Taxation Laws Amendment Act (No. 4) 1994 (181 of 1994)
Schedule 5 AMENDMENTS RELATING TO THE PAYMENT OF INTEREST ON OVERPAYMENTS AND EARLY PAYMENTS
Part 2 TAXATION (INTEREST ON OVERPAYMENTS) ACT 1983
11 After Part II
Insert:
"PART IIA - INTEREST ON EARLY PAYMENTS
Entitlement to interest
"8A. (1) If:
(a) a person makes a payment of, or on account of:
(i) income tax; or
(ii) HEC assessment debt; or
(iii) FS assessment debt; or
(iv) additional tax under Part VII of the Tax Act; or
(v) interest under section 102AAM of the Tax Act; or
(vi) provisional tax; or
(vii) an instalment of provisional tax within the meaning of section 221YA of the Tax Act; or
(viii) an amount mentioned in subsection 221AP(1) of the Tax Act; or
(ix) an amount mentioned in paragraph 221AZD(b) of the Tax Act; or
(x) an instalment under subsection 221AZK(2) of the Tax Act; and
(b) the payment is made more than 14 days before:
(i) if subparagraph (ii) does not apply - the day (the 'appropriate due day') on which the tax, debt, interest, amount or instalment concerned becomes due and payable; or
(ii) if the person is a relevant entity or an instalment taxpayer and the payment is of, or on account of, income tax - the final instalment day (also the 'appropriate due day') in respect of the year of income in respect of which the income tax is payable;
interest is payable by the Commissioner to the person on the payment, calculated in respect of the period applicable under section 8B at the rate specified in section 8C.
"(2) A reference in paragraph (1)(a) to a person making a payment of, or on account of:
(a) income tax; or
(b) HEC assessment debt; or
(c) FS assessment debt;
does not include a reference to the making of a deduction or payment under Part VI (other than Division 1) of the Tax Act or section 20B of the Loan (Income Equalisation Deposits) Act 1976.
"(3) A reference in paragraph (1)(a) to a person making a payment of, or on account of, any thing listed in any of the subparagraphs of that paragraph does not include a reference to the person being deemed or taken, by the Tax Act or any other Act, to have paid the thing because of the crediting or applying of any relevant tax, income tax crediting amount or other payment.
Interest period
"8B. (1) Subject to subsection (2), interest under section 8A is payable to a person for the period:
(a) if the person is neither a relevant entity nor an instalment taxpayer - from the beginning of the later of the following days:
(i) the day on which the payment is made;
(ii) the day on which the notice notifying the tax, debt, interest or instalment concerned is issued; and
(b) if the person is a relevant entity or an instalment taxpayer - from the beginning of the day on which the payment is made;
until the end of the appropriate due day.
"(2) If the payment is to any extent refunded before the appropriate due day, interest is not payable on the payment to that extent in respect of any period after the day on which the refund takes place.
Rate of interest
"8C. Interest under section 8A is payable at such annual rate or rates as are provided for by section 214A of the Tax Act, less 4 percentage points.
No double entitlement to interest
"8D. If:
(a) interest is payable under this Part on a payment in respect of a period; and
(b) interest is also payable under Part IIIA on the whole or part of the payment in respect of the whole or part of the period;
then interest is not payable under this Part on the whole or part of the payment in respect of the whole or part of the period.".
"PART IIB - INTEREST ON OVERPAYMENTS RESULTING FROM ASSESSMENTS
Entitlement to interest - ordinary taxpayers
"8E. (1) If:
(a) a person who is neither a relevant entity nor an instalment taxpayer furnishes a return of income for a year of income; and
(b) an assessment is made of the income tax payable by the person for the year of income; and
(c) the notice of assessment notifies that the Commissioner has credited, applied or refunded (which crediting, applying or refunding is the 'notice crediting') one or more income tax crediting amounts in relation to the income tax payable by the person for the year of income; and
(d) the sum of the income tax crediting amounts in paragraph (c) exceeds the sum of the following amounts:
(i) income tax payable under the assessment (after allowing any rebate or deduction under subsection 100(2) of the Tax Act and before allowing any crediting, applying or other payment);
(ii) additional tax for the year of income payable by the person under Part VII of the Tax Act immediately before the notice crediting;
(iii) an HEC assessment debt that is notified in the notice of assessment;
(iv) an FS assessment debt that is notified in the notice of assessment;
(v) interest for the year of income payable by the person under section 102AAM of the Tax Act immediately before the notice crediting; and
(e) the notice crediting occurs more than 30 days or more after the day on which the person furnishes the return of income;
interest is payable by the Commissioner to the person on the excess mentioned in paragraph (d), calculated in respect of the period applicable under section 8F at the rate specified in section 8I.
"(2) If:
(a) a person who is neither a relevant entity nor an instalment taxpayer furnishes a return of income for a year of income; and
(b) an assessment is made of the income tax payable by the person for the year of income; and
(c) after the notice of assessment is issued to the person, the Commissioner credits, applies or refunds (which crediting, applying or refunding is a 'post-notice crediting') one or more income tax crediting amounts in relation to the income tax payable by the person for the year of income; and
(d) the sum of the income tax crediting amounts in paragraph (c) exceeds the sum of the following amounts:
(i) income tax payable for the year of income by the person immediately before the post-notice crediting;
Note: This is the amount payable under the assessment for the year of income as reduced by any rebate, deduction under subsection 100(2) of the Tax Act, crediting, applying or other payment made before the post-notice crediting.
(ii) additional tax for the year of income payable by the person under Part VII of the Tax Act immediately before the post-notice crediting;
(iii) an HEC assessment debt, worked out by reference to the person's taxable income of the year of income, payable by the person immediately before the post-notice crediting;
(iv) an FS assessment debt, worked out by reference to the person's taxable income of the year of income, payable by the person immediately before the post-notice crediting;
(v) interest for the year of income payable by the person under section 102AAM of the Tax Act immediately before the post-notice crediting;
interest is payable by the Commissioner to the person on the excess mentioned in paragraph (d), calculated in respect of the period applicable under section 8F at the rate specified in section 8I.
Interest period-ordinary taxpayers
"8F. (1) If subsection 8E(1) applies, the interest is payable on the excess mentioned in paragraph 8E(1)(d) for the period from the beginning of the 30th day after the day on which the person furnishes the return of income until the end of the day on which the notice of assessment is issued.
"(2) If subsection 8E(2) applies and subsection (3) of this section does not apply, the interest is payable on the excess mentioned in paragraph 8E(2)(d) for the period from the beginning of the day on which the notice of assessment is issued until the end of the day on which the post-notice crediting occurs.
"(3) If:
(a) subsection 8E(2) applies; and
(b) one or more payments have been made (including any taken to have been made because of the crediting or applying of any amount) of any amounts mentioned in subparagraphs 8E(1)(d)(i) to (v) (including those amounts as increased or decreased for any reason) after the notice of assessment is issued and before the post-notice crediting;
the interest is payable:
(c) on so much of the excess as is attributable to a particular payment mentioned in paragraph (b) - for the period from the beginning of the day on which the payment was made until the end of the day on which the post-notice crediting occurs; and
(d) on so much of the excess as is not attributable to payments mentioned in paragraph (b) - for the period from the beginning of the day on which the notice of assessment is issued until the end of the day on which the post-notice crediting occurs.
"(4) For the purposes of subsection (3), but subject to subsection (5), the excess is attributable to a particular payment to the extent that it would be set off against that payment if it were set off in succession against each of the payments in the reverse of the order in which they were made.
"(5) For the purposes of subsection (4), any payment is to be disregarded to the extent that:
(a) it consists of an amount on which interest is payable under section 9; or
(b) it has been taken into account in any previous application of subsection (4) of this section in relation to a post-notice crediting occurring before the current post-notice crediting.
Entitlement to interest-relevant entities and instalment taxpayers
"8G. (1) If:
(a) a person who is a relevant entity or an instalment taxpayer furnishes a return of income for a year of income; and
(b) after the person furnishes the return, the Commissioner credits, applies or refunds (which crediting, applying or refunding is the 'first crediting') one or more income tax crediting amounts in relation to the income tax payable by the person for the year of income; and
(c) the Commissioner has not previously credited, applied or refunded any income tax crediting amount in relation to the income tax payable by the person for the year of income; and
(d) the sum of the income tax crediting amounts in paragraph (b) exceeds the sum of the following amounts:
(i) income tax payable by the person for the year of income (after allowing any rebate or deduction under subsection 100(2) of the Tax Act and before any crediting, applying or other payment);
(ii) additional tax for the year of income payable by the person under Part VII of the Tax Act immediately before the first crediting;
(iii) interest for the year of income payable by the person under section 102AAM of the Tax Act immediately before the first crediting; and
(e) if the person furnishes the return of income for the year of income 30 days or more before the final instalment day in relation to the year of income - the first crediting occurs 30 days or more after the day on which the person furnishes the return; and
(f) if the person furnishes the return of income for the year of income after the 30th day before the final instalment day in relation to the year of income - the first crediting occurs on or after the final instalment day;
interest is payable by the Commissioner to the person on the excess mentioned in paragraph (d), calculated in respect of the period applicable under section 8H at the rate specified in section 8I.
"(2) If:
(a) a person who is a relevant entity or an instalment taxpayer furnishes a return of income for a year of income; and
(b) after the first crediting, the Commissioner credits, applies or refunds (which crediting, applying or refunding is a 'later crediting') one or more income tax crediting amounts in relation to the income tax payable by the person for the year of income; and
(c) the sum of the income tax crediting amounts in paragraph (b) exceeds the sum of the following amounts:
(i) income tax payable for the year of income by the person immediately before the later crediting;
Note: This is the income tax payable for the year of income as reduced by any rebate, deduction under subsection 100(2) of the Tax Act, crediting, applying or other payment made before the later crediting.
(ii) additional tax for the year of income payable by the person under Part VII of the Tax Act immediately before the later crediting;
(iii) interest for the year of income payable by the person under section 102AAM of the Tax Act immediately before the later crediting; and
interest is payable by the Commissioner to the person on the excess mentioned in paragraph (c), calculated in respect of the period applicable under section 8H at the rate specified in section 8I.
Interest period - relevant entities and instalment taxpayers
"8H. (1) If subsection 8G(1) applies, the interest is payable on the excess mentioned in paragraph 8G(1)(d) for the period from the beginning of the earlier of the following days:
(a) the 30th day after the day on which the person furnishes the return of income for the year of income;
(b) the final instalment day in relation to the year of income;
until the end of the day on which the first crediting occurs.
"(2) If subsection 8G(2) applies and subsection (3) of this section does not apply, the interest is payable on the excess mentioned in paragraph 8G(2)(c) for the period from the beginning of the final instalment day until the end of the day on which the later crediting occurs.
"(3) If:
(a) subsection 8G(2) applies; and
(b) one or more payments have been made (including any taken to have been made because of the crediting or applying of any amount) of any amounts mentioned in subparagraphs 8G(1)(d)(i) to (iii) after the first crediting and before the later crediting;
the interest is payable:
(c) on so much of the excess as is attributable to a particular payment mentioned in paragraph (b) - for the period from the beginning of the day on which the payment was made until the end of the day on which the later crediting occurs; and
(d) on so much of the excess as is not attributable to payments mentioned in paragraph (b) - for the period from the beginning of the final instalment day until the end of the day on which the later crediting occurs.
"(4) For the purposes of subsection (3), but subject to subsection (5), the excess is attributable to a particular payment to the extent that it would be set off against that payment if it were set off in succession against each of the payments in the reverse of the order in which they were made.
"(5) For the purposes of subsection (4), any payment is to be disregarded to the extent that:
(a) it consists of an amount on which interest is payable under section 9; or
(b) it has been taken into account in any previous application of subsection (4) of this section in relation to a later crediting occurring before the current later crediting.
Rate of interest
"8I. Interest under this Part is payable at such annual rate or rates as are provided for by section 214A of the Tax Act, less 4 percentage points.
Limit on interest where correlative relief in respect of foreign tax
"8J. (1) If:
(a) apart from this section, interest is payable on an excess resulting from the crediting, applying or refunding of one or more income tax crediting amounts; and
(b) at least one (the 'correlative relief amount') of the income tax crediting amounts was applied to provide correlative relief in respect of the taxing of an amount under a law of a foreign country; and
(c) the interest on the excess, to the extent that it is attributable to the correlative relief amount, exceeds by an amount (the 'reduction amount') the lesser of:
(i) the amount of the late payment interest mentioned in subparagraph (b)(i) of the definition of 'income tax crediting amount' in subsection 3(1), expressed in Australian currency at the exchange rate applicable at the time when the taxing of the amount under the law of the foreign country takes place;
(ii) the correlative relief amount;
then the interest payable is reduced by the reduction amount.
"(2) For the purposes of paragraph (1)(c), so much of the interest payable on the excess mentioned in paragraph (1)(a) as is worked out using the following formula is taken to be attributable to the correlative relief amount:
(Correlative relief amount / Sum of correlative relief amount and any other income tax crediting amounts) * Excess
Interpretation
"8K. (1) If the Commissioner is satisfied that no tax is payable by a person for a year of income, the Commissioner is taken for the purposes of this Part to have made an assessment that a nil amount of income tax is payable by the person for the year of income.
"(2) If the Commissioner issues a notice to a person that no tax is payable by the person for a year of income, the Commissioner is taken for the purposes of this Part to have issued a notice of assessment to the person that a nil amount of income tax is payable by the person for the year of income.
"(3) If the crediting, applying or refunding of an income tax crediting amount takes place at different times, the whole of the income tax crediting amount is taken for the purposes of this Part to have been credited, applied or refunded at the earlier or earliest of those times.
"(4) Subsections 221AZF(2) and 221AZM(3) of the Tax Act are to be disregarded for the purposes of this Part.".