(6A) Nothing in this Part operates to deem a capital gain to have accrued to a taxpayer during the year of income where the relevant disposal related to an asset for which the taxpayer received consideration under firearms surrender arrangements.

Note: Firearms surrender arrangements has the meaning given by subsection 6(1).

9   Application

The amendments made by this Part apply in respect of years of income in which proceeds are derived as a result of firearms surrender arrangements.

Note: Firearms surrender arrangements has the meaning given by subsection 6(1) of the Income Tax Assessment Act 1936.

Part 2   Amendment of the Income Tax Assessment Act 1997

10   Section 12-5 (after table item headed 'financial arrangements')

Insert:

11   Before paragraph 36-20(3)(a)

Insert:

(aa) paragraph 23(jd) (Income derived by way of compensation under firearms surrender arrangements).

12   After paragraph 36-20(3)(e)

Insert:

(ea) subsection 59(2AAA) (Excess of consideration over depreciated value of property surrendered under firearms surrender arrangements);

13   Application

The amendments made by this Part apply in respect of years of income in which proceeds are derived as a result of firearms surrender arrangements.

Note: Firearms surrender arrangements has the meaning given by subsection 6(1) of theIncome Tax Assessment Act 1936.

Schedule 7   Remote area housing

Fringe Benefits Tax Assessment Act 1986

1   At the end of Division 13 of Part III

Add:

58ZA Exempt benefits - remote area housing used in primary production

A benefit that would, apart from this section, be a remote area housing fringe benefit is an exempt benefit if:

(a) the benefit is provided by an employer who is, for the purposes of theIncome Tax Assessment Act 1936, carrying on a business of primary production; and

(b) the benefit is provided to an employee of the employer; and

(c) the employee is employed in that business of primary production; and

(d) the benefit is provided in respect of that employment.

2   Subsection 59(1)

After "remote area housing fringe benefit", insert ", or a benefit that apart from section 58ZA would be a remote area housing fringe benefit,".

3   Application

The amendments made by this Schedule apply to assessments for the FBT year beginning on 1 April 1997 and for all later FBT years.

Schedule 8   Depreciation of lessor's fixtures

Income Tax Assessment Act 1936

1   At the end of subsection 54AA(1)

Add:

; and (f) section 54AB does not apply.

2   After section 54AA

Insert:

54AB Leased property affixed to land - lessor taken to be owner for depreciation purposes

(1) This section applies if:

(a) a taxpayer (the lessor ) enters into a lease with another person (the lessee ) under which a right to use a unit of property that is plant or articles within the meaning of section 54 is granted to the lessee; and

(b) the property is a fixture on the land of a person other than the lessor and therefore the lessor is not the owner of the property; and

(c) if the property were not a fixture, the lessor would be the owner of the property; and

(d) under sections 54AC and 54AD, the lessor is an eligible lessor in relation to the property.

(2) If this section applies, the provisions of this Act relating to depreciation apply as if the lessor were the owner of the property instead of any other person.

(3) Also, section 51AD and Division 16D apply in relation to property to which this section applies as if the lessor were the owner of the property instead of any other person.

(4) For the purposes of this section and sections 54AC and 54AD:

hire purchase agreement means a contract for the hire of goods under which the hirer has a right or obligation to purchase the goods where the charge that is or may be made for hiring the goods, together with any other amount payable under the contract (including an amount to purchase the goods or to exercise an option to do so) exceeds the price of the goods.

lease means:

(a) any arrangement to let a unit of property (other than realty) on hire under which a right to use the property is granted by the owner to another person for a monetary or other consideration; or

(b) a renewal of such an arrangement;

but does not include a hire purchase agreement.

54AC Eligible lessor - right of removal of property

Right of removal

(1) Where a unit of property is a fixture on land owned by the lessee of the property, then, for the purposes of subsection 54AB(1), the lessor is an eligible lessor in relation to that property if:

(a) the lessor has a right, in addition to any other right, to sever and remove the property from the land in the event of default under, or termination of, the lease (a right to remove ); and

(b) the property can be removed without causing substantial damage to the property or to the land.

Effective right of removal

(2) Where the property is a fixture on land owned by a person other than the lessee, then, for the purposes of subsection 54AB(1), the lessor is an eligible lessor in relation to the property if:

(a) the lessee has a right to sever and remove the property from the land; and

(b) the property can be removed without causing substantial damage to the property or to the land; and

(c) under the lease, the lessor has a right against the lessee to recover the property (an effective right to remove ).

Lessor not an eligible lessor if right to remove, or effective right to remove, is lost

(3) The lessor is not an eligible lessor in relation to the property if:

(a) although the lessor has a right to remove, or an effective right to remove, the property, the lease expires or is otherwise terminated without the lessor exercising that right; or

(b) there is an event of default under the lease and the lessor ceases to have a right to remove, or an effective right to remove, the property; or

(c) the lessor disposes of his or her interest in the lease, including the residual interest in the property; or

(d) the lessee discharges his or her obligations under the lease and the property is not returned to the lessor; or

(e) the property is lost or destroyed.

54AD Lessor not an eligible lessor if property previously owned by the lessee

(1) Subject to subsection (2), a lessor is not an eligible lessor in relation to a unit of property for the purposes of subsection 54AB(1) if, at any time before the lease was entered into, the lessee or an associate of the lessee owned the property and used it or held it for use.

(2) Subsection (1) does not apply if:

(a) the property was first owned and used or held for use by the lessee or an associate of the lessee no more than 6 months before the lessor acquired the property; and

(b) the lessor acquired the property from the lessee or an associate of the lessee; and

(c) the property was not a fixture at the time that it was first owned and used or held for use by the lessee or an associate of the lessee; and

(d) at the time the property was first owned and used or held for use by the lessee or an associate of the lessee, there was an arrangement in existence providing for the property to be sold to the lessor and then leased to the lessee.

(3) For the purposes of subsections (1) and (2), a person (the seller ) is taken to have sold property and another person (the purchaser ) is taken to have acquired property where the seller purports to sell the property to the purchaser but does not because the property is a fixture on land.

(4) If the conditions in subsection (2) are satisfied, the cost of the property to the lessor, for the purposes of working out the property's depreciated value under section 62, is taken to be the lesser of:

(a) the sum of:

(i) the amount that would have been the depreciated value of the property of the lessee or an associate of the lessee at the time the lessor acquired it; and

(ii) any amount included in the assessable income of the lessee or associate under section 59 as a result of the sale; or

(b) the consideration paid by the lessor for the property.

(5) For the purposes of this section:

associate has the same meaning as in section 318.

54AE Lessor taken to have disposed of property in certain cases

(1) A lessor who is not an eligible lessor in relation to a unit of property under section 54AB because one or more of the conditions in subsection 54AC(3) is satisfied, is taken to have disposed of the property for the purposes of section 59 or 59AA for the amount of consideration set out in this section.

(2) If:

(a) the lease expires or is otherwise terminated without the lessor exercising his or her right to remove, or effective right to remove, the property; or

(b) there is an event of default under the lease and the lessor ceases to have a right to remove, or an effective right to remove, the property; or

(c) the lessee discharges his or her obligations under the lease and the property is not returned to the lessor;

the lessor is taken to have disposed of the property for a consideration equal to:

(d) if the parties to the lease are dealing at arm's length and there is any termination or residual amount received or receivable under the lease in respect of the property - that termination or residual amount; or

(e) if the parties to the lease are dealing at arm's length and there is no termination or residual amount received or receivable under the lease in respect of the property - any amount received or receivable by way of compensation in lieu of recovery of the property; or

(f) if the parties to the lease are not dealing at arm's length - the market value of the property immediately before the time of disposal referred to in paragraph (a), (b) or (c) worked out as if it were removed from the land.

(3) If the lessor disposes of his or her interest in the lease including the residual interest in the property, the lessor is taken to have disposed of the property for a consideration equal to:

(a) if the parties to the disposal are dealing at arm's length - the part of the disposal price that is reasonably attributable to the property; or

(b) if the parties to the disposal are not dealing at arm's length - the market value immediately before the time of disposal worked out as if the property were removed from the land.

(4) If the property is lost or destroyed, the lessor is taken to have disposed of the property for the sum of any amounts received or receivable in relation to its loss or destruction.

3   Application

The amendments made by this Schedule apply in relation to units of property first used on or after 1 July 1996 for the purposes of producing assessable income of the lessor of the property.

Schedule 9   Increase in age limit for superannuation contributions

Part 1   Amendment of the Superannuation Guarantee (Administration) Act 1992

1   Paragraph 27(1)(a)

Omit "65", substitute "70".

2   Application

The amendment made by this Part applies in relation to the 1997-98 year and all later years.

Part 2   Amendment of the Small Superannuation Accounts Act 1995

3   Section 30

Omit "65", substitute "70".

4   Application

The amendment made by this Part applies to deposits made for a period of employment where:

(a) the deposit is made on or after 1 July 1997; and

(b) the period of employment to which the deposit relates starts on or after 1 July 1997.

Schedule 10   Rebate for superannuation contributions made on behalf of a low-income or non-working spouse

Income Tax Assessment Act 1936

1   After Subdivision AAC of Division 17 of Part III

Insert:

Subdivision AACA - Rebate for superannuation contributions made on behalf of a low income or non-working spouse

159T Rebate for superannuation contributions made in relation to a spouse

(1) This section applies if the following conditions are satisfied in relation to a taxpayer and in relation to a year of income of the taxpayer:

(a) the taxpayer has a spouse in relation to whom he or she makes one or more eligible spouse contributions; and

(b) the taxpayer and his or her spouse are residents at the time that the taxpayer makes the eligible spouse contribution; and

(c) the spouse's assessable income is less than $13,800.

Note: For the meaning of eligible spouse contribution , see section 159TC.

(2) The taxpayer is entitled to a rebate of tax in the taxpayer's assessment for the year of income equal to 18% of the lesser of:

(a) $3,000 reduced by $1 for every $1 of the amount (if any) by which the spouse's assessable income of that year exceeds $10,800; or

(b) the total of the eligible spouse contributions made in relation to the spouse by the taxpayer in that year.

159TA Taxpayers may qualify for rebate in relation to more than one spouse

If, in relation to a year of income, a taxpayer qualifies for the rebate under section 159T in respect of more than one spouse, the total of rebates under that section for which the taxpayer qualifies is equal to the lesser of:

(a) the sum of the rebate amounts for which the taxpayer qualifies in relation to each spouse; or

(b) $540.

159TB Quotation of tax file number

A taxpayer who qualifies for a rebate under section 159T in respect of an eligible spouse may quote the tax file number of the spouse. The taxpayer must obtain the consent of the spouse to the quotation.

159TC Definitions

For the purposes of this Subdivision:

complying superannuation fund has the same meaning as in Part IX.

dependant has the same meaning as in theSuperannuation Industry (Supervision) Act 1993.

eligible spouse contributions , in relation to a taxpayer, means contributions made by the taxpayer where:

(a) the contributions are made in relation to a person who is the taxpayer's spouse at the time those contributions are made; and

(b) the contributions are made to a fund that is a complying superannuation fund in relation to the year of income of the fund in which the contributions are made; and

(c) the contributions are made to obtain superannuation benefits for the spouse or, in the event of the death of the spouse, for dependants of the spouse; and

(d) the taxpayer is not entitled to a deduction under section 82AAC in relation to the contributions.

spouse , in relation to a taxpayer:

(a) includes another person who, although not legally married to the taxpayer, lives with the taxpayer on a bona fide domestic basis as the husband or wife of the taxpayer;

but:

(b) does not include a person who lives separately and apart from the taxpayer on a permanent basis.

2   Section 159TC (definition of eligible spouse contributions )

Repeal the definition, substitute:

eligible spouse contributions , in relation to a taxpayer, means contributions made by a taxpayer in relation to a person who is the taxpayer's spouse at the time those contributions are made and the taxpayer is not entitled to a deduction under section 82AAC (including a deduction under that section due to the operation of section 82AADA) in relation to the contributions and:

(a) the contributions are made to a fund where:

(i) the fund is a complying superannuation fund in relation to the year of income of the fund in which the contributions are made; and

(ii) the contributions are made to obtain superannuation benefits for the spouse or, in the event of the death of the spouse, for dependants of the spouse; or

(b) the contributions are made to an RSA to obtain superannuation benefits for the spouse or, in the event of the death of the spouse, for dependants of the spouse.

3   Paragraph 221YCAA(2)(m)

After "159N", insert ", 159T".

4   Subparagraph 274(1)(a)(i)

Repeal the subparagraph, substitute:

(i) contributions made for the purpose of making provision for superannuation benefits for another person, other than:

(A) contributions made by a person that is, when the contributions are made, a trustee of an exempt life assurance fund (within the meaning of Division 6C of Part III); or

(B) contributions made by a person that is, when the contributions are made, a trustee of a complying superannuation fund, a complying ADF or a PST; or

(C) eligible spouse contributions within the meaning of section 159T;

5   Subparagraph 274(1)(ba)(i)

After "contributions", insert "other than eligible spouse contibutions within the meaning of section 159T,".

6   Application

(1) The amendments made by items 1, 2, 4 and 5 of this Schedule apply to contributions made on or after 1 July 1997.

(2) The amendment made by item 3 of this Schedule applies to provisional tax (including instalments) payable in respect of income of the 1997-98 year of income and all later years of income.

Schedule 11   Research and development

Income Tax Assessment Act 1936

1   Subsection 73B(1) (definition of residual feedstock expenditure )

After "income" (first occurring), insert "in relation to related research and development activities".

2   Subsection 73B(1) (paragraph (a) of the definition of residual feedstock expenditure )

After "income", insert "in relation to those activities".

3   Subsection 73B(1) (paragraph (b) of the definition of residual feedstock expenditure )

After "income", insert "in relation to those activities".

4   Subsection 73B(4H) (table)

Omit " Annual deduction percentage ", substitute " Percentage ".

5   Subsection 73B(12B) (formula)

Omit "past".

6   Subsection 73B(12B) (definition of undeducted past expenditure )

Repeal the definition, substitute:

undeducted expenditure means so much of the core technology expenditure incurred by the company during the current year or previous years of income in relation to the relevant core technology under contracts entered into at or after the time referred to in subsection (12) as has not been allowed as a deduction from the company's assessable income of any of those previous years of income.

7   Subsection 73B(12B) (paragraph (b) of the definition of current year core technology adjustment amount )

Omit "73B(27)(c)", substitute "73B(27C)(c)".

8   Subsection 73B(14B)

After "income" (first occurring), insert "in relation to related research and development activities".

9   After subsection 73B(24A)

Insert:

(24B) Where:

(a) a deduction has been allowed or is allowable to an eligible company under subsection (15AA) in respect of expenditure incurred in the acquisition or construction of a unit of post-23 July 1996 pilot plant; and

(b) during a year of income, the unit of post-23 July 1996 pilot plant is disposed of, lost or destroyed; and

(c) the company had used the unit of post-23 July 1996 pilot plant before it was disposed of, lost or destroyed exclusively for the purpose of the carrying on by or on behalf of the company of research and development activities; and

(d) no deduction has been allowed or is allowable to the company under section 54 in respect of the unit of post-23 July 1996 pilot plant;

then:

(e) in a case where the consideration receivable in respect of the disposal, loss or destruction is less than the written-down value of the unit of post-23 July 1996 pilot plant:

(i) if the aggregate research and development amount in relation to the company in relation to the year of income is greater than $20,000 - the amount ascertained by multiplying the amount by which that written-down value exceeds that consideration receivable by 1.25; or

(ii) if the aggregate research and development amount in relation to the company in relation to the year of income is less than or equal to $20,000 - the amount by which that written-down value exceeds that consideration receivable;

is allowable as a deduction from the assessable income of the company of the year of income; or

(f) in a case where the consideration receivable in respect of the disposal, loss or destruction is greater than the written-down value of the unit of post-23 July 1996 pilot plant - so much of the excess as does not exceed the difference between the cost of the unit of post-23 July 1996 pilot plant and the written-down value of the unit of post-23 July 1996 pilot plant shall be included in the assessable income of the company of the year of income.

10   After subsection 73B(33B)

Insert:

(33BA) Subject to subsections (33BB) and (33C), if the Board gives the Commissioner a certificate in relation to a company or companies under subsection 39PB(6) of theIndustry Research and Development Act 1986, a deduction is not allowable under this section in respect of expenditure in relation to research and development activities referred to in the certificate that is incurred by that company or any of those companies after the day stated in the certificate.

(33BB) Subsection (33BA) does not apply to expenditure in relation to research and development activities in respect of which a company is registered under section 39J of theIndustry Research and Development Act 1986.

11   Subsection 73B(33C)

Omit "or (33B)", substitute ", (33B) or (33BA)".

12   Application

The amendments made by items 1 to 11 are taken to have come into effect at 5 pm, by legal time in the Australian Capital Territory, on 23 July 1996.

Taxation Laws Amendment Act (No. 3) 1996

13   Item 38 of Schedule 4

Repeal the item, substitute:

38 - Application

The amendments made by this Division do not apply to core technology expenditure incurred:

(a) by a partnership under a contract entered into before 8.30 pm, by legal time in the Australian Capital Territory, on 13 December 1996; or

(b) by eligible companies jointly registered under section 39P of theIndustry Research and Development Act 1986 where the expenditure is incurred under a contract entered into at or after 8.30 pm, by legal time in the Australian Capital Territory, on 13 December 1996.

Schedule 12   Sales tax

Sales Tax (Exemptions and Classifications) Act 1992

1   At the end of Item 43 of Schedule 1

Add:

(4) This Item does not cover goods of a kind ordinarily used in the provision of telecommunications or audio visual services.

2   Application

The amendment made by this Schedule applies to dealings with goods after 7.00 pm, by legal time in the Australian Capital Territory, on 7 November 1996.

Schedule 13   Subsidiary company liquidations and capital gains tax

Part 1   Amendment of the Income Tax Assessment Act 1936

1   After section 160ZZOA

Insert:

160ZZOB Effect of section 160ZZO on certain liquidations

Summary of section

(1) This section will in certain circumstances reduce a capital gain or capital loss to a company from the cancellation of shares in a wholly-owned subsidiary in the course of liquidation of the subsidiary. The main requirement is that roll-over relief must have been available to the subsidiary under section 160ZZO for the disposal by the subsidiary of an asset to the company in the course of the liquidation.

Conditions for section applying

(2) The consequences set out in subsection (3) occur if:

(a) either:

(i) one or more elections are made under section 160ZZO that that section apply to disposals of one or more assets (each of which is a 160ZZO CGT asset ) acquired on or after 20 September 1985; or

(ii) subsection 160ZZO(1AA) applies to one or more disposals of assets (each of which is also a 160ZZO CGT asset ) acquired on or after that date;

or both; and

(b) the disposals of the 160ZZO CGT assets are distributions in the course of the liquidation of the transferee mentioned in section 160ZZO, but they are not distributions to which subsection 160ZL(1) applies; and

(c) the market value of the distributed 160ZZO CGT assets constitutes the whole or part of the consideration for the cancellation, in the course of the liquidation, of all of the shares (the transferee's total shares ) beneficially owned in the transferor mentioned in section 160ZZO by the transferee; and

(d) throughout the period from the first or only disposal of a 160ZZO CGT asset until the cancellation of the shares, the transferee beneficially owned all of the shares in the transferor; and

(e) one or more shares (the transferee's CGT shares ) that were cancelled were acquired by the transferee on or after 20 September 1985; and

(f) either:

(i) there is an overall notional gain on distributions to the transferee of the 160ZZO CGT assets in the course of the liquidation and an overall actual gain on the cancellation of the transferee's CGT shares in the course of the liquidation; or

(ii) there is an overall notional loss on distributions to the transferee of the 160ZZO CGT assets in the course of the liquidation and an overall actual loss on the cancellation of the transferee's CGT shares in the course of the liquidation.

Note: Various expressions used in paragraph (f) are defined in section 160ZZOC.

Where overall notional gain on distribution and overall actual gain on cancellation

(3) If subparagraph (2)(f)(i) applies:

(a) except as mentioned in paragraph (b) of this subsection, no capital gain accrues to the transferee, and the transferee incurs no capital loss, on the disposal of any of the transferee's CGT shares constituted by the cancellation; and

(b) a capital gain accrues to the transferee, in respect of the disposal of each of the transferee's CGT shares constituted by the cancellation, of an amount worked out using the formula:

(Overall actual gain - (Adjustment factor * Overall notional gain)) / Number of transferee's CGT shares

Note: The components in the formula are defined in section 160ZZOC.

Where overall notional loss on distribution and overall actual loss on cancellation

(4) If subparagraph (2)(f)(ii) applies:

(a) except as mentioned in paragraph (b) of this subsection, no capital gain accrues to the transferee, and the transferee incurs no capital loss, on the disposal of any of the transferee's CGT shares constituted by the cancellation; and

(b) a capital loss accrues to the transferee, in respect of the disposal of each of the transferee's CGT shares constituted by the cancellation, of an amount worked out using the formula:

(Overall actual loss - (Adjustment factor * Overall notional loss)) / Number of transferee's CGT shares

Note: The components in the formula are defined in section 160ZZOC.

160ZZOC Definitions used in section 160ZZOB

(1) This section contains definitions of various expressions used in section 160ZZOB.

Overall notional gain on distributions

(2) There is an overall notional gain on distributions to the transferee of the 160ZZO CGT assets in the course of the liquidation if:

(a) the sum of the notional gains (see subsection (3)) in respect of all of the distributions of 160ZZO CGT assets by the transferor to the transferee in the course of the liquidation;

exceeds:

(b) the sum of the notional losses (see subsection (4)) in respect of all such distributions.

The amount of the overall notional gain equals the excess.

Notional gain on distribution

(3) There is a notional gain in respect of the distribution of a 160ZZO CGT asset if, disregarding section 160ZZO, a capital gain would have accrued to the transferor in respect of the distribution assuming it had received consideration for the distribution equal to the asset's market value at the time of the distribution.

Notional loss on distribution

(4) There is a notional loss in respect of the distribution of a 160ZZO CGT asset if, disregarding section 160ZZO, a capital loss would have been incurred by the transferor in respect of the distribution assuming it had received consideration for the distribution equal to the asset's market value at the time of the distribution.

Overall notional loss on distributions

(5) There is an overall notional loss on distributions to the transferee of the 160ZZO CGT assets in the course of the liquidation if:

(a) the sum of the notional losses in respect of all the distributions of 160ZZO CGT assets by the transferor to the transferee in the course of the liquidation;

exceeds:

(b) the sum of the notional gains in respect of all such distributions.

The amount of the overall notional loss equals the excess.

Overall actual gain on cancellations

(6) An overall actual gain accrues to the transferor on the cancellation of the transferee's CGT shares if:

(a) the sum of the capital gains that accrue to it in respect of the cancellation, in the course of the liquidation, of all of the transferee's CGT shares;

exceeds:

(b) the sum of the capital losses that it incurs in respect of all such cancellations.

The amount of the overall actual gain equals the excess.

Overall actual loss on cancellation

(7) An overall actual loss accrues to the transferor on the cancellation of the transferee's CGT shares if:

(a) the sum of the capital losses that accrue to it in respect of the cancellation, in the course of the liquidation, of all of the transferee's CGT shares;

exceeds:

(b) the sum of the capital gains that accrue to it in respect of all such cancellations.

The amount of the overall actual loss equals the excess.

Adjustment factor

(8) The adjustment factor is the fraction worked out by dividing the number of the transferee's CGT shares by the number of the transferee's total shares.

Part 2   Application

2   Application

The amendments made by this Schedule apply if the cancellation of the transferee's total shares took place after 7.30 pm, by legal time in the Australian Capital Territory, on 20 August 1996.

Schedule 14   Gains and losses

Part 1   Income Tax Assessment Act 1936 (revenue losses)

1   Subsection 50B(1) (at the end of the definition of full-year amount )

Add "but does not include any part of a capital gain that forms part of a net capital gain".

2   Subparagraph 50B(4)(a)(i)

After "excepted amounts", insert "and any net capital gain".

3   After paragraph 50C(2)(b)

Insert:

; and (ba) any net capital gain that accrued to the company in respect of the year of income;

4   After subsection 50E(1)

Insert:

(1A) For the purposes of this Subdivision, so much of any amount included in a company's assessable income of a year of income under section 97 or 98A as is a capital gain that forms part of a net capital gain is not a divisible amount in relation to the company in relation to the year of income.

5   Paragraph 50H(1)(e)

After "by the company", insert ", or a capital gain accrued to the company that would not have accrued to the company,".

6   After subsection 50H(3)

Insert:

(3A) Paragraph (1)(e) applies even though the capital gain referred to in that paragraph accrued to the company in the course of ordinary family or commercial dealing, but:

(a) that paragraph does not apply if the natural person or natural persons who had a shareholding interest or shareholding interests in the company immediately before, and immediately after, the time when the capital gain accrued will benefit from the accrual of the capital gain to an extent that the Commissioner considers to be fair and reasonable; and

(b) in determining whether the extent to which that person or those persons will benefit is fair and reasonable, the Commissioner is to have regard to voting, dividend or capital rights attached to the shares in respect of which that person or those persons had a shareholding interest or shareholding interests in the company immediately after the time when the capital gain accrued.

7   Subsection 50H(5)

After "derived" (last occurring), insert ", or a capital gain that has not accrued to the person would have accrued to the person,".

8   Subsection 50H(10)

Repeal the subsection, substitute:

(10) In subsection (9):

(a) a reference to the non-derivation, or to the derivation, of income includes a reference to the non-accrual, or to the accrual, as the case may be, of a capital gain; and

(b) a reference to the doing of an act includes a reference to the happening of an event or the existence of a matter or circumstance.

9   Paragraph 80DA(1)(a)

After "derived" (last occurring), insert ", or a capital gain accrued to the company that would not have accrued to the company,".

10   Subsection 80DA(2)

After "derived by the company", insert ", or the capital gain accrued to the company,".

11   Subsection 80DA(2)

After "derivation of the income", insert ", or the accrual of the capital gain,".

12   Subsection 80DA(3)

After "would have derived", insert ", or a capital gain did not accrue to the person that would have accrued,".

13   Paragraph 80DA(8)(a)

After "by", insert ", or a capital gain would not have accrued to,".

14   Paragraph 80DA(8)(b)

After "by", insert ", or a capital gain would have accrued to,".

15   Subsection 80DA(8)

Omit "where the income would not have been derived by the company, the income would have been derived by the person", substitute "if the income would not have been derived by, or the capital gain would not have accrued to, the company, the income would have been derived by, or the capital gain would have accrued to, the person".

16   Subsections 80G(17) and (18)

Repeal the subsections, substitute:

(17) If the loss company is a shareholder in the income company and receives any consideration from the income company for the transfer of the right to an allowable deduction to the income company under subsection (6):

(a) so much of the consideration as, in the opinion of the Commissioner, is given for the transfer of the right is not taken to be income derived by the loss company; and

(b) a capital gain does not accrue to the loss company because of the receipt of the consideration.

(18) If the income company gives any consideration to the loss company for the transfer of the right to an allowable deduction to the income company under subsection (6):

(a) the consideration is not an allowable deduction to the income company; and

(b) the income company does not incur a capital loss because of the giving of the consideration.

17   Application

(1) The amendments made by this Part apply to the 1996-97 year of income.

(2) However, the amendments made by items 5 to 15have effect only in respect of acts, omissions or events happening after 26 March 1997.

Part 2   Income Tax Assessment Act 1936 (capital gains and capital losses)

18   Paragraph 63B(1)(a)

After "derived" (last occurring), insert ", or a capital gain accrued to the company that would not have accrued to the company,".

19   Subsection 63B(2)

After "derived by the company", insert ", or the capital gain accrued to the company,".

20   Subsection 63B(2)

After "derivation of the income", insert ", or the accrual of the capital gain,".

21   Subsection 63B(3)

After "would have derived", insert ", or a capital gain did not accrue to the person that would have accrued to the person,".

22   Paragraph 63B(8)(a)

After "by", insert ", or a capital gain would not have accrued to,".

23   Paragraph 63B(8)(b)

After "by", insert ", or a capital gain would have accrued to,".

24   Subsection 63B(8)

Omit "where the income would not have been derived by the company, the income would have been derived by the person", substitute "if the income would not have been derived by, or the capital gain would not have accrued to, the company, the income would have been derived by, or the capital gain would have accrued to, the person".

25   After section 160J

Insert:

160JA Interpretative provisions for Divisions 3A, 3B, 3C, 3CA, 3CB, 3CC, 3CD and 3D

In Divisions 3A, 3B, 3C, 3CA, 3CB, 3CC, 3CD and 3D, unless the contrary intention appears:

100% subsidiary has the meaning given by section 975-505 of theIncome Tax Assessment Act 1997.

abnormal trading has the meaning given by Subdivision 960-H of theIncome Tax Assessment Act 1997.

approved deposit fund has the meaning given by section 10 of theSuperannuation Industry (Supervision) Act 1993.

arrangement has the same meaning as in theIncome Tax Assessment Act 1997.

capital shareholding of less than 1% has the meaning given by section 160ZNSQ.

complying approved deposit fund means a complying approved deposit fund within the meaning of section 47 of theSuperannuation Industry (Supervision) Act 1993.

complying superannuation fund means a complying superannuation fund within the meaning of section 45 of theSuperannuation Industry (Supervision) Act 1993.

constitution of a company has the same meaning as in theIncome Tax Assessment Act 1997.

dividend has the meaning given by subsections 6(1), (4) and (5) and section 94L.

dividend shareholding of less than 1% has the meaning given by section 160ZNSQ.

entity has the meaning given by section 960-100 of theIncome Tax Assessment Act 1997.

head company has the meaning given by section 160ZNSM.

indirectly has the same meaning as in theIncome Tax Assessment Act 1997.

interposed company has the meaning given by section 160ZNSN.

listed public company has the same meaning as in theIncome Tax Assessment Act 1997.

member of a company includes a shareholder or stockholder.

more than a 50% stake has the meaning given by section 160ZNC.

more than 50% of the company's capital distributions has the meaning given by section 160ZNJ.

more than 50% of the company's dividends has the meaning given by section 160ZNI.

more than 50% of the listed public company's capital distributions has the meaning given by section 160ZNSJ.

more than 50% of the listed public company's dividends has the meaning given by section 160ZNSI.

more than 50% of the voting power has the meaning given by section 160ZNH.

more than 50% of the voting power in the listed public company has the meaning given by section 160ZNSH.

notional net capital gain has the meaning given by subsection 160ZNF(1).

notional net capital loss has the meaning given by subsection 160ZNF(2).

notional shareholder has the meaning given by section 160ZNSO.

ownership test period has the meaning given by section 160ZNC.

ownership test time has the meaning given by section 160ZNSG.

part of a substantial shareholding has the meaning given by section 166-245 of theIncome Tax Assessment Act 1997.

public company means a company that is a public company as defined by section 103A for the year of income.

redeemable shares has the same meaning as in theIncome Tax Assessment Act 1997.

same business test has the meaning given by Division 3C.

same business test period has the meaning given by sections 160ZNB, 160ZND and 160ZNE and subsection 160ZNSB(5).

shareholding interest has the meaning given by section 175-65 of theIncome Tax Assessment Act 1997.

special company has the same meaning as in theIncome Tax Assessment Act 1997.

substantial continuity of ownership has the meaning given by section 160ZNSG.

substantial shareholding : see part of a substantial shareholding .

superannuation fund has the meaning given by section 10 of theSuperannuation Industry (Supervision) Act 1993.

test period has the meaning given by section 160ZNSB.

test time has the meaning given by sections 160ZNB, 160ZND, 160ZNE and 160ZNSB.

voting share in a company means:

(a) if the company is a body corporate - a voting share as defined by section 9 of the Corporations Law; and

(b) otherwise - a share that would be a voting share as defined by that section if the company were a body corporate.

voting shareholding of less than 1% has the meaning given by section 160ZNSQ.

26   Paragraph 160Z(1)(a)

After "income", insert "and to have so accrued at the time of the disposal".

27   At the end of paragraph 160Z(1)(b)

Add "and to have been so incurred at the time of the disposal".

28   At the end of paragraph 160Z(9)(a)

Add "or".

29   Paragraph 160Z(9)(b)

Repeal the paragraph.

30   Subsection 160Z(9A)

Repeal the subsection.

31   At the beginning of section 160ZC

Insert:

(1A) This section has effect subject to Divisions 3A to 3C.

32   After Division 3 of Part IIIA

Insert:

Division 3A - Net capital gain or net capital loss of company in respect of year of income in which ownership or control of the company changed

Guide to Division 3A

160ZNA What this Division is about

A company that has not had the same ownership and control during the year of income, and has not satisfied the same business test, works out its net capital gain or net capital loss in respect of the year of income under this Division.

The tests for finding out whether a company has maintained the same owners, and the same business test, are set out in Divisions 3B, 3C, 3CB, 3CC and 3CD.

Table of sections

When a company must work out its net capital gain or net capital loss under this Division

160ZNB On a change of ownership, unless the company carries on the same business

160ZNC Who has more than a 50% stake in the company during a period

160ZND On a change of control of voting power in the company, unless the company carries on the same business

Working out the company's net capital gain or net capital loss

160ZNE First, divide the year of income into periods

160ZNF Next, calculate the notional net capital gain or notional net capital loss for each period

160ZNG How to calculate the company's net capital gain or net capital loss for the year of income

When a company must work out its net capital gain or net capital loss under this Division

160ZNB On a change of ownership, unless the company carries on the same business

(1) A company must calculate its net capital gain or net capital loss under this Division unless:

(a) there are persons who had more than a 50% stake in the company during the whole of the year of income; or

(b) there is onlypart of the year of income (a part that started at the start of the year of income) during which the same persons had more than a 50% stake in the company, but the company satisfies the same business test for therest of the year of income (the same business test period ).

(2) For the purposes of paragraph (1)(b), apply the same business test to the business that the company carried on immediately before the time (the test time ) when that part ended.

Note: For the same business test: see Division 3C.

160ZNC Who has more thana 50% stake in the company during a period

(1) If:

(a) there are persons who had more than 50% of the voting power in the company during the whole of a period (the ownership test period ) consisting of the year of income or a part of it; and

(b) there are persons who had rights to more than 50% of the company's dividends during the whole of the ownership test period; and

(c) there are persons who had rights to more than 50% of the company's capital distributions during the whole of the ownership test period;

those persons had more than a 50% stake in the company during the ownership test period.

(2) To work out whether a condition in subsection (1) was satisfied during the ownership test period, apply the primary test for that condition unless subsection (3) requires the alternative test to be applied.

Note: For the primary tests: see subsections 160ZNH(1), 160ZNI(1) and 160ZNJ(1).

(3) Apply the alternative test for that condition if one or more other companies beneficially owned shares, or interests in shares, in the company at any time during the ownership test period.

Note: For the alternative tests: see subsections 160ZNH(2), 160ZNI(2) and 160ZNJ(2).

160ZND On a change of control of voting power in the company, unless the company carries on the same business

(1) A company must calculate its net capital gain or net capital loss under this Division if, during the year of income, a person begins to control, or becomes able to control, the voting power in the company (whether directly, or indirectly through one or more interposed entities) for the purpose, or for the purposes including the purpose, of:

(a) getting some benefit or advantage in relation to how this Act applies; or

(b) getting such a benefit or advantage for someone else.

(2) However, the person's control of the voting power, or ability to control it, does not require the company to calculate its net capital gain or net capital loss under this Division if the company satisfies the same business test for therest of the year of income (the same business test period ).

(3) Apply the same business test to the business that the company carried on immediately before the time (the test time ) when the person began to control that voting power, or became able to control it.

Note: For the same business test: see Division 3C.

Working out the company's net capital gain or net capital loss

160ZNE First, divide the year of income into periods

(1) Divide the year of income into periods and treat each period as a year of income as follows.

(2) The first period starts at the start of the year of income. Each later period starts immediately after the end of the previous period.

(3) The last period ends at the end of the year of income. Each period (except the last) ends at theearlier of:

(a) thelatest time that would result in persons having more than a 50% stake in the company during the whole of the period; or

(b) theearliest time when a person begins to control, or becomes able to control, the voting power in the company (whether directly, or indirectly through one or more interposed entities) for the purpose, or for purposes including the purpose, of:

(i) getting some benefit or advantage to do with how this Act applies; or

(ii) getting such a benefit or advantage for someone else.

(4) However, what would otherwise be 2 or more successive periods are treated as a single period if the company satisfies the same business test for all of them, considered as a single period (the same business test period ). Apply the same business test to the business the company carried on immediately before the end of the first of the periods (the test time ).

Note: For the same business test: see Division 3C.

(5) Treat each period as if it were a year of income and work out the notional net capital gain or notional net capital loss in respect of that period.

160ZNF Next, calculate the notional net capital gain or notional net capital loss in respect of each period

(1) The company has a notional net capital gain in respect of a period if the sum of the capital gains that accrued to the company in the period exceeds the sum of the capital losses that were incurred by the company in the period.

(2) On the other hand, if the sum of those capital losses exceeds the sum of those capital gains, the company has a notional net capital loss in respect of the period.

(3) If the company has a notional net capital loss in respect ofnone of the periods in the year of income, this Division has no further application, and the company's net capital gain in respect of the year of income is calculated in the usual way.

Note: The usual way of working out a net capital gain is set out in section 160ZC.

(4) For the purposes of this section, so much of an amount included in the company's assessable income of the year of income under section 97 or 98A as is a capital gain that forms part of a net capital gain is taken to have accrued to the company in a period so far as the amount is reasonably related to the period.

160ZNG How to calculate the company's net capital gain or net capital loss in respect of the year of income

(1) If the sum of:

(a) the company's notional net capital gains in respect of any of the periods in the year of income; and

(b) so much of any amounts included in the company's assessable income of the year of income under section 97 or 98A as are capital gains that form part of a net capital gain, so far as the amounts are not reasonably related to a period;

exceeds the sum of any net capital losses incurred by the company in respect of earlier years of income that may be applied in respect of the year of income under section 160ZC, the excess is taken to be a net capital gain that accrued to the company in respect of the year of income.

(2) The sum of the company's notional net capital losses in respect of any of the periods in the year of income is taken to be a net capital loss that was incurred by the company in respect of the year of income.

Division 3B - Tests for finding out whether the company has maintained the same owners

Table of sections

The primary and alternative tests

160ZNH Who has more than 50% of the voting power in the company during a period

160ZNI Who has rights to more than 50% of the company's dividends during a period

160ZNJ Who has rights to more than 50% of the company's capital distributions during a period

160ZNK Rules about the primary test for a condition

160ZNL Tests can be satisfied by a single person

Rules affecting the operation of the tests

160ZNM Arrangements affecting beneficial ownership of shares

160ZNN Shares treated as never having carried rights

160ZNO Shares treated as always having carried rights

160ZNP Disregard redeemable shares

160ZNQ Rules do not affect totals of shares or rights

160ZNR Death of beneficial owner

The primary and alternative tests

160ZNH Who has more than 50% of the voting power in the company during a period

The primary test

(1) Applying the primary test: if there are persons who, at all times during the ownership test period, beneficially own (between them) shares that carry (between them) the right to exercise more than 50% of the voting power in the company, those persons have more than 50% of the voting power in the company during that period.

The alternative test

(2) Applying the alternative test: if it is the case, or it is reasonable to assume, that there are persons (none of them companies) who between them control, or are able to control, the voting power in the company at all times during the ownership test period (whether directly, or indirectly through one or more interposed entities), those persons have more than 50% of the voting power in the company during that period.

160ZNI Who has rights to more than 50% of the company's dividends during a period

The primary test

(1) Applying the primary test: if there are persons who, at all times during the ownership test period, beneficially own (between them) shares that carry (between them) the right to receive more than 50% of any dividends that the company may pay, those persons have rights to more than 50% of the company's dividends during that period.

The alternative test

(2) Applying the alternative test: if it is the case, or it is reasonable to assume, that there are persons (none of them companies) who, at all times during the ownership test period, have between them the right to receive for their own benefit (whether directly, or indirectly through one or more interposed entities), more than 50% of any dividends that the company may pay, those persons have rights to more than 50% of the company's dividends during that period.

160ZNJ Who has rights to more than 50% of the company's capital distributions during a period

The primary test

(1) Applying the primary test: if there are persons who, at all times during the ownership test period, beneficially own (between them) shares that carry (between them) the right to receive more than 50% of any distribution of capital of the company, those persons have rights to more than 50% of the company's capital distributions during that period.

The alternative test

(2) Applying the alternative test: if it is the case, or it is reasonable to assume, that there are persons (none of them companies) who, at all times during the ownership test period, have between them the right to receive for their own benefit (whether directly, or indirectly through one or more interposed entities), more than 50% of any distribution of capital of the company, those persons have rights to more than 50% of the company's capital distributions during that period.

160ZNK Rules about the primary test for a condition

(1) A person need not beneficially own exactly the same shares at all times during the ownership test period for the primary test for a condition to be satisfied.

(2) A private company must satisfy the primary test for a condition in order for the test to be satisfied. A public company is taken to satisfy the primary test if it is reasonable to assume that the test is satisfied.

160ZNL Tests can be satisfied by a single person

To avoid doubt, a test for a condition can be satisfied by one person.

Rules affecting the operation of the tests

160ZNM Arrangements affecting beneficial ownership of shares

(1) For the purposes of a test, the Commissioner may treat a person as not having beneficially owned particular shares at a particular time during the ownership test period if the conditions in subsections (2) and (3) are met.

(2) Before or during the year of income an arrangement must have been entered into that in any way (directly or indirectly) related to, affected, or depended for its operation on:

(a) the beneficial interest in the shares, or the value of that beneficial interest; or

(b) a right carried by, or relating to, the shares; or

(c) the exercise of such a right.

(3) The arrangement must also have been entered into for the purpose, or for purposes including the purpose, of eliminating or reducing a liability of an entity to pay income tax for a year of income.

160ZNN Shares treated as never having carried rights

For the purposes of a test, shares are takennever to have carried particular rights during the year of income if the Commissioner is satisfied that:

(a) the sharesstopped carrying those rights after the year of income; or

(b) the shares will or maystop carrying those rights after the year of income;

because of:

(c) the company's constitution as in force at some timeduring the year of income; or

(d) an arrangement entered into before or during the year of income.

160ZNO Shares treated as always having carried rights

For the purposes of a test, shares are taken to have carried particular rightsat all times during the year of income if the Commissioner is satisfied that:

(a) the sharesstarted to carry those rights after the year of income; or

(b) the shares will or maystart to carry those rights after the year of income;

because of:

(c) the company's constitution as in force at some timeduring the year of income; or

(d) an arrangement entered into before or during the year of income.

160ZNP Disregard redeemable shares

For the purposes of a test, a person who beneficially owns redeemable shares at a time during the year of income, is taken not to own the shares beneficially at that time.

160ZNQ Rules do not affect totals of shares or rights

Sections 160ZNM, 160ZNN, 160ZNO and 160ZNP do not affect how shares, and rights carried by shares, are counted for the purposes of determining:

(a) the total voting power in the company; or

(b) the total dividends that the company may pay; or

(c) the total distributions of capital of the company.

160ZNR Death of beneficial owner

For the purposes of a test, after a person dies, shares that the person owned beneficially at the time of death are taken to continue to be owned beneficially by the person so long as:

(a) they are owned by the trustee of the person's estate; or

(b) they are owned beneficially by someone who received them as a beneficiary of the estate.

Division 3C - The same business test

160ZNS The test

(1) The company satisfies the same business test if throughout the same business test period it carries on the same business as it carried on immediately before the test time.

(2) However, the company doesnot satisfy the same business test if, at any time during the same business test period, it derives assessable income from:

(a) a business of a kind that it did not carry on before the test time; or

(b) a transaction of a kind that it had not entered into in the course of its business operations before the test time.

(3) The company also doesnot satisfy the same business test if, before the test time, it:

(a) started to carry on a business it had not previously carried on; or

(b) in the course of its business operations, entered into a transaction of a kind that it had not previously entered into;

and did so for the purpose, or for purposes including the purpose, of being taken to have carried on throughout the same business test period the same business as it carried on immediately before the test time.

(4) The company also doesnot satisfy the test if, at any time during the same business test period, it incurs expenditure:

(a) in carrying on a business of a kind that it did not carry on before the test time; or

(b) as a result of a transaction of a kind that it had not entered into in the course of its business operations before the test time.

Division 3CA - Net capital gain or net capital loss of listed public company or its 100% subsidiary for year of income in which ownership or control of the company changed

Guide to Division 3CA

160ZNSA What this Division is about

This Division modifies the way in which the rules in Division 3A apply to a listed public company (and also its 100% subsidiaries). It makes it easier for the company to comply with those rules.

If the company has maintained the same owners as between certain points of time, it does not need to prove it has maintained the same owners throughout the periods in between.

The tests for finding out whether the company has maintained the same owners are set out in Divisions 3CB, 3CC and 3CD.

Table of sections

160ZNSB How Division 3A applies to a listed public company

160ZNSC How to work out the net capital gain or net capital loss

160ZNSD How Division 3A applies to 100% subsidiary of a listed public company

160ZNSE Companies can choose that this Division is not to apply to them

160ZNSB How Division 3A applies to a listed public company

(1) This Division modifies the way Division 3A applies to a company that is a listed public company at all times during the year of income (the test period ).

Note 1: Division 3A is about when a company must calculate its net capital gain or net capital loss for the year of income in a special way.

Note 2: This Division also modifies how Division 3A applies to a 100% subsidiary of a listed public company: see section 160ZNSD.

Note 3: A company can choose that this Division is not to apply to it: see section 160ZNSE.

No abnormal trading

(2) If there isno abnormal trading in shares in the listed public company during the test period, it is taken to have met the condition in paragraph 160ZNB(1)(a) (which is about there being persons having more than a 50% stake in it during the whole of the year of income).

Abnormal trading, but substantial continuity of ownership

(3) If thereis abnormal trading, but there is substantial continuity of ownership of the company as between the start of the test period and the time of each abnormal trading, the company is also taken to have met the condition in paragraph 160ZNB(1)(a).

Note: See section 160ZNSG to work out whether there is substantial continuity of ownership.

Abnormal trading without substantial continuity of ownership

(4) If thereis abnormal trading, and there isno substantial continuity of ownership of the company as between the start of the test period and the time of the abnormal trading, the company is taken to havefailed to meet the condition in paragraph 160ZNB(1)(a).

Satisfies the same business test

(5) However, if the company satisfies the same business test for the rest of the year of income (the same business test period ) after the first abnormal trading covered by subsection (4), it is taken to have satisfied the condition in paragraph 160ZNB(1)(b) (which is about the company carrying on the same business).

Note: For the same business test: see Division 3C.

(6) Apply the same business test to the business that the company carried on immediately before the time of the first abnormal trading (the test time ) covered by subsection (4).

160ZNSC How to work out the net capital gain or net capital loss

(1) If the listed public company must calculate its net capital gain or net capital loss for the year of income under Division 3A, then, in dividing the year of income into periods, apply subsection (2) instead of subsection 160ZNE(3).

(2) The last period ends at the end of the year of income. Each period (except the last) ends at theearlier of:

(a) theearliest time when there is an abnormal trading in shares in the listed public company (except one covered by subsection (3)); or

(b) theearliest time when a person begins to control, or becomes able to control, the voting power in the listed public company (whether directly, or indirectly through one or more interposed entities) for the purpose, or for purposes including the purpose, of:

(i) getting some benefit or advantage to do with how this Act applies; or

(ii) getting such a benefit or advantage for someone else.

(3) In working out when a period ends, disregard an abnormal trading if there is substantial continuity of ownership of the company as between the start of the period and the time of the abnormal trading.

Note: See section 160ZNSG to work out whether there is substantial continuity of ownership.

160ZNSD How Division 3A applies to 100% subsidiary of a listed public company

(1) This Division also modifies the way Division 3A applies to a company that isnot a listed public company, but only if the conditions in subsections (2) and (3) are met.

Note: Division 3A is about when a company must calculate its net capital gain or net capital loss for the year of income in a special way.

(2) The company (the subsidiary ) must be a 100% subsidiary of another company (the holding company ) at all times during the subsidiary's year of income.

(3) Also, the holding company must be a listed public company at all times during that year of income.

(4) If the conditions are met, then, for the purposes of applying Division 3A to the subsidiary, this Division applies to the subsidiary as if:

(a) the subsidiary were itself a listed public company at all times during the year of income; and

(b) an abnormal trading in shares in the holding company during the year of income were an abnormal trading in shares in the subsidiary.

(Divisions 3CB, 3CC and 3CD apply to the subsidiary in the same way and for the same purpose).

160ZNSE Companies can choose that this Division is not to apply to them

(1) The listed public company or subsidiary can choose that Division 3A is to apply to it for the year of incomewithout the modifications made by this Division.

(2) The company must choose on or before the day it lodges its return under section 161, 162 or 163 for the year of income, or before a later day if the Commissioner allows.

Division 3CB - Tests for finding out whether the listed public company has maintained the same owners

Guide to Division 3CB

160ZNSF What this Division is about

This Division has the tests to work out whether a listed public company has maintained the same owners as between different times.

Divisions 3CC and 3CD have rules that make it easier for the company to satisfy these ownership tests.

Note: The rules in this Division also apply to a company that is a 100% subsidiary of a listed public company: see section 160ZNSD.

Table of sections

Substantial continuity of ownership

160ZNSG Substantial continuity of ownership

The ownership tests

160ZNSH Who has more than 50% of the voting power in the listed public company at a particular time

160ZNSI Who has rights to more than 50% of the listed public company's dividends at a particular time

160ZNSJ Who has rights to more than 50% of the listed public company's capital distributions at a particular time

Rules affecting the operation of the ownership tests

160ZNSK Rules in Division 3B apply

Substantial continuity of ownership

160ZNSG Substantial continuity of ownership

(1) There is substantial continuity of ownership of the listed public company as between the start of the test period and another time in the test period if (and only if) the conditions in this section are met.

Voting power

(2) There must be persons (none of them companies) who had more than 50% of the voting power in the listed public company at the start of the test period. Also, those persons must have had more than 50% of the voting power in the listed public company immediately after the other time in the test period.

Note: To work out who had more than 50% of the voting power: see section 160ZNSH.

Rights to dividends

(3) There must be persons (none of them companies) who had rights to more than 50% of the listed public company's dividends at the start of the test period. Also, those persons must have had rights to more than 50% of the listed public company's dividends immediately after the other time in the test period.

Note: To work out who had rights to more than 50% of the listed public company's dividends: see section 160ZNSI.

Rights to capital distributions

(4) There must be persons (none of them companies) who had rights to more than 50% of the listed public company's capital distributions at the start of the test period. Also, those persons must have had rights to more than 50% of the listed public company's capital distributions immediately after the other time in the test period.

Note: To work out who had rights to more than 50% of the listed public company's capital distributions: see section 160ZNSJ.

When to apply the test

(5) To work out whether a condition in this section was satisfied at a time (the ownership test time ), apply the ownership test for that condition.

The ownership tests

160ZNSH Who has more than 50% of the voting power in the listed public company at a particular time

If it is the case, or it is reasonable to assume, that there are persons (none of them companies) who, at the ownership test time, between them control, or are able to control, the voting power in the listed public company (whether directly, or indirectly through one or more interposed entities), those persons have more than 50% of the voting power in the listed public company at that time.

160ZNSI Who has rights to more than 50% of the listed public company's dividends at a particular time

If it is the case, or it is reasonable to assume, that there are persons (none of them companies) who, at the ownership test time, have between them the right to receive for their own benefit (whether directly, or indirectly through one or more interposed entities), more than 50% of any dividends that the listed public company may pay, those persons have rights to more than 50% of the listed public company's dividends at that time.

160ZNSJ Who has rights to more than 50% of the listed public company's capital distributions at a particular time

If it is the case, or it is reasonable to assume, that there are persons (none of them companies) who, at the ownership test time, have between them the right to receive for their own benefit (whether directly, or indirectly through one or more interposed entities), more than 50% of any distribution of capital of the listed public company, those persons have rights to more than 50% of the listed public company's capital distributions at that time.

Rules affecting the operation of the ownership tests

160ZNSK Rules in Division 3B apply

(1) The rules in these sections also apply for the purposes of an ownership test in this Division:

(a) 160ZNL (which is about how an ownership test can be satisfied by a single person);

(b) 160ZNN (which treats some shares as never having carried rights);

(c) 160ZNO (which treats some shares as always having carried rights);

(d) 160ZNP (which disregards redeemable shares);

(e) 160ZNQ (which is about how other rules do not affect how shares or rights are counted);

(f) 160ZNR (which deals with deaths of beneficial owners).

(2) The rule in section 160ZNM (which is about arrangements affecting beneficial ownership of shares) also applies for the purposes of an ownership test in this Division as if the reference to a particular time during the ownership test period were a reference to the ownership test time.

Division 3CC - How to treat shareholdings of less than 1%

Guide to Division 3CC

160ZNSL What this Division is about

This Division has rules that make it easier for the listed public company to satisfy the ownership tests in Division 3CB.

All shareholdings of less than 1% in the company are treated as if they were held by a single notional entity. This means that the company does not have to trace through to the persons who beneficially own those shares.

A similar rule applies if another listed public company is interposed between the company and those persons. All shareholdings of less than 1% in theinterposed company are treated as if they were held by a different single notional entity. This means that the company does not have to trace through the interposed company to the persons who beneficially own those shares in the interposed company.

Note 1: The rules in this Division also apply to a company that is a 100% subsidiary of a listed public company: see section 160ZNSD.

Note 2: The rules in this Division do not apply if they would hide a failure by the company to maintain the same owners: see sections 160ZNSR and 160ZNSS.

Table of sections

Special tracing rules for listed public companies

160ZNSM Shareholdings of less than 1% in the listed public company

160ZNSN Shareholdings of less than 1% in an interposed listed public company

160ZNSO Notional shareholder

160ZNSP Notional shareholder taken to have minimum voting control, dividend rights and capital rights

160ZNSQ Voting, dividend and capital shareholding of less than 1%

When the rules in this Division do not apply

160ZNSR Limit on listed public company splitting its shares into different classes

160ZNSS If listed public company would not have otherwise passed the ownership tests

Special tracing rules for listed public companies

160ZNSM Shareholdings of less than 1% in the listed public company

This Division modifies how the ownership tests are applied to the listed public company (the head company ) if the company has:

(a) voting shareholdings of less than 1%; or

(b) dividend shareholdings of less than 1%; or

(c) capital shareholdings of less than 1%.

Note: For the ownership tests: see sections 160ZNSH, 160ZNSI and 160ZNSJ.

160ZNSN Shareholdings of less than 1% in an interposed listed public company

(1) This Division also modifies how the ownership tests are applied to the head company if another listed public company (the interposed company ) meets the conditions in subsections (2) and (3).

Note: For the ownership tests: see sections 160ZNSH, 160ZNSI and 160ZNSJ.

(2) The interposed company must be interposed between the head company and persons (none of them companies) who:

(a) control (or are able to control) voting power in the head company indirectly through the interposed company; or

(b) have the right to receive, for their own benefit and indirectly through the interposed company, any dividends the head company may pay; or

(c) have the right to receive, for their own benefit and indirectly through the interposed company, any distributions of capital of the head company.

(3) The interposed company must have:

(a) voting shareholdings of less than 1%; or

(b) dividend shareholdings of less than 1%; or

(c) capital shareholdings of less than 1%.

160ZNSO Notional shareholder

Notional shareholder of the head company

(1) The ownership tests in sections 160ZNSH, 160ZNSI and 160ZNSJ are applied to the head company as if, at the ownership test time, a single notional entity (the notional shareholder ):

(a) directly controlled the voting power in the head company that is carried by each voting shareholding of less than 1% in the company at that time; and

(b) had the right to receive, for its own benefit and directly:

(i) any dividends the head company may pay in respect of each dividend shareholding of less than 1% in the company at that time; and

(ii) any distributions of capital of the head company in respect of each capital shareholding of less than 1% in the company at that time; and

(c) were a person (other than a company).

Notional shareholder of the interposed company

(2) The tests are also applied to the head company as if, at the ownership test time, for each interposed company, a different single notional entity (the notional shareholder ):

(a) directly controlled the voting power in the interposed company that is carried by each voting shareholding of less than 1% in the interposed company at that time; and

(b) had the right to receive, for its own benefit and directly:

(i) any dividends the interposed company may pay in respect of each dividend shareholding of less than 1% in the interposed company at that time; and

(ii) any distributions of capital of the interposed company in respect of each capital shareholding of less than 1% in the interposed company at that time; and

(c) were a person (other than a company).

Persons who actually control or have rights are taken not to

(3) The tests are also applied to the head company as if, at the ownership test time:

(a) the persons (other than companies) who control (or are able to control) the voting power in the head company or interposed company (whether directly, or indirectly through one or more interposed entities) that is carried by each voting shareholding of less than 1% in the company hadnot had that control; and

(b) the persons (other than companies) who have the right to receive for their own benefit (whether directly, or indirectly through one or more interposed entities):

(i) any dividends that the head company or interposed company may pay in respect of each dividend shareholding of less than 1% in the company; and

(ii) any distributions of capital of the head company or interposed company in respect of each capital shareholding of less than 1% in the company;

hadnot had that right.

160ZNSP Notional shareholder taken to have minimum voting control, dividend rights and capital rights

Minimum control of voting power

(1) If the ownership test time isafter the start of the test period and:

(a) the voting power in the head company or interposed company that the notional shareholder controls at that time;

is greater than:

(b) the voting power in the company that the notional shareholder controlled at the start of that period;

the notional shareholder is taken to control voting power in the company at that time only to the extent that it controlled it at the start of that period.

Minimum percentage of rights to dividends and capital

(2) If the ownership test time isafter the start of the test period and:

(a) the percentage of the dividends or distributions of capital of the head company or interposed company that the notional shareholder has the right to receive at that time;

is greater than:

(b) the percentage (the lower percentage ) of the dividends or distributions of capital of the company that the notional shareholder had the right to receive at the start of that period;

the notional shareholder is taken to have the right to receive the lower percentage of the dividends or distributions of capital at that time.

160ZNSQ Voting, dividend and capital shareholding of less than 1%

Meaning of voting shareholding of less than 1%

(1) If all the shares in the head company or interposed company of which an entity is the registered holder at the ownership test time carry (between them) less than 1% of the voting power in the company, those shares (except shares that are part of a substantial shareholding) constitute a voting shareholding of less than 1% in the company at that time.

Meaning of dividend shareholding of less than 1%

(2) If all the shares in the head company or interposed company of which an entity is the registered holder at the ownership test time carry (between them) the right to receive less than 1% of any dividends that the company may pay, those shares (except shares that are part of a substantial shareholding) constitute a dividend shareholding of less than 1% in the company at that time.

Meaning of capital shareholding of less than 1%

(3) If all the shares in the head company or interposed company of which an entity is the registered holder at the ownership test time carry (between them) the right to receive less than 1% of any distribution of capital of the company, those shares (except shares that are part of a substantial shareholding) constitute a capital shareholding of less than 1% in the company at that time.

When the rules in this Division do not apply

160ZNSR Limit on listed public company splitting its shares into different classes

This Division does not apply unless, at the ownership test time, all the voting shares in the head company carry (between them):

(a) the right to receive more than 75% of any dividends the head company may pay; and

(b) the right to receive more than 75% of any distributions of capital of the head company.

160ZNSS If listed public company would not have otherwise passed the ownership tests

This Division does not apply for the purposes of section 160ZNSB if the Commissioner considers it reasonable to assume that the head company would not meet the conditions in that section if it were not for the rules in this Division.

Note: The conditions in section 160ZNSB require the listed public company to maintain the same owners at each ownership test time during the test period.

Division 3CD - How to treat interposed superannuation funds, approved deposit funds and special companies

Guide to Division 3CD

160ZNST What this Division is about

This Division has rules that make it easier for the listed public company to satisfy the ownership tests in Division 3CB.

The company does not have to trace through any complying superannuation funds, complying approved deposit funds or special companies that are interposed between the company and persons who control any of the voting power in the company or have rights to its dividends or capital.

Note: The rules in this Division also apply to a company that is a 100% subsidiary of a listed public company: see section 160ZNSD.

Table of sections

Special tracing rules for listed public companies

160ZNSU When fund or special company is taken to control voting power

160ZNSV When fund or special company is taken to have rights to dividends and capital

Special tracing rules for listed public companies

160ZNSU When fund or special company is taken to control voting power

Modification of application of ownership test about voting power

(1) This section modifies how the ownership test in section 160ZNSH (about control of voting) is applied to the listed public company if:

(a) a superannuation fund, approved deposit fund or special company is interposed, at the ownership test time, between persons (none of them companies) and the listed public company; and

(b) at the ownership test time, those persons control (or are able to control) any of the voting power in the listed public company indirectly through the fund or special company (or through entities including it); and

(c) the fund or special company is a complying superannuation fund, complying approved deposit fund or special company at all times during the year of income of the listed public company in which the ownership test time occurs.

If fund or special company has more than 50 members

(2) If the fund or special company has more than 50 members, the test is applied as if, at the ownership test time, the fund or special company were a person (other than a company) who controlled the voting power in the listed public company that those persons control (or are able to control).

If fund or special company has 50 members or less

(3) However, if the fund or special company has 50 members or less, the test is applied as if, at the ownership test time, each member were a person (other than a company) who controlled an equal proportion of the voting power in the listed public company that those persons control (or are able to control).

Persons who actually control are taken not to control

(4) The test is applied as if, at the ownership test time, the voting power in the listed public company that those persons control (or are able to control) werenot controlled by them (except as provided by subsection (3)).

160ZNSV When fund or special company is taken to have rights to dividends and capital

Modification of application of ownership test about dividend rights and capital rights

(1) This section modifies how the ownership test in section 160ZNSI (about dividend rights) or 160ZNSJ (about capital rights) is applied to the listed public company if:

(a) a superannuation fund, approved deposit fund or special company is interposed, at the ownership test time, between persons (none of them companies) and the listed public company; and

(b) at the ownership test time, those persons have the right to receive for their own benefit, and indirectly through the fund or special company (or through entities including it):

(i) a percentage of any dividends that the listed public company may pay; or

(ii) a percentage of any distributions of capital of the listed public company; and

(c) the fund or special company is a complying superannuation fund, complying approved deposit fund or special company at all times during the year of income of the listed public company in which the ownership test time occurs.

If fund or special company has more than 50 members

(2) If the fund or special company has more than 50 members, the test is applied as if, at the ownership test time, the fund or special company were a person (other than a company) who had the right to receive, for the person's own benefit, that percentage of those dividends or distributions of capital of the listed public company.

If fund or special company has 50 members or less

(3) However, if the fund or special company has 50 members or less, the test is applied as if, at the ownership test time, each member were a person (other than a company) who had the right to receive, for the person's own benefit, an equal proportion of those dividends or distributions of capital.

Persons who actually control are taken not to have it

(4) The test is applied as if, at the ownership test time, the persons (other than companies) who have the right to receive that percentage of those dividends or distributions of capital didnot have that right (except as provided by subsection (3)).

Division 3D - Anti-avoidance measures for capital losses of companies

Table of sections

160ZNT Capital gain accruing to company because of available capital losses

160ZNU Deduction or capital loss injected into company because of available capital gain

160ZNV Someone else obtains a tax benefit because of a capital loss or capital gain available to company

160ZNW Loss resulting from disallowed deductions

160ZNX Net capital loss resulting from disallowed capital losses

160ZNT Capital gain accruing to company because of available capital losses

(1) The Commissioner may disallow capital losses of a company (or parts of them) for a year of income if:

(a) a capital gain accrued to the company and some or all of the capital gain (the injected capital gain ) would not have accrued if the company had not incurred those capital losses; and

(b) the capital gain accrued in that year of income.

The disallowed capital losses and parts of capital losses may exceed the amount of the injected capital gain.

Note: The disallowance may result in a net capital loss for the year of income (see section 160ZNX).

(2) The Commissioner cannot disallow the capital losses or parts of the capital losses if the continuing shareholders will benefit from the accrual of the injected capital gain to an extent that the Commissioner thinks fair and reasonable having regard to their respective shareholding interests in the company.

(3) A reference to disallowing a capital loss or a part of a capital loss for a year of income is a reference to determining that a capital loss or a part of a capital loss, as the case may be, is not to be applied in determining whether a net capital gain has accrued, or a net capital loss is incurred, in respect of the year of income.

(4) The continuing shareholders are the individuals who have shareholding interests in the company both immediately before the injected capital gain accrued, and immediately afterwards.

160ZNU Deduction or capital loss injected into company because of available capital gain

(1) The Commissioner may:

(a) disallow a deduction of a company for a year of income to the extent that the company would not have incurred the loss, outgoing or expenditure that the deduction is for; or

(b) disallow a capital loss of a company for a year of income to the extent that the company would not have incurred the capital loss;

if some or all of a capital gain that accrued to it in the year of income had not accrued.

Note: The disallowance may result in a loss or a net capital loss for the year of income (see sections 160ZNW and 160ZNX).

(2) The Commissioner cannot disallow any of the deduction or capital loss if:

(a) the continuing shareholders will benefit from any profit or advantage that has arisen or might arise directly or indirectly from the incurring of the loss, outgoing or expenditure or of the capital loss, as the case may be; and

(b) the Commissioner thinks that the extent to which they will benefit is fair and reasonable having regard to their respective shareholding interests in the company.

(3) A reference to disallowing a capital loss or a part of a capital loss for a year of income is a reference to determining that a capital loss or a part of a capital loss, as the case may be, is not to be applied in determining whether a net capital gain has accrued, or a net capital loss is incurred, in respect of the year of income.

(4) The continuing shareholders are the individuals who had shareholding interests in the company both immediately before the loss, outgoing or expenditure, or the capital loss, as the case may be, was incurred, and immediately afterwards.

160ZNV Someone else obtains a tax benefit because of a capital loss or capital gain available to company

(1) The Commissioner may disallow a deduction or a capital loss of a company if:

(a) a person (other than the company) has obtained or will obtain a tax benefit in connection with a scheme; and

(b) the scheme would not have been entered into or carried out if the company had not incurred some or all (theavailable expense ) of:

(i) the loss, outgoing or expenditure that the deduction is for; or

(ii) the capital loss;

as the case may be.

However, the deduction or capital loss may be disallowed only to the extent of the available expense.

(2) The Commissioner may disallow deductions or capital losses of a company (or parts of them) if:

(a) a person has obtained or will obtain a tax benefit in connection with a scheme; and

(b) the scheme would not have been entered into or carried out if some or all (the available capital gains ) of the capital gains that accrued to the company had not accrued:

(i) before it incurred the losses, outgoings or expenditure that the deductions were for, or the capital losses, as the case may be; and

(ii) in the same year of income as it incurred them.

The disallowed deductions or capital losses and parts of deductions or capital losses may exceed the amount of the available capital gains.

Note: The disallowance may result in a loss or a net capital loss for the year of income (see sections 160ZNW and 160ZNX).

(3) The Commissioner cannot disallow under this section if:

(a) the person who has obtained or will obtain the tax benefit had a shareholding interest in the company at some time during the year of income; and

(b) the Commissioner considers the tax benefit to be fair and reasonable having regard to that shareholding interest.

(4) A reference to disallowing a capital loss or a part of a capital loss for a year of income is a reference to determining that a capital loss or a part of a capital loss, as the case may be, is not to be applied in determining whether a net capital gain has accrued, or a net capital loss is incurred, in respect of the year of income.

(5) An expression means the same in this section as in Part IVA.

160ZNW Loss resulting from disallowed deductions

(1) If a company has a taxable income for a year of income because the Commissioner disallows under this Division deductions of the company for the year of income (or parts of them), the company may also have a loss for the year of income.

(2) The company's loss for the income year is calculated as follows.

(3) Total what the Commissioner has disallowed under this Division.

(4) If the company has exempt income for the year of income, subtract its net exempt income.

(5) Any amount remaining is the company's loss for the year of income.

Note: For the allowance of the loss as a deduction in later years of income see subsection 50C(2).

160ZNX Net capital loss resulting from disallowed capital losses

(1) If a company has a net capital gain for a year of income because the Commissioner disallows under this Division capital losses of the company for the year of income (or parts of them), the company may also have a net capital loss in respect of the year of income.

(2) The company's net capital loss in respect of the year of income is the total of the amounts of the capital losses that the Commissioner has disallowed under this Division.

Note: To find out how the net capital loss is applied in determining whether the company has a net capital gain in a later year of income, see section 160ZC.

33   Subparagraph 160ZP(7AAA)(b)(i)

Repeal the subparagraph, substitute:

(i) if the gain year is the same year of income as the loss year, the gain company is not required to calculate a net capital gain or net capital loss under Division 3A in respect of the gain year and the gain company is not required to calculate a net capital loss under Division 3D in respect of the gain year - a capital loss incurred by the gain company during the gain year; or

34   After subsection 160ZP(7AAA)

Insert:

(7AAB) In determining for the purposes of subparagraph (7AAA)(b)(i) whether a company is required to calculate a net capital gain or a net capital loss under Division 3A in respect of the gain year, disregard subsection 160ZNF(3).

(7AAC) In determining for the purposes of subparagraph (7AAA)(b)(i) whether Division 3D would require the gain company to calculate a net capital loss in respect of the gain year, assume the gain company incurred a capital loss equal to the transferred amount during the gain year.

35   After subsection 160ZP(8D)

Insert:

(8E) The Commissioner may, at any time, amend an assessment of the gain company to give effect to subsection (8B) where the net capital loss or part of the net capital loss was not taken to have been incurred by the loss company. The Commissioner may do so despite section 170 (amendment of assessments).

36   Subsections 160ZP(9) and (9A)

Repeal the subsections, substitute:

(9) If the loss company is required to calculate a net capital loss in respect of the loss year under Division 3A or Division 3D, no part of a net capital loss incurred by that company in respect of that year is capable of being specified in an agreement under paragraph (7)(c).

37   Subsections 160ZP(11) and (12)

Repeal the subsections, substitute:

(11) If the loss company is a shareholder in the gain company and receives any consideration from the gain company for the whole or a part of a net capital loss incurred by the loss company being treated under subsection (7AAA) as a capital loss or a net capital loss incurred by the gain company:

(a) a capital gain does not accrue to the loss company because of the receipt of the consideration; and

(b) the consideration is not taken to be income derived by the loss company.

(12) If the gain company gives any consideration to the loss company for the whole or a part of a net capital loss incurred by the loss company being treated under subsection (7AAA) as a capital loss or a net capitalloss incurred by the gain company:

(a) the gain company does not incur a capital loss because of the giving of the consideration; and

(b) the consideration is not an allowable deduction to the gain company.

38   Subsection 160ZP(13)

Omit "any payments covered by subsection (12)", substitute "any consideration referred to in subsection (12)".

39   Subsection 160ZP(14)

Omit "any payments covered by subsection (12)", substitute "any consideration referred to in subsection (12)".

40   Subsection 170(13)

Omit "or section 105AAA", substitute ", section 105AAA, section 160ZND, sections 160ZNM to 160ZNR (inclusive) or Division 3D of Part IIIA".

41   Application

(1) Subject to this item, the amendments made by the items in this Part apply to the 1996-97 year of income and to any later years of income to which the provisions respectively amended by those items apply.

(2) The amendments made by items 18 to 24 apply to the 1996-97 year of income and to any later years of income to which the provisions respectively amended by those items apply, but have effect only in respect of acts, omissions or events happening after 26 March 1997.

(3) The references in subsection 160ZNS(3) of theIncome Tax Assessment Act 1936 to a company starting to carry on a business or entering into a transaction are references to the company starting to carry on a business or entering into a transaction after 7.30 pm, by legal time in the Australian Capital Territory, on 20 August 1996.

(4) The reference in subsection 160ZNS(4) of theIncome Tax Assessment Act 1936to a company incurring expenditure is a reference to the company incurring expenditure after 7.30 pm, by legal time in the Australian Capital Territory, on 20 August 1996.

(5) The amendment made by item 35 does not permit the Commissioner to amend an assessment made before 26 March 1997 unless the Commissioner could have made the amendment on that date.

Part 3   Income Tax Assessment Act 1936 (capital gains tax definitions)

42   Subsection 6(1)

Insert:

capital gain has the meaning given by Part IIIA.

capital loss has the meaning given by Part IIIA.

net capital gain has the meaning given by Part IIIA.

net capital loss has the meaning given by Part IIIA.

Part 4   Income Tax Assessment Act 1997 (revenue losses)

43   After subsection 165-60(2)

Insert:

(2A) So much of any amount included in the company's assessable income under section 97 or 98A as is a capital gain that forms part of a net capital gain is not attributed to a period.

44   After subsection 165-60(6)

Insert:

(6A) A net capital gain is not attributed to a period.

45   Subsection 165-60(7)

Repeal the subsection, substitute:

(7) Full year amounts are amounts referred to in paragraphs (2)(a) and (b), so far as they arenot reasonably attributable to a period, but do not include any part of a capital gain that forms part of a net capital gain. Full year amounts are brought in at a later stage of the process of calculating the company's taxable income for the income year.

46   At the end of subsection 165-65(3)

Add "and any net capital gain that accrued to the company in respect of the income year".

47   At the end of subsection 165-70(3)

Add:

; and (f) any net capital gain that accrued to the company in respect of the income year.

48   Section 170-25

Repeal the section, substitute:

170-25 Tax treatment of consideration for transferred tax loss

(1) If the *loss company receives any consideration from the *income company for the amount of the *tax loss:

(a) so much of the consideration as is given for the amount of the *tax loss is neither assessable income nor exempt income of the *loss company; and

(b) a capital gain does not accrue to the *loss company because of the receipt of the consideration.

(2) If the *income company gives any consideration to the *loss company for the amount of the *tax loss:

(a) the *income company cannot deduct the amount or value of the consideration; and

(b) the *income company does not incur a capital loss because of the giving of the consideration.

49   Section 175-10 (heading)

Repeal the heading, substitute:

175-10 First case: income or capital gain injected into company because of available tax loss

50   Subsection 175-10(1)

Omit "some or all of which (the injected income ) it would not have derived", substitute ", or a capital gain accrued to the company, some or all of which (the injected amount ) would not have been derived, or would not have accrued,".

51   Subsection 175-10(2)

Omit "derivation of the *injected income", substitute "derivation or accrual of the *injected amount".

52   Section 175-20 (heading)

Repeal the heading, substitute:

175-20 Income or capital gain injected into company because of available deductions

53   Subsection 175-20(1)

Repeal the subsection (other than the note), substitute:

(1) The Commissioner may disallow deductions of a company (or parts of them) for an income year if:

(a) the company has *derived assessable income, or a capital gain accrued to the company, some or all of which (the injected amount ) would not have been derived, or would not have accrued, if the company did not have those deductions; and

(b) the income was derived, or the capital gain accrued, in that income year.

The disallowed deductions and parts of deductions may exceed the *injected amount.

54   Subsection 175-20(2)

Omit "*injected income", substitute "*injected amount".

55   Subsection 175-20(3)

Omit "*injected income", substitute "*injected amount".

56   Section 175-30 (heading)

Repeal the heading, substitute:

175-30 Someone else obtains a tax benefit because of a deduction, income or capital gain available to company

57   Paragraph 175-30(2)(b)

Repeal the paragraph, substitute:

(b) the scheme would not have been entered into or carried out if some or all (the available amount ) of the assessable income that the company derived or of a capital gain that accrued to the company:

(i) before it incurred the losses, outgoings or expenditure that the deductions were for; and

(ii) in the same income year as it incurred them;

had not been derived or had not accrued, as the case may be.

58   Subsection 175-30(2)

Omit "the amount of the available income", substitute "the available amount".

59   Subsection 995-1(1) (after the definition of in existence )

Insert:

injected amount has the meaning given by sections 175-10 and 175-20.

60   Subsection 995-1(1) (definition of injected income )

Repeal the definition.

Part 5   Income Tax (Consequential Amendments) Act 1997

61   Schedule 1 (items 236 and 237)

Repeal the items.

62   Schedule 1 (items 241 and 242)

Repeal the items.

63   Schedule 1 (item 248)

Repeal the item, substitute:

248 Subsection 170(13)

Repeal the subsection, substitute:

(13) The Commissioner may amend an assessment within 6 years after the day when the tax became due and payable under it, if the amendment is to give effect to any of these provisions:

(a) sections 165-180 to 165-205 and Division 175 of theIncome Tax Assessment Act 1997;

(b) sections 63B, 105AAA, 160ZND and 160ZNM to 160ZNR (inclusive), and Division 3D of Part IIIA, of this Act;

(including any of those provisions as applied by any other provision of that Act or this Act).

64   Application

The items in Schedule 1 to theIncome Tax (Consequential Amendments) Act 1997 that are repealed by items 61 and 62 of this Schedule are taken never to have had any effect.

Schedule 15   Deductions for gifts

Part 1   Amendment of the Income Tax Assessment Act 1936

1   Subsection 78(3) (before the index entry relating to Academies - professional)

Insert:

2   Subsection 78(3) (after the index entry relating to Art galleries)

Insert:

3   Subsection 78(3) (after the index entry relating to Australian Ireland Fund)

Insert:

4   Subsection 78(4) (at the end of Table 5)

Add:

5   Subsection 78(4) (at the end of Table 6)

Add:

6   Subsection 78(4) (at the end of Table 12)

Add:

Part 2   Amendment of the Income Tax Assessment Act 1997

7   Subsection 30-50(2) (at the end of the table)

Add:

8   Subsection 30-55(2) (at the end of the table)

Add:

9   Subsection 30-100(2) (at the end of the table)

Add:

10   Subsection 30-315(2) (before table item 1)

Add:

11   Subsection 30-315(2) (after table item 9)

Insert:

12   Subsection 30-315(2) (after table item 23)

Insert:

13   Application

The amendments made by this Part apply to assessments for the 1997/98 income year and later income years.

Schedule 16   Technical amendments

Taxation Laws Amendment Act 1993

1   Section 44

Omit "'excluded property'", substitute "'excluded unit of property'".

Taxation Laws Amendment Act (No. 3) 1994

2   Part 1 of the Schedule (table item 4)

Omit "222AFA(4)".

3   Part 1 of the Schedule (after table item 4)

Insert:

Taxation Laws Amendment Act (No. 4) 1995

4   Item 1 of Schedule 2 (heading)

Omit " 46L(3)(b) ", substitute " 46M(3)(b) ".

Note: This item corrects a misdescription of the section to be amended by item 1 of Schedule 2 to theTaxation Laws Amendment Act (No. 4) 1995.

5   Item 134 of Schedule 2

After "potential" (second occurring), insert "rebate".

6   Item 136 of Schedule 2

After "potential" (second occurring), insert "rebate".

Taxation Laws Amendment Act (No. 3) 1996

7   Item 74 of Schedule 4

Repeal the item, substitute:

74 - At the end of paragraphs 46(2)(a) and (b)

Add "and".

Taxation Laws Amendment Act (No. 2) 1997

8   Schedule 1 (item 9)

Repeal the item, substitute:

9   Subsection 160ZP(7)

Omit "where" (first occurring), substitute "subsection (7AAA) applies if".

Taxation Laws Amendment (Private Health Insurance Incentives) Act 1997

9   Schedule 3 (before item 1)

Insert:

Income Tax Assessment Act 1936

Schedule 17  

Income Tax Assessment Act 1936

1   Subsection 139CD(5)

Omit "the employees", substitute "the permanent employees".

2   Paragraph 139GF(4)(b)

Omit "2/3", substitute "75%".

3   Application

(1) Part 4 of Schedule 2 to theTaxation Laws Amendment Act (No. 2) 1995 applies in the same way to the amendment made by item 1 of this Schedule as it applied to the amendments made by Schedule 2 to that Act.

(2) The amendment made by item 2 of this Schedule applies to shares or rights acquired on or after 1 July 1996.