Taxation Laws Amendment Act (No. 3) 1994 (138 of 1994)

Part 2   AMENDMENT OF THE INCOME TAX ASSESSMENT ACT 1936

Division 13   Amendments relating to regional headquarters

110   Insertion of new Subdivision

After Subdivision CA of Division 3 of Part III of the Principal Act the following Subdivision is inserted:

"Subdivision CB-Regional Headquarters (RHQs)

Object

"82C. The object of this Subdivision is to provide a deduction for certain expenditure incurred by approved companies in establishing a regional headquarters in Australia.

Deduction for setup costs of RHQ companies

"82CA. RHQ setup costs incurred on or after 1 July 1994 by an RHQ company in a year of income are an allowable deduction from the assessable income of the RHQ company of the year of income.

Interpretation

"82CB.(1) In this Subdivision:

'associated company' has the meaning given by section 82CC;

'management related services' include the following:

(a) finance and treasury services;

(b) business planning services;

(c) marketing services;

(d) accounting services;

(e) research and development services;

'RHQ company' means a company that the Treasurer, under section 82CE, has determined to be an RHQ company;

'RHQ setup costs' means expenditure (whether or not of a capital nature) incurred by an RHQ company:

(a) both:

(i) in setting up the facilities referred to in subsection 82CD(1); and

(ii) in the period starting 12 months before, and ending 12 months after, the company first derives assessable income from the provision of regional headquarters support from those facilities; or

(b) in reimbursing expenditure incurred by a non-resident associated company of the RHQ company if the latter expenditure would have been covered by paragraph (a) if it had instead been incurred by the RHQ company at the time when it was incurred by the associated company;

but does not include:

(c) costs incurred in connection with feasibility studies in relation to the setting up of facilities in Australia to provide regional headquarters

support; or

(d) costs incurred in connection with moving facilities that provide regional headquarters support from one location in Australia to another location in Australia; or

(e) the cost of plant, equipment, land, buildings or similar items.

"(2) A company 'provides regional headquarters support' if:

(a) the company provides to an associated company that is located in a country other than Australia; or

(b) a part of the company provides to another part of the company that is located in a country other than Australia;

any of the following:

(c) management related services; or

(d) data services; or

(e) software support services.

"(3) A reference in this section to the provision of data services to a company, or a part of a company, is a reference to:

(a) the substantial input, transmission or manipulation of data; or

(b) the production of information from data;

for, or on behalf of, that company or that part of that company.

"(4) A reference in this section to the provision of software support services to a company, or a part of a company, is a reference to the provision, to clients of that company or that part of that company, of advice and assistance in relation to computer software sold by that company or that part of that company.

Associated companies

"82CC. For the purposes of this Subdivision, a company is an 'associated company' of another company if:

(a) either company controls at least 10% of the votes in the other company (either directly or through one or more interposed companies, partnerships or trust estates); or

(b) a third company is an associated company (including by one or more applications of this paragraph) of both of the companies.

Application to become an RHQ company

"82CD.(1) A company may, in writing, apply to the Treasurer to become an RHQ company if the company intends to establish facilities in Australia mainly for the purpose of providing regional headquarters support.

"(2) The Treasurer must publish the address to which applications must be sent.

Determination of RHQ companies

"82CE.(1) Subject to subsection (3), the Treasurer may, on application by a company under section 82CD, make a written determination that the company is an RHQ company for the purposes of this Subdivision.

"(2) The determination must:

(a) specify the day when the company commences to be an RHQ company; and

(b) contain any other information the Treasurer considers appropriate.

"(3) A determination of the Treasurer under subsection (1):

(a) may only be made if the Treasurer is satisfied that the company has the intention mentioned in subsection 82CD(1); and

(b) must be made in accordance with guidelines determined by the Treasurer under this section.

"(4) The Treasurer must determine written guidelines for the making of determinations under subsection (1). The guidelines may require the Treasurer to take into account:

(a) specified criteria; or

(b) recommendations of particular bodies; or

(c) any other factors.

"(5) Determinations made under this section are disallowable instruments for the purposes of section 46A of the Acts Interpretation Act 1901.".