Tax Laws Amendment (Improvements to Self Assessment) Act (No. 2) 2005 (161 of 2005)

Schedule 1 Assessments

Part 1 Amending assessments

Income Tax Assessment Act 1936

1 Subsections 170(1) to (7)

Repeal the subsections, substitute:

(1) The Commissioner may amend an assessment as follows:

Amendment of assessments
	Time of amendment	Qualification
1	The Commissioner may amend an assessment of an individual for a year of income within 2 years after the day on which the Commissioner gives notice of the assessment to the individual.	This item does not apply: (a) if the individual carries on a business at any time in that year unless the individual is an STS taxpayer for that year; or (b) if the individual is a partner in a partnership that carries on a business at any time in that year unless the partnership is an STS taxpayer for that year; or (c) to an individual in the capacity of a trustee of a trust estate at any time in that year (see item 3 for this case); or (d) if the individual is a beneficiary of a trust estate at any time in that year unless the trust is an STS taxpayer for that year or the trustee of the trust (in that capacity) is a full self-assessment taxpayer for that year; or (e) if it is reasonable to conclude that any person entered into or carried out a scheme (either alone or with others) for the sole or dominant purpose of the individual obtaining a scheme benefit in relation to income tax from the scheme for that year; or (f) in any other circumstance prescribed by the regulations. This item is subject to items 5 and 6.
2	The Commissioner may amend an assessment of a company that is an STS taxpayer for the year of income to which the assessment relates within 2 years after the day on which the Commissioner gives notice of the assessment to the company.	This item does not apply: (a) if the company is a partner in a partnership that carries on a business at any time in that year unless the partnership is an STS taxpayer for that year; or (b) to a company in the capacity of a trustee of a trust estate at any time in that year (see item 3 for this case); or (c) if the company is a beneficiary of a trust estate at any time in that year unless the trust is an STS taxpayer for that year or the trustee of the trust (in that capacity) is a full self-assessment taxpayer for that year; or (d) if it is reasonable to conclude that any person entered into or carried out a scheme (either alone or with others) for the sole or dominant purpose of the company obtaining a scheme benefit in relation to income tax from the scheme for that year; or (e) in any other circumstance prescribed by the regulations. This item is subject to items 5 and 6.
3	The Commissioner may amend an assessment of a person (in the capacity of a trustee of a trust estate) for a year of income if the trust is an STS taxpayer for that year. The Commissioner may amend the assessment within 2 years after the day on which he or she gives notice of the assessment to the person.	This item does not apply: (a) if the person (in that capacity) is a partner in a partnership that carries on a business at any time in that year unless the partnership is an STS taxpayer for that year; or (b) if the person (in that capacity) is a beneficiary of another trust estate at any time in that year unless the other trust is an STS taxpayer for that year or the trustee of the other trust (in that capacity) is a full self-assessment taxpayer for that year; or (c) if it is reasonable to conclude that any person entered into or carried out a scheme (either alone or with others) for the sole or dominant purpose of the person (in that capacity) obtaining a scheme benefit in relation to income tax from the scheme for that year; or (d) in any other circumstance prescribed by the regulations. This item is subject to items 5 and 6.
4	If item 1, 2 or 3 does not apply, the Commissioner may amend an assessment within 4 years after the day on which he or she gives notice of the assessment to the taxpayer.	This item is subject to items 5 and 6.
5	The Commissioner may amend an assessment at any time if he or she is of the opinion there has been fraud or evasion.	None.
6	The Commissioner may amend an assessment at any time: (a) to give effect to a decision on a review or appeal; or (b) as a result of an objection made by the taxpayer or pending a review or appeal.	None.

Note 1: This section applies to assessments where no tax is payable: see the definition of assessment in subsection 6(1).

Note 2: This section also applies to amended assessments: see section 173. However, there are limits on how amended assessments can be amended: see subsections (2) and (3) of this section.

Note 3: The amendment period mentioned in item 1, 2, 3 or 4 may be extended: see subsections (5) to (7).

Limit on amending amended assessments under subsection (1)

(2) The Commissioner cannot amend an amended assessment under item 1, 2, 3 or 4 of the table in subsection (1) if the limited amendment period for the original assessment concerned has ended.

Note: The Commissioner can amend amended assessments at any time under item 5 or 6 of the table in subsection (1).

Refreshed amendment period for amending amended assessments

(3) If the Commissioner amends an assessment (the earlier assessment ) as set out in column 2 of the following table, he or she may, under this subsection, amend the assessment (the later assessment ) that results from that amendment in the way set out in column 3 within:

(a) if item 1, 2 or 3 of the table in subsection (1) applies to the original assessment concerned (which may or may not be the earlier assessment) - 2 years after the day on which he or she gives notice of the later assessment to the taxpayer; or

(b) otherwise - 4 years after that day.

Amendment of later assessment
Column 1 Item	Column 2 In this case:	Column 3 the position is:
1	The Commissioner amends the earlier assessment about a particular in a way that reduces a taxpayer's liability and the Commissioner accepts a statement made by the taxpayer in making the amendment	The Commissioner may amend the later assessment about that particular in a way that increases the taxpayer's liability.
2	The Commissioner amends the earlier assessment about a particular in a way that: (a) increases a taxpayer's liability; or (b) reduces a taxpayer's liability (other than in a case covered by item 1)	The Commissioner may amend the later assessment about that particular in a way that reduces the taxpayer's liability.

Note 1: The earlier assessment may be the original assessment or an amended assessment.

Note 2: The Commissioner can amend the later assessment at any time under item 5 or 6 of the table in subsection (1).

Note 3: The amendment period mentioned in paragraph (3)(a) or (b) may be extended: see subsections (5) to (7).

(4) The Commissioner cannot amend an assessment under item 2 of the table in subsection (3) about a particular if he or she has previously amended an assessment under item 1 of that table about that particular.

Extensions - applications by taxpayer

(5) The Commissioner may amend an assessment even though the limited amendment period has ended if, before the end of that period, the taxpayer applies for an amendment in the approved form. The Commissioner may amend the assessment to give effect to the decision on the application.

Extensions - giving effect to private rulings

(6) The Commissioner may amend an assessment even though the limited amendment period has ended if:

(a) the taxpayer applies for a private ruling under Division 359 in Schedule 1 to the Taxation Administration Act 1953 before the end of that period; and

(b) the Commissioner makes a private ruling under that Division because of the application.

The Commissioner may amend the assessment to give effect to the ruling.

Extensions - Federal Court orders or taxpayer consent

(7) If:

(a) the Commissioner has started to examine the affairs of a taxpayer in relation to an assessment; and

(b) the Commissioner has not completed the examination before the end of the limited amendment period or that period as extended;

the limited amendment period may be extended as follows:

Extensions of limited amendment period
	In this case:	the position is:
1	The Commissioner, before the end of the limited amendment period or that period as extended, applies to the Federal Court of Australia for an order extending the limited amendment period	The Court may order an extension of the limited amendment period for a specified period if it is satisfied that it was not reasonably practicable, or it was inappropriate, for the Commissioner to complete the examination within the limited amendment period, or that period as extended, because of: (a) any action taken by the taxpayer; or (b) any failure of the taxpayer to take action that would have been reasonable for the taxpayer to take.
2	The Commissioner, before the end of the limited amendment period or that period as extended, requests the taxpayer to consent to extending the limited amendment period	The taxpayer may, by notice in writing, consent to extending the limited amendment period for a specified period.

(8) The limited amendment period for an assessment may be extended more than once under subsection (7).

Note: The following heading to subsection 170(9) is inserted "Other amendment periods".

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