Tax Laws Amendment (Norfolk Island CGT Exemption) Act 2016
No. 20, 2016
An Act to amend the law relating to taxation, and for related purposes
Contents
1 Short title
2 Commencement
3 Schedules
Schedule 1—Norfolk Island capital gains tax exemption
Income Tax Assessment Act 1997
Income Tax (Transitional Provisions) Act 1997
Tax Laws Amendment (Norfolk Island CGT Exemption) Act 2016
No. 20, 2016
An Act to amend the law relating to taxation, and for related purposes
[Assented to 18 March 2016]
The Parliament of Australia enacts:
1 Short title
This Act may be cited as the Tax Laws Amendment (Norfolk Island CGT Exemption) Act 2016.
2 Commencement
(1) Each provision of this Act specified in column 1 of the table commences, or is taken to have commenced, in accordance with column 2 of the table. Any other statement in column 2 has effect according to its terms.
Commencement information |
Column 1 | Column 2 | Column 3 |
Provisions | Commencement | Date/Details |
1. Sections 1 to 3 and anything in this Act not elsewhere covered by this table | The day this Act receives the Royal Assent. | 18 March 2016 |
2. Schedule 1 | Immediately after the commencement of the Tax and Superannuation Laws Amendment (Norfolk Island Reforms) Act 2015. | 1 July 2016 |
Note: This table relates only to the provisions of this Act as originally enacted. It will not be amended to deal with any later amendments of this Act.
(2) Any information in column 3 of the table is not part of this Act. Information may be inserted in this column, or information in it may be edited, in any published version of this Act.
3 Schedules
Legislation that is specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has effect according to its terms.
Schedule 1—Norfolk Island capital gains tax exemption
Income Tax Assessment Act 1997
1 Section 109‑60 (table item 1A)
Repeal the table item.
2 Section 112‑97 (table item 2AA)
Repeal the table item.
Income Tax (Transitional Provisions) Act 1997
3 Paragraph 102‑25(2)(a)
Omit “30 June 2016”, substitute “23 October 2015”.
4 Paragraph 102‑25(2)(d)
Omit “1 July 2016”, substitute “24 October 2015”.
5 Subsection 102‑25(2)
Omit all the words after paragraph (d), substitute:
then Parts 3‑1 and 3‑3 of the Income Tax Assessment Act 1997 apply in relation to the asset as if references in those Parts to 20 September 1985 were references to 24 October 2015.
6 Subsections 102‑25(3) and (4)
Repeal the subsections, substitute:
(3) Despite Division 121 of the Income Tax Assessment Act 1997, the entity is not required to keep records of:
(a) the date of acquisition of an asset in relation to which subsection (1) of this section applies, or its cost base on 30 June 1991; or
(b) the date of acquisition of an asset in relation to which subsection (2) of this section applies.
(4) However, the entity may choose that subsection (1) does not apply in relation to an asset to which it would (apart from this subsection) apply if:
(a) a CGT event happens in relation to the asset; and
(b) as at the date on which it happens, the entity has complied with Division 121 of the Income Tax Assessment Act 1997 in relation to the asset.
[Minister’s second reading speech made in—
House of Representatives on 11 February 2016
Senate on 3 March 2016]
Overview
The Tax Laws Amendment (Norfolk Island CGT Exemption) Act 2016 was enacted by the Parliament of Australia to address the capital gains tax (CGT) implications for Norfolk Island residents following the cessation of Norfolk Island’s self-government. The Act seeks to provide relief from CGT liabilities for Norfolk Islanders by amending the Income Tax Assessment Act 1997 and the Income Tax (Transitional Provisions) Act 1997. It removes specific CGT provisions that were previously applicable to Norfolk Island and adjusts the effective dates for the application of certain tax laws to reflect the timeline of Norfolk Island’s legislative reforms. This amendment ensures that Norfolk Island residents are not unfairly burdened by CGT obligations as a result of the changes to their local governance.
Scope and Application
The Tax Laws Amendment (Norfolk Island CGT Exemption) Act 2016 applies to entities, specifically Norfolk Island entities, and modifies the application of capital gains tax (CGT) as it pertains to Norfolk Island. The Act repeals certain table items in the Income Tax Assessment Act 1997 and modifies provisions in the Income Tax (Transitional Provisions) Act 1997 to adjust the transitional rules for Norfolk Island. This Act came into effect on the day it received Royal Assent, 18 March 2016, and certain provisions began on 24 October 2015. The scope of the Act is geographically limited to Norfolk Island and its entities, modifying specific tax laws to provide a CGT exemption. The Act does not explicitly state exclusions, but the modifications are targeted towards the specific transitional and CGT provisions for Norfolk Island. Subordinate instruments may further define or clarify the application of the Act, although no such instruments are mentioned in the text provided.
Key Provisions
The Tax Laws Amendment (Norfolk Island CGT Exemption) Act 2016 amends the taxation laws to provide a capital gains tax (CGT) exemption for Norfolk Island. The primary operative sections of this Act are found in Schedule 1, which modifies the Income Tax Assessment Act 1997 and the Income Tax (Transitional Provisions) Act 1997 to reflect this exemption. Specifically, Schedule 1 repeals certain table items in the Income Tax Assessment Act 1997 and makes corresponding changes to the transitional provisions in the Income Tax (Transitional Provisions) Act 1997. These amendments are designed to ensure that the new CGT rules apply correctly to assets acquired before and after certain specified dates.
The Act imposes obligations on taxpayers and entities with assets on Norfolk Island. These include compliance with the new CGT rules as specified in the amended sections of the Income Tax Assessment Act 1997 and the transitional provisions in the Income Tax (Transitional Provisions) Act 1997. For instance, entities are no longer required to maintain records of the date of acquisition or the cost base of assets under certain conditions, as detailed in the amended subsections. However, they may still choose to apply the original subsections if they have complied with the relevant CGT provisions when a CGT event occurs. This flexibility allows entities to manage their tax records more efficiently while ensuring compliance with the new legislative framework.
Breach of the provisions outlined in this Act could result in financial penalties and legal consequences. Although the Act does not explicitly detail specific offences or penalties, breaches of tax laws generally can lead to fines, interest on unpaid taxes, and potential criminal charges for serious or repeated violations. The penalties for non-compliance with tax laws can be severe, and taxpayers found guilty of deliberately evading tax or providing false information may face substantial fines and imprisonment. The exact penalties would depend on the nature and severity of the breach, as well as the specific provisions of the Income Tax Assessment Act 1997 and other relevant legislation.