2004-2005-2006-2007 The Parliament of the Commonwealth of Australia HOUSE OF REPRESENTATIVES Presented and read a first time Tax Laws Amendment (2007 Measures No. 1) Bill 2007 No. , 2007 (Treasury) A Bill for an Act to amend the law relating to taxation, and for related purposes [Page Break] 1 Short title ........................................................................................... 1 2 Commencement ................................................................................. 1 3 Schedule(s) ........................................................................................ 1 Schedule 1--Project Wickenby taskforce 3 Administrative Decisions (Judicial Review) Act 1977 3 Freedom of Information Act 1982 3 Taxation Administration Act 1953 3 Schedule 2--Disclosure of information relating to superannuation guarantee complaints 11 Superannuation Guarantee (Administration) Act 1992 11 Schedule 3--Employee share schemes and stapled securities 13 Part 1--Main amendments 13 Income Tax Assessment Act 1936 13 Part 2--Consequential amendments 18 A New Tax System (Goods and Services Tax) Act 1999 18 Fringe Benefits Tax Assessment Act 1986 18 Income Tax Assessment Act 1936 19 Income Tax Assessment Act 1997 20 Taxation Administration Act 1953 26 [Page Break] 1 taxation, and for related purposes 2 The Parliament of Australia enacts: 3 1 Short title 4 This Act may be cited as the Tax Laws Amendment (2007 5 Measures No. 1) Act 2007. 6 2 Commencement 7 This Act commences on the day on which it receives the Royal 8 Assent. 9 3 Schedule(s) 10 Each Act that is specified in a Schedule to this Act is amended or 11 repealed as set out in the applicable items in the Schedule 12 Tax Laws Amendment (2007 Measures No. 1) Bill 2007 No. , 2007 1 [Page Break] 1 according to its terms. 2 [Page Break] Schedule 1--Project Wickenby taskforce 2 3 Administrative Decisions (Judicial Review) Act 1977 4 1 Paragraph (f) of Schedule 1 5 After "subsection 3E(1)", insert ", 3G(1) or 3H(1)". 6 Freedom of Information Act 1982 7 2 Schedule 3 8 Omit "Taxation Administration Act 1953, subsection 3C(2), paragraph 9 8WB(1)(c) and subsection 8XB(1)", substitute "Taxation 10 Administration Act 1953, subsections 3C(2), 3G(6) and (9) and 3H(5) 11 and (8), paragraph 8WB(1)(c) and subsection 8XB(1)". 12 Taxation Administration Act 1953 13 3 At the end of subsection 3B(1AA) 14 Add: 15 ; and (e) set out: 16 (i) the number of occasions (if any) during the year on 17 which the Commissioner was requested to disclose 18 documents under subsection 3G(1) in relation to the 19 Project Wickenby taskforce; and 20 (ii) the number of occasions (if any) during the year on 21 which the Commissioner disclosed documents under 22 that subsection; and 23 (f) set out, in relation to a taskforce that has been prescribed 24 under section 3H: 25 (i) the number of occasions (if any) during the year on 26 which the Commissioner was requested to disclose 27 documents under subsection 3H(1) in relation to the 28 taskforce; and 29 (ii) the number of occasions (if any) during the year on 30 which the Commissioner disclosed documents under 31 that subsection. 32 [Page Break] 1 Add: 2 3G Providing taxation information to the Project Wickenby 3 taskforce 4 Disclosure of taxation information by the Commissioner 5 (1) The Commissioner may disclose information acquired under a 6 taxation law to a person to whom subsection (2) applies (a Project 7 Wickenby officer) if: 8 (a) the Commissioner is satisfied that the information is relevant 9 to a purpose of the Project Wickenby taskforce; and 10 (b) the disclosure occurs before 1 July 2012, or a later prescribed 11 date. 12 Project Wickenby officer 13 (2) This subsection applies to a person: 14 (a) who holds an office in, is employed in, or is performing 15 services for: 16 (i) an agency in the Project Wickenby taskforce; or 17 (ii) an agency that is supporting the Project Wickenby 18 taskforce; and 19 (b) whose duties relate to a purpose of the Project Wickenby 20 taskforce. 21 Project Wickenby taskforce agencies 22 (3) The following agencies are agencies in the Project Wickenby 23 taskforce: 24 (a) the Australian Taxation Office; 25 (b) the Australian Crime Commission; 26 (c) the Australian Federal Police; 27 (d) the Australian Securities and Investments Commission; 28 (e) the Office of the Director of Public Prosecutions; 29 (f) a prescribed agency. 30 [Page Break] 1 (4) The following agencies are agencies supporting the Project 2 Wickenby taskforce: 3 (a) the Attorney-General's Department; 4 (b) the Australian Transaction Reports and Analysis Centre; 5 (c) the Australian Government Solicitor; 6 (d) a prescribed agency. 7 Purposes of Project Wickenby taskforce 8 (5) The purposes of the Project Wickenby taskforce are to: 9 (a) detect; and 10 (b) deter; and 11 (c) investigate; and 12 (d) enforce the law relating to; 13 the promotion of or participation in arrangements (within the 14 meaning of the Income Tax Assessment Act 1997) of an 15 international character, or purported international character, that 16 relate to one or more of these: 17 (e) tax avoidance or evasion; 18 (f) breaches of laws regulating financial markets and 19 corporations; 20 (g) criminal activity in the nature of fraud or obtaining benefits 21 by deception (including deceiving investors or creditors); 22 (h) money laundering; 23 (i) concealing income or assets. 24 Offence--disclosure of taxation information by Project Wickenby 25 officer 26 (6) A person commits an offence if: 27 (a) the person is or has been a Project Wickenby officer; and 28 (b) the person: 29 (i) makes a record of information about the affairs of a 30 second person; or 31 (ii) discloses to a third person information about the affairs 32 of a second person; and 33 (c) the information was disclosed to the person under this 34 section. 35 [Page Break] 1 (7) Subsection (6) does not apply if the person: 2 (a) makes a record of the information for a purpose of the Project 3 Wickenby taskforce; or 4 (b) discloses the information: 5 (i) to a Project Wickenby officer; and 6 (ii) for a purpose of the Project Wickenby taskforce. 7 Note: A defendant bears an evidential burden in relation to the matters in 8 subsection (7): see subsection 13.3(3) of the Criminal Code. 9 (8) Subsection (6) does not apply if: 10 (a) a record of the information is made, or the information is 11 disclosed to a person, for the purposes of, or in connection 12 with: 13 (i) an actual, proposed or possible criminal, civil or 14 administrative proceeding; or 15 (ii) the exercise of an administrative power or the 16 performance of an administrative function; 17 relating to a purpose of the Project Wickenby taskforce; or 18 (b) the information is voluntarily communicated to a court or 19 tribunal in the course of a proceeding of a kind referred to in 20 subparagraph (a)(i). 21 Note: A defendant bears an evidential burden in relation to the matters in 22 subsection (8): see subsection 13.3(3) of the Criminal Code. 23 Offence--disclosure of taxation information by other people 24 (9) A person commits an offence if: 25 (a) information is disclosed to the person in accordance with 26 paragraph (8)(a); and 27 (b) the person makes a record of the information, or discloses the 28 information to another person. 29 Penalty: Imprisonment for 2 years. 30 (10) Subsection (9) does not apply to the person if a record of the 31 information is made, or the information is disclosed to another 32 person, for the purposes of, or in connection with, the proceeding 33 or the exercise of the power or the performance of the function 34 referred to in paragraph (8)(a). 35 [Page Break] 1 subsection (10): see subsection 13.3(3) of the Criminal Code. 2 No requirement to disclose taxation information to a court etc. 3 (11) A person who is or has been a Project Wickenby officer is not to be 4 required to disclose to a court or tribunal information that was 5 disclosed to the person under this section unless it is necessary that 6 the information be disclosed for the purposes of a taxation law. 7 Other matters 8 (12) This section: 9 (a) has effect despite any provision of a taxation law that 10 prohibits the communication or divulging of information; and 11 (b) is in addition to, and does not detract from, any other 12 provision of this Act or of any other law relating to the 13 communication of information. 14 3H Providing taxation information to prescribed taskforces 15 Disclosure of taxation information by the Commissioner 16 (1) The Commissioner may disclose information acquired under a 17 taxation law to a taskforce officer of a prescribed taskforce if the 18 Commissioner is satisfied that the information is relevant to a 19 purpose of the prescribed taskforce. 20 Taskforce officer 21 (2) A person is a taskforce officer of a prescribed taskforce if: 22 (a) the person holds an office in, is employed in, or is performing 23 services for, an agency in the prescribed taskforce; and 24 (b) the person's duties relate to a purpose of the prescribed 25 taskforce. 26 Taskforce may be prescribed 27 (3) The regulations may prescribe a taskforce for the purposes of this 28 section. A major purpose of the taskforce must be protecting the 29 public finances of Australia. 30 [Page Break] 1 of this section may deal with the following matters: 2 (a) the purposes of the taskforce; 3 (b) the agencies in the taskforce; 4 (c) the period during which information can be disclosed to a 5 taskforce officer of the prescribed taskforce. 6 Offence--disclosure of taxation information by taskforce officer 7 (5) A person commits an offence if: 8 (a) the person is or has been a taskforce officer of a prescribed 9 taskforce; and 10 (b) the person: 11 (i) makes a record of information about the affairs of a 12 second person; or 13 (ii) discloses to a third person information about the affairs 14 of a second person; and 15 (c) the information was disclosed to the person under this 16 section. 17 Penalty: Imprisonment for 2 years. 18 (6) Subsection (5) does not apply if the person: 19 (a) makes a record of the information for a purpose of the 20 prescribed taskforce; or 21 (b) discloses the information: 22 (i) to a taskforce officer of the prescribed taskforce; and 23 (ii) for a purpose of the prescribed taskforce. 24 Note: A defendant bears an evidential burden in relation to the matters in 25 subsection (6): see subsection 13.3(3) of the Criminal Code. 26 (7) Subsection (5) does not apply if: 27 (a) a record of the information is made, or the information is 28 disclosed to a person, for the purposes of, or in connection 29 with: 30 (i) an actual, proposed or possible criminal, civil or 31 administrative proceeding; or 32 (ii) the exercise of an administrative power or the 33 performance of an administrative function; 34 relating to a purpose of a prescribed taskforce; or 35 [Page Break] 1 tribunal in the course of a proceeding of a kind referred to in 2 subparagraph (a)(i). 3 Note: A defendant bears an evidential burden in relation to the matters in 4 subsection (7): see subsection 13.3(3) of the Criminal Code. 5 Offence--disclosure of taxation information by other people 6 (8) A person commits an offence if: 7 (a) information is disclosed to the person in accordance with 8 paragraph (7)(a); and 9 (b) the person makes a record of the information, or discloses the 10 information to another person. 11 Penalty: Imprisonment for 2 years. 12 (9) Subsection (8) does not apply to the person if the record of the 13 information is made, or the information is disclosed to another 14 person, for the purposes of, or in connection with, the proceeding 15 or the exercise of the power or the performance of the function 16 referred to in paragraph (7)(a). 17 Note: A defendant bears an evidential burden in relation to the matters in 18 subsection (9): see subsection 13.3(3) of the Criminal Code. 19 No requirement to disclose taxation information to a court etc. 20 (10) A person who is or has been a taskforce officer of a prescribed 21 taskforce is not to be required to disclose to a court or tribunal 22 information that was disclosed to the person under this section 23 unless it is necessary that the information be disclosed for the 24 purposes of a taxation law. 25 Other matters 26 (11) This section: 27 (a) has effect despite any provision of a taxation law that 28 prohibits the communication or divulging of information; and 29 (b) is in addition to, and does not detract from, any other 30 provision of this Act or of any other law relating to the 31 communication of information. 32 5 Application 33 [Page Break] 1 information made on or after the day on which this Act receives the 2 Royal Assent (whenever the information was obtained). 3 [Page Break] Schedule 2--Disclosure of information 2 relating to superannuation guarantee 3 complaints 4 5 Superannuation Guarantee (Administration) Act 1992 6 1 At the end of Part 5 7 Add: 8 45A Disclosure of information to give advice to employee about 9 progress of complaint against employer 10 (1) An employee or former employee (the employee) of an employer 11 may make a complaint to the Commissioner that the employer has 12 not complied with one or more specified obligations under this Act 13 in relation to the employee. 14 (2) To avoid doubt, a person may make a complaint under 15 subsection (1) even if at the time the complaint is made it is in 16 dispute or uncertain whether he or she is an employee or former 17 employee of the employer. 18 (3) If a complaint has been made under subsection (1), the 19 Commissioner may divulge or communicate information covered 20 under subsection (4) to the employee (and make a record necessary 21 for the divulging or communication of the information). 22 (4) Information is covered under this subsection if it relates to the 23 Commissioner's response to the complaint, including information 24 about any of the following matters: 25 (a) the steps (if any) that the Commissioner has taken to 26 investigate the complaint; 27 (b) the actions (if any) that have been taken in relation to the 28 complaint under this Act or the Taxation Administration Act 29 1953 by the Commissioner or the employer; 30 (c) the steps (if any) that the Commissioner has taken to recover 31 superannuation guarantee charge from the employer in 32 relation to the employee. 33 [Page Break] 1 relates to the general financial affairs of the employer. 2 (6) Making a record, or divulging or communicating information, 3 under subsection (3) is not a breach of a provision of a taxation law 4 (within the meaning of the Income Tax Assessment Act 1997) that 5 prohibits the Commissioner or an officer from making a record of, 6 or disclosing, information. 7 Example: Examples of such provisions are section 45 of this Act and section 3C 8 of the Taxation Administration Act 1953. 9 2 Application 10 (1) The amendment made by this Schedule applies to records made, or 11 information divulged or communicated, on or after 1 July 2007. 12 (2) Subitem (1) applies regardless of when the information recorded, 13 divulged or communicated was obtained. 14 [Page Break] Schedule 3--Employee share schemes and 2 stapled securities 3 Part 1--Main amendments 4 Income Tax Assessment Act 1936 5 1 Section 139A (after table item dealing with Subdivision DA) 6 Insert: 7 DB Stapled securities 2 After Subdivision DA of Division 13A of Part III 8 Insert: 9 Subdivision DB--Stapled securities 10 139DSA Object of this Subdivision 11 The object of this Subdivision is to allow this Division to apply to 12 stapled securities that include an ordinary share and are listed for 13 quotation on the Australian Stock Exchange, and to rights to 14 acquire such stapled securities. 15 139DSB Application of Division to stapled securities 16 (1) This Division (except this Subdivision) applies, with the 17 modifications set out in this Subdivision, in relation to a stapled 18 security in the same way as it applies in relation to a share 19 (including an ordinary share) in a company. 20 Note 1: For the definition of stapled security, see subsection 139GCD(1). 21 Note 2: This means the Division also applies to rights to acquire a stapled 22 security in the same way it applies to rights to acquire a share. 23 Example: Subsection 139CD(4) will be satisfied if all the securities available for 24 acquisition under the scheme are stapled securities, and all the rights 25 available for acquisition are rights to acquire stapled securities. 26 (2) For the purposes of the application of this Division (except this 27 Subdivision) in relation to a stapled security or right to acquire a 28 stapled security, a company, the shares in which are the subject of 29 [Page Break] 1 stapled entity for the stapled security. 2 Note 1: For the definition of stapled entity, see subsection 139GCD(2). 3 Note 2: There are some modifications to this rule in this Subdivision. 4 Note 3: This rule has the effect that the company is treated as having all the 5 interests in another entity that stapled entities for the stapled security 6 have. 7 Example: The condition in subsection 139CD(3) will be satisfied if the company 8 would be a holding company of the employer if all those stapled 9 entities' interests in the employer were counted together. 10 139DSC Discount not to be included in assessable income unless 11 stapled security or right is qualifying 12 Section 139B includes a discount given in relation to a stapled 13 security or right to acquire a stapled security in the assessable 14 income of the taxpayer only if the stapled security or right to 15 acquire a stapled security is treated as a qualifying share or 16 qualifying right because of this Subdivision. 17 139DSD Division does not also apply to share part of stapled 18 security 19 (1) If a stapled security or right to acquire a stapled security is treated 20 as a qualifying share or qualifying right because of this 21 Subdivision, this Division does not also apply separately in relation 22 to a share that is a part of the stapled security. 23 (2) However, if a stapled security is not treated as a qualifying share 24 because of this Subdivision, the rest of this Division applies 25 separately in relation to each share that is a part of the stapled 26 security. To avoid doubt, section 139DSC does not prevent a 27 discount given in relation to such a share from being included in 28 the assessable income of a taxpayer. 29 139DSE Modifications relating to employment 30 Proportion of permanent employees of employer 31 (1) Subsection 139DSB(2) does not affect a provision setting out a 32 condition relating to a specified proportion of the permanent 33 employees of a stapled entity that is the employer. 34 [Page Break] 1 taken to include any other stapled entities. The condition in that 2 subsection will be satisfied if it is satisfied for the employing entity 3 alone. 4 (2) The reference in paragraph 139CD(5)(b) to a holding company of 5 an employer includes a reference to the stapled entities for the 6 stapled security if: 7 (a) the employer is not a stapled entity for the stapled security; 8 and 9 (b) a company that included the stapled entities as parts of the 10 company would be a holding company of the employer. 11 Cessation of employment 12 (3) For the purposes of working out the time when a taxpayer ceases to 13 be employed by the employer of the taxpayer, that employer is 14 taken to include (as part of it) each other stapled entity for the 15 stapled security. 16 Note: This rule affects the operation of subsections 139CA(2), 139CB(1) 17 and 139CE(3). 18 139DSF Modification relating to legal or beneficial interest 19 A taxpayer is taken to satisfy a condition that the taxpayer not hold 20 a legal or beneficial interest in more than 5% of the shares in a 21 company at a time only if the taxpayer does not hold a legal or 22 beneficial interest in more than 5% of any of the following at that 23 time: 24 (a) the shares in any company that is a stapled entity for the 25 stapled security; 26 (b) the units in any unit trust that is a stapled entity for the 27 stapled security. 28 Note: This rule affects the operation of subsections 139CD(6) and 29 139DR(5). 30 139DSG Modification relating to voting rights 31 A taxpayer is taken to satisfy a condition that the taxpayer not be in 32 a position to cast, or control the casting of, more than 5% of the 33 maximum number of votes that might be cast at a general meeting 34 of a company only if the taxpayer is not in a position to control the 35 [Page Break] 1 might be cast at a general meeting of: 2 (a) a company that is a stapled entity for the stapled security 3 because an ordinary share in the company is part of the 4 stapled security; or 5 (b) if more than one company is a stapled entity for the stapled 6 security because an ordinary share in the company is part of 7 the stapled security--each of those companies. 8 Note: This rule affects the operation of subsections 139CD(7) and 9 139DR(6). 10 139DSH Cessation time when stapling arrangement ceases 11 The cessation time for a stapled security or right to acquire a 12 stapled security is the earlier of: 13 (a) the time when any of the interests forming the stapled 14 security cease to be stapled together; and 15 (b) the time when the stapled security ceases to be listed for 16 quotation in the official list of the ASX Limited; 17 if that time is earlier than: 18 (c) in the case of a stapled security where subsection 139CA(1) 19 does not apply--the earliest time when an event described in 20 any of paragraphs 139CA(2)(a) to (d) happens; and 21 (d) in the case of a right to acquire a stapled security--the 22 earliest time when an event described in any of paragraphs 23 139CB(1)(a) to (e) happens. 24 Note: The times mentioned in paragraphs (a) and (b) are additional to the 25 times mentioned in subsections 139CA(2) and 139CB(1). The actual 26 cessation time is the time that is the earliest, unless subsection 27 139CA(1) applies (when the cessation time is the time of acquisition). 28 139DSI Deduction to be apportioned 29 (1) If a stapled security is jointly provided by 2 or more taxpayers to 30 another person in a year of income, each of those taxpayers is 31 entitled to an allowable deduction in respect of income of the year 32 of income under section 139DC if, because of this Subdivision: 33 (a) the stapled security is treated as a qualifying share; and 34 (b) the conditions in subsection 139DC(1) are satisfied for the 35 stapled security. 36 [Page Break] 1 139DC(2) in respect of the stapled security must be apportioned 2 between each of the taxpayers on a reasonable basis. 3 3 Subsection 139GB(1) 4 Omit "a company", substitute "an employer". 5 4 Paragraphs 139GB(1)(a) and (b) 6 Omit "the company", substitute "the employer". 7 5 Subsection 139GB(2) 8 Omit "the company" (first occurring), substitute "an employer that is a 9 company". 10 6 After section 139GCC 11 Insert: 12 139GCD Meaning of stapled security and stapled entity 13 (1) A security consisting of 2 or more interests is a stapled security if: 14 (a) each interest is either a share in a company or a unit in a unit 15 trust; and 16 (b) at least one of the interests is an ordinary share; and 17 (c) all the interests are stapled together; and 18 (d) the security is listed for quotation in the official list of the 19 ASX Limited. 20 (2) A stapled entity for a stapled security is a company or a unit trust 21 covered by subsection (1) for the stapled security. 22 7 Section 139GH (after table item dealing with Restructure) 23 Insert: 24 Stapled entity 139GCD Stapled security 139GCD [Page Break] Part 2--Consequential amendments 2 A New Tax System (Goods and Services Tax) Act 1999 3 8 Paragraph 84-14(a) 4 Omit "share or right", substitute "share, right or stapled security (within 5 the meaning of Division 13A of Part III of the *ITAA 1936)". 6 9 Paragraph 84-14(b) 7 Omit "shares or rights", substitute "shares, rights or stapled securities 8 (within the meaning of that Division)". 9 10 Section 195-1 (definition of employee share scheme) 10 After "section 139C", insert "(including as affected by Subdivision DB 11 of Division 13A of Part III)". 12 Fringe Benefits Tax Assessment Act 1986 13 11 Subsection 136(1) (paragraph (ha) of the definition of 14 fringe benefit) 15 After "share or right", insert "to acquire a share". 16 12 Subsection 136(1) (after paragraph (ha) of the definition of 17 fringe benefit) 18 Insert: 19 (haa) a benefit constituted by the acquisition by a person under an 20 employee share scheme (within the meaning of that Division) 21 of a stapled security or right to acquire a stapled security that 22 is treated as a qualifying share or qualifying right for the 23 purposes of that Division because of Subdivision DB of that 24 Division; or 25 13 Subsection 136(1) (after paragraph (hb) of the definition of 26 fringe benefit) 27 Insert: 28 (hc) a benefit constituted by the acquisition by a trust of money or 29 other property where the sole activities of the trust are 30 [Page Break] 1 securities that are treated as qualifying shares or qualifying 2 rights for the purposes of Division 13A of Part III of the 3 Income Tax Assessment Act 1936 because of Subdivision DB 4 of that Division, and providing those stapled securities or 5 rights: 6 (i) to employees of a stapled entity (within the meaning of 7 that Division) for the stapled securities, or to associates 8 of those employees; or 9 (ii) to persons who are engaged in foreign service (within 10 the meaning of section 139GBA of the Income Tax 11 Assessment Act 1936) for a stapled entity for the stapled 12 securities, or associates of those persons; or 13 (iii) for a case where, if all the stapled entities for any of the 14 stapled securities were part of one company, that 15 company would be a holding company (within the 16 meaning of the Corporations Act 2001) of another 17 company--to employees, or associates of employees of 18 that other company; or 19 (iv) for a case where, if all the stapled entities for any of the 20 stapled securities were part of one company, that 21 company would be a holding company (within the 22 meaning of the Corporations Act 2001) of another 23 company--to persons who are engaged in foreign 24 service (within the meaning of section 139GBA of the 25 Income Tax Assessment Act 1936) for that other 26 company, or associates of those persons; or 27 Income Tax Assessment Act 1936 28 14 Section 109H 29 Omit "certain shares or rights under an employee share scheme", 30 substitute "certain shares, rights or stapled securities under an employee 31 share scheme". 32 15 Subsection 109NB(1) 33 Repeal the subsection, substitute: 34 (1) A private company is not taken under section 109D to pay a 35 dividend because of a loan made solely for the purpose of enabling 36 the shareholder or an associate of the shareholder to acquire: 37 [Page Break] 1 share scheme; or 2 (b) a stapled security or right to acquire a stapled security that is 3 treated as a qualifying share or qualifying right because of 4 Subdivision DB of Division 13A. 5 16 At the end of section 530A 6 Add: 7 (3) This section applies in relation to a stapled security or right to 8 acquire a stapled security that is treated as a qualifying share or 9 qualifying right because of Subdivision DB of Division 13A of 10 Part III in the same way as it applies in relation to a share or right. 11 (4) The cessation time for the stapled security or right is the cessation 12 time provided for in that Division. 13 Income Tax Assessment Act 1997 14 17 Subsection 115-30(1A) 15 Omit "another share or right for the purposes of Division 13A of Part III 16 of that Act", substitute "another share, right or stapled security (as 17 defined in Division 13A of Part III of that Act) for the purposes of that 18 Division". 19 18 After subsection 115-30(1A) 20 Insert: 21 (1B) A *CGT asset that forms part of a stapled security (as defined in 22 Division 13A of Part III of the Income Tax Assessment Act 1936) 23 that is treated under section 139DQ of that Act as if it were a 24 continuation of another *share or stapled security for the purposes 25 of that Division, is treated for the purposes of item 8 of the table in 26 subsection (1) of this section as if it were a continuation of each 27 CGT asset that was, or was a part of, the other share or stapled 28 security. 29 Note: This Part applies in relation to a CGT asset that forms part of a stapled 30 security acquired under an employee share scheme in the same way as 31 it applies in relation to a share acquired under an employee share 32 scheme: see section 130-97. 33 19 Paragraph 125-75(3)(a) 34 [Page Break] 1 (a) either: 2 (i) would be a *qualifying share or a *qualifying right 3 *acquired under an *employee share scheme if 4 Division 13A of Part III of the Income Tax Assessment 5 Act 1936 applied to ownership interests in a trust; or 6 (ii) forms part of a stapled security (within the meaning of 7 that Division) that is treated as a qualifying share 8 because of Subdivision DB of that Division; and 9 20 At the end of section 130-90 10 Add: 11 Stapled securities 12 (6) This section applies, in the same way as it applies in relation to a 13 *share or right in a company, in relation to a *CGT asset that: 14 (a) forms part of a stapled security (within the meaning of 15 Division 13A of Part III of the Income Tax Assessment Act 16 1936); or 17 (b) is a right to *acquire a stapled security (within the meaning of 18 that Division). 19 (7) For the purposes of that application, a *withholding payment from 20 a stapled entity (within the meaning of Division 13A of Part III of 21 the Income Tax Assessment Act 1936) for the stapled security is 22 taken to be a withholding payment from the company. 23 21 At the end of Subdivision 130-D 24 Add: 25 130-97 Stapled securities 26 (1) This section sets out what happens if you *acquire a stapled 27 security (within the meaning of Division 13A of Part III of the 28 Income Tax Assessment Act 1936) that: 29 (a) is treated as a *qualifying share because of Subdivision DB of 30 that Division; or 31 (b) because of section 139DQ of that Act is treated, for the 32 purposes of that Division, as if it were a continuation of: 33 [Page Break] 1 scheme; or 2 (ii) another stapled security (within the meaning of that 3 Division) that is treated as a qualifying share because of 4 Subdivision DB of that Division. 5 (2) The provisions (the applied provisions) of Part 3-1, this Part 6 (except this section), Subdivision 768-R and Division 855 apply, 7 with the modifications set out in subsections (3), (4) and (5), in 8 relation to each *CGT asset that forms part of the stapled security 9 in the same way as the applied provisions apply in relation to: 10 (a) a CGT asset that is a *share *acquired under an *employee 11 share scheme; and 12 (b) a CGT asset that is a *qualifying share. 13 Note 1: The assets that form part of a stapled security are an ordinary share 14 and one or more other interests that are either shares or units in a unit 15 trust: see section 139GCD of the Income Tax Assessment Act 1936. 16 Note 2: There are modifications to this application in subsections 115-30(1A) 17 and (1B). 18 (3) The applied provisions apply as if an election under section 139E 19 of the Income Tax Assessment Act 1936 in relation to the stapled 20 security were an election in relation to each of the assets. 21 (4) The applied provisions apply as if the *cessation time for the 22 stapled security were the cessation time for each of the assets. 23 Modification relating to cost base and reduced cost base 24 (5) Subsection (6) applies for the purposes of the application, in 25 relation to a *CGT asset that forms part of a stapled security, of a 26 provision of this Subdivision providing that the first element of the 27 *cost base and *reduced cost base of a *share is its market value 28 (worked out under sections 139FA to 139FF of the Income Tax 29 Assessment Act 1936) at a time. 30 (6) The first element of the *cost base and *reduced cost base of a 31 *CGT asset that forms part of the stapled security is so much of the 32 market value (worked out under sections 139FA to 139FF of the 33 Income Tax Assessment Act 1936) of the stapled security at that 34 time as is reasonably attributable to the asset. 35 22 Section 208-215 36 [Page Break] 1 23 At the end of section 208-215 2 Add: 3 (2) A *share in a company is acquired by a person under an *employee 4 share scheme in circumstances that are relevant for the purposes of 5 paragraph 208-205(b) and 208-235(b) if the share is part of a 6 stapled security (within the meaning of Division 13A of Part III of 7 the Income Tax Assessment Act 1936) that is treated as a 8 *qualifying share because of Subdivision DB of that Division. 9 24 Subsections 703-35(1), (2), (3) and (4) 10 Repeal the subsections, substitute: 11 (1) The object of this section is to ensure that an entity (the first entity) 12 is not prevented from being a *subsidiary member of a 13 *consolidated group or *consolidatable group just because there are 14 minor holdings of *membership interests in an entity (the employee 15 share scheme entity) issued under *arrangements for employee 16 shareholdings. (It does not matter whether the employee share 17 scheme entity is the first entity or is interposed between the first 18 entity and a *member of the group.) 19 Note: A company that is prevented from being a subsidiary member of a 20 consolidated group may be a head company (so there could be 2 21 consolidated or consolidatable groups, instead of the one that this 22 section ensures exists). 23 (2) This Part (except Division 719) operates as if an entity that meets 24 the requirement of subsection (3) at a particular time were a 25 *wholly-owned subsidiary of an entity (the holding entity) at the 26 time. 27 (3) The entity must be one that would be a *wholly-owned subsidiary 28 of the holding entity at the time if the *membership interests in the 29 entity that are to be disregarded under subsection (4) did not exist. 30 (4) Disregard: 31 (a) each of the *shares described in subsection (5) if the total 32 number of those shares is not more than 1% of the number of 33 ordinary shares in the company; and 34 (b) each of the *membership interests in an entity described in 35 subsection (7) if the total number of those membership 36 [Page Break] 1 interests of that kind in the entity. 2 25 Subsection 703-35(5) 3 Omit "the company" (first occurring), substitute "a company". 4 26 At the end of section 703-35 5 Add: 6 (7) A *membership interest of a particular kind in an entity that is 7 beneficially owned by another entity may be disregarded under 8 subsection (4) if: 9 (a) the membership interest forms part of a stapled security 10 (within the meaning of Division 13A of Part III of the Income 11 Tax Assessment Act 1936); and 12 (b) the stapled security is treated as a *qualifying share because 13 of Subdivision DB of that Division. 14 Note: The kinds of membership interest that form part of a stapled security 15 are an ordinary share and one or more other interests that are either 16 shares or units in a unit trust: see section 139GCD of the Income Tax 17 Assessment Act 1936. 18 27 Subsection 719-30(1) 19 Omit "*shares in a company", substitute "*membership interests in an 20 entity". 21 28 Subsection 719-30(2) 22 Repeal the subsection, substitute: 23 (2) For the purposes of this Division, in determining whether an entity 24 is a *wholly-owned subsidiary of another entity, disregard: 25 (a) particular *shares in a company if the shares are covered by 26 subsection (3) and the total number of those shares is not 27 more than 1% of the number of ordinary shares in the 28 company; and 29 (b) particular *membership interests in an entity if the 30 membership interests are covered by subsection (5) and the 31 total number of those membership interests is not more than 32 1% of the number of membership interests of that kind in the 33 entity. 34 [Page Break] 1 Add: 2 (5) A *membership interest of a particular kind in an entity that is 3 beneficially owned by another entity is covered by this subsection 4 if: 5 (a) the membership interest forms part of a stapled security 6 (within the meaning of Division 13A of Part III of the Income 7 Tax Assessment Act 1936); and 8 (b) the stapled security is treated as a *qualifying share because 9 of Subdivision DB of that Division. 10 Note: The kinds of membership interest that form part of a stapled security 11 are an ordinary share and one or more other interests that are either 12 shares or units in a unit trust: see section 139GCD of the Income Tax 13 Assessment Act 1936. 14 30 Subsection 768-920(1) (note) 15 After "Note", insert "1". 16 31 At the end of subsection 768-920(1) (after the note) 17 Add: 18 Note 2: For a stapled security acquired under an employee share scheme, the 19 operation of this Subdivision is affected by section 130-97. 20 32 Subsection 768-920(2) (note) 21 After "Note", insert "1". 22 33 At the end of subsection 768-920(2) (after the note) 23 Add: 24 Note 2: For a stapled security acquired under an employee share scheme, the 25 operation of this Subdivision is affected by section 130-97. 26 34 Subsection 995-1(1) (definition of cessation time) 27 Omit "and 139CB", substitute ", 139CB and 139DSH". 28 35 Subsection 995-1(1) (definition of employee share 29 scheme) 30 Repeal the definition, substitute: 31 [Page Break] 1 *acquire a stapled security that is treated because of Subdivision 2 DB of Division 13A of Part III of the Income Tax Assessment Act 3 1936 as a qualifying right for the purposes of that Division, is 4 acquired under an employee share scheme if it is acquired (within 5 the meaning of section 139G of that Act) in the way described in 6 section 139C of that Act. 7 36 Subsection 995-1(1) (definition of qualifying right) 8 Repeal the definition, substitute: 9 qualifying right has the meaning given by section 139CD of the 10 Income Tax Assessment Act 1936, and includes a right to *acquire a 11 stapled security that is treated because of Subdivision DB of 12 Division 13A of Part III of that Act as a qualifying right for the 13 purposes of that Division. 14 Taxation Administration Act 1953 15 37 Subsection 14-5(3) of Schedule 1 16 After "share or right", insert "to acquire a share". 17 38 At the end of subsection 14-5(3) of Schedule 1 18 Add: 19 ; or (e) a benefit constituted by the acquisition under an employee 20 share scheme (within the meaning of that Division) of a 21 stapled security or right to acquire a stapled security that is 22 treated as a qualifying share or qualifying right for the 23 purposes of that Division because of Subdivision DB of that 24 Division. 25 39 Application 26 (1) The amendments made by this Schedule apply to acquisitions of stapled 27 securities, and of rights to acquire stapled securities, on or after 1 July 28 2006. 29 (2) In this item: 30 acquisition has the same meaning as in Division 13A of Part III of the 31 Income Tax Assessment Act 1936. 32