Taxation Laws Amendment Act (No. 4) 2000 (Cth)

Taxation Laws Amendment Act (No. 4) 2000

Act No. 114 of 2000 as amended

This compilation was prepared on 19 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

An Act to amend the law relating to taxation, and for related purposes

1Short title [see Note 1]

 This Act may be cited as the Taxation Laws Amendment Act (No. 4) 2000.

2Commencement [see Note 1]

• (1)

  Subject to this section, this Act commences on the day on which it receives the Royal Assent.

• (2)

  Items 43 and 44 of Schedule 4 are taken to have commenced on 1 July 1998.

3Schedule(s)

 Subject to section 2, each Act that is specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has effect according to its terms.

Schedule 1Alienation of real property through interposed entities  

International Tax Agreements Act 1953

1

After section 3

Insert:

3AAlienation of real property through interposed entities

• (1)

  This section applies if:

  • (a)

    an agreement makes provision in relation to income, profits or gains from the alienation or disposition of shares or comparable interests in companies, or of interests in other entities, whose assets consist wholly or principally of real property (within the meaning of the agreement) or other interests in relation to land; and

  • (b)

    this Act gave that provision the force of law before 27 April 1998.

• (2)

  For the purposes of this Act, that provision is taken to extend to the alienation or disposition of shares or any other interests in companies, and in any other entities, the value of whose assets is wholly or principally attributable, whether directly, or indirectly through one or more interposed companies or other entities, to such real property or interests.

• (3)

  However, subsection (2) applies only if the real property or land concerned is situated in Australia (within the meaning of the relevant agreement).

• (4)

  If, after the commencement of this section, this Act is amended so as to give the force of law to an amendment or substitution of a provision mentioned in subsection (1), this section ceases to apply to that provision from the time that the amendment of the Act takes effect.

• (5)

  In this section:

entity has the same meaning as in the Income Tax Assessment Act 1997, but does not include an individual in his or her personal capacity.

2

Application

The amendment made by this Schedule applies to income, profits or gains from the alienation or disposition of shares or interests after 12 noon, by legal time in the Australian Capital Territory, on 27 April 1998.

Schedule 2Extension of period for certain gifts  

Income Tax Assessment Act 1997

1

Subsection 30‑50(2) (table item 5.2.1)

Omit “1999”, substitute “2005”.

2

Subsection 30‑50(2) (table item 5.2.6)

Omit “1999”, substitute “2000”.

3

Section 30‑105 (table item 13.2.1)

Omit “2000”, substitute “2002”.

Schedule 3Income of non‑resident sports persons, clubs and associations  

Income Tax Assessment Act 1936

1

Subparagraph 23(c)(i)

Repeal the subparagraph.

2

Subparagraph 23(c)(ii)

Repeal the subparagraph.

3

Application

The amendments made by this Schedule apply to income derived after 30 June 2000.

Schedule 4Technical amendments  

Income Tax Assessment Act 1936

1

Subsection 47(1A) (method statement)

After “each capital gain”, insert “(except a capital gain that is disregarded)”.

Income Tax Assessment Act 1997

3

Paragraph 104‑15(1)(b)

Omit “at the end of the agreement”, substitute “at or before the end of the agreement”.

4

Paragraph 104‑15(4)(a)

Omit “when the agreement ends”, substitute “at or before the end of the agreement”.

5

At the end of subsection 104‑25(3)

Add:

Note: The capital proceeds referred to in this subsection are reduced if the gain or loss was for shares and an amount was taken into account as a capital gain for the shares under section 160ZL of the Income Tax Assessment Act 1936 for the 1997‑98 income year or an earlier income year: see section 104‑25 of the Income Tax (Transitional Provisions) Act 1997.

6

At the end of subsection 104‑35(5)

Add:

• ; or (e)

  a company grants an option to acquire shares or *debentures in the company; or

• (f)

  the trustee of a unit trust grants an option to acquire units or debentures in the trust.

7

Subsection 104‑40(5) (note)

Omit “Note”, substitute “Note 1”.

8

At the end of subsection 104‑40(5)

Add:

Note 2: A capital gain or capital loss you made for the 1997‑98 income year or an earlier income year under Part IIIA of the Income Tax Assessment Act 1936 is also disregarded where the option is exercised in the 1998‑99 income year or a later one: see section 104‑40 of the Income Tax (Transitional Provisions) Act 1997.

9

Paragraph 104‑135(1)(a)

Omit “for a *share”, substitute “in respect of a *share”.

10

Subsection 104‑135(6)

Repeal the subsection, substitute:

• (6)

  You disregard a payment by a liquidator for the purposes of this section if the company is dissolved within 18 months of the payment.

  Note: The payment will be part of your capital proceeds for CGT event C2 happening when the share ends.

11

At the end of subsection 104‑155(5)

Add:

• ; or (e)

  a company grants an option to acquire shares or *debentures in the company; or

• (f)

  the trustee of a unit trust grants an option to acquire units or debentures in the trust.

12

Subsection 104‑230(6)

Repeal the subsection, substitute:

• (6)

  You make a *capital gain equal to that part of the *capital proceeds from the *share or interest that is reasonably attributable to the amount by which the market value of the property referred to in subsection (2) is more than the sum of the *cost bases of that property.

  Note: You cannot make a capital loss.

13

Subsection 108‑5(2) (note 2)

Omit “A capital gain or loss from a CGT asset is disregarded”, substitute “An asset is not a CGT asset”.

14

Subsection 108‑70(2)

After “*CGT event happens”, insert “(except one that happens because of your death)”.

15

Subsection 109‑5(2) (table item B1)

Omit “when the agreement ends”, substitute “at or before the end of the agreement”.

16

Section 109‑15

Repeal the section, substitute:

109‑15Exceptions

 You do not acquire a *CGT asset if the asset was *disposed of:

• (a)

  to provide or redeem a security; or

• (b)

  because of the vesting of the asset in a trustee under the Bankruptcy Act 1966 or under a similar *foreign law; or

• (c)

  because of the vesting of the asset in a liquidator of a company, or the holder of a similar office under a foreign law.

17

Section 109‑55 (table item 11)

Omit “when the liability to pay for the convertible note arose”, substitute “when the conversion of the convertible note happened”.

18

After subsection 110‑45(1)

Insert:

• (1A)

  This section also applies to expenditure incurred after 30 June 1999 on land or a building if:

  • (a)

    the land or building was *acquired at or before the time mentioned in subsection (1); and

  • (b)

    the expenditure forms part of the fourth element of the *cost base of the land or building.

Deductible expenditure excluded from second and third elements

• (1B)

  Expenditure does not form part of the second or third element of the cost base to the extent that you have deducted or can deduct it.

19

Subsection 110‑45(2) (heading)

Omit “Deductible”, substitute “Other deductible”.

20

Subsection 110‑45(2)

After “Expenditure”, insert “(except expenditure excluded by subsection (1B)”.

21

Subsection 110‑45(3)

After “does not form part of”, insert “any element of”.

22

After subsection 110‑50(1)

Insert:

• (1A)

  This section also applies to expenditure incurred after 30 June 1999 on land or a building if:

  • (a)

    the land or building was *acquired at or before the time mentioned in subsection (1); and

  • (b)

    the expenditure forms part of the fourth element of the *cost base of the land or building.

Deductible expenditure excluded from second and third elements

• (1B)

  Expenditure does not form part of the second or third element of the cost base to the extent that you, or a partnership in which you are or were a partner, have deducted or can deduct it.

23

Subsection 110‑50(2) (heading)

Omit “Deductible”, substitute “Other deductible”.

24

Subsection 110‑50(2)

After “Expenditure”, insert “(except expenditure excluded by subsection (1B)”.

25

Subsection 110‑50(3)

After “does not form part of”, insert “any element of”.

26

Subsection 110‑53(3)

Repeal the subsection.

27

Paragraph 112‑20(1)(a)

Repeal the paragraph, substitute:

• (a)

  you did not incur expenditure to acquire it, except where your acquisition of the asset resulted from:

  • (i)

    *CGT event D1 happening; or

  • (ii)

    another entity doing something that did not constitute a CGT event happening; or

28

Subsection 112‑20(2)

Repeal the subsection, substitute:

• (2)

  Despite paragraph (1)(c), if:

  • (a)

    you did not deal at arm’s length with the other entity; and

  • (b)

    your *acquisition of the *CGT asset resulted from another entity doing something that did not constitute a CGT event happening;

the market value is substituted only if what you paid to acquire the CGT asset was more than its market value (at the time of acquisition).

The payment can include giving property: see section 103‑5.

29

Subsection 112‑20(3)

Omit “The rule in subsection (1) does not apply in the situations set out in this table:”, substitute “There are some situations in which the rule in subsection (1) does not apply. They include the situations set out in this table:”.

30

Subsection 112‑20(3) (table item 3)

After “right”, insert “resulting from *CGT event D1 happening”.

31

Subsection 112‑20(3) (table item 5)

After “in a company”, insert “or a right to *acquire a share or *debenture in a company”.

32

Subsection 112‑20(3) (table item 6)

After “in a unit trust”, insert “or a right to *acquire a unit or debenture in a unit trust”.

33

Subsection 112‑30(4) (example)

Omit “subsection (4)”, substitute “subsection (3)”.

34

Subsection 112‑30(4) (example)

Omit “subsection (5)”, substitute “subsection (4)”.

35

At the end of section 114‑15

Add:

• (4)

  Despite subsection (2), there are different rules for the exercise of an option or the conversion of a *convertible note.

Exercise of options

• (5)

  The amount you paid for the option, and the amount you paid to exercise it, are indexed from the quarter in which the liabilities to pay the amounts were incurred.

  Example: On 1 April 1997, Robyn grants Andrew an option to buy land she owns. The option fee is $10,000, and the option is to buy the land on 30 June 1998 for $100,000.

   Andrew exercises the option and acquires the land on 30 June 1998. To work out whether there is a capital gain when Andrew disposes of the land, indexation is available if the land is disposed of 12 months or more after its acquisition.

   The $10,000 option fee can be indexed from 1 April 1997 (when the liability to pay it was incurred). The $100,000 exercise price can be indexed from 30 June 1998 (when the liability to pay the price was incurred).

Convertible notes

• (6)

  If you *acquire *shares in a company or units in a unit trust by converting a *convertible note, the amount paid for the convertible note, and the amount paid to convert it, are indexed from the quarter in which the liabilities to pay the amounts were incurred.

  Note: If shares or units are acquired as a result of the exercise of the option or the conversion of the note, and an amount is paid to the company or trust on the shares or units after the day of acquisition, that amount is indexed from the time it is paid: see subsection 960‑275(3).

36

Subsection 116‑30(3) (heading)

Omit “CGT event C2”, substitute “CGT events C2 and D1”.

37

Section 118‑15 (group heading)

Repeal the heading.

38

Section 118‑15

Repeal the section.

39

Paragraph 118‑37(2)(a)

After “Program”, insert “or the Rural and Remote General Practice Program”.

40

At the end of section 118‑37

Add:

• (3)

  A *capital gain you make from compensation you receive under the *firearms surrender arrangements is disregarded.

41

After paragraph 118‑192(1)(a)

Insert:

• (aa)

  that use occurred for the first time after 7.30 pm, by legal time in the Australian Capital Territory, on 20 August 1996; and

42

After section 118‑195

Insert:

118‑197Special rule for surviving joint tenant

 This Subdivision applies to you as if the *ownership interest of another individual in a *dwelling had *passed to you as a beneficiary in a deceased estate if:

• (a)

  you and the other individual owned ownership interests in the dwelling as joint tenants; and

• (b)

  the other individual dies.

43

Subsection 118‑250(1)

After “entity” (first occurring), insert “(except a partnership)”.

44

Section 118‑255

Omit “an election for the goodwill under subsection 160ZZPQ(1) of the Income Tax Assessment Act 1936”, substitute “a choice for the goodwill under Division 123”.

45

Section 121‑30

After “disregarded”, insert “, except because of a roll‑over”.

46

After subsection 124‑10(1)

Insert:

• (1A)

  A *car, motor cycle or similar vehicle must not be one of the new assets.

47

After subsection 124‑15(1)

Insert:

• (1A)

  A *car, motor cycle or similar vehicle must not be one of the new assets.

48

Subsection 124‑70(2)

After “*CGT asset”, insert “(except a *car, motor cycle or similar vehicle)”.

49

Paragraph 124‑75(2)(a)

After “*CGT asset”, insert “(except a *car, motor cycle or similar vehicle)”.

50

At the end of subsection 124‑80(2)

Add “, nor can it be a *car, motor cycle or similar vehicle”.

51

Paragraph 126‑5(3)(b)

Omit “when the agreement ends”, substitute “at or before the end of the agreement”.

52

Subsection 126‑45(3)

Omit “when the agreement ends”, substitute “at or before the end of the agreement”.

53

Subsection 130‑60(1) (table item 3)

After “of the unit trust”, insert “after 28 January 1988”.

54

Subsection 130‑60(2)

Omit “when the liability to pay for the convertible note arose”, substitute “when the conversion of the convertible note happened”.

55

Section 136‑10 (table item G2)

Omit “the shift losing shares”, substitute “the decreased value shares”.

56

At the end of section 136‑25

Add:

Note: An asset also has the necessary connection with Australia if it was acquired by a company after 28 January 1988 and before 26 May 1988 from a non‑resident as a result of a disposal for which there was a roll‑over under section 160ZZN or 160ZZO of the Income Tax Assessment Act 1936: see section 136‑25 of the Income Tax (Transitional Provisions) Act 1997.

57

Subsection 138‑15(5)

Omit “when the agreement ends”, substitute “at or before the end of the agreement”.

58

Paragraph 138‑160(2)(a)

After “Division 149”, insert “of this Act”.

59

Paragraph 138‑160(2)(a)

After “asset)”, insert “and section 149‑5 of the Income Tax (Transitional Provisions) Act 1997”.

60

Subsection 138‑160(3)

After “Division 149”, insert “of this Act and section 149‑5 of the Income Tax (Transitional Provisions) Act 1997”.

61

Subsection 138‑160(3) (note)

After “Division 149”, insert “of this Act and section 149‑5 of the Income Tax (Transitional Provisions) Act 1997”.

62

Subsection 140‑55(5) (example)

Omit “class A shares just after”, substitute “class A shares just before”.

64

Paragraph 170‑135(1)(a)

After “Australian resident”, insert “(but not a *prescribed dual resident)”.

65

Section 960‑265 (table item 1)

Omit “Subdivision 42‑K”, substitute “section 42‑80”.

66

Subsection 960‑275(3)

Omit “at a time after it was issued or allotted”, substitute “to the company or trust at a time after it was *acquired”.

67

Subsection 960‑275(3) (example)

Repeal the example, substitute:

Example: Peter acquires shares in a company. The shares are partly‑paid, and the company makes a call on the shares. Peter sells the shares to Narina before he is liable to pay the call.

 The amount Narina paid to Peter for the shares is indexed under subsection 960‑275(2) from the quarter in which she incurred the expenditure to acquire the shares.

 The amount Narina later pays for the call on the shares is indexed in accordance with subsection 960‑275(3) from the quarter in which she made that later payment.

• 68

  Subsection 995‑1(1) (paragraph (a) of the definition of resident trust for CGT purposes)

Omit “the trustee”, substitute “a trustee”.

• 69

  Subsection 995‑1(1) (definition of second continuity period)

Omit “165‑110”, substitute “165‑120”.

• 70

  Subsection 995‑1(1) (definition of shareholding interest)

Omit “175‑65”, substitute “175‑95”

71

Amendments relating to asterisking

The provisions of the Income Tax Assessment Act 1997 listed in the table are amended as set out in the table.

Asterisking amendments
Item	Provision	Omit:	Substitute:
1	Subsection 165‑20(2)	tax loss	*tax loss
2	Section 165‑35	tax loss	*tax loss
3	Paragraph 165‑180(2)(b)	*shares	shares
4	Subsection 165‑180(3)	arrangement	*arrangement
5	Subsection 165‑210(4)	tax loss	*tax loss
6	Paragraph 165‑210(4)(b)	*test time	test time
7	Subsection 166‑5(5)	test period	*test period
8	Subsection 166‑40(5)	test period	*test period
9	Subsection 166‑165(2)	*shares	shares
12	Paragraph 166‑230(3)(a)	interposed company	*interposed company
13	Subsection 166‑245(2)	part of the substantial shareholding	*part of the substantial shareholding
14	Subsection 170‑15(1)	*amount	amount
15	Subsection 170‑15(2)	*income year	income year
16	Paragraph 170‑25(1)(a)	*tax loss	tax loss
17	Paragraph 170‑25(1)(a)	*loss company	loss company
18	Paragraph 170‑25(1)(b)	capital gain	*capital gain
19	Paragraph 170‑25(1)(b)	*loss company	loss company
20	Paragraph 170‑25(2)(a)	*income company	income company
21	Paragraph 170‑25(2)(b)	*income company	income company
22	Paragraph 170‑25(2)(b)	capital loss	*capital loss
23	Paragraph 170‑125(1)(a)	exempt income	*exempt income
24	Subsection 170‑135(3)	capital gains	*capital gains
25	Paragraph 175‑5(2)(b)	*business	business
26	Subsection 175‑10(1)	capital gain	*capital gain
27	Subsection 175‑10(1)	*film	film
28	Paragraph 175‑15(1)(b)	*film	film
29	Paragraph 175‑20(1)(a)	capital gain	*capital gain
30	Paragraph 175‑30(2)(b)	derived (first occurring)	*derived
31	Paragraph 175‑30(2)(b)	capital gain	*capital gain
32	Subsection 175‑35(1)	tax loss	*tax loss
33	Subsection 175‑35(4)	exempt income (first occurring)	*exempt income
34	Paragraph 175‑40(2)(b)	*business	business
35	Subsection 175‑60(2)	disallow	*disallow
36	Subsection 175‑60(2)	capital losses (first occurring)	*capital losses
37	Subsection 175‑65(2)	disallow	*disallow
38	Paragraph 175‑80(2)(b)	*business	business

Income Tax (Transitional Provisions) Act 1997

72

Paragraph 102‑5(2)(a)

Omit “same asset roll‑over or replacement asset roll‑over”, substitute “roll‑over”.

73

Paragraph 104‑15(c)

Omit “when the agreement ends”, substitute “at or before the end of the agreement”.

74

After Subdivision 104‑B

Insert:

Subdivision 104‑C—End of a CGT asset

104‑25Cancellation, surrender and similar endings

 The capital proceeds from an ending referred to in subsection 104‑25(3) of the Income Tax Assessment Act 1997 in relation to shares are reduced by any amount that was taken into account as a capital gain for the shares under section 160ZL of the Income Tax Assessment Act 1936 for the 1997‑98 income year or an earlier income year.

Subdivision 104‑D—Bringing into existence a CGT asset

104‑40Granting an option

 A capital gain or capital loss is disregarded if:

• (a)

  you made the capital gain or capital loss for the 1997‑98 income year or an earlier income year under Part IIIA of the Income Tax Assessment Act 1936 because you granted an option to an entity, or renewed or extended an option you had granted; and

• (b)

  the other entity exercises the option in the 1998‑99 income year or a later income year.

75

Subsection 104‑70(1)

Omit “This section”, substitute “Section 104‑70 of the Income Tax Assessment Act 1997”.

76

Section 104‑72

After “Paragraph 104‑70(7)(a)”, insert “of the Income Tax Assessment Act 1997”.

77

Subsection 104‑175(1)

Omit “This section applies”, substitute “Unless subsection (2) or (3) of this section applies, sections 104‑175 and 104‑180 of the Income Tax Assessment Act 1997 apply”.

78

Section 108‑5

Omit “any capital gain or capital loss the entity makes from the asset is disregarded”, substitute “the thing is not a CGT asset”.

79

Subsection 130‑95(1)

Omit “This Subdivision”, substitute “Subdivision 130‑D of the Income Tax Assessment Act 1997”.

80

Subsection 130‑95(2)

Omit “this Subdivision”, substitute “Subdivision 130‑D of the Income Tax Assessment Act 1997”.

81

Paragraph 140‑15(8)(b)

Omit “subsection 12(2)”, substitute “subitem 12(2) of Schedule 1”.

82

Application

(1) The amendments made by this Schedule (other than by item 45) apply to assessments for the 1998‑99 income year and later income years.

(2) The amendment made by item 45 of this Schedule applies to CGT events happening on or after the day on which this Act receives the Royal Assent.

Notes to the Taxation Laws Amendment Act (No. 4) 2000

Note 1

The Taxation Laws Amendment Act (No. 4) 2000 as shown in this compilation comprises Act No. 114, 2000 amended as indicated in the Tables below.

Table of Acts

Act	Number and year	Date of Assent	Date of commencement	Application, saving or transitional provisions
Taxation Laws Amendment Act (No. 4) 2000	114, 2000	5 Sept 2000	See s. 2
Taxation Laws Amendment Act (No. 3) 2003	101, 2003	14 Oct 2003	Schedule 6 (items 40–42): (a)	—
Tax Laws Amendment (2010 Measures No. 2) Act 2010	75, 2010	28 June 2010	Schedule 6 (item 79): 29 June 2010	—

(a)Subsection 2(1) (items 35–37) of the Taxation Laws Amendment Act (No. 3) 2003 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.

Commencement information
Column 1	Column 2	Column 3
Provision(s)	Commencement	Date/Details
35.  Schedule 6, item 40	Immediately after the time specified in the Taxation Laws Amendment Act (No. 4) 2000 for the commencement of item 2 of Schedule 4 to that Act	5 September 2000
36.  Schedule 6, item 41	Immediately after the time specified in the Taxation Laws Amendment Act (No. 4) 2000 for the commencement of item 63 of Schedule 4 to that Act	5 September 2000
37.  Schedule 6, item 42	Immediately after the commencement of item 71 of Schedule 4 to the Taxation Laws Amendment Act (No. 4) 2000	5 September 2000

Table of Amendments

ad. = added or inserted  am. = amended rep. = repealed rs. = repealed and substituted
Provision affected	How affected
S. 4.........................................	rep. No. 75, 2010
Schedule 4
Item 2.....................................	rep. No. 101, 2003
Item 63...................................	rep. No. 101, 2003
Item 71...................................	am. No. 101, 2003