(a) at any time during the year of income the company is a resident of Australia; and
(b) the company is liable to tax in a foreign country in respect of some or all of the income or profits of the company of the year of income (or would be so liable if the company derived income or profits) because:
(i) the company is treated as a resident of that country for the purposes of the relevant law of that country; or
(ii) the company is treated as domiciled in that country for the purposes of the relevant law of that country; or
(iii) the company’s management and control is treated as being located in that country for the purposes of the relevant law of that country; and
(c) at any time during the year of income when the company was in existence:
(i) the company was not carrying on business with a reasonable view to profit; or
(ii) a substantial purpose of the company (whether or not stated in its constituent document) was to acquire or hold shares, securities or other investments in related companies (whether directly or indirectly through one or more companies, partnerships or trusts).
(2) For the purposes of this section, companies are related to each other if they are controlled (as defined by subsection (3)) by the same person, either alone or together with associates (whether or not the same associates are involved in relation to each company).
(3) For the purposes of this section, a person, either alone or together with associates, controls a company if:
(a) the person, either alone or together with associates:
(i) controls or is capable of controlling, either directly or through one or more interposed companies, partnerships or trusts, at least 50% of the maximum number of votes that might be cast at a general meeting of the company; or
(ii) is beneficially entitled to receive, directly or indirectly, at least 50% of any dividends that are or might be paid, or of any distribution of capital that is or may be made, by the company; or
(iii) is capable, under a scheme, of gaining such control or such an entitlement; or
(b) the company or its directors are accustomed or under an obligation (whether formal or informal), or might reasonably be expected, to act in accordance with the directions, instructions or wishes of the person, either alone or together with associates.
(4) Section 159GZH applies for the purposes of this section in determining the beneficial entitlement of a person to receive indirectly the whole or a particular fraction of a dividend that is, or might be, paid by a company or of a distribution of capital of a company.
(5) In this section:
associate has the same meaning as in section 318.
scheme means:
(a) any agreement, arrangement, understanding, promise or undertaking, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings; and
(b) any scheme, plan, proposal, action, course of action or course of conduct, whether there are 2 or more parties or only one party involved.
6H Recognised small credit unions, recognised medium credit unions and recognised large credit unions
Recognised small credit union in relation to a year of income
(1) For the purposes of this Act, a credit union is a recognised small credit union in relation to a year of income if:
(a) both:
(i) the year of income is the 1994‑95 year of income; and
(ii) either:
(A) the credit union is not a designated credit union; or
(B) the credit union’s notional taxable income of the year of income is less than $50,000; or
(b) both:
(i) the year of income is the 1995‑96 year of income or a later year of income; and
(ii) the credit union’s notional taxable income of the year of income is less than $50,000.
Recognised medium credit union in relation to a year of income
(2) For the purposes of this Act, a credit union is a recognised medium credit union in relation to a year of income if:
(a) the year of income is the 1994‑95 year of income or a later year of income; and
(b) the credit union is not a recognised small credit union in relation to the year of income; and
(c) the credit union’s notional taxable income of the year of income is less than $150,000.
Recognised large credit union in relation to a year of income
(3) For the purposes of this Act, a credit union is a recognised large credit union in relation to a year of income if:
(a) the year of income is the 1994‑95 year of income or a later year of income; and
(b) the credit union is neither:
(i) a recognised small credit union in relation to the year of income; nor
(ii) a recognised medium credit union in relation to the year of income.
Designated credit union
(4) For the purposes of this section, a credit union is a designated credit union if:
(a) it was in existence on 1 July 1993; and
(b) assuming that its accounts for the last accounting period that ended before 1 July 1993 had been prepared in accordance with generally accepted accounting principles—the amount that would have been shown in those accounts as the gross value of its assets as at the end of that accounting period is more than $30 million.
Notional taxable income
(5) For the purposes of this section, the notional taxable income of a credit union of a year of income is the amount that would be its taxable income of the year of income if:
(a) section 23G did not apply to income derived by it in the 1994‑95 year of income or any later year of income; and
(b) Division 9 of Part III had not been enacted.
Definitions
(6) In this section:
accounting period, in relation to a credit union, means a period at the end of which the balance of its accounts is struck.
accounts, in relation to a credit union, means accounts prepared for the purposes of reporting annually to the shareholders in the credit union.
credit union means a credit union as defined in section 23G, except a life assurance company.
7B Application of the Criminal Code
Chapter 2 of the Criminal Code applies to all offences against this Act.
Note: Chapter 2 of the Criminal Code sets out the general principles of criminal responsibility.
Part II—Administration
8 Commissioner
The Commissioner shall have the general administration of this Act.
Note: An effect of this provision is that people who acquire information under this Act are subject to the confidentiality obligations and exceptions in Division 355 in Schedule 1 to the Taxation Administration Act 1953.
14 Annual report
(1) The Commissioner shall, as soon as practicable after 30 June in each year, prepare and furnish to the Minister a report on the working of this Act, including any breaches or evasions of this Act of which the Commissioner has notice.
(2) The Minister shall cause a copy of a report furnished to him or her under subsection (1) to be laid before each House of the Parliament within 15 sitting days of that House after the day on which he or she receives the report.
(3) For the purposes of section 34C of the Acts Interpretation Act 1901, a report that is required by subsection (1) to be furnished as soon as practicable after 30 June in a year shall be taken to be a periodic report relating to the working of this Act during the year ending on that 30 June.
Part III—Liability to taxation
Division 1—General
18 Accounting period
Any person may, with the leave of the Commissioner, adopt an accounting period being the 12 months ending on some date other than 30 June. For the purposes of this Act, the person’s accounting period in each succeeding year shall end on the corresponding date of that year, unless:
(a) with the leave of the Commissioner some other date is adopted; or
(b) the accounting period ends earlier under section 18A.
18A Accounting periods for VCLPs, ESVCLPs, AFOFs and VCMPs
(1) If a partnership becomes, or ceases to be, a VCLP, an ESVCLP, an AFOF or a VCMP on a particular day:
(a) the accounting period during which that day occurs (the first accounting period) is taken to have ended immediately before that day; and
(b) another accounting period is taken to have commenced at the beginning of that day.
The other accounting period ends on the day on which the first accounting period would have ended if this section did not apply.
Example: A partnership whose accounting periods ended on 30 June becomes a VCLP, an ESVCLP on 1 October 2002, and ceases to be a VCLP, an ESVCLP on 1 April 2003.
The effect of becoming a VCLP, an ESVCLP: the accounting period that commenced on 1 July 2002 is taken under this section to end on 30 September 2002, and a second accounting period commences on 1 October 2002. The second accounting period is scheduled to end on 30 June 2003.
The effect of ceasing to be a VCLP, an ESVCLP: the second accounting period is now taken under this section to end on 31 March 2003, and a third accounting period commences on 1 April 2003. The third accounting period is to end on 30 June 2003.
(2) This section does not apply in relation to a partnership becoming, or ceasing to be, a VCLP, an ESVCLP, an AFOF or a VCMP on the day on which an accounting period commences.
21 Where consideration not in cash
(1) Where, upon any transaction, any consideration is paid or given otherwise than in cash, the money value of that consideration shall, for the purposes of this Act, be deemed to have been paid or given.
(2) This section has effect subject to section 21A.
21A Non‑cash business benefits
(1) For the purposes of this Act, in determining the income derived by a taxpayer, a non‑cash business benefit that is not convertible to cash shall be treated as if it were convertible to cash.
(2) For the purposes of this Act, if a non‑cash business benefit (whether or not convertible to cash) is income derived by a taxpayer:
(a) the benefit shall be brought into account at its arm’s length value reduced by the recipient’s contribution (if any); and
(b) if the benefit is not convertible to cash—in determining the arm’s length value of the benefit, any conditions that would prevent or restrict the conversion of the benefit to cash shall be disregarded.
(3) Where:
(a) a non‑cash business benefit is income derived by a taxpayer in a year of income; and
(b) if the taxpayer had, at the time the benefit was provided, incurred and paid unreimbursed expenditure in respect of the provision of the benefit equal to the amount of the arm’s length value of the benefit—a once‑only deduction would, or would but for Subdivisions F, GA and G of Division 3 of this Part, and Divisions 28 and 900 of the Income Tax Assessment Act 1997, have been allowable to the taxpayer in respect of a percentage (in this subsection called the deductible percentage) of the expenditure;
the amount that, apart from this subsection, would be applicable under subsection (2) of this section in respect of the benefit shall be reduced by the deductible percentage.
(4) Where:
(a) a non‑cash business benefit is income derived by a taxpayer in a year of income; and
(b) a percentage (in this subsection called the non‑deductible entertainment percentage) of any expenditure incurred by the provider in respect of the provision of the benefit is non‑deductible entertainment expenditure;
the amount that, apart from this subsection, would be applicable under subsection (2) in respect of the benefit shall be reduced by the non‑deductible entertainment percentage.
(5) In this section:
arm’s length value, in relation to a non‑cash business benefit, means:
(a) the amount that the recipient could reasonably be expected to have been required to pay to obtain the benefit from the provider under a transaction where the parties to the transaction are dealing with each other at arm’s length in relation to the transaction; or
(b) if such an amount cannot be practically determined—such amount as the Commissioner considers reasonable.
income derived by a taxpayer means income derived by a taxpayer in carrying on a business for the purpose of gaining or producing assessable income.
non‑cash business benefit means property or services provided after 31 August 1988:
(a) wholly or partly in respect of a business relationship; or
(b) wholly or partly for or in relation directly or indirectly to a business relationship.
non‑deductible entertainment expenditure means expenditure to the extent to which:
(a) section 32‑5 of the Income Tax Assessment Act 1997 applies to the expenditure; and
(b) but for that section, the expenditure would be deductible under section 8‑1 of the Income Tax Assessment Act 1997.
provide:
(a) in relation to property—includes dispose of (whether by assignment, declaration of trust or otherwise); and
(b) in relation to services—includes allow, confer, give, grant or perform.
recipient’s contribution, in relation to a non‑cash business benefit, means the amount of any consideration paid to the provider by the recipient in respect of the provision of the benefit, reduced by the amount of any reimbursement paid to the recipient in respect of that consideration.
services includes any benefit, right (including a right in relation to, and an interest in, real or personal property), privilege or facility and, without limiting the generality of the foregoing, includes a right, benefit, privilege, service or facility that is, or is to be, provided under:
(a) an arrangement for or in relation to:
(i) the performance of work (including work of a professional nature), whether with or without the provision of property;
(ii) the provision of, or of the use of facilities for, entertainment, recreation or instruction; or
(iii) the conferring of rights, benefits or privileges for which remuneration is payable in the form of a royalty, tribute, levy or similar exaction;
(b) a contract of insurance; or
(c) an arrangement for or in relation to the lending of money.
(6) Notwithstanding section 21, the consideration referred to in the definition of recipient’s contribution in subsection (5) of this section is consideration in money.
(7) This section does not apply to an ESS interest (within the meaning of the Income Tax Assessment Act 1997) to which Subdivision 83A‑B or 83A‑C of that Act (about employee share schemes) applies.
23AA Income of persons connected with certain projects of United States Government
(1) In this section, unless the contrary intention appears:
approved project means the establishment, maintenance or operation of the North West Cape naval communication station, of the Joint Defence Space Research Facility, of the Sparta project, of the Joint Defence Space Communications Station or of a Force Posture Initiative.
civilian accompanying the United States Forces means a person (not being a member of the United States Forces, an Australian citizen or a person ordinarily resident in Australia) who:
(a) is an employee:
(i) of the United States Forces; or
(ii) of, or of a body conducting, a club or other facility established for the benefit or welfare of members of the United States Forces or of persons accompanying those Forces and which is recognized by the Government of the United States of America as a non‑appropriated fund activity; or
(b) is serving with an organization that, with the approval of the Government of the Commonwealth, accompanies the United States Forces in Australia.
dependant, in relation to a person, means:
(a) the spouse of that person; or
(b) a relative, other than the spouse, of that person who is wholly or mainly dependent for support on that person;
but, in the case of a person who, immediately before becoming such a spouse or relative, was ordinarily resident in Australia, does not include that person so long as that person continues to be ordinarily resident in Australia.
Force Posture Agreement means the Force Posture Agreement between the Government of Australia and the Government of the United States of America done at Sydney on 12 August 2014, as amended and in force for Australia from time to time.
Note: The Treaty could in 2014 be viewed in the Australian Treaties Library on the AustLII website (http://www.austlii.edu.au).
Force Posture Initiative has the same meaning as in the Force Posture Agreement.
Note: As well as some announced initiatives, this includes future initiatives that Australia and the United States mutually decide to be Force Posture Initiatives for the purposes of that Agreement.
foreign contractor means a person who is a party to a prescribed contract and is not:
(a) a company incorporated in Australia;
(b) an Australian citizen; or
(c) a person, other than a company, who is ordinarily resident in Australia.
foreign employee means a person who:
(a) is an employee of a foreign contractor; or
(b) is a director of a company that is a foreign contractor;
and is not an Australian citizen or ordinarily resident in Australia.
prescribed contract means:
(a) a contract to which the Government of the United States of America is a party in connexion with an approved project; or
(b) a contract made for purposes connected with the performance of a contract referred to in paragraph (a).
prescribed purposes means:
(a) in relation to a foreign contractor or foreign employee—purposes relating to the performance of a prescribed contract;
(aa) in relation to a United States employee—purposes relating to an approved project; and
(b) in relation to a member of the United States Forces or a civilian accompanying the United States Forces—purposes relating to the carrying on of activities agreed upon between the Government of the Commonwealth and the Government of the United States of America.
the Joint Defence Space Communications Station means the undertaking the establishment of which is provided for by an agreement dated 10 November 1969 between the Government of the Commonwealth and the Government of the United States of America.