Taxation Administration Act 1953 Act No. 1 of 1953 as amended This compilation was prepared on 1 October 2009 taking into account amendments up to Act No. 88 of 2009 Volume 2 includes First and Second Schedules Schedule 1 Note 1 Table of Acts Act Notes Table of Amendments Notes 2-5 Tables A and B The text of any of those amendments not in force on that date is appended in the Notes section The operation of amendments that have been incorporated may be affected by application provisions that are set out in the Notes section Contents The Schedules 1 First Schedule-Amendments of Acts 1 Second Schedule-Citation of Acts amended 2 Schedule 1-Collection and recovery of income tax and other liabilities 3 Chapter 2-Collection, recovery and administration of income tax 3 Part 2-1-Introduction to the Pay as you go (PAYG) system 3 Division 6-Guide to Parts 2-5 and 2-10 3 6-1 What Parts 2-5 and 2-10 are about 3 6-5 The Pay as you go (PAYG) system 3 6-10 How the amounts collected are dealt with 4 Part 2-5-Pay as you go (PAYG) withholding 5 Division 10-Guide to Part 2-5 5 10-1 What this Part is about 5 10-5 Summary of withholding payments 5 Division 11-Preliminary matters 8 11-1 Object of this Part 8 11-5 Constructive payment 8 Division 12-Payments from which amounts must be withheld 9 Subdivision 12-A-General rules 9 12-1 General exceptions 9 12-5 What to do if more than one provision requires a withholding 10 12-7 Division does not apply to alienated personal services payments 12 12-10 Division does not apply to non-cash benefits 12 12-20 Application of Division and regulations to non-share dividends 13 Subdivision 12-B-Payments for work and services 13 12-35 Payment to employee 13 12-40 Payment to company director 13 12-45 Payment to office holder 14 12-47 Payment to religious practitioners 14 12-50 Return to work payment 15 12-55 Voluntary agreement to withhold 15 12-60 Payment under labour hire arrangement, or specified by regulations 16 Subdivision 12-C-Superannuation payments, employment termination payments and unused leave payments 16 12-80 Superannuation income streams and annuities 16 12-85 Superannuation lump sums and employment termination payments 17 12-90 Unused leave payments 17 Subdivision 12-D-Benefit and compensation payments 17 12-110 Social Security or other benefit payment 17 12-115 Commonwealth education or training payment 18 12-120 Compensation, sickness or accident payment 18 Subdivision 12-E-Payments where TFN or ABN not quoted 18 Payment in respect of investment 19 12-140 Recipient does not quote tax file number 19 12-145 Investor becoming presently entitled to income of a unit trust 20 12-150 Limited application of section 12-140 to payment under financial arrangement 20 12-155 When investor may quote ABN as alternative 21 12-160 Investment body unaware that exemption from quoting TFN has stopped applying 22 12-165 Exception for fully franked dividend 22 12-170 Exception for payments below thresholds set by regulations 22 Payment for a supply 23 12-190 Recipient does not quote ABN 23 Subdivision 12-F-Dividend, interest and royalty payments 26 Dividends 26 12-210 Dividend payment to overseas person 26 12-215 Dividend payment received for foreign resident 27 12-220 Application to part of a dividend 27 12-225 Application to distribution by a liquidator or other person 27 Interest 28 12-245 Interest payment to overseas person 28 12-250 Interest payment received for foreign resident 28 12-255 Interest payment derived by lender in carrying on business through overseas permanent establishment 29 12-260 Lender to notify borrower if interest derived through overseas permanent establishment 29 Royalties 30 12-280 Royalty payment to overseas person 30 12-285 Royalty payment received for foreign resident 30 General 31 12-300 Limits on amount withheld under this Subdivision 31 Subdivision 12-FA-Departing Australia superannuation payments 31 12-305 Departing Australia superannuation payment 31 12-310 Limits on amount withheld under this Subdivision 32 Subdivision 12-FAA-Excess untaxed roll-over amount [see Note 2] 32 12-312 Untaxed roll-over superannuation benefits 32 12-313 Limits on amount withheld under this Subdivision 32 Subdivision 12-FB-Payments to foreign residents etc. 33 12-315 Payment to foreign resident etc. 33 12-317 Payment received for foreign resident etc. 34 12-319 Exemptions from withholding obligations under this Subdivision 35 Subdivision 12-G-Payments in respect of mining on Aboriginal land, and natural resources 36 Mining on Aboriginal land 37 12-320 Mining payment 37 Natural resources 37 12-325 Natural resource payment 37 12-330 Payer must ask Commissioner how much to withhold 38 12-335 Commissioner may exempt from section 12-330, subject to conditions 38 Subdivision 12-H-Distributions of managed investment trust income 39 Guide to Subdivision 12-H 39 12-375 What this Subdivision is about 39 Operative provisions 40 12-385 Withholding by managed investment trusts 40 12-390 Withholding by custodians and other entities 41 12-395 Requirement to give notice or make information available 44 12-400 Meaning of managed investment trust 46 12-405 Meaning of fund payment 48 12-410 Entity to whom payment is made 50 12-415 Failure to give notice or make information available: administrative penalty 50 12-420 Agency rules 50 Division 13-Alienated personal services payments 52 13-1 Object of this Division 52 13-5 Payment to the Commissioner in respect of alienated personal services payments 52 13-10 Alienated personal services payments 55 13-15 Personal services payment remitters 55 13-20 Time for payments to Commissioner for alienated personal services payments made during 2000-01 56 Division 14-Non-cash benefits, and accruing gains, for which amounts must be paid to the Commissioner 58 Subdivision 14-A-Non-cash benefits 58 14-1 Object of this Subdivision 58 14-5 Provider of non-cash benefit must pay amount to the Commissioner if payment would be subject to withholding 58 14-10 Dividend, interest or royalty received, for a foreign resident, in the form of a non-cash benefit 59 14-15 Payer can recover amount paid to the Commissioner 60 Subdivision 14-B-Accruing gains 60 14-50 Object of this Subdivision 60 14-55 Liability for TFN withholding tax 61 14-60 Investment body may recover TFN withholding tax from investor 62 14-65 Application of rules in Division 18 62 14-75 Overpayment of TFN withholding tax 63 14-85 Other laws do not exempt from TFN withholding tax 63 Division 15-Working out the amount to withhold 64 Guide to Division 15 64 15-1 What this Division is about 64 Subdivision 15-A-Working out how much to withhold 64 15-10 How much to withhold 65 15-15 Variation of amounts required to be withheld 65 Subdivision 15-B-Withholding schedules and regulations 66 15-25 Commissioner's power to make withholding schedules 66 15-30 Matters to be considered when making withholding schedules 67 15-35 Regulations about withholding 68 Subdivision 15-C-Declarations 68 15-50 Declarations 68 Division 16-Payer's obligations and rights 70 Guide to Division 16 70 16-1 What this Division is about 70 Subdivision 16-A-To withhold 70 When to withhold 71 16-5 When to withhold an amount 71 16-20 Payer discharged from liability to recipient for amount withheld 71 Penalties for not withholding 71 16-25 Failure to withhold: offence 71 16-30 Failure to withhold: administrative penalty for entity other than exempt Australian government agency 72 16-35 Failure to withhold: administrative penalty for exempt Australian government agency in relation to payment other than dividend, interest or royalty 73 16-40 Failure to withhold: administrative penalty for exempt Australian government agency in relation to dividend, interest or royalty payment 73 16-43 Failure to withhold: administrative penalty for exempt Australian government agency in relation to payment to foreign resident etc. 74 Subdivision 16-B-To pay withheld amounts to the Commissioner 74 When and how to pay amounts to the Commissioner 75 16-70 Entity to pay amounts to Commissioner 75 16-75 When amounts must be paid to Commissioner 75 16-80 Penalty for failure to pay within time 77 16-85 How amounts are to be paid 77 Who is a large, medium or small withholder 78 16-95 Meaning of large withholder 78 16-100 Meaning of medium withholder 78 16-105 Meaning of small withholder 79 16-110 Commissioner may vary withholder's status downwards 79 16-115 Commissioner may vary withholder's status upwards 80 Subdivision 16-BA-To be registered 81 Registration of withholders 81 16-140 Withholders must be registered 81 16-141 Registration and cancellation 82 Branch registration 82 16-142 Branches may be registered 82 16-143 Separate amounts for entities and branches 83 16-144 Cancellation of branch registration 83 16-145 Effect on branches of cancelling the entity's registration 84 Subdivision 16-C-To provide information 84 To the Commissioner 84 16-150 Commissioner must be notified of amounts 84 16-153 Annual reports 85 To recipients of withholding payments 87 16-155 Annual payment summary 87 16-157 Payment summary for Subdivision 12-H 88 16-160 Part-year payment summary 89 16-165 Payment summaries for superannuation lump sums and employment termination payments 90 16-166 Payment summary for a departing Australia superannuation payment 90 16-167 Payment summary for payment to recipient who does not quote ABN 91 16-170 Form and content of payment summary 91 16-175 Penalty for not providing payment summary 92 16-180 Commissioner may exempt entity from giving payment summary 93 16-182 Definition of reportable employer superannuation contribution 93 Subdivision 16-D-Additional rights and obligations of entity that makes a payment 94 16-195 Payer's right to recover amounts of penalty: certain withholding taxes 94 Division 18-Recipient's entitlements and obligations 96 Subdivision 18-A-Crediting withheld amounts against liability for income tax, withholding tax or mining withholding tax 96 Guide to Subdivision 18-A 96 18-1 What this Subdivision is about 96 General exception 97 18-5 No credit for refunded amount 97 Entitlement to credits: income tax liability 98 18-10 Application of sections 18-15, 18-20 and 18-25 98 18-15 Tax credit for recipient of withholding payments 98 18-20 Tax credit where recipient is a partnership 98 18-25 Tax credit where recipient is a trust 99 18-27 Tax credit for alienated personal services payments 101 Entitlement to credits: dividend, interest or royalty or amount attributable to fund payment 102 18-30 Credit: dividend, interest or royalty 102 18-32 Credit: amount attributable to fund payment 102 18-35 Credit: penalty under section 12-415, 16-30 or 16-40 or related general interest charge 102 18-40 Credit: liability under Part 4-25 104 Entitlement to credit: departing Australia superannuation payment 105 18-42 Credit-departing Australia superannuation payment 105 Entitlement to credit: mining payment 106 18-45 Credit-mining payment 106 Entitlement to credit: amount attributable to fund payment 107 Subdivision 18-B-Refund of certain withheld amounts 107 18-65 Refund of withheld amounts by the payer to the recipient 107 18-70 Refund of withheld amounts by the Commissioner to the recipient 110 18-80 Refund by Commissioner of amount withheld from payment in respect of investment 111 Subdivision 18-C-Recipient's obligations 112 18-100 Obligation to keep payment summary 112 Division 20-Other matters 113 Subdivision 20-B-Offences 113 20-35 Offences 113 20-40 Joining of charges 114 20-45 Offences that would otherwise be committed by a partnership or unincorporated company 115 Subdivision 20-D-Review of decisions 115 20-80 Reviewable decisions 115 Division 21-Entitlements relating to insolvent ADIs and general insurers 117 Guide to Division 21 117 21-1 What this Division is about 117 Subdivision 21-A-Treatment of some payments by APRA 117 21-5 APRA treated like ADI or general insurance company 117 Part 2-10-Pay as you go (PAYG) instalments 119 Division 45-Instalment payments 119 Guide to Division 45 120 45-1 What this Division is about 120 Subdivision 45-A-Basic rules 121 45-5 Object of this Part 121 45-10 Application of Part 122 45-15 Liability for instalments 122 45-20 Information to be given to the Commissioner by certain payers 123 45-25 Penalty for failure to notify Commissioner 123 45-30 Credit for instalments payable 124 Subdivision 45-B-When instalments are due 125 45-50 Liability to pay instalments 125 45-60 Meaning of instalment quarter 126 45-61 When quarterly instalments are due-payers of quarterly instalments 126 45-70 When annual instalments are due 127 45-75 Instalments recoverable in same way as income tax 127 45-80 General interest charge on late payment 127 45-90 Commissioner may withdraw instalment rate 128 Subdivision 45-C-Working out instalment amounts 128 45-110 How to work out amount of quarterly instalment on instalment income basis 128 45-112 Amount of instalment for quarterly payer who pays on basis of GDP-adjusted notional tax 129 45-115 How to work out amount of annual instalment 130 45-120 Meaning of instalment income 131 Subdivision 45-D-Quarterly payers 133 45-125 Quarterly payer who pays instalments on the basis of instalment income 133 45-130 Quarterly payer who pays on the basis of GDP- adjusted notional tax 135 45-132 Quarterly payer who pays 4 instalments annually on the basis of GDP-adjusted notional tax 136 45-134 Quarterly payer who pays 2 instalments annually on the basis of GDP-adjusted notional tax 137 Subdivision 45-E-Annual payers 138 When you start and stop being an annual payer 139 45-140 Choosing to pay annual instalments 139 45-145 Meaning of instalment group 140 45-150 Entity stops being annual payer if involved with GST registration or instalment group 141 45-155 Entity stops being annual payer if notional tax is $8,000 or more, or entity chooses to pay quarterly 142 45-160 Head company of a consolidated group stops being annual payer 142 Subdivision 45-F-Varying the instalment rate for quarterly payers who pay on the basis of instalment income 143 45-200 Application 143 45-205 Choosing a varied instalment rate 143 45-210 Notifying Commissioner of varied instalment rate 144 45-215 Credit on using varied rate in certain cases 144 Subdivision 45-G-General interest charge payable in certain cases if instalments are too low 145 45-230 Liability to GIC on shortfall in quarterly instalment worked out on the basis of varied rate 145 45-232 Liability to GIC on shortfall in quarterly instalment worked out on the basis of estimated benchmark tax 147 45-233 Reduction in GIC liability under section 45-232 if shortfall is made up in later instalment 155 45-235 Liability to GIC on shortfall in annual instalment 156 45-240 Commissioner may remit general interest charge 158 Subdivision 45-H-Partnership income 158 45-260 Instalment income for a period in which you are in a partnership 158 Subdivision 45-I-Trust income included in instalment income of beneficiary 159 45-280 Instalment income for a period in which you are a beneficiary of a trust 159 45-285 Instalment income includes distributions by certain resident unit trusts 161 45-287 When trusts are disqualified due to concentrated ownership 163 45-288 Resident investment trusts for beneficiaries who are absolutely entitled 165 45-290 Exceptions to exclusion of trust capital gains from beneficiary's instalment income 165 Subdivision 45-J-How Commissioner works out your instalment rate and notional tax 166 45-320 Working out instalment rate 166 45-325 Working out your notional tax 167 45-330 Working out your adjusted taxable income 168 45-335 Working out your adjusted withholding income 171 45-340 Adjusted tax on adjusted taxable income or on adjusted withholding income 171 Subdivision 45-K-How Commissioner works out your benchmark instalment rate and benchmark tax 173 45-355 When Commissioner works out benchmark instalment rate and benchmark tax 173 45-360 How Commissioner works out benchmark instalment rate 174 45-365 Working out your benchmark tax 174 45-370 Working out your adjusted assessed taxable income for the variation year 175 45-375 Adjusted assessed tax on adjusted assessed taxable income 176 Subdivision 45-L-How Commissioner works out amount of quarterly instalment on basis of GDP-adjusted notional tax 178 45-400 Working out amount of instalment-payers of 4 quarterly instalments 178 45-402 Working out amount of instalment-payers of 2 quarterly instalments 180 45-405 Working out your GDP-adjusted notional tax 182 Subdivision 45-M-How amount of quarterly instalment is worked out on basis of your estimate of your benchmark tax 183 45-410 Working out amount of instalment-payers of 4 quarterly instalments 183 45-412 Working out amount of instalment-payers of 2 quarterly instalments 185 45-415 Estimating your benchmark tax 187 45-420 Credit in certain cases where amount of instalment is nil 188 Subdivision 45-N-How this Part applies to the trustee of a trust 188 Trustees to whom this Part applies 189 45-450 Trustees to whom a single instalment rate is given 189 45-455 Trustees to whom several instalment rates are given 189 45-460 Rest of Subdivision applies only to multi-rate trustees 191 45-465 Meaning of instalment income 191 45-468 Multi-rate trustee may pay quarterly instalments 191 How Commissioner works out instalment rate and notional tax for a multi-rate trustee 191 45-470 Working out instalment rate 191 45-473 Commissioner must notify you of notional tax 192 45-475 Working out your notional tax 192 45-480 Working out your adjusted taxable income 193 45-483 Meaning of reduced beneficiary's share and reduced no beneficiary's share 194 45-485 Working out your adjusted withholding income 194 How Commissioner works out benchmark instalment rate and benchmark tax for a multi-rate trustee 195 45-525 When Commissioner works out benchmark instalment rate and benchmark tax 195 45-530 How Commissioner works out benchmark instalment rate 195 45-535 Working out your benchmark tax 196 Subdivision 45-P-Anti-avoidance rules 196 45-595 Object of this Subdivision 197 45-600 General interest charge on tax benefit relating to instalments 197 45-605 When do you get a tax benefit from a scheme? 199 45-610 What is your tax position for an income year? 199 45-615 What is your hypothetical tax position for an income year? 202 45-620 Amount on which GIC is payable, and period for which it is payable 202 45-625 Credit if you also got a tax detriment from the scheme 203 45-630 When do you get a tax detriment from a scheme? 204 45-635 No tax benefit or detriment results from choice for which income tax law expressly provides 205 45-640 Commissioner may remit general interest charge in special cases 206 Subdivision 45-Q-General rules for consolidated groups 207 Guide to Subdivision 45-Q 207 45-700 What this Subdivision is about 207 Application of Subdivision 208 45-705 Application of Subdivision to head company 208 Usual operation of this Part for consolidated group members 211 45-710 Single entity rule 211 45-715 When instalments are due-modification of section 45- 61 212 45-720 Head company cannot be an annual payer-modification of section 45-140 212 Membership changes 212 45-740 Change of head company 212 45-755 Entry rule (for an entity that becomes a subsidiary member of a consolidated group) 215 45-760 Exit rule (for an entity that ceases to be a subsidiary member of a consolidated group) 216 45-775 Commissioner's power to work out different instalment rate or GDP-adjusted notional tax 217 Subdivision 45-R-Special rules for consolidated groups 219 Guide to Subdivision 45-R 219 45-850 What this Subdivision is about 219 Operative provisions 220 45-855 Section 701-1 disregarded for certain purposes 220 45-860 Member having a different instalment period 220 45-865 Credit rule 222 45-870 Head company's liability to GIC on shortfall in quarterly instalment 223 45-875 Other rules about the general interest charge 225 45-880 Continued application of Subdivision 45-Q to the head company of an acquired group 226 45-885 Early application of Subdivision 45-Q to the head company of a new group 228 Subdivision 45-S-MEC groups 229 Guide to Subdivision 45-S 229 45-900 What this Subdivision is about 229 Preliminary 230 45-905 Objects of Subdivision 230 General modification rules 230 45-910 Extended operation of Part to cover MEC groups 230 Extended operation of Subdivision 45-Q 231 45-913 Sections 45-705 and 45-740 do not apply to members of MEC groups 231 45-915 Application of Subdivision 45-Q to provisional head company 232 45-917 Assumption for applying section 45-710 (single entity rule) 235 45-920 Change of provisional head company 235 45-922 Life insurance company 238 Extended operation of Subdivision 45-R 238 45-925 Additional modifications of sections 45-855 and 45- 860 238 45-930 Modifications of sections 45-865 and 45-870 and a related provision 239 45-935 Additional modifications of section 45-885 239 Chapter 3-Collection, recovery and administration of other taxes 241 Part 3-10-Indirect taxes 241 Division 105-General rules for indirect taxes 241 Guide to Division 105 241 105-1 What this Division is about 241 Subdivision 105-A-Assessments 242 105-5 Commissioner may make assessment of indirect tax 242 105-10 Request for assessment 243 105-15 Indirect tax liabilities do not depend on assessment 243 105-20 Commissioner must give notice of the assessment 244 105-25 Amendment of assessment 244 105-30 Later assessment prevails in case of inconsistency 244 Subdivision 105-B-Review of indirect tax decisions 244 105-40 Reviewable indirect tax decisions 244 Subdivision 105-C-Limits on credits, refunds and recovering amounts 245 105-50 Time limit on recovery by the Commissioner 245 105-55 Time limit on refunds etc. from the Commissioner 246 105-60 Reliance on Commissioner's interpretation of an indirect tax law (other than a fuel tax law) 248 105-65 Restriction on GST refunds 249 Subdivision 105-D-General interest charge and penalties 250 105-80 General interest charge 250 105-85 Amending Acts cannot impose penalties or general interest charge earlier than 28 days after Royal Assent 251 Subdivision 105-E-Evidence 251 105-100 Production of assessment or declaration is conclusive evidence 251 105-105 Certificate of amount payable is prima facie evidence 252 105-110 Signed copies are evidence 252 Subdivision 105-F-Indirect tax refund schemes 252 105-120 Refund scheme-defence related international obligations 253 105-125 Refund scheme-international obligations 254 Subdivision 105-G-Other administrative provisions 254 105-140 Address for service 254 105-145 Commissioner must give things in writing 256 Division 110-Goods and services tax 257 Guide to Division 110 257 110-1 What this Division is about 257 Subdivision 110-F-Review of GST decisions 257 110-50 Reviewable GST decisions 257 Division 111-Wine tax and luxury car tax 262 Guide to Division 111 262 111-1 What this Division is about 262 Subdivision 111-C-Review of wine tax decisions 262 111-50 Reviewable wine tax decisions 262 Subdivision 111-D-Effect on contracts from amendments to laws 263 111-60 Alteration of contracts if cost of complying with agreement is affected by later alteration to wine tax or luxury car tax laws 263 Division 112-Fuel tax 265 Guide to Division 112 265 112-1 What this Division is about 265 Subdivision 112-E-Review of fuel tax decisions 265 112-50 Reviewable fuel tax decisions 265 Chapter 4-Generic collection and recovery rules 267 Part 4-15-Collection and recovery of tax-related liabilities and other amounts 267 Division 250-Introduction 267 Subdivision 250-A-Guide to Part 4-15 267 250-1 What this Part is about 267 250-5 Some important concepts about tax-related liabilities 267 250-10 Summary of tax-related liabilities 268 Subdivision 250-B-Object of this Part 273 250-25 Object 273 Division 255-General rules about collection and recovery 274 Subdivision 255-A-Tax-related liabilities 274 255-1 Meaning of tax-related liability 274 255-5 Recovering a tax-related liability that is due and payable 274 Subdivision 255-B-Commissioner's power to vary payment time 275 255-10 To defer the payment time 275 255-15 To permit payments by instalments 275 255-20 To bring forward the payment time in certain cases 276 Subdivision 255-C-Recovery proceedings 276 Guide to Subdivision 255-C 276 255-35 What this Subdivision is about 276 Operative provisions 276 255-40 Service of documents if person absent from Australia or cannot be found 276 255-45 Evidentiary certificate 277 255-50 Certain statements or averments 278 255-55 Evidence by affidavit 279 Division 260-Special rules about collection and recovery 280 Guide to Division 260 280 260-1 What this Division is about 280 Subdivision 260-A-From third party 280 260-5 Commissioner may collect amounts from third party 280 260-10 Notice to Commonwealth, State or Territory 282 260-15 Indemnity 282 260-20 Offence 283 Subdivision 260-B-From liquidator 283 260-40 Subdivision does not apply to superannuation guarantee charge 283 260-45 Liquidator's obligation 283 260-50 Offence 285 260-55 Joint liability of 2 or more liquidators 285 260-60 Liquidator's other obligation or liability 285 Subdivision 260-C-From receiver 285 260-75 Receiver's obligation 285 260-80 Offence 287 260-85 Joint liability of 2 or more receivers 287 260-90 Receiver's other obligation or liability 287 Subdivision 260-D-From agent winding up business for foreign resident principal 287 260-105 Obligation of agent winding up business for foreign resident principal 287 260-110 Offence 288 260-115 Joint liability of 2 or more agents 289 260-120 Agent's other obligation or liability 289 Subdivision 260-E-From deceased person's estate 289 260-140 Administered estate 289 260-145 Unadministered estate 290 260-150 Commissioner may authorise amount to be recovered 291 Division 263-Mutual assistance in collection of foreign tax debts 292 Subdivision 263-A-Foreign revenue claims 292 Guide to Subdivision 263-A 292 263-5 What this Subdivision is about 292 Operative provisions 293 263-10 Meaning of foreign revenue claim 293 263-15 Requirements for foreign revenue claims 293 263-20 Foreign Revenue Claims Register 293 263-25 Registering claims 294 263-30 When amount is due and payable 294 363-35 Amending the Register etc. 295 263-40 Payment to competent authority 296 Division 265-Other matters 297 Subdivision 265-A-Right of person to seek recovery or contribution 297 Guide to Subdivision 265-A 297 265-35 What this Subdivision is about 297 Operative provisions 297 265-40 Right of recovery if another person is liable 297 265-45 Right of contribution if persons are jointly liable 298 Subdivision 265-B-Application of laws 298 265-65 Non-application of certain taxation laws 298 Part 4-25-Charges and penalties 299 Division 280-Shortfall interest charge 299 Guide to Division 280 299 280-1 Guide to Division 280 299 Subdivision 280-A-Object of Division 299 280-50 Object of Division 299 Subdivision 280-B-Shortfall interest charge 300 280-100 Liability to shortfall interest charge-income tax 300 280-102 Liability to shortfall interest charge-petroleum resource rent tax 301 280-102ALiability to shortfall interest charge-excess contributions tax 301 280-103 Liability to shortfall interest charge-general 302 280-105 Amount of shortfall interest charge 302 280-110 Notification by Commissioner 303 Subdivision 280-C-Remitting shortfall interest charge 303 280-160 Remitting shortfall interest charge 303 280-165 Commissioner must give reasons for not remitting in certain cases 304 280-170 Objecting against remission decision 304 Division 284-Administrative penalties for statements, unarguable positions and schemes 305 Guide to Division 284 305 284-5 What this Division is about 305 Subdivision 284-A-General provisions 305 284-10 Object of Division 306 284-15 When a matter is reasonably arguable 306 284-20 Which statements this Division applies to 306 284-25 Statements by agents 307 284-30 Application of Division to trusts 307 284-35 Application of Division to partnerships 307 Subdivision 284-B-Penalties relating to statements 308 Guide to Subdivision 284-B 308 284-70 What this Subdivision is about 308 Operative provisions 309 284-75 Liability to penalty 309 284-80 Shortfall amounts 309 284-85 Amount of penalty 311 284-90 Base penalty amount 312 Subdivision 284-C-Penalties relating to schemes 314 Guide to Subdivision 284-C 314 284-140 What this Subdivision is about 314 Operative provisions 314 284-145 Liability to penalty 314 284-150 Scheme benefits and scheme shortfall amounts 315 284-155 Amount of penalty 317 284-160 Base penalty amount: schemes 317 Subdivision 284-D-Provisions common to Subdivisions 284-B and 284-C 318 284-215 Exceptions 318 284-220 Increase in base penalty amount 318 284-225 Reduction of base penalty amount 319 Division 286-Penalties for failing to lodge documents on time 321 Subdivision 286-A-Guide to Division 286 321 286-1 What this Division is about 321 Subdivision 286-B-Object of Division 321 286-25 Object of Division 321 Subdivision 286-C-Penalties for failing to lodge documents on time 322 286-75 Liability to penalty 322 286-80 Amount of penalty 323 Division 288-Miscellaneous administrative penalties 326 288-10 Penalty for non-electronic notification 326 288-20 Penalty for non-electronic payment 327 288-25 Penalty for failure to keep or retain records 327 288-30 Penalty for failure to retain or produce declarations 327 288-35 Penalty for preventing access etc. 328 288-40 Penalty for failing to register or cancel registration 328 288-45 Penalty for failing to issue tax invoice or adjustment note 328 288-50 Penalty for both principal and agent issuing certain documents 329 288-70 Administrative penalties for life insurance companies 329 288-75 Administrative penalty for a copyright collecting society 331 288-80 Administrative penalty for over declaring conduit foreign income 331 288-85 False or misleading statements in approved forms given by trustee of self managed superannuation fund etc. 332 288-90 Failing to give release authority for excess non- concessional contributions tax 333 288-95 Failing to comply etc. with release authority 333 288-100 Excess money paid under release authority 334 288-105 Superannuation provider to calculate crystallised pre-July 83 amount of superannuation interest by 30 June 2008 334 Division 290-Promotion and implementation of schemes 335 Subdivision 290-A-Objects of this Division 335 290-5 Objects of this Division 335 Subdivision 290-B-Civil penalties 335 290-50 Civil penalties 336 290-55 Exceptions 337 290-60 Meaning of promoter 339 290-65 Meaning of tax exploitation scheme 340 Subdivision 290-C-Injunctions 341 290-120 Conduct to which this Subdivision applies 341 290-125 Injunctions 341 290-130 Interim injunctions 341 290-135 Delay in making ruling 341 290-140 Discharge etc. of injunctions 342 290-145 Certain limits on granting injunctions not to apply 342 290-150 Other powers of the Federal Court unaffected 343 Subdivision 290-D-Voluntary undertakings 343 290-200 Voluntary undertakings 343 Division 298-Machinery provisions for penalties 344 Subdivision 298-A-Administrative penalties 344 298-5 Scope of Subdivision 344 298-10 Notification of liability 344 298-15 Due date for penalty 345 298-20 Remission of penalty 345 298-25 General interest charge on unpaid penalty 345 298-30 Assessment of penalties under Division 284 346 Subdivision 298-B-Civil penalties 346 298-80 Application of Subdivision 346 298-85 Civil evidence and procedure rules for civil penalty orders 347 298-90 Civil proceedings after criminal proceedings 347 298-95 Criminal proceedings during civil proceedings 347 298-100 Criminal proceedings after civil proceedings 347 298-105 Evidence given in proceedings for penalty not admissible in criminal proceedings 348 298-110 Civil double jeopardy 348 Part 4-50-Release from particular liabilities 349 Division 340-Commissioner's power to provide release from particular liabilities 349 Guide to Division 340 349 340-1 What this Division is about 349 Operative provisions 349 340-5 Release from particular liabilities in cases of serious hardship 349 340-10 Liabilities to which this section applies 351 340-15 Commissioner may take action to give effect to a release decision 352 340-20 Extinguishing your liability to pay a fringe benefits tax instalment if you are released 353 340-25 Extinguishing your liability to pay a PAYG instalment if you are released 353 Chapter 5-Administration 354 Part 5-1-The Australian Taxation Office 354 Division 352-Accountability of the Commissioner 354 Guide to Division 352 354 352-1 What this Division is about 354 Subdivision 352-A-Accountability of the Commissioner in respect of indirect tax laws 354 352-5 Commissioner must prepare annual report on indirect tax laws 354 Division 353-Powers to obtain information and evidence 356 353-10 Commissioner's power 356 353-15 Access to premises for the purposes of the indirect tax laws 357 353-20 Checking status of specifically listed deductible gift recipients 358 Division 355-Confidentiality 360 Guide to Division 355 360 355-1 What this Division is about 360 Subdivision 355-A-Protection of confidentiality of indirect tax information 360 355-5 Protection of confidentiality of indirect tax information 360 Division 356-General administration of tax laws 364 Guide to Division 356 364 356-1 What this Division is about 364 Subdivision 356-A-Indirect tax laws 364 356-5 Commissioner has general administration of indirect tax laws 364 Part 5-5-Rulings 365 Division 357-Object and common rules 365 Guide to Division 357 365 357-1 What this Division is about 365 Subdivision 357-A-Object of this Part 365 357-5 Object of this Part 366 Subdivision 357-B-Common rules for rulings 366 Rules for all rulings 367 357-50 Scope of Division 367 357-55 The provisions that are relevant for rulings 367 357-60 When rulings are binding on the Commissioner 368 357-65 Stopping relying on a ruling 369 357-70 Commissioner may apply the law if more favourable than the ruling 369 357-75 Inconsistent rulings 369 357-80 Contracts for schemes 370 357-85 Effect on ruling if relevant provision re-enacted 370 357-90 Validity of ruling not affected by formal defect 371 Common rules for public and private rulings 371 357-95 Electronic communications 371 357-100 Evidence 371 Common rules for private and oral rulings 372 357-105 Further information must be sought 372 357-110 Assumptions in making private or oral ruling 372 357-115 Additional information provided by applicant 372 357-120 Commissioner may take into account information from third parties 373 357-125 Applications and objections not to affect obligations and powers 373 Division 358-Public rulings 374 Guide to Division 358 374 358-1 What this Division is about 374 Making public rulings 374 358-5 What is a public ruling? 374 358-10 Application of public rulings 375 358-15 When a public ruling ceases to apply 375 Withdrawing public rulings 375 358-20 Withdrawing public rulings 375 Division 359-Private rulings 377 Guide to Division 359 377 359-1 What this Division is about 377 Private ruling s 378 359-5 Private rulings 378 359-10 Applying for a private ruling 378 359-15 Private rulings to be given to applicants 378 359-20 Private rulings must contain certain details 378 359-25 Time of application of private rulings 379 359-30 Ruling for trustee of a trust 379 359-35 Dealing with applications 379 359-40 Valuations 380 359-45 Related rulings 381 359-50 Delays in making private rulings 381 359-55 Revised private rulings 383 359-60 Objections, reviews and appeals relating to private rulings 383 359-65 Commissioner may consider new information on objection 384 359-70 Successful objection decision alters ruling 384 Division 360-Oral rulings 385 Guide to Division 360 385 360-1 What this Division is about 385 Oral rulings 385 360-5 Applying for and making of oral rulings 385 360-10 Withdrawing an application for an oral ruling 386 360-15 Commissioner determinations 387 Division 361-Non-ruling advice and general administrative practice 388 361-5 Non-ruling advice and general administrative practice 388 Part 5-25-Record-keeping and other obligations of taxpayers 389 Division 382-Record-keeping 389 Guide to Division 382 389 382-1 What this Division is about 389 Subdivision 382-A-Keeping records of indirect tax transactions 389 382-5 Keeping records of indirect tax transactions 389 Subdivision 382-B-Record keeping obligations of deductible gift recipients 393 382-15 Deductible gift recipients to keep records 393 Division 388-Requirements about giving material to the Commissioner 395 Subdivision 388-A-Object of Division 395 388-5 Object of Division 395 Subdivision 388-B-General provisions 395 388-50 Approved forms 395 388-52 Saturdays, Sundays and public holidays 396 388-55 Commissioner may defer time for lodgment 396 388-60 Declaration by entity 397 388-65 Declaration by entity where agent gives document 397 388-70 Declaration by agent 397 388-75 Signing declarations 398 388-80 Electronic notification of BAS amounts 399 388-85 Truncating amounts 399 Division 390-Superannuation reporting 400 Guide to Division 390 400 390-1 What this Division is about 400 Subdivision 390-A-Contributions statements and roll-over superannuation benefit statements etc. 400 390-5 Contributions statements 400 390-10 Statements about roll-over superannuation benefits etc. 403 390-15 Superannuation statements to members 405 Subdivision 390-B-Statements relating to release authorities 406 390-65 Statements relating to release authorities 406 Subdivision 390-C-Other statements 407 390-115 Change or omission in information given to the Commissioner 407 Division 391-First home saver account reporting 408 Guide to Division 391 408 391-1 What this Division is about 408 Subdivision 391-A-Account activity statements 408 391-5 FHSA account activity statements 408 Subdivision 391-B-Transfer statements 410 391-10 Statements about transfer payments between FHSAs etc. 410 Division 394-Reporting about forestry managed investment schemes 412 Guide to Division 394 412 394-1 What this Division is about 412 394-5 Statements about initial contributions to scheme 412 394-10 Statements about failure to establish trees within 18 months 413 Part 5-30-Payment, ABN and identification verification system 415 Division 400-Guide to Part 5-30 415 400-1 What Part 5-30 is about 415 400-5 The payment, ABN and identification verification system 415 Division 405-Transaction reporting by purchasers 416 405-5 Payments to which this Division applies 416 405-10 Reporting requirements 416 405-15 Invoices produced by purchasers 417 Division 410-Transaction reporting by suppliers 418 410-5 Payments to which this Division applies 418 410-10 Reporting requirements 418 410-15 Invoices produced by purchasers 419 Division 415-Verification of suppliers' ABNs by purchasers 420 415-5 Payments to which this Division applies 420 415-10 ABN verification requirements 420 415-15 Method of obtaining ABN verification 421 415-20 Verification applies to later payments 421 Division 417-Verification of suppliers' identities by purchasers 422 417-5 Payments to which this Division applies 422 417-10 Identity verification requirements 422 417-15 Method of obtaining identity verification 423 417-20 Verification applies to later payments 423 Division 420-Penalties for not reporting or verifying 424 420-5 Failing to report or verify: administrative penalty 424 Division 425-Other matters 425 425-20 Constructive payment 425 425-25 Non-cash benefits 425 Part 5-35-Registration and similar processes for various taxes 426 Division 426-Process of endorsing charities and other entities 426 Guide to Division 426 426 426-1 What this Division is about 426 Subdivision 426-A-Application of Subdivision 426-B to various kinds of endorsement 426 426-5 Application of Subdivision 426-B to various kinds of endorsement 427 426-10 How Subdivision 426-B applies to government entities in relation to endorsement under section 30-120 of the Income Tax Assessment Act 1997 427 Subdivision 426-B-Process of endorsement etc. 428 426-15 Applying for endorsement 428 426-20 Dealing with an application for endorsement 429 426-25 Notifying outcome of application for endorsement 430 426-30 Date of effect of endorsement 430 426-35 Review of refusal of endorsement 430 426-40 Checking entitlement to endorsement 431 426-45 Telling Commissioner of loss of entitlement to endorsement 432 426-50 Partnerships and unincorporated bodies 432 426-55 Revoking endorsement 433 426-60 Review of revocation of endorsement 434 Subdivision 426-C-Entries on Australian Business Register 434 426-65 Entries on Australian Business Register 434 Subdivision 426-D-Private ancillary funds 435 Guide to Subdivision 426-D 435 426-100 What this Subdivision is about 435 Private ancillary funds 436 426-105 Private ancillary funds 436 426-110 Private ancillary fund guidelines 437 426-115 Australian Business Register must show private ancillary fund status 437 Administrative penalties 438 426-120 Administrative penalties for trustees of private ancillary funds 438 Suspension and removal of trustees 439 426-125 Suspension or removal of trustees 439 426-130 Commissioner to appoint acting trustee in cases of suspension or removal 441 426-135 Terms and conditions of appointment of acting trustee 441 426-140 Termination of appointment of acting trustee 442 426-145 Resignation of acting trustee 442 426-150 Property vesting orders 442 426-155 Powers of acting trustee 443 426-160 Commissioner may give directions to acting trustee 443 426-165 Property vested in acting trustee-former trustees' obligations relating to books, identification of property and transfer of property 443 Part 5-45-Application of taxation laws to certain entities 446 Division 444-Obligations of entities on behalf of other entities 446 Guide to Division 444 446 444-1 What this Division is about 446 Subdivision 444-A-Unincorporated associations and bodies and companies 446 444-5 Unincorporated associations and bodies 446 444-10 Public officers of companies 447 444-15 Liability of directors and officers of a company 448 Subdivision 444-B-Partnerships 448 444-30 Partnerships 448 Subdivision 444-C-Superannuation funds 449 444-50 Superannuation funds 449 Subdivision 444-D-Incapacitated entities 450 444-70 Representatives of incapacitated entities 450 Subdivision 444-E-Indirect tax specific entities 450 444-80 GST joint ventures 451 444-85 Non-profit sub-entities 451 444-90 GST groups 452 Division 446-Local governing bodies 454 Guide to Division 454 446-1 What this Division is about 454 Operative provisions 454 446-5 Requirements for unanimous resolutions by local governing bodies 454 Notes 459 The Schedules Section 2(1) First Schedule-Amendments of Acts Note: The amendments made by this Schedule are incorporated in the compilations on ComLaw. Estate Duty Assessment Act 1914-1950 [repealed by Act No. 118, 1999, Sch. 1] Gift Duty Assessment Act 1941-1950 [repealed by Act No. 118, 1999, Sch. 1] Income Tax and Social Services Contribution Assessment Act 1936- 1952 [now cited as Income Tax Assessment Act 1936] Officers' Rights Declaration Act 1928-1940 [repealed by Act No. 170, 1978, s. 44(1)] Pay-roll Tax Assessment Act 1941-1942 [repealed by Act No. 101, 2006, Sch. 5] Sales Tax Assessment Act (No. 1) 1930-1942 [repealed by Act No. 101, 2006, Sch. 5] Sales Tax Procedure Act 1934-1940 [repealed by Act No. 101, 2006, Sch. 5] Stevedoring Industry Charge Assessment Act 1947 [repealed by Act No. 118, 1999, Sch. 1] War-time (Company) Tax Assessment Act 1940-1947 [repealed by Act No. 216, 1973, s. 5] Wool Tax Assessment Act 1936-1952 [repealed by Act No. 31, 1964, s. 4] For access to the wording of the amendments made by this Schedule see Act No. 1, 1953. Second Schedule-Citation of Acts amended Section 2(2) |First Column |Second Column | |Gift Duty Assessment Act |Gift Duty Assessment Act | |1941-1950 |1941-1953 | | |[repealed by Act No. 118, | | |1999, Sch. 1] | |Officers' Rights Declaration|Officers' Rights | |Act 1928-1940 |Declaration Act 1928-1953 | | |[repealed by Act No. 170, | | |1978, s. 44(1)] | |Sales Tax Assessment Act |Sales Tax Assessment Act | |(No. 1) 1930-1942 |(No. 1) 1930-1953 | | |repealed by Act No. 101, | | |2006, Sch. 5] | |Sales Tax Procedure Act |Sales Tax Procedure Act | |1934-1940 |1934-1953 | | |[repealed by Act No. 101, | | |2006, Sch. 5] | |Stevedoring Industry Charge |Stevedoring Industry Charge| |Assessment Act 1947 |Assessment Act 1947-1953 | | |[repealed by Act No. 118, | | |1999, Sch. 1] | |War-time (Company) Tax |War-time (Company) Tax | |Assessment Act 1940-1947 |Assessment Act 1940-1953 | | |[repealed by Act No. 216, | | |1973, s. 5] | |Wool Tax Assessment Act |Wool Tax Assessment Act | |1936-1952 |1936-1953 | | |[repealed by Act No. 31, | | |1964, s. 4] | Schedule 1-Collection and recovery of income tax and other liabilities Note: See section 3AA. Chapter 2-Collection, recovery and administration of income tax Part 2-1-Introduction to the Pay as you go (PAYG) system Division 6-Guide to Parts 2-5 and 2-10 6-1 What Parts 2-5 and 2-10 are about To help taxpayers meet their annual income tax liability, they are required to pay amounts of their income at regular intervals as it is earned during the year. The system for collecting these amounts is called "Pay as you go". Amounts collected under this system also go towards meeting liability for Medicare levy, liability to repay contributions under the Higher Education Contribution Scheme (HECS), liability to repay debts under the Higher Education Loan Program (HELP) and liability to repay financial supplement debts under the Student Financial Supplement Scheme (SFSS). Table of sections 6-5 The Pay as you go (PAYG) system 6-10 How the amounts collected are dealt with 6-5 The Pay as you go (PAYG) system (1) Parts 2-5 and 2-10 establish the PAYG system, which has 2 components: . PAYG withholding (Part 2-5) . PAYG instalments (Part 2-10). PAYG withholding (2) Under PAYG withholding, amounts are collected in respect of particular kinds of payments or transactions. Usually, someone who makes a payment to you is required to withhold an amount from the payment, and then to pay the amount to the Commissioner. For a list of the payments and other transactions to which PAYG withholding applies, see Division 10 PAYG instalments (3) You pay PAYG instalments directly to the Commissioner. These are usually based on your GDP-adjusted notional tax or your ordinary income for a past period, but excluding: . income subject to PAYG withholding (with certain exceptions) . exempt income, or income that is otherwise not assessable. An instalment is usually paid after a quarter, but some taxpayers are eligible to pay an annual instalment after the end of the income year. 6-10 How the amounts collected are dealt with You are entitled to credits for the amounts of your income that are collected under the PAYG system. The credits are applied under Division 3 of Part IIB against your tax debts, and any excess is refunded to you. Part 2-5-Pay as you go (PAYG) withholding Division 10-Guide to Part 2-5 10-1 What this Part is about Under PAYG withholding, amounts are collected in respect of particular kinds of payments or transactions. Usually, someone who makes a payment to you is required to withhold an amount from the payment, and then to pay the amount to the Commissioner. If the payment is personal services income that is included in the assessable income of someone else under Division 86 of the Income Tax Assessment Act 1997, the payer must pay such an amount to the Commissioner at a later date. If a non-cash benefit is provided instead of a payment, the provider must first pay to the Commissioner the amount that would have been withheld from the payment. This Part also contains provisions about the obligations and rights of payers and recipients. 10-5 Summary of withholding payments (1) The payments and other transactions covered by PAYG withholding are called withholding payments. They are summarised in the table. Note: The obligation to pay an amount to the Commissioner is imposed on the entity making the withholding payment (except for items 17, 19 and 22, and 26 (to the extent that it covers subsection 12-390(4))). |Summary of withholding payments | |Item |Withholding payment |Section | |1 |A payment of salary etc. to an |12-35 | | |employee | | |2 |A payment of remuneration to the |12-40 | | |director of a company | | |3 |A payment of salary etc. to an office |12-45 | | |holder (e.g. a member of the Defence | | | |Force) | | |3A |a payment to a *religious practitioner|12-47 | |4 |A return to work payment to an |12-50 | | |individual | | |5 |A payment that is covered by a |12-55 | | |voluntary agreement | | |6 |A payment under a labour hire |12-60 | | |arrangement or a payment specified by | | | |regulations | | |7 |A *superannuation income stream or an |12-80 | | |annuity | | |8 |A *superannuation lump sum or an |12-85 | | |*employment termination payment | | |9 |An unused leave payment |12-90 | |10 |A social security or similar payment |12-110 | | |(e.g. old age pension) | | |11 |A Commonwealth education or training |12-115 | | |payment | | |12 |A compensation, sickness or accident |12-120 | | |payment | | |13 |A payment arising from an investment |12-140 | | |where the recipient does not quote its| | | |tax file number, or in some cases, its| | | |ABN | | |14 |Investor becoming presently entitled |12-145 | | |to income of a unit trust | | |15 |A payment for a supply where the |12-190 | | |recipient of the payment does not | | | |quote its ABN | | |16 |A dividend payment to an overseas |12-210 | | |person | | |17 |A dividend payment received for a |12-215 | | |foreign resident | | |18 |An interest payment to an overseas |12-245 | | |person | | |19 |An interest payment received for a |12-250 | | |foreign resident | | |20 |An interest payment derived by a |12-255 | | |lender in carrying on business through| | | |overseas permanent establishment | | |21 |A royalty payment to an overseas |12-280 | | |person | | |22 |A royalty payment received for a |12-285 | | |foreign resident | | |22A |A departing Australia superannuation |12-305 | | |payment | | |22AA |An *excess untaxed roll-over amount |12-312 | |22B |A payment (of a kind set out in the |12-315 | | |regulations) to a foreign resident | | |22C |A payment (of a kind set out in the |12-317 | | |regulations) received for a foreign | | | |resident | | |23 |A mining payment |12-320 | |24 |A natural resource payment |12-325 | |25 |A payment by a managed investment |12-385 | | |trust | | |26 |A payment by a *custodian or other |12-390 | | |entity | | (2) These can also be treated as withholding payments: (a) alienated personal services payments (see Division 13); (b) non-cash benefits (see Division 14). Note: The obligation to pay an amount to the Commissioner is imposed on the entity receiving the alienated personal services payment or providing the non-cash benefit. Division 11-Preliminary matters Table of sections 11-1 Object of this Part 11-5 Constructive payment 11-1 Object of this Part The object of this Part is to ensure the efficient collection of: (a) income tax; and (b) Medicare levy; and (c) amounts of liabilities to the Commonwealth under Chapter 5A of the Higher Education Funding Act 1988; and (ca) amounts of liabilities to the Commonwealth under Chapter 4 of the Higher Education Support Act 2003; and (da) amounts of liabilities to the Commonwealth under Part 2B.3 of the Social Security Act 1991; and (db) amounts of liabilities to the Commonwealth under Division 6 of Part 4A of the Student Assistance Act 1973; and (d) *withholding tax; and (e) *mining withholding tax; and (f) *TFN withholding tax. 11-5 Constructive payment (1) In working out whether an entity has paid an amount to another entity, and when the payment is made, the amount is taken to have been paid to the other entity when the first entity applies or deals with the amount in any way on the other's behalf or as the other directs. (2) An amount is taken to be payable by an entity to another entity if the first entity is required to apply or deal with it in any way on the other's behalf or as the other directs. Division 12-Payments from which amounts must be withheld Table of Subdivisions 12-A General rules 12-B Payments for work and services 12-C Superannuation payments, employment termination payments and unused leave payments 12-D Benefit and compensation payments 12-E Payments where TFN or ABN not quoted 12-F Dividend, interest and royalty payments 12-FA Departing Australia superannuation payments 12-FAA Excess untaxed roll-over amount [see Note 2] 12-FB Payments to foreign residents etc. 12-G Payments in respect of mining on Aboriginal land, and natural resources 12-H Distributions of managed investment trust income Subdivision 12-A-General rules Table of sections 12-1 General exceptions 12-5 What to do if more than one provision requires a withholding 12-7 Division does not apply to alienated personal services payments 12-10 Division does not apply to non-cash benefits 12-20 Application of Division and regulations to non-share dividends 12-1 General exceptions Exempt income of recipient (1) An entity need not withhold an amount under section 12-35, 12- 40, 12-45, 12-47, 12-50, 12-55, 12-60, 12-80, 12-85, 12-90, 12-120 or 12-190 from a payment if the whole of the payment is *exempt income of the entity receiving the payment. Non-assessable non-exempt income of recipient (1A) An entity need not withhold an amount under Subdivision 12-B, Subdivision 12-C or section 12-120 or 12-190 from a payment if the whole of the payment is not assessable income and is not *exempt income of the entity receiving the payment. Living-away-from-home allowance benefit (2) In working out how much to withhold under section 12-35, 12-40, 12-45, 12-47, 12-115, 12-120, 12-315 or 12-317 from a payment, disregard so much of the payment as is a living-away-from-home allowance benefit as defined by section 136 of the Fringe Benefits Tax Assessment Act 1986. Expense payment benefit (3) In working out how much to withhold under section 12-35, 12-40, 12-45, 12-47, 12-115, 12-120, 12-315 or 12-317 from a payment, disregard so much of the payment as: (a) is an expense payment benefit as defined by section 136 of the Fringe Benefits Tax Assessment Act 1986; and (b) is not any of the following: (i) an exempt benefit under section 22 of that Act (about reimbursement of car expenses on the basis of distance travelled); (ii) an expense payment benefit in relation to a contribution to an *FHSA. 12-5 What to do if more than one provision requires a withholding (1) If more than one provision in this Division covers a payment, only one amount is to be withheld from the payment. (2) The provision to apply is the one that is most specific to the circumstances of the payment. However, this general rule is subject to the specific rules in the table, and the specific rule in subsection (3). |Specific rules for determining priority among | |withholding provisions | |Item |Apply: |Which is |In priority to: | | | |about: | | |1AA |section 12-|distributions |each other withholding| | |385 or |to foreign |provision | | |12-390 |residents from| | | | |*managed | | | | |investment | | | | |trusts | | |1 |section 12-|a payment for |section 12-60 (payment| | |35, 12-40, |work or |under a labour hire | | |12-45, |services |arrangement or | | |12-47 or | |specified by | | |12-50 | |regulations); or | | | | |section 12-190 | | | | |(payment for a supply | | | | |where recipient does | | | | |not quote its ABN) | |1A |section 12-|a payment for |section 12-47 (a | | |35 or 12-45|work or |payment to a | | | |services |*religious | | | | |practitioner) | |2 |section 12-|a |section 12-60 (payment| | |80, 12-85 |*superannuatio|under a labour hire | | |or 12-90 |n benefit, an |arrangement or | | | |annuity, an |specified by | | | |*employment |regulations); or | | | |termination |section 12-190 | | | |payment or an |(payment for a supply | | | |unused leave |where recipient does | | | |payment |not quote its ABN) | |3 |section 12-|a payment of |section 12-60 (payment| | |110, 12-115|benefit or |under a labour hire | | |or 12-120 |compensation |arrangement or | | | | |specified by | | | | |regulations); or | | | | |section 12-190 | | | | |(payment for a supply | | | | |where recipient does | | | | |not quote its ABN) | |4 |section 12-|a payment |section 12-190 | | |60 |under a labour|(payment for a supply | | | |hire |where recipient does | | | |arrangement or|not quote its ABN) | | | |specified by | | | | |regulations | | |5 |section 12-|a payment |section 12-210, | | |140 or |arising from |12-215, 12-245, 12-250| | |12-145 |investment |or 12-255 (payment of | | | |where the |a dividend or | | | |recipient does|interest) | | | |not quote tax | | | | |file number | | |6 |section 12-|a payment of |section 12-325 | | |280 or |royalty |(natural resource | | |12-285 | |payment) | (3) Apply a provision in this Division (apart from a provision in Subdivision 12-FB) that covers a payment in priority to a provision in Subdivision 12-FB that also covers the payment. Note: Some provisions of this Division clearly do not cover a payment covered by some other provisions. For example: . Section 12-55 (about voluntary agreements) covers a payment only if no other provision requires the payer to withhold an amount from the payment. 12-7 Division does not apply to alienated personal services payments (1) This Division (other than the provisions mentioned in subsection (2)) does not apply to a payment in so far as the payment: (a) is an *alienated personal services payment; or (b) was received, by the entity making the payment, as an *alienated personal services payment. Note: An entity that receives an alienated personal services payment may be obliged to pay an amount to the Commissioner: see Division 13. (2) The provisions are: (a) Subdivision 12-FB; and (b) any other provisions in this Division to the extent that they apply in relation to that Subdivision. 12-10 Division does not apply to non-cash benefits This Division does not apply to a payment in so far as it consists of providing a *non-cash benefit. Note: If a non-cash benefit is provided in circumstances where a payment would give rise to a withholding obligation, the provider must pay an amount to the Commissioner: see Division 14. 12-20 Application of Division and regulations to non-share dividends This Division and the regulations made for the purposes of this Division: (a) apply to a non-share equity interest in the same way as it applies to a share; and (b) apply to an equity holder in the same way as it applies to a shareholder; and (c) apply to a non-share dividend in the same way as it applies to a dividend. Subdivision 12-B-Payments for work and services Table of sections 12-35 Payment to employee 12-40 Payment to company director 12-45 Payment to office holder 12-47 Payment to religious practitioners 12-50 Return to work payment 12-55 Voluntary agreement to withhold 12-60 Payment under labour hire arrangement, or specified by regulations 12-35 Payment to employee An entity must withhold an amount from salary, wages, commission, bonuses or allowances it pays to an individual as an employee (whether of that or another entity). For exceptions, see section 12-1. 12-40 Payment to company director A company must withhold an amount from a payment of remuneration it makes to an individual: (a) if the company is incorporated-as a director of the company, or as a person who performs the duties of a director of the company; or (b) if the company is not incorporated-as a member of the committee of management of the company, or as a person who performs the duties of such a member. For exceptions, see section 12-1. 12-45 Payment to office holder (1) An entity must withhold an amount from salary, wages, commission, bonuses or allowances it pays to an individual as: (a) a member of an *Australian legislature; or (b) a person who holds, or performs the duties of, an appointment, office or position under the Constitution or an *Australian law; or (c) a member of the Defence Force, or of a police force of the Commonwealth, a State or a Territory; or (d) a person who is otherwise in the service of the Commonwealth, a State or a Territory; or (e) a member of a *local governing body where there is in effect, in accordance with section 446-5, a unanimous resolution by the body that the remuneration of members of the body be subject to withholding under this Part. For exceptions, see section 12-1. (2) This section does not require an amount to be withheld from a payment to an individual as a member of a *local governing body unless it is one to which paragraph (1)(e) applies. 12-47 Payment to religious practitioners An entity must withhold an amount from a payment it makes to a *religious practitioner for an activity, or a series of activities, if: (a) the activity, or series of activities, is done by the religious practitioner in pursuit of his or her vocation as a religious practitioner; and (b) the activity, or series of activities, is done by the religious practitioner as a member of a religious institution; and (c) the payment is made by the entity in the course or furtherance of an *enterprise that the entity *carries on. 12-50 Return to work payment An entity must withhold an amount from a payment it makes to an individual if the payment is included in the individual's assessable income under section 15-3 of the Income Tax Assessment Act 1997 (return to work payments). For exceptions, see section 12-1. 12-55 Voluntary agreement to withhold (1) An entity must withhold an amount from a payment it makes to an individual if: (a) the payment is made under an *arrangement the performance of which, in whole or in part, involves the performance of work or services (whether or not by the individual); and (b) no other provision of this Division requires the entity to withhold an amount from the payment; and (c) the entity and the individual are parties to an agreement (the voluntary agreement) that is in the *approved form and states that this section covers payments under the arrangement mentioned in paragraph (a), or under a series of such arrangements that includes that arrangement; and (d) the individual has an *ABN that is in force and is *quoted in that agreement. For exceptions, see section 12-1. (2) Each party must keep a copy of the voluntary agreement from when it is made until 5 years after the making of the last payment covered by the agreement. Penalty: 30 penalty units. Note: See section 4AA of the Crimes Act 1914 for the current value of a penalty unit. (2A) An offence under subsection (2) is an offence of strict liability. Note: For strict liability, see section 6.1 of the Criminal Code. (3) A party to the voluntary agreement may terminate it at any time by notifying the other party in writing. 12-60 Payment under labour hire arrangement, or specified by regulations (1) An entity that *carries on an *enterprise must withhold an amount from a payment that it makes to an individual in the course or furtherance of the enterprise if: (a) the enterprise is a *business of arranging for persons to perform work or services directly for clients of the entity, or the enterprise includes a business of that kind that is not merely incidental to the main activities of the enterprise; and (b) the payment is made under an *arrangement the performance of which, in whole or in part, involves the performance of work or services by the individual directly for a client of the entity, or directly for a client of another entity. For exceptions, see section 12-1. Example 1: Staffprovider Ltd keeps a database of skilled persons who are willing for their services to be provided to third parties. Staffprovider arranges with Corporate Pty Ltd to provide to it the services of a computer programmer in return for payment. Staffprovider arranges with Jane for her to do computer programming for Corporate. Staffprovider must withhold amounts under this section from payments it makes to Jane under the arrangement with her. Example 2: Ian is a solicitor who regularly briefs barristers to represent his clients. Briefing barristers is merely incidental to Ian's main activities as a solicitor, so he does not have to withhold amounts under this section from payments he makes to barristers. (2) An entity that carries on an *enterprise must withhold an amount from a payment that it makes to an individual in the course or furtherance of the enterprise if the payment is, in whole or in part, for work or services and is of a kind prescribed by the regulations. For exceptions, see section 12-1. Subdivision 12-C-Superannuation payments, employment termination payments and unused leave payments 12-80 Superannuation income streams and annuities An entity must withhold an amount from any of the following payments it makes to an individual: (a) a *superannuation income stream; (b) an *annuity. For exceptions, see section 12-1. 12-85 Superannuation lump sums and employment termination payments An entity must withhold an amount from any of the following payments it makes to an individual: (a) a *superannuation lump sum; (b) an *employment termination payment. For exceptions, see section 12-1. 12-90 Unused leave payments An entity must withhold an amount from any of the following payments it makes to an individual: (a) an *unused annual leave payment; (b) an *unused long service leave payment, to the extent that the payment is included in the individual's assessable income. For exceptions, see section 12-1. Subdivision 12-D-Benefit and compensation payments Table of sections 12-110 Social Security or other benefit payment 12-115 Commonwealth education or training payment 12-120 Compensation, sickness or accident payment 12-110 Social Security or other benefit payment (1) An entity must withhold an amount from a payment it makes to an individual if the payment is: (a) specified in an item of the table in section 52-10 of the Income Tax Assessment Act 1997 (Social Security payments); or (b) specified in an item of the table in section 52-65 of that Act (Veterans' Affairs payments); or (ba) specified in an item of the table in section 52-114 of that Act (Military Rehabilitation and Compensation Act payments); or (c) specified in section 52-105, 53-10, 55-5 or 55-10 of that Act; or Note: Payments specified in those provisions of the Income Tax Assessment Act 1997 are made under various Commonwealth laws. (d) made under Part 3.15A of the Social Security Act 1991. (2) In working out the amount to be withheld, disregard so much of the payment as is *exempt income of the individual. 12-115 Commonwealth education or training payment (1) An entity must withhold an amount from a *Commonwealth education or training payment it makes to an individual. For exceptions, see subsection (2) and section 12-1. (2) In working out the amount to be withheld, disregard so much of the payment as is *exempt income of the individual. 12-120 Compensation, sickness or accident payment An entity must withhold an amount from a payment of compensation, or of sickness or accident pay, it makes to an individual if the payment: (a) is made because of that or another individual's incapacity for work; and (b) is calculated at a periodical rate; and (c) is not a payment made under an insurance policy to the policy owner. For exceptions, see section 12-1. Subdivision 12-E-Payments where TFN or ABN not quoted Table of sections Payment in respect of investment 12-140 Recipient does not quote tax file number 12-145 Investor becoming presently entitled to income of a unit trust 12-150 Limited application of section 12-140 to payment under financial arrangement 12-155 When investor may quote ABN as alternative 12-160 Investment body unaware that exemption from quoting TFN has stopped applying 12-165 Exception for fully franked dividend 12-170 Exception for payments below thresholds set by regulations Payment for a supply 12-190 Recipient does not quote ABN Payment in respect of investment 12-140 Recipient does not quote tax file number (1) An *investment body must withhold an amount from a payment it makes to another entity in respect of a *Part VA investment if: (a) all or some of the payment is *ordinary income or *statutory income of the other entity; and (b) if the investment is non-transferable-the other entity did not *quote its *tax file number in connection with the investment before the time when the payment became payable; and (c) if the investment is transferable-the other entity did not quote its tax file number in connection with the investment before the time when the other entity had to be registered with the investment body as the *investor to be entitled to the payment. Payment in respect of units in a trust or investment-related betting chance (2) If a *Part VA investment consists of: (a) units in a unit trust (as defined in section 202A of the Income Tax Assessment Act 1936); or (b) an investment-related betting chance; an entity (including the *investment body) must withhold an amount from a payment it makes to another entity in respect of the investment if the conditions in subsection (1) of this section are met. For exceptions to the rules in this section, see sections 12-150 to 12-170. 12-145 Investor becoming presently entitled to income of a unit trust (1) This section applies if: (a) a *Part VA investment consists of units in a unit trust (as defined in section 202A of the Income Tax Assessment Act 1936); and (b) the *investor becomes presently entitled, for the purposes of Division 6 of Part III of the Income Tax Assessment Act 1936, to a share of income of the trust at a time (the entitlement time) before any of that share is paid to the investor. (2) The entity (including the *investment body) that would have to pay that share to the *investor if the share were due and payable at the entitlement time must withhold from the share, at that time, the amount (if any) that subsection 12-140(2) would have required it to withhold if it had paid the share to the investor at that time. For exceptions to the rules in this section, see sections 12-155 to 12-170. (3) This Part (except section 12-140 and this section) applies as if that entity had paid that share to the *investor at the entitlement time. (4) If that entity withholds an amount from that share as required by subsection (2), subsection 12-140(2) does not require an amount to be withheld from a payment of all or part of that share to the *investor. 12-150 Limited application of section 12-140 to payment under financial arrangement (1) This section limits the extent to which section 12-140 applies to a payment in respect of a *Part VA investment if the investment is a qualifying security (within the meaning of Division 16E of Part III of the Income Tax Assessment Act 1936 (about gains accruing on securities)) and: (a) is of a kind mentioned in item 1 or 2 of the table in subsection 202D(1) of that Act; or (b) is of a kind mentioned in item 3 of that table and is non- transferable. Note: Section 202D of the Income Tax Assessment Act 1936 lists the investments in connection with which tax file numbers are to be quoted. (2) Section 12-140 applies to the payment only to the extent that is covered by one or both of these paragraphs: (a) so much of the payment as consists of periodic interest (within the meaning of Division 16E of Part III of the Income Tax Assessment Act 1936); (b) if the payment became payable at the end of the term (within the meaning of that Division) of the investment-so much of the payment as does not exceed what section 159GQ of that Act would include in the *investor's assessable income for the income year in which that term ended. Note: This limitation ensures that an amount is not withheld from payment of an amount in respect of which TFN withholding tax is payable. See Subdivision 14-B. (3) The adoption (under section 18 of the Income Tax Assessment Act 1936) of an accounting period ending on a day other than 30 June is disregarded for the purposes of: (a) paragraph (2)(b) of this section; and (b) the application of Division 16E of Part III of that Act for the purposes of that paragraph. 12-155 When investor may quote ABN as alternative Section 12-140 or 12-145 does not require an amount to be withheld if: (a) the other entity made the investment in the course or furtherance of an *enterprise *carried on by it; and (b) the other entity has an *ABN, and has *quoted it to the investment body, by the time referred to in paragraph 12- 140(1)(b) or (c). 12-160 Investment body unaware that exemption from quoting TFN has stopped applying Section 12-140 or 12-145 does not require an amount to be withheld if: (a) a provision of Division 5 of Part VA of the Income Tax Assessment Act 1936 has applied to the other entity in relation to the investment, but no longer applies when the payment is made; and (b) when the payment is made, the *investment body has not been informed of anything that resulted in the provision no longer applying. Note: Division 5 of Part VA of that Act provides, in certain cases, that even though an entity has not quoted its tax file number it is taken to have done so. 12-165 Exception for fully franked dividend Section 12-140 does not require an amount to be withheld if: (a) the investment consists of *shares in a public company (as defined in section 202A of the Income Tax Assessment Act 1936); and (b) the payment is a *distribution that has been franked in accordance with section 202-5 of the Income Tax Assessment Act 1997; and (c) the *franking percentage for the distribution is 100%. 12-170 Exception for payments below thresholds set by regulations (1) Section 12-140 or 12-145 does not require an amount to be withheld if the payment is less than the amount worked out under the regulations. (2) Regulations made for the purposes of this section may deal differently with different payments. Payment for a supply 12-190 Recipient does not quote ABN (1) An entity (the payer) must withhold an amount from a payment it makes to another entity if: (a) the payment is for a *supply that the other entity has made, or proposes to make, to the payer in the course or furtherance of an *enterprise *carried on in Australia by the other entity; and (b) none of the exceptions in this section applies. ABN correctly quoted (2) The payer need not withhold an amount under this section if, when the payment is made: (a) the other entity has given the payer an *invoice that relates to the *supply and *quotes the other entity's *ABN; or (b) the payer has some other document relating to the supply on which the other entity's ABN is *quoted. (2A) The payer need not withhold an amount under this section if the other entity has made the *supply, or proposes to make the supply, through an agent and, when the payment is made: (a) the agent has given the payer an *invoice that relates to the supply and *quotes the agent's *ABN; or (b) the payer has some other document relating to the supply on which the agent's ABN is *quoted. Payer has no reason to believe that ABN has been incorrectly quoted (3) The payer need not withhold an amount under this section if, when the payment is made: (a) the other entity has given the payer an *invoice that relates to the *supply and purports to *quote the other entity's *ABN, or the payer has some other document that relates to the supply and purports to *quote the other entity's ABN; and (b) the other entity does not have an ABN, or the invoice or other document does not in fact quote the other entity's ABN; and (c) the payer has no reasonable grounds to believe that the other entity does not have an ABN, or that the invoice or other document does not quote the other entity's ABN. (3A) The payer need not withhold an amount under this section if the other entity has made the *supply, or proposes to make the supply, through an agent and, when the payment is made: (a) the agent has given the payer an *invoice that relates to the supply and purports to *quote the agent's *ABN, or the payer has some other document that relates to the supply and purports to *quote the agent's ABN; and (b) the agent does not have an ABN, or the invoice or other document does not in fact quote the agent's ABN; and (c) the payer has no reasonable grounds to believe that the agent does not have an ABN, or that the invoice or other document does not quote the agent's ABN. No need to quote ABN (4) The payer need not withhold an amount under this section if: (a) the payment is made otherwise than in the course or furtherance of an *enterprise *carried on in Australia by the payer; or (b) the payment (disregarding so much of it as relates to *GST payable on the *supply) or, if the payer has also made, or proposes to make, one or more other payments to the other entity for the supply, the total of all the payments (disregarding so much of them as relates to *GST payable on the supply) does not exceed $50 or such higher amount as is specified in regulations in force for the purposes of subsection 29-80(1) of the *GST Act; or (c) the supply is made in the course or furtherance of an activity, or series of activities, done as a member of a local governing body established by or under a *State law or *Territory law; or (d) the supply is wholly *input taxed. (5) The payer need not withhold an amount under this section if the payment: (a) is covered by section 12-140 or 12-145 (about not quoting *tax file number in respect of an investment in respect of which the payment is made); or (b) would be covered by section 12-140 or 12-145 if the other entity had not quoted as mentioned in subsection 12-140(1) or section 12-155; or (c) would be covered by section 12-140 or 12-145 apart from section 12-160, 12-165 or 12-170 (which are exceptions to sections 12-140 and 12-145). (6) The payer need not withhold an amount under this section if, when the payment is made: (a) the other entity is an individual and has given the payer a written statement to the effect that: (i) the *supply is made in the course or furtherance of an activity, or series of activities, done as a private recreational pursuit or hobby; or (ii) the supply is, for the other entity, wholly of a private or domestic nature; and (b) the payer has no reasonable grounds to believe that the statement is false or misleading in a material particular. (7) In working out, for the purposes of this section, whether an enterprise is *carried on in Australia: (a) ignore the external Territories; and (b) treat an installation (within the meaning of the Customs Act 1901) that is deemed by section 5C of the Customs Act 1901 to be part of Australia, as part of Australia. Note: The effect of this subsection is to treat an enterprise as carried on in Australia only where it would be treated as carried on in Australia under the A New Tax System (Australian Business Number) Act 1999. Subdivision 12-F-Dividend, interest and royalty payments Table of sections Dividends 12-210 Dividend payment to overseas person 12-215 Dividend payment received for foreign resident 12-220 Application to part of a dividend 12-225 Application to distribution by a liquidator or other person Interest 12-245 Interest payment to overseas person 12-250 Interest payment received for foreign resident 12-255 Interest payment derived by lender in carrying on business through overseas permanent establishment 12-255 Interest payment derived by lender in carrying on business through overseas permanent establishment 12-260 Lender to notify borrower if interest derived through overseas permanent establishment Royalties 12-280 Royalty payment to overseas person 12-285 Royalty payment received for foreign resident General 12-300 Limits on amount withheld under this Subdivision Dividends 12-210 Dividend payment to overseas person A company that is an Australian resident must withhold an amount from a *dividend it pays if: (a) according to the register of the company's members, the entity, or any of the entities, holding the *shares on which the dividend is paid has an address outside Australia; or (b) that entity, or any of those entities, has authorised or directed the company to pay the dividend to an entity or entities at a place outside Australia. For limits on the amount to be withheld, see section 12-300. 12-215 Dividend payment received for foreign resident (1) An entity that receives a payment of a *dividend of a company that is an Australian resident must withhold an amount from the dividend if: (a) the entity is a person in Australia or an *Australian government agency; and (b) a foreign resident is or becomes entitled: (i) to receive the dividend or part of it from the entity, or to receive the amount of the dividend or of part of it from the entity; or (ii) to have the entity credit to the foreign resident, or otherwise deal with on the foreign resident's behalf or as the foreign resident directs, the dividend or part of it, or the amount of the dividend or of part of it. For limits on the amount to be withheld, see section 12-300. (2) The entity must withhold the amount: (a) if the foreign resident is so entitled when the entity receives the payment-immediately after the entity receives the payment; or (b) if the foreign resident becomes so entitled after the entity receives the payment-immediately after the foreign resident becomes so entitled. 12-220 Application to part of a dividend This Part applies to a part of a *dividend in the same way as to a dividend. 12-225 Application to distribution by a liquidator or other person This Part applies to a distribution that section 47 of the Income Tax Assessment Act 1936 treats as a *dividend paid by a company, in the same way as this Part applies to a dividend paid by the company, and as if the liquidator or other person making the distribution were the company. Interest 12-245 Interest payment to overseas person An entity must withhold an amount from interest (within the meaning of Division 11A of Part III of the Income Tax Assessment Act 1936) it pays to an entity, or to entities jointly, if: (a) the recipient or any of the recipients has an address outside Australia according to any record that is in the payer's possession, or is kept or maintained on the payer's behalf, about the transaction to which the interest relates; or (b) the payer is authorised to pay the interest at a place outside Australia (whether to the recipient or any of the recipients or to anyone else). For limits on the amount to be withheld, see section 12-300. 12-250 Interest payment received for foreign resident (1) An entity that receives a payment of interest (within the meaning of Division 11A of Part III of the Income Tax Assessment Act 1936) must withhold an amount from the payment if: (a) the entity is a person in Australia or an *Australian government agency; and (b) a foreign resident is or becomes entitled: (i) to receive the interest or part of it from the entity, or to receive the amount of the interest or of part of it from the entity; or (ii) to have the entity credit to the foreign resident, or otherwise deal with on the foreign resident's behalf or as the foreign resident directs, the interest or part of it, or the amount of the interest or of part of it. For limits on the amount to be withheld, see section 12-300. (2) The entity must withhold the amount: (a) if the foreign resident is so entitled when the entity receives the payment-immediately after the entity receives the payment; or (b) if the foreign resident becomes so entitled after the entity receives the payment-immediately after the foreign resident becomes so entitled. 12-255 Interest payment derived by lender in carrying on business through overseas permanent establishment An entity must withhold an amount from interest (within the meaning of Division 11A of Part III of the Income Tax Assessment Act 1936) it pays if it has been notified under section 12-260 of this Act that this section applies to the interest. Note: For limits on the amount to be withheld, see section 12- 300. 12-260 Lender to notify borrower if interest derived through overseas permanent establishment (1) If: (a) interest (within the meaning of Division 11A of Part III of the Income Tax Assessment Act 1936) is payable to: (i) an entity that is, or entities at least one of whom is, an Australian resident; or (ii) an *Australian government agency; and (b) the entity liable to pay the interest is authorised to pay it at a place in Australia (whether to any of those entities or the agency, or to anyone else); and (c) the interest is or will be *derived by any of those entities or the agency in carrying on business in a country outside Australia at or through a *permanent establishment it has in that country; those entities, or the agency, must notify the entity liable to pay the interest that section 12-255 applies to the interest. (2) The notice must be given in writing, before the entities, or the agency, enter into the transaction in relation to which the interest is payable, or within one month afterwards. (3) Immediately after giving the notice, those entities, or the agency, must notify the Commissioner of: (a) the particulars of the transaction (including the dates on which interest is payable under it); and (b) the day when the notice was given to the entity liable to pay the interest. Failure to comply with this section may contravene section 8C of this Act. Royalties 12-280 Royalty payment to overseas person An entity must withhold an amount from a *royalty it pays to an entity, or to entities jointly, if: (a) the recipient or any of the recipients has an address outside Australia according to any record that is in the payer's possession, or is kept or maintained on the payer's behalf, about the transaction to which the royalty relates; or (b) the payer is authorised to pay the royalty at a place outside Australia (whether to the recipient or any of the recipients or to anyone else). For limits on the amount to be withheld, see section 12-300. 12-285 Royalty payment received for foreign resident (1) An entity that receives a payment of a *royalty must withhold an amount from the payment if: (a) the entity is a person in Australia or an *Australian government agency; and (b) a foreign resident is or becomes entitled: (i) to receive the royalty or part of it from the entity, or to receive the amount of the royalty or of part of it from the entity; or (ii) to have the entity credit to the foreign resident, or otherwise deal with on the foreign resident's behalf or as the foreign resident directs, the royalty or part of it, or the amount of the royalty or of part of it. For limits on the amount to be withheld, see section 12-300. (2) The entity must withhold the amount: (a) if the foreign resident is so entitled when the entity receives the payment-immediately after the entity receives the payment; or (b) if the foreign resident becomes so entitled after the entity receives the payment-immediately after the foreign resident becomes so entitled. General 12-300 Limits on amount withheld under this Subdivision This Subdivision does not require an entity: (a) to withhold an amount from a *dividend, from interest (within the meaning of Division 11A of Part III of the Income Tax Assessment Act 1936) or from a *royalty if no *withholding tax is payable in respect of the dividend, interest or royalty; or (b) to withhold from a dividend, from interest (within the meaning of that Division) or from a royalty more than the withholding tax payable in respect of the dividend, interest or royalty (reduced by each amount already withheld from it under this Subdivision). Note: Section 128B of the Income Tax Assessment Act 1936 deals with withholding tax liability. Subdivision 12-FA-Departing Australia superannuation payments Table of sections 12-305 Departing Australia superannuation payment 12-310 Limits on amount withheld under this Subdivision 12-305 Departing Australia superannuation payment An entity must withhold an amount from a *departing Australia superannuation payment it pays to an entity. 12-310 Limits on amount withheld under this Subdivision This Subdivision does not require an entity: (a) to withhold an amount from a *departing Australia superannuation payment if no *withholding tax is payable in respect of the payment; or (b) to withhold from a departing Australia superannuation payment more than the withholding tax payable in respect of the payment (reduced by each amount already withheld from it under this Subdivision). Note: Section 301-175 of the Income Tax Assessment Act 1997 deals with the withholding tax liability. Subdivision 12-FAA-Excess untaxed roll-over amount [see Note 2] Table of sections 12-312 Untaxed roll-over superannuation benefits 12-313 Limits on amount withheld under this Subdivision 12-312 Untaxed roll-over superannuation benefits An entity must withhold an amount from an *excess untaxed roll- over amount it pays to an entity. Note: An excess untaxed roll-over amount is an amount that may form part of a roll-over superannuation benefit that includes an element untaxed in the fund: see section 306-15 of the Income Tax Assessment Act 1997. 12-313 Limits on amount withheld under this Subdivision This Subdivision does not require an entity: (a) to withhold an amount from an *excess untaxed roll-over amount if no *withholding tax is payable on the amount; or (b) to withhold from an excess untaxed roll-over amount more than the withholding tax payable on the amount (reduced by each amount already withheld from the excess untaxed roll-over amount under this Subdivision). Note: Section 306-15 of the Income Tax Assessment Act 1997 deals with liability to this form of withholding tax. Subdivision 12-FB-Payments to foreign residents etc. Table of sections 12-315 Payment to foreign resident etc. 12-317 Payment received for foreign resident etc. 12-319 Exemptions from withholding obligations under this Subdivision 12-315 Payment to foreign resident etc. (1) An entity (the payer) that *carries on an *enterprise must withhold an amount from a payment it makes to another entity, or to other entities jointly, in the course or furtherance of the enterprise if: (a) the entity receiving the payment, or any of the entities receiving the payment, is an entity covered by subsection (2); and (b) the payment is of a kind set out in the regulations; and (c) the payment is not: (i) a *dividend of a company; or (ii) interest (within the meaning of Division 11A of Part III of the Income Tax Assessment Act 1936); or (iii) a *royalty; or (iv) a *departing Australia superannuation payment; or (v) a payment worked out wholly or partly by reference to the value or quantity of *natural resources produced or recovered in Australia; or (vi) a *mining payment; or (vii) an amount represented by or reasonably attributable to a *fund payment; and (d) the entity receiving the payment is not covered by an exemption in force under subsection 12-319(1), or at least one of the entities receiving the payment is not covered by an exemption in force under that subsection. (2) An entity is covered by this subsection if any of the following conditions is satisfied: (a) the entity is a foreign resident; (b) the payer believes, or has reasonable grounds to believe, that the entity is a foreign resident; (c) the payer has no reasonable grounds to believe that the entity is an Australian resident, and either: (i) the entity has an address outside Australia (according to any record that is in the payer's possession, or is kept or maintained on the payer's behalf, about the transaction to which the payment relates); or (ii) the payer is authorised to make the payment at a place outside Australia (whether to the entity or to anyone else); (d) the entity has a connection outside Australia of a kind set out in the regulations. (3) Before the Governor-General makes a regulation for the purposes of paragraph (1)(b), the Minister must be satisfied that each payment set out in the regulation is a payment of a kind that could reasonably be related to assessable income of foreign residents. 12-317 Payment received for foreign resident etc. (1) An entity (the intermediary) that receives a payment meeting the requirements set out in paragraphs 12-315(1)(b) and (c) must withhold an amount from the payment if: (a) the intermediary is a person in Australia or an *Australian government agency; and (b) another entity (the likely foreign recipient) is or becomes entitled: (i) to receive the payment or part of it from the intermediary, or to receive the amount of the payment or of part of it from the intermediary; or (ii) to have the intermediary credit to the likely foreign recipient, or otherwise deal with on the likely foreign recipient's behalf or as the likely foreign recipient directs, the payment or part of it, or the amount of the payment or of part of it; and (c) the likely foreign recipient is covered by subsection (3); and (d) the likely foreign recipient is not covered by an exemption in force under subsection 12-319(1). (2) The intermediary must withhold the amount: (a) if the likely foreign recipient is so entitled when the intermediary receives the payment-just after the intermediary receives the payment; or (b) if the likely foreign recipient becomes so entitled after the intermediary receives the payment-just after the likely foreign recipient becomes so entitled. (3) The likely foreign recipient is covered by this subsection if any of the following conditions is satisfied: (a) the likely foreign recipient is a foreign resident; (b) the intermediary believes, or has reasonable grounds to believe, that the likely foreign recipient is a foreign resident; (c) the intermediary has no reasonable grounds to believe that the likely foreign recipient is an Australian resident, and either: (i) the likely foreign recipient has an address outside Australia (according to any record that is in the intermediary's possession, or is kept or maintained on the intermediary's behalf); or (ii) the intermediary is authorised to forward the payment to a place outside Australia (whether to the likely foreign recipient or to anyone else); (d) the likely foreign recipient has a connection outside Australia of a kind set out in the regulations. 12-319 Exemptions from withholding obligations under this Subdivision (1) The Commissioner may grant an entity an exemption in writing for the purposes of paragraphs 12-315(1)(d) and 12-317(1)(d) if the Commissioner is satisfied that: (a) the entity has an established history of compliance with its obligations under *taxation laws; and (b) the entity is likely to continue to comply with those obligations in the future. (2) The exemption is in force during the period: (a) beginning when the Commissioner grants the exemption; and (b) ending at the time specified in the exemption. (3) Without limiting the matters to which the Commissioner may have regard in deciding whether to grant an entity an exemption, the Commissioner may have regard to the following: (a) whether the entity is or was liable to pay an instalment under Division 45 at any time in: (i) the income year in which the exemption is proposed to be granted; and (ii) the previous 2 income years; (b) the amount (if any) of the entity's *tax-related liabilities that are currently due and payable; (c) the extent to which the entity and its *associates (if any) have complied with their obligations under *taxation laws during: (i) the income year in which the exemption is proposed to be granted; and (ii) the previous 2 income years. (4) The Commissioner must give a copy of the exemption to the entity to which it relates. (5) A failure to comply with subsection (4) does not affect the validity of the exemption. Subdivision 12-G-Payments in respect of mining on Aboriginal land, and natural resources Table of sections Mining on Aboriginal land 12-320 Mining payment Natural resources 12-325 Natural resource payment 12-330 Payer must ask Commissioner how much to withhold 12-335 Commissioner may exempt from section 12-330, subject to conditions Mining on Aboriginal land 12-320 Mining payment (1) An entity must withhold an amount from a *mining payment that: (a) it makes to another entity; or (b) it applies for the benefit of another entity. (2) Subsection (1) does not require the entity to withhold more than the *mining withholding tax payable in respect of the *mining payment. Note: Section 128V of the Income Tax Assessment Act 1936 deals with mining withholding tax liability. Natural resources 12-325 Natural resource payment (1) An entity must withhold an amount from a payment it makes to a foreign resident, or to 2 or more entities at least one of which is a foreign resident, if the payment is worked out wholly or partly by reference to the value or quantity of *natural resources produced or recovered in Australia. (2) The amount to be withheld is: (a) the amount notified by the Commissioner under section 12-330; or (b) the amount worked out under a certificate in force under section 12-335 that covers the payment; as appropriate. Exception (3) Subsection (1) does not apply if: (a) the Commissioner has notified the entity under section 12-330 that the entity does not need to withhold an amount from the payment; or (b) a certificate in force under section 12-335 covers the payment and does not require the entity to withhold an amount from it. 12-330 Payer must ask Commissioner how much to withhold (1) An entity must not intentionally make a payment from which section 12-325 requires it to withhold an amount, unless: (a) the entity has notified the Commissioner in writing of the amount of the proposed payment; and (b) the Commissioner has later notified the entity in writing of the amount (if any) that the entity must withhold from the payment in respect of tax that is or may become payable by a foreign resident to whom the payment is made; or the payment is covered by a certificate in force under section 12-335. Penalty: 20 penalty units. Note: See section 4AA of the Crimes Act 1914 for the current value of a penalty unit. Failure to notify not an offence against section 8C (2) An entity that fails to notify the Commissioner as required by subsection (1) does not commit an offence against section 8C. 12-335 Commissioner may exempt from section 12-330, subject to conditions (1) The Commissioner may give an entity a written certificate exempting the entity from complying with section 12-330 for specified payments. (2) A certificate is subject to: (a) a condition that the entity must withhold from a payment covered by the certificate the amount (if any) worked out in accordance with the certificate in respect of tax that is or may become payable by a foreign resident to whom the payment is made; and (b) such other conditions as the certificate specifies. However, the entity does not contravene subsection 12-330(1) because it contravenes a condition. (3) The Commissioner may, by written notice given to the entity: (a) revoke a certificate, whether or not a condition of it has been contravened; or (b) vary a certificate by revoking, changing or adding to its conditions. Note: A person who is dissatisfied with a decision under this section may object against the decision in the manner set out in Part IVC. Subdivision 12-H-Distributions of managed investment trust income Guide to Subdivision 12-H 12-375 What this Subdivision is about A managed investment trust may be required to withhold an amount from a payment of its Australian sourced net income (other than dividends, interest and royalties) if the payment is made to an entity whose address, or place for payment, is outside Australia. If the payment is made to another entity, the managed investment trust is required to make information available to the recipient outlining certain details in relation to the payment. If a custodian receives a payment that is covered by that information, it is required to withhold an amount from any related later payment to an entity whose address, or place for payment, is outside Australia. If the later payment is made to another entity, the custodian is required to make information available in relation to that later payment. If an entity that is not a custodian receives a payment that is covered by that information, it is required to withhold an amount from that payment if a foreign resident becomes entitled to that payment. If a resident becomes entitled to the payment, the entity must make information available in relation to that payment. Where there is an obligation to withhold, the applicable withholding rate is determined by the nature of the country or territory in which the recipient's address, place for payment or residency is located. Table of sections Operative provisions 12-385 Withholding by managed investment trusts 12-390 Withholding by custodians and other entities 12-395 Requirement to give notice or make information available 12-400 Meaning of managed investment trust 12-405 Meaning of fund payment 12-410 Entity to whom payment is made 12-415 Failure to give notice or make information available: administrative penalty 12-420 Agency rules Operative provisions 12-385 Withholding by managed investment trusts (1) A trustee of a trust that is a *managed investment trust in relation to an income year that makes a *fund payment in relation to that income year to an entity covered by section 12-410 must withhold an amount from the payment. Note 1: An entity may be covered by section 12-410 if the entity has an address outside Australia or payment is authorised to be made to a place outside Australia. Note 2: If the payment is made to a recipient not covered by section 12-410, the trustee is required to give a notice to the recipient or publish information on a website setting out certain details about the payment: see section 12-395. (2) The amount the trustee must withhold is: [pic] (3) The rate is: (a) if the address or place for payment of the recipient is in an *information exchange country: (i) 22.5% for *fund payments in relation to the first income year starting on or after the first 1 July after the day on which the Tax Laws Amendment (Election Commitments No. 1) Act 2008 receives the Royal Assent; or (ii) 15% for fund payments in relation to the following income year; or (iii) 7.5% for fund payments in relation to later income years; or (b) otherwise-30%. (4) An information exchange country is a foreign country or foreign territory specified in the regulations for the purposes of this section. (5) This section does not apply to an amount paid by a *managed investment trust to the extent that no *managed investment trust withholding tax is payable in respect of the payment or an amount reasonably attributable to the payment. 12-390 Withholding by custodians and other entities Withholding by custodians (1) A *custodian must withhold an amount from a payment (the later payment) it makes if: (a) all or some of the later payment (the covered part) is reasonably attributable to the part of an earlier payment received by the custodian that was covered by a notice or information under section 12-395; and (b) the later payment is made to an entity covered by section 12- 410. Note 1: The covered part referred to in paragraph (1)(a) is attributable to a fund payment made by a managed investment trust, or 2 or more fund payments made by one or more managed investment trusts. Note 2: An entity may be covered by section 12-410 if the entity has an address outside Australia or payment is authorised to be made to a place outside Australia. Note 3: If the payment is made to a recipient not covered by section 12-410, the custodian is required to give a notice to the recipient or publish information on a website setting out certain details about the payment: see section 12-395. (2) The amount the *custodian must withhold is: [pic] (3) The rate is: (a) if the address or place for payment of the recipient is in an *information exchange country: (i) 22.5% for *fund payments in relation to the first income year starting on or after the first 1 July after the day on which the Tax Laws Amendment (Election Commitments No. 1) Act 2008 receives the Royal Assent; or (ii) 15% for fund payments in relation to the following income year; or (iii) 7.5% for fund payments in relation to later income years; or (b) otherwise-30%. Withholding by other entities (4) An entity that is not a *managed investment trust or a *custodian must withhold an amount from a payment it receives if: (a) the payment or part of it (the covered part) was covered by a notice or information under section 12-395; and (b) a foreign resident (the recipient) is or becomes entitled: (i) to receive from the entity; or (ii) to have the entity credit to the recipient, or otherwise deal with on the recipient's behalf or as the recipient directs; an amount (the attributable amount) reasonably attributable to the covered part. Note: If the recipient not a foreign resident, the entity is required to give a notice to the recipient or publish information on a website setting out certain details about the payment: see section 12-395. (5) The amount the entity must withhold is: [pic] (6) The rate is: (a) if the recipient is a resident of an *information exchange country: (i) 22.5% for *fund payments in relation to the first income year starting on or after the first 1 July after the day on which the Tax Laws Amendment (Election Commitments No. 1) Act 2008 receives the Royal Assent; or (ii) 15% for fund payments in relation to the following income year; or (iii) 7.5% for fund payments in relation to later income years; or (b) otherwise-30%. (7) An entity is a resident of an *information exchange country if: (a) the entity is a resident of that country for the purposes of the taxation laws of that country; or (b) if there are no taxation laws of that country applicable to the entity or the entity's residency status cannot be determined under those laws: (i) for an individual-the individual is ordinarily resident in that country; or (ii) for another entity-the entity is incorporated or formed in that country and is carrying on a business in that country. (8) An amount required to be withheld under subsection (4) must be withheld: (a) if the recipient is so entitled when the entity receives the payment-immediately after receipt; or (b) if the recipient becomes so entitled at a later time- immediately after the later time. Meaning of custodian (9) An entity is a custodian if the entity is *carrying on a *business that consists predominantly of providing a custodial or depository service (as defined by section 766E of the Corporations Act 2001) pursuant to an *Australian financial services licence. Exceptions (10) This section does not apply: (a) to a company unless the company would, apart from section 12- 420, be acting in the capacity as *agent for the recipient; or (b) to an amount paid or received by an entity to the extent that no *managed investment trust withholding tax is payable in respect of the amount or an amount reasonably attributable to the amount. 12-395 Requirement to give notice or make information available Managed investment trusts and custodians (1) An entity that is a *managed investment trust or a *custodian must comply with subsection (2) if: (a) the entity makes a payment to another entity (the recipient) from which an amount would have been required to be withheld under section 12-385 or subsection 12-390(1) if the payment had been made to an entity covered by section 12-410; and (b) an amount is not required to be withheld from the payment because the recipient is not an entity covered by section 12- 410. Note: An entity may be covered by section 12-410 if the entity has an address outside Australia or payment is authorised to be made to a place outside Australia. (2) The entity must: (a) give to the recipient a written notice containing the details specified in subsection (3); or (b) make those details available on a website in a way that the details are readily accessible to the recipient for not less than 5 continuous years. (3) The notice must be given, or the details must be made available on a website, before or at the time when the payment is made and: (a) must specify the part of the payment from which an amount would have been so required to have been withheld; and (b) must specify the income year of the *managed investment trust to which that part relates. Note: Failure to give the notice or make the details available as required by this section incurs an administrative penalty: see section 12-415. Other entities (4) An entity that is not a *managed investment trust or a *custodian must comply with subsection (5) if: (a) the entity receives a payment; and (b) another entity (also the recipient) is or becomes entitled: (i) to receive from the entity; or (ii) to have the entity credit to the recipient, or otherwise deal with on the recipient's behalf or as the recipient directs; an amount attributable to the payment; and (c) the entity would have been required to withhold an amount from the payment under subsection 12-390(4) if the recipient had been a foreign resident; and (d) an amount is not required to be withheld from the payment because the recipient is not a foreign resident. (5) The entity must: (a) give to the recipient a written notice containing the details specified in subsection (6); or (b) make those details available on a website in a way that the details are readily accessible to the recipient for not less than 5 continuous years. (6) The notice must be given, or the details must be made available on a website, before or at the time when the amount is paid or credited to the recipient, or is dealt with on the recipient's behalf or as the recipient directs, and: (a) must specify the part of the payment referred to in paragraph (4)(a) from which an amount would have been so required to have been withheld; and (b) must specify the income year of the *managed investment trust to which that part relates. Note: Failure to give the notice or make the details available as required by this section incurs an administrative penalty: see section 12-415. 12-400 Meaning of managed investment trust (1) A trust is a managed investment trust in relation to an income year if: (a) the trustee of the trust makes the first *fund payment in relation to the income year; and (b) the conditions in this table are satisfied. |Conditions to be satisfied | |Item|Condition | |1 |At the time the payment is made, or at an earlier| | |time in the income year: | | |(a) a trustee was an Australian resident; or | | |(b) the central management and control of the | | |trust was in Australia. | |2 |At the time the payment is made, the trust is a | | |managed investment scheme (as defined by | | |section 9 of the Corporations Act 2001) and is | | |operated by a financial services licensee (as | | |defined by section 761A of that Act) whose | | |licence covers operating such a managed | | |investment scheme. | |3 |At the time the payment is made: | | |(a) units in the trust are listed for quotation | | |in the official list of an *approved stock | | |exchange in Australia; or | | |(b) the trust has at least 50 *members (ignoring | | |objects of a trust); or | | |(c) one of the entities covered by a paragraph of| | |subsection (2) is a member of the trust. | (2) These are the entities: (a) a *life insurance company; (b) a *complying superannuation fund, a *complying approved deposit fund or a *foreign superannuation fund, being a fund that has at least 50 *members; (c) a trust for which the conditions in table items 1 and 2 in subsection (1), and the condition in paragraph (a) or (b) of table item 3, are satisfied; (d) an entity that is recognised, under a *foreign law relating to corporate regulation, as an entity with a similar status to a managed investment scheme and that has at least 50 members; (e) a trust: (i) interests in which are owned directly by an entity covered by an earlier paragraph; or (ii) interests in which are held indirectly by an entity covered by an earlier paragraph through a *chain of trusts; where the conditions in table items 1 and 2 in subsection (1) are satisfied for the trust, or for each trust in the chain. Exception: foreign resident individual having a substantial interest (3) The condition in table item 3 in subsection (1) is not satisfied for a trust at a time if, at that time, one foreign resident individual, directly or indirectly: (a) held, or had the right to acquire, interests representing 10% or more of the value of the interests in the trust; or (b) had the control of, or the ability to control, 10% or more of the rights attaching to *membership interests in the trust; or (c) had the right to receive 10% or more of any distribution of income that the trustee may make. Start-up phase (4) A trust that is created during an income year is a managed investment trust in relation to the income year if, at the time the trustee of the trust makes the first *fund payment in relation to the income year, the conditions in table items 1 and 2 in subsection (1) are satisfied for the trust. Wind-up phase (5) A trust that ceases to exist during an income year is a managed investment trust in relation to the income year if: (a) at the time the trustee makes the first *fund payment in relation to the income year, the conditions in table items 1 and 2 in subsection (1) are satisfied for the trust; and (b) the trust was a *managed investment trust in relation to the previous income year otherwise than because of subsection (4). 12-405 Meaning of fund payment (1) The object of this section is to ensure that the total of the *fund payments that the trustee of a trust makes in relation to an income year equals, as nearly as practicable, the net income of the trust for the income year, disregarding these amounts (excluded amounts): (a) a dividend (as defined in Division 11A of Part III of the Income Tax Assessment Act 1936) that is subject to, or exempted from, a requirement to withhold under Subdivision 12-F; (b) interest (as so defined) that is subject to, or exempted from, such a requirement; (c) a *royalty that is subject to, or exempted from, such a requirement; (d) a *capital gain or *capital loss from a *CGT event that happens in relation to a *CGT asset that is not *taxable Australian property; (e) amounts that are not from an *Australian source; and disregarding deductions relating to excluded amounts. (2) Work out as follows how much of a payment (the actual payment) made by the trustee of a trust in relation to an income year is a fund payment in relation to that year: Method statement Step 1. Reduce the actual payment by so much of it that is attributable to excluded amounts. Step 2. Work out what it is reasonable to expect will be the *net income of the trust for the income year: (a) disregarding excluded amounts, expected excluded amounts and deductions relating to those amounts; and (b) on the basis that a *capital gain from *taxable Australian property of the trust that was or would be reduced under step 3 of the method statement in subsection 102-5(1) of the Income Tax Assessment Act 1997 were double the amount it actually is. Step 3. The fund payment is so much of the step 2 amount as is reasonable having regard to: (a) the object of this section; and (b) the step 1 amount; and (c) the amounts of any earlier fund payments made by the trustee in relation to the income year; and (d) the expected amounts of any later fund payments the trustee expects to make in relation to the income year. (3) The expected *net income of the trust and the expected amounts of future *fund payments are to be worked out on the basis of the trustee's knowledge when the actual payment is made. (4) However, an amount is not a fund payment in relation to the income year unless it is paid: (a) during the income year; or (b) within 3 months after the end of the income year; or (c) within a longer period (starting at the end of the period referred to in paragraph (b) and not exceeding 3 months) allowed by the Commissioner. (5) The Commissioner may allow a longer period as mentioned in paragraph (4)(c) only if the Commissioner is of the opinion that the trustee was unable to make the payment during the income year, or within 3 months after the end of the income year, because of circumstances beyond the influence or control of the trustee. 12-410 Entity to whom payment is made (1) An entity (the recipient) is covered by this section for a payment made to it by another entity (the payer) if: (a) according to any record that is in the payer's possession, or is kept or maintained on the payer's behalf, the recipient has an address outside Australia; or (b) the payer is authorised to make the payment to a place outside Australia. (2) However, a recipient is not covered by this section for a payment if, at the time the payment was made, a *business the recipient carries on is carried on at or through an *Australian permanent establishment and the payment is attributable to that establishment. 12-415 Failure to give notice or make information available: administrative penalty An entity that: (a) is required to give a notice, or make details available on a website, under section 12-395 in relation to: (i) a payment made to another entity; or (ii) an amount paid or credited to, or dealt with on behalf of or as directed by, another entity; and (b) fails to comply with that section; is liable to pay to the Commissioner a penalty equal to the amount that would have been required to be withheld under this Subdivision (disregarding subsection 12-385(5) and paragraph 12-390(10)(b)) in relation to amounts attributable to the payment or amount if the notice had been given or the details had been made available. Note: Division 298 in this Schedule contains machinery provisions for administrative penalties. 12-420 Agency rules (1) This section applies to: (a) a payment (the first payment) made to an entity (the first entity) in the capacity as *agent for another entity; and (b) another payment made by the first entity to the extent that it is reasonably attributable to the first payment. (2) This Subdivision has effect as if the first entity were not an *agent in relation to the payments. Note: As a result of subsection (2), an agent may be required to withhold amounts under this Subdivision. Division 13-Alienated personal services payments Table of sections 13-1 Object of this Division 13-5 Payment to the Commissioner in respect of alienated personal services payments 13-10 Alienated personal services payments 13-15 Personal services payment remitters 13-20 Time for payments to Commissioner for alienated personal services payments made during 2000-01 13-1 Object of this Division The object of this Division is to ensure the efficient collection of income tax (and other liabilities) on any *personal services income included in an individual's assessable income under Division 86 of the Income Tax Assessment Act 1997 by: (a) putting *personal services entities receiving *alienated personal services payments in a position similar to their position if amounts were withheld from the payments under Division 12; but (b) doing so in a way that enables them to comply with their obligations without having to withhold amounts separately from each payment. Note: Under Division 86 of the Income Tax Assessment Act 1997 (about alienation of personal services income), an individual's personal services income that is gained or produced by another entity is in some cases included in the individual's assessable income. Payments of this income by the entity might not be caught by Division 12. 13-5 Payment to the Commissioner in respect of alienated personal services payments Obligation to pay amounts (1) A *personal services entity must pay an amount of tax to the Commissioner if: (a) it receives an *alienated personal services payment that relates to an individual's personal services income; and (b) it receives the payment during a *PAYG payment period for which it is a *personal services payment remitter. Working out the amounts (2) Use this method statement to work out the amount: Method statement Step 1. Identify the payments that the *personal services entity makes to the individual during the period mentioned in paragraph (1)(b) that are *withholding payments covered by section 12-35. Step 2. Identify the amounts that: (a) are included in the individual's assessable income under section 86-15 of the Income Tax Assessment Act 1997; and (b) relate to *alienated personal services payments the entity receives during that period. Step 3. Work out the sum of all the amounts that Division 12 would require the entity to withhold in respect of that period if both of these were taken into account: (a) the payments identified in step 1; and (b) the amounts identified in step 2, as if they were payments of salary covered by section 12-35. Step 4. Work out the sum of all the amounts withheld under section 12-35 from the payments identified in step 1. Step 5. Subtract the sum under step 4 from the sum under step 3. Example: For the PAYG payment period of 1 April 2001 to 30 June 2001, NewIT Pty. Ltd. received amounts totalling $18,000 that were Ron's personal services income. NewIT does not conduct a personal services business. During the period, NewIT paid Ron $3,000 in salary. This is a withholding payment covered by section 12-35 (step 1). $15,000 of the amount NewIT received is included in Ron's assessable income under section 86-15 of the Income Tax Assessment Act 1997 (step 2). If NewIT had paid the $15,000 in salary to Ron within 14 days after the end of the PAYG payment period, the amount that NewIT would have had to withhold under Division 12 on the total amount of $18,000 would have been $4,000 (step 3). NewIT withheld $500 from the salary payment of $3,000, as required by section 12-35 (step 4). On the basis of these facts, the amount NewIT must pay to the Commissioner (step 5) is: [pic] (3) Subject to subsections (4) and (5), the *personal services entity must pay the amount to the Commissioner by the end of the 21st day after the end of the *PAYG payment period. Note: A different rule applies for alienated personal services payments that large withholders and medium withholders make during the 2000-01 income year. See section 13-20. (4) If: (a) the *personal services entity is a *deferred BAS payer on the 21st day after the end of the *PAYG payment period; and (b) the personal services entity's PAYG payment period is a *quarter; the entity must pay that amount to the Commissioner as shown in the table: |Payments by *deferred BAS payers | |Item |If |the amount for this | | |paragraph (4)(a|quarter must be paid | | |) applies to |by the end of: | | |the *quarter | | | |ending on: | | |1 |30 September |the following | | | |28 October | |2 |31 December |the following | | | |28 February | |3 |31 March |the following 28 April| |4 |30 June |the following 28 July | (5) If: (a) the *personal services entity is a *deferred BAS payer on the 21st day after the end of the *PAYG payment period; and (b) the personal services entity's PAYG payment period is a month; the entity must pay that amount to the Commissioner: (c) by the end of the 28th day of the month following that period unless the PAYG payment period is a December; or (d) by the end of the 28th day of the next February if the PAYG payment period is a December. 13-10 Alienated personal services payments An alienated personal services payment is a payment (including a payment in the form of a *non-cash benefit) that a *personal services entity receives and that relates to an amount that: (a) is included in an individual's assessable income under Division 86 of the Income Tax Assessment Act 1997; or (b) would be so included but for the fact that the entity received the income in the course of conducting a *personal services business. For valuation of non-cash benefits, see sections 21 and 21A of the Income Tax Assessment Act 1936. 13-15 Personal services payment remitters General (1) A *personal services entity is a personal services payment remitter for a *PAYG payment period if, in the income year preceding that period: (a) the entity's *ordinary income or *statutory income included a person's *personal services income; and (b) the entity was not conducting a *personal services business. Businesses not previously receiving personal services income (2) A *personal services entity is a personal services payment remitter for a *PAYG payment period if: (a) the entity's *ordinary income or *statutory income did not include an individual's *personal services income in any income year preceding that period; and (b) it is reasonable to expect that, in the income year during which the period occurs, the entity's income will include a person's *personal services income that the entity will not have received in the course of conducting a *personal services business. (3) It is not reasonable to expect that the *personal services entity will receive a person's *personal services income in the course of conducting a *personal services business if it is reasonable to expect that: (a) the entity will receive at least 80% of that income from the same entity (or one entity and its *associates); and (b) the entity will not meet the results test under section 87-18 of the Income Tax Assessment Act 1997. Personal services business determinations taking effect (4) However, a *personal services entity is not a personal services payment remitter for a *PAYG payment period if, during that period or an earlier PAYG payment period in the same income year, a *personal services business determination relating to the entity takes effect. 13-20 Time for payments to Commissioner for alienated personal services payments made during 2000-01 (1) Subject to subsection (2), if: (a) a *personal services entity must, under section 13-5, pay an amount for *alienated personal services payments it received during a particular *PAYG payment period; and (b) the period ends in a *quarter in the *financial year starting on 1 July 2000; the payment must be paid to the Commissioner by the end of the 21st day after the end of the quarter. (2) If: (a) the *personal services entity is a *deferred BAS payer on the 21st day after the end of the *quarter; and (b) the quarter ends on 31st March or 30th June of 2001; the payment must be paid to the Commissioner by the end of the 28th day after the end of that quarter. Division 14-Non-cash benefits, and accruing gains, for which amounts must be paid to the Commissioner Table of sections 14-1 Object of this Subdivision 14-5 Provider of non-cash benefit must pay amount to the Commissioner if payment would be subject to withholding 14-10 Dividend, interest or royalty received, for a foreign resident, in the form of a non-cash benefit 14-15 Payer can recover amount paid to the Commissioner 14-50 Object of this Subdivision 14-55 Liability for TFN withholding tax 14-60 Investment body may recover TFN withholding tax from investor 14-65 Application of rules in Division 18 14-75 Overpayment of TFN withholding tax 14-85 Other laws do not exempt from TFN withholding tax Subdivision 14-A-Non-cash benefits 14-1 Object of this Subdivision The object of this Subdivision is: (a) to put entities that provide *non-cash benefits, and entities that receive them, in a position similar to their position under Division 12 if payments of money had been made instead of the non-cash benefits being provided; and (b) in that way, to prevent entities from avoiding their obligations under Division 12 by providing non-cash benefits. 14-5 Provider of non-cash benefit must pay amount to the Commissioner if payment would be subject to withholding (1) An entity (the payer) must pay an amount to the Commissioner before providing a *non-cash benefit to another entity (the recipient) if Division 12 would require the payer to withhold an amount (the notionally withheld amount) if, instead of providing the benefit to the recipient, the payer made a payment to the recipient in money equal to the *market value of the benefit when the benefit is provided. (2) The amount to be paid to the Commissioner is equal to the notionally withheld amount. Example: Nick is a building contractor who has entered into a voluntary agreement with Mike for the purposes of section 12- 55. Nick proposes to give Mike his old utility van (whose market value is $1,000) as payment for work Mike has done for him over a fortnight. If Nick were instead to pay Mike $1,000, Nick would have had to withhold $203 under Division 12 (in accordance with withholding rates current at the time). This section requires Nick to pay $203 to the Commissioner before giving the van to Mike. (3) This section does not apply to providing: (a) a *fringe benefit; or (b) a benefit that is an exempt benefit under the Fringe Benefits Tax Assessment Act 1986; or (c) a benefit that would be an exempt benefit under that Act if paragraphs (d) and (e) of the definition of employer in subsection 136(1) of that Act were omitted; or (d) a benefit constituted by the acquisition of a share or right to acquire a share under an employee share scheme (within the meaning of Division 13A of Part III of the Income Tax Assessment Act 1936); or (e) a benefit constituted by the acquisition under an employee share scheme (within the meaning of that Division) of a stapled security or right to acquire a stapled security that is treated as a qualifying share or qualifying right for the purposes of that Division because of Subdivision DB of that Division. 14-10 Dividend, interest or royalty received, for a foreign resident, in the form of a non-cash benefit If: (a) an entity (the payer) receives in the form of a *non-cash benefit: (i) a *dividend of a company; or (ii) interest (within the meaning of Division 11A of Part III of the Income Tax Assessment Act 1936); or (iii) a *royalty; and (b) section 12-215, 12-250 or 12-285 would have required the payer to withhold an amount if the dividend, interest or royalty had been a payment in money; the payer must pay that amount to the Commissioner before providing the benefit (or part of it) to another entity. 14-15 Payer can recover amount paid to the Commissioner (1) The payer may recover from the recipient as a debt an amount that the payer has paid to the Commissioner under section 14-5. (2) If the payer has paid an amount to the Commissioner under section 14-10, the payer may: (a) if the payer has provided all of the benefit to another entity- recover the amount from that other entity as a debt; or (b) if the payer has provided a part of the benefit to another entity-recover from that other entity as a debt the corresponding proportion of the amount paid to the Commissioner. (3) If the payer can recover an amount from another entity under this section, the payer is entitled to set the amount off against debts due by the payer to the other entity. Subdivision 14-B-Accruing gains 14-50 Object of this Subdivision The object of this Subdivision is to put the parties to a *Part VA investment with an accruing gain in a position similar to what would have been their position under Subdivision 12-E (Payments where TFN or ABN not quoted) if the *investment body had paid the gain in money to the *investor at the end of the income year. 14-55 Liability for TFN withholding tax (1) *TFN withholding tax is payable if: (a) in relation to a *Part VA investment, an amount (the accrued gain) is included in the *investor's assessable income for an income year under section 159GQ of the Income Tax Assessment Act 1936 (about gains accruing on securities); and (b) the investment: (i) is of a kind mentioned in item 1 or 2 of the table in subsection 202D(1) of that Act; or (ii) is of a kind mentioned in item 3 of that table and is non- transferable; and (c) the term of the investment does not end during the income year; and (d) section 12-140 would have required the *investment body to withhold an amount (the TFN withholding amount) from a payment of the accrued gain to the investor, if the investment body had made the payment at the end of the income year and section 12- 150 had not been enacted. Note: Section 202D of the Income Tax Assessment Act 1936 lists the investments in connection with which tax file numbers are to be quoted. (2) The amount of *TFN withholding tax is equal to the TFN withholding amount. (3) The *TFN withholding tax is payable jointly and severally by the *investor and the *investment body. (4) However, if the *investment body is the Commonwealth or an *untaxable Commonwealth entity: (a) the *TFN withholding tax is payable by the *investor; and (b) the investor is taken to have authorised the investment body to pay the TFN withholding tax on the investor's behalf. (5) The *TFN withholding tax is due and payable at the end of 21 days after the end of the income year referred to in paragraph (1)(a). Note 1: When it is due and payable, the TFN withholding tax is payable to the Commissioner: see paragraph 255-5(1)(b). Note 2: An entity by whom it is payable must pay it to the Commissioner in accordance with Subdivision 16-B: see subsection 16-70(3). If any of it remains unpaid, the entity is liable to pay general interest charge: see section 16-80. Note 3: The Commissioner may defer the time at which TFN withholding tax becomes due and payable: see section 255-10. (6) The adoption (under section 18 of the Income Tax Assessment Act 1936) of an accounting period ending on a day other than 30 June is disregarded for the purposes of: (a) this section; and (b) the application of Division 16E of Part III of that Act for the purposes of this section. 14-60 Investment body may recover TFN withholding tax from investor (1) The *investment body may recover from the *investor as a debt any of the *TFN withholding tax that it pays. (2) The *investment body is entitled to set off an amount that it can recover from the *investor under this section against: (a) a debt due by it to the investor; or (b) an amount that is accruing to the investor, or stands to the investor's credit, in respect of the *Part VA investment, even if the amount is not yet due. 14-65 Application of rules in Division 18 These provisions: (a) subsection 18-15(1) and sections 18-20 and 18-25 (about credits for amounts withheld from withholding payments); and (b) section 18-80 (about refunds when exemption declaration not given); apply as if any of the *TFN withholding tax that has been paid were an amount withheld under subsection 12-140(1) from a *withholding payment covered by that subsection and made to the *investor during: (c) unless the *investor has adopted (under section 18 of the Income Tax Assessment Act 1936) an accounting period ending on a day other than 30 June-the income year referred to in paragraph 14-55(1)(a); or (d) if the investor has adopted such an accounting period-the income year in which the TFN withholding tax is paid. Note: Unless the investor has adopted such an accounting period, the credit under section 18-15, 18-20 or 18-25 will be in respect of the income year before the one in which the TFN withholding tax is paid. 14-75 Overpayment of TFN withholding tax If *TFN withholding tax has been overpaid: (a) the Commissioner must refund the amount overpaid; and (b) the *investor is not entitled to a credit under section 18-15, 18-20 or 18-25 in respect of the amount overpaid. 14-85 Other laws do not exempt from TFN withholding tax (1) A provision of a law passed before the commencement of this section that purports to exempt an entity from liability to pay *TFN withholding tax, or to pay taxes that include TFN withholding tax, does not exempt that entity from liability to pay TFN withholding tax. (2) A provision of a law passed at or after the commencement of this section that purports to exempt an entity from liability to pay taxes under the laws of the Commonwealth, or to pay certain taxes under those laws that include *TFN withholding tax, is not to be interpreted as exempting the entity from liability to pay TFN withholding tax, unless it specifically mentions TFN withholding tax. Division 15-Working out the amount to withhold Table of Subdivisions Guide to Division 15 15-A Working out how much to withhold 15-B Withholding schedules and regulations 15-C Declarations Guide to Division 15 15-1 What this Division is about This Division is mainly about how to work out how much an entity must withhold under Division 12. In most cases, the entity will need to use either the Commissioner's withholding schedules or the regulations. The entity will also need to take into account a TFN declaration or declaration under section 15-50 it has been given because, under the schedules and regulations, the declaration may affect how to calculate the amount to withhold. This Division also deals with when an individual can make such a declaration (other than a TFN declaration) so as to change the amount that must be withheld from payments to the individual. Subdivision 15-A-Working out how much to withhold Table of sections 15-10 How much to withhold 15-15 Variation of amounts required to be withheld 15-10 How much to withhold (1) The amount that Subdivision 12-B, 12-C or 12-D requires to be withheld from a payment is to be worked out under the withholding schedules made under section 15-25. However, if the regulations prescribe how the amount is to be worked out, then it is to be worked out under the regulations. Note 1: A TFN declaration, declaration under section 15-50 or voluntary agreement may affect how much is required to be withheld under the withholding schedules or regulations. Note 2: The Commissioner may vary an amount required to be withheld. See section 15-15. (2) The amount that Subdivision 12-E, 12-F, 12-FA, 12-FAA, 12-FB or 12-G (except one covered by section 12-325) requires to be withheld from a payment is to be worked out under the regulations. Note 1: The amount that section 12-325 requires to be withheld is worked out under that section. Note 2: The Commissioner may vary an amount required to be withheld. See section 15-15. (3) The amount that Subdivision 12-H requires to be withheld from a payment or receipt is worked out under subsection 12-385(2), 12- 390(2) or 12-390(5). 15-15 Variation of amounts required to be withheld (1) The Commissioner may, for the purposes of meeting the special circumstances of a particular case or class of cases, vary the *amount required to be withheld by an entity from a *withholding payment (except a withholding payment covered by section 12-140 or 12-145 or Subdivision 12-H). If the Commissioner does so, the amount is varied accordingly. Note: Section 12-140 is about a payment arising from an investment where the recipient does not quote its tax file number (or, in some cases, its ABN). Section 12-145 is about an investor becoming presently entitled to income of a unit trust. Subdivision 12-H is about distributions of managed investment trust income. (2) The Commissioner's power to vary an amount includes the power to reduce the amount to nil. (3) A variation must be made by a written notice: (a) if it applies to a particular entity-that is given to that entity; or (b) if it applies to a class of entities-that is given to each of the entities, or a copy of which is published in the Gazette. Subdivision 15-B-Withholding schedules and regulations Table of sections 15-25 Commissioner's power to make withholding schedules 15-30 Matters to be considered when making withholding schedules 15-35 Regulations about withholding 15-25 Commissioner's power to make withholding schedules (1) For the purposes of collecting income tax and the other liabilities referred to in paragraphs 11-1(b), (c), (ca), (da) and (db), the Commissioner may make one or more withholding schedules specifying the amounts, formulas and procedures to be used for working out the *amount required to be withheld by an entity: (a) from a *withholding payment covered by Subdivision 12-B, 12-C or 12-D; or (b) an *alienated personal services payment to which Division 13 applies. (2) A withholding schedule may deal differently with: (a) different payments; and (b) different circumstances of the recipients of those payments; and (c) different periods in respect of which those payments are made. This subsection does not limit subsection 33(3A) of the Acts Interpretation Act 1901. (3) The Commissioner may withdraw a withholding schedule. (4) A withholding schedule, or the withdrawal of a withholding schedule: (a) only applies if a notice of it is published in the Gazette; and (b) only applies in relation to payments made after the day the notice is published, or after such later day as is specified by the Commissioner in the notice. (5) The Commissioner must make each withholding schedule publicly available. 15-30 Matters to be considered when making withholding schedules The Commissioner must have regard to the following matters when making a withholding schedule: (a) the rates of income tax as specified in the Income Tax Rates Act 1986; (b) the rates of Medicare levy as specified in the Medicare Levy Act 1986; (c) the rates specified in section 106Q (about repayments of accumulated HEC debts) of the Higher Education Funding Act 1988 for any financial year ending before 1 July 2005; (ca) the percentages specified in section 154-20 (about repayments of accumulated HELP debt) of the Higher Education Support Act 2003 for any financial year starting on or after 1 July 2005; (da) the percentages specified in section 1061ZZFD (about repayments of accumulated FS debts) of the Social Security Act 1991 for any financial year starting on or after 1 July 2006; (db) the percentages specified in section 12ZLC (about repayments of accumulated FS debts) of the Student Assistance Act 1973 for any financial year starting on or after 1 July 2006; (d) any prescribed *tax offsets; (e) the family tax benefit (within the meaning of the A New Tax System (Family Assistance) Act 1999); (f) the periods in respect of which *withholding payments are made; (g) any other prescribed matter. 15-35 Regulations about withholding (1) For the purposes of collecting income tax and the other liabilities referred to in section 11-1, the regulations may specify the amounts, formulas and procedures to be used for working out the *amount required to be withheld by an entity from a *withholding payment covered by Division 12 (except one covered by section 12-325). (2) The regulations may deal differently with: (a) different payments; and (b) different circumstances of the recipients of those payments; and (c) different periods in respect of which those payments are made. This subsection does not limit subsection 33(3A) of the Acts Interpretation Act 1901. Subdivision 15-C-Declarations Table of sections 15-50 Declarations 15-50 Declarations Declarations about prescribed matters (1) An individual who: (a) expects to receive a *withholding payment covered by Subdivision 12-B, 12-C or 12-D, or an *alienated personal services payment to which Division 13 applies, from an entity; and (b) wishes to have a prescribed matter relating to the individual's income tax or other liability referred to in paragraph 11-1(b), (c), (ca), (da) or (db) taken into account by the entity in working out the *amount required to be withheld from the payment; may give the entity a declaration about the matter in the *approved form. When declarations under subsection (1) can't be given (2) The individual cannot give a declaration under subsection (1) unless: (a) a *TFN declaration is in effect between the individual and the entity, or a *voluntary agreement covers the payment; and (b) if the individual has given another entity a declaration on a prescribed matter-that declaration is not in effect. Declarations changing information given in TFN declaration (3) If: (a) an individual has given a *TFN declaration to an entity; and (b) the individual made a statement about a prescribed matter in the TFN declaration; and (c) the individual's circumstances change in relation to the matter; the individual may give the entity a declaration about the matter in the *approved form. Regulations (4) The regulations may prescribe: (a) the matters about which a declaration under subsection (1) or (3) may be given; and (b) when a declaration under subsection (1) or (3) starts or ceases to be in effect; and (c) when a declaration under subsection (1) or (3) is taken to have been given. (5) If: (a) an individual gives an entity a declaration under subsection (1) or (3) about a matter; and (b) the individual's circumstances change in relation to the matter; the regulations may also prescribe when the individual must give the entity a new declaration about the matter. Division 16-Payer's obligations and rights Table of Subdivisions Guide to Division 16 16-A To withhold 16-B To pay withheld amounts to the Commissioner 16-BA To be registered 16-C To provide information 16-D Additional rights and obligations of entity that makes a payment Guide to Division 16 16-1 What this Division is about This Division sets out the obligations and rights of an entity required to withhold an amount under Division 12, or to pay an amount to the Commissioner under Division 13 or 14. Note: The entity may also have obligations under other legislation. See, for example, the obligation to keep records under section 262A of the Income Tax Assessment Act 1936. Subdivision 16-A-To withhold Table of sections When to withhold 16-5 When to withhold an amount 16-20 Payer discharged from liability to recipient for amount withheld Penalties for not withholding 16-25 Failure to withhold: offence 16-30 Failure to withhold: administrative penalty for entity other than exempt Australian government agency 16-35 Failure to withhold: administrative penalty for exempt Australian government agency in relation to payment other than dividend, interest or royalty 16-40 Failure to withhold: administrative penalty for exempt Australian government agency in relation to dividend, interest or royalty payment 16-43 Failure to withhold: administrative penalty for exempt Australian government agency in relation to payment to foreign resident etc. When to withhold 16-5 When to withhold an amount If Division 12 requires an entity to withhold an amount from a payment, the entity must do so when making the payment. Note 1: An entity is required to withhold an amount under section 12-145 when an investor becomes presently entitled to income of a unit trust. Note 2: If section 12-215, 12-250 or 12-285, or subsection 12- 390(4), requires an entity to withhold an amount from a payment received by the entity, the entity must do so at the time required by that provision. 16-20 Payer discharged from liability to recipient for amount withheld An entity that: (a) withholds an amount as required by Division 12; or (b) pays to the Commissioner an amount as required by Division 13 or 14; is discharged from all liability to pay or account for that amount to any entity except the Commissioner. Note: The entity may be required to refund the amount in some circumstances. See Subdivision 18-B. Penalties for not withholding 16-25 Failure to withhold: offence (1) An entity must not fail to withhold an amount as required by Division 12. Penalty: 10 penalty units. Note 1: See section 4AA of the Crimes Act 1914 for the current value of a penalty unit. Note 2: See sections 16-30, 16-35, 16-40 and 16-43 for an alternative administrative penalty. (2) An entity must not fail to pay to the Commissioner an amount as required by Division 13 or 14. Penalty: 10 penalty units. Note 1: See section 4AA of the Crimes Act 1914 for the current value of a penalty unit. Note 2: See sections 16-30, 16-35, 16-40 and 16-43 for an alternative administrative penalty. (3) An offence against subsection (1) or (2) is a strict liability offence. Note: For strict liability, see section 6.1 of the Criminal Code. (4) If a person is convicted of an offence in relation to: (a) a failure by that person or someone else to withhold an amount as required by Division 12; or (b) a failure by that person or someone else to pay to the Commissioner an amount as required by Division 13 or 14; the court may order the convicted person to pay to the Commissioner an amount up to the *amount required to be withheld. The court may so order in addition to imposing a penalty on the convicted person. 16-30 Failure to withhold: administrative penalty for entity other than exempt Australian government agency An entity (except an *exempt Australian government agency) that: (a) fails to withhold an amount as required by Division 12; or (b) fails to pay an amount to the Commissioner as required by Division 13 or 14; is liable to pay to the Commissioner a penalty equal to that amount. Note 1: An entity may become liable under this section in respect of a payment it made or received that is taken to have been subject to withholding tax as a result of a Commissioner's determination under subsection 177F(2A) of the Income Tax Assessment Act 1936 (see also subsection 177F(2F) of that Act). Note 2: Division 298 in this Schedule contains machinery provisions for administrative penalties. 16-35 Failure to withhold: administrative penalty for exempt Australian government agency in relation to payment other than dividend, interest or royalty (1) An *exempt Australian government agency that: (a) fails to withhold an amount as required by Division 12; or (b) fails to pay to the Commissioner an amount as required by Division 14; is liable to pay to the Commissioner a penalty of 20 penalty units. Note 1: See section 4AA of the Crimes Act 1914 for the current value of a penalty unit. Note 2: Division 298 in this Schedule contains machinery provisions for administrative and civil penalties. Exception (4) This section does not apply in relation to an *amount required to be withheld from a *withholding payment covered by Subdivision 12-F (about dividend, interest or royalty payment) or by Subdivision 12-FB (about payments to foreign residents). 16-40 Failure to withhold: administrative penalty for exempt Australian government agency in relation to dividend, interest or royalty payment An *exempt Australian government agency that: (a) fails to withhold an amount as required by Division 12 from a *withholding payment covered by Subdivision 12-F (about dividend, interest or royalty payment); or (b) fails to pay to the Commissioner an amount as required by Division 14 in respect of a withholding payment covered by that Subdivision; is liable to pay to the Commissioner a penalty equal to that amount. Note 1: An exempt Australian government agency may become liable under this section in respect of a payment it made or received that is taken to have been subject to withholding tax as a result of a Commissioner's determination under subsection 177F(2A) of the Income Tax Assessment Act 1936 (see also subsection 177F(2F) of that Act). Note 2: Division 298 in this Schedule contains machinery provisions for administrative penalties. 16-43 Failure to withhold: administrative penalty for exempt Australian government agency in relation to payment to foreign resident etc. An *exempt Australian government agency that: (a) fails to withhold an amount as required by Division 12 from a *withholding payment covered by Subdivision 12-FB (about payments to foreign residents); or (b) fails to pay to the Commissioner an amount as required by Division 14 in respect of a withholding payment covered by that Subdivision; is liable to pay to the Commissioner a penalty equal to that amount. Note: Division 298 in this Schedule contains machinery provisions for administrative penalties. Subdivision 16-B-To pay withheld amounts to the Commissioner Table of sections When and how to pay amounts to the Commissioner 16-70 Entity to pay amounts to Commissioner 16-75 When amounts must be paid to Commissioner 16-80 Penalty for failure to pay within time 16-85 How amounts are to be paid Who is a large, medium or small withholder 16-95 Meaning of large withholder 16-100 Meaning of medium withholder 16-105 Meaning of small withholder 16-110 Commissioner may vary withholder's status downwards 16-115 Commissioner may vary withholder's status upwards When and how to pay amounts to the Commissioner 16-70 Entity to pay amounts to Commissioner (1) An entity that withholds an amount under Division 12 must pay the amount to the Commissioner in accordance with this Subdivision. (2) An entity that must pay an amount to the Commissioner under Division 13 or Subdivision 14-A must do so in accordance with section 16-85. (3) An entity that must pay an amount to the Commissioner under Subdivision 14-B must do so in accordance with sections 16-80 and 16-85. Note: For provisions about collection and recovery of amounts payable to the Commissioner under this Part, see Part 4-15. 16-75 When amounts must be paid to Commissioner Large withholder (1) A *large withholder must pay to the Commissioner as shown in the table an amount it withholds under Division 12 during a month. |Payments by large withholders | |Item |If the amount is |It must be paid to the | | |withheld on this day of|Commissioner on or | | |week: |before: | |1 |Saturday or Sunday |The second Monday after | | | |that day | |2 |Monday or Tuesday |The first Monday after | | | |that day | |3 |Wednesday |The second Thursday after| | | |that day | |4 |Thursday or Friday |The first Thursday after | | | |that day | Medium withholders (2) Subject to subsection (2A), a *medium withholder must pay to the Commissioner an amount that it withholds during a month under Division 12 by the end of the 21st day of the next month. (2A) If a *medium withholder: (a) withholds an amount during a month under Division 12; and (b) is a *deferred BAS payer on the 21st day of the month (the next month) following that month; the medium withholder must pay that amount to the Commissioner by the end of the 28th day of: (c) the next month unless the amount is withheld during December; or (d) the next February if the amount is withheld during December. Small withholders (3) Subject to subsection (4), if a *small withholder withholds an amount under Division 12 during a month in a *quarter, it must pay the amount to the Commissioner by the end of the 21st day of the month after the end of that quarter. (4) If a *small withholder: (a) withholds an amount under Division 12 during a month in a *quarter; and (b) is a *deferred BAS payer on the 21st day of the month after the end of that quarter; the small withholder must pay that amount to the Commissioner as shown in the table: |Payments by *deferred BAS payers | |Item |If the amount is |the amount must be paid | | |withheld during the |to the Commissioner by | | |*quarter ending on: |the end of: | |1 |30 September |the following 28 October | |2 |31 December |the following 28 February| |3 |31 March |the following 28 April | |4 |30 June |the following 28 July | 16-80 Penalty for failure to pay within time If an amount that an entity must pay to the Commissioner under subsection 16-70(1) or (3) remains unpaid after the time by which it is due to be paid, the entity is liable to pay *general interest charge on the unpaid amount for each day in the period that: (a) started at the beginning of the day by which the unpaid amount was due to be paid; and (b) finishes at the end of the last day, at the end of which, any of the following remains unpaid: (i) the unpaid amount; (ii) general interest charge on any of the unpaid amount. 16-85 How amounts are to be paid Large withholder (1) A *large withholder must pay to the Commissioner by a means of *electronic payment: (a) an amount that it withholds under Division 12; and (b) an amount that it pays to the Commissioner under Division 13 or 14. Note 1: A different rule applies for some large withholders for July and August 2000. See section 16-130. Note 2: A penalty applies if a large withholder fails to pay electronically as required-see section 288-20. Note 3: A large withholder must also pay other tax debts electronically-see section 8AAZMA. Medium or small withholder (2) A *medium withholder or *small withholder must pay to the Commissioner: (a) any amount that it withholds under Division 12; and (b) any amount that it pays to the Commissioner under Division 13 or 14; by a means of *electronic payment, or any other means approved in writing by the Commissioner. Commissioner may vary payment method (3) The Commissioner may, with an entity's agreement, vary the means by which the withholder pays amounts to the Commissioner under this Subdivision. The variation must be by written notice given to the entity. Who is a large, medium or small withholder 16-95 Meaning of large withholder (1) An entity is a large withholder for a particular month (the current month) in a *financial year starting on or after 1 July 2001 if: (a) it was a *large withholder for June 2001; or (b) the *amounts withheld by the entity during a financial year ending at least 2 months before the current month exceeded $1 million; or (c) both of the following apply: (i) at the end of a financial year (the threshold year) ending at least 2 months before the current month, the entity was one of a number of companies that were at that time all members of the same *wholly-owned group; (ii) the amounts withheld by those companies during the threshold year exceeded $1 million; or (d) the Commissioner determines under section 16-115 that the entity is a large withholder for the current month. Note: Different rules apply for working out who is a large withholder for a month in 2000-01. See section 16-125. Exception (2) However, the entity is not a *large withholder if the Commissioner determines under section 16-110 that it is a *medium withholder or a *small withholder for the current month. 16-100 Meaning of medium withholder (1) An entity is a medium withholder for a particular month (the current month) in a *financial year starting on or after 1 July 2001 if it is not a *large withholder for that month and: (a) it was a *medium withholder for June 2001; or (b) the *amounts withheld by the entity during a financial year ending before the current month exceeded $25,000; or (c) the Commissioner determines under section 16-110 or 16-115 that the entity is a medium withholder for the current month. Note: Different rules apply for working out who is a large withholder for a month in 2000-01. See section 16-125. (2) However, the entity is not a *medium withholder if the Commissioner determines under section 16-110 or 16-115 that the entity is a *large withholder or a *small withholder for the current month. 16-105 Meaning of small withholder An entity is a small withholder for a particular month if: (a) there is at least one *amount withheld by the entity during that month; and (b) the entity is neither a *large withholder nor a *medium withholder for that month. 16-110 Commissioner may vary withholder's status downwards (1) The Commissioner may, by giving written notice to a *withholder: (a) make the following determinations: (i) a determination that a *large withholder is a *medium withholder or a *small withholder; (ii) a determination that a medium withholder is a small withholder; or (b) revoke or vary any such determination. (2) The notice must state that the determination applies: (a) for specified months; or (b) for all months from and including a specified month. (3) The determination has no effect for a particular month unless the notice is given before that month. (4) An entity that would otherwise be a *large withholder or a *medium withholder for a particular month may apply in writing to the Commissioner for a determination under this section. Note: A person who is dissatisfied with a decision under this section may object against the decision in the manner set out in Part IVC. 16-115 Commissioner may vary withholder's status upwards (1) The Commissioner may, by giving written notice to a *withholder: (a) make the following determinations: (i) a determination that a *small withholder is a *medium withholder or a *large withholder; (ii) a determination that a medium withholder is a large withholder; or (b) revoke or vary any such determination. (2) The notice must state that the determination applies: (a) for specified months; or (b) for all months from and including a specified month. (3) A determination that a *small withholder is a *medium withholder has no effect for a particular month unless the notice is given before that month. (4) Any other determination under this section has no effect for a month that is earlier than the second month after the month in which the notice is given. (5) The Commissioner may, in making a determination under this section, have regard to the following: (a) the sum of the amounts that the Commissioner considers to be likely to be the *amounts required to be withheld by the entity in the following 12 months; (b) the extent (if any) to which the entity makes or receives *withholding payments that were previously made or received by another entity; (c) any failure by the entity to comply with its obligations under this Part; (d) any *arrangement that was entered into or carried out for the purpose of lengthening the intervals at which the entity is required to pay to the Commissioner amounts withheld from withholding payments; (e) such other matters as the Commissioner considers relevant. Note: A person who is dissatisfied with a decision under this section may object against the decision in the manner set out in Part IVC. Subdivision 16-BA-To be registered Table of sections Registration of withholders 16-140 Withholders must be registered 16-141 Registration and cancellation Branch registration 16-142 Branches may be registered 16-143 Separate amounts for entities and branches 16-144 Cancellation of branch registration 16-145 Effect on branches of cancelling the entity's registration Registration of withholders 16-140 Withholders must be registered (1) An entity that must pay an amount to the Commissioner under: (a) subsection 16-70(1) (about amounts withheld under Division 12); or (aa) Division 13 (about payments in respect of alienated personal services payments); or (b) Division 14 (about payments in respect of non-cash benefits); must apply to register with the Commissioner. (2) The entity must apply in the *approved form by the day on which the entity is first required: (a) to withhold an amount under Division 12; or (b) to pay an amount to the Commissioner under Division 13 or 14. However, the Commissioner may allow a longer period for applying. (3) An entity that contravenes this section is liable to an administrative penalty of 5 penalty units. Note 1: See section 4AA of the Crimes Act 1914 for the current value of a penalty unit. Note 2: Division 298 contains machinery provisions for administrative and civil penalties. 16-141 Registration and cancellation The Commissioner may register an entity or cancel the registration of an entity at any time. Branch registration 16-142 Branches may be registered (1) The Commissioner may register a branch of a registered entity if: (a) the entity applies, in the *approved form, for registration of the branch; and (b) the entity has an *ABN or has applied for one; and (c) the Commissioner is satisfied that the branch maintains an independent system of accounting, and can be separately identified by reference to: (i) the nature of the activities carried on through the branch; or (ii) the location of the branch; and (d) the Commissioner is satisfied that the entity is *carrying on an enterprise through the branch, or intends to carry on an enterprise through the branch, from a particular date specified in the application. A branch that is so registered is a PAYG withholding branch. Note: A branch may be both a PAYG withholding branch under this Subdivision and a GST branch under the GST Act. (2) The Commissioner may register a branch of a *government entity or a *non-profit sub-entity if: (a) the branch or sub-entity applies, in the *approved form, for registration; and (b) the branch or sub-entity has an *ABN or has applied for one. A branch or sub-entity that is so registered is also a PAYG withholding branch. 16-143 Separate amounts for entities and branches (1) If an entity has a *PAYG withholding branch, this Part applies to the entity as if the amounts that it must pay to the Commissioner under this Part were separated into the following classes: (a) for each such branch of the entity, a class of amounts that relate to the branch; and (b) a class of amounts that do not relate to any of the entity's branches. Note: This section does not impose any legal obligations on the branches. The entity remains legally responsible under this Part for all amounts that relate to its branches. (2) Those amounts are worked out as if the branch were a separate entity and as if: (a) all payments made through the branch, from which amounts are required to be withheld under Division 12, were made by that separate entity; and (aa) all *alienated personal services payments received through the branch, in respect of which Division 13 requires an amount to be paid to the Commissioner, were received by that separate entity; and (b) all non-cash benefits provided through the branch, in respect of which Division 14 requires an amount to be paid to the Commissioner, were provided by that separate entity. 16-144 Cancellation of branch registration The Commissioner must cancel the registration of a *PAYG withholding branch of an entity if the Commissioner is satisfied that the branch does not satisfy paragraph 16-142(c) or (d). 16-145 Effect on branches of cancelling the entity's registration If an entity's registration is cancelled, the registration of any *PAYG withholding branches of the entity ceases to have effect. Subdivision 16-C-To provide information Table of sections To the Commissioner 16-150 Commissioner must be notified of amounts 16-153 Annual reports To recipients of withholding payments 16-155 Annual payment summary 16-157 Payment summary for Subdivision 12-H 16-160 Part-year payment summary 16-165 Payment summaries for superannuation lump sums and employment termination payments 16-166 Payment summary for a departing Australia superannuation payment 16-167 Payment summary for payment to recipient who does not quote ABN 16-170 Form and content of payment summary 16-175 Penalty for not providing payment summary 16-180 Commissioner may exempt entity from giving payment summary 16-182 Definition of reportable employer superannuation contribution To the Commissioner 16-150 Commissioner must be notified of amounts (1) An entity that must pay an amount (even if it is a nil amount) to the Commissioner under: (a) subsection 16-70(1) (about amounts withheld under Division 12); or (aa) Division 13 (about payments in respect of alienated personal services payments); or (b) Division 14 (about payments in respect of non-cash benefits); must notify the Commissioner of the amount on or before the day on which the amount is due to be paid (regardless of whether it is paid). The notification must be in the *approved form and lodged with the Commissioner. 16-153 Annual reports (1) An entity must give a report to the Commissioner in the *approved form, not later than 31 October after the end of a *financial year, if during the financial year: (a) the entity made any payment from which an amount was required to be withheld under section 12-190, Subdivision 12-F (other than section 12-215, 12-250 or 12-285), Subdivision 12-FA, section 12-315 or Subdivision 12-G; or (b) the entity provided any *non-cash benefit in respect of which an amount was required to be paid to the Commissioner under Division 14 because of the application of that Division in relation to section 12-190, Subdivision 12-F (other than section 12-215, 12-250 or 12-285), Subdivision 12-FA, section 12-315 or Subdivision 12-G; or (c) the entity received any payment from which an amount was required to be withheld under section 12-215, 12-250, 12-285 or 12-317; or (d) the entity received any non-cash benefit in respect of which an amount was required to be paid to the Commissioner under Division 14 because of the application of that Division in relation to section 12-215, 12-250, 12-285 or 12-317. (2) An entity must give a report to the Commissioner in the form required by subsection (3), not later than 14 August after the end of a *financial year, if during the financial year: (a) the entity made any payment from which an amount was required to be withheld under Subdivision 12-B, 12-C or 12-D; or (aa) the entity received any *alienated personal services payment in respect of which an amount was required to be paid to the Commissioner under Division 13; or (b) the entity provided any *non-cash benefit in respect of which an amount was required to be paid to the Commissioner under Division 14 because of the application of that Division in relation to Subdivision 12-B, 12-C or 12-D; or (c) any person has a *reportable fringe benefit amount for the income year ending at the end of the financial year in respect of the person's employment by the entity; or (d) the entity made *reportable employer superannuation contributions in respect of a person's employment. (3) The report under subsection (2) must be either: (a) a report in the *approved form; or (b) a report consisting of: (i) copies of all the summaries that the entity gave in relation to the *financial year under section 16-155 in respect of payments, *non-cash benefits, *alienated personal services payments, *reportable fringe-benefit amounts and *reportable employer superannuation contributions covered by subsection (2) of this section; and (ii) an accompanying statement in the approved form. (4) An entity must give a report to the Commissioner in the *approved form if the entity is required to withhold amounts under Subdivision 12-H in relation to *fund payments made by a particular *managed investment trust (the paying trust) in relation to an income year of that trust. Note: The entity may be the managed investment trust itself or a custodian or other entity. (4A) The report under subsection (4) must be given: (a) not later than 14 days after the end of 6 months after the end of the income year of the *managed investment trust in relation to which the relevant *fund payments were made; or (b) within a longer period allowed by the Commissioner. (5) In applying this section: (a) a requirement to pay a nil amount to the Commissioner is to be treated as a requirement to pay an amount to the Commissioner; and (b) a requirement to withhold a nil amount is to be treated as a requirement to withhold an amount. (6) The Commissioner may, to meet the special circumstances of a particular case or class of cases, vary the requirements of this section. (7) A variation must be made by a written notice: (a) if it applies to a particular entity- that is given to that entity; or (b) if it applies to a class of entities-that is given to each of the entities, or a copy of which is published in the Gazette. To recipients of withholding payments 16-155 Annual payment summary (1) Within 14 days after the end of a *financial year, an entity (the payer) must give a *payment summary (and a copy of it) to another entity (the recipient) if: (a) during the year the payer made one or more *withholding payments (other than withholding payments covered by section 12- 85, 12-190, 12-215, 12-250, 12-285, 12-317, 12-385 or 12-390) to the recipient; or (b) during the year the payer received one or more withholding payments covered by section 12-215, 12-250 or 12-285 and, in relation to each of them, the recipient is the foreign resident mentioned in the section; or (baa) during the year the payer received one or more withholding payments covered by section 12-317 and, in relation to each of them, the recipient is the likely foreign recipient mentioned in the section; or (ba) during the year the payer received one or more withholding payments covered by Division 13 and, in relation to each of them, an amount is included in the recipient's assessable income under Division 86 of the Income Tax Assessment Act 1997; or (bb) because of section 86-40 of the Income Tax Assessment Act 1997, the payer is taken to have paid salary to the recipient on the last day of the year; or (c) the recipient is an individual and has a *reportable fringe benefits amount, for the income year ending at the end of that financial year, in respect of his or her employment (within the meaning of the Fringe Benefits Tax Assessment Act 1986) by the payer; or (d) the recipient is an individual and *reportable employer superannuation contributions have been made by the payer, in respect of the individual's employment, during the year. (2) The *payment summary must cover: (a) if paragraph (1)(a), (b) or (ba) applies-each of the *withholding payments mentioned in that paragraph, except one covered by a previous payment summary (and a copy of it) given by the payer to the recipient under section 16-160; and (aa) if paragraph (1)(bb) applies-each of the withholding payments constituted by the salary mentioned in that paragraph, except one covered by a previous payment summary (and a copy of it) given by the payer to the recipient under section 16-160; and (b) if paragraph (1)(c) applies-the *reportable fringe benefits amount, except so much of it as is covered by a previous payment summary (and a copy of it) given by the payer to the recipient under this section; and (c) if paragraph (1)(d) applies-the total of the *reportable employer superannuation contributions, except so much of those contributions as are covered by a previous payment summary given by the payer to the recipient under section 16-160. 16-157 Payment summary for Subdivision 12-H (1) An entity (the payer) must give a *payment summary to another entity (the recipient) if the payer made *withholding payments covered by section 12-385 or 12-390 to the recipient in relation to *fund payments made by a particular *managed investment trust (the paying trust) in relation to an income year of that trust. Note: The entity may be the managed investment trust itself or a custodian or other entity. (2) The *payment summary: (a) must cover each of the *withholding payments mentioned in subsection (1); and (b) may be in electronic form; and (c) must be given: (i) not later than 14 days after the end of 6 months after the end of the income year of the *managed investment trust in relation to which the relevant *fund payments were made; or (ii) within a longer period allowed by the Commissioner. 16-160 Part-year payment summary (1) An entity (the payer) must give a *payment summary (and a copy of it) to another entity (the recipient) if, not later than 21 days before the end of a *financial year, the recipient asks in writing for a payment summary covering: (a) one or more *withholding payments (other than withholding payments covered by section 12-85, 12-190, 12-215, 12-250, 12- 285, 12-317, 12-385 or 12-390) that the payer made to the recipient during the year; or (b) one or more withholding payments covered by section 12-215, 12- 250 or 12-285, or a part of each such payment, that the payer received during the year for the recipient, if the recipient is the foreign resident mentioned in the section; or (ba) one or more withholding payments covered by section 12-317, or a part of each such payment, that the payer received during the year for the recipient, if the recipient is the likely foreign recipient mentioned in that section; or (c) one or more withholding payments covered by Division 13 that the payer received during the year and that are included in the recipient's assessable income for the income year under section 86-15 of the Income Tax Assessment Act 1997; or (d) *reportable employer superannuation contributions made by the payer, in respect of the recipient's employment, during the financial year; other than a payment covered by a previous payment summary (and a copy of it) given under this section. (2) The payer must comply with the request within 14 days after receiving it, unless the recipient is an individual and has a *reportable fringe benefits amount, for the income year ending at the end of that *financial year, in respect of his or her employment (within the meaning of the Fringe Benefits Tax Assessment Act 1986) by the payer. 16-165 Payment summaries for superannuation lump sums and employment termination payments (1) Within 14 days after an entity (the payer) makes a payment covered under subsection (2) to a person (the recipient), the entity must: (a) give a *payment summary to the recipient that covers the payment (and no other payments); and (b) give a copy of the summary to the Commissioner. (2) The following payments are covered under this subsection if they are *withholding payments: (a) a *superannuation lump sum; (b) an *employment termination payment, other than a directed termination payment within the meaning of section 82-10F of the Income Tax (Transitional Provisions) Act 1997. 16-166 Payment summary for a departing Australia superannuation payment Within 14 days after an entity (the payer) makes a *departing Australia superannuation payment, the payer must: (a) give a *payment summary that covers the payment to the recipient of the payment; and (b) give a copy of the summary to the Commissioner. 16-167 Payment summary for payment to recipient who does not quote ABN (1) An entity (the payer) that makes a *withholding payment covered by section 12-190 (about payments to recipients who do not quote their ABN) to another entity (the recipient) must give the recipient a *payment summary (and a copy of it) that covers that payment, unless the *amount required to be withheld from the payment is nil. (2) The summary must cover only that payment. (3) The payer must give the summary to the recipient when making the payment, or as soon as practicable afterwards. 16-170 Form and content of payment summary (1) A payment summary (except one relating to Subdivision 12-H) is a written statement that: (a) names the payer and the recipient; and (b) if the recipient has given the recipient's *tax file number or *ABN to the payer-states the tax file number or ABN; and (c) states the total of the *withholding payments (if any) that it covers, and the total of the *amounts withheld by the payer from those withholding payments; and (d) specifies the *financial year in which the withholding payments were made; and (e) specifies the *reportable fringe benefits amount (if any) that it covers and the income year to which that amount relates; and (f) specifies the *reportable employer superannuation contributions (if any) that it covers and the income year to which those contributions relate; and (g) is in the *approved form. (1AA) A payment summary relating to Subdivision 12-H is a statement that: (a) names the payer and the recipient; and (b) if the recipient has given the recipient's *tax file number or *ABN to the payer-states the tax file number or ABN; and (c) states the total of the *withholding payments (if any) that it covers, and the total of the *amounts withheld by the payer from those withholding payments; and (d) specifies the income year of the relevant *managed investment trust to which it relates. (1A) For any of the *withholding payments to which paragraph 16- 155(2)(aa) applies, paragraph (1)(d) is taken to refer to the *financial year preceding the financial year in which the withholding payments were received. (2) The Commissioner may, in writing, require particular information to be included in a *payment summary or a class of payment summaries. (3) A *payment summary may consist of 2 or more statements that each complies with subsection (1) and together cover what section 16-155, 16-160, 16-165, 16-166 or 16-167 (as appropriate) requires the payment summary to cover. (4) The Commissioner may vary any requirements under subsection (1), (2) or (3) by written notice given to an entity. The Commissioner may do so in such instances and to such extent as the Commissioner thinks fit. 16-175 Penalty for not providing payment summary (1) An entity must not fail to comply with any requirements under section 16-155, 16-157, 16-160, 16-165, 16-166 or 16-167, or subsection 16-170(1), (1AA), (2) or (3) (including any requirements varied by the Commissioner under subsection 16-170(4)). Penalty: 20 penalty units. Note: See section 4AA of the Crimes Act 1914 for the current value of a penalty unit. (2) An offence under subsection (1) is an offence of strict liability. Note: For strict liability, see section 6.1 of the Criminal Code. 16-180 Commissioner may exempt entity from giving payment summary (1) The Commissioner may, having regard to the circumstances of a particular case or class of cases, exempt an entity from specified requirements of any of sections 16-155 to 16-167. If the Commissioner does so, the exemption has effect accordingly. (2) An exemption must be made by a written notice: (a) if it applies to a particular entity-that is given to that entity; or (b) if it applies to a class of entities-that is given to each of the entities, or a copy of which is published in the Gazette. 16-182 Definition of reportable employer superannuation contribution (1) A reportable employer superannuation contribution, for an individual for an income year, is an amount contributed: (a) by an employer of the individual, or an *associate of the employer, for the individual's benefit in respect of the income year; and (b) to a *superannuation fund or an *RSA; to the extent that either or both of the following paragraphs apply: (c) the individual has or has had, or might reasonably be expected to have or have had, the capacity to influence the size of the amount; (d) the individual has or has had, or might reasonably be expected to have or have had, the capacity to influence the way the amount is contributed so that his or her assessable income is reduced. (2) However, an amount is not a reportable employer superannuation contribution to the extent that it is included in the individual's assessable income for the income year. (3) For the purposes of this section, employer has the expanded meaning given by section 12 of the Superannuation Guarantee (Administration) Act 1992 (assuming that subsection 12(11) of that Act had not been enacted). (4) For the purposes of this section, disregard whether any *superannuation benefits arising from a contribution are payable to a *SIS dependant of the individual if the individual dies before or after becoming entitled to receive the benefits. Subdivision 16-D-Additional rights and obligations of entity that makes a payment Table of sections 16-195 Payer's right to recover amounts of penalty: certain withholding taxes 16-195 Payer's right to recover amounts of penalty: certain withholding taxes (1) An entity that has paid an amount of penalty under section 16- 30, 16-35 or 16-40 for a *withholding payment covered by: (a) Subdivision 12-F (about a dividend, interest or royalty payment); or (aa) section 12-305 (about a departing Australia superannuation payment); or (b) section 12-320 (about a mining payment); or (c) Subdivision 12-H (about distributions of managed investment trust income); may recover an amount equal to the amount of penalty from the person liable to pay the *withholding tax, or *mining withholding tax, for the withholding payment. Note Sections 16-30, 16-35 and 16-40 provide for an administrative penalty for failing to comply with Division 12 or 14. (2) Subsection (3) applies if an entity has paid an amount of penalty under section 12-415 to the Commissioner for a failure to give a notice, or to make details available on a website, as required by section 12-395 in relation to an amount (the relevant amount). (3) The entity may recover from another entity that is liable to pay *managed investment trust withholding tax in relation to an amount attributable to the relevant amount the lesser of: (a) an amount equal to the amount of that tax that the other entity is liable to pay; and (b) the amount of the penalty. Division 18-Recipient's entitlements and obligations Table of Subdivisions 18-A Crediting withheld amounts against liability for income tax, withholding tax or mining withholding tax 18-B Refund of certain withheld amounts 18-C Recipient's obligations Subdivision 18-A-Crediting withheld amounts against liability for income tax, withholding tax or mining withholding tax Guide to Subdivision 18-A 18-1 What this Subdivision is about In general, an entity: . that receives a withholding payment (except one covered by section 12-215, 12-250 or 12-285, or subsection 12-390(4)); or . that is the foreign resident for which a withholding payment covered by section 12-215, 12-250 or 12-285, or subsection 12- 390(4), (or a part of it) is received; is entitled to a credit for the amount withheld from the withholding payment. However, if that entity is a partnership or trust, a partner, beneficiary or trustee may be entitled to the credit. This Subdivision tells you: . who is entitled to a credit; and . how to work out the amount of the credit. How a credit is applied is set out in Division 3 of Part IIB. Table of sections General exception 18-5 No credit for refunded amount Entitlement to credits: income tax liability 18-10 Application of sections 18-15, 18-20 and 18-25 18-15 Tax credit for recipient of withholding payments 18-20 Tax credit where recipient is a partnership 18-25 Tax credit where recipient is a trust 18-27 Tax credit for alienated personal services payments Entitlement to credits: dividend, interest or royalty or amount attributable to fund payment 18-30 Credit: dividend, interest or royalty 18-32 Credit: amount attributable to fund payment 18-35 Credit: penalty under section 12-415, 16-30 or 16-40 or related general interest charge 18-40 Credit: liability under Part 4-25 Entitlement to credit: departing Australia superannuation payment 18-42 Credit-departing Australia superannuation payment Entitlement to credit: mining payment 18-45 Credit-mining payment Entitlement to credit: amount attributable to fund payment General exception 18-5 No credit for refunded amount An entity is not entitled to a credit under this Subdivision for an *amount withheld from a *withholding payment to the extent that the amount must be refunded under Subdivision 18-B. Entitlement to credits: income tax liability 18-10 Application of sections 18-15, 18-20 and 18-25 (1) The rules set out in sections 18-15, 18-20 and 18-25 do not apply to an *amount withheld from a *withholding payment that is covered by Subdivision 12-F (about dividend, interest or royalties), Subdivision 12-FA (about departing Australia superannuation payments), section 12-320 (about mining payments), Subdivision 12-H (about distributions of managed investment trust income) or Division 13 (about alienated personal services payments). (2) If an entity withholds an amount from a *withholding payment as required by section 12-317, apply sections 18-15, 18-20 and 18-25 in relation to the payment as if the payment had been made to the likely foreign recipient mentioned in section 12-317 (instead of to the intermediary mentioned in that section). 18-15 Tax credit for recipient of withholding payments (1) An entity is entitled to a credit equal to the total of the *amounts withheld from *withholding payments made to the entity during an income year if an assessment has been made of the income tax payable, or an assessment has been made that no income tax is payable, by the entity for the income year. (2) To the extent that the entitlement to a credit is in respect of an *amount withheld from a *withholding payment to which paragraph 16-155(2)(aa) applies, the entitlement is treated as arising for the income year preceding the income year in which the withholding payment is made. 18-20 Tax credit where recipient is a partnership (1) An entity is entitled to a credit in respect of *amounts withheld from *withholding payments made to a partnership during an income year if: (a) the entity has an individual interest in the net income or partnership loss of the partnership for that income year that is wholly or partly attributable to those withholding payments; and (b) the *income tax return of the partnership for the income year has been lodged with the Commissioner; and (c) an assessment has been made of the income tax payable, or an assessment has been made that no income tax is payable, by the entity for the income year. (2) The amount of the credit is worked out using the formula: [pic] where: amounts withheld means the sum of the *amounts withheld from the *withholding payments. individual interest means so much of the individual interest of the partner as is attributable to the *withholding payments. net income/partnership loss means so much of the net income or partnership loss for that income year as is attributable to the *withholding payments. 18-25 Tax credit where recipient is a trust (1) An entity is entitled under subsection (2), (4), (6) or (8) to a credit in respect of *amounts withheld (the amounts withheld) from *withholding payments made to the trustee of a trust during an income year. Trust-section 97 (2) A beneficiary of the trust is entitled to a credit if: (a) an amount is included in the assessable income of the beneficiary under section 97 of the Income Tax Assessment Act 1936 in respect of a share of the net income of the trust; and (b) the share is wholly or partly attributable to the *withholding payments; and (c) an assessment has been made of the income tax payable, or an assessment has been made that no income tax is payable, by the beneficiary for the income year. (3) The amount of the credit is worked out using the formula: [pic] where: net income means so much of the net income as is attributable to the *withholding payments. share of net income means so much of that share of the net income as is attributable to the *withholding payments. Trust-section 98 (4) The trustee of the trust is entitled to a credit if: (a) under section 98 of the Income Tax Assessment Act 1936 the trustee is liable to be assessed, and to pay income tax, on an amount in respect of a share of the net income of the trust to which a beneficiary is presently entitled; and (b) the share is wholly or partly attributable to the *withholding payments; and (c) an assessment has been made of that income tax or an assessment has been made that no income tax is payable. (5) The amount of the credit is worked out using the formula: [pic] where: net income means so much of the net income as is attributable to the *withholding payments. share of net income means so much of that share of the net income as is attributable to the *withholding payments. Trust-section 99 or 99A (6) The trustee of the trust is entitled to a credit under this subsection if: (a) under section 99 or 99A of the Income Tax Assessment Act 1936, the trustee is liable to be assessed, and to pay income tax, on the net income of the trust, or on part of it; and (b) the net income or that part of it is wholly or partly attributable to the *withholding payments; and (c) an assessment has been made of that income tax or an assessment has been made that no income tax is payable. (7) The amount of the credit is worked out using the formula: [pic] where: net income means so much of the net income as is attributable to the *withholding payments. part of net income means so much of the net income, or of that part of it, as is attributable to the *withholding payments. Trust-no net income (8) If there is no net income of the trust for the income year, the trustee is entitled to a credit equal to the sum of the *amounts withheld from the *withholding payments. 18-27 Tax credit for alienated personal services payments An entity is entitled to a credit equal to the total of the amounts paid under Division 13 in respect of amounts included in the entity's assessable income for an income year under section 86- 15 of the Income Tax Assessment Act 1997 if an assessment has been made of the income tax payable, or an assessment has been made that no income tax is payable, by the entity for the income year. Entitlement to credits: dividend, interest or royalty or amount attributable to fund payment 18-30 Credit: dividend, interest or royalty (1) An entity is entitled to a credit if: (a) the entity's *ordinary income or *statutory income includes a *dividend (or a part of it), interest (within the meaning of Division 11A of Part III of the Income Tax Assessment Act 1936) or a *royalty; and (b) the entity has borne all or part of an *amount withheld from the dividend, interest or royalty. (2) The amount of the credit is that amount or part. Note: A taxpayer may also be entitled to a credit in relation to payment of interest under, or in relation to the transfer of, a qualifying security. See section 128NBA of the Income Tax Assessment Act 1936. 18-32 Credit: amount attributable to fund payment (1) An entity is entitled to a credit if: (a) the entity's *ordinary income or *statutory income includes an amount that is represented by or reasonably attributable to a *fund payment; and (b) the entity has borne all or part of an *amount withheld from the payment under Subdivision 12-H. (2) The amount of the credit is that amount or part. 18-35 Credit: penalty under section 12-415, 16-30 or 16-40 or related general interest charge (1) If an entity has paid: (a) an amount of penalty under section 16-30 or 16-40 to the Commissioner for a *withholding payment covered by Subdivision 12-F or 12-H; or (b) an amount of *general interest charge under section 298-25 for the penalty; the entity liable to pay the *withholding tax for the withholding payment is entitled to a credit equal to the amount of penalty, or general interest charge, as appropriate. (1A) If an entity has paid: (a) an amount of penalty under section 12-415 to the Commissioner for a failure to give a notice, or to make details available on a website, as required by section 12-395; or (b) an amount of *general interest charge under section 298-25 for the penalty; the entity liable to pay the *managed investment trust withholding tax in relation to the amount (the relevant amount) giving rise to the penalty is entitled to a credit equal to the lesser of: (d) the amount of penalty, or general interest charge, as appropriate; and (e) the amount of managed investment trust withholding tax (and any general interest charge under section 840-810 of the Income Tax Assessment Act 1997) in relation to the relevant amount. Remission (2) If: (a) an entity has paid to the Commissioner an amount of penalty mentioned in paragraph (1)(a) or (1A)(a); and (b) the Commissioner remits the whole or a part of the amount of the penalty under section 298-20; then: (c) any credit under subsection (1) or (1A) relating to the amount paid to the Commissioner is reduced by the amount that is remitted; and (d) the Commissioner must pay to the entity an amount equal to the amount that is remitted. (3) If: (a) an entity has paid to the Commissioner an amount of *general interest charge mentioned in paragraph (1)(b) or (1A)(b); and (b) the Commissioner remits the whole or a part of the amount of the charge under section 8AAG; then: (c) any credit under subsection (1) or (1A) relating to the amount is reduced by the amount that is remitted; and (d) the Commissioner must pay to the entity an amount equal to the amount that is remitted. 18-40 Credit: liability under Part 4-25 (1) If an entity has paid to the Commissioner: (a) an amount of penalty under Subdivision 284-C in relation to a *scheme to which section 177CA of the Income Tax Assessment Act 1936 applies for a *withholding payment; or (b) an amount of *general interest charge under section 298-25 in relation to that amount; the entity liable to pay the *withholding tax for that withholding payment is entitled to a credit equal to the amount paid by the entity. Remission (2) If: (a) an entity has paid an amount under Subdivision 284-C in relation to a penalty mentioned in paragraph (1)(a); and (b) the Commissioner remits the whole or a part of the amount of the penalty under section 298-20; then: (c) any credit under subsection (1) relating to the amount paid by the entity is reduced by the amount that is remitted; and (d) the Commissioner must pay to the entity an amount equal to the amount that is remitted. (3) If: (a) an entity has paid to the Commissioner an amount of *general interest charge mentioned in paragraph (1)(b); and (b) the Commissioner remits the whole or a part of the amount of the charge under section 8AAG; then: (c) any credit under subsection (1) relating to the amount is reduced by the amount that is remitted; and (d) the Commissioner must pay to the entity an amount equal to the amount that is remitted. Entitlement to credit: departing Australia superannuation payment 18-42 Credit-departing Australia superannuation payment Credit-amount withheld (1) If there is an *amount withheld from a *withholding payment that is covered by section 12-305 (departing Australia superannuation payment), the entity liable to pay *withholding tax under section 301-175 of the Income Tax Assessment Act 1997 on the payment is entitled to a credit of an amount equal to the amount withheld. Credit-penalty amount (2) If an entity has paid to the Commissioner a penalty amount under section 16-30 or 16-35 in relation to an *amount required to be withheld under section 12-305 (departing Australia superannuation payment), the entity mentioned in subsection (1) is entitled to a credit equal to the penalty amount. Remission (3) If the Commissioner remits the whole or a part of the amount of penalty under section 298-20 that has been paid to the Commissioner by the entity: (a) any credit that relates to the amount is reduced by the amount that is remitted; and (b) the Commissioner must pay to the entity an amount equal to the amount that is remitted. Entitlement to credit: mining payment 18-45 Credit-mining payment Credit-amount withheld (1) If there is an *amount withheld from a *withholding payment that is covered by section 12-320 (mining payment): (a) if paragraph (b) does not apply- the entity liable to pay *mining withholding tax under section 128V of the Income Tax Assessment Act 1936 on the payment is entitled to a credit of an amount equal to the amount withheld; or (b) if, under subsection 128U(4) of that Act, separate mining payments are taken to have been made to, or applied for the benefit of, 2 or more entities because of that payment-each of those entities is entitled to a credit equal to the amount worked out using the formula: [pic] Credit-penalty amount (2) If an entity has paid to the Commissioner a penalty amount under section 16-30 or 16-35 in relation to an *amount required to be withheld under section 12-320 (mining payment): (a) if paragraph (1)(a) applies-the entity mentioned in that paragraph is entitled to a credit equal to the penalty amount; or (b) if paragraph (1)(b) applies-each of the entities mentioned in that paragraph is entitled to a credit of an amount worked out using the formula: [pic] Remission (3) If the Commissioner remits the whole or a part of the amount of penalty under section 298-20 that has been paid to the Commissioner by the entity: (a) any credit that relates to the amount is reduced by the amount that is remitted; and (b) the Commissioner must pay to the entity an amount equal to the amount that is remitted. Entitlement to credit: amount attributable to fund payment Subdivision 18-B-Refund of certain withheld amounts Table of sections 18-65 Refund of withheld amounts by the payer to the recipient 18-70 Refund of withheld amounts by the Commissioner to the recipient 18-80 Refund by Commissioner of amount withheld from payment in respect of investment 18-65 Refund of withheld amounts by the payer to the recipient (1) An entity (the payer) must refund to another entity (the recipient) an amount if: (a) the payer: (i) withheld the amount purportedly under Division 12 from a payment made to, or received for, the recipient (whether the amount has been paid to the Commissioner or not); or (ia) paid the amount to the Commissioner purportedly under Division 13 for an *alienated personal services payment in relation to which an amount is included in the recipient's assessable income year under section 86-15 of the Income Tax Assessment Act 1997; or (ii) paid the amount to the Commissioner purportedly under Division 14 for a *non-cash benefit provided to, or received for, the recipient; and (b) the amount was so withheld, or paid to the Commissioner, in error; and (c) either: (i) the payer becomes aware of the error; or (ii) the recipient applies to the payer for the refund; before the end of 21 July in the financial year after the one in which the amount was so withheld or paid to the Commissioner; and (d) any information requested by the payer under subsection (3) has been given to the payer, or the time for making the request (see subsection (4)) has passed without such a request being made. (2) The amount that must be refunded under subsection (1) is a debt recoverable by the recipient from the payer. Request for tax file number (or in some cases, ABN) (3) The payer may request the recipient to give to the payer: (a) in any case-the recipient's *tax file number; or (b) in any case-evidence of the basis on which the recipient is taken to have quoted its tax file number to the payer; or (c) if the payment or *non-cash benefit was in respect of a *Part VA investment made by the recipient in the course or furtherance of an *enterprise carried on by it-the recipient's *ABN; if: (d) the payment, *alienated personal services payment or non-cash benefit was in respect of any of the following provisions: (i) Subdivision 12-B (payments for work or services); (ii) Subdivision 12-C (*superannuation benefits, annuities, *employment termination payments and unused leave payments); (iii) Subdivision 12-D (benefits and compensation payments); (iv) section 12-140 or 12-145 (recipient does not quote tax file number or ABN); and (e) when the application for the refund is made, or when the payer otherwise becomes aware of the error, the payer has a record of none of the following: (i) the recipient's tax file number; (ii) the basis on which the recipient is taken to have quoted the tax file number to the payer; (iii) if paragraph (c) applies-the recipient's ABN. When must the request be made (4) The request must be made within 7 working days (of the payer) after the payer receives the application for the refund or after the payer otherwise becomes aware of the error (as appropriate). Recovery of refunded amount (5) If a payer refunds an amount under subsection (1), the payer may recover from the Commissioner as a debt due to the payer so much of the amount: (a) which is withheld as mentioned in subparagraph (1)(a)(i) and paid to the Commissioner, or which is paid to the Commissioner as mentioned in subparagraph (1)(a)(ia) or (ii); and (b) which the payer has not recorded as being offset under subsection (6). Offsetting a refunded amount (6) If: (a) a payer refunds an amount (the refunded amount) under subsection (1); and (b) the amount withheld as mentioned in subparagraph (1)(a)(i) that the payer has paid to the Commissioner, or the amount paid to the Commissioner as mentioned in subparagraph (1)(a)(ia) or (ii), is equal to all or a part of the refunded amount; and (c) apart from this subsection, the payer would be required to pay to the Commissioner another amount or amounts under Division 13 or 14 or subsection 16-70(1) (the payment to the Commissioner); and (d) the payer records in writing that it offsets all or a part of the amount paid to the Commissioner (as mentioned in paragraph (b)) against the payment to the Commissioner; the payment to the Commissioner is reduced by so much of the amount as the payer so recorded as being offset. (7) The payer must not record that it offsets any part of an amount that: (a) the payer has previously recorded under subsection (6); or (b) the payer has sought to recover from the Commissioner under subsection (5). 18-70 Refund of withheld amounts by the Commissioner to the recipient (1) An entity (the recipient) may apply in writing to the Commissioner for the refund of an amount if: (a) another entity (the payer): (i) withheld an amount purportedly under Division 12 from a payment made to, or received for, the recipient; or (ia) paid the amount to the Commissioner purportedly under Division 13 for an *alienated personal services payment in relation to which an amount is included in the recipient's assessable income year under section 86-15 of the Income Tax Assessment Act 1997; or (ii) paid to the Commissioner an amount purportedly under Division 14 for a *non-cash benefit provided to, or received for, the recipient; and (b) the amount was so withheld, or paid to the Commissioner, in error; and (c) section 18-65 does not apply because the payer did not become aware of the error, or the recipient did not apply for a refund, as mentioned in subsection 18-65(1); and (d) if subparagraph (a)(i) applies-the payer has already paid the withheld amount to the Commissioner. (2) The Commissioner must refund the amount if the application sets out: (a) if the recipient has a *tax file number-that tax file number; or (b) if the recipient does not have a tax file number but was taken to have quoted a tax file number to the payer before the amount was withheld or paid to the Commissioner-the basis on which the recipient was taken to have quoted the tax file number; or (c) if the payment or *non-cash benefit was in respect of a *Part VA investment made by the recipient in the course or furtherance of an *enterprise carried on by it-the recipient's *ABN; and the Commissioner is satisfied that it would be fair and reasonable to refund the amount, having regard to: (d) the circumstances that gave rise to the withholding obligation (if any); and (e) the nature of the error; and (f) any other matter the Commissioner considers relevant. Note: A person who is dissatisfied with a decision under this section may object against the decision in the manner set out in Part IVC. 18-80 Refund by Commissioner of amount withheld from payment in respect of investment The Commissioner must refund to an entity all or part of an *amount withheld from a *withholding payment covered by section 12- 140 or 12-145 that was made to that entity if: (a) the entity applies in writing for the refund; and (b) the Commissioner is satisfied that the entity was entitled to give *the investment body a declaration under Division 5 of Part VA of the Income Tax Assessment Act 1936 in relation to the *Part VA investment in respect of which the withholding payment was made, but did not do so; and (c) the Commissioner is also satisfied it is fair and reasonable to make the refund, having regard to the purposes of this Part and any other matters that the Commissioner considers appropriate. Note: A person who is dissatisfied with a decision under this section may object against the decision in the manner set out in Part IVC. Subdivision 18-C-Recipient's obligations 18-100 Obligation to keep payment summary (1) An entity that is given a *payment summary and a copy of it in any financial year under this Part must retain the copy for: (a) 5 years after the end of that financial year; or (b) a shorter period determined by the Commissioner in writing for the entity; or (c) a shorter period determined by the Commissioner by legislative instrument for a class of entities that includes the entity. (1AA) A determination under paragraph (1)(c) may specify different periods for different classes of entities. (1A) An offence under subsection (1) is an offence of strict liability. Note: For strict liability, see section 6.1 of the Criminal Code. Division 20-Other matters Table of Subdivisions 20-B Offences 20-D Review of decisions Subdivision 20-B-Offences Table of sections 20-35 Offences 20-40 Joining of charges 20-45 Offences that would otherwise be committed by a partnership or unincorporated company 20-35 Offences (1) A person must not: (a) present a document issued by the Commissioner that specifies a person (the specified person); and (b) falsely pretend to be the specified person with the intention of obtaining under this Part a credit for, or a payment of, an *amount withheld from a *withholding payment. (2) A person must not attempt to obtain for the person a credit under this Part for an *amount withheld from a *withholding payment if: (a) the payment is not covered by section 12-215, 12-250, 12-285 or 12-317, or subsection 12-390(4), and was made to another person; or (b) the payment is covered by section 12-215, 12-250, 12-285 or 12- 317, or subsection 12-390(4), and the person is not the foreign resident in respect of which all or a part of the payment is received as mentioned in that provision. (3) A person must not, with the intention of obtaining a credit, a payment or any other benefit, present: (a) a copy of a *payment summary (except one relating to Subdivision 12-H); or (b) a document purporting to be a copy of such a payment summary; which is not a copy duly given to the person. Penalty: 60 penalty units, or imprisonment for 12 months, or both. Note: See section 4AA of the Crimes Act 1914 for the current value of a penalty unit. (4) A person must not, with the intention of obtaining a credit, a payment or any other benefit, present: (a) a *payment summary relating to Subdivision 12-H, or a copy of such a payment summary; or (b) a document purporting to be such a payment summary or a copy of such a payment summary; which is not a payment summary, or a copy of a payment summary, duly given to the person. Penalty: 60 penalty units, or imprisonment for 12 months, or both. Note: See section 4AA of the Crimes Act 1914 for the current value of a penalty unit. 20-40 Joining of charges (1) Charges against the same person for a number of offences against this Part may be joined in one complaint, information or summons if those charges: (a) are founded on the same facts; or (b) form a series of offences of the same or a similar character; or (c) are part of a series of offences of the same or similar character. (2) Particulars of each offence charged must be set out in a separate paragraph if 2 or more of the charges are included in the same complaint, information or summons. (3) If the charges are joined, the charges must be tried together unless the court: (a) considers it just that any of the charges should be tried separately; and (b) makes an order to that effect. (4) If a person is convicted of 2 or more of the offences: (a) the court may impose one penalty for both or all of those offences; but (b) the penalty must not exceed the sum of the maximum penalties that could be imposed in respect of each offence separately. 20-45 Offences that would otherwise be committed by a partnership or unincorporated company (1) An offence against this Part that would otherwise be committed by a partnership is taken to have been committed by each partner who: (a) aided, abetted, counselled or procured the relevant act or omission; or (b) was in any way knowingly concerned in, or party to, the relevant act or omission (whether directly or indirectly, and whether by any act or omission of the partner). (2) An offence against this Part that would otherwise be committed by a company that is not incorporated is taken to have been committed by each member of the company's committee of management who: (a) aided, abetted, counselled or procured the relevant act or omission; or (b) was in any way knowingly concerned in, or party to, the relevant act or omission (whether directly or indirectly, and whether by any act or omission of the member). Subdivision 20-D-Review of decisions 20-80 Reviewable decisions A person who is dissatisfied with any of the following decisions of the Commissioner may object against the decision in the manner set out in Part IVC. |Reviewable decisions | |Item |Description | |1A |Decision not to grant an exemption under | | |subsection 12-319(1) from withholding | | |obligations in relation to sections 12-315 and | | |12-317 | |1 |Decision not to give a certificate under | | |subsection 12-335(1) exempting an entity from | | |notifying the Commissioner about a natural | | |resource payment | |5 |Decision to revoke a certificate under | | |subsection 12-335(3) | |10 |Decision to vary a certificate under subsection | | |12-335(3) | |25 |Refusal to determine under subsection 16-110(1) | | |that a large withholder is a *medium withholder | | |or a *small withholder for a particular month or| | |particular months | |30 |Refusal to determine under subsection 16-110(1) | | |that a medium withholder is a small withholder | | |for a particular month or particular months | |35 |Decision to revoke a determination made under | | |subsection 16-110(1) | |40 |Decision to vary a determination made under | | |subsection 16-110(1) for a particular month or | | |particular months | |45 |Determination under subsection 16-115(1) that a | | |small withholder is a medium withholder or a | | |large withholder for a particular month or | | |particular months | |50 |Determination under subsection 16-115(1) that a | | |medium withholder is a large withholder | |55 |Decision not to revoke a determination made | | |under subsection 16-115(1) | |60 |Decision not to vary a determination made under | | |subsection 16-115(1) for a particular month or | | |particular months | |65 |Decision not to refund an amount under | | |section 18-70 | |70 |Decision not to refund an amount under | | |section 18-80 | Note: Division 298 also provides review rights about remission of administrative penalties. Division 21-Entitlements relating to insolvent ADIs and general insurers Table of Subdivisions Guide to Division 21 21-A Treatment of some payments by APRA Guide to Division 21 21-1 What this Division is about This Part applies in relation to a payment by APRA under: (a) Division 2AA of Part II of the Banking Act 1959 applying in relation to an account with an ADI; or (b) Part VC of the Insurance Act 1973 applying in relation to a general insurance policy issued by a general insurance company; in a way corresponding to the way this Part would have applied if the payment had been made by the ADI or company in connection with the account or policy. Subdivision 21-A-Treatment of some payments by APRA Table of sections 21-5 APRA treated like ADI or general insurance company 21-5 APRA treated like ADI or general insurance company (1) This section applies if: (a) an entity's entitlement under Division 2AA of Part II of the Banking Act 1959 to be paid an amount by *APRA in connection with the entity's account with an *ADI is met wholly or partly; or (b) an entity's entitlement under Part VC of the Insurance Act 1973 to be paid an amount in connection with a *general insurance policy issued by a *general insurance company is met wholly or partly. Note 1: Division 2AA of Part II of the Banking Act 1959 entitles entities that have certain accounts with certain insolvent ADIs to be paid amounts by APRA worked out by reference to the balance of those accounts. Note 2: Part VC of the Insurance Act 1973 entitles entities with valid claims against certain insolvent general insurance companies under certain general insurance policies issued by those companies to be paid amounts by APRA. (2) This Part applies in relation to *APRA and the meeting of the entitlement in a way corresponding to the way in which this Part would have applied in relation to the *ADI or *general insurance company doing, in connection with the account or policy, whatever was done in meeting the entitlement. Example: APRA (or APRA's agent or delegate) pays an entity an amount of the entity's entitlement relating to an account with an ADI. This Part applies in relation to APRA and the payment in a way corresponding to the way in which this Part would have applied in relation to the ADI had the ADI made a payment at that time of that amount under the arrangements for keeping the account. Part 2-10-Pay as you go (PAYG) instalments Division 45-Instalment payments Table of Subdivisions Guide to Division 45 45-A Basic rules 45-B When instalments are due 45-C Working out instalment amounts 45-D Quarterly payers 45-E Annual payers 45-F Varying the instalment rate for quarterly payers who pay on the basis of instalment income 45-G General interest charge payable in certain cases if instalments are too low 45-H Partnership income 45-I Trust income included in instalment income of beneficiary 45-J How Commissioner works out your instalment rate and notional tax 45-K How Commissioner works out your benchmark instalment rate and benchmark tax 45-L How Commissioner works out amount of quarterly instalment on basis of GDP-adjusted notional tax 45-M How amount of quarterly instalment is worked out on basis of your estimate of your benchmark tax 45-N How this Part applies to the trustee of a trust 45-P Anti-avoidance rules 45-Q General rules for consolidated groups 45-R Special rules for consolidated groups 45-S MEC groups Guide to Division 45 45-1 What this Division is about If you have business or investment income, you must pay instalments towards your income tax liability. However, you do not have to do so unless the Commissioner has given you an instalment rate. Generally, instalments are payable for each quarter of your income year. Your instalments may be based on your previous year's income tax liability and notified to you by the Commissioner, or on your estimate of your income tax liability for the current income year. (In this case, you are a quarterly payer who pays on the basis of GDP adjusted notional tax). Generally, four quarterly instalments are payable annually on this basis, but you may only be required to pay two. If you are not eligible to pay instalments on that basis, or if you are so eligible but choose not to do so, you must work out the amount of your quarterly instalment by multiplying your instalment income for an instalment quarter by the rate the Commissioner gave you, or by a rate you choose yourself. (In this case, you are a quarterly payer who pays on the basis of instalment income). If you are not required to be registered for GST purposes, you may be able to choose to pay an annual instalment after the end of the income year. (In this case, you are an annual payer). The amount of annual instalment can be your instalment income for the income year multiplied by the rate the Commissioner gave you, or an amount based on your previous year's income tax liability and notified to you by the Commissioner, or your own estimate of your income tax liability for the income year. Subdivision 45-A-Basic rules Table of sections 45-5 Object of this Part 45-10 Application of Part 45-15 Liability for instalments 45-20 Information to be given to the Commissioner by certain payers 45-25 Penalty for failure to notify Commissioner 45-30 Credit for instalments payable 45-5 Object of this Part (1) The object of this Part is to ensure the efficient collection of: (a) income tax; and (b) Medicare levy; and (c) amounts of liabilities to the Commonwealth under Chapter 5A of the Higher Education Funding Act 1988; and (ca) amounts of liabilities to the Commonwealth under Chapter 4 of the Higher Education Support Act 2003; and (d) amounts of liabilities to the Commonwealth under Part 2B.3 of the Social Security Act 1991; and (e) amounts of liabilities to the Commonwealth under Division 6 of Part 4A of the Student Assistance Act 1973; through the application of the principles set out in the rest of this section. (2) As you earn *instalment income, you pay instalments after the end of each *instalment quarter worked out on the basis of your instalment income for that quarter if you are required or choose to work out your instalment on this basis. However, you may be able to pay an amount notified by the Commissioner. (There are exceptions to this). (3) The total of your instalments for an income year is as close as possible to the total of your liabilities for the income year that are covered by subsection (1), except so far as the amounts of those liabilities are attributable to a *net capital gain. (The exception does not apply to the entities listed in subsections 45- 120(2) and (2A) or the net capital gains specified in subsection 45- 120(2B).) (4) Consequently, the additional amounts you have to pay to discharge those liabilities, after an assessment of your income tax for the income year is made, are as low as possible. (5) If you are a *quarterly payer who pays on the basis of instalment income, the amount of each of your instalments for an income year is the same proportion (as nearly as possible, subject to the principles in subsections (3) and (4)) of the total of those instalments as your *instalment income for that *instalment quarter is of your total instalment income for the income year. (6) When instalments are payable, and how their amount is calculated, are the same for different kinds of entities, except as expressly provided. Note: Subdivision 45-P penalises an entity whose tax position, so far as it relates to PAYG instalments and related matters, is altered by a scheme that is inconsistent with the object of this Part. 45-10 Application of Part This Part applies to individuals, companies, and the entities listed in items 4 to 10, and 12 and 13, of the table in section 9-1 of the Income Tax Assessment Act 1997 (which lists the entities that must pay income tax). Note 1: Section 45-450 provides for how this Part applies to a trustee covered by any of items 4 to 8, and 12 and 13, of the table in section 9-1 of the Income Tax Assessment Act 1997. In most respects, the trust is treated like a company. Note 2: This Part also applies to a trustee covered by item 11 of the table in section 9-1 of the Income Tax Assessment Act 1997, but only to the extent set out in section 45-455, and the rest of Subdivision 45-N, in this Schedule. 45-15 Liability for instalments (1) The Commissioner may give you an instalment rate from time to time, by giving you written notice of the rate. (2) You are liable to pay instalments under this Division if the Commissioner has given you an instalment rate. Note 1: The instalment rate that the Commissioner gives you is worked out under section 45-320 or 45-775. Note 2: If your assessable income has always consisted wholly of withholding payments (other than non-quotation withholding payments), the Commissioner will not give you an instalment rate. Note 3: Work out the amount of your instalments under Subdivision 45-C. Note 4: If the Commissioner withdraws the rate under section 45- 90, you are not liable to pay further instalments. Note 5: For provisions about collection and recovery of amounts you are liable to pay under this Part, see Part 4-15. 45-20 Information to be given to the Commissioner by certain payers (1) If you are liable to pay an instalment for a period (even if it is a nil amount), you must notify the Commissioner of the amount of your *instalment income for the period. (2) You must notify the Commissioner in the *approved form and on or before the day when the instalment is due (regardless of whether it is paid). Exceptions (3) Subsection (1) does not apply to: (a) a quarterly instalment worked out under section 45-112 (on the basis of GDP-adjusted notional tax or estimated benchmark tax); or (b) an annual instalment, unless it is worked out under paragraph 45-115(1)(a) (based on the Commissioner's rate and your instalment income for the income year). 45-25 Penalty for failure to notify Commissioner (1) If you fail to notify the Commissioner of an amount as required by section 45-20, or you notify an amount that is less than the correct amount, you are liable to pay the *failure to notify penalty on the amount, or on the shortfall, multiplied by the instalment rate that you are required to use to work out the instalment for the period, for each day in the period that: (a) started at the beginning of the day by which the amount was due to be paid; and (b) finishes at the end of the day before you notify the Commissioner of the correct amount, or he or she otherwise becomes aware of it. (2) This section does not apply to a notification required to be lodged on or after 1 July 2000. Note: See instead Division 286 in Schedule 1 to the Taxation Administration Act 1953. 45-30 Credit for instalments payable (1) You are entitled to a credit when the Commissioner makes an assessment of the income tax you are liable to pay for an income year or an assessment that no income tax is payable by you for an income year. (2) The credit is equal to: . the total of each instalment payable by you for the income year (even if you have not yet paid it); reduced by: . the total of each credit that you have claimed under section 45- 215 or 45-420 in respect of such an instalment. (3) The making of the assessment, and the resulting credit entitlement, do not affect the liability to pay an instalment. Note: How the credit is applied is set out in Division 3 of Part IIB. (4) If: (a) you are a *subsidiary member of a *consolidated group at any time during a *consolidation transitional year for you; and (b) an amount of instalment payable by you, or an amount of credit claimed by you under section 45-215 or 45-420, is taken into account in working out a credit to which the *head company of that consolidated group is entitled under section 45-865 for a consolidation transitional year for the head company; that amount, to the extent to which it is so taken into account under that section, is not to be taken into account in working out any credit to which you are entitled under this section for any year. Subdivision 45-B-When instalments are due Table of sections 45-50 Liability to pay instalments 45-60 Meaning of instalment quarter 45-61 When quarterly instalments are due-payers of quarterly instalments 45-70 When annual instalments are due 45-75 Instalments recoverable in same way as income tax 45-80 General interest charge on late payment 45-90 Commissioner may withdraw instalment rate 45-50 Liability to pay instalments (1) Subject to subsection (4), you are liable to pay an instalment for an *instalment quarter in an income year if, at the end of that instalment quarter, you are: (a) a *quarterly payer who pays 4 instalments annually on the basis of GDP-adjusted notional tax; or (b) a *quarterly payer who pays on the basis of instalment income. (2) Subject to subsection (4), you are liable to pay an instalment for an *instalment quarter that is the third or fourth instalment quarter in an income year if, at the end of that quarter, you are a *quarterly payer who pays 2 instalments annually on the basis of GDP-adjusted notional tax. (3) Subject to subsection (4), you are liable to pay an instalment for an income year if, at the end of the *starting instalment quarter in that year, you are an *annual payer. (4) You are only liable to pay an instalment for an *instalment quarter or an income year if: (a) the Commissioner has given you an instalment rate; and (b) the Commissioner has not withdrawn your instalment rate before the end of that quarter or year. 45-60 Meaning of instalment quarter For an income year (whether it ends on 30 June or not), the following are the instalment quarters: (a) your first instalment quarter consists of the first 3 months of the income year; and (b) your second instalment quarter consists of the fourth, fifth and sixth months of the income year; and (c) your third instalment quarter consists of the seventh, eighth and ninth months of the income year; and (d) your fourth instalment quarter consists of the tenth, 11th and 12th months of the income year. 45-61 When quarterly instalments are due-payers of quarterly instalments You are not a deferred BAS payer (1) Subject to subsection (2), if you are: (a) a *quarterly payer who pays on the basis of instalment income; or (b) a *quarterly payer who pays 4 instalments annually on the basis of GDP-adjusted notional tax; or (c) a *quarterly payer who pays 2 instalments annually on the basis of GDP-adjusted notional tax; the instalment for an *instalment quarter that you are liable to pay is due on or before the 21st day of the month after the end of that quarter. Note: You are only liable to pay instalments for the third and fourth instalment quarters in an income year if you are a quarterly payer who pays 2 instalments annually on the basis of GDP-adjusted notional tax. See section 45-50. You are a deferred BAS payer (2) If: (a) subsection (1) would, but for this subsection, have applied to you in relation to an *instalment quarter; but (b) you are a *deferred BAS payer on the 21st day of the month after the end of that quarter; the instalment for that quarter is instead due on or before: (c) the 28th day of the month after the end of that quarter unless all or a part of a December falls within the last month of that quarter; or (d) if all or a part of a December falls within the last month of that quarter-the next 28 February. Note 1: You are only liable to pay instalments for the third and fourth instalment quarters in an income year if you are a quarterly payer who pays 2 instalments annually on the basis of GDP-adjusted notional tax. See section 45-50. Note 2: If you are the head company of a consolidated group to which Subdivision 45-Q applies, the instalment is due on or before the 21st day of the month after the end of the quarter: see section 45-715. 45-70 When annual instalments are due (1) This section applies if you are liable to pay an annual instalment for the 2002-03 income year or a later income year. (2) If the income year ends on 30 June, the instalment is due on or before the next 21 October. (3) If the income year ends on a day other than 30 June, the instalment is due on or before the 21st day of the fourth month after the end of the income year. 45-75 Instalments recoverable in same way as income tax Instalments are to be treated as income tax for the purposes of sections 254 and 255 of the Income Tax Assessment Act 1936. 45-80 General interest charge on late payment If you fail to pay some or all of an instalment by the time by which the instalment is due to be paid, you are liable to pay the *general interest charge on the unpaid amount for each day in the period that: (a) started at the beginning of the day by which the instalment was due to be paid; and (b) finishes at the end of the last day on which, at the end of the day, any of the following remains unpaid: (i) the instalment; (ii) general interest charge on any of the instalment. 45-90 Commissioner may withdraw instalment rate (1) The Commissioner may: (a) by giving you written notice, withdraw your instalment rate; or (b) by notice published in the Gazette, withdraw the instalment rate of a class of entities that includes you. Note: If the Commissioner does so, you cease to be liable to pay instalments (even if you have chosen a rate under section 45- 205). See subsection 45-50(4). (2) If the Commissioner withdraws your instalment rate and later gives you another one: (a) you are again liable to pay instalments in accordance with section 45-50; and (b) this Division has effect as if the Commissioner has given you an instalment rate for the first time. Subdivision 45-C-Working out instalment amounts Table of sections 45-110 How to work out amount of quarterly instalment on instalment income basis 45-112 Amount of instalment for quarterly payer who pays on basis of GDP-adjusted notional tax 45-115 How to work out amount of annual instalment 45-120 Meaning of instalment income 45-110 How to work out amount of quarterly instalment on instalment income basis (1) Work out the amount of an instalment you are liable to pay for an *instalment quarter as follows if, at the end of that instalment quarter, you are a *quarterly payer who pays on the basis of instalment income: [pic] (2) For the purposes of the formula in subsection (1): Applicable instalment rate means: (a) unless paragraph (b) or (c) applies-the most recent instalment rate given to you by the Commissioner under section 45-15 before the end of that quarter; or (b) if you have chosen an instalment rate for that quarter under section 45-205-that rate; or (c) if you have chosen an instalment rate under section 45-205 for an earlier *instalment quarter in that income year (and paragraph (b) does not apply)-that rate. Note: If you believe the Commissioner's rate is not appropriate for the current income year, you may choose a different instalment rate under Subdivision 45-F. 45-112 Amount of instalment for quarterly payer who pays on basis of GDP- adjusted notional tax (1) If, at the end of an *instalment quarter in an income year, you are a *quarterly payer who pays on the basis of GDP-adjusted notional tax who is liable to pay an instalment for that quarter, the amount of your instalment for that quarter is: (a) unless paragraph (b) or (c) applies-the amount that the Commissioner works out under Subdivision 45-L, and notifies to you, as the amount of the instalment; or (b) if you choose to work out the amount of the instalment on the basis of your estimate of your *benchmark tax for that income year, and you notify the Commissioner in accordance with subsection (2)-the amount worked out under Subdivision 45-M; or (c) if paragraph (b) applied to your instalment for an earlier *instalment quarter in that income year-the amount that the Commissioner works out under Subdivision 45-M, and notifies to you, as the amount of the instalment. (2) If the amount of the instalment is worked out under paragraph (1)(b) on the basis of your estimate of your *benchmark tax for the income year, you must notify the Commissioner in the *approved form, on or before the day when the instalment is due (disregarding subsection (3)), of the amount of that estimate. (3) If: (a) after the end of an *instalment quarter the Commissioner notifies you of an amount as the amount of your instalment for that quarter; and (b) the amount of your instalment for that quarter is not worked out under paragraph (1)(b); the instalment is due on or before the 21st day after the day on which the notice is given. 45-115 How to work out amount of annual instalment (1) The amount of an instalment you are liable to pay for the 2002- 03 income year or a later income year is whichever of the following you choose: (a) the amount worked out using the formula: [pic] (b) your most recent *notional tax notified by the Commissioner before the end of the income year; (c) the amount that you estimate will be your *benchmark tax for the income year. Note 1: You cannot choose a different instalment rate under Subdivision 45-F if you are an annual payer. Instead you can work out the amount of your instalment under paragraph (c). Note 2: You may be liable to general interest charge under section 45-235 if working out your instalment under paragraph (c) leads you to pay an instalment that is less than 85% of your benchmark tax for the income year (worked out by the Commissioner under section 45-365). (2) Commissioner's instalment rate for an income year means the most recent instalment rate given to you by the Commissioner before the end of the income year. (3) If you choose to work out your instalment under paragraph (1)(c), you must notify the Commissioner, in the *approved form, of the amount of the instalment on or before the day when it is due. 45-120 Meaning of instalment income General rule (1) Your instalment income for a period includes your *ordinary income *derived during that period, but only to the extent that it is assessable income of the income year that is or includes that period. Note 1: No other amount is instalment income unless it is covered by another provision of this section or by Subdivision 45-H or 45-I. Note 1A: The operation of this section and other provisions relating to instalment income is affected by sections 45-855 and 45-860 (about a member of a consolidated group during a period before the members of the group are treated as a single entity for the purposes of this Part.) Note 2: If during that period you are a partner in a partnership, or a beneficiary of a trust, your instalment income also includes some of the partnership's or trust's instalment income for the period (except in some cases). See Subdivision 45-H or 45-I. Statutory income included for some entities (2) The instalment income of: (a) a *complying approved deposit fund or a *non-complying approved deposit fund; or (b) a *complying superannuation fund or a *non-complying superannuation fund; or (c) a *pooled superannuation trust; or (ca) an *FHSA trust; for a period also includes the entity's *statutory income, to the extent that: (d) it is reasonably attributable to that period; and (e) it is assessable income of the income year that is or includes that period. (2A) The instalment income of a *life insurance company for a period also includes any part of its *statutory income that: (a) is reasonably attributable to that period; and (b) is included in the *complying superannuation/FHSA class of its taxable income for the income year that is or includes that period. Net gains under Division 230 included in instalment income (2B) Your instalment income for a period also includes the difference between: (a) a gain (or gains) you make from a *financial arrangement to the extent to which it is (or they are): (i) assessable under Division 230 of the Income Tax Assessment Act 1997; and (ii) reasonably attributable to that period; and (b) a loss (or losses) you make from a financial arrangement to the extent to which it is (or they are): (i) allowable to you as a deduction under Division 230 of the Income Tax Assessment Act 1997; and (ii) reasonably attributable to that period. This is so only if the gain (or gains) referred to in paragraph (a) exceeds the loss (or losses) referred to in paragraph (b). Exclusion: amounts in respect of withholding payments (3) Your instalment income for a period does not include amounts in respect of: (a) *withholding payments (except *non-quotation withholding payments) made to you during that period; and (b) amounts included in your assessable income under section 86-15 of the Income Tax Assessment Act 1997 for which there are amounts required to be paid under Division 13; and (c) which a penalty is applicable under section 12-415. Farm management deposits: effect of making and repayment (4) Your instalment income for a period is reduced (but not below nil) by a *farm management deposit made during that period, but only to the extent that, at the end of that period, you can reasonably expect to be able to deduct the deposit under section 393-10 in Schedule 2G to the Income Tax Assessment Act 1936 for the income year that is or includes that period. (5) Your instalment income for a period also includes an amount that section 393-15 in Schedule 2G to the Income Tax Assessment Act 1936 includes in your assessable income, for the income year that is or includes that period, because of a repayment during that period of all or some of a *farm management deposit. Instalment income of entity that is not liable for instalments (6) An entity can have *instalment income for a period even if the entity is not liable to pay an instalment for that period. Note: For example, although a partnership does not pay instalments, it is necessary to work out the partnership's instalment income in order to work out instalments payable by the partners. See Subdivision 45-H. Subdivision 45-D-Quarterly payers Table of sections 45-125 Quarterly payer who pays instalments on the basis of instalment income 45-130 Quarterly payer who pays on the basis of GDP-adjusted notional tax 45-132 Quarterly payer who pays 4 instalments annually on the basis of GDP-adjusted notional tax 45-134 Quarterly payer who pays 2 instalments annually on the basis of GDP-adjusted notional tax 45-125 Quarterly payer who pays instalments on the basis of instalment income (1) You are a quarterly payer who pays on the basis of instalment income if: (a) at the end of the *starting instalment quarter in an income year, you are not a *quarterly payer who pays on the basis of GDP-adjusted notional tax and you are not an *annual payer; or (b) but for this section, you would be a quarterly payer who pays on the basis of GDP-adjusted notional tax at the end of the starting instalment quarter in an income year but you choose to pay quarterly instalments on the basis of your instalment income. Note: The entity must make the choice mentioned in paragraph (b) in accordance with subsection (4). (2) The starting instalment quarter in an income year (the current year) is: (a) if the Commissioner gives you an instalment rate for the first time during an *instalment quarter in the current year-that instalment quarter (even if it is not the first instalment quarter in the current year); or (b) if the Commissioner has given you an instalment rate during a previous income year and your instalment rate has not been withdrawn-the first instalment quarter in the current year. How and when you become such a payer (3) You become a *quarterly payer who pays on the basis of instalment income just before the end of the *starting instalment quarter if paragraph (1)(a) or (b) is satisfied. (4) You must make the choice mentioned in paragraph (1)(b) by notifying the Commissioner in the *approved form on or before the day on which the instalment for that quarter is due (disregarding subsection 45-112(3)). How and when you stop being such a payer (5) If you are a *quarterly payer who pays on the basis of instalment income because of paragraph (1)(a), you stop being such a payer at the start of the first *instalment quarter in the next income year if, at the end of that quarter, you become: (a) a *quarterly payer who pays on the basis of GDP-adjusted notional tax; or (b) an *annual payer. (6) If you are a *quarterly payer who pays on the basis of instalment income because of paragraph (1)(b), you stop being such a payer at the start of the first *instalment quarter in the next income year if: (a) you become an *annual payer at the end of that quarter; or (b) both of the following conditions apply: (i) you choose not to be a quarterly payer who pays on the basis of instalment income; (ii) you become a *quarterly payer who pays on the basis of GDP- adjusted notional tax at the end of that quarter. (7) You may only make the choice mentioned in paragraph (6)(b) if you would otherwise satisfy paragraph 45-130(1)(a), (b), (c) or (d) at the end of that quarter. You must make that choice by notifying the Commissioner in the *approved form on or before the day on which the instalment for that quarter is due (disregarding subsection 45-112(3)). 45-130 Quarterly payer who pays on the basis of GDP-adjusted notional tax (1) You are a quarterly payer who pays on the basis of GDP-adjusted notional tax if, at the end of the *starting instalment quarter in an income year: (a) you are an individual who is not an *annual payer or a *quarterly payer who pays on the basis of instalment income; or (b) you are a *full self-assessment taxpayer: (i) that is not an *annual payer or a *quarterly payer who pays on the basis of instalment income; and (ii) your base assessment instalment income (within the meaning of section 45-320) for the *base year is $2 million or less; or (c) you satisfy all of the following conditions: (i) you are a *full self-assessment taxpayer whose base assessment instalment income (within the meaning of section 45-320) for the *base year is more than $2 million; (ii) you are not an annual payer, but you satisfy the conditions set out in subsection 45-140(1) for an annual payer; (iii) you are not a quarterly payer who pays on the basis of instalment income; or (d) for the 2009-10 income year or a later income year-you are a *small business entity (other than because of subsection 328- 110(4) of the Income Tax Assessment Act 1997). Note: Paragraph (a) may apply to you if you are a multi-rate trustee. See section 45-468. How and when you become such a payer (2) You become such a payer just before the end of the *starting instalment quarter if paragraph (1)(a), (b), (c) or (d) is satisfied. (2A) For the purposes of subsection (2), you satisfy proposed paragraph (1)(d) at the end of the *starting instalment quarter in an income year if you are a *small business entity (other than because of subsection 328-110(4) of the Income Tax Assessment Act 1997) for the income year that includes that instalment quarter. How and when you stop being such a payer (3) You stop being a *quarterly payer who pays on the basis of GDP- adjusted notional tax at the start of the first *instalment quarter in the next income year if you fail to satisfy paragraph (1)(a), (b), (c) or (d) at the end of that quarter. (3A) For the purposes of subsection (3), you fail to satisfy proposed paragraph (1)(d) at the end of the first *instalment quarter in an income year if you are not a *small business entity (other than because of subsection 328-110(4) of the Income Tax Assessment Act 1997) for the income year that includes that instalment quarter. (4) In addition, you stop being such a payer at the start of the first *instalment quarter in the next income year if, at the end of that quarter, you become: (a) a *quarterly payer who pays on the basis of instalment income; or (b) an *annual payer. 45-132 Quarterly payer who pays 4 instalments annually on the basis of GDP- adjusted notional tax (1) You are a quarterly payer who pays 4 instalments annually on the basis of GDP-adjusted notional tax if, at the end of the *starting instalment quarter in an income year: (a) you satisfy the conditions to be a *quarterly payer who pays on the basis of GDP-adjusted notional tax under section 45-130; and (b) you do not satisfy the conditions to be a *quarterly payer who pays 2 instalments annually on the basis of GDP-adjusted notional tax under section 45-134. How and when you become such a payer (2) You become such a payer just before the end of the *starting instalment quarter if paragraphs (1)(a) and (b) are satisfied. How and when you stop being such a payer (3) You stop being a *quarterly payer who pays 4 instalments annually on the basis of GDP-adjusted notional tax at the start of the first *instalment quarter in the next income year if you fail to satisfy paragraphs (1)(a) and (b) at the end of that quarter. (4) In addition, you stop being such a payer at the start of the first *instalment quarter in the next income year if, at the end of that quarter, you become: (a) a *quarterly payer who pays on the basis of instalment income; or (b) an *annual payer. 45-134 Quarterly payer who pays 2 instalments annually on the basis of GDP- adjusted notional tax (1) You are a quarterly payer who pays 2 instalments annually on the basis of GDP-adjusted notional tax if, at the end of the *starting instalment quarter in an income year, you are an individual that is a *quarterly payer who pays on the basis of GDP- adjusted notional tax and one or more of the following paragraphs apply: (a) both of the following conditions are satisfied: (i) you are carrying on a *primary production business in the income year; (ii) the assessable income that was *derived from, or resulted from, a primary production business that you carried on in the *base year exceeded the amount of so much of your deductions in that year that are reasonably related to that income; (b) both of the following conditions are satisfied: (i) you are a *special professional in the income year; (ii) your *assessable professional income in the base year exceeded the amount of so much of your deductions in that year that are reasonably related to that income. Note: This section may apply to you if you are a multi-rate trustee. See section 45-468. How and when you become such a payer (2) You become such a payer just before the end of the *starting instalment quarter if subsection (1) is satisfied. How and when you stop being such a payer (3) You stop being a *quarterly payer who pays 2 instalments annually on the basis of GDP-adjusted notional tax at the start of the first *instalment quarter in the next income year if you fail to satisfy subsection (1) at the end of that quarter. (4) In addition, you also stop being such a payer at the start of the first *instalment quarter in the next income year if, at the end of that quarter, you become: (a) a *quarterly payer who pays on the basis of instalment income; or (b) an *annual payer. Subdivision 45-E-Annual payers Table of sections When you start and stop being an annual payer 45-140 Choosing to pay annual instalments 45-145 Meaning of instalment group 45-150 Entity stops being annual payer if involved with GST registration or instalment group 45-155 Entity stops being annual payer if notional tax is $8,000 or more, or entity chooses to pay quarterly 45-160 Head company of a consolidated group stops being annual payer When you start and stop being an annual payer 45-140 Choosing to pay annual instalments (1) You may choose to pay instalments annually instead of quarterly if, at the end of the *starting instalment quarter, you satisfy the following conditions: (a) you are neither registered, nor *required to be registered, under Part 2-5 of the *GST Act; and (b) you are not a partner in a partnership that is registered, or required to be registered, under that Part; and (c) your most recent *notional tax notified by the Commissioner is less than $8,000; and (d) in the case of a company-the company is not a *participant in a *GST joint venture under Division 51 of that Act; and (e) in the case of a company-the company is not part of an *instalment group. Note: You cannot choose to be an annual payer while you are the head company of a consolidated group to which Subdivision 45- Q applies: see section 45-720. (1A) You may also choose at a time (subject to subsection (2)) to pay instalments annually instead of quarterly if at that time either: (a) an *annual tax period election of yours has effect and, if you are a partner in one or more partnerships that are registered under Part 2-5 of the *GST Act, an annual tax period election of each of those partnerships has effect; or (b) all of the following subparagraphs apply: (i) you are neither registered, nor *required to be registered, under Part 2-5 of the GST Act; (ii) you are a partner in one or more partnerships that are registered under that Part; (iii) an annual tax period election of each of those partnerships has effect; and at the end of the *starting instalment quarter, you satisfy the following conditions: (c) you are not a partner in a partnership that is required to be registered under Part 2-5 of the GST Act; (d) your most recent *notional tax notified by the Commissioner is less than $8,000; (e) in the case of a company-the company is not a *participant in a *GST joint venture under Division 51 of that Act; (f) in the case of a company-the company is not part of an *instalment group. Note: You cannot choose to be an annual payer while you are the head company of a consolidated group to which Subdivision 45- Q applies: see section 45-720. (2) You must make the choice under subsection (1) or (1A) by notifying the Commissioner, in the *approved form, on or before the day on which that instalment would otherwise be due. (3) You become an annual payer just before the end of the *starting instalment quarter if: (a) you satisfy the conditions in subsection (1) or (1A); and (b) you choose to pay instalment annually. 45-145 Meaning of instalment group (1) An instalment group consists of: (a) a company: (i) that has *majority control of at least one other company; but (ii) of which no other company has *majority control; and (b) any other company of which the first-mentioned company has *majority control. (2) A company has majority control of another company if, and only if: (a) the first company is in a position to cast, or control the casting of, more than 50% of the maximum number of votes that might be cast at a general meeting of the other company; or (b) the first company has the power to appoint or remove the majority of the directors of the other company; or (c) the other company is, or a majority of its directors are, accustomed or under an obligation, whether formal or informal, to act according to the directions, instructions or wishes of the first company. 45-150 Entity stops being annual payer if involved with GST registration or instalment group (1) You stop being an *annual payer if, during an *instalment quarter that is in an income year that starts after the commencement of this section: (a) you become *required to be registered under Part 2-5 of the *GST Act; or (b) you become a partner in a partnership that is required to be registered under that Part; or (c) a partnership in which you are a partner becomes required to be registered under that Part; or (d) in the case of a company-the company becomes a *participant in a *GST joint venture under Division 51 of that Act; or (e) in the case of a company-the company becomes part of an *instalment group; or (f) an *annual tax period election of yours, or of a partnership in which you are a partner, ceases to have effect. (2) If you stop being an *annual payer under subsection (1): (a) you must still pay an annual instalment for the income year mentioned in that subsection; and (b) you must pay an instalment for each instalment quarter in the next income year for which subsection 45-50(1) or (2) requires you to do so. (3) You may again become an *annual payer if: (a) after you stop being an *annual payer under subsection (1), you satisfy the conditions in subsection 45-140(1) or (1A); and (b) you again choose under section 45-140 to pay instalments annually. 45-155 Entity stops being annual payer if notional tax is $8,000 or more, or entity chooses to pay quarterly (1) You stop being an *annual payer at the start of the first *instalment quarter in an income year (the current year) if: (a) after the end of the first instalment quarter in the previous income year and before the end of the first instalment quarter in the current year, the Commissioner notifies you of your *notional tax, and it is $8,000 or more; or (b) you choose to pay instalments quarterly instead of annually. (1A) You must make the choice by notifying the Commissioner, in the *approved form, on or before the day on which the instalment for the first *instalment quarter for the current year would otherwise be due (disregarding subsection 45-112(3)). (2) You must pay an instalment for the first *instalment quarter of the next income year, and later instalment quarters, in accordance with Subdivision 45-B. (3) You must still pay an annual instalment for the previous income year referred to in subsection (1). (4) You may again become an *annual payer at the end of the first *instalment quarter in a later income year if: (a) at that time, you satisfy the conditions in subsection 45- 140(1) or in paragraphs 45-140(1A)(c), (d), (e) and (f); and (b) you again choose under section 45-140 to pay annually. 45-160 Head company of a consolidated group stops being annual payer (1) You stop being an *annual payer at the start of an *instalment quarter if Subdivision 45-Q starts applying to you as the *head company of a *consolidated group during that quarter. (2) You must pay an instalment for that *instalment quarter and later instalment quarters in accordance with Subdivision 45-B. (3) You may again become an *annual payer if: (a) after you stop being an *annual payer under subsection (1), you satisfy the conditions in subsection 45-140(1) or (1A); and (b) you again choose under section 45-140 to pay instalments annually. Note: You cannot choose to be an annual payer while you are the head company of a consolidated group to which Subdivision 45- Q applies: see section 45-720. Subdivision 45-F-Varying the instalment rate for quarterly payers who pay on the basis of instalment income Table of sections 45-200 Application 45-205 Choosing a varied instalment rate 45-210 Notifying Commissioner of varied instalment rate 45-215 Credit on using varied rate in certain cases 45-200 Application This Subdivision applies if you are a *quarterly payer who pays on the basis of instalment income at the end of an *instalment quarter. 45-205 Choosing a varied instalment rate (1) You may choose an instalment rate for working out under section 45-110 the amount of your instalment for an *instalment quarter in an income year. (2) If you do so, you must use that instalment rate to work out the amount of that instalment. (You cannot later choose another instalment rate for working out that amount.) Note 1: If choosing a rate leads you to pay an instalment that is too low, you may be liable to general interest charge under section 45-230. Note 2: If you choose a rate under this section, you must use it even if the Commissioner later gives you a new instalment rate. (3) You must also use that instalment rate to work out the amount of the instalment that you are liable to pay for each later *instalment quarter in that income year, unless you choose another instalment rate under subsection (1) for working out that amount. Note 1: If you choose a rate under this section, you must use it even if the Commissioner later gives you a new instalment rate. Note 2: If a rate you have chosen for an instalment quarter is not appropriate for a later instalment quarter in the same income year, you should choose another rate under subsection (1) for the later quarter. If the earlier rate is too low, you may be liable to general interest charge under section 45-230. (4) However, for working out under section 45-110 the amount of your instalment for an *instalment quarter in a later income year, you must use the most recent instalment rate given to you by the Commissioner before the end of that quarter, unless you again choose another instalment rate under subsection (1). 45-210 Notifying Commissioner of varied instalment rate If you work out the amount of an instalment using an instalment rate you have chosen under section 45-205, you must specify that rate in the notice about your instalment income that you must give the Commissioner under section 45-20. 45-215 Credit on using varied rate in certain cases (1) You are entitled to claim a credit if: (a) the amount of your instalment for an *instalment quarter (the current quarter) in an income year is to be worked out using an instalment rate you chose under section 45-205; and (b) that rate is lower than the instalment rate you used to work out the amount of your instalment for the previous instalment quarter (if any) in the same income year; and (c) the amount worked out using the method statement is greater than nil. Method statement Step 1. Add up the instalments you are liable to pay for the earlier *instalment quarters in the income year (even if you have not yet paid all of them). Step 2. Subtract from the step 1 amount each earlier credit that you have claimed under this section or section 45-420 in respect of the income year. Step 3. Multiply the total of your *instalment income for those earlier *instalment quarters by the instalment rate to be used for the current quarter. Step 4. Subtract the step 3 amount from the step 2 amount. Step 5. If the result is a positive amount, it is the amount of the credit you can claim. (2) A claim for a credit must be made in the *approved form on or before the day on which the instalment for the current quarter is due. Note: How the credit is applied is set out in Division 3 of Part IIB. (3) The credit entitlement does not affect your liability to pay an instalment. Subdivision 45-G-General interest charge payable in certain cases if instalments are too low Table of sections 45-230 Liability to GIC on shortfall in quarterly instalment worked out on the basis of varied rate 45-232 Liability to GIC on shortfall in quarterly instalment worked out on the basis of estimated benchmark tax 45-233 Reduction in GIC liability under section 45-232 if shortfall is made up in later instalment 45-235 Liability to GIC on shortfall in annual instalment 45-240 Commissioner may remit general interest charge 45-230 Liability to GIC on shortfall in quarterly instalment worked out on the basis of varied rate (1) You are liable to pay the *general interest charge under this section if: (a) you use an instalment rate (the varied rate) under section 45- 205 to work out the amount of your instalment for an *instalment quarter (the variation quarter) in an income year; and (b) the varied rate is less than 85% of your *benchmark instalment rate for that income year that the Commissioner works out under Subdivision 45-K. (2) You are liable to pay the *general interest charge on the amount worked out as follows: [pic] where: rate discrepancy means the difference between the varied rate and the lesser of: (a) the most recent instalment rate given to you by the Commissioner before the end of the variation quarter; and (b) your *benchmark instalment rate for that income year. credit adjustment means: (a) if, as a result of using the varied rate for the variation quarter, you claimed a credit under section 45-215-the amount worked out as follows: [pic] or the amount of the credit, whichever is less; and (b) otherwise-nil. (2A) If the variation quarter is in a *consolidation transitional year for you as a *subsidiary member of a *consolidated group, a reference in subsection (2) to: (a) your *instalment income for the variation quarter; or (b) your instalment income for the earlier instalment quarters in the income year; is taken to be a reference to so much of that income as is reasonably attributable to the period in that quarter or those quarters (as appropriate) during which you are not a subsidiary member of the group. (3) You are liable to pay the charge for each day in the period that: (a) started at the beginning of the day by which the instalment for the variation quarter was due to be paid; and (b) finishes at the end of the day on which your assessed tax for the income year is due to be paid. (4) The Commissioner must give you written notice of the *general interest charge to which you are liable under subsection (2). You must pay the charge within 14 days after the notice is given to you. (5) If any of the *general interest charge to which you are liable under subsection (2) remains unpaid at the end of the 14 days referred to in subsection (4), you are also liable to pay the *general interest charge on the unpaid amount for each day in the period that: (a) starts at the end of those 14 days; and (b) finishes at the end of the last day on which, at the end of the day, any of the following remains unpaid: (i) the unpaid amount; (ii) general interest charge on the unpaid amount. 45-232 Liability to GIC on shortfall in quarterly instalment worked out on the basis of estimated benchmark tax (1) You are liable to pay the *general interest charge under this section if: (a) the amount of your instalment for an *instalment quarter (the variation quarter) in an income year is worked out under paragraph 45-112(1)(b) or (c) on the basis of your estimate of your *benchmark tax for that income year; and (b) the estimate used is less than 85% of your *benchmark tax for the income year (which the Commissioner works out under section 45-365). Amount on which the charge is payable (2) You are liable to pay the *general interest charge on the amount worked out as follows (if it is a positive amount): [pic] where: acceptable amount, of your instalment for an *instalment quarter in an income year, has the meaning given by subsections (3), (3A), (3B), (3C) and (3D). actual amount means: (a) the amount of your instalment, as worked out on the basis of the estimate; or (b) if, as a result of using the estimate, you claimed a credit under section 45-420 for the variation quarter-the amount of the credit, expressed as a negative amount. (3) If you are a *quarterly payer who pays 4 instalments annually on the basis of GDP-adjusted notional tax, the acceptable amount of your instalment for that instalment quarter is: (a) if the amount of the instalment is worked out under paragraph 45-112(1)(b) or (c)-the amount worked out using the table in this subsection (which can be a negative amount); or (b) otherwise-the amount notified to you by the Commissioner under paragraph 45-112(1)(a) as the amount of your instalment for that *instalment quarter. |Acceptable amount of an instalment | |Item |If the |The acceptable amount of your | | |*instalment |instalment for that instalment | | |quarter is: |quarter is: | |1 |the first in |the lower of: | | |that income |(a) the amount that the | | |year for |Commissioner notified to you under | | |which you are|paragraph 45-112(1)(a) as the | | |liable to pay|amount of your instalment for that | | |an instalment|*instalment quarter; and | | | |(b) 25% of your *benchmark tax for | | | |the income year (which the | | | |Commissioner works out under | | | |section 45-365). | |2 |the second in|the lower of: | | |that income |(a) the amount that the | | |year for |Commissioner would have notified to| | |which you are|you under paragraph 45-112(1)(a) as| | |liable to pay|the amount of your instalment for | | |an instalment|that *instalment quarter if the | | | |amounts of all your instalments for| | | |that income year had been required | | | |to be worked out under | | | |Subdivision 45-L; and | | | |(b) the amount worked out by | | | |subtracting: | | | |. the *acceptable amount of your | | | |instalment for the earlier | | | |instalment quarter in that income | | | |year; | | | |from: | | | |. 50% of your *benchmark tax for | | | |the income year (which the | | | |Commissioner works out under | | | |section 45-365). | |3 |the third in |the lower of: | | |that income |(a) the amount that the | | |year for |Commissioner would have notified to| | |which you are|you under paragraph 45-112(1)(a) as| | |liable to pay|the amount of your instalment for | | |an instalment|that *instalment quarter if the | | | |amounts of all your instalments for| | | |that income year had been required | | | |to be worked out under | | | |Subdivision 45-L; and | | | |(b) the amount worked out by | | | |subtracting: | | | |. the total of the *acceptable | | | |amounts of your instalments for the| | | |earlier instalment quarters in that| | | |income year; | | | |from: | | | |. 75% of your *benchmark tax for | | | |the income year (which the | | | |Commissioner works out under | | | |section 45-365). | |4 |the fourth in|the lower of: | | |that income |(a) the amount that the | | |year for |Commissioner would have notified to| | |which you are|you under paragraph 45-112(1)(a) as| | |liable to pay|the amount of your instalment for | | |an instalment|that *instalment quarter if the | | | |amounts of all your instalments for| | | |that income year had been required | | | |to be worked out under | | | |Subdivision 45-L; and | | | |(b) the amount worked out by | | | |subtracting: | | | |. the total of the *acceptable | | | |amounts of your instalments for the| | | |earlier instalment quarters in that| | | |income year; | | | |from: | | | |. 100% of your *benchmark tax for | | | |the income year (which the | | | |Commissioner works out under | | | |section 45-365). | (3A) Subject to subsections (3B), (3C) and (3D), if you are a *quarterly payer who pays 2 instalments annually on the basis of GDP-adjusted notional tax, the acceptable amount of your instalment for an *instalment quarter in an income year is: (a) if the amount of the instalment is worked out under paragraph 45-112(1)(b) or (c)-the amount worked out using the table in this subsection (which can be a negative amount); or (b) otherwise-the amount notified to you by the Commissioner under paragraph 45-112(1)(a) as the amount of your instalment for that instalment quarter. |Acceptable amount of an instalment | |Item |If the |The acceptable amount of your | | |*instalment |instalment for that instalment | | |quarter is: |quarter is: | |1 |the third |the lower of: | | |*instalment |(a) the amount that the | | |quarter in |Commissioner notified to you under | | |that income |paragraph 45-112(1)(a) as the | | |year |amount of your instalment for that | | | |*instalment quarter; and | | | |(b) 75% of your *benchmark tax for | | | |the income year (which the | | | |Commissioner works out under | | | |section 45-365). | |2 |the fourth |the lower of: | | |*instalment |(a) the amount that the | | |quarter in |Commissioner would have notified to| | |that income |you under paragraph 45-112(1)(a) as| | |year |the amount of your instalment for | | | |that *instalment quarter if the | | | |amounts of all your instalments for| | | |that income year had been required | | | |to be worked out under | | | |Subdivision 45-L; and | | | |(b) the amount worked out by | | | |subtracting: | | | |. the *acceptable amount of your | | | |instalment for the earlier | | | |instalment quarter in that income | | | |year; | | | |from: | | | |. 100% of your *benchmark tax for | | | |the income year (which the | | | |Commissioner works out under | | | |section 45-365). | (3B) If: (a) you are a *quarterly payer who pays 2 instalments annually on the basis of GDP-adjusted notional tax; and (b) the Commissioner first gives you an instalment rate during the second *instalment quarter in an income year; the acceptable amount of your instalment for an instalment quarter in that income year is: (c) if the amount of the instalment is worked out under paragraph 45-112(1)(b) or (c)-the amount worked out using the table in this subsection (which can be a negative amount); or (d) otherwise-the amount notified to you by the Commissioner under paragraph 45-112(1)(a) as the amount of your instalment for that instalment quarter. |Acceptable amount of an instalment | |Item |If the |The acceptable amount of your | | |*instalment |instalment for that instalment | | |quarter is: |quarter is: | |1 |the third |the lower of: | | |*instalment |(a) the amount that the | | |quarter in |Commissioner notified to you under | | |that income |paragraph 45-112(1)(a) as the | | |year |amount of your instalment for that | | | |*instalment quarter; and | | | |(b) 50% of your *benchmark tax for | | | |the income year (which the | | | |Commissioner works out under | | | |section 45-365). | |2 |the fourth |the lower of: | | |*instalment |(a) the amount that the | | |quarter in |Commissioner would have notified to| | |that income |you under paragraph 45-112(1)(a) as| | |year |the amount of your instalment for | | | |that *instalment quarter if the | | | |amounts of all your instalments for| | | |that income year had been required | | | |to be worked out under | | | |Subdivision 45-L; and | | | |(b) the amount worked out by | | | |subtracting: | | | |. the *acceptable amount of your | | | |instalment for the earlier | | | |instalment quarter in that income | | | |year; | | | |from: | | | |. 75% of your *benchmark tax for | | | |the income year (which the | | | |Commissioner works out under | | | |section 45-365). | (3C) If: (a) you are a *quarterly payer who pays 2 instalments annually on the basis of GDP-adjusted notional tax; and (b) the Commissioner first gives you an instalment rate during the third *instalment quarter in an income year; the acceptable amount of your instalment for an instalment quarter in that income year is: (c) if the amount of the instalment is worked out under paragraph 45-112(1)(b) or (c)-the amount worked out using the table in this subsection (which can be a negative amount); or (d) otherwise-the amount notified to you by the Commissioner under paragraph 45-112(1)(a) as the amount of your instalment for that instalment quarter. |Acceptable amount of an instalment | |Item |If the |The acceptable amount of your | | |*instalment |instalment for that instalment | | |quarter is: |quarter is: | |1 |the third |the lower of: | | |*instalment |(a) the amount that the | | |quarter in |Commissioner notified to you under | | |that income |paragraph 45-112(1)(a) as the | | |year |amount of your instalment for that | | | |*instalment quarter; and | | | |(b) 25% of your *benchmark tax for | | | |the income year (which the | | | |Commissioner works out under | | | |section 45-365). | |2 |the fourth |the lower of: | | |*instalment |(a) the amount that the | | |quarter in |Commissioner would have notified to| | |that income |you under paragraph 45-112(1)(a) as| | |year |the amount of your instalment for | | | |that *instalment quarter if the | | | |amounts of all your instalments for| | | |that income year had been required | | | |to be worked out under | | | |Subdivision 45-L; and | | | |(b) the amount worked out by | | | |subtracting: | | | |. the *acceptable amount of your | | | |instalment for the earlier | | | |instalment quarter in that income | | | |year; | | | |from: | | | |. 50% of your *benchmark tax for | | | |the income year (which the | | | |Commissioner works out under | | | |section 45-365). | (3D) If: (a) you are a *quarterly payer who pays 2 instalments annually on the basis of GDP-adjusted notional tax; and (b) the Commissioner first gives you an instalment rate during the fourth *instalment quarter in an income year; the acceptable amount of your instalment for an instalment quarter in that income year is the lower of the following amounts: (c) the amount that the Commissioner notified to you under paragraph 45-112(1)(a) as the amount of your instalment for that instalment quarter; (d) 25% of your *benchmark tax for the income year (which the Commissioner works out under section 45-365). Period for which the charge is payable (4) You are liable to pay the charge for each day in the period that: (a) started at the beginning of the day by which the instalment for the variation quarter was due to be paid; and (b) finishes at the end of the day on which your assessed tax for the income year is due to be paid. Commissioner to notify you (5) The Commissioner must give you written notice of the *general interest charge to which you are liable under subsection (2). You must pay the charge within 14 days after the notice is given to you. Further charge if charge under subsection (2) remains unpaid (6) If any of the *general interest charge to which you are liable under subsection (2) remains unpaid at the end of the 14 days referred to in subsection (5), you are also liable to pay the *general interest charge on the unpaid amount for each day in the period that: (a) starts at the end of those 14 days; and (b) finishes at the end of the last day on which, at the end of the day, any of the following remains unpaid: (i) the unpaid amount; (ii) general interest charge on the unpaid amount. Modifications for subsidiary member of consolidated group (7) Subsections (1) to (6) apply to you with the modifications set out in subsections (8) to (10) if the variation quarter is in a *consolidation transitional year for you as a *subsidiary member of a *consolidated group. (8) For the purposes of subsection (7), a reference in subsection (1), (3), (3A), (3B), (3C) and (3D) to your *benchmark tax for that year is taken to be a reference to the amount worked out as follows: [pic] (9) For the purposes of subsection (7), a reference in this section to: (a) the acceptable amount of your instalment for an *instalment quarter in an income year; or (b) the acceptable amount of your instalment for the earlier instalment quarter in an income year; or (c) the acceptable amounts of your instalments for the earlier instalment quarters in an income year; is taken to be a reference to so much of the acceptable amount of instalment or acceptable amounts of instalments, worked out under subsection (3), (3A), (3B), (3C) or (3D) for that quarter or those quarters (as appropriate), as is reasonably attributable to the period in that quarter or those quarters (as appropriate) during which you are not a *subsidiary member of the group. (10) For the purposes of subsection (7), a reference to the actual amount in subsection (2) is taken to be a reference to so much of the actual amount worked out under that subsection as is reasonably attributable to the period in the variation quarter during which you are not a *subsidiary member of the group. 45-233 Reduction in GIC liability under section 45-232 if shortfall is made up in later instalment (1) This section reduces the amount (the shortfall) on which you are liable to pay the *general interest charge under subsection 45- 232(2) if, for a later *instalment quarter (the later quarter) that is in the same income year as the variation quarter, the amount worked out as follows is a negative amount: [pic] That amount (expressed as a positive number) is called the top up. (2) For the purposes of the formula in subsection (1): actual amount of your instalment for the later quarter means: (a) the amount of your instalment for the later quarter, as worked out under section 45-112; or (b) if you claimed a credit under section 45-420 for the later quarter-the amount of the credit, expressed as a negative amount. Amount of the reduction (3) The shortfall is reduced by applying so much of the top up as does not exceed the shortfall. (4) However, if some of the top up has already been applied (under any other application or applications of this section) to reduce the amount on which you are liable to pay the *general interest charge under subsection 45-232(2) as it applies to a different *instalment quarter, the shortfall is reduced by applying so much of the top up as has not already been applied, and does not exceed the shortfall. Period for which reduction has effect (5) The reduction has effect for each day in the period that: (a) started at the beginning of the day by which the instalment for the later quarter was due to be paid; and (b) finishes at the end of the day on which your assessed tax for the income year is due to be paid. 45-235 Liability to GIC on shortfall in annual instalment (1) You are liable to pay the *general interest charge under this section if: (a) you choose to estimate the amount of your instalment (the estimated instalment amount) for an income year under former paragraph 45-115(1)(c) or 45-175(1)(b); and (b) that amount is less than 85% of your *benchmark tax for the income year (which the Commissioner works out under section 45- 365). (2) If you estimated the amount of the instalment under former paragraph 45-175(1)(b), you are liable to pay the *general interest charge on the difference between the estimated instalment amount and the lower of the following amounts: (a) your most recent *notional tax notified by the Commissioner at least 30 days before the day on which the instalment was due; (b) your *benchmark tax for the income year. (3) If you estimated the amount of the instalment under paragraph 45-115(1)(c), you are liable to pay the *general interest charge on the difference between the estimated instalment amount and the lowest of the following amounts: (a) the amount of your instalment worked out using the most recent instalment rate given to you by the Commissioner before the end of the income year; (b) your most recent *notional tax notified by the Commissioner before the end of the income year under subsection 45-320(5); (c) your *benchmark tax for the income year. (4) You are liable to pay the charge for each day in the period that: (a) started at the beginning of the day by which the instalment for the income year was due to be paid; and (b) finishes at the end of the day on which your assessed tax for the income year is due to be paid. (5) The Commissioner must give you written notice of the *general interest charge to which you are liable under subsection (2) or (3). You must pay the charge within 14 days after the notice is given to you. (6) If any of the *general interest charge to which you are liable under subsection (2) or (3) remains unpaid at the end of the 14 days referred to in subsection (5), you are also liable to pay the *general interest charge on the unpaid amount for each day in the period that: (a) starts at the end of those 14 days; and (b) finishes at the end of the last day on which, at the end of the day, any of the following remains unpaid: (i) the unpaid amount; (ii) general interest charge on the unpaid amount. 45-240 Commissioner may remit general interest charge The Commissioner may, if he or she is satisfied that because special circumstances exist it would be fair and reasonable to do so, remit the whole or any part of any *general interest charge payable under subsection 45-230(2) or 45-232(2) or subsection 45- 235(2) or (3). Subdivision 45-H-Partnership income 45-260 Instalment income for a period in which you are in a partnership (1) Your instalment income for a period (the current period) includes an amount for each partnership in which you are a partner at any time during the current period. The amount is worked out using the formula: [pic] (2) For the purposes of the formula in subsection (1): your assessable income from the partnership for the last income year means so much of your individual interest in the partnership's net income for an income year as was included by section 92 of the Income Tax Assessment Act 1936 in your assessable income for the most recent income year: (a) that ended before the start of the current period; and (b) for which you have an assessment, or for which the Commissioner has notified you that you do not have a taxable income. (3) However, if for any reason the component defined in subsection (2) does not exist or is a nil amount, or the partnership had no *instalment income for that income year, your instalment income for the current period includes, for that partnership, an amount that is fair and reasonable having regard to: (a) the extent of your interest in the partnership during the current period; and (b) the partnership's *instalment income for the current period; and (c) any other relevant circumstances. Exception for corporate limited partnerships (4) Your instalment income for the current period does not include an amount for a partnership that is a *corporate limited partnership for the income year that is or includes that period. Note: Your instalment income will still include a distribution by the partnership that is ordinary income. See section 45- 120. Subdivision 45-I-Trust income included in instalment income of beneficiary Table of sections 45-280 Instalment income for a period in which you are a beneficiary of a trust 45-285 Instalment income includes distributions by certain resident unit trusts 45-287 When trusts are disqualified due to concentrated ownership 45-288 Resident investment trusts for beneficiaries who are absolutely entitled 45-290 Exceptions to exclusion of trust capital gains from beneficiary's instalment income 45-280 Instalment income for a period in which you are a beneficiary of a trust (1) Your instalment income for a period (the current period) includes an amount for each trust of which you are a beneficiary at any time during the current period. The amount is worked out using the formula: [pic] (2) For the purposes of the formula in subsection (1): your assessable income from the trust for the last income year means so much of a share of the trust's net income for an income year as: (a) Division 6 of Part III of the Income Tax Assessment Act 1936 included in your assessable income for the most recent income year: (i) that ended before the start of the current period; and (ii) for which you have an assessment, or for which the Commissioner has notified you that you do not have a taxable income; and (b) is not attributable to a *capital gain made by the trust. Note: For exceptions to paragraph (b), see section 45-290. (3) However, if for any reason the component defined in subsection (2) does not exist or is a nil amount, or the trust had no *instalment income for that income year, your instalment income for the current period includes, for that trust, an amount that is fair and reasonable having regard to: (a) the extent of your interest in the trust, and your interest in the income of the trust, during the current period; and (b) the trust's *instalment income for the current period; and (c) any other relevant circumstances. Exception for corporate unit trusts and public trading trusts (4) Your instalment income for the current period does not include an amount for a trust if the trustee is liable to be assessed, and to pay tax, under section 102K or 102S of the Income Tax Assessment Act 1936 for the income year that is or includes that period. Note: Your instalment income will still include a distribution by the trust that is ordinary income. See section 45-120. Exception for certain resident unit trusts (5) Your instalment income for the current period does not include an amount for a trust under subsection (1) if the conditions in either subsection 45-285(1) or (2) are satisfied for you for that trust for that period. Note: Your instalment income will instead include a distribution by the trust: see section 45-285. Exception for trusts whose beneficiary is absolutely entitled (6) Your instalment income for the current period does not include an amount for a trust under subsection (1) if, throughout the current period: (a) the trustee of the trust did not have any active duties to perform in the management of the trust (other than the duty to deal with the trust income and capital in accordance with any requests made or directions given by the beneficiary or beneficiaries); and (b) if there was only one beneficiary, the beneficiary: (i) was absolutely entitled to the trust assets; and (ii) had a vested and indefeasible interest in any trust income arising from time to time; and (c) if there was more than one beneficiary, each beneficiary: (i) was absolutely entitled to that beneficiary's interest in the trust assets; and (ii) had a vested and indefeasible interest in a proportion of any trust income arising from time to time, being a proportion that corresponded to the beneficiary's proportional interest in the trust capital. Instead, your instalment income for the current period includes the following amount: [pic] 45-285 Instalment income includes distributions by certain resident unit trusts (1) Your instalment income for a period includes trust income or trust capital that a unit trust distributes to you, or applies for your benefit, during that period if: (a) the unit trust is a resident unit trust (within the meaning of section 102Q of the Income Tax Assessment Act 1936) for the income year of the trust that is or includes that period; and (b) throughout that period: (i) any of the units in the trust were listed for quotation in the official list of a stock exchange in Australia or elsewhere; or (ii) any of the units in the trust were offered to the public; or (iii) the units in the trust were held by at least 50 persons; and (c) section 45-287 in this Schedule did not apply to the trust at any time during that period; and (d) throughout that period, the trust's activities consisted only of activities listed in the definition of eligible investment business in section 102M of the Income Tax Assessment Act 1936. (It does not matter whether the trust income or trust capital is included in your assessable income for the income year that is or includes that period.) (2) Your instalment income for a period also includes trust income or trust capital that a unit trust distributes to you, or applies for your benefit, during that period if: (a) the income or capital is not included in your instalment income under subsection (1); and (b) the unit trust is a resident unit trust (within the meaning of section 102Q of the Income Tax Assessment Act 1936) for the income year of the trust that is or includes that period; and (c) throughout that period, the trust's activities consisted only of activities listed in the definition of eligible investment business in section 102M of the Income Tax Assessment Act 1936; and (d) throughout that period, either: (i) you are yourself the trustee of a unit trust that satisfies each of paragraphs (1)(a) to (d) of this section; or (ii) you are yourself the trustee of one or more trusts covered by section 45-288; or (iii) you are exempt from tax; or (iv) you are a *complying superannuation entity or a statutory fund of a *life insurance company. (It does not matter whether the trust income or trust capital is included in your assessable income for the income year that is or includes that period.) Extension-nominee and bare trust situations (3) In determining, for the purposes of subparagraph (1)(b)(iii), how many persons hold units in a unit trust, if: (a) another trust (the holding trust) is a unit holder in the unit trust; and (b) the holding trust is a trust of the kind covered by subsection 45-280(6); and (c) the beneficiary's or beneficiaries' absolute entitlement exists at all times while the holding trust is in existence; the beneficiary or beneficiaries count as persons who hold units in the unit trust, and the trustee of the holding trust does not. 45-287 When trusts are disqualified due to concentrated ownership Concentrated ownership (1) This section applies to a trust if an individual holds, or up to 20 individuals hold between them directly or indirectly and for their own benefit, interests in the trust: (a) carrying fixed entitlements to: (i) at least 75% of the trust's income; or (ii) at least 75% of the trust's capital; or (b) if beneficiaries of the trust have a right to vote in respect of activities of the trust-carrying at least 75% of those voting rights. Single individual (2) Subsection (1) operates as if all of these were a single individual: (a) an individual, whether or not the individual holds interests in the trust; and (b) the individual's *associates; and (c) for any interests in respect of which other individuals are nominees of the individual or of the individual's associates- those other individuals. Concentrated ownership-potential due to possible variation of rights etc. (3) This section also applies to a trust if, because of: (a) any provision in the trust's constituent document, or in any contract, agreement or instrument: (i) authorising the variation or abrogation of rights attaching to any of the interests in the trust; or (ii) relating to the conversion, cancellation, extinguishment or redemption of any of those interests; or (b) any contract, *arrangement, option or instrument under which a person has power to acquire any of those interests; or (c) any power, authority or discretion in a person in relation to the rights attaching to any of those interests; it is reasonable to conclude that the rights attaching to any of the interests are capable of being varied or abrogated in such a way (even if they are not in fact varied or abrogated in that way) that, directly or indirectly, the trust would be disqualified under subsection (1). Tracing (4) In applying this section: (a) if a *complying superannuation fund, *approved deposit fund or *superannuation fund for foreign residents has more than 50 members and has, directly or indirectly, a fixed entitlement to any of the trust's income or capital-that entitlement is taken to be held by more than 20 individuals for their own benefit; and (b) if a complying superannuation fund, approved deposit fund or superannuation fund for foreign residents has 50 or fewer members and has, directly or indirectly, a fixed entitlement to any of the trust's income or capital-each of the members is taken to have a share of that entitlement, in equal proportions, for his or her own benefit. 45-288 Resident investment trusts for beneficiaries who are absolutely entitled This section covers a trust if: (a) the trust is a resident trust within the meaning of section 102Q of the Income Tax Assessment Act 1936; and (b) the trust is of the kind covered by subsection 45-280(6) in this Schedule; and (c) the requests or directions that beneficiaries may give the trustee are limited to requests or directions as to which of the activities listed in the definition of eligible investment business in section 102M of the Income Tax Assessment Act 1936 the trustee should engage in; and (d) all of the trust's beneficiaries became beneficiaries as a result of a public offer to invest in the trust; and (e) either: (i) the trust has 50 or more beneficiaries; or (ii) if the trustee of the trust is also the trustee of one or more other trusts that satisfy paragraphs (a), (b), (c) and (d) of this section-all those trusts together have a total of 50 or more beneficiaries. 45-290 Exceptions to exclusion of trust capital gains from beneficiary's instalment income (1) This section sets out cases where paragraph (b) of the definition of your assessable income from the trust for the last income year in subsection 45-280(2) does not apply. (2) It does not apply in the case of: (a) a *complying approved deposit fund or a *non-complying approved deposit fund for the income year that is or includes the current period; or (b) a *complying superannuation fund or a *non-complying superannuation fund for that year; or (c) a *pooled superannuation trust for that year; or (d) an *FHSA trust for that year. (3) It does not apply in the case of a *life insurance company to the extent that the share of the trust's net income is included in the *complying superannuation/FHSA class of its taxable income for the income year that is or includes the current period. Subdivision 45-J-How Commissioner works out your instalment rate and notional tax Table of sections 45-320 Working out instalment rate 45-325 Working out your notional tax 45-330 Working out your adjusted taxable income 45-335 Working out your adjusted withholding income 45-340 Adjusted tax on adjusted taxable income or on adjusted withholding income 45-320 Working out instalment rate (1) Except as provided by section 45-775, an instalment rate that the Commissioner gives you must be the percentage worked out to 2 decimal places (rounding up if the third decimal place is 5 or more) using the formula: [pic] However, the instalment rate must be a nil rate if either component of the formula is nil. (2) For the purposes of the formula in subsection (1): base assessment instalment income means so much of your assessable income, as worked out for the purposes of the *base assessment, as the Commissioner determines is *instalment income for the *base year. (3) The base assessment is the latest assessment for your most recent income year for which an assessment has been made. However, if the Commissioner is satisfied that there is a later income year for which you do not have a taxable income, the base assessment is the latest return or other information from which an assessment for that income year would have been made. (4) The base year is the income year to which the *base assessment relates. (5) When the Commissioner gives you the instalment rate, he or she must also notify you of the amount of your *notional tax, as worked out for the purposes of working out the instalment rate. (6) The Commissioner may incorporate notice of the instalment rate and the amount of your *notional tax in notice of your assessment. 45-325 Working out your notional tax Notional tax if you have no withholding income (1) Your notional tax is your *adjusted tax (worked out under section 45-340) on your *adjusted taxable income (worked out under section 45-330) for the *base year. Notional tax if you have no-TFN contributions income (1A) In working out the notional tax of a *complying superannuation fund, *non-complying superannuation fund or *RSA provider for the *base year, assume that the entity had no *no-TFN contributions income for the base year and that the entity was not entitled to a *tax offset for the base year under Subdivision 295-J of the Income Tax Assessment Act 1997. Notional tax if you have withholding income (2) However, your notional tax (as worked out under subsection (1)) is reduced if your assessable income for the *base assessment includes amounts in respect of *withholding payments (except *non- quotation withholding payments). (3) It is reduced (but not below nil) by your *adjusted tax (worked out under section 45-340) on your *adjusted withholding income (worked out under section 45-335) for the *base year. Commissioner may take into account effect of the law, as applying to income years after base year (4) For the purposes of working out your *notional tax, the Commissioner may work out an amount as if provisions of an Act or regulations, as they may reasonably be expected to apply for the purposes of your assessment for a later income year, had applied for the purposes of the *base assessment. Commissioner may take into account proposed changes to the law so as to reduce instalment rate (5) For the purposes of working out your *notional tax, the Commissioner may work out an amount as if provisions of an Act or regulations that, in the Commissioner's opinion, are likely to be enacted or made had applied for the purposes of the *base assessment. But the Commissioner may do so only if, as a result, the instalment rate given to you is reduced. (6) If the *base year is the income year immediately preceding the income year in which 1 July 2000 occurred, subsections (4) and (5) apply for the purpose of working out the *base assessment instalment income of a *life insurance company in the same way as they apply for the purpose of working out such a company's *notional tax. 45-330 Working out your adjusted taxable income (1) Your adjusted taxable income for the *base year is your total assessable income for the *base assessment, reduced by: (a) any *net capital gain included in that assessable income; and (b) your deductions for the base year (except *tax losses), as used in making that assessment; and (c) the amount of any tax loss, to the extent that you can carry it forward to the next income year. Exception: superannuation entities and net capital gains (2) Paragraph (1)(a) does not apply in the case of: (a) a *complying approved deposit fund or a *non-complying approved deposit fund for the *base year; or (b) a *complying superannuation fund or a *non-complying superannuation fund for that year; or (c) a *pooled superannuation trust for that year; or (d) an *FHSA trust for that year. Special rule for some entities (2A) If an entity: (a) has *tax losses transferred to it under Subdivision 707-A of the Income Tax Assessment Act 1997; or (b) is a *corporate tax entity at any time during the *base year; the adjusted taxable income of the entity for the base year is worked out under subsection (1) as if paragraph (1)(c) were replaced by the following provision: (c) the lesser of the following amounts: (i) the amount of any tax loss, to the extent that you can carry it forward to the next income year; (ii) the amount of the deductions for tax losses used in making your *base assessment. Amounts assessable under Subdivision 250-E of the Income Tax Assessment Act 1997 (2AA) To avoid doubt, paragraph (1)(a) does not apply to a *net capital gain that is included in your assessable income under Subdivision 250-E of the Income Tax Assessment Act 1997. Special rule for life insurance companies (3) The adjusted taxable income of a *life insurance company for the *base year is worked out as follows: Method statement Step 1. Recalculate the taxable income of the *ordinary class for the *base assessment on the basis that it did not include any *net capital gain. Step 2. Add to the step 1 result the deductions for *tax losses of the *ordinary class that were used in making the *base assessment. Step 3. Reduce the step 2 result by the lesser of the following amounts: (a) the amount of any *tax losses of the *ordinary class, to the extent that the company can carry them forward to the next income year; (b) deductions for tax losses of the ordinary class that were used in making the *base assessment. Step 4. Add to the step 3 result the taxable income of the *complying superannuation/FHSA class for the *base assessment. Step 5. Add to the step 4 result the deductions for *tax losses of the *complying superannuation/FHSA class that were used in making the *base assessment. Step 6. Reduce the step 5 result by the lesser of the following amounts: (a) the amount of any *tax losses of the *complying superannuation/FHSA class, to the extent that the company can carry them forward to the next income year; (b) deductions for tax losses of the complying superannuation/FHSA class that were used in making the *base assessment. The result of this step is the adjusted taxable income of the company for the *base year. 45-335 Working out your adjusted withholding income Your adjusted withholding income for the *base year is: . the total of the amounts included in your assessable income for the *base assessment in respect of *withholding payments (except *non-quotation withholding payments); reduced by: . your deductions for that year, as used in making that assessment, to the extent that they reasonably relate to those amounts. 45-340 Adjusted tax on adjusted taxable income or on adjusted withholding income Your adjusted tax on your *adjusted taxable income, or on your *adjusted withholding income, for the *base year is worked out as follows: Method statement Step 1. The income tax payable on your *adjusted taxable income, or on your *adjusted withholding income, for the *base year is worked out disregarding any *tax offset under: (a) Subdivision 61-G of the Income Tax Assessment Act 1997 (the private health insurance tax offset); or (b) Subdivision 61-IA of the Income Tax Assessment Act 1997 (the child care tax offset); or (c) Subdivision 61-J of the Income Tax Assessment Act 1997 (the 25% entrepreneurs' tax offset); or (d) Subdivision 61-K of the Income Tax Assessment Act 1997 (the mature age worker tax offset); or (da) Subdivision 61-L of the Income Tax Assessment Act 1997 (tax offset for Medicare levy surcharge (lump sum payments in arrears)); or (db) Subdivision 61-M of the Income Tax Assessment Act 1997 (the education expenses tax offset); or (e) section 205-70 of the Income Tax Assessment Act 1997 (the tax offset for *franking deficit tax liabilities); or (f) section 159N of the Income Tax Assessment Act 1936 (the tax offset for certain low income earners); or (g) section 290-230 of the Income Tax Assessment Act 1997 (the tax offset for superannuation contributions made for a spouse). Step 2. The Medicare levy payable on your *adjusted taxable income, or on your *adjusted withholding income, for the *base year is worked out disregarding sections 8B, 8C, 8D, 8E, 8F and 8G of the Medicare Levy Act 1986 (which increase Medicare levy in certain cases). Step 3. The amount (if any) that you would have been liable to pay for the *base year in respect of an accumulated HEC debt under the Higher Education Funding Act 1988, or an *accumulated HELP debt under the Higher Education Support Act 2003, if your taxable income for the base year had been your *adjusted taxable income, or your *adjusted withholding income, for that year is worked out. Step 3A. The amount (if any) that you would have been liable to pay for the *base year by way of an *FS assessment debt if your taxable income for the base year had been your *adjusted taxable income, or your *adjusted withholding income, for that year is worked out. Step 4. The results of steps 1, 2, 3 and 3A are added together, and reduced by what would have been your *FTB amount (if any) for the *base year if your taxable income for the base year had been your *adjusted taxable income, or your *adjusted withholding income, for that year. The result is your adjusted tax on your *adjusted taxable income, or on your *adjusted withholding income. Subdivision 45-K-How Commissioner works out your benchmark instalment rate and benchmark tax Table of sections 45-355 When Commissioner works out benchmark instalment rate and benchmark tax 45-360 How Commissioner works out benchmark instalment rate 45-365 Working out your benchmark tax 45-370 Working out your adjusted assessed taxable income for the variation year 45-375 Adjusted assessed tax on adjusted assessed taxable income 45-355 When Commissioner works out benchmark instalment rate and benchmark tax (1) The Commissioner may work out your *benchmark instalment rate for an income year (the variation year) if, under section 45-205, you choose an instalment rate to work out the amount of your instalment for an *instalment quarter in that year. (1A) The Commissioner may work out your *benchmark tax for an income year (the variation year) if, under paragraph 45-112(1)(b) or (c), the amount of your instalment for an *instalment quarter in an income year is worked out on the basis of your estimate of your *benchmark tax for that income year. (2) The Commissioner may work out your *benchmark tax for an income year (the variation year) if, under paragraph 45-115(1)(c), you estimate the amount of your annual instalment for that year. 45-360 How Commissioner works out benchmark instalment rate (1) Your benchmark instalment rate for the variation year is the percentage worked out to 2 decimal places (rounding up if the third decimal place is 5 or more) using the formula: [pic] However, your benchmark instalment rate is a nil rate if either component of the formula is nil. (2) For the purposes of the formula in subsection (1): variation year instalment income means so much of your assessable income for the variation year as the Commissioner determines is *instalment income for that year. 45-365 Working out your benchmark tax Benchmark tax if you had no withholding income (1) Your benchmark tax is your *adjusted assessed tax (worked out under section 45-375) on your *adjusted assessed taxable income (worked out under section 45-370) for the variation year. Benchmark tax if you have no-TFN contributions income (1A) In working out the benchmark tax of a *complying superannuation fund, *non-complying superannuation fund or *RSA provider for the variation year, assume that the entity had no *no-TFN contributions income for the variation year and that the entity was not entitled to a *tax offset for the variation year under Subdivision 295-J of the Income Tax Assessment Act 1997. Benchmark tax if you had withholding income (2) However, your benchmark tax (as worked out under subsection (1)) is reduced if your assessable income for the variation year includes amounts in respect of *withholding payments. (3) It is reduced (but not below nil) by the sum of: (a) the total amount of the credits to which you are entitled for the variation year under section 18-15 (for amounts withheld from withholding payments made to you during the variation year); and (b) the total amount of the credits to which you are entitled for the variation year under section 18-27 (for amounts paid under Division 13 in respect of amounts included in your assessable income under section 86-15 of the Income Tax Assessment Act 1997). 45-370 Working out your adjusted assessed taxable income for the variation year (1) Your adjusted assessed taxable income for the variation year is your taxable income for the year, reduced by any *net capital gain included in your assessable income for the year. Exception: superannuation entities and net capital gains (2) In working out the adjusted assessed taxable income, taxable income is not reduced by any *net capital gain in the case of: (a) a *complying approved deposit fund or a *non-complying approved deposit fund for the variation year; or (b) a *complying superannuation fund or a *non-complying superannuation fund for the variation year; or (c) a *pooled superannuation trust for the variation year; or (d) an *FHSA trust for the variation year. Special rule for life insurance companies (3) The adjusted assessed taxable income of a *life insurance company for the variation year is worked out as follows: Method statement Step 1. Recalculate the *ordinary class of the taxable income for the variation year on the basis that the assessable income that relates to the class did not include any *net capital gain. Step 2. Add to the step 1 result the *complying superannuation/FHSA class of the taxable income for the variation year. 45-375 Adjusted assessed tax on adjusted assessed taxable income Your adjusted assessed tax on your *adjusted assessed taxable income for the variation year is worked out as follows: Method statement Step 1. The income tax payable on your *adjusted assessed taxable income for the variation year is worked out disregarding any *tax offset under: (a) Subdivision 61-G of the Income Tax Assessment Act 1997 (the private health insurance tax offset); or (b) Subdivision 61-IA of the Income Tax Assessment Act 1997 (the child care tax offset); or (c) Subdivision 61-K of the Income Tax Assessment Act 1997 (the mature age worker tax offset); or (ca) Subdivision 61-L of the Income Tax Assessment Act 1997 (tax offset for Medicare levy surcharge (lump sum payments in arrears)); or (cb) Subdivision 61-M of the Income Tax Assessment Act 1997 (the education expenses tax offset); or (d) section 205-70 of the Income Tax Assessment Act 1997 (the tax offset for *franking deficit tax liabilities); or (e) section 159N of the Income Tax Assessment Act 1936 (the tax offset for certain low income earners); or (f) section 290-230 of the Income Tax Assessment Act 1997 (the tax offset for superannuation contributions made for a spouse). Step 2. The Medicare levy payable on your *adjusted assessed taxable income for the variation year is worked out disregarding sections 8B, 8C, 8D, 8E, 8F and 8G of the Medicare Levy Act 1986 (which increase Medicare levy in certain cases). Step 3. The amount (if any) that you would have been liable to pay for the variation year in respect of an accumulated HEC debt under the Higher Education Funding Act 1988, or an *accumulated HELP debt under the Higher Education Support Act 2003, if your taxable income for that year had been your *adjusted assessed taxable income for that year is worked out. Step 3A. The amount (if any) that you would have been liable to pay for the variation year by way of an *FS assessment debt if your taxable income for that year had been your *adjusted assessed taxable income for that year is worked out. Step 4. The results of steps 1, 2, 3 and 3A are added together, and reduced by what would have been your *FTB amount (if any) for the variation year if your taxable income for that year had been your *adjusted assessed taxable income for that year. The result is your adjusted assessed tax on your *adjusted assessed taxable income for the variation year. Subdivision 45-L-How Commissioner works out amount of quarterly instalment on basis of GDP-adjusted notional tax Table of sections 45-400 Working out amount of instalment-payers of 4 quarterly instalments 45-402 Working out amount of instalment-payers of 2 quarterly instalments 45-405 Working out your GDP-adjusted notional tax 45-400 Working out amount of instalment-payers of 4 quarterly instalments Scope (1) This section applies if you are a *quarterly payer who pays 4 instalments annually on the basis of GDP-adjusted notional tax at the end of an *instalment quarter in an income year (the current year). Working out amount of instalment (2) The amount of your instalment for that *instalment quarter which the Commissioner must work out and notify to you under paragraph 45-112(1)(a) is: (a) the amount worked out in accordance with the table if it is positive; or (b) otherwise-nil. |Amount of quarterly instalment worked out on basis of | |GDP-adjusted notional tax | |Item |If the instalment |The amount of the | | |quarter is: |instalment is: | |1 |the first in that |25% of your *GDP-adjusted | | |income year for which |notional tax | | |you are liable to pay | | | |an instalment | | |2 |the second in that |50% of your *GDP-adjusted | | |income year for which |notional tax, reduced by | | |you are liable to pay |the amount of your | | |an instalment |instalment for the earlier| | | |*instalment quarter in | | | |that income year | |3 |the third in that |75% of your *GDP-adjusted | | |income year for which |notional tax, reduced by | | |you are liable to pay |the total of your | | |an instalment |instalments for earlier | | | |*instalment quarters in | | | |that income year | |4 |the fourth in that |100% of your *GDP-adjusted| | |income year for which |notional tax, reduced by | | |you are liable to pay |the total of your | | |an instalment |instalments for earlier | | | |*instalment quarters in | | | |that income year | Note: Your instalments for earlier instalment quarters may have been worked out on a basis other than GDP-adjusted notional tax. Amount reduced in circumstances specified by regulations (3) In the circumstances (if any) specified by the regulations, the amount worked out in accordance with the table in subsection (2) is reduced by the amount worked out under the regulations. (4) Without limiting subsection (3), the regulations may specify circumstances by: (a) specifying the particular *instalment quarter to which the reduction applies; or (b) specifying the kind of payers to whom the reduction applies. (5) In working out, under subsection (2), the amount of your instalment for an *instalment quarter in an income year, assume that there had not been any reductions under subsection (3) for earlier instalment quarters in that year. December 2008 reduction for small business entities (6) If 31 December 2008 occurs in an *instalment quarter in an income year, the amount worked out in accordance with the table in subsection (2) for the instalment quarter is reduced by 20% if you are: (a) a *small business entity for the 2007-08 or 2008-09 income year; or (b) a partner of a partnership that is a small business entity for the 2007-08 or 2008-09 income year; or (c) a beneficiary of a trust that is a small business entity for the 2007-08 or 2008-09 income year. (7) In working out, under subsection (2), the amount of your instalment for a later *instalment quarter in the income year, assume that the reduction under subsection (6) had not happened. 45-402 Working out amount of instalment-payers of 2 quarterly instalments (1) This section applies if you are a *quarterly payer who pays 2 instalments annually on the basis of GDP-adjusted notional tax at the end of an *instalment quarter in an income year. (2) If you are liable to pay an instalment for that *instalment quarter, the amount of that instalment which the Commissioner must work out and notify to you under paragraph 45-112(1)(a) is: (a) the amount worked out in accordance with this section if it is positive; or (b) otherwise-nil. Amount of instalment (3) Subject to subsections (4) to (6), the amount of that instalment is worked out in accordance with the following table: |Amount of quarterly instalment | |Item |If the *instalment |the amount of the | | |quarter is: |instalment is: | |1 |the third *instalment |75% of your *GDP-adjusted | | |quarter in the income |notional tax | | |year | | |2 |the fourth *instalment|100% of your *GDP-adjusted| | |quarter in the income |notional tax, reduced by | | |year |your instalment for | | | |earlier instalment quarter| | | |in that income year | You receive instalment rate for the first time in second quarter (4) If the Commissioner gives you an instalment rate for the first time during the second *instalment quarter in that income year, the amount of the instalment is worked out in accordance with the following table: |Amount of quarterly instalment | |Item |If the *instalment |the amount of the | | |quarter is: |instalment is: | |1 |the third *instalment |50% of your *GDP-adjusted | | |quarter in the income |notional tax | | |year | | |2 |the fourth *instalment|75% of your *GDP-adjusted | | |quarter in the income |notional tax, reduced by | | |year |your instalment for the | | | |earlier instalment quarter| | | |in that income year | You receive instalment rate for the first time in third quarter (5) If the Commissioner first gives you an instalment rate during the third *instalment quarter in that income year, the amount of the instalment is worked out in accordance with the following table: |Amount of quarterly instalment | |Item |If the *instalment |the amount of the | | |quarter is: |instalment is: | |1 |the third *instalment |25% of your *GDP-adjusted | | |quarter in the income |notional tax | | |year | | |2 |the fourth *instalment|50% of your *GDP-adjusted | | |quarter in the income |notional tax, reduced by | | |year |your instalment for the | | | |earlier instalment quarter| | | |in that income year | You receive instalment rate for the first time in fourth quarter (6) If the Commissioner first gives you an instalment rate during the fourth *instalment quarter in that income year, the amount of the instalment must be equal to 25% of your *GDP-adjusted notional tax. 45-405 Working out your GDP-adjusted notional tax (1) Except as provided by section 45-775, your GDP-adjusted notional tax is worked out in the same way as your *notional tax would be worked out for the purposes of working out an instalment rate if that instalment rate were to be given to you at the same time as notice of the amount of the instalment referred to in section 45-400 or 45-402 (as appropriate). (2) However, for the purposes of subsection (1): (a) your *adjusted taxable income for the *base year; and (b) your *adjusted withholding income (if any) for the *base year; are each increased in accordance with the formula: [pic] (3) For the purposes of the formula in subsection (2): original amount means the amount that, apart from subsection (2), would be your *adjusted taxable income for the *base year, or your *adjusted withholding income for the *base year, as appropriate. GDP adjustment means: (a) if the current year is the 2009-10 income year-2%; or (b) otherwise: (i) the percentage (rounded to the nearest whole number, rounding down a number ending in .5) worked out using the following formula; or (ii) if the percentage worked out using the formula is negative-0%: [pic] Note: Paragraph (a) will be repealed on 1 July 2014: see Part 2 of Schedule 1 to the Tax Laws Amendment (2009 Measures No. 3) Act 2009. (4) For the purposes of the formula in subsection (3): sum of GDP amounts (current year) means the sum of the *GDP amounts, for the *quarters in the last calendar year (the later calendar year) ending at least 3 months before the start of the current year, specified in the document referred to in subsection (6). sum of GDP amounts (previous year) means the sum of the *GDP amounts, for the *quarters in the calendar year (the earlier calendar year) before the later calendar year, specified in the document referred to in subsection (6). (5) The GDP amount for a *quarter is the amount published by the Australian Statistician as the original gross domestic product at current prices for that quarter. (6) In a case covered by paragraph (b) of the definition of GDP adjustment in subsection (3), the GDP adjustment must be worked out on the basis of the first document that: (a) is published by the Australian Statistician after the end of the later calendar year; and (b) sets out the *GDP amounts for all the *quarters in both the later calendar year and the earlier calendar year. (7) To avoid doubt, subsections 45-325(4) and (5) also have effect for the purposes of working out your *GDP-adjusted notional tax. Subdivision 45-M-How amount of quarterly instalment is worked out on basis of your estimate of your benchmark tax Table of sections 45-410 Working out amount of instalment-payers of 4 quarterly instalments 45-412 Working out amount of instalment-payers of 2 quarterly instalments 45-415 Estimating your benchmark tax 45-420 Credit in certain cases where amount of instalment is nil 45-410 Working out amount of instalment-payers of 4 quarterly instalments (1A) This section applies if you are a *quarterly payer who pays 4 instalments annually on the basis of GDP-adjusted notional tax at the end of an *instalment quarter in an income year (the current year). (1) For the purposes of paragraph 45-112(1)(b) or (c), the amount of your instalment for that *instalment quarter in an income year is: (a) the amount worked out, in accordance with this section, on the basis of the estimate of your *benchmark tax for that income year that section 45-415 requires to be used, if that amount is positive; or (b) otherwise-nil. Note: If the amount is negative, you can claim a credit under section 45-420. First instalment quarter (2) If the *instalment quarter is the first in that income year for which you are liable to pay an instalment, the amount is 25% of the estimate of your *benchmark tax. Second instalment quarter (3) If the *instalment quarter is the second in that income year for which you are liable to pay an instalment, the amount is worked out by subtracting: . the amount of your instalment under section 45-112 for the earlier *instalment quarter in that income year; from: . 50% of the estimate of your *benchmark tax. Third instalment quarter (4) If the *instalment quarter is the third in that income year for which you are liable to pay an instalment, the amount is worked out using this method statement. Method statement Step 1. The total of your instalments under section 45-112 for earlier *instalment quarters in that income year is subtracted from 75% of the estimate of your *benchmark tax. Step 2. If you were entitled to claim a credit under section 45- 420 for the second of those earlier *instalment quarters, the amount of the credit is added to the step 1 amount. Fourth instalment quarter (5) If the *instalment quarter is the fourth in that income year for which you are liable to pay an instalment, the amount is worked out using this method statement. Method statement Step 1. The total of your instalments under section 45-112 for earlier *instalment quarters in that income year is subtracted from the estimate of your *benchmark tax. Step 2. For each credit that you were entitled to claim under section 45-420 for any of those earlier *instalment quarters, the amount of the credit is added to the step 1 amount. 45-412 Working out amount of instalment-payers of 2 quarterly instalments (1) This section applies if you are a *quarterly payer who pays 2 instalments annually on the basis of GDP-adjusted notional tax at the end of an *instalment quarter in an income year. (2) If you are liable to pay an instalment for that quarter, the amount of that instalment for the purposes of paragraph 45- 112(1)(b) or (c) is: (a) the amount worked out, in accordance with this section, on the basis of the estimate of your *benchmark tax for that income year that section 45-415 requires to be used, if that amount is positive; or (b) otherwise-nil. Note: If the amount is negative, you can claim a credit under section 45-420. Instalment for third quarter (3) Subject to subsections (5) to (9), the amount of the instalment for the third *instalment quarter in that year is 75% of the estimate of your *benchmark tax. Instalment for fourth quarter (4) Subject to subsections (5) to (9), the amount of the instalment for the fourth *instalment quarter in that year is worked out by subtracting: (a) the amount of your instalment for the earlier instalment quarter in that year; from: (b) the estimate of your *benchmark tax. You receive instalment rate for the first time in second quarter (5) If the Commissioner gives you an instalment rate for the first time during the second *instalment quarter in the income year, the amount of the instalment for the third *instalment quarter in that year is 50% of the estimate of your *benchmark tax. (6) If the Commissioner gives you an instalment rate for the first time during the second *instalment quarter in the income year, the amount of the instalment for the fourth instalment quarter in that year is worked out by subtracting: (a) the amount of your instalment for the earlier instalment quarter in that year; from: (b) 75% of the estimate of your *benchmark tax. You receive instalment rate for the first time in third quarter (7) If the Commissioner gives you an instalment rate for the first time during the third *instalment quarter in the income year, the amount of the instalment for the third instalment quarter in that year is 25% of the estimate of your *benchmark tax. (8) If the Commissioner gives you an instalment rate for the first time during the third *instalment quarter in the income year, the amount of the instalment for the fourth instalment quarter in that year is worked out by subtracting: (a) the amount of your instalment for the earlier instalment quarter in that year; from: (b) 50% of the estimate of your *benchmark tax. You receive instalment rate for the first time in fourth quarter (9) If the Commissioner gives you an instalment rate for the first time during the fourth *instalment quarter in the income year, the amount of the instalment for that quarter is 25% of the estimate of your *benchmark tax. 45-415 Estimating your benchmark tax (1) If you choose under paragraph 45-112(1)(b) to work out the amount of your instalment for an *instalment quarter in an income year on the basis of your estimate of your *benchmark tax for that income year, you must make the estimate on or before the day on which the instalment is due (disregarding subsection 45-112(3)). (2) Having done so, you must use that estimate to work out the amount of that instalment. (You cannot later make another estimate for working out that amount.) Note: If your estimate leads you to pay an instalment that is too low, you may be liable to general interest charge under section 45-232. (3) The Commissioner must also use that estimate to work out under this Subdivision the amount of each instalment: (a) that you are liable to pay for a later *instalment quarter in that income year; and (b) whose amount he or she must notify to you under paragraph 45- 112(1)(c); unless a later application of this subsection requires him or her to use a later estimate you make under subsection (1) of this section. Note: This means that if an estimate you have made is not appropriate for a later instalment quarter in the same income year, you should choose under paragraph 45-112(1)(b) to work out the amount of your instalment for that later quarter on the basis of a new estimate under this section. If the instalment that the Commissioner works out on the basis of the earlier estimate is too low, you may be liable to general interest charge under section 45-232. 45-420 Credit in certain cases where amount of instalment is nil (1) You are entitled to claim a credit if the amount of your instalment for an *instalment quarter (the current quarter) in an income year is nil because the amount worked out for the current quarter in accordance with section 45-410 or 45-412 (as appropriate) is negative. The amount of the credit is equal to that amount, expressed as a positive amount. (2) A claim for a credit must be made in the *approved form on or before the day on which the instalment for the current quarter is due. Note: How the credit is applied is set out in Division 3 of Part IIB. Subdivision 45-N-How this Part applies to the trustee of a trust Table of sections Trustees to whom this Part applies 45-450 Trustees to whom a single instalment rate is given 45-455 Trustees to whom several instalment rates are given 45-460 Rest of Subdivision applies only to multi-rate trustees 45-465 Meaning of instalment income 45-468 Multi-rate trustee may pay quarterly instalments How Commissioner works out instalment rate and notional tax for a multi-rate trustee 45-470 Working out instalment rate 45-473 Commissioner must notify you of notional tax 45-475 Working out your notional tax 45-480 Working out your adjusted taxable income 45-483 Meaning of reduced beneficiary's share and reduced no beneficiary's share 45-485 Working out your adjusted withholding income How Commissioner works out benchmark instalment rate and benchmark tax for a multi-rate trustee 45-525 When Commissioner works out benchmark instalment rate and benchmark tax 45-530 How Commissioner works out benchmark instalment rate 45-535 Working out your benchmark tax Trustees to whom this Part applies 45-450 Trustees to whom a single instalment rate is given (1) This Part applies to a trustee covered by any of items 4 to 8, and 12 and 13, of the table in section 9-1 of the Income Tax Assessment Act 1997. (2) Such a trustee is called a single-rate trustee. (3) This Part applies to the trustee of a trust that is a *corporate unit trust, or a *public trading trust, for an income year as if the trustee had a taxable income for the income year equal to the net income of the trust for the income year. 45-455 Trustees to whom several instalment rates are given Trustee previously assessed in respect of beneficiary (1) This Part also applies for an income year (the current year), to the trustee of a trust, in respect of a beneficiary of the trust, if for a previous income year the trustee of the trust was liable to be assessed, and to pay tax, under subsection 98(1) or (2) of the Income Tax Assessment Act 1936 in respect of that beneficiary. (2) However, this Part does not apply for the current year to the trustee in respect of that beneficiary if: (a) for that previous income year the trustee was liable to be assessed, and to pay tax, under subsection 98(1) of the Income Tax Assessment Act 1936 in respect of that beneficiary; and (b) that beneficiary will no longer be under a legal disability, or it is reasonable to expect that he or she will no longer be under a legal disability, at the end of the current year. Trustee previously assessed under section 99 or 99A (3) This Part also applies for an income year to the trustee of a trust if for a previous income year the trustee was liable to be assessed, and to pay tax, under section 99 or 99A of the Income Tax Assessment Act 1936. Multiple applications of this Part to the same trustee for the same income year (4) The application of this Part for an income year, to the trustee of a trust, in respect of a beneficiary of the trust, because of subsection (1), is distinct from, and additional to, each of the following: (a) the application of this Part for that income year, to the trustee of the trust, in respect of another beneficiary; (b) the application of this Part for that income year, to the trustee of the trust, because of subsection (3); (c) the application of this Part for that income year to a beneficiary of the trust. (5) The application of this Part for an income year, to the trustee of a trust, because of subsection (3), is distinct from, and additional to, each of the following: (a) the application of this Part for that income year, to the trustee of the trust, in respect of a beneficiary of the trust, because of subsection (1); (b) the application of this Part for that income year to a beneficiary of the trust. (6) A multi-rate trustee is a trustee to whom this Part applies because of this section. 45-460 Rest of Subdivision applies only to multi-rate trustees The rest of this Subdivision applies to you if, and only if, you are a *multi-rate trustee. (It applies instead of Subdivisions 45-J and 45-K.) Note: Except as provided in the rest of this Subdivision or elsewhere, this Part applies according to its terms to a multi-rate trustee. For example, a multi-rate trustee can become an annual payer under Subdivision 45-E. 45-465 Meaning of instalment income Your instalment income for a period is the whole of the trust's *instalment income for that period. 45-468 Multi-rate trustee may pay quarterly instalments Subdivision 45-D (about quarterly payers) applies to you in the same way as it applies to an individual. Note: This means that a multi-rate trustee may pay instalments on the basis of GDP-adjusted notional tax if the trustee otherwise satisfies the relevant test that applies to an individual. How Commissioner works out instalment rate and notional tax for a multi- rate trustee 45-470 Working out instalment rate (1) An instalment rate that the Commissioner gives you must be the percentage worked out to 2 decimal places (rounding up if the third decimal place is 5 or more) using the formula: [pic] However, the instalment rate must be a nil rate if either component of the formula is nil. (2) For the purposes of the formula in subsection (1): base assessment instalment income means so much of the assessable income of the trust, as worked out for the purposes of the *base assessment, as the Commissioner determines is *instalment income of the trust for the *base year. (3) The base assessment is the latest assessment for the most recent income year for which an assessment has been made of the tax payable by you: (a) under subsection 98(1) or (2) of the Income Tax Assessment Act 1936 in respect of the same beneficiary; or (b) under section 99 or 99A of the Income Tax Assessment Act 1936; as appropriate. (4) However, if the Commissioner is satisfied that there is a later income year for which no tax is payable as mentioned in subsection (3), the base assessment is the latest return or other information from which an assessment of tax so payable for that income year would have been made. (5) The base year is the income year to which the *base assessment relates. 45-473 Commissioner must notify you of notional tax (1) When the Commissioner gives you the instalment rate, he or she must also notify you of the amount of your *notional tax, as worked out for the purposes of working out the instalment rate. (2) The Commissioner may incorporate notice of the instalment rate and the amount of your *notional tax in notice of your assessment. 45-475 Working out your notional tax Notional tax if no withholding income (1) Your notional tax is your *adjusted tax (worked out under section 45-340) on your *adjusted taxable income (worked out under section 45-480) for the *base year. Notional tax if trust has withholding income (2) However, your notional tax (as worked out under subsection (1)) is reduced if the trust's assessable income for the *base assessment includes amounts in respect of *withholding payments (except *non-quotation withholding payments). (3) It is reduced (but not below nil) by your *adjusted tax (worked out under section 45-340) on your *adjusted withholding income (worked out under section 45-485) for the *base year. Commissioner may take into account actual and proposed changes to the law (4) Subsections 45-325(4) and (5) apply for the purposes of working out your *notional tax under this section. 45-480 Working out your adjusted taxable income (1) Your adjusted taxable income for the *base year is worked out using the formula: [pic] (2) For the purposes of the formula in subsection (1): adjusted net income of the trust means the net income of the trust, as worked out for the purposes of the *base assessment and: (a) reduced by any *net capital gain included in the trust's assessable income as so worked out; and (b) increased by any deductions for *tax losses that were made in so working out that net income; and (c) reduced by the amount of any tax loss, to the extent that it can be carried forward for working out the trust's net income for the next income year. reduced net income of the trust means the net income of the trust, as worked out for the purposes of the *base assessment and reduced by any *net capital gain included in the trust's assessable income as so worked out. relevant share means the *reduced beneficiary's share, or the *reduced no beneficiary's share, as appropriate, of the net income of the trust, as worked out for the purposes of the *base assessment. 45-483 Meaning of reduced beneficiary's share and reduced no beneficiary's share (1) If the trustee of a trust is liable to be assessed, and to pay tax, for an income year under subsection 98(1) or (2) of the Income Tax Assessment Act 1936 in respect of a particular beneficiary, the reduced beneficiary's share of the net income is the amount on which the trustee is so liable to be assessed and to pay tax, except so much of that amount as is attributable to a *net capital gain included in the trust's assessable income for that income year. (2) If the trustee of a trust is liable to be assessed, and to pay tax, for an income year under section 99 or 99A of the Income Tax Assessment Act 1936, the reduced no beneficiary's share of the net income is the amount on which the trustee is so liable to be assessed and to pay tax, except so much of that amount as is attributable to a *capital gain made by the trust during that income year. 45-485 Working out your adjusted withholding income (1) Your adjusted withholding income for the *base year is worked out using the formula: [pic] (2) For the purposes of the formula in subsection (1): net withholding income of the trust means: . the total of the amounts included in the trust's assessable income for the *base assessment in respect of *withholding payments (except *non-quotation withholding payments); reduced by: . the trust's deductions for that year, as used in making that assessment, to the extent that they reasonably relate to those amounts. reduced net income of the trust has the meaning given by subsection 45-480(2). relevant share has the meaning given by subsection 45-480(2). How Commissioner works out benchmark instalment rate and benchmark tax for a multi-rate trustee 45-525 When Commissioner works out benchmark instalment rate and benchmark tax (1) The Commissioner may work out your *benchmark instalment rate for an income year (the variation year) if, under section 45-205, you choose an instalment rate to work out the amount of your instalment for an *instalment quarter in that year. (2) The Commissioner may work out your *benchmark tax for an income year (the variation year) if, under paragraph 45-112(1)(b) or (c), the amount of your instalment for an *instalment quarter in an income year is worked out on the basis of your estimate of your *benchmark tax for that income year. (3) The Commissioner may work out your *benchmark tax for an income year (the variation year) if, under paragraph 45-115(1)(c), you estimate the amount of your annual instalment for that year. 45-530 How Commissioner works out benchmark instalment rate (1) Your benchmark instalment rate for the variation year is the percentage worked out to 2 decimal places (rounding up if the third decimal place is 5 or more) using the formula: [pic] However, your benchmark instalment rate is a nil rate if either component of the formula is nil. (2) For the purposes of the formula in subsection (1): variation year instalment income means so much of the trust's assessable income for the variation year as the Commissioner determines is *instalment income for that year. 45-535 Working out your benchmark tax Benchmark tax if no withholding income (1) Your benchmark tax is your *adjusted assessed tax (worked out under section 45-375) on the *reduced beneficiary's share, or the *reduced no beneficiary's share, as appropriate, of the net income of the trust for the variation year. Benchmark tax if you had withholding income (2) However, your benchmark tax (as worked out under subsection (1)) is reduced if the trust's assessable income for the variation year includes amounts in respect of *withholding payments. (3) It is reduced (but not below nil) by the total amount of the credits to which you are entitled for the variation year under section 18-25 (for amounts withheld from the withholding payments). Subdivision 45-P-Anti-avoidance rules Table of sections 45-595 Object of this Subdivision 45-600 General interest charge on tax benefit relating to instalments 45-605 When do you get a tax benefit from a scheme? 45-610 What is your tax position for an income year? 45-615 What is your hypothetical tax position for an income year? 45-620 Amount on which GIC is payable, and period for which it is payable 45-625 Credit if you also got a tax detriment from the scheme 45-630 When do you get a tax detriment from a scheme? 45-635 No tax benefit or detriment results from choice for which income tax law expressly provides 45-640 Commissioner may remit general interest charge in special cases 45-595 Object of this Subdivision (1) The object of this Subdivision is to penalise an entity whose *tax position, so far as it relates to *PAYG instalments (and related credits and *general interest charge), is altered by a *scheme that is inconsistent with: (a) the purposes and objects of this Part ; or (b) the purposes and objects of any relevant provisions of this Part; (whether those purposes and objects are stated expressly or not). (2) This Subdivision is not intended to apply to a straightforward use of structural features of this Part if that use is consistent with the purposes and objects mentioned in subsection (1). (3) This Subdivision is to be interpreted and applied accordingly. 45-600 General interest charge on tax benefit relating to instalments (1) You are liable to pay the *general interest charge under section 45-620 if: (a) you get a *tax benefit from a *scheme; and (b) the tax benefit relates to a *component of your *tax position for an income year, and that component is covered by section 45- 610; and (c) having regard to the matters referred to in subsection (3), it would be concluded that an entity that entered into or carried out the scheme (or part of it) did so for the sole or dominant purpose of: (i) an entity (whether you, that entity or another entity) getting one or more tax benefits from the scheme; or (ii) 2 or more entities (whether or not including you or that entity) each getting one or more tax benefits from the scheme. (2) It does not matter: (a) whether or not you entered into or carried out the *scheme (or part of it); or (b) whether the entity that entered into or carried out the scheme (or part of it) did so alone or together with one or more others; or (c) whether the scheme (or any part of it) was entered into or carried out inside or outside Australia; or (d) whether or not the *tax benefit you got is of the same kind as a tax benefit mentioned in paragraph (1)(c). Matters to be considered in determining purpose of scheme (3) In considering an entity's purpose in entering into or carrying out a *scheme (or part of one), have regard to these matters: (a) the manner in which the scheme or part was entered into or carried out; (b) the form and substance of the scheme, including: (i) the legal rights and obligations involved in the scheme; and (ii) the economic and commercial substance of the scheme; (c) the purposes and objects of this Part and of any relevant provisions of this Part (whether those purposes and objects are stated expressly or not); (d) the timing of the scheme; (e) the period over which the scheme was entered into and carried out; (f) the effect that this Act would have in relation to the scheme apart from this Subdivision; (g) any change in your financial position that has resulted from the scheme, or may reasonably be expected to result from it; (h) any change that has resulted from the scheme, or may reasonably be expected to result from it, in the financial position of an entity that has or had a connection or dealing with you, whether the connection or dealing is or was of a family, business or other nature; (i) any other consequence for you, or for such an entity, of the scheme having been entered into or carried out; (j) the nature of the connection between you and such an entity, including the question whether the dealing is or was at *arm's length. GIC is payable on each of 2 or more tax benefits (4) If you get 2 or more *tax benefits from the *scheme, this section has a separate application to each of them. 45-605 When do you get a tax benefit from a scheme? (1) This section describes how to work out whether you get a tax benefit from a *scheme and, if so, the amount of the tax benefit. (2) First, determine your actual *tax position for an income year (apart from this Subdivision). (3) Next, determine your *hypothetical tax position for the same income year (apart from this Subdivision). (4) Then compare each *component of the 2 positions. If the amount of that component of the actual *tax position is lower than the amount of that component of the *hypothetical tax position, the difference between the 2 amounts is a tax benefit that you get from the *scheme. Note 1: The difference between the 2 amounts is not a tax benefit to the extent that it is attributable to certain things for which the income tax law expressly provides. See section 45- 635. Note 2: An entity may get 2 or more tax benefits from the same scheme. One reason is that the scheme may affect 2 or more components of the entity's tax position for an income year. Another reason is that the scheme may affect the tax position for 2 or more income years. 45-610 What is your tax position for an income year? Your tax position for an income year consists of a number of components. The table sets out each component, and how to work out the amount of the component. |Components of your tax position that relate to PAYG | |instalments and credits | |Item |Each of these is a |The amount of that | | |component: |component is: | |1 |Your instalment for |The amount worked out as | | |each *instalment |follows: | | |quarter in the income|(a) if you are liable to | | |year is a quarterly |pay an instalment for that | | |instalment component.|instalment quarter-the | | | |amount of the instalment; | | | |or | | | |(b) if for any reason you | | | |are not liable to pay an | | | |instalment for that | | | |instalment quarter-nil | | | |(even if you are an *annual| | | |payer or a *quarterly payer| | | |who pays 2 instalments | | | |annually on the basis of | | | |GDP-adjusted notional tax);| | | |or | | | |(c) if you are entitled to | | | |claim a credit for that | | | |instalment quarter under | | | |section 45-420 (because the| | | |instalment for that quarter| | | |is to be worked out on the | | | |basis of your estimated | | | |benchmark tax)-the amount | | | |of the credit (expressed as| | | |a negative amount). | |2 |Your annual |The amount worked out as | | |instalment for the |follows: | | |income year is the |(a) if you are liable to | | |annual instalment |pay an annual instalment | | |component. |for the income year-the | | | |amount of the instalment; | | | |or | | | |(b) if for any reason you | | | |are not liable to pay an | | | |annual instalment for the | | | |income year-nil (even if | | | |you are a *quarterly | | | |payer). | |3 |A variation credit |The amount worked out as | | |component is a credit|follows: | | |arising under |(a) if you are entitled to | | |section 45-215 |the credit-the amount of | | |because the amount of|the credit (expressed as a | | |your instalment for |negative amount); or | | |an *instalment |(b) otherwise-nil. | | |quarter in the income| | | |year is to be worked | | | |out using an | | | |instalment rate you | | | |chose under | | | |section 45-205. | | |4 |A variation GIC |The amount worked out as | | |component is the |follows: | | |*general interest |(a) if you are liable to | | |charge you are liable|pay the charge-the amount | | |to pay under: |of the charge; or | | |(a) subsection |(b) otherwise-nil. | | |45-230(2) (varied | | | |instalment rate); or | | | |(b) subsection | | | |45-232(2) (estimated | | | |benchmark tax); or | | | |(c) subsection | | | |45-235(2) or (3) | | | |(annual instalment); | | | |because of how your | | | |instalment for an | | | |*instalment quarter | | | |in the income year, | | | |or for the income | | | |year, was worked out.| | Example: A scheme results in X Pty Ltd being able to choose to be an annual payer for the 2000-01 income year. The following table shows the actual tax position of X Pty Ltd for that year, and also its hypothetical tax position as defined in section 45-615. X Pty Ltd has got 4 tax benefits from the scheme: one for each of the 4 instalment quarters. |2000-01 income year | |For this |The amount |The amount | |component: |of that |of that | | |component of|component of| | |the actual |the | | |tax position|hypothetical| | |is: |tax position| | | |is: | |Quarterly |nil |$3,000 | |instalment | | | |component | | | |for first | | | |instalment | | | |quarter | | | |Quarterly |nil |$4,000 | |instalment | | | |component | | | |for second | | | |instalment | | | |quarter | | | |Quarterly |nil |$3,000 | |instalment | | | |component | | | |for third | | | |instalment | | | |quarter | | | |Quarterly |nil |$2,000 | |instalment | | | |component | | | |for fourth | | | |instalment | | | |quarter | | | |Annual |$12,000 |nil | |instalment | | | |component | | | 45-615 What is your hypothetical tax position for an income year? Your hypothetical tax position for an income year is what would have been, or what could reasonably be expected to have been, your *tax position for the income year if the *scheme had not been entered into or carried out. 45-620 Amount on which GIC is payable, and period for which it is payable (1) You are liable to pay the *general interest charge on twice the *tax benefit mentioned in paragraph 45-600(1)(a). Note 1: To the extent that you also got a tax detriment from the scheme, you get a credit: see section 45-625. Note 2: In special circumstances the Commissioner can remit some or all of the general interest charge: see section 45-640. (2) You are liable to pay the charge for each day in the period that: (a) started at the beginning of the day by which your instalment for the period mentioned in the applicable item of the table in section 45-610 was due to be paid, or would have been due to be paid if you had been liable to pay an instalment for that period; and (b) finishes at the end of the day on which your assessed tax for the income year is due to be paid. (3) The Commissioner must give you written notice of the *general interest charge to which you are liable under subsection (1). You must pay the charge within 14 days after the notice is given to you. (4) If any of the *general interest charge to which you are liable under subsection (1) remains unpaid at the end of the 14 days referred to in subsection (3), you are also liable to pay the general interest charge on the unpaid amount for each day in the period that: (a) starts at the end of those 14 days; and (b) finishes at the end of the last day on which, at the end of the day, any of the following remains unpaid: (i) the unpaid amount; (ii) general interest charge on the unpaid amount. 45-625 Credit if you also got a tax detriment from the scheme (1) You are entitled to a credit if: (a) you are liable to pay *general interest charge under section 45- 620 because you got one or more *tax benefits from the *scheme; and (b) the Commissioner is satisfied that: (i) you got a *tax detriment from the scheme; and (ii) the tax detriment relates to a *component of your *tax position for an income year, and that component is covered by section 45-610. (It does not matter whether that income year is the same as the one referred to in section 45-600.) Note: How the credit is applied is set out in Division 3 of Part IIB. (2) The credit is equal to the *general interest charge on twice the amount of the *tax detriment for each day in the period that: (a) started at the beginning of the day by which your instalment for the period mentioned in the item of the table in section 45- 610 that applies for the purposes of working out the amount of the tax detriment: (i) was due to be paid; or (ii) would have been due to be paid if you had been liable to pay an instalment for that period; and (b) finishes at the end of the day on which your assessed tax for the income year is due to be paid. (3) However, the credit cannot exceed the total *general interest charge you are liable to pay under section 45-620 because you got one or more *tax benefits from the *scheme. Credit for each of 2 or more tax detriments (4) If you get 2 or more *tax detriments from the scheme, subsections (1) and (2) have a separate application to each of them. However, the total of the credits cannot exceed the total *general interest charge referred to in subsection (3). 45-630 When do you get a tax detriment from a scheme? (1) This section describes how to work out whether you get a tax detriment from a *scheme and, if so, the amount of the tax detriment. (2) First, determine your actual *tax position for an income year (apart from this Subdivision). (3) Next, determine your *hypothetical tax position for the same income year (apart from this Subdivision). (4) Then compare each *component of the 2 positions. If the amount of that component of the actual *tax position is higher than the amount of that component of the *hypothetical tax position, the difference between the 2 amounts is a tax detriment that you get from the *scheme. Example: In the fact situation in the example in section 45-610, X Pty Ltd gets a tax detriment from the scheme for the annual instalment component of its tax position for the income year. Note 1: The difference between the 2 amounts is not a tax detriment to the extent that it is attributable to certain things for which the income law expressly provides. See section 45-635. Note 2: An entity may get 2 or more tax detriments from the same scheme. One reason is that the scheme may affect 2 or more components of the entity's tax position for an income year. Another reason is that the scheme may affect the tax position for 2 or more income years. 45-635 No tax benefit or detriment results from choice for which income tax law expressly provides Choice under the income tax law generally (1) The difference between the 2 amounts referred to in subsection 45-605(4) or 45-630(4) is not a *tax benefit or *tax detriment if there would have been no difference between the 2 amounts but for one or more matters covered by subsection (3). (2) The difference between the 2 amounts is not a *tax benefit or *tax detriment to the extent that the difference between the 2 amounts would have been less but for one or more matters covered by subsection (3). (3) This subsection covers: (a) an entity making an agreement, choice, declaration, election or selection; or (b) an entity giving a notice or exercising an option; for which this Act expressly provides. However, this subsection does not cover an entity doing such a thing under: (c) Subdivision 126-B (about CGT roll-overs involving certain companies in the same wholly-owned group) of the Income Tax Assessment Act 1997; or (d) Subdivision 170-B of that Act (about transferring a net capital loss between certain companies in the same wholly-owned group). Matters excluded in applying subsection (1) or (2) (4) Subsection (1) or (2) does not apply to a matter covered by subsection (3) if an entity entered into or carried out the *scheme (or part of it) for the sole or dominant purpose of creating a circumstance or state of affairs whose existence is necessary for the entity referred to in subsection (3): (a) to make the agreement, choice, declaration, election or selection; or (b) to give the notice or exercise the option. Choice under some CGT provisions (5) The difference between the 2 amounts is not a *tax benefit or *tax detriment if: (a) there would have been no difference between the 2 amounts but for one or more matters covered by subsection (7); and (b) the *scheme consisted wholly of that matter or those matters. (6) Also, the difference between the 2 amounts is not a *tax benefit or *tax detriment to the extent that the difference between the 2 amounts would have been less but for one or more matters covered by subsection (7), but only if the *scheme consisted wholly of that matter or those matters. (7) This subsection covers: (a) a choice made under Subdivision 126-B (about CGT roll-overs involving certain companies in the same wholly-owned group) of the Income Tax Assessment Act 1997; or (b) an agreement made under Subdivision 170-B of that Act (about transferring a net capital loss between certain companies in the same wholly-owned group); 45-640 Commissioner may remit general interest charge in special cases (1) The Commissioner may, if he or she is satisfied that because special circumstances exist it would be fair and reasonable to do so, remit the whole or any part of any *general interest charge payable under section 45-620. (2) If the Commissioner does so, section 45-625 (about credits for tax detriments from schemes) applies, and is taken always to have applied, as if the remitted amount had never been payable. Subdivision 45-Q-General rules for consolidated groups Guide to Subdivision 45-Q 45-700 What this Subdivision is about This Subdivision allows the members of a consolidated group to be treated as a single entity for the purposes of Pay as you go (PAYG) instalments. Generally, the head company of the group is the entity liable to pay PAYG instalments. The PAYG instalments provisions in this Part apply to the head company in much the same way as they apply to any other company. However, the operation of some of these provisions is modified by this Subdivision. This Subdivision also contains special rules to deal with changes in the membership of the group. Note 1: Subdivision 45-R contains special rules that apply to members of a consolidated group before they are treated as a single entity for the purposes of this Part. It also contains special rules that affect the operation of this Subdivision (see sections 45-880 and 45-885). Note 2: Subdivision 45-S extends the operation of this Subdivision so that it can apply to members of a MEC group. It contains modifications of this Subdivision for the purposes of that extended operation. Table of sections Application of Subdivision 45-705 Application of Subdivision to head company Usual operation of this Part for consolidated group members 45-710 Single entity rule 45-715 When instalments are due-modification of section 45-61 45-720 Head company cannot be an annual payer-modification of section 45-140 Membership changes 45-740 Change of head company 45-755 Entry rule (for an entity that becomes a subsidiary member of a consolidated group) 45-760 Exit rule (for an entity that ceases to be a subsidiary member of a consolidated group) 45-775 Commissioner's power to work out different instalment rate or GDP-adjusted notional tax Application of Subdivision 45-705 Application of Subdivision to head company Period during which Subdivision applies to head company (1) Subject to sections 45-880 and 45-885, this Subdivision applies to a company as the *head company of a *consolidated group during the period: (a) starting at the start of the *instalment quarter of the company determined under subsection (2), (3) or (4); and (b) ending: (i) at the end of the instalment quarter of the company determined under paragraph (5)(a) or (b); or (ii) just before the instalment quarter of the company determined under paragraph (5)(c) or (d). When the period begins-initial head company instalment rate (2) This Subdivision starts to apply to a company as the *head company of a *consolidated group at the start of an *instalment quarter under this subsection if, during that quarter, the Commissioner gives the company (as that head company) the *initial head company instalment rate. Note: The operation of this subsection may be affected by section 45-885. When the period begins-group created from MEC group (3) This Subdivision starts to apply to a company as the *head company of a *consolidated group at the start of an *instalment quarter (the starting quarter) under this subsection if all of the following conditions are satisfied: (a) the consolidated group is *created from a *MEC group during the starting quarter; (b) the company is the head company of the consolidated group when the consolidated group is created from the MEC group; (c) either of the following applies: (i) this Subdivision applied, in accordance with Subdivision 45-S, to the *provisional head company of the MEC group at the end of the previous instalment quarter; (ii) the Commissioner gives the *initial head company instalment rate to the provisional head company of the MEC group during the starting quarter. Note: For the application of this Subdivision to a provisional head company of a MEC group: see section 45-915. When the period begins-new head company (4) This Subdivision starts to apply to a company as the *head company of a *consolidated group at the start of an *instalment quarter (the starting quarter) under this subsection if all of the following conditions are satisfied: (a) the company is an interposed company mentioned in subsection 124-380(5) of the Income Tax Assessment Act 1997; (b) the company chooses under that subsection that the consolidated group is to continue in existence at and after the completion time mentioned in that subsection; (c) the completion time occurs during the starting quarter; (d) one of the following subparagraphs applies: (i) this Subdivision applied to the original company mentioned in that subsection (as the head company of the consolidated group) at the end of the previous instalment quarter; (ii) the Commissioner gives the *initial head company instalment rate to the original company mentioned in that subsection (as the head company of the consolidated group) during the starting quarter; (iii) the consolidated group is *created from a *MEC group during the starting quarter and this Subdivision applied to the *provisional head company of the MEC group at the end of the previous instalment quarter; (iv) the consolidated group is created from a MEC group during the starting quarter and the Commissioner gives the initial head company instalment rate to the provisional head company of the MEC group during the starting quarter. When the period ends (5) This Subdivision stops applying to a company as the *head company of a *consolidated group at the earliest of the following times after the company becomes the head company: (a) the end of the *instalment quarter during which the consolidated group ceases to exist (other than because a *MEC group is *created from the consolidated group); (b) the end of the instalment quarter during which the Commissioner is notified of the creation of a MEC group from the consolidated group if the MEC group is created during that instalment quarter; (c) just before the instalment quarter during which the Commissioner is notified of the creation of a MEC group from the consolidated group if the MEC group was created before that instalment quarter; (d) just before the instalment quarter that includes the completion time mentioned in subsection 124-380(5) of the Income Tax Assessment Act 1997 where an interposed company mentioned in that subsection chooses under that subsection that the consolidated group is to continue in existence. Note: The operation of this subsection because of paragraph (a) may be affected by section 45-880. (6) For the purposes of subsection (5), the Commissioner is notified of the creation of a *MEC group from a *consolidated group when the Commissioner receives a notice of the consolidation of the MEC group under subsection 719-40(1) of the Income Tax Assessment Act 1997. (7) If this Subdivision stops applying to a company as the *head company of a *consolidated group just before an *instalment quarter under paragraph (5)(c), then, for the purposes of this Part, this Act has effect for the company and other *members of the group as if: (a) the consolidated group had continued to exist until just before the start of that quarter; and (b) the company were the head company of the group until just before the start of that quarter. (8) To avoid doubt, this Subdivision does not apply to a company as the *head company of a *consolidated group for any time at all if: (a) subsection (2), (3) or (4), and subsection (5), would, apart from this subsection, apply to the company; but (b) the time at which this Subdivision would stop applying to the company under subsection (5) is before the time at which this Subdivision would start to apply to the company under subsection (2), (3) or (4). (9) To avoid doubt, and apart from the operation of subsection (7), this Subdivision may apply to a company as the *head company of a *consolidated group at a time when the company is not in fact the head company of the group. Note: An example of this is when an interposed company becomes the new head company of a consolidated group. Under this section and section 45-740, this Subdivision may start applying to the company as if it had already become the head company when it is not yet such a company. Usual operation of this Part for consolidated group members 45-710 Single entity rule If an entity is a *subsidiary member of a *consolidated group for any period during which this Subdivision applies to the *head company of the group: (a) that entity; and (b) any other subsidiary member of the group; are taken for the purposes of this Part to be parts of that head company (rather than separate entities) during that period. Note: That means, amongst other things, the head company would be liable to pay instalments for that period as if the subsidiary members were parts of the head company. 45-715 When instalments are due-modification of section 45-61 If: (a) the *head company of a *consolidated group is liable to pay an instalment for an *instalment quarter; and (b) this Subdivision applies to the head company during that quarter; then, despite subsection 45-61(2), the instalment is due on or before the 21st day of the month after the end of that quarter whether or not the head company is a *deferred BAS payer on that day. 45-720 Head company cannot be an annual payer-modification of section 45- 140 Despite any other provisions in this Part, the *head company of a *consolidated group cannot choose to be an *annual payer under section 45-140 while this Subdivision applies to the head company. Note: You stop being an annual payer when this Subdivision starts applying to you as the head company of a consolidated group: see section 45-160. Membership changes 45-740 Change of head company Object (1) The object of this section (except subsection (8)) is to ensure that, for the purposes of this Part, when a company becomes the new *head company of a *consolidated group: (a) the company inherits the history of the former head company of the group; and (b) the history of the new head company is effectively ignored. (2) This section applies to a *head company of a *consolidated group if: (a) the company is an interposed company mentioned in subsection 45- 705(4) (an interposed company that chooses under subsection 124- 380(5) of the Income Tax Assessment Act 1997 that the consolidated group is to continue in existence at and after the completion time mentioned in that subsection); and (b) the conditions in subsection 45-705(4) are satisfied in relation to the interposed company (whether or not this Subdivision applies to the company as the head company of the group for any period of time). (3) Everything that happened before the completion time in relation to the company (the original company) that was the *head company of the *consolidated group immediately before the completion time: (a) is taken to have happened in relation to the interposed company instead of in relation to the original company; and (b) is taken to have happened in relation to the interposed company instead of what would (apart from this section) be taken to have happened in relation to the interposed company before the completion time; just as if, at all times before the completion time: (c) the interposed company had been the original company; and (d) the original company had been the interposed company. (4) To avoid doubt, subsection (3) also covers everything that, immediately before the completion time, was taken to have happened in relation to the original company because of: (a) section 701-1 of the Income Tax Assessment Act 1997 (single entity rule); or (b) section 701-5 of that Act (entry history rule); or (c) section 703-75 of that Act (effects of an interposed company becoming the *head company of a *consolidated group); or (d) section 719-90 of that Act (effects of a change of head company of a *MEC group); or (e) section 45-710 in this Schedule (single entity rule for the purposes of this Part), including an application of that section under Subdivision 45-S in this Schedule; or (f) this section; or (g) section 45-920 in this Schedule (effects of a change of *provisional head company of a MEC group for the purposes of this Part); or (h) one or more previous applications of any of the provisions covered by paragraphs (a) to (g). (5) In addition, and without affecting subsection (3): (a) an assessment of the original company for an income year that ends before the income year that includes the completion time; or (b) an amendment of the assessment; is taken to be something that had happened to the interposed company, whether or not the assessment or amendment is made before the completion time. (6) This section has effect for the purposes of applying this Part to *members of the *consolidated group in relation to an *instalment quarter of the interposed company that ends after the completion time. Note: An assessment mentioned in subsection (5) may therefore be taken to be the base assessment of the interposed company for the purposes of this Part. (7) Subsections (1) to (6) are to be disregarded in applying section 45-705 (about the application of this Subdivision to a company as the *head company of a *consolidated group). Note: For example, if the Commissioner has given an initial head company instalment rate to the original company during an earlier instalment quarter, the rate is not, despite this section, treated as if it had been given to the interposed company for the purposes of section 45-705. Subject to the other provisions in that section, this Subdivision therefore starts applying to the interposed company under subsection 45-705(4). Special rule for the original company (8) A provision of this Part that applies on an entity becoming a *subsidiary member of a *consolidated group does not apply to the original company when it is taken to have become such a member at the completion time as a result of section 703-70 of the Income Tax Assessment Act 1997. Note: Section 45-755 (the entry rule) therefore does not apply to the original company on the company becoming a subsidiary member of the consolidated group. 45-755 Entry rule (for an entity that becomes a subsidiary member of a consolidated group) (1) Despite any other provisions in this Part, an entity is liable to pay an instalment for an *instalment quarter or income year (as appropriate) during which the entity becomes a *subsidiary member of a *consolidated group if: (a) this Subdivision applies to the *head company of the group at any time during that quarter or year (as appropriate); and (b) the entity would otherwise be liable to pay an instalment for that quarter or year (as appropriate) if it had not become a subsidiary member of the group; and (c) the entity becomes a subsidiary member of the group on a day other than the first day of that quarter or the first day of that year (as appropriate). Note: Under paragraph (b), this section could apply to an entity that, at the time of becoming a subsidiary member of the group, was not a subsidiary member of another consolidated group, or was a member of another consolidated group but this Subdivision did not apply to the head company of that other group at that time. Modifications for a quarterly payer who pays 4 instalments annually on the basis of GDP-adjusted notional tax (2) Subsections (3) and (4) apply to the entity if: (a) the entity would have been a *quarterly payer who pays 4 instalments annually on the basis of GDP-adjusted notional tax at the end of the *instalment quarter mentioned in subsection (1) if it had not become a *subsidiary member of the group; and (b) the amount of the instalment payable by the entity for that quarter would have been worked out under paragraph 45- 112(1)(b); and (c) that quarter is not the fourth instalment quarter in an income year. (3) For the purposes of working out the amount of the instalment payable by the entity for that *instalment quarter, subsection 45- 410(5) applies to the entity as if that quarter were the fourth instalment quarter in the income year for which the entity is liable to pay an instalment. (4) For the purposes of working out the *acceptable amount of the entity's instalment for that instalment quarter, subsection 45- 232(3) applies to the entity as if that quarter were the fourth instalment quarter in the income year for which the entity is liable to pay an instalment. 45-760 Exit rule (for an entity that ceases to be a subsidiary member of a consolidated group) (1) This section applies to an entity if all of the following conditions are satisfied: (a) the entity ceases to be a *subsidiary member of a *consolidated group during an *instalment quarter of the *head company of the group; (b) this Subdivision applies to the head company of the group during that instalment quarter; (c) the entity does not, at the time it ceases to be a subsidiary member of the group, become: (i) a subsidiary member of another consolidated group the head company of which is one to which this Subdivision applies at that time; or (ii) a member (other than the *provisional head company) of a *MEC group the provisional head company of which is one to which this Subdivision applies, in accordance with Subdivision 45- S, at that time; (d) this Part applies to the entity under section 45-10. (2) This Part applies to the entity as if: (a) the Commissioner had given the entity an instalment rate equal to the most recent instalment rate given to the *head company mentioned in paragraph (1)(a) before the end of the *instalment quarter mentioned in that paragraph; and (b) the entity were a *quarterly payer who pays on the basis of instalment income at the end of that instalment quarter, and of each subsequent instalment quarter, until: (i) if the Commissioner first gives the entity an instalment rate worked out on the basis of the *base assessment covered by subsection (3) during the first instalment quarter of an income year-immediately before the end of that first instalment quarter; or (ii) if that rate is given to the entity during any other instalment quarter of an income year-immediately after the end of the last instalment quarter of that year. (3) This section only covers the first *base assessment of the entity for an income year that is, or includes, a period after the entity ceases to be a *subsidiary member of the group. 45-775 Commissioner's power to work out different instalment rate or GDP- adjusted notional tax (1) This section applies if any of the following changes (the membership change) occurs in relation to a *consolidated group while this Subdivision applies to the *head company of the group: (a) an entity becomes a *subsidiary member of the group or a number of entities become subsidiary members of the group; (b) an entity ceases to be a subsidiary member of the group or a number of entities cease to be subsidiary members of the group. (2) If the Commissioner, having regard to the object of this Part and the membership change, is of the opinion that it would be reasonable to do so, the Commissioner may work out: (a) an instalment rate that is higher, or lower, than the most recent instalment rate given by the Commissioner to the *head company under section 45-15; or (b) an amount of *GDP-adjusted notional tax that is higher, or lower, than the amount of GDP-adjusted notional tax worked out for the purposes of the most recent amount of instalment notified by the Commissioner to the head company under paragraph 45-112(1)(a). (3) The new instalment rate or amount of *GDP-adjusted notional tax must be a rate or amount that, in the opinion of the Commissioner, is reasonable having regard to the object of this Part and the membership change. Note 1: Subdivision 45-J does not apply for the purpose of working out an instalment rate under this section. Note 2: Section 45-405 does not apply for the purpose of working out an amount of GDP-adjusted notional tax under this section. Additional applications of subsection (2) (4) If, after exercising the power in relation to the membership change under subsection (2) for the first time, and on the basis of an assessment (including an amendment) of the *head company for the income year in which the change occurs, or for an earlier year, the Commissioner has worked out: (a) another instalment rate under section 45-320 for the company (whether or not the Commissioner has given that rate to the company); or (b) another amount of *GDP-adjusted notional tax under section 45- 405 for the company (whether or not the Commissioner has notified the company an amount of instalment based on that other amount); the Commissioner may again exercise the power under subsection (2) in relation to the membership change, as if: (c) the rate mentioned in paragraph (a) were the most recent instalment rate mentioned in paragraph (2)(a); and (d) the amount of GDP-adjusted notional tax mentioned in paragraph (b) were the amount of GDP-adjusted notional tax worked out for the purposes of the most recent amount of instalment that is mentioned in paragraph (2)(b). (5) To avoid doubt, in relation to the membership change, the Commissioner: (a) may exercise the power under subsection (2) by applying subsection (4) more than once; but (b) must not exercise that power more than once in relation to a particular instalment rate mentioned in paragraph (4)(a) or a particular amount of *GDP-adjusted notional tax mentioned in paragraph (4)(b). Subdivision 45-R-Special rules for consolidated groups Guide to Subdivision 45-R 45-850 What this Subdivision is about This Subdivision deals with the application of this Part to members of a consolidated group after the group has come into existence but before the members are treated as a single entity for the purposes of this Part. This Subdivision also contains special rules in relation to the application of Subdivision 45-Q to members of a consolidated group in these circumstances: (a) a group whose members were treated as a single entity under that Subdivision (a mature group) is acquired by another group (see section 45-880); or (b) a member of a mature group ceases to be such a member and becomes the head company of a new group (see section 45- 885). Note: Subdivision 45-S extends the operation of this Subdivision so that it can apply to members of a MEC group. It contains modifications of this Subdivision for the purposes of that extended operation. Table of sections Operative provisions 45-855 Section 701-1 disregarded for certain purposes 45-860 Member having a different instalment period 45-865 Credit rule 45-870 Head company's liability to GIC on shortfall in quarterly instalment 45-875 Other rules about the general interest charge 45-880 Continued application of Subdivision 45-Q to the head company of an acquired group 45-885 Early application of Subdivision 45-Q to the head company of a new group Operative provisions 45-855 Section 701-1 disregarded for certain purposes If: (a) an amount is required to be worked out for the purpose of determining the *instalment income of an entity that is a *member of a *consolidated group for a period that is all or a part of a *consolidation transitional year for the entity; and (b) the period ends before Subdivision 45-Q starts to apply, because of subsection 45-705(2) or subparagraph 45- 705(3)(c)(ii), (4)(d)(ii) or (iv), to the *head company of the group; that amount must be worked out without regard to any application of section 701-1 of the Income Tax Assessment Act 1997 to the entity in relation to the period. 45-860 Member having a different instalment period Different instalment period-instalment quarter (1) If: (a) but for Subdivision 45-Q, a *subsidiary member of a *consolidated group would be liable to pay an instalment for an *instalment quarter of the subsidiary member that includes the starting time; and (b) that quarter ends before the end of the instalment quarter of the *head company of the group that includes the starting time; then, despite section 45-710, the subsidiary member is liable to pay an instalment for that quarter. Different instalment period-income year (2) If: (a) but for Subdivision 45-Q, a *subsidiary member of a *consolidated group would be liable to pay an annual instalment for an income year of the subsidiary member that includes the starting time; and (b) that year ends before the end of the income year of the *head company of the group that includes the starting time; then, despite section 45-710, the subsidiary member is liable to pay an instalment for that year. Assumptions for working out amount of instalment (3) The amount of the instalment must be worked out on the following assumptions: (a) that the *instalment quarter or income year of the *subsidiary member (as appropriate) consists only of the period that is the part of the quarter or year occurring before the starting time; (b) that an amount required to be worked out for the purpose of determining the *instalment income of the subsidiary member for that period is worked out under section 45-855. (4) For the purposes of this section, the starting time is the time at which Subdivision 45-Q starts to apply to the *head company of the group because of subsection 45-705(2) or subparagraph 45- 705(3)(c)(ii), (4)(d)(ii) or (iv). 45-865 Credit rule (1) When the Commissioner makes an assessment: (a) of the income tax that the *head company of a *consolidated group is liable to pay for a *consolidation transitional year for the head company; or (b) that no income tax is payable by the head company for that year; the head company is, in addition to any credit to which it is entitled under section 45-30 for that year, entitled to a credit in relation to instalments payable by an entity that is a *subsidiary member of the group at any time during that year. (2) The credit is equal to: (a) the sum of so much of each instalment payable by the entity (even if it has not paid it) for an *instalment quarter of a *consolidation transitional year for the entity, or for that year, as is reasonably attributable to so much of that quarter or year: (i) which is, or is included in, the consolidation transitional year for the *head company; and (ii) during which the entity is a *subsidiary member of the group; minus (b) the sum of so much of each credit that the entity has claimed under section 45-215 or 45-420 for each instalment quarter covered by paragraph (a) as is reasonably attributable to: (i) for a credit under section 45-215-so much of the preceding instalment quarters of that consolidation transitional year for the entity which is covered by subparagraphs (a)(i) and (ii); or (ii) for a credit under section 45-420-so much of that instalment quarter and the preceding instalment quarters of that consolidation transitional year for the entity which is covered by subparagraphs (a)(i) and (ii). (3) To avoid doubt, if: (a) during the *instalment quarter or the *consolidation transitional year mentioned in paragraph (2)(a), the entity is a *subsidiary member of: (i) 2 or more *consolidated groups; or (ii) one or more consolidated groups and one or more *MEC groups; and (b) an amount is taken into account under that paragraph or paragraph (2)(b) in working out the credit to which the *head company of one of the groups is entitled under subsection (1); that amount is not to be taken into account in working out the credit to which the head company of another of those groups is entitled under that subsection. (4) A reference in subsection (3) to subsection (1) or paragraph (2)(a) or (b) includes a reference to that provision in its extended operation in relation to a *MEC group under Subdivision 45-S. Note: This section applies to members of a MEC group with the modifications set out in section 45-930. 45-870 Head company's liability to GIC on shortfall in quarterly instalment Liability for the general interest charge (1) Subject to subsections (3) and (4), the *head company of a *consolidated group is liable to pay the *general interest charge under this section for an *instalment quarter in a *consolidation transitional year for the head company if: (a) the instalment payable by at least one *member of the group for that quarter is worked out: (i) under paragraph 45-112(1)(b) or (c); or (ii) by using an instalment rate under section 45-205; and (b) the sum of instalments payable by the members of the group for that quarter, reduced by credits claimed by those members under section 45-215 or 45-420 for that quarter, is less than 17/80 of the head company's *benchmark tax for that consolidation transitional year. Note: 17/80 of the head company's benchmark tax represents an amount that is 85% of one quarter of that benchmark tax. Amount on which the charge is payable (2) Subject to subsections (3) and (4), the *general interest charge is payable on the amount worked out in accordance with the following method statement (if the amount is a positive amount). Method statement Step 1. Work out the amount that is 1/4 of the *benchmark tax of the *head company for that *consolidation transitional year of that head company. Step 2. Work out the sum of instalments that would have been payable by all the *members of the group for that *instalment quarter of that *head company if none of the members had worked out its instalment for that quarter under paragraph 45-112(1)(b) or (c) or by using an instalment rate under section 45-205. Step 3. Work out the sum of instalments payable by all the *members of the group for that *instalment quarter, reduced by credits claimed by the members under section 45-215 or 45- 420 for that quarter. Step 4. Reduce the lesser of the results of steps 1 and 2 by the result of step 3. The result of this step is the amount on which the *general interest charge is payable if it is a positive amount. No general interest charge is payable if the result of this step is nil or a negative amount. Amounts of instalments or credits that are taken into account (3) In working out an amount of instalment or credit for a *subsidiary member of the group for the purposes of any of the following provisions: (a) paragraph (1)(b); (b) step 2 or 3 of the method statement; take into account only an amount of instalment or credit covered by that provision that is reasonably attributable to a period in that *consolidation transitional year of the *head company during which it is a subsidiary member of the group. Members having different instalment quarters (4) In working out an amount of instalment or credit for a *subsidiary member whose *instalment quarters differ from those of the *head company for the purposes of any of the following provisions: (a) paragraph (1)(a) or (b); (b) step 2 or 3 of the method statement; a reference to an instalment quarter in a *consolidation transitional year of the head company in any of those provisions includes a reference to the last instalment quarter of that subsidiary member ending before the end of that instalment quarter of the head company. 45-875 Other rules about the general interest charge (1) The *general interest charge under section 45-870 for an *instalment quarter in an income year is payable by the *head company for each day in the period that: (a) started at the beginning of the day by which the instalment for that quarter was due to be paid; and (b) finishes at the end of the day on which the head company's assessed tax for that income year is due to be paid. (2) The Commissioner must give the *head company written notice of the *general interest charge. The head company must pay the charge within 14 days after the notice is given to the head company. (3) If any of the *general interest charge remains unpaid at the end of the 14 days, the *head company is also liable to pay the general interest charge on the unpaid amount for each day in the period that: (a) starts at the end of those 14 days; and (b) finishes at the end of the last day on which, at the end of the day, any of the following remains unpaid: (i) the unpaid amount; (ii) general interest charge on the unpaid amount. (4) The Commissioner may, if he or she is satisfied that because special circumstances exist it would be fair and reasonable to do so, remit the whole or any part of any *general interest charge payable under section 45-870. 45-880 Continued application of Subdivision 45-Q to the head company of an acquired group (1) This section applies to a company for which all of the following conditions are satisfied in relation to a particular time (the takeover time): (a) just before the takeover time, Subdivision 45-Q applied to the company as the *head company of a *consolidated group; (b) at the takeover time, the company becomes a *wholly-owned subsidiary of a *member of another consolidated group or *MEC group; (c) that other group is consolidated at or before the takeover time under section 703-50 or 719-50 of the Income Tax Assessment Act 1997; (d) the Commissioner receives the choice (or notice) under that section for the consolidation of that other group not later than 28 days after the takeover time, or within such further period (if any) as the Commissioner allows; (e) at the takeover time, Subdivision 45-Q (including that Subdivision as applied under Subdivision 45-S) does not apply to the head company or the *provisional head company of that other group. (2) For the purposes of this Part only, this Act has effect in relation to the company and the other *members of the *consolidated group mentioned in paragraph (1)(a) (the preserved group) as if, during the period covered by subsection (5): (a) the preserved group had continued to exist as a consolidated group; and (b) the company were still the *head company of the preserved group; and (c) Subdivision 45-Q had continued to apply to the company as the head company of the preserved group; and (d) an entity, while being a *subsidiary member of the preserved group, were not treated as a member of the group mentioned in paragraph (1)(b) (the new group). (3) Subsection (2) does not stop the company from being a member of the new group for the purposes of this Part during the period covered by subsection (5). Note: This means, for example, sections 45-855 and 45-860 apply to the head company as a member of the new group. (4) However, for the purposes of applying section 45-855 to the company, a reference in that section to an application of section 701-1 of the Income Tax Assessment Act 1997 to the company in relation to the period mentioned in section 45-855 is taken to be: (a) a reference only to an application of section 701-1 of that Act to the company as a member of the new group during that period; and (b) not a reference to an application (because of subsection (2) of this section) of section 701-1 of that Act to the company as the *head company of the preserved group during that period. (5) This subsection covers the period that starts from the start of the *instalment quarter of the company that includes the takeover time and ends at the earlier of the following times: (a) the end of the instalment quarter of the company during which the company ceases to be a member of the new group; (b) just before the instalment quarter of the company during which the Commissioner gives the *initial head company instalment rate to the *head company, or the *provisional head company, of the new group. (6) The Commissioner may, on the application of the company made not later than 28 days after the takeover time, allow such extension of time for the purposes of paragraph (1)(d) as he or she considers appropriate. (7) To avoid doubt, nothing in this section prevents the operation of section 45-755 or 45-760 to *members of the preserved group while it continues to exist under subsection (2). 45-885 Early application of Subdivision 45-Q to the head company of a new group (1) This section applies to a company for which all of the following conditions are satisfied in relation to a particular time (the starting time): (a) just before the starting time, the company was a *subsidiary member of a *consolidated group, or a member of a *MEC group; (b) just before the starting time, the consolidated group or MEC group was a mature group (see subsection (4)); (c) at the starting time, either of the following applies: (i) the company ceases to be a subsidiary member of the consolidated group, or a member of the MEC group; (ii) the group ceases to exist (otherwise than because a MEC group or consolidated group is *created from the group, or because its *head company or *provisional head company becomes a *wholly-owned subsidiary of a member of another mature group); (d) at the starting time, the company is the head company of another consolidated group; (e) within 28 days after the starting time, or within such further period (if any) as the Commissioner allows, the Commissioner receives the choice to consolidate, at and after the starting time, that other consolidated group under section 703-50 of the Income Tax Assessment Act 1997. (2) For the purposes of this Part: (a) the instalment rate that the Commissioner is taken to have given to the company under paragraph 45-760(2)(a) has effect as if it were the *initial head company instalment rate for the company as the *head company of the *consolidated group mentioned in paragraph (1)(d); and (b) an instalment rate that would otherwise be the initial head company instalment rate for the company as the head company of that consolidated group is not to be treated as that initial head company instalment rate. Note: This means, subject to the provisions in section 45-705, Subdivision 45-Q starts applying to the company as the head company of the consolidated group at the start of the instalment quarter that includes the starting time: see subsection (2) of that section and paragraph 45-760(2)(a). (3) The Commissioner may, on the application of the company made within 28 days after the starting time, allow such extension of time for the purposes of paragraph (1)(e) as he or she considers appropriate. Mature group (4) For the purposes of this section, a *consolidated group or a *MEC group is a mature group at a particular time if: (a) for a consolidated group-Subdivision 45-Q applies to its *head company at that time; or (b) for a MEC group-Subdivision 45-Q, as applied under Subdivision 45-S, applies to its *provisional head company at that time. Subdivision 45-S-MEC groups Guide to Subdivision 45-S 45-900 What this Subdivision is about This Subdivision sets out how this Part applies in relation to MEC groups and their members. Table of sections Preliminary 45-905 Objects of Subdivision General modification rules 45-910 Extended operation of Part to cover MEC groups Extended operation of Subdivision 45-Q 45-913 Sections 45-705 and 45-740 do not apply to members of MEC groups 45-915 Application of Subdivision 45-Q to provisional head company 45-917 Assumption for applying section 45-710 (single entity rule) 45-920 Change of provisional head company 45-922 Life insurance company Extended operation of Subdivision 45-R 45-925 Additional modifications of sections 45-855 and 45-860 45-930 Modifications of sections 45-865 and 45-870 and a related provision 45-935 Additional modifications of section 45-885 Preliminary 45-905 Objects of Subdivision The objects of this Subdivision are to: (a) extend the operation of this Part (except sections 45-705 and 45-740 and this Subdivision) so that it can apply in relation to *MEC groups and their members; and (b) modify the rules in this Part for that extended operation so that they take account of the special characteristics of MEC groups. General modification rules 45-910 Extended operation of Part to cover MEC groups (1) This Part (except sections 45-705 and 45-740 and this Subdivision) has effect in relation to members of a *MEC group in the same way in which it has effect in relation to *members of a *consolidated group. (2) However, that effect is subject to the modifications set out in the following table and elsewhere in this Subdivision. |Modifications of this Part | |Item |A reference in this |Is taken to be a | | |Part to: |reference to: | |1 |a *consolidated group |a *MEC group | |2 |the *head company of a |the *provisional head | | |*consolidated group |company of a *MEC group | |3 |a *subsidiary member of|a member (other than the| | |a *consolidated group |*provisional head | | | |company) of a *MEC group| Exceptions (3) The modifications set out in the table do not apply to the following provisions: (a) this Subdivision; (b) subsection 45-30(4) (see section 45-930); (c) the note at the end of subsection 45-330(5); (d) note 2 at the end of section 45-700; (e) sections 45-705 and 45-740 (see sections 45-913, 45-915 and 45- 920); (f) subparagraphs 45-760(1)(c)(i) and (ii); (g) the note at the end of section 45-850; (h) sections 45-865 and 45-870 (see section 45-930); (i) paragraphs (1)(b), (c), (d) and (e), and subsection (5), of section 45-880; (j) paragraphs (1)(a), (b) and (c), and subsection (4), of section 45-885. Note: The provisions covered by paragraphs (c), (d), (f), (g), (i) and (j) apply to members of a MEC group without any modifications. Extended operation of Subdivision 45-Q 45-913 Sections 45-705 and 45-740 do not apply to members of MEC groups In applying Subdivision 45-Q to members of a *MEC group, the Subdivision has effect as if: (a) section 45-705 had no effect and section 45-915 had effect instead; and (b) section 45-740 had no effect and section 45-920 had effect instead. 45-915 Application of Subdivision 45-Q to provisional head company Period during which Subdivision applies to provisional head company (1) Subject to sections 45-880 and 45-885 (as applied under this Subdivision), Subdivision 45-Q applies to a company as the *provisional head company of a *MEC group during the period: (a) starting at the start of the *instalment quarter of the company determined under subsection (2), (3) or (4); and (b) ending: (i) at the end of the instalment quarter of the company determined under paragraph (6)(a) or (b); or (ii) just before the instalment quarter of the company determined under paragraph (6)(c). Note: The application of Subdivision 45-Q to the provisional head company is subject to the modifications set out in this section and elsewhere in this Subdivision. When the period begins-initial head company instalment rate (2) Subdivision 45-Q starts to apply to a company as the *provisional head company of a *MEC group at the start of an *instalment quarter under this subsection if, during that quarter, the Commissioner gives the company (as that provisional head company) the *initial head company instalment rate. Note: The operation of this subsection may be affected by section 45-885 (as applied under this Subdivision). When the period begins-group created from consolidated group (3) Subdivision 45-Q starts to apply to a company as the *provisional head company of a *MEC group at the start of an *instalment quarter (the starting quarter) under this subsection if all of the following conditions are satisfied: (a) during the starting quarter, the Commissioner is notified of the creation of the MEC group from a *consolidated group (see subsection (5)); (b) the company is the provisional head company of the MEC group when the Commissioner is so notified; (c) either of the following applies: (i) Subdivision 45-Q applied to the *head company of the consolidated group at the end of the previous instalment quarter; (ii) the Commissioner gives the *initial head company instalment rate to the head company of the consolidated group during the starting quarter. Note: For the application of Subdivision 45-Q to a head company of a consolidated group: see section 45-705. When the period begins-new provisional head company (4) Subdivision 45-Q starts to apply to a company as the *provisional head company of a *MEC group at the start of an *instalment quarter (the starting quarter) under this subsection if both of the following conditions are satisfied: (a) the company is appointed as the provisional head company of the MEC group under subsection 719-60(3) of the Income Tax Assessment Act 1997 during the starting quarter; (b) one of the following applies: (i) Subdivision 45-Q applied to the former provisional head company of the MEC group at the end of the previous instalment quarter; (ii) the Commissioner gives the *initial head company instalment rate to the former provisional head company of the MEC group during the starting quarter; (iii) the Commissioner is notified during the starting quarter of the creation of the MEC group from a *consolidated group and Subdivision 45-Q applied to the *head company of the consolidated group at the end of the previous instalment quarter; (iv) the Commissioner is notified during the starting quarter of the creation of the MEC group from a consolidated group and the Commissioner gives the initial head company instalment rate to the head company of the consolidated group during the starting quarter. Notification of creation of MEC group from consolidated group (5) For the purposes of subsections (3) and (4), the Commissioner is notified of the creation of a *MEC group from a *consolidated group when the Commissioner receives a notice of the consolidation of the MEC group under subsection 719-40(1) of the Income Tax Assessment Act 1997. When the period ends (6) Subdivision 45-Q stops applying to a company as the *provisional head company of a *MEC group at the earliest of the following times after the company becomes the provisional head company: (a) the end of the *instalment quarter during which the MEC group ceases to exist (other than because a *consolidated group is *created from the MEC group); (b) the end of the instalment quarter during which a consolidated group is created from the MEC group; (c) just before the instalment quarter during which another company is appointed as the provisional head company of the MEC group under subsection 719-60(3) of the Income Tax Assessment Act 1997. Note: The operation of this subsection because of paragraph (a) may be affected by section 45-880 (as applied under this Subdivision). (7) To avoid doubt, Subdivision 45-Q does not apply to a company as the *provisional head company of a *MEC group for any time at all if: (a) subsection (2), (3) or (4), and subsection (6), would, apart from this subsection, apply to the company; but (b) the time at which Subdivision 45-Q would stop applying to the company under subsection (6) is before the time at which that Subdivision would start to apply to the company under subsection (2), (3) or (4). (8) To avoid doubt, Subdivision 45-Q may apply to a company as the *provisional head company of a *MEC group at a time when the company is not in fact the provisional head company of the group. Note: An example of this is when a company replaces another company as the provisional head company of a MEC group. Under this section and section 45-920, Subdivision 45-Q may start applying to the company as if it had already become the provisional head company when it is not yet such a company. 45-917 Assumption for applying section 45-710 (single entity rule) In applying section 45-710 to members of a *MEC group at a particular time, the company that is the *provisional head company of the group at that time must be assumed to be the *head company of the group at all times during the period: (a) throughout which the group is in existence; and (b) that is all or a part of the income year of the company that includes that particular time. 45-920 Change of provisional head company Object (1) The object of this section (except subsection (9)) is to ensure that, for the purposes of this Part, when a company becomes the new *provisional head company of a *MEC group: (a) the company inherits the history of the former provisional head company; and (b) the history of the new provisional head company is effectively ignored. (2) This section applies to a *provisional head company of a *MEC group (the new provisional head company) that is appointed under subsection 719-60(3) of the Income Tax Assessment Act 1997 if one of the following conditions is satisfied: (a) the conditions in subsection 45-915(4) are satisfied in relation to the new provisional head company (whether or not Subdivision 45-Q applies to the company as the provisional head company of the group for any period of time); (b) the new provisional head company is so appointed during the *instalment quarter of the company in which the MEC group is *created from a *consolidated group and either: (i) the Commissioner gives the *initial head company instalment rate to the *head company of the consolidated group during that instalment quarter; or (ii) Subdivision 45-Q applied to the head company of the consolidated group at the end of the previous instalment quarter. (3) Everything that happened before the starting time in relation to the company (the former company) that was the *provisional head company of the *MEC group immediately before the starting time: (a) is taken to have happened in relation to the new provisional head company instead of in relation to the former company; and (b) is taken to have happened in relation to the new provisional head company instead of what would (apart from this section) be taken to have happened in relation to the new provisional head company before the starting time; just as if, at all times before the starting time: (c) the new provisional head company had been the former company; and (d) the former company had been the new provisional head company. (4) For the purposes of this section, the starting time is the time at which the *cessation event happened to the former company (the event that results in the appointment of the new provisional head company). (5) To avoid doubt, subsection (3) also covers everything that, immediately before the starting time, was taken to have happened in relation to the former company because of: (a) section 701-1 of the Income Tax Assessment Act 1997 (single entity rule); or (b) section 701-5 of that Act (entry history rule); or (c) section 703-75 of that Act (effects of an interposed company becoming the *head company of a *consolidated group); or (d) section 719-90 of that Act (effects of a change of head company of a *MEC group); or (e) section 45-710 in this Schedule (single entity rule for the purposes of this Part), including an application of that section under this Subdivision; or (f) section 45-740 in this Schedule (effects of an interposed company becoming the head company of a consolidated group for the purposes of this Part); or (g) this section; or (h) one or more previous applications of any of the provisions covered by paragraphs (a) to (g). (6) In addition, and without affecting subsection (3): (a) an assessment of the former company for an income year that ends before the income year that includes the starting time; or (b) an amendment of the assessment; is taken to be something that had happened to the new provisional head company, whether or not the assessment or amendment is made before the starting time. (7) This section has effect for the purposes of applying this Part to members of the *MEC group in relation to an *instalment quarter of the new provisional head company that ends after the starting time. Note: An assessment mentioned in subsection (6) may therefore be taken to be the base assessment of the new provisional head company for the purposes of this Part. (8) Subsections (1) to (7) are to be disregarded in applying section 45-915 (about the application of Subdivision 45-Q to a company as the *provisional head company of a *MEC group). Note: For example, if the Commissioner has given an initial head company instalment rate to the former company during an earlier instalment quarter, the rate is not, despite this section, treated as if it had been given to the new provisional head company for the purposes of section 45-915. Subject to the other provisions in that section, Subdivision 45-Q therefore starts applying to the new provisional head company under subsection 45-915(4). Special rule for the former company (9) A provision of this Part that applies on an entity becoming a member (other than the *provisional head company) of a *MEC group does not apply to the former company when it becomes such a member at the starting time. Note: Section 45-755 (the entry rule, as applied under this Subdivision) therefore does not apply to the former company on the company becoming such a member of the MEC group. 45-922 Life insurance company In applying Subdivision 45-Q to members of a *MEC group for an *instalment quarter of the *provisional head company of the group in an income year of the provisional head company, the company is taken to be a *life insurance company for that quarter if: (a) one or more life insurance companies are members of the group at any time during that quarter; or (b) one or more life insurance companies were members of the group at any time during a previous instalment quarter of the company in that year. Extended operation of Subdivision 45-R 45-925 Additional modifications of sections 45-855 and 45-860 In applying sections 45-855 and 45-860 to members of a *MEC group, those sections have effect as if, in addition to the modifications set out in the table in section 45-910: (a) a reference in those sections to subsection 45-705(2) were a reference to subsection 45-915(2); and (b) a reference in those sections to subparagraph 45-705(3)(c)(ii), (4)(d)(ii) or (iv) were a reference to subparagraph 45- 915(3)(c)(ii), (4)(b)(ii) or (iv). 45-930 Modifications of sections 45-865 and 45-870 and a related provision (1) In applying sections 45-865 and 45-870, and subsection 45-30(4) (which is related to section 45-865), to members of a *MEC group, those provisions have effect as if: (a) a reference in those provisions to a *consolidated group were a reference to a *MEC group; and (b) a reference in those provisions to a MEC group were a reference to a consolidated group. Note: This means a reference in those provisions to the head company of a consolidated group has effect as if it were a reference to the head company of a MEC group. Similarly, a reference in those provisions to a subsidiary member of a consolidated group has effect as if it were a reference to a subsidiary member of a MEC group. (2) However, the modifications in subsection (1) do not apply to subsection 45-865(4) and the note at the end of section 45-865. Note: This means subsection 45-865(4) and the note apply to members of a MEC group without any modifications. 45-935 Additional modifications of section 45-885 In applying section 45-885 to members of a *MEC group, that section has effect as if, in addition to the modifications set out in the table in section 45-910, it had been modified as set out in the following table: |Modifications of section 45-885 | |Item |Provision: |Modification: | |1 |Paragraph |The paragraph is taken to | | |45-885(1)(e) |have been replaced by the | | | |following paragraph: | | | |(e) within 28 days after the | | | |starting time, or within such| | | |further period (if any) as | | | |the Commissioner allows, the | | | |Commissioner receives a | | | |notice of the consolidation | | | |of that other MEC group, at | | | |and after the starting time, | | | |under section 719-50 of the | | | |Income Tax Assessment Act | | | |1997. | |2 |Subsection |A reference to paragraph | | |45-885(2) |45-760(2)(a) is taken to be a| | |(including the note|reference to that paragraph | | |at the end of the |as applied under this | | |subsection) |Subdivision | |3 |The note at the end|The reference to | | |of subsection |section 45-705 is taken to be| | |45-885(2) |a reference to section 45-915| Chapter 3-Collection, recovery and administration of other taxes Part 3-10-Indirect taxes Division 105-General rules for indirect taxes Table of Subdivisions Guide to Division 105 105-A Assessments 105-B Review of indirect tax decisions 105-C Limits on credits, refunds and recovering amounts 105-D General interest charge and penalties 105-E Evidence 105-F Indirect tax refund schemes 105-G Other administrative provisions Guide to Division 105 105-1 What this Division is about This Division contains rules relating to the administration of the indirect tax laws. Note: Administration rules relevant to particular indirect tax laws are in Divisions 110, 111 and 112. The rules in this Division deal with the following: (a) how assessments are made or amended and their effect; (b) review of assessments; (c) limits on credits, refunds and recovering amounts; (d) the effect of relying on a ruling; (e) the effect of not passing on refunds of overpaid amounts; (f) charges and penalties; (g) the evidentiary effect of official indirect tax documents; (h) refunding indirect tax because of Australia's international obligations; (i) your address for service of documents and requirements for notifications. Subdivision 105-A-Assessments Table of sections 105-5 Commissioner may make assessment of indirect tax 105-10 Request for assessment 105-15 Indirect tax liabilities do not depend on assessment 105-20 Commissioner must give notice of the assessment 105-25 Amendment of assessment 105-30 Later assessment prevails in case of inconsistency 105-5 Commissioner may make assessment of indirect tax (1) The Commissioner may at any time make an assessment of: (a) your *net amount, or any part of your net amount, for a *tax period; or (b) your *net fuel amount, or any part of your net fuel amount, for a tax period or *fuel tax return period. (2) The Commissioner may at any time make an assessment of the amount of *indirect tax payable by you on an importation of goods. (3) The Commissioner may make an assessment under this section even if he or she has already made an assessment for the *tax period, *fuel tax return period or importation concerned. Note: An assessment made under this section is a reviewable indirect tax decision: see Subdivision 105-B. 105-10 Request for assessment (1) You may request the Commissioner in the *approved form to make an assessment of: (a) your *net amount for a *tax period; or (b) your *net fuel amount for a tax period or *fuel tax return period; or (c) an amount of *indirect tax payable by you on an importation of goods. (2) The Commissioner must comply with the request if it is made within: (a) 4 years after: (i) the end of the *tax period or *fuel tax return period; or (ii) the importation; or (b) such further period as the Commissioner allows. 105-15 Indirect tax liabilities do not depend on assessment (1) Your liability to pay *indirect tax or a *net fuel amount, and the time by which a *net amount, a net fuel amount or an amount of indirect tax must be paid, do not depend on, and are not in any way affected by, the making of an assessment under this Subdivision. (2) The Commissioner's obligation to pay: (a) a *net amount under section 35-5 of the *GST Act; or (b) a *net fuel amount under section 61-5 of the Fuel Tax Act 2006; and the time by which it must be paid, do not depend on, and are not in any way affected by, the making of an assessment under this Subdivision. Note: However, a notice of assessment can be used as evidence of liability: see section 105-100. 105-20 Commissioner must give notice of the assessment (1) The Commissioner must give you notice of an assessment as soon as practicable after the assessment is made. However, failing to do so does not affect the validity of the assessment. (2) The Commissioner may give you the notice electronically if you are required to lodge or have lodged your *GST returns electronically. 105-25 Amendment of assessment The Commissioner may amend an assessment at any time. An amended assessment is an assessment for all purposes of any *indirect tax law. Note 1: However, there is a time limit on the recovery of overpaid or underpaid net amounts, net fuel amounts and indirect tax: see sections 105-50 and 105-55. Note 2: An amendment under this section is a reviewable indirect tax decision: see Subdivision 105-B. 105-30 Later assessment prevails in case of inconsistency If there is an inconsistency between assessments that relate to the same *tax period, *fuel tax return period or importation of goods, the later assessment prevails to the extent of the inconsistency. Subdivision 105-B-Review of indirect tax decisions Table of sections 105-40 Reviewable indirect tax decisions 105-40 Reviewable indirect tax decisions (1) You may object, in the manner set out in Part IVC, against a decision you are dissatisfied with that is a *reviewable indirect tax decision relating to you. (2) A decision under section 105-5 or 105-25 involving an assessment of a *net amount, a *net fuel amount or an amount of *indirect tax is a reviewable indirect tax decision. Subdivision 105-C-Limits on credits, refunds and recovering amounts Table of sections 105-50 Time limit on recovery by the Commissioner 105-55 Time limit on refunds etc. from the Commissioner 105-60 Reliance on Commissioner's interpretation of an indirect tax law (other than a fuel tax law) 105-65 Restriction on GST refunds 105-50 Time limit on recovery by the Commissioner (1) Any unpaid *net amount, *net fuel amount or amount of *indirect tax (together with any relevant *general interest charge under this Act) ceases to be payable 4 years after it became payable by you. (2) If: (a) an amount was paid to you, or applied under Division 3 of Part IIB of this Act, as: (i) a refund in relation to a *net amount, *net fuel amount or amount of *indirect tax; or (ii) an amount of indirect tax that was overpaid or wrongly paid; and (b) that amount exceeded the amount (if any) that you were entitled to be paid, or to have applied under Division 3 of Part IIB of this Act; the amount of the excess (together with any relevant *general interest charge under this Act) ceases to be payable 4 years after it became payable by you. (3) However, subsection (1) does not apply to an amount, and subsection (2) does not apply to an amount of an excess, if: (a) within those 4 years the Commissioner has required payment of the amount or the amount of excess by giving a notice to you; or (b) the Commissioner is satisfied that: (i) the payment of the amount was avoided by fraud or evaded; or (ii) the payment of the amount of excess, or its application under Division 3 of Part IIB of this Act, was brought about by fraud or evasion. 105-55 Time limit on refunds etc. from the Commissioner (1) You are not entitled to a refund, other payment or credit to which this subsection applies in respect of a *tax period or importation unless: (a) within 4 years after: (i) the end of the tax period; or (ii) the importation; as the case requires, you notify the Commissioner (in a *GST return or otherwise) that you are entitled to the refund, other payment or credit; or (b) within that period the Commissioner notifies you (in a notice of assessment or otherwise) that you are entitled to the refund, other payment or credit; or (c) in the case of a credit-the credit is taken into account in working out: (i) a *net amount or *net fuel amount that the Commissioner may recover from you only because of subparagraph 105- 50(3)(b)(i); or (ii) an amount of excess referred to in subsection 105-50(2) that the Commissioner may recover from you only because of subparagraph 105-50(3)(b)(ii). (2) Subsection (1) applies to: (a) a refund in relation to a *net amount or *net fuel amount in respect of a particular *tax period; or (aa) another payment that represents some or all of an amount: (i) that you p