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Taxation Laws Amendment Bill (No. 5) 1998
Schedule 1 Income Tax deductions for gifts

   

Income Tax Assessment Act 1997

1  Subsection 30-45(2) (at the end of the table)

Add:

4.2.15

The Business Against Domestic Violence Reserve

the gift must be made after 22 April 1998

2  Subsection 30-50(2) (table item dealing with The National Nurses’ Memorial Trust)

Renumber the item as 5.2.7

3  Subsection 30-50(2) (at the end of the table)

Add:

5.2.8

Mount Macedon Memorial Cross Restoration, Development and Maintenance Trust Fund

the gift must be made after 8 February 1998 and before 9 February 1999

4  Subsection 30-70(1)

Omit “marriage guidance”, substitute “or providing marriage education under the Marriage Act 1961 , or family and child mediation or family and child counselling under the Family Law Act 1975 ”.

5  Subsection 30-75(1)

Omit “declared by the Attorney-General to be a marriage guidance organisation”, substitute “approved by the Attorney-General under section 9C of the Marriage Act 1961 or section 13A or 13B of the Family Law Act 1975 ”.

Note:       The heading to section 30-75 is altered by omitting “ guidance ” and substituting “ education and family and child mediation and counselling ”.

6  Subsections 30-75(2) and (3)

Repeal the subsections.

7  Subsection 30-80(2) (at the end of the table)

Add:

9.2.4

Australian American Education Leadership Foundation Limited

the gift must be made after 26 January 1998

9.2.5

Sydney Talmudical College Association Refugees Overseas Aid Fund

the gift must be made after 29 January 1998

9.2.6

United Israel Appeal Refugee Relief Fund Limited

the gift must be made after 29 January 1998

8  After section 30-100

Insert:

Other recipients

30-105   Other recipients

                   This table sets out specific other recipients.

Other recipients—specific

Item

Fund, authority or institution

Special conditions

13.2.1

St Patrick’s Cathedral Parramatta Rebuilding Fund

the gift must be made after 24 February 1998 and before 25 February 2000

9  Subsection 30-315(2) (after table item 13)

Insert:

13A

Australian American Education Leadership Foundation Limited

item 9.2.4

10  Subsection 30-315(2) (after table item 28)

Insert:

28A

Business Against Domestic Violence Reserve

item 4.2.15

11  Subsection 30-315(2) (after table item 48)

Insert:

48A

Family and child mediation and counselling

item 8.1.1

12  Subsection 30-315(2) (table item 70)

Omit “guidance”, substitute “education”.

13  Subsection 30-315(2) (before table item 73)

Insert:

72B

Mount Macedon Memorial Cross Restoration, Development and Maintenance Trust Fund

item 5.2.8

14  Subsection 30-315(2) (after table item 74)

Insert:

74A

National Nurses’ Memorial Trust

item 5.2.7

15  Subsection 30-315(2) (after table item 112)

Insert:

112A

St Patrick’s Cathedral Parramatta Rebuilding Fund

item 13.2.1

112B

Sydney Talmudical College Association Refugees Overseas Aid Fund

item 9.2.5

16  Subsection 30-315(2) (after table item 118)

Insert:

118A

United Israel Appeal Refugee Relief Fund Limited

item 9.2.6

17  Application

The amendments made by items 4, 5, 6, 11 and 12 of this Schedule apply to gifts made on or after the day on which this Act receives the Royal Assent.



 

Schedule 2 Katherine District Business Re-establishment Fund

Part 1 Deductibility of gifts

Income Tax Assessment Act 1997

1  Subsection 30-45(2) (at the end of the table)

Add:

4.2.16

Katherine District Business Re-establishment Fund

none

2  Subsection 30-315(2) (after table item 64)

Insert:

64A

Katherine District Business Re-establishment Fund

item 4.2.16



 

Part 2 Exemption of income etc. from fund

3  Exemption of grants paid from fund

Any amount of ordinary income or statutory income that is paid directly to an entity by way of grant to the entity from the Katherine District Business Re-establishment Fund is exempt from tax under the Income Tax Assessment Act 1997 .

Note:       This exemption does not apply to amounts paid to a third party.

4  Amounts are excluded exempt income

Income that is exempt under item 3 is excluded exempt income for the purposes of the Income Tax Assessment Act 1997 .

Note:       Subsection 36-20(3) of the Income Tax Assessment Act 1997 contains the general definition of excluded exempt income.

5  No capital gain to arise as a result of grant

Nothing in Part IIIA of the Income Tax Assessment Act 1936 operates to deem a capital gain to have accrued to a taxpayer where the relevant disposal related to a right to receive a grant from the Katherine District Business Re-establishment Fund.

6  Application

This Part applies only in relation to assessments for the 1997-98 income year.



 

Schedule 3 Australia as a regional financial centre

Part 1 OBUs, withholding tax and thin capitalisation

Income Tax Assessment Act 1936

1  Paragraph 121B(3)(c)

After “activities”, insert “(unless a foreign tax credit under Division 18 is obtained)”.

2  Paragraph 121B(3)(d)

After “sourced”, insert “unless it is taken to have a foreign source because it has been subject to foreign tax”.

3  At the end of subsection 121B(3)

Add:

                   ; (g)  income derived by overseas charitable institutions from OBUs is exempt from tax;

                     (h)  certain adjustments are made to the capital gains and losses that flow from disposals of certain interests in trusts of which an OBU is the trustee.

4  Section 121C

Insert:

overseas charitable institution means a non-resident institution the income of which:

                     (a)  would be exempt from tax under item 1.1 of section 50-5 of the Income Tax Assessment Act 1997 (and not under any other item of that section) if the institution had a physical presence in Australia and incurred its expenditure and pursued its objectives principally in Australia; and

                     (b)  is exempt in the country in which it is resident.

5  Paragraph 121D(1)(e)

Omit “or (6A)”, substitute “, (6A) or (6B)”.

6  Subparagraph 121D(4)(a)(i)

Omit “, where the securities are denominated other than in Australian currency”.

7  Subparagraph 121D(4)(a)(ii)

Omit “other than in Australian currency”.

8  Subparagraph 121D(4)(b)(i)

Omit “, where the shares are denominated other than in Australian currency”.

9  Subparagraph 121D(4)(b)(ii)

Omit “, where the units are denominated other than in Australian currency”.

10  After paragraph 121D(4)(e)

Insert:

                    (ea)  trading in currency, or options or rights in respect of currency, with an offshore person; or

11  Paragraph 121D(4)(f)

Repeal the paragraph, substitute:

                      (f)  trading in gold bullion, or in options or rights in respect of such bullion:

                              (i)  with an offshore person where the money or moneys payable or receivable is in any currency; or

                             (ii)  a person other than an offshore person where the money or moneys payable or receivable is in a currency other than Australian currency; or

                     (g)  trading with an offshore person in silver, platinum or palladium bullion, or in options or rights in respect of such bullion; or

                     (h)  trading with an offshore person in base metals.

12  Subsection 121D(5)

Omit “under which any money payable is not Australian currency”.

13  Paragraph 121D(6A)(a)

Omit “or agent”, insert “, agent or custodian”.

14  Paragraph 121D(6A)(b)

After “OBU”, insert “or the non-resident”.

15  After subsection 121D(6A)

Insert:

Investment activity—portfolio investment for overseas charitable institutions

          (6B)  For the purposes of paragraph (1)(e), an investment activity is also the managing by an OBU of a portfolio investment (see subsection 121DA(1)) for the whole or part (the investment management period ) of a year of income, where:

                     (a)  the portfolio investment is managed as broker, agent or custodian for, or trustee for the benefit of, an overseas charitable institution; and

                     (b)  the portfolio investment was made by the OBU or the overseas charitable institution.

16  Subsection 121D(8)

Omit all of the words after paragraph (b).

17  Subsection 121DA(1)

Omit “or agent”, substitute “an agent or custodian”.

18  Subsection 121DA(2)

After “121D(6A)”, insert “or (6B)”.

19  Subsection 121EE(3A)

After “121D(6A)”, insert “or (6B)”.

20  At the end of section 121EJ

Add:

             (2)  However, for the purposes of Division 18, if income has been subject to foreign tax it is taken to have a foreign source.

21  At the end of section 121EL

Add:

             (2)  If:

                     (a)  an OBU is a trustee, or is the central manager and controller, of a trust estate; and

                     (b)  the only person who benefits, or is capable (whether by the exercise of a power of appointment or otherwise) of benefiting, under the trust is an overseas charitable institution; and

                     (c)  the terms of the trust are to the effect that income, profits or capital gains of the trust estate may only come from investment activities covered by subsection 121D(6B);

then:

                     (d)  any income of the trust estate derived from an investment activity covered by subsection 121D(6B) is exempt from income tax; and

                     (e)  any capital gain or capital loss made by the trust estate from a CGT event happening in relation to a CGT asset of the trust estate in the course of, or in connection with, an investment activity covered by subsection 121D(6B) is disregarded.

22  After section 121EL

Insert:

121ELA   Exemption of income etc. of overseas charitable institutions

Investment with OBU

             (1)  Income, derived by an overseas charitable institution, is exempt to the extent that it is:

                     (a)  a payment or outgoing from an OBU as part of the OB activities of the OBU; or

                     (b)  a distribution of income that is exempt under subsection 121EL(2).

Capital gains and losses

             (2)  If:

                     (a)  an OBU is a trustee, or is the central manager and controller, of a unit trust estate; and

                     (b)  the only person who benefits, or is capable (whether by the exercise of a power of appointment or otherwise) of benefiting, under the trust is an overseas charitable institution; and

                     (c)  the terms of the trust are to the effect that income, profits or capital gains of the trust estate may only come from investment activities covered by subsection 121D(6B); and

                     (d)  the overseas charitable institution disposes of its interest in the trust;

then the overseas charitable institution makes no capital gain or capital loss from a CGT event happening in relation to the disposal.

121ELB   Adjustment of capital gains and losses from disposal of units in OBU offshore investment trusts

Trust with subsection 121D(6) investment activities

             (1)  If:

                     (a)  an OBU is a trustee, or is the central manager and controller, of a unit trust estate; and

                     (b)  the only persons who benefit, or are capable (whether by the exercise of a power of appointment or otherwise) of benefiting, under the trust are non-residents; and

                     (c)  all units in the trust are held by non-residents; and

                     (d)  the terms of the trust are to the effect that income, profits or capital gains of the trust estate may only come from investment activities covered by subsection 121D(6); and

                     (e)  a non-resident disposes of a unit in the trust;

then the non-resident makes no capital gain or capital loss from a CGT event happening in relation to the disposal.

Trust with subsection 121D(6A) investment activities

             (2)  If:

                     (a)  an OBU is a trustee, or is the central manager and controller, of a unit trust estate; and

                     (b)  the only persons who benefit, or are capable (whether by the exercise of a power of appointment or otherwise) of benefiting, under the trust are non-residents; and

                     (c)  all units in the trust are held by non-residents; and

                     (d)  the terms of the trust are to the effect that income, profits or capital gains of the trust estate may only come from investment activities covered by subsection 121D(6A); and

                     (e)  a non-resident disposes of a unit in the trust; and

                      (f)  the average Australian asset percentage for the portfolio investment concerned was 10% or less;

then if, apart from this section, the non-resident would make a capital gain or capital loss from a CGT event happening in relation to the disposal, the non-resident makes only the average Australian asset percentage of the gain or loss.

             (3)  In working out the average Australian asset percentage for the purposes of subsection (2), the investment management period is taken to be the period during the 12 months before the disposal during which the non-resident held the unit.

23  After paragraph 128AE(2)(c)

Insert:

               ; or (d)  a life insurance company registered under the Life Insurance Act 1995 ; or

                     (e)  a company incorporated under the Corporations Law that provides funds management services on a commercial basis (other than solely to related persons):

                              (i)  that is a registered company included in the category for money market corporations under the Financial Corporations Act 1974 ; or

                             (ii)  all of the shares which are beneficially owned by a company covered by subparagraph (i); or

                            (iii)  that holds a dealer’s licence, or an investment adviser’s licence, granted under Part 7.3 of the Corporations Law; or

                      (f)  a company that the Treasurer determines, in writing, to be an OBU under subsection (2AA);

24  After subsection 128AE(2)

Insert:

       (2AA)  The Treasurer may, on written application by a company, make a written determination that the company is an OBU.

        (2AB)  The determination must:

                     (a)  specify the day when the company commences to be an OBU; and

                     (b)  contain any other information the Treasurer considers appropriate.

        (2AC)  A determination of the Treasurer under subsection (2AA) must be made in accordance with guidelines determined by the Treasurer under subsection (2AD).

       (2AD)  The Treasurer must determine written guidelines for the making of determinations under subsection (2AA). The guidelines may require the Treasurer to take into account:

                     (a)  specified criteria; or

                     (b)  recommendations of particular bodies; or

                     (c)  any other factors.

        (2AE)  Determinations made under subsection (2AD) are disallowable instruments for the purposes of section 46A of the Acts Interpretation Act 1901 .

25  After paragraph 128B(3)(a)

Insert:

                    (aa)  income derived by a non-resident that is an overseas charitable institution (within the meaning of section 121C) where the income is exempt under subsection 121ELA(1); and

26  Paragraphs 128F(1)(c) and (d)

Repeal the paragraphs.

Note:       The heading to section 128F is altered by omitting “ debentures issued on overseas capital markets ” and substituting “ publicly offered debentures ”.

27  Paragraph 128F(3)(c)

Omit “outside Australia”.

28  Subsection 128F(5)

Omit “a debenture”, substitute “a bearer debenture”.

Note:       The heading to subsection 128F(5) is altered by adding at the end “ —bearer debentures ”.

29  After subsection 128F(5)

Insert:

Issues that always fail the public offer test—other debentures

          (5A)  The issue of a debenture (other than a bearer debenture) by a company does not satisfy the public offer test if, at the time of the issue, the company knew, or had reasonable grounds to suspect that the debenture, or an interest in the debenture, was being, or would later be, acquired either directly or indirectly by an associate of the company other than in the capacity of a dealer, manager or underwriter in relation to the placement of the debenture.

No exemption for central borrowing authorities

          (5B)  This section does not apply in relation to a debenture issued in Australia by a company that is covered by subsection (7) or is a central borrowing authority of a State or Territory. A central borrowing authority is a body established for the purpose of raising finance for the State or Territory. The following are examples of central borrowing authorities:

                     (a)  the Tasmanian Public Finance Corporation;

                     (b)  the Queensland Treasury Corporation;

                     (c)  the South Australian Government Financing Authority

                     (d)  the Western Australian Treasury Corporation

                     (e)  the New South Wales Treasury Corporation

                      (f)  the Treasury Corporation of Victoria;

                     (g)  the Northern Territory Treasury Corporation.

30  Paragraph 128F(8)(d)

Omit “and”.

31  Subsection 128F(8)

Omit all of the words and paragraphs after paragraph (d), substitute:

then this section has effect as if the parent company had raised the finance and issued the debenture.

32  Subsections 128GB(3) and (4)

Repeal the subsections.

33  After sub-subparagraph 159GZG(1)(d)(i)(B)

Insert:

                                        (C)  if all of the shares in the financial institution are beneficially owned by a foreign bank that carries on a banking business through an Australian branch—proceeds of debentures issued by the financial institution that are covered by section 128F that are made available by the financial institution to the Australian branch for use in its Australian business;

34  After subsection 262A(1A)

Insert:

          (1B)  Subsection (1A) does not require an OBU to maintain a separate nostro account or vostro account for its OBU activities. Nostro accounts and vostro accounts are accounts held or maintained by the OBU for the sole purpose of settling international transactions.

Income Tax Assessment Act 1997

35  Section 11-15 (table item headed “foreign aspects of income taxation”)

Before:

overseas employment, resident, income of.............................

23AG

insert:

OBU investment trusts for overseas charitable institutions

121EL(2)

overseas charitable institutions, income from OBUs

121ELA(1)

36  Section 118-1 (note)

Omit “section 121EL”, substitute “sections 121EL, 121ELA and 121ELB”.

Income Tax (Offshore Banking Units) (Withholding Tax Recoupment) Act 1988

37  Section 7

Omit “300%”, substitute “75%”.

38  Application

(1)        Subject to this item, the amendments made by this Schedule apply in relation to transactions entered into after 2 July 1998.

(2)        The amendment made by item 20 applies to foreign tax paid after 2 July 1998.

(3)        Subsection 121ELA(2) and section 121ELB of the Income Tax Assessment Act 1936 apply to disposals after 2 July 1998.

(4)        The amendments made by items 23 and 24 apply to declarations made by the Treasurer after 2 July 1998.

(5)        The amendments made by items 26 to 31 apply to debentures issued after 2 July 1998.

(6)        The amendment made by item 32 applies to interest paid by an OBU after 2 July 1998.

(7)        The amendment made by item 33 applies in relation to amounts lent to the Australian branch after 2 July 1998.

(8)        The amendment made by item 34 applies to the year of income before the year of income in which 2 July 1998 occurs and to all later years of income.

(9)        The amendment made by item 37 applies to penalties imposed after 2 July 1998.



 

Part 2 Foreign Investment Funds

Income Tax Assessment Act 1936

39  Paragraph 96A(1)(c)

After “applies”, insert “, or but for Division 8 of Part XI would have applied,”.

40  Subsection 96A(1A)

Omit “The amount”, substitute “An amount, other than an amount relating to an interest in a FIF to which Division 8 of Part XI applies,”.

41  After Division 7 of Part XI

Insert:

Division 8 Exemption for interests in certain US entities

512   Object of Division

                   The object of this Division is to exempt a taxpayer from taxation under this Part in respect of foreign investment fund income that would otherwise be taken to accrue from interests in certain entities that are subject to tax in the United States of America.

512A   Division does not apply to interests in CFTs

                   This Division does not apply in relation to an interest in a CFT.

513   Exemptions

             (1)  The operative provision does not apply to a taxpayer in respect of an interest in:

                     (a)  an entity that is treated as a corporation, and is subject to tax on its worldwide income, under the Internal Revenue Code of 1986 of the United States of America; or

                     (b)  a company or trust that is treated as a regulated investment company, or a real estate investment trust, for the purposes of the Internal Revenue Code of 1986 of the United States of America.

             (2)  The operative provision does not apply to a taxpayer in respect of an interest in one of the following entities if the conditions in subsection (3) or (4) are satisfied:

                     (a)  an entity that is a limited partnership, or a limited liability company under a law of the United States of America or a law of a State of the United States of America;

                     (b)  an entity that is treated as a common trust fund for the purposes of the Internal Revenue Code of 1986 of the United States of America.

             (3)  The condition in this subsection is that the taxpayer satisfies the Commissioner that:

                     (a)  the interest that the taxpayer holds at the end of the entity’s notional accounting period is held for the sole purpose of investing directly, or indirectly through one or more interposed entities, in:

                              (i)  a business conducted in the United States of America; or

                             (ii)  real property located in the United States of America; and

                     (b)  the entity does not directly, or indirectly through one or more interposed entities (other than through an entity covered by paragraph (1)(a) or (b)):

                              (i)  have an interest in income or gains derived from sources outside of the United States of America; or

                             (ii)  hold an interest in a FIF that is not resident in the United States of America; or

                            (iii)  hold real property that is not located in the United States of America.

             (4)  The condition in this subsection is that the taxpayer satisfies the Commissioner that:

                     (a)  the interest that the taxpayer holds at the end of the entity’s notional accounting period is held for the sole purpose of investing directly, or indirectly through one or more interposed entities, in:

                              (i)  a business conducted in the United States of America; or

                             (ii)  real property located in the United States of America; and

                     (b)  throughout the entity’s notional accounting period, the value of FIF interests held by the entity that:

                              (i)  are not covered by paragraph (1)(a) or (b); and

                             (ii)  do not satisfy the condition in subsection (3);

                            do not exceed 5% of the total value of FIF interests held by the entity; and

                     (c)  throughout the entity’s notional accounting period, the value of assets held by the entity that:

                              (i)  produce income from sources outside the United States of America; or

                             (ii)  if disposed of would give rise to a gain from a source outside the United States of America;

                            do not exceed 5% of the total value of assets held by the entity.

             (5)  For the purposes of subsection (4), the value of FIF interests and the value of assets is to be determined using the accounting records of the entity.

42  Section 564

After “another FIF”, insert “unless the FIF’s interest in the other FIF is covered by Division 8”.

43  At the end of section 564

Add:

             (2)  If the FIF’s interest in the other FIF is covered by Division 8, the notional income of the FIF in respect of the relevant period does not include any dividend or distribution paid to the FIF by the other FIF to the extent of the grossed-up amount of a FIF attribution debit that arises in relation to the taxpayer as a result of the dividend or distribution.

44  Paragraph 575(2)(c)

Omit “2 to 15”, substitute “2 to 7 and 9 to 15”.

45  Application

(1)        The amendment made by item 41 of this Schedule applies to notional accounting periods of FIFs ending on or after 2 July 1998.

(2)        The other amendments made by this Part of this Schedule apply in relation to assessments for years of income ending on or after 2 July 1998.



 

Schedule 4 Company tax instalments

   

Income Tax Assessment Act 1936

1  Paragraph 221AZMC(b)

Omit “to (f)”, substitute “and (c)”.

2  Application

The amendment made by this Schedule applies in relation to the 1995-96 year of income and all later years of income.



 

Schedule 5 Non-arm’s length trust distributions etc. to superannuation and similar funds

   

Income Tax Assessment Act 1936

1  Subsection 273(4)

After “dividend to which subsection (2) applies”, insert “or income derived by the entity in the capacity of beneficiary of a trust estate”.

2  At the end of section 273

Add:

             (6)  Income derived by the entity in the capacity of beneficiary of a trust estate (other than by virtue of holding a fixed entitlement to the income) is special income of the entity.

             (7)  Income derived by the entity in the capacity of beneficiary of a trust estate by virtue of holding a fixed entitlement to the income is special income of the entity if:

                     (a)  the entity acquired the fixed entitlement under an arrangement (see subsection (8)), or the income was derived under an arrangement, some or all of the parties to which were not dealing with each other at arm’s length in relation to the arrangement; and

                     (b)  the amount of the income is greater than might have been expected to have been derived by the entity if those parties had been dealing with each other at arm’s length in relation to the arrangement.

             (8)  In subsection (7), arrangement means:

                     (a)  any agreement, arrangement, understanding, promise or undertaking, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings; and

                     (b)  any scheme, plan, proposal, action, course of action or course of conduct.

3  Application

Subject to item 4, the amendments made by this Schedule apply to income derived after 2 pm by standard time in the Australian Capital Territory on 25 November 1997 (the commencement time ).

4  Transitional—income of unit holders

(1)        Income derived during the period from the commencement time until the end of 2 July 1998 by the entity in the capacity of holder of a unit in a trust estate is special income of the entity for the purposes of Part IX of the Income Tax Assessment Act 1936 if, and only if:

                     (a)  the entity acquired the unit under an arrangement, or the income was derived under an arrangement, some or all of the parties to which were not dealing with each other at arm’s length in relation to the arrangement; and

                     (b)  the amount of the income is greater than might have been expected to have been derived by the entity if those parties had been dealing with each other at arm’s length in relation to the arrangement.

(2)        In subitem (1), arrangement has the meaning given by subsection 273(8) as inserted in the Income Tax Assessment Act 1936 by item 2.



 

Schedule 6 Franking credits, franking rebates and the intercorporate dividend rebate

   

Income Tax Assessment Act 1936

1  After paragraph 45Z(1)(c)

Insert:

                    (ca)  the second company is a qualified person in relation to the dividend for the purposes of Division 1A of Part IIIAA; and

2  After subparagraph 45Z(2)(c)(ii)

Insert:

                           (iia)  the second company is a qualified person in relation to the dividend for the purposes of Division 1A of Part IIIAA;

3  After paragraph 45Z(3)(c)

Insert:

                    (ca)  the second company is a qualified person in relation to the dividend for the purposes of Division 1A of Part IIIAA; and

4  After subparagraph 45Z(4)(c)(ii)

Insert:

                           (iia)  the second company is a qualified person in relation to the dividend for the purposes of Division 1A of Part IIIAA;

5  Before section 46

Insert:

45ZB   Reduction of intercorporate dividend rebate in certain circumstances

             (1)  This section applies where:

                     (a)  a partnership or the trustee of a trust has made an election under section 160APHR in relation to shares, or interests in shares, held by the partnership or trustee and managed by or on behalf of the partnership or trust as or in a discrete fund; and

                     (b)  dividends (the relevant dividends ) are paid on the shares during the year of income.

             (2)  For the purposes of this section:

                     (a)  a notional dividend rebate is taken to apply in relation to the partnership or trust in respect of the relevant dividends, and the amount of the notional dividend rebate is the amount of the rebate under section 46 or 46A to which the partnership or trust would be entitled if:

                              (i)  the partnership or trustee were a company (other than a life assurance company) and a resident of Australia; and

                             (ii)  the average rate of tax payable by the partnership or trust were the general company tax rate; and

                            (iii)  the amounts (the included amounts ) included in the net income of the partnership or trust estate, or in the partnership loss, as the case may be that are, or are attributable to, the relevant dividends were dividends paid to the company and included in its assessable income; and

                     (b)  a notional ceiling amount is taken to apply in relation to the fund in relation to the year of income, and the notional ceiling amount is the amount that would be the ceiling amount in relation to the fund in relation to the year of income for the purposes of section 160AQZD if subparagraphs (a)(i) and (ii) of this subsection applied.

             (3)  If the notional dividend rebate exceeds the notional ceiling amount, the excess is an excess rebate amount in respect of the included amounts.

             (4)  Each partner in the partnership or beneficiary of the trust estate who is entitled to a share in the included amounts is taken to have a share in the excess rebate amount in proportion to the share of the partner or beneficiary in the included amounts.

             (5)  Any person who has an interest in the included amounts acquired indirectly through a partner or beneficiary referred to in subsection (4), or through one or more partnerships or trusts interposed between such a partner or beneficiary and the person, is also taken to have a share in the excess rebate amount corresponding to the person’s indirect interest in the included amounts.

             (6)  If:

                     (a)  there is, in relation to a company, an assessable amount referred to in section 45Z that is directly or indirectly attributable to the included amounts; and

                     (b)  the company has a share in the excess rebate amount;

the rebate to which the company is entitled (because of section 45Z) under section 46 or 46A in respect of an amount attributable to the relevant dividends is reduced by:

                     (c)  unless paragraph (d) applies—the amount of the company’s share in the excess rebate amount; or

                     (d)  if the company’s average rate of tax is the general company tax rate—the amount worked out by using the formula:

             (7)  In this section:

general company tax rate has the meaning given by section 160APA.

6  After subsection 46(2A)

Insert:

          (2B)  A shareholder is not entitled to a rebate under subsection (2) or (2A) in respect of a dividend unless the shareholder is a qualified person in relation to the dividend for the purposes of Division 1A of Part IIIAA.

7  After subsection 46A(5A)

Insert:

          (5B)  A shareholder is not entitled to a rebate under subsection (5) or (5A) in respect of a dividend unless the shareholder is a qualified person in relation to the dividend for the purposes of Division 1A of Part IIIAA.

8  After Division 1 of Part IIIAA

Insert:

Division 1A Circumstances in which a taxpayer can qualify for a franking credit, a franking rebate or the intercorporate dividend rebate

Subdivision A Preliminary

160APHC   Object of Division

                   The object of this Division is to set out the circumstances in which a taxpayer can qualify for a franking credit, a franking rebate, or the intercorporate dividend rebate, in respect of a dividend paid on shares or in respect of a distribution from a partnership or trust that is derived from such a dividend.

160APHD   Definitions

                   In this Division, unless the contrary intention appears:

associate has the meaning given by section 318 but includes:

                     (a)  in relation to a trustee—the controller of the trust; and

                     (b)  in relation to a company that is a member of a wholly-owned group (determined in accordance with Subdivision 975-W of the Income Tax Assessment Act 1997 )—any other company that is a member of the group.

benchmark portfolio of shares has the meaning given by section 160AQZF.

closely held fixed trust : a trust is a closely held fixed trust at a particular time if, at that time, it is a fixed trust and not more than 20 entities (as defined in section 960-100 of the Income Tax Assessment Act 1997 and counting entities who are associates as one entity) have interests in the trust that together entitle them to not less than 75% of:

                     (a)  the beneficial interests in the income of the trust; or

                     (b)  the beneficial interests in the capital of the trust.

controller , in relation to a trust, means a person:

                     (a)  who beneficially owns, or is able in any way, whether directly or indirectly, to control the application of more than 50% of the interests in the trust property or in the trust income; or

                     (b)  who has power to appoint or remove the trustee of the trust; or

                     (c)  according to whose directions, instructions or wishes, the trustee of the trust is accustomed or under an obligation, whether formal or informal, to act.

distribution : a distribution in respect of an interest in shares is taken to be made in the circumstances specified in subsection 177EA(15).

employee share scheme security means:

                     (a)  a share that is, or except for subsection 139C(4) would be, a qualifying share for the purposes of Division 13A of Part III; or

                     (b)  a share acquired as a result of the exercise of a qualifying right within the meaning of Division 13A of Part III; or

                     (c)  an interest in a share where:

                              (i)  it is an interest in a share referred to in paragraph (a) or (b); and

                             (ii)  if it is defeasible or subject to forfeiture—it becomes indefeasible, or ceases to be subject to forfeiture (other than forfeiture resulting from fraud, dishonesty or defalcation), as the case may be, within 10 years after it was issued; and

                            (iii)  if it is an interest as a beneficiary of a trust—the sole activities of the trust are obtaining shares, or rights to acquire shares, and providing those shares or rights to employees of a company or to associates of those employees.

ex dividend has the meaning given by section 160APHE.

franked distribution has the meaning given by subsection 177EA(16).

interest , in relation to shares or other property, means any legal or equitable interest in the shares or other property.

materially diminish has the meaning given by section 160APHM.

non-fixed trust has the same meaning as in Schedule 2F.

position , in relation to shares or an interest in shares, has the meaning given by section 160APHJ as that meaning is affected by sections 160APHK and 160APHL.

preference shares in a company means shares in the company that:

                     (a)  have a fixed dividend entitlement or, having regard to the terms of their issue, are likely to have a fixed dividend return; or

                     (b)  having regard to the terms of their issue and other relevant matters, are less risky than ordinary shares in the company.

prescribed person , in relation to a unit trust, has the meaning given by section 160APHS.

primary qualification period , in relation to a taxpayer in relation to shares or an interest in shares, means the period beginning on the day after the day on which the taxpayer acquired the shares or interest and ending:

                     (a)  if the shares are not preference shares—on the 45th day after the day on which the shares or interest became ex dividend ; or

                     (b)  if the shares are preference shares—on the 90th day after the day on which the shares or interest became ex dividend .

qualification period, in relation to a taxpayer in relation to shares or an interest in shares, means the primary qualification period or the secondary qualification period in relation to the taxpayer in relation to the shares or interest.

qualified person , in relation to a dividend paid on shares, has the meaning given by section 160APHO, 160APHP, 160APHQ, 160APHR or 160APHT as that meaning is affected by section 160APHU.

rebateable distribution means a distribution to which section 45Z applies and in respect of which the taxpayer is entitled to a rebate under section 46 or 46A.

rebateable dividend means a dividend for which the taxpayer is entitled to a rebate under section 46 or 46A.

related payment : the making of a related payment has a meaning affected by section 160APHN.

secondary qualification period , in relation to a taxpayer in relation to shares or an interest in shares, means:

                     (a)  if the shares are not preference shares—the period beginning on the 45th day before, and ending on the 45th day after, the day on which the shares or interest became ex dividend ; or

                     (b)  if the shares are preference shares—the period beginning on the 90th day before, and ending on the 90th day after, the day on which the shares or interest become ex dividend .

share includes:

                     (a)  the interest in a corporate limited partnership (within the meaning of Division 5A of Part III) that a partner in the partnership has; and

                     (b)  if a company does not have a share capital—the interest in the company that a member has.

substantially identical securities has the meaning given by section 160APHF.

wholly-owned group : the question whether 2 or more companies are members of the same wholly-owned group is to be determined in the same way as under Subdivision 975-W of the Income Tax Assessment Act 1997 .

widely held trust , at a particular time, means:

                     (a)  a trust that, at that time, is neither a closely held fixed trust nor a non-fixed trust; or

                     (b)  a unit trust the trustee of which made an election under subsection 160APHR(1) before that time pursuant to paragraph (k) of that subsection.

160APHE   Meaning of ex dividend

             (1)  A share in respect of which a dividend is to be paid, or an interest (other than an interest as a beneficiary of a widely held trust) in such a share, becomes ex dividend on the day after the last day on which the acquisition by a person of the share will entitle the person to receive the dividend.

             (2)  An interest as a beneficiary of a widely held trust in a share in respect of which a dividend is to be paid becomes ex dividend on the day after the last day on which the acquisition by a person of the interest will entitle the person to receive a distribution from the trust.

160APHF   Substantially identical securities

Definition

             (1)  In this Division:

substantially identical securities , in relation to shares, or in relation to an interest in shares, in a company (the relevant company ), means property that is fungible with, or economically equivalent to, the shares or interest.

Meanings of subsections (3) and (4) not limited by subsection (1)

             (2)  Subsections (3) and (4) do not limit, by implication, the meaning of subsection (1).

Substantially identical securities in relation to shares

             (3)  The following are taken to be substantially identical securities in relation to shares (the relevant shares ) in the relevant company:

                     (a)  other shares in the relevant company that are of the same class as the relevant shares;

                     (b)  other shares in the relevant company that are of a different class from the relevant shares where there is no material difference between those classes of shares or the other shares are exchangeable at a fixed rate for the relevant shares;

                     (c)  shares in another company that holds predominantly shares in the relevant company of the same class as shares of any of the kinds mentioned in paragraphs (a) and (b);

                     (d)  shares in another company that are, or other property that is, exchangeable at a fixed rate for the relevant shares or for shares in the relevant company of any of the kinds mentioned in paragraphs (a) and (b);

                     (e)  a vested and indefeasible interest in a trust whose assets consist predominantly of shares in the relevant company of the same class as shares of any of the kinds mentioned in paragraphs (a) and (b);

                      (f)  an interest in a partnership whose assets consist predominantly of shares in the relevant company of the same class as shares of any of the kinds mentioned in paragraphs (a) and (b).

Substantially identical securities in relation to interests in shares

             (4)  The following interests are taken to be substantially identical securities in relation to an interest in shares (the relevant shares ) in the relevant company:

                     (a)  a vested and indefeasible interest in a trust whose assets consist predominantly of:

                              (i)  other shares in the relevant company that are of the same class as the relevant shares; or

                             (ii)  other shares in the relevant company that are of a different class from the relevant shares where there is no material difference between those classes of shares or the other shares are exchangeable at a fixed rate for the relevant shares;

                     (b)  an interest in a partnership whose assets consist predominantly of:

                              (i)  other shares in the relevant company that are of the same class as the relevant shares; or

                             (ii)  other shares in the relevant company that are of a different class from the relevant shares where there is no material difference between those classes of shares or the other shares are exchangeable at a fixed rate for the relevant shares;

                     (c)  if the interest in the relevant shares is a unit in a unit trust—any other unit of the same class in the trust;

                     (d)  if the interest in the relevant shares is a vested and indefeasible interest in the whole of a share in the relevant company—that share or any other share of the same class;

                     (e)  if the interest in the relevant shares is a vested and indefeasible interest in part of a share in the relevant company—any other vested and indefeasible interest in a corresponding part of another share in the relevant company of the same class;

                      (f)  if the interest in the relevant shares is exchangeable at a fixed rate for another interest in shares, or for shares, in the relevant company—the other interest or the shares, as the case may be.

Commissioner may determine an interest in the corpus of a trust to be vested and indefeasible

             (5)  If:

                     (a)  a person has an interest in so much of the corpus of a trust as is comprised by shares or an interest in shares; and

                     (b)  apart from this subsection, the interest in the trust would not be a vested or indefeasible interest; and

                     (c)  the Commissioner considers that the interest in the trust should be treated as being vested and indefeasible, having regard to:

                              (i)  the circumstances in which the interest is capable of not vesting or the defeasance can happen; and

                             (ii)  the likelihood of the interest not vesting or the defeasance happening; and

                            (iii)  the nature of the trust; and

                            (iv)  any other matter the Commissioner thinks relevant;

the Commissioner may determine that the interest in the trust is to be taken to be vested and indefeasible.

Effect of determination

             (6)  A determination made under subsection (5) has effect according to its terms.

160APHG   Special provisions relating to acquisition or disposal of shares or interests in shares by partners and trust beneficiaries

Partnerships

             (1)  If a partnership acquires, holds, or disposes of, shares or an interest in shares, each partner in the partnership is taken to acquire, hold, or dispose of, as the case may be, an interest in the shares.

Taxpayers becoming or ceasing to be partners

             (2)  If the assets of a partnership include shares or an interest in shares:

                     (a)  where a taxpayer becomes a partner in the partnership—the taxpayer is taken to acquire an interest in the shares; or

                     (b)  where a taxpayer ceases to be a partner in the partnership—the taxpayer is taken to dispose of the taxpayer’s interest in the shares.

Trusts that are not widely held trusts

             (3)  If the trustee of a trust (other than a widely held trust) acquires, holds, or disposes of, shares or an interest in shares, each beneficiary of the trust (including, if the trust is a discretionary trust, a potential beneficiary) is taken to acquire, hold, or dispose of, as the case may be, an interest in the shares.

Taxpayers becoming or ceasing to be beneficiaries of trusts that are not widely held trusts

             (4)  If a trust estate (other than the trust estate of a widely held trust) includes shares or an interest in shares:

                     (a)  where a taxpayer becomes a beneficiary (including, if the trust is a discretionary trust, a potential beneficiary) of the trust—the taxpayer is taken to acquire an interest in the shares; or

                     (b)  where a taxpayer ceases to be a beneficiary (including, if the trust is a discretionary trust, a potential beneficiary) of the trust—the taxpayer is taken to dispose of the taxpayer’s interest in the shares.

Position of beneficiary of widely held trust if trustee makes the trustee’s first acquisition of shares or interests

             (5)  If:

                     (a)  the trust estate of a widely held trust does not include shares or an interest in shares; and

                     (b)  the trustee of the trust acquires shares or an interest in shares;

each beneficiary of the trust is taken to acquire an interest in the shares.

Position of beneficiary of widely held trust if trust estate includes shares or interests

             (6)  If the trust estate of a widely held trust includes shares or interests in shares, each beneficiary of the trust is taken to hold an interest in the shares.

Disposal of shares or interests by trustee of widely held trust

             (7)  If the trustee of a widely held trust disposes of some only of the shares or interests in shares that form part of the trust estate, no beneficiary of the trust is taken, because of the disposal, to dispose of that beneficiary’s interest in the shares but, if the trustee disposes of all the shares and interests, each beneficiary is taken to dispose of the beneficiary’s interest in the shares.

Taxpayers becoming or ceasing to be beneficiaries of widely held trust

             (8)  If the trust estate of a widely held trust includes shares or an interest in shares:

                     (a)  a taxpayer who becomes a beneficiary of the trust is taken to acquire an interest in the shares; and

                     (b)  a taxpayer who is a beneficiary of the trust and acquires a further interest in the trust (whether by subscription for, or purchase of, further units or otherwise) is taken to acquire a further interest in the shares; and

                     (c)  a taxpayer who disposes of an interest in the trust (whether by redemption or sale of units or otherwise) but remains a beneficiary of the trust is taken to dispose of an interest in the shares; and

                     (d)  a taxpayer who ceases to be a beneficiary of the trust is taken to dispose of the interest in shares that the taxpayer held as a beneficiary of the trust.

Note 1:       The interest that a partner in a partnership has in shares which, or an interest in which, is included in the assets of the partnership is worked out under section 160APHK.

Note 2:       The interest that a beneficiary of a trust has in shares which, or an interest in which, is held by the trustee of the trust is worked out under section 160APHL.

160APHH   Other special provisions relating to acquisition or disposal of shares or interests in shares

Shares or interests acquired or disposed of under a contract

             (1)  If:

                     (a)  a taxpayer acquires or disposes of shares, or an interest in shares, under a contract; and

                     (b)  the price payable for the acquisition or disposal is fixed under the contract; and

                     (c)  either of the following applies:

                              (i)  the contract is unconditional;

                             (ii)  the contract is subject to a condition being complied with before the contract takes effect and the condition has been complied with;

the taxpayer is taken, for the purposes of this Division, to have acquired or disposed of, as the case may be, the shares, or the interest, at the time of the making of the contract.

Bonus shares

             (2)  If shares (the bonus shares ) are issued to a taxpayer in respect of existing shares:

                     (a)  if any part of the bonus shares is, or is taken to be, a dividend that is included in the taxpayer’s assessable income—the bonus shares are taken for the purposes of this Division to have been acquired by the taxpayer at the time when they were issued; or

                     (b)  otherwise—the bonus shares:

                              (i)  are taken for the purposes of section 160APHR to have been acquired by the taxpayer at the time when they were issued; and

                             (ii)  are taken for the purposes of the other provisions of this Division to have been acquired by the taxpayer at the time when the existing shares were acquired and to have been held by the taxpayer continuously from that time until they were issued.

Shares or interest distributed in satisfaction of interest

             (3)  If:

                     (a)  a taxpayer holds an interest in shares:

                              (i)  under a trust; or

                             (ii)  as a partner in a partnership; and

                     (b)  the shares, or an interest in the shares, is distributed to the taxpayer in satisfaction of the interest referred to in paragraph (a);

the taxpayer is taken, for the purposes of this Division, to have held the shares or interest so distributed, to the extent to which the shares or interest distributed satisfies the interest referred to in paragraph (a), from the time when the taxpayer acquired the interest referred to in paragraph (a).

In calculating the number of days for which the taxpayer is taken to have continuously held the shares or interest so distributed, any days on which the trustee or partnership materially diminished risks of loss and opportunities for gain in respect of the shares or interest are to be excluded, but the exclusion of those days is not taken to break the continuity of the period for which the taxpayer is taken to have held the shares or interest.

Shares or interests passing to executor or administrator

             (4)  If any shares or interest in shares held by a person who has died has passed to the executor of the will, or the administrator of the estate, of the dead person, the executor or administrator is taken, for the purposes of this Division, to have acquired the shares at the time when they were acquired by the dead person.

In calculating the number of days for which the executor or administrator is taken to have continuously held the shares or interest, any days on which the person materially diminished risks of loss and opportunities for gain in respect of the shares or interest are to be excluded, but the exclusion of those days is not taken to break the continuity of the period for which the executor or administrator is taken to have held the shares or interest.

Shares or interest held by person under a legal disability transferred to a trustee

             (5)  If:

                     (a)  a person who holds shares or an interest in shares becomes subject to a legal disability; and

                     (b)  the shares or interest is transferred to a trustee to be held in trust for the person while the person is under a legal disability;

both the person and the trustee are taken, for the purposes of this Division, to have held the shares or interest for the periods in which the shares or interest was held by either of them.

In calculating the number of days for which the trustee is taken to have continuously held the shares or interest, any days on which the person materially diminished risks of loss and opportunities for gain in respect of the shares or interest are to be excluded, but the exclusion of those days is not taken to break the continuity of the period for which the trustee is taken to have held the shares or interest.

Certain disposals to be disregarded

             (6)  If:

                     (a)  a taxpayer holds, or holds an interest in, shares; and

                     (b)  the taxpayer disposes of the shares or interest; and

                     (c)  the taxpayer is, under subsection 26BC(4), to be treated in the determination of the matters mentioned in paragraphs 26BC(4)(a) and (b) as if the transaction effecting the disposal had not been entered into;

the disposal is to be taken for the purposes of this Division not to have occurred.

Change of trustees not to affect continuity of holding of shares or interests

             (7)  Any person who was a trustee of a trust during part only of a continuous period in which shares or an interest in shares formed part of the trust estate is taken, for the purposes of this Division, to have held the shares or interest throughout that period.

Certain disposals of shares or interests between companies in the same wholly-owned group not to affect continuity of holding

             (8)  A company that is a member of a wholly-owned group is taken, for the purposes of this Division, to have held shares or an interest in shares throughout a continuous period if:

                     (a)  the company held the shares or interest during part of the period; and

                     (b)  during the remainder of the period the shares or interest was held by another company or other companies that were members of the same group.

In calculating the number of days in the continuous period during which the first-mentioned company is taken to have held the shares or interest, any days in the part of the period in which the shares or interest was held by a company that made an election in relation to the shares or interest under section 160APHR are to be excluded, but the exclusion of those days is not taken to break the continuity of the period for which the first-mentioned company is taken to have held the shares or interest.

160APHI   Certain disposals of shares or interests are to be taken to be disposals of related shares or interests

Effect of section

             (1)  The effect of this section is that, in the calculation of the period for which a taxpayer is taken to have held shares or an interest in shares (the primary securities ) during a qualification period in relation to the taxpayer in relation to the primary securities:

                     (a)  a disposal of the primary securities is taken in certain circumstances to be a disposal of certain other securities and not to be a disposal of the primary securities; and

                     (b)  a disposal of certain other securities is taken in certain circumstances to be a disposal of the primary securities and not to be a disposal of the other securities.

Meaning of related securities

             (2)  In this section:

related securities means:

                     (a)  the primary securities; and

                     (b)  any shares, or interests in shares, held by connected persons:

                              (i)  that are substantially identical securities in relation to the primary securities; and

                             (ii)  in respect of which a connected person has been paid, or is entitled to be paid, a franked dividend or a franked distribution or, in the case of a connected person that is a company, a rebateable dividend or a rebateable distribution, being in either case a dividend or distribution corresponding to the dividend or distribution paid on the primary securities;

but does not include shares or interests in shares:

                     (c)  in relation to which an election is in force under section 160APHR; and

                     (d)  which were not acquired or disposed of for the purpose, or for purposes that included the purpose (whether or not the predominant purpose), of avoiding the application of this section.

Meaning of connected persons

             (3)  The following persons are connected persons for the purposes of this section:

                     (a)  the taxpayer;

                     (b)  if, at a time during the qualification period, an associate of the taxpayer, under an arrangement to which they were parties, disposed of shares or an interest in shares—the associate;

                     (c)  if the taxpayer is a company—another company that is in the same wholly-owned group.

Related securities to be taken to be disposed of on a last-in first-out basis

             (4)  Subject to subsection (5), all related securities held by connected persons at a particular time constitute a group of securities for the purposes of this section and any disposals of securities in the group that were effected by any connected persons during the qualification period are to be taken, in the order in which they occurred, as having been disposals on a last-in first-out basis, that is to say, as having been:

                     (a)  first, disposals of the latest securities in the group to be acquired by any of the connected persons; and

                     (b)  secondly, disposals of the next latest securities in the group to be so acquired, and so on.

Subsection (4) not to apply if primary securities not held for requisite continuous period

             (5)  If primary securities are disposed of during a qualification period and:

                     (a)  if section 160APHO applies to the taxpayer in respect of the securities—the taxpayer has not satisfied subsection 160APHO(2) in relation to the qualification period; or

                     (b)  if the primary securities are an interest in shares and section 160APHP applies to the taxpayer in respect of the interest—the taxpayer has not held the interest for the continuous period referred to in subsection 160APHP(1);

subsection (4) does not apply in respect of the disposal.

Where value of securities actually disposed of is less than value of securities taken to be disposed of

             (6)  If the value of any securities actually disposed of is less than the value of the securities that are taken to be disposed of, only such of the last-mentioned securities are taken to be disposed of as have a value equal to the value of the securities actually disposed of.

Where value of securities actually disposed of exceeds value of securities taken to be disposed of

             (7)  If the value of any securities actually disposed of exceeds the value of the securities that are taken to have been disposed of, such other related securities as have a value equal to the excess are taken to be disposed of in accordance with subsection (4).

Where a disposal is taken to be a disposal of 2 or more parcels of securities

             (8)  If, as a result of the application of subsection (4), a disposal of securities is taken to be a disposal of 2 or more parcels of related securities because those parcels of securities were acquired at the same time:

                     (a)  the connected persons may agree as to the parcel of related securities that is to be taken to be disposed of; or

                     (b)  if they are unable to agree, the Commissioner may determine the parcel of related securities that is taken to be disposed of.

Where 2 or more disposals are taken to be disposals of the same securities

             (9)  If, as a result of the application of subsection (4), the disposals of 2 or more parcels of related securities would be taken to constitute a disposal of the same securities because those 2 parcels of related securities were disposed of at the same time:

                     (a)  the connected persons may agree as to the related securities that are to be taken to be respectively disposed of by the disposals of the parcels of related securities; or

                     (b)  if they are unable to agree, the Commissioner may determine the related securities that are to be taken to be respectively disposed of by the disposals of the parcels of related securities.

Notional re-acquisition of securities that are taken to constitute a disposal of other securities

           (10)  If, as a result of this section, the primary securities are taken to have been disposed of by the taxpayer but are actually still held by the taxpayer, they are taken to have been re-acquired by the taxpayer immediately after the time when they are taken to be disposed of.

Effect of agreement or determination

           (11)  An agreement or determination made under subsection (8) or (9) has effect according to its terms.

160APHJ   Position in relation to shares or interests etc.

Regulations may prescribe what constitutes a position

             (1)  The regulations may, either generally, or as otherwise provided in the regulations, prescribe:

                     (a)  what is a position, a short position, a long position or a net position in relation to shares or an interest in shares; and

                     (b)  when a position relates to particular shares or a particular interest in shares; and

                     (c)  how the delta of a position is to be calculated;

and the following provisions of this section have effect subject to any such regulations.

Meaning of position

             (2)  A position , in relation to shares or an interest in shares, is anything that has a delta in relation to the shares or interest, and includes, without limiting the generality of the above:

                     (a)  a short sale, or a future sale, of:

                              (i)  the shares or interest; or

                             (ii)  property that is substantially similar to, or related to, the shares or interest; and

                     (b)  a purchase, or a future purchase, of property that is substantially similar to, or related to, the shares or interest; and

                     (c)  an option to buy or sell the shares or interest; and

                     (d)  an option to buy or sell:

                              (i)  property that is substantially similar to, or related to, the shares or interest; or

                             (ii)  an interest in such property; and

                     (e)  an option in relation to the shares or interest that is embedded in other property; and

                      (f)  a non-recourse loan made to acquire the shares or interest; and

                     (g)  an indemnity or guarantee in respect of the shares or interest.

However, if a share, or an interest in a share, is an employee share scheme security, a condition attached to the share or interest, or a term of the document that created the interest, that prevents the holder of the share or interest from disposing of it or could result in the share or interest being forfeited is not a position in relation to the share or interest.

Meaning of short position

             (3)  A short position , in relation to shares or an interest in shares, is a position that has a negative delta in relation to the shares or interest. For example, a short sale, a sold future, a sold call option, a bought put option, and a sold share index future, are short positions.

Meaning of long position

             (4)  A long position , in relation to shares or an interest in shares, is a position that has a positive delta in relation to the shares or interest. For example, a share purchase, a bought future, a bought call option, a sold put option, and a bought share index future, are long positions. To avoid doubt, shares or interests in shares are to be treated as a long position (with a delta of +1) in relation to themselves.

Meaning of net position

             (5)  The net position of a taxpayer or fund in relation to shares, or in relation to an interest in shares, is calculated by adding the taxpayer’s or fund’s:

                     (a)  long positions in the shares or interest (calculated on the basis of their deltas); and

                     (b)  short positions in the shares or interest (calculated on the basis of their deltas).

For example, if a taxpayer sells 2 call options (each of which has a delta of -0.5) in respect of shares in a company and buys one share in the company (which has a delta of +1) in respect of those call options, the taxpayer has a net position of nil as a result of those transactions. In such a case, the taxpayer has materially diminished risks of loss and opportunities for gain in relation to the share.

Certain short positions to be disregarded

             (6)  If:

                     (a)  a taxpayer holds shares, or an interest in shares, in a company; and

                     (b)  the sole or dominant business of the company is producing, purchasing, consuming, trading in, or otherwise dealing in, any of the commodities mentioned in subsection (7); and

                     (c)  the taxpayer is a controller of the company for the purposes of section 160ZZRN;

then, any of the taxpayer’s short positions in the shares or interest that:

                     (d)  relate to any of those commodities; and

                     (e)  are taken in the ordinary course of the taxpayer’s business;

are to be disregarded for the purposes of subsection (5).

Commodities to which subsection (6) applies

             (7)  The commodities referred to in subsection (6) are as follows:

                     (a)  minerals;

                     (b)  gold;

                     (c)  ores of a metal included in the table of metals in subsection 330-60(1) of the Income Tax Assessment Act 1997 .

Short position of associate of taxpayer in shares or interest to be attributable to taxpayer

             (8)  If, under an arrangement to which a taxpayer and an associate of the taxpayer are parties, the associate has a short position in shares, or in an interest in shares, held by the taxpayer, the associate’s position is taken, for the purposes of subsection (5), to be a position that the taxpayer has.

Deltas of positions to be taken not to have changed in certain circumstances

             (9)  If:

                     (a)  a taxpayer acquires shares or interests in shares; and

                     (b)  on the day of the acquisition, or on a particular later day, the taxpayer enters into or has positions in relation to any of the shares or interests;

then, so long as the taxpayer continues to hold the shares or interests, continues to have those positions and does not enter into any further positions in relation to the shares or interests, those positions are taken to continue to have the deltas that they had on the day on which they were entered into or the day on which the shares or interests were acquired, whichever is the later.

           (10)  This section has effect subject to sections 160APHK and 160APHL.

160APHK   Assets of partnership include shares or interest in shares: how to determine a partner’s interest in the shares

Application

             (1)  If:

                     (a)  the assets of a partnership include, or include an interest in, a share (the relevant share ); and

                     (b)  an amount is included in the partnership’s assessable income because of the partnership holding and the whole or a part of that amount (the dividend income ) is:

                              (i)  a dividend; or

                             (ii)  attributable, through one or more interposed trusts or partnerships, to a dividend; and

                     (c)  there is a partnership amount in respect of the partnership in relation to a taxpayer who is a partner in the partnership, being a partnership amount that is wholly or partly attributable to the dividend income;

this section sets out how the taxpayer’s interest in the relevant share is to be calculated in determining whether the taxpayer is a qualified person for the purposes of Subdivision B or BA in relation to a dividend paid on the share.

Note:          The calculation is not required unless the partnership is a qualified person in relation to the dividend. If the partnership is not a qualified person, no partner in the partnership can receive a franking rebate or franking credit through the partnership.

Partnership holding

             (2)  For the purposes of this section, the partnership holding is the share, or the interest in the share, that is included in the assets of the partnership as mentioned in subsection (1).

Calculation of interest

             (3)  For the purposes of subsections 160APHG(1) and (2), the taxpayer’s interest in the relevant share is the amount worked out by using the formula:

where:

partner’s share of the dividend income means the partnership amount in relation to the partner to the extent to which that amount is attributable to the dividend income.

A position held by partnership is to be attributed to a partner to whom the position relates

             (4)  A position, or an appropriate part of a position, of the partnership in relation to the partnership holding is taken to be a position of a partner in a partnership if the position relates to the partner’s interest in the relevant share.

When a position of partnership relates to a partner

             (5)  Without limiting by implication the circumstances in which a position of the partnership can be regarded as relating to the partner’s interest in the relevant share, a position of the partnership relates to that interest if:

                     (a)  the whole or a part of the profit or loss from the position will be distributed to, or deducted from an amount that would otherwise be distributed to, the partner; or

                     (b)  the benefit or detriment of the position will otherwise be wholly or partly passed to the partner.

160APHL   Trustee holding shares or interest in shares: how to determine a beneficiary’s interest in the shares

Application in respect of a trust other than a widely held trust

             (1)  If:

                     (a)  the trustee of a trust other than a widely held trust holds, or holds an interest in, a share (the relevant share ); and

                     (b)  an amount is included in the assessable income of the trust estate because of the trust holding and the whole or a part of that amount (the dividend income ) is:

                              (i)  a dividend; or

                             (ii)  attributable, through one or more interposed trusts or partnerships, to a dividend; and

                     (c)  there is a trust amount in respect of the trust estate in relation to a taxpayer who is a beneficiary of the trust estate, being a trust amount that is wholly or partly attributable to the dividend income;

this section sets out how the taxpayer’s interest in the relevant share is to be calculated in determining whether the taxpayer is a qualified person for the purposes of Subdivision B or BA in relation to a dividend paid on the share.

Note:          The calculation is not required unless the trustee is a qualified person in relation to the dividend. If the trustee is not a qualified person, no beneficiary of the trust can receive a franking rebate or franking credit through the trust.

Application in respect of widely held trust

             (2)  If:

                     (a)  the trustee of a trust that is a widely held trust holds, or holds interests in, shares (the relevant shares ); and

                     (b)  an amount is included in the assessable income of the trust estate because of the trust holding and the whole or a part of that amount (the dividend income ) is:

                              (i)  a dividend; or

                             (ii)  attributable, through one or more interposed trusts or partnerships, to a dividend; and

                     (c)  there is a trust amount in respect of the trust estate in relation to a taxpayer who is a beneficiary of the trust estate, being a trust amount that is wholly or partly attributable to the dividend income;

this section sets out how the taxpayer’s interest in the relevant shares is to be calculated in determining whether the taxpayer is a qualified person for the purposes of Subdivision B or BA in relation to a dividend paid on the shares.

Note:          The calculation is not required unless the trustee is a qualified person in relation to the dividend. If the trustee is not a qualified person, no beneficiary of the trust can receive a franking rebate or franking credit through the trust.

Trust holding in relation to trust other than a widely held trust

             (3)  For the purposes of the application of this section in respect of a trust other than a widely held trust, the trust holding is the share, or the interest in a share, that is held by the trustee as mentioned in subsection (1).

Trust holding in relation to a widely held trust

             (4)  For the purposes of the application of this section in respect of a widely held trust, the trust holding is all the shares and interests in shares that are held by the trustee as mentioned in subsection (2).

Calculation of interest under a trust other than a widely held trust

             (5)  For the purposes of subsections 160APHG(3) and (4) in relation to a taxpayer referred to in subsection (1), the taxpayer’s interest in the relevant share is the amount worked out by using the formula:

where:

beneficiary’s share of dividend income means the trust amount in relation to the taxpayer to the extent to which that amount is attributable to the dividend income.

Calculation of interest under a widely held trust

             (6)  For the purposes of subsections 160APHG(5) to (8) in relation to a taxpayer referred to in subsection (2), the taxpayer’s interest in the relevant shares is the amount worked out by using the formula:

where:

beneficiary’s share of dividend income means the trust amount in relation to the taxpayer to the extent to which that amount is attributable to the dividend income.

Taxpayer’s interest to be a long position

             (7)  The taxpayer’s interest in the relevant share worked out under subsection (5), or the taxpayer’s interest in the relevant shares worked out under subsection (6), is a long position with a delta of + 1 in relation to itself.

Trust other than widely held trusts: when trustee’s position attributed to taxpayer

             (8)  If the trust is not a widely held trust, a position, or an appropriate part of a position, of the trustee in relation to the trust holding is taken to be a position of the taxpayer to the extent to which the position relates to the taxpayer’s interest in the relevant share.

However, if the trustee has a position in relation to 2 or more shares or interests in shares, the trustee’s position is taken to constitute separate positions in relation to each of the shares or interests in accordance with an allocation made in a reasonable way.

When a position of the trustee of a trust other than a widely held trust relates to the taxpayer’s interest

             (9)  Without limiting by implication the circumstances in which a position of the trustee of a trust other than a widely held trust will be taken to relate to the taxpayer’s interest in a share or shares, a position of the trustee relates to that interest if:

                     (a)  the position relates wholly or partly to shares in which the taxpayer has a vested and indefeasible interest; or

                     (b)  the whole or a part of the profits or losses from the position will be distributed to, or deducted from an amount that would otherwise be distributed to, the taxpayer; or

                     (c)  the benefit or detriment of the position will be wholly or partly passed to the taxpayer.

Additional positions of the taxpayer

           (10)  If:

                     (a)  the trust is not a family trust within the meaning of Schedule 2F; and

                     (b)  the trust is not a trust for the purposes of this Act merely because of the reference to executors and administrators in paragraph (a) of the definition of trustee in subsection 6(1); and

                     (c)  the taxpayer’s interest in the relevant share or the relevant shares is not an employee share scheme security;

the taxpayer has, in addition to any other long and short positions (including the positions that the taxpayer is taken to have under subsection (8)) in relation to the taxpayer’s interest in the relevant share or relevant shares, a short position equal to the taxpayer’s long position under subsection (7) and a long position equal to so much of the taxpayer’s interest in the trust holding as is a fixed interest.

A vested and indefeasible interest constitutes a fixed interest

           (11)  For the purposes of subsection (10), the taxpayer’s interest in the trust holding is a fixed interest to the extent that the interest is constituted by a vested and indefeasible interest in so much of the corpus of the trust as is comprised by the trust holding.

Certain interests in trust holding taken to be defeasible

           (12)  Subject to subsection (13), if the taxpayer has an interest in the trust holding and either:

                     (a)  the interest may be redeemed under the terms of the trust for less than its value; or

                     (b)  the value of the interest may be materially reduced by:

                              (i)  if the trust is a unit trust—the issue of further units; or

                             (ii)  otherwise—the creation of other interests under the trust;

the interest is taken to be defeasible.

Case where interest not defeasible

           (13)  If:

                     (a)  the trust is a unit trust and the taxpayer holds units in the unit trust; and

                     (b)  the units are redeemable or further units are able to be issued; and

                     (c)  where units in the unit trust are listed for quotation in the official list of an approved stock exchange (within the meaning of section 470)—the units held by the taxpayer will be redeemed, or any further units will be issued, for the price at which other units of the same kind in the unit trust are offered for sale on the approved stock exchange at the time of the redemption or issue; and

                     (d)  where the units are not listed as mentioned in paragraph (c)—the units held by the taxpayer will be redeemed, or any further units will be issued, for a price determined on the basis of the unit trust’s net asset value, according to Australian accounting principles, at the time of the redemption or issue;

then the mere fact that the units are redeemable, or that the further units are able to be issued, does not mean that the taxpayer ’s interest, as a unit holder, in so much of the corpus of the trust as is comprised by the trust holding is defeasible.

Commissioner may determine an interest to be vested and indefeasible

           (14)  If:

                     (a)  the taxpayer has an interest in so much of the corpus of the trust as is comprised by the trust holding; and

                     (b)  apart from this subsection, the interest would not be a vested or indefeasible interest; and

                     (c)  the Commissioner considers that the interest should be treated as being vested and indefeasible, having regard to:

                              (i)  the circumstances in which the interest is capable of not vesting or the defeasance can happen; and

                             (ii)  the likelihood of the interest not vesting or the defeasance happening; and

                            (iii)  the nature of the trust; and

                            (iv)  any other matter the Commissioner thinks relevant;

the Commissioner may determine that the interest is to be taken to be vested and indefeasible.

Effect of determination

           (15)  A determination made under subsection (14) has effect according to its terms.

160APHM   Material diminution of risks of loss and opportunities for gain in respect of shares or interests in shares

Regulations may prescribe what constitutes material diminution

             (1)  The regulations may prescribe the circumstances in which a taxpayer is taken to have materially diminished risks of loss and opportunities for gain in respect of shares or interests in shares, and the following provisions of this section have effect subject to any such regulations.

Material diminution if net position has less than 30% of risks and opportunities

             (2)  A taxpayer is taken to have materially diminished risks of loss and opportunities for gain on a particular day in respect of shares held by the taxpayer, or in respect of an interest held by the taxpayer in shares, if the taxpayer’s net position on that day in relation to the shares or interest has less than 30% of those risks and opportunities.

Net position worked out by reference to deltas

             (3)  A taxpayer’s net position is worked out using the financial concept known as delta (see section 160APHJ). For example, an option to sell a share with a delta of minus 0.5 in relation to the share reduces the risks of loss and opportunities for gain by 50%.

160APHN   Related payments

             (1)  This section gives examples of, but does not limit, what constitutes, for the purposes of this Division, the making of a related payment by a taxpayer or an associate of a taxpayer in respect of a dividend paid in respect of shares, or in respect of a distribution made in respect of interests in shares, held by the taxpayer.

             (2)  The taxpayer or associate is taken, for the purposes of this Division, to have made, to be under an obligation to make, or to be likely to make, a related payment in respect of the dividend or distribution if, under an arrangement, the taxpayer or associate has done, is under an obligation to do, or may reasonably be expected to do, as the case may be, anything having the effect of passing the benefit of the dividend or distribution to one or more other persons.

             (3)  Without limiting subsection (2), the doing of any of the following by the taxpayer or an associate of the taxpayer in the circumstances mentioned in subsection (4) may have the effect of passing the benefit of the dividend or distribution to one or more other persons:

                     (a)  causing a payment or payments to be made to, or in accordance with the directions of, the other person or other persons; or

                     (b)  causing an amount or amounts to be credited to, or applied for the benefit of, the other person or other persons; or

                     (c)  causing services to be provided to, or in accordance with the directions of, the other person or other persons; or

                     (d)  causing property to be transferred to, or in accordance with the directions of, the other person or other persons; or

                     (e)  allowing any property or money to be used by the other person or other persons or by someone nominated by the other person or other persons; or

                      (f)  causing an amount or amounts to be set off against, or to be otherwise applied in reduction of, a debt or debts owed by the other person or other persons to the taxpayer or associate; or

                     (g)  agreeing to treat an amount or amounts owed to the other person or other persons by the taxpayer or associate as having been increased.

             (4)  The circumstances referred to in subsection (3), are where:

                     (a)  the amount or the sum of the amounts paid, credited or applied; or

                     (b)  the value or the sum of the values of the services provided, of the property transferred or of the use of the property or money; or

                     (c)  the amount or the sum of the amounts of the set-offs, reductions or increases;

as the case may be:

                     (d)  is, or may reasonably be expected to be, equal to; or

                     (e)  approximates or may reasonably be expected to approximate; or

                      (f)  is calculated by reference to;

the amount of the dividend or distribution.

             (5)  The distribution by a trustee of a dividend to a beneficiary or beneficiaries of the trust who are presently entitled to it does not constitute the making of a related payment in respect of the dividend.

             (6)  If an amount is taken into account in any way in favour of, or is notionally accredited to, a person in fixing a price or value, or in determining another amount, the first-mentioned amount is taken, for the purposes of this section, to be credited to the other person.

Subdivision B Qualification for franking benefits and intercorporate dividend rebate

160APHO   Persons qualified by holding shares or interests in shares for a prescribed number of days during a qualification period

             (1)  A taxpayer who has held shares or an interest in shares on which a dividend has been paid is a qualified person in relation to the dividend if:

                     (a)  where neither the taxpayer nor an associate of the taxpayer has made, is under an obligation to make, or is likely to make, a related payment in respect of the dividend—the taxpayer has satisfied subsection (2) in relation to the primary qualification period in relation to the dividend; or

                     (b)  where the taxpayer or an associate of a taxpayer has made, is under an obligation to make, or is likely to make, a related payment in respect of the dividend—the taxpayer has satisfied subsection (2) in relation to the secondary qualification period in relation to the dividend.

             (2)  A taxpayer who has held shares or an interest in shares on which a dividend has been paid satisfies this subsection in relation to a qualification period in relation to the shares or interest if, during the period:

                     (a)  where the taxpayer held the shares—the taxpayer held the shares for a continuous period (not counting the day on which the taxpayer acquired the shares or, if the taxpayer has disposed of the shares, the day on which the disposal occurred) of not less than:

                              (i)  if the shares are not preference shares—45 days; or

                             (ii)  if the shares are preference shares—90 days; or

                     (b)  where the taxpayer held the interest in the shares—the taxpayer held the interest for a continuous period (not counting the day on which the taxpayer acquired the interest or, if the taxpayer has disposed of the interest, the day on which the disposal occurred) of not less than:

                              (i)  if the shares are not preference shares—45 days; or

                             (ii)  if the shares are preference shares—90 days.

             (3)  In calculating the number of days for which the taxpayer continuously held the shares or interest, any days on which the taxpayer has materially diminished risks of loss and opportunities for gain in respect of the shares or interest are to be excluded, but the exclusion of those days is not taken to break the continuity of the period for which the taxpayer held the shares or interest.

             (4)  This section does not apply to a taxpayer in respect of an interest in shares held by the taxpayer as a beneficiary of a widely held trust.

160APHP   Persons qualified by holding interests in shares as beneficiaries of a widely held trust for a prescribed number of days during a qualifying period

             (1)  A taxpayer who has held an interest in shares as a beneficiary of a widely held trust is a qualified person in relation to any dividend paid on the shares to which a distribution from the trust to the taxpayer is attributable if:

                     (a)  where neither the taxpayer nor an associate of the taxpayer has made, is under an obligation to make, or is likely to make, a related payment in respect of the distribution—during the primary qualification period in relation to the taxpayer in relation to the interest; or

                     (b)  where the taxpayer or an associate of the taxpayer has made, is under an obligation to make, or is likely to make, a related payment in respect of the distribution—during the secondary qualification period in relation to the taxpayer in relation to the interest;

the taxpayer has held an interest in the shares as a beneficiary of the trust for a continuous period (not counting the day on which the taxpayer acquired the interest or, if the taxpayer has disposed of the interest, the day on which the disposal occurred) of not less than 45 days.

             (2)  In calculating the number of days for which the taxpayer continuously held the interest, any days on which the taxpayer has materially diminished risks of loss and opportunities for gain in respect of the interest are to be excluded, but the exclusion of those days is not taken to break the continuity of the period for which the taxpayer held the interest.

160APHQ   Persons qualified by holding shares or interests in shares where the shares were issued in connection with a winding up

                   A taxpayer who has held shares, or an interest in shares, in a company on which a dividend is paid is a qualified person in relation to the dividend if:

                     (a)  the shares were issued in connection with a proposed winding up of the company; and

                     (b)  the shares or interest was not disposed of by the taxpayer before the commencement of the winding up; and

                     (c)  neither the taxpayer nor an associate of the taxpayer has made, is under an obligation to make, or is likely to make, a related payment in respect of the dividend.

160APHR   Persons qualified by electing to have franking credit ceilings and franking rebate ceilings applied by reference to franking credits or rebates on a benchmark portfolio of shares

Taxpayers who may make election

             (1)  Subject to this section, a taxpayer referred to in any of the following paragraphs may elect to have Subdivision BA of Division 7 apply to the taxpayer, in respect of a year of income specified in the election (the specified year of income ) and all later years of income, in relation to shares, or an interest in shares, managed by or on behalf of the taxpayer as or in a discrete fund (the managed fund ):

                     (a)  the trustee of a unit trust that, at the time when the election is made, is a listed widely held trust (as defined in section 272-115 in Schedule 2F to the Income Tax Assessment Act 1936 ;

                     (b)  the trustee of a unit trust that, at the time when the election is made, is an unlisted very widely held trust (as defined in section 272-120 in Schedule 2F to the Income Tax Assessment Act 1936 ;

                     (c)  a life assurance company within the meaning of section 110;

                     (d)  a general insurance company (as defined in subsection 121AB(4));

                     (e)  a friendly society;

                      (f)  an organisation referred to in subparagraph 23(eb)(i) that only carries on business as a registered health benefits organisation within the meaning of the National Health Act 1953 ;

                     (g)  the trustee of a fund (other than an excluded fund) that is a complying superannuation fund for the purposes of Part IX in relation to the specified year of income;

                     (h)  the trustee of a fund (other than an excluded fund) that is a complying ADF for the purposes of Part IX in relation to the specified year of income;

                      (i)  the trustee of a unit trust that is a pooled superannuation trust for the purposes of Part IX in relation to the specified year of income;

                      (j)  a taxpayer who is declared by the regulations to be a taxpayer, or is included in a class of taxpayers who are declared by the regulations to be taxpayers, to whom this section applies in relation to the specified year of income;

                     (k)  the trustee of a unit trust if, at the time when the election is made:

                              (i)  at least 75% of the units are held by a person who is, or persons each of whom is, a person referred to in a preceding paragraph or a prescribed person in relation to the trust; and

                             (ii)  all of the units carry the same rights; and

                            (iii)  if the units are redeemable, they are redeemable for a price determined on the basis of the trust’s net asset value, according to Australian accounting principles; and

                            (iv)  the trust engages only in qualifying activities.

Regulations may preclude election

             (2)  A taxpayer referred to in any of paragraphs (1)(a) to (i) and (k) cannot make an election under subsection (1) if, under the regulations, the taxpayer is precluded from making such an election.

Election ineffective if related payments made

             (3)  An election under subsection (1) does not have any effect in respect of a particular dividend or distribution if:

                     (a)  the taxpayer or an associate of the taxpayer has made, is under an obligation to make, or is likely to make, a related payment in respect of the dividend or distribution; and

                     (b)  the payment was or will be a payment of a prescribed kind.

Prescribed kinds of payments

             (4)  For the purposes of subsection (3), a payment is taken to have been, or will be, a payment of a prescribed kind if:

                     (a)  unless the regulations otherwise provide, the payment occurred or will occur pursuant to:

                              (i)  an obligation under a securities lending arrangement (other than such an obligation to which section 160AQUA applies); or

                             (ii)  an obligation under an arrangement of a kind known as an equity swap; or

                     (b)  the payment is included in a class of payments declared by the regulations to be payments to which subsection (3) applies.

Consequences of ineffective elections

             (5)  If an election under subsection (1) does not have any effect in respect of a particular dividend or distribution because of subsection (3), neither the share nor the interest in respect of which the dividend or distribution was made, nor the positions that the taxpayer has in relation to the share or interest, are to be taken into account in calculating the net equity exposure that the managed fund has in shares, or interests in shares, included in the fund for the purposes of section 160AQZF.

Commissioner’s consent required for revocation of election

             (6)  An election under subsection (1) is irrevocable without the consent of the Commissioner.

Breach of condition of consent

             (7)  If:

                     (a)  the Commissioner consents to the revocation of an election subject to specified conditions; and

                     (b)  the election is revoked but any of the conditions is breached;

the revocation of the election is taken not to have been made.

Taxpayer making election is a qualified person

             (8)  A taxpayer who makes an election under subsection (1) is a qualified person in relation to every dividend paid during a year of income to which the election applies on shares held by the taxpayer or in which the taxpayer has an interest.

Effect of determination by Commissioner

             (9)  If the Commissioner has made a determination under subsection 177EA(5) in respect of:

                     (a)  a dividend paid in respect of shares held by a taxpayer; or

                     (b)  a distribution that:

                              (i)  was derived from a dividend paid in respect of shares; and

                             (ii)  is made in respect of an interest held by a taxpayer in the shares;

the following paragraphs have effect:

                     (c)  if the shares or interest is included in a discrete fund to which an election under subsection (1) relates—the Commissioner may determine that the election ceases or ceased to have effect from the beginning of the year of income in which the determination was made or from the beginning of a later year of income specified in the determination;

                     (d)  if the shares or interest is not included in such a fund—the taxpayer is not entitled, without the consent of the Commissioner, to make an election under subsection (1).

A determination under this subsection has effect according to its terms.

Effect of entering into certain positions

           (10)  If:

                     (a)  an election made by a taxpayer under subsection (1) is in force in respect of the shares or interests in shares included in a discrete fund managed by or on behalf of the taxpayer; and

                     (b)  the Commissioner informs the taxpayer that the Commissioner is of the opinion that:

                              (i)  the taxpayer has entered into, or caused another person (for example, the asset overlay manager of the fund) on behalf of the taxpayer, to enter into; or

                             (ii)  under an arrangement to which the taxpayer and an associate are parties, the associate has entered into;

                            a position or positions that, apart from this subsection, would not be taken into account under subsection 160AQZF(2) for a purpose of materially diminishing risks of loss and opportunities for gain in respect of the shares or interests;

the following provisions have effect:

                     (c)  the short position or positions are to be taken into account under subsection 160AQZF(2);

                     (d)  the Commissioner may determine that the election ceases or ceased to have effect from a time specified in the determination;

                     (e)  if such a determination is made:

                              (i)  the determination has effect according to its terms; and

                             (ii)  the taxpayer is not entitled to make another election under subsection (1) without the consent of the Commissioner; and

                            (iii)  if the Commissioner consents to the making of such an election subject to specified conditions and the election is made but any of the conditions is breached—the election is taken not to have been made.

Definitions

           (11)  In this section:

excluded fund has the meaning given by subsection 10(1) of the Superannuation Industry Supervision Act 1993 .

qualifying activity means an activity that:

                     (a)  is an investment or business activity; and

                     (b)  is conducted in accordance with the trust instrument or deed, and any prospectus, of the relevant trust; and

                     (c)  is conducted at arm’s length.

160APHS   Prescribed persons in relation to a unit trust

             (1)  A company is a prescribed person in relation to a unit trust for the purposes of subparagraph 160APHR(1)(k)(i) if:

                     (a)  the company is a non-resident; or

                     (b)  were the company to receive a distribution from the trust, the distribution would be exempt income of the company for the purposes of this Part.

             (2)  A trustee is a prescribed person in relation to a unit trust for the purposes of subparagraph 160APHR(1)(k)(i) if:

                     (a)  all the beneficiaries in the trust are prescribed persons under other provisions of this section; or

                     (b)  were the trustee to receive a distribution from the trust, the distribution would be exempt income of the trust estate for the purposes of this Part.

             (3)  A partnership is a prescribed person in relation to a unit trust for the purposes of subparagraph 160APHR(1)(k)(i) if:

                     (a)  all the partners are prescribed persons under other provisions of this section; or

                     (b)  were the partnership to receive a distribution from the trust, the distribution would be exempt income of the partnership for the purposes of this Part.

             (4)  An individual (other than a trustee) is a prescribed person in relation to a unit trust for the purposes of subparagraph 160APHR(1)(k)(i) if:

                     (a)  he or she is a non-resident; or

                     (b)  were he or she to receive a distribution from the trust, the distribution would be exempt income of the individual for the purposes of this Part.

             (5)  The Commonwealth, each of the States, the Australian Capital Territory, the Northern Territory and Norfolk Island are prescribed persons in relation to a unit trust for the purposes of subparagraph 160APHR(1)(k)(i).

160APHT   Individuals qualified by electing to have a franking rebate ceiling applied

             (1)  A taxpayer who is an individual may elect to have a franking rebate ceiling applied in respect of him or her in relation to a specified year of income in accordance with Subdivision BB of Division 7.

             (2)  Subject to subsection (3), if a taxpayer makes such an election, the taxpayer is a qualified person in relation to every dividend paid during the year of income specified in the election on shares that the taxpayer held or in which the taxpayer held an interest.

             (3)  A taxpayer is not a qualified person under subsection (2) in relation to a dividend if the taxpayer or an associate of the taxpayer has made, is under an obligation to make, or is likely to make, a related payment in respect of the dividend or a distribution attributable to the dividend.

160APHU   Beneficiary or partner not to be a qualified person if trustee or partnership is not a qualified person: trustee or partnership may be entitled to deduction

Disqualification of beneficiary or partner

             (1)  If a taxpayer that is a trustee or partnership is not a qualified person in relation to a dividend (including a trustee or partnership that is not a qualified person because of a previous application of this subsection), then, despite any other provision of this Subdivision, no beneficiary of the trust or partner in the partnership is a qualified person in relation to the dividend.

Allowable deduction to trustee or partnership in certain circumstances

             (2)  If:

                     (a)  a taxpayer that is a trustee or a partnership is not a qualified person in relation to a dividend; and

                     (b)  the dividend is not paid to the trustee or partnership as the holder of the shares on which the dividend is paid (that is, the trustee or partnership receives a trust amount or partnership amount in respect of the dividend);

a deduction is allowable to the trustee or partnership, from the assessable income of the trust estate or partnership of the year of income in which the relevant trust amount or partnership amount was received, of an amount equal to the sum of the amounts represented by the letters PR and EPR in the definition of potential rebate amount in section 160APA in so far as it relates to the trust amount or partnership amount.

9  At the end of subsection 160APP(6)

Add “or if the shareholder is not a qualified person in relation to the dividend for the purposes of Division 1A”.

10  After paragraph 160APQ(1)(b)

Insert:

               and (c)  the company is a qualified person in relation to the relevant franked dividend for the purposes of Division 1A;

11  After paragraph 160APQ(2)(b)

Insert:

               and (c)  the company is a qualified person in relation to the relevant franked dividend for the purposes of Division 1A;

12  At the end of paragraphs 160AQT(1)(a) and (b)

Add “and”.

13  After paragraph 160AQT(1)(b)

Insert:

                    (ba)  the shareholder is a qualified person in relation to the dividend for the purposes of Division 1A; and

14  After paragraph 160AQT(1AB)(b)

Insert:

                    (ba)  the shareholder is a qualified person in relation to the dividend for the purposes of Division 1A; and

15  After paragraph 160AQT(1A)(b)

Insert:

                    (ba)  the shareholder is a qualified person in relation to the dividend for the purposes of Division 1A; and

16  After paragraph 160AQT(1C)(b)

Insert:

                    (ba)  the shareholder is a qualified person in relation to the dividend for the purposes of Division 1A; and

17  After paragraph 160AQX(c)

Insert:

             and (ca)  the taxpayer is a qualified person in relation to the relevant franked dividend for the purposes of Division 1A;

18  After paragraph 160AQY(b)

Insert:

             and (ba)  the trustee is a qualified person in relation to the relevant franked dividend for the purposes of Division 1A;

19  After paragraph 160AQYA(1)(c)

Insert:

             and (ca)  the taxpayer is a qualified person in relation to the relevant franked dividend for the purposes of Division 1A;

20  After paragraph 160AQYA(2)(c)

Insert:

             and (ca)  the taxpayer is a qualified person in relation to the relevant franked dividend for the purposes of Division 1A;

21  After paragraph 160AQZ(c)

Insert:

             and (ca)  the taxpayer is a qualified person in relation to the relevant franked dividend for the purposes of Division 1A;

22  After Subdivision B of Division 7 of Part IIIAA

Insert:

Subdivision BA Maximum franking credits, maximum franking rebates, and maximum potential rebate amounts (and allowable deductions), for taxpayers who elect under section 160APHR

160AQZB   Application of Subdivision

                   This Subdivision applies in relation to a year of income to a taxpayer (the electing taxpayer ) who makes an election under section 160APHR in relation to the year of income.

160AQZC   Maximum franking credits

             (1)  If:

                     (a)  any dividends are paid on shares during the year of income; and

                     (b)  the electing taxpayer is a company that held the shares or had interests in the shares; and

                     (c)  the shares or interests are managed by or on behalf of the electing taxpayer as or in a discrete fund; and

                     (d)  the election under section 160APHR related to the shares or interests;

the sum of the franking credits to which the electing taxpayer is entitled under this Part in respect of all those dividends is not to exceed the ceiling amount in relation to the fund in relation to the year of income.

             (2)  If the electing taxpayer is entitled to both class A franking credits and class C franking credits under this Part in respect of any of the dividends referred to in subsection (1), the sum of the franking credits to which the taxpayer is entitled under this Part in respect of all the dividends referred to in that subsection is the sum of:

                     (a)  the class C franking credits in respect of any of those dividends; and

                     (b)  the amount worked out by using the formula:

             (3)  The ceiling amount , in relation to the fund in relation to the year of income, is the notional total credit amount in relation to the fund in relation to the year of income increased by:

                     (a)  if paragraph (b) does not apply—20%; or

                     (b)  if a different percentage is prescribed by the regulations in relation to the index by reference to which the relevant benchmark portfolio of shares that applies in respect of the fund is determined—that percentage.

             (4)  The notional total credit amount , in relation to the fund in relation to the year of income, is:

                     (a)  subject to paragraph (b), an amount equal to the sum of the franking credits to which a taxpayer (the notional taxpayer ) of the same kind or class as the electing taxpayer would be entitled under this Part in respect of dividends paid:

                              (i)  during the year of income;

                             (ii)  on shares in the benchmark portfolio of shares that applies in respect of the fund;

                            if the notional taxpayer were a qualified person under section 160APHO in relation to the dividends; or

                     (b)  if the regulations provide another method of calculating notional total credit amounts in relation to funds managed in the year of income by or on behalf of a class of taxpayers in which the electing taxpayer is included—the amount calculated in relation to the fund in accordance with that method.

             (5)  The regulations may determine what constitutes a kind of taxpayer or class of taxpayers for the purposes of this section.

160AQZD   Maximum franking rebates or intercorporate dividend rebates

             (1)  If:

                     (a)  any dividends are paid on shares during the year of income; and

                     (b)  the electing taxpayer held the shares or had interests in the shares; and

                     (c)  the shares or interests are managed by or on behalf of the electing taxpayer as or in a discrete fund; and

                     (d)  the election under section 160APHR related to the shares or interests;

the sum of the rebates of tax to which the electing taxpayer is entitled under this Part or Subdivision D of Division 2 of Part III in respect of all those dividends is not to exceed the ceiling amount in relation to the fund in relation to the year of income.

             (2)  The ceiling amount , in relation to the fund in relation to the year of income, is the notional total rebate amount in relation to the fund in relation to the year of income increased by:

                     (a)  if paragraph (b) does not apply—20%; or

                     (b)  if a different percentage is prescribed by the regulations in relation to the index by reference to which the relevant benchmark portfolio of shares that applies in respect of the fund is determined—that percentage.

             (3)  The notional total rebate amount , in relation to the fund in relation to the year of income, is:

                     (a)  subject to paragraph (b), an amount equal to the sum of the rebates of tax to which a taxpayer (the notional taxpayer ) of the same kind or class as the electing taxpayer would be entitled under this Part in respect of dividends paid:

                              (i)  during the year of income;

                             (ii)  on shares in the benchmark portfolio of shares that applies in respect of the fund;

                            if the notional taxpayer were a qualified person under section 160APHP in relation to the dividends; or

                     (b)  if the regulations provide another method of calculating notional total rebate amounts in relation to funds managed in the year of income by or on behalf of a class of taxpayers in which the electing taxpayer is included—the amount calculated in relation to the fund in accordance with that method.

             (4)  The regulations may determine what constitutes a kind of taxpayer or class of taxpayers for the purposes of this section.

160AQZE   Maximum potential rebate amount and allowable deduction

             (1)  If:

                     (a)  any dividends are paid on shares during the year of income; and

                     (b)  the electing taxpayer is a taxpayer mentioned in paragraph 160APHR(1)(a), (b), (j) or (k) who held the shares or had interests in the shares; and

                     (c)  the shares or interests are managed by or on behalf of the electing taxpayer as or in a discrete fund; and

                     (d)  the election under section 160APHR related to the shares or interests;

the sum of the amounts represented by the letters PR and EPR in the formulas in the definition of potential rebate amount in section 160APA in relation to the electing taxpayer in respect of all those dividends is not to exceed the ceiling amount in relation to the fund in relation to the year of income.

             (2)  The ceiling amount , in relation to the fund in relation to the year of income, is the notional total rebate amount in relation to the fund in relation to the year of income increased by:

                     (a)  if paragraph (b) does not apply—20%; or

                     (b)  if a different percentage is prescribed by the regulations in relation to the index by reference to which the relevant benchmark portfolio of shares that applies in respect of the fund is determined—that percentage.

             (3)  The notional total rebate amount , in relation to the fund in relation to the year of income, is:

                     (a)  subject to paragraph (b), an amount equal to the sum of the rebates of tax to which a taxpayer (the notional taxpayer ) who is a natural person and a resident of Australia would be entitled under this Part in respect of dividends paid:

                              (i)  during the year of income;

                             (ii)  on shares in the benchmark portfolio of shares that applies in respect of the fund;

                            if the notional taxpayer were a qualified person under section 160APHP in relation to the dividends; or

                     (b)  if the regulations provide another method of calculating notional total rebate amounts in relation to funds managed in the year of income by or on behalf of a class of taxpayers in which the electing taxpayer is included—the amount calculated in relation to the fund in accordance with that method.

             (4)  If the sum of the amounts referred to in subsection (1) in relation to the electing taxpayer in respect of dividends paid during the year of income exceeds the ceiling amount referred to in that subsection in relation to the year of income, the excess is allowable as a deduction from the electing taxpayer’s assessable income of the year of income.

160AQZF   Benchmark portfolio of shares

             (1)  The benchmark portfolio of shares that is applicable in respect of a fund managed by or on behalf of a taxpayer is the portfolio of the shares and other securities used to calculate:

                     (a)  the All Ordinaries Index published by the Australian Stock Exchange Limited; or

                     (b)  if the regulations prescribe another index in relation to a class of taxpayers in which the taxpayer is included—the other index;

being a portfolio whose value is equal to the net equity exposure of the fund for the year of income.

             (2)  The net equity exposure of a fund for the year of income is the sum of the average values during the year of income of the long and short positions that the fund has in such of the shares, or in interests in such of the shares, included in the fund as:

                     (a)  are shares:

                              (i)  in companies that are residents of Australia; and

                             (ii)  that are included in the relevant index; or

                     (b)  if the relevant index is the index referred to in paragraph (1)(a)—are ordinary shares:

                              (i)  in companies that are residents of Australia; and

                             (ii)  that are listed for quotation in the official list of Australian Stock Exchange Limited.

             (3)  The value of a position in a share, or a position in an interest in a share, is calculated by multiplying the value of the share or interest by the delta of the position in the share or interest.

             (4)  The average values referred to in subsection (2) are to be calculated weekly on the same day each week (being the day chosen for the first calculation) or, if another basis for calculating those average values is prescribed by the regulations, are to be calculated on that other basis.

Subdivision BB Maximum franking rebates and allowable deductions for taxpayers who elect under section 160APHT

160AQZG   Application of Subdivision

                   This Subdivision applies in relation to a year of income to a taxpayer who makes an election under section 160APHT in relation to the year of income.

160AQZH   Maximum franking rebates

             (1)  The sum of the rebates of tax to which the taxpayer is entitled under sections 160AQU, 160AQX and 160AQZ in respect of dividends paid or distributions made during the year of income is not to exceed the amount (the applicable amount ) worked out in accordance with subsection (2).

             (2)  The applicable amount is worked out as follows:

                     (a)  calculate the total of the amounts of the rebates of tax to which the taxpayer would be entitled under sections 160AQU, 160AQX and 160AQZ in respect of the year of income if he or she had not made the election referred to in section 160AQZG but were a qualified person in relation to each of those dividends because of section 160APHO;

                     (b)  deduct from $2000 an amount of $4 for each $1 by which the total amount calculated under paragraph (a) exceeds $2000;

                     (c)  the amount (if any) remaining is the applicable amount.

160AQZI   Deduction allowable

             (1)  An amount calculated in accordance with subsection (2) is allowable as a deduction from the taxpayer’s assessable income of the year of income.

             (2)  The amount allowable as a deduction is the lesser of $2,500 or the amount worked out using the formula:

where:

deducted amount is the amount deducted under paragraph 160AQZH(2)(b).

total rebates means the total of the amounts of the rebates of tax calculated under paragraph 160AQZH(2)(a).

23  After section 160ARAA

Insert:

160ARAB   Adjustment where taxpayer who receives a trust amount or partnership amount is not a qualified person under Division 1A in relation to relevant franked dividend

             (1)  If:

                     (a)  a trust amount is included in a taxpayer’s assessable income of a year of income; and

                     (b)  the taxpayer is not a qualified person in relation to the relevant franked dividend for the purposes of Division 1A; and

                     (c)  no deduction has been allowed, or is allowable, from the taxpayer’s assessable income of any year of income under section 160AR in respect of the trust amount;

an amount equal to so much of the class A potential rebate amount, the class B potential rebate amount or the class C potential rebate amount that, if the taxpayer were such a qualified person, would arise in relation to the trust amount as does not exceed the trust amount is allowable as a deduction from the taxpayer’s assessable income of the year of income.

             (2)  If:

                     (a)  a partnership amount is included in, or is allowable as a deduction from, a taxpayer’s assessable income of a year of income; and

                     (b)  the taxpayer is not a qualified person in relation to the relevant franked dividend for the purposes of Division 1A; and

                     (c)  no deduction has been allowed, or is allowable, from the taxpayer’s assessable income of any year of income under section 160AR in respect of the partnership amount;

the class A potential rebate amount, the class B potential rebate amount or the class C potential rebate amount that, if the taxpayer were such a qualified person, would arise in relation to the partnership amount is allowable as a deduction from the taxpayer’s assessable income of the year of income.

24  At the end of subsection 272-87 of Schedule 2F

Add:

               ; or (g)  persons in the group are the only persons who, under the terms of the trust, can obtain the beneficial enjoyment of the income and capital of the trust.

25  Application of amendments

(1)        Subject to this item, the amendments made by this Schedule apply in respect of shares, or interests in shares, where the shares or interests were acquired by the taxpayer on or after 1 July 1997 except where the shares or interests were acquired under a contract made before 7.30 pm by legal time in the Australian Capital Territory on 13 May 1997.

(2)        If:

                     (a)  a taxpayer has acquired, or acquires, shares or an interest in shares on or after 1 July 1997; and

                     (b)  the acquisition constituted, or constitutes, an acquisition or reacquisition of replacement securities for the purposes of subparagraph 26BC(3)(a)(ii) of the Income Tax Assessment Act 1936 ;

the acquisition is taken for the purposes of subitem (1) to have occurred before 1 July 1997.

(3)        Despite subitem (1):

                     (a)  references to shares, or interests in shares, in Subdivisions BA and BB of Division 7 of Part IIIA of the Income Tax Assessment Act 1936 include references to shares, or interests in shares, acquired by the taxpayer before 1 July 1997; and

                     (b)  in calculating the net position of a taxpayer or fund in relation to shares, or an interest in shares, for the purposes of section 160APHJ of the Income Tax Assessment Act 1936 , regard is to be had to the long positions and the short positions of the taxpayer or fund in relation to shares, or interests in shares, acquired before 1 July 1997.

(4)        Section 160APHL of the Income Tax Assessment Act 1936 is taken to have come into effect at 3.00 pm by legal time in the Australian Capital Territory on 31 December 1997 and applies to:

                     (a)  all trusts (other than widely held public share-trading trusts) that receive dividends from shares, or distributions in respect of interests in shares, but only in relation to shares or interests in shares acquired after that time; and

                     (b)  widely held public share-trading trusts established after that date.

(5)        A reference in a provision inserted in the Income Tax Assessment Act 1936 by this Schedule to a related payment in respect of a dividend or distribution is a reference to a related payment under an arrangement entered into after 7.30 pm by legal time in the Australian Capital Territory on 13 May 1997, whether or not the shares or interests in shares in respect of which the dividend was paid or the distribution was made were acquired by the taxpayer before or after that time.

(6)        Section 160APHN of the Income Tax Assessment Act 1936 has effect for the purposes of subitem (5) of this item in the same way as it has effect for the purposes of Division 1A of Part III of that Act.

(7)        In this item:

arrangement has the same meaning as in Division 1A of Part III of the Income Tax Assessment Act 1936 .

widely held public share-trading trust means a widely held trust that:

                     (a)  is open to investment by members of the public; and

                     (b)  buys and sells shares with a view to profit.

widely held trust has the same meaning as in Division 1A of Part III of the Income Tax Assessment Act 1936 .



 

Schedule 7 Distributions to beneficiaries and partners that are equivalent to interest

   

Income Tax Assessment Act 1936

1  Before subsection 45Z(1)

Insert:

          (1A)  This section is subject to section 45ZA.

2  After section 45Z

Insert:

45ZA   Trustee or partnership not entitled to intercorporate dividend rebate for distribution that is equivalent to interest

             (1)  This section applies if:

                     (a)  an amount (the distributed amount ) is included in the assessable income of a taxpayer that:

                              (i)  is a company; and

                             (ii)  is a beneficiary in a trust estate or a partner in a partnership; and

                     (b)  an amount (the attributable amount ) that is the whole or a part of the distributed amount was attributable to the payment of a dividend by a company; and

                     (c)  the attributable amount was paid to the taxpayer:

                              (i)  in respect of an interest in the trust or partnership that was acquired or created, or was acquired or created for a term that was extended, at or after the commencing time; or

                             (ii)  under a finance arrangement (including an arrangement extending an earlier arrangement) to which the trustee of the trust, or the partnership, is a party and which was or is entered into at or after the commencing time; and

                     (d)  the payment to the taxpayer of the attributable amount or the distributed amount may reasonably be regarded as equivalent to the payment of interest on a loan.

             (2)  In determining whether the payment of the attributable amount or the distributed amount may reasonably be regarded as equivalent to the payment of interest on a loan, regard is to be had to:

                     (a)  the way in which the amount was calculated; and

                     (b)  the conditions applying to the payment of the amount; and

                     (c)  any other relevant matters.

             (3)  The taxpayer is not entitled to a rebate of tax under section 46 or 46A (as the section concerned has effect under section 45Z) in respect of the attributable amount.

             (4)  In this section:

arrangement means any agreement, arrangement or understanding, whether formal or informal, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings.

associate has the meaning given by section 318 but includes:

                     (a)  in relation to a trustee—the controller of the trust; and

                     (b)  in relation to a company that is a member of a wholly-owned group (determined in accordance with Subdivision 975-W of the Income Tax Assessment Act 1997 )—any other company that is a member of the group.

commencing time means 7.30 pm by legal time in the Australian Capital Territory on 13 May 1997.

controller , in relation to a trust, means a person:

                     (a)  who beneficially owns, or is able in any way, whether directly or indirectly, to control the application of, more than 50% of the interests in the trust property or in the trust income; or

                     (b)  who has power to appoint or remove the trustee of the trust; or

                     (c)  according to whose directions, instructions or wishes the trustee of the trust is accustomed or under an obligation, whether formal or informal, to act.

finance includes money (including money in the currency of a foreign country) raised by the issue of shares or the creation of an interest in a trust or partnership.

finance arrangement , in relation to a trustee or a partnership, means an arrangement entered into or carried out by any of the parties to the arrangement for the purpose, or for purposes that include the purpose:

                     (a)  of enabling the trustee or partnership, or the company referred to in paragraph (1)(b), or an associate of the trustee, partnership or company, to obtain finance (whether by way of renewal or otherwise); or

                     (b)  of enabling the trustee or partnership, or the company referred to in paragraph (1)(b), or an associate of the trustee, partnership or company, to obtain an extension of the period for which finance was obtained under an earlier arrangement.

interest , in relation to a trust that is a discretionary trust, includes a right to receive, at the discretion of the trustee of the trust, benefits under the trust.

loan includes the provision of credit or any other form of financial accommodation.

paid : an attributable amount or distributed amount is taken to have been paid to a taxpayer if it is included in the taxpayer’s assessable income.

3  After subsection 128B(3)

Insert:

          (3A)  Paragraph (3)(ga) does not apply to income consisting of a dividend, or a part of a dividend, that is derived by the trustee of a trust, or to a partnership, to the extent (if any) to which any amount paid to, or applied for the benefit of, a taxpayer (being a beneficiary in the trust or a partner in the partnership) that:

                     (a)  was attributable to the dividend; and

                     (b)  was paid or applied:

                              (i)  in respect of an interest in the trust or partnership that was acquired, or was acquired for a period that was extended, at or after the commencing time; or

                             (ii)  under a finance arrangement (including an arrangement extending an earlier arrangement) entered into at or after the commencing time;

may reasonably be regarded as equivalent to the payment of interest on a loan.

          (3B)  In subsection (3A):

commencing time means 7.30 pm by legal time in the Australian Capital Territory on 13 May 1997.

finance arrangement has the same meaning as in section 45ZA.

          (3C)  In determining for the purposes of subsection (3A) the extent (if any) to which an amount may reasonably be regarded as equivalent to the payment of interest on a loan, regard is to be had to:

                     (a)  the way in which the amount was calculated; and

                     (b)  the conditions applying to the payment or application of the amount; and

                     (c)  any other relevant matters.

4  Section 160APA

Insert:

finance arrangement has the same meaning as in section 45ZA.

5  At the end of section 160APQ

Add:

             (4)  A franking credit of a company does not arise under this section if:

                     (a)  the trust amount or partnership amount was paid:

                              (i)  in respect of an interest in the trust or partnership that was acquired, or was acquired for a period that was extended, at or after the commencing time; or

                             (ii)  under a finance arrangement (including an arrangement extending an earlier arrangement) entered into at or after the commencing time; and

                     (b)  the payment may reasonably be regarded as the payment of interest on a loan.

             (5)  In subsection (4):

commencing time means 7.30 pm by legal time in the Australian Capital Territory on 13 May 1997.

paid : a trust amount or partnership amount is taken to have been paid to a taxpayer if it is included in, or is allowed as a deduction from, the taxpayer’s assessable income.

             (6)  In determining whether the payment of the trust amount or partnership amount may reasonably be regarded as equivalent to the payment of interest on a loan, regard is to be had to:

                     (a)  the way in which the amount was calculated; and

                     (b)  the conditions applying to the payment of the amount; and

                     (c)  any other relevant matters.

6  At the end of section 160AQX

Add:

             (2)  A taxpayer is not entitled to a rebate of tax under subsection (1) if:

                     (a)  the trust amount was paid:

                              (i)  in respect of an interest in the trust that was acquired, or was acquired for a period that was extended, at or after the commencing time; or

                             (ii)  under a finance arrangement (including an arrangement extending an earlier arrangement) entered into at or after the commencing time; and

                     (b)  the payment may reasonably be regarded as equivalent to the payment of interest on a loan.

             (3)  In subsection (2):

commencing time means 7.30 pm by legal time in the Australian Capital Territory on 13 May 1997.

paid : a trust amount is taken to have been paid to a taxpayer if it is included in the taxpayer’s assessable income.

             (4)  In determining whether the payment of the trust amount may reasonably be regarded as equivalent to the payment of interest on a loan, regard is to be had to:

                     (a)  the way in which the amount was calculated; and

                     (b)  the conditions applying to the payment of the amount; and

                     (c)  any other relevant matters.

7  At the end of section 160AQY

Add:

             (2)  A trustee is not entitled to a rebate of tax under subsection (1) if:

                     (a)  the trust amount was paid:

                              (i)  in respect of an interest in the trust or partnership that was acquired, or was acquired for a period that was extended, at or after the commencing time; or

                             (ii)  under a finance arrangement (including an arrangement extending an earlier arrangement) entered into at or after the commencing time; and

                     (b)  the payment may reasonably be regarded as equivalent to the payment of interest on a loan.

             (3)  In subsection (2):

commencing time means 7.30 pm by legal time in the Australian Capital Territory on 13 May 1997.

paid : a trust amount is taken to have been paid to a taxpayer if it is included in the taxpayer’s assessable income.

             (4)  In determining whether the payment of the trust amount may reasonably be regarded as equivalent to the payment of interest on a loan, regard is to be had to:

                     (a)  the way in which the amount was calculated; and

                     (b)  the conditions applying to the payment of the amount; and

                     (c)  any other relevant matters.

8  After subsection 160AQYA(1)

Insert:

          (1A)  A taxpayer is not entitled to a rebate of tax under subsection (1) if:

                     (a)  the trust amount was paid:

                              (i)  in respect of an interest in the trust or partnership that was acquired, or was acquired for a period that was extended, at or after the commencing time; or

                             (ii)  under a finance arrangement (including an arrangement extending an earlier arrangement) entered into at or after the commencing time; and

                     (b)  the payment may reasonably be regarded as equivalent to the payment of interest on a loan.

          (1B)  In subsection (1A):

commencing time means 7.30 pm by legal time in the Australian Capital Territory on 13 May 1997.

paid : a trust amount is taken to have been paid to a taxpayer if it is included in the taxpayer’s assessable income.

          (1C)  In determining whether the payment of the trust amount may reasonably be regarded as equivalent to the payment of interest on a loan, regard is to be had to:

                     (a)  the way in which the amount was calculated; and

                     (b)  the conditions applying to the payment of the amount; and

                     (c)  any other relevant matters.

9  At the end of section 160AQYA

Add:

             (3)  A taxpayer is not entitled to a rebate of tax under subsection (1) if:

                     (a)  the partnership amount was paid:

                              (i)  in respect of an interest in the trust or partnership that was acquired, or was acquired for a period that was extended, at or after the commencing time; or

                             (ii)  under a finance arrangement (including an arrangement extending an earlier arrangement) entered into at or after the commencing time; and

                     (b)  the payment may reasonably be regarded as equivalent to the payment of interest on a loan.

             (4)  In subsection (3):

commencing time means 7.30 pm by legal time in the Australian Capital Territory on 13 May 1997.

paid : a partnership amount is taken to have been paid to a taxpayer if it is included in, or is allowed as a deduction from, the taxpayer’s assessable income.

             (5)  In determining whether the payment of the partnership amount may reasonably be regarded as equivalent to the payment of interest on a loan, regard is to be had to:

                     (a)  the way in which the amount was calculated; and

                     (b)  the conditions applying to the payment of the amount; and

                     (c)  any other relevant matters.

10  At the end of section 160AQZ

Add:

             (2)  A taxpayer is not entitled to a rebate of tax under subsection (1) if:

                     (a)  the partnership amount was paid:

                              (i)  in respect of an interest in the trust or partnership that was acquired, or was acquired for a period that was extended, at or after the commencing time; or

                             (ii)  under a finance arrangement (including an arrangement extending an earlier arrangement) entered into at or after the commencing time; and

                     (b)  the payment may reasonably be regarded as equivalent to the payment of interest on a loan.

             (3)  In subsection (2):

commencing time means 7.30 pm by legal time in the Australian Capital Territory on 13 May 1997.

paid : a partnership amount is taken to have been paid to a taxpayer if it is included in, or is allowed as a deduction from, the taxpayer’s assessable income.

             (4)  In determining whether the payment of the partnership amount may reasonably be regarded as equivalent to the payment of interest on a loan, regard is to be had to:

                     (a)  the way in which the amount was calculated; and

                     (b)  the conditions applying to the payment of the amount; and

                     (c)  any other relevant matters.

11  At the end of section 160AQZA

Add:

             (4)  A taxpayer is not entitled to a rebate of tax under subsection (1) if:

                     (a)  the trust amount or partnership amount was paid:

                              (i)  in respect of an interest in the trust or partnership that was acquired, or was acquired for a period that was extended, at or after the commencing time; or

                             (ii)  under a finance arrangement (including an arrangement extending an earlier arrangement) entered into at or after the commencing time; and

                     (b)  the payment may reasonably be regarded as equivalent to the payment of interest on a loan.

             (5)  In subsection (4):

commencing time means 7.30 pm by legal time in the Australian Capital Territory on 13 May 1997.

paid : a trust amount or partnership amount is taken to have been paid to a taxpayer if it is included in, or is allowed as a deduction from, the taxpayer’s assessable income.

             (6)  In determining whether the payment of the trust amount or partnership amount may reasonably be regarded as equivalent to the payment of interest on a loan, regard is to be had to:

                     (a)  the way in which the amount was calculated; and

                     (b)  the conditions applying to the payment of the amount; and

                     (c)  any other relevant matters.

12  After section 160ARAB

Insert:

160ARAC   Adjustment where rebate not allowed in respect of trust amount or partnership amount

             (1)  If:

                     (a)  a trust amount is included in a taxpayer’s assessable income of a year of income; and

                     (b)  the taxpayer is not entitled to a rebate of tax in respect of the trust amount because of subsection 160APQ(4), 160AQX(2), 160AQY(2), 160AQYA(1A) or 160AQZA(4); and

                     (c)  no deduction has been allowed, or is allowable, from the trustee’s assessable income of any year of income under section 160AR or 160ARAB;

an amount equal to the class A potential rebate amount, the class B potential rebate amount, or the class C potential rebate amount, that arises in relation to the trust amount is allowable as a deduction from the trustee’s assessable income of the year of income.

             (2)  If:

                     (a)  a partnership amount is included in a taxpayer’s assessable income of a year of income; and

                     (b)  the taxpayer is not entitled to a rebate of tax in respect of the partnership amount because of subsection 160APQ(4), 160AQYA(3), 160AQZ(2) or 160AQZA(4); and

                     (c)  no deduction has been allowed, or is allowable, from the partnership’s assessable income of any year of income under section 160AR or 160ARAB;

an amount equal to the class A potential rebate amount, the class B potential rebate amount, or the class C potential rebate amount, that arises in relation to the partnership amount is allowable as a deduction from the partnership’s assessable income of the year of income.



 

Schedule 8 Charges and penalties for failing to meet obligations

Part 1 Insertion of new Part IIA in the Taxation Administration Act 1953

1  After Part II

Insert:

Part IIA Charges and penalties for failing to meet obligations

Division 1 The general interest charge

8AAA   Overview

This Division explains how to work out the general interest charge on an amount.

Usually, a person is liable to pay the charge if an amount that the person must pay to the Commissioner is not paid on time. But there are also other circumstances in which a person can be liable.

A person is only liable to pay the charge if a provision of an Act makes the person liable. (Most of the provisions are in the Income Tax Assessment Act 1936. )

8AAB   When the general interest charge applies

             (1)  There are certain provisions of this Act and other Acts that make persons liable to pay the general interest charge. Subsections (4) and (5) list the provisions.

             (2)  A person is only liable to pay the charge on an amount if a provision specifies that the person is liable to pay the charge on the amount.

             (3)  The charge does not apply to the Commonwealth or an authority of the Commonwealth.

             (4)  The following table is an index of the provisions of the Income Tax Assessment Act 1936 that deal with liability to the charge.

 

Liability to the charge under the Income Tax Assessment Act 1936

Item

Section

Topic

1

128C

payment of withholding tax

2

160ARU

payment of franking deficit tax

3

160ARUA

payment of deficit deferral tax

4

160ARV

payment of franking additional tax

5

160ARW

payment of franking deficit tax—amended assessments

6

163AA

returns by instalment taxpayers

7

163B

returns persons other than instalment taxpayers

8

170AA

amended assessments

9

204

payment of tax assessed

10

220AAE

payment of RPS, PAYE and PPS deductions (large remitters)

11

220AAM

payment of RPS, PAYE and PPS deductions (medium remitters)

12

220AAR

payment of RPS, PAYE and PPS deductions (small remitters)

13

220AAW

non-electronic payment of RPS, PAYE and PPS deductions (large remitters)

14

220AS

deductions from reportable payments (RPS)

15

221AZMAA

payment of instalments by companies etc.

16

221AZP

underestimation of instalments by companies etc.

17

221EAA

deductions from salary or wages (PAYE)

18

221YD

payment of provisional tax or instalments of provisional tax

19

221YDB

provisional tax—income underestimated or PAYE deductions over-estimated

20

221YHH

deductions from prescribed payments (PPS)

21

221YHZC

deductions from certain payments

22

221YHZD

payment of certain payments

23

221YN

payment of withholding tax

24

221ZC

payment of mining withholding tax

25

221ZD

deductions of mining withholding tax

26

221ZO

deductions—Australian Film Industry Trust Fund accounts

27

221ZP

payments—Australian Film Industry Trust Fund accounts

28

221ZXC

payments of farm management deposits

29

221ZXG

understated farm management deposits

30

222AJA

payments of estimates of certain amounts

             (5)  The following table is an index of the provisions of Acts other than the Income Tax Assessment Act 1936 that deal with liability to the charge.

 

Liability to the charge under other Acts

Item

Section

Act

1

93

Fringe Benefits Tax Assessment Act 1986

2

112

Fringe Benefits Tax Assessment Act 1986

3

65

Petroleum Resource Rent Tax Assessment Act 1987

4

85

Petroleum Resource Rent Tax Assessment Act 1987

5

68

Sales Tax Assessment Act 1992

6

91ZB

Sales Tax Assessment Act 1992

7

91ZC

Sales Tax Assessment Act 1992

8

21

Superannuation Contributions Tax (Assessment and Collection) Act 1997

9

22

Superannuation Contributions Tax (Assessment and Collection) Act 1997

10

25

Superannuation Contributions Tax (Assessment and Collection) Act 1997

11

18

Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997

12

21

Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997

13

49

Superannuation Guarantee (Administration) Act 1992

14

8AAN

Taxation Administration Act 1953

15

8AAT

Taxation Administration Act 1953

16

13

Taxation (Unpaid Company Tax) Assessment Act 1982

17

13

Termination Payments Tax (Assessment and Collection) Act 1997

18

16

Termination Payments Tax (Assessment and Collection) Act 1997

19

18

Tobacco Charges Assessment Act 1955

20

38

Wool Tax (Administration) Act 1964

8AAC   Amount of the general interest charge

             (1)  The general interest charge on an amount is payable by a person for each day in the period that is specified in the provision which makes the person liable to pay the charge.

             (2)  The charge for a particular day is worked out daily on a compounding basis.

             (3)  To work out the charge, multiply the general interest charge rate for that day by the sum of so much of the following amounts as remains unpaid:

                     (a)  the charge from previous days;

                     (b)  the original amount.

Note:          Payments of the general interest charge can be deducted: see paragraph 25-5(1)(c) of the Income Tax Assessment Act 1997 .

8AAD   What is the general interest charge rate

             (1)  The general interest charge rate for a day is the rate worked out by adding 8 percentage points to the Treasury Note yield rate for that day, and dividing that total by the number of days in the calendar year.

             (2)  The Treasury Note yield rate for a day depends on which quarter of the year the day is in. For each day in a quarter in the first column of the table, it is the weighted average yield set at the last weekly tender for the 13 week Treasury Note before the end of the month in the second column of the table.

 

Treasury Note yield rate



Item



For days in this quarter...

the last weekly tender before the end of this month applies...

1

1 January to 31 March

the preceding November

2

1 April to 30 June

the preceding February

3

1 July to 30 September

the preceding May

4

1 October to 31 December

the preceding August

             (3)  The Treasury Note yield rate must be rounded to the second decimal place (rounding .005 upwards).

8AAE   When the charge is due and payable

                   The general interest charge for a day is due and payable to the Commissioner at the end of that day.

Note:          For rules about how the charge can be recovered, see Division 4.

8AAF   Notification by Commissioner

             (1)  The Commissioner may give notice to a person liable to pay the charge of the amount of the charge for a particular day or days.

             (2)  If the amount of the charge specified in the notice is not a multiple of 5 cents, the Commissioner must round it down to the nearest multiple of 5 cents.

             (3)  The notice may be included in any other notice issued by the Commissioner in respect of the person.

8AAG   Remission of the charge

             (1)  The Commissioner may remit all or a part of the charge payable by a person.

             (2)  However, if a person is liable to pay the charge because an amount remains unpaid after the time by which it is due to be paid, the Commissioner may only remit all or a part of the charge in the circumstances set out in subsection (3), (4) or (5).

             (3)  The Commissioner may remit all or a part of the charge referred to in subsection (2) if the Commissioner is satisfied that:

                     (a)  the circumstances that contributed to the delay in payment were not due to, or caused directly or indirectly by, an act or omission of the person; and

                     (b)  the person has taken reasonable action to mitigate, or mitigate the effects of, those circumstances.

             (4)  The Commissioner may remit all or a part of the charge referred to in subsection (2) if the Commissioner is satisfied that:

                     (a)  the circumstances that contributed to the delay in payment were due to, or caused directly or indirectly by, an act or omission of the person; and

                     (b)  the person has taken reasonable action to mitigate, or mitigate the effects of, those circumstances; and

                     (c)  having regard to the nature of those circumstances, it would be fair and reasonable to remit all or a part of the charge.

             (5)  The Commissioner may remit all or a part of the charge referred to in subsection (2) if the Commissioner is satisfied that there are special circumstances because of which it would be fair and reasonable to remit all or a part of the charge.

8AAH   Judgment for payment of an unpaid amount

             (1)  This section applies if judgment is given by, or entered in, a court for the payment of:

                     (a)  all or a part of an amount in respect of which a person is, or was, liable to pay the charge because the amount remains unpaid after the time by which it is due to be paid; or

                     (b)  an amount that includes all or a part of the unpaid amount.

             (2)  The consequences of judgment being given or entered are:

                     (a)  the unpaid amount is not taken, for the purposes of a provision that makes, or would make, the person liable to pay the charge on the unpaid amount, to have ceased to be due and payable by reason only of the giving or entering of the judgment; and

                     (b)  if the judgment debt carries interest, the amount of the charge that the person would, if not for this paragraph, be liable to pay on the unpaid amount is reduced by:

                              (i)  in a case to which paragraph (1)(a) applies—the amount of the interest; or

                             (ii)  in a case to which paragraph (1)(b) applies—the amount worked out using the formula:

Division 2 The failure to notify penalty

8AAI   Overview

This Division explains how to work out the failure to notify penalty on an amount.

Generally, a person is liable to pay the penalty if the person must notify the Commissioner by a certain time of an amount that the person is liable to pay, and fails to do so.

A person is only liable to pay the penalty if a provision of an Act makes the person liable. (Most of the provisions are in the Income Tax Assessment Act 1936. )

8AAJ   When the failure to notify penalty applies

             (1)  There are certain provisions of other Acts that make persons liable to pay the failure to notify penalty. Subsection (4) lists the provisions.

             (2)  A person is only liable to pay the penalty on an amount if a provision specifies that the person is liable to pay the penalty on the amount.

             (3)  The penalty does not apply to exempt Australian government agencies.

Note:          Exempt Australian government agency is defined in subsection 995-1(1) of the Income Tax Assessment Act 1997 .

             (4)  The following table is an index of the provisions in the Income Tax Assessment Act 1936 that deal with liability to the penalty. Sections 91Z and 95A of the Sales Tax Assessment Act 1992 also deal with liability to the penalty.

 

Liability to the penalty under the Income Tax Assessment Act 1936

Item

Section

Topic

1

220AAGA

payment of RPS, PAYE and PPS deductions (large remitter)

2

220AAOA

payment of RPS, PAYE and PPS deductions (medium remitter)

3

220AATA

payment of RPS, PAYE and PPS deductions (small remitter)

4

221YHZCA

deductions from certain payments

5

221YN

withholding tax

6

221ZC

mining withholding tax

7

221ZNA

Australian Film Industry Trust Fund accounts

8AAK   Amount of the failure to notify penalty

             (1)  The failure to notify penalty on an amount is payable by a person for each day in the period that is specified in the provision which makes the person liable to pay the penalty.

             (2)  The penalty on an amount is worked out at the rate of 8% per annum of the amount.

8AAL   Notification by Commissioner

             (1)  The Commissioner must give written notice to the person of:

                     (a)  the amount of the penalty; and

                     (b)  the day on which that amount of the penalty is due and payable, which must be at least 30 days after the notice is given to the person.

             (2)  The amount of the penalty is due and payable to the Commissioner on the day specified.

             (3)  The notice may be included in any other notice issued by the Commissioner in respect of the person.

Note:          For rules about how the penalty can be recovered, see Division 4.

8AAM   Remission of the penalty

                   The Commissioner may remit all or a part of the penalty payable by a person if the Commissioner is satisfied that:

                     (a)  the circumstances that contributed to the failure to notify, or delay in notifying, the Commissioner were not due to, or caused directly or indirectly by, an act or omission of the person; and

                     (b)  the person has taken reasonable action to mitigate, or mitigate the effects of, those circumstances.

8AAN   Failure to pay the penalty

                   If any of the amount of penalty that a person is liable to pay remains unpaid after the day by which it is due to be paid, the person is liable to pay the general interest charge on the unpaid amount for each day in the period that:

                     (a)  starts on the day by which the amount of the penalty is due to be paid; and

                     (b)  ends on the last day on which, at the end of the day, an amount of the penalty remains unpaid.

Note:          The general interest charge is worked out under Division 1.

Division 3 The late reconciliation statement penalty

8AAO   Overview

This Division explains how to work out the late reconciliation statement penalty on an amount.

Generally, a person is liable to pay the penalty if the person must give the Commissioner a reconciliation statement, report or form by a certain time, and fails to do so.

A person is only liable to pay the penalty if a provision of an Act makes the person liable. (All of the provisions are in the Income Tax Assessment Act 1936. )

8AAP   When the late reconciliation statement penalty applies

             (1)  There are certain provisions of the Income Tax Assessment Act 1936 that make persons liable to pay the late reconciliation statement penalty. Subsection (4) lists the provisions.

             (2)  A person is only liable to pay the penalty if a provision specifies that the person is liable to pay the penalty.

             (3)  The penalty does not apply to exempt Australian government agencies.

Note:          Exempt Australian government agency is defined in subsection 995-1(1) of the Income Tax Assessment Act 1997 .

             (4)  The following table is an index of the provisions of the Income Tax Assessment Act 1936 that deal with liability to the penalty.

 

Liability to the penalty under the Income Tax Assessment Act 1936

Item

Subsection

Topic

1

220AJ(5)

RPS payment report

2

221F(6)

PAYE deductions reconciliation statement

3

221YHDC(9A)

PPS payment summary

4

221YHZC(1AAA)

statement of deductions from certain payments

5

221YN(2C)

statement of withholding tax deductions

6

221ZC(2C)

statement of mining withholding tax deductions

7

221ZXD(4)

farm management deposits report

8AAQ   Amount of the late reconciliation statement penalty

             (1)  The late reconciliation statement penalty is payable by a person for each week in the period that:

                     (a)  starts on the day by which the statement, report or form referred to in the provision which makes the person liable to pay the penalty is due to be given to the Commissioner; and

                     (b)  ends on the day before the Commissioner is given the statement, report or form.

             (2)  The penalty is $10 for each week, or part of a week. However, the penalty for a particular reconciliation statement cannot exceed $200.

8AAR   Notification by Commissioner

             (1)  The Commissioner must give written notice to the person of:

                     (a)  the amount of the penalty; and

                     (b)  the day on which that amount of the penalty is due and payable, which must be at least 30 days after the notice is given to the person.

             (2)  The amount of the penalty is due and payable to the Commissioner on the day specified.

             (3)  The notice may be included in any other notice issued by the Commissioner in respect of the person.

Note:          For rules about how the penalty can be recovered, see Division 4.

8AAS   Remission of the penalty

             (1)  The Commissioner may remit all or a part of the penalty payable by a person if the Commissioner is satisfied that:

                     (a)  the circumstances that contributed to the failure to give, or delay in giving, the Commissioner the statement, report or form referred to in the provision which makes the person liable to pay the penalty were not due to, or caused directly or indirectly by, an act or omission of the person; and

                     (b)  the person has taken reasonable action to mitigate, or mitigate the effects of, those circumstances.

             (2)  The Commissioner may also remit all or a part of the penalty if the Commissioner is satisfied that there are special circumstances because of which it would be fair and reasonable to remit all or a part of the penalty.

8AAT   Failure to pay the penalty

                   If any of the amount of penalty that a person is liable to pay remains unpaid after the day by which it is due to be paid, the person is liable to pay the general interest charge on the unpaid amount for each day in the period that:

                     (a)  starts on the day by which the amount of the penalty is due to be paid; and

                     (b)  ends on the last day on which, at the end of the day, an amount of the penalty remains unpaid.

Note:          The general interest charge is worked out under Division 1.

Division 4 Recovery of charges and penalties

8AAU   Overview

This Division sets out how the Commissioner can recover unpaid amounts of the general interest charge, the failure to notify penalty and the late reconciliation statement penalty.

8AAV   Recovery of amounts by Commissioner

             (1)  This Division applies to the following amounts if the amount is not paid to the Commissioner on or before the day by which the amount is due to be paid:

                     (a)  an amount of the general interest charge under Division 1;

                     (b)  an amount of the failure to notify penalty under Division 2;

                     (c)  an amount of the late reconciliation statement penalty under Division 3.

             (2)  The amount may be sued for and recovered in a court of competent jurisdiction by the Commissioner, or a Deputy Commissioner, suing in his or her official name.

             (3)  The provisions of section 8ZL (which deals with averments) apply in proceedings for the recovery of the amount in a corresponding way to the way in which they apply in relation to a prosecution for a prescribed taxation offence within the meaning of Part III.

             (4)  A notice under section 8AAF, 8AAL or 8AAR given to a person by the Commissioner is prima facie evidence of the matters stated in the notice.

Note:          Notices under those sections notify persons liable to pay amounts of how much the amounts are.

8AAW   Payment when multiple amounts owing

             (1)  If 2 or more of the amounts are payable by a person, and a payment which is less than the total of them is made to the Commissioner in respect of one or more of the amounts, the Commissioner may:

                     (a)  apply the payment in partial discharge of the total of the amounts that are payable; and

                     (b)  recover the remaining balance as a debt due to the Commonwealth.

             (2)  The Commissioner may do those things despite any direction by or on behalf of the person who is liable to pay the amounts or the person who makes the payment.

8AAX   Substituted service

                   If the Commissioner is satisfied, after reasonable enquiry, that a person against whom proceedings for recovery of amounts are taken:

                     (a)  is absent from Australia and does not have any attorney or agent in Australia on whom service of process can be effected; or

                     (b)  cannot be found;

service of any process in the proceedings may, without the leave of the Court, be effected on the person by posting the process or a sealed copy of it in a letter addressed to the person at the person’s last known place of business or residence in Australia.



 

Part 2 General interest charge on unpaid amounts, and repeal of offences for failure to remit amounts

Fringe Benefits Tax Assessment Act 1986

2  Section 93

Repeal the section, substitute:

93   Unpaid tax

             (1)  If any of the tax, or the additional tax under Part VIII, which a person is liable to pay remains unpaid after the time by which the tax or additional tax became payable or would, if not for section 92, have become payable, the person is liable to pay the general interest charge on the unpaid amount for each day in the period that:

                     (a)  starts on the day by which the tax or additional tax is due to be paid; and

                     (b)  ends on the last day on which, at the end of the day, any of the tax or additional tax remains unpaid.

             (2)  The amount of the general interest charge is taken to be additional tax payable under this section.

Note:          The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

3  Subsection 94(2)

Omit “section 93 or”.

4  Subsection 95(2)

Omit “section 93 or”.

5  Subsection 136(1)

Insert:

general interest charge means the charge worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

Income Tax Assessment Act 1936

6  Subsection 6(1) (paragraph (ab) of the definition of assessment )

Repeal the paragraph.

7  Subsection 6(1)

Insert:

general interest charge means the charge worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

8  Subsection 102AAM(14)

Omit “207, 207A,”.

9  Subsection 128C(1)

Omit “him”, substitute “the person”.

10  Subsection 128C(3)

Repeal the subsection, substitute:

             (3)  If any of the withholding tax which a person is liable to pay remains unpaid after the time by which it is due to be paid, the person is liable to pay the general interest charge on the unpaid amount for each day in the period that:

                     (a)  starts on the day by which the withholding tax is due to be paid; and

                     (b)  ends on the last day on which, at the end of the day, any of the withholding tax remains unpaid.

Note:          The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

11  Subsection 128C(4)

Repeal the subsection.

12  Subsection 128C(4AA)

Omit “Without limiting the generality of subsection (4), where”, substitute “If”.

13  Paragraph 128C(4AA)(a)

Omit “additional tax is due and payable by a person under subsection (3) in relation to an amount of withholding tax”, substitute “a person is liable to pay the general interest charge on an amount of withholding tax which is”.

14  Subsection 128C(4AA)

Omit “additional tax as”, substitute “general interest charge as”.

15  Subsection 128C(4A)

Repeal the subsection.

16  Subsection 128C(5)

Omit “, and any unpaid additional tax payable under this section,”.

17  Subsection 128TE(5)

Omit “207, 207A,”.

18  Subsection 159GZZZZH(4)

Omit “207, 207A,”.

19  At the end of section 160ARU

Add:

             (3)  If any of the franking deficit tax which a company is liable to pay remains unpaid after the time by which the franking deficit tax is due to be paid, the company is liable to pay the general interest charge on the unpaid amount for each day in the period that:

                     (a)  starts on the day by which the franking deficit tax is due to be paid; and

                     (b)  ends on the last day on which, at the end of the day, any of the franking deficit tax remains unpaid.

Note:          The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

20  At the end of section 160ARUA

Add:

             (2)  If any of the deficit deferral tax which a company is liable to pay remains unpaid after the time by which the deficit deferral tax is due to be paid, the company is liable to pay the general interest charge on the unpaid amount for each day in the period that:

                     (a)  starts on the day by which the deficit deferral tax is due to be paid; and

                     (b)  ends on the last day on which, at the end of the day, any of the deficit deferral tax remains unpaid.

Note:          The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

21  At the end of section 160ARV

Add:

             (2)  If any of the franking additional tax which a company is liable to pay remains unpaid after the time by which the franking additional tax is due to be paid, the company is liable to pay the general interest charge on the unpaid amount for each day in the period that:

                     (a)  starts on the day by which the franking additional tax is due to be paid; and

                     (b)  ends on the last day on which, at the end of the day, any of the franking additional tax remains unpaid.

Note:          The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

22  Subsection 160ARW(1)

Omit “207, 207A,”.

23  Subsection 160ARW(2)

Omit all the words after paragraph (b), substitute:

             ; and (c)  the company has not paid the excess amount of the franking deficit tax by the 30th day after the day on which the assessment was amended;

the company is liable to pay the general interest charge on the unpaid amount.

Note:          The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

24  At the end of section 160ARW

Add:

             (3)  The company is liable to do so for each day in the period that:

                     (a)  starts on the 30th day after the day on which the assessment was amended; and

                     (b)  ends on the last day on which, at the end of the day, any of the excess amount of the franking deficit tax remains unpaid.

25  Subsection 172(1)

Omit “sections 170AA, 207 and 207A”, substitute “provisions of this Act that apply the general interest charge”.

26  Subsection 172(2)

Omit all the words after “includes”, substitute “the general interest charge under a provision of this Act and additional tax under Part VII.”.

27  At the end of subsection 172(2)

Add:

Note 1:       The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

Note 2:       Subsection 8AAB(4) of that Act lists the provisions that apply the charge.

28  At the end of section 204

Add:

             (3)  If any of the tax which a person is liable to pay remains unpaid after the time by which the tax is due to be paid, the person is liable to pay the general interest charge on the unpaid amount for each day in the period that:

                     (a)  starts on the day by which the tax is due to be paid; and

                     (b)  ends on the last day on which, at the end of the day, any of the tax remains unpaid.

Note:          The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

29  Sections 207 and 207A

Repeal the sections.

30  Subsection 208(2)

Omit all the words after “includes”, substitute “the general interest charge under a provision of this Act and additional tax under Part VII.”.

31  At the end of subsection 208(2)

Add:

Note 1:       The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

Note 2:       Subsection 8AAB(4) of that Act lists the provisions that apply the charge.

32  Subsection 209(2)

Omit all the words after “includes”, substitute “the general interest charge under a provision of this Act and additional tax under Part VII.”.

33  At the end of subsection 209(2)

Add:

Note 1:       The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

Note 2:       Subsection 8AAB(4) of that Act lists the provisions that apply the charge.

34  Subsection 214(2)

Omit all the words after “includes”, substitute “the general interest charge under a provision of this Act and additional tax under Part VII.”.

35  At the end of subsection 214(2)

Add:

Note 1:       The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

Note 2:       Subsection 8AAB(4) of that Act lists the provisions that apply the charge.

36  Subsection 215(6) (paragraphs (a) and (b) of the definition of tax )

Repeal the paragraphs, substitute:

                     (a)  the general interest charge under a provision of this Act; and

                     (b)  additional tax under Part VII; and

37  At the end of subsection 215(6)

Add:

Note 1:       The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

Note 2:       Subsection 8AAB(4) of that Act lists the provisions that apply the charge.

38  Subsection 216(3)

Omit all the words after “includes”, substitute “the general interest charge under a provision of this Act and additional tax under Part VII.”.

39  At the end of subsection 216(3)

Add:

Note 1:       The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

Note 2:       Subsection 8AAB(4) of that Act lists the provisions that apply the charge.

40  Subsection 218(6B) (paragraph (a) of the definition of tax )

Repeal the paragraph, substitute:

                     (a)  additional tax under Part VII;

41  Subsection 218(6B) (after paragraph (a) of the definition of tax )

Insert:

                    (ab)  the general interest charge under a provision of this Act;

42  Subsection 218(6B) (paragraph (ba) of the definition of tax )

Omit “, 170AA or 207A”.

43  Subsection 218(6B) (subparagraph (c)(ii) of the definition of tax )

Repeal the subparagraph, substitute:

                             (ii)  additional tax under Part VII;

44  Subsection 218(6B) (after subparagraph (c)(ii) of the definition of tax )

Insert:

                           (iia)  the general interest charge under a provision of this Act;

45  Subsection 218(6B) (subparagraph (c)(iv) of the definition of tax )

Omit “, 170AA or 207A”.

46  Subsection 218(6B) (at the end of the definition of tax )

Add:

Note 1:       The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

Note 2:       Subsection 8AAB(4) of that Act lists the provisions that apply the charge.

47  Subsection 220(5)

Omit “and any additional tax under section 207 or interest under section 207A”, substitute “any general interest charge under a provision of this Act”.

48  At the end of subsection 220(5)

Add:

Note 1:       The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

Note 2:       Subsection 8AAB(4) of that Act lists the provisions that apply the charge.

49  Subsection 220AAE(3)

Repeal the subsection, substitute:

             (3)  If any of the amount which a large remitter must pay to the Commissioner remains unpaid after the time by which it is due to be paid, the large remitter is liable to pay the general interest charge on the unpaid amount for each day in the period that:

                     (a)  starts on the day by which the amount is due to be paid; and

                     (b)  ends on the last day on which, at the end of the day, any of the amount remains unpaid.

Note:          The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

50  Subsection 220AAM(3)

Repeal the subsection, substitute:

             (3)  If any of the amount which a medium remitter must pay to the Commissioner remains unpaid after the time by which it is due to be paid, the medium remitter is liable to pay the general interest charge on the unpaid amount for each day in the period that:

                     (a)  starts on the day by which the amount is due to be paid; and

                     (b)  ends on the last day on which, at the end of the day, any of the amount remains unpaid.

Note:          The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

51  Subsection 220AAR(3)

Repeal the subsection, substitute:

             (3)  If any of the amount which a small remitter must pay to the Commissioner remains unpaid after the time by which it is due to be paid, the small remitter is liable to pay the general interest charge on the unpaid amount for each day in the period that:

                     (a)  starts on the day by which the amount is due to be paid; and

                     (b)  ends on the last day on which, at the end of the day, any of the amount remains unpaid.

Note:          The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

52  Section 220AAV

Repeal the section.

53  Section 220AS

Repeal the section, substitute:

220AS   Failure to make deduction from reportable payment

             (1)  If a person making a reportable payment to a payee does not deduct from the payment the amount required to be deducted under this Division, the person is liable to pay to the Commissioner an amount, by way of penalty, equal to the amount not deducted.

             (2)  The person must pay the penalty amount by the time by which, if the person had deducted the amount required to be deducted, the person would have been required to pay that amount to the Commissioner.

             (3)  If any of the penalty amount remains unpaid after the time by which it is due to be paid, the person is liable to pay the general interest charge on the unpaid penalty amount for each day in the period that:

                     (a)  starts on the day by which the penalty amount is due to be paid; and

                     (b)  ends on the last day on which, at the end of the day, any of the penalty amount remains unpaid.

Note:          The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

54  Section 220AU

Repeal the section, substitute:

220AU   Commissioner may remit penalty for failure to deduct

             (1)  The Commissioner may remit all or a part of the penalty a person is liable to pay under subsection 220AS(1).

             (2)  The Commissioner must give written notice to the person if the Commissioner decides:

                     (a)  to remit a part only of the penalty; or

                     (b)  not to remit any part of the penalty.

55  Section 220A V

Repeal the section.

56  At the end of subsection 221AZK(2)

Add:

Note:          An instalment taxpayer who fails to pay on time some or all of an instalment is liable to pay the general interest charge on the unpaid amount: see section 221AZMAA.

57  Subsection 221AZK(5)

Repeal the subsection, substitute:

             (5)  Instalments are to be treated as tax for the purposes of sections 206, 208, 209, 214, 254, 255, 258 and 259.

58  At the end of Subdivision BA of Division 1C of Part VI

Add:

221AZMAA   Late payment of instalments

             (1)  An instalment taxpayer who fails to pay some or all of an instalment, by the time by which the instalment is due to be paid under section 221AZK, is liable to pay the general interest charge on the unpaid amount for each day in the period that:

                     (a)  starts on the day by which the instalment is due to be paid; and

                     (b)  ends on the last day on which, at the end of the day, any of the instalment remains unpaid.

Note:          The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

             (2)  For the purpose of working out any unpaid amount of a final instalment, the final instalment is first reduced by any credits or offsets specified in paragraph 221AZP(1)(b).

59  Section 221EAA

Repeal the section, substitute:

221EAA   Failure to make deductions from salary or wages

             (1)  If an employer paying salary or wages to an employee does not deduct from the salary or wages the amount required to be deducted under this Division, the employer is liable to pay to the Commissioner an amount, by way of penalty, equal to the amount not deducted.

             (2)  The employer must pay the penalty amount by the time by which, if the employer had deducted the amount required to be deducted, the employer would have been required to pay that amount to the Commissioner.

             (3)  If any of the penalty amount remains unpaid after the time by which it is due to be paid, the employer is liable to pay the general interest charge on the unpaid penalty amount for each day in the period that:

                     (a)  starts on the day by which the penalty amount is due to be paid; and

                     (b)  ends on the last day on which, at the end of the day, any of the penalty amount remains unpaid.

Note:          The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

60  Section 221N

Repeal the section, substitute:

221N   Remission of penalty

             (1)  The Commissioner may remit all or a part of the penalty a person is liable to pay under subsection 221EAA(1).

             (2)  The Commissioner must give written notice to the person if the Commissioner decides:

                     (a)  to remit a part only of the penalty; or

                     (b)  not to remit any part of the penalty.

61  Section 221NA

Repeal the section.

62  Subsection 221YA(2)

Omit “207, 207A,”.

63  Paragraph 221YBA(6)(g)

Omit “sections 207 and 207A apply”, substitute “the general interest charge under section 221YD applies”.

64  At the end of subsection 221YBA(6)

Add:

Note:          The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

65  At the end of section 221YD

Add:

             (3)  If any of the provisional tax, or the instalment of provisional tax, which a taxpayer is liable to pay remains unpaid after the time by which it is due to be paid, the taxpayer is liable to pay the general interest charge on the unpaid amount for each day in the period that:

                     (a)  starts on the day by which the provisional tax or the instalment is due to be paid; and

                     (b)  ends on the last day on which, at the end of the day, any of the provisional tax or the instalment remains unpaid.

Note 1:       The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

Note 2:       Subsection 8AAB(4) of that Act lists the provisions that apply the charge.

66  Subsection 221YDA(2AC)

Omit “sections 207, 207A and”, substitute “section”.

67  Subsection 221YDA(2A)

Omit “sections 207 and 207A”, substitute “the general interest charge under section 221YD”.

68  At the end of subsection 221YDA(2A)

Add:

Note:          The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

69  Subsection 221YDB(1)

Omit “to the Commissioner additional tax, by way of penalty, equal to 16% of”, substitute “, for each day in the period in subsection (1AAAA), the general interest charge on”.

70  At the end of subsection 221YDB(1)

Add:

Note:          The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

71  Subsection 221YDB(1AAA)

Omit “to the Commissioner additional tax, by way of penalty, equal to 16% of”, substitute “, for each day in the period in subsection (1AAAA), the general interest charge on”.

72  At the end of subsection 221YDB(1AAA)

Add:

Note:          The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

73  After subsection 221YDB(1AAA)

Insert:

  (1AAAA)  A taxpayer that is liable to pay the general interest charge under subsection (1) or (1AAA) is liable to pay the charge for each day in the period that:

                     (a)  starts on the day by which the provisional tax payable in respect of the estimated taxable income is due to be paid; and

                     (b)  ends on the day by which the tax payable in respect of the taxable income is due to be paid.

74  Subsections 221YDB(1B) to (4)

Repeal the subsections, substitute:

             (2)  The amount of the general interest charge payable under subsection (1), (1AAA), (1AA) or (1ABA) is taken to be additional tax payable under this section.

75  Paragraph 221YHAAE(4)(a)

Omit “sections 207 and 207A”, substitute “the general interest charge under sections 221YD and 221YDB”.

76  At the end of subsection 221YHAAE(4)

Add:

Note:          The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

77  Section 221YHH

Repeal the section, substitute:

221YHH   Failure to make deductions from prescribed payments

             (1)  If an eligible paying authority which makes a prescribed payment to a payee does not deduct from the payment the amount required to be deducted under this Division, the eligible paying authority is liable to pay to the Commissioner an amount, by way of penalty, equal to the amount not deducted.

             (2)  The eligible paying authority must pay the penalty amount by the time by which the eligible paying authority, if it had deducted the amount required to be deducted, would have been required to pay that amount to the Commissioner.

             (3)  If any of the penalty amount remains unpaid after the time by which it is due to be paid, the eligible paying authority is liable to pay the general interest charge on the unpaid penalty amount for each day in the period that:

                     (a)  starts on the day by which the penalty amount is due to be paid; and

                     (b)  ends on the last day on which, at the end of the day, any of the penalty amount remains unpaid.

Note:          The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

78  Subsection 221YHL(1)

Repeal the subsection.

79  Subsection 221YHL(2)

Omit “paragraph 221YHH(1)(a) or subsection 221YHH(2)”, substitute “subsection 221YHH(1)”.

80  Section 221YHLA

Repeal the section.

81  At the end of subsection 221YHZC(1)

Add:

Note:          For an alternative sanction for failing to deduct the amount required to be deducted, see subsection (3).

82  At the end of subsection 221YHZC(1A)

Add:

Note:          For an alternative sanction for failing to deduct the amount required to be deducted, see subsection (3).

83  Subsections 221YHZC(3) and (4)

Repeal the subsections, substitute:

             (3)  If a person making a payment to a non-resident or an investor does not deduct from the payment the amount required to be deducted under subsection (1) or (1A), the person is liable to pay to the Commissioner an amount, by way of penalty, equal to the amount not deducted.

             (4)  The person must pay the penalty amount by the time by which, if the person had deducted the amount required to be deducted, the person would have been required to pay that amount to the Commissioner.

             (5)  If any of the penalty amount remains unpaid after the time by which it is due to be paid, the person is liable to pay the general interest charge on the unpaid penalty amount for each day in the period that:

                     (a)  starts on the day by which the penalty amount is due to be paid; and

                     (b)  ends on the last day on which, at the end of the day, any of the penalty amount remains unpaid.

Note:          The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

84  Subsection 221YHZD(1A) (penalty)

Repeal the penalty.

85  Subsection 221YHZD(2)

Repeal the subsection, substitute:

             (2)  If any of the amount which a person is liable to pay under subsection (1), (1A) or (1B) remains unpaid after the time by which it is due to be paid, the person is liable to pay the general interest charge on the unpaid amount for each day in the period that:

                     (a)  starts on the day by which the amount is due to be paid; and

                     (b)  ends on the last day on which, at the end of the day, any of the amount remains unpaid.

Note:          The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

86  Subsection 221YHZE(1)

Repeal the subsection.

87  Subsection 221YHZE(2)

Omit “paragraph 221YHZC(3)(a), subsection 221YHZC(4) or sub-subparagraph 221YHZD(2)(b)(ii)(A)”, substitute “subsection 221YHZC(3)”.

88  Section 221YHZF

Repeal the section.

89  Subsection 221YN(2)

Repeal the subsection.

90  Subsections 221YN(4) to (7)

Repeal the subsections, substitute:

             (4)  If any of the amount which a person is liable to pay under paragraph (1)(a) remains unpaid after the time by which it is due to be paid, the person is liable to pay the general interest charge on the unpaid amount for each day in the period that:

                     (a)  starts on the day by which the amount is due to be paid; and

                     (b)  ends on the last day on which, at the end of the day, any of the amount remains unpaid.

Note:          The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

91  Paragraph 221YQ(1)(b)

Omit “additional tax”, substitute “general interest charge”.

92  Subsection 221YQ(4)

Omit “the additional tax or any part of the additional tax to which the amount relates is remitted by the Commissioner under subsection 128C(4)”, substitute “some or all of the general interest charge is remitted by the Commissioner”.

93  Paragraphs 221YQ(4)(a) and (b)

Omit “additional tax” (wherever occurring), substitute “amount of the general interest charge”.

94  At the end of subsection 221ZB(2)

Add:

Note:          For an alternative sanction for contravening subsection (1), see subsection 221ZD(1).

95  Subsection 221ZC(2)

Repeal the subsection.

96  Subsections 221ZC(4) and (5)

Repeal the subsections, substitute:

             (4)  If any of the amount which a person is liable to pay under paragraph (1)(a) remains unpaid after the time by which it is due to be paid, the person is liable to pay the general interest charge on the unpaid amount for each day in the period that:

                     (a)  starts on the day by which the amount is due to be paid; and

                     (b)  ends on the last day on which, at the end of the day, any of the amount remains unpaid.

Note:          The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

97  Subsection 221ZD(1)

Repeal the subsection, substitute:

             (1)  A person who contravenes subsection 221ZB(1) in relation to a mining payment is liable to pay to the Commissioner an amount, by way of penalty, equal to the amount of any unpaid mining withholding tax payable in respect of that mining payment.

          (1A)  The person must pay the penalty amount within 21 days after the end of the month in which the mining payment was made.

          (1B)  If any of the penalty amount remains unpaid after the time by which it is due to be paid, the person is liable to pay the general interest charge on the unpaid penalty amount for each day in the period that:

                     (a)  starts on the day by which the penalty amount is due to be paid; and

                     (b)  ends on the last day on which, at the end of the day, any of the penalty amount remains unpaid.

Note:          The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

98  Subsections 221ZD(2) and (3)

Omit “paragraph (1)(a)” (wherever occurring), substitute “subsection (1)”.

99  Section 221ZDA

Repeal the section.

100  Subsection 221ZN(5)

Repeal the subsection, substitute:

             (5)  A person must not refuse or fail to comply with paragraph (1)(a), (b) or (e).

Penalty:  10 penalty units.

Note:          For an alternative sanction for failing to deduct the amount required to be deducted, see subsection 221ZO(1).

101  Subsection 221ZO(1)

Omit all the words after “Division from an amount”, substitute “withdrawn from a film account, the person is liable to pay to the Commissioner an amount, by way of penalty, equal to the amount that the person failed or refused to deduct.”.

102  After subsection 221ZO(1)

Insert:

          (1A)  The person must pay the penalty amount within 21 days after the amount was withdrawn from the film account.

103  Subsection 221ZO(3)

Repeal the subsection, substitute:

             (3)  If any of the penalty amount which a person is liable to pay under subsection (1) remains unpaid after the time by which it is due to be paid, the person is liable to pay the general interest charge on the unpaid penalty amount for each day in the period that:

                     (a)  starts on the day by which the penalty amount is due to be paid; and

                     (b)  ends on the last day on which, at the end of the day, any of the penalty amount remains unpaid.

Note:          The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

104  Subsection 221ZO(4)

Omit “paragraph (1)(a)”, substitute “subsection (1)”.

105  Section 221ZP

Repeal the section, substitute:

221ZP   Late payment of deduction

                   If any of the amount which a person is liable to pay under paragraph 221ZN(1)(c) remains unpaid after the time by which it is due to be paid, the person is liable to pay the general interest charge on the unpaid amount for each day in the period that:

                     (a)  starts on the day by which the amount is due to be paid; and

                     (b)  ends on the last day on which, at the end of the day, any of the amount remains unpaid.

Note:          The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

106  Sections 221ZQ and 221ZQA

Repeal the sections.

107  Section 221ZS

Omit “paragraph 221ZO(1)(a)” (wherever occurring), substitute “subsection 221ZO(1)”.

108  Subsection 221ZXC(2)

Repeal the subsection, substitute:

             (2)  If any of the amount which the financial institution must pay to the Commissioner remains unpaid after the time by which it is due to be paid, the financial institution is liable to pay the general interest charge on the unpaid amount for each day in the period that:

                     (a)  starts on the day by which the amount is due to be paid; and

                     (b)  ends on the last day on which, at the end of the day, any of the amount remains unpaid.

Note:          The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

109  Sections 221ZXH, 221ZXI and 221ZXJ

Repeal the sections.

110  Subdivision E of Division 8 of Part VI (heading)

Repeal the heading, substitute:

Subdivision E Late payment of estimate

111  Subsections 222AJA(3), (4) and (5)

Repeal the subsections, substitute:

             (3)  The person is also liable to pay the general interest charge on the unpaid amount of the estimate for each day in the period that:

                     (a)  starts on the day by which the estimate is due to be paid; and

                     (b)  ends on the last day on which, at the end of the day, any of the estimate remains unpaid.

Note:          The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

Note:       The heading to section 222AJA is altered by omitting “ penalty ” and substituting “ the general interest charge ”.

112  Subsection 222AJB(1)

Omit “a penalty payable under a provision of”, substitute “pay the general interest charge under”.

Note:       The heading to section 222AJB is altered by omitting “ paying penalty ” and substituting “ paying the general interest charge ”.

113  Paragraph 222AJB(1)(a)

Omit “penalty”, substitute “general interest charge”.

114  Paragraphs 222AJB(1)(d) and (e)

Repeal the paragraphs, substitute:

                     (d)  a liability of the person to pay interest carried by a judgment debt, to the extent that the judgment debt is based on the liability to pay the estimate or on the liability to pay the general interest charge under subsection 222AJA(3) on an unpaid amount of the estimate.

115  Section 222AJC

Repeal the section.

116  At the end of section 227

Add:

Note:          Section 204 sets out when the additional tax is payable and the consequences of not paying it on time.

117  Subsection 251M(1)

Omit “any additional tax or any interest under section 170AA or 207A”, substitute “the general interest charge under a provision of this Act”.

118  Subsection 251M(1)

Omit “penalty, additional tax or interest”, substitute “penalty or general interest charge”.

119  At the end of subsection 251M(1)

Add:

Note 1:       The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

Note 2:       Subsection 8AAB(4) of that Act lists the provisions that apply the charge.

120  Subsection 254(2)

Omit all the words after “includes”, substitute “the general interest charge under a provision of this Act and additional tax under Part VII.”.

121  At the end of subsection 254(2)

Add:

Note 1:       The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

Note 2:       Subsection 8AAB(4) of that Act lists the provisions that apply the charge.

122  Subsection 255(4)

Omit all the words after “includes”, substitute “the general interest charge under a provision of this Act and additional tax under Part VII.”.

123  At the end of subsection 255(4)

Add:

Note 1:       The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

Note 2:       Subsection 8AAB(4) of that Act lists the provisions that apply the charge.

124  Subsection 258(2)

Omit all the words after “includes”, substitute “the general interest charge under a provision of this Act and additional tax under Part VII.”.

125  At the end of subsection 258(2)

Add:

Note 1:       The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

Note 2:       Subsection 8AAB(4) of that Act lists the provisions that apply the charge.

126  Subsection 259(2)

Omit all the words after “includes”, substitute “the general interest charge under a provision of this Act and additional tax under Part VII.”.

127  At the end of subsection 259(2)

Add:

Note 1:       The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

Note 2:       Subsection 8AAB(4) of that Act lists the provisions that apply the charge.

128  Subsection 265(12)

Omit all the words after “includes”, substitute “the general interest charge under a provision of this Act and additional tax under Part VII.”.

129  At the end of subsection 265(12)

Add:

Note 1:       The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

Note 2:       Subsection 8AAB(4) of that Act lists the provisions that apply the charge.

Income Tax Assessment Act 1997

130  Paragraph 25-5(1)(c)

Repeal the paragraph, substitute:

                     (c)  the general interest charge under Division 1 of Part IIA of the Taxation Administration Act 1953 .

131  Subsection 995-1(1)

Insert:

general interest charge means the charge worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

Petroleum Resource Rent Tax Assessment Act 1987

132  Section 2

Insert:

general interest charge means the charge worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

133  Section 85

Repeal the section, substitute:

85   Unpaid tax

             (1)  If any of the tax which a person is liable to pay remains unpaid after the time by which the tax became payable or would, if not for section 84, have become payable, the person is liable to pay the general interest charge on the unpaid amount.

Note:          The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

             (2)  The person is liable to do so for each day in the period that:

                     (a)  starts:

                              (i)  on the day on which the tax became payable; or

                             (ii)  if the Commissioner has extended the time for payment of the tax or has allowed it to be paid by instalments—on a later day determined by the Commissioner; and

                     (b)  ends on the last day on which, at the end of the day, any of the tax remains unpaid.

             (3)  The amount of the general interest charge is taken to be additional tax payable under this section.

             (4)  In this section:

tax includes additional tax under Part IX.

Sales Tax Assessment Act 1992

134  Section 5

Insert:

general interest charge means the charge worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

135  Section 5 (definition of late-payment penalty )

Repeal the definition, substitute:

late-payment penalty means the general interest charge under section 68.

136  Section 68

Repeal the section, substitute:

68   Unpaid tax

             (1)  If any of the tax which a person is liable to pay remains unpaid after the time by which the tax is due to be paid, the person is liable to pay the general interest charge on the unpaid amount for each day in the period that:

                     (a)  starts on the usual due date; and

                     (b)  ends on the last day on which, at the end of the day, any of the tax remains unpaid.

Note:          The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

             (2)  In this section:

tax includes penalty under Part 9.

usual due date means the date on which tax becomes due for payment, ignoring any extension of time granted under section 66.

137  Section 91ZB

Repeal the section, substitute:

91ZB   Failure to make deductions from payments

             (1)  If a person making a payment does not deduct from the payment the amount required to be deducted under this Division, the person is liable to pay to the Commissioner an amount, by way of penalty, equal to the amount not deducted.

             (2)  The person must pay the penalty amount by the time by which, if the person had deducted the amount required to be deducted, the person would have been required to pay that amount to the Commissioner.

             (3)  If any of the penalty amount remains unpaid after the time by which it is due to be paid, the person is liable to pay the general interest charge on the unpaid penalty amount for each day in the period that:

                     (a)  starts on the day by which the penalty amount is due to be paid; and

                     (b)  ends on the last day on which, at the end of the day, any of the penalty amount remains unpaid.

Note:          The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

138  Section 91ZC

Repeal the section, substitute:

91ZC   Failure to pay deducted amounts

                   If any of the amount which a person must pay to the Commissioner under subsection 91Z(1) remains unpaid after the time by which it is due to be paid, the person is liable to pay the general interest charge on the unpaid amount for each day in the period that:

                     (a)  starts on the day by which the amount is due to be paid; and

                     (b)  ends on the last day on which, at the end of the day, any of the amount remains unpaid.

Note:          The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

Superannuation Contributions Tax (Assessment and Collection) Act 1997

139  Section 6

Omit “interest is payable on the additional surcharge”, substitute “the general interest charge is payable on the additional surcharge”.

140  Section 6

Omit:

•             The Commissioner may remit interest or late payment penalty: a refusal to remit is reviewable by the Administrative Appeals Tribunal.

141  Subsections 25(1) to (3A)

Repeal the subsections, substitute:

Late payment penalty

             (1)  If an amount of surcharge, advance instalment, or interest under section 21 or 22, that a person is liable to pay remains unpaid after the time by which it is due to be paid, the person is liable to pay the general interest charge on the unpaid amount.

Note:          The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

             (2)  The person is liable to do so for each day in the period that:

                     (a)  starts on the day by which the surcharge, advance instalment or interest is due to be paid; and

                     (b)  ends on the last day on which, at the end of the day, any of the surcharge, advance instalment or interest remains unpaid.

             (3)  The amount of the general interest charge payable under this section is called the late payment penalty .

142  Subsection 25(4)

Repeal the subsection.

143  Paragraph 26(c)

Omit “interest”, substitute “general interest charge under section 21 or 22”.

144  Section 27

Omit “interest”, substitute “general interest charge”.

145  Section 29

Repeal the section.

146  Subsection 37(4)

Omit “interest”, substitute “general interest charge”.

147  Section 43

Insert:

general interest charge means the charge worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

148  Section 43 (definition of interest )

Omit “interest”, substitute “general interest charge”.

149  Section 43 (definition of late payment penalty )

Repeal the definition, substitute:

late payment penalty has the meaning given by subsection 25(3).

Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997

150  Section 6

Omit “interest”, substitute “general interest charge”.

151  Section 6

Omit:

•             The Commissioner may remit interest or late payment penalty: a refusal to remit is reviewable by the Administrative Appeals Tribunal.

152  Subsections 21(1) to (4)

Repeal the subsections, substitute:

Late payment penalty

             (1)  If an amount of surcharge that a person is liable to pay remains unpaid after the time by which it is due to be paid, the person is liable to pay the general interest charge on the unpaid amount.

Note:          The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

             (2)  The person is liable to pay the general interest charge on the unpaid amount for each day in the period that:

                     (a)  starts on the day by which the surcharge is due to be paid; and

                     (b)  ends on the last day on which, at the end of the day, any of the surcharge remains unpaid.

             (3)  The amount of the general interest charge payable under this section is called the late payment penalty .

153  Subsection 21(6)

Repeal the subsection.

154  Paragraph 22(b)

Omit “interest”, substitute “general interest charge under section 21”.

155  Paragraph 23(b)

Omit “interest”, substitute “general interest charge”.

156  Section 25

Repeal the section.

157  Subsection 31(4)

Omit “interest”, substitute “general interest charge”.

158  Section 38

Insert:

general interest charge means the charge worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

159  Section 38 (definition of interest )

Repeal the definition.

160  Section 38 (definition of late payment penalty )

Repeal the definition, substitute:

late payment penalty has the meaning given by subsection 21(3).

Superannuation Guarantee (Administration) Act 1992

161  Subsection 6(1)

Insert:

general interest charge means the charge worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

162  Section 49

Repeal the section, substitute:

49   Unpaid superannuation guarantee charge

             (1)  If any of the superannuation guarantee charge which an employer is liable to pay remains unpaid after the time by which it became payable or would, if not for section 48, have become payable, the employer is liable to pay the general interest charge on the unpaid amount.

Note:          The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

             (2)  However, the unpaid amount must be reduced by those amounts in respect of:

                     (a)  the employer’s administration component for the year; and

                     (b)  the employer’s nominal interest component for the year.

             (3)  The employer is liable to pay the general interest charge for each day in the period that:

                     (a)  starts on the day on which the superannuation guarantee charge originally became payable; and

                     (b)  ends on the last day on which, at the end of the day, any of the superannuation guarantee charge remains unpaid.

             (4)  The amount of the general interest charge is taken to be additional superannuation guarantee charge payable under this section.

             (5)  In this section:

superannuation guarantee charge includes additional superannuation guarantee charge under Part 7.

Taxation Administration Act 1953

163  Section 2

Insert:

exempt Australian government agency has the meaning given by subsection 995-1(1) of the Income Tax Assessment Act 1997 .

164  Section 2

Insert:

general interest charge means the charge worked out under Division 1 of Part IIA.

165  Subsection 16B(2) (definition of tax liability )

After “liability”, insert “(other than a liability to pay the general interest charge)”.

Taxation (Unpaid Company Tax) Assessment Act 1982

166  Subsection 3(1)

Insert:

general interest charge means the charge worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

167  Section 13

Repeal the section, substitute:

13   Late payment of tax

             (1)  If any of the recoupment tax which a person is liable to pay remains unpaid after the time by which it became payable or would, if not for section 206 of the Assessment Act, have become payable, the person is liable to pay the general interest charge on the unpaid amount.

Note:          The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

             (2)  The person is liable to do so for each day in the period that:

                     (a)  starts:

                              (i)  on the day on which the recoupment tax became payable; or

                             (ii)  if the Commissioner has extended the time for payment of the recoupment tax or has allowed it to be paid by instalments—on a later day determined by the Commissioner; and

                     (b)  ends on the last day on which, at the end of the day, any of the recoupment tax remains unpaid.

             (3)  The amount of the general interest charge is taken to be additional tax payable under this section.

             (4)  In this section:

recoupment tax includes additional tax under Part VII of the Assessment Act as that Part applies for the purposes of this Act.

Termination Payments Tax (Assessment and Collection) Act 1997

168  Section 6

Omit “interest is payable on the additional surcharge”, substitute “the general interest charge is payable on the additional surcharge”.

169  Section 6

Omit:

•             The Commissioner may remit interest or late payment penalty: a refusal to remit is reviewable by the Administrative Appeals Tribunal.

170  Subsections 16(1) to (3A)

Repeal the subsections, substitute:

             (1)  If an amount of surcharge payable by a taxpayer remains unpaid throughout all or a part of:

                     (a)  the calendar month starting on the day after the day on which the amount became due and payable; or

                     (b)  any following calendar month;

the taxpayer is liable to pay the general interest charge on the unpaid amount for each day in the calendar month.

Note:          The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

             (2)  However, the taxpayer is not liable to pay the general interest charge if the amount was fully paid before the 15th day of the calendar month.

Note:          Calendar month is defined by section 22 of the Acts Interpretation Act 1901 .

             (3)  The amount of the general interest charge that the taxpayer is liable to pay is called the late payment penalty .

171  Subsection 16(4)

Repeal the subsection.

172  Paragraph 17(b)

Omit “interest”, substitute “general interest charge”.

173  Section 18

Omit “interest”, substitute “general interest charge”.

Note:       The heading to section 18 is altered by omitting “ interest ” and substituting “ general interest charge ”.

174  Section 20

Repeal the section.

175  Subsection 25(4)

Omit “interest”, substitute “general interest charge under section 13”.

176  Subsection 28A(10) (paragraphs (b) and (d) of the definition of surcharge debt )

Omit “interest” (wherever occurring), substitute “general interest charge under section 13”.

177  Section 31

Insert:

general interest charge means the charge worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

178  Section 31 (definition of interest )

Repeal the definition.

179  Section 31 (definition of late payment penalty )

Repeal the definition, substitute:

late payment penalty has the meaning given by subsection 16(3).

Tobacco Charges Assessment Act 1955

180  Subsection 4(1)

Insert:

general interest charge means the charge worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

181  Section 18

Repeal the section, substitute:

18   Unpaid charge

             (1)  If any of a charge which a person is liable to pay remains unpaid after the time by which the charge became payable or would, if not for subsection 17(2), have become payable, the person is liable to pay the general interest charge on the unpaid amount.

Note 1:       The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

Note 2:       If a broker is also liable under section 12 to pay the charge, the person is only liable to pay the general interest charge in certain circumstances: see subsection (3).

             (2)  The person is liable to pay the general interest charge for each day in the period that:

                     (a)  starts:

                              (i)  on the day on which the charge became payable; or

                             (ii)  if the Commissioner has extended the time for payment of the charge or has allowed it to be paid by instalments—on a later day determined by the Commissioner; and

                     (b)  ends on the last day on which, at the end of the day, any of the charge remains unpaid.

             (3)  However, if a broker is required to pay the charge under section 12, a person liable under section 11 for the same charge is only liable to pay the general interest charge on the unpaid amount of the charge if the Commissioner gives the person a notice of assessment in respect of the charge.

             (4)  If a person has been given a notice under subsection (3), the person is liable to pay the general interest charge on the unpaid amount for each day in the period that:

                     (a)  starts on the day specified in the notice as the day by which the charge is payable; and

                     (b)  ends on the last day on which, at the end of the day, any of the charge remains unpaid.

             (5)  The amount of the general interest charge a person is liable to pay under this section is taken to be additional charge payable under this section.

             (6)  In this section:

charge includes additional charge under section 29.

Wool Tax (Administration) Act 1964

182  Subsection 4(1)

Insert:

general interest charge means the charge worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

183  Section 38

Repeal the section, substitute:

38   Unpaid tax

             (1)  If any of the tax which a person is liable to pay remains unpaid after the time by which the tax became payable or would, if not for section 37, have become payable, the person is liable to pay the general interest charge on the unpaid amount.

Note:          The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

             (2)  The person is liable to do so for each day in the period that:

                     (a)  starts:

                              (i)  on the day on which the tax became payable; or

                             (ii)  if the Commissioner has extended the time for payment of the tax or has allowed it to be paid by instalments—on a later day determined by the Commissioner; and

                     (b)  ends on the last day on which, at the end of the day, any of the tax remains unpaid.

             (3)  The amount of the general interest charge is taken to be additional tax payable under this section.

             (4)  In this section:

tax includes additional tax under section 61.

184  Application

(1)        The amendments made by this Part apply in relation to amounts that are due to be paid on or after 1 January 1999.

(2)        The amendments, other than the amendments referred to in subitem (4), also apply in relation to amounts that are due to be paid before 1 January 1999 if:

                     (a)  some or all of the amount remains unpaid on 1 January 1999; and

                     (b)  the amendments would have applied to the unpaid amount if the day by which the amount is due to be paid had been on or after 1 January 1999.

(3)        In applying the amendments in that case:

                     (a)  the unpaid amount is taken to be the sum of the unpaid amount and any unpaid penalty or interest that had accrued before 1 January 1999; and

                     (b)  the day by which the unpaid amount is due to be paid is taken to be 1 January 1999; and

                     (c)  the unpaid amount and the unpaid penalty or interest that had accrued before 1 January 1999 continues to be payable.

Example: Ken is liable to pay a penalty from 1 December 1998 for failing to pay an amount of assessed income tax due by that day. From 1 January 1999, Ken is liable to pay the general interest charge on the sum of the amount of tax and the penalty that remains unpaid on that day. The period for which he is liable to pay the charge starts on 1 January.

(4)        In addition to applying in relation to amounts that are due to be paid on or after 1 January 1999, the amendments made by items 49, 50, 51, 53, 59, 77, 83, 85, 90, 96, 97, 103, 105, 111, 136, 137 and 138 also apply in relation to amounts that are due to be paid before 1 January 1999, if some or all of the amount remains unpaid on that day, from the day by which the amount is due to be paid.

Example: A medium remitter is liable to pay a penalty from 7 December 1998 for failing to send to the Commissioner an amount that is due by that day. It hasn’t paid any of the amount or penalty by 1 January 1999. From 7 December, the medium remitter is liable to pay the general interest charge on the amount that hasn’t been paid (but not the penalty) until all of it has been paid.



 

Part 3 General interest charge on other amounts

Fringe Benefits Tax Assessment Act 1986

185  Subsection 112(4)

Omit “additional tax, by way of penalty, in respect of the penalty period, is due and payable by the employer to the Commissioner at the rate of 16% per annum”, substitute “the employer is liable to pay, for each day in the penalty period, the general interest charge”.

186  After subsection 112(4)

Insert:

          (4A)  The amount of the general interest charge is taken to be additional tax payable under subsection (4).

187  Subsection 112(6)

Repeal the subsection.

Income Tax Assessment Act 1936

188  At the end of subsection 163A(3)

Add:

Note:          A person who fails to pay on time some or all of the penalty is liable to pay the general interest charge on the unpaid amount: see section 163AA.

189  Subsection 163A(8)

Omit “207, 207A,”.

190  After section 163A

Insert:

163AA   General interest charge on unpaid penalty

                   A person who fails to pay some or all of a penalty under section 163A by the time by which the penalty is due to be paid is liable to pay the general interest charge on the unpaid amount for each day in the period that:

                     (a)  starts on the day by which the penalty is due to be paid; and

                     (b)  ends on the last day on which, at the end of the day, any of the penalty remains unpaid.

Note:          The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

191  Subsection 163B(1)

Omit all the words after paragraph (c), substitute:

the person is liable to pay the general interest charge on the amount in subsection (2) and the amount of the charge is taken to be additional tax payable under this section.

Note:       The heading to section 163B is altered by omitting “ Late lodgement penalty—additional tax for ” and substituting “ Late lodgment of returns by ”.

192  At the end of subsection 163B(1)

Add:

Note:          The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

193  After subsection 163B(1)

Insert:

          (1A)  The person is liable to pay the general interest charge for each day in the period that:

                     (a)  starts on the day by which the return must be furnished; and

                     (b)  ends on the day before the return is furnished, or the day before the Commissioner made the assessment, whichever is earlier.

194  Subsection 163B(4)

Repeal the subsection.

195  Subsection 163B(7)

Repeal the subsection.

196  Subsection 163B(8)

Omit “204, 205, 206, 207, 207A, 208, 209, 214,”, substitute “205, 206,”.

197  Section 163C

Repeal the section.

198  Subsections 170AA(1), (1A) and (3)

Omit “interest to the Commissioner, calculated in accordance with subsection (4),” (wherever occurring), substitute “the general interest charge, for each day in the period in subsection (4),”.

Note:       The heading to section 170AA is altered by omitting “ Payment of interest by ” and substituting “ Liability of ”.

199  Subsection 170AA(4)

Omit “Interest”, substitute “The general interest charge”.

200  Subsection 170AA(4)

Omit “shall be calculated”, substitute “is payable for each day in the period that”.

201  Paragraph 170AA(4)(a)

Omit “in respect of the period commencing on”, substitute “starts on”.

202  Subparagraph 170AA(4)(a)(ii)

Omit “amendment,”, substitute “amendment; and”.

203  Paragraph 170AA(4)(a)

Omit all the words after subparagraph (ii).

204  Paragraph 170AA(4)(b)

Repeal the paragraph, substitute:

                     (b)  ends on the day before the current amended assessment or the amended determination is made.

205  At the end of subsection 170AA(4)

Add:

Note:          The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

206  Subsection 170AA(8)

Omit “interest” (wherever occurring), substitute “the general interest charge”.

207  Subsections 170AA(9) to (13)

Repeal the subsections, substitute:

             (9)  Unless the contrary intention appears, in sections 172, 205, 206, 215, 216, 254, 255, 258, 259 and 265, but not in any other section, income tax or tax includes the general interest charge payable under this section.

208  Section 220AAF

Omit “a penalty”, substitute “the general interest charge”.

209  At the end of section 220AAF

Add:

Note:          The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

210  Section 220AAW

Repeal the section, substitute:

220AAW   Large remitters—non-electronic payment

             (1)  A large remitter that pays an amount other than by electronic transfer is liable to pay the general interest charge on the amount for each day in the period that:

                     (a)  starts on the day by which the payment must be made; and

                     (b)  ends 7 days later.

Note:          The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

             (2)  However, if the amount of the general interest charge is less than $500, the large remitter is instead liable to pay a penalty of $500.

             (3)  The Commissioner may remit all or a part of the penalty that a large remitter is liable to pay because of subsection (2).

Note:          The Commissioner may remit an amount of the general interest charge under section 8AAG of the Taxation Administration Act 1953.

             (4)  This section does not apply to an exempt Australian government agency (within the meaning of subsection 995-1(1) of the Income Tax Assessment Act 1997 ).

211  Sections 220AAX and 220AAY

Repeal the sections.

212  At the end of section 220AS

Add:

Government bodies

             (4)  If a government body making a reportable payment to a payee does not deduct from the payment the amount required to be deducted under this Division, the government body is liable to pay the general interest charge on the amount not deducted for each day in the period that:

                     (a)  starts on the day when the payment is made; and

                     (b)  ends on 30 June in the financial year in which the payment is made.

Note:          The general interest charge does not apply to the Commonwealth or authorities of the Commonwealth.

213  Subsection 221AZP(1)

Omit “is liable to pay a penalty under this section in respect of an estimate lodged by the taxpayer for the current year”, substitute “who lodges an estimate for the current year is liable to pay the general interest charge on the amount in subsection (2)”.

Note:       The heading to section 221AZP is altered by omitting “ Penalty applies ” and substituting “ Liability ”.

214  At the end of subsection 221AZP(1)

Add:

Note:          The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

215  Subsection 221AZP(2)

Omit “The penalty applies to”, substitute “The taxpayer is liable to pay the general interest charge on the amount that is”

216  Subsection 221AZP(3)

Omit “The penalty is calculated at the rate of 16% per year for”, substitute “The general interest charge is payable for each day in”.

217  Subsection 221AZP(4)

Repeal the subsection.

218  Subsection 221AZP(5)

Omit “Penalty”, substitute “The amount of the general interest charge payable”.

219  Subsection 221AZP(5)

Omit “208, 209, 214,”.

220  At the end of section 221EAA

Add:

Government bodies

             (4)  If a government body paying salary or wages to an employee does not deduct from the salary or wages the amount required to be deducted under this Division, the government body is liable to pay the general interest charge on the amount not deducted for each day in the period that:

                     (a)  starts on the day by which the government body was required to deduct the amount; and

                     (b)  ends on 30 June in the financial year in which that day occurred.

Note:          The general interest charge does not apply to the Commonwealth or authorities of the Commonwealth.

221  Subsection 221YDB(1AA)

Omit “additional tax, by way of penalty, in respect of the penalty period, is due and payable by the taxpayer to the Commissioner at the rate of 16% per annum”, substitute “the taxpayer is liable to pay, for each day in the penalty period, the general interest charge”.

Note:       The heading to section 221YDB is altered by omitting “ Additional tax ” and substituting “ Liability ”.

222  At the end of subsection 221YDB(1AA)

Add:

Note:          The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

223  Subsection 221YDB(1ABA)

Omit “additional tax, by way of penalty, in respect of the penalty period, is due and payable by the taxpayer to the Commissioner at the rate of 16% per annum”, substitute “the taxpayer is liable to pay, for each day in the penalty period, the general interest charge”.

224  At the end of subsection 221YDB(1ABA)

Add:

Note:          The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

225  At the end of section 221YHH

Add:

Government bodies

             (4)  If a government body that is an eligible paying authority makes a prescribed payment to a payee and does not deduct from the payment the amount required to be deducted under this Division, the government body is liable to pay the general interest charge on the amount not deducted for each day in the period that:

                     (a)  starts on the day by which, if the government body had deducted the amount, the government body would have been required to pay that amount to the Commissioner; and

                     (b)  ends on 30 June in the financial year in which that day occurred.

Note:          The general interest charge does not apply to the Commonwealth or authorities of the Commonwealth.

226  At the end of section 221YHZC

Add:

Government bodies

             (6)  If a government body making a payment to a non-resident or an investor does not deduct from the payment the amount required to be deducted under this Division, the government body is liable to pay the general interest charge on the amount not deducted for each day in the period that:

                     (a)  starts on the day by which, if the government body had deducted the amount, the government body would have been required to pay that amount to the Commissioner; and

                     (b)  ends on 30 June in the financial year in which that day occurred.

Note:          The general interest charge does not apply to the Commonwealth or authorities of the Commonwealth.

227  Section 221ZXG

Omit “the Commissioner a penalty of 20% per annum of”, substitute “general interest charge, for each day in the period in subsection (2), on”.

228  Paragraph 221ZXG(c)

Omit “amount;”, substitute “amount.”.

229  Section 221ZXG

Omit all the words after paragraph (c).

230  At the end of section 221ZXG

Add:

Note:          The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

231  At the end of section 221ZXG (after the note)

Add:

             (2)  The depositor is liable to pay the general interest charge for each day in the period that:

                     (a)  starts on the day on which the repayment is made; and

                     (b)  ends on the day before the making of the owner’s assessment for the year of income in which the repayment is made.

Petroleum Resource Rent Tax Assessment Act 1987

232  Subsection 65(1)

Omit “interest to the Commissioner, calculated in accordance with”, substitute “the general interest charge for each day in the period in”.

Note:       The heading to section 65 is altered by omitting “ interest ” and substituting “ the general interest charge ”.

233  At the end of subsection 65(1)

Add:

Note:          The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

234  Subsection 65(2)

Omit “interest” (wherever occurring), substitute “general interest charge”.

235  Subsection 65(3)

Omit “interest” (wherever occurring), substitute “general interest charge”.

236  Subsection 65(3)

Omit “to the Commissioner, calculated in accordance with”, substitute “for each day in the period in”.

237  Subsection 65(4)

Omit “Interest”, substitute “The general interest charge”.

238  Subsection 65(4)

Omit “shall be calculated”, substitute “is payable for each day in the period that”.

239  Paragraph 65(4)(a)

Omit “in respect of the period commencing on”, substitute “starts”.

240  Subparagraph 65(4)(a)(ii)

Omit “amendment,”, substitute “amendment; and”

241  Paragraph 65(4)

Omit all the words after subparagraph (ii).

242  Paragraph 65(4)(b)

Repeal the paragraph, substitute:

                     (b)  ends on the day before the current amended assessment is made.

243  Subsections 65(8) to (11)

Repeal the subsections.

244  Subsections 65(12) and (13)

Omit “interest” (wherever occurring), substitute “general interest charge”.

245  At the end of section 65

Add:

           (14)  The amount of the general interest charge that a person is liable to pay is called interest payable under this section.

Superannuation Contributions Tax (Assessment and Collection) Act 1997

246  Subsections 21(1) and (2)

Repeal the subsections, substitute:

             (1)  If an amendment of an assessment increasing a person’s liability to pay surcharge for a financial year is made, the person is liable to pay the general interest charge on the amount of the increase for each day in the period that:

                     (a)  starts on 15 June in the financial year; and

                     (b)  ends on the day before the amended assessment is made.

Note:          The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

Note:       The heading to section 21 is altered by omitting “ interest to Commonwealth ” and substituting “ the general interest charge ”.

247  Subsections 21(4), (5) and (6)

Repeal the subsections.

248  Section 22

Repeal the section, substitute:

22   Payment of general interest charge if surcharge payable under a further assessment

                   If, under an assessment (the new assessment ) made under subsection 15(1) because of subsection 20(3), a person is liable to pay an amount of surcharge for a financial year, the person is liable to pay the general interest charge on that amount for each day in the period that:

                     (a)  starts on 15 June in the financial year; and

                     (b)  ends on the day before the new assessment is made.

Note:          The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997

249  Subsections 18(1) and (2)

Repeal the subsections, substitute:

             (1)  If an amendment of an assessment increasing a member’s liability to pay surcharge for a financial year is made, the member is liable to pay the general interest charge on the amount of the increase for each day in the period that:

                     (a)  starts on 15 June in the financial year; and

                     (b)  ends on the day before the amended assessment is made.

Note:          The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

Note:       The heading to section 18 is altered by omitting “ interest to Commonwealth ” and substituting “ the general interest charge ”.

250  Subsections 18(4), (5) and (6)

Repeal the subsections.

Termination Payments Tax (Assessment and Collection) Act 1997

251  Section 13

Repeal the section, substitute:

13   Payment of general interest charge if liability increased by amended assessment

             (1)  If an amendment of an assessment increasing a taxpayer’s liability to pay surcharge for a financial year is made, the taxpayer is liable to pay the general interest charge on the amount of the increase for each day in the period that:

                     (a)  starts on 15 June in the financial year; and

                     (b)  ends on the day before the amended assessment is made.

Note:          The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953 .

             (2)  If:

                     (a)  the Commissioner has calculated that no surcharge is payable by a taxpayer for a financial year; and

                     (b)  the Commissioner afterwards makes an assessment of surcharge payable by the taxpayer for the financial year;

that assessment is taken to be an amended assessment.

252  Application

The amendments made by this Part apply where the period for which the person is liable to pay the general interest charge starts on or after 1 January 1999.



 

Part 4 Failure to notify penalty

Income Tax Assessment Act 1936

253  Subsection 6(1)

Insert:

failure to notify penalty means the penalty worked out under Division 2 of Part IIA of the Taxation Administration Act 1953 .

254  After section 220AAG

Insert:

220AAGA   Commissioner must be notified of amounts

             (1)  A large remitter that must pay an amount to the Commissioner under section 220AAE must notify the Commissioner of the amount on or before the day on which the amount is due to be paid (regardless of whether it is paid).

             (2)  If the large remitter fails to do so, or notifies the Commissioner of an amount that is less than the correct amount, the large remitter is liable to pay the failure to notify penalty on the amount, or on the amount of the shortfall, for each day in the period that:

                     (a)  starts on the day by which the large remitter must pay the amount; and

                     (b)  ends on the day before the Commissioner receives notification from the large remitter, or otherwise becomes aware, of the correct amount.

Note:          The failure to notify penalty is worked out under Division 2 of Part IIA of the Taxation Administration Act 1953 .

             (3)  The notification must be in a form approved in writing by the Commissioner, unless:

                     (a)  it is by way of a statement under section 220AAG accompanying a payment; and

                     (b)  the Commissioner requires statements under that section to be in a particular form, contain particular information or be given in a particular manner; and

                     (c)  the statement meets those requirements.

255  After section 220AAO

Insert:

220AAOA   Commissioner must be notified of amounts

             (1)  A medium remitter that must pay an amount to the Commissioner under section 220AAM must notify the Commissioner of the amount on or before the day on which the amount is due to be paid (regardless of whether it is paid).

             (2)  If the medium remitter fails to do so, or notifies the Commissioner of an amount that is less than the correct amount, the medium remitter is liable to pay the failure to notify penalty on the amount, or on the amount of the shortfall, for each day in the period that:

                     (a)  starts on the day by which the medium remitter must pay the amount; and

                     (b)  ends on the day before the Commissioner receives notification from the medium remitter, or otherwise becomes aware, of the correct amount.

Note:          The failure to notify penalty is worked out under Division 2 of Part IIA of the Taxation Administration Act 1953 .

             (3)  The notification must be in a form approved in writing by the Commissioner, unless:

                     (a)  it is by way of a statement under section 220AAO accompanying a payment; and

                     (b)  the Commissioner requires statements under that section to be in a particular form, contain particular information or be given in a particular manner; and

                     (c)  the statement meets those requirements.

256  After section 220AAT

Insert:

220AATA   Commissioner must be notified of amounts

             (1)  A small remitter that must pay an amount to the Commissioner under section 220AAR must notify the Commissioner of the amount on or before the day on which the amount is due to be paid (regardless of whether it is paid).

             (2)  If the small remitter fails to do so, or notifies the Commissioner of an amount that is less than the correct amount, the small remitter is liable to pay the failure to notify penalty on the amount, or on the amount of the shortfall, for each day in the period that:

                     (a)  starts on the day by which the small remitter must pay the amount; and

                     (b)  ends on the day before the Commissioner receives notification from the small remitter, or otherwise becomes aware, of the correct amount.

Note:          The failure to notify penalty is worked out under Division 2 of Part IIA of the Taxation Administration Act 1953 .

             (3)  The notification must be in a form approved in writing by the Commissioner, unless:

                     (a)  it is by way of a statement under section 220AAT accompanying a payment; and

                     (b)  the Commissioner requires statements under that section to be in a particular form, contain particular information or be given in a particular manner; and

                     (c)  the statement meets those requirements.

257  After section 221YHZC

Insert:

221YHZCA   Duty to notify Commissioner of amount deducted

             (1)  A person, or an investment body in relation to a Part VA investment, that must pay an amount to the Commissioner under subsection 221YHZD(1) or (1A) must notify the Commissioner of the amount on or before the day on which the amount is due to be paid (regardless of whether it is paid).

             (2)  If the person or investment body fails to do so, or notifies the Commissioner of an amount that is less than the correct amount, the person or investment body is liable to pay the failure to notify penalty on the amount, or on the amount of the shortfall, for each day in the period that:

                     (a)  starts on the day by which the person or investment body must pay the amount; and

                     (b)  ends on the day before the Commissioner receives notification from the person or investment body, or otherwise becomes aware, of the correct amount.

Note:          The failure to notify penalty is worked out under Division 2 of Part IIA of the Taxation Administration Act 1953 .

             (3)  The notification must be in a form approved in writing by the Commissioner.

258  Subsection 221YHZD(1)

Omit all the words after “a non-resident,”, substitute “must pay the amount to the Commissioner within 14 days after the end of the month in which the person makes the payment to the non-resident.”.

259  At the end of subsection 221YHZD(1)

Add:

Note:          The person must also notify the Commissioner of the amount on or before the day on which the person must pay it: see section 221YHZCA.

260  After subsection 221YN(1)

Insert:

             (2)  A person who must pay an amount to the Commissioner under paragraph (1)(a) must notify the Commissioner of the amount on or before the day on which the amount is due to be paid (regardless of whether it is paid).

          (2A)  If the person fails to do so, or notifies the Commissioner of an amount that is less than the correct amount, the person is liable to pay the failure to notify penalty on the amount, or on the amount of the shortfall, for each day in the period that:

                     (a)  starts on the day by which the person must pay the amount; and

                     (b)  ends on the day before the Commissioner receives notification from the person, or otherwise becomes aware, of the correct amount.

Note:          The failure to notify penalty is worked out under Division 2 of Part IIA of the Taxation Administration Act 1953 .

          (2B)  The notification must be in a form approved in writing by the Commissioner.

261  After subsection 221ZC(1)

Insert:

             (2)  A person who must pay an amount to the Commissioner under paragraph (1)(a) must notify the Commissioner of the amount on or before the day on which the amount is due to be paid (regardless of whether it is paid).

          (2A)  If the person fails to do so, or notifies the Commissioner of an amount that is less than the correct amount, the person is liable to pay the failure to notify penalty on the amount, or on the amount of the shortfall, for each day in the period that:

                     (a)  starts on the day by which the person must pay the amount; and

                     (b)  ends on the day before the Commissioner receives notification from the person, or otherwise becomes aware, of the correct amount.

Note:          The failure to notify penalty is worked out under Division 2 of Part IIA of the Taxation Administration Act 1953 .

          (2B)  The notification must be in a form approved in writing by the Commissioner.

262  Paragraph 221ZN(1)(d)

Repeal the paragraph.

263  At the end of subsection 221ZN(1)

Add:

Note:          The person must also notify the Commissioner of the amount on or before the day on which the person must pay it: see section 221ZNA.

264  After section 221ZN

Insert:

221ZNA   Notification of amount deducted

             (1)  A person who must pay an amount to the Commissioner under paragraph 221ZN(1)(c) must notify the Commissioner of the amount on or before the day on which the amount is due to be paid (regardless of whether it is paid).

             (2)  If the person fails to do so, or notifies the Commissioner of an amount that is less than the correct amount, the person is liable to pay the failure to notify penalty on the amount, or on the amount of the shortfall, for each day in the period that:

                     (a)  starts on the day by which the person must pay the amount; and

                     (b)  ends on the day before the Commissioner receives notification from the person, or otherwise becomes aware, of the correct amount.

Note:          The failure to notify penalty is worked out under Division 2 of Part IIA of the Taxation Administration Act 1953 .

             (3)  The notification must be in a form approved in writing by the Commissioner.

Sales Tax Assessment Act 1992

265  After subsection 91Z(2)

Insert:

          (2A)  If the person fails to send to the Commissioner the form notifying the amounts, or notifies the Commissioner of one or more amounts that are less than the correct amount, the person is liable to pay the failure to notify penalty on the total of the amounts, or on the amount of the shortfall, for each day in the period that:

                     (a)  starts on the day by which the person must send the form to the Commissioner; and

                     (b)  ends on the day before the Commissioner receives from the person the form notifying the correct amounts, or the Commissioner otherwise becomes aware of the correct amounts.

266  Before section 96 of Part 9

Insert:

95A   Failure to notify of assessable dealings with goods

             (1)  A taxpayer who fails to notify an assessable dealing with goods in a return on or before the day on which the taxpayer must lodge a return under section 61 is liable to pay the failure to notify penalty on the amount of the assessable dealing.

             (2)  A taxpayer who notifies an amount of an assessable dealing with goods in a return that is less than the correct amount of the assessable dealing is liable to pay the failure to notify penalty on the amount of the shortfall.

             (3)  The failure to notify penalty is payable for each day in the period that:

                     (a)  starts on the day on which the taxpayer must lodge the return; and

                     (b)  ends on the day before the Commissioner receives notification from the taxpayer, or otherwise becomes aware, of the correct amount.

             (4)  The failure to notify penalty means the penalty worked out under Division 2 of Part IIA of the Taxation Administration Act 1953 .

267  Section 96

Omit “a return or other information”, substitute “information (other than information in a return covered by section 95A)”.

Note:       The heading to section 96 is altered by omitting “ return or ”.

Taxation Administration Act 1953

268  Section 2

Insert:

failure to notify penalty means the penalty worked out under Division 2 of Part IIA.

269  Application

The amendments made by this Part apply in relation to notifications that must be given to the Commissioner on or after 1 January 1999.



 

Part 5 Late reconciliation statement penalty

Income Tax Assessment Act 1936

270  Subsection 6(1)

Insert:

late reconciliation statement penalty means the penalty worked out under Division 3 of Part IIA of the Taxation Administration Act 1953 .

271  At the end of section 220AJ

Add:

             (5)  If the payer fails to give the Commissioner the report by the time by which it must be given to the Commissioner, the payer is liable to pay the late reconciliation statement penalty.

Note:          The late reconciliation statement penalty is worked out under Division 3 of Part IIA of the Taxation Administration Act 1953 .

272  After subsection 221F(5J)

Insert:

             (6)  An employer who fails to give the Commissioner a statement under paragraph (5J)(b), on or before the day on which it must be given to the Commissioner, is liable to pay the late reconciliation statement penalty.

Note 1:       The late reconciliation statement penalty is worked out under Division 3 of Part IIA of the Taxation Administration Act 1953 .

Note 2:       Subsection (15) provides an alternative liability for failing to give the statement to the Commissioner.

273  At the end of subsection 221F(15)

Add:

Note:          Subsection (6) provides an alternative liability for contravening paragraph (5J)(b).

274  After subsection 221YHDC(9)

Insert:

Late reconciliation statement penalty

          (9A)  An eligible paying authority that fails to give the Commissioner a reconciliation statement form under subparagraph (5)(b)(iii) or (6)(d)(iii), on or before the day on which it must be given to the Commissioner, is liable to pay the late reconciliation statement penalty.

Note 1:       The late reconciliation statement penalty is worked out under Division 3 of Part IIA of the Taxation Administration Act 1953 .

Note 2:       Subsection (10) provides an alternative liability for failing to give the form to the Commissioner.

275  At the end of subsection 221YHZC(1A)

Add:

Note:          Subsection (1AAA) provides an alternative liability for failing to give the statement under paragraph (f) to the Commissioner.

276  After subsection 221YHZC(1A)

Insert:

     (1AAA)  If the investment body in relation to a Part VA investment fails to give the Commissioner a statement under paragraph (1A)(f) by the time by which it must be given to the Commissioner, the investment body is liable to pay the late reconciliation statement penalty.

Note:          The late reconciliation statement penalty is worked out under Division 3 of Part IIA of the Taxation Administration Act 1953 .

277  After subsection 221YN(2B)

Insert:

          (2C)  A person who fails to give the Commissioner a statement under paragraph (1)(b), by the time by which it must be given to the Commissioner, is liable to pay the late reconciliation statement penalty.

Note 1:       The late reconciliation statement penalty is worked out under Division 3 of Part IIA of the Taxation Administration Act 1953 .

Note 2:       Subsection (3) provides an alternative liability for failing to give the statement to the Commissioner.

278  After subsection 221ZC(2B)

Insert:

          (2C)  A person who fails to give the Commissioner a statement under paragraph (1)(b), by the time by which it must be given to the Commissioner, is liable to pay the late reconciliation statement penalty.

Note 1:       The late reconciliation statement penalty is worked out under Division 3 of Part IIA of the Taxation Administration Act 1953 .

Note 2:       Subsection (3) provides an alternative liability for failing to give the statement to the Commissioner.

279  At the end of section 221ZXD

Add:

             (4)  A financial institution that fails to give the Commissioner the report, by the time by which it must be given to the Commissioner, is liable to pay the late reconciliation statement penalty.

Note:          The late reconciliation statement penalty is worked out under Division 3 of Part IIA of the Taxation Administration Act 1953 .

Taxation Administration Act 1953

280  Section 2

Insert:

late reconciliation statement penalty means the penalty worked out under Division 3 of Part IIA.

281  Application

The amendments made by this Part apply in relation to reconciliation statements, reports or forms that must be given to the Commissioner on or after 1   January 1999.



 

Part 6 Other amendments

Income Tax Assessment Act 1936

282  Subsection 214A(1)

Repeal the subsection, substitute:

             (1)  In this section:

Treasury Note yield rate has the meaning given by section 8AAD of the Taxation Administration Act 1953 .

283  Paragraph 214A(2)(a)

Omit “170AA, 207A,”.

284  Paragraphs 214A(2)(b) , (c), (f), (fa) and (g)

Repeal the paragraphs.

285  Subsection 214A(2)

Omit all the words after “for”, substitute “any day is the Treasury Note yield rate for that day, plus 4 percentage points.”.

286  Subsections 214A(3) to (8)

Repeal the subsections.

287  Application

The amendments made by this Part apply in relation to calculating interest for 1 January 1999 or a later day.