Taxation Laws Amendment Act (No. 1) 1995 (120 of 1995)

Schedule 1   VARIOUS AMENDMENTS OF THE INCOME TAX ASSESSMENT ACT 1936

Part 8   PRIVATISED STATE BANK OF NEW SOUTH WALES

58   After Division 9A of Part III

Insert:

"Division 9B-State Bank of NSW

Interpretation

"121EM. In this Division:

'asset' means property, or a right, of any kind, and includes:

(a) any legal or equitable estate or interest (whether present or future, vested or contingent, tangible or intangible, in real or personal property) of any kind; and

(b) any chose in action; and

(c) any right, interest or claim of any kind including rights, interests or claims in or in relation to property (whether arising under an instrument or otherwise, and whether liquidated or unliquidated, certain or contingent, accrued or accruing); and

(d) any asset within the meaning of Part IIIA;

'authorised actuary' means a Fellow or an Accredited Member of the Institute of Actuaries of Australia;

'first taxing time' means the time when the NSW State Bank ceases to be a public authority within the meaning of paragraph 23(d);

'liability' includes a duty or obligation of any kind (whether arising under an instrument or otherwise, and whether actual, contingent or prospective);

'NSW State Bank' means the State Bank of New South Wales Limited.

Deemed disposal and re-acquisition of assets

"121EN.(1) Subject to subsection (2), for the purposes of the application of this Act (other than the excluded provisions mentioned in subsection (2)) to the NSW State Bank, the Bank is taken to have sold, immediately before the first taxing time, all of its assets and to have purchased each of the assets at the first taxing time for consideration equal to its market value at that time.

"(2) For the purposes of subsection (1), the excluded provisions are sections 54 to 62AAV and Divisions 10 to 10D.

"(3) To avoid doubt, an effect of subsection (1) is that the sum of all allowable deductions (if any) in respect of the writing off as bad of the whole or any part or parts of a debt to which that subsection applies will not exceed the market value of the debt at the first taxing time.

Deemed cessation and re-assumption of liabilities

"121EO.(1) For the purposes of the application of this Act to the NSW State Bank, the Bank is taken to have ceased immediately before the first taxing time to have any liabilities, and to have assumed each of the liabilities again at the first taxing time in return for consideration equal to the market value at that time of the right or other asset, corresponding to the liability, that is held by the person to whom the liability is owed.

"(2) An example for the purposes of subsection (1) is a liability under a security, issued by the NSW State Bank before the first taxing time, to pay an amount of $1,000 after that time. If the market value of the holders' right to receive the $1,000 under the security was $950 at the first taxing time, the NSW State Bank is taken to have received, at the first taxing time, $950 by way of consideration for assuming the liability under the security to pay the $1,000.

Effect of unfunded pre-first taxing time superannuation liabilities

"121EP.(1) This section applies to a deduction under section 82AAC in respect of a contribution made in relation to a person who was an employee of the NSW State Bank at the first taxing time.

"(2) A deduction to which this section applies is not allowable to the NSW State Bank for any year of income unless the requirements of subsections (3) and (4) are complied with.

"(3) For the deduction to be allowable, the NSW State Bank must obtain a certificate by an authorised actuary stating the actuarial value, as at the first taxing time, of liabilities of the NSW State Bank to provide superannuation benefits for, or for dependants of, employees of the Bank, where the liabilities:

(a) had accrued as at the first taxing time; and

(b) were, according to actuarial principles, unfunded at that time.

"(4) The certificate must be in a form approved in writing by the Commissioner. The NSW State Bank must obtain the certificate:

(a) before the date of lodgment of its return of income of the year of income in which the first taxing time occurs; or

(b) within such further time as the Commissioner allows.

"(5) If the NSW State Bank obtains the certificate, a deduction to which this section applies is nevertheless not allowable for a year of income if the sum of all deductions to which this section applies for the year of income is less than or equal to the unfunded liability limit (see subsection (7)) for the year of income.

"(6) If the sum is greater than that limit, so much of the deduction as is worked out using the following formula is not allowable:

(Amount of deduction / Sum of all deductions to which this section applies for the year of income) * Unfunded liability limit for the year of income

"(7) The 'unfunded liability limit' for a year of income is:

(a) if the year of income is the one in which the first taxing time occurs-the actuarial value of the liabilities set out in the actuary's certificate; or

(b) in any other case-that actuarial value as reduced by the total amount of deductions to which this section applies that, because of subsection (5), have not been allowable to the NSW State Bank for all previous years of income.

"(8) Expressions used in this Division that are also used in section 82AAC have the same respective meanings as in that section.

Effect of pre-first taxing time provision for bad debts

"121EQ.(1) This section applies to a debt owing to the NSW State Bank that existed immediately before the first taxing time if at that time there was, in the accounting records of the Bank, a doubtful debt provision in respect of the debt described as a 'specific provision'.

"(2) If this section applies to a debt, a deduction under this Act that, apart from this subsection, would be allowable to the NSW State Bank for the writing off of the whole or part of the debt as bad is not allowable to the extent that the amount written off equals the doubtful debt provision limit (see subsection (3)) in respect of the debt immediately before the writing off occurs.

"(3) The 'doubtful debt provision limit', in respect of a debt at a particular time, is:

(a) if subsection (2) has not applied in relation to any previous writing off of part of the debt-the amount of the specific provision in respect of the debt mentioned in subsection (1); or

(b) in any other case-the amount of the specific provision in respect of the debt mentioned in subsection (1), reduced by the sum of the amounts of deductions that, because of a previous application of subsection (2) in respect of the writing off of one or more parts of the debt as bad, have not been allowable to the Bank.

"(4) If:

(a) this section does not apply to a debt that existed immediately before the first taxing time; and

(b) the debt is included in a class of debts existing immediately before that time where, at that time, there was, in the accounting records of the NSW State Bank, a doubtful debt provision in respect of the class described as a 'specific provision';

this section applies to the debt as if there were a specific provision in respect of the debt of the kind mentioned in subsection (1) of an amount worked out using the formula:

Amount of specific provision for the class * (Amount of the debt / Sum of the amounts of debts included in the class).".