Taxation Laws Amendment Act (No. 2) 1986 (Cth)
This compilation was prepared on 9 September 2010
taking into account amendments up to Act No. 75 of 2010
The text of any of those amendments not in force
on that date is appended in the Notes section
The operation of amendments that have been incorporated may be
affected by application provisions that are set out in the Notes section
Prepared by the Office of Legislative Drafting and Publishing,
Attorney-General’s Department, Canberra
TABLE OF PROVISIONS
PART I - PRELIMINARY
Section
1. Short title [
2. Commencement [
12. Insertion of new sections -
128AC. Deemed interest in respect of hire-purchase and certain other
128AD. Indemnification, &c., agreements in relation to bills of
14. Insertion of new section -
128NA. Special tax payable in respect of certain securities and
16. Insertion of new Division -
159GY. Effect of Division where qualifying security is trading stock
17. Rebate in respect of annual leave, long service leave and eligible
21. Insertion of new section -
22. Dividends, &c., not in money not to be paid until payment made to
25. Insertion of new section -
221YSA. Credits in respect of amounts assessed under Division 16E of
27. Insertion of new section -
PART IV - AMENDMENTS OF THE TAXATION LAWS AMENDMENT ACT (No. 4)
34. Income of certain persons serving with an armed force under the
39. Release of liability of members of the Defence Force on death
PART V - AMENDMENT OF THE INCOME TAX REGULATIONS
TAXATION LAWS AMENDMENT ACT (No. 2) 1986No. 49, 1986 - LONG TITLE
An Act to amend the law relating to taxation
TAXATION LAWS AMENDMENT ACT (No. 2) 1986No. 49, 1986
- SECT 1
Short title [
1. This Act may be cited as the Taxation Laws Amendment Act (No. 2) 1986.
TAXATION LAWS AMENDMENT ACT (No. 2) 1986No. 49, 1986
- SECT 2
Commencement [
2. (1) Subject to this section, this Act shall come into operation on the
day on which it receives the Royal Assent.
(2) Sections 33 and 36 shall be deemed to have come into operation
immediately after the commencement of section 1 of the Taxation Laws Amendment
Act (No. 4) 1985.
(3) Sections 34, 35, 37, 38 and 39 shall be deemed to have come into
operation immediately after the commencement of the Veterans' Entitlements Act
1986.
TAXATION LAWS AMENDMENT ACT (No. 2) 1986No. 49, 1986
- SECT 3
Principal Act
3. The Income Tax Assessment Act 1936*1* is in this Part referred to as the
Principal Act.
*1* No. 27, 1936, as amended. For previous amendments, see No. 88, 1936; No.
5, 1937; No. 46, 1938; No. 30, 1939; Nos. 17 and 65, 1940; Nos. 58 and 69,
1941; Nos. 22 and 50, 1942; No. 10, 1943; Nos. 3 and 28, 1944; Nos. 4 and 37,
1945; No. 6, 1946; Nos. 11 and 63, 1947; No. 44, 1948; No. 66, 1949; No. 48,
1950; No. 44, 1951; Nos. 4, 28 and 90, 1952; Nos. 1, 28, 45 and 81, 1953; No.
43, 1954; Nos. 18 and 62, 1955; Nos. 25, 30 and 101, 1956; Nos. 39 and 65,
1957; No. 55, 1958; Nos. 12, 70 and 85, 1959; Nos. 17, 18, 58 and 108, 1960;
Nos. 17, 27 and 94, 1961; Nos. 39 and 98, 1962; Nos. 34 and 69, 1963; Nos. 46,
68, 110 and 115, 1964; Nos. 33, 103 and 143, 1965; Nos. 50 and 83, 1966; Nos.
19, 38, 76 and 85, 1967; Nos. 4, 60, 70, 87 and 148, 1968; Nos. 18, 93 and
65 and 85,
1972; Nos. 51, 52, 53, 164 and 165, 1973; No. 216, 1973 (as amended by No. 20,
1974); Nos. 26 and 126, 1974; Nos. 80 and 117, 1975; Nos. 50, 53, 56, 98, 143,
165 and 205, 1976; Nos. 57, 126 and 127, 1977; Nos. 36, 57, 87, 90, 123, 171
and 172, 1978; Nos. 12, 19, 27, 43, 62, 146, 147 and 149, 1979; Nos. 19, 24,
57, 58, 124, 133, 134 and 159, 1980; Nos. 61, 92, 108, 109, 110, 111, 154 and
175, 1981; Nos. 29, 38, 39, 76, 80, 106 and 123, 1982; Nos. 14, 25, 39, 49,
51, 54 and 103, 1983; Nos. 14, 42, 47, 63, 76, 115, 124, 165 and 174, 1984;
No. 123, 1984 (as amended by No. 65, 1985); Nos. 47, 49, 104, 123, 129, 168,
173 and 174, 1985; and Nos. 41, 46 and 48, 1986.
TAXATION LAWS AMENDMENT ACT (No. 2) 1986No. 49, 1986
- SECT 4
Officers to observe secrecy
4. Section 16 of the Principal Act is amended by inserting after paragraph
(4) (hb) the following paragraph:
either-
where the holder of an office established under a law of the
Commonwealth is prescribed for the purposes of this paragraph-the holder of
that office; or
where sub-paragraph (i) does not apply-the Secretary to the
Department of the Treasury,
for purposes in connection with the supervision or regulation of-
provident, benefit, superannuation or retirement funds;
funds that are approved deposit funds within the meaning of
Subdivision AA of Division 2 of Part III; or
other similar funds;".
TAXATION LAWS AMENDMENT ACT (No. 2) 1986No. 49, 1986
- SECT 5
Exemptions
5. Section 23 of the Principal Act is amended by inserting after paragraph
(jc) the following paragraph:
income derived by a person by way of payments made by the
Commonwealth known as Formal Training Allowance, to the extent to which the
payments are made-
by reason that the person had a dependent child or children,
within
the meaning of section 6 of the Social Security Act 1947, or was making
regular contributions towards the maintenance of a child or children;
by reason that, within the meaning of Part IIa of the Social
Security Act 1947, the person was physically present in, and had his or her
usual place of residence situated in, a remote area; or
by reason that the person or the spouse of the person paid rent
within the meaning of section 6 of the Social Security Act 1947;".
TAXATION LAWS AMENDMENT ACT (No. 2) 1986No. 49, 1986
- SECT 6
Bad debts
6. Section 63 of the Principal Act is amended by inserting after sub-section
(1) the following sub-section:
"(1A) Where a debt in respect of the whole or a part of a payment that has,
or will, become liable to be made under a qualifying security within the
meaning of Division 16e is written off as a bad debt by a taxpayer during a
year of income, the taxpayer shall, for the purposes of sub-section (1), be
taken to have brought to account as assessable income of a year of income so
much of the debt as equals the amount (if any) ascertained in accordance with
the formula A-B, where-
is the amount (if any) or the sum of the amounts (if any) included in the
assessable income of the taxpayer of any year or years of income under section
159GQ or 159GR that is or are attributable to the payment or to the part of
the payment, as the case requires; and
is the amount (if any) or the sum of the amounts (if any) allowable as a
deduction or deductions from the assessable income of the taxpayer of any year
or years of income under section 159GQ or 159GR that is or are attributable to
the payment or to the part of the payment, as the case requires.".
TAXATION LAWS AMENDMENT ACT (No. 2) 1986No. 49, 1986
- SECT 7
Gifts, pensions, &c.
7. Section 78 of the Principal Act is amended by inserting after
sub-paragraph (1)(a)(1xxxiv) the following sub-paragraph:
the Pearl Watson Foundation Limited,".
TAXATION LAWS AMENDMENT ACT (No. 2) 1986No. 49, 1986
- SECT 8
Rebates for residents of isolated areas
8. Section 79A of the Principal Act is amended by omitting from sub-section
(4) the definition of "prescribed allowance" and substituting the following
definition:
" 'prescribed allowance' means-
an allowance paid in accordance with Part IIA of the Social
Security
Act 1947 or section 57 of the Veterans' Entitlements Act 1986; or
a payment made by the Commonwealth known as Formal Training
is made by reason that, within
the meaning of Part IIA of the Social Security Act 1947, a person was
physically present in, and had his or her usual place of residence situated
in, a remote area;".
TAXATION LAWS AMENDMENT ACT (No. 2) 1986No. 49, 1986
- SECT 9
Documentary evidence
9. Section 82KU of the Principal Act is amended by omitting from paragraphs
(1) (b), (2) (b) and (5) (c) "signed, and supplied," and substituting
"supplied".
TAXATION LAWS AMENDMENT ACT (No. 2) 1986No. 49, 1986
- SECT 10
Interpretation
10. Section 103 of the Principal Act is amended by inserting after
sub-section (1) the following sub-section:
"(1A) For the purposes of the application of the definition of 'the
distributable income' in sub-section (1) in relation to a private company in
relation to a year of income, the reference in that definition to the taxable
income of the private company shall (other than for the purposes of references
in that definition to the tax payable by the private company) be read as a
reference to the amount that, if Division 16E were disregarded, would be the
taxable income of the private company of the year of income.".
TAXATION LAWS AMENDMENT ACT (No. 2) 1986No. 49, 1986
- SECT 11
Interpretation
11. Section 128A of the Principal Act is amended by inserting after
sub-section (1) the following sub-sections:
"(1A) Subject to sub-section (1B), for the purposes of this sub-section and
sections 128AA, 128AB, 128AD, 128C and 128NA-
a reference to the reduced issue price of a security that has been
partially redeemed on one or more occasions is a reference to the issue price
of the security reduced by the amount of the partial redemption or the sum of
the amounts of the partial redemptions, as the case may be;
expressions used in this sub-section or those sections that are also
used in Division 16E have the same respective meanings as in that Division;
and
sections 159GV (other than sub-section 159GV (2)) and 159GZ apply as if
references in those sections to 'this Division' were references to
'sub-section 128A (1A) and sections 128AA, 128AB, 128AD, 128C and 128NA'.
"(1B) Sub-section (1A) applies as if paragraph (c) of the definition of
'qualifying security' in sub-section 159GP (1) were omitted.".
TAXATION LAWS AMENDMENT ACT (No. 2) 1986No. 49, 1986
- SECT 12
12. After section 128A of the Principal Act the following sections are
inserted:
Deemed interest in respect of transfers of certain securities
"128AA. (1) Where-
a person transfers a qualifying security; and
the transfer price of the security exceeds the issue price or, where
the security has been partially redeemed, the reduced issue price of the
security, so much of the transfer price as equals the excess referred to in
paragraph (b) shall, for the purposes of this Division, be deemed to be income
that consists of interest.
"(2) For the purposes of references to the transfer price, issue price or
reduced issue price of a qualifying security in sub-section (1), any
application of sub-section 159GP (2) shall be disregarded.
Certificates relating to issue price of certain securities
"128AB. (1) Where-
a qualifying security is or was transferred either before or after the
commencement of this section; and
at the time of transfer either-
the transferor is or was a resident; or
the transferor is or was a non-resident and the transfer price is
or
was derived from a source in Australia, the transferee may at any time after
the transfer (including a time after the transferee ceases to be the holder of
the security) apply to the Commissioner for the issue of a certificate under
this section.
"(2) An application under sub-section (1) shall be in accordance with the
form required by the Commissioner, by notice in writing published in the
Gazette, for the purposes of applications under that sub-section.
"(3) Where the Commissioner is satisfied that the requirements of paragraph
(1) (b) are satisfied in relation to the transfer of the qualifying security
to which an application under sub-section (1) relates and that the security
was transferred on a particular date and for a particular consideration to the
applicant, the Commissioner shall issue to the applicant a certificate that-
is expressed to be issued under this section;
identifies the security to which it relates;
specifies that date as the date of transfer;
specifies that consideration, or, where sub-section 159GP(2) applies,
the amount that is taken under that sub-section to be the consideration for
the transfer, as the transfer price; and
specifies the name of the applicant as the transferee.
"(4) Where the Commissioner issues a certificate under this section in
relation to a qualifying security that has been transferred to a person, the
following provisions have effect:
for the purposes of the application of this Division in relation to the
first subsequent transfer (if any) of the qualifying security by the person-
the amount specified in the certificate shall be taken to be the
issue price of the security; and
where the security was partially redeemed before the transfer to
the
person-any such partial redemption shall be taken not to have occurred;
if the security is redeemed or partially redeemed without having been
subsequently transferred by the person-in determining for the purposes of the
application of this Division the extent (if any) to which the redemption
payment comprises an amount that is interest by reason only of the definition
of 'interest' in sub-section 128A (1)-
the amount specified in the certificate as the transfer price
shall
be taken to be the issue price of the security; and
where the security was partially redeemed before the transfer to
the
person-any such partial redemption shall be taken not to have occurred.
"(5) If the Commissioner refuses an application under sub-section (1), the
Commissioner shall serve on the applicant, by post or otherwise, notice in
writing that the application has been refused.
Deemed interest in respect of hire-purchase and certain other agreements
"128AC. (1) In this section-
'agreement' means any agreement, arrangement or understanding, whether
formal or informal, whether express or implied and whether or not enforceable,
or intended to be enforceable, by legal proceedings;
'attributable agreement payment', in relation to a relevant agreement, means
so much of any payment made or liable to be made under the agreement as
represents consideration for the use, sale or disposal of the relevant
agreement property;
'carry forward interest', in relation to an attributable agreement payment
in relation to a relevant agreement, means so much (if any) of the notional
interest in relation to the payment as exceeds the amount of the payment;
'eligible value', in relation to the relevant agreement property in relation
to a relevant agreement, means the market value of the property at the time at
which the agreement commences or commenced to apply in relation to the
property;
'formula interest', in relation to an attributable agreement payment in
relation to a relevant agreement, means the amount ascertained in
2 AC
----------, where-
B (B + 1)
is the total interest in relation to the relevant agreement;
is the total number of attributable agreement payments liable to be
made under the relevant agreement; and
is the number that is B, reduced by the number of attributable
ageement
payments made under the relevant agreement before the attributable agreement
payment concerned;
'notional interest', in relation to an attributable agreement payment in
relation to a relevant agreement, means the sum of the formula interest (if
any) in relation to the payment and the carry forward interest (if any) in
relation to the immediately preceding attributable agreement payment in
relation to the relevant agreement;
'relevant agreement' means an agreement entered into after 16 December 1984,
being-
a hire-purchase agreement; or
a lease or any other agreement relating to the use by a person of
property owned by another person, being a lease or agreement under which-
the lessee or person using the property is entitled to purchase
or require the transfer of the lease property or property subject to the
agreement on the termination or expiration of the lease or agreement; or
the lease term or term of the agreement is for all, or
substantially all, of the effective life of the lease property or property
subject to the agreement;
'relevant agreement property', in relation to a relevant agreement, means-
in the case of a hire-purchase agreement-the property that is the
subject of the agreement; and
in any other case-the property in relation to which sub-paragraph
(b)
(i) or (ii) of the definition of 'relevant agreement' applies;
'total interest', in relation to a relevant agreement, means the sum of all
of the attributable agreement payments liable to be made under the relevant
agreement, reduced by the eligible value of the relevant agreement property.
"(2) Where an agreement (including a hire-purchase agreement and a lease)
relates to the use by a person of 2 or more items of property owned by another
person, this section applies as if, instead of the single agreement, there
were separate agreements relating to the use of each of the items of property
having such of the terms of the first-mentioned agreement as are relevant.
"(3) Where a variation is or was made in the terms of, or liability to make
payments under, a relevant agreement, then, for the purposes of the
application of this section-
the relevant agreement shall be taken to be, or to have been,
terminated at the time at which the variation has effect; and
a new relevant agreement shall be taken to be, or to have been, entered
into at the time at which the variation has effect and on the terms of the
first-mentioned relevant agreement as so varied.
"(4) Where any right or option under an agreement to extend the term of, or
otherwise vary the effect of, the agreement is or was exercised, then, for the
purposes of this section, the exercise of that right or option shall be taken
to be a variation of the terms of the agreement to provide for the extension
or other effect.
"(5) Where an attributable agreement payment in relation to a relevant
agreement is made, so much of the attributable agreement payment as does not
exceed the notional interest in relation to the payment shall, for the
purposes of this Division, be deemed to be income that consists of interest.
"(6) Where-
a relevant agreement is entered into after the commencement of this
section; and
at the time at which the relevant agreement is entered into, the total
interest in relation to the relevant agreement exceeds the sum of all amounts
that, if all of the attributable agreement payments liable to be made under
the relevant agreement were made, would, disregarding this sub-section, be
deemed to be income that consists of interest under sub-section (5) in
relation to the relevant agreement, the amount of the notional interest in
relation to the first attributable agreement payment in relation to the
relevant agreement shall, for the purposes of this section, be increased by an
amount equal to the excess referred to in paragraph (b).
"(7) For the purposes of section 128d, where withholding tax is payable on a
part of an attributable agreement payment that is taken under sub-section (5)
of this section to be an amount of interest, the withholding tax shall be
taken to be payable on the whole of the attributable agreement payment.
Indemnification, &c., agreements in relation to bills of exchange and
promissory
notes
"128AD. (1) Where-
the drawer of a bill of exchange issued after the day on which this
section comes into operation pays an amount (in this sub-section referred to
as the 'indemnification amount') to the acceptor of the bill to indemnify,
reimburse or otherwise compensate the acceptor in respect of the whole or a
part of an amount (which whole or part is in this sub-section referred to as
the 'eligible presentment amount') that the acceptor has, or will, become
liable to pay to the payee under the bill on presentment of the bill;
no part of the indemnification amount is, or will be, included in the
assessable income of the acceptor of any year of income; and
the whole or a part (in this sub-section referred to as the 'eligible
presentment interest') of the eligible presentment amount consists or will
consist of interest, so much of the indemnification amount as indemnifies,
reimburses or otherwise compensates the acceptor in respect of the eligible
presentment interest shall, for the purposes of this Division, be deemed to be
income that consists of interest.
"(2) Where-
a person (in this sub-section referred to as the 'indemnifier') pays an
amount (in this sub-section referred to as the 'indemnification amount') to
the issuer of a promissory note issued after the day on which this section
comes into operation to indemnify, reimburse or otherwise compensate the
issuer in respect of the whole or a part of an amount (which whole or part is
in this sub-section referred to as the 'eligible presentment amount') that the
issuer has, or will, become liable to pay to the payee under the note on
presentment of the note;
no part of the indemnification amount is, or will be, included in the
assessable income of the issuer of any year of income; and
the whole or a part (in this sub-section referred to as the 'eligible
presentment interest') of the eligible presentment amount consists or will
consist of interest, so much of the indemnification amount as indemnifies,
reimburses or otherwise compensates the issuer in respect of the eligible
presentment interest shall, for the purposes of this Division, be deemed to be
income that consists of interest.".
TAXATION LAWS AMENDMENT ACT (No. 2) 1986No. 49, 1986
- SECT 13
Payment of withholding tax
13. Section 128C of the Principal Act is amended by inserting after
sub-section (4) the following sub-section:
"(4AA) Without limiting the generality of sub-section (4), where-
additional tax is due and payable by a person under sub-section (3) in
relation to an amount of withholding tax payable on an amount that, by virtue
of the application of section 128AA, is taken to consist of interest paid in
relation to the transfer of a qualifying security;
the Commissioner is satisfied that-
before the security was transferred, a notice expressed to be
issued
under sub-section 265B (4) identifying the security was given by the person,
in connection with the transfer, to the transferee;
one or more of the statements made in the notice is incorrect; and
the person did not know of the circumstance referred to in
sub-paragraph (ii) at the time of transfer of the security; and
the proper amount of the withholding tax liability of the person
exceeds the amount that would have been the amount of the withholding tax
liability if it were determined on the basis that the statements made in the
notice were correct, the Commissioner shall remit so much of the amount of the
additional tax as bears to that amount the same proportion as the amount of
the excess referred to in paragraph (c) bears to the amount of withholding
tax.".
TAXATION LAWS AMENDMENT ACT (No. 2) 1986No. 49, 1986
- SECT 14
14. After section 128n of the Principal Act the following section is inserted:
Special tax payable in respect of certain securities and agreements
"128NA. (1) Where, but for sub-section 128AA (2)-
the transferor of a qualifying security who is not liable to pay
withholding tax in relation to the transfer of the qualifying security would
be liable to pay withholding tax in relation to the transfer; or
the transferor of a qualifying security who is liable to pay
withholding tax in relation to the transfer of the qualifying security would
be liable to pay additional withholding tax in relation to the transfer, then,
for the purposes of this section, there shall be taken to be an avoided
withholding tax amount in relation to the person who is the transferee of the
qualifying security of an amount equal to the withholding tax or the
additional withholding tax, as the case may be, that the person would be so
liable to pay.
"(2) Where-
an attributable agreement payment or attributable agreement payments
were made by a person under a relevant agreement before the commencement of
section 128AC; and
the Commissioner is of the opinion that the payment or payments were
made before the commencement of that section, or that the payment or payments
were of a greater amount than they would otherwise have been, for the sole or
dominant purpose of securing the result that the total amount (in this
sub-section referred to as the 'actual withholding tax') of withholding tax
payable under that section in relation to all attributable agreement payments
made under the relevant agreement after the commencement of that section would
be less than the amount (in this sub-section referred to as the 'notional
withholding tax') that would otherwise have been payable, then, for the
purposes of this section, there shall be taken to be an avoided withholding
tax amount in relation to the person of an amount equal to the amount by which
the notional withholding tax exceeds the actual withholding tax.
"(3) For the purposes of sub-section (2), expressions used in that
sub-section that are also used in section 128AC have the same respective
meanings in that sub-section as in that section.
"(4) Where there is an avoided withholding tax amount in relation to a
person under this section, the person is liable to pay income tax, as imposed
by the Income Tax (Securities and Agreements) (Withholding Tax Recoupment) Act
1986, in respect of the avoided withholding tax amount.".
TAXATION LAWS AMENDMENT ACT (No. 2) 1986No. 49, 1986
- SECT 15
Reviews and appeals
15. Section 128P of the Principal Act is amended-
by inserting in sub-section (1) ", and in relation to the specification
by the Commissioner of an amount in a certificate under section 128AB," after
"this Division";
by adding at the end of paragraph (1) (a) "or to the specification of
such an amount, as the case requires;";
by adding at the end of paragraph (1) (c) "or to the fact that a
different amount should have been specified, as the case requires."; and
by omitting from sub-section (2) "or direct the issue of a
certificate." and substituting ", direct the issue of a certificate or, in the
case of a reference that relates to the specification by the Commissioner of
an amount in a certificate under section 128AB, direct the variation of the
certificate to specify a different amount.".
TAXATION LAWS AMENDMENT ACT (No. 2) 1986No. 49, 1986
- SECT 16
16. Before Division 17 of Part III of the Principal Act the following
Division is inserted:
"Division 16E-Accruals assessability, &c., in respect of certain security
payments
Interpretation
"159GP. (1) In this Division, unless the contrary intention appears-
'adjusted term', in relation to a security that has been transferred to a
taxpayer, means the part of the term of the security that occurs after the
transfer of the security;
'eligible notional accrual period', in relation to a fixed return security
issued or transferred to a taxpayer, means-
any notional accrual period in relation to the security the whole
of
which occurs after the issue or transfer of the security to the taxpayer; and
where the security was issued or transferred to the taxpayer during
a
notional accrual period in relation to the security-the part of the notional
accrual period that occurs after the issue or transfer of the security;
'fixed return security' means a qualifying security under which the amount
or amounts payable are or consist of-
a specified amount or specified amounts;
an amount or amounts the method of calculation of which does not
involve an interest or indexation rate or other factor, being a rate or factor
that varies or may vary during the term of the security; or
any combination of amounts referred to in paragraph (a) or (b);
'holder', in relation to a security at a particular time, means the person
who, if the amount or amounts payable under the security were due and payable
at that time, would be entitled to receive payment of the amount or amounts;
'issue', in relation to a security other than a bill of exchange, means the
creation of the liability to pay an amount or amounts under the security;
'issue price', in relation to a security, means the consideration (if any)
for the issue of the security;
'issuer', in relation to a security (other than a bill of exchange) at a
particular time, means the person who, if the amount or amounts payable under
the security were due and payable at that time, would be liable to pay the
amount or amounts;
'non-varying element', in relation to a payment under a variable return
security, means so much (if any) of the payment as consists of a specified
amount or any other amount, not being a varying element or an amount of
periodic interest;
'notional accrual amount', in relation to an eligible notional accrual
period in relation to a fixed return security that was issued or transferred
to a taxpayer, means the amount ascertained in accordance with the formula
AB-C, where-
is the taxpayer's yield to redemption in relation to the security,
properly adjusted in a case where the eligible notional accrual period is part
only of a notional accrual period;
is-
in the case of the first eligible notional accrual period in the
term, or the adjusted term, as the case requires, of the security-the issue
price or transfer price, as the case requires, of the security; and
in any other case-the sum of the issue price or transfer price,
as
the case requires, and the notional accrual amounts in relation to all
preceding eligible notional accrual periods in the term or the adjusted term,
as the case requires, of the security; and
is the amount of any periodic interest payment or payments made or
liable to be made during the eligible notional accrual period;
'notional accrual period', in relation to a fixed return security, means any
of the following periods:
the period of 6 months ending at the expiration of the period that
is, or is at the time of issue of the security reasonably likely to be, the
term of the security;
any period of 6 months ending immediately before a period that,
under
paragraph (a) or this paragraph, is a notional accrual period in relation to
the security;
'partial redemption', in relation to a security, means the discharging of a
part (other than the final part) of a liability to pay an amount or amounts
under the security representing a return of the issue price of the security;
'partial redemption payment', in relation to a security, means a payment
that has the effect of partially redeeming the security;
'qualifying security' means any security-
that is issued after 16 December 1984;
that is not a prescribed security within the meaning of section
26C;
the term of which, ascertained as at the time of issue of the
security will, or is reasonably likely to, exceed 1 year;
that has an eligible return; and
where the precise amount of the eligible return is able to be
ascertained at the time of issue of the security-in relation to which the
amount of the eligible return is greater than 1 1/2% of the amount ascertained
by multiplying the amount of the payment or the sum of the payments (excluding
any periodic interest) liable to be made under the security by the number
(including any fraction) of years in the term of the security;
'redemption', in relation to a security, means the discharging of all
liability to pay any amount or amounts under the security representing a
return of the issue price of the security;
'redemption payment', in relation to a security, means any payment that has
the effect of redeeming the security;
'security' means-
stock, a bond, debenture, certificate of entitlement, bill of
exchange, promissory note or other security;
a deposit with a bank, building society or other financial
institution;
a secured or unsecured loan; or
any other contract, whether or not in writing, under which a person
is liable to pay an amount or amounts, whether or not the liability is
secured;
'taxpayer's yield to redemption', in relation to a fixed return security
held by a taxpayer, means the rate of compound interest per notional accrual
period, or part of a notional accrual period, in the term or, where the
security was transferred to the taxpayer, the adjusted term of the security,
at which the sum of the present values of all amounts payable under the
security during the term or adjusted term, as the case may be, of the security
equals the issue price or, where the security was transferred to the taxpayer,
the transfer price of the security;
'term', in relation to a security, means the period from the issue of the
security until the time at which the liability to make the payment or final
payment or payments, as the case requires, under the security arises;
'transfer', in relation to a security, means transfer, sell, assign or
dispose in any way of the security or of the right to receive payment of the
amount or amounts payable under the security, but does not include a
redemption or partial redemption of the security;
'transfer price', in relation to the transfer of a security, means the
consideration (if any) for the transfer of the security;
'variable return security' means a qualifying security that is not a fixed
return security;
'varying element', in relation to a payment under a variable return
security, means so much (if any) of the payment as consists of an amount the
method of calculation of which involves an interest, indexation or other rate,
not being an amount of periodic interest.
"(2) Where-
the Commissioner, having regard to any connection between the parties
to the issue or transfer of a security and to any other relevant
circumstances, is satisfied that the parties were not dealing with each other
at arm's length in relation to the issue or transfer; and
the Commissioner determines that this sub-section should apply in
relation to the issue or transfer, then, for the purposes of the application
of the definition of 'issue price' or 'transfer price', as the case may be, in
sub-section (1) in relation to the issue or transfer, the consideration for
the issue or transfer shall be taken to be equal to-
the consideration that might reasonably be expected for the issue or
transfer if the parties to the issue or transfer were independent parties
dealing at arm's length with each other in relation to the issue or transfer;
or
where, for any reason (including an insufficiency of information
available to the Commissioner), it is not possible or not practicable for the
Commissioner to ascertain the amount referred to in paragraph (c)-such amount
as the Commissioner determines.
For the purposes of this Division, there shall be taken to be an
eligible return in relation to a security if at the time when the security is
issued it is reasonably likely, by reason that the security was issued at a
discount, bears deferred interest or is capital indexed or for any other
reason, having regard to the terms of the security, for the sum of all
payments (other than periodic interest payments) under the security to exceed
the issue price of the security, and the amount of the eligible return is the
amount of the excess.
"(4) Where, in relation to a variable return security, the sum of the
non-varying elements in relation to all payments liable to be made under the
security exceeds the issue price of the security, there shall be taken to be
an issue discount in relation to the issue of the security of an amount equal
to the excess.
"(5) Where, in relation to the transfer of a variable return security-
the sum of the non-varying elements in relation to all payments liable
to be made under the security after the transfer and so much of the varying
elements of all such payments as is attributable to the period before the
transfer exceeds the transfer price-there shall be taken to be a purchase
discount in relation to the transfer of the security of an amount equal to the
excess; or
the transfer price exceeds the sum referred to in paragraph (a)-there
shall be taken to be a purchase premium in relation to the transfer of the
security of an amount equal to the excess.
For the purposes of this Division, where an amount of interest is
payable under a security, the amount shall be taken to be periodic interest if
the period between the commencement of the period in respect of which the
interest is expressed to be payable and the time at which the interest is
payable is less than or equal to one year.
"(7) Where-
but for this sub-section, an amount of interest payable under a
security would, by reason of the application of sub-section (6), be taken, for
the purposes of this Division, to be periodic interest; and
the Commissioner, having regard to the amount of the interest,
considers that it is properly attributable to a period in excess of one year,
then, for purposes of the application of this Division-
the amount of interest shall not be taken to be periodic interest; and
the amount of interest shall be taken to be attributable to the period
to which the Commissioner considers it is properly attributable.
Where 2 or more of the amounts payable under a security are payable to
different persons and in return for consideration given by different persons,
the 2 or more amounts shall, for the purposes of this Division, be taken to be
payable under a separate security having such of the terms of the
first-mentioned security as are relevant.
"(9) For the purposes of the application of this Division in relation to the
holding of a security acquired by a taxpayer on transfer, any prior holding of
the security by the taxpayer, whether on issue or transfer, shall be
disregarded.
Accruals assessability, &c.
"159GQ. (1) Where a taxpayer is the holder of a fixed return security during
a period (other than a period at the end of which the taxpayer transfers the
security), being the whole or a part of a year of income (which whole or part
is in this sub-section referred to as the 'assessability period'), there shall
be included in the assessable income of the taxpayer of the year of income an
amount equal to the sum of-
if an entire eligible notional accrual period or entire such periods
occur in the assessability period-the notional accrual amount or amounts in
relation to the eligible notional accrual period or periods; and
(b) if a fraction of an eligible notional accrual period or fractions of
such periods occur in the assessability period-the same fraction of the
notional accrual amount, or the same fractions of the notional accrual
amounts, in relation to the eligible notional accrual period or periods.
"(2) Where a taxpayer is the holder of a variable return security, being a
security that was issued to the taxpayer, during a period (other than a period
at the end of which the taxpayer transfers the security), being the whole or a
part of a year of income (which whole or part is in this sub-section referred
to as the 'assessability period')-
where there is an issue discount in relation to the issue of the
security to the taxpayer-the fraction of the issue discount equal to the
fraction of the term of the security represented by the assessability period
shall be included in the assessable income of the taxpayer of the year of
income; and
so much of any varying element in relation to any payment that will, or
in the opinion of the Commissioner may, become payable under the security as,
having regard to the method of calculation provided for under the terms of the
security and the length of the assessability period, is attributable, or in
the opinion of the Commissioner may reasonably be attributed, to the
assessability period shall be included in the assessable income of the
taxpayer of the year of income.
"(3) Where a taxpayer is the holder of a variable return security, being a
security that was transferred to the taxpayer, during a period (other than a
period at the end of which the taxpayer transfers the security), being the
whole or a part of a year of income (which whole or part is in this
sub-section referred to as the 'assessability period')-
where there is a purchase discount in relation to the transfer of the
security to the taxpayer-the fraction of the purchase discount equal to the
fraction of the term occurring after the transfer that is represented by the
assessability period shall be included in the assessable income of the
taxpayer of the year of income;
where there is a purchase premium in relation to the transfer of the
security to the taxpayer-the fraction of the purchase premium in relation to
the transfer of the security to the taxpayer equal to the fraction of the term
occurring after the transfer of the security to the taxpayer that is
represented by the assessability period shall be allowable as a deduction from
the assessable income of the taxpayer of the year of income; and
so much of the varying elements in relation to payments that will, or
in the opinion of the Commissioner may, become liable to be made after the
the method of calculation provided for under
the terms of the security and to the length of the assessability period, is
attributable, or in the opinion of the Commissioner may reasonably be
attributed, to the assessability period shall be included in the assessable
income of the taxpayer of the year of income.
Consequence of actual payments
"159GR. (1) Where a payment (not being a payment that is, or to the extent
that it consists of, a periodic interest payment, a redemption payment or a
partial redemption payment) is made or liable to be made in a year of income
to a taxpayer under a qualifying security-
no amount shall be included in the assessable income of the taxpayer of
the year of income in respect of the payment otherwise than under section
159GQ or sub-section (2) of this section; and
where the taxpayer acquired the qualifying security on transfer-no
amount shall be allowable as a deduction from the assessable income of the
taxpayer of the year of income in respect of the payment otherwise than under
section 159GQ or sub-section (2) of this section.
"(2) Where-
a payment (not being a periodic interest payment) is made or liable to
be made in a year of income to a taxpayer under a variable return security;
and
by reason that, in the application of sub-section 159GQ (2) or (3) in
relation to the taxpayer in relation to any year or years of income, the
amount of the payment was taken to be different from the actual amount of the
payment, the sum of the amounts included in the assessable income of the
taxpayer, reduced by any amount allowable as a deduction from that assessable
income, under section 159GQ in relation to the security (the amount of which
sum as so reduced is in this sub-section referred to as the 'actual taxable
amount') differs from the amount (in this sub-section referred to as the
'correct taxable amount') that would have been the actual taxable amount if
the amount of the payment had not been taken to be different from the actual
amount of the payment, the following provisions have effect:
where the correct taxable amount exceeds the actual taxable amount-an
amount equal to the excess shall be included in the assessable income of the
taxpayer of the year of income in which the payment is made or liable to be
made;
where the actual taxable amount exceeds the correct taxable amount-an
amount equal to the excess shall be allowable as a deduction from the
assessable income of the taxpayer of the year of income in which the payment
is made or liable to be made.
Balancing adjustments on transfer of qualifying security
"159GS. (1) Where there is a profit amount in relation to the transfer of a
qualifying security by a taxpayer in a year of income-
if there is a net assessable amount in relation to the transfer and-
the profit amount exceeds the net assessable amount-an amount
equal
to the excess shall be included in the assessable income of the taxpayer of
the year of income; or
the net assessable amount exceeds the profit amount-an amount
equal
to the excess shall be allowable as a deduction from the assessable income of
the taxpayer of the year of income; and
if there is a net deductible amount in relation to the transfer-an
amount equal to the sum of that amount and the profit amount shall be included
in the assessable income of the taxpayer of the year of income.
Where there is a loss amount in relation to the transfer of a
qualifying security by a taxpayer in a year of income and-
there is a net assessable amount in relation to the transfer-an amount
equal to the net assessable amount shall be allowable as a deduction from the
assessable income of the taxpayer of the year of income; or
there is a net deductible amount in relation to the transfer that
exceeds the loss amount-an amount equal to the excess shall be included in the
assessable income of the taxpayer of the year of income.
"(3) For the purposes of the application of this section in relation to the
transfer (in this sub-section referred to as the 'relevant transfer') of a
qualifying security by a taxpayer-
where the transfer price, as increased by the amount of any payments
(other than periodic interest payments) made to the taxpayer under the
security in respect of the period when the security was held by the taxpayer
exceeds-
the issue price of the security; or
where the security was acquired by the taxpayer on transfer-the
transfer price in relation to that transfer,
there shall be taken to be a profit amount in relation to the relevant
transfer of an amount equal to the excess;
where the issue price of the security or, where the security was
acquired by the taxpayer on transfer, the transfer price in relation to that
transfer exceeds the sum of the transfer price in relation to the relevant
transfer and any payments (other than periodic interest payments) made to the
taxpayer under the security in respect of the period when the security was
held by the taxpayer, there shall be taken to be a loss amount in relation to
the relevant transfer of an amount equal to the excess;
where the sum of all amounts (if any) included under sections 159GQ and
159GR in the assessable income of the taxpayer in respect of the security in
respect of the period when the security was held by the taxpayer exceeds the
sum of all amounts (if any) allowable under those sections as deductions from
the assessable income of the taxpayer in respect of the security in respect of
that period, there shall be taken to be a net assessable amount in relation to
the relevant transfer of an amount equal to the excess; and
where the sum of all amounts (if any) allowable under sections 159GQ
and 159GR as deductions from the assessable income of the taxpayer in respect
of the security in respect of the period when the taxpayer held the security
exceeds the sum of all amounts (if any) included under those sections in the
assessable income of the taxpayer in respect of the security in respect of
that period, there shall be taken to be a net deductible amount in relation to
the relevant transfer of an amount equal to the excess.
Deductions allowable to issuer of qualifying security, &c.
"159GT. (1) Subject to this section, a taxpayer who during the whole or a
part (which whole or part is in this sub-section referred to as the 'relevant
period') of a year of income is an issuer of a qualifying security to which
this section applies is entitled to a deduction in the assessment of the
taxpayer of the year of income of an amount equal to the amount that,
disregarding sections 159GW, 159GX and 159GY, would be included in the
assessable income of the taxpayer under section 159GQ in respect of the
relevant period if the security had been issued to the taxpayer and the
whole of the relevant period
and did not transfer the security at the end of the relevant period.
"(2) A deduction is not allowable to a taxpayer under sub-section (1) in
relation to a qualifying security to which this section applies unless the
taxpayer would, but for this Division, be entitled to a deduction under
section 51 in respect of payments (not being redemption payments, partial
redemption payments or periodic interest payments) made or liable to be made
under the security in respect of the relevant period referred to in that
sub-section.
"(3) Where a payment (not being a payment that is, or to the extent that it
consists of, a periodic interest payment, a redemption payment or a partial
redemption payment) is made or liable to be made in a year of income by a
taxpayer under a qualifying security to which this section applies, no amount
shall be allowable as a deduction from the assessable income of the taxpayer
of the year of income in respect of the payment otherwise than under this
section.
"(4) Where-
a payment (not being a periodic interest payment) is made or liable to
be made in a year of income under a variable return security by a taxpayer
being the issuer of the security at the time the payment is made or liable to
be made; and
by reason that, in the application of sub-section (1) in relation to
the taxpayer in relation to any year or years of income, the amount of the
payment was taken to be different from the actual amount of the payment, the
sum of the amounts allowable as deductions from the assessable income of the
taxpayer under that sub-section in relation to the security (the amount of
which sum is in this sub-section referred to as the 'actual total deductions')
differs from the amount (in this sub-section referred to as the 'correct total
deductions') that would have been the actual total deductions if the amount of
the payment had not been taken to be different from the actual amount of the
payment, the following provisions have effect:
where the actual total deductions exceed the correct total
deductions-an amount equal to the excess shall be included in the assessable
income of the taxpayer of the year of income in which the payment is made or
liable to be made;
where the correct total deductions exceed the actual total
deductions-an amount equal to the excess shall be allowable as a deduction
from the assessable income of the taxpayer of the year of income in which the
payment is made or liable to be made.
This section applies to-
any qualifying security issued on or before 22 May 1986; and
any qualifying security issued in Australia after 22 May 1986 other
than a negotiable instrument issued payable to bearer.
Effect of Division on certain transfer profits and losses
"159GU. (1) Where, apart from this Division, a profit that is made by a
resident taxpayer in relation to a transfer of a qualifying security that does
not form part of the trading stock of the taxpayer would be included in the
assessable income of the taxpayer of a year of income, the profit shall not be
so included in the assessable income of the taxpayer.
"(2) Where, apart from this Division, a loss that is incurred by a resident
taxpayer in relation to a transfer of a qualifying security that does not form
part of the trading stock of the taxpayer would be allowable as a deduction
from the assessable income of the taxpayer of a year of income and there is a
net deductible amount, within the meaning of section 159gs, in relation to the
transfer, so much only of the amount of the loss as exceeds the net deductible
amount shall be so allowable as a deduction.
Consequence of variation of terms of security
"159GV. (1) Where, after 22 May 1986, a material variation is made in the
terms of a security, for the purposes of the application of this Division in
relation to the security in respect of the period after the variation and
before any subsequent material variation-
the security shall be taken to have been issued on the terms on which
it was originally issued as varied by the material variation and any prior
variation;
where consideration for the variation is paid or payable by the holder
of the security-the issue price of the security shall be taken to be an amount
equal to the amount that was the issue price of the security immediately
before this application of this sub-section increased by the amount of that
consideration;
where consideration for the variation is paid or payable by the issuer
of the security-the issue price of the security shall be taken to be an amount
equal to the amount that was the issue price of the security immediately
before this application of this sub-section reduced by the amount of that
consideration; and
paragraph (a) of the definition of 'qualifying security' in sub-section
159GP (1) shall be disregarded.
"(2) Where-
sub-section (1) applies in relation to a security held by a taxpayer in
relation to a material variation in the terms of the security; and
if-
that sub-section had effect not only in relation to the period
after
the variation but also in relation to the whole of the term of the security
before the variation; and
any previous material variations were taken into account but any
subsequent material variations were disregarded,
the sum (in this sub-section referred to as the 'total notional taxable
income') of the taxable incomes of the taxpayer in respect of the year of
income in which the variation is made and all previous years of income would
have differed from the sum (in this sub-section referred to as the 'total
actual taxable income') of the actual taxable incomes of the taxpayer of those
years of income, the following provisions have effect:
where the total notional taxable income exceeds the total actual
taxable income-an amount equal to the excess shall be included in the
assessable income of the taxpayer of the year of income in which the variation
is made;
where the total actual taxable income exceeds the total notional
taxable income-an amount equal to the excess shall be allowable as a deduction
from the assessable income of the taxpayer of the year of income in which the
variation is made.
"(3) In this section, a reference to a material variation of the terms of a
security is a reference to a variation of the terms of the security-
that has the effect that a security that was not a qualifying security
before the variation would, if the security had been originally issued with
the terms as varied and if paragraph (a) of the definition of 'qualifying
security' in sub-section 159GP (1) were disregarded, have been a qualifying
security when the security was issued;
that has the effect that a security that is a qualifying security
would, if originally issued with the terms as varied, not have been a
qualifying security at the time of issue; or
that has the effect that the amount, or time of making, of a payment
under the security, or that the holder or issuer of the security, is varied.
"(4) Where any right or option under a security to extend the term of, or
otherwise vary the effect of, the security is exercised, then, for the
purposes of this section, the exercise of that right or option shall be taken
to be a variation of the terms of the security to provide for the extension or
other effect.
Effect of Division in relation to non-residents
"159GW. (1) Subject to sub-section (2), where during the whole or a part of
a year of income (which whole or part is in this sub-section referred to as
the 'period of non-residence') a taxpayer is not a resident-
no amount shall be included in, or allowable as a deduction from, the
assessable income of the taxpayer of the year of income under section 159GQ in
relation to the period of non-residence;
no amount shall be included in, or allowable as a deduction from, the
assessable income of the taxpayer of the year of income under sub-section
159GR (2) in relation to any payment made or liable to be made to the taxpayer
during the period of non-residence; and
no amount shall be included in, or allowable as a deduction from, the
assessable income of the taxpayer of the year of income under section 159GS in
relation to any transfer of the security that occurred during the period of
non-residence.
"(2) Where-
a payment is made or liable to be made under a qualifying security to a
resident taxpayer; and
the taxpayer was not a resident for the whole or a part (which whole or
part is in this sub-section referred to as the 'period of non-residence') of
the period during which the taxpayer held the security, the following
provisions have effect:
there shall be included in the assessable income of the taxpayer of the
year of income in which the payment is made or liable to be made an amount
equal to the amount that, but for sub-section (1), would have been included in
the assessable income of the taxpayer of any year or years of income under
section 159GQ in respect of the payment in respect of the period of
non-residence;
there shall be allowable as a deduction from the assessable income of
the taxpayer of the year of income in which the payment is made or liable to
be made an amount equal to the amount that, but for sub-section (1), would
have been allowable as a deduction from the assessable income of the taxpayer
of any year or years of income under section 159GQ in respect of the payment
in respect of the period of non-residence.
Effect of Division where certain payments not assessable
"159GX. Where, but for this section, an amount would be included in, or
allowable as a deduction from, the assessable income of a taxpayer of a year
of income under section 159GQ or 159GR in respect of the whole or a part of a
payment under a qualifying security, no amount shall be so included or
allowable unless the payment or a part of the payment, when actually made or
liable to be made, would, disregarding section 128D, be included in the
assessable income of the taxpayer of a year of income.
Effect of Division where qualifying security is trading stock
"159GY. No amount shall be included in, or allowable as a deduction from,
the assessable income of a taxpayer-
under section 159GQ in relation to a qualifying security in respect of
any year or part of a year of income during which the qualifying security
forms part of the trading stock of the taxpayer;
under section 159GR in respect of the whole or a part of a payment made
or liable to be made under a qualifying security during any year or part of a
year of income during which the qualifying security forms part of the trading
stock of the taxpayer; or
under section 159GS in relation to the transfer of a qualifying
security by the taxpayer where, immediately before the transfer, the
qualifying security was or formed part of the trading stock of the taxpayer.
Stripped securities
"159GZ. (1) Where-
at any time a taxpayer acquires or acquired a security (in this
sub-section referred to as the 'underlying security') in relation to which
there are or were 2 or more payment rights; and
the taxpayer transfers or transferred one or some but not all of those
rights to a particular person or particular persons jointly, for the purposes
of the application of this Division (including any subsequent application of
this sub-section) in relation to any period after the transfer of the right or
rights-
instead of the underlying security, there shall be taken to have been
originally issued-
a separate security under which the payment right or payment
rights
transferred to the person or persons referred to in paragraph (b) were
created;
where at the time at which that right or those rights were
transferred, another payment right or other payment rights in relation to the
underlying security was or were transferred to another person or to other
persons jointly-a separate security under which that other right or those
other rights were created; and
where immediately after the transfer the taxpayer retains or
retained any payment right or rights-a separate security under which that
right or those rights were created;
where the underlying security was issued to the taxpayer-the issue
price of each separate security referred to in paragraph (c) shall be taken to
be so much of the issue price of the underlying security as bears to that
amount the proportion that the market value of the separate security at the
time of issue of the underlying security bears to the market value of the
underlying security at that time; and
where the underlying security was acquired by the taxpayer on
transfer-the transfer price, in relation to that transfer, of each separate
security referred to in paragraph (c) shall be taken to be so much of the
transfer price of the underlying security as bears to that amount the
proportion that the market value of the separate security at the time of
transfer bears to the market value of the underlying security at that time.
"(2) Where, by reason of the application of sub-section (1) in relation to
the transfer after 16 December 1984 of a payment right or payment rights in
relation to a security to a particular person or particular persons jointly,
the payment right or rights is or are taken to comprise a separate security,
then, for the purposes of the application of this Division in relation to the
separate security in relation to any period after the transfer, paragraph (a)
of the definition of 'qualifying security' in sub-section 159GP (1) shall be
disregarded.
"(3) In sub-sections (1) and (2), 'payment right', in relation to a
security, means a right to receive a particular payment that is liable to be
made under the security.
"(4) Where-
at any time a taxpayer acquires or acquired a security (in this
sub-section referred to as the 'underlying security') on issue or transfer;
after 16 December 1984, the taxpayer issues a qualifying security (in
this sub-section referred to as the 'stripped security'); and
but for this sub-section, a deduction of an amount equal to the whole
or a part of the issue price or, where the underlying security was acquired on
transfer, the transfer price of the underlying security would be allowable
from the assessable income of the taxpayer of the year of income in which the
taxpayer issues the stripped security in respect of the issue of the stripped
security, the amount of the deduction allowable shall be an amount that bears
to the issue price or transfer price, as the case may be, of the underlying
security the same proportion of the market value of the stripped security at
the time of issue or purchase, as the case may be, bears to the market value
of the underlying security at that time.".
TAXATION LAWS AMENDMENT ACT (No. 2) 1986No. 49, 1986
- SECT 17
Rebate in respect of annual leave, long service leave and eligible
termination
payments
17. Section 160AA of the Principal Act is amended-
by omitting paragraph (1) (d) and substituting the following
paragraph:
the additional tax amount in relation to the taxpayer in relation
to
the year of income exceeds the sum of-
15% of the qualifying 15% amount (if any) in relation to the
taxpayer in relation to the year of income;
25% of the qualifying 25% amount (if any) in relation to the
taxpayer in relation to the year of income; and
30% of so much (if any) of the relevant income amount in
relation to the taxpayer in relation to the year of income as exceeds the sum
of the amounts referred to in sub-paragraphs (i) and (ii),";
by inserting after the definition of "non-resident taxpayer" in
sub-section (2) the following definitions:
" 'non-15% taxable income' means the amount ascertained by deducting
from
the taxable income of the taxpayer of the year of income the qualifying 15%
amount (if any);
'notional (non-lump sum) taxable income' means the amount ascertained
by
deducting from the taxable income of the taxpayer of the year of income the
relevant income amount;"; and
by inserting after the definition of "notional tax amount" in
sub-section (2) the following definitions:
" 'qualifying 15% amount' means so much (if any) of-
any amount included in the assessable income of the taxpayer of
the year of income under sub-section 27B (1) in respect of an age 55
termination payment; or
where 2 or more such amounts are so included-the aggregate of
those amounts,
as does not exceed the lesser of the residual amount and the relevant
income amount;
'qualifying 25% amount' means-
where the taxpayer is a resident taxpayer in relation to the
year
of income and the notional (non-lump sum) taxable income does not exceed
$12,500-the amount (if any) by which the lesser of $12,500 and the non-15%
taxable income exceeds the notional (non-lump sum) taxable income; and
any other case-nil;".
TAXATION LAWS AMENDMENT ACT (No. 2) 1986No. 49, 1986
- SECT 18
Interpretation
18. Section 221A of the Principal Act is amended by inserting after
paragraph (h) of the definition of "salary or wages" in sub-section (1) the
following paragraph:
"(ha) by way of Formal Training Allowance;".
TAXATION LAWS AMENDMENT ACT (No. 2) 1986No. 49, 1986
- SECT 19
Interpretation
19. Section 221YK of the Principal Act is amended by omitting from
sub-section (1) the definition of "interest" and substituting the following
definition:
" 'interest' means any amount that is, or is deemed to consist of, interest
for the purposes of Division 11A of Part III.".
TAXATION LAWS AMENDMENT ACT (No. 2) 1986No. 49, 1986
- SECT 20
Deductions from dividends and interest
20. Section 221YL of the Principal Act is amended by inserting in
sub-section (4) ", or an amount of interest to which section 128AA, 128AC or
128AD applies," after "dividend".
TAXATION LAWS AMENDMENT ACT (No. 2) 1986No. 49, 1986
- SECT 21
21. After section 221YM of the Principal Act the following section is
inserted:
Effect of section 128AB certificates and section 265B notices
"221YMA. (1) Subject to sub-section (3), where-
the holder of a security transfers the security to another person; and
before the security was transferred, the holder gave to the transferee,
in connection with the transfer, a notice expressed to be issued under section
265B and identifying the security, then, for the purposes only of determining
under this Division whether, or the extent to which, any amount is deemed to
consist of interest under section 128AA in relation to the transfer of the
security, that section shall be taken to apply as if the matters specified in
the notice, being matters required to be stated under sub-section 265B (4),
were correct and as if no variation or partial redemption of the security,
other than any variation or partial redemption stated in the notice or advised
in writing by the holder before the transfer, had occurred.
"(2) Where the requirements of paragraph (1) (b) are satisfied in relation
to 2 or more notices, sub-section (1) applies only in relation to the notice
that bears, as the stated time and date of issue of the notice, the later or
latest time and date.
"(3) Where a certificate expressed to be issued under section 128AB is
either-
given by the person specified in the certificate to another person
before, and in connection with, the transfer of the qualifying security
identified in the certificate by the person specified in the certificate to
the other person; or
given by the person specified in the certificate to the issuer of the
qualifying security identified in the certificate before, and in connection
with, the redemption or partial redemption of the security from the person
specified in the certificate, then, for the purposes of any application of
this Division in relation to the transfer, redemption or partial redemption,
as the case may be, of the security-
the amount of the transfer price specified in the certificate shall be
taken to be the issue price of the security; and
any partial redemption of the security that took place before the date
specified in the certificate shall be taken not to have occurred.
"(4) Where 2 or more certificates expressed to be issued under section 128ab
that identify the same security are given to a person in circumstances
referred to in paragraph (3) (a) or (b), sub-section (3) applies only in
relation to the certificate in which is specified the later or latest date.
"(5) Where, before the transfer to a person, or the redemption or partial
redemption by a person, of a qualifying security, no certificate expressed to
be issued under section 128AB that identifies the qualifying security was
given to the person in connection with the transfer, redemption or partial
redemption, then, for the purposes only of the application of this Division in
relation to the transfer to the person, or the redemption or partial
redemption by the person, of the qualifying security, any certificate issued
under section 128AB that identifies the security shall be taken not to have
been issued.
"(6) Subject to sub-section (7), for the purposes of this section-
expressions used in this section that are also used in Division 16E of
Part III have the same respective meanings as in that Division; and
sections 159GV (other than sub-section 159GV (2)) and 159GZ apply as if
references in those sections to 'this Division' were references to 'section
221YMA'.
"(7) Sub-section (6) applies as if paragraph (c) of the definition of
'qualifying security' in sub-section 159GP (1) were omitted.".
TAXATION LAWS AMENDMENT ACT (No. 2) 1986No. 49, 1986
- SECT 22
Dividends, &c., not in money not to be paid until payment made to
Commissioner
on account of tax
22. Section 221YP of the Principal Act is amended by inserting after
sub-section (3) the following sub-section:
"(3A) Where-
interest to which section 128AA, 128AC or 128AD applies is to be paid
by a person; and
the person would, but for sub-section 221YL (4), be required to make a
deduction under section 221YL from the interest, the person shall not pay or
credit the interest to any person until an amount equal to the amount that,
but for that sub-section, would have been required to be deducted has been
paid to the Commissioner in respect of the interest.".
TAXATION LAWS AMENDMENT ACT (No. 2) 1986No. 49, 1986
- SECT 23
Liability of person who fails to make deductions, &c.
23. Section 221YQ of the Principal Act is amended by omitting from
sub-section (1) "or (2) in relation to a dividend" and substituting ", (2) or
(3A) in relation to a dividend or interest".
TAXATION LAWS AMENDMENT ACT (No. 2) 1986No. 49, 1986
- SECT 24
Credits in respect of deductions made from dividends or interest
24. Section 221YS of the Principal Act is amended by inserting in
sub-section (2) "or interest" after "dividend".
TAXATION LAWS AMENDMENT ACT (No. 2) 1986No. 49, 1986
- SECT 25
25. After section 221YS of the Principal Act the following section is
inserted:
Credits in respect of amounts assessed under Division 16E of Part III
"221YSA. (1) Where-
the amount of any withholding tax that has become payable by a taxpayer
on a payment of interest under, or in relation to the transfer of, a
qualifying security has been paid;
there is a net Division 16E amount in relation to the taxpayer in
relation to-
where the payment of interest is a payment in relation to the
transfer of the qualifying security-the security;
where the payment of interest is such a payment by virtue of the
application of section 128AC in relation to an attributable agreement payment
within the meaning of that section-the attributable agreement payment; or
in any other case-the payment of interest; and
the amount of the withholding tax payable on the interest exceeds the
amount that would have been payable on the interest if the interest were
reduced by the net Division 16E amount, the taxpayer may apply to the
Commissioner for a credit of an amount equal to the excess referred to in
paragraph (c).
"(2) An application under sub-section (1) shall-
be in writing; and
set out details of the amounts referred to in paragraphs (1) (a), (b)
and (c).
"(3) Where, on an application under sub-section (1), the Commissioner is
satisfied as to the matters referred to in paragraphs (1) (a), (b) and (c),
the applicant is entitled to a credit of an amount equal to the excess
referred to in paragraph (1) (c).
"(4) Subject to sub-section (5), for the purposes of this section-
there shall be taken to be a net Division 16E amount in relation to a
taxpayer in relation to a qualifying security, an attributable agreement
payment or a payment of interest under a qualifying security if the sum of all
amounts (if any) included in the assessable income of the taxpayer of any
years of income in relation to the security or the payment, as the case may
be, under section 159GQ or 159GR exceeds the sum of all amounts (if any)
allowable as deductions from the assessable income of the taxpayer of any
years of income in relation to the security or the payment, as the case may
be, under those sections;
the net Division 16E amount is an amount equal to the excess referred
to in paragraph (a);
expressions used in this section that are also used in Division 16E of
Part III have the same respective meanings as in that Division; and
sections 159GV (other than sub-section 159GV (2)) and 159GZ apply as if
references in those sections to 'this Division' were references to 'section
221YSA'.
"(5) Sub-section (4) applies as if paragraph (c) of the definition of
'qualifying security' in sub-section 159GP (1) were omitted.".
TAXATION LAWS AMENDMENT ACT (No. 2) 1986No. 49, 1986
- SECT 26
Penalty for false or misleading statements
26. Section 223 of the Principal Act is amended by inserting after
sub-section (9) the following sub-sections:
"(9A) Where-
a person to whom a notice is issued under section 265B gives the notice
to another person in connection with the transfer of a qualifying security to
the other person; or
a person gives advice in writing to another person, in connection with
the transfer of a qualifying security, of a variation or partial redemption of
the qualifying security, any statement in the notice when so issued or given,
or in the advice when so given, to the other person shall, for the purposes of
this Part, be taken to have been made by the person giving the notice or
advice, as the case may be, to the other person for a purpose in connection
with the operation of this Act.
"(9B) Where-
the holder of a qualifying security transfers the security to another
person;
by virtue of the application of section 128AA, the holder is liable to
pay withholding tax in relation to the transfer of the qualifying security;
before the security was transferred, the holder gave to the transferee,
in connection with the transfer, a notice issued to the holder under section
265B identifying the security;
after the notice was issued to the holder, the security was varied or
partially redeemed; and
the holder did not advise the transferee in writing of the variation or
partial redemption, the holder shall, for the purposes of this Part, be taken
to have made for a purpose in connection with the operation of this Act a
statement that the qualifying security was not so varied or partially
redeemed.
"(9C) Where-
the holder of a qualifying security who acquired the security on
transfer (in this sub-section referred to as the 'current acquisition
transfer') transfers the security to another person;
by virtue of the application of section 128AA, the holder is liable to
pay withholding tax in relation to the transfer of the security;
before the security was transferred, the holder gave to the transferee,
in connection with the transfer, a certificate issued to the holder under
section 128AB identifying the security; and
the holder had acquired the security on transfer on any occasion before
the current acquisition transfer, the holder shall, for the purposes of this
Part, be taken to have made for a purpose in connection with the operation of
this Act a statement that the certificate relates to the current acquisition
transfer.
"(9D) Where-
a qualifying security is redeemed or partially redeemed from the
holder;
the holder acquired the security on transfer (in this sub-section
referred to as the 'current acquisition transfer');
the holder is liable to pay withholding tax in relation to the
redemption or partial redemption of the security;
before the security was redeemed or partially redeemed, the holder gave
to the issuer, in connection with the redemption or partial redemption, a
certificate issued to the holder under section 128ab identifying the security;
and
the holder had acquired the security on transfer on any occasion before
the current acquisition transfer, the holder shall, for the purposes of this
Part, be taken to have made for a purpose in connection with the operation of
this Act a statement that the certificate relates to the current acquisition
transfer.
"(9E) Subject to sub-section (9F), for the purposes of sub-sections (9A) to
(9D) (inclusive)-
expressions used in those sub-sections that are also used in Division
16E of Part III have the same respective meanings as in that Division; and
sections 159GV (other than sub-section 159GV (2)) and 159GZ apply as if
references in those sections to 'this Division' were references to 'section
223'.
"(9F) Sub-section (9E) applies as if paragraph (c) of the definition of
'qualifying security' in sub-section 159GP (1) were omitted.".
TAXATION LAWS AMENDMENT ACT (No. 2) 1986No. 49, 1986
- SECT 27
27. After section 265A of the Principal Act the following section is
inserted:
Notices in relation to certain securities
"265B. (1) Subject to sub-section (2), for the purposes of this section-
(a) expressions used in this section that are also used in Division 16E of
(b)
sections 159GV (other than sub-section 159GV (2)) and 159GZ apply as if
references in those sections to 'this Division' were references to 'section
265B'.
"(2) Sub-section (1) applies as if paragraph (c) of the definition of
'qualifying security' in sub-section 159GP (1) were omitted.
"(3) The holder of a security, not being a prescribed security within the
meaning of section 26C, may apply at any time to the issuer for a notice under
this section in relation to the security.
"(4) Where the issuer of a security receives an application under
sub-section (3) in relation to the security, the issuer shall within 21 days
of receipt of the application issue a notice in writing to the applicant,
expressed to be issued under this section and identifying the security, that
states that the notice was issued at a specified time on a specified date and-
where the security is not a qualifying security-that the security is not
(b) where the security is a qualifying
security-that-
the security is a qualifying security;
the security was issued for a specified consideration;
where the security was partially redeemed on one or more
occasions
before the time of issue of the notice-that the security was partially
redeemed by a specified amount or amounts on a specified date or dates; and
where the security was varied to become a qualifying security-the
security was varied, for a specified consideration, to become a qualifying
security.".
TAXATION LAWS AMENDMENT ACT (No. 2) 1986No. 49, 1986
- SECT 29
Application of amendments
29. (1) In this section, "amended Act" means the Principal Act as amended by
this Act.
(2) The amendments made by sections 5 and 8 apply to assessments in respect
of income of the year of income that commenced on 1 July 1985 and of all
subsequent years of income.
(3) Section 79A of the amended Act applies to assessments in respect of
income of the year of income that commenced on 1 July 1985 as if an allowance
paid in accordance with section 98AA of the Repatriation Act 1920 (including
that section as applied by virtue of Division 5A, 6, 7, 8 or 9 of Part III of
that Act or by virtue of the Repatriation (Special Overseas Service) Act 1962)
were a prescribed allowance within the meaning of that first-mentioned
section.
(4) The amendments made by sections 6, 10 and 16 apply as if they had come
into operation on 17 December 1984.
(5) The amendment made by section 7 applies to gifts made after 22 May 1986.
(6) The amendment made by section 9 applies in relation to an expense, as
defined in sub-section 82KT (1) of the amended Act, incurred by a taxpayer
during a year of income commencing on or after 1 July 1986.
(7) The amendments made by section 17 apply to assessments in respect of
income of the year of income that commenced on 1 July 1984 and of all
subsequent years of income.
(8) In the application of section 160AA of the amended Act to assessments in
respect of income of the year of income that commenced on 1 July 1984,
references in that section to 25% shall be read as references to 26.67%.
TAXATION LAWS AMENDMENT ACT (No. 2) 1986No. 49, 1986
- SECT 30
Principal Act
30. The Taxation Administration Act 1953*2* is in this Part referred to as
the Principal Act.
*2* No. 1, 1953, as amended. For previous amendments, see Nos. 28, 39, 40 and
52, 1953; No. 18, 1955; No. 39, 1957; No. 95, 1959; No. 17, 1960; No. 75,
1964; No. 155, 1965; No. 93, 1966; No. 120, 1968; No. 216, 1973; No. 133,
1974; No. 37, 1976; Nos. 19 and 59, 1979; Nos. 39 and 117, 1983; No. 123,
1984; Nos. 4, 47, 65, 104 and 123, 1985; and Nos. 41, 46 and 48, 1986.
TAXATION LAWS AMENDMENT ACT (No. 2) 1986No. 49, 1986
- SECT 31
Interpretation
31. Section 8J of the Principal Act is amended by adding at the end the
following sub-sections:
"(12) Where-
a person issues a notice to another person under section 265B of the
Income Tax Assessment Act 1936;
a person to whom a notice is issued under that section gives the notice
to another person in connection with the transfer of a qualifying security to
the other person; or
a person gives advice in writing to another person, in connection with
the transfer of a qualifying security, of a variation or partial redemption of
the qualifying security, any statement in the notice when so issued or given,
or in the advice when so given, to the other person shall, for the purposes of
this Division, be taken to have been made by the issuer or person giving the
notice or advice, as the case may be, to the other person for a purpose in
connection with the operation of a taxation law.
"(13) Where-
the holder of a qualifying security transfers the security to another
person;
by virtue of the application of section 128AA of the Income Tax
Assessment Act 1936, the holder is liable to pay withholding tax in relation
to the transfer of the qualifying security;
before the security was transferred, the holder gave to the transferee,
in connection with the transfer, a notice issued to the holder under section
265B of that Act identifying the security;
after the notice was issued to the holder, the security was varied or
partially redeemed; and
the holder did not advise the transferee in writing of the variation or
partial redemption, the holder shall, for the purposes of this Division, be
taken to have made for a purpose in connection with the operation of a
taxation law a statement that the qualifying security was not so varied or
partially redeemed.
"(14) Where-
the holder of a qualifying security who acquired the security on
transfer (in this sub-section referred to as the 'current acquisition
transfer') transfers the security to another person;
by virtue of the application of section 128AA of the Income Tax
Assessment Act 1936, the holder is liable to pay withholding tax in relation
to the transfer of the security;
before the security was transferred, the holder gave to the transferee,
in connection with the transfer, a certificate issued to the holder under
section 128AB of that Act identifying the security; and
the holder had acquired the security on transfer on any occasion before
the current acquisition transfer, the holder shall, for the purposes of this
Division, be taken to have made for a purpose in connection with the operation
of a taxation law a statement that the certificate relates to the current
acquisition transfer.
"(15) Where-
a qualifying security is redeemed or partially redeemed from the
holder;
the holder acquired the security on transfer (in this sub-section
referred to as the 'current acquisition transfer');
the holder is liable to pay withholding tax in relation to the
redemption or partial redemption of the security;
before the security was redeemed or partially redeemed, the holder gave
to the issuer, in connection with the redemption or partial redemption, a
certificate issued to the holder under section 128AB of the Income Tax
Assessment Act 1936 identifying the security; and
the holder had acquired the security on transfer on any occasion before
the current acquisition transfer, the holder shall, for the purposes of this
Division, be taken to have made for a purpose in connection with the operation
of a taxation law a statement that the certificate relates to the current
acquisition transfer.
"(16) Subject to sub-section (17), for the purposes of sub-sections (12) to
(15) (inclusive)-
expressions used in those sub-sections that are also used in Division
16E of Part III of the Income Tax Assessment Act 1936 have the same respective
meanings as in that Division; and
sections 159GV (other than sub-section 159GV (2)) and 159GZ of the
Income Tax Assessment Act 1936 apply as if references in those sections to
'this Division' were references to 'section 8j of the Taxation Administration
Act 1953'.
"(17) Sub-section (16) applies as if paragraph (c) of the definition of
'qualifying security' in sub-section 159GP (1) of the Income Tax Assessment
Act 1936 were omitted.".
TAXATION LAWS AMENDMENT ACT (No. 2) 1986No. 49, 1986
- SECT 32
Principal Act
32. The Taxation Laws Amendment Act (No. 4) 1985*3* is in this Part referred
to as the Principal Act.
*3* No. 173, 1985.
TAXATION LAWS AMENDMENT ACT (No. 2) 1986No. 49, 1986
- SECT 33
Commencement
33. Section 2 of the Principal Act is amended by omitting sub-section (4)
and substituting the following sub-section:
"(4) Section 4, sub-section 5 (3) and sections 17, 20, 21 and 22 shall come
into operation on the day on which the Veterans' Entitlements Act 1986 comes
into operation.".
TAXATION LAWS AMENDMENT ACT (No. 2) 1986No. 49, 1986
- SECT 34
Income of certain persons serving with an armed force under the control of
the
United Nations
34. Section 4 of the Principal Act is amended by omitting "Veterans'
Entitlements Act 1985" and substituting "Veterans' Entitlements Act 1986".
TAXATION LAWS AMENDMENT ACT (No. 2) 1986No. 49, 1986
- SECT 35
Exemption of certain pensions
35. Section 5 of the Principal Act is amended-
by omitting from sub-section (3) "Veterans' Entitlements Act 1985"
(wherever occurring) and substituting "Veterans' Entitlements Act 1986"; and
by omitting from sub-section (3) "Veterans' Entitlements (Transitional
Provisions and Consequential Amendments) Act 1985" (wherever occurring) and
substituting "Veterans' Entitlements (Transitional Provisions and
Consequential Amendments) Act 1986".
TAXATION LAWS AMENDMENT ACT (No. 2) 1986No. 49, 1986
- SECT 36
Repeal of section 13
36. Section 13 of the Principal Act is repealed.
TAXATION LAWS AMENDMENT ACT (No. 2) 1986No. 49, 1986
- SECT 37
Rebate in respect of certain pensions
37. Section 17 of the Principal Act is amended by omitting "Veterans'
Entitlements Act 1985" and substituting "Veterans' Entitlements Act 1986".
TAXATION LAWS AMENDMENT ACT (No. 2) 1986No. 49, 1986
- SECT 38
Prescribed persons
38. Section 21 of the Principal Act is amended by omitting "Veterans'
Entitlements Act 1985" and substituting "Veterans' Entitlements Act 1986".
TAXATION LAWS AMENDMENT ACT (No. 2) 1986No. 49, 1986
- SECT 39
Release of liability of members of the Defence Force on death
39. Section 22 of the Principal Act is amended by omitting "Veterans'
Entitlements Act 1985" (wherever occurring) and substituting "Veterans'
Entitlements Act 1986".
TAXATION LAWS AMENDMENT ACT (No. 2) 1986No. 49, 1986
- SECT 40
Income Tax Regulations
40. The Income Tax Regulations are in this Part referred to as the
Regulations.
TAXATION LAWS AMENDMENT ACT (No. 2) 1986No. 49, 1986
- SECT 41
Definitions
41. Regulation 54ZF of the Regulations is amended by omitting from
sub-regulation (1) the definition of "interest" and substituting the following
definition:
" 'interest' means any amount that is, or is deemed to consist of, interest
for the purposes of Division 11A of Part III of the Act.".
TAXATION LAWS AMENDMENT ACT (No. 2) 1986No. 49, 1986
- SECT 42
Amendment or repeal of Regulations
42. The amendment of the Regulations by this Part does not prevent the
amendment or repeal, by regulations, of the Regulations as amended by this
Part.
The
Act No. 49, 1986 amended as indicated in the Tables below.
Act |
Number and year |
Date of Assent |
Date of commencement |
Application, saving or transitional provisions |
49, 1986 |
24 June 1986 |
|||
141, 1987 |
18 Dec 1987 |
S. 3: 24 June 1986 ( |
— | |
75, 2010 |
28 June 2010 |
Schedule 6 (item 38): 29 June 2010 |
— |
am. = amended rep. = repealed rs. = repealed and substituted | |
Provision affected | How affected |
S. 9.......................................... | am. No. 141, 1987 |
S. 28........................................ | rep. No. 75, 2010 |
0
0
0