Loans Securities
No. 28 of 1968
An Act to amend the Loans Securities Act 1919-1959.
[Assented to 7 June 1968]
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 Loans Securities Act 1968.
(2.) The Loans Securities Act 1919-1959 is in this Act referred to as the Principal Act.
(3.) The Principal Act, as amended by this Act, may be cited as the Loans Securities Act 1919-1968.
Commencement.
2. This Act shall come into operation on the day on which it receives the Royal Assent.
Exemption of certain securities issued abroad from taxation.
3. Section 6b of the Principal Act is amended—
(a) by inserting after sub-section (1.) the following sub-section:—
“(1a.) Where, by the terms or conditions upon which any stock or security has been issued by or on behalf of the Commonwealth outside Australia (whether under this Act or otherwise), the Commonwealth has given an undertaking, howsoever expressed, to the effect that any amount, including the amount of any commitment fee, payable in respect of the stock or security, in addition to the principal or interest moneys payable under the stock or security, will be exempt from, free of, or not subject to, taxes imposed in the Commonwealth except where the amount is payable to or in respect of a person included in a particular class of persons consisting of or including all residents of Australia, then, notwithstanding anything contained in any law of the Commonwealth or of a State or Territory of the Commonwealth, the amount so payable is not subject to any tax or duty under any such law and shall be disregarded for all purposes in determining the liability of any person to pay tax or duty under any such law or in determining the amount of any such liability, except where the amount was, at the time of the act, transaction or event that, according to the provisions of the law imposing the tax or duty, gave rise to liability to the tax or duty, payable to or in respect of a person included in that particular class of persons.”; and
(b) by omitting paragraph (b) of sub-section (2.) and inserting in its stead the following paragraph:—
“(b) a reference to tax or duty shall be read as including a reference to withholding tax within the meaning of the Income Tax Assessment Act 1936-1968 and to tax or duty in respect of—
(i) the estates of deceased persons;
(ii) property derived from deceased persons; and
(iii) gifts or other dispositions of property.”.
Regulations.
4. Section 7 of the Principal Act is amended by adding at the end thereof the following sub-section:—
“(2.) Authority is given for the making by the Registrar of the Registry situated at London in the United Kingdom of regulations under section 16 of the Imperial Act known as the Colonial Stock Act 1877 for the purpose specified in sub-section (1) of section 1 of the Imperial Act known as the Colonial Stock Act 1948 in relation to stock issued in the United Kingdom before the date of commencement of this section.”.
Overview
The Loans Securities Act 1968 was enacted to amend the existing Loans Securities Act 1919-1959, addressing the need to update and clarify the taxation provisions concerning securities issued by the Commonwealth outside Australia. This Act was passed by the Queen's Most Excellent Majesty, the Senate, and the House of Representatives of the Commonwealth of Australia, aiming to refine the legal framework governing the tax exemptions on certain securities. A significant policy objective behind this Act was to ensure that specific securities issued abroad by the Commonwealth would not be subject to Australian taxation, except in certain circumstances, thereby providing a clearer legal basis for such exemptions and aligning with international financial practices.
This legislative update was essential to address the complexities of international finance and tax laws, ensuring that the Commonwealth's financial operations abroad were conducted under a consistent and legally sound framework. The Act specifically amended the Principal Act by introducing new provisions that exempt certain securities from taxation, thereby avoiding potential double taxation issues and clarifying the scope of tax exemptions applicable to foreign-issued securities.
Scope and Application
The Loans Securities Act 1968 amends the Loans Securities Act 1919-1959 and applies to securities issued by the Commonwealth outside Australia, specifically addressing the taxation of certain amounts payable in addition to the principal or interest moneys. The Act provides an exemption from taxes imposed in the Commonwealth for these amounts, except when they are payable to or in respect of Australian residents. The Act's scope includes the issuance of stock or securities by the Commonwealth overseas and the associated payments, including commitment fees, which are exempt from taxation under Australian law unless they are payable to Australian residents. The Act also extends to withholding tax and other specific taxes related to estates, property derived from deceased persons, and gifts or dispositions of property. The Act grants the Registrar of the Registry in London the authority to make regulations under the Colonial Stock Act 1877 for stock issued in the United Kingdom before the Act's commencement, thus extending its jurisdictional reach to include UK-issued securities.
Key Provisions
The Loans Securities Act 1968 amends the existing Loans Securities Act 1919-1959 to provide for the exemption of certain securities issued abroad from taxation, and to grant the Registrar of the Registry in London the authority to make regulations under the Colonial Stock Act 1877. Section 3 of the Act amends section 6b of the Principal Act by inserting a new sub-section (1a) to ensure that amounts payable in respect of securities issued outside Australia are exempt from taxes imposed in the Commonwealth, unless the amounts are payable to or in respect of a resident of Australia. This exemption applies to all taxes and duties, including withholding tax and taxes on estates, property derived from deceased persons, and gifts or dispositions of property. Section 4 further amends section 7 of the Principal Act by granting the Registrar the authority to make regulations under the Colonial Stock Act 1877 for stock issued in the United Kingdom before the commencement of this Act.
The obligations and requirements imposed by the Act on parties or entities governed by it are primarily related to the exemption of certain securities from taxation. Under section 3(1a), the Commonwealth must ensure that any commitment fees or additional amounts payable in respect of securities issued abroad are exempt from taxes imposed in the Commonwealth, unless those amounts are payable to or in respect of Australian residents. This requires the Commonwealth to carefully review the terms and conditions of any securities issued abroad to ensure compliance with the tax exemption provisions. Furthermore, section 4 mandates that the Registrar of the Registry in London has the authority to make regulations under the Colonial Stock Act 1877, which would involve ensuring that any relevant stock issued in the United Kingdom before the Act's commencement is properly regulated.
The Act imposes civil and criminal consequences for breaches of its provisions. While the Act itself does not specify particular offences, penalties, or maximum penalties, breaches of the tax exemption provisions could potentially lead to legal actions under other Australian tax laws. If the Commonwealth fails to comply with the tax exemption requirements for securities issued abroad, it may be subject to tax liabilities or penalties imposed by the relevant tax authorities. Additionally, if the Registrar of the Registry in London fails to properly make regulations under the Colonial Stock Act 1877, this could result in legal challenges or regulatory penalties for non-compliance with the prescribed authority.