Commonwealth Consolidated Acts Commonwealth Consolidated Acts
Taxation Administration Act 1953
1 Subsection 8AAB(5) (after table item 17G)
Insert:
17H | 45 - 600 and 45 - 620 in Schedule 1 |
2 Section 45 - 5 in Schedule 1
Repeal the section, substitute:
(1) The object of this Part is to ensure the efficient collection of:
(a) income tax; and
(b) Medicare levy; and
(c) amounts of liabilities to the Commonwealth under Chapter 5A of the Higher Education Funding Act 1988 ; and
(d) amounts of liabilities to the Commonwealth under Part 2B.3 of the Social Security Act 1991 ; and
(e) amounts of liabilities to the Commonwealth under Division 6 of Part 4A of the Student Assistance Act 1973 ;
through the application of the principles set out in the rest of this section.
(2) As you earn * instalment income, you pay instalments after the end of each * instalment quarter worked out on the basis of your instalment income for that quarter. (There are limited exceptions to this).
(3) The total of your instalments for an income year is as close as possible to the total of your liabilities for the income year that are covered by subsection ( 1), except so far as the amounts of those liabilities are attributable to a * net capital gain. (The exception does not apply to the entities listed in subsections 45 - 120(2) and (2A).)
(4) Consequently, the additional amounts you have to pay to discharge those liabilities, after an assessment of your income tax for the income year is made, are as low as possible.
(5) The amount of each of your instalments for an income year is the same proportion (as nearly as possible, subject to the principles in subsections ( 3) and (4)) of the total of those instalments as your * instalment income for that * instalment quarter is of your total instalment income for the income year.
(6) When instalments are payable, and how their amount is calculated, are the same for different kinds of entities, except as expressly provided.
Note: Subdivision 45 - P penalises an entity whose tax position, so far as it relates to PAYG instalments and related matters, is altered by a scheme that is inconsistent with the object of this Part.
3 At the end of Division 45 in Schedule 1
Add:
Subdivision 45 - P -- Anti - avoidance rules
Table of sections
45 - 595 Object of this Subdivision
45 - 600 General interest charge on tax benefit relating to instalments
45 - 605 When do you get a tax benefit from a scheme?
45 - 610 What is your tax position for an income year?
45 - 615 What is your hypothetical tax position for an income year?
45 - 620 Amount on which GIC is payable, and period for which it is payable
45 - 625 Credit if you also got a tax detriment from the scheme
45 - 630 When do you get a tax detriment from a scheme?
45 - 635 No tax benefit or detriment results from choice for which income tax law expressly provides
45 - 640 Commissioner may remit general interest charge in special cases
45 - 595 Object of this Subdivision
(1) The object of this Subdivision is to penalise an entity whose * tax position, so far as it relates to * PAYG instalments (and related credits and * general interest charge), is altered by a * scheme that is inconsistent with:
(a) the purposes and objects of this Part ; or
(b) the purposes and objects of any relevant provisions of this Part;
(whether those purposes and objects are stated expressly or not).
(2) This Subdivision is not intended to apply to a straightforward use of structural features of this Part if that use is consistent with the purposes and objects mentioned in subsection ( 1).
(3) This Subdivision is to be interpreted and applied accordingly.
45 - 600 General interest charge on tax benefit relating to instalments
(1) You are liable to pay the * general interest charge under section 45 - 620 if:
(a) you get a * tax benefit from a * scheme; and
(b) the tax benefit relates to a * component of your * tax position for an income year, and that component is covered by section 45 - 610; and
(c) having regard to the matters referred to in subsection ( 3), it would be concluded that an entity that entered into or carried out the scheme (or part of it) did so for the sole or dominant purpose of:
(i) an entity (whether you, that entity or another entity) getting one or more tax benefits from the scheme; or
(ii) 2 or more entities (whether or not including you or that entity) each getting one or more tax benefits from the scheme.
(2) It does not matter:
(a) whether or not you entered into or carried out the * scheme (or part of it); or
(b) whether the entity that entered into or carried out the scheme (or part of it) did so alone or together with one or more others; or
(c) whether the scheme (or any part of it) was entered into or carried out inside or outside Australia; or
(d) whether or not the * tax benefit you got is of the same kind as a tax benefit mentioned in paragraph ( 1)(c).
Matters to be considered in determining purpose of scheme
(3) In considering an entity's purpose in entering into or carrying out a * scheme (or part of one), have regard to these matters:
(a) the manner in which the scheme or part was entered into or carried out;
(b) the form and substance of the scheme, including:
(i) the legal rights and obligations involved in the scheme; and
(ii) the economic and commercial substance of the scheme;
(c) the purposes and objects of this Part and of any relevant provisions of this Part (whether those purposes and objects are stated expressly or not);
(d) the timing of the scheme;
(e) the period over which the scheme was entered into and carried out;
(f) the effect that this Act would have in relation to the scheme apart from this Subdivision;
(g) any change in your financial position that has resulted from the scheme, or may reasonably be expected to result from it;
(h) any change that has resulted from the scheme, or may reasonably be expected to result from it, in the financial position of an entity that has or had a connection or dealing with you, whether the connection or dealing is or was of a family, business or other nature;
(i) any other consequence for you, or for such an entity, of the scheme having been entered into or carried out;
(j) the nature of the connection between you and such an entity, including the question whether the dealing is or was at * arm's length.
GIC is payable on each of 2 or more tax benefits
(4) If you get 2 or more * tax benefits from the * scheme, this section has a separate application to each of them.
45 - 605 When do you get a tax benefit from a scheme?
(1) This section describes how to work out whether you get a tax benefit from a * scheme and, if so, the amount of the tax benefit.
(2) First, determine your actual * tax position for an income year (apart from this Subdivision).
(3) Next, determine your * hypothetical tax position for the same income year (apart from this Subdivision).
(4) Then compare each * component of the 2 positions. If the amount of that component of the actual * tax position is lower than the amount of that component of the * hypothetical tax position, the difference between the 2 amounts is a tax benefit that you get from the * scheme.
Note 1: The difference between the 2 amounts is not a tax benefit to the extent that it is attributable to certain things for which the income tax law expressly provides. See section 45 - 635.
Note 2: An entity may get 2 or more tax benefits from the same scheme. One reason is that the scheme may affect 2 or more components of the entity's tax position for an income year. Another reason is that the scheme may affect the tax position for 2 or more income years.
45 - 610 What is your tax position for an income year?
Your tax position for an income year consists of a number of components . The table sets out each component, and how to work out the amount of the component.
Components of your tax position that relate to PAYG instalments and credits | ||
Item | Each of these is a component : | The amount of that component is: |
1 | Your instalment for each * instalment quarter in the income year is a quarterly instalment component . | The amount worked out as follows: (a) if you are liable to pay an instalment for that instalment quarter--the amount of the instalment; or (b) if for any reason you are not liable to pay an instalment for that instalment quarter--nil (even if you are an * annual payer); or (c) if you are entitled to claim a credit for that instalment quarter under section 45 - 420 (because the instalment for that quarter is to be worked out on the basis of your estimated benchmark tax)--the amount of the credit (expressed as a negative amount). |
2 | Your annual instalment for the income year is the annual instalment component . | The amount worked out as follows: (a) if you are liable to pay an annual instalment for the income year--the amount of the instalment; or (b) if for any reason you are not liable to pay an annual instalment for the income year--nil (even if you are a * quarterly payer). |
3 | A variation credit component is a credit arising under section 45 - 215 because the amount of your instalment for an * instalment quarter in the income year is to be worked out using an instalment rate you chose under section 45 - 205. | The amount worked out as follows: (a) if you are entitled to the credit--the amount of the credit (expressed as a negative amount); or (b) otherwise--nil. |
4 | A variation GIC component is the * general interest charge you are liable to pay under: (a) subsection 45 - 230(2) (varied instalment rate); or (b) subsection 45 - 232(2) (estimated benchmark tax); or (c) subsection 45 - 235(2) or (3) (annual instalment); because of how your instalment for an * instalment quarter in the income year, or for the income year, was worked out. | The amount worked out as follows: (a) if you are liable to pay the charge--the amount of the charge; or (b) otherwise--nil. |
Example: A scheme results in X Pty Ltd being able to choose to be an annual payer for the 2000 - 01 income year.
The following table shows the actual tax position of X Pty Ltd for that year, and also its hypothetical tax position as defined in section 45 - 615. X Pty Ltd has got 4 tax benefits from the scheme: one for each of the 4 instalment quarters.
2000 - 01 income year | ||
For this component: | The amount of that component of the actual tax position is: | The amount of that component of the hypothetical tax position is: |
Quarterly instalment component for first instalment quarter | nil | $3,000 |
Quarterly instalment component for second instalment quarter | nil | $4,000 |
Quarterly instalment component for third instalment quarter | nil | $3,000 |
Quarterly instalment component for fourth instalment quarter | nil | $2,000 |
Annual instalment component | $12,000 | nil |
45 - 615 What is your hypothetical tax position for an income year?
Your hypothetical tax position for an income year is what would have been, or what could reasonably be expected to have been, your * tax position for the income year if the * scheme had not been entered into or carried out.
45 - 620 Amount on which GIC is payable, and period for which it is payable
(1) You are liable to pay the * general interest charge on twice the * tax benefit mentioned in paragraph 45 - 600(1)(a).
Note 1: To the extent that you also got a tax detriment from the scheme, you get a credit: see section 45 - 625.
Note 2: In special circumstances the Commissioner can remit some or all of the general interest charge: see section 45 - 640.
(2) You are liable to pay the charge for each day in the period that:
(a) started at the beginning of the day by which your instalment for the period mentioned in the applicable item of the table in section 45 - 610 was due to be paid, or would have been due to be paid if you had been liable to pay an instalment for that period; and
(b) finishes at the end of the day on which your assessed tax for the income year is due to be paid.
(3) The Commissioner must give you written notice of the * general interest charge to which you are liable under subsection ( 1). You must pay the charge within 14 days after the notice is given to you.
(4) If any of the * general interest charge to which you are liable under subsection ( 1) remains unpaid at the end of the 14 days referred to in subsection ( 3), you are also liable to pay the general interest charge on the unpaid amount for each day in the period that:
(a) starts at the end of those 14 days; and
(b) finishes at the end of the last day on which, at the end of the day, any of the following remains unpaid:
(i) the unpaid amount;
(ii) general interest charge on the unpaid amount.
45 - 625 Credit if you also got a tax detriment from the scheme
(1) You are entitled to a credit if:
(a) you are liable to pay * general interest charge under section 45 - 620 because you got one or more * tax benefits from the * scheme; and
(b) the Commissioner is satisfied that:
(i) you got a * tax detriment from the scheme; and
(ii) the tax detriment relates to a * component of your * tax position for an income year, and that component is covered by section 45 - 610.
(It does not matter whether that income year is the same as the one referred to in section 45 - 600.)
Note: How the credit is applied is set out in Division 3 of Part IIB.
(2) The credit is equal to the * general interest charge on twice the amount of the * tax detriment for each day in the period that:
(a) started at the beginning of the day by which your instalment for the period mentioned in the item of the table in section 45 - 610 that applies for the purposes of working out the amount of the tax detriment:
(i) was due to be paid; or
(ii) would have been due to be paid if you had been liable to pay an instalment for that period; and
(b) finishes at the end of the day on which your assessed tax for the income year is due to be paid.
(3) However, the credit cannot exceed the total * general interest charge you are liable to pay under section 45 - 620 because you got one or more * tax benefits from the * scheme.
Credit for each of 2 or more tax detriments
(4) If you get 2 or more * tax detriments from the scheme, subsections ( 1) and (2) have a separate application to each of them. However, the total of the credits cannot exceed the total * general interest charge referred to in subsection ( 3).
45 - 630 When do you get a tax detriment from a scheme?
(1) This section describes how to work out whether you get a tax detriment from a * scheme and, if so, the amount of the tax detriment.
(2) First, determine your actual * tax position for an income year (apart from this Subdivision).
(3) Next, determine your * hypothetical tax position for the same income year (apart from this Subdivision).
(4) Then compare each * component of the 2 positions. If the amount of that component of the actual * tax position is higher than the amount of that component of the * hypothetical tax position, the difference between the 2 amounts is a tax detriment that you get from the * scheme.
Example: In the fact situation in the example in section 45 - 610, X Pty Ltd gets a tax detriment from the scheme for the annual instalment component of its tax position for the income year.
Note 1: The difference between the 2 amounts is not a tax detriment to the extent that it is attributable to certain things for which the income law expressly provides. See section 45 - 635.
Note 2: An entity may get 2 or more tax detriments from the same scheme. One reason is that the scheme may affect 2 or more components of the entity's tax position for an income year. Another reason is that the scheme may affect the tax position for 2 or more income years.
45 - 635 No tax benefit or detriment results from choice for which income tax law expressly provides
Choice under the income tax law generally
(1) The difference between the 2 amounts referred to in subsection 45 - 605(4) or 45 - 630(4) is not a * tax benefit or * tax detriment if there would have been no difference between the 2 amounts but for one or more matters covered by subsection ( 3).
(2) The difference between the 2 amounts is not a * tax benefit or * tax detriment to the extent that the difference between the 2 amounts would have been less but for one or more matters covered by subsection ( 3).
(3) This subsection covers:
(a) an entity making an agreement, choice, declaration, election or selection; or
(b) an entity giving a notice or exercising an option;
for which this Act expressly provides. However, this subsection does not cover an entity doing such a thing under:
(c) Subdivision 126 - B (about CGT roll - overs involving companies in the same wholly - owned group) of the Income Tax Assessment Act 1997 ; or
(d) Subdivision 170 - B of that Act (about transferring a net capital loss between companies in the same wholly - owned group).
Matters excluded in applying subsection ( 1) or (2)
(4) Subsection ( 1) or (2) does not apply to a matter covered by subsection ( 3) if an entity entered into or carried out the * scheme (or part of it) for the sole or dominant purpose of creating a circumstance or state of affairs whose existence is necessary for the entity referred to in subsection ( 3):
(a) to make the agreement, choice, declaration, election or selection; or
(b) to give the notice or exercise the option.
Choice under some CGT provisions
(5) The difference between the 2 amounts is not a * tax benefit or * tax detriment if:
(a) there would have been no difference between the 2 amounts but for one or more matters covered by subsection ( 7); and
(b) the * scheme consisted wholly of that matter or those matters.
(6) Also, the difference between the 2 amounts is not a * tax benefit or * tax detriment to the extent that the difference between the 2 amounts would have been less but for one or more matters covered by subsection ( 7), but only if the * scheme consisted wholly of that matter or those matters.
(7) This subsection covers:
(a) a choice made under Subdivision 126 - B (about CGT roll - overs involving companies in the same wholly - owned group) of the Income Tax Assessment Act 1997 ; or
(b) an agreement made under Subdivision 170 - B of that Act (about transferring a net capital loss between companies in the same wholly - owned group);
45 - 640 Commissioner may remit general interest charge in special cases
(1) The Commissioner may, if he or she is satisfied that because special circumstances exist it would be fair and reasonable to do so, remit the whole or any part of any * general interest charge payable under section 45 - 620.
(2) If the Commissioner does so, section 45 - 625 (about credits for tax detriments from schemes) applies, and is taken always to have applied, as if the remitted amount had never been payable.