TAXATION LAWS AMENDMENT ACT (NO. 2) 2000 - SCHEDULE 1 CFCs and capital gains tax
TAXATION LAWS AMENDMENT ACT (NO. 2) 2000 - SCHEDULE 1
CFCs and capital gains taxPart 1 -- Amendments based on old CGT law
Income Tax Assessment Act 1936
1 Section 317 (definition of designated concession income )
Repeal the definition, substitute:
"designated concession income" , in relation to a broad - exemption listed country, means:
(a) income or profits of a kind specified in the regulations if:
(i) foreign tax imposed by a tax law of the country is not payable in respect of the income or profits because of a particular feature; or
(ii) foreign tax imposed by a tax law of the country is payable in respect of the income or profits but there is a feature in relation to that tax;
and the feature is of a kind specified in the regulations; or
(b) capital gains that would accrue because of section 160ZZOA, if the assumptions in paragraphs 383(a) to (c) applied.
Note 1: Section 160ZZOA is about companies ceasing to be related after a roll - over.
Note 2: Basically, the effect of those assumptions is that the company concerned is taken to be a taxpayer and a resident and may therefore be taken to have disposed of an asset because of section 160ZZOA.
2 Section 317 (definition of disposal )
Repeal the definition, substitute:
"disposal" of an asset includes:
(a) redemption; and
(b) a disposal that would be taken to occur under section 160ZZOA (about companies ceasing to be related after a roll - over) if the assumptions in paragraphs 383(a) to (c) applied.
Note: Basically, the effect of those assumptions is that the company concerned is taken to be a taxpayer and a resident and may therefore be taken to have disposed of an asset under section 160ZZOA.
3 Section 317 (definition of tainted commodity gain )
Omit all the words after "a statutory accounting period,", substitute:
means:
(a) a gain realised by the company in the statutory accounting period from disposing of a tainted commodity investment; or
(b) a capital gain that would have accrued to the company in the statutory accounting period, if the assumptions in paragraphs 383(a) to (c) applied, because the company would be taken to have disposed of a tainted commodity investment under section 160ZZOA.
Note: Basically, the effect of those assumptions is that the company concerned is taken to be a taxpayer and a resident and may therefore be taken to have disposed of an asset under section 160ZZOA.
4 Section 317 (definition of tainted commodity loss )
Omit all the words after "a statutory accounting period,", substitute:
means:
(a) a loss realised by the company in the statutory accounting period from disposing of a tainted commodity investment; or
(b) a capital loss that the company would have incurred in the statutory accounting period, if the assumptions in paragraphs 383(a) to (c) applied, because the company would be taken to have disposed of a tainted commodity investment under section 160ZZOA.
Note: Basically, the effect of those assumptions is that the company concerned is taken to be a taxpayer and a resident and may therefore be taken to have disposed of an asset under section 160ZZOA.
5 After subsection 401(6)
Insert:
(6A) In determining, for the purposes of this section, whether there was an attribution surplus immediately before a disposal, and the amount of such a surplus, also take into account any attribution credit that later arises because the disposal caused section 160ZZOA (as it notionally applies to the disposal entity under this Division) to operate.
6 After subsection 434(1)
Insert:
(1A) In working out the gross turnover of a company of a statutory accounting period, assume that the amounts shown in the company's recognised accounts, as mentioned in paragraphs ( 1)(b) and (c), for that period had been worked out by also including:
(a) as gains derived by the company in that period--capital gains that would have accrued to the company; and
(b) as losses incurred by the company in that period--capital losses the company would have incurred;
in that period because of section 160ZZOA, if the assumptions in paragraphs 383(a) to (c) had applied.
Note 1: Section 160ZZOA is about companies ceasing to be related after a roll - over.
Note 2: Basically, the effect of the assumptions in paragraphs 383(a) to (c) is that the company concerned is taken to be a taxpayer and a resident and may therefore be taken to have disposed of an asset because of section 160ZZOA.
7 At the end of section 445
Add:
(2) In paragraph ( 1)(a):
"gains" includes capital gains that would have accrued to the company in the statutory accounting period because of section 160ZZOA, if the assumptions in paragraphs 383(a) to (c) applied.
"losses" includes capital losses that the company would have incurred in the statutory accounting period because of section 160ZZOA, if the assumptions in paragraphs 383(a) to (c) applied.
Note 1: Section 160ZZOA is about companies ceasing to be related after a roll - over.
Note 2: Basically, the effect of the assumptions in paragraphs 383(a) to (c) is that the company concerned is taken to be a taxpayer and a resident period and may therefore be taken to have disposed of an asset because of section 160ZZOA.
8 At the end of Division 9 of Part X
Add:
460A Effect of reducing section 160ZZOA amount
(1) This section applies in either of the following cases:
(a) one or more schemes or arrangements have the effect of reducing the attribution percentage of an attributable taxpayer in relation to a company that is a CFC, and are intended by the attributable taxpayer or an associate of the attributable taxpayer to have that effect;
(b) a company ceases to be a CFC in relation to a particular taxpayer.
(2) Work out the amount (if any) included under this Division in the taxpayer's assessable income because of section 160ZZOA (as it notionally applies to the company under Division 7) as though the reduction or cessation had not happened.
Note: Section 160ZZOA is about companies ceasing to be related after a roll - over.
9 After subsection 461(4)
Insert:
(4A) In determining, for the purposes of this section, whether there was an attribution surplus immediately before a disposal, and the amount of such a surplus, also take into account any attribution credit that later arises because the disposal caused section 160ZZOA (as it notionally applies to the disposal entity under Division 7) to operate.
10 Application of amendments
The amendments made by this Part apply in determining the attributable income of a CFC if a disposal was taken to have occurred, under section 160ZZOA of the Income Tax Assessment Act 1936 , after 7.30 pm, by legal time in the Australian Capital Territory, on 13 May 1997.
11 Transitional--group roll - over disposals before 13 May 1997
(1) This item applies if a group roll - over disposal (within the meaning of section 160ZZOA of the Income Tax Assessment Act 1936 ) happened at or before 7.30 pm, by legal time in the Australian Capital Territory, on 13 May 1997 and during a particular statutory accounting period of an attributable taxpayer.
(2) In applying section 460A of that Act (as amended by this Schedule), the taxpayer may elect to disregard so much of any change to the attribution percentage of the taxpayer in relation to the relevant CFC as happened before the end of the statutory accounting period.
Part 2 -- Amendments based on new CGT law
Income Tax Assessment Act 1936
12 Section 317 ( paragraph ( b) of the definition of designated concession income )
Omit "accrue because of section 160ZZOA", substitute "be made because of CGT event J1".
13 Section 317 (note 1 to the definition of designated concession income )
Omit "Section 160ZZOA", substitute "CGT event J1".
14 Section 317 (note 2 to the definition of designated concession income )
Omit all the words after "resident", substitute "and CGT event J1 may therefore be taken to have happened.".
15 Section 317 ( paragraph ( b) of the definition of disposal )
Omit "a disposal that would be taken to occur under section 160ZZOA", substitute "CGT event J1 happening in relation to the asset".
16 Section 317 (note to the definition of disposal )
Omit all the words after "resident", substitute "and CGT event J1 may therefore be taken to have happened.".
17 Section 317 ( paragraph ( b) of the definition of tainted commodity gain and the note to that definition)
Repeal the paragraph and the note, substitute:
(b) a capital gain that the company would have made in the statutory accounting period because CGT event J1 would have happened in relation to a tainted commodity investment, if the assumptions in paragraphs 383(a) to (c) applied.
Note: Basically, the effect of those assumptions is that the company concerned is taken to be a taxpayer and a resident and CGT event J1 may therefore be taken to have happened.
18 Section 317 ( paragraph ( b) of the definition of tainted commodity loss and the note to that definition)
Repeal the paragraph and the note, substitute:
(b) a capital loss that the company would have made in the statutory accounting period because CGT event J1 would have happened in relation to a tainted commodity investment, if the assumptions in paragraphs 383(a) to (c) applied.
Note: Basically, the effect of those assumptions is that the company concerned is taken to be a taxpayer and a resident and CGT event J1 may therefore be taken to have happened.
19 Subsection 401(6A)
Omit "disposal" (wherever occurring), substitute "CGT event".
20 Subsection 401(6A)
Omit "160ZZOA", substitute "104 - 175 of the Income Tax Assessment Act 1997 ".
21 Subsection 434(1A)
Repeal the subsection, substitute:
(1A) In working out the gross turnover of a company of a statutory accounting period, assume that the amounts shown in the company's recognised accounts, as mentioned in paragraphs ( 1)(b) and (c), for that period had been worked out by also including:
(a) as gains derived by the company in that period--capital gains the company would have made; and
(b) as losses incurred by the company in that period--capital losses the company would have made;
in that period because of CGT event J1, if the assumptions in paragraphs 383(a) to (c) had applied.
Note 1: CGT event J1 is about companies ceasing to be related after a roll - over.
Note 2: Basically, the effect of the assumptions in paragraphs 383(a) to (c) is that the company concerned is taken to be a taxpayer and a resident and CGT event J1 may therefore be taken to have happened.
22 Subsection 445(2)
Repeal the subsection, substitute:
(2) In paragraph ( 1)(a):
"gains" includes capital gains the company would have made in the statutory accounting period because of CGT event J1, if the assumptions in paragraphs 383(a) to (c) applied.
"losses" includes capital losses the company would have made in the statutory accounting period because of CGT event J1, if the assumptions in paragraphs 383(a) to (c) applied.
Note 1: CGT event J1 is about companies ceasing to be related after a roll - over.
Note 2: Basically, the effect of the assumptions in paragraphs 383(a) to (c) is that the company concerned is taken to be a taxpayer and a resident and CGT event J1 may therefore be taken to have happened.
23 Subsection 460A(2)
Omit "section 160ZZOA (as it notionally applies", substitute "CGT event J1 (as it notionally happens".
Note: The section heading to section 460A is altered by omitting " 160ZZOA " and substituting " CGT event J1 ".
24 Subsection 460A(2) (note)
Omit "Section 160ZZOA", substitute "CGT event J1".
25 Subsection 461(4A)
Omit "disposal" (wherever occurring), substitute "CGT event".
26 Subsection 461(4A)
Omit "160ZZOA", substitute "104 - 175 of the Income Tax Assessment Act 1997 ".
27 Application of amendments
The amendments made by this Part apply in determining the attributable income of a CFC if CGT event J1 is taken to have happened at any time, whether before or after the Part commences.