Tax Laws Amendment (2010 Measures No. 2) Act 2010 (75 of 2010)

Schedule 2   Extending the TFN withholding arrangements to closely held trusts, including family trusts

Part 1   Main amendments

Income Tax Assessment Act 1936

1   After Division 4A of Part VA

Insert:

Division 4B - Quotation of tax file numbers in connection with certain closely held trusts

202DN Application of Division

This Division applies to both the trustee of a trust and to a beneficiary of the trust, if:

(a) paragraph 12-175(1)(c) in Schedule 1 to the Taxation Administration Act 1953 applies to the trust; and

Note: That paragraph applies to certain closely held trusts.

(b) paragraph 12-175(1)(d) in that Schedule applies to the beneficiary.

202DO Quotation of tax file numbers

(1) The beneficiary may quote the beneficiary's tax file number to the trustee.

(2) The beneficiary quotes the beneficiary's tax file number to the trustee if the beneficiary, or another person acting for the beneficiary, informs the trustee of the number in a manner approved by the Commissioner.

202DP Trustee must report quoted tax file numbers

(1) The trustee must report the beneficiary's tax file number to the Commissioner, in the approved form, if:

(a) the beneficiary quotes the beneficiary's tax file number to the trustee during a quarter (within the meaning of the Income Tax Assessment Act 1997); and

(b) the beneficiary has not quoted the beneficiary's tax file number to the trustee in connection with an investment to which this Part applies; and

(c) the trustee has not reported, and is not required to report, the beneficiary's tax file number to the Commissioner under Division 6D of Part III of this Act (about trustee beneficiary non-disclosure tax).

(2) The trustee must give the report to the Commissioner within:

(a) one month after the end of the quarter to which it relates; or

(b) within such further time as the Commissioner allows.

(3) The Commissioner may, by notice in writing given to the trustee, inform the trustee that the period specified in the notice (being a period greater than 3 months) is to be the trustee's reporting period for the purposes of this section. If the Commissioner does so, a reference in this section to a quarter is taken to be a reference to the period specified in the notice.

(4) For the purposes of this section, disregard subsection 202DR(3).

Note: Refusal or failure to report to the Commissioner as required by this section is an offence under section 8C of the Taxation Administration Act 1953.

202DR Effect of incorrect quotation of tax file number

Commissioner may notify trustee of correct tax file number

(1) If the Commissioner is satisfied:

(a) that the tax file number quoted to the trustee:

(i) has been cancelled or withdrawn since it was quoted; or

(ii) is otherwise wrong; and

(b) that the beneficiary has a tax file number;

the Commissioner may give the trustee notice in writing of the beneficiary's correct tax file number.

(2) The notice give under subsection (1) is taken to have taken effect on the day on which the cancelled or withdrawn tax file number was quoted to the trustee as mentioned in paragraph (1)(a).

(3) On and from the day on which the notice given under subsection (1) took effect, the beneficiary is taken to have quoted the beneficiary's correct tax file number to the trustee.

Commissioner may notify trustee if beneficiary does not have a tax file number etc.

(4) If:

(a) the Commissioner is satisfied that the tax file number quoted to the trustee:

(i) has been cancelled or withdrawn since it was quoted; or

(ii) is for any other reason not the beneficiary's tax file number; and

(b) the Commissioner is not satisfied that the beneficiary has a tax file number;

the Commissioner must give the trustee written notice accordingly.

(5) The Commissioner must give the beneficiary a copy of the notice given under subsection (4), together with a written statement of the reasons for the decision to give the notice.

(6) The notice given under subsection (4) takes effect on the day specified in the notice, being a day not earlier than the day on which the copy of the notice is given to the beneficiary.

(7) On and from the day on which the notice given under subsection (4) takes effect, the beneficiary is taken not to have quoted the beneficiary's tax file number to the trustee.

Note: The trustee may be required to withhold an amount from a payment to the beneficiary if the beneficiary has not quoted the beneficiary's tax file number to the trustee at the time the payment is made: see sections 12-175 and 12-180 in Schedule 1 to the Taxation Administration Act 1953.

As such, the trustee may be required to withhold if a notice under subsection (4) of this section is in effect on the day on which the payment is made.