Income Tax Assessment Act 1997

Chapter 4 inserted by No 162 of 2001.

Part 4-5 inserted by No 162 of 2001.

Div 770 inserted by No 143 of 2007 , s 3 and Sch 1 item 1, applicable in relation to income years, statutory accounting periods and notional accounting periods starting on or after the first 1 July that occurs after 24 September 2007. No 143 of 2007 , s 3 and Sch 1 Pt 6 contains the following savings provisions:

Part 6 - Savings provisions

Object  
225
The object of this Part is to ensure that, despite the repeals and amendments made by this Act, the full legal and administrative consequences of:

(a) any act done or omitted to be done; or

(b) any state of affairs existing; or

(c) any period ending;

before such a repeal or amendment applies, can continue to arise and be carried out, directly or indirectly through an indefinite number of steps, even if some or all of those steps are taken after the repeal or amendment applies.

Making and amending assessments, and doing other things, in relation to past matters  
226
Even though an Act is repealed or amended by this Act, the repeal or amendment is disregarded for the purpose of doing any of the following under any Act or legislative instrument (within the meaning of the Legislative Instruments Act 2003 ):

(a) making or amending an assessment (including under a provision that is itself repealed or amended);

(b) exercising any right or power, performing any obligation or duty or doing any other thing (including under a provision that is itself repealed or amended);

in relation to any act done or omitted to be done, any state of affairs existing, or any period ending, before the repeal or amendment applies.

Example:

For the 2006-07 income year, Smart Investor Pty Ltd, an Australian resident private investment company, has assessable foreign income in the passive income class on which it has paid foreign tax for which it wishes to claim a foreign tax credit. The company also has a tax loss for the year from its Australian investments. When it lodges its tax return for the year it does not elect to claim a deduction for any of the tax loss under section 79DA of the ITAA 1936, because the Australian tax payable on its passive foreign income equals the foreign tax it has paid.

In 2009 the amount of foreign tax payable in respect of some foreign rental income it had included in its return for the 2006-07 year is reduced and Smart Investor receives a refund of the difference in foreign tax. Smart Investor Pty Ltd then applies to be able to make an election under section 79DA , that is, after the Tax Laws Amendment (2007 Measures No 4) Act 2007 (which repeals section 79DA ) receives Royal Assent. The Commissioner allows Smart Investor to submit an election to claim a deduction for so much of its 2006-07 tax loss as to reduce the amount of Australian tax payable on its 2006-07 assessable foreign income to the revised foreign tax paid, by the end of 2009.

Despite the repeal of section 79DA , item 226 allows the Commissioner to permit an election to be lodged after the return for 2006-07 has been lodged, and to amend Smart Investor ' s assessment for that year, because these actions relate to a thing done, and period ending, before the repeal of section 79DA applies.

Subdiv 770-C inserted by No 143 of 2007 , s 3 and Sch 1 item 1, applicable in relation to income years, statutory accounting periods and notional accounting periods starting on or after the first 1 July that occurs after 24 September 2007. For savings provisions, see note under Div 770 heading .

S 770-135(1) amended by No 15 of 2017, s 3 and Sch 4 item 78, by substituting " subsections (3) and (5) " for " subsections (3), (5) and (6) " in para (b), effective 1 April 2017.

S 770-135(1) amended by No 114 of 2010, s 3 and Sch 1 item 67, by omitting " or a *FIF " after " other than a *CFC " , applicable in relation to the 2010-11 year of income for a taxpayer and later years of income.

S 770-135(1) amended by No 88 of 2009, s 3 and Sch 5 item 258, by inserting " (other than a *CFC or a *FIF) " after " entity " , applicable in relation to income years, statutory accounting periods and notional accounting periods starting on or after 1 July 2008.

S 770-135(2) substituted by No 114 of 2010, s 3 and Sch 1 item 68, applicable in relation to the 2010-11 year of income for a taxpayer and later years of income. S 770-135(2) formerly read:

770-135(2)
An amount is included in an entity ' s assessable income as described in this subsection if:

(a) the entity is a company and the amount is included under:

(i) section 456 (a section 456 case ) of the 1936 Act in relation to a *CFC and a statutory accounting period; or

(ii) section 457 (a section 457 case ) of that Act in relation to a CFC; or

(iii) section 529 of that Act in relation to a foreign company (within the meaning of Part XI of that Act) (a foreign company case ) in respect of a notional accounting period (within the meaning of that Part) (a notional accounting period ); or

(b) the amount is included under section 529 of that Act in relation to a foreign trust (within the meaning of Part XI of that Act) (a foreign trust case ) in respect of a notional accounting period.

Note:

Section 456 of the 1936 Act includes, in the assessable income of certain Australian shareholders, amounts that are attributable to the profits of an Australian-controlled foreign company.

Section 457 does likewise when a controlled foreign company changes residence from an unlisted to a listed country or to Australia.

Section 529 includes, in the assessable income of resident taxpayers, amounts that are attributable to FIF interests held in foreign companies and in foreign trusts.

S 770-135(3) amended by No 114 of 2010, s 3 and Sch 1 items 69 and 70, by substituting " . " for " ; or " in para (b) and omitting para (c), applicable in relation to the 2010-11 year of income for a taxpayer and later years of income. Para (c) formerly read:

(c) for a foreign company case or a foreign trust case - by the foreign company or foreign trust in respect of an amount included in its notional income (within the meaning of Part XI of the 1936 Act) of the notional accounting period.

S 770-135(5) amended by No 114 of 2010, s 3 and Sch 1 items 71 to 73, by substituting " . " for " ; or " in para (b), and repealing para (c) and the note, applicable in relation to the 2010-11 year of income for a taxpayer and later years of income. Para (c) and the note formerly read:

(c) for a foreign company case - at the end of the notional accounting period.

Note:

There is no association condition for a foreign trust case.

S 770-135(6) repealed by No 114 of 2010, s 3 and Sch 1 item 74, applicable in relation to the 2010-11 year of income for a taxpayer and later years of income. S 770-135(6) formerly read:

Calculation method condition for FIFs

770-135(6)
For a foreign company case and a foreign trust case, the amount included under section 529 of the 1936 Act must have been determined by the application of the calculation method set out in Subdivision D of Division 18 of Part XI of that Act (the calculation method ).

S 770-135(7) substituted by No 114 of 2010, s 3 and Sch 1 item 74, applicable in relation to the 2010-11 year of income for a taxpayer and later years of income. S 770-135(7) formerly read:

Amount of foreign income tax

770-135(7)
The amount worked out under this subsection is:

(a) for a section 456 case - the sum of all the tax amounts for the statutory accounting period multiplied by the company ' s *attribution percentage in relation to the *CFC at the time mentioned in paragraph (5)(a); or

(b) for a section 457 case - the sum of all the tax amounts to the extent they are attributable to the amount included in the company ' s assessable income under section 457 of the 1936 Act; or

(c) for a foreign company case or a foreign trust case - an amount worked out using the following formula:

	Sum of all of the tax amounts for the notional accounting period	×	Entity ' s share of calculated profit
			FIF ' s calculated profit

where:

entity ' s share of calculated profit
means the share of the calculated profit of the foreign company or foreign trust in respect of the notional accounting period to which the entity is entitled as determined under the calculation method.

FIF ' s calculated profit
means the calculated profit of the foreign company or foreign trust in respect of the notional accounting period as determined under the calculation method.

S 770-135(8) substituted by No 114 of 2010, s 3 and Sch 1 item 74, applicable in relation to the 2010-11 year of income for a taxpayer and later years of income. S 770-135(8) formerly read:

Grossing-up of attributed amount

770-135(8)
For the purposes of this Act except this section and:

(a) section 371 of the 1936 Act (for a section 456 case or a section 457 case); or

(b) section 605 of that Act (for a foreign company case or a foreign trust case);

the amount included in the entity ' s assessable income as described in subsection (2) is taken to be increased by the amount of tax worked out under subsection (7).

Note:

Section 371 of the 1936 Act records an amount in an attribution account when the amount is included in the assessable income of an attributable taxpayer in relation to a CFC. Section 605 does the same thing for taxpayers with interests in FIFs.

S 770-135 inserted by No 143 of 2007 , s 3 and Sch 1 item 1, applicable in relation to income years, statutory accounting periods and notional accounting periods starting on or after the first 1 July that occurs after 24 September 2007. For savings provisions, see note under Div 770 heading .