Bills Digest No. 83 2003-04
Taxation Laws (Clearing and Settlement Facility Support)
Bill 2003
WARNING:
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
consulted to determine the subsequent official status of the
Bill.
CONTENTS
Passage History
Purpose
Background
Main Provisions
Concluding Comments
Endnotes
Contact Officer & Copyright Details
Passage History
Taxation Laws (Clearing and
Settlement Facility Support) Bill 2003
Date Introduced:
4 December 2003
House: House of Representatives
Portfolio: Treasury
Commencement:
Royal
Assent
The purpose of
the Taxation Laws (Clearing and Settlement Facility Support) Bill
2003 (the Bill) is to ensure that there are no income tax and goods
and services tax (GST) consequences arising from a payment out of
the National Guarantee Fund (the NGF) under section 891A of the
Corporations Act 2001 (the Corporations Act).
The NGF was
established in 1987 following the formation of the Australian Stock
Exchange (ASX) from the separate capital city
exchanges.(1) The NGF replaced the fidelity funds each
stock exchange was required to establish and maintain under the
Securities Industry Act 1980.(2) The NGF is
administered by the Securities Exchange Guarantee Corporation
(SEGC) in accordance with the compensation provisions of Division 4
of Part 7.5 of the Corporations Act.
The NGF provides protection for investors
by:
-
providing compensation to investors in circumstances set out in
Division 4 of Part 7.5 of the Corporations Act and Regulations,
and
-
providing a clearing and settlement support by providing the
financial backing for ASX related clearing
houses.(3)
Section 891A of the Corporations Act provides
that if the Minister(4) is satisfied that if a body
corporate specified in the Corporations Regulations 2001 has made
adequate arrangements covering all or part of the clearing and
settlement system support provided by Division 4 of Part 7.5 of the
Corporations Act the Minister may instruct the SEGC to pay a
specified amount to that body corporate out of the NGF if it will
have sufficient assets to meet claims after the payment is
made.(5)
Clause 3 exempts payments
made from the NGF under subsection 891A(1) of the Corporations Act
from a tax liability as a consequence of any income tax law or the
GST that would otherwise apply. Subclause 3(3)
defines income tax law as having the same meaning as in the
Income Tax Assessment Act 1997 and GST as having the same
meaning as in the A New Tax System (Goods and Services Tax) Act
1999.
Once the Bill receives Royal Assent the
exemption will apply for any payment made from the NGF after the
day the Bill was introduced into Parliament.(6)
The Bill is
designed so that payments out of the NGF, if under the direction of
the Minister in accordance with section 891A of the Corporations
Act to provide protection for an alternative clearing and
settlement system, will not be subject to any income tax or GST.
However, it does not prevent any income derived from that payment,
e.g. investment income, from being subject to income tax and GST
laws.
-
Prior to 1987 each state capital city had its own exchange.
These were amalgamated to form the Australian Stock Exchange on 1
April 1987.
-
The Securities Industry Act 1980 was repealed by the
Corporations (Repeals, Consequentials and Transitionals) Act
2001 with effect from 15 July 2001 as part of the Government s
reform of the corporations law.
-
Explanatory Memorandum, p. 3.
-
Currently the Parliamentary Secretary to the Treasurer.
-
Explanatory Memorandum, p. 3.
-
The Bill was introduced into the House of Representatives on 4
December 2003.
Graeme Selleck
12 February 2004
Bills Digest Service
Information and Research Services
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ISSN 1328-8091
© Commonwealth of Australia 2004
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Published by the Department of Parliamentary Services, 2004.
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