Tax Laws Amendment (2007 Measures No. 4) Act 2007 (Cth)
This compilation was prepared on 9 March 2010
[Schedule 2 (item 25) repealed item 217 of Schedule 1
Schedule 2 (item 26) repealed item 42 of Schedule 4
Schedule 2 (items 25 and 26) commenced on 1 March 2010]
Prepared by the Office of Legislative Drafting and Publishing,
Attorney‑General’s Department, Canberra
Contents
[
The Parliament of Australia enacts:
This Act may be cited as the
Tax Laws Amendment (2007 Measures No. 4) Act 2007 .
(1) Each provision of this Act specified in column 1 of the table commences, or is taken to have commenced, in accordance with column 2 of the table. Any other statement in column 2 has effect according to its terms.
Sections 1 to 3 and anything in this Act not elsewhere covered by this table | The day on which this Act receives the Royal Assent. | 24 September 2007 |
2. Schedule 1, Parts 1 to 6 | The day on which this Act receives the Royal Assent. | 24 September 2007 |
Schedule 1, Part 7 | 30 June 2014. | 30 June 2014 |
Schedules 2 to 4 | The day on which this Act receives the Royal Assent. | 24 September 2007 |
Schedule 5, Part 1 | The day on which this Act receives the Royal Assent. | 24 September 2007 |
Schedule 5, Part 2 | Immediately after the commencement of Schedule 1 to
the | 15 March 2007 |
Schedule 5, Part 3 | The day on which this Act receives the Royal Assent. | 24 September 2007 |
Schedule 6 | The day on which this Act receives the Royal Assent. | 24 September 2007 |
Schedule 7, item 1 | The day on which this Act receives the Royal Assent. | 24 September 2007 |
Schedule 7, items 2 to 6 | 1 July 2006. | 1 July 2006 |
Schedule 7, items 7 to 104 | The day on which this Act receives the Royal Assent. | 24 September 2007 |
Schedule 8 | The day on which this Act receives the Royal Assent. | 24 September 2007 |
Note: This table relates only to the provisions of this Act as originally passed by both Houses of the Parliament and assented to. It will not be expanded to deal with provisions inserted in this Act after assent.
(2) Column 3 of the table contains additional information that is not part of this Act. Information in this column may be added to or edited in any published version of this Act.
Each Act that is specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has effect according to its terms.
Insert:
Guide to Division 770
770‑A Entitlement rules for foreign income tax offsets
770‑B Amount of foreign income tax offset
770‑C Rules about payment of foreign income tax
770‑D Administration
You may get a non‑refundable tax offset for foreign income tax paid on your assessable income.
There is a limit on the amount of the tax offset.
A resident of a foreign country does not get the offset for some foreign income taxes.
You may also get the offset for foreign income tax paid on some amounts that are not taxed in Australia.
(1) The object of this Division is to relieve double taxation where:
(a) you have paid foreign income tax on amounts included in your assessable income; and
(b) you would, apart from this Division, pay Australian income tax on the same amounts.
(2) To achieve this object, this Division gives you a tax offset to reduce or eliminate Australian income tax otherwise payable on those amounts.
Basic entitlement rule for foreign income tax offset 770‑10 Entitlement to foreign income tax offset
770‑15 Meaning of
foreign income tax ,credit absorption tax andunitary tax
(1) You are entitled to a *tax offset for an income year for *foreign income tax. An amount of foreign income tax counts towards the tax offset for the year if you paid it in respect of an amount that is all or part of an amount included in your assessable income for the year.
Note 1: The offset is for the income year in which your assessable income included an amount in respect of which you paid foreign income tax—even if you paid the foreign income tax in another income year.
Note 2: If the foreign income tax has been paid on an amount that is part non‑assessable non‑exempt income and part assessable income for you for the income year, only a proportionate share of the foreign income tax (the share that corresponds to the part that is assessable income) will count towards the tax offset (excluding the operation of subsection (2)).
Note 3: For offshore banking units, the amount of foreign income tax paid in respect of offshore banking income is reduced: see subsection 121EG(3A) of the
Income Tax Assessment Act 1936.
Taxes paid on section 23AI or 23AK amounts
(2) An amount of *foreign income tax counts towards the *tax offset for you for the year if you paid it in respect of an amount that is your *non‑assessable non‑exempt income under either section 23AI or 23AK of the
Income Tax Assessment Act 1936 for the year.Note 1: Sections 23AI and 23AK of the
Income Tax Assessment Act 1936 provide that amounts paid out of income previously attributed from a controlled foreign company or a foreign investment fund are non‑assessable non‑exempt income.Note 2: Foreign income taxes covered by this subsection are direct taxes (for example, a withholding tax on a dividend payment) and not underlying taxes, only some of which are covered by section 770‑135.
Exception for certain residence‑based foreign income taxes
(3) An amount of *foreign income tax you paid does not count towards the *tax offset for the year if you paid it:
(a) to a foreign country because you are a resident of that country for the purposes of a law relating to the foreign income tax; and
(b) in respect of an amount derived from a source outside that country.
Exception for previously complying funds and previously foreign funds
(4) An amount of *foreign income tax paid by a *superannuation provider in relation to a *superannuation fund does not count towards the *tax offset for the year if:
(a) the tax was paid in respect of an amount included in the fund’s assessable income under table item 2 or 3 in section 295‑320; and
(b) the provider paid the tax before the start of the income year.
Note: Table items 2 and 3 in section 295‑320 include additional amounts in the assessable income of superannuation funds that change their status from complying to non‑complying or from foreign to Australian.
Exception for credit absorption tax and unitary tax
(5) An amount of *credit absorption tax or *unitary tax you paid does not count towards the *tax offset for the year.
(1)
Foreign income tax means tax that:
(a) is imposed by a law other than an *Australian law; and
(b) is:
(i) tax on income; or
(ii) tax on profits or gains, whether of an income or capital nature; or
(iii) any other tax, being a tax that is subject to an agreement having the force of law under the
International Tax Agreements Act 1953 .(2)
Credit absorption tax means a tax imposed by a law of a foreign country, or of any part of, or place in, a foreign country to the extent that the tax would not have been payable if the entity concerned or another entity had not been entitled to an offset in respect of the tax under this Division.(3)
Unitary tax means a tax imposed by a law of a foreign country, or of any part of, or place in, a foreign country, being a law which, for the purposes of taxing income, profits or gains of a company derived from sources within that country, takes into account, or is entitled to take into account, income, losses, outgoings or assets of the company (or of a company that for the purposes of that law is treated as being associated with the company) derived, incurred or situated outside that country, but does not include tax imposed by that law if that law only takes those matters into account:
(a) if such an associated company is a resident of the foreign country for the purposes of the law of the foreign country; or
(b) for the purposes of granting any form of relief in relation to tax imposed on dividends received by one company from another company.
The amount of your tax offset is based on the amount of foreign income tax you have paid.
However, there is a limit on the maximum amount of your offset. The limit is the greater of $1,000 and an amount worked out under this Subdivision. This amount is based on a comparison between your tax liability and the tax liability you would have if certain foreign‑taxed and foreign‑sourced income and related deductions were disregarded.
You may choose to use the limit of $1,000 and not work out this amount.
There is an increase in the limit to ensure foreign income tax paid on some amounts that are not taxed always forms part of the offset.
Operative provisions 770‑70 Amount of foreign income tax offset
770‑75 Foreign income tax offset limit
770‑80 Increase in offset limit for tax paid on amounts to which section 23AI or 23AK of the
Income Tax Assessment Act 1936 apply
The amount of your *tax offset for the year is the sum of the *foreign income tax you paid that counts towards the offset for the year.
Note 1: The amount of foreign income tax you paid may be affected by Subdivision 770‑C.
Note 2: The amount of the offset might be increased under section 770‑230 of the
Income Tax (Transitional Provisions) Act 1997 , if you have pre‑commencement excess foreign income tax.
(1) There is a limit (the
offset limit ) on the amount of your *tax offset for a year. If your tax offset exceeds the offset limit, reduce the offset by the amount of the excess.(2) Your offset limit is the greater of:
(a) $1,000; and
(b) this amount:
(i) the amount of income tax payable by you for the income year;
less (ii) the amount of income tax that would be payable by you for the income year if the assumptions in subsection (4) were made.
Note 1: If you do not intend to claim a foreign income tax offset of more than $1,000 for the year, you do not need to work out the amount under paragraph (b).
Note 2: The amount of the offset limit might be increased under section 770‑80.
(3) For the purposes of paragraph (2)(b), work out the amount of income tax payable by you, or that would be payable by you, disregarding any *tax offsets.
(4) Assume that:
(a) your assessable income did not include:
(i) so much of any amount included in your assessable income as represents an amount in respect of which you paid *foreign income tax that counts towards the *tax offset for the year; and
(ii) any other amounts of *ordinary income or *statutory income from a source other than an *Australian source; and
(b) you were not entitled to any deductions that:
(i) are *debt deductions that are attributable to an *overseas permanent establishment of yours; or
(ii) are other deductions that are reasonably related to income covered by paragraph (a) for that year.
Note: You must also assume you were not entitled to any deductions for certain converted foreign losses: see section 770‑35 of the
Income Tax (Transitional Provisions) Act 1997 .Example: If an entity has paid foreign income tax on a capital gain that comprises part of its net capital gain, only that capital gain on which foreign income tax has been paid is disregarded.
Your offset limit under subsection 770‑75(2) is increased by any amounts of *foreign income tax that count towards the *tax offset for you for the year because of subsection 770‑10(2).
Rules about when foreign tax is paid 770‑130 When foreign income tax is considered paid—taxes paid by someone else
770‑135 Foreign income tax paid by CFCs and FIFs on attributed amounts
Rules about when foreign tax is considered not paid 770‑140 When foreign income tax is considered not paid—anti‑avoidance rule
(1) This Act applies to you as if you had paid an amount of *foreign income tax in respect of an amount (a
taxed amount ) that is all or part of an amount included in your *ordinary income or *statutory income if you are covered by subsection (2) or (3) for an amount of foreign income tax paid in respect of the taxed amount.(2) You are covered by this subsection for an amount of *foreign income tax paid in respect of a taxed amount if that foreign income tax has been paid in respect of the taxed amount by another entity under an *arrangement with you or under the law relating to the foreign income tax.
Example: You are a partner in a partnership and the partnership pays foreign income tax on the partnership income.
(3) You are covered by this subsection for an amount of *foreign income tax paid in respect of the taxed amount to the extent that:
(a) the taxed amount is taken, because of section 6B of the
Income Tax Assessment Act 1936 (the1936 Act ), to be attributable to another amount of income of a particular kind or source; and(b) foreign income tax has been paid in respect of the other amount of income; and
(c) the taxed amount is less than it would have been if that tax had not been paid.
Example: Aust Co (an Australian resident) is the sole beneficiary of an Australian resident trust H and is presently entitled to all the income of trust H. Trust H owns shares in For Co (a foreign company). For Co pays a dividend to trust H and the dividend is subject to withholding tax in For Co’s country of residence.
Trust H allocates to Aust Co, the dividend, as well as other Australian source income trust H earned in the year (none of which was subject to foreign income tax). Aust Co is treated as having paid the foreign income tax paid by For Co under subsection 770‑130(3). The foreign income tax is treated as paid in respect of the amount included in Aust Co’s assessable income that is attributable to the dividend.
(1) This Division applies to an entity as if it had paid an amount of *foreign income tax worked out under subsection (7) in respect of an amount included in its assessable income if:
(a) the amount is included in its assessable income as described in subsection (2); and
(b) the conditions in subsections (3), (5) and (6) are satisfied.
(2) An amount is included in an entity’s assessable income as described in this subsection if:
(a) the entity is a company and the amount is included under:
(i) section 456 (a
section 456 case ) of the 1936 Act in relation to a *CFC and a statutory accounting period; or(ii) section 457 (a
section 457 case ) of that Act in relation to a CFC; or(iii) section 529 of that Act in relation to a foreign company (within the meaning of Part XI of that Act) (a
foreign company case ) in respect of a notional accounting period (within the meaning of that Part) (anotional accounting period ); or(b) the amount is included under section 529 of that Act in relation to a foreign trust (within the meaning of Part XI of that Act) (a
foreign trust case ) in respect of a notional accounting period.Note: Section 456 of the 1936 Act includes, in the assessable income of certain Australian shareholders, amounts that are attributable to the profits of an Australian‑controlled foreign company.
Section 457 does likewise when a controlled foreign company changes residence from an unlisted to a listed country or to Australia.
Section 529 includes, in the assessable income of resident taxpayers, amounts that are attributable to FIF interests held in foreign companies and in foreign trusts.
Tax paid condition
(3) An amount of *foreign income tax, income tax or *withholding tax (the
tax amount ) must have been paid:
(a) for a section 456 case—by the *CFC in respect of an amount included in the notional assessable income of the CFC for the statutory accounting period; or
(b) for a section 457 case—by the CFC; or
(c) for a foreign company case or a foreign trust case—by the foreign company or foreign trust in respect of an amount included in its notional income (within the meaning of Part XI of the 1936 Act) of the notional accounting period.
Note: Section 770‑130 deems foreign income tax to have been paid in certain circumstances.
(4) For the purposes of paragraphs (3)(a) and (b), the tax amount includes an amount that is taken to have been paid by the *CFC under subsection 393(4) of the 1936 Act (about tax paid on reinsurance premiums).
Association condition
(5) If the entity is a company, it must have an *attribution percentage of 10% or more:
(a) for a section 456 case—in relation to the *CFC at the end of the statutory accounting period; or
(b) for a section 457 case—in relation to the CFC at the residence‑change time (within the meaning of section 457 of the 1936 Act); or
(c) for a foreign company case—at the end of the notional accounting period.
Note: There is no association condition for a foreign trust case.
Calculation method condition for FIFs
(6) For a foreign company case and a foreign trust case, the amount included under section 529 of the 1936 Act must have been determined by the application of the calculation method set out in Subdivision D of Division 18 of Part XI of that Act (the
calculation method ).
Amount of foreign income tax
(7) The amount worked out under this subsection is:
(a) for a section 456 case—the sum of all the tax amounts for the statutory accounting period multiplied by the company’s *attribution percentage in relation to the *CFC at the time mentioned in paragraph (5)(a); or
(b) for a section 457 case—the sum of all the tax amounts to the extent they are attributable to the amount included in the company’s assessable income under section 457 of the 1936 Act; or
(c) for a foreign company case or a foreign trust case—an amount worked out using the following formula:
where:
entity’s share of calculated profit means the share of the calculated profit of the foreign company or foreign trust in respect of the notional accounting period to which the entity is entitled as determined under the calculation method.
FIF’s calculated profit means the calculated profit of the foreign company or foreign trust in respect of the notional accounting period as determined under the calculation method.
Grossing‑up of attributed amount
(8) For the purposes of this Act except this section and:
(a) section 371 of the 1936 Act(for a section 456 case or a section 457 case); or
(b) section 605 of that Act (for a foreign company case or a foreign trust case);
the amount included in the entity’s assessable income as described in subsection (2) is taken to be increased by the amount of tax worked out under subsection (7).
Note: Section 371 of the 1936 Act records an amount in an attribution account when the amount is included in the assessable income of an attributable taxpayer in relation to a CFC. Section 605 does the same thing for taxpayers with interests in FIFs.
Despite anything else in this Division, this Act applies to you as if you had
not paid an amount of *foreign income tax to the extent that you or any other entity become entitled to:
(a) a refund of the foreign income tax; or
(b) any other benefit worked out by reference to the amount of the foreign income tax (other than a reduction in the amount of the foreign income tax).
770‑190 Amendment of assessments
(1) Section 170 of the
Income Tax Assessment Act 1936 does not prevent the amendment of an assessment for the purpose of giving effect to this Division for an income year if:
(a) an event described in subsection (2) (an
amendment event ) happens after the time you lodged your *income tax return for that year; and(b) the amendment is made at any time during the period of 4 years starting immediately after the amendment event.
Note: Section 170 of that Act specifies the periods within which assessments may be amended.
(2) The following are amendment events:
(a) you pay an amount of *foreign income tax that counts towards your *tax offset for the year;
(b) there is an increase in an amount of foreign income tax you paid that counts towards your offset for the year;
(c) there is a reduction in an amount of foreign income tax you paid that counts towards your offset for the year.
Insert:
(4A) Subsection (4) does not prevent the taxpayer from making an election under subsection (3) in relation to a FIF in relation to a notional accounting period if the taxpayer also makes a choice under subsection 559A(1) in relation to the FIF in relation to the notional accounting period.
Insert:
(1) The taxpayer may choose to work out the notional income and notional deductions of the FIF in accordance with subsection (3) if:
(a) the FIF is a foreign company; and
(b) the taxpayer’s attribution percentage in relation to the FIF is 10% or more at the end of the relevant period; and
(c) if the taxpayer has previously made a choice under this subsection in relation to the FIF in relation to a notional accounting period of the FIF—the taxpayer has made such a choice in relation to the FIF in relation to every notional accounting period of the FIF (if any) occurring between:
(i) the end of the notional accounting period of the FIF for which the taxpayer first made such a choice in relation to the FIF; and
(ii) the start of the relevant period.
(2) For the purposes of this section:
(a) treat the FIF as a FIF that is a CFC; and
(b) treat the taxpayer as an attributable taxpayer in relation to the FIF throughout the relevant period; and
(c) treat the relevant period as the statutory accounting period of the FIF.
Main rule—work out notional income and notional deductions under Part X, etc.
(3) For the purposes of working out the notional income and notional deductions of the FIF of the relevant period:
(a) treat that notional income as the FIF’s notional assessable income worked out under Part X for the relevant period; and
(b) treat those notional deductions as the FIF’s notional allowable deductions worked out under Part X for the relevant period; and
(c) if the taxpayer is an AFI entity at a particular time in the relevant period—treat the FIF as an AFI subsidiary at that time.
(4) In working out the FIF’s notional allowable deductions for the purposes of paragraph (3)(b):
(a) disregard sections 429 and 431 (which deal with losses); and
(b) instead, include notional deductions (if any) from the notional income of the FIF of the relevant period worked out under section 572 (which deals with notional deductions for calculated losses for prior periods).
(5) For the purposes of subsection (3), treat the FIF’s commencing day mentioned in Subdivision C of Division 7 of Part X as the first day of the period over which, apart from this section, the profits or gains of a capital nature derived by the FIF during the relevant period would be determined.
Application of sections 575 to 579
(6) For the purposes of subsection (3), apply sections 575 to 579 in relation to a taxpayer (the
actual taxpayer ), subject to the rules in subsections (7) and (8).(7) If the actual taxpayer has made a choice under subsection (1) in relation to a FIF (the
first‑tier FIF ), in working out the first‑tier FIF’s notional assessable income for the purposes of paragraph (3)(a):
(a) disregard paragraphs 384(2)(ca) and 385(2)(ca) (which deal with amounts included in notional assessable income under Part XI); and
(b) instead, include in that notional assessable income the first‑tier FIF’s notional income worked out under section 576.
(8) If the taxpayer mentioned in paragraphs (1)(b) and (3)(c) is the first‑tier FIF mentioned in section 576 (because of the effect of section 576 on this section):
(a) treat the references in those paragraphs to the taxpayer as references to the actual taxpayer (and not to the first‑tier FIF); and
(b) if, as a result of paragraph (a), the actual taxpayer has made a choice under subsection (1) in relation to a FIF (the
second‑tier FIF )—in working out the second‑tier FIF’s notional assessable income for the purposes of paragraph (3)(a):
(i) disregard paragraphs 384(2)(ca) and 385(2)(ca) (which deal with amounts included in notional assessable income under Part XI); and
(ii) instead, include in that notional assessable income the second‑tier FIF’s notional income worked out under section 579.
Note: The actual taxpayer cannot make a choice under subsection (1) in relation to a third‑tier FIF, because the calculation method is not available in respect of a third‑tier FIF (see subparagraph 579(b)(ii)).
Definitions
(9) In this section:
AFI entity has the same meaning as in section 326.
AFI subsidiary has the same meaning as in Part X (see section 326).
attributable taxpayer has the same meaning as in Part X (see section 361).
attribution percentage has the same meaning as in Part X (see section 362).
notional allowable deductions has the same meaning as in Part X (see section 382).
notional assessable income has the same meaning as in Part X (see section 382).
Insert:
(1) This section applies if:
(a) the foreign company is a *FIF; and
(b) the holding company has made a choice under subsection 559A(1) of the
Income Tax Assessment Act 1936 in relation to the foreign company in respect of a *notional accounting period of the foreign company; and(c) because of the choice, the foreign company is treated under paragraph 559A(3)(c) of that Act as an AFI subsidiary (within the meaning of that Act) in relation to that holding company at a particular time.
Note: If the holding company makes a choice under subsection 559A(1) of the
Income Tax Assessment Act 1936 , the notional income and notional deductions of the foreign company (in its capacity as a FIF) is worked out under the FIF calculation method by reference to its notional assessable income and notional allowable deductions under Part X of that Act.(2) For the purposes of this Subdivision, treat the foreign company as an AFI subsidiary in relation to that holding company at that time.
Insert:
770‑A Transitional foreign losses (common rules)
770‑B Transitional foreign losses (special rules for consolidated groups)
770‑C Transitional foreign losses (special rules for CFCs)
770‑D Transitional foreign income tax offsets (common rules)
770‑E Transitional foreign income tax offsets (special rules for consolidated groups)
Converting an overall foreign loss into a type of tax loss 770‑1 Converting a past foreign loss into a tax loss
770‑5 Convertible foreign loss
770‑10 Reducing the amount of an overall foreign loss of a class of assessable foreign income
Utilising transitional foreign losses 770‑15 No special rules if convertible foreign losses total less than or equal to $10,000 or choice made
770‑20 Starting total for loss parcel
770‑25 Tax loss has foreign loss component
770‑30 Deduction limit for foreign loss component
770‑35 Offset limit to take account of deducted foreign loss component
(1) The
Income Tax Assessment Act 1936 (the1936 Act ), theIncome Tax Assessment Act 1997 (the1997 Act ) and this Act operate for the purposes of the income years mentioned in subsection (3) as if an entity that has a convertible foreign loss for an earlier income year under section 770‑5 had a tax loss for the earlier year equal to:
(a) the amount (if any) that would have been the entity’s tax loss for the earlier year under section 36‑10, 165‑70, 175‑35 or 701‑30 of the 1997 Act (about deducting past tax losses);
plus (b) the amount of the entity’s convertible foreign loss for the earlier year.
Note 1: This is instead of an amount of tax loss worked out under section 36‑10, 165‑70, 175‑35 or 701‑30 of the 1997 Act.
Note 2: This section does not affect the amount (if any) of an entity’s taxable income for the year. An entity may be taken to have a tax loss for a year under this section, but also have a taxable income for the year.
Note 3: This section has an expanded operation for consolidated groups: see section 770‑90.
(2) The earlier year is taken for those purposes to be a loss yearfor the entity if the entity would not otherwise have a tax loss for that year.
(3) The income years are:
(a) the first income year starting on or after the first 1 July that occurs after the day on which the
Tax Laws Amendment (2007 Measures No. 4) Act 2007 receives the Royal Assent (thecommencement year ); and(b) later income years.
(1) An entity has a loss to which this section applies (a
convertible foreign loss ) for an earlier income year covered by subsection (2) if:
(a) the entity has incurred an overall foreign loss in respect of a class of assessable foreign income (within the meaning of former section 160AFD of the 1936 Act) for the earlier year, reduced to the extent that it has been taken into account under that former section in reducing the entity’s assessable foreign income of the relevant class for an income year before the commencement year; and
(b) a positive amount remains after reducing the overall foreign loss under section 770‑10.
Note 1: For the classes of income, see former subsection 160AFD(8) of the 1936 Act.
Note 2: There is a modification to this rule for losses transferred to a head company of a consolidated group: see subsection 770‑80(2).
Note 3: Former section 160AFD of the 1936 Act allowed a past foreign loss to reduce assessable foreign income of the same class.
(2) The income year must be one of the most recent 10 income years ending before the commencement year.
(3) The amount of the convertible foreign loss for the earlier year is the sum of the positive amounts remaining after each overall foreign loss in respect of a class of assessable foreign income for the earlier year is reduced under section 770‑10.
Apply the following method statement to each overall foreign loss in relation to a class of assessable foreign income of an earlier income year.
Method statement
Step 1. If the entity is a company and the relevant class of assessable foreign income is the “all other assessable income” class—reduce the amount applicable under paragraph 770‑5(1)(a) to the extent (if any) that the loss is attributable to losses or outgoings incurred in gaining or producing income of a kind that would be the company’s non‑assessable non‑exempt income if it were gained or produced in the commencement year.
Note: For other entities, there is no reduction under step 1.
Step 2. For income years other than the most recent 7 income years ending before the commencement year—reduce the result of step 1 by half.
Note: Step 2 is modified for losses transferred to a head company of a consolidated group: see subsection 770‑80(3).
Section 770‑30 does not apply in relation to a tax loss an entity is taken by section 770‑1 to have if:
(a) the amount worked out under section 770‑20 (the
starting total ) is less than or equal to $10,000; or(b) the entity chooses to reduce one or more tax losses the entity is taken by section 770‑1 to have had so that the starting total equals $10,000.
The sum of the convertible foreign losses for each earlier year for which an entity is taken by section 770‑1 to have a tax loss is the starting total for all of those tax losses taken together (the
loss parcel ).Example: On 1 July 2008, Loss Co determines that it has incurred the following overall foreign losses:
• Year ended 30 June 2002: $5,000 (with no amount of convertible foreign loss due to the operation of 770‑10);
• Year ended 30 June 2004: $4,000 (with an amount of $2,000 being a convertible foreign loss);
• Year ended 30 June 2005: $7,000 (with an amount of $3,000 being a convertible foreign loss);
• Year ended 30 June 2007: $8,000 (with the entire amount being a convertible foreign loss).
Loss Co does not have any other domestic tax losses for those income years (that is, the 2002, 2004, 2005 and 2007 income years are not loss years).
Initially, Loss Co’s starting total for the loss parcel is $13,000, which consists of the tax losses incurred in the year ended 30 June 2004, the year ended 30 June 2005 and the year ended 30 June 2007 (there is no convertible foreign loss incurred in the year ended 30 June 2002 because of section 770‑1 and therefore there is no tax loss included in the loss parcel for that year). The 2004, 2005 and 2007 income years will then be a new loss year for Loss Co (under subsection 770‑1(2)), because Loss Co did not otherwise incur a tax loss in those years.
To avoid the operation of the deduction limit (under section 770‑30), Loss Co chooses under paragraph 770‑15(b) to reduce the starting total for the loss parcel to $10,000 by not converting $3,000 of its convertible foreign losses (which consists of $2,000 of the 2004 tax loss and $1,000 of the 2005 tax loss). Consequently, only the 2005 and 2007 income years are the new loss years for Loss Co.
A tax loss an entity is taken to have under section 770‑1 has a separate component (the
foreign loss component ). The amount of the component is the amount of the convertible foreign loss.
(1) The amount of the foreign loss component of one or more tax losses in a loss parcel that any entity can deduct in an income year
cannot exceed the amount worked out for the year using the table.
1 | The commencement year | 1/5 of the starting total for the loss parcel |
2 | The first income year ending after the commencement year | The difference between:
|
3 | The second income year ending after the commencement year | The difference between:
|
4 | The third income year ending after the commencement year | The difference between:
|
Note: There may be a reduction of the limit for the head company of a consolidated group under section 770‑100.
(2) This section does not limit the amount of the foreign loss component of a tax loss that an entity can deduct in a year later than the third income year ending after the commencement year.
Note: For later years, any remaining undeducted tax loss may be deducted to the extent permitted by the general rules for tax losses.
(1) This section affects the calculation of your offset limit for an income year under section 770‑75 of the 1997 Act.
(2) This section applies for an income year if you have deducted an amount of the foreign loss component of one or more tax losses (see section 770‑25) in the income year.
(3) In working out the amount referred to in subparagraph 770‑75(2)(b)(ii) of the 1997 Act for the year, you must assume (in addition to the assumptions set out in subsection 770‑75(4) of that Act), that you were not entitled to any deductions covered by subsection (2).
770‑80 Transferred losses taken not to be refreshed for purposes of converting overall foreign loss
770‑85 Deduction limit not to restrict transfer of losses
770‑90 Transfer of losses not restricted where part of trial year occurs before commencement year
770‑95 Foreign loss component and starting total retained after transfer to head company
770‑100 Limit where foreign loss component utilised by joining entity
770‑105 Modified operation of Subdivision 707‑C of the 1997 Act for foreign loss component
770‑110 Application of Subdivision to MEC groups
(1) This section applies if:
(a) a loss is transferred under section 707‑120 of the
Income Tax Assessment Act 1997 (the1997 Act ) from a joining entity to a head company; and(b) the loss is an overall foreign loss in respect of a class of assessable foreign income (within the meaning of former section 160AFD of the
Income Tax Assessment Act 1936 (the1936 Act )).Note: Former section 160AFD of the 1936 Act allowed a past foreign loss to reduce assessable foreign income of the same class.
(2) In applying section 770‑5, only have regard to the overall foreign loss if the income year in which it was actually incurred (disregarding subsection 707‑140(1) of the 1997 Act) was one of the most recent 10 income years ending before the commencement year.
Note: Section 770‑5 is about the amount of an entity’s convertible foreign losses. Section 707‑140 deems the head company of a group to have made a transferred loss in the year in which it is transferred.
(3) A reduction must be made under step 2 of the method statement in section 770‑10 if the overall foreign loss was actually incurred (disregarding subsection 707‑140(1) of that Act) in an income year other than the most recent 7 income years ending before the commencement year.
Note: Section 770‑10 is about reducing an entity’s past foreign losses to arrive at the entity’s convertible foreign loss for past years.
Section 770‑30 (deduction limit for foreign loss component) does not limit the transfer, under Subdivision 707‑A of the 1997 Act, of a tax loss that has a foreign loss component.
Section 770‑1 operates in relation to a trial year in the same way it operates in relation to the income years mentioned in subsection 770‑1(3) if:
(a) a tax loss has a foreign loss component; and
(b) it is necessary to determine whether an entity could utilise the tax loss for an income year consisting of the trial year; and
(c) part of the trial year occurs before the start of the commencement year mentioned in subsection 770‑1(3).
Where a tax loss having a foreign loss component is transferred under Subdivision 707‑A of the 1997 Act to a head company:
(a) the tax loss has the same amount of foreign loss component after the transfer as it had immediately before the transfer; and
(b) the starting total for the loss parcel to which the tax loss belongs (see section 770‑20) is the same after the transfer as it was immediately before the transfer; and
(c) for the purposes of section 770‑30, the amount of the foreign loss component of one or more of the tax losses in the parcel that any entity has deducted for an income year is the same after the transfer as immediately before the transfer.
Note 1: This section ensures a tax loss retains its foreign loss component, starting total and deduction history even though the head company is taken after the transfer to have made the loss for the income year in which the transfer occurs.
Note 2: Section 770‑30 sets a limit on how much of an entity’s past foreign losses may be deducted in each of the first 4 years after the commencement of this section.
(1) This section applies where one or more tax losses having a foreign loss component are transferred under Subdivision 707‑A of the 1997 Act to the head company of a consolidated group.
(2) The limit under subsection 770‑30(1) of the amount of the foreign loss component of the tax losses that the transferee can deduct for an income year (the
deduction year ) mentioned in an item in the table in that subsection is reduced by the amount (if any) worked out under subsection (3).(3) The amount of the reduction is the sum of each amount of the foreign loss component that has been deducted by other entities in respect of a non‑membership period mentioned in section 701‑30 of the 1997 Act, or income year, ending before the end of the deduction year.
Note: Section 701‑30 of the 1997 Act sets out how an entity that is not a subsidiary member of a consolidated group for all of an income year calculates its tax liability or tax loss for the periods (called non‑membership periods) when it is not a member of a group.
(1) This section affects the way in which one or more tax losses in a bundle of losses transferred under Subdivision 707‑A of the 1997 Act can be utilised by the transferee in an income year if:
(a) one or more of the tax losses has a foreign loss component (regardless whether at the time of transfer the bundle included a tax loss having a foreign loss component or an overall foreign loss in respect of a class of income (within the meaning of former section 160AFD of the 1936 Act)); and
(b) section 770‑30 limits the amount of the foreign loss component that the transferee can deduct in the income year.
(2) Subdivision 707‑C of the 1997 Act does not limit the utilisation of the foreign loss component for the income year.
Note: This means that the available fraction does not apply to the foreign loss component of a tax loss in the first 4 years after commencement. Instead, the deduction limit in section 770‑30 applies.
(3) For the purposes of working out under Subdivision 707‑C of the 1997 Act how much of the tax losses in the bundle the transferee can utilise in the income year, section 707‑310 of the 1997 Act has effect as if the first reference in paragraph (3)(b) of that section to the transferee’s losses included a reference to the sum of the amounts of the foreign loss components for all loss parcels in the income year.
Note: This affects the limit that Subdivision 707‑C of that Act sets on utilising other tax losses in the bundle (because that limit depends on the transferee’s income and gains remaining after utilisation of losses that have not been transferred under Subdivision 707‑A of that Act): see subsection 707‑310(3) of that Act.
This Subdivision has effect in relation to a MEC group in the same way in which it has effect in relation to a consolidated group.
770‑160 Converting a past CFC loss
770‑165 Convertible CFC loss
770‑170 Reducing the amount of a CFC loss of a class of notional assessable income
(1) The
Income Tax Assessment Act 1936 (the1936 Act ) operates for the purposes of the statutory accounting periods mentioned in subsection (2) as if an eligible CFC (within the meaning of Division 7 of Part X of that Act) (aneligible CFC ) that has a convertible CFC loss for an earlier statutory accounting period under section 770‑165 has a loss for the earlier period equal to the amount of the convertible CFC loss.Note: Part X of the 1936 Act deals with the attribution of the income of a CFC to attributable taxpayers.
(2) The statutory accounting periods are:
(a) the first statutory accounting period starting on or after the first 1 July that occurs after the day on which the
Tax Laws Amendment (2007 Measures No. 4) Act 2007 receives the Royal Assent (thecommencement period ); and(b) later statutory accounting periods.
(1) An eligible CFC has a loss to which this section applies (a
convertible CFC loss ) for an earlier statutory accounting period covered by subsection (2) if:
(a) the eligible CFC has a loss under section 426 of the 1936 Act for the earlier period in relation to notional assessable income of a class, reduced to the extent that it has been previously taken into account under section 431 of the 1936 Act in respect of a statutory accounting period before the commencement period; and
(b) a positive amount remains after reducing the loss under section 770‑170.
Note: For the classes of notional assessable income, see former subsection 424(1) of the 1936 Act.
(2) The statutory accounting period must be one of the most recent 10 statutory accounting periods ending before the commencement period.
(3) The amount of the convertible CFC loss for the earlier period is the sum of the positive amounts remaining after each loss in relation to notional assessable income of a class for the earlier period is reduced under section 770‑170.
Apply the following method statement to each loss in relation to notional assessable income of a class for the earlier statutory accounting period.
Method statement
Step 1. Reduce the amount applicable under paragraph 770‑165(1)(a) to the extent (if any) that the loss relates to the “all other amounts” class of notional assessable income, except to the extent (if any) that the loss is attributable to losses or outgoings incurred in gaining or producing income of a kind that would be the company’s notional assessable income or sometimes‑exempt income.
Step 2. For statutory accounting periods other than the most recent 7 statutory accounting periods ending before the commencement period—reduce the result of step 1 by half.
770‑220 Converting excess foreign tax credits into pre‑commencement excess foreign income tax
770‑225 Pre‑commencement excess foreign income tax generated for a company by excess foreign tax credits relating to other income
770‑230 Increase in the foreign income tax offset
(1) You have pre‑commencement excess foreign income tax from an income year if:
(a) you have excess foreign tax credits in relation to a class of foreign income from an earlier income year under former section 160AFE of the
Income Tax Assessment Act 1936 (the1936 Act ); and(b) the earlier income year is one of the most recent 5 income years ending before the first income year starting on or after the first 1 July that occurs after the day on which the
Tax Laws Amendment (2007 Measures No. 4) Act 2007 receives the Royal Assent; and(c) the credits have not already been applied under former section 160AFE of the 1936 Act.
Note: For the classes of income, see former subsections 160AF(7) and 160AFE(5) of the 1936 Act.
Former section 160AFE of the 1936 Act determined whether an entity had excess foreign tax credits for an income year and whether it could use them to increase the foreign tax credit amount in a later income year. Under the former foreign tax credit system, the excess credits were worked out and, where applicable, applied to increase the foreign tax credit amount in relation to each of the classes of income listed in former subsection 160AF(7).
(2) The amount of your pre‑commencement excess foreign income tax from an income year is the sum of the amounts set out in the table in subsection (3) for that year.
(3) Column 2 of the following table specifies the class of income to which the excess foreign tax credits covered by subsection (1) relate. Column 3 sets the amount of pre‑commencement excess foreign income tax from that income year generated by those excess foreign tax credits.
1 | Passive income | The amount of those excess foreign tax credits |
2 | Offshore banking income | The amount of those excess foreign tax credits multiplied by the eligible fraction (within the meaning of section 121EG of the 1936 Act) |
3 | An amount included in assessable income under section 305‑70 of the 1997 Act (which is about the assessability of lump sums received from foreign superannuation funds) | The amount of those excess foreign tax credits |
4 | Other income |
|
Note: Section 121EG of the 1936 Act applies the eligible fraction to assessable OB income, allowable OB deductions and foreign income tax paid on assessable OB income.
Reduce the amount of the excess foreign tax credits to the extent (if any) that they are attributable to foreign tax paid in respect of amounts that would be your non‑assessable non‑exempt income if they were derived in the commencement year.
(1) This section affects the amount of your tax offset under section 770‑70 of the
Income Tax Assessment Act 1997 (the1997 Act ).Note: That section determines how much tax offset you can claim for foreign income tax you have paid.
(2) Your tax offset for an income year (the
current year ) is increased in accordance with this section if:
(a) the amount of your tax offset worked out under section 770‑70 of the 1997 Act falls short of your offset limit under section 770‑75 of that Act; and
(b) you have pre‑commencement excess foreign income tax (see section 770‑220) from an earlier year of income that is one of the most recent 5 income years ending before the current year.
(3) Increase your tax offset for the current year by adding your pre‑commencement excess foreign income tax covered by paragraph (2)(b) to the amount of your tax offset worked out under section 770‑70 of the 1997 Act
. (4) Only increase the offset to the extent of the shortfall worked out under paragraph (2)(a).
(5) You no longer have the pre‑commencement excess foreign income tax to the extent that it has been used to increase your offset limit.
770‑285 Objects of this Subdivision
770‑290 Transferring subsidiary member’s pre‑commencement excess foreign income tax to head company
770‑295 Where entity not subsidiary member for whole of income year
770‑300 Pre‑commencement excess foreign income tax lost on joining consolidated group
770‑305 Exit history rule does not treat leaving entity as having pre‑commencement excess foreign income tax
770‑310 Application of Subdivision to MEC groups
The main objects of this Subdivision are:
(a) to allow the head company of a consolidated group to apply, in relation to an income year, pre‑commencement excess foreign income tax of an entity (the
joining entity ) that becomes a subsidiary member of the group at a time (thejoining time ) if:
(i) the income year starts at or after the joining time; and
(ii) that pre‑commencement excess foreign income tax is from an income year ending before the joining time; and
(b) to prevent the joining entity from applying pre‑commencement excess foreign income tax mentioned in subparagraph (a)(ii) to increase its own tax offset under Division 770 of the
Income Tax Assessment Act 1997 (the1997 Act ).
(1) This section operates for the purposes of section 770‑220 in relation to an income year if:
(a) an entity (the
joining entity ) becomes a subsidiary member of a consolidated group at a time (thejoining time ); and(b) the joining time is before or at the start of that income year; and
(c) the joining entity has pre‑commencement excess foreign income tax (the
transferred foreign income tax ) from an earlier income year.(2) For those purposes:
(a) the head company of the group is taken to have the transferred foreign income tax; and
(b) if, apart from paragraph (a), the head company has pre‑commencement excess foreign income tax from the earlier year—the transferred foreign income tax is taken to be included in that pre‑commencement excess foreign income tax.
(3) Subsection (2) also has effect for the purposes of a subsequent operation of this section.
(1) This section operates if:
(a) an entity (the
joining entity ) is a subsidiary member of a consolidated group for some but not all of an income year (thejoining year ); and(b) there are one or more periods in the joining year (each of which is a
non‑membership period ) during which the entity is not a subsidiary member of any consolidated group.Note: Section 701‑30 of the 1997 Act treats each non‑membership period as a separate income year for some purposes.
(2) Subsection (3) has effect for the purposes of section 701‑30 of the 1997 Act in relation to the joining entity.
(3) In working out amounts for the joining entity under subsection 701‑30(3) of the 1997 Act in relation to each non‑membership period, assume that, if the joining year starts at the same time as the earliest of those non‑membership periods, section 770‑230 operates in relation to the joining entity for that non‑membership period.
(1) For the purposes of section 770‑220 in relation to an income year ending after the time an entity becomes a subsidiary member of a consolidated group, the entity is taken not to have any pre‑commencement excess foreign income tax from an income year, or non‑membership period described in section 701‑30 of the 1997 Act, that ended before or at that time.
(2) Subsection (1) does not affect the operation of section 770‑220 in accordance with section 770‑290.
(1) This section operates in relation to an income year if:
(a) an entity (the
leaving entity ) ceases to be a subsidiary member of a consolidated group before the end of that income year; and(b) the head company of the group has pre‑commencement excess foreign income tax from an earlier income year.
(2) To avoid doubt, the leaving entity is
not taken because of section 701‑40 of the 1997 Act (the exit history rule) to have that pre‑commencement excess foreign income tax.(3) It does not matter whether the head company has that pre‑commencement excess foreign income tax because of section 717‑10 of the 1997 Act or 770‑290 (whether in relation to the leaving entity or another entity) or because of another provision.
This Subdivision has effect in relation to a MEC group in the same way in which it has effect in relation to a consolidated group.
Repeal the section.
7
Section 195‑1 (note at the end of the definition of taxable supply ) Omit “110‑10,”.
Omit “and foreign tax credits”.
Omit “, other than a foreign income deduction,”.
Omit “other than a foreign income deduction”.
Omit “, other than a foreign income deduction,”.
Omit “other than a foreign income deduction”.
Omit “, other than a foreign income deduction,”.
Omit “other than a foreign income deduction”.
Omit “, other than a foreign income deduction,”.
Omit “other than a foreign income deduction”.
17
Subsection 136(1) (definition of foreign income deduction ) Repeal the definition.
Insert:
interest income , in relation to a taxpayer, means income consisting of interest, or a payment in the nature of interest, in respect of:
(a) money lent, advanced or deposited; or
(b) credit given; or
(c) any other form of debt or liability;
whether security is given or not, other than:
(d) an amount to the extent to which it is a return on an equity interest in a company; or
(e) interest derived by the taxpayer from a transaction directly related to the active conduct of a trade or business; or
(f) interest derived by the taxpayer from carrying on a banking business or any other business whose income is principally derived from the lending of money; or
(g) interest received by the taxpayer during a year of income from a foreign company, where:
(i) at any time during the year of income, the taxpayer had (or would have had, if the taxpayer were a company and a resident), a voting interest, within the meaning of section 334A, amounting to at least 10% of the voting power, within the meaning of that section, in that company; and
(ii) during the year of income or the preceding year of income, the company has not derived an amount of interest income exceeding 10% of the total profits derived by the company during the same year.
Insert:
passive commodity gain , in relation to a taxpayer, in relation to a year of income, means a gain realised by the taxpayer in a year of income from disposing of a forward contract or a futures contract, or a right or option in respect of a forward contract or a futures contract, in respect of any thing (acommodity ):
(a) that is capable of delivery under an agreement for its delivery; and
(b) that is not an instrument creating or evidencing a chose in action;
unless the contract, right or option relates to the carrying on by the taxpayer of a business:
(c) of producing or processing the commodity; or
(d) that involves the use of the commodity as a raw material in a production process.
Insert:
passive income ,in relation to a taxpayer, in relation to a year of income means:
(a) dividends (within the meaning of this section) and non‑share dividends paid to the taxpayer in the year of income; or
(b) unit trust dividends (within the meaning of Division 6B or 6C) paid to the taxpayer in the year of income; or
(c) a distribution made to the taxpayer in the year of income that is taken to be a dividend because of section 47; or
(d) an amount that is taken to be a dividend paid to the taxpayer in the year of income because of section 47A or 108 or Division 7A of Part III; or
(e) interest income derived by the taxpayer in the year of income; or
(f) annuities derived by the taxpayer in the year of income; or
(g) income derived by the taxpayer by way of rent (within the meaning of Part X) in the year of income; or
(h) royalties derived by the taxpayer in the year of income; or
(i) an amount derived by the taxpayer in the year of income as consideration for the assignment, in whole or in part, of any copyright, patent, design, trade mark or other like property or right; or
(j) profits of a capital nature that accrued to the taxpayer in the year of income; or
(k) passive commodity gains that accrued to the taxpayer in the year of income; or
(l) an amount included in the assessable income of the taxpayer of the year of income under section 102AAZD, 456, 457, 459A or 529;
but does not include:
(m) an amount that arose from an asset necessarily held by the taxpayer in connection with an insurance business actively carried on by the taxpayer; or
(n) an amount included in the taxpayer’s assessable income under Division 13A.
Omit “26D,”.
Repeal the subsections.
Repeal the subsection, substitute:
(2) A reference in this Act to foreign tax is a reference to tax imposed by a law of a foreign country, being:
(a) tax upon income; or
(b) tax upon profits or gains, whether of an income or capital nature; or
(c) any other tax, being a tax that is subject to an agreement having the force of law under the
International Tax Agreements Act 1953 ;but does not include a unitary tax or a credit absorption tax.
Repeal the subsections.
25
Subsection 6AB(6) (definition of credit absorption tax ) Omit “a credit in respect of the tax under Division 18 of Part III”, substitute “an offset in respect of the tax under Division 770 of the
Income Tax Assessment Act 1997 ”.
Repeal the section.
Repeal the subsections.
Insert:
A tax offset under a provision of the
Income Tax Assessment Act 1997 that corresponds to a provision of this Act that provides for a credit is taken to be a credit for the purposes of this Act.Note: All other tax offsets under the
Income Tax Assessment Act 1997 are treated as rebates: see section 160ADA.
Repeal the subsection, substitute:
(2) This section is to be disregarded for the purposes of applying any other provision of this Act to determine allowable deductions.
Repeal the subsection, substitute:
(2) This section is to be disregarded for the purposes of applying any other provision of this Act to determine allowable deductions.
Repeal the section.
Repeal the section.
33
Subsection 46FA(11) (definition of group company ) Before “section 160AFE”, insert “former”.
34
Subsection 46FB(6) (definition of group company ) Before “section 160AFE”, insert “former”.
Omit “Division 18 and section 365”, substitute “section 365 of this Act and Division 770 of the
Income Tax Assessment Act 1997 ”.
Repeal the section.
Repeal the section.
Insert:
tax offset has the same meaning as in theIncome Tax Assessment Act 1997 .
Omit “FTC”, substitute “FITO”.
Insert:
FITO (Foreign income tax offset) means so much of any tax offset under Division 770 of theIncome Tax Assessment Act 1997 to which the taxpayer is entitled as is attributable to the distributed amount of the non‑resident trust’s year of income.
Repeal the definition.
Omit “FTC”, substitute “FITO”.
Insert:
FITO (Foreign income tax offset) means so much of any tax offset under Division 770 of theIncome Tax Assessment Act 1997 to which the taxpayer is entitled as is attributable to the taxpayer’s portion of the distributed amount of the non‑resident trust’s year of income.
Repeal the definition.
Omit “FTC”, substitute “FITO”.
Insert:
FITO (Foreign income tax offset) means so much of any tax offset under Division 770 of theIncome Tax Assessment Act 1997 to which the taxpayer is entitled as is attributable to the taxpayer’s portion of the distributed amount of the non‑resident trust’s year of income.
Repeal the definition.
Omit “FTC”, substitute “FITO”.
Insert:
FITO (Foreign income tax offset) means so much of any tax offset under Division 770 of theIncome Tax Assessment Act 1997 to which the trustee of the first trust would be entitled, in respect of the taxpayer’s portion of the distributed amount of the non‑resident trust’s year of income, if the taxpayer’s portion of the distributed amount of the non‑resident trust’s income were an amount in respect of which the trustee were liable to be assessed and to pay tax under section 99A.
Repeal the definition.
Omit “(1)”.
Repeal the subsection.
Omit “or in section 160AF”.
Omit “or in section 160AF”.
Repeal the paragraph.
Omit “unless it is taken to have a foreign source because it has been subject to foreign tax”.
Insert:
Only eligible fraction of foreign income tax is taken to be paid
(3A) Subject to section 121EH, this Act applies to an OBU as if only the eligible fraction of each amount of foreign income tax (within the meaning of the
Income Tax Assessment Act 1997 ) the OBU paid in respect of an amount of assessable OB income had been paid in respect of that income.Note: The heading to section 121EG is replaced by the heading “
Reduction of assessable OB income, allowable OB deductions and foreign income tax paid ”.
Add:
; and (e) subsection 121EG(3A) (which limits the OBU’s foreign income tax) does not apply to the OBU in relation to an amount of foreign income tax (within the meaning of the
Income Tax Assessment Act 1997 ) the OBU paid in respect of an amount of the OBU’s assessable OB income of the year of income.
Repeal the section.
Omit “(1)”.
Repeal the subsection.
Omit “subsection 3(6) and”.
Omit “160AHA”, substitute “6D”.
Repeal the Division.
Repeal the Division.
Note: The heading to Division 18B of Part III is omitted.
Repeal the Division.
Repeal the section.
Insert:
(11) Nothing in this section prevents the amendment, at any time, of an assessment to decrease the liability of a taxpayer for the purpose of giving effect to section 24 of the
International Tax Agreements Act 1953.
69
Subsection 177A(1) (definition of foreign tax credit ) Repeal the definition.
Insert:
foreign income tax offset means a tax offset allowed under Division 770 of theIncome Tax Assessment Act 1997 .
Omit “foreign tax credit” (wherever occurring), substitute “foreign income tax offset”.
Omit “foreign tax credit” (wherever occurring), substitute “foreign income tax offset”.
Omit “foreign tax credit”, substitute “foreign income tax offset”.
Omit “foreign tax credit” (wherever occurring), substitute “foreign income tax offset”.
Omit “foreign tax credit” (wherever occurring), substitute “foreign income tax offset”.
Repeal the section.
Repeal the paragraph.
Before “In this Part”, insert “(1)”.
79
Section 317 (definition of attributed tax account credit ) Repeal the definition.
80
Section 317 (definition of attributed tax account debit ) Repeal the definition.
81
Section 317 (definition of attributed tax account surplus ) Repeal the definition.
82
Section 317 (definition of member of a non‑portfolio company group ) Repeal the definition.
83
Section 317 (definition of non‑portfolio dividend ) Omit “section 160AFB”, substitute “section 334A”.
84
Section 317 (definition of tainted interest income ) Omit all the words after “factoring income;”, substitute:
but does not include:
(d) income (being interest, fees, commission or other amounts) derived by a person in respect of offshore banking transfers of the person; or
(e) income consisting of dividends or non‑share dividends paid to a person by a company out of profits derived from the making of offshore banking transfers.
Add:
(2) Where, if all offshore borrowings made by persons when they were offshore banking units were taken to be tax exempt loan money of the persons for the purposes of Division 11A of Part III, an offshore loan, or other transfer, of an amount by a person would, for the purposes of that Division, be an offshore loan, or other transfer, of tax exempt loan money of the person, the offshore loan, or other transfer, of the amount is an offshore banking transfer of the person for the purposes of the definition of
tainted interest income .
Repeal the subsection, substitute:
(1) Subject to this section, for the purposes of this Part, a particular item of income or profits derived by an entity is taken to be subject to tax in a listed country in a particular tax accounting period if, and only if, foreign tax (other than a withholding‑type tax) is payable under a tax law of the listed country in respect of the item because the item is included in the tax base of that law for the tax accounting period.
Repeal the section.
Insert:
(1) For the purposes of this section, a company is taken to have a voting interest in another company if:
(a) the first‑mentioned company is the beneficial owner of shares (other than eligible finance shares or widely distributed finance shares) in the other company that carry the right to exercise any of the voting power in the other company; and
(b) there is no arrangement in force at the relevant time by virtue of which any person is in a position, or may become in a position, to affect that right;
and the extent of the voting interest is taken to be the total number of votes that, by virtue of that right, can be cast on a poll at, or arising out of, a general meeting of the other company as regards all questions that could be submitted to such a poll.
(2) For the purposes of paragraph (1)(b), a person is taken to be in a position to affect a right of a company if that person has a right, power or option (whether by virtue of any provision in the constituent document of any company or by virtue of any agreement or instrument or otherwise) to acquire that right or do an act or thing that would prevent the first‑mentioned company from exercising that right or receiving any benefits accruing by reason of that right.
(3) Despite paragraph (1)(b) and subsection (2), in determining for the purposes of this section:
(a) whether a company has a voting interest in another company; and
(b) the extent of that interest;
any appointment of a liquidator in respect of the other company is to be disregarded.
(4) For the purposes of this section, the voting power in a company is the maximum number of votes that can be cast on a poll at, or arising out of, a general meeting of a company as regards all questions that can be submitted to such a poll.
(5) In this section,
arrangement includes:
(a) any agreement, arrangement, understanding, promise or undertaking, whether expressed or implied, and whether or not enforceable, or intended to be enforceable, by legal proceedings; and
(b) any scheme, plan, proposal, action, course of action or course of conduct, whether unilateral or otherwise.
Repeal the Division.
Omit “6AC,”.
Omit “subsection (5); and”, substitute “subsection (5).”.
Repeal the paragraph.
Repeal the subsection.
Repeal the section.
Omit “of a particular class”.
Omit “of that class”.
Omit “sections 430 and”, substitute “section”.
Omit “, in relation to notional assessable income of a particular class,”.
Omit “of that class” (wherever occurring).
Omit “, in relation to notional assessable income of a particular class,”.
Omit “, in relation to notional assessable income of that class,”.
Omit “, in relation to notional assessable income of a particular class,”.
Omit “, in relation to notional assessable income of that class,”.
Omit “disregarding section 430,”.
Omit “in relation to notional assessable income of a particular class”.
Note: The heading to section 426 is altered by omitting “
in relation to a class of notional assessable income ”.
Omit “of that class”.
Omit “of that class”.
Omit “ in relation to notional assessable income of that class”.
Omit “sections 79D and 79DA of this Act and”.
Omit “Subdivision 165‑A,”.
Omit “175‑A,”.
Omit “;”, substitute “.”.
Repeal the paragraph.
Omit “in relation to notional assessable income of a particular class”.
Note: The heading to section 429 is altered by omitting “
of a particular class ”.
Omit “of that class”.
Repeal the section.
Omit “, in relation to notional assessable income of a particular class,”.
Note: The heading to section 431 is altered by omitting “
in relation to a class of notional assessable income ”.
Omit “of the class”.
Repeal the paragraph, substitute:
(b) any excess is then a notional allowable deduction for the eligible period, but only to the extent that the deduction does not exceed the amount of the notional assessable income for the period as reduced by notional allowable deductions other than under this section;
Repeal the subsections, substitute:
(4) A loss for a statutory accounting period is to be taken into account under subsection (2) only if:
(a) where the eligible CFC is a resident of a listed country at the end of the eligible period:
(i) the eligible CFC is a resident of a listed country at the end of that statutory accounting period; and
(ii) if there are any statutory accounting periods (the
intervening periods ) occurring between that statutory accounting period and the eligible period—the eligible CFC was a resident of a listed country at the end of each of the intervening periods; or(b) where the eligible CFC is a resident of an unlisted country at the end of the eligible period:
(i) the eligible CFC is a resident of an unlisted country at the end of that statutory accounting period; and
(ii) if there are any statutory accounting periods (also the
intervening periods ) occurring between that statutory accounting period and the eligible period—the eligible CFC was a resident of an unlisted country at the end of each of the intervening periods.(4A) If:
(a) at the end of both the eligible period and of a prior statutory accounting period, the eligible CFC was a resident of the same country; and
(b) the country was either:
(i) a listed country at the end of the eligible period and an unlisted country at the end of that statutory accounting period; or
(ii) an unlisted country at the end of the eligible period and a listed country at the end of that statutory accounting period;
subsection (4) does not prevent a loss for that statutory accounting period, or an earlier statutory accounting period, from being taken into account under subsection (2).
(4B) If:
(a) the eligible CFC is a resident of an unlisted country at the end of the eligible period; and
(b) that country emerged from the dissolution of another country; and
(c) the other country was in existence at the end of a prior statutory accounting period; and
(d) at the end of that statutory accounting period, the CFC was a resident of the other country; and
(e) the other country was a listed country at the end of that statutory accounting period;
subsection (4) does not prevent a loss for that statutory accounting period, or an earlier statutory accounting period, from being taken into account under subsection (2).
Omit “, (4B) or (4C)”, substitute “or (4B)”.
Repeal the subsection, substitute:
(5) A loss for a statutory accounting period is not to be taken into account under subsection (2) if, assuming that it were a tax loss (within the meaning of the
Income Tax Assessment Act 1997 ) of the eligible CFC, it would not be taken into account or allowed as a deduction in relation to the eligible period.
Omit “section 373; and”, substitute “section 373.”.
Repeal the paragraph.
Repeal the subsection.
Repeal the Division.
127
Section 245‑110 in Schedule 2C (table items 2 and 3 of the table in the definition of table of deductible revenue losses ) Repeal the items.
Add:
|
|
|
Omit:
|
|
Omit:
|
|
131 Section 10‑5 (table item headed “foreign investment funds (FIFs)”) Omit:
|
|
132 Section 12‑5 (table item headed “foreign income”) Repeal the item.
133 Section 12‑5 (table item headed “foreign tax credits”) Repeal the item.
134 Section 12‑5 (table item headed “offshore banking units”) Omit:
|
Repeal the item.
136
Section 13‑1 (table item headed “foreign tax”) Repeal the item, substitute:
| |
|
|
137 Section 13‑1 (table item headed “overseas tax”) Repeal the item.
138 Section 13‑1 (table item headed “shipping income”) Repeal the item.
Repeal the item.
Repeal the note, substitute:
Note 1: Some deductions are limited so that they cannot contribute to a tax loss. See section 26‑55 (Limit on certain deductions).
141
Section 36‑25 (table items 1 and 2 in the table headed “ Tax losses of entities generally ”) Repeal the items.
Omit “subsection 160AEA(1)”, substitute “section 6”.
Insert:
22 | *Tax offset for *foreign income tax under Division 770 | You cannot get a refund of it, you cannot transfer it and you cannot carry it forward to a later income year |
Omit “Minister for the Environment and Heritage”, substitute “*Environment Minister”.
Repeal the heading, substitute:
Omit “a law of the Commonwealth, a State or Territory”, substitute “an *Australian law”.
Omit “have you”, substitute “you have”.
Insert:
(ia) section 59‑35 (amounts that would be mutual receipts but for prohibition on distributions to members);
The amendment made by item 37 applies to assessments for income years commencing on or after 1 July 2000.
Omit “direct or indirect equity interests”, substitute “*direct equity interests or *indirect equity interests”.
Omit “direct or indirect equity interest”, substitute “*direct equity interest or *indirect equity interest”.
Repeal the subsection.
Omit “direct or indirect equity interests”, substitute “*direct equity interests or *indirect equity interests”.
Omit “direct or indirect equity interest”, substitute “*direct equity interest or *indirect equity interest”.
Repeal the subsection.
Omit “direct or indirect equity interests”, substitute “*direct equity interests or *indirect equity interests”.
Omit “direct or indirect equity interest”, substitute “*direct equity interest or *indirect equity interest”.
Repeal the subsections.
Omit “direct or indirect equity interest”, substitute “*direct equity interest or *indirect equity interest”.
Omit “direct or indirect equity interests”, substitute “*direct equity interests or *indirect equity interests”.
Omit “direct or indirect equity interest”, substitute “*direct equity interest or *indirect equity interest”.
Repeal the subsections.
Omit “direct or indirect equity interests”, substitute “*direct equity interests or *indirect equity interests”.
Repeal the note.
Omit “direct or indirect equity interest”, substitute “*direct equity interest or *indirect equity interest”.
Repeal the note.
Repeal the subsection.
Omit “a law of the Commonwealth, or of a State or Territory,”, substitute “an *Australian law”.
Omit “320‑15(h)”, substitute “320‑15(1)(h)”.
59
Subsection 713‑545(6) (definition of ordinary class tax rate ) Omit “subparagraph 23A(a)(ii)”, substitute “paragraph 23A(a)”.
Omit “direct or indirect equity interests”, substitute “*direct equity interests or *indirect equity interests”.
Omit “*foreign permanent establishments”, substitute “*overseas permanent establishments”.
Omit “that time”, substitute “the particular time mentioned in subsection (2) or (2A)”.
Insert:
direct equity interests in a company are *shares in the company.
Insert:
Environment Minister means the Minister administering theEnvironment Protection and Biodiversity Conservation Act 1999 .
65
Subsection 995‑1(1) (definition of GST joint venture ) (the definition inserted by item 59 of Schedule 3 to the A New Tax System (Indirect Tax and Consequential Amendments) Act 1999 ) Repeal the definition.
Insert:
indirect equity interests : an entity hasindirect equity interests in a company if it has *shares or other interests in entities interposed between the entity and the company.
67
Subsection 995‑1(1) (paragraph (d) of the definition of member ) Omit “person who” (wherever occurring), substitute “entity that”.
68
Subsection 995‑1(1) (all the definitions of share ) Repeal the definitions, substitute:
share :
(a) in a company means a share in the capital of the company, and includes stock; and
(b) of an *exempting credit has the meaning given by section 208‑180; and
(c) of a *franked distribution has the meaning given by section 207‑55; and
(d) of a *franking credit has the meaning given by section 207‑57.
Repeal the section.
Omit “
Income Tax Assessment Act 1936‑1974 ”, substitute “Income Tax Assessment Act 1936 ”.
Repeal the paragraph, substitute:
(a) in respect of income to which subsection 128B(4) of the Assessment Act applies—30%; and
Repeal the section.
73 Subsection 3(1) (definition of AD/RLA component ) Repeal the definition.
74 Subsection 3(1) (definition of CS/RA component ) Repeal the definition.
Repeal the definition.
76
Subsection 3(1) (definition of general fund component ) Repeal the definition.
Repeal the definition.
78
Subsection 3(1) (definition of registered organisation ) Repeal the definition.
79
Subsection 3(1) (definition of RSA category A component ) Repeal the definition.
80
Subsection 3(1) (definition of RSA category B component ) Repeal the definition.
81
Subsection 3(1) (definition of RSA combined component ) Repeal the definition.
Repeal the definition, substitute:
RSA component has the same meaning as in theIncome Tax Assessment Act 1997 .
83
Subsection 3(1) (definition of standard component ) Repeal the definition, substitute:
standard component has the same meaning as in theIncome Tax Assessment Act 1997 .
Omit “sections 23A, 23B and 23C”, substitute “section 23A”.
Repeal the paragraphs.
Reletter as paragraphs (a), (b) and (c).
Repeal the subsections.
Omit “or a registered organization”.
Renumber as subsections (3), (4), (5), (6) and (7).
Omit “, not being a registered organization,”.
Omit “Subject to sections 23B and 23C, the”, substitute “The”.
Repeal the paragraphs, substitute:
(a) in respect of the ordinary class—30%; and
(b) in respect of the complying superannuation class—15%.
Repeal the sections.
Omit “paragraph 23(4BA)(a)”, substitute “paragraph 23(3)(a)”.
Omit “paragraph 23(4A)(ba)”, substitute “paragraph 23A(b)”.
The amendments made by items 73 to 95 apply to assessments for the 2007‑08 income year and later income years.
Repeal the heading, substitute:
Note 1: The heading to section 701C‑10 is replaced by the heading “
Additional membership rules where entities are interposed between the head company and a subsidiary member—case where an interposed entity is a foreign resident and the subsidiary member is a company ”.Note 2: The heading to section 701C‑15 is replaced by the heading “
Additional membership rules where entities are interposed between the head company and a subsidiary member—case where an interposed entity is a foreign resident and the subsidiary member is a trust or partnership ”.
Omit “*” (wherever occurring).
99 Section 14ZQ (paragraph (b) of the definition of delayed administration (trustee) objection ) Reletter as paragraph (a).
100 Section 14ZQ (paragraphs (c) to (f) of the definition of delayed administration (trustee) objection ) Repeal the paragraphs.
101 Section 14ZQ (paragraph (g) of the definition of delayed administration (trustee) objection ) Reletter as paragraph (b).
102 Subsection 288‑80(4) in Schedule 1 (definition of applicable withholding tax rate ) Omit “subparagraph 7(a)(ii)”, substitute “paragraph 7(a)”.
After “at a later”, insert “time”.
(1) The provisions of the
Fringe Benefits Tax Assessment Act 1986 listed in the table are amended as set out in the table.
1 | Subsection 121(1) (penalty) | $1,000 | 10 penalty units |
2 | Subsection 121(2) (penalty) | $1,000 | 10 penalty units |
3 | Subsection 121(2B) (penalty) | $1,000 | 10 penalty units |
4 | Subsection 122(1) (penalty) | $1,000 | 10 penalty units |
5 | Section 135 | $500 | 5 penalty units |
(2) The provisions of the
Income Tax Assessment Act 1936 listed in the table are amended as set out in the table.
1 | Section 16 (penalty) | $10,000 | 100 penalty units |
2 | Subsection 124ZADA(3) (penalty) | $200 | 2 penalty units |
3 | Subsection 124ZADB(1) (penalty) | $200 | 2 penalty units |
4 | Subsection 202CD(1) (penalty) | $1,000 | 10 penalty units |
5 | Subsection 202CD(4) (penalty) | $1,000 | 10 penalty units |
6 | Subsection 202EE(2) (penalty) | $1,000 | 10 penalty units |
7 | Subsection 202EF(4) (penalty) | $1,000 | 10 penalty units |
8 | Subsection 213(2) (penalty) | $2,000 | 20 penalty units |
9 | Section 251A (sub-subparagraph (c)(ii)(A) of
the definition of | $2,000 | 20 penalty units |
10 | Subsection 251KG(1) (penalty) | $500 | 5 penalty units |
11 | Subsection 251KH(1) (penalty) | $500 | 5 penalty units |
12 | Section 251KJ (penalty) | $500 | 5 penalty units |
13 | Subsection 251KK(2) (penalty) | $500 | 5 penalty units |
14 | Subsections 251N(1), (2) and (2B) (penalty) | $1,000 | 10 penalty units |
15 | Subsection 251O(1) (penalty) | $1,000 | 10 penalty units |
16 | Subsection 252(3) | $50 | 1 penalty unit |
17 | Subsection 252A(1) | $50 | 1 penalty unit |
18 | Section 266 | $500 | 5 penalty units |
(3) The provisions of the
Taxation Administration Act 1953 listed in the table are amended as set out in the table.
1 | Subsection 3D(21) | $10,000 | 100 penalty units |
2 | Subsection 8E(1) | $2,000 | 20 penalty units |
3 | Subsection 8E(2) | $4,000 | 40 penalty units |
4 | Subsection 8E(3) | $5,000 | 50 penalty units |
5 | Subsection 8H(1) | $5,000 | 50 penalty units |
6 | Subsection 8M(1) | $2,000 | 20 penalty units |
7 | Subsection 8M(2) | $4,000 | 40 penalty units |
8 | Subsection 8R(1) | $3,000 | 30 penalty units |
9 | Subsection 8R(2) | $5,000 | 50 penalty units |
10 | Subsection 8V(1) | $5,000 | 50 penalty units |
11 | Subsection 8V(2) | $10,000 | 100 penalty units |
12 | Subsection 8WA(1) (penalty) | $10,000 | 100 penalty units |
13 | Subsection 8WB(1) (penalty) | $10,000 | 100 penalty units |
14 | Subsection 8WC(1) (penalty) | $10,000 | 100 penalty units |
15 | Section 8XA (penalty) | $10,000 | 100 penalty units |
16 | Subsection 8XB(1) (penalty) | $10,000 | 100 penalty units |
17 | Subsection 13F(4) (penalty) | $1,000 | 10 penalty units |
18 | Subsection 14J(3) (penalty) | $1,000 | 10 penalty units |
19 | Subsection 14R(1) (penalty) | $5,000 | 50 penalty units |
20 | Subsection 14ZA(1) (penalty) | $500 | 5 penalty units |
Insert:
(da) a trust with the same individual specified in its family trust election; or
Repeal the subsection, substitute:
Election generally cannot be varied or revoked
(5) Subject to subsections (5A), (5B), (5C), (6) and (6A), the election cannot be varied or revoked.
Variation cases
(5A) The trustee of a trust may, in respect of an income year during the period specified in subsection (6B), vary an election so that a different individual (the
new individual ) is specified for the purposes of subsection (3) as the individual whose family group is to be taken into account in relation to the election if:
(a) the new individual was a member of the family of the individual originally specified in the election at the election commencement time; and
(b) any conferrals of present entitlement to income or capital of:
(i) the trust; and
(ii) an entity for which an interposed entity election has been made in relation to the trust;
during the period in which the election has been in force have been made on the new individual or on persons who would have been members of the new individual’s family group at the time of the conferral; and
(c) any distributions of income or capital of:
(i) the trust; and
(ii) an entity for which an interposed entity election has been made in relation to the trust;
during the period in which the election has been in force have been made to the new individual or to persons who would have been members of the new individual’s family group at the time of the distribution.
(5B) A variation of an election under subsection (5A) in relation to a trust can only be made once.
(5C) The trustee of a trust may vary an election so that a different individual (the
new individual ) is specified for the purposes of subsection (3) as the individual whose family group is to be taken into account in relation to the election if:
(a) an order; or
(b) an agreement; or
(c) an award;
of a kind mentioned in paragraphs 126‑5(1)(a) to (f) of the
Income Tax Assessment Act 1997 results in the new individual, or a group comprising the new individual and members of the new individual’s family, having control of the trust under subsection (5D).
(5D) The new individual, or a group comprising the new individual and members of the new individual’s family, have control of the trust for the purposes of subsection (5C) if any of paragraphs 272‑87(2)(a) to (g) are satisfied in relation to a group consisting of:
(a) the new individual; or
(b) the new individual and members of the new individual’s family.
Insert:
(6A) The trustee of a trust may, in respect of an income year during the period specified in subsection (6B), revoke the election unless:
(a) the trust, or another entity, has incurred a tax loss and had its assessable income reduced by part or all of the loss in an income year or years during the period:
(i) starting at the beginning of the income year specified in the election; and
(ii) finishing at the end of the income year immediately prior to the income year from which the revocation is to be effective (see subsection (8));
and the trust, or the other entity, could not have had its assessable income so reduced had the election not been in force; or
(b) the trust, or another entity, has claimed a deduction for bad debts in an income year or years during the period specified in paragraph (a) and the trust, or the other entity, could not have claimed the deduction had the election not been in force; or
(c) a beneficiary of the trust in an income year during the period specified in paragraph (a) received a franked distribution indirectly through the trust and paragraph 207‑150(1)(a) of the
Income Tax Assessment Act 1997 would have applied in relation to the distribution had the election not been in force.
Period to vary or revoke the election
(6B) The trustee of a trust cannot vary or revoke the election under subsections (5A) or (6A) unless the variation or revocation is in respect of an income year that occurs during the period:
(a) starting at the beginning of the income year specified in the election and finishing at the end of the fourth income year after the income year specified in the election; or
(b) starting at the beginning of the income year in which Schedule 8 to the
Tax Laws Amendment (2007 Measures No. 4) Act 2007 commenced and finishing at the end of the subsequent income year.Note: The heading to subsection 272‑80(6) is altered by omitting “
case ” and substituting “cases ”.
4
Subsections 272‑80(7), (8) and (9) in Schedule 2F Repeal the subsections, substitute:
How to vary or revoke the election
(7) To revoke an election under subsection (6), the revocation must be made in the trust’s return of income for the income year in which the later time occurs. If the trustee is not required to give a return for the income year, the revocation must:
(a) be in writing and in the approved form; and
(b) specify the later time; and
(c) be given to the Commissioner before the end of:
(i) 2 months after the end of the income year in which the later time occurs; or
(ii) such later day as the Commissioner allows.
(8) To vary or revoke an election under subsection (5A), (5C) or (6A), the variation or revocation must be made in the trust’s return of income for the income year from which the variation or revocation is to be effective. If the trustee is not required to give a return for the income year, the variation or revocation must:
(a) be in writing and in the approved form; and
(b) specify the income year from which the variation or revocation is to be effective; and
(c) be given to the Commissioner on or before:
(i) 2 months after the end of that income year; or
(ii) such later day as the Commissioner allows.
When election is in force
(9) The election is in force:
(a) if it is not revoked—at all times after the election commencement time (see subsection (10)); or
(b) if it is revoked under subsection (6)—at all times from the election commencement time until the later time specified in the revocation; or
(c) if it is revoked under subsection (6A)—at all times from the election commencement time until the end of the income year immediately prior to the income year from which the revocation is to be effective (see subsection (8)).
Omit “in accordance with subsection 272‑80(3)”.
Repeal the subsections, substitute:
Election generally cannot be revoked
(5) Subject to subsections (5A) and (5B), the election cannot be revoked.
Revocation cases
(5A) A company, the partners in any partnership or the trustee of a trust may, in respect of an income year during the period specified in subsection (5C), revoke the election if at the election commencement time, or at a later time, the entity was, or becomes, a member of the family group (within the meaning of subsection 272‑90(3A) or (5)) of the individual specified in the family trust election.
(5B) The election is taken to be revoked if the family trust election to which it relates is revoked.
Period to revoke the election
(5C) A company, the partners in any partnership or the trustee of a trust cannot revoke an election under subsection (5A) unless the revocation is in respect of an income year that occurs during the period:
(a) starting at the later of:
(i) the beginning of the income year specified in the election; and
(ii) the beginning of the income year in which the entity became a member of the family group;
and finishing at the end of the fourth income year after the income year referred to in subparagraph (i) or (ii); or
(b) starting at the beginning of the income year in which Schedule 8 to the
Tax Laws Amendment (2007 Measures No. 4) Act 2007 commenced and finishing at the end of the subsequent income year.
How revocation is made
(6) A revocation must be made in the entity’s return of income for the income year from which the revocation is to be effective. If the entity is not required to give a return for the income year, the revocation must:
(a) be in writing and in the approved form; and
(b) specify the income year from which the revocation is to be effective; and
(c) be given to the Commissioner on or before:
(i) 2 months after the end of that income year; or
(ii) such later day as the Commissioner allows.
When election is in force
(6A) The election is in force:
(a) if it is not revoked—at all times after the election commencement time (see subsection (6B)); or
(b) if it is revoked under subsection (5A)—at all times from the election commencement time to the end of the income year immediately prior to the income year from which the revocation is to be effective (see subsection (6)); or
(c) if the family trust election to which it relates is revoked under subsection 272‑80(6)—at all times from the election commencement time until the later time specified in that revocation; or
(d) if the family trust election to which it relates is revoked under subsection 272‑80(6A)—at all times from the election commencement time to the end of the income year immediately prior to the income year from which the family trust revocation is to be effective (see subsection 272‑80(8)).
Election commencement time
(6B) The
election commencement time is:
(a) if the company, partnership or trust does not pass the family control test at all times in the specified income year—the later of:
(i) the beginning of the specified day; and
(ii) the earliest time from which the company, partnership or trust does pass the family control test for the remainder of the specified income year; or
(b) in any other case—the beginning of the specified day.
Add:
(8) For the purposes of subsection (7) disregard an election that has been revoked under subsection (5A) or (5B).
Insert:
Certain former family members
(2A) The following persons are members of the primary individual’s family group in relation to the conferral or distribution:
(a) a person who was a spouse of either the primary individual or of a member of the primary individual’s family before a breakdown in the marriage; and
(b) a person who was a widow or widower (whichever is applicable) of either the primary individual or of a member of the primary individual’s family and who is now the spouse of a person who is not a member of the primary individual’s family; and
(c) a person who was a step‑child of either the primary individual or of a member of the primary individual’s family before a breakdown in the marriage of the primary individual or the member of the primary individual’s family.
Note: The fact that a person is a member of the family group of an individual under this subsection does not mean that the person is a member of the individual’s family under section 272‑95.
Insert:
Trust with same primary individual
(3A) A trust with the same primary individual specified in its family trust election is a member of the primary individual’s family group in relation to the conferral or distribution.
Repeal the section, substitute:
(1) The
family of an individual (thetest individual ) consists of the test individual and all of the following (if applicable):
(a) any parent, grandparent, brother or sister of the test individual or the test individual’s spouse;
(b) any nephew, niece or child of the test individual or the test individual’s spouse;
(c) any lineal descendant of a nephew, niece or child referred to in paragraph (b);
(d) the spouse of the test individual or of anyone who is a member of the test individual’s family because of paragraphs (a), (b) and (c).
Note:
Child andspouse are defined in subsection 6(1).(2) A person does not cease to be a family member merely because of the death of any other family member.
(3) In this section, an adopted child, step‑child or ex‑nuptial child of a person is taken to be a lineal descendant of that person for the purposes of determining the lineal descendants of that person or any other person.
Note: A person who is no longer a member of an individual’s family under this section may still be a member of the individual’s family group under subsection 272‑90(2A).
Before “In this Schedule”, insert “(1)”.
Insert:
specified individual in relation to a family trust election has the meaning given by subsection (2).
Add:
(2) A reference in this Schedule to a person specified in a family trust election is a reference to:
(a) if the family trust election has not been varied—the person specified for the purposes of subsection 272‑80(3); or
(b) if the family trust election has been varied—the person most recently specified under subsection 272‑80(5A) or (5C).
The amendments made by this Schedule apply to the income year in which this Act receives the Royal Assent and to later income years.
0
0
0