INCOME TAX ASSESSMENT.
No. 30 of 1939.
An Act to amend the Income Tax Assessment Act 1936–1938.
[Assented to 26th September, 1939.]
[Date of Commencement, 24th October, 1939.]
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 Assessment Act 1939.
(2.) The Income Tax Assessment Act 1936–1938 is in this Act referred to as the Principal Act.
(3.) The Principal Act, as amended by this Act, may be cited as the Income Tax Assessment Act 1936–1939.
Definition of resident.
2. Section six of the Principal Act is amended—
(a) by omitting from sub-paragraph (i) of paragraph (a) of the definition of “resident” or “resident of Australia” the word “or”;
(b) by omitting from sub-paragraph (ii) of paragraph (a) of the definition of “resident” or “resident of Australia” the word “and” (last occurring) and inserting in its stead the word “or”; and
(c) by inserting after sub-paragraph (ii) of paragraph (a) of the definition of “resident” or “resident of Australia” the following sub-paragraph:—
“(iii) who is a contributor to the Superannuation Fund established under the Superannuation Act 1922–1937 or who is the spouse or a child under sixteen years of age of such a contributor; and”.
Rebate on dividends.
3. Section forty-six of the Principal Act is amended by inserting in sub-section (1.), after the word “shareholder”, the words “(other than a company which is a non-resident)”.
4. After section one hundred and twenty-three of the Principal Act the following section is inserted:—
Deduction of unrecouped capital expenditure on prospecting or mining for petroleum.
“123a.—(1.) In this section—
‘petroleum’ means naturally-occurring solid, liquid, or gaseous hydrocarbons in a free state but does not include any substance which may be extracted from rocks or minerals by any process of destructive distillation; and
‘unrecouped capital expenditure’ means the amount remaining after deducting from the total amount of the capital expenditure incurred by the taxpayer prior to the year of tax in prospecting or mining for petroleum in Australia or the Territory of New Guinea and in plant necessary for the treatment of that petroleum the amount remaining after deducting from the income derived by the taxpayer, in and out of Australia, prior to the year of tax, from the sale of that petroleum and its products all outgoings (other than outgoings of a capital nature) incurred in gaining or producing that income and any taxes payable in respect of that income.
(2.) Where a taxpayer derives income from carrying on mining operations in Australia or the Territory of New Guinea for the purpose of obtaining petroleum, the amount of the unrecouped capital expenditure (not exceeding the amount remaining after deducting from the assessable income derived from the sale of that petroleum and its products all other deductions allowable in respect of that assessable income) shall be an allowable deduction.
(3.) The provisions of sections one hundred and twenty-two and one hundred and twenty-three shall not apply to any expenditure to which this section applies.”.
Application of Act.
5. The amendments effected by this Act shall apply to all assessments for the financial year beginning on the first day of July, One thousand nine hundred and thirty-nine and all subsequent years.
Overview
The Income Tax Assessment Act 1939, enacted by the Parliament of Australia and assented to on 26 September 1939, was introduced to amend the Income Tax Assessment Act 1936–1938. The 1939 Act made various changes to the tax system, including the redefinition of residency to include contributors to the Superannuation Fund and their families, the exclusion of non-resident companies from dividend rebates, and the introduction of deductions for unrecouped capital expenditures related to petroleum prospecting and mining. The Act aimed to fine-tune the tax framework to better address the economic circumstances of the time, ensuring that the tax system remained fair and effective. These amendments commenced on 24 October 1939 and were applicable to all assessments for the financial year starting 1 July 1939 and subsequent years.
Scope and Application
The Income Tax Assessment Act 1939 applies to taxpayers who derive income from carrying on various activities within Australia or the Territory of New Guinea, including those involved in mining operations for petroleum. The Act amends the definition of "resident" in the Principal Act to include contributors to the Superannuation Fund established under the Superannuation Act 1922–1937, as well as their spouses and children under sixteen years of age. It also modifies the rebate on dividends to exclude companies that are non-residents and introduces a specific deduction for unrecouped capital expenditure on prospecting or mining for petroleum. These amendments are applicable to all assessments for the financial year beginning on the first day of July, 1939, and all subsequent years. The Act’s geographic reach extends to Australia and the Territory of New Guinea, and it specifically excludes certain expenditures from other sections of the Principal Act. The application of the Act may be further extended or restricted through subordinate instruments, although specific details are not provided within the text of the Act itself.
Key Provisions
The Income Tax Assessment Act 1939 (C1939A00030) amends the Income Tax Assessment Act 1936–1938, introducing specific changes related to the definition of a resident (section 2) and the allowance of deductions for unrecouped capital expenditure on prospecting or mining for petroleum (section 123a). Section 2 of the Act modifies the definition of "resident" by altering sub-paragraphs within the existing sub-paragraph (a) to refine who qualifies as a resident of Australia, specifically including contributors to the Superannuation Fund under the Superannuation Act 1922–1937 or their spouses and children under sixteen years of age. Section 3 amends the Principal Act by inserting a condition that excludes non-resident companies from the rebate on dividends, and section 4 introduces a new section 123a, allowing an allowable deduction for unrecouped capital expenditure on prospecting or mining for petroleum.
Under the Act, taxpayers who derive income from mining operations for petroleum in Australia or the Territory of New Guinea are entitled to deduct unrecouped capital expenditure from their assessable income, subject to certain conditions. Specifically, this deduction is limited to the amount that remains after deducting outgoings and taxes from the income derived from the sale of petroleum and its products (section 123a(2)). The Act explicitly states that sections 122 and 123 do not apply to the expenditure covered by section 123a (section 123a(3)). These amendments apply to all assessments for the financial year beginning on 1 July 1939 and subsequent years (section 5).
Failure to comply with the requirements set forth in the Income Tax Assessment Act 1939 may result in civil or criminal consequences. For instance, providing false or misleading information in tax returns or documentation can lead to penalties. The Act does not explicitly state maximum penalties for breaches; however, under general tax law principles, penalties can include fines and imprisonment for serious offences. The Australian Taxation Office (ATO) may also impose additional administrative penalties for non-compliance, which can vary based on the nature and severity of the breach. It is crucial for taxpayers to adhere to the requirements to avoid these consequences.