INCOME TAX ASSESSMENT AMENDMENT ACT 1979 No. 12, 1979
INCOME TAX ASSESSMENT AMENDMENT ACT 1979 No. 12 of 1979 - SECT. 1. Short title.
INCOME TAX ASSESSMENT AMENDMENT ACT 1979 No. 12 of 1979 An Act to amend the law relating to income tax. 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 1979.*1* (2) The Income Tax Assessment Act 1936*2* is in this Act referred to as the Principal Act. INCOME TAX ASSESSMENT AMENDMENT ACT 1979 No. 12 of 1979 - 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 1979 No. 12 of 1979 - SECT. 3. Source of royalty income derived by non-resident
3. (1) Section 6C of the Principal Act is amended by inserting after sub-section (1) the following sub-section: ''(1A) For the purposes of Division 5 and Division 6 of Part III, but subject to sub-sections (3) and (4), income to which this section applies shall be deemed to be attributable to sources in Australia.''. (2) The amendment made by sub-section (1) applies to assessments in respect of income of the year of income that commenced on 1 July 1978 and in respect of income of all subsequent years of income. INCOME TAX ASSESSMENT AMENDMENT ACT 1979 No. 12 of 1979 - SECT. 4. Exemption from tax of certain income derived from sources outside Australia
4. (1) Section 24F of the Principal Act is amended by omitting sub-section (1) and substituting the following sub-section: ''(1) Subject to sub-sections (2), (3) and (4), this section applies to- (a) income derived (otherwise than as a trustee) from sources outside Australia by a person being a Territory resident or by a company being a Territory company in relation to the year of income; and (b) income derived from sources outside Australia by a trustee of a trust that is a Territory trust in relation to the year of income.''. (2) The amendment made by sub-section (1) applies to assessments in respect of income of the year of income that commenced on 1 July 1978 and in respect of income of all subsequent years of income. INCOME TAX ASSESSMENT AMENDMENT ACT 1979 No. 12 of 1979 - SECT. 5. Certain items of assessable income
5. (1) Section 26 of the Principal Act is amended by omitting paragraph (b) and substituting the following paragraph: ''(b) beneficial interests in income derived under any will, settlement, deed of gift or instrument of trust, not being- (i) amounts that are included in the assessable income of a beneficiary of a trust estate in pursuance of section 97 or 99B; or (ii) amounts in respect of which a trustee of a trust estate is assessed and liable to pay tax in pursuance of section 98, 99 or 99A.''. (2) The amendment made by sub-section (1) applies to assessments in respect of income of the year of income that commenced on 1 July 1978 and in respect of income of all subsequent years of income. INCOME TAX ASSESSMENT AMENDMENT ACT 1979 No. 12 of 1979 - SECT. 6.
6. After section 82KG of the Principal Act the following Subdivision is inserted in Division 3 of Part III: ''Subdivision D-Losses and Outgoings Incurred under Certain Tax Avoidance Schemes Interpretation ''82KH. (1) In this Subdivision, unless the contrary intention appears- 'agreement' means any agreement, arrangement, understanding or scheme, whether formal or informal, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings; 'associate', in relation to a taxpayer, means- (a) in the case of a taxpayer who is a natural person, other than a taxpayer in the capacity of a trustee- (i) a relative of the taxpayer;
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(ii) a partner of the taxpayer; (iii) if a person who is an associate of the taxpayer by virtue of sub-paragraph (ii) is a natural person-the spouse or a child of that person; (iv) a trustee of a trust estate where the taxpayer or another person who is an associate of the taxpayer by virute of another sub-paragraph of this paragraph benefits or is capable (whether by the exercise of a power of appointment or otherwise) of benefiting under the trust, either directly or through any interposed companies, partnership or trusts; or (v) a company where- (A) the company is, or its directors are, accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the taxpayer, of another person who is an associate of the taxpayer by virtue of another sub-paragraph of this paragraph, of a company that is in an associate of the taxpayer by virtue of another application of this sub-paragraph or of any 2 or more such persons; or (B) the taxpayer is, the persons who are associates of the taxpayer by virtue of clause (A) and the preceding sub-paragraphs of this paragraph are, or the taxpayer and the persons who are associates of the taxpayer by virtue of that clause and those sub-paragraphs are, in a position to cast, or control the casting of, more than 50% of the maximum number of votes that might be cast at a general meeting of the company; (b) in the case of a taxpayer being a company, other than a taxpayer in the capacity of a trustee- (i) a partner of the taxpayer; (ii) if a person who is an associate of the taxpayer by virtue of sub-paragraph (i) is a natural person-the spouse or a child of that person; (iii) a trustee of a trust estate where the taxpayer or another person who is an associate of the taxpayer by virtue of another sub-paragraph of this paragraph benefits or is capable (whether by the exercise of a power of appointment or otherwise) of benefiting under the trust, either directly or through any interposed companies, partnerships or trusts; (iv) another person where- (A) the taxpayer company is, or its directors are, accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of that person, or of that person and another person or other persons, whether those directions, instructions or wishes are communicated directly to the taxpayer company or its directors, or through any interposed companies, partnerships or trusts; or (B) that person is, or that person and the persons who, if that person were the taxpayer, would be associates of that person by virtue of paragraph (a), by virtue of clause (A), by virtue of another sub-paragraph of this paragraph or by virtue of paragraph (c) are, in a position to cast, or control the casting of, more than 50% of the maximum number of votes that might be cast at a general meeting of the taxpayer company; (v) another company where- (A) the other company is, or its directors are, accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the taxpayer company, of a person who is an associate of the taxpayer company by virtue of another sub-paragraph of this paragraph, of a company that is an associate of the taxpayer company by virtue of another application of this sub-paragraph or of any 2 or more such persons; or (B) the taxpayer company is, the persons who are associates of the taxpayer company by virtue of clause (A) and the other sub-paragraphs of this paragraph are, or the taxpayer company and the persons who are associates of the taxpayer company by virtue of that clause and those sub-paragraphs are, in a position to cast, or control the casting of, more than 50% of the maximum number of votes that might be cast at a general meeting of the other company; or (vi) any other person who, if a third person who is an associate of the taxpayer company by virtue of sub-paragraph (iv) were the taxpayer, would be an associate of that third person by virtue of paragraph (a), by virtue of another sub-paragraph of this paragraph or by virtue of paragraph (c);
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(c) in the case of a taxpayer in the capacity of a trustee of trust estate- (i) any person who benefits or is capable (whether by the exercise of a power of appointment or otherwise) of benefiting under the trust estate, either directly or through any interposed companies, partnerships or trust; (ii) where a person who is an associate of the taxpayer by virtue of sub-paragraph (i) is a natural person-any person who, if that natural person were the taxpayer, would be an associate of that natural person by virtue of paragraph (a) or this paragraph; or (iii) where a person who is an associate of the taxpayer by virtue of sub-paragraph (i) or (ii) is a company-any person who, if that company were the taxpayer, would be an associate of that company by virtue of paragraph (b) or this paragraph; or (d) in the case of a taxpayer being a partnership- (i) a partner in the partnership; (ii) where any partner in the partnership is a natural person-any person who, if that natural person were the taxpayer, would be an associate of that natural person by virtue of paragraph (a) or (c); or (iii) where any partner in the partnership is a company-any person who, if the company were the taxpayer, would be an associate of the company by virtue of paragraph (b) or (c); '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; 'tax avoidance agreement' means an agreement that was entered into or carried out for the purpose, or for purposes that included the purpose, of securing that a person who, if the agreement had not been entered into or carried out, would have been liable to pay income tax in respect of a year of income would not be liable to pay income tax in respect of that year of income or would be liable to pay less income tax in respect of that year of income than that person would have been liable to pay if the agreement had not been entered into or carried out. ''(2) A reference in this Subdivision to the supply of goods or the provision of services shall be read as not including a reference to the making available of money by way of loan. ''(3) For the purposes of this Subdivision, an agreement shall be taken to have been entered into or carried out for a particular purpose, or for purposes that included a particular purpose, if any of the parties to the agreement entered into or carried out the agreement for that purpose, or for purposes that included that purpose, as the case may be. ''(4) A reference in this Subdivision to a person shall be read as including a reference to a person in the capacity of a trustee. Deduction not allowable in respect of certain pre-paid outgoings ''82KJ. Where- (a) a loss or outgoing in respect of which a deduction would, but for this section, be allowable, was incurred by a taxpayer after 19 April 1978 by reason of, as a result of or as part of a tax avoidance agreement; (b) having regard to the benefit in respect of which the loss or outgoing was incurred (but without regard to any benefit relating to the acquisition or possible acquisition of the property referred to in paragraph (c)), the amount of the loss or outgoing was greater than the amount (if any) that might reasonably be expected to have been incurred, at the time when the loss or outgoing was incurred, in respect of that benefit if the loss or outgoing had not been incurred by reason of, as a result of or as part of a tax avoidance agreement; (c) property has been, will be, or may reasonably be expected to be, acquired by the taxpayer or by an associate of the taxpayer as a result of, by reason of, or as part of the tax avoidance agreement; and (d) the consideration (if any) that was payable in respect of the acquisition of that property was less, or the consideration that may reasonably be expected to be payable in respect of the acquisition of that property is less, than the consideration that might reasonably be expected to have been payable, or to be payable, as the case may be, in respect of the acquisition of that property if the loss or outgoing had not been incurred,
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notwithstanding any other provision of this Act, a deduction is not allowable to the taxpayer in respect of the loss or outgoing. Schemes designed to postpone tax liability ''82KK. (1) This section applies to a loss or outgoing incurred by a taxpayer if- (a) the loss or outgoing was incurred after 19 April 1978 and was incurred to an associate of the taxpayer; (b) a deduction is allowable to the taxpayer in respect of that loss or outgoing; and (c) the deduction allowable in respect of that loss or outgoing would, but for this section, be allowable to the taxpayer in the year of income in which the loss or outgoing was incurred and- (i) in a case where the loss or outgoing is in respect of interest that, if it had actually been paid, would be subject to withholding tax under Division 11A-the withholding tax payable in respect of the whole or a part of the interest is not payable until a time occurring in a subsequent year of income; and (ii) in any other case-the whole or a part of the amount incurred to the associate will not be included in the assessable income of the associate until a subsequent year of income. ''(2) Notwithstanding any other provision of this Act, where- (a) a taxpayer incurs in a year of income (in this sub-section referred to as the 'relevant year of income') a loss or outgoing (not being a loss or outgoing in respect of the supply of goods or the provision of services at a time that occurs after, or during a period that occurs after or extends beyond, the end of the relevant year of income) and the loss or outgoing is a loss or outgoing to which this section applies; and (b) the loss or outgoing was incurred by reason of, as a result of, as part of or in connection with an agreement, course of conduct or course of business that was entered into or carried out for the purpose, or for purposes that included the purpose, of securing that- (i) in a case where the loss or outgoing is in respect of interest that, if it had actually been paid, would be subject to withholding tax under Division 11A-the withholding tax payable in respect of the whole or a part of the interest will not be payable until a time occurring in a subsequent year of income; and (ii) in any other case-the whole or a part of the amount incurred to the associate would not be included in the assessable income of the associate until a subsequent year of income, the loss or outgoing shall, for the purposes of this Act, be deemed to have been incurred by the taxpayer in the relevant year of income and in any subsequent year of income only to the extent to which the loss or outgoing represents an amount actually paid during the relevant year of income or that subsequent year of income by the taxpayer to the person to whom the loss or outgoing is incurred. ''(3) Notwithstanding any other provision of this Act but subject to sub-section (4), where- (a) a taxpayer incurs in a year of income a loss or outgoing in respect of the supply of goods or the provision of services at a time that occurs after, or during a period that occurs after or extends beyond, the end of the year of income and the loss or outgoing is a loss or outgoing to which this section applies; and (b) the loss or outgoing was incurred by reason of, as a result of or as part of an agreement that was entered into or carried out for the purpose, or for purposes that included the purpose, of securing that- (i) a deduction would be allowable to the taxpayer in a year of income in respect of the loss or outgoing; and (ii) the whole or a part of the amount of the loss or outgoing would not be included in the assessable income of the person to whom the loss or outgoing was incurred until a subsequent year of income, that loss or outgoing shall, for the purposes of this Act, be deemed to have been incurred by the taxpayer in the year of income in which, or in the years of income in which, goods to which the loss or outgoing relates are supplied or services to which the loss or outgoing relates are provided.
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''(4) Where, by virtue of sub-section (3), a loss or outgoing incurred by a taxpayer in respect of the supply of goods or the provision of services is deemed to have been incurred by the taxpayer in each of 2 or more years of income, there shall be allowable as a deduction to the taxpayer in each such year of income so much only of the amount that, apart from this section, would be allowable as a deduction in respect of the loss or outgoing as the Commissioner considers reasonable having regard to the extent to which the goods in respect of which the loss or outgoing was incurred were supplied or the services in respect of which the loss or outgoing was incurred were provided, in each of those years of income.''. INCOME TAX ASSESSMENT AMENDMENT ACT 1979 No. 12 of 1979 - SECT. 7.
7. (1) Section 90 of the Principal Act is repealed and the following section substituted: Interpretation ''90. In this Division- 'exempt income', in relation to a partnership, means the exempt income of the partnership calculated as if the partnership were a taxpayer who was a resident; 'net income', in relation to a partnership, means the assessable income of the partnership, calculated as if the partnership were a taxpayer who was a resident, less all allowable deductions except the concessional deductions and deductions allowable under section 80 or 80AA; 'partnership loss', in relation to a partnership, means the excess (if any) of the allowable deductions, other than the concessional deductions and deductions allowable under section 80 or 80AA, over the assessable income of the partnership calculated as if the partnership were a taxpayer who was a resident.''. (2) The amendment made by sub-section (1) applies to assessments in respect of income of the year of income that commenced on 1 July 1978 and in respect of income of all subsequent years of income. INCOME TAX ASSESSMENT AMENDMENT ACT 1979 No. 12 of 1979 - SECT. 8.
8. (1) Section 92 of the Principal Act is repealed and the following section substituted: Income and deductions of partner ''92. (1) The assessable income of a partner in a partnership shall include- (a) so much of the individual interest of the partner in the net income of the partnership of the year of income as is attributable to a period when the partner was a resident; and (b) so much of the individual interest of the partner in the net income of the partnership of the year of income as is attributable to a period when the partner was not a resident and is also attributable to sources in Australia. ''(2) Where a partnership loss is incurred by a partnership in a year of income, there shall be allowable as a deduction to a partner in the partnership- (a) so much of the individual interest of the partner in the partnership loss as is attributable to a period when the partner was a resident; and (b) so much of the individual interest of the partner in the partnership loss as is attributable to a period when the partner was not a resident and is also attributable to sources in Australia. ''(3) The exempt income of a partner in a partnership shall include- (a) so much of the individual interest of the partner in the exempt income of the partnership of the year of income as is attributable to a period when the partner was a resident; and (b) so much of the individual interest of the partner in the exempt income of the partnership of the year of income as is attributable to a period when the partner was not a resident and is also attributable to sources in Australia.''. (2) The amendment made by sub-section (1) applies to assessments in respect of income of the year of income that commenced on 1 July 1978 and in respect of income of all subsequent years of income. INCOME TAX ASSESSMENT AMENDMENT ACT 1979 No. 12 of 1979 - SECT. 9. Partner not having control and disposal of share in partnership income
9. (1) Section 94 of the Principal Act is amended- (a) by inserting after sub-section (8) the following sub-section: ''(8A) In forming an opinion for the purposes of sub-section (8) as to whether it is unreasonable that this section should apply in relation to any
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of the net income of a trust estate, the Commissioner shall take into consideration the extent (if any) to which that net income represents income to which a beneficiary is presently entitled that is attributable to a period when the beneficiary was not a resident and is also attributable to sources out of Australia.''; and (b) by omitting from sub-section (13) the definition of ''share in the net income of a partnership'' and substituting the following definition: '' 'share in the net income of a partnership', in relation to a partner, means- (a) so much of the individual interest of the partner in the net income of the partnership and of any income derived by the partner from the partnership otherwise than as a partner as is attributable to a period when the partner was a resident; and (b) so much of the individual interest of the partner in the net income of the partnership and of any income derived by the partner from the partnership otherwise than as a partner as is attributable to a period when the partner was not a resident and is also attributable to sources in Australia.''. (2) The amendments made by sub-section (1) apply to assessments in respect of income of the year of income that commenced on 1 July 1978 and in respect of income of all subsequent years of income. INCOME TAX ASSESSMENT AMENDMENT ACT 1979 No. 12 of 1979 - SECT. 10. Heading to Division 6 of Part III
10. (1) The heading to Division 6 of Part III of the Principal Act is omitted and the following heading substituted: ''Division 6-Trust Income''. (2) The amendment made by sub-section (1) applies to assessments in respect of income of the year of income that commenced on 1 July 1978 and in respect of income of all subsequent years of income. INCOME TAX ASSESSMENT AMENDMENT ACT 1979 No. 12 of 1979 - SECT. 11.
11. (1) Section 95 of the Principal Act is repealed and the following sections are substituted: Interpretation ''95. (1) In this Division- 'exempt income', in relation to a trust estate, means the exempt income of the trust estate calculated as if the trustee were a taxpayer who was a resident; 'net income', in relation to a trust estate, means the total assessable income of the trust estate calculated under this Act as if the trustee were a taxpayer in respect of that income and were a resident, less all allowable deductions, except the concessional deductions and deductions under Division 16C and except also, in respect of any beneficiary who has no beneficial interest in the corpus of the trust estate, or in respect of any life tenant, the deductions allowable under section 80 or section 80AA in respect of such of the losses of previous years as are required to be met out of corpus. ''(2) For the purposes of this Division, a trust estate shall be taken to be a resident trust estate in relation to a year of income if- (a) a trustee of the trust estate was a resident at any time during the year of income; or (b) the central management and control of the trust estate was in Australia at any time during the year of income. Special provisions relating to present entitlement ''95A. For the purposes of this Act, where a beneficiary of a trust estate is presently entitled to any income of the trust estate, the beneficiary shall be taken to continue to be presently entitled to that income notwithstanding that the income is paid to, or applied for the benefit of, the beneficiary.''. (2) Subject to sub-section (3), the amendment made by sub-section (1) applies to assessments in respect of income of the year of income that commenced on 1 July 1978 and in respect of income of all subsequent years of income. (3) For the purposes of the application of section 95A of the Income Tax Assessment Act 1936 for the purposes of section 100A of that Act, section 95A of that Act applies to assessments in respect of income of the year of income that commenced on 1 July 1977 and in respect of income of all subsequent years of income. INCOME TAX ASSESSMENT AMENDMENT ACT 1979 No. 12 of 1979 - SECT. 12.
12. (1) Section 97 of the Principal Act is repealed and the following section substituted: Beneficiary not under any legal disability
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''97. Where a beneficiary of a trust estate who is not under any legal disability is presently entitled to a share of the income of the trust estate- (a) the assessable income of the beneficiary shall include- (i) so much of that share of the net income of the trust estate as is attributable to a period when the beneficiary was a resident; and (ii) so much of that share of the net income of the trust estate as is attributable to a period when the beneficiary was not a resident and is also attributable to sources in Australia; and (b) the exempt income of the beneficiary shall include- (i) so much of the individual interest of the beneficiary in the exempt income of the trust estate as is attributable to a period when the beneficiary was a resident; and