Trust Recoupment Tax Assessment Act 1985

SECTION 12   PENALTY TAX  

12(1)    
Where -

(a) for the purpose of making an assessment, the Commissioner has calculated the trust recoupment tax that is assessable to a person or persons in relation to a taxable amount, not being a secondary taxable amount arising under subsection 6(3);

(b) the tax avoidance scheme to which the taxable amount relates was entered into after 28 April 1983 and before the commencement of this Act;

(c) the assessment is to be made in a quarter (in this subsection referred to as the " assessment quarter " ) commencing after the end of the year of income that immediately succeeded the year of income to which the taxable amount relates; and

(d) the index number in relation to the quarter immediately preceding the assessment quarter exceeds the index number in relation to the March quarter of the year of income that immediately succeeded the year of income to which the taxable amount relates;

the person is liable or, in the case of persons included in an eligible beneficiaries class, the persons are jointly and severally liable, to pay, by way of penalty, additional tax equal to an amount ascertained in accordance with the formula

AB C

−

A ,

where -

A is the amount of the trust recoupment tax referred to in paragraph (a);

B is the index number in relation to the quarter immediately preceding the assessment quarter; and

C is the index number in relation to the March quarter referred to in paragraph (d).

12(2)    
Where:

(a) for the purpose of making an assessment, the Commissioner has calculated the income tax that is assessable to a person in relation to a year of income (in this subsection referred to as the " relevant year of income " );

(b) in the calculation of that income tax an amount was, or amounts were, included in the assessable income of the person by virtue of the application of section 7 in relation to a tax avoidance scheme or tax avoidance schemes entered into after 28 April 1983 and before the commencement of this Act;

(c) if the amount or amounts had not been included in the assessable income of the person -

(i) no income tax would have been assessable to the person in relation to the relevant year of income; or

(ii) there would have been assessable to the person in relation to the relevant year of income an amount of income tax (in this subsection referred to as the " amount of claimed tax " ) that is less than the amount of the income tax referred to in paragraph (a);

(d) the assessment is to be made in a quarter (in this subsection referred to as the " assessment quarter " ) commencing after the end of the year of income that immediately succeeded the relevant year of income; and

(e) the index number in relation to the quarter immediately preceding the assessment quarter exceeds the index number in relation to the March quarter of the year of income that immediately succeeded the relevant year of income;

the person is liable to pay, by way of penalty, additional tax equal to an amount ascertained in accordance with the formula

AB C

−

A ,

where:

A is -

(f) in a case to which subparagraph (c)(i) applies - the amount of the income tax referred to in paragraph (a); or

(g) in a case to which subparagraph (c)(ii) applies - the amount by which the amount of the income tax referred to in paragraph (a) exceeds the amount of claimed tax;

B is the index number in relation to the quarter immediately preceding the assessment quarter; and

C is the index number in relation to the March quarter referred to in paragraph (e).

12(3)    
Where -

(a) for the purpose of making an assessment, the Commissioner has calculated the trust recoupment tax that is assessable to a person or persons in relation to a taxable amount, not being a secondary taxable amount arising under subsection 6(3); and

(b) the tax avoidance scheme to which the taxable amount relates was entered into after the commencement of this Act;

the person is liable or, in the case of persons included in an eligible beneficiaries class, the persons are jointly and severally liable, to pay, by way of penalty, additional tax equal to double the amount of the trust recoupment tax referred to in paragraph (a).

12(4)    
Where -

(a) for the purpose of making an assessment, the Commissioner has calculated the income tax that is assessable to a person in relation to a year of income (in this subsection referred to as the relevant year of income );

(b) in the calculation of that income tax an amount was, or amounts were, included in the assessable income of the person by virtue of the application of section 7 in relation to a tax avoidance scheme or tax avoidance schemes entered into after the commencement of this Act; and

(c) if the amount or amounts had not been included in the assessable income of the person -

(i) no income tax would have been assessable to the person in relation to the relevant year of income; or

(ii) there would have been assessable to the person in relation to the relevant year of income an amount of income tax (in this subsection referred to as the " amount of claimed tax " ) that is less than the amount of the income tax referred to in paragraph (a);

the person is liable to pay, by way of penalty, additional tax equal to -

(d) in a case to which subparagraph (c)(i) applies - double the amount of the income tax referred to in paragraph (a); or

(e) in a case to which subparagraph (c)(ii) applies - double the amount by which the amount of the income tax referred to in paragraph (a) exceeds the amount of claimed tax.

12(5)    

Subject to subsection (6), if at any time, whether before or after the commencement of this section, the Australian Statistician has published or publishes an index number in respect of a quarter in substitution for an index number previously published by him or her in respect of that quarter, the publication of the later index number shall be disregarded for the purposes of this section.

12(6)    

If at any time, whether before or after the commencement of this section, the Australian Statistician has changed or changes the index reference period for the Consumer Price Index, then, for the purposes of the application of this section after the change took place or takes place, regard shall be had only to the index numbers published in terms of the new index reference period.

12(7)    
The Commissioner shall make an assessment of the additional tax payable by a person or persons under a provision of this section.

12(8)    
Notice of an assessment made in respect of a person or persons under subsection (7) may be incorporated in notice of any other assessment made in respect of the person or persons under this Act or the Assessment Act.

12(9)    
The Commissioner may, in the Commissioner ' s discretion, remit the whole or any part of the additional tax payable by a person or persons under a provision of this section, but, for the purposes of the application of subsection 33(1) of the Acts Interpretation Act 1901 to the power of remission conferred by this subsection, nothing in this Act shall be taken to preclude the exercise of the power at a time before an assessment is made under subsection (7) of the additional tax.

12(10)    
In this section, " index number " , in relation to a quarter, means the All Groups Consumer Price Index number, being the weighted average of the 8 capital cities, published by the Australian Statistician in respect of the quarter.