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  • Functions transferred to another nominated body

    A change in structure may involve a transfer of functions between nominated bodies.

    This may be associated with a change in name and/or another nominated body being abolished. Where this occurs, only the body that is abolished will cease to exist.

    If there is an ongoing function which that remains after the restructure, a nominated body which that increases or decreases its functions and changes its name will not cease to exist.

    Example: Change of name with a change in functions

    A state or territory decides to:

    • change the name of the Treasury Department to the Department of Treasury and Finance
    • abolish the Finance Department
    • transfer the functions of the Finance Department to the renamed Department of Treasury and Finance.

    As a result of these changes, only the Finance Department has ceased to exist.

    End of example

    If a department ceases to exist, the state or territory must ensure the steps outlined in Nominated state or territory body ceases to exist are undertaken for that department.

    In addition, the department the function is transferred to will need to advise us of the change in name and vary its FBT instalment on the next activity statement.

    If employees are transferred to another nominated state or territory body, the FBT obligations relating to the transferred employees for the remainder of the year can be transferred to the nominated state or territory body. This will require the nominated state or territory body to vary the FBT instalments shown on its next activity statement, to include the notional tax that relates to the transferred employees. To do this, complete labels F2, F3 and F4 on the activity statement.

    The revised notional tax of the nominated state or territory body, which is shown at label F2, is calculated using the following formula:

    Notional tax of the nominated body + Notional tax of the ceased body − (Instalments paid by the ceased body − Previous credits claimed by the ceased body)

    The amount of the varied instalment for the quarter is shown at label F3. This is calculated using the following formula:

    F2 amount × Relevant percentage − (Instalments paid − Previous credits claimed).

    The relevant percentage depends on the FBT quarter in which the changes occur. The percentages are:

    • 25% for the quarter ending 30 June
    • 50% for the quarter ending 30 September
    • 75% for the quarter ending 31 December
    • 100% for the quarter ending 31 March.

    The reason for the variation is inserted at label F4. The relevant code to use is 22.

    Example: Variation of instalments following transfer of employees

    On 1 October 2018, Department Ex was abolished with the employees and functions being transferred to a nominated state or territory body.

    The notional tax of Department Ex for the year ended 31 March 2019 is $160,000. Prior to being abolished, the Department had paid two instalments of $40,000.

    The notional tax of the nominated body for the year ending 31 March 2019 is $320,000. As at 1 October, it has paid two instalments of $80,000.

    As a result of the changes, the nominated state or territory body varied its final two instalments by completing labels F2, F3 and F4 on its activity statement for the quarter ending 31 December 2018.

    The amounts inserted were calculated as follows:

    F2 400,000 = (Notional tax of the nominated body) + (Notional tax of the abolished department) − (Instalments paid by the abolished department)

    400,000 = ($320,000) + (160,000) − (80,000)

    F3 140,000 = F2 amount × Relevant percentage − (Instalments paid − Previous credits claimed)

    140,000 = 400,000 × 75% − (160,000 − 0)

    F4 22

    Department Ex would need to follow the steps set out in Nominated state or territory body ceases to exist.

    If Department Ex was not abolished, but only reduced in size, it would be able to vary its final two instalments to reflect its reduced notional tax.

    End of example
      Last modified: 06 Dec 2019QC 20311