “ Subsection 65-30(2) ”, substitute “ Paragraph 65-30(2)(a) ”.

[consequential—large ADIs]

(27)   Schedule  3 , item  14 , page 23 (line 15) , omit “ Subsection 65-35(3A) ”, substitute “ Paragraph 65-35(3A)(a) ”.

[consequential—large ADIs]

(28)   Schedule 3, item 16, page 24 (line 5), after “Company A”, insert “(which is not a large ADI)”.

[consequential—large ADIs]

(29)   Schedule 3, item 17, page 24 (line 30), after “Company E”, insert “(which is not a large ADI)”.

[consequential—large ADIs]

(30)   Schedule  3 , item 20, page 25 (line 13) , omit “ Subsection 65-30(2) ”, substitute “ Paragraph 65-30(2)(a) ”.

[consequential—large ADIs]

(31)   Schedule  3 , item  21 , page 25 (line 15) , omit “ Subsection 65-35(3A) ”, substitute “ Paragraph 65-35(3A)(a) ”.

[consequential—large ADIs]

(32)   Schedule 3, item 23, page 26 (line 5), after “Company A”, insert “(which is not a large ADI)”.

[consequential—large ADIs]

(33)   Schedule 3, item 24, page 26 (line 30), after “Company E”, insert “(which is not a large ADI)”.

[consequential—large ADIs]

(34)   Schedule  3 , item 27, page 27 (line 13) , omit “ Subsection 65-30(2) ”, substitute “ Paragraph 65-30(2)(a) ”.

[consequential—large ADIs]

(35)   Schedule  3 , item  28 , page 27 (line 15) , omit “ Subsection 65-35(3A) ”, substitute “ Paragraph 65-35(3A)(a) ”.

[consequential—large ADIs]

(36)   Schedule  4 , page 28 (lines 3 and 4) , omit the heading.

[consequential—large ADIs]

(37)   Schedule  4 , items  1 and 2 , page 28 (lines 5 to 14) , to be opposed .

[consequential—large ADIs]