Commonwealth Consolidated Acts

TAXATION LAWS AMENDMENT ACT (NO. 1) 1998 - SCHEDULE 10

Part 1 -- Amendment of the Income Tax Assessment Act 1997

1   Section 10 - 5 (table item headed "balancing adjustment")

After " scientific research ", insert " , tax exempt entities ".

2   Section 10 - 5 (table item headed "shares")

After:

insert:

3   Section 10 - 5 (after the table item headed "shipping")

Insert:

4   Section 10 - 5 (after the table item headed "tax avoidance")

Insert:

5   Section 10 - 5 (at the end of the table item headed "trading stock")

Add "and tax exempt entities ".

6   Section 11 - 5 (before the table)

Insert:

Note:   Special rules apply to entities that cease to be exempt. See Schedule 2D to the Income Tax Assessment Act 1936 .

7   Section 12 - 5 (table item headed "shares")

After:

insert:

8   Section 12 - 5 (after the table item headed "shares")

Insert:

9   Section 12 - 5 (after the table item headed "tax avoidance schemes")

Insert:

10   Section 13 - 1 (table item headed "low income earner")

Repeal the item, substitute:

11   Section 13 - 1 (table item headed "trustee")

After " dividends ", insert " , low income earner ".

12   Section 42 - 65 (table item 9, 3rd column)

After "(21)", insert ", (21A)".

13   Section 42 - 65

At the end of the table, add:

14   Section 42 - 205

At the end of the table, add:

15   Paragraph 166 - 265(1)(c)

Repeal the paragraph, substitute:

  (c)   at all times during the income year of the listed public company in which the ownership test time occurs:

  (i)   the superannuation fund is a * complying superannuation fund or a * foreign superannuation fund; or

  (ii)   the approved deposit fund is a * complying approved deposit fund; or

  (iii)   the special company is a special company.

16   Paragraph 166 - 270(1)(c)

Repeal the paragraph, substitute:

  (c)   at all times during the income year of the listed public company in which the ownership test time occurs:

  (i)   the superannuation fund is a * complying superannuation fund or a * foreign superannuation fund; or

  (ii)   the approved deposit fund is a * complying approved deposit fund; or

  (iii)   the special company is a special company.

17   Section 960 - 220

Repeal the section, substitute:

960 - 220   Meaning of trading

Shares in a listed public company

  (1)   There is a trading in * shares in a * listed public company if there is an issue, redemption or transfer of those shares, or any other dealing in those shares, but only if it changes the respective proportions in which all the registered holders of shares in the company:

  (a)   can exercise the voting power in the company; or

  (b)   have the right to receive, as registered holders (whether or not for their own benefit) any dividends that the company may pay; or

  (c)   have the right to receive, as registered holders (whether or not for their own benefit) any distribution of capital of the company.

Units in a unit trust

  (2)   There is a trading in units in a unit trust if there is an issue, redemption or transfer of those units, or any other dealing in those units, but only if it changes the respective proportions in which all the registered holders of units in the trust hold (whether beneficially or not) interests in the trust income or trust capital.

18   Subsection 995 - 1(1)

Insert:

"foreign superannuation fund" has the meaning given by subsections 6(1), (7) and (7A) of the Income Tax Assessment Act 1936 .

19   Application

The amendments made by this Part apply to assessments for the 1997 - 98 income year and later income years.

Part 2 -- Amendment of the Income Tax Assessment Act 1936

20   Subsection 73B(4J)

Omit "section 54A", substitute "Subdivision 42 - C of the Income Tax Assessment Act 1997 ".

21   Paragraph 73B(4J)(a)

Omit "this Act", substitute "that Act".

22   Paragraph 73B(4J)(b)

Omit "that section to the use of a unit of property for assessable income producing purposes", substitute "Division 42 of that Act to the use of plant for the purpose of producing assessable income".

23   Subsection 128TG(2)

Omit "25 or 51", substitute "6 - 5 or 8 - 1 of the Income Tax Assessment Act 1997 ".

24   Subparagraph 128TH(d)(i)

Omit "25", substitute "6 - 5 of the Income Tax Assessment Act 1997 ".

25   Subparagraph 128TH(d)(ii)

Omit "51", substitute "8 - 1 of that Act".

26   Paragraph 128TI(a)

Omit "25", substitute "6 - 5 of the Income Tax Assessment Act 1997 ".

27   Paragraph 128TI(b)

Omit "51", substitute "8 - 1 of that Act".

28   Paragraph 128TI(d)

Omit "25", substitute "6 - 5 of that Act".

29   Paragraph 128TI(d)

Omit "51", substitute "8 - 1 of that Act".

30   Section 128TI (note)

Omit "25 or 51", substitute "6 - 5 or 8 - 1 of that Act".

31   Section 128TI (note)

After "Part IIIA", insert "of this Act".

32   Subsection 245 - 230(4) of Schedule 2C

Repeal the subsection, substitute:

  (4)   In this section:

"deductible revenue loss" of a company does not include an amount of a tax loss transferred to the company by another company if the other company incurred the tax loss in the relevant year of income.

Note:   Subdivision 170 - A of the Income Tax Assessment Act 1997 provides for the transfer of tax losses within wholly - owned groups of companies.

33   Subsection 57 - 10(1) of Schedule 2D (note)

Omit "Division 10 of Part III as modified by Subdivision 57 - J", substitute "Division 330 of the Income Tax Assessment Act 1997 as modified by Subdivision 57 - J of this Schedule".

34   Subsection 57 - 20(1) of Schedule 2D

After "51", insert "of this Act or section 8 - 1 of the Income Tax Assessment Act 1997 , as appropriate".

35   Subsection 57 - 20(2) of Schedule 2D

After "51", insert "of this Act or section 8 - 1 of the Income Tax Assessment Act 1997 , as appropriate".

36   Subsection 57 - 25(4) of Schedule 2D

Repeal the subsection, substitute:

  (4)   For the purposes of subsection (2), the excluded provisions are:

  (a)   sections 53I to 62AAV of this Act (relating to depreciation on trading ships); and

  (b)   Subdivision B of Division 3 of Part III of this Act (about development allowance); and

  (c)   Divisions 10, 10AAA, 10AA and 10AB of Part III (about operations relevant to the mining and quarrying industry); and

  (d)   Division 10A of Part III (about timber operations and timber mill buildings); and

  (e)   Division 10B of Part III of this Act (about industrial property); and

  (f)   Division 10BA of Part III of this Act (about Australian films); and

  (g)   Divisions 10C and 10D (about deductions for capital expenditure on some buildings); and

  (h)   Division 42 of the Income Tax Assessment Act 1997 (about depreciation); and

  (i)   Division 43 of the Income Tax Assessment Act 1997 (about deductions for capital works); and

  (j)   section 70 - 120 of the Income Tax Assessment Act 1997 (about deducting capital costs of acquiring trees); and

  (k)   Division 330 of the Income Tax Assessment Act 1997 (about mining and quarrying); and

  (l)   Subdivision 387 - G of the Income Tax Assessment Act 1997 (about forestry roads and timber mill buildings).

37   Subsection 57 - 25(6) of Schedule 2D

Repeal the subsection, substitute:

  (6)   The provisions are listed in the table below. Provisions of the Income Tax Assessment Act 1997 are identified in normal text. The other provisions, in bold , are provisions of the Income Tax Assessment Act 1936 .

38   Subsection 57 - 30(3) of Schedule 2D

Omit "Division 3B of Part III", substitute "A provision listed in subsection (4)".

39   Subsection 57 - 30(3) of Schedule 2D

Omit "that Division", substitute "Division 3B of Part III".

40   At the end of section 57 - 30 of Schedule 2D

Add:

  (4)   The provisions are listed in the table below. Provisions of the Income Tax Assessment Act 1997 are identified in normal text. The other provisions, in bold , are provisions of the Income Tax Assessment Act 1936 .

41   Subsection 57 - 60(1) of Schedule 2D

After "51(1)", insert "of this Act or section 8 - 1 (about general deductions) of the Income Tax Assessment Act 1997 ".

42   Subsection 57 - 60(1) of Schedule 2D (note)

Repeal the note, substitute:

Note:   Subsection 51(3) of this Act or section 26 - 10 of the Income Tax Assessment Act 1997 (as appropriate) contains additional requirements for certain leave payments to be deductible.

43   Subsection 57 - 70(1) of Schedule 2D

Omit "subsection 51(1) or subsection 78(11)", substitute "section 8 - 1 (about general deductions) or 25 - 50 (about pensions, gratuities or retiring allowances) of the Income Tax Assessment Act 1997 ".

44   Section 57 - 75 of Schedule 2D

Omit "79E, 79F, 80, 80AAA or 80AA", substitute "36 - 15 of the Income Tax Assessment Act 1997 (about how to deduct tax losses)".

45   Paragraph 57 - 75(b) of Schedule 2D

Omit everything before "they are in respect of", substitute "the transition taxpayer's deductions are taken into account only so far as".

46   Section 57 - 85 of Schedule 2D

Repeal the section, substitute:

57 - 85   What are the modified deduction rules and corresponding deduction provisions ?

  (1)   A modified deduction rule is a provision listed in column 3 of an item in the table in subsection (3). Provisions of the Income Tax Assessment Act 1997 are identified in normal text, while provisions of the Income Tax Assessment Act 1936 are in bold .

  (2)   The corresponding deduction provision (if any) for a modified deduction rule listed in column 3 of an item in the table in subsection (3) is the provision of the Income Tax Assessment Act 1936 listed in column 4 of the item.

  (3)   The table is as follows:

47   Section 57 - 90 of Schedule 2D

After "rule" (second occurring), insert "or the corresponding deduction provision".

48   Paragraphs 57 - 100(a) and (b) of Schedule 2D

After "rule", insert "or the corresponding deduction provision (as appropriate)".

49   Subsections 57 - 105(1) and (2) of Schedule 2D

Omit "Division 10 or 10AA of Part III", substitute "Subdivision 330 - A or 330 - C of the Income Tax Assessment Act 1997 ".

50   Subsection 57 - 110(1) of Schedule 2D (definition of actual deductions )

Omit "(3)", substitute "(2)".

51   Subsections 57 - 110(2) and (3) of Schedule 2D

Repeal the subsections, substitute:

  (2)   Each balancing adjustment provision and its related deduction rule are shown in an item of the table. Provisions of the Income Tax Assessment Act 1997 are shown in ordinary text, and provisions of the Income Tax Assessment Act 1936 are shown in bold .

52   Subsection 57 - 115(1) of Schedule 2D

Omit "Subdivision B of Division 2 of Part III", substitute "Division 70 of the Income Tax Assessment Act 1997 ".

53   Subsection 57 - 115(1) of Schedule 2D

Omit "28", substitute "70 - 35 of that Act".

54   Subsection 57 - 115(2) of Schedule 2D (note)

Omit "29", substitute "70 - 40 of the Income Tax Assessment Act 1997 ".

55   Paragraph 57 - 115(3)(a) of Schedule 2D

Omit "price".

56   Subsection 57 - 115(3) of Schedule 2D

Omit "cost price of the trading stock", substitute "cost of the trading stock for the purposes of Division 70 of the Income Tax Assessment Act 1997 ".

57   Application

(1)   The amendments made by items 52 to 56 (inclusive) apply to a transition year that is the 1997 - 98 income year, or a later income year, of the transition taxpayer.

(2)   The other amendments made by this Part apply to assessments for the 1997 - 98 income year and later income years.

Part 3 -- Amendment of the Airports (Transitional) Act 1996

58   Before section 49

Insert:

48A   Definitions

    In this Division:

"exempt Australian government agency" has the meaning given by subsection 995 - 1(1) of the Income Tax Assessment Act 1997 .

"plant" has the meaning given by section 42 - 18 of the Income Tax Assessment Act 1997 .

"quasi-owner" has the meaning given by section 42 - 310 of the Income Tax Assessment Act 1997 .

"quasi-ownership right" over land has the meaning given by subsection 995 - 1(1) of the Income Tax Assessment Act 1997 .

59   After section 49

Insert:

49A   Special depreciation rules for fixtures-- Income Tax Assessment Act 1997

  (1)   This section applies if:

  (a)   a company obtains a lease relating to particular land under section 21, 22 or 23; and

  (b)   at the time the lease was obtained, a unit of plant is attached to the land.

  (2)   If:

  (a)   immediately before the land vested in the Commonwealth under Part 2:

  (i)   the part of the land to which the plant was attached was held by another entity under a quasi - ownership right over land granted by an exempt Australian government agency; and

  (ii)   the other entity was the quasi - owner of the plant under subsection 42 - 310(2) of the Income Tax Assessment Act 1997 ; and

  (b)   on the grant of the lease referred to in paragraph (1)(a), the other entity became a sub - lessee of the company;

then, so long as the other entity continues to hold the sub - lease of that part of the land from the company or a successor, the other entity:

  (c)   is taken to hold a quasi - ownership right over the land granted by an exempt Australian government agency; and

  (d)   is taken to satisfy paragraph 42 - 310(2)(b) of that Act for the plant.

  (3)   If:

  (a)   subsection (2) does not apply to the plant; and

  (b)   the FAC was the owner of the plant for the purposes of Division 42 of the Income Tax Assessment Act 1997 immediately before the land vested in the Commonwealth under Part 2;

that Division applies to the plant as if:

  (c)   the company satisfied paragraph 42 - 310(2)(b) of that Act for the plant; and

  (d)   the company held a quasi - ownership right over the land and that right was assigned to the company; and

  (e)   the amount paid by the company for the grant of the lease were an amount paid for the acquisition of the lease.

Note:   If, as a result, the company is the quasi - owner of the plant, the cost of the plant to it will be determined under item 4 in the table in section 42 - 65 of that Act, unless item 13 or 14 applies.

  (4)   However, the Minister for Finance may make a written determination of the cost of the plant referred to in subsection (3) for the purposes of Division 42 of the Income Tax Assessment Act 1997 .

Note:   If a determination is made, the cost of the plant will be determined under item 13 or 14 in the table in section 42 - 65 of that Act.

  (5)   The FAC must give the Minister for Finance such information as the Minister for Finance requires about the application of Subdivision 42 - F of the Income Tax Assessment Act 1997 to the plant and to the FAC.

  (6)   This section does not affect the operation of section 19 of the Civil Aviation Legislation Amendment Act 1995 .

  (7)   In this section:

"entity" means any of the following:

  (a)   a company;

  (b)   a partnership;

  (c)   a person in a capacity of trustee;

  (d)   any other person.

60   After section 50

Insert:

50A   Acquisition of depreciated plant from the Commonwealth-- Income Tax Assessment Act 1997

  (1)   This section applies to a unit of plant that:

  (a)   was transferred from the Commonwealth to a company under section 23; and

  (b)   at the time of transfer, was not attached to land.

  (2)   The Minister for Finance may make a written determination of the cost of the plant for the purposes of Division 42 of the Income Tax Assessment Act 1997 .

Note:   If a determination is made, the cost of the plant will be determined under item 13 or 14 in the table in section 42 - 65 of that Act.

  (3)   The FAC must give the Minister for Finance such information as the Minister for Finance requires about the application of Subdivision 42 - F of the Income Tax Assessment Act 1997 to the plant and to the FAC.

61   After section 51

Insert:

51A   Acquisition of depreciated plant from the FAC-- Income Tax Assessment Act 1997

  (1)   This section applies to a unit of plant that was transferred from the FAC to a company under section 30.

  (2)   The Minister for Finance may make a written determination of the cost of the plant for the purposes of Division 42 of the Income Tax Assessment Act 1997 .

Note:   If a determination is made, the cost of the plant will be determined under item 13 or 14 in the table in section 42 - 65 of that Act.

  (3)   The FAC must give the Minister for Finance such information as the Minister for Finance requires about the application of Subdivision 42 - F of the Income Tax Assessment Act 1997 to the plant and to the FAC.

62   After section 52

Insert:

52A   Consideration received by the FAC for transfer of assets-- Income Tax Assessment Act 1997

  (1)   This section applies to an asset that was:

  (a)   transferred from the FAC to the Commonwealth under section 11, 12 or 13; or

  (b)   transferred from the FAC to an airport - lessee company under section 30 or 31.

  (2)   The Minister for Finance may make a written determination that the Income Tax Assessment Act 1936 and the Income Tax Assessment Act 1997 apply to the FAC as if the FAC had received consideration of an amount specified in the determination from the Commonwealth in respect of the transfer of a specified asset.

Note:   If such a determination is relevant to working out a balancing adjustment, the termination value of the plant will be determined under item 13 or 14 in the table in section 42 - 205 of the Income Tax Assessment Act 1997 .

  (3)   The FAC must give the Minister for Finance such information as the Minister for Finance requires about the application of Subdivision 42 - F of the Income Tax Assessment Act 1997 to the asset and to the FAC.

  (4)   A determination made by the Minister for Finance under section 52 before the commencement of this subsection has effect as if it had also been made under this section for the purposes of the Income Tax Assessment Act 1997 .

63   Paragraphs 55(2)(a) and (b)

Repeal the paragraphs, substitute:

  (a)   the provisions of the Income Tax Assessment Act 1936 or the Income Tax Assessment Act 1997 relating to depreciation; and

  (b)   the provisions of either of those Acts relating to capital gains and capital losses;

64   Application

The amendments made by this Part apply to assessments for the 1997 - 98 income year and later income years.

Part 4 -- Amendment of the Civil Aviation Legislation Amendment Act 1995

65   Subsection 19(1)

Omit "section 54, or Division 10D of Part III, of the Income Tax Assessment Act 1936 ", substitute "Division 42 or 43 of the Income Tax Assessment Act 1997 ".

66   Application

The amendment made by this Part applies to assessments for the 1997 - 98 income year and later income years.

Part 5 -- Amendment of the Federal Airports Corporation Act 1986

67   Subsections 57E(1) and (2)

After "Assessment Act", insert "or the Income Tax Assessment Act 1997 ".

68   Application

The amendments made by this Part apply to assessments for the 1997 - 98 income year and later income years.