Explanatory Memorandum
(Circulated by authority of the Minister for Financial Services and Regulation, the Honourable J.B. Hockey, MP)7 - Schedule 4 - Amendment of the Financial Corporations (Transfer of Assets and Liabilities) Act 1993
| Schedule 4 amends the Financial Corporations (Transfer of Assets and Liabilities) Act 1993 (FCTAL) to extend the deadline for foreign ADIs, operating in Australia since 18 June 1993, to obtain a banking authority until 30 June 2000 in order to be eligible for concessional tax treatment for transferring assets and liabilities. In addition, the legislation will apply where there has been a change in ownership of the foreign ADI. |
| For any transfer of assets and liabilities to be eligible for any tax relief under the FCTAL, the transfer will still need to be reasonably required for the proper reorganisation of the activities within Australia. |
7.1 Items 1 and 3 commence immediately after the commencement of consequential amendments made to the FCTAL by the Financial Sector Reform (Consequential Amendments) Act 1998 .
7.2 Items 5, 6, 8 and 10 commence from 22 December 1998, the date the previous deadline expired.
7.3 The remainder of the amendments to Schedule 4 commence on the day which this Bill receives Royal Assent.
Definition of Eligible Foreign ADI
7.4 This item corrects a mistake contained in the Financial Sector Reform (Consequential Amendments) Act 1998 which accidentally shortened the time period under which foreign ADIs could apply for a banking authority and still be eligible for tax relief under the legislation.
7.5 This item gives foreign ADIs, operating in Australia since 18 June 1993, until 30 June 2000 to obtain a banking authority in order to be eligible for concessional tax treatment when transferring their assets and liabilities.
Definition of Newly Established Local ADI
7.6 When the FCTAL was last temporarily extended for two years, as part of the Financial Laws Amendment Act 1997 , the definition of eligible local bank was not amended. As the Financial Sector Reform (Consequential Amendments) Act 1998 continued this error when replacing references to bank with ADI, this item corrects the earlier error by replacing the three with five with respect to the number of years.
7.7 This item gives foreign ADIs, operating in Australia since 18 June 1993, until 30 June 2000 to establish a new local ADI in order to be eligible for concessional tax treatment when transferring their assets and liabilities.
Eligible Money Market Corporation
7.8 This item enables money market corporations to still be eligible under the FCTAL regardless of whether there has been a change in their owner since 18 June 1993.
7.9 This item amends section 7 of the FCTAL to ensure that the Act applies whether or not there has been a change in their owner since 18 June 1993.
Period within which Transfers must be Effected
7.10 This item amends the period within which transfers must be effected to before 1 July 2003.
7.11 This item amends the application of subsection 160ZP(7) of the Income Tax Assessment Act 1936 on the transfer of net capital losses to be consistent with the extended time periods.
7.12 This item amends the definition of the transfer year. The transfer year must be one of the 7 income years after the commencement of the FCTAL.
7.13 This item extends the period for which the modifications of the Income Tax Assessment Act 1997 continue with respect to the transfer of net losses.
7.14 This item extends the period for which the modifications of the Income Tax Assessment Act 1997 continue with respect to the transfer of net capital losses.