Commonwealth Numbered Acts

TAXATION LAWS AMENDMENT ACT (No. 2) 1995No. 169, 1995 - SCHEDULE 1

                             SCHEDULE 1                 Section 3

AMENDMENTS RELATING TO STATE/TERRITORY BODIES
PART 1-STATE/TERRITORY BODIES
Division 1-Income Tax Assessment Act 1936
Subdivision A-Certain State/Territory bodies exempt from tax 1. After Division
1AA of Part III: Insert:

"Division 1AB-Certain State/Territory bodies exempt from income tax

"Subdivision A-Exemption for certain State/Territory bodies Key principle

"24AK. A body that is a State/Territory body (an STB) is exempt from income
tax under this Division unless it is an excluded STB. There are 5 different
ways in which a body can be an STB. Diagram-guide to work out if body is
exempt under this Division

"24AL. The following diagram is a guide to help work out whether a body is
exempt from income tax under this Division:
(DIAGRAM OMITTED) Certain STBs exempt from tax

"24AM. The income of a State/Territory body (an STB) is exempt from income tax
unless section 24AN applies to the STB. Certain STBs not exempt from tax under
this Division

"24AN. Income derived by an STB is not exempt from income tax under this
Division if, at the time that it is derived, the STB is an excluded STB or an
SGIO. Notes: 1. For the definition of excluded STB see section 24AT.
2. Even though an excluded STB is not exempt from income tax under this
Division, it may still be exempt under another provision of this Act.
3. Subsection 112A(1A) operates to exempt certain income of SGIOs. First way
in which a body can be an STB

"24AO. A body is an STB if:

   (a)  it is a company limited solely by shares; and

   (b)  all the shares in it are beneficially owned by one or more government
        entities. Note: For the definition of government entity see section
        24AT. Note that an excluded STB is not a government entity. Second way
        in which a body can be an STB

"24AP. A body is an STB if:

   (a)  it is established by State or Territory legislation; and

   (b)  it is not a company limited solely by shares; and

   (c)  the legislation provides that it must distribute all of its profits
        (if any) only to one or more government entities; and

   (d)  if the legislation makes provision as to the way its net assets may be
        distributed if it is dissolved or wound up-the provision is that, if
        it is dissolved, all of its net assets (if any) must be distributed
        only to one or more government entities. Third way in which a body can
        be an STB

"24AQ. A body is an STB if:

   (a)  it is established by State or Territory legislation; and

   (b)  it is not a company limited solely by shares; and

   (c)  the legislation gives the power to appoint or dismiss its governing
        person or body only to one or more government entities. Fourth way in
        which a body can be an STB

"24AR. A body is an STB if:

   (a)  it is established by State or Territory legislation; and

   (b)  it is not a company limited solely by shares; and

   (c)  the legislation gives the power to direct its governing person or body
        as to the conduct of its affairs only to one or more government
        entities. Fifth way in which a body can be an STB

"24AS. A body is an STB if:

   (a)  it is not a company limited solely by shares; and

   (b)  it is not established by State or Territory legislation; and

   (c)  all the legal and beneficial interests (including, but not limited to,
        interests as to income, profits, dividends, capital and distributions
        of capital) in it are held only by one or more government entities;
        and

   (d)  all the rights or powers (if any) to vote, appoint or dismiss its
        governing person or body and direct its governing person or body as to
        the conduct of its affairs are held only by one or more government
        entities. What do excluded STB, government entity and Territory mean?

"24AT. In this Division: excluded STB means an STB that:

   (a)  at a particular time, is prescribed as an excluded STB in relation to
        that time; or

   (b)  is a municipal corporation or other local governing body (within the
        meaning of paragraph 23(d)); or

   (c)  is a public educational institution (within the meaning of paragraph
        23(e)); or

   (d)  is a public hospital (within the meaning of paragraph 23(ea)); or

   (e)  is a superannuation fund; government entity means:

   (a)  a State; or

   (b)  a Territory; or

   (c)  another STB that is not an excluded STB; Territory means the Northern
        Territory or the Australian Capital Territory. Governor, Minister and
        Department Head taken to be a government entity

"24AU. For the purposes of sections 24AQ, 24AR and 24AS, if the power to
appoint, dismiss or direct the governing body is given to, or is held by:

   (a)  a Governor of a State; or

   (b)  a Minister of the Crown of a State; or

   (c)  a Minister of a Territory; or

   (d)  the head of a Department of a State or a Territory; or

   (e)  any combination of paragraphs (a) to (d); the power is taken to be
        given to, or held by, a government entity. Regulations prescribing
        excluded STBs States and Territories to consent to STBs being excluded
        STBs

"24AV.(1) The regulations may prescribe that an STB is an excluded STB only if
all States and Territories consent to the STB being so prescribed. Regulations
prescribing excluded STBs may be retrospective

"(2) Despite section 48 of the Acts Interpretation Act 1901, a regulation
prescribing an STB as an excluded STB may provide that the STB is an excluded
STB in relation to a time before the day of the notification of the regulation
in the Gazette.

"Subdivision B-Body ceasing to be an STB Body ceasing to be an STB

"24AW. This Act applies in relation to a body for a year of income (the
cessation year) in which the body ceases to be an STB as if:

   (a)  the cessation were, for the purposes of Subdivision B of Division 2A,
        a disqualifying event that, by reason of section 50H, is taken to have
        occurred; and

   (b)  the references in that Subdivision to 'company' were references to
        'body'; and

   (c)  subsection 50A(2) did not apply in relation to that disqualifying
        event; and

   (d)  if the body is not a company-there were no other disqualifying events
        for the body in the cessation year; and

   (e)  for the purposes of section 50D, the amount of any notional loss
        incurred in the relevant period before the cessation were taken to be
        nil; and

   (f)  paragraph 50F(1)(c) were amended by omitting '79E,' and '80,'; and

   (g)  deductions allowable under sections 79E and 80 were taken, under
        section 50G, to be allowable in respect of the relevant period before
        the cessation and not in respect of any other relevant period;

   (h)  for the purposes of Subdivision B of Division 2A, the application of
        Part IIIA were modified in accordance with section 24AX. Special
        provisions relating to capital gains and losses Period after cessation
        date-prior net capital losses to be disregarded

"24AX.(1) In determining if an amount is to be included in the assessable
income of the body under Part IIIA for a relevant period that occurred after
the cessation, any net capital losses incurred before the cessation are to be
disregarded. Special cases where net capital gain before cessation and net
capital loss after cessation

"(2) Subsections (3) and (4) apply if:

   (a)  a net capital gain accrued in the relevant period before the
        cessation; and

   (b)  if the period from the cessation until the end of the year of income
        were treated as a year of income-a net capital loss would have accrued
        in that period. Special case 1-gain exceeds loss

"(3) If this subsection applies and the net capital gain exceeds the net
capital loss:

   (a)  the amount that is to be included in the assessable income of the body
        for the relevant period that occurred before the cessation as a result
        of the net capital gain accruing to the body is taken to be the amount
        by which the net capital gain exceeds the net capital loss; and

   (b)  no net capital gain is taken to have accrued, and no net capital loss
        is taken to have been incurred, in any relevant period in the
        cessation year after the cessation; and

   (c)  in determining if a net capital gain accrued to, or a net capital loss
        was incurred by, the body for the year following the cessation year,
        no net capital loss is taken to have been incurred by the body in the
        cessation year. Special case 2-loss equal to or exceeds gain

"(4) If this subsection applies and the net capital gain does not exceed the
net capital loss:

   (a)  no amount is to be included in the assessable income of the body for
        any relevant period in the cessation year as a result of a net capital
        gain accruing to the body; and

   (b)  in determining if a net capital gain accrued to, or a net capital loss
        was incurred by, the body for the year following the cessation year,
        the net capital loss that the body incurred in the cessation year is
        taken to be the amount (if any) by which the net capital loss exceeds
        the net capital gain. Losses from STB years not carried forward

"24AY.(1) If a body is an STB on the last day of a year of income in which it
incurs a loss (within the meaning of section 79E or 79F), the loss is not
allowable as a deduction from the body's assessable income of a later year of
income unless the body is an STB on the first day of that later year of
income.
Note:     This section prevents losses from years prior to the
cessation year from being carried forward to years after the cessation year.

"(2) This section only applies to losses incurred in the 1995-96 year of
income or a later year of income. Effect of unfunded superannuation
liabilities

"24AYA.(1) This section applies to a deduction under section 82AAC in respect
of a contribution made in relation to a person who was an employee of a
prescribed excluded STB when it ceased to be an STB.

"(2) A deduction to which this section applies is not allowable to the body
for any year of income unless the requirements of subsections (3) and (4) are
complied with.

"(3) For the deduction to be allowable, the body must obtain a certificate by
an authorised actuary stating the actuarial value, as at the time the body
ceases to be an STB, of liabilities of the STB to provide superannuation
benefits for, or for dependants of, employees of the body, where the
liabilities:

   (a)  accrued after 30 June 1995 and before the time when the body ceased to
        be an STB; and

   (b)  were, according to actuarial principles, unfunded at that time.

"(4) The certificate must be in a form approved in writing by the
Commissioner. The body must obtain the certificate:

   (a)  before the date of lodgment of its return of income of the year of
        income in which the body ceased to be an STB; or

   (b)  within such further time as the Commissioner allows.

"(5) If the body obtains the certificate, a deduction to which this section
applies is nevertheless not allowable for a year of income if the sum of all
deductions to which this section applies for the year of income is less than
or equal to the unfunded liability limit (see subsection (6)) for the year of
income.

"(6) If the sum is greater than that limit, so much of the deduction as is
worked out using the following formula is not allowable:
          Amount of deduction     X   Unfunded liability limit

    Sum of all deductions to which     for the year of income

this section applies for the
year of income where: Unfunded liability limit for a year of income is:

   (a)  if the year of income is the one in which the body ceases to be an
        STB-the actuarial value of the liabilities set out in the actuary's
        certificate; or

   (b)  in any other case-that actuarial value as reduced by the total amount
        of deductions to which this section applies that, because of
        subsection (5), have not been allowable to the body for all previous
        years of income.

"(7) Expressions used in this section that are also used in section 82AAC have
the same respective meanings as in that section. Meaning of relevant period
and prescribed excluded STB

"24AZ. In this Subdivision: prescribed excluded STB means an STB that is an
excluded STB as a result of regulations made for the purposes of paragraph (a)
of the definition of excluded STB in section 24AT; relevant period has the
same meaning as in Subdivision B of Division 2A.".
Subdivision B-Consequential amendments 2. Subsection 6(1) (definition of
SGIO): Omit "a public authority", substitute "an STB (within the meaning of
Division 1AB of Part III)". 3. Paragraph 23(d): After "public authority"
insert "(other than an STB within the meaning of Division 1AB)". 4.
Subsections 46(9) and 46A(16): Add at the end "or Division 1AB". 5. Section
51AD: Add at the end:

"(21) For the purposes of determining if this section applies to property, the
income of a prescribed excluded STB (within the meaning of Division 1AB) is
taken to be exempt.". 6. Subsection 73CB(6): Add at the end:

"; or (c) an STB (within the meaning of Division 1AB).". 7. Paragraph
73C(2)(b): After "or a Territory" insert ", an STB (within the meaning of
Division 1AB)". 8. Section 102M (definition of exempt entity): After paragraph
(a) insert:

"(aa) an STB (within the meaning of Division 1AB) the income of which is
wholly exempt from tax;". 9. Section 121F (definition of relevant exempting
provision): After paragraph (bb) insert:

"(bc) section 24AM;". 10. Subsection 124ZA(1) (definition of exempt body):
Omit the definition, substitute:

"exempt body means:

   (a)  a body, association or fund to which paragraph 23(d), (e), (ea), (eb),
        (ec), (f), (g), (h), (i), (j) or (k) applies; or

   (b)  an STB (within the meaning of Division 1AB) the income of which is
        wholly exempt from tax;". 11. Subsection 159GE(1) (definition of
        exempt public body): After paragraph (a) insert:

"or (aa) an STB (within the meaning of Division 1AB) the income of which is
wholly exempt from tax; or". 12. After section 159GE: Insert:
Division applies to certain State/Territory bodies

"159GEA. In addition to any other operation that this Division has, this
Division operates as if the references to an exempt public body included a
reference to a prescribed excluded STB (within the meaning of Division 1AB).".
13. Subsection 160K(1) (definition of relevant exempting provision): After
paragraph (bb) insert:

"(bca) section 24AM;". 14. Subsection 269B(1): Omit "section 23G", substitute
"sections 23G and 24AM".
Division 2-Development Allowance Authority Act 1992 15. Subsection 93D(1)
(definition of government body): Omit the definition, substitute the following
definition:

"government body means:

   (a)  the Commonwealth, a State or a Territory; or

   (b)  a body to which paragraph 23(d) of the Tax Act applies; or

   (c)  an STB (within the meaning of Division 1AB of Part III of the Tax Act)
        the income of which is wholly exempt from tax;".
Division 3-Application of amendments made by this Part 16. Application The
amendments made by items 5 and 12 of this Part apply to income derived on or
after 1 July 1995. All other amendments made by this Part apply to income
derived on or after 1 July 1994.
PART 2-SALES TAX (EXEMPTIONS AND CLASSIFICATIONS) ACT 1992 17. Object The
object of this Part is to exempt certain State and Territory bodies from sales
tax. 18. Section 3: Insert the following definitions:

"excluded STB has the meaning given by subsection 3D(6); State/Territory body
has the meaning given by section 3D;". 19. Before section 4: Insert in Part 2:
State/Territory bodies First way in which a body can be a State/Territory body

"3D.(1) A body is a State/Territory body if:

   (a)  it is a company limited solely by shares; and

   (b)  all the shares in it are beneficially owned by one or more government
        entities. Note. For the definition of government entity see subsection
        (6). Note that an excluded STB is not a government entity. Second way
        in which a body can be a State/Territory body

"(2) A body is a State/Territory body if:

   (a)  it is established by State or Territory legislation; and

   (b)  it is not a company solely limited by shares; and

   (c)  the legislation provides that it must distribute all of its profits
        (if any) only to one or more government entities; and

   (d)  if the legislation makes provision as to the way its net assets may be
        distributed if it is dissolved or wound up-the provision is that, if
        it is dissolved, all of its net assets (if any) must be distributed
        only to one or more government entities. Third way in which a body can
        be a State/Territory body

"(3) A body is a State/Territory body if:

   (a)  it is established by State or Territory legislation; and

   (b)  it is not a company solely limited by shares; and

   (c)  the legislation gives the power to appoint or dismiss its governing
        person or body only to one or more government entities. Fourth way in
        which a body can be a State/Territory body

"(4) A body is a State/Territory body if:

   (a)  it is established by State or Territory legislation; and

   (b)  it is not a company solely limited by shares; and

   (c)  the legislation gives the power to direct its governing person or body
        as to the conduct of its affairs only to one or more government
        entities. Fifth way in which a body can be a State/Territory body

"(5) A body is a State/Territory body if:

   (a)  it is not a company solely limited by shares; and

   (b)  it is not established by State or Territory legislation; and

   (c)  all the legal and beneficial interests (including, but not limited to,
        interests as to income, profits, dividends, capital and distributions
        of capital) in it are held only by one or more government entities;
        and

   (d)  all the rights or powers (if any) to vote, appoint or dismiss its
        governing person or body and direct its governing person or body as to
        the conduct of its affairs are held only by one or more government
        entities. What do excluded STB, government entity and Territory mean?

"(6) In this section: excluded STB means a State/Territory body that:

   (a)  at a particular time, is prescribed as an excluded State/Territory
        body in relation to that time; or

   (b)  is a municipal corporation or other local governing body (within the
        meaning of paragraph 23(d) of the Income Tax Assessment Act 1936); or

   (c)  is a public educational institution (within the meaning of paragraph
        23(e) of that Act); or

   (d)  is a public hospital (within the meaning of paragraph 23(ea) of that
        Act); government entity means:

   (a)  a State; or

   (b)  a Territory; or

   (c)  another State/Territory body that is not an excluded State/Territory
        body; Territory means the Northern Territory or the Australian Capital
        Territory. Governor, Minister and Department Head taken to be a
        government entity

"(7) For the purposes of subsections (3), (4) and (5), if the power to
appoint, dismiss or direct the governing body is given to, or is held by:

   (a)  a Governor of a State; or

   (b)  a Minister of the Crown of a State; or

   (c)  a Minister of a Territory; or

   (d)  the Head of a Department of a State or a Territory; or

   (e)  any combination of paragraphs (a) to (d); the power is taken to be
        given to, or held by, a government entity. States and Territories to
        consent to State/Territory bodies being excluded STBs

"(8) The regulations may prescribe that a State/Territory body is an excluded
STB only if all States and Territories consent to the State/Territory body
being so prescribed.". 20. After Item 126 in the Table of Contents in Schedule
1: Insert:

"126A. State/Territory bodies". 21. Subitem 126(2) of Schedule 1: Omit the
subitem, substitute:

"(2) This Item does not cover goods for use by:

   (a)  a Commonwealth-controlled authority within the meaning of section 130
        of the Assessment Act; or

   (b)  a State/Territory body.". 22. After Item 126 of Schedule 1: Insert:
        Item 126A: (State/Territory bodies)

"Goods for use by a State/Territory body other than an excluded STB.". 23.
Paragraph 127(1)(c) of Schedule 1: Add at the end:

"other than such a board or trust that is a State/Territory body". 24.
Application The amendments made by this Part apply to dealings with goods
after the commencement of this item. 25. Transitional-periodic quotes by
State/Territory bodies If, before the commencement of this item, a
State/Territory body (other than an excluded STB) has made a periodic quote
under section 85 of the Sales Tax Assessment Act 1992 on the basis that goods
will be used to satisfy exemption Item 126 or 127, then, after the
commencement of this Item, the periodic quote is taken to have been made on
the basis that goods will be used to satisfy exemption Item 126A.