Tax Laws Amendment (Transfer of Provisions) Act 2010 (Cth)
This compilation was prepared on 29 July 2011
taking into account amendments up to Act No. 41 of 2011
The text of any of those amendments not in force
on that date is appended in the Notes section
The operation of amendments that have been incorporated may be
affected by application provisions that are set out in the Notes section
Prepared by the Office of Legislative Drafting and Publishing,
Attorney‑General’s Department, Canberra
Contents
This Act may be cited as the
Tax Laws Amendment (Transfer of Provisions) Act 2010 .
(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 this Act receives the Royal Assent. | 29 June 2010 |
Schedule 1 | 1 July 2010. | 1 July 2010 |
Schedule 2 | Immediately after the commencement of the provision(s) covered by table item 4. | 1 July 2010 |
Schedules 3 to 5 | 1 July 2010. | 1 July 2010 |
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Each Act that is specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has effect according to its terms.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:
(1) This section applies if 2 or more persons (the
recipients ) are in receipt of income, or of profits or gains of a capital nature, for or on behalf of:
(a) a non‑resident; or
(b) a person absent from Australia.
(2) The Commissioner may, if it appears to him or her to be expedient to do so:
(a) consolidate all or any of the assessments of the income, profits or gains; and
(b) declare one of the recipients to be the agent of the non‑resident or absent person in respect of the consolidated assessment; and
(c) require the agent to pay income tax on the amount assessed.
(3) If the Commissioner does so, the agent is liable to pay the tax.
Repeal the Part.
Insert:
Guide to Division 5
5‑A How to work out when to pay your income tax
If your assessed income tax liability exceeds the credits available to you under the PAYG system, this Division explains
when you must pay the excess to the Commissioner.If your assessment is amended so that you must pay income tax, or pay more income tax than under the previous assessment, this Division explains:
(a)
when you must pay the additional tax; and(b)
when any associated interest charges must be paid.
Note: For provisions about the collection and recovery of income tax and other tax‑related liabilities, see Part 4‑15 in Schedule 1 to the
Taxation Administration Act 1953 .
5‑5 When income tax is payable
5‑10 When shortfall interest charge is payable
5‑15 General interest charge payable on unpaid income tax or shortfall interest charge
Scope
(1) This section tells you when income tax you must pay for a *financial year is due and payable.
Note: The Commissioner may defer the time at which the income tax is due and payable: see section 255‑10 in Schedule 1 to the
Taxation Administration Act 1953 .(2) The income tax is only due and payable if the Commissioner makes an *assessment of your income tax for the year.
(3) However, if the Commissioner does make an *assessment of your income tax for the year, the tax may be taken to have been due and payable at a time before your assessment was made.
Note: This is to ensure that general interest charge begins to accrue from the same date for all like entities. General interest charge on unpaid income tax is calculated from when the tax is due and payable, not from when the assessment is made: see section 5‑15.
Original assessments—self‑assessment entities
(4) If you are a *self‑assessment entity, the income tax is due and payable on the first day of the sixth month after the end of the income year.
Example: If your income year is the same as the financial year, your income tax would be due and payable on 1 December.
Original assessments—other entities
(5) If you are
not a *self‑assessment entity, the income tax is due and payable 21 days after the day (thereturn day ) on or before which you are required to lodge your *income tax return with the Commissioner.Note: For rules about income tax returns and when they are due, see Part IV of the
Income Tax Assessment Act 1936 .(6) However, if you lodge your return
on or before the return day and the Commissioner gives you a notice of *assessment (other than an amended assessment)after the return day, the income tax is due and payable 21 days after the Commissioner gives you the notice.
Amended assessments
(7) If the Commissioner amends your *assessment, any extra income tax resulting from the amendment is due and payable 21 days after the day on which the Commissioner gives you notice of the amended assessment.
Note: Shortfall interest charge may be payable, on any amount of extra income tax payable as a result of the amended assessment, for each day in the period that:
(a) starts at the time income tax was due and payable on your original assessment; and
(b) ends the day before the day on which the Commissioner gives you notice of the amended assessment.
An amount of *shortfall interest charge that you are liable to pay is due and payable 21 days after the day on which the Commissioner gives you notice of the charge.
Note: Shortfall interest charge is imposed if the Commissioner amends an assessment and the amended assessment results in an increase in some tax payable. For provisions about liability for shortfall interest charge, see Division 280 in Schedule 1 to the
Taxation Administration Act 1953 .
If an amount of income tax or *shortfall interest charge that you are liable to pay remains unpaid after the time by which it is due to be paid, you are liable to pay the *general interest charge on the unpaid amount for each day in the period that:
(a) starts at the beginning of the day on which the amount was due to be paid; and
(b) finishes at the end of the last day on which, at the end of the day, any of the following remains unpaid:
(i) the income tax or shortfall interest charge;
(ii) general interest charge on any of the income tax or shortfall interest charge.
Note 1: The general interest charge is worked out under Part IIA of the
Taxation Administration Act 1953 .Note 2: Shortfall interest charge is worked out under Division 280 in Schedule 1 to that Act.
Insert:
self‑assessment entity means a full self‑assessment taxpayer (within the meaning of subsection 6(1) of theIncome Tax Assessment Act 1936 ).
Insert:
statutory demand has the same meaning as in theCorporations Act 2001 .
Insert:
Deferrals for particular taxpayers
Insert:
Deferrals for classes of taxpayers
(2A) The Commissioner, having regard to the circumstances of the case, may, by notice published on the Australian Taxation Office website, defer the time at which amounts of *tax‑related liabilities are, or would become, due and payable by a class of taxpayers (whether or not the liabilities have already arisen).
(2B) If the Commissioner does so, that time is varied accordingly.
Note: General interest charge and any other relevant penalties, if applicable for any unpaid amounts of the liabilities, will begin to accrue from the time as varied. See, for example, paragraph 5‑15(a) of the
Income Tax Assessment Act 1997 .(2C) A notice published under subsection (2A) is not a legislative instrument.
Deferral does not affect time for giving form
Omit “subsection (1)”, substitute “this section”.
Add:
255‑100 Commissioner may require security deposit
255‑105 Notice of requirement to give security
255‑110 Offence
(1) The Commissioner may require you to give security for the due payment of an existing or future *tax‑related liability of yours if:
(a) the Commissioner has reason to believe that:
(i) you are establishing or *carrying on an *enterprise in Australia; and
(ii) you intend to carry on that enterprise for a limited time only; or
(b) the Commissioner reasonably believes that the requirement is otherwise appropriate, having regard to all relevant circumstances.
Note: A requirement to give security under this section is
not a tax‑related liability. As such, the collection and recovery provisions in this Part do not apply to it.(2) The Commissioner may require you to give the security:
(a) by way of a bond or deposit (including by way of payments in instalments); or
(b) by any other means that the Commissioner reasonably believes is appropriate.
(3) The Commissioner may require you to give security under this section:
(a) at any time the Commissioner reasonably believes is appropriate; and
(b) as often as the Commissioner reasonably believes is appropriate.
Example: The Commissioner may require additional security if he or she reasonably believes that the original security requirement underestimated the amount of the likely tax‑related liability.
Commissioner must give notice of requirement to give security
(1) If the Commissioner requires you to give security under section 255‑100, he or she must give you written notice of the requirement.
Content of notice
(2) The notice must:
(a) state that you are required to give the security to the Commissioner; and
(b) explain why the Commissioner requires the security; and
(c) set out the amount of the security; and
(d) describe the means by which you are required to give the security under subsection 255‑100(2); and
(e) specify the time by which you are required to give the security; and
(f) explain how you may have the Commissioner’s decision to require you to give the security reviewed.
(3) To avoid doubt, a single notice may relate to security for the payment of 2 or more existing or future *tax‑related liabilities, but must comply with subsection (2) in relation to each of them.
When notice is given
(4) Despite section 29 of the
Acts Interpretation Act 1901 , a notice under subsection (1) is taken to be given at the time the Commissioner leaves or posts it.Note: Section 28A of the
Acts Interpretation Act 1901 may be relevant to giving a notice under subsection (1).
Miscellaneous
(5) A failure to comply with this section does not affect the validity of the requirement to give the security under section 255‑100.
You commit an offence if:
(a) the Commissioner requires you to give security under section 255‑100; and
(b) you fail to give that security as required.
Penalty: 100 penalty units.
Add:
Guide to Division 268
268‑A Object
268‑B Making estimates
268‑C Liability to pay estimates
268‑D Reducing and revoking estimates
268‑E Late payment of estimates
268‑F Miscellaneous
This Division enables the Commissioner to make an estimate of amounts not paid as required by Part 2‑5 (Pay as you go (PAYG) withholding), and to recover the amount of the estimate.
If you are given an estimate, you are liable to pay the amount of the estimate. That liability is distinct from your liability to pay the amounts required by Part 2‑5. However, you can ensure that the Commissioner does not require you to pay more than the amounts not paid under that Part.
Other Divisions of this Part provide for the recovery of amounts payable under this Division.
268‑5 Object of Division
The object of this Division is to enable the Commissioner to take prompt and effective action to recover amounts not paid as required by Part 2‑5 (Pay as you go (PAYG) withholding).
268‑10 Commissioner may make estimate
268‑15 Notice of estimate
Estimate
(1) The Commissioner may estimate the unpaid and overdue amount of a liability (the
underlying liability ) of yours under section 16‑70.Note: Section 16‑70 requires you to pay to the Commissioner amounts you have withheld under the Pay as you go withholding rules.
Amount of estimate
(2) The amount of the estimate must be what the Commissioner thinks is reasonable.
(3) In making the estimate, the Commissioner may have regard to anything he or she thinks relevant.
Example: The Commissioner may have regard to information about amounts you withheld under the Pay as you go rules before the period in relation to which the underlying liability arose.
Only one estimate for each liability
(4) While the estimate is in force, the Commissioner cannot make another estimate relating to the underlying liability.
(5) For the purposes of subsection (4), the estimate is in force if:
(a) the Commissioner has given you notice of the estimate; and
(b) the estimate has not been revoked; and
(c) your liability to pay the estimate has not been discharged.
Commissioner must give notice of estimate
(1) The Commissioner must give you written notice of the estimate.
Content of notice
(2) The notice must:
(a) identify the underlying liability; and
(b) specify the date of the estimate; and
(c) set out the amount of the estimate; and
(d) state that the amount of the estimate is due and payable; and
(e) explain how you may have the amount of the estimate reduced or the estimate revoked.
(3) To avoid doubt, a single notice may relate to 2 or more estimates, but must comply with subsection (2) in relation to each of them.
When notice is given
(4) Despite section 29 of the
Acts Interpretation Act 1901 , a notice under subsection (1) is taken to be given at the time the Commissioner leaves or posts it.Note: Section 28A of the
Acts Interpretation Act 1901 may be relevant to giving a notice under subsection (1).
268‑20 Nature of liability to pay estimate
268‑25 Accuracy of estimate irrelevant to liability to pay
268‑30 Estimate provable in bankruptcy or winding up
Liability to pay amount of estimate
(1) You must pay to the Commissioner the amount of the estimate if the Commissioner gives you notice of the estimate in accordance with section 268‑15. The amount is due and payable when the Commissioner gives you the notice.
Note: The amount of the estimate may be reduced, or the estimate revoked, under Subdivision 268‑D.
Liability to pay amount of estimate is distinct from underlying liability
(2) Your liability to pay the amount of the estimate is separate and distinct from the underlying liability. It is separate and distinct for all purposes.
Example: The Commissioner may take:
(a) proceedings to recover the unpaid amount of the estimate; or
(b) proceedings to recover the unpaid amount of the underlying liability; or
(c) proceedings of both kinds.
Discharging one liability discharges other liabilities
(3) Despite subsection (2), if, at a particular time, one of the liabilities to which this subsection applies is discharged, to the extent of an amount, for either of the following reasons, each of the other liabilities to which this subsection applies is discharged to the extent of the same amount:
(a) an amount is paid or applied towards discharging the liability;
(b) the liability is discharged because of section 269‑40 (Effect of director paying penalty or company discharging liability).
(4) Subsection (3) applies to whichever of the following liabilities are in existence at the particular time:
(a) your liability to pay the amount of the estimate;
(b) the underlying liability;
(c) a liability of yours under a judgment, to the extent that it is based on a liability referred to in paragraph (a) or (b).
(5) Subsection (3) does not discharge a liability to a greater extent than the amount of the liability.
You are liable to pay the unpaid amount of the estimate even if:
(a) the underlying liability never existed or has been discharged in full; or
(b) the unpaid amount of the underlying liability is less than the unpaid amount of the estimate.
Note 1: Section 268‑40 revokes the estimate if you give the Commissioner a statutory declaration, or file an affidavit, to the effect that the underlying liability never existed.
Note 2: Subdivision 268‑D provides ways in which you can challenge the estimate or its amount.
(1) Your liability (the
estimate liability ) to pay the unpaid amount of the estimate is provable in a bankruptcy or winding up, even if the estimate was made after:
(a) the date of the bankruptcy; or
(b) the relevant date (within the meaning of the
Corporations Act 2001 ).(2) However, the estimate liability is provable only to the extent that the underlying liability would be provable if the unpaid amount of the underlying liability were the same as the unpaid amount of the estimate.
Example: Subsection (2) prevents proof of the estimate liability if the underlying liability could not be proved because, for example, of when it arose.
(3) Subsections (1) and (2) do not apply if:
(a) the underlying liability has already been admitted to proof; and
(b) the proof has not been set aside.
(4) If the estimate liability has been admitted to proof at a particular amount, the underlying liability is provable only to the extent the unpaid amount of the underlying liability exceeds that particular amount.
(5) To the extent that a liability is provable because of this section, it is taken, for the purposes of the
Bankruptcy Act 1966 , to be provable in bankruptcy under that Act.
268‑35 How estimate may be reduced or revoked—Commissioner’s powers
268‑40 How estimate may be reduced or revoked—statutory declaration or affidavit
268‑45 How estimate may be reduced or revoked—rejection of proof of debt
268‑50 How estimate may be reduced—amount paid or applied
268‑55 When reduction or revocation takes effect
268‑60 Consequences of reduction or revocation—refund
268‑65 Consequences of reduction or revocation—statutory demand changed or set aside
268‑70 Consequences of reduction or revocation—underlying liability
Reduction
(1) The Commissioner may at any time reduce the amount of the estimate, but is not obliged to consider whether or not to do so.
(2) If the Commissioner reduces the amount of the estimate under subsection (1), he or she must give you a written notice that:
(a) identifies the underlying liability; and
(b) sets out the reduced amount of the estimate.
Note: The estimate is taken always to have had effect as reduced: see section 268‑55.
Revocation
(3) The Commissioner may at any time revoke the estimate, but is not obliged to consider whether or not to do so.
(4) If the Commissioner revokes the estimate under subsection (3), he or she must give you a written notice that:
(a) identifies the underlying liability; and
(b) states that the estimate has been revoked.
Note: The estimate is taken never to have been made: see section 268‑55.
Matters for Commissioner to consider
(5) In exercising his or her power under this section to reduce the amount of the estimate, or to revoke the estimate, the Commissioner must have regard to:
(a) the following principles:
(i) the estimate is of the unpaid amount of the underlying liability as at a particular time;
(ii) the purpose of reducing the amount of the estimate is to bring it closer to the unpaid amount of the underlying liability as at the time the estimate was made;
(iii) reductions of the unpaid amount of the underlying liability that happen after the time the estimate was made are dealt with by section 268‑20 (Nature of liability to pay estimate) and so should not be taken into account in exercising such a power; and
(b) the effects of sections 268‑55 and 268‑70 (effect of reduction or revocation on liabilities).
Scope
(1) This section applies as set out in the following table:
1 | the Commissioner gives you notice of the estimate | you give the Commissioner a statutory declaration for the purposes of this section |
(b) a longer period allowed by the Commissioner. |
2 | you are a party to proceedings before a court that relate to the recovery of the unpaid amount of the estimate | you:
(b) serve a copy on the Commissioner |
(b) a longer period allowed by the court. |
3 |
| the company:
(b) serves a copy on the applicant |
(b) a longer period allowed by the court. |
Example: For the purposes of item 2 of the table, taking a procedural step as a party to proceedings includes entering an appearance, filing a notice of intention to defend, or applying to set aside judgment entered in default of appearance.
Note 1: Section 459C of the
Corporations Act 2001 creates a presumption that a company is insolvent, and may be wound up, if the company fails to comply with a statutory demand.Note 2: See section 268‑90 for what the statutory declaration or affidavit must contain and who must make, swear or affirm it.
Reduction
(2) The amount of the estimate is reduced if the statutory declaration is to the effect, or the affidavit verifies facts sufficient to prove, that a specified lesser amount is the unpaid amount of the underlying liability.
Example: Subsection (2) will apply if the statutory declaration etc. is to the effect that the underlying liability has been discharged in full (and therefore the unpaid amount of the liability is nil).
(3) The amount of the reduction is the amount by which the unpaid amount of the estimate (just before the reduction) exceeds the amount specified.
Note: The effect of subsection (3) is to reduce the unpaid amount of the estimate to the amount specified.
Revocation
(4) The estimate is revoked if the statutory declaration is to the effect, or the affidavit verifies facts sufficient to prove, that the underlying liability never existed.
Scope
(1) This section applies if:
(a) the Commissioner lodges a proof of debt relating to the unpaid amount of the estimate; and
(b) section 268‑95 applies to an entity (your
supervising entity ) in relation to you.
Rejection of proof of debt
(2) Your supervising entity may give the Commissioner a statutory declaration to the effect that:
(a) the underlying liability has been discharged in full; or
(b) the unpaid amount of the underlying liability is a specified, lesser amount; or
(c) the underlying liability never existed.
Note: See section 268‑90 for what the statutory declaration must contain and who must make it.
(3) If your supervising entity does so, he or she may reject the proof of debt (in whole or in part) on the ground made out in the statutory declaration.
(4) If the Commissioner appeals, or applies for review of, your supervising entity’s decision to reject the proof of debt, nothing in subsection (2) or (3) prevents evidence being adduced to contradict statements in the declaration.
Note: Such evidence might also be relevant to a prosecution for an offence, such as an offence against section 11 of the
Statutory Declarations Act 1959 (False declarations).
Revocation or reduction of estimate
(5) The following table applies in relation to the outcome following all (if any) appeals from, and applications for review of, your supervising entity’s decision to reject the proof of debt. (If there are no appeals or applications for review, the outcome is your supervising entity’s decision as originally made.)
1 | the proof is rejected in whole on the ground that the estimate has been discharged in full | the amount of the estimate is reduced by the unpaid amount of the estimate (just before the reduction). |
2 | the proof is rejected in part | the amount of the estimate is reduced by so much of the unpaid amount of the estimate (just before the reduction) as is rejected. |
3 | the proof is rejected in whole on the ground that the underlying liability never existed | the estimate is revoked. |
Note 1: The effect of item 1 of the table is to reduce the unpaid amount of the estimate to nil.
Note 2: The effect of item 2 of the table is to reduce the unpaid amount of the estimate to the amount admitted to proof.
(1) This section applies if:
(a) an amount is paid or applied towards discharging your liability to pay the amount of the estimate; and
(b) the amount paid or applied exceeds the unpaid amount of the underlying liability as at the time just before the payment or application.
(2) The amount of the estimate is reduced so that it does not exceed the unpaid amount, at the time mentioned in paragraph (1)(b), of the underlying liability.
Scope
(1) This section applies for the purposes of the following:
(a) Subdivision 268‑C (Liability to pay estimates);
(b) section 268‑60 (refund of overpayments);
(c) Subdivision 268‑E (Late payment of estimates);
(d) Division 269 (Penalties for directors of non‑complying companies).
When reduction or revocation takes effect
(2) If the amount of the estimate is reduced, the estimate has effect, and is taken always to have had effect, as if the original amount of the estimate had been the reduced amount.
(3) If the estimate is revoked, the estimate is taken never to have been made.
(1) This section applies if:
(a) an amount is paid or applied towards discharging your liability to pay the amount of the estimate; and
(b) the amount paid or applied exceeds the unpaid amount of the estimate as at the time just before the payment or application.
Example: You pay an amount towards discharging the estimate and the estimate is later reduced to a lesser amount.
Note: Section 268‑50 provides for the reduction of the amount of the estimate in the case of overpayment.
(2) The Commissioner must pay you the excess.
Note: See Division 3A of Part IIB of this Act for the rules about how the Commissioner must pay you. Division 3 of that Part allows the Commissioner to apply the amount owing as a credit against tax debts that you owe the Commonwealth.
Scope
(1) This section applies if:
(a) the estimate is of the unpaid amount of a liability of a company; and
(b) the Commissioner has served a *statutory demand on the company relating to the company’s liability to pay the unpaid amount of the estimate; and
(c) the amount of the estimate is later reduced, or the estimate is revoked.
Statutory demand changed
(2) The *statutory demand is changed accordingly.
(3) The *statutory demand is taken to have had effect (as so changed) from the time the Commissioner served it on the company.
Statutory demand set aside
(4) The *statutory demand is set aside if subsection (2) reduces the amount of the debt (or the total of the amounts of the debts) below the statutory minimum (within the meaning of the
Corporations Act 2001 ).
Reduction of the amount of the estimate, or revocation of the estimate, does not affect the Commissioner’s rights or remedies in relation to the underlying liability (except to the extent that this Division expressly provides otherwise).
268‑75 Liability to pay the general interest charge
268‑80 Effect of paying the general interest charge
(1) This section applies if your liability to pay the amount of the estimate remains undischarged at the end of 7 days after the Commissioner gives you notice of the estimate.
(2) You are liable to pay the *general interest charge on the unpaid amount of the estimate for each day in the period that:
(a) started at the beginning of the day by which the underlying liability was due to be paid; and
(b) finishes at the end of the last day on which, at the end of the day, any of the following remains unpaid:
(i) the amount of the estimate;
(ii) general interest charge on any of the amount of the estimate.
Note: The general interest charge is worked out under Part IIA of this Act.
Scope
(1) If you are liable to pay the *general interest charge under section 268‑75 in relation to the estimate, this section applies to the following liabilities:
(a) your liability to pay the general interest charge;
(b) a liability of yours to pay a general interest charge, under a corresponding provision of Subdivision 16‑B, because the underlying liability remains undischarged;
(c) liability under a judgment, to the extent that it is based on a liability referred to in paragraph (a) or (b);
(d) a liability of yours to pay interest carried by a judgment debt, to the extent that the judgment debt is based on:
(i) the liability to pay the estimate; or
(ii) the liability to pay the general interest charge under section 268‑75 on an unpaid amount of the estimate.
Discharging one liability discharges other liabilities
(2) If, at a particular time, an amount is paid or applied towards discharging one of the liabilities, each of the other liabilities that is in existence at that time is discharged to the extent of the same amount.
(3) However, this section does not discharge a liability to a greater extent than the amount of the liability.
(4) If, because a judgment debt carries interest, section 8AAH of this Act reduces the amount of a *general interest charge payable as mentioned in paragraph (1)(b) of this section, the amount of the reduction is taken, for the purposes of subsection (2) of this section, to have been applied towards discharging your liability to the charge.
268‑85 Effect of judgment on liability on which it is based
268‑90 Requirements for statutory declaration or affidavit
268‑95 Liquidators, receivers and trustees in bankruptcy
268‑100 Division not to limit or exclude Corporations or Bankruptcy Act
Estimate payable despite judgment
(1) The unpaid amount of the estimate, or of the underlying liability, does not stop being payable merely because a judgment has been given by, or entered in, a court.
Division applies to liability under judgment
(2) This Division applies in relation to liability under a judgment, to the extent that it is based on your liability to pay the amount of the estimate, in the same way as this Division applies to that estimate liability.
(3) This Division applies in relation to liability under a judgment, to the extent that it is based on the underlying liability, in the same way as this Division applies to the underlying liability.
(4) Subsections (2) and (3) do not apply for the purposes of the following:
(a) section 268‑20 (Nature of liability to pay estimate);
(b) section 268‑30 (Estimate provable in bankruptcy or winding up);
(c) section 268‑45 (rejection of proof of debt).
Judgment conclusive as to amount of liability
(5) Nothing in this Division affects the conclusiveness of a judgment as to the amount of a liability on which it is based.
Scope
(1) This section applies to a statutory declaration given, or an affidavit filed, for the purposes of section 268‑40 or 268‑45 in relation to the estimate.
Content
(2) The statutory declaration or affidavit must verify the following facts:
(a) whichever of the following are applicable:
(i) the sum of all amounts you withheld under Division 12 during the relevant period, or the fact that you did not withhold any such amounts during the period;
(ii) the sum of all amounts you were required to pay under Division 13 (Alienated personal services payments) during the relevant period, or the fact that you were not required to pay any such amounts during the period;
(iii) the sum of all amounts you were required to pay under Division 14 (non‑cash benefits and accruing gains) during the relevant period, or the fact that you were not required to pay any such amounts during the period;
(b) what has been done to comply with Division 16 (Payer’s obligations and rights) in relation to the amounts referred to in paragraph (a).
Maker or deponent
(3) The statutory declaration or affidavit must be made, sworn or affirmed by:
(a) an individual specified in the following table; or
(b) your liquidator, receiver or trustee in bankruptcy (if and as applicable).
1 | an individual | that individual. |
2 | a body corporate |
|
3 | a body politic | an individual prescribed by the regulations. |
4 | a partnership | a partner of the partnership. |
5 | any other unincorporated association or body of persons |
|
6 | a trust | (a) the trustee of the trust; or
|
7 | a *superannuation fund or an *approved deposit fund | (a) the trustee of the fund; or
|
(4) If the entity specified in the table in subsection (3) is not an individual, the table is taken to specify the individual who, under that subsection, would be eligible to make a statutory declaration in relation to an estimate of a liability of that entity.
Scope
(1) This section applies to an entity (your
supervising entity ), in relation to you, if:
(a) the entity is your liquidator, receiver, trustee in bankruptcy or administrator, or the administrator of a deed of company arrangement executed by you; or
(b) your property is vested in the entity, or the entity has control of your property.
(2) For the purposes of this Division, this section applies to an entity in relation to a partnership if it applies to the entity in relation to a partner of the partnership.
Notices from the Commissioner
(3) For the purposes of this Division, a notice given by the Commissioner to your supervising entity is taken to have been given to you.
(4) You must give your supervising entity a copy of any notice given to you by the Commissioner under this Division. You must do so as soon as practicable, and in any event within 7 days, after:
(a) if the Commissioner gave you the notice before the day when your property vested in, or control of your property passed to, the supervising entity—that day; or
(b) if subsection (2) applies and the Commissioner gave you the notice before the day when the relevant partner’s property vested in, or control of the relevant partner’s property passed to, the supervising entity—that day; or
(c) otherwise—the day when the Commissioner gave you the notice.
(5) If the Commissioner gives you and your supervising entity a notice at different times, each notice is taken to have been given at the later of those times.
Action taken by your supervising entity
(6) For the purposes of this Division, a statutory declaration given to the Commissioner by your supervising entity is taken to have been given by you.
(7) For the purposes of this Division, an affidavit filed by your supervising entity is taken to have been filed by you.
(8) For the purposes of item 2 in the table in subsection 268‑40(1) (recovery proceedings), a procedural step taken by your supervising entity is taken to have been taken by you.
Multiple supervising entities
(9) If you have 2 or more supervising entities, anything this Division provides for to be done by or in relation to your supervising entity may be done by or in relation to any of them.
This Division is not intended to limit or exclude the operation of Chapter 5 of the
Corporations Act 2001 (External administration), or theBankruptcy Act 1966 , to the extent that Chapter or Act can operate concurrently with this Division.Note: Section 268‑30 and Subdivision 268‑D affect the operation of Chapter 5 of the
Corporations Act 2001 and theBankruptcy Act 1966 .
Guide to Division 269
269‑A Object and scope
269‑B Obligations and penalties
269‑C Discharging liabilities
269‑D Miscellaneous
The directors of a company have a duty to ensure that the company either:
(a) meets its obligations under Subdivision 16‑B (obligation to pay withheld amounts to the Commissioner) and Division 268; or
(b) goes promptly into voluntary administration under the
Corporations Act 2001 or into liquidation.The directors’ duties are enforced by penalties.
Note: The duties this Division imposes on the directors of the company are in addition to the similar duties imposed on the public officer of the company. See subsection 252(1) of the
Income Tax Assessment Act 1936 .
269‑5 Object of Division
269‑10 Scope of Division
The object of this Division is to ensure that a company either:
(a) meets its obligations under Subdivision 16‑B (obligation to pay withheld amounts to the Commissioner) and Division 268; or
(b) goes promptly into voluntary administration under the
Corporations Act 2001 or into liquidation.Note: The directors’ duties are enforced by penalties on the directors. A penalty recovered under this Division is applied towards meeting the company’s obligation.
(1) This Division applies as set out in the following table:
1 | withholds an amount under Division 12 | that amount in accordance with Subdivision 16‑B. |
2 | receives an *alienated personal services payment | an amount in respect of that alienated personal services payment in accordance with Division 13 and Subdivision 16‑B. |
3 | provides a *non‑cash benefit | an amount in respect of that benefit in accordance with Subdivision 16‑B. |
4 | is given notice of an estimate under Division 268 | the amount of the estimate. |
Note: In a case covered by item 2, 3 or 4 of the table, the due day is the same as the initial day.
(2) This Division applies in relation to an amount that the company purports to withhold under Division 12, but is not required to withhold, as if the company were required to withhold the amount.
269‑15 Directors’ obligations
269‑20 Penalty
269‑25 Notice
269‑30 Remission of penalty before end of notice period
269‑35 Defences
Directors’ obligations
(1) The directors (within the meaning of the
Corporations Act 2001 ) of the company (from time to time) on or after the initial day must cause the company to comply with its obligation.(2) The directors of the company (from time to time) continue to be under their obligation until:
(a) the company complies with its obligation; or
(b) an administrator of the company is appointed under section 436A, 436B or 436C of the
Corporations Act 2001 ; or(c) the company begins to be wound up (within the meaning of that Act).
Instalment arrangements
(3) The Commissioner must not commence, or take a procedural step as a party to, proceedings to enforce an obligation, or to recover a penalty, of a director under this Division if an *arrangement that covers the company’s obligation is in force under section 255‑15 (Commissioner’s power to permit payments by instalments).
Note 1: The arrangement may also cover other obligations of the company.
Note 2: Subsection (3) does not prevent the Commissioner from giving a director a notice about a penalty under section 269‑25.
Penalty for director on or before due day
(1) You are liable to pay to the Commissioner a penalty if:
(a) at the end of the due day, the directors of the company are still under an obligation under section 269‑15; and
(b) you were under that obligation at or before that time (because you were a director).
Note: Paragraph (1)(b) applies even if you stopped being a director before the end of the due day: see subsection 269‑15(2).
(2) The penalty is due and payable at the end of the due day.
Note: The Commissioner must not commence proceedings to recover the penalty until the end of 21 days after the Commissioner gives you notice of the penalty under section 269‑25.
Penalty for new director
(3) You are also liable to pay to the Commissioner a penalty if:
(a) after the due day, you became a director of the company and began to be under an obligation under section 269‑15; and
(b) 14 days later, you are still under that obligation.
(4) The penalty is due and payable at the end of that 14th day.
Note: The Commissioner must not commence proceedings to recover the penalty until the end of 21 days after the Commissioner gives you notice of the penalty under section 269‑25.
Amount of penalty
(5) The amount of a penalty under this section is equal to the unpaid amount of the company’s liability under its obligation.
Note 1: See section 269‑40 for the effect on your penalty of the company discharging its obligation, or of another director paying his or her penalty.
Note 2: See section 269‑45 for your rights of indemnity and contribution.
Commissioner must give notice of penalty
(1) The Commissioner must not commence proceedings to recover from you a penalty payable under this Subdivision until the end of 21 days after the Commissioner gives you a written notice under this section.
Content of notice
(2) The notice must:
(a) set out what the Commissioner thinks is the unpaid amount of the company’s liability under its obligation; and
(b) state that you are liable to pay to the Commissioner, by way of penalty, an amount equal to that unpaid amount because of an obligation you have or had under this Division; and
(c) explain the main circumstances in which the penalty will be remitted.
(3) To avoid doubt, a single notice may relate to 2 or more penalties, but must comply with subsection (2) in relation to each of them.
When notice is given
(4) Despite section 29 of the
Acts Interpretation Act 1901 , a notice under subsection (1) is taken to be given at the time the Commissioner leaves or posts it.Note 1: Section 28A of the
Acts Interpretation Act 1901 may be relevant to giving a notice under subsection (1).Note 2: Section 269‑50 of this Act is also relevant to giving a notice under subsection (1).
A penalty of yours under this Division is remitted if the directors of the company stop being under the relevant obligation under section 269‑15:
(a) before the Commissioner gives you notice of the penalty under section 269‑25; or
(b) within 21 days after the Commissioner gives you notice of the penalty under that section.
Scope
(1) This section applies in relation to:
(a) proceedings to recover from you a penalty payable under this Division; or
(b) proceedings against you in relation to a right referred to in paragraph 269‑45(2)(b) (directors jointly and severally liable as guarantors).
Illness
(2) It is a defence in the proceedings if it is proved that, because of illness or for some other good reason, it would have been unreasonable to expect you to take part, and you did not take part, in the management of the company at any time when:
(a) you were a director of the company; and
(b) the directors were under the relevant obligations under section 269‑15.
All reasonable steps
(3) It is a defence in the proceedings if it is proved that:
(a) you took all reasonable steps to ensure that the directors complied with their relevant obligations under section 269‑15; or
(b) there were no such steps that you could have taken.
(4) In determining what are reasonable steps for the purposes of subsection (3), have regard to:
(a) when, and for how long, you were a director and took part in the management of the company; and
(b) all other relevant circumstances.
Power of courts to grant relief
(5) Section 1318 of the
Corporations Act 2001 does not apply to an obligation or liability of a director under this Division.
269‑40 Effect of director paying penalty or company discharging liability
269‑45 Directors’ rights of indemnity and contribution
Liabilities
(1) This section applies to the following liabilities:
(a) the liability of the company under its obligation referred to in section 269‑10;
(b) the liability of each director (or former director) to pay a penalty under this Division in relation to the liability of the company referred to in paragraph (a);
(c) a liability under a judgment, to the extent that it is based on a liability referred to in paragraph (a) or (b).
Discharging one liability discharges other liabilities
(2) If an amount is paid or applied at a particular time towards discharging one of the liabilities, each of the other liabilities in existence at that time is discharged to the extent of the same amount.
(3) If, because of section 268‑20 (Nature of liability to pay estimate), one of the liabilities is discharged at a particular time to the extent of a particular amount, each of the other liabilities in existence at that time is discharged to the extent of the same amount.
(4) This section does not discharge a liability to a greater extent than the amount of the liability.
(1) This section applies if you pay a penalty under this Division in relation to a liability of the company under an obligation referred to in section 269‑10.
(2) You have the same rights (whether by way of indemnity, subrogation, contribution or otherwise) against the company or anyone else as if:
(a) you made the payment under a guarantee of the liability of the company; and
(b) under the guarantee you and every other person who has paid, or from whom the Commissioner is entitled to recover, a penalty under this Division in relation to the company’s obligation were jointly and severally liable as guarantors.
269‑50 How notice may be given
269‑55 Division not to limit or exclude Corporations Act
The Commissioner may give you a notice under section 269‑25 by leaving it at, or posting it to, an address that appears, from information held by the Australian Securities and Investments Commission, to be, or to have been within the last 7 days, your place of residence or *business.
To avoid doubt, this Division is not intended to limit or exclude the operation of Chapter 5 of the
Corporations Act 2001 (External administration), to the extent that Chapter can operate concurrently with this Division.
Repeal the paragraph.
Insert:
(gaa) decisions of the Commissioner of Taxation under Subdivision 268‑B or section 268‑35 in Schedule 1 to the
Taxation Administration Act 1953 ;Note: Subdivision 268‑B and section 268‑35 empower the Commissioner to make, reduce and revoke estimates of certain liabilities.
13
Subsection 443BA(2) (definition of unpaid amount ) Repeal the definition.
Omit “, and Division 1 of Part VI,”.
Insert:
(aa) Division 5 of the
Income Tax Assessment Act 1997 ; and
Repeal the note.
Repeal the subsection.
18
At the end of Subdivision B of Division 6AAA of Part III Add:
Sections 170, 172, 174, 254 and 255 of this Act, and Division 5 of the
Income Tax Assessment Act 1997 (How to work out when to pay your income tax), apply to interest payable under section 102AAM in the same way as they apply to income tax.
Omit “204,”.
After “former sections”, insert “204,”.
Add:
(5) Division 5 of the
Income Tax Assessment Act 1997 (How to work out when to pay your income tax) applies to tax payable under this section in the same way as that Division applies to income tax.
Repeal the subsection, substitute:
Collection etc. of additional tax
(8) Former sections 204, 205, 206, 215, 216, 258 and 259, and sections 254 and 255, apply to additional tax payable under this section in the same way as they apply to income tax.
23
Subsection 163B(10) (definition of instalment taxpayer ) Before “Division 1C”, insert “former”.
24
Subsection 163B(10) (definition of relevant entity ) Before “Division 1B”, insert “former”.
Repeal the subsection, substitute:
(2) Subsection (1) applies to the following in the same way as it applies to tax:
(a) the general interest charge under:
(i) section 163AA, former section 170AA, former subsection 204(3), former subsection 221AZMAA(1), former subsection 221AZP(1), former subsection 221YD(3) or former section 221YDB of this Act;
(ii) section 5‑15 of the
Income Tax Assessment Act 1997 ;(b) additional tax under former Part VII of this Act;
(c) shortfall interest charge.
Note 1: The general interest charge is worked out under Part IIA of the
Taxation Administration Act 1953 and shortfall interest charge is worked out under Division 280 in Schedule 1 to that Act.Note 2: Subsection 8AAB(4) of that Act lists the provisions that apply the general interest charge.
Repeal the subsection, substitute:
(4) This section applies to the following in the same way as it applies to tax:
(a) the general interest charge under:
(i) section 163AA, former section 170AA, former subsection 204(3), former subsection 221AZMAA(1), former subsection 221AZP(1), former subsection 221YD(3) or former section 221YDB of this Act;
(ii) section 5‑15 of the
Income Tax Assessment Act 1997 ;(b) additional tax under former Part VII of this Act;
(c) shortfall interest charge.
Note 1: The general interest charge is worked out under Part IIA of the
Taxation Administration Act 1953 and shortfall interest charge is worked out under Division 280 in Schedule 1 to that Act.Note 2: Subsection 8AAB(4) of that Act lists the provisions that apply the general interest charge.
Omit “sections 204, 213 and 219 of the
Income Tax Assessment Act 1936 ”, substitute “Division 5 of this Act”.
Repeal the sections.
Repeal the item, substitute:
3 | section 5‑5 of the | the *financial year to which the income tax etc. relates |
5 | section 197‑70 of the | the *franking period of the *head company in which the *untainting tax became due and payable |
Repeal the item.
Add:
Note: The other amounts referred to in item 3 of the table are:
(a) interest payable under section 102AAM of the
Income Tax Assessment Act 1936 (distributions from certain non‑resident trust estates); and(b) tax payable under section 159GZZZZH of that Act (Tax payable where infrastructure borrowing certificate cancelled).
32
Subsection 995‑1(1) (definition of full self‑assessment taxpayer ) Repeal the definition.
Repeal the section.
Omit “, and section 204, of the
Income Tax Assessment Act 1936 ,”, substitute “of theIncome Tax Assessment Act 1936 , Division 5 of theIncome Tax Assessment Act 1997 ,”.
Omit “and section 204 of the
Income Tax Assessment Act 1936 ”, substitute “of theIncome Tax Assessment Act 1936 , Division 5 of theIncome Tax Assessment Act 1997 ”.
Omit “(Most of the provisions are in the
Income Tax Assessment Act 1936 .)”.
Repeal the items.
Insert:
|
|
|
Insert:
|
|
|
Omit “*full self‑assessment taxpayer”, substitute “*self‑assessment entity”.
Omit “*full self‑assessment taxpayer”, substitute “self‑assessment entity”.
Omit “Division 1 of Part VI of the
Income Tax Assessment Act 1936 ”, substitute “Division 5 of theIncome Tax Assessment Act 1997 ”.
43
Subsection 250‑10(1) in Schedule 1 (table items 55 and 65 to 85) Repeal the items.
44
Subsection 250‑10(1) in Schedule 1 (at the end of the table) Add:
100 | interest payable under section 102AAM (about distributions from non‑resident trust estates) | 5‑5 of the |
105 | tax payable under section 159GZZZZH (Tax payable where infrastructure borrowing certificate cancelled) | 5‑5 of the |
45
Subsection 250‑10(2) in Schedule 1 (after table item 36) Insert:
36A | compulsory repayment amount under the | 5‑5 | |
37 | income tax | 5‑5 |
46
Subsection 250‑10(2) in Schedule 1 (after table item 137) Insert:
138 | estimate of payable amounts | 268‑20 in Schedule 1 | |
139 | penalty under Subdivision 269‑B | 269‑20 in Schedule 1 |
Omit “paragraph 204(3)(a) of the
Income Tax Assessment Act 1936 ”, substitute “paragraph 5‑15(a) of theIncome Tax Assessment Act 1997 ”.
Omit “paragraph 204(3)(a) of the
Income Tax Assessment Act 1936 ”, substitute “paragraph 5‑15(a) of theIncome Tax Assessment Act 1997 ”.
Omit “section 204 of the
Income Tax Assessment Act 1936 ”, substitute “Division 5 of theIncome Tax Assessment Act 1997 ”.
Omit “That section”, substitute “That Division”.
51
Subsection 340‑10(2) in Schedule 1 (table item 3) Before “subsection 204(3)”, insert “former”.
52
Subsection 340‑10(2) in Schedule 1 (after paragraph (a) in the cell at table item 3, column headed “Provision(s)”) Insert:
(aa) section 5‑15 in the
Income Tax Assessment Act 1997 ; or
In this Part:
commencement time means the time this item commences.
Insert:
5‑A How to work out when to pay your income tax
5‑5 Application of Division 5 of the
Income Tax Assessment Act 1997 5‑7 References in tax sharing agreements to former section 204
5‑10 General interest charge
Division 5 of the
Income Tax Assessment Act 1997 , as originally enacted, applies in relation to income tax or shortfall interest charge you must pay for:
(a) the 2010‑11 financial year; or
(b) a later financial year.
(1) A reference in an agreement to section 204 of the
Income Tax Assessment Act 1936 is taken, from the commencement of this section, to be a reference to section 5‑5 of theIncome Tax Assessment Act 1997 , if:
(a) paragraph 721‑25(1)(a) of the
Income Tax Assessment Act 1997 applies to the agreement; and(b) the agreement was in force just before the commencement of this section.
(2) This section applies in relation to tax to which Division 5 of the
Income Tax Assessment Act 1997 applies.
(1) This section applies if, just before the commencement of this section, you were liable, under subsection 204(3) (the
old provision ) of theIncome Tax Assessment Act 1936 , to pay the general interest charge on an unpaid amount (theliability ) of any tax or shortfall interest charge.(2) On that commencement, the old provision ceases to apply to the liability.
(3) From that commencement, section 5‑15 (the
new provision ) of theIncome Tax Assessment Act 1997 , as originally enacted, applies to the liability as if:
(a) the liability remained unpaid at that time; and
(b) so much of the charge under the old provision as remained unpaid at that time had been imposed under the new provision and remained unpaid at that time.
Add:
721‑A Application of Division
721‑25 References in tax sharing agreements to former table item 25
(1) A reference in an agreement to item 25 of the table in subsection 721‑10(2) of the
Income Tax Assessment Act 1997 is taken, from the commencement of this section, to be a reference to item 3 of that table, if:
(a) paragraph 721‑25(1)(a) of that Act applies to the agreement; and
(b) the agreement was in force just before the commencement of this section.
(2) This section applies in relation to tax to which Division 5 of the
Income Tax Assessment Act 1997 applies.
Despite the repeal of section 204 of the
Income Tax Assessment Act 1936 by this Schedule, that section (other than subsection 204(3)) continues to apply, from the commencement time, to income tax or shortfall interest charge to which Division 5 of theIncome Tax Assessment Act 1997 , as inserted by this Schedule, does not apply.
If, just before the commencement time, a security requirement is in force under section 213 of the
Income Tax Assessment Act 1936 , the requirement has effect, from the commencement time, as if it had been made under section 255‑100 in Schedule 1 to theTaxation Administration Act 1953 , as added by this Schedule.
New estimate (1) Section 268‑10 in Schedule 1 to the
Taxation Administration Act 1953 , as added by this Schedule, applies in relation to an amount you became liable to pay to the Commissioner under section 16‑70 in Schedule 1 to that Act before, on or after the commencement time.
Existing estimate
(2) Subitem (3) applies to an estimate that:
(a) was made under section 222AGA of the
Income Tax Assessment Act 1936 (whether or not notice of it has been sent to you or your trustee); and(b) was in force just before the commencement time.
(3) The estimate remains in force, from the commencement time, as if it had been made under section 268‑10 in Schedule 1 to the
Taxation Administration Act 1953 , as added by this Schedule.
Section 268‑30 in Schedule 1 to the
Taxation Administration Act 1953 , as added by this Schedule, applies whether the date of the bankruptcy, or the relevant date, referred to in that section occurred before, on or after the day on which the commencement time occurred.
(1) Section 268‑40 in Schedule 1 to the
Taxation Administration Act 1953 , as added by this Schedule, applies in relation to:
(a) a notice given by the Commissioner before, on or after the commencement time; or
(b) proceedings that relate to the recovery of the unpaid amount of an estimate commenced before, on or after the commencement time; or
(c) an application made under section 234, 459P, 462 or 464 of the
Corporations Act 2001 before, on or after the commencement time.(2) Section 268‑45 in Schedule 1 to the
Taxation Administration Act 1953 , as added by this Schedule, applies in relation to a proof of debt lodged before, on or after the commencement time.
New charge (1) Section 268‑75 in Schedule 1 to the
Taxation Administration Act 1953 , as added by this Schedule, applies in relation to an estimate of which the Commissioner sends notice:
(a) on or after the commencement time; or
(b) no more than 7 days before the commencement time.
Existing charge (2) Subitems (3) and (4) apply if, just before the commencement time, you were liable, under Subdivision E of Division 8 of Part VI of the
Income Tax Assessment Act 1936 (theold Subdivision ), to pay the general interest charge on an unpaid amount of an estimate.(3) At the commencement time, the old Subdivision stops applying to the liability.
(4) From the commencement time, Subdivision 268‑E in Schedule 1 to the
Taxation Administration Act 1953 (thenew Subdivision ) applies to the liability as if:
(a) the liability remained unpaid at the commencement time; and
(b) so much of the charge under the old Subdivision as remained unpaid at that time:
(i) had been imposed under the new Subdivision; and
(ii) remained unpaid at that time.
(1) This item applies in relation to an agreement that:
(a) was made under section 222ALA of the
Income Tax Assessment Act 1936 ; and(b) was in force just before the commencement time.
(2) The agreement has effect, from the commencement time, as if the agreement were an arrangement made under section 255‑15 in Schedule 1 to the
Taxation Administration Act 1953 .
63
Savings—regulations relating to government bodies
(1) This item applies in relation to regulations:
(a) made for the purposes of paragraph 222AGF(7)(c), 222AHE(5)(c) or 222AIH(4)(c) of the
Income Tax Assessment Act 1936 ; and(b) in force just before the commencement time.
(2) The regulations have effect from the commencement time as if they had been made for the purposes of paragraph (b) of item 2, and item 3, of the table in subsection 268‑90(3) in Schedule 1 to the
Taxation Administration Act 1953 , as added by this Schedule.
64
Application—Division 269 in Schedule 1 to the Taxation Administration Act 1953 Subject to item 65, Division 269 in Schedule 1 to the
Taxation Administration Act 1953 , as added by this Schedule, applies in relation to an amount payable by a company to the Commissioner before, on or after the commencement time.
No doubling‑up of penalties (1) Subsection 269‑20(1) in Schedule 1 to the
Taxation Administration Act 1953 , as added by this Schedule, does not apply if the due day referred to in that subsection occurs before the commencement time.(2) Subsection 269‑20(3) in Schedule 1 to that Act, as added by this Schedule, does not apply if the 14th day referred to in that subsection occurs before the commencement time.
New provisions apply to existing penalties (3) Subitem (4) applies in relation to a penalty that, just before the commencement time, was payable under Division 9 of Part VI of the
Income Tax Assessment Act 1936 .(4) Division 269 in Schedule 1 to the
Taxation Administration Act 1953 (other than section 269‑20) has effect, from the commencement time, as if the penalty were payable under Subdivision 269‑B in that Schedule.
Penalties remitted because of payment agreement
(5) Subitem (6) applies if:
(a) a penalty payable by a director of a company was remitted under section 222APF of the
Income Tax Assessment Act 1936 because the company made an agreement with the Commissioner as mentioned in paragraph 222APB(1)(b); and(b) on or after the commencement time, the company contravenes the agreement such that the director would have been liable to pay a penalty under section 222AQA if that section had continued to apply.
(6) Division 269 in Schedule 1 to the
Taxation Administration Act 1953 (other than section 269‑20) has effect, from the commencement time, as if the penalty:
(a) had not been remitted; and
(b) were payable under Subdivision 269‑B in that Schedule.
(1) This item applies if:
(a) just before the commencement time, a person was liable to pay an amount to the Commissioner under:
(i) former section 220AAE, 220AAM or 220AAR of the
Income Tax Assessment Act 1936 ; or(ii) former subsection 221YHZD(1) or (1A) of that Act; or
(iii) former subsection 221YN(1) of that Act; or
(b) the Commissioner has reason to suspect that, just before the commencement time, a person was so liable.
(2) Despite the repeal of Divisions 8 and 9 of Part VI of the
Income Tax Assessment Act 1936 by this Schedule, but subject to item 62 of this Schedule, those Divisions continue to apply, after the commencement time, in relation to the liability or suspected liability, as if the repeal had not happened.(3) Subsection 268‑90(2) in Schedule 1 to the
Taxation Administration Act 1953 , as added by this Schedule, is taken to require a statutory declaration or affidavit to which that subsection applies to verify any facts:
(a) that relate to the liability, or suspected liability; and
(b) that the declaration or affidavit would have been required to verify if subsection 222AHE(4), 222AID(4) or 222AIH(3) of the
Income Tax Assessment Act 1936 , as in force just before the commencement time, had applied to the declaration or affidavit.
Repeal the Schedule.
Insert:
Guide to Division 245
245‑A Debts to which operative rules apply
245‑B What constitutes forgiveness of a debt
245‑C Calculation of gross forgiven amount of a debt
245‑D Calculation of net forgiven amount of a debt
245‑E Application of net forgiven amounts
245‑F Special rules relating to partnerships
245‑G Record keeping
When a creditor forgives a commercial debt you owe, you make a gain. This is usually not included in your assessable income. Instead, this Division offsets the forgiven amount against amounts that could otherwise reduce your taxable income in the same or a later income year. Those amounts are:
(a) your tax losses and net capital losses; and
(b) capital allowances and some similar deductions; and
(c) the cost bases of your CGT assets.
(1) This Division applies to any commercial debt (or part of a commercial debt) you owe that is forgiven.
Note: This Division does not apply if:
(a) the debt is waived and the waiver constitutes a fringe benefit; or
(b) the amount of the debt has been, or will be, included in your assessable income in any income year; or
(c) the debt is forgiven under an Act relating to bankruptcy; or
(d) the debt is forgiven by will; or
(e) the debt is forgiven for reasons of natural love and affection; or
(f) the debt is a tax‑related liability.
(2) The net forgiven amount of a debt is worked out by reducing the value of your forgiven debt by:
(a) any consideration you provided for the forgiveness; and
(b) any amounts that this Act already brings to account because of the forgiveness.
(3) The net forgiven amounts of all your forgiven debts in an income year are added up. This total net forgiven amount is applied to reduce the following amounts (in the following order):
(a) your tax losses from previous income years;
(b) your net capital losses from previous income years;
(c) the deductions you would otherwise get in the income year, or in a later year, because of expenditure from a previous year (e.g. the capital allowance deductions you would get for the cost of a depreciating asset);
(d) the cost bases of your CGT assets.
(4) Any unapplied total net forgiven amount is disregarded.
(5) Special rules apply to debts of partnerships.
This Division applies to a debt if you can deduct interest payable on the debt.
Application of Division 245‑10 Commercial debts
245‑15 Non‑equity shares
245‑20 Parts of debts
Subdivisions 245‑C to 245‑G apply to a debt of yours if:
(a) the whole or any part of interest, or of an amount in the nature of interest, paid or payable by you in respect of the debt has been deducted, or can be deducted, by you; or
(b) interest, or an amount in the nature of interest, is not payable by you in respect of the debt but, had interest or such an amount been payable, the whole or any part of the interest or amount could have been deducted by you; or
(c) interest or an amount mentioned in paragraph (a) or (b) could have been deducted by you apart from the operation of a provision of this Act (other than paragraphs 8‑1(2)(a), (b) and (c)) that has the effect of preventing a deduction.
Note: Paragraphs 8‑1(2)(a), (b) and (c) prevent deductions for capital, private or domestic outgoings and for outgoings relating to exempt income or non‑assessable non‑exempt income.
This Division applies to a *non‑equity share issued by a company as if it were a debt to which section 245‑10 applies that is owed by the company to the relevant shareholder.
This Division applies to part of a debt in the same way as it applies to a whole debt.
Note: This Division treats interest, or an amount in the nature of interest, payable on a debt as being a separate debt if the interest or amount has accrued but has not been paid.
A debt is
forgiven if you no longer have to pay it.However, this Division does not apply to some cases of forgiveness, such as bankruptcy.
Operative provisions 245‑35 What constitutes
forgiveness of a debt245‑36 What constitutes
forgiveness of a debt if the debt is assigned245‑37 What constitutes
forgiveness of a debt if a subscription for shares enables payment of the debt245‑40 Forgivenesses to which operative rules do not apply
245‑45 Application of operative rules if forgiveness involves an arrangement
A debt is
forgiven if and when:
(a) the debtor’s obligation to pay the debt is released or waived, or is otherwise extinguished other than by repaying the debt in full; or
(b) the period within which the creditor is entitled to sue for the recovery of the debt ends, because of the operation of a statute of limitations, without the debt having been paid.
A debt is
forgiven if and when the creditor assigns the right to receive payment of the debt to another entity (thenew creditor ) and the following conditions are met:
(a) either the new creditor is the debtor’s *associate or the assignment occurred under an *arrangement to which the new creditor and debtor were parties;
(b) the right to receive payment of the debt was not acquired by the new creditor in the ordinary course of *trading on a market, exchange or other place on which, or facility by means of which, offers to sell, buy or exchange securities (within the meaning of Division 16E of Part III of the
Income Tax Assessment Act 1936 ) are made or accepted.Note 1: Division 16E of Part III of the
Income Tax Assessment Act 1936 brings to account gains and losses on some securities on an accruals basis.Note 2: This Division also applies if an assigned debt is subsequently forgiven by the new creditor. Section 245‑61 tells you how to work out the value of the debt in that case.
If an entity subscribes for *shares in a company to enable the company to make a payment in or towards discharge of a debt it owes to the entity, the debt is
forgiven when, and to the extent that, the company applies any of the money subscribed in or towards payment of the debt.
Subdivisions 245‑C to 245‑G do not apply to a *forgiveness of a debt if:
(a) the debt is waived and the waiver constitutes a *fringe benefit; or
Note: The waiver by an employer of a debt owed by an employee is usually a fringe benefit: see section 14 of the
Fringe Benefits Tax Assessment Act 1986 .(b) the amount of the debt has been, or will be, included in the assessable income of the debtor in any income year; or
(c) the forgiveness is effected under an Act relating to bankruptcy; or
(d) the forgiveness is effected by will; or
(e) the forgiveness is for reasons of natural love and affection; or
(f) the debt is a *tax‑related liability or a civil penalty under Division 290 in Schedule 1 to the
Taxation Administration Act 1953 (about penalties for promoters and implementers of tax avoidance schemes).Note: If the forgiveness of your debt involved an arrangement which was entered into before 28 June 1996, see section 245‑10 of the
Income Tax (Transitional Provisions) Act 1997 .
(1) If:
(a) the debtor and the creditor in relation to a debt enter into an *arrangement; and
(b) under the arrangement, the debtor’s obligation to pay the debt is to cease at a particular future time; and
(c) the cessation of the obligation is to occur without the debtor incurring any financial or other obligation (other than an obligation that, having regard to the debtor’s circumstances, is of a nominal or insignificant amount or kind);
Subdivisions 245‑C to 245‑G apply as if the debt were *forgiven when the arrangement is entered into.
(2) If, after the arrangement is entered into, the debt is forgiven, the later forgiveness is disregarded for the purposes of those Subdivisions.
The amount of forgiveness (called the gross forgiven amount) for the debtor reflects the loss that the creditor makes for tax purposes. It is worked out in 2 steps:
(a) the value of the debt when it was forgiven is worked out on the basis that you were solvent both then and when you incurred the debt; and
(b) the value of the debt is then offset by any consideration given for the forgiveness of the debt.
The difference between the value of the debt and the amount offset is the gross forgiven amount.
If the debt was owed by several debtors, the gross forgiven amount is divided between them equally
.
Working out the value of a debt 245‑50 Extent of forgiveness if consideration is given
245‑55 General rule for working out the value of a debt
245‑60 Special rule for working out the value of a non‑recourse debt
245‑61 Special rule for working out the value of a previously assigned debt
Working out if an amount is offset against the value of the debt 245‑65 Amount offset against amount of debt
Working out the gross forgiven amount 245‑75
Gross forgiven amount of a debt245‑77 Gross forgiven amount shared between debtors
If any consideration is paid or given in respect of the *forgiveness of a debt, the debt that is forgiven is:
(a) the obligation that existed before the forgiveness to pay so much of the debt as is expressed, or is taken, to be forgiven; and
(b) the obligation that existed before the forgiveness to pay any part of the debt to which paragraph (a) does not apply but which ceases to be payable as a result of the payment or giving of the consideration.
Example: Daniel owes Samara $100. Samara agrees to accept $60 in full payment of the debt.
If their agreement specifies that Samara forgives the whole debt in return for $60, paragraph (a) provides that the forgiven debt is $100.
If their agreement instead requires Daniel to repay $60 and specifies that Samara forgives the remaining $40, paragraph (a) would deal with the $40 and paragraph (b) would add the remaining $60, again producing a forgiven amount of $100.
In either case, the $60 Daniel pays is offset against the forgiven amount of $100 in working out the gross forgiven amount of the debt: see sections 245‑65 and 245‑75.
(1) The value of your debt at the time (the
forgiveness time ) when it is *forgiven is the amount that would have been its *market value (considered as an asset of the creditor) at the forgiveness time, assuming that:
(a) when you incurred the debt, you were able to pay all your debts (including that one) as and when they fell due; and
(b) your capacity to pay the debt is the same at the forgiveness time as when you incurred it.
(2) However, the value of the debt at the forgiveness time is the sum of the following amounts, if that sum is less than the amount applicable under subsection (1):
(a) what would have been the amount applicable under subsection (1) if there had been no change, from the time the debt was incurred until the forgiveness time, in any rate of interest, or rate of exchange between currencies, that affects the *market value of the debt;
(b) each amount:
(i) that you have deducted or can deduct as a result of the *forgiveness of the debt; and
(ii) that is attributable to such a change.
(3) Paragraph (1)(a) does not apply to the debt if:
(4) In determining whether a deposit made after the entitlement arises is a *farm management deposit, disregard the old deposit when determining whether a requirement contained in an agreement as set out in item 5 of the table in section 393‑35 (prohibiting farm management deposits with other FMD providers) has been complied with.
Note: Subsection (4) means that a deposit made with a financial institution other than the old ADI after the entitlement arises can be a farm management deposit (despite subsection 393‑30(1)) even though the owner of the deposit still has the old deposit with the old ADI.
(5) A requirement contained in an agreement as set out in item 5 of the table in section 393‑35 does not apply to the new deposit to prevent it from being a *farm management deposit.
Note: Subsections (4) and (5) mean that, despite subsection 393‑30(1) (which prevents a deposit, or part of a deposit, from being a farm management deposit if certain requirements are not met), the fact that you are the owner of both the new deposit with one financial institution and the old deposit with another financial institution does not prevent the new deposit from being a farm management deposit.
Unrecouped FMD deduction for new deposit less than old deposit
(6) Despite subsection (2) and subsection 393‑15(3), if the new deposit is less than the old deposit at the time (the
declaration time ) the old ADI became a declared ADI under theBanking Act 1959 , theunrecouped FMD deduction in respect of the new deposit is the amount worked out using the following formula:Note: The new deposit could be less than the old deposit if the entitlement is paid in instalments (each of which will be a separate new deposit).
(7) However, if the amount worked out under subsection (6) is more than the difference (if any) between:
(a) the *unrecouped FMD deduction in respect of the old deposit just before the declaration time; and
(b) the total of the amounts worked out under all previous applications of subsection (6) in relation to that old deposit;
the
unrecouped FMD deduction in respect of the new deposit is equal to the difference (if any).Note: This ensures that when new deposits linked to the old deposit are repaid, the total amount included in assessable income will not exceed the unrecouped FMD deduction in respect of the old deposit.
Relationship with other provisions
(8) This section has effect despite Division 253 (about tax treatment of entitlements under the financial claims scheme for insolvent ADIs).
Subsection 393‑10(4) does not apply in relation to so much of a *farm management deposit with an *ADI as is equal to the sum of the amounts described in subparagraphs (d)(i) and (ii) of this section if:
(a) you are the *owner of the deposit; and
(b) the deposit becomes repayable during an income year because of the requirement contained in the relevant agreement as set out in item 11 of the table in section 393‑35 (death, bankruptcy etc.); and
(c) during the income year, the ADI becomes a declared ADI under Division 2AA (Financial claims scheme for account‑holders with insolvent ADIs) of Part II of the
Banking Act 1959 ; and(d) at the end of the income year, you have either or both of the following:
(i) an unmet entitlement under that Division connected with the account for the farm management deposit;
(ii) an unmet claim against the ADI, or an unpaid debt owed to you by the ADI, in the winding up of the ADI connected with the account for the deposit.
Note: Subsection 393‑10(4) makes the repayment of a farm management deposit assessable in the income year when the death, bankruptcy etc. occurs, rather than in any later year in which it might be repaid.
3
Subsection 995‑1(1) (definition of farm management deposit ) Repeal the definition, substitute:
farm management deposit has the meaning given by Subdivision 393‑B.
Insert:
FMD provider (short for farm management deposit provider) has the meaning given by subsection 393‑20(3).
Insert:
owner of a *farm management deposit has the meaning given by subsection 393‑25(1).
Insert:
unrecouped FMD deduction (short for unrecouped farm management deposit deduction) has the meaning given by subsections 393‑10(2) and 393‑55(6) and (7).
Add:
Guide to Division 398
398‑A Farm Management Deposit reporting
This Division contains reporting obligations not covered by other Divisions of this Part.
398‑5 Reporting to Agriculture Department
FMD provider must provide quarterly information
(1) An *FMD provider must, within 60 days after the end of a *quarter, give in writing to the *Agriculture Secretary the information specified in subsection (3) if the provider holds a *farm management deposit at the end of any month in the quarter.
Penalty: 10 penalty units.
(2) An offence under subsection (1) is an offence of strict liability.
Note: For strict liability, see section 6.1 of the
Criminal Code .
Information required
(3) The information is:
(a) the number of *farm management deposits held at the end of each month in the *quarter; and
(b) the number of depositors in respect of such deposits at the end of each month in the quarter; and
(c) the sum of the balances of such deposits at the end of each month in the quarter; and
(d) any other information, in relation to farm management deposits held by the *FMD provider at any time in the quarter, that is required by the regulations for the purposes of this section.
Regulations not to require identity of depositor
(4) Regulations made for the purposes of paragraph (3)(d) must not require information:
(a) that discloses the identity of a depositor; or
(b) from which the identity of a depositor could reasonably be inferred.
8
Subsection 3(2) (paragraph (aa) of the definition of exempt livestock proceeds ) Omit “Schedule 2G to the
Income Tax Assessment Act 1936) ”, substitute “theIncome Tax Assessment Act 1997 )”.
Insert:
farm management deposit has the meaning given by theIncome Tax Assessment Act 1997 .
Insert:
FMD provider has the meaning given by theIncome Tax Assessment Act 1997 .
11
Subsection 6(1) (definition of income from personal exertion or income derived from personal exertion ) Omit “section 393‑15 of Schedule 2G”, substitute “section 393‑10 of the
Income Tax Assessment Act 1997 ”.
Insert:
owner of a farm management deposit has the meaning given by theIncome Tax Assessment Act 1997 .
Omit “under Schedule 2G”, substitute “under Division 393 of the
Income Tax Assessment Act 1997 (Farm management deposits)”.
Add “and”.
Omit “and”.
Repeal the paragraph.
Add “and”.
Omit “and”.
Repeal the paragraph.
Repeal the subsection.
Add:
Note: This section applies to certain beneficiaries as if they were individuals who are carrying on a primary production business: see subsection 393‑25(3) of the
Income Tax Assessment Act 1997 .
Omit “(within the meaning of Schedule 2G)”.
Repeal the item.
Add:
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Repeal the subsections, substitute:
(1) Nothing in the following limit the operation of this Part:
(a) the provisions of this Act (other than this Part);
(b) the
International Tax Agreements Act 1953 ;(c) the
Petroleum (Timor Sea Treaty) Act 2003 .(2) This Part does not affect the operation of Division 393 of the
Income Tax Assessment Act 1997 (Farm management deposits).
Repeal the section.
Omit “financial institution” (first occurring), substitute “FMD provider”.
Omit “393‑30(3) of Schedule 2G”, substitute “393‑20(2) of the
Income Tax Assessment Act 1997 ”.
Omit “financial institution”, substitute “FMD provider”.
Add:
Note: If a farm management deposit was made by a trustee on behalf of a beneficiary who was under a legal disability when the deposit was made, and the beneficiary is no longer under a legal disability, this Division applies as if the beneficiary had made the deposit: see subsection 393‑25(4) of the
Income Tax Assessment Act 1997 .
Omit “a financial institution”, substitute “an FMD provider”.
Note: The heading to subsection 202DM(1) is altered by omitting “
financial institution ” and substituting “FMD provider ”.
Omit “the financial institution”, substitute “the FMD provider”.
Omit “a financial institution”, substitute “an FMD provider”.
Note: The heading to subsection 202DM(3) is altered by omitting “
financial institution ” and substituting “FMD provider ”.
Omit “the financial institution”, substitute “the FMD provider”.
Repeal the section.
Omit “Farm Management Deposits”, substitute “farm management deposits”.
Repeal the note, substitute:
Note: See Division 393 of the
Income Tax Assessment Act 1997 .
38
Section 10‑5 (table item headed “farm management deposits”) Omit:
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substitute:
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39
Section 12‑5 (table item headed “primary production”) Omit:
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substitute:
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Repeal the paragraph, substitute:
(c) the amount you can deduct for the income year under section 393‑5 (which provides for deductions for making *farm management deposits).
Omit “section 393‑15 of Schedule 2G to the
Income Tax Assessment Act 1936 ”, substitute “section 393‑10”.
Omit “Farm Management Deposits”, substitute “*farm management deposits”.
Repeal the note, substitute:
Note: See Division 393.
Repeal the subsection, substitute:
Farm management deposits
(15) A right to receive, or an obligation to provide, *financial benefits is the subject of an exception if:
(a) the right or obligation is the right or obligation of an *owner of a *farm management deposit; and
(b) the right or obligation relates to the deposit.
45
Subsection 253‑5(1) (paragraph (b) of the note) Omit “Subdivision 393‑D in Schedule 2G to the
Income Tax Assessment Act 1936 ”, substitute “Subdivision 393‑C”.
Repeal the subsection, substitute:
Primary production deductions
(3) Your
primary production deductions for the *current year are:
(a) all amounts you can deduct that relate exclusively to your *assessable primary production income for the current year; and
(b) so much of any other amounts you can deduct (other than *apportionable deductions) to the extent that they reasonably relate to your assessable primary production income for the current year.
Repeal the subsections.
Omit “section 393‑10 in Schedule 2G to the
Income Tax Assessment Act 1936 ”, substitute “section 393‑5 of theIncome Tax Assessment Act 1997 ”.
Omit “section 393‑15 in Schedule 2G to the
Income Tax Assessment Act 1936 ”, substitute “section 393‑10 of theIncome Tax Assessment Act 1997 ”.
Insert:
393‑A Tax consequences of farm management deposits
393‑B Meaning of farm management deposit and owner
393‑1 Application of Division 393 of the
Income Tax Assessment Act 1997 393‑5 Unrecouped FMD deduction
393‑10 Unrecouped FMD deduction for deposits made as a result of section 25B of the
Loan (Income Equalization Deposits) Act 1976
Division 393 of the
Income Tax Assessment Act 1997 (about farm management deposits) applies to assessments for:
(a) the 2010‑11 income year; and
(b) later income years.
A reference in Division 393 of the
Income Tax Assessment Act 1997 to a deduction under section 393‑5 of that Act for making a farm management deposit is taken to include a reference to a deduction under section 393‑10 in Schedule 2G to theIncome Tax Assessment Act 1936 , as in force just before the commencement of this section, if the deposit was made before the 2010‑11 income year.
Despite subsection 393‑10(2) of the
Income Tax Assessment Act 1997 , if:
(a) no part of a farm management deposit has been repaid before a particular time; and
(b) the deposit was made with an FMD provider as a result of a request to which section 25B of the
Loan (Income Equalization Deposits) Act 1976 , as in force on 21 February 2005, applied;the
unrecouped FMD deduction in respect of the deposit at that time is equal to the amount of the unrecouped deduction (within the meaning of the former subsection 159GA(3) of theIncome Tax Assessment Act 1936 ) in respect of the deposit immediately before it ceased to be a deposit under theLoan (Income Equalization Deposits) Act 1976 .Note: This means that the unrecouped deduction relating to the deposit under the
Loan (Income Equalization Deposits) Act 1976 continues to apply (by becoming an unrecouped FMD deduction) when the deposit is transferred to an FMD provider as a farm management deposit. TheLoan (Income Equalization Deposits) Act 1976 was repealed on 22 February 2005.
393‑40 The day the deposit was made for deposits made as a result of section 25B of the
Loan (Income Equalization Deposits) Act 1976
If a farm management deposit was made with an FMD provider as a result of a request under section 25B of the
Loan (Income Equalization Deposits) Act 1976 , as in force on 21 February 2005, then:
(a) subsections 393‑40(1) to (4) of the
Income Tax Assessment Act 1997 apply as if the day the deposit was made was the day on which the deposit was originally made under theLoan (Income Equalization Deposits) Act 1976 ; and(b) subsection 393‑40(6) does not apply to the deposit.
Note: The
Loan (Income Equalization Deposits) Act 1976 was repealed on 22 February 2005.
The amendments made by Parts 1 and 2 of this Schedule (other than item 2) apply to assessments for:
(a) the 2010‑11 income year; and
(b) later income years.
Repeal the Schedule.
Insert:
321‑A Provision for, and payment of, claims by general insurance companies
321‑B Premium income of general insurance companies
321‑C Companies that self‑insure in respect of workers’ compensation liabilities
321‑10 Assessable income to include amount for reduction in outstanding claims liability
321‑15 Deduction for increase in outstanding claims liability
321‑20 How value of outstanding claims liability is worked out
321‑25 Deduction for claims paid during current year
A *general insurance company’s assessable income for the *current year includes an amount equal to the amount (if any) by which:
(a) the value, at the end of the previous income year, of the company’s liability for *outstanding claims under *general insurance policies; exceeds
(b) the value, at the end of the current year, of that liability.
Note: Those values are worked out under section 321‑20.
A *general insurance company can deduct for the *current year an amount equal to the amount (if any) by which:
(a) the value, at the end of the current year, of the company’s liability for *outstanding claims under *general insurance policies; exceeds
(b) the value, at the end of the previous income year, of that liability.
Note: Those values are worked out under section 321‑20.
Work out the value, at the end of an income year, of a *general insurance company’s liability for *outstanding claims under *general insurance policies in this way:
Method statement Step 1. Add up the amounts that, at the end of the income year, the company determines, based on proper and reasonable estimates, to be appropriate to set aside and invest in order to meet:
(a) liabilities for outstanding claims under those policies; and
(b) direct settlement costs associated with those outstanding claims.
Step 2. Reduce the step 1 amount by so much of it as the company expects at the end of the income year to recover:
(a) under a contract of reinsurance; or
(b) in any other way;
other than under a contract of reinsurance to which subsection 148(1) of the
Income Tax Assessment Act 1936 (about reinsurance with non‑residents) applies.
A *general insurance company can deduct for the *current year amounts paid during that year in respect of claims under *general insurance policies.
321‑45 Assessable income to include gross premiums
321‑50 Assessable income to include amount for reduction in value of unearned premium reserve
321‑55 Deduction for increase in value of unearned premium reserve
321‑60 How value of unearned premium reserve is worked out
A *general insurance company’s assessable income for the *current year includes the gross premiums received or receivable by the company during the current year in respect of *general insurance policies.
A *general insurance company’s assessable income for the *current year includes an amount equal to the amount (if any) by which:
(a) the value, at the end of the previous income year, of the company’s unearned premium reserve; exceeds
(b) the value, at the end of the current year, of that reserve.
Note: Those values are worked out under section 321‑60.
A *general insurance company can deduct for the *current year an amount equal to the amount (if any) by which:
(a) the value, at the end of the current year, of the company’s unearned premium reserve; exceeds
(b) the value, at the end of the previous income year, of that reserve.
Note: Those values are worked out under section 321‑60.
Work out the value, at the end of an income year, of a *general insurance company’s unearned premium reserve in this way:
Method statement Step 1. Add up the gross premiums received or receivable by the company, in relation to *general insurance policies issued in the course of carrying on *insurance business, in that or an earlier income year.
Step 2. Reduce the step 1 amount by so much of the costs incurred by the company in connection with the issue of those policies as relate to the gross premiums, including, for example, costs such as:
(a) commission and brokerage fees; and
(b) administration costs of processing insurance proposals and renewals; and
(c) administration costs of collecting premiums; and
(d) selling and underwriting costs; and
(e) fire brigade charges; and
(f) stamp duty; and
(g) other charges, levies and contributions imposed by governments or governmental authorities that directly relate to general insurance policies.
Step 3. Reduce the step 2 amount by any premiums (the
relevant reinsurance premiums ) paid or payable by the company, in that or an earlier income year, for the reinsurance of risks covered by those policies, except:
(a) reinsurance premiums that the company cannot deduct because of subsection 148(1) of the
Income Tax Assessment Act 1936 (about reinsurance with non‑residents); and(b) reinsurance premiums that were paid or payable in respect of a particular class of *insurance business where, under the contract of reinsurance, the reinsurer agreed to pay, in respect of a loss incurred by the company that is covered by the relevant policy, some or all of the excess over an agreed amount.
Step 4. Add to the step 3 amount any reinsurance commissions received or receivable by the company that relate to the relevant reinsurance premiums.
Step 5. The value, at the end of an income year, of the unearned premium reserve is so much of the step 4 amount as the company determines, based on proper and reasonable estimates, to relate to risks covered by the policies in respect of later income years.
321‑80 Assessable income to include amount for reduction in outstanding claims liability
321‑85 Deduction for outstanding claims liability
321‑90 How value of outstanding claims liability is worked out
321‑95 Deductions for claims paid during current year
The assessable income for the *current year of a company that is not required by law to insure, and does not insure, against liability for workers’ compensation claims includes an amount equal to the amount (if any) by which:
(a) the value, at the end of the previous income year, of the company’s liability for such claims that:
(i) arose from events that occurred in that or an earlier income year; and
(ii) were not paid in full before the end of the previous income year; exceeds
(b) the value, at the end of the current year, of that liability.
Note: Those values are worked out under section 321‑90.
A company that is not required by law to insure, and does not insure, against liability for workers’ compensation claims can deduct for the *current year an amount equal to the amount (if any) by which:
(a) the value, at the end of the current year, of the company’s liability for such claims that:
(i) arose from events that occurred in the current or an earlier income year; and
(ii) were not paid in full before the end of the current year; exceeds
(b) the value, at the end of the previous income year, of that liability.
Note: Those values are worked out under section 321‑90.
Work out the value, at the end of an income year, of a company’s liability for claims covered by section 321‑80 or 321‑85 by adding up the amounts that, at the end of that income year, the company determines, based on proper and reasonable estimates, to be appropriate to set aside and invest in order to meet:
(a) liabilities for those claims; and
(b) direct settlement costs associated with those claims.
A company that is not required by law to insure, and does not insure, against liability for workers’ compensation claims can deduct for the *current year amounts paid during that year in respect of such claims.
3
Subsection 6(1) (definition of outstanding claims ) Repeal the definition.
4
Subsection 6(1) (both the definitions of value of the outstanding claims liability ) Repeal the definitions.
5
Subsection 6(1) (definition of value of the unearned premium reserve ) Repeal the definition.
6
Section 10‑5 (table item headed “general insurance”) Repeal the item, substitute:
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Section 12‑5 (table item headed “general insurance”) Repeal the item, substitute:
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Omit “in Schedule 2J to the
Income Tax Assessment Act 1936 ” (wherever occurring).
Omit “in that Schedule”.
Omit “in that Schedule”.
Omit “in that Schedule”.
12
Subsection 995‑1(1) (definition of contract of reinsurance ) Repeal the definition, substitute:
contract of reinsurance , in respect of *life insurance policies, does not include a contract of reinsurance in respect of:
(a) the parts of *complying superannuation/FHSA life insurance policies in respect of which the liabilities of the company that issued the policies are to be discharged out of a *complying superannuation/FHSA asset pool; or
(b) policies that are *exempt life insurance policies.
The amendments made by this Schedule apply to the first income year starting on or after the day on which this Act receives the Royal Assent and later income years.
The
Act | Number and year | Date of Assent | Date of commencement | Application, saving or transitional provisions |
79, 2010 | 29 June 2010 | |||
41, 2011 | 27 June 2011 | Schedule 5 (item 372): | — |
(a) Subsection 2(1) (item 22) of theTax Laws Amendment (2011 Measures No. 2) Act 2011 provides as follows:
(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.
Schedule 5, item 372 | Immediately after the time specified in the | 1 July 2010 |
am. = amended rep. = repealed rs. = repealed and substituted | |
Provision affected | How affected |
Item 16.................................. | rep. No. 41, 2011 |
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