Commonwealth Consolidated Acts

TAXATION LAWS AMENDMENT ACT (NO. 2) 2000 - SCHEDULE 11

Income Tax Assessment Act 1936

1   Subsection 262A(4AL)

Omit "or 23(3)", substitute ", 22A(3), 23(3) or 23A(2)".

Taxation Laws Amendment (Trust Loss and Other Deductions) Act 1998

2   Subitem 22(1) of Schedule   1

After "this item", insert "and item   22A".

3   Subitems 22(2) and (3) of Schedule   1

Repeal the subitems, substitute:

(2)   If:

  (a)   a family trust election can be made in accordance with subsection 272 - 80(2) of the trust loss etc. Schedule specifying the 1998 - 99 year of income; and

  (b)   assuming that the family trust election could instead specify the 1996 - 97 year of income or the 1997 - 98 year of income (the qualifying year of income ):

  (i)   a company that would otherwise be prevented, by section   63B or 63C of the Income Tax Assessment Act 1936 from deducting in the qualifying year of income an amount in respect of a debt would not be so prevented; or

  (ii)   a company that would otherwise be prevented by subsection 160ZC(5) of the Income Tax Assessment Act 1936 from applying a net capital loss in the qualifying year of income would not be so prevented; or

  (iii)   a company that would otherwise be prevented by Subdivision   165 - A, 175 - A or 175 - B of the Income Tax Assessment Act 1997 from deducting an amount in the qualifying year of income would not be so prevented; or

  (iv)   a company that would otherwise be required to calculate its taxable income for the qualifying year of income in accordance with section   50C of the Income Tax Assessment Act 1936 would not be so required; or

  (v)   a company that would otherwise not be entitled, in calculating its taxable income for the qualifying year of income in accordance with section   50C of the Income Tax Assessment Act 1936 , to take into account an amount, by reason of subsection 50D(2), in ascertaining the eligible notional loss of the company under section   50D, would be so entitled; or

  (vi)   a company that would otherwise be required to calculate its taxable income and tax loss for the qualifying year of income under Subdivision   165 - B of the Income Tax Assessment Act 1997 would not be so required; and

  (c)   the trust concerned passes the family control test (see section   272 - 87 of the trust loss etc. Schedule):

  (i)   if the qualifying year of income is the 1996 - 97 year of income--at all times from the beginning of that year of income until the end of the 1997 - 98 year of income; or

  (ii)   if the qualifying year of income is the 1997 - 98 year of income--at the end of the 1997 - 98 year of income; and

  (d)   the Taxation Laws Amendment Act (No.   2) 2000 receives the Royal Assent:

  (i)   if the trustee is required to furnish a return for the 1998 - 99 year of income--before the time when the trustee furnishes the return; or

  (ii)   if the trustee is not required to furnish a return for the 1998 - 99 year of income--before the end of 2 months after the end of that year of income;

the election can instead specify the qualifying year of income.

(2A)   If:

  (a)   a family trust election can be made in accordance with subsection 272 - 80(2) of the trust loss etc. Schedule in relation to a non - fixed trust (within the meaning of section   272 - 70 of the trust loss etc. Schedule) specifying the 1998 - 99 year of income; and

  (b)   a franked dividend or a franked distribution (both within the meaning of section   177EA of the Income Tax Assessment Act 1936 ) was included in the assessable income of the trust of the 1997 - 98 year of income (the qualifying year of income ); and

  (c)   the trust passes the family control test at the end of the 1997 - 98 year of income; and

  (d)   the Taxation Laws Amendment Act (No.   2) 1999 and the Taxation Laws Amendment Act (No.   2) 2000 receive the Royal Assent:

  (i)   if the trustee is required to furnish a return for the 1998 - 99 year of income--before the time when the trustee furnishes the return; or

  (ii)   if the trustee is not required to furnish a return for the 1998 - 99 year of income--before the end of 2 months after the end of that year of income;

the election can instead specify the qualifying year of income.

(3)   A family trust election specifying the qualifying year of income in accordance with subitem   ( 2) or (2A) must:

  (a)   be in writing in a form and manner approved by the Commissioner; and

  (b)   be made:

  (i)   if the trustee is required to furnish a return for the 1998 - 99 year of income--by the time when the trustee furnishes the return; or

  (ii)   if the trustee is not required to furnish a return for the 1998 - 99 year of income--before the end of 2 months after the end of that year of income or before the end of such later day as the Commissioner allows.

4   Subitem 22(4) of Schedule   1

Omit "1997 - 98 year of income or an earlier", substitute "qualifying".

5   Subitem 22(5) of Schedule   1

Repeal the subitem, substitute:

(5)   If:

  (a)   a family trust election does specify the qualifying year of income in accordance with this item; and

  (b)   the trust concerned is not prevented by the trust loss etc. Schedule from deducting a tax loss, or an amount in respect of a debt, and is not required to work out its net income and tax loss under Division   268 of that Schedule in:

  (i)   if the qualifying year is the 1996 - 97 year of income--that year of income, the 1997 - 98 year of income or both (the excluded period ); or

  (ii)   if the qualifying year mentioned in that subitem is the 1997 - 98 year of income--that year of income (also the excluded period );

no liability to pay family trust distribution tax arises under Division   271 of the trust loss etc. Schedule in respect of a conferral of a present entitlement to, or a distribution of, income or capital that took place in the excluded period.

6   After item   22 of Schedule   1

Insert:

22A   Transitional--family trust elections

(1)   If:

  (a)   a family trust election can be made in accordance with subsection 272 - 80(2) of the trust loss etc. Schedule specifying the 1999 - 2000 year of income; and

  (b)   assuming that a family trust election could specify the 1996 - 97 year of income, the 1997 - 98 year of income or the 1998 - 1999 year of income (the qualifying year of income ):

  (i)   a company that would otherwise be prevented, by section   63B or 63C of the Income Tax Assessment Act 1936 or by Subdivision   165 - C or 175 - C of the Income Tax Assessment Act 1997 , from deducting in the qualifying year of income an amount in respect of a debt would not be so prevented; or

  (ii)   a company that would otherwise be prevented by Subdivision   165 - A, 175 - A or 175 - B of the Income Tax Assessment Act 1997 from deducting an amount in the qualifying year of income would not be so prevented; or

  (iii)   a company that would otherwise be required to calculate its taxable income for the qualifying year of income in accordance with section   50C of the Income Tax Assessment Act 1936 would not be so required; or

  (iv)   a company that would otherwise not be entitled, in calculating its taxable income for the qualifying year of income in accordance with section   50C of the Income Tax Assessment Act 1936 , to take into account an amount, by reason of subsection 50D(2), in ascertaining the eligible notional loss of the company under section   50D, would be so entitled; or

  (v)   a company that would otherwise be required to calculate its taxable income and tax loss for the qualifying year of income under Subdivision   165 - B of the Income Tax Assessment Act 1997 would not be so required; or

  (vi)   a company that would otherwise be prevented by Subdivision   165 - CA or 175 - CA of the Income Tax Assessment Act 1997 from applying in the qualifying year a net capital loss from an earlier year of income would not be so prevented; or

  (vii)   a company that would otherwise be required to calculate its net capital gain and net capital loss for the qualifying year under Subdivision   165 - CB or 175 - CB of the Income Tax Assessment Act 1997 would not be so required; and

  (c)   the trust concerned passes the family control test (see section   272 - 87 of the trust loss etc. Schedule):

  (i)   if the qualifying year of income is the 1996 - 97 year of income or the 1997 - 98 year of income--at all times from the beginning of that year of income until the end of the 1998 - 99 year of income; or

  (ii)   if the qualifying year of income is the 1998 - 99 year of income--at the end of the 1998 - 99 year of income; and

  (d)   the Taxation Laws Amendment Act (No.   2) 2000 receives the Royal Assent:

  (i)   if the trustee is required to furnish a return for the 1998 - 99 year of income--after the time when the trustee furnishes the return; or

  (ii)   if the trustee is not required to furnish a return for the 1998 - 99 year of income--after the end of 2 months after the end of that year of income;

the election can instead specify the qualifying year of income.

(2)   If:

  (a)   a family trust election can be made in accordance with subsection 272 - 80(2) of the trust loss etc. Schedule in relation to a non - fixed trust (within the meaning of section   272 - 70 of the trust loss etc. Schedule) specifying the 1999 - 2000 year of income; and

  (b)   a franked dividend or a franked distribution (both within the meaning of section   177EA of the Income Tax Assessment Act 1936 ) was included in the assessable income of the trust of the 1997 - 98 year of income or the 1998 - 99 year of income (the qualifying year of income ); and

  (c)   the trust concerned passes the family control test (see section   272 - 87 of the trust loss etc. Schedule):

  (i)   if the qualifying year of income is the 1997 - 98 year of income--at all times from the beginning of that year of income until the end of the 1998 - 99 year of income; or

  (ii)   if the qualifying year of income is the 1998 - 99 year of income--at the end of the 1998 - 99 year of income; and

  (d)   either the Taxation Laws Amendment Act (No.   2) 1999 or the Taxation Laws Amendment Act (No.   2) 2000 , or both, receive the Royal Assent:

  (i)   if the trustee is required to furnish a return for the 1998 - 99 year of income--after the time when the trustee furnishes the return; or

  (ii)   if the trustee is not required to furnish a return for the 1998 - 99 year of income--after the end of 2 months after the end of that year of income;

the election can instead specify the qualifying year of income.

(3)   The election must:

  (a)   be in a form and manner approved by the Commissioner; and

  (b)   be made:

  (i)   if the trustee is required to furnish a return for the 1999 - 2000 year of income--by the time when the trustee furnishes the return; or

  (ii)   if the trustee is not required to furnish a return for the 1999 - 2000 year of income--before the end of 2 months after the end of that year of income or before the end of such later day as the Commissioner allows.

(4)   If a family trust election is made in accordance with subitem   ( 3) specifying the qualifying year:

  (a)   if the trustee is required to furnish a return for the 1999 - 2000 year of income--such information about the election as is required by the return must be included in the return; and

  (b)   if the trustee is not required to furnish a return for that year of income--the trustee must, before the end of 2 months after the end of the 1999 - 2000 year of income or before the end of such later day as the Commissioner allows, give the Commissioner such information about the election as the Commissioner, by notice in the Gazette , requires.

(5)   If:

  (a)   a family trust election does specify the qualifying year of income in accordance with this item; and

  (b)   the trust is not prevented by the trust loss etc. Schedule from deducting a tax loss, or an amount in respect of a debt, and is not required to work out its net income and tax loss under Division   268 of that Schedule in the qualifying year or any later year of income that occurs before the 1999 - 2000 year of income;

no liability to pay family trust distribution tax arises under Division   271 of the trust loss etc. Schedule in respect of a conferral of a present entitlement to, or a distribution of, income or capital that took place during the qualifying year or the later year of income.

7   Subitem 23(1) of Schedule   1

After "this item", insert "and item   23A".

8   Subitems 23(2) and (3) of Schedule   1

Repeal the subitems, substitute:

(2)   If:

  (a)   a trustee makes a family trust election under subitem 22(3) (as inserted by the Taxation Laws Amendment Act (No.   2) 2000 ); and

  (b)   an interposed entity election can be made in accordance with subsection 272 - 85(2) of the trust loss etc. Schedule in relation to the family trust election specifying a day in the 1998 - 99 year of income; and

  (c)   the company, partnership or trust concerned passes the family control test (see section   272 - 87 of the trust loss etc. Schedule):

  (i)   if the qualifying year of income specified in the family trust election as mentioned in subitem 22(3) is the 1996 - 97 year of income--at all times from a day in that year of income until the end of the 1997 - 98 year of income; or

  (ii)   if the qualifying year of income specified in the family trust election as mentioned in subitem 22(3) is the 1997 - 98 year of income--at the end of the 1997 - 98 year of income;

the interposed entity election can instead specify:

  (d)   if subparagraph   ( c)(i) of this subitem applies--the day mentioned in that subparagraph or a later day in the qualifying year of income; or

  (e)   if subparagraph   ( c)(ii) applies--a day in the qualifying year of income;

provided the day specified is not before the day on which the family trust election came into force.

(3)   The election must:

  (a)   be in writing in a form and manner approved by the Commissioner; and

  (b)   be made:

  (i)   if the trustee is required to furnish a return for the 1998 - 99 year of income--by the time when the trustee furnishes the return; or

  (ii)   if the trustee is not required to furnish a return for the 1998 - 99 year of income--before the end of 2 months after the end of that year of income or before the end of such later day as the Commissioner allows.

10   After item   23 of Schedule   1

Insert:

23A   Transitional--interposed entity elections

(1)   If:

  (a)   a trustee makes a family trust election under subitem 22A(3); and

  (b)   an interposed entity election can be made in accordance with subsection 272 - 85(2) of the trust loss etc. Schedule in relation to the family trust election specifying a day in the 1999 - 2000 year of income; and

  (c)   the company, partnership or trust concerned passes the family control test (see section   272 - 87 of the trust loss etc. Schedule):

  (i)   if the qualifying year of income specified in the family trust election as mentioned in subitem 22(3) is the 1996 - 97 year of income or the 1997 - 98 year of income--at all times from a day in that year of income until the end of the 1998 - 99 year of income; or

  (ii)   if the qualifying year of income specified in the family trust election as mentioned in subitem 22(3) is the 1998 - 99 year of income--at the end of the 1998 - 99 year of income;

the interposed entity election can instead specify:

  (d)   if subparagraph   ( c)(i) of this subitem applies and the qualifying year of income is the 1996 - 1997 year of income--the day mentioned in that subparagraph, a later day in the 1996 - 97 year of income or a day in the 1997 - 1998 year of income; or

  (e)   if subparagraph   ( c)(i) of this subitem applies and the qualifying year of income is the 1997 - 1998 year of income--the day mentioned in that subparagraph or a later day in the 1997 - 98 year of income; or

  (f)   if subparagraph   ( c)(ii) applies--a day in the 1998 - 99 year of income;

provided the day specified is not before the day on which the family trust election came into force.

(2)   The election must:

  (a)   be in a form and manner approved by the Commissioner; and

  (b)   be made:

  (i)   if the company, partners or the trustee is required to furnish a return for the 1999 - 2000 year of income--by the time when the company, partners or trustee furnishes the return; or

  (ii)   if not--before the end of 2 months after the end of that year of income or before the end of such later day as the Commissioner allows.

(3)   If an interposed entity election is made in accordance with subitem   ( 2) specifying the qualifying year:

  (a)   if the company, partners or the trustee is required to furnish a return for the 1999 - 2000 year of income--such information about the election as is required by the return must be included in the return; and

  (b)   if the company, partners or the trustee is not required to furnish a return for that year of income--the company, the partners or the trustee must, before the end of 2 months after the end of the 1999 - 2000 year of income or before the end of such later day as the Commissioner allows, give the Commissioner such information about the election as the Commissioner, by notice in the Gazette , requires.

11   Continuation of previous transitional election provisions

In addition to the effect that items   22 and 23 of Schedule   1 to the Taxation Laws Amendment (Trust Loss and Other Deductions) Act 1998 have as a result of the amendments made by this Schedule, those items continue to have the effect that they would have had if the amendments had not been made.

Notes to the Taxation Laws Amendment Act (No. 2) 2000

Note 1

The Taxation Laws Amendment Act (No.   2) 2000 as shown in this compilation comprises Act No.   58 , 20 0 0 amended as indicated in the Tables below.

For all relevant information pertaining to application, saving or transitional provisions see Table A.

Table of Acts

Table of Amendments

Table A

Application, saving or transitional provisions

Taxation Laws Amendment Act (No.   2) 2002 (No.   57, 2002)

Schedule   12

86   Application

An item in a Schedule to an Act that is repealed by an item in this Part is taken never to have had any effect.