Income Tax (Companies, Corporate Unit Trusts and Superannuation Funds) Amendment Act 1985

Overview

The Income Tax (Companies, Corporate Unit Trusts and Superannuation Funds) Amendment Act 1985, enacted by the Queen, and the Senate and the House of Representatives of the Commonwealth of Australia, aims to amend the Income Tax (Companies, Corporate Unit Trusts and Superannuation Funds) Act 1985, addressing gaps in the taxation framework for prescribed entities. This amendment was introduced to ensure that income tax provisions more accurately reflect the nature of prescribed unit trusts and public trading trusts. The policy objective is to streamline and clarify the application of income tax laws to these entities, thereby enhancing compliance and administrative efficiency. The Act was assented to on 16 December 1985 and came into operation on the same day, making immediate changes to the definitions and tax rates applicable to prescribed unit trusts and public trading trusts, while ensuring these amendments are applied consistently with existing provisions.

Scope and Application

The Income Tax (Companies, Corporate Unit Trusts and Superannuation Funds) Amendment Act 1985 applies to entities such as companies, corporate unit trusts, and superannuation funds, as well as their trustees, by amending the Income Tax (Companies, Corporate Unit Trusts and Superannuation Funds) Act 1985. This amendment particularly impacts prescribed unit trusts, which include corporate unit trusts and public trading trusts, thereby altering the scope of the Principal Act. The Act imposes a specific tax rate of 46% on the net income of public trading trusts, as determined under section 102s of the Assessment Act. This legislation operates within the Commonwealth jurisdiction and applies to any relevant entities operating in Australia. The amendments introduced by this Act are effective only in the context of the Principal Act, as stipulated in subsection 12(2) of the Principal Act. The Act does not explicitly state exclusions or exemptions, but its application is limited to prescribed unit trusts and their trustees, as defined within the Assessment Act.

Key Provisions

The Income Tax (Companies, Corporate Unit Trusts and Superannuation Funds) Amendment Act 1985 primarily modifies the Income Tax (Companies, Corporate Unit Trusts and Superannuation Funds) Act 1985. Section 1 states that this Act can be cited as the Income Tax (Companies, Corporate Unit Trusts and Superannuation Funds) Amendment Act 1985. The Principal Act, referred to in this Act, is the Income Tax (Companies, Corporate Unit Trusts and Superannuation Funds) Act 1985 (section 1(2)). The Act comes into operation on the day it receives Royal Assent (section 2). The title of the Principal Act is amended by replacing "corporate" with "prescribed" (section 3). Similarly, section 1 of the Principal Act is amended by replacing "Corporate" with "Prescribed" (section 4). New definitions are added under section 3 of the Principal Act, including "prescribed unit trust" and "public trading trust" (section 5). Section 5 of the Principal Act is amended to replace "corporate" with "prescribed" in sub-paragraphs (3)(a)(ii) and (b)(ii) (section 6). A new section 7a is inserted into the Principal Act, specifying that the rate of tax payable by a trustee of a public trading trust is 46% (section 7). Section 14 of the Principal Act is amended to replace "corporate" with "prescribed" (section 8). The amendments made by this Act apply in accordance with sub-section 12(2) of the Principal Act (section 9). This Act imposes specific obligations and requirements on trustees of public trading trusts. Trustees of public trading trusts must ensure they are aware of and comply with the amended tax rate of 46% as set out in section 7a. They must also be mindful of the broader changes made to the definition of "prescribed" entities and the application of these changes as outlined in sections 5 and 9. Trustees must ensure that their financial records and tax filings accurately reflect these changes to avoid any discrepancies or non-compliance issues. The obligations also include keeping abreast of any further amendments or interpretations of the Act that may affect their obligations. The Act introduces specific penalties and consequences for non-compliance. Failure to adhere to the amended tax rates or misreporting income could lead to severe financial penalties. Under the relevant provisions of the Principal Act, penalties may include fines and additional tax liabilities. The maximum penalties for tax evasion or fraud could be significant, potentially including imprisonment, depending on the severity of the breach. Trustees must ensure strict compliance with the Act to avoid these severe repercussions.