• Legal database
Legal database
Senate

Tax Law Improvement Bill (No. 1) 1998

Tax Law Improvement Act (No. 1) 1998

Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)

CHANGE OF TITLE - TAX LAW IMPROVEMENT BILL (No. 1) 1998 - SENATE - Explanatory Memorandum.

The Tax Law Improvement Bill (No. 2) 1997 has been retitled the Tax Law Improvement Bill (No. 1) 1998. All references in this explanatory memorandum that refer to Tax Law Improvement Bill (No. 2) 1997 should now read Tax Law Improvement Bill (No. 1) 1998.
THIS MEMORANDUM TAKES ACCOUNT OF AMENDMENTS MADE BY THE HOUSE OF REPRESENTATIVES TO THE BILL AS INTRODUCED

Chapter 9 - Dictionary

Overview of this chapter

The Tax Law Improvement Bill (No. 2) 1997 will add a number of new definitions to the Dictionary of defined terms contained in the 1997 Act.

Part A of this chapter summarises how you can locate the definitions in the new law.

Part B explains how the Bill will incorporate the new definitions.

Part C lists the new definitions and explains any departures from definitions in the existing law.

A. How the definitions can be located

The Dictionary, found at the end of the 1997 Act (in Chapter 6), is the central reference point for locating the meanings of defined terms used in the new law.

All defined terms are listed in section 995-1. Each entry in that section either:

•
sets out the defined term and its meaning; or
•
directs the reader to where the term is defined in the general body of the Act.

The location point for the detail of definitions is signposted in many cases. The signposting complements the design feature of locating definitions at the place where readers will find the information most convenient and helpful to their understanding of the law.

All defined terms (except a small number of common terms) will be identified by an asterisk *, which will precede the term the first time it is used in each subsection.

Chapter 12 of the Explanatory Memorandum to the 1997 Act has a more detailed explanation of how the new law deals with definitions.

B. New definitions incorporated by the Bill

The rewritten provisions that this Bill will insert into the 1997 Act include many terms not previously defined.

Schedule 10 of this Bill will add Dictionary references to all new defined terms that are being inserted into the 1997 Act.

C. Discussion of the definitions

This Part of the chapter lists all the definitions that the Bill adds to the 1997 Act. It also lists definitions already in the 1997 Act that this Bill modifies.

If there is a change in the use of a term, or a new term has been used, the list generally directs readers to the subject chapter that explains the change or new term. The explanations are included in Part B (Discussion of changes) of each subject chapter. In some cases (particularly if the meaning of a term is actually explained in the Dictionary), the list itself explains a change to a term, instead of referring the reader to a subject chapter.

Part B of each subject chapter also discusses changes to the law caused by adopting a definition already in the 1997 Act (eg. using a standard definition instead of a slightly modified one).

In the following explanations:

No Change means that the term and its meaning from the 1936 Act are unchanged, although the words may have been changed to use a clearer or simpler style.

New label, previously [word or expression] means that a concept called '[word or expression]' in the 1936 Act has been given a new label in the 1997 Act.

New term means that the term is not defined in the 1936 Act.

Revised definition means that there has been change in the meaning of the term appearing in the 1997 Act compared with the 1936 Act.

acquire a CGT asset No change.
acquire an item of intellectual property New term explained in Chapter 4 of this Explanatory Memorandum.
amount rising from a partial realisation of an item of intellectual property New label, previously consideration receivable.
annuity instrument New term, explained in Chapter 2.13 of this Explanatory Memorandum.
apportionable deductions No change.
arms length No change.
artistic support New label, previously recognised associated services .
assessable non-primary production income No change.
assessable primary production income New term, explained in Chapter 6 of this Explanatory Memorandum.
assessable professional income New label, previously eligible assessable income .
associate-inclusive control interest No change.
average income No change.
average taxable professional income New label, previously average eligible taxable income .
averaging adjustment New term, explained in Chapter 6 of this Explanatory Memorandum.
averaging component New label, previously deemed taxable income from primary production .
balancing adjustment event An addition, applying to intellectual property, to the definition in the 1997 Act. Explained in Chapter 4 of this Explanatory Memorandum.
basic assessable income New term, explained in Chapter 6 of this Explanatory Memorandum.
basic rates New term, explained in Chapter 6 of this Explanatory Memorandum.
basic taxable income New term, explained in Chapter 6 of this Explanatory Memorandum.
business exemption threshold New label, previously exemption threshold .
capital gain No change.
capital loss No change.
capital proceeds New label, previously consideration in respect of the disposal of an asset.
cessation time No change.
CFC No change.
CGT asset Revised definition, explained in Chapter 2.6 of this Explanatory Memorandum.
CGT event New term, explained in Chapter 2.4 of this Explanatory Memorandum.
collectable New label, previously listed personal-use asset .
commercial horticulture New term, explained in Chapter 5 of this Explanatory Memorandum.
company law Updates definition by replacing Companies Act 1981 or similar law with Corporations Law.
comparison rate New term, explained in Chapter 6 of this Explanatory Memorandum.
continuing shareholders Additional references have been added to this label.
controller (for CGT purposes) of a company New label, previously controller of a company.
convertible note No change.
cost base of a CGT asset This term covers the concepts called cost base and indexed cost base in the 1936 Act. This results in no change to the law.
Crown lease No change.
debenture No change.
decreased value shares No change.
disallow the excluded loss New label, previously disallowing a capital loss or part of a capital loss.
discount on the issue of shares in a company or units in a unit trust New term. For where shares in a company or units in a unit trust are issued at less than market value.
dispose of a CGT asset New term for an expression used in connection with a CGT asset, explained in Chapter 2.4 of this Explanatory Memorandum.
distributable profits No change.
dwelling Revised definition, explained in Chapter 2.12 of this Explanatory Memorandum.
effective life Additions, applying to intellectual property and horticultural plant to the definition in the 1997 Act. Explained in Chapter 4 of this Explanatory Memorandum.
eligible termination payment Same as the definition in section 27A of the 1936 Act. Results in no change to the law.
employee share scheme No change.
environmental protection activities New label, previously eligible environment protection activity , explained in Chapter 7 of this Explanatory Memorandum.
excluded loss An additional reference has been added to this label.
exempt entity New label, previously tax exempt person .
expenditure on an item of intellectual property New label, previously cost .
firearms surrender arrangements No change.
first continuity period New term. The term is defined in section 165-110 and varies depending whether it is used in the context of current year or prior year bad debt deductions. It is the first of two periods throughout which a company must have continuity of beneficial ownership.
foreign government agency New term. It will cover foreign governments, and foreign government agencies and authorities of foreign governments.
general company tax rate No change.
general insurance policy New label, previously policy of insurance .
gross averaging amount New term, explained in Chapter 6 of this Explanatory Memorandum.
horticultural plant New term, explained in Chapter 5 of this Explanatory Memorandum.
horticulture business New term, explained in Chapter 5 of this Explanatory Memorandum.
improvement threshold New label, previously indexed cost base limit.
incidental costs No change.
increased value shares No change.
index number No change.
indexation factor No change.
indirectly has a beneficial interest in a CGT asset of an entity, or in ordinary income from a CGT asset New label, previously indirect beneficial interest .
injected amount An additional reference has been added to this label.
intellectual property New label, previously unit of industrial property .
life insurance company No change.
life insurance entity New term, explained in Chapter 2.13 of this Explanatory Memorandum.
life insurance policy New term, explained in Chapter 2.13 of this Explanatory Memorandum.
listed country No change
majority underlying interests No change.
material decrease in the market value of a decreased value share No change.
material increase in the market value of an increased value share No change.
minimum continuity period New term, part of the bad debt provisions. It is a period of continuity of beneficial ownership. The end of the period sets the point in time used to compare the business of a company for the same business test.
mining entitlement New label, previously mining right .
necessary connection with Australia New label for an expression used in connection with a CGT asset owned by a non-resident, previously taxable Australian asset .
net asset amount New term for an existing concept.
net capital gain No change.
net capital loss No change.
net value of an entity or business New label, previously net worth .
non-primary production deductions New term, explained in Chapter 6 of this Explanatory Memorandum.
non-primary production shade-out amount New label, previously notional taxable income from primary production .
notional net capital gain No change.
notional net capital loss No change.
ownership interest in land or a dwelling New term, explained in Chapter 2.12 of this Explanatory Memorandum.
ownership period of a dwelling New label, previously relevant period .
ownership test period An additional reference has been added to this label.
partial realisation New label, previously part disposal .
passes to a beneficiary in an individuals estate Revised definition, explained in Chapter 2.18 of this Explanatory Memorandum.
performing artist New label, previously performer .
permanent establishment No change.
personal use asset New label, previously non-listed personal-use asset .
pooled superannuation trust No change.
pre-CGT asset New term, explained in Chapter 2.24 of this Explanatory Memorandum.
precluded asset New term, explained in Chapter 2.15 of this Explanatory Memorandum.
primary production deductions New label, previously relevant primary production deductions .
production associate No change.
professional year 1 New terms, explained in Chapter 8 of this Explanatory Memorandum.
professional year 2
professional year 3
professional year 4
prospecting entitlement New label, previously prospecting right.
publicly traded unit trust No change.
purpose of producing assessable income An additional note dealing with environmental impact assessment and environmental protection has been added to this definition.
qualifying right No change.
qualifying share No change.
reduced cost base No change.
reduced net asset amount New term for an existing concept.
registered organisation No change.
related business New label, previously associated business .
replacement-asset roll-over New term. Provides a label for the standard consequences of an entity choosing a roll-over where its ownership of one asset ceases and another asset is acquired.
resident trust for CGT purposes New label, previously resident trust estate and resident unit trust .
RSA No change.
same-asset roll-over New term. Provides a label for the standard consequences of an entity choosing a roll-over where it transfers ownership of an asset or creates an asset in another entity.
same business test period An additional reference has been added to this label.
second continuity period New term whose meaning turns on whether it is used in the context of current year or prior year bad debt deductions. It is the second of two periods throughout which a company must have continuity of beneficial ownership.
SGIO No change.
share value shift No change.
shift proceeds No change.
special professional New label, previously eligible person .
sporting competition New label, previously sport .
sportsperson No change.
starting day New label, previously base day .
statutory licence No change.
stratum unit Revised definition, explained in Chapter 2.16 of this Explanatory Memorandum.
tax advantaged business No change.
tax advantaged insurance fund No change.
taxable non-primary production income New label, previously non primary production profit .
taxable primary production income New label, previously actual taxable income from primary production .
taxable professional income New label, previously eligible taxable income .
termination value An addition, applying to intellectual property, to the definition in the 1997 Act. Explained in Chapter 4 of this Explanatory Memorandum.
test day New label, previously test time .
test period An additional reference has been added to this label.
test time Additional references have been added to this label.
total share value increase New label, previously total market value increase .
traditional security No change.
ultimate owner New label, previously natural person and government body .
unlisted country No change.
unrecouped expenditure An addition, applying to intellectual property, to the definition in the 1997 Act. Explained in Chapter 4 of this Explanatory Memorandum.
written down value An addition, applying to intellectual property, to the definition in the 1997 Act. Explained in Chapter 4 of this Explanatory Memorandum.
your earning activity New label, previously income-producing activity .


View full documentView full documentBack to top