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This is a Bill, not an Act. For current law, see the Acts databases.

TAX LAWS AMENDMENT (FOREIGN SOURCE INCOME DEFERRAL) BILL (NO. 1) 2010

2008-2009-2010
The Parliament of the
Commonwealth of Australia
HOUSE OF REPRESENTATIVES
Presented and read a first time
Tax Laws Amendment (Foreign Source
Income Deferral) Bill (No. 1) 2010
No. , 2010
(Treasury)
A Bill for an Act to amend the law relating to
taxation, and for related purposes
i Tax Laws Amendment (Foreign Source Income Deferral) Bill (No. 1) 2010 No. , 2010
Contents
1 Short
title
...........................................................................................
1
2 Commencement
.................................................................................
1
3 Schedule(s)
........................................................................................
2
Schedule 1--Repeal of the FIF and deemed present entitlement
rules
3
Part 1--Main amendments
3
Income Tax Assessment Act 1936
3
Income Tax Assessment Act 1997
12
Superannuation Industry (Supervision) Act 1993
23
Part 2--Other amendments
24
Income Tax Assessment Act 1936
24
Part 3--Application and saving provisions
30
Tax Laws Amendment (Foreign Source Income Deferral) Bill (No. 1) 2010 No. , 2010 1
A Bill for an Act to amend the law relating to
1
taxation, and for related purposes
2
The Parliament of Australia enacts:
3
1 Short title
4
This Act may be cited as the Tax Laws Amendment (Foreign
5
Source Income Deferral) Act (No. 1) 2010.
6
2 Commencement
7
(1) Each provision of this Act specified in column 1 of the table
8
commences, or is taken to have commenced, in accordance with
9
column 2 of the table. Any other statement in column 2 has effect
10
according to its terms.
11
12
2 Tax Laws Amendment (Foreign Source Income Deferral) Bill (No. 1) 2010 No. ,
2010
Commencement information
Column 1
Column 2
Column 3
Provision(s)
Commencement
Date/Details
1. Sections 1 to 3
and anything in
this Act not
elsewhere covered
by this table
The day this Act receives the Royal Assent.
2. Schedule 1,
Part 1
The day this Act receives the Royal Assent.
3. Schedule 1,
Part 2
Immediately after the commencement of
Schedule 1 to the Tax Laws Amendment
(Repeal of Inoperative Provisions) Act 2006.
14 September
2006
4. Schedule 1,
Part 3
The day this Act receives the Royal Assent.
Note:
This table relates only to the provisions of this Act as originally
1
passed by both Houses of the Parliament and assented to. It will not be
2
expanded to deal with provisions inserted in this Act after assent.
3
(2) Column 3 of the table contains additional information that is not
4
part of this Act. Information in this column may be added to or
5
edited in any published version of this Act.
6
3 Schedule(s)
7
Each Act that is specified in a Schedule to this Act is amended or
8
repealed as set out in the applicable items in the Schedule
9
concerned, and any other item in a Schedule to this Act has effect
10
according to its terms.
11
12
Repeal of the FIF and deemed present entitlement rules Schedule 1
Main amendments Part 1
Tax Laws Amendment (Foreign Source Income Deferral) Bill (No. 1) 2010 No. , 2010
3
Schedule 1--Repeal of the FIF and deemed
1
present entitlement rules
2
Part 1--Main amendments
3
Income Tax Assessment Act 1936
4
1 Subsection 6(1)
5
Insert:
6
approved stock exchange has the same meaning as in the Income
7
Tax Assessment Act 1997.
8
2 Subsection 6(1) (paragraph (l) of the definition of passive
9
income)
10
Omit ", 459A or 529", substitute "or 459A".
11
3 Subsection 6(1)
12
Insert:
13
post FIF abolition credit means a post FIF abolition credit arising
14
under:
15
(a) subsection 23AK(6); and
16
(b) subsection 717-220(2) of the Income Tax Assessment Act
17
1997; and
18
(c) subsection 717-255(2) of that Act.
19
4 Subsection 6(1)
20
Insert:
21
post FIF abolition debit means a post FIF abolition debit arising
22
under:
23
(a) subsection 23AK(2); and
24
(b) subsection 23B(1); and
25
(c) subsection 717-220(3) of the Income Tax Assessment Act
26
1997; and
27
(d) subsection 717-255(3) of that Act.
28
5 Subsection 6(1)
29
Schedule 1 Repeal of the FIF and deemed present entitlement rules
Part 1 Main amendments
4 Tax Laws Amendment (Foreign Source Income Deferral) Bill (No. 1) 2010 No. ,
2010
Insert:
1
post FIF abolition surplus has the meaning given by
2
section 23AK.
3
6 Subsection 6AB(1)
4
Omit ", 459A or 529", substitute "or 459A".
5
7 Section 23AK
6
Repeal the section, substitute:
7
23AK Amounts paid out of attributed foreign investment fund
8
income not assessable
9
When this section applies
10
(1) This section applies if:
11
(a)
either:
12
(i) a FIF attribution account payment of a kind referred to
13
in former paragraph 603(1)(a), (b), (c), (d), (f), (g) or (h)
14
is made to a taxpayer (other than a partnership or
15
taxpayer in the capacity of trustee of a trust); or
16
(ii) a FIF attribution account payment of a kind referred to
17
in former paragraph 603(1)(e) is made to a taxpayer;
18
and
19
(b) on the making of the payment, a post FIF abolition debit
20
arises, for the FIF attribution account entity making the
21
payment, in relation to the taxpayer.
22
Post FIF abolition debit arises
23
(2) A post FIF abolition debit arises for a FIF attribution account entity
24
(the eligible entity) in relation to a taxpayer if:
25
(a) the eligible entity makes a FIF attribution account payment to
26
the taxpayer or to a FIF attribution account entity; and
27
(b) immediately before the eligible entity makes the FIF
28
attribution account payment, there is a post FIF abolition
29
surplus for the eligible entity in relation to the taxpayer.
30
Repeal of the FIF and deemed present entitlement rules Schedule 1
Main amendments Part 1
Tax Laws Amendment (Foreign Source Income Deferral) Bill (No. 1) 2010 No. , 2010
5
Amount of post FIF abolition debit
1
(3) The amount of the post FIF abolition debit is the lesser of:
2
(a) the post FIF abolition surplus; and
3
(b) whichever of the following is applicable:
4
(i) if the attribution account payment is made to the
5
taxpayer--the FIF attribution account payment;
6
(ii) in any other case--the taxpayer's FIF attribution
7
account percentage (for the FIF attribution account
8
entity to which the payment is made) of the FIF
9
attribution account payment;
10
reduced by any attribution debit that arises under section 372
11
for the entity in relation to the taxpayer as a result of the
12
making of the payment.
13
When the post FIF abolition debit arises
14
(4) The post FIF abolition debit arises when the FIF attribution
15
account payment is made.
16
When a post FIF abolition surplus exists
17
(5) A post FIF abolition surplus for a FIF attribution account entity in
18
relation to a taxpayer exists at a particular time (the relevant time)
19
if the sum of:
20
(a) the entity's total FIF attribution credits (within the meaning
21
of former section 605) that arose before the commencement
22
of Schedule 1 to the Tax Laws Amendment (Foreign Source
23
Income Deferral) Act (No. 1) 2010; and
24
(b) the entity's total post FIF abolition credits arising before the
25
relevant time in relation to the taxpayer;
26
exceeds the sum of:
27
(c) the entity's total FIF attribution debits (within the meaning of
28
former section 606) that arose before that commencement in
29
relation to the taxpayer; and
30
(d) the entity's total post FIF abolition debits arising before the
31
relevant time in relation to the taxpayer.
32
Post FIF abolition credit arises
33
(6) A post FIF abolition credit arises for a FIF attribution account
34
entity (the eligible entity) in relation to a taxpayer if a FIF
35
Schedule 1 Repeal of the FIF and deemed present entitlement rules
Part 1 Main amendments
6 Tax Laws Amendment (Foreign Source Income Deferral) Bill (No. 1) 2010 No. ,
2010
attribution account payment that requires a post FIF abolition debit
1
for another entity in relation to the taxpayer is made to the eligible
2
entity.
3
Amount of post FIF abolition credit
4
(7) The amount of the post FIF abolition credit is equal to the amount
5
of the post FIF abolition debit for the other entity.
6
When the post FIF abolition credit arises
7
(8) The post FIF abolition credit arises when the FIF attribution
8
account payment referred to in subsection (6) is made.
9
Effect of this section applying
10
(9) If this section applies, the following provisions have effect:
11
(a) if the payment is of a kind referred to in former paragraph
12
603(1)(a) or (b)--the payment is not assessable income, and
13
is not exempt income, to the extent of the debit;
14
(b) if the payment is of a kind referred to in former paragraph
15
603(1)(c) and, apart from this section, an amount would be
16
included in the taxpayer's assessable income under
17
section 92 in respect of an individual interest in the net
18
income of the partnership of the year of income referred to in
19
that paragraph--that amount is not assessable income, and is
20
not exempt income, to the extent of the debit;
21
(c) if the payment is of a kind referred to in former paragraph
22
603(1)(d) and, apart from this section, an amount would be
23
included in the taxpayer's assessable income under
24
section 97, 98A or 100 in respect of a share of the net income
25
of the trust of the year of income referred to in that
26
paragraph--that amount is not assessable income, and is not
27
exempt income, to the extent of the debit;
28
(d) if the payment is of a kind referred to in former paragraph
29
603(1)(d) and, apart from this section, an amount would be
30
assessable to the trustee of the trust referred to in that
31
paragraph under section 98 in respect of a share of the net
32
income of the trust of the year of income referred to in that
33
paragraph--that amount is not so assessable to the extent of
34
the debit;
35
Repeal of the FIF and deemed present entitlement rules Schedule 1
Main amendments Part 1
Tax Laws Amendment (Foreign Source Income Deferral) Bill (No. 1) 2010 No. , 2010
7
(e) if the payment is of a kind referred to in former paragraph
1
603(1)(e)--the payment is not, to the extent of the debit,
2
assessable to the taxpayer as mentioned in that paragraph;
3
(f) if the payment is of a kind referred to in former paragraph
4
603(1)(f) and, apart from this section, an amount would be
5
included in the taxpayer's assessable income, of the year of
6
income referred to in that paragraph, under section 99B in
7
respect of the trust property referred to in that paragraph--
8
that amount is not assessable income, and is not exempt
9
income, to the extent of the debit;
10
(g) if the payment is of a kind referred to in former paragraph
11
603(1)(g)--the payment is not assessable income, and is not
12
exempt income, to the extent of the debit;
13
(h) if the payment is of a kind referred to in former paragraph
14
603(1)(h)--the payment is not assessable income, and is not
15
exempt income, to the extent of the debit.
16
(10) This section is to be disregarded for the purposes of applying any
17
other provision of this Act to determine allowable deductions.
18
(11) In this section:
19
FIF attribution account entity has the same meaning as in former
20
Part XI.
21
FIF attribution account payment has the same meaning as in
22
former Part XI.
23
FIF attribution account percentage has the same meaning as in
24
former Part XI.
25
trust has the same meaning as in former Part XI, but does not
26
include a trust covered by former subsection 605(11).
27
23B Reduction of disposal consideration if FIF attributed income
28
not distributed
29
(1)
If:
30
(a) it is necessary, for the purposes of applying a provision of
31
this Act in the assessment of a taxpayer for a year of income,
32
to take into account:
33
Schedule 1 Repeal of the FIF and deemed present entitlement rules
Part 1 Main amendments
8 Tax Laws Amendment (Foreign Source Income Deferral) Bill (No. 1) 2010 No. ,
2010
(i) the amount of consideration received, entitled to be
1
received or taken to have been received, by the taxpayer
2
in respect of the disposal of an asset; or
3
(ii) the capital proceeds from a CGT event happening in
4
relation to a CGT asset;
5
being an asset that is an interest in a FIF attribution account
6
entity; and
7
(b) immediately before the disposal or CGT event takes place
8
there is a post FIF abolition surplus for the FIF attribution
9
account entity in relation to the taxpayer;
10
then, for the purposes of this Act:
11
(c) the consideration or capital proceeds that, apart from this
12
section, would be taken into account under the provision
13
referred to in paragraph (a) in respect of the disposal or CGT
14
event is taken to be reduced by so much of the amount of the
15
post FIF abolition surplus as does not exceed the
16
consideration or capital proceeds; and
17
(d) a post FIF abolition debit arises at the time of the disposal or
18
the CGT event under this paragraph, in relation to the
19
taxpayer, for the FIF attribution account entity; and
20
(e) the amount of the post FIF abolition debit is equal to so much
21
of the surplus as is taken into account under paragraph (c).
22
(2) For the purposes of paragraph (1)(c), if the disposal of the asset or
23
the CGT event causes the taxpayer's FIF attribution account
24
percentage for the FIF attribution account entity to be reduced by a
25
proportion, then only that proportion of the post FIF abolition
26
surplus for the entity is to be taken into account under that
27
paragraph.
28
(3) In this section:
29
FIF attribution account entity has the same meaning as in former
30
Part XI.
31
FIF attribution account percentage has the same meaning as in
32
former Part XI.
33
8 Subsection 82KZL(1) (definition of approved stock
34
exchange)
35
Repeal the definition.
36
Repeal of the FIF and deemed present entitlement rules Schedule 1
Main amendments Part 1
Tax Laws Amendment (Foreign Source Income Deferral) Bill (No. 1) 2010 No. , 2010
9
9 Sections 96A, 96B and 96C
1
Repeal the sections.
2
10 Paragraph 102AAU(1)(b)
3
Repeal the paragraph, substitute:
4
(b) if the non-resident trust estate is a listed country trust estate
5
in relation to the year of income--the amount that would
6
have been the net income of the non-resident trust estate of
7
the year of income if the exempt income of the trust estate
8
included all income and profits of the trust estate, other than
9
eligible designated concession income in relation to any
10
listed country in relation to the year of income;
11
11 Sub-subparagraph 102AAU(1)(c)(viii)(B)
12
Omit "; or", substitute "; and".
13
12 Subparagraph 102AAU(1)(c)(ix)
14
Repeal the subparagraph.
15
13 Subsections 102AAU(7), (8) and (9)
16
Repeal the subsections.
17
14 Subsection 317(1) (definition of FIF attribution account
18
entity)
19
Repeal the definition.
20
15 Subsection 317(1) (definition of FIF attribution account
21
payment)
22
Repeal the definition.
23
16 Subsection 317(1) (definition of FIF attribution debit)
24
Repeal the definition.
25
17 Subsection 317(1) (definition of grossed-up amount)
26
Repeal the definition, substitute:
27
grossed-up amount, in relation to an attribution debit, has the
28
meaning given by section 373.
29
Schedule 1 Repeal of the FIF and deemed present entitlement rules
Part 1 Main amendments
10 Tax Laws Amendment (Foreign Source Income Deferral) Bill (No. 1) 2010 No. ,
2010
18 Subparagraph 356(4B)(b)(ii)
1
After "a FIF", insert "(within the meaning of former Part XI)".
2
19 Subparagraph 356(4C)(b)(ii)
3
After "in FIFs", insert "(within the meaning of former Part XI)".
4
20 Paragraphs 371(1)(aa) and (ab)
5
Repeal the paragraphs.
6
21 Subsection 371(2)
7
Omit "subsections (2A), (2B), (3) and (4)", substitute "subsection (4)".
8
22 Subsections 371(2A), (2B), (2C) and (2D)
9
Repeal the subsections.
10
23 Paragraphs 371(5)(aa) and (ab)
11
Repeal the paragraphs.
12
24 Paragraph 384(2)(ca)
13
Repeal the paragraph.
14
25 Subparagraph 384(2)(d)(iii)
15
Omit "; and", substitute ".".
16
26 Subparagraph 384(2)(d)(iv)
17
Repeal the subparagraph.
18
27 Paragraphs 385(2)(a) and (b)
19
Omit "to E", substitute "to D".
20
28 Paragraph 385(2)(ca)
21
Repeal the paragraph.
22
29 Paragraph 385(2)(d)
23
Omit "to E" (wherever occurring), substitute "to D".
24
30 Sub-subparagraph 385(2)(d)(iv)(B)
25
Omit "; and", substitute ".".
26
Repeal of the FIF and deemed present entitlement rules Schedule 1
Main amendments Part 1
Tax Laws Amendment (Foreign Source Income Deferral) Bill (No. 1) 2010 No. , 2010
11
31 Subparagraph 385(2)(d)(v)
1
Repeal the subparagraph.
2
32 Subsection 385(4)
3
Omit "paragraphs (2)(a) and (ca)", substitute "paragraph (2)(a)".
4
33 Paragraph 389(a)
5
Omit ", 461 and 605", substitute "and 461".
6
34 Subsections 402(2A), (2B) and (2C)
7
Repeal the subsections.
8
35 Subsection 402(4)
9
Repeal the subsection, substitute:
10
(4)
If:
11
(a) a FIF attribution account entity (within the meaning of
12
former Part XI) makes a FIF attribution account payment
13
(within the meaning of former Part XI) to the eligible CFC in
14
the eligible period; and
15
(b) apart from this subsection, the whole or part of the FIF
16
attribution account payment would be included in the
17
notional assessable income of the eligible CFC in relation to
18
the eligible taxpayer for the eligible period; and
19
(c) on the making of the FIF attribution account payment, a post
20
FIF abolition debit arises under section 23AK for the FIF
21
attribution account entity in relation to the eligible taxpayer;
22
so much (if any) of the whole or the part of the FIF attribution
23
account payment as does not exceed the grossed-up amount of the
24
post FIF abolition debit is notional exempt income of the eligible
25
CFC for the eligible period.
26
(5) For the purposes of subsection (4), the grossed-up amount of the
27
post FIF abolition debit is:
28
(a) where subparagraph 23AK(3)(b)(i) applied in relation to the
29
debit--the amount of the debit; or
30
(b) where subparagraph 23AK(3)(b)(ii) applied in relation to the
31
debit--the amount of the debit, divided by the FIF attribution
32
account percentage referred to in that subparagraph.
33
Schedule 1 Repeal of the FIF and deemed present entitlement rules
Part 1 Main amendments
12 Tax Laws Amendment (Foreign Source Income Deferral) Bill (No. 1) 2010 No. ,
2010
36 Subdivision E of Division 7 of Part X
1
Repeal the Subdivision.
2
37 Part XI
3
Repeal the Part.
4
38 Subsection 272-140(1) in Schedule 2F (definition of
5
approved stock exchange)
6
Repeal the definition.
7
39 Schedules 3, 4 and 5
8
Repeal the Schedules.
9
Income Tax Assessment Act 1997
10
40 Section 10-5 (table item headed "attributable income")
11
Omit "and foreign investment funds".
12
41 Section 10-5 (table item headed "FIFs")
13
Repeal the item.
14
42 Section 10-5 (table item headed "foreign investment funds
15
(FIFs)")
16
Repeal the item.
17
43 Section 10-5 (table item headed "insurance")
18
Omit:
19
foreign life assurance policy ............................................... 529
44 Section 11-55 (table item headed "foreign aspects of
20
income taxation")
21
Omit:
22
attributed controlled foreign company income .................. 23AI
attributed foreign investment fund income ........................ 23AK
Substitute:
23
attributed controlled foreign company income, amounts
paid out of .....................................................................
23AI
Repeal of the FIF and deemed present entitlement rules Schedule 1
Main amendments Part 1
Tax Laws Amendment (Foreign Source Income Deferral) Bill (No. 1) 2010 No. , 2010
13
attributed foreign investment fund income, amounts paid
out of .............................................................................
23AK
45 Section 12-5 (table item headed "foreign investment funds
1
(FIFs)")
2
Repeal the item.
3
46 Section 12-5 (table item headed "foreign life assurance
4
policies")
5
Repeal the item.
6
47 Section 70-70
7
Repeal the section.
8
48 Subsection 116-10(7) (note 1)
9
Repeal the note, substitute:
10
Note 1:
Also, these provisions of the Income Tax Assessment Act 1936 modify
11
capital proceeds:
12
(a) section 23B (undistributed FIF attribution income on disposal of
13
an interest in a FIF);
14
(b) sections 159GZZZF and 159GZZZG (cancellation of shares in a
15
holding company);
16
(c) sections 159GZZZQ and 159GZZZS (buy-backs of shares);
17
(d) sections 401, 422, 423 and 461 (CFCs).
18
49 Subsection 230-460(12)
19
Repeal the subsection, substitute:
20
Interest in controlled foreign companies
21
(12) A right or obligation that arises under a
*
direct participation
22
interest of an
*
attributable taxpayer in a
*
controlled foreign
23
company is the subject of an exception.
24
50 Subsection 703-75(4) (note)
25
Omit "and FIF rules in Parts X and XI", substitute "rules in Part X".
26
51 Subsection 715-660(1) (table items 1 and 2)
27
Repeal the table items, substitute:
28
1
A provision of Part X of the
Attribution of income in respect of controlled
Schedule 1 Repeal of the FIF and deemed present entitlement rules
Part 1 Main amendments
14 Tax Laws Amendment (Foreign Source Income Deferral) Bill (No. 1) 2010 No. ,
2010
Income Tax Assessment Act
1936 for an irrevocable
declaration, election, choice
or selection
foreign companies
52 Subdivision 717-D of Division 717 of Part 3-90 (heading)
1
Repeal the heading, substitute:
2
Subdivision 717-D--Transfer of certain surpluses under CFC
3
provisions and former FIF and FLP provisions: entry
4
rules
5
53 Section 717-200
6
Omit "FIF attribution", substitute "post FIF abolition".
7
54 Paragraph 717-205(c)
8
Repeal the paragraph, substitute:
9
(b) the post FIF abolition surplus (if any) (within the meaning of
10
the Income Tax Assessment Act 1936) for a FIF attribution
11
account entity (within the meaning of former Part XI of that
12
Act) in relation to the joining company just before the joining
13
time.
14
55 Section 717-220
15
Repeal the section, substitute:
16
717-220 FIF surpluses
17
(1) This section operates for the purposes of sections 23AK and 23B
18
of the Income Tax Assessment Act 1936 if:
19
(a) a company (the joining company) becomes a
*
subsidiary
20
member of a
*
consolidated group at a time (the joining time);
21
and
22
(b) just before the joining time there was a post FIF abolition
23
surplus for a FIF attribution account entity in relation to the
24
joining company for the purposes of those sections; and
25
(c) just before the joining time, the joining company's FIF
26
attribution account percentage in relation to the FIF
27
attribution account entity for the purposes of those sections
28
was more than nil.
29
Repeal of the FIF and deemed present entitlement rules Schedule 1
Main amendments Part 1
Tax Laws Amendment (Foreign Source Income Deferral) Bill (No. 1) 2010 No. , 2010
15
Credit in relation to the head company
1
(2) A post FIF abolition credit arises at the joining time for the FIF
2
attribution account entity in relation to the
*
head company of the
3
group. The credit is equal to the post FIF abolition surplus.
4
Debit in relation to the joining company
5
(3) A post FIF abolition debit arises at the joining time for the FIF
6
attribution account entity in relation to the joining company. The
7
debit is equal to the post FIF abolition surplus.
8
Definitions
9
(4) In this section:
10
FIF attribution account entity has the same meaning as in former
11
Part XI of the Income Tax Assessment Act 1936.
12
FIF attribution account percentage has the same meaning as in
13
former Part XI of the Income Tax Assessment Act 1936.
14
post FIF abolition credit has the same meaning as in the Income
15
Tax Assessment Act 1936.
16
post FIF abolition debit has the same meaning as in the Income
17
Tax Assessment Act 1936.
18
post FIF abolition surplus has the same meaning as in the Income
19
Tax Assessment Act 1936.
20
56 Section 717-230
21
Repeal the section.
22
57 Subdivision 717-E of Division 717 of Part 3-90 (heading)
23
Repeal the heading, substitute:
24
Subdivision 717-E--Transfer of certain surpluses under CFC
25
provisions and former FIF and FLP provisions: exit
26
rules
27
58 Section 717-235
28
Omit "FIF attribution", substitute "post FIF abolition".
29
Schedule 1 Repeal of the FIF and deemed present entitlement rules
Part 1 Main amendments
16 Tax Laws Amendment (Foreign Source Income Deferral) Bill (No. 1) 2010 No. ,
2010
59 Paragraph 717-240(c)
1
Repeal the paragraph, substitute:
2
(b) the post FIF abolition surplus (if any) (within the meaning of
3
the Income Tax Assessment Act 1936) for a FIF attribution
4
account entity (within the meaning of former Part XI of that
5
Act) in relation to the head company just before the leaving
6
time.
7
60 Section 717-255
8
Repeal the section, substitute:
9
717-255 FIF surpluses
10
(1) This section operates for the purposes of sections 23AK and 23B
11
of the Income Tax Assessment Act 1936 (the 1936 Act) if:
12
(a) a company (the leaving company) ceases to be a
*
subsidiary
13
member of a
*
consolidated group at a time (the leaving time);
14
and
15
(b) just before the leaving time, there was a post FIF abolition
16
surplus for a FIF attribution account entity in relation to the
17
*
head company of the group for the purposes of those
18
sections; and
19
(c) at the leaving time, the leaving company's FIF attribution
20
account percentage in relation to the FIF attribution account
21
entity for the purposes of those sections is more than nil.
22
Credit in relation to the leaving company
23
(2) A post FIF abolition credit arises at the leaving time for the FIF
24
attribution account entity in relation to the leaving company. The
25
credit is the amount worked out under subsection (4).
26
Debit in relation to head company
27
(3) A post FIF abolition debit arises at the leaving time for the FIF
28
attribution account entity in relation to the company that was the
29
*
head company of the group just before the leaving time. The debit
30
is the amount worked out under subsection (4).
31
Repeal of the FIF and deemed present entitlement rules Schedule 1
Main amendments Part 1
Tax Laws Amendment (Foreign Source Income Deferral) Bill (No. 1) 2010 No. , 2010
17
Amount of credit and debit
1
(4) The amount of the credit and debit is worked out using the
2
formula:
3
Leaving company's FIF
attribution account percentage in
relation to the FIF attribution
account entity at the leaving time
*Head company's FIF attribution
account percentage in relation
to the FIF attr
Post FIF abolition surplus
for the FIF attribution
account entity
in relation to the
*head company just
before the leaving time
ibution account entity
just before the leaving time
×
4
Definitions
5
(5) In this section:
6
FIF attribution account entity has the same meaning as in former
7
Part XI of the Income Tax Assessment Act 1936.
8
FIF attribution account percentage has the same meaning as in
9
former Part XI of the Income Tax Assessment Act 1936.
10
post FIF abolition credit has the same meaning as in the Income
11
Tax Assessment Act 1936.
12
post FIF abolition debit has the same meaning as in the Income
13
Tax Assessment Act 1936.
14
post FIF abolition surplus has the same meaning as in the Income
15
Tax Assessment Act 1936.
16
61 Section 717-265
17
Repeal the section.
18
62 Subsection 768-533(1)
19
Repeal the subsection, substitute:
20
(1) This section applies if:
21
(a) the foreign company is a FIF (within the meaning of former
22
section 481 of the Income Tax Assessment Act 1936); and
23
(b) the holding company has made a choice under former
24
subsection 559A(1) of the Income Tax Assessment Act 1936
25
Schedule 1
Repeal of the FIF and deemed present entitlement rules
Part 1
Main amendments
18 Tax Laws Amendment (Foreign Source Income Deferral) Bill (No. 1) 2010 No. ,
2010
in relation to the foreign company in respect of a notional
1
accounting period (within the meaning of former section 486
2
of that Act) of the foreign company that ends in the 2009-10
3
income year; and
4
(c) because of the choice, the foreign company has been treated
5
under former paragraph 559A(3)(c) of that Act as an AFI
6
subsidiary (within the meaning of that Act) in relation to that
7
holding company; and
8
(d) the holding company makes a choice under subsection (1A)
9
in relation to the foreign company; and
10
(e) the holding company has not failed to make a choice under
11
that subsection for the 2010-11 income year or any later
12
income year.
13
(1A) A holding company may make a choice under this subsection in
14
relation to a foreign company if the holding company could have
15
made a choice in relation to the foreign company under former
16
section 559A of the Income Tax Assessment Act 1936 if it had not
17
been repealed by item 37 of Schedule 1 to the Tax Laws
18
Amendment (Foreign Source Income Deferral) Act (No. 1) 2010.
19
63 Section 768-900
20
Omit "controlled foreign company and foreign investment fund rules",
21
substitute "controlled foreign company rules".
22
64 Section 768-965
23
Repeal the section.
24
65 Section 768-975
25
Repeal the section.
26
66 Section 770-135 (heading)
27
Repeal the heading, substitute:
28
770-135 Foreign income tax paid by CFCs on attributed amounts
29
67 Subsection 770-135(1)
30
Omit "or a
*
FIF".
31
68 Subsection 770-135(2)
32
Repeal of the FIF and deemed present entitlement rules Schedule 1
Main amendments Part 1
Tax Laws Amendment (Foreign Source Income Deferral) Bill (No. 1) 2010 No. , 2010
19
Repeal the subsection, substitute:
1
(2) An amount is included in an entity's assessable income as
2
described in this subsection if the entity is a company and the
3
amount is included under:
4
(a) section 456 (a section 456 case) of the 1936 Act in relation to
5
a
*
CFC and a statutory accounting period; or
6
(b) section 457 (a section 457 case) of that Act in relation to a
7
CFC.
8
Note:
Section 456 of the 1936 Act includes, in the assessable income of
9
certain Australian shareholders, amounts that are attributable to the
10
profits of an Australian-controlled foreign company.
11
Section 457 does likewise when a controlled foreign company changes
12
residence from an unlisted to a listed country or to Australia.
13
69 Paragraph 770-135(3)(b)
14
Omit "; or", substitute ".".
15
70 Paragraph 770-135(3)(c)
16
Repeal the paragraph.
17
71 Paragraph 770-135(5)(b)
18
Omit "; or", substitute ".".
19
72 Paragraph 770-135(5)(c)
20
Repeal the paragraph.
21
73 Subsection 770-135(5) (note)
22
Repeal the note.
23
74 Subsections 770-135(6), (7) and (8)
24
Repeal the subsections, substitute:
25
Amount of foreign income tax
26
(7) The amount worked out under this subsection is:
27
(a) for a section 456 case--the sum of all the tax amounts for the
28
statutory accounting period multiplied by the company's
29
*
attribution percentage in relation to the
*
CFC at the time
30
mentioned in paragraph (5)(a); or
31
Schedule 1
Repeal of the FIF and deemed present entitlement rules
Part 1
Main amendments
20 Tax Laws Amendment (Foreign Source Income Deferral) Bill (No. 1) 2010 No. ,
2010
(b) for a section 457 case--the sum of all the tax amounts to the
1
extent they are attributable to the amount included in the
2
company's assessable income under section 457 of the 1936
3
Act.
4
Grossing-up of attributed amount
5
(8) For the purposes of this Act except this section and section 371 of
6
the 1936 Act (for a section 456 case or a section 457 case), the
7
amount included in the entity's assessable income as described in
8
subsection (2) is taken to be increased by the amount of tax worked
9
out under subsection (7).
10
Note:
Section 371 of the 1936 Act records an amount in an attribution
11
account when the amount is included in the assessable income of an
12
attributable taxpayer in relation to a CFC.
13
75 Subsection 830-10(1)
14
Omit "A
*
limited", substitute "Subject to subsection (2), a
*
limited".
15
76 Subsection 830-10(2)
16
Repeal the subsection, substitute:
17
(2) If a partner is not an
*
attributable taxpayer in relation to a
*
limited
18
partnership, then, for the purposes of applying the Income Tax
19
Assessment Act 1936 and this Act in relation to the partner's
20
interest in the limited partnership, the limited partnership is a
21
foreign hybrid limited partnership in relation to an income year
22
for the partner if, and only if, the partner:
23
(a) has made an election under former subsection 485AA(1) of
24
the Income Tax Assessment Act 1936; or
25
(b) makes an election under this paragraph;
26
in relation to the partner's interest in the partnership.
27
(3) For the purposes of subsection (2), the limited partnership is a
28
foreign hybrid limited partnership in relation to any income year
29
during which an election referred to in paragraph (2)(a) or (2)(b) is
30
in force.
31
(4) An election can only be made under paragraph (2)(b) if:
32
(a) disregarding subsection 94D(6) of the Income Tax
33
Assessment Act 1936:
34
Repeal of the FIF and deemed present entitlement rules Schedule 1
Main amendments Part 1
Tax Laws Amendment (Foreign Source Income Deferral) Bill (No. 1) 2010 No. , 2010
21
(i) at the end of the income year in which the election is
1
made, the partner has an interest in a FIF (within the
2
meaning of former Part XI of that Act) that is a
3
*
corporate limited partnership; and
4
(ii) the interest consists of a
*
share in the FIF; and
5
(b) the limited partnership satisfies paragraphs (1)(a) to (d) in
6
relation to the income year in which the election is made.
7
(5) An election under paragraph (2)(b) must be made:
8
(a) on or before the day on which the partner lodges the partner's
9
income tax return for the income year; or
10
(b) within a further time allowed by the Commissioner.
11
(6)
The
election:
12
(a) is in force during the income year and all later income years;
13
and
14
(b)
is
irrevocable.
15
77 Subsection 830-15(1)
16
Omit "A company", substitute "Subject to subsection (5), a company".
17
78 Subsection 830-15(5)
18
Repeal the subsection, substitute:
19
(5) If a shareholder is not an
*
attributable taxpayer in relation to a
20
company, then, for the purposes of applying the Income Tax
21
Assessment Act 1936 and this Act in relation to the shareholder's
22
*
share or shares in the company, the company is a foreign hybrid
23
company in relation to an income year for the shareholder if, and
24
only if, the shareholder:
25
(a) has made an election under former subsection 485AA(1) of
26
the Income Tax Assessment Act 1936; or
27
(b) makes an election under this paragraph;
28
in relation to the shareholder's share or shares in the company.
29
(6) For the purposes of subsection (5), the company is a foreign hybrid
30
company in relation to any income year during which the election
31
referred to in paragraph (5)(a) or (5)(b) is in force.
32
(7) An election can only be made under paragraph (5)(b) if:
33
Schedule 1
Repeal of the FIF and deemed present entitlement rules
Part 1
Main amendments
22 Tax Laws Amendment (Foreign Source Income Deferral) Bill (No. 1) 2010 No. ,
2010
(a) in relation to the income year in which the election is made,
1
the company:
2
(i) is a FIF (within the meaning of former Part XI of the
3
Income Tax Assessment Act 1936); and
4
(ii) satisfies paragraphs (1)(a) to (c); and
5
(b) at the end of the income year in which the election is made,
6
the shareholder's interest in the FIF consists of one or more
7
*
shares in the FIF.
8
(8) An election under paragraph (5)(b) must be made:
9
(a) on or before the day on which the shareholder lodges the
10
shareholder's income tax return for the income year; or
11
(b) within a further time allowed by the Commissioner.
12
(9)
The
election:
13
(a) is in force during the income year and all later income years;
14
and
15
(b)
is
irrevocable.
16
79 Paragraph 960-50(10)(c)
17
Omit ";", substitute ".".
18
80 Paragraph 960-50(10)(d)
19
Repeal the paragraph.
20
81 Subsection 995-1(1) (definition of approved stock
21
exchange)
22
Repeal the definition, substitute:
23
approved stock exchange means a stock exchange named in
24
regulations made for the purposes of this definition.
25
82 Subsection 995-1(1) (definition of attribution percentage)
26
Repeal the definition, substitute:
27
attribution percentage, in relation to a
*
CFC or a
*
CFT, has the
28
meaning given by Part X of the Income Tax Assessment Act 1936.
29
83 Subsection 995-1(1) (definition of FIF)
30
Repeal the definition.
31
Repeal of the FIF and deemed present entitlement rules Schedule 1
Main amendments Part 1
Tax Laws Amendment (Foreign Source Income Deferral) Bill (No. 1) 2010 No. , 2010
23
84 Subsection 995-1(1) (definition of FLP)
1
Repeal the definition.
2
85 Subsection 995-1(1) (definition of foreign investment fund)
3
Repeal the definition.
4
86 Subsection 995-1(1) (definition of notional accounting
5
period)
6
Repeal the definition.
7
Superannuation Industry (Supervision) Act 1993
8
87 Subsection 66(5) (paragraph (b) of the definition of listed
9
security)
10
Omit "section 470 of the Income Tax Assessment Act 1936", substitute
11
"the Income Tax Assessment Act 1997".
12
13
Schedule 1
Repeal of the FIF and deemed present entitlement rules
Part 2
Other amendments
24 Tax Laws Amendment (Foreign Source Income Deferral) Bill (No. 1) 2010 No. ,
2010
Part 2--Other amendments
1
Income Tax Assessment Act 1936
2
88 Subsection 401(1)
3
Repeal the subsection, substitute:
4
(1)
If:
5
(a) it is necessary, for the purposes of applying a provision of
6
this Act in calculating the attributable income of the eligible
7
CFC in relation to the eligible taxpayer, to take into account:
8
(i) the amount of consideration received, entitled to be
9
received or taken to have been received, by the eligible
10
CFC in respect of the disposal of an asset; or
11
(ii) the capital proceeds from a CGT event happening in
12
relation to a CGT asset;
13
being an asset that is an interest in an attribution account
14
entity (the disposal entity); and
15
(b) immediately before the disposal or CGT event takes place,
16
either or both of the following conditions are satisfied:
17
(i) there is an attribution surplus for the disposal entity in
18
relation to the eligible taxpayer;
19
(ii) there is an attribution surplus for one or more other
20
attribution account entities in relation to the eligible
21
taxpayer, where each such entity is one in which the
22
eligible taxpayer has an indirect attribution account
23
interest held through the disposal entity;
24
then:
25
(c) for the purpose of calculating the attributable income, the
26
consideration or capital proceeds that, apart from this section,
27
would be taken into account under the provision referred to
28
in paragraph (a) in respect of the disposal or CGT event is,
29
subject to subsection (3), taken to be reduced by the
30
grossed-up amount of the attribution surplus, or the sum of
31
the grossed-up amounts of the attribution surpluses, as the
32
case requires; and
33
(d) for the purposes of this Act, attribution debits and credits
34
arise in accordance with subsection (5).
35
Note:
The heading to section 401 is replaced by the heading "Reduction of disposal
36
consideration or capital proceeds if attributed income not distributed".
37
Repeal of the FIF and deemed present entitlement rules Schedule 1
Other amendments Part 2
Tax Laws Amendment (Foreign Source Income Deferral) Bill (No. 1) 2010 No. , 2010
25
89 Subsection 401(3)
1
Repeal the subsection, substitute:
2
(3) For the purposes of paragraph (1)(c):
3
(a) a reference to the grossed-up amount of an attribution surplus
4
is a reference to the amount of the surplus divided by the
5
eligible taxpayer's attribution account percentage for the
6
eligible CFC; and
7
(b) where the disposal of the asset, or the CGT event, causes the
8
eligible taxpayer's attribution account percentage for an
9
attribution account entity in relation to which there is an
10
attribution surplus to be reduced by a proportion, then only
11
that proportion of the attribution surplus is, subject to this
12
subsection, to be taken into account under that paragraph;
13
and
14
(c) where there is only one attribution surplus referred to in that
15
paragraph and (after any application of paragraph (b) of this
16
subsection) its grossed-up amount exceeds the consideration
17
in respect of the disposal or the capital proceeds from the
18
CGT event, then the surplus is only to be taken into account
19
to the extent that its grossed-up amount equals the
20
consideration or those capital proceeds; and
21
(d) where there are 2 or more attribution surpluses referred to in
22
paragraph (1)(c) and (after any application of paragraph (b)
23
of this subsection) the sum of their grossed-up amounts
24
exceeds the consideration in respect of the disposal or the
25
capital proceeds from the CGT event, then:
26
(i) if the taxpayer makes an election that for the purposes
27
of this paragraph, a part of each surplus (after any
28
application of paragraph (b)) such that the sum of the
29
grossed-up amounts of the parts to which the election
30
relates equals the consideration or those capital
31
proceeds--only the part to which the election relates of
32
each surplus is to be taken into account under
33
paragraph (1)(c); or
34
(ii) if subparagraph (i) does not apply--only a proportion of
35
each surplus (after any application of paragraph (b)) is
36
to be taken into account under paragraph (1)(c), being
37
the proportion calculated using the formula:
38
Schedule 1
Repeal of the FIF and deemed present entitlement rules
Part 2
Other amendments
26 Tax Laws Amendment (Foreign Source Income Deferral) Bill (No. 1) 2010 No. ,
2010
Consideration
Total grossed-up surplus
1
where:
2
consideration means the amount of the consideration or
3
the capital proceeds.
4
total grossed-up surplus means the sum of the
5
grossed-up amounts of the attribution surpluses (after
6
any application of paragraph (b)).
7
90 Subsection 461(1)
8
Repeal the subsection, substitute:
9
(1)
If:
10
(a) it is necessary, for the purposes of applying a provision of
11
this Act in the assessment of a taxpayer for a year of income,
12
to take into account:
13
(i) the amount of consideration received, entitled to be
14
received or taken to have been received, by the taxpayer
15
in respect of the disposal of an asset; or
16
(ii) the capital proceeds from a CGT event happening in
17
relation to a CGT asset;
18
being an asset that is an interest in an attribution account
19
entity (the disposal entity); and
20
(b) immediately before the disposal or CGT event takes place,
21
either or both of the following conditions are satisfied:
22
(i) there is an attribution surplus for the disposal entity in
23
relation to the taxpayer;
24
(ii) there is an attribution surplus for one or more other
25
attribution account entities in relation to the taxpayer,
26
where each such entity is one in which the taxpayer has
27
an indirect attribution account interest held through the
28
disposal entity;
29
then, for the purposes of this Act:
30
(c) the consideration or capital proceeds that, apart from this
31
section, would be taken into account under the provision
32
referred to in paragraph (a) in respect of the disposal or CGT
33
event is, subject to subsection (3), taken to be reduced by so
34
much of the amount of the attribution surplus, or sum of the
35
attribution surpluses, as the case requires; and
36
Repeal of the FIF and deemed present entitlement rules Schedule 1
Other amendments Part 2
Tax Laws Amendment (Foreign Source Income Deferral) Bill (No. 1) 2010 No. , 2010
27
(d) an attribution debit is taken to arise at the time of the disposal
1
or the CGT event under section 372, in relation to the
2
taxpayer, for each attribution account entity (the surplus
3
entity) in relation to which there is a surplus to which
4
paragraph (c) applies; and
5
(e) the amount of the attribution debit is equal to so much of the
6
surplus as is taken into account under paragraph (c); and
7
(f) there is no grossed-up amount in relation to the attribution
8
debit under section 373.
9
Note:
The heading to section 461 is replaced by the heading "Reduction of disposal
10
consideration or capital proceeds if attributed income not distributed".
11
91 Subsection 461(3)
12
Repeal the subsection, substitute:
13
(3) For the purposes of paragraph (1)(c):
14
(a) if the disposal of the asset or the CGT event causes the
15
taxpayer's attribution account percentage for a surplus entity
16
to be reduced by a proportion, then only that proportion of
17
the attribution surplus for the entity is, subject to this
18
subsection, to be taken into account under that paragraph;
19
and
20
(b) if there is only one attribution surplus referred to in that
21
paragraph and (after any application of paragraph (a) of this
22
subsection) it exceeds the consideration from the disposal or
23
the capital proceeds from the CGT event, then only so much
24
of the surplus as does not exceed that consideration or those
25
capital proceeds is to be taken into account under
26
paragraph (1)(c); and
27
(c) where there are 2 or more attribution surpluses referred to in
28
paragraph (1)(c) and (after any application of paragraph (a)
29
of this subsection) their sum exceeds the consideration from
30
the disposal or the capital proceeds from the CGT event,
31
then:
32
(i) if the taxpayer makes an election that, for the purposes
33
of this paragraph, a part of each surplus (after any
34
application of paragraph (a)) such that the sum of the
35
amounts to which the election relates equals that
36
consideration or those capital proceeds--only the part to
37
which the election relates of each surplus is to be taken
38
into account under paragraph (1)(c); or
39
Schedule 1
Repeal of the FIF and deemed present entitlement rules
Part 2
Other amendments
28 Tax Laws Amendment (Foreign Source Income Deferral) Bill (No. 1) 2010 No. ,
2010
(ii) if subparagraph (i) does not apply--only a proportion of
1
each surplus (after any application of paragraph (a)) is
2
to be taken into account under paragraph (1)(c), being
3
the proportion calculated using the formula:
4
Consideration
Total surplus
5
where:
6
consideration means the amount of the consideration or
7
the capital proceeds.
8
total
surplus means the sum of the attribution surpluses
9
(after any application of paragraph (a)).
10
92 Section 613
11
Repeal the section, substitute:
12
613 Reduction of disposal consideration or capital proceeds if
13
FIF attributed income not distributed
14
(1)
If:
15
(a) it is necessary, for the purposes of applying a provision of
16
this Act in the assessment of a taxpayer for a year of income,
17
to take into account:
18
(i) the amount of consideration received, entitled to be
19
received or taken to have been received, by the taxpayer
20
in respect of the disposal of an asset; or
21
(ii) the capital proceeds from a CGT event happening in
22
relation to a CGT asset;
23
being an asset that is an interest in a FIF attribution account
24
entity; and
25
(b) immediately before the disposal or CGT event takes place
26
there is a FIF attribution surplus for the FIF attribution
27
account entity in relation to the taxpayer;
28
then, for the purposes of this Act:
29
(c) the consideration or capital proceeds that, apart from this
30
section, would be taken into account under the provision
31
referred to in paragraph (a) in respect of the disposal or CGT
32
event is taken to be reduced by so much of the amount of the
33
Repeal of the FIF and deemed present entitlement rules Schedule 1
Other amendments Part 2
Tax Laws Amendment (Foreign Source Income Deferral) Bill (No. 1) 2010 No. , 2010
29
FIF attribution surplus as does not exceed the consideration
1
or capital proceeds; and
2
(d) a FIF attribution debit is taken to arise at the time of the
3
disposal or the CGT event under section 606, in relation to
4
the taxpayer, for the FIF attribution account entity; and
5
(e) the amount of the FIF attribution debit is equal to so much of
6
the surplus as is taken into account under paragraph (c).
7
(2) For the purposes of paragraph (1)(c), if the disposal of the asset or
8
the CGT event causes the taxpayer's FIF attribution account
9
percentage for the FIF attribution account entity to be reduced by a
10
proportion, then only that proportion of the FIF attribution surplus
11
for the entity is to be taken into account under that paragraph.
12
13
Schedule 1
Repeal of the FIF and deemed present entitlement rules
Part 3
Application and saving provisions
30 Tax Laws Amendment (Foreign Source Income Deferral) Bill (No. 1) 2010 No. ,
2010
Part 3--Application and saving provisions
1
93 Application of Part 1 amendments
2
(1)
The amendments made by items 2 to 7, 9, 37, 39, 47 to 49, 51, 54 to 56,
3
59 to 80, and 82 to 87 of this Schedule apply in relation to the 2010-11
4
year of income for a taxpayer and later years of income.
5
(2)
The amendments made by items 10 to 13 of this Schedule apply in
6
relation to the 2010-11 year of income for a trust estate and later years
7
of income.
8
(3)
The amendments made by items 14 to 36 of this Schedule apply in
9
relation to statutory accounting periods ending in the 2010-11 year of
10
income and later years of income.
11
94 Application of Part 2 amendments
12
The amendments made by Part 2 of this Schedule apply to assessments
13
for the 2006-07 income year and later income years.
14
95 Saving of regulations relating to stock exchanges
15
Despite the repeal of the definition of approved stock exchange in
16
section 470 of the Income Tax Assessment Act 1936 by item 37 of this
17
Schedule, regulations made for the purposes of that definition that were
18
in force immediately before this item commences continue in force on
19
and after that commencement as if those regulations had been made for
20
the purposes of the definition of approved stock exchange in the
21
Income Tax Assessment Act 1997 as inserted by item 81 of this
22
Schedule.
23
96 Saving of elections relating to foreign hybrids
24
Despite the repeal of subsection 485AA(1) of the Income Tax
25
Assessment Act 1936 by item 37 of this Schedule, elections made under
26
that subsection continue to have effect on and after the commencement
27
of this Schedule as if that repeal had not happened.
28

 

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