Income Tax Assessment Act 1936

PART III - LIABILITY TO TAXATION  

Division 11A - Dividends, interest and royalties paid to non-residents and to certain other persons  

Subdivision A - General  

SECTION 128NB   SPECIAL TAX PAYABLE IN RESPECT OF CERTAIN DEALINGS BY CURRENT AND FORMER OFFSHORE BANKING UNITS  

128NB(1)   [Transfers liable to tax]  

Where a person who is or has been an offshore banking unit transfers to another person an amount of tax exempt loan money or tax exempt gold, other than by way of:

(a) payment in carrying on an OB activity or what would be an OB activity if the person were an OBU; or

(b) repayment of an offshore borrowing or offshore gold borrowing;

the person is liable to pay income tax, as imposed by the Income Tax (Offshore Banking Units) (Withholding Tax Recoupment) Act 1988 , on the lost withholding tax amount in respect of the transfer.

128NB(2)   [Calculation of lost withholding tax]  

For the purposes of subsection (1), the lost withholding tax amount in respect of the transfer is an amount ascertained in accordance with the formula:

IWT rate   ×   PB rate   ×   PB term   ×   TA

where:

IWT rate is the rate declared by the Parliament in respect of income to which subsection 128B(5) applies;

PB rate is the prevailing borrowing rate in relation to the person at the time of the transfer;

PB term is the number of years in the prevailing borrowing term in relation to the person at the time of the transfer; and

TA is the amount of tax exempt loan money or tax exempt gold transferred.

128NB(3)   [Time tax due and payable]  

Tax under this section is due and payable by the person liable to pay the tax at the end of:

(a) 21 days after the end of the month in which the transfer to which it relates takes place; or

(b) such further period as the Commissioner, in special circumstances, allows.

128NB(3A)   Application.  

The Commissioner must not exercise his or her power under paragraph (3)(b) on or after 1 July 2000.

Note:

For provisions about collection and recovery of tax on or after 1 July 2000, see Part 4-15 in Schedule 1 to the Taxation Administration Act 1953 .

128NB(4)   [Application of s 128C]  

Section 128C (other than subsections (1) and (4AA)) applies, in addition to its application apart from this subsection, as if references in that section to withholding tax were references to tax payable under this section.

128NB(5)   [Remission of tax]  

The Commissioner may remit the whole or part of an amount of tax payable under this section in relation to the transfer of an amount of tax exempt loan money or tax exempt gold to another person if:

(a) the Commissioner is satisfied that:

(i) the liability to pay the amount of tax arose because the person mistakenly believed, on reasonable grounds, that the other person was a non-resident or an offshore banking unit, that interest payable to the person in respect of the amount transferred would be an outgoing of a particular kind or that the amount transferred was not tax exempt loan money or tax exempt gold; and

(ii) the person had taken reasonable steps to ascertain the matter to which the mistaken belief related; or

(b) the Commissioner is satisfied that there are special circumstances justifying the remission of the whole or part of the amount of tax.