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

Taxation Laws Amendment Act (No. 1) 2004 Act No. 101 of 2004 as amended This compilation was prepared on 6 July 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—Second World War payments Part 1—Amendments Income Tax Assessment Act 1936 Income Tax Assessment Act 1997 Part 2—Application of amendments Schedule 2—Specific gift recipients Income Tax Assessment Act 1997 Schedule 3—Gifts and covenants Income Tax Assessment Act 1997 Schedule 4—Amendment of the Crimes (Taxation Offences) Act 1980 Part 1—Clarifying application of Parts I and II of that Act Crimes (Taxation Offences) Act 1980 Part 2—Application of the Criminal Code Crimes (Taxation Offences) Act 1980 Schedule 5—Consolidation: transitional foreign loss makers Income Tax (Transitional Provisions) Act 1997 Schedule 6—Goods and services tax: interaction with consolidation regime A New Tax System (Goods and Services Tax) Act 1999 Schedule 7—Imputation for life insurance companies Income Tax Assessment Act 1997 Income Tax (Transitional Provisions) Act 1997 Schedule 8—Overseas forces tax offsets Income Tax Assessment Act 1936 Schedule 9—Roll‑over for FSR transitions Part 1—Amendments Income Tax Assessment Act 1997 Part 2—Application of amendments Schedule 10—Foreign hybrids Part 1—Amendment of the Income Tax Assessment Act 1936 Part 2—Amendment of the Income Tax Assessment Act 1997 Part 3—Amendment of the Income Tax (Transitional Provisions) Act 1997 Schedule 11—Technical amendments Part 1—Amendments commencing on 16 July 1999 Income Tax Assessment Act 1936 Part 2—Amendments commencing on 22 December 1999 Division 1—Withholding from mining payments Taxation Administration Act 1953 Division 2—Administrative penalties Taxation Administration Act 1953 Division 3—Correcting cross‑reference Taxation Administration Act 1953 Division 4—Interest on overpayments Taxation (Interest on Overpayments and Early Payments) Act 1983 Part 3—Amendments commencing on 30 June 2000 Division 1—Life assurance company definition Income Tax Assessment Act 1936 Income Tax Assessment Act 1997 Superannuation Contributions Tax (Assessment and Collection) Act 1997 Division 2—Disallowance of deductions Income Tax Assessment Act 1936 Division 3—Deductions for life assurance premiums Income Tax Assessment Act 1936 Part 4—Amendments commencing on 1 July 2000 Division 1—Mutual life assurance company definition Income Tax Assessment Act 1936 Income Tax Rates Act 1986 Division 2—Due date for income tax Income Tax Assessment Act 1936 Division 3—Repeal of various redundant provisions Income Tax Assessment Act 1936 Income Tax Assessment Act 1997 Division 4—SGIOs Income Tax Assessment Act 1936 Division 5—Registered organizations Income Tax Assessment Act 1936 Income Tax Assessment Act 1997 Superannuation Contributions Tax (Assessment and Collection) Act 1997 Superannuation Guarantee (Administration) Act 1992 Division 6—Miscellaneous amendments relating to repeal of Divisions 8 and 8A of Part III of the Income Tax Assessment Act 1936 Income Tax Assessment Act 1936 Division 7—Life assurance company definition in section 27A of the Income Tax Assessment Act 1936 Income Tax Assessment Act 1936 Superannuation Guarantee (Administration) Act 1992 Part 5—Amendment commencing on 30 June 2001 Taxation Administration Act 1953 Part 6—Amendments commencing on 1 July 2001 Income Tax Assessment Act 1936 Income Tax Assessment Act 1997 Part 7—Amendments commencing on Royal Assent Income Tax Assessment Act 1997 Income Tax Rates Act 1986 Income Tax (Transitional Provisions) Act 1997 Taxation Administration Act 1953 Part 8—Amendments commencing on Royal Assent or later Income Tax Assessment Act 1936 Taxation Administration Act 1953 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 Taxation Laws Amendment Act (No. 1) 2004. 2 Commencement (1) Each provision of this Act specified in column 1 of the table commences, or is taken to have commenced, on the day or at the time specified in column 2 of the table. 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 30 June 2004 2. Schedule 1 The day on which this Act receives the Royal Assent 30 June 2004 3. Schedule 2 30 June 2003 30 June 2003 4. Schedule 3 1 July 2003 1 July 2003 5. Schedule 4 The day after this Act receives the Royal Assent 1 July 2004 6. Schedule 5 Immediately after the commencement of Schedule 16 to the New Business Tax System (Consolidation and Other Measures) Act 2003 24 October 2002 7. Schedule 6 The day on which this Act receives the Royal Assent 30 June 2004 8. Schedule 7 Immediately after the commencement of Part 1 of Schedule 10 to the Taxation Laws Amendment Act (No. 6) 2003 30 June 2003 9. Schedules 8 and 9 The day on which this Act receives the Royal Assent 30 June 2004 10. Schedule 10 The day on which this Act receives the Royal Assent 30 June 2004 11. Schedule 11, Part 1 Immediately after the commencement of item 51 of Schedule 5 to the Taxation Laws Amendment Act (No. 2) 1999 16 July 1999 12. Schedule 11, Part 2 Immediately after the commencement of item 21 of Schedule 12 to the A New Tax System (Tax Administration) Act 1999 22 December 1999 13. Schedule 11, Part 3 Immediately after the start of 30 June 2000 30 June 2000 14. Schedule 11, Part 4 Immediately after the start of 1 July 2000 1 July 2000 15. Schedule 11, Part 5 Immediately after the commencement of item 61 of Schedule 1 to the Taxation Laws Amendment Act (No. 3) 2001 30 June 2001 16. Schedule 11, Part 6 Immediately after the start of 1 July 2001 1 July 2001 17. Schedule 11, Part 7 The day on which this Act receives the Royal Assent 30 June 2004 18. Schedule 11, Part 8 The later of: 30 June 2004 (paragraph (a) applies) (a) the start of the day on which this Act receives the Royal Assent; and (b) immediately after the start of the day on which the Taxation Laws Amendment Act (No. 4) 2003 receives the Royal Assent 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 is for additional information that is not part of this Act. This information may be included 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—Second World War payments Part 1—Amendments Income Tax Assessment Act 1936 1 After section 23AK Insert: 23AL Exemption of certain Second World War payments (1) A payment is exempt from income tax if: (a) the payment is received by an individual who is a resident of Australia; and (b) the payment is received from a source in a foreign country; and (c) the payment is not received directly or indirectly from an associate (within the meaning of section 318) of the recipient; and (d) the payment is in connection with: (i) any wrong or injury; or (ii) any loss of, or damage to, property; or (iii) any other detriment; that is suffered by the recipient or another individual as a result of: (iv) persecution by the National Socialist regime of Germany during the National Socialist period; or (v) persecution by any other enemy of the Commonwealth during the Second World War; or (vi) persecution by an enemy‑associated regime during the Second World War; or (vii) flight from persecution mentioned in subparagraph (iv), (v) or (vi); or (viii) participation in a resistance movement during the Second World War against forces of the National Socialist regime of Germany; or (ix) participation in a resistance movement during the Second World War against forces of any other enemy of the Commonwealth. Duration of Second World War (2) For the purposes of subsection (1), the duration of the Second World War includes: (a) the period immediately before the Second World War; and (b) the period immediately after the Second World War. Enemy‑associated regime (3) For the purposes of subsection (1), a regime is an enemy‑associated regime if, and only if, it was: (a) in alliance with; or (b) occupied by; or (c) effectively controlled by; or (d) under duress from; or (e) surrounded by; either or both of the following: (f) the National Socialist regime of Germany; (g) any other enemy of the Commonwealth. Legal personal representative etc. (4) Subsection (1) applies to a payment received by the legal personal representative of an individual in a corresponding way to the way in which that subsection would have applied if the payment had been received by the individual. (5) Subsection (1) applies to a payment received by: (a) the legal personal representative of a deceased individual; or (b) the trustee of a trust established by the will of a deceased individual; in a corresponding way to the way in which that subsection would have applied if: (c) the individual had not died; and (d) the payment had been received by the individual. Income Tax Assessment Act 1997 2 Section 11‑15 (table row relating to foreign aspects of income taxation) Before: resistance fighter and victim of wartime persecution, pension and etc. of 23(kca) insert: resistance fighter and victim of wartime persecution, payments to 23AL 3 At the end of section 118‑37 Add: (5) A *capital gain or *capital loss you make as a result of receiving a payment or property is disregarded if: (a) you are an individual who is an Australian resident; and (b) you receive the payment or property from a source in a foreign country; and (c) you do not receive the payment or property directly or indirectly from an *associate of yours; and (d) the payment or property you receive is in connection with: (i) any wrong or injury; or (ii) any loss of, or damage to, property; or (iii) any other detriment; that you, or another individual, suffered as a result of: (iv) persecution by the National Socialist regime of Germany during the National Socialist period; or (v) persecution by any other enemy of the Commonwealth during the Second World War; or (vi) persecution by an enemy‑associated regime during the Second World War; or (vii) flight from persecution mentioned in subparagraph (iv), (v) or (vi); or (viii) participation in a resistance movement during the Second World War against forces of the National Socialist regime of Germany; or (ix) participation in a resistance movement during the Second World War against forces of any other enemy of the Commonwealth. (6) For the purposes of subsection (5), the duration of the Second World War includes: (a) the period immediately before the Second World War; and (b) the period immediately after the Second World War. (7) For the purposes of subsection (5), a regime is an enemy‑associated regime if, and only if, it was: (a) in alliance with; or (b) occupied by; or (c) effectively controlled by; or (d) under duress from; or (e) surrounded by; either or both of the following: (f) the National Socialist regime of Germany; (g) any other enemy of the Commonwealth. (8) Subsection (5) applies to a payment or property received by the *legal personal representative of an individual in a corresponding way to the way in which that subsection would have applied if the payment or property had been received by the individual. (9) Subsection (5) applies to a payment or property received by: (a) the *legal personal representative of a deceased individual; or (b) the trustee of a trust established by the will of a deceased individual; in a corresponding way to the way in which that subsection would have applied if: (c) the individual had not died; and (d) the payment or property had been received by the individual. Part 2—Application of amendments 4 Application of amendments The amendments made by this Schedule apply to assessments for the 2001‑2002 income year and later income years. Schedule 2—Specific gift recipients Income Tax Assessment Act 1997 1 Subsection 30‑25(2) (at the end of the table) Add: 2.2.28 Australian‑American Educational Foundation the gift must be made after 30 April 2003 2.2.29 The Australian Literacy and Numeracy Foundation Limited the gift must be made after 11 October 2002 2.2.30 The Constitution Education Fund the gift must be made after 20 June 2003 2 Subsection 30‑45(2) (at the end of the table) Add: 4.2.21 Crime Stoppers Western Australia Limited the gift must be made after 31 October 2002 4.2.22 New South Wales Crime Stoppers Limited the gift must be made after 31 October 2002 4.2.23 Crime Stoppers Tasmania the gift must be made after 28 November 2002 4.2.24 Crime Stoppers Queensland Limited the gift must be made after 23 January 2003 4.2.25 Crime Stoppers Australia Ltd the gift must be made after 4 June 2003 4.2.26 Alcohol Education and Rehabilitation Foundation Limited the gift must be made after 5 June 2003 3 Subsection 30‑70(2) (table item 8.2.2) After "28 February 1999", insert "and before 4 February 2003". Schedule 3—Gifts and covenants Income Tax Assessment Act 1997 2 Subsection 30‑5(4B) Repeal the subsection, substitute: (4B) Subdivision 30‑DB allows you to spread deductions for certain gifts and covenants over up to 5 income years. 57 Subdivisions 30‑DB to 30‑DE Repeal the Subdivisions, substitute: Subdivision 30‑DB—Spreading certain gift and covenant deductions over up to 5 income years Guide to Subdivision 30‑DB 30‑246 What this Subdivision is about This Subdivision allows you to elect to spread deductions for certain gifts and covenants over up to 5 income years. There are some different requirements for environmental, heritage and cultural property gifts and conservation covenants. Table of sections Operative provisions 30‑247 Gifts and covenants for which elections can be made 30‑248 Making an election 30‑249 Effect of election 30‑249A Requirements—environmental property gifts 30‑249B Requirements—heritage property gifts 30‑249C Requirements—certain cultural property gifts 30‑249D Requirements—conservation covenants [This is the end of the Guide.] Operative provisions 30‑247 Gifts and covenants for which elections can be made (1) An election under this Subdivision may be made for a gift, made on or after 1 July 2003, that is: (a) a gift of: (i) money; or (ii) property valued by the Commissioner at more than $5,000; made to a fund, authority or institution covered by item 1 or 2 of the table in section 30‑15; or (b) a gift that is covered by item 4, 5 or 6 of the table in section 30‑15. (2) An election under this Subdivision may also be made for entering into a *conservation covenant, under Division 31, on or after 1 July 2003. 30‑248 Making an election (1) If you can deduct an amount: (a) under this Division for a gift covered by subsection 30‑247(1); or (b) under Division 31 for entering into a *conservation covenant covered by subsection 30‑247(2); you may make a written election to spread that deduction over the current income year and up to 4 of the immediately following income years. (2) In the election, you must specify the percentage (if any) of the deduction that you will deduct in each of the income years. (3) You must make the election before you lodge your *income tax return for the income year in which you made the gift or entered into the covenant. (4) You may vary an election at any time. However, the variation can only change the percentage that you will deduct in respect of income years for which you have not yet lodged an *income tax return. (5) Unless section 30‑249A, 30‑249B or 30‑249C applies, the election and any variation must be in the *approved form. Note: Sections 30‑249A, 30‑249B and 30‑249C provide for the form of elections and variations for gifts covered by those sections. 30‑249 Effect of election (1) In each of the income years you specified in the election, you can deduct the amount corresponding to the percentage you specified for that year. (2) You cannot deduct the amount that you otherwise would have been able to deduct for the gift in the income year in which you made the gift or entered into the covenant. 30‑249A Requirements—environmental property gifts (1) This section applies if you make an election for a gift of property made to a fund, authority or institution covered by section 30-55. (2) You must give a copy of the election to the *Environment Secretary before you lodge your *income tax return for the income year in which you made the gift. (3) If you vary the election, you must give a copy of the variation to the *Environment Secretary before you lodge your *income tax return for the first income year to which the variation applies. (4) The election and any variation must be in a form approved in writing by the *Environment Secretary. 30‑249B Requirements—heritage property gifts (1) This section applies if you make an election for a gift of property made to a fund, authority or institution covered by item 6 of the table in section 30-15. (2) You must give a copy of the election to the *Heritage Secretary before you lodge your *income tax return for the income year in which you made the gift. (3) If you vary the election, you must give a copy of the variation to the *Heritage Secretary before you lodge your *income tax return for the first income year to which the variation applies. (4) The election and any variation must be in a form approved in writing by the *Heritage Secretary. 30‑249C Requirements—certain cultural property gifts (1) This section applies if you make an election for a gift covered by item 4 or 5 of the table in section 30‑15. (2) You must give a copy of the election to the *Arts Secretary before you lodge your *income tax return for the income year in which you made the gift. (3) If you vary the election, you must give a copy of the variation to the *Arts Secretary before you lodge your *income tax return for the first income year to which the variation applies. (4) The election and any variation must be in a form approved in writing by the *Arts Secretary. 30‑249D Requirements—conservation covenants (1) This section applies if you make an election for a *conservation covenant. (2) You must give a copy of the election to the *Environment Secretary before you lodge your *income tax return for the income year in which you entered the covenant. (3) If you vary the election, you must give a copy of the variation to the *Environment Secretary before you lodge your *income tax return for the first income year to which the variation applies. 61 Subsection 30‑315(2) (cell at table item 112AA, column headed "Provision") Repeal the cell, substitute: Subdivision 30‑DB 63 Subsection 31‑5(3) (note) Omit "30‑DE", substitute "30‑DB". 72 Transitional—Division 30 of the Income Tax Assessment Act 1997 (1) Despite the amendments made by this Schedule, Division 30 of the Income Tax Assessment Act 1997 continues to apply, in relation to gifts made before 1 July 2003, as if those amendments had not been made. (2) Despite the amendments made by this Schedule, Subdivision 30DE of the Income Tax Assessment Act 1997 continues to apply, in relation to covenants entered into under Division 31 of that Act before 1 July 2003, as if those amendments had not been made. Schedule 4—Amendment of the Crimes (Taxation Offences) Act 1980 Part 1—Clarifying application of Parts I and II of that Act Crimes (Taxation Offences) Act 1980 1 Paragraph 3(2)(a) Before "sales tax" (wherever occurring), insert "old". 2 Paragraphs 13(1)(a), (b) and (d) Before "sales tax", insert "old". 3 Paragraphs 14(1)(a), (b) and (d) Before "sales tax", insert "old". 4 Paragraphs 15(1)(a), (b) and (d) Before "sales tax", insert "old". 5 Paragraphs 16(1)(a), (b) and (d) Before "sales tax", insert "old". 6 Paragraphs 17(1)(a), (b) and (d) Before "sales tax", insert "old". 7 Paragraphs 18(1)(a), (b) and (d) Before "sales tax", insert "old". 8 Paragraphs 19(1)(a), (b) and (d) Before "sales tax", insert "old". 9 Paragraphs 20(1)(a), (b) and (d) Before "sales tax", insert "old". 10 Application Each amendment made by this Part applies in relation to acts and omissions happening after this Part commences. Part 2—Application of the Criminal Code Crimes (Taxation Offences) Act 1980 11 Paragraphs 3(2)(a) and (b) Omit "purpose, or a purpose,", substitute "intention". 12 Subsection 5(1) Omit "for the purpose, or for purposes which include the purpose,", substitute "with the intention". 13 Paragraph 5(2)(a) Omit "for the purpose, or for purposes which include the purpose,", substitute "with the intention". 14 At the end of section 5 Add: Penalty: Imprisonment for 10 years or 1,000 penalty units, or both. 15 Subsection 6(1) Omit "for the purpose, or for purposes which include the purpose,", substitute "with the intention". 16 Paragraph 6(2)(a) Omit "for the purpose, or for purposes which include the purpose", substitute "with the intention". 17 At the end of section 6 Add: Penalty: Imprisonment for 10 years or 1,000 penalty units, or both. 18 At the end of subsections 7(1) and (2) Add: Penalty: Imprisonment for 10 years or 1,000 penalty units, or both. 19 Paragraph 7(3)(b) Omit "for the purpose, or for purposes which include the purpose", substitute "with the intention". 20 At the end of section 8 Add: Penalty: Imprisonment for 10 years or 1,000 penalty units, or both. 21 Subsection 9(1) Repeal the subsection. Note: The heading to section 9 is altered by omitting "Penalties" and substituting "Prosecutions and convictions". 22 Subsections 13(2), 14(2), 15(2), 16(2), 17(2), 18(2), 19(2) and 20(2) Omit "purpose, or a purpose," (wherever occurring), substitute "intention". 23 Application Each amendment made by this Part applies in relation to acts and omissions happening after this Part commences. Schedule 5—Consolidation: transitional foreign loss makers Income Tax (Transitional Provisions) Act 1997 1 After Division 701C Insert: Division 701D—Transitional foreign loss makers Table of Subdivisions 701D‑A Object of this Division 701D‑B Membership rules allowing transitional foreign loss makers to remain outside consolidated group Subdivision 701D‑A—Object of this Division Table of sections 701D‑1 Object of this Division 701D‑1 Object of this Division (1) The object of this Division is to allow an entity that is a potential subsidiary member of a consolidated group to utilise an overall foreign loss during a transitional period, rather than have the head company utilise the loss subject to the restrictions in Subdivision 707‑C of the Income Tax Assessment Act 1997. (2) Therefore, this Division allows the head company to prevent the entity from being a subsidiary member of the group, for a transitional period. [The next section is section 701D‑10.] Subdivision 701D‑B—Rules allowing transitional foreign loss makers to remain outside consolidated group Table of sections 701D‑10 Transitional foreign loss maker not member of group if certain conditions satisfied 701D‑15 Choice to apply transitional rules to entity 701D‑10 Transitional foreign loss maker not member of group if certain conditions satisfied (1) The Income Tax Assessment Act 1997 and this Act have effect as if an entity (the transitional foreign loss maker) is not a subsidiary member of a consolidated group at a particular time (the transitional time) if: (a) the group came into existence at a particular time (the formation time) before 1 July 2004; and (b) apart from this section, the transitional foreign loss maker would be a subsidiary member of the group at the transitional time; and (c) the transitional time is not later than 3 years after the formation time; and (d) the head company of the group has made a choice under section 701D‑15 to apply this section to the transitional foreign loss maker; and (e) the continuous ownership condition in subsection (2) is satisfied; and (f) the foreign loss condition in subsection (3) is satisfied; and (g) the no‑subsidiary condition in subsection (4) is satisfied. Continuous ownership condition (2) The continuous ownership condition is satisfied if the transitional foreign loss maker was a wholly‑owned subsidiary of the entity that became the head company of the group throughout the period: (a) beginning at the start of 1 July 2002; and (b) ending at the transitional time. Foreign loss condition (3) The foreign loss condition is satisfied if: (a) the transitional foreign loss maker incurred an overall foreign loss (as defined in section 160AFD of the Income Tax Assessment Act 1936) in respect of the 2001‑02 income year or an earlier income year; and (b) the amount of the overall foreign loss has not been fully taken into account under one or more applications of section 160AFD of the Income Tax Assessment Act 1936 to the transitional foreign loss maker in relation to an income year or income years ending before the transitional time; and (c) assuming that the transitional foreign loss maker had become a subsidiary member of a consolidated group at the formation time, as a result all or part of the overall foreign loss would have been transferred at that time to the head company of the group under Division 707 of the Income Tax Assessment Act 1997. No‑subsidiary condition (4) The no‑subsidiary condition is satisfied if, at the transitional time: (a) the transitional foreign loss maker does not hold any membership interests in any other entity; or (b) both of the following conditions are satisfied: (i) the transitional foreign loss maker holds one or more membership interests in one or more other entities; (ii) assuming that the head company of the group (rather than the transitional foreign loss maker) held that interest or those interests, none of those other entities would be a subsidiary member of the group. Transitional foreign loss maker stays in consolidatable group (5) To avoid doubt, subsection (1) does not prevent the transitional foreign loss maker from being a member of a consolidatable group at the transitional time for the purposes of: (a) paragraph 126‑50(6)(b) of the Income Tax Assessment Act 1997; and (b) paragraphs 170‑5(2A)(b) and 170‑105(2A)(b) of that Act; and (c) subparagraph 820‑599(2)(c)(iii) of that Act. 701D‑15 Choice to apply transitional rules to entity (1) The head company of a consolidated group may make a choice in the approved form to apply section 701D‑10 to another entity. (2) However, the head company cannot make that choice if subsection 701D‑10(1) previously prevented the entity from being a subsidiary member of a consolidated group. (3) The choice must be made by the later of: (a) the end of the period described in subsection 703‑50(3) of the Income Tax Assessment Act 1997 for giving the Commissioner the choice under section 703‑50 of that Act that the group is taken to be consolidated; and (b) 30 days after the Taxation Laws Amendment Act (No. 1) 2004 received the Royal Assent. (4) The choice cannot be revoked. 2 After paragraph 707‑325(1)(c) Insert: (ca) neither the real loss‑maker nor the value donor has been, at any time before the initial transfer time, a transitional foreign loss maker prevented by subsection 701D‑10(1) from being a subsidiary member of a consolidated group; and 3 After paragraph 707‑350(1)(d) Insert: (da) the real loss‑maker has not been, at any time before the initial transfer time, a transitional foreign loss maker prevented by subsection 701D‑10(1) from being a subsidiary member of a consolidated group; and 4 At the end of Subdivision 719‑B Add: 719‑15 Modified effect of subsection 701D‑10(2) (1) This section applies if the group mentioned in subsection 701D‑10(2) of this Act is a MEC group. (2) For the purposes of that subsection, in determining whether an entity was at a particular time (the ownership time) a wholly‑owned subsidiary of the entity that became the head company of the group (the head entity), make the assumption in subsection (3). (3) The assumption is that the head entity owned at the ownership time each membership interest covered by subsection (4). (4) A membership interest is covered by this subsection if it was beneficially owned at the ownership time by any entity that became an eligible tier‑1 company of the group at the formation time. Schedule 6—Goods and services tax: interaction with consolidation regime A New Tax System (Goods and Services Tax) Act 1999 1 At the end of Division 110 Add: 110‑15 Supplies under operation of consolidated group regime (1) A supply is not a *taxable supply to the extent that it occurs because of the operation of these provisions: (a) Part 3‑90 of the *ITAA 1997; (b) Part 3‑90 of the Income Tax (Transitional Provisions) Act 1997. (2) Without limiting the scope of subsection (1), for the purposes of that subsection, the operation mentioned in that subsection includes an operation that results from: (a) a choice made under the provisions mentioned in that subsection; or (b) any other voluntary action provided for by those provisions. (3) This section has effect despite section 9‑5 (which is about what are taxable supplies). 110‑20 Tax sharing agreements—entering into agreement etc. (1) This section applies if: (a) an entity makes a supply because it enters into or becomes a party to an agreement; and (b) the agreement satisfies the requirements of subsections 721‑25(1) and (2) of the *ITAA 1997 in relation to an existing or future *group liability of the *head company of a *consolidated group or *MEC group. (2) The supply is not a *taxable supply to the extent that it relates to the fact that the agreement satisfies those requirements. (3) This section has effect despite section 9‑5 (which is about what are taxable supplies). 110‑25 Tax sharing agreements—leaving group clear of group liability (1) A supply made to a *TSA contributing member of a *consolidated group or a *MEC group is not a *taxable supply if: (a) the supply is a release from an obligation relating to a *contribution amount in relation to a *group liability of the *head company of the group; and Example: The obligation could be a contractual obligation created by the agreement under which the contribution amount was determined. (b) the TSA contributing member has, for the purposes of subsection 721‑30(3) of the *ITAA 1997, left the group clear of the group liability. Note: See section 721‑35 of the ITAA 1997 for when a TSA contributing member has left a group clear of the group liability. (2) This section has effect despite section 9‑5 (which is about what are taxable supplies). 110‑30 Tax funding agreements (1) This section applies if: (a) an entity makes a supply because it enters into or becomes a party to a written agreement; and (b) the agreement deals with the distribution of economic burdens and benefits directly related to *tax‑related liabilities mentioned in subsection 721‑10(2) of the *ITAA 1997 of the *head company of a *consolidated group or *MEC group, among *members and former members of the group; and (c) if the group is not in existence when the entity enters into or becomes a party to the agreement—the agreement contemplates that the parties to the agreement will become members of the group when it does come into existence; and (d) the agreement complies with the requirements (if any) set out in the regulations. (2) The supply is not a *taxable supply to the extent that it relates to the fact that the agreement deals with the distribution mentioned in paragraph (1)(b). (3) Without limiting paragraph (1)(b), the agreement deals with the distribution mentioned in that paragraph if it includes one or more of the following kinds of provisions: (a) provisions for *members or former members of the group to contribute towards payment of *tax‑related liabilities mentioned in subsection 721‑10(2) of the *ITAA 1997 of the *head company of the group; (b) provisions for payments to be made to a member or former member of the group in recognition of activities or attributes of that member that have the effect of reducing the amount of those liabilities. (4) This section has effect despite section 9‑5 (which is about what are taxable supplies). 2 Section 195‑1 Insert: consolidated group has the meaning given by section 703‑5 of the *ITAA 1997. 3 Section 195‑1 Insert: contribution amount has the meaning given by paragraph 721‑25(1)(b) of the *ITAA 1997. 4 Section 195‑1 Insert: group liability of a *head company of a *consolidated group or a *MEC group has the meaning given by paragraph 721‑10(1)(a) of the *ITAA 1997. 5 Section 195‑1 Insert: head company of a *consolidated group or a *MEC group has the meaning given by subsection 995‑1(1) of the *ITAA 1997. 6 Section 195‑1 Insert: MEC group has the meaning given by section 719‑5 of the *ITAA 1997. 7 Section 195‑1 (at the end of the definition of member) Add: ; or (c) in relation to a *consolidated group—has the meaning given by section 703‑15 of the *ITAA 1997. 8 Section 195‑1 (note at the end of the definition of taxable supply) After "110‑10", insert ", 110‑15, 110‑20, 110‑25, 110‑30". 9 Section 195‑1 Insert: tax‑related liability has the meaning given by section 255‑1 in Schedule 1 to the Taxation Administration Act 1953. 10 Section 195‑1 Insert: TSA contributing member of a *consolidated group or a *MEC group has the meaning given by paragraph 721‑25(1)(a) of the *ITAA 1997. 11 Application The amendments made by this Schedule apply, and are taken to have applied, in relation to net amounts for tax periods starting, or that started, on or after 1 July 2002. Schedule 7—Imputation for life insurance companies Income Tax Assessment Act 1997 1 Section 205‑15 (table item 4) Omit "at the end of the income year of the last partnership or trust interposed between the entity and the corporate tax entity that made the distribution", substitute "at the time specified in subsection (2)". 2 At the end of section 205‑15 Add: (2) A *franking credit covered by item 4 of the table arises at the end of the income year: (a) that is an income year of the last *partnership or trust interposed between: (i) the entity; and (ii) the *corporate tax entity that made the distribution; and (b) during which the *franked distribution *flows indirectly to the entity. 3 Subsection 205‑25(1) Repeal the subsection, substitute: (1) An entity satisfies the residency requirement for an income year in which, or in relation to which, an event specified in a relevant table occurs if: (a) the entity is a *company, or a *corporate limited partnership, to which at least one of the following subparagraphs applies: (i) the entity is an *Australian resident for more than one half of the 12 months immediately preceding the event if the event occurs before the end of the income year; (ii) the entity is an Australian resident at all times during the income year when the entity exists if the event occurs at or after the end of the income year; (iii) the entity is an Australian resident for more than one half of the income year (whether or not the event occurs before the end of the income year); or (b) the entity is a *corporate unit trust for the income year; or (c) the entity is a *public trading trust for the income year. 4 Link note before Division 220 Repeal the link note, substitute: Division 219—Imputation for life insurance companies Table of Subdivisions Guide to Division 219 219‑A Application of imputation rules to life insurance companies 219‑B Franking accounts of life insurance companies Guide to Division 219 219‑1 What this Division is about This Division sets out how the imputation rules are applied to a life insurance company. Subdivision 219‑A—Application of imputation rules to life insurance companies Table of sections 219‑10 Application of imputation rules to life insurance companies 219‑10 Application of imputation rules to life insurance companies (1) This Part (except this Division) applies to a *life insurance company in the same way as it applies to any other company. (2) However, that application is subject to the modifications set out in this Division. Subdivision 219‑B—Franking accounts of life insurance companies Table of sections 219‑15 Franking credits 219‑30 Franking debits 219‑40 Residency requirement 219‑45 Assessment day 219‑50 Amount attributable to shareholders' share of income tax liability 219‑55 Adjustment resulting from an amended assessment 219‑15 Franking credits (1) The table in section 205‑15 does not apply to a *life insurance company. (2) The following table sets out when a *franking credit arises under this section in the *franking account of a *life insurance company. Franking credits in the franking account Item If: A credit of: Arises: 1 the company *pays a PAYG instalment; and that part of the payment that: on the day on which the payment is made (see note 1 to this subsection) the company satisfies the *residency requirement for the income year in relation to which the PAYG instalment is paid; and (a) the company estimates will be attributable to the *shareholders' share of the income tax liability of the company for that income year; and the payment is made before the company's *assessment day for that income year; and (b) is attributable to the period during which the company was a franking entity the company is a *franking entity for the whole or part of the relevant *PAYG instalment period 2 the company *paid a PAYG instalment; and that part of the payment that is attributable to: on the company's assessment day for that income year (see note 1 to this subsection) the company satisfied the *residency requirement for the income year in relation to which the PAYG instalment was paid; and (a) the *shareholders' share of the income tax liability of the company for that income year; and the payment was made before the company's *assessment day for that income year; and (b) the period during which the company was a franking entity the company was a *franking entity for the whole or part of the relevant *PAYG instalment period 3 the company *pays a PAYG instalment; and that part of the payment that is attributable to: on the day on which the payment is made the company satisfies the *residency requirement for the income year in relation to which the PAYG instalment is paid; and (a) the *shareholders' share of the income tax liability of the company for that income year; and the payment is made on or after the company's *assessment day for that income year; and (b) the period during which the company was a franking entity the company is a *franking entity for the whole or part of the relevant *PAYG instalment period 4 the company *pays income tax; and that part of the payment that is attributable to: on the day on which the payment is made the company satisfies the *residency requirement for the income year for which the tax is paid; and (a) the *shareholders' share of the income tax liability of the company for that income year; and the company is a *franking entity for the whole or part of that income year (b) the period during which the company was a franking entity 5 a *franked distribution is made to the company; and the amount of the tax offset on the day on which the distribution is made the company satisfies the *residency requirement for the income year in which the distribution is made; and the company is a *franking entity when it receives the distribution; and the company is entitled to a *tax offset under Division 207 because of the distribution; and the tax offset is not subject to the refundable tax offset rules in Division 67 6 a *franked distribution *flows indirectly to the company through a *partnership or trust; and the amount of the tax offset at the time specified in subsection (3) the company is a *franking entity when the franked distribution is made; and the company is entitled to a *tax offset under Division 207 because of the distribution; and the tax offset is not subject to the refundable tax offset rules in Division 67 7 the company incurs a liability to pay *franking deficit tax under section 205‑45 or 205‑50 the amount of the liability immediately after the liability is incurred Note 1: On the assessment day, a franking credit that arose under item 1 of the table: * is reversed by a franking debit that arises under item 1 of the table in section 219‑30; and * is replaced with a franking credit that arises under item 2 of the table in this section. Note 2: Section 219‑50 tells you how to work out the part of an amount that is attributable to the shareholders' share of the income tax liability of the company for the income year. Note 3: To find out whether a tax offset under Division 207 is subject to the refundable tax offset rules: see section 67‑25. (3) A *franking credit covered by item 6 of the table arises at the end of the income year: (a) that is an income year of the last *partnership or trust interposed between: (i) the *life insurance company; and (ii) the *corporate tax entity that made the distribution; and (b) during which the *franked distribution *flows indirectly to the life insurance company. 219‑30 Franking debits (1) The table in section 205‑30 (except item 2) applies to a *life insurance company in the same way as it applies to any other company. (2) The following table sets out when a *franking debit arises under this section in the *franking account of a *life insurance company. Franking debits in the franking account Item If: A debit of: Arises: 1 a *franking credit arises for the company under item 1 of the table in section 219‑15 (*payment of a PAYG instalment) the amount of the franking credit on the company's *assessment day for the income year mentioned in that item 2 the company *receives a refund of income tax; and that part of the refund that is attributable to: on the day on which the refund is received the company satisfies the *residency requirement for the income year to which the refund relates; and (a) the *shareholders' share of the income tax liability of the company for that income year; and the company was a *franking entity for the whole or part of that income year (b) the period during which the company was a franking entity Note 1: On the assessment day, a franking debit that arises under item 1 of this table reverses the effect of a franking credit that arose under item 1 of the table in section 219‑15. Note 2: Section 219‑50 tells you how to work out the part of an amount that is attributable to the shareholders' share of the income tax liability of the company for the income year. 219‑40 Residency requirement The tables in sections 219‑15 and 219‑30 are relevant for the purposes of subsection 205‑25(1) (about the residency requirement). 219‑45 Assessment day A *life insurance company's assessment day for an income year is the earlier of: (a) the day on which the company furnishes its *income tax return for that income year; or (b) the day on which the Commissioner makes an assessment of the amount of the company's taxable income for that income year under section 166 of the Income Tax Assessment Act 1936. 219‑50 Amount attributable to shareholders' share of income tax liability (1) Subsection (2) applies to a *life insurance company in relation to the payment or refund mentioned in an item of a table in this Subdivision (except item 1 of the table in section 219‑15). (2) For the purposes of this Part, the part of the payment or refund that is attributable to the *shareholders' share of the income tax liability of the company for an income year must be worked out as follows: Method statement Step 1. Work out the part of the company's total income tax liability for the income year that is attributable to the company's shareholders. The result of this step is the shareholders' share of the income tax liability of the company for the income year. Step 2. Divide the step 1 result by that total income tax liability. The result of this step is the shareholders' ratio for the income year. Step 3. Multiply the amount of the payment or refund by the *shareholders' ratio. The result of this step is the part of the payment or refund that is attributable to the *shareholders' share of the income tax liability of the company for the income year. (3) For the purposes of this Part, the estimate mentioned in item 1 of the table in section 219‑15 (the part of a payment estimated to be attributable to the *shareholders' share of a company's income tax liability for an income year) must be worked out on the basis of: (a) subject to paragraph (b), the method statement in subsection (2); and (b) the company's reasonable estimate of the amounts that, on the company's *assessment day for the income year, will be: (i) its total income tax liability for the income year; and (ii) the part of that total income tax liability that is attributable to its shareholders. (4) In working out the part of the income tax liability of a *life insurance company that is attributable to the shareholders of the company for the purposes of this section, regard is to be had to the accounting records of the company. 219‑55 Adjustment resulting from an amended assessment (1) This section applies in relation to the *franking account of a *life insurance company if: (a) the assessment of the company's income tax liability for an income year is amended on a particular day (the adjustment day); and (b) the *shareholders' ratio (the new ratio) based on the amended assessment is different from the shareholders' ratio used previously in relation to that income year to work out a *franking credit or *franking debit for the company; and (c) the franking account would have a different balance on the adjustment day if the new ratio had been used to work out all the franking credits and franking debits covered by paragraph (b). (2) On the adjustment day, a *franking credit or *franking debit (as appropriate) of the amount worked out under subsection (3) arises in the *franking account. (3) The amount is an adjustment that will bring the *franking account to the balance that it would have on the adjustment day if the new ratio had been used to work out all the *franking credits and *franking debits covered by paragraph (1)(b). Example: On the basis of a shareholders' ratio of 60% for the income year, franking credits of the amounts of $6,000, $6,000, $6,000 and $6,000 arose under item 2 of the table in section 219‑15 for Company X. An amended assessment results in a new shareholders' ratio of 70%. Under this section, a franking credit of $4,000 arises on the day of the amended assessment to bring the balance of the franking account from $24,000 to $28,000, which would be the account's balance if the new shareholders' ratio had been used. 5 Subsection 995‑1(1) Insert: assessment day for an income year of a *life insurance company has the meaning given by section 219‑45. 6 Subsection 995‑1(1) Insert: shareholders' ratio for an income year of a *life insurance company has the meaning given by section 219‑50. 7 Subsection 995‑1(1) Insert: shareholders' share of the income tax liability of a *life insurance company for an income year has the meaning given by section 219‑50. 8 Application Subject to the rules on the application of Part 3‑6 of the Income Tax Assessment Act 1997 set out in the Income Tax (Transitional Provisions) Act 1997, the amendments made by items 1 to 7 apply to events that occur on or after 1 July 2002. Income Tax (Transitional Provisions) Act 1997 9 Before Division 220 Insert: Division 219—Imputation for life insurance companies Table of sections 219‑40 Reversing and replacing (on tax paid basis) certain franking credits that arose before 1 July 2002 219‑45 Reversing (on tax paid basis) certain franking debits that arose before 1 July 2002 219‑40 Reversing and replacing (on tax paid basis) certain franking credits that arose before 1 July 2002 (1) This section applies if: (a) a franking credit arose before 1 July 2002 in the franking account of a life insurance company under section 160APVJ of the Income Tax Assessment Act 1936 in relation to a PAYG instalment in respect of an income year; and (b) the company's assessment day (the assessment day) for that income year occurs on or after 1 July 2002; and (c) the company has a franking account (the new franking account) under section 205‑10 of the Income Tax Assessment Act 1997. (2) A franking debit of the amount worked out in accordance with the following formula is taken to have arisen in the new franking account on the assessment day: where: amount of the 1936 Act credit means the amount of the franking credit mentioned in paragraph (1)(a). (3) On the assessment day, a franking credit of the amount mentioned in item 2 of the table in section 219‑15 of the Income Tax Assessment Act 1997 arises in the new franking account in relation to a payment of the PAYG instalment mentioned in paragraph (1)(a) of this section that was made before 1 July 2002. Note: On the assessment day, the franking credit mentioned in paragraph (1)(a) is therefore: * reversed by the franking debit arising under subsection (2); and * replaced with a franking credit arising under subsection (3). 219‑45 Reversing (on tax paid basis) certain franking debits that arose before 1 July 2002 (1) This section applies if: (a) a franking debit arose before 1 July 2002 in the franking account of a life insurance company under section 160AQCNCE of the Income Tax Assessment Act 1936 in relation to a PAYG instalment variation credit in respect of an income year; and (b) the company's assessment day (the assessment day) for that income year occurs on or after 1 July 2002; and (c) the company has a franking account (the new franking account) under section 205‑10 of the Income Tax Assessment Act 1997. (2) A franking credit of the amount worked out in accordance with the following formula is taken to have arisen in the new franking account on 1 July 2002: where: amount of the 1936 Act debit means the amount of the franking debit mentioned in paragraph (1)(a). Note: As the effects of sections 160AQCNCE and 160APVN of the Income Tax Assessment Act 1936 are not duplicated in the Income Tax Assessment Act 1997, this section ensures that a debit arising under section 160AQCNCE before 1 July 2002 is reversed on a tax paid basis on that date if it has not been reversed under section 160APVN before that date. Schedule 8—Overseas forces tax offsets Income Tax Assessment Act 1936 1 At the end of subsection 23AB(8A) Add "or 23AG". 2 Subsection 79B(3A) Omit "or 23AD", substitute ", 23AD or 23AG". 3 Application The amendments made by this Schedule apply in respect of service performed on or after 1 July 2001. Schedule 9—Roll‑over for FSR transitions Part 1—Amendments Income Tax Assessment Act 1997 1 Section 108‑50 (note) Omit "and section 124‑725 (about a roll‑over for a prospecting or mining entitlement)", insert ", section 124‑725 (about a roll‑over for a prospecting or mining entitlement) and sections 124‑895, 124‑915 and 124‑920 (about roll‑overs for FSR transitions)". 2 Subsection 108‑75(2) (cell at table item 3, column headed "Roll‑over is obtained under this provision:") Repeal the cell, substitute: Subdivision 124‑C or 124‑O 3 Section 109‑55 (after table item 6) Insert: 6A A new owner obtains a replacement‑asset roll‑over for replacing an asset that the original owner acquired before 20 September 1985 before 20 September 1985 sections 124‑915 and 124‑920 4 Section 109‑55 (after table item 7) Insert: 7A You obtain a replacement‑asset roll‑over in relation to an FSR transition and a replacement asset or part of a replacement asset relates to an original asset that you acquired before 20 September 1985 before 20 September 1985 (for that replacement asset or that part of a replacement asset that relates to a pre‑CGT original asset) section 124‑895 7B A new owner obtains a replacement‑asset roll‑over in relation to an FSR transition and a replacement asset or part of a replacement asset relates to an original asset that the original owner acquired before 20 September 1985 before 20 September 1985 (for that replacement asset or that part of a replacement asset that relates to a pre‑CGT original asset) sections 124‑915 and 124‑920 5 Section 112‑115 (after table item 14B) Insert: 14BA Replacement assets acquired during an FSR transition Subdivision 124‑O 6 Subsection 124‑5(1) Omit "124‑N", substitute "124‑O". 7 Subsection 124‑5(1) (note) Omit "Note", substitute "Note 1". 8 At the end of subsection 124‑5(1) Add: Note 2: Subdivision 124‑O (about FSR transitions) also provides for roll‑overs in situations where a replacement CGT asset is acquired by a new owner. 9 Subsection 124‑5(2) (at the end of the note) Add "The consequences of the new owner roll‑overs in Subdivision 124‑O (about FSR transitions) are set out in that Subdivision.". 10 Subsection 124‑10(3) (note 1) Omit all the words after "(about statutory licences)", substitute ", Subdivision 124‑D (about strata title conversion) and Subdivision 124‑O (about FSR transitions).". 11 Subsection 124‑10(3) (note 2) Omit all the words after "(about Crown leases)", substitute ", Subdivision 124‑L (about prospecting and mining) and Subdivision 124‑O (about FSR transitions).". 12 At the end of subsection 124‑15(5) (after the example) Add: Note: Subdivision 124‑O provides a different rule for FSR transitions. 13 At the end of Division 124 Add: Subdivision 124‑O—FSR (financial services reform) transitions Table of sections Same owner roll‑overs 124‑880 Old licence roll‑over (same owner) 124‑885 Qualified licence roll‑over (same owner) 124‑890 Rights roll‑over (same owner) 124‑895 Consequences of a same owner roll‑over New owner roll‑overs 124‑900 Old licence roll‑over (new owner) 124‑905 Qualified licence roll‑over (new owner) 124‑910 Rights roll‑over (new owner) 124‑915 Consequences of a new owner roll‑over (where one CGT asset comes to an end) 124‑920 Consequences of a new owner roll‑over (where more than one CGT asset comes to an end) Extension of FSR transition period 124‑925 Special extension of the 10 March 2004 cut‑off date (same owner roll‑overs) 124‑930 Special extension of the 10 March 2004 cut‑off date (new owner roll‑overs) Same owner roll‑overs 124‑880 Old licence roll‑over (same owner) There is a roll‑over if: (a) you apply for an *Australian financial services licence during the period beginning on 11 March 2002 and ending on 10 March 2004; and (b) at the time you make the application, you hold one or more licences, registrations, approvals, authorities or other similar things (the old licence or licences) that give you the status of a regulated principal within the meaning of section 1430 of the Corporations Act 2001; and (c) you are granted an Australian financial services licence as a result of the application; and (d) that licence covers some or all of the activities that the old licence or licences authorised you to carry on; and (e) the old licence or licences cease to have effect (whether wholly or partly): (i) when the Australian financial services licence is granted to you; or (ii) if the Australian financial services licence is granted to you after 10 March 2004—on 10 March 2004. Note: The period in paragraph (a) may be extended in special circumstances: see section 124‑925. If it is extended, the day in subparagraph (e)(ii) changes too. 124‑885 Qualified licence roll‑over (same owner) There is a roll‑over if: (a) you apply for an *Australian financial services licence during the period beginning on 11 March 2002 and ending on 10 March 2004; and (b) at the time you make the application, you hold an Australian financial services licence to which section 1434 of the Corporations Act 2001 applies (the qualified licence); and (c) you are granted an Australian financial services licence as a result of the application (the new licence); and (d) if the new licence is granted on or before 10 March 2004—the qualified licence is revoked as a result of the new licence being granted to you; and (e) if the new licence is granted after 10 March 2004: (i) the qualified licence ceases to have effect on 10 March 2004; and (ii) if the new licence had been granted on or before 10 March 2004, the qualified licence would have been revoked as a result of the new licence being granted. Note: The period in paragraph (a) may be extended in special circumstances: see section 124‑925. If it is extended, the day in paragraphs (d) and (e) changes too. 124‑890 Rights roll‑over (same owner) There is a roll‑over if: (a) one or more intangible *CGT assets owned by you cease to exist during the period beginning on 11 March 2002 and ending on 10 March 2004; and (b) the asset or assets cease to exist because of the termination of one or more contracts; and (c) the termination is directly connected with Chapter 7 of the Corporations Act 2001 (as amended by the Financial Services Reform Act 2001) beginning to apply to you; and (d) you acquire one or more intangible CGT assets by entering into one or more contracts in substitution (whether wholly or partly) for the contract or contracts that were terminated. Note: The period in paragraph