Tax Laws Amendment (Repeal of Inoperative Provisions) Act 2006 (101 of 2006)

Schedule 2   Consequential amendments relating to Schedule 1 repeals etc.

Part 1   Amendments: general

Taxation Administration Act 1953

955   At the end of Division 14 in Schedule 1

Add:

Subdivision 14-B - Accruing gains

14-50 Object of this Subdivision

The object of this Subdivision is to put the parties to a *Part VA investment with an accruing gain in a position similar to what would have been their position under Subdivision 12-E (Payments where TFN or ABN not quoted) if the *investment body had paid the gain in money to the *investor at the end of the income year.

14-55 Liability for TFN withholding tax

(1) *TFN withholding tax is payable if:

(a) in relation to a *Part VA investment, an amount (the accrued gain ) is included in the *investor's assessable income for an income year under section 159GQ of the Income Tax Assessment Act 1936 (about gains accruing on securities); and

(b) the investment:

(i) is of a kind mentioned in item 1 or 2 of the table in subsection 202D(1) of that Act; or

(ii) is of a kind mentioned in item 3 of that table and is non-transferable; and

(c) the term of the investment does not end during the income year; and

(d) section 12-140 would have required the *investment body to withhold an amount (the TFN withholding amount ) from a payment of the accrued gain to the investor, if the investment body had made the payment at the end of the income year and section 12-150 had not been enacted.

Note: Section 202D of the Income Tax Assessment Act 1936 lists the investments in connection with which tax file numbers are to be quoted.

(2) The amount of *TFN withholding tax is equal to the TFN withholding amount.

(3) The *TFN withholding tax is payable jointly and severally by the *investor and the *investment body.

(4) However, if the *investment body is the Commonwealth or an *untaxable Commonwealth entity:

(a) the *TFN withholding tax is payable by the *investor; and

(b) the investor is taken to have authorised the investment body to pay the TFN withholding tax on the investor's behalf.

(5) The *TFN withholding tax is due and payable at the end of 21 days after the end of the income year referred to in paragraph (1)(a).

Note 1: When it is due and payable, the TFN withholding tax is payable to the Commissioner: see paragraph 255-5(1)(b).

Note 2: An entity by whom it is payable must pay it to the Commissioner in accordance with Subdivision 16-B: see subsection 16-70(3). If any of it remains unpaid, the entity is liable to pay general interest charge: see section 16-80.

Note 3: The Commissioner may defer the time at which TFN withholding tax becomes due and payable: see section 255-10.

(6) The adoption (under section 18 of the Income Tax Assessment Act 1936) of an accounting period ending on a day other than 30 June is disregarded for the purposes of:

(a) this section; and

(b) the application of Division 16E of Part III of that Act for the purposes of this section.

14-60 Investment body may recover TFN withholding tax from investor

(1) The *investment body may recover from the *investor as a debt any of the *TFN withholding tax that it pays.

(2) The *investment body is entitled to set off an amount that it can recover from the *investor under this section against:

(a) a debt due by it to the investor; or

(b) an amount that is accruing to the investor, or stands to the investor's credit, in respect of the *Part VA investment, even if the amount is not yet due.

14-65 Application of rules in Division 18

These provisions:

(a) subsection 18-15(1) and sections 18-20 and 18-25 (about credits for amounts withheld from withholding payments); and

(b) section 18-80 (about refunds when exemption declaration not given);

apply as if any of the *TFN withholding tax that has been paid were an amount withheld under subsection 12-140(1) from a *withholding payment covered by that subsection and made to the *investor during:

(c) unless the *investor has adopted (under section 18 of the Income Tax Assessment Act 1936) an accounting period ending on a day other than 30 June - the income year referred to in paragraph 14-55(1)(a); or

(d) if the investor has adopted such an accounting period - the income year in which the TFN withholding tax is paid.

Note: Unless the investor has adopted such an accounting period, the credit under section 18-15, 18-20 or 18-25 will be in respect of the income year before the one in which the TFN withholding tax is paid.

14-75 Overpayment of TFN withholding tax

If *TFN withholding tax has been overpaid:

(a) the Commissioner must refund the amount overpaid; and

(b) the *investor is not entitled to a credit under section 18-15, 18-20 or 18-25 in respect of the amount overpaid.

14-85 Other laws do not exempt from TFN withholding tax

(1) A provision of a law passed before the commencement of this section that purports to exempt an entity from liability to pay *TFN withholding tax, or to pay taxes that include TFN withholding tax, does not exempt that entity from liability to pay TFN withholding tax.

(2) A provision of a law passed at or after the commencement of this section that purports to exempt an entity from liability to pay taxes under the laws of the Commonwealth, or to pay certain taxes under those laws that include *TFN withholding tax, is not to be interpreted as exempting the entity from liability to pay TFN withholding tax, unless it specifically mentions TFN withholding tax.