Commonwealth Consolidated Acts Commonwealth Consolidated Acts
Income Tax Assessment Act 1936
1 Section 160AFE
Repeal the section, substitute:
160AFE Carrying forward excess foreign tax credits
(1) This section operates if the amount (the current foreign tax amount ) worked out under paragraph 160AF(1)(c) for a taxpayer for a year of income (the current year ) falls short of the amount worked out under paragraph 160AF(1)(d) for the taxpayer for the current year.
(2) The taxpayer's excess foreign tax credits from earlier years of income (see subsection ( 4)) are applied in accordance with subsection ( 3) to increase the current foreign tax amount.
(3) Apply those credits according to the following rules:
(a) only apply credits from the most recent 5 years of income ending before the current year;
(b) apply credits from an earlier year of income before applying credits for a later year of income;
(c) do not apply credits beyond the extent of the shortfall mentioned in subsection ( 1);
(d) do not apply credits to the extent that the credits have already been applied under a previous operation of this section.
(4) The taxpayer has excess foreign tax credits from an earlier year of income (the earlier year ) if the amount worked out under paragraph 160AF(1)(c) for the taxpayer for the earlier year exceeds the amount worked out under paragraph 160AF(1)(d) for the taxpayer for the earlier year. The amount of the credits equals the excess.
(5) This section operates separately in relation to each class of foreign income identified in subsection 160AF(7), as if the taxpayer's foreign income of that class for a year of income were the whole of the taxpayer's foreign income for that year.
2 Basic rule about application of section 160AFE
(1) Section 160AFE of the Income Tax Assessment Act 1936 as amended by this Schedule applies in relation to a taxpayer for each of its:
(a) income years starting after 30 June 2003; and
(b) non - membership periods (if any) under section 701 - 30 of the Income Tax Assessment Act 1997 starting after 30 June 2003.
(2) This item does not apply in relation to a taxpayer to which item 3 applies.
Note: If you have a substituted accounting period, item 5 or 7 may apply instead of this item.
3 Different application for members of certain groups
(1) This item applies to a taxpayer if:
(a) the taxpayer becomes a member of a consolidated group or MEC group on the day (the consolidation day ) the group comes into existence; and
(b) the consolidation day either is before 1 July 2003 or is both:
(i) the first day of the first income year starting after 30 June 2003 of the group's head company (for a consolidated group) or provisional head company (for a MEC group) on the consolidation day; and
(ii) before 1 July 2004; and
(c) the taxpayer was not a member of a consolidated group or MEC group before the consolidation day.
(2) Section 160AFE of the Income Tax Assessment Act 1936 as amended by this Schedule applies in relation to the taxpayer for each of its:
(a) income years starting on or after the consolidation day; and
(b) non - membership periods (if any) under section 701 - 30 of the Income Tax Assessment Act 1997 starting on or after the consolidation day.
Note: If you become the head company of a consolidated group on or after 1 July 2002 and before 1 July 2003 on a day that is not the start of your income year, item 6 will apply instead of this item.
4 Transitional provision for section 160AFE
For the purposes of paragraph 160AFE(3)(d) of the Income Tax Assessment Act 1936 as in force immediately after the commencement of this Schedule, take account of an amount utilised or applied under section 160AFE of that Act as in force either before or after that commencement for a year of income ending before or after that commencement.
5 Modification of basic rule
(1) This item applies to a taxpayer instead of item 2 if the taxpayer:
(a) has a substituted accounting period; and
(b) is not a member of a consolidated group or a MEC group.
(2) Section 160AFE of the Income Tax Assessment Act 1936 as amended by this Schedule applies to the taxpayer from 1 July 2003. That section applies from 1 July 2003 until the start of the taxpayer's next income year as if that period were an income year.
(3) Section 160AFE of the Income Tax Assessment Act 1936 as in force just before the commencement of this Schedule (the old section 160AFE ) applies to the taxpayer from the start of the taxpayer's income year in which 1 July 2003 occurs until the end of 30 June 2003 as if that period were an income year.
6 Consolidation day on or after 1 July 2002 and before 1 July 2003
(1) This item applies to a taxpayer instead of item 3 if:
(a) the taxpayer becomes the head company of a consolidated group or MEC group on the day (also the consolidation day ) the group comes into existence; and
(b) the consolidation day is on or after 1 July 2002 and before 1 July 2003 and is not the start of an income year (whether or not the taxpayer has a substituted accounting period).
(2) Section 160AFE of the Income Tax Assessment Act 1936 as amended by this Schedule applies to the taxpayer from the consolidation day. That section applies from the consolidation day until the end of the taxpayer's income year in which that day occurs as if that period were an income year.
(3) If:
(a) the consolidation day is after 1 July 2002; and
(b) the taxpayer does not have a substituted accounting period;
the old section 160AFE applies to the taxpayer from 1 July 2002 until just before the consolidation day. If the taxpayer so chooses, it applies as if that period were an income year.
(4) If the taxpayer has a substituted accounting period, the old section 160AFE applies to the taxpayer from the start of the taxpayer's income year in which the consolidation day occurred until just before the consolidation day. If the taxpayer so chooses, it applies as if that period were an income year.
7 Consolidation day on or after 1 July 2003
(1) This item applies to a taxpayer instead of item 2 if:
(a) the taxpayer has a substituted accounting period; and
(b) the taxpayer becomes the head company of a consolidated group or MEC group on the day (also the consolidation day ) the group comes into existence; and
(c) the consolidation day is on or after 1 July 2003 and is not the start of the taxpayer's next income year.
(2) Section 160AFE of the Income Tax Assessment Act 1936 as amended by this Schedule applies to the taxpayer from 1 July 2003. That section applies from 1 July 2003 until the start of the taxpayer's next income year as if that period were an income year.
(3) The old section 160AFE applies to the taxpayer from the start of the taxpayer's income year in which 1 July 2003 occurs until the end of 30 June 2003. If the taxpayer so chooses, it applies as if that period were an income year.
8 Applying old section 160AFE to part years
(1) Subitem ( 2) has effect for the purposes of applying the old section 160AFE:
(a) to a taxpayer as mentioned in item 5, 6 or 7; and
(b) for a period that is shorter than an income year.
(2) The requirement in paragraph ( 1D)(b) of that section that the income company be a group company in relation to the credit company in relation to the current year of income has effect as if it were a requirement that the income company be a group company in relation to the credit company:
(a) continuously for a period of at least 12 months ending on the day before the day on which section 160AFE of the Income Tax Assessment Act 1936 as amended by this Schedule starts to apply to the taxpayer; or
(b) from the time when the income company and the credit company were both in existence, if that period is shorter.
9 Applying old section 160AFE to non - membership periods
(1) Subitem ( 2) has effect for the purposes of applying the old section 160AFE to a taxpayer that:
(a) becomes a subsidiary member of a consolidated group or MEC group; and
(b) has a period referred to in section 701 - 30 as a non - membership period.
(2) The requirement in paragraph ( 1D)(b) of the old section 160AFE that the income company be a group company in relation to the credit company in relation to the current year of income has effect as if it were a requirement that the income company be a group company in relation to the credit company:
(a) continuously for a period of at least 12 months ending on the last day of the non - membership period; or
(b) from the time when the income company and the credit company were both in existence, if that period is shorter.
10 Parts of income years not earlier income years
Any period that is shorter than an income year and that is treated as if it were an income year for the purposes of item 5, 6 or 7 of this Schedule is taken not to be an earlier income year for the purposes of section 160AFE of the Income Tax Assessment Act 1936 as amended by this Schedule.
11 Transitional provision for section 160AF
(1) This item applies if:
(a) because of item 5, 6 or 7, old section 160AFE applies to a taxpayer as if a period were an income year (the notional income year ); and
(b) the taxpayer has an initial excess credit (within the meaning of old section 160AFE) in relation to the notional income year; and
(c) the taxpayer transfers all or part (the extent of the transfer being the transfer amount ) of that initial excess credit under old section 160AFE for utilisation by another company in the notional income year.
(2) Section 160AF of the Income Tax Assessment Act 1936 applies to the taxpayer for the year of income in which the notional income year ends as if the amount of foreign tax paid by the taxpayer mentioned in paragraph 160AF(1)(b) of that Act were reduced by the transfer amount.
(3) This item operates separately in relation to each class of foreign income identified in subsection 160AF(7) of the Income Tax Assessment Act 1936 , as if the taxpayer's foreign income of that class for a year of income were the whole of the taxpayer's foreign income for that year.