TAXATION LAWS AMENDMENT ACT 1988No. 11, 1988 - LONG TITLE
An Act to amend the law relating to taxation
PART I - PRELIMINARY
TAXATION LAWS AMENDMENT ACT 1988No. 11, 1988
- SECT 1
Short title [see Note 1]
1. This Act may be cited as the Taxation Laws Amendment Act 1988.
TAXATION LAWS AMENDMENT ACT 1988No. 11, 1988
- SECT 2
Commencement [see Note 1]
2. (1) Subject to this section, this Act shall come into operation on the
day on which it receives the Royal Assent.
(2) Section 14 shall be deemed to have come into operation on 24 June 1986.
(3) Part VI shall be deemed to have come into operation on 1 September 1987.
(4) Part VII shall be deemed to have come into operation on 6 November 1987.
(5) Part VIII shall be deemed to have come into operation on the
commencement of section 51 of the Taxation Laws Amendment Act (No. 4) 1987.
(6) Part IX shall be deemed to have come into operation on the commencement
of the Taxation Laws Amendment (Fringe Benefits and Substantiation) Act 1987.
PART II - AMENDMENT OF THE AUSTRALIAN CAPITAL TERRITORY TAXATION
(ADMINISTRATION) ACT 1969
TAXATION LAWS AMENDMENT ACT 1988No. 11, 1988
- SECT 3
Principal Act
3. In this Part, "Principal Act" means the Australian Capital Territory
Taxation (Administration) Act 1969*1*.
*1* No. 42, 1969, as amended. For previous amendments, see No. 216, 1973; Nos.
61, 92 and 127, 1981; No. 127, 1982; No. 39, 1983; No. 123, 1984; Nos. 123 and
168, 1985; Nos. 48 and 154, 1986; and No. 62, 1987.
TAXATION LAWS AMENDMENT ACT 1988No. 11, 1988
- SECT 4
Interpretation
4. Section 4 of the Principal Act is amended:
(a) by omitting ", or a debenture of," from paragraph (a) of the definition
of "marketable security" in subsection (1);
(b) by omitting "share, debenture" from the definition of "marketable
security" in subsection (1) and substituting "share".
TAXATION LAWS AMENDMENT ACT 1988No. 11, 1988
- SECT 5
Application of amendments
5. (1) The amendments made by this Part, insofar as they relate to the tax
imposed by the Australian Capital Territory Tax (Purchases of Marketable
Securities) Act 1969, apply in relation to a purchase of a marketable security
where the purchase is made after 15 July 1987.
(2) The amendments made by this Part, insofar as they relate to the tax
imposed by the Australian Capital Territory Tax (Sales of Marketable
Securities) Act 1969, apply in relation to a sale of a marketable security
where the sale is made after 15 July 1987.
(3) The amendments made by this Part, insofar as they relate to the tax
imposed by the Australian Capital Territory Tax (Transfers of Marketable
Securities) Act 1986, apply in relation to a transfer of a marketable security
effected by an instrument of transfer that appears to have been executed by
the transferor, or by any of the transferors, after the commencement of that
Act (including an instrument that appears to have been executed by the
transferee, or by any of the transferees, before the commencement of that
Act).
(4) The amendments made by this Part, insofar as they relate to stamp duty
imposed by the Australian Capital Territory Stamp Duty Act 1969, apply in
relation to an instrument executed after 15 July 1987.
(5) The amendments made by this Part, insofar as they relate to section 58G
of the Principal Act as amended by this Act, apply in relation to the
registration of a transfer where the registration is made after 15 July 1987
and, for the purposes of the application of paragraphs 58G (1) (b) and (c) of
that Act to a registration made on or before that date, the amendments made by
this Part shall be disregarded.
PART III - AMENDMENT OF THE INCOME TAX ACT 1986
TAXATION LAWS AMENDMENT ACT 1988No. 11, 1988
- SECT 6
Principal Act
6. In this Part, "Principal Act" means the Income Tax Act 1986*2*.
*2* No. 108, 1986, as amended. For previous amendments, see Nos. 64 and 109,
1987.
TAXATION LAWS AMENDMENT ACT 1988No. 11, 1988
- SECT 7
Imposition of income tax
7. Section 5 of the Principal Act is amended by inserting in subsection (2)
"128NB," after "128NA,".
PART IV - AMENDMENT OF THE INCOME TAX ASSESSMENT ACT 1936
TAXATION LAWS AMENDMENT ACT 1988No. 11, 1988
- SECT 8
Principal Act
8. In this Part, "Principal Act" means the Income Tax Assessment Act
1936*3*.
*3* No. 27, 1936, as amended. For previous amendments, see No. 88, 1936; No.
5, 1937; No. 46, 1938; No. 30, 1939; Nos. 17 and 65, 1940; Nos. 58 and 69,
1941; Nos. 22 and 50, 1942; No. 10, 1943; Nos. 3 and 28, 1944; Nos. 4 and 37,
1945; No. 6, 1946; Nos. 11 and 63, 1947; No. 44, 1948; No. 66, 1949; No. 48,
1950; No. 44, 1951; Nos. 4, 28 and 90, 1952; Nos. 1, 28, 45 and 81, 1953; No.
43, 1954; Nos. 18 and 62, 1955; Nos. 25, 30 and 101, 1956; Nos. 39 and 65,
1957; No. 55, 1958; Nos. 12, 70 and 85, 1959; Nos. 17, 18, 58 and 108, 1960;
Nos. 17, 27 and 94, 1961; Nos. 39 and 98, 1962; Nos. 34 and 69, 1963; Nos. 46,
68, 110 and 115, 1964; Nos. 33, 103 and 143, 1965; Nos. 50 and 83, 1966; Nos.
19, 38, 76 and 85, 1967; Nos. 4, 70, 87 and 148, 1968; Nos. 18, 93 and 101,
1969; No. 87, 1970; Nos. 6, 54 and 93, 1971; Nos. 5, 46, 47, 65 and 85, 1972;
Nos. 51, 52, 53, 164 and 165, 1973; No. 216, 1973 (as amended by No. 20,
1974); Nos. 26 and 126, 1974; Nos. 80 and 117, 1975; Nos. 50, 53, 56, 98, 143,
165 and 205, 1976; Nos. 57, 126 and 127, 1977; Nos. 36, 57, 87, 90, 123, 171
and 172, 1978; Nos. 12, 19, 27, 43, 62, 146, 147 and 149, 1979; Nos. 19, 24,
57, 58, 124, 133, 134 and 159, 1980; Nos. 61, 92, 108, 109, 110, 111, 154 and
175, 1981; Nos. 29, 38, 39, 76, 80, 106 and 123, 1982; Nos. 14, 25, 39, 49,
51, 54 and 103, 1983; Nos. 14, 42, 47, 63, 76, 115, 124, 165 and 174, 1984;
No. 123, 1984 (as amended by No. 65, 1985); Nos. 47, 49, 104, 123 and 168,
1985; No. 173, 1985 (as amended by No. 49, 1986); Nos. 41, 46, 48, 49, 51, 52,
90, 109, 112 and 154, 1986; Nos. 23, 58, 61, 108, 120, 138, 139, 145 and 163,
1987; and No. 62, 1987 (as amended by No. 108, 1987).
TAXATION LAWS AMENDMENT ACT 1988No. 11, 1988
- SECT 9
Certain sea installations and offshore areas to be treated as part of
Australia
9. Section 6AA of the Principal Act is amended:
(a) by omitting subsections (1) and (2) and substituting the following
subsections:
"(1) For all purposes of this Act related directly or indirectly to:
(a) the exploration for minerals in, or the exploitation of the natural
resources (being minerals) of:
(i) an eligible external Territory;
(ii) a Petroleum Act adjacent area;
(iii) an Installations Act adjacent area by means of a sea
installation installed in that area; or
(iv) the Papua New Guinea offshore area;
whether the exploration or exploitation is by the taxpayer concerned or
by another person;
(b) the carrying on of an environment related activity in:
(i) an eligible external Territory;
(ii) a Petroleum Act adjacent area;
(iii) an Installations Act adjacent area by means of a sea
installation installed in that area; or
(iv) the Papua New Guinea offshore area;
whether the activity is carried on by the taxpayer concerned or by
another person; or
(c) acts, matters, circumstances and things touching, concerning,
arising out of or connected with any such exploration, exploitation or
environment related activity;
including purposes in relation to the application of this Act in respect
of income or profits derived from any such exploration, exploitation,
environment related activity, act, matter, circumstance or thing, or in
respect of dividends paid wholly or partly out of any such profits, the
provisions of this Act have effect, subject to this section, as if:
(d) the whole of each eligible external Territory and each Petroleum Act
adjacent area were, and at all times had been, a part of Australia;
(e) each sea installation, when installed in the Installations Act
adjacent area, were a part of Australia; and
(f) the Papua New Guinea offshore area were, and at all times had been,
a part of Papua New Guinea.
"(2) Where a company carries on business that:
(a) consists of exploration or exploitation, or an environment related
activity, of a kind referred to in subsection (1); or
(b) arises out of or is connected with any such exploration,
exploitation or environment related activity (whether by that company or by
another person);
the company shall, for the purposes of the definition of 'resident' or
'resident of Australia' in subsection 6 (1), be deemed to be carrying on
business in Australia.";
(b) by inserting after subsection (3A) the following subsections:
"(3B) Subject to subsection (3C), this section does not operate so as to
include in the assessable income of a person any income derived before 15
October 1987 that would not have been so included if section 9 of the Taxation
Laws Amendment Act 1988 had not come into operation.
"(3C) This section shall be taken to have applied as if the reference in
paragraph (4) (a) of this section, as in force during the period commencing
when the Petroleum (Submerged Lands) Amendment Act 1980 came into operation
and ending immediately before this subsection came into operation, to the
Petroleum (Submerged Lands) Act 1967-1974 had instead been a reference to the
Petroleum (Submerged Lands) Act 1967 as in force immediately before the
Petroleum (Submerged Lands) Amendment Act 1980 came into operation.";
(c) by omitting paragraphs (4) (a), (b) and (c) and substituting the
following paragraphs:
"(a) 'eligible external Territory' means the area, whether land or
water, within the territorial limits of:
(i) the Territory of Ashmore and Cartier Islands;
(ii) the Coral Sea Islands Territory; or
(iii) the Territory of Heard and McDonald Islands;
and includes the space above and below that area;
(b) 'environment related activity' has the same meaning as in the Sea
Installations Act 1987; and
(c) 'Installations Act adjacent area' means an area that is an adjacent
area for the purposes of the Sea Installations Act 1987;";
(d) by adding at the end of subsection (4) the following word and
paragraph:
"; and (e) 'Petroleum Act adjacent area' means an area that is an
adjacent area for the purposes of the Petroleum (Submerged Lands) Act 1967.";
(e) by adding at the end the following subsection:
"(5) Where, if the definition of 'sea installation' in subsection 4 (1)
of the Sea Installations Act 1987:
(a) extended to include:
(i) resources industry fixed structures and resources industry
mobile units, within the meaning of subsections 4 (2) and (3) of that Act;
(ii) partly constructed structures (including pipelines) or vessels
that, when completed, are intended to be, or could be, structures or units
referred to in subparagraph (i); and
(iii) the remains of structures (including pipelines) or vessels that
have been structures, units or vessels referred to in subparagraph (i) or
(ii); and
(b) did not include fishing boats, fishing equipment and pearling
vessels; a structure or vessel, or structures or vessels, would, by section 6
of that Act, be deemed for the purposes of that Act to be a sea installation
installed in a particular area, the structure or vessel, or the structures or
vessels, shall be taken for the purposes of this section to be a sea
installation installed in that area.".
TAXATION LAWS AMENDMENT ACT 1988No. 11, 1988
- SECT 10
Interpretation
10. Section 24B of the Principal Act is amended by adding at the end the
following subsection:
"(5) For the purposes of this Division (other than section 24C), the
adjacent area, within the meaning of the Sea Installations Act 1987, in
relation to a prescribed Territory shall, after the commencement of this
subsection, be taken to be part of the prescribed Territory.".
TAXATION LAWS AMENDMENT ACT 1988No. 11, 1988
- SECT 11
Interpretation
11. Section 27A of the Principal Act is amended:
(a) by inserting "or (aa)" after "(a)" in paragraph (a) of the definition
of "eligible service period" in subsection (1);
(b) by omitting "or (c)" from paragraph (b) of the definition of "eligible
service period" in subsection (1) and substituting ", (ba), (c), (ca), (da),
(db), (ga) or (gb)";
(c) by omitting "eligible annuity" (wherever occurring) from paragraph (d)
of the definition of "eligible service period" in subsection (1) and
substituting "qualifying annuity";
(d) by inserting after paragraph (a) of the definition of "eligible
termination payment" in subsection (1) the following paragraph:
"(aa) any payment made to the taxpayer in consequence of the termination
of any employment of another person, where:
(i) the payment is made after the death of the other person;
(ii) the taxpayer was not a dependant of the other person at the time
of the death of the other person and is not a dependant of the other person at
the time of payment;
(iii) the payment is made to the taxpayer otherwise than as trustee
of the estate of the other person; and
(iv) the payment is not a payment:
(A) to which paragraph (ba) applies:
(B) of an annuity, or supplement, to which section 27H applies; or
(C) from a fund in relation to which section 121DA applies, or has
applied, in relation to the year of income commencing on 1 July 1984 or any
subsequent year of income;";
(e) by omitting from subparagraph (b) (ii) of the definition of "eligible
termination payment" in subsection (l) "or (e)" and substituting ", (da), (e)
or (ga)";
(f) by inserting after paragraph (b) of the definition of "eligible
termination payment" in subsection (1) the following paragraph:
"(ba) any payment made to the taxpayer from a superannuation fund by
reason that another person was a member of the fund, where:
(i) the payment is made after the death of the other person;
(ii) the taxpayer was not a dependant of the other person at the
time of the death of the other person and is not a dependant of the other
person at the time of payment;
(iii) the payment is made to the taxpayer otherwise than as trustee
of the estate of the other person; and
(iv) the payment is not:
(A) income of the taxpayer;
(B) a payment to which paragraph (d), (db), (e), (f) or (gb)
applies; or
(C) a benefit to which subsection 26AF (1), 26AFA (1) or 26AFB (2)
or (3) applies;
reduced by any amount that has been or will be included in the
assessable income of any person under subsection 26AF (2), 26AFA (3) or 26AFB
(5) in respect of the transfer to the taxpayer of a right to receive the
payment or any part of the payment;";
(g) by inserting after paragraph (c) of the definition of "eligible
termination payment" in subsection (1) the following paragraph:
"(ca) any payment made to the taxpayer by the trustee of an approved
deposit fund by reason that another person was a depositor with the fund,
where: (i) the payment is made after the death of the other person;
(ii) the taxpayer was not a dependant of the other person at the
time of the death of the other person and is not a dependant of the other
person at the time of payment;
(iii) the payment is made to the taxpayer otherwise than as trustee
of the estate of the other person; and
(iv) the payment is not income of the taxpayer;";
(h) by inserting after paragraph (d) of the definition of "eligible
termination payment" in subsection (1) the following paragraphs:
"(da) a payment (in this paragraph called the 'capital payment') made
after the death of the taxpayer to the trustee of the estate of the taxpayer
where:
(i) the capital payment is made by reason that the taxpayer was a
member of a superannuation fund (whether or not the capital payment is made
from the fund); and
(ii) at some time after the death of the taxpayer, a person had a
right to elect to receive a superannuation pension (whether or not from the
person making the capital payment) in lieu of the capital payment being made
to the trustee;
reduced by the amount that would have been the unused undeducted
purchase price in relation to the superannuation pension;
(db) a payment (in this paragraph called the 'capital payment') made to
the taxpayer after the death of another person (in this paragraph called the
'deceased person') where:
(i) the capital payment is made by reason that the deceased person
was a member of a superannuation fund (whether or not the capital payment is
made from the fund);
(ii) the capital payment is made to the taxpayer otherwise than as
trustee of the estate of the deceased person; and
(iii) at some time after the death of the deceased person, the
taxpayer or another person had a right to elect to receive a superannuation
pension (whether or not from the person making the capital payment) in lieu of
the capital payment being made to the taxpayer;
reduced by the amount that would have been the unused undeducted
purchase price in relation to the superannuation pension;";
(j) by omitting "eligible" from paragraph (g) of the definition of
"eligible termination payment" in subsection (1) and substituting
"qualifying";
(k) by inserting after paragraph (g) of the definition of "eligible
termination payment" in subsection (1) the following paragraphs:
"(ga) a payment (in this paragraph called the 'capital payment') made
after the death of the taxpayer to the trustee of the estate of the taxpayer
where:
(i) the capital payment is made by reason that the taxpayer was a
member of a superannuation fund (whether or not the capital payment is made
from the fund); and
(ii) at some time after the death of the taxpayer a person had a
right to elect to receive an annuity (whether or not from the person making
the capital payment) in lieu of the capital payment being made to the
trustee;
reduced by the amount that would have been the unused undeducted
purchase price in relation to the annuity (having regard only to contributions
made to the fund);
(gb) a payment (in this paragraph called the 'capital payment') made to
the taxpayer after the death of another person (in this paragraph called the
'deceased person') where:
(i) the capital payment is made by reason that the deceased person
was a member of a superannuation fund (whether or not the capital payment is
made from the fund);
(ii) the capital payment is made to the taxpayer otherwise than as
trustee of the estate of the deceased person; and
(iii) at some time after the death of the deceased person, the
taxpayer or another person had a right to elect to receive an annuity (whether
or not from the person making the capital payment) in lieu of the capital
payment being made to the taxpayer;
reduced by the amount that would have been the unused undeducted
purchase price in relation to the annuity (having regard only to contributions
made to the fund);";
(m) by omitting "eligible" from paragraph (h) of the definition of
"eligible termination payment" in subsection (1) and substituting
"qualifying";
(n) by omitting "eligible" from paragraph (j) of the definition of
"eligible termination payment" in subsection (1) and substituting
"qualifying";
(p) by inserting "or, as the case requires, the fund member referred to in
the applicable paragraph of the definition of 'eligible termination payment' "
after "the taxpayer" in subparagraph (a) (i) of the definition of "relevant
service period" in subsection (1);
(q) by inserting "or the fund member, as the case may be," after "the
taxpayer" in subparagraph (a) (ii) of the definition of "relevant service
period" in subsection (1);
(r) by inserting "or, as the case requires, the fund member referred to in
the applicable paragraph of the definition of 'eligible termination payment' "
after "the taxpayer" (first occurring) in paragraph (b) of the definition of
"relevant service period" in subsection (1);
(s) by inserting "or the fund member, as the case may be," after "the
taxpayer" in subparagraph (b) (i) of the definition of "relevant service
period" in subsection (1);
(t) by inserting "or the fund member, as the case may be," after "the
taxpayer" in subparagraph (b) (ii) of the definition of "relevant service
period" in subsection (1);
(u) by inserting "or, as the case requires, the depositor referred to in
the applicable paragraph of the definition of 'eligible termination payment' "
after "the taxpayer" (first occurring) in paragraph (c) of the definition of
"relevant service period" in subsection (1);
(w) by inserting "or the depositor, as the case may be," after "the
taxpayer" (second occurring) in paragraph (c) of the definition of "relevant
service period" in subsection (1);
(y) by omitting from subsection (1) the definition of "dependant" and
substituting the following definition:
" 'dependant', in relation to a person:
(a) in subparagraph (3) (a) (ii), subsections (5), (5C) and (7) and
paragraph (12) (a), includes:
(i) another person who is or was the spouse of the person; and
(ii) any child of the person; and
(b) in any other case, includes:
(i) another person who is or was a spouse of the person; and
(ii) any child of the person, being a child who has not attained
the age of 18 years;";
(z) by omitting from subsection (1) the definition of "eligible annuity"
and substituting the following definition:
" 'eligible annuity', in relation to a taxpayer, means:
(a) an annuity payable under a superannuation policy within the
meaning of Division 8; or
(b) an annuity in respect of which the following conditions are
satisfied:
(i) the annuity:
(A) is an immediate annuity purchased on or before 9 December
1987; or
(B) is an annuity whose purchase price consists wholly of a
rolled-over amount or rolled-over amounts;
(ii) if the annuity contract permits a residual capital value to
become payable after the 65th anniversary of the birth of the taxpayer-the
contract does not permit the residual capital value to exceed the purchase
price of the annuity;
(iii) if the annuity is payable for a term of years certain and
the annuity contract permits a commutation payment or payments to become
payable after the 65th anniversary of the birth of the taxpayer-the contract
does not permit the total of such payments to exceed the reduced purchase
price of the annuity;
(iv) if the annuity is payable until:
(A) the death of a particular person or of the last to die of 2
or more persons; or
(B) the end of a term of years certain;
whichever last occurs, and the annuity contract permits a
commutation payment or payments to become payable after the 65th anniversary
of the birth of the taxpayer and before the end of that term of years
certain-the contract does not permit the total of such payments to exceed the
reduced purchase price of the annuity;
(v) if the annuity contract permits any annuity income to be
derived in respect of a period commencing after the 65th anniversary of the
birth of the taxpayer-the Commissioner is satisfied that there will not be any
unreasonable deferral of the derivation of any of that income, having regard
to the following matters:
(A) to the extent to which the amounts of that annuity income
will depend on the amount of income that may be derived by the person paying
the annuity-the respective times of derivation of those amounts of annuity
income and of the income of the person paying the annuity;
(B) to the extent to which the amounts of that annuity income
are not dependent on the amount of income that may be derived by the person
paying the annuity-the relative sizes of the annual entitlements to that
annuity income;
(C) such other matters as the Commissioner considers relevant;
(vi) if the annuity is a deferred annuity-the annuity contract
requires the annuity to become an immediate annuity not later than the 65th
anniversary of the birth of the taxpayer;";
(za) by inserting in subsection (1) the following definitions:
" 'qualifying annuity' means:
(a) an annuity purchased after 12 January 1987 that has at any time
been:
(i) an eligible annuity in relation to any taxpayer; or
(ii) the subject of an eligible policy within the meaning of
Division 8 or 8A;
(b) an annuity that:
(i) was purchased on or before 12 January 1987; and
(ii) is an eligible annuity within the meaning of this section as
in force immediately before the commencement of section 11 of the Taxation
Laws Amendment Act 1988; or
(c) an immediate annuity purchased on or before 9 December 1987;
'reduced purchase price', in relation to an annuity, means the purchase
price of the annuity, reduced by the total of the amounts excluded from
assessable income under paragraph 27H (1) (a) as deductible amounts in
relation to the annuity;";
(zb) by inserting in subsection (1) the following definition:
" 'spouse', in relation to a person, includes another person who,
although not legally married to the person, lives with the person on a bona
fide domestic basis as the husband or wife of the person;";
(zc) by inserting after subsection (4) the following subsection:
"(4A) Where:
(a) but for this subsection, an amount (in this subsection called the
'gross amount') would, in relation to a deceased taxpayer, be the amount of an
eligible termination payment to which paragraph (h) of the definition of
'eligible termination payment' in subsection (1) applies because of it having
been made to the trustee of the estate of the deceased taxpayer; and
(b) the annuity to which the payment relates was a roll-over annuity at
the time of death of the deceased taxpayer;
the gross amount shall be reduced by such amount (if any) as the
Commissioner considers appropriate having regard to the extent to which the
dependants of the deceased taxpayer may reasonably be expected to benefit from
the estate.";
(zd) by inserting after subsection (5B) the following subsection:
"(5BA) Paragraph (j) of the definition of 'eligible termination payment'
in subsection (l) does not apply to a payment made to a taxpayer of the
residual capital value of an annuity if:
(a) the taxpayer was, at the time of death of the deceased person to
whom the annuity was payable, a dependant of that person or is a dependant of
that person at the time of payment; and
(b) the annuity was a roll-over annuity at the time of death of the
person to whom the annuity was payable.";
(ze) by inserting after subsection (7) the following subsection:
"(7A) For the purposes of this Subdivision, an annuity shall be taken to
be presently payable at all times after, but not before, the commencement of
the first period in respect of which the annuity is payable.";
(zf) by omitting paragraph (12) (c) and substituting the following
paragraph:
"(c) paid to a life assurance company or registered organisation in
respect of the purchase of an annuity that:
(i) is an eligible annuity in relation to the taxpayer; and
(ii) is for the benefit of the taxpayer or for the benefit of
dependants of the taxpayer in the event of the death of the taxpayer.";
(zg) by inserting after subsection (12A) the following subsections:
"(12B) Notwithstanding subsection (12), an eligible termination payment
to which paragraph (aa), (ba) or (ca) of the definition of 'eligible
termination payment' in subsection (1) applies is not a qualifying eligible
termination payment.
"(12C) Notwithstanding subsection (12), where:
(a) an eligible termination payment is an eligible termination payment
in relation to a taxpayer (in this subsection called the 'receiving taxpayer')
because of the application of paragraph (g) or (h) of the definition of
'eligible termination payment' in subsection (l) to a payment (in this
subsection called the 'capital payment') made to the receiving taxpayer;
(b) the capital payment:
(i) is made in relation to an annuity that:
(A) has been an eligible annuity in relation to any taxpayer under
paragraph (b) of the definition of 'eligible annuity' in subsection (1);
(B) has a purchase price that consists wholly or partly of a
rolled-over amount or rolled-over amounts; and
(C) was previously payable to a person who has died; and
(ii) is made to the receiving taxpayer after the death of the
deceased person; and
(c) the receiving taxpayer was not the spouse of the deceased person at
the time of death of the deceased person;
the eligible termination payment is not a qualifying eligible termination
payment.
"(12D) Notwithstanding subsection (12), where:
(a) paragraph (j) of the definition of 'eligible termination payment' in
subsection (1) applies to an eligible termination payment in relation to a
taxpayer (in this subsection called the 'receiving taxpayer');
(b) the annuity referred to in that paragraph is an annuity:
(i) that has been an eligible annuity in relation to any taxpayer
under paragraph (b) of the definition of 'eligible annuity' in subsection (1);
and
(ii) whose purchase price consists wholly or partly of a rolled-over
amount or rolled-over amounts; and
(c) the receiving taxpayer was not, at the time of death of the person
to whom the annuity was payable, the spouse of that person;
the eligible termination payment is not a qualifying eligible termination
payment.".
TAXATION LAWS AMENDMENT ACT 1988No. 11, 1988
- SECT 12
Expenditure on scientific research
12. Section 73A of the Principal Act is amended by inserting after
subsection (2) the following subsection:
"(2A) Subsection (2) does not apply to expenditure incurred by a taxpayer in
the construction of a building or part of a building, in the making of an
alteration or addition to a building or in the acquisition of a building or
part of a building unless:
(a) either of the following subparagraphs applies:
(i) that construction or making commenced, or that acquisition
occurred, before 21 November 1987;
(ii) any contract in respect of that construction, making or acquisition
was entered into before 21 November 1987; and
(b) if the expenditure was incurred after 20 November 1987-the taxpayer
intended, on 20 November 1987, that:
(i) scientific research, being research related to a business carried
on by the taxpayer for the purpose of gaining or producing assessable income,
would be carried on by or on behalf of the taxpayer in the building; and
(ii) the building, part of the building, alteration or addition, as the
case may be, would be of use for scientific research purposes only.".
TAXATION LAWS AMENDMENT ACT 1988No. 11, 1988
- SECT 13
Expenditure on research and development activities
13. Section 73B of the Principal Act is amended:
(a) by inserting in subsection (1) the following definitions:
" 'associate' has the same meaning as in section 26AAB;
'non-associate', in relation to an eligible company, means a person who
is not an associate of the company;";
(b) by inserting after subsection (1) the following subsection:
"(1A) For the purpose of determining whether a person is an associate of
another person within the meaning of this section, the definition of
'relative' in subsection 6 (1) and the definition of 'associate' in subsection
26AAB (14) apply as if a reference in the definition concerned to the spouse
of a person included a reference to another person who, although not legally
married to the person, lives with the person on a bona fide domestic basis as
the husband or wife of the person.";
(c) by adding at the end of paragraph (2) (f) "or";
(d) by omitting paragraph (2) (g);
(e) by inserting after subsection (2) the following subsection:
"(2A) For the purposes of the definition of 'research and development
activities' in subsection (1), activities carried on by or on behalf of an
eligible company by way of the development of computer software shall not be
taken to be systematic, investigative or experimental activities unless the
computer software is developed for the purpose, or for purposes that include
the purpose, of sale, rent, licence, hire or lease to 2 or more non-associates
of the company (counting a non-associate of the company and the associates of
such a non-associate together as one person).";
(f) by inserting after subsection (5) the following subsection:
"(5A) This section does not apply to expenditure incurred by an eligible
company in the acquisition or construction of a building or of an extension,
alteration or improvement to a building unless:
(a) in the case of acquisition-any contract in respect of that
acquisition was entered into before 21 November 1987;
(b) in the case of construction-either of the following subparagraphs
applies:
(i) that construction commenced before 21 November 1987;
(ii) any contract in respect of that construction was entered into
before 21 November 1987; and
(c) if the expenditure was incurred after 20 November 1987-the company
intended, on 20 November 1987, that the building, or the extension, alteration
or improvement to the building, as the case may be, would be for use by the
company exclusively for the purpose of the carrying on by or on behalf of the
company of research and development activities.".
TAXATION LAWS AMENDMENT ACT 1988No. 11, 1988
- SECT 14
Money paid on shares in management and investment companies
14. Section 77F of the Principal Act is amended:
(a) by omitting from subsection (1) the definition of "prescribed share
capital";
(b) by omitting from paragraphs (2) (e) and (13) (a) and (b) "prescribed
share capital" and substituting "share capital".
TAXATION LAWS AMENDMENT ACT 1988No. 11, 1988
- SECT 15
Transfer of loss within company group
15. Section 80G of the Principal Act is amended:
(a) by omitting from subsection (5) "subsection (5A)" and substituting
"subsections (5A) and (5B)";
(b) by omitting from paragraph (5A) (a) "1986" and substituting "1984";
(c) by inserting after subsection (5A) the following subsection:
"(5B) For the purposes of subsection (1), where:
(a) at a time (in this subsection called the 'issue time') in the year
of income commencing on 1 July 1984 or in a subsequent year of income, a
company (in this subsection called the 'shelf company') issued shares (in this
subsection called the 'newly issued shares') to another company or companies;
(b) immediately before the issue time, a person or persons held other
shares in the shelf company;
(c) immediately after the issue time, the shelf company redeemed all the
shares in the shelf company other than the newly issued shares; and
(d) the shelf company was dormant, within the meaning of Part VI of the
Companies Act 1981, throughout the period (in this subsection called the
'dormant period') commencing on the day on which the shelf company was
incorporated and ending immediately before the issue time;
the shelf company shall be taken not to have been in existence during the
dormant period.".
TAXATION LAWS AMENDMENT ACT 1988No. 11, 1988
- SECT 16
Deductions for superannuation contributions by eligible persons
16. Section 82AAT of the Principal Act is amended by adding at the end the
following subsection:
"(3) A deduction is not allowable under this section in respect of so much
of a contribution made after 12 January 1987 as is deemed by section 27D to
have been expended in making a payment as mentioned in paragraph 27A (12)
(a).".
TAXATION LAWS AMENDMENT ACT 1988No. 11, 1988
- SECT 17
Interpretation
17. Section 110 of the Principal Act is amended:
(a) by omitting the definition of "eligible policy" and substituting the
following definition:
" 'eligible policy' means:
(a) a superannuation policy;
(b) a life assurance policy in relation to an immediate annuity,
being an immediate annuity in respect of which the following conditions are
satisfied: (i) the annuity was purchased after 9 December 1987;
(ii) the purchase price does not consist wholly of a rolled-over
amount or rolled-over amounts within the meaning of Subdivision AA of Division
2;
(iii) if the annuity contract permits a residual capital value to
be payable-the contract does not permit the residual capital value to exceed
the purchase price of the annuity;
(iv) if the annuity is payable for a term of years certain-the
annuity contract does not permit the total of any commutation payments to
exceed the reduced purchase price of the annuity;
(v) if the annuity is payable until:
(A) the death of a particular person or of the last to die of 2
or more persons; or
(B) the end of a term of years certain;
(iv) whichever last occurs, and the annuity contract permits a
commutation payment or payments to become payable before the end of that term
of years certain-the contract does not permit the total of such payments to
exceed the reduced purchase price of the annuity;
(vi) the Commissioner is satisfied there will not be any
unreasonable deferral of the derivation of any annuity income, having regard
to the following matters:
(A) to the extent to which the amounts of that annuity income
will depend on the amount of income that may be derived by the person paying
the annuity-the respective times of derivation of those amounts of annuity
income and of the income of the person paying the annuity;
(B) to the extent to which the amounts of that annuity income
are not dependent on the amount that may be derived by the person paying the
annuity-the relative sizes of the annual entitlements to that annuity income;
(C) such other matters as the Commissioner considers relevant;
(c) a life assurance policy in relation to an annuity that was
purchased after 12 January 1987 and comes within paragraph (b) of the
definition of 'eligible annuity' in subsection 27A (1); or
(d) a life assurance policy in relation to an annuity that comes
within paragraph (b) or (c) of the definition of 'qualifying annuity' in
subsection 27A (1);";
(b) by omitting the definitions of "deferred annuity" and "roll-over
annuity";
(c) by inserting the following definition:
" 'reduced purchase price', in relation to an annuity, has the same
meaning as in Subdivision AA of Division 2;";
(d) by adding at the end the following subsection:
"(2) For the purposes of this Division, an annuity shall be taken to be
presently payable at all times after, but not before, the beginning of the
first period in respect of which the annuity is payable.".
TAXATION LAWS AMENDMENT ACT 1988No. 11, 1988
- SECT 18
Interpretation
18. Section 116E of the Principal Act is amended:
(a) by omitting the definition of ''eligible policy'' and substituting the
following definition:
" 'eligible policy' means:
(a) a superannuation policy;
(b) a policy in relation to an immediate annuity, being an immediate
annuity in respect of which the following conditions are satisfied:
(i) the annuity was purchased after 9 December 1987;
(ii) the purchase price does not consist wholly of a rolled-over
amount or rolled-over amounts within the meaning of Subdivision AA of Division
2;
(iii) if the annuity contract permits a residual capital value to
be payable-the contract does not permit the residual capital value to exceed
the purchase price of the annuity;
(iv) if the annuity is payable for a term of years certain-the
annuity contract does not permit the total of any commutation payments to
exceed the reduced purchase price of the annuity; and
(v) if the annuity is payable until:
(A) the death of a particular person or of the last to die of 2
or more persons; or
(B) the end of a term of years certain;
(v) whichever last occurs, and the annuity contract permits a
commutation payment or payments to become payable before the end of that term
of years certain-the contract does not permit the total of such payments to
exceed the reduced purchase price of the annuity;
(vi) the Commissioner is satisfied there will not be any
unreasonable deferral of the derivation of any annuity income, having regard
to the following matters:
(A) to the extent to which the amounts of that annuity income
will depend on the amount of income that may be derived by the person paying
the annuity-the respective times of derivation of those amounts of annuity
income and of the income of the person paying the annuity;
(B) to the extent to which the amounts of that annuity income
are not dependent on the amount that may be derived by the person paying the
annuity-the relative sizes of the annual entitlements to that annuity income;
(C) such other matters as the Commissioner considers relevant;
(c) a policy in relation to an annuity that was purchased after 12
January 1987 and comes within paragraph (b) of the definition of 'eligible
annuity' in subsection 27A (1); or
(d) a policy in relation to an annuity that comes within paragraph
(b) or (c) of the definition of 'qualifying annuity' in subsection 27A (1);";
(b) by omitting the definitions of "deferred annuity", "eligible annuity"
and "roll-over annuity";
(c) by inserting the following definitions:
" 'qualifying annuity' has the same meaning as in Subdivision AA of
Division 2;
'reduced purchase price', in relation to an annuity, has the same
meaning as in Subdivision AA of Division 2;";
(d) by adding at the end the following subsection:
"(2) For the purposes of this Division, an annuity shall be taken to be
presently payable at all times after, but not before, the beginning of the
first period in respect of which the annuity is payable.".
TAXATION LAWS AMENDMENT ACT 1988No. 11, 1988
- SECT 19
Assessable income of registered organisations
19. Section 116G of the Principal Act is amended by omitting from subsection
(2) "eligible" and substituting "qualifying".
TAXATION LAWS AMENDMENT ACT 1988No. 11, 1988
- SECT 20
20. After section 128AD of the Principal Act the following section is
inserted:
Interpretation provisions relating to offshore banking units
"128AE. (1) In this Division, unless the contrary intention appears:
'offshore banking unit' means a person in relation to whom a declaration is
in force under subsection (2);
'offshore borrowing' means a borrowing from:
(a) a non-resident in any currency; or
(b) a resident in a currency other than Australian currency;
'offshore loan' means a loan to:
(a) a person who is a non-resident, where it would reasonably be
expected that:
(i) the person would continue to be a non-resident during the term
of the loan; and
(ii) interest payable during the term of the loan would not be, in
whole or in part, an outgoing incurred by the person in carrying on business
in Australia at or through a permanent establishment of the person in
Australia; or (b) an offshore banking unit;
'prevailing borrowing rate', in relation to a person who is or has been an
offshore banking unit, in relation to a particular time, means the effective
annual interest rate that the Commissioner considers was payable by the person
on borrowings at or about that time or, where there were none, by offshore
banking units generally at or about that time;
'prevailing borrowing term', in relation to a person who is or has been an
offshore banking unit, in relation to a particular time, means the period that
the Commissioner considers was the usual term of borrowings by the person at
or about that time or, where there were none, by offshore banking units
generally at or about that time;
'tax exempt loan money' means an amount that is tax exempt loan money under
this section;
'transfer to a person' includes apply an amount for the benefit of a person.
"(2) The Treasurer may, by notice published in the Gazette, declare a person
being:
(a) a savings bank or trading bank as defined by subsection 5 (1) of the
Banking Act 1959;
(b) a public authority constituted by a law of a State, being a public
authority that carries on the business of State banking; or
(c) a person whom the Treasurer is satisfied is appropriately authorised to
carry on business as a dealer in foreign exchange; to be an offshore banking
unit for the purposes of this Division.
"(3) A declaration under subsection (2) shall not come into force before the
day on which the notice containing the declaration is published in the
Gazette.
"(4) Where:
(a) a person who is an offshore banking unit makes an offshore borrowing;
and (b) the lender would, but for section 128GB, be liable to pay withholding
tax on income consisting of interest on the offshore borrowing;
then, for the purposes of this Division, the amount borrowed is tax exempt
loan money of the person.
"(5) Where:
(a) a person who is or has been an offshore banking unit makes an offshore
loan of tax exempt loan money; and
(b) the loan is repaid;
the amount repaid is, for the purposes of this Division, deemed to be tax
exempt loan money of the person.
"(6) Where a person who is an offshore banking unit borrows tax exempt loan
money from a person who is or has been an offshore banking unit, the amount
borrowed is, for the purposes of this Division, deemed to be tax exempt loan
money of the first-mentioned person.
"(7) Where a person who is or has been an offshore banking unit transfers an
amount of tax exempt loan money to another person, the following provisions
have effect for the purposes of this Division:
(a) subject to subsections (10) and (11), the amount transferred ceases to
be tax exempt loan money of the person; and
(b) the amount transferred does not, except under subsection (6), become
tax exempt loan money of the other person.
"(8) Where a person who is or has been an offshore banking unit transfers to
another person an amount that, in the opinion of the Commissioner, includes
tax exempt loan money, so much of the amount transferred as the Commissioner
considers was tax exempt loan money is deemed, for the purposes of this
Division, to have been tax exempt loan money of the person.
"(9) Where a person who is or has been an offshore banking unit deals with
an amount of tax exempt loan money of the person under the person's internal
accounting arrangements in such a way that the amount becomes available for
possible transfer to other persons (other than by way of an offshore loan or
repayment of an offshore borrowing), the following provisions have effect for
the purposes of this Division:
(a) the person is, when the amount so becomes available, deemed to make a
transfer of the amount to another person, other than by way of an offshore
loan or repayment of an offshore borrowing;
(b) any actual transfer of the amount by the person to another person shall
be disregarded.
"(10) For the purposes of this Division, where a person who is or has been
an offshore banking unit transfers tax exempt loan money to another person in
exchange for an equivalent amount in a different currency:
(a) the amount received in exchange shall be taken to be the same money as
was transferred; and
(b) the transfer shall be taken not to have occurred.
"(11) For the purposes of this Division, where a person who is or has been
an offshore banking unit transfers tax exempt loan money to another person by
way of a deposit for the purposes of temporary safe-keeping pending the making
of an offshore loan or repayment of an offshore borrowing:
(a) the amount held on deposit and upon being repaid shall be taken to be
the same money as was transferred; and
(b) the transfer shall be taken not to have occurred.
"(12) For the purposes of this section, an amount:
(a) deposited in an account with a bank or other financial institution; or
(b) paid by way of consideration for the issue of a security;
shall be taken to have been lent to, and borrowed by, the bank, financial
institution or issuer of the security.".
TAXATION LAWS AMENDMENT ACT 1988No. 11, 1988
- SECT 21
Liability to withholding tax
21. Section 128B of the Principal Act is amended:
(a) by omitting from subsection (1) "subsection (3)" and substituting
"subsections (3) and (3A)";
(b) by omitting from subparagraph (3) (h) (iv) "or 128GA" and substituting
", 128GA or 128GB";
(c) by inserting after subsection (3) the following subsection:
"(3A) If section 112A provides for the exclusion from assessable income
of a percentage of a dividend derived by a non-resident who carries on
business in Australia at or through a permanent establishment of the
non-resident in Australia, this section does not apply to that percentage of
so much of the dividend as has not been franked in accordance with section
160AQF.".
TAXATION LAWS AMENDMENT ACT 1988No. 11, 1988
- SECT 22
Certain income not included in assessable income
22. Section 128D of the Principal Act is amended by omitting "or section
128GA" and substituting ", section 128GA or section 128GB".
TAXATION LAWS AMENDMENT ACT 1988No. 11, 1988
- SECT 23
23. After section 128GA of the Principal Act the following section is
inserted:
Division not to apply to interest payments on offshore borrowings by offshore
banking units
"128GB. (1) This section applies to interest paid by a person in respect of
an offshore borrowing of the person if, when the borrowing took place, the
person was an offshore banking unit (whether or not the person is an offshore
banking unit when the interest is paid).
"(2) Tax is not payable in accordance with this Division in respect of
interest to which this section applies.
"(3) Where:
(a) under an arrangement:
(i) a person (in this subsection called the 'conduit bank') is to make
an offshore borrowing from another person (in this subsection called the
'foreign lender'); and
(ii) the conduit bank is to make an offshore loan to another person (in
this subsection called the 'real borrower') of the same or a similar amount;
(b) but for this subsection, this section would apply to interest on the
offshore borrowing; and
(c) the rate of interest payable on the offshore borrowing is the same as
or, in the opinion of the Commissioner, similar to the rate of interest
payable in respect of the offshore loan;
this section does not apply to interest on the offshore borrowing.
"(4) In subsection (3):
'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.".
TAXATION LAWS AMENDMENT ACT 1988No. 11, 1988
- SECT 24
24. After section 128NA of the Principal Act the following section is
inserted:
Special tax payable in respect of certain dealings by current and former
offshore banking units
"128NB. (1) Where a person who is or has been an offshore banking unit
transfers to another person an amount of tax exempt loan money, other than by
way of:
(a) an offshore loan; or
(b) repayment of an offshore borrowing; the person is liable to pay income
tax, as imposed by the Income Tax (Offshore Banking Units) (Withholding Tax
Recoupment) Act 1988, on the lost withholding tax amount in respect of the
transfer.
"(2) For the purposes of subsection (1), the lost withholding tax amount in
respect of the transfer is an amount ascertained in accordance with the
formula:
IWT rate X PB rate X PB term X TA
where:
IWT rate is the rate declared by the Parliament in respect of income to
which subsection 128B (5) applies;
PB rate is the prevailing borrowing rate in relation to the person at the
time of the transfer;
PB term is the number of years in the prevailing borrowing term in relation
to the person at the time of the transfer; and
TA is the amount of tax exempt loan money transferred.
"(3) Tax under this section is due and payable by the person liable to pay
the tax at the end of:
(a) 21 days after the end of the month in which the transfer to which it
relates takes place; or
(b) such further period as the Commissioner, in special circumstances,
allows.
"(4) Section 128C (other than subsections (1) and (4AA)) applies, in
addition to its application apart from this subsection, as if references in
that section to withholding tax were references to tax payable under this
section.
"(5) The Commissioner may remit the whole or part of an amount of tax
payable under this section in relation to the transfer of an amount of tax
exempt loan money to another person if:
(a) the Commissioner is satisfied that:
(i) the liability to pay the amount of tax arose because the person
mistakenly believed, on reasonable grounds, that the other person was a
non-resident or an offshore banking unit, that interest payable to the person
in respect of the amount transferred would be an outgoing of a particular kind
or that the amount transferred was not tax exempt loan money; and
(ii) the person had taken reasonable steps to ascertain the matter to
which the mistaken belief related; or
(b) the Commissioner is satisfied that there are special circumstances
justifying the remission of the whole or part of the amount of tax.".
TAXATION LAWS AMENDMENT ACT 1988No. 11, 1988
- SECT 25
Stripped securities
25. Section 159GZ of the Principal Act is amended by omitting from
subsection (4) "proportion of" and substituting "proportion as".
TAXATION LAWS AMENDMENT ACT 1988No. 11, 1988
- SECT 26
Rebate in respect of amounts assessable under section 26AH
26. Section 160AAB of the Principal Act is amended:
(a) by omitting "or" from the end of paragraph (1) (e);
(b) by adding at the end of subsection (1) the following word and
paragraph:
"; or (g) the State Government Insurance Corporation established by a
law of Western Australia.".
TAXATION LAWS AMENDMENT ACT 1988No. 11, 1988
- SECT 27
Rebate for money paid on shares for the purposes of petroleum exploration,
prospecting or mining
27. Section 160ACA of the Principal Act is amended by inserting "(being that
Act as in force immediately before the Petroleum (Submerged Lands) Amendment
Act 1980 came into operation)" after "Petroleum (Submerged Lands) Act 1967" in
the definition of "adjacent area" in subsection (1).
TAXATION LAWS AMENDMENT ACT 1988No. 11, 1988
- SECT 28
Interpretation
28. Section 160AE of the Principal Act is amended:
(a) by omitting from paragraph (3) (e) "or" (last occurring);
(b) by inserting after paragraph (3) (e) the following paragraph:
"(ea) interest that is offshore banking income; or";
(c) by adding at the end the following subsections:
"(4) In this Division, 'offshore banking income' means:
(a) income (being interest, fees, commission or other amounts) derived
by a person in respect of offshore banking transfers of the person; or
(b) income consisting of dividends paid to a person by a company out of
profits derived from the making of offshore banking transfers.
"(5) Where, if all offshore borrowings made by persons when they were
offshore banking units were taken to be tax exempt loan money of the persons
for the purposes of Division 11A, an offshore loan, or other transfer, of an
amount by a person would, for the purposes of that Division, be an offshore
loan, or other transfer, of tax exempt loan money of the person, the offshore
loan, or other transfer, of the amount is an offshore banking transfer of the
person for the purposes of subsection (4).
"(6) Expressions used in subsection (5) that are also used in Division
11A have the same respective meanings in that subsection as in that
Division.".
TAXATION LAWS AMENDMENT ACT 1988No. 11, 1988
- SECT 29
Credits in respect of foreign tax
29. Section 160AF of the Principal Act is amended by omitting subsection (7)
and substituting the following subsection:
"(7) Notwithstanding the preceding provisions of this section, where the
foreign income derived by a taxpayer in a year of income consists of any 2 or
more of the following classes of income:
(a) interest income;
(b) offshore banking income;
(c) other income;
the following provisions have effect:
(d) this section does not apply in relation to the taxpayer in relation to
the foreign income as a whole but, instead, applies in relation to the
taxpayer separately in relation to each of the 2 or more classes of income;
(e) for the purposes of this section as so applying in relation to each of
the 2 or more classes of income, that class of the income shall be treated as
the whole of the foreign income.".
TAXATION LAWS AMENDMENT ACT 1988No. 11, 1988
- SECT 30
30. After section 160AFA of the Principal Act the following section is
inserted:
Certain dividends deemed to be offshore banking income
"160AFAA. (1) Where:
(a) a dividend is paid by a foreign company to a taxpayer in a year of
income; and
(b) at any time in the year of income, the foreign company is related to
the taxpayer or would be related to the taxpayer if the taxpayer were an
Australian company;
then, for the purposes of this Division, so much of the dividend as does not
exceed the amount then standing in the transferred offshore banking income
pool of the foreign company shall be deemed to be offshore banking income
derived by the taxpayer.
"(2) For the purposes of subsection (1), the foreign company shall be deemed
to have at a particular time a transferred offshore banking income pool
consisting of the sum of all amounts of transferred offshore banking income of
the company derived at or before that time, reduced by the sum of all amounts
deemed under subsection (1) to be offshore banking income derived by the
taxpayer before that time.
"(3) In subsection (2), 'transferred offshore banking income', in relation
to the foreign company, means any income derived by the company, where:
(a) the right to receive the income was transferred or assigned to the
company by the taxpayer; and
(b) the income would, but for the transfer or assignment of the right, have
been offshore banking income of the taxpayer.".
TAXATION LAWS AMENDMENT ACT 1988No. 11, 1988
- SECT 31
Losses of previous years
31. Section 160AFD of the Principal Act is amended by omitting subsection
(6) and substituting the following subsection:
"(6) For the purposes of this section:
(a) interest income constitutes a single class of income;
(b) offshore banking income constitutes a single class of income; and
(c) all other income constitutes a single class of income.".
TAXATION LAWS AMENDMENT ACT 1988No. 11, 1988
- SECT 32
Transfer of excess credit within company group
32. Section 160AFE of the Principal Act is amended:
(a) by omitting from subsection (6) "subsection (6A)" and substituting
"subsections (6A) and (6B)";
(b) by omitting from paragraph (6A) (a) "1986" and substituting "1987";
(c) by inserting after subsection (6A) the following subsection:
"(6B) For the purposes of subsection (2), where:
(a) at a time (in this subsection called the 'issue time') in the year
of income commencing on 1 July 1987 or in a subsequent year of income, a
company (in this subsection called the 'shelf company') issued shares (in this
subsection called the 'newly issued shares') to another company or companies;
(b) immediately before the issue time, a person or persons held other
shares in the shelf company;
(c) immediately after the issue time, the shelf company redeemed all the
shares in the shelf company other than the newly issued shares; and
(d) the shelf company was dormant, within the meaning of Part VI of the
Companies Act 1981, throughout the period (in this subsection called the
'dormant period') commencing on the day on which the shelf company was
incorporated and ending immediately before the issue time;
the shelf company shall be taken not to have been in existence during the
dormant period.";
(d) by omitting subsection (8) and substituting the following subsection:
"(8) This section applies only to the following 2 classes of income:
(a) interest income;
(b) all other income other than offshore banking income.".
TAXATION LAWS AMENDMENT ACT 1988No. 11, 1988
- SECT 33
Transfer of net capital loss within company group
33. Section 160ZP of the Principal Act is amended:
(a) by omitting from subsection (6) "subsection (6A)" and substituting
"subsections (6A) and (6B)";
(b) by omitting from paragraph (6A) (a) "1986" and substituting "1985";
(c) by inserting after subsection (6A) the following subsection:
"(6B) For the purposes of subsection (1), where:
(a) at a time (in this subsection called the 'issue time') in the year
of income commencing on 1 July 1985 or in a subsequent year of income, a
company (in this subsection called the 'shelf company') issued shares (in this
subsection called the 'newly issued shares') to another company or companies;
(b) immediately before the issue time, a person or persons held other
shares in the shelf company;
(c) immediately after the issue time, the shelf company redeemed all the
shares in the shelf company other than the newly issued shares; and
(d) the shelf company was dormant, within the meaning of Part VI of the
Companies Act 1981, throughout the period (in this subsection called the
'dormant period') commencing on the day on which the shelf company was
incorporated and ending immediately before the issue time;
the shelf company shall be taken not to have been in existence during the
dormant period.".
TAXATION LAWS AMENDMENT ACT 1988No. 11, 1988
- SECT 34
Transfer of asset to wholly-owned company
34. Section 160ZZN of the Principal Act is amended:
(a) by inserting in subparagraph (7) (b) (i) "the" before "indexed";
(b) by omitting from subparagraph (7) (b) (ii) "asset" (first occurring)
and substituting "shares or securities".
TAXATION LAWS AMENDMENT ACT 1988No. 11, 1988
- SECT 35
Transfer of asset between companies in the same group
35. Section 160ZZO of the Principal Act is amended:
(a) by omitting from subsection (8) "subsection (8A)" and substituting
"subsections (8A) and (8B)";
(b) by omitting from paragraph (8A) (a) "1986" and substituting "1985";
(c) by inserting after subsection (8A) the following subsection:
"(8B) For the purposes of subsection (3), where:
(a) at a time (in this subsection called the 'issue time') in the year
of income commencing on 1 July 1985 or in a subsequent year of income, a
company (in this subsection called the 'shelf company') issued shares (in this
subsection called the 'newly issued shares') to another company or companies;
(b) immediately before the issue time, a person or persons held other
shares in the shelf company;
(c) immediately after the issue time, the shelf company redeemed all the
shares in the shelf company other than the newly issued shares; and
(d) the shelf company was dormant, within the meaning of Part VI of the
Companies Act 1981, throughout the period (in this subsection called the
'dormant period') commencing on the day on which the shelf company was
incorporated and ending immediately before the issue time;
the shelf company shall be taken not to have been in existence during the
dormant period.".
TAXATION LAWS AMENDMENT ACT 1988No. 11, 1988
- SECT 36
36. After section 160ZZP of the Principal Act the following sections are
inserted in Division 17 of Part IIIA:
Exchange of units in a unit trust for shares in a company
"160ZZPA. (1) This section applies where:
(a) under a scheme that:
(i) is for the reorganisation of the affairs of a unit trust; and
(ii) was entered into, or commenced to be carried out, after 9 December
1987;
2 or more taxpayers (in this section called the 'exchanging taxpayers'),
being the holders of all the units (in this section called the 'exchange
units') in the unit trust, dispose of all the exchange units to a company (in
this section called the 'interposed company'), not being a company in the
capacity of a trustee of a trust estate;
(b) the consideration in respect of each of the disposals consists only of
non-redeemable shares (in this section called the 'replacement shares') in the
interposed company;
(c) the total number of replacement shares is equal to, or is a multiple
of, the total number of exchange units;
(d) in the case of each exchanging taxpayer-all of the exchange units held
by the taxpayer are disposed of at the same time (in this section called the
'exchanging taxpayer's disposal time');
(e) immediately after the time (in this section called the 'completion
time') of the disposals or, if the disposals occurred at different times, the
last of the disposals:
(i) the exchanging taxpayers are the owners of all the shares in the
interposed company; and
(ii) the interposed company holds all the units in the unit trust;
(f) if the exchanging taxpayer's disposal time in relation to a particular
exchanging taxpayer occurred before the completion time-the taxpayer was the
owner of the replacement shares concerned at all times during the period
commencing immediately after the exchanging taxpayer's disposal time and
ending at the completion time;
(g) the unit trust is a resident unit trust in relation to the year of
income of the unit trust in which the completion time occurred;
(h) the interposed company is a resident of Australia at the completion
time and, if the disposals occurred at different times, at all times during
the period commencing at the time of the first of the disposals and ending at
the completion time;
(j) in the case of an exchanging taxpayer in the capacity of a trustee of a
trust estate-immediately after the exchanging taxpayer's disposal time, the
taxpayer holds the replacement shares concerned upon the same trust as the
taxpayer held the exchange units that were disposed of to the interposed
company;
(k) immediately after the completion time, each exchanging taxpayer owned
the replacement shares in the interposed company in the same proportion as the
taxpayer held the exchange units in the unit trust that were disposed of to
the interposed company;
(m) in the case of each exchanging taxpayer-the ratio calculated in
accordance with the formula:
MV of taxpayer's shares
--------------------------------
MV of total shares
where:
MV of taxpayer's shares is so much of the market value, immediately after
the completion time, of the replacement shares owned by the taxpayer
immediately after that time as is attributable to the exchange units held by
the interposed company; and
MV of total shares is so much of the market value of all the replacement
shares, immediately after the completion time, as is attributable to the
exchange units held by the interposed company;
is the same as the ratio calculated in accordance with the formula:
MV of taxpayer's units
--------------------------------
MV of total units
where:
MV of taxpayer's units is the market value, immediately before the
exchanging taxpayer's disposal time, of the exchange units held by the
taxpayer immediately before that time; and
MV of total units is the market value of all the exchange units
immediately before the exchanging taxpayer's disposal time;
(n) the interposed company has, by notice in writing given to the
Commissioner within 2 months after the completion time, or within such further
time as the Commissioner allows, elected that this subsection apply in respect
of all the disposals; and
(p) the notice referred to in paragraph (n) is accompanied by a
declaration, in a form approved by the Commissioner, with respect to the
operation of this section.
"(2) If:
(a) either of the following conditions is satisfied in relation to a
particular exchanging taxpayer:
(i) the taxpayer is a resident of Australia;
(ii) each disposal of an exchange unit by the taxpayer constitutes a
disposal of a taxable Australian asset; and
(b) the taxpayer has elected that this subsection is to apply in respect of
the disposal of all the exchange units held by the taxpayer;
this Part (other than this section) does not apply in respect of the disposal
of those units and:
(c) if all the exchange units held by the taxpayer were acquired by the
taxpayer before 20 September 1985-the taxpayer shall be deemed, for the
purposes of this Part, to have acquired the replacement shares concerned
before 20 September 1985;
(d) if:
(i) some, but not all, of the exchange units held by the taxpayer were
acquired by the taxpayer before 20 September 1985;
(ii) the taxpayer, in the notice of election, nominates, as pre-CGT
shares, such of the replacement shares acquired by the taxpayer as are
specified in the notice; and
(iii) the number of replacement shares nominated by the taxpayer does
not exceed the number calculated in accordance with the formula:
Pre CGT units
Shares X --------------------
Total units
where:
Pre CGT units is the number of exchange units acquired by the taxpayer
before 20 September 1985;
Shares is the number of replacement shares owned by the taxpayer
immediately after the completion time; and
Total units is the number of exchange units that the taxpayer disposed
of to the interposed company;
the taxpayer shall be deemed, for the purposes of this Part, to have
acquired the nominated shares before 20 September 1985;
(e) each replacement share acquired by the taxpayer that is not deemed by
paragraph (c) or (d) to have been acquired by the taxpayer before 20 September
1985 shall be taken to be a post-20 September 1985 replacement share for the
purposes of paragraph (g) and subsection (3);
(f) each exchange unit that was acquired by the taxpayer on or after 20
September 1985 shall be taken to be a post-20 September 1985 exchange unit for
the purposes of paragraph (g); and
(g) in the case of a post-20 September 1985 replacement share-the taxpayer
shall be deemed to have paid or given as consideration in respect of the
acquisition of the share an amount equal to:
(i) for the purpose of ascertaining whether a capital gain accrued to
the taxpayer in the event of a subsequent disposal of the share by the
taxpayer-the amount calculated in accordance with the formula:
ICB of post CGT units
-------------------------------
Post CGT shares
where:
ICB of post CGT units is the sum of the amounts that would have been
the indexed cost bases to the taxpayer of post-20 September 1985 exchange
units for the purposes of this Part if this Part had applied in respect of the
disposal of the units by the taxpayer to the interposed company; and
Post CGT shares is the number of post-20 September 1985 replacement
shares owned by the taxpayer immediately after the completion time; or
(ii) for the purposes of ascertaining whether the taxpayer incurred a
capital loss in the event of a subsequent disposal of the share by the
taxpayer-the amount calculated in accordance with the formula:
RCB of post CGT units
--------------------------------
Post CGT shares
where:
RCB of post CGT units is the sum of the amounts that would have been
the reduced cost bases to the taxpayer of post-20 September 1985 exchange
units for the purposes of this Part if this Part had applied in respect of the
disposal of the units by the taxpayer to the interposed company; and
Post CGT shares is the number of post-20 September 1985 replacement
shares owned by the taxpayer immediately after the completion time.
"(3) If a post-20 September 1985 replacement share is disposed of by an
exchanging taxpayer within 12 months after the earliest day, being a day after
19 September 1985, on which any exchange unit was acquired by the taxpayer,
the reference in paragraph (2) (g) to the indexed cost bases to the taxpayer
of units is a reference to the cost bases to the taxpayer of the units.
"(4) An election by a taxpayer under subsection (2) shall be made by notice
in writing given to the Commissioner on or before the date of lodgment of the
return of income of the taxpayer for the year of income in which the disposal
of the exchange units concerned took place, or within such further period as
the Commissioner allows.
"(5) If:
(a) any of the assets of the unit trust, as at the completion time, were
acquired by the trustee of the unit trust before 20 September 1985;
(b) the interposed company, by notice in writing accompanying the notice
referred to in paragraph (1) (n), nominates, as pre-CGT units, such of the
exchange units held by the company immediately after the completion time as
are specified in the notice; and
(c) the number of exchange units nominated by the company does not exceed
the number calculated in accordance with the formula:
Net value of pre CGT assets
Units X ---------------------------
Net value of total assets
where:
Net value of pre CGT assets is the number of dollars in the market value
of the assets referred to in paragraph (a) as at the completion time reduced
by the number of dollars in the liabilities of the unit trust as at that time
to the extent that those liabilities are attributable to those assets;
Units is the number of exchange units held by the company immediately
after the completion time; and
Net value of total assets is the number of dollars in the market value of
the assets of the unit trust as at the completion time reduced by the number
of dollars in the liabilities of the unit trust as at that time;
the units so nominated shall be deemed, for the purposes of this Part, to have
been acquired by the interposed company before 20 September 1985.
"(6) Any other exchange units held by the interposed company immediately
after the completion time shall be taken to be post-20 September 1985 exchange
units for the purposes of subsections (7) and (8).
"(7) The interposed company shall be deemed to have paid or given as
consideration in respect of the acquisition of each post-20 September 1985
exchange unit an amount equal to:
(a) for the purpose of ascertaining whether a capital gain accrued to the
company in the event of a subsequent disposal of the unit by the company-the
amount calculated in accordance with the formula:
Net ICB of post CGT assets
Post CGT units
where:
Net ICB of post CGT assets is the sum of the amounts that would have been
the indexed cost bases to the trustee of the unit trust, for the purposes of
this Part, of such of the assets of the unit trust, as at the completion time,
as were acquired by the trustee on or after 20 September 1985 if those assets
of the trust had been disposed of by the trustee at the completion time, being
that sum reduced by the liabilities of the unit trust as at the completion
time to the extent that those liabilities are attributable to those assets;
and
Post CGT units is the number of post-20 September 1985 exchange units
held by the company immediately after the completion time; or
(b) for the purposes of ascertaining whether the company incurred a capital
loss in the event of a subsequent disposal of the unit by the company-the
amount
Net RCB of post CGT assets
Post CGT units
calculated in accordance with the formula:
where:
Net RCB of post CGT assets is the sum of the amounts that would have been
the reduced cost bases to the trustee of the unit trust, for the purposes of
this Part, of such of the assets of the unit trust, as at the completion time,
as were acquired by the trustee on or after 20 September 1985 if those assets
had been disposed of by the trustee at the completion time, being that sum
reduced by the liabilities of the unit trust as at the completion time to the
extent that those liabilities are attributable to those assets; and
Post CGT units is the number of post-20 September 1985
exchange units held by the company immediately after the completion time.
"(8) If a post-20 September 1985 exchange unit is disposed of by the
interposed company within 12 months after the day on which the unit was
acquired by the company, the reference in paragraph (7) (a) to the indexed
cost bases to the trustee of assets is a reference to the cost bases to the
trustee of the assets.
"(9) For the purposes of this section, a share issued by a company shall be
taken to be a non-redeemable share unless:
(a) the share is, or at the option of the company is to be, liable to be
redeemed; or
(b) the share was issued under, or as part of, an agreement or arrangement,
whether oral or in writing and whether entered into before or after the
commencement of this section, that had the purpose, or purposes that included
the purpose, of enabling the company, by means of the redemption, purchase or
cancellation, or of a reduction in the paid-up value, of that share or of any
other share in the company, to pay, transfer or apply to, on behalf of or at
the direction of the person to whom the share was issued or any other person,
whether upon the exercise of an option by the company or by any other person
or not, any money or other property other than shares in the company.
"(10) Where:
(a) immediately after the completion time, the exchanging taxpayers are the
owners of some, but not all, of the shares in the interposed company;
(b) the number of the remaining shares does not exceed 5; and
(c) the Commissioner is of the opinion that, having regard to:
(i) the ratio calculated in accordance with the formula:
MV of remaining shares
MV of total shares
where:
MV of remaining shares is the number of dollars in the market value of
the remaining shares immediately after the completion time; and
MV of total shares is the number of dollars in the market value of the
replacement shares immediately after the completion time; and
(ii) such other matters as the Commissioner considers relevant;
it would be unreasonable not to treat the exchanging taxpayers as being
the owners of all the shares in the interposed company;
the following provisions have effect:
(d) the exchanging taxpayers shall be treated, for the purposes of
subparagraph (1) (e) (i), as if, immediately after the completion time, they
were the owners of all the shares in the interposed company;
(e) the remaining shares shall be disregarded for the purposes of the
application of paragraph (1) (k).
"(11) For the purposes of this section, the liabilities of the unit trust,
as at the completion time, to the extent that, apart from this subsection,
they are not attributable to the assets of the unit trust as at the completion
time (in this subsection called the 'general liabilities'), shall be taken to
be attributable to particular assets of the unit trust, as at that time, to
the extent calculated in accordance with the formula:
MV of particular assets
General liabilities X -----------------------
MV of total assets where:
General liabilities is the amount of the general liabilities;
MV of particular assets is the number of dollars in the market value, as at
the completion time, of the particular assets as at that time; and
MV of total assets is the number of dollars in the market value, as at the
completion time, of the assets of the unit trust as at that time.
Redemption or cancellation of units in a unit trust in exchange for shares in
a company
"160ZZPB. (1) This section applies where:
(a) all of the following conditions are satisfied in relation to a scheme
for the reorganisation of the affairs of a unit trust:
(i) the scheme was entered into, or commenced to be carried out, after
9 December 1987;
(ii) under the scheme, a company (in this section called the 'interposed
company'), not being a company in the capacity of a trustee of a trust estate,
acquires not more than 5 units (in this section called the 'formal units') in
the unit trust;
(iii) the interposed company did not hold any other units in the unit
trust at any time before the acquisition of the formal units;
(iv) the remaining units (in this section called the 'exchange units')
in the unit trust are held by 2 or more taxpayers (in this section called the
'exchanging taxpayers');
(v) under the scheme, all the exchange units are redeemed or cancelled;
(vi) under the scheme, the trustee of the unit trust issues to the
interposed company 2 or more units (in this section called the 'scheme units')
in the unit trust;
(vii) the number of scheme units issued to the interposed company
equals, or is a multiple of, the number of exchange units that were redeemed
or cancelled;
(b) the consideration in respect of each of the redemptions or
cancellations consists only of newly issued non-redeemable shares (in this
section called the 'replacement shares') in the interposed company;
(c) the total number of replacement shares is equal to, or is a multiple
of, the total number of exchange units;
(d) in the case of each exchanging taxpayer-all of the exchange units held
by the taxpayer are redeemed or cancelled at the same time (in this section
called the 'exchanging taxpayer's disposal time');
(e) immediately after the time (in this section called the 'completion
time') of the redemptions or cancellations or, if the redemptions or
cancellations occurred at different times, the last of the redemptions or
cancellations:
(i) the exchanging taxpayers are the owners of all the shares in the
interposed company; and
(ii) the interposed company holds all the units in the unit trust;
(f) if the exchanging taxpayer's disposal time in relation to a particular
exchanging taxpayer occurred before the completion time-the taxpayer was the
owner of the replacement shares concerned at all times during the period
commencing immediately after the exchanging taxpayer's disposal time and
ending at the completion time;
(g) the unit trust is a resident unit trust in relation to the year of
income of the unit trust in which the completion time occurred;
(h) the interposed company is a resident of Australia at the completion
time and, if the redemptions or cancellations occurred at different times, at
all times during the period commencing at the time of the first of the
redemptions or cancellations and ending at the completion time;
(j) in the case of an exchanging taxpayer in the capacity of a trustee of a
trust estate-immediately after the exchanging taxpayer's disposal time, the
taxpayer holds the replacement shares concerned upon the same trust as the
taxpayer held the exchange units that were redeemed or cancelled;
(k) immediately after the completion time, each exchanging taxpayer owned
the replacement shares in the interposed company in the same proportion as the
taxpayer held the exchange units in the unit trust that were redeemed or
cancelled;
(m) in the case of each exchanging taxpayer-the ratio calculated in
accordance with the formula:
MV of taxpayer's shares
MV of total shares
where:
MV of taxpayer's shares is so much of the market value, immediately after
the completion time, of the replacement shares owned by the taxpayer
immediately after that time as is attributable to the scheme units held by the
interposed company; and
MV of total shares is so much of the market value of all the replacement
MV of taxpayer's units
MV of total units
shares, immediately after the completion time, as is attributable to the
scheme units held by the interposed company;
is the same as the ratio calculated in accordance with the formula:
where:
MV of taxpayer's units is the market value, immediately before the
exchanging taxpayer's disposal time, of the exchange units held by the
taxpayer immediately before that time; and
MV of total units is the market value of all the exchange units
immediately before the exchanging taxpayer's disposal time;
(n) the interposed company has, by notice in writing given to the
Commissioner within 2 months after the completion time, or within such further
time as the Commissioner allows, elected that this subsection apply in respect
of all the
redemptions or cancellations; and
(p) the notice referred to in paragraph (n) is accompanied by a
declaration,
in a form approved by the Commissioner, with respect to the operation of this
section.
"(2) If:
(a) either of the following conditions is satisfied in relation to a
particular exchanging taxpayer:
(i) the taxpayer is a resident of Australia;
(ii) each redemption or cancellation of an exchange unit held by the
taxpayer constitutes a disposal of a taxable Australian asset; and
(b) the taxpayer has elected that this subsection is to apply in respect of
the redemption or cancellation of all the exchange units held by the taxpayer;
this Part (other than this section) does not apply in respect of the
redemption or cancellation of those units and:
(c) if all the exchange units held by the taxpayer were acquired by the
taxpayer before 20 September 1985-the taxpayer shall be deemed, for the
purposes of this Part, to have acquired the replacement shares concerned
before 20 September 1985;
(d) if:
(i) some, but not all, of the exchange units held by the taxpayer were
acquired by the taxpayer before 20 September 1985;
(ii) the taxpayer, in the notice of election, nominates, as pre-CGT
shares, such of the replacement shares acquired by the taxpayer as are
specified in the notice; and
(iii) the number of replacement shares nominated by the taxpayer does
not exceed the number calculated in accordance with the formula:
Shares X Pre CGT units
-----------------
Total units
where:
Pre CGT units is the number of exchange units acquired by the taxpayer
before 20 September 1985;
Shares is the number of replacement shares owned by the taxpayer
immediately after the completion time; and
Total units is the number of exchange units held by the taxpayer that
were redeemed or cancelled;
the taxpayer shall be deemed, for the purposes of this Part, to have
acquired the nominated shares before 20 September 1985;
(e) each replacement share acquired by the taxpayer that is not deemed by
paragraph (c) or (d) to have been acquired by the taxpayer before 20 September
1985 shall be taken to be a post-20 September 1985 replacement share for the
purposes of paragraph (g) and subsection (3);
(f) each exchange unit that was acquired by the taxpayer on or after 20
September 1985 shall be taken to be a post-20 September 1985 exchange unit for
the purposes of paragraph (g); and
(g) in the case of a post-20 September 1985 replacement share-the taxpayer
shall be deemed to have paid or given as consideration in respect of the
acquisition of the share an amount equal to:
(i) for the purpose of ascertaining whether a capital gain accrued to
the taxpayer in the event of a subsequent disposal of the share by the
taxpayer-the amount calculated in accordance with the formula:
ICB of post CGT units
-------------------------------
Post CGT shares
where:
ICB of post CGT units is the sum of the amounts that would have been
the indexed cost bases to the taxpayer of post-20 September 1985 exchange
units for the purposes of this Part if this Part had applied in respect of the
redemption or cancellation of the units held by the taxpayer; and
Post CGT shares is the number of post-20 September 1985 replacement
shares owned by the taxpayer immediately after the completion time; or
(ii) for the purposes of ascertaining whether the taxpayer incurred a
capital loss in the event of a subsequent disposal of the share by the
taxpayer-the amount calculated in accordance with the formula:
RCB of post CGT units
--------------------------------
Post CGT shares
where:
RCB of post CGT units is the sum of the amounts that would have been
the reduced cost bases to the taxpayer of post-20 September 1985 exchange
units for the purposes of this Part if this Part had applied in respect of the
redemption or cancellation of the units held by the taxpayer; and
Post CGT shares is the number of post-20 September 1985 replacement
shares owned by the taxpayer immediately after the completion time.
"(3) If a post-20 September 1985 replacement share is disposed of by an
exchanging taxpayer within 12 months after the earliest day, being a day after
19 September 1985, on which any exchange unit was acquired by the taxpayer,
the reference in paragraph (2) (g) to the indexed cost bases to the taxpayer
of units is a reference to the cost bases to the taxpayer of the units.
"(4) An election by a taxpayer under subsection (2) shall be made by notice
in writing given to the Commissioner on or before the date of lodgment of the
return of income of the taxpayer for the year of income in which the
redemption or cancellation of the exchange units concerned took place, or
within such further period as the Commissioner allows.
"(5) If:
(a) any of the assets of the unit trust, as at the completion time, were
acquired by the trustee of the unit trust before 20 September 1985;
(b) the interposed company, by notice in writing accompanying the notice
referred to in paragraph (1) (n), nominates, as pre-CGT units, such of the
scheme units held by the company immediately after the completion time as are
specified in the notice; and
(c) the number of scheme units nominated by the company does not exceed the
number calculated in accordance with the formula:
Units X Net value of pre CGT assets
Units X Net value of total assets
where:
Net value of pre CGT assets is the number of dollars in the market value
of the assets referred to in paragraph (a) as at the completion time reduced
by the number of dollars in the liabilities of the unit trust as at that time
to the extent that those liabilities are attributable to those assets;
Units is the number of scheme units held by the company immediately after
the completion time; and
Net value of total assets is the number of dollars in the market value of
the assets of the unit trust as at the completion time reduced by the number
of dollars in the liabilities of the unit trust as at that time;
the units so nominated shall be deemed, for the purposes of this Part, to have
been acquired by the interposed company before 20 September 1985.
"(6) Any other scheme units held by the interposed company immediately after
the completion time shall be taken to be post-20 September 1985 scheme units
for the purposes of subsections (7) and (8).
"(7) The interposed company shall be deemed to have paid or given as
consideration in respect of the acquisition of each post-20 September 1985
scheme unit an amount equal to:
(a) for the purpose of ascertaining whether a capital gain accrued to the
company in the event of a subsequent disposal of the unit by the company-the
amount calculated in accordance with the formula:
Net ICB of post CGT assets
Post CGT units
where:
Net ICB of post CGT assets is the sum of the amounts that would have been
the indexed cost bases to the trustee of the unit trust, for the purposes of
this Part, of such of the assets of the unit trust, as at the completion time,
as were acquired by the trustee on or after 20 September 1985 if those assets
of the trust had been disposed of by the trustee at the completion time, being
that sum reduced by the liabilities of the unit trust as at the completion
time to the extent that those liabilities are attributable to those assets;
and
Post CGT units is the number of post-20 September 1985 scheme units held
by the company immediately after the completion time; or
(b) for the purposes of ascertaining whether the company incurred a capital
loss in the event of a subsequent disposal of the unit by the company-the
amount calculated in accordance with the formula:
Net RCB of post CGT assets
Post CGT units
where:
Net RCB of post CGT assets is the sum of the amounts that would have been
the reduced cost bases to the trustee of the unit trust, for the purposes of
this Part, of such of the assets of the unit trust, as at the completion time,
as were acquired by the trustee on or after 20 September 1985 if those assets
had been disposed of by the trustee at the completion time, being that sum
reduced by the liabilities of the unit trust as at the completion time to the
extent that those liabilities are attributable to those assets; and
Post CGT units is the number of post-20 September 1985 scheme units held
by the company immediately after the completion time.
"(8) If a post-20 September 1985 scheme unit is disposed of by the
interposed company within 12 months after the day on which the unit was
acquired by the company, the reference in paragraph (7) (a) to the indexed
cost bases to the trustee of assets is a reference to the cost bases to the
trustee of the assets.
"(9) For the purposes of this section, a share issued by a company shall be
taken to be a non-redeemable share unless:
(a) the share is, or at the option of the company is to be, liable to be
redeemed; or
(b) the share was issued under, or as part of, an agreement or arrangement,
whether oral or in writing and whether entered into before or after the
commencement of this section, that had the purpose, or purposes that included
the purpose, of enabling the company, by means of the redemption, purchase or
cancellation, or of a reduction in the paid-up value, of that share or of any
other share in the company, to pay, transfer or apply to, on behalf of or at
the direction of the person to whom the share was issued or any other person,
whether upon the exercise of an option by the company or by any other person
or not, any money or other property other than shares in the company.
"(10) Where:
(a) immediately after the completion time, the exchanging taxpayers are the
owners of some, but not all, of the shares in the interposed company;
(b) the number of the remaining shares does not exceed 5; and
(c) the Commissioner is of the opinion that, having regard to:
(i) the ratio calculated in accordance with the formula:
MV of remaining shares
MV of total shares
where:
MV of remaining shares is the number of dollars in the market value of
the remaining shares immediately after the completion time; and
MV of total shares is the number of dollars in the market value of the
replacement shares immediately after the completion time; and
(ii) such other matters as the Commissioner considers relevant;
it would be unreasonable not to treat the exchanging taxpayers as being
the owners of all the shares in the interposed company;
the following provisions have effect:
(d) the exchanging taxpayers shall be treated, for the purposes of
subparagraph (1) (e) (i), as if, immediately after the completion time, they
were the owners of all the shares in the interposed company;
(e) the remaining shares shall be disregarded for the purposes of the
application of paragraph (1) (k).
"(11) For the purposes of this section, the liabilities of the unit trust,
as at the completion time, to the extent that, apart from this subsection,
they are not attributable to the assets of the unit trust as at the completion
time (in this subsection called the 'general liabilities'), shall be taken to
be attributable to particular assets of the unit trust, as at that time, to
the extent calculated in accordance with the formula:
General liabilities X MV of particular assets
General liabilities X MV of total assets where:
General liabilities is the amount of the general liabilities;
MV of particular assets is the number of dollars in the market value, as at
the completion time, of the particular assets as at that time; and
MV of total assets is the number of dollars in the market value, as at the
completion time, of the assets of the unit trust as at that time.''.
TAXATION LAWS AMENDMENT ACT 1988No. 11, 1988
- SECT 37
Notification of instalments of provisional tax
37. Section 221YDAA of the Principal Act is amended:
(a) by omitting from subsection (1) ", during a year of income,";
(b) by omitting from paragraph (1) (a) "the year of income" and
substituting "a year of income";
(c) by inserting after subsection (3) the following subsection:
"(3A) Where:
(a) an instalment notice is served (not including an instalment notice
that is deemed by subsection (7) to have been served); and
(b) either of the following subparagraphs applies:
(i) no due date for payment of the instalment is specified in the
instalment notice;
(ii) the due date for payment of the instalment purportedly specified
in the instalment notice is not in accordance with subsection (3);
this Division has effect as if the instalment notice had specified, as the
date on which the instalment is due and payable, whichever is the later of the
following dates:
(c) the thirtieth day after the date of service of the instalment
notice;
(d) the date applicable under whichever of paragraphs (3) (a), (b) and
(c) applies to the instalment.".
TAXATION LAWS AMENDMENT ACT 1988No. 11, 1988
- SECT 38
Application of amendments
38. (1) In this section:
"amended Act" means the Principal Act as amended by this Act.
(2) The amendment made by section 10 applies as if it had come into
operation on 15 October 1987.
(3) The amendment made by paragraph 11 (y):
(a) insofar as it applies for the purposes of subsection 27A (4) of the
amended Act-applies to payments made after 9 December 1987; and
(b) insofar as it applies for the purposes of paragraph 27A (12) (c) of the
amended Act-applies to payments made after 12 January 1987.
(4) The amendments made by paragraphs 11 (z) and (zf) apply to annuities
purchased after 12 January 1987.
(5) The amendments made by paragraphs 11 (ze), 17 (d) and 18 (d) apply to
annuities purchased after 9 December 1987.
(6) The amendments made by paragraphs 11 (a), (b), (d), (e), (f), (g), (h)
and (k) and (p) to (w) (inclusive) apply to payments made after 12 January
1987.
(7) The amendment made by paragraph 11 (zb):
(a) insofar as it applies for the purposes of subsections 27A (3) and (5)
and paragraph 27A (12) (a) of the amended Act-applies to payments made after 9
December 1987;
(b) insofar as it applies for the purposes of subsection 27A (5C) of the
amended Act-applies to payments or contributions made after 9 December 1987;
(c) insofar as it applies for the purposes of subsection 27A (7) of the
amended Act-applies to contributions made after 9 December 1987; and
(d) insofar as it applies for the purposes of paragraph 27A (12) (c) of the
amended Act-applies to annuities purchased after 12 January 1987.
(8) The amendments made by paragraphs 11 (zc) and (zd) apply where the
annuity concerned was purchased after 12 January 1987.
(9) Subsection 27A (12C) of the amended Act:
(a) insofar as it applies in relation to paragraph (g) of the definition of
"eligible termination payment" in subsection 27A (1) of the amended
Act-applies where the annuity concerned was purchased after 9 December 1987;
and (b) insofar as it applies in relation to paragraph (h) of the definition
of "eligible termination payment" in subsection 27A (1) of the amended
Act-applies where the annuity concerned was purchased after 12 January 1987.
(10) Subsection 27A (12D) of the amended Act applies where the annuity
concerned was purchased after 12 January 1987.
(11) To the extent to which an eligible termination payment (within the
meaning of Subdivision AA of Division 2 of Part III of the amended Act) made
before the commencement of the first day of the second month after the month
in which this Act receives the Royal Assent would not have been an eligible
termination payment if the amendments made by section 11 of this Act had not
been made, Division 2 of Part VI of the amended Act does not apply to that
eligible termination payment.
(12) The amendments made by paragraphs 13 (a), (b), (c), (d) and (e) apply
to expenditure incurred after 20 November 1987.
(13) The amendments made by paragraphs 21 (a) and (c) apply to dividends
paid to a shareholder on or after 1 July 1987.
(14) Section 128GB of the amended Act applies to offshore borrowings under
contracts entered into after 1 July 1986.
(15) The amendment made by section 25 applies as if it had come into
operation on 17 December 1984.
(16) The amendments made by section 26 apply to amounts received (within the
meaning of section 26AH of the Principal Act) by taxpayers on or after 1 July
1987.
(17) The amendment made by section 27 applies as if it had come into
operation on 14 February 1983.
(18) The amendments made by section 34 apply to assessments in respect of
income of the year of income in which 20 September 1985 occurred and of all
subsequent years of income.
(19) The amendments made by section 37 apply in relation to instalment
notices served after 9 December 1987.
TAXATION LAWS AMENDMENT ACT 1988No. 11, 1988
- SECT 39
Transitional-offshore banking units
39. Where at any time (in this section called an "OBU commencing time")
within the period of 6 months after the day on which this section comes into
operation, a person (in this section called a "transitional person") becomes
or first becomes an offshore banking unit under section 128AE of the Principal
Act as amended by this Part (which Act as so amended is in this section called
the "amended Act"), the following provisions have effect:
(a) section 128GB of the amended Act applies in relation to interest paid
by a transitional person after the person's OBU commencing time as if the
person had been an offshore banking unit at all times during the period
commencing on 2 July 1986 and ending immediately before the person's OBU
commencing time;
(b) for the purposes of determining whether:
(i) an amount transferred by a transitional person after the person's
OBU commencing time is tax exempt loan money of the person for the purposes of
section 128NB of the amended Act;
(ii) income derived by a transitional person after the person's OBU
commencing time was derived in respect of offshore banking transfers of the
person for the purposes of paragraph 160AE (4) (a) of the amended Act; or
(iii) dividends paid by a transitional person after the person's OBU
commencing time were paid out of profits derived by the person from the making
of offshore banking transfers for the purposes of paragraph 160AE (4) (b) of
the amended Act;
the amendments made by section 20, paragraph 21 (b) and section 23 of this
Act apply as if:
(iv) they had come into operation on 2 July 1986; and
(v) each transitional person had been an offshore banking unit at all
times during the period commencing on 2 July 1986 and ending immediately
before the person's OBU commencing time.
PART V - AMENDMENT OF THE INCOME TAX RATES ACT 1986
TAXATION LAWS AMENDMENT ACT 1988No. 11, 1988
- SECT 41
Principal Act
41. In this Part, "Principal Act" means the Income Tax Rates Act 1986*4*.
*4* No. 107, 1986, as amended. For previous amendments, see No. 60, 1987.
TAXATION LAWS AMENDMENT ACT 1988No. 11, 1988
- SECT 42
Interpretation
42. Section 3 of the Principal Act is amended by inserting "128NB," after
"128NA," in the definition of "tax" in subsection (1).
PART VI - AMENDMENT OF THE JURISDICTION OF COURTS (MISCELLANEOUS
AMENDMENTS) ACT 1987
TAXATION LAWS AMENDMENT ACT 1988No. 11, 1988
- SECT 43
Principal Act
43. In this Part, "Principal Act" means the Jurisdiction of Courts
(Miscellaneous Amendments) Act 1987*5*.
*5* No. 23, 1987.
TAXATION LAWS AMENDMENT ACT 1988No. 11, 1988
- SECT 44
Amendment of Schedule to Principal Act
44. The Schedule to the Principal Act is amended by inserting after the
amendment of subsection 42H (2) of the Sales Tax Assessment Act (No. 1) 1930
the following amendment:
"Section 44A:
Repeal the section.".
PART VII - AMENDMENT OF THE SEA INSTALLATIONS ACT 1987
TAXATION LAWS AMENDMENT ACT 1988No. 11, 1988
- SECT 45
Principal Act
45. In this Part, "Principal Act" means the Sea Installations Act 1987*6*.
*6* No. 102, 1987.
TAXATION LAWS AMENDMENT ACT 1988No. 11, 1988
- SECT 46
Schedule
46. The Schedule to the Principal Act is amended by omitting "Income Tax
Assessment Act 1936".
PART VIII - AMENDMENT OF THE TAXATION LAWS AMENDMENT ACT (No. 4) 1987
TAXATION LAWS AMENDMENT ACT 1988No. 11, 1988
- SECT 47
Principal Act
47. In this Part, "Principal Act" means the Taxation Laws Amendment Act (No.
4) 1987*7*.
*7* No. 138, 1987.
TAXATION LAWS AMENDMENT ACT 1988No. 11, 1988
- SECT 48
Transitional-Division 16F of Part III
48. Section 51 of the Principal Act is amended by omitting from subsection
(7) all the words after "Part III of the Principal Act" and substituting:
"as amended by this Part applies as if:
(a) where the accounting period would, apart from this subsection, have
ended after 30 November 1987 and before 31 January 1988:
(i) the accounting period had commenced on 1 July 1987 and ended at
the end of 31 January 1988; and
(ii) the subsequent accounting period had commenced on 1 February
1988 and ended when it would, apart from this subsection, have ended; and
(b) in any other case-the accounting period had commenced on 1 July 1987
and ended when it would, apart from this subsection, have ended.".
PART IX - AMENDMENT OF THE TAXATION LAWS AMENDMENT (FRINGE BENEFITS AND
SUBSTANTIATION) ACT 1987
TAXATION LAWS AMENDMENT ACT 1988No. 11, 1988
- SECT 49
Principal Act
49. In this Part, "Principal Act" means the Taxation Laws Amendment (Fringe
Benefits and Substantiation) Act 1987*8*.
*8* No. 139, 1987.
TAXATION LAWS AMENDMENT ACT 1988No. 11, 1988
- SECT 50
Reduction of taxable value-remote area residential fuel
50. Section 35 of the Principal Act is amended by omitting from paragraph
(b) "benefit" and substituting "fringe benefit".
Notes to the Taxation Laws Amendment Act 1988
Note 1
The Taxation Laws Amendment Act 1988 as shown in this compilation comprises
Act No. 11, 1988 amended as indicated in the Tables below.
Table of Acts
Act | Number
and year | Date
of Assent | Date of commencement | Application, saving or transitional provisions |
Taxation Laws Amendment Act 1988 | 11, 1988 | 26 Apr 1988 | See s. 2 | |
Tax Laws Amendment (2010 Measures No. 2) Act 2010 | 75, 2010 | 28 June 2010 | Schedule 6 (item 24): 29 June 2010 | — |
Table of Amendments
ad. = added or inserted am. = amended rep. = repealed rs. = repealed and substituted |
Provision affected | How affected |
S. 40................... | rep. No. 75, 2010 |
