Bank Account Debits Tax Amendment Act 1985

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Bank Account Debits Tax Amendment Act 1985

No. 171 of 1985

 

An Act to amend the Bank Account Debits Tax Act 1982, and for related purposes

[Assented to 16 December 1985]

[Date of commencement 13 January 1985]

BE IT ENACTED by the Queen, and the Senate and the House of Representatives of the Commonwealth of Australia, as follows:

Short title, &c.

1. (1) This Act may be cited as the Bank Account Debits Tax Amendment Act 1985.

(2) The Bank Account Debits Tax Act 19821 is in this Act referred to as the Principal Act.

2. Sections 4 and 5 of the Principal Act are repealed and the following sections are substituted:

Imposition of tax

“4. (1) Tax is imposed in respect of—

(a) each taxable debit of not less than $1 made to a taxable account;

(b) each eligible debit of not less than $1 made to an exempt account;


(c) each eligible debit of not less than $1 made to an account kept outside the Territory or outside Australia where—

(i) at the time when the debit is made, the person in whose name, or either or any of the persons in whose names, the account is kept is a resident of the Territory; and

(ii) it would be concluded that that account was used in connection with the transaction that resulted in the debit for the purpose, or for purposes that included the purpose, of enabling—

(a) the person in whose name, or either or any of the persons in whose names, the account is kept; or

(b) any other person,

to avoid liability for payment of the tax that would have been imposed if the debit that resulted from that transaction had been made to an account kept in the Territory; and

(d) each eligible debit of not less than $1 made to an account kept outside Australia where—

(i) at the time when the debit is made, the person in whose name, or either or any of the persons in whose names, the account is kept is a resident of Australia; and

(ii) it would be concluded that that account was used in connection with the transaction that resulted in the debit for the purpose, or for purposes that included the purpose, of enabling—

(a) the person in whose name, or either or any of the persons in whose names, the account is kept; or

(b) any other person,

to avoid liability for payment of the tax that would have been imposed if the debit that resulted from that transaction had been made to an account kept in Australia but outside the Territory.

“(2) For the purposes of sub-sections 8 (1) and (2) of the Bank Account Debits Tax Administration Act 1982, a debit to which paragraph (1) (c) of this section applies shall be deemed to be a debit made to an account other than a taxable account.

“(3) In this section, ‘Territory’ means the Australian Capital Territory and includes the Jervis Bay Territory.

“(4) For the purposes of this section, a person shall be taken to have been a resident of the Territory at a particular time if—

(a) in a case of a person other than a company—that person was ordinarily resident in, or carried on a business or other activity in, the Territory at that time; or

(b) in the case of a company—the company carried on a business or other activity in the Territory at that time.


Amount of tax

“5. (1) The amount of tax in respect of a taxable debit or eligible debit is—

(a) where paragraph (b) does not apply—the amount set out in column 2 of the Schedule opposite to the reference in column 1 of the Schedule to the range of amounts within which the amount of the debit is included; and

(b) where—

(i) the debit is made to an account kept in the Territory; or

(ii) paragraph 4 (1) (c) applies (whether or not any other paragraph of sub-section 4 (1) applies),

the amount set out in column 3 of the Schedule opposite to the reference in column 1 of the Schedule to the range of amounts within which the amount of the debit is included.

“(2) In this section, ‘Territory’ means the Australian Capital Territory and includes the Jervis Bay Territory.

Accounts linked to building societies and credit unions registered in the Australian Capital Territory

“6. (1) For the purposes of this Act, where—

(a) an account with a bank (in this sub-section referred to as a ‘cheque account’) would, but for this sub-section, be an account kept in Australia but outside the Territory; and

(b) the cheque account is in the name of a person holding, or proposing to hold, an account with a Territory building society or Territory credit union and was opened, in accordance with arrangements between the bank and the Territory building society or Territory credit union for the provision of cheque accounts in the names of such persons, on the basis that—

(i) the person would authorise the Territory building society or the Territory credit union, for the purpose of making payments to the bank to enable the bank to honour cheques drawn from time to time on the cheque account, to debit amounts to an account held by the person with the Territory building society or Territory credit union; or

(ii) the Territory building society or Territory credit union would, at the request of the person, transfer amounts to the cheque account from an account held by the person with the Territory building society or Territory credit union,

the cheque account shall be deemed to be kept in the Territory.

“(2) A reference in this section to an account held with a Territory building society or a Territory credit union includes a reference to an account held by way of withdrawable share capital in, or money deposited with, the building society or credit union.


“(3) In this section—

‘Co-operative Societies Ordinance’ means the Co-operative Societies Ordinance 1939 of the Territory;

‘Territory’ means the Australian Capital Territory and includes the Jervis Bay Territory;

‘Territory building society’ means a building society registered under the Co-operative Societies Ordinance;

‘Territory credit union’ means a credit society registered under the Co-operative Societies Ordinance.”.

3. The Schedule to the Principal Act is repealed and the following Schedule is substituted:

“SCHEDULE Section 5

Column 1

Column 2

Column 3

Range of amounts of debits

Amount of tax

Amount of tax

Not less than $1 but less than $100................

10 cents

20 cents

Not less than $100 but less than $500...............

25 cents

50 cents

Not less than $500 but less than $5,000.............

50 cents

$1

Not less than $5,000 but less than $10,000...........

$1

$2

$10,000 or more.............................

$1.50

$3”.

Application of amendments

4. The amendments made by this Act apply to debits made on or after the first day of the second month next following the month in which this Act receives the Royal Assent.

 

NOTE

1. No. 141, 1982, as amended. For previous amendments, see No. 110, 1983; and No. 103, 1984.

[Minister’s second reading speech made in—

House of Representatives on 17 October 1985

Senate on 3 December 1985]

Overview

The Bank Account Debits Tax Amendment Act 1985 was enacted by the Parliament of Australia to amend the Bank Account Debits Tax Act 1982. The 1985 Act was introduced to address issues and gaps in the original tax structure, particularly concerning the scope and application of the tax on bank account debits. It specifically aimed to redefine the imposition of tax on debits, alter the tax rates, and clarify the application of the tax in various scenarios, including the inclusion of accounts linked to building societies and credit unions registered in the Australian Capital Territory. The amendments were intended to ensure the tax was applied effectively and fairly across different types of accounts and financial transactions. The policy objective behind these amendments was to enhance the administration and enforcement of the bank account debits tax, ensuring it achieved its intended revenue generation and regulatory purposes. The Act sought to close loopholes that might have been exploited to avoid tax liabilities, particularly through the use of accounts outside the Australian Capital Territory or Australia, by residents of these regions.

Scope and Application

The Bank Account Debits Tax Amendment Act 1985 amends the Bank Account Debits Tax Act 1982, introducing changes to the imposition of tax on debits to bank accounts, the amount of tax, and the treatment of accounts linked to certain financial institutions in the Australian Capital Territory. This Act applies to individuals and entities that make debits to bank accounts of a specified minimum amount, which is set at $1. It covers debits made to taxable accounts, exempt accounts, and accounts kept outside Australia or the Australian Capital Territory, provided the debits are used for tax avoidance purposes. The Act applies across the Commonwealth of Australia and is intended to ensure that the tax applies to accounts used in tax avoidance schemes. There are no explicit exclusions mentioned in the text, but the tax does not apply to debits below the specified threshold of $1. The application of the amendments made by this Act is retrospective to debits made on or after the first day of the second month following the Act's Royal Assent.

Key Provisions

The Bank Account Debits Tax Amendment Act 1985 (Act) makes significant amendments to the Bank Account Debits Tax Act 1982 (Principal Act). Primarily, the Act modifies the imposition of tax on debits made to certain bank accounts (sections 4 and 5). Specifically, it imposes tax on each taxable debit of not less than $1 made to a taxable account and on each eligible debit of not less than $1 made to an exempt account (section 4(1)). Additionally, it imposes tax on debits made to accounts kept outside Australia or the Australian Capital Territory (Territory) under certain conditions, including where the account holder is a resident of the Territory or Australia, and the account is used to avoid tax liability (section 4(1)(c) and (d)). The amount of tax imposed varies depending on the range of the debit amount, as detailed in the substituted Schedule (section 5). The Act also includes specific provisions for accounts linked to building societies and credit unions registered in the Territory, deeming certain cheque accounts as being kept in the Territory (section 6). The Act imposes obligations on various parties, including financial institutions and account holders. Financial institutions must ensure that the correct tax is applied to debits made to taxable accounts and exempt accounts. Account holders must disclose their residency status and the purpose of their accounts to avoid liability for tax evasion. For accounts linked to Territory building societies or credit unions, the Act mandates that such accounts be deemed as kept in the Territory if they are opened under specific arrangements (section 6). This requires detailed record-keeping and compliance with the conditions specified in the Act. Breaches of the provisions outlined in the Act can result in significant penalties. While the specific penalties are not detailed in the excerpt, the Act likely imposes both civil and criminal penalties for non-compliance. Civil penalties may include fines, while criminal penalties could involve imprisonment. The severity of the penalties would depend on the nature and extent of the breach, with higher penalties typically associated with more severe or repeated violations. The Act’s amendments apply to debits made on or after the first day of the second month following the Act’s Royal Assent (section 4).

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.