Income Tax Assessment Act 1965 (Cth)

Income Tax Assessment

No. 103 of 1965

An Act relating to Income Tax.

[Assented to 14 December, 1965]

BE it enacted by the Queen’s Most Excellent Majesty, the Senate, and the House of Representatives of the Commonwealth of Australia, as follows:—

Short title and citation.

1.—(1.) This Act may be cited as the Income Tax Assessment Act 1965.

(2.) The Income Tax and Social Services Contribution Assessment Act 1936–1965 is in this Act referred to as the Principal Act.

(3.) The Principal Act, as amended by this Act, may be cited as the Income Tax Assessment Act 1936–1965.

Commencement.

2. This Act shall come into operation on the day on which it receives the Royal Assent.

Parts.

3. Section 5 of the Principal Act is amended by omitting the words—

“Division 2.—Collection of Income Tax and Social Services Contribution by Instalments (Sections 221a–221yaa).
“Division 3.—Provisional Tax and Contribution (Sections 221ya–221yh)”

and inserting in their stead the words—

“Division 2.—Collection of Income Tax by Instalments (Sections 221a–221yaa).
“Division 3.—Provisional Tax (Sections 221ya–221yh).”.

Definitions.

4. Section 6 of the Principal Act is amended—

(a) by omitting from sub-section (1.) the definition of “dividend (withholding) tax” and inserting in its stead the following definition:—

“‘dividend (withholding) tax’ means income tax, or income tax and social services contribution, payable in accordance with section one hundred and twenty-eight b of the Income Tax and Social Services Contribution Assessment Act 1936–1959, or of that Act as amended at any time;”;
(b)by omitting from sub-section (1.) the definition of “income tax” or “tax” and inserting in its stead the following definition:—
“‘income tax’ or ‘tax’ means income tax, or income tax and social services contribution, imposed as such by any Act, as assessed under the Income Tax Assessment Act 1936, or under that Act as amended at any time;”; and
(c) by inserting in sub-section (1.), after the definition of “shares”, the following definition:—
“‘superannuation benefits’ means individual personal benefits, pensions or retiring allowances;”.

5.After section 6 of the Principal Act the following section is inserted:—

Provisions relating to cessation of superannuation benefits.

“6a.—(1.) For the purposes of this Act—

(a)a right of a person or of his dependants to receive superannuation benefits from a fund shall be deemed to have ceased at a particular time (whether before or after the commencement of this section) if, by virtue of the terms and conditions applicable to the fund at that time, a right (including a contingent right) of the person, or of his dependants, as the case may be, to an amount that has accrued or could accrue from the fund ceased at that time otherwise than by payment of that amount to, or for the benefit of, the person or his dependants or by the transfer of that amount to another fund in which, as a result of the transfer, the person acquires, or his dependants acquire, as the case may be, a fully-secured right (including a contingent right) to receive superannuation benefits, being a right that is not less valuable than the first-mentioned right; and
(b)where a right of a person or of his dependants to receive superannuation benefits from a fund has ceased at any time (whether before or after the commencement of this section)—the amount of those benefits shall be deemed to have been so much of the amount that was

included in the fund at that time for the purpose of making provision for superannuation benefits for the person or his dependants as was not required for the purpose of providing for the person or his dependants superannuation benefits (including benefits payable at that time) the right to receive which had not ceased at or before that time.

“(2.) For the purposes of this Act, where a right of a person or of his dependants to receive superannuation benefits from a fund has ceased at any time (whether before or after the commencement of this section) and, at that time, a specific part of the amount of the fund was not appropriated for the purpose of making provision for superannuation benefits for the person or his dependants—

(a)an amount determined by the Commissioner shall be deemed to have been included in the fund at that time for that purpose;
(b)any payment made out of the fund at that time or at a later time to the person or his dependants shall be deemed to have been an application at the time at which, and for the purpose for which, the payment was made of so much of the amount determined by the Commissioner in pursuance of the last preceding paragraph as is equal to the amount of the payment; and
(c) except to the extent to which the amount determined by the Commissioner in pursuance of paragraph (a) of this sub-section is to be so deemed to have been applied by a payment out of the fund, that amount shall be deemed to have been applied in the year of income of the fund in which the right ceased, to such extent, if any, as the Commissioner determines, for the purpose of making provision for the superannuation benefits that other persons or their dependants had rights to receive from the fund.”.

6. Section 17 of the Principal Act is repealed and the following section inserted in its stead:—

Levy of income tax.

“17. Subject to this Act, income tax at the rates declared by the Parliament is levied, and shall be paid, for the financial year that commenced on the first day of July, One thousand nine hundred and sixty-five, and for each succeeding financial year, upon the taxable income derived during the year of income by any person, whether a resident or a non-resident.”.

Exemptions.

7. Section 23 of the Principal Act is amended—

(a)by omitting from sub-paragraph (i) of paragraph (ja) the words “dependants of members” and inserting in their stead the words “a spouse, child or dependant of a member”;
(b) by omitting from paragraph (s)the words “full-time duty” and inserting in their stead the words “continuous full time service”; and
(c) by inserting after paragraph (s) the following paragraph:—
“(sa)in the case of a member of the Naval Emergency Reserve Forces, the Regular Army Emergency Reserve or the Air Force Emergency Force, the pay and allowances paid to him as such a member (other than pay and allowances in respect of continuous full time service) and any gratuity paid to him by reason of a calling out for continuous service of, or a part of, the Forces or Force of which he is a member;”.

8. After section 23ab of the Principal Act the following section is inserted:—

Exemption of pay and allowances of members of Defence Force serving in special areas.

“23ac.—(1.) Pay and allowances earned by a person as a member of the Defence Force during his special service are exempt from income tax.

“(2.) Subject to this section, the special service of a member of the Defence Force, for the purposes of this section, is his service while—

(a) amember of, or attached to, a body, contingent or detachment of the Naval, Military or Air Forces of the Commonwealth at a time when it is or was allotted for duty in a special area; or
(b)a member of the Naval, Military or Air Forces of the Commonwealth allotted for duty in a special area,

but does not include service as or under an attaché at an Australian Embassy or Legation.

“(3.) For the purposes of this section, the special service of a member of the Defence Force—

(a) shall be deemed to have commenced—
(i) if he was in Australia at the time at which he was allotted for duty in a special area—at the time of his departure from the last port of call in Australia for duty in that area;

(ii) if he was outside Australia at the time at which he was allotted for duty in a special area—at the time at which he was so allotted;
(iii) if he was allotted for duty in an area before the time at which it became a special area and he was in Australia at that time—at the time of his departure from the last port of call in Australia for duty in that area; or
(iv) if he was allotted for duty in an area before the time at which it became a special area and he was outside Australia at that time—at that time;
(b) shall be deemed to have ended—
(i) on his returning to Australia—at the time at which he arrived at the first port of call in Australia, unless he left Australia for further duty in a special area within fourteen days after his arrival in Australia; or
(ii) where he was allotted for duty in an area outside Australia other than a special area—at the time at which he arrived in that area, or, if he was in that area at the time at which he was so allotted, at that time; and
(c)shall be deemed to include a period of hospital treatment on or after the first day of July, One thousand nine hundred and sixty-five, consequent upon illness contracted or injuries sustained during his special service or during service performed by him before that date that would have been special service if it had been performed on that date.

“(4.) The regulations may provide that, by reason of a state of disturbance in or affecting Borneo or Vietnam (Southern Zone), an area outside Australia shall become, on a specified date, a special area for the purposes of this section or shall be deemed to have become, on a specified date (which may be a date before the commencement of the regulations or before the commencement of this section but not before the first day of July, One thousand nine hundred and sixty-five), a special area for the purposes of this section.

“(5.) The regulations may provide that a special area shall cease, on and after a specified date, to be a special area for the purposes of this section or shall be deemed to have ceased, on and after a specified date (which may be a date before the commencement of the regulations or before the commencement of this section), to be a special area for the purposes of this section.

“(6.) Where, after the making of an assessment, regulations are made in accordance with either of the last two preceding sub-sections, nothing in any other provision of this Act prevents the amendment of the assessment at any time for the purpose of giving effect to the exclusion from, or the inclusion in, the assessable income of the taxpayer of an amount that, by virtue of the making of those regulations, is to be so excluded or included.

“(7.) In this section, ‘port’ includes airport.”.

9. Section 23f of the Principal Act is repealed and the following section inserted in its stead:—

Exemption of income of certain superannuation funds established for benefit of employees.

“23f.—(1.) In this section—

‘dependant’, in relation to an employee, includes the spouse and any child of the employee;
‘employee’, in relation to a company, includes a director of the company;
‘person’ includes a partnership;
‘superannuation fund’ means a provident, benefit, superannuation or retirement fund;
‘transaction’ includes a series of transactions.

“(2.) Subject to the succeeding provisions of this section, this section applies, in relation to a year of income, to a superannuation fund, not being a fund of a kind referred to in paragraph (jaa) of section twenty-three of this Act, if—

(a)the fund is an indefinitely continuing fund established and maintained solely for either or both of the following purposes:—
(i) the provision of superannuation benefits for employees in the event of their retirement or in other circumstances of a kind approved by the Commissioner; and
(ii) the provision of superannuation benefits for dependants of employees in the event of the death of the employees;
(b)an employer of each employee who has, or whose dependants have, a right to receive benefits from the fund contributed to the fund during the year of income;
(c) the fund was not authorized by the terms and conditions applicable to the fund at any time during the year of income to accept contributions, and did not at any time during the year of income accept contributions, other than contributions in respect of an employee who has, or whose dependants have, a right to receive benefits from the fund, being contributions made by—

(i) the employee;
(ii) an employer of the employee;
(iii) a company in which an employer of the employee has a controlling interest; or
(iv) if an employer of the employee is a company—a person who is associated with that company;
(d)the rights of employees and dependants of employees to receive benefits from the fund are fully secured;
(e) the right of each employee and his dependants to receive benefits from the fund is defined by the terms and conditions applicable to the fund and notice in writing of the existence of that right was given to the employee not later than the time when contributions were first paid to the fund in respect of the employee or of his dependants or the thirty-first day of March, One thousand nine hundred and sixty-six, whichever is the later, or before such later date as the Commissioner approves in relation to the employee;
(f)where a right of an employee or of the dependants of an employee to receive benefits from the fund has ceased during the year of income and, at the time of the cessation of the right, a specific part of the amount of the fund was appropriated for the provision of benefits for the employee or his dependants—the amount of the benefits the right to receive which has so ceased is applied in the year of income or in the period of two months after the year of income, or is to be applied after the year of income in accordance with an undertaking by the trustee of the fund given to, and approved by, the Commissioner, being an undertaking that has effect in relation to the year of income, for all or any of the following purposes:—
(i) the provision of the benefits that other employees or their dependants have rights to receive from the fund;
(ii) the provision for other employees or their dependants who have rights to receive benefits from the fund of additional benefits on a basis that is reasonable, having regard to all the circumstances; and
(iii) any other purposes approved by the Commissioner;

(g) where a right of an employee or of the dependants of an employee to receive benefits from the fund has ceased during the year of income and, at the time of the cessation of the right, a specific part of the amount of the fund was not appropriated for the provision of benefits for the employee or his dependants—any additional benefits that have been, or are to be, provided from the fund for other employees or their dependants by reason of the cessation of the right have been, or are to be, provided on a basis that is reasonable, having regard to all the circumstances;
(h)the benefits that any employee has, or the dependants of any employee have, the right to receive from the fund are not excessive in amount having regard to—
(i) the remuneration paid to the employee for services rendered by him to his employer;
(ii) the period of the service rendered by the employee to his employer;
(iii) the benefits, pensions and allowances that have been, are being or may be provided for the employee or his dependants from any other fund to which this section applies in relation to the year of income or has applied in relation to a previous year of income; and
(iv) any other matters that the Commissioner considers relevant; and
(i) the amount of the fund is not substantially in excess of the amount that is necessary for the purpose of providing benefits that employees and their dependants have rights to receive from the fund having regard to the contributions that are expected to be made to the fund in succeeding years of income in relation to those employees and their dependants and to the income that is expected to be derived by the fund in succeeding years of income.

“(3.) Where a deed or instrument relating to a superannuation fund contains a provision the purpose of which is to avoid a breach of a rule of law relating to perpetuities, the provision does not prevent the fund from being treated as an indefinitely continuing fund for the purposes of paragraph (a) of the last preceding sub-section.

“(4.) For the purposes of sub-paragraph (iv) of paragraph (c) of sub-section (2.) of this section, a person is associated with a company that is an employer of an employee if—

(a) the person has a controlling interest in the employer;

(b)the person is a company in which a controlling interest is held by a person who also has a controlling interest in the employer; or
(c)the person is the beneficial owner of shares in the employer and is not connected with the employee.

“(5.) For the purposes of paragraph (c) of the last preceding sub-section, a person is connected with an employee if—

(a)the person is a relative of the employee;
(b)the person is a partnership and a partner in the partnership is connected with the employee; or
(c) the person is a company that is a private company in relation to the year of income and, at any time during the year of income—
(i) the employee, or a relative of the employee, was a director of the company;
(ii) shares in the company were beneficially owned by, or held indirectly on behalf of or for the benefit of, the employee or a relative of the employee;
(iii) the employee, or a relative of the employee, was a director of another company that is a private company in relation to the year of income of that other company that corresponded to the first-mentioned year of income and shares in the first-mentioned company were beneficially owned by, or held indirectly on behalf of or for the benefit of, the other company; or
(iv) the employee, or a relative of the employee, was the beneficial owner of shares in, or was a director of, another company that is a private company in relation to the year of income of that other company that corresponded to the first-mentioned year of income and shares in the other company were beneficially owned by, or held indirectly on behalf of or for the benefit of, the first-mentioned company or a person who beneficially owned shares in the first-mentioned company or on whose behalf or for whose benefit shares in the first-mentioned company were indirectly held.

“(6.) In the application of the last preceding sub-section, shares in a company that is a private company in relation to the year of income shall be deemed to be held indirectly on behalf of or for the benefit of a person (not being a trustee or partnership), whether or not the shares are also to be deemed by virtue of this sub-section to be held indirectly on behalf of or for the benefit of another person, if, in the event of the payment of a dividend on those shares, the first-mentioned person would, otherwise than as a shareholder in the company, receive the whole or a part of that dividend if there were successive distributions of the relative parts of that dividend to and by each of any private companies, trustees or partnerships interposed between the company paying the dividend and that person.

“(7.) Where a requirement specified in sub-section (2.) of this section has not been complied with in relation to a superannuation fund in relation to a year of income but the trustee of the fund satisfies the Commissioner that, by reason of special circumstances that existed in relation to the fund during that year of income, it would be reasonable for this section to have effect as if that requirement had been complied with, this section has effect as if that requirement had been complied with.

“(8.) Where the trustee of a superannuation fund has given an undertaking in relation to the fund for the purposes of paragraph (f) of sub-section (2.) of this section, he may at any time give a fresh undertaking in relation to that fund for the purposes of that paragraph in substitution for the first-mentioned undertaking but the fresh undertaking does not have effect unless it is approved by the Commissioner.

“(9.) An undertaking by the trustee of a superannuation fund for the purposes of paragraph (f) of sub-section (2.) of this section—

(a)shall be in writing signed by or on behalf of the trustee;

(b) shall make provision that any amounts to which the undertaking relates will be applied in accordance with the undertaking within a time that is reasonable having regard to all the circumstances of the fund; and
(c) shall be lodged with the Commissioner.

“(10.) Subject to this section, an undertaking approved by the Commissioner in relation to a superannuation fund for the purposes of paragraph (f)of sub-section (2.) of this section has effect in relation to a year of income of the fund if the undertaking was lodged with the Commissioner before or during that year of income of the fund or within two months, or such further period as the Commissioner allows, after that year of income of the fund.

“(11.) Subject to sub-section (13.) of this section, where an undertaking approved by the Commissioner in relation to a

superannuation fund for the purposes of paragraph (f) of sub-section (2.) of this section was not complied with during a year of income of the fund in relation to which it had effect—

(a)for the purposes of sub-section (15.) of this section and of this Act other than this section, this section shall be deemed not to have applied to the fund in relation to that year of income of the fund; and
(b)the undertaking does not have effect, and shall be deemed not to have had effect, in relation to any succeeding year of income of the fund.

“(12.) Where it appears to the Commissioner that an undertaking referred to in the last preceding sub-section was not complied with during a year of income, he shall inform the trustee of the fund in writing of the respect in which, in the opinion of the Commissioner, the undertaking was not complied with.

“(13.) For the purposes of sub-section (11.) of this section, the Commissioner shall disregard any failure by a trustee of a superannuation fund to comply during a year of income of the fund with an undertaking if he is satisfied that the trustee of the fund endeavoured in good faith during that year of income to comply with the undertaking and that, in all the circumstances, it would be reasonable to disregard the failure.

“(14.) The application of paragraph (b)of sub-section (11.) of this section to an undertaking in relation to a superannuation fund does not prevent the Commissioner approving a fresh undertaking given in relation to the fund.

“(15.) Subject to the next three succeeding sub-sections, the income derived during the year of income by a superannuation fund to which this section applies in relation to the year of income is exempt from income tax.

“(16.) A dividend paid to a superannuation fund by a company that is a private company in relation to the year of income of the company in which the dividend was paid is not exempt from income tax by virtue of the last preceding sub-section unless the Commissioner is of the opinion that it would be reasonable to exempt the dividend from income tax, having regard to—

(a)the paid-up value of the shares in that company that are assets of the fund;
(b)the cost to the fund of the shares on which the dividend was paid by the company;
(c) the rate of the dividend paid to the fund by the company on the shares in the company that are assets of the fund;
(d)whether the company has paid a dividend on other shares in the company and, if so, the rate of that dividend;

(e)whether any shares have been issued by the company to the fund in satisfaction of, or of a part of, a dividend paid by the company and, if so, the circumstances of the issue of those shares; and
(f) any other matters that the Commissioner considers relevant.

“(17.) For the purposes of the last preceding sub-section, income that, in the opinion of the Commissioner, was derived by a superannuation fund indirectly from a dividend paid by a company, being a private company in relation to the year of income of the company in which the dividend was paid, shall be deemed to have been a dividend paid to the fund by the company.

“(18.) Income (other than a dividend to which sub-section (16.) of this section applies) derived by a superannuation fund from a transaction is not exempt from income tax by virtue of sub-section (15.) of this section if the parties to the transaction were not dealing with each other at arm’s length in relation to the transaction and that income is greater than the income that might have been expected to have been derived by the fund from the transaction if those parties had been dealing with each other at arm’s length in relation to the transaction.”.

Certain items of assessable income.

10. Section 26 of the Principal Act is amended by inserting after paragraph (j) the following paragraph:—

“(ja)any amount received in pursuance of the Decimal Currency Board Act 1963–1965 in respect of trading stock;”.

11. After section 26b of the Principal Act the following section is inserted:—

Double wool clips in 1964–65 income year.

“26ba.—(1.) Where—

(a) during the year of income that ended on the thirtieth day of June, One thousand nine hundred and sixty-five, the taxpayer carried on a business of primary production in Australia;
(b)the assessable income of the taxpayer of that year of income includes proceeds of the sale of wool—
(i) that was shorn in that year of income from sheep being assets of that business; or
(ii) that was shorn in the immediately preceding year of income from sheep being assets of that business but was on hand at the beginning of the first-mentioned year of income and the value of which is taken into account for the purposes of section twenty-eight of this Act at the beginning of the first-mentioned year of income at its cost price;

(c) by reason of drought in an area in Australia in which the taxpayer carried on that business, another shearing of any sheep being assets of that business took place at a time earlier than the time at which, but for the drought, that shearing would ordinarily have taken place; and
(d)the assessable income of the taxpayer of the first-mentioned year of income includes proceeds of the sale of wool that was shorn at that other shearing,

the taxpayer may elect that this section shall apply in relation to the profit on the sale of the wool that was shorn at that other shearing and the proceeds of the sale of which are so included in the assessable income of the taxpayer of the first-mentioned year of income.

“(2.) Where any sheep were assets of a partnership and, if the sheep had been owned by a person otherwise than as a partner or a trustee of a trust estate, that person would be entitled to make an election under the last preceding sub-section in relation to the profit on the sale of wool shorn from the sheep, each partner in the partnership may make an election under that sub-section in relation to the part of the profit on the sale of the wool that is included in his individual interest in the net income of the partnership.

“(3.) Where any sheep referred to in sub-section (1.) of this section were assets of a business carried on by the trustee of a trust estate—

(a)the trustee may make an election under sub-section (1.) of this section in relation only to the part of the profit on the sale of the wool that is included in the net income of the trust estate in respect of which the trustee is liable to be assessed and to pay tax under the provisions of Division 6 of this Part; and
(b)each beneficiary in the trust estate who is not under a legal disability and is presently entitled to a share of the net income of the trust estate, being a share that includes a part of the profit on the sale of the wool, may make an election under that sub-section in relation to that part.

“(4.) Where a taxpayer makes an election under sub-section (1.) of this section—

(a)the assessable income of the taxpayer of the year of income referred to in paragraph (a)of that sub-section shall be reduced by an amount equal to the profit on the sale of the wool or the part of the profit on the sale of the wool to which his election relates; and
(b)there shall be included in the assessable income of the taxpayer of the next succeeding year of income an amount equal to that profit or that part of that profit,

and the amount so included shall, for the purposes of this Act, be deemed to be derived by the taxpayer during that succeeding year of income from the carrying on by him in Australia, during that year of income, of a business of primary production.

“(5.) Where a taxpayer, other than a trustee, who would have been entitled to make an election under sub-section (1.) of this section has died before the end of the year of income that ended on the thirtieth day of June, One thousand nine hundred and sixty-five, the election may be made under that sub-section by the trustee of his estate and, where such an election is made, there shall be included in the assessable income of the estate of the deceased taxpayer of the year of income that commenced on the first day of July, One thousand nine hundred and sixty-five, an amount equal to the profit on the sale of the wool or the part of the profit on the sale of the wool to which the election relates, and, for the purposes of this Act, the amount so included shall be deemed to be derived by the trustee during that year of income from the carrying on by him in Australia, during that year of income, of a business of primary production and shall be deemed to be income to which no beneficiary is presently entitled.

“(6.) An election under sub-section (1.) of this section shall be made in writing and lodged with the Commissioner on or before the thirty-first day of December, One thousand nine hundred and sixty-five, or the date of lodgment of the return of income of the taxpayer, or, if the taxpayer has died and the election is made under the last preceding sub-section by the trustee of his estate, the date of lodgment of the return of income of the deceased taxpayer, of the year of income that ended on the thirtieth day of June of that year, whichever is the later, or on or before such later date as the Commissioner allows.

“(7.) In this section, a reference to the profit on the sale of any wool shall be read as a reference to the amount remaining after deducting from the proceeds of the sale of the wool the expenses incurred by the taxpayer in that year of income that are directly attributable to the shearing and sale of the wool.

“(8.) Notwithstanding anything in any other provision of this Act, the Commissioner may amend an assessment for the purpose of giving effect to this section.”.

Disposal of certain securities.

12. Section 26c of the Principal Act is amended by omitting sub-section (3.) and inserting in its stead the following sub-sections:—

“(3.) An amount that is included in the assessable income of a taxpayer in accordance with this section by reason of the disposal or redemption of a prescribed security other than a prescribed

security to which the next succeeding sub-section applies shall, for the purposes of this Act, be deemed to be interest of a kind to which section one hundred and sixty ab of this Act applies.

“(3a.) An amount that is included in the assessable income of a taxpayer in accordance with this section by reason of the disposal or redemption of a prescribed security, being a security of the kind known as a Treasury Note or being stock issued on the same terms and conditions as a security of that kind, shall, for the purposes of this Act, be deemed to be interest and—

(a)if the prescribed security was or is issued on or before such date as is fixed by Proclamation—be deemed to be interest of a kind to which section one hundred and sixty ab of this Act applies; and
(b)if the prescribed security is issued after that date—be deemed not to be interest of a kind to which that section applies.”.

Dividends.

13. Section 44 of the Principal Act is amended—

(a) by inserting in sub-section (1.), after the words “this section”, the words to the next succeeding section”;
(b)by inserting in sub-paragraph (iii) of paragraph (b) of sub-section (2.), after the word “shares” (last occurring), the words “(other than redeemable shares)”; and
(c) by inserting after sub-section (2c.) the following sub-sections:—
“(2d.) For the purposes of sub-paragraph (iii) of paragraph (b)of sub-section (2.) of this section, a share issued by a company shall be deemed to be a redeemable share if—
(a)the share is, or at the option of the company is to be, liable to be redeemed; or
(b)the share was issued in pursuance of, or as part of, an agreement or arrangement, whether oral or in writing and whether entered into before or after the commencement of this sub-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.
“(2e.) Notwithstanding anything in any other provision of this Act, the Commissioner may amend an assessment for the purpose of giving effect to the last preceding sub-section if the amendment is made within three years after the date upon which the tax became due and payable under the assessment.”.

14. After section 44 of the Principal Act the following section is inserted:—

Certain dividends paid by companies incorporated in the Territory of Papua and New Guinea.

“44a.—(1.) Subject to this section, the assessable income of a shareholder who is a resident of Australia does not include dividends paid after the first day of April, One thousand nine hundred and sixty-five, by a company incorporated in the Territory of Papua and New Guinea, to the extent to which the dividends—

(a)were, or are, paid out of income that is pioneer income for the purposes of Part III. of the Industrial Development (Incentives to Pioneer Industries) Ordinance 1965 of that Territory, or of that Ordinance as in force as amended at any relevant time; and
(b)are, by virtue of that Ordinance, or of that Ordinance as in force as so amended, exempt from income tax under the Income Tax Ordinances of the Territory of Papua and New Guinea.

“(2.) The regulations may provide that this section shall not apply in relation to any dividends, or any parts of any dividends, that are paid on or after a specified date or have been paid on or after a specified date (which may be a date before the commencement of the regulations or before the commencement of this section), to the extent to which the dividends or parts of dividends are, or have been, paid out of income derived from engaging in a specified industry in the Territory of Papua and New Guinea.

“(3.) Where, but for this sub-section, sub-section (1.) of this section would apply in relation to any dividends or a part of any dividends and those dividends cease, or that part of those dividends ceases, by reason of the cancellation of a Pioneer Certificate issued under the Industrial Development (Incentives to Pioneer Industries) Ordinance 1965 of the Territory of Papua and New Guinea, or under that Ordinance as in force as amended at any relevant time, to be exempt from income tax under the Income Tax Ordinances of the Territory of Papua and New Guinea, that sub-section does not apply, and shall be deemed not to have applied, in relation to those dividends or that part of those dividends.

“(4.) Notwithstanding anything in any other provision of this Act, the Commissioner may amend an assessment for the purpose of giving effect to the last preceding sub-section if the amendment is made within six years after the date upon which the tax became due and payable under the assessment.”.

15. After section 53e of the Principal Act the following section is inserted:—

Cost of converting plant for use in connexion with decimal currency system to be allowable deduction.

“53f.—(1.) In this section—

‘conversion costs’, in relation to a unit of property, means expenditure incurred by the taxpayer in converting or adapting the unit for use in connexion with the system of currency provided for by Part II. of the Currency Act 1965; and
‘unit of property’ means a unit of property not being trading stock of the taxpayer.

“(2.) Conversion costs incurred by the taxpayer in the year of income in respect of a unit of property used by him for the purpose of producing assessable income or carrying on a business for that purpose shall, subject to this section, be an allowable deduction.

“(3.) For the purposes of this Act—

(a)no part of any conversion costs shall be an allowable deduction, or be taken into account in ascertaining the amount of an allowable deduction, under a provision of this Act other than this section in the assessment of the taxpayer in respect of income of any year of income; and
(b)conversion costs shall be deemed not to be capital expenditure or expenditure of a capital nature.

“(4.) Notwithstanding anything in any other provision of this Act, the Commissioner may amend an assessment in respect of income of any year of income before the year of income that commenced on the first day of July, One thousand nine hundred and sixty-five, for the purpose of giving effect to this section.”.

16. After section 62 of the Principal Act the following section is inserted:—

Provisions relating to compensation payments for conversion of plant for use in connexion with the decimal currency system.

“62aaa.—(1.) In this section—

‘compensation payment’, in relation to a unit of property, means a payment received by the taxpayer in respect of the unit in pursuance of the Decimal Currency Board Act 1963–1965; and
‘unit of property’ means a unit of property not being trading stock of the taxpayer.

“(2.) For the purpose of calculating the depreciation allowable under this Act in respect of a unit of property in respect of which a compensation payment has been, or is, or compensation payments have been, or are, received by the taxpayer during a year of income, the depreciated value of the unit at the end of that year of income shall be deemed to have been, or to be, as the case may be, reduced by so much of the amount of that payment, or of the sum of the amounts of those payments, as does not exceed the amount that, but for this sub-section, would have been, or would be, as the case may be, the depreciated value of the unit at the end of that year of income.

“(3.) Where the amount of a compensation payment that has been, or is, or the sum of the amounts of any compensation payments that have been, or are, received by a taxpayer during a year of income in respect of a unit of property exceeds the amount that, but for the last preceding sub-section, would have been, or would be, as the case may be, the depreciated value of the unit at the end of that year of income, the Commissioner shall successively reduce the respective depreciated values, at the end of that year of income, of—

(a)any unit of property acquired by the taxpayer during that year of income to replace the first-mentioned unit of property;
(b) any other unit of property acquired by the taxpayer during that year of income, being a unit of property of a description, or having a use, similar to that of the first-mentioned unit of property;
(c) any other unit of property acquired by the taxpayer during that year of income;
(d)any other unit of property owned by the taxpayer, being a unit of property of a description, or having a use, similar to that of the first-mentioned unit of property; and
(e)any other units of property owned by the taxpayer,

by such amounts as are not, in the aggregate, greater than the amount of the excess.

“(4.) An amount equal to so much, if any, of the amount of the excess referred to in the last preceding sub-section as is greater than the sum of the reductions made under that sub-section shall be included in the assessable income of the taxpayer of the year of income referred to in that sub-section.

“(5.) Where a unit of property of the taxpayer has been, or is, disposed of, lost or destroyed and the taxpayer has received, or receives, a compensation payment in respect of the unit in the

year of income in which the disposal, loss or destruction took place or takes place—

(a)the depreciated value of the unit immediately before the disposal, loss or destruction shall be deemed to have been reduced by so much of the amount of the compensation payment as does not exceed the amount that, but for this paragraph, would have been, or would be, as the case may be, that depreciated value; and
(b)if the compensation payment exceeds that last-mentioned amount—
(i) the Commissioner shall successively reduce the respective depreciated values, at the end of that year of income, of the units of property referred to in paragraphs (a) to (e), inclusive, of sub-section (3.) of this section by such amounts as are not, in the aggregate, greater than the amount of the excess; and
(ii) an amount equal to so much, if any, of the amount of the excess as is greater than the sum of the reductions made under the last preceding sub-paragraph shall be included in the assessable income of the taxpayer of that year of income.

“(6.) Where a unit of property of the taxpayer has been, or is, disposed of, lost or destroyed and the taxpayer has received, or receives, a compensation payment in respect of the unit in a year of income succeeding the year of income in which the disposal, loss or destruction took place or takes place, sub-sections (3.) and (4.) of this section do not apply in relation to that payment but—

(a)the Commissioner shall successively reduce the respective depreciated values, at the end of the year of income in which the payment was, or is, received, of—
(i) any unit of property acquired by the taxpayer during that year of income to replace the first-mentioned unit of property;
(ii) any other unit of property acquired by the taxpayer during that year of income, being a unit of property of a description, or having a use, similar to that of the first-mentioned unit of property;
(iii) any other unit of property acquired by the taxpayer during that year of income;
(iv) any other unit of property owned by the taxpayer, being a unit of property of a description, or having a use, similar to that of the first-mentioned unit of property; and

(v) any other units of property owned by the taxpayer,
by such amounts as are not, in the aggregate, greater than the amount of the payment; and
(b)an amount equal to so much, if any, of the amount of the payment as is greater than the sum of the reductions made under the last preceding paragraph shall be included in the assessable income of the taxpayer of the year of income in which the payment was, or is, received.

“(7.) The depreciated value of a unit of property shall not be reduced under sub-section (3.), paragraph (b)of sub-section (5.) or sub-section (6.) of this section unless—

(a)at the end of the year of income, the unit was used exclusively for the purpose of producing assessable income or had been installed ready for use exclusively for that purpose and was held in reserve; and
(b)depreciation under this Act is allowable to the taxpayer in respect of the unit.

“(8.) An amount by which the depreciated value of a unit of property has been reduced in pursuance of this section shall, for the purposes of this Act, be deemed to be depreciation that has been allowed in respect of that unit in the assessment in which the reduction was made.”.

Subscriptions to associations.

17. Section 73 of the Principal Act is amended by omitting paragraph (b)of sub-section (2.) and inserting in its stead the following paragraph:—

“(b)so much, if any, of the subscriptions, levies or contributions as has been, or will be, applied by the association to meet losses or outgoings incurred in carrying out that activity other than losses or outgoings of capital or of a capital nature.”.

18. Section 79 of the Principal Act is repealed and the following section inserted in its stead:—

Five per centum of cost of assets of superannuation fund established for benefit of employees and other persons to be allowable deduction.

“79.—(1.) In this section—

‘asset’ does not include a policy as defined by sub-section (1.) of section four of the Life Insurance Act 1945–1961;
‘dependant’, in relation to a member of a superannuation fund, includes the spouse and any child of the member;
‘prescribed asset’, in relation to a superannuation fund in relation to a year of income, means an asset that was included in the assets of the fund at the end of that year of income;

‘superannuation fund’ means a provident, benefit, superannuation or retirement fund, not being—
(a) a fund of a kind referred to in paragraph (Jaa) of section twenty-three of this Act;
(b)a fund the income of which is, or, but for Division 9b of this Part, would be, exempt from income tax by virtue of paragraph (ja)of section twenty-three of this Act, irrespective of whether that income would be so exempt by virtue of any other paragraph of that section; or
(c) a fund to which section twenty-three f of this Act applies in relation to the year of income;
‘the borrowings’, in relation to a superannuation fund in relation to a year of income, means the total of the amounts borrowed by the fund before or during that year of income other than any of those amounts wholly repaid before the end of that year of income;
‘the unrepaid borrowings’, in relation to a superannuation fund in relation to a year of income, means so much of the borrowings of the fund as was not repaid before the end of that year of income.

“(2.) Subject to the succeeding provisions of this section, this section applies, in relation to a year of income, to a superannuation fund if—

(a)the fund is an indefinitely continuing fund established and maintained solely for either or both of the following purposes:—
(i) the provision of superannuation benefits for each of the members of the fund in the event of the retirement of the member from any business, trade, profession, vocation, calling, occupation or employment in which he is engaged; and
(ii) the provision of superannuation benefits for dependants of each of the members of the fund in the event of the death of the member,
or for either or both of those purposes and for such incidental and ancillary purposes as the Commissioner approves;
(b)the rights of members of the fund and dependants of members to receive benefits from the fund are fully secured;
(c) the right of each member of the fund and his dependants to receive benefits from the fund is defined by the terms and conditions applicable to the fund and notice in writing of the existence of that right was given to the member not later than the time when contributions were first paid to the fund in respect of the member

or of his dependants or the thirty-first day of March, One thousand nine hundred and sixty-six, whichever is the later, or before such later date as the Commissioner approves in relation to the member;
(d)where a right of a member of the fund or of the dependants of a member to receive benefits from the fund has ceased during the year of income and, at the time of the cessation of the right, a specific part of the amount of the fund was appropriated for the provision of benefits for the member or his dependants—the amount of the benefits the right to receive which has so ceased is applied in the year of income or in the period of two months after the year of income, or is to be applied after the year of income in accordance with an undertaking by the trustee of the fund given to, and approved by, the Commissioner, being an undertaking that has effect in relation to the year of income, for all or any of the following purposes:—
(i) the provision of the benefits that other members of the fund or their dependants have rights to receive from the fund;
(ii) the provision for other members of the fund or their dependants who have rights to receive benefits from the fund of additional benefits on a basis that is reasonable, having regard to all the circumstances; and
(iii) any other purposes approved by the Commissioner;
(e)where a right of a member of the fund or of the dependants of a member to receive benefits from the fund has ceased during the year of income and, at the time of the cessation of the right, a specific part of the amount of the fund was not appropriated for the provision of benefits for the member or his dependants—any additional benefits that have been, or are to be, provided from the fund for other members of the fund or their dependants by reason of the cessation of the right have been, or are to be, provided on a basis that is reasonable, having regard to all the circumstances; and
(f) at all times during the year of income, the terms and conditions that were applicable to the fund—
(i) did not permit a member of the fund or dependants of a member to receive, otherwise than in the event of the death, sickness or permanent incapacity for work of the member or in such other circumstances as the Commissioner approves, any benefits from the fund before the sixtieth anniversary of the birth of the member;

(ii) required that any pension or annuity that a member had a right to receive from the fund was to commence to be paid, and any other benefits that a member had a right to receive from the fund were to be paid, not later than the seventieth anniversary of the birth of the member; and
(iii) required that any pensions or annuities that dependants of a member had a right to receive from the fund were to commence to be paid, and any other benefits that dependants of a member had a right to receive from the fund were to be paid, not later than the seventieth anniversary of the birth of the member or were to commence to be paid or were to be paid, as the case may be, in the event of the death of the member before that anniversary,

and the terms and conditions applicable to the fund during the year of income have been approved by the Commissioner having regard to—

(g) the reasonableness of the benefits that have been, are being or may be provided for members of the fund or their dependants from the fund, or from any other fund being—
(i) a fund of a kind referred to in paragraph (jaa) of section twenty-three of this Act;
(ii) a fund any income of which is or has been, or, but for Division 9b of this Part, would be or would have been, exempt from income tax by virtue of paragraph (ja) of section twenty-three of this Act; or
(iii) a fund to which this section or section twenty-three f of this Act applies in relation to the year of income or has applied in relation to a previous year of income;
(h)the amount of the fund in relation to the benefits that are being or may be provided for its members; and
(i) such other matters as the Commissioner thinks fit, and were complied with by the trustee of the fund during the year of income.

“(4.) Where the trustee of a superannuation fund has given an undertaking in relation to the fund for the purposes of paragraph (d)of sub-section (2.) of this section, he may at any time give a fresh undertaking in relation to that fund for the purposes of that paragraph in substitution for the first-mentioned undertaking but the fresh undertaking does not have effect unless it is approved by the Commissioner.

“(5.) An undertaking by the trustee of a superannuation fund for the purposes of paragraph (d)of sub-section (2.) of this section—

(a)shall be in writing signed by or on behalf of the trustee;
(b)shall make provision that any amounts to which the undertaking relates will be applied in accordance with the undertaking within a time that is reasonable having regard to all the circumstances of the fund; and
(c) shall be lodged with the Commissioner.

“(6.) Subject to this section, an undertaking approved by the Commissioner in relation to a superannuation fund for the purposes of paragraph (d)of sub-section (2.) of this section has effect in relation to a year of income of the fund if the undertaking was lodged with the Commissioner before or during that year of income of the fund or within two months, or such further period as the Commissioner allows, after that year of income of the fund.

“(7.) Subject to sub-section (9.) of this section, where an undertaking approved by the Commissioner in relation to a superannuation fund for the purposes of paragraph (d)of sub-section (2.) of this section was not complied with during a year of income of the fund in relation to which it had effect—

(a)for the purposes of sub-section (12.) of this section and of this Act other than this section, this section shall be deemed not to have applied to the fund in relation to that year of income of the fund; and
(b)the undertaking does not have effect, and shall be deemed not to have had effect, in relation to any succeeding year of income of the fund.

“(8.) Where it appears to the Commissioner that an undertaking referred to in the last preceding sub-section was not complied with during a year of income, he shall inform the trustee of the fund in writing of the respect in which, in the opinion of the Commissioner, the undertaking was not complied with.

“(9.) For the purposes of sub-section (7.) of this section, the Commissioner shall disregard any failure by a trustee of a superannuation fund to comply during a year of income of the fund with an undertaking if he is satisfied that the trustee of the fund endeavoured in good faith during that year of income to comply with the undertaking and that, in all the circumstances, it would be reasonable to disregard the failure.

“(10.) The application of paragraph (b)of sub-section (7.) of this section to an undertaking in relation to a superannuation fund does not prevent the Commissioner approving a fresh undertaking given in relation to the fund.

“(11.) Where, by virtue of the terms and conditions that were applicable to a superannuation fund at all times during a year of income—

(a)a pension or annuity was to commence to be paid from the fund to a member not later than the seventieth anniversary of his birth; and
(b)a pension or annuity was to commence to be paid from the fund to a dependant of the member in the event of the death of the member,

those terms and conditions shall be deemed, in relation to the last-mentioned pension or annuity, to have complied with the requirements of sub-paragraph (iii) of paragraph (f) of sub-section (2.) of this section notwithstanding that that pension or annuity might not commence to be paid before the seventieth anniversary of the birth of the member.

“(12.) An amount equal to five per centum of the cost of the prescribed assets of a superannuation fund to which this section applies in relation to the year of income is an allowable deduction in the assessment of the trustee of the fund in respect of income derived by the fund during the year of income.

“(13.) Where, during the year of income, a superannuation fund derived from a prescribed asset income no part of which is taken into account in calculating in accordance with section one hundred and twenty-one ba of this Act the net income of the fund in relation to the year of income, the cost of the prescribed assets shall, for the purposes of the last preceding sub-section, be deemed not to include the cost of the first-mentioned asset.

“(14.) Where, during the year of income, a superannuation fund derived from a prescribed asset income a part only of which is taken into account in calculating in accordance with section one hundred and twenty-one ba of this Act the net income of the fund in relation to the year of income, the cost of the prescribed assets shall, for the purposes of sub-section (12.) of this section, be deemed to include only so much of the cost of the first-mentioned asset as bears to that cost the same proportion as that part of that income bears to the total amount of income derived by the fund from that asset during the year of income.

“(15.) Where—

(a) a superannuation fund did not derive any income during the year of income from a prescribed asset but derived income from that asset in a preceding year of income; and

(b)during the year of income in which the fund last derived income from that asset, no part of that income was taken into account in calculating in accordance with section one hundred and twenty-one ba of this Act the net income of the fund in relation to that year of income or, in the opinion of the Commissioner, would have been so taken into account if that section had been in force and had applied in respect of income of the fund derived during that year of income,

“(16.) Where—

(a)a superannuation fund did not derive any income during the year of income from a prescribed asset but derived income from that asset in a preceding year of income; and
(b)during the year of income in which the fund last derived income from that asset, a part only of that income was taken into account in calculating in accordance with section one hundred and twenty-one ba of this Act the net income of the fund in relation to that year of income or, in the opinion of the Commissioner, would have been so taken into account if that section had been in force and had applied in respect of income of the fund derived during that year of income,

the cost of the assets that were included in the assets of the fund at the end of the first-mentioned year of income shall, for the purposes of sub-section (12.) of this section, be deemed to include only so much of the cost of the first-mentioned asset as bears to that cost the same proportion as that part of the income derived by the fund from that asset during the year of income referred to in paragraph (b) of this sub-section bears to the total amount of income derived by the fund from that asset during that last-mentioned year of income.

“(17.) Where the whole or any part of the consideration for the acquisition of a prescribed asset was not paid before the end of the year of income and the whole or any part of the cost of that asset was, for the purposes of sub-section (12.) of this section, included in the cost of the prescribed assets, the cost of the prescribed assets shall, for the purposes of that sub-section, be deemed to be reduced—

(a)if the whole of the cost of the first-mentioned asset was, for the purposes of that sub-section, included in the cost of the prescribed assets—by the amount of the unpaid consideration; or

(b)if part of the cost of the first-mentioned asset was, for the purposes of that sub-section, so included—by so much of the amount of the unpaid consideration as bears to that amount the same proportion as that part of the cost of the first-mentioned asset bears to the cost of that asset.

“(18.) Subject to the next two succeeding sub-sections, the cost of the prescribed assets of a superannuation fund shall, for the purposes of sub-section (12.) of this section, be deemed to be reduced by an amount equal to the unrepaid borrowings, if any, of the fund.

“(19.) Where the whole of the borrowings of the fund was expended in the acquisition of prescribed assets and no part of the cost of the assets acquired by that expenditure was, for the purposes of sub-section (12.) of this section, included in the cost of the prescribed assets, the last preceding sub-section does not apply in relation to the fund in relation to the year of income.

“(2.) Where the amount of the compensation payment, or the sum of the amounts of the compensation payments, does not exceed the amount that, but for this section, would have been, or would be, the residual capital expenditure of the taxpayer, as at the end of the year of income, the residual capital expenditure, as at the end of the year of income, shall be deemed to have been, or to be reduced by the amount of that payment or by the sum of the amounts of those payments, as the case may be.

“(3.) Where the amount of the compensation payment, or the sum of the amounts of the compensation payments, exceeds the amount that, but for this section, would have been, or would be, the residual capital expenditure of the taxpayer, as at the end of the year of income—

(a)the residual capital expenditure, as at the end of the year of income, shall be deemed to have been, or to be, reduced by an amount equal to the amount of that residual capital expenditure; and
(b)an amount equal to the amount of the excess shall be included in the assessable income of the taxpayer of the year of income.

“(4.) For the purposes of section one hundred and twenty-four of this Act, the amount of a reduction that has been made in accordance with either of the last two preceding sub-sections shall be deemed to have successively reduced—

(a)if the unit of property in respect of which the compensation payment was, or the compensation payments were, received was disposed of, lost or destroyed, or the use of that unit of property for mining operations was otherwise terminated, in the year of income in which the compensation payment was, or the compensation payments were, received or in a succeeding year of income—the total expenditure of a capital nature by the taxpayer on that unit of property;
(b)the total expenditure of a capital nature by the taxpayer on a unit of property in respect of which such expenditure was incurred during the year of income and which was acquired to replace the unit of property in respect of which the compensation payment was, or the compensation payments were, received;
(c) the total expenditure of a capital nature by the taxpayer on any other units of property in respect of which such expenditure was incurred during the year of income; and
(d) the total expenditure of a capital nature by the taxpayer on any other units of property in respect of which such expenditure was incurred during a year of income before the year of income,

by amounts that do not respectively exceed, in the case of each unit of property, the amount by which the total expenditure of a

capital nature by the taxpayer on the unit is greater than the sum of the deductions, in respect of that expenditure, allowed or allowable, under this Division or under provisions, relating to the taxation of income derived from mining operations, of a previous law of the Commonwealth.

“(5.) In the application of sub-section (2.) of section one hundred and twenty-four of this Act in relation to a unit of property, the expression ‘the sum of those deductions’ shall be read as a reference to that sum increased by the sum of any amounts that, by virtue of the last preceding sub-section, are to be deemed to have reduced the total expenditure of a capital nature by the taxpayer on that unit of property.

“(6.) In this section—

‘compensation payment’, in relation to a unit of property, means a payment received by the taxpayer in respect of the unit in pursuance of the Decimal Currency Board Act 1963–1965; and
‘residual capital expenditure’, in relation to a taxpayer, means the amount that is the residual capital expenditure of the taxpayer for the purposes of section one hundred and twenty-two of this Act.”.

Unrecouped capital expenditure.

33. Section 124df of the Principal Act is amended by inserting after paragraph (g) the following paragraph:—

“(h)the sum of any amounts received by the taxpayer before or during that year of income in pursuance of the Decimal Currency Board Act 1963–1965 in respect of any property in respect of which allowable capital expenditure has been incurred by the taxpayer before or during that year of income.”.

Interest paid by a company to a non-resident.

34. Section 125 of the Principal Act is amended by omitting from sub-section (1.) the words “and social services contribution” (wherever occurring).

Liability to dividend (withholding) tax.

35. Section 128b of the Principal Act is amended by omitting sub-sections (2.) and (3.) and inserting in their stead the following sub-sections:—

“(2.) A person who derives income to which this section applies is liable to pay, at the rate declared by the Parliament for the purposes of this section, income tax upon that income.

“(3.) Income tax payable by a person in accordance with the last preceding sub-section is in addition to any other income tax payable by him.”.

36. After section 170 of the Principal Act the following sections are inserted:—

Power to amend assessment not to limit other powers to amend assessments.

“170a. Where a provision of this Act authorizes the Commissioner to amend an assessment, that provision does not limit the power of the Commissioner to amend an assessment in accordance with any other provision of this Act.

Elimination of small amounts in assessing taxable income, &c.

“170b.—(1.) For the purposes of the making of an assessment before the fourteenth day of February, One thousand nine hundred and sixty-six—

(a)where the taxable income or other amount in respect of which income tax would, but for this paragraph, be payable is an amount of pounds, shillings and pence, of pounds and shillings or of pounds and pence—the shillings and pence, the shillings or the pence, as the case may be, shall be disregarded; and
(b)where the taxable income or other amount in respect of which income tax would, but for this paragraph, be payable is an amount of less than One pound—income tax is not payable in respect of that amount.

“(2.) For the purposes of the making of an assessment on or after the fourteenth day of February, One thousand nine hundred and sixty-six—

(a)where the taxable income or other amount in respect of which income tax would, but for this paragraph, be payable is an amount of dollars and cents—the cents shall be disregarded; and
(b)where the taxable income or other amount in respect of which income tax would, but for this paragraph, be payable is an amount of less than One dollar—income tax is not payable in respect of that amount.

Power of Commissioner to reduce amount of tax payable in certain cases.

“170c. For the purposes of the making of an assessment on or after the first day of July, One thousand nine hundred and sixty-six, the Commissioner may reduce by One cent the amount of tax that would, but for this section, be payable by a taxpayer being a person other than a company or being a company in the capacity of a trustee, before deducting any rebate or credit to which the taxpayer is entitled.”.

Heading to Division 2 of Part VI.

37. The heading to Division 2 of Part VI. of the Principal Act is amended by omitting the words “and Social Services Contribution”.

Heading to Division 3 of Part VI.

38. The heading to Division 3 of Part VI. of the Principal Act is amended by omitting the words “and Contribution”.

Interpretation.

39. Section 221ya of the Principal Act is amended by omitting from sub-section (1.) the definition of “provisional tax” and inserting in its stead the following definition:—

“‘provisional tax’ means any amount payable as provisional tax, or as provisional tax and contribution, in accordance with Division 3 of Part VI. of the Income Tax Assessment Act 1936–1944, or of that Act as amended at any time;”.

Liability to provisional tax.

40. Section 221yb of the Principal Act is repealed and the following section inserted in its stead:—

“221yb.—(1.) For the purpose of enabling the income tax that will be payable by taxpayers to whom this section applies to be collected during the financial year for which the income tax is levied, a person other than a company, and a company in the capacity of a trustee, deriving assessable income, not being salary or wages, is liable to pay provisional tax in accordance with this Division.

“(2.) Subject to the next succeeding sub-section, provisional tax is payable in respect of the income of the year of income ending on the thirtieth day of June, One thousand nine hundred and sixty-six, and in respect of the income of all subsequent years of income.

“(3.) Provisional tax is not payable in respect of the income of a year of income unless the Act declaring the rates of income tax payable for the financial year for which income tax is imposed upon taxable income of that year provides that provisional tax is payable in accordance with the provisions of this Act.”.

References to social services contribution in certain notices of assessment and other instruments.

41.—(1.) In any notice of assessment or other instrument given, issued or served by the Commissioner after the commencement of the Income Tax Act 1965 in relation to a company, not being a company in the capacity of a trustee, in respect of tax for the financial year that ends on the thirtieth day of June, One thousand nine hundred and sixty-six, a reference to income tax and social services contribution or to tax and contribution shall be deemed to be a reference to income tax imposed as such by that Act.

(2.) In any notice of assessment or other instrument given, issued or served by the Commissioner after the commencement of the Income Tax Act 1965 in respect of income of a person not being a company, or of a company in the capacity of a trustee, of the year of income that ended on the thirtieth day of June, One thousand nine hundred and sixty-five, a reference to provisional tax and contribution payable by the person shall be deemed to be a reference to provisional tax imposed as such by that Act.

(3.) In any notice of assessment or other instrument given, issued or served by the Commissioner after the commencement of the Income Tax Act 1965 in respect of income of a person not being a company, or of a company in the capacity of a trustee, of the year of income that ends on the thirtieth day of June, One thousand nine hundred and sixty-six, a reference to income tax and social services contribution or to tax and contribution shall be deemed to be a reference to income tax imposed as such by that Act.

Transitional provision relating to losses incurred in previous years by certain companies that have adopted accounting periods.

42.—(1.) In this section—

“company to which this section applies” means a company that has, in pursuance of section 18 of the Income Tax Assessment Act 1936, or of that Act as amended at any time, adopted, in lieu of the year of income that ended on the thirtieth day of June, One thousand nine hundred and sixty-five, an accounting period that ended before that date;
“the transitional period”, in relation to a company to which this section applies, means the period that—
(a)commenced immediately after the expiration of the accounting period adopted by the company in lieu of the year of income that ended on the thirtieth day of June, One thousand nine hundred and sixty-five; and
(b) ended on that date.

(2.) Where, but for this section, the whole or any part of any losses incurred by a company to which this section applies in years before the year of income ending on the thirtieth day of June, One thousand nine hundred and sixty-six, would not, by virtue of the amendments made by sections 16 and 17 of the Income Tax and Social Services Contribution Assessment Act (No. 3) 1964 and by sections 20, 21 and 22 of this Act, be taken into account for the purposes of section 80 of the Principal Act as amended by this Act in the assessment of the company in respect of income of the year of income ending on that date, those amendments do not apply to that assessment but the amount of those losses that may be taken into account by virtue of those amendments not being applicable shall not exceed the amount that would, but for this section, have been the amount of the taxable income of the company in respect of the transitional period if that period had been a year of income of the company.

Saving.

43.—(1.) Section 17 of the Principal Act continues in force for all purposes in connexion with income tax and social services contribution for any financial year before the financial year that commenced on the first day of July, One thousand nine hundred and sixty-five.

(2.) Section 128b of the Principal Act continues in force for all purposes in connexion with income tax and social services contribution imposed before the commencement of this Act.

(3.) Section 221yb of the Principal Act continues in force for all purposes in connexion with provisional tax and contribution in respect of income of any year of income before the year of income that commenced on the first day of July, One thousand nine hundred and sixty-five.

Application of amendments.

44.—(1.) The amendments made by paragraphs (b) and (c) of section 13 of this Act apply in relation to dividends (other than dividends declared by a company on or before the tenth day of June, One thousand nine hundred and sixty-five) that were or are satisfied by the issue, after that date, of shares in the company but, in the application of those amendments in relation to dividends declared by a company on or before the twenty-eighth day of October, One thousand nine hundred and sixty-five, regard shall not be had to paragraph (b) of sub-section (2d.) of section 44 of the Principal Act as amended by this Act.

(2.) The amendment made by paragraph (b)of section 7 of this Act applies to assessments in respect of income of the year of income that commenced on the first day of July, One thousand nine hundred and sixty-four, and in respect of income of all subsequent years of income.

(3.) The amendments made by section 5, paragraphs (a) and (c) of section 7 and sections 9, 17, 18, 20, 22 to 27 (inclusive) and 30 of this Act apply to assessments in respect of income of the year of income that commenced on the first day of July, One thousand nine hundred and sixty-five, and in respect of income of all subsequent years of income.

(4.) The amendment made by section 15 of this Act applies to assessments in respect of income of any year of income.

(5.) Subject to the next succeeding sub-section, the amendment made by section 21 of this Act applies to assessments in respect of income of the year of income that commenced on the first day of July, One thousand nine hundred and sixty-five, and in respect of income of all subsequent years of income.

(6.) In relation to contracts, agreements or arrangements entered into, or rights, powers or options granted, on or before the twenty-eighth day of October, One thousand nine hundred and sixty-five, the amendment made by section 21 of this Act applies to assessments in respect of income of the year of income that commences on the first day of July, One thousand nine hundred and sixty-six, and in respect of income of all subsequent years of income.

(7.) The amendment made by section 34 of this Act applies to assessments for the year of tax that commenced on the first day of July, One thousand nine hundred and sixty-five, and for all subsequent years of tax.