INCOME TAX REGULATIONS (AMENDMENT) 1992 NO. 38 INCOME TAX REGULATIONS (AMENDMENT) 1992 NO. 38 - TABLE OF PROVISIONS 1. Commencement 2. Amendment 3. Regulation 152C (When are income or profits subject to a reduction of tax?) 4. New regulation 152HA 5. Applications 1992 No. 38 INCOME TAX REGULATIONS (AMENDMENT) - REG 1 1. Commencement 1.1 Subject to subregulation 1.2, these Regulations commence on 1 March 1992. 1.2 Subregulations 3.3, 3.5, 3.6 and 4.1 are taken to have commenced on 1 July 1989. 1992 No. 38 INCOME TAX REGULATIONS (AMENDMENT) - REG 2 2. Amendment 2.1 The Income Tax Regulations are amended as set out in these Regulations. 1992 No. 38 INCOME TAX REGULATIONS (AMENDMENT) - REG 3 3. Regulation 152C (When are income or profits subject to a reduction of tax?) 3.1 Subregulation 152C (1): After "profits" (first occurring), insert "of a kind specified in subregulation 152D (1)". 3.2 Subregulation 152C (1): Omit "provides", substitute "provides, or has the effect,". 3.3 Paragraph 152C (1) (g): Omit "subregulation (3),", substitute "subregulations (3) and (3A)," 3.4 Paragraph 152C (1) (h): Omit "has the effect of reducing", substitute "reduces". 3.5 Subregulation 152C (3): Omit the subregulation, substitute: "(3) Paragraph (1) (g) does not apply to the reduction under the tax law of the listed country of income or profits mentioned in subregulation 152C (1) to the extent that the tax law permits the deduction, from the income or profits, of losses or outgoings: (a) incurred during the relevant period by the entity in deriving any income or profits; or (b) incurred before the relevant period by the entity in deriving any income or profits if the losses or outgoings have not been allowed under that tax law as a deduction from any income or profits derived by the entity. "(3A) Subject to subregulation (3C), paragraph (1) (g) does not apply to the reduction under the tax law of the listed country of income or profits mentioned in subregulation 152C (1) to the extent that the tax law permits the deduction, from the income or profits, of losses or outgoings incurred, in deriving any income or profits, by a company other than the entity (in this regulation called 'the loss company') if the entity is: (a) a CFC in relation to an Australian entity; and (b) a resident, within the meaning of section 332 of the Act, of the listed country; during the period stated in subregulation (3B). "(3B) The period referred to in subregulation (3A) is the period that: (a) starts on the first day of the relevant period during which the losses or outgoings are transferred to the entity by the loss company; and (b) ends at the end of the last day of the relevant period (whether or not it is the period mentioned in paragraph (a)) during which the losses or outgoings are deducted from the income or profits derived by the entity. "(3C) Subregulation (3A) applies only if: (a) at all times during the loss period (as defined in subregulation (7)), the loss company is: (i) a CFC in relation to the Australian entity referred to in paragraph (3A) (a); and (ii) a resident, within the meaning of section 332 of the Act, of the listed country; and (b) the loss company is a group company (within the rules stated in subregulation (3D)) in relation to the entity referred to in subregulation (3A) during: (i) unless subparagraph (ii) applies-the whole of the period applicable under subregulation (3A); or (ii) if the loss company was not in existence for the whole of that period-the whole of the portion of that period during which the loss company was in existence; and (c) the losses or outgoings have not previously been allowed under the tax law mentioned in subregulation (3A) as a deduction from any income or profits derived by any entity. "(3D) Subject to subregulation (3E), in order to find out for the purposes of subregulation (3C) whether a company is a group company during the period applicable under subregulation (3A) (in this subregulation called 'the period'), the following rules must be applied: (a) company A is a group company in relation to company B, during the period, if: (i) one of the companies is a subsidiary (as defined in paragraph (b)) of the other company; or (ii) each of the companies is a subsidiary (as so defined) of company C; during: (iii) unless subparagraph (iv) applies-the whole of the period; or (iv) if company A or company B was not, or both of them were not, in existence for the whole of the period or the whole of the portion of the period during which both of the companies were in existence; (b) company A is a subsidiary of company B if company B owns a dominant parcel of shares (as defined in subregulation (8)) of company A during: (i) if the circumstance stated in subparagraph (a) (iv) applies during a portion of the period-that portion of the period; or (ii) in any other case-the whole of the period. "(3E) For the purposes of subregulation (3D), if company A is a subsidiary of company B (including the case where company A is a subsidiary of company B because of 1 or more further applications of this subregulation), every subsidiary of company A is taken to be a subsidiary of company B.". 3.6 Add at the end: "(6) F or the purposes of subregulation (3A), 'deduction' includes a reduction of the income or profits of an entity either directly or by means of: (a) the consolidation of the activities of the loss company and the entity; or (b) a payment by the entity to the loss company. "(7) For the purposes of subregulation (3C), 'loss period' in relation to a company, means the period from the start of the relevant period during which the losses or outgoings were incurred by the company to the end of: (a) the last day of the period that is referred to in subregulation (3A); or (b) if the company ceased to exist during the applicable period stated in paragraph (a)-the end of the day on which the company ceased to exist. "(8) For the purposes of paragraph (3D) (b), 'dominant parcel of shares' in relation to the shares of a company, means: (a) shares representing at least 60% of the paid-up share capital of that company; or (b) shares conferring at least 60% of the total rights of the shareholders of that company to vote, or to take part in decision making of that company, concerning: (i) the making of distributions of capital and profits of the company to its shareholders; and (ii) the constituent document of the company; and (iii) any variation of the share capital of the company; or (c) shares conferring at least 60% of the total rights to distribution of capital and profits of that company: (i) on winding up; and (ii) otherwise than on winding up.". 1992 No. 38 INCOME TAX REGULATIONS (AMENDMENT) - REG 4 4. New regulation 152HA 4.1 After regulation 152H, insert: Accruals tax laws "152HA. For the purposes of the definition of 'accruals tax law' in section 317 of the Act, each of the following laws of a listed country is declared to be an accruals tax law: (a) sections 91 to 95 (inclusive) of the Income Tax Act of Canada; (b) article 209B of the General Tax Code of France; (c) sections 7 to 14 (inclusive) of the External Tax Law of the Federal Republic of Germany; (d) articles 40-4 to 40-6 (inclusive) and 66-6 to 66-9 (inclusive) of the Special Taxation Measures Law of Japan; (e) sections 245C to 245Q (inclusive) of the Income Tax Act 1976 of New Zealand; (f) section 16.2 of the National Income Tax Act of Sweden; (g) Chapter IV of Part XVII of the Income and Corporation Taxes Act 1988 of the United Kingdom; (h) subpart F of Part III of subchapter N of Chapter 1 of the Internal Revenue Code of the United States of America.". 1992 No. 38 INCOME TAX REGULATIONS (AMENDMENT) - REG 5 Applications 5.1 The amendments made by subregulations 3.1, 3.2 and 3.4 apply as follows: (a) for the purposes of section 23AH of the Income Tax Assessment Act 1936, the amendments apply in respect of the year of income of the taxpayer that commences on or after 1 March 1992; (b) for the purposes of Division 6AAA of Part III of that Act, the amendments apply in respect of the year of income of a non-resident trust estate of a kind referred to in that Division that commences on or after 1 March 1992; (c) for the purposes of Division 6 of Part X of that Act, the amendments apply in respect of an accounting period of a company of a kind referred to in that Division that commences on or after 1 March 1992; (d) for the purposes of Division 7 of Part X of that Act, the amendments apply in respect of a statutory accounting period of a company of a kind referred to in that Division that commences on or after 1 March 1992; (e) for the purposes of the other provisions of that Act, the amendments apply on and from 1 March 1992. - NOTES 1992 No. 38*1* INCOME TAX REGULATIONS*2* (AMENDMENT) *1*Notified in the Commonwealth of Australia Gazette on 7 February 1992. *2*Statutory Rules 1936 No. 94 as amended by 1939 Nos. 6 and 42; 1940 Nos. 138 and 289; 1941 Nos. 120 and 327; 1942 Nos. 339 and 553; 1943 Nos. 80, 127 and 151; 1944 Nos. 90 and 124; 1945 Nos. 12, 85, 169 and 192; 1946 No. 135; 1947 Nos. 77 and 173; 1948 Nos. 115 and 162; 1949 Nos. 25 and 50; 1950 Nos. 63 and 101; 1951 Nos. 136 and 157; 1952 Nos. 89, 90 and 102; 1953 Nos. 55 and 88; 1954 Nos. 11, 99 and 112; 1955 No. 23; 1956 Nos. 34, 35 and 96; 1957 Nos. 39 and 74; 1958 Nos. 27 and 70; 1959 Nos. 25 and 81; 1960 Nos. 44 and 74; 1962 Nos. 15, 44 and 112; 1963 Nos. 53 and 92; 1964 Nos. 74, 121 and 134; 1965 Nos. 133 and 187; 1966 No. 156; 1967 Nos. 112 and 126; 1968 No. 1; 1969 No. 68; 1970 Nos. 43, 126, 168 and 213; 1971 Nos. 120 and 148; 1972 Nos. 48, 50 and 137; 1973 No. 266; 1974 Nos. 193, 226 and 267; 1975 Nos. 88, 89, 99, 101 and 213; 1976 Nos. 115, 188 and 212; 1977 Nos. 77, 107 and 248; 1978 Nos. 85 and 193; 1979 Nos. 126 and 239; 1980 Nos. 86, 137 and 149; 1981 Nos. 116 and 360; 1982 Nos. 115, 128, 267 and 280; 1983 Nos. 79, 87, 111, 213 and 319; 1984 Nos. 172, 286, 408, and 416; 1985 Nos. 21, 148, 274 and 278; 1986 No. 325 and Acts Nos. 28, 49 and 112, 1986; 1987 Nos. 92 and 120; 1988 Nos. 196, 208, 262, 381, 382, 383 and 384 and Act No. 97, 1988; 1989 Nos. 67, 80, 115, 123, 124, 141, 250 and 358; 1990 Nos. 19, 126, 151, 152, 192, 347, 390, 398 and 468; 1991 Nos. 20, 121, 156, 158, 240, 300, 301, 390 and 391.