INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART VI - COLLECTION AND RECOVERY OF TAX  

Division 3 - Provisional tax  

Subdivision B - Provisional tax avoidance schemes  

SECTION 221YHAAA   INTERPRETATION  

221YHAAA(1)   [Definitions]  

In this Subdivision:

"arrangement"
means:

(a) any agreement, arrangement, understanding, promise or undertaking, whether express or implied, and whether or not enforceable, or intended to be enforceable, by legal proceedings; and

(b) any scheme, plan, proposal, action, course of action or course of conduct, whether unilateral or otherwise;

"associate"
, in relation to a person (in this definition referred to as the ``family member'' ), means:

(a) a relative of the family member;

(b) (except for the purposes of the definition of ``family partnership'' ) a partner of the family member;

(c) (except for the purposes of the definition of ``family partnership'' ) if a person who is an associate of the family member by virtue of paragraph (b) is a natural person - the spouse or a child of that natural person;

(d) a partnership in which the family member is a partner or in which another person who is an associate of the family member by virtue of another paragraph of this definition is a partner;

(e) a trustee of a trust estate where the family member or another person who is an associate of the family member by virtue of another paragraph of this definition 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; or

(f) a company where:

(i) 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 family member, of another person who is an associate of the family member by virtue of another paragraph of this definition, of a company that is an associate of the family member by virtue of another application of this subparagraph or of any 2 or more such persons; or

(ii) the family member is, the persons who are associates of the family member by virtue of subparagraph (i) and the preceding paragraphs of this definition are, or the family member and the persons who are associates of the family member by virtue of that subparagraph and those 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;

"family partnership"
, in relation to a taxpayer, in relation to a year of income, means a partnership where the taxpayer and at least one associate of the taxpayer are partners in the partnership and the factor calculated in accordance with the formula

A B

,

where:

A is the sum of the individual interests of partners in the partnership, being:

(a) the taxpayer; and

(b) associates of the taxpayer,

in the net income, or the partnership loss, of the partnership of the year of income; and

B is the net income, or the partnership loss, as the case may be, of the partnership of the year of income,

exceeds 0.5;

"family partnership income"
, in relation to a family partnership of a taxpayer, in relation to a year of income, means the amount included in the assessable income of the taxpayer of the year of income under subsection 92(1) in respect of the net income of the partnership;

"family partnership loss"
, in relation to a family partnership of a taxpayer, in relation to a year of income, means the amount of the deduction allowable to the taxpayer under subsection 92(2) in the year of income in respect of the partnership loss of the partnership;

"family trust"
, in relation to a person (in this definition referred to as the ``family member''), in relation to a year of income, means:

(a) a trust estate where the family member and at least one associate of the family member benefits, or is capable (whether by the exercise of a power of appointment or otherwise) of benefiting, at any time during the year of income, under the trust and, in a case where there is a net income of the trust estate of the year of income, the factor calculated in accordance with the formula

A B

,

where:

A is the sum of the shares of the net income of the trust estate of the year of income:

(i) included, under section 97 , 98A or 100 , in the assessable income of a beneficiary, or assessable incomes of beneficiaries, of the trust estate, being:

(A) the family member; or

(B) associates of the family member; or

(ii) not being shares to which subparagraph (i) applies - in respect of which the trustee of the trust estate is liable to be assessed under section 98 in relation to beneficiaries of the trust estate, being:

(A) the family member; or

(B) associates of the family member; and

B is the net income of the trust estate of the year of income,

exceeds 0.5; or

(b) a trust estate where:

(i) the family member benefits, or is capable (whether by the exercise of a power of appointment or otherwise) of benefiting, at any time during the year of income, under the trust;

(ii) if there is a net income of the trust estate of the year of income - the factor calculated in accordance with the formula

A B

,

where:

A is the share of the net income of the trust estate of the year of income included, under section 97 , 98A or 100 , in the assessable income of the family member or, not being such a share, in respect of which the trustee of the trust estate is liable to be assessed under section 98 in relation to the family member; and

B is the sum of the shares of the net income of the trust estate of the year of income:

(A) included, under section 97 , 98A or 100 , in the assessable income of the beneficiary, or assessable incomes of beneficiaries, of the trust estate; or

(B) not being shares to which sub-subparagraph (A) applies - in respect of which the trustee of the trust estate is liable to be assessed under section 98 in relation to the beneficiary, or the beneficiaries, of the trust estate,

exceeds 0.5; and

(iii) either of the following sub-subparagraphs apply:

(A) the trustee of the trust estate is, or the trustees of the trust estate are, accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the family member, of an associate of the family member or of any 2 or more of such persons;

(B) the family member, an associate of the family member, or any 2 or more such persons, may remove or appoint the trustee, or any of the trustees, of the trust estate;

"family trust income"
, in relation to a family trust of a taxpayer, in relation to a year of income, means the amount included in the assessable income of the taxpayer of the year of income under section 97 , 98A or 100 in respect of the trust.

221YHAAA(2)    

221YHAAA(3)   [Person carrying out arrangement]  

A reference in this Subdivision to the carrying out of an arrangement by a person includes a reference to the carrying out of an arrangement by a person together with another person or other persons.

221YHAAA(4)   [Purpose of carrying out arrangement]  

A reference in this Subdivision to an arrangement or a part of an arrangement being entered into or carried out by a person for a particular purpose shall be read as including a reference to the arrangement or the part of the arrangement being entered into or carried out by the person for 2 or more purposes of which that particular purpose is the dominant purpose.

221YHAAA(5)   [Net income of trust estate]  

A reference in this Subdivision to the net income of a trust estate of a year of income is, if the net income of the trust estate of that year of income included a net capital gain under Part 3-1 of the Income Tax Assessment Act 1997 , taken to be the amount that would have been that net income if the net capital gain had not been so included.

221YHAAA(6)    
(Repealed by No 46 of 1998)