Treasury Laws Amendment (Combating Multinational Tax Avoidance) Act 2017 (27 of 2017)

Schedule 1   Diverted profits tax

Taxation Administration Act 1953

44   At the end of Chapter 3 in Schedule 1

Add:

Part 3-30 - Diverted profits tax

Division 145 - Assessments of diverted profits tax

Guide to Division 145

145-1 What this Division is about

The Commissioner can make an assessment of diverted profits tax. The entity that is the subject of the assessment can appeal to the Federal Court against the Commissioner's decision to make the assessment. Such an appeal can be made generally no earlier than 12 months after the day on which the Commissioner first gives notice of the assessment to the entity.

Table of sections

145-5 DPT assessments - modified application of Division 155

145-10 When DPT assessments can be made

145-15 Period of review of DPT assessments

145-20 Review of assessments

145-25 Restricted DPT evidence

145-5 DPT assessments - modified application of Division 155

In applying Division 155 in relation to an amount of *diverted profits tax:

(a) apply the provisions of that Division with the modifications set out in sections 145-10 to 145-25; and

(b) disregard sections 155-15, 155-20, 155-25, 155-30, 155-40, 155-45, 155-50, 155-55 and 155-70.

145-10 When DPT assessments can be made

Despite subsection 155-5(1), the Commissioner can make an assessment (the DPT assessment ) of the amount of *diverted profits taxonly at a time in the period:

(a) starting on the day on which the Commissioner first gives the entity that is the subject of the assessment a notice of assessment under Part IV of the Income Tax Assessment Act 1936 for the income year mentioned in paragraph 177J(1)(a) of the Income Tax Assessment Act 1936 (as that paragraph applies in relation to the amount of diverted profits tax); and

(b) ending on the last day of the period of 7 years starting the day after that day.

145-15 Period of review of DPT assessments

(1) Despite subsection 155-35(2), the period of review , for the *DPT assessment, is:

(a) the period:

(i) starting on the day on which the Commissioner first gives notice of the assessment to the entity that is the subject of the assessment under section 155-10; and

(ii) ending on the last day of the period of 12 months starting the day after that day; or

(b) if:

(i) the entity, by written notice given to the Commissioner, specifies a shorter period in accordance with subsection (2); and

(ii) the Federal Court of Australia has not made an order under subsection (3) in respect of the written notice;

that shorter period; or

(c) if the period of review is extended under subsection 155-35(3) or (4) - the period as so extended.

(2) For the purposes of subparagraph (1)(b)(i), the shorter period must:

(a) start on the day mentioned in subparagraph (1)(a)(i); and

(b) end on a day that is at least 30 days after the day on which the entity gives the written notice to the Commissioner.

(3) For the purposes of subparagraph (1)(b)(ii), the Federal Court of Australia may make an order under this subsection in respect of the written notice if:

(a) the Commissioner has started to examine the entity's affairs in relation to the assessment; and

(b) the Commissioner has not completed the examination within the shorter period specified in the written notice; and

(c) the Commissioner, within 30 days after the day on which the entity gives the written notice to the Commissioner, applies to the Court for the order; and

(d) the Court is satisfied that it was not reasonably practicable, or it was inappropriate, for the Commissioner to complete the examination within the shorter period specified in the written notice, because of:

(i) any action taken by the entity; or

(ii) any failure by the entity to take action that it would have been reasonable for the entity to take.

(4) Despite subsection 155-35(5), in relation to the *DPT assessment:

(a) an order may be made under subsection 155-35(3) only once; and

(b) consent may be given under subsection 155-35(4) only once.

145-20 Review of assessments

(1) Section 155-90 does not apply during the *period of review mentioned in section 145-15.

(2) In applying Part IVC of this Act as a result of section 155-90 after the end of that *period of review:

(a) have regard only to the provisions of that Part mentioned in subsection (3); and

(b) apply those provisions with the modifications set out in subsection (4); and

(c) disregard the other provisions of that Part; and

(d) apply section 145-25 (restricted DPT evidence).

(3) For the purposes of paragraph (2)(a), the provisions of that Part are as follows:

(a) sections 14ZL and 14ZP;

(b) subsection 14ZR(1);

(c) subsection 14ZZ(1);

(d) Division 5 (apart from section 14ZZS).

(4) For the purposes of paragraph (2)(b), the modifications are as follows:

(a) treat the Commissioner's decision to make the *DPT assessment as an objection decision;

(b) treat subsection 14ZZ(1) as reading "The entity that is the subject of the DPT assessment may appeal to the Federal Court of Australia against the objection decision.";

(c) treat the reference in section 14ZZN to "within 60 days after the person appealing is served with notice of the decision" as being a reference to "within 60 days after the end of the period of review mentioned in section 145-15 in Schedule 1";

(d) disregard paragraph 14ZZO(a);

(e) treat paragraph 14ZZO(b) as reading "the appellant has the burden of proving that the DPT assessment is excessive or otherwise incorrect and what the DPT assessment should have been";

(f) treat the reference in section 14ZZR to a taxation decision as being a reference to the Commissioner's decision to make the DPT assessment.

145-25 Restricted DPT evidence

(1) *Restricted DPT evidence is not admissible in evidence in proceedings under Part IVC on an appeal to the Federal Court of Australia related to the *DPT assessment.

(2) Restricted DPT evidence means information or documents that:

(a) the entity that is the subject of the *DPT assessment (or an associate (within the meaning of section 318 of the Income Tax Assessment Act 1936) of that entity), had in its custody or under its control at a time before, during or after the *period of review; and

(b) the Commissioner did not have in his or her custody or under his or her control at any time in the period of review.

(3) Subsection (1) does not prevent *restricted DPT evidence from being admissible in evidence in the proceedings if:

(a) the Commissioner consents to the admission of the restricted DPT evidence in accordance with subsection (4); or

(b) the court in which the proceedings take place considers that the admission of the restricted DPT evidence is necessary in the interests of justice; or

(c) the restricted DPT evidence is expert evidence that:

(i) comes into existence after the *period of review; and

(ii) is based on evidence that the Commissioner had in his or her custody or under his or her control at any time in the period of review.

(4) For the purposes of paragraph (3)(a), the Commissioner may give the consent if the Commissioner considers that it is reasonable to do so.

(5) In making a decision under paragraph (3)(a) or (b), the Commissioner or the court must have regard to:

(a) whether, if the *restricted DPT evidence were not admissible in evidence in the proceedings, the remaining information or documents that are relevant to the proceedings are, or are likely to be, misleading; and

(b) whether it would have been reasonable for the entity that is the subject of the *DPT assessment (or the associate of that entity mentioned in paragraph (2)(a)) to have given the Commissioner the restricted DPT evidence within the *period of review.

(6) The Commissioner must give a consent for the purposes of paragraph (3)(a) if failure to do so would have the effect, for the purposes of the Constitution, of making any tax or penalty incontestable.

(7) A consent for the purposes of paragraph (3)(a) is to be in writing.

(8) If the Commissioner gives a consent for the purposes of paragraph (3)(a), the Commissioner must give the entity that is the subject of the *DPT assessment a copy of the consent as soon as practicable afterwards.