2008-2009 The Parliament of the Commonwealth of Australia HOUSE OF REPRESENTATIVES Presented and read a first time Tax Laws Amendment (2009 Measures No. 6) Bill 2009 No. , 2009 (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) ........................................................................................ 3 Schedule 1--Abolishing trust cloning and providing a CGT roll-over for certain trusts 4 Part 1--Removing trust cloning exception 4 Income Tax Assessment Act 1997 4 Part 2--Roll-over for certain trusts 5 Income Tax Assessment Act 1997 5 Part 3--Other amendments 18 A New Tax System (Goods and Services Tax) Act 1999 18 Income Tax Assessment Act 1997 18 Schedule 2--Loss relief for merging superannuation funds 20 Part 1--Main amendment 20 Income Tax Assessment Act 1997 20 Part 2--Other amendments 36 Income Tax Assessment Act 1997 36 Part 3--Application provision 39 Part 4--Repeals 40 Income Tax Assessment Act 1997 40 Part 5--Savings 41 Schedule 3--Exempt annuity business of life insurance companies 43 Part 1--Amendments applying from 30 June 2000 43 Division 1--Amendment of the Income Tax Assessment Act 1997 43 Division 2--Consequential amendment 44 Tax Laws Amendment (2006 Measures No. 2) Act 2006 44 Part 2--Amendments applying from the 2007-08 income year 45 i Tax Laws Amendment (2009 Measures No. 6) Bill 2009 No. , 2009 [Page Break] Division 2--Consequential amendments 45 Superannuation Legislation Amendment (Simplification) Act 2007 45 Part 3--Application provision 47 Schedule 4--Deductible gift recipients 48 Part 1--Amendments commencing on 4 June 2009 48 Income Tax Assessment Act 1997 48 Part 2--Amendments commencing on Royal Assent 49 Income Tax Assessment Act 1997 49 Part 3--Application provision 50 Schedule 5--North Western Queensland floods 51 Part 1--Main amendments 51 Income Tax Assessment Act 1936 51 Income Tax Assessment Act 1997 51 Part 2--Sunsetting on 1 July 2011 52 Income Tax Assessment Act 1997 52 Part 3--Application provision 53 Schedule 6--Spirit blending 54 Excise Act 1901 54 Tax Laws Amendment (2009 Measures No. 6) Bill 2009 No. , 2009 ii [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 (2009 6 Measures No. 6) Act 2009. 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 (2009 Measures No. 6) Bill 2009 No. , 2009 1 [Page Break] Column 1 Column 2 Column 3 Provision(s) Commencement Date/Details 4. Sections 1 to 3 The day this Act receives the Royal Assent. and anything in this Act not elsewhere covered by this table 2. Schedule 1 The day this Act receives the Royal Assent. 3. Schedule 2, The day after this Act receives the Royal Parts 1, 2 and 3 Assent. 4. Schedule 2, 1 July 2013. 1 July 2013 Parts 4 and 5 5. Schedule 3, Immediately after the commencement of 30 June 2000 Part 1, Division 1 item 57 of Schedule 1 to the Tax Laws Amendment (2004 Measures No. 2) Act 2004. 6. Schedule 3, Immediately after the commencement of 22 June 2006 Part 1, Division 2 item 214 of Schedule 7 to the Tax Laws Amendment (2006 Measures No. 2) Act 2006. 7. Schedule 3, At the same time as Schedule 1 to the 15 March 2007 Part 2, Division 1 Superannuation Legislation Amendment (Simplification) Act 2007 commences. 8. Schedule 3, Immediately after the start of the day on 15 March 2007 Part 2, Division 2 which the Superannuation Legislation Amendment (Simplification) Act 2007 received the Royal Assent. 9. Schedule 3, The day this Act receives the Royal Assent. Part 3 10. Schedule 4, 4 June 2009. 4 June 2009 Part 1 11. Schedule 4, The day this Act receives the Royal Assent. Parts 2 and 3 12. Schedule 5, 25 February 2009. 25 February Part 1 2009 13. Schedule 5, Immediately before the commencement of 1 July 2011 Part 2 item 5 of Schedule 5 to the Tax Laws Amendment (2008 Measures No. 6) Act 2009. 2 Tax Laws Amendment (2009 Measures No. 6) Bill 2009 No. , 2009 [Page Break] Column 1 Column 2 Column 3 Provision(s) Commencement Date/Details 14. Schedule 5, The day this Act receives the Royal Assent. Part 3 15. Schedule 6 The day 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. 12 Tax Laws Amendment (2009 Measures No. 6) Bill 2009 No. , 2009 3 [Page Break] Part 1 Removing trust cloning exception 1 Schedule 1--Abolishing trust cloning and 2 providing a CGT roll-over for certain 3 trusts 4 Part 1--Removing trust cloning exception 5 Income Tax Assessment Act 1997 6 1 Subsection 104-55(5) 7 Repeal the subsection, substitute: 8 Exceptions 9 (5) CGT event E1 does not happen if you are the sole beneficiary of 10 the trust and: 11 (a) you are absolutely entitled to the asset as against the trustee 12 (disregarding any legal disability); and 13 (b) the trust is not a unit trust. 14 2 Subsection 104-60(5) 15 Repeal the subsection, substitute: 16 Exceptions 17 (5) CGT event E2 does not happen if you are the sole beneficiary of 18 the trust and: 19 (a) you are absolutely entitled to the asset as against the trustee 20 (disregarding any legal disability); and 21 (b) the trust is not a unit trust. 22 3 Application provision 23 The amendments made by this Part apply to CGT events happening on 24 or after 1 November 2008. 25 4 Tax Laws Amendment (2009 Measures No. 6) Bill 2009 No. , 2009 [Page Break] Roll-over for certain trusts Part 2 1 Part 2--Roll-over for certain trusts 2 Income Tax Assessment Act 1997 3 4 Subsection 40-340(1) (at the end of the table) 4 Add: 5 *Disposal of asset between The trustees of the trusts choose to obtain a certain trusts roll-over under Subdivision 126-G in relation to the disposal. 5 5 Section 109-55 (after table item 8F) 6 Insert: 8G You hold a membership when you acquired the section 115-30 interest in the receiving trust corresponding involved in a roll-over under membership interest in Subdivision 126-G the transferring trust involved in the roll-over 7 6 After section 112-54 8 Insert: 9 112-54A Transfer of assets between certain trusts 10 Transfer of assets between certain trusts Item In this situation: Element affected: See sections: 1 There is a roll-over under First element of cost base 126-240 Subdivision 126-G relating and reduced cost base of to the transfer of a CGT the CGT asset asset between certain trusts 2 There is a roll-over under Cost base and reduced 126-245 and Subdivision 126-G relating cost base of membership 126-250 to the transfer of a CGT interests in each trust asset between certain trusts 11 7 Section 112-150 (at the end of the table) 12 Add: 10 Transfer of a CGT asset between certain trusts Subdivision 126-G Tax Laws Amendment (2009 Measures No. 6) Bill 2009 No. , 2009 5 [Page Break] Part 2 Roll-over for certain trusts 1 8 Subsection 115-30(1) (at the end of the table) 2 Add: 9 A *CGT asset that: (a) when the acquirer *acquired (a) is a *membership interest in the the corresponding receiving trust involved in a roll-over membership interest (or under Subdivision 126-G; and membership interests) in the transferring trust involved in (b) is held by the acquirer just after the the roll-over; or transfer time for the roll-over (b) if the roll-over asset for the roll-over has been involved in an unbroken series of roll-overs under Subdivision 126-G--when the acquirer acquired the corresponding membership interest (or membership interests) in the transferring trust involved in the first roll-over in the series 3 9 At the end of Division 126 4 Add: 5 Subdivision 126-G--Transfer of assets between certain trusts 6 Guide to Subdivision 126-G 7 126-215 What this Subdivision is about 8 Roll-overs may be available when CGT assets are transferred 9 between certain trusts. 10 Table of sections 11 Operative provisions 12 126-220 Object of this Subdivision 13 126-225 When a roll-over may be chosen 14 126-230 Beneficiaries' entitlements not be discretionary etc. 15 126-235 Exceptions for roll-over 16 126-240 Consequences for the trusts 6 Tax Laws Amendment (2009 Measures No. 6) Bill 2009 No. , 2009 [Page Break] Roll-over for certain trusts Part 2 1 126-245 Consequences for beneficiaries--general approach for working out cost 2 base etc. 3 126-250 Consequences for beneficiaries--other approach for working out cost base 4 etc. 5 126-255 No other cost base etc. adjustment for beneficiaries 6 126-260 Giving information to beneficiaries 7 Operative provisions 8 126-220 Object of this Subdivision 9 The object of this Subdivision is to ensure that CGT considerations 10 are not an impediment to the restructure of trusts, whilst ensuring 11 that subsequent changes to the manner and extent to which 12 beneficiaries can benefit from the trusts are subject to appropriate 13 tax consequences. 14 126-225 When a roll-over may be chosen 15 (1) A roll-over may be chosen for a *CGT asset (the roll-over asset) if: 16 (a) the trustee of a trust (the transferring trust): 17 (i) creates a trust (the receiving trust), by declaration or 18 settlement, over one or more CGT assets that include 19 the roll-over asset; or 20 (ii) transfers the roll-over asset to an existing trust (the 21 receiving trust); 22 at a particular time (the transfer time); and 23 (b) if subparagraph (a)(ii) applies--the receiving trust has no 24 CGT assets, other than small amounts of cash or debt, just 25 before the transfer time; and 26 (c) just after the transfer time: 27 (i) each of the trusts has the same beneficiaries; and 28 (ii) the receiving trust has the same *classes of *membership 29 interests that the transferring trust had just before, and 30 has just after, the transfer time; and 31 (iii) the sum of the *market values of each beneficiary's 32 membership interests of a particular class in both trusts 33 is substantially the same as the sum of the market 34 values, just before the transfer time, of the beneficiary's 35 membership interests of that class in both trusts; and 36 (d) the requirement in section 126-230 is met; and Tax Laws Amendment (2009 Measures No. 6) Bill 2009 No. , 2009 7 [Page Break] Part 2 Roll-over for certain trusts 1 (e) the exceptions in section 126-235 do not apply. 2 Exception if other roll-over assets already transferred 3 (2) However, paragraph (1)(b) does not apply if: 4 (a) the roll-over asset is transferred to the receiving trust under 5 an *arrangement; and 6 (b) the roll-over asset was an asset of the transferring trust just 7 before the arrangement was made; and 8 (c) at least one other asset of the receiving trust: 9 (i) is an asset for which a roll-over was obtained under this 10 Subdivision for the trusts; and 11 (ii) is an asset over which the receiving trust was created, or 12 was transferred by the transferring trust to the receiving 13 trust under the arrangement; and 14 (d) the transfer time is in the income year for the transferring 15 trust that includes the earliest transfer time (the start time) for 16 the assets covered by paragraph (c). 17 Obtaining the roll-over 18 (3) The roll-over only happens if both the trustee of the transferring 19 trust and the trustee of the receiving trust choose to obtain it. 20 126-230 Beneficiaries' entitlements not be discretionary etc. 21 (1) The conditions in subsections (2) and (3) must be met: 22 (a) if subsection 126-225(2) applies--at all times during the 23 period: 24 (i) starting at the start time; and 25 (ii) ending at the transfer time; and 26 (b) otherwise--at the transfer time. 27 CGT event E4 is capable of happening 28 (2) The first condition is met at a particular time if, at that time, *CGT 29 event E4 is capable of happening to all of the *membership 30 interests in each of the trusts. 31 Note: A roll-over cannot be chosen if either trust is a discretionary trust. 8 Tax Laws Amendment (2009 Measures No. 6) Bill 2009 No. , 2009 [Page Break] Roll-over for certain trusts Part 2 1 Beneficiaries' entitlements not discretionary 2 (3) The second condition is met at a particular time if, at that time, the 3 manner or extent to which each beneficiary of each trust can 4 benefit from the trust is not capable of being significantly affected 5 by the exercise, or non-exercise, of a power. 6 (4) However, if both trusts are *managed investment trusts, disregard a 7 power if the power's existence at that time does not significantly 8 affect the *market value at that time of each *membership interest 9 in each of the trusts. 10 126-235 Exceptions for roll-over 11 Foreign trusts 12 (1) An exception applies for a *CGT asset if: 13 (a) the receiving trust is a *foreign trust for CGT purposes for the 14 income year that includes the transfer time; and 15 (b) the roll-over asset is not *taxable Australian property just 16 after the transfer time. 17 Corporate unit trusts and public trading trusts 18 (2) Another exception applies if either trust is a trust to which 19 section 102K or 102S of the Income Tax Assessment Act 1936 20 applies for the income year that includes the transfer time. 21 Choices 22 (3) Another exception applies if, just after the transfer time: 23 (a) a choice (however described) under a provision of a *taxation 24 law is in force for either of the trusts in relation to particular 25 circumstances; and 26 (b) the same choice (however described) under that provision for 27 the other trust in relation to those circumstances (a mirror 28 choice) is not also in force; and 29 (c) the absence of a mirror choice would or could have an 30 ongoing effect on the calculation of an entity's *net income, 31 or taxable income, for: 32 (i) the entity's income year that includes the transfer time; 33 or Tax Laws Amendment (2009 Measures No. 6) Bill 2009 No. , 2009 9 [Page Break] Part 2 Roll-over for certain trusts 1 (ii) a later income year. 2 (4) However, the exception in subsection (3) does not apply if: 3 (a) the other trust makes a mirror choice before the first time 4 after the transfer time when the absence of the mirror choice 5 would affect the calculation of an entity's *net income, or 6 taxable income, for an income year; or 7 (b) it would not be reasonable for subsection (3) to apply. 8 Note: For paragraph (a), the other trust must still be able, under the relevant 9 provision of the taxation law, to make the mirror choice. 10 (5) If, just after the transfer time: 11 (a) a choice (however described) referred to in paragraph (3)(a) 12 is in force for either of the trusts (the first choice); and 13 (b) a provision of a *taxation law: 14 (i) prevents the revocation or variation of that choice; or 15 (ii) sets out a consequence for an entity if that choice is 16 revoked or varied; 17 that provision is taken to apply for a mirror choice, in force for the 18 other trust at or after that time, in a way corresponding to the way 19 in which it applies for the first choice. 20 Note: For example, if the provision sets out consequences that flow from the 21 revocation of the first choice, then those consequences will also flow 22 if the mirror choice is revoked. 23 126-240 Consequences for the trusts 24 Disregard any capital gain or loss 25 (1) If the roll-over is chosen, disregard any *capital gain or *capital 26 loss the trustee of the transferring trust makes from: 27 (a) creating the receiving trust over the roll-over asset; or 28 (b) transferring the roll-over asset to the receiving trust; 29 at the transfer time. 30 Adjust roll-over asset's cost base and reduced cost base 31 (2) If the roll-over is chosen: 32 (a) the first element of the roll-over asset's *cost base, in the 33 hands of the receiving trust, is its cost base just before the 34 transfer time; and 10 Tax Laws Amendment (2009 Measures No. 6) Bill 2009 No. , 2009 [Page Break] Roll-over for certain trusts Part 2 1 (b) the first element of the roll-over asset's *reduced cost base is 2 worked out similarly. 3 Any pre-transfer losses of receiving trust cannot be utilised 4 (3) If the roll-over is chosen: 5 (a) any *net capital loss of the receiving trust for an income year 6 ending before the transfer time cannot be applied after the 7 transfer time to reduce an amount of that trust's *capital 8 gains; and 9 (b) the sum of the receiving trust's *capital losses for the income 10 year that includes the transfer time (the transfer year) is 11 reduced by an amount equal to any net capital loss that the 12 trust would have had for that year had that year ended just 13 before the transfer time; and 14 (c) any *tax loss of the receiving trust for an income year ending 15 before the transfer time cannot be deducted after the transfer 16 time from an amount of that trust's assessable income or *net 17 exempt income; and 18 (d) the sum of the receiving trust's deductions for the transfer 19 year is reduced by an amount equal to any tax loss that the 20 trust would have had for that year had that year ended just 21 before the transfer time. 22 References in this subsection to the transfer time are to be read as 23 references to the start time if subsection 126-225(2) applies. 24 Note: Subsection 126-225(2) applies if the roll-over asset is transferred to 25 the receiving trust after an earlier roll-over under this Subdivision, for 26 another asset, was obtained for the trusts. 27 Pre-CGT assets 28 (4) If: 29 (a) the roll-over is chosen; and 30 (b) the transferring trust last *acquired the roll-over asset before 31 20 September 1985; 32 the receiving trust is taken to have acquired it before that day. 33 126-245 Consequences for beneficiaries--general approach for 34 working out cost base etc. 35 (1) If the roll-over is chosen, each of the following: Tax Laws Amendment (2009 Measures No. 6) Bill 2009 No. , 2009 11 [Page Break] Part 2 Roll-over for certain trusts 1 (a) the *cost base and *reduced cost base of each of a 2 beneficiary's *membership interests in each trust; 3 (b) the time each of the beneficiary's membership interests in the 4 receiving trust is treated as having been *acquired; 5 is adjusted under this section for the transfer time unless the 6 beneficiary has chosen for them to be adjusted under 7 section 126-250. 8 Note: The beneficiary can choose for these things to be adjusted once for 9 several consecutive transfer times (for multiple roll-over assets) if the 10 beneficiary owned the interests at all of those times (see 11 section 126-250). 12 First element of cost base of interests in transferring trust 13 (2) The first element of the *cost base, just after the transfer time, of 14 each of the beneficiary's *membership interests in the transferring 15 trust is an amount equal to such proportion of the interest's cost 16 base just before the transfer time as is reasonable having regard to: 17 (a) the *market value of the interest just after the transfer time, or 18 a reasonable approximation of that market value; and 19 (b) the market value of the interest just before the transfer time, 20 or a reasonable approximation of that market value. 21 First element of cost base of interests in receiving trust 22 (3) The first element of the *cost base, just after the transfer time, of 23 each of the beneficiary's *membership interests in the receiving 24 trust is such amount so that the sum of: 25 (a) the cost base, just before the transfer time, of that 26 membership interest in the receiving trust; and 27 (b) if, just after the transfer time, that interest in the receiving 28 trust corresponds to at least one of the beneficiary's 29 membership interests in the transferring trust--the cost base, 30 just before the transfer time, of each of those corresponding 31 membership interests in the transferring trust; and 32 (c) if, just after the transfer time, that interest in the receiving 33 trust corresponds to a proportion of one of the beneficiary's 34 membership interests in the transferring trust--that 35 proportion of the cost base, just before the transfer time, of 36 that corresponding membership interest in the transferring 37 trust; 38 reasonably approximates: 12 Tax Laws Amendment (2009 Measures No. 6) Bill 2009 No. , 2009 [Page Break] Roll-over for certain trusts Part 2 1 (d) if paragraph (b) applies--the sum of the cost bases, just after 2 the transfer time, of each of the interests referred to in 3 paragraphs (a) and (b); and 4 (e) if paragraph (c) applies--the sum of: 5 (i) the cost base, just after the transfer time, of the interest 6 referred to in paragraph (a); and 7 (ii) the proportion of the cost base, just after the transfer 8 time, of the interest referred to in paragraph (c). 9 First element of reduced cost base of interests in each trust 10 (4) The first element of the *reduced cost base, just after the transfer 11 time, of each of the beneficiary's *membership interests in each 12 trust is worked out similarly. 13 Time of acquisition for interests in the receiving trust 14 (5) Each of the beneficiary's *membership interests in the receiving 15 trust is treated as having been *acquired just after the transfer time. 16 Time of acquisition for pre-CGT interests in the receiving trust 17 (6) However, if one or more of the beneficiary's *membership interests 18 in the transferring trust were *pre-CGT assets just before the 19 transfer time, the beneficiary is treated as having *acquired before 20 20 September 1985 its interests in the receiving trust that 21 correspond to those interests in the transferring trust. 22 126-250 Consequences for beneficiaries--other approach for 23 working out cost base etc. 24 (1) This section applies if the beneficiary owns one or more 25 *membership interests in the transferring trust at all times during 26 the period: 27 (a) starting just before this time (the starting time): 28 (i) the transfer time; or 29 (ii) the transfer time for an asset referred to in paragraph 30 126-225(2)(c) (assuming subsection 126-225(2) 31 applies); and 32 (b) ending just after this time (the ending time): Tax Laws Amendment (2009 Measures No. 6) Bill 2009 No. , 2009 13 [Page Break] Part 2 Roll-over for certain trusts 1 (i) the transfer time (assuming this is not also the starting 2 time); or 3 (ii) a later time in the transfer year that is the transfer time 4 for another asset for which a roll-over is obtained under 5 this Subdivision for the trusts. 6 Note: Subsection 126-225(2) applies if the roll-over asset is transferred to 7 the receiving trust after an earlier roll-over under this Subdivision, for 8 another asset, was obtained for the trusts. 9 (2) The beneficiary may choose for each of the following: 10 (a) the *cost base and *reduced cost base of each of those 11 *membership interests and of the beneficiary's corresponding 12 membership interests in the receiving trust; 13 (b) the time each of those corresponding interests in the 14 receiving trust is treated as having been *acquired; 15 to be adjusted under subsection (3) for the period. 16 (3) For each of the interests referred to in subsection (2), subsections 17 126-245(2), (3), (4), (5) and (6) apply as if: 18 (a) references in those subsections to just before the transfer time 19 were references to just before the starting time; and 20 (b) references in those subsections to just after the transfer time 21 were references to just after the ending time. 22 126-255 No other cost base etc. adjustment for beneficiaries 23 If a beneficiary of the trusts makes adjustments under 24 section 126-245 or 126-250 to the *cost base and *reduced cost 25 base of the beneficiary's *membership interests in relation to the 26 *CGT event that is: 27 (a) the creation of the receiving trust over the roll-over asset; or 28 (b) the transfer of the roll-over asset to the receiving trust; 29 no other adjustment is to be made under this Act to those cost 30 bases and reduced cost bases because of something that happens in 31 relation to that event. 32 Note: This section prevents the general value shifting regime from applying 33 in relation to the event because sections 126-245 and 126-250 deal 34 with any value shift that might occur. 14 Tax Laws Amendment (2009 Measures No. 6) Bill 2009 No. , 2009 [Page Break] Roll-over for certain trusts Part 2 1 126-260 Giving information to beneficiaries 2 Beneficiaries must be given particulars of the roll-over 3 (1) If the roll-over is chosen, the trustee of the transferring trust must, 4 within 3 months after the end of the transfer year, send written 5 notice of the particulars set out in subsection (2) to each of the 6 trust's beneficiaries: 7 (a) by post to the address most recently notified by the 8 beneficiary as the beneficiary's address; or 9 (b) by any other means notified by the beneficiary for receiving 10 correspondence from the trust. 11 Note: The trustee may also notify beneficiaries of other details of the 12 roll-over. 13 The particulars that must be given 14 (2) The particulars are as follows: 15 (a) the roll-over asset's transfer time; 16 (b) sufficient information to enable a beneficiary to work out 17 which of the beneficiary's *membership interests in the 18 receiving trust correspond to each of the beneficiary's 19 membership interests in the transferring trust; 20 (c) the *market value of each of the membership interests held by 21 the beneficiary in the transferring trust just after the roll-over 22 asset's transfer time, or a reasonable approximation of that 23 market value; 24 (d) the market value of each of the membership interests held by 25 the beneficiary in the transferring trust just before the 26 roll-over asset's transfer time, or a reasonable approximation 27 of that market value. 28 Offence 29 (3) A trustee commits an offence if the trustee contravenes 30 subsection (1). 31 Penalty: 30 penalty units. 32 (4) An offence against subsection (3) is an offence of strict liability. 33 Note: For strict liability, see section 6.1 of the Criminal Code. Tax Laws Amendment (2009 Measures No. 6) Bill 2009 No. , 2009 15 [Page Break] Part 2 Roll-over for certain trusts 1 If the transferring trust has multiple trustees 2 (5) If the transferring trust has 2 or more trustees, the obligation 3 imposed by subsection (1) is imposed on each of the trustees, but 4 may be discharged by any of the trustees. 5 Note: Each of the trustees commits an offence against subsection (3) if none 6 of them discharges the obligation imposed by subsection (1). 7 (6) In a prosecution of a trustee for an offence against subsection (3) 8 for an act or omission contravening subsection (1), it is a defence if 9 the trustee proves that the trustee: 10 (a) did not aid, abet, counsel or procure the act or omission; and 11 (b) was not in any way knowingly concerned in, or party to, the 12 act or omission (whether directly or indirectly and whether 13 by any act or omission of the trustee). 14 Note: A defendant bears a legal burden in relation to the matters in 15 subsection (6): see section 13.4 of the Criminal Code. 16 Obligations of beneficiary unaffected if not notified of roll-over 17 (7) A failure by a trustee to comply with subsection (1) does not affect 18 the application of section 126-245 to the beneficiary. 19 10 Subsection 995-1(1) (definition of class) (second 20 occurring) 21 After "company", insert "or trust". 22 11 Application provision 23 The amendments made by items 4 to 9 apply to CGT events happening 24 on or after 1 November 2008. 25 12 Transitional: time for making mirror choices 26 (1) Subsection 126-235(3) of the Income Tax Assessment Act 1997 does not 27 apply if the other trust makes a mirror choice under a provision of a 28 taxation law by: 29 (a) 6 months after the day this Act receives the Royal Assent; or 30 (b) a later day allowed by the Commissioner of Taxation. 31 Note: For this item to have effect, the other trust must still be able, under that provision of the 32 taxation law, to make the mirror choice. 16 Tax Laws Amendment (2009 Measures No. 6) Bill 2009 No. , 2009 [Page Break] Roll-over for certain trusts Part 2 1 (2) This item has effect in addition to subsection 126-235(4) of the Income 2 Tax Assessment Act 1997. 3 13 Transitional: deadline for giving information to 4 beneficiaries 5 (1) This item applies in relation to a roll-over chosen under 6 Subdivision 126-G of the Income Tax Assessment Act 1997 if the 7 transfer year for the roll-over is the transferring trust's 2008-09 income 8 year. 9 (2) Subsection 126-260(1) of that Act has effect, in relation to the roll-over, 10 as if the reference in that subsection to 3 months after the end of the 11 transfer year were a reference to 6 months after the day this Act 12 receives the Royal Assent. 13 Tax Laws Amendment (2009 Measures No. 6) Bill 2009 No. , 2009 17 [Page Break] Part 3 Other amendments 1 Part 3--Other amendments 2 A New Tax System (Goods and Services Tax) Act 1999 3 14 Subsection 184-1(2) (note) 4 Omit "Note", substitute "Note 1". 5 15 At the end of subsection 184-1(2) 6 Add: 7 Note 2: The entity that is the trustee of a trust or fund does not change merely 8 because of a change in the person who is the trustee of the trust or 9 fund, or persons who are the trustees of the trust or fund. 10 Income Tax Assessment Act 1997 11 16 Subsection 104-10(2) 12 Repeal the subsection, substitute: 13 (2) You dispose of a *CGT asset if a change of ownership occurs from 14 you to another entity, whether because of some act or event or by 15 operation of law. However, a change of ownership does not occur 16 if you stop being the legal owner of the asset but continue to be its 17 beneficial owner. 18 Note: A change in the trustee of a trust does not constitute a change in the 19 entity that is the trustee of the trust (see subsection 960-100(2)). This 20 means that CGT event A1 will not happen merely because of a change 21 in the trustee. 22 17 At the end of subsection 104-55(1) 23 Add: 24 Note: A change in the trustee of a trust does not constitute a change in the 25 entity that is the trustee of the trust (see subsection 960-100(2)). This 26 means that CGT event E1 will not happen merely because of a change 27 in the trustee. 28 18 At the end of subsection 104-60(1) 29 Add: 30 Note: A change in the trustee of a trust does not constitute a change in the 31 entity that is the trustee of the trust (see subsection 960-100(2)). This 32 means that CGT event E2 will not happen merely because of a change 33 in the trustee. 18 Tax Laws Amendment (2009 Measures No. 6) Bill 2009 No. , 2009 [Page Break] Other amendments Part 3 1 19 Subsection 960-100(2) (note) 2 Omit "Note", substitute "Note 1". 3 20 At the end of subsection 960-100(2) 4 Add: 5 Note 2: The entity that is the trustee of a trust or fund does not change merely 6 because of a change in the person who is the trustee of the trust or 7 fund, or persons who are the trustees of the trust or fund. 8 Tax Laws Amendment (2009 Measures No. 6) Bill 2009 No. , 2009 19 [Page Break] Part 1 Main amendment 1 Schedule 2--Loss relief for merging 2 superannuation funds 3 Part 1--Main amendment 4 Income Tax Assessment Act 1997 5 1 At the end of Part 3-30 6 Add: 7 Division 310--Loss relief for merging superannuation 8 funds 9 Table of Subdivisions 10 Guide to Division 310 11 310-A Object of this Division 12 310-B Choice to transfer losses 13 310-C Consequences of choosing to transfer losses 14 310-D Choice for assets roll-over 15 310-E Consequences of choosing assets roll-over 16 310-F Choices 17 Guide to Division 310 18 310-1 What this Division is about 19 This Division sets out special rules for certain merging 20 superannuation funds. These rules relate to the transfer of losses, 21 the treatment of CGT events related to the merger and the 22 treatment of assets related to the merger. 23 Note 1: This Division applies only to mergers happening between 24 24 December 2008 and 30 June 2011 (see Part 3 of Schedule 2 to the 25 Tax Laws Amendment (2009 Measures No. 6) Act 2009). 26 Note 2: This Division and associated provisions will be repealed on 1 July 27 2013 (see Parts 4 and 5 of that Schedule). 20 Tax Laws Amendment (2009 Measures No. 6) Bill 2009 No. , 2009 [Page Break] Main amendment Part 1 1 Operative provisions 2 Subdivision 310-A--Object of this Division 3 310-5 Object 4 The main object of this Division is to facilitate the consolidation of 5 the superannuation industry by allowing certain merging 6 *superannuation funds to retain the value, for income tax purposes, 7 of certain losses that might otherwise cease to be able to be utilised 8 as a result of the merger. 9 Subdivision 310-B--Choice to transfer losses 10 Table of sections 11 310-10 Original fund's assets extend beyond life insurance policies and units in 12 pooled superannuation trusts 13 310-15 Original fund's assets include a complying superannuation/FHSA life 14 insurance policy 15 310-20 Original fund's assets include units in a pooled superannuation trust 16 310-10 Original fund's assets extend beyond life insurance policies 17 and units in pooled superannuation trusts 18 (1) A trustee of: 19 (a) a *complying superannuation fund (the transferring entity or 20 the original fund); or 21 (b) a *complying approved deposit fund (the transferring entity 22 or the original fund); 23 can choose to transfer losses if an *arrangement is made for which 24 the conditions in this section are satisfied. 25 Transferring entity's assets include other assets 26 (2) The first condition is satisfied if, just before the *arrangement was 27 made, the transferring entity's assets included assets other than: 28 (a) a *complying superannuation/FHSA life insurance policy; or 29 (b) units in a *pooled superannuation trust. 30 Note: Other entities may also choose under this Subdivision to transfer 31 losses, for the same arrangement, if the transferring entity holds a 32 complying superannuation/FHSA life insurance policy or units in a 33 pooled superannuation trust. Tax Laws Amendment (2009 Measures No. 6) Bill 2009 No. , 2009 21 [Page Break] Part 1 Main amendment 1 Original fund's members transfer to a continuing fund 2 (3) The second condition is satisfied if, under the *arrangement: 3 (a) the transferring entity ceases to have any members (within 4 the meaning of the Superannuation Industry (Supervision) 5 Act 1993) at a particular time (the completion time); and 6 (b) the individuals who cease to be members (within the meaning 7 of that Act) of the transferring entity become members 8 (within the meaning of that Act) of one or more *complying 9 superannuation funds (the continuing funds). 10 Continuing funds will usually not be able to be small funds 11 (4) The third condition is satisfied if either: 12 (a) none of the continuing funds was a *small superannuation 13 fund, and all existed, just before the *arrangement was made; 14 or 15 (b) the following subparagraphs apply: 16 (i) only one of the continuing funds either was a small 17 superannuation fund, or did not exist, just before the 18 arrangement was made; 19 (ii) under the arrangement, a *complying superannuation 20 fund or *complying approved deposit fund, other than 21 the original fund, ceases to have any members (within 22 the meaning of the Superannuation Industry 23 (Supervision) Act 1993); 24 (iii) under the arrangement, the individuals who cease to be 25 members (within the meaning of that Act) of that other 26 fund become members (within the meaning of that Act) 27 of the continuing fund; 28 (iv) either the other fund or the original fund was not a small 29 superannuation fund just before the arrangement was 30 made; 31 (v) the continuing fund is not a small superannuation fund 32 just after the earliest time when both the other fund and 33 the original fund cease to have any members (within the 34 meaning of that Act). 22 Tax Laws Amendment (2009 Measures No. 6) Bill 2009 No. , 2009 [Page Break] Main amendment Part 1 1 Ignore members who cannot transfer to a continuing fund 2 (5) For the purposes of subsections (3) and (4), ignore an individual 3 who remains a member of a *complying superannuation fund or 4 *complying approved deposit fund because of circumstances 5 beyond the control of the trustee of that fund. 6 310-15 Original fund's assets include a complying 7 superannuation/FHSA life insurance policy 8 (1) A *life insurance company (the transferring entity) can choose to 9 transfer losses if an *arrangement is made for which the conditions 10 in this section are satisfied. 11 Original fund holds a complying superannuation/FHSA life 12 insurance policy 13 (2) The first condition is satisfied if, just before the *arrangement was 14 made, a *complying superannuation/FHSA life insurance policy 15 issued by the transferring entity was held by: 16 (a) a *complying superannuation fund (the original fund); or 17 (b) a *complying approved deposit fund (the original fund). 18 Note: Other entities may also choose under this Subdivision to transfer 19 losses, for the same arrangement, if the original fund holds other 20 assets. 21 Original fund's members transfer to a continuing fund 22 (3) The second condition is satisfied if, under the *arrangement: 23 (a) the original fund ceases to have any members (within the 24 meaning of the Superannuation Industry (Supervision) Act 25 1993) at a particular time (the completion time); and 26 (b) the individuals who cease to be members (within the meaning 27 of that Act) of the original fund become members (within the 28 meaning of that Act) of one or more *complying 29 superannuation funds (the continuing funds). 30 Continuing funds will usually not be able to be small funds 31 (4) The third condition is satisfied if either: Tax Laws Amendment (2009 Measures No. 6) Bill 2009 No. , 2009 23 [Page Break] Part 1 Main amendment 1 (a) none of the continuing funds was a *small superannuation 2 fund, and all existed, just before the *arrangement was made; 3 or 4 (b) the following subparagraphs apply: 5 (i) only one of the continuing funds either was a small 6 superannuation fund, or did not exist, just before the 7 arrangement was made; 8 (ii) under the arrangement, a *complying superannuation 9 fund or *complying approved deposit fund, other than 10 the original fund, ceases to have any members (within 11 the meaning of the Superannuation Industry 12 (Supervision) Act 1993); 13 (iii) under the arrangement, the individuals who cease to be 14 members (within the meaning of that Act) of that other 15 fund become members (within the meaning of that Act) 16 of the continuing fund; 17 (iv) either the other fund or the original fund was not a small 18 superannuation fund just before the arrangement was 19 made; 20 (v) the continuing fund is not a small superannuation fund 21 just after the earliest time when both the other fund and 22 the original fund cease to have any members (within the 23 meaning of that Act). 24 Ignore members who cannot transfer to a continuing fund 25 (5) For the purposes of subsections (3) and (4), ignore an individual 26 who remains a member of a *complying superannuation fund or 27 *complying approved deposit fund because of circumstances 28 beyond the control of the trustee of that fund. 29 310-20 Original fund's assets include units in a pooled 30 superannuation trust 31 (1) A trustee of a *pooled superannuation trust (the transferring entity) 32 can choose to transfer losses if an *arrangement is made for which 33 the conditions in this section are satisfied. 24 Tax Laws Amendment (2009 Measures No. 6) Bill 2009 No. , 2009 [Page Break] Main amendment Part 1 1 Units in the trust were held by the original fund 2 (2) The first condition is satisfied if, just before the *arrangement was 3 made, units in the transferring entity were held by: 4 (a) a *complying superannuation fund (the original fund); or 5 (b) a *complying approved deposit fund (the original fund). 6 Note: Other entities may also choose under this Subdivision to transfer 7 losses, for the same arrangement, if the original fund holds other 8 assets. 9 Original fund's members transfer to a continuing fund 10 (3) The second condition is satisfied if, under the *arrangement: 11 (a) the original fund ceases to have any members (within the 12 meaning of the Superannuation Industry (Supervision) Act 13 1993) at a particular time (the completion time); and 14 (b) the individuals who cease to be members (within the meaning 15 of that Act) of the original fund become members (within the 16 meaning of that Act) of one or more *complying 17 superannuation funds (the continuing funds). 18 Continuing funds will usually not be able to be small funds 19 (4) The third condition is satisfied if either: 20 (a) none of the continuing funds was a *small superannuation 21 fund, and all existed, just before the *arrangement was made; 22 or 23 (b) the following subparagraphs apply: 24 (i) only one of the continuing funds either was a small 25 superannuation fund, or did not exist, just before the 26 arrangement was made; 27 (ii) under the arrangement, a *complying superannuation 28 fund or *complying approved deposit fund, other than 29 the original fund, ceases to have any members (within 30 the meaning of the Superannuation Industry 31 (Supervision) Act 1993); 32 (iii) under the arrangement, the individuals who cease to be 33 members (within the meaning of that Act) of that other 34 fund become members (within the meaning of that Act) 35 of the continuing fund; Tax Laws Amendment (2009 Measures No. 6) Bill 2009 No. , 2009 25 [Page Break] Part 1 Main amendment 1 (iv) either the other fund or the original fund was not a small 2 superannuation fund just before the arrangement was 3 made; 4 (v) the continuing fund is not a small superannuation fund 5 just after the earliest time when both the other fund and 6 the original fund cease to have any members (within the 7 meaning of that Act). 8 Ignore members who cannot transfer to a continuing fund 9 (5) For the purposes of subsections (3) and (4), ignore an individual 10 who remains a member of a *complying superannuation fund or 11 *complying approved deposit fund because of circumstances 12 beyond the control of the trustee of that fund. 13 Subdivision 310-C--Consequences of choosing to transfer 14 losses 15 Table of sections 16 310-25 Who losses can be transferred to 17 310-30 Losses that can be transferred 18 310-35 Effect of transferring a net capital loss 19 310-40 Effect of transferring a tax loss 20 310-25 Who losses can be transferred to 21 An entity choosing under Subdivision 310-B to transfer losses can 22 choose to transfer any or all of the transferring entity's losses set 23 out in section 310-30, in whole or in part, to one or more of the 24 following entities (a receiving entity): 25 (a) a continuing fund for the choice; 26 (b) a *pooled superannuation trust in which units are held by a 27 continuing fund for the choice just after the completion time; 28 (c) a *life insurance company with which a *complying 29 superannuation/FHSA life insurance policy is held by a 30 continuing fund for the choice just after the completion time. 31 310-30 Losses that can be transferred 32 (1) The transferring entity's losses that can be transferred are: 26 Tax Laws Amendment (2009 Measures No. 6) Bill 2009 No. , 2009 [Page Break] Main amendment Part 1 1 (a) any of its *net capital losses for income years earlier than the 2 income year for the transferring entity that includes the 3 completion time (the transfer year), to the extent that it was 4 not *utilised before the completion time (an earlier year net 5 capital loss); and 6 (b) any net capital loss it would have made for the transfer year 7 were the transfer year to have ended at the completion time (a 8 transfer year net capital loss); and 9 (c) any of its *tax losses for income years earlier than the transfer 10 year, to the extent that it was not utilised before the 11 completion time (an earlier year tax loss); and 12 (d) any tax loss it would have incurred for the transfer year were 13 the transfer year to have ended at the completion time (a 14 transfer year tax loss); 15 worked out subject to the modifications set out in this section. 16 Note: If the entity choosing to transfer losses also chooses an asset roll-over 17 under Subdivision 310-D for the same arrangement, none of the 18 transfer events for the roll-over will contribute towards a loss 19 transferred under this Subdivision (see subsections 310-55(1), 20 310-60(3), 310-65(1) and 310-70(1)). 21 (2) For a choice under section 310-15 (life insurance companies), work 22 out those losses by only considering the following to the extent that 23 they relate to assets reasonably attributable to a *complying 24 superannuation/FHSA life insurance policy issued by the 25 transferring entity and held by the original fund: 26 (a) *capital gains from *complying superannuation/FHSA assets; 27 (b) *capital losses from complying superannuation/FHSA assets; 28 (c) assessable income covered by subsection 320-137(2) (about 29 complying superannuation/FHSA assets); 30 (d) deductions covered by subsection 320-137(4) (about 31 complying superannuation/FHSA assets). 32 (3) For a choice under section 310-20 (pooled superannuation trusts), 33 work out those losses by only considering *capital gains, *capital 34 losses, assessable income and deductions to the extent that they 35 relate to assets reasonably attributable to units in the transferring 36 entity held by the original fund. Tax Laws Amendment (2009 Measures No. 6) Bill 2009 No. , 2009 27 [Page Break] Part 1 Main amendment 1 310-35 Effect of transferring a net capital loss 2 (1) To the extent that an earlier year net capital loss is transferred to a 3 receiving entity: 4 (a) the transferring entity is taken not to have made the loss for 5 that earlier income year; and 6 (b) an amount equal to the transferred amount is taken to be: 7 (i) if the receiving entity is a *life insurance company--a 8 *capital loss from *complying superannuation/FHSA 9 assets made by the receiving entity for that earlier year; 10 and 11 (ii) otherwise--a capital loss made by the receiving entity 12 for that earlier year. 13 (2) To the extent that a transfer year net capital loss is transferred to a 14 receiving entity: 15 (a) if the transferring entity is a *life insurance company--the 16 sum of the transferring entity's *capital losses from 17 *complying superannuation/FHSA assets for the transfer year 18 is reduced by an amount equal to the transferred amount; and 19 (b) if the transferring entity is not a life insurance company--the 20 sum of the transferring entity's capital losses for the transfer 21 year is reduced by an amount equal to the transferred 22 amount; and 23 (c) if the receiving entity is a life insurance company--an 24 amount equal to the transferred amount is taken to be a 25 capital loss from complying superannuation/FHSA assets 26 made by the receiving entity for the transfer year; and 27 (d) if the receiving entity is not a life insurance company--an 28 amount equal to the transferred amount is taken to be a 29 capital loss made by the receiving entity for the transfer year. 30 310-40 Effect of transferring a tax loss 31 (1) To the extent that an earlier year tax loss is transferred to a 32 receiving entity: 33 (a) the transferring entity is taken not to have incurred the loss 34 for that earlier income year; and 35 (b) an amount equal to the transferred amount is taken to be: 28 Tax Laws Amendment (2009 Measures No. 6) Bill 2009 No. , 2009 [Page Break] Main amendment Part 1 1 (i) if the receiving entity is a *life insurance company--a 2 *tax loss of the *complying superannuation/FHSA class 3 incurred by the receiving entity for that earlier year; and 4 (ii) otherwise--a tax loss incurred by the receiving entity 5 for that earlier year. 6 (2) To the extent that a transfer year tax loss is transferred to a 7 receiving entity: 8 (a) if the transferring entity is a *life insurance company--the 9 sum of the transferring entity's deductions covered by 10 subsection 320-137(4) (about complying 11 superannuation/FHSA assets) for the transfer year is reduced 12 by an amount equal to the transferred amount; and 13 (b) if the transferring entity is not a life insurance company--the 14 sum of the transferring entity's deductions for the transfer 15 year is reduced by an amount equal to the transferred 16 amount; and 17 (c) if the receiving entity is a life insurance company--an 18 amount equal to the transferred amount is taken to be a *tax 19 loss of the *complying superannuation/FHSA class incurred 20 by the receiving entity for the transfer year; and 21 (d) if the receiving entity is not a life insurance company--an 22 amount equal to the transferred amount is taken to be a tax 23 loss incurred by the receiving entity for the transfer year. 24 Subdivision 310-D--Choice for assets roll-over 25 Table of sections 26 310-45 Choosing the assets roll-over 27 310-50 Choosing the form of the assets roll-over 28 310-45 Choosing the assets roll-over 29 (1) An entity can choose a roll-over under this Subdivision if: 30 (a) the entity makes or could make a choice under 31 Subdivision 310-B (the losses choice) to transfer the losses of 32 an entity (the transferring entity); and 33 (b) the conditions in this section are satisfied for the 34 *arrangement to which the losses choice relates. Tax Laws Amendment (2009 Measures No. 6) Bill 2009 No. , 2009 29 [Page Break] Part 1 Main amendment 1 (2) The first condition is that, under the *arrangement, one or more 2 *CGT events (the transfer events) happen in relation to the 3 following assets (the original assets) of the transferring entity with 4 the result that it ceases to own those assets: 5 (a) for a losses choice under section 310-10 (original funds)--all 6 of its *CGT assets; 7 (b) for a losses choice under section 310-15 (life insurance 8 companies)--all of its CGT assets reasonably attributable to 9 the *complying superannuation/FHSA life insurance policy 10 held by the original fund for the losses choice just before the 11 arrangement was made; 12 (c) for a losses choice under section 310-20 (pooled 13 superannuation trusts)--all of its CGT assets reasonably 14 attributable to the units in that entity held by the original fund 15 for the losses choice just before the arrangement was made. 16 (3) The second condition is that the transfer events all happen in the 17 income year (the transfer year) for the transferring entity that 18 includes the completion time for the losses choice. 19 (4) The third condition is that, for each transfer event, an asset (the 20 received asset) becomes an asset of one of the following (the 21 receiving entity) as a result of the event: 22 (a) a continuing fund for the losses choice; 23 (b) a *pooled superannuation trust in which units are held by a 24 continuing fund for the losses choice just after the completion 25 time; 26 (c) a *life insurance company with which a *complying 27 superannuation/FHSA life insurance policy is held by a 28 continuing fund for the losses choice just after the completion 29 time. 30 (5) For the purposes of subsection (2), ignore any *CGT assets retained 31 by the transferring entity: 32 (a) to pay its existing or expected debts relating to the 33 *arrangement; or 34 (b) to meet its liabilities relating to individuals who have 35 remained members (within the meaning of the 36 Superannuation Industry (Supervision) Act 1993) of the 37 original fund because of circumstances beyond the control of 38 the trustee of that fund. 30 Tax Laws Amendment (2009 Measures No. 6) Bill 2009 No. , 2009 [Page Break] Main amendment Part 1 1 310-50 Choosing the form of the assets roll-over 2 (1) For those of the original assets that are not *revenue assets, the 3 form of the roll-over is worked out as follows: 4 Method statement 5 Step 1. For the transfer events relating to those original assets: 6 (a) add up any *capital losses of the transferring entity 7 for the events; and 8 (b) subtract any *capital gains of the transferring entity 9 for the events. 10 Step 2. If the result of step 1 is more than zero, the entity 11 choosing the roll-over can choose either section 310-55 12 (global asset approach) or 310-60 (individual asset 13 approach) to apply to those assets and the corresponding 14 received assets. 15 Step 3. Otherwise, section 310-60 (individual asset approach) 16 applies to those original assets and the corresponding 17 received assets. 18 (2) For those of the original assets that are *revenue assets, the form of 19 the roll-over is worked out as follows: 20 Method statement 21 Step 1. For the transfer events relating to those original assets: 22 (a) add up any amounts the transferring entity would 23 be able to deduct as a result of the events; and 24 (b) subtract any amounts that would be included in the 25 transferring entity's assessable income as a result 26 of the events. 27 Step 2. If the result of step 1 is more than zero, the entity 28 choosing the roll-over can choose either section 310-65 29 (global asset approach) or 310-70 (individual asset Tax Laws Amendment (2009 Measures No. 6) Bill 2009 No. , 2009 31 [Page Break] Part 1 Main amendment 1 approach) to apply to those assets and the corresponding 2 received assets. 3 Step 3. Otherwise, section 310-70 (individual asset approach) 4 applies to those original assets and the corresponding 5 received assets. 6 Subdivision 310-E--Consequences of choosing assets roll-over 7 Table of sections 8 310-55 CGT assets--if global asset approach chosen 9 310-60 CGT assets--individual asset approach 10 310-65 Revenue assets--if global asset approach chosen 11 310-70 Revenue assets--individual asset approach 12 310-75 Further consequences for roll-overs involving life insurance companies 13 310-55 CGT assets--if global asset approach chosen 14 Consequences for transferring entity 15 (1) For each of the original assets to which this section applies, the 16 transferring entity's *capital proceeds from the relevant transfer 17 event are taken to be an amount equal to: 18 (a) if, apart from this subsection, the event would result in a 19 *capital gain--the asset's *cost base just before the event; or 20 (b) if, apart from this subsection, the event would result in a 21 *capital loss--the asset's *reduced cost base just before the 22 event. 23 Note: This section only applies if it is chosen to apply under subsection 24 310-50(1). 25 Consequences for receiving entity 26 (2) For each of the received assets to which this section applies, the 27 first element of the *cost base of the asset (in the hands of the 28 receiving entity) is taken to be an amount equal to the cost base of 29 the corresponding original asset just before the relevant transfer 30 event. 31 (3) For each of the received assets to which this section applies, the 32 first element of the *reduced cost base of the asset (in the hands of 32 Tax Laws Amendment (2009 Measures No. 6) Bill 2009 No. , 2009 [Page Break] Main amendment Part 1 1 the receiving entity) is taken to be an amount equal to the reduced 2 cost base of the corresponding original asset just before the 3 relevant transfer event. 4 310-60 CGT assets--individual asset approach 5 Consequences for transferring entity 6 (1) The transferring entity may disregard any *capital loss for a 7 transfer event relating to an original asset to which this section 8 applies. 9 Note: This section does not apply if section 310-55 (global asset approach) 10 is chosen to apply under subsection 310-50(1). 11 (2) Subsections (3), (4) and (5) apply if under subsection (1) the 12 transferring entity disregards a *capital loss for a transfer event 13 relating to an original asset. 14 (3) The transferring entity's *capital proceeds from the transfer event 15 are taken to be an amount equal to the *reduced cost base of the 16 original asset just before the event. 17 Consequences for receiving entity 18 (4) The first element of the *cost base of the corresponding received 19 asset (in the hands of the receiving entity) is taken to be an amount 20 equal to the cost base of the original asset just before the event. 21 (5) The first element of the *reduced cost base of the corresponding 22 received asset (in the hands of the receiving entity) is taken to be 23 an amount equal to the reduced cost base of the original asset just 24 before the event. 25 310-65 Revenue assets--if global asset approach chosen 26 Consequences for transferring entity 27 (1) For each of the original assets to which this section applies, the 28 transferring entity's gross proceeds for the relevant transfer event 29 are taken to be the amount (the deemed proceeds) the transferring 30 entity would need to have received in order to have a nil profit and 31 nil loss for the event. Tax Laws Amendment (2009 Measures No. 6) Bill 2009 No. , 2009 33 [Page Break] Part 1 Main amendment 1 Note: This section only applies if it is chosen to apply under subsection 2 310-50(2). 3 Consequences for receiving entity 4 (2) For each of the received assets to which this section applies, the 5 receiving entity is taken, for the purposes of this Act, to have paid 6 an amount for that asset at the time of the transfer event that is 7 equal to the deemed proceeds for the corresponding original asset. 8 310-70 Revenue assets--individual asset approach 9 Consequences for transferring entity 10 (1) If the transferring entity incurs a *tax loss for a transfer event 11 relating to an original asset to which this section applies, the entity 12 choosing the roll-over can choose for the transferring entity's gross 13 proceeds for the event to be taken to be the amount (the deemed 14 proceeds) the transferring entity would need to have received in 15 order to have a nil profit and nil loss for the event. 16 Note: This section does not apply if section 310-65 (global asset approach) 17 is chosen to apply under subsection 310-50(2). 18 Consequences for receiving entity 19 (2) If a choice is made under subsection (1), the receiving entity is 20 taken to have paid an amount for the corresponding received asset 21 at the time of the transfer event that is equal to the deemed 22 proceeds for the event. 23 310-75 Further consequences for roll-overs involving life insurance 24 companies 25 (1) Section 320-200 (about consequences of transferring assets to or 26 from a complying superannuation/FHSA asset pool) does not apply 27 for a transfer event for the roll-over if either the transferring entity 28 or the receiving entity is a *life insurance company. 29 (2) If the receiving entity for the roll-over is a *life insurance 30 company, each received asset of that entity is taken: 31 (a) to be a *complying superannuation/FHSA asset of that entity; 32 and 33 (b) not to be, in whole or in part, a *life insurance premium. 34 Tax Laws Amendment (2009 Measures No. 6) Bill 2009 No. , 2009 [Page Break] Main amendment Part 1 1 Subdivision 310-F--Choices 2 Table of sections 3 310-85 Choices 4 310-85 Choices 5 (1) A choice under this Division must be made: 6 (a) by the day the transferring entity's *income tax return is 7 lodged for the transfer year for the entity; or 8 (b) within a further time allowed by the Commissioner. 9 (2) The way the transferring entity's *income tax return is prepared is 10 sufficient evidence of the making of the choice. 11 Tax Laws Amendment (2009 Measures No. 6) Bill 2009 No. , 2009 35 [Page Break] Part 2 Other amendments 1 Part 2--Other amendments 2 Income Tax Assessment Act 1997 3 2 Subsection 40-340(1) (at the end of the table) 4 Add: 6 Disposal of asset as part of The transferor chooses a roll-over under merger of superannuation Subdivision 310-D in relation to the disposal. funds 5 3 Section 112-97 (at the end of the table) 6 Add: 33 An entity chooses a roll-over First element of cost base section 310-55 under Subdivision 310-D and and reduced cost base the entity chooses section 310-55 to apply to assets 34 An entity chooses a roll-over First element of cost base section 310-60 under Subdivision 310-D, but and reduced cost base the entity does not choose section 310-55 to apply to assets 7 4 Subsection 115-30(1) (at the end of the table) 8 Add: 10 A *CGT asset that the acquirer *acquired (a) when the transferring entity as a received asset for a roll-over under for the roll-over acquired the Subdivision 310-D corresponding original asset for the roll-over; or (b) if that original asset (or any asset corresponding to it) has been involved in an unbroken series of roll-overs--when the entity that owned the applicable asset before the first roll-over in the series acquired it 9 5 Section 116-25 (table item dealing with CGT event A1) 10 Repeal the item, substitute: 36 Tax Laws Amendment (2009 Measures No. 6) Bill 2009 No. , 2009 [Page Break] Other amendments Part 2 A1 Disposal of a CGT 1, 2, 3, 4, 5, 6 If the *disposal is because asset another entity exercises an option: see section 116-65 If the disposal is of *shares or an interest in a trust: see section 116-80 If the disposal is a gift for which a section 30-212 valuation is obtained: see section 116-100 If a roll-over under Subdivision 310-D applies: see section 116-110 1 6 Section 116-25 (table item dealing with CGT event C2) 2 Omit "and 116-80", substitute ", 116-80 and 116-110". 3 7 Section 116-25 (table item dealing with CGT event E2) 4 Repeal the item, substitute: E2 Transferring a CGT 1, 2, 3, 4, 5, 6 If a roll-over under asset to a trust Subdivision 310-D applies: see section 116-110 5 8 At the end of Division 116 6 Add: 7 116-110 Roll-overs for merging superannuation funds 8 If a roll-over is chosen under Subdivision 310-D in relation to 9 *CGT event A1, C2 or E2, the *capital proceeds of the transferring 10 entity (within the meaning of that Division) from the event are the 11 amount worked out under subsection 310-55(1) or 310-60(3). 12 9 At the end of section 290-170 13 Add: 14 Application to merging superannuation funds 15 (5) If: 16 (a) after making your contribution, a choice is made under 17 Subdivision 310-B in relation to the *superannuation fund Tax Laws Amendment (2009 Measures No. 6) Bill 2009 No. , 2009 37 [Page Break] Part 2 Other amendments 1 (the original fund), another superannuation fund (the 2 continuing fund) and an *arrangement; and 3 (b) under the arrangement, you became a member (within the 4 meaning of the Superannuation Industry (Supervision) Act 5 1993) of the continuing fund; and 6 (c) you did not give a notice under subsection (1) in relation to 7 the contribution while you were a member (within the 8 meaning of the Superannuation Industry (Supervision) Act 9 1993) of the original fund; 10 then subsections (1) to (4), and section 290-180, apply as if: 11 (d) references in those provisions to the fund were references to 12 the continuing fund; and 13 (e) references in those provisions to the trustee were references 14 to the trustee of the continuing fund. 15 10 At the end of section 290-180 16 Add: 17 Application to merging superannuation funds 18 (5) If: 19 (a) after a valid notice is given, a choice is made under 20 Subdivision 310-B in relation to the *superannuation fund 21 (the original fund), another superannuation fund (the 22 continuing fund) and an *arrangement; and 23 (b) under the arrangement, you became a member (within the 24 meaning of the Superannuation Industry (Supervision) Act 25 1993) of the continuing fund; and 26 (c) you seek to vary the valid notice after you cease to be a 27 member (within the meaning of the Superannuation Industry 28 (Supervision) Act 1993) of the original fund; 29 then subsections (2) and (3A) apply as if: 30 (d) the reference in subsection (3A) to the fund were a reference 31 to the continuing fund; and 32 (e) references in those subsections to the trustee were references 33 to the trustee of the continuing fund. 34 38 Tax Laws Amendment (2009 Measures No. 6) Bill 2009 No. , 2009 [Page Break] Application provision Part 3 1 Part 3--Application provision 2 11 Application provision 3 The amendments made by Parts 1 and 2 of this Schedule apply in 4 relation to a transferring entity and a receiving entity if: 5 (a) the condition in subsection 310-10(3), 310-15(3) or 6 310-20(3) of the Income Tax Assessment Act 1997 (as 7 amended by this Schedule) for those entities is satisfied; and 8 (b) all the transfer events (if any) referred to in subsection 9 310-45(2) of that Act for those entities happen; 10 during the period starting on 24 December 2008 and ending at the end 11 of 30 June 2011. 12 Note 1: The effect of paragraph (a) is that all of the members of the original fund will need to 13 become members of a continuing fund during this period. 14 Note 2: The effect of paragraph (b) is that the transferring fund needs to cease to hold all 15 relevant assets during this period. 16 Tax Laws Amendment (2009 Measures No. 6) Bill 2009 No. , 2009 39 [Page Break] Part 4 Repeals 1 Part 4--Repeals 2 Income Tax Assessment Act 1997 3 12 Subsection 40-340(1) (table item 6) 4 Repeal the item. 5 13 Section 112-97 (table items 33 and 34) 6 Repeal the items. 7 14 Subsection 115-30(1) (table item 10) 8 Repeal the item. 9 15 Section 116-25 (table item dealing with CGT event A1) 10 Omit "If a roll-over under Subdivision 310-D applies: see 11 section 116-110". 12 16 Section 116-25 (table item dealing with CGT event C2) 13 Omit ", 116-80 and 116-110", substitute "and 116-80". 14 17 Section 116-25 (table item dealing with CGT event E2) 15 Omit "If a roll-over under Subdivision 310-D applies: see 16 section 116-110", substitute "None". 17 18 Section 116-110 18 Repeal the section. 19 19 Subsection 290-170(5) 20 Repeal the subsection. 21 20 Subsection 290-180(5) 22 Repeal the subsection. 23 21 Division 310 24 Repeal the Division. 25 40 Tax Laws Amendment (2009 Measures No. 6) Bill 2009 No. , 2009 [Page Break] Savings Part 5 1 Part 5--Savings 2 22 Object 3 The object of this Part is to ensure that, despite the repeals made by 4 Part 4, the full legal and administrative consequences of: 5 (a) any act done or omitted to be done; or 6 (b) any state of affairs existing; or 7 (c) any period ending; 8 before such a repeal, can continue to arise and flow, directly or 9 indirectly, through an indefinite number of steps, even if some or all of 10 those steps are taken after the repeal. 11 23 Making and amending assessments, and doing other 12 things, in relation to past matters 13 Even though a provision is repealed by Part 4, the repeal is disregarded 14 for the purpose of doing any of the following under any Act or 15 legislative instrument (within the meaning of the Legislative 16 Instruments Act 2003): 17 (a) making or amending an assessment; 18 (b) exercising any right or power, performing any obligation or 19 duty or doing any other thing (including under a provision 20 that is itself repealed); 21 in relation to any act done or omitted to be done, any state of affairs 22 existing, or any period ending, before the repeal. 23 24 Saving of provisions about effect of assessments 24 If a provision or part of a provision that is repealed by Part 4 affects an 25 assessment, the repeal is disregarded in relation to assessments made, 26 before or after the repeal, in relation to any act done or omitted to be 27 done, any state of affairs existing, or any period ending, before the 28 repeal. 29 25 Repeals disregarded for the purposes of dependent 30 provisions 31 If the operation of a provision (the subject provision) of any Act or 32 legislative instrument (within the meaning of the Legislative 33 Instruments Act 2003) made under any Act depends to any extent on a 34 provision that is repealed by Part 4 of this Schedule, the repeal is 35 disregarded so far as it affects the operation of the subject provision. Tax Laws Amendment (2009 Measures No. 6) Bill 2009 No. , 2009 41 [Page Break] Part 5 Savings 1 26 Part does not limit operation of section 8 of the Acts 2 Interpretation Act 1901 3 This Part does not limit the operation of section 8 of the Acts 4 Interpretation Act 1901. 5 42 Tax Laws Amendment (2009 Measures No. 6) Bill 2009 No. , 2009 [Page Break] Amendments applying from 30 June 2000 Part 1 1 Schedule 3--Exempt annuity business of life 2 insurance companies 3 Part 1--Amendments applying from 30 June 2000 4 Division 1--Amendment of the Income Tax Assessment 5 Act 1997 6 1 Subparagraphs 320-246(1)(e)(ii) and (iii) 7 Omit "the conditions in subsections (3), (4) and (5)", substitute 8 "whichever of the conditions in subsection (3) are applicable". 9 2 Subsections 320-246(3) to (5) 10 Repeal the subsections, substitute: 11 (3) The following table sets out the conditions mentioned in 12 subparagraphs (1)(e)(ii) and (iii): 13 Annuity conditions Item Column 1 Column 2 The condition in column 2 applies The condition is that ... in the following circumstances ... 1 there is a residual capital value the contract under which the annuity (within the meaning of section 27A is payable does not permit the of the Income Tax Assessment Act residual capital value to exceed the 1936) in relation to the *immediate annuity's purchase price (within the annuity. meaning of that section). 2 the contract under which the the contract does not permit the total *immediate annuity is payable of the amounts paid for the annuity's provides that the annuity is payable commutation (whether in whole or until the end of a term of years in part) to exceed the annuity's certain. reduced purchase price (within the meaning of that section). 3 the contract under which the the contract does not permit the total *immediate annuity is payable: of the commutation payments that (a) provides that the annuity is may become payable before the end payable until the later of: of the term of years certain to (i) the death of a person (or exceed the annuity's reduced the death of the last of 2 purchase price (within the meaning Tax Laws Amendment (2009 Measures No. 6) Bill 2009 No. , 2009 43 [Page Break] Part 1 Amendments applying from 30 June 2000 Annuity conditions Item Column 1 Column 2 The condition in column 2 applies The condition is that ... in the following circumstances ... or more persons to die); or of that section). (ii) the end of a term of years certain; and (b) permits one or more amounts (commutation payments) to become payable before the end of the term of years certain for the annuity's commutation (whether in whole or in part). 4 all circumstances. there is no unreasonable deferral of the payments of the *immediate annuity, having regard to: (a) to the extent to which the payments depend on the returns of the investment of the assets of the *life insurance company paying the annuity--when the payments are made and when those returns are *derived; and (b) to the extent to which the payments do not depend on those returns--the relative sizes of the annual totals of the payments from year to year; and (c) any other relevant factors. 1 Division 2--Consequential amendment 2 Tax Laws Amendment (2006 Measures No. 2) Act 2006 3 3 Item 214 of Schedule 7 (table item 30) 4 Repeal the item. 5 44 Tax Laws Amendment (2009 Measures No. 6) Bill 2009 No. , 2009 [Page Break] Amendments applying from the 2007-08 income year Part 2 1 Part 2--Amendments applying from the 2007-08 2 income year 3 Division 1--Amendment of the Income Tax Assessment 4 Act 1997 5 4 Subparagraphs 320-246(1)(e)(i) to (iii) 6 Repeal the subparagraphs, substitute: 7 (i) was purchased on or before 9 December 1987; or 8 (ii) is a *superannuation income stream; or 9 (iii) satisfies whichever of the conditions in subsection (3) 10 are applicable; or 11 5 Subsection 320-246(3) 12 Omit "subparagraphs (1)(e)(ii) and (iii)", substitute 13 "subparagraph (1)(e)(iii)". 14 6 Subsection 320-246(3) (cell at table item 1, column 1) 15 Omit "section 27A", substitute "section 27H". 16 7 Subsection 320-246(3) (cell at table item 2, column 2) 17 Omit "reduced purchase price (within the meaning of that section)", 18 substitute "purchase price (within the meaning of that section), reduced 19 by the sum of the deductible amounts excluded from assessable income 20 under that section". 21 8 Subsection 320-246(3) (cell at table item 3, column 2) 22 Omit "reduced purchase price (within the meaning of that section)", 23 substitute "purchase price (within the meaning of that section), reduced 24 by the sum of the deductible amounts excluded from assessable income 25 under that section". 26 Division 2--Consequential amendments 27 Superannuation Legislation Amendment (Simplification) Act 28 2007 29 9 Items 237, 238, 239 and 241 of Schedule 1 Tax Laws Amendment (2009 Measures No. 6) Bill 2009 No. , 2009 45 [Page Break] Part 2 Amendments applying from the 2007-08 income year 1 Repeal the items. 2 10 Item 51 of Schedule 3 3 Repeal the item. 4 46 Tax Laws Amendment (2009 Measures No. 6) Bill 2009 No. , 2009 [Page Break] Application provision Part 3 1 Part 3--Application provision 2 11 Application of Part 2 amendments 3 The amendments made by Division 1 of Part 2 of this Schedule apply 4 to: 5 (a) the 2007-08 income year; and 6 (b) later income years. 7 12 Effect of repeal 8 To avoid doubt, the following provisions are taken never to have had 9 effect: 10 (a) item 30 of the table in item 214 of Schedule 7 to the Tax 11 Laws Amendment (2006 Measures No. 2) Act 2006; 12 (b) items 237, 238, 239 and 241 of Schedule 1, and item 51 of 13 Schedule 3, to the Superannuation Legislation Amendment 14 (Simplification) Act 2007. 15 Note 1: The provision mentioned in paragraph (a) is repealed by Division 2 of Part 1 of this 16 Schedule. 17 Note 2: The provisions mentioned in paragraph (b) are repealed by Division 2 of Part 2 of this 18 Schedule. 19 Tax Laws Amendment (2009 Measures No. 6) Bill 2009 No. , 2009 47 [Page Break] Part 1 Amendments commencing on 4 June 2009 1 Schedule 4--Deductible gift recipients 2 Part 1--Amendments commencing on 4 June 2009 3 Income Tax Assessment Act 1997 4 1 Subsection 30-25(2) (table item 2.2.21) 5 Omit "Dymocks Literacy Foundation Limited", substitute "Dymocks 6 Children's Charities Limited". 7 2 Section 30-315 (table item 45A) 8 Omit "Dymocks Literacy Foundation Limited", substitute "Dymocks 9 Children's Charities Limited". 10 48 Tax Laws Amendment (2009 Measures No. 6) Bill 2009 No. , 2009 [Page Break] Amendments commencing on Royal Assent Part 2 1 Part 2--Amendments commencing on Royal Assent 2 Income Tax Assessment Act 1997 3 3 Subsection 30-40(2) (at the end of the table) 4 Add: 3.2.12 The Green Institute Limited the gift must be made after 23 June 2009 3.2.13 United States Studies Centre the gift must be made after 26 July 2009 5 4 Section 30-315 (after table item 53) 6 Insert: 53AA Green Institute Limited item 3.2.12 7 5 Section 30-315 (after table item 118A) 8 Insert: 118B United States Studies Centre item 3.2.13 9 Tax Laws Amendment (2009 Measures No. 6) Bill 2009 No. , 2009 49 [Page Break] Part 3 Application provision 1 Part 3--Application provision 2 6 Application provision 3 The amendments made by this Schedule apply in relation to 4 assessments for: 5 (a) the 2008-09 income year; and 6 (b) later income years. 7 50 Tax Laws Amendment (2009 Measures No. 6) Bill 2009 No. , 2009 [Page Break] Main amendments Part 1 1 Schedule 5--North Western Queensland 2 floods 3 Part 1--Main amendments 4 Income Tax Assessment Act 1936 5 1 Subsection 159J(6) (after paragraph (bb) of the definition of 6 separate net income) 7 Insert: 8 (bc) does not include an ex-gratia payment from the 9 Commonwealth known as Income Recovery Subsidy for the 10 North Western Queensland floods of January and February 11 2009; and 12 Income Tax Assessment Act 1997 13 2 Section 11-15 (table item headed "welfare") 14 After: Income Recovery Subsidy for the North Queensland floods of January and February 2009 ............................ 51-30 15 Insert: Income Recovery Subsidy for the North Western Queensland floods of January and February 2009......... 51-30 16 3 Section 51-30 (at the end of the table) 17 Add: 5.4 an individual in the payment the payment must receipt of an ex-gratia be claimed: payment from the (a) after Commonwealth 24 February known as Income 2009; and Recovery Subsidy for (b) before the North Western 13 April 2009 Queensland floods of January and February 2009 18 Tax Laws Amendment (2009 Measures No. 6) Bill 2009 No. , 2009 51 [Page Break] Part 2 Sunsetting on 1 July 2011 1 Part 2--Sunsetting on 1 July 2011 2 Income Tax Assessment Act 1997 3 4 Section 11-15 (table item headed "welfare") 4 Omit: Income Recovery Subsidy for the North Western Queensland floods of January and February 2009......... 51-30 5 5 Section 51-30 (table item 5.4) 6 Repeal the item. 7 52 Tax Laws Amendment (2009 Measures No. 6) Bill 2009 No. , 2009 [Page Break] Application provision Part 3 1 Part 3--Application provision 2 6 Application provision 3 The amendments made by Part 1 of this Schedule apply in relation to 4 the 2008-09 income year. 5 Tax Laws Amendment (2009 Measures No. 6) Bill 2009 No. , 2009 53 [Page Break] 1 Schedule 6--Spirit blending 2 3 Excise Act 1901 4 1 At the end of Part VIIAA 5 Add: 6 77FM Spirit blending is to be treated as manufacture 7 (1) Subject to subsection (2), for greater certainty so far as concerns 8 the application of the provisions of this Act, spirit blending to 9 produce spirit is taken to constitute the manufacture of that spirit. 10 (2) For the purposes of this Act, spirit blending to produce spirit is 11 taken not to constitute the manufacture of that spirit if the spirit 12 blending occurred in circumstances specified in an instrument 13 under subsection (3). 14 (3) The CEO may, by legislative instrument, specify circumstances for 15 the purposes of subsection (2). 16 (4) Subsection (1) does not imply that, in the absence of such a 17 provision, the blending of substances (whether spirit or not) would 18 not constitute the manufacture of the substance produced by the 19 blending. 54 Tax Laws Amendment (2009 Measures No. 6) Bill 2009 No. , 2009