Taxation Laws Amendment Act (No. 2) 1999 (Cth)
This compilation was prepared on 18 August 2010
taking into account amendments up to Act No. 75 of 2010
The text of any of those amendments not in force
on that date is appended in the Notes section
The operation of amendments that have been incorporated may be
affected by application provisions that are set out in the Notes section
Prepared by the Office of Legislative Drafting and Publishing,
Attorney‑General’s Department, Canberra
Contents
This Act may be cited as the
Taxation Laws Amendment Act (No. 2) 1999 .
(1) Subject to this section, this Act commences on the day on which it receives the Royal Assent.
Schedule 4
(2) Item 24 of Schedule 4 is taken to have commenced on 16 April 1998.
Subject to section 2, each Act that is specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has effect according to its terms.
After “activities”, insert “(unless a foreign tax credit under Division 18 is obtained)”.
After “sourced”, insert “unless it is taken to have a foreign source because it has been subject to foreign tax”.
Add:
; (g) income derived by overseas charitable institutions from OBUs is exempt from tax;
(h) certain adjustments are made to the capital gains and losses that flow from disposals of certain interests in trusts of which an OBU is the trustee.
Insert:
overseas charitable institution means a non‑resident institution the income of which:
(a) would be exempt from tax under item 1.1 of section 50‑5 of the
Income Tax Assessment Act 1997 (and not under any other item of that section) if the institution had a physical presence in Australia and incurred its expenditure and pursued its objectives principally in Australia; and(b) is exempt in the country in which it is resident.
Omit “or (6A)”, substitute “, (6A) or (6B)”.
Omit “, where the securities are denominated other than in Australian currency”.
Omit “other than in Australian currency”.
Omit “, where the shares are denominated other than in Australian currency”.
Omit “, where the units are denominated other than in Australian currency”.
Insert:
(ea) trading in currency, or options or rights in respect of currency, with an offshore person; or
Repeal the paragraph, substitute:
(f) trading in gold bullion, or in options or rights in respect of such bullion:
(i) with an offshore person where the money or moneys payable or receivable is or are in any currency; or
(ii) a person other than an offshore person where the money or moneys payable or receivable is or are in a currency other than Australian currency; or
(g) trading with an offshore person in silver, platinum or palladium bullion, or in options or rights in respect of such bullion; or
(h) trading with an offshore person in base metals.
Omit “under which any money payable is not Australian currency”.
Omit “or agent”, insert “, agent or custodian”.
After “OBU”, insert “or the non‑resident”.
Insert:
Investment activity—portfolio investment for overseas charitable institutions
(6B) For the purposes of paragraph (1)(e), an
investment activity is also the managing by an OBU of a portfolio investment (see subsection 121DA(1)) for the whole or part (theinvestment management period ) of a year of income, where:
(a) the portfolio investment is managed as broker, agent or custodian for, or trustee for the benefit of, an overseas charitable institution; and
(b) the portfolio investment was made by the OBU or the overseas charitable institution.
Omit all of the words after paragraph (b).
Omit “or agent”, substitute “an agent or custodian”.
After “121D(6A)”, insert “or (6B)”.
After “121D(6A)”, insert “or (6B)”.
Add:
(2) However, for the purposes of Division 18, if income has been subject to foreign tax it is taken to have a foreign source.
Add:
(2) If:
(a) an OBU is a trustee, or is the central manager and controller, of a trust estate; and
(b) the only person who benefits, or is capable (whether by the exercise of a power of appointment or otherwise) of benefiting, under the trust is an overseas charitable institution; and
(c) the terms of the trust are to the effect that income, profits or capital gains of the trust estate may only come from investment activities covered by subsection 121D(6B);
then:
(d) any income of the trust estate derived from an investment activity covered by subsection 121D(6B) is exempt from income tax; and
(e) any capital gain or capital loss made by the trust estate from a CGT event happening in relation to a CGT asset of the trust estate in the course of, or in connection with, an investment activity covered by subsection 121D(6B) is disregarded.
Insert:
Investment with OBU
(1) Income, derived by an overseas charitable institution, is exempt to the extent that it is:
(a) a payment or outgoing from an OBU as part of the OB activities of the OBU; or
(b) a distribution of income that is exempt under subsection 121EL(2).
Capital gains and losses
(2) If:
(a) an OBU is a trustee, or is the central manager and controller, of a unit trust estate; and
(b) the only person who benefits, or is capable (whether by the exercise of a power of appointment or otherwise) of benefiting, under the trust is an overseas charitable institution; and
(c) the terms of the trust are to the effect that income, profits or capital gains of the trust estate may only come from investment activities covered by subsection 121D(6B); and
(d) the overseas charitable institution disposes of its interest in the trust;
then the overseas charitable institution makes no capital gain or capital loss from a CGT event happening in relation to the disposal.
Trust with subsection 121D(6) investment activities
(1) If:
(a) an OBU is a trustee, or is the central manager and controller, of a unit trust estate; and
(b) the only persons who benefit, or are capable (whether by the exercise of a power of appointment or otherwise) of benefiting, under the trust are non‑residents; and
(c) all units in the trust are held by non‑residents; and
(d) the terms of the trust are to the effect that income, profits or capital gains of the trust estate may only come from investment activities covered by subsection 121D(6); and
(e) a non‑resident disposes of a unit in the trust;
then the non‑resident makes no capital gain or capital loss from a CGT event happening in relation to the disposal.
Trust with subsection 121D(6A) investment activities
(2) If:
(a) an OBU is a trustee, or is the central manager and controller, of a unit trust estate; and
(b) the only persons who benefit, or are capable (whether by the exercise of a power of appointment or otherwise) of benefiting, under the trust are non‑residents; and
(c) all units in the trust are held by non‑residents; and
(d) the terms of the trust are to the effect that income, profits or capital gains of the trust estate may only come from investment activities covered by subsection 121D(6A); and
(e) a non‑resident disposes of a unit in the trust; and
(f) the average Australian asset percentage for the portfolio investment concerned was 10% or less;
then if, apart from this section, the non‑resident would make a capital gain or capital loss from a CGT event happening in relation to the disposal, the non‑resident makes only the average Australian asset percentage of the gain or loss.
(3) In working out the average Australian asset percentage for the purposes of subsection (2), the investment management period is taken to be the period during the 12 months before the disposal during which the non‑resident held the unit.
After “128F”, insert “(to the extent it applies to non‑residents who are not engaged in carrying on a business in Australia at or through a permanent establishment in Australia)”.
Insert:
; or (d) a life insurance company registered under the
Life Insurance Act 1995 ; or(e) a company incorporated under the Corporations Law that provides funds management services on a commercial basis (other than solely to related persons):
(i) that is a registered company included in the category for money market corporations under the
Financial Corporations Act 1974 ; or(ii) all of the shares which are beneficially owned by a company covered by subparagraph (i); or
(iii) that holds a dealer’s licence, or an investment adviser’s licence, granted under Part 7.3 of the Corporations Law; or
(f) a company that the Treasurer determines, in writing, to be an OBU under subsection (2AA);
Insert:
(2AA) The Treasurer may, on written application by a company, make a written determination that the company is an OBU.
(2AB) The determination must:
(a) specify the day when the company commences to be an OBU; and
(b) contain any other information the Treasurer considers appropriate.
(2AC) A determination of the Treasurer under subsection (2AA) must be made in accordance with guidelines determined by the Treasurer under subsection (2AD).
(2AD) The Treasurer must determine written guidelines for the making of determinations under subsection (2AA). The guidelines may require the Treasurer to take into account:
(a) specified criteria; or
(b) recommendations of particular bodies; or
(c) any other factors.
(2AE) Determinations made under subsection (2AD) are disallowable instruments for the purposes of section 46A of the
Acts Interpretation Act 1901 .
Insert:
(aa) income derived by a non‑resident that is an overseas charitable institution (within the meaning of section 121C) where the income is exempt under subsection 121ELA(1); and
Repeal the paragraphs.
Note: The heading to section 128F is altered by omitting “
debentures issued on overseas capital markets ” and substituting “publicly offered debentures ”.
Omit “outside Australia”.
Repeal the subsection, substitute:
Issues that always fail the public offer test
(5) The issue of a debenture by a company does not
satisfy the public offer test if, at the time of the issue, the company knew, or had reasonable grounds to suspect that the debenture, or an interest in the debenture, was being, or would later be, acquired either directly or indirectly by an associate of the company other than in the capacity of a dealer, manager or underwriter in relation to the placement of the debenture.
No exemption for central borrowing authorities
(5A) This section does not apply in relation to a debenture issued in Australia by a company that is covered by subsection (7) or is a central borrowing authority of a State or Territory. A central borrowing authority is a body established for the purpose of raising finance for the State or Territory. The following are examples of central borrowing authorities:
(a) the Tasmanian Public Finance Corporation;
(b) the Queensland Treasury Corporation;
(c) the South Australian Government Financing Authority;
(d) the Western Australian Treasury Corporation;
(e) the New South Wales Treasury Corporation;
(f) the Treasury Corporation of Victoria;
(g) the Northern Territory Treasury Corporation.
Omit “and”.
Omit all of the words and paragraphs after paragraph (d), substitute:
then this section has effect as if the parent company had raised the finance and issued the debenture.
Insert:
company includes a company in the capacity of trustee of a resident trust estate if:
(a) the trust is not established by a will, or instrument of trust, for public charitable purposes; and
(b) the only person who is capable (whether by the exercise of a power of appointment or otherwise) of benefiting under the trust is a company other than a company in the capacity of trustee.
Repeal the subsections.
Insert:
(C) if all of the shares in the financial institution are beneficially owned, directly or indirectly, by a foreign bank that carries on a banking business through an Australian branch—proceeds of debentures issued by the financial institution that are covered by section 128F that are made available by the financial institution to the Australian branch for use in its Australian business;
Insert:
(1AA) Subsection (1A) does not require an OBU to maintain a separate nostro account or vostro account for its OBU activities. Nostro accounts and vostro accounts are accounts held or maintained by the OBU for the sole purpose of settling international transactions.
36
Section 11‑15 (table item headed “foreign aspects of income taxation”) Before:
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insert:
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Omit “section 121EL”, substitute “sections 121EL, 121ELA and 121ELB”.
Omit “300%”, substitute “75%”.
(1) Subject to this item, the amendments made by this Schedule apply in relation to transactions entered into after 2 July 1998.
(2) The amendment made by item 20 applies to foreign tax paid after 2 July 1998.
(3) Subsection 121ELA(2) and section 121ELB of the
Income Tax Assessment Act 1936 apply to disposals after 2 July 1998.(4) The amendments made by items 24 and 25 apply to declarations made by the Treasurer after 2 July 1998.
(5) The amendments made by items 27 to 32 apply to debentures issued after 2 July 1998.
(6) The amendment made by item 33 applies to interest paid by an OBU after 2 July 1998.
(7) The amendment made by item 33 applies in relation to amounts lent to the Australian branch after 2 July 1998.
(8) The amendment made by item 35 applies to the year of income before the year of income in which 2 July 1998 occurs and to all later years of income.
(9) The amendment made by item 38 applies to penalties imposed after 2 July 1998.
After “applies”, insert “, or but for Division 8 of Part XI would have applied,”.
Omit “The amount”, substitute “An amount, other than an amount relating to an interest in a FIF to which Division 8 of Part XI applies,”.
Insert:
The object of this Division is to exempt a taxpayer from taxation under this Part in respect of foreign investment fund income that would otherwise be taken to accrue from interests in certain entities that are subject to tax in the United States of America.
This Division does not apply in relation to an interest in a CFT.
(1) The operative provision does not apply to a taxpayer in respect of an interest in:
(a) an entity that is treated as a corporation, and is subject to tax on its worldwide income, under the Internal Revenue Code of 1986 of the United States of America; or
(b) a company or trust that is treated as a regulated investment company, or a real estate investment trust, for the purposes of the Internal Revenue Code of 1986 of the United States of America.
(2) The operative provision does not apply to a taxpayer in respect of an interest in one of the following entities if the conditions in subsection (3) or (4) are satisfied:
(a) an entity that is a limited partnership, or a limited liability company under a law of the United States of America or a law of a State of the United States of America;
(b) an entity that is treated as a common trust fund for the purposes of the Internal Revenue Code of 1986 of the United States of America.
(3) The condition in this subsection is that the taxpayer satisfies the Commissioner that:
(a) the interest that the taxpayer holds at the end of the entity’s notional accounting period is held for the sole purpose of investing directly, or indirectly through one or more interposed entities, in:
(i) a business conducted in the United States of America; or
(ii) real property located in the United States of America; and
(b) the entity does not directly, or indirectly through one or more interposed entities (other than through an entity covered by paragraph (1)(a) or (b)):
(i) have an interest in income or gains derived from sources outside of the United States of America; or
(ii) hold an interest in a FIF that is not resident in the United States of America; or
(iii) hold real property that is not located in the United States of America.
(4) The condition in this subsection is that the taxpayer satisfies the Commissioner that:
(a) the interest that the taxpayer holds at the end of the entity’s notional accounting period is held for the sole purpose of investing directly, or indirectly through one or more interposed entities, in:
(i) a business conducted in the United States of America; or
(ii) real property located in the United States of America; and
(b) throughout the entity’s notional accounting period, the total value of:
(i) any interests that the entity has in income or gains derived from sources outside the United States of America; and
(ii) any interests that the entity has in FIFs that are not resident in the United States of America; and
(iii) any real property held by the entity that is not located in the United States of America;
being interests or real property that the entity has or holds directly, or indirectly through one or more interposed entities (other than through an entity covered by paragraph (1)(a) or (b)), does not exceed 5% of the total value of all interests held by the entity in other entities; and
(c) throughout the entity’s notional accounting period, the value of assets held by the entity that:
(i) produce income from sources outside the United States of America; or
(ii) if disposed of would give rise to a gain from a source outside the United States of America;
do not exceed 5% of the total value of assets held by the entity.
(5) For the purposes of subsection (4), the value of FIF interests and the value of assets is to be determined using the accounting records of the entity.
After “another FIF”, insert “unless the FIF’s interest in the other FIF is covered by Division 8”.
Add:
(2) If the FIF’s interest in the other FIF is covered by Division 8, the notional income of the FIF in respect of the relevant period does not include any dividend or distribution paid to the FIF by the other FIF to the extent of the grossed‑up amount of a FIF attribution debit that arises in relation to the taxpayer as a result of the dividend or distribution.
Omit “2 to 15”, substitute “2 to 7 and 9 to 15”.
(1) The amendment made by item 42 of this Schedule applies to notional accounting periods of FIFs ending on or after 2 July 1998.
(2) The other amendments made by this Part of this Schedule apply in relation to assessments for years of income ending on or after 2 July 1998.
Insert:
(4A) Shares in a company that is treated as a real estate investment trust for the purposes of the Internal Revenue Code 1986 of the United States of America are to be ignored for the purposes of the application of subsection (1) to the company (except in so far as that subsection has effect for the purposes of section 459) if the conditions in subsection (4B) or (4C) are satisfied.
(4B) The condition in this subsection is that the taxpayer who holds the shares satisfies the Commissioner that:
(a) the shares that the taxpayer holds at the end of the entity’s statutory accounting period are held for the sole purpose of investing directly, or indirectly through one or more interposed entities, in:
(i) a business conducted in the United States of America; or
(ii) real property located in the United States of America; and
(b) the company does not directly, or indirectly through one or more interposed entities:
(i) have an interest in income or gains derived from sources outside the United States of America; or
(ii) hold an interest in a FIF that is not resident in the United States of America; or
(iii) hold real property that is not located in the United States of America.
(4C) The condition in this subsection is that the taxpayer who holds the shares satisfies the Commissioner that:
(a) the shares that the taxpayer holds at the end of the entity’s statutory accounting period are held for the sole purpose of investing directly, or indirectly through one or more interposed entities, in:
(i) a business conducted in the United States of America; or
(ii) real property located in the United States of America; and
(b) throughout the entity’s statutory accounting period, the total value of:
(i) any interests that the company has in income or gains derived from sources outside the United States of America; and
(ii) any interests that the company has in FIFs that are not resident in the United States of America; and
(iii) any real property held by the company that is not located in the United States of America;
does not exceed 5% of the total value of all interests held by the company in other entities; and
(c) throughout the entity’s statutory accounting period, the total value of assets held by the company that:
(i) produce income from sources outside the United States of America; or
(ii) if disposed of would give rise to a gain from a source outside the United States of America;
does not exceed 5% of the total value of all the assets held by the company.
(4D) For the purposes of subsection (4C), the value of interests and the value of assets is to be determined using the accounting records of the company.
The amendment made by item 47 applies to statutory accounting periods of CFCs ending on or after 2 July 1998.
Omit “the immediately preceding year of income”, substitute “an earlier year of income”.
Omit “the year of income immediately preceding the forgiveness year of income”, substitute “years of income before the forgiveness year of income”.
The amendments made by this Schedule apply in relation to debts forgiven after the day on which the Bill that became the
Taxation Laws Amendment Act (No. 2) 1999 was introduced into the House of Representatives.
Add:
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Repeal the paragraph, substitute:
(d) if Common rule 1 applied to your acquisition of the plant and you acquired the plant from a *transition entity to which Subdivision 58‑B applies—the sum of the amounts that are to be deducted under paragraphs 58‑80(a), (b) and (c) in calculating the *notional written down value of the plant in relation to the transition entity or are to be deducted under paragraphs 58‑145(5)(a) and (b) in calculating the *undeducted cost of the plant in relation to the transition entity, as the case may be; and
(e) if Common rule 1 applied to your acquisition of the plant—the sum of the amounts that would apply under paragraphs (a), (b), (c) and (d) to the transferor and earlier successive transferors.
(2) This section has effect subject to Subdivision 58‑B in relation to *plant to which that Subdivision applies.
Add:
(4) The operation of subsection (2) is affected, in relation to certain *plant to which Division 58 applies, by subsections 58‑85(7) and (8), 58‑145(7) and (8), 58‑215(2) and (3) and 58‑270(2) and (3).
(5) If a *transition entity or a *tax exempt vendor had at any previous time been the owner or a *quasi‑owner of the *plant and either of the following paragraphs applies:
(a) the transferor was the transition entity or the purchaser from the tax exempt vendor and Common rule 1 applied to your acquisition of the plant;
(b) the transferor was not the transition entity or the purchaser from the tax exempt vendor and Common rule 1 applied to:
(i) your acquisition of the plant; and
(ii) all earlier successive acquisitions of the plant by entities that acquired it from, or became the owners or quasi‑owners of it after it was acquired from, the transition entity or the purchaser from the tax exempt vendor;
subsection (2) has effect in relation to the plant as if paragraph (a) of that subsection were omitted and replaced by whichever of the paragraphs mentioned in subsections 58‑85(7) and (8), 58‑145(7) and (8), 58‑215(2) and (3) and 58‑270(2) and (3) would have applied to the transition entity or the purchaser from the tax exempt vendor, as the case may be.
Add:
(4) The operation of subsection (3) is affected, in relation to certain *plant to which Division 58 applies, by subsections 58‑85(5) and 58‑145(4).
Add:
(2) The operation of subsection (1) is affected, in relation to certain *plant to which Division 58 applies, by subsection 58‑85(6).
(3) If a *transition entity had at any previous time been the owner or *quasi‑owner of the *plant and had made a choice under paragraph 58‑20(1)(a) in relation to the plant and either of the following paragraphs applies:
(a) the transferor was the transition entity and Common rule 1 applied to your acquisition of the plant;
(b) the transferor was not the transition entity and Common rule 1 applied to your acquisition of the plant and all earlier successive acquisitions of the plant by entities that acquired it from, or became the owners or quasi‑owners of it after it was acquired from, the transition entity;
the cost of the plant is taken to be its *notional written down value at the transition time plus the amounts of any capital expenditure on improving it incurred after that time.
Repeal the link note, substitute:
[The next Division is Division 58.]
Add:
Guide to Division 58
58‑A Application and interpretation
58‑B Plant of exempt entities that become taxable
58‑C Plant acquired from exempt entities in connection with the acquisition of a business
This Division sets out special rules that apply in calculating depreciation deductions and balancing adjustments in respect of plant previously owned by an exempt entity if the plant:
· continues to be owned by that entity after the entity becomes taxable; or
· is acquired from that entity, in connection with the acquisition of a business, by a purchaser that is a taxable entity.
The following diagram shows the operation of this Division.
58‑5 Application of Division to quasi‑owners of plant
58‑10 Pre‑existing audited book value of unit of plant
This Division applies in relation to a unit of *plant of which an entity has been or is, or becomes, a *quasi‑owner in the same way as it applies in relation to a unit of plant that has been or is owned by, or is acquired by, an entity.
(1) If:
(a) a balance sheet, as at the end of an annual accounting period (the
balance date ), that was prepared as part of an *exempt entity’s final accounts for that period showed a unit of *plant (theunit ) as an asset of the exempt entity and specified a value for the unit; and(b) a qualified independent auditor who was engaged, or was required by law, to undertake an audit of those accounts had prepared and signed, before 4 August 1997, a final audit report on those accounts; and
(c) the report did not state that the auditor was not satisfied that the specified value fairly represented the value of the unit;
the unit is taken to have had a
pre‑existing audited book value at the balance date of an amount equal to the specified value.
(2) If a balance sheet did not specify a value for the unit but specified a total value for 2 or more units of plant including the unit, the balance sheet is taken to have specified as the value of the unit so much of that total value as is reasonably attributable to the unit.
(3) The latest time at which a unit of *plant is taken to have had a *pre‑existing audited book value is the
test time in relation to the unit.
58‑15 Transition entities etc.
58‑20 Choice by entity
Provisions applying where depreciation of the unit is calculated by reference to notional written down value 58‑25 Exclusion of certain provisions
58‑30 Undeducted cost of unit
58‑35 Ownership of unit
58‑40 Cost of unit to transition entity
58‑45 Effective life of unit
58‑50 Choice or election to calculate assumed effective life
58‑55 Use of unit for producing assessable income
58‑60 Method of depreciation
58‑65 Application of certain provisions in calculating depreciation rates
58‑70 Choice of rate
58‑75 Nomination or election of depreciation percentage
58‑80 Notional written down value
58‑85 Calculation of depreciation deductions and balancing adjustments
Provisions applying where depreciation of the unit is calculated by reference to undeducted pre‑existing audited book value 58‑90 Exclusion of certain provisions
58‑95 Cost of unit to transition entity
58‑100 Ownership of unit
58‑105 Assumed cost of unit to transition entity for purpose of calculating undeducted pre‑existing audited book value
58‑110 Effective life of unit
58‑115 Election to calculate assumed effective life
58‑120 Use of unit for producing assessable income
58‑125 Method of depreciation
58‑130 Application of certain provisions in calculating depreciation rates
58‑135 Nomination or election of depreciation percentage
58‑140 Undeducted pre‑existing audited book value
58‑145 Calculation of depreciation deductions and balancing adjustments
If:
(a) at a particular time on or after 4 August 1997, an entity is an *exempt entity; and
(b) immediately after that time, the entity’s *ordinary income or *statutory income becomes to any extent assessable income;
then:
(c) the entity is a
transition entity ; and(d) the time when the entity’s ordinary income or statutory income becomes to that extent assessable is the
transition time ; and(e) the income year in which the *transition time occurs is the
transition year for the entity.
(1) A *transition entity must, in relation to every unit of *plant (the
unit ) that was owned by it at the *transition time, do either of the following:
(a) choose that depreciation deductions and balancing adjustments for periods after the transition time are to be calculated by reference to the *notional written down value of the unit;
(b) choose that depreciation deductions and balancing adjustments for periods after the transition time are to be calculated by reference to the *undeducted pre‑existing audited book value (if any) of the unit.
(2) A choice under subsection (1) must be made:
(a) by the day on which the *transition entity lodges its *income tax return for the *transition year; or
(b) within a further period allowed by the Commissioner.
(3) A choice, once made, applies to *the transition year and all later income years.
(4) If the *transition entity makes a choice under paragraph (1)(a), sections 58‑25 to 58‑85 have effect in relation to the unit.
(5) If the *transition entity makes a choice under paragraph (1)(b), sections 58‑90 to 58‑145 have effect in relation to the unit.
The following provisions do not apply in respect of the unit in relation to the *transition entity:
(a) Subdivision 57‑I of the
Income Tax Assessment Act 1936 ;(b) Subdivision 57‑K of that Act in so far as that Subdivision deals with depreciation balancing adjustments.
(1) Section 42‑175 has effect in relation to the unit as if that section provided that the *undeducted cost of the unit were the *notional written down value of the unit.
(2) Sections 58‑35 to 58‑75 have effect for the purpose of the calculation of that value under section 58‑80.
(1) If the *transition entity was an *exempt Australian government agency immediately before the *transition time and had acquired the unit from another exempt Australian government agency:
(a) assume that the transition entity acquired it at the time when it was acquired or constructed by the other exempt Australian government agency; or
(b) if it had, before its acquisition by the transition entity, been successively owned by 2 or more exempt Australian government agencies—assume that the transition entity acquired it at the time when it was acquired or constructed by the first of those exempt Australian government agencies that owned it.
(2) To avoid doubt, if subsection (1) does not apply, the *transition entity is taken to have acquired the unit at the time when the transition entity acquired or constructed it.
(1) To avoid doubt, Subdivision 42‑B applies for the purpose of determining the cost of the unit to the *transition entity.
(2) However, if the *transition entity was an *exempt Australian government agency immediately before the *transition time and had acquired the unit from another exempt Australian government agency:
(a) assume that its cost to the transition entity is the amount that was its cost to the other exempt Australian government agency; or
(b) if it had, before its acquisition by the transition entity, been successively owned by 2 or more exempt Australian government agencies, assume that its cost to the transition entity is the amount that was its cost to the first of those exempt Australian government agencies that owned it.
Assume that the *effective life of the unit is the period that would have been calculated to be its effective life:
(a) if subsection 58‑35(1) applies—at the time when it is assumed under that subsection to have been acquired by the *transition entity; or
(b) if subsection 58‑35(2) applies—at the time when it was acquired or constructed by the transition entity.
For the purpose of calculating the assumed *effective life of the unit under section 58‑45:
(a) if the *transition entity would have been required to make a choice under subsection 42‑100(1) at a particular time during the period for which the transition entity owned, or is assumed to have owned, it—assume that the transition entity made a choice at that time under paragraph 42‑100(1)(b) to adopt the effective life specified by the Commissioner; or
(b) if the transition entity could have made an election under subsection 54A(1) of the
Income Tax Assessment Act 1936 at a particular time during the period for which the transition entity owned, or is assumed to have owned, it—assume that the transition entity made the election at that time.
Assume that the unit had, at all times during the period beginning when it was acquired or constructed, or is assumed to have been acquired, by the *transition entity and ending immediately before the *transition time, been used wholly for the purpose of producing assessable income by the transition entity, and assume that deductions for depreciation in respect of it had been allowed to the transition entity during that period.
Assume that the *method of depreciation selected by the *transition entity in relation to the unit for:
(a) the *transition year; or
(b) if the transition entity does not claim depreciation for the transition year—the first income year after the transition year in which the transition entity claims depreciation;
was also used by the transition entity in each income year before the transition year.
In calculating the rate of depreciation in relation to the unit in each income year before the *transition year:
(a) if section 57AG of the
Income Tax Assessment Act 1936 as in force at any time before its repeal had applied in respect of that income year—that section is to be taken into account; and(b) if subsection 55(6) of the
Income Tax Assessment Act 1936 as in force immediately before the commencement of section 7 of theTaxation Laws Amendment Act (No. 2) 1992 had applied in respect of that income year—that subsection is to be taken into account; and(c) if section 57AL of the
Income Tax Assessment Act 1936 as in force at any time before its repeal had applied in respect of that income year—that section is to be disregarded.
(1) If the *transition entity could have made a choice under subsection 42‑120(1) at a particular time (the
relevant time ) during the period for which the transition entity owned, or is assumed to have owned, the unit, the transition entity may make the choice and, if the choice is made, it is taken to have been made at the relevant time.(2) A *diminishing value rate chosen must not be less than the percentage worked out by using the formula:
where:
number of years in effective life means the number of years in the assumed *effective life of the unit under section 58‑45.
(3) A *prime cost rate chosen must not be less than two‑thirds of the percentage that would be worked out under subsection (2) if a *diminishing value rate had been chosen.
(1) If the *transition entity could have made a nomination or election under subsection 55(8) of the
Income Tax Assessment Act 1936 as in force at a particular time (therelevant time ) during the period for which the transition entity owned, or is assumed to have owned, the unit, the transition entity may make the nomination or election, as the case may be, and, if the nomination or election is made, it is taken to have been made at the relevant time.(2) If the *transition entity makes a nomination under subsection 55(8) of the
Income Tax Assessment Act 1936 as in force immediately before the commencement of section 23 of theTaxation Laws Amendment Act 1993 , the following paragraphs apply:
(a) the nomination applies to the income year for which it is taken to have been made and all later income years;
(b) a *diminishing value rate nominated must not be less than the percentage worked out by using the formula:
where:
number of years in effective life means the number of years in the assumed *effective life of the unit under section 58‑45;
(c) a *prime cost rate nominated must not be less than two‑thirds of the percentage that would be worked out under paragraph (b) if a diminishing value rate had been nominated.
(3) If the *transition entity makes an election under subsection 55(8) of the
Income Tax Assessment Act 1936 as in force immediately before the commencement of section 7 of theTaxation Laws Amendment Act (No. 2) 1992 , the election applies to the income year in which it is taken to have been made and all later income years.
The
notional written down value of the unit in relation to the *transition entity is the amount of its cost or assumed cost to the transition entity under section 58‑40 less the sum of:
(a) the amounts in respect of which deductions for depreciation are assumed under section 58‑55 to have been allowed to the transition entity in respect of it; and
Note: Sections 58‑35 to 58‑50, and sections 58‑60 to 58‑75, have effect for the purpose of determining the amounts referred to in paragraph (a).
(b) the amounts the transition entity has deducted or can deduct for depreciation of it; and
(c) any further amounts the transition entity could have deducted for depreciation of it for any period after the *transition time during which the transition entity was its owner and used it, or had it *installed ready for use, assuming that:
(i) the transition entity used it wholly for the purpose of producing assessable income during that period; and
(ii) the transition entity used the same rate of depreciation and the same method of depreciation during that period as the transition entity used for the income year in which a depreciation deduction was first allowable to the transition entity for it.
(1) The rules otherwise applying in calculating depreciation deductions and balancing adjustments in respect of the unit have effect in relation to the *transition entity subject to this section and section 58‑30.
(2) Sections 58‑35 to 58‑50 and sections 58‑65 to 58‑75 apply in the same way as they apply in calculating the deductions for depreciation assumed under section 58‑55 to have been allowed to the *transition entity.
(3) The rate of depreciation is to be the same as the rate that was used in calculating the deduction for depreciation assumed under section 58‑55 to have been allowed to the *transition entity in respect of the latest income year in the period referred to in that section.
(4) Subdivision 42‑L, and sections 62AAB to 62AAV of the
Income Tax Assessment Act 1936 , do not apply in respect of the unit.(5) Subsection 42‑195(3) does not apply to any period in which the unit was used, or *installed ready for use, before the *transition time.
(6) For the purposes of section 42‑200, the cost of the unit is taken to be its *notional written down value at the *transition time plus the amounts of any capital expenditure on improving it incurred after that time.
(7) If a *balancing adjustment event occurred before the 1998‑99 income year, subsection 42‑190(2) has effect in relation to the unit as if paragraph (a) of that subsection were omitted and replaced by the following paragraph:
(a) the amount by which the higher of:
(i) the cost base of the *plant for the purposes of Part IIIA of the
Income Tax Assessment Act 1936 , less any amounts included in that cost base as a result of expenditure incurred after the *transition time that were not, immediately before the balancing adjustment event occurred, included in the cost of the plant to you for the purposes of Division 42; or(ii) the *notional written down value of the plant at the transition time plus the amounts of any capital expenditure on improving it incurred after that time;
exceeds its *written down value; and
(8) If a *balancing adjustment event occurred in a later income year, subsection 42‑190(2) has effect in relation to the unit as if paragraph (a) of that subsection were omitted and replaced by the following paragraph:
(a) the amount by which the higher of:
(i) the cost base (without indexation) of the *plant for the purposes of Parts 3‑1 and 3‑3, less any amounts included in that cost base as a result of expenditure incurred after the *transition time that were not, immediately before the balancing adjustment event occurred, included in the cost of the plant to you for the purposes of Division 42; or
(ii) the *notional written down value of the plant at the transition time plus the amounts of any capital expenditure on improving it incurred after that time;
exceeds its *written down value; and
The following provisions do not apply in respect of the unit in relation to the *transition entity:
(a) Subdivision 57‑I of the
Income Tax Assessment Act 1936 ;(b) Subdivision 57‑K of that Act in so far as that Subdivision deals with depreciation balancing adjustments.
(1) The cost of the unit to the *transition entity is taken to be the *undeducted pre‑existing audited book value of the unit.
(2) Sections 58‑100 to 58‑135 have effect for the purpose of the calculation of that value under section 58‑140.
(1) If the *transition entity was an *exempt Australian government agency immediately before the *transition time and had acquired the unit from another exempt Australian government agency:
(a) assume that the transition entity acquired it at the time when it was acquired or constructed by the other exempt Australian government agency; or
(b) if it had, before its acquisition by the transition entity, been successively owned by 2 or more exempt Australian government agencies—assume that the transition entity acquired it at the time when it was acquired or constructed by the first of those exempt Australian government agencies that owned it.
(2) To avoid doubt, if subsection (1) does not apply, the *transition entity is taken to have acquired the unit at the time when the transition entity acquired or constructed it.
Assume that the cost of the unit to the *transition entity is the sum of:
(a) its *pre‑existing audited book value at the test time; and
(b) the amounts of any capital expenditure on improving it incurred by the transition entity, or by an earlier owner that was an *exempt Australian government agency, during the period beginning immediately after the test time and ending immediately before the *transition time.
Assume that the *effective life of the unit is the period that would have been calculated to be its effective life:
(a) if subsection 58‑100(1) applies—at the time when it is assumed under that subsection to have been acquired by the *transition entity; or
(b) if subsection 58‑100(2) applies—at the time when it was acquired or constructed by the transition entity.
For the purpose of calculating the assumed *effective life of the unit under section 58‑110, if the *transition entity could have made an election under subsection 54A(1) of the
Income Tax Assessment Act 1936 at a particular time during the period for which the transition entity owned, or is assumed to have owned, it, assume that the transition entity made the election at that time.
Assume that the unit had, at all times during the period beginning at the test time and ending immediately before the *transition time, been used wholly for the purpose of producing assessable income by the *transition entity, and assume that deductions for depreciation in respect of it had been allowed to the transition entity during that period.
Assume that the *method of depreciation selected by the *transition entity in relation to the unit for:
(a) the *transition year; or
(b) if the transition entity does not claim depreciation for the transition year—the first income year after the transition year in which the transition entity claims depreciation;
was also used by the transition entity for each income year in the period referred to in section 58‑120.
In calculating the rate of depreciation in relation to the unit in each income year in the period referred to in section 58‑120:
(a) if section 57AG of the
Income Tax Assessment Act 1936 as in force at any time before its repeal had applied in respect of that income year—that section is to be taken into account; and(b) if subsection 55(6) of the
Income Tax Assessment Act 1936 as in force immediately before the commencement of section 7 of theTaxation Laws Amendment Act (No. 2) 1992 had applied in respect of that income year—that subsection is to be taken into account; and(c) if section 57AL of the
Income Tax Assessment Act 1936 as in force at any time before its repeal had applied in respect of that income year—that section is to be disregarded.
(1) If the *transition entity could have made a nomination or election under subsection 55(8) of the
Income Tax Assessment Act 1936 as in force at a particular time (therelevant time ) during the period referred to in section 58‑120, the transition entity may make the nomination or election, as the case may be, and, if the nomination or election is made, it is taken to have been made at the relevant time.(2) If the *transition entity makes a nomination under subsection 55(8) of the
Income Tax Assessment Act 1936 as in force immediately before the commencement of section 23 of theTaxation Laws Amendment Act 1993 , the following paragraphs apply:
(a) the nomination applies to the income year in which it is taken to have been made and all later income years;
(b) a *diminishing value rate nominated must not be less than the percentage worked out by using the formula:
where:
number of years in effective life means the number of years in the assumed *effective life of the unit under section 58‑110;
(c) a *prime cost rate nominated must not be less than two‑thirds of the percentage that would be worked out under paragraph (b) if a diminishing value rate had been nominated.
(3) If the *transition entity makes an election under subsection 55(8) of the
Income Tax Assessment Act 1936 as in force immediately before the commencement of section 7 of theTaxation Laws Amendment Act (No. 2) 1992 , the election applies to the income year in which it is taken to have been made and all later income years.
The
undeducted pre‑existing audited book value of the unit in relation to the *transition entity is:
(a) if the test time in relation to the unit is less than one year before the *transition time—the amount of its assumed cost under section 58‑105; or
(b) if the test time in relation to the unit is one year or more before the transition time—the amount of its assumed cost under section 58‑105 less any amounts in respect of which deductions for depreciation are assumed under section 58‑120 to have been allowed to the transition entity in respect of it.
Note: Sections 58‑100 to 58‑135 have effect for the purpose of determining the amounts referred to in paragraph (b).
(1) The rules otherwise applying in calculating depreciation deductions and balancing adjustments in respect of the unit have effect in relation to the *transition entity subject to this section and section 58‑95.
(2) Sections 58‑100, 58‑110 and 58‑115 apply in the same way as they apply in calculating the *undeducted pre‑existing audited book value of the unit.
(3) Subdivision 42‑L, and sections 62AAB to 62AAV of the
Income Tax Assessment Act 1936 , do not apply in respect of the unit.(4) Subsection 42‑195(3) does not apply to any period in which the unit was used, or *installed ready for use, before the *transition time.
(5) Section 42‑175 has effect in relation to the unit as if that section provided that the *undeducted cost of the unit were the *undeducted pre‑existing audited book value of the unit less the sum of:
(a) the amounts the *transition entity has deducted or can deduct for depreciation of it; and
(b) any further amounts the transition entity could have deducted for depreciation of it for any period after the *transition time during which the transition entity was its owner and used it, or had it *installed ready for use, assuming that:
(i) the transition entity used it wholly for the purpose of producing assessable income during that period; and
(ii) the transition entity used the same rate of depreciation and method of depreciation during that period as the transition entity used for the income year in which a depreciation deduction was first allowable to the transition entity for it.
(6) If the test time in relation to the unit is one year or more before the *transition time, the rate of depreciation is to be the same as the rate that was used in calculating the deduction for depreciation assumed under section 58‑120 to have been allowed to the *transition entity in respect of the latest income year in the period referred to in that section.
(7) If a *balancing adjustment event occurred before the 1998‑99 income year, subsection 42‑190(2) has effect in relation to the unit as if paragraph (a) of that subsection were omitted and replaced by the following paragraph:
(a) the amount by which the higher of:
(i) the cost base of the *plant for the purposes of Part IIIA of the
Income Tax Assessment Act 1936 , less any amounts included in that cost base as a result of expenditure incurred after the *transition time that were not, immediately before the balancing adjustment event occurred, included in the cost of the plant to you for the purposes of Division 42; or(ii) the cost of the plant to you;
exceeds its *written down value; and
(8) If a *balancing adjustment event occurred in a later income year, subsection 42‑190(2) has effect in relation to the unit as if paragraph (a) of that subsection were omitted and replaced by the following paragraph:
(a) the amount by which the higher of:
(i) the cost base (without indexation) of the *plant for the purposes of Parts 3‑1 and 3‑3, less any amounts included in that cost base as a result of expenditure incurred after the *transition time that were not, immediately before the balancing adjustment event occurred, included in the cost of the plant to you for the purposes of Division 42; or
(ii) the cost of the plant to you;
exceeds its *written down value; and
58‑150 Purchase of unit of plant from tax exempt vendor in connection with acquisition of a business
58‑155 Choice by purchaser
Provisions applying where depreciation of the unit is calculated by reference to notional written down value 58‑160 Cost of unit to purchaser
58‑165 Ownership of unit
58‑170 Cost of unit to tax exempt vendor
58‑175 Effective life of unit
58‑180 Choice or election to calculate assumed effective life
58‑185 Use of unit for producing assessable income
58‑190 Method of depreciation
58‑195 Application of certain provisions in calculating depreciation rates
58‑200 Choice of rate
58‑205 Nomination or election of depreciation percentage
58‑210 Notional written down value
58‑215 Calculation of depreciation deductions and balancing adjustments
Provisions applying where depreciation of the unit is calculated by reference to undeducted pre‑existing audited book value 58‑220 Cost of unit to purchaser
58‑225 Ownership of unit
58‑230 Assumed cost of unit to tax exempt vendor for purpose of calculating undeducted pre‑existing audited book value
58‑235 Effective life of unit
58‑240 Election to calculate assumed effective life
58‑245 Use of unit for producing assessable income
58‑250 Method of depreciation
58‑255 Application of certain provisions in calculating depreciation rates
58‑260 Nomination or election of depreciation percentage
58‑265 Undeducted pre‑existing audited book value
58‑270 Calculation of depreciation deductions and balancing adjustments
(1) If:
(a) at a particular time on or after 4 August 1997, an entity whose *ordinary income or *statutory income is to any extent assessable acquires a unit of *plant from an *exempt entity; and
(b) the unit of plant is acquired in connection with the acquisition of a *business from the exempt entity;
then:
(c) the exempt entity is the
tax exempt vendor ; and(d) the time when the unit of plant is acquired is the
acquisition time ; and(e) the income year in which the *acquisition time occurs is the
acquisition year ; and(f) the entity that acquired the unit of plant is the
purchaser ; and(g) the unit of plant is the
unit .
(2) The unit is taken to be acquired in connection with the acquisition of a *business from the *exempt entity if:
(a) the unit was used by the exempt entity in carrying on a business and the purchaser or another person uses the unit in carrying on the business; or
(b) both of the following subparagraphs apply:
(i) the unit was used by the exempt entity in performing functions, or engaging in activities, that did not constitute the carrying on of a business by the exempt entity;
(ii) the unit is used by the purchaser or another person in performing those functions or engaging in those activities as part of carrying on a business; or
(c) all of the following subparagraphs apply:
(i) the acquisition by the purchaser of the unit was connected with the acquisition of another asset by the purchaser or another person from the exempt entity or from an *associate of the exempt entity;
(ii) ownership of the other asset gives the purchaser or other person a right, or imposes on the purchaser or other person an obligation, to perform functions or engage in activities as part of the carrying on of a business or confers on the purchaser or other person a commercial advantage or opportunity in connection with performing functions or engaging in activities as part of the carrying on of a business;
(iii) the unit is used by the purchaser or other person in performing those functions or engaging in those activities pursuant to the right or obligation or in taking the benefit of the advantage or opportunity, as the case may be; or
(d) the unit was acquired by the purchaser under an arrangement under which the purchaser or another person acquired another asset from the exempt entity or from an associate of the exempt entity and:
(i) the other asset is taken by paragraph (a), (b) or (c); or
(ii) where the other asset is not a unit of plant, it would, if it were a unit of plant, be taken by paragraph (a), (b) or (c);
to be acquired in connection with the acquisition of a business from the exempt entity.
(3) Paragraphs (2)(b), (c) and (d) do not apply if the unit is used by the purchaser solely to derive assessable income from the provision of office or residential accommodation.
(1) The purchaser must, in relation to the unit, do either of the following:
(a) choose that depreciation deductions and balancing adjustments are to be calculated by reference to the *notional written down value of the unit;
(b) choose that depreciation deductions and balancing adjustments are to be calculated by reference to the *undeducted pre‑existing audited book value (if any) of the unit.
(2) A choice under subsection (1) must be made:
(a) by the day on which the purchaser lodges the purchaser’s *income tax return for the *acquisition year; or
(b) within a further period allowed by the Commissioner.
(3) A choice, once made, applies to the *acquisition year and all later income years.
(4) If the purchaser makes a choice under paragraph (1)(a), sections 58‑160 to 58‑215 have effect in relation to the unit.
(5) If the purchaser makes a choice under paragraph (1)(b), sections 58‑220 to 58‑270 have effect in relation to the unit.
(1) The
cost of the unit to the purchaser is taken to be the amount that is the sum of:
(a) the *notional written down value of the unit in relation to the *tax exempt vendor; and
(b) the amount of any incidental costs to the purchaser in respect of the acquisition of the unit.
(2) Sections 58‑165 to 58‑205 have effect for the purpose of the calculation under section 58‑210 of the *notional written down value referred to in paragraph (1)(a).
(1) If the *tax exempt vendor was an *exempt Australian government agency immediately before the *acquisition time and had acquired the unit from another exempt Australian government agency:
(a) assume that the tax exempt vendor acquired it at the time when it was acquired or constructed by the other exempt Australian government agency; or
(b) if it had, before its acquisition by the tax exempt vendor, been successively owned by 2 or more exempt Australian government agencies—assume that the tax exempt vendor acquired it at the time when it was acquired or constructed by the first of those exempt Australian government agencies that owned it.
(2) To avoid doubt, if subsection (1) does not apply, the *tax exempt vendor is taken to have acquired the unit at the time when the tax exempt vendor acquired or constructed it.
(1) To avoid doubt, Subdivision 42‑B applies for the purpose of determining the cost of the unit to the *tax exempt vendor.
(2) However, if the *tax exempt vendor was an *exempt Australian government agency immediately before the *acquisition time and had acquired the unit from another exempt Australian government agency:
(a) assume that its cost to the tax exempt vendor is the amount that was its cost to the other exempt Australian government agency; or
(b) if the unit had, before its acquisition by the tax exempt vendor, been successively owned by 2 or more exempt Australian government agencies, assume that its cost to the tax exempt vendor is the amount that was its cost to the first of those exempt Australian government agencies that owned it.
Assume that the *effective life of the unit is the period that would have been calculated to be its *effective life:
(a) if subsection 58‑165(1) applies—at the time when it is assumed under that subsection to have been acquired by the *tax exempt vendor; or
(b) if subsection 58‑165(2) applies—at the time when it was acquired or constructed by the tax exempt vendor.
For the purpose of calculating the assumed *effective life of the unit under section 58‑175:
(a) if the *tax exempt vendor would have been required to make a choice under subsection 42‑100(1) at a particular time during the period for which the tax exempt vendor owned, or is assumed to have owned, it—assume that the tax exempt vendor made a choice at that time under paragraph 42‑100(1)(b) to adopt the effective life specified by the Commissioner; or
(b) if the tax exempt vendor could have made an election under subsection 54A(1) of the
Income Tax Assessment Act 1936 at a particular time during the period for which the tax exempt vendor owned, or is assumed to have owned, it—assume that the tax exempt vendor made the election at that time.
Assume that the unit had, at all times during the period beginning when it was acquired or constructed, or is assumed to have been acquired, by the *tax exempt vendor and ending immediately before the *acquisition time, been used wholly for the purpose of producing assessable income by the tax exempt vendor, and assume that deductions for depreciation in respect of it had been allowed to the tax exempt vendor during that period.
(1) Assume that the *tax exempt vendor could have selected a *method of depreciation to use in relation to the unit for the income years included in the period referred to in section 58‑185.
(2) The purchaser must make the selection that the *tax exempt vendor could have made.
(3) Assume that the *method of depreciation selected was used by the *tax exempt vendor for each of the income years referred to in subsection (1).
In calculating the rate of depreciation in relation to the unit in each income year included in the period referred to in section 58‑185:
(a) if section 57AG of the
Income Tax Assessment Act 1936 as in force at any time before its repeal had applied in respect of that income year—that section is to be taken into account; and(b) if subsection 55(6) of the
Income Tax Assessment Act 1936 as in force immediately before the commencement of section 7 of theTaxation Laws Amendment Act (No. 2) 1992 had applied in respect of that income year—that subsection is to be taken into account; and(c) if section 57AL of the
Income Tax Assessment Act 1936 as in force at any time before its repeal had applied in respect of that income year—that section is to be disregarded.
(1) If the *tax exempt vendor could have made a choice under subsection 42‑120(1) at a particular time (the
relevant time ) during the period referred to in section 58‑185, the purchaser may make the choice and, if the choice is made, it is taken to have been made by the tax exempt vendor at the relevant time.(2) A *diminishing value rate chosen must not be less than the percentage worked out by using the formula:
where:
number of years in effective life means the number of years in the assumed *effective life of the unit under section 58‑175.
(3) A *prime cost rate chosen must not be less than two‑thirds of the percentage that would be worked out under subsection (2) if a *diminishing value rate had been chosen.
(1) If the *tax exempt vendor could have made a nomination or election under subsection 55(8) of the
Income Tax Assessment Act 1936 as in force at a particular time (therelevant time ) during the period referred to in section 58‑185, the purchaser may make the nomination or election, as the case may be, and, if the nomination or election is made, it is taken to have been made by the tax exempt vendor at the relevant time.(2) If the purchaser makes a nomination under subsection 55(8) of the
Income Tax Assessment Act 1936 as in force immediately before the commencement of section 23 of theTaxation Laws Amendment Act 1993 , the following paragraphs apply:
(a) the nomination applies to the income year in which it is taken to have been made and all later income years in the period referred to in section 58‑185;
(b) a *diminishing value rate nominated must not be less than the percentage worked out by using the formula:
where:
number of years in effective life means the number of years in the assumed *effective life of the unit under section 58‑175;
(c) a *prime cost rate nominated must not be less than two‑thirds of the percentage that would be worked out under paragraph (b) if a diminishing value rate had been nominated.
(3) If the purchaser makes an election under subsection 55(8) of the
Income Tax Assessment Act 1936 as in force immediately before the commencement of section 7 of theTaxation Laws Amendment Act (No. 2) 1992 , the election applies to the income year in which it is taken to have been made and all later income years in the period referred to in section 58‑185.
The
notional written down value of the unit in relation to the *tax exempt vendor is the amount of its cost or assumed cost to the tax exempt vendor under section 58‑170 less the sum of the amounts in respect of which deductions for depreciation are assumed under section 58‑185 to have been allowed to the tax exempt vendor in respect of it.Note: Sections 58‑165 to 58‑180, and sections 58‑190 to 58‑205, have effect for the purpose of determining the amounts referred to in this section.
(1) The rules otherwise applying to the purchaser in the calculation of depreciation deductions and balancing adjustments in respect of the unit have effect in relation to the purchaser subject to this section and section 58‑160.
(2) If a *balancing adjustment event occurred before the 1998‑99 income year, subsection 42‑190(2) has effect in relation to the unit as if paragraph (a) of that subsection were omitted and replaced by the following paragraph:
(a) the amount by which the higher of:
(i) the cost base of the *plant for the purposes of Part IIIA of the
Income Tax Assessment Act 1936 , less any amounts included in that cost base as a result of expenditure incurred after the *acquisition time that were not, immediately before the balancing adjustment event occurred, included in the cost of the plant to you for the purposes of Division 42; or(ii) the cost of the plant to you;
exceeds its *written down value; and
(3) If a *balancing adjustment event occurred in a later income year, subsection 42‑190(2) has effect in relation to the unit as if paragraph (a) of that subsection were omitted and replaced by the following paragraph:
(a) the amount by which the higher of:
(i) the cost base (without indexation) of the *plant for the purposes of Parts 3‑1 and 3‑3, less any amounts included in that cost base as a result of expenditure incurred after the *acquisition time that were not, immediately before the balancing adjustment event occurred, included in the cost of the plant to you for the purposes of Division 42; or
(ii) the cost of the plant to you;
exceeds its *written down value; and
(1) The
cost of the unit to the purchaser is taken to be the amount that is the sum of:
(a) the *undeducted pre‑existing audited book value of the unit in relation to the *tax exempt vendor; and
(b) the amount of any incidental costs to the purchaser in respect of the acquisition of the unit.
(2) Sections 58‑225 to 58‑260 have effect for the purpose of the calculation under section 58‑265 of the *undeducted pre‑existing audited book value referred to in paragraph (1)(a).
(1) If the *tax exempt vendor was an *exempt Australian government agency immediately before the *acquisition time and had acquired the unit from another exempt Australian government agency:
(a) assume that the tax exempt vendor acquired it at the time when it was acquired or constructed by the other exempt Australian government agency; or
(b) if it had, before its acquisition by the tax exempt vendor, been successively owned by 2 or more exempt Australian government agencies—assume that the tax exempt vendor acquired it at the time when it was acquired or constructed by the first of those exempt Australian government agencies that owned it.
(2) To avoid doubt, if subsection (1) does not apply, the *tax exempt vendor is taken to have acquired the unit at the time when the tax exempt vendor acquired or constructed it.
Assume that the cost of the unit to the *tax exempt vendor is the sum of:
(a) its *pre‑existing audited book value at the test time; and
(b) the amounts of any capital expenditure on improving it incurred by the tax exempt vendor, or by an earlier owner that was an *exempt Australian government agency, during the period beginning immediately after the test time and ending immediately before the *acquisition time.
Assume that the *effective life of the unit is the period that would have been calculated to be its effective life:
(a) if subsection 58‑225(1) applies—at the time when it is assumed under that subsection to have been acquired by the *tax exempt vendor; or
(b) if subsection 58‑225(2) applies—at the time when it was acquired or constructed by the tax exempt vendor.
For the purpose of calculating the assumed *effective life of the unit under section 58‑235, if the *tax exempt vendor could have made an election under subsection 54A(1) of the
Income Tax Assessment Act 1936 at a particular time during the period for which the tax exempt vendor owned, or is assumed to have owned, it, assume that the tax exempt vendor made the election at that time.
Assume that the unit had, at all times during the period beginning at the test time and ending immediately before the *acquisition time, been used wholly for the purpose of producing assessable income by the *tax exempt vendor, and assume that deductions for depreciation in respect of it had been allowed to the tax exempt vendor during that period.
(1) Assume that the *tax exempt vendor could have selected a *method of depreciation to use in relation to the unit for the income years included in the period referred to in section 58‑245.
(2) The purchaser must make the selection that the *tax exempt vendor could have made.
(3) Assume that the *method of depreciation selected was used by the *tax exempt vendor for each of the income years referred to in subsection (1).
In calculating the rate of depreciation in relation to the unit in each income year included in the period referred to in section 58‑245:
(a) if section 57AG of the
Income Tax Assessment Act 1936 as in force at any time before its repeal had applied in respect of that income year—that section is to be taken into account; and(b) if subsection 55(6) of the
Income Tax Assessment Act 1936 as in force immediately before the commencement of section 7 of theTaxation Laws Amendment Act (No. 2) 1992 had applied in respect of that income year—that subsection is to be taken into account; and(c) if section 57AL of the
Income Tax Assessment Act 1936 as in force at any time before its repeal had applied in respect of that income year—that section is to be disregarded.
(1) If the *tax exempt vendor could have made a nomination or election under subsection 55(8) of the
Income Tax Assessment Act 1936 as in force at a particular time (therelevant time ) during the period referred to in section 58‑245, the purchaser may make the nomination or election, as the case may be, and, if the nomination or election is made, it is taken to have been made by the tax exempt vendor at the relevant time.(2) If the purchaser makes a nomination under subsection 55(8) of the
Income Tax Assessment Act 1936 as in force immediately before the commencement of section 23 of theTaxation Laws Amendment Act 1993 , the following paragraphs apply:
(a) the nomination applies to the income year in which it is taken to have been made and all later income years in the period referred to in section 58‑245;
(b) a *diminishing value rate nominated must not be less than the percentage worked out by using the formula:
where:
number of years in effective life means the number of years in the assumed *effective life of the unit under section 58‑235;
(c) a *prime cost rate nominated must not be less than two‑thirds of the percentage that would be worked out under paragraph (b) if a diminishing value rate had been nominated.
(3) If the purchaser makes an election under subsection 55(8) of the
Income Tax Assessment Act 1936 as in force immediately before the commencement of section 7 of theTaxation Laws Amendment Act (No. 2) 1992 , the election applies to the income year in which it is taken to have been made and all later income years in the period referred to in section 58‑245.
The
undeducted pre‑existing audited book value of the unit in relation to the *tax exempt vendor is:
(a) if the test time in relation to the unit is less than one year before the *acquisition time—the amount of its assumed cost to the tax exempt vendor under section 58‑230; or
(b) if the test time in relation to the unit is one year or more before the acquisition time—the amount of its assumed cost to the tax exempt vendor under section 58‑230 less any amounts in respect of which deductions for depreciation are assumed under section 58‑245 to have been allowed to the tax exempt vendor in respect of it.
Note: Sections 58‑225 to 58‑260 have effect for the purpose of determining the amounts referred to in paragraph (b).
(1) The rules otherwise applying to the purchaser in the calculation of depreciation deductions and balancing adjustments in respect of the unit have effect in relation to the purchaser subject to this section and section 58‑220.
(2) If a *balancing adjustment event occurred in the 1998‑99 income year, subsection 42‑190(2) has effect in relation to the unit as if paragraph (a) of that subsection were omitted and replaced by the following paragraph:
(a) the amount by which the higher of:
(i) the cost base of the *plant for the purposes of Part IIIA of the
Income Tax Assessment Act 1936 , less any amounts included in that cost base as a result of expenditure incurred after the *acquisition time that were not, immediately before the balancing adjustment event occurred, included in the cost of the plant to you for the purposes of Division 42; or(ii) the cost of the plant to you;
exceeds its *written down value; and
(3) If a *balancing adjustment event occurred in a later income year, subsection 42‑190(2) has effect in relation to the unit as if paragraph (a) of that subsection were omitted and replaced by the following paragraph:
(a) the amount by which the higher of:
(i) the cost base (without indexation) of the *plant for the purposes of Parts 3‑1 and 3‑3, less any amounts included in that cost base as a result of expenditure incurred after the *acquisition time that were not, immediately before the balancing adjustment event occurred, included in the cost of the plant to you for the purposes of Division 42; or
(ii) the cost of the plant to you;
exceeds its *written down value; and
[The next Part is Part 2‑20.]
Repeal the paragraph, substitute:
(a) any amounts worked out under whichever of the following subparagraphs applies:
(i) if Division 58 does not apply to the asset—any amount included in your assessable income for any income year because of a balancing adjustment for the asset;
(ii) if Division 58 applies to the asset and an amount has been included in your assessable income for an income year because of a balancing adjustment for the asset—any part of that amount that was attributable to amounts you have deducted or can deduct for depreciation of the asset; and
Add “, 58‑80(c) or 58‑145(5)(b)”.
Repeal the paragraph, substitute:
(a) any amounts worked out under whichever of the following subparagraphs applies:
(i) if Division 58 does not apply to the asset—any amount included in the assessable income of the partnership for any income year because of a balancing adjustment for the asset;
(ii) if Division 58 applies to the asset and an amount has been included in the assessable income of the partnership for an income year because of a balancing adjustment for the asset—any part of that amount that was attributable to amounts that the partnership has deducted or can deduct for depreciation of the asset; and
Add “, 58‑80(c) or 58‑145(5)(b)”.
Add:
(4)
Transport capital expenditure also does not include expenditure on *plant to which Subdivision 58‑B or 58‑C applies.(5)
Transport capital expenditure also does not include expenditure on *plant if:
(a) at any time a *transition entity or a purchaser from a *tax exempt vendor had been the owner or a *quasi‑owner of the plant; and
(b) Subdivision 58‑B or 58‑C had applied to the plant at that time; and
(c) either of the following subparagraphs applies:
(i) the transferor was the transition entity or the purchaser from the tax exempt vendor and Common rule 1 applied to your acquisition of the plant;
(ii) the transferor was not the transition entity or the purchaser from the tax exempt vendor and Common rule 1 applied to your acquisition of the plant and all earlier successive acquisitions of the plant by entities that acquired it from, or became the owners or quasi‑owners of it after it was acquired from, the transition entity or the purchaser from the tax exempt vendor.
total income means the income of the trust or partnership of the year of income.
Person holding an interest in a trust or partnership to be treated as having received share of dividend directly from former exempting company
(1) If:
(a) a class A exempted dividend or a class C exempted dividend (the
relevant dividend ) is paid by a former exempting company to a shareholder that is a trustee of a trust or is a partnership; and(b) at the time when the relevant dividend was paid, a person who held an interest in the trust or partnership was a life assurance company, an exempting company, a former exempting company, or a person who acquired the interest under an eligible employee share scheme, being a company or person in respect of which or in respect of whom a franking credit, franking rebate or exempting credit would have arisen if the relevant dividend had been paid to the company or person; and
(c) an amount attributable to the relevant dividend is included in the assessable income of the holder of the interest, or would have been so included if:
(i) sections 110C, 112A and 116FB had not been enacted; and
(ii) the definition of
eligible insurance policy in section 116E were amended by omitting “an RA policy, a superannuation policy, a sickness policy, a funeral policy or an eligible policy” and substituting “an RA policy or a superannuation policy”;then, for the purposes of the application of this Part in relation to the holder of the interest:
(d) the part of the relevant dividend to which the amount referred to in paragraph (1)(c) is attributable is taken:
(i) to have been a class A exempted dividend or a class C exempted dividend, as the case may be, paid to the holder of the interest; and
(ii) to have been exempted to the same extent as the relevant dividend; and
(e) the holder of the interest is taken to have been the holder of the share in respect of which the relevant dividend was paid.
Holding an interest in a trust
(2) A person is taken to hold an interest in a trust if:
(a) the person is a beneficiary under the trust; or
(b) the person derives, or will derive, income indirectly, through interposed trusts or partnerships, from dividends received by the trustee.
Holding an interest in a partnership
(3) A person is taken to hold an interest in a partnership if:
(a) the person is a partner in the partnership; or
(b) the person derives, or will derive, income indirectly, through interposed trusts or partnerships, from dividends received by the partnership.
Calculation of part of dividend to which amount received by holder of interest is attributable
(4) For the purposes of subsection (1), the
part of the relevant dividend to which the amount referred to in paragraph (1)(c) is attributable is taken to be the amount worked out using the formula:where:
amount of dividend means the amount of the relevant dividend paid to the trustee or partnership.
share of income means the share of the income of the trust, or of the income of the partnership, of the year of income to which the holder of the interest is entitled.
total income means the income of the trust or partnership of the year of income.
After “class C franking account balance”, insert “and, if the company is a former exempting company, includes a reference to matters relevant to working out the class A exempting account balance or the class C exempting account balance”.
65
Subsection 177EA(1) (paragraph (a) of the definition of franked ) After “160AQF”, insert “or 160AQFA”.
After “franking debit”, insert “or exempting debit”.
Repeal the subsection, substitute:
Effect of determination of franking debit or exempting debit
(10) If the Commissioner makes a determination under paragraph (5)(a):
(a) on the day on which notice in writing of the determination is served on the company, a franking debit or exempting debit of the company arises in respect of the dividend; and
(b) the amount of the franking debit or exempting debit is such amount as is stated in the Commissioner’s determination, being an amount that:
(i) the Commissioner considers reasonable in the circumstances; and
(ii) does not exceed the amount of the franking debit or exempting debit of the company arising under section 160AQB or 160AQCNE in respect of the dividend.
Repeal the subsection, substitute:
Meaning of franked distribution
(16) A distribution in respect of an interest in shares is taken to be
franked if:
(a) there is a class A flow‑on franking amount, a class B flow‑on franking amount or a class C flow‑on franking amount in relation to the relevant partnership amount or trust amount; or
(b) the distribution is taken by section 160AQZB or 160AQZC to be franked.
After “160APP”, insert “or 160APPA”.
Add:
; or (e) the shareholder is a company and an exempting credit of the company arises under section 160AQCNF.
After “franking credits” (wherever occurring), insert “or exempting credits”.
Repeal the subsection, substitute:
Meaning of greater benefit from franking credits
(20) The circumstances in which the relevant taxpayer would, in a year of income, derive a
greater benefit from franking credits than another person referred to in paragraph (19)(b) include, but are not limited to:
(a) any of the following circumstances existing in relation to the other person and not in relation to the relevant taxpayer:
(i) the person is a non‑resident;
(ii) the amount of tax (if any) that, apart from Part IIIAA, would be payable by the person is less than the amount of the rebate of tax to which the person would be entitled under section 160AQU, 160AQX, 160AQY, 160AQYA, 160AQZ or 160AQZA;
(iii) the person is a company that is unable to pay a dividend to its shareholders in the year of income because it has not made any profits or has not made sufficient profits to do so;
(iv) the person is an exempting company or a company for which no franking credits arise; and
(b) any of the following circumstances existing in relation to the relevant taxpayer and not in relation to the other person:
(i) a franking credit arises under section 160APPA;
(ii) a franking credit or exempting credit arises under section 160AQCNF;
(iii) subsection 160AQTA(2) or (5) applies;
(iv) section 160AQTB applies.
Repeal the subsection, substitute:
(1B) Subsection (1A) does not apply in relation to income paid in respect of a share investment if the income is paid as a dividend that has been franked in accordance with section 160AQF or 160AQFA and:
(a) the franking percentage (within the meaning of section 160APA), if any, in relation to the dividend is 100%; and
(b) if the dividend is an exempted dividend—the sum of the exempted amount and the franked amount (if any) is equal to the amount of the dividend.
Repeal the subsection, substitute:
(1D) If:
(a) unattributed income is to be paid, in respect of a share investment, as a dividend that has been franked in accordance with section 160AQF or 160AQFA; and
(b) the percentage to which the dividend has been franked in accordance with section 160AQF or 160AQFA is less than 100%;
the amount to be deducted, in accordance with paragraph (1A)(d) of this section, from the unattributed income is the amount (being a multiple of 5 cents) that is, or is nearest to, the amount worked out by using the formula:
where:
exempted amount means the exempted amount in relation to the dividend.
factor means the factor prescribed for the purposes of subsection (1C).
franked amount means the franked amount (within the meaning of section 160APA) in relation to the dividend.
unattributed income means the amount of unattributed income.
Insert:
(3AA) For the purpose of determining whether a deduction is required to be made under subsection (2) in relation to an exempted dividend paid to the trustee of a trust, or a partnership, in which a non‑resident holds an interest within the meaning of section 160AQZB or 160AQZC, the dividend is taken to have been franked in accordance with section 160AQFA to the extent of the lesser of:
(a) so much of the dividend as the non‑resident is entitled to receive or to have credited to the non‑resident, or otherwise dealt with on behalf of the non‑resident or as the non‑resident directs, by the trustee or partnership; and
(b) the exempted amount of the dividend.
After “160AQF”, insert “or 160AQFA”.
Add “or 160AQFA”.
Add “or 160AQFA”.
Add “or 160AQFA”.
80
Statements given by company to shareholders before 2 April 1998 A company is not liable to a penalty under section 160ARY merely because:
(a) the company gave to a shareholder before 2 April 1998 a dividend statement that complied with section 160AQH of the
Income Tax Assessment Act 1936 as in force at the time when the statement was given; or(b) the company gave to a shareholder before that date a dividend statement that the Commissioner is satisfied reasonably complied with section 160AQH of the
Income Tax Assessment Act 1936 as amended by this Schedule.
The amendments made by this Schedule apply to dividends paid at or after 7.30 pm by legal time in the Australian Capital Territory on 13 May 1997 other than:
(a) dividends declared before that time by a listed public company (within the meaning of the
Income Tax Assessment Act 1997 ); or(b) dividends paid after that time that related to dividends referred to in paragraph (a).
Add:
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Insert:
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|
Insert:
(1A) This section is subject to section 45ZA.
Insert:
(1) This section applies if:
(a) an amount (the
distributed amount ) is included in the assessable income of a taxpayer that:
(i) is a company; and
(ii) is a beneficiary in a trust estate or a partner in a partnership; and
(b) an amount (the
attributable amount ) that is the whole or a part of the distributed amount was attributable to the payment of a dividend by a company; and(c) the attributable amount was paid to the taxpayer:
(i) in respect of an interest in the trust or partnership that was created before the commencing time and either was acquired on or after 2 July 1998 or was created or acquired for a term that was extended at or after the commencing time; or
(ii) in respect of an interest in the trust or partnership that was created at or after the commencing time; or
(iii) under a finance arrangement (including an arrangement extending an earlier arrangement) to which the trustee of the trust, or the partnership, is a party and which was or is entered into at or after the commencing time; and
(d) the payment to the taxpayer of the attributable amount or the distributed amount may reasonably be regarded as equivalent to the payment of interest on a loan.
(2) In determining whether the payment of the attributable amount or the distributed amount may reasonably be regarded as equivalent to the payment of interest on a loan, regard is to be had to:
(a) the way in which the amount was calculated; and
(b) the conditions applying to the payment of the amount; and
(c) any other relevant matters.
(3) The taxpayer is not entitled to a rebate of tax under section 46 or 46A (as the section concerned has effect under section 45Z) in respect of the attributable amount.
(4) In this section:
arrangement 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.
associate has the meaning given by section 318 but includes:
(a) in relation to a trustee—the controller of the trust; and
(b) in relation to a company that is a member of a wholly‑owned group (determined in accordance with Subdivision 975‑W of the
Income Tax Assessment Act 1997 )—any other company that is a member of the group.
commencing time means 7.30 pm by legal time in the Australian Capital Territory on 13 May 1997.
controller , in relation to a trust, means a person:
(a) who beneficially owns, or is able in any way, whether directly or indirectly, to control the application of, more than 50% of the interests in the trust property or in the trust income; or
(b) who has power to appoint or remove the trustee of the trust; or
(c) according to whose directions, instructions or wishes the trustee of the trust is accustomed or under an obligation, whether formal or informal, to act.
finance includes money (including money in the currency of a foreign country) raised by the issue of shares or the creation of an interest in a trust or partnership.
finance arrangement , in relation to a trustee or a partnership, means an arrangement entered into or carried out by any of the parties to the arrangement for the purpose, or for purposes that include the purpose:
(a) of enabling the trustee or partnership, or the company referred to in paragraph (1)(b), or an associate of the trustee, partnership or company, to obtain finance (whether by way of renewal or otherwise); or
(b) of enabling the trustee or partnership, or the company referred to in paragraph (1)(b), or an associate of the trustee, partnership or company, to obtain an extension of the period for which finance was obtained under an earlier arrangement.
interest , in relation to a trust that is a discretionary trust, includes a right to receive, at the discretion of the trustee of the trust, benefits under the trust.
loan includes the provision of credit or any other form of financial accommodation.
paid : an attributable amount or distributed amount is taken to have been paid to a taxpayer if it is included in the taxpayer’s assessable income.
Insert:
(3A) Paragraph (3)(ga) does not apply to income consisting of a dividend, or a part of a dividend, that is derived by the trustee of a trust, or to a partnership, to the extent (if any) to which any amount paid to, or applied for the benefit of, a taxpayer (being a beneficiary in the trust or a partner in the partnership) that:
(a) was attributable to the dividend; and
(b) was paid or applied:
(i) in respect of an interest in the trust or partnership that was acquired, or was acquired for a period that was extended, at or after the commencing time; or
(ii) under a finance arrangement (including an arrangement extending an earlier arrangement) entered into at or after the commencing time;
may reasonably be regarded as equivalent to the payment of interest on a loan.
(3B) In subsection (3A):
commencing time means 7.30 pm by legal time in the Australian Capital Territory on 13 May 1997.
finance arrangement has the same meaning as in section 45ZA.
(3C) In determining for the purposes of subsection (3A) the extent (if any) to which an amount may reasonably be regarded as equivalent to the payment of interest on a loan, regard is to be had to:
(a) the way in which the amount was calculated; and
(b) the conditions applying to the payment or application of the amount; and
(c) any other relevant matters.
Insert:
finance arrangement has the same meaning as in section 45ZA.
Add:
(6) A franking credit of a company does not arise under this section if:
(a) the trust amount or partnership amount was paid:
(i) in respect of an interest in the trust or partnership that was acquired, or was acquired for a period that was extended, at or after the commencing time; or
(ii) under a finance arrangement (including an arrangement extending an earlier arrangement) entered into at or after the commencing time; and
(b) the payment may reasonably be regarded as the payment of interest on a loan.
(7) In subsection (6):
commencing time means 7.30 pm by legal time in the Australian Capital Territory on 13 May 1997.
paid : a trust amount or partnership amount is taken to have been paid to a taxpayer if it is included in, or is allowed as a deduction from, the taxpayer’s assessable income.
(8) In determining whether the payment of the trust amount or partnership amount may reasonably be regarded as equivalent to the payment of interest on a loan, regard is to be had to:
(a) the way in which the amount was calculated; and
(b) the conditions applying to the payment of the amount; and
(c) any other relevant matters.
Add:
(4) A taxpayer is not entitled to a rebate of tax under subsection (1) if:
(a) the trust amount was paid:
(i) in respect of an interest in the trust that was acquired, or was acquired for a period that was extended, at or after the commencing time; or
(ii) under a finance arrangement (including an arrangement extending an earlier arrangement) entered into at or after the commencing time; and
(b) the payment may reasonably be regarded as equivalent to the payment of interest on a loan.
(5) In subsection (4):
commencing time means 7.30 pm by legal time in the Australian Capital Territory on 13 May 1997.
paid : a trust amount is taken to have been paid to a taxpayer if it is included in the taxpayer’s assessable income.
(6) In determining whether the payment of the trust amount may reasonably be regarded as equivalent to the payment of interest on a loan, regard is to be had to:
(a) the way in which the amount was calculated; and
(b) the conditions applying to the payment of the amount; and
(c) any other relevant matters.
Add:
(5) A trustee is not entitled to a rebate of tax under subsection (1) if:
(a) the trust amount was paid:
(i) in respect of an interest in the trust or partnership that was acquired, or was acquired for a period that was extended, at or after the commencing time; or
(ii) under a finance arrangement (including an arrangement extending an earlier arrangement) entered into at or after the commencing time; and
(b) the payment may reasonably be regarded as equivalent to the payment of interest on a loan.
(6) In subsection (5):
commencing time means 7.30 pm by legal time in the Australian Capital Territory on 13 May 1997.
paid : a trust amount is taken to have been paid to a taxpayer if it is included in the taxpayer’s assessable income.
(7) In determining whether the payment of the trust amount may reasonably be regarded as equivalent to the payment of interest on a loan, regard is to be had to:
(a) the way in which the amount was calculated; and
(b) the conditions applying to the payment of the amount; and
(c) any other relevant matters.
Insert:
(1A) A taxpayer is not entitled to a rebate of tax under subsection (1) if:
(a) the trust amount was paid:
(i) in respect of an interest in the trust or partnership that was acquired, or was acquired for a period that was extended, at or after the commencing time; or
(ii) under a finance arrangement (including an arrangement extending an earlier arrangement) entered into at or after the commencing time; and
(b) the payment may reasonably be regarded as equivalent to the payment of interest on a loan.
(1B) In subsection (1A):
commencing time means 7.30 pm by legal time in the Australian Capital Territory on 13 May 1997.
paid : a trust amount is taken to have been paid to a taxpayer if it is included in the taxpayer’s assessable income.
(1C) In determining whether the payment of the trust amount may reasonably be regarded as equivalent to the payment of interest on a loan, regard is to be had to:
(a) the way in which the amount was calculated; and
(b) the conditions applying to the payment of the amount; and
(c) any other relevant matters.
Add:
(5) A taxpayer is not entitled to a rebate of tax under subsection (1) if:
(a) the partnership amount was paid:
(i) in respect of an interest in the trust or partnership that was acquired, or was acquired for a period that was extended, at or after the commencing time; or
(ii) under a finance arrangement (including an arrangement extending an earlier arrangement) entered into at or after the commencing time; and
(b) the payment may reasonably be regarded as equivalent to the payment of interest on a loan.
(6) In subsection (5):
commencing time means 7.30 pm by legal time in the Australian Capital Territory on 13 May 1997.
paid : a partnership amount is taken to have been paid to a taxpayer if it is included in, or is allowed as a deduction from, the taxpayer’s assessable income.
(7) In determining whether the payment of the partnership amount may reasonably be regarded as equivalent to the payment of interest on a loan, regard is to be had to:
(a) the way in which the amount was calculated; and
(b) the conditions applying to the payment of the amount; and
(c) any other relevant matters.
Add:
(4) A taxpayer is not entitled to a rebate of tax under subsection (1) if:
(a) the partnership amount was paid:
(i) in respect of an interest in the trust or partnership that was acquired, or was acquired for a period that was extended, at or after the commencing time; or
(ii) under a finance arrangement (including an arrangement extending an earlier arrangement) entered into at or after the commencing time; and
(b) the payment may reasonably be regarded as equivalent to the payment of interest on a loan.
(5) In subsection (4):
commencing time means 7.30 pm by legal time in the Australian Capital Territory on 13 May 1997.
paid : a partnership amount is taken to have been paid to a taxpayer if it is included in, or is allowed as a deduction from, the taxpayer’s assessable income.
(6) In determining whether the payment of the partnership amount may reasonably be regarded as equivalent to the payment of interest on a loan, regard is to be had to:
(a) the way in which the amount was calculated; and
(b) the conditions applying to the payment of the amount; and
(c) any other relevant matters.
Add:
(6) A taxpayer is not entitled to a rebate of tax under subsection (1) if:
(a) the trust amount or partnership amount was paid:
(i) in respect of an interest in the trust or partnership that was acquired, or was acquired for a period that was extended, at or after the commencing time; or
(ii) under a finance arrangement (including an arrangement extending an earlier arrangement) entered into at or after the commencing time; and
(b) the payment may reasonably be regarded as equivalent to the payment of interest on a loan.
(7) In subsection (6):
commencing time means 7.30 pm by legal time in the Australian Capital Territory on 13 May 1997.
paid : a trust amount or partnership amount is taken to have been paid to a taxpayer if it is included in, or is allowed as a deduction from, the taxpayer’s assessable income.
(8) In determining whether the payment of the trust amount or partnership amount may reasonably be regarded as equivalent to the payment of interest on a loan, regard is to be had to:
(a) the way in which the amount was calculated; and
(b) the conditions applying to the payment of the amount; and
(c) any other relevant matters.
Insert:
(1) If:
(a) a trust amount is included in a taxpayer’s assessable income of a year of income; and
(b) the taxpayer is not entitled to a rebate of tax in respect of the trust amount because of subsection 160APQ(6), 160AQX(4), 160AQY(5), 160AQYA(1A) or 160AQZA(6); and
(c) no deduction has been allowed, or is allowable, from the trustee’s assessable income of any year of income under section 160AR or 160ARAB;
an amount equal to the class A potential rebate amount, the class B potential rebate amount, or the class C potential rebate amount, that arises in relation to the trust amount is allowable as a deduction from the trustee’s assessable income of the year of income.
(2) If:
(a) a partnership amount is included in a taxpayer’s assessable income of a year of income; and
(b) the taxpayer is not entitled to a rebate of tax in respect of the partnership amount because of subsection 160APQ(6), 160AQYA(5), 160AQZ(4) or 160AQZA(6); and
(c) no deduction has been allowed, or is allowable, from the partnership’s assessable income of any year of income under section 160AR or 160ARAB;
an amount equal to the class A potential rebate amount, the class B potential rebate amount, or the class C potential rebate amount, that arises in relation to the partnership amount is allowable as a deduction from the partnership’s assessable income of the year of income.
The
Act | Number and year | Date of Assent | Date of commencement | Application, saving or transitional provisions |
93, 1999 | 16 July 1999 | |||
57, 2002 | 3 July 2002 | Schedule 12 (item 53): | — | |
75, 2010 | 28 June 2010 | Schedule 6 (item 51): 29 June 2010 | — |
(a) Subsection 2(1) (item 53) of theTaxation Laws Amendment Act (No. 2) 2002 provides as follows:
(1) Each provision of this Act specified in column 1 of the table commences, or is taken to have commenced, on the day or at the time specified in column 2 of the table.
Schedule 12, item 53 | Immediately after the time specified in the | 16 July 1999 |
am. = amended rep. = repealed rs. = repealed and substituted | |
Provision affected | How affected |
S. 4......................................... | rep. No. 75, 2010 |
Item 36................................... | am. No. 57, 2002 |
0
0
0