TAX AND SUPERANNUATION LAWS AMENDMENT (2015 MEASURES NO. 2) BILL 2015

2013-2014-2015

The Parliament of the

Commonwealth of Australia

HOUSE OF REPRESENTATIVES

Presented and read a first time

Tax and Superannuation Laws

Amendment (2015 Measures No. 2) Bill

2015

No. , 2015

(Treasury)

A Bill for an Act to amend the law relating to

taxation, and for related purposes

No. , 2015

Tax and Superannuation Laws Amendment (2015 Measures No. 2) Bill

2015

Contents

Short title ........................................................................................... 1

Commencement ................................................................................. 1

Schedules ........................................................................................... 2

Amendment of assessments ............................................................... 2

Schedule 1--Tax relief for certain mining arrangements

Part 1--Interest realignment arrangements

Income Tax Assessment Act 1997

Income Tax (Transitional Provisions) Act 1997

Part 2--Farm-in farm-out arrangements

Income Tax Assessment Act 1997

Part 3--Mining, quarrying or prospecting information

Income Tax Assessment Act 1997

Schedule 2--In-house software

Income Tax Assessment Act 1997

Schedule 3--Instalment trusts

Income Tax Assessment Act 1997

Income Tax (Transitional Provisions) Act 1997

Taxation Administration Act 1953

Schedule 4--Company losses

Part 1--Changes in company ownership

Division 1--Main amendments

Income Tax Assessment Act 1997

Division 2--Other amendments

Income Tax Assessment Act 1997

Income Tax (Transitional Provisions) Act 1997

Part 2--Same business test

Income Tax Assessment Act 1997

Part 3--Shares held by certain entities

No. , 2015

Tax and Superannuation Laws Amendment (2015 Measures No. 2) Bill

2015

A Bill for an Act to amend the law relating to

taxation, and for related purposes

The Parliament of Australia enacts:

1 Short title

This Act may be cited as the Tax and Superannuation Laws

Amendment (2015 Measures No. 2) Act 2015.

2 Commencement

(1) Each provision of this Act specified in column 1 of the table

commences, or is taken to have commenced, in accordance with

column 2 of the table. Any other statement in column 2 has effect

according to its terms.

Tax and Superannuation Laws Amendment (2015 Measures No. 2) Bill

2015

No. , 2015

Commencement information

Column 1

Column 2

Column 3

Provisions

Commencement

Date/Details

1. Sections 1 to 4

and anything in

this Act not

elsewhere covered

by this table

The day this Act receives the Royal Assent.

2. Schedule 1

The day this Act receives the Royal Assent.

3. Schedule 2

1 July 2015.

1 July 2015

4. Schedule 3

The day this Act receives the Royal Assent.

5. Schedule 4

The day after this Act receives the Royal

Assent.

Note:

This table relates only to the provisions of this Act as originally

enacted. It will not be amended to deal with any later amendments of

this Act.

(2) Any information in column 3 of the table is not part of this Act.

Information may be inserted in this column, or information in it

may be edited, in any published version of this Act.

3 Schedules

Legislation that is specified in a Schedule to this Act is amended or

repealed as set out in the applicable items in the Schedule

concerned, and any other item in a Schedule to this Act has effect

according to its terms.

4 Amendment of assessments

(1) Section 170 of the Income Tax Assessment Act 1936 does not

prevent the amendment of an assessment if:

(a) the assessment was made before the commencement of

Schedule 3 to this Act (Instalment trusts); and

(b) the amendment is made for the purpose of giving effect to

that Schedule; and

commencement.

No. , 2015

Tax and Superannuation Laws Amendment (2015 Measures No. 2) Bill

2015

(2) Section 170 of the Income Tax Assessment Act 1936 does not

prevent the amendment of an assessment if:

(a) the assessment was made before the commencement of

Schedule 4 to this Act (Company losses); and

(b) the amendment is made for the purpose of giving effect to

that Schedule; and

commencement.

Schedule 1 Tax relief for certain mining arrangements

Part 1 Interest realignment arrangements

Tax and Superannuation Laws Amendment (2015 Measures No. 2) Bill

2015

No. , 2015

Schedule 1

--Tax relief for certain mining

arrangements

Part 1

--Interest realignment arrangements

Income Tax Assessment Act 1997

1 After section 40-362

Insert:

40-363 Roll-over relief for interest realignment arrangements

Circumstances giving rise to roll-over relief

(1) There is roll-over relief if:

(a) there is a

balancing adjustment event under section 40-295

because, in an income year, you dispose of a

depreciating

asset to another entity; and

(b) the asset is a

mining, quarrying or prospecting right; and

interest realignment

arrangement; and

(d) you choose to apply roll-over relief in relation to the asset.

Choosing to apply roll-over relief

(2) The choice must:

(a) be in writing; and

(b) be made at or before the time you lodge your

income tax

return for the income year in which the

balancing

adjustment event occurs, or within a longer period allowed

by the Commissioner.

The effect of roll-over relief

(3) If there is roll-over relief under this section:

(a) section 40-285 does not apply to the

balancing adjustment

event in relation to the asset; and

Tax relief for certain mining arrangements Schedule 1

Interest realignment arrangements Part 1

No. , 2015

Tax and Superannuation Laws Amendment (2015 Measures No. 2) Bill

2015

(b) an amount is included in your assessable income if such an

amount (the non-realignment amount) would have been

included under subsection 40-285(1) if:

(i) paragraph (a) of this subsection did not apply; and

(ii) the

adjustable value of the

mining, quarrying or

prospecting rights that you disposed of under the

arrangement were taken to be the market value of the

mining, quarrying or prospecting rights that you

received under the arrangement; and

cost of a mining, quarrying or

prospecting right that you receive under the arrangement, if:

(i) some or all of the cost consists of a

non-cash benefit

that you provide; and

(ii) that benefit is a mining, quarrying or prospecting right

that you disposed of under the arrangement;

the market value of the benefit is taken to be the adjustable

value of the benefit.

(4) The amount included in your assessable income under

paragraph (3)(b) is the non-realignment amount, and it is included

for the income year in which the balancing adjustment event

occurred.

Meaning of interest realignment arrangement etc.

(5) An interest realignment arrangement is an

arrangement:

(a) that is entered into between entities:

(i) that are undertaking jointly, or propose to undertake

jointly, a project for carrying out

mining and quarrying

operations; and

(ii) that each

holds one or more

mining, quarrying or

prospecting rights relating to the project; and

(b) under which those entities exchange (or agree to exchange),

with the effect set out in subsection (6), parts of those rights;

and

or prospecting right, that does not give rise to the effect

referred to in subsection (6).

Schedule 1 Tax relief for certain mining arrangements

Part 1 Interest realignment arrangements

Tax and Superannuation Laws Amendment (2015 Measures No. 2) Bill

2015

No. , 2015

Note:

The parts referred to in paragraph (b) are themselves mining,

quarrying or prospecting rights (see paragraph (c) of the definition of

mining, quarrying or prospecting right in subsection 995-1(1)), and

are therefore not referred to elsewhere in this Act as parts of such

rights.

(6) The effect referred to in paragraphs (5)(b) and (c) must be that, for

each of those entities, the following are equal:

(a) the entity's percentage interest in the project;

(b) the reserves and resources represented by the

mining,

quarrying or prospecting rights that the entity

holds relating

to the project, expressed as a percentage of the reserves and

resources represented by all mining, quarrying or prospecting

rights that any of the entities hold relating to the project.

(7) For the purposes of subsection (6):

(a) the reserves represented by a

mining, quarrying or

prospecting right are taken to be the reserves, reasonably

estimated using an appropriate accepted industry practice,

that are expected to be extracted from the mine,

petroleum

field or quarry to which the right relates; and

(b) the resources represented by a mining, quarrying or

prospecting right are taken to be the resources, reasonably

estimated using an appropriate accepted industry practice,

that are expected to be situated in the area to which the right

relates (other than those resources that are reserves referred

to in paragraph (a)).

40-364 Interest realignment adjustments

Effect of receiving interest realignment adjustment on assessable

income

(1) If you receive an

interest realignment adjustment in an income

year, include in your assessable income for the year an amount (the

adjustment amount) equal to:

(a) the amount of the adjustment; or

(b) if the adjustment is not an amount--the

market value of the

adjustment.

Tax relief for certain mining arrangements Schedule 1

Interest realignment arrangements Part 1

No. , 2015

Tax and Superannuation Laws Amendment (2015 Measures No. 2) Bill

2015

Effect of providing interest realignment adjustment on cost, or cost

base and reduced cost base

(2) If an

interest realignment adjustment is provided by you or on

your behalf:

(a) include the adjustment amount in the second element of the

cost of a

mining, quarrying or prospecting right that you

acquired under the

interest realignment arrangement to

which the adjustment amount relates; or

(b) if this Division does not apply to that right--include the

adjustment amount in the

cost base and

reduced cost base

of that right.

However, if you acquired more than one such right under the

arrangement, apportion the adjustment amount between the costs,

or cost bases and reduced cost bases, of those rights on a

reasonable basis.

Note:

Subsections 40-77(1D) and (1E) of the Income Tax (Transitional

Provisions) Act 1997 set out when this Division does not apply to the

right.

Tax effects of the right to an interest realignment adjustment

(3) In calculating the

termination value of a

mining, quarrying or

prospecting right that you provide under an

interest realignment

arrangement, assume to be zero the

market value of any

contractual right conferred by the arrangement to an

interest

realignment adjustment to be received by you.

(4) In calculating the

cost of a

mining, quarrying or prospecting right

that you receive under an

interest realignment arrangement,

assume to be zero the

market value of any contractual right

conferred by the arrangement to an

interest realignment

adjustment to be provided by you.

(5) The creation of a right to an

interest realignment adjustment does

not cause

CGT event D1 or CGT event D3 to happen.

(6) Your receipt of an

interest realignment adjustment does not cause

CGT event C2 to happen in relation to the right to receive the

adjustment.

Schedule 1 Tax relief for certain mining arrangements

Part 1 Interest realignment arrangements

Tax and Superannuation Laws Amendment (2015 Measures No. 2) Bill

2015

No. , 2015

Meaning of interest realignment adjustment

(7) An interest realignment adjustment is an amount, or an asset

(other than a

mining, quarrying or prospecting right), that:

(a) is provided under an

interest realignment arrangement to a

party to the arrangement by or on behalf of another party to

the arrangement; and

(b) is provided as an adjustment, to the parties' contributions of

value to the project to which the arrangement relates, that

arises because information that has become available since

the time the arrangement took effect indicates that the other

party did not make an appropriate contribution at that time.

2 At the end of Division 124

Add:

Subdivision 124-S--Interest realignment arrangements

Guide to Subdivision 124-S

124-1220 What this Subdivision is about

There is roll-over relief if an interest in a mining, quarrying or

prospecting right is disposed of under an interest realignment

arrangement.

Table of sections

124-1225 Disposals of interests under interest realignment arrangements

124-1230 Roll-over consequences--partial roll-over

124-1235 Roll-over consequences--all original interests were post-CGT

124-1240 Roll-over consequences--all original interests were pre-CGT

124-1245 Roll-over consequences--original interests were of mixed CGT status, all

were pre-UCA

124-1250 Roll-over consequences--some original interests were pre-UCA

Tax relief for certain mining arrangements Schedule 1

Interest realignment arrangements Part 1

No. , 2015

Tax and Superannuation Laws Amendment (2015 Measures No. 2) Bill

2015

Operative provisions

124-1225 Disposals of interests under interest realignment

arrangements

(1) There is a roll-over if:

(a)

CGT event A1 happens because you

dispose of one or more

assets each of which:

(i) is an interest (an original interest) in a

mining,

quarrying or prospecting right; and

(ii) is an interest that you started to

hold before 1 July

2001; and

(b) the disposal occurs under an

interest realignment

arrangement.

(2) The first element of the

cost base and

reduced cost base of an

interest (a new interest) in a

mining, quarrying or prospecting

right that you acquire under the

interest realignment arrangement

includes any amount you paid to acquire the new interest.

Note 1:

The rest of the first element is worked out under Subdivision 124-A.

Note 2:

Under subsections 124-10(2) and 124-15(2), a capital gain or capital

loss you make from the original interest is disregarded.

(3) The amount can include giving property: see section 103-5.

However, it does not include a

mining, quarrying or prospecting

right that you dispose of under the

interest realignment

arrangement.

124-1230 Roll-over consequences--partial roll-over

(1) You can obtain only a partial roll-over in relation to an original

interest if the

capital proceeds for that interest includes something

(the ineligible proceeds) other than a new interest or new interests.

There is no roll-over for that part (the ineligible part) of the

interest for which you received the ineligible proceeds.

Note:

If there is more than one original interest, some or all of those original

interests may each have an ineligible part.

Schedule 1 Tax relief for certain mining arrangements

Part 1 Interest realignment arrangements

Tax and Superannuation Laws Amendment (2015 Measures No. 2) Bill

2015

No. , 2015

(2) The

cost base of the ineligible part is that part of the cost base of

the original interest as is reasonably attributable to the ineligible

part.

(3) The

reduced cost base of the ineligible part is that part of the

reduced cost base of the original interest as is reasonably

attributable to the ineligible part.

(4) For the purposes of sections 124-1235 and 124-1245, for each

original interest that has an ineligible part:

(a) reduce the

cost base of that interest (just before the

CGT

event that happened in relation to it) by so much of that cost

base as is attributable to that ineligible part; and

(b) reduce the

reduced cost base of that interest (just before the

CGT event that happened in relation to it) by so much of that

reduced cost base as is attributable to that ineligible part.

124-1235 Roll-over consequences--all original interests were

post-CGT and pre-UCA

(1) If you acquire the new interest in exchange for:

(a) one original interest that you started to

hold on or after

20 September 1985 and before 1 July 2001; or

(b) 2 or more original interests, each of which you started to hold

on or after 20 September 1985 and before 1 July 2001;

you are taken to have started to hold the new interest (or all of the

new interests) on or after 20 September 1985 and before 1 July

2001.

(2) The first element of the

cost base of the new interest (or of each of

the new interests) is such amount as is reasonable having regard to:

(a) the total of the cost bases of all the original interests; and

(b) the number,

market value and character of the original

interests; and

(3) The first element of the

reduced cost base of the new interest (or

of each of the new interests) is such amount as is reasonable having

regard to:

Tax relief for certain mining arrangements Schedule 1

Interest realignment arrangements Part 1

No. , 2015

Tax and Superannuation Laws Amendment (2015 Measures No. 2) Bill

2015

(a) the total of the reduced cost bases of all the original interests;

and

(b) the number,

market value and character of the original

interests; and

124-1240 Roll-over consequences--all original interests were

pre-CGT

If you acquire the new interest in exchange for:

(a) one original interest that you started to

hold before

20 September 1985; or

(b) 2 or more original interests, each of which you started to hold

before 20 September 1985;

you are taken to have started to hold the new interest (or all of the

new interests) before that day.

124-1245 Roll-over consequences--original interests were of mixed

CGT status, all were pre-UCA

(1) This section applies if:

(a) you acquire the new interest in exchange for more than one

original interest; and

(b) you started to

hold one or more of the original interests

before 20 September 1985; and

after that day; and

(d) you did not start to hold any of the original interests on or

after 1 July 2001.

(2) Each new interest is taken to be 2 separate

CGT assets that are

both new interests:

(a) one (which you are taken to have started to

hold on or after

20 September 1985 and before 1 July 2001) representing the

extent to which you started to hold the original interests on or

after 20 September 1985 and before 1 July 2001; and

(b) another (which you are taken to have started to hold before

20 September 1985) representing the extent to which you

started to hold the original interests before that day.

Schedule 1 Tax relief for certain mining arrangements

Part 1 Interest realignment arrangements

Tax and Superannuation Laws Amendment (2015 Measures No. 2) Bill

2015

No. , 2015

(3) The first element of the

cost base and

reduced cost base of the

CGT asset mentioned in paragraph (2)(a) in relation to a new

interest is worked out under the formula:

Market value of new interest

Total post-CGT cost base

Market value of all new interests

where:

market value of all new interests is the total of the

market values

of all of the new interests.

market value of new interest is the

market value of the new

interest to which the

CGT asset mentioned in paragraph (2)(a)

relates.

total post-CGT cost base is the total of the

cost bases of all the

original interests that you started to

hold on or after 20 September

1985.

124-1250 Roll-over consequences--some original interests were

pre-UCA

(1) This section applies if:

(a) you acquire the new interest in exchange for more than one

original interest; and

(b) you started to

hold one or more of the original interests

(pre-UCA interests) before 1 July 2001; and

(post-UCA interests) on or after that day.

(2) If you started to

hold all of the pre-UCA interests on or after

20 September 1985, each new interest is taken to be 2 separate

assets that are both new interests:

(a) one (which you are taken to have started to hold on or after

that day and before 1 July 2001) representing the extent to

which the original interests are pre-UCA interests; and

(b) another (which you are taken to have started to hold on or

after 1 July 2001) representing the extent to which the

original interests are post-UCA interests.

Tax relief for certain mining arrangements Schedule 1

Interest realignment arrangements Part 1

No. , 2015

Tax and Superannuation Laws Amendment (2015 Measures No. 2) Bill

2015

Apply section 124-1235 to the interest referred to in paragraph (a)

as if the pre-UCA interests were the only original interests. Apply

Division 40 to the interests referred to in paragraph (b).

(3) If you started to

hold all of the pre-UCA interests before

20 September 1985, each new interest is taken to be 2 separate

assets that are both new interests:

(a) one (which you are taken to have started to hold before that

day) representing the extent to which the original interests are

pre-UCA interests; and

(b) another (which you are taken to have started to hold on or

after 1 July 2001) representing the extent to which the

original interests are post-UCA interests.

Apply section 124-1240 to the new interest referred to in

paragraph (a) as if the pre-UCA interests were the only original

interests. Apply Division 40 to the new interest referred to in

paragraph (b).

(4) If you started to

hold one or more of the pre-UCA interests before

20 September 1985 and one or more of the pre-UCA interests on or

after that day, each new interest is taken to be 3 separate assets that

are all new interests:

(a) one (which you are taken to have started to hold on or after

20 September 1985 and before 1 July 2001) representing the

extent to which the original interests that you started to hold

on or after 20 September 1985 are pre-UCA interests; and

(b) another (which you are taken to have started to hold before

20 September 1985) representing the extent to which the

original interests that you started to hold before 20 September

1985 are pre-UCA interests; and

after 1 July 2001) representing the extent to which the

original interests are post-UCA interests.

Apply section 124-1245 to the new interests referred to in

paragraphs (a) and (b) as if the pre-UCA interests were the only

original interests. Apply Division 40 to the new interest referred to

in paragraph (c).

Schedule 1 Tax relief for certain mining arrangements

Part 1 Interest realignment arrangements

Tax and Superannuation Laws Amendment (2015 Measures No. 2) Bill

2015

No. , 2015

3 Subsection 995-1(1)

Insert:

interest realignment adjustment has the meaning given by

subsection 40-364(7).

interest realignment arrangement has the meaning given by

subsection 40-363(5).

Income Tax (Transitional Provisions) Act 1997

4 After subsection 40-77(1C)

Insert:

(1D) Division 40 of the new Act does not apply to an interest in a

mining, quarrying or prospecting right that you started to hold on

or after 1 July 2001 if:

(a) you acquired the interest under an interest realignment

arrangement; and

(b) the interest was acquired in exchange for one or more other

interests in other mining, quarrying or prospecting rights all

of which you had started to hold before 1 July 2001.

(1E) If:

(a) you acquired, under an interest realignment arrangement, an

interest (a new interest) in a mining, quarrying or prospecting

right; and

(b) the interest was acquired in exchange for one or more other

interests (old interests) in other mining, quarrying or

prospecting rights; and

2001;

Division 40 of the new Act applies to the new interest only to the

extent that the new interest was acquired in exchange for the old

interests that you started to hold on or after 1 July 2001.

Schedule 1 Tax relief for certain mining arrangements

Part 2 Farm-in farm-out arrangements

Tax and Superannuation Laws Amendment (2015 Measures No. 2) Bill

2015

No. , 2015

Part 2

--Farm-in farm-out arrangements

Income Tax Assessment Act 1997

6 Section 11-

55 (after table item headed "environment")

Insert:

farm-in farm-out arrangements

rewards for providing exploration benefits ......................... 40-1135

7 Section 40-175 (note)

After:

paragraph 40-365(5)(a);

insert:

section 40-1110;

8 At the end of subsection 40-180(4)

Add:

Note:

The first element of cost may be reduced under section 40-1105 to

account for exploration benefits received under farm-in farm-out

arrangements.

9 Subsection 40-300(3) (note)

Repeal the note, substitute:

Note 1:

Termination value may be adjusted under Subdivision 27-B so that

any GST consequences are accounted for.

Note 2:

Termination value may be reduced under section 40-1105 to account

for exploration benefits received under farm-in farm-out

arrangements.

10 At the end of Division 40

Add:

Tax relief for certain mining arrangements Schedule 1

Farm-in farm-out arrangements Part 2

No. , 2015

Tax and Superannuation Laws Amendment (2015 Measures No. 2) Bill

2015

Subdivision 40-K--Farm-in farm-out arrangements

Guide to Subdivision 40-K

40-1095 What this Subdivision is about

The costs and termination values of parts of interests in mining,

quarrying or prospecting rights that are transferred under farm-in

farm-out arrangements are reduced by the market value of the

exploration benefits conferred under the arrangements.

Table of sections

Farm-in farm-out arrangements and exploration benefits

40-1100 Meaning of farm-in farm-out arrangement and exploration benefit

Consequences for transferors

40-1105 Treatment of certain exploration benefits received under farm-in farm-out

arrangements

40-1110 Cost of split interests resulting from farm-in farm-out arrangements

40-1115 Deductions for certain expenditure covered by exploration benefits

40-1120 Cost base and reduced cost base of exploration benefits etc.

40-1125 Effect of exploration benefits on the cost of mining, quarrying or

prospecting information

Consequences for transferees

40-1130 Consequences of certain exploration benefits provided under farm-in

farm-out arrangements

Farm-in farm-out arrangements and exploration benefits

40-1100 Meaning of farm-in farm-out arrangement and exploration

benefit

(1) A farm-in farm-out arrangement is an

arrangement under which:

(a) an entity (the transferor) transfers, or agrees to transfer, part

of the entity's interest in a

mining, quarrying or prospecting

right to another entity (the transferee); and

(b) in exchange for the transfer, the transferee provides to the

transferor one or more

exploration benefits.

Schedule 1 Tax relief for certain mining arrangements

Part 2 Farm-in farm-out arrangements

Tax and Superannuation Laws Amendment (2015 Measures No. 2) Bill

2015

No. , 2015

(2) The transferee provides an exploration benefit to the transferor if:

(a) the transferee:

(i) conducts

exploration or prospecting for

minerals, or

quarry materials, obtainable by

mining and quarrying

operations; or

(ii) undertakes to conduct exploration or prospecting for

minerals, or quarry materials, obtainable by mining and

quarrying operations; or

(iii) funds, on the transferor's behalf, expenditure that the

transferor incurs in relation to exploration or

prospecting by the transferor or another entity (other

than the transferee); or

(iv) undertakes to fund, on the transferor's behalf,

expenditure that the transferor incurs in relation to

exploration or prospecting by the transferor or another

entity (other than the transferee); and

(b) the exploration or prospecting relates to the part of the

transferor's interest in the

mining, quarrying or prospecting

right that the transferor does not transfer, or agree to transfer,

under the arrangement; and

prospecting--expenditure incurred by the transferor relating

to the exploration or prospecting is:

(i) included in the

cost of

mining, quarrying or

prospecting information

held by the transferor; or

(ii) included in any other

depreciating asset, held by the

transferor, for which the decline in value is provided

under section 40-80; or

(iii) expenditure, of a kind referred to in

subsection 40-730(1), that meets the requirements of

subsection (3) of this section; and

(d) in a case where the transferor does not conduct the

exploration or prospecting--were the transferor to conduct

the exploration or prospecting, expenditure incurred by the

transferor relating to the exploration or prospecting would:

(i) be included in the cost of mining, quarrying or

prospecting information held by the transferor; or

Tax relief for certain mining arrangements Schedule 1

Farm-in farm-out arrangements Part 2

No. , 2015

Tax and Superannuation Laws Amendment (2015 Measures No. 2) Bill

2015

(ii) be included in any other depreciating asset, held by the

transferor, for which the decline in value is provided

under section 40-80; or

(iii) be expenditure, of a kind referred to in

subsection 40-730(1), that meets the requirements of

subsection (3) of this section.

(3) Expenditure meets the requirements of this subsection if:

(a) for that expenditure, the transferor satisfies, or would satisfy,

one or more of paragraphs 40-730(1)(a) to (c); and

(b) the expenditure is not of a kind referred to in

subsection 40-730(2) or (3); and

Act provides is not deductible.

Consequences for transferors

40-1105 Treatment of certain exploration benefits received under

farm-in farm-out arrangements

If, under a

farm-in farm-out arrangement, you receive an

exploration benefit in relation to the transfer of part of your

interest in a

mining, quarrying or prospecting right, the

termination value of the part of the interest is reduced by the

market value of the exploration benefit.

40-1110 Cost of split interests resulting from farm-in farm-out

arrangements

Despite section 40-205, if:

(a) under a

farm-in farm-out arrangement, you provide a part of

your interest in a

mining, quarrying or prospecting right; and

(b) because of subsection 40-115(2), this Division applies as if

you had split your interest into the part you stopped

holding

and the rest of your interest;

then:

cost of the asset that consists of the

part you stopped holding is a reasonable proportion of the

Schedule 1 Tax relief for certain mining arrangements

Part 2 Farm-in farm-out arrangements

Tax and Superannuation Laws Amendment (2015 Measures No. 2) Bill

2015

No. , 2015

amount you are taken to have paid under section 40-185 for

any economic benefit involved in splitting your interest; and

(d) the first element of the cost of the asset that consists of the

rest of your interest is the sum of:

(i) the

adjustable value of your interest just before it was

split; and

(ii) a reasonable proportion of the amount you are taken to

have paid under section 40-185 for any economic

benefit involved in splitting your interest.

40-1115 Deductions relating to receipt of exploration benefits

(1) If:

(a) under a

farm-in farm-out arrangement, you receive an

exploration benefit in exchange for providing a part of your

interest in a

mining, quarrying or prospecting right; and

(b) because of section 40-1105, the

termination value of the

interest you provide is reduced (including reduced to nil);

you are not entitled to a deduction under a provision of this Act in

relation to your expenditure consisting of the provision of that part.

(2) If:

(a) under a

farm-in farm-out arrangement, you receive an

exploration benefit in exchange for providing a part of your

interest in a

mining, quarrying or prospecting right; and

(b) because of section 40-1105, the

termination value of the

interest you provide is reduced (including reduced to nil); and

arrangement funding on your behalf, or undertaking to fund

on your behalf, expenditure that you incur in relation to

exploration or prospecting;

your entitlement (if any) to a deduction under a provision of this

Act in relation to that expenditure is reduced to the same extent as

the extent to which the expenditure is reasonably attributable to the

exploration benefit.

40-1120 Cost base and reduced cost base of exploration benefits etc.

If:

Tax relief for certain mining arrangements Schedule 1

Farm-in farm-out arrangements Part 2

No. , 2015

Tax and Superannuation Laws Amendment (2015 Measures No. 2) Bill

2015

(a) under a

farm-in farm-out arrangement, you receive an

exploration benefit; and

(b) the benefit involves one or more undertakings of the kinds

referred to in subparagraphs 40-1100(2)(a)(ii) and (iv);

the first element of the

cost base and the

reduced cost base of the

benefit are reduced by the

market value of the undertakings.

40-1125 Effect of exploration benefits on the cost of mining,

quarrying or prospecting information

If:

(a) you

hold a

depreciating asset that is

mining, quarrying or

prospecting information; and

(b) under a

farm-in farm-out arrangement, you receive an

exploration benefit; and

included in the second element of the

cost of the asset;

do not include that amount or expenditure in the second element to

the extent (if any) that it is reasonably attributable to the

exploration benefit.

Consequences for transferees

40-1130 Consequences of certain exploration benefits provided

under farm-in farm-out arrangements

(1) If, under a

farm-in farm-out arrangement, you provide an

exploration benefit in relation to the transfer to you of part of

another entity's interest in a

mining, quarrying or prospecting

right:

(a) the first element of the

cost of the part of the interest is

reduced by the

market value of the exploration benefit; and

(b) if, for providing the exploration benefit, you receive a reward

as a result of which an amount would, apart from this

paragraph, be included in your assessable income--the entire

amount of the reward is not assessable income and is not

exempt income; and

expenditure that you incur under the arrangement if the

Schedule 1 Tax relief for certain mining arrangements

Part 2 Farm-in farm-out arrangements

Tax and Superannuation Laws Amendment (2015 Measures No. 2) Bill

2015

No. , 2015

reduction in market value under paragraph (a) took into

account your liability to incur that expenditure.

(2) A reduction under paragraph(1)(a) may be a reduction to nil.

11 Paragraph 104-35(5)(f)

Omit "the trust.", substitute "the trust; or".

12 After paragraph 104-35(5)(f)

Insert:

(g) you created the right by creating in another entity a right to

receive an

exploration benefit under a

farm-in farm-out

arrangement.

13 Section 112-97 (before table item 1)

Insert:

You receive, under a

farm-in farm-out

arrangement, an

exploration benefit or an

entitlement to an

exploration benefit

First element of cost

base and reduced cost

base

Section 40-1120

14 Section 116-25 (at the end of the cell at table item A1,

column headed "Special rules:")

Add:

If the disposal is a disposal of part of an interest in a

mining, quarrying or prospecting

right under a

farm-in farm-out arrangement: see section 116-115

15 Section 116-25 (cell at table item C2, column headed

"Special rules:")

Omit "and 116-110", substitute ", 116-110 and 116-115".

16 After section 116-110

Insert:

Tax relief for certain mining arrangements Schedule 1

Farm-in farm-out arrangements Part 2

No. , 2015

Tax and Superannuation Laws Amendment (2015 Measures No. 2) Bill

2015

116-115 Farm-in farm-out arrangements

(1) If:

(a)

CGT event A1 is the

disposal of part of your interest in a

mining, quarrying or prospecting right; and

(b) the part is disposed of under a

farm-in farm-out

arrangement; and

exploration benefit in respect of the

event happening;

in working out the

capital proceeds for the CGT event, treat as

zero the

market value of the exploration benefit.

(2) If:

(a)

CGT event C2 arises as a result of an

exploration benefit

being provided to you; and

(b) the exploration benefit is provided under a

farm-in farm-out

arrangement;

in working out the

capital proceeds for the CGT event, treat as

zero the

market value of the exploration benefit.

17 After subsection 230-460(17)

Insert:

Exploration benefits

(17A) A right or obligation that arises because of the provision of an

exploration benefit under a

farm-in farm-out arrangement is the

subject of an exception.

18 Subsection 995-1(1)

Insert:

exploration benefit has the meaning given by

subsection 40-1100(2).

farm-in farm-out arrangement has the meaning given by

subsection 40-1100(1).

Tax relief for certain mining arrangements Schedule 1

Mining, quarrying or prospecting information Part 3

No. , 2015

Tax and Superannuation Laws Amendment (2015 Measures No. 2) Bill

2015

Part 3

--Mining, quarrying or prospecting information

Income Tax Assessment Act 1997

20 Paragraph 40-80(1AB)(d)

Repeal the paragraph, substitute:

(d) if the amount relates to

mining, quarrying or prospecting

information--after the inclusion of the amount in the second

element:

(i) you satisfy paragraph (1)(e) in relation to the

information; or

(ii) you would satisfy that paragraph, in relation to the

economic benefit that resulted in the inclusion of the

amount in the second element, if that economic benefit

were the asset referred to in that paragraph.

21 Application of amendment

The amendment made by this Part applies to any mining, quarrying or

prospecting information to which item 16 of Schedule 1 to the Tax and

Superannuation Laws Amendment (2014 Measures No. 3) Act 2014

applies.

Schedule 2 In-house software

Tax and Superannuation Laws Amendment (2015 Measures No. 2) Bill

2015

No. , 2015

Schedule 2

--In-house software

Income Tax Assessment Act 1997

1 Subsection 40-95(7) (cell at table item 8, column headed

"The effective life is:")

Repeal the cell, substitute:

5 years

2 Section 40-455 (table)

Repeal the table, substitute:

Deductions allowed for software development pool

Column 1

Column 2

Item

Income year

Amount of expenditure you can deduct for that year

Year 1

Nil

Year 2

30%

Year 3

30%

Year 4

30%

Year 5

10%

3 Application of amendments

(1)

The amendment made by item 1 applies to in-house software if its start

time occurs on or after 1 July 2015.

(2)

The amendment made by item 2 applies to expenditure incurred in an

income year starting on or after 1 July 2015.

Instalment trusts Schedule 3

No. , 2015

Tax and Superannuation Laws Amendment (2015 Measures No. 2) Bill

2015

Schedule 3

--Instalment trusts

Income Tax Assessment Act 1997

1 After Division 230

Insert:

Division 235--Particular financial transactions

Table of Subdivisions

Guide to Division 235

235-I

Instalment trusts

Guide to Division 235

235-1 What this Division is about

This Division is about the tax treatment of particular kinds of

financial transactions.

Subdivision 235-I--Instalment trusts

Guide to Subdivision 235-I

235-805 What this Subdivision is about

An entity that invests in an asset through an instalment warrant,

instalment receipt, or other similar arrangement, is treated for most

income tax purposes as if it had invested in the asset directly.

A regulated superannuation fund that invests in an asset through a

limited recourse borrowing is treated in the same way.

Table of sections

Schedule 3 Instalment trusts

Tax and Superannuation Laws Amendment (2015 Measures No. 2) Bill

2015

No. , 2015

Operative provisions

235-810 Object of this Subdivision

235-815 Application of Subdivision

235-820 Look-through treatment for instalment trusts

235-825 Meaning of instalment trust and instalment trust asset

235-830 What trusts are covered--instalment trust arrangements

235-835 Requirement for underlying investments to be listed or widely held

235-840 What trusts are covered--limited recourse borrowings by regulated

superannuation funds

235-845 Interactions with other provisions

Operative provisions

235-810 Object of this Subdivision

The object of this Subdivision is to ensure that, for most income

tax purposes, the consequences of ownership of an

instalment

trust asset flow to the entity that has the beneficial interest in the

asset, instead of to the trustee.

235-815 Application of Subdivision

(1) This Subdivision applies to:

(a) the entity that has the beneficial interest in an

instalment

trust asset as the beneficiary of an

instalment trust; and

(b) the trustee of the instalment trust.

(2) This Subdivision applies for the purposes of this Act, apart from:

(a) Part VA of the Income Tax Assessment Act 1936 (which is

about tax file numbers); and

(b) Subdivisions 12-E, 12-F and 12-H in Schedule 1 to the

Taxation Administration Act 1953 (which are about PAYG

withholding).

Joint investments

(3) This Subdivision applies in relation to 2 or more entities that hold

an interest in a trust as joint tenants, or as tenants in common, in

the same way it applies in relation to a single entity that holds such

an interest.

Instalment trusts Schedule 3

No. , 2015

Tax and Superannuation Laws Amendment (2015 Measures No. 2) Bill

2015

Note:

Each investor that is treated by this Subdivision as jointly owning an

instalment trust asset is treated for CGT purposes as owning a separate

asset: see section 108-7.

235-820 Look-through treatment for instalment trusts

(1) If an entity (the investor) has a beneficial interest in an

instalment

trust asset under an

instalment trust, the asset is treated as being

the investor's asset (instead of being an asset of the trust).

Example: A dividend in respect of the asset is paid to the trustee. It is treated

(but not for the purposes of the PAYG withholding provisions

mentioned in paragraph 235-815(2)(b)) as if it had been paid directly

to the investor.

(2) An act done in relation to an

instalment trust asset of an

instalment trust by the trustee of the trust is treated as if the act

had been done by the investor (instead of by the trustee).

Example: A trustee disposes of the asset. Any capital gain or loss is made by the

investor, not by the trustee.

(3) The investor is treated as having the

instalment trust asset in the

same circumstances as the investor actually has the interest in the

instalment trust.

(4) Without limiting subsection (3), the circumstances include:

(a) whether the interest is held on capital account or on revenue

account; and

(b) whether the interest is held as a joint tenant or tenant in

common.

(5) Any consequence arising under the

GST Act for the trustee of the

instalment trust, as a result of anything done in relation to the

instalment trust asset, is treated as if it had arisen for the investor

(instead of for the trustee), even if that consequence would not

have arisen had the thing been done by or to the investor.

Example: If the trustee has a net input tax credit under the GST Act, the investor

must apply the credit to reduce the investor's cost base for the

instalment trust asset (even if the investor is not registered or required

to be registered for GST purposes): see section 103-30.

Schedule 3 Instalment trusts

Tax and Superannuation Laws Amendment (2015 Measures No. 2) Bill

2015

No. , 2015

235-825 Meaning of instalment trust and instalment trust asset

(1) A trust is an instalment trust if:

(a) the trust is covered by section 235-830 (about instalment trust

arrangements) and satisfies the requirements in

section 235-835 (about requirements for underlying

investments to be listed or widely held); or

(b) the trust is covered by section 235-840 (about limited

recourse borrowings by

regulated superannuation funds).

(2) An instalment trust asset is an asset that is, or is part of, the

underlying investment of an

instalment trust (as mentioned in

section 235-830 or 235-840, as the case requires).

235-830 What trusts are covered--instalment trust arrangements

(1) This section covers a trust if, under an

arrangement:

(a) an entity (the investor) makes a

borrowing, or is provided

with credit; and

(b) to secure the borrowing or provision of credit, the trustee of

the trust acquires an asset or assets (the underlying

investment); and

investment as the sole beneficiary of the trust; and

(d) for a provision of credit--the credit was provided to the

investor to acquire the asset, or one of the assets, that

comprises the underlying investment; and

(e) the investor is entitled to the benefit of all income from the

underlying investment; and

(f) the investor is entitled to acquire legal ownership of the

underlying investment on discharging its obligations relating

to the borrowing or provision of credit.

Note:

For paragraph (c), the sole beneficiary of the trust may be 2 or more

entities that have an interest in the trust as joint tenants or tenants in

common: see subsection 235-815(3).

(2) However, this section does not cover a trust if the investor is a

trustee of a

regulated superannuation fund and the

arrangement

includes a

borrowing.

Instalment trusts Schedule 3

No. , 2015

Tax and Superannuation Laws Amendment (2015 Measures No. 2) Bill

2015

(3) This section does not cover a trust if the underlying investment is

subject to any charge, security or other encumbrance (apart from

any charge securing the obligations relating to the

borrowing or

provision of credit).

235-835 Requirement for underlying investments to be listed or

widely held

(1) A trust satisfies the requirements in this section if:

(a) each asset that is, or is part of, the underlying investment is:

(i) a

share, a unit in a unit trust or a stapled security; or

(ii) an interest in an entity that holds an interest in a share, a

unit in a unit trust or a stapled security either directly, or

indirectly through one or more interposed entities; and

(b) each such share, unit or stapled security:

(i) is listed for quotation in the official list of an

approved

stock exchange; or

(ii) meets the widely held requirement set out in the

applicable item of the following table.

Widely held requirements

Item

Column 1

Type of asset

Column 2

Widely held requirement

share in a

company

The company is a

widely held company

A unit in a unit

trust

The unit trust is a widely held unit trust as defined in

section 272-105 in Schedule 2F to the Income Tax

Assessment Act 1936

A stapled security

All companies involved are

widely held companies

and all trusts involved are such widely held unit trusts

(2) A

share, unit in a unit trust or a stapled security that fails the

widely held requirement set out in the table in subsection (1) is

treated as satisfying that requirement if the failure:

(a) is of a temporary nature only; and

(b) is caused by circumstances outside the investor's control.

Schedule 3 Instalment trusts

Tax and Superannuation Laws Amendment (2015 Measures No. 2) Bill

2015

No. , 2015

(3) In applying subsection (1), disregard an asset, or the cash proceeds

from disposing of an asset, if:

(a) the trustee became entitled to the asset in respect of a

share,

unit or stapled security that was, or was part of, the

underlying investment just before the entitlement arose; and

(b) the asset is not a

share, unit in a unit trust, or stapled

security; and

similar interest that gives the holder an entitlement to acquire

an interest in an entity:

(i) an interest in the entity is listed for quotation in the

official list of an

approved stock exchange; or

(ii) the entity meets a widely held requirement set out in

column 2 of item 1 or 2 of the table in subsection (1);

and

(d) the underlying investment comprises one or more other assets

that are not disregarded under this subsection.

Example: Examples of the types of assets disregarded by this subsection are:

(a) assets that represent distributions and capital payments in respect

of the underlying investment; and

(b) bonus rights issued in respect of the underlying investment.

(4) Despite subsections (1) to (3), the underlying investment does not

satisfy the requirement in this section if an asset that is, or is part

of, the underlying investment is an

ESS interest to which

Subdivision 83A-B or 83A-C (about employee share schemes)

applies.

235-840 What trusts are covered--limited recourse borrowings by

regulated superannuation funds

This section covers a trust if:

(a) under an

arrangement, an asset or assets (the underlying

investment) is acquired by the trustee of the trust for the

benefit of a trustee of a

regulated superannuation fund to

secure a

borrowing; and

(b) until the borrowing is repaid, the arrangement is covered by:

Instalment trusts Schedule 3

No. , 2015

Tax and Superannuation Laws Amendment (2015 Measures No. 2) Bill

2015

(i) the exception in subsection 67A(1) of the

Superannuation Industry (Supervision) Act 1993 (which

is about limited recourse borrowing arrangements); or

(ii) the exception in former subsection 67(4A) of that Act

(which was about instalment warrants).

235-845 Interactions with other provisions

(1) Section 106-50 (about absolutely entitled beneficiaries) does not

apply to an

instalment trust asset.

(2) Section 106-60 (about securities, charges and encumbrances) does

not apply to an

instalment trust asset.

(3) Nothing in this Subdivision limits Division 247 (which is about

capital protected borrowings).

Note:

Division 247 may apply to an arrangement to which this Subdivision

applies.

2 Subsections 290-60(4) and 290-230(4)

Omit "regulated superannuation fund (within the meaning of that Act)",

substitute "

regulated superannuation fund".

3 Section 295-175

Omit "regulated superannuation fund (within the meaning of that Act)",

substitute "

regulated superannuation fund".

4 Subsection 995-1(1) (definition of complying

superannuation plan)

Repeal the definition, substitute:

complying superannuation plan means:

(a) a

complying superannuation fund; or

(b) a

public sector superannuation scheme that is:

(i) a

regulated superannuation fund; or

(ii) an exempt public sector superannuation scheme (within

the meaning of section 10 of the Superannuation

Industry (Supervision) Act 1993); or

complying approved deposit fund; or

Schedule 3 Instalment trusts

Tax and Superannuation Laws Amendment (2015 Measures No. 2) Bill

2015

No. , 2015

(d) an

RSA.

5 Subsection 995-1(1)

Insert:

instalment trust has the meaning given by section 235-825.

instalment trust asset has the meaning given by section 235-825.

regulated superannuation fund has the same meaning as in the

Superannuation Industry (Supervision) Act 1993.

Income Tax (Transitional Provisions) Act 1997

6 Before Division 242

Insert:

Division 235--Particular financial transactions

Table of Subdivisions

235-I

Instalment trusts

Subdivision 235-I--Instalment trusts

Table of sections

235-810 Application of Subdivision 235-I of the Income Tax Assessment Act 1997

235-810 Application of Subdivision 235-I of the Income Tax

Assessment Act 1997

Subdivision 235-I of the Income Tax Assessment Act 1997 applies

to assets acquired by the trustee of an instalment trust in:

(a) the 2007-08 income year; or

(b) a later income year.

Instalment trusts Schedule 3

No. , 2015

Tax and Superannuation Laws Amendment (2015 Measures No. 2) Bill

2015

Taxation Administration Act 1953

7 Subsection 355-65(3) in Schedule 1 (table item 10, column

hea

ded "The record is made for or the disclosure is to

...", paragraphs (a) and (b))

Repeal the paragraphs, substitute:

(a) a

regulated superannuation fund; or

(b) a public sector superannuation scheme (within the meaning of the Superannuation

Industry (Supervision) Act 1993); or

Schedule 4 Company losses

Part 1 Changes in company ownership

Tax and Superannuation Laws Amendment (2015 Measures No. 2) Bill

2015

No. , 2015

Schedule 4

--Company losses

Part 1

--Changes in company ownership

Division 1

--Main amendments

Income Tax Assessment Act 1997

1 After Division 166

Insert:

Division 167--Companies whose shares carry unequal

rights to dividends, capital distributions or voting

power

Table of Subdivisions

Guide to Division 167

167-A Rights to dividends or capital distributions

167-B Voting power

Guide to Division 167

167-1 What this Division is about

This Division modifies the way conditions relating to this Part

apply to companies whose shares:

(a)

do not all carry the same rights to dividends or capital

distributions; or

(b)

do not all carry the same voting rights, or do not carry

all of the voting rights in the company.

Company losses Schedule 4

Changes in company ownership Part 1

No. , 2015

Tax and Superannuation Laws Amendment (2015 Measures No. 2) Bill

2015

Subdivision 167-A--Rights to dividends or capital distributions

Guide to Subdivision 167-A

167-5 What this Subdivision is about

Companies whose shares do not all carry the same rights to

dividends or capital distributions may test the possession of those

rights similarly to companies whose shares are all of a single class

with the same rights.

167-7 Simplified outline of this Subdivision

If a condition of the continuity of ownership test cannot be worked

out for a company:

(a)

because of its unequal share structure; or

(b)

because of a holding company's unequal share structure;

an entity can choose to reconsider that condition in up to 3 ways.

The first way involves disregarding debt interests.

The second way involves disregarding debt interests and secondary

share classes.

The third way involves disregarding those shares, and treating the

remaining shares as carrying certain percentages of the rights to

receive dividends and capital distributions.

The second way can only be tried after the first way, while the

third way can only be tried after the second way.

Table of sections

Operative provisions

167-10

When this Subdivision applies

167-15

First way--disregard debt interests

167-20

Second way--also disregard secondary share classes

Schedule 4 Company losses

Part 1 Changes in company ownership

Tax and Superannuation Laws Amendment (2015 Measures No. 2) Bill

2015

No. , 2015

167-25

Third way--treat remaining shares as having fixed rights to dividends and

capital distributions

167-30

Fixing rights if practicable to work out market values

167-35

Fixing rights if impracticable to work out market values etc.

167-40

The valuing times for conditions listed in subsection 167-10(1)

Operative provisions

167-10 When this Subdivision applies

When this Subdivision applies

(1) This Subdivision applies in relation to a company if:

(a) as described in the following table, a condition (the

unsatisfied condition) cannot be worked out for the company

for a particular period (the test period); and

(b) at one or more times during the test period:

(i) the company; or

(ii) a company that has a

shareholding interest in it;

(an unequally structured company) has an

unequal share

structure.

Conditions that can be reconsidered under this Subdivision

Item

Column 1

Each of the following provisions

contains a condition:

Column 2

that cannot be worked out for:

(a) subsection 165-12(3) or (4);

(b) paragraph 165-37(1)(b) or (c);

(d) paragraph 175-10(3)(b) or (c),

175-45(3)(b) or (c) or 175-85(3)(b)

or (c);

(e) subparagraph (b)(ii) or (iii) of the

definition of eligible Division 166

company in subsection 995-1(1)

a period that is all or part of the

period to which that provision

relates

Note:

Each of these conditions is about rights to the company's dividends or

capital distributions.

(2) This Subdivision also applies in relation to a company if:

Company losses Schedule 4

Changes in company ownership Part 1

No. , 2015

Tax and Superannuation Laws Amendment (2015 Measures No. 2) Bill

2015

(a) as described in the following table, a condition (the

unsatisfied condition) cannot be worked out for the company

for a particular time (the test time); and

(b) at the test time, the company, or a company that has a

shareholding interest in it, (an unequally structured

company) has an

unequal share structure.

Conditions that can be reconsidered under this Subdivision

Item

Column 1

Each of the following provisions

contains a condition:

Column 2

that cannot be worked out for:

(a) paragraph 165-115C(1)(b) or (c) or

165-115L(1)(b) or (c);

(b) subparagraph 165-115X(1)(b)(ii) or

(iii);

(d) subsection 166-145(3) or (4);

(e) subparagraph 166-175(1)(e)(ii) or

(iii);

(f) paragraph 166-225(1)(b) or (c);

(g) subparagraph 166-230(1)(a)(ii) or

(iii);

(h) paragraph 166-240(1)(b) or (c);

(i) subparagraph 166-255(1)(e)(ii) or (iii)

or 166-260(1)(e)(ii) or (iii);

(j) paragraph 166-260(3)(b) or (c) or

166-270(2)(c);

(k) paragraph 170-260(3)(b) or (c) or

170-265(2)(b) or (c)

a time that is the time, or one of

the times, to which that

provision relates

Note 1:

Each of these conditions is about rights to the company's dividends or

capital distributions.

Note 2:

If a condition cannot be worked out for several of the times to which

the provision relates, apply this Subdivision separately for each of

those times.

Meaning of unequal share structure

(3) A company has an unequal share structure at a particular time if,

at that time:

Schedule 4 Company losses

Part 1 Changes in company ownership

Tax and Superannuation Laws Amendment (2015 Measures No. 2) Bill

2015

No. , 2015

(a) the company's

shares do not all carry the same rights to

dividends, or capital distributions, of the company; or

(b) some or all of the company's shares carry discretionary rights

to dividends, or capital distributions, of the company; or

co-operative company that has

on issue

one or more interests (other than shares) in the company's

capital.

167-15 First way--disregard debt interests

(1) The unsatisfied condition may be reconsidered by disregarding any

debt interests in each unequally structured company.

(2) The way an entity prepares its

income tax return is sufficient

evidence of it choosing to work out the unsatisfied condition under

subsection (1).

167-20 Second way--also disregard secondary share classes

(1) This section applies in relation to each unequally structured

company if:

(a) despite section 167-15, the unsatisfied condition cannot be

worked out; and

(b) on the last day of the test period or at the test time (as

appropriate), there is

on issue in that company one or more

classes of

shares (the secondary share classes) other than:

(i) the class or classes of ordinary or common shares that

represent the majority of that company's value; and

(ii)

debt interests; and

market value of the

secondary share classes does not exceed 25% of the total

market value of all of that company's shares (other than debt

interests); and

(d) for one or more of the secondary share classes, it is

reasonable to conclude that the market value of each of them

does not exceed 10% of the total market value of all of that

company's shares (other than debt interests).

Note:

This section can apply separately for each unequally structured

company.

Company losses Schedule 4

Changes in company ownership Part 1

No. , 2015

Tax and Superannuation Laws Amendment (2015 Measures No. 2) Bill

2015

(2) For the purposes of subsection (1), use

market values on the last

day of the test period, or at the test time, (as appropriate).

(3) The unsatisfied condition may be reconsidered by disregarding:

(a) those of the secondary share classes that, under

paragraph (1)(d), caused this section to apply; and

(b) any

debt interests in that company.

(4) The way an entity prepares its

income tax return is sufficient

evidence of it choosing to work out the unsatisfied condition under

subsection (3).

167-25 Third way--treat remaining shares as having fixed rights to

dividends and capital distributions

When this section applies

(1) This section applies if, despite sections 167-15 and 167-20, the

unsatisfied condition cannot be worked out for the test period or

test time (as appropriate).

How to fix rights to dividends and capital distributions

(2) The unsatisfied condition may be reconsidered by applying

subsections (3) and (4) to each unequally structured company.

When doing this for an unsatisfied condition listed in

subsection 167-10(1), assume:

(a) that the test period consists only of the valuing times worked

out under section 167-40; and

(b) that each of those valuing times is a test time.

(3) Firstly, disregard any

debt interests in that company and any of its

shares that can be disregarded under subsection 167-20(3).

(4) Secondly, treat each of that company's remaining

on issue

at the test time as having at that time the percentage of the rights to

receive

dividends, and capital distributions, worked out either:

(a) under section 167-30; or

(b) under section 167-35 if:

(i) it is not reasonably practicable to work out the market

values of each of those remaining shares; or

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(ii) the sum of the

market values of all of those remaining

shares is nil.

Note:

The remaining shares are those remaining after disregarding the shares

mentioned in subsection (3).

Evidence of a choice under this section

(5) The way an entity prepares its

income tax return is sufficient

evidence of it choosing to work out the unsatisfied condition under

this section.

167-30 Fixing rights if practicable to work out market values

Each remaining

share is treated at the test time as carrying the

following percentage of the rights to receive

dividends, and

capital distributions, from the company:

Share's market value

100

Sum of market values of all

of the remaining shares in the company

where market value is worked out at the test time.

167-35 Fixing rights if impracticable to work out market values etc.

(1) Each remaining

share is treated at the test time as carrying such a

percentage of the rights to receive

dividends, and capital

distributions, from the company as is reasonable worked out:

(a) at the test time; and

(b) having regard to the purpose of the unsatisfied condition.

(2) In working out what is reasonable for subsection (1), have regard

to the following:

(a) the company's

constitution;

(b) any agreements between the company and either or both of

the following:

(i) any or all of the shareholders in the company;

(ii) any or all of the

associates of a shareholder in the

company;

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dividends or making capital distributions;

(d) the ability of an entity to control (whether directly, or

indirectly through one or more interposed entities) how the

company pays dividends or makes capital distributions;

(e) how the company has previously paid dividends or made

capital distributions;

(f) whether all classes of

shares carry substantially the same

rights to receive dividends and capital distributions;

(g) the principle that:

(i) a

tax loss or bad debt should only be deductible; and

(ii) a

net capital loss should only be applied;

if a majority of the persons entitled to the benefits of

dividend and capital distributions of the company is

maintained.

167-40 The valuing times for conditions listed in

subsection 167-10(1)

(1) For the purposes of subsection 167-25(2), the valuing times for the

test period are:

(a) the time the test period starts; and

(b) the time just before, and the time just after, any of the

following events that happen during the test period:

(i) the issue of

shares of a class of remaining shares;

(ii) the variation of rights attached to any remaining shares

to receive

dividends or capital distributions;

(iii) the redemption or cancellation of any remaining shares;

and

(2) For paragraph (1)(b), disregard a time if it is outside the test period.

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Subdivision 167-B--Voting power

Guide to Subdivision 167-B

167-75 What this Subdivision is about

Companies whose shares:

(a)

do not all carry the same voting rights; or

(b)

do not carry all of the voting rights in the company;

may test the possession of voting rights similarly to companies

whose shares are all of a single class with the same rights.

Table of sections

Operative provisions

167-80

When this Subdivision applies

167-85

Different method for working out voting power

167-90

Dual listed companies

Operative provisions

167-80 When this Subdivision applies

(1) For the purposes of this Part, voting power in a company at one or

more times can be worked out under section 167-85 if:

(a) the company's

shares do not all, at those times, carry the

same voting rights for all matters affecting the company; or

(b) the company's shares do not carry all of the voting rights in

the company;

whether this is because of the company's

constitution, an

arrangement or some other reason.

Note:

Disregard dual listed company voting shares (see section 167-90).

(2) Further, if those times are consecutive times during a period, the

voting power in the company can be worked out under

section 167-85 as if that period consists only of:

(a) the time that period starts; and

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(b) each later time (if any) during that period when there is a

change in the maximum number of votes any entity could

cast on a poll described in paragraph 167-85(1)(a) or (b).

167-85 Different method for working out voting power

(1) An entity may choose whether voting power in the company at a

particular time is worked out solely by reference to:

(a) the maximum number of votes that could be cast on a poll on

the election of a director of the company, if such a poll were

to be held at that time; or

(b) the maximum number of votes that could be cast on a poll on

an amendment to the company's

constitution, other than an

amendment altering:

(i) the rights carried by any of the company's

shares; or

(ii) other forms of voting power in the company;

if such a poll were to be held at that time.

(2) The way the entity prepares its

income tax return is sufficient

evidence of it making a choice under subsection (1).

167-90 Dual listed companies

For the purposes of this Subdivision, disregard

shares that are

dual listed company voting shares.

Division 2

--Other amendments

Income Tax Assessment Act 1997

2 Subsection 165-12(2) (note)

Omit "Note", substitute "Note 1".

3 At the end of subsection 165-12(2)

Add:

Note 2:

Subdivision 167-B has special rules for working out voting power in a

company whose shares do not all carry the same voting rights, or do

not carry all of the voting rights in the company.

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2015

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4 Subsection 165-12(3) (note)

Omit "Note", substitute "Note 1".

5 At the end of subsection 165-12(3)

Add:

Note 2:

Subdivision 167-A has special rules for working out rights to

dividends in a company whose shares do not all carry the same rights

to dividends.

6 Subsection 165-12(4) (note)

Omit "Note", substitute "Note 1".

7 At the end of subsection 165-12(4)

Add:

Note 2:

Subdivision 167-A has special rules for working out rights to capital

distributions in a company whose shares do not all carry the same

rights to capital distributions.

8 At the end of subsection 165-37(1)

Add:

Note:

Division 167 has special rules for working out rights to voting power,

dividends and capital distributions in a company whose shares do not

all carry the same rights to those matters.

9 Subsection 165-40(1) (note)

Omit "Note", substitute "Note 1".

10 At the end of subsection 165-40(1)

Add:

Note 2:

Subdivision 167-B has special rules for working out voting power in a

company whose shares do not all carry the same voting rights, or do

not carry all of the voting rights in the company.

11 At the end of subsection 165-115C(1)

Add:

Note 5:

Division 167 has special rules for working out rights to voting power,

dividends and capital distributions in a company whose shares do not

all carry the same rights to those matters.

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12 Subsection 165-115D(1) (note)

Omit "Note", substitute "Note 1".

13 At the end of subsection 165-115D(1)

Add:

Note 2:

Subdivision 167-B has special rules for working out voting power in a

company whose shares do not all carry the same voting rights, or do

not carry all of the voting rights in the company.

14 At the end of subsection 165-115L(1)

Add:

Note 4:

Division 167 has special rules for working out rights to voting power,

dividends and capital distributions in a company whose shares do not

all carry the same rights to those matters.

15 Subsection 165-115M(1) (note)

Omit "Note", substitute "Note 1".

16 At the end of subsection 165-115M(1)

Add:

Note 2:

Subdivision 167-B has special rules for working out voting power in a

company whose shares do not all carry the same voting rights, or do

not carry all of the voting rights in the company.

17 At the end of subsection 165-115X(1)

Add:

Note:

For paragraph (b), Division 167 has special rules for working out

rights to voting power, dividends and capital distributions in a

company whose shares do not all carry the same rights to those

matters.

18 Subsection 165-115Z(1) (note)

Omit "Note", substitute "Note 1".

19 At the end of subsection 165-115Z(1)

Add:

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Note 2:

Division 167 has special rules for working out rights to voting power,

dividends and capital distributions in a company whose shares do not

all carry the same rights to those matters.

20 Subsection 165-123(2) (note)

Repeal the note, substitute:

Note 1:

See section 165-150 to work out who had more than 50% of the

voting power.

Note 2:

Subdivision 167-B has special rules for working out voting power in a

company whose shares do not all carry the same voting rights, or do

not carry all of the voting rights in the company.

21 Subsection 165-123(3) (note)

Repeal the note, substitute:

Note 1:

See section 165-155 to work out who had rights to more than 50% of

the company's dividends.

Note 2:

Subdivision 167-A has special rules for working out rights to

dividends in a company whose shares do not all carry the same rights

to dividends.

22 Subsection 165-123(4) (note)

Omit "Note", substitute "Note 1".

23 At the end of subsection 165-123(4)

Add:

Note 2:

Subdivision 167-A has special rules for working out rights to capital

distributions in a company whose shares do not all carry the same

rights to capital distributions.

24 Subsection 165-129(1) (note)

Omit "Note", substitute "Note 1".

25 At the end of subsection 165-129(1)

Add:

Note 2:

Subdivision 167-B has special rules for working out voting power in a

company whose shares do not all carry the same voting rights, or do

not carry all of the voting rights in the company.

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26 Subsection 166-145(2) (note)

Repeal the note, substitute:

Note 1:

To work out who had more than 50% of the voting power, see

section 165-150.

Note 2:

Subdivision 167-B has special rules for working out voting power in a

company whose shares do not all carry the same voting rights, or do

not carry all of the voting rights in the company.

27 Subsection 166-145(3) (note)

Repeal the note, substitute:

Note 1:

To work out who had rights to more than 50% of the company's

dividends, see section 165-155.

Note 2:

Subdivision 167-A has special rules for working out rights to

dividends in a company whose shares do not all carry the same rights

to dividends.

28 Subsection 166-145(4) (note)

Omit "Note", substitute "Note 1".

29 At the end of subsection 166-145(4)

Add:

Note 2:

Subdivision 167-A has special rules for working out rights to capital

distributions in a company whose shares do not all carry the same

rights to capital distributions.

30 At the end of subsection 166-175(1)

Add:

Note:

For paragraph (e), Division 167 has special rules for working out

rights to voting power, dividends and capital distributions in a

company whose shares do not all carry the same rights to those

matters.

31 Subsection 166-225(1) (note)

Omit "Note", substitute "Note 1".

32 At the end of subsection 166-225(1)

Add:

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Note 2:

Division 167 has special rules for working out rights to voting power,

dividends and capital distributions in a company whose shares do not

all carry the same rights to those matters.

33 At the end of subsection 166-230(1)

Add:

Note 3:

For paragraph (a), Division 167 has special rules for working out

rights to voting power, dividends and capital distributions in a

company whose shares do not all carry the same rights to those

matters.

34 At the end of subsection 166-235(2)

Add:

Note:

For working out the size of a voting stake (for example, for

paragraph 166-225(1)(a)), Subdivision 167-B has special rules for

working out voting power in a company whose shares do not all carry

the same voting rights, or do not carry all of the voting rights in the

company.

35 At the end of subsection 166-235(4)

Add:

Note:

For working out the size of a dividend stake (for example, for

paragraph 166-225(1)(b)), Subdivision 167-A has special rules for a

company whose shares do not all carry the same rights to dividends.

36 At the end of subsection 166-235(6)

Add:

Note:

For working out the size of a capital stake (for example, for

paragraph 166-225(1)(c)), Subdivision 167-A has special rules for a

company whose shares do not all carry the same rights to capital

distributions.

37 Subsection 166-240(1) (note)

Omit "Note", substitute "Note 1".

38 At the end of subsection 166-240(1)

Add:

Note 2:

Division 167 has special rules for working out rights to voting power,

dividends and capital distributions in a company whose shares do not

all carry the same rights to those matters.

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39 At the end of subsection 166-255(1)

Add:

Note 3:

For paragraph (e), Division 167 has special rules for working out

rights to voting power, dividends and capital distributions in a

company whose shares do not all carry the same rights to those

matters.

40 At the end of subsection 166-260(1)

Add:

Note 3:

For paragraph (e), Division 167 has special rules for working out

rights to voting power, dividends and capital distributions in a

company whose shares do not all carry the same rights to those

matters.

41 At the end of subsection 166-260(3)

Add:

Note:

Division 167 has special rules for working out rights to voting power,

dividends and capital distributions in a company whose shares do not

all carry the same rights to those matters.

42 At the end of subsection 170-260(3)

Add:

Note:

Division 167 has special rules for working out rights to voting power,

dividends and capital distributions in a company whose shares do not

all carry the same rights to those matters.

43 At the end of subsection 170-265(2)

Add:

Note:

Division 167 has special rules for working out rights to voting power,

dividends and capital distributions in a company whose shares do not

all carry the same rights to those matters.

44 Subsection 175-10(3) (note)

Repeal the note, substitute:

Note 1:

See section 165-12 (which is about the company maintaining the same

owners).

Note 2:

Division 167 has special rules for working out rights to voting power,

dividends and capital distributions in a company whose shares do not

all carry the same rights to those matters.

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45 Subsection 175-45(3) (note)

Repeal the note, substitute:

Note 1:

See section 165-12 (which is about the company maintaining the same

owners).

Note 2:

Division 167 has special rules for working out rights to voting power,

dividends and capital distributions in a company whose shares do not

all carry the same rights to those matters.

46 Subsection 175-85(3) (note)

Repeal the note, substitute:

Note 1:

See section 165-123 (about the company maintaining the same

owners).

Note 2:

Division 167 has special rules for working out rights to voting power,

dividends and capital distributions in a company whose shares do not

all carry the same rights to those matters.

47 Subsection 707-205(1)

Omit "Divisions 165 and 166", substitute "Divisions 165, 166 and 167".

48 Subsection 707-205(2)

Omit "Division 166", substitute "Divisions 166 and 167".

49 Subsection 974-10(1) (note)

Omit "Note", substitute "Note 1".

50 At the end of subsection 974-10(1)

Add:

Note 2:

Subdivision 167-A has special rules for working out rights to

dividends and capital distributions in a company whose shares do not

all carry the same rights to those matters. Those rules include

disregarding debt interests.

51 Subsection 995-1(1) (at the end of the definition of eligible

Division 166 company)

Add:

Note:

For subparagraphs (b)(i), (ii) and (iii), Division 167 has special rules

for working out rights to voting power, dividends and capital

distributions in a company whose shares do not all carry the same

rights to those matters.

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52 Subsection 995-1(1)

Insert:

unequal share structure has the meaning given by

subsection 167-10(3).

Income Tax (Transitional Provisions) Act 1997

53 After Division 166

Insert:

Division 167--Companies whose shares carry unequal

rights to dividends, capital distributions or voting

power

Table of sections

167-1

Application of provisions

167-1 Application of provisions

(1) Division 167 of the Income Tax Assessment Act 1997 applies:

(a) to any tax loss that is incurred in an income year

commencing on or after 1 July 2002; and

(b) to any net capital loss that is made in an income year

commencing on or after 1 July 2002; and

income year commencing on or after 1 July 2002; and

(d) in determining whether any changeover time or alteration

time occurred on or after 1 July 2002.

(2) Division 167 of the Income Tax Assessment Act 1997 also applies:

(a) to any tax loss of a company:

(i) that is incurred in an income year commencing on or

before 30 June 2002; and

(ii) that could have been deducted, in accordance with

Divisions 165 and 166 of that Act as in force at that

time, in the first income year commencing after 30 June

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2002 if the deduction had not been limited by the

company's income for that income year; and

(b) to any net capital loss of a company:

(i) that is made in an income year commencing on or

before 30 June 2002; and

(ii) that could have been applied, in accordance with

Divisions 165 and 166 of that Act as in force at that

time, in the first income year commencing after 30 June

2002 if the application of the loss had not been limited

by the company's capital gains for that income year.

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Income Tax Assessment Act 1997

54 Section 165-212E

Repeal the section, substitute:

165-212E Entry history rule does not apply for the purposes of

section 165-210

For the purposes of section 165-210, section 701-5 (the entry

history rule) does not operate in relation to an entity becoming a

subsidiary member of a

consolidated group or a

MEC group.

55 Application of amendments

The amendment made by this Part applies on and after 1 July 2002.

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Part 3

--Shares held by certain entities

Income Tax Assessment Act 1997

56 At the end of subsection 165-202(1)

Add:

; (h) a

complying superannuation fund;

(i) a superannuation fund that is established in a foreign country

and is regulated under a

foreign law;

(j) a

complying approved deposit fund;

(k) a

special company;

(l) a

managed investment scheme.

57 Application of amendments

The amendment made by item 56 applies in relation to:

(a) deducting a tax loss in the 2011-12 income year or a later

income year; or

(b) applying a net capital loss in the 2011-12 income year or a

later income year; or

income year or a later income year; or

(d) determining whether any changeover time or alteration time

occurred during the 2011-12 income year or a later income

year.

58 Transitional

--FHSA trusts

(1)

An FHSA trust (within the meaning of the Income Tax Assessment Act

1997 on 1 January 2015) is taken to be one of the kinds of entities listed

in the paragraphs of subsection 165-202(1) of that Act.

(2)

Subitem (1) applies in relation to:

(a) deducting a tax loss in an applicable income year; or

(b) applying a net capital loss in an applicable income year; or

income year; or

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