Explanatory Memorandum(Circulated by the Minister representing the Treasurer, Senator the Hon. Sir Kenneth Anderson, K.B.E.)
The main purpose of this memorandum is to explain the provisions of the Income Tax Assessment Bill (No. 3) 1972 following amendments made in the House of Representatives to provisions of the Bill relating to dividend stripping operations and the tests for income tax purposes of a public company subsidiary. An explanation of the provisions of the Income Tax (International Agreements) Bill 1972 is also given.
The major Bill is the Income Tax Assessment Bill (No. 3) 1972 by which it is proposed to amend the Income Tax Assessment Act 1936-1972 (the "Principal Act"). The amending Bill contains proposals to limit the rebate of tax on dividends received by companies in certain circumstances and to strengthen the provisions of the law under which a company is to be regarded as a public company for income tax purposes. Under other provisions of the Bill, certain dividends paid by a private company to another company are not to be taken into account in determining whether the private company has made a sufficient distribution of its income for undistributed income tax purposes.
The second Bill will amend the Income Tax (International Agreements) Act 1953-1969. The amendments are of a technical nature and are consequential on those provisions of the first Bill that relate to the rebate on inter-company dividends.