Income Tax Assessment Amendment Act 1977 (Cth)
An Act to amend the Law relating to Income Tax.
BE IT ENACTED by the Queen, and the Senate and House of Representatives of the Commonwealth of Australia, as follows:—
(2) The
(2) Sections 16 and 17 shall be deemed to have come into operation on 1 July 1976.
“(jc) income derived under the scheme known as the Commonwealth Rebate for Apprentice Full-Time Training by a person as an employer;”.
“(4) Nothing in this section exempts from income tax—
(a) any payment made under the
Superannuation Act 1922;(b) any payment of a pension or benefit to which sub-section (1) of section 8 of the
Superannuation Act 1948 applies;(c) any payment of a pension made in accordance with section 9 or 14 of the
Superannuation Act (No. 2) 1956;(d) any payment of a pension made under section 10 of the
Superannuation (Pension Increases) Act 1971;(e) any payment made under the
Superannuation Act 1976;(f) any payment made under the
Defence Forces Retirement Benefits Act 1948;(g) any payment made under the
Defence Force Retirement and Death Benefits Act 1973;(h) any payment made under the
Parliamentary Retiring Allowances Act 1948; or(j) any payment made under the
Papua New Guinea (Staffing Assistance) Act 1973.”.
“31c. (1) Where—
(a) a person (in this section referred to as the ‘purchaser’) has, on or after 21 April 1977, purchased from another person (in this section referred to as the ‘vendor’) an article (in this sub-section referred to as the ‘relevant article’) that, for the purposes of the application of this Act in relation to the purchaser, was an article of trading stock;
(b) the Commissioner is satisfied that, having regard to any connexion between the vendor and the purchaser or to any other relevant circumstances, those persons were not dealing with each other at arm’s length in relation to the transaction; and
(c) the Commissioner is satisfied—
(i) that the purchase price is greater than the amount (in this section referred to as the ‘arm’s length price’) that, in the opinion of the Commissioner, would have been the purchase price if the vendor and purchaser had been dealing with each other at arm’s length in relation to the transaction; or
(ii) that—
(A) the purchaser could have purchased an identical article from another person and obtained delivery of the identical article at or about the time when the purchaser obtained delivery of the relevant article;
(B) the cost to the purchaser of purchasing the relevant article from the vendor was greater than the amount that, in the opinion of the Commissioner, would have been the cost to the purchaser of purchasing the identical article; and
(C) the purchase price of the relevant article is greater than the amount (in this section referred to as the ‘alternative price’) that, in the opinion of the Commissioner, would have been the purchase price of the identical article,
the amount paid by the purchaser to the vendor in respect of the relevant article shall, for all purposes of the application of this Act in relation to the purchaser and the vendor, be deemed to be an amount ascertained in accordance with sub-section (2).
“(2) The amount ascertained in relation to an article for the purposes of sub-section (1) is—
(a) if the Commissioner is satisfied as to the matter mentioned in sub-paragraph (i) of paragraph (c) of sub-section (1) but not as to the matters mentioned in sub-paragraph (ii) of that paragraph—an amount equal to the arm’s length price of the article;
(b) if the Commissioner is satisfied as to the matters mentioned in sub-paragraph (ii) of paragraph (c) of sub-section (1) but not as to the matter mentioned in sub-paragraph (i) of that paragraph—an amount equal to the alternative price of the article increased, if the purchaser would have incurred expenditure (apart from payment of the purchase price) in obtaining delivery of an identical article from another person as mentioned in sub-paragraph (ii) of that paragraph in excess of the expenditure (apart from payment of the purchase price) that the purchaser incurred in obtaining delivery of the relevant article, by such amount as the Commissioner considers fair and reasonable; and
(c) if the Commissioner is satisfied as to the matter mentioned in sub-paragraph (i) of paragraph (c) of sub-section (1) and also as to the matters mentioned in sub-paragraph (ii) of that paragraph—whichever of the following amounts is the lesser amount:—
(i) the arm’s length price of the article;
(ii) the amount that would be determined in relation to the article in accordance with paragraph (b) if that paragraph were applicable.
“(3) A reference in this section to the purchase by a person of an article of trading stock from another person shall be construed as including a reference to an acquisition of that article by the first-mentioned person from that other person that is deemed to have occurred for the purposes of section 36 by reason of the operation of section 36a or that would be so deemed to have occurred if sections 36 and 36a applied in relation to a disposal of trading stock in the ordinary course of carrying on a business.
“(4) In this section, a reference to the cost to a person of purchasing an article shall be construed as a reference to expenditure incurred by the person that is directly attributable to purchasing or obtaining delivery of the article.
“(5) This section applies in relation to the purchase of an article of trading stock notwithstanding that the purchase was in the course of ordinary family or commercial dealing.”,
“(2) Where—
(a) property in relation to which sub-section (1) applies has become, upon the change in ownership or interests, an asset of a business carried on by the person or persons by whom the property is owned after the change;
(b) the person or persons by whom the property was owned before the change holds or hold, after the change, an interest or interests in the property of a value equal to not less than one-quarter of the value of the property;
(c) the value of the property as ascertained in accordance with paragraph (a) of sub-section (8) of section 36 is greater than the value (if any) that would have been taken into account at the end of the year of income if no disposal had taken place and the year of income had ended on the date of the change; and
(d) the person or persons by whom the property was owned before the change together with the person or persons by whom the property is owned after the change give notice to the Commissioner, in accordance with this section, that they have agreed that this sub-section shall apply in respect of the property,
the value of the property, for the purposes of section 36, shall be, instead of the value specified in paragraph (a) of sub-section (8) of that section, the value (if any) that would have been taken into account at the end of the year of income if no disposal had taken place and the year of income had ended on the date of the change.
(2) Section 36a of the Principal Act is amended by adding at the end thereof the following sub-section:—
“(5) A notice for the purposes of sub-section (2) given on or after 24 May 1977 in respect of a change in the ownership of, or in the interests of persons in, property, being—
(a) a share or stock in the capital of a company;
(b) a debenture, note or other security issued in respect of a loan to a company; or
(c) any other chose in action,
does not have any effect unless the persons giving the notice establish to the satisfaction of the Commissioner that the change in ownership or interests occurred before that date.
“; (xlv) the Queen Elizabeth II Silver Jubilee Trust for Young Australians,”.
“82b. (1) In this Subdivision, unless the contrary intention appears—
‘acquisition’, in relation to a business, includes acquisition under a will or by operation of law;
‘disposal’, in relation to a business, includes transmission by will or by operation of law;
‘index number’, in relation to the last quarter of a financial year, means the index number for the goods component of the Consumer Price Index, being the weighted average of the 6 State capital cities, published by the Australian Statistician in respect of that quarter;
‘prescribed percentage’, in relation to a year of income, means the percentage, calculated to 1 decimal place, ascertained in
| 50 ( | where— |
a is the index number in respect of the last quarter of the financial year that is the relevant financial year in relation to that year of income; and
b is the index number in respect of the last quarter of the next preceding financial year;‘relevant financial year’, in relation to a year of income, means—
(a) in the case to which paragraph (b) does not apply—the financial year that constitutes that year of income; or
(b) in the case of a taxpayer in relation to whom that year of income is an accounting period adopted in lieu of a financial year—that financial year;
‘trading stock’, without extending or limiting by implication the meaning of that expression for any purpose of this Act other than the application of this Subdivision, includes livestock (other than livestock to which paragraph (f) applies) but does not include—
(a) land or an interest in land;
(b) shares in, or debentures of, companies;
(c) bonds, debentures, stock or other securities issued under an Act;
(d) bonds, debentures, stock or other securities issued by—
(i) a State;
(ii) a Territory;
(iii) a municipal corporation, other local governing body or public authority constituted by or under an Act or by or under a law of a State or Territory; or
(iv) the government of another country or an authority of such a government;
(e) choses in action; or
(f) animals (including birds and fish) for use in, or in connexion with, sporting or recreational activites or to be kept as pets or to be kept for other domestic purposes.
“(2) Subject to sub-section (3), if at any time, whether before or after the commencement of this section, the Australian Statistician has published or publishes an index number in respect of the last quarter of a financial year in substitution for an index number previously published by him in respect of that quarter, the publication of the later index number shall be disregarded for the purposes of this section.
“(3) If at any time, whether before or after the commencement of this section, the Australian Statistician has changed or changes the reference base for Consumer Price Index, then, for the purposes of the application of this section after the change took place or takes place, regard shall be had only to index numbers published in terms of the new reference base.
“(4) Where the percentage ascertained in relation to a year of income in accordance with the formula in the definition of ‘prescribed percentage’ in sub-section (1) would, if it were calculated to 2 decimal places, end with a number greater than 4, the prescribed percentage in relation to that year of income shall be taken to be the percentage calculated to 1 decimal place in accordance with that formula and increased by 0.1.
“(5) For the purposes of this Subdivision, the value of an article of trading stock at any time is—
(a) if the value of the article at that time, as ascertained under Subdivision B of Division 2, has been or will be taken into account under section 28 in ascertaining whether a person has a taxable income—the value that has been or will be so taken into account or the cost price of the article, whichever is the less; or
(b) if the value of the article at that time has been or will be included in the assessable income of a person under section 36 or 37—the value that has been or will be so included.
“(6) For the purposes of this Subdivision—
(a) a taxpayer who acquired a business from another person shall be taken to have commenced to carry on the business at the time when the taxpayer acquired the business; and
(b) a taxpayer who, during a year of income (in this paragraph referred to as the ‘relevant year of income’), incurred expenditure in respect of the acquisition of trading stock for the purposes of a business, not being a business to which paragraph (a) applies or a business that was carried on by the taxpayer immediately before the commencement of the relevant year of income, shall be taken to have commenced to carry on that business—
(i) where, at any time during a month in the relevant year of income, not being the last month of that year of income, the taxpayer incurred expenditure in respect of the acquisition of trading stock for the purposes of the business and—
(A) the amount of that expenditure; or
(B) if, before that time and during the relevant year of income the taxpayer incurred other expenditure in respect of the acquisition of trading stock for the purposes of the business—the sum of the amount of the expenditure first mentioned in this sub-paragraph and the amount of that other expenditure,
was not less than one-third of the value of the trading stock on hand in relation to the business at the end of the relevant year of income or, if the taxpayer disposed of the business before the end of the relevant year of income, at the time when the taxpayer disposed of the business—on the first day of the month next succeeding the month first mentioned in this sub-paragraph; and
(ii) in any other case—immediately before the commencement of the year of income next succeeding the relevant year of income.
“(7) Where, during a year of income, a taxpayer has carried on 2 or more businesses, this Subdivision shall be construed as applying to the operations of the taxpayer in connexion with each of those businesses, and to any acquisition or disposal by the taxpayer of any of those businesses, as if it were the only business carried on by the taxpayer.
“(8) For the purposes of this Subdivision, a taxpayer shall not be taken to have carried on 2 or more businesses at any time during a year of income by reason only that, at that time, the taxpayer carried on business operations of a similar kind at 2 or more locations.
“(9) Where—
(a) during a year of income a taxpayer acquired a business (in this sub-section referred to as the ‘acquired business’) from another person; and
(b) the Commissioner is satisfied that, immediately before and immediately after the taxpayer acquired the business, the taxpayer carried on another business (in this sub-section referred to as the ‘original business’) that was similar to the acquired business,
then, for the purposes of the application of this Subdivision in relation to the taxpayer—
(c) the taxpayer shall not be taken to have commenced to carry on a business by reason of his acquisition of the acquired business;
(d) the taxpayer shall not be taken to have carried on 2 or more businesses during the year of income by reason only of the carrying on by the taxpayer of both the acquired business and the original business; and
(e) any operations of the taxpayer in connexion with the acquired business shall be taken to be operations in connexion only with the original business.
“(10) Where, for any reason, including—
(a) the formation or dissolution of a partnership; or
(b) a variation in the constitution of a partnership, or in the interests of the partners,
a change has occurred in the ownership of, or in the interests of persons in, a business and the person, or one or more of the persons, who owned the business before the change has or have an interest in the business after the change, this Subdivision has effect as if the person or persons who owned the business before the change had, on the day on which the change occurred, disposed of the business to the person or persons by whom the business is owned after the change and as if the business had been acquired by that last-mentioned person or those last-mentioned persons on that day.
“(11) The
Treasurer shall, as soon as practicable after the end of each financial year,
cause to be published in the
“82c. This Subdivision does not apply in relation to a year of income, being a financial year or an accounting period adopted under this Act in lieu of a financial year, unless the index number in respect of the last quarter of that financial year exceeds the index number in respect of the last quarter of the next preceding financial year.
“82d. (1) Where a taxpayer has carried on a business during the whole of the year of income, being a business that was carried on by the taxpayer immediately before the commencement of the year of income, there shall be allowed as a deduction from the assessable income of the taxpayer of the year of income an amount equal to the prescribed percentage of the value of any trading stock on hand in relation to the business at the commencement of the year of income.
“(2) Subject to sub-section (3), where a taxpayer has, after the commencement of a year of income, disposed of a business that had been carried on by the taxpayer during the whole of the period that commenced at the commencement of the year of income in which the disposal took place and ended on the date of the disposal, or, if the taxpayer commenced to carry on the business during that year of income, during the whole of the period that commenced on the date on which the taxpayer commenced to carry on the business and ended on the date of the disposal and—
(a) the disposal took place by will or by operation of law;
(b) the taxpayer is not a company and the Commissioner is satisfied that the taxpayer disposed of the business with the expectation that the business would be carried on during the whole of the remainder of the year of income of the taxpayer in which the disposal took place;
(c) the taxpayer is a company and—
(i) the business was disposed of to a person, not being a company that was associated with the taxpayer at the time when the disposal took place; and
(ii) the Commissioner is satisfied that the taxpayer disposed of the business with the expectation that the business would be carried on during the whole of the remainder of the year of income of the taxpayer in which the disposal took place; or
(d) the taxpayer is a company and—
(i) the business was disposed of to another company (in this paragraph referred to as the ‘related company’) that was associated with the taxpayer at the time when the disposal took place; and
(ii) either of the following provisions is applicable:—
(A) the business was carried on during the whole of the remainder of the year of income of the taxpayer in which the disposal took place; or
(B) before the end of the year of income of the taxpayer in which the disposal by the taxpayer took place, the business was disposed of, either by the related company or by another company, to a person (in this provision referred to as the ‘purchaser’), not being a company that was associated with the related company or the other company, as the case may be, at the time of the disposal to the purchaser, and the Commissioner is satisfied that the related company or the other company, as the case may be, disposed of the business to the purchaser with the expectation that the business would be carried on during the whole of the remainder of the year of income of the taxpayer in which the disposal by the taxpayer took place,
there shall be allowed as a deduction from the assessable income of the taxpayer of the year of income an amount ascertained in accordance
with the formula | ||
365 |
“(3) Sub-section (2) does not apply in relation to a business disposed of by a taxpayer during a year of income unless—
(a) in the case of a business that was carried on by the taxpayer immediately before the commencement of the year of income— there was trading stock on hand in relation to the business at the commencement of the year of income; and
(b) in the case mentioned in paragraph (a) and in any other case— there was trading stock on hand in relation to the business at the time when the taxpayer disposed of the business.
“(4) For the purposes of the formula in sub-section (2)—
x is the number of days in the period during which the taxpayer carried on the business in the year of income as mentioned in that sub-section; and
y is an amount equal to—(a) where the business was carried on by the taxpayer immediately before the commencement of the year of income—the prescribed percentage of whichever of the following amounts is the lesser amount:—
(i) the value of the trading stock on hand in relation to the business at the commencement of the year of income;
(ii) the value of the trading stock on hand in relation to the business at the time when the taxpayer disposed of the business; and
(b) where the taxpayer commenced to carry on the business on or after the first day of the year of income—
(i) if the business was carried on by a person other than the taxpayer immediately before the commencement of the year of income of the taxpayer in which the taxpayer commenced to carry on the business, there was trading stock on hand in relation to the business at the commencement of that year of income and there was also trading stock on hand in relation to the business at the time when the taxpayer commenced to carry on the business, being trading stock the value of which at those times is able to be ascertained under sub-section (5) of section 82b—the prescribed percentage of whichever of the following amounts is the least amount:—
(A) the value of the trading stock on hand in relation to the business at the commencement of the year of income;
(B) the value of the trading stock on hand in relation to the business at the time when the taxpayer commenced to carry on the business;
(C) the value of the trading stock on hand in relation to the business at the time when the taxpayer disposed of the business; or
(ii) in any other case—the prescribed percentage of two- thirds of the value of the trading stock on hand in relation to the business at the time when the taxpayer disposed of the business.
“(5) Where—
(a) a taxpayer commenced to carry on a business on or after the first day of a year of income of the taxpayer; and
(b) the taxpayer carried on the business during the whole of the period that commenced on the day on which he commenced to carry on the business and ended at the end of the year of income,
there shall be allowed as a deduction from the assessable income of the taxpayer of the year of income an amount ascertained in accordance
with the formula | . | |
365 |
“(6) For the purposes of the formula in sub-section (5)—
r is the number of days in the period mentioned in paragraph (b) of sub-section (5); and
s is an amount equal to—(a) where the business was carried on (whether by the taxpayer or by another person) immediately before the commencement of the year of income of the taxpayer in which the taxpayer commenced to carry on the business, there was trading stock on hand in relation to the business at the commencement of that year of income and there was also trading stock on hand in relation to the business at the time when the taxpayer commenced to carry on the business, being trading stock the value of which at those times is able to be ascertained under sub-section (5) of section 82b—the prescribed percentage of whichever of the following amounts is the lesser amount:—
(i) the value of the trading stock on hand in relation to the business at the commencement of the year of income;
(ii) the value of the trading stock on hand in relation to the business at the time when the taxpayer commenced to carry on the business; and
(b) in any other case—the prescribed percentage of two-thirds of the value of any trading stock on hand in relation to the business at the end of the year of income.
“(7) Where—
(a) in relation to a business carried on by a taxpayer, the value of the trading stock on hand at the end of the period that is the relevant period was substantially less than the value of the trading stock on hand at the commencement of that period; and
(b) the reduction in the value of the trading stock was, in the opinion of the Commissioner, due to a reduction (other than a temporary reduction) in the extent of the operations of the business, or to a change (other than a temporary change) in the manner in which the business was conducted during that period,
this section applies in relation to that business in relation to the taxpayer as if the amount that was the value of the trading stock on hand at the end of that period had also been the value of the trading stock on hand at the commencement of that period.
“(8) For the purposes of the application of sub-section (7) in relation to a business in relation to a taxpayer, the relevant period in relation to the business is—
(a) if sub-section (1) applies in relation to the business in relation to the taxpayer—the year of income mentioned in sub-section (1);
(b) if sub-section (2) applies in relation to the business in relation to the taxpayer—the period during which the taxpayer carried on the business as mentioned in that sub-section; and
(c) if sub-section (5) applies in relation to the business in relation to the taxpayer—the period mentioned in paragraph (b) of sub-section (5).
“(9) Where the Commissioner is of the opinion that—
(a) at any time (in this sub-section referred to as the ‘relevant time’) the amount of trading stock on hand in relation to a business carried on by a taxpayer exceeded the amount of trading stock reasonably required for the purposes of the business; and
(b) some or all of that trading stock was produced, manufactured, acquired or purchased by the taxpayer for the purpose, or for purposes that included the purpose, of securing for the taxpayer or for another person a deduction under this Subdivision greater than the deduction that would have been allowable if that trading stock had not been produced, manufactured, acquired or purchased by the taxpayer,
then, for the purposes of the application of this Subdivision in relation to the taxpayer or that other person, the value of the trading stock on hand in relation to the business at the relevant time or at any later time shall be taken to be such amount as the Commissioner considers fair and reasonable.
“(10) Where—
(a) a company has disposed of a business to another company that, at the time of the disposal, was associated with the first- mentioned company;
(b) a deduction would, but for this sub-section, have been allowable to the first-mentioned company under this Subdivision in respect of income of the year of income of that company in which the disposal took place; and
(c) the companies have made a joint election that this sub-section is to have effect in relation to the trading stock of that business,
the deduction is not allowable to the first-mentioned company but a deduction of the amount that would, but for this sub-section, be allowable to that company is allowable to the other company in respect of income of the year of income of the other company that corresponds with the year of income of the first-mentioned company in which the disposal took place.
“(11) An election for the purposes of sub-section (10) shall be in writing signed on behalf of each of the companies making the election and shall be lodged with the Commissioner not later than 2 months after the end of the year of income of the company acquiring the business as mentioned in that sub-section or within such further time as the Commissioner allows.
“(12) For the purposes of this section, a company is associated with another company at a particular time if, at that time, the first-mentioned company is a company—
(a) the operations of which are, or are able to be, controlled, either directly or indirectly, by that other company;
(b) that controls, or is able to control, either directly or indirectly, the operations of the other company; or
(c) the operations of which are controlled, or are able to be controlled, either directly or indirectly, by a person who controls, or is able to control, or persons who control or are able to control, either directly or indirectly, the operations of that other company.”.
“149. (1) Subject to sub-section (2), for the purposes of the application of this Division in relation to a taxpayer in relation to a year of income, a reference in this Division to the average income of the taxpayer shall be construed as a reference to the average of the taxable incomes of the taxpayer of the years of income (in this Division referred to as ‘average years’) beginning with the first average year and ending with the first-mentioned year of income.
“(2) For the purposes of the application of sub-section (1) in ascertaining the average income of a taxpayer in relation to a year of income, where the taxable income of the taxpayer of an average year is greater than $16,000, that taxable income shall be taken to be $16,000.”.
“(2) For the purposes of the application of sub-section (1) in relation to a taxpayer in relation to a year of income, a reference in that sub-section to the average taxable income of the taxpayer shall be construed as a reference to the amount that would be the average income of the taxpayer in relation to that year of income ascertained in accordance with section 149 if—
(a) no regard were had to sub-section (2) of section 149; and
(b) there were excluded from the assessable income of the taxpayer of the average years any income received by him from sources from which he does not usually receive income.”.
(a) by inserting in paragraph (a) of sub-section (3), after the word “average” (wherever occurring), the word “taxable”; and
(b) by omitting sub-section (5) and substituting the following sub-section:—
“(5) In this section—
‘average income’, in relation to a taxpayer in relation to a year of income, means the average income of the taxpayer in relation to that year of income ascertained in accordance with section 149;
‘average taxable income’, in relation to a taxpayer in relation to a year of income, means the average income of the taxpayer in relation to that year of income ascertained in accordance with section 149 without regard to sub-section (2) of that section;
‘profit on the disposal of the live-stock’ means the profit on the disposal of the live-stock referred to in paragraph (b) of sub-section (1), ascertained in accordance with subsection (8) of section 36;
‘tax’ does not include further tax payable in accordance with section 94.”.
(a) by inserting in sub-section (10), after the word and figures “section 31b,”, the word and figures “section 31c,”; and
(b) by inserting in that sub-section, after the words “Division 3 of Part III,”, the word and figures “section 82d,”.
“(a) 2 instalments of tax in respect of income of the year of income that commenced on 1 July 1976; and
(b) 3 instalments of tax in respect of income of the year of income that commences on 1 July 1977 and in respect of income of each subsequent year of income.”.
“(a) in the case of an instalment of tax in respect of income of the year of income that commenced on 1 July 1976—
(i) if the notice is the first notice served on the company under sub-section (1) in respect of income of that year of income—not earlier than 15 November 1977; or
(ii) if the notice is the second notice served on the company under that sub-section in respect of income of that year of income—not earlier than 15 February 1978; and”.
(a) by omitting from paragraph (f) of the definition of “salary or wages” in sub-section (1) the word “or” (last occurring); and
(b) by inserting after paragraph (g) of that definition the following word and paragraph:—
“; or (h) by way of allowance under the scheme known as the Commonwealth Rebate for Apprentice Full-Time Training,”.
“(5) An application may be made to the Administrative Appeals Tribunal for review of the cancellation under this section of the registration of a tax agent, being a cancellation made after the commencement of this sub-section.
“(6) For the purpose of a review in pursuance of an application under sub-section (5), the Administrative Appeals Tribunal shall be constituted by a presidential member alone.”.
(2) Subject to sub-section (3), the amendment made by section 4 applies in relation to payments made after 21 April 1977.
(3) For the purposes of Division 2 of Part VI of the Principal Act as amended by this Act, the amendment made by section 4 applies in relation to payments made on or after the date of commencement of this sub-section.
(4) The amendment made by sub-section 6(1) does not apply in relation to a change in ownership or interests that occurred before 21 April 1977.
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