Income Tax Assessment Act 1936 - Legislation

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Income Tax Assessment Act 1936

VOLUME 11

Part IIIA—Capital gains and capital losses

Income Tax Assessment Act 1936 iii

Contents Part IIIA—Capital gains and capital losses i

Division 18—Principal residence 1 160ZZQ Principal residence............................................................................ 1

Division 19—Goodwill 28 160ZZR Exemption of part of gain attributable to goodwill ......................... 28 160ZZRAA Calculation of exemption threshold for purposes of

section 160ZZR............................................................................... 31 Division 19A—Transfers of assets between companies under

common ownership 33 Subdivision A—Outline and interpretation 33

160ZZRAAAOutline of Division ......................................................................... 33 160ZZRA Interpretation................................................................................... 33 160ZZRB When companies under common ownership................................... 35 160ZZRBA Cost base etc. of certain assets ........................................................ 35 160ZZRBB Meaning of indexed common ownership market value................... 36 160ZZRC Underlying interest ......................................................................... 36

Subdivision B—Application of Division 37 160ZZRD Transfers of assets between companies under common

ownership........................................................................................ 37 160ZZRDA How Division applies to grouped assets ......................................... 37 160ZZRDB How Division applies to depreciable assets .................................... 37 160ZZRDC Application of Subdivision E.......................................................... 38 160ZZRDD Application of Subdivision F .......................................................... 38

Subdivision C—Grouped assets 39 160ZZRDE Transferor may elect to group assets............................................... 39 160ZZRDF Depreciable property groups........................................................... 39 160ZZRDG Pre-common ownership groups ...................................................... 41 160ZZRDH Post-common ownership groups..................................................... 42 160ZZRDI Shares or loans created after first asset in group is disposed

of..................................................................................................... 43 Subdivision D—Depreciable assets 43

160ZZRDJ Shares in, and loans to, transferor—depreciable assets—deemed disposal.............................................................................. 43

160ZZRDK Shares of different classes............................................................... 44 160ZZRDL Loans to transferor—depreciable assets.......................................... 45 160ZZRDM Loans to transferor—depreciable assets—deemed disposal............ 46 160ZZRDN More than one loan ......................................................................... 47

iv Income Tax Assessment Act 1936

Subdivision E—Other assets 48 160ZZRE Shares in, and loans to, transferor—deemed disposal and

re-acquisition .................................................................................. 48 160ZZRF First asset acquired before transferor and transferee came

under common ownership—shares in, and loans to, transferor—reduction in cost base etc. ............................................ 54

160ZZRFA First asset acquired when transferor and transferee under common ownership—shares in, and loans to, transferor—reduction in cost base etc. ............................................................... 56

Subdivision F—Other adjustments 57 160ZZRG Indirect equity or debt interests in transferor—reduction in

cost base etc. ................................................................................... 57 160ZZRH Equity interests in transferee—compensatory increase in cost

base etc. .......................................................................................... 57 Division 19B—Share value shifting arrangements 59

160ZZRI Object.............................................................................................. 59 160ZZRJ Simplified outline ........................................................................... 59 160ZZRK List of definitions............................................................................ 60 160ZZRL Requirements for Division to apply ................................................ 61 160ZZRM Share value shift under an arrangement .......................................... 62 160ZZRN Controller of a company etc............................................................ 64 160ZZRO Material decrease, material increase and total market value

increase........................................................................................... 65 160ZZRP Consequences of value shift to pre-CGT share ............................... 67 160ZZRQ Consequences of value shift to post-CGT share.............................. 68

Division 20—Changes in majority underlying interests in assets 72 Subdivision A—Preliminary 72

160ZZRR Interpretation................................................................................... 72 160ZZRRA What is a 100% subsidiary.............................................................. 76 160ZZRRB Position to affect rights in relation to a company............................ 77 160ZZRS Indirect beneficial interest in asset .................................................. 78 160ZZRT Indirect beneficial interest in income derived from asset................ 78 160ZZRU Acquisition of percentage of underlying interests as a result

of death ........................................................................................... 78 Subdivision B—Provisions applying to taxpayers other than

public entities 79 160ZZS Changes in majority underlying interests in assets of

taxpayers other than public entities................................................. 79

Income Tax Assessment Act 1936 v

Subdivision C—Provisions applying to public entities 80 160ZZSA Public entities to determine at identified times whether

changes have occurred since 19 September 1985 in majority underlying interests in assets of the entities .................................... 80

160ZZSB Date of acquisition of asset if failure to make determination on time ............................................................................................ 81

160ZZSC If no continuity of majority underlying interests found at first test time........................................................................................... 82

160ZZSD If no continuity of majority underlying interests at later test time ................................................................................................. 83

Subdivision D—Abnormal trading 84 160ZZSE Abnormal trading in shares in a public company or units in a

publicly traded unit trust ................................................................. 84 160ZZSF Abnormal trading: general provision .............................................. 85 160ZZSG Abnormal trading: 5% of shares or units in one transaction ........... 85 160ZZSH Abnormal trading: suspected acquisition or merger........................ 85 160ZZSI Abnormal trading—20% of shares or units traded over 60

day period ....................................................................................... 85 Subdivision E—How holdings of shares or units of less than 1% in

certain public entities may be treated 86 160ZZSJ What this Subdivision is about........................................................ 86 160ZZSK Holdings of less than 1% in public company or publicly

traded unit trust ............................................................................... 86 160ZZSL Holdings of less than 1% in interposed public company or

interposed publicly traded unit trust................................................ 87 160ZZSM Notional single shareholder or unitholder....................................... 88 160ZZSN Capital shareholding and dividend shareholding of less than

1%................................................................................................... 90 160ZZSO Capital unitholding and income unitholding of less than 1%.......... 91 160ZZSP Shares that are part of a substantial shareholding ........................... 91

Subdivision F—How interposed superannuation funds, approved deposit funds, special companies and government bodies may be treated 92

160ZZSR What this Subdivision is about........................................................ 92 160ZZSS When fund, special company or government body is taken to

have rights to capital, dividends or other income............................ 93

vi Income Tax Assessment Act 1936

Subdivision G—Determination of underlying interests if mutual insurance organisation with more than 50 members ceases to be such an organisation but continues to be a public entity 95

160ZZST Members of former mutual insurance organisation taken to hold underlying interests in assets since base time ......................... 95

Division 20A—Special provisions relating to disposals of certain pre-20 September 1985 assets 96

160ZZT Disposal of shares or interest in trust .............................................. 96 Division 21—Miscellaneous 100

160ZZU Keeping of records........................................................................ 100

Part IIIB—Australian branches of foreign banks 105

Division 1—Preliminary 105 160ZZVA Object............................................................................................ 105 160ZZVB Application ................................................................................... 105 160ZZV Definitions .................................................................................... 106 160ZZW Certain provisions to apply as if Australian branch of foreign

bank were a separate legal entity .................................................. 107 Division 2—Provisions relating to income tax 109

160ZZX Income of branch to have Australian source ................................. 109 160ZZY Deduction for foreign tax.............................................................. 109 160ZZZ Notional borrowing by branch from bank..................................... 109 160ZZZA Notional payment of interest by branch to bank ........................... 110 160ZZZC Offshore banking units.................................................................. 111 160ZZZE Notional derivative transactions between branch and bank .......... 111 160ZZZF Notional foreign exchange transactions between branch and

bank .............................................................................................. 112 160ZZZG Losses ........................................................................................... 112 160ZZZH Net capital losses .......................................................................... 112 160ZZZI Certain transactions to be disregarded .......................................... 113

Division 3—Provisions relating to withholding tax 114 160ZZZJ Withholding tax on interest paid by branch to bank...................... 114

Part IV—Returns and assessments 115 161 Annual returns .............................................................................. 115 161A Form and content of returns .......................................................... 115 161AA Contents of returns of full self-assessment taxpayers ................... 116 161G Tax agent to give taxpayer copy of notice of assessment.............. 116 162 Further returns and information .................................................... 116 163 Special returns .............................................................................. 117

Income Tax Assessment Act 1936 vii

163A Late lodgement penalty—relevant entities, instalment taxpayers and full self-assessment taxpayers ................................ 117

163AA General interest charge on unpaid penalty .................................... 119 163B Late lodgment of returns by persons other than relevant

entities, instalment taxpayers and full self-assessment taxpayers ....................................................................................... 120

164 Returns deemed to be duly made .................................................. 122 166 Assessment ................................................................................... 123 166A Deemed assessment ...................................................................... 123 167 Default assessment........................................................................ 124 168 Special assessment ........................................................................ 125 169 Assessments on all persons liable to tax ....................................... 125 169A Reliance by Commissioner on returns and statements .................. 125 170 Amendment of assessments .......................................................... 126 170A Power to amend assessment not to limit other powers to

amend assessment ......................................................................... 136 170AA Liability of taxpayer where assessment amended ......................... 136 170BA Effect of public ruling on tax other than withholding tax ............. 142 170BB Effect of private rulings on tax other than withholding tax........... 142 170BCA Effect of oral ruling on tax other than withholding tax ................. 143 170BC Assessment of tax other than withholding tax if public or

private rulings conflict .................................................................. 144 170BDA Assessment of tax other than withholding tax if public and

oral rulings conflict ....................................................................... 144 170BDB Assessment of tax other than withholding tax if private and

oral rulings conflict ....................................................................... 145 170BDC Assessment of tax other than withholding tax if public,

private and oral rulings conflict .................................................... 146 170BD Effect of public ruling on withholding tax .................................... 147 170BE Effect of private ruling on withholding tax................................... 147 170BF Withholding tax where conflicting rulings.................................... 148 170BG Final Tribunal decision about private ruling conclusive ............... 149 170BH Final court order about private ruling conclusive.......................... 149 170BI Final court order about Commissioner discretion ......................... 150 170C Power of Commissioner to reduce amount of tax payable in

certain cases .................................................................................. 151 171 Where no notice of assessment served.......................................... 151 172 Refunds of amounts overpaid ....................................................... 152 173 Amended assessment to be an assessment .................................... 152 174 Notice of assessment..................................................................... 152 175 Validity of assessment .................................................................. 153 175A Objections against assessments..................................................... 153 176 Judicial notice of signature ........................................................... 153

viii Income Tax Assessment Act 1936

177 Evidence ....................................................................................... 153

Part IVA—Schemes to reduce income tax 155 177A Interpretation................................................................................. 155 177B Operation of Part........................................................................... 156 177C Tax benefits .................................................................................. 156 177CA Withholding tax avoidance ........................................................... 161 177D Schemes to which Part applies...................................................... 161 177E Stripping of company profits ........................................................ 162 177EA Creation of franking debit or cancellation of franking credits ...... 164 177EB Cancellation of franking credits—consolidated groups ................ 172 177F Cancellation of tax benefits etc. .................................................... 175 177G Amendment of assessments ......................................................... 179 177H Amendment of foreign tax credit determinations.......................... 179

Part VA—Tax file numbers 181

Division 1—Preliminary 181 202 Objects of this Part........................................................................ 181 202A Interpretation................................................................................. 183 202AA Definition of eligible PAYG payment ........................................... 187

Division 2—Issuing of tax file numbers 188 202B Application for tax file number..................................................... 188 202BA Issuing of tax file numbers............................................................ 188 202BB Current tax file number................................................................. 189 202BC Deemed refusal by Commissioner ................................................ 189 202BD Interim notices .............................................................................. 189 202BE Cancellation of tax file numbers ................................................... 190 202BF Alteration of tax file numbers ....................................................... 191

Division 3—Quotation of tax file numbers by recipients of eligible PAYG payments 192

202C TFN declarations by recipients of eligible PAYG payments ........ 192 202CA Operation of TFN declaration ....................................................... 192 202CB Quotation of tax file number in TFN declaration.......................... 193 202CC Making a replacement TFN declaration in place of an

ineffective declaration................................................................... 194 202CD Sending of TFN declaration to Commissioner.............................. 195 202CE Effect of incorrect quotation of tax file number............................ 196 202CF Payer must notify Commissioner if no TFN declaration by

recipient ........................................................................................ 197

Income Tax Assessment Act 1936 ix

Division 4—Quotation of tax file numbers in connection with certain investments 199

202D Explanation of terms: investment, investor, investment body....... 199 202DA Phasing-in period for Division...................................................... 202 202DB Quotation of tax file numbers in connection with investments ..... 202 202DC Method of quoting tax file number ............................................... 203 202DD Investor excused from quoting tax file number in certain

circumstances................................................................................ 203 202DDA Quotation of investment body remitter number to be

alternative to quoting tax file number ........................................... 204 202DDB Quotation of tax file number in connection with indirectly

held investment ............................................................................. 205 202DE Securities dealer to inform the investment body of tax file

number .......................................................................................... 207 202DF Effect of incorrect quotation of tax file number............................ 207 202DG Investments held jointly................................................................ 208 202DH Tax file number quoted for superannuation or surcharge

purposes taken to be quoted for purposes of the taxation of eligible termination payments ....................................................... 210

202DI Tax file number quoted for RSA purposes taken to be quoted for purposes of the taxation of eligible termination payments ...... 210

202DJ Tax file number quoted for purposes of taxation of eligible termination payments taken to be quoted for surcharge purposes ........................................................................................ 211

Division 4A—Quotation of tax file numbers in connection with farm management deposits 212

202DK Interpretation................................................................................. 212 202DL Quotation of tax file number ......................................................... 212 202DM Effect of incorrect quotation of tax file number............................ 212

Division 5—Exemptions 214 202EA Persons receiving certain pensions etc.—employment ................. 214 202EB Persons receiving certain pensions etc.—investments .................. 215 202EC Entities not required to lodge income tax returns.......................... 216 202EE Non-residents................................................................................ 218 202EF Territory residents etc. .................................................................. 219 202EG Manner of completing declarations............................................... 220 202EH Declarations under this Division to be retained in certain

circumstances................................................................................ 220 Division 6—Review of decisions 221

202F Review of decisions ...................................................................... 221 202FA Statements to accompany notification of decisions...................... 222

x Income Tax Assessment Act 1936

Division 7—Manner of providing information 223 202G Transmission of information in accordance with

specifications ................................................................................ 223

Part VI—Collection and recovery of tax 225

Division 1—General 225 204 When tax payable.......................................................................... 225 205 Taxpayer leaving Australia ........................................................... 226 206 Extension of time and payment of tax by instalments................... 227 208 Tax a debt due to the Commonwealth........................................... 227 209 Recovery of tax............................................................................. 228 213 Temporary business ...................................................................... 229 214 Substituted service ........................................................................ 229 214A Interest rates.................................................................................. 230 215 Liquidators, receivers and certain agents ...................................... 230 216 When tax not paid during lifetime ................................................ 233 218 Commissioner may collect tax from person owing money to

taxpayer ........................................................................................ 235 219 Consolidated assessments ............................................................. 238 220 Assessment where no administration ............................................ 238

Division 1AAA—Payment of RPS, PAYE and PPS deductions to Commissioner 241

Subdivision A—Outline of Division 241 220AAA Outline of Division ....................................................................... 241

Subdivision B—Large remitters 241 220AAB Who is a large remitter—general .................................................. 241 220AAC Who is a large remitter—determination by Commissioner........... 243 220AAD Application to cease to be a large remitter .................................... 244 220AAE When amounts must be remitted................................................... 244 220AAF How amounts must be paid........................................................... 245 220AAG What else must be sent.................................................................. 245 220AAGA Commissioner must be notified of amounts.................................. 246 220AAH Variation of requirements ............................................................. 246 220AAI Grouping of companies................................................................. 247

Subdivision C—Medium remitters 248 220AAJ Who is a medium remitter—general ............................................. 248 220AAK Who is a medium remitter—determination by Commissioner...... 249 220AAL Application to cease to be a medium remitter ............................... 250 220AAM When amounts must be remitted................................................... 250 220AAN How amounts must be paid........................................................... 251

Income Tax Assessment Act 1936 xi

220AAO What else must be sent.................................................................. 251 220AAOA Commissioner must be notified of amounts.................................. 251 220AAP Variation of requirements ............................................................. 252

Subdivision D—Small remitters 253 220AAQ Who is a small remitter ................................................................. 253 220AAR When amounts must be remitted................................................... 253 220AAS How amounts must be paid........................................................... 253 220AAT What else must be sent.................................................................. 254 220AATA Commissioner must be notified of amounts.................................. 254 220AAU Variation of requirements ............................................................. 255

Subdivision E—Offences and penalties 255 220AAW Large remitters—non-electronic payment..................................... 255 220AAZ Failure to send statements to Commissioner—offence ................. 256

Subdivision F—Recovery of amounts by Commissioner 256 220AAZA Recovery of amounts by Commissioner ....................................... 256

Subdivision G—Miscellaneous 259 220AAZB Power of Commissioner to obtain information ............................. 259 220AAZC Declarations .................................................................................. 259 220AAZD Application of this Division to partnerships.................................. 259 220AAZE Application of this Division to unincorporated companies ........... 260 220AAZF Review of decisions ...................................................................... 260 220AAZG Interpretation................................................................................. 261

Division 1AA—Reportable payments system (RPS) 262 Subdivision A—Object and outline 262

220AA Object............................................................................................ 262 220AB Outline .......................................................................................... 262

Subdivision B—Interpretation 263 220AC Interpretation................................................................................. 263 220AD Money not actually paid to a person ............................................. 265 220ADA Transfer of reportable payment debts............................................ 265 220AE Signing of documents ................................................................... 265

Subdivision C—Payer of reportable payment must make deduction if payee’s tax file number not quoted 266

220AF Deduction from reportable payment if payee’s tax file number not quoted ........................................................................ 266

Subdivision D—Payers’ reporting and record-keeping obligations 267 220AH Obligation to issue receipt for deduction ...................................... 267

xii Income Tax Assessment Act 1936

220AJ Annual report ................................................................................ 268 220AK Retention of annual report............................................................. 269

Subdivision E—How payees can quote their tax file numbers 269 220AL Method of quoting tax file number ............................................... 269 220AM Meaning of tax file number declaration........................................ 269 220AN When tax file number declaration in force.................................... 270 220AO Commissioner may correct tax file number set out in tax file

number declaration form............................................................... 271 Subdivision F—Making of pensioner exemption declaration to be

alternative to quotation of tax file number 272 220AP Making of pensioner exemption declaration to be alternative

to quotation of tax file number...................................................... 272 Subdivision G—Payer to send tax file number declaration form or

pensioner exemption declaration form to Commissioner 275

220AQ Obligations of payer—tax file number declaration form or pensioner exemption declaration form.......................................... 275

Subdivision H—Refund of deductions in special circumstances 277 220AR Commissioner may refund deductions.......................................... 277

Subdivision I—Civil penalties for failure to make deductions from reportable payments and for failure to send deductions to the Commissioner 278

220AS Failure to make deduction from reportable payment .................... 278 220AU Commissioner may remit penalty for failure to deduct................. 279

Subdivision J—Payers to have civil protection for making deductions 279

220AX Payers to have civil protection for making deductions.................. 279 Subdivision K—Recovery of amounts payable under this Division 279

220AY Recovery of amounts by Commissioner ....................................... 279 Subdivision L—Tax credits for deductions from reportable

payments 281 220AZ Entitlement to credit—payee neither a partnership nor a

trustee............................................................................................ 281 220AZA Entitlement to credit—payee a partnership................................... 281 220AZB Entitlement to credit—payee a trustee .......................................... 282 220AZC Application of credits.................................................................... 285

Subdivision M—Miscellaneous 285 220AZD Power of Commissioner to obtain information ............................. 285

Income Tax Assessment Act 1936 xiii

220AZE Declarations .................................................................................. 286 220AZF Application of this Division to partnerships.................................. 286 220AZG Application of this Division to unincorporated companies ........... 286 220AZH Review of decisions ...................................................................... 287

Division 1A—Collection by instalments of tax on companies in respect of years of income before the year of income ending on 30 June 1990 288

221AAA Application ................................................................................... 288 221AA Interpretation................................................................................. 288 221AB Modified application of Division for early balancing

companies ..................................................................................... 289 221AC Liability to pay instalments of tax................................................. 289 221AD Amount of notional tax ................................................................. 290 221AE Amount of instalment of tax ......................................................... 292 221AF When instalment of tax payable.................................................... 295 221AG Estimated income tax.................................................................... 296 221AH Notice of alteration of amount of instalment................................. 302 221AI Application of payments of instalments of tax.............................. 303 221AJ Notice of instalment of tax to be prima facie evidence................. 304

Division 1B—Collection of Tax on Companies and Trustees of certain Funds 306

221AK General interpretative provisions .................................................. 306 221AKA Termination of operation of this Division..................................... 308 221AL Net capital gains to be disregarded in making certain

calculations ................................................................................... 309 221AM When income tax becomes due and payable................................. 310 221AN Modified application of Division for certain entities with

substituted accounting periods ...................................................... 310 221AO Liability to make payments under this Division............................ 312 221AP When initial payment to be made.................................................. 312 221AQ Amount of initial payment ............................................................ 313 221AR Power of relevant entity to revise estimate in certain

circumstances................................................................................ 314 221AS Statement as to basis of estimate................................................... 315 221AT Circumstances in which initial payment not required ................... 315 221AU Election to make single payment .................................................. 316 221AV Power of Commissioner to reduce amount of initial payment

or waive initial payment................................................................ 318 221AW Power of Commissioner to vary estimate of income tax............... 319 221AX Initial payment avoidance arrangements...................................... 320 221AY Additional tax if income or deduction transferred under

avoidance scheme ......................................................................... 326

xiv Income Tax Assessment Act 1936

221AZ Additional payments to form part of initial payment .................... 328 221AZA Refund to reduce initial payment of tax ........................................ 328 221AZB Notional tax .................................................................................. 329

Capital gains and capital losses Part IIIA Principal residence Division 18

Section 160ZZQ

Income Tax Assessment Act 1936 1

Division 18—Principal residence

160ZZQ Principal residence

(1) In this section:

dependent child, in relation to a taxpayer, means a child of the taxpayer who is under the age of 18 years and is dependent on the taxpayer for economic support.

dwelling includes: (a) a unit of accommodation constituted by, or contained in, a

building, being a unit that consists, in whole or in substantial part, of residential accommodation; and

(b) a caravan, houseboat or other mobile home.

relevant period, in relation to the disposal of a dwelling by a taxpayer other than a taxpayer in the capacity of a trustee, means the period after 19 September 1985 during which the dwelling was owned by the taxpayer and includes any period during which land acquired after that date on which the dwelling is erected was owned by the taxpayer before the erection of the dwelling.

(1AA) For the purposes of this section, if: (a) land or a dwelling is acquired or disposed of under a contract

entered into at a particular time; and (b) legal ownership of the land or dwelling does not pass until a

later time; then, in spite of any other provision of this Part, the ownership of the land or dwelling is to be worked out on the basis of the legal ownership.

(1AB) If, under the contract mentioned in subsection (1AA) or another contract entered into in relation to it, the person to whom the legal ownership is to pass has a right or licence to occupy the land or dwelling before legal ownership passes, then that subsection has effect in relation to that person as if the legal ownership began when the licence or right was first exercisable.

Part IIIA Capital gains and capital losses Division 18 Principal residence Section 160ZZQ

2 Income Tax Assessment Act 1936

(1A) For the purposes of this section, where: (a) an asset was disposed of by a company or a trustee of a trust

estate to a taxpayer; (b) the asset was acquired by the company or the trustee on or

after 20 September 1985; and (c) because of section 160ZZMA, this Part (other than that

section) does not apply in respect of the disposal; the following provisions have effect:

(d) the taxpayer shall be treated as having owned the asset at all times during the period (in this subsection called the prior ownership period) commencing at the time when the company or trustee acquired the asset and ending at the time of the disposal of the asset;

(e) a dwelling to which the asset relates shall not be treated as the sole or principal residence of the taxpayer during the prior ownership period.

(2) For the purposes of this section, a person shall be taken to own, or to have acquired, a dwelling constituted by or contained in a building if the person owns or has acquired, as the case may be:

(a) in the case of a dwelling other than a flat or home unit: (i) a legal or equitable estate or interest in the land on

which the dwelling is erected; or (ii) a licence or right to occupy the dwelling; or (b) in the case of a flat or home unit: (i) a legal or equitable estate or interest in a stratum unit in

relation to the flat or home unit; (ii) a licence or right to occupy the flat or home unit; or (iii) a share in a company that owns a legal or equitable

estate or interest in the land on which the building containing the flat or home unit is erected, being a share that entitles the holder to a right of occupancy of the flat or home unit.

(3) For the purposes of this section, a dwelling owned by a person shall be deemed to include:


Section 160ZZQ


(a) any land owned by the person that is adjacent to the dwelling to the extent that:

(i) that land is used by the person primarily for private or domestic purposes in association with the dwelling; and

(ii) the sum of the area of that land and the area of the land on which the dwelling is situated does not exceed 2 hectares; and

(b) in the case of a dwelling being a flat or home unit—a garage, storeroom or other structure owned by the person that forms part of or is attached to or otherwise associated with the building containing the flat or home unit and is used by the person primarily for private or domestic purposes.

(4) If: (a) land that by virtue of paragraph (3)(a) forms part of a

dwelling owned by a person is disposed of by the person separately from the rest of the dwelling; or

(b) a garage, storeroom or other structure that forms part of a dwelling owned by a person is disposed of by the person separately from the rest of the dwelling;

this section does not apply in respect of the disposal.

(5) Where: (a) a taxpayer has at any time (in this subsection called the

relevant time), whether before or after the commencement of this subsection, acquired a legal or equitable estate or interest (other than a life interest) in land; and

(b) one of the following subparagraphs is applicable: (i) no dwelling or partly erected dwelling was on the land

at the relevant time and, after that time, the taxpayer: (A) erected a dwelling on the land; or (B) commenced to erect a dwelling on the land but

died before the erection of the dwelling was completed;

(ii) a partly erected dwelling was on the land at the relevant time and, after that time, the taxpayer:

(A) completed the erection of the dwelling; or



(B) commenced to complete the erection of the dwelling but died before the erection of the dwelling was completed;

(iii) a dwelling or partly erected dwelling was on the land at the relevant time and, after that time, the taxpayer demolished the dwelling or partly erected dwelling and:

(A) erected a new dwelling on the land; or (B) commenced to erect a new dwelling on the land

but died before the erection of the dwelling was completed;

(iv) a dwelling was on the land at the relevant time and, after that time, the taxpayer:

(A) repaired or renovated the dwelling; or (B) commenced to repair or renovate the dwelling

but died before the repairs or renovations were completed; and

(c) if sub-subparagraph (b)(i)(A), (ii)(A), (iii)(A) or (iv)(A) applies:

(i) the dwelling became the sole or principal residence of the taxpayer for the purposes of this Part as soon as practicable after the dwelling was erected, the erection of the dwelling was completed or the repair or renovation of the dwelling was completed, as the case requires and continued to be the sole or principal residence of the taxpayer for the purposes of this Part for not less than 3 months; or

(ii) the taxpayer died after the dwelling was erected, the erection of the dwelling was completed or the repair or renovation of the dwelling was completed, as the case requires and the taxpayer’s death occurred:

(A) before it was practicable for the dwelling to become the taxpayer’s sole or principal residence; or

(B) during the period of 3 months referred to in subparagraph (i); and


Section 160ZZQ


(d) an election that this subsection is to apply in relation to the dwelling is made in accordance with subsection (5A) or (5B) by:

(i) in a case where subparagraph (ii) does not apply—the taxpayer; or

(ii) in a case where sub-subparagraph (b)(i)(B), (ii)(B), (iii)(B) or (iv)(B) or subparagraph (c)(ii) applies or any other case where the taxpayer died before the end of the period allowed for making an election without having made an election:

(A) if the taxpayer held the estate or interest as a joint tenant—the surviving joint tenant; or

(B) otherwise—the trustee of the estate of the taxpayer;

the following provisions have effect: (e) if subparagraph (c)(i) applies: (i) the period during which the dwelling was the sole or

principal residence of the taxpayer for the purposes of this Part includes:

(A) the period on and from the relevant commencing date to and including the date on which the dwelling was erected, the erection of the dwelling was completed or the repair or renovation of the dwelling was completed, as the case requires (other than any part of that period during which the taxpayer was the dependent child of another taxpayer); or

(B) the period of 4 years immediately before the dwelling became the sole or principal residence of the taxpayer (other than any part of that period during which the taxpayer was the dependent child of another taxpayer);

whichever period (in this paragraph called the construction period) is the shorter period; and

(ii) no other dwelling is to be treated as having been the sole or principal residence of the taxpayer during the construction period;



(f) if sub-subparagraph (b)(i)(B), (ii)(B), (iii)(B) or (iv)(B) or subparagraph (c)(ii) applies:

(i) this Part has effect as if the dwelling was the sole or principal residence of the taxpayer at the time of his or her death; and

(ii) the period during which the dwelling was the sole or principal residence of the taxpayer for the purposes of this Part includes:

(A) the period on and from the relevant commencing date to and including the date of the death of the taxpayer (other than any part of that period during which the taxpayer was the dependent child of another taxpayer); or

(B) the period of 4 years immediately before the death of the taxpayer (other than any part of that period during which the taxpayer was the dependent child of another taxpayer);

whichever period (in this paragraph called the construction period) is the shorter period; and

(iii) no other dwelling is to be treated as having been the sole or principal residence of the taxpayer during the construction period.

(5AA) For the purposes of subsection (5): (a) a reference to the relevant commencing date is a reference to: (i) if subparagraph (5)(b)(iii) applies and the dwelling, or

partly completed dwelling, that was demolished was occupied by the taxpayer or another person after the relevant time—the date on which the dwelling ceased, or last ceased, to be so occupied; or

(ia) if: (A) subparagraph (5)(b)(iv) applies; and (B) the dwelling was occupied by the taxpayer or

another person after the relevant time; and (C) the dwelling ceased to be so occupied for the

purpose of allowing the repairs or renovations to be carried out;


Section 160ZZQ


the date on which the dwelling ceased, or last ceased, to be so occupied; or

(ii) otherwise—the date on which the taxpayer acquired the estate or interest in the land; and

(b) a taxpayer who has, whether before or after the commencement of this subsection, entered into a contract or contracts for the erection of, or for the completion of the erection of, a dwelling is taken to have commenced to erect, or to have commenced to complete the erection of, the dwelling at the time when the contract or the first contract was entered into; and

(c) a taxpayer who has, whether before or after the commencement of this paragraph, entered into a contract or contracts for the repair or renovation of a dwelling is taken to have commenced to repair or renovate the dwelling at the time when the contract or the first contract was entered into.

(5A) An election for the purposes of subsection (5) does not have any effect unless it is made on or before the date of lodgment of the taxpayer’s return of income of the later of the following years of income:

(a) the year of income in which the dwelling first became the sole or principal residence of the taxpayer for the purposes of this Part;

(b) the year of income in which this subsection commenced; or within such further period as the Commissioner allows.

(5B) An election by a surviving joint tenant, or a trustee, in relation to a deceased taxpayer for the purposes of subsection (5) does not have any effect unless it is made on or before whichever is the later of the following dates:

(a) the date of lodgment of the return of income of the deceased taxpayer’s estate for the year of income in which the taxpayer died;

(b) the last day of the year of income in which the Act that inserted this subsection received the Royal Assent;

or within such further period as the Commissioner allows.



(6) A reference in this section to a taxpayer having acquired a dwelling as a beneficiary in the estate of a deceased person is a reference to a taxpayer having acquired a dwelling:

(a) under the will of a deceased person, or under such a will as varied by an order of a court; or

(b) by operation of a law as a result of the intestacy of a deceased person, or by operation of law as a result of such an intestacy as the operation of the law is varied by an order of a court; or

(c) under a deed of arrangement where: (i) the deed was entered into in settlement of a claim to

participate in the distribution of the estate of the deceased person; and

(ii) the consideration (if any) given by the taxpayer for the dwelling consisted of the variation or waiver of a claim to one or more other assets that formed part of that estate;

whether the dwelling was transmitted directly to the taxpayer or was transferred to the taxpayer by the executor of the will, or by the administrator of the estate, of the deceased person.

(6A) Where: (a) a taxpayer and another person owned a dwelling as joint

tenants; and (b) the other person died;

this section applies according to its tenor to the acquisition by the taxpayer of the dwelling as a result of the death of the other person as it applies to a taxpayer who acquired the dwelling as a beneficiary in the estate of a deceased person.

(7) A reference in this section to the acquisition or disposal by a person of a dwelling or to the transmission or transfer of a dwelling to a person includes a reference to the acquisition or disposal by a person or to the transmission or transfer to a person, as the case may be, of the asset the ownership of which, by virtue of subsection (2), constitutes ownership of the dwelling.


Section 160ZZQ


(8) For the purposes of this section: (a) a dwelling shall be deemed to be the sole or principal

residence of a person at a particular time notwithstanding that it is used at that time both for that purpose and another purpose or other purposes; and

(b) where: (i) a taxpayer disposes of a dwelling that: (A) was the sole or principal residence of the

taxpayer for a continuous period of not less than 3 months included in the period of 12 months ending at the time of disposal; and

(B) the dwelling was not used for gaining or producing assessable income in any part of that period of 12 months other than the part of that period in which the dwelling was also the sole or principal residence of the taxpayer; and

(ii) before disposing of the dwelling, the taxpayer acquired another dwelling and that other dwelling became the next sole or principal residence of the taxpayer;

each of those dwellings shall be deemed to be the sole or principal residence of the taxpayer during:

(iii) in a case where the taxpayer acquired that other dwelling more than 3 months before the time of disposal—the period of 3 months ending at the time of disposal; or

(iv) in any other case—the period commencing on the day on which the taxpayer acquired that other dwelling and ending at the time of disposal.

(9) Where: (a) a dwelling is the sole or principal residence of a taxpayer at a

particular time; and (b) at that time, another dwelling is the sole or principal

residence of the taxpayer’s spouse or of a dependent child of the taxpayer;

whichever of those dwellings is nominated by the taxpayer and the taxpayer’s spouse, or by the taxpayer, as the case may be, shall, for



the purposes of this section, be deemed to be the sole or principal residence of the taxpayer and the taxpayer’s spouse, or the taxpayer and the dependent child of the taxpayer, as the case may be, at that time.

(10) Where, under subsection (9), a taxpayer nominates a dwelling, and the taxpayer’s spouse nominates a different dwelling, in relation to the same period:

(a) in the case of the dwelling nominated by the taxpayer: (i) if the interest of the taxpayer in the dwelling throughout

that period did not exceed one-half of the total of all the interests in the dwelling—the dwelling shall, for the purposes of this section, be deemed to have been the sole or principal residence of the taxpayer during that period; or

(ii) in any other case—the dwelling shall, for the purposes of this section, be deemed to have been the sole or principal residence of the taxpayer during one-half of that period; or

(b) in the case of the dwelling nominated by the taxpayer’s spouse:

(i) if the interest of the spouse in the dwelling throughout that period did not exceed one-half of the total of all the interests in the dwelling—the dwelling shall, for the purposes of this section, be deemed to have been the sole or principal residence of the spouse during that period; or

(ii) in any other case—the dwelling shall, for the purposes of this section, be deemed to have been the sole or principal residence of the spouse during one-half of that period.

(11) Where: (a) at a particular time (in this subsection called the cessation

time), a dwelling owned by a taxpayer ceases to be the sole or principal residence of the taxpayer (disregarding subsection (20D)); and


Section 160ZZQ


(b) an election that this subsection is to apply in relation to the taxpayer and in relation to the dwelling is made in accordance with subsection (11A) by:

(i) if the taxpayer died before the end of the period allowed for making an election without having made an election:

(A) if the taxpayer and another person owned the dwelling as joint tenants—the surviving joint tenant; or

(B) otherwise—the trustee of the estate of the taxpayer; or

(ii) in any other case—the taxpayer; then, for the purposes of this section (other than this subsection and subsection (20D)), during the period:

(c) commencing at the cessation time; and (d) ending at the earliest of the following later times: (i) the time when the dwelling again became the sole or

principal residence of the taxpayer; (ii) the end of the relevant period; (iii) the end of the period of 6 years (whether that period is

continuous or represents the aggregation of 2 or more periods):

(A) commencing at or after the cessation time; and (B) during which the part of the dwelling that was

the sole or principal residence of the taxpayer before the cessation time was used for the purpose of gaining or producing assessable income;

the following provisions have effect: (e) the dwelling is taken to have been the sole or principal

residence of the taxpayer; (f) no other dwelling is taken as having been the sole or

principal residence of the taxpayer; (g) any use for the purpose of gaining or producing assessable

income of the part of the dwelling that was the sole or principal residence of the taxpayer before the cessation time is to be disregarded.



(11A) An election for the purposes of subsection (11) must be made: (a) in the case of an election by a taxpayer—on or before the

date of lodgment of the taxpayer’s return of income for the later of the following years of income:

(i) the year of income in which the disposal of the dwelling takes place;

(ii) the year of income in which this subsection commenced; or

(b) in the case of an election by a surviving joint tenant, or a trustee, in relation to a deceased taxpayer—on or before whichever is the later of the following dates:

(i) the date of lodgment of the return of income of the deceased taxpayer’s estate for the year of income in which the taxpayer died;

(ii) the last day of the year of income in which this subsection commenced;

or, in either case, within such further period as the Commissioner allows.

(12) Subject to subsection (21), where: (a) a dwelling owned by a taxpayer, being a natural person other

than: (i) a person who acquired the dwelling as a beneficiary in

the estate of a deceased person; or (ii) a person in the capacity of a trustee; is disposed of; and (b) the dwelling was, throughout the relevant period, the sole or

principal residence of the taxpayer; a capital gain shall not be deemed to have accrued to the taxpayer, and a capital loss shall not be deemed to have been incurred by the taxpayer, as the case requires, in respect of the disposal of the dwelling.

(13) Subject to subsection (21), where: (a) a dwelling owned by a taxpayer, being a natural person who

acquired the dwelling as a beneficiary in the estate of a deceased person, is disposed of;


Section 160ZZQ


(b) the dwelling was the sole or principal residence of the taxpayer throughout that part of the relevant period during which the taxpayer was (disregarding section 160X) the owner of the dwelling;

(c) if the dwelling was acquired by the deceased person after 19 September 1985—the dwelling was, immediately before the death of the deceased person, the sole or principal residence of the deceased person; and

(d) the dwelling was, throughout the period from the death of the deceased person during which the dwelling was owned by the legal personal representative of the deceased person, the sole or principal residence of any one or more of the following:

(i) the person who was, immediately before the death of the deceased person, the spouse of the deceased person;

(ii) a person who, under the will of the deceased person, had a right to occupy the dwelling;

a capital gain shall not be deemed to have accrued to the taxpayer, and a capital loss shall not be deemed to have been incurred by the taxpayer, as the case requires, in respect of the disposal of the dwelling.

(13A) Subject to subsection (21), where: (a) a dwelling owned by a taxpayer, being a natural person who

acquired the dwelling as a beneficiary in the estate of a deceased person, is disposed of;

(b) the dwelling was, throughout the period from the death of the deceased person to the disposal of the dwelling, the sole or principal residence of the taxpayer; and

(c) if the dwelling was acquired by the deceased person after 19 September 1985—the dwelling was, immediately before the death of the deceased person, the sole or principal residence of the deceased person;




(14) Subject to subsection (21), where: (a) a taxpayer, being a natural person, disposes of a dwelling that

the taxpayer acquired as a beneficiary in the estate of a deceased person;

(b) the disposal took place within 2 years after the date of the death of the deceased person; and

(c) if the dwelling was acquired by the deceased person after 19 September 1985, the dwelling was, immediately before the death of the deceased person, the sole or principal residence of the deceased person;


(15) Subject to subsection (21), where: (a) a dwelling owned by a taxpayer in the capacity of the trustee

of the estate of a deceased person is disposed of; (b) either of the following subparagraphs is applicable: (i) the disposal took place within 2 years after the date of

the death of the deceased person; or (ii) the dwelling was, throughout the period from the death

of the deceased person to the time of disposal of the dwelling by the taxpayer, the sole or principal residence of any one or more of the following:

(A) the person who was, immediately before the death of the deceased person, the spouse of the deceased person;

(B) a person who, under the will of the deceased person, had a right to occupy the dwelling; and

(c) if the dwelling was acquired by the deceased person after 19 September 1985, the dwelling was, immediately before the death of the deceased person, the sole or principal residence of the deceased person;

a capital gain shall not be deemed to have accrued to the taxpayer, and a capital loss shall not be deemed to have been incurred by the


Section 160ZZQ


taxpayer, as the case requires, in respect of the disposal of the dwelling.

(16) Subject to subsection (21), where: (a) a dwelling owned by a taxpayer referred to in

paragraph (12)(a) is disposed of; (b) the dwelling was the sole or principal residence of the

taxpayer during part only of the relevant period; and (c) but for this section and subsection 160ZA(1), a capital gain

would have accrued to the taxpayer, or the taxpayer would have incurred a capital loss, in respect of the disposal;

a capital gain shall be deemed to have accrued to the taxpayer, or the taxpayer shall be deemed to have incurred a capital loss, as the case may be, in respect of the disposal of the dwelling, of an amount calculated in accordance with the formula:

AB

C,

where:

A is the amount of the capital gain or of the capital loss, as the case may be, referred to in paragraph (c);

B is the number of days in the part of the relevant period during which the dwelling was not the sole or principal residence of the taxpayer; and

C is the number of days in the relevant period.

(17) Subject to subsections (20A) and (21), where: (a) a dwelling owned by a taxpayer referred to in

paragraph (13)(a) is disposed of; (aa) the disposal is not covered by subsection (13), (13A) or (14); (b) any one or more of the following subparagraphs is or are

applicable: (i) the dwelling was the sole or principal residence of the

taxpayer during the whole or a portion of the part of the relevant period referred to in paragraph (13)(b);



(ii) in a case to which paragraph (13)(c) applies—the dwelling was the sole or principal residence of the deceased person referred to in that paragraph during the whole or part of the period during which the deceased person owned the dwelling;

(iii) in a case to which paragraph (13)(d) applies—the dwelling was the sole or principal residence of any one or more of the persons referred to in subparagraphs (13)(d)(i) and (ii) during the whole or part of the period referred to in that paragraph; and

(c) but for this section and subsection 160ZA(1), a capital gain would have accrued to the taxpayer, or the taxpayer would have incurred a capital loss, in respect of the disposal;


AB

C,

where:

A is the amount of the capital gain or of the capital loss, as the case may be, referred to in paragraph (c).

B is the sum of the following: (d) the number of days (if any) in the relevant period during

which the taxpayer owned the dwelling (disregarding section 160X), but the dwelling was not the taxpayer’s sole or principal residence;

(e) if the deceased person acquired the dwelling on or after 20 September 1985—the number of days (if any) in the period during which the deceased person owned the dwelling, but the dwelling was not the deceased person’s sole or principal residence;

(f) the number of days (if any) in the period mentioned in paragraph (13)(d) during which the dwelling was not the sole or principal residence of any of the persons mentioned in subparagraphs (13)(d)(i) and (ii).


Section 160ZZQ


C is: (h) in a case where the dwelling was acquired by the deceased

person before 20 September 1985—the number of days in the period from and including the date of the death of the deceased person to and including the day immediately before the date of the disposal; or

(j) in a case where the dwelling was acquired by the deceased person on or after 20 September 1985—the number of days in the period from and including the date on which the dwelling was acquired by the deceased person to and including the day immediately before the date of disposal.

Note: The number of days worked out under paragraphs (e) and (j) is modified in some cases: see subsection (20AA).

(17A) Subject to subsections (20A) and (21), where: (a) a dwelling owned by a taxpayer referred to in

paragraph (13A)(a) is disposed of; (aa) the disposal is not covered by subsection (13), (13A) or (14); (b) either or both of the following subparagraphs is or are

applicable: (i) the dwelling was the sole or principal residence of the

taxpayer during the whole or part of the period referred to in paragraph (13A)(b);

(ii) in a case to which paragraph (13A)(c) applies—the dwelling was the sole or principal residence of the deceased person referred to in that paragraph during the whole or part of the period during which the deceased person owned the dwelling; and

(c) but for this section and subsection 160ZA(1), a capital gain would have accrued to the taxpayer, or the taxpayer would have incurred a capital loss, in respect of the disposal;




AB

C,

where:


B is the sum of the following: (d) the number of days (if any) in the period from the deceased

person’s death to the disposal of the dwelling during which the dwelling was not the taxpayer’s sole or principal residence;

(e) if the deceased person acquired the dwelling on or after 20 September 1985—the number of days (if any) in the period during which the deceased person owned the dwelling, but the dwelling was not the deceased person’s sole or principal residence.

C is: (g) in a case where the dwelling was acquired by the deceased


(h) in a case where the dwelling was acquired by the deceased person on or after 20 September 1985—the number of days in the period from and including the date on which the dwelling was acquired by the deceased person to and including the day immediately before the date of disposal.

Note: The number of days worked out under paragraphs (e) and (h) is modified in some cases: see subsection (20AA).


paragraph (14)(a) is disposed of; (b) the disposal took place within 2 years after the date of death

of the deceased person; (c) the dwelling was the sole or principal residence of the

deceased person referred to in paragraph (14)(a) during part


Section 160ZZQ


only of the period during which the deceased person owned the dwelling; and

(d) but for this section and subsection 160ZA(1) a capital gain would have accrued to the taxpayer, or the taxpayer would have incurred a capital loss, in respect of the disposal;

a capital gain shall be deemed to have accrued to the taxpayer, or the taxpayer shall be deemed to have incurred a capital loss, as the case may be, in respect of the disposal of the dwelling, of an amount calculated in accordance with the formula

AB

C,

where:

A is the amount of the capital gain or of the capital loss, as the case may be, referred to in paragraph (d);

B is the number of days in the part of the period during which the deceased person owned the dwelling during which the dwelling was not the sole or principal residence of the deceased person; and

C is the number of days in the period during which the deceased person owned the dwelling.

(19) Subject to subsections (20A) and (21), where: (a) a dwelling owned by a taxpayer in the capacity of the trustee

of the estate of a deceased person is disposed of; (aa) the disposal is not covered by subsection (15); (b) either or both of the following subparagraphs is or are

applicable: (i) the dwelling was the sole or principal residence of any

one or more of the persons referred to in sub-subparagraphs (15)(b)(ii)(A) and (B), during the whole or part of the period referred to in subparagraph (15)(b)(ii);

(ii) in a case to which paragraph (15)(c) applies—the dwelling was the sole or principal residence of the deceased person during the whole or part of the period



during which the deceased person owned the dwelling; and

(c) but for this section and subsection 160ZA(1), a capital gain would have accrued to the taxpayer, or the taxpayer would have incurred a capital loss, as the case may be, in respect of the disposal;


AB

C,

where:


B is the sum of the following: (d) the number of days (if any) in the period mentioned in

subparagraph (15)(b)(ii) during which the dwelling was not the sole or principal residence of any of the persons mentioned in sub-subparagraphs (15)(b)(ii)(A) and (B);

(e) if the deceased person acquired the dwelling on or after 20 September 1985—the number of days (if any) in the period during which the deceased person owned the dwelling, but the dwelling was not the deceased person’s sole or principal residence.

C is: (g) in a case where the dwelling was acquired by the deceased


(h) in a case where the dwelling was acquired by the deceased person on or after 20 September 1985—the number of days in the period from and including the date on which the


Section 160ZZQ


dwelling was acquired by the deceased person to and including the day immediately before the date of disposal.

Note: The number of days worked out under paragraphs (e) and (h) is modified in some cases: see subsection (20AA).


paragraph (15)(a) is disposed of; (b) the disposal took place within 2 years after the date of death

of the deceased person; (c) the dwelling was the sole or principal residence of the

deceased person referred to in paragraph (15)(a) during part only of the period during which the deceased person owned the dwelling; and

(d) but for this section and subsection 160ZA(1) a capital gain would have accrued to the taxpayer, or the taxpayer would have incurred a capital loss, in respect of the disposal;


AB

C,

where:

A is the amount of the capital gain or of the capital loss, as the case may be, referred to in paragraph (d);

B is the number of days in the part of the period during which the deceased person owned the dwelling during which the dwelling was not the sole or principal residence of the deceased person; and

C is the number of days in the period during which the deceased person owned the dwelling.

(20A) Where both subsections (17) and (18), both subsections (17A) and (18) or both subsections (19) and (20) would, but for this subsection, apply to a taxpayer in respect of the disposal of a dwelling owned by the taxpayer:



(a) if each of the subsections that would so apply has the effect of deeming a capital gain to have accrued to the taxpayer in respect of the disposal—only that subsection applies which deems the smaller capital gain to have accrued; or

(b) if each of the subsections that would so apply has the effect of deeming the taxpayer to have incurred a capital loss in respect of the disposal—only that subsection applies which deems the larger capital loss to have been incurred.

(20AA) For the purposes of subsections (17), (17A) and (19), if, immediately before the death of the deceased person concerned, the dwelling concerned:

(a) was the deceased person’s sole or principal residence; and (b) was not being used for the purpose of gaining or producing

assessable income; then:

(c) the number of days mentioned in paragraphs (17)(e), (17A)(e) or (19)(e) (as appropriate) is taken to be nil; and

(d) the number of days mentioned in paragraphs (17)(j), (17A)(h) or (19)(h) (as appropriate) is worked out from and including the date of the death, instead of the date on which the deceased person acquired the dwelling.

(20B) Where: (a) but for this subsection a capital gain would be deemed to

have accrued to a taxpayer, or a taxpayer would be deemed to have incurred a capital loss, in respect of the disposal of a dwelling by the taxpayer; and

(b) the taxpayer owned the dwelling as the trustee of, or acquired the dwelling as a beneficiary in, the estate of a deceased person (in this subsection called the relevant deceased person); and

(ba) subparagraph 160X(5)(a)(ii) does not apply to the taxpayer’s acquisition of the dwelling;

then: (c) in the case of a dwelling disposed of on or before 15 August

1989—that capital gain is to be reduced or that capital loss is to be increased; or


Section 160ZZQ


(d) in the case of a dwelling disposed of after that date—that capital gain is to be increased or reduced or that capital loss is to be increased or reduced;

by such amount as the Commissioner considers appropriate to take into account the extent to which the dwelling was, during any period that occurred after 19 September 1985 and before the dwelling was acquired by the relevant deceased person, the sole or principal residence of any one or more of the following:

(e) any person who owned the dwelling at the time of his or her death;

(f) any person who, immediately before the death of a person referred to in paragraph (e), was the spouse of that person;

(g) any person who, under the will of a person, had a right to occupy the dwelling;

(h) any person who acquired the dwelling as a beneficiary in the estate of a deceased person.

(20C) Subject to subsection (21), where, pursuant to the will of a deceased person, a taxpayer in the capacity of a trustee of the estate of the deceased person acquired a dwelling after 19 September 1985 for occupation by another person (in this subsection called the beneficiary):

(a) if the taxpayer disposes of the dwelling to the beneficiary for no consideration:

(i) the taxpayer is not taken for the purposes of this Part other than this subsection to have disposed of the dwelling; and

(ii) the beneficiary is taken for the purposes of this Part to have acquired the dwelling on the date on which it was acquired by the taxpayer; and

(iii) the cost base, the indexed cost base or the reduced cost base to the beneficiary of the dwelling for the purposes of this Part includes any amount that would, if the taxpayer had disposed of the dwelling for the purposes of this Part at the time when ownership of the dwelling passed to the beneficiary, have been included in the cost base, the indexed cost base or the reduced cost base, as the case may be, of the dwelling to the taxpayer as a



result of the taxpayer having incurred expenditure in respect of the dwelling; or

(b) if the taxpayer disposes of the dwelling to a person otherwise than as mentioned in paragraph (a):

(i) if the dwelling was the sole or principal residence of the beneficiary during the whole of the period from the time when the dwelling was acquired by the taxpayer to the time when it was so disposed of—a capital gain is not to be deemed to have accrued to the taxpayer, and a capital loss is not to be deemed to have been incurred by the taxpayer, as the case requires, in respect of the disposal of the dwelling; or

(ii) if the dwelling was the sole or principal residence of the beneficiary during part only of the period referred to in subparagraph (i) and, but for this section and subsection 160ZA(1), a capital gain would have accrued to the taxpayer, or the taxpayer would have incurred a capital loss, in respect of the disposal—a capital gain is to be deemed to have accrued to the taxpayer, or the taxpayer is to be deemed to have incurred a capital loss, as the case may be, in respect of the disposal of the dwelling, of an amount calculated in accordance with the formula:

AB

C,

where: A is the amount of the capital gain or of the capital loss,

as the case may be, first mentioned in this subparagraph. B is the number of days in the part of the period

referred to in subparagraph (i) during which the dwelling was not the sole or principal residence of the beneficiary.

C is the number of days in the period referred to in subparagraph (i).

(20D) Despite subparagraphs (20C)(a)(ii) and (iii) and subsection 160X(5), if:


Section 160ZZQ


(a) a taxpayer acquires a dwelling on or after 20 September 1985; and

(b) for the first time (the first income time) since the acquisition, the dwelling begins to be used for the purpose of gaining or producing assessable income; and

(c) assuming that the taxpayer had disposed of the dwelling immediately before the first income time, the disposal would have been covered by any of the following provisions:

(i) subsection (12) or (13A); (ii) subsection (13); (iii) if subparagraph (15)(b)(ii) would then have applied to

the dwelling—subsection (15); (iv) subparagraph (20C)(b)(i); and (d) the taxpayer later disposes of the dwelling; and (e) that later disposal is not covered by: (i) subsection (14); or (ii) if subparagraph (15)(b)(i) applies to the disposal—

subsection (15); then:

(f) for the purposes of this Part, the taxpayer is taken to have acquired the dwelling at the first income time for a consideration equal to its market value at that time; and

(g) for the purposes of this section, the taxpayer is taken not to have acquired the dwelling as a beneficiary in, or a trustee of, the estate of a deceased person; and

(h) if subparagraph (c)(ii) or (iii) of this subsection applies—throughout the period mentioned in paragraph (13)(d) or subparagraph (15)(b)(ii) (as appropriate) during which the dwelling was the sole or principal residence of any one or more of the following:

(i) the person who was, immediately before the deceased person’s death, the deceased person’s spouse;

(ii) a person who, under the deceased person’s will, had a right to occupy the dwelling;

the dwelling is taken, for the purposes of this section, to have been the taxpayer’s sole or principal residence.



Note: This means that, in applying this Part to the disposal, the period before the first income time (including any time when a deceased person owned the dwelling ) is to be disregarded. Subsection (12) or (16) might apply to the disposal (subject to subsection (21), which deals with use of the dwelling for the purpose of gaining or producing assessable income).

(21) Where: (a) a dwelling owned by a taxpayer is disposed of; (b) but for this subsection, subsection (12), (13), (13A), (14),

(15), (16), (17), (17A), (18), (19), (20) or (20C) would apply in respect of the disposal because the dwelling was, during a particular period, the sole or principal residence of the taxpayer or of another person; and

(c) the dwelling was, during the whole or a part of that period, also used for the purpose of gaining or producing assessable income;

that subsection does not apply in respect of the disposal of the dwelling but a capital gain shall be deemed to have accrued to the taxpayer, or the taxpayer shall be deemed to have incurred a capital loss, as the case may be, in respect of the disposal of the dwelling, of such amount as the Commissioner determines having regard to:

(d) if, apart from this subsection and subsection 160ZA(1), a capital gain would be deemed to have accrued to the taxpayer, or a capital loss would be deemed to have been incurred by the taxpayer, in respect of the disposal of the dwelling—the amount of that capital gain or capital loss; and

(e) the extent to which, and the period for which, the dwelling was used in the first-mentioned period for the purpose of gaining or producing assessable income; and

(f) if subsection (13), (13A), (14) or (15) would have applied in respect of the disposal—the extent to which, and the period for which, the dwelling was used for the purpose of gaining or producing assessable income in the period during which both:

(i) the deceased person mentioned in whichever of those subsections would have applied owned the dwelling; and


Section 160ZZQ


(ii) the dwelling was the deceased person’s sole or principal residence.

Note: This paragraph means that, in determining the amount of the capital gain or capital loss, the Commissioner must have regard to certain use of the dwelling for the purpose of gaining or producing assessable income before the death. However, this rule is subject to subsection (22).

(22) If: (a) apart from subsection (21), subsection (13), (13A), (14), (15),

(17), (17A), (18), (19), (20) or (20C) would apply in respect of the disposal of a dwelling; and

(b) during all or part of the period (the exemption period) mentioned in paragraph (21)(b), the dwelling was the sole or principal residence of the deceased person mentioned in whichever of those subsections would have applied; and

(c) immediately before the deceased person’s death, the dwelling:

(i) was the deceased person’s sole or principal residence; and

(ii) was not being used for the purpose of gaining or producing assessable income;

then: (d) in having regard to the matter mentioned in

paragraph (21)(e), the Commissioner must disregard so much of the exemption period as occurred before the death; and

(e) paragraph (21)(f) does not apply in respect of the disposal.

Note: This means that, in determining the amount of the capital gain or capital loss under subsection (21), the Commissioner must disregard any use of the dwelling before the death for the purpose of gaining or producing assessable income.

(23) To avoid doubt, for the purposes of subsection (21), a period may consist of a particular instant in time.

Part IIIA Capital gains and capital losses Division 19 Goodwill Section 160ZZR


Division 19—Goodwill

160ZZR Exemption of part of gain attributable to goodwill

(1) Where: (a) a taxpayer disposes of, or of an interest in, a business (in this

section referred to as the relevant business), being a disposal that includes, or includes an interest in, the goodwill of the business;

(b) in a case to which paragraph (c) does not apply—the net value of the relevant business, or the value of the taxpayer’s interest in the net value of the relevant business, as the case may be, is less than the exemption threshold for the year of income in which the disposal takes place;

(c) if, at the time of the disposal, there is another business that is, or there are other businesses that are, associated with the relevant business—the sum of the net values of the relevant business and the associated business or associated businesses, or the sum of the values of the taxpayer’s interests in the net values of the relevant business and the associated business or associated businesses, as the case may be, is less than the exemption threshold for the year of income in which the disposal takes place; and

(d) a capital gain is deemed for the purposes of this Part to have accrued to the taxpayer in respect of the disposal of, or of the taxpayer’s interest in, the goodwill;

the amount of the capital gain shall be deemed to be reduced by half.

(2) For the purposes of subsection (1): (a) a business (in this paragraph referred to as the associated

business) shall be taken to be associated with the relevant business if:

(i) where the taxpayer is not a company and does not carry on the relevant business in the capacity of a trustee—the

Capital gains and capital losses Part IIIA Goodwill Division 19

Section 160ZZR


associated business is carried on by the taxpayer otherwise than in the capacity of a trustee;

(ii) where the taxpayer is a company (other than a company in the capacity of a trustee)—the associated business is carried on by the company, or by another company that is related to the company, otherwise than in the capacity of a trustee; or

(iii) where the taxpayer carries on the relevant business in the capacity of a trustee of a trust estate—the associated business is carried on by the taxpayer in the capacity of a trustee of that trust estate or of an associated trust estate; and

(b) a reference to the net value of a business is a reference to the amount by which the sum of the values of the assets (including goodwill) of the business exceeds the sum of the liabilities of the business; and

(c) the expression exemption threshold has the meaning given by section 160ZZRAA.

(3) If a taxpayer makes an election under paragraph 160ZZPQ(1)(f) in relation to the disposal of an interest in goodwill, this section does not apply, and is taken never to have applied, in respect of the disposal.

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Capital gains and capital losses Part IIIA Goodwill Division 19

Section 160ZZRAA


160ZZRAA Calculation of exemption threshold for purposes of section 160ZZR

Calculation in accordance with section

(1) For the purposes of section 160ZZR, the exemption threshold for a year of income is calculated as follows.

Exemption threshold before 1993-94

(2) The exemption threshold for years of income before the 1993-94 year of income is $2,000,000.

Exemption threshold from 1993-94 onwards

(3) For each later year of income, the exemption threshold is calculated by:

(a) taking the exemption threshold for the year of income before it (ignoring any application of paragraph (d)); and

(b) multiplying the exemption threshold by the indexation factor for the later year of income (see subsection (4)); and

(c) rounding the result to the nearest $1,000 or multiple of $1,000 (rounding upwards an amount ending in $500); and

(d) if the result is less than $2,000,000—increasing it to $2,000,000.

Calculating the indexation factor in subsection (3)

(4) The indexation factor for the later year of income is calculated, to 3 decimal places, using the following formula:

sum of index numbers for quarters in period 1

sum of index numbers for quarters in period 2

where:

index number, for a quarter, means the All Groups Consumer Price Index number, being the weighted average of the 8 capital cities, published by the Australian Statistician in respect of the

Part IIIA Capital gains and capital losses Division 19 Goodwill Section 160ZZRAA


quarter (ignoring any later number that may be published by the Australian Statistician in substitution for it).

period 1 means the period of 12 months ending on 31 March immediately before the later year of income (ignoring any substituted accounting period).

period 2 means the period of 12 months immediately before period 1.

Indexation factor: rounding

(5) If the indexation factor would end with a number greater than 4 if it were calculated to 4 decimal places (instead of 3 decimal places as mentioned in subsection (4)), then the indexation factor must be increased by 0.001.

Indexation factor: change in CPI reference base

(6) For the purposes of applying the formula component index number, if at any time, whether before or after the commencement of this section, the Australian Statistician has changed or changes the reference base for the Consumer Price Index, then, after the change only index numbers published in terms of the new base are to be used.

Publication of indexation factor and exemption threshold

(7) Before the beginning of each year of income (ignoring any substituted accounting period) the Commissioner must publish by written notice the indexation factor and the exemption threshold for the year of income.

Capital gains and capital losses Part IIIA Transfers of assets between companies under common ownership Division 19A

Section 160ZZRAAA


Division 19A—Transfers of assets between companies under common ownership

Subdivision A—Outline and interpretation

160ZZRAAA Outline of Division

(1)

This Division adjusts the cost bases of shares and loans in certain cases where assets are transferred between companies under common ownership and the transfer is likely to reduce the value of the share or loan.

• There are detailed rules for the circumstances in which adjustments are made and the amount of those adjustments.

• The rules that apply to most depreciable assets are different from the rules that apply to transfers of other assets.

• Taxpayers are able to group certain assets before applying this Division. In some cases, this will result in no adjustment being required and in some other cases it will result in a lesser reduction being required. Taxpayers may also choose to group certain assets for administrative convenience.

(2) The following chart shows the operative provisions that will apply to particular assets:

160ZZRA Interpretation

(1) In this Division, unless the contrary intention appears:

consideration, in relation to the disposal of the first asset, means consideration worked out as if subsection 160ZD(2) had not been enacted.

Part IIIA Capital gains and capital losses Division 19A Transfers of assets between companies under common ownership Section 160ZZRA


eligible debt interest, in relation to a company, means: (a) a loan to the company; or (b) an underlying interest in a loan to the company.

eligible equity interest, in relation to a company, means: (a) a share in the company; or (b) an underlying interest in a share in the company.

first asset has the meaning given by section 160ZZRD.

first asset disposal time has the meaning given by section 160ZZRD.

indexed threshold amount has the meaning given by subsection 160ZZRE(1B).

non-finance shares means shares other than shares where, having regard to:

(a) the manner in which the amount of dividends in respect of the share is to be calculated; and

(b) the conditions applicable to the payment of dividends in respect of the share; and

(c) any other relevant matters; the payment of dividends in respect of the share may reasonably be regarded as equivalent to the payment of interest on a loan.

original cost, of an asset to a taxpayer, means the consideration for the last acquisition of the asset by the taxpayer.

subsidiary has the same meaning as in section 160G.

total underlying share interests, in relation to particular shares in a company, means all of the beneficial interests held by natural persons (whether directly or through one or more interposed companies or trusts) in the shares.

transferee has the meaning given by section 160ZZRD.

transferor has the meaning given by section 160ZZRD.


Section 160ZZRB


under common ownership has the meaning given by section 160ZZRB.

underlying interest has the meaning given by section 160ZZRC.

written down value, for an asset of a taxpayer at a particular time, means the greater of:

(a) the depreciated value of that asset at that time as recorded in the books of the taxpayer; and

(b) the depreciated value of the asset, within the meaning of section 62 of this Act, or the written down value of the asset under Division 42 of the Income Tax Assessment Act 1997, at that time.

160ZZRB When companies under common ownership

For the purposes of this Division, a company (in this section called the first company) and another company (in this section called the second company) are under common ownership at a particular time if, and only if:

(a) the first company was related to the second company at that time; or

(b) at that time: (i) the total underlying share interests in the non-finance

shares in the first company were held by natural persons who, at that time, held the total underlying share interests in the non-finance shares in the second company; and

(ii) the proportion of the total underlying share interests in the non-finance shares in the first company held by each natural person was the same as the proportion of the total underlying share interests in the non-finance shares in the second company held by that person.

160ZZRBA Cost base etc. of certain assets

For the purpose of this Division, the cost base, the indexed cost base and the reduced cost base, at a particular time, of an asset to

Part IIIA Capital gains and capital losses Division 19A Transfers of assets between companies under common ownership Section 160ZZRBB


which subsection 160M(6) applies are taken to be equal to the market value of the asset at that time.

160ZZRBB Meaning of indexed common ownership market value

(1) The indexed common ownership market value of an asset is worked out by multiplying the market value of the asset at the common ownership time by the following indexation factor:

Index number for the CPI quarter in which the first assetdisposal time occurred

Index number for the CPI quarter in which the commonownership time occurred

(2) The indexation factor is to be worked out to 3 decimal places, but increased by 0.001 if the 4th decimal place is 5 or more.

(3) Calculations under subsection (1): (a) are to be made using only the index numbers published in

terms of the most recently published reference base for the Consumer Price Index; and

(b) are to disregard indexation numbers that are published in substitution for previously published index numbers (except where the substituted numbers are published to take account of changes in the reference base).


CPI quarter means a period of 3 months ending on 31 March, 30 June, 30 September or 31 December.

index number means the All Groups Consumer Price Index Number (being the weighted average of the 8 capital cities) published by the Australian Statistician.

160ZZRC Underlying interest

For the purposes of this Division, an asset held by a taxpayer is taken to be an underlying interest in particular property if, because of the holding of that asset, the taxpayer holds an interest (whether


Section 160ZZRD


directly or through one or more interposed companies or trusts) in the property.

Subdivision B—Application of Division

160ZZRD Transfers of assets between companies under common ownership

(1) Subject to this section, this Division applies where: (a) at a particular time (in this Division called the first asset

disposal time), a company (in this Division called the transferor) disposes of an asset (in this Division called the first asset) to another company (in this Division called the transferee); and

(b) at the first asset disposal time, the transferor and the transferee are under common ownership; and

(c) the transferee is not a subsidiary of the transferor.

(3) This Division does not apply if: (a) the disposal is a distribution to shareholders of a company by

a liquidator in the course of winding-up the company; and (b) the company is dissolved within 3 years after the winding-up

commenced, or within such further time as the Commissioner considers appropriate for the purposes of the application of this subsection in relation to the company.

160ZZRDA How Division applies to grouped assets

(1) Subdivision C sets out how this Division applies to groups of assets and to assets that are in a group of assets.

(2) Subdivision C applies Subdivisions D and E to the assets as a group. Those Subdivisions do not have any other operation in relation to an asset included in a group of assets.

160ZZRDB How Division applies to depreciable assets

(1) Subdivision D only applies to the disposal of the first asset if:

Part IIIA Capital gains and capital losses Division 19A Transfers of assets between companies under common ownership Section 160ZZRDC


(a) the asset is a depreciable asset; and (b) the consideration for the disposal of the asset is less than the

written down value of the asset at the time of the disposal; and

(c) the market value of the asset is not more than 10% greater than the written down value of the asset at the time of the disposal; and

(d) the original cost of the asset to the transferor was less than $1 million; and

(e) the asset is not a building.

Note 1: Written down value and original cost are defined in section 160ZZRA.

Note 2: Subdivision D also applies to some depreciable assets as part of depreciable asset groups as a result of Subdivision C.

(2) Subdivision E does not have any operation in relation to an asset to which Subdivision D applies.

160ZZRDC Application of Subdivision E

Subdivision E applies in relation to assets that are covered by this Division but not by Subdivision C or D.

Note: Subdivision E also applies to some assets as part of pre-common ownership groups or post-common ownership groups as a result of Subdivision C.

160ZZRDD Application of Subdivision F

Subdivision F only applies to the disposal of an asset if Subdivision C, D or E applied in relation to that disposal.


Section 160ZZRDE


Subdivision C—Grouped assets

160ZZRDE Transferor may elect to group assets

Reason for grouping

(1) Grouping provides taxpayers with a simplified method of applying this Division to 2 or more assets that are transferred from the transferor to the transferee. It may also reduce the cases in which adjustments have to be made to cost bases of shares or loans under this Division and may reduce the amount of those adjustments.

The 3 kinds of groups

(2) There are 3 kinds of groups: (a) a depreciable property group (see section 160ZZRDF); and (b) a pre-common ownership group (see section 160ZZRDG);

and (c) a post-common ownership group (see section 160ZZRDH).

The groups are mutually exclusive. An asset that could be included in the depreciable property group can not be included in either of the other groups.

(3) The transferor may elect to allocate assets to which this Division applies that are transferred to a transferee to groups of assets. All of the assets in a group must be disposed of to the same transferee in the same year of income of the transferor.

(4) An election under subsection (3) must be made in writing on or before the lodgment of the transferor’s return for the year of income in which the relevant disposals occurred. The Commissioner may allow the election to be made at a later time.

160ZZRDF Depreciable property groups

Assets that may be in depreciable property group

(1) An asset can be allocated to a depreciable property group if: (a) the asset is a depreciable asset; and

Part IIIA Capital gains and capital losses Division 19A Transfers of assets between companies under common ownership Section 160ZZRDF


(b) the asset is the first asset to be allocated to the group or is disposed of to the transferee in the same year of income of the transferor as the year in which other assets in the group are disposed of; and

(c) the original cost of the asset to the transferor was less than $1 million; and

(d) the asset is not a building.

How and when Subdivision D applies to depreciable property groups

(2) Subdivision D applies in a way specified in subsection (3) to all of the assets in a depreciable property group if:

(a) the sum of the consideration for the disposal of the assets in the group is less than the sum of the written down values of the assets in the group; and

(b) the sum of the market values of the assets in the group is not more than 10% greater than the sum of the written down values of the assets in the group.

The written down value and the market value of each asset is to be worked out when that asset is disposed of by the transferor.

(3) Subdivision D applies to all of the assets in a depreciable property group as if all of the grouped assets were one asset that:

(a) was disposed of at the earliest first asset disposal time for any asset in the group; and

(b) was disposed of for consideration equal to the sum of the consideration for the disposal of each of the assets; and

(c) had a written down value equal to the sum of the written down values of each of the assets.

In calculating the sums of written down values, the written down value of each asset at the first asset disposal time for that asset is to be used.


Section 160ZZRDG


160ZZRDG Pre-common ownership groups

Assets that may be in pre-common ownership group

(1) An asset can be allocated to a pre-common ownership group if: (a) the asset was acquired by the transferor before the time at

which the transferor and the transferee last came under common ownership; and

(b) the asset is the first asset to be allocated to the group or is disposed of to the transferee in the same year of income of the transferor as the year in which that asset is disposed of; and

(c) the original cost of the asset to the transferor was less than $1 million; and

(d) the asset is not land or a building.

How and when section 160ZZRF applies to pre-common ownership groups

(2) Section 160ZZRF applies to all of the assets in a pre-common ownership group in the way specified in subsection (3) if the sum of the consideration for the disposal of the assets in the group is less than the sum of the indexed common ownership market values of the assets in the group.

(3) Section 160ZZRF applies as if all of the grouped assets were one asset that:

(a) was acquired on or after 20 September 1985; and (b) was disposed of at the earliest first asset disposal time for any

asset in the group; and (c) was disposed of for consideration equal to the sum of the

consideration for the disposal of each of the assets; and (d) had a market value at the common ownership time equal to

the sum of the market values of the assets at that time. In applying section 160ZZRF to the grouped assets the matters in subsection (6) of that section must be used to determine what amount is reasonable.

Part IIIA Capital gains and capital losses Division 19A Transfers of assets between companies under common ownership Section 160ZZRDH


160ZZRDH Post-common ownership groups

Assets that may be in post-common ownership group

(1) An asset can be allocated to a post-common ownership group if: (a) the asset was acquired by the transferor at or after the time at

which the transferor and the transferee last came under common ownership; and

(b) the asset was last acquired by the transferor on or after 20 September 1985; and

(c) the asset is the first asset to be allocated to the group or is disposed of to the transferee in the same year of income of the transferor as the year in which the first asset is disposed of; and

(d) the original cost of the asset to the transferor was less than $1 million; and

(e) the asset is not land or a building.

How and when section 160ZZRE applies to post-common ownership groups

(2) Section 160ZZRE applies to all of the assets in a post-common ownership group in the way specified in subsection (3) if the sum of the consideration for the disposal of the assets in the group is less than the sum of the indexed threshold amount of each asset in the group. The indexed threshold amount of each asset is to be worked out when that asset is disposed of by the transferor.

(3) Section 160ZZRE applies as if all of the grouped assets were one asset that:

(a) was acquired by the transferor on or after 20 September 1985; and

(b) was disposed of at the earliest first asset disposal time for any asset in the group; and

(c) was disposed of for consideration equal to the sum of the consideration for the disposal of each of the assets; and

(d) had an indexed threshold amount equal to the sum of the indexed threshold amount for each of the assets; and


Section 160ZZRDI


(e) had a reduced threshold amount equal to the sum of the reduced threshold amounts for each of the assets.

In calculating the sums of reduced threshold amounts, or indexed threshold amounts, the reduced threshold amount, or indexed threshold amount, of each asset at the first asset disposal time for that asset is to be used.

160ZZRDI Shares or loans created after first asset in group is disposed of

(1) This section applies if a share in the transferor, or a loan to the transferor, comes into existence after the first time (the adjustment time) in a year of income at which an asset in the group is disposed of by the transferor but before the last time in the year of income at which such an asset is actually disposed of.

(2) This section does not apply to a share that is issued to replace a share that is, or is to be, cancelled.

(3) This Division applies as if: (a) the share or loan had been in existence immediately before

the adjustment time; and (b) the share or loan had all the same attributes at that time as it

had immediately after it came into existence.

Subdivision D—Depreciable assets

160ZZRDJ Shares in, and loans to, transferor—depreciable assets—deemed disposal

(1) This section applies to each share in the transferor acquired by a taxpayer (the second taxpayer) on or after 20 September 1985 that is held by the second taxpayer at the first asset disposal time.

(2) For each share to which this section applies, the second taxpayer is taken to have disposed of the share at the first asset disposal time for a consideration equal to the indexed cost base to the second taxpayer of the share.

Part IIIA Capital gains and capital losses Division 19A Transfers of assets between companies under common ownership Section 160ZZRDK


(3) For the purpose of ascertaining whether a capital gain accrued to the second taxpayer in the event of a subsequent disposal of the share by the second taxpayer, the second taxpayer is taken to have immediately re-acquired the share for a consideration equal to the indexed cost base to the second taxpayer of the share, reduced by the share reduction amount (see subsection (5)).

(4) For the purpose of ascertaining whether the second taxpayer incurred a capital loss in the event of a subsequent disposal of the share by the second taxpayer, the second taxpayer is taken to have immediately re-acquired the share for a consideration equal to the reduced cost base to the second taxpayer of the share, reduced by the share reduction amount (see subsection (5)).

(5) The share reduction amount is worked out, immediately before the first asset disposal time, using the formula:

Market value of share Written down value Consideration for –of the first asset disposal of first assetTotal of market values ofall shares in transferor

×

(6) If the second taxpayer or another taxpayer disposed of a share (otherwise than because of the application of this section) within 12 months after the taxpayer acquired the share (otherwise than because of the application of this section), subsections (2) and (3) have effect as if the references to the indexed cost base to the taxpayer in respect of the share were a reference to the cost base to the taxpayer in respect of the share.

160ZZRDK Shares of different classes

If: (a) at the first asset disposal time, a taxpayer (the second

taxpayer) held a share of a particular class in the transferor that was acquired by the second taxpayer on or after 20 September 1985 (the post-CGT share); and

(b) at the first asset disposal time, the second taxpayer or another taxpayer held a share of another class in the transferor; and


Section 160ZZRDL


(c) the application of section 160ZZRDJ to the post-CGT share would be unreasonable;

then, that section does not apply to the post-CGT share and the cost base, the indexed cost base or the reduced cost base of the post-CGT share to the second taxpayer is instead reduced by such amount (if any) as is reasonable having regard to:

(d) the circumstances in which the post-CGT share was acquired by the second taxpayer; and

(e) the extent (if any) to which the market value of the post-CGT share was reduced as a result of the disposal of the first asset at the first asset disposal time.

160ZZRDL Loans to transferor—depreciable assets

(1) Section 160ZZRDM applies to a loan to the transferor acquired by a taxpayer (the second taxpayer) if the 3 conditions below are satisfied.

(2) The first condition is that the loan was acquired by the second taxpayer on or after 20 September 1985 and is held by the second taxpayer at the first asset disposal time.

(3) The second condition is that: (a) the parties to the loan were not dealing with each other at

arm’s length in relation to the loan; or (b) the value of the loan was reduced as a result of the disposal

of the first asset.

(4) The third condition is that: (a) one or more shares in the transferor (the excess shares) are

taken, because of section 160ZZRDJ or 160ZZRDK, to have a cost base, indexed cost base or reduced cost base of nil immediately after the first asset disposal time; or

(b) at the first asset disposal time, there were no shares in the transferor that were acquired (by the second taxpayer or otherwise) on or after 20 September 1985.

Part IIIA Capital gains and capital losses Division 19A Transfers of assets between companies under common ownership Section 160ZZRDM


160ZZRDM Loans to transferor—depreciable assets—deemed disposal

(1) If this section applies (see section 160ZZRDL), the second taxpayer is taken to have disposed of the loan at the first asset disposal time for a consideration equal to the indexed cost base to the second taxpayer of the loan.

(2) For the purpose of ascertaining whether a capital gain accrued to the second taxpayer in the event of a subsequent disposal of the loan by the second taxpayer, the second taxpayer is taken to have immediately re-acquired the loan for a consideration equal to the indexed cost base to the second taxpayer of the loan, reduced by the reduction (capital gain) amount.

(3) The reduction (capital gain) amount is worked out, immediately before the first asset disposal time, using the formula:

Market value of loan Total excess share reduction (capital gain) amountTotal of market values ofall loans to transferor

×

(4) The total excess share reduction (capital gain) amount is: (a) if paragraph 160ZZRDL(4)(a) applies—so much of the total

share reduction amounts for the excess shares as was not applied in making reductions to the indexed cost bases of the excess shares in accordance with subsection 160ZZRDJ(3) or section 160ZZRDK; or

(b) if paragraph 160ZZRDL(4)(b) applies—the amount worked out using the formula:

Written down value of Consideration for disposal–first asset of first asset

(5) For the purpose of ascertaining whether a capital loss accrued to the second taxpayer in the event of a subsequent disposal of the loan by the second taxpayer, the second taxpayer is taken to have immediately re-acquired the loan for a consideration equal to the reduced cost base to the second taxpayer of the loan, reduced by the reduction (capital loss) amount.


Section 160ZZRDN


(6) The reduction (capital loss) amount is worked out, immediately before the first asset disposal time, using the formula:

Market value of loan Total excess share reduction (capital gain) amountTotal of market values ofall loans to transferor

×

(7) The total excess share reduction (capital loss) amount is: (a) if paragraph 160ZZRDL(4)(a) applies—so much of the total

share reduction amounts for the excess shares as was not applied in making reductions to the reduced cost bases of the excess shares in accordance with subsection 160ZZRDJ(4) or section 160ZZRDK; or

(b) if paragraph 160ZZRDL(4)(b) applies and the written down value of the first asset exceeds the consideration in respect of the disposal of the first asset—the amount of the excess; or

(c) in any other case—0.

(8) If the second taxpayer or another taxpayer disposed of a loan (otherwise than because of the application of this section) within 12 months after the taxpayer acquired the loan (otherwise than because of the application of this section), subsections (1) and (2) have effect as if the references to the indexed cost base to the taxpayer in respect of the loan were a reference to the cost base to the taxpayer in respect of the loan.

160ZZRDN More than one loan

If: (a) at the first asset disposal time, a taxpayer (the second

taxpayer) held a loan to the transferor that was acquired by the second taxpayer on or after 20 September 1985 (the post-CGT loan); and

(b) at the first asset disposal time, the second taxpayer or another taxpayer held:

(i) a share in the transferor that was acquired by that taxpayer before 20 September 1985; or

(ii) another loan to the transferor; and

Part IIIA Capital gains and capital losses Division 19A Transfers of assets between companies under common ownership Section 160ZZRE


(c) the application of section 160ZZRDM to the post-CGT loan would be unreasonable;

then, that section does not apply to the post-CGT loan and the cost base, the indexed cost base or the reduced cost base of the post-CGT loan to the second taxpayer is instead reduced by such amount (if any) as is reasonable having regard to:

(d) the circumstances in which the post-CGT loan was acquired by the second taxpayer; and

(e) the extent (if any) to which the market value of the post-CGT loan was reduced as a result of the disposal of the first asset at the first asset disposal time.

Subdivision E—Other assets

160ZZRE Shares in, and loans to, transferor—deemed disposal and re-acquisition

(1) This section only applies to a share in, or a loan to, the transferor acquired by a taxpayer if no reduction to the cost base, the indexed cost base or the reduced cost base of the share or the loan to the taxpayer is made under section 160ZZRF.

(1A) This section only applies in relation to the disposal of the first asset if the first asset was acquired by the transferor on or after 20 September 1985.

(1B) This section only applies if the consideration for the disposal of the first asset is less than the indexed threshold amount being the lesser of:

(a) the indexed cost base to the transferor of the first asset, or the amount that would have been the indexed cost base if this Part had applied in respect of the disposal of the first asset; and

(b) the market value of the first asset immediately before the first asset disposal time.

(2) This section only applies to a loan to the transferor if: (a) the parties to the loan were not dealing with each other at

arm’s length in relation to the loan; or


Section 160ZZRE


(b) the value of the loan was reduced as a result of the disposal of the first asset.

(3) If, at the first asset disposal time, a taxpayer (in this subsection called the second taxpayer) held a share in the transferor that was acquired by the second taxpayer on or after 20 September 1985, the second taxpayer is taken:

(a) to have disposed of the share at the first asset disposal time for a consideration equal to the indexed cost base to the second taxpayer of the share; and

(b) for the purpose of ascertaining whether a capital gain accrued to the second taxpayer in the event of a subsequent disposal of the share by the second taxpayer—to have immediately re-acquired the share for a consideration equal to the indexed cost base to the second taxpayer of the share, reduced by the amount (in this section called the indexed share reduction amount) calculated using the formula:

Indexed First Share MV threshold – asset

Total post-CGT amount considerationshare MV

×

where: Share MV means the market value of the share immediately

before the first asset disposal time. Total post-CGT share MV means the total market value,

immediately before the first asset disposal time, of all of the shares in the transferor that were acquired (by the second taxpayer or otherwise) on or after 20 September 1985.

Indexed threshold amount means the indexed threshold amount.

First asset consideration means the amount of the consideration in respect of the disposal of the first asset; and

(c) for the purpose of ascertaining whether the second taxpayer incurred a capital loss in the event of a subsequent disposal of the share by the second taxpayer—to have immediately re-acquired the share for a consideration equal to:

(i) if the consideration in respect of the disposal of the first asset is less than the lesser of the following amounts:



(A) the reduced cost base to the transferor of the first asset;

(B) the amount that would have been the reduced cost base to the transferor of the first asset for the purposes of this Part if this Part had applied in respect of the disposal of the first asset;

(C) the market value, immediately before the first asset disposal time, of the first asset;

(which lesser amount is in this paragraph called the reduced threshold amount)—the reduced cost base to the second taxpayer of the share, reduced by the amount (in this section called the reduced share reduction amount) calculated using the formula:

Reduced First Share MV threshold – asset

Total post-CGT amount considerationshare MV

×

where: Share MV means the market value of the share

immediately before the first asset disposal time. Total post-CGT share MV means the total market

value, immediately before the first asset disposal time, of all of the shares in the transferor that were acquired (by the second taxpayer or otherwise) on or after 20 September 1985.

Reduced threshold amount means the reduced threshold amount.

First asset consideration means the amount of the consideration in respect of the disposal of the first asset; or

(ii) in any other case—the reduced cost base to the second taxpayer of the share.

(4) If: (a) at the first asset disposal time, a taxpayer (in this subsection

called the second taxpayer) held a loan to the transferor, being a loan that was acquired by the second taxpayer on or after 20 September 1985; and


Section 160ZZRE


(b) either of the following conditions is satisfied: (i) one or more shares in the transferor (in this subsection

called the excess shares) are taken, because of paragraph (3)(b) or (c), to have been re-acquired, by the second taxpayer or by another taxpayer, at the first asset disposal time, for nil consideration;

(ii) at the first asset disposal time, there were no shares in the transferor that were acquired (by the second taxpayer or otherwise) on or after 20 September 1985;

the second taxpayer is taken: (c) to have disposed of the loan at the first asset disposal time for

a consideration equal to the indexed cost base to the second taxpayer of the loan; and

(d) for the purpose of ascertaining whether a capital gain accrued to the second taxpayer in the event of a subsequent disposal of the loan by the second taxpayer—to have immediately re-acquired the loan for a consideration equal to the indexed cost base to the second taxpayer of the loan, reduced by the amount calculated using the formula:

Loan MV Total excess share reduction amountTotal post-CGTloan MV

×

where: Loan MV means the market value of the loan immediately

before the first asset disposal time. Total post-CGT loan MV means the total market value,

immediately before the first asset disposal time, of all the loans to the transferor that were acquired (by the second taxpayer or otherwise) on or after 20 September 1985.

Total excess share reduction amount means: (i) if subparagraph (b)(i) of this subsection applies—so

much of the total indexed share reduction amounts for the excess shares as was not applied in making reductions to the indexed cost bases of the excess shares in accordance with paragraph (3)(b); or

(ii) if subparagraph (b)(ii) of this subsection applies—the amount calculated using the formula:



Indexed First threshold – assetamount consideration

where: Indexed threshold amount means the indexed threshold

amount. First asset consideration means the amount of the

consideration in respect of the disposal of the first asset; and

(e) for the purpose of ascertaining whether the second taxpayer incurred a capital loss in the event of a subsequent disposal of the loan by the second taxpayer—to have immediately re-acquired the loan for a consideration equal to the reduced cost base to the second taxpayer of the loan, reduced by the amount calculated using the formula:

Loan MV Total excess share reduction amountTotal post-CGTloan MV

×

where: Loan MV means the market value of the loan immediately

before the first asset disposal time. Total post-CGT loan MV means the total market value,

immediately before the first asset disposal time, of all the loans to the transferor that were acquired (by the second taxpayer or otherwise) on or after 20 September 1985.

Total excess share reduction amount means: (i) if subparagraph (b)(i) of this subsection applies—so

much of the total reduced share reduction amounts for the excess shares as was not applied in making reductions to the reduced cost bases of the excess shares in accordance with paragraph (3)(c); or

(ii) if subparagraph (b)(ii) of this subsection applies: (A) if the reduced cost base to the transferor of the

first asset, or the amount that would have been the reduced cost base to the transferor of the first asset for the purposes of this Part if this Part had applied in respect of the disposal of the


Section 160ZZRE


first asset, as the case may be, exceeds the consideration in respect of the disposal of the first asset—the amount of the excess; or

(B) in any other case—0.

(5) If the second taxpayer or another taxpayer disposed of a share or loan (otherwise than because of the application of this section) within 12 months after the taxpayer acquired the share or loan (otherwise than because of the application of this section), subsections (3) and (4) have effect as if the references in the subsection concerned to the indexed cost base to the taxpayer in respect of the share or loan were a reference to the cost base to the taxpayer in respect of the share or loan.

(6) If: (a) at the first asset disposal time, a taxpayer (in this subsection

called the second taxpayer) held an asset, being: (i) a share in the transferor that was acquired by the second

taxpayer on or after 20 September 1985 (in this subsection called a post-CGT share); or

(ii) a loan to the transferor that was acquired by the second taxpayer on or after 20 September 1985 (in this subsection called a post-CGT loan); and

(b) either: (i) at the first asset disposal time, the second taxpayer or

another taxpayer held a share in the transferor that was acquired by that taxpayer before 20 September 1985; or

(ii) whichever of the following is applicable: (A) in the case of a post-CGT share—at the first

asset disposal time, shares in the transferor belonging to 2 or more classes were in existence;

(B) in the case of a post-CGT loan—at the first asset disposal time, at least one other loan to the transferor was held by the second taxpayer, a company related to the transferor, or a person mentioned in paragraph 160ZZRB(b) in relation to the transferor; and

Part IIIA Capital gains and capital losses Division 19A Transfers of assets between companies under common ownership Section 160ZZRF


(c) the application of subsection (3) to the post-CGT share, or the application of subsection (4) to the post-CGT loan, as the case may be, would be unreasonable;

then: (d) in the case of a post-CGT share—subsection (3) does not

apply to the post-CGT share; and (e) in the case of a post-CGT loan—subsection (4) does not

apply to the post-CGT loan; and (f) the cost base, the indexed cost base or the reduced cost base

of the post-CGT share or the post-CGT loan to the second taxpayer is reduced by such amount (if any) as is reasonable having regard to:

(i) the circumstances in which the post-CGT share or the post-CGT loan was acquired by the second taxpayer; and

(ii) the extent (if any) to which the market value of the post-CGT share or the post-CGT loan was reduced as a result of the disposal of the first asset at the first asset disposal time.

160ZZRF First asset acquired before transferor and transferee came under common ownership—shares in, and loans to, transferor—reduction in cost base etc.

(1) This section applies where the transferor acquired the first asset before the latest time (in this section called the common ownership time):

(a) earlier than the first asset disposal time; and (b) at which the transferor and the transferee came under

common ownership.

(2) If: (aa) the first asset was acquired by the transferor on or after

20 September 1985 (otherwise than because of section 160ZZS); and

(a) at the first asset disposal time, a taxpayer (in this subsection called the second taxpayer) held an asset, being:


Section 160ZZRF


(i) a share in the transferor that was acquired by the second taxpayer on or after 20 September 1985; or

(ii) a loan to the transferor that was acquired by the second taxpayer on or after 20 September 1985; and

(b) at the common ownership time, the market value of the assets of the transferor substantially exceeded the total indexed cost bases to the transferor of those assets;

the cost base, the indexed cost base or the reduced cost base of the share or the loan to the second taxpayer is reduced by such amount (if any) as is reasonable.

(3) If: (a) either of the following conditions is satisfied: (i) the first asset was acquired by the transferor before

20 September 1985; (ii) the first asset was acquired by the transferor on or after

20 September 1985 because of section 160ZZS; and (b) at the first asset disposal time, a taxpayer (in this subsection


taxpayer on or after 20 September 1985; or (ii) a loan to the transferor that was acquired by the second

taxpayer on or after 20 September 1985; the cost base, the indexed cost base or the reduced cost base of the share or the loan to the second taxpayer is reduced by such amount (if any) as is reasonable.

(4) The second taxpayer must choose whether to use the matters set out in subsection (5) or the matters set out in subsection (6) to determine what amount is reasonable.

(5) The matters in this subsection are: (a) the circumstances in which the share or the loan was acquired

by the second taxpayer; and (b) the extent (if any) to which the market value of the share or

the loan was reduced as a result of the disposal of the first asset at the first asset disposal time; and

Part IIIA Capital gains and capital losses Division 19A Transfers of assets between companies under common ownership Section 160ZZRFA


(c) the extent (if any) to which any consideration paid or given by the second taxpayer for the acquisition of the share or the loan was attributable to the first asset.

(6) The matters in this subsection are: (a) the indexed common ownership market value of the first

asset (see section 160ZZRBB); and (b) the amount of the consideration for the disposal of the first

asset to the transferee.

160ZZRFA First asset acquired when transferor and transferee under common ownership—shares in, and loans to, transferor—reduction in cost base etc.

(1) This section applies where the transferor acquired the first asset at or after the latest time (in this section called the common ownership time):

(a) earlier than the first asset disposal time; and (b) at which the transferor and the transferee came under

common ownership.

(2) If: (a) the first asset was acquired by the transferor before

20 September 1985; and (b) at the first asset disposal time, a taxpayer (in this subsection


taxpayer on or after 20 September 1985; or (ii) a loan to the transferor that was acquired by the second

taxpayer on or after 20 September 1985; the cost base, the indexed cost base or the reduced cost base of the share or the loan to the second taxpayer is reduced by such amount (if any) as is reasonable having regard to:

(c) the circumstances in which the share or the loan was acquired by the second taxpayer; and

(d) the extent (if any) to which the market value of the share or the loan was reduced as a result of the disposal of the first asset at the first asset disposal time.


Section 160ZZRG


Subdivision F—Other adjustments

160ZZRG Indirect equity or debt interests in transferor—reduction in cost base etc.

If: (a) at the first asset disposal time, a taxpayer (in this section

called the second taxpayer) held an asset, being: (i) an eligible equity interest (other than a share) in the

transferor that was acquired by the second taxpayer on or after 20 September 1985; or

(ii) an eligible debt interest (other than a loan) in the transferor that was acquired by the second taxpayer on or after 20 September 1985; and

(b) the second taxpayer disposes of that asset; the cost base, the indexed cost base or the reduced cost base of the asset to the second taxpayer is reduced by such amount as is reasonable having regard to the reduction in value of the asset resulting from the disposal of the first asset.

160ZZRH Equity interests in transferee—compensatory increase in cost base etc.

(1) If: (a) at the first asset disposal time, a taxpayer (in this section

called the third taxpayer) (who may be the second taxpayer mentioned in section 160ZZRE, 160ZZRF, 160ZZRFA or 160ZZRG) holds an eligible equity interest in the transferee that was acquired by the third taxpayer on or after 20 September 1985; and

(b) the third taxpayer disposes of the eligible equity interest; the cost base, the indexed cost base or the reduced cost base of the eligible equity interest to the third taxpayer is increased by such amount (if any) as is reasonable having regard to:

(c) the increase in the value of the interest resulting from the acquisition of the first asset; and

Part IIIA Capital gains and capital losses Division 19A Transfers of assets between companies under common ownership Section 160ZZRH


(d) the amount of any relevant reductions made under Subdivision C, D or E; and

(e) in the case of the indexed cost base—inflation as measured using the method in section 160Q.

(2) The total of increases made under subsection (1) in relation to the first asset is not to exceed the total of adjustments made in relation to that asset under Subdivisions C, D and E.

Capital gains and capital losses Part IIIA Share value shifting arrangements Division 19B

Section 160ZZRI


Division 19B—Share value shifting arrangements

160ZZRI Object

The object of this Division is to remove the capital gains tax advantages of share value shifting arrangements.

160ZZRJ Simplified outline

The following diagram is a simplified outline of this Division:

Part IIIA Capital gains and capital losses Division 19B Share value shifting arrangements Section 160ZZRK


Division applies if:

• the value of shares of a taxpayer or an associate is shifted under an arrangement involving a company and the taxpayer

• the taxpayer is the controller of the company at some time in the course of the arrangement

• the value shifted from the shares is material

Consequences to the extent that value shift is to pre-CGT shares:

Consequences to the extent that value shift is to post-CGT shares:

→ possible deemed capital gain in respect of decreased value shares

→ possible deemed capital gain in respect of decreased value shares of different person

→ cost base reduction for decreased value shares, to take account of value shifted

→ cost base reduction for decreased value shares of same or different person, to take account of value shifted

→ if material increase in increased valie shares, cost base increase for those shares, to take account of value shifted

160ZZRK List of definitions

The following is a list of expressions defined for the purposes of this Division and their location:

arrangement ......................... subsection 160ZZRM(3)

associate............................... subsection 160ZZRN(2)

controller ............................. subsection 160ZZRN(1)


Section 160ZZRL


decreased value share .......... paragraph 160ZZRM(1)(b)

different person share .......... paragraph 160ZZRQ(2)(a)

entity.................................... subsection 160ZZRN(2)

group.................................... subsection 160ZZRN(2)

increase................................ subparagraph 160ZZRM(1)(c)(ii)

increased value share........... paragraph 160ZZRM(1)(c)

material decrease ................. subsection 160ZZRO(1)

material increase.................. subsection 160ZZRO(2)

post-CGT share.................... subsection 160ZZRM(6)

pre-CGT share ..................... subsection 160ZZRM(5)

same person share................ paragraph 160ZZRQ(6)(b)

share..................................... subsection 160ZZRM(4)

share value shift................... subsection 160ZZRM(1)

total market value increase .. subsection 160ZZRO(3)

160ZZRL Requirements for Division to apply

In order for the operative provisions of this Division (sections 160ZZRP and 160ZZRQ) to apply, the following requirements must be satisfied:

(a) first, a share value shift must take place under an arrangement involving a company and a taxpayer (see section 160ZZRM);

(b) secondly, the taxpayer must be a controller (see subsection 160ZZRN(1)) of the company at some time during the period beginning when the arrangement is entered into and ending when it has been implemented;

(c) thirdly, there must be a material decrease (see subsection 160ZZRO(1)) in the market value of a share involved in the share value shift.

Part IIIA Capital gains and capital losses Division 19B Share value shifting arrangements Section 160ZZRM


160ZZRM Share value shift under an arrangement

Share value shift

(1) A share value shift takes place under an arrangement (see subsection (3)) involving a company and a taxpayer if:

(a) under the arrangement, the company, the taxpayer or an associate of the taxpayer, either alone or with one or more other persons, does something in relation to a share or shares (including issuing a share or shares) in the company (for example, changing voting rights attached to a share, buying-back shares or issuing new shares at a discount on their market value); and

(b) at the same time as, or after, the thing is done, one or more shares (each of which is a decreased value share) in the company (whether or not shares to which paragraph (a) applies) that are post-CGT shares held by the taxpayer or an associate of the taxpayer decrease in market value; and

(c) at the same time as, or after, the thing is done, either or both of the following happen:

(i) one or more existing shares (each of which is an increased value share) in the company (whether post-CGT shares or pre-CGT shares and whether or not shares to which paragraph (a) applies) held by:

(A) in any case—the taxpayer or an associate of the taxpayer; or

(B) if any decreased value share was held by an associate of the taxpayer—an associate of that associate;

increase in market value; or (ii) one or more new shares (each of which is also an

increased value share) in the company are issued to: (A) in any case—the taxpayer or an associate of the

taxpayer; or (B) if any decreased value share was held by an

associate of the taxpayer—an associate of that associate;


Section 160ZZRM


where the market value of each new share exceeds the consideration (if any) given by the taxpayer or other person for its issue (the excess is referred to in this Division as an increase in its market value); and

(d) it is reasonable to conclude that the decrease and increase were caused by the doing of the thing mentioned in paragraph (a).

Increase or decrease partly due to arrangement

(2) If it is reasonable to conclude that an increase or decrease in the market value of one or more shares is partly caused by the doing of the thing under the arrangement and partly caused by something else, subsection (1) applies to the decrease or increase to the extent only that it is reasonable to conclude that the decrease or increase is caused by the doing of the thing under the arrangement.

Where subsection 159GSSSQ(2) applies to share buy-back

(2A) If: (a) it is reasonable to conclude that a decrease in the market

value of a share is caused by a proposed buy-back of the share by the company; and

(b) the buy-back of the share takes place; and (c) subsection 159GZZZQ(2) applies in respect of the buy-back;

then the decrease in market value is disregarded for the purposes of this section.

Arrangement

(3) An arrangement is: (a) any arrangement, agreement, understanding, promise or

undertaking, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings; or

(b) any scheme, plan, proposal, action, course of action, or course of conduct, whether of one person or more than one person.

Part IIIA Capital gains and capital losses Division 19B Share value shifting arrangements Section 160ZZRN


Share

(4) The expression “share” includes: (a) an interest in a share; or (b) a right or option (including a contingent right or option) to

acquire a share or an interest in a share.

Pre-CGT share

(5) A share is a pre-CGT share if it was acquired by the shareholder before 20 September 1985.

Post-CGT share

(6) A share is a post-CGT share if it was acquired by the shareholder on or after 20 September 1985.

160ZZRN Controller of a company etc.

Controller

(1) A taxpayer is a controller of a company if: (a) the taxpayer has an associate-inclusive control interest in the

company of not less than 50%; or (b) both the following subparagraphs apply: (i) the taxpayer has an associate-inclusive control interest

in the company of not less than 40%; (ii) the company is not controlled by a group of entities

other than a group consisting of or including the taxpayer or any of the taxpayer’s associates; or

(c) the taxpayer controls the company, either alone or together with an associate or associates.

Associate, entity and group

(2) The expressions “associate”, “entity” and “group” have the same respective meanings as in Part X.


Section 160ZZRO


Associate-inclusive control interest

(3) Subject to the modifications in subsection (4), whether a taxpayer has an associate-inclusive control interest of not less than 50%, or not less than 40%, in a company is to be determined by applying Division 3 of Part X.

Modifications of applied provisions

(4) The modifications are as follows: (a) that Division 3 of Part X applies for the purpose of

determining the associate-inclusive control interests in a company whether or not in the capacity of trustee;

Note: The expression “company” in Part X does not include a company in the capacity of trustee.

(b) that the purpose of making the determination is one of the purposes for which subsection 349(4) is to be applied;

(c) that subsections 350(6) and (7) and 355(1) do not apply; (d) that the reference in subsection 352(2) to a CFE is a

reference to: (i) a company of which the taxpayer or an associate is a

controller; or (ii) a partnership; or (iii) a trust; (e) that references in section 354 to a CFP are references to any

partnership; (f) that references in section 355 to a CFT are references to any

trust.

160ZZRO Material decrease, material increase and total market value increase

Material decrease

(1) A decrease (the current decrease) in the market value of a share involved in a share value shift is a material decrease if:

(a) the sum of the percentage of the current decrease and the percentages of all other decreases (if any) in the market value

Part IIIA Capital gains and capital losses Division 19B Share value shifting arrangements Section 160ZZRO


of the share as a result of share value shifts under the same arrangement (whether before or after the current decrease) is at least 5%; or

(b) the sum of all decreases in the market value of all shares whose market value is decreased as a result of share value shifts at any time under the same arrangement is at least $100,000.

Material increase

(2) An increase (the current increase) in the market value of a share involved in a share value shift is a material increase if:

(a) the sum of the percentage of the current increase and the percentages of all other increases (if any) in the market value of the share as a result of share value shifts under the same arrangement (whether before or after the current increase) is at least 5%; or

(b) the sum of all increases in the market value of all shares whose market value is increased as a result of share value shifts at any time under the same arrangement is at least $100,000.

Total market value increase

(3) The total market value increase in respect of an arrangement under which one or more share value shifts take place is the sum of:

(a) all increases in market value of all shares whose market value is increased as a result of the share value shifts; and

(b) all increases in market value of all other shares whose market value is increased, where it is reasonable to conclude that the doing of the thing mentioned in paragraph 160ZZRM(1)(a) in relation to any of the share value shifts caused the increase.


Section 160ZZRP


160ZZRP Consequences of value shift to pre-CGT share

Section sets out consequences

(1) If the requirements of section 160ZZRL are satisfied and a particular increased value share is a pre-CGT share, the following are the consequences.

Deemed capital gain

(2) If: (a) in respect of each decreased value share for which there was

a material decrease in market value, this Part were applied on the following assumptions:

(i) that a part of the share had been disposed of by its holder immediately after the decrease in value of the share;

(ii) that the consideration for the disposal was an amount worked out using the formula:

Increase in market value ofDecrease in marketparticular increased value

value of decreasedsharevalue share


×

(iii) that the cost base or indexed cost base of the part was the amount worked out by multiplying the amount that would be the cost base or indexed cost base for the whole of the share if it were being disposed of at the time, by the fraction worked out using the formula:

Amount worked out undersubparagraph (ii)

Market value of the shareimmediately before the decrease

(b) as a result a capital gain would accrue to the holder; then, for the purposes of this Act, a capital gain of that amount is taken to accrue to the holder for the year of income in respect of

Part IIIA Capital gains and capital losses Division 19B Share value shifting arrangements Section 160ZZRQ


the disposal of an asset (even though no asset was actually disposed of).

Adjustment to acquisition consideration etc. for decreased value share

(3) Regardless of whether subsection (2) applies, for the purposes of any application of this Part to a later disposal by the holder of any decreased value share for which there was a material decrease in market value:

(a) all amounts that, under section 160ZH (which deals with cost base, indexed cost base and reduced cost base) are attributable to the share in relation to the period before the decrease in value took place;

are taken to be reduced by: (b) the fraction worked out using the formula:

Increase in market value ofparticular increased value Decrease in market value

share of decreased value share Total market value increase Market value of

decreased value shareimmediately before the

decrea

×

se

160ZZRQ Consequences of value shift to post-CGT share

Section sets out consequences

(1) If the requirements of section 160ZZRL are satisfied and a particular increased value share is a post-CGT share, the following are the consequences.

Deemed capital gain

(2) If: (a) in respect of each decreased value share (a different person

share): (i) held by a person other than the holder of the particular

increased value share; and


Section 160ZZRQ


(ii) for which there was a material decrease in market value; this Part were applied on the following assumptions:

(iii) that a part of the different person share had been disposed of by its holder immediately after the decrease in value of the share;

(iv) that the consideration for the disposal was an amount worked out using the formula:

Increase in market value ofparticular increased value Decrease in market share value of different person share


×

(v) that the cost base or indexed cost base of the part was

the amount worked out by multiplying the amount that would be the cost base or indexed cost base for the whole of the share if it were being disposed of at the time, by the fraction worked out using the formula:

Amount worked out undersubparagraph (iv)

Market value of the shareimmediately before the decrease

(b) as a result a capital gain would accrue to the holder; then, for the purposes of this Act, a capital gain of that amount is taken to accrue to the holder for the year of income in respect of the disposal of an asset (even though no asset was actually disposed of).

Adjustment to acquisition consideration etc. for decreased value share

(3) For the purpose of any application of this Part to a later disposal by the holder of any decreased value share for which there was a material decrease in market value:

(a) all amounts that, under section 160ZH (which deals with cost base, indexed cost base and reduced cost base) are

Part IIIA Capital gains and capital losses Division 19B Share value shifting arrangements Section 160ZZRQ


attributable to any such share in relation to the period before the decrease in value took place;

are taken to be reduced by: (b) the fraction worked out using the formula:

Increase in market value ofparticular increased value Decrease in market value

share of decreased value share Total market value increase Market value of

decreased value shareimmediately before the

decrea

×

se

Adjustment to cost base expenditure for increased value share

(4) If there is a material increase (see subsection 160ZZRO(2)) in the market value of the particular increased value share then, for the purposes of any application of this Part to a later disposal of the particular increased value share by the holder, the holder is taken to have incurred in relation to the share, at the time of the increase in its market value, expenditure to which paragraph 160ZH(1)(c), (2)(c) or (3)(c) applies that is equal to the sum of the amounts qualifying under subsections (5) and (6) of this section.

Deemed expenditure referable to decreased value shares of different persons

(5) One amount qualifying for the purposes of subsection (4) is the smaller of the following:

(a) the amount worked out by multiplying the increase in market value of the particular increased value share, to the extent that the increase is reflected in its market value at the time of the later disposal, by the following fraction:

Sum of decreases in market value of alldifferent person shares

Sum of decreases in market value of alldecreased value shares

(b) the sum of the amounts worked out for each different person share using the following formula:


Section 160ZZRQ


Increase in market value ofparticular increased value Decrease in market share value of same person share


×

Deemed expenditure referable to decreased value shares of same person

(6) The other amount qualifying for the purposes of subsection (4) is the smallest of the following:

(a) the amount worked out by multiplying the increase in market value of the particular increased value share, to the extent that the increase is reflected in its market value at the time of the later disposal, by the following fraction: 1 – fraction in paragraph (5)(a);

(b) the sum of the amounts worked out for each share (a same person share):

(i) held by the person who holds the particular increased value share; and

(ii) for which there was a material decrease in market value; using the following formula:

Increase in market value ofparticular increased value Decrease in market share value of different person share


×

(c) the sum of the amounts of reductions that would result from

the application of subsection (3) if that subsection applied only to same person shares.

Part IIIA Capital gains and capital losses Division 20 Changes in majority underlying interests in assets Section 160ZZRR


Division 20—Changes in majority underlying interests in assets

Subdivision A—Preliminary

160ZZRR Interpretation

(1) In this Division:

abnormal trading has the meaning given by Subdivision D.

approved stock exchange has the same meaning as in section 470.

base time, in relation to a public entity, means: (a) the last moment of a day within the period beginning on

1 July 1985 and ending on 30 June 1986 that is chosen by the entity and is a day the choice of which will result in a determination that gives a reasonable approximation of the natural persons who held underlying interests in the assets of the entity at the last moment of 19 September 1985; or

(b) if no day within that period is so chosen—the last moment of 19 September 1985.

business day, in relation to the application of paragraph (b) of the definition of test time to a public entity, means a day other than:

(a) a Saturday; or (b) a Sunday; or (c) a day that is a public holiday or a bank holiday in the place

where the records of ownership of shares or other interests in the entity are kept.

capital shareholding of less than 1% has the meaning given by subsection 160ZZSN(1).

capital unitholding of less than 1% has the meaning given by subsection 160ZZSO(1).

Capital gains and capital losses Part IIIA Changes in majority underlying interests in assets Division 20

Section 160ZZRR


complying approved deposit fund means a complying approved deposit fund within the meaning of section 47 of the Superannuation Industry (Supervision) Act 1993.

complying superannuation fund means a complying superannuation fund within the meaning of section 45 of the Superannuation Industry (Supervision) Act 1993.

dividend shareholding of less than 1% has the meaning given by subsection 160ZZSN(2).

first test time means the last moment of 20 January 1997.

government body means: (a) the Commonwealth, a State or a Territory; or (b) a municipal corporation or other local government body; or (c) a foreign state.

head company has the meaning given by section 160ZZSK.

head trust has the meaning given by section 160ZZSK.

hold includes have.

in a position to affect rights has the meaning given by section 160ZZRRB.

income unitholding of less than 1% has the meaning given by subsection 160ZZSO(2).

indirect beneficial interest: (a) in relation to an asset, has the meaning given by

section 160ZZRS; and (b) in relation to income derived from an asset, has the meaning

given by section 160ZZRT.

interposed entity has the meaning given by section 160ZZSL.

last moment, in relation to a day, has the meaning given by subsection (3).

Part IIIA Capital gains and capital losses Division 20 Changes in majority underlying interests in assets Section 160ZZRR


listed public company means a company in which any of the shares (except shares that carry the right to a fixed rate of dividend) are listed for quotation in the official list of an approved stock exchange.

majority underlying interests, in relation to an asset, means more than one-half of:

(a) the beneficial interests that natural persons hold (whether directly or indirectly) in the asset; and

(b) the beneficial interests that natural persons hold (whether directly or indirectly) in any income that may be derived from the asset.

mutual insurance organisation means: (a) a mutual insurance company within the meaning of

section 121AB; or (b) a mutual affiliate company within the meaning of

section 121AC.

part of a substantial shareholding has the meaning given by section 160ZZSP.

prescribed period, in relation to a test time, means: (a) the period of 6 months beginning on the day after the day on

which that time occurs; or (b) the period of 3 months beginning on the day after the day on

which the Taxation Laws Amendment Act (No. 1) 1997 received the Royal Assent;

whichever period ends last.

public company means: (a) a listed public company; or (b) a company (other than a listed public company) all the shares

in which are beneficially owned by any one or more of the following:

(i) listed public companies; (ii) mutual insurance organisations; (iii) publicly traded unit trusts; or


Section 160ZZRR


(c) a 100% subsidiary of a company to which paragraph (b) applies.

public entity means: (a) a public company; or (b) a mutual insurance organisation; or (c) a publicly traded unit trust.

publicly traded unit trust means a unit trust the units in which: (a) are listed for quotation in the official list of an approved

stock exchange; or (b) are ordinarily available for subscription or purchase by the

public.

relevant interest has the meaning given by Division 5 of Part 1.2 of the Corporations Law.

special company means: (a) a mutual insurance organisation; or (b) a company whose constituent document prevents it from

making any distribution, whether in money, property or otherwise, to its members; or

(c) a company that is prescribed by the regulations.

subsidiary: the expression “100% subsidiary” has the meaning given by section 160ZZRRA.

test time, in relation to a public entity, means: (a) the last moment of 20 January 1997; or (b) the last moment of a day that is 5 years (or a multiple of 5

years) after the day referred to in paragraph (a) or, if a day worked out under this paragraph is not a business day, the last moment of the next day that is a business day; or

(c) if the public entity is a public company or a publicly traded unit trust—the last moment of any day after 20 January 1997 on which:

(i) there is abnormal trading in shares in the company or in units in the trust; or

Part IIIA Capital gains and capital losses Division 20 Changes in majority underlying interests in assets Section 160ZZRRA


(ii) in respect of a public entity that is, or is a 100% subsidiary of, a public company all the shares in which are beneficially owned by a listed public company or are beneficially owned by a publicly traded unit trust—there is abnormal trading in shares in the listed public company or in the publicly traded unit trust.

trading, in relation to shares in a public company or units in a publicly traded unit trust, has the meaning given by subsections 160ZZSE(2) and (3).

underlying interest, in relation to an asset, means a beneficial interest that a natural person holds (whether directly or indirectly) in the asset or in any income that may be derived from the asset.

(2) A reference in this Division to a requirement having, or not having, been made of a public entity, or to a public entity having done or failed to do any thing, is, if the entity is a publicly traded unit trust, taken to be a reference to the requirement having, or not having, been made of the trustee of the trust or to the trustee of the trust having done or failed to do that thing, as the case may be.

(3) A reference in the definition of base time or test time, for the purposes of the application of that definition to a public entity, to the last moment of a day is a reference to the last moment of that day by legal time in the place where the records of ownership of shares or other interests in the entity are kept.

(4) For the purposes of this Division, the following are taken to be natural persons:

(a) a government body; (b) a company whose constituent document prevents it from

making any distribution, whether in money, property or otherwise, to its members.

160ZZRRA What is a 100% subsidiary

(1) A company (the subsidiary company) is a 100% subsidiary of another company (the holding company) if all the shares in the subsidiary company are beneficially owned by:


Section 160ZZRRB


(a) the holding company; or (b) one or more 100% subsidiaries of the holding company; or (c) the holding company and one or more 100% subsidiaries of

the holding company.

(2) However, the subsidiary company is not a 100% subsidiary of the holding company if a person is in a position to affect rights, in relation to the subsidiary company, of:

(a) the holding company; or (b) a 100% subsidiary of the holding company.

(3) The subsidiary company is also not a 100% subsidiary of the holding company if at some future time a person will be in a position to affect rights as described in subsection (2).

(4) A company (other than the subsidiary company) is a 100% subsidiary of the holding company if, and only if:

(a) it is a 100% subsidiary of the holding company; or (b) it is a 100% subsidiary of a 100% subsidiary of the holding

company; because of any other application or applications of this section.

160ZZRRB Position to affect rights in relation to a company

(1) A person is in a position to affect rights of a company in relation to another company if the person has the right, power or option:

(a) to acquire those rights from one or other of those companies; or

(b) to do something that would prevent one or other of those companies from exercising its rights for its own benefit, or from receiving any benefit arising from having those rights.

(2) It does not matter whether the person has the right, power or option because of the constituent document of one or other of those companies, any agreement or otherwise.

Part IIIA Capital gains and capital losses Division 20 Changes in majority underlying interests in assets Section 160ZZRS


160ZZRS Indirect beneficial interest in asset

A natural person is taken to hold an indirect beneficial interest in an asset of an entity (other than another natural person) for the purposes of this Division where:

(a) if the entity were to distribute any of its capital; and (b) in the case where another entity or other entities are

interposed between the first-mentioned entity and the person—if the capital were then distributed by the other entity or successively distributed by each of the other entities;

the person would have the right to receive any of the capital for the person’s own benefit.

160ZZRT Indirect beneficial interest in income derived from asset

A natural person is taken to hold an indirect beneficial interest in income that may be derived from an asset of an entity (other than another natural person) for the purposes of this Division where:

(a) if the entity were to pay a dividend or otherwise distribute any of its income; and

(b) in the case where another entity or other entities are interposed between the first-mentioned entity and the person—if the dividend or income were then paid or distributed by the other entity or successively paid or distributed by each of the other entities;

the person would have the right to receive any of the dividend or income for the person’s own benefit.

160ZZRU Acquisition of percentage of underlying interests as a result of death

For the purposes of this Division, if, because of a person’s death, a natural person acquires a percentage (the acquired percentage) of the underlying interests in an asset, the natural person is taken to have held (in addition to any other part of the total underlying interests that the person held or is taken to have held), at any time when the dead person held a percentage (the dead person’s


Section 160ZZS


percentage) of the total underlying interests in the asset, a percentage of the total underlying interests in the asset equal to the acquired percentage, or the dead person’s percentage at that time, whichever is the less.

Subdivision B—Provisions applying to taxpayers other than public entities

160ZZS Changes in majority underlying interests in assets of taxpayers other than public entities

(1AA) This section does not apply to a taxpayer that is a public entity in respect of an asset to which Subdivision C applies.

(1) For the purposes of the application of this Part in relation to a taxpayer, an asset acquired by the taxpayer on or before 19 September 1985 shall be deemed to have been acquired by the taxpayer after that date unless the Commissioner is satisfied, or considers it reasonable to assume, that, at all times after that date when the asset was held by the taxpayer, majority underlying interests in the asset were held by natural persons who, immediately before 20 September 1985, held majority underlying interests in the asset.

(1A) If subsection (1) applies so as to deem an asset to have been acquired by a taxpayer after 19 September 1985:

(a) the time when the taxpayer is taken, for the purposes of this Part, to have acquired the asset is the time when the natural persons who, immediately before 20 September 1985, held majority underlying interests in the asset ceased, or first ceased, to hold those interests; and

(b) the taxpayer is taken to have acquired the asset for a consideration equal to the market value of the asset as at the time mentioned in paragraph (a).

Part IIIA Capital gains and capital losses Division 20 Changes in majority underlying interests in assets Section 160ZZSA


Subdivision C—Provisions applying to public entities

160ZZSA Public entities to determine at identified times whether changes have occurred since 19 September 1985 in majority underlying interests in assets of the entities

Determination to be made by entity that has not previously found a lack of continuity of holding of majority underlying interests

(1) This section applies to a public entity in relation to a test time in respect of an asset acquired on or before 19 September 1985 if, and only if:

(a) the entity was the owner of the asset at the test time; and (b) the asset was not, immediately before 20 January 1997,

taken, under subsection 160ZZS(1), to have been acquired by the entity after 19 September 1985; and

(c) if the test time was a time referred to in paragraph (b) or (c) of the definition of test time in subsection 160ZZRR(1)—the asset was not, immediately before the day on which the test time occurred, taken, under section 160ZZS or under a previous application of this Subdivision, to have been acquired by the entity after 19 September 1985.

Entity to examine its records to determine whether continuity exists

(2) The entity must, within the prescribed period after the test time or within such further period (if any) as the Commissioner approves, make a determination, by an examination of its records, showing whether majority underlying interests in the asset at the test time were held by natural persons who held majority underlying interests in the asset at the base time.

Interests whose holders cannot be identified

(3) If there were, at the base time, underlying interests in the asset the holders of which cannot be identified by the entity from an examination of its records, those interests are taken, for the purposes of the determination, to have been held at the base time


Section 160ZZSB


by natural persons who did not hold underlying interests in the asset at the test time.

160ZZSB Date of acquisition of asset if failure to make determination on time

Section applies if determination not made in respect of test time

(1) This section applies if a public entity that is required under subsection 160ZZSA(2) to make a determination in respect of an asset in respect of a test time fails duly to make the determination within the period applying under that subsection.

Failure to determine in respect of first test time

(2) If the test time is the first test time, the asset is taken for the purposes of this Part to have been acquired by the entity on 20 September 1985.

Failure of public entity to determine in respect of first test time after it becomes a public entity

(3) If: (a) a public entity becomes a public entity after 20 January 1997;

and (b) the test time is the first time it is required to make a

determination under subsection 160ZZSA(2) after it became a public entity;

the asset is taken for the purposes of this Part to have been acquired by the entity at the time when it became a public entity.

Failure to determine in respect of later test time

(4) If the test time is later than the test time applicable under subsection (2) or (3), as the case may be, the asset is taken for the purposes of this Part to have been acquired by the entity on the most recent day in respect of which both the following conditions were satisfied:

(a) the day must have been a day on which a test time occurred;

Part IIIA Capital gains and capital losses Division 20 Changes in majority underlying interests in assets Section 160ZZSC


(b) at the test time that occurred on the day, majority underlying interests in the asset must have been held by natural persons who held majority underlying interests in the asset at the base time.

Consideration for acquisition of asset

(5) If an asset is taken by subsection (2), (3) or (4) to have been acquired by a public entity on a particular day, the entity is taken to have acquired the asset for a consideration equal to the market value of the asset on that day.

160ZZSC If no continuity of majority underlying interests found at first test time

Time of, and consideration for, acquisition of asset

(1) If a determination by a public entity under subsection 160ZZSA(2) in relation to the first test time shows that majority underlying interests in an asset of the entity at that test time were not held by natural persons who held majority underlying interests in the asset at the base time, the asset is taken for the purposes of this Part:

(a) to have been acquired by the entity at the time applicable under this section; and

(b) to have been so acquired for a consideration equal to the market value of the asset at that time.

Commissioner may accept that the same natural persons held majority underlying interests in an asset at the base time and the first test time

(2) A determination referred to in subsection (1) is taken not to show that majority underlying interests in an asset of a public entity at the first test time were not held by natural persons who held majority underlying interests in the asset at the base time if the Commissioner is satisfied, or considers it reasonable to assume, that majority underlying interests in the asset at that test time were held by natural persons who held majority underlying interests in the asset at the base time.


Section 160ZZSD


If no requirement to test before 20 January 1997

(3) If the entity was not required before 20 January 1997, under a ruling given by the Commissioner that was made available to the public, to determine whether, at a time after the base time and before the first test time, majority underlying interests in the asset were held by natural persons who held majority underlying interests in the asset at the base time, the asset is taken to have been acquired by the entity on 20 January 1997.

If requirement to test before 20 January 1997

(4) If the entity was required before 20 January 1997, under a ruling given by the Commissioner that was made available to the public, to determine whether, at a time (the previous determination time) after the base time and before the first test time, majority underlying interests in the asset were held by natural persons who held majority underlying interests in the asset at the base time, the asset is taken to have been acquired by the entity on:

(a) the earliest day in respect of which: (i) the entity was required under the ruling to determine

whether majority underlying interests in the asset were held by natural persons who held majority underlying interests in the asset at the base time; and

(ii) the entity is unable to show that majority underlying interests were so held; and

(b) if there is no day applicable under paragraph (a)—20 January 1997.

160ZZSD If no continuity of majority underlying interests at later test time

Time of, and consideration for, acquisition of asset

(1) If a determination by a public entity under subsection 160ZZSA(2) in relation to a later test time shows that majority underlying interests in an asset of the entity at that test time were not held by natural persons who held majority underlying interests in the asset at the base time, the asset is taken for the purposes of this Part:

Part IIIA Capital gains and capital losses Division 20 Changes in majority underlying interests in assets Section 160ZZSE


(a) to have been acquired by the entity at the later test time; and (b) to have been so acquired for a consideration equal to the

market value of the asset at that time.

Commissioner may accept that the same natural persons held majority underlying interests in an asset at the base time and the later test time

(2) A determination referred to in subsection (1) is taken not to show that majority underlying interests in an asset of a public entity at a later test time were not held by natural persons who held majority underlying interests in the asset at the base time if the Commissioner is satisfied, or considers it reasonable to assume, that majority underlying interests in the asset at that test time were held by natural persons who held majority underlying interests in the asset at the base time.

Subdivision D—Abnormal trading

160ZZSE Abnormal trading in shares in a public company or units in a publicly traded unit trust

(1) This Subdivision applies for the purpose of determining whether there has been abnormal trading in shares in a public company or in units in a publicly traded unit trust for the purposes of this Division.

(2) There is taken for the purposes of this Division to have been a trading in shares in the company, or in units in the trust, if there was an issue, redemption or transfer of, or any other dealing in, those shares or units.

(3) However, an issue, redemption or transfer of, or another dealing in, shares in the company or units in the trust is not a trading in the shares or units to which this Division applies if the issue, redemption, transfer or other dealing does not change the proportions in which natural persons hold underlying interests in assets of the company or trust.


Section 160ZZSF


160ZZSF Abnormal trading: general provision

(1) There is taken to have been an abnormal trading in shares in the company, or in units in the trust, if a trading in the shares or units was abnormal having regard to all relevant factors, including these:

(a) the timing of the trading, when compared with the normal timing for trading in the company’s shares or in the trust’s units;

(b) the number of shares or units traded, when compared with the normal number of the company’s shares, or the trust’s units, traded;

(c) any connection between the trading and any other trading in the company’s shares or in the trust’s units.

(2) There may also be an abnormal trading under section 160ZZSG, 160ZZSH or 160ZZSI.

160ZZSG Abnormal trading: 5% of shares or units in one transaction

There is taken to have been an abnormal trading in shares in the company, or in units in the trust, if 5% or more of the shares or units were traded in one transaction.

160ZZSH Abnormal trading: suspected acquisition or merger

There is taken to have been an abnormal trading in shares in the company, or in units in the trust, if there was a trading in those shares or units that the company or trustee knows or reasonably suspects was part of an acquisition or merger of the company with another company or of the trust with another trust.

160ZZSI Abnormal trading—20% of shares or units traded over 60 day period

(1) There is taken to have been an abnormal trading in shares in the company, or in units in the trust, if more than 20% of the shares or units were traded during a 60 day period.

Part IIIA Capital gains and capital losses Division 20 Changes in majority underlying interests in assets Section 160ZZSJ


(2) The abnormal trading is taken to have happened at the end of the 60 day period concerned.

Subdivision E—How holdings of shares or units of less than 1% in certain public entities may be treated

160ZZSJ What this Subdivision is about

This Subdivision has rules that make it easier for a public company or the trustee of a publicly traded unit trust to determine, as at a test time or the base time, the holders of majority underlying interests in its assets.

All holdings of shares or units of less than 1% in the company or trust are treated as if they were held by a single notional natural person. This means that the company or trustee does not have to trace through to the actual natural persons who beneficially hold underlying interests in the assets of the company or trust.

A similar rule applies if another public company or publicly traded unit trust is interposed between the company or trust and those persons. All holdings of less than 1% in the interposed company or interposed trust are treated as if they were held by a different single notional natural person. This means that the company or trustee does not have to trace through the interposed company or interposed trust to the actual natural persons who beneficially hold underlying interests in the assets of the head company or the head trust.

160ZZSK Holdings of less than 1% in public company or publicly traded unit trust

This Subdivision modifies the way in which a public company (the head company) or a publicly traded unit trust (the head trust) may determine under subsection 160ZZSA(2) the natural persons who, at a test time or the base time, held underlying interests in:

(a) an asset of the head company if there were at that time:


Section 160ZZSL


(i) capital shareholdings of less than 1%; or (ii) dividend shareholdings of less than 1%; in the head company; or (b) an asset of the head trust if there were at that time: (i) capital unit holdings of less than 1%; or (ii) income unit holdings of less than 1%; in the head trust.

160ZZSL Holdings of less than 1% in interposed public company or interposed publicly traded unit trust

(1) This Subdivision also modifies the way in which the head company or the head trust may determine under subsection 160ZZSA(2) the natural persons who, at a test time or the base time, held underlying interests in an asset of the head company or of the head trust if at that time another entity (the interposed entity) that is a public company or a publicly traded unit trust met the conditions in subsections (2) and (3).

(2) The interposed entity must have been interposed between the head company or head trust and natural persons who held indirectly beneficial interests in the asset or in any income that may be derived from the asset.

(3) There must have been: (a) if the interposed entity was a public company: (i) capital shareholdings of less than 1%; or (ii) dividend shareholdings of less than 1%; in the interposed public company; or (b) if the interposed entity was a publicly traded unit trust: (i) capital unitholdings of less than 1%; or (ii) income unitholdings of less than 1%; in the interposed publicly traded unit trust.

Part IIIA Capital gains and capital losses Division 20 Changes in majority underlying interests in assets Section 160ZZSM


160ZZSM Notional single shareholder or unitholder

Application

(1) The head company or the head trust may apply the provisions of this section in determining the natural persons who held underlying interests in an asset of the head company or of the head trust at the base time and at a test time.

Notional shareholder or unitholder of head company or head trust

(2) Subject to subsection (6), the natural persons who held underlying interests in the asset at the respective times may be determined as if a single notional natural person (the notional holder) had the right to receive, for the person’s own benefit and directly:

(a) in respect of a determination in relation to an asset of the head company:

(i) any distributions of capital of the head company in respect of each capital shareholding of less than 1% in the company at each such time; and

(ii) any dividends the head company may pay in respect of each dividend shareholding of less than 1% in the company at each such time; and

(b) in respect of a determination in relation to an asset of the head trust:

(i) any distributions of capital of the head trust in respect of each capital unitholding of less than 1% in the trust at each such time; and

(ii) any income that may be distributed by the head trust in respect of each income unitholding of less than 1% in the trust at each such time.

Notional shareholder or unitholder of the interposed entity

(3) Subject to subsection (6), the natural persons who held underlying interests in the asset at the respective times may also be determined as if, for each interposed entity, a different single notional natural person (the notional holder) had the right to receive, for the person’s own benefit and directly:


Section 160ZZSM


(a) if the interposed entity is a public company: (i) any distributions of capital of the interposed entity in

respect of each capital shareholding of less than 1% in the interposed entity at each such time; and

(ii) any dividends the interposed entity may pay in respect of each dividend shareholding of less than 1% in the interposed entity at each such time; or

(b) if the interposed entity is a publicly traded unit trust: (i) any distributions of capital of the interposed entity in

respect of each capital unitholding of less than 1% in the interposed entity at each such time; or

(ii) any income that may be distributed by the interposed entity in respect of each income unitholding of less than 1% in the interposed entity at each such time.

People who actually had rights in respect of head company or head trust are taken not to have had the rights

(4) If subsection (2) is applied in determining the natural persons who held underlying interests in the asset at a particular time, the determination is to be made as if the natural persons who at that time had the right to receive for their own benefit (whether directly or indirectly):

(a) any distributions of capital of the head company or head trust in respect of each capital shareholding of less than 1% or each capital unitholding of less than 1% in the company or trust; and

(b) any dividends that may be paid by the head company, or any income that may be distributed by the head trust, in respect of each dividend shareholding of less than 1% in the company or each income unitholding of less than 1% in the trust;

did not have that right.

People who actually had rights in respect of interposed entity are taken not to have had the rights

(5) If subsection (3) is applied in determining the natural persons who held underlying interests in the asset at a particular time, the

Part IIIA Capital gains and capital losses Division 20 Changes in majority underlying interests in assets Section 160ZZSN


determination is also to be made as if the natural persons who at that time had the right to receive for their own benefit (whether directly or indirectly):

(a) any distributions of capital of the interposed entity in respect of each capital shareholding of less than 1% or each capital unitholding of less than 1% in the entity; and

(b) any dividends that may be paid by, or any income that may be distributed by, the interposed entity in respect of each dividend shareholding of less than 1% or each income unitholding of less than 1% in the entity;

did not have that right.

Reduction of percentage of notional holder’s rights to distributions

(6) If: (a) the percentage of the distributions of capital, dividends or

income of the head company or head trust, or of the interposed entity, that the notional holder had the right to receive at a test time;

is greater than: (b) the percentage (the lower percentage) of the distributions of

capital, dividends or other income of the head company or head trust, or of the interposed entity, that the notional holder had the right to receive at the base time;

the notional holder is taken to have the right to receive the lower percentage of the distributions of capital, dividends or other income at the test time.

160ZZSN Capital shareholding and dividend shareholding of less than 1%

Meaning of capital shareholding of less than 1%

(1) If all the shares in the head company, or in an interposed entity that is a public company, of which an entity is the registered holder at a test time or the base time carry (between them) the right to receive less than 1% of any distribution of capital of the company, those shares (except shares that are part of a substantial shareholding)


Section 160ZZSO


constitute a capital shareholding of less than 1% in the company at that time.

Meaning of dividend shareholding of less than 1%

(2) If all the shares in the head company, or in an interposed entity that is a public company, of which an entity is the registered holder at a test time or the base time carry (between them) the right to receive less than 1% of any dividends that the company may pay, those shares (except shares that are part of a substantial shareholding) constitute a dividend shareholding of less than 1% in the company at that time.

160ZZSO Capital unitholding and income unitholding of less than 1%

Meaning of capital unitholding of less than 1%

(1) If all the units in the head trust, or in an interposed entity that is a publicly traded unit trust, of which an entity is the registered holder at a test time or the base time carry (between them) the rights to receive less than 1% of any distribution of capital of the trust, those units constitute a capital unitholding of less than 1% in the trust at that time.

Meaning of income unitholding of less than 1%

(2) If all the units in the head trust, or in an interposed entity that is a publicly traded unit trust, of which an entity is the registered holder at a test time or the base time carry (between them) the rights to receive less than 1% of any distribution of income of the trust, those units constitute an income unitholding of less than 1% in the trust at that time.

160ZZSP Shares that are part of a substantial shareholding

When shares begin to be part of substantial shareholding

(1) Shares in a company begin to be part of a substantial shareholding of a person when the person gives the company:

Part IIIA Capital gains and capital losses Division 20 Changes in majority underlying interests in assets Section 160ZZSR


(a) a notice under section 709 of the Corporations Law from which it appears that the person or an associate (within the meaning of that section) had a relevant interest in the shares as at the day when the person became a substantial shareholder in the company; or

(b) a notice under section 710 of the Corporations Law from which it appears that the person or an associate (within the meaning of that section) had a relevant interest in the shares after the change in relevant interests because of which the notice had to be given;

whichever happens first.

When shares stop being part of substantial shareholding

(2) The shares stop being part of the substantial shareholding when the person gives the company:

(a) a notice under section 710 of the Corporations Law from which it appears that neither the person nor an associate (within the meaning of that section) had a relevant interest in the shares after the change in relevant interests because of which the notice had to be given; or

(b) a notice under section 711 of the Corporations Law from which it appears that the person had stopped being a substantial shareholder in the company;

whichever happens first.

Subdivision F—How interposed superannuation funds, approved deposit funds, special companies and government bodies may be treated

160ZZSR What this Subdivision is about

This Subdivision has rules that make it easier for a public company or the trustee of a publicly traded unit trust to determine, as at a test time or the base time, the holders of underlying interests in its assets.


Section 160ZZSS


The company or trustee does not have to trace through any complying superannuation funds, complying approved deposit funds, special companies or government bodies that are interposed between the company or trust and the natural persons who beneficially hold underlying interests in the assets of the company or trust.

160ZZSS When fund, special company or government body is taken to have rights to capital, dividends or other income

(1) A public company or a publicly traded unit trust may apply the provisions of this section in determining the natural persons who held underlying interests in an asset of the company or in an asset of the trust, as the case may be, at a test time or the base time if:

(a) a superannuation fund, approved deposit fund, special company or government body was interposed, at that time, between natural persons and the company or trust; and

(b) at that time, those persons had the right to receive for their own benefit, and indirectly through the fund, special company or government body (or through entities including it), a percentage (the relevant percentage) of:

(i) any distributions of capital of the public company or publicly traded unit trust; or

(ii) any dividends that the public company may pay or any income that the publicly traded unit trust may distribute; and

(c) where a superannuation fund was interposed as mentioned in paragraph (a)—at the test time the fund was a complying superannuation fund or was a foreign superannuation fund; and

(d) where an approved deposit fund was interposed as mentioned in paragraph (a)—at the test time the fund was a complying approved deposit fund.

Part IIIA Capital gains and capital losses Division 20 Changes in majority underlying interests in assets Section 160ZZSS


If fund, special company or government body has more than 50 members

(2) If, at the test time or the base time, the fund, special company or government body had more than 50 members, the public company or the publicly traded unit trust may determine the natural persons who held underlying interests in the asset of the company or trust at that time as if the fund, special company or government body were a natural person who had the right to receive, for the person’s own benefit, the relevant percentage of those distributions of capital, those dividends or that income of the public company or publicly traded unit trust.

If fund or special company has not more than 50 members

(3) If, at the test time or the base time, the fund or special company did not have more than 50 members, the public company or the publicly traded unit trust may determine the natural persons who held underlying interests in the asset of the company or trust at that time as if each member were a natural person who had a right to receive, for the person’s own benefit, an equal proportion of those distributions of capital, those dividends or that income.

Persons who actually had the right are taken not to have had the right

(4) If the public company or the publicly traded unit trust applies subsection (2) or (3) in determining the natural persons who held underlying interests in an asset of the company or trust at a test time or the base time, those interests are to be determined as if, at that time, the natural persons who had the right to receive that percentage of those distributions of capital, those dividends or that income did not have that right (except as provided by subsection (3)).

Notional membership of government body

(5) For the purposes of this section, a government body is taken to have more than 50 members.


Section 160ZZST


Subdivision G—Determination of underlying interests if mutual insurance organisation with more than 50 members ceases to be such an organisation but continues to be a public entity

160ZZST Members of former mutual insurance organisation taken to hold underlying interests in assets since base time

(1) A public entity may apply the provisions of this section in determining the natural persons who held underlying interests in an asset of the entity at a test time or the base time if:

(a) the entity was a mutual insurance organisation at the base time; and

(b) the entity has, whether before or after the commencement of this section, ceased to be such an organisation but has continued in existence as a public company or a publicly traded unit trust; and

(c) at the time of the cessation (the cessation time) the entity had more than 50 members.

(2) A natural person who: (a) immediately before the cessation time was a member of the

entity; and (b) immediately after the cessation time held: (i) an underlying interest in an asset of the entity; or (ii) an underlying interest, through the entity, in an asset of

another entity that was a public entity; is taken, for the purposes of the application of this Division in determining, after the cessation time, the natural persons who held underlying interests in assets of the entity or the other entity at a test time or the base time, to have held the interest at all times from and including the base time until immediately after the cessation time.

Part IIIA Capital gains and capital losses Division 20A Special provisions relating to disposals of certain pre-20 September 1985 assets Section 160ZZT


Division 20A—Special provisions relating to disposals of certain pre-20 September 1985 assets

160ZZT Disposal of shares or interest in trust

(1) Where: (a) a taxpayer has, whether before or after the commencement of

this Part, disposed of an asset being: (i) shares in a private company; or (iii) an interest in a private trust estate; (b) the taxpayer acquired the asset before 20 September 1985; (c) immediately before the disposal of the asset by the taxpayer: (i) in a case where the asset disposed of by the taxpayer

consisted of shares in a private company or an interest in a private trust estate, the property of the company or trust estate, as the case may be, included property (in this subsection referred to as the underlying property) that:

(A) was acquired by the company or trustee of the trust estate, as the case may be, on or after 20 September 1985; and

(B) was not trading stock of the company or trust estate; or

(ii) the company or trustee of the trust estate, as the case may be, held an interest, through one or more interposed companies or trusts, in property (in this subsection also referred to as the underlying property) that:

(A) was acquired by another private company or trustee of a private trust estate on or after 20 September 1985; and

(B) was not trading stock of the company or trust estate referred to in sub-subparagraph (A); and

(d) immediately before the disposal of the asset by the taxpayer, the value of:

Capital gains and capital losses Part IIIA Special provisions relating to disposals of certain pre-20 September 1985 assets

Division 20A

Section 160ZZT


(i) in a case to which subparagraph (c)(i) applies—the underlying property referred to in that subparagraph; or

(ii) in a case to which subparagraph (c)(ii) applies—the interest referred to in that subparagraph;

was not less than 75% of the net worth of the company or trust estate referred to in paragraph (a);

a capital gain shall be deemed to have accrued to the taxpayer during the year of income in which the taxpayer disposed of the asset equal to so much of the consideration received or receivable by the taxpayer in respect of the disposal as may reasonably be attributed to the amount (if any) by which the value of the underlying property immediately before the disposal exceeds the sum of the amounts that would be the indexed cost bases to the company or trustee referred to in sub-subparagraph (c)(i)(A) or to the company or trustee referred to in sub-subparagraph (c)(ii)(A), as the case requires, of the underlying property if the underlying property had been disposed of immediately before the disposal of the asset.

(1A) For the purposes of this section: (a) a company is taken to have been a private company at a

particular time (in this paragraph called the relevant time) after 19 September 1985 if the company was an unlisted company:

(i) at the relevant time; or (ii) at any time during: (A) where the relevant time was later than

15 August 1994—the period of 5 years immediately preceding the relevant time; or

(B) in any other case—the period that commenced on 15 August 1989 and ended at the relevant time; and

(b) a trust estate is taken to have been a private trust estate at a particular time (in this paragraph called the relevant time) after 19 September 1985 if the relevant trust is not a unit trust or, where the relevant trust is a unit trust, if the unit trust was an unlisted unit trust:

Part IIIA Capital gains and capital losses Division 20A Special provisions relating to disposals of certain pre-20 September 1985 assets Section 160ZZT


(i) at the relevant time; or (ii) at any time during: (A) where the relevant time was later than

15 August 1994—the period of 5 years immediately preceding the relevant time; or

(B) in any other case—the period that commenced on 15 August 1989 and ended at the relevant time; and

(c) a company is taken to have been an unlisted company at a particular time if at that time no shares in the company were listed for quotation in the official list of a stock exchange in Australia or elsewhere; and

(d) a unit trust is taken to have been an unlisted unit trust at a particular time if at that time no units in the unit trust were listed for quotation in the official list of a stock exchange in Australia or elsewhere or were ordinarily available for subscription or purchase by the public.

(2) For the purposes of this section: (a) a reference to property generally or to a particular kind of

property includes a reference to an estate or interest in property, or in that kind of property; and

(b) a reference to the net worth of a company or trust estate is a reference to the total value of the assets of the company or trust estate as reduced by the total liabilities of the company or trust estate; and

(c) if a share is acquired by way of subscription of capital (with or without the payment of any other consideration), it is taken to have been purchased; and

(d) if a company issues shares in itself to a person as, or as part of, the consideration for the sale of property by the person to the company, the person is taken to have purchased those shares; and

(e) if one or more persons (the transferors) transfer property, with or without consideration, to one or more other persons (the transferees) the transfer is taken to constitute:

Capital gains and capital losses Part IIIA Special provisions relating to disposals of certain pre-20 September 1985 assets

Division 20A

Section 160ZZT


(i) the sale of the property by the transferors; and (ii) the purchase of the property by the transferees; and (f) if, under a contract, land is sold or purchased, it is taken to be

sold or purchased on the day the contract is made.

(3) In calculating the net worth of a company or trust estate for the purposes of this section, the Commissioner shall, if satisfied that liabilities were discharged or released or assets acquired for the purpose, or for purposes that included the purpose, of ensuring that this section would not apply in relation to a taxpayer, disregard the discharge or release of those liabilities or the values of those assets, as the case may be.

(4) For the purposes of this section, if: (a) after 15 August 1989, a company (in this subsection called

the transferor) disposes of an asset to another company (in this subsection called the transferee) that is a non-resident; and

(b) the transferor acquired the asset before 20 September 1985; and

(c) the asset is not a taxable Australian asset; and (d) the transferee is related to the transferor when the disposal

takes place; the transferee is taken to have acquired the asset before 20 September 1985.

Part IIIA Capital gains and capital losses Division 21 Miscellaneous Section 160ZZU


Division 21—Miscellaneous

160ZZU Keeping of records

(1) A person who has at any time after 19 September 1985 owned an asset other than an excepted asset shall keep such records in the English language as are necessary to enable the ready ascertainment of:

(a) the date on which the person acquired the asset; (b) if the asset has not been disposed of: (i) in any case—any amount that would, if the asset were

disposed of, form part of the cost base to the person in respect of the asset; and

(ii) if the asset is a share whose market value has suffered a material decrease under an arrangement where the requirements of section 160ZZRL (which deals with share value shifting arrangements) are satisfied:

(A) the essential features of the arrangement; and (B) the dates of the decreases in market value of all

shares involved in share value shifts under the arrangement; and

(C) the amounts of the decreases in market value of all shares involved in share value shifts under the arrangement; and

(D) the amounts of the increases in market value of all shares involved in share value shifts under the arrangement and of any other shares covered by paragraph 160ZZRO(3)(b); and

(E) any amount that would, if the share were disposed of at the time of the decrease in market value, form part of the cost base to the person in respect of the asset; and

(c) if the asset has been disposed of by the person: (i) the date of disposal;

Capital gains and capital losses Part IIIA Miscellaneous Division 21

Section 160ZZU


(ii) any amount that formed part of the cost base to the person in respect of the asset; and

(iii) the consideration in respect of the disposal.

Penalty: $3,000.

(2) For the purpose of the application of subsection (1) in relation to a person, an asset is an excepted asset if:

(a) where the asset has been disposed of by the person—this Part did not apply in respect of the disposal; or

(b) where the asset has not been disposed of by the person—this Part would not, in the event of the disposal of the asset, apply in respect of the disposal.

(3) A transferee (within the meaning of section 160ZZO) who acquires an asset (other than an excepted asset) as a result of a disposal mentioned in paragraph 160ZZO(1)(a) to which section 160ZZO applies (assuming that paragraph 160ZZO(1)(bb) had not been enacted), must keep such records in the English language as are necessary to enable the ready ascertainment of:

(a) the acts, transactions and other circumstances (including the identity of the transferor concerned) that resulted in section 160ZZO applying in relation to the disposal (assuming that paragraph 160ZZO(1)(bb) had not been enacted); and

(b) the transferee’s status as a subsidiary (within the meaning of section 160ZZOA) in relation to the ultimate holding company (within the meaning of section 160ZZOA) in respect of the disposal at a time before the earliest of the following:

(i) the break-up time mentioned in section 160ZZOA; (ia) if section 160ZZO does not actually apply to the

disposal but would have applied if paragraph 160ZZO(1)(bb) had not been enacted—the time when the derived asset mentioned in that paragraph was acquired by the transferee;

(ii) the time when the asset was disposed of by the transferee; and



(c) the earliest of the times mentioned in paragraph (b) of this subsection.

Penalty: $3,000.

(4) Paragraphs (3)(b) and (c) do not require a person to keep a record of information if the person did not know, and made all reasonable efforts to obtain, the information.

(5) For the purpose of the application of subsection (3) in relation to a person, an asset is an excepted asset if this Part would not, in the event of the disposal of the asset by the person, apply in respect of the disposal.

(6) A person who has possession of any records kept under subsection (1) or (3) must retain those records, an asset register entry for those records, or a combination of both, containing all the information required to be contained in those records under that subsection, until:

(a) if subsection (1) applies—the end of 5 years after the asset to which the records relate was disposed of by the person; or

(b) if subsection (3) applies—the end of 5 years after the earliest of the times mentioned in paragraph (3)(b).

Penalty: $3,000.

Note: Asset register entry is defined in subsection (9).

Mergers of qualifying superannuation funds—record-keeping requirements for transferor

(6A) If section 160ZZPI applies to the disposal of an asset by a transferor (within the meaning of that section) to a transferee (within the meaning of that section), the transferor must keep such records in the English language as are necessary to establish that that section applies to the disposal, including:

(a) records relating to the identity of the transferee; and (b) the election under paragraph 160ZZPI(1)(c).

Capital gains and capital losses Part IIIA Miscellaneous Division 21

Section 160ZZU


Mergers of qualifying superannuation funds—record-keeping requirements for transferee

(6B) If subsection 160ZZPI(3) or (4) applies to a subsequent disposal of the asset by the transferee, the transferee must keep such records in the English language as are necessary to establish that the subsection applies to the subsequent disposal, including:

(a) records relating to the identity of the transferor; and (b) a copy of the election under paragraph 160ZZPI(1)(c).

Period for retention of records under subsection (6A) or (6B)

(6C) A person who has possession of any records kept under subsection (6A) or (6B) must retain the records, an asset register entry for the records, or a combination of both, containing all the information required to be contained in the records under that subsection, until:

(a) if subsection (6A) applies—the end of 5 years after the end of the merger period (within the meaning of section 160ZZPIA); or

(b) if subsection (6B) applies—the end of 5 years after the subsequent disposal of the asset by the transferee.

Note: Asset register entry is defined in subsection (9).

Penalty

(6D) A person who, without reasonable excuse, contravenes subsection (6A), (6B) or (6C) commits an offence punishable on conviction by a penalty not exceeding 30 penalty units.

(7) Subsection (6) or (6C) does not require a person to retain records where:

(a) the Commissioner has notified the person that retention of the records is not required; or

(b) the person is a company that has gone into liquidation and been finally dissolved.

(8) Subsections 262A(4) and (5) do not apply in relation to records kept under this section.



(9) If: (a) a person (the record keeper) is required by subsection (1),

(3), (6A) or (6B) to keep records containing particular information; and

(b) the record keeper makes an entry in a register, in English, setting out some or all of the information; and

(c) a registered tax agent (within the meaning of section 251A) or other person approved by the Commissioner certifies in the register that the information entered is information from those records (so long as the person certifying is not the record keeper); and

(d) the record keeper retains the records that contain the information entered for at least 5 years after the entry is certified;

the entry is an asset register entry for those records.

Australian branches of foreign banks Part IIIB Preliminary Division 1

Section 160ZZVA


Part IIIB—Australian branches of foreign banks

Division 1—Preliminary

160ZZVA Object

(1) The object of this Part is: (a) to assist in calculating that part of a foreign bank’s taxable

income that is referable to certain activities of its Australian branch; and

(b) to make it clear that withholding tax will apply to amounts that are taken by this Part to be interest paid by the branch to the bank.

(2) For the purpose of achieving the object mentioned in subsection (1), this Part requires, in the circumstances stated in this Part and not otherwise, that the Australian branch is to be treated as if it were a separate legal entity from the bank.

160ZZVB Application

(1) It is the intention that, in so far as this Part is to be applied to identify amounts of income and expenditure that are taken into account in calculating that part of a foreign bank’s taxable income of a year of income that is referable to certain activities of its Australian branch, the provisions of this Part are to be applied in their entirety.

(2) If, as a result of the application of this Part: (a) the taxable income of a year of income of a foreign bank that

is attributable to activities carried on by the bank through its Australian branch is greater than the amount that would be that taxable income if this Part did not apply; or

(b) a foreign bank would be taken not to incur a loss in a year of income in respect of activities carried on by the bank through

Part IIIB Australian branches of foreign banks Division 1 Preliminary Section 160ZZV


its Australian branch that it would be taken to have incurred if this Part did not apply; or

(c) the amount of a loss that a foreign bank would be taken to incur in a year of income in respect of activities carried on by the bank through its Australian branch is less than the amount of the loss that it would be taken to have incurred if this Part did not apply;

and an agreement within the meaning of the Income Tax (International Agreements) Act 1953 that has the force of law applies in relation to the bank, the bank may elect that this Part is not to apply in the calculation of its taxable income of that year of income.

(3) If a foreign bank makes an election as mentioned in subsection (2): (a) this Part does not apply in the calculation of the bank’s

taxable income of the year of income to which the election relates and the bank may furnish returns, and is liable to pay tax, accordingly; but

(b) the election does not affect the operation of this Part in respect of the application of withholding tax to amounts that are taken by this Part to be interest paid by the branch to the bank.

160ZZV Definitions

In this Part, unless the contrary intention appears:

accounting records includes: (a) invoices, receipts, vouchers and other documents of prime

entry; and (b) any working papers and other documents that are necessary

to explain the methods and calculations by which accounts are made up.

Australian branch, in relation to a foreign bank, means a permanent establishment in Australia through which the bank carries on banking business.

Australian branches of foreign banks Part IIIB Preliminary Division 1

Section 160ZZW


derivative transaction means a transaction entered into for the purpose of eliminating, reducing or altering the risk of adverse financial consequences that might result from changes in rates of interest or changes in rates of exchange between currencies, or for the purpose of making a profit from such changes, but does not include a transaction for the provision of finance or a foreign exchange transaction.

interest has the same meaning as in Division 11A of Part III.

foreign bank means a body corporate that is a foreign ADI (authorised deposit-taking institution) for the purposes of the Banking Act 1959.

foreign exchange transaction means a transaction by which different currencies are exchanged.

offshore banking unit has the same meaning as in Division 11A of Part III.

time of establishment, in relation to an Australian branch of a foreign bank, means the time when the bank began to carry on business through the permanent establishment in Australia that constitutes the branch.

160ZZW Certain provisions to apply as if Australian branch of foreign bank were a separate legal entity

(1) Subsections (2), (3), (4) and (5) apply only: (a) for the purposes of sections 160ZZZ, 160ZZZA, 160ZZZC,

160ZZZE and 160ZZZF as they have effect in the determination under this Act of the liability of a foreign bank to tax (other than withholding tax) in respect of income derived from an Australian branch of the bank; and

(b) for the purposes of the provisions of this Act other than this Part as those provisions apply in relation to amounts that are taken by this Part to have been received from a foreign bank by its Australian branch or to have been paid to a foreign bank by its Australian branch; and

Part IIIB Australian branches of foreign banks Division 1 Preliminary Section 160ZZW


(c) for the purposes of section 160ZZZJ as it has effect in determining the liability of a foreign bank to withholding tax in respect of amounts paid to the bank by an Australian branch of the bank.

(2) The branch and the bank are taken to be, and to have been since the time of establishment of the branch, separate legal entities.

(3) The branch is taken to be, and to have been since the time of its establishment, a company having a share capital all the shares in which are or were beneficially owned by the bank.

(4) The branch is taken to be a non-resident and to have been a non-resident since the time of its establishment.

(5) For the purposes of Division 13 of Part III, the branch is taken not to be, and not to have been at any time since its establishment, a permanent establishment in Australia of the bank.

Australian branches of foreign banks Part IIIB Provisions relating to income tax Division 2

Section 160ZZX


Division 2—Provisions relating to income tax

160ZZX Income of branch to have Australian source

All income derived by a foreign bank through its Australian branch is taken, for the purposes of this Act, to be income derived from a source in Australia.

160ZZY Deduction for foreign tax

Foreign tax paid during a year of income by a foreign bank on interest received by its Australian branch from a place outside Australia is an allowable deduction for that year of income.

160ZZZ Notional borrowing by branch from bank

(1) If an amount has been made available by a foreign bank for use by an Australian branch of the bank and is recorded in the branch’s accounting records as having been provided by the bank to the branch, that amount is taken, for the purposes of this Act, to have been borrowed by the branch from the bank when the amount became so available and to have been so borrowed in the currency in which the amount became so available.

(2) If an amount has been made available by the branch to the bank in purported repayment of an amount that is taken, under subsection (1), to have been borrowed by the branch from the bank and the amount so made available is recorded in the branch’s accounting records as having been repaid by the branch to the bank, the amount that was so taken to have been borrowed is taken, for the purposes of this Act, to have been repaid by the branch to the bank when the amount became so available and to have been so repaid in the currency in which the amount became so available.

Part IIIB Australian branches of foreign banks Division 2 Provisions relating to income tax Section 160ZZZA


160ZZZA Notional payment of interest by branch to bank

(1) If, under section 160ZZZ, an amount is taken, for the purposes of this Act, to have been borrowed (the notional borrowing) in a particular currency from a foreign bank by an Australian branch of the bank, the following provisions have effect:

(a) at any time (the relevant time) when, in respect of the notional borrowing, an amount (the notional amount of interest) is entered in the branch’s accounting records as interest for a period fixed by the bank, interest is taken, for the purposes of this Act, to be incurred by the branch, paid by the branch to the bank, and derived by the bank, in respect of the notional borrowing;

(b) subject to the application of paragraph (c), the notional amount of interest is taken, for the purposes of this Act, to be the amount of interest so taken to be paid;

(c) if the interest on the notional borrowing at the relevant time was at a rate of interest that exceeded the LIBOR that was applicable at the beginning of the relevant interest calculation period in relation to the notional borrowing, there is taken to have been entered in the branch’s accounting records at the relevant time, in lieu of the notional amount of interest, the amount that would have been so entered if interest on the notional borrowing for the relevant interest calculation period had been calculated at the LIBOR that was applicable at the beginning of that period.

(2) For the purposes of this section, a reference to the LIBOR that was applicable at the beginning of the relevant interest calculation period in relation to the notional borrowing is a reference to:

(a) the LIBOR applicable at the beginning of that period in respect of advances in the currency of that borrowing for a term the number of days in which was equal to the number of days in that period; or

(b) if there was no LIBOR applicable at the beginning of that period in respect of advances in the currency of that borrowing for such a term:


Section 160ZZZC


(i) the LIBOR applicable at the beginning of that period in respect of advances in that currency for a term the number of days in which most nearly approximated the number of days in that period; or

(ii) if there were different LIBORs so applicable for different terms the number of days in each of which could be described as having most nearly approximated the number of days in that period—the LIBOR so applicable for the shorter of those terms.

(3) For the purposes of this section: (a) a reference to LIBOR, in relation to a particular time, is a

reference to the rate of interest applicable at that time in relation to banks in the London inter bank market as determined by reference to the Reuter Monitor Money Rates Service or any other published source; and

(b) a reference to the relevant interest calculation period in relation to a notional borrowing from a foreign bank by an Australian branch of the bank is a reference to the period fixed by the bank for the calculation of the notional amount of interest in respect of the notional borrowing.

160ZZZC Offshore banking units

If: (a) apart from this section, a foreign bank would be an offshore

banking unit under a declaration published under subsection 128AE(2); and

(b) the foreign bank has an Australian branch; this Act has effect as if the Australian branch were the offshore banking unit under the declaration.

160ZZZE Notional derivative transactions between branch and bank

If the accounting records of an Australian branch of a foreign bank reflect a derivative transaction notionally entered into by the branch with the bank:

Part IIIB Australian branches of foreign banks Division 2 Provisions relating to income tax Section 160ZZZF


(a) the notional transaction is taken to be a transaction entered into by the branch with the bank; and

(b) any amount entered in the branch’s accounting records as a payment or receipt in respect of the notional transaction is taken, for the purposes of this Act, to be an amount paid or received by the branch, as the case may be, in respect of the derivative transaction when the amount was so entered.

160ZZZF Notional foreign exchange transactions between branch and bank

If the accounting records of an Australian branch of a foreign bank reflect a foreign exchange transaction notionally entered into by the branch with the bank:

(a) the notional transaction is taken to be a transaction entered into by the branch with the bank; and

(b) any amount entered in the branch’s accounting records as a payment or receipt in respect of the notional transaction is taken, for the purposes of this Act, to be an amount paid or received by the branch, as the case may be, in respect of the foreign exchange transaction when the amount was so entered.

160ZZZG Losses

Subdivision 170-A of the Income Tax Assessment Act 1997 has effect as if an Australian branch of a foreign bank were a subsidiary of the bank and a resident of Australia.

160ZZZH Net capital losses

Subdivision 170-B of the Income Tax Assessment Act 1997 (about transfer of net capital losses within wholly-owned groups of companies) has effect as if an Australian branch of a foreign bank were a 100% subsidiary (within the meaning of that Act) of the bank and an Australian resident (within the meaning of that Act).


Section 160ZZZI


160ZZZI Certain transactions to be disregarded

Any transaction entered into by a foreign bank otherwise than through its Australian branch:

(a) under which finance is provided to the bank; or (b) that is a derivative transaction or a foreign exchange

transaction; is to be disregarded for the purpose of determining whether a deduction is allowable to the bank under this Act.

Part IIIB Australian branches of foreign banks Division 3 Provisions relating to withholding tax Section 160ZZZJ


Division 3—Provisions relating to withholding tax

160ZZZJ Withholding tax on interest paid by branch to bank

(1) If: (a) an amount of interest is taken under section 160ZZZA to be

paid to, and derived by, a foreign bank by an Australian branch of the bank; and

(b) apart from this section, section 128B of this Act, and either section 221YL of this Act or Subdivision 12-F in Schedule 1 to the Taxation Administration Act 1953, would apply to an amount (the taxable amount) that comprises the whole or a part of the amount so taken to be paid;

the following subsections have effect.

(2) Section 128B of this Act, and section 221YL of this Act or Subdivision 12-F in Schedule 1 to the Taxation Administration Act 1953 (as the case may be), apply only to the amount worked out using the formula:

Taxable amount

2

(3) An amount to which section 128B applies because of subsection (2) of this section is taken, for the purposes of section 128C, to be income that was derived by the bank when the amount of interest referred to in paragraph (1)(a) is taken to have been paid to the bank.

Returns and assessments Part IV

Section 161


Part IV—Returns and assessments

161 Annual returns

Requirement to lodge a return

(1) Every person must, if required by the Commissioner by notice published in the Gazette, give to the Commissioner a return for a year of income within the period specified in the notice.

Note: The Commissioner may defer the time for giving the return: see section 388-55 in Schedule 1 to the Taxation Administration Act 1953.

(1A) The Commissioner may, in the notice, exempt from liability to furnish returns such classes of persons not liable to pay income tax as the Commissioner thinks fit, and a person so exempted need not furnish a return unless the person is required by the Commissioner to do so.

(2) If the taxpayer is absent from Australia, or is unable from physical or mental infirmity to make such return, the return may be signed and delivered by some person duly authorized.

(3) Nothing in this section prevents an approval by the Commissioner of a form of return under section 36A of the Superannuation Industry (Supervision) Act 1993 from requiring or permitting a return under that section to be attached to, or to form part of, a return under this section.

Note: However, the rules applicable to a return under section 36A of the Superannuation Industry (Supervision) Act 1993 are those specified in that Act.

161A Form and content of returns

(1) The return must be in the approved form.

Part IV Returns and assessments Section 161AA


Electronic returns

(2) An approval given by the Commissioner of a form of return may require or permit the return to be given on a specified kind of data processing device, or by way of electronic transmission, in accordance with specified software requirements.

161AA Contents of returns of full self-assessment taxpayers

A full self-assessment taxpayer must, in a return for a year of income, specify:

(a) its taxable income or its net income for that year of income; and

(b) the amount (if any) of the tax payable on that taxable income or net income; and

(c) the amount of interest (if any) payable by the taxpayer under section 102AAM for that year of income.

161G Tax agent to give taxpayer copy of notice of assessment

Where a taxpayer has given the address of a registered tax agent as the taxpayer’s address for service, the registered tax agent must give the taxpayer the original of, or a copy of, any notice of assessment in respect of that taxpayer that is delivered to that address.

Penalty: 30 penalty units.

162 Further returns and information

A person must, if required by the Commissioner, whether before or after the end of the year of income, give the Commissioner, within the time required and in the approved form:

(a) a return or a further or fuller return for a year of income or a specified period, whether or not the person has given the Commissioner a return for the same period; or

(b) any information, statement or document about the person’s financial affairs.


Section 163


163 Special returns

Every person, whether a taxpayer or not, if required by the Commissioner, shall, in the approved form and within the time required by him, furnish any return required by the Commissioner for the purposes of this Act.

163A Late lodgement penalty—relevant entities, instalment taxpayers and full self-assessment taxpayers

(1) Subject to subsection (2), if: (a) a person who is a relevant entity, an instalment taxpayer or a

full self-assessment taxpayer is required to furnish a return under section 161, 162 or 163 in relation to a year of income; and

(b) the return is not furnished within: (i) in the case of section 161—the period specified in the

notice under that section or any further period allowed by the Commissioner under that section; or

(ii) in the case of section 162 or 163—the time required by the Commissioner under that section;

the person is liable to pay, by way of penalty, $10 for each week or part of a week that occurs after the end of the period, the further period or the time mentioned in paragraph (b) and before the return is furnished.

Note: The penalty is payable even if the return is never furnished.

Maximum penalty

(2) The maximum penalty payable under subsection (1) in respect of the return is $200.

Notification requirements

(3) The Commissioner must give the person a notice in writing stating that the person is liable to penalty under this section in relation to the year of income and specifying:

(a) the amount of the penalty; and

Part IV Returns and assessments Section 163A


(b) the day on which the penalty is due and payable. The day specified must be at least 30 days after the day on which the notice is given, and the amount is due and payable on the day specified.

Note: A person who fails to pay on time some or all of the penalty is liable to pay the general interest charge on the unpaid amount: see section 163AA.

Notice in assessment notice

(4) The notice may be included in any other notice of assessment in respect of the person.

Remission of penalty

(5) The Commissioner may, in his or her discretion, remit the whole or any part of the penalty.

Notice in writing of decision

(6) If the Commissioner makes a decision to remit part only of the penalty, or not to remit any part of the penalty, the Commissioner must:

(a) if the decision is made before the Commissioner gives the notice under subsection (3)—advise the person of the decision in the notice under subsection (3); or

(b) in any other case—give notice in writing of the decision to the person.

Objections

(7) If the person is dissatisfied with: (a) the notice given to the person under subsection (3); or (b) a decision of the Commissioner under subsection (5) in

relation to the person; the person may object against the notice, or against the decision, as the case requires, in the manner set out in Part IVC of the Taxation Administration Act 1953.


Section 163AA


Income tax or tax includes penalty

(8) Unless the contrary intention appears, in sections 205, 206, 208, 209, 214, 215, 216, 254, 255, 258 and 259, but not in any other section of this Act, a reference to income tax or tax includes a reference to the penalty.

Definitions


instalment taxpayer has the same meaning as in Division 1C of Part VI.

relevant entity has the same meaning as in Division 1B of Part VI.

(10) This section does not apply to a return for the 2000-01 year of income or a later year of income.

Note: See instead Division 286 in Schedule 1 to the Taxation Administration Act 1953.

163AA General interest charge on unpaid penalty

A person who fails to pay some or all of a penalty under section 163A by the time by which the penalty is due to be paid is liable to pay the general interest charge on the unpaid amount for each day in the period that:

(a) started at the beginning of the day by which the penalty was due to be paid; and

(b) finishes at the end of the last day on which, at the end of the day, any of the following remains unpaid:

(i) the penalty; (ii) general interest charge on any of the penalty.

Note: The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953.

Part IV Returns and assessments Section 163B


163B Late lodgment of returns by persons other than relevant entities, instalment taxpayers and full self-assessment taxpayers

(1) If: (a) a person (other than a relevant entity, an instalment taxpayer

or a full self-assessment taxpayer) is required to furnish a return under section 161, 162 or 163 in relation to a year of income; and

(b) the return is not furnished within: (i) in the case of section 161—the period specified in the

notice under that section or any further period allowed by the Commissioner under that section; or

(ii) in the case of section 162 or 163—the time required by the Commissioner under that section; and

(c) an assessment (other than an amended assessment) is made of the income tax payable by the person for the year of income (whether or not on the basis of a return that is later furnished by the person);

the person is liable to pay the general interest charge on the amount in subsection (2) and the amount of the charge is taken to be additional tax payable under this section.


(1A) The person is liable to pay the general interest charge for each day in the period that:

(a) started at the beginning of the day by which the return was required to be furnished; and

(b) finishes at the end of the day before the return is furnished, or the day before the Commissioner made the assessment, whichever is earlier.

Amount on which additional tax payable

(2) The additional tax is payable on the lesser of:


Section 163B


(a) the amount of income tax payable under the assessment (after allowing any rebate or deduction under subsection 100(2) and before any crediting, applying or other payment); and

(b) the person’s net tax payable (see subsection (3)).

Meaning of net tax payable

(3) The person’s net tax payable is the amount worked out using the formula:

Tax liabilities – Crediting amounts and payments on account

where:

Tax liabilities means the sum of the following amounts (worked out disregarding any payment on account of the amounts):

(a) income tax payable under the assessment (after allowing any rebate or deduction under subsection 100(2) and before allowing any crediting, applying or refunding, notified in the notice of assessment, of an income tax crediting amount);

(b) additional tax for the year of income payable by the person under Part VII immediately before any such crediting, applying or refunding;

(c) interest for the year of income payable by the person under section 102AAM immediately before any such crediting, applying or refunding;

(d) an HEC assessment debt notified in the notice of assessment; (e) an FS assessment debt notified in the notice of assessment.

Crediting amounts and payments on account means the sum of: (a) any income tax crediting amounts notified in the notice of

assessment; and (b) any payments made on account of the amounts in

paragraphs (a) to (e) of the definition of Tax liabilities.

Income tax or tax includes additional tax

(8) Unless the contrary intention appears, in sections 204, 205, 206, 215, 216, 254, 255, 258 and 259, but not in any other section of

Part IV Returns and assessments Section 164


this Act, a reference to income tax or tax includes a reference to the additional tax.

Minimum amount

(9) If less than $20 of additional tax is payable under this section, the additional tax is taken to be $20.

Definitions


FS assessment debt means an FS assessment debt under: (a) subsection 19AB(2) of the Social Security Act 1991; or (b) the Student Assistance Act 1973 as in force at a time on or

after 1 July 1998.

HEC assessment debt has the same meaning as in Chapter 5A of the Higher Education Funding Act 1988.

income tax crediting amount, in relation to the income tax payable by a person for a year of income, means an amount of a credit applied under Division 3 of Part IIB of the Taxation Administration Act 1953 against the income tax.

instalment taxpayer has the same meaning as in Division 1C of Part VI.

relevant entity has the same meaning as in Division 1B of Part VI.

(11) This section does not apply to a return for the 2000-01 year of income or a later year of income.

Note: See instead Division 286 in Schedule 1 to the Taxation Administration Act 1953.

164 Returns deemed to be duly made

Every return purporting to be made or signed by or on behalf of any person shall be deemed to have been duly made by him or with his authority until the contrary is proved.


Section 166


166 Assessment

From the returns, and from any other information in his possession, or from any one or more of these sources, the Commissioner shall make an assessment of the amount of the taxable income of any taxpayer, and of the tax payable thereon.

166A Deemed assessment

(1) Where a taxpayer that is a relevant entity within the meaning of Division 1B of Part VI furnishes a return in respect of income of a year of income to which that Division applies:

(a) the Commissioner is taken to have made, on the day on which the return is furnished, an assessment of the relevant taxable income or net income, as the case may be, and of the tax payable on that taxable income or net income, being those respective amounts as specified in the return; and

(b) on and after the day on which the Commissioner is deemed to have made the assessment, the return is deemed to be a notice of the deemed assessment and to be under the hand of the Commissioner; and

(c) the notice referred to in paragraph (b) is deemed to have been served on the entity on the day on which the Commissioner is deemed to have made the assessment.

(2) Where: (aa) at a particular time, a taxpayer to which Division 1C of

Part VI applies gives a return in respect of income of a year of income to which that Division applies; and

(ab) before that time, no return has been given, and no assessment has been made, in relation to the taxpayer in respect of the income of the year of income:

the following provisions apply: (a) the Commissioner is deemed to have made an assessment of

the taxable income or net income, and the tax payable on that income, equal to those respective amounts specified in the return;



(b) the assessment is deemed to have been made on the day on which the return is lodged;

(c) on and after the day on which the Commissioner is deemed to have made the assessment, the return is deemed to be a notice of the deemed assessment:

(i) under the hand of the Commissioner; and (ii) served on the taxpayer on the day on which the

Commissioner is deemed to have made the assessment.

(3) If: (a) at a particular time, a full self-assessment taxpayer gives a

return in respect of a year of income for which the taxpayer is a full self-assessment taxpayer; and

(b) before that time, no return has been given, and no assessment has been made, in relation to the taxpayer in respect of the income of the year of income;

the following provisions apply: (c) the Commissioner is taken to have made an assessment of the

taxable income or net income, and the tax payable on that income, equal to those respective amounts specified in the return;

(d) the assessment is taken to have been made on the day on which the return is lodged;

(e) on and after the day on which the Commissioner is taken to have made the assessment, the return is taken to be a notice of the assessment:

(i) under the hand of the Commissioner; and (ii) served on the taxpayer on the day on which the

Commissioner is taken to have made the assessment.

167 Default assessment

If: (a) any person makes default in furnishing a return; or (b) the Commissioner is not satisfied with the return furnished

by any person; or


Section 168


(c) the Commissioner has reason to believe that any person who has not furnished a return has derived taxable income;

the Commissioner may make an assessment of the amount upon which in his judgment income tax ought to be levied, and that amount shall be the taxable income of that person for the purpose of section 166.

168 Special assessment

(1) The Commissioner may at any time during any year, or after its expiration, make an assessment of the taxable income derived in that year or any part of it by any taxpayer, and of the tax payable thereon.

(2) Where the income, in respect of which such an assessment is made, is derived in a period less than a year, the assessment shall be made as if the beginning and end of that period were the beginning and end respectively of the year of income.

169 Assessments on all persons liable to tax

Where under this Act any person is liable to pay tax, the Commissioner may make an assessment of the amount of such tax.

169A Reliance by Commissioner on returns and statements

(1) Where a return of income of a taxpayer of a year of income is furnished to the Commissioner (whether or not by the taxpayer), the Commissioner may, for the purposes of making an assessment in relation to the taxpayer under this Act, accept, either in whole or in part, a statement in the return of the assessable income derived by the taxpayer and of any allowable deductions or rebates to which it is claimed that the taxpayer is entitled and any other statement in the return or otherwise made by or on behalf of the taxpayer.

(2) Despite subsection (1), if, in a document given with a return of income of a taxpayer of a year of income and signed by or on behalf of the taxpayer, a question is raised:



(a) that is relevant to the liability of the taxpayer in respect of the year of income; and

(b) on which the taxpayer is not entitled to apply for a private ruling under Part IVAA of the Taxation Administration Act 1953;

the Commissioner must give attention to that question.

(3) In determining whether an assessment is correct, any determination, opinion or judgment of the Commissioner made, held or formed in connection with the consideration of an objection against the assessment shall be deemed to have been made, held or formed when the assessment was made.

170 Amendment of assessments

(1) The Commissioner may, subject to this section, at any time amend any assessment by making such alterations therein or additions thereto as he thinks necessary, notwithstanding that tax may have been paid in respect of the assessment.

(1A) If: (a) an assessment has been amended in any particular in a way

that effected a reduction in the liability of a taxpayer; and (b) for the purposes of making the amendment, the

Commissioner accepted a statement made by or on behalf of the taxpayer;

the Commissioner may: (c) if the taxpayer is not a SPOR taxpayer for the year of income

to which the amended assessment relates—within 4 years after the day on which notice of the amended assessment was served; or

(d) if the taxpayer is a SPOR taxpayer for the year of income to which the amended assessment relates—within 2 years after the day on which tax is due and payable under the amended assessment;

further amend the assessment in, or in respect of, that particular in a way that increases the taxpayer’s liability to the extent that the Commissioner thinks necessary.


Section 170


(2) Subject to this section, where there has been an avoidance of tax, the Commissioner may:

(a) if the Commissioner is of the opinion that the avoidance of tax is due to fraud or evasion—at any time; or

(b) if paragraph (a) does not apply, the taxpayer is a relevant entity within the meaning of Division 1B of Part VI and the assessment is taken by section 166A to have been made—within 4 years after the day on which the assessment is so taken to have been made; or

(c) if neither paragraph (a) nor (b) applies and the taxpayer is not a SPOR taxpayer for the year of income to which the assessment relates—within 4 years after the day on which tax became due and payable under the assessment; or

(d) if neither paragraph (a) nor (b) applies and the taxpayer is a SPOR taxpayer for the year of income to which the assessment relates—within 2 years after the day on which tax became due and payable under the assessment;

amend the assessment by making such alterations in it or additions to it as the Commissioner thinks necessary to correct the assessment.

(3) An amendment effecting a reduction in a taxpayer’s liability under an assessment is not to be made:

(a) if the taxpayer is a relevant entity within the meaning of Division 1B of Part VI and the assessment is taken by section 166A to have been made—after the end of 4 years after the day on which the assessment is so taken to have been made; or

(b) if paragraph (a) does not apply and the taxpayer is not a SPOR taxpayer for the year of income to which the assessment relates—after the end of 4 years after the day on which tax became due and payable under the assessment; or

(c) if paragraph (a) does not apply and the taxpayer is a SPOR taxpayer for the year of income to which the assessment relates—after the end of 2 years after the day on which tax became due and payable under the assessment.

(4) Where:



(a) the Commissioner has begun an examination of the affairs of a taxpayer; and

(b) the examination was not completed within the period within which the Commissioner may amend an assessment to which the examination relates under subsection (2) or, if that period has been extended by any previous order or orders of the Federal Court of Australia made under subsection (4A), or by any previous consent or consents of the taxpayer given under subsection (4B), within that period as so extended;

the Commissioner may, before the end of the period referred to in paragraph (b) of this subsection, apply to the Federal Court for an order extending, or request the taxpayer to consent to the extension of, the period within which the Commissioner may amend the assessment under paragraph (2)(b).

(4A) If, on application made to the Federal Court of Australia in accordance with subsection (4), the Court is satisfied that it was not reasonably practicable, or it was inappropriate, for the Commissioner to complete the examination within the period referred to in paragraph (4)(b) because of any action taken by the taxpayer or any failure of the taxpayer to take action that it would have been reasonable for the taxpayer to take, the Court may make an order extending the period within which the Commissioner may amend the assessment under paragraph (2)(b) for such period as the Court considers appropriate.

(4B) If a request is made to the taxpayer in accordance with subsection (4), the taxpayer may, by writing, consent to the extension of the period within which the Commissioner may amend the assessment under paragraph (2)(b) for such period as is specified in the instrument of consent.

(4C) In subsection (4A): (a) a reference to action taken by a taxpayer includes a reference

to: (i) the institution by a taxpayer of a proceeding before a

court or tribunal; and (ii) the doing by a taxpayer of any act or thing that hinders

or prevents the exercise by the Commissioner or an


Section 170


officer authorised by the Commissioner of any power under section 263; and

(b) a reference to a failure by a taxpayer to take action includes a reference to the failure by a taxpayer to comply with subsection 263(3) or a requirement made under section 264.

(5) If an assessment has, under this section, been amended in any particular, the Commissioner may:

(a) if the taxpayer is not a SPOR taxpayer for the year of income to which the assessment relates—within 4 years after the day on which tax became due and payable under the amended assessment; or

(b) if the taxpayer is a SPOR taxpayer for the year of income to which the assessment relates—within 2 years after the day on which tax became due and payable under the amended assessment;

make, in or in respect of that particular, such further amendment of the assessment as, in the Commissioner’s opinion, is necessary to effect such reduction in the taxpayer’s liability under the assessment as is just.

(5A) Subsection (5) does not authorise the further amendment of an earlier further amendment of an assessment made under subsection (1A).

(6) If: (a) a taxpayer applies for an amendment of his or her

assessment; and (b) either of the following subparagraphs applies: (i) if the taxpayer is not a SPOR taxpayer for the year of

income to which the assessment relates—the application is made within 4 years after the day on which tax became due and payable under the assessment;

(ii) if the taxpayer is a SPOR taxpayer for the year of income to which the assessment relates—the application is made within 2 years after the day on which tax became due and payable under the assessment; and



(c) the taxpayer has supplied to the Commissioner within the period applicable under subparagraph (b)(i) or (ii), as the case may be, all information needed by the Commissioner for the purpose of deciding the application;

the Commissioner may amend the assessment when he or she decides the application even though that period has elapsed.

(6AA) An application for amendment must be made in writing, on a data processing device or by way of electronic transmission and must be signed in accordance with section 264B.

(6A) An application for amendment must be in the approved form.

(7) Nothing contained in this section shall prevent the amendment of any assessment in order to give effect to the decision upon any appeal or review, or its amendment by way of reduction in any particular in pursuance of an objection made by the taxpayer or pending any appeal or review.

(9) Notwithstanding anything contained in this section, when the assessment of the taxable income of any year includes an estimated amount of income, or of profits or gains of a capital nature, derived by the taxpayer in that year from an operation or series of operations the profit or loss on which was not ascertainable at the end of that year owing to the fact that the operation or series of operations extended over more than one or parts of more than one year, the Commissioner may at any time within 4 years after ascertaining the total profit or loss actually derived or arising from the operation or series of operations, amend the assessment so as to ensure its completeness and accuracy on the basis of the profit or loss so ascertained.

(9A) Nothing in this section prevents the amendment, for the purpose of giving effect of subsection 159P(3B), of an assessment of a trustee of the estate of a deceased person upon the assessable income derived by the deceased person during the year of income in which he died if the trustee has, within 4 years from the date of death of that person:


Section 170


(a) applied in writing to the Commissioner for an amendment of that assessment for the purpose of giving effect to that subsection; and

(b) supplied to the Commissioner all the information needed by the Commissioner for the purpose of deciding the application.

(9B) Subject to subsection (9C), nothing in this section prevents the amendment, at any time, of an assessment for the purpose of giving effect to a prescribed provision or a relevant provision.

(9C) Subsection (9B) does not authorize the Commissioner, for the purpose of giving effect to a prescribed provision or a relevant provision, to amend an assessment made in relation to a taxpayer in relation to a year of income where:

(a) in a case where the purpose of the amendment is to give effect to the prescribed provision in relation to the supply or acquisition of property—the prescribed provision has been previously applied, in relation to that supply or acquisition, in making or amending an assessment in relation to the taxpayer in relation to the year of income; or

(b) in any other case—the prescribed provision or the relevant provision, as the case may be, has been previously applied, in relation to the same subject matter, in making or amending an assessment in relation to the taxpayer in relation to the year of income.

(9D) This section does not prevent the amendment of an assessment at any time if the amendment is made, in relation to a contract that after the making of the assessment is found to be void ab initio, to ensure that Part IIIA of this Act or Part 3-1 or 3-3 of the Income Tax Assessment Act 1997 (about CGT) is taken always to have applied to the contract as if the contract had never been made.

(9E) Nothing in this section prevents the amendment of an assessment within 4 years after the day on which tax became due and payable under the assessment if:

(a) the amendment relates wholly to one of the following:



(i) an amount included in the taxpayer’s assessable income other than an amount referred to in subsection 6AD(2);

(ii) an amount (other than an amount referred to in subsection 6AD(3)) that was deducted from the taxpayer’s assessable income in the Commissioner’s determination of the amount of the taxpayer’s taxable income;

(iii) an amount (other than an amount referred to in subsection 6AD(3)) that the taxpayer was entitled to deduct, but was not deducted, from the taxpayer’s assessable income in the Commissioner’s determination of the amount of the taxpayer’s taxable income; or

(b) the amendment is necessary because circumstances referred to in subsection 6AD(4) that were previously believed to exist in relation to the taxpayer for a year of income have been found not to exist; or

(c) the amendment is necessary, in the Commissioner’s opinion, to make a correct assessment solely because of an amendment made under paragraph (a) or (b).

(9F) If: (a) the Commissioner makes an amendment of an assessment on

the assumption that the taxpayer was not a SPOR taxpayer for the year of income to which the assessment related; and

(b) the Commissioner would not have been authorised under this Act to make the amendment if the taxpayer had been a SPOR taxpayer for that year of income; and

(c) the Commissioner afterwards becomes aware that the taxpayer is a SPOR taxpayer for that year of income;

nothing in this section prevents the Commissioner from making a further amendment of the assessment for the purpose of reversing the effect of the earlier amendment.

(10) Nothing in this section prevents the amendment, at any time, of an assessment for the purpose of giving effect to the provisions of section 23AB, 23H, 26AAB, 26AG, 31C, 36AAA or 36AA, subsection 36A(8) or 47(2B), section 51AD or 51AH, subsection 57AM(10), (13), (14), (15) or (16) or 59(2D), section 70A,


Section 170


subsection 75B(4), 75D(4) or 77F(5), section 78A or 78B, Subdivision B or BA of Division 3 of Part III, section 82KJ, 82KK or 82KL, Subdivision F of Division 3 of Part III, subsection 82S(3), 82SA(2) or 82Z(3) or (4), section 100A, Subdivision C of Division 6D of Part III, section 105AA, 105AB or 121AT, Division 9C of Part III, subsection 122B(2), 122BA(7) or 122JD(2), section 122T, subsection 123A(2) or (3), 123BD(4) or (5), 124AB(3) or 124ABA(4), section 124AQ, Division 10BA of Part III, section 136AF, Division 16C or 16D of Part III, 159GZZZH(2), section 160ABB, subsection 221YRA(2), Part XII, Schedule 2A, 2B or 2G or section 271-105 of Schedule 2F.

(10AA) Nothing in this section prevents the amendment, at any time, of an assessment for the purpose of giving effect to any of the provisions of the Income Tax Assessment Act 1997 set out in this table.

Amendment of assessments

Item Provision Brief description

1 Subdivision 20-B Disposal of a car for which lease payments have been deducted

5 Subsection 26-25(3) Deduction for interest or royalty if withholding tax paid

10 Division 28 Car expenses

20 The former section 42-290 Balancing adjustment relief for plant

25 Subdivision 61-H Private health insurance offset complementary to the Private Health Insurance Incentives Act 1998

24 Subdivision 61-I Tax offset for first child

30 Subsection 104-10(3) or (6) Subsection 104-25(2) Subsection 104-45(2) Subsection 104-90(2) Subsection 104-110(2) Subsection 104-205(2) Subsection 104-225(5) Subsection 104-230(5)

The time of a CGT event is decided by there being a contract entered into





40 Paragraph 104-15(4)(a) CGT event B1: agreement ends without title passing

50 Subsection 104-40(5) Exception to CGT event D2 where option is exercised

60 Section 108-15 Disposal of collectable that is part of a set

70 Section 108-25 Disposal of personal use asset that is part of a set

80 Section 116-45 Modification to capital proceeds for non-receipt

90 Section 116-50 Modification to capital proceeds for amounts you repay

100 Subsection 122-25(4) Right or option etc. exercised after roll-over to acquire trading stock


120 Subdivision 124-B Roll-over for assets compulsorily acquired, lost or destroyed

130 Subsection 126-5(3) CGT event B1: agreement ends without title passing



160 Section 126-70 Capital loss disregarded despite choice for no roll-over


170 Subsection 165-115ZA(2) Reduction in respect of reduced cost base etc. of debt disregarded if commercial debt forgiveness provisions apply


Section 170




180 The former section 330-175 The former section 330-245

An amount in an agreement to transfer deduction entitlements exceeds the maximum amount capable of being transferred

185 Subdivision 375-H Deductions for shares in a film licensed investment company

190 Subdivision 385-E Primary producer elects to spread or defer tax on profit from forced disposal or death of live stock

200 Section 385-160 Disentitling event happens in relation to your primary production business

210 Division 900 Substantiation

(10AB) Nothing in this section prevents the amendment of an assessment, at any time, for the purpose of giving effect to section 59-30 of the Income Tax Assessment Act 1997.

(10A) Nothing in this section prevents the amendment, at any time, of an assessment to increase the liability of a taxpayer for the purpose of giving effect to section 73B, 73BH, 73BA, 73BF, 73BM, 73C, 73CB, 73D, 73I or 73Y.

(13) The Commissioner may amend an assessment within 6 years after the day when the tax became due and payable under it, if the amendment is to give effect to any of these provisions:

(a) sections 165-180 to 165-205 and Division 175 of the Income Tax Assessment Act 1997;

(b) sections 105AAA, 160ZND and 160ZNM to 160ZNR (inclusive), and Division 3D of Part IIIA, of this Act;

(c) Division 270 of Schedule 2F to this Act; (including any of those provisions as applied by any other provision of that Act or this Act).

(14) In this section, unless the contrary intention appears:

Part IV Returns and assessments Section 170A


double taxation agreement means an agreement within the meaning of the International Tax Agreements Act 1953.

international tax sharing treaty has the meaning given by subsection 136AA(1).

prescribed provision means section 136AD or 136AE.

relevant provision means: (a) paragraph (3) of Article 5, or paragraph (1) of Article 7, of

the United Kingdom agreement or a provision of any other double taxation agreement that corresponds with either of those paragraphs; or

(b) paragraph 7, 8 or 9 of Article 5, or Article 7, of the Taxation Code in Annex G to the Timor Sea Treaty or a provision of any other international tax sharing treaty that corresponds with any of those paragraphs or that Article.

tax includes additional tax under Part VII.

the United Kingdom agreement has the same meaning as in the International Tax Agreements Act 1953.

170A Power to amend assessment not to limit other powers to amend assessment

Where a provision of this Act authorizes the Commissioner to amend an assessment, that provision does not limit the power of the Commissioner to amend an assessment in accordance with any other provision of this Act.

170AA Liability of taxpayer where assessment amended

(1) Subject to this section, where an amendment of an assessment increasing the liability of a taxpayer to tax is made, the taxpayer is liable to pay the general interest charge, for each day in the period in subsection (4), on the amount (in this section referred to as the principal amount) by which the tax payable by the taxpayer under the amended assessment exceeds the tax payable by the taxpayer under the assessment that was amended.


Section 170AA


(1AA) Subsection (1) applies even if the amendment of the assessment is made in relation to a matter because of which the taxpayer is liable under Part VII to pay additional tax by way of penalty.

(1A) Subject to this section, where an amendment of a determination reducing a credit, or an offset within the meaning of Part IIIAA, allowable to a taxpayer is made, the taxpayer is liable to pay the general interest charge, for each day in the period in subsection (4), on the amount (in this section also called the principal amount) by which the amount of the credit or offset allowable to the taxpayer under the amended determination is less than the amount of the credit or offset allowable to the taxpayer under the determination that was amended.

(2) Subsection (1A) applies even if the amendment of the determination is made in relation to a matter because of which the taxpayer is liable under Part VII to pay additional tax by way of penalty.

(3) Where: (a) a taxpayer is liable to pay or would, but for subsection (11),

be liable to pay, general interest charge under subsection (1) or (1A) on an amount (in this subsection referred to as the base amount), being the whole or a part of the principal amount; and

(b) as a result of the amendment by virtue of which the general interest charge became payable, an amendment of an assessment is made increasing:

(i) the liability of the taxpayer (in this subsection referred to as the penalty payer) to additional tax under Part VII;

(ii) the liability of a partner (in this subsection also referrred to as the penalty payer) in a partnership in which the taxpayer is or was a partner to additional tax under section 226N, 226P or 226Q; or

(iii) the liability of the trustee (in this subsection also referred to as the penalty payer) of a trust estate of which the taxpayer is or was a beneficiary to additional tax under section 226R, 226S or 226T;



the penalty payer is liable to pay the general interest charge, for each day in the period in subsection (4), on the amount ascertained in accordance with the formula: AB

C,

where:

A is so much of the additional tax payable by the penalty payer under the amended assessment as is attributable to the amendment by virtue of which the general interest charge referred to in paragraph (a) became payable.

B is the number of whole dollars in the base amount; and

C is the number of whole dollars in the principal amount.

(4) The general interest charge payable by a taxpayer under subsection (1) or (3) in relation to an amended assessment (in this subsection referred to as the current amended assessment) or under subsection (1A) in relation to an amended determination (in this subsection called the amended determination) in respect of a year of income is payable for each day in the period that:

(a) started at the beginning of: (i) in a case to which subsection (1) or (1A) applies and the

taxpayer is not a relevant entity within the meaning of Division 1B of Part VI, an instalment taxpayer within the meaning of Division 1C of Part VI or a full self-assessment taxpayer—the day on which tax became due and payable by the taxpayer under the first assessment in respect of income of the taxpayer of the year of income; or

(ia) in a case to which subsection (1) or (1A) applies and the taxpayer is a relevant entity within the meaning of Division 1B of Part VI—the day on which the payment of tax by the taxpayer was, or, if paragraph 221AZD(b) had applied, would have been, required to be made under paragraph 221AZD(b) in respect of the relevant year of income; or


Section 170AA


(ib) if subsection (1) or (1A) applies and the taxpayer is an instalment taxpayer within the meaning of Division 1C of Part VI—the day specified in Table 1 in subsection 221AZK(2) as the day on which the final instalment for the relevant year of income was required to be paid by taxpayers of the same classification as the taxpayer (whether or not the taxpayer is required to pay such an instalment); or

(ic) if subsection (1) or (1A) applies and the taxpayer is a full self-assessment taxpayer—the day on which tax became due and payable under the first assessment in respect of income of the taxpayer of the year of income;

(ii) in a case to which subsection (3) applies—the day on which additional tax under Part VII became due and payable by the taxpayer under the assessment referred to in paragraph (3)(b) or, if that assessment was previously amended on one or more occasions, under that assessment before any amendment; and

(b) finishes at the end of the day before the current amended assessment or the amended determination is made.


(5) If general interest charge (the primary general interest charge) is payable by a taxpayer under subsection (1), (1A) or (3), the Commissioner may give a notice to the taxpayer specifying a date after which general interest charge will apply under subsection (5A). The specified date must be at least 30 days after the notice is given.

(5A) If the primary general interest charge remains unpaid after the day specified in the notice, the taxpayer is liable to pay general interest charge on the unpaid amount.

(5B) The taxpayer is liable to pay the general interest charge for each day in the period that:

(a) started at the beginning of the day specified in the notice; and (b) finishes at the end of the last day on which, at the end of the

day, any of the following remains unpaid:



(i) primary general interest charge; (ii) general interest charge on primary general interest

charge.

(6) Where: (a) the Commissioner has served notice in respect of a taxpayer

to the effect that the taxable income of the taxpayer of the year of income is nil or that no tax is payable on the taxable income of the taxpayer of a year of income; and

(b) the Commissioner subsequently makes an assessment of the taxable income of the taxpayer of the year of income and of the tax payable on that taxable income;

the following provisions have effect for the purposes of this section:

(c) the notice referred to in paragraph (a) shall be deemed to be an assessment (in this subsection referred to as the notional assessment) on which a nil amount of tax became due and payable at the end of 30 days after the date of service of the notice; and

(d) the assessment referred to in paragraph (b) shall be deemed to be an amendment of the notional assessment.

(7) For the purposes of subsection (6), if the taxpayer is a relevant entity within the meaning of Division 1B of Part VI and, on the basis of the entity’s return, either:

(a) the taxable income of the entity of the year of income is nil; or

(b) no tax is payable on the taxable income of the entity of the year of income;

then: (c) the Commissioner is deemed for the purposes of paragraph

6(a) to have served notice in respect of the entity; and (d) paragraph 6(c) applies as if all words after “payable” were

omitted and there were substituted “on the day that would have applied under subparagraph 4(a)(ia) if the notional assessment had been an assessment and the assessment referred to in paragraph (b) had been an amendment of the notional assessment”.


Section 170AA


(7A) If Division 1C of Part VI applies to the taxpayer for a year of income and, on the basis of the taxpayer’s return, the taxable income was nil or no tax was payable on the taxable income, the following provisions apply for the purposes of subsection (6):

(a) the Commissioner is taken to have served a notice of the kind specified in paragraph (6)(a); and

(b) the reference in paragraph (6)(c) to the end of 30 days after the date of service of the notice is to be read as a reference to the due date that applies under section 221AZT.

(7B) If the taxpayer is a full self-assessment taxpayer for a year of income and, on the basis of the taxpayer’s return, the taxable income or net income was nil, or no tax was payable on the taxable income or net income, the following provisions apply for the purposes of subsection (6):

(a) the Commissioner is taken to have served a notice of the kind specified in paragraph (6)(a);

(b) the reference in paragraph (6)(c) to the end of 30 days after the date of service of the notice is to be read as a reference to the date on which the tax becomes due and payable under subsection 204(1A).

(8) Where, but for this subsection, the amount of the general interest charge that would be payable under subsection (1), (1A) or (3) by a taxpayer is less than 50 cents, the general interest charge is not payable by the taxpayer under that subsection.

(9) Unless the contrary intention appears, in sections 172, 205, 206, 215, 216, 254, 255, 258 and 259, but not in any other section, income tax or tax includes the general interest charge payable under this section.


tax does not include additional tax payable under section 104.

taxpayer includes a penalty payer referred to in subsection (3) of this section.

Part IV Returns and assessments Section 170BA


(15) This section does not apply to amendments relating to the 2000-01 year of income or a later year of income.

170BA Effect of public ruling on tax other than withholding tax


final tax, in relation to a person, means ruling affected tax payable in relation to the person after allowing:

(a) a credit within the meaning of Division 19 of Part III; or (b) an offset within the meaning of Division 1 of Part IIIAA.

ruling affected tax means: (a) income tax; or (b) franking deficit tax within the meaning of Part IIIAA; or (c) Medicare levy;

but does not include withholding tax.

withholding tax includes mining withholding tax.

(2) Expressions used in this section have the same meanings as in Part IVAAA of the Taxation Administration Act 1953.

(3) Subject to sections 170BC and 170BDA, if: (a) there is a public ruling on the way in which an income tax

law applies to a person in relation to an arrangement (ruled way); and

(b) that law applies to a person in relation to that arrangement in a different way; and

(c) the amount of final tax under an assessment in relation to that person would (apart from this section and sections 170BC and 170BDA) exceed what it would have been if that law applied in the ruled way;

the assessment and amount of final tax must be what they would be if that law applied in the ruled way.

170BB Effect of private rulings on tax other than withholding tax



Section 170BCA


final tax has the same meaning as in section 170BA.

(2) Expressions used in this section have the same meanings as in Part IVAA of the Taxation Administration Act 1953.

(3) Subject to sections 170BC, 170BG and 170BH, if: (a) there is a private ruling on the way in which an income tax

law applies to a person in respect of a year of income in relation to an arrangement (ruled way); and

(b) that law applies to that person in respect of that year in relation to that arrangement in a different way; and

(c) the amount of final tax under an assessment in relation to that person would (apart from this section and section 170BC) exceed what it would have been if that law applied in the ruled way;


(4) Subsection (3) applies to an assessment whether or not in respect of the year of income in paragraphs (3)(a) and (b).

170BCA Effect of oral ruling on tax other than withholding tax



(2) Expressions used in this section have the same meanings as in Division 360 (Oral rulings) in Schedule 1 to the Taxation Administration Act 1953.

(3) If: (a) there is an oral ruling on the way in which an income tax law

applies to a person in respect of a year of income in relation to an oral ruling arrangement (ruled way); and

(b) that law applies to that person in respect of that year in relation to that arrangement in a different way; and

(c) the amount of final tax under an assessment in relation to that person would (apart from this section and sections 170BDA,

Part IV Returns and assessments Section 170BC


170BDB and 170BDC) exceed what it would have been if that law applied in the ruled way;


(4) This section has effect subject to sections 170BDA, 170BDB and 170BDC.

170BC Assessment of tax other than withholding tax if public or private rulings conflict


ruling means: (a) a public ruling; or (b) a private ruling.

(2) Expressions used in this section have the same meanings as in section 170BA or 170BB.

(3) If: (a) there are rulings of different ways in which the same income

tax law applies to the same person in relation to the same arrangement; and

(b) apart from this section, because of there being those different ways, there are conflicting requirements under section 170BA or 170BB, or both, of what the assessment and amount of final tax in relation to that person are to be;

the assessment and amount of final tax must be what they would be if that law so applied in whichever of those ways would result in the lowest amount of final tax.

170BDA Assessment of tax other than withholding tax if public and oral rulings conflict



(2) If:


Section 170BDB


(a) there is a public ruling on the way in which an income tax law applies to a person in relation to an arrangement; and

(b) there is an oral ruling on the way in which the same income tax law applies to the same person in relation to the same arrangement; and

(c) those ways are different; and (d) apart from this section, because of there being those different

ways, there are conflicting requirements under section 170BA or 170BC and section 170BCA of what the assessment and amount of final tax in relation to that person are to be;

the assessment and amount of final tax must be what they would be if that law so applied in whichever of those ways would result in the lowest amount of final tax.

(3) Expressions used in paragraph (2)(a) have the same meanings as in section 170BA.

(4) Expressions used in paragraph (2)(b) have the same meanings as in Division 360 (Oral rulings) in Schedule 1 to the Taxation Administration Act 1953.

170BDB Assessment of tax other than withholding tax if private and oral rulings conflict



(2) If: (a) there is a private ruling on the way in which an income tax

law applies to a person in relation to an arrangement (private ruling way); and

(b) there is an oral ruling on the way in which the same income tax law applies to the same person in relation to the same arrangement; and

(c) those ways are different; and (d) apart from this section, because of there being those different

ways, there are conflicting requirements under

Part IV Returns and assessments Section 170BDC


section 170BB or 170BC and section 170BCA of what the assessment and amount of final tax in relation to that person are to be;

the assessment and amount of final tax must be what they would be if that law applied in the private ruling way.

(3) Expressions used in paragraph (2)(a) have the same meanings as in section 170BB.

(4) Expressions used in paragraph (2)(b) have the same meanings as in Division 360 (Oral rulings) in Schedule 1 to the Taxation Administration Act 1953.

170BDC Assessment of tax other than withholding tax if public, private and oral rulings conflict



(2) If: (a) there is a public ruling on the way in which an income tax

law applies to a person in relation to an arrangement; and (b) there is a private ruling on the way in which the same income

tax law applies to the same person in relation to the same arrangement; and

(c) there is an oral ruling on the way in which the same income tax law applies to the same person in relation to the same arrangement; and

(d) those ways are different; the assessment and amount of final tax must be what they would be if the oral ruling had not been made.

(3) Expressions used in paragraph (2)(a) have the same meanings as in section 170BA.

(4) Expressions used in paragraph (2)(b) have the same meanings as in section 170BB.


Section 170BD


(5) Expressions used in paragraph (2)(c) have the same meanings as in Division 360 (Oral rulings) in Schedule 1 to the Taxation Administration Act 1953.

170BD Effect of public ruling on withholding tax

(1) Expressions used in this section have the same meanings as in section 170BA.

(2) If: (a) there is a public ruling on the way in which an income tax

law applies to a person in relation to an arrangement; and (b) an amount of withholding tax is payable that exceeds what

would have been payable if that law applied in that way; then:

(c) the Commissioner may not sue for the recovery of the amount of the excess; and

(d) the Commissioner must not serve on a person a notice that the excess is payable by the person; and

(e) the excess is remitted.

170BE Effect of private ruling on withholding tax


objection decision and taxation objection have the same meanings as in Part IVC of the Taxation Administration Act 1953.

(2) Expressions used in this section have the same meanings as in section 170BA or 170BC.

(3) Subject to sections 170BF, 170BG and 170BH, if: (a) there is a private ruling on the way in which an income tax

law applies to a person in respect of a year of income in relation to an arrangement; and

(b) an amount of withholding tax is payable that exceeds what would have been payable if that law applied in the way ruled;

then:

Part IV Returns and assessments Section 170BF


(c) the Commissioner may not sue for the recovery of the amount of the excess; and

(d) the Commissioner must not serve on a person a notice that the excess is payable by the person; and

(e) if no taxation objection against the ruling has been lodged—the excess is remitted; and

(f) if: (i) there was a taxation objection against the ruling; and (ii) an objection decision about the taxation objection has

been made; and (iii) the period in which the objection decision may be

appealed against or an application for the review of the objection decision may be made has ended; and

(iv) there has been neither such an appeal nor application or such an appeal or application has been withdrawn;

the excess is remitted.

170BF Withholding tax where conflicting rulings


ruling means: (a) a public ruling; or (b) a private ruling.

(2) Expressions used in this section have the same meanings as in section 170BD or 170BE.

(3) If: (a) there are rulings of different ways in which the same income

tax law applies to the same person in respect of the same year of income in relation to the same arrangement; and

(b) apart from this section, because of there being those different ways, there are 2 or more different excesses for the purposes of section 170BD or 170BE, or both;

the excess is the highest of those excesses.


Section 170BG


170BG Final Tribunal decision about private ruling conclusive


arrangement, income tax law and private ruling have the same meanings as in Part IVAA of the Taxation Administration Act 1953.


(2) If: (a) on the review of an objection decision about a taxation

objection against a private ruling, the Tribunal decides that an income tax law would apply to a person in a particular way in respect of a year of income in relation to an arrangement; and

(b) that decision becomes final; then, for the purposes of this Act, that law applies to that person in that way in respect of that year in relation to that arrangement.

(3) Subsection (2) applies in spite of any order or decision of a court, or any other decision of the Tribunal, about any application of that law.

(4) For the purposes of subsection (2), if there is no appeal against the Tribunal’s decision when the period for lodging an appeal ends, the decision becomes final at the end of the period.

170BH Final court order about private ruling conclusive


arrangement, income tax law and private ruling have the same meanings as in Part IVAA of the Taxation Administration Act 1953.


(2) If:

Part IV Returns and assessments Section 170BI


(a) on an appeal against: (i) an objection decision about a taxation objection against

a private ruling; or (ii) a decision of the Tribunal on the review of such an

objection decision; a court orders that an income tax law would apply to a person

in a particular way in respect of a year of income in relation to an arrangement; and

(b) that order becomes final; then, for the purposes of this Act, that law applies to that person in that way in respect of that year in relation to that arrangement.

(3) Subsection (2) applies despite any other order or decision of a court about any application of that law.

(4) For the purposes of subsection (2): (a) if the order is made by the Federal Court constituted by a

single judge and there is no appeal against the order when the period for lodging an appeal ends—the order becomes final at the end of the period; and

(b) if the order is made by the Full Court of the Federal Court and there is no application for special leave to appeal to the High Court against the order when the period of 30 days after the order is made ends—the order becomes final at the end of the period.

170BI Final court order about Commissioner discretion

(1) Expressions used in this section have the same meanings as in section 170BH.

(2) For the purposes of this section, the Commissioner exercises a discretion if the Commissioner acts as described in section 14ZAD of the Taxation Administration Act 1953.

(3) If: (a) a private ruling rules that a discretion of the Commissioner

under the income tax law which the ruling is about would be exercised in a particular way; and


Section 170C


(b) on an appeal against: (i) an objection decision about a taxation objection against

that ruling; or (ii) a decision of the Tribunal on the review of such an

objection decision; a court orders that it would be in accordance with law for the

Commissioner to exercise that discretion in that way in relation to the law, person, year and arrangement that the ruling is about (rule matters); and

(c) that order becomes final; then, for the purposes of this Act, if the Commissioner exercises that discretion in that way in relation to the rule matters, the discretion is exercised in accordance with law.

(4) For the purposes of subsection (3), an order becomes final if it would become final for the purposes of subsection 170BH (2).

(5) Subsection (3) applies despite any other order or decision of a court about the exercise of a discretion.

170C Power of Commissioner to reduce amount of tax payable in certain cases

For the purposes of the making of an assessment on or after 1 July 1966, the Commissioner may reduce by One cent the amount of tax that would, but for this section, be payable by a taxpayer being a person other than a company or being a company in the capacity of a trustee, before deducting any rebate or credit to which the taxpayer is entitled.

171 Where no notice of assessment served

(1) Where a taxpayer has duly furnished to the Commissioner a return of income, or of profits or gains of a capital nature, and no notice of assessment in respect thereof has been served within 12 months thereafter, he may in writing by registered post request the Commissioner to make an assessment.



(2) If within 3 months after the receipt by the Commissioner of the request a notice of assessment is not served upon the taxpayer, any assessment issued thereafter in respect of that income, or of those profits or gains, shall be deemed to be an amended assessment, and for the purpose of determining whether such amended assessment may be made, the taxpayer shall be deemed to have been served on the last day of the 3 months with a notice of assessment in respect of which income tax was payable on that day.

172 Refunds of amounts overpaid

(1) Where, by reason of an amendment of an assessment, a person’s liability to tax is reduced:

(a) the amount by which the tax is so reduced shall be taken, for the purposes of provisions of this Act that apply the general interest charge, never to have been payable; and

(b) the Commissioner must apply the amount of any tax overpaid in accordance with Divisions 3 and 3A of Part IIB of the Taxation Administration Act 1953.

(2) In subsection (1), unless the contrary intention appears, tax includes the general interest charge under a provision of this Act and additional tax under Part VII.

Note 1: The general interest charge is worked out under Division 1 of Part IIA of the Taxation Administration Act 1953.

Note 2: Subsection 8AAB(4) of that Act lists the provisions that apply the charge.

173 Amended assessment to be an assessment

Except as otherwise provided every amended assessment shall be an assessment for all the purposes of this Act.

174 Notice of assessment

(1) As soon as conveniently may be after any assessment is made, the Commissioner shall serve notice thereof in writing by post or otherwise upon the person liable to pay the tax.


Section 175


(3) In subsection (1), tax includes additional tax under Part VII.

175 Validity of assessment

The validity of any assessment shall not be affected by reason that any of the provisions of this Act have not been complied with.

175A Objections against assessments

A taxpayer who is dissatisfied with an assessment made in relation to the taxpayer may object against it in the manner set out in Part IVC of the Taxation Administration Act 1953.

176 Judicial notice of signature

All courts and all persons having by law or consent of parties authority to hear, receive and examine evidence, shall take judicial notice of the signature of every person who is or has been the Commissioner, a Second Commissioner or a Deputy Commissioner, provided such signature is attached or appended to any official document.

177 Evidence

(1) The production of a notice of assessment, or of a document under the hand of the Commissioner, a Second Commissioner, or a Deputy Commissioner, purporting to be a copy of a notice of assessment, shall be conclusive evidence of the due making of the assessment and, except in proceedings under Part IVC of the Taxation Administration Act 1953 on a review or appeal relating to the assessment, that the amount and all the particulars of the assessment are correct.

(2) The production of a Gazette containing a notice purporting to be issued by the Commissioner shall be conclusive evidence that the notice was so issued.

(3) The production of a document under the hand of the Commissioner, a Second Commissioner, or a Deputy



Commissioner, purporting to be a copy of a document issued by either the Commissioner, a Second Commissioner, or a Deputy Commissioner, shall be conclusive evidence that the document was so issued.

(4) The production of a document under the hand of the Commissioner, a Second Commissioner, or a Deputy Commissioner, purporting to be a copy of or extract from any return or notice of assessment shall be evidence of the matter therein set forth to the same extent as the original would be if it were produced.

(5) To avoid doubt, subsection (4) applies to a copy or an extract of a document that was given to the Commissioner on a data processing device or by way of electronic transmission unless the taxpayer can show that the taxpayer did not authorise the document.

Schemes to reduce income tax Part IVA

Section 177A


Part IVA—Schemes to reduce income tax

177A Interpretation

(1) In this Part, unless the contrary intention appears:

capital loss has the meaning given by subsection 995-1(1) of the Income Tax Assessment Act 1997.

foreign tax credit means a credit within the meaning of Division 19 of Part III.

scheme means: (a) any agreement, arrangement, understanding, promise or

undertaking, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings; and

(b) any scheme, plan, proposal, action, course of action or course of conduct.

taxpayer includes a taxpayer in the capacity of a trustee.

(2) The definition of taxpayer in subsection (1) shall not be taken to affect in any way the interpretation of that expression where it is used in this Act other than this Part.

(3) The reference in the definition of scheme in subsection (1) to a scheme, plan, proposal, action, course of action or course of conduct shall be read as including a reference to a unilateral scheme, plan, proposal, action, course of action or course of conduct, as the case may be.

(4) A reference in this Part to the carrying out of a scheme by a person shall be read as including a reference to the carrying out of a scheme by a person together with another person or other persons.

(5) A reference in this Part to a scheme or a part of a scheme being entered into or carried out by a person for a particular purpose shall

Part IVA Schemes to reduce income tax Section 177B


be read as including a reference to the scheme or the part of the scheme being entered into or carried out by the person for 2 or more purposes of which that particular purpose is the dominant purpose.

177B Operation of Part

(1) Subject to subsection (2), nothing in the provisions of this Act other than this Part or in the International Tax Agreements Act 1953 or in the Petroleum (Timor Sea Treaty) Act 2003 shall be taken to limit the operation of this Part.

(2) This Part shall not be taken to affect the operation of Division 16C of Part III or the operation of Schedule 2G.

(3) Where a provision of this Act other than this Part is expressed to have effect where a deduction would be allowable to a taxpayer but for or apart from a provision or provisions of this Act, the reference to that provision or to those provisions, as the case may be, shall be read as including a reference to subsection 177F(1).

(4) Where a provision of this Act other than this Part is expressed to have effect where a deduction would otherwise be allowable to a taxpayer, that provision shall be deemed to be expressed to have effect where a deduction would, but for subsection 177F(1), be otherwise allowable to the taxpayer.

177C Tax benefits

(1) Subject to this section, a reference in this Part to the obtaining by a taxpayer of a tax benefit in connection with a scheme shall be read as a reference to:

(a) an amount not being included in the assessable income of the taxpayer of a year of income where that amount would have been included, or might reasonably be expected to have been included, in the assessable income of the taxpayer of that year of income if the scheme had not been entered into or carried out; or


Section 177C


(b) a deduction being allowable to the taxpayer in relation to a year of income where the whole or a part of that deduction would not have been allowable, or might reasonably be expected not to have been allowable, to the taxpayer in relation to that year of income if the scheme had not been entered into or carried out; or

(ba) a capital loss being incurred by the taxpayer during a year of income where the whole or a part of that capital loss would not have been, or might reasonably be expected not to have been, incurred by the taxpayer during the year of income if the scheme had not been entered into or carried out; or

(bb) a foreign tax credit being allowable to the taxpayer where the whole or a part of that foreign tax credit would not have been allowable, or might reasonably be expected not to have been allowable, to the taxpayer if the scheme had not been entered into or carried out;

and, for the purposes of this Part, the amount of the tax benefit shall be taken to be:

(c) in a case to which paragraph (a) applies—the amount referred to in that paragraph; and

(d) in a case to which paragraph (b) applies—the amount of the whole of the deduction or of the part of the deduction, as the case may be, referred to in that paragraph; and

(e) in a case to which paragraph (ba) applies—the amount of the whole of the capital loss or of the part of the capital loss, as the case may be, referred to in that paragraph; and

(f) in a case where paragraph (bb) applies—the amount of the whole of the foreign tax credit or of the part of the foreign tax credit, as the case may be, referred to in that paragraph.

(2) A reference in this Part to the obtaining by a taxpayer of a tax benefit in connection with a scheme shall be read as not including a reference to:

(a) the assessable income of the taxpayer of a year of income not including an amount that would have been included, or might reasonably be expected to have been included, in the assessable income of the taxpayer of that year of income if the scheme had not been entered into or carried out where:

Part IVA Schemes to reduce income tax Section 177C


(i) the non-inclusion of the amount in the assessable income of the taxpayer is attributable to the making of an agreement, choice, declaration, agreement, election, selection or choice, the giving of a notice or the exercise of an option (expressly provided for by this Act other than section 160ZP or 160ZZO or the Income Tax Assessment Act 1997) by any person, except one under Subdivision 126-B or 170-B of the Income Tax Assessment Act 1997; and

(ii) the scheme was not entered into or carried out by any person for the purpose of creating any circumstance or state of affairs the existence of which is necessary to enable the declaration, agreement, election, selection, choice, notice or option to be made, given or exercised, as the case may be; or

(b) a deduction being allowable to the taxpayer in relation to a year of income the whole or a part of which would not have been, or might reasonably be expected not to have been, allowable to the taxpayer in relation to that year of income if the scheme had not been entered into or carried out where:

(i) the allowance of the deduction to the taxpayer is attributable to the making of a declaration, agreement, election, selection or choice, the giving of a notice or the exercise of an option by any person, being a declaration, agreement, election, selection, choice, notice or option expressly provided for by this Act; and

(ii) the scheme was not entered into or carried out by any person for the purpose of creating any circumstance or state of affairs the existence of which is necessary to enable the declaration, agreement, election, selection, choice, notice or option to be made, given or exercised, as the case may be; or

(c) a capital loss being incurred by the taxpayer during a year of income the whole or part of which would not have been, or might reasonably be expected not to have been, incurred by the taxpayer during the year of income if the scheme had not been entered into or carried out where:


Section 177C


(i) the incurring of the capital loss by the taxpayer is attributable to the making of a declaration, agreement, choice, election or selection, the giving of a notice or the exercise of an option (expressly provided for by this Act or the Income Tax Assessment Act 1997) by any person, except one under Subdivision 126-B or 170-B of the Income Tax Assessment Act 1997; and

(ii) the scheme was not entered into or carried out by any person for the purpose of creating any circumstance or state of affairs the existence of which is necessary to enable the declaration, agreement, election, selection, notice or option to be made, given or exercised, as the case may be; or

(d) a foreign tax credit being allowable to the taxpayer the whole or a part of which would not have been, or might reasonably be expected not to have been, allowable to the taxpayer if the scheme had not been entered into or carried out, where:

(i) the allowance of the foreign tax credit to the taxpayer is attributable to the making of a declaration, agreement, election, selection or choice, the giving of a notice or the exercise of an option by any person, being a declaration, agreement, election, selection, choice, notice or option expressly provided for by this Act; and

(ii) the scheme was not entered into or carried out by any person for the purpose of creating any circumstance or state of affairs the existence of which is necessary to enable the declaration, agreement, election, selection, choice, notice or option to be made, given or exercised, as the case may be.

(2A) A reference in this Part to the obtaining by a taxpayer of a tax benefit in connection with a scheme is to be read as not including a reference to:

(a) the assessable income of the taxpayer of a year of income not including an amount that would have been included, or might reasonably be expected to have been included, in the assessable income of the taxpayer of that year of income if the scheme had not been entered into or carried out where:

Part IVA Schemes to reduce income tax Section 177C


(i) the non-inclusion of the amount in the assessable income of the taxpayer is attributable to the making of a choice under Subdivision 126-B of the Income Tax Assessment Act 1997 or an agreement under Subdivision 170-B of that Act; and

(ii) the scheme consisted solely of the making of the agreement or election; or

(b) a capital loss being incurred by the taxpayer during a year of income the whole or part of which would not have been, or might reasonably be expected not to have been, incurred by the taxpayer during the year of income if the scheme had not been entered into or carried out where:

(i) the incurring of the capital loss by the taxpayer is attributable to the making of a choice under Subdivision 126-B of the Income Tax Assessment Act 1997 or an agreement under Subdivision 170-B of that Act; and

(ii) the scheme consisted solely of the making of the agreement or election.

(3) For the purposes of subparagraph (2)(a)(i), (b)(i), (c)(i) or (d)(i) or (2A)(a)(i) or (b)(i):

(a) the non-inclusion of an amount in the assessable income of a taxpayer; or

(b) the allowance of a deduction to a taxpayer; or (c) the incurring of a capital loss by a taxpayer; or

is taken to be attributable to the making of a declaration, election, agreement or selection, the giving of a notice or the exercise of an option where, if the declaration, election, agreement, selection, notice or option had not been made, given or exercised, as the case may be:

(ca) the allowance of a foreign tax credit to a taxpayer; (d) the amount would have been included in that assessable

income; or (e) the deduction would not have been allowable; or (f) the capital loss would not have been incurred; or (g) the foreign tax credit would not have been allowable.


Section 177CA


(4) To avoid doubt, paragraph (1)(a) applies to a scheme if: (a) an amount of income is not included in the assessable income

of the taxpayer of a year of income; and (b) an amount would have been included, or might reasonably be

expected to have been included, in the assessable income if the scheme had not been entered into or carried out; and

(c) instead, the taxpayer or any other taxpayer makes a discount capital gain (within the meaning of the Income Tax Assessment Act 1997) for that or any other year of income.

(5) Subsection (4) does not limit the generality of any other provision of this Part.

177CA Withholding tax avoidance

(1) This section applies in relation to a particular amount if a taxpayer is not liable to pay withholding tax on an amount where that taxpayer would have, or could reasonably be expected to have, been liable to pay withholding tax on the amount if a scheme had not been entered into or carried out.

(2) For the purposes of this Part, if this section applies in relation to an amount, the taxpayer is taken to have obtained a tax benefit in connection with the scheme of an amount equal to the amount mentioned in subsection (1).

177D Schemes to which Part applies

This Part applies to any scheme that has been or is entered into after 27 May 1981, and to any scheme that has been or is carried out or commenced to be carried out after that date (other than a scheme that was entered into on or before that date), whether the scheme has been or is entered into or carried out in Australia or outside Australia or partly in Australia and partly outside Australia, where:

(a) a taxpayer (in this section referred to as the relevant taxpayer) has obtained, or would but for section 177F obtain, a tax benefit in connection with the scheme; and

(b) having regard to:

Part IVA Schemes to reduce income tax Section 177E


(i) the manner in which the scheme was entered into or carried out;

(ii) the form and substance of the scheme; (iii) the time at which the scheme was entered into and the

length of the period during which the scheme was carried out;

(iv) the result in relation to the operation of this Act that, but for this Part, would be achieved by the scheme;

(v) any change in the financial position of the relevant taxpayer that has resulted, will result, or may reasonably be expected to result, from the scheme;

(vi) any change in the financial position of any person who has, or has had, any connection (whether of a business, family or other nature) with the relevant taxpayer, being a change that has resulted, will result or may reasonably be expected to result, from the scheme;

(vii) any other consequence for the relevant taxpayer, or for any person referred to in subparagraph (vi), of the scheme having been entered into or carried out; and

(viii) the nature of any connection (whether of a business, family or other nature) between the relevant taxpayer and any person referred to in subparagraph (vi);

it would be concluded that the person, or one of the persons, who entered into or carried out the scheme or any part of the scheme did so for the purpose of enabling the relevant taxpayer to obtain a tax benefit in connection with the scheme or of enabling the relevant taxpayer and another taxpayer or other taxpayers each to obtain a tax benefit in connection with the scheme (whether or not that person who entered into or carried out the scheme or any part of the scheme is the relevant taxpayer or is the other taxpayer or one of the other taxpayers).

177E Stripping of company profits

(1) Where: (a) as a result of a scheme that is, in relation to a company:


Section 177E


(i) a scheme by way of or in the nature of dividend stripping; or

(ii) a scheme having substantially the effect of a scheme by way of or in the nature of a dividend stripping;

any property of the company is disposed of; (b) in the opinion of the Commissioner, the disposal of that

property represents, in whole or in part, a distribution (whether to a shareholder or another person) of profits of the company (whether of the accounting period in which the disposal occurred or of any earlier or later accounting period);

(c) if, immediately before the scheme was entered into, the company had paid a dividend out of profits of an amount equal to the amount determined by the Commissioner to be the amount of profits the distribution of which is, in his opinion, represented by the disposal of the property referred to in paragraph (a), an amount (in this subsection referred to as the notional amount) would have been included, or might reasonably be expected to have been included, by reason of the payment of that dividend, in the assessable income of a taxpayer of a year of income; and

(d) the scheme has been or is entered into after 27 May 1981, whether in Australia or outside Australia;

the following provisions have effect: (e) the scheme shall be taken to be a scheme to which this Part

applies; (f) for the purposes of section 177F, the taxpayer shall be taken

to have obtained a tax benefit in connection with the scheme that is referable to the notional amount not being included in the assessable income of the taxpayer of the year of income; and

(g) the amount of that tax benefit shall be taken to be the notional amount.

(2) Without limiting the generality of subsection (1), a reference in that subsection to the disposal of property of a company shall be read as including a reference to:

(a) the payment of a dividend by the company;

Part IVA Schemes to reduce income tax Section 177EA


(b) the making of a loan by the company (whether or not it is intended or likely that the loan will be repaid);

(c) a bailment of property by the company; and (d) any transaction having the effect, directly or indirectly, of

diminishing the value of any property of the company.

(2A) This section: (a) applies to a non-share equity interest in the same way as it

applies to a share; and (b) applies to an equity holder in the same way as it applies to a

shareholder; and (c) applies to a non-share dividend in the same way as it applies

to a dividend.

(3) In this section, property includes a chose in action and also includes any estate, interest, right or power, whether at law or in equity, in or over property.

177EA Creation of franking debit or cancellation of franking credits


relevant circumstances has a meaning affected by subsection (17).

relevant taxpayer has the meaning given by subsection (3).

scheme for a disposition, in relation to membership interests or an interest in membership interests, has a meaning affected by subsection (14).

(2) An expression used in this section that is defined in the Income Tax Assessment Act 1997 has the same meaning as in that Act, except to the extent that its meaning is extended by subsection (16), (18) or (19), or affected by subsection (15).

Application of section

(3) This section applies if:


Section 177EA


(a) there is a scheme for a disposition of membership interests, or an interest in membership interests, in a corporate tax entity; and

(b) either: (i) a frankable distribution has been paid, or is payable or

expected to be payable, to a person in respect of the membership interests; or

(ii) a frankable distribution has flowed indirectly, or flows indirectly or is expected to flow indirectly, to a person in respect of the interest in membership interests, as the case may be; and

(c) the distribution was, or is expected to be, a franked distribution or a distribution franked with an exempting credit; and

(d) except for this section, the person (the relevant taxpayer) would receive, or could reasonably be expected to receive, imputation benefits as a result of the distribution; and

(e) having regard to the relevant circumstances of the scheme, it would be concluded that the person, or one of the persons, who entered into or carried out the scheme or any part of the scheme did so for a purpose (whether or not the dominant purpose but not including an incidental purpose) of enabling the relevant taxpayer to obtain an imputation benefit.

Bare acquisition of membership interests or interest in membership interests

(4) It is not to be concluded for the purposes of paragraph (3)(e) that a person entered into or carried out a scheme for a purpose mentioned in that paragraph merely because the person acquired membership interests, or an interest in membership interests, in the entity.

Commissioner to determine franking debit or deny franking credit

(5) The Commissioner may make, in writing, either of the following determinations:

(a) if the corporate tax entity is a party to the scheme, a determination that a franking debit or exempting debit of the



entity arises in respect of each distribution made to the relevant taxpayer or that flows indirectly to the relevant taxpayer;

(b) a determination that no imputation benefit is to arise in respect of a distribution or a specified part of a distribution that is made, or that flows indirectly, to the relevant taxpayer.

A determination does not form part of an assessment.

Notice of determination

(6) If the Commissioner makes a determination under subsection (5), the Commissioner must:

(a) in respect of a determination made under paragraph (5)(a)—serve notice in writing of the determination on the corporate tax entity; or

(b) in respect of a determination made under paragraph (5)(b)—serve notice in writing of the determination on the relevant taxpayer.

The notice may be included in a notice of assessment.

Publication in national newspaper of determination in relation to listed public company denying imputation benefit

(7) If the Commissioner makes a determination under paragraph (5)(b), in respect of a distribution made by a listed public company, the Commissioner is taken to have served notice in writing of the determination on the relevant taxpayer if the Commissioner causes the notice to be published in a daily newspaper that circulates generally in each State, the Australian Capital Territory and the Northern Territory. The notice is taken to have been served on the day on which the publication takes place.

Evidence of determination

(8) The production of: (a) a notice of a determination; or (b) a document signed by the Commissioner, a Second

Commissioner or a Deputy Commissioner purporting to be a copy of a determination;


Section 177EA


is conclusive evidence: (c) of the due making of the determination; and (d) except in proceedings under Part IVC of the Taxation

Administration Act 1953 on an appeal or review relating to the determination, that the determination is correct.

Objections

(9) If a taxpayer to whom a determination relates is dissatisfied with the determination, the taxpayer may object against it in the manner set out in Part IVC of the Taxation Administration Act 1953.

Effect of determination of franking debit or exempting debit

(10) If the Commissioner makes a determination under paragraph (5)(a):

(a) on the day on which notice in writing of the determination is served on the entity, a franking debit or exempting debit of the corporate tax entity arises in respect of the distribution; and

(b) the amount of the franking debit or exempting debit is such amount as is stated in the Commissioner’s determination, being an amount that:

(i) the Commissioner considers reasonable in the circumstances; and

(ii) does not exceed the amount of the franking debit or exempting debit of the entity arising under item 1 of the table in section 205-30 of the Income Tax Assessment 1997 or item 2 of the table in section 208-120 of that Act in respect of the distribution.

Effect of determination that no imputation benefit is to arise

(11) If the Commissioner makes a determination under paragraph (5)(b), the determination has effect according to its terms.



Application of section to non-share dividends

(12) This section: (a) applies to a non-share equity interest in the same way as it

applies to a membership interest; and (b) applies to an equity holder in the same way as it applies to a

member; and (c) applies to a non-share dividend in the same way as it applies

to a distribution.

Meaning of interest in membership interests

(13) A person has an interest in membership interests if: (a) the person has any legal or equitable interest in the

membership interests; or (b) the person is a partner in a partnership and: (i) the assets of the partnership include, or will include, the

membership interests; or (ii) the partnership derives, or will derive, income indirectly

through interposed companies, trusts or partnerships, from distributions made on the membership interests; or

(c) the person is a beneficiary of a trust (including a potential beneficiary of a discretionary trust) and:

(i) the membership interests form, or will form, part of the trust estate; or

(ii) the trust derives, or will derive, income indirectly through interposed companies, trusts or partnerships, from distributions made on the membership interests.

Meaning of scheme for a disposition

(14) A scheme for a disposition of membership interests or an interest in membership interests includes, but is not limited to, a scheme that involves any of the following:

(a) issuing the membership interests or creating the interest in membership interests;

(b) entering into any contract, arrangement, transaction or dealing that changes or otherwise affects the legal or


Section 177EA


equitable ownership of the membership interests or interest in membership interests;

(c) creating, varying or revoking a trust in relation to the membership interests or interest in membership interests;

(d) creating, altering or extinguishing a right, power or liability attaching to, or otherwise relating to, the membership interests or interest in membership interests;

(e) substantially altering any of the risks of loss, or opportunities for profit or gain, involved in holding or owning the membership interests or having the interest in membership interests;

(f) the membership interests or interest in membership interests beginning to be included, or ceasing to be included, in any of the insurance funds of a life assurance company.

(15) In determining whether a distribution flows indirectly to a person, assume that the following provisions had not been enacted:

(a) section 282B, 283 or 297B of this Act (certain income derived by an eligible entity within the meaning of Part IX of that Act); or

(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).

When imputation benefit is received

(16) A taxpayer to whom a distribution flows indirectly receives an imputation benefit as a result of the distribution if:

(a) the taxpayer is entitled to a tax offset under Division 207 of the Income Tax Assessment Act 1997 as a result of the distribution; or

(b) where the taxpayer is a corporate tax entity—a franking credit would arise in the franking account of the taxpayer as a result of the distribution.

Note: Where the distribution is made directly to the taxpayer, see subsection 204-30(6) of the Income Tax Assessment Act 1997 for a definition of imputation benefit.



Meaning of relevant circumstances of scheme

(17) The relevant circumstances of a scheme include the following: (a) the extent and duration of the risks of loss, and the

opportunities for profit or gain, from holding membership interests, or having interests in membership interests, in the corporate tax entity that are respectively borne by or accrue to the parties to the scheme, and whether there has been any change in those risks and opportunities for the relevant taxpayer or any other party to the scheme (for example, a change resulting from the making of any contract, the granting of any option or the entering into of any arrangement with respect to any membership interests, or interests in membership interests, in the corporate tax entity);

(b) whether the relevant taxpayer would, in the year of income in which the distribution is made, or if the distribution flows indirectly to the relevant taxpayer, in the year in which the distribution flows indirectly to the relevant taxpayer, derive a greater benefit from franking credits than other entities who hold membership interests, or have interests in membership interests, in the corporate tax entity;

(c) whether, apart from the scheme, the corporate tax entity would have retained the franking credits or exempting credits or would have used the franking credits or exempting credits to pay a franked distribution to another entity referred to in paragraph (b);

(d) whether, apart from the scheme, a franked distribution would have flowed indirectly to another entity referred to in paragraph (b);

(e) if the scheme involves the issue of a non-share equity interest to which section 215-10 of the Income Tax Assessment Act 1997 applies—whether the corporate tax entity has issued, or is likely to issue, equity interests in the corporate tax entity:

(i) that are similar, from a commercial point of view, to the non-share equity interest; and

(ii) distributions in respect of which are frankable; (f) whether any consideration paid or given by or on behalf of,

or received by or on behalf of, the relevant taxpayer in


Section 177EA


connection with the scheme (for example, the amount of any interest on a loan) was calculated by reference to the imputation benefits to be received by the relevant taxpayer;

(g) whether a deduction is allowable or a capital loss is incurred in connection with a distribution that is made or that flows indirectly under the scheme;

(h) whether a distribution that is made or that flows indirectly under the scheme to the relevant taxpayer is equivalent to the receipt by the relevant taxpayer of interest or of an amount in the nature of, or similar to, interest;

(i) the period for which the relevant taxpayer held membership interests, or had an interest in membership interests, in the corporate tax entity;

(j) any of the matters referred to in subparagraphs 177D(b)(i) to (viii).

Meaning of greater benefit from franking credits

(18) The following subsection lists some of the cases in which a taxpayer to whom a distribution flows indirectly receives a greater benefit from franking credits than an entity referred to in paragraph (17)(b). It is not an exhaustive list.

(19) A taxpayer to whom a distribution flows indirectly receives a greater benefit from franking credits than an entity referred to in paragraph (17)(b) if any of the following circumstances exist in relation to that entity in the income year in which the distribution giving rise to the benefit is made, and not in relation to the taxpayer if:

(a) the entity is not an Australian resident; or (b) the entity would not be entitled to any tax offset under

Division 207 of the Income Tax Assessment Act 1997 because of the distribution; or

(c) the amount of income tax that would be payable by the entity because of the distribution is less than the tax offset to which the entity would be entitled; or

Part IVA Schemes to reduce income tax Section 177EB


(d) the entity is a corporate tax entity at the time the distribution is made, but no franking credit arises for the entity as a result of the distribution; or

(e) the entity is a corporate tax entity at the time the distribution is made, but cannot use franking credits received on the distribution to frank distributions to its own members because:

(i) it is not a franking entity; or (ii) it is unable to make frankable distributions.

Note: Where the distribution is made directly to the taxpayer, see subsections 204-30(7), (8), (9) and (10) of the Income Tax Assessment Act 1997 for a list of circumstances in which the taxpayer will be treated as deriving a greater benefit from franking credits than another entity.

177EB Cancellation of franking credits—consolidated groups

Expressions to have same meanings as in section 177EA and Income Tax Assessment Act 1997

(1) Unless the contrary intention appears, expressions used in this section:

(a) if those expressions are defined in section 177EA—have the same meanings as in that section (subject to subsection (10) of this section); and

(b) otherwise—have the same meanings as in the Income Tax Assessment Act 1997.

This section and section 177EA do not limit each other

(2) This section does not limit the operation of section 177EA, and section 177EA does not limit the operation of this section.

Application of section

(3) This section applies if: (a) there is a scheme for a disposition of membership interests in

an entity (the joining entity); and


Section 177EB


(b) as a result of the disposition, the joining entity becomes a subsidiary member of a consolidated group; and

(c) a credit arises in the franking account of the head company of the group because of the joining entity becoming a subsidiary member of the group; and

(d) having regard to the relevant circumstances of the scheme, it would be concluded that the person, or one of the persons, who entered into or carried out the scheme or any part of the scheme did so for a purpose (whether or not the dominant purpose but not including an incidental purpose) of enabling the credit referred to in paragraph (c) to arise in the head company’s franking account.

Bare acquisition of membership interests

(4) It is not to be concluded for the purposes of paragraph (3)(d) that a person entered into or carried out a scheme for a purpose mentioned in that paragraph merely because the person acquired membership interests in the joining entity.

Commissioner to determine no franking credit

(5) The Commissioner may make, in writing, a determination that no credit is to arise in the head company’s franking account because of the joining entity becoming a subsidiary member of the consolidated group. A determination does not form part of an assessment.

Effect of determination

(6) A determination under subsection (5) has effect according to its terms.

Notice of determination

(7) If the Commissioner makes a determination under subsection (5), the Commissioner must serve notice in writing of the determination on the head company. The notice may be included in a notice of assessment.

Part IVA Schemes to reduce income tax Section 177EB


Evidence of determination

(8) The production of: (a) a notice of a determination; or (b) a document signed by the Commissioner, a Second

Commissioner or a Deputy Commissioner purporting to be a copy of a determination;

is conclusive evidence: (c) of the due making of the determination; and (d) except in proceedings under Part IVC of the Taxation

Administration Act 1953 on an appeal or review relating to the determination, that the determination is correct.

Objections

(9) If a taxpayer to whom a determination relates is dissatisfied with the determination, the taxpayer may object against it in the manner set out in Part IVC of the Taxation Administration Act 1953.

Relevant circumstances

(10) The relevant circumstances of a scheme include the following: (a) the extent and duration of the risks of loss, and the

opportunities for profit or gain, from holding membership interests in the joining entity that are respectively borne by or accrue to the parties to the scheme, and whether there has been any change in those risks and opportunities for the head company or any other party to the scheme (for example, a change resulting from the making of any contract, the granting of any option or the entering into of any arrangement with respect to any membership interests in the joining entity);

(b) whether the head company, or a person holding membership interests in the head company, would, in the year of income in which the joining entity became a subsidiary member of the group or any later year of income, derive a greater benefit from franking credits than other persons who held membership interests in the joining entity immediately before it became a subsidiary member of the group;


Section 177F


(c) the extent (if any) to which the joining entity was able to pay a franked dividend or distribution immediately before it became a subsidiary member of the group;

(d) whether any consideration paid or given by or on behalf of, or received by or on behalf of, the head company in connection with the scheme (for example, the amount of any interest on a loan) was calculated by reference to the franking credit benefits to be received by the head company;

(e) the period for which the head company held membership interests in the joining entity;

(f) any of the matters referred to in subparagraphs 177D(b)(i) to (viii).

Section to apply to exempting credits

(11) This section applies to exempting credits arising in the exempting account of the head company of a consolidated group in the same way that it applies to credits arising in the head company’s franking account.

177F Cancellation of tax benefits etc.

(1) Where a tax benefit has been obtained, or would but for this section be obtained, by a taxpayer in connection with a scheme to which this Part applies, the Commissioner may:

(a) in the case of a tax benefit that is referable to an amount not being included in the assessable income of the taxpayer of a year of income—determine that the whole or a part of that amount shall be included in the assessable income of the taxpayer of that year of income; or

(b) in the case of a tax benefit that is referable to a deduction or a part of a deduction being allowable to the taxpayer in relation to a year of income—determine that the whole or a part of the deduction or of the part of the deduction, as the case may be, shall not be allowable to the taxpayer in relation to that year of income; or

(c) in the case of a tax benefit that is referable to a capital loss or a part of a capital loss being incurred by the taxpayer during

Part IVA Schemes to reduce income tax Section 177F


a year of income—determine that the whole or a part of the capital loss or of the part of the capital loss, as the case may be, was not incurred by the taxpayer during that year of income;

(d) in the case of a tax benefit that is referable to a foreign tax credit, or a part of a foreign tax credit, being allowable to the taxpayer—determine that the whole or a part of the foreign tax credit, or the part of the foreign tax credit, as the case may be, is not to be allowable to the taxpayer;

and, where the Commissioner makes such a determination, he shall take such action as he considers necessary to give effect to that determination.

(2) Where the Commissioner determines under paragraph (1)(a) that an amount is to be included in the assessable income of a taxpayer of a year of income, that amount shall be deemed to be included in that assessable income by virtue of such provision of this Act as the Commissioner determines.

(2A) Where a tax benefit that is covered by section 177CA has been obtained, or would but for this section be obtained, by a taxpayer in connection with a scheme to which this Part applies:

(a) the Commissioner may determine that the taxpayer is subject to withholding tax under section 128B on the whole or a part of that amount; and

(b) if the Commissioner makes such a determination, he or she must take such action as he or she considers necessary to give effect to that determination.

(2B) A determination under paragraph (1)(c) or subsection (2A) must be in writing.

(2C) Notice of the determination must be given to the taxpayer and, in the case of a determination under subsection (2A), to the person who paid the amount.

(2D) More than one determination may be included in the same notice.

(2E) A failure to comply with subsection (2C) does not affect the validity of a determination.


Section 177F


(2F) If the Commissioner makes a determination under subsection (2A), the amount that the Commissioner determines is taken to be subject to withholding tax is taken to have been subject to withholding tax at all times by virtue of such provision of section 128B as the Commissioner determines.

(2G) If the taxpayer is dissatisfied with a determination under paragraph (1)(c) or subsection (2A), the taxpayer may object against it in the manner set out in Part IVC of the Taxation Administration Act 1953.

(3) Where the Commissioner has made a determination under subsection (1) or (2A) in respect of a taxpayer in relation to a scheme to which this Part applies, the Commissioner may, in relation to any taxpayer (in this subsection referred to as the relevant taxpayer):

(a) if, in the opinion of the Commissioner: (i) there has been included, or would but for this subsection

be included, in the assessable income of the relevant taxpayer of a year of income an amount that would not have been included or would not be included, as the case may be, in the assessable income of the relevant taxpayer of that year of income if the scheme had not been entered into or carried out; and

(ii) it is fair and reasonable that that amount or a part of that amount should not be included in the assessable income of the relevant taxpayer of that year of income;

determine that that amount or that part of that amount, as the case may be, should not have been included or shall not be included, as the case may be, in the assessable income of the relevant taxpayer of that year of income; or

(b) if, in the opinion of the Commissioner: (i) an amount would have been allowed or would be

allowable to the relevant taxpayer as a deduction in relation to a year of income if the scheme had not been entered into or carried out, being an amount that was not allowed or would not, but for this subsection, be allowable, as the case may be, as a deduction to the relevant taxpayer in relation to that year of income; and

Part IVA Schemes to reduce income tax Section 177F


(ii) it is fair and reasonable that that amount or a part of that amount should be allowable as a deduction to the relevant taxpayer in relation to that year of income;

determine that that amount or that part, as the case may be, should have been allowed or shall be allowable, as the case may be, as a deduction to the relevant taxpayer in relation to that year of income; or

(c) if, in the opinion of the Commissioner: (i) a capital loss would have been incurred by the relevant

taxpayer during a year of income if the scheme had not been entered into or carried out, being a capital loss that was not incurred or would not, but for this subsection, be incurred, as the case may be, by the relevant taxpayer during that year of income; and

(ii) it is fair and reasonable that the capital loss or a part of that capital loss should be incurred by the relevant taxpayer during that year of income;

determine that the capital loss or the part, as the case may be, should be incurred by the relevant taxpayer during that year of income; or

(d) if, in the opinion of the Commissioner: (i) an amount would have been allowed, or would be

allowable, to the relevant taxpayer as a foreign tax credit if the scheme had not been entered into or carried out, being an amount that was not allowed or would not, apart from this subsection, be allowable, as the case may be, as a foreign tax credit to the relevant taxpayer; and

(ii) it is fair and reasonable that the amount, or a part of the amount, should be allowable as a foreign tax credit to the relevant taxpayer;

determine that that amount or that part, as the case may be, should have been allowed or is allowable, as the case may be, as a foreign tax credit to the relevant taxpayer;

and the Commissioner shall take such action as he considers necessary to give effect to any such determination.


Section 177G


(4) Where the Commissioner makes a determination under subsection (3) by virtue of which an amount is allowed as a deduction to a taxpayer in relation to a year of income, that amount shall be deemed to be so allowed as a deduction by virtue of such provision of this Act as the Commissioner determines.

(5) Where, at any time, a taxpayer considers that the Commissioner ought to make a determination under subsection (3) in relation to the taxpayer in relation to a year of income, the taxpayer may post to or lodge with the Commissioner a request in writing for the making by the Commissioner of a determination under that subsection.

(6) The Commissioner shall consider the request and serve on the taxpayer, by post or otherwise, a written notice of his decision on the request.

(7) If the taxpayer is dissatisfied with the Commissioner’s decision on the request, the taxpayer may object against it in the manner set out in Part IVC of the Taxation Administration Act 1953.

177G Amendment of assessments

(1) Nothing in section 170 prevents the amendment of an assessment at any time before the expiration of 6 years after the date on which tax became due and payable under the assessment if the amendment is for the purposes of giving effect to subsection 177F (1).

(2) Nothing in section 170 prevents the amendment of an assessment at any time if the amendment is for the purpose of giving effect to subsection 177F(3).

177H Amendment of foreign tax credit determinations

(1) Section 160AK does not prevent the amendment of a foreign tax credit determination at any time before the end of 6 years after the original determination date if the amendment is for the purposes of giving effect to subsection 177F(1).

Part IVA Schemes to reduce income tax Section 177H


(2) Section 160AK does not prevent the amendment of a foreign tax credit determination at any time if the amendment is for the purpose of giving effect to subsection 177F(3).

(3) For the purposes of this section, a foreign tax credit determination is a determination under Division 19 of Part III.

(4) For the purposes of this section, the original determination date for a foreign tax credit determination has the same meaning as in section 160AK.

Tax file numbers Part VA Preliminary Division 1

Section 202


Part VA—Tax file numbers

Division 1—Preliminary

202 Objects of this Part

The objects of this Part are, by means of the establishment of a system of tax file numbers:

(a) to increase the effectiveness and efficiency of the matching of information contained in reports given to the Commissioner under this Act or the regulations with information disclosed in income tax returns by taxpayers; and

(b) to prevent evasion of liability to taxation under the laws of the Commonwealth relating to income tax; and

(c) to facilitate the administration of any legislation enacted by the Parliament under which benefits are provided by the Commonwealth to students in relation to contributions or charges payable by students in respect of the costs of courses of study provided by institutions of higher education; and

(d) to facilitate the administration of any legislation enacted by the Parliament to impose charge equal to any shortfall in the amount spent by employers on training employees; and

(e) to facilitate the administration of a provision of an Act, being a provision which authorises the collection of a tax file number as a condition to the giving of personal assistance within the meaning of the Data-matching Program (Assistance and Tax) Act 1990; and

(f) to facilitate the administration of the Data-matching Program (Assistance and Tax) Act 1990; and

(g) to facilitate the administration of any legislation enacted by the Parliament in relation to the imposition of charge on an employer’s superannuation guarantee shortfall; and

(ga) to facilitate the administration of the Child Support (Assessment) Act 1989 and the Child Support (Registration and Collection) Act 1988; and

Part VA Tax file numbers Division 1 Preliminary Section 202


(h) to facilitate the administration of Division 6 of Part 4A of the Student Assistance Act 1973; and

(ha) to facilitate the administration of: (i) Part 2B.3 of the Social Security Act 1991; or (ii) a provision of an instrument under Chapter 2B of the

Social Security Act 1991 (as in force before the commencement of Schedule 2 to the Youth Allowance Consolidation Act 2000) establishing a Student Financial Supplement Scheme, being a provision relating to the recovery through the taxation system of a student’s outstanding indebtedness in respect of financial supplement paid to the student in accordance with the Scheme; and

(hb) to facilitate the administration of Part 3.18 of the Social Security Act 1991; and

(hc) to facilitate the administration of Division 11A of Part IIIB of the Veterans’ Entitlements Act 1986; and

(i) to facilitate: (i) the administration of Part 25A of the Superannuation

Industry (Supervision) Act 1993 in relation to individuals; and

(ii) the administration of that Act in relation to superannuation entities (within the meaning of that Act) or regulated exempt public sector superannuation schemes (within the meaning of Part 25A of that Act); and

(ia) to facilitate the administration of the Superannuation (Unclaimed Money and Lost Members) Act 1999 (including the administration of registers by State or Territory authorities (within the meaning of that Act) in accordance with section 18 of that Act); and

(j) to facilitate the administration of the Small Superannuation Accounts Act 1995; and

(ka) to facilitate: (i) the administration of Part 11 of the Retirement Savings

Accounts Act 1997 in relation to individuals; and


Section 202A


(ii) the administration of that Act in relation to RSA providers; and

(l) to facilitate the administration of the Superannuation Contributions Tax (Assessment and Collection) Act 1997, the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997 and the Termination Payments Tax (Assessment and Collection) Act 1997; and

(m) to facilitate the administration of the A New Tax System (Family Assistance) (Administration) Act 1999 and section 5 of the A New Tax System (Family Assistance) (Consequential and Related Measures) Act (No. 1) 1999; and

(n) to facilitate the administration of the A New Tax System (Bonuses for Older Australians) Act 1999; and

(o) to facilitate the administration of section 204A of the Social Security (Administration) Act 1999.

202A Interpretation

In this Part, unless the contrary intention appears:

alienated personal services payment has the meaning given by section 13-10 in Schedule 1 to the Taxation Administration Act 1953.

applicant, in relation to an application for the issue of a tax file number, means the person specified in the application as the person by whom or on whose behalf the issue of a tax file number is sought.

approved form has the same meaning as in the Income Tax Assessment Act 1997.

bank means: (a) the Reserve Bank of Australia; (b) a body corporate that is an ADI (authorised deposit-taking

institution) for the purposes of the Banking Act 1959; or (c) a person who carries on State banking within the meaning of

paragraph 51(xiii) of the Constitution.

Part VA Tax file numbers Division 1 Preliminary Section 202A


child means a person who is less than 16 years of age.

co-operative housing society means a society registered or incorporated as a co-operative housing society or similar society under a law of a State or Territory.

data processing device means any article or material from which information is capable of being reproduced with or without the aid of any other article or device.

eligible PAYG payment means: (a) a payment from which an amount must be withheld under

Subdivision 12-B (other than section 12-55), Subdivision 12-C or Subdivision 12-D in Schedule 1 to the Taxation Administration Act 1953; or

(aa) an alienated personal services payment in respect of which Division 13 in Schedule 1 to the Taxation Administration Act 1953 requires an amount to be paid to the Commissioner; or

(b) a non-cash benefit in respect of which an amount is payable to the Commissioner under section 14-5 in Schedule 1 to the Taxation Administration Act 1953 because of the application of that section in relation to Subdivision 12-B, 12-C or 12-D of that Schedule;

and has a meaning affected by section 202AA.

eligible paying authority has the meaning given by subsection 221YHA(4).

entity means a body corporate or unincorporated association, but does not include a natural person or a partnership.

financial institution means: (a) a bank; or (b) a co-operative housing society.

government body means the Commonwealth, a State, a Territory or an authority of the Commonwealth or of a State or Territory.

interest-bearing account means any facility, other than an RSA, by which a financial institution:


Section 202A


(a) does any one or more of the following: (i) accepts deposits of money to the credit of a person; (ii) allows withdrawals from the money deposited; (iii) pays cheques or payment orders drawn on the institution

by, or collects cheques or payment orders on behalf of, the person; and

(b) pays or credits interest, or amounts in the nature of interest, on the balance standing to the credit of the person from time to time.

interest-bearing deposit means a deposit of money, other than into an RSA, with a financial institution, in consideration of which the financial institution pays or credits interest, or amounts in the nature of interest, to a person.

investment body means a person who is an investment body within the meaning of section 202D.

investment to which this Part applies means an investment of a kind mentioned in section 202D.

investor means a person who is an investor within the meaning of section 202D.

passport, in relation to a person who does not hold a passport, means another official travel document held by the person.

payer means: (a) a person who makes an eligible PAYG payment (other than

an alienated personal services payment), or is likely to make such a payment; or

(b) a person who receives an alienated personal services payment, or is likely to receive such a payment.

person includes a partnership, a company and a person in the capacity of trustee of a trust estate.

public company means a public company within the meaning of the Corporations Act 2001.

recipient means:

Part VA Tax file numbers Division 1 Preliminary Section 202A


(a) a person who receives an eligible PAYG payment (other than an alienated personal services payment), or is likely to receive such a payment; or

(b) a person in relation to whose personal services income (within the meaning of the Income Tax Assessment Act 1997) a payer receives an alienated personal services payment, or is likely to receive such a payment.

salary or wages means salary or wages as defined in section 221A.

securities dealer means a person who is a dealer for the purposes of the Securities Industry Act 1980 or for the purposes of a law of a State or Territory that corresponds to that Act.

solicitor means a solicitor, barrister and solicitor or legal practitioner of the High Court or of the Supreme Court of a State or Territory.

tax file number, in relation to a person, means a number issued to the person by the Commissioner, being a number that is either:

(a) a number issued to the person under Division 2; or (b) a number notified, before the commencement of this section,

to the person as the person’s income tax file number.

TFN declaration means a declaration made for the purposes of section 202C.

unit trust means a trust to which a unit trust scheme relates, and includes:

(a) a cash management trust; (b) a property trust; (c) an arrangement declared by the Minister, by notice published

in the Gazette, to be a unit trust for the purposes of this definition;

but does not include any arrangement declared by the Minister, by notice published in the Gazette, not to be a unit trust for the purposes of this definition.

unit trust scheme means an arrangement made for the purpose, or having the effect, of providing, for a person who has funds


Section 202AA


available for investment, facilities for participation by the person, as a beneficiary under a trust, in any profit or income arising from the acquisition, holding, management or disposal of property under the trust.

202AA Definition of eligible PAYG payment

In applying the definition of eligible PAYG payment in section 202A:

(a) a requirement to withhold a nil amount is treated as a requirement to withhold an amount; and

(b) a requirement to pay a nil amount to the Commissioner is treated as a requirement to pay an amount to the Commissioner; and

(c) the following provisions in Schedule 1 to the Taxation Administration Act 1953 are to be disregarded, namely: section 12-1, subsection 12-45(2), subsection 12-110(2) and subsection 12-115(2).

Part VA Tax file numbers Division 2 Issuing of tax file numbers Section 202B


Division 2—Issuing of tax file numbers

202B Application for tax file number

(1) A person may apply to the Commissioner for the issue of a tax file number.

(2) An application shall be in a form approved by the Commissioner and shall be accompanied by documentary evidence of the applicant’s identity.

(3) An application may be handed in at, or posted to, the office of a Deputy Commissioner.

(4) An application may be handed in at an office or facility designated by the Commissioner as a receiving centre for applications of that kind.

202BA Issuing of tax file numbers

(1) Subject to subsection (3), if, on an application for a tax file number, the Commissioner is satisfied that the applicant’s identity has been established, the Commissioner shall issue a tax file number to the applicant.

(2) If, on such an application, the Commissioner is not satisfied as to the applicant’s true identity, the Commissioner may refuse the application.

(3) If, on such an application, the Commissioner is satisfied that: (a) the applicant already has a tax file number; or (b) a notice under section 202BD in relation to the applicant is in

force; the Commissioner shall refuse the application.

(4) The Commissioner may, without an application being made, issue a tax file number to a person whenever it is necessary to do so in connection with the performance of a function of the

Tax file numbers Part VA Issuing of tax file numbers Division 2

Section 202BB


Commissioner under a law of the Commonwealth relating to taxation.

(5) The Commissioner shall issue a tax file number to a person by giving the person a written notice of the number.

(6) The Commissioner shall refuse an application for a tax file number by giving the applicant a written notice of the refusal and of the reasons for the refusal.

202BB Current tax file number

On the issue of a tax file number to a person, any tax file number previously issued to the person and not already cancelled or withdrawn ceases to have effect.

202BC Deemed refusal by Commissioner

(1) If the Commissioner has not decided an application for a tax file number within 28 days after the application is made, the applicant may, at any time, give to the Commissioner written notice that the applicant wishes to treat the application as having been refused.

(2) If in the application the applicant has stated the name and address of one or more payers of the applicant, subsection (1) does not apply at a particular time if at that time a notice has been issued to each such payer under section 202BD in relation to the applicant and each such notice is in force.

(3) For the purposes of Division 6, where an applicant gives notice under subsection (1), the Commissioner shall be taken to have refused the application for a tax file number on the day on which the notice was given.

202BD Interim notices

(1) Where an application for a tax file number states the name and address of a payer of, or eligible paying authority in relation to, the applicant, the Commissioner may give to the payer or eligible

Part VA Tax file numbers Division 2 Issuing of tax file numbers Section 202BE


paying authority a notice under this section in relation to the applicant.

(2) The notice remains in force for the period of 28 days commencing on the day specified in the notice.

(3) The notice shall specify: (a) the applicant’s name as shown in the application; and (b) the last day of the period for which the notice remains in

force.

(4) On giving the notice, the Commissioner shall inform the applicant that the notice has been given.

(5) The notice may be given to take effect on the expiration of a notice previously given to the payer or eligible paying authority under this section in relation to the applicant.

(6) Where, while an application for a tax file number is pending, the applicant notifies the Commissioner, in writing, of the name and address of a payer of the applicant (being a payer whose name and address is not stated on the application), the payer’s name and address shall, at the end of the period of 7 days after the notification, be taken to have been stated on the application.

(7) If: (a) an application for a tax file number is pending; and (b) the applicant notifies the Commissioner, in writing, of the

name and address of an eligible paying authority in relation to the applicant (being an eligible paying authority whose name and address are not already stated in the application);

the eligible paying authority’s name and address are taken, at the end of 7 days after the notification, to have been stated in the application.

202BE Cancellation of tax file numbers

(1) Where the Commissioner concludes that a tax file number was issued to a person under an identity that is not the person’s true

Tax file numbers Part VA Issuing of tax file numbers Division 2

Section 202BF


identity, the Commissioner may, by written notice given to the person, cancel the tax file number.

(2) The Commissioner shall set out in the notice the reasons for the Commissioner’s conclusion.

202BF Alteration of tax file numbers

The Commissioner may, at any time, by written notice given to a person who has a tax file number:

(a) withdraw that number; and (b) issue to the person a new tax file number in place of the

withdrawn number.

Part VA Tax file numbers Division 3 Quotation of tax file numbers by recipients of eligible PAYG payments Section 202C


Division 3—Quotation of tax file numbers by recipients of eligible PAYG payments

202C TFN declarations by recipients of eligible PAYG payments

(1) A person who is a recipient of a payer, or expects to become a recipient of a payer, may make a TFN declaration in relation to the payer.

(2) To be effective, the declaration must be made in the approved form.

202CA Operation of TFN declaration

(1) Subject to this Division, a TFN declaration commences to have effect when it is made.

Note: Under section 202CB, a TFN declaration is not effective unless the tax file number of the recipient is stated in the declaration.

(1A) A TFN declaration ceases to have effect when the recipient makes another TFN declaration in relation to the payer.

(1B) A TFN declaration ceases to have effect 12 months after it is made if no eligible PAYG payment is made by the payer to the recipient during that 12 month period.

(1C) If: (a) the payer makes an eligible PAYG payment to the recipient

after the TFN declaration is made; and (b) a period of 12 months then elapses without any further

eligible PAYG payment being made by the payer to the recipient;

then the TFN declaration ceases to have effect at the end of that period of 12 months.

(2) A TFN declaration to which a determination under subsection (3) applies ceases to have effect at the end of the day fixed by the determination.

Tax file numbers Part VA Quotation of tax file numbers by recipients of eligible PAYG payments Division 3

Section 202CB


(3) The Commissioner may determine that: (a) all TFN declarations; or (b) a specified class of TFN declarations;

shall cease to have effect at the end of the day specified in the determination.

(4) A determination shall be made by notice published in the Gazette.

202CB Quotation of tax file number in TFN declaration

(1) Subject to subsections (2) and (4) and subsection 202CE(2), a TFN declaration is not effective for the purposes of this Part unless the tax file number of the recipient is stated in the declaration.

(2) For the purposes of this Part, a recipient is taken to have stated his or her tax file number in a TFN declaration if the declaration includes a statement:

(a) that an application by the recipient for a tax file number is pending; or

(b) that the recipient has a tax file number but does not know what it is and has asked the Commissioner to inform him or her of the number.

(3) Where: (a) a TFN declaration includes such a statement; and (b) the recipient who made the declaration fails to inform the

payer of the recipient’s tax file number within 28 days after making the declaration;

subsection (2) does not apply to the declaration in respect of any time after the end of the period of 28 days.

(4) For the purposes of this Part, a recipient is taken to have stated his or her tax file number in a TFN declaration in relation to a payer while a notice under section 202BD given to the payer in relation to the recipient is in force.

(5) If: (a) the tax file number of a recipient is withdrawn under

section 202BF; and

Part VA Tax file numbers Division 3 Quotation of tax file numbers by recipients of eligible PAYG payments Section 202CC


(b) at the time of the withdrawal, the number is stated in a TFN declaration;

the declaration is taken to state the tax file number of the recipient in spite of the withdrawal of the number.

(6) Subsections (2) to (4) do not apply to a TFN declaration given to the Secretary to the Department of Social Security or to the Chief Executive Officer of the Commonwealth Services Delivery Agency, established by the Commonwealth Services Delivery Agency Act 1997:

(a) by a person who is an applicant for an austudy payment, a CDEP Scheme Participant Supplement, a newstart allowance, a sickness allowance or a youth allowance under the Social Security Act 1991; or

(aaa) by a person who is not a member of a couple and is an applicant for a parenting payment under the Social Security Act 1991; or

(b) by a person who is a recipient for the purposes of this Part because the person receives, or expects to receive, a payment referred to in paragraph (a).

Persons receiving benefits under Veterans’ Entitlements Act

(7) Subsections (2) to (4) do not apply to a TFN declaration given to the Secretary to the Department of Veterans’ Affairs:

(a) by a person who is an applicant for a pension or allowance under the Veterans’ Entitlements Act 1986; or

(b) by a person who is a recipient for the purposes of this Part because the person receives, or expects to receive, such a pension or allowance.

202CC Making a replacement TFN declaration in place of an ineffective declaration

Nothing in this Division prevents a recipient making a new TFN declaration in place of a TFN declaration that is ineffective under subsection 202CB(1).


Section 202CD


202CD Sending of TFN declaration to Commissioner

(1) Where a recipient gives a payer a TFN declaration, the payer shall: (a) countersign the original of the declaration; (b) within 14 days after the declaration is made, send the original

to the office of a Deputy Commissioner; and (c) retain the copy of the declaration in accordance with

subsection (6).

Penalty: $1,000.

(4) If: (a) a TFN declaration, when given to a payer, does not quote the

recipient’s tax file number; and (b) before the payer sends the declaration to the Deputy

Commissioner, the recipient informs the payer of the recipient’s tax file number;

the payer shall write the number on the declaration and on the copy.

Penalty: $1,000.

(5) Where a tax file number has been written on a declaration under subsection (4), the declaration shall be regarded as stating that number as the tax file number of the recipient who made the declaration.

(5A) A payer who fails to comply with subsection (1) or (4) is liable to pay to the Commissioner a penalty of 10 penalty units.

Note 1: See section 4AA of the Crimes Act 1914 for the current value of a penalty unit.

Note 2: Division 298 in Schedule 1 to the Taxation Administration Act 1953 contains machinery provisions relating to civil penalties.

(6) The payer shall retain the copy of a TFN declaration until the second 1 July after the day on which the declaration ceases to have effect.

Part VA Tax file numbers Division 3 Quotation of tax file numbers by recipients of eligible PAYG payments Section 202CE


202CE Effect of incorrect quotation of tax file number

(1) If the Commissioner is satisfied: (a) that the tax file number stated in a TFN declaration: (i) has been cancelled or withdrawn since the declaration

was given; or (ii) is otherwise wrong; and (b) that the recipient has a tax file number;

the Commissioner may give to the payer concerned written notice of the incorrect statement and the recipient’s tax file number.

(2) If a notice is given under subsection (1), the TFN declaration shall be regarded, for the purposes of this Part, as having always stated the recipient’s tax file number.

(3) If: (a) the Commissioner is satisfied that the tax file number stated

in a TFN declaration: (i) has been cancelled since the declaration was given; or (ii) is for any other reason not the recipient’s tax file

number; and (b) the Commissioner is not satisfied that the recipient has a tax

file number; the Commissioner may, by written notice given to the payer, inform the payer accordingly.

(4) A notice under subsection (3) takes effect on the day specified in the notice, being a day not earlier than the day on which a copy of the notice is given to the recipient under subsection (5).

(5) The Commissioner shall give a copy of any notice under subsection (3) to the recipient concerned, together with a written statement of the reasons for the decision to give the notice.

(6) On and from the day on which a notice under subsection (3) takes effect, the TFN declaration concerned shall be taken not to state the tax file number of the recipient concerned.


Section 202CF


(7) Subsection (6) does not apply to a TFN declaration given to the Secretary to the Department of Social Security or to the Chief Executive Officer of the Commonwealth Services Delivery Agency, established by the Commonwealth Services Delivery Agency Act 1997:

(a) by a person who is an applicant for an austudy payment, a CDEP Scheme Participant Supplement, a newstart allowance, a sickness allowance or a youth allowance under the Social Security Act 1991; or

(aaa) by a person who is not a member of a couple and is an applicant for a parenting payment under the Social Security Act 1991; or

(b) by a person who is a recipient for the purposes of this Part because the person receives, or expects to receive, a payment referred to in paragraph (a).

Persons receiving benefits under Veterans’ Entitlements Act

(8) Subsection (6) does not apply to a TFN declaration given to the Secretary to the Department of Veterans’ Affairs:

(a) by a person who is an applicant for a pension or allowance under the Veterans’ Entitlements Act 1986; or

(b) by a person who is a recipient for the purposes of this Part because the person receives, or expects to receive, such a pension or allowance.

202CF Payer must notify Commissioner if no TFN declaration by recipient

(1) If, after the commencement of this section, a person (the payer) commences a relationship with another person under which, or as a result of which, the payer will make (or will be likely to make) eligible PAYG payments to a person (the recipient), whether or not the recipient is a party to the relationship, the payer must give notice to the Commissioner in the approved form, within 14 days after the commencement of the relationship, unless a TFN declaration made by the recipient to the payer is in effect at the end of that 14 day period.

Part VA Tax file numbers Division 3 Quotation of tax file numbers by recipients of eligible PAYG payments Section 202CF


(2) If, at the commencement of this section, a person (the payer) has a relationship with another person under which, or as a result of which, the payer will make (or will be likely to make) eligible PAYG payments to a person (the recipient), whether or not the recipient is a party to the relationship, the payer must give notice to the Commissioner in the approved form, not later than 31 October 2000, unless a TFN declaration made by the recipient to the payer is in effect on 31 October 2000.

(3) A payer who fails to comply with subsection (1) or (2) is liable to pay to the Commissioner a penalty of 10 penalty units.

Note 1: See section 4AA of the Crimes Act 1914 for the current value of a penalty unit.

Note 2: Division 298 in Schedule 1 to the Taxation Administration Act 1953 contains machinery provisions relating to civil penalties.

Tax file numbers Part VA Quotation of tax file numbers in connection with certain investments Division 4

Section 202D


Division 4—Quotation of tax file numbers in connection with certain investments

202D Explanation of terms: investment, investor, investment body

(1A) This section: (a) applies to a non-share equity interest in the same way as it

applies to a share; and (b) applies to an equity holder in the same way as it applies to a

shareholder.

(1) Investments of the kinds mentioned in column 1 of the following table are investments to which this Part applies, whether or not the investments come into existence before the commencement of this section.

Table

Item No.

Column 1 Investment

Column 2 Investor

Column 3 Investment body

1 Interest-bearing account with a financial institution

The person in whose name the account is held

The financial institution

2 Interest-bearing deposit (other than a deposit to the credit of an account) with a financial institution

The person in whose name the deposit is made

The financial institution

3 Loan of money to a government body or to a body corporate (other than a deposit to the credit of an account referred to in item 1, a deposit to which item 2 applies or a loan made in the ordinary course

The person in whose name the money is lent

The government body or body corporate

Part VA Tax file numbers Division 4 Quotation of tax file numbers in connection with certain investments Section 202D


Item No.

Column 1 Investment

Column 2 Investor

Column 3 Investment body

of the business of providing business or consumer finance by a person who carries on that business)

4 Deposit of money with a solicitor for the purpose of:

The person for whose benefit the money is to be invested or lent

The solicitor

(a) being invested by the solicitor; or

(b) being lent under an agreement to be arranged by or on behalf of the solicitor

5 Units in a unit trust The person in whose name the units are held

The manager of the unit trust

6 Shares in a public company

The shareholder The company

7 An investment-related betting chance

The betting investor

The betting investment body

(2) In relation to an investment of a kind mentioned in column 1 of an item in the table in subsection (1):

(a) the investor is the person specified in column 2 of the item; and

(b) the investment body is the person specified in column 3 of the item.

(3) Where:


Section 202D


(a) by virtue of subsection (2), a body corporate other than an entrepot nominee company is the investor in relation to an investment; and

(b) another person is entitled to receive from the body corporate all or part of the income from the investment;

the person’s right to receive the income or part of the income is an investment to which this Part applies.

(3A) In the case of an investment that is a relevant Part VA investment for the purposes of section 221YHZLA, subsection (3) does not apply to a person’s right to receive income if:

(a) the body corporate concerned has received a payment of the kind referred to in paragraph 221YHZLA(2)(a); and

(b) the circumstances referred to in subparagraph 221YHZLA(2)(c)(i) or (ii) in relation to an applicant exist in relation to the body corporate.

(4) In relation to an investment referred to in subsection (3): (a) the person entitled to receive income is the investor; and (b) the body corporate is the investment body.

(5) Subsection (4) does not affect a person’s status or obligations as an investor by virtue of subsection (2).

(6) In determining whether a person in the capacity of trustee of a trust estate is an investor in relation to an investment, it is irrelevant that the name of the trust estate, the name of any actual or potential beneficiary or any other indication of trust is shown on any documentation in connection with the investment.

(7) Subsection (6) is enacted for the guidance and information of investors and investment bodies and does not, by implication, affect the meaning of other provisions of this Act dealing with trustees and trust estates.

(8) If subparagraph 26AJ(1)(a)(ii) and paragraphs 26AJ(1)(b), (c), (d), (e), (f) and (g) apply in relation to the payment or crediting of an amount to a person, being the taxpayer referred to in subsection 26AJ(1), then:

(a) for the purposes of this section:

Part VA Tax file numbers Division 4 Quotation of tax file numbers in connection with certain investments Section 202DA


(i) the betting chance referred to in paragraph 26AJ(1)(c) is an investment-related betting chance; and

(ii) the person is the betting investor in relation to the investment-related betting chance; and

(iii) the investment body referred to in paragraph 26AJ(1)(c) is the betting investment body in relation to the investment-related betting chance; and

(b) for the purposes of this Part and Division 3B of Part VI of this Act, and for the purposes of Subdivision 12-E in Schedule 1 to the Taxation Administration Act 1953:

(i) the betting chance referred to in paragraph 26AJ(1)(c) is taken to be an investment; and

(ii) the amount paid or credited is taken to be income in respect of the investment.

(9) For the purposes of subsection (3), an entrepot nominee company is a body corporate that is:

(a) controlled solely by a securities dealer or by 2 or more persons each of whom is a securities dealer; and

(b) operated for the sole purpose of facilitating settlement of security transactions.

202DA Phasing-in period for Division

The phasing-in period for this Division is the period of 12 months commencing on 1 July 1990.

202DB Quotation of tax file numbers in connection with investments

(1) A person who, at any time after the beginning of the phasing-in period for this Division, is an investor in relation to an investment to which this Part applies may quote the person’s tax file number to the investment body in connection with the investment.

(2) Where: (a) a person, at any time after the beginning of the phasing-in

period for this Division, holds an investment on behalf of another person; and


Section 202DC


(b) the first-mentioned person does not have a tax file number in his or her capacity of trustee of a trust estate in relation to the investment;

the first-mentioned person may quote his or her tax file number to the investment body in connection with the investment and, for the purposes of this Part, that person is to be taken to have quoted the investor’s tax file number in connection with the investment.

202DC Method of quoting tax file number

(1) A person quotes a tax file number to an investment body by informing the body of the number in a manner approved by the Commissioner.

(2) The investment body may be so informed by the person or by another person acting for that person.

(3) If, after the beginning of the phasing-in period for this Division, a person becomes an investor as a result of a transaction carried out through a securities dealer, the person shall be taken to have quoted the person’s tax file number to the investment body concerned if the dealer is informed of the number.

202DD Investor excused from quoting tax file number in certain circumstances

Where: (a) at a particular time a person becomes an investor in relation

to an investment to which this Part applies by virtue of acquiring shares in a public company; and

(b) at that time, the person has quoted, or is taken to have quoted, a tax file number in connection with an existing investment consisting of a shareholding in that company; and

(c) the company has not, since the quotation of the number in connection with the existing investment, informed the person that the company has lost the person’s tax file number;

the person is to be taken to have quoted a tax file number in connection with the first-mentioned investment.

Part VA Tax file numbers Division 4 Quotation of tax file numbers in connection with certain investments Section 202DDA


202DDA Quotation of investment body remitter number to be alternative to quoting tax file number

(1) The regulations may provide for a system for the issue, cancellation, alteration and quotation of investment body remitter numbers.

(2) Where: (a) either of the following subparagraphs applies: (i) both of the following conditions are satisfied: (A) a body corporate (in this section called the

interposed entity) is the investor in relation to an investment (in this section called the secondary investment) with an investment body (in this section called the secondary investment body);

(B) another person is entitled to receive from the interposed entity all or part of the income from the secondary investment;

(ii) both of the following conditions are satisfied: (A) a person is the investor in relation to an

investment covered by item 4 in the table in subsection 202D(1), being a deposit of money with a solicitor (in this section also called the interposed entity);

(B) as a result of carrying out the purpose for which that investment was made, the interposed entity is the investor in relation to another investment (in this section also called the secondary investment) with an investment body (in this section also called the secondary investment body); and

(b) the interposed entity is taken, under regulations made for the purpose of subsection (1), to have quoted its investment body remitter number to the secondary investment body in connection with the secondary investment;


Section 202DDB


then, for the purposes of this Part, the interposed entity is taken to have quoted its tax file number to the secondary investment body in connection with the secondary investment.

202DDB Quotation of tax file number in connection with indirectly held investment

(1) If, apart from this section: (a) either of the following subparagraphs applies: (i) both of the following conditions are satisfied: (A) a body corporate (in this section called the

interposed entity) is the investor in relation to an investment (in this section called the secondary investment) with an investment body (in this section called the secondary investment body);

(B) another person (in this section called the primary investor) is entitled to receive from the interposed entity all or part of the income from the secondary investment (which right to receive the income or part of the income is in this section called primary investment);

(ii) both of the following conditions are satisfied: (A) a person (in this section also called the primary

investor) is the investor in relation to an investment (in this section also called the primary investment) covered by item 4 in the table in subsection 202D(1), being a deposit of money with a solicitor (in this section also called the interposed entity);

(B) as a result of carrying out the purpose for which that investment was made, the interposed entity is the investor in relation to another investment (in this section also called the secondary investment) with an investment body (in this section also called the secondary investment body); and

(b) the conditions set out in the regulations are satisfied;

Part VA Tax file numbers Division 4 Quotation of tax file numbers in connection with certain investments Section 202DDB


the following provisions have effect for the purposes of this Part and of Division 3B of Part VI of this Act, and for the purposes of Subdivision 12-E in Schedule 1 to the Taxation Administration Act 1953:

(c) the primary investor may quote his or her tax file number under section 202DB to the secondary investment body in connection with the secondary investment as if he or she were the investor in relation to the secondary investment;

(d) if the primary investor quotes his or her tax file number as mentioned in paragraph (c)—the interposed entity is taken to have quoted his or her tax file number to the secondary investment body in connection with the secondary investment;

(e) the interposed entity is not entitled to actually quote his or her tax file number to the secondary investment body in connection with the secondary investment;

(f) the interposed entity is taken not to be an investment body in relation to the primary investment.

(2) If there are 2 or more primary investors in relation to a primary investment, all the primary investors are taken to have quoted their tax file numbers as mentioned in paragraph (1)(c) if, and only if:

(a) all of those primary investors are persons who, for the purposes of this Part, are taken, by section 202EE or 202EF, or both, to have quoted their tax file numbers under this Division in connection with the primary investment; or

(b) if: (i) paragraph (a) does not apply; and (ii) all of those primary investors are covered by any or all

of the following categories: (A) persons who, for the purpose of this Part, are

taken, under section 202EE or 202EF, or both, to have quoted their tax file numbers under this Division in connection with the primary investment;

(B) persons to whom section 202EB applies;


Section 202DE


(C) entities mentioned in paragraph 202EC(1)(a); and

(iii) all of the following conditions are satisfied in relation to at least one of those primary investors:

(A) the primary investor is covered by sub-subparagraph (ii)(B) or (C);

(B) the primary investor gives to the secondary investment body the information mentioned in subsection 202EB(1) or 202EC(1) as if the primary investor were the investor in relation to the secondary investment;

(C) as a result of the giving of that information, the primary investor would be taken, under section 202EB or 202EC, to have quoted his or her tax file number under this Division in connection with the secondary investment; or

(c) at least one of those primary investors: (i) has a tax file number; and (ii) has quoted that number under section 202DB to the

secondary investment body in connection with the secondary investment as if he or she were the investor in relation to the secondary investment.

202DE Securities dealer to inform the investment body of tax file number

Where: (a) after the beginning of the phasing-in period for this Division,

a person becomes an investor as a result of a transaction carried out through a securities dealer; and

(b) the person informs the dealer of the person’s tax file number; the dealer shall inform the investment body concerned of the person’s tax file number.

202DF Effect of incorrect quotation of tax file number

(1) If the Commissioner is satisfied:

Part VA Tax file numbers Division 4 Quotation of tax file numbers in connection with certain investments Section 202DG


(a) that the tax file number quoted to an investment body in relation to an investment:

(i) has been cancelled or withdrawn since it was quoted; or (ii) is otherwise wrong; and (b) that the investor has a tax file number;

the Commissioner may give to the investment body concerned notice of the incorrect statement and the investor’s tax file number.

(2) If a notice is given under subsection (1), the investor shall be regarded, for the purposes of this Part, as having always stated the investor’s tax file number in connection with the investment.

(3) If: (a) the Commissioner is satisfied that the tax file number quoted

to an investment body in relation to an investment: (i) has been cancelled since it was quoted; or (ii) is for any other reason not the investor’s tax file

number; and (b) the Commissioner is not satisfied that the investor has a tax

file number; the Commissioner may, by written notice given to the investment body concerned, inform the investment body accordingly.

(4) A notice under subsection (3) takes effect on the day specified in the notice, being a day not earlier than the day on which a copy of the notice is given to the investor under subsection (5).

(5) The Commissioner shall give a copy of any notice under subsection (3) to the investor concerned, together with a written statement of the reasons for the decision to give the notice.

(6) On and from the day on which a notice under subsection (3) takes effect, the investor concerned shall be taken not to have quoted the investor’s tax file number in connection with the investment.

202DG Investments held jointly

(1) Where 2 persons are jointly entitled to the property or rights that constitute an investment to which this Part applies, neither person


Section 202DG


shall be taken to have quoted the person’s tax file number in connection with the investment unless both persons have quoted their tax file numbers under this Division in connection with the investment.

(2) Where more than 2 persons are jointly entitled to the property or rights that constitute an investment to which this Part applies, all of the persons are to be taken to have quoted their tax file numbers in connection with the investment if and only if:

(a) where one of those persons has a tax file number and is not an exempt person in relation to the investment—that person has quoted that number, and at least one of the other persons is, for the purposes of this Part, to be taken to have quoted his or her tax file number, under this Division in connection with the investment; or

(b) where 2 or more of those persons have tax file numbers and are not exempt persons in relation to the investment—at least 2 of those persons have quoted their own tax file numbers under this Division in connection with the investment; or

(c) in any other case—at least 2 of those persons are, for the purposes of this Part, to be taken to have quoted their tax file numbers under this Division in connection with the investment.

(2A) A reference in subsection (2) to an exempt person in relation to an investment is a reference to a person who, for the purposes of this Part, is to be taken to have quoted his or her tax file number under this Division in connection with the investment although the person has not actually done so.

(3) This section does not apply in relation to persons who are jointly entitled to property or rights merely because they are partners in a partnership.

(4) This section does not apply in relation to investments covered by section 202DDB.

Part VA Tax file numbers Division 4 Quotation of tax file numbers in connection with certain investments Section 202DH


202DH Tax file number quoted for superannuation or surcharge purposes taken to be quoted for purposes of the taxation of eligible termination payments

(1) If a person (the first person) who is a beneficiary of an eligible superannuation entity or of a regulated exempt public sector superannuation scheme has quoted his or her tax file number to the trustee of the entity or scheme in connection with the operation or possible future operation of the Superannuation Industry (Supervision) Act 1993, the Superannuation Contributions Tax (Assessment and Collection) Act 1997, the Superannuation (Unclaimed Money and Lost Members) Act 1999, the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997 or the Termination Payments Tax (Assessment and Collection) Act 1997, the first person is taken, so long as he or she continues to be such a beneficiary, to have made a TFN declaration in relation to the trustee that has effect under Division 3..

(2) In this section, eligible superannuation entity and regulated exempt public sector superannuation scheme have the same meanings as in Part 25A of the Superannuation Industry (Supervision) Act 1993.

202DI Tax file number quoted for RSA purposes taken to be quoted for purposes of the taxation of eligible termination payments

If a person (the first person) who is the holder of an RSA has quoted his or her tax file number to the provider of the RSA in connection with the operation or possible future operation of the Retirement Savings Accounts Act 1997, the first person is taken, so long as he or she continues to be the holder of the RSA, to have made a TFN declaration in relation to the provider of the RSA that has effect under Division 3..


Section 202DJ


202DJ Tax file number quoted for purposes of taxation of eligible termination payments taken to be quoted for surcharge purposes

(1) If a person who is: (a) a beneficiary of an eligible superannuation entity or of a

regulated exempt public sector superannuation scheme; or (b) a member of a constitutionally protected superannuation

fund; or (c) the holder of an RSA;

has made a TFN declaration in relation to the trustee of the entity, scheme or fund, or the RSA provider, that states his or her tax file number, and has effect under Division 3 (except a declaration that includes a statement mentioned in subsection 202CB(2)), the person is taken, so long as he or she continues to be such a beneficiary, member or holder, to have quoted that tax file number to the trustee of the entity, scheme or fund or to the RSA provider, as the case may be, in connection with the operation or possible future operation of the Superannuation Contributions Tax (Assessment and Collection) Act 1997, the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997 and the Termination Payments Tax (Assessment and Collection) Act 1997.


constitutionally protected superannuation fund has the same meaning as constitutionally protected fund has in Part IX.

eligible superannuation entity and regulated exempt public sector superannuation scheme have the same meanings as in Part 25A of the Superannuation Industry (Supervision) Act 1993.

holder, RSA and RSA provider have the same meanings as in the Retirement Savings Account Act 1997.

Part VA Tax file numbers Division 4A Quotation of tax file numbers in connection with farm management deposits Section 202DK


Division 4A—Quotation of tax file numbers in connection with farm management deposits

202DK Interpretation

Expressions used in this Division that are also used in Schedule 2G have the same meanings as in that Schedule.

202DL Quotation of tax file number

A depositor of a farm management deposit quotes the owner’s tax file number to the financial institution in connection with the deposit by:

(a) stating the number in the form mentioned in subsection 393-30(3) of Schedule 2G in relation to the deposit; or

(b) informing the financial institution of the number in any other manner approved by the Commissioner in connection with the deposit.

202DM Effect of incorrect quotation of tax file number

Commissioner may notify financial institution of correct tax file number

(1) If the Commissioner is satisfied: (a) that the tax file number quoted to a financial institution in

connection with a farm management deposit: (i) has been cancelled or withdrawn since it was quoted; or (ii) is otherwise wrong; and (b) that the owner has a tax file number;

the Commissioner may give the financial institution notice in writing of the owner’s correct tax file number.

Tax file numbers Part VA Quotation of tax file numbers in connection with farm management deposits Division

4A

Section 202DM


Owner taken to have notified financial institution

(2) If a notice is given under subsection (1), then, for the purposes of section 221ZXB, the owner’s correct tax file number is taken as having always been quoted in connection with the deposit.

Commissioner may notify financial institution if owner does not have a tax file number etc.

(3) If: (a) the Commissioner is satisfied that the tax file number quoted

to a financial institution in connection with a farm management deposit:

(i) has been cancelled since it was quoted; or (ii) is for any other reason not the owner’s tax file number;

and (b) the Commissioner is not satisfied that the owner has a tax file

number; the Commissioner may give the financial institution notice in writing accordingly.

Commissioner to give owner copy of notice

(4) If a notice is given under subsection (3), the Commissioner must give the depositor a copy of the notice, together with a written statement of the reasons for the decision to give the notice.

Notice takes effect when given to owner

(5) The notice takes effect on the day specified in the notice, being a day not earlier than the day on which the copy of the notice is given to the depositor.

Tax file number deemed not quoted

(6) On and from the day on which the notice takes effect, the depositor is taken not to have quoted the owner’s tax file number in connection with the deposit.

Part VA Tax file numbers Division 5 Exemptions Section 202EA


Division 5—Exemptions

202EA Persons receiving certain pensions etc.—employment

(1) Nothing in this Part shall be taken to provide for a person who is a recipient because the person receives, or expects to receive, a pension or benefit referred to in subsection (5) to make a TFN declaration, or to quote his or her tax file number, in connection with the payment of that pension, benefit or allowance.

(2) For the purposes of this Part, a person who is being paid a pension or benefit referred to in subsection (5) shall be taken to have quoted his or her tax file number in a TFN declaration given to a payer of the person if a statement is made in the declaration to the effect that the person is being paid such a pension or benefit.

(3) A person who, as a person who is being paid a pension or benefit referred to in subsection (5), is taken, because of this section, to have quoted his or her tax file number in a TFN declaration shall continue to be taken to have, because of this section, quoted the number in the declaration until the Commissioner gives a written notice to the person to the effect that the person is no longer entitled to exemption under this section.

(4) The Commissioner may not give a notice under subsection (3) until the person has ceased to be paid any pension or benefit referred to in subsection (5).

(5) This section applies in relation to the following: (a) an age pension under Part 2.2 of the Social Security Act

1991; (b) a disability support pension under Part 2.3 of that Act; (c) a wife pension under Part 2.4 of that Act; (d) a carer payment under Part 2.5 of that Act; (f) a widow B pension under Part 2.8 of that Act; (fa) a parenting payment that is a pension PP (single) under

Part 2.10 of that Act;

Tax file numbers Part VA Exemptions Division 5

Section 202EB


(g) a special benefit under Part 2.15 of that Act; (h) a special needs pension under Part 2.16 of that Act; (i) a pension under Part III of the Veterans’ Entitlements Act

1986.

202EB Persons receiving certain pensions etc.—investments

(1) For the purposes of this Part, a person to whom this section applies shall be taken to have quoted his or her tax file number under Division 4 in connection with the investment if the investment body concerned is given the following information by the person in a manner approved by the Commissioner:

(a) the person’s full name; (b) the nature of the pension, benefit or allowance by virtue of

the payment of which the person is a person to whom this section applies.

(3) A person who, as a person to whom this section applies, is taken, because of this section, to have quoted his or her tax file number in connection with an investment shall continue to be taken to have, because of this section, quoted the number in connection with the investment until the Commissioner gives a written notice to the person to the effect that the person is no longer entitled to exemption under this section.

(4) The Commissioner may not give a notice under subsection (3) until the person has ceased to be a person to whom this section applies.

(5) A person to whom this section applies is a person who is being paid:

(a) one of the following: (i) an age pension under Part 2.2 of the Social Security Act

1991; (ii) a disability support pension under Part 2.3 of that Act; (iii) a wife pension under Part 2.4 of that Act; (iv) a carer payment under Part 2.5 of that Act; (vi) a widow B pension under Part 2.8 of that Act;

Part VA Tax file numbers Division 5 Exemptions Section 202EC


(via) a parenting payment that is a pension PP (single) under Part 2.10 of that Act;

(vii) a special benefit under Part 2.15 of that Act; (viii) a special needs pension under Part 2.16 of that Act; or (c) a pension under Part III of the Veterans’ Entitlements Act

1986.

202EC Entities not required to lodge income tax returns

(1) For the purposes of this Part, where: (a) an entity that is not required to furnish to the Commissioner a

return under section 161 in respect of a year of income is, at any time during that year, an investor in relation to an investment to which this Part applies; and

(b) the entity does not have a tax file number; the entity shall be taken to have quoted its tax file number in connection with the investment if the investment body concerned is given the following information by the eligible representative in a manner approved by the Commissioner:

(c) the name and address of the entity; (d) the reason why the entity is not obliged to furnish to the

Commissioner a return under section 161 in respect of the year of income.

(3) An entity that, as an entity that is not required to furnish to the Commissioner a return under section 161 in respect of a year of income, is to be taken, because of this section, to have quoted its tax file number in connection with an investment shall continue to be taken to have, because of this section, quoted the number in connection with the investment until 2 months after the end of the first year of income, following the time at which the entity is to be taken to have quoted the number, in respect of which the entity is required so to furnish a return.

(4) Where an entity in respect of which information has been given to an investment body under subsection (1) in connection with an investment becomes obliged under section 161 to furnish a return


Section 202EC


in respect of a year of income, the person who is the public officer of the entity for the purposes of this Act is guilty of an offence if:

(a) the entity is, at the end of the year of income, still an investor in relation to the investment; and

(b) the investment body is not, within 2 months after the end of the year of income, informed of the entity’s tax file number or informed that the entity is obliged to furnish the return.

Penalty: $1,000.

(5) For the purposes of this section, a person is an eligible representative of an entity if the person is:

(a) where the entity is a body corporate—a person who is any one or more of the following:

(i) the public officer of the body corporate for the purposes of this Act;

(ii) an officer of the body corporate within the meaning of section 8Y of the Taxation Administration Act 1953;

(iii) a receiver of property of the body corporate, whether appointed by a court or otherwise and whether or not also a manager;

(iv) a liquidator of the body corporate appointed by a court; (v) in the case of a foreign company within the meaning of

the Corporations Act 2001—a local agent of the company within the meaning of that Act;

(vi) an employee of the body corporate in relation to whom there is in force a written authorisation to act as an eligible representative of the body corporate, being an authorisation by a person who, when the authorisation was given, was an eligible representative of the body corporate by virtue of one or more of the preceding subparagraphs; or

(b) where the entity is an unincorporated association—a person who is any one or more of the following:

(i) the public officer of the unincorporated association for the purposes of this Act;

(ii) a director, secretary, office-holder, liquidator, receiver or trustee of the association;

Part VA Tax file numbers Division 5 Exemptions Section 202EE


(iii) an employee or member of the unincorporated association in relation to whom there is in force a written authorisation to act as an eligible representative of the unincorporated association, being an authorisation by a person who, when the authorisation was given, was an eligible representative of the unincorporated association by virtue of either or both of the preceding subparagraphs.

202EE Non-residents

(1) For the purposes of this Part, where: (a) a non-resident is an investor in relation to an investment to

which this Part applies; and (b) at a particular time, the investment body pays an amount to

the non-resident by way of income derived from the investment;

the non-resident is taken to have quoted the non-resident’s tax file number in connection with the investment at that time if:

(c) the investment body is required to make a deduction under subsection 221YL, or withhold an amount under Subdivision 12-F in Schedule 1 to the Taxation Administration Act 1953, from the payment; or

(d) the investment body would have been required to make such a deduction, or withhold such an amount, but for the operation of paragraph 128B(3)(a), (b) or (ga) or subparagraph 128B(3)(h)(iv).

(2) If: (a) a person who was a non-resident and an investor in relation

to an investment to which this Part applies becomes a resident of Australia at a particular time; and

(b) the person is, at that time, still an investor in relation to the investment; and

(c) the investment body concerned is not, within one month after that time, informed of the person’s tax file number or informed that the person has become such a resident;

the person is guilty of an offence.


Section 202EF


Penalty: $1,000.

(3) Nothing in this section affects the person’s liability to pay withholding tax.

202EF Territory residents etc.

(1) For the purposes of this Part, a recipient is taken to have quoted the recipient’s tax file number in a TFN declaration given to the payer concerned under section 202C if all eligible PAYG payments by the payer to the recipient would be exempt from income tax because of Division 1A of Part III.

(2) For the purposes of this Part, an investor in relation to an investment to which this Part applies shall be taken to have quoted the investor’s tax file number under Division 4 in connection with the investment if income derived from the investment would be exempt from income tax because of Division 1A of Part III.

(3) Subsection (1) or (2) continues to have effect until the end of one month after the payments or income would no longer be exempt from income tax because of Division 1A of Part III.

(4) Where: (a) a person has been taken, because of this section, to have

quoted the person’s tax file number in connection with payments, or with an investment; and

(b) the payments, or income derived from the investment, ceases to be exempt from income tax because of Division 1A of Part III;

the person is guilty of an offence if, within one month of the income ceasing to be exempt from income tax, the payer concerned, or the investment body concerned, is not informed of the person’s tax file number or informed that the income is no longer exempt from income tax.

Penalty: $1,000.

Part VA Tax file numbers Division 5 Exemptions Section 202EG


202EG Manner of completing declarations

Where a person is unable to make a declaration under this Division, the declaration may be made by another person on behalf of the first-mentioned person.

202EH Declarations under this Division to be retained in certain circumstances

(1) The Commissioner may direct an investment body to retain declarations, or declarations of a particular kind, made under this Division for such time as is specified in the direction.

(2) A direction mentioned in subsection (1) must be given to the investment body in writing or by notice published in the Gazette.

(3) An investment body that is retaining a declaration in accordance with such a direction must, if required to do so by the Commissioner:

(a) forward the declaration to the office of a Deputy Commissioner in accordance with the Commissioner’s directions; or

(b) give to the Commissioner such information contained in the declaration as the Commissioner specifies.

Tax file numbers Part VA Review of decisions Division 6

Section 202F


Division 6—Review of decisions

202F Review of decisions

(1) Applications may be made to the Tribunal for review of the following decisions of the Commissioner:

(a) a decision refusing an application for the issue of a tax file number under section 202BA (including a decision that is to be taken to have been made by virtue of section 202BC);

(b) a decision to cancel a tax file number under section 202BE; (c) a decision to give a notice under subsection 202CE(3); (d) a decision to give a notice under subsection 202DF(3); (da) a decision to give a notice under subsection 202DM(3); (e) a decision to give a notice under subsection 202EB(3); (f) a decision under subsection 202G(4) not to exempt a person

from compliance with section 202G or to vary or revoke a notice given under that subsection;

(g) a decision stated by the regulations to be a reviewable decision for the purposes of this section.

(2) Where an application has been made to the Tribunal for review of a decision referred to in paragraph (1)(a), the orders that may be made under subsection 41(2) of the Administrative Appeals Tribunal Act 1975 include an order that the Commissioner issue a tax file number to the applicant pending the determination of the application for review.

(3) A tax file number issued in accordance with an order referred to in subsection (2) ceases to have effect when the application is finally disposed of.

(4) When a tax file number ceases to have effect under subsection (3), this Part (other than this section) applies as if the number had been cancelled.

Part VA Tax file numbers Division 6 Review of decisions Section 202FA


202FA Statements to accompany notification of decisions

(1) Where a decision of a kind referred to in section 202F is made and notice in writing of the decision is given to a person whose interests are affected by the decision, that notice shall include a statement to the effect that, if the person is dissatisfied with the decision, application may, subject to the Administrative Appeals Tribunal Act 1975, be made to the Tribunal for review of the decision and, except where subsection 28(4) of that Act applies, also include a statement to the effect that the person may request a statement under section 28 of that Act.

(2) A failure to comply with subsection (1) does not affect the validity of the decision.

Tax file numbers Part VA Manner of providing information Division 7

Section 202G


Division 7—Manner of providing information

202G Transmission of information in accordance with specifications

(1) The Commissioner may, by notice published in the Gazette, set out specifications for transmission to the Commissioner of information to which this section applies.

(2) A notice under subsection (1) has effect on and from the day specified in the notice.

(3) Where the whole or part of the information to which this section applies that a person is obliged to give to the Commissioner is kept by or on behalf of the person by means of a data processing device, the person shall, when giving any of that information to the Commissioner, give it in a manner and form that is in accordance with the specifications set out in the notice under subsection (1), as amended from time to time.

(4) A person is exempt from compliance with subsection (3) if, on an application by the person, the Commissioner has, by written notice to the person, exempted the person from compliance with this section.

(5) A notice under subsection (4) has effect for the period specified in the notice.

(6) Refusal by the Commissioner of an application under subsection (4) shall be by notice in writing to the applicant.

(7) In deciding whether to exempt a person, the Commissioner shall consider:

(a) the amount of information concerned; (b) any difficulties in giving the information in the manner

required by this section; (c) the purposes of this Part; and (d) any other matters that the Commissioner thinks are relevant.

Part VA Tax file numbers Division 7 Manner of providing information Section 202G


(8) A person is exempt from compliance with subsection (3) if the person is included in a class of persons specified by the Commissioner by notice published in the Gazette.

(9) This section applies to information that a person is or will be obliged to give to the Commissioner, whether by means of a report, form, certificate or otherwise:

(a) under this Part; (b) under regulations made for the purposes of this Part; or (c) under this Act, being information in respect of which this Act

provides for the inclusion of tax file numbers.

Collection and recovery of tax Part VI General Division 1

Section 204


Part VI—Collection and recovery of tax

Division 1—General

204 When tax payable

(1) Subject to the provisions of this Part, the tax payable by a taxpayer other than a full self-assessment taxpayer for a year of income becomes due and payable:

(a) if the taxpayer’s return of income is lodged on or before the due date for lodgment—on the later of:

(i) 21 days after the due date for lodgment of that return specified in the Gazette under section 161 for the year of income; or

(ii) 21 days after a notice of assessment is given to the taxpayer; or

(b) in any other case—21 days after that due date for lodgment.

Note 1: The Commissioner may defer the time at which the tax is, or would become, due and payable: see section 255-10 in Schedule 1 to the Taxation Administration Act 1953.

Note 2 The Commissioner may defer the due date for lodgment: see section 388-55 in that Schedule.

(1A) Subject to the provisions of this Part, the tax payable by a full self-assessment taxpayer for a year of income becomes due and payable as follows:

(a) if the taxpayer’s year of income ends on 30 June—on 1 December of the following year of income or on such later date as the Commissioner allows by notice published in the Gazette;

(b) if the taxpayer’s year of income ends on a day other than 30 June—on the first day of the sixth month of the following year of income, or on such later date as the Commissioner allows by notice published in the Gazette.

Part VI Collection and recovery of tax Division 1 General Section 205


(3) If any of the tax which a person is liable to pay remains unpaid after the time by which the tax is due to be paid, the person is liable to pay the general interest charge on the unpaid amount for each day in the period that:

(a) started at the beginning of the day by which the tax was due to be paid; and


(i) the tax; (ii) general interest charge on any of the tax.


Note: For provisions about collection and recovery of income tax and related amounts, see Part 4-15 in Schedule 1 to the Taxation Administration Act 1953.

205 Taxpayer leaving Australia

(1) Where the Commissioner has reason to believe that a person liable to pay tax may leave Australia before the date on which the tax is due and payable the tax shall be due and payable on such date as the Commissioner notifies to that person.


Application

(3) The Commissioner must not exercise his or her power under this section (including the extended operation that this section has because of any provision of this or any other Act) on or after 1 July 2000.

Example: Subsection 163A(8) provides for an extended operation of this section in respect of a penalty under section 163A. The Commissioner therefore must not exercise his or her power under this section because of that extended operation on or after 1 July 2000.

Note: For provisions about collection and recovery of tax and other amounts on or after 1 July 2000 (including provisions about the variation of the time for paying an amount), see Part 4-15 in Schedule 1 to the Taxation Administration Act 1953.


Section 206


206 Extension of time and payment of tax by instalments

(1) The Commissioner may in any case grant such extension of time for payment of tax, or permit payment of tax to be made by such instalments and within such time as he considers the circumstances warrant; and in such case the tax shall be due and payable accordingly.


Application

(3) The Commissioner must not exercise his or her power under this section (including the extended operation that this section has because of any provision of this or any other Act) on or after 1 July 2000.

Example: Subsection 163A(8) provides for an extended operation of this section in respect of a penalty under section 163A. The Commissioner therefore must not exercise his or her power under this section because of that extended operation on or after 1 July 2000.

Note: For provisions about collection and recovery of tax and other amounts on or after 1 July 2000 (including provisions about the variation of the time for paying an amount), see Part 4-15 in Schedule 1 to the Taxation Administration Act 1953.

208 Tax a debt due to the Commonwealth

(1) Income tax when it becomes due and payable shall be a debt due to the Commonwealth, and payable to the Commissioner in the manner and at the place prescribed.

(2) In subsection (1), income tax includes the general interest charge under a provision of this Act and additional tax under Part VII.



Application

(3) This section does not apply in relation to:



(a) income tax that becomes due and payable on or after 1 July 2000; or

(b) any other amount that becomes due and payable on or after that day, and that is taken to be income tax for the purposes of this section because of any provision of this or any other Act.

Example: Subsection 160ARW(1) provides that in section 208 income tax includes franking deficit tax, deficit deferral tax and franking additional tax. This section therefore does not apply in relation to any franking deficit tax, deficit deferral tax or franking additional tax that becomes due and payable on or after 1 July 2000.

Note: For provisions about collection and recovery of income tax and other amounts on or after 1 July 2000, see Part 4-15 in Schedule 1 to the Taxation Administration Act 1953.

209 Recovery of tax

(1) Any tax unpaid may be used for and recovered in any Court of competent jurisdiction by the Commissioner or a Deputy Commissioner suing in his official name.

(2) In subsection (1), tax includes the general interest charge under a provision of this Act and additional tax under Part VII.



Application

(3) This section does not apply in relation to: (a) any tax that becomes due and payable on or after 1 July

2000; or (b) any other amount that becomes due and payable on or after

that day, and that is taken to be tax for the purposes of this section because of any provision of this or any other Act.

Example: Subsection 160ARW(1) provides that in section 209 tax includes franking deficit tax, deficit deferral tax and franking additional tax. This section therefore does not apply in relation to any franking deficit tax, deficit deferral tax or franking additional tax that becomes due and payable on or after 1 July 2000.


Section 213


Note: For provisions about collection and recovery of tax and other amounts on or after 1 July 2000, see Part 4-15 in Schedule 1 to the Taxation Administration Act 1953.

213 Temporary business

(1) Where the Commissioner has reason to believe that any person establishing or carrying on business in Australia intends to carry on that business for a limited period only, or where the Commissioner for any other reason thinks it proper so to do, he may at any time and from time to time require that person to give security by bond or deposit or otherwise to the satisfaction of the Commissioner for the due return of, and payment of income tax on, the income derived by that person.

(2) A person who refuses or fails to give security when required to do so under this section is guilty of an offence.

Penalty for contravention of this subsection: $2,000.

214 Substituted service

(1) If a taxpayer: (a) is absent from Australia and has not to the knowledge of the

Commissioner after reasonable inquiry in that behalf any attorney or agent in Australia on whom service of process can be effected; or

(b) cannot after reasonable inquiry be found; service of any process in proceedings against him for recovery of income tax may, without leave of the Court, be effected on him by posting the same or a sealed copy thereof in a letter addressed to him at his last known place of business or abode in Australia.

(2) In subsection (1), income tax includes the general interest charge under a provision of this Act and additional tax under Part VII.



Part VI Collection and recovery of tax Division 1 General Section 214A


Application

(3) A process must not be served under this section (including the extended operation that this section has because of any provision of this or any other Act) on or after 1 July 2000.

Example: Subsection 163A(8) provides for an extended operation of this section in respect of a penalty under section 163A. A process therefore must not be served on or after 1 July 2000 under this section because of that extended operation.

Note: For provisions about collection and recovery of income tax and other amounts on or after 1 July 2000 (including provisions about substituted service), see Part 4-15 in Schedule 1 to the Taxation Administration Act 1953.

214A Interest rates


base interest rate for a day has the same meaning as in section 8AAD of the Taxation Administration Act 1953.

(2) The annual rate at which interest is calculated or computed under: (a) section 102AAB, 102AAM, 555 or 592 of this Act; or (d) section 75 of the Training Guarantee (Administration) Act

1990; or (e) section 8C, 8I, 8T, 8X, 8ZB, 10 or 12C of the Taxation

(Interest on Overpayments and Early Payments) Act 1983; or for any day is the base interest rate for that day.

215 Liquidators, receivers and certain agents

(1) Every person (in this section called the trustee): (a) who is liquidator of any company which is being wound up;

or (b) who is receiver for any debenture holders, and has taken

possession of any assets of a company; or


Section 215


(c) who is agent for a non-resident and has been required by his principal to wind up the business or realize the assets of his principal;

shall within 14 days after he has become liquidator, or after he has so taken possession of assets, or after he has been so required by his principal, give notice thereof to the Commissioner.

(2) The Commissioner shall as soon as practicable thereafter, notify to the trustee the amount which appears to the Commissioner to be sufficient to provide for any tax which then is or will thereafter become payable by the company or principal, as the case may be.

(3) Subject to subsection (3B), if the trustee is a person of the kind referred to in paragraph (1) (a) or (b), the trustee:

(a) shall not, without the leave of the Commissioner, part with any of the assets of the company until the trustee has been so notified;

(b) shall set aside, out of the assets available for payment of ordinary debts of the company, assets to the value of an amount that bears to the value of the assets available for payment of ordinary debts of the company the same proportion as the amount notified by the Commissioner under subsection (2) bears to the sum of:

(i) the amount notified by the Commissioner under subsection (2);

(ii) any amount of prescribed tax that the Commissioner is required to notify to the trustee under an Act other than this Act and has so notified; and

(iii) the aggregate of the ordinary debts of the company (excluding any debt in respect of tax or prescribed tax); and

(c) is, to the extent of the value of the assets that the trustee is so required to set aside, liable as trustee to pay the tax.

(3A) If the trustee is a person of the kind referred to in paragraph (1) (c), the trustee:

(a) shall not, without the leave of the Commissioner, part with any of the assets of the principal until the trustee has been notified by the Commissioner under subsection (2);



(b) shall set aside, out of the assets available for the payment of the tax, assets to the value of the amount so notified, or the whole of the assets so available if they are of less than that value; and

(c) is, to the extent of the value of the assets that the trustee is so required to set aside, liable as trustee to pay the tax.

(3B) Nothing in paragraph (3) (a) prevents the trustee parting with assets of the company for the purpose of paying debts of the company that are not ordinary debts of the company.

(3C) For the purposes of subsections (3) and (3B), a debt of the company is an ordinary debt if:

(a) the debt is an unsecured debt; and (b) the debt is not required, under a law of the Commonwealth or

of a State or Territory, to be paid in priority to some or all of the other debts of the company.

(3D) In subsection (3), prescribed tax means any amount that the Commissioner is required to notify under a section of another Act that corresponds to this section.

(4) If the trustee refuses or fails to comply with any provision of this section or refuses or fails as trustee duly to pay the tax for which the trustee is liable under subsection (3) or (3A), the trustee:

(a) is, to the extent of the value of the assets that the trustee is required under subsection (3) or (3A), as the case may be, to set aside, personally liable to pay the tax; and

(b) is guilty of an offence punishable on conviction by a fine not exceeding $1,000.

(5) Where more than one person is the trustee, the obligations and liabilities attaching to the trustee under this section shall attach to those persons jointly.


tax includes: (a) the general interest charge under a provision of this Act; and (b) additional tax under Part VII; and


Section 216


(c) an amount payable to the Commissioner under Division 1AAA, 1AA, 1A, 1B, 1C, 2, 3, 3A, 3B, 4, 8 or 9.



Application

(7) This section (including the extended operation that this section has because of any provision of this or any other Act) does not apply in relation to:

(a) a person who, on or after 1 July 2000, becomes the liquidator of a company; or

(b) a person who, on or after 1 July 2000, takes possession of assets of a company as a receiver for any debenture holders of the company; or

(c) an agent who, on or after 1 July 2000, is instructed to wind up the principal’s business or realise the principal’s assets.

Example: Subsection 163A(8) provides for an extended operation of this section in respect of a penalty under section 163A. However, despite that extended operation, this section does not apply in relation to a person mentioned in a paragraph of subsection (7).

Note: For provisions about collection and recovery of tax and other amounts on or after 1 July 2000 (including provisions about liquidators, receivers and agents), see Part 4-15 in Schedule 1 to the Taxation Administration Act 1953.

216 When tax not paid during lifetime

(1) The following provisions shall apply in any case where, at the time of a taxpayer’s death, tax has not been assessed or paid on the whole of the income, and of the profits or gains of a capital nature, derived by the taxpayer up to the time of the death of the taxpayer or additional tax under Part VII to which the taxpayer is liable has not been assessed or paid:

(a) The Commissioner shall have the same powers and remedies for the assessment and recovery of tax from the trustees of the estate of the taxpayer in respect of the liability to which



the taxpayer was subject as he would have against the taxpayer if the taxpayer were still living;

(aa) The trustees shall furnish a return of any income, or profits or gains of a capital nature, derived by the deceased person in respect of which no return was lodged by the deceased person;

(b) The trustees shall furnish such returns as the Commissioner requires for the purpose of an accurate assessment;

(c) The trustees shall be subject to additional tax to the same extent as the taxpayer would be subject to additional tax if he were still living:

Provided that the Commissioner may in any particular case, for reasons which he thinks sufficient, remit the additional tax or any part thereof.

(d) The amount of any tax payable by the trustees shall be a first charge on all the taxpayer’s estate in their hands.

(2) Where the trustees are unable or refuse or fail to furnish a return, the Commissioner may make an assessment of the amount on which, in the Commissioner’s judgment, tax ought to be levied and the trustees shall be liable to pay tax as if that amount were the taxable income of the deceased person.

(3) In this section, unless the contrary intention appears, tax includes the general interest charge under a provision of this Act and additional tax under Part VII.



Application

(4) This section (including the extended operation that this section has because of any provision of this or any other Act) does not apply in relation to a person who dies on or after 1 July 2000.

Example: Subsection 163A(8) provides for an extended operation of this section in respect of a penalty under section 163A. However, despite that extended operation, this section does not apply in relation to a person who dies on or after 1 July 2000.


Section 218


Note: For provisions about collection and recovery of tax and other amounts on or after 1 July 2000 (including provisions about the estate of a deceased taxpayer), see Part 4-15 in Schedule 1 to the Taxation Administration Act 1953.

218 Commissioner may collect tax from person owing money to taxpayer

(1) The Commissioner may at any time, or from time to time, by notice in writing (a copy of which shall be forwarded to the taxpayer at his last place of address known to the Commissioner), require:

(a) any person by whom any money is due or accruing or may become due to a taxpayer;

(b) any person who holds or may subsequently hold money for or on account of a taxpayer;

(c) any person who holds or may subsequently hold money on account of some other person for payment to a taxpayer; or

(d) any person having authority from some other person to pay money to a taxpayer;

to pay to the Commissioner, either forthwith upon the money becoming due or being held, or at or within a time specified in the notice (not being a time before the money becomes due or is held):

(e) so much of the money as is sufficient to pay the amount due by the taxpayer in respect of tax or, if the amount of the money is equal to or less than the amount due by the taxpayer in respect of tax, the amount of the money; or

(f) such amount as is specified in the notice out of each payment that the person so notified becomes liable from time to time to make to the taxpayer until the amount due by the taxpayer in respect of tax is satisfied;

and may at any time, or from time to time, amend or revoke any such notice, or extend the time for making any payment in pursuance of the notice.

(2) Any person who refuses or fails to comply with any notice under this section is guilty of an offence.

Penalty: $1,000.



(3) Where a person (in this subsection referred to as the convicted person) is convicted before a court of an offence against subsection (2) in relation to the refusal or failure of the convicted person or another person to comply with a notice under this section, the court may, in addition to imposing a penalty on the convicted person, order the convicted person to pay to the Commissioner an amount not exceeding the amount or the aggregate of the amounts, as the case requires, that the convicted person or the other person, as the case may be, refused or failed to pay to the Commissioner in accordance with the notice.

(4) Any person making any payment in pursuance of this section shall be deemed to have been acting under the authority of the taxpayer and of all other persons concerned and is hereby indemnified in respect of such payment.

(5) If the Commissioner receives any payment in respect of the amount due by the taxpayer before payment is made by the person so notified he shall forthwith give notice thereof to that person.

(6) Where: (a) money has been paid by a person to a co-operative housing

society in respect of the issue of withdrawable shares in the capital of the society; and

(b) the money has not been repaid; the money shall, for the purposes of this section, be taken:

(c) in a case where the money is repayable on demand—to be due by the co-operative housing society to the person; or

(d) in any other case—to be money that may become due by the co-operative housing society to the person.

(6A) Where, but for this subsection, money is not due, or repayable on demand, to a person unless a condition is fulfilled, the money shall be taken, for the purposes of this section, to be due, or repayable on demand, as the case may be, to the person notwithstanding that the condition has not been fulfilled.

(6B) In this section:


Section 218


co-operative housing society means a society registered or incorporated as a co-operative housing society or similar society under a law of a State or Territory.

person includes a company, a partnership, the Commonwealth, a State, a Territory and any public authority (whether incorporated or unincorporated) of the Commonwealth or a State or Territory.

tax includes: (a) additional tax under Part VII; (ab) the general interest charge under a provision of this Act; (b) an amount that a person is liable to pay to the Commissioner

under Division 1AAA, 1AA, 1A, 1B, 1C, 2, 3, 3A, 3B, 4, 8 or 9;

(ba) an amount of interest that a person is liable to pay to the Commissioner under section 102AAM;

(c) a judgment debt or costs in respect of: (i) tax; (ii) additional tax under Part VII; (iia) the general interest charge under a provision of this Act; (iii) an amount that a person is liable to pay to the

Commissioner under Division 1AAA, 1AA, 1A, 1B, 1C, 2, 3, 3A, 3B, 4, 8 or 9; or

(iv) an amount of interest that a taxpayer is liable to pay to the Commissioner under section 102AAM;

(d) any fine or costs imposed by a court in respect of: (i) an offence against this Act or the regulations; or (ii) any other taxation offence within the meaning of Part III

of the Taxation Administration Act 1953 that relates to this Act or the regulations; or

(e) any amount ordered by a court, upon the conviction of a person for an offence of a kind referred to in paragraph (d), to be paid by the person to the Commissioner.





taxpayer includes a person who is liable to pay an amount to the Commissioner under Division 1AA, 1A, 1B, 1C, 2, 3, 3A, 3B, 4, 8 or 9.

(7) Any notice to be given under this section to the Commonwealth or a State may be served upon such person as is prescribed, and any notice so served shall be deemed to have been served upon the Commonwealth or a State, as the case may be.

Application

(8) The Commissioner must not issue a notice under this section (including the extended operation that this section has because of any provision of this or any other Act) on or after 1 July 2000.

Example: Subsection 160ARW(1) provides for an extended operation of this section in respect of franking deficit tax, deficit deferral tax or franking additional tax. The Commissioner therefore must not exercise his or her power under this section because of that extended operation on or after 1 July 2000.

Note: For provisions about collection and recovery of tax and other amounts on or after 1 July 2000 (including provisions on collecting an amount from a third person), see Part 4-15 in Schedule 1 to the Taxation Administration Act 1953.

219 Consolidated assessments

Where several persons are in receipt of income, or of profits or gains of a capital nature, for or on behalf of a non-resident or a person absent from Australia, the Commissioner, if it appears to him to be expedient to do so, may consolidate all or any of the assessments thereof, and declare any one of such persons to be the agent of the non-resident or absent person in respect of the consolidated assessment, and require him to pay income tax on the amount thereof, and thereupon the person so declared to be agent shall be liable to pay the tax.

220 Assessment where no administration

(1) Where, in respect of the estate of a deceased taxpayer, neither probate has not been granted nor letters of administration have been taken out within 6 months of the death of the taxpayer, and:


Section 220


(a) tax has not been assessed or paid on the whole of the income, and of the profits or gains of a capital nature, derived by the taxpayer up to the time of the death of the taxpayer; or

(aa) interest under section 102AAM to which the taxpayer is liable has not been assessed or paid; or

(b) additional tax under Part VII to which the taxpayer is liable has not been assessed or paid;

the Commissioner may make an assessment of the tax payable by the estate of the taxpayer.

(2) The Commissioner shall cause notice of the assessment to be published twice in a daily newspaper circulating in the State in which the taxpayer resided.

(3) A person who claims an interest in the estate of the taxpayer and who is dissatisfied with the assessment may object against it in the manner set out in Part IVC of the Taxation Administration Act 1953.

(4) Subject to any amendment of the assessment, the published notice of the assessment so made shall be conclusive evidence of the indebtedness of the deceased to the Commissioner.

(5) The Commissioner may issue an order in the prescribed form authorizing any member of the police force of the Commonwealth or of a State or of a Territory or any other person named therein, to levy the amount of tax assessed any general interest charge under a provision of this Act payable in relation to that tax, with costs, by distress and sale of any property of the deceased.



(6) Upon the issue of any such order the member or person so authorized shall have power to levy that amount accordingly in the prescribed manner.

(7) In spite of subsections (4), (5) and (6), if probate of the will, or letters of administration of the estate, of the deceased is or are



granted to a person, and the person is dissatisfied with the assessment, the person may object against it in the manner set out in Part IVC of the Taxation Administration Act 1953.

(7A) Part IVC of the Taxation Administration Act 1953 applies in relation to an objection under subsection (3) or (7) as if the person were the taxpayer.


tax includes: (a) interest under section 102AAM; and (b) additional tax under Part VII.

Application

(9) This section (including the extended operation that this section has because of any provision of this or any other Act) does not apply in relation to a person who dies on or after 1 July 2000.

Note: For provisions about collection and recovery of tax and other amounts on or after 1 July 2000 (including provisions about the estate of a deceased taxpayer), see Part 4-15 in Schedule 1 to the Taxation Administration Act 1953.

Collection and recovery of tax Part VI Payment of RPS, PAYE and PPS deductions to Commissioner Division 1AAA

Section 220AAA


Division 1AAA—Payment of RPS, PAYE and PPS deductions to Commissioner

Subdivision A—Outline of Division

220AAA Outline of Division

This Division sets out when and how amounts deducted under:

(a) Division 1AA (RPS); and

(b) Division 2 (PAYE); and

(c) Division 3A (PPS);

must be paid to the Commissioner.

Remitters are divided into 3 categories—small, medium and large. The timing and method of payment depends on the category of the remitter.

Failure to remit payments or to comply with other requirements of this Division may be a criminal offence or result in penalties.

Subdivision B—Large remitters

220AAB Who is a large remitter—general

General rule

(1) Subject to this section, a person is a large remitter in relation to a particular month if any of the following paragraphs applies:

(a) the total of the deductions that the person makes under Divisions 1AA, 2 and 3A for the financial year ending on 30 June 1997 exceeded $1 million;

(b) both of the following subparagraphs apply:

Part VI Collection and recovery of tax Division 1AAA Payment of RPS, PAYE and PPS deductions to Commissioner Section 220AAB


(i) at the end of the financial year (the 1996-97 year) ending on 30 June 1997, the person was included in a company group;

(ii) the total of the deductions under Divisions 1AA, 2 and 3A, for the 1996-97 year, of the persons that were included in that company group at the end of the 1996-97 year exceeded $1 million;

(c) the total of the deductions that the person makes under Divisions 1AA, 2 and 3A for any financial year ending on or after 30 June 1998 and before that month exceeded $1 million;

(d) both of the following subparagraphs apply: (i) at the end of any financial year (the threshold year)

ending on or after 30 June 1998 and before that month, the person was included in a company group;

(ii) the total of the deductions under Divisions 1AA, 2 and 3A, for the threshold year, of the persons that were included in that company group at the end of the threshold year exceeded $1 million;

Note: Company group is defined in section 220AAI.

(e) that month is covered by a notice in force under section 220AAC;

and that month is not covered by a notice in force under subsection (3).

Not large remitter before certain times

(2) A person: (a) is not a large remitter in relation to any month before July

1998; and (b) is not a large remitter in relation to July or August 1998

unless the person is covered by paragraph (1)(a) or (b); and (c) is not a large remitter because of paragraph (1)(c) or (d) in

relation to July or August in a later financial year unless the person was a large remitter in relation to June of the previous financial year.


Section 220AAC


Commissioner’s determination that person not a large remitter

(3) The Commissioner may, by notice in writing served on a person who would otherwise be a large remitter:

(a) determine that the person is not a large remitter in relation to: (i) a month or months specified in the notice; or (ii) all months after and including a month specified in the

notice; and (b) revoke or vary any such determination.

Note: A person who is not a large remitter because of this subsection will generally be a medium remitter: see paragraph 220AAJ(1)(d).

(4) A notice under subsection (3) does not have effect in relation to a particular month unless the notice was served before the beginning of the month.

220AAC Who is a large remitter—determination by Commissioner

(1) The Commissioner may, by notice in writing served on a person who would otherwise be a medium remitter or a small remitter in relation to a month:

(a) determine that the person is a large remitter in relation to: (i) a month or months specified in the notice; or (ii) all months after and including a month specified in the


(2) A notice under subsection (1) does not have effect in relation to any month earlier than the second month following the month in which the notice is served.

Matters to have regard to

(3) In exercising powers under subsection (1), the Commissioner may have regard to the following matters:

(a) any arrangement that was entered into or carried out after 15 August 1989 for the purpose, or for purposes that included the purpose, of avoiding the application of section 220AAE

Part VI Collection and recovery of tax Division 1AAA Payment of RPS, PAYE and PPS deductions to Commissioner Section 220AAD


or of paragraph 221F(5)(a) in relation to deductions made by a person;

(b) the extent (if any) to which the person concerned pays: (i) salary or wages to persons to whom salary or wages

were previously paid by another person; or (ii) reportable payments to persons to whom reportable

payments were previously paid by another person; or (iii) prescribed payments to persons to whom prescribed

payments were previously paid by another person; (c) the amount that the Commissioner considers the person is

likely to deduct under Divisions 1AA, 2 and 3A in the following 12 months;

(d) such other matters as the Commissioner considers relevant.

(4) The reference in paragraph (3)(a) to paragraph 221F(5)(a) is a reference to that paragraph as in force before the commencement of Schedule 4 to the Taxation Laws Amendment Act (No. 3) 1998.

220AAD Application to cease to be a large remitter

A person who is a large remitter in relation to a month may apply in writing to the Commissioner for a determination under subsection 220AAB(3) that the person is not a large remitter in relation to particular months.

220AAE When amounts must be remitted

(1) A person who is a large remitter in relation to a month must pay to the Commissioner the amount of any deductions that the person makes under Division 1AA, 2 or 3A during that month as set out in the following table:

Table of payments by large remitters

Item Day on which amount deducted Payment day

1 Saturday or Sunday The second Monday after that day

2 Monday or Tuesday The first Monday after that day

3 Wednesday The second Thursday after that day


Section 220AAF


Table of payments by large remitters

Item Day on which amount deducted Payment day

4 Thursday or Friday The first Thursday after that day

Note: The payments covered by items 1 and 2 would normally be paid together, as would the payments covered by items 3 and 4.

(3) If any of the amount (the deducted amount) which a large remitter must pay to the Commissioner remains unpaid after the time by which it is due to be paid, the large remitter is liable to pay the general interest charge on the unpaid amount for each day in the period that:

(a) started at the beginning of the day by which the deducted amount was due to be paid; and


(i) the deducted amount; (ii) general interest charge on any of the deducted amount.


220AAF How amounts must be paid

A large remitter must pay an amount by a means of electronic transfer approved in writing by the Commissioner. If a large remitter pays an amount other than by electronic transfer, the large remitter will be liable for a penalty under section 220AAW.

220AAG What else must be sent

(1) Each payment that is made to the Commissioner must be accompanied by a statement about the payment and about the deductions in relation to which the payment is made.

(2) The Commissioner may, by written notice, require statements to be in a particular form, contain particular information and be given in a particular manner. For example, the Commissioner may require certain statements to be given by way of electronic transmission.

Part VI Collection and recovery of tax Division 1AAA Payment of RPS, PAYE and PPS deductions to Commissioner Section 220AAGA


220AAGA Commissioner must be notified of amounts

(1) A large remitter that must pay an amount to the Commissioner under section 220AAE must notify the Commissioner of the amount on or before the day on which the amount is due to be paid (regardless of whether it is paid).

(2) If the large remitter fails to do so, or notifies the Commissioner of an amount that is less than the correct amount, the large remitter is liable to pay the failure to notify penalty on the amount, or on the amount of the shortfall, for each day in the period that:

(a) started at the beginning of the day by which the amount was due to be paid; and

(b) finishes at the end of the day before the Commissioner receives notification from the large remitter, or otherwise becomes aware, of the correct amount.

Note: The failure to notify penalty is worked out under Division 2 of Part IIA of the Taxation Administration Act 1953.

(3) The notification must be in a form approved in writing by the Commissioner, unless:

(a) it is by way of a statement under section 220AAG accompanying a payment; and

(b) the Commissioner requires statements under that section to be in a particular form, contain particular information or be given in a particular manner; and

(c) the statement meets those requirements.

220AAH Variation of requirements

(1) The Commissioner may, in such cases and to the extent the Commissioner thinks fit, by written notice given to a large remitter:

(a) extend any time set out in section 220AAE for compliance with the requirements of that section; or

(b) with the agreement of the large remitter, vary the requirements of section 220AAF or 220AAG in their application to the large remitter.


Section 220AAI


Application

(2) The Commissioner must not exercise his or her power under paragraph (1)(a) on or after 1 July 2000.

Note: For provisions about collection and recovery of amounts on or after 1 July 2000 (including provisions about the extension of the time for paying an amount), see Part 4-15 in Schedule 1 to the Taxation Administration Act 1953.

220AAI Grouping of companies

(1) For the purposes of this Division, a company group consists of any collection of 2 or more companies each of which is a group company in relation to each of the others.

(2) For the purposes of this section, a company is a group company in relation to another company if:

(a) one of the companies is a 100% subsidiary of the other company; or

(b) each of the companies is a 100% subsidiary of the same third company.

(3) A company (the subsidiary company) is a 100% subsidiary of another company (the holding company) if all the shares in the subsidiary company are beneficially owned by:

(a) the holding company; or (b) one or more 100% subsidiaries of the holding company; or (c) the holding company and one or more 100% subsidiaries of

the holding company.

(4) A company (other than the subsidiary company) is a 100% subsidiary of the holding company if, and only if:

(a) it is a 100% subsidiary of the holding company; or (b) it is a 100% subsidiary of a 100% subsidiary of the holding

company; because of any other application or applications of this section.

Part VI Collection and recovery of tax Division 1AAA Payment of RPS, PAYE and PPS deductions to Commissioner Section 220AAJ


Subdivision C—Medium remitters

220AAJ Who is a medium remitter—general

General rule

(1) Subject to this section, a person is a medium remitter in relation to a particular month if the person is not a large remitter in relation to that month and any of the following paragraphs applies:

(a) the total of the deductions that the person makes under Divisions 1AA, 2 and 3A for the period between 1 July 1997 and 31 March 1998 exceeded $18,750;

(b) the total of the deductions that the person makes under Divisions 1AA, 2 and 3A for any financial year ending on or after 30 June 1998 and before that month exceeded $25,000;

(c) that month is covered by a notice in force under section 220AAK;

(d) that month is covered by a notice in force under subsection 220AAB(3) (determination that the person is not a large remitter);

and that month is not covered by a notice in force under subsection (3).

Not medium remitter before certain times

(2) A person: (a) is not a medium remitter in relation to any month before July

1998; and (b) is not a medium remitter in relation to July, August or

September 1998 unless the person is covered by paragraph (1)(a), (c) or (d); and

(c) is not a medium remitter because of paragraph (1)(b) in relation to July, August or September in a later financial year unless the person was a medium remitter in relation to June of the previous financial year.


Section 220AAK


Commissioner’s determination that person not a medium remitter

(3) The Commissioner may, by notice in writing served on a person who would otherwise be a medium remitter:

(a) determine that the person is not a medium remitter in relation to:

(i) a month or months specified in the notice; or (ii) all months after and including a month specified in the


Note: A person who is not a medium remitter because of this subsection will be a small remitter.

(4) A notice under subsection (3) does not have effect in relation to a particular month unless the notice was served before the beginning of the month.

220AAK Who is a medium remitter—determination by Commissioner

(1) The Commissioner may, by notice in writing served on a person who would otherwise be a small remitter:

(a) determine that the person is a medium remitter in relation to: (i) a month or months specified in the notice; or (ii) all months after and including a month specified in the


(2) A notice under subsection (1) does not have effect in relation to any month earlier than the second month following the month in which the notice is served.

Matters to have regard to

(3) In exercising powers under subsection (1), the Commissioner may have regard to the following matters:

(a) any failure to comply with one or more of the person’s obligations under this Division as a result of which the

Part VI Collection and recovery of tax Division 1AAA Payment of RPS, PAYE and PPS deductions to Commissioner Section 220AAL


Commissioner considers that it is no longer appropriate for the person to be a small remitter;

(b) any arrangement that was entered into or carried out after 13 May 1997 for the purpose, or for purposes that included the purpose, of avoiding the application of section 220AAM in relation to deductions made by a person;

(c) the extent (if any) to which the person concerned pays: (i) salary or wages to persons to whom salary or wages

were previously paid by another person; or (ii) reportable payments to persons to whom reportable

payments were previously paid by another person; or (iii) prescribed payments to persons to whom prescribed

payments were previously paid by another person; (d) the amount that the Commissioner considers the person is

likely to deduct under Divisions 1AA, 2 and 3A in the following 12 months;

(e) such other matters as the Commissioner considers relevant.

220AAL Application to cease to be a medium remitter

A person who is medium remitter in relation to a month may apply in writing to the Commissioner for a determination under subsection 220AAJ(3) that the person is not a medium remitter in relation to particular months.

220AAM When amounts must be remitted

(1) A person who is a medium remitter in relation to a month must pay to the Commissioner the amount of any deductions that the medium remitter makes under Division 1AA, 2 or 3A in that month by the end of the 21st day after the end of the month.

Note: Subsection 36(2) of the Acts Interpretation Act 1901 does not apply for the purposes of this subsection.

(3) If any of the amount (the deducted amount) which a medium remitter must pay to the Commissioner remains unpaid after the time by which it is due to be paid, the medium remitter is liable to


Section 220AAN


pay the general interest charge on the unpaid amount for each day in the period that:





220AAN How amounts must be paid

A medium remitter must pay an amount: (a) by a means of electronic transfer approved in writing by the

Commissioner; or (b) by any other means approved in writing by the

Commissioner.

220AAO What else must be sent



220AAOA Commissioner must be notified of amounts

(1) A medium remitter that must pay an amount to the Commissioner under section 220AAM must notify the Commissioner of the amount on or before the day on which the amount is due to be paid (regardless of whether it is paid).

Part VI Collection and recovery of tax Division 1AAA Payment of RPS, PAYE and PPS deductions to Commissioner Section 220AAP


(2) If the medium remitter fails to do so, or notifies the Commissioner of an amount that is less than the correct amount, the medium remitter is liable to pay the failure to notify penalty on the amount, or on the amount of the shortfall, for each day in the period that:


(b) finishes at the end of the day before the Commissioner receives notification from the medium remitter, or otherwise becomes aware, of the correct amount.



(a) it is by way of a statement under section 220AAO accompanying a payment; and



220AAP Variation of requirements

(1) The Commissioner may, in such cases and to the extent the Commissioner thinks fit, by written notice given to a medium remitter:

(a) extend the time set out in section 220AAM for compliance with the requirements of that section; or

(b) with the agreement of the medium remitter, vary the requirements of section 220AAN or 220AAO in their application to the medium remitter.

Application


Note: For provisions about collection and recovery of amounts on or after 1 July 2000 (including provisions about the extension of the time for


Section 220AAQ


paying an amount), see Part 4-15 in Schedule 1 to the Taxation Administration Act 1953.

Subdivision D—Small remitters

220AAQ Who is a small remitter

A person is a small remitter in relation to any month in relation to which the person is neither a large remitter nor a medium remitter.

220AAR When amounts must be remitted

(1) A person who is a small remitter in relation to a month must pay to the Commissioner the amount of any deductions that the person makes under Division 1AA, 2 or 3A in that month by the end of the 21st day after the end of the quarter in which the month occurs. The quarters end at the end of 31 March, 30 June, 30 September and 31 December.

Note: Subsection 36(2) of the Acts Interpretation Act 1901 does not apply for the purposes of this subsection.

(3) If any of the amount (the deducted amount) which a small remitter must pay to the Commissioner remains unpaid after the time by which it is due to be paid, the small remitter is liable to pay the general interest charge on the unpaid amount for each day in the period that:





220AAS How amounts must be paid

A small remitter must pay an amount:

Part VI Collection and recovery of tax Division 1AAA Payment of RPS, PAYE and PPS deductions to Commissioner Section 220AAT


(a) by a means of electronic transfer approved in writing by the Commissioner; or

(b) by any other means approved in writing by the Commissioner.

220AAT What else must be sent



220AATA Commissioner must be notified of amounts

(1) A small remitter that must pay an amount to the Commissioner under section 220AAR must notify the Commissioner of the amount on or before the day on which the amount is due to be paid (regardless of whether it is paid).

(2) If the small remitter fails to do so, or notifies the Commissioner of an amount that is less than the correct amount, the small remitter is liable to pay the failure to notify penalty on the amount, or on the amount of the shortfall, for each day in the period that:


(b) finishes at the end of the day before the Commissioner receives notification from the small remitter, or otherwise becomes aware, of the correct amount.



(a) it is by way of a statement under section 220AAT accompanying a payment; and


Section 220AAU




220AAU Variation of requirements

(1) The Commissioner may, in such cases and to the extent the Commissioner thinks fit, by written notice given to a small remitter:

(a) extend the time set out in section 220AAR for compliance with the requirements of that section; or

(b) with the agreement of the small remitter, vary the requirements of section 220AAS or 220AAT in their application to the small remitter.

Application


Note: For provisions about collection and recovery of amounts on or after 1 July 2000 (including provisions about the extension of time for paying an amount), see Part 4-15 in Schedule 1 to the Taxation Administration Act 1953.

Subdivision E—Offences and penalties

220AAW Large remitters—non-electronic payment

(1) A large remitter that pays an amount other than by electronic transfer is liable to a penalty of the greater of:

(a) $500; or (b) assuming that the general interest charge applied to the

amount that was paid other than by electronic transfer—an amount equal to the general interest charge that would be payable for each day in a period of 7 days starting at the beginning of the day on which the payment became due.


Part VI Collection and recovery of tax Division 1AAA Payment of RPS, PAYE and PPS deductions to Commissioner Section 220AAZ


(2) However, the Commissioner may remit some or all of the penalty.

(3) The penalty becomes due for payment on the day the payment was made.

(4) If any of the penalty remains unpaid after the time by which it is due to be paid, the large remitter is liable to pay the general interest charge on the unpaid penalty amount for each day in the period that:

(a) started at the beginning of the day by which the penalty amount was due to be paid; and


(i) the penalty amount; (ii) general interest charge on any of the penalty amount.

(5) This section does not apply to an exempt Australian government agency (as defined in subsection 995-1(1) of the Income Tax Assessment Act 1997).

220AAZ Failure to send statements to Commissioner—offence

A person (other than a government body) who contravenes section 220AAG, 220AAO or 220AAT is guilty of an offence punishable on conviction by a fine not exceeding 20 penalty units.

Subdivision F—Recovery of amounts by Commissioner

220AAZA Recovery of amounts by Commissioner

Recoverable amount


recoverable amount means any of the following amounts: (a) an amount payable to the Commissioner under this Division

by a person other than the Commonwealth; (b) the unpaid amount of an estimate under section 222AGA that

relates to a liability under this Division;


Section 220AAZA


(c) a penalty payable under Subdivision E of Division 8 in relation to such an estimate;

(d) an amount that is due and payable under an agreement under section 222ALA that relates to:

(i) a liability under this Division; or (ii) a liability to pay an estimate relating to a liability under

this Division; even if the agreement also relates to a liability that is not of a

kind referred to in subparagraph (i) or (ii); (e) a penalty payable under Subdivision B of Division 9 in

relation to a company’s liability under this Division; (f) a penalty payable under Subdivision C of Division 9 in

relation to an estimate relating to a company’s liability under this Division;

(g) a penalty payable under Subdivision D of Division 9 in relation to a company’s liability to pay an amount of the kind mentioned in paragraph (d).

(2) A recoverable amount is a debt due to the Commonwealth.

(3) A recoverable amount is payable to the Commissioner.

(4) A recoverable amount may be sued for and recovered in a court of competent jurisdiction by the Commissioner or a Deputy Commissioner suing in his or her official name.

Criminal proceedings—ancillary order for payment

(5) If proceedings for an offence against this Division are brought against the person by whom a recoverable amount is payable, the court before which the proceedings are brought may order the person to pay the amount to the Commissioner.

Averments

(6) The provisions of section 8ZL of the Taxation Administration Act 1953 (which deals with averments) apply in proceedings for the recovery of a recoverable amount in a corresponding way to the way in which they apply in relation to a prosecution for a

Part VI Collection and recovery of tax Division 1AAA Payment of RPS, PAYE and PPS deductions to Commissioner Section 220AAZA


prescribed taxation offence within the meaning of Part III of that Act.

Evidentiary certificate

(7) In an action for the recovery of a recoverable amount, a written certificate stating that the sum specified in the certificate was, as at the date of the certificate, due by a specified person to the Commonwealth in respect of a recoverable amount is prima facie evidence of the matters stated in the certificate. The certificate must be signed by the Commissioner, a Second Commissioner, a Deputy Commissioner or a delegate of the Commissioner.

(10) In making a statement (whether orally or in writing and whether or not under oath) for a purpose connected with proceedings to recover a recoverable amount from a person (the debtor), the maker of the statement (who may be the debtor) may, in so far as the statement relates to a question about whether the debtor has a defence, ignore the possibility that a statutory declaration relating to an estimate may be given to the Commissioner, or an affidavit relating to an estimate may be filed, under Subdivision B, C or D of Division 8.

Interpretation

(11) An expression used in paragraphs (1)(b) to (g) has the same meaning as in Division 8.

Application

(12) This section applies or has effect as follows: (a) subsections (2), (3) and (4) do not apply in relation to a

recoverable amount that becomes due and payable on or after 1 July 2000;

(b) an averment must not be made because of subsection (6) on or after 1 July 2000;

(c) a certificate must not be made under subsection (7) on or after 1 July 2000.


Section 220AAZB


Note: For provisions about collection and recovery of recoverable amounts and other amounts on or after 1 July 2000, see Part 4-15 in Schedule 1 to the Taxation Administration Act 1953.

Subdivision G—Miscellaneous

220AAZB Power of Commissioner to obtain information

Section 264 applies, for the purposes of this Division, as if the reference in paragraph (1)(b) of that section to a person’s income or assessment were a reference to a matter relevant to the administration or operation of this Division.

Note: Section 264 empowers the Commissioner to obtain information.

220AAZC Declarations

A form that is approved by the Commissioner for the purposes of this Division may be required to contain a declaration by the person using the form.

220AAZD Application of this Division to partnerships

This Division applies to a partnership as if the partnership were a person, but it applies with the following changes:

(a) obligations that would be imposed on the partnership are imposed instead on each partner, but may be discharged by any of the partners;

(b) the partners are jointly and severally liable to pay an amount that would be payable by the partnership;

(c) any offence against this Division that would otherwise be committed by the partnership is taken to have been committed by each partner who:

(i) aided, abetted, counselled or procured the relevant act or omission; or

(ii) was in any way knowingly concerned in, or party to, the relevant act or omission (whether directly or indirectly and whether by any act or omission of the partner).

Part VI Collection and recovery of tax Division 1AAA Payment of RPS, PAYE and PPS deductions to Commissioner Section 220AAZE


220AAZE Application of this Division to unincorporated companies

(1) This Division applies to an unincorporated company as if the company were a person, but it applies with the following changes:

(a) obligations that would be imposed on the company are imposed instead on each member of the committee of management of the company, but may be discharged by any of those members;

(b) any offence against this Division that would otherwise be committed by the company is taken to have been committed by each member of the committee of management of the company who:

(i) aided, abetted, counselled or procured the relevant act or omission; or

(ii) was in any way knowingly concerned in, or party to, the relevant act or omission (whether directly or indirectly and whether by any act or omission of the member).

220AAZF Review of decisions

A person who is dissatisfied with any of the following decisions may object against the decision in the manner set out in Part IVC of the Taxation Administration Act 1953:

(a) a refusal to determine under subsection 220AAB(3) that a person is not a large remitter in relation to particular months;

(b) a decision to revoke or vary a determination under subsection 220AAB(3) that a person is not a large remitter in relation to particular months;

(c) a determination under subsection 220AAC(1) that a person is a large remitter in relation to particular months;

(d) a refusal to determine under subsection 220AAJ(3) that a person is not a medium remitter in relation to particular months;

(e) a decision to revoke or vary a determination under subsection 220AAJ(3) that a person is not a medium remitter in relation to particular months;


Section 220AAZG


(f) a determination under subsection 220AAK(1) that a person is a medium remitter in relation to particular months;

(g) a decision referred to in subsection 220AAW(2) (remission of penalties).

220AAZG Interpretation

In this Division:

government body means the Commonwealth, a State, a Territory or an authority of the Commonwealth, a State or a Territory.

person means any of the following: (a) a company; (b) a partnership; (c) a person in a particular capacity of trustee; (d) a government body; (e) any other person.

Note 1: Section 220AAZD sets out additional rules about partnerships.

Note 2: Section 220AAZE sets out additional rules about unincorporated companies.

prescribed payment has the same meaning as in Division 3A.

reportable payment has the same meaning as in Division 1AA.

salary or wages has the same meaning as in Division 2.

Part VI Collection and recovery of tax Division 1AA Reportable payments system (RPS) Section 220AA


Division 1AA—Reportable payments system (RPS)

Subdivision A—Object and outline

220AA Object

The object of this Division is to facilitate the efficient collection of tax by:

(a) providing for payers of certain payments (reportable payments) to make deductions from those payments if the payee’s tax file number is not quoted; and

(b) requiring payers of reportable payments to give reports to the Commissioner about those payments.

220AB Outline

(1) The following table sets out an outline of this Division:

Topic Provision(s)

Reportable payments

— definition sections 220AC and

220ADA

Deductions by payer from reportable payments

— obligation to deduct section 220AF

— receipts section 220AH

— exemption for pensioners section 220AP

— refunds section 220AR

— civil penalties for breach of deduction rules sections 220AS to 220AW

— civil protection for payers section 220AX

— recovery by Commissioner section 220AY

— tax credits sections 220AZ to 220AZC

Collection and recovery of tax Part VI Reportable payments system (RPS) Division 1AA

Section 220AC


Topic Provision(s)

Reports by payer to Commissioner

— annual reports section 220AJ

— retention requirements section 220AK

Quotation of tax file number by payee

— method section 220AL

— tax file number declarations sections 220AM to 220AO

— payer to send declaration forms to

Commissioner

section 220AQ

Pensioners

— exemption section 220AP

— payer to send declaration forms to

Commissioner

section 220AQ

(2) Amounts deducted under this Division must be paid to the Commissioner in accordance with Division 1AAA.

Subdivision B—Interpretation

220AC Interpretation

In this Division:

arrangement means any agreement, arrangement, understanding, promise or undertaking, whether express or implied, and whether or not enforceable, or intended to be enforceable, by legal proceedings.

Note: This definition is only used in section 220AQ.

exempt inter-corporate payment means a payment made by a company (other than in the capacity of trustee) to another company (other than in the capacity of trustee) where, at the time of the payment:

(a) one of those companies is a subsidiary of the other company; or

(b) each of those companies is a subsidiary of a third company.

Part VI Collection and recovery of tax Division 1AA Reportable payments system (RPS) Section 220AC


Note: This definition is only used in paragraph (e) of the definition of reportable payment.

government body means the Commonwealth, a State, a Territory or an authority of the Commonwealth, a State or a Territory.

payee means a person who receives, or is entitled to receive, a reportable payment.

payer means a person who makes, or has made, a reportable payment.

payment has a meaning affected by section 220AD.

pensioner exemption declaration has the meaning given by section 220AP.

pensioner exemption declaration form has the meaning given by section 220AP.

person means any of the following: (a) a company; (b) a partnership; (c) a person in a particular capacity of trustee; (d) a government body; (e) any other person.

Note 1: Section 220AZF sets out additional rules about partnerships.

Note 2: Section 220AZG sets out additional rules about unincorporated companies.

reportable payment means a payment that: (a) is declared by the regulations to be a reportable payment for

the purposes of this Division; and (b) is assessable income; and (c) is not a payment of salary or wages within the meaning of

section 221A; and (d) is not a prescribed payment within the meaning of

section 221YHA; and (e) is not an exempt inter-corporate payment.

Note 1: Exempt inter-corporate payment is defined by this section.


Section 220AD


Note 2: Section 220ADA clarifies the definition of reportable payment.

signed has the meaning given by section 220AE.

subsidiary has the same meaning as in section 221ED.

Note: This definition is only used in paragraphs (a) and (b) of the definition of exempt inter-corporate payment.

tax file number has the meaning given by section 202A.

tax file number declaration has the meaning given by section 220AM.

tax file number declaration form has the meaning given by section 220AM.

220AD Money not actually paid to a person

For the purposes of this Division, if money is not actually paid to a person but is reinvested, accumulated, capitalised or otherwise dealt with on behalf of the person, or as the person directs, the money is taken to be paid to the person when it is so reinvested, accumulated, capitalised or otherwise dealt with.

220ADA Transfer of reportable payment debts

To avoid doubt, if: (a) a debt is owed to a person; and (b) a payment in satisfaction of the debt would be a reportable

payment (see section 220AC); and (c) the person transfers the whole or part of the debt to another

person in return for a payment;

the last-mentioned payment is a reportable payment.

220AE Signing of documents

Natural persons

(1) For the purposes of this Division, a natural person is taken to have signed a document if, and only if, the document is signed by:

Part VI Collection and recovery of tax Division 1AA Reportable payments system (RPS) Section 220AF


(a) the person; or (b) a person declared by the regulations to be a signatory for the

purposes of this subsection.

Persons other than natural persons

(2) For the purposes of this Division, a person other than a natural person is taken to have signed a document if, and only if, the document is signed by a person declared by the regulations to be a signatory for the purposes of this subsection.

Subdivision C—Payer of reportable payment must make deduction if payee’s tax file number not quoted

220AF Deduction from reportable payment if payee’s tax file number not quoted

When section applies

(1) This section applies if: (a) a payer makes a reportable payment to a payee; and (b) the payee has not quoted his or her tax file number to the

payer in connection with the payment; and (c) the payment is made on or after 1 December 1994 and before

1 July 2000.

Note 1: See section 220AL for the method of quoting tax file numbers.

Note 2: The making of a pensioner exemption declaration is an alternative to quotation of a tax file number—see section 220AP.

Deduction

(2) The payer must deduct: (a) 48.4% of the payment; or (b) if another percentage is specified in regulations made for the

purposes of this subsection—that percentage of the payment. If working out the relevant percentage results in an amount of dollars and cents, the cents are to be disregarded.


Section 220AH


Offence

(3) A person (other than a government body) who contravenes this section is guilty of an offence punishable on conviction by a maximum fine of 10 penalty units.

Note: See section 220AS for an alternative civil penalty for contravening this section.

Subdivision D—Payers’ reporting and record-keeping obligations

220AH Obligation to issue receipt for deduction


(1) This section applies if a payer deducts an amount under this Division from a reportable payment.

Receipt to be given

(2) The payer must give the payee, at the time of the payment or as soon as practicable afterwards, a written receipt, invoice or similar document setting out:

(a) the payer’s name and address; and (b) the payee’s name (if known to the payer); and (c) the payee’s address (if known to the payer); and (d) the date on which the payment was made; and (e) the amount of the payment; and (f) the amount deducted.

Receipt to be in English and signed

(3) A document given by a payer under subsection (2) must be: (a) in the English language; and (b) signed by the payer.

Penalty: 1 penalty unit.

Part VI Collection and recovery of tax Division 1AA Reportable payments system (RPS) Section 220AJ


220AJ Annual report

Requirements for annual report

(1) A payer who makes one or more reportable payments during a financial year ending on or before 30 June 2000 must:

(a) send to the Commissioner a written report setting out, in respect of each payee:

(i) the payee’s tax file number (if quoted to the payer); and (ii) if the payee’s tax file number was not quoted to the

payer but the payee made a pensioner exemption declaration to the payer:

(A) a statement to that effect; and (B) the type of pension or benefit specified in the

pensioner exemption declaration form concerned; and

(iii) the payee’s name (if known to the payer); and (iv) the payee’s address (if known to the payer); and (v) the total amount of the reportable payments made by the

payer to the payee during the financial year; and (vi) the total amount (if any) deducted by the payer under

this Division from those payments; and (b) make a copy of the report.

Note: Section 220AK deals with retention of the copies.

Time limit

(2) A report under subsection (1) relating to a financial year must be given to the Commissioner within 2 months after the end of that financial year or before such later date as the Commissioner allows.

Form of report

(3) The report must be in a form approved by the Commissioner.


Section 220AK


Section not to apply to pre-1 December 1994 payments

(4) This section does not apply to a reportable payment made before 1 December 1994.


(5) If the payer fails to give the Commissioner the report by the time by which it must be given to the Commissioner, the payer is liable to pay the late reconciliation statement penalty.

Note: The late reconciliation statement penalty is worked out under Division 3 of Part IIA of the Taxation Administration Act 1953.

220AK Retention of annual report

Retention of annual report

(2) A person who makes a copy of a report under paragraph 220AJ(1)(b) in relation to a financial year must retain the copy for at least 5 years after the end of the financial year.


Subdivision E—How payees can quote their tax file numbers

220AL Method of quoting tax file number

A payee is taken to have quoted his or her tax file number to a payer in connection with a reportable payment if a tax file number declaration made to the payer by the payee is in force when the payment is made.

Note: See subsection 220AM(2) for the definition of making a tax file number declaration.

220AM Meaning of tax file number declaration

Tax file number declaration form

(1) A tax file number declaration form is a document, in a form approved by the Commissioner for the purposes of this section,

Part VI Collection and recovery of tax Division 1AA Reportable payments system (RPS) Section 220AN


that (in addition to anything else that it requires or permits) enables the person completing the form to state his or her tax file number.

Making a tax file number declaration

(2) If a person (the first person) completes the form and gives it to another person, the first person is said to make a tax file number declaration to the other person at the time when the form is given.

Note: The first person would normally be a payee and the other person would normally be a payer.

220AN When tax file number declaration in force

When declaration in force

(1) A tax file number declaration made by a person (the first person) to another person (the second person) is in force at all times after it is made until any of the following happens:

(a) 29 days pass after the declaration is made without an obligation being imposed on the second person under section 220AQ in relation to the tax file number declaration form concerned;

(b) one year passes after the second person makes a reportable payment to the first person (being a payment made when the declaration is in force) without the first person again becoming entitled to receive a reportable payment from the second person;

(c) the first person makes another tax file number declaration to the second person;

(d) the Commissioner, by notice in the Gazette, determines that: (i) all tax file number declarations cease to be in force; or (ii) a specified class of tax file number declarations that

includes the particular tax file number declaration ceases to be in force;

(e) the declaration ceases to be in force because of subsection (2).

Note: The first person would normally be a payee and the second person would normally be a payer.


Section 220AO


Cancellation—no tax file number

(2) A tax file number declaration ceases to be in force if: (a) the Commissioner is satisfied that the tax file number stated

in the declaration form: (i) has been cancelled since the form was given; or (ii) is for any other reason not the first person’s tax file

number; and (b) the Commissioner is not satisfied that the first person has a

tax file number; and (c) the Commissioner, by written notice given to the second

person and the first person: (i) informs them accordingly; and (ii) states that the declaration ceases to be in force on a

specified day (which must not be earlier than the day on which the notice is given to the first person).

In such a case, the declaration ceases to be in force on the day specified in the notices.

Notification of decisions

(3) If the Commissioner gives the first person a notice under subsection (2), the Commissioner must, together with the notice, give the first person a written statement of the reasons for the decision to give the notice.

220AO Commissioner may correct tax file number set out in tax file number declaration form

(1) If: (a) the Commissioner is satisfied that the tax file number stated

in a tax file number declaration form: (i) has been cancelled or withdrawn since the form was

given; or (ii) is otherwise wrong; and

Part VI Collection and recovery of tax Division 1AA Reportable payments system (RPS) Section 220AP


(b) the Commissioner is satisfied that the person who gave the form (the first person) has a tax file number;

the Commissioner may give the person to whom the declaration was made (the second person) written notice of the incorrect statement and of the correct tax file number.


(2) If the Commissioner does so, the second person must, in any document under this Division requiring the first person’s tax file number that the second person completes after that time (before another tax file number declaration is made by the first person to the second person), state that correct tax file number.

Subdivision F—Making of pensioner exemption declaration to be alternative to quotation of tax file number

220AP Making of pensioner exemption declaration to be alternative to quotation of tax file number

Pensions and benefits to which this section applies

(1) This section applies to the following pensions and benefits: (a) an age pension under Part 2.2 of the Social Security Act

1991; (b) a disability support pension under Part 2.3 of that Act; (c) a wife pension under Part 2.4 of that Act; (d) a carer pension under Part 2.5 of that Act; (f) a widow B pension under Part 2.8 of that Act; (fa) a parenting payment that is a pension PP (single) under

Part 2.10 of that Act; (g) a special benefit under Part 2.15 of that Act; (h) a special needs pension under Part 2.16 of that Act; (i) a pension under Part III of the Veterans’ Entitlements Act

1986.


Section 220AP


Making of pensioner exemption declaration

(2) For the purposes of this Division, a payee is taken to have quoted his or her tax file number to a payer in connection with a reportable payment if a pensioner exemption declaration made to the payer by the payee is in force when the payment is made. However, this rule does not apply for the purposes of section 220AJ (which deals with annual reports by payers).

Note: See subsection (4) for the definition of making a pensioner exemption declaration.

Pensioner exemption declaration form

(3) A pensioner exemption declaration form is a document, in a form approved by the Commissioner for the purposes of this section, that(in addition to anything else that it requires or permits) enables the person completing the form to state that he or she is being paid a pension or benefit.

Making a pensioner exemption declaration

(4) If a person (the first person) completes the form and gives it to another person, the first person is said to make a pensioner exemption declaration to the other person at the time when the form is given.

Note: The first person would normally be a payee and the other person would normally be a payer.

When declaration in force

(5) A pensioner exemption declaration made by a person (the first person) to another person (the second person) is in force at all times after it is made until any of the following happens:

(a) 29 days pass after the declaration is made without an obligation being imposed on the second person under section 220AQ in relation to the pensioner exemption declaration form concerned;

(b) one year passes after the second person makes a reportable payment to the first person (being a payment made when the declaration is in force) without the first person again

Part VI Collection and recovery of tax Division 1AA Reportable payments system (RPS) Section 220AP


becoming entitled to receive a reportable payment from the second person;

(c) the first person makes another pensioner exemption declaration to the second person;

(d) the Commissioner, by notice in the Gazette, determines that: (i) all pensioner exemption declarations cease to be in

force; or (ii) a specified class of pensioner exemption declarations

that includes the particular pensioner exemption declaration ceases to be in force;

(e) the first person makes a tax file number declaration to the second person;

(f) the first person ceases to be paid a pension or benefit.


Commissioner may tell payers and payees about cessation of pension/benefit

(6) If a pensioner exemption declaration made by a person (the first person) to another person (the second person) ceases to be in force because of paragraph (5)(f), the Commissioner may tell the first person and the second person that the declaration has so ceased to be in force. The Commissioner may also explain the reasons for the cessation and the effect of the cessation.


Payees to tell payers about cessation of entitlement to pension/benefit

(7) If a pensioner exemption declaration made by a person (the first person) to another person (the second person) ceases to be in force because of paragraph (5)(f), the first person must tell the second person, in writing, about the cessation as soon as practicable after the cessation occurs.

Penalty for contravention of this subsection: 1 penalty unit.


Section 220AQ



Subdivision G—Payer to send tax file number declaration form or pensioner exemption declaration form to Commissioner

220AQ Obligations of payer—tax file number declaration form or pensioner exemption declaration form

Form to be sent to Commissioner—prior dealings with payee

(1) If: (a) a tax file number declaration form or pensioner exemption

declaration form is given by a person (the first person) to another person (the second person); and

(b) at any time during the period of 12 months ending at the time of receipt by the second person of the form, there was in existence an arrangement that gave rise, or was capable of giving rise, to the making of a reportable payment by the second person to the first person on or before 30 June 2000 (whether on fulfilment of a condition or otherwise);

the second person must: (c) complete the part of the form required to be completed by the

second person; and (d) sign the form; and (e) make a copy of the form; and (f) send the form to the Commissioner in sufficient time for it to

be received by the Commissioner in the ordinary course of events within:

(i) 14 days after receipt by the second person of the form; or

(ii) such longer period as the Commissioner allows.

Note 1: The first person would normally be a payee and the second person would normally be a payer.

Note 2: Section 220AC defines arrangement.

Part VI Collection and recovery of tax Division 1AA Reportable payments system (RPS) Section 220AQ


Form to be sent to Commissioner—no prior dealings with payee

(2) If: (a) a tax file number declaration form or pensioner exemption

declaration form is given by a person (the first person) to another person (the second person); and

(b) at no time during the period of 12 months ending at the time of receipt by the second person of the form was there in existence an arrangement that gave rise, or was capable of giving rise, to the making of a reportable payment by the second person to the first person (whether on fulfilment of a condition or otherwise); and

(c) during the period of 28 days after the receipt by the second person of the form, and on or before 30 June 2000, the second person made one or more reportable payments to the first person;

the second person must: (d) complete the part of the form required to be completed by the

second person; and (e) sign the form; and (f) make a copy of the form; and (g) send the form to the Commissioner in sufficient time for it to

be received by the Commissioner in the ordinary course of events within:

(i) 14 days after the earliest time when any of the payments mentioned in paragraph (c) were made; or

(ii) such longer period as the Commissioner allows.

Note: Section 220AC defines arrangement.

Retention of copy of form

(3) A person who makes a copy of a form under paragraph (1)(e) or (2)(f) must retain that copy until the second 1 July after the day on which the declaration concerned ceases to be in force.



Section 220AR


Subdivision H—Refund of deductions in special circumstances

220AR Commissioner may refund deductions


(1) This section applies if a deduction was made under this Division from a reportable payment to a person.

Application for refund

(2) The person may apply for a refund of the whole or a part of the deduction.

Application to be in writing

(3) The application is to be in writing and must be given to the Commissioner.

Criteria for granting application

(4) The Commissioner must grant the application if the Commissioner is satisfied that:

(a) there are special circumstances that warrant granting the application; and

(b) it would be fair and reasonable to grant the application having regard to:

(i) the purposes of this Division; and (ii) the nature of the act or omission that resulted in the

deduction being made; and (iii) such other matters (if any) as the Commissioner thinks

fit.

No credit for refunded amounts

(5) A person is not entitled to a credit under this Division in respect of an amount refunded under this section.

Part VI Collection and recovery of tax Division 1AA Reportable payments system (RPS) Section 220AS


Subdivision I—Civil penalties for failure to make deductions from reportable payments and for failure to send deductions to the Commissioner

220AS Failure to make deduction from reportable payment

(1) If a person, other than a government body, making a reportable payment to a payee does not deduct from the payment the amount required to be deducted under this Division, the person is liable to pay to the Commissioner an amount, by way of penalty, equal to the amount not deducted.

(2) The person must pay the penalty amount by the time by which, if the person had deducted the amount required to be deducted, the person would have been required to pay that amount to the Commissioner.

(3) If any of the penalty amount remains unpaid after the time by which it is due to be paid, the person is liable to pay the general interest charge on the unpaid penalty amount for each day in the period that:

(a) started at the beginning of the day by which the penalty amount was due to be paid; and


(i) the penalty amount; (ii) general interest charge on any of the penalty amount.


Government bodies

(4) If a government body making a reportable payment to a payee does not deduct from the payment the amount required to be deducted under this Division, the government body is liable to pay the general interest charge on the amount not deducted for each day in the period that:


Section 220AU


(a) started at the beginning of the day on which the payment was made; and

(b) finishes at the end of 30 June in the financial year in which the payment is made.

Note: The general interest charge does not apply to the Commonwealth or authorities of the Commonwealth: see subsection 8AAB(3) of the Taxation Administration Act 1953.

220AU Commissioner may remit penalty for failure to deduct

(1) The Commissioner may remit all or a part of the penalty a person is liable to pay under subsection 220AS(1).

(2) The Commissioner must give written notice to the person if the Commissioner decides:

(a) to remit a part only of the penalty; or (b) not to remit any part of the penalty.

Subdivision J—Payers to have civil protection for making deductions

220AX Payers to have civil protection for making deductions

A person is discharged from all liability to pay, or account for, a deduction to any person other than the Commissioner if:

(a) the person makes the deduction from a reportable payment; and

(b) the deduction was made, or purports to have been made, for the purposes of section 220AF.

Subdivision K—Recovery of amounts payable under this Division

220AY Recovery of amounts by Commissioner

Recoverable amount


Part VI Collection and recovery of tax Division 1AA Reportable payments system (RPS) Section 220AY


recoverable amount means an amount payable to the Commissioner under this Division other than by the Commonwealth.

Debt

(2) A recoverable amount is a debt due to the Commonwealth.

Payable to Commissioner

(3) A recoverable amount is payable to the Commissioner.

Recovery in court

(4) A recoverable amount may be sued for and recovered in a court of competent jurisdiction by the Commissioner or a Deputy Commissioner suing in his or her official name.

Criminal proceedings—ancillary order for payment

(5) If proceedings for an offence against this Division are brought against the person by whom a recoverable amount is payable, the court before which the proceedings are brought may order the person to pay the amount to the Commissioner.

Averments

(6) The provisions of section 8ZL of the Taxation Administration Act 1953 (which deals with averments) apply in proceedings for the recovery of a recoverable amount in a corresponding way to the way in which they apply in relation to a prosecution for a prescribed taxation offence within the meaning of Part III of that Act.

Evidentiary certificate

(7) In an action for the recovery of a recoverable amount, a written certificate stating that the sum specified in the certificate was, as at the date of the certificate, due by a specified person to the Commonwealth in respect of a recoverable amount is prima facie evidence of the matters stated in the certificate. The certificate


Section 220AZ


must be signed by the Commissioner, a Second Commissioner, a Deputy Commissioner or a delegate of the Commissioner.

Application

(8) This section applies or has effect as follows: (a) subsections (2), (3) and (4) do not apply in relation to a

recoverable amount that becomes due and payable on or after 1 July 2000;

(b) an averment must not be made because of subsection (6) on or after 1 July 2000;

(c) a certificate must not be made under subsection (7) on or after 1 July 2000.

Note: For provisions about collection and recovery of recoverable amounts and other amounts on or after 1 July 2000, see Part 4-15 in Schedule 1 to the Taxation Administration Act 1953.

Subdivision L—Tax credits for deductions from reportable payments

220AZ Entitlement to credit—payee neither a partnership nor a trustee

If: (a) any deductions have been made under this Division from

reportable payments made in a year of income to a person (other than a partnership or the trustee of a trust estate); and

(b) an assessment has been made of the tax payable, or the Commissioner is satisfied that no tax is payable, by the person in relation to the year of income;

the person is entitled to a credit of an amount equal to the deductions.

220AZA Entitlement to credit—payee a partnership

If: (a) any deductions have been made under this Division from

reportable payments made in a year of income to a partnership; and

Part VI Collection and recovery of tax Division 1AA Reportable payments system (RPS) Section 220AZB


(b) the return of income of the partnership for the year of income has been lodged with the Commissioner; and

(c) an assessment has been made of the tax payable, or the Commissioner is satisfied that no tax is payable, in relation to the year of income by a partner in the partnership whose individual interest in the net income or partnership loss of the partnership is wholly or partly attributable to the reportable payments;

the partner is entitled to a credit worked out using the formula:

Individual interestDeductions

Net income/partnership loss×

where:

Deductions means the sum of the deductions.

Individual interest means so much of the individual interest as is attributable to the reportable payments.

Net income/partnership loss means so much of the net income or partnership loss as is attributable to the reportable payments.

220AZB Entitlement to credit—payee a trustee


(1) This section applies if any deductions are made under this Division from reportable payments made during a year of income to a trustee of a trust estate.

Trusts—section 97

(2) If: (a) a share of the net income of the trust estate is included in the

assessable income of a beneficiary in the trust estate under section 97, being a share that is wholly or partly attributable to the reportable payments; and


Section 220AZB


(b) an assessment has been made of the tax payable, or the Commissioner is satisfied that no tax is payable, by the beneficiary in relation to the year of income;

the beneficiary is entitled to a credit equal to the amount worked out using the formula:

Share of net incomeDeductions

Net income ×

where:


Share of net income means so much of the share of the net income of the trust estate as is attributable to the reportable payments.

Net income means so much of the net income of the trust estate as is attributable to the reportable payments.

Trusts—section 98

(3) If: (a) the trustee is liable to be assessed under section 98 in respect

of a share of the net income of the trust estate to which a beneficiary is presently entitled, being a share that is wholly or partly attributable to the reportable payments; and

(b) an assessment has been made of the tax payable, or the Commissioner is satisfied that no tax is payable, by the trustee in respect of that share;

the trustee is entitled to a credit equal to the amount worked out using the formula:

Share of net incomeDeductions

Net income ×

where:


Share of net income means so much of the share of the net income of the trust estate as is attributable to the reportable payments.

Part VI Collection and recovery of tax Division 1AA Reportable payments system (RPS) Section 220AZB



Trusts—section 99 or 99A

(4) If: (a) the trustee is liable to be assessed under section 99 or 99A in

respect of the net income, or a part of the net income, of the trust estate and that net income or part is wholly or partly attributable to the reportable payments; and

(b) an assessment has been made of the tax payable, or the Commissioner is satisfied that no tax is payable, by the trustee under those sections in respect of that net income or part;

the trustee is entitled to a credit equal to the amount worked out using the formula:

Part of net incomeDeductions

Net income ×

where:


Part of net income means so much of the net income or part of the net income in respect of which the trustee is so liable to be assessed as is attributable to the reportable payments.


Trusts—no net income

(5) If there is no net income of the trust estate of the year of income, the trustee is entitled to a credit equal to the sum of the deductions.


Section 220AZC


220AZC Application of credits

Credit is a debt owing by the Commonwealth

(1) The amount of the credit to which a person is entitled under this Division is a debt due and payable to that person by the Commissioner on behalf of the Commonwealth.

Deemed payment of tax

(6) If, under Division 3 of Part IIB of the Taxation Administration Act 1953, the Commissioner has applied an amount of a credit in payment of an amount of tax payable by a person, the person is taken to have paid the amount so applied in payment of the tax as at:

(a) the time at which it was so applied; or (b) such earlier time as the Commissioner determines.

Recovery of excess credits

(7) If the amount, or the sum of the amounts, applied or paid by the Commissioner as a credit to which a person is entitled under this Division exceeds the amount of the credit to which the person is so entitled, the Commissioner may recover the amount of the excess as if it were income tax due and payable by the person.

Subdivision M—Miscellaneous

220AZD Power of Commissioner to obtain information

Section 264 applies, for the purposes of this Division, as if the reference in paragraph (1)(b) of that section to a person’s income or assessment were a reference to a matter relevant to the administration or operation of this Division.

Note: Section 264 empowers the Commissioner to obtain information.

Part VI Collection and recovery of tax Division 1AA Reportable payments system (RPS) Section 220AZE


220AZE Declarations

A form that is approved by the Commissioner for the purposes of this Division may be required to contain a declaration by the person using the form.

220AZF Application of this Division to partnerships

(1) This Division applies to a partnership as if the partnership were a person, but it applies with the following changes:

(a) obligations that would be imposed on the partnership are imposed instead on each partner, but may be discharged by any of the partners;

(b) the partners are jointly and severally liable to pay an amount that would be payable by the partnership;

(c) any offence against this Division that would otherwise be committed by the partnership is taken to have been committed by each of the partners.

(2) In a prosecution of a person for an offence that the person is taken to have committed because of paragraph (1)(c), it is a defence if the person proves that the person:

(a) did not aid, abet, counsel or procure the relevant act or omission; and

(b) was not in any way knowingly concerned in, or party to, the relevant act or omission (whether directly or indirectly and whether by any act or omission of the person).

220AZG Application of this Division to unincorporated companies

(1) This Division applies to an unincorporated company as if the company were a person, but it applies with the following changes:

(a) obligations that would be imposed on the company are imposed instead on each member of the committee of management of the company, but may be discharged by any of those members;

(b) any offence against this Division that would otherwise be committed by the company is taken to have been committed


Section 220AZH


by each member of the committee of management of the company.

(2) In a prosecution of a person for an offence that the person is taken to have committed because of paragraph (1)(b), it is a defence if the person proves that the person:

(a) did not aid, abet, counsel or procure the relevant act or omission; and

(b) was not in any way knowingly concerned in, or party to, the relevant act or omission (whether directly or indirectly and whether by any act or omission of the person).

220AZH Review of decisions

(1) This section applies to: (a) a decision of the Commissioner under any of the following

provisions: (i) subsection 220AN(2); (ii) subsection 220AO(1); (iii) section 220AR; and (b) a decision of the Commissioner under section 220AU (other

than a decision relating to a penalty payable under subsection 220AS(3)).

(2) A person who is dissatisfied with a decision made in relation to the person may object against the decision in the manner set out in Part IVC of the Taxation Administration Act 1953.

Part VI Collection and recovery of tax Division 1A Collection by instalments of tax on companies in respect of years of income before the year of income ending on 30 June 1990 Section 221AAA


Division 1A—Collection by instalments of tax on companies in respect of years of income before the year of income ending on 30 June 1990

221AAA Application

This Division does not apply in respect of income of the year of income ending on 30 June 1990 or of any subsequent year of income.

221AA Interpretation

(1) In this Division, income tax or tax does not include income tax that a company is liable to pay in the capacity of a trustee.

(2) In sections 206, 207, 208, 209, 214, 254, 255, 258 and 259, but not in any other section of this Act, income tax or tax includes an instalment of tax payable under this Division.

(3) In sections 208, 209, 214, 254, 255, 258 and 259, but not in any other section of this Act, income tax or tax includes additional tax payable under subsection 221AG(6), (7), (7A) or (7B).

(4) The ascertainment of the amount of any notional tax, or the amount of any instalment of tax, in accordance with this Division shall not be deemed to be an assessment within the meaning of any of the provisions of this Act.

(5) All amounts of instalments of tax shall be calculated to the nearest dollar.

(6) A reference in this Division to the amount of the taxable income of a company of a year shall, if by virtue of Part IIIA the assessable income of the company for that year included a net capital gain within the meaning of that Part, be construed as a reference to the amount that would have been that taxable income if that net capital gain had not been so included.

Collection and recovery of tax Part VI Collection by instalments of tax on companies in respect of years of income before the

year of income ending on 30 June 1990 Division 1A

Section 221AB


221AB Modified application of Division for early balancing companies

(1) This Division applies, in relation to instalments of tax payable by an early balancing company in respect of income of the year of income commencing on 1 July 1986 or a subsequent year of income, as if:

(a) references in section 221AC (including that section as it applies in accordance with section 102L or 102T) and section 221AF to a year of tax were references to the period (in this subsection referred to as the substituted instalment period) of one year commencing on:

(i) the first day of the month next following the month in which the year of income of the company ends; or

(ii) 1 January in the financial year next preceding the year of tax;

whichever is the later; and (b) references in sections 221AF and 221AG to a specified date

in a year of tax were references to the date that precedes the specified date by the number of months in the period commencing on the first day of the substituted instalment period and ending immediately before the beginning of the year of tax.

(2) In this section, early balancing company means a company whose year of income ends more than 1 month before the beginning of the year of tax.

221AC Liability to pay instalments of tax

(1) For the purpose of securing generally the more expeditious collection of income tax payable by companies, a company is liable to pay during the relevant year of tax in accordance with this Division:

(a) 2 instalments of tax in respect of income of the year of income that commenced on 1 July 1976; and

Part VI Collection and recovery of tax Division 1A Collection by instalments of tax on companies in respect of years of income before the year of income ending on 30 June 1990 Section 221AD


(b) 3 instalments of tax in respect of income of the year of income that commences on 1 July 1977 and in respect of income of each subsequent year of income.

221AD Amount of notional tax

(1) Subject to this section, the notional tax of a company in respect of a year of income is an amount equal to the income tax assessed in respect of the taxable income of the company of the year next preceding the year of income.

(1A) The reference in subsection (1) to the income tax assessed in respect of the taxable income of a company of the year next preceding the year of income shall, if by virtue of Part IIIA the assessable income of the company of that next preceding year included a net capital gain within the meaning of that Part, be construed as a reference to the income tax that would have been payable in respect of the taxable income of the company of that year if that net capital gain had not been so included.

(2) Subject to the following provisions of this section, where: (a) the rates of income tax payable by companies for a financial

year are different from the rates declared by the Parliament for the next succeeding financial year; and

(b) provision is made by the regulations for varying the amount of notional tax of companies in respect of the year of income to the income of which the last-mentioned rates apply;

then, on and after such date as is prescribed, the notional tax of the company in respect of that year of income is the amount ascertained in accordance with subsection (1) as varied in accordance with the provision so made by the regulations.

(2A) Where: (a) no assessment has been made of the amount of income tax

payable by a company in respect of its taxable income of the year of income;



Section 221AD


(b) no assessment has been made of the amount of income tax payable by the company in respect of its taxable income of the year next preceding the year of income; and

(c) the Commissioner has reason to believe that income tax will be payable by the company in respect of its taxable income of the year of income;

then, subject to subsection (2B), the notional tax of the company in respect of the year of income is such amount as the Commissioner estimates to be the amount of income tax that will be so payable by the company.

(2AA) Any estimate made for the purposes of this section of the amount of income tax that will be payable by a company in respect of its taxable income of the year of income shall be based on the assumption that the assessable income of the company of the year of income will not include any net capital gain within the meaning of Part IIIA.

(2B) Subject to subsection (3), where, in relation to an instalment of tax in respect of the income of a company of the year of income, the company has estimated in pursuance of subsection 221AG(1) the amount of income tax that will be payable in respect of its taxable income of the year of income and has furnished to the Commissioner a statement in accordance with that subsection, then:

(a) if the amount payable by the company as that instalment of tax is required to be ascertained under subsection 221AG(4)—on and after the date specified in the notice in respect of that instalment of tax served on the company in accordance with section 221AF as the date on which the amount specified in that notice was due and payable the notional tax of the company in respect of the year of income is an amount equal to the amount so estimated by the company; or

(b) if the amount payable by the company as that instalment of tax is required to be ascertained under subparagraph 221AG(5)(b)(i)—on and after the date specified in the notice in respect of that instalment of tax served on the company in

Part VI Collection and recovery of tax Division 1A Collection by instalments of tax on companies in respect of years of income before the year of income ending on 30 June 1990 Section 221AE


accordance with section 221AF as the date on which the amount specified in that notice was due and payable the notional tax of the company in respect of the year of income is an amount equal to the amount estimated by the Commissioner under paragraph 221AG(5)(a) as the amount that, in his opinion, should have been the amount estimated by the company in pursuance of subsection 221AG(1) in respect of the year of income.

(2C) Where: (a) a notice is served on a company in accordance with

section 221AF; (b) the amount specified in the notice as the amount payable by

the company as an instalment of tax in respect of its income of the year of income is calculated by reference to a notional tax of the company in respect of the year of income ascertained in accordance with subsection (2A); and

(c) on or after the date shown on the notice as being the date of issue of the notice an assessment is made of the amount of income tax payable by the company in respect of its taxable income of the year next preceding the year of income;

this section has effect as if that assessment had not been made.

(3) Where an assessment has been made of the amount of income tax payable by a company in respect of its taxable income of the year of income, then, on and after the date shown on the notice of that assessment served on the company as being the date of issue of that notice, the notional tax of the company in respect of the year of income is an amount equal to the amount of income tax so payable.

221AE Amount of instalment of tax

(1) Subject to subsections (2) and (4), the amount payable by a company as an instalment of tax in respect of its income of a year of income is an amount equal to one-quarter of the amount that, on the date shown on the notice in respect of that instalment of tax served on the company in accordance with section 221AF as being



Section 221AE


the date of issue of that notice, is the notional tax of the company in respect of that year of income.

(1A) Where the amount that would, but for this subsection, be payable by a company as an instalment of tax in respect of its income of a year of income is less than:

(a) $250; or (b) if the Commissioner has determined another amount under

subsection (1B) in relation to the year of income, that other amount;

then, unless the Commissioner otherwise determines in relation to the company or a specified class of companies in which the company is included, the instalment is not payable.

(1B) For the purposes of this section, the Commissioner may, by notice published in the Gazette, determine an amount other than $250 as the minimum amount in relation to instalments of tax payable by companies in respect of income of a specified year of income and each subsequent year of income.

(2) The Commissioner may, having regard to the purpose for which this Division was enacted and to particular circumstances that exist in relation to a company, determine that the amount that, but for this subsection, would be payable by the company as an instalment of tax in respect of its income of a year of income shall be reduced by such amount as he thinks appropriate or that an instalment of tax that would otherwise be payable by the company in respect of its income of a year of income is not payable.

(3) The particular circumstances to which regard may be had under subsection (2) in relation to a company include the operation, in relation to the company in relation to the year of income or the year immediately preceding the year of income, of subsection 98A(2), Division 18 of Part III, section 160AQK or Division 3A of this Part, or of the Income Tax (International Agreements) Act 1953-1973.

(4) If the Commissioner has reason to believe that the amount of income tax that will be payable by a company in respect of its

Part VI Collection and recovery of tax Division 1A Collection by instalments of tax on companies in respect of years of income before the year of income ending on 30 June 1990 Section 221AE


taxable income of a year of income will be greater than the notional tax by reference to which an amount payable by the company as an instalment of tax in respect of its income of the year of income is to be calculated, he may, for the purposes of the notice to be served on the company in respect of that instalment in accordance with section 221AF, determine that the amount that, but for this subsection, would be payable by the company under subsection (1) as that instalment of tax shall be increased by such amount as he thinks appropriate.

(5) If, on the date on which income tax becomes due and payable in respect of the taxable income of a company of a year of income, the whole or a part of an amount payable as an instalment of tax in respect of the income of the company of that year of income has not been paid and there is no other instalment of tax in respect of the income of the company of that year of income the whole or a part of which has not been paid:

(a) where no part of the income tax in respect of the taxable income of the company of that year of income has been paid—so much, if any, of the amount unpaid in respect of that instalment as exceeds the amount of that income tax ceases, on that date, to be payable;

(b) where part only of the income tax in respect of the taxable income of the company of that year of income has been paid—so much, if any, of the amount unpaid in respect of that instalment as exceeds the amount of that income tax that has not been paid ceases, on that date, to be payable; or

(c) where the whole of the income tax in respect of the taxable income of the company of that year of income has been paid—the amount unpaid in respect of that instalment ceases, on that date, to be payable.

(6) If, on the date on which income tax becomes due and payable in respect of the taxable income of a company of a year of income, there are 2 or more instalments of tax in respect of the income of the company of that year of income the whole or a part of each of which has not been paid:



Section 221AF


(a) where no part of the income tax in respect of the taxable income of the company of that year of income has been paid or part only of that income tax has been paid—the Commissioner may determine that the whole or any part of all or any of the amounts unpaid in respect of those instalments shall cease, on that date, to be payable; or

(b) where the whole of the income tax in respect of the taxable income of the company of that year of income has been paid—each of the amounts unpaid in respect of those instalments ceases, on that date, to be payable.

(7) In making a determination for the purposes of paragraph (6)(a), the Commissioner shall have regard to the extent, if any, to which the sum of the amounts unpaid in respect of the instalments of tax referred to in that paragraph exceeds the amount of the income tax referred to in that paragraph that has not been paid and to any other relevant matters.

221AF When instalment of tax payable

(1) The Commissioner may, during the year of tax, cause a notice in writing to be served on a company specifying:

(a) the amount payable by the company as an instalment of tax in respect of its income of the year of income; and

(b) the date on which that amount is due and payable.

(2) The date to be specified in a notice under subsection (1) as the date on which an amount is due and payable by a company as an instalment of tax in respect of income of the company of a year of income shall be a date that is not earlier than 30 days after the date of service of the notice and is:

(a) in the case of an instalment of tax in respect of income of the year of income that commenced on 1 July 1976:

(i) if the notice is the first notice served on the company under subsection (1) in respect of income of that year of income—not earlier than 15 November 1977; or

Part VI Collection and recovery of tax Division 1A Collection by instalments of tax on companies in respect of years of income before the year of income ending on 30 June 1990 Section 221AG


(ii) if the notice is the second notice served on the company under that subsection in respect of income of that year of income—not earlier than 15 February 1978; and

(b) in the case of an instalment of tax in respect of income of the company of a subsequent year of income:

(i) if the notice is the first notice served on the company under subsection (1) in respect of income of that year of income—not earlier than 15 August in the relevant year of tax;

(ii) if the notice is the second notice served on the company under that subsection in respect of income of that year of income—not earlier than 15 November in the relevant year of tax; or

(iii) if the notice is the third notice served on the company under that subsection in respect of income of that year of income—not earlier than 15 February in the relevant year of tax.

221AG Estimated income tax

(1) Subject to subsections (2) and (3), a company that has been served with a notice under subsection 221AF(1) may, not later than the date specified in that notice as the date on which the amount of the instalment of tax specified in that notice is due and payable, or within such further period as the Commissioner allows make an estimate of the amount of income tax, if any, that will be payable by the company in respect of its taxable income of the year of income to which the instalment of tax relates and furnish to the Commissioner a statement in writing showing the amount so estimated (in this section referred to as the estimated income tax) and the basis on which the estimate has been made.

(1A) Any estimate made for the purposes of this section of the amount of income tax that will be payable by a company in respect of its taxable income of a year of income shall be based on the assumption that the assessable income of the company of that year



Section 221AG


of income will not include any net capital gain within the meaning of Part IIIA.

(2) A company is not entitled, in relation to an instalment of tax in respect of its income of a year of income, to make an estimate and furnish to the Commissioner a statement in pursuance of subsection (1) if the amount specified in the notice referred to in that subsection as the amount payable by the company as that instalment of tax was calculated by reference to an amount of notional tax ascertained under subsection 221AD(3).

(3) Where, in relation to an instalment of tax in respect of the income of a company of a year of income, the company has made an estimate and furnished to the Commissioner a statement in pursuance of subsection (1), the company is not entitled to make a further estimate and furnish to the Commissioner a further statement in relation to any other instalment of tax in respect of the income of the company of that year of income.

(4) Where a company duly furnishes to the Commissioner, in relation to an instalment of tax, a statement under subsection (1), the amount payable by the company as that instalment is, subject to subsection (5), an amount (in this section and section 221AH referred to as the adjusted instalment of tax) equal to one-quarter of the estimated income tax.

(5) Where, having regard to information in returns of income lodged by the company and any other information in his possession, the Commissioner has reason to believe that the amount of income tax that will be payable by the company in respect of its taxable income of the year of income is different from the estimated income tax:

(a) the Commissioner may estimate the amount that, in his opinion, should have been the amount estimated by the company in pursuance of subsection (1) in respect of that year of income; and

(b) the amount payable by the company as the instalment of tax in relation to which the statement was furnished under subsection (1) is:



(i) an amount equal to one-quarter of the amount of income tax so estimated by the Commissioner; or

(ii) the amount of the instalment of tax as specified in the notice referred to in subsection (1);

whichever is the less.

(5A) Where: (a) 2 or 3 instalments of tax in respect of the income of a

company of a year of income are due and payable on the same day;

(b) the same date is shown on each of the notices served on the company under subsection 221AF(1) in respect of those instalments as being the date of issue of the notice; and

(c) the amount payable by the company as one of those instalments of tax is required to be ascertained under subsection (4) or subparagraph (5)(b)(i);

the amount of the other instalment, or each of those other instalments, of tax payable by the company in respect of its income of the year of income is an amount equal to the amount so ascertained.

(6) If the amount of income tax payable by the company in respect of its taxable income of the year of income exceeds the estimated income tax and that amount of income tax has become due and payable, then additional tax, by way of penalty, in respect of the period that commenced on the day immediately following the date specified in the notice referred to in subsection (1) as the date on which the amount of the instalment of tax specified in that notice was due and payable and ended on the day on which that amount of income tax became due and payable, is due and payable by the company at the rate of 20% per annum on the amount (in subsection (7A) referred to as the prescribed amount) by which:

(a) the amount payable as the instalment of tax as specified in the notice referred to in subsection (1); or

(b) an amount equal to one-quarter of the amount of income tax so payable by the company;

whichever is the less, exceeds:



Section 221AG


(c) the adjusted instalment of tax; or (d) in a case to which subsection (5) applies—the amount

ascertained in accordance with paragraph (b) of that subsection;

whichever is the greater.

(7) Where: (a) an amount payable by the company as an instalment of tax in

respect of its income of the year of income was calculated under subsection 221AE(1) by reference to an amount of notional tax ascertained under subsection 221AD(2B);

(b) the amount of income tax payable by the company in respect of its taxable income of the year of income exceeds the estimated income tax; and

(c) the amount of income tax referred to in paragraph (b) has become due and payable;

then additional tax, by way of penalty, in respect of the period that commenced on the day immediately following the date specified in the notice in respect of that instalment of tax served on the company in accordance with section 221AF as the date on which the amount payable as that instalment of tax was due and payable and ended on the day on which the amount of income tax referred to in paragraph (b) became due and payable, is due and payable by the company at the rate of 20% per annum on the amount by which:

(d) the amount that, but for the operation of subsection 221AD(2B), would have been payable as that instalment of tax under subsection 221AE(1); or

(e) an amount equal to one-quarter of the amount of income tax referred to in paragraph (b);

whichever is the less, exceeds: (f) the adjusted instalment of tax; or (g) the amount that was payable by the company as that

instalment of tax; whichever is the greater.

(7A) Where:



(a) but for the operation of subsection 221AD(2B) or subsections 221AD(2B) and 221AE(1A), a company would have been liable to pay an instalment of tax, or 2 instalments of tax, in respect of its income of a year of income;

(b) the estimated income tax is: (i) nil; or (ii) an amount less than: (A) $1,000; or (B) if the Commissioner has made a determination

under subsection 221AE(1B) in relation to the year of income, 4 times the amount determined by the Commissioner under that subsection in relation to the year of income; and

(c) additional tax under subsection (6) is due and payable by the company in respect of the year of income;

then, additional tax, by way of penalty, in respect of the instalment of tax or each instalment of tax, as the case may be, in respect of the period:

(d) commencing on: (i) 16 November in the relevant year of tax; or (ii) 16 February in the relevant year of tax; whichever is the earliest day on which, but for the operation

of subsection 221AD(2B) or subsections 221AD(2B) and 221AE(1A), as the case may be, the instalment of tax would have been due and payable by the company if a notice under subsection 221AF(1) had been duly served on the company in relation to the instalment of tax not later than 30 days before that day; and

(e) ending on the day on which the amount of income tax payable by the company in respect of its taxable income of the year of income became due and payable;

is due and payable by the company at the rate of 20% per annum on an amount equal to the prescribed amount.

(7B) Where:



Section 221AG


(a) subsection (5A) applies in relation to instalments of tax in respect of the income of a company of a year of income; and

(b) additional tax under subsection (6) is due and payable by the company in respect of the year of income;

additional tax, by way of penalty, equal to: (c) in a case where subsection (5A) applies in relation to 3

instalments of tax—double the amount of additional tax referred to in paragraph (b) of this subsection; or

(d) in a case where subsection (5A) applies in relation to 2 instalments of tax—the amount of additional tax referred to in paragraph (b) of this subsection;

is due and payable by the company.

(7C) Where the Commissioner is satisfied that there are special circumstances by reason of which it would be fair and reasonable to do so, the Commissioner may remit the whole or any part of any additional tax payable by the company under subsection (6), (7), (7A) or (7B).

(8) A reference in this section to the amount of income tax that is or will be payable by a company in respect of its taxable income of a year of income shall be read as a reference to the amount of the income tax that is or will be so payable after deducting:

(a) any credits to which the company is or will be entitled under: (i) subsection 98A(2), Division 18 of Part III or

Division 3A of this Part; or (ii) the International Tax Agreements Act 1953; and (b) any offset to which the company is or will be entitled under

section 160AQK.

(9) In determining for the purposes of this section whether an amount of income tax has become due and payable by a company and, if an amount of income tax has become due and payable by a company, the day on which that amount became due and payable, the operation of section 206 shall be disregarded.

Part VI Collection and recovery of tax Division 1A Collection by instalments of tax on companies in respect of years of income before the year of income ending on 30 June 1990 Section 221AH


221AH Notice of alteration of amount of instalment

(1) Where: (a) a notice has been served on a company under subsection

221AF(1) specifying the amount payable by the company as an instalment of tax in respect of its income of the year of income; and

(b) by reason of: (i) the making of a determination by the Commissioner

under subsection 221AE(2); or (ii) the operation of subsection 221AE(1A), (5) or (6) or

221AG(4), (5) or (5A); the amount payable as the instalment has been reduced or the

instalment is not payable; the Commissioner shall cause to be served on the company a further notice in writing specifying the reduced amount as the amount payable as the instalment or stating that the instalment is not payable, as the case may be, and, if the further notice so specifies a reduced amount, the reduced amount is payable, or shall be deemed to have been payable, as the case may be, on the date specified in the first-mentioned notice.

(2) Where, by reason of the operation of subsection 221AG(5), the amount payable by a company as an instalment of tax is greater than the adjusted instalment of tax, the notice served on the company under subsection (1) of this section continues to have effect but the Commissioner shall cause to be served on the company a further notice in writing specifying:

(a) the amount of the increase in the instalment of tax that became payable by reason of subsection 221AG(5); and

(b) a date as the due date for payment of that amount, being a date not less than 14 days after the date of service of the last-mentioned notice;

and the amount of the increase in the instalment of tax so specified is, notwithstanding the provisions of section 221AF, due and payable on the date so specified.



Section 221AI


(3) Where: (a) subsection 221AG(5A) applies in relation to instalments of

tax in respect of the income of a company of a year of income; and

(b) a notice is served on the company under subsection (2) of this section specifying:

(i) the amount of the increase in an instalment of tax in respect of the income of the company of the year of income that became payable by reason of subsection 221AG(5); and

(ii) a date as the due date for payment of that amount; so much of each of the other instalments of tax referred to in paragraph (a) as is equal to the amount referred to in subparagraph (b)(i) is, notwithstanding the provisions of section 221AF, due and payable on the date so specified.

221AI Application of payments of instalments of tax

(1) Where: (a) a company has been served, in accordance with subsection

221AF(1), with a notice specifying an amount payable as an instalment of tax in respect of its income of a year of income;

(b) the company has been served, in accordance with subsection 221AH(1), with a further notice specifying a reduced amount as the amount of the instalment; and

(c) the company has paid, in respect of the instalment, an amount exceeding:

(i) in a case to which subparagraph (ii) does not apply—the reduced amount; or

(ii) if the company has been served in accordance with subsection 221AH(2) with a further notice specifying an amount of an increase in that instalment—the sum of the reduced amount and the amount of the increase;

the Commissioner shall credit the amount of the excess in payment successively of:

Part VI Collection and recovery of tax Division 1A Collection by instalments of tax on companies in respect of years of income before the year of income ending on 30 June 1990 Section 221AJ


(d) any income tax due and payable by the company in respect of its taxable income of that year of income;

(e) any amount payable by the company as any other instalment of tax in respect of its income of the year of income whether or not that amount is due for payment; and

(f) any other income tax or any withholding tax payable by the company whether or not that income tax or withholding tax is due for payment;

and is liable to refund to the company so much of the excess as is not so credited.

(2) Where a company has paid the whole or a part of an instalment of tax in respect of its income of a year of income and:

(a) an assessment has been made of the amount of income tax payable by the company in respect of its taxable income of that year of income; or

(b) the Commissioner is satisfied that no income tax will be payable by the company in respect of its taxable income, if any, of that year of income;

the Commissioner shall credit the amount (in this subsection referred to as the residual amount) remaining after deducting from the amount so paid by the company any part of the amount so paid that has been, or is required to be, credited or refunded in accordance with subsection (1) in payment successively of:

(c) any income tax payable by the company in respect of that taxable income whether or not that income tax is due for payment; and

(d) any other income tax or any withholding tax payable by the company whether or not that income tax or withholding tax is due for payment;

and is liable to refund to the company so much of the residual amount as is not so credited.

221AJ Notice of instalment of tax to be prima facie evidence

(1) The production of a notice specifying an amount payable by a company as an instalment of tax, or of a document under the hand



Section 221AJ


of the Commissioner, a Second Commissioner or a Deputy Commissioner purporting to be a copy of such a notice, is prima facie evidence that the amount of the instalment and all particulars relating to the instalment are correct.

(2) In this section, a reference to an instalment of tax includes a reference to an increase in an instalment of tax.

Part VI Collection and recovery of tax Division 1B Collection of Tax on Companies and Trustees of certain Funds Section 221AK


Division 1B—Collection of Tax on Companies and Trustees of certain Funds

221AK General interpretative provisions

(1) In this Division, unless the contrary intention appears:

AD/RLA component has the same meaning as in Division 8 of Part III.

amount, in relation to an estimate by a relevant entity of the income tax that will be payable in respect of its taxable income of a year of income, includes a nil amount.

company includes a trustee of a corporate unit trust and a trustee of a public trading trust but does not otherwise include a company in the capacity of a trustee.

corporate unit trust means a unit trust that is a corporate unit trust within the meaning of Division 6B of Part III.

CS/RA component: (a) in relation to the taxable income of a life assurance

company—has the same meaning as in Division 8 of Part III; or

(b) in relation to the taxable income of a registered organization—has the same meaning as in Division 8A of Part III.

EIB component has the same meaning as in Division 8A of Part III.

general fund component has the same meaning as in Division 8 of Part III.

initial payment of tax means a payment of tax that is required by section 221AP to be made by a relevant entity.

month means one of the 12 months of the year.

Collection and recovery of tax Part VI Collection of Tax on Companies and Trustees of certain Funds Division 1B

Section 221AK


NCS component: (a) in relation to the taxable income of a life assurance

company—has the same meaning as in Division 8 of Part III; or

(b) in relation to the taxable income of a registered organization—has the same meaning as in Division 8A of Part III.

public trading trust means a unit trust that is a public trading trust within the meaning of Division 6C of Part III.

relevant entity, in relation to a year of income, means: (a) a company; or (b) any person in the capacity of a trustee of: (i) a fund that is an eligible ADF in relation to that year of

income; or (ii) a fund that is an eligible superannuation fund in relation

to that year of income; or (iii) a unit trust that is a pooled superannuation trust in

relation to that year of income.

registered organization has the same meaning as in Division 8A of Part III.

taxable income: (a) in relation to a relevant entity being the trustee of a corporate

unit trust or of a public trading trust, means the net income of the corporate unit trust or of the public trading trust, as the case may be; and

(b) in relation to a relevant entity being the trustee of a fund or unit trust referred to in paragraph (b) of the definition of relevant entity, means the taxable income of the fund or trust, as the case may be.

year of income to which this Division applies means the year of income ending on 30 June 1990 or a subsequent year of income.

Part VI Collection and recovery of tax Division 1B Collection of Tax on Companies and Trustees of certain Funds Section 221AKA


(2) Subject to subsection (1), expressions used in this Division that are defined in section 267 have, in this Division, the same meanings as they have in that section.

(3) In sections 206, 207, 207A, 208, 209, 214, 254, 255, 258 and 259, but not in any other section, income tax or tax includes a payment that a relevant entity is required to make as an initial payment of tax or a final payment of tax under this Division.

(4) In sections 208, 209, 214, 254, 255, 258 and 259, but not in any other section, income tax or tax includes additional tax payable under section 221AY or 221AZE.

(5) The ascertainment of the amount of any notional tax, or the amount of any initial payment of tax, in accordance with this Division is not to be taken to be an assessment within the meaning of any of the provisions of this Act.

(6) The amount of an initial payment of tax is to be calculated to the nearest dollar.

221AKA Termination of operation of this Division

(1) This Division does not apply to a taxpayer in relation to a year of income if Division 1C applies to the taxpayer for that year of income.

(2) If this Division ceases to apply to a taxpayer because of subsection (1), the taxpayer is no longer to be regarded as a relevant entity within the meaning of this Division for any purpose of this Act.

(3) This Division does not apply to a taxpayer for the 2000-01 income year or a later income year.

Note: For the 2000-01 income year a taxpayer may be liable to pay PAYG instalments: see Division 45 in Schedule 1 to the Taxation Administration Act 1953.


Section 221AL


221AL Net capital gains to be disregarded in making certain calculations

In the making of an estimate for the purpose of calculating the amount of an initial payment of tax to be made by a relevant entity under this Division, a reference in this Division to the income tax that will be or would be payable in respect of the taxable income of the entity of a year of income is, in the case of an entity that is a company whose assessable income of that year of income included a net capital gain within the meaning of Part IIIA, to be taken to be a reference to:

(a) in the case of a company other than a life assurance company or a registered organization—the income tax that would be payable in respect of the amount that would have been the taxable income of that company of that year of income if that net capital gain had not been included; and

(b) in the case of a life assurance company—the sum of: (i) the income tax that will be payable in respect of the

CS/RA component of the company’s taxable income of that year of income; and

(ii) in relation to each of the NCS component, the general fund component (if any) and the AD/RLA component of the company’s taxable income of that year of income:

(A) if the part of the company’s assessable income of that year of income to which that component relates included a net capital gain within the meaning of Part IIIA—the income tax that would be payable in respect of the amount that would have been that component if that net capital gain had not been included; or

(B) otherwise—the income tax that will be payable in respect of that component; and

(c) in the case of a registered organization—the sum of: (i) the income tax that will be payable in respect of the

CS/RA component of the organization’s taxable income of that year of income; and

(ii) in relation to each of the NCS component, the RSA combined component (if any) and the EIB component of

Part VI Collection and recovery of tax Division 1B Collection of Tax on Companies and Trustees of certain Funds Section 221AM


the organization’s taxable income of that year of income:

(A) if the part of the organization’s assessable income of that year of income to which that component relates included a net capital gain within the meaning of Part IIIA—the income tax that would be payable in respect of the amount that would have been that component if that net capital gain had not been included; or

(B) otherwise—the income tax that will be payable in respect of that component.

221AM When income tax becomes due and payable

For the purposes of this Act, income tax in respect of a relevant entity’s taxable income of a year of income to which this Division applies becomes due and payable:

(a) if the entity is required to make a payment under section 221AZD in respect of that year of income:

(i) if the entity furnishes the return on or before the day by which the entity is required to make the payment—on that day; or

(ii) if the entity furnishes the return after the day by which the entity is required to make the payment—on the day on which the return is furnished; or

(b) if the entity is not required to make a payment under section 221AZD in respect of that year of income otherwise than because no amount of income tax is payable—on the day that would have been applicable under paragraph (a) if the entity had been required to make such a payment under section 221AZD.

221AN Modified application of Division for certain entities with substituted accounting periods

(1) Subject to subsection (2), this section applies, in respect of a year of income to which this Division applies, to a relevant entity that has adopted or adopts under this Act, in lieu of that year of income,


Section 221AN


an accounting period ending on a date (in this section called the substituted date) other than 30 June (in this section called the relevant 30 June).

(2) This section does not apply to an entity in respect of a year of income if the substituted date is earlier than the relevant 30 June but not earlier than 1 June next preceding the relevant 30 June.

(3) For the purposes of the application of this Division to an entity to which this section applies in respect of a year of income:

(a) if the substituted date is earlier than 31 December next preceding the relevant 30 June:

(i) the reference in section 221AP to 28 July next following a year of income is to be taken to be a reference to 28 January next following that 31 December; and

(ii) the reference in section 221AZD to 15 March next following a year of income is to be taken to be a reference to:

(A) in the case of an entity that has made an election under subsection 221AU(1) in respect of the year of income—15 June next following that 31 December; or

(B) in any other case—15 September next following that 31 December; or

(b) if the substituted date is not earlier than 31 December next preceding the relevant 30 June but is earlier than 1 June next preceding the relevant 30 June:

(i) the reference in section 221AP to 28 July next following a year of income is to be taken to be a reference to the 28th day of the month next following the month in which the substituted date occurs; and


(A) in the case of an entity that has made an election under subsection 221AU(1) in respect of the year of income—the 15th day of the sixth

Part VI Collection and recovery of tax Division 1B Collection of Tax on Companies and Trustees of certain Funds Section 221AO


month next following the month in which the substituted date occurs; or

(B) in any other case—the 15th day of the ninth month next following the month in which the substituted date occurs; or

(c) if the substituted date is later than the relevant 30 June: (i) the reference in section 221AP to 28 July next following

a year of income is to be taken to be a reference to the 28th day of the month next following the month in which the substituted date occurs; and


(A) in the case of an entity that has made an election under subsection 221AU(1) in respect of the year of income—the 15th day of the sixth month next following the month in which the substituted date occurs; or

(B) in any other case—the 15th day of the ninth month next following the month in which the substituted date occurs;

or the 15th day of June next following the relevant 30 June, whichever is the earlier day.

221AO Liability to make payments under this Division

For the purpose of securing generally the more expeditious collection of income tax payable by relevant entities, a relevant entity is liable to make payments in accordance with this Division in respect of its taxable income of each year of income to which this Division applies.

221AP When initial payment to be made

(1) Subject to sections 221AN, 221AT, 221AU and 221AV, a relevant entity must make an initial payment of tax in respect of its taxable income of a year of income to which this Division applies not later than 28 July next following that year of income.


Section 221AQ


(2) An initial payment of tax is due and payable on the day referred to in subsection (1).

221AQ Amount of initial payment

(1) Subject to this Division, the amount of an initial payment of tax to be made by a relevant entity in respect of its taxable income of a year of income is 85% of:

(a) the amount specified in a written notice given by the entity to the Commissioner to be the amount estimated by the entity to be the income tax that will be payable in respect of its taxable income of that year of income; or

(b) if no such notice is given—the entity’s notional tax in respect of that year of income.

(2) A notice given under paragraph (1)(a) in relation to a year of income:

(a) must specify the amount estimated by the entity to be the income tax that will be payable in respect of its taxable income of that year of income; and

(b) is irrevocable.

(3) If: (a) a relevant entity gives a notice under paragraph (1)(a) at a

time after the relevant entity made the initial payment of tax in respect of its taxable income of the year of income to which the notice relates; and

(b) the entity had paid as that initial payment an amount that was not less than 85% of its notional tax in respect of that year of income; and

(c) the amount estimated by the entity to be the income tax that will be payable in respect of its taxable income of that year of income is less than its notional tax in respect of that year of income;

the Commissioner must, as soon as practicable, refund to the entity an amount equal to 85% of the difference between the amount so estimated and that notional tax.

Part VI Collection and recovery of tax Division 1B Collection of Tax on Companies and Trustees of certain Funds Section 221AR


221AR Power of relevant entity to revise estimate in certain circumstances

(1) A relevant entity that had given a notice under paragraph 221AQ(1)(a) in respect of a year of income at the time when the initial payment of tax in respect of its taxable income of that year of income was made may, before the date by which it is required to make a final payment of tax in respect of its taxable income of that year of income, by written notice given to the Commissioner, make a revised estimate of the amount of the income tax that will be payable in respect of its taxable income of that year of income in substitution for the estimate made by it under that paragraph.

(2) An entity is entitled to make only one revised estimate under subsection (1) in respect of each year of income.

(3) If the Commissioner has made a determination under section 221AW in respect of the income tax that will be payable by a relevant entity in respect of its taxable income of a year of income, the entity is not entitled to make a revised estimate under subsection (1) of this section of that income tax that would be less than the amount determined by the Commissioner.

(4) If, by virtue of a determination made by the Commissioner under section 221AX, the amount estimated by a relevant entity under paragraph 221AQ(1)(a) to be the income tax that will be payable in respect of its taxable income of a year of income is increased, the entity is not entitled to make a revised estimate under subsection (1) of this section of that income tax that would be less than the increased amount.

(5) If a relevant entity makes a revised estimate under subsection (1) of the income tax that will be payable in respect of its taxable income of a year of income that exceeds the amount of the estimate of that income tax that was made by the entity under paragraph 221AQ(1)(a), the entity must pay to the Commissioner, when notice of the revised estimate is given to the Commissioner, an amount equal to 85% of the excess.


Section 221AS


(6) If a relevant entity makes a revised estimate under subsection (1) of the income tax that will be payable in respect of its taxable income of a year of income that is less than the amount of the estimate of that income tax that was made by the entity under paragraph 221AQ(1)(a), the Commissioner must, as soon as practicable, refund to the entity an amount equal to 85% of the difference.

(7) Nothing in this section prevents a relevant entity that has made an initial payment of tax in respect of its taxable income of a year of income from making a further payment or payments on account of tax in respect of that taxable income at any time or times before the day on which the entity makes a final payment of tax in respect of that taxable income under section 221AZD.

221AS Statement as to basis of estimate

If a relevant entity makes an estimate or revised estimate of the income tax that will be payable in respect of its taxable income of a year of income, the entity must, if required to do so by the Commissioner by written notice served on the entity, give to the Commissioner, within the period specified in the notice, a written statement showing the basis on which the estimate or revised estimate, as the case may be, was made and containing such information and explanations in connection with the application of this Division (including, without limiting the generality of the foregoing, information and explanations as to any matters referred to in sub-subparagraphs 221AX(4)(b)(ii)(A) to (H) (inclusive)) as are specified in the notice.

Penalty: $3,000.

221AT Circumstances in which initial payment not required

(1) Where the amount ascertained in relation to a relevant entity in respect of a year of income to which this Division applies in accordance with the formula

100 otherwise required initial payment

85

×

Part VI Collection and recovery of tax Division 1B Collection of Tax on Companies and Trustees of certain Funds Section 221AU


is less than: (a) except where paragraph (b) applies—$1,000; or (b) if the Commissioner has determined another amount under

subsection (2) in relation to that year of income—that other amount;

then, unless the Commissioner otherwise determines in relation to the entity or a specified class of entities in which the entity is included, the entity is not required to make an initial payment of tax in respect of that year of income.

(2) For the purposes of this section, the Commissioner may, by notice published in the Gazette, determine an amount other than $1,000 to be the minimum amount in relation to initial payments of tax payable by relevant entities in respect of taxable income of a specified year of income and each subsequent year of income.


otherwise required initial payment, in relation to a relevant entity in respect of a year of income, means the amount that, but for this section, would be payable by the entity (whether as a result of the giving of a notice under paragraph 221AQ(1)(a) or otherwise) as an initial payment of tax in respect of its taxable income of that year of income.

221AU Election to make single payment

(1) Where the amount ascertained in relation to a relevant entity in respect of a year of income to which this Division applies in accordance with the formula

100 otherwise required initial payment

85

×

is not less than the amount applicable under paragraph 221AT(1)(a) or (b), as the case may be, but is less than:

(a) in the case of the year of income ending on 30 June 1990—$400,000; or


Section 221AU


(b) in the case of a subsequent year of income—$20,000; then, unless the Commissioner otherwise determines in relation to the entity or a specified class of entities in which the entity is included, the entity may, by written notice given to the Commissioner, elect that this section is to apply to the entity in respect of that year of income.

(2) Where an election is made by an entity under subsection (1) in respect of a year of income (in this subsection called the relevant year of income):

(a) the entity is not required to make an initial payment of tax in respect of its taxable income of the relevant year of income; and

(b) for the purposes of the application of this Division to the entity in respect of the relevant year of income, the reference in section 221AZD to 15 March next following a year of income is, except in the case of an entity to which section 221AN applies, to be taken to be a reference to 15 December next following the relevant year of income.

(3) An election under subsection (1) is irrevocable.

(4) If a relevant entity makes an election under subsection (1) at a time after the relevant entity made an initial payment of tax in respect of its taxable income of the year of income to which the election relates, the Commissioner must, as soon as practicable, refund to the entity the amount paid.


otherwise required initial payment, in relation to a relevant entity in respect of a year of income, means the amount that, but for this section, would be payable by the entity (whether as a result of the giving of a notice under paragraph 221AQ(1)(a) or otherwise) as an initial payment of tax in respect of its taxable income of that year of income.

Part VI Collection and recovery of tax Division 1B Collection of Tax on Companies and Trustees of certain Funds Section 221AV


221AV Power of Commissioner to reduce amount of initial payment or waive initial payment

(1) The Commissioner may, having regard to the purpose for which this Division was enacted and to particular circumstances that exist in relation to a relevant entity, determine:

(a) that the amount that, but for this subsection, would be payable by the entity as an initial payment of tax in respect of its taxable income of a year of income is to be reduced by such amount as the Commissioner thinks appropriate; or

(b) that the entity is not required to make an initial payment of tax in respect of its taxable income of a year of income.

(2) The particular circumstances to which regard may be had under subsection (1) in relation to a relevant entity include the operation, in relation to the entity in relation to the year of income referred to in that subsection or the next preceding year of income, of subsection 98A(2), Division 18 of Part III, section 160AQK or Division 1AA or 3A of this Part, or of the International Tax Agreements Act 1953.

(3) Where the Commissioner makes a determination under subsection (1), the Commissioner must cause a written notice to be served on the relevant entity setting out:

(a) in the case of a determination under paragraph (1)(a)—the amount of the reduction; or

(b) in the case of a determination under paragraph (1)(b)—the effect of the determination.

(4) Where a relevant entity has made an initial payment of tax in respect of its taxable income of a year of income and, because of a determination under subsection (1):

(a) the amount of the payment exceeded the amount that the entity was required to pay; or

(b) the entity was not required to make the payment; the Commissioner must, as soon as practicable, refund to the entity the excess or the amount of the payment, as the case may be.


Section 221AW


221AW Power of Commissioner to vary estimate of income tax

(1) Subject to this section, if: (a) a relevant entity has given a notice under paragraph

221AQ(1)(a) in respect of a year of income; and (b) the Commissioner has reason to believe that the amount of

income tax that will be payable by the entity in respect of its taxable income of that year of income will be greater or less than the amount of the estimate or of a revised estimate, as the case may be, of that income tax made by the entity under this Division;

the Commissioner may, for the purposes of section 221AQ, determine that such amount as the Commissioner thinks appropriate is to be substituted for the amount of that estimate or revised estimate.

(2) A determination under subsection (1) in relation to a relevant entity in respect of a year of income is of no effect if it would result in the amount of the initial payment of tax that is required to be made by the entity in respect of its taxable income of that year of income being increased to an amount exceeding 85% of the entity’s notional tax in respect of that year of income.

(3) Where the Commissioner makes a determination under subsection (1), the Commissioner must cause a written notice to be served on the relevant entity specifying:

(a) the amount that, by virtue of the determination, is to be substituted for the amount of the entity’s estimate or revised estimate of the income tax that will be payable in respect of its taxable income of the year of income to which the determination relates and the basis on which the determination was made; and

(b) the date on which the determination takes effect, being a date not less than 30 days after the date of service of the notice.

(4) Any additional amount that, because of a determination under subsection (1), is payable by a relevant entity in respect of the initial payment of tax that the entity is required to make under section 221AP in respect of its taxable income of the year of

Part VI Collection and recovery of tax Division 1B Collection of Tax on Companies and Trustees of certain Funds Section 221AX


income to which the determination relates is payable not later than the date on which the determination takes effect.

(5) Where a relevant entity has made an initial payment of tax in respect of its taxable income of a year of income and, because of a determination under subsection (1):

(a) the amount of the payment exceeded the amount that the entity was required to pay; or

(b) the entity was not required to make the payment; the Commissioner must, as soon as practicable, refund to the entity the excess or the amount of the payment, as the case may be.

221AX Initial payment avoidance arrangements


arrangement means: (a) any agreement, arrangement, understanding, promise or

undertaking, whether express or implied, and whether or not enforceable, or intended to be enforceable, by legal proceedings; and

(b) any scheme, plan, proposal, action, course of action or course of conduct, whether unilateral or otherwise.

(2) A reference in this section to the carrying out of an arrangement by a person includes a reference to the carrying out of an arrangement by a person together with any other person or persons.

(3) A reference in this section to an arrangement or a part of an arrangement being entered into or carried out by a person for a particular purpose includes a reference to the arrangement or the part of the arrangement being entered into or carried out by the person for 2 or more purposes of which that particular purpose is the dominant purpose.

(4) Where: (a) a relevant entity has given a notice under paragraph

221AQ(1)(a) in respect of a year of income (in this section called the relevant year of income); and


Section 221AX


(b) the Commissioner is of the opinion that: (i) the entity has obtained or, but for this subsection would

obtain, a benefit (in this section called an initial payment tax benefit) in relation to its obligation to make an initial payment of tax in respect of its taxable income of the relevant year of income, in connection with an arrangement, whether entered into within Australia or outside Australia, or partly within and partly outside Australia, and whether entered into before or after the commencement of this section; and

(ii) having regard to any one or more of the following: (A) the manner in which the arrangement was

entered into or carried out; (B) the form and substance of the arrangement; (C) the time at which the arrangement was entered

into and the length of the period during which the arrangement was carried out;

(D) the result in relation to the operation of this Division that, but for this section, would be achieved by the arrangement;

(E) any change in the financial position of the entity that has resulted, will result, or may reasonably be expected to result, from the arrangement;

(F) any change in the financial position of any person who has, or has had, any connection (whether of a business, family or other nature) with the entity, being a change that has resulted, will result, or might reasonably be expected to result, from the arrangement;

(G) any other consequence for the entity, or for any person referred to in sub-subparagraph (F), of the arrangement having been entered into or carried out;

(H) the nature of any connection (whether of a business, family or other nature) between the



entity and any person referred to in sub-subparagraph (F);

it would be concluded that the person, or one of the persons, who entered into or carried out the arrangement or any part of the arrangement did so for the purpose of enabling the entity to obtain an initial payment tax benefit in connection with the arrangement or of enabling the entity and another taxpayer or other taxpayers each to obtain an initial payment tax benefit in connection with the arrangement (whether or not the person who entered into or carried out the arrangement or any part of the arrangement is the entity or is the other taxpayer or one of the other taxpayers);

the following provisions of this section have effect.

(5) The Commissioner may determine either: (a) that the amount of the initial payment of tax to be made by

the entity in respect of its taxable income of the relevant year of income is to be taken for the purposes of this Division to be 85% of the entity’s notional tax in respect of that year of income; or

(b) that the amount of the estimate or of a revised estimate, as the case may be, made by the entity under this Division of the income tax that would be payable in respect of its taxable income of the relevant year of income is to be taken for the purposes of this Division to be increased by the amount of the initial payment tax benefit.

(6) If the Commissioner makes a determination under subsection (5), the Commissioner must cause to be served on the entity written notice:

(a) stating that the Commissioner is of opinion as set out in subsection (4); and

(b) specifying the nature and amount of the initial payment tax benefit; and

(c) setting out the terms of the determination made under subsection (5); and


Section 221AX


(d) specifying the date of effect of the determination, being a date not less than 7 days after the date of service of the notice.

(7) A determination under subsection (5) has effect despite any other provision of this Division.

(8) Any additional amount that, because of a determination under subsection (5), is payable by a relevant entity in respect of the initial payment of tax that the entity is required to make under section 221AP in respect of its taxable income of the relevant year of income is payable not later than the date on which the determination takes effect.

(9) After the determination comes into effect, the entity is not entitled to make a revised estimate under section 221AR of the income tax that will be payable in respect of its taxable income of the relevant year of income if:

(a) in the case of a determination under paragraph (5)(a)—the revised estimate would result in the amount of the initial payment of tax to be made by the entity in respect of its taxable income of the relevant year of income being less than 85% of the entity’s notional tax in respect of that year of income; or

(b) in the case of a determination under paragraph (5)(b) in respect of an estimate made by the entity under paragraph 221AQ(1)(a)—the revised estimate would be less than the amount of the entity’s estimate under that last-mentioned paragraph as increased by the determination.

(10) A reference in this section to the obtaining by an entity of a benefit in relation to its obligation to make an initial payment of tax in respect of its taxable income of the relevant year of income in connection with an arrangement is a reference to the amount of the estimate or of a revised estimate, as the case may be, made by the entity under this Division of the income tax that would be payable in respect of its taxable income of that year of income being less than it would otherwise have been because of:

(a) in the case of an entity that is a company:



(i) an amount not being included in the company’s assessable income of that year of income where that amount would have been so included, or might reasonably be expected to have been so included, if the arrangement had not been entered into or carried out; or

(ii) a deduction being allowable to the company in relation to that year of income where the whole or a part of that deduction would not have been so allowable, or might reasonably be expected not to have been so allowable, if the arrangement had not been entered into or carried out; or

(b) in the case of an entity that is a trustee of a fund or unit trust referred to in paragraph (b) of the definition of relevant entity in subsection 221AK(1):

(i) an amount not being included in the assessable income of the fund or trust of that year of income where that amount would have been so included, or might reasonably be expected to have been so included, if the arrangement had not been entered into or carried out; or

(ii) a deduction being allowable to the trustee in relation to that year of income where the whole or a part of that deduction would not have been so allowable, or might reasonably be expected not to have been so allowable, if the arrangement had not been entered into or carried out.

(11) For the purposes of this section, the amount of an initial payment tax benefit obtained by a relevant entity in relation to the relevant year of income is to be taken to be:

(a) if, apart from this section, the entity would be required to make an initial payment of tax in respect of its taxable income of that year of income—the amount by which that payment would have been greater if the entity had not obtained that initial payment tax benefit in relation to that year of income; or

(b) if, apart from this section, the entity would not be required to make an initial payment of tax in respect of its taxable income of that year of income—the amount of the initial


Section 221AX


payment of tax in respect of that taxable income that the entity would have been required to make if the entity had not obtained that initial payment tax benefit in relation to that year of income.

(12) Subsections (5) to (11), inclusive, do not apply, and are to be taken never to have applied, in relation to an initial payment tax benefit obtained by a relevant entity in respect of the relevant year of income if the Commissioner is satisfied that:

(a) as a result of the arrangement referred to in subsection (4): (i) the initial payment of tax that another relevant entity has

made in respect of its taxable income of that year of income has increased; or

(ii) the initial payments of tax that 2 or more other relevant entities have made in respect of their taxable incomes of that year of income have increased; and

(b) the amount of the increase, or the sum of the amounts of the increases, as the case may be, is not less than the amount of the initial payment tax benefit obtained by the first-mentioned entity in respect of that year of income.

(13) If the Commissioner becomes satisfied under subsection (12) after the serving of a notice under subsection (6), the Commissioner must cause to be served on the entity a further notice informing the entity that the determination does not have, and is to be taken never to have had, any effect.

(14) If: (a) because of a determination under subsection (5), a relevant

entity has paid an additional amount under subsection (8); and

(b) after the payment of the additional amount, a notice in respect of the determination is served on the entity under subsection (13);

the Commissioner must, as soon as practicable, refund the additional amount to the entity.

Part VI Collection and recovery of tax Division 1B Collection of Tax on Companies and Trustees of certain Funds Section 221AY


221AY Additional tax if income or deduction transferred under avoidance scheme

(1) If: (a) the Commissioner is of the opinion in relation to a relevant

entity in respect of a year of income to which this Division applies (in this section called the relevant year of income) that, in connection with an arrangement referred to in subsection 221AX(1):

(i) an amount has been included in the assessable income of the entity of the relevant year of income where the entity is a company, or in the assessable income of the relevant fund or unit trust of the relevant year of income where the entity is a trustee of a fund or unit trust, being an amount that would not have been so included, or might reasonably be expected not to have been so included, if the arrangement had not been entered into or carried out; or

(ii) a deduction is not allowable to the entity in relation to the relevant year of income where the whole or a part of that deduction would have been so allowable, or might reasonably be expected to have been so allowable, if the arrangement had not been entered into or carried out; and

(b) the entity did not give a notice under paragraph 221AQ(1)(a) in relation to the relevant year of income; and

(c) income tax has become due and payable by the entity in respect of its taxable income of the relevant year of income;

the following provisions of this section have effect.

(2) If the entity was not required to make an initial payment of tax in respect of its taxable income of the relevant year of income, additional tax, by way of penalty, in respect of the period that:

(a) commenced on the day by which, if such an initial payment of tax had been payable by the entity, that payment would have been required to be made; and


Section 221AY


(b) ended on the day on which the entity makes the payment that it is required by section 221AZD to make in respect of the relevant year of income;

is due and payable by the entity, at the rate of 16% per annum on the amount equal to 85% of the amount calculated by the entity under that section to be the income tax that is payable in respect of its taxable income of the relevant year of income.

(3) If the entity made an initial payment of tax in respect of its taxable income of the relevant year of income, additional tax, by way of penalty, in respect of each day (in this subsection called the day concerned) during the period that:

(a) commenced on the day by which the entity was required to make that initial payment; and

(b) ended on the day on which the entity makes the payment that it is required by section 221AZD to make in respect of the relevant year of income;

is due and payable by the entity, at the rate of 16% per annum, on the amount by which 85% of the amount calculated by the entity under that section to be the income tax that is payable in respect of its taxable income of that year of income exceeds the amount, or the total of the amounts, paid by the entity on or before the day concerned in respect of that initial payment of tax.

(4) Where the entity received a refund in respect of an amount paid as an initial payment of tax in respect of its taxable income of the relevant year of income under this Division:

(a) subject to paragraph (b), the amount, or the total of the amounts, paid by the entity in respect of that initial payment of tax is to be taken, for the purposes of this section, to have been reduced, on and after the date of receipt of the refund, by the amount of the refund; or

(b) if the entity received the refund because a determination under section 221AV reduced the amount of the initial payment that the entity was liable to make in respect of its taxable income of the relevant year of income—paragraph (a) does not apply and subsection (3) has effect as if the entity had not received the refund.

Part VI Collection and recovery of tax Division 1B Collection of Tax on Companies and Trustees of certain Funds Section 221AZ


(5) Where the Commissioner is satisfied that there are special circumstances because of which it would be fair and reasonable to do so, the Commissioner may remit the whole or any part of any additional tax payable by the entity under subsection (2) or (3).

(6) For the purposes of this section, the income tax that is payable by the entity in respect of its taxable income of the relevant year of income is the income tax that is so payable after deducting:

(a) any credits to which the entity is or will be entitled under: (i) subsection 98A(2), Division 18 of Part III or

Division 1AA or 3A of this Part; or (ii) the International Tax Agreements Act 1953; and (b) any offset to which the entity is or will be entitled under

section 160AQK.

221AZ Additional payments to form part of initial payment

(1) Subject to this section, an amount paid by a relevant entity under subsection 221AR(5), 221AW(4) or 221AX(8), or as mentioned in subsection 221AR(7), is to be taken for the purposes of this Act to be, or to constitute part of, as the case requires, the initial payment of tax that the entity is required to make under section 221AP in respect of its taxable income of the year of income concerned and a reference in this Division to an initial payment of tax is, unless the context otherwise requires, to be taken to include a reference to an amount so paid.

(2) An amount paid as mentioned in subsection 221AR(7) is not taken, for the purposes of Part IIIAA, to be, or to constitute part of, as the case requires, an initial payment of tax.

221AZA Refund to reduce initial payment of tax

An amount refunded to a relevant entity under subsection 221AQ(3), 221AR(6), 221AU(4), 221AV(4), 221AW(5) or 221AX(14) is to be taken for the purposes of this Act (other than Part IIIAA) to reduce the amount of the initial payment of tax made in respect of the entity’s taxable income of the year of income concerned.


Section 221AZB


221AZB Notional tax

(1) This section has effect subject to section 221AZC.

(2) Subject to this section, the notional tax of a relevant entity in respect of a year of income is an amount equal to the income tax assessed in respect of the entity’s taxable income of the next preceding year of income.

(3) A reference in subsection (2) to the income tax assessed in respect of a relevant entity’s taxable income of a year of income is, in the case of a relevant entity that is a company whose assessable income of that year of income included a net capital gain within the meaning of Part IIIA, to be taken to be a reference to:

(a) in the case of a company other than a life assurance company or a registered organization—the income tax that would have been assessed in respect of the amount that would have been the taxable income of that company of that year of income if that net capital gain had not been included; and

(b) in the case of a life assurance company—the sum of: (i) the income tax assessed in respect of the CS/RA

component of the company’s taxable income of that year of income; and

(ii) in relation to each of the NCS component, the general fund component (if any) and the AD/RLA component of the company’s taxable income of that year of income:

(A) if the part of the company’s assessable income of that year of income to which that component relates included a net capital gain within the meaning of Part IIIA—the income tax that would have been assessed in respect of the amount that would have been that component if that net capital gain had not been included; or

(B) otherwise—the income tax assessed in respect of that component; and

(c) in the case of a registered organization—the sum of:

Part VI Collection and recovery of tax Division 1B Collection of Tax on Companies and Trustees of certain Funds Section 221AZB


(i) the amount of the income tax assessed in respect of the CS/RA component of the organization’s taxable income of that year of income; and

(ii) in relation to each of the NCS component and the EIB component of the organization’s taxable income of that year of income:

(A) if the part of the organization’s assessable income of that year of income to which that component relates included a net capital gain within the meaning of Part IIIA—the income tax that would have been assessed in respect of the amount that would have been that component if that net capital gain had not been included; or

(B) otherwise—the income tax assessed in respect of that component.

(4) Where: (a) the rates of income tax payable by a class of relevant entities

for a financial year are different from the rates declared by the Parliament for the next succeeding financial year; and

(b) provision is made by the regulations for varying the amount of notional tax of such entities in respect of the year of income to the income of which the last-mentioned rates apply;

then, on and after such date as is prescribed, the notional tax of such an entity in respect of that year of income is the amount ascertained in accordance with subsections (2) and (3) as varied in accordance with the provision so made by the regulations.

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Income Tax Assessment Act 1936 - Legislation