INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART VI - COLLECTION AND RECOVERY OF TAX  

Division 1C - Payment of instalments by companies and certain trustees  

Subdivision E - Miscellaneous  

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

221AZU(1)   [Application]  

This section applies in relation to an instalment taxpayer in respect of a year of income to which this Division applies (the ``current year'' ) if:

(a) the taxpayer has entered into or carried out an arrangement; and

(b) the taxpayer has a qualifying increase in taxable income for the current year (see subsections (2) and (3)); and

(c) the sum of the instalments, other than the final instalment, payable under this Division in respect of the current year by the taxpayer and one or more other taxpayers is less than the sum that would have been so payable, or might reasonably be expected to have been so payable, if the arrangement had not been entered into or carried out; and

(d) income tax has become due and payable by the taxpayer in respect of its taxable income of the current year.

221AZU(2)   [Companies]  

A taxpayer that is a company (other than a company in the capacity of trustee) has a qualifying increase in taxable income for the current year if:

(a) an amount has been included in the assessable income of the taxpayer of the current year, being an amount that would not have been so included, or might reasonably be expected not to have been so included, if the arrangement had not been entered into or carried out; or

(b) a deduction is not allowable to the taxpayer in relation to the current year where the whole or a part of that deduction would have been so allowable, or might reasonably be expected to have been so allowable, if the arrangement had not been entered into or carried out.

221AZU(3)   [Trustee of fund or unit trust]  

A taxpayer that is a trustee of a fund or unit trust has a qualifying increase in taxable income for the current year if:

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

(b) a deduction is not allowable to the relevant fund or unit trust in relation to the current year where the whole or a part of that deduction would have been so allowable, or might reasonably be expected to have been so allowable, if the arrangement had not been entered into or carried out.

221AZU(4)   [Additional tax]  

Additional tax, by way of penalty, is due and payable by the taxpayer, equal to 12% of the amount by which:

(a) the sum of the instalments, other than the final instalment, payable under this Division in respect of the current year by the taxpayer and the other taxpayer, or taxpayers, referred to in paragraph (1)(c);

is exceeded by:

(b) the greatest sum that would have been so payable, or might reasonably be expected to have been so payable, if the arrangement had not been entered into or carried out.

221AZU(5)   [Taxpayer received refund of instalments paid]  

If the taxpayer received a refund in respect of an amount paid as an instalment of tax in respect of its taxable income of the current year under this Division, the amount, or the total of the amounts, paid by the taxpayer in respect of that instalment of tax is taken, for the purposes of this section, to have been reduced by the amount of the refund.

221AZU(6)   [Remission of additional tax]  

If the Commissioner is satisfied that there are special circumstances because of which it would be fair and reasonable to do so, the Commissioner may remit the whole or any part of any additional tax payable by the taxpayer under subsection (4).

221AZU(7)   [Income tax payable]  

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

(a) any credits to which the taxpayer is or will be entitled under subsection 98A(2) , Division 18 of Part III or Division 3A of this Part or the Income Tax (International Agreements) Act 1953 ; and

(b) offsets under section 160AQK .

221AZU(8)   [Deduction not allowable]  

To avoid doubt, a reference in subsections (2) and (3) to a deduction that is not allowable to a taxpayer includes a reference to a deduction that is not allowable to that taxpayer because a tax loss, or part of a tax loss, that would have given rise to the entitlement to the deduction is taken, under Subdivision 170-A (which is about transferring tax losses within wholly-owned company groups) of the Income Tax Assessment Act 1997 , to be a tax loss incurred by another taxpayer.

221AZU(9)   [``arrangement'']  

In this section:

"arrangement"
means:

(a) any agreement, arrangement, understanding, promise or undertaking, whether express or implied, and whether or not enforceable, or intended to be enforceable, by legal proceedings; and

(b) any scheme, plan, proposal, action, course of action or course of conduct, whether unilateral or otherwise.

221AZU(10)   [Entering into or carrying out an arrangement]  

A reference in this section to the entering into or carrying out of an arrangement by a taxpayer includes a reference to the entering into or carrying out of an arrangement by a taxpayer together with any other person or persons.