INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART VI - COLLECTION AND RECOVERY OF TAX  

Division 1B - Collection of tax on companies and trustees of certain funds  

SECTION 221AY   ADDITIONAL TAX IF INCOME OR DEDUCTION TRANSFERRED UNDER AVOIDANCE SCHEME  

221AY(1)   [Operation of section]  

If:


(a) the Commissioner is of the opinion in relation to a relevant entity in respect of a year of income to which this Division applies (in this section called the ``relevant year of income'' ) that, in connection with an arrangement referred to in subsection 221AX(1) :


(i) an amount has been included in the assessable income of the entity of the relevant year of income where the entity is a company, or in the assessable income of the relevant fund or unit trust of the relevant year of income where the entity is a trustee of a fund or unit trust, being an amount that would not have been so included, or might reasonably be expected not to have been so included, if the arrangement had not been entered into or carried out; or

(ii) a deduction is not allowable to the entity in relation to the relevant year of income where the whole or a part of that deduction would have been so allowable, or might reasonably be expected to have been so allowable, if the arrangement had not been entered into or carried out; and


(b) the entity did not give a notice under paragraph 221AQ(1)(a) in relation to the relevant year of income; and


(c) income tax has become due and payable by the entity in respect of its taxable income of the relevant year of income;

the following provisions of this section have effect.

221AY(2)   [Entity not required to make initial payment of tax]  

If the entity was not required to make an initial payment of tax in respect of its taxable income of the relevant year of income, additional tax, by way of penalty, in respect of the period that:


(a) commenced on the day by which, if such an initial payment of tax had been payable by the entity, that payment would have been required to be made; and


(b) ended on the day on which the entity makes the payment that it is required by section 221AZD to make in respect of the relevant year of income;

is due and payable by the entity, at the rate of 16% per annum on the amount equal to 85% of the amount calculated by the entity under that section to be the income tax that is payable in respect of its taxable income of the relevant year of income.

221AY(3)   [Entity made initial payment of tax]  

If the entity made an initial payment of tax in respect of its taxable income of the relevant year of income, additional tax, by way of penalty, in respect of each day (in this subsection called the ``day concerned'' ) during the period that:


(a) commenced on the day by which the entity was required to make that initial payment; and


(b) ended on the day on which the entity makes the payment that it is required by section 221AZD to make in respect of the relevant year of income;

is due and payable by the entity, at the rate of 16% per annum, on the amount by which 85% of the amount calculated by the entity under that section to be the income tax that is payable in respect of its taxable income of that year of income exceeds the amount, or the total of the amounts, paid by the entity on or before the day concerned in respect of that initial payment of tax.

221AY(4)   [Entity received refund]  

Where the entity received a refund in respect of an amount paid as an initial payment of tax in respect of its taxable income of the relevant year of income under this Division:


(a) subject to paragraph (b), the amount, or the total of the amounts, paid by the entity in respect of that initial payment of tax is to be taken, for the purposes of this section, to have been reduced, on and after the date of receipt of the refund, by the amount of the refund; or


(b) if the entity received the refund because a determination under section 221AV reduced the amount of the initial payment that the entity was liable to make in respect of its taxable income of the relevant year of income - paragraph (a) does not apply and subsection (3) has effect as if the entity had not received the refund.

221AY(5)   [Remission of additional tax]  

Where the Commissioner is satisfied that there are special circumstances because of which it would be fair and reasonable to do so, the Commissioner may remit the whole or any part of any additional tax payable by the entity under subsection (2) or (3).

221AY(6)   [Income tax payable]  

For the purposes of this section, the income tax that is payable by the entity in respect of its taxable income of the relevant year of income is the income tax that is so payable after deducting:


(a) any credits to which the entity is or will be entitled under:


(i) subsection 98A(2) , Division 18 of Part III or Division 1AA or 3A of this Part; or

(ii) the International Tax Agreements Act 1953 ; and


(b) any offset to which the entity is or will be entitled under section 160AQK .


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