Income Tax Assessment Act (No. 2) 1967

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Income Tax Assessment (No. 2)

No. 38 of 1967

An Act to amend the Law relating to Income Tax in relation to Income derived by Persons connected with certain Undertakings of the Governments of the United States of America, in relation to Moneys paid on Shares in certain Prospecting and Mining Companies and in relation to Non-resident Dividend Income.

[Assented to 25 May 1967]

BE it enacted by the Queen’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 (No. 2) 1967.

(2.) The Income Tax Assessment Act 1936-1966, as amended by the Income Tax Assessment Act 1967, is in this Act referred to as the Principal Act.

(3.) Section 1 of the Income Tax Assessment Act 1967 is amended by omitting sub-section (3.).

(4.) The Principal Act, as amended by this Act, may be cited as the Income Tax Assessment Act 1936-1967.

Commencement.

2. This Act shall come into operation on the day on which it receives the Royal Assent.

Parts.

3. Section 5 of the Principal Act is amended by omitting the words—

“Division 11a.—Dividends paid to Non-residents (Sections 128a-128e).”

and inserting in their stead the words—

“Division 11a.—Dividends paid to Non-residents (Sections 128 a-128d).”.

Income of certain persons connected with undertakings of the United States Government.

4. Section 23aa of the Principal Act is amended—

(a) by inserting before the definition of “Australia” in sub-section

(1.) the following definition:—

“‘approved project’ means the establishment, maintenance or operation of the North West Cape naval communication station, of the Joint Defence Space Research Facility or of the Sparta project;”;

(b) by omitting from paragraph (a) of the definition of “prescribed contract” in sub-section (1.) the words “the establishment, maintenance or operation of the North West Cape naval communication station “and inserting in their stead the words “an approved project”;

(d) by inserting after paragraph (a) of the definition of “prescribed purposes” in sub-section (1.) the following paragraph:—

“(aa) in relation to a United States employee—purposes relating to an approved project; and”:

(e) by inserting after the definition of “prescribed purposes” in sub-section (1.) the following definition:—

“‘the Joint Defence Space Research Facility’ means the undertaking the establishment of which is provided for by an agreement dated the ninth day of December, One thousand nine hundred and sixty-six, between the Government of the Commonwealth and the Government of the United States of America;”;

(f) by inserting after the definition of “the North West Cape naval communication station “in sub-section (1.) the following definition:—

“‘the Sparta project’ means the undertaking the establishment of which is provided for by a memorandum of arrangement dated the thirtieth day of March, One thousand nine hundred and sixty-six, between the Government of the Commonwealth, the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the United States of America;”;

(g) by adding at the end of sub-section (1.) the following definition:—

“‘United States employee’ means a person who is employed by the Government of the United States of America and is not—

(a) a member of the United States Forces;

(b) a civilian accompanying the United States Forces;

(d) a person ordinarily resident in Australia.”;

(h) by omitting sub-section (2.) and inserting in its stead the following sub-section:—

“(2.) For the purposes of this section, a foreign contractor, foreign employee or United States employee who is in Australia, or is carrying on business in Australia, solely for prescribed purposes does not cease to be in Australia solely for those purposes, or to be carrying on business in Australia solely for those purposes,

by reason of anything undertaken or done by him in connexion with an undertaking in Australia of the Government of the United States of America, other than an approved project, agreed upon between the Government of the Commonwealth and the Government of the United States of America.”;

(i) by omitting from paragraph (b) of sub-section (3.) and from sub-section (4.) the words “or a civilian accompanying the United States Forces “and inserting in their stead the words”, a civilian accompanying the United States Forces or a United States employee”; and

(j) by inserting in paragraph (a) of sub-section (6.), after the word “Forces”, the words “or as a United States employee”.

Moneys paid on shares for the purposes of petroleum exploration.

5. Section 77a of the Principal Act is amended by omitting from sub-section (18.) the words “One thousand nine hundred and sixty-seven” and inserting in their stead the words “One thousand nine hundred and seventy”.

Moneys paid on shares for the purposes of certain mining or prospecting.

6. Section 77aa of the Principal Act is amended by omitting from sub-section (9.) the words “One thousand nine hundred and sixty-seven” and inserting in their stead the words “One thousand nine hundred and seventy”.

Interpretation.

7. Section 128a of the Principal Act is amended—

(a) by omitting from sub-section (1.) the definition of “non-resident” and inserting in its stead the following definition:—

“‘non-resident’ does not include a resident of the Territory of Papua and New Guinea, of Norfolk Island, of the Territory of Cocos (Keeling) Islands, of the Territory of Christmas Island or of the Territory of Nauru.”; and

(b) by omitting from sub-section (3.) the words “two hundred and twenty-six,”.

8. Section 128d of the Principal Act is repealed and the following section inserted in its stead:—

Non-resident dividend income not included in assessable income.

“128d. Non-resident dividend income shall not be included in the assessable income of a person.”.

Credits and rebates where election made.

9. Section 128e of the Principal Act is repealed.

Amendment of assessments.

10. Section 170 of the Principal Act is amended by omitting from sub-section (10.) the words “, sub-section (2.) of section one hundred and twenty-four de or sub-section (4.) of section one hundred and twenty-eight d,” and inserting in their stead the words “or sub-section (2.) of section one hundred and twenty-four de,”.

Provisional tax not payable in respect of non-resident dividend income.

11. Section 221yab of the Principal Act is repealed.

Amount of provisional tax.

12. Section 221yc of the Principal Act is amended by omitting from sub-section (5.) the words “or non-resident dividend income”.

Interpretation.

13. Section 221yk of the Principal Act is amended by omitting sub-section (1.) and inserting in its stead the following sub-section:—

“(1.) In this Division, unless the contrary intention appears—

‘Australia’ includes the Territory of Papua and New Guinea, Norfolk Island, the Territory of Cocos (Keeling) Islands, the Territory of Christmas Island and the Territory of Nauru;

‘dividend’ includes part of a dividend;

‘non-resident’ does not include a resident of the Territory of Papua and New Guinea, of Norfolk Island, of the Territory of Cocos (Keeling) Islands, of the Territory of Christmas Island or of the Territory of Nauru.”.

Deductions from dividends.

14. Section 221yl of the Principal Act is amended by omitting sub-section (5.) and inserting in its stead the following sub-section:—

“(5.) In this section, ‘money’ includes postal orders, money orders, bills of exchange, promissory notes, drafts and letters of credit.”.

Calculation of provisional tax payable in respect of year of income commencing on 1 July, 1967.

15.—(1.) This section applies in relation to a taxpayer whose assessable income for the year of income that commenced on the first day of July, One thousand nine hundred and sixty-six (in this section referred to as “the relevant year of income”) included non-resident dividend income.

(2.) For the purpose of ascertaining the amount of provisional tax payable by a taxpayer to whom this section applies in accordance with Division 3 of Part VI. of the Principal Act as amended by this Act in respect of income of the year of income next succeeding the relevant year of income—

(a) a reference in that Division to assessable income shall be read as not including a reference to non-resident dividend income;

(b) the taxable income of the taxpayer for the relevant year of income shall be deemed to be the amount that would have been his taxable income for that year of income if his assessable income for that year of income had not included non-resident dividend income; and

(c) the income tax assessed in respect of the taxable income of the taxpayer for the relevant year of income shall, for the purposes of paragraph (a) of sub-section (1.) of section two hundred and twenty-one yc of the Principal Act as so amended, be deemed to be the amount that would have been the income tax assessed in respect of the amount that would have been his taxable income for that year of income if his assessable income for that year of income had not included non-resident dividend income.

Application of amendments.

16.—(1.) The amendments made by section 4 of this Act apply to assessments in respect of income of the year of income that commenced on the first day of July, One thousand nine hundred and sixty-five, and in respect of income of all subsequent years of income.

(2.) The amendments made by sections 7 to 14 (inclusive) of this Act apply in respect of income derived on or after the first day of July, One thousand nine hundred and sixty-seven.

Overview

The Income Tax Assessment (No. 2) Act 1967 was enacted to amend the law relating to income tax in various respects, including income derived by persons connected with certain undertakings of the United States government, moneys paid on shares for petroleum exploration and mining or prospecting purposes, and non-resident dividend income. This Act was passed by the Parliament of Australia and received Royal Assent on 25 May 1967. The primary objective of the Act was to clarify and refine the tax treatment of income derived from specific activities and sources, ensuring that the tax system remained fair and effective in addressing the economic and strategic interests of Australia in relation to the United States and other entities. This legislation sought to address gaps and ambiguities in the existing tax framework by introducing specific definitions and provisions that targeted particular types of income and taxpayers. For example, the Act introduced the concept of "approved projects" for the purposes of determining the tax liability of United States employees involved in certain government undertakings in Australia, and it excluded non-resident dividend income from the assessable income of taxpayers. Additionally, the Act extended the deadline for certain petroleum exploration and mining or prospecting activities to qualify for specific tax treatments, reflecting changes in economic conditions and strategic priorities.

Scope and Application

The Income Tax Assessment (No. 2) Act 1967 amends the Income Tax Assessment Act 1936-1967, primarily focusing on the taxation of income derived by certain United States Government employees, moneys paid on shares for petroleum exploration and mining or prospecting, and non-resident dividend income. This Act applies to individuals who are employed by the United States Government and are in Australia or carrying on business in Australia for specific purposes, including the establishment, maintenance, or operation of approved projects such as the North West Cape naval communication station, the Joint Defence Space Research Facility, or the Sparta project. The Act also pertains to transactions involving shares in certain prospecting and mining companies, and income from dividends paid to non-residents. Notably, the Act excludes residents of specific Australian territories from the definition of "non-resident." The amendments made by this Act extend to assessments for income years commencing on or after 1 July 1965, with certain provisions applying specifically to income derived on or after 1 July 1967. The scope of the Act is further defined and potentially extended through subordinate legislation, which may provide additional rules or specifics regarding the application of these amendments.

Key Provisions

The Income Tax Assessment (No. 2) Act 1967 (Act) makes significant amendments to the Income Tax Assessment Act 1936-1967 (Principal Act) in several key areas. Firstly, it modifies the definitions and scope of income for certain persons connected with undertakings of the United States Government (section 4). This includes defining "approved project" and "United States employee," and it adjusts the definitions of "prescribed contract" and "prescribed purposes" to align with these changes. The Act also specifies that foreign contractors, foreign employees, or United States employees in Australia for prescribed purposes will not lose their status due to other activities related to U.S. Government undertakings in Australia (section 4(2)). Secondly, it amends the provisions related to moneys paid on shares for petroleum exploration and mining or prospecting, extending the time limit from 1967 to 1970 (sections 5 and 6). Entities and individuals affected by these provisions must ensure their activities align with the new definitions and scopes provided by the Act. For instance, those involved in the establishment, maintenance, or operation of the North West Cape naval communication station, the Joint Defence Space Research Facility, or the Sparta project must verify that their income is appropriately classified under the new definitions. Moreover, taxpayers with non-resident dividend income must be aware that such income is excluded from assessable income (section 128d). This requires careful accounting and reporting to ensure compliance with the new stipulations. Failure to comply with the requirements of the Act can result in various consequences. While the Act does not explicitly list specific offences or penalties, non-compliance with tax laws generally can lead to civil or criminal penalties under other sections of the Principal Act or related legislation. For instance, under section 224A of the Principal Act, a person can be liable for penalties for providing false or misleading statements. The maximum penalties for such offences can be substantial, including fines and imprisonment, depending on the severity and intent of the non-compliance. Additionally, incorrect classification of income could lead to assessments being adjusted, potentially resulting in overpayment or underpayment of tax, which would need to be rectified through amended returns or additional assessments.

Area of Law: Taxation Law
Instrument: Act
Concepts: Commencement Provisions; Definitions & Interpretation; Offence Provisions

Interactions

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.

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