Commonwealth: Tax Laws Amendment (2004 Measures No. 1) Act 2004 (Cth)

Tax Laws Amendment (2004 Measures No. 1) Act 2004 Act No. 95 of 2004 as amended This compilation was prepared on 19 August 2010 taking into account amendments up to Act No. 75 of 2010 The text of any of those amendments not in force on that date is appended in the Notes section The operation of amendments that have been incorporated may be affected by application provisions that are set out in the Notes section Prepared by the Office of Legislative Drafting and Publishing, Attorney‑General's Department, Canberra Contents 1 Short title [see Note 1] 2 Commencement 3 Schedule(s) Schedule 1—Medical expenses offset Income Tax Assessment Act 1936 Schedule 2—Deduction for transport between workplaces Income Tax Assessment Act 1997 Schedule 3—Small business CGT relief and discretionary trusts Income Tax Assessment Act 1997 Schedule 4—Amendment of the Energy Grants (Credits) Scheme (Consequential Amendments) Act 2003 Schedule 5—Net input tax credits and capital gains tax Income Tax Assessment Act 1997 Schedule 6—Confidentiality of ABN information A New Tax System (Australian Business Number) Act 1999 Schedule 7—Deductions for contributions relating to fund‑raising events Part 1—Amendments Income Tax Assessment Act 1997 Income Tax Assessment Act 1936 Part 2—Application of amendments Schedule 8—Distributions to certain entities Part 1—Division 7A amendments Income Tax Assessment Act 1936 Part 2—Application Schedule 9—Deductions for dividends on‑paid to non‑resident owners Income Tax Assessment Act 1936 Schedule 10—Endorsement of charities etc. Part 1—Amendments A New Tax System (Australian Business Number) Act 1999 A New Tax System (Goods and Services Tax) Act 1999 Fringe Benefits Tax Assessment Act 1986 Income Tax Assessment Act 1997 Taxation Administration Act 1953 Part 2—Application and transitional provisions Schedule 11—Specific gift recipients Income Tax Assessment Act 1997 Notes An Act to amend the law relating to taxation, and for related purposes 1 Short title [see Note 1] This Act may be cited as the Tax Laws Amendment (2004 Measures No. 1) Act 2004. 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 Provision(s) Commencement Date/Details 1. Sections 1 to 4 and anything in this Act not elsewhere covered by this table The day on which this Act receives the Royal Assent. 29 June 2004 2. Schedules 1 to 3 The day on which this Act receives the Royal Assent. 29 June 2004 3. Schedule 4, items 1 to 7 Immediately after the commencement of the Energy Grants (Credits) Scheme (Consequential Amendments) Act 2003. 1 July 2003 4. Schedule 4, item 8 The day on which this Act receives the Royal Assent. 29 June 2004 5. Schedules 5 and 6 The day on which this Act receives the Royal Assent. 29 June 2004 6. Schedule 7 1 July 2004. 1 July 2004 7. Schedules 8 and 9 The day on which this Act receives the Royal Assent. 29 June 2004 8. Schedule 10 1 July 2005. 1 July 2005 9. Schedule 11 The day on which this Act receives the Royal Assent. 29 June 2004 Note: This table relates only to the provisions of this Act as originally passed by the Parliament and assented to. It will not be expanded to deal with provisions inserted in this Act after assent. (2) Column 3 of the table contains additional information that is not part of this Act. Information in this column may be added to or edited in any published version of this Act. 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—Medical expenses offset Income Tax Assessment Act 1936 1 Subsection 159P(4) (paragraph (i) of the definition of medical expenses) Repeal the paragraph, substitute: (i) for the maintenance of a dog used for the guidance or assistance of, but not social therapy for, a person with a disability, being a dog that the Commissioner is satisfied is properly trained in the guidance or assistance of persons with disabilities. 2 Application The amendment made by this Schedule applies, and is taken to have applied, in relation to the 2002‑03 income year and later income years. Schedule 2—Deduction for transport between workplaces Income Tax Assessment Act 1997 1 Section 12‑5 (table item headed "car expenses") After: "12% of original value" method................. Subdivision 28‑D insert: see also transport expenses 2 Section 12‑5 (after table item headed "transfer pricing") Insert: transport expenses incurred in travel between workplaces........................................... 25‑100 3 At the end of Division 25 Add: 25‑100 Travel between workplaces When a deduction is allowed (1) If you are an individual, you can deduct a *transport expense to the extent that it is incurred in your *travel between workplaces. Travel between workplaces (2) Your travel between workplaces is travel directly between 2 places, to the extent that: (a) while you were at the first place, you were: (i) engaged in activities to gain or produce your assessable income; or (ii) engaged in activities in the course of carrying on a *business for the purpose of gaining or producing your assessable income; and (b) the purpose of your travel to the second place was to: (i) engage in activities to gain or produce your assessable income; or (ii) engage in activities in the course of carrying on a business for the purpose of gaining or producing your assessable income; and you engaged in those activities while you were at the second place. (3) Travel between 2 places is not travel between workplaces if one of the places you are travelling between is a place at which you reside. (4) Travel between 2 places is not travel between workplaces if, at the time of your travel to the second place: (a) the arrangement under which you gained or produced assessable income at the first place has ceased; or (b) the *business in respect of which you engaged in activities at the first place has ceased. No deduction for capital expenditure (5) You cannot deduct expenditure under subsection (1) to the extent that the expenditure is capital, or of a capital nature. 4 Subsection 28‑25(3) Repeal the subsection, substitute: (3) Business kilometres are kilometres the *car travelled in the course of: (a) producing your assessable income; or (b) your *travel between workplaces. You calculate the number of business kilometres by making a reasonable estimate. 5 Subsection 28‑50(2) Repeal the subsection, substitute: (2) Business kilometres are kilometres the *car travelled in the course of: (a) producing your assessable income; or (b) your *travel between workplaces. You calculate the number of business kilometres by making a reasonable estimate. 6 Subsection 28‑75(2) Repeal the subsection, substitute: (2) Business kilometres are kilometres the *car travelled in the course of: (a) producing your assessable income; or (b) your *travel between workplaces. You calculate the number of business kilometres by making a reasonable estimate. 7 Subsection 28‑90(4) Repeal the subsection, substitute: (4) Business kilometres are kilometres the *car travelled in the course of: (a) producing your assessable income; or (b) your *travel between workplaces. 8 At the end of subsection 900‑30(7) (before the notes) Add: ; (c) expenditure you incur that entitles you to a deduction under section 25‑100 (transport expenses incurred in your travel between workplaces), other than *car expenses. 9 At the end of section 900‑30 Add: Note 3: See Subdivision 900‑C for car expenses that are also transport expenses incurred in your travel between workplaces. 10 Subsection 995‑1(1) Insert: travel between workplaces has the meaning given by section 25‑100. 11 Application The amendments made by this Schedule apply to assessments for the 2001‑2002 income year and each later income year. Schedule 3—Small business CGT relief and discretionary trusts Income Tax Assessment Act 1997 1 Paragraph 152‑30(2)(a) Before "beneficially own", insert "except where the other entity is a discretionary trust—". 2 At the end of subsection 152‑30(2) Add: Note: There are further rules relating to discretionary trusts in subsections (4) to (6C). 3 Subsection 152‑30(3) After "subsection (2)", insert "or (5)". 4 Subsections 152‑30(5) and (6) Repeal the subsections, substitute: Control of discretionary trust (5) An entity (the first entity) controls a discretionary trust if, for any of the 4 income years before the income year for which relief is sought for a *CGT event under this Division: (a) the trustee paid to, or applied for the benefit of: (i) the first entity; or (ii) one or more of the first entity's *small business CGT affiliates; or (iii) the first entity and one or more of the first entity's small business CGT affiliates; any of the income or capital of the trust; and (b) the amount paid or applied is at least 40% (the control percentage) of the total amount of income or capital paid or applied by the trustee for that income year. (6) An entity does not control a discretionary trust because of subsection (5) if the entity is: (a) an *exempt entity; or (b) a *deductible gift recipient. (6A) The trustee of a discretionary trust may, for an income year for which the trust had a *tax loss and for which the trustee did not pay or apply any income or capital of the trust, nominate not more than 4 beneficiaries as being controllers of the trust. Note: The trust might not have had the funds to make a distribution for that income year, which would prevent it from being controlled in that year. The trustee may wish to make the nomination to ensure that a relevant CGT asset is treated as an active asset (see section 152‑40). (6B) This section has effect as if each nominated beneficiary controlled the trust during the relevant income year in the way described in this section. (6C) A nomination must be in writing and signed by the trustee and by each nominated beneficiary. 5 Subsection 152‑30(8) Repeal the subsection, substitute: (8) However, if an entity (the first entity) controls an entity of a kind referred to in subsection (9) (the public entity), this section does not, merely because of subsection (7), apply to the first entity as if it controlled any other entity that is controlled by the public entity. (9) The kinds of entities are: (a) a company *shares in which (except shares that carry the right to a fixed rate of *dividend) are listed for quotation in the official list of an *approved stock exchange; or (b) a *publicly traded unit trust; or (c) a *mutual insurance company; or (d) a *mutual affiliate company; or (e) a company (other than one covered by paragraph (a)) all the shares in which are beneficially owned by one or more of the following: (i) a company covered by paragraph (a); (ii) a publicly traded unit trust; (iii) a mutual insurance company; (iv) a mutual affiliate company. 6 Subsection 152‑305(3) Omit "(within the meaning of subsection 152‑30(6))", substitute "of a kind referred to in subsection 152‑30(9)". 7 Application of amendments The amendments made by this Schedule apply to CGT events happening after 11.45 am, by legal time in the Australian Capital Territory, on 21 September 1999. 8 Transitional: general (1) In this item and in item 9: assent day means the day on which this Act receives the Royal Assent. (2) The subsection 152‑30(5) of the Income Tax Assessment Act 1997 inserted by this Schedule applies to assessments for the 1999‑2000, 2000‑01 and 2001‑02 income years as if the reference to any of the 4 income years before the income year for which relief is sought for a CGT event under Division 152 of that Act were a reference to the income year for which that relief is sought. (3) The following subitems apply in relation to: (a) a CGT event that happened before the assent day; and (b) an entity who becomes eligible to make a choice under Division 152 of the Income Tax Assessment Act 1997 in relation to that event because of this Schedule. (4) Despite subsection 103‑25(1) of the Income Tax Assessment Act 1997, any such choice must be made by the entity by the latest of: (a) the day the entity lodges its income tax return for the income year in which the relevant CGT event happened; and (b) 12 months after the assent day; and (c) a later day allowed by the Commissioner of Taxation. (5) The period within which the entity must acquire a replacement asset as mentioned in subsection 152‑420(1) or (2) of the Income Tax Assessment Act 1997 ends on the latest of: (a) 2 years after the happening of the last CGT event in the income year for which the entity obtained the small business roll‑over; and (b) 12 months after the assent day; and (c) a later day allowed by the Commissioner of Taxation. (6) The period within which a replacement asset the entity acquires must be an active asset as mentioned in subsection 152‑420(4) of the Income Tax Assessment Act 1997 (if it is not an active asset when acquired) ends on the latest of: (a) 2 years after the happening of the last CGT event in the income year for which the entity obtained the small business roll‑over; and (b) 12 months after the assent day; and (c) a later day allowed by the Commissioner of Taxation. 9 Transitional: choice (1) This item applies to CGT events that happen no later than the end of the 2003‑04 income year. (2) Subject to subitem (3), an entity can choose that Division 152 of the Income Tax Assessment Act 1997 apply to such a CGT event as if the amendments made by this Schedule had not been made. (3) However, subsection 152‑30(6) inserted by item 4 of this Schedule applies to those CGT events. (4) A choice under this item must be made by the latest of: (a) the day the entity lodges its income tax return for the income year in which the relevant CGT event happened; and (b) 12 months after the assent day; and (c) a later day allowed by the Commissioner of Taxation. Schedule 4—Amendment of the Energy Grants (Credits) Scheme (Consequential Amendments) Act 2003 1 Subitem 1(1) of Schedule 7 Omit "This", substitute "Subject to subitem (1A), this". 2 Subitem 1(1) of Schedule 7 Omit "a person", substitute "an entity". 3 At the end of subitem 1(1) of Schedule 7 Add "as in force on 1 July 2003 (including as affected by regulations under that Act commencing on that day)". 4 Subitem 1(2) of Schedule 7 Repeal the subitem, substitute: (1A) This item does not apply if: (a) the on‑road alternative fuel is liquefied natural gas or biodiesel; or (b) the entity purchased or imported into Australia the off‑road diesel fuel before 1 July 2002 for a use mentioned in paragraph 53(4)(a) of the Energy Grants (Credits) Scheme Act 2003 as in force on 1 July 2003. (2) The Energy Grants (Credits) Scheme Act 2003 and regulations under that Act apply to fuel to which this item applies in the same way as they apply to on‑road diesel fuel, on‑road alternative fuel or off‑road diesel fuel purchased or imported into Australia on 1 July 2003. Note: The effect of subitem (2) will be to create entitlements to energy grants that, subject to subitem (3), can be claimed under section 15 of the Product Grants and Benefits Administration Act 2000. However, because of the claim period requirements in that section, a claim will not be able to be made more than 3 years after the actual time of purchase or importation of the fuel concerned. 5 Subitem 1(3) of Schedule 7 Omit "a person", substitute "an entity". 6 Subitem 1(3) of Schedule 7 Omit "the person" (wherever occurring), substitute "the entity". 7 No entitlements under original version of Schedule To avoid doubt, no entitlement to an energy grant arises under Schedule 7 to the Energy Grants (Credits) Scheme (Consequential Amendments) Act 2003 as in force before its amendment by this Schedule. 8 Recouping entitlement to certain energy grants where assessment made before commencement (1) If: (a) the amendments made by this Schedule have the effect of reducing (the amount of the reduction being the recoupment amount) an entity's entitlement to an energy grant (including to nil); and (b) before the time at which this item commenced (the commencement time), an assessment was made under section 17 of the Product Grants and Benefits Administration Act 2000 of the entity's entitlement to the energy grant; then: (c) the Commissioner of Taxation is not entitled to amend the assessment under section 20 of that Act to give effect to the reduction in the entitlement; but Note: However, the Commissioner is not prevented from amending the assessment for any other purpose. (d) the following entitlements of the entity: (i) entitlements to grants and benefits within the meaning of the Product Grants and Benefits Administration Act 2000 that arose before the commencement time, where an assessment was not made before that time under section 17 of that Act of the entity's entitlement to the grant or benefit; (ii) entitlements to grants and benefits, within the meaning of that Act, that, disregarding this item, arise at or after the commencement time; are reduced in accordance with the rules in subitem (2). (2) The rules are: (a) the entitlements are reduced, in the order in which they arose or arise, until the total amount of the reduction equals the recoupment amount; and (b) if 2 or more entitlements arose or arise at the same time, they are taken for the purposes of paragraph (a) to have arisen or to arise in the order determined by the Commissioner of Taxation. Schedule 5—Net input tax credits and capital gains tax Income Tax Assessment Act 1997 1 At the end of section 17‑10 Add: (2) However, the amount is not assessable income to the extent that, because it becomes a component of a *net input tax credit, a reduction is made under section 103‑30 (reduction of cost base etc. by net input tax credits). 2 At the end of section 27‑10 Add: (4) However, you cannot deduct an amount under subsection (1) or (3) to the extent that, because it becomes a component of a *net input tax credit, a reduction is made under section 103‑30 (reduction of cost base etc. by net input tax credits). 3 At the end of Division 103 Add: 103‑30 Reduction of cost base etc. by net input tax credits Reduce the *cost base and *reduced cost base of a *CGT asset, and any other amount that could be involved in the calculation of an entity's *capital gain or *capital loss, by the amount of any *net input tax credit of the entity in relation to that amount. Example: The other amount could be expenditure in the case of some CGT events (see, for example, CGT event D1). Note: Subsection 116‑20(5) deals with the effect of net GST on supplies for the purposes of capital proceeds. 4 Subsection 110‑25(1) (note) Omit "Note", substitute "Note 1". 5 At the end of subsection 110‑25(1) Add: Note 2: The cost base is reduced by net input tax credits: see section 103‑30. 6 Subsection 110‑45(3A) Repeal the subsection. 7 Subsection 110‑50(3A) Repeal the subsection. 8 At the end of subsection 110‑55(1) Add: Note: The reduced cost base is reduced by net input tax credits: see section 103‑30. 9 Application The amendments made by this Schedule apply to CGT events that happen after the end of the day the Bill for this Act was introduced into the Parliament. Schedule 6—Confidentiality of ABN information A New Tax System (Australian Business Number) Act 1999 1 Subparagraph 30(3)(c)(i) Omit all the words after "purposes of", substitute "carrying out functions of the Agency (within the meaning of that Act); or". 2 Subparagraph 30(3)(c)(vi) Omit all the words after "purposes of", substitute "carrying out functions of the Department; or". 3 Subparagraph 30(3)(d)(i) Omit all the words after "purposes of", substitute "carrying out functions of the Agency (within the meaning of that Act); or". 4 Subparagraph 30(3)(d)(iv) Omit all the words after "purposes of", substitute "carrying out functions of the Department; or". 5 Application of amendments The amendments of the A New Tax System (Australian Business Number) Act 1999 made by this Schedule apply in relation to disclosures made on or after 15 October 2001. Schedule 7—Deductions for contributions relating to fund‑raising events Part 1—Amendments Income Tax Assessment Act 1997 1 Subsection 20‑30(1) (after table item 1.8A) Insert: 1.8B item 7 of the table in section 30‑15 contributions relating to fund‑raising events 1.8C item 8 of the table in section 30‑15 contributions relating to fund‑raising auctions 2 Section 30‑15 (at the end of the table) Add: 7 A *deductible gift recipient that is a fund, authority or institution covered by item 1 or 2 of this table. A contribution of: (a) if the contribution is money—the amount of the contribution, reduced by the *GST inclusive market value, on the day you made the contribution, of the right to attend, or participate in, the fund‑raising event; or (a) if the contribution is money—the GST inclusive market value, on the day you made the contribution, of the right to attend, or participate in, the fund‑raising event must not exceed the lesser of: (a) money, if the amount is more than $250; or (b) if the contribution is property that you purchased during the 12 months before making the contribution—the lesser of:  10% of the amount of the contribution; and (b) property that you purchased during the 12 months before making the contribution, if the lesser of:  the market value of the property on the day you made the contribution; and  $100; and  the market value of the property on the day you made the contribution; and  the amount you paid for the property; (b) if the contribution is property that you purchased during the 12 months before making the contribution—the GST inclusive market value, on the day you made the contribution, of the right to attend, or participate in, the fund‑raising event must not exceed the lesser of:  the amount you paid for the property; reduced by the GST inclusive market value, on the day you made the contribution, of the right to attend, or participate in, the fund‑raising event; or  10% of the lesser of the market value of the property on the day you made the contribution and the amount you paid for the property; and is more than $250; or (c) if the contribution is property valued by the Commissioner at more than $5,000 and you did not purchase the property during the 12 months before making the contribution—the value of the property as determined by the Commissioner, reduced by the GST inclusive market value, on the day you made the contribution, of the right to attend, or participate in, the fund‑raising event.  $100; and (c) property valued by the Commissioner at more than $5,000, if you did not purchase the property during the 12 months before making the contribution; (c) if the contribution is property valued by the Commissioner at more than $5,000 and you did not purchase the property during the 12 months before making the contribution—the GST inclusive market value, on the day you made the contribution, of the right to attend, or participate in, the fund‑raising event must not exceed $100; and where: (d) if, instead of making the contribution, you had made a gift of money to the fund, authority or institution, and: (d) the contribution is not a gift; and  the amount of the gift had been more than $2; and (e) either:  the gift had been made for the same purpose for which funds were to be raised by the fund‑raising event;  the contribution is made in return for a right permitting you to attend, or participate in, a particular *fund‑raising event in Australia; or you could have deducted the gift under item 1 or 2 of this table; and  the contribution is made in return for a right permitting an individual (other than you) to attend, or participate in, a particular fund‑raising event in Australia. (e) you must be an individual; and (f) you cannot deduct more than 2 contributions in relation to the same fund‑raising event; and (g) if the property is to be valued by the Commissioner—the requirements of section 30‑212 are satisfied. 8 A *deductible gift recipient that is a fund, authority or institution covered by item 1 or 2 of this table. A contribution of money, if: The amount of the contribution, reduced by the *GST inclusive market value, on the day you made the contribution, of the goods or services. (a) the GST inclusive market value, on the day you made the contribution, of the goods or services must not exceed the lesser of: (a) the amount is more than $250; and  10% of the amount of the contribution; and (b) the contribution is not a gift; and  $100; and (c) you made the contribution by way of consideration for the supply of goods or services; and (b) if, instead of making the contribution, you had made a gift of money to the fund, authority or institution, and: (d) you made the contribution because you were the successful bidder at an auction that:  the amount of the gift had been more than $2; and  was a particular *fund‑raising event in Australia; or  the gift had been made for the same purpose for which funds were to be raised by the fund‑raising event;  was held at a particular fund‑raising event in Australia; and you could have deducted the gift under item 1 or 2 of this table; and (e) the amount of the contribution exceeds the *GST inclusive market value, on the day you made the contribution, of the goods or services. (c) you must be an individual. 3 At the end of section 30‑15 Add: (4) For the purposes of item 7 of the table in subsection (2), in working out the *GST inclusive market value of the right in question, disregard anything that would prevent or restrict conversion of the right to money. (5) For the purposes of item 8 of the table in subsection (2), in working out the *GST inclusive market value of the goods or services in question, disregard anything that would prevent or restrict conversion of the goods or services to money. 4 Paragraphs 30‑125(4)(a) and (b) After "gifts", insert ", or deductible contributions,". 5 After subsection 30‑125(4) Insert: (4A) For the purposes of subsection (4), if a contribution described in item 7 or 8 of the table in section 30‑15 is made in relation to a *fund‑raising event: (a) the contribution is a deductible contribution; and (b) the contribution is taken to have been made for the same purpose for which funds were raised by the fund‑raising event. 6 Subsection 30‑212(1) After "gift", insert "or contribution". 7 At the end of section 30‑228 (after the note) Add: (2) If a *deductible gift recipient issues a receipt for a contribution described in item 7 of the table in section 30‑15, the deductible gift recipient must ensure that the receipt states: (a) the name of the deductible gift recipient; and (b) the *ABN (if any) of the deductible gift recipient; and (c) the fact that the receipt is for a contribution made in return for a right to attend, or participate in, a specified *fund‑raising event; and (d) if the contribution is money—the amount of the contribution; and (e) the amount of the *GST inclusive market value, on the day the contribution was made, of the right to attend, or participate in, the fund‑raising event. (3) For the purposes of paragraph (2)(e), in working out the *GST inclusive market value of the right in question, disregard anything that would prevent or restrict conversion of the right to money. (4) If a *deductible gift recipient issues a receipt for a contribution described in item 8 of the table in section 30‑15, the deductible gift recipient must ensure that the receipt states: (a) the name of the deductible gift recipient; and (b) the *ABN (if any) of the deductible gift recipient; and (c) the fact that the receipt is for a contribution made by way of consideration for the supply of goods or services; and (d) the fact that the contribution was made because the contributor was the successful bidder at an auction that: (i) was a specified *fund‑raising event; or (ii) was held at a specified fund‑raising event; and (e) if the contribution is money—the amount of the contribution; and (f) the *GST inclusive market value, on the day the contribution was made, of the goods or services. (5) For the purposes of paragraph (4)(f), in working out the *GST inclusive market value of the goods or services in question, disregard anything that would prevent or restrict conversion of the goods or services to money. Note: The heading to section 30‑228 is altered by adding at the end "or contribution". 8 Subsection 30‑315(2) (after table item 51) Insert: 51AA Fund‑raising events—contributions items 7 and 8 of the table in section 30‑15 9 Subsection 995‑1(1) (paragraph (b) of the definition of apportionable deductions) Omit "item 1 or 2", substitute "item 1, 2, 7 or 8". 10 Subsection 995‑1(1) Insert: fund‑raising event has the meaning given by section 40‑165 of the A New Tax System (Goods and Services Tax) Act 1999, as modified by the omission of subparagraph 40‑165(1)(b)(i) of that Act. Income Tax Assessment Act 1936 11 Subsection 6(1) (paragraph (aa) of the definition of apportionable deductions) Omit "item 1 or 2", substitute "item 1, 2, 7 or 8". 12 Paragraph 6AD(3)(c) Omit "item 1, 2 or 3", substitute "item 1, 2, 3, 7 or 8". Part 2—Application of amendments 13 Application of amendments The amendments made by this Schedule apply in relation to contributions made on or after 1 July 2004. Schedule 8—Distributions to certain entities Part 1—Division 7A amendments Income Tax Assessment Act 1936 1 Section 109S Omit ", 109UA and 109UB", substitute "and 109UA". 2 Section 109UB Repeal the section. 3 After Subdivision E of Division 7A of Part III Insert: Subdivision EA—Unpaid present entitlements 109XA Payments, loans and debt forgiveness by a trustee in favour of a shareholder etc. of a private company with an unpaid present entitlement Payments (1) Section 109XB applies if: (a) a trustee makes a payment to a shareholder or an associate of a shareholder of a private company (except a shareholder or associate that is a company) (the actual transaction); and (b) the payment is a discharge of or a reduction in a present entitlement of the shareholder or associate that is wholly or partly attributable to an amount that is an unrealised gain; and (c) the company is presently entitled to an amount from the net income of the trust estate at the time the actual transaction takes place, and the whole of that amount has not been paid to the company before the earlier of the due date for lodgment and the date of lodgment of the trustee's return of income for the trust for the year of income of the trust in which the actual transaction takes place. Loans (2) Section 109XB applies if: (a) a trustee makes a loan to a shareholder or an associate of a shareholder of a private company (except a shareholder or associate that is a company) (the actual transaction); and (b) the company is presently entitled to an amount from the net income of the trust estate at the time the actual transaction takes place, and the whole of that amount has not been paid to the company before the earlier of the due date for lodgment and the date of lodgment of the trustee's return of income for the trust for the year of income of the trust in which the actual transaction takes place. Forgiven debts (3) Section 109XB applies if: (a) all or part of a debt owed to a trustee by a shareholder or an associate of a shareholder of a private company is forgiven (except where the shareholder or associate is a company) (the actual transaction); and (b) the company is presently entitled to an amount from the net income of the trust estate at the time the actual transaction takes place, and the whole of that amount has not been paid to the company before the earlier of the due date for lodgment and the date of lodgment of the trustee's return of income for the trust for the year of income of the trust in which the actual transaction takes place. Amount involved in the actual transaction (4) The amount involved in the actual transaction is the lesser of: (a) the amount actually involved in the actual transaction; and (b) the amount worked out using the formula: where: previous transactions means the sum of: (a) the amounts that, because of previous applications of section 109UB (as in force before the commencement of this section) have been taken to be loans; and (b) the amounts that, because of previous applications of this Subdivision, have been included in an entity's assessable income; in relation to the unpaid present entitlement. unpaid present entitlement means: (a) if the actual transaction is a payment—the amount of the present entitlement referred to in paragraph (1)(c) that remained unpaid on the earlier of the dates mentioned in that paragraph; and (b) if the actual transaction is a loan—the amount of the present entitlement referred to in paragraph (2)(b) that remained unpaid on the earlier of the dates mentioned in that paragraph; and (c) if the actual transaction is the forgiveness of a debt—the amount of the present entitlement referred to in paragraph (3)(b) that remained unpaid on the earlier of the dates mentioned in that paragraph. The amount of the actual transaction where the entitlement is only partly attributable to an unrealised gain (5) For the purposes of subsection (4), where the actual transaction was a payment and that payment was only partly attributable to an amount that is an unrealised gain, the amount of the actual transaction is taken to be the amount of the payment that was attributable to the amount that is the unrealised gain. Creation of a present entitlement is not a payment (6) The creation of a present entitlement to the capital or income of a trust estate is not, of itself, a payment for the purposes of this Subdivision. Meaning of unrealised gain (7) In this section: unrealised gain, in relation to a trust estate and an actual payment, means any unrealised gain, whether of a capital or income nature, but does not include an unrealised gain to the extent that it has been or would be included in the assessable income of the trust, apart from this Division, for: (a) a year of income before the year in which the actual payment was made; or (b) the year of income in which the actual payment was made; or (c) the year of income following the year in which the actual payment was made. 109XB Amounts included in assessable income (1) An amount is included, as if it were a dividend, in the assessable income of the shareholder or associate referred to in subsection 109XA(1), (2) or (3) if: (a) had the actual transaction been done by a private company (the notional company); and (b) had the shareholder or associate been a shareholder of the notional company at the time the actual transaction took place; an amount (the Division 7A amount) would have been included in the shareholder's or associate's assessable income because of a provision of this Division outside this Subdivision. (2) Subject to section 109Y, the amount that is included under subsection (1) is the Division 7A amount. Note: There are some modifications of this Division for the purposes of working out the Division 7A amount: see section 109XC. 109XC Modifications Modifications for this Subdivision only (1) The modifications in this section have effect for the purposes of the operation of this Subdivision. General modifications (2) This Division (but not this Subdivision) applies to an actual transaction done by a trustee of a trust estate with these modifications: (a) a reference (except in section 109Y) to an amount paid to a private company has effect as a reference to an amount paid to the trustee; and (b) a reference to a year of income of a private company has effect as a reference to the corresponding year of income of the trust estate; and (c) a reference to the ordinary course of a private company's business has effect as a reference to the ordinary course of the trust estate's business. Modified operation of section 109E (3) A loan referred to in this Subdivision that is made during a year of income of a trust estate is taken to have been fully repaid at the end of the year for the purposes of paragraph 109E(3)(a) if it is fully repaid by the earlier of the due date for lodgment and the date of lodgment of the trustee's return of income for the trust for that year of income of the trust. Modified operation of section 109J (4) Section 109J does not apply to a payment to the extent that it is a discharge of or a reduction in a present entitlement. Modified operation of section 109N (5) A loan referred to in this Subdivision is taken to have been made under a written agreement for the purposes of paragraph 109N(1)(a) if a written agreement is made in relation to the loan before the earlier of the due date for lodgment and the date of lodgment of the trustee's return of income for the trust for the year of income of the trust in which the loan was made. Modified operation of section 109R (6) For the purposes of applying section 109R to an actual transaction: (a) a reference in that section to obtaining a loan from a private company has effect as a reference to obtaining a loan from the trustee; and (b) a reference in that section to property transferred to a private company has effect as a reference to property transferred to the trustee; and (c) a reference in that section to an amount paid by a private company for a transfer of property has effect as a reference to an amount paid by the trustee for a transfer of property. Modified operation of section 109Y (7) Section 109Y applies to the Division 7A amount in this way: (a) assume that the private company referred to in subsection 109XA(1), (2) or (3) had been taken to have paid a dividend to the shareholder or associate referred to in that subsection equal to the Division 7A amount; and (b) assume that the dividend was taken to have been paid at the end of the year of income of the company in which the actual transaction took place; and (c) a reference in that section to a private company's distributable surplus has effect as a reference to the distributable surplus of the private company referred to in paragraph (a). Certain provisions do not apply (8) Subsection 109D(1A), sections 109K, 109NA and 109NB and paragraphs 109R(3)(a), (b) and (ba) do not apply to an actual transaction. 4 Paragraph 109XA(1)(c) Repeal the paragraph, substitute: (c) either: (i) the company is presently entitled to an amount from the net income of the trust estate at the time the actual transaction takes place, and the whole of that amount has not been paid to the company before the earlier of the due date for lodgment and the date of lodgment of the trustee's return of income for the trust for the year of income of the trust in which the actual transaction takes place; or (ii) the company becomes presently entitled to an amount from the net income of the trust estate after the actual transaction takes place, but before the earlier of the due date for lodgment and the date of lodgment of the trustee's return of income for the trust for the year of income of the trust in which the actual transaction takes place, and the whole of the amount has not been paid to the company before the earlier of those dates. 5 Paragraph 109XA(2)(b) Repeal the paragraph, substitute: (b) either: (i) the company is presently entitled to an amount from the net income of the trust estate at the time the actual transaction takes place, and the whole of that amount has not been paid to the company before the earlier of the due date for lodgment and the date of lodgment of the trustee's return of income for the trust for the year of income of the trust in which the actual transaction takes place; or (ii) the company becomes presently entitled to an amount from the net income of the trust estate after the actual transaction takes place, but before the earlier of the due date for lodgment and the date of lodgment of the trustee's return of income for the trust for the year of income of the trust in which the actual transaction takes place, and the whole of the amount has not been paid to the company before the earlier of those dates. 6 Paragraph 109XA(3)(b) Repeal the paragraph, substitute: (b) either: (i) the company is presently entitled to an amount from the net income of the trust estate at the time the actual transaction takes place, and the whole of that amount has not been paid to the company before the earlier of the due date for lodgment and the date of lodgment of the trustee's return of income for the trust for the year of income of the trust in which the actual transaction takes place; or (ii) the company becomes presently entitled to an amount from the net income of the trust estate after the actual transaction takes place, but before the earlier of the due date for lodgment and the date of lodgment of the trustee's return of income for the trust for the year of income of the trust in which the actual transaction takes place, and the whole of the amount has not been paid to the company before the earlier of those dates. 7 Subsection 109XA(4) (definition of unpaid present entitlement) Repeal the definition, substitute: unpaid present entitlement means: (a) in a case mentioned in subparagraph (1)(c)(i), (2)(b)(i) or (3)(b)(i)—the amount of the present entitlement that remained unpaid on the earlier of the dates mentioned in that subparagraph; and (b) in a case mentioned in subparagraph (1)(c)(ii), (2)(b)(ii) or (3)(b)(ii)—the amount of the present entitlement that remained unpaid on the earlier of the dates mentioned in that subparagraph. Part 2—Application 8 Application of items 1, 2 and 3 The amendments made by items 1, 2 and 3 of this Schedule apply to payments or loans made, or debts forgiven, on or after 12 December 2002. 9 Application of items 4, 5, 6 and 7 The amendments made by items 4, 5, 6 and 7 of this Schedule apply to payments or loans made, or debts forgiven, on or after the day on which the Bill for this Act was introduced into the House of Representatives. Schedule 9—Deductions for dividends on‑paid to non‑resident owners Income Tax Assessment Act 1936 1 Subsection 46F(1) (definition of group company) After "this Act", insert "as in force immediately before 1 July 2002". 2 Paragraph 46FA(1)(c) After "but for", insert "subsection 46AB(1) or 46AC(2) or". 3 Subsection 46FA(5) Repeal the subsection, substitute: Unfranked amount of flow‑on dividend unfrankable (5) Part 3‑6 of the Income Tax Assessment Act 1997 (the imputation system) applies to the unfranked amount of the flow‑on dividend as if it were an unfrankable distribution within the meaning of section 202‑45 of that Act if a deduction is allowed to the resident company in relation to the flow‑on dividend. 4 Subsection 46FA(11) (definition of fully‑franked dividend) Repeal the definition, substitute: fully‑franked dividend means a dividend whose franking percentage (within the meaning of section 203‑35 of the Income Tax Assessment Act 1997) is 100%. 5 Subsection 46FA(11) (definition of group company) After "160AFE", insert "as in force immediately before 1 July 2002". 6 Subsection 46FA(11) (definition of unfranked amount) Repeal the definition, substitute: unfranked amount of a dividend (including an unfrankable distribution within the meaning of section 202‑45 of the Income Tax Assessment Act 1997) means the amount of the dividend less the franked part. 7 Subsection 46FB(6) (definition of group company) After "160AFE", insert "as in force immediately before 1 July 2002". 8 Subsection 46FB(6) (definition of unfranked amount) Repeal the definition, substitute: unfranked amount of a dividend (including an unfrankable distribution within the meaning of section 202‑45 of the Income Tax Assessment Act 1997) means the amount of the dividend less the franked part. 9 Application (1) Subject to subitem (2), the amendment made by item 2 of this Schedule applies to dividends paid after 30 June 2003. (2) For a taxpayer to which section 46AC of the Income Tax Assessment Act 1936 applies, the amendment made by item 2 of this Schedule applies to dividends paid on or after the consolidation day referred to in that section. (3) The amendments made by items 1, 3, 4, 5, 6, 7 and 8 of this Schedule apply to dividends paid on or after 1 July 2002. Schedule 10—Endorsement of charities etc. Part 1—Amendments A New Tax System (Australian Business Number) Act 1999 1 Subsection 25(2) (note) Omit "Note", substitute "Note 1". 2 At the end of subsection 25(2) (after the note) Add: Note 2: Section 426‑65 in Schedule 1 to the Taxation Administration Act 1953 also requires the Registrar to make entries in the Australian Business Register about entities that are endorsed in the ways mentioned in that section. 3 After paragraph 26(3)(g) Insert: (ga) any statement required to be entered in the *Australian Business Register in relation to the entity under section 426‑65 in Schedule 1 to the Taxation Administration Act 1953; A New Tax System (Goods and Services Tax) Act 1999 4 After subsection 29‑40(2) Insert: (2A) Subsection (2) does not apply in relation to a charitable institution or a trustee of a charitable fund unless the institution or trustee is an *endorsed charitable institution or an *endorsed trustee of a charitable fund. Example: Subsection (2) does not apply in relation to an entity that is both a charitable institution and a gift‑deductible entity unless the entity is an endorsed charitable institution. 5 Subsection 29‑50(5) Omit "Paragraph (1)(a)", substitute "Subject to subsection (6), paragraph (1)(a)". 6 At the end of section 29‑50 Add: (6) Subsection (5) does not apply in relation to a charitable institution or a trustee of a charitable fund unless the institution or trustee is an *endorsed charitable institution or an *endorsed trustee of a charitable fund. Example: Subsection (5) does not apply in relation to an entity that is both a charitable institution and a gift‑deductible entity unless the entity is an endorsed charitable institution. 7 At the end of section 38‑250 Add: (3) Subsections (1) and (2) do not apply in relation to a charitable institution or a trustee of a charitable fund unless the institution or trustee is an *endorsed charitable institution or an *endorsed trustee of a charitable fund. Example: Subsections (1) and (2) do not apply in relation to an entity that is both a charitable institution and a gift‑deductible entity unless the entity is an endorsed charitable institution. 8 At the end of section 38‑255 Add: (2) Subsection (1) does not apply in relation to a charitable institution or a trustee of a charitable fund unless the institution or trustee is an *endorsed charitable institution or an *endorsed trustee of a charitable fund. Example: Subsection (1) does not apply in relation to an entity that is both a charitable institution and a gift‑deductible entity unless the entity is an endorsed charitable institution. 9 At the end of section 38‑270 Add: (2) Subsection (1) does not apply in relation to a charitable institution or a trustee of a charitable fund unless the institution or trustee is an *endorsed charitable institution or an *endorsed trustee of a charitable fund. Example: Subsection (1) does not apply in relation to an entity that is both a charitable institution and a gift‑deductible entity unless the entity is an endorsed charitable institution. 10 At the end of section 40‑160 Add: (2) Subsection (1) does not apply in relation to a charitable institution or a trustee of a charitable fund unless the institution or trustee is an *endorsed charitable institution or an *endorsed trustee of a charitable fund. Example: Subsection (1) does not apply in relation to an entity that is both a charitable institution and a gift‑deductible entity unless the entity is an endorsed charitable institution. 11 After subsection 48‑15(1) Insert: (1AA) Subparagraph (1)(e)(iii) does not apply in relation to a charitable institution or a trustee of a charitable fund unless the institution or trustee is an *endorsed charitable institution or an *endorsed trustee of a charitable fund. Example: Subparagraph (1)(e)(iii) does not apply in relation to an entity that is both a charitable institution and a gift‑deductible entity unless the entity is an endorsed charitable institution. 12 At the end of section 63‑5 Add: (3) Paragraph (2)(a) does not apply in relation to a charitable institution or a trustee of a charitable fund unless the institution or trustee is an *endorsed charitable institution or an *endorsed trustee of a charitable fund. Example: Paragraph (2)(a) does not apply in relation to an entity that is both a charitable institution and a gift‑deductible entity unless the entity is an endorsed charitable institution. 13 At the end of section 111‑18 Add: (2) Subsection (1) does not apply in relation to a charitable institution or a trustee of a charitable fund unless the institution or trustee is an *endorsed charitable institution or an *endorsed trustee of a charitable fund. Example: Subsection (1) does not apply in relation to an entity that is both a charitable institution and a gift‑deductible entity unless the entity is an endorsed charitable institution. 14 At the end of section 129‑45 Add: (2) Subsection (1) does not apply in relation to a charitable institution or a trustee of a charitable fund unless the institution or trustee is an *endorsed charitable institution or an *endorsed trustee of a charitable fund. Example: Subsection (1) does not apply in relation to an entity that is both a charitable institution and a gift‑deductible entity unless the entity is an endorsed charitable institution. 15 Before Division 177 Insert: Division 176—Endorsement of charitable institutions etc. 176‑1 Endorsement by Commissioner as charitable institution (1) The Commissioner must endorse an entity as a charitable institution if: (a) the entity is entitled to be endorsed as a charitable institution (see subsection (2)); and (b) the entity has applied for that endorsement in accordance with Division 426 in Schedule 1 to the Taxation Administration Act 1953. (2) An entity is entitled to be endorsed as a charitable institution if the entity: (a) is a charitable institution; and (b) has an *ABN. 176‑5 Endorsement by Commissioner as trustee of a charitable fund (1) The Commissioner must endorse an entity as a trustee of a charitable fund if: (a) the entity is entitled to be endorsed as a trustee of a charitable fund (see subsection (2)); and (b) the entity has applied for that endorsement in accordance with Division 426 in Schedule 1 to the Taxation Administration Act 195