INCOME TAX ASSESSMENT AMENDMENT ACT (No. 2) 1978 No. 123, 1978
INCOME TAX ASSESSMENT AMENDMENT ACT (No. 2) 1978 No. 123 of 1978 - SECT. 1. Short title.
INCOME TAX ASSESSMENT AMENDMENT ACT (No. 2) 1978 No. 123 of 1978 An Act to amend the Income Tax Assessment Act 1936 and for related purposes. BE IT ENACTED by the Queen, and the Senate and House of Representatives of the Commonwealth of Australia, as follows: Short title, &c. 1. (1) This Act may be cited as the Income Tax Assessment Amendment Act (No. 2) 1978.*1* (2) The Income Tax Assessment Act 1936*2* is in this Act referred to as the Principal Act. INCOME TAX ASSESSMENT AMENDMENT ACT (No. 2) 1978 No. 123 of 1978 - SECT. 2. Commencement
2. This Act shall come into operation on the day on which it receives the Royal Assent.*1* INCOME TAX ASSESSMENT AMENDMENT ACT (No. 2) 1978 No. 123 of 1978 - SECT. 3. Exemptions
3. (1) Section 23 of the Principal Act is amended- (a) by omitting sub-paragraph (ii) of paragraph (t); (b) by omitting from sub-paragraph (ii) of paragraph (z) ''or''; and (c) by adding at the end of paragraph (z) the following word and sub-paragraph: ''; or (iv) income derived under a Post-graduate Award granted under the Student Assistance Act 1973;''. (2) The amendment made by paragraph (1) (a) applies to assessments in respect of income of the year of income that commenced on 1 July 1978 and to assessments in respect of income of all subsequent years of income. (3) The amendments made by paragraphs (1) (b) and (c) apply to amounts paid on or after 1 November 1978. INCOME TAX ASSESSMENT AMENDMENT ACT (No. 2) 1978 No. 123 of 1978 - SECT. 4. Certain items of assessable income
4. Section 26 of the Principal Act is amended- (a) by omitting paragraph (d) and substituting the following paragraph: ''(d) 5% of the capital amount of any allowance, gratuity or compensation where that amount is paid (whether voluntarily, by agreement or by compulsion of law) in a lump sum in consequence of retirement from, or the termination of, any office or employment, not being- (i) an amount that, under any provision of this Act, is deemed to be a dividend paid to the recipient; or (ii) an amount to which section 26AC or 26AD applies;''; and (b) by inserting in paragraph (e) '', which is an amount to which section 26AC or 26AD applies'' after ''preceding paragraph''. INCOME TAX ASSESSMENT AMENDMENT ACT (No. 2) 1978 No. 123 of 1978 - SECT. 5.
5. After section 26AB of the Principal Act the following sections are inserted: Amounts received on retirement or termination of employment in lieu of annual leave ''26AC. (1) This section applies to any amount paid after 15 August 1978 (whether voluntarily, by agreement or by compulsion of law) to a taxpayer in a lump sum in consequence of the retirement of the taxpayer after that date from any office or employment or in consequence of the termination after that date of any office or employment of the taxpayer, being an amount that is paid in respect of unused annual leave or in respect of unused annual leave and a bonus, loading or other additional payment relating to that leave. ''(2) Where an amount to which this section applies is paid to a taxpayer in a year of income, that amount shall be included in the assessable income of the taxpayer of the year of income. ''(3) The reference in sub-section (1) to the payment to a taxpayer in consequence of the retirement of the taxpayer from any office or employment or in consequence of the termination of any office or employment of the taxpayer of a lump sum in respect of unused annual leave shall be read as including a reference to the payment to the taxpayer in consequence of that retirement or termination, as the case may be, of an amount in respect of, or an amount calculated directly or indirectly by reference to, annual leave, or annual leave and a bonus, loading or other additional payment relating to annual leave, to which the taxpayer was not entitled immediately before that
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retirement or termination, as the case may be, but to which the taxpayer would have become entitled, or that would ordinarily have been granted to the taxpayer, at a later time if the taxpayer had continued in that office or employment for a period after the time of the retirement or termination, as the case may be. ''(4) In this section, 'annual leave' means- (a) leave described as annual leave, recreation leave or annual holidays, being leave to which a person has an entitlement by virtue of a law of the Commonwealth or of a State or Territory, an award, determination or industrial agreement in force under any such law, a contract of employment or the terms of appointment to an office; (b) leave described otherwise than as annual leave, recreation leave or annual holidays, being leave to which a person has an entitlement by virtue of such a law, award, determination, industrial agreement or contract or by virtue of the terms of appointment to an office and the entitlement to which is determined by reference to matters similar to matters by reference to which entitlement to leave referred to in paragraph (a) is ordinarily determined; or (c) leave that may be made available to a person as a privilege, being leave the availability of which is ordinarily determined by reference to matters similar to matters by reference to which entitlement to leave referred to in paragraph (a) or (b) is ordinarily determined. Amounts received on retirement or termination of employment in lieu of long service leave ''26AD. (1) This section applies to any amount paid after 15 August 1978 (whether voluntarily, by agreement or by compulsion of law) to a taxpayer in a lump sum in consequence of the retirement of the taxpayer after that date from any office or employment or in consequence of the termination after that date of any office or employment of the taxpayer, being an amount that is paid in respect of unused long service leave. ''(2) Where- (a) an amount to which this section applies is paid to a taxpayer in a year of income in respect of unused long service leave; and (b) the eligible service period in relation to that unused long service leave commenced after 15 August 1978, the assessable income of the taxpayer of the year of income shall include the amount of the payment. ''(3) Where- (a) an amount to which this section applies (in this sub-section referred to as the 'lump sum amount') is paid to a taxpayer in a year of income in respect of unused long service leave; (b) the eligible service period in relation to that unused long service leave commenced on or before 15 August 1978 and ended after that date; and (c) the employment or service of the taxpayer was on a full-time basis during the whole of the eligible service period or was on a part-time basis during the whole of the eligible service period, the assessable income of the taxpayer of the year of income shall include an amount ascertained in accordance with the formula A C (B + D) -- (----------- - F) B E where- A is the lump sum amount; B is the number of whole days of long service leave included in the unused long service leave in respect of which the lump sum amount was paid; C is the number of whole days in the eligible service period that occurred after 15 August 1978; D is the number of whole days of long service leave that accrued in respect of the eligible service period and were used by the taxpayer before the retirement date; E is the number of whole days in the eligible service period; and F is-
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(d) in a case where the number of whole days of long service leave that accrued in respect of the eligible service period and were used by the taxpayer after 15 August 1978 exceeds the number (in this paragraph referred to as the 'relevant number') that bears to the number of whole days of long service leave that accrued in respect of the eligible service period (including days of long service leave that were used by the taxpayer before the retirement date) the same proportion as the number of whole days in the eligible service period that occurred after 15 August 1978 bears to the number of whole days in the eligible service period-the relevant number; and (e) in any other case-the number of whole days of long service leave that accrued in respect of the eligible service period and were used by the taxpayer after 15 August 1978. ''(4) Where- (a) an amount to which this section applies is paid to a taxpayer in a year of income in respect of unused long service leave; (b) the eligible service period in relation to that unused long service leave commenced on or before 15 August 1978 and ended after that date; and (c) the employment or service of the taxpayer during the eligible service period was partly on a full-time basis and partly on a part-time basis, the assessable income of the taxpayer of the year of income shall include an amount equal to the sum of- (d) the amount that would be calculated in accordance with the formula in sub-section (3) if- (i) the reference in that sub-section to the lump sum amount were a reference to so much of the lump sum amount as was paid in respect of unused long service leave that accrued in respect of the employment or service of the taxpayer on a full-time basis; (ii) a reference in that sub-section to whole days of long service leave were a reference to whole days of long service leave that accrued in respect of the employment or service of the taxpayer on a full-time basis; and (iii) a reference in that sub-section to whole days in the eligible service period were a reference to whole days in the eligible service period during which the employment or service of the taxpayer was on a full-time basis; and (e) the amount that would be calculated in accordance with the formula in sub-section (3) if- (i) the reference in that sub-section to the lump sum amount were a reference to so much of the lump sum amount as was paid in respect of unused long service leave that accrued in respect of the employment or service of the taxpayer on a part-time basis; (ii) a reference in that sub-section to whole days of long service leave were a reference to whole days of long service leave that accrued in respect of the employment or service of the taxpayer on a part-time basis; and (iii) a reference in that sub-section to whole days in the eligible service period were a reference to whole days in the eligible service period during which the employment or service of the taxpayer was on a part-time basis. ''(5) Where- (a) an amount to which this section applies (in this sub-section referred to as the 'lump sum amount') is paid to a taxpayer in a year of income in respect of unused long service leave; and (b) the eligible service period in relation to that unused long service leave commenced on or before 15 August 1978, the assessable income of the taxpayer of the year of income shall include, in addition to any amount included in that assessable income by the application of sub-section (3) or (4) in relation to the lump sum amount, an amount equal to 5% of the amount remaining after deducting from the lump sum amount any amount included in that assessable income by the application of sub-section (3) or (4) in relation to the lump sum amount. ''(6) A reference in this section to the payment to a taxpayer in consequence of the retirement of the taxpayer from any office or employment or in consequence of the termination of any office or employment of the taxpayer
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of a lump sum in respect of unused long service leave shall be read as including a reference to the payment to the taxpayer in consequence of that retirement or termination, as the case may be, of an amount in respect of, or an amount calculated directly or indirectly by reference to, long service leave (in this sub-section referred to as the 'relevant long service leave') to which the taxpayer was not entitled immediately before that retirement or termination, as the case may be, but to which the taxpayer would have become entitled, or that would ordinarily have been granted to the taxpayer, at a later time if the taxpayer had continued in that office or employment for a period after the time of the retirement or termination, as the case may be, and, for the purposes of the application of this section in relation to the taxpayer, a reference to the number of whole days of long service leave that accrued in respect of the eligible service period shall be read as a reference to the sum of the number of whole days of long service leave that actually accrued in respect of the eligible service period and the number of whole days included in the relevant long service leave. ''(7) For the purposes of the application of this section in relation to an amount (in this sub-section referred to as the 'lump sum amount') paid to a taxpayer in consequence of the retirement of the taxpayer from any office or employment or in consequence of the termination of any office or employment of the taxpayer, being an amount paid in respect of unused long service leave- 'eligible service period' means- (a) where the taxpayer had not, before the retirement date, used any long service leave to which he became entitled in respect of any office or employment in respect of which the lump sum amount was paid-the period by reference to which the lump sum amount was determined; and (b) where the taxpayer had, before the retirement date, used long service leave to which he became entitled in respect of any office or employment in respect of which the lump sum amount was paid-the period by reference to which- (i) the entitlement of the taxpayer to the long service leave that was so used by the taxpayer; and (ii) the lump sum amount, was determined; 'retirement date' means the date on which the taxpayer retired from the office or employment or on which the office or employment of the taxpayer was terminated, as the case may be. ''(8) In this section, 'long service leave' means- (a) long service leave, long leave, furlough, extended leave, or leave of a similar kind (however described) to which a person has an entitlement by virtue of a law of the Commonwealth or of a State or Territory, an award, determination or industrial agreement in force under any such law, a contract of employment or the terms of appointment to an office; (b) leave (other than leave that is annual leave for the purposes of section 26AC) to which a person has an entitlement by virtue of a scheme or arrangement by reason of the existence and nature of which the employer of the person has secured exemption from obligations to comply with a law of the Commonwealth or of a State or Territory relating to long service, long leave, furlough, extended leave or leave of a similar kind (however described); or (c) leave that may be made available to a person as a privilege, being leave the availability of which is determined by reference to matters similar to matters by reference to which entitlement to leave referred to in paragraphs (a) and (b) is ordinarily determined. ''(9) A reference in sub-section (3), in relation to a taxpayer, to a number of whole days of long service leave shall be read as a reference to a number of whole days of long service leave in respect of which the taxpayer was paid or was entitled to be paid full or ordinary pay. ''(10) For the purposes of sub-section (3) as affected by sub-section (9), where a taxpayer used a number (in this sub-section referred to as the 'relevant number') of days of long service leave and was paid or entitled to be paid in respect of that long service leave at a rate (in this sub-section referred to as the 'reduced rate') of pay that was less than the rate (in this sub-section referred to as the 'ordinary rate') of full or ordinary pay, the taxpayer shall be deemed to have used a number (disregarding fractions) of days of long service leave that bears to the relevant number the same proportion as the reduced rate bears to the ordinary rate and to have been
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paid full or ordinary pay in respect of the days of long service leave deemed to have been used. ''(11) Where- (a) an amount to which this section applies is paid to a taxpayer in respect of unused long service leave; and (b) in consequence of an alteration to the basis on which the entitlement of the taxpayer to long service leave is determined, the period of service or employment of the taxpayer by reference to which the entitlement of the taxpayer to long service leave was determined was shorter than the period (in this sub-section referred to as the 'full period') by reference to which the entitlement of the taxpayer to long service leave would have been determined but for that alteration, the eligible service period in relation to the payment to the taxpayer of that amount shall be deemed to be the full period.''. INCOME TAX ASSESSMENT AMENDMENT ACT (No. 2) 1978 No. 123 of 1978 - SECT. 6. Gifts, calls on afforestation shares, pensions, &c.
6. (1) Section 78 of the Principal Act is amended by inserting after sub-paragraph (xlvi) of paragraph (a) of sub-section (1) the following sub-paragaph: ''; (xlvii) the World Wildlife Fund Australia,''. (2) The amendment made by sub-section (1) applies to gifts made to the World Wildlife Fund Australia at any time, including gifts made before the commencement of this Act. (3) Nothing in section 170 of the Income Tax Assessment Act 1936 prevents the amendment of an assessment made before the commencement of this Act for the purposes of giving effect to the amendment made by sub-section (1) of this section. INCOME TAX ASSESSMENT AMENDMENT ACT (No. 2) 1978 No. 123 of 1978 - SECT. 7.
7. After section 82KBA of the Principal Act the following section is inserted: Interest accruing after 31 October 1978 not deductible ''82KBB. A deduction is not allowable under this Subdivision in respect of- (a) an amount paid by a taxpayer by way of or on account of interest to the extent that the interest accrued or will accrue after 31 October 1978; or (b) an amount paid by a taxpayer by way of interest, being an amount paid on or after 1 July 1979.''. INCOME TAX ASSESSMENT AMENDMENT ACT (No. 2) 1978 No. 123 of 1978 - SECT. 8. Partner not having control and disposal of share in partnership income
8. (1) Section 94 of the Principal Act is amended- (a) by omitting sub-section (9) and substituting the following sub-section: ''(9) Where the assessable income of a taxpayer, other than a taxpayer in the capacity of a trustee, includes income to which this section applies, the taxpayer shall be assessed and is liable to pay further tax, in accordance with sub-section (10A) or (10B), upon the portion (in this section referred to as the 'eligible portion') of his taxable income that is derived from income to which this section applies.''; (b) by omitting sub-sections (11) and (12) and substituting the following sub-sections: ''(10A) Where a taxpayer is not entitled to a rebate of tax under section 156 in his assessment in respect of income of the year of income, the taxpayer is liable to pay further tax upon the eligible portion of his taxable income at the rate declared by the Parliament to be the rate of further tax payable in pursuance of sub-section (9) in respect of the relevant part of the taxable income. ''(10B) Where a taxpayer is entitled to a rebate of tax under section 156 in his assessment in respect of income of the year of income, the taxpayer is liable to pay further tax upon the relevant part of the eligible portion of his taxable income at the rate declared by the Parliament to be the rate of further tax payable in pursuance of sub-section (9) in respect of the relevant part of the taxable income and is, in addition, liable to pay further tax upon the prescribed part of the eligible portion of his taxable income at the rate declared by the Parliament to be the rate of further tax payable in pursuance of sub-section (9) in respect of the prescribed part of the taxable income. ''(10C) For the purposes of sub-sections (10A) and (10B)- (a) the prescribed part of the eligible portion of the taxable income of a taxpayer of a year of income is-
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(i) in a case to which sub-paragraph (ii) does not apply-the sum of- (A) the amount ascertained by deducting from so much of the assessable primary production income of the taxpayer as is also income to which this section applies so much of the deductions allowable in his assessment as constitutes relevant primary production deductions and is also deductible in accordance with sub-section (10) from income to which this section applies; and (B) the amount (if any) ascertained in accordance with the formula ab ----, where- c a is the amount of the notional taxable income from primary production of the taxpayer of the year of income; b is the number of whole dollars in the amount ascertained by deducting from the eligible portion the amount calculated in accordance with clause (A); and c is the number of whole dollars in the amount ascertained by deducting from the taxable income of the taxpayer of the year of income the actual taxable income from primary production of the taxpayer of the year of income; and (ii) in a case where the aggregate of the relevant primary production deductions of the taxpayer of the year of income exceeds the assessable primary production income of the taxpayer of the year of income-the amount ascertained in accordance with the formula ab -----, where- c + d a is the amount of the notional taxable income from primary production of the taxpayer of the year of income; b is the number of whole dollars in the eligible portion; c is the number of whole dollars in the taxable income of the taxpayer of the year of income; and d is the number of whole dollars in the amount ascertained by deducting from the aggregate of the relevant primary production deductions of the taxpayer of the year of income the amount of the assessable primary production income of the taxpayer of the year of income; and (b) the relevant part of the eligible portion of the taxable income of the taxpayer is the amount ascertained by deducting from the amount of that eligible portion so much of that eligible portion as is the prescribed part of that eligible portion. ''(11) Where- (a) section 98 applies in relation to the net income of a trust estate or a share of that net income; and (b) this section applies to a portion (in this sub-section referred to as the 'relevant portion') of that net income or of that share of that net income, as the case may be, the trustee of the trust estate shall be assessed and is liable to pay further tax, in accordance with sub-section (12A) or (12B), upon an amount (in this section referred to as the 'eligible trust portion') ascertained by deducting from the relevant portion of that net income or of that share of that net income, as the case may be, an amount equal to so much of the sum of the concessional deductions that are taken into account for the purposes of section 98 in relation to that net income or that share of that net income as bears to that sum the same proportion as the relevant portion of that net income or of that share of that net income bears to that net income or that share of that net income, as the case may be. ''(12) Where- (a) section 99 applies in relation to the net income of a trust estate or a part of that net income; and (b) this section applies to a portion (in this section referred to as the 'eligible trust portion') of that net income or of that part of that net
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income, as the case may be, the trustee of the trust estate shall be assessed and is liable to pay further tax, in accordance with sub-section (12A) or (12B), upon the eligible trust portion. ''(12A) Where a trustee of a trust estate is not entitled to a rebate of tax under section 156 in his assessment in respect of the net income of the trust estate of which the eligible trust portion is a portion, the trustee is liable to pay further tax upon the eligible trust portion at the rate declared by the Parliament to be the rate of further tax payable in pursuance of sub-section (11) or (12) in respect of the relevant part of the net income of a trust estate. ''(12B) Where a trustee of a trust estate is entitled to a rebate of tax under section 156 in his assessment in respect of the net income of the trust estate of which the eligible trust portion is a portion, the trustee is liable to pay further tax upon the relevant part of the eligible trust portion at the rate declared by the Parliament to be the rate of further tax payable in pursuance of sub-section (11) or (12) in respect of the relevant part of the net income of a trust estate and is, in addition, liable to pay further tax upon the prescribed part of the eligible trust portion at the rate declared by the Parliament to be the rate of further tax payable in pursuance of sub-section (11) or (12) in respect of the prescribed part of the net income of a trust estate.