{"id":"C1971A00055","name":"Income Tax (Bearer Debentures) Act 1971","slug":"income-tax-bearer-debentures-act-1971","collection":"act","jurisdiction":"commonwealth","status":"in_force","isInForce":true,"actNumber":"55 of 1971","makingDate":null,"administeringDepartment":null,"currentVersion":{"id":2321,"registerId":"C2014C00341","compilationNumber":null,"startDate":"2014-06-25","status":"InForce","reasons":[{"affect":"Amend","markdown":"sch 1 of the [Income Tax (Bearer Debentures) Amendment (Temporary Budget Repair Levy) Act 2014](/C2014A00043)","dateChanged":null,"amendedByTitle":null,"affectedByTitle":{"name":"Income Tax (Bearer Debentures) Amendment (Temporary Budget Repair Levy) Act 2014","year":2014,"number":43,"titleId":"C2014A00043","provisions":"sch 1","seriesType":"Act","optionalSeriesNumber":null}}],"registeredAt":"2014-07-09T09:37:11.720Z"},"sections":[{"sectionNumber":"1","sectionType":"section","heading":"Income Tax (Bearer Debentures) Act 1971","content":"---\nmeta-content-style-type: text/css\nmeta-content-type: application/xhtml+xml; charset=utf-8\ntitle: Income Tax (Bearer Debentures) Act 1971\n---\n\n?xml version=\"1.0\" encoding=\"utf-8\" standalone=\"no\"?>\n\n![Commonwealth Coat of Arms](image.001.png)\n\nIncome Tax (Bearer Debentures) Act 1971\n\nAct No. 55 of 1971 as amended\n\nCompilation start date:   25 June 2014\n\nIncludes amendments up to: Act No. 43, 2014\n\n \n\nAbout this compilation\n\nThis compilation\n\nThis is a compilation of the Income Tax (Bearer Debentures) Act 1971 as in force on 25 June 2014. It includes any commenced amendment affecting the legislation to that date.\n\nThis compilation was prepared on 2 July 2014.\n\nThe notes at the end of this compilation (the endnotes) include information about amending laws and the amendment history of each amended provision.\n\nUncommenced amendments\n\nThe effect of uncommenced amendments is not reflected in the text of the compiled law but the text of the amendments is included in the endnotes.\n\nApplication, saving and transitional provisions for provisions and amendments\n\nIf the operation of a provision or amendment is affected by an application, saving or transitional provision that is not included in this compilation, details are included in the endnotes.\n\nModifications\n\nIf a provision of the compiled law is affected by a modification that is in force, details are included in the endnotes.\n\nProvisions ceasing to have effect\n\nIf a provision of the compiled law has expired or otherwise ceased to have effect in accordance with a provision of the law, details are included in the endnotes.\n\n \n\n \n\n \n\nContents\n\n1 Short title\n\n2 Commencement\n\n3 Interpretation\n\n4 Incorporation\n\n5 Imposition of tax\n\n6 Rate of tax\n\n7 Temporary budget repair levy\n\nEndnote 1—About the endnotes\n\nEndnote 2—Abbreviation key\n\nEndnote 3—Legislation history\n\nEndnote 4—Amendment history\n\nEndnote 5—Uncommenced amendments [none]\n\nEndnote 6—Modifications [none]\n\nEndnote 7—Misdescribed amendments [none]\n\nEndnote 8—Miscellaneous [none]\n\n \n\nAn Act to impose Income Tax upon Interest paid or credited by Companies in respect of certain Debentures\n\n \n\n \n\n1  Short title\n\n  This Act may be cited as the Income Tax (Bearer Debentures) Act 1971.\n\n2  Commencement\n\n  This Act shall come into operation on the day on which it receives the Royal Assent.\n\n3  Interpretation\n\n  In this Act, the Assessment Act means the Income Tax Assessment Act 1936‑1971.\n\n4  Incorporation\n\n  The Assessment Act is incorporated and shall be read as one with this Act.\n\n5  Imposition of tax\n\n  The tax known as income tax, to the extent that it is payable in accordance with section 126 of the Assessment Act, is imposed, and shall be levied and paid, upon interest to which that section applies.\n\n6  Rate of tax\n\n  The rate of tax imposed by this Act on an amount of interest is 45%.\n\n7  Temporary budget repair levy\n\n (1) This section applies to amounts of interest paid or credited in a temporary budget repair levy year.\n\n (2) Increase the rate of tax mentioned in section 6 by 2 percentage points.\n\n (3) In this section:\n\ntemporary budget repair levy year has the same meaning as in section 4‑11 of the Income Tax (Transitional Provisions) Act 1997.\n\nEndnote 1—About the endnotes\n\nThe endnotes provide details of the history of this legislation and its provisions. The following endnotes are included in each compilation:\n\n \n\nEndnote 1—About the endnotes\n\nEndnote 2—Abbreviation key\n\nEndnote 3—Legislation history\n\nEndnote 4—Amendment history\n\nEndnote 5—Uncommenced amendments\n\nEndnote 6—Modifications\n\nEndnote 7—Misdescribed amendments\n\nEndnote 8—Miscellaneous\n\n \n\nIf there is no information under a particular endnote, the word “none” will appear in square brackets after the endnote heading.\n\n \n\nAbbreviation key—Endnote 2\n\nThe abbreviation key in this endnote sets out abbreviations that may be used in the endnotes.\n\n \n\nLegislation history and amendment history—Endnotes 3 and 4\n\nAmending laws are annotated in the legislation history and amendment history.\n\n \n\nThe legislation history in endnote 3 provides information about each law that has amended the compiled law. The information includes commencement information for amending laws and details of application, saving or transitional provisions that are not included in this compilation.\n\n \n\nThe amendment history in endnote 4 provides information about amendments at the provision level. It also includes information about any provisions that have expired or otherwise ceased to have effect in accordance with a provision of the compiled law.\n\n \n\nUncommenced amendments—Endnote 5\n\nThe effect of uncommenced amendments is not reflected in the text of the compiled law but the text of the amendments is included in endnote 5.\n\n \n\nModifications—Endnote 6\n\nIf the compiled law is affected by a modification that is in force, details of the modification are included in endnote 6.\n\n \n\nMisdescribed amendments—Endnote 7\n\nAn amendment is a misdescribed amendment if the effect of the amendment cannot be incorporated into the text of the compilation. Any misdescribed amendment is included in endnote 7.\n\n \n\nMiscellaneous—Endnote 8\n\nEndnote 8 includes any additional information that may be helpful for a reader of the compilation.\n\n \n\nEndnote 2—Abbreviation key\n\n \n\n| ad = added or inserted | pres = present |\n| --- | --- |\n| am = amended | prev = previous |\n| c = clause(s) | (prev) = previously |\n| Ch = Chapter(s) | Pt = Part(s) |\n| def = definition(s) | r = regulation(s)/rule(s) |\n| Dict = Dictionary | Reg = Regulation/Regulations |\n| disallowed = disallowed by Parliament | reloc = relocated |\n| Div = Division(s) | renum = renumbered |\n| exp = expired or ceased to have effect | rep = repealed |\n| hdg = heading(s) | rs = repealed and substituted |\n| LI = Legislative Instrument | s = section(s) |\n| LIA = Legislative Instruments Act 2003 | Sch = Schedule(s) |\n| mod = modified/modification | Sdiv = Subdivision(s) |\n| No = Number(s) | SLI = Select Legislative Instrument |\n| o = order(s) | SR = Statutory Rules |\n| Ord = Ordinance | Sub‑Ch = Sub‑Chapter(s) |\n| orig = original | SubPt = Subpart(s) |\n| par = paragraph(s)/subparagraph(s)<br>/sub‑subparagraph(s) |  |\n\n\n \n\n \n\nEndnote 3—Legislation history\n\n \n\n| Act | Number and year | Assent | Commencement | Application, saving and transitional provisions |\n| --- | --- | --- | --- | --- |\n| Income Tax (Bearer Debentures) Act 1971 | 55, 1971 | 25 May 1971 | 25 May 1971 |  |\n| Income Tax (Bearer Debentures) Act 1974 | 128, 1974 | 6 Dec 1974 | 6 Dec 1974 | — |\n| Income Tax (Bearer Debentures) Amendment Act 1983 | 107, 1983 | 23 Nov 1983 | 23 Nov 1983 | — |\n| Taxation Laws (Miscellaneous Provisions) Act 1986 | 109, 1986 | 4 Nov 1986 | 4 Nov 1986 | — |\n| Taxation Laws Amendment (Rates and Rebates) Act 1989 | 70, 1989 | 21 June 1989 | 21 June 1989 | s. 6 |\n| Taxation Laws Amendment Act (No. 2) 1997 | 95, 1997 | 30 June 1997 | Schedule 5 (item10): (a) | Sch. 5 (item 11) [see Table A] |\n| Tax Laws Amendment (Personal Tax Reduction and Improved Depreciation Arrangements) Act 2006 | 55, 2006 | 19 June 2006 | Schedule 1 (items 6, 32(2)): 1 July 2006 | Sch. 1 (item 32(2)) [see Table A] |\n| Income Tax (Bearer Debentures) Amendment (Temporary Budget Repair Levy) Act 2014 | 43, 2014 | 25 June 2014 | Sch 1: 25 June 2014 (see s 2(1))  Remainder: Royal Assent | — |\n\n\n \n\nEndnote 4—Amendment history\n\n \n\n| Provision affected | How affected |\n| --- | --- |\n| s. 6..................... | am. No. 128, 1974; No. 107, 1983; No. 109, 1986; No. 70, 1989 |\n|  | rs. No. 95, 1997 |\n|  | am. No. 55, 2006 |\n| s7...................... | ad No 43, 2014 |\n\n\n \n\nEndnote 5—Uncommenced amendments [none]\n\nEndnote 6—Modifications [none]\n\nEndnote 7—Misdescribed amendments [none]\n\nEndnote 8—Miscellaneous [none]\n\n \n\n \n\n \n\n \n","sortOrder":0}],"analysis":{"flash_summary_failed":{"failed":true,"reason":"Unauthenticated. Configure AI_GATEWAY_API_KEY or use a provider module. Learn more: https://ai-sdk.dev/unauthenticated-ai-gateway","source":"analysis-cron"},"flash_summary":{"complexity_score":3,"scope_assessment":{"changed":false,"description":"The Act’s core scope—taxing interest on certain debentures identified by reference to section 126 of the Assessment Act—remains the same as its original purpose. Amendments over time have altered the tax rate (s.6) and added a temporary levy mechanism (s.7), which change fiscal impact and timing but do not materially broaden the Act’s substantive subject matter."},"complexity_factors":["Very short Act: 7 sections only (ss 1–7)","Incorporates an external, substantive statute (Income Tax Assessment Act 1936‑1971) by reference (s.3–4), shifting detail to that instrument","Relies on a specific provision of the Assessment Act (s.126) rather than restating assessment rules (s.5)","Cross‑reference to a separate Act for the temporary levy year definition (Income Tax (Transitional Provisions) Act 1997 s.4‑11) (s.7)","Few in‑Act definitions or exceptions (minimal internal complexity), but external cross‑references increase interpretive work","Amendment history changes the applied tax rate and added the temporary levy (tracked in endnotes) — affects fiscal outcome though not structural complexity"],"plain_english_summary":"**What this law does (mechanics)\n\n- The Act taxes interest paid or credited by companies in respect of certain \"debentures\" (a form of debt security).  The tax is imposed by reference to section 126 of the Income Tax Assessment Act 1936‑1971 (the Assessment Act). (Section 5.)\n- The Act sets the rate of that tax at 45% of the interest amount. (Section 6.)\n- For any year that is a \"temporary budget repair levy year\" (a term defined in another Act), the rate is increased by 2 percentage points (so the effective rate in such a year is 47%). (Section 7.)\n- The Assessment Act is incorporated into this Act, so the detailed rules in the Assessment Act about how interest is assessed, collected and administered apply together with this Act. (Sections 3–4.)\n\nWho is affected and who pays\n\n- Companies that pay or credit interest on the kinds of debentures covered by section 126 of the Assessment Act must deal with this tax treatment when they make interest payments/credits.\n- Holders of those debentures (the recipients of the interest) are the economic subjects of the tax: the interest they receive is taxed at the rate set by this Act. Practically this can reduce the net return to a debenture holder.\n- The Australian Taxation Office (under the Assessment Act) administers, assesses and collects the tax; the Act operates by folding its provisions into the Assessment Act framework.\n\nWhy it matters (practical effects, incentives and trade‑offs)\n\n- It targets interest on a specific form of debt (bearer-type debentures). By imposing a high, fixed rate on that interest, the Act raises the after‑tax cost of holding those debentures for investors and can raise the effective funding cost for companies issuing them. (s.5–6.)\n- Because the Act applies to interest \"to which\" section 126 of the Assessment Act applies, the detailed incidence, timing and collection rules depend on the incorporated Assessment Act provisions. That means administration, withholding obligations (if any), deduction rules and assessment procedures follow the Assessment Act rules. (s.3–4, s.5.)\n- The temporary budget repair levy mechanism (s.7) is a fiscal add‑on that can temporarily increase the tax rate. It is triggered only in years designated under a separate Act, so the headline rate can change for limited periods without altering the core structure of the Act.\n\nCosts, compliance burden and implementation issues\n\n- Compliance and administration: companies and debenture holders must apply the Assessment Act’s rules when reporting and assessing the interest; tax administration is handled through existing ATO processes (because the Assessment Act is incorporated). That reduces the need for wholly new administrative machinery but requires actors to apply cross‑referenced rules.\n- Private‑sector choices and substitution effects: a high fixed tax on this interest makes bearer‑style debentures less attractive compared with other instruments (registered debentures, bonds, or other financing). Issuers or investors may substitute away from instruments caught by this Act.\n- Concentration of effects: the measure concentrates costs on holders and issuers who use the particular debenture form covered by section 126 — other investors are unaffected. Any fiscal benefit (tax receipts) accrues to the Commonwealth.\n- Revenue versus behavioural change trade‑off: increasing tax rates (including temporary levies) raises revenue from the covered interest but may shrink the tax base over time if issuance or demand for the covered instruments falls.\n\nScope and limits\n\n- The Act is narrow in scope: it applies to interest on debentures of the kind picked up by section 126 of the Assessment Act. It does not itself define complex rules about assessment or exemptions — those are supplied by the incorporated Assessment Act. (s.3–5.)\n\nOfficial purpose claims and testing them against effects\n\n- The Act’s long title and text show a clear statutory purpose: to impose income tax on interest paid or credited by companies in respect of certain debentures. That purpose is implemented by (a) incorporating the Assessment Act for technical rules, and (b) prescribing a tax rate (and a mechanism for a temporary levy). (Long title; ss 3–7.)\n- Tested against costs and incentives: the Act achieves a simple, administrable rule (fixed percentage rate) which simplifies calculation of tax on the covered interest. The trade‑offs are predictable: a straightforward rule is easy to apply but delivers a blunt instrument that may prompt substitution to other financial instruments, and it concentrates compliance and economic cost on users of the specified debentures.\n\nKey provisions cited: sections 3–7 (incorporation, imposition, rate, temporary levy) and the reference to section 126 of the Income Tax Assessment Act 1936‑1971 (through which the detailed assessment rules operate)."},"kimi_summary":{"content_quality":"ok","complexity_score":2,"scope_assessment":{"changed":false,"description":"The legislation has remained tightly focused on its original purpose since 1971. The only significant addition was section 7 in 2014, which added the temporary budget repair levy mechanism — a time-limited revenue measure consistent with the Act's function as a tax imposition statute. The core scope (taxing interest on bearer debentures at a penalty rate) has not expanded or drifted from its original anti-avoidance intent."},"complexity_factors":["Only 7 operative sections, with 4 being mechanical (short title, commencement, interpretation, incorporation)","Single substantive provision imposing tax (section 5) with minimal conditions","Flat tax rate of 45% with simple 2 percentage point surcharge mechanism","Only 1 defined term in the Act itself ('Assessment Act'), plus 1 definition by reference ('temporary budget repair levy year')","No nested exceptions, conditional logic, or complex cross-referencing beyond incorporation of the 1936 Assessment Act","Legislation history shows only 6 amending Acts over 43 years, with most amendments simply updating the tax rate"],"plain_english_summary":"This law imposes a special tax on interest payments made by companies on **bearer debentures** — a type of loan document where whoever physically holds the certificate (the 'bearer') is entitled to receive the interest payments, rather than a named individual.\n\n**What it does:**\n- **Targets specific financial instruments:** Bearer debentures are essentially anonymous IOUs issued by companies. Because they don't record who owns them, they can be used to hide income from tax authorities.\n- **Imposes a flat tax rate:** The law charges a **45% tax** on interest paid or credited on these debentures. This is significantly higher than normal income tax rates to discourage their use for tax avoidance.\n- **Includes a temporary surcharge:** During 'temporary budget repair levy years' (a specific period relating to budget repair measures), the tax rate increases by an additional **2 percentage points** to **47%**.\n\n**Who it affects:**\n- Companies that issue bearer debentures and pay interest on them\n- Anyone who holds bearer debentures and receives interest payments\n- The Australian Taxation Office, which collects this specific tax\n\n**Why it matters:**\nBearer instruments are attractive to people who want to hide their income because ownership isn't registered anywhere. This law ensures that even if the recipient's identity is unknown, the company paying the interest must still withhold tax at a high rate. It's essentially an anti-avoidance measure to prevent people from using anonymous financial instruments to evade paying their fair share of tax.\n\nThe law works together with the **Income Tax Assessment Act 1936** (referred to here as 'the Assessment Act'), which contains the detailed rules about how this tax is calculated and collected."}},"importantCases":[],"_links":{"self":"/api/acts/income-tax-bearer-debentures-act-1971","history":"/api/acts/income-tax-bearer-debentures-act-1971/history","analysis":"/api/acts/income-tax-bearer-debentures-act-1971/analysis","conflicts":"/api/acts/income-tax-bearer-debentures-act-1971/conflicts","importantCases":"/api/acts/income-tax-bearer-debentures-act-1971/important-cases","documents":"/api/acts/income-tax-bearer-debentures-act-1971/documents"}}