Taxation Administration Amendment Regulations 2010 (No. 3)

(189 of 2010)

Dated 29 June 2010

Taxation Administration Act 1953

1   Name of Regulations

These Regulations are the Taxation Administration Amendment Regulations 2010 (No. 3).

2   Commencement

These Regulations commence on the commencement of Part 1 of Schedule 2 to the Tax Laws Amendment (2010 Measures No. 2) Act 2010.

3   Amendment of Taxation Administration Regulations 1976

Schedule 1 amends the Taxation Administration Regulations 1976.

Schedule 1 Amendments

(regulation 3)

Schedule 1   Amendments

[1]   Regulation 2, after definition of tax-related liability

insert

top rate means the sum of:

(a) the highest rate specified in the table in Part I of Schedule 7 to the Income Tax Rates Act 1986; and

(b) the rate of levy specified in subsection 6 (1) of the Medicare Levy Act 1986.

[2]   Subregulation 34 (4), definition of top rate

omit

[3]   Subregulation 34 (4), at the foot

insert

Note For top rate , see regulation 2.

[4]   Subregulation 37 (2), at the foot

insert

Note For top rate , see regulation 2.

[5]   Subregulation 37 (3)

omit

[6]   Subregulation 38 (2), at the foot

insert

Note For top rate , see regulation 2.

[7]   Subregulation 38 (3)

omit

[8]   Part 5, after Division 3

insert

Division 3A Withholding arrangements - closely held trusts

38A Prescribed trusts

(1) For subparagraph 12-175 (1) (c) (iii) in Schedule 1 of the Act, the following trusts are prescribed:

(a) a trust that is a discretionary mutual fund;

(b) an employee share trust for an employee share scheme;

(c) a law practice trust.

(2) In this regulation:

discretionary mutual fund means:

(a) a discretionary mutual fund (within the meaning of subsections 5 (5) and (6) of the Financial Sector (Collection of Data) Act 2001); or

(b) a fund that provides professional indemnity insurance or insurance like cover to a legal practitioner, including a fund established under legislation or by a State or Territory law society to provide professional indemnity cover to its members.

employee share trust , for an employee share scheme, has the meaning given by subsection 130-85 (4) of the Income Tax Assessment Act 1997.

law practice trust means a trust that is:

(a) created and maintained for the purposes of, or in connection with:

(i) the provision of legal services by a duly qualified legal practitioner; or

(ii) the deposit of money of a kind described in column 1 of item 4 of the table in subsection 202D (1) of the Income Tax Assessment Act 1936; and

(b) regulated by a State or Territory law for the regulation of legal practices or legal services.

38B Threshold amounts for exceptions

For subsection 12-185 (1) of the Act, the amount of the threshold, below which payments are not required to be withheld under sections 12-175 and 12-180 of the Act, is:

(a) if the payment is for the whole of a financial year - $120;

(b) if the payment is for part of a financial year - the amount worked out using the formula:

where:

P is the number of days in the financial year for which the amount is payable.

38C Amount to be withheld from distribution of income of closely held trust

For subsection 15-10 (2) of the Act, the amount to be withheld by a trustee of a closely held trust from a distribution to a beneficiary of the trust under subsection 12-175 (2) of the Act is the amount worked out using the formula:

Note 1 The amount of a distribution in a financial year is affected by the operation of subsection 12-175 (4) of the Act.

Note 2 For top rate , see regulation 2.

38D Amount to be withheld if beneficiary is presently entitled to income of closely held trust

For subsection 15-10 (2) of the Act, the amount to be withheld by a trustee of a closely held trust from a beneficiary’s share of the net income of the trust under subsection 12-180 (2) of the Act is the amount worked out using the formula:

Note 1 The amount of an entitlement in a financial year is affected by the operation of subsection 12-180 (4) of the Act.

Note 2 For top rate , see regulation 2.