New Business Tax System (Income Tax Rates) Act (No. 2) 1999 (Cth)

New Business Tax System (Income Tax Rates) Act (No. 2) 1999

Act No. 168 of 1999 as amended

This compilation was prepared on 1 September 2010

taking into account amendments up to Act No. 75 of 2010

The text of any of those amendments not in force

on that date is appended in the Notes section

The operation of amendments that have been incorporated may be

affected by application provisions that are set out in the Notes section

Prepared by the Office of Legislative Drafting and Publishing,

Attorney‑General’s Department, Canberra

Contents

An Act to implement the New Business Tax System by amending income tax rates, and for related purposes

1Short title [see Note 1]

This Act may be cited as the New Business Tax System (Income Tax Rates) Act (No. 2) 1999.

2Commencement [see Note 1]

This Act commences on the day on which it receives the Royal Assent.

3Schedule(s)

Each Act that is specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has effect according to its terms.

Schedule 1Removal of CGT averagingPart 1Amendments

Income Tax Rates Act 1986

1. 1

   Subsection 3(1) (definition of capital gains amount)

   Repeal the definition.

2. 2

   Subsection 3(1) (definition of capital gains component)

   Repeal the definition.

3

Subsection 3(1) (definition of eligible part)

Repeal the definition, substitute:

eligible part, in relation to the special income component of the taxable income of a taxpayer, means so much of the special income component as is eligible taxable income for the purposes of Division 6AA of Part III of the Assessment Act.

4

Subsection 3(1) (definition of reduced share)

Repeal the definition.

5

Subsection 3(1) (definition of special income component)

Repeal the definition, substitute:

special income component, in relation to a taxable income for which there is an abnormal income amount, means:

1. (a)

   so much of the taxable income as does not exceed the abnormal income amount; or

2. (b)

   if the sum (the component sum) of:

   1. (i)

      the abnormal income amount; and

   2. (ii)

      the EC part of the taxable income;

is more than the taxable income—the abnormal income amount, reduced by the amount by which the component sum exceeds the taxable income.

6

Subsection 20F(2)

Repeal the subsection.

Note: The heading to section 20F is altered by omitting “or capital gains component”.

7

Subsection 20F(2A)

Repeal the subsection.

8

Subsection 20F(3) (definition of section 20F rate adjustment)

Repeal the definition, substitute:

section 20F rate adjustment means the rate worked out using the formula:

9

Subsection 20F(3) (definition of share of net income)

Repeal the definition.

10

Schedule 12 (clause 1 of Part I)

Omit “and that share does not consist of or include a capital gains component”.

11

Schedule 12 (clause 2 of Part I)

Omit “and that share does not consist of or include a capital gains component”.

12

Schedule 12 (clause 3 of Part I)

Repeal the clause.

13

Schedule 12 (clause 1 of Part II)

Omit “and that share does not consist of or include a capital gains component”.

14

Schedule 12 (clause 2 of Part II)

Omit “and that share does not consist of or include a capital gains component”.

15

Schedule 12 (clause 3 of Part II)

Repeal the clause.

Part 2Application

16

Application of amendments

The amendments made by this Schedule apply in relation to the 1999‑2000 year of income and later years of income.

Part 3Transitional provisions

17

Overview of Part

(1) This Part provides for your basic income tax liability for the 1999‑2000 income year to be reduced in certain circumstances if you have made a capital gain from a CGT event before the start time.

(2) The purpose of this Part is to ensure, as far as is practicable, that the income tax payable in relation to capital gains from CGT events before the start time is the same as it would have been if capital gains tax averaging had not been removed.

18

Part is a special provision for working out your basic income tax liability

(1) This Part is a special provision that applies (as mentioned in paragraph (b) of step 2 of subsection 4‑10(3) of the Income Tax Assessment Act 1997) to working out your basic income tax liability on your taxable income.

(2) This Part is to be applied after any other special provisions that apply to you.

19

When this Part applies

Only applies for 1999‑2000 income year

(1) This Part only applies for the 1999‑2000 income year.

Only applies to individuals and certain trustees

(2) This Part only applies to you if you are:

1. (a)

   an individual and your assessable income included a net capital gain; or

2. (b)

   a trustee of a trust estate and, apart from the amendments made by this Act, clause 3 of Part I or clause 3 of Part II of Schedule 12 to the Income Tax Rates Act 1986 would have applied in working out your basic income tax liability; or

3. (c)

   a trustee of a trust estate and Schedule 10 to the Income Tax Rates Act 1986 applied in working out your basic tax liability and, apart from the amendments made by this Act, the share of the net income of the trust estate referred to in that Schedule would consist of, or include, a capital gains component.

Only applies if capital gain made before the start time

(3) This Part does not apply to you unless you made a capital gain as a result of a CGT event that happened during the income year and before the start time and the capital gain is not disregarded.

20

Meaning of start time

In this Part:

start time means 11.45 am, by legal time in the Australian Capital Territory, on 21 September 1999.

21

Working out if you are entitled to a reduction

You are entitled to a reduction to your basic income tax liability if the following amounts are both greater than zero:

1. (a)

   your gross adjustment amount under item 22;

2. (b)

   your pre‑announcement net capital gain amount worked out under item 23.

The amount of the reduction is worked out under item 24.

22

Working out the gross adjustment amount

Work out your gross adjustment amount as follows:

Method statement

Step 1. Work out the amount that would have been your basic income tax liability for the income year if the amendments made by:

1. (a)

   Schedules 8 and 9 to the New Business Tax System (Integrity and Other Measures) Act 1999; and

2. (b)

   Schedule 1 to the New Business Tax System (Capital Gains Tax) Act 1999;

had not been made.

Step 2. Work out the amount that would have been your basic income tax liability for the income year if the amendments made by:

1. (a)

   Schedules 8 and 9 to the New Business Tax System (Integrity and Other Measures) Act 1999; and

2. (b)

   Schedule 1 to the New Business Tax System (Capital Gains Tax) Act 1999; and

3. (c)

   Part 1 of this Schedule;

had not been made.

Step 3. Subtract the amount worked out under step 2 from the amount worked out under step 1. The result is the gross adjustment amount.

If the result is zero or negative, you are not entitled to any reduction.

23

Working out your net capital gain amounts

Working out your pre‑announcement net capital gain amount

(1) Your pre‑announcement net capital gain amount is the amount that would have been your modified net capital gain amount if any capital gains or capital losses arising after the start time were disregarded.

Working out your modified net capital gain amount

(2) Your modified net capital gain amount is the amount that would have been your net capital gain for the income year if:

1. (a)

   the amendments made by:

   1. (i)

      Schedules 8 and 9 to the New Business Tax System (Integrity and Other Measures) Act 1999; and

   2. (ii)

      Schedule 1 to the New Business Tax System (Capital Gains Tax) Act 1999;

had not been made; and

1. (b)

   you did not have any unapplied net capital losses from previous income years; and

2. (c)

   any capital gains or losses that are:

   1. (i)

      part of the special income component and eligible taxable income for the purposes of Division 6AA of Part III of the Assessment Act; and

   2. (ii)

      part of the capital gains component and net income to which Division 6AA of Part III of the Assessment Act applies;

were disregarded.

24

Working out the amount of your reduction

(1) The amount of the reduction in your basic income tax liability is worked out using the formula:

Working out your capital gain adjustment percentage

(2) Your capital gain adjustment percentage is the percentage worked out using the following formula:

25

Choices

If:

1. (a)

   the calculation of an amount under this Part could be affected by a choice or election that you could make under the Income Tax Assessment Act 1936 or the Income Tax Assessment Act 1997; and

2. (b)

   apart from the operation of this Part, you would not need to have made that choice or election;

you may calculate the amount for the purpose of this Part as if you had made the election or choice.

26

Income from trust estates

To avoid doubt, if your assessable income includes a share of the net income of a trust estate, the assumptions and other adjustments required by this Part are taken, for the purpose of the operation of this Part to you, to have applied in relation to the calculation of the net income of the trust.

27

Interpretation

Expressions used in this Act that are defined in the Income Tax Assessment Act 1997 have the same meaning as in that Act.

Notes to the New Business Tax System (Income Tax Rates) Act (No. 2) 1999

Note 1

The New Business Tax System (Income Tax Rates) Act (No. 2) 1999 as shown in this compilation comprises Act No. 168, 1999 amended as indicated in the Tables below.

Table of Acts

Act	Number and year	Date of Assent	Date of commencement	Application, saving or transitional provisions
New Business Tax System (Income Tax Rates) Act (No. 2) 1999	168, 1999	10 Dec 1999	10 Dec 1999
Tax Laws Amendment (2010 Measures No. 2) Act 2010	75, 2010	28 June 2010	Schedule (item 16): 29 June 2010	—

Table of Amendments

ad. = added or inserted am. = amended rep. = repealed rs. = repealed and substituted
Provision affected	How affected
S. 4.........................................	rep. No. 75, 2010