Taxation Laws Amendment Act (No. 6) 1999 (Cth)

Taxation Laws Amendment Act (No. 6) 1999 No. 54, 1999 Taxation Laws Amendment Act (No. 6) 1999 No. 54, 1999 An Act to amend the law relating to taxation, and for related purposes Contents 1 Short title................................... 2 Commencement............................... 3 Schedule(s).................................. 4 Amendment of income tax assessments................. Schedule 1—Spectrum licences Part 1—Insertion of new Division in the Income Tax Assessment Act 1997 Part 2—Consequential amendments Income Tax Assessment Act 1936 Income Tax Assessment Act 1997 Part 3—International Tax Agreements Act 1953 Part 4—Application Schedule 2—Technical amendment of the Income Tax Assessment Act 1997 Schedule 3—Technical amendment of the Income Tax Assessment Act 1936 Schedule 4—Amendment of other Acts Airports (Transitional) Act 1996 Income Tax (Transitional Provisions) Act 1997 Tax Law Improvement Act 1997 Schedule 5—"Catch‑up" amendments Part 1—Amendment of the Income Tax Assessment Act 1997 Part 2—Amendment of the Income Tax Assessment Act 1936 Schedule 6—Provisional tax uplift factor Income Tax Assessment Act 1936 Schedule 7—Youth allowance and austudy payment Income Tax Assessment Act 1936 Income Tax Assessment Act 1997 Taxation Laws Amendment Act (No. 6) 1999 No. 54, 1999 An Act to amend the law relating to taxation, and for related purposes [Assented to 5 July 1999] The Parliament of Australia enacts: 1 Short title This Act may be cited as the Taxation Laws Amendment Act (No. 6) 1999. 2 Commencement (2) Item 2 of Schedule 7 commences immediately after the commencement of Schedule 5. 3 Schedule(s) Subject to section 2, each Act that is specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has effect according to its terms.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—Spectrum licences Part 1—Insertion of new Division in the Income Tax Assessment Act 1997 1 Section 375‑880 (link note) Repeal the link note, substitute: [The next Division is Division 380.] Division 380—Spectrum licences under the Radiocommunications Act Table of Subdivisions Guide to Division 380 380‑A Deductions for capital expenditure on spectrum licences 380‑B Partial realisation of spectrum licences 380‑C Replacement of spectrum licences 380‑D Balancing adjustments 380‑E Application of the Common rules 380‑F Adjustments affecting your deductions under this Division Guide to Division 380 380‑5 What this Division is about This Division creates a capital allowance for expenditure incurred in obtaining a spectrum licence that you use for the purpose of producing assessable income. Note 1: In some cases, you get a deduction even if you obtained the spectrum licence for nothing. Note 2: Division 40 sets out an overview of capital allowances. Division 41 sets out the Common rules that can affect capital allowances (see also Subdivision 380‑E). In certain cases, an amount is included in your assessable income to reverse the effect of past deductions. Subdivision 380‑A—Deductions for capital expenditure on spectrum licences Table of sections 380‑10 When can you deduct your expenditure? 380‑15 How much can you deduct? 380‑20 What is your unrecouped expenditure? 380‑25 What is your expenditure? 380‑10 When can you deduct your expenditure? (1) You can deduct an amount for the *current year for your *expenditure incurred in obtaining a *spectrum licence if you used the spectrum licence in that year for the *purpose of producing assessable income. (2) However, you cannot deduct an amount under this section if, in the *current year or an earlier income year: (a) you ceased to hold the *spectrum licence when it was *replaced by another spectrum licence that you held after the replacement; or (b) a *balancing adjustment event happened at a time when you held the *spectrum licence. Note 1: For the replacement of spectrum licences, see Subdivision 380‑C. If some or all of the spectrum licence was replaced in the current year, you may be able to deduct an amount under that Subdivision whether or not you ceased to hold the spectrum licence when that happened. Note 2: If a balancing adjustment event happened in the current year, you may be able to deduct an amount because of the balancing adjustment that you must make: see Subdivision 380‑D. Note 3: You can deduct an amount under this section even if you have assigned part of the spectrum licence, or part of it is resumed by the ACA. The effect of such partial realisations is set out in Subdivision 380‑B. Note 4: Once you have a deduction under this section, an amount may be included in your assessable income under Subdivision 380‑B, 380‑C or 380‑D. 380‑15 How much can you deduct? The amount you can deduct for the *current year is worked out as follows. How much you can deduct Step 1. Divide your *unrecouped expenditure on the *spectrum licence at the end of the current year by the number of income years from the start of the current year to the end of the income year in which the spectrum licence expires. Step 2. Work out the number of days in the current year on which you used the spectrum licence for the *purpose of producing assessable income. Step 3. Divide the result in step 2 by the number of days in the current year. Step 4. Multiply the results in steps 1 and 3. This is the amount that you can deduct for the current year under section 380‑10. 380‑20 What is your unrecouped expenditure? (1) Your unrecouped expenditure on a *spectrum licence starts as your *expenditure incurred in obtaining the spectrum licence, but is reduced over time. (It can also be increased later.) (2) Immediately after the end of an income year, it is reduced by the amount you can deduct under section 380‑10 for the *expenditure for that income year. (3) The table shows the other provisions that reduce or increase your unrecouped expenditure. Reducing or increasing unrecouped expenditure Item For this situation: See: 1 A partial realisation of the spectrum licence may reduce it Subdivision 380‑B 2 A replacement of some or all of the spectrum licence may reduce it Subdivision 380‑C 3 A balancing adjustment reduces it to nil Subdivision 380‑D 4 A variation of the spectrum licence to increase the part of the spectrum specified may increase it Section 380‑105 380‑25 What is your expenditure? (1) Your expenditure incurred in obtaining a *spectrum licence is worked out using the table. If more than one case in the table applies, use the expenditure in the last applicable case. (It does not matter whether an event described happened in the *current year or earlier.) (2) However, your expenditure does not include an amount that you have deducted or can deduct, or that has been or will be taken into account in working out an amount you have deducted or can deduct: (a) under this Division in respect of another *spectrum licence; or (b) under another Division of this Act. Your expenditure on the spectrum licence Case If you hold the spectrum licence at the end of the current year because: Your expenditure on the spectrum licence is: But it may be adjusted by: 1 the spectrum licence was originally issued to you the capital expenditure you incurred in obtaining the spectrum licence Common rule 2 (non‑arm's length transactions: see section 380‑95) 2 the spectrum licence was originally issued to you because some or all of another spectrum licence, that you held but had never used for the *purpose of producing assessable income, was resumed by the *ACA under Division 6 of Part 3.2 of the Radiocommunications Act 1992 so much of the difference between: not applicable (a) the capital expenditure you incurred in obtaining the other spectrum licence; and (b) the amount of compensation paid to you under section 93 of that Act in respect of the resumption; as is reasonably attributable to the *part of the *spectrum specified in the spectrum licence 3 it is a *new spectrum licence originally issued to you to *replace some or all of an *old spectrum licence (see also Subdivision 380‑C) the sum of: not applicable (a) the capital expenditure (if any) you incurred in obtaining the *new spectrum licence; and (b) if subsection 380‑65(3) applies to the old spectrum licence—the amount worked out in that subsection reduced by the amount (if any) you can deduct under subsection 380‑65(6) 4 the spectrum licence was assigned to you the capital expenditure you incurred in obtaining the spectrum licence section 380‑110 (non‑arm's length transactions) 5 the spectrum licence was assigned to you with other property and no separate consideration was allocated to the spectrum licence so much of the capital expenditure you incurred in obtaining the spectrum licence with the other property as is reasonably attributable to the spectrum licence section 380‑110 (non‑arm's length transactions) 6 the spectrum licence was assigned to you by an entity for no consideration the sum of that entity's *unrecouped expenditure on the spectrum licence, just before the assignment took effect and the capital expenditure (if any) you incurred in obtaining the spectrum licence section 380‑115 (assignment of part of a spectrum licence) 7 the spectrum licence was assigned to you for no consideration by an entity that: a nil amount not applicable (a) used the spectrum licence while it held it, but never for the *purpose of producing assessable income; or (b) never used the item while it held it, but if it had, would never have used it for the *purpose of producing assessable income 8 a *balancing adjustment event happened that is covered by item 3 (about partial changes of ownership) in the table in subsection 380‑80(3) the spectrum licence's market value at the time of the event not applicable 9 a *balancing adjustment event happened to which Common rule 1 applies (see section 380‑100) the transferor's *unrecouped expenditure on the spectrum licence just before the event not applicable Subdivision 380‑B—Partial realisation of spectrum licences Guide to Subdivision 380‑B 380‑30 What this Subdivision is about If you partially realise a spectrum licence, the amount arising reduces your unrecouped expenditure on the spectrum licence, and therefore reduces your future deductions. However, the replacement of some or all of your spectrum licence with another spectrum licence that you hold is not a partial realisation. Instead, Subdivision 380‑C applies. Depending on how much the amount arising is, an amount may also be included in your assessable income (to reverse the effect of past deductions). Note: The full realisation of a spectrum licence may be a balancing adjustment event (see Subdivision 380‑D). Table of sections Operative provisions 380‑35 Amount arising from the partial realisation 380‑40 What are the effects of the partial realisation? 380‑45 Spectrum licence after the partial realisation [This is the end of the Guide.] Operative provisions 380‑35 Amount arising from the partial realisation (1) A partial realisation of a *spectrum licence is an event described in column 2 of an item in the table. (2) However, the *replacement of some or all of a *spectrum licence with another spectrum licence that you hold after the replacement is not a partial realisation of the first‑mentioned spectrum licence. Instead, Subdivision 380‑C applies. (3) The amount arising from the partial realisation is the amount in column 3 of the applicable item in the table. (If more than one item applies, use the amount in the last applicable item.) (4) However, the amount arising from the *partial realisation does not include any amount that is *ordinary income. Partial realisation of a spectrum licence Item Event that is a partial realisation Amount arising from it 1 you assign part of the spectrum licence the amount (if any) paid to you for the part less your expenses reasonably attributable to the assignment 2 you assign part of the spectrum licence with other property, and no separate consideration is allocated to the part the portion of the consideration that is reasonably attributable to the part, less the same portion of your expenses reasonably attributable to the assignment 3 you assign part of the spectrum licence for no consideration so much of your *unrecouped expenditure on the spectrum licence as is reasonably attributable to the part 4 you assign part of the spectrum licence to an entity with which you are not dealing at *arm's length, for no consideration or for less than the part's market value at the time of the assignment the greater of: • so much of your *unrecouped expenditure on the spectrum licence as is reasonably attributable to the part; and • the part's market value at the time of the assignment 5 part of the spectrum licence is resumed under Division 6 of Part 3.2 of the Radiocommunications Act 1992 the amount of compensation paid to you under section 93 of that Act 380‑40 What are the effects of the partial realisation? (1) You work out the effects of a *partial realisation by comparing: (a) the *amount arising from the partial realisation; and (b) your *unrecouped expenditure on the *spectrum licence just before the partial realisation. (2) If the *amount arising from the *partial realisation does not exceed your *unrecouped expenditure, your unrecouped expenditure is reduced by that amount at the time of the *partial realisation. (3) On the other hand, if the *amount arising from the *partial realisation exceeds your *unrecouped expenditure, then: (a) your unrecouped expenditure is reduced to nil (if it is not nil already) at the time of the partial realisation; and (b) the excess is included in your assessable income for the income year of the partial realisation. (4) However, the amount included in your assessable income cannot exceed: • the total of each amount (if any) you can deduct or have deducted for the *spectrum licence for the *current year or an earlier income year under this Division; reduced by: • the total of each amount (if any) included in your assessable income for an income year, in respect of the spectrum licence, under this Division. Note: An amount may be included in your assessable income under this section (because of a previous partial realisation), under section 380‑70 (because of a replacement) or under section 380‑85 (because of a balancing adjustment event). 380‑45 Spectrum licence after the partial realisation To avoid doubt, this Division applies as if the *spectrum licence as varied because of the *partial realisation were the same spectrum licence as before the partial realisation. Subdivision 380‑C—Replacement of spectrum licences Guide to Subdivision 380‑C 380‑50 What this Subdivision is about If some or all of your spectrum licence (whether or not you still hold it) is replaced by another spectrum licence that you hold after the replacement, your unrecouped expenditure on the first‑mentioned spectrum licence is reduced. You may be entitled to deduct an amount in respect of that spectrum licence, or be required to include an amount in your assessable income (to reverse the effect of past deductions). Table of sections Operative provisions 380‑55 Application of Subdivision 380‑60 Amount arising from the replacement 380‑65 Effect if the amount arising does not exceed your unrecouped expenditure 380‑70 Effect if the amount arising exceeds your unrecouped expenditure 380‑75 Old spectrum licence varied because of the replacement [This is the end of the Guide.] Operative provisions 380‑55 Application of Subdivision (1) This Subdivision applies if some or all of a *spectrum licence (the old spectrum licence) is *replaced in the *current year by another spectrum licence (the new spectrum licence). Note 1: The new spectrum licence is treated in the same way as any other spectrum licence. If it was issued to you at the time of the replacement, Case 3 in the table in subsection 380‑25(2) tells you what your expenditure is. But, if you held it before the replacement, your unrecouped expenditure may be adjusted by section 380‑105. Note 2: The consequences may differ depending on whether you continue to hold the old spectrum licence. (2) Some or all of an *old spectrum licence is replaced by a *new spectrum licence if: (a) you held the old spectrum licence when some or all of it was assigned or resumed under Division 5 or 6 of Part 3.2 of the Radiocommunications Act 1992; and (b) you held the new spectrum licence when any of the *part of the *spectrum that was, just before the assignment or resumption, specified in the old spectrum licence is first specified in the new spectrum licence; and (c) none of that part of the spectrum was specified in any other spectrum licence in the interim; and (d) you used the old spectrum licence in the *current year or an earlier income year for the *purpose of producing assessable income. 380‑60 Amount arising from the replacement (1) If the *new spectrum licence *replaces some or all of an *old spectrum licence that is resumed under Division 6 of Part 3.2 of the Radiocommunications Act 1992, the amount arising from the replacement is the amount of compensation paid to you under section 93 of that Act in respect of that resumption. Note: The amount arising does not include any ordinary income (see subsection (3)). (2) If the *new spectrum licence *replaces part of an *old spectrum licence that you assigned under Division 5 of Part 3.2 of that Act, the amount arising from the replacement is the amount in column 3 of the applicable item in the following table. (If more than one item applies, use the amount in the last applicable item.) (3) However, the amount arising from the *replacement (under subsection (1) or (2)) does not include any amount that is *ordinary income. Amount arising when partly assigned Item You assigned part of the old spectrum licence: Amount arising from the replacement 1 for consideration the amount (if any) paid to you for the part less your expenses reasonably attributable to the assignment 2 with other property and no separate consideration was allocated to the part the portion of the consideration that is reasonably attributable to the part, less the same portion of your expenses reasonably attributable to the assignment 3 for no consideration so much of your *unrecouped expenditure on the old spectrum licence as is reasonably attributable to the part 4 to an entity with which you are not dealing at *arm's length, for no consideration or for less than the part's market value at the time of the assignment the greater of: • so much of your *unrecouped expenditure on the old spectrum licence as is reasonably attributable to the part; and • the part's market value at the time of the assignment 380‑65 Effect if the amount arising does not exceed your unrecouped expenditure (1) This section sets out the effect of *replacing some or all of an *old spectrum licence if the *amount arising from the replacement does not exceed your *unrecouped expenditure on the old spectrum licence just before the replacement. (2) Your *unrecouped expenditure is reduced by the *amount arising from the *replacement when the replacement happens. (3) Work out how much of your remaining *unrecouped expenditure on the *old spectrum licence is reasonably attributable to the *part of the *spectrum specified in the *new spectrum licence. Note: This amount is also used to work out your expenditure on the new spectrum licence. See Case 3 in the table in subsection 380‑25(2). (4) If you continue to hold the *old spectrum licence after the *replacement, your *unrecouped expenditure is further reduced (but not beyond nil) by the amount in subsection (3) when the replacement happens. (5) On the other hand, if you no longer hold the *old spectrum licence after the *replacement, your *unrecouped expenditure is further reduced to nil (if it is not nil already) just after the replacement. (6) Whether or not you continue to hold the *old spectrum licence after the *replacement, if you used it in the *current year before that happened for the *purpose of producing assessable income, you can deduct for the current year the amount worked out as follows. How much you can deduct Step 1. Divide the amount in subsection (3) by the number of income years from the start of the current year to the end of the income year in which the old spectrum licence expires or would have expired if it hadn't been replaced. Step 2. Work out the number of days in the current year before the replacement on which you used the old spectrum licence for the purpose of producing assessable income. Step 3. Divide the result in step 2 by the number of days in the current year. Step 4. Multiply the results in steps 1 and 3. This is the amount you can deduct under this section. Note: You may also be able to deduct an amount for the current year under section 380‑10 if you continue to hold the old spectrum licence after the replacement. 380‑70 Effect if the amount arising exceeds your unrecouped expenditure (1) This section sets out the effect of *replacing some or all of an *old spectrum licence if the *amount arising from the replacement exceeds your *unrecouped expenditure on the old spectrum licence just before the replacement. (2) Your *unrecouped expenditure is reduced to nil (if it is not nil already) when the *replacement happens, and the excess is included in your assessable income for the income year in which that happens. (3) However, the amount included in your assessable income cannot exceed: • the total of each amount (if any) you can deduct or have deducted for the *old spectrum licence for the *current year or an earlier income year under this Division; reduced by: • the total of each amount (if any) included in your assessable income for an income year, in respect of the old spectrum licence, under this Division. Note: An amount may be included in your assessable income under this section (because of a previous replacement), under section 380‑40 (because of a partial realisation) or under section 380‑85 (because of a balancing adjustment event). 380‑75 Old spectrum licence varied because of the replacement To avoid doubt, this Division applies as if an *old spectrum licence that you continue to hold after it is varied because of a *replacement were the same spectrum licence as before it was varied. Subdivision 380‑D—Balancing adjustments Table of sections 380‑80 When a balancing adjustment is required 380‑85 How to do the balancing adjustment 380‑90 Meaning of termination value 380‑80 When a balancing adjustment is required (1) A balancing adjustment is required if: (a) you have incurred *expenditure in obtaining a *spectrum licence; and (b) you have ever used the spectrum licence for the *purpose of producing assessable income; and (c) a *balancing adjustment event happens in the *current year at a time when you hold the spectrum licence. (2) However, a balancing adjustment is not required if: (a) some or all of the *spectrum licence is *replaced by another spectrum licence that you hold after the replacement (Subdivision 380‑C applies instead); or (b) roll‑over relief is available under Common rule 1 (see Subdivision 380‑E). (3) A balancing adjustment event is an event listed in the table. Balancing adjustment events Item Event 1 You assign the *spectrum licence under Division 5 of Part 3.2 of the Radiocommunications Act 1992 (except by a *partial realisation) 2 The spectrum licence ceases to exist because it expires, is cancelled, or is resumed by the *ACA 3 Another entity becomes the licensee, but an entity that was the licensee (alone or with others) immediately beforehand still has an interest in the spectrum licence immediately afterwards 380‑85 How to do the balancing adjustment (1) You make the adjustment by comparing: (a) the *spectrum licence's *termination value; and (b) your *unrecouped expenditure on the spectrum licence just before the *balancing adjustment event. (2) If the *termination value exceeds your *unrecouped expenditure, the excess is included in your assessable income. However, the amount included cannot be more than: • the total of the amounts (if any) you have deducted or can deduct for earlier income years under this Division for the *spectrum licence; reduced by: • the total of each amount (if any) included in your assessable income for an income year, in respect of the spectrum licence, under this Division. Note 1: An amount may be included in your assessable