Taxation Laws Amendment Act (No. 2) 1993 (18 of 1993)
PART 3 AMENDMENT OF THE INCOME TAX ASSESSMENT ACT 1936
Division 8 Amendments relating to the payment of instalments by companies and certain trustees
Subdivision A Insertion of new Division
54
Insertion of new Division
After Division 1B of Part VI of the Principal Act the following Division is inserted:
"Division 1C-Payment of instalments by companies and certain trustees
"Subdivision A-Interpretation
Interpretation
"221AZH. In this Division, unless the contrary intention appears:
'amount', in relation to an estimate, includes a nil amount;
'current year' means the year of income for which instalments are being calculated;
'due date', in relation to a particular instalment, means the due date specified in Table 1 in section 221AZK, whether or not the taxpayer is actually required to pay that instalment;
'estimate' means an estimate under section 221AZO;
'final instalment' means:
(a) for a small taxpayer-the single instalment specified in Table 1 in section 221AZK;
(b) for any other taxpayer-the 4th instalment specified in that table;
'instalment' means an instalment under section 221AZK;
'instalment taxpayer' means a taxpayer specified in subsection 221AZK(1);
'large taxpayer' means a taxpayer who is classified as large in accordance with Table 1 in section 221AZK;
'likely tax' means the likely tax calculated under Subdivision C;
'medium taxpayer' means a taxpayer who is classified as medium in accordance with Table 1 in section 221AZK;
'small taxpayer' means a taxpayer who is classified as small in accordance with Table 1 in section 221AZK;
'taxable income', in relation to a taxpayer in the capacity of trustee of a fund or trust, means the taxable income or net income, as appropriate, of the fund or trust.
References to tax payable modified for years in which taxpayer had net capital gain
"221AZI.(1) This section applies if:
(a) the taxpayer's assessable income of a year of income ('the gain year') included a net capital gain; and
(b) Lthe amount of the tax assessed or payable by the taxpayer for the gain year is relevant for either of the following purposes:
(i) Lcalculating the likely tax for the current year;
(ii) determining whether a penalty is payable under section 221AZP in respect of an estimate made for the current year; and
(c) Lthe taxpayer is:
(i) La company; or
(ii) the trustee of a trust that is a corporate unit trust in relation to the current year for the purposes of Division 6B of Part III; or
(iii) the trustee of a trust that is a public trading trust in relation to the current year for the purposes of Division 6C of Part III.
"(2) References in this Division to the tax assessed or payable for the gain year are to be read as references to that tax, as recalculated in accordance with this section. The recalculated amount applies only for the purposes mentioned in paragraph (1) (b).
"(3) If the taxpayer is a life assurance company or registered organisation, the tax is to be recalculated as the sum of:
(a) the tax on the CS/RA component of the taxable income; and
(b) the tax on the other components, recalculated on the basis that the assessable income to which the components relate did not include any net capital gain.
"(4) In all other cases, the tax is to be recalculated on the basis that the assessable income did not include any net capital gain.
"(5) In this section:
'CS/RA component' has the same meaning as in Division 8 or 8A of Part III, as the case requires;
'life assurance company' has the same meaning as in Division 8 of Part III;
'net capital gain' means a net capital gain within the meaning of Part IIIA;
'registered organisation' has the same meaning as in Division 8A of Part III.
"Subdivision B-General rules for payment of instalments
Object of Division
"221AZJ. The object of this Division is to ensure the efficient collection of tax payable by instalment taxpayers. Liability to pay instalments
"221AZK.(1) The following taxpayers are instalment taxpayers in relation to a year of income ('the current year'):
(a) a company;
(b) the trustee of a trust that is a corporate unit trust in relation to the current year for the purposes of Division 6B of Part III;
(c) the trustee of a trust that is a public trading trust in relation to the current year for the purposes of Division 6C of Part III;
(d) the trustee of a fund that is an eligible ADF (as defined in section 267) in relation to the current year;
(e) the trustee of a fund that is an eligible superannuation fund (as defined in section 267) in relation to the current year;
(f) the trustee of a fund that is a pooled superannuation trust (as defined in section 267) in relation to the current year.
"(2) An instalment taxpayer is liable to pay instalments for the current year in accordance with the following table:
Table 1: Instalments
------------------------------------------------------------------------
Class of Likely tax on first Instalment(s) Instalment amount(s)
taxpayer day of month 9 due on first
day of:
------------------------------------------------------------------------
Small less than $8,000 month 18 100% of assessed tax
for current year
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Medium $8,000 to $300,000 month 12 25% of likely tax for
current year
month 15 25% of likely tax for
current year
month 18 25% of likely tax for
current year
month 21 assessed tax for
current year,less
previous instalments
for current year
-----------------------------------------------------------------------
Large more than $300,000 month 9 25% of likely tax for
current year
month 12 25% of likely tax for
current year
month 15 25% of likely tax for
current year
month 18 assessed tax for
current year,less
previous instalments
for current year
------------------------------------------------------------------------
"(3) For the purposes of Table 1:
(a) a taxpayer is classified as small, medium or large according to the taxpayer's likely tax for the current year, calculated on the first day of month 9;
(b) months are reckoned from the start of the current year;
(For example, if the current year starts on 1 July 1995 then month 12 will be June 1996 and month 15 will be September 1996.)
(c) 'assessed tax' means the tax payable for the current year, as shown in the taxpayer's return for the current year.
"(4) Instalments are to be calculated to the nearest dollar.
"(5) Instalments are to be treated as tax for the purposes of sections 206, 207, 207A, 208, 209, 214, 254, 255, 258 and 259. However, in applying sections 207 and 207A in relation to the final instalment, the credits and offsets specified in paragraph 221AZP (1) (b) are to be deducted from that instalment.
Commissioner may waive or reduce instalment
"221AZL.(1) The Commissioner may determine that a particular instalment is not payable, or is reduced, if the Commissioner is satisfied that it is appropriate to do so having regard to the object of this Division and the particular circumstances of the taxpayer.
"(2) If the amount of an instalment paid by a taxpayer turns out to be excessive because of a determination later made under subsection (1), the Commissioner must refund the excess.
Instalments to be credited against current year's tax etc.
"221AZM.(1) The Commissioner must credit an instalment in payment of the following, in order:
(a) tax payable for the current year;
(b) tax payable under section 160AQJ;
(c) any other liability of the taxpayer to the Commonwealth that arises under an Act of which the Commissioner has the general administration.
"(2) The Commissioner must refund any excess to the taxpayer.
"(3) An amount credited under this section is taken to be credited on the day on which section 166A deems an assessment to have been made for the taxpayer for the current year.
"Subdivision C-Calculating likely tax for current year
General rule for calculating likely tax
"221AZN.(1) The taxpayer's likely tax at any particular time is worked out using the following table:
Table 2: Likely tax
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Situation existing at the particular Likely tax
time
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Case I The taxpayer has lodged an estimate The estimated amount
(or the last estimated
amount if 2 estimates
have been lodged)
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Case 2 The taxpayer has not lodged an The previous year's tax
estimate but there is a previous amount
year's tax amount
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Case 3 The taxpayer has not lodged an The earlier year's tax
estimate and there is not a amount (or the earlier
previous year's tax amount, but year's tax amount for
there is an earlier year`s tax the most recent year of
amount income if there are 2
or more such amounts
------------------------------------------------------------------------
Case 4 None of the above applies Nil
------------------------------------------------------------------------
"(2) For the purposes of Table 2:
'previous year's tax amount' means the amount assessed as the tax payable for the year of income before the current year;
'earlier year's tax amount' means the amount assessed as the tax payable for a year of income 2 or more years before the current year.
"(3) For the purposes of this section, a return lodged by the taxpayer stating that no tax is payable is treated as an assessment of a nil amount of tax.
"(4) The ascertainment of likely tax is not an assessment for the purposes of this Act.
"Subdivision D-Estimates of current year's tax
Taxpayer may lodge estimates of current year's tax
"221AZO.(1) A taxpayer is entitled to lodge with the Commissioner up to 2 estimates of the tax (if any) that the taxpayer will be liable to pay for the current year.
"(2) An estimate cannot be revoked.
Penalty applies if estimate is too low
"221AZP.(1) A taxpayer is liable to pay a penalty under this section in respect of an estimate lodged by the taxpayer for the current year if the estimated amount turns out to be more than 10% below the base amount. The base amount is the lesser of the following amounts:
(a) the likely tax for the current year, immediately before the taxpayer lodged the estimate;
(b) the tax payable by the taxpayer for the current year, reduced by the following amounts:
(i) credits under subsection 98A (2), Division 18 of Part III or Division 3A of this Part, or under the Income Tax (International Agreements) Act 1953;
(ii) offsets under section 160AQK.
"(2) The penalty applies to the difference between the estimated amount and the base amount.
"(3) The penalty is calculated at the rate of 16% per year for the period that:
(a) starts on the later of the following dates:
(i) the date on which the taxpayer lodged the estimate;
(ii) the earliest date on which the taxpayer would have had to pay an instalment for the current year if the estimate had not been lodged; and
(b) ends on the earlier of the following dates:
(i) the date on which the taxpayer lodges another estimate for the current year;
(ii) the due date for the last instalment.
"(4) The Commissioner may remit some or all of the penalty if the Commissioner is satisfied that there are special circumstances that make it fair and reasonable to do so.
"(5) Penalty under this section is to be treated as tax for the purposes of sections 208, 209, 214, 254, 255, 258 and 259. Refund of excessive instalment on downwards estimate
"221AZQ.(1) If a medium or large taxpayer lodges an estimate after paying an instalment, and the amount paid was more than it would have been if it had been calculated on the basis of the estimate, the Commissioner must refund the difference.
"(2) The refund is to be treated as reducing the amount of the instalment concerned for all purposes of this Act (other than Part IIIAA).
"(3) No refund is payable under this section if the estimate is lodged after the due date for the 3rd instalment.
Liability to pay an additional amount on upwards estimate
"221AZR.(1) If a medium or large taxpayer lodges an estimate after paying an instalment, and the amount paid was less than it would have been if it had been calculated on the basis of the estimate, the taxpayer must pay the difference to the Commissioner at the time of lodging the estimate.
"(2) The taxpayer's additional payment is to be treated as being part of the instalment concerned for all purposes of this Act (other than Part IIIAA).
"(3) This section does not apply if the estimate is lodged after the due date for the 3rd instalment.
"Subdivision E-Miscellaneous
Taxpayer must specify taxable income etc. in return
"221AZS. In its return for the current year, an instalment taxpayer must specify:
(a) its taxable income for the current year; and
(b) the amount (if any) of the tax payable on that taxable income.
Due date for payment of tax
"221AZT. The tax payable by an instalment taxpayer for the current year becomes due and payable as follows:
(a) on the due date for the final instalment, if taxpayer lodges the taxpayer's return for the current year on or before the due date for the final instalment; or
(b) on the date on which the taxpayer lodges the taxpayer's return for the current year, if the taxpayer lodges the return after the due date for the final instalment.
Avoidance schemes
"221AZU. Part IVA and the related provisions of this Act apply for the purposes of this Division as if references in that Part to a taxpayer obtaining a tax benefit included references to a taxpayer obtaining a benefit in relation to the operation of this Division.".