2008 The Parliament of the Commonwealth of Australia HOUSE OF REPRESENTATIVES Presented and read a first time Tax Laws Amendment (2008 Measures No. 2) Bill 2008 No. , 2008 (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) ........................................................................................ 2 Schedule 1--Amounts misappropriated by an employee or agent 3 Part 1--Capital allowances 3 Income Tax Assessment Act 1997 3 Part 2--Capital gains and losses 5 Income Tax Assessment Act 1997 5 Part 3--Application 9 Schedule 2--Late payment offset for superannuation guarantee contributions 10 Superannuation Guarantee (Administration) Act 1992 10 Schedule 3--CGT market value substitution rule for interests in widely held entities 13 Income Tax Assessment Act 1997 13 Schedule 4--Endeavour Research Fellowships and Executive Awards 16 Income Tax Assessment Act 1997 16 Schedule 5--Early completion bonuses for apprentices 17 Income Tax Assessment Act 1997 17 Schedule 6--Deductible gift recipients 18 Income Tax Assessment Act 1997 18 [Page Break] 2 taxation, and for related purposes 3 The Parliament of Australia enacts: 4 1 Short title 5 This Act may be cited as the Tax Laws Amendment (2008 6 Measures No. 2) Act 2008. 7 2 Commencement 8 (1) Each provision of this Act specified in column 1 of the table 9 commences, or is taken to have commenced, in accordance with 10 column 2 of the table. Any other statement in column 2 has effect 11 according to its terms. 12 Tax Laws Amendment (2008 Measures No. 2) Bill 2008 No. , 2008 1 [Page Break] Column 1 Column 2 Column 3 Provision(s) Commencement Date/Details 1. Sections 1 to 3 The day on which this Act receives the and anything in Royal Assent. this Act not elsewhere covered by this table 2. Schedules 1 to The day on which this Act receives the 4 Royal Assent. 3. Schedule 5 Immediately after the commencement of the provisions covered by table item 2. 4. Schedule 6 The day on which this Act receives the Royal Assent. 1 Note: This table relates only to the provisions of this Act as originally 2 passed by both Houses of the Parliament and assented to. It will not be 3 expanded to deal with provisions inserted in this Act after assent. 4 (2) Column 3 of the table contains additional information that is not 5 part of this Act. Information in this column may be added to or 6 edited in any published version of this Act. 7 3 Schedule(s) 8 Each Act that is specified in a Schedule to this Act is amended or 9 repealed as set out in the applicable items in the Schedule 10 concerned, and any other item in a Schedule to this Act has effect 11 according to its terms. [Page Break] 2 Schedule 1--Amounts misappropriated by an 3 employee or agent 4 Part 1--Capital allowances 5 Income Tax Assessment Act 1997 6 1 Section 12-5 (after the table item headed "mining") 7 Insert: misappropriation by employee or agent .......................................................... 25-47 8 2 Subsection 20-30(1) (after table item 1.5) 9 Insert: 1.5A 25-47 misappropriation by an employee or agent 10 3 After section 25-45 11 Insert: 12 25-47 Misappropriation where a balancing adjustment event occurs 13 (1) You can deduct an amount if: 14 (a) a *balancing adjustment event occurs for a *depreciating asset 15 you *held; and 16 (b) your employee or *agent misappropriates (whether by theft, 17 embezzlement, larceny or otherwise) all or part of the amount 18 applicable to you under: 19 (i) item 8 of the table in subsection 40-300(2); or 20 (ii) item 1, 3, 4 or 6 of the table in subsection 40-305(1); 21 in relation to the balancing adjustment event. 22 Note 1: The amount applicable to you under subsection 40-300(2) or 23 40-305(1) may be the market value of an asset or of a non-cash 24 benefit. 25 Note 2: If you receive an amount as recoupment of the amount 26 misappropriated, the amount may be included in your assessable 27 income: see Subdivision 20-A. [Page Break] 2 misappropriated as represents an amount applicable to you under 3 item 8 of the table in subsection 40-300(2) or item 1, 3, 4 or 6 of 4 the table in subsection 40-305(1) in relation to the *balancing 5 adjustment event. 6 (3) You can deduct the amount for the income year in which the 7 misappropriation happens. 8 (4) You must reduce the amount you can deduct under this section if 9 your deductions for the asset have been reduced under 10 section 40-25 because of use for a purpose other than a *taxable 11 purpose. The reduction is by the same proportion you reduce the 12 balancing adjustment amount for the asset under section 40-290. 13 (5) Section 170 of the Income Tax Assessment Act 1936 does not 14 prevent the amendment of an assessment for the purposes of giving 15 effect to this section for an income year if: 16 (a) you discover the misappropriation after you lodged your 17 *income tax return for the income year; and 18 (b) the amendment is made at any time during the period of 4 19 years starting immediately after you discover the 20 misappropriation. 21 4 At the end of subsections 40-285(1) and (2) 22 Add: 23 Note 3: There is a modification to the calculation in the case of 24 misappropriation by your employee or agent: see section 25-47. [Page Break] 2 Part 2--Capital gains and losses 3 Income Tax Assessment Act 1997 4 5 Subsection 104-190(1) 5 After "subsection 116-45(2)", insert "or 116-60(3)". 6 6 Subsection 104-190(1) (note) 7 Repeal the note, substitute: 8 Note: Section 116-45 applies if you do not receive your capital proceeds 9 despite having taken all reasonable steps to get them, and 10 section 116-60 applies if your capital proceeds are misappropriated by 11 your employee or agent. 12 7 At the end of section 104-240 13 Add: 14 (3) In applying subsection (1) or (2), reduce the *termination value of 15 the *depreciating asset by so much of an amount misappropriated 16 by your employee or *agent (whether by theft, embezzlement, 17 larceny or otherwise) as represents an amount applicable to you 18 under: 19 (a) item 8 of the table in subsection 40-300(2); or 20 (b) item 1, 3, 4 or 6 of the table in subsection 40-305(1); 21 in relation to the *balancing adjustment event. 22 (4) If you later receive an amount as *recoupment of all or part of the 23 amount misappropriated, the amount applicable under 24 subsection (3) is increased by the amount received. 25 (5) Section 170 of the Income Tax Assessment Act 1936 does not 26 prevent the amendment of an assessment for the purposes of giving 27 effect to this section for an income year if: 28 (a) you discover the misappropriation, or you receive an amount 29 as *recoupment of all or part of the amount misappropriated, 30 after you lodged your *income tax return for the income year; 31 and [Page Break] 2 years starting immediately after you discover the 3 misappropriation or receive the amount. 4 8 At the end of section 104-245 5 Add: 6 (3) In applying subsection (1) or (2), reduce the *termination value of 7 the *depreciating asset by so much of an amount misappropriated 8 by your employee or *agent (whether by theft, embezzlement, 9 larceny or otherwise) as represents an amount applicable to you 10 under: 11 (a) item 8 of the table in subsection 40-300(2); or 12 (b) item 1, 3, 4 or 6 of the table in subsection 40-305(1); 13 in relation to the *balancing adjustment event. 14 (4) If you later receive an amount as *recoupment of all or part of the 15 amount misappropriated, the amount applicable under 16 subsection (3) is increased by the amount received. 17 (5) Section 170 of the Income Tax Assessment Act 1936 does not 18 prevent the amendment of an assessment for the purposes of giving 19 effect to this section for an income year if: 20 (a) you discover the misappropriation, or you receive an amount 21 as *recoupment of all or part of the amount misappropriated, 22 after you lodged your *income tax return for the income year; 23 and 24 (b) the amendment is made at any time during the period of 4 25 years starting immediately after you discover the 26 misappropriation or receive the amount. 27 9 Subsection 116-10(1) 28 Omit "5 modifications", substitute "6 modifications". 29 10 At the end of section 116-10 (before the note) 30 Add: 31 (7) The sixth relates to misappropriation by an employee or agent. It is 32 relevant if your employee or agent misappropriates all or part of 33 the capital proceeds from a CGT event. [Page Break] 2 Omit "5 modifications", substitute "6 modifications". 3 12 Section 116-25 (table items dealing with CGT events A1 4 and B1, column headed "Only these modifications can 5 apply:") 6 After ", 5", insert ", 6". 7 13 Section 116-25 (table items dealing with CGT events C1, 8 C2, C3, D1, D2 and D3, column headed "Only these 9 modifications can apply:") 10 After ", 4", insert ", 6". 11 14 Section 116-25 (table items dealing with CGT events D4, 12 E1, E2 and E8, column headed "Only these 13 modifications can apply:") 14 After ", 5", insert ", 6". 15 15 Section 116-25 (table items dealing with CGT events F1, 16 F2, F4, F5 and H2, column headed "Only these 17 modifications can apply:") 18 After ", 4", insert ", 6". 19 16 Section 116-25 (table items dealing with CGT event K6, 20 column headed "Only these modifications can apply:") 21 After ", 5", insert ", 6". 22 17 Section 116-25 (table items dealing with CGT event K9, 23 column headed "Only these modifications can apply:") 24 After ", 4", insert ", 6". 25 18 After section 116-55 26 Insert: 27 116-60 Misappropriation rule: modification 6 28 (1) The *capital proceeds from a *CGT event are reduced if your 29 employee or *agent misappropriates (whether by theft, 30 embezzlement, larceny or otherwise) all or part of those proceeds. [Page Break] 2 an amount when you are entitled to receive it. 3 (2) The *capital proceeds are reduced by the amount misappropriated. 4 (3) There is a further consequence if: 5 (a) those proceeds are reduced by the amount misappropriated; 6 and 7 (b) you later receive an amount as *recoupment of all or part of 8 the amount misappropriated. 9 Those proceeds are increased by the amount received. 10 (4) This Part and Part 3-3 apply to the debt owed to you (the amount 11 misappropriated) as if it were not a *CGT asset. 12 (5) Section 170 of the Income Tax Assessment Act 1936 does not 13 prevent the amendment of an assessment for the purposes of giving 14 effect to this section for an income year if: 15 (a) you discover the misappropriation, or you receive an amount 16 as *recoupment of all or part of the amount misappropriated, 17 after you lodged your *income tax return for the income year; 18 and 19 (b) the amendment is made at any time during the period of 4 20 years starting immediately after you discover the 21 misappropriation or receive the amount. [Page Break] 2 Part 3--Application 3 19 Application 4 The amendments made by this Schedule apply to amounts 5 misappropriated in the 2007-08 income year and later income years. [Page Break] 2 Schedule 2--Late payment offset for 3 superannuation guarantee 4 contributions 5 6 Superannuation Guarantee (Administration) Act 1992 7 1 Paragraph 23A(1)(a) 8 Repeal the paragraph, substitute: 9 (a) the contribution is made after the end of the period of 28 days 10 after the end of a quarter; and 11 2 Subsection 23A(2) 12 Repeal the subsection, substitute: 13 (2) The election must be made: 14 (a) in a statement having effect under section 35 as the 15 employer's assessment for the quarter; or 16 (b) within 4 years after the employer's superannuation guarantee 17 charge for the quarter became payable. 18 The election cannot be revoked. 19 3 After subsection 23A(4) 20 Insert: 21 (4A) If the election happens after the employer's assessment for the 22 quarter is made, then, for the offset to take effect, the assessment 23 must be amended accordingly under section 37. 24 4 Subsection 49(1) 25 After "unpaid amount", insert "(the original unpaid amount)". 26 5 Subsection 49(1) (note) 27 Repeal the note, substitute: 28 Note 1: The general interest charge is worked out under Part IIA of the 29 Taxation Administration Act 1953. 30 Note 2: Subsections (2) and (3A) deal with reducing the original unpaid 31 amount. [Page Break] 2 Before "unpaid amount", insert "original". 3 7 After subsection 49(3) 4 Insert: 5 (3A) For the purposes of this section and subsection 8AAC(3) of the 6 Taxation Administration Act 1953, if: 7 (a) the employer gives the Commissioner an election under 8 section 23A at a time (the election time) after the time the 9 superannuation guarantee charge is due to be paid; and 10 (b) the effect of the election is to reduce the employer's liability 11 to pay the superannuation guarantee charge by an amount 12 (the offset amount); 13 then, from the election time, the proportion of the original unpaid 14 amount that remains unpaid immediately before that time is taken 15 to be reduced by the offset amount. 16 Note: The original unpaid amount will not be reduced by the offset amount 17 during the period when the charge is payable before the election time. 18 8 Transitional--charge remaining payable at commencement 19 (1) If, for the purposes of the Superannuation Guarantee (Administration) 20 Act 1992, superannuation guarantee charge: 21 (a) became payable under an assessment before the 22 commencement of this Schedule; and 23 (b) was not fully paid before that commencement; 24 this item applies in relation to the employer's liability to pay the 25 proportion of the charge (the remaining charge) remaining payable at 26 that commencement. 27 (2) After that commencement, subsection 23A(2) of that Act applies as if 28 the remaining charge became payable at that commencement. 29 (3) If it is proposed to amend the assessment to effect a reduction, as a 30 result of an offset under section 23A of that Act, in the employer's 31 liability to pay the remaining charge, then: 32 (a) subsection 37(3) of that Act applies as if the assessment were 33 made at that commencement; and [Page Break] 2 charge became payable under the assessment at that 3 commencement. 4 (4) If the assessment was of superannuation guarantee charge payable in 5 relation to a year (instead of a quarter), then that Act also applies as if 6 references in that Act to a quarter were references to a year. 7 9 Transitional--charge for a year that becomes payable after 8 commencement 9 If, for the purposes of the Superannuation Guarantee (Administration) 10 Act 1992, superannuation guarantee charge: 11 (a) is payable in relation to a year (instead of a quarter) 12 happening before the commencement of this Schedule; and 13 (b) does not become payable until after that commencement; 14 then that Act applies, in relation to the employer's liability to pay the 15 charge, as if references in that Act to a quarter were references to a year. [Page Break] 2 Schedule 3--CGT market value substitution 3 rule for interests in widely held entities 4 5 Income Tax Assessment Act 1997 6 1 After subsection 116-30(2A) 7 Insert: 8 (2B) Despite paragraph (2)(b), subsection (2) does not apply if the *CGT 9 event is *CGT event C2 (about cancellation, surrender and similar 10 endings) and the *CGT asset that is the subject of the event is: 11 (a) a *share in a company that has at least 300 *members and is 12 not a company that is covered by section 116-35; or 13 (b) a unit in a unit trust that has at least 300 unit holders and is 14 not a trust that is covered by section 116-35. 15 Note: So, for one of these assets, the capital proceeds for the cancellation 16 will be what you actually received. 17 2 After section 116-30 18 Insert: 19 116-35 Companies and trusts that are not widely held 20 Coverage 21 (1) A company is covered by this section if subsection (3) or (5) 22 applies to the company. 23 (2) A unit trust is covered by this section if subsection (4) or (5) 24 applies to the trust. 25 Concentrated ownership 26 (3) This subsection applies to a company if an individual owns, or up 27 to 20 individuals own between them, directly or indirectly (through 28 one or more interposed entities) and for their own benefit, *shares 29 in the company: 30 (a) carrying *fixed entitlements to at least 75% of the company's 31 income or at least 75% of the company's capital; or [Page Break] 2 (4) This subsection applies to a trust if an individual owns, or up to 20 3 individuals own between them, directly or indirectly (through one 4 or more interposed entities) and for their own benefit, units in the 5 trust: 6 (a) carrying *fixed entitlements to at least 75% of the trust's 7 income or at least 75% of the trust's capital; or 8 (b) if unit holders of the trust have a right to vote in respect of 9 activities of the trust--carrying at least 75% of the voting 10 power in the trust. 11 Possible variation of rights 12 (5) This subsection applies to a company or trust if, because of: 13 (a) any provision in the entity's constituent document, or in any 14 contract, agreement or instrument: 15 (i) authorising the variation or abrogation of rights 16 attaching to any of the *shares or units in the entity; or 17 (ii) relating to the conversion, cancellation, extinguishment 18 or redemption of any of those shares or units; or 19 (b) any contract, *arrangement, option or instrument under which 20 a person has power to acquire any of those shares or units; or 21 (c) any power, authority or discretion in a person in relation to 22 the rights attaching to any of those shares or units; 23 it is reasonable to conclude that the rights attaching to any of those 24 shares or units are capable of being varied or abrogated in such a 25 way (even if they are not in fact varied or abrogated in that way) 26 that, directly or indirectly, subsection (3) or (4) would apply to the 27 entity. 28 Single individual 29 (6) For the purposes of subsections (3) and (4), all of the following are 30 taken to be a single individual: 31 (a) an individual, whether or not the individual holds *shares or 32 units in the entity concerned; 33 (b) the individual's *associates; 34 (c) for any shares or units in respect of which other individuals 35 are nominees of the individual or of the individual's 36 associates--those other individuals. [Page Break] 2 The amendments made by this Schedule apply to CGT events 3 happening after the start of the 2006-07 income year. [Page Break] 2 Schedule 4--Endeavour Research 3 Fellowships and Executive Awards 4 5 Income Tax Assessment Act 1997 6 1 Section 11-15 (table item headed "education") 7 After "education" (first occurring), insert "and training". 8 2 Section 11-15 (table item headed "education") 9 After: CRAFT scheme, employer's income from......................... 51-10 10 insert: Endeavour Awards, research fellowship under.................. 51-10 Endeavour Executive Award.............................................. 51-10 11 3 Section 11-15 (table item headed "student") 12 Omit: see education 13 substitute: see education and training 14 4 Section 51-10 (at the end of the table) 15 Add: 2.5 a recipient of: the fellowship or award none (a) a research fellowship under the Endeavour Awards; or (b) an Endeavour Executive Award 16 5 Application 17 The amendments of the Income Tax Assessment Act 1997 made by 18 items 2 and 4 of this Schedule apply in relation to fellowships and 19 awards received in the 2007-08 income year and later income years. [Page Break] 2 Schedule 5--Early completion bonuses for 3 apprentices 4 5 Income Tax Assessment Act 1997 6 1 Section 11-15 (table item headed "education and training") 7 After: CRAFT scheme, employer's income from......................... 51-10 8 insert: early completion bonuses for apprentices .......................... 51-10 and 51-42 9 2 Section 51-10 (at the end of the table) 10 Add: 2.6 a recipient of a bonus so much of the bonus as see section 51-42 for early completion does not exceed $1,000 of an apprenticeship 11 3 After section 51-40 12 Insert: 13 51-42 Bonuses for early completion of an apprenticeship 14 (1) The bonus must be provided under a scheme provided by a State or 15 Territory, and the scheme must be specified in the regulations for 16 the purposes of this section. 17 (2) The apprenticeship: 18 (a) must be for an occupation of a kind specified in the 19 regulations; and 20 (b) must be completed within a time frame specified in the 21 regulations for apprenticeships of that kind. 22 4 Application 23 The amendments made by this Schedule apply to assessments for the 24 2007-08 income year and later income years. [Page Break] 2 Schedule 6--Deductible gift recipients 3 4 Income Tax Assessment Act 1997 5 1 Subsection 30-25(2) (at the end of the table) 6 Add: 2.2.36 The Spirit of Australia Foundation the gift must be made after 10 September 2007 7 2 Subsection 30-45(2) (at the end of the table) 8 Add: 4.2.40 Ian Thorpe's Fountain for youth Limited the gift must be made after 28 February 2008 9 3 Subsection 30-50(2) (table item 5.2.25) 10 Omit "28 August 2007", substitute "1 July 2009". 11 4 Subsection 30-50(2) (at the end of the table) 12 Add: 5.2.29 AE 2 Commemorative Foundation Ltd the gift must be made after 28 February 2008 and before 1 March 2010 5.2.30 Memorials Development Committee Ltd the gift must be made after 4 September 2007 and before 1 July 2010 13 5 Subsection 30-70(2) (at the end of the table) 14 Add: 8.2.12 Playgroup Australia Incorporated the gift must be made after 2 August 2006 15 6 Subsection 30-80(2) (after table item 9.2.8) 16 Insert: 9.2.10 Australia for UNHCR the gift must be made after 27 June 2007 and before 28 June 2012 [Page Break] 2 Omit "21 July 2007", substitute "21 July 2009". 3 8 Subsection 30-80(2) (at the end of the table) 4 Add: 9.2.19 WHEELCHAIRS FOR KIDS Incorporated the gift must be made after 28 February 2008 and before 1 March 2010 9.2.20 World Youth Day 2008 Trust the gift must be made after 4 September 2007 and before 1 July 2009 5 9 Section 30-90 (at the end of the table) 6 Add: 10.2.8 Amy Gillett Foundation the gift must be made after 13 September 2007 7 10 Section 30-105 (before table item 13.2.2) 8 Insert: 13.2.1 the Council for Jewish Community Security the gift must be made after 9 August 2007 9 11 Section 30-105 (table item 13.2.6) 10 Omit "1 January 2008", substitute "1 January 2009". 11 12 Subsection 30-315(2) (after table item 2AC) 12 Insert: 2ACA AE 2 Commemorative Foundation Ltd item 5.2.29 13 13 Subsection 30-315(2) (after table item 3) 14 Insert: 3A Amy Gillett Foundation item 10.2.8 15 14 Subsection 30-315(2) (before table item 10) 16 Insert: 9A Australia for UNHCR item 9.2.10 17 15 Subsection 30-315(2) (after table item 39) [Page Break] 39A Council for Jewish Community Security item 13.2.1 2 16 Subsection 30-315(2) (after table item 72) 3 Insert: 72AA Memorials Development Committee Ltd item 5.2.30 4 17 Subsection 30-315(2) (after table item 86A) 5 Insert: 86AA Playgroup Australia Incorporated item 8.2.12 6 18 Subsection 30-315(2) (after table item 111B) 7 Insert: 111C Spirit of Australia Foundation item 2.2.36 8 19 Subsection 30-315(2) (after table item 124) 9 Insert: 124A WHEELCHAIRS FOR KIDS Incorporated item 9.2.19 10 20 Subsection 30-315(2) (after table item 127) 11 Insert: 127AA World Youth Day 2008 Trust item 9.2.20 12