Taxation Laws Amendment Act (No. 1) 2002

Taxation Laws Amendment Act (No. 1) 2002

No. 26, 2002

An Act to amend the law relating to taxation, and for related purposes

Contents

1 Short title...................................

2 Commencement...............................

3 Schedule(s)..................................

Schedule 1—Forestry expenditure

Part 1—Prepayments

Income Tax Assessment Act 1936

Income Tax Assessment Act 1997

Part 2—Non‑commercial losses

Income Tax Assessment Act 1997

Part 3—Years after year including 21 September 2002

Income Tax Assessment Act 1936

Part 4—Application of amendments

Taxation Laws Amendment Act (No. 1) 2002

No. 26, 2002

An Act to amend the law relating to taxation, and for related purposes

[Assented to 4 April 2002]

The Parliament of Australia enacts:

1  Short title

  This Act may be cited as the Taxation Laws Amendment Act (No. 1) 2002.

2  Commencement

  This Act commences on the day on which it receives the Royal Assent.

3  Schedule(s)

  Each Act that is specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has effect according to its terms.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—Forestry expenditure

Part 1—Prepayments

Income Tax Assessment Act 1936

1  After section 82KZMF

Insert:

82KZMG  Deductions for certain forestry expenditure

 (1) Sections 82KZMB, 82KZMD and 82KZMF do not affect the timing of a deduction for expenditure incurred by a taxpayer in a year of income (the expenditure year) to the extent that the requirements of this section are met.

General requirements for expenditure

 (2) There are these requirements for the expenditure:

 (a) it must be incurred on or after 2 October 2001 and on or before 30 June 2006 under an agreement; and

 (b) the eligible service period for the expenditure must be 12 months or shorter and must end on or before the last day of the year of income after the expenditure year; and

 (c) it must be incurred in return for the doing of a thing under the agreement that is not to be wholly done within the expenditure year.

Requirements for agreement

 (3) There are these requirements for the agreement:

 (a) the agreement must be for planting and tending trees for felling; and

 (b) the taxpayer must not have day to day control over the operation of the agreement (whether or not the taxpayer has the right to be consulted or give directions); and

 (c) at least one of these must be satisfied:

 (i) there is more than one participant in the agreement in the same capacity as the taxpayer;

 (ii) the person (the manager) who manages, arranges or promotes the agreement, or an associate of that person, manages, arranges or promotes similar agreements for other taxpayers.

Requirements for expenditure

 (4) The expenditure incurred by the taxpayer must be paid for seasonally dependent agronomic activities undertaken by the manager during the establishment period for the relevant planting of trees for felling.

Example: Examples of seasonally dependent agronomic activities include:

•   tending the seedlings prior to planting, and planting them;
•   ripping and mounding the site where the planting is to occur;
•   applying fertiliser, herbicide or pesticide in conjunction with the planting.

 (5) The establishment period for a particular planting of trees starts on the day when the first seasonally dependent agronomic activity for that planting is done and ends on the later of:

 (a) the day when the last seedling is planted as part of that planting, not including replacement of seedlings already planted; and

 (b) the day when any fertiliser, herbicide or pesticide is applied to the seedlings in conjunction with that planting.

Income Tax Assessment Act 1997

2  Section 10‑5 (after table item headed “foreign investment funds (FIFs)”)

Insert:

3  At the end of Division 15

Add:

15‑45  Amounts paid under forestry agreements

 (1) Your assessable income includes an amount you receive under an agreement for the planting and tending of trees for felling if:

 (a) you are the manager of the agreement as mentioned in section 82KZMG of the Income Tax Assessment Act 1936; and

 (b) the amount satisfies, for the entity that paid it, the requirements of that section.

The amount is included for the income year in which the entity can claim a deduction for the amount.

 (2) No part of an amount included under subsection (1) is included in your assessable income for a later income year.

4  Transitional

(1) Section 15‑45 of the Income Tax Assessment Act 1997 may apply differently for the manager of an agreement mentioned in section 82KZMG of the Income Tax Assessment Act 1936 if an entity can first claim a deduction in accordance with section 82KZMG for the 2001‑02 or 2002‑03 income year for an amount paid under the agreement.

(2) The manager can choose to include in the manager’s assessable income for the income year in which the amount was paid one half of the amount that the manager would otherwise be required to include for that year under section 15‑45 of the Income Tax Assessment Act 1997, and to include one half of that amount for the following income year.

Part 2—Non‑commercial losses

Income Tax Assessment Act 1997

5  Paragraph 35‑55(1)(b)

After “carried on and”, insert “, for that or those income years”.

6  Subparagraph 35‑55(1)(b)(i)

Repeal the subparagraph, substitute:

 (i) because of its nature, it has not satisfied, or will not satisfy, one of the tests set out in section 35‑30, 35‑35, 35‑40 or 35‑45; and

7  Subsection 35‑55(2)

Repeal the subsection.

Part 3—Years after year including 21 September 2002

Income Tax Assessment Act 1936

8  Subsection 82KZMG(1)

Omit “82KZMB,”.

Part 4—Application of amendments

9  Application of amendments

(1) The amendments made by Part 1 of this Schedule apply to expenditure incurred on or after 2 October 2001 and on or before 30 June 2006.

(2) The amendments made by Part 2 of this Schedule apply to assessments for the 2000‑01 income year and later income years.

(3) The amendments made by Part 3 of this Schedule apply to expenditure incurred by a taxpayer in an income year after the taxpayer’s income year that includes 21 September 2002 and before the taxpayer’s income year that includes 1 July 2006.

[Minister’s second reading speech made in—

House of Representatives on 21 February 2002

Senate on 20 March 2002]