TAX LAWS AMENDMENT (2009 MEASURES NO. 3) BILL 2009

i Tax Laws Amendment (2009 Measures No. 3) Bill 2009 No. , 2009

B09BU203.v02.docx 28/4/2009 5:01 PM

Contents

Short title ............................................................................................ 1

Commencement .................................................................................. 1

Schedule(s) ......................................................................................... 2

Schedule 1--Reduction in 2009-10 PAYG instalments

Part 1--Main amendments

Taxation Administration Act 1953

Part 2--Sunsetting on 1 July 2014

Taxation Administration Act 1953

Part 3--Application provision

Schedule 2--Choosing annual PAYG instalme nts if voluntarily

registered for GST

Income Tax Assessment Act 1997

Taxation Administration Act 1953

Schedule 3--Petroleum resource rent tax

Part 1--Functional currency

Petroleum Resource Rent Tax Assessment Act 1987

Part 2--Exploration expenditure etc.

Petroleum Resource Rent Tax Assessment Act 1987

Part 3--Processing of internal petroleum

Petroleum Resource Rent Tax Assessment Act 1987

Part 4--Designated frontier areas

Petroleum Resource Rent Tax Assessment Act 1987

Schedule 4--Deductible gift recipients

Income Tax Assessment Act 1997

Tax Laws Amendment (2009 Measures No. 3) Bill 2009 No. , 2009 1

A Bill for an Act to amend the law relating to

taxation, and for related purposes

The Parliament of Australia enacts:

1 Short title

This Act may be cited as the Tax Laws Amendment (2009

Measures No. 3) Act 2009.

2 Commence ment

(1) Each provision of this Act specified in column 1 of the table

commences, or is taken to have commenced, in accordance with

column 2 of the table. Any other statement in column 2 has effect

according to its terms.

2 Tax Laws Amendment (2009 Measures No. 3) Bill 2009 No. , 2009

Commencement information

Column 1

Column 2

Column 3

Provision(s)

Commencement

Date/Details

1. Sections 1 to 3

and anything in

this Act not

elsewhere covered

by this table

The day on which this Act receives the

Royal Assent.

2. Schedule 1,

Part 1

The day after this Act receives the Royal

Assent.

3. Schedule 1,

Part 2

1 Ju ly 2014.

1 Ju ly 2014

4. Schedule 1,

Part 3

The day after this Act receives the Royal

Assent.

5. Schedule 2

The day on which this Act receives the

Royal Assent.

6. Schedule 3,

Part 1

1 Ju ly 2009.

1 Ju ly 2009

7. Schedule 3,

Parts 2 and 3

1 Ju ly 2008.

1 Ju ly 2008

8. Schedule 3,

Part 4

12 May 2009.

12 May 2009

9. Schedule 4

The day on which this Act receives the

Royal Assent.

Note:

This table relates only to the provisions of this Act as originally

passed by both Houses of the Parliament and assented to. It will not be

expanded to deal with provisions inserted in this Act after assent.

(2) Column 3 of the table contains additional information that is not

part of this Act. Information in this column may be added to or

edited in any published version of this Act.

3 Schedule(s)

Each Act that is specified in a Schedule to this Act is amended or

repealed as set out in the applicable items in the Schedule

concerned, and any other item in a Schedule to this Act has effect

according to its terms.

Reduction in 2009-10 PA YG instalments Schedule 1

Main amendments Part 1

Tax Laws Amendment (2009 Measures No. 3) Bill 2009 No. , 2009 3

Schedule 1

Reduction in 2009-10 PAYG

instalments

Part 1

Main amendments

Taxation Administration Act 1953

1 Subsection 45-405(3) in Schedule 1 (definition of GDP

adjustment)

Repeal the definition, substitute:

GDP adjustment means:

(a) if the current year is the 2009-10 income year--2%; or

(b) otherwise:

(i) the percentage (rounded to the nearest whole number,

rounding down a number ending in .5) worked out using

the following formula; or

(ii) if the percentage worked out using the formula is

negative--0%:

Sum of GDP amounts current year

100

Sum of GDP amounts previous year

Note:

Paragraph (a) will be repealed on 1 July 2014: see Part 2 of

Schedule 1 to the Tax Laws Amendment (2009 Measures No. 3) Act

2009.

2 Subsection 45-405(6) in Schedule 1

Omit "The GDP adjustment", substitute "In a case covered by

paragraph (b) of the definition of GDP adjustment in subsection (3), the

GDP adjustment".

Schedule 1 Reduction in 2009-10 PA YG instalments

Part 2 Sunsetting on 1 July 2014

4 Tax Laws Amendment (2009 Measures No. 3) Bill 2009 No. , 2009

Part 2

Sunsetting on 1 July 2014

Taxation Administration Act 1953

3 Subsection 45-405(3) in Schedule 1 (paragraphs (a) and (b)

of the definition of GDP adjustment)

Repeal the paragraphs (not including the formula), substitute:

(a) the percentage (rounded to the nearest whole number,

rounding down a number ending in .5) worked out using the

following formula; or

(b) if the percentage worked out using the formula is negative--

0%:

4 Subsection 45-405(3) in Schedule 1 (note to the definition

of GDP adjustment)

Repeal the note.

5 Subsection 45-405(6) in Schedule 1

Omit "In a case covered by paragraph (b) of the definition of GDP

adjustment in subsection (3), the", substitute "The".

Schedule 2 Choosing annual PA YG instalments if voluntarily registered for GST

6 Tax Laws Amendment (2009 Measures No. 3) Bill 2009 No. , 2009

Schedule 2

Choosing annual PAYG

instalments if voluntarily registered for

GST

Income Tax Assessment Act 1997

1 Subsection 995-1(1)

Insert:

annual tax period election has the same meaning as in the A New

Tax System (Goods and Services Tax) Act 1999.

Taxation Administration Act 1953

2 Section 45-1 in Schedule 1

Omit "If you are not registered for GST purposes,", substitute "If you

are not required to be registered for GST purposes,".

3 After subsection 45-140(1) in Schedule 1

Insert:

(1A) You may also choose at a time (subject to subsection (2)) to pay

instalments annually instead of quarterly if at that time either:

(a) an

annual tax period election of yours has effect and, if you

are a partner in one or more partnerships that are registered

under Part 2-5 of the

GST Act, an annual tax period election

of each of those partnerships has effect; or

(b) all of the following subparagraphs apply:

(i) you are neither registered, nor

required to be registered,

under Part 2-5 of the GST Act;

(ii) you are a partner in one or more partnerships that are

registered under that Part;

(iii) an annual tax period election of each of those

partnerships has effect;

and at the end of the

starting instalment quarter, you satisfy the

following conditions:

registered under Part 2-5 of the GST Act;

Choosing annual PA YG instalments if voluntarily registered for GST Schedule 2

Tax Laws Amendment (2009 Measures No. 3) Bill 2009 No. , 2009 7

(d) your most recent

notional tax notified by the Commissioner

is less than $8,000;

(e) in the case of a company--the company is not a

participant

in a

GST joint venture under Division 51 of that Act;

(f) in the case of a company--the company is not part of an

instalment group.

Note:

You cannot choose to be an annual payer while you are the head

company of a consolidated group to which Subdivision 45-Q applies:

see section 45-720.

4 Subsection 45-140(2) in Schedule 1

After "choice", insert "under subsection (1) or (1A)".

5 Paragraph 45-140(3)(a) in Schedule 1

After "subsection (1)", insert "or (1A)".

6 Paragraph 45-150(1)(a) in Schedule 1

Omit "

registered, or

required to be registered,", substitute "

required

to be registered".

7 Paragraphs 45-150(1)(b) and (c) in Schedule 1

Omit "registered, or required to be registered,", substitute "required to

be registered".

8 At the end of subsection 45-150(1) in Schedule 1

Add:

; or (f) an

annual tax period election of yours, or of a partnership in

which you are a partner, ceases to have effect.

9 Paragraph 45-150(3)(a) in Schedule 1

Repeal the paragraph, substitute:

(a) after you stop being an

annual payer under subsection (1),

you satisfy the conditions in subsection 45-140(1) or (1A);

and

10 Paragraph 45-150(3)(b) in Schedule 1

Omit "that section", substitute "section 45-140".

11 Paragraph 45-155(4)(a) in Schedule 1

Schedule 2 Choosing annual PA YG instalments if voluntarily registered for GST

8 Tax Laws Amendment (2009 Measures No. 3) Bill 2009 No. , 2009

Omit "again satisfy the conditions in section 45-140", substitute "satisfy

the conditions in subsection 45-140(1) or in paragraphs 45-140(1A)(c),

(d), (e) and (f)".

12 Paragraph 45-155(4)(b) in Schedule 1

Omit "that section", substitute "section 45-140".

13 Paragraph 45-160(3)(a) in Schedule 1

Repeal the paragraph, substitute:

(a) after you stop being an

annual payer under subsection (1),

you satisfy the conditions in subsection 45-140(1) or (1A);

and

14 Paragraph 45-160(3)(b) in Schedule 1

Omit "that section", substitute "section 45-140".

15 Application

The amendments of the Taxation Administration Act 1953 made by this

Schedule apply in relation to instalments for income years starting after

30 June 2009.

Petroleu m resource rent tax Schedule 3

Functional currency Part 1

Tax Laws Amendment (2009 Measures No. 3) Bill 2009 No. , 2009 9

Schedule 3

Petroleum resource rent tax

Part 1

Functional currency

Petroleum Resource Rent Tax Assessment Act 1987

1 Section 2

Insert:

accounts includes:

(a) ledgers; and

(b) journals; and

(d) profit and loss accounts; and

(e) balance-sheets; and

(f) statements of financial position;

and also includes statements, reports and notes attached to, or

intended to be read with, anything covered by any of the above

paragraphs.

2 Section 2

Insert:

applicable foreign currency has the meaning given by

section 58C.

3 Section 2

Insert:

basic company group has the meaning given by section 2B.

4 Section 2

Insert:

designated company group has the meaning given by section 2BA.

5 Section 2

Insert:

Schedule 3 Petro leu m resource rent tax

Part 1 Functional currency

10 Tax Laws Amendment (2009 Measures No. 3) Bill 2009 No. , 2009

excess closing-down expenditure has the meaning given by

paragraph 46(1)(a).

6 Section 2

Insert:

foreign currency means a currency other than Australian currency.

7 Section 2

Insert:

group company has the meaning given by section 2B.

8 Section 2

Insert:

head company of a designated company group has the meaning

given by section 2BA.

9 Section 2

Insert:

overall company group has the meaning given by section 2B.

10 Section 2

Insert:

subsidiary has the meaning given by section 2B.

11 Subsection 2B(1)

Before "during so much", insert "at all times".

Note 1: The heading to section 2B is altered by adding at the end ", subsidiaries, basic

company groups and overall company groups".

Note 2: The following heading to subsection 2B(1) is inserted "Group company--period".

12 After subsection 2B(1)

Insert:

Petroleu m resource rent tax Schedule 3

Functional currency Part 1

Tax Laws Amendment (2009 Measures No. 3) Bill 2009 No. , 2009 11

Group company--time

(1A) For the purposes of this Act, a company is a group company in

relation to another company at a particular time if, at that time:

(a) one of the companies was a subsidiary of the other company;

(b) each of the companies was a subsidiary of the same

company.

13 Subsection 2B(2)

Repeal the subsection, substitute:

Subsidiary

(2) For the purposes of this Act, a company (in this subsection called

the subsidiary company) is a subsidiary of another company (in

this subsection called the holding company) at a particular time if,

at that time:

(a) all the shares in the subsidiary company are beneficially

owned by:

(i) the holding company; or

(ii) a company that is, or 2 or more companies each of

which is, a subsidiary of the holding company; or

(iii) the holding company and a company that is, or 2 or

more companies each of which is, a subsidiary of the

holding company; and

(b) there is no agreement, arrangement or understanding in force

under which any person is able, or would be able after that

time, to affect rights of the holding company or of a

subsidiary of the holding company in relation to the

subsidiary company.

14 Subsection 2B(3)

Omit "this section", substitute "this Act".

15 After subsection 2B(4)

Insert:

Schedule 3 Petro leu m resource rent tax

Part 1 Functional currency

12 Tax Laws Amendment (2009 Measures No. 3) Bill 2009 No. , 2009

Basic company group

(4A) For the purposes of this Act, a basic company group is a group of

companies, where each company in the group is a group company

in relation to each other company in the group.

Overall company group

(4B) For the purposes of this Act, an overall company group is a basic

company group that is not a subset of any other basic company

group.

Note:

The following heading to subsection 2B(5) is inserted "When company in existence".

16 After section 2B

Insert:

2BA Designated company groups

(1) This section sets out the method for identifying a designated

company group for the purposes of this Act.

(2) First, identify a particular overall company group.

(3) Second, identify all of the members of the overall company group

that are entitled to derive assessable receipts in relation to a

petroleum project (whether or not the same petroleum project).

These members constitute a provisional designated company

group.

(4) Third, if the following conditions are satisfied in relation to a

company (the key company):

(a) the key company is a member of the provisional designated

company group;

(b) the key company is not a subsidiary of any other company in

the provisional designated company group;

group is a subsidiary of the key company;

then:

(d) the provisional designated company group is a designated

company group; and

(e) the key company is the head company of that designated

company group.

Petroleu m resource rent tax Schedule 3

Functional currency Part 1

Tax Laws Amendment (2009 Measures No. 3) Bill 2009 No. , 2009 13

(5) Fourth, if:

(a) subsection (4) does not apply; and

(b) each company in the provisional designated company group

is a subsidiary of another company (the key company) that:

(i) is a member of the overall company group; and

(ii) is not a member of the provisional designated company

group;

then:

(i) the key company; and

(ii) the members of the provisional designated company

group;

constitute a designated company group; and

(d) the key company is the head company of that designated

company group.

(6) Subsection (5) has effect subject to subsection (7).

(7) If:

(a) a designated company group is covered by subsection (5);

and

(b) the head company of the designated company group is a

subsidiary of another company (the higher-tier company);

and

group; and

(d) the higher-tier company is not a member of the provisional

designated company group;

there is taken not to be a designated company group of which:

(e) the higher-tier company is the head company; and

(f) any member of the provisional designated company group is

a member.

17 Section 10

Repeal the section, substitute:

10 Translation of amounts into Australian currency

(1) For the purposes of this Act, an amount in a foreign currency is to

be translated into Australian currency.

Schedule 3 Petro leu m resource rent tax

Part 1 Functional currency

14 Tax Laws Amendment (2009 Measures No. 3) Bill 2009 No. , 2009

Examples of an amount

(2) The following are examples of an amount:

(a) an amount of an expense;

(b) an amount of an obligation;

(d) an amount of a receipt;

(e) an amount of a payment;

(f) an amount of consideration;

(g) a value.

Translation rule--assessable receipt

(3) If:

(a) a person derives an assessable receipt in relation to a

petroleum project; and

(b) the receipt is in a foreign currency;

the receipt is to be translated into Australian currency at the

exchange rate applicable at the time when the receipt is derived.

Translation rule--deductible expenditure

(4) If:

(a) a person incurs deductible expenditure in relation to a

petroleum project; and

(b) the expenditure is in a foreign currency;

the expenditure is to be translated into Australian currency at the

exchange rate applicable at the time when the expenditure is

incurred.

Translation rule--transfer of entire entitlement to assessable

receipts

(5) If:

(a) section 48 applies in relation to a transaction; and

(b) a person is a purchaser (within the meaning of section 48) in

relation to the transaction; and

incurred an amount; and

Petroleu m resource rent tax Schedule 3

Functional currency Part 1

Tax Laws Amendment (2009 Measures No. 3) Bill 2009 No. , 2009 15

(d) the vendor (within the meaning of section 48) in relation to

the transaction has made an election under section 58B

(functional currency); and

(e) the election is in effect for the year of tax in which the

transfer time (within the meaning of section 48) occurred;

and

(f) the amount is in the vendor's applicable functional currency;

the amount is to be translated from the applicable functional

currency into Australian currency at the exchange rate applicable at

the transfer time (within the meaning of section 48).

Translation rule--transfer of part of entitlement to assessable

receipts

(6) If:

(a) section 48A applies in relation to a transaction; and

(b) a person is a purchaser (within the meaning of section 48A)

in relation to the transaction; and

incurred an amount; and

(d) the vendor (within the meaning of section 48A) in relation to

the transaction has made an election under section 58B

(functional currency); and

(e) the election is in effect for the year of tax in which the

transfer time (within the meaning of section 48A) occurred;

and

(f) the amount is in the vendor's applicable functional currency;

the amount is to be translated from the applicable functional

currency into Australian currency at the exchange rate applicable at

the transfer time (within the meaning of section 48A).

Operation of functional currency provisions unaffected

(7) This section does not affect the operation of Division 7 of Part V

(functional currency).

18 Subsection 46(1)

Repeal the subsection, substitute:

(1) If, in relation to a petroleum project, the sum of any closing-down

expenditure and any other deductible expenditure incurred by a

Schedule 3 Petro leu m resource rent tax

Part 1 Functional currency

16 Tax Laws Amendment (2009 Measures No. 3) Bill 2009 No. , 2009

person in a year of tax exceeds the assessable receipts derived by

the person in the year of tax:

(a) so much of the excess as does not exceed the amount of the

closing-down expenditure is the person's excess

closing-down expenditure for the year of tax; and

(b) the person is entitled to a credit of the lesser of the following

amounts:

(i) an amount equal to 40% of the excess closing-down

expenditure for the year of tax;

(ii) the total amount of any tax in respect of the project

(including in the case of a combined project any

pre-combination project in relation to the project) paid

or payable by the person in relation to previous years of

tax, reduced by the total amount of any credits allowed

or allowable to the person under this section in relation

to the project in relation to any previous years of tax.

19 At the end of Part V

Add:

Division 7--Functional currency

58A Objects of this Division

The objects of this Division are:

(a) to allow a person whose accounts are kept solely or

predominantly in a particular foreign currency (the

functional currency) to calculate:

(i) the person's taxable profits; and

(ii) certain other amounts;

by reference to the functional currency; and

(b) to allow companies that:

(i) are in a designated company group; and

(ii) whose accounts are kept solely or predominantly in a

particular foreign currency (the functional currency);

to calculate:

(iii) their taxable profits; and

(iv) certain other amounts;

by reference to the functional currency.

Petroleu m resource rent tax Schedule 3

Functional currency Part 1

Tax Laws Amendment (2009 Measures No. 3) Bill 2009 No. , 2009 17

58B Person may elect to be bound by the functional currency rules

(1) A person may elect to be bound by the functional currency rules

for the purposes of this Act, with effect from the start of:

(a) if the election was made by the person within 30 days after

the day on which the Tax Laws Amendment (2009 Measures

No. 3) Act 2009 received the Royal Assent--the year of tax

beginning on 1 July 2009; or

(b) in any other case--the year of tax following the one in which

the person made the election.

(2) An election under subsection (1) must be in writing.

(3) An election under subsection (1) continues in effect until a

withdrawal of the election takes effect (see section 58L).

Designated company group--deemed election etc.

(4) If:

(a) a person has made an election under subsection (1); and

(b) at the time when the person made the election, the person

was the head company of a designated company group; and

(d) when the election took effect, the person was the head

company of a designated company group; and

(e) immediately before the end of the year of tax, the person is

the head company of a designated company group (the

current designated company group);

then:

(f) each other company that was in the current designated

company group immediately before the end of the year of tax

is taken to have made an election under subsection (1); and

(g) an election covered by paragraph (f):

(i) is taken to have been in effect for the year of tax; and

(ii) supersedes any previous election made by the other

company that was in effect for the year of tax.

(5) If:

(a) a person has made an election under subsection (1); and

(b) at the time when the person made the election, the person

was the head company of a designated company group; and

Schedule 3 Petro leu m resource rent tax

Part 1 Functional currency

18 Tax Laws Amendment (2009 Measures No. 3) Bill 2009 No. , 2009

(d) during the year of tax, the person ceased to be the head

company of the designated company group; and

(e) immediately before the end of the year of tax, another

company is the head company of the designated company

group;

then:

(f) the company covered by paragraph (e) is taken to have made

an election under subsection (1); and

(g) an election covered by paragraph (f):

(i) is taken to have been in effect for the year of tax; and

(ii) supersedes any previous election made by the company

that was in effect for the year of tax; and

(h) each other company that was in the designated company

group immediately before the end of the year of tax is taken

to have made an election under subsection (1); and

(i) an election covered by paragraph (h):

(i) is taken to have been in effect for the year of tax; and

(ii) supersedes any previous election made by the other

company that was in effect for the year of tax.

(6) If:

(a) immediately before the end of a year of tax, a person is the

head company of a designated company group; and

(b) the person is not taken, under subsection (5), to have made an

election under subsection (1) that is in effect for the year of

tax; and

(i) is in effect for the year of tax; and

(ii) under subsection (4), results in each other company that

was in the designated company group immediately

before the end of the year of tax being taken to have

made an election under subsection (1); and

(d) a company that was in the designated company group

immediately before the end of the year of tax has made an

election under subsection (1); and

(e) the election covered by paragraph (d) is in effect for the year

of tax;

Petroleu m resource rent tax Schedule 3

Functional currency Part 1

Tax Laws Amendment (2009 Measures No. 3) Bill 2009 No. , 2009 19

the company covered by paragraph (d) is taken to have withdrawn

the election covered by paragraph (d) with effect from the start of

the year of tax.

58C Applicable foreign curre ncy

(1) For the purposes of this Act, if:

(a) a person has made an election under section 58B (other than

an election taken to have been made as a result of the

application of subsection 58B(4) or paragraph 58B(5)(h) to a

designated company group); and

(b) the election is in effect for a year of tax;

the person's applicable functional currency for the year of tax is

the sole or predominant foreign currency in which:

group--the person kept the person's accounts immediately

before the end of the year of tax; or

(d) otherwise--the person kept the person's accounts at the time

when the person made the election.

Designated company group

(2) For the purposes of this Act, if:

(a) a person is taken to have made an election under section 58B

as a result of the application of subsection 58B(4) or

paragraph 58B(5)(h) to a designated company group; and

(b) the election is in effect for a year of tax;

the person's applicable functional currency for the year of tax is

the sole or predominant currency in which the head company of the

designated company group kept its accounts immediately before

the end of the year of tax.

58D Basic translation rules

(1) If:

(a) a person has made an election under section 58B; and

(b) that election is in effect for a year of tax;

the following rules apply:

person of the year of tax in relation to a petroleum project:

Schedule 3 Petro leu m resource rent tax

Part 1 Functional currency

20 Tax Laws Amendment (2009 Measures No. 3) Bill 2009 No. , 2009

(i) an amount that is not in the applicable functional

currency is to be translated into the applicable

functional currency; and

(ii) the definition of foreign currency in section 2 does not

apply; and

(iii) the applicable functional currency is taken not to be a

foreign currency; and

(iv) Australian currency and any other currency (except the

applicable functional currency) are taken to be foreign

currencies;

(d) second, the taxable profit of the person of the year of tax in

relation to the petroleum project is to be translated into

Australian currency;

(e) third, for the purpose of working out a credit to which the

person is entitled under section 46 in relation to the year of

tax, an amount of excess closing-down expenditure is to be

translated into Australian currency.

Examples of an amount

(2) The following are examples of an amount:

(a) an amount of an expense;

(b) an amount of an obligation;

(d) an amount of a receipt;

(e) an amount of a payment;

(f) an amount of consideration;

(g) a value.

58E Translation rule--assessable receipt

If:

(a) a person derives an assessable receipt in relation to a

petroleum project; and

(b) the receipt is not in the applicable functional currency; and

under section 58B was in effect;

the receipt is to be translated into the applicable functional

currency at the exchange rate applicable at the time when the

receipt was derived.

Petroleu m resource rent tax Schedule 3

Functional currency Part 1

Tax Laws Amendment (2009 Measures No. 3) Bill 2009 No. , 2009 21

58F Translation rule--deductible expenditure

If:

(a) a person incurs deductible expenditure in relation to a

petroleum project; and

(b) the expenditure is not in the applicable functional currency;

and

person under section 58B was in effect;

the expenditure is to be translated into the applicable functional

currency at the exchange rate applicable at the time the expenditure

was incurred.

58G Translation rule--transfer of entire entitle ment to assessable

receipts

If:

(a) section 48 applies in relation to a transaction; and

(b) a person is a purchaser (within the meaning of section 48) in

relation to the transaction; and

incurred an amount; and

(d) the transfer time (within the meaning of section 48) occurred

when an election made by the person under section 58B was

in effect; and

(e) the amount is not in the applicable functional currency;

the amount is to be translated into the applicable functional

currency at the exchange rate applicable at the transfer time (within

the meaning of section 48).

58H Translation rule--transfer of part of entitlement to assessable

receipts

If:

(a) section 48A applies in relation to a transaction; and

(b) a person is a purchaser (within the meaning of section 48A)

in relation to the transaction; and

incurred an amount; and

Schedule 3 Petro leu m resource rent tax

Part 1 Functional currency

22 Tax Laws Amendment (2009 Measures No. 3) Bill 2009 No. , 2009

(d) the transfer time (within the meaning of section 48A)

occurred when an election made by the person under

section 58B was in effect; and

(e) the amount is not in the applicable functional currency;

the amount is to be translated into the applicable functional

currency at the exchange rate applicable at the transfer time (within

the meaning of section 48A).

58J Translation of taxable profit, or excess closing-down

expenditure, into Australian curre ncy

(1) If:

(a) paragraph 58D(1)(d) requires the translation of the taxable

profit of a person of a year of tax in relation to a petroleum

project; or

(b) paragraph 58D(1)(e) requires the translation of an amount of

excess closing-down expenditure for the purpose of working

out a credit to which a person is entitled under section 46 in

relation to a year of tax;

that taxable profit or excess closing-down expenditure, as the case

may be, is to be translated using:

of all the exchange rates during the year of tax--that

exchange rate; or

(d) if the person elects to use the exchange rate applicable on the

last day of the year of tax--that exchange rate.

(2) An election under paragraph (1)(c) or (d):

(a) must be in writing; and

(b) is irrevocable.

Default election

(3) If:

(a) either:

(i) paragraph 58D(1)(d) requires the translation of the

taxable profit of a person of a year of tax in relation to a

petroleum project; or

(ii) paragraph 58D(1)(e) requires the translation of an

amount of excess closing-down expenditure for the

Petroleu m resource rent tax Schedule 3

Functional currency Part 1

Tax Laws Amendment (2009 Measures No. 3) Bill 2009 No. , 2009 23

purpose of working out a credit to which a person is

entitled under section 46 in relation to a year of tax; and

(b) the person does not make an election under paragraph (1)(c)

or (d) of this section in relation to the year of tax;

the person is taken to have made an election under paragraph (1)(c)

of this section in relation to the year of tax.

Continuity of election

(4) If:

(a) a person has made an election under section 58B; and

(b) that election is in effect for 2 or more consecutive years of

tax; and

section in relation to the first of those years of tax;

the person is taken to have made an election under paragraph (1)(c)

of this section in relation to each remaining year of tax.

(5) If:

(a) a person has made an election under section 58B; and

(b) that election is in effect for 2 or more consecutive years of

tax; and

section in relation to the first of those years of tax;

the person is taken to have made an election under paragraph (1)(d)

of this section in relation to each remaining year of tax.

Designated company group--deemed election under

paragraph (1)(c) etc.

(6) If:

(a) a person has made an election under paragraph (1)(c) in

relation to a year of tax; and

(b) at the time when the person made the election, the person

was the head company of a designated company group; and

the head company of a designated company group (the

current designated company group);

then:

Schedule 3 Petro leu m resource rent tax

Part 1 Functional currency

24 Tax Laws Amendment (2009 Measures No. 3) Bill 2009 No. , 2009

(d) each other company that was in the current designated

company group immediately before the end of the year of tax

is taken to have made an election under paragraph (1)(c) in

relation to the year of tax; and

(e) an election covered by paragraph (d):

(i) is taken to have been in effect for the year of tax; and

(ii) supersedes any previous election made by the other

company that was in effect for the year of tax.

(7) If:

(a) a person has made an election under paragraph (1)(c); and

(b) at the time when the person made the election, the person

was the head company of a designated company group; and

(d) during the year of tax, the person ceased to be the head

company of the designated company group; and

(e) immediately before the end of the year of tax, another

company is the head company of the designated company

group;

then:

(f) the company covered by paragraph (e) of this subsection is

taken to have made an election under paragraph (1)(c); and

(g) an election covered by paragraph (f) of this subsection:

(i) is taken to have been in effect for the year of tax; and

(ii) supersedes any previous election made by the company

that was in effect for the year of tax; and

(h) each other company that was in the designated company

group immediately before the end of the year of tax is taken

to have made an election under paragraph (1)(c); and

(i) an election covered by paragraph (h) of this subsection:

(i) is taken to have been in effect for the year of tax; and

(ii) supersedes any previous election made by the other

company that was in effect for the year of tax.

(8) If:

(a) immediately before the end of a year of tax, a person is the

head company of a designated company group; and

Petroleu m resource rent tax Schedule 3

Functional currency Part 1

Tax Laws Amendment (2009 Measures No. 3) Bill 2009 No. , 2009 25

(b) the person is not taken, under subsection (7), to have made an

election under paragraph (1)(c) that is in effect for the year of

tax; and

that:

(i) relates to the year of tax; and

(ii) under subsection (6), results in each other company that

was in the designated company group immediately

before the end of the year of tax being taken to have

made an election under paragraph (1)(c); and

(d) a company that was in the designated company group

immediately before the end of the year of tax has made an

election under paragraph (1)(c) in relation to the year of tax;

the election covered by paragraph (c) of this subsection is taken not

to have been in effect for the year of tax.

Designated company group--deemed election under

paragraph (1)(d) etc.

(9) If:

(a) a person has made an election under paragraph (1)(d) in

relation to a year of tax; and

(b) at the time when the person made the election, the person

was the head company of a designated company group; and

the head company of a designated company group (the

current designated company group);

then:

(d) each other company that was in the current designated

company group immediately before the end of the year of tax

is taken to have made an election under paragraph (1)(d) in

relation to the year of tax; and

(e) an election covered by paragraph (d):

(i) is taken to have been in effect for the year of tax; and

(ii) supersedes any previous election made by the other

company that was in effect for the year of tax.

(10) If:

(a) a person has made an election under paragraph (1)(d); and

Schedule 3 Petro leu m resource rent tax

Part 1 Functional currency

26 Tax Laws Amendment (2009 Measures No. 3) Bill 2009 No. , 2009

(b) at the time when the person made the election, the person

was the head company of a designated company group; and

(d) during the year of tax, the person ceased to be the head

company of the designated company group; and

(e) immediately before the end of the year of tax, another

company is the head company of the designated company

group;

then:

(f) the company covered by paragraph (e) of this subsection is

taken to have made an election under paragraph (1)(d); and

(g) an election covered by paragraph (f) of this subsection:

(i) is taken to have been in effect for the year of tax; and

(ii) supersedes any previous election made by the company

that was in effect for the year of tax; and

(h) each other company that was in the designated company

group immediately before the end of the year of tax is taken

to have made an election under paragraph (1)(d); and

(i) an election covered by paragraph (h) of this subsection:

(i) is taken to have been in effect for the year of tax; and

(ii) supersedes any previous election made by the other

company that was in effect for the year of tax.

(11) If:

(a) immediately before the end of a year of tax, a person is the

head company of a designated company group; and

(b) the person is not taken, under subsection (10), to have made

an election under paragraph (1)(d) that is in effect for the

year of tax; and

that:

(i) relates to the year of tax; and

(ii) under subsection (9), results in each other company that

was in the designated company group immediately

before the end of the year of tax being taken to have

made an election under paragraph (1)(d); and

(d) a company that was in the designated company group

immediately before the end of the year of tax has made an

election under paragraph (1)(d) in relation to the year of tax;

Petroleu m resource rent tax Schedule 3

Functional currency Part 1

Tax Laws Amendment (2009 Measures No. 3) Bill 2009 No. , 2009 27

the election covered by paragraph (c) of this subsection is taken not

to have been in effect for the year of tax.

58K Special translation rules--events that happened before the

current election took effect

Class 1 augmented bond rate general expenditure, class 1

augmented bond rate exploration expenditure and class 2

augmented bond rate general expenditure

(1) If:

(a) a person has made an election under section 58B (the current

election) with effect from the start of a particular year of tax;

and

(b) any of the following subparagraphs applies:

(i) under subsection 33(3), an amount is taken to be class 1

augmented bond rate general expenditure incurred by

the person in relation to a petroleum project on the first

day of the year of tax;

(ii) under subsection 34(3), an amount is taken to be class 1

augmented bond rate exploration expenditure incurred

by the person in relation to a petroleum project on the

first day of the year of tax;

(iii) under subsection 34A(4), an amount is taken to be class

2 augmented bond rate general expenditure incurred by

the person on the first day of the year of tax; and

the amount be translated into the applicable functional

currency;

the amount is to be translated into the applicable functional

currency at the exchange rate applicable when the current election

took effect.

Class 2 augmented bond rate exploration expenditure, class 2

GDP factor expenditure and transferable exploration expenditure

(2) For the purpose of working out:

(a) the class 2 augmented bond rate exploration expenditure; or

(b) the class 2 GDP factor expenditure; or

Schedule 3 Petro leu m resource rent tax

Part 1 Functional currency

28 Tax Laws Amendment (2009 Measures No. 3) Bill 2009 No. , 2009

that a person is taken to have incurred in a year of tax in relation to

a petroleum project, if:

(d) the person has made an election (the current election) under

section 58B; and

(e) the current election is in effect for the year of tax; and

(f) section 58D requires that an amount of expenditure be

translated into the applicable functional currency; and

(g) the expenditure was actually incurred before the current

election took effect;

the expenditure is to be translated into the applicable functional

currency at the exchange rate applicable when the current election

took effect.

58L Withdrawal of election

(1) If:

(a) a person has made an election under section 58B (other than

an election taken to have been made as a result of the

application of subsection 58B(4) or paragraph 58B(5)(h) to a

designated company group); and

(b) the person's applicable functional currency has ceased to be

the sole or predominant currency in which the person keeps

the person's accounts;

the person may withdraw the election with effect from immediately

after the end of the year of tax in which the person withdraws the

election.

(2) A withdrawal must be in writing.

(3) Withdrawing an election does not prevent the person from making

a fresh election under section 58B.

Designated company groups--deemed withdrawal of election etc

(4) If:

(a) a person withdraws an election under section 58B with effect

from immediately after the end of the year of tax in which the

person withdraws the election; and

(b) at the time when the withdrawal is made, the person is the

head company of a designated company group;

Petroleu m resource rent tax Schedule 3

Functional currency Part 1

Tax Laws Amendment (2009 Measures No. 3) Bill 2009 No. , 2009 29

each other company in the designated company group is taken to

have withdrawn the other company's section 58B election with

effect from immediately after the end of the year of tax.

58M Special translation rules--events that happened before the

withdrawal of an election took effect

Class 1 augmented bond rate general expenditure, class 1

augmented bond rate exploration expenditure and class 2

augmented bond rate general expenditure

(1) If:

(a) a person withdraws an election under section 58B with effect

from immediately after the end of a year of tax; and

(b) the person does not make a fresh election under section 58B

with effect from the start of the next year of tax; and

(i) under subsection 33(3), an amount is taken to be class 1

augmented bond rate general expenditure incurred by

the person in relation to a petroleum project on the first

day of the next year of tax;

(ii) under subsection 34(3), an amount is taken to be class 1

augmented bond rate exploration expenditure incurred

by the person in relation to a petroleum project on the

first day of the next year of tax;

(iii) under subsection 34A(4), an amount is taken to be class

2 augmented bond rate general expenditure incurred by

the person on the first day of the next year of tax; and

(d) section 10 requires that the amount be translated into

Australian currency;

the amount is to be translated into Australian currency at the

exchange rate applicable at the start of the next year of tax.

Class 2 augmented bond rate exploration expenditure, class 2

GDP factor expenditure and transferable exploration expenditure

(2) For the purpose of working out:

(a) the class 2 augmented bond rate exploration expenditure; or

(b) the class 2 GDP factor expenditure; or

Schedule 3 Petro leu m resource rent tax

Part 1 Functional currency

30 Tax Laws Amendment (2009 Measures No. 3) Bill 2009 No. , 2009

that a person is taken to have incurred in a year of tax in relation to

a petroleum project, if:

(d) a person withdraws an election under section 58B with effect

from immediately after the end of an earlier year of tax; and

(e) the person has not made an election under section 58B with

effect from the start of an intervening year of tax; and

(f) section 10 requires that an amount of expenditure be

translated into Australian currency; and

(g) the expenditure was actually incurred before the withdrawal

of the election took effect;

the expenditure is to be translated into Australian currency at the

exchange rate applicable at the start of the next year of tax after

that earlier year of tax.

20 Application of amendments

The amendments made by this Part apply in relation to instalments and

assessments of tax under the Petroleum Resource Rent Tax Assessment

Act 1987 for years of tax that start on or after 1 July 2009.

Petroleu m resource rent tax Schedule 3

Exp loration expenditure etc. Part 2

Tax Laws Amendment (2009 Measures No. 3) Bill 2009 No. , 2009 31

Part 2

Exploration expenditure etc.

Petroleum Resource Rent Tax Assessment Act 1987

21 Section 2

Insert:

post-30 June 2008 petroleum project means a petroleum project,

where the production licence, or each production licence, in

relation to the project came into force after 30 June 2008.

22 Section 2

Insert:

pre-1 July 2008 petroleum project means a petroleum project

other than a post-30 June 2008 petroleum project.

23 Subsection 5(1)

Omit "this Act (including this section)", substitute "the application of

this Act (including this section) to a pre-1 July 2008 petroleum

project,".

Note:

The following heading to subsection 5(1) is inserted "Pre-1 July 2008 petroleum

project".

24 Subsection 5(2)

Omit "this Act,", substitute "the application of this Act to a pre-1 July

2008 petroleum project,".

25 At the end of section 5

Add:

Post-30 June 2008 petroleum project

(5) For the purposes of the application of this Act (including this

section) to a post-30 June 2008 petroleum project, a reference to

exploration for petroleum in, or recovery of petroleum from, a

production licence area, an exploration permit area or a retention

lease area is a reference to exploration for petroleum in, or

recovery of petroleum from, the production licence area, the

exploration permit area or the retention lease area while the

Schedule 3 Petro leu m resource rent tax

Part 2 Exp loration expenditure etc.

32 Tax Laws Amendment (2009 Measures No. 3) Bill 2009 No. , 2009

production licence, exploration permit or retention lease concerned

is or was in force.

(6) For the purposes of the application of this Act to a post-30 June

2008 petroleum project, a reference to exploration for petroleum

in, or recovery of petroleum from, the eligible exploration or

recovery area in relation to a petroleum project is a reference to:

(a) if the production licence, or any production licence, in

relation to the project is a production licence (in this

paragraph called the current production licence) derived

from an exploration permit (in this paragraph called the prior

exploration permit)--exploration for petroleum in, or

recovery of petroleum from, the exploration permit area of

the prior exploration permit, where the exploration or

recovery occurred:

(i) before the current production licence came into force;

and

(ii) if, before the current production licence came into force,

there came into force one or more retention leases, or

one or more other production licences, derived from the

prior exploration permit--after whichever of those

retention leases or other production licences last came

into force before the current production licence came

into force; and

(b) if the production licence, or any production licence, in

relation to the project is a production licence (in this

paragraph called the current production licence) derived

from a retention lease (in this paragraph called the prior

retention lease)--exploration for petroleum in, or recovery

of petroleum from, the retention lease area of the prior

retention lease, where the exploration or recovery occurred

before the current production licence came into force; and

(i) the production licence, or any production licence, in

relation to the project is a production licence (in this

paragraph called the current production licence)

derived from a retention lease (in this paragraph called

the prior retention lease); and

(ii) the prior retention lease was derived from an

exploration permit (in this paragraph called the prior

exploration permit);

Petroleu m resource rent tax Schedule 3

Exp loration expenditure etc. Part 2

Tax Laws Amendment (2009 Measures No. 3) Bill 2009 No. , 2009 33

exploration for petroleum in, or recovery of petroleum from,

the exploration permit area of the prior exploration permit,

where the exploration or recovery occurred:

(iii) before the prior retention lease came into force; and

(iv) if, before the prior retention lease came into force, there

came into force one or more other production licences,

or one or more other retention leases, derived from the

prior exploration permit--after whichever of those other

retention leases or other production licences last came

into force before the prior retention lease came into

force; and

(d) exploration for petroleum in, or recovery of petroleum from,

the production licence area of the production licence, or the

production licence areas of the production licences, in respect

of the project.

(7) If:

(a) paragraph (6)(c) applies to a post-30 June 2008 petroleum

project; and

(b) the prior retention lease mentioned in that paragraph is one of

a set of 2 or more retention leases that:

(i) came into force at the same time; and

(ii) were derived from the prior exploration permit

mentioned in that paragraph; and

to one or more other post-30 June 2008 petroleum projects

were derived from one or more of the retention leases

included in the set mentioned in paragraph (b) of this

subsection; and

(d) exploration expenditure incurred in relation to the petroleum

project mentioned in paragraph (a) of this subsection is

attributable to exploration for petroleum in, or recovery of

petroleum from, the exploration permit area of the prior

exploration permit;

then, for the purposes of the application of this Act to the

petroleum project mentioned in paragraph (a) of this subsection,

the amount of the exploration expenditure mentioned in

paragraph (d) of this subsection is taken to be the amount worked

out using the following formula:

Schedule 3 Petro leu m resource rent tax

Part 2 Exp loration expenditure etc.

34 Tax Laws Amendment (2009 Measures No. 3) Bill 2009 No. , 2009

Number of retention leases

relating to the petroleum

project mentioned in

paragraph (a) of this subsection

Unadjusted amount of

exploration expentiture

Total number of

retention leases

where:

number of retention leases relating to the petroleum project

mentioned in paragraph (a) of this subsection means the number

of retention leases:

(a) from which the production licence, or the production

licences, in relation to the petroleum project mentioned in

paragraph (a) of this subsection were derived; and

(b) that are included in the set mentioned in paragraph (b) of this

subsection.

total number of retention leases means the number of retention

leases that are included in the set mentioned in paragraph (b) of

this subsection.

unadjusted amount of exploration expenditure means the amount

that, apart from this subsection, is the amount of the exploration

expenditure mentioned in paragraph (d) of this subsection.

Petroleu m resource rent tax Schedule 3

Processing of internal petroleu m Part 3

Tax Laws Amendment (2009 Measures No. 3) Bill 2009 No. , 2009 35

Part 3

Processing of internal petroleum

Petroleum Resource Rent Tax Assessment Act 1987

26 Section 2

Insert:

internal petroleum, in relation to a petroleum project, means

petroleum, or constituents of petroleum, recovered from the

production licence area or production licence areas in relation to

the project, where:

(a) the petroleum, or the constituents of petroleum, is, or is to be,

recovered or processed:

(i) by a person entitled to derive assessable receipts in

relation to the project; and

(ii) for or on behalf of another person who is entitled to

derive assessable receipts in relation to the project; or

(b) the petroleum, or the constituents of petroleum, is, or is to be,

sold:

(i) by a person entitled to derive assessable receipts in

relation to the project; and

(ii) to another person who is entitled to derive assessable

receipts in relation to the project.

27 Section 2 (at the end of the definition of petroleum project

or project)

Add "or (2C)".

28 Section 2

Insert:

processing of internal petroleum, in relation to a petroleum

project, includes the stabilisation, transportation, storage or

recovery of internal petroleum in relation to the project.

29 After subsection 19(2B)

Insert:

(2C) For the purposes of this Act, there is taken to be included, as part

of any petroleum project within the meaning of subsection (1) or

Schedule 3 Petro leu m resource rent tax

Part 3 Processing of internal petroleu m

36 Tax Laws Amendment (2009 Measures No. 3) Bill 2009 No. , 2009

(2), the carrying on of any processing of internal petroleum wholly

or partly using the operations, facilities and other things

comprising the project:

(a) in the case of an eligible production licence referred to in

subsection (1)--while that licence is in force; or

(b) in the case of 2 or more eligible production licences referred

to in subsection (2)--while any of those licences are in force.

30 Section 24A

After "external petroleum", insert ", or internal petroleum,".

31 Paragraph 37(1)(c)

Repeal the paragraph, substitute:

recover or process petroleum recovered from the eligible

exploration or recovery area (other than any production

licence area) in relation to the project, if that stabilisation,

transportation, storage, recovery or processing constitutes:

(i) the processing of internal petroleum in relation to the

project; or

(ii) the processing of external petroleum in relation to

another petroleum project;

32 Paragraph 38(1)(c)

After "external petroleum", insert ", or internal petroleum,".

33 Paragraph 38(1)(d)

Repeal the paragraph, substitute:

(d) in procuring another person to stabilise, transport, store,

recover or process petroleum recovered from the production

licence area or areas in relation to the project, if that

stabilisation, transportation, storage, recovery or processing

constitutes:

(i) the processing of internal petroleum in relation to the

project; or

(ii) the processing of external petroleum in relation to

another petroleum project;

34 Subsection 38(2)

Petroleu m resource rent tax Schedule 3

Processing of internal petroleu m Part 3

Tax Laws Amendment (2009 Measures No. 3) Bill 2009 No. , 2009 37

After "external petroleum", insert ", or internal petroleum,".

35 Subsection 41(2)

After "external petroleum", insert ", or internal petroleum,".

36 Application of amendments

The amendments made by this Part apply in relation to instalments and

assessments of tax under the Petroleum Resource Rent Tax Assessment

Act 1987 for years of tax that start on or after 1 July 2008.

Deductible gift recipients Schedule 4

Tax Laws Amendment (2009 Measures No. 3) Bill 2009 No. , 2009 39

Schedule 4

Deductible gift recipients

Income Tax Assessment Act 1997

1 Subsection 30-25(2) (at the end of the table)

Add:

2.2.37

The Royal Institution of Australia

Incorporated

the gift must be made

after 16 April 2009

2 Subsection 30-80(2) (at the end of the table)

Add:

9.2.21

Dip lo macy Training Program Limited

the gift must be made

after 16 April 2009

3 Section 30-105 (after table item 13.2.3)

Insert:

13.2.3

Leeuwin Ocean Adventure Foundation

Limited

the gift must be made

after 16 April 2009

4 Section 30-315 (after table item 44)

Insert:

44AAA

Dip lo macy Training Program Limited

item 9.2.21

5 Section 30-315 (after table item 65)

Insert:

65A

Leeuwin Ocean Adventure Foundation

Limited

item 13.2.3A

6 Section 30-315 (after table item 103)

Insert:

103A

Royal Institution of Australia Incorporated

item 2.2.37

7 Application of amendments

The amendments made by this Schedule apply in relation to

assessments for:

(a) the 2009-10 income year; and

(b) later income years.

Commonwealth of Australia Bills

TAX LAWS AMENDMENT (2009 MEASURES NO. 3) BILL 2009