Commonwealth: Taxation Laws Amendment Act (No. 4) 2003 (Cth)

Taxation Laws Amendment Act (No. 4) 2003 Act No. 66 of 2003 as amended This compilation was prepared on 16 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—Internal roll‑overs Income Tax Assessment Act 1936 Schedule 2—Mining Income Tax Assessment Act 1997 Income Tax (Transitional Provisions) Act 1997 Schedule 3—Non‑assessable non‑exempt income Income Tax Assessment Act 1936 Income Tax Assessment Act 1997 Income Tax (Transitional Provisions) Act 1997 Taxation Administration Act 1953 Schedule 4—Refundable tax offset rules Income Tax Assessment Act 1997 Schedule 5—Foreign resident etc. withholding Taxation Administration Act 1953 Schedule 6—PAYG withholding where no ABN is quoted Income Tax Assessment Act 1997 Taxation Administration Act 1953 Schedule 7—FBT exemption for worker entitlements Fringe Benefits Tax Assessment Act 1986 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 Taxation Laws Amendment Act (No. 4) 2003. 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 2003 2. Schedule 1 The day on which this Act receives the Royal Assent 30 June 2003 3. Schedule 2 The day on which this Act receives the Royal Assent 30 June 2003 4. Schedule 3, items 1 to 45 The day on which this Act receives the Royal Assent 30 June 2003 5. Schedule 3, item 46 The later of: 30 June 2003 (a) immediately after the commencement of Schedule 3 to the Taxation Laws Amendment Act (No. 2) 2003; and (b) the day on which this Act receives the Royal Assent 5A. Schedule 3, item 46A Immediately after the commencement of Schedule 27 to the New Business Tax System (Consolidation and Other Measures) Act 2003 29 June 2002 6. Schedule 3, items 47 to 57 The day on which this Act receives the Royal Assent 30 June 2003 7. Schedule 3, item 58 The later of: 30 June 2003 (a) immediately after the commencement of Schedule 3 to the Taxation Laws Amendment Act (No. 2) 2003; and (b) the day on which this Act receives the Royal Assent 8. Schedule 3, items 59 to 70 The day on which this Act receives the Royal Assent 30 June 2003 8A. Schedule 3, item 70A Immediately after the commencement of Schedule 3 to the Taxation Laws Amendment Act (No. 1) 2003 2 April 2003 8B. Schedule 3, item 71 The day on which this Act receives the Royal Assent 30 June 2003 9. Schedule 3, items 72 and 73 The later of: 30 June 2003 (a) immediately after the commencement of Schedule 3 to the Taxation Laws Amendment Act (No. 2) 2003; and (b) the day on which this Act receives the Royal Assent 10. Schedule 3, items 74 to 89 The day on which this Act receives the Royal Assent 30 June 2003 11. Schedule 3, item 90 The later of: 30 June 2003 (a) immediately after the commencement of Schedule 3 to the Taxation Laws Amendment Act (No. 2) 2003; and (b) the day on which this Act receives the Royal Assent 12. Schedule 3, items 91 to 128 The day on which this Act receives the Royal Assent 30 June 2003 12A. Schedule 3, item 128A Immediately after the commencement of Schedule 3 to the Taxation Laws Amendment Act (No. 1) 2003 2 April 2003 12B. Schedule 3, items 129 to 132 The day on which this Act receives the Royal Assent 30 June 2003 13. Schedule 3, item 133 The later of: 30 June 2003 (a) immediately after the commencement of Schedule 3 to the Taxation Laws Amendment Act (No. 2) 2003; and (b) the day on which this Act receives the Royal Assent 14. Schedule 3, items 134 to 141 The day on which this Act receives the Royal Assent 30 June 2003 15. Schedule 4 The day on which this Act receives the Royal Assent 30 June 2003 16. Schedule 5 The day on which this Act receives the Royal Assent 30 June 2003 17. Schedule 6 The day on which this Act receives the Royal Assent 30 June 2003 18. Schedule 7 The day on which this Act receives the Royal Assent 30 June 2003 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—Internal roll‑overs Income Tax Assessment Act 1936 1 Subsection 27A(1) (paragraph (c) of the definition of eligible service period) Omit "(e)", substitute "(daa), (e), (ea)". 2 Subsection 27A(1) (paragraph (d) of the definition of eligible service period) Omit "(h)", substitute "(gaa), (h), (ha)". 3 Subsection 27A(1) (after paragraph (d) of the definition of eligible termination payment) Insert: (daa) an amount resulting from the commutation in whole or in part of a superannuation pension payable to the taxpayer from a superannuation fund, being an amount: (i) that remains in the fund after the commutation, for the purpose of providing superannuation benefits to the taxpayer or to dependants of the taxpayer in the event of the death of the taxpayer; or (ii) that is applied, immediately after the commutation, towards the provision of one or more other superannuation pensions payable to the taxpayer from that fund; 4 Subsection 27A(1) (after paragraph (e) of the definition of eligible termination payment) Insert: (ea) the residual capital value of a superannuation pension payable to the taxpayer from a superannuation fund: (i) that remains in the fund, after the residual capital value of the pension became payable, for the purpose of the provision of superannuation benefits to the taxpayer or to dependants of the taxpayer in the event of the death of the taxpayer; or (ii) that is applied, immediately after the residual capital value of the pension became payable, towards the provision of one or more other superannuation pensions payable to the taxpayer from that fund; 5 Subsection 27A(1) (after paragraph (g) of the definition of eligible termination payment) Insert: (gaa) an amount resulting from the commutation in whole or in part of a qualifying annuity (the first annuity) payable to the taxpayer, being an amount applied, immediately after the commutation, towards the provision of one or more other qualifying annuities payable to the taxpayer by the payer of the first annuity; 6 Subsection 27A(1) (after paragraph (h) of the definition of eligible termination payment) Insert: (ha) the residual capital value of a qualifying annuity (the first annuity) payable to the taxpayer, that is applied, immediately after that residual capital value became payable, towards the provision of one or more other qualifying annuities payable to the taxpayer by the payer of the first annuity; 7 Subsection 27A(1) Insert: internal roll‑over amount, in respect of a taxpayer, means an ETP covered by any of paragraphs (daa), (ea), (gaa) or (ha) of the definition of eligible termination payment in this subsection. 8 Subsection 27A(1) (paragraph (a) of the definition of undeducted contributions) Omit "(e)", substitute "(daa), (e), (ea)". 9 Subsection 27A(1) (paragraph (c) of the definition of undeducted contributions) Omit "(h)", substitute "(gaa), (h), (ha)". 10 After subsection 27A(5C) Insert: (6) If the Commissioner specifies in writing guidelines or principles to be applied in calculating internal roll‑over amounts, an internal roll‑over amount is to be calculated in accordance with those guidelines or principles. 11 Subsection 27A(12) After "qualifying eligible termination payment if", insert "it is an internal roll‑over amount in relation to the taxpayer or if". 12 Paragraph 27A(13)(a) After "if", insert "the amount is an internal roll‑over amount or if". 13 Subsection 27AAAA(2) Omit "(e), (f), (g), (h)", substitute "(daa), (e), (ea), (f), (g), (gaa), (h), (ha)". 14 Paragraph 27AAAA(4)(b) After "payment of", insert ", or represents,". 15 Subsection 27AB(1) (table item 5, column headed "ETP type") Omit "(h)", substitute "(gaa), (h), (ha)". 16 Subsection 27AB(1) (table item 7, column headed "ETP type") Omit "(e)", substitute "(daa), (e), (ea)". 17 After subparagraph 27D(1)(b)(i) Insert: and (ia) details of each internal roll‑over amount (in this section referred to as a qualifying roll‑over payment) in relation to the taxpayer; and 18 Application The amendments made by this Schedule apply to commutations occurring, and residual capital values becoming payable, on or after 1 July 2001. Schedule 2—Mining Income Tax Assessment Act 1997 1 At the end of section 40‑30 Add: (6) This Division applies to a *mining, quarrying or prospecting right (the new right) as if it were a continuation of another mining, quarrying or prospecting right you *held if: (a) the other right ends; and (b) the new right and the other right relate to the same area, or any difference in area is not significant. 2 Paragraph 40‑80(1)(b) Before "you do not use it", insert "when you first use the asset,". 3 Subsection 40‑95(7) (at the end of the table) Add: 11 A *mining, quarrying or prospecting right relating to *mining operations (except obtaining *petroleum or quarry materials) The life of the mine or proposed mine or, if there is more than one, the life of the mine that has the longest estimated life 12 A *mining, quarrying or prospecting right relating to *mining operations to obtain *petroleum The life of the petroleum field or proposed petroleum field 13 A *mining, quarrying or prospecting right relating to *mining operations to obtain quarry materials The life of the quarry or proposed quarry or, if there is more than one, the life of the quarry that has the longest estimated life 4 Subsection 40‑95(8) Omit "(for example, a *mining, quarrying or prospecting right)". 5 Subsection 40‑730(7) Omit "for a *taxable purpose", substitute "for the *purpose of producing assessable income". Income Tax (Transitional Provisions) Act 1997 6 At the end of subsection 40‑35(1) Add: Note: Subsection (6) also applies to a case where you did not have unrecouped expenditure at 30 June 2001: see subsection (8). 7 At the end of section 40‑35 Add: (7) If section 40‑115 of the new Act applies, or section 40‑125 of the new Act would, apart from this subsection, apply, to the real asset referred to in subsection (5) of this section, then: (a) if the real asset is split into 2 or more depreciating assets and you stop holding, or stop using for a taxable purpose, one or more but not all of the assets into which it is split—subsection (5) does not apply to that asset or assets into which it is split that you continue to hold and continue to use for a taxable purpose; or (b) if the real asset is merged into another depreciating asset—section 40‑125 does not apply to the asset into which it is merged while you continue to hold it. (8) Subsection (6) also applies to a case where: (a) you did not have an amount of unrecouped expenditure under Division 330 of the former Act at the end of 30 June 2001, but you had an amount of unrecouped expenditure under that Division before 30 June 2001; and (b) that expenditure relates to property that is not a depreciating asset (the other property); and (c) after that day, the other property is disposed of, lost or destroyed, or you stop using it for a taxable purpose. 8 After section 40‑35 Insert: 40‑37 Post‑30 June 2001 mining expenditure (1) This section applies to you if: (a) you incur expenditure after 30 June 2001 under a contract entered into before that day; and (b) the expenditure would have been allowable capital expenditure, and you could have deducted an amount for it, under Division 330 of the former Act if you had incurred it before 1 July 2001; and (c) the expenditure does not relate to a depreciating asset. (2) Division 40 of the new Act applies to the expenditure as if it were a depreciating asset (the notional asset) you hold on this basis: (a) it has a cost at the time you incur the expenditure equal to the amount of the expenditure; and (b) in applying the formula in section 40‑75 of the new Act for the income year in which you incur the expenditure—you use the adjustments in subsection 40‑75(3) of the new Act; and (c) it is taken to be used for a taxable purpose when you incur the expenditure; and (d) it has an effective life worked out under subsection (3); and (e) you must use the prime cost method. Note: There are special rules for entities that have substituted accounting periods: see section 40‑65. (3) The effective life of the notional asset at the start of an income year (present income year) for which you are working out its decline in value is: (a) for an amount of expenditure incurred in carrying on eligible mining operations other than in the course of petroleum mining—the lesser of 10 and the number equal to the number of whole years in the estimated life of the mine, or proposed mine, on the mining property, or, if there is more than one such mine, of the mine that has the longest estimated life, as at the end of the present income year; or (b) for an amount of expenditure incurred in carrying on eligible mining operations in the course of petroleum mining—the lesser of 10 and the number equal to the number of whole years in the estimated life of the petroleum field or proposed petroleum field as at the end of the present income year; or (c) for an amount of expenditure incurred in carrying on eligible quarrying operations—the lesser of 20 and the number equal to the number of whole years in the estimated life of the quarry, or proposed quarry, on the quarrying property, or, if there is more than one such quarry, of the quarry that has the longest estimated life, as at the end of the present income year. (4) Sections 40‑95 and 40‑110 of the new Act do not apply to the expenditure. (5) If both of these paragraphs apply: (a) any of the expenditure referred to in subsection (1) relates to property that is not a depreciating asset (the other property); (b) in an income year (the cessation year), the other property is disposed of, lost or destroyed, or you stop using it for a taxable purpose; there is an additional decline in value of the notional asset for the cessation year equal to so much of the notional asset's adjustable value as relates to the other property. (6) If the other property is disposed of, lost or destroyed, or you stop using it for a taxable purpose, you must include in your assessable income: (a) if the other property is sold for a price specific to that property—that price, less the expenses of the sale (to the extent the expenses are reasonably attributable to selling that particular property); or (b) if the other property is sold with additional property without a specific price being allocated to it—the part of the total sale price, less the reasonably attributable expenses of the sale, that is reasonably attributable to selling the other property; or (c) if the other property is lost or destroyed—the amount or value received or receivable under an insurance policy or otherwise for the loss or destruction; or (d) if you own the other property and you stop using it for a taxable purpose—its market value at that time; or (e) if you do not own the property and you stop using it for a taxable purpose—a reasonable amount. However, the amount included is reduced to the extent (if any) that it is also included under subsection 40‑830(6) of the new Act. 40‑38 Mining cash bidding payments (1) This section applies to expenditure you incur, under a contract entered into before 30 June 2001, if: (a) the expenditure would have been a mining cash bidding payment under Subdivision 330‑D of the former Act; and (b) either: (i) you incurred the expenditure before that day but the grant of the mining authority concerned occurred on a day (the start day) after 30 June 2001; or (ii) the grant of the mining authority concerned occurred before 30 June 2001 but you incurred the expenditure on a day (also the start day) after 30 June 2001. (2) Division 40 of the new Act applies to the expenditure as if it were a depreciating asset (the notional asset) you hold on this basis: (a) it has a cost at the start day equal to the amount of the expenditure; and (b) in applying the formula in section 40‑75 of the new Act for the income year in which the start day occurs—you use the adjustments in subsection 40‑75(3) of the new Act; and (c) it is taken to be used for a taxable purpose on the start day; and (d) it has an effective life worked out under subsection (3); and (e) you must use the prime cost method. Note: There are special rules for entities that have substituted accounting periods: see section 40‑65. (3) The effective life of the notional asset at the start of an income year (present income year) for which you are working out its decline in value is: (a) for an amount of expenditure incurred in carrying on eligible mining operations other than in the course of petroleum mining—the lesser of 10 and the number equal to the number of whole years in the estimated life of the mine, or proposed mine, on the mining property, or, if there is more than one such mine, of the mine that has the longest estimated life, as at the end of the present income year; or (b) for an amount of expenditure incurred in carrying on eligible mining operations in the course of petroleum mining—the lesser of 10 and the number equal to the number of whole years in the estimated life of the petroleum field or proposed petroleum field as at the end of the present income year. (4) Sections 40‑95 and 40‑110 of the new Act do not apply to the expenditure. (5) If both of these paragraphs apply: (a) any of the expenditure referred to in subsection (1) relates to a depreciating asset (the real asset); (b) in an income year (the cessation year) you stop holding the real asset, or stop using it for a taxable purpose; there is an additional decline in value of the notional asset for the cessation year equal to so much of the notional asset's adjustable value as relates to the real asset and has not been taken into account in working out the amount of a balancing adjustment in relation to the real asset. (6) If section 40‑115 of the new Act applies, or section 40‑125 of the new Act would, apart from this subsection, apply, to the real asset referred to in subsection (5) of this section, then: (a) if the real asset is split into 2 or more depreciating assets and you stop holding, or stop using for a taxable purpose, one or more but not all of the assets into which it is split—subsection (5) does not apply to that asset or assets into which it is split that you continue to hold and continue to use for a taxable purpose; or (b) if the real asset is merged into another depreciating asset—section 40‑125 does not apply to the asset into which it is merged while you continue to hold it. 9 At the end of section 40‑40 Add: (6) If section 40‑115 of the new Act applies, or section 40‑125 of the new Act would, apart from this subsection, apply, to the real asset referred to in subsection (4) of this section, then: (a) if the real asset is split into 2 or more depreciating assets and you stop holding, or stop using for a taxable purpose, one or more but not all of the assets into which it is split—subsection (4) does not apply to that asset or assets into which it is split that you continue to hold and continue to use for a taxable purpose; or (b) if the real asset is merged into another depreciating asset—section 40‑125 does not apply to the asset into which it is merged while you continue to hold it. 10 After section 40‑40 Insert: 40‑43 Post‑30 June 2001 transport expenditure (1) This section applies to you if: (a) you incur expenditure after 30 June 2001 under a contract entered into before that day; and (b) the expenditure would have been transport capital expenditure in respect of a transport facility, and you could have deducted an amount for it, under Subdivision 330‑H of the former Act if you had incurred it before 1 July 2001 and you had started to use the facility for a qualifying purpose before 1 July 2001; and (c) the expenditure does not relate to a depreciating asset. (2) Division 40 of the new Act applies to the expenditure as if it were a depreciating asset (the notional asset) you hold on this basis: (a) it has a cost at the time you incur the expenditure equal to the amount of the expenditure; and (b) in applying the formula in section 40‑75 of the new Act for your income year in which you incur the expenditure—you use the adjustments in subsection 40‑75(3) of the new Act; and (c) it is taken to have been used for a taxable purpose when you incur the expenditure; and (d) it has an effective life when you incur the expenditure equal to the years remaining for the expenditure under section 330‑395 of the former Act; and (e) you must use the prime cost method. Note: There are special rules for entities that have substituted accounting periods: see section 40‑65. (3) Sections 40‑95 and 40‑110 of the new Act do not apply to the expenditure. (4) If both of these paragraphs apply: (a) any of the expenditure referred to in subsection (1) relates to property that is not a depreciating asset (the other property); (b) in an income year (the cessation year), the other property is disposed of, lost or destroyed, or you stop using it for a taxable purpose; there is an additional decline in value of the notional asset for the cessation year equal to so much of the notional asset's adjustable value as relates to the other property. (5) If the other property is disposed of, lost or destroyed, or you stop using it for a taxable purpose, you must include in your assessable income: (a) if the other property is sold for a price specific to that property—that price, less the expenses of the sale (to the extent the expenses are reasonably attributable to selling that particular property); or (b) if the other property is sold with additional property without a specific price being allocated to it—the part of the total sale price, less the reasonably attributable expenses of the sale, that is reasonably attributable to selling the other property; or (c) if the other property is lost or destroyed—the amount or value received or receivable under an insurance policy or otherwise for the loss or destruction; or (d) if you own the other property and you stop using it for a taxable purpose—its market value at that time; or (e) if you do not own the property and you stop using it for a taxable purpose—a reasonable amount. However, the amount included is reduced to the extent (if any) that it is also included under subsection 40‑830(6) of the new Act. 40‑44 No additional decline in certain cases (1) Despite subsections 40‑35(5), 40‑38(5) and 40‑40(4), there is no additional decline in the value of the notional asset referred to in those subsections if: (a) apart from this section, subsection 40‑35(5), 40‑38(5) or 40‑40(4) would apply because the real asset referred to in that subsection is disposed of; and (b) roll‑over relief is chosen under subsection 40‑340(3) of the Income Tax Assessment Act 1997 for the disposal. (2) Instead, the cost to the transferee of that real asset is the sum of: (a) the adjustable value of that real asset; and (b) the adjustable value of the notional asset referred to in subsection 40‑35(5), 40‑38(5) or 40‑40(4); just before the disposal. 11 After subsection 40‑77(1) Insert: (1A) Division 40 of the new Act does not apply to a renewal or extension of a mining, quarrying or prospecting right that you started to hold before 1 July 2001. (1B) Subsection (1) applies to a mining, quarrying or prospecting right (the new right) that you start to hold on or after 1 July 2001 as if you had started to hold the new right before that day if: (a) you started to hold another mining, quarrying or prospecting right before that day; and (b) the other right ends on or after that day; and (c) the new right and the other right relate to the same area, or any difference in area is not significant. (1C) Division 40 of the new Act does not apply to a mining, quarrying or prospecting right if: (a) a company (the original holder) started to hold the right before 1 July 2001; and (b) the right is transferred after that day to another company where: (i) the other company is a member of the same wholly‑owned group as the original holder and was a member of that group just before that day; and (ii) the right was held in the period between that day and the time of the transfer by a company or companies that were members of that group on that day and at the time of the transfer. 12 Paragraph 40‑77(2)(a) After "associate of yours", insert "(except a company that is a member of the same wholly‑owned group)". 13 At the end of section 40‑77 Add: (4) Your assessable income includes an amount if: (a) after 1 July 2001, you stop holding a mining, quarrying or prospecting right that you started to hold before that day; and (b) you have deducted or can deduct an amount for it under Subdivision 330‑C in relation to Subdivision 330‑D or 330‑E of the former Act. The amount included is the amount you have deducted or can deduct. (5) Your assessable income also includes an amount if: (a) after 1 July 2001, you stop holding a mining, quarrying or prospecting right that you started to hold before that day; and (b) because of section 40‑35 or 40‑38 of this Act, you have deducted or can deduct an amount for a notional asset that relates to expenditure on the right under Division 40 of the new Act. The amount included is the amount you have deducted or can deduct. (6) Division 110 of the new Act applies as if an amount included in assessable income under subsection (4) or (5) of this section were the reversal of a deduction under a provision of the new Act outside Parts 3‑1 and 3‑3 and Division 243. (7) An amount that would be included in your assessable income under subsection 40‑285(1) of the new Act in respect of a mining, quarrying or prospecting right is reduced by an amount worked out under subsection (8) if: (a) you acquired the right from an associate (except a company that is a member of the same wholly‑owned group) on or after 1 July 2001; and (b) the associate started to hold the right before that day. (8) The amount is reduced (but not below zero) by the difference between the capital cost that you incurred after that day and the amount to which the cost of the right is limited under subsection (2) of this section. 14 At the end of Subdivision 40‑B Add: 40‑95 Accelerated depreciation for split or merged plant (1) This section applies to a depreciating asset that is plant if: (a) you entered into a contract to acquire the plant, you otherwise acquired it or you started to construct it before 11.45 am, by legal time in the Australian Capital Territory, on 21 September 1999; and (b) you held it at the end of 30 June 2001; and (c) on or after 1 July 2001: (i) the plant is split into 2 or more depreciating assets; or (ii) the plant is merged into another depreciating asset. (2) For a case where the plant is split into 2 or more depreciating assets, the new Act applies as if you had acquired the assets into which it is split before the time mentioned in paragraph (1)(a) while you continue to hold those assets. (3) For a case where the plant is merged into another depreciating asset, section 40‑125 of the new Act does not apply to the asset, or to your interest in the asset, into which it is merged while you continue to hold it. 15 After section 40‑285 Insert: 40‑287 Disposal of pre‑1 July 2001 mining depreciating asset to associate (1) This section applies if: (a) on or after 1 July 2001, a company (the transferor) disposes of a depreciating asset to another company; and (b) the companies are members of the same linked group at the time of the disposal; and (c) apart from this section, the disposal would have resulted in: (i) an amount (the included amount) being included in the assessable income of the transferor under subsection 40‑285(1) of the Income Tax Assessment Act 1997; and (ii) the transferor having an additional decline in value (the deductible amount) under subsection 40‑35(5), 40‑38(5) or 40‑40(4) of this Act; and (d) the included amount is more than the deductible amount. (2) Subsection 40‑35(5), 40‑38(5) or 40‑40(4) of this Act does not apply to the disposal. (3) The amount that is included in the transferor's assessable income under subsection 40‑285(1) of the Income Tax Assessment Act 1997 is the included amount reduced by the deductible amount. 40‑288 Disposal of pre‑1 July 2001 mining non‑depreciating asset to associate (1) This section applies if: (a) on or after 1 July 2001, a company (the transferor) disposes of property that is not a depreciating asset to another company; and (b) the companies are members of the same linked group at the time of the disposal; and (c) apart from this section, the disposal would have resulted in the transferor having an additional decline in value (the deductible amount) under subsection 40‑35(5), 40‑37(5), 40‑40(4) or 40‑43(4) of this Act; and (d) the sum of: (i) the money the transferor receives, or is entitled to receive, in respect of the disposal; and (ii) the market value of any other property the transferor receives, or is entitled to receive, in respect of the disposal; is more than the deductible amount. (2) There is no additional decline in value of the notional asset referred to in subsection 40‑35(5), 40‑37(5), 40‑40(4) or 40‑43(4) as a result of the disposal. (3) Any amount that would be included in the transferor's assessable income under subsection 40‑35(6), 40‑37(6), 40‑38(6), 40‑40(5) or 40‑43(5) of this Act, or subsection 40‑830(6) of the Income Tax Assessment Act 1997, as a result of the disposal is reduced by the deductible amount. 16 At the end of Subdivision 40‑D Add: 40‑365 Involuntary disposals Section 40‑365 of the new Act applies to a case where: (a) a balancing adjustment event occurred for plant in the circumstances mentioned in subsection 42‑293(2) of the former Act before 1 July 2001; and (b) you start to hold a replacement asset or assets after that day; and (c) the conditions in subsections 40‑365(3) and (4) of the new Act are satisfied. 17 Application of amendments The amendments made by this Schedule apply to assessments for the income year in which 1 July 2001 occurred and later income years. Schedule 3—Non‑assessable non‑exempt income Income Tax Assessment Act 1936 1 Subsection 6(1) Insert: non‑assessable non‑exempt income has the meaning given by the Income Tax Assessment Act 1997. 2 Subparagraph 6AB(2)(b)(iv) Omit "23AI exempt part", substitute "23AI non‑assessable part". 3 Subparagraph 6AB(2)(b)(vi) Omit "23AK exempt part", substitute "23AK non‑assessable part". 4 Paragraph 6AB(3A)(b) Omit "23AI exempt part", substitute "23AI non‑assessable part". 5 Paragraph 6AB(3A)(c) Omit "23AK exempt part", substitute "23AK non‑assessable part". 6 Paragraph 23(jd) Repeal the paragraph. 7 Subsection 23AE(1A) (note) Omit "51‑25", substitute "59‑15". 8 Subsection 23AH(2) Repeal the subsection, substitute: (2) If the original taxpayer in relation to the foreign branch income is a company, so much of the foreign branch income as is attributable to a period when the company was a resident is not assessable income and is not exempt income of the company. Note: The heading to section 23AH is replaced by the heading "Foreign branch profits of Australian companies not assessable". 9 Paragraph 23AH(3)(d) Repeal the paragraph, substitute: (d) so much of the foreign branch income as is attributable to a period when the actual taxpayer was a resident is not assessable income and is not exempt income of the original taxpayer; and 10 Subsection 23AH(4) Repeal the subsection. 11 Paragraph 23AH(9)(d) Repeal the paragraph, substitute: (d) so much of the foreign branch capital gain as is attributable to a period when the actual taxpayer was a resident is not assessable income and is not exempt income of the original taxpayer; and 12 Paragraph 23AI(1)(c) Repeal the paragraph, substitute: (c) if the payment is of a kind referred to in paragraph 365(1)(a)—the payment is not assessable income, and is not exempt income, to the extent of the debit; Note: The heading to section 23AI is replaced by the heading "Amounts paid out of attributed income not assessable". 13 Paragraph 23AI(1)(d) Omit "that amount is not so included, to the extent of the debit", substitute "that amount is not assessable income, and is not exempt income, to the extent of the debit". 14 Paragraph 23AI(1)(e) Repeal the paragraph, substitute: (e) if the payment is of a kind referred to in paragraph 365(1)(c) and, apart from this section, an amount would be included in the taxpayer's assessable income under section 97, 98A or 100 in respect of a share of the net income of the trust of the year of income referred to in that paragraph—that amount is not assessable income and is not exempt income, to the extent of the debit; (ea) if the payment is of a kind referred to in paragraph 365(1)(c) and, apart from this section, an amount would be assessable to the trustee of the trust referred to in that paragraph under section 98 in respect of a share of the net income of the trust of the year of income referred to in that paragraph—that amount is not so assessable to the extent of the debit; 15 Paragraph 23AI(1)(g) Omit "not so included", substitute "not assessable income, and is not exempt income,". 16 Subsection 23AJ(1) Omit "exempt from income tax", substitute "not assessable income, and is not exempt income,". Note: The heading to section 23AJ is replaced by the heading "Certain non‑portfolio dividends from foreign countries not assessable". 17 Paragraph 23AK(1)(c) Omit "exempt from tax", substitute "not assessable income, and is not exempt income,". Note: The heading to section 23AK is replaced by the heading "Amounts paid out of attributed foreign investment fund income not assessable". 18 Paragraph 23AK(1)(d) Omit "not so included,", substitute "not assessable income, and is not exempt income,". 19 Paragraph 23AK(1)(e) Repeal the paragraph, substitute: (e) if the payment is of a kind referred to in paragraph 603(1)(d) and, apart from this section, an amount would be included in the taxpayer's assessable income under section 97, 98A or 100 in respect of a share of the net income of the trust of the year of income referred to in that paragraph—that amount is not assessable income, and is not exempt income, to the extent of the debit; (ea) if the payment is of a kind referred to in paragraph 603(1)(d) and, apart from this section, an amount would be assessable to the trustee of the trust referred to in that paragraph under section 98 in respect of a share of the net income of the trust of the year of income referred to in that paragraph—that amount is not so assessable to the extent of the debit; 20 Paragraph 23AK(1)(g) Omit "not so included", substitute "not assessable income, and is not exempt income,". 21 Paragraph 23AK(1)(h) Omit "exempt from tax", substitute "not assessable income, and is not exempt income,". 22 Paragraph 23AK(1)(i) Omit "exempt from tax", substitute "not assessable income, and is not exempt income,". 23 Subsection 23E(1) Repeal the subsection, substitute: (1) An amount received by a person upon the redemption of a Special Bond, other than a part of that amount paid as accrued interest, is not assessable income and is not exempt income of the person. 24 Subsection 23J(1) Repeal the subsection, substitute: (1) An amount received by a person upon the sale or redemption of eligible securities purchased or otherwise acquired at a discount on or before 30 June 1982, other than any part of that amount received as accrued interest, is not assessable income and is not exempt income of the person. 25 Subsection 23L(1) Repeal the subsection, substitute: (1) Income derived by a taxpayer by way of the provision of a fringe benefit within the meaning of the Fringe Benefits Tax Assessment Act 1986 is not assessable income and is not exempt income of the taxpayer. (1A) Income derived by a taxpayer by way of the provision of a benefit (other than a benefit to which paragraph 26(eaa) of this Act applies) that, but for paragraph (g) of the definition of fringe benefit in subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986, would be a fringe benefit within the meaning of that Act is exempt income of the taxpayer. Note: The heading to section 23L is replaced by the heading "Certain benefits in the nature of income not assessable". 26 Subparagraph 47A(7)(b)(i) Repeal the subparagraph, substitute: (i) non‑assessable non‑exempt exempt income under section 23AJ (in whole or in part); or 27 Subsection 59(2AAA) Repeal the subsection, substitute: (2AAA) For the purposes of the application of subsection (2), any amount by which consideration receivable under firearms surrender arrangements exceeds the depreciated value of a surrendered item of property is not assessable income and not exempt income of the taxpayer. Note: Firearms surrender arrangements has the meaning given by subsection 6(1). 28 Section 90 Insert: non‑assessable non‑exempt income, in relation to a partnership, means the non‑assessable non‑exempt income of the partnership calculated as if the partnership were a taxpayer who was a resident. 29 At the end of section 92 Add: (4) The non‑assessable non‑exempt income of a partner in a partnership shall include: (a) so much of the individual interest of the partner in the non‑assessable non‑exempt income of the partnership of the year of income as is attributable to a period when the partner was a resident; and (b) so much of the individual interest of the partner in the non‑assessable non‑exempt income of the partnership of the year of income as is attributable to a period when the partner was not a resident and is also attributable to sources in Australia. 30 Subsection 95(1) Insert: non‑assessable non‑exempt income, in relation to a trust estate, means the non‑assessable non‑exempt income of the trust estate calculated as if the trustee were a taxpayer who was a resident. 31 At the end of subsection 97(1) (before the note) Add: ; and (c) the non‑assessable non‑exempt income of the beneficiary shall include: (i) so much of the individual interest of the beneficiary in the non‑assessable non‑exempt income of the trust estate as is attributable to a period when the beneficiary was a resident; and (ii) so much of the individual interest of the beneficiary in the non‑assessable non‑exempt income of the trust estate as is attributable to a period when the beneficiary was not a resident and is also attributable to sources in Australia. 32 After subsection 99B(2) Insert: (2A) An amount that is not included in a beneficiary's assessable income because of paragraph (2)(d) or (e) is not assessable income and is not exempt income. 33 Paragraph 102AAZB(a) Omit "exempt income", substitute "non‑assessable income". 34 Subsection 109ZC(3) Repeal the subsection, substitute: (3) An amount that is taken not to be a dividend under subsection (2) is not assessable income and is not exempt income. 35 Section 128D Omit "shall not be included in the assessable income of a person", substitute "is not assessable income and is not exempt income of a person". Note: The heading to section 128D is replaced by the heading "Certain income not assessable". 36 Paragraph 128TA(1)(a) Omit "exempt from income tax", substitute "non‑assessable non‑exempt income". 37 Paragraph 128TA(2)(a) Omit "exempt", substitute "non‑assessable non‑exempt income". 38 Paragraph 128TA(2)(b) Omit "exempt from income tax", substitute "non‑assessable non‑exempt income". 39 Section 160AFCD Repeal the section, substitute: 160AFCD Foreign tax in respect of amounts that are non‑assessable non‑exempt income under section 23AI (1) If an attribution account payment made to a resident taxpayer by an attribution account entity in a year of income is, in whole or in part (the section 23AI non‑assessable part), not assessable income and not exempt income under section 23AI, these provisions have effect: (a) the section 23AI non‑assessable part is taken, for the purposes of paragraph 160AF(1)(a) but not (d), to be included in the assessable income of the taxpayer of the year of income; (b) the taxpayer is taken for the purposes of this Division to have paid, and to have been personally liable for, in respect of the section 23AI non‑assessable part, in the year of income, an amount of foreign tax calculated using the formula: (2) In this section: AEP or adjusted exempt percentage means the percentage that would be the exempt percentage if the attribution account payment were reduced by any part of that payment that is non‑assessable non‑exempt income under section 23AJ. AT or attributed tax means the amount of any attributed tax account debit arising for the attribution account entity in relation to the taxpayer on the making of the attribution account payment, to the extent that the amount of the debit does not exceed the multiple of the adjusted exempt percentage and the underlying tax. DT or direct tax means any foreign tax that, disregarding this section and section 160AFC, the taxpayer is taken for the purposes of this Division to have paid, and to have been personally liable for, in respect of the attribution account payment. EP or exempt percentage means the percentage of the attribution account payment represented by the section 23AI non‑assessable part. UT or underlying tax means any foreign tax (other than CFC‑type foreign tax) that, disregarding this section, the taxpayer is taken, for the purposes of this Division, to have paid, and to have been personally liable for, under section 160AFC in respect of the attribution account payment. 40 Section 160AFCJ Repeal the section, substitute: 160AFCJ Foreign tax in respect of amounts that are non‑assessable non‑exempt income under section 23AK (1) If a FIF attribution account payment made to a resident taxpayer by a FIF attribution account entity in a year of income is, in whole or in part (the section 23AK non‑assessable part), not assessable income and not exempt income under section 23AK, these provisions have effect. (2) The section 23AK non‑assessable part is taken, for the purposes of paragraph 160AF(1)(a) but not (d), to be included in the taxpayer's assessable income of the year of income. (3) The taxpayer is taken for the purposes of this Division to have paid, and to have been personally liable for, in respect of the section 23AK non‑assessable part, in the year of income, an amount of foreign tax worked out using the formula: (4) In this section: AEP or adjusted exempt percentage means the percentage that would be the exempt percentage if the FIF attribution account payment were reduced by any part of that payment that is non‑assessable non‑exempt income under section 23AJ. AT or attributed tax means the amount of any FIF attributed tax account debit arising for the FIF attribution account entity in relation to the taxpayer on the making of the FIF attribution account payment, to the extent that the amount of the debit does not exceed the multiple of the adjusted exempt percentage and the underlying tax. DT or direct tax means any foreign tax that, disregarding this section and section 160AFC, the taxpayer is taken for the purposes of this Division to have paid, and to have been personally liable for, in respect of the FIF attribution account payment. EP or exempt percentage means the percentage of the FIF attribution account payment represented by the section 23AK non‑assessable part. UT or underlying tax means any foreign tax that, disregarding this section, the taxpayer is taken, for the purposes of this Division, to have paid, and to have been personally liable for, under subparagraph 6AB(3)(a)(ii) or under section 160AFC in respect of the FIF attribution account payment. 41 Paragraph 160AQT(4)(b) Repeal the paragraph, substitute: (b) paragraphs 320‑37(1)(a) and (d) of the Income Tax Assessment Act 1997. 42 Paragraph 160AQU(2)(b) Repeal the paragraph, substitute: (b) paragraphs 320‑37(1)(a) and (d) of the Income Tax Assessment Act 1997. 43 Paragraph 160AQWA(1)(b) Repeal the paragraph, substitute: (b) paragraphs 320‑37(1)(a) and (d) of the Income Tax Assessment Act 1997; 44 Subparagraph 160AQZB(1)(c)(ii) Repeal the subparagraph, substitute: (ii) would have been included in the assessable income of the holder of the interest if paragraphs 320‑37(1)(a) and (d) of the Income Tax Assessment Act 1997 had not been enacted; 45 Subparagraph 160AQZC(1)(c)(ii) Repeal the subparagraph, substitute: (ii) would have been included in the assessable income of the holder of the interest if paragraphs 320‑37(1)(a) and (d) of the Income Tax Assessment Act 1997 had not been enacted; 46 Subsection 170(10AB) Omit "Division 22", substitute "section 59‑30". 46A Paragraph 177EA(15)(b) Repeal the paragraph, substitute: (b) paragraph 320‑37(1)(a) of the Income Tax Assessment Act 1997 (segregated exempt assets) or paragraph 320‑37(1)(d) of that Act (income bonds, funeral policies and scholarship plans). 47 Subparagraph 530(1)(d)(i) Omit "exempt from income tax", substitute "non‑assessable non‑exempt income". 48 At the end of section 271‑105 in Schedule 2F Add: (3) The amount of the reduction is not assessable income and is not exempt income. Note: The heading to section 271‑105 in Schedule 2F is replaced by the heading "Amounts subject to family trust distribution tax not assessable". Income Tax Assessment Act 1997 49 Section 6‑1 Repeal the section, substitute: 6‑1 Diagram showing relationships among concepts in this Division (1) Assessable income consists of ordinary income and statutory income. (2) Some ordinary income, and some statutory income, is exempt income. (3) Exempt income is not assessable income. (4) Some ordinary income, and some statutory income, is neither assessable income nor exempt income. For the effect of the GST in working out assessable income, see Division 17. (5) An amount of ordinary income or statutory income can have only one status (that is, assessable income, exempt income or non‑assessable non‑exempt income) in the hands of a particular entity. [This is the end of the Guide.] 50 Subsection 6‑15(2) (note) Repeal the note, substitute: Note: If an amount is exempt income, there are other consequences besides it being exempt from income tax. For example: * the amount may be taken into account in working out the amount of a tax loss (see section 36‑10); * you cannot deduct as a general deduction a loss or outgoing incurred in deriving the amount (see Division 8); * capital gains and losses on assets used solely to produce exempt income are disregarded (see section 118‑12). 51 At the end of section 6‑15 Add: (3) If an amount is *non‑assessable non‑exempt income, it is not assessable income. Note 1: You cannot deduct as a general deduction a loss or outgoing incurred in deriving an amount of non‑assessable non‑exempt income (see Division 8). Note 2: Capital gains and losses on assets used to produce some types of non‑assessable non‑exempt income are disregarded (see section 118‑12). 52 Subsection 6‑20(1) Omit "Commonwealth law", substitute "*Commonwealth law". 53 Subsection 6‑20(2) (note) Repeal the note. 54 Subsection 6‑20(3) Omit "Commonwealth law", substitute "*Commonwealth law". 55 At the end of section 6‑20 Add: (4) If an amount of *ordinary income or *statutory income is *non‑assessable non‑exempt income, it is not exempt income. Note: An amount of non‑assessable non‑exempt income is not taken into account in working out the amount of a tax loss. 56 After section 6‑20 Insert: 6‑23 Non‑assessable non‑exempt income An amount of *ordinary income or *statutory income is non‑assessable non‑exempt income if a provision of this Act or of another *Commonwealth law states that it is not assessable income and is not *exempt income. Note: Capital gains and losses on assets used to produce some types of non‑assessable non‑exempt income are disregarded (see section 118‑12). For a summary list of provisions about non‑assessable non‑exempt income, see Subdivision 11‑B. 57 Paragraph 8‑1(2)(c) After "*exempt income", insert "or your *non‑assessable non‑exempt income". 58 Section 10‑5 (table item headed "repayments") Repeal the item. 59 Division 11 (heading) Repeal the heading, substitute: Division 11—Particular kinds of non‑assessable income Table of Subdivisions 11‑A Lists of classes of exempt income 11‑B Particular kinds of non‑assessable non‑exempt income 60 Before section 11‑1A Insert: Subdivision 11‑A—Lists of classes of exempt income Table of sections 11‑1A Effect of this Subdivision 11‑1 Overview 11‑5 Entities that are exempt, no matter what kind of ordinary or statutory income they have 11‑10 Ordinary or statutory income which is exempt, no matter whose it is 11‑15 Ordinary or statutory income which is exempt only if it is derived by certain entities 61 Section 11‑1A Repeal the section, substitute: 11‑1A Effect of this Subdivision This Subdivision is a *Guide. 62 Section 11‑10 (table item dealing with Commonwealth places windfall tax) Repeal the item. 63 Section 11‑10 (table item dealing with foreign aspects of income taxation) Repeal the item, substitute: foreign aspects of income taxation Australian‑American Education Foundation, grant from 51‑10 64 Section 11‑10 (table item dealing with franchise fees windfall tax) Repeal the item. 65 Section 11‑10 (table item dealing with non‑cash benefits) Repeal the item, substitute: non‑cash benefits business benefit............................ 23L(2) exempt fringe benefit........................ 23L(1A) 66 Section 11‑15 (table item dealing with foreign aspects of income taxation) Omit: dividend from a foreign country, non‑portfolio. 23AJ 67 Section 11‑15 (table item dealing with foreign aspects of income taxation) Omit: foreign branch profits by an Australian company...... 23AH 68 Section 11‑15 (table item dealing with mining) Repeal the item. 69 Section 11‑15 (table item dealing with social security or like payments) Omit: bonus payments made to certain older Australians..... Subdivision 52‑E 70 At the end of Division 11 Add: Subdivision 11‑B—Particular kinds of non‑assessable non‑exempt income Table of sections 11‑50 Effect of this Subdivision 11‑55 List of non‑assessable non‑exempt income provisions 11‑50 Effect of this Subdivision This Subdivision is a *Guide. 11‑55 List of non‑assessable non‑exempt income provisions The provisions set out in the list make amounts non‑assessable non‑exempt income. Provisions of the Income Tax Assessment Act 1997 are identified in normal text. The other provisions, in bold, are provisions of the Income Tax Assessment Act 1936. alienated personal services income associate, non‑deductible payment or obligation to 85‑20(3) entitlements to a share of net income that is personal services income already assessable to an individual 86‑35(2) payments by personal services entity or associate of personal services income already assessable to an individual 86‑35(1) personal services entity, amounts of personal services income assessable to an individual 86‑30 bonds see securities dividends demerger dividends......................... 44(4) later dividend set off against amount taken to be dividend 109ZC(3) firearms surrender arrangements compensation under......................... 59‑10 depreciated value, consideration exceeds........... 59(2AAA) foreign aspects of income taxation attributed controlled foreign company income........ 23AI attributed foreign investment fund income.......... 23AK dividend from a foreign country, non‑portfolio. 23AJ branch profits of Australian companies............ 23AH withholding tax, dividend royalty or interest subject to.. 128D GST GST payable on a taxable supply................ 17‑5(a) increasing adjustments....................... 17‑5(b) and (c) life insurance companies.......................... Subdivision 320‑B mining withholding tax, payments to Aboriginals and distributing bodies subject to 59‑15 non‑cash benefits fringe benefits............................. 23L(1) notional sale and loan arrangement payments a notional seller receives or is entitled to receive 240‑40 luxury car leases, lease payments that the lessor receives or is entitled to receive 42A‑40 in Schedule 2E offshore banking units assessable OB income other than eligible fraction..... 121EG related entities amounts from, where deduction reduced for......... 26‑35(4) repayable amounts previously assessable amounts.................. 59‑30 securities securities acquired at a discount on or before 30 June 1982, amount received on sale or redemption of 23J special bond, amount received on redemption of...... 23E small business assets income arising from CGT event, company or trust owned asset continuously for 15 years 152‑110(2) social security or like payments older Australians, bonus payments made to.......... 59‑5 tax loss transfers consideration received by loss company from income company, generally 170‑25(1) consideration received by loss company from income company, net capital loss 170‑125(1) trading stock disposal outside ordinary course of business, amounts received upon 70‑90(2) trusts attributable income, amounts representing.......... 99B(2A) family trust distribution tax, amounts subject to....... 271‑105(3) in Schedule 2F windfall amounts business franchise fees, refund of when invalid....... 59‑20 State tax on Commonwealth place, refund of when invalid 59‑25 70A Paragraph 15‑60(3)(b) Omit "*exempt income of the company under paragraph 320‑35(1)(f)", substitute "*non‑assessable non‑exempt income of the company under paragraph 320‑37(1)(d)". 71 Subparagraph 17‑5(c)(ii) Omit "an *assessable recoupment", substitute "a *recoupment that is included in assessable income". 72 Section 20‑160 (link note) Repeal the link note, substitute: [The next Division is Division 25.] 73 Division 22 Repeal the Division. 74 Section 25‑90 (heading) Repeal the heading, substitute: 25‑90 Deduction relating to foreign non‑assessable non‑exempt income 75 Paragraph 25‑90(b) Omit "exempt income", substitute "*non‑assessable non‑exempt income". 76 Subsection 36‑20(1) Omit "(except *excluded exempt income)". 77 Paragraphs 36‑20(2)(a) and (b) Repeal the paragraphs, substitute: (a) your *exempt income *derived from sources in Australia; and (b) your exempt income to which section 26AG (Certain film proceeds included in assessable income) of the Income Tax Assessment Act 1936 applies; 78 Subsections 36‑20(3), (3A) and (4) Repeal the subsections. 79 Subsection 40‑100(4) After "*exempt income", insert "or *non‑assessable non‑exempt income". 80 Subsection 40‑105(1) After "*exempt income", insert "or *non‑assessable non‑exempt income". 81 Part 2‑15 (heading) Repeal the heading, substitute: Part 2‑15—Non‑assessable income 82 Section 51‑15 (link note) Omit "51‑25", substitute "51‑30". 83 Section 51‑25 Repeal the section. 84 Section 51‑45 Repeal the section. 85 Section 51‑48 Repeal the section. 86 Section 51‑49 Repeal the section. 87 Subdivision 52‑E Repeal the Subdivision. 88 Section 58‑90 (link note) Repeal the link note. 89 At the end of Part 2‑15 Add: Division 59—Particular amounts of non‑assessable non‑exempt income Guide to Division 59 59‑1 What this Division is about This Division details particular amounts that are non‑assessable non‑exempt income. Table of sections Operative provisions 59‑5 Bonus payments made to certain older Australians 59‑10 Compensation under firearms surrender arrangements 59‑15 Mining payments 59‑20 Taxable amounts relating to franchise fees windfall tax 59‑25 Taxable amounts relating to Commonwealth places windfall tax [This is the end of the Guide.] Operative provisions 59‑5 Bonus payments made to certain older Australia