Inserts for
Tax Laws Amendment (2013 Measures No. 1) Bill 2013: General anti‑avoidance rules

EXPOSURE DRAFT

Commencement information	
Column 1	Column 2	Column 3	
Provision(s)	Commencement	Date/Details	
1.  Schedule #	The day this Act receives the Royal Assent.		
2.  			
3.  			

Schedule #—General anti‑avoidance rules
  
Income Tax Assessment Act 1936
1  Paragraph 45B(8)(k)
Omit “subparagraphs 177D(b)(i) to (viii)”, substitute “subsection 177D(2)”.
2  Before section 177A
Insert:
177AA  Object of this Part
		The object of this Part is to counter schemes (including schemes that are steps within or towards other schemes) that are entered into or carried out with an objectively ascertainable purpose of reducing the liability of a taxpayer to tax or withholding tax.
Note:	The ascertainable purpose must in most cases be the sole or dominant purpose (see sections 177E, 177EA and 177EB for the exceptions).
3  At the end of paragraph 177C(1)(bb)
Add “or”.
4  After paragraph 177C(1)(bb)
Insert:
	(bc)	the taxpayer not being liable to pay withholding tax on an amount where the taxpayer either would have, or might reasonably be expected to have, been liable to pay withholding tax on the amount if the scheme had not been entered into or carried out;
5  At the end of subsection 177C(1)
Add:
	; and (g)	in a case to which paragraph (bc) applies—the amount referred to in that paragraph.
6  Sections 177CA and 177D
Repeal the sections, substitute:
177CB  Assumptions relating to alternative postulates
	(1)	In deciding whether paragraph 177C(1)(a), (b), (ba), (bb) or (bc) is satisfied on the basis of a postulate that is an alternative to the entry into or carrying out of a scheme:
	(a)	assume that each person (whether or not a participant in the scheme) would have acted or refrained from acting, as the case requires, without regard to any person’s liability (or potential liability) to tax or withholding tax in any year of income; and
	(b)	if the scheme achieves, or would achieve, one or more non‑tax effects for the taxpayer—assume that each person (whether or not a participant in the scheme) would have acted or refrained from acting, as the case requires, intending to achieve for the taxpayer:
	(i)	the same non‑tax effects as the scheme achieves, or would achieve, for the taxpayer; and
	(ii)	all the other non‑tax effects that were achieved, or would be achieved, for the taxpayer in connection with the scheme; and
	(c)	if the scheme does not achieve, or would not achieve, any non‑tax effects for the taxpayer—assume that all events or circumstances that actually happened or existed but did not form part of the scheme would still have happened or existed.
	(2)	For the purposes of paragraph (1)(b), have regard to the matters to which regard must be had under subsections 177D(1) and (2) in deciding whether this Part applies to the scheme, so far as those matters relate to the taxpayer.
	(3)	In this section:
non‑tax effect means an effect other than:
	(a)	an effect relating to the taxpayer’s liability to tax (or withholding tax) in any year of income; or
	(b)	an effect that is incidental to achieving an effect, for the taxpayer, covered by paragraph (a).
177D  Schemes to which this Part applies
Scheme for purpose of obtaining a tax benefit
	(1)	This Part applies to a scheme if it would be concluded (having regard to the matters in subsection (2)) that the person, or one of the persons, who entered into or carried out the scheme or any part of the scheme did so for the purpose of:
	(a)	enabling a taxpayer (a relevant taxpayer) to obtain a tax benefit in connection with the scheme; or
	(b)	enabling the relevant taxpayer and another taxpayer (or other taxpayers) each to obtain a tax benefit in connection with the scheme;
whether or not that person who entered into or carried out the scheme, or a part of the scheme, is the relevant taxpayer or is the other taxpayer (or one of the other taxpayers).
Have regard to certain matters
	(2)	For the purpose of subsection (1), have regard to the following matters:
	(a)	the manner in which the scheme was entered into or carried out;
	(b)	the form and substance of the scheme;
	(c)	the time at which the scheme was entered into and the length of the period during which the scheme was carried out;
	(d)	the result in relation to the operation of this Act that, but for this Part, would be achieved by the scheme;
	(e)	any change in the financial position of the relevant taxpayer that has resulted, will result, or may reasonably be expected to result, from the scheme;
	(f)	any change in the financial position of any person who has, or has had, any connection (whether of a business, family or other nature) with the relevant taxpayer, being a change that has resulted, will result or may reasonably be expected to result, from the scheme;
	(g)	any other consequence for the relevant taxpayer, or for any person referred to in paragraph (f), of the scheme having been entered into or carried out;
	(h)	the nature of any connection (whether of a business, family or other nature) between the relevant taxpayer and any person referred to in paragraph (f).
Note:	Section 960‑255 of the Income Tax Assessment Act 1997 may be relevant to determining family relationships for the purposes of paragraphs (f) and (h).
Tax benefit
	(3)	Despite subsection (1), this Part applies to the scheme only if the relevant taxpayer has obtained, or would but for section 177F obtain, a tax benefit in connection with the scheme.
When schemes entered into etc.
	(4)	Despite subsection (1), this Part applies to the scheme only if:
	(a)	the scheme has been or is entered into after 27 May 1981; or
	(b)	the scheme has been or is carried out or commenced to be carried out after that day (and is not a scheme that was entered into on or before that day).
Schemes outside Australia
	(5)	This section applies whether or not the scheme has been or is entered into or carried out in Australia or outside Australia or partly in Australia and partly outside Australia.
7  Paragraphs 177EA(17)(j) and 177EB(10)(f)
Omit “subparagraphs 177D(b)(i) to (viii)”, substitute “subsection 177D(2)”.
8  Subsection 177F(1)
Omit “a tax benefit has been obtained, or would but for this section be obtained, by a taxpayer in connection with a scheme to which this Part applies,”, substitute “this Part applies to a scheme in connection with which a tax benefit has been obtained, or would but for this section be obtained,”.
9  Subsection 177F(2A)
Omit “section 177CA”, substitute “paragraph 177C(1)(bc)”.
Taxation Administration Act 1953
10  Paragraph 18‑40(1)(a) in Schedule 1
Omit “section 177CA”, substitute “paragraph 177C(1)(bc)”.
11  Application
The amendments made by this Schedule apply in relation to all schemes except schemes that were entered into, or that were commenced to be carried out, on or before 15 November 2012.