TREASURY LAWS AMENDMENT (MAKING SURE MULTINATIONALS PAY THEIR FAIR SHARE OF TAX IN AUSTRALIA AND OTHER MEASURES) BILL 2018

2016-2017-2018

The Parliament of the

Commonwealth of Australia

HOUSE OF REPRESENTATIVES

Presented and read a first time

Treasury Laws Amendment (Making

Sure Multinationals Pay Their Fair

Share of Tax in Australia and Other

Measures) Bill 2018

No. , 2018

(Treasury)

A Bill for an Act to amend the law in relation to

taxation, and for related purposes

No. , 2018

Treasury Laws Amendment (Making Sure Multinationals Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

Contents

Short title ........................................................................................... 1

Commencement ................................................................................. 1

Schedules ........................................................................................... 2

Schedule 1--Better targeting the R&D Tax Incentive

Income Tax Assessment Act 1997

Tax Laws Amendment (Research and Development) Act 2015

Schedule 2--Enhancing the integrity of the R&D Tax Incentive

Part 1--Schemes to reduce income tax

Income Tax Assessment Act 1936

Part 2--R&D clawback and catch up amounts

Income Tax Assessment Act 1997

Income Tax Rates Act 1986

Income Tax (Transitional Provisions) Act 1997

Part 3--Application of amendments

Schedule 3--Improving the administration of the R&D Tax

Incentive

Part 1--Reporting of information about research and

development tax offset

Taxation Administration Act 1953

Part 2--Findings about clinical trials and determinations about

performance of Board's functions

Industry Research and Development Act 1986

Part 3--Delegation by Board and committees

Industry Research and Development Act 1986

Part 4--Extensions of time

Industry Research and Development Decision-making Principles 2011

Schedule 4--Thin capitalisation

Part 1--Amendments

Treasury Laws Amendment (Making Sure Multinationals Pay Their

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No. , 2018

Income Tax Assessment Act 1936

Income Tax Assessment Act 1997

Part 2--Application and transitional provisions

Schedule 5--Online hotel bookings

A New Tax System (Goods and Services Tax) Act 1999

Schedule 6--Non-taxable re-importations of refurbished

luxury cars

A New Tax System (Luxury Car Tax) Act 1999

Schedule 7--Significant global entities

Income Tax Assessment Act 1997

Taxation Administration Act 1953

No. , 2018

Treasury Laws Amendment (Making Sure Multinationals Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

A Bill for an Act to amend the law in relation to

taxation, and for related purposes

The Parliament of Australia enacts:

1 Short title

This Act is the Treasury Laws Amendment (Making Sure

Multinationals Pay Their Fair Share of Tax in Australia and Other

Measures) Act 2018.

2 Commencement

(1) Each provision of this Act specified in column 1 of the table

commences, or is taken to have commenced, in accordance with

column 2 of the table. Any other statement in column 2 has effect

according to its terms.

Treasury Laws Amendment (Making Sure Multinationals Pay Their

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No. , 2018

Commencement information

Column 1

Column 2

Column 3

Provisions

Commencement

Date/Details

1. Sections 1 to 3

and anything in

this Act not

elsewhere covered

by this table

The day this Act receives the Royal Assent.

2. Schedules 1, 2,

3, 4, 5, 6 and 7

The first 1 January, 1 April, 1 July or

1 October to occur after the day this Act

receives the Royal Assent.

Note:

This table relates only to the provisions of this Act as originally

enacted. It will not be amended to deal with any later amendments of

this Act.

(2) Any information in column 3 of the table is not part of this Act.

Information may be inserted in this column, or information in it

may be edited, in any published version of this Act.

3 Schedules

Legislation that is specified in a Schedule to this Act is amended or

repealed as set out in the applicable items in the Schedule

concerned, and any other item in a Schedule to this Act has effect

according to its terms.

Note:

The provisions of the Industry Research and Development

Decision-making Principles 2011 amended or inserted by this Act,

and any other provisions of that instrument, may be amended or

repealed by an instrument made under section 32A of the Industry

Research and Development Act 1986 (see subsection 13(5) of the

Legislation Act 2003).

Better targeting the R&D Tax Incentive Schedule 1

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Treasury Laws Amendment (Making Sure Multinationals Pay Their

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Schedule 1--Better targeting the R&D Tax

Incentive

Income Tax Assessment Act 1997

1 Subsection 63-10(1) (at the end of the cell at table item 35,

column headed "Tax offset")

Add: "or is a tax offset to which subparagraph 67-30(1A)(a)(ii)

applies".

2 Subsection 67-30(1)

Omit "if all or part of the amount of the tax offset is worked out using

the percentage in item 1 of the table in subsection 355-100(1)",

substitute "if the amount of the tax offset is worked out in accordance

with item 1 of the table in subsection 355-100(1) (disregarding

subsection 355-100(3))".

3 Subsection 67-30(1) (notes)

Repeal the notes, substitute:

Note:

Otherwise, the tax offset will be a non-refundable tax offset (see

item 35 of the table in subsection 63-10(1)).

4 After subsection 67-30(1)

Insert:

(1A) Despite subsection (1), if, disregarding the part (the clinical trial

component) mentioned in subsection (1B) of the

tax offset (the

original offset), the amount of the tax offset exceeds $4 million,

this Act applies as if:

(a) the

R&D entity were entitled under section 355-100 to:

(i) a tax offset equal to the sum of the clinical trial

component and $4 million; and

(ii) another tax offset equal to the difference between the

original offset and the tax offset mentioned in

subparagraph (i); and

(b) the tax offset mentioned in subparagraph (a)(ii) were not

subject to the refundable tax offset rules.

Schedule 1 Better targeting the R&D Tax Incentive

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(1B) The part is such amount of the

tax offset as is attributable to

amounts mentioned in subsection 355-100(1) that relate to

R&D

activities that are registered under paragraph 27A(1)(c) of the

Industry Research and Development Act 1986 as activities that

formed part of a clinical trial conducted during the income year.

(1C) A clinical trial is a planned study of the safety or efficacy in

humans of an intervention (including a medicine, vaccine,

treatment, diagnostic procedure or medical device) with the aim of

achieving at least one of the following:

(a) the discovery, or verification, of clinical, pharmacological or

pharmacodynamic effects;

(b) the identification of adverse reactions or adverse effects;

excretion.

5 Subsection 355-100(1) (heading)

Repeal the heading, substitute:

If notional deductions are between $20,000 and $150 million

6 Subsection 355-100(1) (cell at table item 1, column headed

"The percentage is:")

Repeal the cell, substitute:

the R&D entity's

corporate tax rate for

the income year, plus 13.5 percentage

points

7 Subsection 355-100(1) (table items 2 and 3, column headed

"The percentage is:")

Omit "38.5%", substitute "the R&D entity's

corporate tax rate for the

income year".

8 Subsection 355-100(1) (note)

Repeal the note, substitute:

Note 1:

The tax offset will generally be a refundable tax offset if item 1 of the

table applies (see section 67-30). However, if the amount of the tax

offset (disregarding any clinical trial component) exceeds $4 million,

Better targeting the R&D Tax Incentive Schedule 1

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Treasury Laws Amendment (Making Sure Multinationals Pay Their

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part of the tax offset will not be refundable (see subsections 67-30(1A)

and (1B)).

Note 2:

The tax offset is increased under subsection (1A) of this section if

item 2 or 3 of the table applies.

9 After subsection 355-100(1)

Insert:

R&D premium

(1A) If item 2 or 3 of the table in subsection (1) applies to the

R&D

entity, the amount of the

tax offset for the income year is

increased by the sum of the amounts (if any) worked out for each

item of the following table for that entity:

Tiered offset rates

Item

Work out the part of the total

amount mentioned in

subsection 355-100(1) that:

Multiply that part by this

percentage:

exceeds nil but does not exceed 2%

of the

R&D entity's total expenses

for the income year worked out

under section 355-115

exceeds 2% but does not exceed 5%

of the

R&D entity's total expenses

for the income year worked out

under section 355-115

6.5%

exceeds 5% but does not exceed

10% of the

R&D entity's total

expenses for the income year

worked out under section 355-115

exceeds 10% of the

R&D entity's

total expenses for the income year

worked out under section 355-115

12.5%

Schedule 1 Better targeting the R&D Tax Incentive

Treasury Laws Amendment (Making Sure Multinationals Pay Their

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10 Subsection 355-100(2)

Omit "However, if the total of those amounts is less than $20,000, the

R&D entity is instead entitled to a

tax offset for the income year equal

to that percentage of", substitute "However, if the total amount

mentioned in subsection (1) is less than $20,000, the

R&D entity is

instead entitled to a

tax offset for the income year, worked out in

accordance with subsections (1) and (1A), as if that amount were

instead".

11 Subsection 355-100(3)

Repeal the subsection (including the note), substitute:

If notional deductions exceed $150 million

(3) Despite subsections (1) and (1A), if the total amount mentioned in

subsection (1) exceeds $150 million, the

R&D entity is instead

entitled to a

tax offset for the income year equal to the sum of:

(a) the amount worked out in accordance with those subsections

as if that amount were $150 million; and

(b) the product of the excess and the R&D entity's

corporate tax

rate for the income year.

12 At the end of Subdivision 355-C

Add:

355-115 Working out an R&D entity's total expenses

(1) For the purposes of subsection 355-100(1A), an

R&D entity's

total expenses for an income year is the sum of the amounts

covered by subsection (2).

(2) The following amounts are covered by this subsection:

(a) the

R&D entity's total expenses for the income year worked

out in accordance with:

(i) the

accounting principles; or

(ii) if accounting principles do not apply in relation to the

R&D entity--commercially accepted principles relating

to accounting;

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Treasury Laws Amendment (Making Sure Multinationals Pay Their

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(b) any amount the R&D entity can deduct for the income year

as mentioned in subsection 355-100(1), to the extent the

amount is not covered by paragraph (a) for the income year.

Amounts counted once only

(3) For the purposes of subsection (2):

(a) disregard an amount to which paragraph (2)(a) otherwise

applies if paragraph (2)(b) has previously applied in relation

to the amount; and

(b) disregard an amount to which paragraph (2)(b) otherwise

applies if paragraph (2)(a) has previously applied in relation

to the amount.

13 Section 355-750

Repeal the section.

14 Subsection 995-1(1)

Insert:

clinical trial has the meaning given by subsection 67-30(1C).

Tax Laws Amendment (Research and Development) Act 2015

15 Subsection 2(1) (table item 3)

Repeal the item.

16 Part 2 of Schedule 1

Repeal the Part.

17 Application of amendments

The amendments made by this Schedule apply in relation to

assessments for income years commencing on or after 1 July 2018.

Schedule 2 Enhancing the integrity of the R&D Tax Incentive

Part 1 Schemes to reduce income tax

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Schedule 2--Enhancing the integrity of the

R&D Tax Incentive

Part 1--Schemes to reduce income tax

Income Tax Assessment Act 1936

1 Subsection 177A(1)

Insert:

R&D tax offset means a tax offset allowed under Division 355 of

the Income Tax Assessment Act 1997.

2 After paragraph 177C(1)(bc)

Insert:

or (bd) an R&D tax offset being allowable to the taxpayer in relation

to a year of income where the whole or a part of that R&D

tax offset would not have been allowable, or might

reasonably be expected not to have been allowable, to the

taxpayer in relation to that year of income if the scheme had

not been entered into or carried out;

3 At the end of subsection 177C(1)

Add:

; and (h) in a case to which paragraph (bd) applies--the amount of the

whole of the R&D tax offset or of the part of the R&D tax

offset, as the case may be, referred to in that paragraph.

4 At the end of subsection 177C(2)

Add:

; or (f) an R&D tax offset being allowable to the taxpayer in relation

to a year of income the whole or a part of which would not

have been, or might reasonably be expected not to have been,

allowable to the taxpayer in relation to that year of income if

the scheme had not been entered into or carried out, where:

(i) the allowance of the R&D tax offset to the taxpayer is

attributable to the making of a declaration, agreement,

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election, selection or choice, the giving of a notice or

the exercise of an option by any person, being a

declaration, agreement, election, selection, choice,

notice or option expressly provided for by this Act; and

(ii) the scheme was not entered into or carried out by any

person for the purpose of creating any circumstance or

state of affairs the existence of which is necessary to

enable the declaration, agreement, election, selection,

choice, notice or option to be made, given or exercised,

as the case may be.

5 Subsection 177C(3)

Omit "or (e)(i)", substitute ", (e)(i) or (f)(i)".

6 After paragraph 177C(3)(cb)

Insert:

or (cc) the allowance of an R&D tax offset to a taxpayer;

7 At the end of subsection 177C(3)

Add:

; or (i) the R&D tax offset would not have been allowable.

8 At the end of subsection 177CB(1)

Add:

; (f) the whole or a part of an R&D tax offset not being allowable

to the taxpayer.

9 After paragraph 177F(1)(e)

Insert:

or (f) in the case of a tax benefit that is referable to an R&D tax

offset, or a part of an R&D tax offset, being allowable to the

taxpayer in relation to a year of income--determine that the

whole or a part of the R&D tax offset, or the part of the R&D

tax offset, as the case may be, is not to be allowable to the

taxpayer in relation to that year of income;

10 After paragraph 177F(3)(f)

Insert:

Schedule 2 Enhancing the integrity of the R&D Tax Incentive

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No. , 2018

or (g) if, in the opinion of the Commissioner:

(i) an amount would have been allowed, or would be

allowable, to the relevant taxpayer as an R&D tax offset

in relation to a year of income if the scheme had not

been entered into or carried out, being an amount that

was not allowed or would not, apart from this

subsection, be allowable, as the case may be, as an

R&D tax offset to the relevant taxpayer in relation to

that year of income; and

(ii) it is fair and reasonable that the amount, or a part of the

amount, should be allowable as an R&D tax offset to

the relevant taxpayer;

determine that that amount or that part, as the case may be,

should have been allowed or is allowable, as the case may be,

as an R&D tax offset to the relevant taxpayer in relation to

that year of income;

Enhancing the integrity of the R&D Tax Incentive Schedule 2

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Part 2--R&D clawback and catch up amounts

Income Tax Assessment Act 1997

11 Section 4-25

Repeal the section, substitute:

4-25 Special provisions for working out your basic income tax

liability

Subsection 392-35(3) may increase your basic income tax liability

beyond the liability worked out simply by applying the income tax

rates to your taxable income.

Note:

Subsection 392-35(3) increases some primary producers' tax liability

by requiring them to pay extra income tax on their averaging

components worked out under Subdivision 392-C.

12 Subsection 9-5(1) (table item 4A)

Repeal the item.

13 Section 10-

5 (table item headed "R&D")

Omit:

feedstock adjustment ......................................................... 355-465

substitute:

recoupments and feedstock adjustments ........................... 355-450

14 Section 20-5 (table item 10)

Repeal the item, substitute:

An R&D entity:

• receives, or becomes entitled to

receive, a recoupment from

government relating to R&D

activities; or

• can deduct, under Division 355,

expenditure on goods, materials or

energy used during R&D activities to

produce marketable products or

Subdivision 355-G

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No. , 2018

products applied to the R&D entity's

own use;

and the entity is entitled under

Division 355 to a tax offset relating to

those R&D activities.

An amount is included in its assessable

income.

15 Subsection 40-292(1)

After "Note", insert "1".

16 At the end of subsection 40-292(1)

Add:

Note 2:

To the extent that any amount is included in your assessable income

under section 40-285 in relation to R&D activities, you may have an

additional amount included in your assessable income (see

section 355-447).

Note 3:

To the extent any amount that you are entitled to as a deduction under

section 40-285 relates to R&D activities, you may have an additional

amount you can deduct (see section 355-466).

17 Subsections 40-292(3) to (5)

Repeal the subsections.

18 Subsection 40-293(1)

After "Note", insert "1".

19 At the end of subsection 40-293(1)

Add:

Note 2:

To the extent any amount that is included in the R&D partnership's

assessable income under section 40-285 relates to R&D activities, a

partner may have an additional amount included in the partner's

assessable income (see section 355-449).

Note 3:

To the extent any amount that the R&D partnership is entitled to as a

deduction under section 40-285 relates to R&D activities, a partner

may have an additional amount the partner can deduct (see

section 355-468).

20 Subsection 40-293(3)

Repeal the subsection.

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21 Paragraphs 355-100(1)(c) and (f)

Repeal the paragraphs.

22 Section 355-105

Before "An amount", insert "(1)".

23 At the end of section 355-105

Add:

(2) Subsection (1) does not apply to amounts that the

R&D entity can

deduct under the following:

(a) subsection 355-315(2);

(b) subsection 355-475(1);

24 Subdivision 355-E (heading)

After "Notional deductions", insert "etc.".

25 Section 355-300

Omit "notionally deduct" (second occurring), substitute "actually

deduct".

26 Subsection 355-315(2) (heading)

Repeal the heading.

27 At the end of subsection 355-315(2)

Add:

Note 1:

A deduction under this subsection is not a notional deduction (see

subsection 355-105(2)).

Note 2:

A deduction under this subsection results in a catch up amount for the

R&D entity (see section 355-465).

28 Subsection 355-315(3)

Repeal the subsection, substitute:

(3) If an amount would be included in the

R&D entity's assessable

income for the event year under subsection 40-285(1) for the asset

and the event if Division 40 applied as described in

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paragraph (1)(e), that amount is included in the R&D entity's

assessable income for the event year.

Note:

Some or all of the amount included in the R&D entity's assessable

income may result in a clawback amount for the R&D entity (see

section 355-446).

29 Subdivisions 355-G and 355-H

Repeal the Subdivisions, substitute:

Subdivision 355-G--Clawback of R&D recoupments, feedstock

adjustments and balancing adjustments

Guide to Subdivision 355-G

355-430 What this Subdivision is about

An amount is included in an R&D entity's assessable income if:

(a)

the R&D entity receives a recoupment from government

of expenditure on R&D activities for which it has

obtained tax offsets under this Division; or

(b)

the R&D entity can deduct under this Division

expenditure on goods, materials or energy used during

R&D activities to produce marketable products or

products applied to the R&D entity's own use; or

(c)

a balancing adjustment event happens for an asset held

by the R&D entity (or an R&D partnership in which the

R&D entity is a partner) for which tax offsets have been

obtained under this Division and for which an amount is

otherwise included in the R&D entity's (or R&D

partnership's) assessable income.

Table of sections

Operative provisions

355-435 When this Subdivision applies

355-440 R&D recoupments

355-445 Feedstock adjustments

355-446 Balancing adjustments for assets only used for R&D activities

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355-447 Balancing adjustments for assets partially used for R&D activities

355-448 Balancing adjustments for R&D partnership assets only used for R&D

activities

355-449 Balancing adjustments for R&D partnership assets partially used for R&D

activities

355-450 Amount to be included in assessable income

Operative provisions

355-435 When this Subdivision applies

This Subdivision applies to an

R&D entity for an income year (the

present year) if:

(a) the R&D entity has an amount (a clawback amount) under

section 355-440, 355-445, 355-446, 355-447, 355-448 or

355-449 for the present year; and

(b) the R&D entity has received, or is entitled to receive, a

tax

offset under section 355-100 for one or more income years

(each an offset year) in relation to that clawback amount.

355-440 R&D recoupments

(1) The

R&D entity has an amount under this section if:

(a) the entity, or another entity mentioned in subsection (5),

receives or becomes entitled to receive a

recoupment from

either of the following (otherwise than under the

CRC

program):

(i) an

Australian government agency;

(ii) an STB (within the meaning of Division 1AB of Part III

of the Income Tax Assessment Act 1936); and

(b) the recoupment is received, or the entitlement to receive the

recoupment arises, during the present year; and

(i) the recoupment is of expenditure incurred on or in

relation to certain activities; or

(ii) the recoupment requires expenditure (the project

expenditure) to have been incurred, or to be incurred,

on certain activities.

Note:

Paragraph (c) includes expenditure incurred in purchasing a tangible

depreciating asset to be used when conducting R&D activities.

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(2) The amount is equal to the sum of:

(a) so much of the expenditure referred to in subsection (1) that

is deducted under this Division; and

(b) for each asset (if any) for which expenditure referred to in

subsection (1) is included in the asset's

cost--each amount

(if any) equal to the asset's decline in value that is deducted

under this Division;

that is taken into account in working out

tax offsets under

section 355-100 obtained by the

R&D entity for one or more

income years.

Note:

Paragraphs (a) and (b) of this subsection refer to amounts notionally

deducted under this Division (see section 355-105).

Amount is reduced by any repayments of the recoupment

(3) For the purposes of subsection (2), reduce the expenditure referred

to in subparagraph (1)(c)(i) by any repayments of the

recoupment

during an income year.

Cap on extra income tax if recoupment relates to a project

(4) Despite subsection (2), if the

recoupment is covered by

subparagraph (1)(c)(ii), the amount mentioned in subsection (2) for

the present year cannot exceed the amount worked out using the

following formula:

R&D expenditure

Net amount of the recoupment

Project expenditure



where:

net amount of the recoupment means the total amount of the

recoupment, less any repayments of the recoupment during an

income year.

R&D expenditure means the amount mentioned in subsection (2),

disregarding subsection (3).

Related entities

(5) The other entities for the purposes of paragraph (1)(a) are as

follows:

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(a) an entity

connected with the

R&D entity;

(b) an

affiliate of the R&D entity or an entity of which the R&D

entity is an affiliate.

355-445 Feedstock adjustments

(1) The

R&D entity has an amount under this section if:

(a) it incurs expenditure in one or more income years in

acquiring or producing goods, or materials, (the feedstock

inputs) transformed or processed during

R&D activities in

producing one or more tangible products (the feedstock

outputs); and

(b) it obtains under section 355-100

tax offsets for one or more

income years (each an offset year) for deductions under this

Division:

(i) for the expenditure; or

(ii) for expenditure it incurs on any energy input directly

into the transformation or processing; or

(iii) for the decline in value of assets used in acquiring or

producing the feedstock inputs; and

feedstock output, (the marketable product), is:

(i)

supplied by the R&D entity to another entity; or

(ii) applied by the R&D entity to the R&D entity's own use,

other than use for the purpose of transforming that

product for supply.

(2) The amount is equal to the lesser of:

(a) the

feedstock revenue for the feedstock output; and

(b) so much of the total of the amounts deducted as described in

paragraph (1)(b) as is reasonably attributable to the

production of the feedstock output.

(3) Subsection (2) does not apply to the feedstock output if:

(a) it becomes, or is transformed into, a feedstock input; or

(b) that subsection already applies to the feedstock output

because of the application of paragraph (1)(c) to:

(i) an earlier time during the present year; or

(ii) an earlier income year.

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(4) The feedstock revenue, for the feedstock output, is worked out

using the following formula:

Cost of producing the feedstock output

Market value of the

marketable product

Cost of producing the marketable product



where:

market value of the marketable product means the marketable

product's

market value at the time it is:

(a)

supplied by the

R&D entity to the other entity; or

(b) first applied by the R&D entity to the R&D entity's own use,

other than use for the purpose of transforming that product

for supply.

(5) This section applies to a

supply or use of the marketable product

by:

(a) an entity

connected with the

R&D entity; or

(b) an

affiliate of the R&D entity or an entity of which the R&D

entity is an affiliate;

as if it were by the R&D entity.

355-446 Balancing adjustments for assets only used for R&D

activities

(1) The

R&D entity has an amount under this section if:

(a) a

balancing adjustment event happens in the present year for

an asset

held by the R&D entity; and

(b) the R&D entity cannot deduct, for the asset for an income

year, an amount under section 40-25 as that section applies

apart from:

(i) this Division; and

(ii) former section 73BC of the Income Tax Assessment Act

1936; and

tax

offsets for one or more income years for deductions under

section 355-305 for the asset; and

(d) the R&D entity is registered under section 27A of the

Industry Research and Development Act 1986 for one or

R&D activities for the present year; and

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(e) an amount (the section 40-285 amount) is included in the

R&D entity's assessable income for the present year under

subsection 355-315(3) for the asset and the balancing

adjustment event.

Note 1:

This section applies in a modified way if the entity also has deductions

for the asset under former section 73BA or 73BH of the Income Tax

Assessment Act 1936 (see section 355-320 of the Income Tax

(Transitional Provisions) Act 1997).

Note 2:

Section 40-292 applies if the entity can deduct an amount under

section 40-25, as that section applies apart from this Division and

former section 73BC of the Income Tax Assessment Act 1936.

(2) The amount is so much of an amount equal to the section 40-285

amount as does not exceed the difference between:

(a) the asset's

cost; and

(b) the asset's

adjustable value, worked out under Division 40

as if that Division applied with the changes described in

section 355-310.

355-447 Balancing adjustments for assets partially used for R&D

activities

(1) The

R&D entity has an amount under this section if:

(a) a

balancing adjustment event happens in the present year for

an asset

held by the R&D entity and for which:

(i) the R&D entity can deduct, for an income year, an

amount under section 40-25, as that section applies

apart from Division 355 and former section 73BC of the

Income Tax Assessment Act 1936; or

(ii) the R&D entity could have deducted, for an income

year, an amount as described in subparagraph (i) if the

R&D entity had used the asset; and

(b) the R&D entity is entitled under section 355-100 to

tax

offsets for one or more income years for deductions (the

R&D deductions) under section 355-305 for the asset; and

R&D entity's assessable income for the asset under

section 40-285 (after applying subsection 40-292(2)) for the

present year.

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Note:

This section applies in a modified way if you have deductions for the

asset under former section 73BA or 73BH of the Income Tax

Assessment Act 1936 (see section 40-292 of the Income Tax

(Transitional Provisions) Act 1997).

(2) The amount is worked out as follows:

Total R&D deductions

Adjusted section 40-285 amount

Total decline in value



where:

adjusted section 40-285 amount means so much of an amount

equal to the section 40-285 amount as does not exceed the total

decline in value.

total decline in value means the

cost of the asset less its

adjustable value.

355-448 Balancing adjustments for R&D partnership assets only

used for R&D activities

(1) The

R&D entity (the partner) has an amount under this section if:

(a) the partner is a partner in an

R&D partnership; and

(b) a

balancing adjustment event happens in the present year for

an asset

held by the R&D partnership; and

income year, an amount under section 40-25, as that section

applies apart from:

(i) this Division; and

(ii) former section 73BC of the Income Tax Assessment Act

1936; and

(d) the partner is entitled under section 355-100 to

tax offsets

for one or more income years for deductions under

section 355-520 for the asset; and

(e) the partner is registered under section 27A of the Industry

Research and Development Act 1986 for one or more

R&D

activities for the present year; and

(f) an amount (the section 40-285 amount) would, as mentioned

in subsection 355-525(3), be included in the R&D

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partnership's assessable income for the present year for the

asset and the balancing adjustment event.

Note 1:

This section applies in a modified way if the partner has deductions

for the asset under former section 73BA or 73BH of the Income Tax

Assessment Act 1936 (see section 355-325 of the Income Tax

(Transitional Provisions) Act 1997).

Note 2:

Section 40-293 applies if the R&D partnership can deduct an amount

under section 40-25, as that section applies apart from this Division

and former section 73BC of the Income Tax Assessment Act 1936.

(2) The amount is the partner's proportion of the amount that is so

much of an amount equal to the section 40-285 amount as does not

exceed the difference between:

(a) the asset's

cost; and

(b) the asset's

adjustable value, worked out under Division 40

as if that Division applied with the changes described in

section 355-310.

355-449 Balancing adjustments for R&D partnership assets

partially used for R&D activities

(1) The

R&D entity (the partner) has an amount under this section if:

(a) the partner is a partner in an

R&D partnership; and

(b) a

balancing adjustment event happens in the present year for

depreciating asset

held by the R&D partnership and for

which:

(i) the R&D partnership can deduct, for an income year, an

amount under section 40-25, as that section applies

apart from Division 355 and former section 73BC of the

Income Tax Assessment Act 1936; or

(ii) the R&D partnership could have deducted, for an

income year, an amount as described in subparagraph (i)

if it had used the asset; and

partnership are entitled under section 355-100 to

tax offsets

for one or more income years for deductions under

section 355-520 for the asset; and

(d) an amount (the section 40-285 amount) is included in the

R&D partnership's assessable income for the asset under

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section 40-285 (after applying subsection 40-293(2)) for the

present year.

(2) The amount is the partner's proportion of the amount worked out

as follows:

Total R&D deductions

Adjusted section 40-285 amount

Total decline in value



where:

adjusted section 40-285 amount means so much of an amount

equal to the section 40-285 amount as does not exceed the total

decline in value.

total decline in value means the

cost of the asset less its

adjustable value.

total R&D deductions means the sum of each partner's deductions

mentioned in paragraph (1)(c) of this section.

355-450 Amount to be included in assessable income

(1) The

R&D entity must include, in the entity's assessable income

for the present year, the sum of the following amounts for each

offset year relating to the clawback amount:

Starting offset

Adjusted offset

Deduction amount

R&D entity's corporate tax rate for the present year

�-

where:

adjusted offset means the

tax offset the R&D entity would have

received under section 355-100 for the offset year if the total

amount mentioned in subsection 355-100(1) for that tax offset

were reduced by the portion of the clawback amount that is

attributable to the offset year.

deduction amount means the portion of the clawback amount that

is attributable to the offset year, multiplied by the R&D entity's

corporate tax rate for the offset year.

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starting offset means the amount of the

tax offset the R&D entity

has received, or is entitled to receive, under section 355-100 for the

offset year.

(2) However, if this section, or section 355-475, has previously applied

(whether in the present year or an earlier income year) in relation

to another clawback amount, or catch up amount, the

R&D entity

has that relates to the offset year, subsection (1) of this section

applies as if:

(a) the starting offset were the

tax offset the R&D entity would

have received under section 355-100 for the offset year if the

total amount mentioned in subsection 355-100(1) were:

(i) decreased by the sum of the portions of any such other

clawback amounts that are attributable to the offset

year; and

(ii) increased by the sum of the portions of any such other

catch up amounts that are attributable to the offset year;

and

(b) the reference to the "total amount" in the definition of

adjusted offset were a reference to that amount as so

adjusted.

Subdivision 355-H--Catch up deductions for balancing

adjustment events for assets used for R&D activities

355-455 What this Subdivision is about

An R&D entity can deduct an amount under this Subdivision if:

(a)

a balancing adjustment event happens for an asset held

by the R&D entity (or an R&D partnership in which the

R&D entity is a partner); and

(b)

tax offsets have been obtained under this Division for

deductions for the asset; and

(c)

the R&D entity (or the R&D partnership) can otherwise

deduct an amount for the asset and the balancing

adjustment event.

Table of sections

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355-460 When this Subdivision applies

355-465 Assets only used for R&D activities

355-466 Assets partially used for R&D activities

355-467 R&D partnership assets only used for R&D activities

355-468 R&D partnership assets partially used for R&D activities

355-475 Amount that can be deducted

355-460 When this Subdivision applies

This Subdivision applies to an

R&D entity for an income year (the

present year) if:

(a) the R&D entity has an amount (a catch up amount) under

section 355-465, 355-466, 355-467 or 355-468 for an asset

for the present year; and

(b) the R&D entity has received, or is entitled to receive, a

tax

offset under section 355-100 for one or more income years

(each an offset year) in relation to the asset.

355-465 Assets only used for R&D activities

(1) The

R&D entity has an amount under this section if:

(a) a

balancing adjustment event happens in the present year for

an asset

held by the R&D entity; and

(b) the R&D entity cannot deduct, for the asset for an income

year, an amount under section 40-25 as that section applies

apart from:

(i) this Division; and

(ii) former section 73BC of the Income Tax Assessment Act

1936; and

tax

offsets for one or more income years for deductions under

section 355-305 for the asset; and

(d) the R&D entity is registered under section 27A of the

Industry Research and Development Act 1986 for one or

R&D activities for the present year; and

(e) the R&D entity can deduct, for the present year, an amount

under subsection 355-315(2) for the asset and the balancing

adjustment event.

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Note 1:

This section applies in a modified way if the entity also has deductions

for the asset under former section 73BA or 73BH of the Income Tax

Assessment Act 1936 (see section 355-320 of the Income Tax

(Transitional Provisions) Act 1997).

Note 2:

Section 40-292 applies if the entity can deduct an amount under

section 40-25, as that section applies apart from this Division and

former section 73BC of the Income Tax Assessment Act 1936.

(2) The amount is an amount equal to the amount mentioned in

paragraph (1)(e).

355-466 Assets partially used for R&D activities

(1) The

R&D entity has an amount under this section if:

(a) a

balancing adjustment event happens in the present year for

an asset

held by the R&D entity for which:

(i) the R&D entity can deduct, for an income year, an

amount under section 40-25, as that section applies

apart from Division 355 and former section 73BC of the

Income Tax Assessment Act 1936; or

(ii) the R&D entity could have deducted, for an income

year, an amount as described in subparagraph (i) if the

R&D entity had used the asset; and

(b) the R&D entity is entitled under section 355-100 to

tax

offsets for one or more income years for deductions (the

R&D deductions) under section 355-305 for the asset; and

amount) for the asset under section 40-285 (after applying

subsection 40-292(2)) for the present year.

Note:

This section applies in a modified way if you have deductions for the

asset under former section 73BA or 73BH of the Income Tax

Assessment Act 1936 (see section 40-292 of the Income Tax

(Transitional Provisions) Act 1997).

(2) The amount is worked out as follows:

Total R&D deductions

Section 40-285 amount

Total decline in value



where:

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No. , 2018

total decline in value means the

cost of the asset less its

adjustable value.

355-467 R&D partnership assets only used for R&D activities

(1) The

R&D entity (the partner) has an amount under this section if:

(a) the partner is a partner in an

R&D partnership; and

(b) a

balancing adjustment event happens in the present year for

an asset

held by the

R&D partnership; and

income year, an amount under section 40-25, as that section

applies apart from:

(i) this Division; and

(ii) former section 73BC of the Income Tax Assessment Act

1936; and

(e) the partner is entitled under section 355-100 to

tax offsets

for one or more income years for deductions under

section 355-520 for the asset; and

(d) the partner is registered under section 27A of the Industry

Research and Development Act 1986 for one or more

R&D

activities for the present year; and

(e) the partner can deduct an amount under

subsection 355-525(2) for the present year for the asset and

the balancing adjustment event.

(2) The amount is an amount equal to the amount mentioned in

paragraph (1)(e).

355-468 R&D partnership assets partially used for R&D activities

(1) The

R&D entity (the partner) has an amount under this section if:

(a) the partner is a partner in an

R&D partnership; and

(b) a

balancing adjustment event happens in the present year for

depreciating asset

held by the R&D partnership and for

which:

(i) the R&D partnership can deduct, for an income year, an

amount under section 40-25, as that section applies

apart from Division 355 and former section 73BC of the

Income Tax Assessment Act 1936; or

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(ii) the R&D partnership could have deducted, for an

income year, an amount as described in subparagraph (i)

if it had used the asset; and

partnership are entitled under section 355-100 to

tax offsets

for one or more income years for deductions under

section 355-520 for the asset; and

(d) the R&D partnership can deduct an amount (the

section 40-285 amount) for the asset under section 40-285

(after applying subsection 40-293(2)) for the present year.

Note:

This section applies in a modified way if the partners have deductions

for the asset under former section 73BA or 73BH of the Income Tax

Assessment Act 1936 (see section 40-293 of the Income Tax

(Transitional Provisions) Act 1997).

(2) The amount is the partner's proportion of the amount worked out

as follows:

Total R&D deductions

Section 40-285 amount

Total decline in value



where:

total decline in value means the

cost of the asset less its

adjustable value.

total R&D deductions means the sum of each partner's deductions

mentioned in paragraph (1)(c) of this section.

355-475 Amount that can be deducted

(1) The

R&D entity can deduct, for the present year, the sum of the

following amounts for each offset year relating to the catch up

amount:

Adjusted offset

Starting offset

Deduction amount

R&D entity's corporate tax rate for the present year

�-

where:

adjusted offset means the

tax offset the R&D entity would have

received under section 355-100 for the offset year if the total

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amount mentioned in subsection 355-100(1) for that tax offset

were increased by the portion of the catch up amount that is

attributable to the offset year.

deduction amount means the portion of the catch up amount that is

attributable to the offset year, multiplied by the R&D entity's

corporate tax rate for the offset year.

starting offset means the amount of the

tax offset the R&D entity

has received, or is entitled to receive, under section 355-100 for the

offset year.

Note:

A deduction under this subsection is not a notional deduction: see

subsection 355-105(2).

(2) However, if this section, or section 355-450, has previously applied

(whether in the present year or an earlier income year) in relation

to another catch up amount, or clawback amount, the

R&D entity

has that relates to the offset year, subsection (1) of this section

applies as if:

(a) the starting offset were the

tax offset the R&D entity would

have received under section 355-100 for the offset year if the

total amount mentioned in subsection 355-100(1) were:

(i) increased by the sum of the portions of any such other

catch up amounts that are attributable to the offset year;

and

(ii) decreased by the sum of the portions of any such other

clawback amounts that are attributable to the offset

year; and

(b) the reference to the "total amount" in the definition of

adjusted offset were a reference to that amount as so

adjusted.

30 Subsection 355-525(2) (heading)

Repeal the heading.

31 At the end of subsection 355-525(2)

Add:

Note 1:

A deduction under this subsection is not a notional deduction (see

subsection 355-105(2)).

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Note 2:

A deduction under this subsection will result in a catch up amount for

the partner (see section 355-467).

32 Subsections 355-525 (3) to (7)

Repeal the subsections, substitute:

(3) If an amount would be included in the

R&D partnership's

assessable income for the event year under subsection 40-285(1)

for the asset and the event if Division 40 applied as described in

paragraph (1)(e), the partner's proportion of that amount is

included in the partner's assessable income for the event year.

Note:

Some or all of the amount included in the partner's assessable income

may result in a clawback amount for the partner (see section 355-448).

33 Section 355-530

Omit "For the purposes of sections 40-292 (balancing adjustments for

decline in value) and", substitute "For the purposes of section".

34 Subsection 355-715(2)

Omit ", 355-315, 355-520 or 355-525", substitute "or 355-520".

35 Subsection 355-715(2) (note 2)

Repeal the note, substitute:

Note 2:

Section 355-305 is about the decline in value of R&D assets and

section 355-520 is about the decline in value of R&D partnership

assets.

36 Section 355-720

Repeal the section.

37 Subsection 360-40(2)

Repeal the subsection, substitute:

(2) For the purposes of paragraph (1)(c), disregard any of the

following:

(a) an Accelerating Commercialisation Grant under the program

administered by the Commonwealth known as the

Entrepreneurs' Programme;

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(b) an amount required to be included in the company's

assessable income under subsection 355-450(1).

38 Subsection 995-1(1) (definition of feedstock revenue)

Omit "section 355-470", substitute "subsection 355-445(4)".

Income Tax Rates Act 1986

39 Subsection 12(7)

Omit "sections 12A and 12B" (wherever occurring), substitute

"section 12A".

40 Sections 12B and 31

Repeal the sections.

Income Tax (Transitional Provisions) Act 1997

41 Subsection 40-292(3) (formula)

Repeal the formula (not including the definitions), substitute:

Old law

1.25 rate

deductions

Adjusted section

40-285 amount

Total decline

in value







































42 After subsection 40-292(3)

Insert:

Application of Division 355

(3A) In applying Division 355 of the new Act in relation to the asset for

the income year, the R&D entity is taken to have:

(a) if the section 40-285 amount is an amount included in the

R&D entity's assessable income--a clawback amount under

section 355-447 of the new Act for the income year; or

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(b) if the section 40-285 amount is a deduction--a catch up

amount under section 355-466 of the new Act for the income

year;

equal to the following amount:

Sum of new

law deductions

Adjusted section

40-285 amount

Total decline

in value



where:

adjusted section 40-285 amount means:

(a) if the section 40-285 amount is a deduction--the amount of

the deduction; or

(b) if the section 40-285 amount is an amount included in the

R&D entity's assessable income--so much of the

section 40-285 amount as does not exceed the total decline in

value.

total decline in value means the cost of the asset less its adjustable

value.

43 Subsection 40-293(3) (formula)

Repeal the formula (not including the definitions), substitute:

Old law

1.25 rate

deductions

Adjusted section

40-285 amount

Total decline

in value







































44 After subsection 40-293(3)

Insert:

Application of Division 355

(3A) In applying Division 355 of the new Act in relation to the asset for

the income year, an R&D entity (the partner) that is a partner in

the R&D partnership and is entitled to one or more new law

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deductions for one or more income years for the asset, is taken to

have:

(a) if the section 40-285 amount is an amount included in the

R&D partnership's assessable income--a clawback amount

under section 355-449 of the new Act for the income year; or

(b) if the section 40-285 amount is a deduction--a catch up

amount under section 355-468 of the new Act for the income

year;

equal to the partner's proportion of the following amount:

Sum of new

law deductions

Adjusted section

40-285 amount

Total decline

in value



where:

adjusted section 40-285 amount means:

(a) if the section 40-285 amount is a deduction--the amount of

the deduction; or

(b) if the section 40-285 amount is an amount included in the

R&D partnership's assessable income--so much of the

section 40-285 amount as does not exceed the total decline in

value.

sum of new law deductions means the sum of each partner's new

law deductions mentioned in paragraph (2)(b) of this section.

total decline in value means the cost of the asset less its adjustable

value.

45 Subsection 355-320(1) (note 1)

Omit "(the new law deductions)".

46 Subsection 355-320(3) (heading)

Repeal the heading, substitute:

Deduction

47 Subsection 355-320(3) (note)

Repeal the note.

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48 Subsection 355-320(4) (formula)

Repeal the formula (not including the definitions), substitute:

Old law

1.25 rate

deductions

Adjusted section

40-285 amount

Total decline

in value







































49 After subsection 355-320(4)

Insert:

Application of Division 355

(4A) In applying Division 355 of the new Act in relation to the asset for

the income year, if the R&D entity is entitled under

section 355-100 of the new Act to tax offsets for one or more

income years for deductions (the new law deductions) under

section 355-305 for the asset, the R&D entity is taken to have

(a) if an amount is taken to be included in the R&D entity's

assessable income for the event year as mentioned in

subsection (4) of this section--a clawback amount under

section 355-446 of the new Act for the income year equal to

the amount mentioned in subsection (4B) of this section; or

(b) if the R&D entity is taken to be able to deduct an amount as

mentioned in subsection (3) of this section--a catch up

amount under section 355-465 of the new Act for the income

year equal to the amount of that deduction.

(4B) The amount is the following:

Sum of new

law deductions

Adjusted section

40-285 amount

Total decline

in value



where:

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adjusted section 40-285 amount means so much of the

section 40-285 amount as does not exceed the total decline in

value.

total decline in value means the asset's cost, less its adjustable

value, worked out under Division 40 of the new Act as it applies as

described in subsection (2) of this section.

50 Subsection 355-325(1) (note 1)

Omit "(the new law deductions)".

51 Subsection 355-325(3) (heading)

Repeal the heading, substitute:

Deduction

52 Subsection 355-325(3) (note)

Repeal the note.

53 Subsection 355-325(4)

Repeal the formula (not including the definitions), substitute:

Old law

1.25 rate

deductions

Adjusted section

40-285 amount

Total decline

in value







































54 Subsections 355-325(4A) to (4D)

Repeal the subsections, substitute:

Application of Division 355

(4A) In applying Division 355 of the new Act in relation to the asset for

the income year, if one or more partners (including the partner) in

the R&D partnership is entitled under section 355-100 of the new

Act to tax offsets for one or more income years for deductions

under section 355-520 of that Act for the asset, the partner is taken

to have:

Enhancing the integrity of the R&D Tax Incentive Schedule 2

R&D clawback and catch up amounts Part 2

No. , 2018

Treasury Laws Amendment (Making Sure Multinationals Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

(a) if an amount is taken to be included in the R&D entity's

assessable income for the event year as mentioned in

subsection (4) of this section--a clawback amount under

section 355-448 of the new Act for the income year equal to

the amount mentioned in subsection (4B) of this section; or

(b) if the partner is taken to be able to deduct an amount as

mentioned in subsection (3) of this section--a catch up

amount under section 355-467 of the new Act for the income

year equal to the amount of that deduction.

(4B) The amount is an amount equal to the partner's proportion of the

following:

Sum of new

law deductions

Adjusted section

40-285 amount

Total decline

in value



where:

adjusted section 40-285 amount means so much of the

section 40-285 amount as does not exceed the total decline in

value.

sum of new law deductions means the sum of each partner's

deductions under section 355-520 of the new Act mentioned in

subsection (4A) of this section.

total decline in value means the asset's cost, less its adjustable

value, worked out under Division 40 of the new Act as it applies as

described in subsection (2) of this section.

55 Section 355-720

Repeal the section.

Schedule 2 Enhancing the integrity of the R&D Tax Incentive

Part 3 Application of amendments

Treasury Laws Amendment (Making Sure Multinationals Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

No. , 2018

Part 3--Application of amendments

56 Application of amendments

(1)

The amendments made by Part 1 of this Schedule apply on or after

1 July 2018 in connection with a scheme, whether or not the scheme

was entered into, or was commenced to be carried out, before that day.

(2)

Despite subitem (1), the amendments made by Part 1 of this Schedule

do not apply in relation to tax benefits that a taxpayer derives before

that day.

(3)

The amendments made by Part 2 of this Schedule apply in relation to

assessments for income years commencing on or after 1 July 2018.

Improving the administration of the R&D Tax Incentive Schedule 3

Reporting of information about research and development tax offset Part 1

No. , 2018

Treasury Laws Amendment (Making Sure Multinationals Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

Schedule 3--Improving the administration of

the R&D Tax Incentive

Part 1--Reporting of information about research and

development tax offset

Taxation Administration Act 1953

1 At the end of Part IA

Add:

3G Reporting of information about research and development tax

offset

(1) This section applies to an R&D entity in relation to an income year

if, according to information the entity gave the Commissioner, the

entity is entitled under Division 355 of the Income Tax Assessment

Act 1997 to a tax offset for amounts it can deduct under that

Division for the income year.

(2) The Commissioner must, as soon as practicable after the second

30 June after the financial year corresponding to the income year,

make publicly available the information mentioned in

subsection (3).

(3) The information is as follows:

(a) the entity's name;

(b) the entity's ABN or, if the first information the entity gave

the Commissioner indicating the entity's entitlement to the

tax offset does not include the entity's ABN but does include

the entity's ACN (within the meaning of the Corporations

Act 2001), the entity's ACN;

Commissioner indicating the entity's entitlement to the tax

offset, the total described in paragraph (4)(a) exceeds the

total described in paragraph (4)(b)--the excess.

(4) For the purposes of paragraph (3)(c), the totals are as follows:

Schedule 3 Improving the administration of the R&D Tax Incentive

Part 1 Reporting of information about research and development tax offset

Treasury Laws Amendment (Making Sure Multinationals Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

No. , 2018

(a) the total of what the entity can deduct for the income year as

described in subsection (1) of this section;

(b) the total of the amounts the entity has under section 355-445

of the Income Tax Assessment Act 1997 for the income year.

(5) Subsection (6) applies if:

(a) the entity gives the Commissioner a notice in writing that the

information mentioned in paragraph (3)(c) contains an error;

and

(b) the notice contains information that corrects the error.

(6) The Commissioner may at any time make the information

mentioned in paragraph (5)(b) publicly available, in accordance

with subsection (2), in order to correct the error.

(7) To avoid doubt, if the Commissioner considers that information

made publicly available under subsection (2) fails to reflect all of

the information required to be made publicly available under that

subsection, the Commissioner may at any time make publicly

available other information in order to remedy the failure.

(8) An expression used in this section and in the Income Tax

Assessment Act 1997 has the same meaning in this section as in

that Act.

2 Subsection 355-50(1) in Schedule 1 (note 2)

Omit "and 3E", substitute ", 3E and 3G".

3 Application

Section 3G of the Taxation Administration Act 1953 applies to income

years that start on or after 1 July 2018.

Improving the administration of the R&D Tax Incentive Schedule 3

Findings about clinical trials and determinations about performance of Board's

functions Part 2

No. , 2018

Treasury Laws Amendment (Making Sure Multinationals Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

Part 2--Findings about clinical trials and

determinations about performance of

Board's functions

Industry Research and Development Act 1986

4 Subsection 4(1)

Insert:

clinical trial has the same meaning as in the Income Tax

Assessment Act 1997.

5 At the end of section 26A

Add:

•

The Board may make general determinations about how it will

exercise its powers, and perform its functions and duties,

under this Part. The Board must act in accordance with such a

determination.

6 Subsection 27A(1)

Omit "either or both", substitute "one or more".

7 After paragraph 27A(1)(b)

Insert:

; (c) one or more specified activities, for which the entity is or is

to be registered under another paragraph of this subsection,

as activities that formed part of a clinical trial conducted

during the income year.

8 After paragraph 27B(1)(d)

Insert:

; (e) that all or part of an activity mentioned in the application

formed part of a clinical trial conducted during the income

year;

Schedule 3 Improving the administration of the R&D Tax Incentive

Part 2 Findings about clinical trials and determinations about performance of Board's

functions

Treasury Laws Amendment (Making Sure Multinationals Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

No. , 2018

(f) that all or part of an activity mentioned in the application did

not form part of a clinical trial conducted during the income

year.

9 Subsection 27B(1) (note 2)

Repeal the note, substitute:

Note 2:

The Board could make a finding under paragraph 27B(1)(b) if, for

example, the Board has insufficient information to make a finding

under paragraph 27B(1)(a). Similarly, the Board could:

(a) make a finding under paragraph 27B(1)(d) if it has insufficient

information to make a finding under paragraph 27B(1)(c); or

(b) make a finding under paragraph 27B(1)(f) if it has insufficient

information to make a finding under paragraph 27B(1)(e).

10 Subsection 27E(2) (note 3)

Omit "or (d)", substitute ", (d) or (f)".

11 Subsection 27H(2) (note 3)

Omit "or (d)", substitute ", (d) or (f)".

12 After paragraph 27J(1)(d)

Insert:

; (e) that all or part of a registered activity formed part of a

clinical trial conducted during the registration year;

(f) that all or part of a registered activity did not form part of a

clinical trial conducted during the registration year.

13 Subsection 27J(1) (note 2)

Repeal the note, substitute:

Note 2:

The Board could make a finding under paragraph 27J(1)(b) if, for

example, the Board has insufficient information to make a finding

under paragraph 27J(1)(a). Similarly, the Board could:

(a) make a finding under paragraph 27J(1)(d) if it has insufficient

information to make a finding under paragraph 27J(1)(c); or

(b) make a finding under paragraph 27J(1)(f) if it has insufficient

information to make a finding under paragraph 27J(1)(e).

14 Section 28

Omit "an R&D activity.", substitute "an R&D activity or forms part of a

clinical trial.".

Improving the administration of the R&D Tax Incentive Schedule 3

Findings about clinical trials and determinations about performance of Board's

functions Part 2

No. , 2018

Treasury Laws Amendment (Making Sure Multinationals Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

15 After paragraph 28A(1)(c)

Insert:

(ca) find that all or part of the activity forms part of a clinical

trial;

(cb) find that all or part of the activity does not form part of a

clinical trial;

16 After Division 6 of Part III

Insert:

Division 6A--Determinations about Board's powers,

functions and duties under this Part

31C Simplified outline

•

The Board may make general determinations about the

circumstances or way in which it will exercise its powers, or

perform its functions or duties, under this Part.

•

The Board must act in accordance with such a determination.

•

A determination cannot override the decision-making

principles.

31D Board may make a determination about its powers, functions

and duties

(1) On its own initiative, the Board may, by notifiable instrument,

make a determination about the circumstances or way in which the

Board will exercise any of its powers, or perform any of its

functions or duties, under this Part (except this Division).

(2) The determination must not relate to the exercise of powers, or the

performance of functions or duties, in a particular case or in

relation to a particular entity.

Schedule 3 Improving the administration of the R&D Tax Incentive

Part 2 Findings about clinical trials and determinations about performance of Board's

functions

Treasury Laws Amendment (Making Sure Multinationals Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

No. , 2018

(3) The Board must exercise its powers, and perform its functions and

duties, under this Part (except section 30D and this Division) in

accordance with the determination.

Note:

Section 30D is about the Board reviewing a reviewable decision.

(4) The determination has no effect to the extent of any inconsistency

with this Act, the regulations or the decision-making principles.

Note:

The Board must revoke or amend the determination to remove any

inconsistency: see section 31E.

31E When Board must amend or revoke a determination

(1) This section applies to a determination made under section 31D if:

(a) as a result of reviewing under section 30D a reviewable

decision that was made in accordance with the determination

because of section 31D, the Board is satisfied that the

determination is incorrect; or

(b) the determination is inconsistent with:

(i) a decision of a court; or

(ii) a decision of the Administrative Appeals Tribunal on

review of an internal review decision relating to a

reviewable decision that was made in accordance with

the determination because of section 31D; or

(iii) this Act, the regulations or the decision-making

principles.

(2) The Board must, by notifiable instrument, revoke the determination

or amend it so it is no longer incorrect or inconsistent.

(3) This section does not limit the application of subsection 33(3) of

the Acts Interpretation Act 1901 in relation to the power to make a

determination under section 31D of this Act.

Note:

Subsection 33(3) of the Acts Interpretation Act 1901 provides that a

power to make an instrument includes the power to revoke or vary the

instrument.

17 Application

The amendments made by this Part apply in relation to the exercise of

powers, and the performance of functions and duties, by the Board after

the commencement of this Part.

Schedule 3 Improving the administration of the R&D Tax Incentive

Part 4 Extensions of time

Treasury Laws Amendment (Making Sure Multinationals Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

No. , 2018

Part 4--Extensions of time

Industry Research and Development Decision-making

Principles 2011

20 At the end of section 3.2

Add:

(3) However, the total of further periods allowed under this Part for a

particular thing to be given by an interested person must not

exceed 3 months. This subsection has effect despite section 3.4.

(4) Subsection (3) does not apply if the thing to be given deals with a

matter that corresponds to the subject of a decision that:

(a) relates to the interested person; and

(b) has not been finalised;

but is not the subject of that decision.

Example: Subsection (3) does not apply to an application to register activities of

an R&D entity under section 27A of the Act for an income year if:

(a) the entity has previously applied for registration, or for variation

of the entity's registration, for corresponding activities for an

earlier income year; and

(b) a decision on the previous application either has not been made

or is subject to review under Division 5 of Part III of the Act.

Thin capitalisation Schedule 4

Amendments Part 1

No. , 2018

Treasury Laws Amendment (Making Sure Multinationals Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

Schedule 4--Thin capitalisation

Part 1--Amendments

Income Tax Assessment Act 1936

1 Subsection 262A(2AA)

Omit ", 820-980 or 820-985", substitute "or 820-980".

2 Paragraph 262A(3)(d)

Omit "; and", substitute ".".

3 Paragraph 262A(3)(e)

Repeal the paragraph.

Income Tax Assessment Act 1997

4 Paragraph 820-583(5)(b)

Omit ";", substitute ".".

5 Subsection 820-583(5)

Omit all the words after paragraph (b).

6 Paragraph 820-583(6)(c)

Omit ";", substitute ".".

7 Subsection 820-583(6)

Omit all the words after paragraph (c).

8 Paragraph 820-680(1)(a)

Omit "(including revaluing its assets for the purposes of that

calculation)".

9 Subsection 820-680(1) (note)

Omit ", 820-682, 820-683 and 820-684", substitute "and 820-682".

Schedule 4 Thin capitalisation

Part 1 Amendments

Treasury Laws Amendment (Making Sure Multinationals Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

No. , 2018

10 Subsection 820-680(1A) (note)

Omit "sections 820-682 and 820-683", substitute "section 820-682".

11 Subsections 820-680(2) to (2E)

Repeal the subsections, substitute:

(2) If:

(a) an entity is required by an Australian law to prepare financial

statements for a period in accordance with the

accounting

standards; and

(b) a matter mentioned in subsection (1) is determined or

calculated in accordance with the accounting standards for

the purposes of the financial statements in relation to the

period;

then, for the purposes of this Division, the matter is to be

determined or calculated in relation to the period, or any part of the

period, in the same way as it is determined or calculated in the

financial statements.

(3) If:

(a) a period in relation to which a matter mentioned in

subsection (1) is determined or calculated (the current

period) is not the same as a period in relation to which

paragraphs (2)(a) and (b) are satisfied; and

(b) the current period overlaps with one or more periods in

relation to which paragraphs (2)(a) and (b) are satisfied;

then, for the purposes of this Division, the matter is to be

determined or calculated in relation to the current period in the

same way as it is determined or calculated in the financial

statements for the most recent of the overlapping periods.

12 Subsections 820-682(1) and (2)

Omit "subsections 820-680(1) and (1A)", substitute

"subsections 820-680(1), (1A) and (2)".

13 Sections 820-683 and 820-684

Repeal the sections.

Schedule 4 Thin capitalisation

Part 2 Application and transitional provisions

Treasury Laws Amendment (Making Sure Multinationals Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

No. , 2018

Part 2--Application and transitional provisions

17 Revaluation of assets

(1)

The amendments made by items 1 to 3 and items 8 to 16 of this

Schedule apply in relation to any of the following carried out for the

purposes of Division 820 of the Income Tax Assessment Act 1997 after

7.30 pm, by legal time in the Australian Capital Territory, on 8 May

2018 (the transition time):

(a) a determination that an asset or liability is an asset or liability

of an entity (including a determination that the entity has an

asset or liability at a particular time);

(b) a calculation of:

(i) the value of an entity's assets; or

(ii) the value of an entity's liabilities (including its

debt

capital); or

(iii) the value of an entity's

equity capital.

(2)

If any of the matters mentioned in subitem (1) have been determined or

calculated before the transition time:

(a) only the most recent of those determinations or calculations

that comply with Division 820 of the Income Tax Assessment

Act 1997, as in force at the time the determination or

calculation was made, may be used by the entity for the

purposes of that Division on or after the transition time; and

(b) those determinations or calculations may only be used by the

entity for the purposes of Division 820 of that Act for income

years beginning before 1 July 2019.

18 Classification of head company

The amendments made by items 4 to 7 of this Schedule apply in relation

to income years beginning on or after 1 July 2019.

Online hotel bookings Schedule 5

No. , 2018

Treasury Laws Amendment (Making Sure Multinationals Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

Schedule 5--Online hotel bookings

A New Tax System (Goods and Services Tax) Act 1999

1 Paragraph 83-5(2)(c)

Omit "or (c)" (wherever occurring).

2 Subsection 151-5(2)

Omit "or (c)" (wherever occurring).

3 Paragraphs 188-15(3)(c) and 188-20(3)(c)

Repeal the paragraphs.

4 Application

The amendments made by this Schedule apply in relation to a supply:

(a) for which consideration is first received on or after 1 July

2019; or

(b) if, before any consideration is received for the supply, an

invoice is issued relation to the supply--for which an invoice

is issued on or after 1 July 2019.

Schedule 6 Non-taxable re-importations of refurbished luxury cars

Treasury Laws Amendment (Making Sure Multinationals Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

No. , 2018

Schedule 6--Non-taxable re-importations of

refurbished luxury cars

A New Tax System (Luxury Car Tax) Act 1999

1 After subsection 7-20(1)

Insert:

(1A) An

importation of a

car is a non-taxable re-importation if:

(a) the car was exported from the indirect tax zone and is

returned to the indirect tax zone; and

(b) the car has been subject to any treatment, industrial

processing, repair, renovation, alteration or any other process

since its export; and

beginning immediately before the car was exported and

ending at the time it is returned to the indirect tax zone.

2 Application

The amendment made by this Schedule applies in relation to

importations occurring on or after 1 January 2019.

Significant global entities Schedule 7

No. , 2018

Treasury Laws Amendment (Making Sure Multinationals Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

Schedule 7--Significant global entities

Income Tax Assessment Act 1997

1 Subdivision 815-E (heading)

Repeal the heading, substitute:

Subdivision 815-E--Reporting obligations for country by

country reporting entities

2 Section 815-350

Omit "Significant global entities", substitute "Country by country

reporting entities".

3 Paragraph 815-355(1)(a)

Omit "

significant global entity", substitute "

country by country

reporting entity".

4 Subparagraph 815-355(3)(a)(ii)

Repeal the subparagraph, substitute:

(ii) if you were, or any other entity was, a

country by

country reporting entity during the preceding year

because of your membership of a group of entities

(including a

country by country reporting group)--the

other members of that group;

5 At the end of Subdivision 815-E-H

Add:

815-370 Meaning of country by country reporting entity, country by

country reporting group and country by country parent

entity

(1) An entity is a country by country reporting entity if the entity is

not an individual and any of the following conditions are satisfied:

Schedule 7 Significant global entities

Treasury Laws Amendment (Making Sure Multinationals Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

No. , 2018

(a) the entity is controlled by an entity that is a country by

country reporting entity because of another operation of this

subsection;

(b) the entity:

(i) is a

country by country parent entity; and

(ii) would be a

significant global entity, assuming that

references in Subdivision 960-U (other than

section 960-575) to

notional listed company group

were instead references to

country by country reporting

group.

(2) A group of entities is a country by country reporting group if, on

the assumption that paragraph 960-575(4)(a) were disregarded, the

group would be a

notional listed company group.

Note:

The effect of that assumption is that exceptions in accounting or other

principles to requirements to consolidate for accounting purposes are

taken into account in working out the membership of the country by

country reporting group. Where such exceptions apply, a country by

country reporting group may have fewer members than the equivalent

notional listed company group.

(3) Each entity in that group is a member of the

country by country

reporting group.

(4) An entity is a country by country parent entity if:

(a) it is not a

member of a

country by country reporting group;

(b) where it is a member of a country by country reporting

group:

(i) it is a

global parent entity; or

(ii) it would be a global parent entity if all entities that are

not members of that group were disregarded.

6 Paragraph 960-555(2)(a)

Repeal the paragraph, substitute:

(a) any of the following requirements are satisfied:

(i) the entity is a

member of a group of entities that are

consolidated for accounting purposes as a single group;

(ii) the entity is a member of a

notional listed company

group; and

Significant global entities Schedule 7

No. , 2018

Treasury Laws Amendment (Making Sure Multinationals Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

7 Section 960-565

Before "The", insert "(1)".

8 After paragraph 960-565(a)

Insert:

(aa) if the entity is a member of a

notional listed company

group--the total annual income of all the members of the

group (worked out on the assumption that all members of the

group were consolidated for accounting purposes as a single

group); or

9 At the end of section 960-565

Add:

(2) Subsection (3) applies if:

(a) there are no

global financial statements for the

global

parent entity for the period; or

(b) there are no global financial statements for the global parent

entity for the period that show the total annual income

mentioned in subsection (1).

(3) Despite subsection (1), the annual global income of the

global

parent entity for the period is the amount that would be, on the

assumption that such statements had been prepared, the total

annual income mentioned in subsection (1) shown in those

statements.

10 At the end of Subdivision 960-U

Add:

960-575 Meaning of notional listed company group

(1) A notional listed company group is a group of entities that would

be required to be consolidated for accounting purposes as a single

group, on the assumption that an entity (the test entity) were a

listed company (within the meaning of section 26BC of the Income

Tax Assessment Act 1936).

(2) Each entity in that group is a member of the

notional listed

company group.

Schedule 7 Significant global entities

Treasury Laws Amendment (Making Sure Multinationals Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

No. , 2018

(3) For the purposes of subsection (1), determine whether a group of

entities would be required to be consolidated for accounting

purposes as a single group according to:

(a)

accounting principles; or

(b) if accounting principles do not apply in relation to the test

entity--commercially accepted principles related to

accounting.

(4) In applying the

accounting principles or commercially accepted

principles referred to in subsection (3):

(a) disregard any exceptions in those principles to requirements

in those principles for entities to be consolidated as a single

group; and

(b) without limiting paragraph (a), disregard any rule in those

principles providing that one or more entities (the excepted

entities) are not required to be consolidated as a single group

with one or more other entities because the effect of such

consolidation would be immaterial as a result of:

(i) the size of the excepted entities; or

(ii) any other matter.

11 Subsection 995-1(1)

Insert:

country by country parent entity has the meaning given by

section 815-370.

country by country reporting entity has the meaning given by

section 815-370.

country by country reporting group has the meaning given by

section 815-370.

12 Subsection 995-1(1) (after paragraph (bb) of the definition

of member)

Insert:

(bc) in relation to a

notional listed company group--has the

meaning given by section 960-575; and

(bd) in relation to a

country by country reporting group--has the

meaning given by section 815-370; and

Significant global entities Schedule 7

No. , 2018

Treasury Laws Amendment (Making Sure Multinationals Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

13 Subsection 995-1(1)

Insert:

notional listed company group has the meaning given by

section 960-575.

Taxation Administration Act 1953

14 Subsection 2(1)

Insert:

country by country reporting entity has the meaning given by

section 815-370 of the Income Tax Assessment Act 1997.

significant global entity has the meaning given by section 960-555

of the Income Tax Assessment Act 1997.

15 Section 3CA (heading)

Repeal the heading, substitute:

3CA Reporting of information by corporate country by country

reporting entities

16 Paragraph 3CA(1)(a)

Omit "significant global entity", substitute "country by country

reporting entity".

17 Application

(1)

The amendments made by this Schedule apply in relation to income

years or other periods starting on or after 1 July 2018.

(2)

Subitem (3) applies if:

(a) an entity is a significant global entity for an income year or

other period that starts:

(i) on or after 1 July 2018; and

(ii) before 1 July 2019; and

Schedule 7 Significant global entities

Treasury Laws Amendment (Making Sure Multinationals Pay Their

Fair Share of Tax in Australia and Other Measures) Bill 2018

No. , 2018

(b) disregarding the amendments made by this Schedule, the

entity would not be a significant global entity for that income

year or other period.

(3)

For the purposes of Divisions 284 and 286 in Schedule 1 to the

Taxation Administration Act 1953, treat the entity as not being a

significant global entity for that income year or other period.

Commonwealth of Australia Bills

TREASURY LAWS AMENDMENT (MAKING SURE MULTINATIONALS PAY THEIR FAIR SHARE OF TAX IN AUSTRALIA AND OTHER MEASURES) BILL 2018