(1) With respect to every person having the receipt control or disposal of money belonging to a non‑resident, who derives income, or profits or gains of a capital nature, from a source in Australia or who is a shareholder, debenture holder, or depositor in a company deriving income, or profits or gains of a capital nature, from a source in Australia, the following provisions shall, subject to this Act, apply:
(a) the person shall when required by the Commissioner pay the tax due and payable by the non‑resident;
(b) the person is hereby authorized and required to retain from time to time out of any money which comes to the person on behalf of the non‑resident so much as is sufficient to pay the tax which is or will become due by the non‑resident;
(c) the person is hereby made personally liable for the tax payable by the person on behalf of the non‑resident to the extent of any amount that the person has retained, or should have retained, under paragraph (b); but the person shall not be otherwise personally liable for the tax;
(d) the person is hereby indemnified for all payments which the person makes in pursuance of this Act or of any requirement of the Commissioner.
(2) Every person who is liable to pay money to a non‑resident shall be deemed to be a person having the control of money belonging to the non‑resident, and, subject to subsection (2A), all money due by the person to the non‑resident shall be deemed to be money which comes to the person on behalf of the non‑resident.
(2A) For the purposes of this section, money due by a person to a non‑resident from which an amount must be withheld under section 12‑325 in Schedule 1 to the Taxation Administration Act 1953 (about natural resource payments) or Subdivision 12‑H in that Schedule (about distributions to foreign residents from withholding MITs) shall be deemed not to be money which comes to the person on behalf of the non‑resident.
(2B) For the purposes of subsection (2A), if an entity must pay an amount to the Commissioner under Subdivision 12A‑C in Schedule 1 to the Taxation Administration Act 1953 in respect of money due by the entity to a non‑resident, treat that amount as being an amount that must be withheld from the money under Subdivision 12‑H in that Schedule.
(3) Where the Commonwealth, a State or an authority of the Commonwealth or a State has the receipt, control or disposal of money belonging to a non‑resident, this section (other than paragraph (1)(c)) applies to and in relation to the Commonwealth, the State or the authority, as the case may be, in the same manner as it applies to and in relation to any other person.
(4) This section applies to the following in the same way as it applies to tax:
(a) the general interest charge under:
(i) former section 163AA, former section 170AA, former subsection 204(3), former subsection 221AZMAA(1), former subsection 221AZP(1), former subsection 221YD(3) or former section 221YDB of this Act;
(ii) section 5‑15 of the Income Tax Assessment Act 1997;
(b) additional tax under former Part VII of this Act;
(c) shortfall interest charge.
Note 1: The general interest charge is worked out under Part IIA of the Taxation Administration Act 1953 and shortfall interest charge is worked out under Division 280 in Schedule 1 to that Act.
Note 2: Subsection 8AAB(4) of that Act lists the provisions that apply the general interest charge.
(5) This section applies to an equity holder in the same way as it applies to a shareholder.
257 Payment of tax by banker
Where any income of any person out of Australia is paid, or any proceeds of the disposal of an asset of any person out of Australia are paid, into the account of that person with a banker, the Commissioner may, by notice in writing to the banker, appoint the banker to be the person’s agent in respect of the money so paid so long as the banker is indebted in respect thereof, and thereupon the banker shall accordingly be that person’s agent.
260 Contracts to evade tax void
(1) Every contract, agreement, or arrangement made or entered into, orally or in writing, whether before or after the commencement of this Act, shall so far as it has or purports to have the purpose or effect of in any way, directly or indirectly:
(a) altering the incidence of any income tax;
(b) relieving any person from liability to pay any income tax or make any return;
(c) defeating, evading, or avoiding any duty or liability imposed on any person by this Act; or
(d) preventing the operation of this Act in any respect;
be absolutely void, as against the Commissioner, or in regard to any proceeding under this Act, but without prejudice to such validity as it may have in any other respect or for any other purpose.
(2) This section does not apply to any contract, agreement or arrangement made or entered into after 27 May 1981.
262 Periodical payments in the nature of income
Where under any contract agreement or arrangement made or entered into orally or in writing, either before or after the commencement of this Act, a person assigns, conveys, transfers or disposes of any property on terms and conditions which include the payment for the assignment, conveyance, transfer or disposal of the property by periodical payments which, in the opinion of the Commissioner, are either wholly or in part really in the nature of income of that person such of those payments as are derived in the year of income shall, to the extent to which they are in that opinion in the nature of income, be included in the person’s assessable income.
262A Keeping of records
(1) Subject to this section, a person carrying on a business must keep records that record and explain all transactions and other acts engaged in by the person that are relevant for any purpose of this Act.
Note: There is an administrative penalty if you do not keep or retain records as required by this section: see section 288‑25 in Schedule 1 to the Taxation Administration Act 1953.
(1A) Without limiting subsection (1), if the person is an OBU (within the meaning of Division 9A of Part III), the person must, subject to this section, maintain the same accounting records in respect of, and separately account for, money used in its OB activities (within the meaning of that Division) as it would if it were a bank conducting banking activities with another person.
(1AA) Subsection (1A) does not require an OBU to maintain a separate nostro account or vostro account for its OBU activities. Nostro accounts and vostro accounts are accounts held or maintained by the OBU for the sole purpose of settling international transactions.
Note: A defendant bears an evidential burden in relation to the matters in subsection (1AA), see subsection 13.3(3) of the Criminal Code.
(1B) Without limiting subsection (1), a foreign bank must maintain accounting records in respect of, and separately account for, money used in the activities of a permanent establishment in Australia through which the bank carries on banking business.
(1BA) Without limiting subsection (1), a foreign entity (as defined in the Income Tax Assessment Act 1997) that is a financial entity (as defined in that Act) must maintain accounting records in respect of, and separately account for, money used in the activities of a permanent establishment in Australia of the entity.
(1C) Without limiting subsection (1), if a trust is taken to be 2 separate trusts under section 50‑80 of the Income Tax Assessment Act 1997, the trustee must maintain accounting records in respect of, and separately account for, those 2 trusts.
(1D) A taxpayer who is a full self‑assessment taxpayer must:
(a) keep a record containing particulars of the basis of the calculation of the amounts that the taxpayer specified under section 161AA in a return for a year of income; and
(b) produce to the Commissioner, when and as required by the Commissioner under this Act, a document containing those particulars.
(2) The records to be kept under subsection (1) include:
(a) any documents that are relevant for the purpose of ascertaining the person’s income and expenditure; and
(b) documents containing particulars of any election, choice, estimate, determination or calculation made by the person under this Act and, in the case of an estimate, determination or calculation, particulars showing the basis on which and method by which the estimate, determination or calculation was made.
(2AAA) Subsection (1) applies to a participant in a forestry managed investment scheme in relation to the scheme even if the participant is not carrying on a business in relation to the scheme.
(2AAB) Subsection (2AAC) applies to the forestry manager of a forestry managed investment scheme if:
(a) the forestry manager (or an associate of the forestry manager) receives an amount under the scheme; and
(b) the amount is included in the forestry manager’s (or the associate’s) assessable income under section 15‑46 of the Income Tax Assessment Act 1997.
(2AAC) The records to be kept under subsection (1) by the forestry manager include records about the basis on which the scheme satisfies the requirement in paragraph 394‑10(1)(c) of the Income Tax Assessment Act 1997 (the 70% DFE rule).
(2AAD) Subsection (1) applies to a person who has a Division 230 financial arrangement even if the person is not carrying on a business in relation to the arrangement. However, that subsection only requires the person to keep records that, for the purposes of this Act, are relevant to the arrangement.
(2AAE) To avoid doubt, for the purposes of subsection (4), if the records mentioned in that subsection relate to a Division 230 financial arrangement that a person has, the transactions or acts mentioned in that subsection are taken to be completed at:
(a) the end of the year of income in which the person ceases to have the arrangement; or
(b) if:
(i) the person applies the hedging financial arrangement method in Subdivision 230‑E of the Income Tax Assessment Act 1997 to determine the amount of one or more gains or losses the person makes from the arrangement; and
(ii) determining the way in which those gains or losses are dealt with in accordance with subsection 230‑310(4) of that Act is possible only at a time after the end of the income year mentioned in paragraph (a);
the end of the year of income in which that time occurs.
(2AA) The records to be kept under subsection (1) include records required to be kept for the purposes of section 820‑960, 820‑980 or 820‑985 of the Income Tax Assessment Act 1997.
(2A) If an entity is required to withhold an amount under Division 12 in Schedule 1 to the Taxation Administration Act 1953, or to pay an amount to the Commissioner under Division 13 or 14 of that Schedule, the entity must keep records that record and explain all transactions and other acts engaged in by the entity that are relevant for the purposes of that Schedule.
(3) A person who is required by this section to keep records must:
(a) keep the records in writing in the English language or so as to enable the records to be readily accessible and convertible into writing in the English language; and
(b) keep the records so as to enable the person’s liability under this Act to be readily ascertained; and
(c) for records required to be kept under section 820‑960 of the Income Tax Assessment Act 1997—comply with the applicable provisions of that section; and
(ca) for records required to be kept under section 230‑355 of the Income Tax Assessment Act 1997—comply with the applicable provisions of that section; and
(d) for records required to be kept under section 820‑980 of that Act—comply with subsections (2) and (3) of that section; and
(e) for records required to be kept under section 820‑985 of that Act—comply with subsections (2) and (3) of that section.
(4) A person who has possession of any records kept or obtained under or for the purposes of this Act must retain those records until:
(a) in a case to which paragraph (b) does not apply—the end of 5 years after those records were prepared or obtained, or the completion of the transactions or acts to which those records relate, whichever is the later; or
(b) if the period (in this paragraph called the assessment period) within which the Commissioner may, under section 170, amend an assessment in respect of the person’s income of the year of income to which those records relate, or in which a transaction or act to which those records relate was completed, is extended under subsection 170(7):
(i) the end of the period of 5 years referred to in paragraph (a); or
(ii) the end of the assessment period as so extended;
whichever is the later.
(4AAA) Subsection (4) does not apply to any record required to be kept by a provision in Schedule 1 to the Taxation Administration Act 1953.
Note: A defendant bears an evidential burden in relation to the matters in subsection (4AAA), see subsection 13.3(3) of the Criminal Code.
(4A) A person who makes an election under subsection 371(8) must retain the election until the end of 5 years after the election was made.
(4AA) A person who is a party to a joint election for roll‑over relief made under former section 59AA, 122R, 123F, 124AO or 124W must retain the election, or a copy, until the end of 5 years after the earlier of:
(a) the disposal by the person of the property; or
(b) the loss or destruction of the property.
(4ACA) Subsection (4AC) does not apply in relation to a disposal of property:
(a) to which former subsection 58(1), 122JAA(1), 122JG(1), 123BBA(1), 123BF(1), 124AMAA(1), 124GA(1) or 124JD(1) applies; and
(b) that occurs in the 1997‑98 year of income or a later year of income.
Note: A defendant bears an evidential burden in relation to the matters in subsection (4ACA), see subsection 13.3(3) of the Criminal Code.
(4AC) If former subsection 58(1), subsection 73AA(1), or former subsection 122JAA(1), 122JG(1), 123BBA(1), 123BF(1), 124AMAA(1), 124GA(1), 124JD(1) or 124PA(1) applies to the disposal of property by the transferor referred to in that subsection to the transferee referred to in that subsection:
(a) the transferor must give to the transferee, within the period specified in subsection (4AD), a notice containing such information about the transferor’s holding of the property as will enable the transferee to work out how former section 58, section 73AA, or former section 122JAA, 122JG, 123BBA, 123BF, 124AMAA, 124GA, 124JD or 124PA, as the case may be, will apply to the transferee’s holding of the property; and
(b) the transferee must retain the notice, or a copy, until the end of 5 years after the earlier of:
(i) the disposal by the person of the property; or
(ii) the loss or destruction of the property.
(4AD) The notice referred to in subsection (4AC) must be given within 6 months after the later of the following:
(a) the end of the year of income of the transferee in which the disposal occurred;
(b) the commencement of subsection (4AC);
or within such further period as the Commissioner allows.
(4AE) A person who made an election under former paragraph 54A(1)(a) in relation to a unit of property must retain the election, or a copy, until the end of 5 years after the earlier of:
(a) the disposal by the person of the property; or
(b) the loss or destruction of the property.
(4AF) If:
(a) a person (the transferor) disposes of, or of a lease of, any part of a building within the meaning of former Division 10C of Part III to another person (the transferee); and
(b) either:
(i) one or more deductions have been allowed to the transferor under former subsection 124ZC(2A) or (4A) in respect of qualifying hotel expenditure or qualifying apartment expenditure in respect of the building; or
(ii) if there have been one or more prior successive owners or lessees of the building—one or more deductions have been allowed to any of the prior successive owners or lessees under former subsection 124ZC(2A) or (4A) in respect of qualifying hotel expenditure or qualifying apartment expenditure in respect of the building;
then:
(c) the transferor must give to the transferee, within the period specified in subsection (4AG), a notice containing such information about the transferor’s holding or lease of the building as will enable the transferee to work out how former Division 10C of Part III applies to the transferee’s holding or lease of the building; and
(d) the transferee must retain the notice, or a copy, until the end of 5 years after the earlier of:
(i) the transferee ceasing to be the owner or lessee of the part of the building; or
(ii) the destruction of the building.
(4AG) The notice referred to in subsection (4AF) must be given within 6 months after the later of the following:
(a) the end of the year of income of the transferee in which the disposal occurred;
(b) the commencement of subsection (4AF);
or within such further period as the Commissioner allows.
(4AH) If:
(a) a person (the transferor) disposes of, or of a lease of, any part of a building within the meaning of former Division 10D of Part III to another person (the transferee); and
(b) either:
(i) one or more deductions have been allowed to the transferor under former subsection 124ZH(2A) in respect of qualifying expenditure in respect of the building; or
(ii) if there have been one or more prior successive owners or lessees of the building—one or more deductions have been allowed to any of the prior successive owners or lessees under former subsection 124ZH(2A) in respect of qualifying expenditure in respect of the building;
then:
(c) the transferor must give to the transferee, within the period specified in subsection (4AJ), a notice containing such information about the transferor’s holding or lease of the building as will enable the transferee to work out how former Division 10D of Part III applies to the transferee’s holding or lease of the building; and