Income Tax Assessment Act 1936

s 121G — Diverted income and diverted trust income

(1) Where: (a) a taxpayer, not being a taxpayer in the capacity of a trustee, has acquired property (in this subsection referred to as the relevant property ) under a tax avoidance agreement or by reason of an act, transaction or circumstance occurring as part of, in connection with or as a result of a tax avoidance agreement; (b) by reason that the taxpayer derives any income from the relevant property, an amount (in this subsection referred to as the relevant amount ) would, apart from the operation of the relevant exempting provisions, be included in the assessable income of the taxpayer of a year of income otherwise than under Division 5, section 97, section 99B or section 100; (c) apart from this Division, the relevant amount would not be included in the assessable income of the taxpayer of the year of income; and (d) so much of the amount or value of the consideration provided by the taxpayer under or in connection with the tax avoidance agreement as the Commissioner is satisfied was provided in respect of the acquisition by the taxpayer of the relevant property substantially exceeds the amount or value of the consideration that might reasonably be expected to have been provided by the taxpayer in respect of the acquisition of the relevant property if the taxpayer were liable to pay tax, in respect of any income derived by the taxpayer from the relevant property, at the public company rate applicable for the financial year in which the taxpayer acquired the relevant property; the diverted income of the taxpayer of the year of income shall include the relevant amount. (2) Where: (a) a taxpayer, not being a taxpayer in the capacity of a trustee, has acquired property (in this subsection referred to as the relevant property ), being an interest in a partnership, under a tax avoidance agreement or by reason of an act, transaction or circumstance occurring as part of, in connection with or as a result of a tax avoidance agreement; (b) by reason of the ownership by the taxpayer of the relevant property, an amount (in this subsection referred to as the relevant amount ) would, apart from the operation of the relevant exempting provisions, be included, under Division 5, in the assessable income of the taxpayer of a year of income (in this subsection referred to as the relevant year of income ); (c) apart from this Division, the relevant amount would not be included in the assessable income of the taxpayer of the relevant year of income; and (d) so much of the amount or value of the consideration provided by the taxpayer under or in connection with the tax avoidance agreement as the Commissioner is satisfied was provided in respect of the acquisition by the taxpayer of the relevant property substantially exceeds the amount or value of the consideration that might reasonably be expected to have been provided by the taxpayer in respect of the acquisition of the relevant property if the taxpayer were liable to pay tax, in respect of any income derived by the taxpayer from the relevant property, at the public company rate applicable for the financial year in which the taxpayer acquired the relevant property; the diverted income of the taxpayer of the relevant year of income shall include the relevant amount. (3) Where: (a) a taxpayer, not being a taxpayer in the capacity of a trustee, has acquired property (in this subsection referred to as the relevant property ), being a beneficial interest in a trust estate, under a tax avoidance agreement or by reason of an act, transaction or circumstance occurring as part of, in connection with or as a result of a tax avoidance agreement; (b) by reason of the ownership by the taxpayer of the relevant property, an amount (in this subsection referred to as the relevant amount ) would, apart from the operation of the relevant exempting provisions, be included, under Division 6, in the assessable income of the taxpayer of a year of income (in this subsection referred to as the relevant year of income ); (c) apart from this Division, the relevant amount would not be included in the assessable income of the taxpayer of the relevant year of income; and (d) so much of the amount or value of the consideration provided by the taxpayer under or in connection with the tax avoidance agreement as the Commissioner is satisfied was provided in respect of the acquisition by the taxpayer of the relevant property substantially exceeds the amount or value of the consideration that might reasonably be expected to have been provided by the taxpayer in respect of the acquisition of the relevant property if the taxpayer were liable to pay tax, in respect of any income derived by the taxpayer from the relevant property, at the public company rate applicable for the financial year in which the taxpayer acquired the relevant property; the diverted income of the taxpayer of the relevant year of income shall include the relevant amount. (4) Where: (a) a taxpayer, being a taxpayer in the capacity of a trustee of a trust estate, has acquired property (in this subsection referred to as the relevant property ) under a tax avoidance agreement or by reason of an act, transaction or circumstance occurring as part of, in connection with or as a result of a tax avoidance agreement; (b) by reason that the taxpayer derives any income from the relevant property, an amount (in this subsection referred to as the relevant amount ) would, apart from the operation of the relevant exempting provisions, be included in the assessable income of the trust estate of a year of income otherwise than under Division 5, section 97, section 99B or section 100; (c) apart from this Division, the relevant amount would not be included in the assessable income of the trust estate of the year of income; and (e) so much of the amount or value of the consideration provided by the taxpayer under or in connection with the tax avoidance agreement as the Commissioner is satisfied was provided in respect of the acquisition by the taxpayer of the relevant property substantially exceeds the amount or value of the consideration that might reasonably be expected to have been provided by the taxpayer in respect of the acquisition of the relevant property if the taxpayer were liable to pay tax, in respect of any income derived by the taxpayer from the relevant property, at the public company rate applicable for the financial year in which the taxpayer acquired the relevant property; the diverted trust income of the trust estate of the year of income shall include the relevant amount. (5) Where: (a) a taxpayer, being a taxpayer in the capacity of a trustee of a trust estate, has acquired property (in this subsection referred to as the relevant property ), being an interest in a partnership, under a tax avoidance agreement or by reason of an act, transaction or circumstance occurring as part of, in connection with or as a result of a tax avoidance agreement; (b) by reason of the ownership by the taxpayer of the relevant property, an amount (in this subsection referred to as the relevant amount ) would, apart from the operation of the relevant exempting provisions, be included, under Division 5, in the assessable income of the trust estate of a year of income (in this subsection referred to as the relevant year of income ); (c) apart from this Division, the relevant amount would not be included in the assessable income of the trust estate of the relevant year of income; and (e) so much of the amount or value of the consideration provided by the taxpayer under or in connection with the tax avoidance agreement as the Commissioner is satisfied was provided in respect of the acquisition by the taxpayer of the relevant property substantially exceeds the amount or value of the consideration that might reasonably be expected to have been provided by the taxpayer in respect of the acquisition of the relevant property if the taxpayer were liable to pay tax, in respect of any income derived by the taxpayer from the relevant property, at the public company rate applicable for the financial year in which the taxpayer acquired the relevant property; the diverted trust income of the trust estate of the relevant year of income shall include the relevant amount. (6) Where: (a) a taxpayer, being a taxpayer in the capacity of a trustee of a trust estate (in this subsection referred to as the relevant trust estate ), has acquired property (in this subsection referred to as the relevant property ), being a beneficial interest in another trust estate, under a tax avoidance agreement or by reason of an act, transaction or circumstance occurring as part of, in connection with or as a result of a tax avoidance agreement; (b) by reason of the ownership by the taxpayer of the relevant property, an amount (in this subsection referred to as the relevant amount ) would, apart from the operation of the relevant exempting provisions, be included, under section 97, 99B or 100, in the assessable income of the relevant trust estate of a year of income (in this subsection referred to as the relevant year of income ); (c) apart from this Division, the relevant amount would not be included in the assessable income of the relevant trust estate of the relevant year of income; and (e) so much of the amount or value of the consideration provided by the taxpayer under or in connection with the tax avoidance agreement as the Commissioner is satisfied was provided in respect of the acquisition by the taxpayer of the relevant property substantially exceeds the amount or value of the consideration that might reasonably be expected to have been provided by the taxpayer in respect of the acquisition of the relevant property if the taxpayer were liable to pay tax, in respect of any income derived by the taxpayer from the relevant property, at the public company rate applicable for the financial year in which the taxpayer acquired the relevant property; the diverted trust income of the relevant trust estate of the relevant year of income shall include the relevant amount. (8) Where: (a) a deduction is allowable or deductions are allowable, in calculating the net income of a partnership or trust estate of a year of income, in respect of losses or outgoings (in this subsection referred to as the relevant losses or outgoings ) incurred under or in connection with a tax avoidance agreement; (b) if no deduction were allowable, in calculating that net income, in respect of the relevant losses or outgoings and no relevant exempting provisions were applicable in relation to a taxpayer, an amount would be included in the assessable income of the taxpayer of a year of income by reason that the taxpayer owned an interest in the partnership or a beneficial interest in the trust estate or owned an interest in any other partnership or a beneficial interest in any other trust estate; and (c) if the deduction or deductions were allowed, in calculating that net income, in respect of the relevant losses or outgoings and no relevant exempting provision were applicable in relation to the taxpayer: (i) no amount would be included in the assessable income of the taxpayer of the year of income by reason that the taxpayer owned an interest in a partnership or a beneficial interest in a trust estate as mentioned in paragraph (b); or (ii) an amount would be included in the assessable income of the taxpayer of the year of income by reason that the taxpayer owned an interest in a partnership or a beneficial interest in a trust estate as mentioned in paragraph (b) but the amount that would be so included in that assessable income would be less than the amount referred to in paragraph (b); then, for the purposes of the application of subsections (2), (3), (5) and (6) in relation to the taxpayer in relation to the tax avoidance agreement, no deduction shall be allowed in respect of the relevant losses or outgoings in calculating the net income of the partnership or trust estate referred to in paragraph (a). (10) For the purposes of the application of subsection (8), a reference to a deduction that is allowable in calculating the net income of a partnership does not include a reference to a deduction allowable to the partnership in respect of expenditure taken under sections 70 ‑ 90 and 70 ‑ 95 and subsection 70 ‑ 100(3) of the Income Tax Assessment Act 1997 to have been incurred in the acquisition of trading stock by the partnership. (11) In determining for the purposes of this section the amount or value of the consideration that might reasonably be expected to have been provided by a taxpayer in respect of the acquisition of property by the taxpayer if the taxpayer were liable to pay tax in respect of any income derived by the taxpayer from the property at the public company rate applicable for the financial year in which the taxpayer acquired the property, the possibility that the taxpayer would be entitled to a rebate of tax in respect of any of that income shall be disregarded. (12) In determining for the purposes of this section whether an amount would, apart from the operation of the relevant exempting provisions, be included in the assessable income of a taxpayer or a trust estate of a year of income, section 128D of this Act and section 802 ‑ 15 of the Income Tax Assessment Act 1997 shall be disregarded. (13) For the purposes of this section, where: (a) a taxpayer acquired property, being an interest in a trust estate or partnership, before the time when a tax avoidance agreement was entered into; and (b) under the tax avoidance agreement, or by reason of an act, transaction or circumstance occurring as part of, in connection with or as a result of the tax avoidance agreement, the amount of the share (in this subsection referred to as the relevant share ) of the taxpayer of the income of the trust estate or partnership of any year of income was or is increased; the following provisions apply: (c) the property referred to in paragraph (a) shall be taken to have been acquired by the taxpayer under the tax avoidance agreement; and (d) any consideration provided by the taxpayer in respect of the increase in the amount of the relevant share shall be taken to be consideration provided by the taxpayer in respect of the acquisition of the property referred to in paragraph (a). (14) For the purposes of the application of this section in relation to the acquisition of property by a person under a tax avoidance agreement, the Commissioner may be satisfied that consideration provided by the person under or in connection with the tax avoidance agreement was provided by the person in respect of the acquisition of the property notwithstanding, in a case where the person acquired property from another person, that the consideration was not provided to that other person.

Amendment history: Inserted by No 108 of 1981, effective s 4–25: 24 June 1981 (s 2) | Amended by No 29 of 1982, effective s 3–24: 17 May 1982 (s 2(1)) | Amended by No 49 of 1985, item 27, effective s 4–36, 38, 39 and Sch: 30 May 1985 (s 2) | Amended by No 123 of 1985, item 26, effective s 10–36: 28 Oct 1985 (s 2) | Amended by No 97 of 1989, Sch 2 item 1988, effective s 4–9, 11–15 and Sch 1: 30 June 1989 (s 2) | Amended by No 121 of 1997, Sch 5 item 82, effective s 4: 8 July 1997 (s 2(1)) Sch 2 (items 18–37), Sch 3 (items 31–61), Sch 4 (items 63–138), Sch 5 (items 43–93), Sch 6 (items 68–132), Sch 7 (items 5–7), Sch 8 (items 32–51), Sch 9 (items 16–40), Sch 10 (items 12–15), Sch 11 (items 37–57) and Sch 12 (items 15–23): 1 July 1997 (s 2(3), (5)) | Amended by No 147 of 2005, Sch 2 item 5, effective Sch 1 (items 1–3, 169(1)), Sch 2 (items 2–11, 27(1)–(4), 28(1)–(3)), Sch 4 (items 1–3, 12), Sch 5 (items 1–12, 20) and Sch 7 (items 1–13, 19, 20): 14 Dec 2005 (s 2(1) items 2, 3, 5, 6) | Amended by No 101 of 2006, Sch 2 item 305, effective Sch 1 (items 1, 5–199), Sch 2 (items 118–565, 1017, 1023–1037) and Sch 6 (items 1–4, 6–15): 14 Sept 2006 (s 2(1) items 2, 4) Sch 3 (items 1–10) and Sch 4 (items 1–11): 1 Jan 2008 (s 2(1) item 3)

s 121H — Assessment of diverted income and diverted trust income

(1) A taxpayer, not being a taxpayer in the capacity of a trustee of a trust estate, shall be assessed and is liable to pay tax, at the rate declared by the Parliament for the purposes of this Division, upon the diverted income of the taxpayer of the year of income. (2) A taxpayer in the capacity of a trustee of a trust estate shall be assessed and is liable to pay tax, at the rate declared by the Parliament for the purposes of this Division, upon the diverted trust income of the trust estate of the year of income.

Amendment history: Inserted by No 108 of 1981, effective s 4–25: 24 June 1981 (s 2) | Amended by No 97 of 1989, Sch 2 item 1988 | Sch 1 item 1989, effective s 4–9, 11–15 and Sch 1: 30 June 1989 (s 2)

s 121J — Ascertainment of diverted income or diverted trust income deemed to be an assessment

The ascertainment of the amount of the diverted income or diverted trust income and of the tax payable thereon shall, for all purposes of this Act be deemed to be an assessment.

Amendment history: Inserted by No 108 of 1981, effective s 4–25: 24 June 1981 (s 2)

s 121K — Application of International Tax Agreements Act

For the purposes of sections 15 and 16 of the International Tax Agreements Act 1953 , any amount that is included in the diverted income or diverted trust income of a taxpayer of a year of income shall be deemed to be included in the assessable income of the taxpayer of the year of income.

Amendment history: Inserted by No 108 of 1981, effective s 4–25: 24 June 1981 (s 2) | Amended by No 22 of 1995, item 20, effective Sch (items 16–35): 29 Mar 1995 (s 2) | Amended by No 143 of 2007, Sch 1 item 62, effective Sch 1 (items 2, 3, 18–127, 222, 223, 224(1), (2), 225, 226), Sch 4 (items 1–46, 51, 52), Sch 7 (items 9–17, 104(2)) and Sch 8: 24 Sept 2007 (s 2(1) items 2, 4, 11, 12)

s 121L — Division applies notwithstanding exemption under other laws

This Division has effect notwithstanding anything contained in any law of the Commonwealth other than this Act. Income Tax Assessment Act 1936 No. 27, 1936 Compilation No. 191 Compilation date: 1 April 2026 Includes amendments: Act No. 12, 2026 This compilation is in 7 volumes Volume 1: sections 1 ‑ 78A Volume 2: sections 79A ‑ 121L Volume 3: sections 124ZM ‑ 204 Volume 4: sections 251R ‑ 468 Volume 5: Schedules Volume 6: Endnotes 1 ‑ 4 Volume 7: Endnote 5 Each volume has its own contents About this compilation This compilation This is a compilation of the Income Tax Assessment Act 1936 that shows the text of the law as amended and in force on 1 April 2026 (the compilation date ). The notes at the end of this compilation (the endnotes ) include information about amending laws and the amendment history of provisions of the compiled law. Uncommenced amendments The effect of uncommenced amendments is not shown in the text of the compiled law. The details of amendments made up to, but not commenced at, the compilation date are underlined in the endnotes. Any uncommenced amendments affecting the law are accessible on the Register (www.legislation.gov.au). Application, saving and transitional provisions If the operation of a provision or amendment of the compiled law is affected by an application, saving or transitional provision that is not included in this compilation, details are included in the endnotes. Editorial changes For more information about any editorial changes made in this compilation, see the endnotes. Presentational changes The Legislation Act 2003 provides for First Parliamentary Counsel to make presentational changes to a compilation. Presentational changes are applied to give a more consistent look and feel to legislation published on the Register, and enable the user to more easily navigate those documents. Modifications If the compiled law is modified by another law, the compiled law operates as modified but the modification does not amend the text of the law. Accordingly, this compilation does not show the text of the compiled law as modified. Any modifications affecting the law are accessible on the Register. Self ‑ repealing provisions If a provision of the compiled law has been repealed in accordance with a provision of the law, details are included in the endnotes. Contents

Amendment history: Inserted by No 108 of 1981, effective s 4–25: 24 June 1981 (s 2)

s 124ZM — Treatment distributions to shareholders in PDF

Unfranked part of distribution exempt from income tax (1) If a company makes a distribution to a shareholder at a time when the company is a PDF, the unfranked part of the distribution is exempt from income tax. Rest of section deals with franked part (2) The rest of this section applies to the franked part of the distribution. Usual case (3) Subsection (4) applies if the assessable income of a year of income of a taxpayer who or that is: (a) a company or a natural person (other than a company or natural person in the capacity of a trustee); or (c) a public trading trust in relation to that year of income; or (d) a complying superannuation fund, a non ‑ complying superannuation fund, a complying approved deposit fund, a non ‑ complying approved deposit fund or a pooled superannuation trust in relation to that year of income; would (apart from subsection (4)) include: (e) the franked part of the distribution; or (f) any of the franked part of the distribution that flows indirectly to the taxpayer. This subsection does not apply to cases dealt with in subsections (5) and (6). (4) Subject to subsection (7), the following is exempt income of the taxpayer: (a) if paragraph (3)(e) applies—the franked part; (b) if paragraph (3)(f) applies—so much of the franked part of the distribution as flows indirectly to the taxpayer. Taxpayers who qualify for venture capital franking tax offset (5) If a taxpayer (other than a life assurance company) is entitled to a tax offset in relation to the distribution under section 210 ‑ 170 of the Income Tax Assessment Act 1997 , then: (a) so much of the franked part of the distribution as equals the part of the distribution that is franked with a venture capital credit is exempt income of the taxpayer; and (b) if the franked part exceeds the amount so exempt—the excess is, subject to subsection (7), exempt income of the taxpayer. (6) If a life assurance company is entitled to a tax offset in relation to the distribution under section 210 ‑ 170 of the Income Tax Assessment Act 1997 , then: (a) so much of the franked part of the distribution as equals the amount worked out using the following formula is exempt income of the life assurance company: where: complying superannuation class of taxable income is the life assurance company’s complying superannuation class of taxable income, within the meaning of the Income Tax Assessment Act 1997 , for the year of income in which the distribution is made. venture capital franked part i s the part of the distribution that is franked with a venture capital credit. total income is the life assurance company’s assessable income for the year of income in which the distribution is made; and (b) if the franked part exceeds the amount so exempt—the excess is, subject to subsection (7), exempt income of the life assurance company. No exemption if return prepared on basis that amount assessable (7) Subsection (4) and paragraphs (5)(b) and (6)(b) do not exempt, and are taken never to have exempted, an amount if the taxpayer’s return of income of the year of income is prepared on the basis that the amount is included in the taxpayer’s assessable income of that year. Where partner entitled to deduction for amount flowing indirectly (8) If: (a) any of the franked part of the distribution flows indirectly to a taxpayer who is a partner in a partnership; and (b) apart from this subsection, the amount that flows indirectly would be allowable as a deduction from the taxpayer’s assessable income of a year of income; and (c) the taxpayer is of a kind mentioned in any of paragraphs (3)(a) to (d); the amount that flows indirectly is not allowable as a deduction from that assessable income. (9) Subsection (8) does not prevent, and is taken never to have prevented, an amount from being allowable as a deduction if the taxpayer’s return of income of the year of income is prepared on the basis that the amount is so allowable. Where trustee assessed on amount flowing indirectly (10) If: (a) any of the franked part of the distribution flows indirectly to the trustee of a trust estate; and (b) apart from this subsection, the trustee would be liable under section 98, 99 or 99A to be assessed and pay tax on the amount that flows indirectly; the trustee is not liable under that section to be assessed and to pay tax on the amount that flows indirectly. (11) Subsection (10) does not prevent, and is taken never to have prevented, the trustee from being liable under that section to be assessed and to pay tax on an amount if the trustee elects to be so liable. (12) An election must be made in the trustee’s return of income of the trust estate for the year of income concerned. Interpretation (13) In this section: flows indirectly has the meaning given by subsection 995 ‑ 1(1) of the Income Tax Assessment Act 1997 . part of a distribution that is franked with a venture capital credit has the meaning given by subsection 995 ‑ 1(1) of the Income Tax Assessment Act 1997 .

Amendment history: Inserted by No 98 of 1992, item 12 | item 14 | item 15 | item 16 | item 18 | item 20, effective s 4–31 and 37–81: 30 June 1992 (s 2(1)) s 32–36: 1 July 1992 (s 2(2)) | Amended by No 79 of 2000, Sch 5 item 2 | Sch 5 item 3 | Sch 5 item 32 | Sch 5 item 44, effective s 4: 30 June 2000 (s 2(1)) Sch 1 (items 1, 2, 4), Sch 2 (items 6A–6J, 7), Sch 3, Sch 4 (items 1–5) and Sch 6 (items 12–15): 1 July 2000 (s 2(2)) Sch 4 (items 6–10): 1 July 2001 (s 2(3)) Sch 5: 10 Dec 1999 (s 2(4)) | Repealed and substituted by No 101 of 2006, Sch 2 item 329, effective Sch 1 (items 1, 5–199), Sch 2 (items 118–565, 1017, 1023–1037) and Sch 6 (items 1–4, 6–15): 14 Sept 2006 (s 2(1) items 2, 4) Sch 3 (items 1–10) and Sch 4 (items 1–11): 1 Jan 2008 (s 2(1) item 3) | Amended by No 15 of 2007, Sch 1 item 98, effective Sch 1 (items 1–8, 22–149, 406(1)–(3)) and Sch 3 (items 6, 7): 15 Mar 2007 (s 2(1) items 2, 6) | Amended by No 45 of 2008, Sch 1 item 5 | Sch 7 item 1 | Sch 7 item 2, effective Sch 1 (items 2–7), Sch 4 (items 1–7) and Sch 7 (items 1–5): 26 June 2008 (s 2) | Amended by No 70 of 2015, Sch 1 item 56 | Sch 1 item 57 | Sch 1 item 58 | Sch 1 item 59, effective Sch 1 (items 47–64, 195–205): 1 July 2015 (s 2(1) items 3, 6) Sch 2 (items 1–16, 18–23, 38), Sch 3 and Sch 7 (items 2, 3, 11): 25 June 2015 (s 2(1) items 7, 20) | Amended by No 53 of 2016, Sch 5 item 22, effective Sch 3 (item 1), Sch 5 (items 1, 3, 6–28, 75), Sch 6 (items 1–20) and Sch 8 (item 1): 5 May 2016 (s 2(1) items 2, 4)

s 124ZN — Exemption of income from sale of shares in a PDF

Income derived by a taxpayer from selling shares in a company is exempt from income tax if the company is a PDF at the time of the sale. Note: Any capital gain or capital loss from a disposal of shares in a PDF is disregarded: see section 118 ‑ 13 of the Income Tax Assessment Act 1997 .

Amendment history: Inserted by No 98 of 1992, item 20, effective s 4–31 and 37–81: 30 June 1992 (s 2(1)) s 32–36: 1 July 1992 (s 2(2)) | Amended by No 46 of 1998, Sch 10 item 339, effective s 4, Sch 2 (items 49–522), Sch 3 (items 13–20), Sch 4 (items 12–27), Sch 5 (items 6–10), Sch 6 (items 8–30), Sch 7 (items 12–19), Sch 8 (items 2–9) and Sch 9 (items 7, 8): 22 June 1998 (s 2(1)–(4))

s 124ZO — Shares in a PDF are not trading stock

Shares in a PDF are not trading stock for the purposes of this Act.

Amendment history: Inserted by No 98 of 1992, item 20, effective s 4–31 and 37–81: 30 June 1992 (s 2(1)) s 32–36: 1 July 1992 (s 2(2))

s 124ZQ — Effect of company becoming a PDF

(1) This section applies to shares in a company that a taxpayer holds when the company becomes a PDF. (2) In determining for the purposes of this Act whether an amount is or was allowable as a deduction to the taxpayer in respect of acquiring the shares, the shares are taken to have been shares in a PDF throughout the period beginning immediately before the taxpayer acquired them and ending when the company became a PDF. (3) For the purposes of this Act, the shares are taken to have been trading stock of the taxpayer at no time during that period. (4) Section 170 does not prevent an assessment from being amended to give effect to this section.

Amendment history: Inserted by No 98 of 1992, item 20, effective s 4–31 and 37–81: 30 June 1992 (s 2(1)) s 32–36: 1 July 1992 (s 2(2))

s 124ZR — Effect of company ceasing to be a PDF

(1) This section applies to shares in a company that a taxpayer holds when the company ceases to be a PDF. (2) For the purposes of this Act (except Parts 3 ‑ 1 and 3 ‑ 3 (about CGT) of the Income Tax Assessment Act 1997 ), the taxpayer is taken: (a) to have sold the shares immediately before the company ceased to be a PDF; and (b) to have rebought the shares immediately after the company so ceased; for a consideration equal to the market value of the shares immediately after the company so ceased. (3) Parts 3 ‑ 1 and 3 ‑ 3 (about CGT) of the Income Tax Assessment Act 1997 apply as if the taxpayer: (a) had disposed of the CGT assets constituted by the shares, and had done so immediately before the company ceased to be a PDF; and (b) had re ‑ acquired those assets immediately afterwards; for an amount equal to the shares’ market value immediately after the company so ceased.

Amendment history: Inserted by No 98 of 1992, item 20, effective s 4–31 and 37–81: 30 June 1992 (s 2(1)) s 32–36: 1 July 1992 (s 2(2)) | Amended by No 46 of 1998, Sch 10 item 30 | Sch 10 item 112 | Sch 10 item 341 | Sch 10 item 342, effective s 4, Sch 2 (items 49–522), Sch 3 (items 13–20), Sch 4 (items 12–27), Sch 5 (items 6–10), Sch 6 (items 8–30), Sch 7 (items 12–19), Sch 8 (items 2–9) and Sch 9 (items 7, 8): 22 June 1998 (s 2(1)–(4))

s 124ZS — Definitions

In this Subdivision: non ‑ CGT assessable income means an amount included in assessable income otherwise than under Part 3 ‑ 1 or 3 ‑ 3 (about CGT) of the Income Tax Assessment Act 1997 or Subdivision C of this Division. SME investment means an investment other than an unregulated investment. Note: SME stands for small and medium enterprises. unregulated investment has the same meaning as in the Pooled Development Funds Act 1992 .

Amendment history: Inserted by No 181 of 1994, effective Sch 1 (items 1–21, 86–91), Sch 2 (items 5–23, 23 (2nd occurring)), Sch 3 (items 6–100), Sch 4 (items 9–23) and Sch 5 (items 25–30, 46(10)): 19 Dec 1994 (s 2(1)) Sch 1 (items 22–85): 13 Oct 1994 (s 2(2)) | Amended by No 46 of 1998, Sch 10 item 343, effective s 4, Sch 2 (items 49–522), Sch 3 (items 13–20), Sch 4 (items 12–27), Sch 5 (items 6–10), Sch 6 (items 8–30), Sch 7 (items 12–19), Sch 8 (items 2–9) and Sch 9 (items 7, 8): 22 June 1998 (s 2(1)–(4))

s 124ZTA — Taxable income in first year as PDF if PDF component is nil

(1) This section applies if: (a) a company becomes a PDF during a year of income and is still a PDF at the end of the year of income; and (b) the PDF component for the year of income is a nil amount; and (c) the year of income is the 1997 ‑ 98 year of income or a later one. (2) The company’s taxable income of the year of income is the amount that, if the period (the notional year ) beginning at the start of the year of income and ending immediately before the company becomes a PDF were a year of income of the company, would be the company’s taxable income of the notional year.

Amendment history: Inserted by No 39 of 1997, effective Sch 1: 1 July 1997 (s 2)

s 124ZT — SME assessable income

SME assessable income (1) A company’s SME assessable income of a year of income is the sum of: (a) so much of the company’s non ‑ CGT assessable income of the year of income as was derived: (i) from, or from the disposal of, an SME investment of the company; and (ii) at a time when the company was a PDF; and (b) any assessable income allocated to the company’s SME assessable income under section 124ZZB. Note: Section 124ZZB deals with capital gains etc. When assessable income derived (2) For the purposes of paragraph (1)(a), if an amount is derived by a company during, but not at a particular time during, a year of income, the amount is taken to have been derived by the company on the last day of the year of income.

s 124ZU — SME income component

Full ‑ year PDFs (1) The SME income component of a year of income of a company that is a PDF throughout the year of income is so much of the company’s taxable income of the year of income as does not exceed the amount (if any) remaining after deducting from the company’s SME assessable income of the year of income any deductions allowable to the company in relation to the year of income. Part ‑ year PDFs (2) The SME income component of a year of income of a company that becomes a PDF during the year of income and is still a PDF at the end of the year of income is so much of the company’s adjusted taxable income of the year of income as does not exceed the amount (if any) remaining after deducting from the company’s SME assessable income of the year of income any deductions where both of the following conditions are satisfied: (a) the deductions were allowable to the company in relation to the year of income; (b) the deductions were taken into account in working out the company’s PDF component of the year of income. For this purpose, adjusted taxable income means so much of the company’s taxable income of the year of income as does not exceed its PDF component of the year of income.

s 124ZV — Unregulated investment component

Full ‑ year PDFs (1) The unregulated investment component of a year of income of a company that is a PDF throughout the year of income is the amount (if any) remaining after deducting from the company’s taxable income of the year of income the company’s SME income component of the year of income. Part ‑ year PDFs (2) The unregulated investment component of a year of income of a company that becomes a PDF during the year of income and is still a PDF at the end of the year of income is the amount (if any) remaining after deducting from the company’s adjusted taxable income of the year of income the company’s SME income component of the year of income. For this purpose, adjusted taxable income means so much of the company’s taxable income of the year of income as does not exceed its PDF component of the year of income.

s 124ZW — Definitions

In this Subdivision: accumulated net capital loss for a year of income (the loss year ) means the amount (if any) by which the total of: (a) the total of the overall capital losses for all classes of assessable income for the loss year; and (b) any accumulated net capital loss for the last year of income before the loss year; exceeds: (c) the total of the overall capital gains for all classes of assessable income for the loss year (before section 116GB is applied). class , in relation to assessable income, means a class specified in section 124ZY. company does not include a company in a capacity of trustee. non ‑ CGT assessable income means an amount included in assessable income otherwise than under Part 3 ‑ 1 or 3 ‑ 3 (about CGT) of the Income Tax Assessment Act 1997 or this Subdivision. ordinary capital gain for a CGT event means any capital gain that would (apart from this Subdivision) arise from the event. ordinary capital loss for a CGT event means any capital loss that would (apart from this Subdivision) arise from the event. overall capital gain for a class of assessable income means: (a) the amount by which the total ordinary capital gain for that class exceeds the total ordinary capital loss for that class; or (b) if an amount has been applied under subsection 124ZZB(2) to reduce an overall capital gain previously worked out under this definition—that gain as so reduced. overall capital loss for a class of assessable income means the amount by which the total ordinary capital gain for that class is less than the total ordinary capital loss for that class. residual overall capital gain means so much of an overall capital gain as remains after applying subsection 124ZZB(2). SME assessable income has the meaning given by Subdivision B. SME investment means an investment other than an unregulated investment. total ordinary capital gain for a class means the total of so much of any ordinary capital gains as has been allocated to that class under section 124ZZA. total ordinary capital loss for a class means the total of so much of any ordinary capital losses as has been allocated to that class under section 124ZZA. unregulated investment has the same meaning as in the Pooled Development Funds Act 1992 .

Amendment history: Inserted by No 181 of 1994, effective Sch 1 (items 1–21, 86–91), Sch 2 (items 5–23, 23 (2nd occurring)), Sch 3 (items 6–100), Sch 4 (items 9–23) and Sch 5 (items 25–30, 46(10)): 19 Dec 1994 (s 2(1)) Sch 1 (items 22–85): 13 Oct 1994 (s 2(2)) | Amended by No 46 of 1998, Sch 10 item 344 | Sch 10 item 345 | Sch 10 item 346 | Sch 10 item 347 | Sch 10 item 348 | Sch 10 item 349 | Sch 10 item 350 | Sch 10 item 351 | Sch 10 item 352 | Sch 10 item 353, effective s 4, Sch 2 (items 49–522), Sch 3 (items 13–20), Sch 4 (items 12–27), Sch 5 (items 6–10), Sch 6 (items 8–30), Sch 7 (items 12–19), Sch 8 (items 2–9) and Sch 9 (items 7, 8): 22 June 1998 (s 2(1)–(4))

s 124ZX — Companies to which this Subdivision applies

This Subdivision applies to a company in relation to a year of income if: (a) the company is a PDF throughout the year of income; or (b) the company becomes a PDF during the year of income and is still a PDF at the end of the year of income.

s 124ZY — Classes of assessable income

Classes (1) The classes of assessable income of the company are as follows: (a) SME assessable income (see section 124ZT); (b) other assessable income (see subsection(2)). Other assessable income (2) The company’s other assessable income of the year of income is the sum of: (a) so much of the company’s non ‑ CGT assessable income of the year of income as is not included in the company’s SME assessable income of the year of income; and (b) any assessable income allocated to the company’s other assessable income under section 124ZZB.

s 124ZZ — Treatment of capital gains

Nothing is to be included in the company’s assessable income of the year of income under section 102 ‑ 5 of the Income Tax Assessment Act 1997 (about net capital gains).

Amendment history: Inserted by No 181 of 1994, effective Sch 1 (items 1–21, 86–91), Sch 2 (items 5–23, 23 (2nd occurring)), Sch 3 (items 6–100), Sch 4 (items 9–23) and Sch 5 (items 25–30, 46(10)): 19 Dec 1994 (s 2(1)) Sch 1 (items 22–85): 13 Oct 1994 (s 2(2)) | Amended by No 46 of 1998, Sch 10 item 354, effective s 4, Sch 2 (items 49–522), Sch 3 (items 13–20), Sch 4 (items 12–27), Sch 5 (items 6–10), Sch 6 (items 8–30), Sch 7 (items 12–19), Sch 8 (items 2–9) and Sch 9 (items 7, 8): 22 June 1998 (s 2(1)–(4))

s 124ZZA — Allocation of gain amounts and loss amounts to classes of assessable income

Disposals of SME investments (1) If: (a) there is an ordinary capital gain amount, or an ordinary capital loss amount, in respect of a disposal of an SME investment of the company; and (b) the company was a PDF at the time of the disposal; the ordinary capital gain amount or ordinary capital loss amount, as the case may be, is taken into account in determining the overall capital gain or overall capital loss for the class known as SME assessable income. Disposals of assets other than SME investments (2) If: (a) there is an ordinary capital gain amount, or an ordinary capital loss amount, in respect of a disposal of an asset of the company; and (b) subsection (1) does not apply to the disposal; the ordinary capital gain amount or the ordinary capital loss amount, as the case may be, is taken into account in determining the overall capital gain or overall capital loss for the class known as other assessable income.

Amendment history: Inserted by No 181 of 1994, Sch 2 item 160Z, effective Sch 1 (items 1–21, 86–91), Sch 2 (items 5–23, 23 (2nd occurring)), Sch 3 (items 6–100), Sch 4 (items 9–23) and Sch 5 (items 25–30, 46(10)): 19 Dec 1994 (s 2(1)) Sch 1 (items 22–85): 13 Oct 1994 (s 2(2)) | Amended by No 46 of 1998, Sch 10 item 352 | Sch 10 item 353 | Sch 10 item 355, effective s 4, Sch 2 (items 49–522), Sch 3 (items 13–20), Sch 4 (items 12–27), Sch 5 (items 6–10), Sch 6 (items 8–30), Sch 7 (items 12–19), Sch 8 (items 2–9) and Sch 9 (items 7, 8): 22 June 1998 (s 2(1)–(4))

s 124ZZB — Assessable income etc. in relation to capital gains

(1) The assessable income of each class includes the amount (if any) that is left over after the overall capital gain for that class has been reduced in accordance with this section. (2) If there is an overall capital loss for a particular class of assessable income, the loss is to be applied in reduction of overall capital gains for the remaining class. (3) Any accumulated net capital loss for the immediately preceding year of income is to be applied in reduction of residual overall capital gains for the classes of assessable income in the following order: (a) SME assessable income; (b) other assessable income.

Amendment history: Inserted by No 181 of 1994, Sch 2 item 23 | Sch 2 item 160Z, effective Sch 1 (items 1–21, 86–91), Sch 2 (items 5–23, 23 (2nd occurring)), Sch 3 (items 6–100), Sch 4 (items 9–23) and Sch 5 (items 25–30, 46(10)): 19 Dec 1994 (s 2(1)) Sch 1 (items 22–85): 13 Oct 1994 (s 2(2)) | Amended by No 46 of 1998, Sch 10 item 348 | Sch 10 item 351 | Sch 10 item 356 | Sch 10 item 357 | Sch 10 item 358 | Sch 10 item 359, effective s 4, Sch 2 (items 49–522), Sch 3 (items 13–20), Sch 4 (items 12–27), Sch 5 (items 6–10), Sch 6 (items 8–30), Sch 7 (items 12–19), Sch 8 (items 2–9) and Sch 9 (items 7, 8): 22 June 1998 (s 2(1)–(4))

s 124ZZD — No net capital loss

The company does not make a net capital loss for the year of income, despite section 102 ‑ 10 of the Income Tax Assessment Act 1997 .

Amendment history: Inserted by No 181 of 1994, effective Sch 1 (items 1–21, 86–91), Sch 2 (items 5–23, 23 (2nd occurring)), Sch 3 (items 6–100), Sch 4 (items 9–23) and Sch 5 (items 25–30, 46(10)): 19 Dec 1994 (s 2(1)) Sch 1 (items 22–85): 13 Oct 1994 (s 2(2)) | Repealed and substituted by No 46 of 1998, Sch 10 item 361, effective s 4, Sch 2 (items 49–522), Sch 3 (items 13–20), Sch 4 (items 12–27), Sch 5 (items 6–10), Sch 6 (items 8–30), Sch 7 (items 12–19), Sch 8 (items 2–9) and Sch 9 (items 7, 8): 22 June 1998 (s 2(1)–(4))

s 126 — Interest paid by a company on bearer debentures

(1) If: (a) a company pays or credits an amount of interest in respect of a debenture payable to bearer; and (b) the interest is not, to any extent, subject to withholding tax under Division 11A; and (c) neither of sections 128F (to the extent it applies to non ‑ residents who are not engaged in carrying on a business in Australia at or through a permanent establishment in Australia) and 128GB applies to the interest; and (e) the company does not give the Commissioner the name and address of the holder of the debenture; the company is liable to pay income tax, as imposed by the Income Tax (Bearer Debentures) Act 1971 , on the amount paid or credited, or, if the company makes a deduction under subsection (2), the amount that otherwise would have been paid or credited. (1A) Subsection (1) does not affect any other liability of the company to pay income tax. (2) The company may deduct and retain for its own use from an amount payable to a person in respect of which the company is liable to pay tax in accordance with subsection (1) an amount equal to that tax. (3) Where the Commissioner is satisfied that that person is not liable to furnish a return, the Commissioner must refund to that person the amount of tax paid by the company in respect of his or her debentures.

Amendment history: Amended by No 6 of 1946, effective 13 Apr 1946 (s 2) | Amended by No 45 of 1953, item 18, effective 26 Oct 1953 (s 2) | Amended by No 143 of 1965, item 6, effective 14 Feb 1966 (s 2) | Amended by No 85 of 1967, item 15, effective s 2(2), (3) and 3–37: 8 Nov 1967 (s 2(1)) | Amended by No 54 of 1971, item 6, effective s 3–12: 25 May 1971 (s 2) | Amended by No 51 of 1973, effective s 25(1): 25 June 1968 (s 25(2)) Remainder: 14 June 1973 (s 2) | Amended by No 108 of 1981, item 124, effective s 4–25: 24 June 1981 (s 2) | Amended by No 95 of 1997, Sch 5 item 2 | Sch 5 item 3 | Sch 5 item 6, effective Sch 1 (item 23): 30 June 1997 (s 2(1)) | Amended by No 93 of 1999, Sch 1 item 23, effective s 4, Sch 1 (items 1–35, 39–48), Sch 2, Sch 3 (items 26–33), Sch 4 (items 1–23, 25), Sch 5 and 7: 16 July 1999 (s 2(1)) Sch 4 (item 24): 16 Apr 1998 (s 2(2)) | Amended by No 101 of 2006, Sch 2 item 330 | Sch 2 item 847 | Sch 4 item 2, effective Sch 1 (items 1, 5–199), Sch 2 (items 118–565, 1017, 1023–1037) and Sch 6 (items 1–4, 6–15): 14 Sept 2006 (s 2(1) items 2, 4) Sch 3 (items 1–10) and Sch 4 (items 1–11): 1 Jan 2008 (s 2(1) item 3) | Amended by No 41 of 2011, Sch 5 item 9 | Sch 5 item 281 | Sch 5 item 419, effective Sch 5 (items 15–17): 28 June 2011 (s 2(1) item 11) Sch 5 (items 57–73, 79, 176–367, 376–382, 412, 413): 27 June 2011 (s 2(1) items 17, 23) | Amended by No 4 of 2018, effective Sch 6 (items 4–8, 27): 21 Feb 2018 (s 2(1) item 1)

s 127 — Credit for tax paid by company

(1) Where the company pays tax under this Division on any interest, and that interest is included in the assessment of the person to whom it was paid or credited, the proportionate amount of tax paid by the company in respect of the interest shall be deducted from the total tax payable by that person.

Amendment history: Amended by No 85 of 1967, item 16, effective s 2(2), (3) and 3–37: 8 Nov 1967 (s 2(1)) | Amended by No 51 of 1973, effective s 25(1): 25 June 1968 (s 25(2)) Remainder: 14 June 1973 (s 2) | Amended by No 108 of 1981, item 124, effective s 4–25: 24 June 1981 (s 2) | Amended by No 95 of 1997, Sch 5 item 4, effective Sch 1 (item 23): 30 June 1997 (s 2(1))

s 128 — Assessments of tax

An assessment of tax payable in accordance with this Division by a company may be an assessment of the amount of tax so payable upon interest in respect of a number of debentures, whether held by the one holder or not.

Amendment history: Repealed and substituted by No 54 of 1971, item 7 | item 8 | item 9 | item 11, effective s 3–12: 25 May 1971 (s 2)

s 128AAA — Application of Division to non ‑ share dividends

(1) This Division: (a) applies to a non ‑ share equity interest in the same way as it applies to a share; and (b) applies to an equity holder in the same way as it applies to a shareholder; and (c) applies to a non ‑ share dividend in the same way as it applies to a dividend. (2) Subsection (1) does not apply to: (a) section 128AE; and (b) section 128F; and (ba) section 128FA.

Amendment history: Inserted by No 163 of 2001, effective Sch 1 (items 35–116, 118(1), (2), (6)–(13)): 1 July 2001 (s 2) | Amended by No 73 of 2004, effective 23 June 2004 (s 2) | Amended by No 101 of 2006, Sch 2 item 331, effective Sch 1 (items 1, 5–199), Sch 2 (items 118–565, 1017, 1023–1037) and Sch 6 (items 1–4, 6–15): 14 Sept 2006 (s 2(1) items 2, 4) Sch 3 (items 1–10) and Sch 4 (items 1–11): 1 Jan 2008 (s 2(1) item 3)

s 128A — Interpretation

(1) In this Division, unless the contrary intention appears: ADI means a body corporate that is an ADI (authorised deposit ‑ taking institution) for the purposes of the Banking Act 1959 . dividend : (a) includes part of a dividend; and (b) (except when used in paragraph (d) of the definition of interest in subsection (1AB)) does not include a dividend paid in respect of a non ‑ equity share. enterprise means a business or other industrial or commercial undertaking. entity means: (a) the Commonwealth, a State or an authority of the Commonwealth or of a State; (b) a natural person; (c) a company; (d) the partners in a partnership, in their capacity as partners; (e) the persons carrying on a joint venture, in their capacity as such persons; or (f) the trustees of a trust, in their capacity as such trustees. foreign bank means a non ‑ resident company that carries on a banking business. joint venture means an enterprise carried on by 2 or more persons in common otherwise than as partners. non ‑ ADI financial institution means a corporation that: (a) is a registered entity within the meaning of the Financial Sector (Collection of Data) Act 2001 ; and (b) is included in Category D (Money Market Corporation) in a list kept under section 11 of that Act; and (c) carries on a general business of providing finance (within the meaning of that Act) on a commercial basis. nostro account means an account that: (a) an ADI or non ‑ ADI financial institution holds with a foreign bank and maintains for the sole purpose of settling international transactions; and (b) operates on the basis that: (i) amounts deposited in the account are held in the account for no more than 10 days; and (ii) amounts advanced by way of an overdraft on the account are repaid within 10 days. (1AA) In this Division and in an Act imposing withholding tax: income includes a royalty and a dividend. (1AB) For the purposes of this Division: interest includes an amount: (a) that is in the nature of interest; or (b) to the extent that it could reasonably be regarded as having been converted into a form that is in substitution for interest; or (c) to the extent that it could reasonably be regarded as having been received in exchange for interest in connection with a washing arrangement; or (d) that is a dividend paid in respect of a non ‑ equity share; or (e) if regulations under the Income Tax Assessment Act 1997 are made having the effect that instruments known as upper tier 2 capital instruments, or a class of instruments of that kind, are debt interests—that is paid on such a debt interest and is not a return of an investment; but does not include an amount to the extent to which it is a return on an equity interest in a company. washing arrangement means an arrangement under which the title to a security is transferred to a resident shortly before an interest payment is made where the sole or dominant purpose of the arrangement is to reduce the amount of withholding tax payable by a person. (1AC) An example of an amount in the nature of interest is an amount representing a discount on a security. (1AD) An example of an amount in substitution for interest is a lump sum payment made instead of payments of interest. (1AE) For the purposes of this Division, if a lender assigns a loan, or the right to interest under a loan, any payment from the borrower to the assignee that represents an amount that would have been interest if the assignment had not taken place is taken to be a payment of interest. (1AF) For the purposes of this Division, if a person acquires a security, or the right to interest under a security, any payment from the issuer of the security to that person that represents an amount that would have been interest if the acquisition had not taken place is taken to be a payment of interest. (1A) Subject to subsection (1B), for the purposes of this subsection and sections 128AA, 128AB, 128AD, 128C, 128NA and 128NBA: (a) a reference to the reduced issue price of a security that has been partially redeemed on one or more occasions is a reference to the issue price of the security reduced by the amount of the partial redemption or the sum of the amounts of the partial redemptions, as the case may be; (b) expressions used in this subsection or those sections that are also used in Division 16E have the same respective meanings as in that Division; and (c) sections 159GV (other than subsection 159GV(2)) and 159GZ apply as if references in those sections to “this Division” were references to “subsection 128A(1A) and sections 128AA, 128AB, 128AD, 128C, 128NA and 128NBA”. (1B) Subsection (1A) applies as if: (a) paragraph (c) of the definition of qualifying security in subsection 159GP(1) were omitted; and (b) paragraph (a) of the definition of security in that subsection included a reference to debt interests. (2) For the purposes of this Division, interest or a royalty shall be deemed to have been paid by a person to another person although it is not actually paid over to the other person but is reinvested, accumulated, capitalized, carried to any reserve, sinking fund or insurance fund however designated, or otherwise dealt with on behalf of the other person or as the other person directs. (3) For the purposes of this Division, a beneficiary who is presently entitled to a dividend, to interest or to a royalty included in the income of a trust estate shall be deemed to have derived income consisting of that dividend, interest or royalty at the time when he or she became so entitled. (4) In section 260, income tax or tax includes withholding tax. (5) For the purposes of this Division: (a) the borrowing of moneys by a company by means of the issue of a number of debentures or debt interests in one borrowing operation shall be deemed to be the raising of a loan; (b) subject to paragraph (a), each receipt of moneys by a borrower under a contract under which moneys are to be, or may be, advanced by way of loan shall be deemed to be the raising of a loan; and (c) the moneys received by the raising of a loan, less the expenses of borrowing, shall be deemed to be the loan moneys in respect of the loan. (6) A reference in this Division to beneficial interests in relation to an entity shall be read: (a) in the case of an entity being a company or the partners in a partnership—as a reference to beneficial interests in respect of the capital of, and in respect of any profits or income of, the company or partnership; (b) in the case of an entity being persons carrying on a joint venture—as a reference to beneficial interests in respect of the enterprise; and (c) in the case of an entity being the trustees of a trust—as a reference to beneficial interests under the trust. (7) A reference in this Division to the use of moneys for the purposes of an enterprise shall be read as not including use of those moneys in the course of carrying on an enterprise: (a) by way of providing capital for another enterprise; or (b) by way of the making of loans. (9) For the purposes of this Division: (a) a reference to particular loan moneys (including the reference in paragraph (b)) includes a reference to moneys that, in the opinion of the Commissioner, represent those loan moneys; and (b) without limiting the generality of paragraph (a): (i) moneys received by way of repayment of a loan made out of particular loan moneys; and (ii) moneys received in respect of shares in the capital of a company, being shares purchased or subscribed for by the expenditure of particular loan moneys, upon a sale of the shares, a return of capital by the company or liquidation of the company; shall be deemed to represent those loan moneys. (10) For the purposes of this Division, the trustee of a provident, benefit, superannuation or retirement fund is a non ‑ resident at a particular time if, and only if, the fund is a foreign superannuation fund at that time. (11) If, apart from this subsection, there is, in relation to a fund, no person who is a trustee of the fund for the purposes of this Division, the person, or each of the persons, who manages the fund is taken, for the purposes of this Division, to be the trustee, or a trustee, as the case requires, of the fund.

Amendment history: Inserted by No 85 of 1959, effective s 3–36: 2 Dec 1959 (s 2(1)) | Amended by No 18 of 1960, effective 17 June 1960 | Amended by No 38 of 1967, effective s 3–16: 25 May 1967 (s 2) | Repealed and substituted by No 85 of 1967, effective s 2(2), (3) and 3–37: 8 Nov 1967 (s 2(1)) | Amended by No 4 of 1968, effective 8 May 1968 (s 2(1)) | Amended by No 54 of 1971, effective s 3–12: 25 May 1971 (s 2) | Amended by No 51 of 1973, effective s 25(1): 25 June 1968 (s 25(2)) Remainder: 14 June 1973 (s 2) | Amended by No 165 of 1973, effective s 3–36: 11 Dec 1973 (s 2) | Amended by No 80 of 1975, effective 20 June 1975 (s 2) | Amended by No 108 of 1981, effective s 4–25: 24 June 1981 (s 2) | Amended by No 123 of 1984, effective s 91–166 and 385: 14 Dec 1984 (s 2(3)) | Amended by No 49 of 1986, item 11 | item 12, effective s 4–29: 24 June 1986 (s 2(1)) | Amended by No 224 of 1992, item 63, effective s 4–13, 14(1), 15(1), 16(1), 17(1) and 18–87: 24 Dec 1992 (s 2(1)) s 14(2), 15(2), 16(2) and 17(2): 1 July 1993 (s 2(1)) | Amended by No 181 of 1994, Sch 3 item 31, effective Sch 1 (items 1–21, 86–91), Sch 2 (items 5–23, 23 (2nd occurring)), Sch 3 (items 6–100), Sch 4 (items 9–23) and Sch 5 (items 25–30, 46(10)): 19 Dec 1994 (s 2(1)) Sch 1 (items 22–85): 13 Oct 1994 (s 2(2)) | Amended by No 95 of 1997, Sch 2 item 1 | Sch 2 item 2 | Sch 2 item 3, effective Sch 1 (item 23): 30 June 1997 (s 2(1)) | Amended by No 163 of 2001, Sch 1 item 82 | Sch 1 item 83 | Sch 1 item 84, effective Sch 1 (items 35–116, 118(1), (2), (6)–(13)): 1 July 2001 (s 2) | Amended by No 12 of 2003, Sch 1 item 1 | Sch 1 item 2 | Sch 1 item 2A | Sch 1 item 3, effective Sch 1: 29 Aug 2001 (s 2(1) item 2) Sch 3 (items 7, 11): 2 Apr 2003 (s 2(1) item 4) | Amended by No 67 of 2003, Sch 9 item 9, effective Sch 10 (item 13): 14 Oct 2003 (s 2(1) item 8) | Amended by No 21 of 2005, Sch 3 item 2 | Sch 3 item 3 | Sch 3 item 45 | Sch 3 item 47, effective Sch 3 (items 1–31, 45, 47(1), (2)): 21 Mar 2005 (s 2) | Amended by No 101 of 2006, Sch 1 item 126 | Sch 1 item 127 | Sch 1 item 128 | Sch 2 item 298 | Sch 2 item 332 | Sch 2 item 333 | Sch 2 item 334, effective Sch 1 (items 1, 5–199), Sch 2 (items 118–565, 1017, 1023–1037) and Sch 6 (items 1–4, 6–15): 14 Sept 2006 (s 2(1) items 2, 4) Sch 3 (items 1–10) and Sch 4 (items 1–11): 1 Jan 2008 (s 2(1) item 3) | Amended by No 15 of 2007, Sch 1 item 99, effective Sch 1 (items 1–8, 22–149, 406(1)–(3)) and Sch 3 (items 6, 7): 15 Mar 2007 (s 2(1) items 2, 6) | Amended by No 41 of 2011, Sch 5 item 282, effective Sch 5 (items 15–17): 28 June 2011 (s 2(1) item 11) Sch 5 (items 57–73, 79, 176–367, 376–382, 412, 413): 27 June 2011 (s 2(1) items 17, 23) | Amended by No 47 of 2016, Sch 6 item 12, effective Sch 6 (items 8–15, 19–25): 6 May 2016 (s 2(1) item 8)

s 128AA — Deemed interest in respect of transfers of certain securities

(1) Where: (a) a person transfers a qualifying security; and (b) the transfer price of the security exceeds the issue price or, where the security has been partially redeemed, the reduced issue price of the security; so much of the transfer price as equals the excess referred to in paragraph (b) shall, for the purposes of this Division, be deemed to be income that consists of interest. (2) For the purposes of references to the transfer price, issue price or reduced issue price of a qualifying security in subsection (1), any application of subsection 159GP(2) shall be disregarded.

Amendment history: Inserted by No 49 of 1986, item 13 | item 14 | item 20 | item 265B | item 22 | item 26 | item 31, effective s 4–29: 24 June 1986 (s 2(1))

s 128AB — Certificates relating to issue price of certain securities

(1) Where: (a) a qualifying security is or was transferred either before or after the commencement of this section; and (b) at the time of transfer either: (i) the transferor is or was a resident; or (ii) the transferor is or was a non ‑ resident and the transfer price is or was derived from a source in Australia; the transferee may at any time after the transfer (including a time after the transferee ceases to be the holder of the security) apply, in the approved form, to the Commissioner for the issue of a certificate under this section. (3) Where the Commissioner is satisfied that the requirements of paragraph (1)(b) are satisfied in relation to the transfer of the qualifying security to which an application under subsection (1) relates and that the security was transferred on a particular date and for a particular consideration to the applicant, the Commissioner shall issue to the applicant a certificate that: (a) is expressed to be issued under this section; (b) identifies the security to which it relates; (c) specifies that date as the date of transfer; (d) specifies that consideration, or, where subsection 159GP(2) applies, the amount that is taken under that subsection to be the consideration for the transfer, as the transfer price; and (e) specifies the name of the applicant as the transferee. (4) Where the Commissioner issues a certificate under this section in relation to a qualifying security that has been transferred to a person, the following provisions have effect: (a) for the purposes of the application of this Division in relation to the first subsequent transfer (if any) of the qualifying security by the person: (i) the amount specified in the certificate shall be taken to be the issue price of the security; and (ii) where the security was partially redeemed before the transfer to the person—any such partial redemption shall be taken not to have occurred; (b) if the security is redeemed or partially redeemed without having been subsequently transferred by the person—in determining for the purposes of the application of this Division the extent (if any) to which the redemption payment comprises an amount that is interest by reason only of the definition of interest in subsection 128A(1AB): (i) the amount specified in the certificate as the transfer price shall be taken to be the issue price of the security; and (ii) where the security was partially redeemed before the transfer to the person—any such partial redemption shall be taken not to have occurred. (5) If the Commissioner refuses an application under subsection (1), the Commissioner shall serve on the applicant, by post or otherwise, notice in writing that the application has been refused.

Amendment history: Inserted by No 49 of 1986, item 21 | item 15 | item 265B, effective s 4–29: 24 June 1986 (s 2(1)) | Amended by No 95 of 1997, Sch 2 item 4, effective Sch 1 (item 23): 30 June 1997 (s 2(1)) | Amended by No 64 of 2020, Sch 3 item 206 | Sch 3 item 207, effective Sch 1: 1 July 2020 (s 2(1) item 2) Sch 3 (items 203–227, 325, 326): 1 Oct 2020 (s 2(1) item 6)

s 128AC — Deemed interest in respect of hire ‑ purchase and certain other agreements

(1) In this section: agreement means any agreement, arrangement or understanding, whether formal or informal, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings. attributable agreement payment , in relation to a relevant agreement, means so much of any payment made or liable to be made under the agreement as represents consideration for the use, sale or disposal of the relevant agreement property. carry forward interest , in relation to an attributable agreement payment in relation to a relevant agreement, means so much (if any) of the notional interest in relation to the payment as exceeds the amount of the payment. eligible value , in relation to the relevant agreement property in relation to a relevant agreement, means the market value of the property at the time at which the agreement commences or commenced to apply in relation to the property. formula interest , in relation to an attributable agreement payment in relation to a relevant agreement, means the amount ascertained in accordance with the formula , where: A is the total interest in relation to the relevant agreements. B is the total number of attributable agreement payments liable to be made under the relevant agreements; and C is the number that is B , reduced by the number of attributable agreement payments made under the relevant agreement before the attributable agreement payment concerned. notional interest , in relation to an attributable agreement payment in relation to a relevant agreement, means the sum of the formula interest (if any) in relation to the payment and the carry forward interest (if any) in relation to the immediately preceding attributable agreement payment in relation to the relevant agreement. relevant agreement means an agreement entered into after 16 December 1984, being: (a) a hire ‑ purchase agreement; or (b) a lease or any other agreement relating to the use by a person of property owned by another person, being a lease or agreement under which: (i) the lessee or person using the property is entitled to purchase or require the transfer of the lease property or property subject to the agreement on the termination or expiration of the lease or agreement; or (ii) the lease term or term of the agreement is for all, or substantially all, of the effective life of the lease property or property subject to the agreement. relevant agreement property , in relation to a relevant agreement, means: (a) in the case of a hire ‑ purchase agreement—the property that is the subject of the agreement; and (b) in any other case—the property in relation to which subparagraph (b)(i) or (ii) of the definition of relevant agreement applies. total interest , in relation to a relevant agreement, means the sum of all of the attributable agreement payments liable to be made under the relevant agreement, reduced by the eligible value of the relevant agreement property. (2) Where an agreement (including a hire ‑ purchase agreement and a lease) relates to the use by a person of 2 or more items of property owned by another person, this section applies as if, instead of the single agreement, there were separate agreements relating to the use of each of the items of property having such of the terms of the first ‑ mentioned agreement as are relevant. (3) Where a variation is or was made in the terms of, or liability to make payments under, a relevant agreement, then, for the purposes of the application of this section: (a) the relevant agreement shall be taken to be, or to have been, terminated at the time at which the variation has effect; and (b) a new relevant agreement shall be taken to be, or to have been, entered into at the time at which the variation has effect and on the terms of the first ‑ mentioned relevant agreement as so varied. (4) Where any right or option under an agreement to extend the term of, or otherwise vary the effect of, the agreement is or was exercised, then, for the purposes of this section, the exercise of that right or option shall be taken to be a variation of the terms of the agreement to provide for the extension or other effect. (5) Where an attributable agreement payment in relation to a relevant agreement is made, so much of the attributable agreement payment as does not exceed the notional interest in relation to the payment shall, for the purposes of this Division, be deemed to be income that consists of interest. (6) Where: (a) a relevant agreement is entered into after the commencement of this section; and (b) at the time at which the relevant agreement is entered into, the total interest in relation to the relevant agreement exceeds the sum of all amounts that, if all of the attributable agreement payments liable to be made under the relevant agreement were made, would, disregarding this subsection, be deemed to be income that consists of interest under subsection (5) in relation to the relevant agreement; the amount of the notional interest in relation to the first attributable agreement payment in relation to the relevant agreement shall, for the purposes of this section, be increased by an amount equal to the excess referred to in paragraph (b). (7) For the purposes of section 128D, where withholding tax is payable on a part of an attributable agreement payment that is taken under subsection (5) of this section to be an amount of interest, the withholding tax shall be taken to be payable on the whole of the attributable agreement payment.

s 128AD — Indemnification etc. agreements in relation to bills of exchange and promissory notes

(1) Where: (a) the drawer of a bill of exchange issued after the day on which this section comes into operation pays an amount (in this subsection referred to as the indemnification amount ) to the acceptor of the bill to indemnify, reimburse or otherwise compensate the acceptor in respect of the whole or a part of an amount (which whole or part is in this subsection referred to as the eligible presentment amount ) that the acceptor has, or will, become liable to pay to the payee under the bill on presentment of the bill; (b) no part of the indemnification amount is, or will be, included in the assessable income of the acceptor of any year of income; and (c) the whole or a part (in this subsection referred to as the eligible presentment interest ) of the eligible presentment amount consists or will consist of interest; so much of the indemnification amount as indemnifies, reimburses or otherwise compensates the acceptor in respect of the eligible presentment interest shall, for the purposes of this Division, be deemed to be income that consists of interest. (2) Where: (a) a person (in this subsection referred to as the indemnifier ) pays an amount (in this subsection referred to as the indemnification amount ) to the issuer of a promissory note issued after the day on which this section comes into operation to indemnify, reimburse or otherwise compensate the issuer in respect of the whole or a part of an amount (which whole or part is in this subsection referred to as the eligible presentment amount ) that the issuer has, or will, become liable to pay to the payee under the note on presentment of the note; (b) no part of the indemnification amount is, or will be, included in the assessable income of the issuer of any year of income; and (c) the whole or a part (in this subsection referred to as the eligible presentment interest ) of the eligible presentment amount consists or will consist of interest; so much of the indemnification amount as indemnifies, reimburses or otherwise compensates the issuer in respect of the eligible presentment interest shall, for the purposes of this Division, be deemed to be income that consists of interest.

s 128AE — Interpretation provisions relating to offshore banking units

(1) In this Division, unless the contrary intention appears: borrow includes raise finance by the issue of a security. lend includes provide finance by the purchase of a security. OB activity has the same meaning as in section 121D. offshore banking unit has the meaning given by this section. offshore borrowing means: (a) a borrowing in any currency, by a person who is or has been an offshore banking unit, from a non ‑ resident who is not a related person (within the meaning of Division 9A); or (b) a borrowing in a currency other than Australian currency, by a person who is or has been an offshore banking unit, from a resident or a related person (within the meaning of Division 9A). offshore gold borrowing means borrowing gold from an offshore person within the meaning of section 121E. prevailing borrowing rate , in relation to a person who is or has been an offshore banking unit, in relation to a particular time, means the effective annual interest rate that the Commissioner considers was payable by the person on borrowings at or about that time or, where there were none, by offshore banking units generally at or about that time. prevailing borrowing term , in relation to a person who is or has been an offshore banking unit, in relation to a particular time, means the period that the Commissioner considers was the usual term of borrowings by the person at or about that time or, where there were none, by offshore banking units generally at or about that time. security means a bond, debenture, debt interest, bill of exchange, promissory note or other security or similar instrument. tax exempt gold means gold that is tax exempt gold under this section. tax exempt loan money means an amount that is tax exempt loan money under this section. transfer to a person includes apply an amount for the benefit of a person. (1A) The Minister must not make a declaration under subsection (2), or a determination under subsection (2AA), after the day on which the Treasury Laws Amendment (2021 Measures No. 2) Act 2021 received the Royal Assent. (2) The Minister may, by notifiable instrument, declare a person being: (a) a body corporate that is an ADI (authorised deposit ‑ taking institution) for the purposes of the Banking Act 1959 ; or (b) a public authority constituted by a law of a State, being a public authority that carries on the business of State banking; or (ba) a company in which all of the equity interests are beneficially owned by an offshore banking unit (other than one to which paragraph (c) applies); or (c) a person whom the Minister is satisfied is appropriately authorised to carry on business as a dealer in foreign exchange; or (d) a life insurance company registered under section 21 of the Life Insurance Act 1995 ; or (e) a company incorporated under the Corporations Act 2001 that provides funds management services on a commercial basis (other than solely to related persons): (i) that is, under the Financial Sector (Collection of Data) Act 2001 , a registered entity included in the category for money market corporations; or (ii) all of the shares which are beneficially owned by a company covered by subparagraph (i); or (iii) a financial services licensee (within the meaning of the Corporations Act 2001 ) whose licence covers dealing in securities (within the meaning of subsection 92(3) of that Act), providing financial advice in relation to such securities or operating a managed investment scheme (within the meaning of that Act); or (f) a company that the Minister determines, in writing, to be an OBU under subsection (2AA); to be an offshore banking unit for the purposes of this Division. (2AA) The Minister may, on written application by a company, determine, by notifiable instrument, that the company is an OBU. (2AB) The determination must: (a) specify the day when the company commences to be an OBU; and (b) contain any other information the Minister considers appropriate. (2AC) A determination of the Minister under subsection (2AA) must be made in accordance with guidelines determined by the Minister under subsection (2AD). (2ACA) A determination under subsection (2AA) that a company is an OBU and a declaration under subsection (2), for the purposes of paragraph (2)(f), that the company is an offshore banking unit for the purposes of this Division may be included in the same instrument. (2AD) The Minister must, by legislative instrument, determine guidelines for the making of determinations under subsection (2AA). The guidelines may require the Minister to take into account: (a) specified criteria; or (b) recommendations of particular bodies; or (c) any other factors. (2A) If a person who is an offshore banking unit for the purposes of this Division: (a) is convicted of an offence against section 8L, 8N, 8Q, 8T or 8U of the Taxation Administration Act 1953 , or against Division 136 or 137 of the Criminal Code in relation to a taxation law (within the meaning of the Taxation Administration Act 1953 ); or (b) incurs a tax liability, within the meaning of that Act, by way of a penalty equal to 90% of an amount; the Minister may, by notifiable instrument, declare that the person is no longer an offshore banking unit for the purposes of this Division. (2B) If the Minister makes such a declaration in respect of a company that is an offshore banking unit only because of paragraph (2)(ba), the offshore banking unit mentioned in that paragraph, and in any previous application of that paragraph that was necessary for it to apply to the company, is no longer an offshore banking unit from the time when the declaration comes into force. (2C) If a person who is an offshore banking unit ceases to be a person of a kind mentioned in any of paragraphs (2)(a), (b), (ba) and (c), the Minister must, by notifiable instrument, declare that the person is no longer an offshore banking unit for the purposes of this Division. (2D) Except as mentioned in subsection (2A), (2B) or (2C), a person does not cease to be an offshore banking unit for the purposes of this Division. (3) A declaration under subsection (2), (2A) or (2C) shall not come into force before the day on which the declaration is registered on the Federal Register of Legislation under the Legislation Act 2003 . (4) Where: (a) a person who is an offshore banking unit makes an offshore borrowing or offshore gold borrowing; and (b) the lender would, but for section 128GB, be liable to pay withholding tax on income consisting of interest on the offshore borrowing or offshore gold borrowing; then, for the purposes of this Division, the amount borrowed is tax exempt loan money or tax exempt gold of the person. (5) Where: (a) a person who is or has been an offshore banking unit makes a loan of tax exempt loan money or tax exempt gold where the loan is an OB activity or would be if the person were an OBU; and (b) the loan is repaid; the amount repaid is, for the purposes of this Division, deemed to be tax exempt loan money or tax exempt gold of the person. (7) Where a person who is or has been an offshore banking unit transfers an amount of tax exempt loan money or tax exempt gold to another person, the following provisions have effect for the purposes of this Division: (a) subject to subsections (10) and (11), the amount transferred ceases to be tax exempt loan money or tax exempt gold of the person; and (b) the amount transferred does not become tax exempt loan money or tax exempt gold of the other person. (8) Where a person who is or has been an offshore banking unit transfers to another person an amount of money or gold that, in the opinion of the Commissioner, includes tax exempt loan money or tax exempt gold, so much of the amount transferred as the Commissioner considers was tax exempt loan money or tax exempt gold is deemed, for the purposes of this Division, to have been tax exempt loan money or tax exempt gold of the person. (9) Where a person who is or has been an offshore banking unit deals with an amount of tax exempt loan money or tax exempt gold of the person under the person’s internal accounting arrangements in such a way that the amount becomes available for possible transfer to other persons (other than by way of payment in carrying on an OB activity, or what would be an OB activity if the person were an OBU, or repayment of an offshore borrowing or an offshore gold borrowing), the following provisions have effect for the purposes of this Division: (a) the person is, when the amount so becomes available, deemed to make a transfer of the amount to another person, other than by way of payment in carrying on an OB activity (or what would be an OB activity if the person were an OBU) or repayment of an offshore borrowing or an offshore gold borrowing; (b) any actual transfer of the amount by the person to another person shall be disregarded. (10) For the purposes of this Division, where a person who is or has been an offshore banking unit transfers tax exempt loan money to another person in exchange for an equivalent amount in a different currency: (a) the amount received in exchange shall be taken to be the same money as was transferred; and (b) the transfer shall be taken not to have occurred. (11) For the purposes of this Division, where a person who is or has been an offshore banking unit transfers tax exempt loan money or tax exempt gold to another person by way of a deposit for the purposes of temporary safe ‑ keeping pending the making of an offshore loan or repayment of an offshore borrowing or an offshore gold borrowing: (a) the amount held on deposit and upon being repaid shall be taken to be the same money as was transferred; and (b) the transfer shall be taken not to have occurred. (12) For the purposes of this section, an amount: (a) deposited in an account with a bank or other financial institution; or (b) paid by way of consideration for the issue of a security; shall be taken to have been lent to, and borrowed by, the bank, financial institution or issuer of the security. (13) If an offshore banking unit consists of: (a) one or more permanent establishments in Australia at or through which the offshore banking unit carries on what are OB activities within the meaning of Division 9A; and (b) one or more other permanent establishments either in Australia or outside Australia; then this section and section 128NB apply as if: (c) the offshore banking unit consisted only of the permanent establishments referred to in paragraph (a); and (d) the permanent establishments referred to in paragraph (b) were separate persons.

Amendment history: Inserted by No 11 of 1988, item 39, effective s 9–13 and 15–40: 26 Apr 1988 (s 2(1)) s 14: 24 June 1986 (s 2(2)) | Amended by No 129 of 1989, effective Sch 4: 28 Dec 1989 (s 2(4) and gaz 1989, No S383) | Amended by No 191 of 1992, item 14 | item 16, effective s 4–35: 21 Dec 1992 (s 2) | Amended by No 82 of 1994, Sch 4 item 112, effective s 8–43, 47–71, 80–83, 93–112, 114–119, 122, 128–134: 23 June 1994 (s 2(1)) s 7, 120 and 121: 22 Oct 1986 (s 2(2)) s 44–46: 9 June 1993 (s 2(3)) s 72–79: 1 Jan 1993 (s 2(4)) s 84–92: 30 June 1992 (s 2(5)) s 113: 21Dec 1992 (s 2(6)) s 123–127): 24 Dec 1992 (s 2(7)) | Amended by No 76 of 1996, Sch 1 item 18 | Sch 1 item 19 | Sch 1 item 20 | Sch 1 item 22, effective s 4 and Sch 1 (items 1–43, 47): 18 Dec 1996 (s 2(1)) Sch 1 (items 44–46): 1 Jan 1993 (s 2(2)) Sch 2: 27 June 1996 (s 2(3)) Sch 4 (items 19–24): 16 Feb 1997 (s 2(4)) | Amended by No 48 of 1998, Sch 3 item 87, effective Sch 1 (items 83–97): 1 July 1998 (s 2(2)) | Amended by No 93 of 1999, Sch 1 item 24 | Sch 1 item 25, effective s 4, Sch 1 (items 1–35, 39–48), Sch 2, Sch 3 (items 26–33), Sch 4 (items 1–23, 25), Sch 5 and 7: 16 July 1999 (s 2(1)) Sch 4 (item 24): 16 Apr 1998 (s 2(2)) | Amended by No 55 of 2001, Sch 3 item 221, effective s 4–14 and Sch 3 (items 220–263): 15 July 2001 (s 2(1), (3)) | Amended by No 121 of 2001, effective Sch 2 (items 154–157): 1 July 2002 (s 2(2)) | Amended by No 123 of 2001, effective Sch 1 (items 238, 239): 11 Mar 2002 (s 2(1), (6)) | Amended by No 146 of 2001, Sch 4 item 65, effective Sch 4 (items 41–91): 15 Dec 2001 (s 2(1)) | Amended by No 21 of 2005, Sch 3 item 4 | Sch 3 item 5, effective Sch 3 (items 1–31, 45, 47(1), (2)): 21 Mar 2005 (s 2) | Amended by No 58 of 2006, Sch 7 item 250 | Sch 7 item 251, effective s 4 and Sch 7 (items 35–50, 241–256): 22 June 2006 (s 2(1) items 1, 6, 24) Sch 7 (items 173, 175): 30 June 2000 (s 2(1) items 9, 11) Sch 7 (item 174): 24 Oct 2002 (s 2(1) item 10) Sch 7 (items 176, 178): 30 June 2004 (s 2(1) items 12, 14) Sch 7 (item 177): 24 Dec 1992 (s 2(1) item 13) | Amended by No 75 of 2009, Sch 1 item 207, effective Sch 1 (items 206, 207): 27 Feb 2010 (s 2(1) item 2) | Amended by No 110 of 2014, effective Sch 2 (items 1, 6–12, 23): 17 Oct 2014 (s 2(1) item 2) Sch 5 (items 7–15, 95–97): 16 Oct 2014 (s 2(1) items 4, 7) | Amended by No 61 of 2018, effective Sch 2A (item 7): 18 Sept 2018 (s 2(1) item 2) | Amended by No 64 of 2020, Sch 3 item 208 | Sch 3 item 209 | Sch 3 item 210 | Sch 3 item 211 | Sch 3 item 212 | Sch 3 item 213, effective Sch 1: 1 July 2020 (s 2(1) item 2) Sch 3 (items 203–227, 325, 326): 1 Oct 2020 (s 2(1) item 6) | Amended by No 110 of 2021, Sch 2 item 14, effective Sch 2 (items 1–7, 13–15): 1 Oct 2021 (s 2(1) item 2) | Amended by No 76 of 2023, effective Sch 2 (item 648): 20 Oct 2023 (s 2(1) item 2)

s 128AF — Payments through interposed entities

(1) This section applies if: (a) a payment received by a non ‑ resident through one or more interposed companies, partnerships, trusts or other persons is attributable to an amount of dividends, interest or royalties paid by a resident; and (b) one or more of the interposed companies, partnerships, trusts or other persons is exempt from tax. (1A) However, this section does not apply if one or more of the interposed entities is an AMIT for the year of income in which the payment is received. Note: See Division 12A in Schedule 1 to the Taxation Administration Act 1953 for provisions about withholding tax that apply specifically to AMITs. (2) If this section applies, the amount of dividends, interest or royalties paid by a resident is taken, for the purposes of this Division, to have been paid by the resident directly to the non ‑ resident. (3) For the purposes of this section, a person is exempt from tax if, at the time at which the payment was received by the non ‑ resident, all income of the person was exempt from tax.

Amendment history: Inserted by No 95 of 1997, effective Sch 1 (item 23): 30 June 1997 (s 2(1)) | Amended by No 53 of 2016, Sch 3 item 1, effective Sch 3 (item 1), Sch 5 (items 1, 3, 6–28, 75), Sch 6 (items 1–20) and Sch 8 (item 1): 5 May 2016 (s 2(1) items 2, 4)

s 128B — Liability to withholding tax

(1A) In this section, a reference to a person to whom this section applies is a reference to the Commonwealth, a State, an authority of the Commonwealth or of a State or a person who is, or persons at least 1 of whom is, a resident. Note: References in this section to amounts paid to a person may include amounts from an AMIT that, under section 12A ‑ 205 in Schedule 1 to the Taxation Administration Act 1953 , are treated as payments to the person (from the trustee of the AMIT or a custodian). (1) Subject to subsections (3), (3A), (3D) and (3E), this section applies to income that: (a) is derived, on or after 1 January 1968, by a non ‑ resident; and (b) consists of a dividend paid by a company that is a resident. Note: An amount declared to be conduit foreign income is an amount to which this section does not apply: see sections 802 ‑ 15 and 802 ‑ 17 of the Income Tax Assessment Act 1997 . (2) Subject to subsection (3), this section also applies to income that: (a) is derived, on or after 1 January 1968, by a non ‑ resident; and (b) consists of interest that: (i) is paid to the non ‑ resident by a person to whom this section applies and is not an outgoing wholly incurred by that person in carrying on business in a country outside Australia at or through a permanent establishment of that person in that country; or (ii) is paid to the non ‑ resident by a person who, or by persons each of whom, is not a resident and is, or is in part, an outgoing incurred by that person or those persons in carrying on business in Australia at or through a permanent establishment of that person or those persons in Australia. Note: An amount of interest paid to a person by a temporary resident is an amount to which this section does not apply: see section 768 ‑ 980 of the Income Tax Assessment Act 1997 . (2A) Subject to subsection (3), where income: (a) is, or has, after 2 July 1973, been, derived, or derived in part, by a person to whom this section applies in carrying on business in a country outside Australia at or through a permanent establishment of the person in that country; and (b) consists of interest that: (i) is or has been paid to the person by another person to whom this section applies and is not an outgoing wholly incurred by that other person in carrying on business in a country outside Australia at or through a permanent establishment of that other person in that country; or (ii) is or has been paid to the first ‑ mentioned person by a person who is, or by persons each of whom is, not a resident and is, or is in part, an outgoing incurred by that last ‑ mentioned person or those last ‑ mentioned persons in carrying on business in Australia at or through a permanent establishment of that last ‑ mentioned person or those last ‑ mentioned persons in Australia; this section also applies to that income or to the part of that income so derived, as the case may be. Note: An amount of interest paid to a person by a temporary resident is an amount to which this section does not apply: see section 768 ‑ 980 of the Income Tax Assessment Act 1997 . (2B) Subject to subsection (3), this section also applies to income that: (a) is derived by a non ‑ resident: (i) during the 1993 ‑ 94 year of income of the non ‑ resident; or (ii) during a later year of income of the non ‑ resident; and (b) consists of a royalty that: (i) is paid to the non ‑ resident by a person to whom this section applies and is not an outgoing wholly incurred by that person in carrying on business in a foreign country at or through a permanent establishment of that person in that country; or (ii) is paid to the non ‑ resident by a person who, or by persons each of whom, is not a resident and is, or is in part, an outgoing incurred by that person or those persons in carrying on business in Australia at or through a permanent establishment of that person or those persons in Australia. (2C) Subject to subsection (3), where income: (a) is derived, or derived in part, by a person (the recipient ) to whom this section applies in carrying on business in a country outside Australia at or through a permanent establishment of the person in that country; and (b) consists of a royalty that: (i) is paid to the recipient by another person (the payer ) to whom this section applies and is not an outgoing wholly incurred by the payer in carrying on business in a country outside Australia at or through a permanent establishment of the payer in that country; or (ii) is paid to the recipient by one or more persons (the non ‑ resident payers ), each of whom is not a resident, and is, or is in part, an outgoing incurred by the non ‑ resident payers in carrying on business in Australia at or through a permanent establishment of the non ‑ resident payers in Australia; this section also applies to that income or to the part of that income mentioned in paragraph (a). (2D) Subsections (2B) and (2C) do not apply to income to the extent to which it is a return on an equity interest in a company. (3) This section does not apply to: (aaa) income that consists of a non ‑ share dividend that is unfrankable under section 215 ‑ 10 of the Income Tax Assessment Act 1997 ; or (a) income derived by a non ‑ resident that is: (i) exempt from income tax because of section 50 ‑ 5 (other than because of item 1.6 in the table in that section) or 50 ‑ 10, item 6.1 or 6.2 of the table in section 50 ‑ 30, section 50 ‑ 40 or item 9.1, 9.2, 9.3, 9.4, 9.5, 9.10 or 9.11 of the table in section 50 ‑ 45 of the Income Tax Assessment Act 1997 ; and (ii) exempt from income tax in the country in which the non ‑ resident resides; or (aa) income derived by a non ‑ resident that is an overseas charitable institution (within the meaning of section 121C) where the income is exempt under subsection 121ELA(1); or (ab) income derived by a non ‑ resident that is exempt from income tax because of item 9.8, 9.9, 9.12 or 9.13 of the table in section 50 ‑ 45 of the Income Tax Assessment Act 1997 ; or (ba) income that is exempt from income tax because of section 124ZM (which exempts dividends paid by PDFs); or (d) income in respect of which a trustee is liable to be assessed under section 99 or section 99A; or (e) income that is derived by a trustee, being a trustee in relation to a trust created by a person who, at the time the income is derived, is a resident and in respect of which the Commissioner is empowered, under section 102, to assess the trustee to pay income tax; or (ga) income that consists of: (i) the franked part of a dividend; or (ii) in relation to a dividend that is paid by a former exempting entity (within the meaning of the Income Tax Assessment Act 1997 ) on a share acquired under an employee share scheme (within the meaning of that Act)—the part of the dividend that is franked with an exempting credit; or (iii) in relation to a dividend that is paid by a former exempting entity (within the meaning of the Income Tax Assessment Act 1997 ) to an eligible continuing substantial member (within the meaning of that Act)—the part of the dividend that is franked with an exempting credit; other than a dividend in respect of which a determination is made under paragraph 204 ‑ 30(3)(c) of the Income Tax Assessment Act 1997 or a dividend or a part of a dividend in respect of which a determination is made under paragraph 177EA(5)(b) of this Act; or (gb) income that consists of a dividend derived from assets included in the insurance funds of a life assurance company that carries on business in Australia at or through a permanent establishment of the life assurance company in Australia; or (gc) income that consists of interest derived on a nostro account by a non ‑ resident that is a foreign bank; or (h) income that consists of: (ii) interest derived by a non ‑ resident in carrying on business in Australia at or through a permanent establishment of the non ‑ resident in Australia (except interest derived by a limited partner in a VCLP, ESVCLP or AFOF as such a partner); (iv) interest to which section 128F, 128FA or 128GB applies; or (j) income in respect of which a taxpayer is liable to be assessed under Division 9C; or (jb) income that: (i) is derived by a non ‑ resident that is a superannuation fund for foreign residents; and (ii) consists of interest, or consists of dividends or non ‑ share dividends paid by a company that is a resident; and (iii) is exempt from income tax in the country in which the non ‑ resident resides; or Note: See subsection (3CA) for extra requirements relating to this paragraph. (k) income that is not included in assessable income because of subsection 271 ‑ 105(1); or (l) income derived by a trustee that, because of paragraph 102UK(2)(b) or 102UM(2)(b), is not included in the assessable income of a trustee beneficiary of the trust estate; or (m) income that consists of a royalty that is paid to the non ‑ resident by a person (the lessee ) as consideration for the lease, by the lessee from the non ‑ resident, of a vessel if: (i) the lessee is an Australian resident company; and (ii) the vessel is not an excluded vessel (within the meaning of the Shipping Reform (Tax Incentives) Act 2012 ); and (iii) under the lease, the lessee has whole possession and control of the vessel (including the right to appoint the master and crew of the ship); and (iv) during the period of the lease, the vessel is used, or is available for use, as mentioned in paragraph 8(1)(c) of the Shipping Reform (Tax Incentives) Act 2012 ; or (n) income that is non ‑ assessable non ‑ exempt income because of Division 880 of the Income Tax Assessment Act 1997 or Division 880 of the Income Tax (Transitional Provisions) Act 1997 . (3A) Paragraph (3)(ga) does not apply to income consisting of a dividend, or a part of a dividend, that is derived by the trustee of a trust, or a partnership, to the extent (if any) to which any amount paid to, or applied for the benefit of, a taxpayer (being a beneficiary in the trust or a partner in the partnership) that: (a) was attributable to the dividend; and (b) was paid or applied: (i) in respect of an interest in the trust or partnership that was acquired, or was acquired for a period that was extended, at or after the commencing time; or (ii) under a financing arrangement (including an arrangement extending an earlier arrangement) entered into at or after the commencing time; may reasonably be regarded as equivalent to the payment of interest on a loan. (3B) In subsection (3A): commencing time means 7.30 pm by legal time in the Australian Capital Territory on 13 May 1997. financing arrangement has the meaning given by subsection 995 ‑ 1(1) of the Income Tax Assessment Act 1997 . (3C) In determining for the purposes of subsection (3A) the extent (if any) to which an amount may reasonably be regarded as equivalent to the payment of interest on a loan, regard is to be had to: (a) the way in which the amount was calculated; and (b) the conditions applying to the payment or application of the amount; and (c) any other relevant matters. (3CA) Paragraph (3)(jb) applies to income derived by the superannuation fund mentioned in subparagraph (3)(jb)(i) only if: (a) the superannuation fund satisfies the portfolio interest test in subsection (3CC) in relation to the entity mentioned in subsection (3CB) (the test entity ): (i) at the time the income was derived; and (ii) throughout any 12 month period that began no earlier than 24 months before that time and ended no later than that time; and (b) the superannuation fund does not, at the time the income was derived, have influence of a kind described in subsection (3CD) in relation to the test entity; and (c) the income is not non ‑ assessable non ‑ exempt income of the superannuation fund because of: (i) Subdivision 880 ‑ C of the Income Tax Assessment Act 1997 ; or (ii) Division 880 of the Income Tax (Transitional Provisions) Act 1997 . (3CB) For the purposes of subsection (3CA), the test entity is: (a) unless paragraph (b) applies—the entity that paid the interest, dividends or non ‑ share dividends as mentioned in subparagraph (3)(jb)(ii); or (b) if subsection 128A(3) applies in relation to a resident trust estate (within the meaning of Division 6)—the trust estate. (3CC) A superannuation fund satisfies the portfolio interest test in this subsection in relation to the test entity at a time if, at that time, the total participation interest (within the meaning of the Income Tax Assessment Act 1997 ) the superannuation fund holds in the test entity: (a) is less than 10%; and (b) would be less than 10% if, in working out the direct participation interest (within the meaning of that Act) that any entity holds in a company: (i) an equity holder were treated as a shareholder; and (ii) the total amount contributed to the company in respect of non ‑ share equity interests were included in the total paid ‑ up share capital of the company. (3CD) A superannuation fund has influence of a kind described in this subsection in relation to the test entity at a time if any of the following requirements are satisfied at that time: (a) the superannuation fund: (i) is directly or indirectly able to determine; or (ii) in acting in concert with others, is directly or indirectly able to determine; the identity of at least one of the persons who, individually or together with others, make (or might reasonably be expected to make) the decisions that comprise the control and direction of the test entity’s operations; (b) at least one of those persons is accustomed or obliged to act, or might reasonably be expected to act, in accordance with the directions, instructions or wishes of the superannuation fund (whether those directions, instructions or wishes are expressed directly or indirectly, or through the superannuation fund acting in concert with others). (3CE) However, a superannuation fund does not have influence of a kind described in subsection (3CD) if, disregarding any breach of terms of a debt interest by any entity, the superannuation fund would not have influence of that kind. (3D) This section does not apply to a demerger dividend to which section 45B does not apply. (3E) This section does not apply to income that consists of a dividend that: (a) is paid to a person who is a non ‑ resident carrying on business in Australia at or through a permanent establishment of the person in Australia; and (b) is attributable to the permanent establishment; and (c) is not paid to the person in the person’s capacity as trustee. Note: This subsection not only ensures that this section does not apply to that income to make withholding tax payable on it, but also (as a result) ensures that none of that income is non ‑ assessable non ‑ exempt income under section 128D. Subsection 44(1) makes that income assessable income. (3F) In subsection (3E): permanent establishment of a person: (a) has the same meaning as in a double tax agreement (as defined in Part X) that relates to a foreign country and affects the person; or (b) has the meaning given by subsection 6(1), if there is no such agreement. (4) A person who derives income to which this section applies that consists of a dividend is liable to pay income tax upon that income at the rate declared by the Parliament in respect of income to which this subsection applies. (5) A person who derives income to which this section applies that consists of interest is, subject to subsections (6) and (7), liable to pay income tax upon that income at the rate declared by the Parliament in respect of income to which this subsection applies. (5A) A person who derives income to which this section applies that consists of a royalty is liable to pay income tax upon that income at the rate declared by the Parliament in respect of income to which this subsection applies. (6) Where: (a) income to which this section applies consists of interest and is paid to the person by whom it is derived by a person to whom this section applies; and (b) the interest is, in part only, an outgoing incurred by that person to whom this section applies in carrying on business in a country outside Australia at or through a permanent establishment of that person to whom this section applies in that country; income tax is payable under subsection (5) upon so much only of the income as is attributable to so much of the interest as is not an outgoing so incurred. (7) Where: (a) income to which this section applies consists of interest and is paid to the person by whom it is derived by a person who, or by persons each of whom, is not a resident; and (b) the interest is, in part only, an outgoing incurred by the person or persons by whom it is paid in carrying on business in Australia at or through a permanent establishment of that person or those persons in Australia; income tax is payable under subsection (5) upon so much only of the income as is attributable to so much of the interest as is an outgoing so incurred. (8) For the purposes of subparagraphs (2)(b)(i) and (2A)(b)(i) and paragraph (6)(b), where: (a) interest is paid, or has, after 2 July 1973, been paid, to a person by another person, being a person to whom this section applies, carrying on business in a country outside Australia; and (b) the interest or a part of the interest: (i) is interest incurred by the other person in gaining or producing income that is derived by the other person otherwise than in carrying on business in a country outside Australia at or through a permanent establishment of the other person in that country or is interest incurred by the other person for the purpose of gaining or producing income to be so derived; or (ii) is interest incurred by the other person in carrying on business for the purpose of gaining or producing income and is reasonably attributable to income that is derived, or may be derived, by the other person otherwise than in so carrying on business at or through a permanent establishment of the other person in a country outside Australia; the interest or the part of the interest, as the case may be, is not an outgoing incurred by the other person in carrying on business in a country outside Australia at or through a permanent establishment of the other person in that country. (9) For the purposes of subparagraphs (2)(b)(ii) and (2A)(b)(ii) and paragraph (7)(b), where: (a) interest is paid, or has, after 2 July 1973, been paid, to a person by another person or other persons (in this subsection referred to as the borrower ), being: (i) another person who is or was carrying on business in Australia and is not or was not a resident; or (ii) other persons who are or were carrying on business in Australia and each of whom is not or was not a resident; and (b) the interest or a part of the interest: (i) is interest incurred by the borrower in gaining or producing income that is derived by the borrower in carrying on business in Australia at or through a permanent establishment of the borrower in Australia or is interest incurred by the borrower for the purpose of gaining or producing income to be so derived; or (ii) is interest incurred by the borrower in carrying on a business for the purpose of gaining or producing income and is reasonably attributable to income that is derived, or may be derived, by the borrower in so carrying on business at or through a permanent establishment of the borrower in Australia; the interest or the part of the interest, as the case may be, is an outgoing incurred by the borrower in carrying on business in Australia at or through a permanent establishment of the borrower in Australia. (9A) For the purposes of subparagraphs (2B)(b)(i) and (2C)(b)(i), where: (a) a royalty is paid, to a person by another person, being a person to whom this section applies, carrying on business in a country outside Australia; and (b) the royalty, or a part of the royalty: (i) is a royalty incurred by the other person in gaining or producing income that is derived by the other person otherwise than in carrying on business in a country outside Australia at or through a permanent establishment of the other person in that country or is a royalty incurred by the other person for the purpose of gaining or producing income to be so derived; or (ii) is a royalty incurred by the other person in carrying on business for the purpose of gaining or producing income and is reasonably attributable to income that is derived, or may be derived, by the other person otherwise than in so carrying on business at or through a permanent establishment of the other person in a country outside Australia; the royalty or the part of the royalty, as the case may be, is not an outgoing incurred by the other person in carrying on business in a country outside Australia at or through a permanent establishment of the other person in that country. (9B) For the purposes of subparagraphs (2B)(b)(ii) and (2C)(b)(ii), where: (a) a royalty is paid to a person by another person or other persons (the licensee ), being: (i) another person who is or was carrying on business in Australia and is not or was not a resident; or (ii) other persons who are or were carrying on business in Australia and each of whom is not or was not a resident; and (b) the royalty or a part of the royalty: (i) is a royalty incurred by the licensee in gaining or producing income that is derived by the licensee in carrying on business in Australia at or through a permanent establishment of the licensee in Australia or is a royalty incurred by the licensee for the purpose of gaining or producing income to be so derived; or (ii) is a royalty incurred by the licensee in carrying on a business for the purpose of gaining or producing income and is reasonably attributable to income that is derived, or may be derived, by the licensee in so carrying on business at or through a permanent establishment of the licensee in Australia; the royalty or the part of the royalty, as the case may be, is an outgoing incurred by the licensee in carrying on business in Australia at or through a permanent establishment of the licensee in Australia. (9C) If: (a) apart from this subsection, tax would be payable under subsection 126(1) on an amount of interest paid to a person; and (b) section 128F would apply to the interest, assuming that paragraph (1)(e) of that section had not been enacted; then: (c) despite anything else in this section, the interest is taken, for the purposes of this Division, to be income derived by the person and to be income to which this section applies; and Note: As a result of this paragraph, the interest will not be subject to tax under subsection 126(1): see paragraph 126(1)(b). (d) in addition to the effect of any credit arising under section 18 ‑ 30 in Schedule 1 to the Taxation Administration Act 1953 in respect of the interest, the total tax payable by the person, other than under this section, is reduced by the amount of any tax payable under this section on the interest; and (e) tax paid under this section on the interest is not an allowable deduction. (10) Income tax payable by a person in accordance with this section is in addition to any other income tax payable by him or her upon income to which this section does not apply. (11) Income tax payable by a person in accordance with this section upon income to which this section applies by virtue of subsection (2A) or (2C) is in addition to, and shall not be taken into account in arriving at the amount of, any other income tax payable by him or her in respect of that income.

Amendment history: Inserted by No 85 of 1959, effective s 3–36: 2 Dec 1959 (s 2(1)) | Amended by No 17 of 1961, effective 12 June 1961 | Amended by No 110 of 1964, effective s 3–46: 23 Nov 1964 (s 2(1)) | Amended by No 103 of 1965, effective 14 Dec 1965 (s 2) | Repealed and substituted by No 85 of 1967, effective s 2(2), (3) and 3–37: 8 Nov 1967 (s 2(1)) | Amended by No 54 of 1971, effective s 3–12: 25 May 1971 (s 2) | Amended by No 51 of 1973, effective s 25(1): 25 June 1968 (s 25(2)) Remainder: 14 June 1973 (s 2) | Amended by No 26 of 1974, item 9, effective 1 Aug 1974 (s 2) | Amended by No 80 of 1975, effective 20 June 1975 (s 2) | Amended by No 50 of 1976, effective s 3–19 and Sch: 4 June 1976 (s 2) | Amended by No 108 of 1981, effective s 4–25: 24 June 1981 (s 2) | Amended by No 25 of 1983, item 9, effective 19 June 1983 (s 2) | Amended by No 58 of 1987, item 11 | item 99, effective s 6–19: 5 June 1987 (s 2) | Amended by No 62 of 1987, Sch 4 item 35, effective s 9–38 and Sch 4: 5 June 1987 (s 2(1), (3), (4)) | Amended by No 11 of 1988, item 21 | item 24, effective s 9–13 and 15–40: 26 Apr 1988 (s 2(1)) s 14: 24 June 1986 (s 2(2)) | Amended by No 78 of 1988, item 22, effective s 8–13, 14(1), 16–36, 38, 55(1)–(14), 56, 57 and Sch: 24 June 1988 (s 2(1)) s 14(2): 1 July 1988 (s 2(2)) s 15: 22 Dec 1986 (s 2(3)) s 37, 39–53 and 55(15)–(25):1 Nov 1988 (s 2(4) and gaz 1988, No S331) | Amended by No 105 of 1989, item 25, effective s 4, 5(a)–(n), (p) and 6–66: 30 June 1989 (s 2(1)) s 5(o): 18 Dec 1987 (s 2(2)) | Amended by No 98 of 1992, item 12 | item 33, effective s 4–31 and 37–81: 30 June 1992 (s 2(1)) s 32–36: 1 July 1992 (s 2(2)) | Amended by No 224 of 1992, item 64 | item 82 | item 89, effective s 4–13, 14(1), 15(1), 16(1), 17(1) and 18–87: 24 Dec 1992 (s 2(1)) s 14(2), 15(2), 16(2) and 17(2): 1 July 1993 (s 2(1)) | Amended by No 56 of 1994, item 60 | item 64, effective s 14–23, 39–54, 65–69, 70(3), 71(3), (4), 72–74, 75(2), 76–82, 83(3) and 84–87: 7 Apr 1994 (s 2(1)) s 24–32: 1 July 1993 (s 2(2)) s 33–38: 20 Mar 1994 (s 2(3)) s 55–64: 1 July 1994 (s 2(4)) s 70(1) and 83(1): 30 June 1989 (s 2(5), (8)) s 70(2), 71(2) and 83(2): 8 Jan 1991 (s 2(9)) s 71(1) and 75(1): 17 Jan 1990 (s 2(6), (7)) | Amended by No 138 of 1994, item 46 | item 48 | item 113, effective s 4, 5, 8–10, 14–16, 21–24, 27–33, 44–92, 99–116 and Sch: 28 Nov 1994 (s 2(1)) s 11–13, 17–20, 25, 26 and 34–43: 1 Jan 1993 (s 2(2)) s 93–98: 28 Nov 1994 (s 2(3)) | Amended by No 181 of 1994, Sch 3 item 32, effective Sch 1 (items 1–21, 86–91), Sch 2 (items 5–23, 23 (2nd occurring)), Sch 3 (items 6–100), Sch 4 (items 9–23) and Sch 5 (items 25–30, 46(10)): 19 Dec 1994 (s 2(1)) Sch 1 (items 22–85): 13 Oct 1994 (s 2(2)) | Amended by No 95 of 1997, Sch 2 item 6 | Sch 2 item 7 | Sch 2 item 8 | Sch 2 item 13 | Sch 5 item 6, effective Sch 1 (item 23): 30 June 1997 (s 2(1)) | Amended by No 121 of 1997, Sch 3 item 51 | Sch 3 item 52, effective s 4: 8 July 1997 (s 2(1)) Sch 2 (items 18–37), Sch 3 (items 31–61), Sch 4 (items 63–138), Sch 5 (items 43–93), Sch 6 (items 68–132), Sch 7 (items 5–7), Sch 8 (items 32–51), Sch 9 (items 16–40), Sch 10 (items 12–15), Sch 11 (items 37–57) and Sch 12 (items 15–23): 1 July 1997 (s 2(3), (5)) | Amended by No 17 of 1998, Sch 2F item 8, effective s 4 and Sch 1: 16 Apr 1998 (s 2) | Amended by No 47 of 1998, Sch 7 item 2 | Sch 7 item 5 | Sch 7 item 12 | Sch 7 item 25, effective Sch 3 (items 17–20), Sch 4 (items 1, 6–65, 69), Sch 6, 7, Sch 8 (items 1–10) and Sch 9 (items 7–14, 15(3), 16): 23 June 1998 (s 2(1)) | Amended by No 70 of 1999, Sch 2 item 10, effective Sch 1 and Sch 2 (items 1–12): 8 July 1999 (s 2) | Amended by No 93 of 1999, Sch 1 item 26 | Sch 5 item 10 | Sch 7 item 3, effective s 4, Sch 1 (items 1–35, 39–48), Sch 2, Sch 3 (items 26–33), Sch 4 (items 1–23, 25), Sch 5 and 7: 16 July 1999 (s 2(1)) Sch 4 (item 24): 16 Apr 1998 (s 2(2)) | Amended by No 179 of 1999, Sch 18 item 28 | Sch 18 item 34 | Sch 18 item 35, effective Sch 2 (items 20–47), Sch 3 (items 3–6), Sch 5 (item 74), Sch 6 (items 1–13, 24(1)–(4)), Sch 10 (items 22–24), Sch 11 (item 44), Sch 16 (items 3–17, 37) and Sch 17 (items 1, 2): 22 Dec 1999 (s 2(1), (4), (7)(b)–(d)) Sch 5 (items 1–64), Sch 11 (items 14–43, 45–79) and Sch 12 (item 3): 1 July 2000 (s 2(9), (12)) | Amended by No 163 of 2001, Sch 1 item 85 | Sch 1 item 86, effective Sch 1 (items 35–116, 118(1), (2), (6)–(13)): 1 July 2001 (s 2) | Amended by No 90 of 2002, Sch 13 item 4 | Sch 16 item 19 | Sch 16 item 20, effective s 4, Sch 10, Sch 15 (items 16–18) and Sch 16 (items 2–20, 54, 55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) | Amended by No 12 of 2003, Sch 1 item 4, effective Sch 1: 29 Aug 2001 (s 2(1) item 2) Sch 3 (items 7, 11): 2 Apr 2003 (s 2(1) item 4) | Amended by No 16 of 2003, Sch 29 item 8 | Sch 29 item 9 | Sch 29 item 10, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 5 (item 1), Sch 9 (items 3–12), Sch 10 (item 1) and Sch 23 (items 1–9): 24 Oct 2002(s 2(1) items 4–6, 13) Sch 29 (items 1–11, 14): 29 June 2002 (s 2(1) items 20, 22) | Amended by No 65 of 2003, Sch 5 item 1 | Sch 5 item 2, effective s 4, Sch 3 (items 1, 2), Sch 4, Sch 5 (items 2, 4): 30 June 2003 (s 2(1) items 1, 3, 4, 7) Sch 5 (item 1): 16 July 1999 (s 2(1) item 6) | Amended by No 73 of 2004, effective 23 June 2004 (s 2) | Amended by No 101 of 2004, item 130 | item 4, effective s 4, Sch 1 (items 1, 4), Sch 8, Sch 10 (items 1–6) and Sch 11 (items 161, 162): 30 June 2004 (s 2(1) items 1, 2, 9, 10, 18) Sch 11 (items 1, 2): 16 July 1999 (s 2(1) item 11) Sch 11 (items 17–34, 38–43): 30 June 2000 (s 2(1) item 13) Sch 11 (items 44–46, 49–51, 60–87, 101–127): 1 July 2000 (s 2(1) item 14) Sch 11 (items 131–140): 1 July 2001 (s 2(1) item 16) | Amended by No 105 of 2004, effective s 4, Sch 1 (items 1–3) and Sch 3: 30 June 2004 (s 2(1) items 1, 2, 4) | Amended by No 23 of 2005, Sch 3 item 43, effective s 4 and Sch 3 (items 14–74, 111(3)–(5), 112–114): 21 Mar 2005 (s 2(1) items 1, 6) | Amended by No 64 of 2005, Sch 1 item 5 | Sch 1 item 6, effective Sch 1 (items 1–6), Sch 3 (items 1–4) and Sch 4 (items 2–27, 38, 39): 26 June 2005 (s 2(1) items 2, 4) Sch 2 (items 1–9): 27 June 2005 (s 2(1) item 3) | Amended by No 147 of 2005, Sch 2 item 802 | Sch 2 item 6 | Sch 2 item 7, effective Sch 1 (items 1–3, 169(1)), Sch 2 (items 2–11, 27(1)–(4), 28(1)–(3)), Sch 4 (items 1–3, 12), Sch 5 (items 1–12, 20) and Sch 7 (items 1–13, 19, 20): 14 Dec 2005 (s 2(1) items 2, 3, 5, 6) | Amended by No 32 of 2006, Sch 1 item 768 | Sch 1 item 5 | Sch 1 item 6, effective Sch 1 (items 4–15, 40(8), (9)): 6 Apr 2006 (s 2) | Amended by No 101 of 2006, Sch 1 item 40 | Sch 1 item 130 | Sch 2 item 292 | Sch 2 item 293 | Sch 2 item 297 | Sch 2 item 337 | Sch 2 item 339 | Sch 2 item 340 | Sch 2 item 341, effective Sch 1 (items 1, 5–199), Sch 2 (items 118–565, 1017, 1023–1037) and Sch 6 (items 1–4, 6–15): 14 Sept 2006 (s 2(1) items 2, 4) Sch 3 (items 1–10) and Sch 4 (items 1–11): 1 Jan 2008 (s 2(1) item 3) | Amended by No 15 of 2007, Sch 1 item 260, effective Sch 1 (items 1–8, 22–149, 406(1)–(3)) and Sch 3 (items 6, 7): 15 Mar 2007 (s 2(1) items 2, 6) | Amended by No 78 of 2007, effective s 4, Sch 3 (items 1–20), Sch 7 (items 1, 15) and Sch 8 (items 86–95): 21 June 2007 (s 2(1) items 1–3, 5, 6) | Amended by No 79 of 2007, Sch 9 item 13 | Sch 9 item 802, effective Sch 1 (items 1–27, 33–38, 43(1), (4), (5)), Sch 6 (items 1, 2, 8), Sch 7 (items 1–16), Sch 9 (items 1–13, 30–33) and Sch 10 (items 3–9, 32): 21 June 2007 (s 2(1) items 2, 4, 6) Sch 8 (items 1, 4–11, 26(1), (2) and (4)): 1 July 2007 (s 2(1) item 5) | Amended by No 143 of 2007, Sch 7 item 11 | Sch 7 item 16 | Sch 7 item 71, effective Sch 1 (items 2, 3, 18–127, 222, 223, 224(1), (2), 225, 226), Sch 4 (items 1–46, 51, 52), Sch 7 (items 9–17, 104(2)) and Sch 8: 24 Sept 2007 (s 2(1) items 2, 4, 11, 12) | Amended by No 97 of 2008, Sch 3 item 23, effective Sch 1 (items 1, 2, 12) and Sch 3 (items 5–43): 3 Oct 2008 (s 2(1) items 2, 3) | Amended by No 41 of 2011, Sch 5 item 79, effective Sch 5 (items 15–17): 28 June 2011 (s 2(1) item 11) Sch 5 (items 57–73, 79, 176–367, 376–382, 412, 413): 27 June 2011 (s 2(1) items 17, 23) | Amended by No 57 of 2012, Sch 4 item 1, effective Sch 4: 21 June 2012 (s 2) | Amended by No 169 of 2012, effective Sch 2 (items 1–3, 26, 27): 3 Dec 2012 (s 2(1) item 3) | Amended by No 4 of 2018, effective Sch 6 (items 4–8, 27): 21 Feb 2018 (s 2(1) item 1) | Amended by No 84 of 2018, effective Sch 1 (items 2–7, 15), Sch 2 (items 4, 5, 9, 10) and Sch 4 (item 1): 1 Oct 2018 (s 2(1) item 1) | Amended by No 15 of 2019, Sch 1 item 1, effective Sch 1 (items 1, 46): 1 Apr 2019 (s 2(1) item 2) | Amended by No 34 of 2019, Sch 3 item 1 | Sch 3 item 2 | Sch 4 item 2, effective Sch 1 (items 15, 16), Sch 3 and Sch 4 (items 1, 2): 1 July 2019 (s 2(1) item 2) | Amended by No 35 of 2022, effective Sch 3 (item 1): 1 Oct 2022 (s 2(1) item 4) | Amended by No 12 of 2026, Sch 3 item 2, effective sch 3 (items 1-3): 1 Apr 2026 (s 2(1) item 4)

s 128C — Payment of withholding tax

(1) Withholding tax is due and payable by the person liable to pay the tax at the expiration of 21 days after the end of the month in which the income to which the tax relates was derived by the person. (3) If any of the withholding tax which a person is liable to pay remains unpaid after the time by which it is due to be paid, the person is liable to pay the general interest charge on the unpaid amount for each day in the period that: (a) started at the beginning of the day by which the withholding tax was due to be paid; and (b) finishes at the end of the last day on which, at the end of the day, any of the following remains unpaid: (i) the withholding tax; (ii) general interest charge on any of the withholding tax. Note: The general interest charge is worked out under Part IIA of the Taxation Administration Act 1953 . (4AA) If: (a) a person is liable to pay the general interest charge on an amount of withholding tax which is payable on an amount that, by virtue of the application of section 128AA, is taken to consist of interest paid in relation to the transfer of a qualifying security; (b) the Commissioner is satisfied that: (i) before the security was transferred, a notice expressed to be issued under subsection 265B(4) identifying the security was given by the person, in connection with the transfer, to the transferee; (ii) one or more of the statements made in the notice is incorrect; and (iii) the person did not know of the circumstance referred to in subparagraph (ii) at the time of transfer of the security; and (c) the proper amount of the withholding tax liability of the person exceeds the amount that would have been the amount of the withholding tax liability if it were determined on the basis that the statements made in the notice were correct; the Commissioner shall remit so much of the amount of the general interest charge as bears to that amount the same proportion as the amount of the excess referred to in paragraph (c) bears to the amount of withholding tax. (6) The ascertainment of the amount of any withholding tax shall not be deemed to be an assessment within the meaning of any of the provisions of this Act. (7) The Commissioner may serve on a person, by post or otherwise, a notice in which is specified: (a) the amount of any withholding tax that the Commissioner has ascertained is payable by that person; and (b) the date on which that tax became due and payable. (8) The production of a notice served under subsection (7), or of a document under the hand of the Commissioner, a Second Commissioner or a Deputy Commissioner purporting to be a copy of such a notice, is prima facie evidence that the amount of withholding tax specified in the notice became due and payable by the person on whom the notice was served on the date so specified.

Amendment history: Inserted by No 85 of 1959, effective s 3–36: 2 Dec 1959 (s 2(1)) | Repealed and substituted by No 85 of 1967, effective s 2(2), (3) and 3–37: 8 Nov 1967 (s 2(1)) | Amended by No 108 of 1981, effective s 4–25: 24 June 1981 (s 2) | Amended by No 123 of 1982, effective 13 Dec 1982 (s 2) | Amended by No 123 of 1984, effective s 91–166 and 385: 14 Dec 1984 (s 2(3)) | Amended by No 49 of 1986, item 13, effective s 4–29: 24 June 1986 (s 2(1)) | Amended by No 191 of 1992, item 33, effective s 4–35: 21 Dec 1992 (s 2) | Amended by No 11 of 1999, item 19 | item 20 | item 21 | item 22 | item 23 | item 24 | item 25 | item 26 | item 216, effective Sch 1 (items 12–276, 398–404): 1 July 1999 (s 2(3), (4)) Sch 2: 9 Apr 1999 (s 2(2)) Sch 3 (items 1, 2): 31 Mar 1999 (s 2(1)) | Amended by No 179 of 1999, Sch 18 item 21, effective Sch 2 (items 20–47), Sch 3 (items 3–6), Sch 5 (item 74), Sch 6 (items 1–13, 24(1)–(4)), Sch 10 (items 22–24), Sch 11 (item 44), Sch 16 (items 3–17, 37) and Sch 17 (items 1, 2): 22 Dec 1999 (s 2(1), (4), (7)(b)–(d)) Sch 5 (items 1–64), Sch 11 (items 14–43, 45–79) and Sch 12 (item 3): 1 July 2000 (s 2(9), (12)) | Amended by No 44 of 2000, Sch 3 item 14 | Sch 3 item 15, effective Sch 3 (items 14–33, 36, 37), Sch 4 (items 10–12): 22 Dec 1999 (s 2(1)) Sch 3 (items 34, 35) and Sch 4 (items 4–9): 1 July 2000 (s 2(4), (5), (11)) | Amended by No 101 of 2006, Sch 1 item 131 | Sch 1 item 132 | Sch 2 item 342 | Sch 2 item 1025, effective Sch 1 (items 1, 5–199), Sch 2 (items 118–565, 1017, 1023–1037) and Sch 6 (items 1–4, 6–15): 14 Sept 2006 (s 2(1) items 2, 4) Sch 3 (items 1–10) and Sch 4 (items 1–11): 1 Jan 2008 (s 2(1) item 3) | Amended by No 61 of 2016, Sch 3 item 24, effective Sch 1 (item 296) and Sch 3 (items 24, 25): 21 Oct 2016 (s 2(1) item 1)

s 128D — Certain income not assessable

Income other than income to which section 128B applies by virtue of subsection (2A), (2C) or (9C) of that section upon which withholding tax is payable, or upon which withholding tax would, but for paragraph 128B(3)(ga), (jb) or (m), section 128F, section 128FA or section 128GB, be payable, is not assessable income and is not exempt income of a person. Note: An amount of interest paid to a person by a temporary resident is non ‑ assessable non ‑ exempt income: see section 768 ‑ 980 of the Income Tax Assessment Act 1997 .

Amendment history: Inserted by No 85 of 1959, effective s 3–36: 2 Dec 1959 (s 2(1)) | Repealed and substituted by No 38 of 1967, effective s 3–16: 25 May 1967 (s 2) | Repealed and substituted by No 85 of 1967, effective s 2(2), (3) and 3–37: 8 Nov 1967 (s 2(1)) | Amended by No 54 of 1971, effective s 3–12: 25 May 1971 (s 2) | Amended by No 51 of 1973, effective s 25(1): 25 June 1968 (s 25(2)) Remainder: 14 June 1973 (s 2) | Amended by No 26 of 1974, effective 1 Aug 1974 (s 2) | Amended by No 80 of 1975, effective 20 June 1975 (s 2) | Amended by No 108 of 1981, effective s 4–25: 24 June 1981 (s 2) | Amended by No 25 of 1983, item 10, effective 19 June 1983 (s 2) | Amended by No 58 of 1987, item 12 | item 128D, effective s 6–19: 5 June 1987 (s 2) | Amended by No 11 of 1988, item 22, effective s 9–13 and 15–40: 26 Apr 1988 (s 2(1)) s 14: 24 June 1986 (s 2(2)) | Amended by No 138 of 1994, item 47, effective s 4, 5, 8–10, 14–16, 21–24, 27–33, 44–92, 99–116 and Sch: 28 Nov 1994 (s 2(1)) s 11–13, 17–20, 25, 26 and 34–43: 1 Jan 1993 (s 2(2)) s 93–98: 28 Nov 1994 (s 2(3)) | Amended by No 95 of 1997, Sch 2 item 9 | Sch 5 item 7 | Sch 5 item 8, effective Sch 1 (item 23): 30 June 1997 (s 2(1)) | Amended by No 66 of 2003, Sch 3 item 35 | Sch 3 item 118, effective s 4, Sch 1 and Sch 3 (items 1–46, 47, 48, 140(1), (5), (7)): 30 June 2003 (s 2(1) items 1, 2, 4–6, 14) Sch 3 (item 46A): 29 June 2002 (s 2(1) item 5A) | Amended by No 73 of 2004, effective 23 June 2004 (s 2) | Amended by No 147 of 2005, Sch 2 item 8, effective Sch 1 (items 1–3, 169(1)), Sch 2 (items 2–11, 27(1)–(4), 28(1)–(3)), Sch 4 (items 1–3, 12), Sch 5 (items 1–12, 20) and Sch 7 (items 1–13, 19, 20): 14 Dec 2005 (s 2(1) items 2, 3, 5, 6) | Amended by No 32 of 2006, Sch 1 item 7, effective Sch 1 (items 4–15, 40(8), (9)): 6 Apr 2006 (s 2) | Amended by No 101 of 2006, Sch 2 item 343 | Sch 2 item 344 | Sch 4 item 4, effective Sch 1 (items 1, 5–199), Sch 2 (items 118–565, 1017, 1023–1037) and Sch 6 (items 1–4, 6–15): 14 Sept 2006 (s 2(1) items 2, 4) Sch 3 (items 1–10) and Sch 4 (items 1–11): 1 Jan 2008 (s 2(1) item 3) | Amended by No 57 of 2012, Sch 4 item 1A, effective Sch 4: 21 June 2012 (s 2)

s 128F — Division does not apply to interest on certain publicly offered company debentures or debt interests

Interest to which this section applies (1) This section applies to interest paid by a company in respect of a debenture or debt interest in the company if: (a) the company was a resident of Australia when it issued the debenture or debt interest; and (b) the company is a resident of Australia when the interest is paid; and (c) for a debt interest other than a debenture—the debt interest: (i) is a non ‑ equity share; or (ii) consists of 2 or more related schemes (within the meaning of the Income Tax Assessment Act 1997 ) where one or more of them is a non ‑ equity share; or (iii) is a syndicated loan; or (iv) is prescribed by the regulations for the purposes of this section; and (d) either: (i) the issue of the debenture or debt interest satisfies the public offer test set out in subsection (3) or (4); or (ii) for a syndicated loan—the invitation to become a lender under the relevant syndicated loan facility satisfies the public offer test set out in subsection (3A). (1A) This section also applies to interest paid by a company in respect of a debenture or debt interest in the company if: (a) the company was a non ‑ resident when it issued the debenture or debt interest; and (b) the company is a non ‑ resident when the interest is paid; and (c) the debenture or debt interest was issued, and the interest is paid, by the company in carrying on business at or through a permanent establishment in Australia; and (d) for a debt interest other than a debenture—the debt interest: (i) is a non ‑ equity share; or (ii) consists of 2 or more related schemes (within the meaning of the Income Tax Assessment Act 1997 ) where one or more of them is a non ‑ equity share; or (iii) is a syndicated loan; or (iv) is prescribed by the regulations for the purposes of this section; and (e) either: (i) the issue of the debenture or debt interest satisfies the public offer test set out in subsection (3) or (4); or (ii) for a syndicated loan—the invitation to become a lender under the relevant syndicated loan facility satisfies the public offer test set out in subsection (3A). (1B) If: (a) some or all of the transfer price (within the meaning of section 128AA) of a debenture or debt interest is taken under that section to be income that consists of interest; and (b) for a debt interest other than a debenture—the debt interest: (i) is a non ‑ equity share; or (ii) consists of 2 or more related schemes (within the meaning of the Income Tax Assessment Act 1997 ) where one or more of them is a non ‑ equity share; or (iii) is a syndicated loan; or (iv) is prescribed by the regulations for the purposes of this section; and (c) either: (i) the issue of the debenture or debt interest satisfies the public offer test set out in subsection (3) or (4); or (ii) for a syndicated loan—the invitation to become a lender under the relevant syndicated loan facility satisfies the public offer test set out in subsection (3A); this section applies to the interest. Note: Subsection (6) does not apply to the interest because that subsection deals only with interest paid on a debenture or debt interest by the issuing company. Tax not payable (2) Tax is not payable under this Division in respect of interest to which this section applies. Public offer test (3) The issue of a debenture or debt interest by a company satisfies the public offer test if the issue resulted from the debenture or debt interest being offered for issue: (a) to at least 10 persons each of whom: (i) was carrying on a business of providing finance, or investing or dealing in securities, in the course of operating in financial markets; and (ii) was not known, or suspected, by the company to be an associate (see subsection (9)) of any of the other persons covered by this paragraph; or (b) to at least 100 persons whom it was reasonable for the company to have regarded as either: (i) having acquired debentures or debt interests in the past; or (ii) being likely to be interested in acquiring debentures or debt interests; or (c) as a result of being accepted for listing on a stock exchange, where the company had previously entered into an agreement with a dealer, manager or underwriter, in relation to the placement of debentures or debt interests, requiring the company to seek such listing; or (d) as a result of negotiations being initiated publicly in electronic form, or in another form, that was used by financial markets for dealing in debentures or debt interests; or (e) to a dealer, manager or underwriter, in relation to the placement of debentures or debt interests, who, under an agreement with the company, offered the debenture or debt interest for sale within 30 days in a way covered by any of paragraphs (a) to (d). (3A) An invitation to become a lender under a syndicated loan facility by a company satisfies the public offer test if the invitation was made: (a) to at least 10 persons each of whom: (i) was carrying on a business of providing finance, or investing or dealing in securities, in the course of operating in financial markets; and (ii) was not known, or suspected, by the company to be an associate (see subsection (9)) of any of the other persons covered by this paragraph; or (b) publicly in electronic form, or in another form, that was used by financial markets for dealing in debentures or debt interests; or (c) to a dealer, manager or underwriter, in relation to the placement of debentures or debt interests, who, under an agreement with the company, made the invitation to become a lender under the facility within 30 days in a way covered by paragraph (a) or (b). Global bonds (4) The issue of a debenture or debt interest by a company also satisfies the public offer test if the debenture or debt interest is a global bond (see subsection (10)). Issues and invitations that always fail the public offer test (5) The issue of a debenture or debt interest by a company does not satisfy the public offer test if, at the time of the issue, the company knew, or had reasonable grounds to suspect, that: (a) the debenture, an interest in the debenture or the debt interest was being, or would be, acquired either directly or indirectly by an associate of the company; and (b) either: (i) the associate is a non ‑ resident and the debenture or interest, or the debt interest, was not being, or would not be, acquired by the associate in carrying on a business in Australia at or through a permanent establishment of the associate in Australia; or (ii) the associate is a resident of Australia and the debenture or interest, or the debt interest, was being, or would be, acquired by the associate in carrying on a business in a country outside Australia at or through a permanent establishment of the associate in that country; and (c) the debenture or interest, or the debt interest, was not being, or would not be, acquired by the associate in the capacity of: (i) a dealer, manager or underwriter in relation to the placement of the debenture or debt interest; or (ii) a clearing house, custodian, funds manager or responsible entity of a registered scheme. (5AA) An invitation to become a lender under a syndicated loan facility is taken never to have satisfied the public offer test if, at the time the invitation is made, the company knew, or had reasonable grounds to suspect, that: (a) an associate of the company is or will become a lender under the facility; and (b) either: (i) the associate is a non ‑ resident and the associate is not or would not become a lender under the facility in carrying on a business in Australia at or through a permanent establishment of the associate in Australia; or (ii) the associate is a resident of Australia and the associate is or would become a lender under the facility in carrying on a business in a country outside Australia at or through a permanent establishment of the associate in that country; and (c) the associate is not or would not become a lender under the facility in the capacity of: (i) a dealer, manager or underwriter in relation to the invitation; or (ii) a clearing house, custodian, funds manager or responsible entity of a registered scheme. No exemption for interest paid to certain associates of the issuing company (6) This section does not apply to interest paid by the company to a person in respect of the debenture or debt interest if, at the time of the payment, the company knows, or has reasonable grounds to suspect, that: (a) the person is an associate of the company; and (b) either: (i) the associate is a non ‑ resident and the payment is not received by the associate in respect of a debenture or debt interest that the associate acquired in carrying on a business in Australia at or through a permanent establishment of the associate in Australia; or (ii) the associate is a resident of Australia and the payment is received by the associate in respect of a debenture or debt interest that the associate acquired in carrying on a business in a country outside Australia at or through a permanent establishment of the associate in that country; and (c) the associate does not receive the payment in the capacity of a clearing house, paying agent, custodian, funds manager or responsible entity of a registered scheme. Australian public bodies are treated as Australian resident companies (7) This section applies in relation to a debenture or debt interest issued by: (a) the Commonwealth, a State or a Territory; or (b) an authority of the Commonwealth, of a State or of a Territory; as if the Commonwealth, State, Territory or authority were a company and a resident of Australia. Debentures or debt interests issued through certain non ‑ resident subsidiaries can also get the exemption (8) If: (a) a company (the parent company ) beneficially owns all of the issued equity interests in the capital of a company (the subsidiary ) that is not a resident of Australia; and (b) the subsidiary’s only business is raising finance for the purposes of the parent company; and (c) the subsidiary raises finance in the United States of America or in another country specified in the regulations (but not Australia) by issuing a debenture or debt interest in that country; and (d) when the debenture or debt interest is issued, the subsidiary is treated as a resident of that country for the purposes of the tax law (see subsection (9)) of the country; then this section has effect as if the parent company had raised the finance and issued the debenture or debt interest. Definitions (9) In this section: associate has the meaning given by section 318, except that paragraphs (1)(b), (2)(a) and (4)(a) of that section must be disregarded. clearing house means a person who operates a facility that is used by financial markets for investing in or dealing in securities. company includes a company in the capacity of trustee of a resident trust estate if: (a) the trust is not a charity; and (b) the only person who is capable (whether by the exercise of a power of appointment or otherwise) of benefiting under the trust is a company other than a company in the capacity of trustee. debenture , without affecting its meaning elsewhere in this Act, includes a promissory note or a bill of exchange (in addition to the things mentioned in the definition of debenture in subsection 6(1)). global bond has the meaning given by subsection (10). registered scheme has the same meaning as in the Corporations Act 2001 . responsible entity , of a registered scheme, has the same meaning as in the Corporations Act 2001 . syndicated loan means a loan or other form of financial accommodation that is provided under a syndicated loan facility, being a facility that has 2 or more lenders. syndicated loan facility has the meaning given by subsections (11), (12) and (13). tax law , in relation to a country other than Australia, means: (a) if the country has federal foreign tax—the law of the country that imposes the federal foreign tax; or (b) in any other case—the law of the country that imposes foreign tax. Global bond (10) A debenture or debt interest issued by a company is a global bond if: (a) it describes itself as a global bond or a global note; and (b) it is issued to a clearing house (see subsection (9)) or to a person as trustee or agent for, or otherwise on behalf of, one or more clearing houses; and (c) in connection with the issue, the clearing house or houses: (i) confer rights in relation to the debenture or debt interest on other persons; and (ii) record the existence of the rights; and (d) before the issue: (i) the company; or (ii) a dealer, manager or underwriter, in relation to the placement of debentures or debt interests, on behalf of the company; announces that, as a result of the issue, such rights will be able to be created; and (e) the announcement is made in a way or ways covered by any of paragraphs (3)(a) to (e) (reading a reference in those paragraphs to “debentures or debt interests” as if it were a reference to such a right, and a reference to the “company” as if it included a reference to the dealer, manager or underwriter); and (f) under the terms of the debenture or debt interest, interests in the debenture or debt interest are able to be surrendered, whether or not in particular circumstances, in exchange for other debentures or debt interests issued by the company that are not themselves global bonds. (11) A written agreement is a syndicated loan facility if: (a) the agreement describes itself as a syndicated loan facility or syndicated facility agreement; and (b) the agreement is between one or more borrowers and at least 2 lenders; and (c) under the agreement each lender severally, but not jointly, agrees to lend money to, or otherwise provide financial accommodation to, the borrower or borrowers; and (d) the amount to which the borrower or borrowers will have access at the time the first loan or other form of financial accommodation is to be provided under the agreement is at least $100,000,000 (or a prescribed amount). (12) A written agreement is also a syndicated loan facility if: (a) the agreement describes itself as a syndicated loan facility or syndicated facility agreement; and (b) the agreement is between one or more borrowers and one lender where the agreement provides for the addition of other lenders; and (c) the agreement provides that, when other lenders are added, each lender severally, but not jointly, agrees to lend money to, or otherwise provide financial accommodation to, the borrower or borrowers; and (d) the amount to which the borrower or borrowers will have access at the time the first loan or other form of financial accommodation is to be provided under the agreement is at least $100,000,000 (or a prescribed amount). (13) However, an agreement under which there are 2 or more borrowers is a syndicated loan facility only if all of them are: (a) members of the same wholly ‑ owned group (within the meaning of the Income Tax Assessment Act 1997 ); or (b) parties to the same joint venture; or (c) associates of each other. (14) For the purposes of this section, a change (including by novation) to the lenders under a syndicated loan facility does not result in a different agreement. (15) For a debt interest that consists of 2 or more related schemes (within the meaning of the Income Tax Assessment Act 1997 ) where one or more of them is a non ‑ equity share, this section applies only to interest paid in respect of the non ‑ equity share. Note: Subsection 128A(1AB) defines interest for the purposes of this Division. Under that subsection, dividends paid in respect of a non ‑ equity share are treated as being interest. (16) The rule in subsection (15) does not apply to the extent that interest in respect of the other related scheme or schemes would be interest to which this section applies in respect of a debenture or debt interest.

Amendment history: Inserted by No 54 of 1971, item 12, effective s 3–12: 25 May 1971 (s 2) | Amended by No 51 of 1973, effective s 25(1): 25 June 1968 (s 25(2)) Remainder: 14 June 1973 (s 2) | Amended by No 108 of 1981, effective s 4–25: 24 June 1981 (s 2) | Amended by No 14 of 1984, effective 12 Apr 1984 (s 2) | Amended by No 112 of 1986, effective s 15–34, 46 and 47: 4 Nov 1986 (s 2) | Repealed and substituted by No 95 of 1997, Sch 5 item 3 | Sch 5 item 6 | Sch 5 item 11 | Sch 5 item 12 | Sch 5 item 13 | Sch 5 item 14 | Sch 5 item 16, effective Sch 1 (item 23): 30 June 1997 (s 2(1)) | Amended by No 93 of 1999, Sch 1 item 27 | Sch 1 item 28 | Sch 1 item 29 | Sch 1 item 30 | Sch 1 item 31 | Sch 1 item 32 | Sch 1 item 34, effective s 4, Sch 1 (items 1–35, 39–48), Sch 2, Sch 3 (items 26–33), Sch 4 (items 1–23, 25), Sch 5 and 7: 16 July 1999 (s 2(1)) Sch 4 (item 24): 16 Apr 1998 (s 2(2)) | Amended by No 162 of 2001, Sch 1 item 820 | Sch 1 item 2 | Sch 1 item 3 | Sch 1 item 23, effective Sch 1 (items 2–13, 23–26): 1 July 2001 (s 2(1)) | Amended by No 12 of 2003, Sch 1 item 5 | Sch 1 item 6 | Sch 1 item 7 | Sch 1 item 8 | Sch 1 item 9, effective Sch 1: 29 Aug 2001 (s 2(1) item 2) Sch 3 (items 7, 11): 2 Apr 2003 (s 2(1) item 4) | Amended by No 73 of 2004, effective 23 June 2004 (s 2) | Amended by No 21 of 2005, Sch 3 item 6 | Sch 3 item 7 | Sch 3 item 8 | Sch 3 item 9 | Sch 3 item 12 | Sch 3 item 13 | Sch 3 item 14 | Sch 3 item 15 | Sch 3 item 16 | Sch 3 item 18 | Sch 3 item 19 | Sch 3 item 20 | Sch 3 item 21 | Sch 3 item 22 | Sch 3 item 23 | Sch 3 item 24, effective Sch 3 (items 1–31, 45, 47(1), (2)): 21 Mar 2005 (s 2) | Amended by No 79 of 2007, Sch 7 item 1 | Sch 7 item 2 | Sch 7 item 3 | Sch 7 item 4 | Sch 7 item 5 | Sch 7 item 6 | Sch 7 item 7 | Sch 7 item 8 | Sch 7 item 12 | Sch 7 item 14 | Sch 7 item 15, effective Sch 1 (items 1–27, 33–38, 43(1), (4), (5)), Sch 6 (items 1, 2, 8), Sch 7 (items 1–16), Sch 9 (items 1–13, 30–33) and Sch 10 (items 3–9, 32): 21 June 2007 (s 2(1) items 2, 4, 6) Sch 8 (items 1, 4–11, 26(1), (2) and (4)): 1 July 2007 (s 2(1) item 5) | Amended by No 145 of 2008, Sch 3 item 1, effective Sch 3 and 5: 9 Dec 2008 (s 2) | Amended by No 118 of 2009, Sch 5 item 2, effective Sch 5: 5 Dec 2009 (s 2(1) item 9) | Amended by No 96 of 2013, Sch 1 item 21, effective Sch 1 (items 19–22): 1 Jan 2014 (s 2(1) item 2) | Amended by No 2 of 2015, Sch 2 item 104, effective Sch 2 (items 73, 100–110) and Sch 4 (items 9–23, 79): 25 Feb 2015 (s 2(1) items 5, 6) Sch 2 (items 24–28): 1 July 2015 (s 2(1) item 4)

s 128FA — Division does not apply to interest on certain publicly offered unit trust debentures or debt interests

Interest to which this section applies (1) This section applies to interest paid by the trustee of an eligible unit trust in respect of a debenture or debt interest issued by the trustee if: (a) for a debt interest other than a debenture—the debt interest: (i) is a syndicated loan; or (ii) is prescribed by the regulations for the purposes of this section; and (b) either: (i) the issue of the debenture or debt interest satisfies the public offer test set (see subsection (6)); or (ii) for a syndicated loan—the invitation to become a lender under the relevant syndicated loan facility satisfies the public offer test (see subsection (6A)). (2) If: (a) some or all of the transfer price (within the meaning of section 128AA) of a debenture or debt interest issued by the trustee of an eligible unit trust is taken under that section to be income that consists of interest; and (b) for a debt interest other than a debenture—the debt interest: (i) is a syndicated loan; or (ii) is prescribed by the regulations for the purposes of this section; and (c) either: (i) the issue of the debenture or debt interest satisfies the public offer test set (see subsection (6)); or (ii) for a syndicated loan—the invitation to become a lender under the relevant syndicated loan facility satisfies the public offer test (see subsection (6A)); this section applies to the interest. Note: Subsection (4) does not apply to the interest because that subsection deals only with interest paid on a debenture or debt interest by the issuing eligible unit trust. Tax not payable (3) Tax is not payable under this Division in respect of interest to which this section applies. No exemption for interest paid to certain associates of the issuing trustee (4) This section does not apply to interest paid by the trustee of an eligible unit trust to a person in respect of the debenture or debt interest if, at the time of the payment, the trustee knows, or has reasonable grounds to suspect, that: (a) the person is an associate of the trustee; and (b) either: (i) the associate is a non ‑ resident and the payment is not received by the associate in respect of a debenture or debt interest that the associate acquired in carrying on a business in Australia at or through a permanent establishment of the associate in Australia; or (ii) the associate is a resident of Australia and the payment is received by the associate in respect of a debenture or debt interest that the associate acquired in carrying on a business in a country outside Australia at or through a permanent establishment of the associate in that country; and (c) the associate does not receive the payment in the capacity of a clearing house, paying agent, custodian, funds manager or responsible entity of a registered scheme. Debentures or debt interests issued through certain non ‑ resident subsidiaries can also get the exemption (5) If: (a) the trustee of an eligible unit trust holds all of the issued equity interests in the capital of a company that is not a resident of Australia; and (b) the company’s only business is raising finance for the purposes of the eligible unit trust; and (c) the company raises finance in a country specified in the regulations (but not Australia) by issuing a debenture or debt interest in that country; and (d) when the debenture or debt interest is issued, the company is treated as a resident of that country for the purposes of the tax law (see subsection (8)) of the country; then this section has effect as if the trustee had raised the finance and issued the debenture or debt interest. Public offer test (6) For the purposes of working out under this section whether the issue of a debenture or debt interest by the trustee of an eligible unit trust satisfies the public offer test , subsections 128F(3) to (5) apply to the trustee of the eligible unit trust in a corresponding way to the way in which those subsections apply to a company, subject to subsection (7) of this section. (6A) For the purposes of working out under this section whether an invitation to become a lender under a syndicated loan facility satisfies the public offer test, subsections 128F(3A) and (5AA) apply to the trustee of the eligible unit trust in a corresponding way to the way in which those subsections apply to a company, subject to subsection (7) of this section. (7) For the purposes of applying subsection 128F(3), (3A), (4), (5) or (5AA) as mentioned in subsection (6) or (6A) of this section: (a) a reference in any of those subsections to a company knowing, suspecting or having reasonable grounds to suspect something, or it being reasonable for a company to have regarded something, is taken to be a reference to the trustee of the eligible unit trust knowing, suspecting or having reasonable grounds to suspect that thing, or it being reasonable for the trustee of the eligible unit trust to have regarded that thing; and (b) a reference in any of those subsections to an associate is taken to be a reference to an associate within the meaning of this section; and (c) a reference in any of those subsections to a global bond is taken to be a reference to a global bond within the meaning of subsection 128F(10). (7A) For the purposes of this section, a change (including by novation) to the lenders under a syndicated loan facility does not result in a different agreement. Definitions (8) In this section: associate has the meaning given by section 318, except that: (a) paragraphs (1)(b), (2)(a) and (4)(a) of that section must be disregarded; and (b) subsection (5) of that section applies to a unit trust mentioned in paragraph (b) of the definition of eligible unit trust in this subsection in the same way as that subsection applies in relation to a public unit trust. clearing house has the same meaning as in section 128F. company has the same meaning as in section 128F. debenture : (a) in relation to the trustee of an eligible unit trust, includes debenture stock, bonds, promissory and other notes, bills of exchange and any other securities issued by the trustee, whether constituting a charge on the assets of the eligible unit trust or not; and (b) in relation to a company, has the same meaning as in section 128F. eligible unit holder means: (a) the trustee of a public unit trust; or (b) the trustee (within the meaning of the Income Tax Assessment Act 1997 ) of a complying superannuation fund that has 50 or more members; or (c) the trustee of a pooled superannuation trust within the meaning of the Income Tax Assessment Act 1997 ; or (d) the trustee (within the meaning of the Income Tax Assessment Act 1997 ) of a complying approved deposit fund; or (e) a life insurance company within the meaning of the Income Tax Assessment Act 1997 ; or (f) a public company within the meaning of section 103A; or (g) the trustee of a unit trust in which all of the issued units are held by 2 or more entities that are eligible unit holders because of: (i) the application of another paragraph of this definition (whether or not the same paragraph); or (ii) a previous application of this paragraph; or (iii) any combination of subparagraphs (i) and (ii). eligible unit trust means: (a) a public unit trust; or (b) a unit trust in which all of the issued units are held by 2 or more eligible unit holders. public unit trust has the same meaning as in section 102P (disregarding subsection (2) of that section). registered scheme has the same meaning as in section 128F. responsible entity has the same meaning as in section 128F. syndicated loan has the same meaning as in section 128F. syndicated loan facility has the same meaning as in section 128F. tax law has the same meaning as in section 128F. (9) For the purposes of this section, a trust or fund of a kind mentioned in any of paragraphs (a) to (d) of the definition of eligible unit holder in subsection (8) in relation to a year of income is taken to be a trust or fund of that kind at all times during the year of income.

Amendment history: Inserted by No 73 of 2004, effective 23 June 2004 (s 2) | Amended by No 21 of 2005, Sch 3 item 25 | Sch 3 item 27 | Sch 3 item 28 | Sch 3 item 29 | Sch 3 item 30 | Sch 3 item 31, effective Sch 3 (items 1–31, 45, 47(1), (2)): 21 Mar 2005 (s 2) | Amended by No 15 of 2007, Sch 1 item 101 | Sch 1 item 102, effective Sch 1 (items 1–8, 22–149, 406(1)–(3)) and Sch 3 (items 6, 7): 15 Mar 2007 (s 2(1) items 2, 6) | Amended by No 79 of 2007, Sch 7 item 9 | Sch 7 item 10 | Sch 7 item 11 | Sch 7 item 13 | Sch 7 item 14 | Sch 7 item 15, effective Sch 1 (items 1–27, 33–38, 43(1), (4), (5)), Sch 6 (items 1, 2, 8), Sch 7 (items 1–16), Sch 9 (items 1–13, 30–33) and Sch 10 (items 3–9, 32): 21 June 2007 (s 2(1) items 2, 4, 6) Sch 8 (items 1, 4–11, 26(1), (2) and (4)): 1 July 2007 (s 2(1) item 5) | Amended by No 53 of 2016, Sch 6 item 14, effective Sch 3 (item 1), Sch 5 (items 1, 3, 6–28, 75), Sch 6 (items 1–20) and Sch 8 (item 1): 5 May 2016 (s 2(1) items 2, 4)

s 128GB — Division not to apply to interest payments on offshore borrowings by offshore banking units

(1) This section applies to: (a) interest paid by a person in respect of an offshore borrowing of the person; or (b) interest consisting of gold paid by a person in respect of an offshore gold borrowing of the person; if, when the borrowing took place, the person was an offshore banking unit (whether or not the person is still an offshore banking unit when the interest is paid). (1A) However, this section does not apply to: (a) interest paid on or after 1 January 2024; and (b) interest consisting of gold paid on or after 1 January 2024. (2) Tax is not payable in accordance with this Division in respect of interest to which this section applies.

Amendment history: Inserted by No 11 of 1988, item 20 | item 22 | item 38 | item 39, effective s 9–13 and 15–40: 26 Apr 1988 (s 2(1)) s 14: 24 June 1986 (s 2(2)) | Amended by No 82 of 1994, Sch 4 item 113, effective s 8–43, 47–71, 80–83, 93–112, 114–119, 122, 128–134: 23 June 1994 (s 2(1)) s 7, 120 and 121: 22 Oct 1986 (s 2(2)) s 44–46: 9 June 1993 (s 2(3)) s 72–79: 1 Jan 1993 (s 2(4)) s 84–92: 30 June 1992 (s 2(5)) s 113: 21Dec 1992 (s 2(6)) s 123–127): 24 Dec 1992 (s 2(7)) | Amended by No 76 of 1996, Sch 1 item 24 | Sch 1 item 25 | Sch 1 item 26, effective s 4 and Sch 1 (items 1–43, 47): 18 Dec 1996 (s 2(1)) Sch 1 (items 44–46): 1 Jan 1993 (s 2(2)) Sch 2: 27 June 1996 (s 2(3)) Sch 4 (items 19–24): 16 Feb 1997 (s 2(4)) | Amended by No 93 of 1999, effective s 4, Sch 1 (items 1–35, 39–48), Sch 2, Sch 3 (items 26–33), Sch 4 (items 1–23, 25), Sch 5 and 7: 16 July 1999 (s 2(1)) Sch 4 (item 24): 16 Apr 1998 (s 2(2)) | Amended by No 110 of 2021, Sch 2 item 15, effective Sch 2 (items 1–7, 13–15): 1 Oct 2021 (s 2(1) item 2)

s 128NA — Special tax payable in respect of certain securities and agreements

(1) Where, but for subsection 128AA(2): (a) the transferor of a qualifying security who is not liable to pay withholding tax in relation to the transfer of the qualifying security would be liable to pay withholding tax in relation to the transfer; or (b) the transferor of a qualifying security who is liable to pay withholding tax in relation to the transfer of the qualifying security would be liable to pay additional withholding tax in relation to the transfer; then, for the purposes of this section, there shall be taken to be an avoided withholding tax amount in relation to the person who is the transferee of the qualifying security of an amount equal to the withholding tax or the additional withholding tax, as the case may be, that the person would be so liable to pay. (2) Where: (a) an attributable agreement payment or attributable agreement payments were made by a person under a relevant agreement before the commencement of section 128AC; and (b) the Commissioner is of the opinion that the payment or payments were made before the commencement of that section, or that the payment or payments were of a greater amount than they would otherwise have been, for the sole or dominant purpose of securing the result that the total amount (in this subsection referred to as the actual withholding tax ) of withholding tax payable under that section in relation to all attributable agreement payments made under the relevant agreement after the commencement of that section would be less than the amount (in this subsection referred to as the notional withholding tax ) that would otherwise have been payable; then, for the purposes of this section, there shall be taken to be an avoided withholding tax amount in relation to the person of an amount equal to the amount by which the notional withholding tax exceeds the actual withholding tax. (3) For the purposes of subsection (2), expressions used in that subsection that are also used in section 128AC have the same respective meanings in that subsection as in that section. (4) Where there is an avoided withholding tax amount in relation to a person under this section, the person is liable to pay income tax, as imposed by the Income Tax (Securities and Agreements) (Withholding Tax Recoupment) Act 1986 , in respect of the avoided withholding tax amount.

Amendment history: Inserted by No 49 of 1986, effective s 4–29: 24 June 1986 (s 2(1))

s 128NB — Special tax payable in respect of certain dealings by current and former offshore banking units

(1) Where a person who is or has been an offshore banking unit transfers to another person an amount of tax exempt loan money or tax exempt gold, other than by way of: (a) payment in carrying on an OB activity or what would be an OB activity if the person were an OBU; or (b) repayment of an offshore borrowing or offshore gold borrowing; the person is liable to pay income tax, as imposed by the Income Tax (Offshore Banking Units) (Withholding Tax Recoupment) Act 1988 , on the lost withholding tax amount in respect of the transfer. (2) For the purposes of subsection (1), the lost withholding tax amount in respect of the transfer is an amount ascertained in accordance with the formula: where: IWT rate is the rate declared by the Parliament in respect of income to which subsection 128B(5) applies. PB rate is the prevailing borrowing rate in relation to the person at the time of the transfer. PB term is the number of years in the prevailing borrowing term in relation to the person at the time of the transfer; and TA is the amount of tax exempt loan money or tax exempt gold transferred. (3) Tax under this section is due and payable by the person liable to pay the tax at the end of: (a) 21 days after the end of the month in which the transfer to which it relates takes place; or (b) such further period as the Commissioner, in special circumstances, allows. Application (3A) The Commissioner must not exercise his or her power under paragraph (3)(b) on or after 1 July 2000. Note: For provisions about collection and recovery of tax on or after 1 July 2000, see Part 4 ‑ 15 in Schedule 1 to the Taxation Administration Act 1953 . (4) Section 128C (other than subsections (1) and (4AA)) applies, in addition to its application apart from this subsection, as if references in that section to withholding tax were references to tax payable under this section. (5) The Commissioner may remit the whole or part of an amount of tax payable under this section in relation to the transfer of an amount of tax exempt loan money or tax exempt gold to another person if: (a) the Commissioner is satisfied that: (i) the liability to pay the amount of tax arose because the person mistakenly believed, on reasonable grounds, that the other person was a non ‑ resident or an offshore banking unit, that interest payable to the person in respect of the amount transferred would be an outgoing of a particular kind or that the amount transferred was not tax exempt loan money or tax exempt gold; and (ii) the person had taken reasonable steps to ascertain the matter to which the mistaken belief related; or (b) the Commissioner is satisfied that there are special circumstances justifying the remission of the whole or part of the amount of tax.

Amendment history: Inserted by No 11 of 1988, item 39, effective s 9–13 and 15–40: 26 Apr 1988 (s 2(1)) s 14: 24 June 1986 (s 2(2)) | Amended by No 191 of 1992, item 16 | item 17, effective s 4–35: 21 Dec 1992 (s 2) | Amended by No 76 of 1996, Sch 1 item 27 | Sch 1 item 28, effective s 4 and Sch 1 (items 1–43, 47): 18 Dec 1996 (s 2(1)) Sch 1 (items 44–46): 1 Jan 1993 (s 2(2)) Sch 2: 27 June 1996 (s 2(3)) Sch 4 (items 19–24): 16 Feb 1997 (s 2(4)) | Amended by No 44 of 2000, Sch 3 item 16, effective Sch 3 (items 14–33, 36, 37), Sch 4 (items 10–12): 22 Dec 1999 (s 2(1)) Sch 3 (items 34, 35) and Sch 4 (items 4–9): 1 July 2000 (s 2(4), (5), (11))

s 128NBA — Credits in respect of amounts assessed in relation to certain financial arrangements

When section applies (1) This section applies if: (a) the amount of any withholding tax that has become payable by a taxpayer on a payment of interest under, or in relation to the transfer of, a qualifying security or a Division 230 financial arrangement has been paid; and (b) there is a net financial arrangement amount (see subsection (5)) in relation to the taxpayer in relation to: (i) if the payment of interest is a payment in relation to the transfer of the qualifying security—the security; or (ii) if the payment of interest is such a payment by virtue of the application of section 128AC in relation to an attributable agreement payment within the meaning of that section—the attributable agreement payment; or (iii) in any other case—the payment of interest; and (c) the amount of the withholding tax payable on the interest exceeds the amount that would have been payable on the interest if the interest were reduced by the net financial arrangement amount. Entitlement to apply for credit (2) The taxpayer may apply to the Commissioner for a credit of an amount equal to the excess. Requirements for application (3) The application must be in the approved form. Entitlement to credit (4) If the Commissioner is satisfied as to the matters mentioned in paragraphs (1)(a), (b) and (c), the applicant is entitled to a credit of an amount equal to the excess. Net financial arrangement amount (5) For the purposes of this section, if: (a) in the case of a qualifying security—the sum of all amounts (if any) included in the assessable income of the taxpayer of any years of income in relation to the qualifying security, attributable agreement payment or payment of interest under section 159GQ; or (b) in the case of a Division 230 financial arrangement—the sum of all amounts (if any) included in the assessable income of the taxpayer of any years of income in relation to the arrangement under Division 230 of the Income Tax Assessment Act 1997 ; exceeds: (c) in the case of a qualifying security—the sum of all amounts (if any) allowable as deductions from the assessable income of the taxpayer of any years of income in relation to the security or the payment, as the case may be, under that section; or (d) in the case of a Division 230 financial arrangement—the sum of: (i) all amounts (if any) allowable as deductions from the assessable income of the taxpayer of any years of income in relation to the arrangement under Division 230 of the Income Tax Assessment Act 1997 ; and (ii) all amounts (if any) of interest paid under the arrangement before the interest mentioned in paragraph (1)(a) is paid; there is a net financial arrangement amount equal to the excess. (6) For the purposes of paragraph (5)(b) and subparagraph (5)(d)(i), disregard any year of income in which the taxpayer was not an Australian resident. (7) For the purposes of subsection (6): (a) if section 230 ‑ 485 of the Income Tax Assessment Act 1997 applies in relation to a year of income: (i) treat the foreign residency period mentioned in that section as a year of income in which the taxpayer was not an Australian resident; and (ii) treat the Australian residency period mentioned in that section as a year of income in which the taxpayer was an Australian resident; and (b) if section 230 ‑ 490 of that Act applies in relation to a year of income: (i) treat the period during that year in which the taxpayer was not an Australian resident as a year of income in which the taxpayer was not an Australian resident; and (ii) treat the period during that year in which the taxpayer was an Australian resident as a year of income in which the taxpayer was an Australian resident.

Amendment history: Inserted by No 101 of 2006, Sch 2 item 960, effective Sch 1 (items 1, 5–199), Sch 2 (items 118–565, 1017, 1023–1037) and Sch 6 (items 1–4, 6–15): 14 Sept 2006 (s 2(1) items 2, 4) Sch 3 (items 1–10) and Sch 4 (items 1–11): 1 Jan 2008 (s 2(1) item 3) | Amended by No 15 of 2009, Sch 1 item 38 | Sch 1 item 39 | Sch 1 item 40, effective Sch 1 (items 31–51, 102–105): 26 Mar 2009 (s 2(1) item 2)

s 128P — Objections

If an applicant for a certificate under this Division is dissatisfied with a decision of the Commissioner: (a) in any case—to refuse to issue the certificate; or (b) in the case of a certificate under section 128AB—to specify a particular amount in the certificate; the applicant may object against the decision in the manner set out in Part IVC of the Taxation Administration Act 1953 .

Amendment history: Inserted by No 54 of 1971, effective s 3–12: 25 May 1971 (s 2) | Amended by No 48 of 1986, effective s 70–98, 213, 216, 219, 221, 226 and 228: 1 July 1986 (s 2(1)) | Amended by No 49 of 1986, item 15, effective s 4–29: 24 June 1986 (s 2(1)) | Repealed and substituted by No 216 of 1991, Sch 4 item 23A, effective s 10, 12–39, 41, 43, 44, 67–81, 83–86, 89(1), (3)–(19), 91, 92, 102, 103 and Sch 1–4: 24 Dec 1991 (s 2(1)) s 11 and 89(2): 22 Jan 1991 (s 2(2)) s 40 and 42: 6 Jan 1992 (s 2(3)) s 45, 46, 48–51, 54–58, 60–66, 90(1), (3)–(14), 93–96 and 98–101: 21 Aug 1991 (s 2(4)) s 47, 52, 53, 59, 90(2) and 97: 3 pm (A.C.T) 20 Aug 1991 (s 2(5)) s 82(2): 25 Dec 1991 (s 2(6))

s 128R — Informal arrangements

For the purposes of this Division, the Commissioner may have regard to arrangements, understandings and practices not having legal force in the same manner as if they had legal force.

Amendment history: Inserted by No 54 of 1971, effective s 3–12: 25 May 1971 (s 2) | Amended by No 164 of 1973, effective s 3–17, 19–22 and Sch: 11 Dec 1973 (s 2)

s 128U — Interpretation

(1) In this Division, unless the contrary intention appears: Aboriginals Benefit Account means the Aboriginals Benefit Account continued in existence by section 62 of the Aboriginal Land Rights (Northern Territory) Act 1976 . distributing body means: (a) an Aboriginal Land Council established by or under the Aboriginal Land Rights (Northern Territory) Act 1976 ; (b) a corporation registered under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 ; or (d) any other incorporated body that: (i) is established by or under provisions of a law of the Commonwealth or of a State or Territory that relate to Indigenous persons; and (ii) is empowered or required (whether under that law or otherwise) to pay moneys received by the body to Indigenous persons or to apply such moneys for the benefit of Indigenous persons, either directly or indirectly. mineral royalties means royalties payable in respect of the mining of minerals. minerals means: (a) gold, silver, copper, tin and other metals; (b) coal, shale, petroleum (within the meaning of the Income Tax Assessment Act 1997 ) and valuable earths and substances; (c) mineral substances; (d) gems and precious stones; and (e) ores and other substances containing minerals; whether suspended in water or not, and includes water. miner’s right means a miner’s right or other authority issued or granted under a law of the Commonwealth or of a State or Territory relating to mining of minerals, being a right or authority that empowers the holders to take possession of, mine or occupy land or take any other action in relation to land for any purpose in connection with mining. mining includes the obtaining of minerals from alluvial or surface deposits. mining interests , in relation to any land, means any lease or other interest in the land (including a right to prospect or explore for minerals in or on the land) issued or granted under a law of the Commonwealth or of a State or Territory relating to mining of minerals. mining payment means a payment made to a distributing body or made to, or applied for the benefit of, an Indigenous person or persons, being: (a) a payment made on or after 1 July 1979 and before the day that the Financial Management Legislation Amendment Act 1999 commenced, out of the Aboriginals Benefit Reserve to the extent that the payment represents money paid into the Aboriginals Benefit Reserve on or after 1 July 1979 in pursuance of subsection 63(2) or (4) of the Aboriginal Land Rights (Northern Territory) Act 1976 ; and (aa) a payment made on or after the day that the Financial Management Legislation Amendment Act 1999 commenced by the Commonwealth in respect of a debit from the Aboriginals Benefit Account to the extent that the payment represents an amount credited to the Aboriginals Benefit Account in pursuance of subsection 63(1) or (4) of the Aboriginal Land Rights (Northern Territory) Act 1976 ; and (b) any payment made on or after 1 July 1979 that is of the kind referred to in subsection 44 (1) or (2) of the Aboriginal Land Rights (Northern Territory) Act 1976 ; and (c) any other payment made on or after 1 July 1979 under provisions of a law of the Commonwealth or of a State or Territory that relate to Indigenous persons or under an agreement made in accordance with such provisions, being a payment made: (i) in consideration of the issuing, granting or renewal of a miner’s right or mining interest in respect of Indigenous land; (ii) in consideration of the granting of permission to a person to enter or remain on Indigenous land or to do any act on Indigenous land in relation to prospecting or exploring for, or mining of, minerals; or (iii) by way of payment of mineral royalties payable in respect of the mining of minerals on Indigenous land or by way of payment of an amount determined by reference to an amount of mineral royalties received by the Commonwealth, a State or the Northern Territory in respect of the mining of minerals on Indigenous land; but does not include: (d) a payment made by a distributing body; or (e) a native title benefit (within the meaning of the Income Tax Assessment Act 1997 ). (2) In section 260, income tax or tax includes mining withholding tax. (3) For the purposes of this Division, a mining payment is taken to include any amount that has been, or purports to have been, withheld from the mining payment for the purposes of section 12 ‑ 320 in Schedule 1 to the Taxation Administration Act 1953 . (4) For the purposes of the succeeding provisions of this Division, where a mining payment (in this subsection referred to as the relevant mining payment ) is made to, or applied for the benefit of, 2 or more persons, there shall be deemed to have been made to, or applied for the benefit of, each of those persons, a mining payment of an amount equal to so much of the relevant mining payment as bears to the relevant mining payment the same proportion as 1 bears to the number of persons to whom the relevant mining payment was made or for whose benefit the relevant mining payment was applied, as the case may be.

Amendment history: Inserted by No 27 of 1979, effective s 5: 5 Dec 1978 (s 2(2)) s 6: 23 June 1977 (s 2(3)) Remainder: 4 June 1979 (s 2(1)) | Amended by No 108 of 1981, effective s 4–25: 24 June 1981 (s 2) | Amended by No 123 of 1984, effective s 91–166 and 385: 14 Dec 1984 (s 2(3)) | Amended by No 152 of 1997, Sch 2 item 877 | Sch 2 item 878 | Sch 2 item 879, effective Sch 2 (items 877–880): 1 Jan 1998 (s 2(2)) | Amended by No 179 of 1999, Sch 18 item 30, effective Sch 2 (items 20–47), Sch 3 (items 3–6), Sch 5 (item 74), Sch 6 (items 1–13, 24(1)–(4)), Sch 10 (items 22–24), Sch 11 (item 44), Sch 16 (items 3–17, 37) and Sch 17 (items 1, 2): 22 Dec 1999 (s 2(1), (4), (7)(b)–(d)) Sch 5 (items 1–64), Sch 11 (items 14–43, 45–79) and Sch 12 (item 3): 1 July 2000 (s 2(9), (12)) | Amended by No 67 of 2003, Sch 9 item 10, effective Sch 10 (item 13): 14 Oct 2003 (s 2(1) item 8) | Amended by No 8 of 2005, Sch 1 item 156 | Sch 1 item 157 | Sch 1 item 158, effective s 4 and Sch 1 (items 156–158, 496): 22 Feb 2005 (s 2(1) items 1, 2) | Amended by No 101 of 2006, Sch 2 item 346, effective Sch 1 (items 1, 5–199), Sch 2 (items 118–565, 1017, 1023–1037) and Sch 6 (items 1–4, 6–15): 14 Sept 2006 (s 2(1) items 2, 4) Sch 3 (items 1–10) and Sch 4 (items 1–11): 1 Jan 2008 (s 2(1) item 3) | Amended by No 125 of 2006, Sch 2 item 98, effective Sch 2 (item 98): 1 July 2007 (s 2(1) item 2) | Amended by No 84 of 2013, Sch 1 item 1 | Sch 1 item 13 | Sch 1 item 14 | Sch 1 item 15 | Sch 1 item 16 | Sch 1 item 17 | Sch 1 item 18, effective s 4, Sch 1 (items 1, 9(1), 10–18) and Sch 5: 28 June 2013 (s 2(1) items 1, 2)

s 128V — Liability to mining withholding tax

(1) Where a mining payment is made to, or applied for the benefit of, a person, that person is liable to pay income tax on the amount of the mining payment at the rate declared by the Parliament for the purposes of this section. (2) Income tax payable by a person in accordance with this section is in addition to other income tax payable by that person upon amounts that are not mining payments.

Amendment history: Inserted by No 27 of 1979, effective s 5: 5 Dec 1978 (s 2(2)) s 6: 23 June 1977 (s 2(3)) Remainder: 4 June 1979 (s 2(1))

s 128W — Payment of mining withholding tax

(1) Mining withholding tax is due and payable by a person liable to pay the tax at the expiration of 21 days after the end of the month in which the payment of the amount to which the tax relates was made, or of such further period as the Commissioner, in special circumstances, allows. Note: For provisions about collection and recovery of mining withholding tax and other amounts, see Part 4 ‑ 15 in Schedule 1 to the Taxation Administration Act 1953 . (4) The ascertainment of the amount of any mining withholding tax shall not be deemed to be an assessment within the meaning of any of the provisions of this Act. (5) The Commissioner may serve on a person liable to pay mining withholding tax, by post or otherwise, a notice in which is specified: (a) the amount of any mining withholding tax that the Commissioner has ascertained is payable by that person; and (b) the date on which that tax became due and payable. (6) The production of a notice served under subsection (5), or of a document under the hand of the Commissioner, a Second Commissioner or a Deputy Commissioner purporting to be a copy of such a notice, is prima facie evidence that the amount of mining withholding tax specified in the notice became due and payable by the person on whom the notice was served on the date specified in the notice as the date on which that tax became due and payable.

Amendment history: Inserted by No 27 of 1979, effective s 5: 5 Dec 1978 (s 2(2)) s 6: 23 June 1977 (s 2(3)) Remainder: 4 June 1979 (s 2(1)) | Amended by No 179 of 1999, Sch 18 item 22, effective Sch 2 (items 20–47), Sch 3 (items 3–6), Sch 5 (item 74), Sch 6 (items 1–13, 24(1)–(4)), Sch 10 (items 22–24), Sch 11 (item 44), Sch 16 (items 3–17, 37) and Sch 17 (items 1, 2): 22 Dec 1999 (s 2(1), (4), (7)(b)–(d)) Sch 5 (items 1–64), Sch 11 (items 14–43, 45–79) and Sch 12 (item 3): 1 July 2000 (s 2(9), (12)) | Amended by No 88 of 2009, Sch 5 item 314, effective s 4, Sch 1, Sch 3 (items 2–4), Sch 4 (items 1, 5) and Sch 5 (items 21–112, 306–318): 18 Sept 2009 (s 2(1) items 1, 2, 6, 7, 10) Sch 2 (items 2, 3): 1 Oct 2009 (s 2(1) item 3) | Amended by No 61 of 2016, Sch 3 item 25, effective Sch 1 (item 296) and Sch 3 (items 24, 25): 21 Oct 2016 (s 2(1) item 1)

s 129 — Taxable income of ship ‑ owner or charterer

Where a ship belonging to or chartered by a person whose principal place of business is out of Australia carries passengers, live ‑ stock, mails or goods shipped in Australia, 5% of the amount paid or payable to him or her in respect of such carriage, whether that amount is payable in or out of Australia, shall be deemed to be taxable income derived by him or her in Australia.

Amendment history: Amended by No 108 of 1981, item 124, effective s 4–25: 24 June 1981 (s 2) | Amended by No 41 of 2011, effective Sch 5 (items 15–17): 28 June 2011 (s 2(1) item 11) Sch 5 (items 57–73, 79, 176–367, 376–382, 412, 413): 27 June 2011 (s 2(1) items 17, 23)

s 130 — Commissioner may require master or agent to make return

(1) The Commissioner may, by writing, require: (a) the master of a particular ship to which section 129 applies, or the agent or other representative in Australia of the owner or charterer of the ship; or (b) the master of a ship included in a class of ships to which section 129 applies, or the agent or other representative in Australia of the owner or charterer of the ship; to make a return of the amounts so paid or payable. (2) An instrument under paragraph (1)(a): (a) must be given to the master, agent or representative; and (b) is not a legislative instrument. (3) An instrument under paragraph (1)(b) is a legislative instrument.

Amendment history: Amended by No 41 of 2011, Sch 5 item 26 | Sch 5 item 27 | Sch 5 item 28 | Sch 5 item 33, effective Sch 5 (items 15–17): 28 June 2011 (s 2(1) item 11) Sch 5 (items 57–73, 79, 176–367, 376–382, 412, 413): 27 June 2011 (s 2(1) items 17, 23) | Repealed and substituted by No 64 of 2020, Sch 3 item 35 | Sch 3 item 214 | Sch 3 item 326, effective Sch 1: 1 July 2020 (s 2(1) item 2) Sch 3 (items 203–227, 325, 326): 1 Oct 2020 (s 2(1) item 6)

s 131 — Determination by Commissioner

If such return is not made, or if the Commissioner is not satisfied with the return, the Commissioner may determine the amount so paid or payable.

Amendment history: Amended by No 41 of 2011, Sch 5 item 285, effective Sch 5 (items 15–17): 28 June 2011 (s 2(1) item 11) Sch 5 (items 57–73, 79, 176–367, 376–382, 412, 413): 27 June 2011 (s 2(1) items 17, 23)

s 132 — Assessment of tax

The master, agent or representative, as agent for the owner or charterer, may be assessed upon the taxable income and shall be liable to pay the tax assessed.

s 133 — Master liable to pay

(1) Where the assessment is made on the agent or representative, and the tax is not paid forthwith upon receipt of notice of the assessment, the master shall be liable to pay the tax. (2) This section shall not, so long as any tax for which the master becomes liable under this section remains unpaid, relieve any other person to whom the notice of assessment has been given in respect of that tax, from liability to pay the tax remaining unpaid.

s 134 — Notice of assessment

Where any person is liable to pay tax under this Division, the Commissioner shall give notice to the person of the assessment, and he or she shall forthwith pay the tax.

Amendment history: Amended by No 41 of 2011, Sch 5 item 286, effective Sch 5 (items 15–17): 28 June 2011 (s 2(1) item 11) Sch 5 (items 57–73, 79, 176–367, 376–382, 412, 413): 27 June 2011 (s 2(1) items 17, 23)

s 135 — Clearance of ship

A collector or officer of customs for any State or Territory shall not grant a clearance to the ship until he or she is satisfied that any tax which has been or may be assessed under this Division has been paid, or that arrangements for its payment have been made to the satisfaction of the Commissioner.

Amendment history: Amended by No 216 of 1973, Sch 1 item 11, effective Sch 1: 31 Dec 1973 (s 2) | Amended by No 20 of 1974, Sch 1 item 18, effective Sch 1: 31 Dec 1973 (s 2) | Amended by No 41 of 2011, effective Sch 5 (items 15–17): 28 June 2011 (s 2(1) item 11) Sch 5 (items 57–73, 79, 176–367, 376–382, 412, 413): 27 June 2011 (s 2(1) items 17, 23)

s 135A — Freights payable under certain agreements

Where goods are shipped in pursuance of an agreement of the kind specified in section 7C of the Australian Industries Preservation Act 1906 ‑ 1937 , the amount paid or payable to the owner or charterer of the ship in respect of the carriage of those goods shall, for the purposes of this Division, be deemed to be the amount remaining after deducting from the amount which would be payable according to the gross rate of freight specified in the agreement the amount of any rebate allowed in pursuance of the agreement or any payment, whenever made, by the owner or charterer, or out of funds provided by the owner or charterer, to any person or persons being the owner or shipper of the goods or the agent of either of them in respect of the shipment.

Amendment history: Inserted by No 46 of 1938, effective 28 Dec 1938 | Amended by No 51 of 1973, effective s 25(1): 25 June 1968 (s 25(2)) Remainder: 14 June 1973 (s 2)

s 141 — Interpretation

In this Division: insurance contract means a contract or guarantee whereby liability is undertaken, contingent upon the happening of any specified event, to pay any money or make good any loss or damage, but does not include a contract of life assurance. insured event means an event upon the happening of which the liability under an insurance contract arises. insured person means a person with whom any insurance contract is entered into by an insurer. insured property means the property the subject of an insurance contract made or given by an insurer. insurer means any non ‑ resident who undertakes liability under an insurance contract.

s 142 — Income derived by non ‑ resident insurer

(1) Where an insured person, whether a resident or non ‑ resident, has entered into an insurance contract with an insurer, and the insured property at the time of the making of the contract is situated in Australia, or the insured event is one which can happen only in Australia, the premium paid or payable under the contract shall be included in the assessable income of the insurer, and shall be deemed to be derived by the insurer from sources in Australia, and, unless the contract was made by a principal office or branch established by the insurer in Australia, this Division shall apply to that premium. (2) Where an insured person who is a resident has entered into an insurance contract with an insurer, and an agent or representative in Australia of the insurer was in any way instrumental in inducing the entry of the insured person into that contract, any premium paid or payable under the contract shall, wherever the insured property is situate, or the insured event may happen, be included in the assessable income of the insurer and shall be deemed to be derived by the insurer from sources in Australia, and, unless the contract was made by a principal office or branch established by the insurer in Australia, this Division shall apply to that premium.

Amendment history: Amended by No 18 of 1960, effective 17 June 1960 | Amended by No 164 of 1973, effective s 3–17, 19–22 and Sch: 11 Dec 1973 (s 2) | Amended by No 80 of 1975, item 42, effective 20 June 1975 (s 2) | Amended by No 41 of 2011, effective Sch 5 (items 15–17): 28 June 2011 (s 2(1) item 11) Sch 5 (items 57–73, 79, 176–367, 376–382, 412, 413): 27 June 2011 (s 2(1) items 17, 23)

s 143 — Taxable income of non ‑ resident insurer

The insurer shall be deemed to have derived in any year, in respect of the premiums paid or payable in that year under such contracts, a taxable income equal to 10% of the total amount of such premiums: Provided that, where the actual profit or loss derived or made by the insurer in respect of such premiums is established to the satisfaction of the Commissioner, the taxable income of the insurer in respect thereof, or the amount of the loss so made by the insurer shall, subject to this Act, be calculated by reference to receipts and expenditure taken into account in calculating that profit or loss.

Amendment history: Amended by No 108 of 1981, item 124, effective s 4–25: 24 June 1981 (s 2) | Amended by No 41 of 2011, effective Sch 5 (items 15–17): 28 June 2011 (s 2(1) item 11) Sch 5 (items 57–73, 79, 176–367, 376–382, 412, 413): 27 June 2011 (s 2(1) items 17, 23)

s 144 — Liability of agents of insurer

The insured person and any person in Australia acting on behalf of the insurer shall be the agents of the insurer, and shall be jointly and severally liable as such for all purposes of this Act. If either of those persons pays or credits to the insurer any amount in respect of the insurance contract before arrangements have been made to the satisfaction of the Commissioner for the payment of any income tax which has been or may be assessed under this Division in respect of that amount, that person shall be personally liable to pay that tax.

s 145 — Deduction of premiums

Notwithstanding any other provision of this Act, no such premium shall be an allowable deduction to the insured person unless arrangements have been made to the satisfaction of the Commissioner for the payment of any income tax which has been or may be assessed in respect of that premium.

s 146 — Exporter to furnish information

Every person who exports any goods from Australia shall furnish to the Collector of Customs for transmission to the Commissioner a copy of the customs entry for such goods, and shall show thereon such information as is prescribed regarding the insurance of such goods.

s 147 — Rate of tax in special circumstances

Where the insurer satisfies the Commissioner that, on account of special circumstances, it is necessary that the rate of tax payable by the insurer under this Division should be ascertained at the time when premiums are paid to the insurer, the Commissioner may direct that the tax so payable in respect of premiums paid during any financial year shall be calculated at the rate which would have been payable if an assessment had been made in respect of those premiums at the date when they were paid.

Amendment history: Amended by No 41 of 2011, effective Sch 5 (items 15–17): 28 June 2011 (s 2(1) item 11) Sch 5 (items 57–73, 79, 176–367, 376–382, 412, 413): 27 June 2011 (s 2(1) items 17, 23)

s 148 — Reinsurance with non ‑ residents

(1) Notwithstanding anything contained in this Act other than section 177F, but subject to this section, where a person carrying on the business of insurance in Australia reinsures out of Australia the whole or part of any risk with a non ‑ resident: (a) the premiums paid or credited in respect of the reinsurance shall not be: (i) an allowable deduction to the person carrying on the business of insurance in Australia; or (ii) included in the assessable income of the non ‑ resident; and (b) the income of the person carrying on the business of insurance in Australia shall not include sums recovered from that non ‑ resident in respect of a loss on any risk so reinsured. (2) A person carrying on the business of insurance in Australia who reinsures out of Australia the whole or part of any risk with a non ‑ resident may elect, in accordance with this section, that the provisions of subsection (1) shall not be applied in arriving at that person’s taxable income, and thereupon: (a) those provisions shall not apply in arriving at that person’s taxable income of a year of income to which the election applies; and (b) that person shall be liable to furnish returns, and to pay tax, in accordance with the succeeding provisions of this section, as agent for all non ‑ residents with whom that person so reinsures. (3) Where a person makes an election under subsection (2), he or she shall, subject to subsection (5), be assessed and liable to pay tax as agent, on an amount equal to 10% of the sum of the gross amounts of the premiums paid or credited by him or her in the year of income (being a year of income to which the election applies) to non ‑ residents in respect of all such reinsurances, as if that amount were the taxable income of a non ‑ resident company (not being a private company) not carrying on business in Australia by means either of a principal office or a branch. (4) A person who has made an election under this section shall, as agent, furnish to the Commissioner, within the prescribed time, or within such further time as the Commissioner allows, in respect of every year of income to which the election applies: (a) a return showing the gross amounts of the premiums paid or credited by that person to non ‑ residents in respect of all such reinsurances; or (b) 2 returns, of which: (i) one shall show the gross amounts of such premiums paid or credited by that person to non ‑ residents which are companies; and (ii) the other shall show the gross amounts of such premiums paid or credited by that person to non ‑ residents who are not companies. (5) Where returns are furnished by a person in accordance with paragraph (4)(b), there shall be excluded from the amount on which that person shall be assessed and liable to pay tax as agent in pursuance of subsection (3) an amount equal to 10% of the sum of the gross premiums properly shown in the return specified in subparagraph (4)(b)(ii), and that person shall, in addition to any other tax which that person is liable under this section to pay as agent, be assessed and liable to pay tax as agent on the amount so excluded as if it were the taxable income of a non ‑ resident company (being a private company) not carrying on business in Australia by means either of a principal office or a branch. (6) An election for the purposes of this section shall: (c) be made on or before the last day for the furnishing of the taxpayer’s return of income of the year of income in respect of which the election is first to apply, or within such further time as the Commissioner allows; (d) first apply in respect of a year of income which shall be specified in the election; and (e) apply in respect of all subsequent years of income. (7) An assessment for the purposes of subsection (3) or (5) shall be made and notified separately from any other assessment. (8) Where a person is liable, in pursuance of an assessment for the purposes of this section, to pay tax, in respect of any premiums, as agent for more than one non ‑ resident, the amount which that person shall be liable to pay as agent for any one of those non ‑ residents shall be so much of the tax so payable as bears to the whole of that tax the same proportion as the total amount of such of those premiums as were paid to that non ‑ resident bears to the total amount of those premiums. (9) Where a person is or may become liable under this section to pay tax as agent for a non ‑ resident in respect of any premium paid or credited by that person to that non ‑ resident: (a) that person shall, for the purposes of section 254, be deemed to have received the premium in that person’s representative capacity immediately before it was so paid or credited; and (b) if that person pays or credits the premium before arrangements have been made to the satisfaction of the Commissioner for the payment of any tax which may be assessed in respect of that premium, that person shall be personally liable to pay that tax. Application to a life assurance company (10) This section applies to a life assurance company in relation to the whole or a part of a risk if, and only if, the risk or that part of the risk: (a) is covered by a disability policy as defined in subsection 995 ‑ 1(1) of the Income Tax Assessment Act 1997 ; and (b) relates to a benefit that is payable in an event mentioned in that definition.

Amendment history: Repealed and substituted by No 46 of 1938, effective 28 Dec 1938 | Repealed and substituted by No 11 of 1947, effective 3 June 1947 (s 2) | Amended by No 51 of 1973, effective s 25(1): 25 June 1968 (s 25(2)) Remainder: 14 June 1973 (s 2) | Amended by No 108 of 1981, item 124, effective s 4–25: 24 June 1981 (s 2) | Amended by No 110 of 1981, item 6, effective s 4–11: 24 June 1981 (s 2) | Amended by No 101 of 1992, effective s 16–32, 34 and Sch 1–4: 30 June 1992 (s 2) | Amended by No 83 of 2004, effective s 4, Sch 1 (items 108–115, 126(7)), Sch 2 (items 1, 3, 4, 35, 37), Sch 3 (items 1–3, 6, 7), Sch 9, Sch 10 (item 43(1)) and Sch 11: 25 June 2004 (s 2(1) items 1, 12, 13, 16, 17, 21, 27, 28) Sch 1 (item 1): 30 June 2000 (s 2(1) item 2) Sch 10 (items 1, 2): 1 July 2000 (s 2(1) item 22) | Amended by No 41 of 2011, Sch 5 item 291 | Sch 5 item 292 | Sch 5 item 293 | Sch 5 item 294 | Sch 5 item 295 | Sch 5 item 297 | Sch 5 item 298 | Sch 5 item 299 | Sch 5 item 300, effective Sch 5 (items 15–17): 28 June 2011 (s 2(1) item 11) Sch 5 (items 57–73, 79, 176–367, 376–382, 412, 413): 27 June 2011 (s 2(1) items 17, 23)

s 149 — Average income

(1) For the purposes of the application of this Division in relation to a taxpayer in relation to a year of income, a reference in this Division to the average income of the taxpayer shall be construed as a reference to the average of the taxable incomes of the taxpayer of the years of income (in this Division referred to as average years ) beginning with the first average year and ending with the first ‑ mentioned year of income.

Amendment history: Repealed and substituted by No 57 of 1977, item 9 | item 10 | item 11, effective s 3–15 and 18: 16 June 1977 (s 2(1)) s 16: 1 July 1976 (s 2(2)) | Amended by No 126 of 1977, item 12 | item 13, effective 10 Nov 1977 (s 2)

s 149A — Capital gains, abnormal income and certain death benefits to be disregarded

(1) For the purposes of this Division (including the purpose of determining whether this Division applies to the income of a taxpayer): (a) references in this Division to the assessable income of a taxpayer shall be read as references to the amount that would have been the assessable income if the assessable income did not include any net capital gain and did not include any amount under section 82 ‑ 65, 82 ‑ 70 or 302 ‑ 145 of the Income Tax Assessment Act 1997 ; and (b) references in this Division to the taxable income of a taxpayer shall be read as references to the amount that would have been the taxable income if: (i) the assessable income did not include any net capital gain and did not include any amount under section 82 ‑ 65, 82 ‑ 70 or 302 ‑ 145 of the Income Tax Assessment Act 1997 ; and (ii) the taxable income were reduced by so much of the taxable income as consists of above ‑ average special professional income within the meaning of the Income Tax Assessment Act 1997 . (2) A reference in subsection (1) to the assessable income or taxable income of a taxpayer of a year of income shall, in relation to a taxpayer in the capacity of trustee of a trust estate, be read as a reference to the assessable income or net income, as the case may be, of the trust estate of the year of income.

Amendment history: Inserted by No 52 of 1986, effective 24 June 1986 (s 2) | Amended by No 138 of 1987, Sch 2 item 37, effective s 4, 5 and 7–52: 18 Dec 1987 (s 2(1)) s 6: 21 Dec 1987 (s 2(2)) | Amended by No 7 of 1993, item 28, effective s 4–6, 8–11 and 30–34: 27 May 1993 (s 2(1)) s 7 and 12–29: 1 July 1994 (s 2(2)(a), (3)) | Amended by No 46 of 1998, Sch 10 item 364 | Sch 10 item 392, effective s 4, Sch 2 (items 49–522), Sch 3 (items 13–20), Sch 4 (items 12–27), Sch 5 (items 6–10), Sch 6 (items 8–30), Sch 7 (items 12–19), Sch 8 (items 2–9) and Sch 9 (items 7, 8): 22 June 1998 (s 2(1)–(4)) | Amended by No 101 of 2006, effective Sch 1 (items 1, 5–199), Sch 2 (items 118–565, 1017, 1023–1037) and Sch 6 (items 1–4, 6–15): 14 Sept 2006 (s 2(1) items 2, 4) Sch 3 (items 1–10) and Sch 4 (items 1–11): 1 Jan 2008 (s 2(1) item 3) | Amended by No 15 of 2007, Sch 1 item 103, effective Sch 1 (items 1–8, 22–149, 406(1)–(3)) and Sch 3 (items 6, 7): 15 Mar 2007 (s 2(1) items 2, 6)

s 150 — First average year

Subject to this Division, the first average year shall be the fourth year before the year of income. A year the income of which was subject to assessment under the previous Act shall be capable of being a first or subsequent average year.

s 151 — First application of Division in relation to a taxpayer

(1) For the purposes of the first application of this Division in determining the tax payable by a taxpayer, the first average year shall be the first year which is otherwise capable of being an average year, and in which the taxable income is not greater than that of the next succeeding year. No year prior to that first average year shall, for the purposes of any application of this Division in determining the tax payable by a taxpayer, be capable of being an average year. (2) Any year in which the taxpayer was not carrying on business and was not in receipt of a taxable income shall not be counted as a first average year for the purposes of the first application of this Division in determining the tax payable by a taxpayer. (3) This section shall not apply to a taxpayer whose income has been or is liable to be assessed at an average rate of tax determined under the provisions of the previous Act.

Amendment history: Amended by No 123 of 1978, item 10, effective 13 Oct 1978 (s 2)

s 152 — Taxpayer not in receipt of assessable income

Any year in which the taxpayer was not carrying on business and was not in receipt of assessable income shall not be counted as an average year, and the provisions of this Division shall apply to the income thereafter derived by the taxpayer as if he or she had never been a taxpayer before that year.

Amendment history: Amended by No 41 of 2011, Sch 5 item 91 | Sch 5 item 92 | Sch 5 item 93 | Sch 5 item 94 | Sch 5 item 95 | Sch 5 item 96 | Sch 5 item 97 | Sch 5 item 98 | Sch 5 item 99 | Sch 5 item 100 | Sch 5 item 101 | Sch 5 item 102 | Sch 5 item 105 | Sch 5 item 301, effective Sch 5 (items 15–17): 28 June 2011 (s 2(1) item 11) Sch 5 (items 57–73, 79, 176–367, 376–382, 412, 413): 27 June 2011 (s 2(1) items 17, 23)

s 153 — Taxpayer with no taxable income

Any year in which the taxpayer was carrying on business but had no taxable income shall be capable of being an average year.

s 154 — Excess of allowable deductions

Any excess of allowable deductions over the assessable income of the taxpayer in any average year shall not be taken into account in calculating the average income.