A New Tax System (Pay As You Go) Act 1999 (178 of 1999)

Schedule 2   Running balance accounts, general interest charge and related matters

Part 1   Running balance accounts

Division 1   Amendment of Part IIB of the Taxation Administration Act 1953

22   Division 3 of Part IIB

Repeal the Division, substitute:

Division 3 - Treatment of payments, credits and RBA surpluses

8AAZL Amounts covered by this Division

(1) This Division sets out how the Commissioner must treat the following kinds of amount:

(a) a payment the Commissioner receives in respect of a current or anticipated tax debt or tax debts of an entity;

(b) a credit (including an excess non-RBA credit) that an entity is entitled to under a taxation law;

(c) an RBA surplus of an entity.

(2) The Commissioner must treat each such amount using the method set out in section 8AAZLA or 8AAZLB (but not both).

Note: In either case, section 8AAZLC has some additional rules that apply to RBA surpluses and to certain excess non-RBA credits.

8AAZLA Method 1 - allocating the amount first to an RBA

(1) The Commissioner may, in the manner he or she determines, allocate the amount to an RBA of the entity.

(2) The Commissioner must then also apply the amount against the following kinds of debts (if there are any):

(a) tax debts that have been allocated to that RBA;

(b) general interest charge on such tax debts.

(3) To the extent that the amount is not applied under subsection (2), it gives rise to an excess non-RBA credit in favour of the entity that:

(a) is equal to the part of the amount that is not applied; and

(b) relates to the RBA to which the amount was allocated.

8AAZLB Method 2 - applying the amount first against a non-RBA tax debt

(1) The Commissioner may, in the manner he or she determines, apply the amount against a non-RBA tax debt of the entity.

(2) If the non-RBA tax debt is:

(a) a tax debt that has been allocated to an RBA; or

(b) general interest charge on such a tax debt;

the Commissioner must then also allocate the amount to that RBA.

(3) To the extent that the amount is not applied under subsection (1), it gives rise to an excess non-RBA credit in favour of the entity that is equal to the part of the amount that is not applied.

(4) The excess non-RBA credit relates to the RBA (if any) that the Commissioner determines and the balance of that RBA is adjusted in the entity's favour by the amount of that credit.

Separate RBAs for one entity

(5) If the non-RBA tax debt mentioned in subsection (1) has been allocated to 2 or more RBAs, the Commissioner must allocate the amount applied between those RBAs in the proportions in which the tax debt was allocated.

Note: Separate RBAs may be established for different businesses or undertakings conducted by the same entity, for different parts of the same business or undertaking or for different periods: see subsection 8AAZC(5).

8AAZLC RBA surplus and related credits must remain equivalent if one or the other is applied

RBA surpluses

(1) If an RBA surplus is allocated or applied under this Division, the Commissioner must reduce by the same amount excess non-RBA credits that relate to the RBA.

Excess non-RBA credits

(2) If, under this Division, an excess non-RBA credit that relates to an RBA (the related RBA ) is:

(a) allocated to an RBA; or

(b) applied against a non-RBA tax debt;

the related RBA is adjusted in the Commissioner's favour by the same amount.

8AAZLD Special priority credits: HEC and FS assessment debts

If, under this Division, the Commissioner is to apply a credit that arises under Schedule 1 to this Act (the PAYG system), the Commissioner must apply it, whether under section 8AAZLA or 8AAZLB:

(a) first, against any HEC assessment debt of the entity; and

(b) then against any FS assessment debt of the entity;

before applying it against other non-RBA tax debts of the entity.

8AAZLE Instructions to Commissioner not binding

In doing anything under this Division, the Commissioner is not required to take account of any instructions of any entity.

Division 3A - Refunds of RBA surpluses and credits

8AAZLF Commissioner must refund RBA surpluses and credits

(1) The Commissioner must refund to an entity so much of:

(a) an RBA surplus of the entity; or

(b) a credit (including an excess non-RBA credit) in the entity's favour;

as the Commissioner does not allocate or apply under Division 3.

Voluntary payments only to be refunded on request

(2) However, the Commissioner is not required to refund an RBA surplus or excess non-RBA credit that arises because a payment is made in respect of an anticipated tax debt of an entity unless the entity later requests, in the approved manner, that the Commissioner do so.

(3) On receiving such a request, the Commissioner must refund so much of the amount as the Commissioner does not allocate or apply under Division 3.

Effect of refunding RBA surplus

(4) If the Commissioner refunds an RBA surplus under this section, the Commissioner must reduce by the same amount excess non-RBA credits that relate to the RBA.

Effect of refunding credit that relates to an RBA

(5) If, under this section, the Commissioner refunds an excess non-RBA credit that relates to an RBA, the RBA is adjusted in the Commissioner's favour by the same amount.

8AAZLG Retaining refunds until information or notification given

(1) The Commissioner may retain an amount that he or she otherwise would have to refund to an entity under section 8AAZLF, if the entity has not given the Commissioner a notification:

(a) that affects or may affect the amount that the Commissioner refunds to the entity; and

(b) that the entity is required to give the Commissioner under any of the following provisions:

(2) The Commissioner may retain the amount until the entity has given the Commissioner that notification.

8AAZLH How refunds are made

(1) This section applies to refunds payable to an entity of RBA surpluses, or excess non-RBA credits that relate to an RBA, if primary tax debts arising under any of the provisions set out in paragraph 8AAZLG(1)(b) have been allocated to that RBA.

(2) The Commissioner must pay those refunds to the credit of a financial institution account nominated by the entity.

(3) However, the Commissioner may direct that any such refunds be paid to the entity in a different way.

(4) If an entity has not nominated a financial institution account for the purposes of this section and the Commissioner has not directed that any such refunds be paid in a different way, the Commissioner is not obliged to refund any amount to the entity until the entity does so.