Tax Laws Amendment (2007 Measures No. 3) Act 2007 (Cth)

Tax Laws Amendment (2007 Measures No. 3) Act 2007 No. 79, 2007 An Act to amend the law relating to taxation, and for related purposes Contents 1 Short title 2 Commencement 3 Schedule(s) Schedule 1—Distributions to entities connected with a private company and related issues Part 1—Main amendments Income Tax Assessment Act 1936 Income Tax Assessment Act 1997 Part 2—Other amendments Fringe Benefits Tax Assessment Act 1986 Income Tax Assessment Act 1936 Income Tax Assessment Act 1997 Part 3—Time limit for making franking assessments Income Tax Assessment Act 1997 Part 4—Application Schedule 2—Transitional excess non‑concessional contributions Income Tax (Transitional Provisions) Act 1997 Schedule 3—Capital gains of testamentary trusts Income Tax Assessment Act 1997 Schedule 4—Superannuation of deceased military and police Income Tax Assessment Act 1997 Schedule 5—Thin capitalisation Income Tax (Transitional Provisions) Act 1997 Schedule 6—Repeal of dividend tainting rules Income Tax Assessment Act 1936 Income Tax Assessment Act 1997 Schedule 7—Interest withholding tax Income Tax Assessment Act 1936 Schedule 8—Forestry managed investment schemes Part 1—Main amendments Income Tax Assessment Act 1936 Income Tax Assessment Act 1997 Taxation Administration Act 1953 Part 2—Other amendments Income Tax Assessment Act 1936 Income Tax Assessment Act 1997 Part 3—Application Schedule 9—Non‑resident trustee beneficiaries Income Tax Assessment Act 1936 Income Tax Assessment Act 1997 Income Tax Rates Act 1986 Schedule 10—Distributions to foreign residents from managed investment trusts Part 1—Main amendments Taxation Administration Act 1953 Part 2—Consequential amendments Income Tax Assessment Act 1936 Income Tax Assessment Act 1997 Taxation Administration Act 1953 Part 3—Application Tax Laws Amendment (2007 Measures No. 3) Act 2007 No. 79, 2007 An Act to amend the law relating to taxation, and for related purposes [Assented to 21 June 2007] The Parliament of Australia enacts: 1 Short title This Act may be cited as the Tax Laws Amendment (2007 Measures No. 3) Act 2007. 2 Commencement (1) Each provision of this Act specified in column 1 of the table commences, or is taken to have commenced, in accordance with column 2 of the table. Any other statement in column 2 has effect according to its terms. Commencement information Column 1 Column 2 Column 3 Provision(s) Commencement Date/Details 1. Sections 1 to 3 and anything in this Act not elsewhere covered by this table The day on which this Act receives the Royal Assent. 21 June 2007 2. Schedule 1 The day on which this Act receives the Royal Assent. 21 June 2007 3. Schedule 2 Immediately after the commencement of Schedule 1 to the Tax Laws Amendment (Simplified Superannuation) Act 2007. 15 March 2007 4. Schedules 3 to 7 The day on which this Act receives the Royal Assent. 21 June 2007 5. Schedule 8 1 July 2007. 1 July 2007 6. Schedules 9 and 10 The day on which this Act receives the Royal Assent. 21 June 2007 Note: This table relates only to the provisions of this Act as originally passed by both Houses of the Parliament and assented to. It will not be expanded to deal with provisions inserted in this Act after assent. (2) Column 3 of the table contains additional information that is not part of this Act. Information in this column may be added to or edited in any published version of this Act. 3 Schedule(s) Each Act that is specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has effect according to its terms. Schedule 1—Distributions to entities connected with a private company and related issues Part 1—Main amendments Income Tax Assessment Act 1936 1 Section 109B Omit "and provides a basis for a debit arising in the company's franking account (under item 8 of the table in section 205‑30 of the Income Tax Assessment Act 1997)". 2 At the end of subsection 109C(3A) Add: Note: Payments converted to loans before the private company's lodgment day are treated as loans (see subsection 109D(4A)). 3 After subsection 109D(4) Insert: Payment converted to loan before lodgment day (4A) If: (a) a private company makes a payment to an entity at a time in a year of income; and (b) the payment is converted to a loan before the end of the private company's lodgment day for the year of income; for the purposes of this Division, treat the events mentioned in paragraphs (a) and (b) as the private company making a loan to the entity at the time mentioned in paragraph (a). 4 Paragraph 109E(1)(c) Repeal the paragraph, substitute: (c) the amount (if any) paid to the private company during the current year in relation to the amalgamated loan falls short of the minimum yearly repayment of the amalgamated loan worked out under subsection (5) for the current year; and (d) section 109Q does not apply in relation to the current year. 5 Subsection 109E(2) Omit "the amount of the amalgamated loan that has not been repaid at the end of the current year", substitute "the amount of the shortfall mentioned in paragraph (1)(c)". 6 After subsection 109E(3) Insert: (3A) Subsection (3B) applies if: (a) a private company is taken to have made an amalgamated loan (the old amalgamated loan) during a year of income (the original year of income); and (b) the maximum term of the old amalgamated loan under subsection 109N(3) was 7 years; and (c) in a later year of income (the later year of income): (i) a constituent loan taken account of by the old amalgamated loan becomes secured by a mortgage over real property; and (ii) the term of the constituent loan is extended; and (d) as a result of the mortgage, the maximum term of the constituent loan under subsection 109N(3) is 25 years; and (e) the term of the constituent loan after the extension (including the period before the extension during which the constituent loan was in existence) does not exceed 25 years. (3B) For the purposes of this Division in relation to the later year of income and subsequent years of income: (a) treat the constituent loan as a new amalgamated loan that takes account of that constituent loan; and (b) treat the new amalgamated loan as having been made just before the start of the later year of income; and (c) treat the amount of the new amalgamated loan just before the start of the later year of income as the amount of the constituent loan that had not been repaid at that time; and (d) unless paragraph (e) applies—reduce the amount of the old amalgamated loan just before the start of the later year of income by the amount of the new amalgamated loan at that time; and (e) if the constituent loan was the only constituent loan taken account of by the old amalgamated loan—disregard the old amalgamated loan. 7 Paragraph 109G(3)(a) Omit "or 109E". Note: The heading to subsection 109G(3) is altered by omitting "did give rise to dividend" and substituting "gives rise to dividend under section 109D". 8 Paragraph 109G(3)(b) Omit "subsection 108(1)", substitute "former subsection 108(1)". 9 After subsection 109G(3) Insert: Reduced dividend for forgiveness of loan debt if loan causes dividend under section 109E (3A) Subsection (3B) applies if: (a) a private company is taken under section 109F to pay a dividend at the end of a year of income because of the forgiveness of an amount of a debt resulting from a loan; and (b) the private company is taken under section 109E to pay a dividend at the end of an earlier year of income in relation to the loan. (3B) The amount of the dividend mentioned in paragraph (3A)(a) is reduced by the amount of the dividend mentioned in paragraph (3A)(b) (but not below zero). Note: There may be more than one reduction under this subsection if the private company has been taken under section 109E to pay more than one dividend in relation to the loan. 10 After subsection 109N(3) Insert: (3A) Reduce the maximum term under paragraph (3)(a) for a loan (the new loan) in accordance with subsection (3B) if: (a) the new loan results from the refinancing of another loan (the old loan); and (b) the maximum term of the old loan under subsection (3) was 7 years; and (c) the maximum term of the new loan under subsection (3) is 25 years (disregarding this subsection). (3B) The amount of the reduction is equal to the length of the period: (a) starting when the old loan was made; and (b) ending when the old loan was refinanced. (3C) Reduce the maximum term under paragraph (3)(b) for a loan (the new loan) in accordance with subsection (3D) if: (a) the new loan results from the refinancing of another loan (the old loan); and (b) the maximum term of the old loan under subsection (3) was 25 years; and (c) the maximum term of the new loan under subsection (3) is 7 years (disregarding this subsection); and (d) the length of the period: (i) starting when the old loan was made; and (ii) ending when the old loan was refinanced; exceeds 18 years. (3D) The amount of the reduction is the excess mentioned in paragraph (3C)(d). 11 Section 109P (note) Repeal the note, substitute: Note: A shortfall in a minimum yearly repayment of an amalgamated loan may be treated as a dividend under section 109E. 12 At the end of section 109R Add: (5) Subsection (2) does not apply to a payment if: (a) the payment is made to refinance the loan mentioned in subsection (1) (the old loan); and (b) the entity to which the old loan was made has another loan (the primary loan) from another entity; and (c) the old loan becomes subordinated to the primary loan; and (d) the refinancing of the old loan mentioned in paragraph (a) took place in connection with that subordination; and (e) that subordination arose as a result of circumstances beyond the control of the entity to which the old loan was made; and (f) the entity to which the old loan was made and the other entity dealt with each other at arm's length in relation to that subordination; and (g) the private company and the other entity dealt with each other at arm's length in relation to that subordination. (6) Subsection (2) does not apply to a payment if: (a) the payment is made to refinance the loan mentioned in subsection (1) (the old loan); and (b) the refinancing results in another loan (the new loan); and (c) the maximum term of the old loan under subsection 109N(3) was 7 years; and (d) the maximum term of the new loan under subsection 109N(3) is 25 years (reduced in accordance with subsection 109N(3B)). (7) Subsection (2) does not apply to a payment if: (a) the payment is made to refinance the loan mentioned in subsection (1) (the old loan); and (b) the refinancing results in another loan (the new loan); and (c) the maximum term of the old loan under subsection 109N(3) was 25 years; and (d) the maximum term of the new loan under subsection 109N(3) is: (i) unless subparagraph (ii) applies—7 years; or (ii) if subsection 109N(3D) applies—7 years reduced in accordance with that subsection. 13 After Subdivision DA of Division 7A Insert: Subdivision DB—Other exceptions 109RB Commissioner may disregard operation of Division or allow dividend to be franked (1) The Commissioner may make a decision under subsection (2) if: (a) this Division (disregarding this section) operates with the result that: (i) a private company is taken to pay a particular dividend to a particular entity (the recipient) under this Division; or (ii) a particular amount is included, as if it were a dividend, in the assessable income of a particular entity (also the recipient) in relation to a private company under Subdivision EA; and (b) the result mentioned in paragraph (a) arises because of an honest mistake or inadvertent omission by any of the following entities: (i) the recipient; (ii) the private company; (iii) any other entity whose conduct contributed to that result. (2) The Commissioner may decide in writing that: (a) the result mentioned in paragraph (1)(a) should be disregarded (see subsection (4)); or (b) the dividend mentioned in subparagraph (1)(a)(i) may be franked in accordance with Part 3‑6 of the Income Tax Assessment Act 1997 (see subsection (6)). (3) In making a decision under subsection (2) (or refusing to make such a decision), the Commissioner must have regard to the following: (a) the circumstances that led to the mistake or omission mentioned in paragraph (1)(b); (b) the extent to which any of the entities mentioned in paragraph (1)(b) have taken action to try to correct the mistake or omission and if so, how quickly that action was taken; (c) whether this Division has operated previously in relation to any of the entities mentioned in paragraph (1)(b), and if so, the circumstances in which this occurred; (d) any other matters that the Commissioner considers relevant. (4) The Commissioner may make a decision under subsection (2) subject to any of the following kinds of condition: (a) a condition that the recipient or another entity must make specified payments to the private company or another entity within a specified time; (b) a condition that a specified requirement in this Division must be met within a specified time. (5) This Division is taken not to operate with the result mentioned in paragraph (1)(a) if: (a) the Commissioner makes a decision under paragraph (2)(a); and (b) if the Commissioner makes the decision subject to a condition under subsection (4)—the condition is satisfied. (6) If the Commissioner makes a decision under paragraph (2)(b), subparagraph 202‑45(g)(i) of the Income Tax Assessment Act 1997 does not make the dividend mentioned in subparagraph (1)(a)(i) unfrankable. (7) Despite subsection 33(3A) of the Acts Interpretation Act 1901, each decision made under subsection (2) must relate only to one amount that would (disregarding this section): (a) be taken to be a dividend paid by the private company; or (b) be included, as if it were a dividend, in the assessable income of an entity. 109RC Dividend may be franked if taken to be paid because of family law obligation (1) This section applies if a dividend is taken to be paid under this Division because of a family law obligation. (2) Subparagraph 202‑45(g)(i) of the Income Tax Assessment Act 1997 does not make the amount of the dividend unfrankable. (3) The dividend can be franked in accordance with Part 3‑6 of the Income Tax Assessment Act 1997 only if: (a) the dividend is franked at the private company's benchmark franking percentage for the franking period in which the dividend is taken to be paid; or (b) if the private company does not have a benchmark franking percentage for the period—the dividend is franked at a franking percentage of 100%. (4) For the purposes of subsection (3), if the recipient of the dividend is not a member of the private company for the purposes of Part 3‑6 of the Income Tax Assessment Act 1997, treat that recipient as such a member. 109RD Commissioner may extend period for repayments of amalgamated loan (1) The Commissioner may make a decision under subsection (2) if: (a) section 109E operates with the result that a private company is taken to pay a particular dividend to a particular entity (the recipient); and (b) the shortfall mentioned in paragraph 109E(1)(c) arises because the recipient is unable to pay the private company the minimum yearly repayment mentioned in that paragraph because of circumstances beyond the recipient's control. (2) The Commissioner may decide in writing that the result mentioned in paragraph (1)(a) should be disregarded (see subsection (4)) if the recipient pays the private company the amount of the shortfall within a specified time. (3) In making a decision under subsection (2) (or refusing to make such a decision), the Commissioner must have regard to the following: (a) the nature of the circumstances mentioned in paragraph (1)(b); (b) any other matters that the Commissioner considers relevant. (4) This Division is taken not to operate with the result mentioned in paragraph (1)(a) if: (a) the Commissioner makes a decision under subsection (2); and (b) the recipient pays the private company the amount of the shortfall within the specified time. (5) Despite subsection 33(3A) of the Acts Interpretation Act 1901, each decision made under subsection (2) must relate only to one amount that would be taken to be a dividend paid by the private company (disregarding this section). 14 At the end of section 109UA Add: (5) Subsection (1) does not apply if: (a) as a result of the first entity's liability mentioned in that subsection, the target entity has a liability (other than a contingent liability) to make a payment to the first entity; and (b) because of section 109N, the liability to make a payment to the first entity is not treated under this Division as giving rise to a dividend paid to the first entity. 15 Subsection 109X(2) Repeal the subsection, substitute: (2) Subsections (3) and (4) apply if a notional loan arises under section 109W because an entity interposed between the private company and the target entity makes a loan (the actual loan) to the target entity. (3) For the purposes of section 109N, treat the agreement under which the actual loan was made as the agreement under which the notional loan was made. (4) For the purposes of section 109E: (a) treat the notional loan as an amalgamated loan from the private company to the target entity; and (b) treat the amount of the notional loan worked out under subsection 109W(1) as the amount of the amalgamated loan; and (c) treat the agreement under which the actual loan was made as the agreement under which the amalgamated loan was made; and (d) treat repayments by the target entity of the amount of the notional loan worked out under subsection 109W(3) as payments by the target entity to the private company in relation to the amalgamated loan. Note: The heading to section 109X is replaced by the heading "Operation of Subdivision D in relation to payment or loan". 16 Subsection 109Y(2) (definition of net assets) Omit "undervalue", substitute "undervalue or overvalue". 17 Subsection 109Y(2) (definition of net assets) Omit "overvalue", substitute "undervalue or overvalue". 18 Subsection 109Y(2) (paragraph (a) of the definition of repayments of non‑commercial loans) After "loans", insert "or amounts". 19 After subsection 109ZC(1) Insert: (1A) This section also sets out special rules for dealing with a dividend (also the later dividend) distributed by a private company if: (a) the private company distributes the later dividend to a shareholder in the company; and (b) the shareholder applies the amount of the dividend to repay all or part of a loan: (i) that was obtained from the private company by an associate of the shareholder; and (ii) in relation to which a dividend was previously taken under this Division to have been paid by the private company. 20 Subsection 109ZC(2) After "set off" (wherever occurring), insert "or applied". 21 Section 109ZD Insert: benchmark franking percentage has the same meaning as in the Income Tax Assessment Act 1997. 22 Section 109ZD Insert: deficit has the same meaning as in the Income Tax Assessment Act 1997. 23 Section 109ZD Insert: family law obligation means an order, agreement or award mentioned in paragraph 126‑5(1)(a), (b), (c), (d), (e) or (f) of the Income Tax Assessment Act 1997. 24 Section 109ZD Insert: franking account has the same meaning as in the Income Tax Assessment Act 1997. 25 Section 109ZD Insert: franking percentage has the same meaning as in the Income Tax Assessment Act 1997. 26 Section 109ZD Insert: franking period has the same meaning as in the Income Tax Assessment Act 1997. 27 Section 109ZD Insert: unfrankable has the same meaning as in the Income Tax Assessment Act 1997. Income Tax Assessment Act 1997 28 Subparagraph 202‑45(g)(i) Before "Division", insert "unless subsection 109RB(6) or 109RC(2) applies in relation to the amount—". 29 Section 205‑30 (table item 8) Repeal the item. Part 2—Other amendments Fringe Benefits Tax Assessment Act 1986 30 At the end of subsection 16(1) Add: Note: A loan benefit that is taken under this subsection to be provided in respect of a year of tax may not be provided as a fringe benefit if: (a) the loan was made in that year of tax or a previous year of tax; and (b) a dividend is not taken to be paid under section 109D of the Income Tax Assessment Act 1936 in relation to the loan, because of section 109N of that Act. See paragraph (s) of the definition of fringe benefit in subsection 136(1) of this Act. 31 Subsection 136(1) (paragraph (r) of the definition of fringe benefit) Omit "dividend.", substitute "dividend; or". 32 Subsection 136(1) (at the end of the definition of fringe benefit) Add: (s) a loan (within the meaning of section 109D of the Income Tax Assessment Act 1936), if: (i) a dividend is not taken to be paid under that section in relation to the loan, but would be if section 109N of that Act were disregarded; or (ii) an amount is not included, as if it were a dividend, in the assessable income of an entity under section 109XB of that Act in relation to the loan, but would be if section 109N of that Act were disregarded. Income Tax Assessment Act 1936 33 Section 108 Repeal the section. 34 Subsection 109Y(2) (definition of non‑commercial loans) Omit "section 108", substitute "former section 108". 35 Subsection 109Y(2) (definition of repayments of non‑commercial loans) Omit "section 108" (wherever occurring), substitute "former section 108, or section". 36 Subsection 109Y(2) (subparagraph (b)(i) of the definition of repayments of non‑commercial loans) Omit "subsection 108(2)", substitute "former subsection 108(2)". 37 Paragraph 160AEA(1)(d) Omit "or 108". 38 Paragraph 268‑40(5)(b) in Schedule 2F Repeal the paragraph. Income Tax Assessment Act 1997 39 Section 10‑5 (table item headed "shareholders") Omit "108,". 40 Paragraph 165‑60(5)(b) Repeal the paragraph. 41 Subparagraph 202‑45(g)(ii) Repeal the subparagraph. Part 3—Time limit for making franking assessments Income Tax Assessment Act 1997 42 After subsection 214‑60(1) Insert: (1A) However, the Commissioner must not make an assessment under subsection (1) for an entity for an income year if: (a) the entity is not required under Subdivision 214‑A to give the Commissioner a *franking return for the income year; and (b) the entity is not required under Division 214 of the Income Tax (Transitional Provisions) Act 1997 to give the Commissioner a franking return for the balancing period ending within the income year; and (c) the entity was required to lodge an *income tax return for the income year by a particular time; and (d) the entity has lodged that income tax return; and (e) 3 years have passed since the later of the following: (i) the time mentioned in paragraph (c); (ii) the time when the entity lodged that income tax return. Part 4—Application 43 Application (1) The amendments made by this Schedule apply to assessments for the income year in which 1 July 2006 occurred and later income years. (2) Despite subitem (1), the amendments made by this Schedule to the Fringe Benefits Tax Assessment Act 1986 apply to benefits provided in a year of tax that begins on or after 1 April 2007. (3) If: (a) a loan was made in a year of tax that began before 1 April 2007; and (b) the loan is covered under paragraph (s) of the definition of fringe benefit in the Fringe Benefits Tax Assessment Act 1986 (as added by this Schedule); and (c) because of the loan, a loan benefit is taken under subsection 16(1) of the Fringe Benefits Tax Assessment Act 1986 to be provided in respect of a year of tax that begins on or after 1 April 2007; treat the loan benefit as not being a fringe benefit for the purposes of that Act. (4) Despite subitem (1), the following rules apply: (a) the amendments made by this Schedule, to they extent that they relate to section 109RB of the Income Tax Assessment Act 1936, apply in relation to the 2001‑02 income year and later income years; (b) the Commissioner may make decisions under that section on and after the commencement of that section in relation to events that occurred before that commencement; (c) however, the Commissioner cannot make a decision under paragraph 109RB(2)(b) of that Act if the dividend mentioned in subparagraph 109RB(1)(a)(i) of that Act is taken to have been paid before 1 July 2002; (d) the Commissioner may amend a franking assessment made before the commencement of this item for the purpose of giving effect to a decision under section 109RB of that Act, if the amendment is made within 4 years after that commencement. (5) Section 170 of the Income Tax Assessment Act 1936 does not prevent the amendment of an assessment if: (a) the assessment was made before the commencement of this item; and (b) the amendment is made within 4 years after that commencement; and (c) the amendment is made for the purpose of giving effect to a decision of the Commissioner under section 109RB of that Act. (6) Despite subitem (1), the amendment made by Part 3 of this Schedule applies to franking assessments for the income year in which 1 July 2006 occurred and later income years. Schedule 2—Transitional excess non‑concessional contributions Income Tax (Transitional Provisions) Act 1997 1 At the end of paragraph 292‑80(3)(b) Add: (iii) included each contribution covered under subsection (7) in respect of the person; and 2 At the end of section 292‑80 Add: (7) A contribution is covered under this subsection if: (a) the contribution is made in respect of the person mentioned in subparagraph (3)(b)(iii) by another entity; and (b) the person is not an employee of the other entity; and (c) under Division 295 of the Income Tax Assessment Act 1997 (as that Division applies for the purposes of subsection (3)), the contribution is included in the assessable income of the superannuation provider in relation to the superannuation plan to which the contribution is made; and (d) the contribution is made after 6 December 2006. (8) For the purposes of paragraph (7)(b), treat the person as an employee of the other entity if the person would be treated as an employee of the other entity under Division 290 of the Income Tax Assessment Act 1997 (as that Division applies for the purposes of subsection (3)). Schedule 3—Capital gains of testamentary trusts Income Tax Assessment Act 1997 1 Before paragraph 103‑25(3)(a) Insert: (aa) subsection 115‑230(3) (relating to assessment of *capital gains of resident testamentary trusts) requires a trustee to make a choice by the time specified in subsection 115‑230(5); and 2 At the end of Subdivision 115‑C Add: 115‑230 Assessing capital gains of resident testamentary trusts Purpose (1) The purpose of this section is to allow a trustee of a resident testamentary trust to make a choice that has the effect that the trustee will be assessed on *capital gains of the trust in situations where: (a) the gains would otherwise form part of a share of the net income of the trust estate that would be included in the assessable income of a beneficiary who could not benefit from them; or (b) the trustee would otherwise be liable to tax on the gains on behalf of such a beneficiary under section 98 of the Income Tax Assessment Act 1936. Trusts for which choice can be made (2) A trustee can only make a choice under this section in relation to a trust estate: (a) that results from: (i) a will, a codicil or an order of a court that varied or modified the provisions of a will or a codicil; or (ii) an intestacy or an order of a court that varied or modified the application, in relation to the estate of a deceased person, of the provisions of the law relating to the distribution of the estates of persons who die intestate; and (b) that is, in the income year in respect of which the choice is made, a resident trust estate within the meaning of Division 6 of Part III of the Income Tax Assessment Act 1936. Circumstances in which choice can be made (3) If: (a) apart from this section: (i) a share of the net income of a trust estate that is attributable to *capital gains would be included in the assessable income of a beneficiary for an income year under section 97 of the Income Tax Assessment Act 1936; or (ii) a trustee would, on behalf of a beneficiary, be assessed and liable to pay tax for an income year under section 98 of the Income Tax Assessment Act 1936 in respect of a share of the net income of a trust estate that is attributable to capital gains; and (b) the beneficiary does not have a vested and indefeasible interest in trust property representing that share; and (c) trust property representing that share has not been paid to or applied for the benefit of the beneficiary; the trustee may, no later than the deadline in subsection (5), make a choice that subsection (4) applies in respect of the beneficiary's share. Consequences if trustee makes choice (4) These are the consequences if the trustee makes a choice that this subsection applies in respect of a beneficiary's share: (a) for the purposes of sections 97, 98A and 100 of the Income Tax Assessment Act 1936, the share is taken not to be included in the assessable income of the beneficiary; (b) the trustee is not assessed, and is not liable to pay tax, in respect of the share under section 98 of the Income Tax Assessment Act 1936. Note 1: Because of these consequences in relation to sections 97 and 98 of the Income Tax Assessment Act 1936, the trustee will be assessed on the beneficiary's share under section 99A or (at the Commissioner's discretion) 99 of that Act. Note 2: Section 115‑215 does not apply in relation to an amount to which this subsection applies. Deadline for making choice (5) The deadline for the purposes of subsection (3) is: (a) the day 2 months after the last day of the income year; or (b) a later day allowed by the Commissioner. Note: This deadline is an exception to the general rule about choices in section 103‑25. 3 Application (1) The amendments made by this Schedule apply in relation to the 2005‑2006 income year and later income years. (2) Despite subsection 115‑230(5) of the Income Tax Assessment Act 1997, a choice under subsection 115‑230(3) of that Act may be made no later than 2 years after the commencement of section 115‑230 (or a later time allowed by the Commissioner) if the choice is in respect of the 2005‑2006 income year. (3) Despite subsection 115‑230(5) of the Income Tax Assessment Act 1997, a choice under subsection 115‑230(3) of that Act may be made no later than 2 years after the commencement of section 115‑230 (or a later time allowed by the Commissioner) if: (a) section 115‑230 commences after the end of the 2006‑2007 income year; and (b) the choice is in respect of the 2006‑2007 income year. 4 Amendment of assessments Section 170 of the Income Tax Assessment Act 1936 does not prevent the amendment of an assessment if: (a) the assessment was made before the commencement of this item; and (b) an application to amend the assessment is made, in the form approved for the purposes of subsection 170(5), within 2 years of the commencement of this item; and (c) the amendment is made for the purpose of giving effect to a choice under subsection 115‑230(3) of the I