First Home Saver Accounts (Consequential Amendments) Act 2008 (45 of 2008)

Schedule 1   Main taxation related amendments

Income Tax Assessment Act 1997

31   After Division 328

Insert:

Division 345 - FHSAs

Table of Subdivisions

Guide to Division 345

345-A Treatment of FHSA providers

345-B Treatment of FHSA holders

345-C FHSA misuse tax

Guide to Division 345

345-1 What this Division is about

FHSAs (short for first home saver accounts) are accounts, life policies and interests in trusts that comply with requirements in the First Home Saver Accounts Act 2008.

This Division sets out the income tax treatment of the financial institutions that provide FHSAs (Subdivision 345-A) and of individuals that hold FHSAs (Subdivision 345-B).

Certain payments from FHSAs are subject to FHSA misuse tax (Subdivision 345-C).

Subdivision 345-A - Treatment of FHSA providers

Table of sections

345-5 FHSA provider that is trustee of FHSA trust - tax payable

345-10 FHSA provider that is trustee of FHSA trust - CGT to be primary code for calculating gains or losses

345-15 FHSA provider that is an ADI (other than RSA provider) - taxable income and standard component of taxable income

345-20 FHSA provider that is an ADI - FHSA component of taxable income

345-5 FHSA provider that is trustee of FHSA trust - tax payable

(1) The trustee of an *FHSA trust is liable to pay income tax for the *financial year on the taxable income of the trust.

(2) The amount of the tax is the amount of income tax that would be payable by the trust under section 4-10 if the trust were an *Australian resident liable (in accordance with section 4-1) to pay income tax for the *financial year.

(3) For the purposes of subsection (2):

(a) apply the special rules in this Subdivision in working out the taxable income of the trust; and

(b) apply the applicable rate of tax specified in section 30 of the Income Tax Rates Act 1986 to the taxable income of the trust.

345-10 FHSA provider that is trustee of FHSA trust - CGT to be primary code for calculating gains or losses

(1) The modifications in subsection (2) apply if a *CGT event happens involving a *CGT asset that was owned by an *FHSA trust.

(2) These provisions do not apply to the *CGT event:

(a) sections 6-5 (about *ordinary income);

(b) section 8-1 (about amounts you can deduct);

(c) sections 15-15 and 25-40 (about profit-making undertakings or plans).

Exceptions

(3) The provisions referred to in subsection (2) can apply to the *CGT event if:

(a) any *capital gain or *capital loss from the event is attributable to currency exchange rate fluctuations; or

(b) the *CGT asset is one of the following:

(i) debenture stock, a bond, *debenture, certificate of entitlement, bill of exchange, promissory note or other security;

(ii) a deposit with a bank, building society or other financial institution;

(iii) a loan (secured or not);

(iv) some other contract under which an entity is liable to pay an amount (whether the liability is secured or not).

(4) The provisions referred to in subsection (2) can also apply to the *CGT event if a *capital gain or *capital loss from the event is disregarded because of one of the provisions in this table:

345-15 FHSA provider that is an ADI (other than RSA provider) - taxable income and standard component of taxable income

(1) The taxable income of an *FHSA provider that is an *ADI (other than an *RSA provider) is split into an *FHSA component and a *standard component.

Note: The taxable income of an FHSA provider that is an ADI and an RSA provider is split into an RSA component, an FHSA component and a standard component (see section 295-555).

(2) If the *FHSA component exceeds the *FHSA provider’s taxable income:

(a) the provider’s taxable income is equal to the FHSA component; and

(b) this Act applies to the provider as if it had a *tax loss for the income year of an amount that would have been that loss if the FHSA component were not *ordinary income or *statutory income.

(3) The standard component is the remaining part (if any) of the *FHSA provider’s taxable income for the income year after subtracting the *FHSA component.

345-20 FHSA provider that is an ADI - FHSA component of taxable income

The FHSA component for an income year of an *FHSA provider that is an *ADI is the total earnings or other return for the year credited to *FHSAs provided by the FHSA provider, reduced by the total amount of fees (however described) paid from those FHSAs to the FHSA provider for providing them.

Subdivision 345-B - Treatment of FHSA holders

Table of sections

345-50 Credits to and payments from FHSAs etc.

345-50 Credits to and payments from FHSAs etc.

(1) An amount of earnings or other return credited to an *FHSA you hold is not your assessable income and is not your *exempt income.

(2) A payment made from an *FHSA you hold is not your assessable income and is not your *exempt income.

(3) A *Government FHSA contribution payable for you in accordance with the First Home Saver Accounts Act 2008, and paid in accordance with Part 4 of that Act, is not your assessable income and is not your *exempt income.

(4) A *capital gain or *capital loss that you make from a *CGT event happening in relation to a right to, or any part of, an *FHSA that you hold is disregarded.

Subdivision 345-C - FHSA misuse tax

Table of sections

345-100 Liability for FHSA misuse tax

345-110 Due date for payment of FHSA misuse tax

345-115 General interest charge

345-100 Liability for FHSA misuse tax

A person is liable to pay tax imposed by the Income Tax (First Home Saver Accounts Misuse Tax) Act 2008 in respect of a *FHSA home acquisition payment from an *FHSA held by the person if:

(a) the payment fails to satisfy the *FHSA payment conditions; or

(b) the payment satisfies the FHSA payment conditions, but is an *FHSA ineligibility payment.

Note: The Commissioner may make an assessment of the amount of the tax under section 169 of the Income Tax Assessment Act 1936.

345-110 Due date for payment of FHSA misuse tax

*FHSA misuse tax assessed for a person is due and payable 21 days after the Commissioner gives the person notice of the assessment.

345-115 General interest charge

If *FHSA misuse tax payable by a person remains unpaid after the time by which it is due and payable, the person is liable to pay the *general interest charge on the unpaid amount for each day in the period that:

(a) starts at the beginning of the day on which the FHSA misuse tax was due to be paid; and

(b) ends at the end of the last day on which, at the end of the day, any of the following remains unpaid:

(i) the FHSA misuse tax;

(ii) general interest charge on any of the FHSA misuse tax.

Note: The general interest charge is worked out under Part IIA of the Taxation Administration Act 1953.