Taxation Laws Amendment Act (No. 3) 1992

(98 of 1992)

An Act to amend the law relating to taxation

(Assented to 30 June 1992)

Part 1   PRELIMINARY

1   Short title

This Act may be cited as the Taxation Laws Amendment Act (No. 3) 1992.

2   Commencement

 

(1) Subject to subsection (2), this Act commences on the day on which it receives the Royal Assent.
        

      

(2) Division 6 of Part 2 commences on the day after the day on which this Act receives the Royal Assent.
        

Part 2   AMENDMENT OF THE INCOME TAX ASSESSMENT ACT 1936

Division 1   Principal Act

3   Principal Act

In this Part, "Principal Act" means the Income Tax Assessment Act 1936.*1*

*1* No. 27, 1936, as amended. For previous amendments, see No. 88, 1936; No. 5, 1937; No. 46, 1938; No. 30, 1939; Nos. 17 and 65, 1940; Nos. 58 and 69, 1941; Nos. 22 and 50, 1942; No. 10, 1943; Nos. 3 and 28, 1944; Nos. 4 and 37, 1945; No. 6, 1946; Nos. 11 and 63, 1947; No. 44, 1948; No. 66, 1949; No. 48, 1950; No. 44, 1951; Nos. 4, 28 and 90, 1952; Nos. 1, 28, 45 and 81, 1953; No. 43, 1954; Nos. 18 and 62, 1955; Nos. 25, 30 and 101, 1956; Nos. 39 and 65, 1957; No. 55, 1958; Nos. 12, 70 and 85, 1959; Nos. 17, 18, 58 and 108, 1960; Nos. 17, 27 and 94, 1961; Nos. 39 and 98, 1962; Nos. 34 and 69, 1963; Nos. 46, 68, 110 and 115, 1964; Nos. 33, 103 and 143, 1965; Nos. 50 and 83, 1966; Nos. 19, 38, 76 and 85, 1967; Nos. 4, 70, 87 and 148, 1968; Nos. 18, 93 and 101, 1969; No. 87, 1970; Nos. 6, 54 and 93, 1971; Nos. 5, 46, 47, 65 and 85, 1972; Nos. 51, 52, 53, 164 and 165, 1973; No. 216, 1973 (as amended by No. 20, 1974); Nos. 26 and 126, 1974; Nos. 80 and 117, 1975; Nos. 50, 53, 56, 98, 143, 165 and 205, 1976; Nos. 57, 126 and 127, 1977; Nos. 36, 57, 87, 90, 123, 171 and 172, 1978; Nos. 12, 19, 27, 43, 62, 146, 147 and 149, 1979; Nos. 19, 24, 57, 58, 124, 133, 134 and 159, 1980; Nos. 61, 92, 108, 109, 110, 111, 154 and 175, 1981; Nos. 29, 38, 39, 76, 80, 106 and 123, 1982; Nos. 14, 25, 39, 49, 51, 54 and 103, 1983; Nos. 14, 42, 47, 63, 76, 115, 124, 165 and 174, 1984; No. 123, 1984 (as amended by No. 65, 1985); Nos. 47, 49, 104, 123, 168 and 174, 1985; No. 173, 1985 (as amended by No. 49, 1986); Nos. 41, 46, 48, 51, 109, 112 and 154, 1986; No. 49, 1986 (as amended by No. 141, 1987); No. 52, 1986 (as amended by No. 141, 1987); No. 90, 1986 (as amended by No. 141, 1987); Nos. 23, 58, 61, 120, 145 and 163, 1987; No. 62, 1987 (as amended by No. 108, 1987); No. 108, 1987 (as amended by No. 138, 1987); No. 138, 1987 (as amended by No. 11, 1988); No. 139, 1987 (as amended by Nos. 11 and 78, 1988); Nos. 8, 11, 59, 75, 78, 80, 87, 95, 97, 127 and 153, 1988; Nos. 2, 11, 56, 70, 73, 105, 107, 129, 163 and 167, 1989; No. 97, 1989 (as amended by No. 105, 1989); Nos. 20, 35, 45, 57, 58, 60, 61, 87, 119 and 135, 1990; Nos. 4, 5, 6, 48, 55, 100, 203, 208, and 216, 1991; and No. 3, 1992.

Division 2   Amendments relating to horticulture

4   Interpretation

Section 6 of the Principal Act is amended:

(a) by omitting "or" from paragraph (c) of the definition of "primary production" in subsection (1);
          

(b) by inserting after paragraph (d) of the definition of "primary production" in subsection (1) the following word and paragraph:
          

"; or (e) horticulture;";

(c) by inserting in subsection (1) the following definition:
          

" 'horticulture' includes:

(a) propagation as well as cultivation; or

(b) propagation or cultivation of seeds, bulbs, spores or similar things; or

(c) propagation or cultivation of fungi; or

(d) propagation or cultivation in environments other than soil, whether natural or artificial;

but does not include the doing of any thing other than in the course of, or for the purposes of, a business;".

5   Application of amendments

The amendments made by this Division apply to the doing of things after 26 May 1992.

Division 3   Amendment relating to expenditure on research and development activities

6   Expenditure on research and development activities

Section 73B of the Principal Act is amended by omitting from paragraph (2)(c) "determining the size or quality of any deposits" and substituting "discovering deposits, determining more precisely the location of deposits or determining the size or quality of deposits".

7   Application of amendment

The amendment made by this Division applies to activities carried on on or after 1 July 1985 (including after the commencement of this section).

Division 4   Amendments relating to pooled development funds Interpretation

8   Interpretation

Section 6 of the Principal Act is amended:

(a) by omitting from subsection (1) the definition of "taxable income" and substituting the following definition:
          

" 'taxable income' means:

(a) except in a case where paragraph (b) or (c) applies - the amount remaining after deducting from the assessable income all allowable deductions; or

(b) in a case where paragraph (c) does not apply and Subdivision B of Division 2A of Part III applies - the amount calculated in accordance with section 50C; or

(c) in a case where:

(i) a company becomes a PDF during the year of income and is still a PDF at the end of the year of income; and

(ii) the PDF component for the year of income is a nil amount;

the amount that, if the period ('the notional year') beginning at the start of the year of income and ending immediately before the company becomes a PDF were a year of income of the company, would be the taxable income of the notional year because of paragraph (a) or (b), as the case requires;";

(b) by inserting in subsection (1) the following definitions:
          

" 'PDF' (pooled development fund) means a company that is a PDF within the meaning of the Pooled Development Funds Act 1992, but does not include such a company in the capacity of a trustee;

'PDF component', in relation to a company that becomes a PDF during the year of income and is still a PDF at the end of the year of income, means:

(a) in a case where the amount that, if:

(i) the period beginning at the start of the year of income and ending immediately before the company becomes a PDF were a year of income of the company; and

(ii) the period ('the PDF notional year') beginning when the company becomes a PDF and ending at the end of the year of income were a year of income of the company; and

(iii) paragraph (c) of the definition of 'taxable income' were omitted;

would be the company's taxable income of the PDF notional year is $1 or more - that amount; or

(b) otherwise - a nil amount;".

9   After section 79E

After section 79E of the Principal Act the following sections are inserted:

Loss of company's first year as a PDF where taxable income consists of pre-PDF income

"79EA.(1) If a company has a taxable income for a year of income because of paragraph (c) of the definition of 'taxable income' in subsection 6(1), this section applies for the purposes of section 79E despite subsections 79E(1) and (2).

"(2) The company incurs a loss in that year of income equal to the loss (if any) that, if:

(a) the period beginning at the start of that year of income and ending immediately before the company became a PDF were a year of income of the company; and

(b) the period ('the PDF notional year') beginning when the company became a PDF and ending at the end of the first-mentioned year of income were a year of income of the company;

the company would be taken because of section 79E to incur in the PDF notional year.

Losses incurred while a PDF not allowable after company ceases to be a PDF

"79EB.(1) If a company is a PDF throughout the last day of a year of income in which it incurs a loss, the loss is not allowable as a deduction from the company's assessable income of a later year of income unless the company is a PDF throughout the later year of income.

"(2) However, if:

(a) a company becomes a PDF during a year of income and is still a PDF at the end of the year of income; and

(b) the company incurs a loss in that year of income otherwise than because of section 79EA;

subsection (1) of this section does not apply to so much of the loss as does not exceed the loss (if any) that, if the period ('the notional year') beginning at the start of the year of income and ending immediately before the company becomes a PDF were a year of income of the company, the company would be taken to incur in the notional year.

"(3) An expression has in this section the same meaning as in section 79E.".

10   Transfer of loss within company group

Section 80G of the Principal Act is amended by inserting after subsection (9) the following subsections:

"(9A) If the loss company was a PDF throughout the last day of the loss year, the right to an allowable deduction in respect of any part of the loss incurred by the loss company in the loss year must not be transferred.

"(9B) However, if:

(a) the loss company became a PDF during the loss year and was still a PDF at the end of the loss year; and

(b) the loss company incurred a loss in the loss year otherwise than because of section 79EA;

subsection (9A) does not apply to so much of the loss as does not exceed the loss (if any) that, if the period ('the notional year') beginning at the start of the loss year and ending immediately before the loss company became a PDF were a year of income of the loss company, the loss company would be taken to incur in the notional year.".

11   After section 124ZL

After section 124ZL of the Principal Act the following Division is inserted:

"Division 10E - Shares in PDFs

Treatment of dividends on shares in a PDF

"124ZM.(1) If a company pays a dividend to a shareholder at a time when the company is a PDF, then:

(a) so much (if any) of the dividend as has not been franked in accordance with section 160AQF is exempt from income tax; and

(b) if the whole or a part of the dividend has been so franked - the rest of this section applies.

"(2) If, apart from this subsection, the assessable income of a year of income of a taxpayer who or that is:

(a) a company or a natural person (other than a company or natural person in the capacity of a trustee); or

(b) a corporate unit trust in relation to that year of income; or

(c) a public trading trust in relation to that year of income; or

(d) an eligible entity within the meaning of Part IX in relation to that year of income;

would include:

(e) the franked amount; or

(f) a trust amount or partnership amount in relation to which there would be a flow-on franking amount;

the franked amount, or so much of the trust amount or partnership amount as would constitute the flow-on franking amount, as the case may be, is exempt income of the taxpayer.

"(3) Subsection (2) does not exempt, and is taken never to have exempted, an amount if the taxpayer's return of income of the year of income is prepared on the basis that the amount is included in the taxpayer's assessable income of that year.

"(4) If, apart from this subsection, a partnership amount in relation to which there would be a flow-on franking amount would be allowable as a deduction from the assessable income of a year of income of a taxpayer of a kind referred to in subsection (2), so much of the partnership amount as would constitute the flow-on franking amount is not allowable as a deduction from that assessable income.

"(5) Subsection (4) does not prevent, and is taken never to have prevented, an amount from being allowable as a deduction if the taxpayer's return of income of the year of income is prepared on the basis that the amount is so allowable.

"(6) If, apart from this subsection, a trustee would be liable under section 98, 99 or 99A to be assessed and pay tax on a trust amount or partnership amount in relation to which there would be a flow-on franking amount, the trustee is not liable under that section to be assessed and to pay tax on so much of the trust amount or partnership amount as would constitute the flow-on franking amount.

"(7) Subsection (6) does not prevent, and is taken never to have prevented, the trustee from being liable under that section to be assessed and to pay tax on an amount if the trustee elects to be so liable.

"(8) An election must be made in the trustee's return of income of the trust estate for the year of income concerned.

"(9) In this section:

'flow-on franking amount' means:

(a) in relation to a trust amount - so much of the trust amount as is attributable to:

(i) if the franked amount is included in the assessable income of the trust estate - the franked amount; or

(ii) the flow-on franking amount in relation to another trust amount included in the assessable income of the trust estate; or

(iii) the flow-on franking amount in relation to a partnership amount included in, or allowable as a deduction from, the assessable income of the trust estate; and

(b) in relation to a partnership amount - so much of the partnership amount as is attributable to:

(i) if the franked amount is included in the assessable income of the partnership - the franked amount; or

(ii) the flow-on franking amount in relation to a trust amount included in the assessable income of the partnership; 'franked amount' means so much of the dividend as has been franked in accordance with section 160AQF;

'partnership amount' has the same meaning as in Part IIIAA;

'trust amount' has the same meaning as in Part IIIAA.

Exemption of income from sale of shares in a PDF

"124ZN. Income derived by a taxpayer from selling shares in a company is exempt from income tax if the company is a PDF at the time of the sale.

Shares in a PDF are not trading stock

"124ZO. Shares in a PDF are not trading stock for the purposes of this Act.

Part IIIA does not apply to disposal of shares in a PDF

"124ZP. Part IIIA does not apply in respect of a disposal (within the meaning of that Part) of shares in a company if the company is a PDF at the time of the disposal.

Effect of company becoming a PDF

"124ZQ.(1) This section applies to shares in a company that a taxpayer holds when the company becomes a PDF.

"(2) In determining for the purposes of this Act whether an amount is or was allowable as a deduction to the taxpayer in respect of acquiring the shares, the shares are taken to have been shares in a PDF throughout the period beginning immediately before the taxpayer acquired them and ending when the company became a PDF.

"(3) For the purposes of this Act, the shares are taken to have been trading stock of the taxpayer at no time during that period.

"(4) Section 170 does not prevent an assessment from being amended to give effect to this section.

Effect of company ceasing to be a PDF

"124ZR.(1) This section applies to shares in a company that a taxpayer holds when the company ceases to be a PDF.

"(2) For the purposes of this Act (other than Part IIIA), the taxpayer is taken:

(a) to have sold the shares immediately before the company ceased to be a PDF; and

(b) to have rebought the shares immediately after the company so ceased;

for a consideration equal to the market value of the shares immediately after the company so ceased.

"(3) For the purposes of Part IIIA, the taxpayer is taken:

(a) to have disposed of the shares immediately before the company ceased to be a PDF; and

(b) to have re-acquired the shares immediately after the company so ceased;

for a consideration equal to the market value of the shares immediately after the company so ceased.".

12   Liability to withholding tax

Section 128B of the Principal Act is amended by inserting after paragraph (3)(b) the following paragraph:

"(ba) income that is exempt from income tax because of section 124ZM (which exempts dividends paid by PDFs);".

13   Interpretation

Section 160APA of the Principal Act is amended by omitting "or life assurance companies" from the definition of "general company tax rate" and substituting ", life assurance companies or companies that are PDFs throughout the last day of the year of income".

14   Receipt of franked dividends

Section 160APP of the Principal Act is amended by inserting after subsection (3) thefollowing subsection:

"(3A) In determining for the purposes of subsection (2) or (3) whether the dividend is wholly or partly exempt income of the shareholder, section 124ZM (which exempts dividends paid by PDFs) is to be disregarded.".

15   Extra amount to be included in assessable income where franked dividend paid

Section 160AQT of the Principal Act is amended by adding at the end the following subsection:

"(5) For the purposes of this section, if:

(a) because of subsection 124ZM(3), subsection 124ZM(2) does not exempt the franked amount of a dividend paid by a company to a shareholder; and

(b) the dividend is not otherwise exempt income of the shareholder;

the dividend is taken not to be exempt income of the shareholder.".

16   Transfer of shareholder status for tax purposes - cum-dividend stock exchange sales and securities lending arrangements

Section 160AQUA of the Principal Act is amended by inserting in subsection (1) ", of section 124ZM" after "Part III".

17   Net capital gains and net capital losses

Section 160ZC of the Principal Act is amended by adding at the end the following subsections:

"(6) If:

(a) at some time during the last day of a year of income, a company is not a PDF; and

(b) the company was a PDF throughout the last day of the previous year of income ('the final PDF year');

a net capital loss that the company is taken to have incurred in respect of the final PDF year is to be disregarded in ascertaining whether a net capital gain accrued to the company, or the company incurred a net capital loss, in the first-mentioned year.

"(7) However, subsection (6) does not apply to so much of the net capital loss as does not exceed the amount (if any) by which the total of:

(a) if the company is taken to have incurred a net capital loss in respect of the last year of income before the year of income at the start of which, or during which, it became a PDF - that net capital loss; and

(b) if the company incurred a capital loss or capital losses after that last year of income and before it became a PDF - that capital loss or those capital losses;

exceeds:

(c) if a capital gain or capital gains accrued to the company after that last year of income and before the year of income referred to in paragraph (6)(a) - that capital gain or the total of those capital gains; or

(d) otherwise - a nil amount.".

18   Return of capital on investment in trust

Section 160ZM of the Principal Act is amended by omitting subsection (3A) and substituting the following subsection:

"(3A) In subsections (2) and (3):

'adjusted payment' means so much of the amount of the payment as is attributable to none of the following:

(a) a deduction allowed under Division 10C or 10D of Part III;

(b) income that is exempt from income tax because of section 124ZM or 124ZN (which exempt income arising from shares in a PDF);

(c) consideration in respect of a disposal of shares in a company that is a PDF at the time of the disposal.".

19   Transfer of net capital loss within company group

Section 160ZP of the Principal Act is amended by inserting before subsection (10) the following subsections:

"(9B) If the loss company was a PDF throughout the last day of the loss year, no part of the net capital loss incurred by that company in respect of that year can be specified in a notice under paragraph (7)(c).

"(9C) However, subsection (9B) does not apply to so much of the net capital loss as does not exceed the amount (if any) by which the total of:

(a) if the loss company is taken to have incurred a net capital loss in respect of the last year of income before the year of income at the start of which, or during which, it became a PDF - that net capital loss; and

(b) if the loss company incurred a capital loss or capital losses after that last year of income and before it became a PDF - that capital loss or those capital losses;

exceeds:

(c) if a capital gain or capital gains accrued to the loss company after that last year of income and before the end of the loss year - that capital gain or the total of those capital gains; or

(d) otherwise - a nil amount.".

20   Application of amendments

 

(1) In this section:
        

"amended Act" means the Principal Act as amended by this Division;

"at any time" includes at a time before the commencement of this section.

      

(2) The following apply in relation to a year of income beginning at any time:
        

(a) the amendments made by sections 8, 10, 13, 17 and 19;
          

(b) sections 79EA and 79EB of the amended Act.
          

      

(3) The following apply in relation to a dividend paid at any time:
        

(a) section 124ZM of the amended Act;
          

(b) the amendments made by sections 14, 15 and 16 of this Act.
          

     

(4) The following apply in relation to income derived at any time:
        

(a) section 124ZN of the amended Act;
          

(b) the amendment made by section 12 of this Act.
          

      

(5) Section 124ZO of the amended Act applies in relation to shares acquired at any time.
        

      

(6) Section 124ZP of the amended Act applies in relation to a disposal (within the meaning of Part IIIA of that Act) occurring at any time.
        

      

(7) Section 124ZQ of the amended Act applies in relation to a company becoming a PDF at any time.
        

      

(8) Section 124ZR of the amended Act applies in relation to a company ceasing at any time to be a PDF.
        

      

(9) The amendment made by section 18 applies in relation to a payment made at any time.
        

Division 5   Amendments relating to debts

21   Interpretation

Section 50B of the Principal Act is amended by adding at the end the following subsections:

"(13) Where a part of a debt is an allowable deduction in an assessment, this Subdivision (other than subsection (14) of this section) applies as if the part were an entire debt that is an allowable deduction in the assessment.

"(14) This Subdivision has the same effect in relation to an allowable deduction under section 63E in respect of the whole or part of a debt that is extinguished as it has in relation to an allowable deduction under section 51 or 63 in respect of the whole or part of a debt that is written off as bad.".

22   Bad debts

Section 63 of the Principal Act is amended:

(a) by omitting from subsection (3) "to him under this or the previous Act, his" and substituting "to the taxpayer under section 51 or this section, the taxpayer's";
          

(b) by adding at the end the following subsection:
          

"(4) Where a part of a debt is bad, this section applies as if the part were an entire debt that is bad.".

23   Bad debts etc. of company not allowable deductions unless there is substantial continuity of beneficial ownership of shares in company

Section 63A of the Principal Act is amended by adding at the end the following subsections:

"(13) Where a part of a debt is an allowable deduction in an assessment, the preceding provisions of this section apply as if the part were an entire debt that is an allowable deduction in the assessment.

"(14) This section has the same effect in relation to an allowable deduction under section 63E in respect of the whole or part of a debt that is extinguished as it has in relation to an allowable deduction under section 51 or 63 in respect of the whole or part of a debt that is written off as bad.".

24   Bad debts etc. of company not allowable deductions in certain circumstances

Section 63B of the Principal Act is amended by adding at the end the following subsections:

"(10) Where a part of a debt is an allowable deduction in an assessment, the preceding provisions of this section apply as if the part were an entire debt that is an allowable deduction in the assessment.

"(11) This section has the same effect in relation to an allowable deduction under section 63E in respect of the whole or part of a debt that is extinguished as it has in relation to an allowable deduction under section 51 or 63 in respect of the whole or part of a debt that is written off as bad.".

25   Bad debts etc. of a company may be allowable deductions where company carries on same business

Section 63C of the Principal Act is amended by adding at the end the following subsections:

"(3) Where a part of a debt is written off by a company as bad, the preceding provisions of this section apply as if the part were an entire debt that is written off by the company as bad.

"(4) This section has the same effect in relation to an allowable deduction under section 63E in respect of the whole or part of a debt that is extinguished as it has in relation to an allowable deduction under section 51 or 63 in respect of the whole or part of a debt that is written off as bad.".

26   Bad debts etc. of money-lenders not allowable deductions where attributable to listed country branches

Section 63D of the Principal Act is amended:

(a) by omitting from subsection (1) all the words from and including "Where" to the end of paragraph (1)(a) and substituting:
          

"Subject to section 63F, where:

(a) apart from this section and section 63F, a deduction would be allowable to a taxpayer:

(i) under section 51 or 63 in respect of the writing off of a debt as bad; or

(ii) under section 63E in respect of a debt/equity swap in relation to a debt; and";

(b) by inserting in subsection (2) ", or in respect of which there is a debt/equity swap (within the meaning of section 63E)," after "written off";
          

(c) by adding at the end the following subsection:
          

"(3) Where a part of a debt is written off as bad, this section applies as if the part were an entire debt that is written off as bad.".

27   After section 63D

After section 63D of the Principal Act, the following sections are inserted:

Debt/equity swaps

(Meaning of "debt/equity swap")

"63E.(1) For the purposes of this section, a 'debt/equity swap' occurs if:

(a) under an arrangement (defined in subsection (6)), a taxpayer discharges, releases or otherwise extinguishes the whole or part of a debt owed to the taxpayer in return for the issue by the debtor to the taxpayer of shares (other than redeemable preference shares), or units, in the debtor; and

(b) the debtor is:

(i) a company; or

(ii) a trading trust (within the meaning of section 102N), or a public unit trust (within the meaning of section 102P), in relation to the year of income in which the units are issued; and

(c) the debt either:

(i) has been brought to account by the taxpayer as assessable income of any year of income; or

(ii) is in respect of money lent in the ordinary course of the business of the lending of money by the taxpayer who carries on that business.

(Meaning of "equity value" and "swap loss")

"(2) For the purposes of this section:

(a) the 'equity value' of the shares or units is the greater of:

(i) their market value at the time of their issue to the taxpayer; and

(ii) their value shown in the accounts of the taxpayer as at the time of their issue to the taxpayer; and

(b) a 'swap loss' occurs if the amount of the whole or the part of the debt that is extinguished is greater than the equity value of the shares or units.

(Swap loss is deductible etc.)

"(3) If a debt/equity swap occurs:

(a) subject to section 63F, any swap loss is allowable as a deduction from the taxpayer's assessable income of the year of income in which the shares or units are issued; and

(b) no amount is allowable as a deduction from the assessable income of the taxpayer of any year of income under section 51 or 63 in respect of the writing off of the whole or part of the debt as bad in connection with the debt/equity swap; and

(c) for the purposes of any application of subsection 63(3) in relation to the issue of the shares or units to the taxpayer, the amount received in respect of the issue is taken to be the same as the equity value of the shares or units.

(Effect of debt/equity swap on later equity disposal etc.)

"(4) If a debt/equity swap occurs and the taxpayer later disposes of any of the shares or units or they are cancelled or redeemed:

(a) except in accordance with paragraph (b), no amount is included in, or allowable as a deduction from, the taxpayer's assessable income of any year of income under this Act in respect of the later disposal, cancellation or

redemption; and

(b) if the consideration received or receivable by the taxpayer in respect of the disposal, cancellation or redemption is different from the equity value of the shares or units:

(i) if the consideration is greater - the difference is included in the taxpayer's assessable income of the year of income in which the disposal, cancellation or redemption occurs; or

(ii) if it is less - the difference is allowable as a deduction from that assessable income.

(Consideration of a nil amount)

"(5) For the purposes of subsection (4), if no consideration is received or receivable by the taxpayer in respect of the disposal, cancellation or redemption, then consideration of a nil amount is taken to have been so received or receivable.

(Meaning of "arrangement")

"(6) In this section: 'arrangement' means any agreement, arrangement, understanding, promise, undertaking or scheme, whether express or implied, and whether or not enforceable, or intended to be enforceable, by legal proceedings.

Limit on deductions where debt write offs and debt/equity swaps occur

(Situations where limit is to be applied)

"63F.(1) If:

(a) apart from this section, a deduction ('the current deduction') would be allowable to a taxpayer:

(i) under section 51 or 63 in respect of the writing off of the whole or part of a debt as bad; or

(ii) under section 63E in respect of a debt/equity swap relating to the whole or part of a debt; and

(b) a deduction ('a previous deduction') was allowed or allowable to the taxpayer under any of those sections in respect of any number of occurrences of either or both of the following:

(i) a previous writing off as bad of the whole or part of a debt ('a previous debt') that was the same as, or included, the debt mentioned in subparagraph (a)(i) or (ii);

(ii) a previous debt/equity swap relating to a part of a debt ('a previous debt') that was the same as, or included, the debt mentioned in subparagraph (a)(i) or (ii); and

(c) the current deduction or at least one previous deduction is a deduction allowable under section 63E in respect of a debt/equity swap;

then the current deduction is only allowable to the extent that it does not exceed the limit worked out under subsection (2).

(Calculation of limit)

"(2) The limit is worked out as follows:

Step 1: Take the amount of the previous debt in respect of the earliest or only writing off or debt/equity swap to which paragraph (1)(b) applies.

Step 2: Reduce the amount by the previous deduction in respect of that writing off or debt/equity swap.

Step 3: If one or more of the following events occur after the writing off or debt/equity swap, progressively reduce the balance of the amount in the way set out below and in the order in which the events occur:

Event

How balance reduced

A writing off or debt/equity swap in respect of which there is a previous deduction.

Reduce the balance by the amount of that previous deduction. If the reduced balance is higher than the level of the debt owing afterthe event, further reduce the balance to that lower level.

Any other event (e.g. a repayment) that reduces the amount of debt owing, being an event that occurs before the writing off or debt/equity swap in respect of the current deduction.

If the balance at the time of the event is higher than the level of the debt owing after the event occurs, reduce the balance to that lower level.

The limit is the resulting balance.".

28   Loss resulting from bad debt etc. not to be taken into account in certain circumstances

Section 80F of the Principal Act is amended by adding at the end the following subsections:

"(2) Where a part of a debt is written off as bad, subsection (1) applies as if the part were an entire debt that is written off as bad.

"(3) This section has the same effect in relation to an allowable deduction under section 63E in respect of the whole or part of a debt that is extinguished as it has in relation to an allowable deduction under section 51 or 63 in respect of the whole or part of a debt that is written off as bad.".

29   Interpretation

Section 82KH of the Principal Act is amended:

(a) by inserting in subsection (1AA) ", or a part of a debt," after "to a debt";
          

(b) by inserting after subsection (1AB) the following subsection:
          

"(1ABA) This section has the same effect in relation to an allowable deduction under section 63E in respect of the extinguishing of the whole or part of a debt as it has in respect of an allowable deduction under section 51 or 63 in respect of the writing off of the whole or part of a debt as bad.".

30   Modified application of bad debt etc. provisions

Section 399A of the Principal Act is amended by adding at the end the following subsections:

"(4) Where a part of a debt is written off as bad, the preceding provisions of this section apply as if the part were an entire debt that is written off as bad.

"(5) This section has the same effect in relation to an allowable deduction under section 63E in respect of the whole or part of a debt that is extinguished as it has in relation to an allowable deduction under section 51 or 63 in respect of the whole or part of a debt that is written off as bad.".

31   Application of amendments

(Part-debt write offs)

 

(1) The amendments made by this Division, so far as they relate to the writing off of part of a debt, apply to a writing off occurring after 26 February 1992, and the amendments are to be disregarded for the purpose of interpreting any of the amended provisions of the Principal Act in relation to the writing off of a part of a debt on or before that day.
        

(Debt/equity swaps)

      

(2) Section 63E of the Principal Act as amended by this Division applies where the debt or part of the debt concerned is extinguished after 26 February 1992.
        

Division 6   Amendments relating to infrastructure borrowings

32   Division not to apply to certain interest

Section 125 of the Principal Act is amended by adding at the end ", or that is not included in assessable income because of section 159GZZZZE.".

33   Liability to withholding tax

Section 128B of the Principal Act is amended by inserting after paragraph (3)(ba) the following paragraph:

"(bb) income that is not included in assessable income because of section 159GZZZZE;".

34   After Division 16K of Part III of the Principal Act, the following Division is inserted

"Division 16L - Tax-exempt infrastructure borrowings

"Subdivision A - Interpretation

General

"159GZZZU. In this Division:

'associate' has the same meaning as in subsection 26AAB(14);

'borrowing' means any form of borrowing, whether secured or unsecured, and includes the raising of funds by the issue of a bond, debenture, discounted security or other document evidencing indebtedness;

'Crown lease' means a lease granted by the Crown under a statutory law of the Commonwealth, a State or a Territory;

'direct infrastructure borrowing' has the meaning given by section 159GZZZW;

'exemption period', in relation to an infrastructure borrowing, means:

(a) in the case of a direct infrastructure borrowing or an indirect infrastructure borrowing - the period of 10 years beginning at the time of the borrowing; or

(b) in the case of a refinancing infrastructure borrowing - so much of the period that under paragraph (a) is the exemption period in respect of the direct infrastructure borrowing, or the indirect infrastructure borrowing, to which the refinancing infrastructure borrowing relates as remains at the time of the refinancing infrastructure borrowing;

'government body' means the Commonwealth, a State, a Territory or a body to which paragraph 23(d) applies;

'indirect infrastructure borrowing' has the meaning given by section 159GZZZX;

'listed company' means a company any of the shares of which are listed for quotation in the official list of a stock exchange in Australia or elsewhere;

'Loan Council' means the Australian Loan Council constituted under the Financial Agreement referred to in the Financial Agreement Validation Act 1929;

'refinancing infrastructure borrowing' has the meaning given by section 159GZZZY;

'used for assessable income purposes' means used for gaining or producing assessable income or installed ready for use for that purpose and held in reserve;

'25 year assessable use period', in relation to a direct infrastructure borrowing, means the period of 25 years mentioned in paragraph 159GZZZZB(1)(b).

Kinds of infrastructure borrowing

"159GZZZV. There are 3 kinds of infrastructure borrowing:

(a) a direct infrastructure borrowing (see section 159GZZZW); and

(b) an indirect infrastructure borrowing (see section 159GZZZX); and

(c) a refinancing infrastructure borrowing (see section 159GZZZY).

Direct infrastructure borrowing

"159ZZZW. A direct infrastructure borrowing is a borrowing of money where:

(a) the borrower requirements set out in section 159GZZZZ are met; and

(b) the requirement relating to the spending of the borrowed money, set out in section 159GZZZZA, is met; and

(c) the requirement relating to the use of facilities on which the borrowed money is spent, set out in section 159GZZZZB, is met.

Indirect infrastructure borrowing

"159GZZZX. An indirect infrastructure borrowing is a borrowing of money by an incorporated body where:

(a) the borrower requirements set out in section 159GZZZZ are met; and

(b) the body intends, at the time of the borrowing:

(i) to lend all the borrowed money to another person; and

(ii) that the loan will constitute the whole or part of a direct infrastructure borrowing by that other person.

Refinancing infrastructure borrowing

(Meaning of "refinancing infrastructure borrowing")

"159GZZZY.(1) A refinancing infrastructure borrowing is a borrowing of money where:

(a) the borrower requirements set out in section 159GZZZZ are met; and

(b) the borrower intends, at the time of the borrowing, to use the money borrowed only to repay the whole or part of any of the following borrowings of the borrower:

(i) a direct infrastructure borrowing; or

(ii) an indirect infrastructure borrowing; or

(iii) a borrowing that is a refinancing infrastructure borrowing because of another application of this subsection.

(Interpretive provision)

"(2) For the purposes of references in this Division, a refinancing infrastructure borrowing relates to a direct infrastructure borrowing or to an indirect infrastructure borrowing if the repayment mentioned in paragraph (1)(b) is of:

(a) the direct infrastructure borrowing or the indirect infrastructure borrowing, as the case may be; or

(b) another refinancing infrastructure borrowing that, under a previous application of this subsection, relates to the direct infrastructure borrowing or the indirect infrastructure borrowing, as the case may be.

Infrastructure borrowings - borrower requirements

(Borrower requirements)

"159GZZZZ.(1) For a borrowing to be an infrastructure borrowing, the requirements of this section must be met.

(Basic borrower requirement)

"(2) The borrower must:

(a) be:

(i) in any case - an incorporated body at the time of the borrowing; or

(ii) in the case of a direct infrastructure borrowing or a refinancing infrastructure borrowing that relates to a direct infrastructure borrowing - a corporate unit trust (within the meaning of section 102J), or a public trading trust (within the meaning of section 102R), in relation to the year of income in which the borrowing takes place; and

(b) where the borrower is an incorporated body and the borrowing is a direct infrastructure borrowing or a refinancing infrastructure borrowing that relates to a direct infrastructure borrowing - at the time of the borrowing, intend to be an incorporated body throughout the 25 year assessable use period in relation to the direct infrastructure borrowing; and

(c) where the borrower is a trust to which subparagraph (a)(ii) applies - at the time of the borrowing, intend to be such a trust in relation to each year of income the whole or part of which occurs during the 25 year assessable use period in relation to the direct infrastructure borrowing mentioned in that subparagraph; and

(d) in any case - not be making the borrowing in partnership (disregarding the definition of that expression in section 6) with anyone else; and

(e) in any case - subject to subsection (4), not be a government body or government owned (see subsection (3)) at the time of the borrowing.

(Meaning of "government owned")

"(3) For the purposes of paragraph (2)(e):

(a) an incorporated body is government owned if:

(i) it is limited by shares; and

(ii) a government body is the beneficial owner of at least 50% of the total rights:

(A) to dividends paid by the body; or

(B) to distributions of capital of the body on winding-up or otherwise; or

(C) to vote at meetings of shareholders of the body; and

(b) a trust is government owned if a government body is the beneficial owner of more than 50% of the interests in income or corpus of the trust.

(Paragraph (2)(e) not to apply to certain bodies)

"(4) Paragraph (2)(e) does not apply to a borrower if the Loan Council has declared the borrower to be exempt from the coverage of the global borrowing limits for the financial year in which the infrastructure borrowing takes place.

(Treasurer to publish notice)

"(5) The Treasurer must, as soon as practicable after the Loan Council has made a declaration in relation to a borrower, arrange for notice of the making of the declaration in relation to the borrower to be published in the Gazette.

(Direct infrastructure borrowings by listed companies)

"(6) Where:

(a) the infrastructure borrowing is:

(i) a direct infrastructure borrowing; or

(ii) a refinancing infrastructure borrowing that relates to a direct infrastructure borrowing;

by an incorporated body limited by shares; and

(b) the incorporated body is a listed company; and

(c) at the time of the borrowing, a person is the beneficial owner of shares carrying more than half the voting rights in the incorporated body;

that person must not, at the time of the borrowing, intend to dispose of sufficient of those shares to cause the number of voting rights to fall to or below half during the 25 year assessable use period in relation to the

borrowing.

(Direct infrastructure borrowings by unlisted companies)

"(7) Where:

(a) the infrastructure borrowing is:

(i) a direct infrastructure borrowing; or

(ii) a refinancing infrastructure borrowing that relates to a direct infrastructure borrowing; by an incorporated body limited by shares; and

(b) the incorporated body is not a listed company; and

(c) at the time of the borrowing, a person either alone or together with an associate or associates is the beneficial owner of shares carrying more than half the voting rights in the incorporated body;

that person, or that person and the associates, must not intend, at the time of the borrowing, to dispose of sufficient of those shares to cause the number of voting rights to fall to or below half during the 25 year assessable use period in relation to the borrowing.

Direct infrastructure borrowing - requirement relating to spending of borrowed money

(Spending requirement)

"159GZZZZA.(1) For a borrowing to be a direct infrastructure borrowing, the borrower must, at the time of the borrowing, intend to spend the money borrowed only on:

(a) the construction of one or more infrastructure facilities; or

(b) subject to subsection (2), the construction or acquisition of one or more related facilities.

(Spending on related facilities)

"(2) Spending money on the construction or acquisition of a related facility only qualifies under subsection (1) if:

(a) the borrower also intends to spend some of the borrowed money as mentioned in paragraph (1)(a) on one or more of the infrastructure facilities to which the related facility is related; or

(b) the following conditions are satisfied:

(i) the borrower already owns the infrastructure facility or facilities to which the related facility is related; and

(ii) the requirements of section 159GZZZZB are satisfiedin relation to that infrastructure facility or those infrastructure facilities (assuming the money were also to be spent on them) as well as the related facility at the time of the borrowing; and

(iii) the borrower intends to begin the construction or make the acquisition of the related facility not later than 10 years after:

(A) if the borrower constructed the infrastructure facility or facilities to which it is related - the beginning of construction of the infrastructure facility, or the first of the infrastructure facilities, to which it is related; or

(B) if the borrower acquired the infrastructure facility or facilities to which it is related - the time of acquisition of the infrastructure facility, or the first of the infrastructure facilities, to which it is related.

(Exclusions)

"(3) A borrowing does not qualify for the purposes of subsection (1) if the body intends to spend the money borrowed:

(a) on entering into or acquiring a lease; or

(b) on acquiring land on which there is a building or structure that is to form part of the infrastructure facility or the related facility concerned; or

(c) on refinancing a loan.

(Facility can be part of or related to other facilities)

"(4) It does not matter for the purposes of subsection (1) if the infrastructure facility is to be part of or related to any other infrastructure facility of any person.

("acquisition" includes dismantling etc.)

"(5) In paragraph (1)(b), 'acquisition' includes dismantling, transportation or installation in connection with the acquisition.

Direct infrastructure borrowing - requirement relating to use of facilities on which borrowed money is to be spent (Facility use requirements)

"159GZZZZB.(1) For the borrowing to be a direct infrastructure borrowing, it is also necessary that, at the time of the borrowing, the borrower intends:

(a) that it will own, use and effectively control the use of, the facilities on which the money will be spent (other than by leasing them) principally for assessable income purposes; and

(b) that the use for assessable income purposes will continue for at least 25 years after the first such use by the body of any of the facilities concerned; and

(c) that it will not do anything that will cause section 51AD or Division 16D to apply to any of the facilities concerned.

(Crown leases)

"(2) For the purposes of paragraph (1)(a), if:

(a) the borrower intends that any of the facilities concerned will be a fixture on land that is the subject of a Crown lease; and

(b) it can reasonably be expected, when the borrowing takes place, that the Crown lease will run, or (because of law, custom or otherwise) be extended or renewed to run, for at least the 25 year assessable use period;

then the borrower is taken to intend to own the facility concerned.

Infrastructure facilities

(3 kinds of facilities)

"159GZZZZC.(1) There are 3 kinds of infrastructure facility.

(Land transport facility)

"(2) One kind of infrastructure facility is a land transport facility, that is to say, a road, tunnel, bridge, or railway line, or a combination of these, in Australia that is to be used for the transport of the public or their goods at a charge (whether the transport is by the member of the public concerned or by another person).

(Seaport facility)

"(3) Another kind of infrastructure facility is a seaport facility, that is to say, a wharf, or dock, in Australia for the public to embark or disembark, or for loading or unloading their cargo, onto or from seagoing vessels, where there is a charge for the transport of the public or their cargo on the vessels.

(Electricity generating facility)

"(4) The other kind of infrastructure facility is an electricity generating facility in Australia, where the electricity generated is primarily or principally for sale to the public through the public electricity grid.

Related facilities

(Basic test)

"159GZZZZD.(1) Related facilities are facilities in Australia that are reasonably necessary for an infrastructure facility to be able to operate for the purpose for which it was constructed.

(Examples)

"(2) The following are examples of facilities that are related facilities in respect of an infrastructure facility, provided that they pass the test in subsection (1):

(a) plant and other equipment (for example, rolling stock in the case of a railway) for use in operating the infrastructure facility;

(b) buildings or other structures from which staff are to operate the infrastructure facility;

(c) buildings or other structures for storing freight, cargo, plant, fuel, stores or equipment;

(d) stations or passenger terminals;

(e) maintenance facilities.

(Access roads etc. excluded)

"(3) In the case of any infrastructure facility, a road, bridge, tunnel or railway to provide access to the infrastructure facility is not a related facility (or part of the infrastructure facility itself).

(Dry-docks etc. excluded)

"(4) In the case of a seaport facility, a dry-dock or other facility for repair or maintenance of vessels is not a related facility (or part of the infrastructure facility itself).

(Dams etc. excluded)

"(5) In the case of an electricity generating facility, the following are not related facilities (or part of the infrastructure facility itself):

(a) a dam or coal mine;

(b) facilities for transporting fuel to the site at which the electricity generating takes place;

(c) transmission lines or other plant or equipment for use in sending the electricity generated to the public electricity grid.

"Subdivision B - Tax effects of infrastructure borrowings Infrastructure borrowings to be non-assessable and non-deductible

(Basic non-assessability/non-deductibility provision)

"159GZZZZE.(1) No amount is included in, or allowable as a deduction from, the assessable income of a taxpayer of a year of income in respect of:

(a) payments of principal or interest, or in the nature of interest, made or liable to be made by or to the taxpayer under an infrastructure borrowing during the exemption period in relation to the borrowing; or

(b) amounts received or receivable, or paid or payable, by the taxpayer by way of consideration for the acquisition or disposal, during the exemption period in relation to an infrastructure borrowing, of:

(i) rights or liabilities in respect of the borrowing; or

(ii) any bond, debenture, discounted security, or other document evidencing indebtedness, in respect of the borrowing; or

(c) any profit or loss of the taxpayer in respect of a disposal mentioned in paragraph (b), or in respect of the repayment of an infrastructure borrowing by or to the taxpayer during the exemption period in relation to the borrowing; or

(d) the writing off or extinguishing of the whole or part of any debt that consists of a payment or amount to which this subsection applies that is liable to be made to, or is receivable by, the taxpayer.

(Special provision relating to Division 16E)

"(2) No amount is included in, or allowable as a deduction from, the assessable income of a taxpayer of a year of income:

(a) under section 159GQ in relation to the exemption period in respect of an infrastructure borrowing; or

(b) under subsection 159GR(2) in relation to any payment made or liable to be made to the taxpayer during the exemption period in respect of an infrastructure borrowing; or

(c) under section 159GS in relation to any transfer, during the exemption period in respect of an infrastructure borrowing, of:

(i) rights or liabilities in respect of the borrowing; or

(ii) any bond, debenture, discounted security, or other document evidencing indebtedness, in respect of the borrowing; or

(d) under section 159GT in respect of the exemption period in relation to an infrastructure borrowing.

(Deemed re-acquisition after exemption period)

"(3) For the purposes of this Act:

(a) if a taxpayer holds a bond, debenture, discounted security, or other document evidencing indebtedness, in respect of an infrastructure borrowing - that bond, debenture, discounted security or other document; or

(b) in any other case - all rights of a taxpayer under any infrastructure borrowing;

is or are taken to have been disposed of by the taxpayer immediately before the end of the exemption period and to have been re-acquired by the taxpayer immediately after the end of the period for their market value at that time.

Tax exemption to be disregarded for certain purposes

"159GZZZZF. The exclusion under section 159GZZZZE of amounts from assessable income is to be disregarded for the purpose of applying any provision of this Act to determine allowable deductions in respect of infrastructure borrowings (other than deductions to which section 159GZZZZE applies).".

35   Return of capital on investment in trust

Section 160ZM of the Principal Act is amended by adding at the end of the definition of "adjusted payment" in subsection (3A) the following paragraph:

"; (d) an amount that, because of section 159GZZZZE (which relates to infrastructure borrowings), is not included in assessable income.".

36   Application of Division

The amendments made by this Division apply to an infrastructure borrowing, where all of the following conditions are satisfied:

(a) the borrowing takes place on or after 1 July 1992;
          

(b) no contract for spending any of the borrowed money was entered into before 27 February 1992;
          

(c) no construction or acquisition on which the borrowed money is to be spent began before 1 July 1992.
          

Division 7   Amendments relating to depreciation of property installed on leased Crown land

37   After section 54

After section 54 of the Principal Act the following section is inserted:

Property installed on leased Crown land - lessee deemed to be owner etc.

(When section applies)

"54AA.(1) This section applies if:

(a) a taxpayer is the lessee of land under a Crown lease; and

(b) a unit of property is affixed to the land; and

(c) apart from this section, the taxpayer is not the owner of the property; and

(d) if the property was not already affixed to the land at the time when the taxpayer acquired the lease:

(i)the taxpayer acquired or constructed the property and affixed it to the land; and

(ii) at the time when the property was first affixed to the land as mentioned in subparagraph (i), the taxpayer had not entered into a scheme:

(A) under which a person other than the lessor would become the owner of the property at a later time; or

(B) where it would be concluded that a purpose of the scheme was to provide finance to enable a person other than the taxpayer or the lessor to become the end-user of the property for the whole, or a substantial part of, the effective life of the property; and

(e) if the property was already affixed to the land at the time when the taxpayer acquired the lease:

(i) the taxpayer acquired the lease from a prior holder of the lease; and

(ii) either:

(A) the prior holder acquired or constructed the property and affixed the property to the land; or

(B) if there have been 2 or more prior successive holders of the lease - one of those prior successive holders acquired or constructed the property and affixed the property to the land; and

(iii) at the time when the taxpayer acquired the lease, the taxpayer had not entered into a scheme:

(A) under which a person other than the lessor would become the owner of the property at a later time; or

(B) where it would be concluded that a purpose of the scheme was to provide finance to enable a person other than the taxpayer or the lessor to become the end-user of the property for the whole, or a substantial part of, the remainder of the effective life of the property.

(Modification of depreciation provisions)

"(2) The provisions of this Act relating to depreciation apply as if:

(a) the taxpayer were the owner of the property instead of the lessor; and

(b) if the taxpayer acquired the lease from a prior holder of the lease and the property was already affixed to the land at the time when the taxpayer acquired the lease:

(i) the cost to the taxpayer of the property were equal to so much of the consideration paid or given by the taxpayer for the acquisition of the lease as is attributable to the property; and

(ii) the taxpayer had acquired the property under a contract entered into at the time the taxpayer acquired the lease; and

(c) if:

(i) the lease expires or is surrendered; and

(ii) the expiry or surrender is not followed by the grant to the taxpayer, or to an associate of the taxpayer, of:

(A) one or more fresh Crown leases of the land; or

(B) an estate in fee simple in the land;

the taxpayer had disposed of the property to the lessor, and the lessor had acquired the property from the taxpayer, for:

(iii) if the taxpayer receives, or is entitled to receive, consideration in respect of the expiry or surrender - a consideration equal to so much of the consideration received or receivable by the taxpayer as is attributable to the property; or

(iv) in any other case - no consideration; and

(d) if:

(i) the lease expires or is surrendered; and

(ii) the expiry or surrender is followed by the grant to an associate of the taxpayer of:

(A) one or more fresh Crown leases of the land; or

(B) an estate in fee simple in the land;

the taxpayer had disposed of the property to the lessor, and the lessor had acquired the property from the taxpayer, for a consideration equal to the amount that would have been the market value of the property immediately before the expiry or surrender if the taxpayer had held an estate in fee simple in the land instead of the lease; and

(e) if:

(i) the lessor terminates the lease; and

(ii) the termination is not followed by the grant to the taxpayer, or to an associate of the taxpayer, of:

(A) one or more fresh Crown leases of the land; or

(B) an estate in fee simple in the land;

the taxpayer had disposed of the property to the lessor, and the lessor had acquired the property from the taxpayer, for:

(iii) if the taxpayer receives, or is entitled to receive, consideration in respect of the termination - a consideration equal to so much of the consideration received or receivable by the taxpayer as is attributable to the property; or

(iv) in any other case - no consideration; and

(f) if:

(i) the lessor terminates the lease; and

(ii) the termination is followed by the grant to an associate of the taxpayer of:

(A) one or more fresh Crown leases of the land; or

(B) an estate in fee simple in the land;

the taxpayer had disposed of the property to the lessor, and the lessor had acquired the property from the taxpayer, for a consideration equal to the amount that would have been the market value of the property immediately before the termination if the taxpayer had held an estate in fee simple in the land instead of the lease; and

(g) if the taxpayer disposes of the lease to another person - the taxpayer had disposed of the property to the other person for a consideration equal to so much of the consideration paid or given by the other person for the acquisition of the lease as is attributable to the property.

(Modification of market value)

"(3) In working out the following amounts in relation to the property:

(a) the value mentioned in paragraph 59(3)(d);

(b) the market value mentioned in subsection 59(4);

(c) the market value mentioned in subsection 59AA(2);

it is to be assumed that the taxpayer had held an estate in fee simple in the land instead of the lease.

(Modification of section 51AD and Division 16D)

"(4) Section 51AD, and Division 16D, to the extent to which that section and that Division relate to depreciation, apply as if the taxpayer were the owner of the property instead of the lessor.

(Expiry or surrender of certain leases to be ignored)

"(5) For the purposes of the application of this section to a unit of property affixed to land, if:

(a) a taxpayer is the lessee of the land under a Crown lease; and

(b) the Crown lease expires or is surrendered or terminated; and

(c) one or more fresh Crown leases of the land are granted to the taxpayer;

the lease or leases mentioned in paragraph (c) are taken to be a continuation of the lease mentioned in paragraph (b).

(Extended meaning of "associate" - government authorities)

"(6) For the purposes of this section, but without limiting the meaning of the expression 'associate':

(a) the Commonwealth is taken to be an associate of each authority of the Commonwealth; and

(b) an authority of the Commonwealth is taken to be an associate of each other authority of the Commonwealth; and

(c) a State is taken to be an associate of each authority of the State; and

(d) an authority of a State is taken to be an associate of each other authority of the State; and

(e) a Territory is taken to be an associate of each authority of the Territory; and

(f) an authority of a Territory is taken to be an associate of each other authority of the Territory.

(Extended meaning of "associate" - former partnerships)

"(7) For the purposes of this section, the definition of 'associate' in section 26AAB has effect as if:

(a) subparagraph (a)(ii) of that definition were omitted and the following subparagraph were substituted:

'(ii) a partner of the taxpayer or a partnership in which the taxpayer is or was a partner (whether or not the partnership still exists);'; and

(b) subparagraph (b)(i) of that definition were omitted and the following subparagraph were substituted:

'(i) a partner of the taxpayer or a partnership in which the taxpayer is or was a partner (whether or not the partnership still exists);'.

(Definitions)

"(8) In this section:

'associate' has the same meaning as in section 26AAB;

'Crown lease' has the same meaning as in section 160K;

'effective life' has the same meaning as in section 54A;

'scheme' includes:

(a) any agreement, arrangement, understanding, promise or undertaking:

(i) whether expressed or implied; or

(ii) whether or not enforceable, or intended to be enforceable, by legal proceedings; and

(b) any scheme, plan, proposal, action, course of action or course of conduct, whether unilateral or otherwise.".

38   Application of amendments relating to depreciation of property installed on leased Crown land (Definitions)

 

(1) In this section:
        

"amended Act" means the Principal Act as amended by this Act;

"first year of income", in relation to a unit of property owned by a taxpayer, means the year of income for which depreciation is first allowable to the taxpayer in relation to the property;

"interim Act" means the Principal Act as in force immediately before the commencement of section 1 of the Taxation Laws Amendment Act (No. 2) 1992;

"pre-27 February 1992 property", in relation to a taxpayer, has the same meaning as in section 66 of the Taxation Laws Amendment Act (No. 2) 1992.

(General application of amendments: post-26 February 1992 periods)

      

(2) Section 54AA of the amended Act applies in calculating the depreciation allowable to a taxpayer in relation to a unit of property in respect of so much of a year of income as occurred on or after27 February 1992.
        

(Modified basis for calculating depreciation of pre-27 February 1992 property)

      

(3) If:
        

(a) section 54AA of the amended Act operates so as to deem a taxpayer to be the owner of a unit of property; and
          

(b) the property is pre-27 February 1992 property of the taxpayer; the provisions of the Income Tax Assessment Act 1936 relating to depreciation apply as if:
          

(c) if the amendments covered by subsection 54(7) of the Taxation Laws Amendment Act (No. 4) 1988 did not apply to the taxpayer in relation to the property - those amendments applied to the taxpayer in relation to the property; and
          

(d) if the depreciation allowable to the taxpayer in respect of the property for the first year of income was calculated in accordance with paragraph 56(1)(a) of the interim Act - the taxpayer had acquired the property for a consideration equal to the amount that would have been the depreciated value of the property immediately before 27 February 1992 if:
          

(i) section 54AA of the amended Act had applied in calculating the depreciation allowable to the taxpayer in relation to the property in respect of so much of a year of income as occurred before 27 February 1992; and
        

(ii) subsection 55(5) of the interim Act (which deals with broadbanding) had not been enacted; and
        

(iii) repealed sections 57AA, 57AB, 57AC, 57AD, 57AE, 57AH and 57AL of the Principal Act (which dealt with special depreciation) had not been enacted; and
        

(iv) section 57AK of the amended Act (which deals with special depreciation) had not been enacted; or
        

(e) in any other case - depreciation were not allowable to the taxpayer in relation to the property in respect of so much of the cost of the property as would have been allowable to the taxpayer in respect of depreciation in relation to the property if:
          

(i) section 54AA of the amended Act had applied in calculating the depreciation allowable to the taxpayer in relation to the property in respect of so much of a year of income as occurred before 27 February 1992; and
        

(ii) subsection 55(5) of the interim Act (which deals with broadbanding) had not been enacted; and
        

(iii) repealed sections 57AA, 57AB, 57AC, 57AD, 57AE, 57AH and 57AL of the Principal Act (which dealt with special depreciation) had not been enacted; and
        

(iv) section 57AK of the amended Act (which deals with special depreciation) had not been enacted; and
        

(v) section 61of the amended Act (which deals with property used partly for income-producing purposes) had not been enacted.
        

(Paragraph (3)(d) has effect in spite of subparagraph 54AA(2)(b)(i) of amended Act)

      

(4) Paragraph (3)(d) of this section has effect in spite of subparagraph 54AA(2)(b)(i) of the amended Act.
        

Division 8   Amendments relating to deductions for capital expenditure on traveller accommodation

39   Interpretation

Section 124ZA of the Principal Act is amended:

(a) by inserting the following definitions in subsection (1):
          

" 'post-26 February 1992 qualifying apartment expenditure' means qualifying apartment expenditure where the building, or the extension, alteration or improvement, in respect of the construction of which the qualifying apartment expenditure was incurred commenced to be constructed after 26 February 1992;

'post-26 February 1992 qualifying hotel expenditure' means qualifying hotel expenditure where the building, or the extension, alteration or improvement, in respect of the construction of which the qualifying hotel expenditure was incurred commenced to be constructed after 26 February 1992;

'pre-18 July 1985 qualifying apartment expenditure' means qualifying apartment expenditure where the building, or the extension, alteration or improvement, in respect of the construction of which the qualifying apartment expenditure was incurred commenced to be constructed before 18 July 1985;

'pre-18 July 1985 qualifying hotel expenditure' means qualifying hotel expenditure where the building, or the extension, alteration or improvement, in respect of the construction of which the qualifying hotel expenditure was incurred commenced to be constructed before 18 July 1985.";

(b) by omitting from subsection (16) "qualifying hotel expenditure or" (first occurring) and substituting "pre-18 July 1985 qualifying hotel expenditure or pre-18 July 1985";
          

(c) by inserting after subsection (16) the following subsections:
          

"(16A) For the purposes of this Division, if there is an amount of post-26 February 1992 qualifying hotel expenditure in respect of an eligible building, the amount of so much of the residual capital expenditure at a particular time ('relevant time') in relation to that qualifying hotel expenditure as is attributable to the hotel part or a part ('relevant part') of the hotel part is the amount (if any) worked out by:

(a) identifying the period:

(i) commencing on the day on which the hotel part or relevant part was first used by any person for any purpose after completion of the relevant construction; and

(ii) ending at the relevant time; and

(b) calculating, for each day (if any) in that period during the whole of which any part ('4% part') of the hotel part or relevant part, as the case may be, was dealt with in the prescribed manner by a taxpayer who owned that part of the hotel part or relevant part, the amount worked out using the formula:

(Portion of qualifying expenditure / Days in year) * 0.04

where:

'Portion of qualifying expenditure' means so much of the qualifying hotel expenditure as is attributable to the 4% part;

'Days in year' means the number of days in the financial year in which that day occurred; and

(c) calculating, for each day (if any) in that period during any part of which any part ('2.5% part') of the hotel part or relevant part, as the case may be, was not dealt with in the prescribed manner by a taxpayer who owned that part of the hotel part or relevant part, the amount worked out using the formula:

(Portion of qualifying expenditure / Days in year) * 0.025

where:

'Portion of qualifying expenditure' means so much of the qualifying hotel expenditure as is attributable to the 2.5% part;

'Days in year' means the number of days in the financial year in which that day occurred; and

(d) adding the amounts calculated under paragraphs (b) and (c); and

(e) deducting the result of the addition mentioned in paragraph (d) from so much of the amount of that qualifying hotel expenditure as is attributable to the hotel part or relevant part, as the case requires.

"(16B) For the purposes of this Division, if there is an amount of post-26 February 1992 qualifying apartment expenditure in respect of an eligible building, the amount of so much of the residual capital expenditure at a particular time ('relevant time') in relation to that qualifying apartment expenditure as is attributable to the apartment part or a part ('relevant part') of the apartment part is the amount (if any) worked out by:

(a) identifying the period:

(i) commencing on the day on which the apartment part or relevant part was first used by any person for any purpose after completion of the relevant construction; and

(ii) ending at the relevant time; and

(b) calculating, for each day (if any) in that period during the whole of which any part ('4% part') of the apartment part or relevant part, as the case may be, was dealt with in the prescribed manner by a taxpayer who owned that part of the apartment part or relevant part, the amount worked out using the formula:

(Portion of qualifying expenditure / Days in year) * 0.04

where:

'Portion of qualifying expenditure' means so much of the qualifying apartment expenditure as is attributable to the 4% part;

'Days in year' means the number of days in the financial year in which that day occurred; and

(c) calculating, for each day (if any) in that period during any part of which any part ('2.5% part') of the apartment part or relevant part, as the case may be, was not dealt with in the prescribed manner by a taxpayer who owned that part of the apartment part or relevant part, the amount worked out using the formula:

(Portion of qualifying expenditure / Days in year) * 0.025

where:

'Portion of qualifying expenditure' means so much of the qualifying apartment expenditure as is attributable to the 2.5% part;

'Days in year' means the number of days in the financialyear in which that day occurred; and

(d) adding the amounts calculated under paragraphs (b) and (c); and

(e) deducting the result of the addition mentioned in paragraph (d) from so much of the amount of that qualifying apartment expenditure as is attributable to the apartment part or relevant part, as the case requires.".

40   Qualifying expenditure

Section 124ZB of the Principal Act is amended:

(a) by omitting from paragraphs (1)(a) and (2)(a) "in Australia" (wherever occurring);
          

(b) by omitting paragraph (1)(c) and substituting the following paragraph:
          

"(c) either:

(i) the building or the extension, alteration or improvement, as the case may be, commenced to be constructed after 21 August 1979 and before 18 July 1985 and construction of the building or of the extension, alteration or improvement, as the case may be, has been completed; or

(ii) the building or the extension, alteration or improvement, as the case may be, commenced to be constructed after 26 February 1992 and construction of the building or of the extension, alteration or improvement, as the case may be, has been completed;";

(c) by omitting paragraph (2)(b) and substituting the following paragraph:
          

"(b) either:

(i) the building or the extension, alteration or improvement, as the case may be, commenced to be constructed after 21 August 1979 and before 18 July 1985 and construction of the building or of the extension, alteration or improvement, as the case may be, has been completed; or

(ii) the building or the extension, alteration or improvement, as the case may be, commenced to be constructed after 26 February 1992 and construction of the building or of the extension, alteration or improvement, as the case may be, has been completed;".

41   Deductions in respect of capital expenditure

Section 124ZC of the Principal Act is amended:

(a) by inserting in paragraphs (1)(a), (2)(a), (3)(a) and (4)(a) "pre-18 July 1985" before "qualifying";
          

(b) by inserting after subsection (2) the following subsection:
          

"(2A) Subject to this section and section 124ZD, if:

(a) there is an amount of post-26 February 1992 qualifying hotel expenditure in respect of a building; and

(b) during a period in a year of income, a taxpayer:

(i) was the owner of the hotel part and used any part of the hotel part for the purpose of producing assessable income; or

(ii) was the owner of a part of the hotel part and used any part of that part of the hotel part for the purpose of producing assessable income;

a deduction is allowable to the taxpayer for the year of income equal to the amount worked out by:

(c) calculating, for each day (if any) in that period during the whole of which any part ('4% part') of the hotel part owned by the taxpayer was dealt with by the taxpayer in the prescribed manner, the amount worked out using the formula:

(Portion of qualifying expenditure / Days in year) * 0.04

where:

'Portion of qualifying expenditure' means so much of the qualifying hotel expenditure as is attributable to the 4% part;

'Days in year' means the number of days in the year of income; and

(d) calculating, for each day (if any) in that period during any part of which any part ('2.5% part') of the hotel part owned by the taxpayer was not dealt with by the taxpayer in the prescribed manner but was used by the taxpayer for the purpose of producing assessable income, the amount worked out using the formula:

(Portion of qualifying expenditure / Days in year) * 0.025

where:

'Portion of qualifying expenditure' means so much of the qualifying hotel expenditure as is attributable to the 2.5% part;

'Days in year' means the number of days in the year of income; and

(e) by adding the amounts calculated under paragraphs (c) and (d).";

(c) by inserting after subsection (4) the following subsection:
          

"(4A) Subject to this section and section 124ZD, if:

(a) there is an amount of post-26 February 1992 qualifying apartment expenditure in respect of a building; and

(b) during a period in a year of income, a taxpayer:

(i) was the owner of the apartment part and used any part of the apartment part for the purpose of producing assessable income; or

(ii) was the owner of a part of the apartment part and used any part of that part of the apartment part for the purpose of producing assessable income;

a deduction is allowable to the taxpayer for the year of income equal to the amount worked out by:

(c) calculating, for each day (if any) in that period during the whole of which any part ('4% part') of the apartment part owned by the taxpayer was dealt with by the taxpayer in the prescribed manner, the amount worked out using the formula:

(Portion of qualifying expenditure / Days in year) * 0.04

where:

'Portion of qualifying expenditure' means so much of the qualifying apartment expenditure as is attributable to the 4% part;

'Days in year' means the number of days in the year of income; and

(d) calculating, for each day (if any) in that period during any part of which any part ('2.5% part') of the apartment part owned by the taxpayer was not dealt with by the taxpayer in the prescribed manner but was used by the taxpayer for the purpose of producing assessable income, the amount worked out using the formula:

(Portion of qualifying expenditure / Days in year) * 0.025

where:

'Portion of qualifying expenditure' means so much of the qualifying apartment expenditure as is attributable to the 2.5% part;

'Days in year' means the number of days in the year of income; and

(e) by adding the amounts calculated under paragraphs (c) and (d).";

(d) by omitting from subsection (5) "under this section" and substituting "under subsection (1), (2), (3) or (4)";
          

(e) by inserting after subsection (5) the following subsections:
          

"(5A) A deduction allowable to a taxpayer under subsection (2A) in relation to a year of income in respect of so much of an amount of qualifying hotel expenditure as is attributable to the hotel part, or the part of the hotel part, mentioned in paragraph (2A)(b) must not exceed so much of the residual capital expenditure at whichever of the following times is applicable:

(a) if the taxpayer's ownership of the hotel part, or the part of the hotel part, as the case may be, commenced during the year of income – immediately after the time when that ownership commenced; or

(b) in any other case - the beginning of the year of income;

in relation to the amount of the qualifying hotel expenditure as is attributable to the hotel part or the part of the hotel part, as the case may be.

"(5B) A deduction allowable to a taxpayer under subsection (4A) in relation to a year of income in respect of so much of an amount of qualifying apartment expenditure as is attributable to the apartment part, or the part of the apartment part, mentioned in paragraph (4A)(b) must not exceed so much of the residual capital expenditure at whichever of the following times is applicable:

(a) if the taxpayer's ownership of the apartment part, or the part of the apartment part, as the case may be, commenced during the year of income - immediately after the time when that ownership commenced; or

(b) in any other case - the beginning of the year of income;

in relation to the amount of the qualifying partnership expenditure as is attributable to the apartment part or the part of the apartment part, as the case may be.".

42   Reduction of deductions

Section 124ZD of the Principal Act is amended:

(a) by omitting from paragraph (5)(a) "the whole or a part of" and substituting "so much of";

(b) by inserting in paragraph (5)(a) "as is attributable to the hotel part, a part of the hotel part, the apartment part or a part of the apartment part" after "building" (last occurring).

43   Deduction in respect of destruction of building

Section 124ZE of the Principal Act is amended:

(a) by omitting from paragraphs (1)(e), (2)(e), (3)(e) and (4)(e) "in the prescribed manner" (wherever occurring) and substituting "in the eligible manner";
          

(b) by inserting in paragraphs (1)(f) and (3)(f) "so much of" before "the residual capital expenditure";
          

(c) by inserting in paragraph (1)(f) "as is attributable to the hotel part" after "qualifying hotel expenditure";
          

(d) by inserting in paragraph (3)(f) "as is attributable to the apartment part" after "qualifying apartment expenditure";
          

(e) by adding at the end the following subsection:
          

"(7) For the purposes of the application of this section to an amount of qualifying hotel expenditure or qualifying apartment expenditure in respect of a building, a part of the building is taken to be used in an eligible manner if:

(a) in the case of pre-18 July 1985 qualifying hotel expenditure or pre-18 July 1985 qualifying apartment expenditure - the part of the building was used in the prescribed manner; or

(b) in the case of post-26 February 1992 qualifying hotel expenditure or post-26 February 1992 apartment expenditure - the part of the building was used for the purpose of producing assessable income.".

44   Qualifying expenditure

Section 124ZG of the Principal Act is amended by inserting after subsection (2B) the following subsection:

"(2C) If there is an amount of post-26 February 1992 qualifying hotel expenditure, or post-26 February 1992 qualifying apartment expenditure, in respect of a building (within the meaning of Division 10C), no part of the amount of qualifying hotel expenditure, or qualifying apartment expenditure, as the case may be, is taken to be qualifying expenditure in respect of a building.".

45   Keeping of records

Section 262A of the Principal Act is amended by inserting after subsection (4AE) the following subsections:

"(4AF) If:

(a) a person (the 'transferor') disposes of, or of a lease of, any part of a building within the meaning of Division 10C of Part III to another person (the 'transferee'); and

(b) either:

(i) one or more deductions have been allowed or are allowable to the transferor under subsection 124ZC(2A) or (4A) in respect of qualifying hotel expenditure or qualifying apartment expenditure in respect of the building; or

(ii) if there have been one or more prior successive owners or lessees of the building - one or more deductions have been allowed or are allowable to any of the prior successive owners or lessees under subsection 124ZC(2A) or (4A) in respect of qualifying hotel expenditure or qualifying apartment expenditure in respect of the building; then:

(c) the transferor must give to the transferee, within the period specified in subsection (4AG), a notice containing such information about the transferor's holding or lease of the building as will enable the transferee to work out how Division 10C of Part III will apply to the transferee's holding or lease of the building; and

(d) the transferee must retain the notice, or a copy, until the end of 5 years after the earlier of:

(i) the transferee ceasing to be the owner or lessee of the part of the building; or

(ii) the destruction of the building.

"(4AG) The notice referred to in subsection (4AF) must be given within 6 months after the later of the following:

(a) the end of the year of income of the transferee in which the disposal occurred;

(b) the commencement of subsection (4AF);

or within such further period as the Commissioner allows.".

46   Application of amendments relating to deductions for traveller accommodation

The amendments made by paragraph 40(a) apply in relation to expenditure incurred in respect of the construction of a building, or an extension, alteration or improvement to a building, if the construction commenced after 26 February 1992.

Division 9   Amendments relating to deductions for capital expenditure on industrial buildings

47   Interpretation

Section 124ZF of the Principal Act is amended:

(a) by inserting the following definitions in subsection (1):
          

" 'eligible industrial manner', in relation to a building, has the meaning given by section 124ZFA;

'post-26 February 1992 qualifying expenditure' means qualifying expenditure where the building, or the extension, alteration or improvement, in respect of the construction of which the qualifying expenditure was incurred commenced to be constructed after 26 February 1992;

'pre-27 February 1992 qualifying expenditure' means qualifying expenditure where the building, or the extension, alteration or improvement, in respect of the construction of which the qualifying expenditure was incurred commenced to be constructed before 27 February 1992;";

(b) by inserting in subsection (11) "pre-27 February 1992" before "qualifying expenditure" (first occurring);
          

(c) by inserting after subsection (11) the following subsection:
          

"(11A) For the purposes of this Division, if there is an amount of post-26 February 1992 qualifying expenditure in respect of an eligible building, the amount of so much of the residual capital expenditure at a particular time ('relevant time') in relation to that qualifying expenditure as is attributable to the prescribed part or a part ('relevant part') of the prescribed part is the amount (if any) worked out by:

(a) identifying the period:

(i) commencing on the day on which the prescribed part or relevant part was first used by any person for any purpose after completion of the relevant construction; and

(ii) ending at the relevant time; and

(b) calculating, for each day (if any) in that period during the whole of which any part ('4% part') of the prescribed part or relevant part, as the case may be, was dealt with in an eligible industrial manner by a taxpayer who owned that part of the prescribed part or relevant part, the amount worked out using the formula:

(Portion of qualifying expenditure / Days in year) * 0.04

where:

'Portion of qualifying expenditure' means so much of the qualifying expenditure as is attributable to the 4% part;

'Days in year' means the number of days in the financial year in which that day occurred; and

(c) calculating, for each day (if any) in that period during which any part of which any part ('2.5% part') of the prescribed part or relevant part, as the case may be, was not dealt with in an eligible industrial manner by a taxpayer who owned that part of the prescribed part or relevant part, the amount worked out using the formula:

(Portion of qualifying expenditure / Days in year) * 0.025

where:

'Portion of qualifying expenditure' means so much of the qualifying expenditure as is attributable to the 2.5% part;

'Days in year' means the number of days in the financial year in which that day occurred; and

(d) adding the amounts calculated under paragraphs (b) and (c); and

(e) deducting the result of the addition mentioned in paragraph (d) from so much of the amount of that qualifying expenditure as is attributable to the prescribed part or relevant part, as the case requires.".

48   After section 124ZF

After section 124ZF of the Principal Act the following section is inserted:

When building used in eligible industrial manner

(Purposes of section)

"124ZFA.(1) This section has effect for the purposes of the application of his Division in determining:

(a) the amount of any deduction allowable under section 124ZH or 124ZK; or

(b) the amount of the residual capital expenditure;

in respect of an amount of qualifying expenditure in respect of a building ther than a structural improvement that is taken to be a building because of section 124ZFB.

(Eligible industrial manner)

"(2) A person is taken to have dealt with a part of a building in an eligible industrial manner at a particular time if, at that time:

(a) the person used that part of the building for the purpose of producing assessable income; and

(b) that part of the building was used (whether by that person or by another person):

(i) wholly or principally for eligible industrial activities; or

(ii) in the provision of meal rooms, rest-rooms, first-aid rooms, change-rooms or similar facilities wholly or principally for use by:

(A) workers employed wholly or principally to undertake the work directly involved in carrying out eligible industrial activities; or

(B) the immediate supervisors of those workers; or

(iii) wholly or principallyas office accommodation for the immediate supervisors of those workers.

(Eligible industrial activities)

"(3) A reference in this section to eligible industrial activities is a reference to:

(a) any of the following activities ('core activities') carried on by a person:

(i) operations by means of which:

(A) manufactured goods are derived from other goods (including other manufactured goods) by the person or by other persons on whose behalf the person performs services; or

(B) manufactured goods manufactured by the person or by other persons are (otherwise than by packing, placing in containers or labelling) brought into or maintained in the form or condition in which they are sold or used by the person or by those other persons, as the case may be; or

(ii) the concentration of a metal or the treatment or processing of a metal after its concentration; or

(iii) in the case of a metal not requiring concentration - the application to the metal of a treatment or process which, if the metal had required concentration, would not have been applied until after the concentration;

(iv) the refining of petroleum;

(v) the scouring or carbonising of wool;

(vi) the milling of timber;

(vii) the freezing of primary products;

(viii) the operations of:

(A) printing; or

(B) lithographing; or

(C) engraving; or

(D) any similar process;

in the course of carrying on a business as a publisher, printer, lithographer or engraver;

(ix) the curing of meat or fish;

(x) the production of chilled or frozen meat;

(xi) the pasteurising of milk;

(xii) the canning or bottling of foodstuffs;

(xiii) the production of electric current, hydraulic power, steam, compressed air or gases (other than natural gas) for the purposes of:

(A) sale by the person; or

(B) use wholly or principally in carrying on an activity mentioned in any of the preceding subparagraphs of this paragraph; or

(b) any of the following activities carried on by a person:

(i) the packing, placing in containers or labelling of any goods resulting from the carrying on by the person of core activities;

(ii) the disposal of waste substances resulting from the carrying on by the person of core activities;

(iii) the cleansing or sterilising of bottles, vats or other containers used by the person to store:

(A) goods to be used by the person in carrying on core activities; or

(B) goods resulting from the carrying on by the person of core activities;

(iv) the assembly, maintenance, cleansing, sterilising or repair of property used by the person in carrying on core activities;

(v) the storage, within premises in which the taxpayer carries on core activities or premises contiguous to such premises, of:

(A) goods to be used by the person in carrying on core activities; or

(B) goods in relation to which the taxpayer has commenced, but not finally completed, the carrying on of core activities; or

(C) goods resulting from core activities carried on by the person;

but does not include the preparation of food or drink (whether for consumption on the premises where it is prepared or elsewhere) in, or in premises occupied in connection with:

(c) an hotel or motel; or

(d) a boarding house; or

(e) a catering establishment; or

(f) a restaurant, cafe, milk-bar or coffee shop; or

(g) a retail shop; or

(h) any similar establishment.

(Definitions)

"(4) In this section:

'concentration', in relation to a metal, means the separation of the metal from its ore by any process, but does not include crushing, grinding, breaking, screening or sizing in order to enable or facilitate the carrying out of any such process;

'eligible industrial activity' has the meaning given by subsection (3);

'goods' includes:

(a) liquids, gases and substances; and

(b) ships and aircraft;

'manufactured goods' includes goods manufactured for the purpose of use as parts or materials in the manufacture of other goods;

'metal' includes a compound of a metal.".

49   Deductions in respect of qualifying expenditure

Section 124ZH of the Principal Act is amended:

(a) by inserting in paragraphs (1)(a) and (2)(a) "pre-27 February 1992" before "qualifying expenditure";
          

(b) by inserting after subsection (2) the following subsection:
          

"(2A) Subject to this section and section 124ZJ, if:

(a) there is an amount of post-26 February 1992 qualifying expenditure in respect of a building; and

(b) during a period in a year of income, a taxpayer:

(i) was the owner of the prescribed part and dealt with any part of the prescribed part in the prescribed manner; or

(ii) was the owner of a part of the prescribed part and dealt with any part of that part of the prescribed part in the prescribed manner;

a deduction is allowable to the taxpayer for the year of income equal to the amount worked out by:

(c) calculating, for each day (if any) in that period during the whole of which any part ('4% part') of the prescribed part owned by the taxpayer was dealt with by the taxpayer in an eligible industrial manner, the amount worked out using the formula:

(Portion of qualifying expenditure / Days in year) * 0.04

where:

'Portion of qualifying expenditure' means so much of the qualifying expenditure as is attributable to the 4% part;

'Days in year' means the number of days in the year of income; and

(d) calculating, for each day (if any) in that period during any part of which any part ('2.5% part') of the prescribed part owned by the taxpayer was not dealt with by the taxpayer in an eligible industrial manner but was dealt with by the taxpayer in the prescribed manner, the amount worked out using the formula:

(Portion of qualifying expenditure / Days in year) * 0.025

where:

'Portion of qualifying expenditure' means so much of the qualifying expenditure as is attributable to the 2.5% part;

'Days in year' means the number of days in the year of income; and

(e) adding the amounts calculated under paragraphs (c) and (d).";

(c) by omitting from subsection (3) "this section" and substituting "subsection (1) or (2)";
          

(d) by inserting after subsection (3) the following subsection:
          

"(3A) A deduction allowable to a taxpayer under subsection (2A) in relation to a year of income in respect of so much of an amount of qualifying expenditure as is attributable to the prescribed part, or the part of the prescribed part, mentioned in paragraph (2A)(b), must not exceed so much of the residual capital expenditure at whichever of the following times is applicable:

(a) if the taxpayer's ownership of the prescribed part, or the part of the prescribed part, as the case may be, commenced during the year of income - immediately after the time when that ownership commenced; or

(b) in any other case - the beginning of the year of income;

in relation to the amount of the qualifying expenditure as is attributable to the prescribed part, or the part of the prescribed part, as the case requires.".

50   Reduction of deductions

Section 124ZJ of the Principal Act is amended:

(a) by omitting from paragraph (2)(a) "the whole or a part of" and substituting "so much of";

(b) by inserting in paragraph (2)(a) "as is attributable to the prescribed part or a part of the prescribed part" after "building" (last occurring).

51   Deduction in respect of destruction of building

Section 124ZK of the Principal Act is amended:

(a) by inserting in paragraph (1)(f) "so much of" before "the residual capital expenditure";

(b) by inserting in paragraph (1)(f) "as is attributable to the prescribed part" after "qualifying expenditure".

52   Keeping of records

Section 262A of the Principal Act is amended by inserting before subsection (5) the following subsections:

"(4AH) If:

(a) a person (the 'transferor') disposes of, or of a lease of, any part of a building within the meaning of Division 10D of Part III to another person (the 'transferee'); and

(b) either:

(i) one or more deductions have been allowed or are allowable to the transferor under subsection 124ZH(2A) in respect of qualifying expenditure in respect of the building; or

(ii) if there have been one or more prior successive owners or lessees of the building - one or more deductions have been allowed or are allowable to any of the prior successive owners or lessees under subsection 124ZH(2A) in respect of qualifying expenditure in respect of the building;

then:

(c) the transferor must give to the transferee, within the period specified in subsection (4AJ), a notice containing such information about the transferor's holding or lease of the building as will enable the transferee to work out how Division 10D of Part III will apply to the transferee's holding or lease of the building; and

(d) the transferee must retain the notice, or a copy, until the end of 5 years after the earlier of:

(i) the transferee ceasing to be the owner or lessee of the part of the building; or

(ii) the destruction of the building.

"(4AJ) The notice referred to in subsection (4AH) must be given within 6 months after the later of the following:

(a) the end of the year of income of the transferee in which the disposal occurred;

(b) the commencement of subsection (4AH);

or within such further period as the Commissioner allows.".

Division 10   Amendments relating to deductions for capital expenditure on income-producing structural improvements

53   Heading to Division 10D of Part III

The heading to Division 10D of Part III of the Principal Act is amended by adding at the end "and Structural Improvements".

54   Interpretation

Section 124ZF of the Principal Act is amended by inserting the following definition in subsection (1):

" 'building' includes a structural improvement covered by section 124ZFB;".

55   Qualifying expenditure

Section 124ZG of the Principal Act is amended by inserting in subsection (3) ", 75D, 124F" after "75B".

56   Before section 124ZG

Before section 124ZG of the Principal Act the following section is inserted:

Division has effect as if certain structural improvements were buildings (Structural improvements to which this section applies)

"124ZFB.(1) This section applies to a structural improvement if:

(a) apart from this section, the structural improvement is not a building; and

(b) the structural improvement does not consist of earthworks that:

(i) are not reasonably likely to require replacement because of physical deterioration (assuming that the earthworks are maintained in reasonably good order and condition); and

(ii) can be economically maintained in reasonably good order and condition for an indefinite period; and

(iii) are not integral to the construction of things that, apart from this paragraph, are structural improvements to which this section applies;

(for example: unlined channels; unlined basins; earth tanks; and dirt tracks); and

(c) the structural improvement does not consist of earthworks that merely create artificial landscapes (for example: grass golf course fairways and greens; gardens; and grass sports fields).

(Examples of structural improvements to which this section applies)

"(2) The following are examples of structural improvements to which this section applies:

(a) sealed roads, sealed driveways or sealed car parks;

(b) bridges;

(c) sealed airport runways;

(d) pipelines;

(e) lined road tunnels;

(f) retaining walls;

(g) fences;

(h) concrete or rock dams;

(i) artificial sports fields.

(Structural improvements deemed to be buildings)

"(3) This Division has effect as if the structural improvement were a building.

(Application of section - post-26 February 1992 structural improvements)

"(4) This section applies in relation to expenditure incurred in respect of the construction of a structural improvement, or an extension, alteration or improvement to a structural improvement, if the construction commenced after 26 February 1992.".

57   Application of amendments relating to structural improvements

The amendment made by section 55 applies in relation to expenditure incurred in respect of the construction of a structural improvement, or an extension, alteration or improvement to a structural improvement, if the construction commenced after 26 February 1992.

Division 11   Amendments relating to development allowance

58   Officers to observe secrecy

Section 16 of the Principal Act is amended by inserting after paragraph (4)(hb) the following paragraph:

"(hba) the Development Allowance Authority, for the purpose of the administration of the Development Allowance Authority Act 1992 or of the prosecution provisions within the meaning of that Act;".

59   Deductions not allowable for entertainment expenses

Section 51AE of the Principal Act is amended by omitting from subsection (14) "(other than Subdivision B of this Division)".

60   Special depreciation on trading ships

Section 57AM of the Principal Act is amended by omitting from paragraph (33)(h) "and, if the ship was acquired new by the lessee under a contract entered into on or after 1 January 1976 or was constructed by the lessee and the construction commenced on or after that date, for the purposes of Subdivision B".

61   Heading to Subdivision B of Division 3 of Part III

The heading to Subdivision B of Division 3 of Part III of the Principal Act is amended by omitting "Investment Allowance" and substituting "Development Allowance".

62   Before section 82AA

Before section 82AA of the Principal Act the following section is inserted:

Object

"82AAAA.(1) The object of this Subdivision and the Development Allowance Authority Act 1992 is to provide tax incentives for investment in large Australian projects which cost $50 million or more and meet certain other criteria.

"(2) The tax incentive takes the form of an allowable deduction, which may be referred to as development allowance.

"(3) The main deduction provision is section 82AB.".

63   Property to which Subdivision applies

Section 82AA of the Principal Act is amended:

(a) by omitting from paragraph (1)(b) "1 January 1976" and substituting "27 February 1992";
          

(b) by omitting subsections (2), (3) and (4) and substituting the following subsection:
          

"(2) Sub-subparagraphs (1)(a)(ii)(A) and (C) do not applyif the taxpayer leases the property, or grants rights touse the property, in the taxpayer's capacity as an eligible entertainment/tourism operator.".

64   Deduction for new plant installed after 26 February 1992

Section 82AB of the Principal Act is amended:

(a) by omitting subsections (1) to (5B) (inclusive) and substituting the following subsection:
          

"(1) Subject to this Subdivision, if:

(a) after 26 February 1992, a taxpayer incurs expenditure of a capital nature in respect of the acquisition or construction by the taxpayer of a new unit of eligible property to which this Subdivision applies; and

(b) the expenditure has pre-qualified under the Development Allowance Authority Act 1992; and

(c) the expenditure was incurred:

(i) in respect of a unit of property acquired by the taxpayer under a contract entered into after 26 February 1992; or

(ii) in respect of a unit of property that was constructed by the taxpayer where the construction commenced after 26 February 1992; and

(d) the unit of property was first used or installed ready for use before 1 July 2002;

a deduction equal to 10% of the expenditure is allowable to the taxpayer for the first year of income during which that unit was either used for the purpose of producing assessable income or installed ready for use for that purpose.";

(b) by omitting from subsection (6) "the foregoing provisions of this section" and substituting "subsection (1)";
          

(c) by omitting from subsection (6) "or (2)(d)";
          

(d) by omitting subsections (6A) and (6B);
          

(e) by omitting from paragraph (7)(d) and subsection (8) "1 January 1976" and substituting "27 February 1992";
          

(f) by omitting subsections (9) and (10).
          

65   Lessor may transfer benefit of deduction to lessees

Section 82AD of the Principal Act is amended:

(a) by omitting subparagraph (1)(b)(i) and substituting the following subparagraph:
          

"(i) a description of the property;";

(b) by omitting subsection (1A);
          

(c) by omitting paragraphs (2)(a) and (b) and substituting the following paragraphs:
          

"(a) if the agreement for the lease was entered into before 1 January 1993 - 8 January 1993; or

(b) in any other case - the 8th day after the end of the month in which the agreement for the lease is entered into;".

66   Subdivision not to apply to certain structural improvements

Section 82AE of the Principal Act is amended by inserting before paragraph (a) the following paragraph:

"(aa) structural improvements that, apart from subsection 54(2), are plant or articles within the meaning of section 54; or".

67   Subdivision not to apply to certain other property

Section 82AF of the Principal Act is amended:

(a) by inserting before subparagraphs (1)(a)(i) and (b)(i) the following subparagraph:
          

"(ia) for use in a business carried on by the taxpayer which consists principally of the provision by the taxpayer of either or both of the following:

(A) entertainment;

(B) accommodation for tourists or travellers; or";

(b) by omitting paragraph (2)(h);
          

(c) by adding "or" at the end of paragraph (2)(j);
          

(d) by adding at the end of subsection (2) the following paragraphs:
          

"(k) aircraft; or

(l) ships other than ships covered by any of the following subparagraphs:

(i) ships that are:

(A) capable of navigating the high seas; and

(B) registered under the Shipping Registration Act 1981; and

(C) wholly and exclusively for use in trade or commerce within Australia;

(ii) ships that are:

(A) incapable of navigating the high seas; and

(B) wholly and exclusively for use in trade or commerce within Australia;

(iii) ships that are off-shore industry vessels, or off-shore industry mobile units, within the meaning of the Navigation Act 1912.";

(e) by omitting subsection (3A);
          

(f) by omitting from subsection (4) "1 January 1976" and substituting "27 February 1992".
          

68   Disposal etc. of property within 12 months after installation etc.

Section 82AG of the Principal Act is amended:

(a) by omitting paragraph (1)(b) and substituting the following paragraph:
          

"(b) the taxpayer:

(i) leased the property; or

(ii) let the property on hire under a hire-purchase agreement; or

(iii) otherwise granted a right to another person to use the property; or";

(b) by inserting after subsection (1) the following subsection:
          

"(1A) Subparagraphs (1)(b)(i) and (iii) do not apply if the taxpayer leased the property, or granted rights to use the property, in the taxpayer's capacity as an eligible entertainment/tourism operator.";

(c) by omitting subsections (2A) and (2B);
          

(d) by omitting subsection (3A) and substituting the following subsection:
          

"(3A) Paragraphs (3)(d) and (f) do not apply if the lessee entered into the contract or arrangement concerned in the lessee's capacity as an eligible entertainment/tourism operator.";

(e) by adding at the end the following subsection:
          

"(5) Subsection (4) does not apply if the lessee entered into the contract or arrangement concerned in the lessee's capacity as an eligible entertainment/tourism operator.".

69   Disposal etc. of property after 12 months after installation etc.

Section 82AH of the Principal Act is amended:

(a) by omitting subparagraph (1)(b)(ii) and substituting the following subparagraph:
          

"(ii) the taxpayer:

(A) leased the property; or

(B) let the property on hire under a hire-purchase agreement; or

(C) otherwise granted a right to another person to use the property; or";

(b) by inserting after subsection (1) the following subsection:
          

"(1A) Sub-subparagraphs (1)(b)(ii)(A) and (C) do not apply if the taxpayer leased the property, or granted rights to use the property, in the taxpayer's capacity as an eligible entertainment/tourism operator.";

(c) by omitting subsections (2A) and (2B);
          

(d) by omitting subsection (3A) and substituting the following subsection:
          

"(3A) Subparagraphs (3)(b)(iv) and (vi) do not apply if the lessee entered into the contract or arrangement concerned in the lessee's capacity as an eligible entertainment/tourism operator.";

(e) by omitting subsection (5) and substituting the following subsection:
          

"(5) Subparagraphs (4)(b)(iii) and (v) do not apply if the taxpayer entered into the contract or arrangement concerned in the taxpayer's capacity as an eligible entertainment/tourism operator.".

70   Goods or services used to produce exempt income

Section 82AHA of the Principal Act is amended by omitting "18 December 1981" (wherever occurring) and substituting "26 February 1992".

71   Notional disposal of property under hire-purchase

Section 82AI of the Principal Act is amended by omitting paragraphs (a) and (b) and substituting the following paragraphs:

"(a) the taxpayer is taken to have disposed of the property; and

(b) the disposal is taken to have occurred at the time when possession of the property was so obtained by the owner.".

72   Special provisions relating to partnerships

Section 82AJ of the Principal Act is amended:

(a) by omitting paragraph (1)(c) and substituting the following paragraph:
          

"(c) before the end of 12 months after the property was first used or installed ready for use by the partnership, the taxpayer disposed of the whole or a part of the taxpayer's interest in the partnership or in the property;";

(b) by omitting paragraphs (2)(c) and (d) and substituting the following paragraphs:
          

"(c) after the end of 12 months after the property was first used or installed ready for use by the partnership, the taxpayer disposed of the whole or a part of the taxpayer's interest in the partnership or in the property; and

(d) the Commissioner is satisfied that, at the time the property was

acquired or constructed by the partnership, the taxpayer intended to dispose of the whole or a part of the taxpayer's interest in the partnership or in the property after the partnership became entitled to a deduction under this Subdivision;";

(c) by omitting subsections (5A) and (6A);
          

(d) by omitting subsection (7AA) and substituting the following subsection:
          

"(7AA) Paragraphs (7)(d) and (f) do not apply if the lessee entered into the contract or arrangement concerned in the lessee's capacity as an eligible entertainment/tourism operator.";

(e) by inserting after subsection (7A) the following subsection:
          

"(7B) Subsection (7A) does not apply if the lessee entered into the contract or arrangement concerned in the lessee's capacity as an eligible entertainment/tourism operator.";

(f) by omitting subsection (9) and substituting the following subsection:
          

"(9) Subparagraphs (8)(b)(iv) and (vi) do not apply if the lessee entered into the contract or arrangement concerned in the lessee's capacity as an eligible entertainment/tourism operator.".

73   Disposals within company group

Section 82AJA of the Principal Act is amended:

(a) by omitting from subsection (1) "after 19 August 1979 by a taxpayer being a company, and paragraph 82AG(2A)(b) does not apply in relation to a ship ceasing to be an eligible Australian ship by reason only of the disposal of the ship";
          

(b) by omitting subparagraph (1)(d)(i) and substituting the following subparagraphs:
          

"(i) lease the property; or

(ia) let the property on hire under a hire-purchase agreement; or

(ib) otherwise grant a right to another person to use the property; or";

(c) by omitting from subparagraph (1)(d)(ii) "in a case where the property is subsection 82AA(1) property - ";
          

(d) by inserting after subsection (1) the following subsection:
          

"(1A) Subparagraphs (1)(d)(i) and (ib) do not apply if the person leased the property, or granted rights to use the property, in the person's capacity as an eligible entertainment/tourism operator.".

74   Property acquired etc. in substitution for other property

Section 82AL of the Principal Act is amended:

(a) by omitting "1 January 1976" (wherever occurring) and substituting "27 February 1992";
          

(b) by omitting from paragraphs (1)(c) and (2)(c) "obtaining a deduction under this Subdivision," and substituting the following word and subparagraphs: 
          

"obtaining:

(i) a deduction under this Subdivision; or

(ii) a benefit related directly or indirectly to a deduction under this Subdivision;".

75   Deduction under Subdivision to be in addition to certain other deductions

Section 82AM of the Principal Act is amended:

(a) by omitting from subsection (1) "subsection (2)" and substituting "subsections (2), (3) and (4)";
          

(b) by inserting in subsection (2) "73B, 75B," after "70A,";
          

(c) by adding at the end the following subsections:
          

"(3) A deduction under this Subdivision is not allowable for expenditure in relation to a unit of property if:

(a) a deduction is allowable for depreciation in relation to the property; and

(b) assuming that paragraph 55(2)(b) and subsection 55(8) had not been enacted, the annual depreciation percentage fixed under section 55 is 100%.

"(4) A deduction under this Subdivision is not allowable for expenditure in relation to a unit of property if a deduction is allowable in accordance with section 57AM in respect of the property (section 57AM deals with special depreciation on trading ships).".

76   Repeal of section 82AP

Section 82AP of the Principal Act is repealed.

77   Before section 82AQ

Before section 82AQ of the Principal Act the following section is inserted:

Leases etc. granted in an entity's capacity as an eligible entertainment/tourism operator

"82APA.(1) For the purposes of this Subdivision, if:

(a) an entity:

(i) leases property; or

(ii) grants a right to another person to use property; or

(iii) enters into a contract or arrangement with another person for the use of the property by that other person; and

(b) the property is:

(i) for use in a business carried on by the entity which consists principally of the provision by the entity of either or both of the following:

(A) entertainment;

(B) accommodation for tourists or travellers; or

(ii) for use in a business carried on by the entity a substantial part of which consists of the provision by the entity of accommodation for tourists or travellers; or

(iii) for use in premises used or held for use by the entity principally for the purpose of deriving income in the nature of rent by the provision of accommodation for tourists or travellers;

the entity is taken to have leased the property, granted rights to use the property, or entered into a contract or arrangement with the other person for the use of the property by that other person, as the case requires, in the entity's capacity as an eligible entertainment/tourism operator.

"(2) In this section:

'entity' means:

(a) a company; or

(b) a partnership; or

(c) a person in a particular capacity of trustee; or

(d) any other person.".

78   Interpretation

Section 82AQ of the Principal Act is amended:

(a) by omitting from subsection (1) the definitions of "commissioning date", "eligible Australian ship", "eligible date", "new ship", "subsection 82AA(1) property" and "subsection 82AA(2) ship";
          

(b) by inserting the following definitions in subsection (1):
          

" 'aircraft' means a machine or apparatus that derives support inthe atmosphere from the reactions of the air or from buoyancy, but does not include an air-cushion vehicle; 'Australian satellite' has the same meaning as in the Radiocommunications Act 1983;

'ship' means a vessel or boat of any description, and includes an air-cushion vehicle, but does not include a floating structure;";

(c) by adding at the end the following subsection:
          

"(4) For the purposes of this Subdivision, an Australian satellite is taken to be in Australia.".

79   Minor consequential amendments

The following provisions of the Principal Act are amended by omitting "subsection 82AA(1) property" (wherever occurring) and substituting "property":

paragraph 82AB(7)(a)

subsection 82AF(3)

subsections 82AG(1), (2), (3) and (4)

subsections 82AH(1), (2), (3) and (4)

subsections 82AJ(5), (6), (7), (7A) and (8).

80   Transitional - old investment allowance provisions

In spite of the amendments made by this Division, subsections 51AE(14) and 57AM(33) and Subdivision B of Division 3 of Part III of the Principal Act continue to apply, in relation to:

(a) a unit of subsection 82AA(1) property that was first used or installed ready for use before 1 January 1988; or
          

(b) a subsection 82AA(2) ship that was first used or installed ready for use before 1 January 1988; as if those amendments had not been made.
          

Division 12   Amendment of assessments

81   Amendment of assessments

Section 170 of the Principal Act does not prevent the amendment of an assessment made before the commencement of this section for the purpose of giving effect to this Act.

Part 3   AMENDMENT OF THE INCOME TAX RATES ACT 1986

82   Principal Act

In this Part, "Principal Act" means the Income Tax Rates Act 1986.*2*

*2* No. 107, 1986, as amended. For previous amendments, see Nos. 60 and 138, 1987; Nos. 11, 78 and 118, 1988; Nos. 70, 98 and 106, 1989; and Nos. 48, 100 and 216, 1991.

83   Interpretation

Section 3 of the Principal Act is amended by inserting in subsection (1) the following definitions:

" 'PDF' (pooled development fund) has the same meaning as in the Assessment Act;

'PDF component' has the same meaning as in the Assessment Act;".

84   Rates of tax payable by companies

Section 23 of the Principal Act is amended:

(a) by adding "or" at the end of paragraphs (2)(a) and (c);
          

(b) by inserting after paragraph (2)(c) the following paragraph:
          

"(d) a company to which subsection (4C) or (4D) applies;";

(c) by omitting from subsection (3) "not a life assurance company," and substituting "neither a life assurance company nor a company to which subsection (4C) or (4D) applies,";
          

(d) by inserting after subsection (4B) the following subsections:
          

"(4C) The rates of tax in respect of the taxable income of a company that becomes a PDF during the year of income and is still a PDF at the end of the year of income are:

(a) in respect of so much of the taxable income as does not exceed the PDF component - 30%; and

(b) in respect of so much of the taxable income as exceeds the PDF component - 39%.

"(4D) The rate of tax in respect of the taxable income of a company that is a PDF throughout the year of income is 30%.".

85   Application of amendments

The amendments made by this Part apply for any year of income, whether beginning before, at or after the commencement of this section.

Part 4   AMENDMENT OF THE OCCUPATIONAL SUPERANNUATION STANDARDS ACT 1987

86   Principal Act

In this Part, "Principal Act" means the Occupational Superannuation Standards Act 1987.*3*

*3* No. 97, 1987, as amended. For previous amendments, see No. 138, 1987; Nos. 97 and 105, 1989; Nos. 61 and 135, 1990; and Nos. 55 and 216, 1991.

87   Notification of determinations

 

(1) Section 15M of the Principal Act is amended:
        

(a) by omitting from subsection(1) "in relation to an eligible termination payment made to a person or the payment of a superannuation pension or an annuity to a person" and substituting "that a payment to a person is in excess of the reasonable benefit limits";
          

(b) by omitting from paragraph (1)(b) "and" (last occurring);
          

(c) by omitting paragraph (1)(c);
          

(d) by omitting subsection (2) and substituting the following subsections:
          

"(2) Whenever the Commissioner makes a determination under subsection 15K(1) or section 15L, the Commissioner may, at the request of the Commissioner of Taxation, give to the Commissioner of Taxation:

(a) a copy of the determination; and

(b) any or all information disclosed or obtained under or for the purposes of this Act and concerning the payment to which the determination relates.

"(3) A request by the Commissioner of Taxation under subsection (2) may relate to a particular determination or a class of determinations.

"(4) Whenever, under subsection 15K(1) or section 15L, the Commissioner makes a determination to which subsection (1) does not apply, the Commissioner may, if he or she thinks it desirable, give to the recipient of the payment to which the determination relates the documents mentioned in paragraphs (1)(a) and (b).".

      

(2) Subsections 15M(1) and (4) of the Principal Act as amended by this Act apply in relation to any determination that relates to a payment made on or after 1 July 1991.
        

      

(3) Section 15M of the Principal Act as in force immediately before the commencement of this section continues to apply in relation to a determination that relates to a payment made before 1 July 1991.
        

88   Amendment of interim determinations

 

(1) Section 15N of the Principal Act is amended by omitting subsection (5) and substituting the following subsection:
        

"(5) If the Commissioner amends a determination under this section, the following provisions have effect:

(a) if the determination, as amended, is a determination that a payment is in excess of the reasonable benefit limits, the Commissioner must give a copy of the amended determination, and a written statement setting out the basis on which the determination was amended, to the person;

(b) in any other case, if the Commissioner thinks it desirable, he or she may give the person the documents mentioned in paragraph (a);

(c) if the Commissioner of Taxation so requests, the Commissioner may give the Commissioner of Taxation:

(i) a copy of the amended determination; and

(ii) any or all information disclosed or obtained under or for the purposes of this Act and concerning the payment to which the determination relates.".

      

(2) Subsection 15N(5) of the Principal Act as amended by this Act applies in relation to any amended determination that relates to a payment made on or after 1 July 1991.
        

      

(3) Section 15N of the Principal Act as in force immediately before the commencement of this section continues to apply in relation to an amended determination that relates to a payment made before 1 July 1991.
        

89   Person may request copy of previous determination

Section 15Q of the Principal act is amended by adding at the end the following subsection:

"(3) If:

(a) the Commissioner has provided a copy of a determination to a person in accordance with subsection (1); and

(b) the Commissioner had not previously given the person documents under section 15M or 15N in relation to the determination or provided a copy of the determination to the person;

subsection 16(1A) has effect as if, on the day on which the copy was so provided, the Commissioner had given the person notice of the decision to make the determination and of any decision to amend the determination.".

90   Review of certain decisions

Section 16 of the Principal Act is amended by inserting after subsection (1A) the following subsection:

"(1B) A request under subsection (1A) in relation to the decision to make or amend a determination to which subsection 15Q(3) applies must be made within one year after the end of the financial year in which the payment to which the determination relates was made or within such further period as the Commissioner allows.".

91   After section 18

After section 18 of the Principal Act the following section is inserted:

Transmission of information to the Commissioner of Taxation

"18A. Where a provision of this Act requires or authorises the Commissioner or a superannuation standards officer to give information to the Commissioner of Taxation or a taxation officer, the information may be given by means of a data processing device.".

Part 5   AMENDMENT OF THE TAXATION ADMINISTRATION ACT 1953

92   Principal Act

In this Part, "Principal Act" means the Taxation Administration Act 1953.*4*

*4* No. 1, 1953, as amended. For previous amendments, see Nos. 28, 39, 40 and 52, 1953; No. 18, 1955; No. 39, 1957; No. 95, 1959; No. 17, 1960; No. 75, 1964; No. 155, 1965; No. 93, 1966; No. 120, 1968; No. 216, 1973; No. 133, 1974; No. 37, 1976; Nos. 19 and 59, 1979; Nos. 39 and 117, 1983; No. 123, 1984; No. 65, 1985 (as amended by No. 193, 1985); Nos. 4, 47, 104, 123 and 168, 1985; Nos. 41, 46, 48, 112, 144 and 154, 1986; No. 49, 1986 (as amended by No. 141, 1987); Nos. 120 and 145, 1987; No. 62, 1987 (as amended by No. 108, 1987); No. 108, 1987 (as amended by No. 138, 1987); No. 138, 1987 (as amended by No. 11, 1988); Nos. 95 and 97, 1988; Nos. 97, 105, 107, 124, 163 and 167, 1989; Nos. 20, 60, 61, 110, 119 and 136, 1990; and Nos. 5, 6, 48, 100, 122 and 216, 1991.

93   Annual report

Section 3B of the Principal Act is amended by inserting after subsection (1A) the following subsection:

"(1B) Subsection (1) does not apply in relation to Part III and sections 13J, 15 and 15A insofar as that Part and those sections apply in relation to the Development Allowance Authority Act 1992.".

94   Secrecy

Section 3C of the Principal Act is amended by inserting after subsection (1AA) the following subsection:

"(1AB) This section does not apply in relation to information disclosed or obtained under or for the purposes of Part III insofar as that Part applies in relation to the Development Allowance Authority Act 1992.".

95   After section 8AA

After section 8AA of the Principal Act the following section is inserted:

Application of Part to the Development Allowance Authority Act 1992

"8AB. This Part applies in relation to the Development Allowance Authority Act 1992 as if:

(a) that Act were a taxation law; and

(b) references in this Part to the Commissioner were references to the Development Allowance Authority.".

96   Interpretation

Section 8J of the Principal Act is amended by inserting after paragraph (2)(g) the following paragraph:

"(ga) paragraph 79(1)(b) or (c) of the Development Allowance Authority Act 1992;".

97   Court may order payment of amount in addition to penalty

Section 8W of the Principal Act is amended by inserting after subsection (1A) the following subsection:

"(1B) For the purposes of paragraph (1)(b), a decision made by the Development Allowance Authority under Part 2, 3, 4, 5 or 6 of the Development Allowance Authority Act 1992 is taken to form part of the process of making assessments of income tax.".

98   Provision of Commonwealth taxation information to State taxation authorities

Section 13J of the Principal Act is amended by adding at the end the following subsection:

"(8) This section applies in relation to the Development Allowance Authority Act 1992 as if:

(a) that Act were a taxation law; and

(b) references in this section to the Commissioner were references to the Development Allowance Authority.".

99   Certification by State taxation officer of copies of, and extracts from, documents

Section 13K of the Principal Act is amended by adding at the end the following subsection:

"(11) This section applies in relation to the Development Allowance Authority Act 1992 as if that Act were a taxation law.".

100   Appearance by Commissioner etc.

Section 15 of the Principal Act is amended by adding at the end the following subsection:

"(4) This section applies in relation to the Development Allowance Authority Act 1992 as if:

(a) that Act were a taxation law; and

(b) references in this section to the Commissioner were references to the Development Allowance Authority; and

(c) references in this section to a Second Commissioner or to a Deputy Commissioner were omitted.".

101   Certification by Commissioner of copies of, and extracts from, documents

Section 15A of the Principal Act is amended by adding at the end the following subsection:

"(11) This section applies in relation to the Development Allowance Authority Act 1992 as if:

(a) that Act were a taxation law; and

(b) references in this section to the Commissioner were references to the Development Allowance Authority.".

Part 6   AMENDMENT OF THE TAXATION LAWS AMENDMENT ACT 1992

102   Principal Act

In this Part, "Principal Act" means the Taxation Laws Amendment Act 1992.*5*

*5* No. 35, 1992.

103   Transitional - section 58 of the amended Act

Section 71 of the Principal Act is amended by omitting from sub-subparagraphs (4)(b)(ii)(A), (5)(b)(ii)(A) and (6)(b)(ii)(A) "transferee" and substituting "transferor".

104   Application of amendments

The amendments made by this Part apply in relation to disposals of property, whether occurring before or after the commencement of this section.