Contents

Part VI--Collection and recovery of tax                                                                    1

Division 1--General                                                                                                       1

204........ When tax payable ............................................................................... 1

213........ Temporary business ........................................................................... 2

219........ Consolidated assessments .................................................................. 3

Division 8--Prompt recovery, through estimates and payment agreements, of certain amounts not remitted                                                                                                      4

Subdivision A--Object and interpretation                                                               4

222AFA Object and outline ............................................................................... 4

222AFB Interpretation ...................................................................................... 4

222AFC Unpaid amount ................................................................................... 6

Subdivision B--Making, reducing and revoking estimates                                 6

222AGA............................................. When Commissioner may make estimate   6

222AGB.......................................................................... Notice to person liable   7

222AGC................................................................ Reducing amount of estimate   8

222AGD................................................................................. Revoking estimate   8

222AGE Matters for Commissioner to consider under sections 222AGC and 222AGD       9

5>222A GF Requirements for statutory declaration under section 222AGC or 222AGD          10

5>222A GG.......... Further estimate after previous estimate revoked or discharged   11

Subdivision C--Recovering unpaid amount of estimate                                      12

222AHA..................................................... Nature of liability created by notice   12

222AHB..................................... Refund if estimate exceeds underlying liability   12

222AHC......................................................... Defences in recovery proceedings   13

222AHD.............................................................. Effect of affidavit on estimate   14

222AHE Requirements for affidavit under section 222AHC .......................... 14

Subdivision D--Insolvency proceedings                                                                16

222AIA. Effect on statutory demand if estimate reduced or revoked ............. 16

222AIB. Defences on winding up application ................................................ 16

222AIC. Effect of affidavit on estimate .......................................................... 17

222AID. Requirements for affidavit under section 222AIB ............................ 18

222AIE. Defences under section 222AIB not available on application to set aside statutory demand 19

222AIF. Estimate provable in bankruptcy or winding up .............................. 19

222AIG. Rejection of proof of debt relating to estimate ................................. 19

222AIH. Requirements for statutory declaration under section 222AIG ....... 21

222AII.. Provisions altering effect of Corporations Act ................................. 22

Subdivision E--Late payment of estimate                                                              22

222AJA Liability to the general interest charge .............................................. 22

222AJB. Effect of paying the general interest charge ...................................... 23

Subdivision F--Effect on liabilities under this and other Divisions if estimate reduced or revoked                24

222AKA.......................... Liabilities adjusted with effect from when they arose   24

222AKB Reduction or revocation does not prejudice Commissioner's rights in relation to underlying liability    24

Subdivision G--Payment agreements                                                                    24

222ALA Commissioner may make agreement ................................................. 24

222ALB Effect of certain payments ............................................................... 25

Subdivision H--Miscellaneous                                                                                26

222AMAEffect of judgment on liability on which it is based ........................ 26

222AMBNotices under this Division where trustee has control of
affairs of person liable ...................................................................... 26

Division 9--Penalties for directors of non‑remitting companies         28

Subdivision A--Object and interpretation                                                             28

222ANA................................................................................. Object and outline   28

222ANB........................................................................................ Interpretation   28

Subdivision B--Company failing to remit deductions, amounts withheld etc. 29

222AOA........................................................................................... Application   29

222AOB Directors to cause company to remit or to go into voluntary administration or liquidation--deductions and amounts withheld ............................................................................................ 30

222AOBAADirectors to cause company to remit or to go into
voluntary administration or liquidation--alienated personal services payments     31

222AOBADirectors to cause company to remit or to go into
voluntary administration or liquidation--non‑cash benefits ............ 32

222AOC............................. Penalty for directors in office on or before due date   33

222AOD..................................................................... Penalty for new directors   33

222AOE Commissioner must give 14 days' notice before recovering penalty 34

222AOF How notice may be given ................................................................. 35

222AOG Remission of penalty if section 222AOB, 222AOBAA or 222AOBA complied with before notice period ends 35

222AOH Effect of director paying penalty or company discharging underlying liability       36

222AOI. Director's rights of indemnity and contribution ............................... 36

222AOJ Defences ........................................................................................... 37

Subdivision C--Company failing to pay estimate under Division 8                  37

222APA Application ....................................................................................... 37

222APB Directors to cause company to pay estimate or to go into voluntary administration or liquidation        37

222APC Penalty for directors in office within 14 days after notice of estimate 38

222APD Penalty for new directors ................................................................. 38

222APE Commissioner must give 14 days' notice before recovering penalty 39

222APF Remission of penalty if section 222APB complied with before notice period ends                40

222APG Effect of director paying penalty or company discharging liability in respect of estimate      40

222APH Director's rights of indemnity and contribution ............................... 40

222API. Defences ........................................................................................... 41

Subdivision D--Company contravening payment agreement under Division 8 42

222AQA Directors to ensure that company complies with payment agreement   42

222AQB..... Effect of director paying penalty or company discharging liability   42

222AQC................................... Director's rights of indemnity and contribution   43

222AQD............................................................................................... Defences   43

Division 10--Miscellaneous                                                                                    45

222ARA... This Part not to limit or exclude Chapter 5 of the Corporations Act   45

Part VIIA--Registration of tax agents                                                                      46

Division 1--Interpretation                                                                                        46

251A..... Interpretation .................................................................................... 46

251B..... Territories ......................................................................................... 47

251BA.. Companies in which qualified directors have a substantial interest . 47

251BB... Non‑exempt companies .................................................................... 48

251BC... Fit and proper persons to prepare income tax returns ..................... 49

Division 2--Tax Agents' Boards                                                                          51

251C..... Tax Agents' Boards .......................................................................... 51

251D..... Constitution of Boards ..................................................................... 51

251DA.. Remuneration and allowances ........................................................... 51

251E...... Conduct of business of Board .......................................................... 51

251F...... Board not to be sued ......................................................................... 52

251G..... Summoning of witnesses etc. ............................................................ 52

Division 3--Registration of tax agents                                                              53

Subdivision A--Original registration of tax agents                                            53

251J...... Applications for original registration of tax agents ........................... 53

251JA... Original registration of tax agents ..................................................... 53

Subdivision B--Re‑registration of tax agents                                                      54

251JB.... Applications for re‑registration of tax agents ................................... 54

251JC.... Re‑registration of tax agents ............................................................. 55

Subdivision C--Effect of changes in constitution of partnerships                    57

251JD... Registration of a partnership terminated if constitution changes ..... 57

Subdivision D--Changes in constitution of partnerships--registration of successor tax agents     57

251JE.... Applications for registration of successor tax agents ....................... 57

251JF.... Registration of successor .................................................................. 59

Subdivision E--Duration of registration of tax agents                                        59

251JG... Registration of tax agents to be in force for 3 years ......................... 59

Subdivision F--Surrender of registration of tax agents                                     60

251JH... Surrender of registration ................................................................... 60

Subdivision G--Termination of registration of tax agents other than partnerships           60

251JK... Death of natural person .................................................................... 60

251JM.. Companies ceasing to exist ............................................................... 60

Subdivision H--Cancellation or suspension of registration of tax agents      61

251K..... Cancellation or suspension of registration of tax agents ................... 61

Division 4--Registration of nominees of tax agents                                   64

251KA.. Original nominee to be registered as a nominee ................................ 64

251KB.. Applications for registration or re‑registration of nominees ............ 64

251KC.. Registration and re‑registration of nominees of tax agents ............... 65

251KD.. Duration of registration of nominees ................................................ 66

251KE... Cancellation of registration of nominees ........................................... 67

Division 5--Refund of lodgment fees                                                                 68

251KF... Refund of lodgment fees if application withdrawn .......................... 68

Division 6--Notification obligations of tax agents etc.                              69

251KG.. Tax agents who are natural persons .................................................. 69

251KH.. Tax agents that are partnerships ....................................................... 69

251KJ... Changes in the constitution of partnerships ..................................... 69

251KK.. Tax agents that are companies .......................................................... 70

Division 7--Privileges and duties of registered tax agents                    71

251L...... Unregistered tax agents not to charge fees ........................................ 71

251LA... Recognised professional associations ............................................... 73

251M.... Negligence of registered tax agent etc. ............................................... 74

251N..... Preparation of returns etc. on behalf of registered tax agents ........... 75

251O..... Advertising etc. by persons other than registered tax agents ........... 76

Division 8--Miscellaneous                                                                                       77

251P...... Offences by partnerships ................................................................. 77

251Q..... Removal of business to another State ............................................... 77

251QA.. Review of decisions .......................................................................... 77

251QB.. Statements to accompany notification of decisions ........................ 78

Part VIIB--Medicare levy and Medicare levy surcharge                             79

251R..... Interpretation .................................................................................... 79

251S...... Medicare levy ................................................................................... 83

251T..... Levy (other than certain levy increases) not payable by prescribed persons or by certain trustees       84

251U..... Prescribed persons ............................................................................ 85

251V..... Subsections 251R(4), (5), (6B), (6C) and (6D) not to apply to certain medicare levy increases             88

251VA.. Subsection 251U(3) not to apply for certain medicare levy increases 88

251W.... Regulations ....................................................................................... 89

251X..... Notice of assessment to set out Medicare levy and surcharge ......... 89

251Z..... Administration of Medicare levy surcharge Act .............................. 89

Part VIII--Miscellaneous                                                                                                 90

252........ Public officer of company ................................................................ 90

252A..... Public officer of trust estate ............................................................. 92

254........ Agents and trustees .......................................................................... 96

255........ Person in receipt or control of money from non‑resident ................ 97

257........ Payment of tax by banker ................................................................. 99

260........ Contracts to evade tax void .............................................................. 99

262........ Periodical payments in the nature of income .................................. 100

262A..... Keeping of records .......................................................................... 100

263........ Access to books etc. ....................................................................... 107

264........ Commissioner may require information and evidence .................... 108

264AA.. Reporting to Department of Primary Industries and Energy ......... 108

264A..... Offshore information notices .......................................................... 109

264BB... Commissioner may require private health insurers to provide information             114

265A..... Release of liability of members of the Defence Force on death ...... 115

265B..... Notices in relation to certain securities ........................................... 117

266........ Regulations ..................................................................................... 118

Part X--Attribution of income in respect of controlled foreign companies                 119

Division 1--Preliminary                                                                                           119

316........ Object of Part ................................................................................. 119

317........ Interpretation .................................................................................. 119

318........ Associates ....................................................................................... 136

319........ Statutory accounting period of a company .................................... 141

320........ Listed countries and unlisted countries .......................................... 143

321........ Each listed country and each unlisted country to be treated as a separate foreign country     144

322........ Meaning of entitled to acquire ........................................................ 144

323........ State foreign taxes may be treated as federal foreign taxes ............. 144

324........ When income or profits subject to tax in a listed country .............. 144

325........ When dividends etc. taxed in a country at normal company tax rate 146

326........ AFI subsidiary ................................................................................ 147

327........ Eligible finance shares ..................................................................... 148

327A..... Widely distributed finance shares ................................................... 149

327B..... Transitional finance shares ............................................................. 152

328........ Non‑resident family trusts ............................................................. 156

329........ Public unit trusts ............................................................................ 158

330........ Tax detriment .................................................................................. 159

331........ Company deemed to be treated as a resident of a listed country or an unlisted country for the purposes of the tax law of that country ................................................................................ 159

332........ Companies that are residents of listed countries ............................ 159

332A..... Companies that are residents of section 404 countries .................. 160

333........ Companies that are residents of unlisted countries ........................ 160

334A..... Voting interests in companies ......................................................... 162

335........ References extend to pre‑commencement matters and things ........ 163

Division 2--Types of entity                                                                                    164

Subdivision A--Australian entities                                                                      164

336........ Australian entity ............................................................................. 164

337........ Australian partnership .................................................................... 164

338........ Australian trust ............................................................................... 164

Subdivision B--Controlled foreign entities (CFEs)                                           164

339........ Controlled foreign entity (CFE) ..................................................... 164

340........ Controlled foreign company (CFC) ................................................ 165

341........ Controlled foreign partnership (CFP) ............................................ 165

342........ Controlled foreign trust (CFT) ....................................................... 165

Subdivision C--Eligible transferors in relation to trusts                                166

343........ Interpretation .................................................................................. 166

344........ References to transfer of property or services ............................... 167

345........ Deemed transfers of property or services ...................................... 168

346........ Circumstances in which a transfer of property or services is an eligible business transaction                 171

347........ Eligible transferor in relation to a discretionary trust ..................... 172

348........ Eligible transferor in relation to a non‑discretionary trust or a public unit trust     173

Division 3--Control interests, attribution interests, attributable taxpayers and attribution percentages                                                                                                                     175

Subdivision A--Control interests                                                                         175

349........ Associate‑inclusive control interest in a company or trust ............ 175

350........ Direct control interest in a company .............................................. 177

351........ Direct control interest in a trust ..................................................... 179

352........ Indirect control interest in a company or trust ............................... 180

353........ Control tracing interest in a company ............................................ 181

354........ Control tracing interest in a CFP .................................................... 182

355........ Control tracing interest in a CFT .................................................... 182

Subdivision B--Attribution interests                                                                   183

356........ Direct attribution interest in a CFC or CFT ................................... 183

357........ Indirect attribution interest in a CFC or CFT ................................ 187

358........ Attribution tracing interest in a CFC .............................................. 188

359........ Attribution tracing interest in a CFP .............................................. 188

360........ Attribution tracing interest in a CFT .............................................. 188

Subdivision C--Attributable taxpayers and attribution percentages             189

361........ Attributable taxpayer in relation to a CFC or a CFT ..................... 189

362........ Attribution percentage of an attributable taxpayer ........................ 190

Division 4--Attribution accounts                                                                        193

363........ Attribution account entity .............................................................. 193

364........ Attribution account percentage ...................................................... 193

365........ Attribution account payment ......................................................... 193

366........ Direct attribution account interest in a company ........................... 195

367........ Direct attribution account interest in a partnership ....................... 196

368........ Direct attribution account interest in a trust .................................. 197

369........ Indirect attribution account interest in an entity ............................ 198

370........ Attribution surplus ......................................................................... 199

371........ Attribution credit ............................................................................ 200

372........ Attribution debit ............................................................................. 205

373........ Grossed‑up amount of an attribution debit .................................... 206

Division 7--Calculation of attributable income of CFC                          207

Subdivision A--Basic principles                                                                           207

381........ Separate attributable income for each attributable taxpayer ........... 207

382........ Attributable income is taxable income calculated on certain assumptions                207

383........ Basic assumptions .......................................................................... 207

384........ Additional assumption for unlisted country CFC .......................... 208

385........ Additional assumption for listed country CFC .............................. 209

386........ Adjusted tainted income ................................................................. 212

387........ Reduction of attributable income because of interim dividends ..... 213

Subdivision B--General modifications of Australian tax law                          213

388........ Double tax agreements to be disregarded ........................................ 213

389........ Certain provisions to be disregarded in calculating attributable income   213

389A..... Other provisions to be disregarded in calculating attributable income 214

390........ Elections to be made by eligible taxpayer ....................................... 214

392........ Notional assessable amounts are to be pre‑tax ............................... 215

393........ Notional allowable deduction for taxes paid ................................... 215

394........ Notional allowable deduction for eligible finance share dividends, widely distributed finance share dividends and transitional finance share dividends ................................................ 215

395........ Expenditure incurred to produce income or profits in later statutory accounting periods       216

396........ Modified application of sections 25A and 52 ................................ 216

397........ Modified application of trading stock provisions .......................... 216

398........ Modified application of depreciation provisions ........................... 217

398A..... Application of Division 3A of Part III ........................................... 217

399........ Modifications of net income of partnerships and trusts ................ 218

399A..... Modified application of bad debt etc. provisions .......................... 219

400........ Modified application of Division 13 of Part III ............................. 221

401........ Reduction of capital proceeds where attributed income not distributed 221

402........ Additional notional exempt income--unlisted or listed country CFC 224

403........ Additional notional exempt income--unlisted country CFC ......... 226

404........ Additional notional exempt income--listed or section 404 country CFC                227

Subdivision C--Modifications relating to Australian capital gains tax         227

405........ Interpretation .................................................................................. 227

406........ Meaning of c ommencing day and commencing day asset ............... 227

408........ Certain capital gains and losses disregarded ................................... 228

408A..... Certain events before commencing day ignored .............................. 228

409........ Losses before 30 June 1990 to be disregarded ................................ 228

410........ General modifications--CGT ......................................................... 228

411........ Commencing day assets taken to have been acquired on commencing day              229

412........ Cost base of commencing day asset ............................................... 229

413........ Adjustment of cost base as at commencing day--return of capital 229

414........ Exercise of rights ............................................................................. 230

418........ Options ........................................................................................... 231

418A..... Effect of change of residence from Australia to listed or unlisted country               231

419........ Modified application of Subdivision 126‑B of the Income Tax Assessment Act 1997             232

421........ Elections under CGT roll‑over provisions ..................................... 233

422........ Adjustment of capital proceeds where change of residence by eligible CFC from unlisted to listed country          235

423........ Adjustment of capital proceeds where section 47A applies to rolled‑over assets   237

Subdivision D--Modifications relating to losses                                               238

425........ Sometimes‑exempt income etc. ....................................................... 238

426........ Creation of loss ............................................................................... 239

427........ Certain provisions to be disregarded .............................................. 239

428........ Subdivision to apply as if there were always a requirement to calculate attributable income 239

429........ Notional allowable deduction for (sometimes‑exempt income) loss 240

431........ Deduction etc. for previous period loss ......................................... 240

Subdivision E--Modifications relating to application of Part XI                     242

431A..... Exemption of attributable taxpayer from Part XI .......................... 242

Division 8--Active income test                                                                           244

Subdivision A--Basic conditions for passing the active income test             244

432........ Active income test .......................................................................... 244

Subdivision B--Tainted income ratio                                                                   245

433........ Tainted income ratio ....................................................................... 245

434........ Gross turnover ................................................................................ 245

435........ Gross tainted turnover .................................................................... 248

436........ Amounts excluded from active income test .................................... 248

Subdivision C--Treatment of partnership income                                             250

437........ Treatment of partnership income ................................................... 250

Subdivision D--General interpretive provisions                                                252

438........ Roll‑overs--asset disposals ........................................................... 252

439........ When currency exchange gains or losses relate to active income transactions         255

440........ Asset disposals--revaluations and arm's length amounts ............. 256

441........ Hire‑purchase and other property financing transactions .............. 257

442........ Assumption of rights of lender under a loan .................................. 257

443........ Net tainted commodity gains .......................................................... 257

444........ Net tainted currency exchange gains ............................................... 257

445........ Net gains--disposal of tainted assets ............................................. 258

Subdivision E--Passive income, tainted sales income and tainted services income            259

446........ Passive income ................................................................................ 259

447........ Tainted sales income ....................................................................... 262

448........ Tainted services income .................................................................. 267

Subdivision F--Special rules relating to AFI subsidiaries carrying on financial intermediary business     271

449........ AFI subsidiaries--interest income ................................................. 271

450........ AFI subsidiaries--asset disposals and currency transactions ........ 272

Subdivision G--Substantiation requirements                                                    275

451........ Active income test--substantiation requirements for company .... 275

452........ Active income test--substantiation requirements for partnership 277

453........ Active income test--substantiation requirements for attributable taxpayer            280

454........ Assessment on assumption--retention of accounts etc. and compliance with information notices        282

455........ Amendment of assessments ........................................................... 282

Division 9--Attribution of attributable income and other amounts 284

456........ Assessability in respect of CFC's attributable income .................. 284

456A..... Reduction of section 456 assessability where item subject to foreign accruals tax 284

457........ Assessability where CFC changes residence from unlisted country to listed country or to Australia    286

459A..... Assessability where CFC or CFT has interest in certain attributable taxpayers     287

460........ Only resident partners, beneficiaries etc. liable to be assessed as a result of attribution         289

460A..... Effect of reducing section CGT event J1 amount ........................... 291

Division 10--Post‑attribution asset disposals                                              293

461........ Reduction of capital proceeds where attributed income not distributed 293

Division 11--Keeping of records                                                                        296

462........ Keeping of records--section 456 ................................................... 296

462A..... Keeping of records--section 457 ................................................... 296

464A..... Keeping of records--section 459A ................................................ 297

465........ Offence of failing to keep records ................................................... 298

466........ Manner in which records required to be kept ................................. 298

467........ Circumstances where records not required to be kept--reasonable excuse etc.       298

468........ Treatment of partnerships .............................................................. 298

Part XI--Foreign investment funds and foreign life assurance policies 300

Division 1--Preliminary                                                                                           300

Subdivision A--Application of Part                                                                      300

469........ Taxpayers to be taxed on share of income of certain foreign investment funds and foreign life assurance policies ........................................................................................................ 300

Subdivision B--Meaning of certain expressions used in this Part                301

470........ Definitions ...................................................................................... 301

471........ Australian entity ............................................................................. 305

472........ Australian partnership .................................................................... 305

473........ Australian trust ............................................................................... 305

474........ Distributions by a FIF or a FLP .................................................... 306

475........ Entitlement to acquire ..................................................................... 306

476........ Quoted price ................................................................................... 306

477........ Resident superannuation entity ...................................................... 307

478........ Tax detriment .................................................................................. 307

479........ Wholly‑owned subsidiary .............................................................. 308

Subdivision C--Key concepts                                                                                 309

480........ Outline of Subdivision .................................................................... 309

481........ What is a FIF .................................................................................. 309

482........ What is a FLP ................................................................................. 309

483........ What is an interest in a FIF or a FLP ............................................. 311

484........ Bare trustee's interest to be attributed to beneficiary .................... 311

485........ Taxpayers to whose interests in FIFs and FLPs this Part applies 312

485AA.. Election to exclude interests in foreign hybrids from operation of this Part            313

485A..... Applying operative provision in working out net income of partnership or trust estate        315

486........ Notional accounting period of a FIF ............................................... 315

487........ Notional accounting period of a FLP .............................................. 316

Subdivision D--The disposal and acquisition of interests                                318

488........ What is a disposal or acquisition of an interest in a FIF or a FLP . 318

489........ Time of disposal or acquisition of interest ..................................... 319

490........ Consideration for disposal or acquisition ....................................... 319

Subdivision E--Associates                                                                                     320

491........ Associates of an entity to be determined in accordance with section 318 as modified            320

Division 2--Exemption of attributable taxpayers for interests in certain FIFs 322

492........ Object of Division .......................................................................... 322

493........ Exemption of attributable taxpayer in relation to certain trusts ..... 322

494........ Exemption of attributable taxpayer referred to in section 456 ....... 322

Division 3--Exemption for interest in foreign company that is designated as engaging, or whose assets are principally for use, in certain activities                          324

495........ Object of Division .......................................................................... 324

496........ Interpretation .................................................................................. 324

497........ Exemption ....................................................................................... 324

498........ How to determine whether a foreign company is taken to have been principally engaged in eligible activities       325

499........ Stock exchange listing method ........................................................ 326

500........ Balance‑sheet method ..................................................................... 327

501........ Indirect ownership of paid‑up share capital of company ............. 331

Division 4--Exemption for interest in foreign bank or holding company of foreign bank            333

502........ Object of Division .......................................................................... 333

503........ Exemption for interest in foreign bank ........................................... 333

504........ Exemption for interest in foreign holding company of foreign bank 334

Division 5--Exemption for interest in foreign company whose assets are principally for use in carrying on life insurance business                                                             336

505........ Object of Division .......................................................................... 336

506........ Exemption for interest in foreign life insurance company .............. 336

507........ How to determine whether a foreign company was principally engaged in carrying on life insurance business      336

507A..... Exemption for interest in foreign holding company of foreign life insurance company           340

Division 6--Exemption for interest in foreign general insurance company         344

508........ Object of Division .......................................................................... 344

509........ Exemption for interest in foreign general insurance company ........ 344

509A..... Exemption for interest in foreign holding company of foreign general insurance company     345

Division 7--Exemption for interest in foreign company engaged in certain activities connected with real property                                                                                                  347

510........ Object of Division ..........................................................................