Home | Databases | WorldLII | Search | Feedback Papua New Guinea Sessional Legislation

  Download original PDF

Income Tax (2015 Budget) (Amendment) Act 2014

PAPUA NEW GUINEA

Income Tax (2015 Budget) (Amendment) Act 2014.

No. 45 of 2014
Certified on: 22 Dec 2014

ARRANGEMENT OF SECTIONS.

1. Interpretation (Amendment of Section 4).
2. Officers to observe secrecy (Amendment of Section 9).
3. Concessional treatment of approved redundancy payments (Amendment of Section 46CA).
4. Restriction on the interest deduction (Amendment of Section 68AF).
5. 150% Deduction for gifts and sponsorships in respect of the 2015 Pacific Games (Repeal and replacement of Section 69K).

"69K. 150% DEDUCTION FOR SPONSORSHIP AND GIFTS IN RESPECT OF THE 2015 PACIFIC GAMES.

6. Landowner resource trusts to be taxed as resource company (Amendment of Section 139).
7. New Division III.6C.

"Division 6C - Collection of Tax in Respect of Prescribed Royalty Payments.
"142A. OBJECT."
"142B. INTERPRETATION."
"142C. LIABILITY TO PRESCRIBED ROYALTY (WITHHOLDING) TAX."
"142D. PAYMENT OF PRESCRIBED ROYALTY (WITHHOLDING) TAX.

8. Interpretation (Amendment of Section 276).
9. Duties of paying authority (Amendment of Section 280).
10. Director's liability for company's non-remittance of salary or wages tax to the Commissioner (Amendment of Section 299AD).
11. Remission of penalty where Section 299AD, is complied with before the notice period ends (Amendment of Section 299AG).
12. Non-remission in certain cases (New Section 299AI).
13. Order to comply with court order requirement (Amendment of Section 315).
14. Interpretation (Amendment of Section 354A).
15. Application for issue of certificate (Amendment of Section 354B).

An Act

entitled

Income Tax (2015 Budget) (Amendment) Act 2014,

Being an Act to amend the Income Tax Act 1959,

MADE by the National Parliament and deemed to have come into operation -

(a) in respect of Sections 14 and 15 - on 20 April 2000; and
(b) in respect of Sections 10, 11 and 12 - on 1 January 2011; and
(c) in respect of Section 3 - on 1 January 2012; and
(d) in respect of Sections 1 and 4 - on 1 January 2013; and
(e) in respect of the remainder of the Act - on 1 January 2015.

1. INTERPRETATION (AMENDMENT OF SECTION 4).

Section 4 of the Principal Act is amended by repealing the definitions of "debt", "equity" and "interest".

2. OFFICERS TO OBSERVE SECRECY (AMENDMENT OF SECTION 9).

Section 9 of the Principal Act is amended -

(a) in Subsection (4) by -

• (i) repealing the word "and" last appearing in Paragraph (j); and
• (ii) repealing the full stop in Paragraph (k) and replacing it with the semi colon; and
• (iii) inserting after Paragraph (k) the following new paragraphs:
  • "(l) an officer of the relevant Division of the Department of Treasury approved by the Commissioner General to receive such information for the purposes of allowing that officer whose duty is to estimate or analyse taxation revenues or cost policy proposals and information that does not include the name, contact details or taxpayer identification number of any taxpayer; or
  • (m) an officer of the relevant Division of the Department of Treasury to receive such information for the purposes of enabling the Department of Treasury to report on the tax incentives available to particular entities or projects; or
  • (n) an officer of the National Statistics Office approved by the Commissioner General to receive such information for the purpose of enabling the National Statistics Office to perform its functions or exercise its powers under the Statistical Services Act 1980 and information that does not include the name, contact details or tax identification number of any entity."; and

(b) by inserting after Subsection (6) the following new Subsection:

• "(6A) Section (6) does not apply to the extent that the information provided is to the Minister responsible for Treasury for the purposes of considering or reporting on the provision of a tax incentive to a particular taxpayer or project.".

3. CONCESSIONAL TREATMENT OF APPROVED REDUNDANCY PAYMENTS (AMENDMENT OF SECTION 46CA).

Section 46CA of the Principal Act is amended in Subsection (4) by repealing the word "Subsection" and replacing it with "Section".

4. RESTRICTION ON THE INTEREST DEDUCTION (AMENDMENT OF SECTION 68AF).

Section 68AF of the Principal Act is amended by inserting the following new Subsection:

"(1A) In this section -

• "debt" means indebtedness of the taxpayer, as it would have been shown in a balance sheet prepared in accordance with the standards published by the International Accounting Standards Committee drawn up as at the date at which the relevant calculation is being made, including -
  • (a) any indebtedness for borrowed money or arising out of any credit facility or financial accommodation for the deferred purchase price of property or services (other than trade accounts payable arising in the ordinary course of business and on terms requiring payment in full within no more than 90 days); and
  • (b) all guarantees or other obligations which are the economic equivalent of a guarantee, including any obligation to purchase, to provide funds for payment, to supply funds to or otherwise to invest in any other entity in respect of the indebtedness of any other entity for borrowed money or arising out of any credit facility or financial accommodation for the deferred purchase price or property or services (other than trade accounts payable arising in the ordinary course of business and on terms requiring payment in full within no more than 90 days); and
  • (c) all indebtedness or other obligations of any other entity for borrowed money or arising out of any credit facility or financial accommodation for the deferred purchase price of property or services (other than trade accounts payable arising in the ordinary course of business and on terms requiring payment in full within no more than 90 days) secured by (or for which the holder of such indebtedness has an existing right, contingent or otherwise, to be secured by) any lien upon property (including, without limitation, accounts receivable and contract rights) owned by the taxpayer or one of its subsidiaries, whether or not the taxpayer or any of its subsidiaries has assumed or become liable for the payment of such indebtedness of obligations; and
  • (d) all obligations of the taxpayer and its subsidiaries in respect of Finance Leases (being the aggregate of the present value, determined in accordance with generally accepted financial practice, of the rental that will fall due thereunder and the specified residual value (if any));
• "equity" means shareholders' funds which shall include, without limiting the generality of the term, paid up capital and accumulated income as they would have been shown if a balance sheet, prepared in accordance with the standards published by the International Accounting Standards Committee, had been drawn up at the date at which the relevant calculation is being made;".

5. 150% DEDUCTION FOR GIFTS SPONSORSHIP AND IN RESPECT OF THE 2015 PACIFIC GAMES (REPEAL AND REPLACEMENT OF SECTION 69K).

Section 69K of the Principal Act is repealed and replaced with the following:

"69K. 150% DEDUCTION FOR SPONSORSHIP AND GIFTS IN RESPECT OF THE 2015 PACIFIC GAMES.

• (1) For the purposes of this Act, any reference to the PNG Sports Federation and Olympic Committee Incorporation in this Act or any other law means the PNG Olympic Committee Incorporation.
• (2) An amount by way of gift (the value of which is not less than K500,000.00) of money or property (other than money) purchased by a taxpayer in the 12 months immediately preceding the making of the gift by the taxpayer in a year of income, in respect of the 2015 Pacific Games to -
  • (a) the PNG Sports Federation and Olympic Committee Incorporation; or
  • (b) the Pacific Games (2015) Authority,
• shall be an eligible amount.
• (3) An amount by way of sponsorship (the value of which is not less than K500,000.00) of money or property (other than money), made by the taxpayer in a year of income, in respect of the 2015 Pacific Games to the PNG 2015 Pacific Games Limited, shall be an eligible amount.
• (4) An amount equal to 150% of the eligible amount shall be an allowable deduction under this section.
• (5) Where an eligible amount or a part of the eligible amount allowed under this section is recouped or recoupable, an amount shall be included in the assessable income to the extent that a deduction has been allowed.
• (6) Where a 150% deduction is allowed under this section, the amount deductible shall be allowable only to the extent that the tax savings resulting from the allowance of the deduction does not exceed 45% of the eligible amount.
• (7) This section applies to gifts and sponsorships made up to 31 December, 2015.
• (8) The Commissioner General shall use every endeavor to value fairly, based on best market prices, the sponsorship money or property provided under Subsection (3), and such evaluation shall be made in consultation with the PNG 2015 Pacific Games Limited.".

6. LANDOWNER RESOURCE TRUSTS TO BE TAXED AS RESOURCE COMPANY (AMENDMENT OF SECTION 139).

Section 139 of the Principal Act is amended by repealing Subsection (5) and replacing it with the following new Subsection:

"(5) Notwithstanding any other provision of this Act, where a landowner resource trust derives royalties from a related landowner resources project which have already been subject to prescribed royalty withholding tax under Division III.6C, the royalty shall not be included in the assessable income of the landowner resources trust".

7. NEW DIVISION III.6C.

Part III of the Principal Act is amended by inserting after Division 6B, the following new Division:

"Division 6C. - Collection of Tax in Respect of Prescribed Royalty Payments.
142A. OBJECT
The object of this division is to impose and collect prescribed royalty withholding tax as a final tax on royalty payments made to customary landowners for certain activities carried out on their land.
142B. INTERPRETATION.
In this Division unless the contrary intention appears -

• "customary landowner" means the traditional landowners of customary land where activities giving rise to a prescribed royalty payment, are undertaken;
• "prescribed royalty payment" means a payment made to or on behalf of a customary landowner that -
  • (a) arises out of any of the following activities:
    • (i) the exploration, taking, extraction, processing, transport or conveyance of any form of hydrocarbon and all activities incidental or ancillary to such exploration, taking, extraction, processing, transport or conveyance; or
    • (ii) the exploration, taking, extraction, processing, transport or conveyance of any mineral and all activities incidental or ancillary to such exploration, taking, extraction, processing, transport or conveyance; or
    • (iii) activities of the kinds listed in the definition of "fishing operations" under Section 4 of the Income Tax Act 1959 or listed in the definition of "fishing" under Section 2 of the Fisheries Management Act 1998 and all activities incidental or ancillary to such activities; or
    • (iv) activities of the kinds listed in the definition of "timber operations" under Section 166 of the Income Tax Act 1959 and all activities incidental or ancillary to such activities; and
  • (b) is made by reason of the activity being performed on or in the vicinity of customary land or in waters adjacent to customary land.

142C. LIABILITY TO PRESCRIBED ROYALTY (WITHHOLDING) TAX.
Where a prescribed royalty payment is paid or credited by any person to a customary landowner, the person making the payment or crediting such payment is liable to withhold and pay tax upon that income at the rate of 5%.
142D. PAYMENT OF PRESCRIBED ROYALTY (WITHHOLDING) TAX.
(1) Prescribed Royalty (Withholding) Tax is due and payable by the person liable to pay the tax within 21 days after the end of the month in which the prescribed royalty income to which the tax relates was credited or paid (whichever occurs earlier), or such further time as the Commissioner General, in special circumstances, allows.
(2) Prescribed Royalty (Withholding) Tax, when it becomes due and payable, is a debt due to the Government and payable to the Commissioner General.
(3) Any unpaid Prescribed Royalty (Withholding) Tax payable under this Division may be sued for and recovered in a court of competent jurisdiction by the Commissioner General suing in his official name.
(4) The ascertainment of the amount of any Prescribed Royalty (Withholding) Tax, shall not be deemed to be an assessment within the meaning of any of the provisions of this Act.
(5) The Commissioner General may serve on a person, by post or otherwise, a notice in which is specified -

• (a) the amount of any Prescribed Royalty (Withholding) Tax that the Commissioner General has ascertained is payable by that person; and
• (b) the date on which tax became due and payable.

(6) The production of a notice served under Subsection (5) or of a document under the hand of the Commissioner General purporting to be a copy of such a notice, is evidence that the amount of Prescribed Royalty (Withholding) Tax specified in the notice or document became due and payable by the person on whom the notice was served on the date so specified.
(7) Where tax as provided under Subsection (1) has been deducted and paid -

• (a) the prescribed royalty income shall not be included in assessable income; and
• (b) in computing assessable income of the taxpayer no deduction shall be allowed in respect of any expenditure for or in connection with the earning of prescribed royalty income.".

8. INTERPRETATION (AMENDMENT OF SECTION 276).

Section 276 of the Principal Act is amended in Subsection (1) by -

(a) by repealing the definition "eligible payment" and replacing it with the following:

• "eligible payment" means a business income payment."; and

(b) by repealing the definition "prescribed royalty payment".

9. DUTIES OF PAYING AUTHORITY (AMENDMENT OF SECTION 280).

Section 280 of the Principal Act is amended by repealing Subsection (9) and replacing it with the following new Subsection:

"(9) In Subsection (1), "required amount" means 10% of the gross amount of the payment."

10. DIRECTOR'S LIABILITY FOR COMPANY'S NON-REMITTANCE OF SALARY OR WAGES TAX TO THE COMMISSIONER (AMENDMENT OF SECTION 299AD).

Section 299AD of the Principal Act is amended in Subsection (3) by repealing the word "before" and replacing it with the word "after".

11. REMISSION OF PENALTY WHERE SECTION 299AD, IS COMPLIED WITH BEFORE THE NOTICE PERIOD ENDS (AMENDMENT OF SECTION 299AG).

Section 299AG of the Principal Act is amended by repealing and replacing it with the following new section

"299AG. Subject to Section 299AI, where a penalty is payable by a director under Section 299AD and one or all of the acts referred to in Section 299AD(1)(a), (b) or (c) is complied with -

• (a) at a time when the Commissioner General has not yet given the person a notice under Section 299AE; or
• (b) within 30 days after the Commissioner General gives the person such a notice,

penalty will be remitted by the Commissioner General.".

12. NON-REMISSION IN CERTAIN CASES (NEW SECTION 299AI).

The Principal Act is amended by inserting the following a new section after Section 299AH:

"299AI. Where Section 299AD(1)(c) is complied with, a penalty payable by a director under Section 299AD shall not be remitted under Section 299AG where it is established that the company did not comply with its reporting obligations under Section 299G(4)(a)(i), (ii) and (iii) within 90 days of the due date for complying.".

13. ORDER TO COMPLY WITH COURT ORDER REQUIREMENT (AMENDMENT OF SECTION 315).

Section 315 of the Principal Act is amended in Subsection (1) by repealing the penalty provision and replacing it with the following:

"Penalty: (a) In the case of a natural person, a fine of not less than K1,000.00 and not exceeding K10,000.00, or a term of imprisonment not exceeding 12 months, plus K50.00 for each day during which the failure, refusal, or neglect continues; and
(b) In the case of a company, a fine of not less than K5,000.00 and not exceeding K50,000.00, or a term of imprisonment not exceeding 12 months to be served by the person who was the public officer of the company at the time of non-compliance with a court order, plus K50.00 for each day during which the failure, refusal, or neglect continues.".

14. INTERPRETATION (AMENDMENT OF SECTION 354A).

Section 354A of the Principal Act is amended by repealing the definition of "Central Bank" and "Bank" and replacing it with the following definition:

"Central Bank" or "Bank" means the Bank of Papua New Guinea;".

15. APPLICATION FOR ISSUE OF CERTIFICATE (AMENDMENT OF SECTION 354B).

Section 354B of the Principal Act is amended -

(a) in Paragraph (a) by repealing the figure "61" and replacing it with "81"; and
(b) in Paragraph (b) -

• (i) by repealing the figures and letters "64A(1)(a)" and replacing them with "81(1)(a)"; and
• (ii) by repealing the figures and letters "61A(1)(b)" and replacing them with "81(1)(b)".
  

I hereby certify that the above is a fair print of the Income Tax (2015 Budget) (Amendment) Act 2014 which has been made by the National Parliament.

Acting Clerk of the National Parliament
22 Dec 2014

I hereby certify that the Income Tax (2015 Budget) (Amendment) Act 2014 was made by the National Parliament on 25 November, 2014.

Acting Speaker of the National Parliament
22 Dec 2014