Commonwealth Consolidated Acts

TAX LAWS AMENDMENT (2007 MEASURES NO. 5) ACT 2007 - SCHEDULE 3

Income Tax Assessment Act 1997

1   At the end of section   820 - 585

Add:

  (3)   Subsection   (1) does not apply if, at each time in the period mentioned in subsection   (2), all the * ADIs that are * members of the group then are * specialist credit card institutions.

2   After section   820 - 587

Insert:

820 - 588   Choice to treat specialist credit card institutions as being financial entities and not ADIs

  (1)   If the conditions in subsection   (2) are met in relation to a * consolidated group or * MEC group and a period that is all or part of an income year, this Division (except this section) has effect as if:

  (a)   none of the * members of the group were an * ADI at any time in the period; and

  (b)   each member of the group that is an ADI (ignoring paragraph   (a)) at any time in the period were a financial entity at that time.

Note 1:   One result of this Division having effect in that way is that Subdivision   820 - D (and related provisions, such as section   820 - 589) will not apply in relation to the head company, because:

(a)   the head company of the group will not be classified under section   820 - 583 as an outward investing entity (ADI); and

(b)   section   820 - 587 will not apply that Subdivision.

Note 2:   Another result of this Division having effect in that way is that Subdivision   820 - B or 820 - C may apply in relation to the head company, because it may be classified under section   820 - 583 as either:

(a)   an outward investing entity (non - ADI) and an outward investor (financial); or

(b)   an inward investing entity (non - ADI) and an inward investment vehicle (financial).

  (2)   The conditions are that:

  (a)   at all times in the period at least one * member of the * consolidated group or * MEC group is an * ADI; and

  (b)   each ADI that is a member of the group at any time in the period is a * specialist credit card institution at that time; and

  (c)   the * head company of the group for the period chooses, before lodging its * income tax return for the income year, that this Division should have effect in that way in relation to the group and every period for which the conditions in paragraphs   (a) and (b) are met in the income year.

  (3)   An * ADI is a specialist credit card institution at a time if, at that time, the ADI's authority under section   9 of the Banking Act 1959 to carry on banking business (as defined in that Act) authorises the ADI to carry on only banking business that:

  (a)   is participation in a payment system (as defined in the Payment Systems (Regulation) Act 1998 ) that is a credit card scheme and is designated under section   11 of that Act; and

  (b)   is either or both of the following:

  (i)   credit card acquiring (as defined in regulations made for the purposes of the Banking Act 1959 );

  (ii)   credit card issuing (as defined in those regulations).

  (4)   To avoid doubt, a choice for the purposes of paragraph   (2)(c) cannot be revoked.

3   Paragraph 820 - 609(2)(a)

Repeal the paragraph, substitute:

  (a)   section   820 - 585 would prevent the disallowance of a * debt deduction for the income year including the trial period; or

4   At the end of subsection 820 - 609(7)

Add "and section   820 - 610".

5   After section   820 - 609

Insert:

820 - 610   Choice not to be outward investing entity (ADI) or inward investing entity (ADI)

  (1)   This section applies if:

  (a)   apart from this section, the * head company or single company would, under section   820 - 609, be an * outward investing entity (ADI) or an * inward investing entity (ADI) for the trial period; and

  (b)   at all times in the trial period, each of the following entities that is an * ADI is a * specialist credit card institution:

  (i)   the head company or single company;

  (ii)   an establishment entity whose * Australian permanent establishments the head company or single company has chosen under section   820 - 597 or 820 - 599 to have treated as part of the company for the period.

  (2)   The * head company or single company is an outward investing entity (non - ADI) and an outward investor (financial) for the trial period if:

  (a)   apart from this section, the company would, under section   820 - 609, be an * outward investing entity (ADI) for the trial period; and

  (b)   the company chooses, before lodging its * income tax return for the income year including the trial period, to be an outward investing entity (non - ADI) and an outward investor (financial) for that period.

  (3)   The * head company or single company is an inward investing entity (non - ADI) and an inward investment vehicle (financial) for the trial period if:

  (a)   apart from this section, the company would, under section   820 - 609, be an * inward investing entity (ADI) for the trial period; and

  (b)   the company chooses, before lodging its * income tax return for the income year including the trial period, to be an inward investing entity (non - ADI) and an inward investment vehicle (financial) for that period.

  (4)   This section has effect despite sections   820 - 85, 820 - 185 and 820 - 609.

6   Subsection 995 - 1(1) (definition of inward investing entity (non - ADI) )

Omit "and 820 - 609", substitute ", 820 - 609 and 820 - 610".

7   Subsection 995 - 1(1) (definition of inward investment vehicle (financial) )

Omit "and 820 - 609", substitute ", 820 - 609 and 820 - 610".

8   Subsection 995 - 1(1) (definition of outward investing entity (non - ADI) )

Omit "and 820 - 609", substitute ", 820 - 609 and 820 - 610".

9   Subsection 995 - 1(1) (definition of outward investor (financial) )

Omit "and 820 - 609", substitute ", 820 - 609 and 820 - 610".

10   Subsection 995 - 1(1)

Insert:

"specialist credit card institution" has the meaning given by section   820 - 588.

11   Application

The amendments made by this Schedule apply to income years starting on or after 1   January 2004.