Commonwealth Numbered Acts

INCOME TAX ASSESSMENT ACT 1974 No. 26 of 1974 - SECT 9

9. (1) Section 128B of the Principal Act is amended-

   (a)  by inserting before sub-section (1) the following sub-section:-



"(1A) In this section, a reference to a person to whom this section applies is
a reference to Australia, a State, an authority of Australia or of a State or
a person who is, or persons at least 1 of whom is, a resident.";

   (b)  by omitting from sub-section (2) the words "the next succeeding
        sub-section" and substituting the words "sub-section (3)";

   (c)  by omitting sub-paragraph (i) of paragraph (b) of sub-section (2) and
        substituting the following sub-paragraph:-



"(i) is paid to the non-resident by a person to whom this section applies and
is not an outgoing wholly incurred by that person in carrying on business in a
country outside Australia at or through a permanent establishment of that
person in that country; or";

   (d)  by inserting after sub-section (2) the following sub-section:-



"(2A) Subject to sub-section (3), where income-

   (a)  is, or has, after 2 July 1973, been, derived, or derived in part, by a
        person to whom this section applies in carrying on business in a
        country outside Australia at or through a permanent establishment of
        the person in that country; and

   (b)  consists of interest that-

        (i)    is or has been paid to the person by another person to whom
               this section applies and is not an outgoing wholly incurred by
               that other person in carrying on business in a country outside
               Australia at or through a permanent establishment of that other
               person in that country; or

        (ii)   is or has been paid to the first-mentioned person by a person
               who is, or by persons each of whom is, not a resident and is,
               or is in part, an outgoing incurred by that last-mentioned
               person or those last-mentioned persons in carrying on business
               in Australia at or through a permanent establishment of that
               last-mentioned person or those last-mentioned persons in
               Australia,

this section also applies to that income or to the part of that income so
derived, as the case may be.";

   (e)  by omitting from paragraph (a) of sub-section (6) the words "the
        Commonwealth, by a State, by an authority of the Commonwealth or of a
        State or by a person who, or by persons at least one of whom, is a
        resident" and substituting the words "a person to whom this section
        applies";

   (f)  by omitting from paragraph (b) of sub-section (6) the words "the
        Commonwealth, the State, the authority or that person or those
        persons" (wherever occurring) and substituting the words "that person
        to whom this section applies"; and

   (g)  by omitting sub-section (8) and substituting the following
        sub-sections:-



"(8) For the purposes of sub-paragraph (i) of paragraph (b) of sub-section
(2), sub-paragraph (i) of paragraph (b) of sub-section (2A) and paragraph (b)
of sub-section (6), where-

   (a)  interest is paid, or has, after 2 July 1973, been paid, to a person by
        another person, being a person to whom this section applies, carrying
        on business in a country outside Australia; and

   (b)  the interest or a part of the interest-

        (i)    is interest incurred by the other person in gaining or
               producing income that is derived by the other person otherwise
               than in carrying on business in a country outside Australia at
               or through a permanent establishment of the other person in
               that country or is interest incurred by the other person for
               the purpose of gaining or producing income to be so derived; or

        (ii)   is interest incurred by the other person in carrying on
               business for the purpose of gaining or producing income and is
               reasonably attributable to income that is derived, or may be
               derived, by the other person otherwise than in so carrying on
               business at or through a permanent establishment of the other
               person in a country outside Australia,

the interest or the part of the interest, as the case may be, is not an
outgoing incurred by the other person in carrying on business in a country
outside Australia at or through a permanent establishment of the other person
in that country.



"(9) For the purposes of sub-paragraph (ii) of paragraph (b) of sub-section
(2), sub-paragraph (ii) of paragraph (b) of sub-section (2A) and paragraph (b)
of sub-section (7), where-

   (a)  interest is paid, or has, after 2 July 1973, been paid, to a person by
        another person or other persons (in this sub-section referred to as
        'the borrower'), being-

        (i)    another person who is or was carrying on business in Australia
               and is not or was not a resident; or

        (ii)   other persons who are or were carrying on business in Australia
               and each of whom is not or was not a resident; and

   (b)  the interest or a part of the interest-

        (i)    is interest incurred by the borrower in gaining or producing
               income that is derived by the borrower in carrying on business
               in Australia at or through a permanent establishment of the
               borrower in Australia or is interest incurred by the borrower
               for the purpose of gaining or producing income to be so
               derived; or

        (ii)   is interest incurred by the borrower in carrying on a business
               for the purpose of gaining or producing income and is
               reasonably attributable to income that is derived, or may be
               derived, by the borrower in so carrying on business at or
               through a permanent establishment of the borrower in Australia,

the interest or the part of the interest, as the case may be, is an outgoing
incurred by the borrower in carrying on business in Australia at or through a
permanent establishment of the borrower in Australia.



"(10) Income tax payable by a person in accordance with this section is in
addition to any other income tax payable by him upon income to which this
section does not apply.



"(11) Income tax payable by a person in accordance with this section upon
income to which this section applies by virtue of sub-section (2A) is in
addition to, and shall not be taken into account in arriving at the amount of,
any other income tax payable by him in respect of that income.".

(2) In relation to income tax that is, by virtue of the amendments of section
128B of the Principal Act effected by sub-section (1) of this section, payable
under sub-section 128B (5) of the Principal Act as amended by this Act upon
income consisting of interest derived after 2 July 1973 and before the
commencement of this Act, sub-section 128C (1) of the Principal Act as amended
by this Act has effect as if the reference in that sub-section to the
expiration of 21 days after the end of the month in which income was derived
were a reference to the expiration of 21 days after the end of the month in
which this Act comes into operation.