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CONTENTS
Passage History
Purpose
Background
Main Provisions
Contact Officer and Copyright Details
New Business Tax System (Venture Capital Deficit Tax) Bill
1999
Date Introduced: 9 December 1999
House: House of
Representatives
Portfolio: Treasury
Commencement: At the same time as Schedule 3 of the New
Business Tax System (Capital Gains Tax) Act 1999 commenced
(ie10 December 1999)
To impose
formally a tax on a deficit in a Pooled Development Fund's venture
capital franking sub-account and to provide for the calculation of
the amount of tax payable.
The New Business Tax System (Miscellaneous) Bill
1999 extends to resident superannuation funds and similar bodies
the exemption from tax currently available for similar non-resident
entities for unfranked dividends paid by Pooled Development Funds.
(PDF). To achieve this, a PDF may establish a venture capital
franking sub-account in its class C franking account and credit
amounts to this account (principally through the payment of certain
capital gains tax). The account will also be subject to debits,
principally through the payment of dividends. If, at the end of a
year the account is in deficit, the tax imposed by this Bill is
payable.
For further information on this area, refer to
the Digest for the New Business Tax System (Miscellaneous) Bill
1999 (No.118 of 1999-2000).
Subclause 4(1) will impose
formally the tax on a PDFs venture capital sub-account in deficit
at the end of a franking year.
If a refund of tax imposed by this Bill is
received within 6 months of the end of a franking year, then for
the purposes of calculating if there is a deficit, the refund will
be taken to have been received on the last day of the franking year
(subclause 4(2)). (This will mean that there will
have to be a re-calculation of whether there is a deficit at the
end of that year and may result in further tax being payable as a
result of receiving the refund.)
The amount of tax payable is to be calculated in
accordance with the formulas contained in clause
5. If the deficit is 10% or less of the total venture
capital credits arising during the franking year, the amount of tax
payable will be the amount of the deficit multiplied by: the
company tax rate divided by 1 minus the company tax rate (the
company tax rate will be 34% for 2000-01 and 30% for later years).
If the deficit is more than 10%, the amount of tax payable will be
increased by 30%.
Chris Field
11 February 2000
Bills Digest Service
Information and Research Services
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ISSN 1328-8091
© Commonwealth of Australia 2000
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Published by the Department of the Parliamentary Library,
2000.
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