INCOME TAX (No. 2).
No. 61 of 1930.
An Act to amend the Income Tax Act 1930.
[Assented to 16th December, 1930.]
BE it enacted by the King’s Most Excellent Majesty, the Senate, and the House of Representatives of the Commonwealth of Australia, as follows:—
Short title and citation.
1.—(1.) This Act may be cited as the Income Tax Act (No. 2) 1930.
(2.) The Income Tax Act 1930* is in this Act referred to as the Principal Act.
(3.) The Income Tax Act 1930, as amended by this Act, may be cited as the Income Tax Acts 1930.
Further tax.
2. Section seven of the Principal Act is amended by omitting from paragraph (a) the word “ten” and inserting in its stead the word “fifteen”.
3. After section seven of the Principal Act the following section is inserted:—
Farther tax on income from property.
“7a—(1.) In addition to any tax (including additional tax, super-tax and further tax) payable under the preceding provisions of this Act, there shall be payable upon the taxable income derived by any person—
(a) from property;
(b) by way of interest, dividends, rents or royalties, whether derived from personal exertion or from property; and
(c) in the course of carrying on a business, where the income is of such a class that, if derived otherwise than in the course of carrying on a business, it would be income from property,
a further tax of seven and one-half per centum of the amount of that taxable income.
“(2).Where tax is payable by a company under this section, tax shall not be payable under this section upon any taxable income derived by any person in consequence of the distribution by that company to its members or shareholders of the income upon which tax is so payable by that company or in consequence of a succession of such distributions through another company or through other companies of that income or any part thereof.
“(3.) This section shall not apply to income which is assessable for the financial year beginning on the first day of July One thousand nine hundred and thirty under the provisions of sub-paragraph (i) or (ii) of paragraph (b) of section sixteen of the Income Tax Assessment Act 1922-1930 if that income is distributed out of income which was assessable income of a company under those provisions for any prior financial year.
“(4.) Any tax payable by a company under this section shall not be included in the calculation, for the purposes of the provisoes following sub-paragraph (iii) of paragraph (b) of section sixteen of the Income Tax Assessment Act 1922-1930, of the rate of tax paid or payable by that company.
“(5.) Sub-sections (2.) to (13.) inclusive of section thirteen of the Income Tax Assessment Act 1922-1930 shall not apply to tax payable under the provisions of this section”.
Overview
The Income Tax (No. 2) Act 1930 was enacted to amend the existing Income Tax Act 1930, responding to an identified need for increased revenue through taxation to support government expenditure during the economic challenges of the time. This Act was passed by the King’s Most Excellent Majesty, the Senate, and the House of Representatives of the Commonwealth of Australia and is aimed at bolstering the tax base by introducing additional taxes on certain income categories. The policy objective is to enhance the government's fiscal capacity through a more comprehensive tax regime, particularly by imposing a further tax on income derived from property, interest, dividends, rents, royalties, and specific business income. This legislative amendment ensures that income derived in these ways is subject to additional taxation, thereby increasing the overall tax collected from these income sources.
Scope and Application
The Income Tax (No. 2) Act 1930 applies to individuals, companies, and other entities that are subject to income tax under the Income Tax Act 1930. The Act imposes a further tax on specific types of income, including income from property, interest, dividends, rents, royalties, and business income that would otherwise be classified as income from property. This additional tax is set at seven and a half per cent of the taxable income derived from these sources. The Act also includes provisions to prevent double taxation in cases where income is distributed by a company to its members or shareholders. The Act's jurisdiction extends across the Commonwealth of Australia and operates within the legislative framework established by the Income Tax Assessment Act 1922-1930. The Act’s application is further refined through subordinate instruments, which may extend or restrict its application in specific circumstances.
Key Provisions
The Income Tax (No. 2) Act 1930 amends the Income Tax Act 1930, introducing several key provisions that modify the taxation framework. Section 2 of the Act alters the rate of tax from ten percent to fifteen percent, impacting the tax liability of individuals and entities as detailed in the Principal Act (section 7). This adjustment increases the tax burden on taxable income. Additionally, section 3 introduces a further tax of 7.5 percent on specific types of income, including income from property, interest, dividends, rents, royalties, and business income that would otherwise be classified as property income (section 7a(1)). This further tax is levied in addition to other taxes, additional tax, super-tax, and the fifteen percent tax.
The Act imposes specific obligations on taxpayers and entities. For instance, section 7a(2) requires companies to ensure that the further tax on income derived by individuals from distributed company income is not double-taxed. This involves careful accounting to exclude such distributed income from the further tax calculation. Moreover, section 7a(3) exempts certain income from the further tax if it was assessable under specific provisions of the Income Tax Assessment Act 1922-1930. This necessitates accurate record-keeping and assessment to determine eligibility for this exemption. Furthermore, section 7a(4) stipulates that tax payable by a company under this section must be excluded from the rate of tax calculations for other provisions, which demands precise administrative practices to comply with this requirement.
Failure to comply with the obligations and requirements stipulated in the Act can lead to various consequences. Under section 7a(5), the non-application of specific sub-sections of section thirteen of the Income Tax Assessment Act 1922-1930 to tax payable under this section highlights the need for adherence to the prescribed tax calculation methods. Non-compliance with these provisions may result in penalties or legal repercussions. The precise penalties are not explicitly detailed in the provided text, but generally, tax laws in Australia provide for both civil and criminal penalties for non-compliance, including fines and imprisonment for severe or repeated breaches.