{"id":"C2004A03291","name":"Income Tax (Securities and Agreements) (Withholding Tax Recoupment) Act 1986","slug":"income-tax-securities-and-agreements-withholding-tax-recoupment-act-1986","collection":"act","jurisdiction":"commonwealth","status":"in_force","isInForce":true,"actNumber":"50 of 1986","makingDate":null,"administeringDepartment":null,"currentVersion":{"id":7185,"registerId":"commonwealth-C2004A03291-current","compilationNumber":null,"startDate":"2026-03-30","status":"InForce","reasons":null,"registeredAt":null},"sections":[{"sectionNumber":"1","sectionType":"section","heading":"Income Tax (Securities and Agreements) (Withholding Tax Recoupment) Act 1986","content":"---\nmeta-content-style-type: text/css\nmeta-content-type: application/xhtml+xml; charset=utf-8\n---\n\n?xml version=\"1.0\" encoding=\"utf-8\" standalone=\"no\"?>\n\n![](image.001.png)\n\n \n\n \n\n \n\n \n\n \n\n \n\nIncome Tax (Securities and Agreements) (Withholding Tax Recoupment) Act 1986\n\n \n\nNo. 50, 1986\n\n \n\n \n\n \n\n \n\n \n\nAn Act to impose income tax in respect of avoided withholding tax amounts in relation to certain securities and agreements\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 Amount of tax\n\n \n\n![](image.002.png)\n\n \n\n \n\nIncome Tax (Securities and Agreements) (Withholding Tax Recoupment) Act 1986\n\n \n\nNo. 50, 1986\n\n \n\n \n\n \n\n \n\nAn Act to impose income tax in respect of avoided withholding tax amounts in relation to certain securities and agreements\n\n[Assented to 24 June 1986]\n\nThe Parliament of Australia enacts:\n\n##### 1  Short title\n\n  This Act may be cited as the Income Tax (Securities and Agreements) (Withholding Tax Recoupment) Act 1986.\n\n##### 2  Commencement\n\n  This Act shall come into operation on the day on which the Taxation Laws Amendment Act (No. 2) 1986 receives the Royal Assent.\n\n##### 3  Interpretation\n\n  In this Act, Assessment Act means the Income Tax Assessment Act 1936.\n\n##### 4  Incorporation\n\n  The Assessment Act is incorporated and shall be read as one with this Act.\n\n##### 5  Imposition of tax\n\n  The tax known as income tax, to the extent that it is payable in accordance with subsection 128NA(4) of the Assessment Act, is imposed, and shall be levied and paid, upon the avoided withholding tax amount referred to in that subsection.\n\n##### 6  Amount of tax\n\n  The amount of the tax imposed by this Act in respect of the avoided withholding tax amount referred to in subsection 128NA(4) of the Assessment Act is an amount equal to that avoided withholding tax amount.\n\n \n","sortOrder":0}],"analysis":{"kimi_summary":{"content_quality":"ok","complexity_score":2,"scope_assessment":{"changed":false,"description":"The Act remains tightly focused on its original purpose: imposing a penalty tax equal to avoided withholding tax amounts as defined in the Assessment Act. It has not expanded beyond this narrow recoupment function since its enactment in 1986."},"complexity_factors":["Extremely short: only 6 sections spanning approximately 1 page","Single defined term ('Assessment Act') in the interpretation section","No nested exceptions or conditional logic — the tax is imposed at a flat 100% of the avoided amount","Operates entirely by reference to external legislation (Income Tax Assessment Act 1936, section 128NA)","No substantive operational rules contained within the Act itself — it is purely a 'machinery' provision imposing tax that is calculated elsewhere"],"plain_english_summary":"This law is a **tax penalty mechanism** designed to stop people from dodging withholding tax on interest payments.\n\n**What it does:**\n- When someone lends money to an Australian borrower, the borrower normally has to **withhold tax** (take out a portion of the interest payment and send it to the tax office) before paying the rest to the overseas lender.\n- Some people were using clever financial arrangements — involving **securities and agreements** — to get around this withholding requirement.\n- This Act imposes a special **recoupment tax** (a penalty tax to recover what should have been paid) equal to the amount of tax that was avoided.\n\n**Who it affects:**\n- Anyone involved in financial arrangements designed to avoid withholding tax on interest payments to non-residents.\n- Primarily targets sophisticated taxpayers and financial institutions using structured products.\n\n**Why it matters:**\n- It closes a loophole where people could structure deals to look like something other than interest-bearing loans, thereby escaping the withholding tax net.\n- The penalty is severe: you pay **100% of the avoided tax amount** as a penalty.\n- It works hand-in-hand with the main Income Tax Assessment Act 1936 (specifically section 128NA), which defines what constitutes an \"avoided withholding tax amount.\""},"flash_summary_failed":{"failed":true,"reason":"A positive credit balance is required for all requests, including BYOK, so fallback providers remain available. Add credits at https://vercel.com/d?to=%2F%5Bteam%5D%2F%7E%2Fai%3Fmodal%3Dtop-up to continue.","source":"analysis-cron"},"flash_summary":{"complexity_score":2,"scope_assessment":{"changed":false,"description":"This Act does not broaden or narrow which amounts are subject to tax; it incorporates the Income Tax Assessment Act 1936 (s4) and simply (a) imposes income tax to the extent payable under subsection 128NA(4) (s5) and (b) fixes the tax amount equal to the avoided withholding tax amount referred to in that subsection (s6). Any change to scope or definitions therefore depends on s128NA(4) of the Assessment Act, not on this Act."},"complexity_factors":["Short, single-purpose statute with only six sections (low textual complexity).","Direct cross-reference to a specific subsection of the Income Tax Assessment Act 1936 (requires reading external provision: s128NA(4)).","Key operative terms (e.g. \"avoided withholding tax amount\") are defined or given effect only by the Assessment Act, not within this Act.","No discretionary powers or administrative procedures set out in this Act (straightforward mechanical imposition).","Practical compliance requires tax computation and identification of liable parties under the Assessment Act (administrative/technical complexity lies outside this Act)."],"plain_english_summary":"This Act makes income tax payable on any “avoided withholding tax amount” identified by subsection 128NA(4) of the Income Tax Assessment Act 1936 (the Assessment Act is incorporated by s4). It states that the tax payable equals that avoided withholding tax amount (ss5–6). It therefore affects taxpayers to whom s128NA(4) applies; identifying who pays and how much requires applying the cross‑referenced provision in the Assessment Act."}},"importantCases":[],"_links":{"self":"/api/acts/income-tax-securities-and-agreements-withholding-tax-recoupment-act-1986","history":"/api/acts/income-tax-securities-and-agreements-withholding-tax-recoupment-act-1986/history","analysis":"/api/acts/income-tax-securities-and-agreements-withholding-tax-recoupment-act-1986/analysis","conflicts":"/api/acts/income-tax-securities-and-agreements-withholding-tax-recoupment-act-1986/conflicts","importantCases":"/api/acts/income-tax-securities-and-agreements-withholding-tax-recoupment-act-1986/important-cases","documents":"/api/acts/income-tax-securities-and-agreements-withholding-tax-recoupment-act-1986/documents"}}