Commonwealth Consolidated Acts Commonwealth Consolidated Acts
Income Tax Assessment Act 1936
1 Before subsection 45Z(1)
Insert:
(1A) This section is subject to section 45ZA.
2 After section 45Z
Insert:
(1) This section applies if:
(a) an amount (the distributed amount ) is included in the assessable income of a taxpayer that:
(i) is a company; and
(ii) is a beneficiary in a trust estate or a partner in a partnership; and
(b) an amount (the attributable amount ) that is the whole or a part of the distributed amount was attributable to the payment of a dividend by a company; and
(c) the attributable amount was paid to the taxpayer:
(i) in respect of an interest in the trust or partnership that was created before the commencing time and either was acquired on or after 2 July 1998 or was created or acquired for a term that was extended at or after the commencing time; or
(ii) in respect of an interest in the trust or partnership that was created at or after the commencing time; or
(iii) under a finance arrangement (including an arrangement extending an earlier arrangement) to which the trustee of the trust, or the partnership, is a party and which was or is entered into at or after the commencing time; and
(d) the payment to the taxpayer of the attributable amount or the distributed amount may reasonably be regarded as equivalent to the payment of interest on a loan.
(2) In determining whether the payment of the attributable amount or the distributed amount may reasonably be regarded as equivalent to the payment of interest on a loan, regard is to be had to:
(a) the way in which the amount was calculated; and
(b) the conditions applying to the payment of the amount; and
(c) any other relevant matters.
(3) The taxpayer is not entitled to a rebate of tax under section 46 or 46A (as the section concerned has effect under section 45Z) in respect of the attributable amount.
(4) In this section:
"arrangement" means any agreement, arrangement or understanding, whether formal or informal, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings.
"associate" has the meaning given by section 318 but includes:
(a) in relation to a trustee--the controller of the trust; and
(b) in relation to a company that is a member of a wholly‑owned group (determined in accordance with Subdivision 975‑W of the Income Tax Assessment Act 1997 )--any other company that is a member of the group.
"commencing time" means 7.30 pm by legal time in the Australian Capital Territory on 13 May 1997.
"controller" , in relation to a trust, means a person:
(a) who beneficially owns, or is able in any way, whether directly or indirectly, to control the application of, more than 50% of the interests in the trust property or in the trust income; or
(b) who has power to appoint or remove the trustee of the trust; or
(c) according to whose directions, instructions or wishes the trustee of the trust is accustomed or under an obligation, whether formal or informal, to act.
"finance" includes money (including money in the currency of a foreign country) raised by the issue of shares or the creation of an interest in a trust or partnership.
"finance arrangement" , in relation to a trustee or a partnership, means an arrangement entered into or carried out by any of the parties to the arrangement for the purpose, or for purposes that include the purpose:
(a) of enabling the trustee or partnership, or the company referred to in paragraph (1)(b), or an associate of the trustee, partnership or company, to obtain finance (whether by way of renewal or otherwise); or
(b) of enabling the trustee or partnership, or the company referred to in paragraph (1)(b), or an associate of the trustee, partnership or company, to obtain an extension of the period for which finance was obtained under an earlier arrangement.
"interest" , in relation to a trust that is a discretionary trust, includes a right to receive, at the discretion of the trustee of the trust, benefits under the trust.
"loan" includes the provision of credit or any other form of financial accommodation.
"paid" : an attributable amount or distributed amount is taken to have been paid to a taxpayer if it is included in the taxpayer's assessable income.
3 After subsection 128B(3)
Insert:
(3A) Paragraph (3)(ga) does not apply to income consisting of a dividend, or a part of a dividend, that is derived by the trustee of a trust, or to a partnership, to the extent (if any) to which any amount paid to, or applied for the benefit of, a taxpayer (being a beneficiary in the trust or a partner in the partnership) that:
(a) was attributable to the dividend; and
(b) was paid or applied:
(i) in respect of an interest in the trust or partnership that was acquired, or was acquired for a period that was extended, at or after the commencing time; or
(ii) under a finance arrangement (including an arrangement extending an earlier arrangement) entered into at or after the commencing time;
may reasonably be regarded as equivalent to the payment of interest on a loan.
(3B) In subsection (3A):
"commencing time" means 7.30 pm by legal time in the Australian Capital Territory on 13 May 1997.
"finance arrangement" has the same meaning as in section 45ZA.
(3C) In determining for the purposes of subsection (3A) the extent (if any) to which an amount may reasonably be regarded as equivalent to the payment of interest on a loan, regard is to be had to:
(a) the way in which the amount was calculated; and
(b) the conditions applying to the payment or application of the amount; and
(c) any other relevant matters.
4 Section 160APA
Insert:
"finance arrangement" has the same meaning as in section 45ZA.
5 At the end of section 160APQ
Add:
(6) A franking credit of a company does not arise under this section if:
(a) the trust amount or partnership amount was paid:
(i) in respect of an interest in the trust or partnership that was acquired, or was acquired for a period that was extended, at or after the commencing time; or
(ii) under a finance arrangement (including an arrangement extending an earlier arrangement) entered into at or after the commencing time; and
(b) the payment may reasonably be regarded as the payment of interest on a loan.
(7) In subsection (6):
"commencing time" means 7.30 pm by legal time in the Australian Capital Territory on 13 May 1997.
"paid" : a trust amount or partnership amount is taken to have been paid to a taxpayer if it is included in, or is allowed as a deduction from, the taxpayer's assessable income.
(8) In determining whether the payment of the trust amount or partnership amount may reasonably be regarded as equivalent to the payment of interest on a loan, regard is to be had to:
(a) the way in which the amount was calculated; and
(b) the conditions applying to the payment of the amount; and
(c) any other relevant matters.
6 At the end of section 160AQX
Add:
(4) A taxpayer is not entitled to a rebate of tax under subsection (1) if:
(a) the trust amount was paid:
(i) in respect of an interest in the trust that was acquired, or was acquired for a period that was extended, at or after the commencing time; or
(ii) under a finance arrangement (including an arrangement extending an earlier arrangement) entered into at or after the commencing time; and
(b) the payment may reasonably be regarded as equivalent to the payment of interest on a loan.
(5) In subsection (4):
"commencing time" means 7.30 pm by legal time in the Australian Capital Territory on 13 May 1997.
"paid" : a trust amount is taken to have been paid to a taxpayer if it is included in the taxpayer's assessable income.
(6) In determining whether the payment of the trust amount may reasonably be regarded as equivalent to the payment of interest on a loan, regard is to be had to:
(a) the way in which the amount was calculated; and
(b) the conditions applying to the payment of the amount; and
(c) any other relevant matters.
7 At the end of section 160AQY
Add:
(5) A trustee is not entitled to a rebate of tax under subsection (1) if:
(a) the trust amount was paid:
(i) in respect of an interest in the trust or partnership that was acquired, or was acquired for a period that was extended, at or after the commencing time; or
(ii) under a finance arrangement (including an arrangement extending an earlier arrangement) entered into at or after the commencing time; and
(b) the payment may reasonably be regarded as equivalent to the payment of interest on a loan.
(6) In subsection (5):
"commencing time" means 7.30 pm by legal time in the Australian Capital Territory on 13 May 1997.
"paid" : a trust amount is taken to have been paid to a taxpayer if it is included in the taxpayer's assessable income.
(7) In determining whether the payment of the trust amount may reasonably be regarded as equivalent to the payment of interest on a loan, regard is to be had to:
(a) the way in which the amount was calculated; and
(b) the conditions applying to the payment of the amount; and
(c) any other relevant matters.
8 After subsection 160AQYA(1)
Insert:
(1A) A taxpayer is not entitled to a rebate of tax under subsection (1) if:
(a) the trust amount was paid:
(i) in respect of an interest in the trust or partnership that was acquired, or was acquired for a period that was extended, at or after the commencing time; or
(ii) under a finance arrangement (including an arrangement extending an earlier arrangement) entered into at or after the commencing time; and
(b) the payment may reasonably be regarded as equivalent to the payment of interest on a loan.
(1B) In subsection (1A):
"commencing time" means 7.30 pm by legal time in the Australian Capital Territory on 13 May 1997.
"paid" : a trust amount is taken to have been paid to a taxpayer if it is included in the taxpayer's assessable income.
(1C) In determining whether the payment of the trust amount may reasonably be regarded as equivalent to the payment of interest on a loan, regard is to be had to:
(a) the way in which the amount was calculated; and
(b) the conditions applying to the payment of the amount; and
(c) any other relevant matters.
9 At the end of section 160AQYA
Add:
(5) A taxpayer is not entitled to a rebate of tax under subsection (1) if:
(a) the partnership amount was paid:
(i) in respect of an interest in the trust or partnership that was acquired, or was acquired for a period that was extended, at or after the commencing time; or
(ii) under a finance arrangement (including an arrangement extending an earlier arrangement) entered into at or after the commencing time; and
(b) the payment may reasonably be regarded as equivalent to the payment of interest on a loan.
(6) In subsection (5):
"commencing time" means 7.30 pm by legal time in the Australian Capital Territory on 13 May 1997.
"paid" : a partnership amount is taken to have been paid to a taxpayer if it is included in, or is allowed as a deduction from, the taxpayer's assessable income.
(7) In determining whether the payment of the partnership amount may reasonably be regarded as equivalent to the payment of interest on a loan, regard is to be had to:
(a) the way in which the amount was calculated; and
(b) the conditions applying to the payment of the amount; and
(c) any other relevant matters.
10 At the end of section 160AQZ
Add:
(4) A taxpayer is not entitled to a rebate of tax under subsection (1) if:
(a) the partnership amount was paid:
(i) in respect of an interest in the trust or partnership that was acquired, or was acquired for a period that was extended, at or after the commencing time; or
(ii) under a finance arrangement (including an arrangement extending an earlier arrangement) entered into at or after the commencing time; and
(b) the payment may reasonably be regarded as equivalent to the payment of interest on a loan.
(5) In subsection (4):
"commencing time" means 7.30 pm by legal time in the Australian Capital Territory on 13 May 1997.
"paid" : a partnership amount is taken to have been paid to a taxpayer if it is included in, or is allowed as a deduction from, the taxpayer's assessable income.
(6) In determining whether the payment of the partnership amount may reasonably be regarded as equivalent to the payment of interest on a loan, regard is to be had to:
(a) the way in which the amount was calculated; and
(b) the conditions applying to the payment of the amount; and
(c) any other relevant matters.
11 At the end of section 160AQZA
Add:
(6) A taxpayer is not entitled to a rebate of tax under subsection (1) if:
(a) the trust amount or partnership amount was paid:
(i) in respect of an interest in the trust or partnership that was acquired, or was acquired for a period that was extended, at or after the commencing time; or
(ii) under a finance arrangement (including an arrangement extending an earlier arrangement) entered into at or after the commencing time; and
(b) the payment may reasonably be regarded as equivalent to the payment of interest on a loan.
(7) In subsection (6):
"commencing time" means 7.30 pm by legal time in the Australian Capital Territory on 13 May 1997.
"paid" : a trust amount or partnership amount is taken to have been paid to a taxpayer if it is included in, or is allowed as a deduction from, the taxpayer's assessable income.
(8) In determining whether the payment of the trust amount or partnership amount may reasonably be regarded as equivalent to the payment of interest on a loan, regard is to be had to:
(a) the way in which the amount was calculated; and
(b) the conditions applying to the payment of the amount; and
(c) any other relevant matters.
12 After section 160ARAB
Insert:
160ARAC Adjustment where rebate not allowed in respect of trust amount or partnership amount
(1) If:
(a) a trust amount is included in a taxpayer's assessable income of a year of income; and
(b) the taxpayer is not entitled to a rebate of tax in respect of the trust amount because of subsection 160APQ(6), 160AQX(4), 160AQY(5), 160AQYA(1A) or 160AQZA(6); and
(c) no deduction has been allowed, or is allowable, from the trustee's assessable income of any year of income under section 160AR or 160ARAB;
an amount equal to the class A potential rebate amount, the class B potential rebate amount, or the class C potential rebate amount, that arises in relation to the trust amount is allowable as a deduction from the trustee's assessable income of the year of income.
(2) If:
(a) a partnership amount is included in a taxpayer's assessable income of a year of income; and
(b) the taxpayer is not entitled to a rebate of tax in respect of the partnership amount because of subsection 160APQ(6), 160AQYA(5), 160AQZ(4) or 160AQZA(6); and
(c) no deduction has been allowed, or is allowable, from the partnership's assessable income of any year of income under section 160AR or 160ARAB;
an amount equal to the class A potential rebate amount, the class B potential rebate amount, or the class C potential rebate amount, that arises in relation to the partnership amount is allowable as a deduction from the partnership's assessable income of the year of income.