Replacement Explanatory Memorandum
(Circulated by the authority of the Treasurer, the Hon John Dawkins, M.P)Chapter 9 Offshore Banking - Commencement date
The tax concessions for offshore banking activities will apply to assessable income derived and allowable deductions of losses and outgoings incurred after 30 June 1992.
The deductions allowed in calculating assessable offshore banking income for foreign tax paid will also apply to foreign tax paid after 30 June 1992.
The provisions that deem assessable OB income to be sourced in Australia will apply to assessable OB income derived after 30 June 1992.
The provisions that relate to deemed interest on OBU resident-owner money apply to deemed interest for any period beginning after 30 June 1992 irrespective of when the money was provided.
The provisions relating to the transmission of information to the Treasurer and the requirement to keep records and amendments to the measures that deal with exemptions from interest withholding tax apply after the date of commencement.
The exemption of income etc of OBU offshore investment trusts applies to income derived and capital gains or losses which occur after 30 June 1992. [Clause 19]
Transitional - 1 July 1992 to commencement
This Bill was first introduced into the House of Representatives on 24 June 1992. Subsequently a number of amendments and new clauses were moved by the Government in the House to clarify certain aspects bearing on the scope of the measures and to make it consistent with business practices. Certain anti-avoidance provisions have also been tightened.
Some of the amendments proposed would have a possible adverse effect on an OBU. Wherever this could happen a transitional provision will have the effect of applying the rules as set out in the Bill as originally introduced for the period from 1 July 1992 to date of commencement. [Clause 20]
The following provisions will operate as originally introduced for the transitional period:
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- the definition of "non-OB money" (proposed section 121C);
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- the definition of "related person" (proposed section 121C);
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- the amendment to guarantee-type activity (proposed paragraph 121D(3)(b));
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- the requirement that any money payable or receivable in respect of gold bullion trading is not Australian currency (proposed paragraph 121D(4)(f));
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- restricting hedging activities to borrowing and lending activities (proposed paragraphs 121D(8)(a) and (b));
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- the requirement for an OBU to make a statement that money paid to another OBU is not non-OB money (proposed paragraph 121E(c));
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- the meaning of "OBU owner money" (proposed section 121EC); and
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- deemed interest to be based on the original definition of "OBU owner money" (proposed subsection 121EK(1)).