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This is a Bill, not an Act. For current law, see the Acts databases.
1996-97-98
The Parliament of
the
Commonwealth of
Australia
HOUSE OF
REPRESENTATIVES
Presented and read a first
time
Taxation Laws
Amendment (Company Law Review) Bill 1998
No.
, 1998
(Treasury)
A
Bill for an Act to amend the law relating to taxation, and for related
purposes
9805820—1.147/7.4.1998—(58/98)
Cat. No. 97 2948 8 ISBN 0644 519916
Contents
Income Tax Assessment Act
1936 0644519916.html
Income Tax Assessment Act
1936 0644519916.html
Income Tax Assessment Act
1936 0644519916.html
Income Tax Assessment Act
1936 0644519916.html
Income Tax Assessment Act
1936 0644519916.html
Part 1—Bonus shares 0644519916.html
Part 2—Definitional
changes 0644519916.html
A Bill for an Act to amend the law relating to taxation,
and for related purposes
The Parliament of Australia enacts:
This Act may be cited as the Taxation Laws Amendment (Company Law
Review) Act 1998.
(1) Subject to this section, this Act commences on a day to be fixed by
Proclamation.
(2) Items 23, 54, 55 and 56 of Schedule 5 commence immediately after the
later of:
(a) the commencement of section 1 of this Act; and
(b) the commencement of section 1 of the Taxation Laws Amendment Act
(No. 7) 1997.
(3) Schedule 6 commences immediately after the later of:
(a) the commencement of section 1 of this Act; and
(b) the commencement of section 1 of the Tax Law Improvement Act (No.
1) 1998.
Subject to section 2, each Act 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Act is amended or repealed as set out in the applicable items in the Schedule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.
Income
Tax Assessment Act 1936
Insert:
Application of section
(1) This section applies in respect of a company that, whether in the same
year of income or in different years of income, streams the provision of shares
(other than shares to which subsection 6BA(5) applies) and the payment of
minimally franked dividends to its shareholders in such a way that:
(a) the shares are received by some shareholders but not all shareholders;
and
(b) some or all of the shareholders who do not receive the shares receive
or will receive minimally franked dividends.
(2) The value of the share at the time that the shareholder is provided
with the share is taken, for the purposes of this Act, to be an unfranked
dividend that is paid by the company, out of profits of the company, to the
shareholder at that time. No entitlement to a rebate arises under section 46 or
46A in respect of the dividend.
(3) A dividend is minimally franked if it is not franked, or
is franked to less than 10%, in accordance with section 160AQF or
160AQFA.
Expressions to have same meanings as in Part IIIAA
(4) Expressions used in this section that are defined in Part IIIAA have
the same meanings as in that Part.
Application of section
(1) This section applies in respect of a company that, whether in the same
year of income or in different years of income, streams the provision of capital
benefits and the payment of dividends to its shareholders in such a way
that:
(a) the capital benefits are, or apart from this section would be,
received by shareholders (the advantaged shareholders) who would,
in the year of income in which the capital benefits are provided, derive a
greater benefit from the capital benefits than other shareholders; and
(b) it is reasonable to assume that the other shareholders (the
disadvantaged shareholders) have received, or will receive,
dividends.
However, it does not apply if section 45 applies in relation to the
streaming or in the circumstances set out in subsection (5).
Commissioner to determine that section 45C applies
(2) The Commissioner may make, in writing, a determination that section
45C applies in relation to the whole, or a part, of the capital benefits. A
determination does not form part of an assessment.
Note: Subsection (6) limits the determination to a part of
the capital benefit in certain cases.
Meaning of provision of capital benefit
(3) A reference to the provision of a capital benefit to a
shareholder in a company is a reference to any of the following:
(a) the provision to the shareholder of shares in the company;
(b) the distribution to the shareholder of share capital;
(c) something that is done in relation to a share that has the effect of
increasing the value of a share (which may or may not be the same share) held by
the shareholder.
Meaning of greater benefit from capital benefits
(4) The circumstances in which a shareholder would, in a year of income,
derive a greater benefit from capital benefits than another
shareholder include, but are not limited to, any of the following circumstances
existing in relation to the first shareholder and not in relation to the other
shareholder:
(a) some or all of the shares in the company held by the shareholder were
acquired, or are taken to have been acquired, before 20 September
1985;
(b) the shareholder is a non-resident;
(c) the cost base (for the purposes of Part IIIA) of the relevant share is
not substantially less than the value of the applicable capital
benefit;
(d) the shareholder has a net capital loss for the year of income in which
this capital benefit is provided;
(e) the shareholder is a private company who would not be entitled to a
rebate under section 46F if the shareholder had received the dividend that was
paid to the disadvantaged shareholder;
(f) the shareholder has income tax losses.
Certain capital benefits not covered
(5) This section does not apply where the capital benefit provided to the
advantaged shareholders is the provision of shares and it is reasonable to
assume that the disadvantaged shareholders have received, or will receive, fully
franked dividends.
Determination limited in certain cases
(6) If the capital benefit provided to the advantaged shareholders is the
provision of shares and it is reasonable to assume that the disadvantaged
shareholders have received, or will receive, partly franked dividends, the
Commissioner may only make a determination under subsection (2) in relation to
so much of the capital benefit as the Commissioner considers relates to the
unfranked part of the dividend.
Purpose of section
(1) The purpose of this section is to ensure that certain payments that
are paid in substitution for dividends are treated as dividends for taxation
purposes.
Application of section
(2) This section applies if:
(a) there is a scheme under which a person is provided with a capital
benefit by a company; and
(b) under the scheme, a taxpayer (the relevant taxpayer),
who may or may not be the person provided with the capital benefit, obtains a
tax benefit; and
(c) having regard to the relevant circumstances of the scheme, it would be
concluded that the person, or one of the persons, who entered into or carried
out the scheme or any part of the scheme did so for a purpose (whether or not
the dominant purpose but not including an incidental purpose) of enabling a
taxpayer (the relevant taxpayer) to obtain a tax
benefit.
Commissioner to determine that section 45C applies
(3) The Commissioner may make, in writing, a determination that section
45C applies in relation to the whole, or a part, of the capital benefit. A
determination does not form part of an assessment.
Meaning of provided with a capital benefit
(4) A reference to a person being provided with a capital
benefit is a reference to any of the following:
(a) the provision of shares in a company to the person;
(b) the distribution to the person of share capital;
(c) something that is done in relation to a share that has the effect of
increasing the value of a share (which may or may not be the same share) that is
held by the person.
Meaning of relevant circumstances of scheme
(5) The relevant circumstances of a scheme are:
(a) the extent to which the capital benefit is attributable to profits of
the company or of an associate (within the meaning in section 318) of the
company;
(b) the pattern of distributions of dividends, bonus shares and returns of
capital by the company;
(c) whether the relevant taxpayer has capital losses that, apart from the
scheme, would be carried forward to a later year of income;
(d) whether some or all of the shares in the company held by the relevant
taxpayer were acquired, or are taken to have been acquired, by the relevant
taxpayer before 20 September 1985;
(e) whether the relevant taxpayer is a non-resident;
(f) whether the cost base (for the purposes of Part IIIA) of the relevant
share is not substantially less than the value of the applicable capital
benefit;
(g) whether the relevant taxpayer is a private company who would not have
been entitled to a rebate under section 46F if the taxpayer had been paid an
equivalent dividend instead of the capital benefit;
(h) if the scheme involves the distribution of share capital—whether
the interest held by the relevant taxpayer after the distribution is the same as
the interest would have been if an equivalent dividend had been paid instead of
the distribution of share capital;
(i) if the scheme involves the provision of shares and the later disposal
of those shares or an interest in those shares—the matters set out in
subsection (6);
(j) if the scheme involves an increase in the value of a share and the
later disposal of that share or an interest in that share—the matters set
out in subsection (6);
(k) any of the matters referred to in subparagraphs 177D(b)(i) to
(viii).
(6) The matters are:
(a) the period for which the shares, or the interests in the shares, are
held by the shareholder or the holder of the interest; and
(b) when the arrangement for the disposal of the shares, or interests in
the shares, was entered into; and
(c) whether, and when, any arrangement (for example, an option or other
derivative) affecting the incidence of the risks of loss and opportunities for
profit or gain from holding the shares or interests in the shares was entered
into; and
(d) if there is such an arrangement, the extent to which the risks or
opportunities were borne by or accrued to the shareholder or holder of the
interest, and the extent to which they were borne by or accrued to any other
person, while the shareholder or holder of the interest held the shares or
interests in the shares; and
(e) whether there was any change in those risks and opportunities for the
shareholder or holder of the interest or any other person.
Meaning of obtaining a tax benefit
(7) A relevant taxpayer obtains a tax benefit if an amount
of tax payable, or any other amount payable under this Act, by the relevant
taxpayer would, apart from this section, be less than the amount that would have
been payable, or would be payable at a later time than it would have been
payable, if the capital benefit had been a dividend.
Expressions to have same meanings as in Part IIIAA
(8) Expressions used in this section that are defined in Part IIIAA have
the same meanings as in that Part.
(1) If the Commissioner makes a determination under subsection 45A(2) or
45B(3), the amount of the capital benefit, or the part of the benefit, is taken,
for the purposes of this Act, to be an unfranked dividend that is paid by the
company to the shareholder or relevant taxpayer at the time that the shareholder
or relevant taxpayer is provided with the capital benefit. No entitlement to a
rebate arises under section 46 or 46A in respect of the dividend.
(2) The dividend is taken to have been paid out of profits of the
company.
(3) If the Commissioner has made a determination under section 45B in
respect of the whole or a part of a capital benefit and the Commissioner makes a
further written determination that the capital benefit, or the part of the
capital benefit, was paid under a scheme for which a purpose, other than an
incidental purpose, was to avoid franking debits arising in relation to the
distribution from the company:
(a) on the day on which notice of the determination is served in writing
on the company, a class C franking debit of the company arises in respect of the
capital benefit; and
(b) the amount of the franking debit is the amount that, if the company
had paid a dividend of an amount equal to the amount of the capital benefit, or
the part of the capital benefit, at the time when it was provided and had fully
franked the dividend, would have been the franked amount of the
dividend.
(4) The amount of the capital benefit is:
(a) if the benefit is the provision of a share—the value of the
share at the time that it is provided; or
(b) if the benefit is an increase in the value of a share—the
increase in the value of the share as a result of the change; or
(c) if the benefit is a distribution to the shareholder of share
capital—the amount debited to the share capital account of the company in
connection with the provision of the benefit.
Franking debit to be reduced by any franking debit under section
160AQCB, 160AQCNA or 160AQCNB
(5) If:
(a) a franking debit of the company arises under paragraph (3)(b) in
respect of a capital benefit; and
(b) a franking debit of the company arises under section 160AQCB, 160AQCNA
or 160AQCNB in respect of the same capital benefit;
the amount of the franking debit arising under paragraph (3)(b) is reduced
by the amount of the franking debit arising under section 160AQCB, 160AQCNA or
160AQCNB.
Expressions to have same meanings as in Part IIIAA
(6) Expressions used in this section that are defined in Part IIIAA have
the same meanings as in that Part.
Notice of determination
(1) If the Commissioner makes a determination under section 45A, 45B or
45C, the Commissioner must give a copy of the determination to:
(a) the company; and
(b) for a section 45A determination—the advantaged shareholder
referred to in that section; and
(c) for a section 45B determination—the relevant taxpayer referred
to in that section.
The notice may be included in a notice of assessment.
Publication in national newspaper of determination in relation to listed
public company
(2) If the Commissioner makes a determination under paragraph (1)(b), in
respect of a dividend paid by a listed public company within the meaning of the
Income Tax Assessment Act 1997, the Commissioner is taken to have served
notice in writing of the determination on the relevant taxpayer if the
Commissioner causes the notice to be published in a daily newspaper that
circulates generally in each State, the Australian Capital Territory and the
Northern Territory. The notice is taken to have been served on the day on which
the publication takes place.
Evidence of determination
(3) The production of:
(a) a notice of a determination; or
(b) a document signed by the Commissioner, a Second Commissioner or a
Deputy Commissioner purporting to be a copy of a determination;
is conclusive evidence of:
(c) the due making of the determination; and
(d) except in proceedings under Part IVC of the Taxation Administration
Act 1953 on an appeal or review relating to the determination, that the
determination is correct.
Objections
(4) If a taxpayer to whom a determination relates is dissatisfied with the
determination, the taxpayer may object against it in the manner set out in Part
IVC of the Taxation Administration Act 1953.
2 After section 160AQCNP
Insert:
(1) If:
(a) a company is a party to a scheme to which section 45B applies;
and
(b) the Commissioner makes a determination under subsection 45C(3) in
respect of the whole or a part of a capital benefit provided by the company
under the scheme;
a franking debit of the company will arise under section 45C.
(2) The amount of the franking debit is worked out under paragraph
45C(3)(b) and subsection 45C(5).
3 Application
The amendments made by this Schedule apply to the provision of bonus shares
or capital benefits on or after a day to be fixed by Proclamation unless the
provision was pursuant to a legally binding commitment entered into before 13
November 1997.
Income
Tax Assessment Act 1936
1 At the end of subsection
46(2)
Add:
Note: A dividend paid from a tainted share capital account
is unrebatable. See subsection 160ARDN(2).
2 Section 160APA
Insert:
company with higher tax shareholders, in relation to a
tainted share capital account, means a company that is not a company with only
lower tax shareholders in relation to the account.
3 Section 160APA
Insert:
company with only lower tax shareholders, in relation to a
tainted share capital account, means a company whose only shareholders
were:
(a) other companies (other than life assurance companies or registered
organisations); or
(b) non-residents; or
(c) other companies (other than life assurance companies or registered
organisations) and non-residents;
throughout the period beginning when the share capital account most
recently became tainted under section 160ARDM and ending when the company makes
an election under section 160ARDR or 160ARDW to untaint the account.
4 Section 160APA
Insert:
tainted share capital account means a share capital account
that is tainted under section 160ARDM.
5 Section 160APA
Insert:
tainting amount means the sum of:
(a) the amount transferred to a company’s share capital account when
the share capital account most recently became tainted under section 160ARDM;
and
(b) if the company subsequently transferred one or more further
amounts to its share capital account—that further amount or those further
amounts.
6 Section 160APA
Insert:
untainting tax means tax payable in accordance with section
160ARDT or 160ARDY.
7 After section 160AQCNQ
Insert:
Franking debits also arise under sections 160ARDQ, 160ARDS, 160ARDV and
160ARDX.
8 After Division 7A of Part
IIIAA
Insert:
A company’s share capital account is tainted if the
company transfers an amount to its share capital account from any of its other
accounts.
Note: Certain distributions from tainted share accounts will
be unfranked dividends for which no section 46 or 46A rebate is
available.
A company’s share capital account stops being tainted if the
company makes an election under section 160ARDR or 160ARDW.
The payment of untainting tax as a result of an election under section
160ARDR or 160ARDW does not give rise to a franking credit.
This Subdivision applies to companies other than life assurance
companies.
(1) If a company transfers an amount to its share capital account from any
of its other accounts, a class C franking debit of the company arises on the day
of the transfer.
(2) The amount of the debit is equal to the amount (if any) that would be
calculated under subsection 160AQDB(4) as the class C required franking amount
for a frankable dividend if:
(a) the dividend were paid on that day to a shareholder in the company;
and
(b) the amount of the dividend were equal to the amount transferred to the
share capital account.
(1) A company with a tainted share capital account may elect in writing to
untaint that account. The election can be made at any time but cannot be
revoked.
(2) If the company is a company with higher tax shareholders, the election
must specify the amount of the franking debit to arise under subsection
160ARDS(2). The maximum amount that may be specified is the tainting amount less
the sum of:
(a) the amount of the class C franking debit (if any) that arose under
section 160ARDQ when the share capital account most recently became tainted;
and
(b) if the company subsequently transferred one or more further amounts to
its share capital account from any of its other accounts—the amounts of
any class C franking debits that arose under section 160ARDQ when that further
amount or those further amounts were transferred.
Company with only lower tax shareholders
(1) If a company with only lower tax shareholders elects to untaint its
share capital account under section 160ARDR, a class C franking debit of the
company arises on the day of the election equal to the tainting amount less the
sum of:
(a) the amount of the class C franking debit (if any) that arose under
section 160ARDQ when the share capital account most recently became tainted;
and
(b) if the company subsequently transferred one or more further amounts to
its share capital account from any of its other accounts—the amounts of
any class C franking debits that arose under section 160ARDQ when that further
amount or those further amounts were transferred.
Company with higher tax shareholders
(2) If a company with higher tax shareholders elects to untaint its share
capital account under section 160ARDR, a class C franking debit of the company
arises on the day of the election equal to the amount specified in the
election.
(1) If a company with higher tax shareholders elects to untaint its share
capital account under section 160ARDR, the company is liable to pay tax equal to
the difference between:
(a) the tax payable by top marginal rate shareholders (see subsection
(2)); and
(b) the notional franking amount (see subsection (3)).
(2) In subsection (1), the tax payable by top marginal rate
shareholders is the amount calculated in accordance with the
formula:
where:
top marginal rate is the maximum rate specified in column 2
of the table in Part I of Schedule 7 to the Income Tax Rates Act 1986
that applies for the year of income in which the election is made.
top medicare levy rate is 2.5%.
(3) In subsections (1) and (2), the notional franking amount
is the amount calculated in accordance with the formula:
where:
total franking debits is the sum of:
(a) the amount of the class C franking debit (if any) that arose under
section 160ARDQ when the share capital account most recently became tainted;
and
(b) if the company subsequently transferred one or more further amounts to
its share capital account from any of its other accounts—the amounts of
any class C franking debits that arose under section 160ARDQ when that further
amount or those further amounts were transferred; and
(c) the amount of the class C franking debit (if any) specified in the
election, that arose under subsection 160ARDS(2) when the election was
made.
This Subdivision applies to life assurance companies.
(1) If a company transfers an amount to its share capital account from any
of its other accounts, a class A franking debit and a class C franking debit of
the company arise on the day of the transfer.
(2) The amount of:
(a) the class A franking debit is equal to the amount (if any) that would
be calculated under subsection 160AQDB(1) as the class A required franking
amount for a frankable dividend if the assumptions in subsection (3) were made;
and
(b) the class C franking debit is equal to the amount (if any) that would
be calculated under subsection 160AQDB(4) as the class C required franking
amount for a frankable dividend if the assumptions in subsection (3) were
made.
(3) The assumptions for paragraphs (2)(a) and (b) are that:
(a) the dividend was paid on the day of the transfer to a shareholder in
the company; and
(b) the amount of the dividend were equal to the amount transferred to the
share capital account.
(1) A company with a tainted share capital account may elect in writing to
untaint that account. The election can be made at any time but cannot be
revoked.
(2) The election must specify:
(a) the amount of the class A franking debit to arise under paragraph
160ARDX(2)(a); and
(b) the amount of the class C franking debit to arise under paragraph
160ARDX(2)(b).
Company with only lower tax shareholders
(3) For a company with only lower tax shareholders, the sum of the
franking debits specified in the election under subsection (2) must equal the
tainting amount less the sum of:
(a) the amount of the class A franking debit (if any) that arose under
section 160ARDV when the share capital account most recently became tainted;
and
(b) if the company subsequently transferred one or more further amounts to
its share capital account from any of its other accounts—the amounts of
any class A franking debits that arose under section 160ARDV when that further
amount or those further amounts were transferred; and
(c) the amount of the class C franking debit (if any) that arose under
section 160ARDV when the share capital account most recently became tainted;
and
(d) if the company subsequently transferred one or more further amounts to
its share capital account from any of its other accounts—the amounts of
any class C franking debits that arose under section 160ARDV when that further
amount or those further amounts were transferred.
Company with higher tax shareholders
(4) The sum of the franking debits that may be specified under subsection
(2) must not exceed the tainting amount less the sum of:
(a) the amount of the class A franking debit (if any) that arose under
section 160ARDV when the share capital account most recently became tainted;
and
(b) if the company subsequently transferred one or more further amounts to
its share capital account from any of its other accounts—the amounts of
any class A franking debits that arose under section 160ARDV when that further
amount or those further amounts were transferred; and
(c) the amount of the class C franking debit (if any) that arose under
section 160ARDV when the share capital account most recently became tainted;
and
(d) if the company subsequently transferred one or more further amounts to
its share capital account from any of its other accounts—the amounts of
any class C franking debits that arose under section 160ARDV when that further
amount or those further amounts were transferred.
If a company elects to untaint its share capital account under section
160ARDW:
(a) a class A franking debit of the company arises on the day of the
election equal to the amount of the class A franking debit specified in the
election; and
(b) a class C franking debit of the company arises on the day of the
election equal to the amount of the class C franking debit specified in the
election.
(1) If a company with higher tax shareholders elects to untaint its share
capital account under section 160ARDW, the company is liable to pay tax equal to
the difference between:
(a) the tax payable by top marginal rate shareholders (see subsection
(2)); and
(b) the notional franking amount (see subsection (3)).
(2) In subsection (1), the tax payable by top marginal rate
shareholders is the amount calculated in accordance with the
formula:
where:
top marginal rate is the maximum rate specified in column 2
of the table in Part I of Schedule 7 to the Income Tax Rates Act 1986
that applies for the year of income in which the election is made.
top medicare levy rate is 2.5%.
(3) In subsections (1) and (2), the notional franking amount
is the amount calculated in accordance with the formula:
where:
total class A franking debits is the sum of:
(a) the amount of the class A franking debit (if any) that arose under
section 160ARDV when the share capital account most recently became tainted;
and
(b) if the company subsequently transferred one or more further amounts to
its share capital account from any of its other accounts—the amounts of
any class A franking debits that arose under section 160ARDV when that further
amount or those further amounts were transferred; and
(c) the amount of the class A franking debit (if any) specified in the
election, that arose under subsection 160ARDX(2) when the election was
made.
total class C franking debits is the sum of:
(a) the amount of the class C franking debit (if any) that arose under
section 160ARDV when the share capital account most recently became tainted;
and
(b) if the company subsequently transferred one or more further amounts to
its share capital account from any of its other accounts—the amounts of
any class C franking debits that arose under section 160ARDV when that further
amount or those further amounts were transferred; and
(c) the amount of the class C franking debit (if any) specified in the
election, that arose under subsection 160ARDX(2) when the election was
made.
9 Application
The amendments made by this Schedule apply where, after the commencement of
this item, an amount is transferred to the share capital account of a company
with shares with no par value.
10 Transitional—merging of share capital
account and share premium account
A company’s share capital account does not become tainted under
Division 7B of Part IIIAA of the Income Tax Assessment Act 1936 merely
because an amount standing to the credit of the company’s share premium
account or capital redemption reserve becomes part of the company’s share
capital under Schedule 5 to the Company Law Review Act
1998.
Income
Tax Assessment Act 1936
1 Subsection 6(1) (paragraph (a) of the
definition of dividend)
Omit “property;”, substitute “property;
and”.
2 Subsection 6(1) (paragraph (b) of the
definition of dividend)
Omit “and”.
3 Subsection 6(1) (paragraph (c) of the
definition of dividend)
Repeal the paragraph.
4 Subsection 6(1) (paragraph (d) of the
definition of dividend)
After “apply”, insert “or moneys paid or credited, or
property distributed for the redemption or cancellation of a redeemable
preference share”.
5 Subsection 6(1) (paragraph (d) of the
definition of dividend)
Omit “a share premium account of the company;”, substitute
“the share capital account of the company; or”.
6 Subsection 6(1) (paragraph (e) of the
definition of dividend)
Repeal the paragraph, substitute:
(e) moneys paid or credited, or property distributed, by a company for the
redemption or cancellation of a redeemable preference share if:
(i) the company gives the holder of the share a notice when it redeems or
cancels the share; and
(ii) the notice specifies the amount paid-up on the share immediately
before the cancellation or redemption; and
(iii) the amount is debited to the company’s share capital
account;
except to the extent that the amount of those moneys or the value of that
property, as the case may be, is greater than the amount specified in the notice
as the amount paid-up on the share; or
7 Subsection 6(4)
Repeal the subsection, substitute:
(4) Paragraph (d) of the definition of dividend in
subsection (1) does not apply if, under an arrangement:
(a) a person pays or credits any money or gives property to the company
and the company credits its share capital account with the amount of the money
or the value of the property; and
(b) the company pays or credits any money, or distributes property to
another person, and debits its share capital account with the amount of the
money or the value of the property so paid, credited or distributed.
8 Application
The amendments made by this Schedule apply to dividends paid after the
commencement of this item by a company with shares with no par
value.
Income
Tax Assessment Act 1936
1 Subsections 6BA(1) to (2)
Repeal the subsections, substitute:
(1) Subsection (3) applies where a shareholder has shares in a company
(the original shares) and the company issues shares for no
consideration (the bonus shares) to the shareholder. However, this
section does not apply to the extent (if any) that the issue of the bonus shares
is taken to be a dividend as a result of section 45, 45A or 45B.
Note: The heading to section 6BA is altered by omitting
“Cost” and substituting “Taxation
treatment”.
2 Subsection 6BA(3)
Omit “In determining”, substitute “For the purposes of
this Act (other than section 26AAC), in determining:”.
3 Subsections 6BA(4) to (9)
Repeal the subsections, substitute:
(4) A company issues shares for no consideration if:
(a) it credits its capital account with profits in connection with the
issue of the shares; or
(b) it credits its capital account with the amount of any dividend to a
shareholder and the shareholder does not have a choice whether to be paid the
dividend or to be issued with the shares.
This subsection does not limit the generality of subsection (1).
Note: A company that makes a credit covered by paragraph (a)
or (b) will have a tainted share capital account.
(5) Subject to subsection (6), if a shareholder has a choice whether to be
paid a dividend or to be issued shares and the shareholder chooses to be issued
with shares:
(a) the dividend is taken to be credited to the shareholder; and
(b) the consideration for the acquisition of the shares for the purposes
of this Act is so much of the dividend as is included in the taxpayer’s
assessable income and is credited to the share capital account.
However, the share capital account of the company does not become a tainted
share capital account as a result of the crediting of the dividend to the share
capital account.
(6) If a shareholder in a listed public company (within the meaning of the
Income Tax Assessment Act 1997) has a choice whether to be paid a
dividend (other than a minimally franked dividend within the meaning of
subsection 45(3)) or to be issued shares and the shareholder chooses to be
issued with shares:
(a) the shareholder is only taken to be credited with a dividend if the
company credits the share capital account in connection with the issue of those
shares; and
(b) the shares are taken to be issued for no consideration.
4 Division 8A of Part IIIA
Repeal the Division.
5 Application
The amendment made by this Schedule applies in relation to bonus shares
provided after the commencement of this item by a company with shares with no
par value.
Income
Tax Assessment Act 1936
1 Subsection 6(1)
Insert:
amount paid-up on a share means the amount (if any) paid on
that share.
2 Subsection 6(1)
Insert:
amount unpaid on a share means the amount (if any) unpaid on
that share.
3 Subsection 6(1)
Insert:
paid-up share capital of a company means the amount standing
to the credit of the company’s share capital account reduced by the amount
(if any) that represents amounts unpaid on shares.
4 Subsection 6(1)
Insert:
share capital account, for the purposes of this Act other
than subsection 44(1B), section 46H, subsection 159GZZZQ(5), Division 7B of Part
IIIAA and subsection 160ZA(7A), does not include an account that is tainted for
the purposes of Division 7B of Part IIIAA.
5 Subsection 6(1) (definition of share
premium account)
Repeal the definition.
6 Subsection 6(5)
Repeal the subsection.
7 Paragraph 44(1B)(a)
Omit “share premium account”, substitute “share capital
account”.
8 Paragraph 44(1B)(b)
Omit “moneys paid up”, substitute “an amount
paid-up”.
9 Paragraph 46H(1)(c)
Repeal the paragraph.
10 Subsection 46H(2)
Repeal the subsection.
11 Paragraph 46J(2)(a)
Omit “or a share premium account”.
12 Paragraph 46J(2)(b)
Omit “, or in share premiums, that have been permanently lost or
have”, substitute “that has been permanently lost or
has”.
13 Subsection 47(1)
Omit “paid up capital”, substitute “paid-up share
capital”.
14 Subsection 47(3)
Omit “paid up capital”, substitute
“paid-up share capital”.
15 Subsection 52A(8)
Omit “as payment of a premium in respect of the prescribed
property,”.
16 Subsection 82L(1) (subparagraph (a)(ii) of
the definition of convertible note)
Repeal the subparagraph.
17 Subparagraph
82L(3)(a)(ii)
Repeal the subparagraph.
18 Subsection 82Q(1)
Repeal the subsection, substitute:
(1) Shares in the capital of a company to which there are attached the
same rights, including the following rights:
(a) rights in respect of voting;
(b) rights in respect of dividends;
(c) rights in respect of distribution of share capital in consequence of a
reduction of share capital;
(d) rights in respect of distribution of the property of the company in
the event of the winding up of the company;
constitute a class of shares for the purposes of this Division, and no
other shares in the capital of the company constitute a class of shares for such
purposes.
19 Subparagraph
82S(1)(d)(xiii)
Omit “the amount that, for the purposes of this subsection, is the
minimum amount applicable to the share, that is to say, whichever amount is the
greater of the nominal value of the share or”.
20 Subparagraph
82SA(1)(d)(xi)
Omit “the amount that, for the purposes of this subsection, is the
minimum amount applicable to the share, that is to say, whichever amount is the
greater of the nominal value of the share or”.
21 Paragraph 103A(3)(a)
Omit all the words after “three-quarters”, substitute “of
the value of the shares in the company, other than shares entitled to a fixed
rate of dividend only.”.
22 Paragraph 103A(5)(b)
Omit “paid-up”, substitute “market”.
23 Subsection 109Y(2) (definition of paid-up
share value)
Repeal the definition, substitute:
paid-up share value is the paid-up share capital of the
company at the end of its year of income.
24 Subsection 120(1)
Omit “paid up capital”, substitute
“value”.
25 Section 121EC
Omit all the words after “except”, substitute “if the
shares are redeemable preference shares”.
26 Subparagraph
128J(3)(a)(i)
After “paid-up”, insert “share”.
27 Paragraph 128K(2)(a)
After “paid-up”, insert “share”.
28 Paragraph 128TC(3)(a)
Omit “(for example in the case of a redeemable preference share, the
sum of the paid-up value of the share, any premium paid on the share and any
other amount payable on a redemption of the share)”.
29 Paragraph 128TC(3)(b)
Omit “nominal”, substitute “market”.
30 Subsection 128TG(3)
Omit “paid up capital”, substitute
“value”.
31 Paragraph 128TJ(c)
Omit “total paid-up capital of the SME (assuming all amounts payable
for the issue had been paid)”, substitute “value of the
SME”.
32 Paragraph 139FB(2)(a)
Repeal the paragraph, substitute:
(a) the amount unpaid on the share; and
33 Section 159GZA (definition of paid-up
value)
Repeal the definition.
34 Paragraph 159GZG(1)(a)
Repeal the paragraph.
35 Paragraph 159GZG(1)(b)
Omit “any share premium account”, substitute “the share
capital account”.
36 Subparagraph
159GZG(1)(b)(ii)
Omit “by not less than the amount standing to the credit of the share
premium account”.
37 Subparagraph
159GZG(1)(e)(i)
Omit “the paid-up value of”, substitute “the amount
paid-up on”.
38 Subparagraph
159GZG(2)(c)(i)
Omit “the paid-up value of”, substitute “the amount
paid-up on”.
39 Paragraph 159GZG(6)(a)
Omit “paragraph (1)(a) the paid-up value of”, substitute
“paragraph (1)(b)”.
40 Sub-subparagraph
159GZG(6)(a)(iii)(B)
Omit “the paid-up value of the share was less”, substitute
“the amount unpaid on the share was more”.
41 Sub-subparagraph
159GZG(6)(b)(i)(D)
Omit “applies;”, substitute “applies;
or”.
42 Subparagraphs 159GZG(6)(b)(ii) and
(iii)
Repeal the subparagraphs, substitute:
(ii) an amount is distributed out of the share capital account to, or for
the benefit of, an insider;
43 Paragraph 159GZG(6)(c)
Omit all the words after “under” (first occurring), substitute
“paragraph (1)(b)”.
44 Subparagraphs 159GZG(6)(d)(i) and
(ii)
Repeal the subparagraphs, substitute:
(i) the greatest amount unpaid on the eligible share at any time during
the year of income; and
(ii) the amount unpaid on the eligible share at the end of the year of
income;
45 Sub-subparagraphs 159GZG(6)(f)(i)(A) and
(B)
Repeal the sub-subparagraphs, substitute:
(A) the greatest amount unpaid on the eligible share at any time during
the year of income; and
(B) the amount unpaid on the eligible share at the end of the year of
income;
46 Subparagraph
159GZG(7)(a)(ii)
Repeal the subparagraph, substitute:
(ii) in any other case—the amount (if any) that was taken into
account under paragraph (1)(b) in relation to the share;
47 Subsection 159GZZZP(1)
Omit “so much of the purchase price as exceeds the sum of:”,
substitute “the difference between:”.
48 Paragraph 159GZZZP(1)(a)
Repeal the paragraph, substitute:
(a) the purchase price; and
49 Paragraph 159GZZZP(1)(b)
Omit “a share premium account”, substitute “the share
capital account”.
50 Paragraph 159GZZZQ(5)(a)
Omit “a share premium account,”.
51 Subsection 159GZZZQ(6)
Repeal the subsection.
52 Subsection 159GZZZQ(7)
Omit “accounts”, substitute “account”.
53 Section 160APA (definition of tax-exempt
bonus share)
Repeal the definition, substitute:
tax-exempt bonus share, in relation to a company, means a
share issued by the company in the circumstances mentioned in subsection
6BA(1).
54 Subsection 160AQCBA(11)
Repeal the subsection.
55 Subsection 160AQCBA(12)
After “any other benefit”, insert “(including the
provision of shares)”.
56 Paragraph
160AQCBA(15)(b)
Omit “capital paid on shares”, substitute “paid-up share
capital”.
57 Paragraph 160T(1)(d)
Omit “of the issued share capital of the company (excluding any part
of that share capital”, substitute “, by value, of the shares of the
company (excluding any shares”.
58 Paragraph 160ZA(7A)(b)
Repeal the paragraph.
59 Subsection 160ZA(7A)
Omit all the words from and including “An account continues”,
to and including “purposes of this Act”.
60 Paragraph 160ZZPA(9)(b)
Omit “cancellation, or of a reduction in the paid-up value, of that
share or of any other share in the company,”, substitute
“cancellation of that share or of any other share in the company, or a
distribution of the share capital of the company”.
61 Paragraph 160ZZPB(9)(b)
Omit “cancellation, or of a reduction in the paid-up value, of that
share or of any other share in the company,”, substitute
“cancellation of that share or of any other share in the company, or a
distribution of the share capital of the company”.
62 Paragraph 273(2)(a)
Omit “paid-up value”, substitute “value”.
63 Application
The amendments made by this Schedule apply to things done after the
commencement of this item where the relevant company has shares with no par
value.
1 Section 130-15
Repeal the section, substitute:
2 Paragraph 130-20(1)(b)
Repeal the paragraph, substitute:
(b) either:
(i) the company issues other shares with a par value (the bonus
equities) to you for no consideration as a result of your ownership of
the original equities; or
(ii) the company issues other shares with no par value (also called the
bonus equities) to you in the circumstances set out in subsection
6BA(1); or
(iii) the trustee issues other units (also called the bonus
equities) to you because it owes an amount to you in relation to the
original equities.
3 Paragraph 130-20(2)(a)
After “*shares”, insert “that have a par
value”.
4 After paragraph
130-20(2)(a)
Insert:
(aa) for shares that do not have a par value—any part of the amount
that is taken to be a dividend under section 45, 45A or 45B of the Income Tax
Assessment Act 1936; or
5 Paragraph 130-20(2)(b)
Repeal the paragraph, substitute:
(b) either:
(i) the company issues other shares (the bonus equities) to
you for no consideration as a result of your ownership of the original equities;
or
(ii) the trustee issues other units (also the bonus
equities) to you because it owes an amount to you in relation to the
original equities.
6 Paragraph 130-20(3)(a)
Before “none”, insert “for
*shares that have a par
value—”.
7 After paragraph
130-20(3)(a)
Insert:
(aa) for shares that do not have a par value—no part of the amount
that is taken to be a dividend under section 45, 45A or 45B of the Income Tax
Assessment Act 1936; or
8 After subsection
130-20(3)
Insert:
(3A) If only a part of a capital benefit that is bonus equities is taken
to be a dividend under section 45, 45A or 45B of the Income Tax Assessment
Act 1936, you apportion the first element of your
*cost base and
*reduced cost base for the original equities in
a reasonable way over both the original equities and the bonus
equities.
9 Paragraph 118-20(6)(b)
Repeal the paragraph.
10 Paragraph 124-240(e)
Omit “total paid-up capital”, substitute “*paid-up share
capital”.
11 Section 136-25 (paragraph (b) of table item
5)
Omit “of the issued share capital (except share capital”,
substitute “, by value of the shares of the company (except
shares”.
12 Subsection 272-10(2)
Omit “paid-up capital”, substitute “the *paid-up share
capital”.
13 Paragraph 272-50(2)(a)
Repeal the paragraph, substitute:
(a) it pays or credits money, or transfers property, of the company to the
person, where the amount paid or credited, or the amount or value of the
property, is debited against an amount standing to the credit of the share
capital account of the company; and
14 Paragraph 272-90(10)(d)
Omit “paid-up capital”, substitute “*paid-up share
capital”.
15 Subsection 995-1(1)
Insert:
paid-up share capital of a company means the amount standing
to the credit of the company’s share capital account reduced by the amount
(if any) that represents amounts unpaid on shares.
16 Application
(1) The amendments made by Part 1 of this Schedule apply to things done
after the commencement of this item.
(2) The amendments made by Part 2 of this Schedule apply to things done
after the commencement of this item where the relevant company has shares with
no par value.
After “after”, insert “section
1 of”.