Income Tax Regulations (Amendment) (Cth)

Statutory Rules 1996

No. 346 1

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Income Tax Regulations 2(Amendment)

I, The Governor-General of the Commonwealth of Australia, acting with the advice of the Federal Executive Council, make the following Regulations under the Income Tax Assessment Act 1936.

Dated 20 December 1996.

 WILLIAM DEANE

 Governor-General

By His Excellency’s Command,

C. R. KEMP

Assistant Treasurer

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1.   Commencement

1.1   These Regulations commence on 1 March 1997.

2.   Amendment

2.1   The Income Tax Regulations are amended as set out in these Regulations.

3.   New Division 11B of Part 7

3.1   After Division 11A of Part 7, insert:

“Division 11B—Reportable payments in the fruit and vegetable industry

Interpretation

 “147FC. (1)In this Division, unless the contrary intention appears:

‘fresh produce’ means produce other than:

• (a)

  dried produce; or

• (b)

  processed produce (within the meaning of subregulation (3)); or

• (c)

  the juice of any produce; or

• (d)

  any beverage made from produce; or

• (e)

  cereals (except sweet corn), grains or oilseeds;

‘produce’ means fruit or vegetables (including sweet corn, nuts, herbs and fungi);

‘quarter’ has the meaning set out in subsection 221A (1) of the Act;

‘trader’ has the meaning set out in regulation 147FE.

 “(2)A reference in subregulation (1) to fruit or vegetables includes both whole items, and parts of items, of fruit or vegetables.

 “(3) For the purposes of paragraph (b) of the definition of ‘fresh produce’ in subregulation (1), produce is taken to be processed if it has been canned, bottled, frozen, cooked, pickled, roasted or subjected to any other treatment to alter it from its natural state but is not taken to be processed simply because it has been subjected to any one or more of the following forms of treatment:

• (a)

  cutting, chopping or peeling;

• (b)

  waxing;

• (c)

  storage under controlled atmospheric conditions;

• (d)

  treatment having the effect of stimulating, hastening, delaying or simulating ripening;

• (e)

  packaging or wrapping (either with or without other kinds of produce).

Payments in relation to produce declared to be reportable payments

 “147FD. (1)Subject to subregulation (2), and for the purposes of paragraph (a) of the definition of ‘reportable payment’ in section 220AC of the Act, a payment is declared to be a reportable payment for the purposes of Division 1AA of Part VI of the Act if it is a payment that a trader makes, or is liable to make, wholly or partly for the sale or supply of produce that:

• (a)

  was sold or supplied as produce for human consumption; and

• (b)

  consisted of:

  • (i)

    fresh produce; or

  • (ii)

    dried produce, if the person to whom the payment is made or is due is a person whose activity in the drying of produce, or trading in dried produce, is subsidiary to that person’s activity in the growing of produce.

 “(2) Subregulation (1) does not apply:

• (a)

  to a payment of commission to an agent in relation to the sale or supply of produce; or

• (b)

  to a payment made by a trader, otherwise than in the course of business, for the sale or supply of produce to the trader.

Who is a trader?

 “147FE. (1)In this regulation, ‘relevant produce’ means fresh produce and dried produce.

“(2) For the purposes of this Division, a person is a trader in relation to the whole of a financial year if:

• (a)

  one third or more of the person’s gross income arising out of trading in, or acting as an agent in relation to, goods in the immediately preceding financial year was derived from the sale or supply of relevant produce; or

• (b)

  in the immediately preceding financial year, the person paid, or became liable to pay, in the course of business (including business as an agent), amounts totalling not less than $500,000 for the sale or supply of relevant produce; or

• (c)

  in any quarter in the immediately preceding financial year, the person paid, or became liable to pay, in the course of business (including business as an agent), amounts totalling not less than $125,000 for the sale or supply of relevant produce.

 “(3)For the purposes of this Division, a person is a trader in relation to the whole of the portion of a financial year commencing on the first day of the second month of a quarter (in this subregulation called the ‘commencing day’) and ending at the end of that financial year if the person is not a person to whom subregulation (2) applies but:

• (a)

  one third or more of the person’s gross income arising out of trading in, or acting as an agent in relation to, goods in the most recently completed quarter preceding the commencing day was derived from the sale or supply of relevant produce; or

• (b)

  in the most recently completed quarter preceding the commencing day, the person paid, or became liable to pay, in the course of business (including business as an agent), amounts totalling not less than $125,000 for the sale or supply of relevant produce.

 “(4)A company is taken, for the purposes of subregulation (2) or (3), to have paid, or been liable to pay, in the course of business (including business as an agent), an amount specified in a paragraph of that subregulation, for the sale or supply of relevant produce during the year or quarter specified in that paragraph, if:

• (a)

  the company is a group company (within the meaning of section 221ED of the Act) in relation to another company or other companies; and

• (b)

  subject to subregulation (5), during that year or quarter, the company and all other companies in relation to which it is a group company paid, or became liable to pay, in the course of business (including business as an agent), amounts totalling not less than the amount specified in that paragraph for the sale or supply of relevant produce.

 “(5)Paragraph (4) (b) does not apply to an amount that is an exempt inter-corporate payment (within the meaning of section 220AC of the Act).”.

[NOTE: An example for the purposes of subregulation 147FE (4):

Company A has 3 subsidiaries, Company X, Company Y and Company Z.

 If, during the immediately preceding financial year, X, Y and Z each paid, in the course of business (including business as an agent), $200,000 for the sale or supply of relevant produce, A, X, Y and Z are each taken to have paid not less than $500,000 for that financial year.]

4.   Transitional

4.1   For the purposes of subsection 220AF (2) of the Act, the specified percentage is 0% if the reportable payment is a payment to which regulation 147FD of the Income Tax Regulations, as amended by these Regulations, applies and is made in the period from 1 March 1997 to 30 June 1997 inclusive.

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NOTES

1. Notified in the Commonwealth of Australia Gazette on 24 December 1996.

2. Statutory Rules 1936 No. 94 as amended by 1939 Nos. 6 and 42; 1940 Nos. 138 and 289; 1941 Nos. 120 and 327; 1942 Nos. 339 and 553; 1943 Nos. 80, 127 and 151; 1944 Nos. 90 and 124; 1945 Nos. 12, 85, 169 and 192; 1946 No. 135; 1947 Nos. 77 and 173; 1948 Nos. 115 and 162; 1949 Nos. 25 and 50; 1950 Nos. 63 and 101; 1951 Nos. 136 and 157; 1952 Nos. 89, 90 and 102; 1953 Nos. 55 and 88; 1954 Nos. 11, 99 and 112; 1955 No. 23; 1956 Nos. 34, 35 (repealed by 1956 No. 96) and 96; 1957 Nos. 39 and 74; 1958 Nos. 27 and 70; 1959 Nos. 25 and 81; 1960 Nos. 44 and 74; 1962 Nos. 15, 44 and 112; 1963 Nos. 53 and 92; 1964 Nos. 74, 121 and 134; 1965 Nos. 133 and 187; 1966 No. 156; 1967 Nos. 112 and 126; 1968 No. 1; 1969 No. 68; 1970 Nos. 43, 126, 168 and 213; 1971 Nos. 120 and 148; 1972 Nos. 48, 50 and 137; 1973 No. 266; 1974 Nos. 193, 226 and 267; 1975 Nos. 88, 89, 99, 101 and 213; 1976 Nos. 115, 188 and 212; 1977 Nos. 77, 107 and 248; 1978 Nos. 85 and 193; 1979 Nos. 126 and 239; 1980 Nos. 86, 137 and 149; 1981 Nos. 116 and 360; 1982 Nos. 115, 128, 267 and 280; 1983 Nos. 79, 87, 111, 213 and 319; 1984 Nos. 172, 286, 408 and 416; 1985 Nos. 21, 148, 274 and 278; 1986 No. 325; Acts Nos. 28, 49 and 112, 1986; Statutory Rules 1987 Nos. 92 and 120; 1988 Nos. 196, 208, 262, 381, 382, 383 and 384; Act No. 97, 1988; Statutory Rules 1989 Nos. 67, 80, 115 (as amended by 1989 No. 358), 123, 124, 141, 250 and 358; 1990 Nos. 19, 126, 151, 152, 192, 347, 390, 398 and 468; 1991 Nos. 20, 121, 156, 158, 240, 300, 301, 390 and 391; 1992 Nos. 38, 129, 216, 313 and 449; 1993 Nos. 15, 46, 47, 65, 91, 159, 202, 216, 275, 288 and 370; 1994 Nos. 95, 96, 127, 174, 195, 219, 399, 412, 460, 461 and 462; 1995 Nos. 58, 107, 139, 152, 153, 194, 316, 356, 381, 382, 383 and 447; Act No. 30, 1995; Statutory Rules 1996 Nos. 38, 56, 114, 124, 133, 150, 185, 274, 320 and 345.