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[F.A.Q.]
Papua New Guinea Consolidated Legislation |
No. 24 of 1959.
Certified on: / /20 .
INDEPENDENT
STATE OF PAPUA NEW GUINEA.
No. 24 of 1959.
ARRANGEMENT OF SECTIONS.
1. Short title.
[2 - 3. Repealed]
4. Interpretation.
4A. Application to off-shore area.
4B. Cost of certain shares.
4C. Source of royalty income derived by non-resident.
[5. Repealed]
6. Commissioner General of Internal Revenue.
6A. Removal of Commissioner General from office.
6B. Commissioner of Taxation.
7. Delegation.
8. Report by Commissioner General.
9. Officers to observe secrecy.
9A. Communication of information where taxpayer has engaged in transfer pricing manipulation.
10. Officers not to assist in preparation of tax returns, etc.
11. Imposition of income tax.
12. Accounting period.
12A. Accounting periods.
13. Money credited, reinvested, etc., to be income.
14. Income to be expressed in Papua New Guinea currency.
15. Where consideration not in cash.
16. Non-profit companies.
17. Minimum tax.
[18. Repealed]
19. Exemption of certain official salaries.
19A. Exemption of prescribed personnel.
19B. Exemption of Peace Corps personnel.
19C. Exemption of non Papua New Guinea income.
20. Exemption of remuneration paid to non-resident member of Commission of Inquiry.
21. Exemption of income of representatives of clubs, etc.
22. Exemption of income of persons under technical co-operation agreement.
22A. Exemption of institutions.
23. Exemption of the Disciplined Forces Institutional Housing Project.
24. Exemption of public authorities, etc.
25. Exemption of religious institutions, hospitals, etc.
25A. Exemption of charitable bodies.
26. Exemption of trade unions, etc.
27. Exemption of certain non-profit bodies.
28. Exemption of certain funds.
29. Exemption of pension, etc.
30. Alimony exempt in certain cases.
31. Exemption of international trade financial institutions.
[32 - 34. Repealed]
35. Exemption of certain interest income.
35A. Exemption of certain income from fishing operations.
36. Exemption of income derived by non-resident out of Papua New Guinea.
[36A. Repealed]
36B. Exemption of income from sale of shares on Port Moresby Stock Exchange.
37. Exemption of certain pay and allowances of members of Defence Force, etc.
38. Exemption of income of persons assisting in defence of Australia or Papua New Guinea.
39. Exemption of international organizations, etc.
40. Exemption of scholarships, etc.
40AA. Exemption of certain travel benefits.
40A. Exemption of Savings and Loan Societies.
[40B - 41. Repealed]
42. Exemption of certain dividends.
[43. Repealed]
43A. Redemption of premium securities redeemable at a premium.
44. Limitation of exemption.
45. Liability to furnish returns not affected by exemption.
45A. Interpretation.
45B. Exemption related to export sales.
45C. Exemption in respect of restricted period.
45D. Calculation where goods qualify for part period only.
45E. Arrangements to increase exemptions.
45F. Modification of tax information.
45G. Deductions in calculating exemption.
45H. Gaining improper advantages, etc.
45I. Interpretation.
45J. Rural development income.
45K. Gaining improper advantage, etc.
45L. Tax exemption period.
45M. Losses incurred during the tax exemption period.
45N. Interpretation.
45O. Tax exemption period.
45P. Losses incurred during the tax exemption period.
45Q. Gaining improper advantage.
45R. Offence.
46AA. Interpretation.
46AB. Tax exemption and losses.
46AC. Suitable business and accounting records.
46AD. Gaining improper advantage.
46AE. Offence.
46BA. Interpretation.
46BB. Tax exemption period.
46BC. Losses incurred during the exemption period.
46BD. Gaining improper advantage, etc.
Subdivision A – Assessable income generally.
46A. Non-application of subdivision.
46B. Capital amount of allowance, etc, deemed salary or wages.
46C. Income other than salary or wages taxable.
46. Assessable income.
47. Certain items of assessable income.
47A. Assessable income–premium for lease.
47B. Assessable incomes–superannuation fund contributions.
47C. Assessable income–Deduction of payments under lease.
47D. Assessable income–accounting for value added tax.
48. Dividends.
49. Assessable income–annuities.
50. Insurance recoveries on losses of livestock and trees.
Subdivision B – Trading Stock.
51. Trading stock to be taken into account.
52. Value at beginning of year of income.
53. Value of trading stock at end of year of income.
53A. Purchase of trading stock not at arm’s length.
54. Value of livestock at end of year of income.
55. Changes in basis of valuation of livestock.
56. Cost price of natural increase.
57. Disposal of trading stock.
57A. Compensation for death or compulsory destruction of livestock.
58. Disposal of change of ownership or interests.
59. Devolution on death.
Subdivision C – Business Carried on Partly in and Partly out of Papua New Guinea.
60. Sales by manufacturers.
61. Sales by merchants.
62. Determination of profit by Commissioner General.
63. Goods deemed to be sold in Papua New Guinea.
64. Source of profits.
65. Assessable income to include certain profits.
65A. Interpretation.
[65B. Repealed]
65C. Gratuity under new contract.
65CA. Objects.
65CB. Interpretation.
[65CC. Repealed]
65CD. Gratuity under new or existing contracts.
65D. Interpretation.
65E. Income applicable.
65F. Non-application in special circumstances.
65G. Liability to pay tax.
65H. Payment of salary or wages tax.
65I. Assessment of salary or wages tax.
65J. Income upon which salary or wages tax paid not otherwise assessable.
Subdivision A – General.
66. Allowable deductions.
66A. Non-application of this Division.
67. Successive deductions.
68. Losses and outgoings.
68A. Special deductions–solar heating.
[68AA. Repealed]
68AB. Club fees and expenditure relating to leisure facilities.
68AC. Prepaid expenses.
68AD. Management fees.
68AE. Lease payments.
69. Deductions for gifts to political parties.
69A. Deduction for gifts to sporting bodies.
69B. Double deduction for gifts to South Pacific Games (1991) Foundation.
69C. Deductions for gifts to the Foundation for Law, Order and Justice.
69D. Double deduction for gifts to certain World Expositions.
69E. Deduction for gifts to charitable bodies.
69F. Donations by companies for the 3rd Global Conference on National Youth Service.
69G. Donations to the Seventh South Pacific Festival of Arts.
69H. Double deductions for donations to law and order.
69I. Double deduction for gifts to national day celebrations.
69J. Donations to PNG Sports Commission Olympic 2000 Project.
69K. Double deduction for gifts to PNG Sports Federation Inc.
[70. Repealed]
70A. Deduction for education expenses.
71. Loss on property acquired for profit-making.
71A. Certain amounts disregarded in ascertaining taxable income.
72. Repairs.
72A. Double deduction for staff training.
[72B. Repealed]
72C. Double deduction for export market development costs.
73. Depreciation.
74. Basis of depreciation.
75. Calculation of depreciation.
76. Exercise of option.
77. Alteration of method of calculation.
78. Disposal, loss or destruction of depreciated property.
78A. Adjustment of deductions on the sale of a right to occupy real property.
79. Disposal of depreciated property on change of ownership or interest.
80. Notional income where assessable income includes consideration receivable on disposal, loss or destruction of depreciated property.
81. Acquisition of depreciated property.
82. Property used partly for producing assessable income.
83. Definition of depreciated value.
84. Notional cost in certain circumstances.
85. Bad debts.
86. Commission.
87. Payments to relatives.
88. Contributions to fund for benefit of employees of taxpayer.
89. Expenses of borrowing.
90. Expenses of preparing lease.
91. Expenses relating to grant of patents, etc.
92. Losses by embezzlement, etc.
[93. Repealed]
94. Subscriptions to associations.
95. Expenditure on scientific research.
96. Election expenses of candidates in national elections.
97. Certain expenditure on land used for primary production.
97A. Deduction of agricultural development expenditure.
97B. Deduction for the provision of agricultural extension services.
98. Loss in deriving exempt income.
[99. Repealed]
100. Pensions, etc.
101. Losses of previous years.
101A. Losses of previous years incurred in engaging in primary production.
101B. Order in which deductions allowable in respect of losses of previous years are to be taken into account.
101C. Limitations on net exempt income to be taken into account in respect of deductions under Section 101A.
101D. Losses of previous years not to be taken into account unless there is substantial continuity of ownership of shares in company.
101E. Special provisions relating to beneficial ownership of, or rights attached to, shares.
101F. Losses of previous years of subsidiary not to be taken into account unless there is substantial continuity of beneficial ownership of shares in holding company.
101G. Losses of previous years may be taken into account where company carries on same business.
101H. Amendment of assessments.
[102. Repealed]
103. Double deductions.
[Subdivision B – Repealed]
104 - 115A. Repealed]
116 - 122. Repealed]
123. Definitions.
124. Partnerships.
125. Income of partner.
126. Options of partners in respect of livestock.
127. Partner not in receipt and control of share.
128. Interpretation.
129. Incorporation of trust estate.
130. Trustees.
131. Assessable income of beneficiaries.
132. Assessable income to include entitlements to income.
133. Credits.
134. Exercise of discretion by trustee.
135. Non-resident beneficiaries.
136. Assessment of income of deceased persons.
136A. Interpretation.
136B. Unit trust deemed to be a company.
136C. Taxation of unit trust.
137. Declaration of trust as landowner resources trust.
138. Declaration of projects as landowner resources projects.
139. Landowner resources trusts to be taxed as resource company.
140. Landowner resources trusts deriving dividends from landowner resources trust.
141. Derivation of other income by landowner resources trust.
142. Distributions from landowner resources trusts.
[Subdivision A – Repealed]
143. Repealed]
Subdivision B – Payments and Loans to Certain Persons.
144. Interpretation.
144A. Deemed dividends.
144AB. Deemed dividends outside the country.
144B. Repayment of loans.
144C. Loans to associated persons and shareholder companies.
144D. Loans, etc. to persons associated with shareholders.
144E. Nominee shareholders.
144F. Dividend as satisfaction for loan, etc.
145. Payments to shareholders and directors.
145A. Interpretation.
145B. Notice of amalgamation.
145C. Tax consequences specified.
145D. Cancellation of shares held by amalgamating company on amalgamation.
145E. Deduction to amalgamated company for bad debts, expenditure, etc., on qualifying amalgamation.
145F. Amalgamated company to assume unexpired accrual expenditure and income of amalgamating company on qualifying amalgamation.
145G. Transfer of property or obligation.
145H. Transfer of financial arrangement on qualifying amalgamation.
145I. Losses of previous years of amalgamating company on qualifying amalgamation.
145J. Transfer of retained profits to amalgamated company.
145K. Amalgamated company to assume rights and obligations of amalgamating company.
145L. Transfer of infrastructure tax credits.
146. Definitions.
147. Premiums, etc., not assessable income.
148. Deductions.
149. Calculated liabilities.
150. Co-operative companies.
151. Company not co-operative if less than 90% of business with members.
152. Sums received to be taxed.
153. Deductions allowable to co-operative company.
154. Mutual insurance associations.
154A. Interpretation.
154B. Application of Section 154C.
154C. Tax liability of qualifying corporation.
154D. Election by certain corporations.
Subdivision A – Subdivision A.-General Provisions Applicable To Mining, Petroleum And Designated Gas Projects.
155. Interpretation.
155A. Allowable exploration expenditure.
155B. Residual exploration expenditure.
155C. Deduction for residual exploration expenditure.
155D. Allowable capital expenditure.
155E. Deduction for allowable capital expenditure.
155F. Election that this Division does not apply to certain plant.
155G. Deduction or income in respect of disposal or loss of property.
155H. Restriction on interest deduction.
155I. Immediate deduction for certain capital items.
155J. Double deductions.
155K. Transactions not at arms length.
155L. Adjustment of deductions on disposal of right or information.
155M. Limitation on deduction of management fees.
155N. Additional deduction for exploration expenditure incurred outside the resource project.
155O. Joint Venture financial statement.
155P. Resource operations by contractors profit sharing arrangements, etc.
155Q. Change of interests in property.
155R. Taxation arrangements for interest paid by resource projects.
155S. Partnerships.
Subdivision B – Specific Provisions Applicable To Mining.
156. Application.
156A. Project basis of assessment.
156B. Additional allowable capital expenditure.
156C. Additional allowable exploration expenditure.
156D. Additional deduction for exploration expenditure incurred outside the mining project.
156E. Double deduction of exploration expenditure.
156F. Additional provisions for deduction of allowable capital expenditure.
156G. Modification of the Act in relation to Porgera Parties.
Subdivision C – Specific Provisions Applicable To Petroleum.
157. Application.
157A. Project basis of assessment.
157B. Additional provisions, allowable exploration expenditure.
157C. Additional allowable capital expenditure.
157D. Petroleum used in petroleum operations.
157E. Adjustments pursuant to redeterminations.
157F. Effect of conversion of a petroleum project to a designated gas project.
Subdivision D – Specific Provisions Applicable To Designated Gas Projects.
158. Application.
158A. Project basis of assessment.
158B. Conversion of petroleum project to designated gas project.
158C. Additional provisions, allowable exploration expenditure.
158D. Additional allowable capital expenditure.
158E. Operating expenditure.
158F. Related corporations.
158G. Petroleum used in gas operations.
158H. Adjustments pursuant to redeterminations.
158I. Apportionment of income and expenditure.
Subdivision E – Additional Profits Tax.
159. Application.
159A. Interpretation.
159B. Accumulated value of net project receipts.
159C. Liability for additional profits tax.
159D. Related corporations.
159E. Transfer between related corporations.
159F. Consequences of a petroleum project converting to a gas project.
Subdivision F – Mining Levy.
160. Mining Levy.
160A. Payment of mining levy.
160B. Notice of assessment.
160C. Amendment of assessment.
160D. Deduction of levy.
Subdivision G – Tax Credits for Royalty and Development Levy paid.
161. Interpretation.
161A. Tax credit allowable.
166. Definitions.
167. Deduction of expenditure.
167A. Election that deduction not be made.
168. Disposal, destruction or termination of use of property.
169. Acquisition of property.
170. Timber felled upon acquired land or under right.
170A. Elections.
170B. Deductions not allowable under other provisions.
171. Definitions.
172. Application.
173. Annual deductions.
174. Deductions on the disposal or lapse of a unit of industrial property.
175. Amount to be included in assessable income on disposal of a unit of industrial property.
176. Disposal of part of a unit of industrial property.
177. Cost of a unit of industrial property.
178. Residual value.
179. Consideration receivable on disposal.
180. Effective life.
181. Interest by licence in patent, etc.
182. Disposal of unit of industrial property on change of partnership, etc.
183. Use of patent by the State.
184. Damages for infringement.
185. Benefit from overseas rights.
185A. Application of Division.
185B. Interpretation.
185C. Liability to withholding tax.
185D. Payment of Prescribed Product (Withholding) Tax.
186. Liability to Interest (Withholding) Tax.
187. Payment of Interest (Withholding) Tax.
[188 - 189. Repealed]
189AA. Application of Division.
189A. Interpretation.
189B. Liability to dividend (withholding) tax.
189C. Payment of Dividend (withholding) tax.
189D. Certain income not included in assessable income.
189E. Refund of dividend (withholding) tax.
190. Taxable income of shipowner or charterer.
190. Taxable income of shipowner or charterer.
191. Master or agent to make return.
192. Determination by Commissioner General.
193. Assessment of tax.
194. Master liable to pay.
195. Notice of assessment.
196. Clearance of ship.
196A. Definitions.
196B. Source of income.
196C. Liability of foreign contractor.
196D. Taxable income of foreign contractors.
196E. Notice of deemed assessment.
196F. Liability of agent.
196G. Definitions.
196GA. Non-application of this Division.
196H. Liability.
196I. Limitation.
196J. Liability of agents.
196K. Notification of sale.
196L. Deduction by purchaser.
196M. Rebate of tax paid.
196N. Offences.
196O. Notice of assessment.
196P. Interpretation.
196Q. Application.
196R. Liability to management fee (withholding) tax.
196S. Taxable management fee.
196T. Payment of management fee (withholding) tax.
196U. Deductions from management fees.
196V. Payment to Commissioner General.
196W. Liability of person who fails to make deductions, etc.
196X. Recovery of amounts by Commissioner General.
196Y. Interpretation.
196Z. Training Levy.
196ZA. Notice of assessment.
196ZB - 196ZF. Repealed]
[197. Repealed]
197A. Interpretation.
197B. Operation of Division.
197C. International agreements.
197D. Arm’s length consideration deemed to be received or given.
197E. Determination of source of income.
197F. Consequential adjustments to assessable income and allowable deductions.
197G. Modified application of Part III.2.C.
198 - 201. Repealed]
202. Definitions.
203. Income derived by non-resident insurer.
204. Taxable income of non-resident insurer.
205. Liability of agents of insurer.
206. Deduction of premiums.
207. Exporter to furnish information.
208. Rate in special circumstances.
209. Reinsurance with non-residents.
210. Application of Division.
211. Abnormal income.
212. Determination of notional income.
213. Joint authors and inventors.
213A. Interpretation of Division 18A.
213B. Rebate allowable to resident only. .
213C. Non-application of Division.
213D. Entitlement to rebate for dependants.
213E. Limit to rebate entitlement.
213F. Calculation of rebate.
214. Rebate of salary or wages tax.
[214A. Repealed]
214B. Rebate of education expenses.
[215. Repealed]
216. Rebate on dividends.
[217. Repealed]
217A. Liability for additional amount.
218. Maximum amount of rebates.
219. Credits.
219A. Credits in respect of deductions made from dividends.
219B. Credits in respect of deductions of Prescribed Product (Withholding) Tax.
219BB. Credits in respect of deduction of Interest (Withholding) Tax.
219C. Credits in respect of prescribed infrastructure developments.
219D. Credits in respect of bank community service obligations.
[219E. Repealed]
220. Application of credit.
221. Determination of claims for credits.
222. Recovery of overpayment of credits.
223. Annual returns.
224. Further returns, etc.
225. Special returns.
226. Returns deemed to be duly made.
227. Certificate of sources of information.
228. Assessments.
229. Default assessments.
230. Special assessments.
231. Assessments on all persons liable to tax.
232. Amendment of assessments.
233. Where no notice of assessment served.
234. Refund of taxes overpaid.
235. Amended assessment to be an assessment.
236. Notice of assessment.
237. Validity of assessment.
238. Judicial notice of signatures.
239. Evidence.
240. Appointment of Review Tribunal.
241. Illness, suspension or absence of Tribunal.
242. Tribunal may not be sued.
243. Removal or suspension of person constituting Tribunal.
244. Vacation of office.
245. Objections.
246. Decision of Commissioner General.
247. Application for review or appeal.
248. Reference to tribunal.
[249. Repealed]
250. Grounds of objection and burden of proof.
251. Reduced assessments.
252. Review by Tribunal.
253. Powers of Tribunal.
254. Decision of Tribunal.
255. Appeal or reference to National Court.
256. Order of National Court on appeal.
257. Pending appeal not to delay payment of tax.
258. Adjustment of tax after appeal.
258A. Interpretation.
259. When tax payable.
260. Taxpayer leaving Papua New Guinea.
261. Extension of time and payment by instalments.
262. Penalty for unpaid tax.
263. Tax a debt due to the State.
264. Recovery of tax.
264A. Recovery of costs.
265. Issue of tax clearance certificates.
266. Tax clearance certificates to be produced to shipowner, etc.
267. Temporary business.
268. Substituted service.
269. Liquidators, etc.
270. When tax not paid during lifetime.
271. Provision for payment of tax by trustees of deceased person.
272. Commissioner General may collect tax from person owing money to taxpayer.
273. Consolidation assessments.
274. Where no administration.
275. Insolvency and companies being wound up.
275AA. Application.
275A. Definitions.
275B. Liability to pay notional tax.
275C. Amount of notional tax.
275D. Amount of instalment of tax.
275E. When instalment of tax payable.
275F. Estimated income tax.
275G. Notice of alteration of amount of instalment.
275H. Application of payments of notional tax.
275I. Notice of notional tax to be prima facie evidence.
275J. Application.
275K. Definitions.
275L. Liability to pay company provisional tax.
275M. Amount of company provisional tax.
275N. Notice of company provisional tax payable.
275O. Under estimation of company provisional tax.
275P. Application of payments of provisional tax.
275Q. Notice of company provisional tax to be prima facie evidence.
275R. Transitional provisions.
276A. Application.
276. Interpretation.
277. Registration of paying authorities.
278. Cancellation of paying authority registration.
[279. Repealed]
280. Duties of paying authority.
281. Payee to forward income tax deduction certificate, etc.
282. Credits in respect of deductions.
283. Failure to make deductions from eligible payments.
284. Failure to pay amounts deducted to Commissioner General.
285. Paying authority not accounting for deductions.
286. Person discharged from liability.
287. Recovery of amounts by Commissioner General.
288. Moneys received under this Division form part of public revenues, etc.
289. Nil deduction authority.
290. Revocation of certificates.
291. Notification and review of decisions.
292. Offences.
293. Joinder of charges under this Division.
294. Power of Commissioner General to obtain information.
295. Declarations.
296. Special provisions relating to partnerships.
297. Prosecutions.
[298. Repealed]
299A. Non-application and transitional provision.
299B. Object of Division.
299C. Interpretation.
299D. Deduction by employer from salary or wages.
299DA. Calculation of deduction for part of a fortnight.
299E. Variation of deductions.
299F. Certificate of exemption.
299G. Group employers.
299H. Statement of earnings to be forwarded with return.
299I. Powers of Commissioner General in relation to certificates.
299J. Recovery of amounts not deducted.
299K. Employer not accounting for deductions.
299L. Recovery of amounts by Commissioner General.
299M. Payments to and from Public Revenue.
299N. Offences.
299O. Joinder of charges under this Division.
299P. Offences by partners.
299Q. Prosecutions.
299R. Non-application.
300. Interpretation.
301. Liability to provisional tax.
302. Amount of provisional tax.
303. When provisional tax payable.
304. Provisional tax on estimated income.
305. Provisional tax in respect of first year to which this Act applies.
306. Penalty where income underestimated.
307. Reduction of provisional tax.
308. Provisional tax to be credited against tax assessed.
309. Provisional tax not to be notified where income tax assessed.
310. Alteration of notice of provisional tax.
311. Notice of provisional tax to be evidence.
311AA. Non-application and transitional provision.
311AB. Interpretation.
311AC. Liability to provisional tax.
311AD. Amount of provisional tax.
311AE. When provisional tax payable.
311AF. Provisional tax on estimated income.
311AG. Penalty where income underestimated.
311AH. Reduction of provisional tax.
311AI. Provisional tax to be credited against tax assessed.
311AJ. Provisional tax not to be notified where income tax assessed.
311AK. Alteration of notice of provisional tax.
311AL. Notice of provisional tax to be evidence.
311AM. Object.
311AN. Interpretation.
311AO. Taxpayer to estimate income.
311AP. Determination of tax payable.
311AQ. Payment of tax.
311AR. Recovery of amounts by Commissioner General.
311AS. Variation of estimate.
311AT. Increased tax.
311AU. Refunds.
311AV. Unpaid instalments.
311AW. Penalty for late payment.
311AX. Transitional arrangements.
311A. Object of Division 4.
311B. Interpretation.
311C. Deductions from dividends.
311D. Exemptions and variations.
311E. Deductions to be forwarded to the Commissioner General.
311F. Dividends not in money not to be paid until payment made to Commissioner General on account of tax.
311G. Liability of person who fails to make deductions, etc.
311H. Recovery of amounts by Commissioner General.
311I. Credits in respect of deductions made from dividends.
[311IA. Repealed]
311J. Application of credits.
311K. Liability of trustee to pay deductions to Commissioner General.
311L. Persons discharged from liability in respect of deductions.
311M. Payments to and from General Revenue.
311N. Time for prosecutions.
311O. Joinder of charges under this Division.
312A. Object of Division 5.
312B. Interpretation.
312C. Deduction from gross income.
312D. Exemptions and variations.
312E. Deductions to be forwarded to the Commissioner General.
312F. Liability of person who fails to make deductions, etc.
312G. Recovery of amounts by Commissioner General.
312H. Credits in respect of deductions from gross income.
312AA. Object of Division 5A.
312AB. Interpretation.
312AC. Deduction from gross income.
312AD. Exemptions and variations.
312AE. Deductions to be forwarded to the Commissioner General.
312AF. Liability of person failing to make deduction.
312AG. Recovery of amounts by Commissioner General.
312. Taxation prosecution.
313. Failure to furnish returns or information, etc.
314. Refusal to give evidence.
315. Order to comply with requirement.
316. Additional tax in certain cases.
317. False returns or statements.
318. Failure to sign or false certificate.
319. False declarations.
320. Understating income.
321. Fraudulent avoidance of tax.
322. Obstructing officers.
323. Taxation prosecutions.
324. Defendant to have right of trial in National Court.
325. Mode of trial.
326. Appeal.
327. Prosecution in accordance with practice rules.
328. Information, etc., to be valid if in words of Act.
329. No objection for informality.
330. Conviction not to be quashed.
331. Place where offence committed.
332. Protection to witnesses.
333. Averment of prosecutor sufficient.
334. Evidence of authority to institute proceedings.
335. Appearance by Commissioner General.
336. Minimum penalties.
337. Treatment of convicted offenders.
338. Release of offenders.
339. Enforcement of orders for payment.
340. Costs.
341. Penalties not to relieve from tax.
342. Definitions.
343. Registrar of Tax Agents.
344. Registrar not to be sued.
345. Summoning of witnesses, etc.
346. Registration of tax agents.
347. Annual notice by tax agents.
348. Cancellation of registration of tax agents.
349. Unregistered tax agents not to charge fees.
350. Negligence of registered tax agents, etc.
351. Preparation of returns, etc., on behalf of registered tax agent.
352. Advertising, etc., by persons other than registered tax agents.
353. Offences by partnerships.
354. Public officer of company.
354A. Interpretation.
354B. Application for issue of certificate.
354C. Issue of certificates.
354D. Grounds on which issue of certificates may be refused.
354E. Objections.
354F. References to the Review Tribunals and appeals and references to courts.
354G. Commissioner General may obtain information or evidence.
354H. Offences.
354I. Object.
354J. Application.
354K. Interpretation.
354L. Power to issue certificates.
354M. Duty to obtain compliance certificate.
354N. Duties of a paying authority.
354O. Registration paying authorities.
354P. Variation.
354Q. Revocation of certificates.
354R. Cancellation of paying authority registration.
354S. Notification and review of decisions.
354T. Offences.
354U. Joinder of charges under this Division.
354V. Power of the Commissioner General to obtain information.
354W. Declarations.
354X. Taxpayer to keep records.
354Y. Trustee.
354Z. Special provisions relating to partnerships.
354ZA. Prosecutions.
355. Agents and trustees.
356. Person in receipt or control of money for non-resident.
357. Person paying royalty to non-resident.
358. Payment of tax by banker.
359. Recovery of tax paid on behalf of another person.
360. Contribution from joint taxpayers.
361. Contracts or arrangements to evade tax.
362. Covenant by mortgagor to pay tax.
363. Periodical payments in the nature of income.
364. Taxpayer to keep records.
365. Access, etc., to books, etc.
366. Commissioner General may obtain information and evidence.
367. Hardship Relief.
[368. Repealed]
369. Regulations.
INDEPENDENT STATE OF PAPUA NEW GUINEA.
AN ACT
entitled
Being an Act to impose a tax upon incomes and to provide for its assessment and collection.
PART I. – PRELIMINARY.
1. SHORT TITLE.
2 - 3. [REPEALED.]
4. INTERPRETATION.
“accumulated liability” means the State’s liability to the taxpayer arising from the carried interest of the State or the State’s nominee under an agreement between the State and the taxpayer relating to gas operations or petroleum operations carried on by the taxpayer as part of a gas project or a petroleum project, as the case may be;
“adopted child”, in relation to a person means a person adopted by the first-mentioned person–
(a) under the laws of Papua New Guinea relating to the adoption of children; or
(b) under the laws of any other place relating to the adoption of children, if the validity of the adoption would be recognised under the laws of Papua New Guinea;
“agent” includes–
(a) a person who in Papua New Guinea, for or on behalf of any person out of Papua New Guinea, holds or has the control, receipt or disposal of any money belonging to that person; and
(b) a person declared by the Commissioner General to be an agent or the sole agent of a person for any of the purposes of this Act;
“allowable deduction” means a deduction allowable under this Act;
“assessable income” means all the amounts that, under the provisions of this Act, are included in the assessable income;
“assessable income from gas operations”, in relation to a taxpayer means–
(a)[2] assessable income from the sale of petroleum at a price ascertained by reference to the provisions of Section 158 of the Oil and Gas Act 1998;
(b) assessable income derived from the carrying out of gas operations including rents or interest (other than interest exempted under Section 35) derived by the taxpayer in the course of those operations; and
(c) assessable income from royalties, other forms of profit-sharing income and any other income derived by the taxpayer from or in connection with the carrying on of those gas operations by the taxpayer or another person; and
(d)[3] assessable income from the sale of petroleum or gas, at a price ascertained by reference to the provisions of Section 158 of the Oil and Gas Act 1998, deemed to be assessable income from those operations pursuant to Section 157B(7);
but does not include the proceeds of the sale of petroleum which the State has agreed to forego in favour of a taxpayer to meet the State’s accumulated liability (other than for interest) under an agreement between the State and the taxpayer relating to gas operations carried on by the taxpayer;
“assessable income from mining operations”, in relation to a taxpayer, means–
(a) assessable income derived by the taxpayer from the sale or other disposition of minerals obtained from mining operations carried on by him; and
(b) assessable income from rents and interest (other than interest exempted under Section 35) derived by the taxpayer in the course of carrying on those operations; and
(c) assessable income from royalties, other forms of profit-sharing income and any other income derived by the taxpayer from or in connection with the carrying on of those operations by him or by another person;
“assessable income from petroleum operations”, in relation to a taxpayer, means–
(a)[4] assessable income from the sale of petroleum or gas, at a price ascertained by reference to the provisions of Section 158 of the Oil and Gas Act 1998, or in the case of petroleum operations by reference to the fair market value of those products obtained from petroleum operations carried on by him;
(b) assessable income derived from the carrying out of petroleum operations including rents or interest (other than interest exempted under Section 35) derived by the taxpayer in the course of carrying out those operations;
(c) assessable income from royalties, other forms of profit-sharing income and any other income derived by the taxpayer from or in connection with the carrying on of those operations by him or by another person; and
(d)[5] assessable income from the sale of petroleum or gas, at a price ascertained by reference to the provisions of Section 158 of the Oil and Gas Act 1998, deemed to be assessable income from those operations pursuant to Section 157B(7) or 158I;
but does not include the proceeds of sale of petroleum which the State has agreed to forgo in favour of a taxpayer to meet the State’s accumulated liability (other than for interest) under an agreement between the State and the taxpayer relating to petroleum operations carried on by the taxpayer;
“assessment” means the ascertainment of the amount of taxable income and of the tax payable on that income;
[6]“Assistant Commissioner” means an Assistant Commissioner of Taxes appointed under Section 6;
“associate”, in relation to a person (in this definition referred to as the “taxpayer”) means–
(a) where the taxpayer is a natural person, other than a taxpayer in the capacity of a trustee–
(i) a relative of the taxpayer; or
(ii) a partner of the taxpayer or a partnership in which the taxpayer is a partner; or
(iii) if a person who is an associate of the taxpayer by virtue of Subparagraph (ii) is a natural person–the spouse or a child of that person; or
(iv) a trustee of a trust estate where the taxpayer or another person who is an associate of the taxpayer by virtue of another subparagraph of this paragraph benefits or is capable (whether by the exercise of a power of appointment or otherwise) of benefiting under the trust, either directly or through any interposed companies, partnerships or trusts; or
(v) a company where–
(A) the company is, or its directors are, accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the taxpayer, of another person who is an associate of the taxpayer by virtue of another subparagraph of this paragraph, of a company that is an associate of the taxpayer by virtue of another application of this subparagraph or of any two or more such persons; or
(B) the taxpayer is, the persons who are associates of the taxpayer by virtue of Clause (A) and the preceding subparagraphs are, or the taxpayer and the persons who are associates of the taxpayer by virtue of that Clause and those subparagraphs are, in a position to cast, or control the casting of, more than 50% of the maximum number of votes that might be cast at a general meeting of the company; and
(b) where the taxpayer is a company, other than a taxpayer in the capacity of a trustee–
(i) a partner of the taxpayer or a partnership in which the taxpayer is a partner; or
(ii) if a person who is an associate of the taxpayer by virtue of Subparagraph (i) is a natural person–the spouse or a child of that person; or
(iii) a trustee of a trust estate where the taxpayer or another person who is an associate of the taxpayer by virtue of another subparagraph benefits or is capable (whether by the exercise of a power of appointment or otherwise) of benefiting under the trust, either directly or through any interposed companies, partnerships or trusts; or
(iv) another person where–
(A) the taxpayer company is, or its directors are, accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of that person, or of that person and another person or other persons, whether those directions, instructions or wishes are communicated directly to the taxpayer company or its directors, or through any interposed companies, partnerships or trusts; or
(B) that person is, or that person and the persons who, if that person were the taxpayer would be associates of that person by virtue of Paragraph (a), by virtue of Clause (A), by virtue of another subparagraph of this paragraph or by virtue of Paragraph (c) are in a position to cast, or control the casting of, more than 50% of the maximum number of votes that might be cast at a general meeting of the taxpayer company; or
(v) another company where–
(A) the other company is, or its directors are, accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the taxpayer company, of a person who is an associate of the taxpayer company by virtue of another subparagraph, of a company that is an associate of the taxpayer company by virtue of another application of this subparagraph or of any two or more such persons; or
(B) the taxpayer company is, the persons who are associates of the taxpayer company by virtue of Clause (A) and the other subparagraphs are, or the taxpayer company and the persons who are associates of the taxpayer company by virtue of that Clause and those subparagraphs are, in a position to cast, or control the casting of, more than 50% of the maximum number of votes that might be cast at a general meeting of the other company; or
(vi) any other persons who, if a third person who is an associate of the taxpayer company by virtue of Subparagraph (iv) were the taxpayer, would be an associate of that third person by virtue of Paragraph (a), by virtue of another subparagraph of this paragraph or by virtue of Paragraph (c); and
(c) where the taxpayer is a trustee of a trust estate–
(i) any person who benefits or is capable (whether by the exercise of a power of appointment or otherwise) of benefiting under that trust estate, either directly or through any interposed companies, partnerships or trusts; or
(ii) where a person who is an associate of the taxpayer by virtue of Subparagraph (i) is a natural person–any person who, if that natural person were a taxpayer, would be an associate of that natural person by virtue of Paragraph (a) or this paragraph; or
(iii) where a person who is an associate of the taxpayer by virtue of Subparagraph (i) or (ii) is a company–any person who, if that company were the taxpayer, would be an associate of that company by virtue of Paragraph (b) or this paragraph; or
(d) where the taxpayer is a partnership–
(i) a partner in the partnership; or
(ii) where any partner in the partnership is a natural person–any person who, if that natural person were the taxpayer, would be an associate of that natural person by virtue of Paragraph (a) or (c); or
(iii) where any partner in the partnership is a company–any person who, if the company were the taxpayer, would be an associate of the company by virtue of Paragraph (b) or (c);
[7]“Authorized Superannuation Fund” means: –
(a) a superannuation fund authorized by the Bank of Papua New Guinea pursuant to Section 8 of the Superannuation (General Provision) Act 2000; and
(b) until the end of the fifth year after the coming into operation of the Superannuation (General Provision) Act 2000, an Existing Small Superannuation Fund as defined in that Act, providing the Commissioner General, in consultation with the Central Bank, is satisfied that the rights of the employees or dependents to receive the benefits, pensions or allowance payable by that fund are fully secured.
“business” includes any profession, trade, employment, vocation or calling, but does not include occupation as an employee;
“child”, in relation to a person, includes an adopted child, a step-child or an ex-nuptial child of that person;
“Commissioner General” means the Commissioner General of Internal Revenue appointed under Section 6;
“Commissioner of Taxation” means the Commissioner of Taxation appointed under Section 6;
“Commonwealth country” means–
(a) any of the following countries (other than a country declared by the regulations not to be a Commonwealth country) namely, Australia, Barbados, Republic of Botswana, Canada, Sri Lanka, Republic of Cyprus, Fiji, Republic of the Gambia, Republic of Ghana, Guyana, Republic of India, Jamaica, Republic of Kenya, Kingdom of Lesotho, Republic of Malawi, Malaysia, Malta, Mauritius, Republic of Nauru, New Zealand, Federal Republic of Nigeria, Sierra Leone, Republic of Singapore, Kingdom of Swaziland, United Republic of Tanzania, Independent State of Western Samoa, Kingdom of Tonga, Trinidad and Tobago, Republic of Uganda, United Kingdom of Great Britain and Northern Ireland, Republic of Zambia; and
(b) any other country declared by the regulations to be a Commonwealth country,
and includes–
(c) a colony, overseas territory or protectorate of a country specified in paragraph (a) of this definition or of a country declared to be a Commonwealth country under Paragraph (b) of this definition; and
(d) a territory for the international relations of which a country so specified or declared is responsible;
“company” includes all bodies or associations corporate or unincorporate and superannuation funds and the Motor Vehicles Insurance Fund, but does not include partnerships;
“concessional rebates” means the rebates allowable under Division III.18A;
[8]“court of summary jurisdiction” means a Court of Petty Sessions or a District Court;
“date of commencement of commercial operation” in relation to a gas project or a petroleum project means the date on which, in the opinion of the Departmental Head of the Department responsible for petroleum matters, the commercial operation of the gas project or petroleum project (being more than merely incidental to the development of the project) commenced;
“daughter”, in relation to a person, includes an adopted child, a step-child or an ex-nuptial child, being a female, of that person;
“debenture”, in relation to a company, includes debenture stock, bonds, notes and any other securities of the company, whether constituting a charge on the assets of the company or not;
[9]“designated gas project” has the meaning given in Section 158A(1);
“dividend” includes–
(a) any distribution made by a company to any of its shareholders, whether in money or other property; and
(b) any amount credited by a company to any of its shareholders as shareholders; and
(c) the paid-up value of shares issued by a company to any of its shareholders to the extent to which the paid-up value represents a capitalization of profits,
but does not include–
(d) moneys paid or credited by a company to a shareholder or any other property distributed by a company to shareholders (not being moneys or other property to which this paragraph, by reason of Subsection (6), does not apply), where the amount of the moneys paid or credited, or the amount of the value of the property, is debited against an amount standing to the credit of a share premium account of the company; or
(e) moneys paid or credited, or property distributed, by the company by way of repayment by the company of moneys paid up on a share, except to the extent that–
(i) if the share is cancelled or redeemed–the amount of those moneys or the value of that property, as the case may be, is greater than the amount to which the share was paid up immediately before the cancellation or redemption; or
(ii) in any other case–the amount of those moneys or the value of that property, as the case may be, is greater than the amount by which the repayment exceeds the amount to which the share is paid up immediately after the payment; or
(f) a reversionary bonus on a policy of life-assurance; or
(g) any distribution by a unit trust or property unit trust;
“dividend (withholding) tax” means tax payable under Section 189B;
“employee” means a person who receives, or is entitled to receive, salary or wages, and includes a member of the National Parliament a person employed in the Public Service and a person employed by an authority constituted by or under a law of Papua New Guinea;
“entertainment allowance” is an allowance provided to an employee for expenditure incurred by the employee for entertainment which is wholly and exclusively for the purpose of the business of the employer;
“exempt income” means income that is exempt from income tax or salary or wages tax and includes income that is not assessable income;
“fiscal year” means the fiscal year as provided for by the Fiscal Year (Change) Act 1977;
“fishing operations” means–
(a) operations relating directly to the taking or catching of fish, turtles, dugong, crustacea or oysters or other shellfish; or
(b) pearling operations,
and includes oyster farming, but does not include whaling and also does not include operations conducted otherwise than for the purposes of a business;
“fortnight” means a period of two weeks consisting of 14 consecutive calendar days and includes the first and last days of such a period;
“fully taxed salary or wages” means salaries or wages taxed at the rates prescribed by Schedule 1 of the Income Tax (Salary or Wages Tax) (Rates) Act 1979 or Schedule 1 of the Income Tax (Rates) Act as in force from time to time prior to 1 January 1980;
“gas agreement” means a gas agreement as defined in the Oil and Gas Act 1998, as such gas agreement may be amended from time to time;
[10]“gas field” means a field producing petroleum under a petroleum development licence, which, by reason of the application of a gas to oil ratio in the manner prescribed, constitutes a gas field;
[11]“gas income tax” means income tax on taxable income from gas operations, but does not include additional profits tax payable under Section 159C;
[12]“gas operations” means petroleum operations relating to the recovery of, processing, transportation or sale of petroleum recovered from a gas field;
“housing allowance” is any allowance paid or provided to an employee, whether directly or indirectly, for the purpose of subsidising residential accommodation to be occupied by the employee;
“housing expenditure” means expenditure (including rental (at arms length) in the case of rented premises) and amounts deductible by way of depreciation on the house (not being a boat) and its fittings, incurred by an employee deriving a housing allowance (which shall include, where the housing occupied by that employee is jointly owned with his or her spouse, net expenditure incurred by the spouse in respect of that housing) for the provision of housing (not being a boat) occupied by the employee as his or her sole or principal residence in Papua New Guinea and shall be an amount equal to the amount which would be deductible pursuant to the provisions of this Act, if at all times that property had been income-producing in his or her hands, provided that–
(a) the amount deductible cannot exceed the amount of the allowance; and
(b) prescribed expenditure of a personal nature is not deductible;
“income tax” means income tax imposed as such by this Act as assessed under this Act, but does not include dividend (withholding) tax or salary or wages tax and includes specific gains tax;
[13]“joint venture” means an enterprise carried on by two or more persons in common otherwise than as a partnership;
“landowner resources trust” means a trust which is declared to be a landowner resources trust in accordance with Section 137;
“liquidator” means the person who, whether or not appointed as liquidator, is the person required by law to carry out the winding-up of a company;
“livestock” does not include animals used as beasts of burden or working beasts in a business other than a business of primary production;
[14]“Management fee” means a payment of any kind to any person, other than to an employee of the person making the payment and other than in the way of royalty, in consideration for any services of a technical or managerial nature and includes payments for consultancy services, to the extent the Commissioner is satisfied those consultancy services are of a managerial nature;
[15]“mine products” has the same meaning as it has in Part X of the Mining Act (Amalgamated) 1977;
“mineral” has the same meaning as it has in the Mining Act (Amalgamated) 1977, and includes gold as defined in that Act;
[16]“mining income tax” means income tax on taxable income from mining but does not include additional profits tax payable under subdivision III.10.E;
[17]“mining operations” means the extraction of minerals in Papua New Guinea from their natural site and includes the construction and operation of facilities–
(a) to produce the first saleable product from a mine; and
(b) to transport the first saleable product to a point of delivery;
“mortgage” includes any charge lien or encumbrance to secure the repayments of money;
“motor vehicle allowance” is an allowance provided to an employee, whether directly or indirectly, for the acquisition or use of a motor vehicle in Papua New Guinea;
“motor vehicle excess benefit tax” is deemed to be an income tax for the purposes of any provision in this Act dealing with the assessment or collection of income tax;
“motor vehicle expenditure” means expenditure and amounts deductible by way of depreciation, incurred in connection with the use of a motor vehicle in Papua New Guinea where such use is substantially in relation to the employment of the user and the expenditure incurred is of a type that would have been deductible under Division III.3;
“non-profit company” means a company that is not carried on for the purposes of profit or gain to its individual members and is, by the terms of the memorandum or articles of association, rules or other document constituting the company or governing its activities, prohibited from making any distribution, whether in money, property or otherwise, to its members;
“non-resident” means a person who is not a resident of Papua New Guinea;
“paid”, in relation to dividends or unit trust dividends, includes credited or distributed;
“partnership” means an association of persons carrying on business as partners or in receipt of income jointly, but does not include a company;
“pearling operations” means operations, relating directly to the taking of pearl shell or the culture of pearls or pearl shell, and includes operations relating directly to the taking or catching of trochus, beche-de-mer or green snails, but does not include operations conducted otherwise than for the purposes of a business;
“permanent establishment”, in relation to a person (including the State or an authority of the State), means a place at or through which the person carries on any business and, without limiting the generality of the foregoing, includes–
(a) a place where the person is carrying on business through an agent; and
(b) a place where the person has, is using or is installing, substantial machinery or substantial equipment; and
(c) a place where the person is engaged in a construction project; and
(d) where the person is engaged in selling goods manufactured, assembled, processed, packed or distributed by another person for, or at or to the order of, the first-mentioned person and either of those persons participates in the management, control or capital of the other person or another person participates in the management, control or capital of both of those persons–the place where the goods are manufactured, assembled, processed, packed or distributed,
but does not include–
(e) a place where the person is engaged in business dealings through a bona fide commission agent or broker who, in relation to those dealings, acts in the ordinary course of his business as a commission agent or broker and does not receive remuneration otherwise than at a rate customary in relation to dealings of that kind, not being a place where the person otherwise carries on business; or
(f) a place where the person is carrying on business through an agent who does not have or does not habitually exercise, a general authority to negotiate and conclude contracts on behalf of the person;
“person” includes a company, an authority of the State or public authority constituted by or under an Act, a Provincial Government or a Local-level Government or a local level government body, by whatever name known, established by or under a Provincial law;
“petroleum” has the same meaning as it has in the Oil and Gas Act 1998;
[18]“petroleum income tax” means income tax on taxable income from petroleum operations, but does not include additional profits tax payable under Section 159C;
“petroleum operations” means all or any of the following:–
(a) operations in Papua New Guinea for the purposes of recovering petroleum, including the construction or acquisition of facilities for that purpose;
(b) operations for or related to the processing or transporting of petroleum prior to–
(i) entry of the petroleum into a facility which is located in Papua New Guinea for the refining of petroleum or liquefaction of natural gas; or
(ii) export of the petroleum,
whichever occurs first;
(c) the refining of petroleum or petroleum products where such refining is solely for the purpose of or incidental to the operations in Papua New Guinea for recovering petroleum or the construction of facilities used in those operations or where the Commissioner General considers the refining is required in order for the taxpayer to be able to conduct those operations;
(d) exploration activities within the area of and pursuant to a development licence,
but does not include exploration or gas operations;
[19]“petroleum project” has the meaning given in Section 157A;
“Prescribed Product (Withholding) Tax” is an instalment of income tax payable under Part III.12A;
“primary production” means production resulting directly from–
(a) the cultivation of land;
(b) the maintenance of animals or poultry for the purpose of selling them or their bodily produce, including natural increase; or
(c) fishing operations,
and includes the manufacture of dairy produce by the person who produced the raw material used in that manufacture;
“property unit trust” means an inter vivos trust the interest of each beneficiary under which is prescribed by reference to units of the trust, and–
(a) issued units of the trust include–
(i) units having conditions attached thereto that include conditions requiring the trust to accept, at the demand of the holder thereof and at prices determined and payable in accordance with the conditions, the surrender of the units, or fractions or parts thereof, that are fully paid; or
(ii) units qualified in accordance with the prescribed conditions relating to the redemption of units by the trust,
and the fair market value of such units as have conditions attached thereto that include such conditions or are so qualified, as the case may be, is not less than 95% of the fair market value of all assessed units for the trust (determined without any regards to any voting rights attaching to units of the trust); and
(b) throughout the relevant year the trust complied with the following conditions:–
(i) it was resident in Papua New Guinea;
(ii) its only undertaking was investing the funds of the trust in Papua New Guinea;
(iii) funds invested by the trust were not less than K10 million at any time;
(iv) not less than 80% of funds were invested in real property;
(v) where there were prescribed for the purposes of this definition conditions relating to the number of its unit holders, dispersal of ownership of its units or public trading of its units, all holdings of and transactions in its units accorded with these conditions; and
(c) where by virtue of the preceding provisions, a trust would be deemed not to be a property unit trust, and the Commissioner General is of the opinion that having regard to–
(i) the length of period, or the aggregate of the lengths of periods the trust failed to comply with the preceding conditions; or
(ii) any other matters the Commissioner General considers relevant,
it is reasonable that the trust should be treated as a property unit trust, the trust shall notwithstanding any default be deemed to be a property unit trust for that year of income;
“provincial law” means a law made or adopted by a provincial legislature, and includes a subordinate legislative enactment made under any such law;
“public utility allowance” means an allowance provided to an employee in connection with his electricity, gas, water or garbage expenses;
“redetermination” means a determination or redetermination pursuant to a co-ordinated development agreement of the rights and obligations of a Co-ordinated Development Participant as to the costs of gas operations or petroleum operations in respect of the petroleum pools to which that co-ordinated development agreement relates or production of petroleum therefrom or both;
“relative” in relation to a person, means any of the following, namely:–
(a) the parent, grandparent, brother, sister, uncle, aunt, nephew, niece, lineal descendant or adopted child of that person or of his or her spouse; and
(b) the spouse of that person or of any other person specified in Paragraph (a) of this definition;
“resident” or “resident of Papua New Guinea”–
(a) in relation to a person, other than a company, means a person who resides in Papua New Guinea, and includes a person–
(i) whose domicile is in Papua New Guinea, unless the Commissioner General is satisfied that his permanent place of abode is outside Papua New Guinea; and
(ii) who has actually been in Papua New Guinea, continuously or intermittently, during more than one-half of the year of income, unless the Commissioner General is satisfied that his usual place of abode is outside Papua New Guinea, and that he does not intend to take up residence in Papua New Guinea; or
(iii) who is a contributor to a prescribed superannuation fund or who is the spouse, or a child under 16 years of age, of such a contributor; and
(b) in relation to a company other than a superannuation fund, means a company which is incorporated in Papua New Guinea, or which, not being incorporated in Papua New Guinea, carries on business in Papua New Guinea, and has either its central management and control in Papua New Guinea, or its voting power controlled by shareholders who are residents of Papua New Guinea; and
(c) in relation to a superannuation fund, means a superannuation fund which is established or managed in Papua New Guinea;
[20]“retirement savings account” means moneys allocated by the trustee of an Authorised Superannuation Fund to a member for the purpose of paying that member’s entitlement to a distribution by the fund in the form of periodic payments.
[21]“royalty” or “royalties” includes any payment whether periodical or not, and however described or computed, to the extent to which it is paid or credited as consideration for–
(a) the use of, or the right to use, any copyright, patent, design or model, plan, secret formula or process, trademark or other like property or right; or
(b) [Repealed.]
(c) the supply of scientific, technical, industrial or commercial knowledge or information; or
(d) the supply of any assistance that is ancillary and subsidiary to, and is furnished as a means of enabling the application or enjoyment of, any such property or right as is mentioned in Paragraph (a), or any such knowledge or information as is mentioned in Paragraph (c); or
(e) the use of, the right to use–
(i) motion picture films; or
(ii) films or video tapes for use in connection with television; or
(iii) tapes for use in connection with radio broadcasting; or
(f) total or partial forbearance in respect of the use of a property or right referred to in this definition,
but does not include so much of any payment as Section 155L authorizes the vendor and purchaser referred to in those sections respectively to agree to designate as expenditure of a particular class or classes;
“salary or wages” in relation to any person means–
(a) salary, wages, commission, bonus, remuneration of any kind or allowances (whether paid in cash or otherwise) paid (whether at piece-work rates or otherwise) in respect of or in relation to the employment of that person as an employee; or
(b) any remuneration by way of fees or otherwise for professional services or services as an adviser, consultant or manager (whether at piece-work rates or otherwise) where such remuneration is paid wholly or substantially for personal services rendered by that person in Papua New Guinea,
and without limiting the generality of the foregoing, includes any payments made–
(c) under a contract that is wholly or substantially for the labour of the person to whom the payments are made; or
(d) by a company by way of remuneration to a director of that company; or
(e) by way of superannuation, pension or retiring allowances; or
(f) by way of commission to an insurance or time-payment canvasser or collector,
but does not include payments of exempt income;
“salary or wages tax” means the fortnightly deduction of tax from the salary or wages of an employee representing a final tax on that income;
“shareholder” includes member or stockholder;
“share premium account”, in relation to a company, means an account, whether called a share premium account or not, to which the company has, in respect of premiums received by the company on shares issued by it, credited amounts, being amounts not exceeding the respective amounts of the premiums, but does not include–
(a) where any other amount is included in the amount standing to the credit of such an account–that account; or
(b) where an amount that has been credited to such an account in respect of a premium received by the company on a share issued by it (not being an amount that has been so credited immediately after the receipt by the company of the premium) could not, at any time before it was so credited, be identified in the books of the company as such a premium–that account;
“specific gains tax” means tax payable under Division 14B; or
[22]“superannuation fund” has the same meaning as in the Superannuation (General Provision) Act 2000;
“tax” means income tax;
[23]“taxable additional profits from resource operations” has the meaning given in Section 159A;
[24]“taxable income from mining operations” means the taxable income that comprises the amount remaining after deducting from the assessable income from mining operations all the deductions allowable under this Act relating to such income;
“taxable gain” means that amount of the consideration from sale of shares received or receivable in accordance with the provisions of Division 14B;
“taxable income” means the amount remaining after deducting from assessable income all allowable deductions and includes taxable additional profits from mining operations and taxable additional profits from petroleum operations;
“taxable income from gas operations” means the taxable income that comprises the amount remaining after deducting from the assessable income from gas operations all the deductions allowable under this Act relating to such income;
“taxable income from petroleum operations” means the taxable income that comprises the amount remaining after deducting from the assessable income from petroleum operations all the deductions allowable under this Act relating to such income;
“taxpayer” means a person deriving income;
“trading stock” includes anything produced, manufactured, acquired or purchased for purposes of manufacture, sale or exchange, and also includes livestock;
“training levy” is deemed to be an income tax for the purposes of any provision in this Act dealing with the assessment or collection of income tax;
“trustee” means a person appointed or constituted trustee by act of parties, by order or declaration of a court or by operation of law, and includes–
(a) an executor, administrator, guardian, committee, receiver or liquidator; and
(b) a person having or taking upon himself the administration or control of income affected by an express or implied trust, or acting in a fiduciary capacity, or having the possession, control or management of the income of a person under a legal or other disability;
“unit trust” means an inter vivos trust the interest of each beneficiary under which is described by reference to units of the trust, and–
(a) issued units of the trust include–
(i) units having conditions attached thereto that include conditions requiring the trust to accept, at the demand of the holder thereof and at prices determined and payable in accordance with the conditions, the surrender of the units, or fractions or parts thereof, that are fully paid; or
(ii) units qualified in accordance with the prescribed conditions relating to the redemption of units by the trust,
and the fair market value of such of the units as have conditions attached thereto that include such conditions or are so qualified, as the case may be, is not less than 95% of the fair market value of all the issued units for the trust (determined without any regard to any voting rights attaching to units of the trust); and
(b) throughout the relevant year the trust complied with the following conditions:–
(i) it was resident in Papua New Guinea;
(ii) its only undertaking was the investing of funds of the trust;
(iii) at no time in the year did more than 10% of its property consist of shares, bonds or securities of any one company or debtor other than the Government of Papua New Guinea;
(iv) where there were prescribed for the purposes of this definition conditions relating to the number of its unit holders, dispersal of ownership of its units or public trading of its units all holdings of and transactions in its units accorded with those conditions; and
(c) where, by virtue of the preceding conditions, a trust would be deemed not to be a unit trust and the Commissioner General is of the opinion that, having regard to–
(i) the length of period, or the aggregate of the lengths of periods the trust failed to comply with the preceding conditions; or
(ii) any other matters the Commissioner General considers relevant,
it is reasonable that the trust should be treated as a unit trust, the trust shall notwithstanding any default be deemed to be a unit trust for that year of income;
“year of income” means–
(a) in the case of a company (other than a company in the capacity of a trustee:
(i) in relation to a year of tax ending prior to 31 December 1986–the fiscal year next preceding that year of tax or the accounting period (if any) adopted under this Act in lieu of any such fiscal year, as the case requires; and
(ii) in relation to any subsequent year of tax–the fiscal year (being a year ended 31 December) immediately preceding that year of tax; and
(b) in the case of any other person–
(i) in relation to a fiscal year ending prior to 31 December 1985, the fiscal year for which tax is levied, or the accounting period (if any) adopted under this Act in lieu of that fiscal year, as the case requires; and
(ii) in relation to any subsequent fiscal year, the fiscal year (being a year ended 31 December) for which income tax is levied;
“year of tax” means the financial year for which income tax is levied.
(2) Unless the contrary intention appears, a reference in this Act to any year of income shall be deemed to include, in relation to a taxpayer who has adopted, or who is deemed to have adopted, under this Act, an accounting period in lieu of that year of income, a reference to that accounting period.
(3) A reference in this Act to the Commissioner General shall, in respect of a matter as to which a person has exercised a power or performed a function delegated to him by the Commissioner General, be deemed to include a reference to the delegate.
(4) Where, in this Act, reference is made to an Act, and that Act is subsequently amended, the reference shall, from the date of the amendment, be deemed to be to the amended Act.
(5) For the purposes of this Act, the average rate of tax payable by a company for a year of tax shall be deemed to be an amount per kina being the amount ascertained by dividing the amount of income tax that would be assessed in respect of the taxable income derived by the company in the year of income if the company was not entitled to any rebate of tax or credit against its liability to tax, by a number equal to the whole number of kina in that taxable income.
(6) Subject to Subsection (7), where, in pursuance of or as part of an agreement or an arrangement, whether oral or in writing, being an agreement or arrangement which, in the opinion of the Commissioner General, has the purpose or effect of tax avoidance as defined in Section 361 and which was made after the commencement of this subsection–
(a) a company issues shares at a premium, being a premium in respect of which the company credits an amount to a share premium account of the company; and
(b) the company pays or credits any moneys, or distributes any other property, to shareholders in the company and the amount of the moneys so paid or credited or the amount of the value of the property so distributed is debited against an amount standing to the credit of that share premium account,
paragraph (d) of the definition of “dividend” in Subsection (1) does not apply to the moneys so paid or credited or to the property so distributed.
(7) Where moneys so credited are, in pursuance of or as part of the agreement or arrangement, applied or to be applied in paying up an amount on a share issued or to be issued by the company, the credit shall be disregarded for the purposes of Subsection (6) unless, in pursuance of or as part of the agreement or arrangement, the company, by means of the redemption or cancellation, or of a reduction in the paid-up value, of that share or any other share in the company, is to pay or transfer to, or pay, transfer or apply on behalf of or at the direction of, the holder of the share, any money or other property other than shares in the company.
(8) The Regulations may prescribe activities to be ancillary activities for the purposes of the definition of “mining operation” in Subsection (1) and may make different provision in relation to the mining of different classes of minerals.
(9) The express references in this Act to companies do not imply that references to persons do not include references to companies.
(10) In a provision in this Act providing an exemption from income tax, a reference to income shall include, unless the contrary intention appears, a reference to an amount that is a taxable gain for the purposes of Division 14B.
(11) A reference in this Act to the Chief Collector shall be read as a reference to the Commissioner General.
4A. APPLICATION TO OFF-SHORE AREA.
(2) For all purposes of this Act related directly or indirectly to–
(a) the exploration of the off-shore area for minerals and petroleum, or the exploitation of the natural resources, being minerals and petroleum, of the off-shore area, whether by the taxpayer concerned or by another person; or
(b) anything concerning, arising out of or connected with any such exploration or exploitation,
including purposes–
(c) in relation to the application of this Act in respect of income or profits derived from any such exploration, exploitation or thing; or
(d) in respect of dividends paid wholly or partly out of any such profits,
the provisions of this Act have effect, subject to this section, as if the whole of the offshore area were and had at all times been a part of Papua New Guinea.
(3) Where a company carries on business in the off-shore area that–
(a) consists of exploration or exploitation of a kind referred to in Subsection (2); or
(b) arises out of or is connected with any such exploration or exploitation (whether by the company or by another person),
the company shall, for the purpose of the definition “resident” or “resident of Papua New Guinea” in Section 4(1), be deemed to be carrying on business in Papua New Guinea.
4B. COST OF CERTAIN SHARES.
(a) an amount (in this section referred to as the “relevant amount”) is payable to a taxpayer by a company in respect of shares (in this section referred to as the “original shares”) in the company; and
(b) the company issues other shares (in this section referred to as the “bonus shares”) to the taxpayer; and
(c) the relevant amount is applied by the company, in whole or in part, in payment or part payment of the moneys payable by the taxpayer in respect of the bonus shares or the liability of the company to pay the relevant amount to the taxpayer is otherwise satisfied, in whole or in part, by the issue of the bonus shares,
then the following provisions have effect for the purposes of this Act.
(2) For the purpose of this section, an amount credited to a taxpayer by a company shall be taken to be an amount payable to the taxpayer by the company whether or not the taxpayer has a right to demand payment of the amount.
(3) Subject to Subsections (5), (6) and (7) no part of the relevant amount that is applied by the company in payment or part payment of the moneys payable by the taxpayer in respect of the bonus shares or the liability of the company to pay which is otherwise satisfied by the issue of the bonus shares shall be treated as being an amount paid or payable by the taxpayer in respect of the bonus shares or as in any other way constituting any part of the cost to the taxpayer of the bonus shares.
(4) In determining–
(a) where any of the original shares or any of the bonus shares are articles of trading stock of the taxpayer and the taxpayer opts, under Section 53, in respect of all or any of the shares that are articles of trading stock, to adopt the cost price of those shares as being the value of those articles of trading stock–the value of those articles of trading stock; and
(b) where any of the original shares or any of the bonus shares are not articles of trading stock of the taxpayer–the amount of any profit or loss arising on the sale or disposal of any of those shares,
any amounts paid or payable by the taxpayer in respect of the original shares (whether on purchase of the shares, on application for or allotment of the shares, to meet calls or otherwise) shall be deemed to have been paid or to be payable by the taxpayer in respect of the original shares and the bonus shares in such proportions as the Commissioner General considers appropriate in the circumstances.
(5) Subject to Subsection (7), where the taxpayer is–
(a) a partnership that is being treated as a taxpayer in the capacity of a trustee of a trust estate; or
(b) a partnership that is being treated as a taxpayer for the purposes of Section 123; or
(c) a taxpayer (other than a taxpayer referred to in paragraph (a) or (b)) not being a company that is a resident,
Subsection (3) does not apply in relation to any part of the relevant amount that has been or will be included in the assessable income of the taxpayer of any year of income.
(6) Where the taxpayer, not being a trustee of a trust estate, is a company that is a resident, Subsection (3) does not apply in relation to any part of the relevant amount that has been or will be included in the assessable income of the taxpayer of any year of income to the extent that that part is not constituted by a dividend.
(7) Where–
(a) the taxpayer is a taxpayer in the capacity of a trustee of a trust estate or a partnership that is being treated as a taxpayer for the purposes of Section 123; and
(b) by the application of Subsection (5), Subsection (3) would not, apart from this subsection, apply in relation to an amount that has been or will be included in the assessable income of the taxpayer of a year of income; and
(c) the amount referred to in Paragraph (b) is constituted, in whole or in part, by a dividend; and
(d) an amount attributable to the dividend is included, through the taxpayer or through the taxpayer and any interposed partnerships or trusts, in the assessable income of any year of income (in this subsection referred to as the “relevant year of income”) of a company being a resident but not being a trustee of a trust estate,
then, for the purpose of making an assessment of that company of the relevant year of income–
(e) Subsection (3) shall be taken to have applied in relation to the amount referred to in Paragraph (b) to the extent that that amount is a dividend; and
(f) the net income of the taxpayer of the relevant year of income shall be taken to be such amount as would have been the net income of the taxpayer of the relevant year of income if Subsection (3) had applied in relation to the amount referred to in Paragraph (b) to the extent that that amount is a dividend; and
(g) the amount of the net income of the relevant year of income of any interposed partnership or trust shall be taken to be such amount as might reasonably be expected to have been the net income of the relevant year of income of that partnership or trust if Subsection (3) had applied in relation to the amount referred to in Paragraph (b) to the extent that that amount is a dividend.
(8) For the purposes of Subsections (5), (6) and (7), where an amount that is payable to a taxpayer in respect of shares in a company has been or will be taken into account in determining the amount of any profit arising or loss incurred on the disposal by the taxpayer of those shares or other shares in the company, that amount shall be taken to be an amount that has been or will be included in the assessable income of the taxpayer of a year of income.
(9) For the purposes of determining whether a deduction is allowable to a taxpayer under Section 101(3) in respect of the year of income that commenced on 1 January 1979 or in respect of a subsequent year of income and for the purpose of ascertaining the amount of any such deduction, there shall be disregarded so much of the amount of any loss as would not have been deemed, for the purpose of Section 101, to have been incurred by the taxpayer by virtue of the operation of this section.
4C. SOURCE OF ROYALTY INCOME DERIVED BY NON-RESIDENT.
(a) is paid or credited to the non-resident by the State, by an authority of the State or a public authority constituted by or under an Act, a Provincial Government, Local-level Government or a local level government body by whatever name known established by a provincial law, or by a person who is, or by persons at least one of whom is, a resident and is not an outgoing wholly incurred by the State, the authority of the State or public authority, Provincial Government, Local-level Government or local level government body or those persons in carrying on business in a country outside Papua New Guinea at or through a permanent establishment of the State, the authority or public authority, Provincial Government, Local-level Government or local level government body or that person or those persons in that country; or
(b) is paid or credited to the non-resident by a person who is, or by persons each of whom is, a non-resident and is, or is in part, an outgoing incurred by that person or those persons in carrying on business in Papua New Guinea at or through a permanent establishment of that person or those persons in Papua New Guinea.
(2) For the purposes of Part III.5 and 6 but subject to Subsections (4) and (5), income to which this section applies shall be deemed to be attributable to sources in Papua New Guinea.
(3) For the purposes of Sections 36, 46 and 356 but subject to Subsections (4) and (5), income to which this section applies shall be deemed to have been derived from a source in Papua New Guinea.
(4) Where–
(a) income to which this section applies is paid or credited to the non-resident by whom it is derived by the State, by an authority of the State, or a public authority constituted by or under an Act, a Provincial Government, Local-level Government or local government body by whatever name known established by a provincial law, or by a person who is, or by persons at least one of whom is, a resident; and
(b) the royalty of which the income consists is, in part, an outgoing incurred by the State, the authority of the State or public authority, a Provincial Government, Local-level Government or local government body or that person or those persons in carrying on business in a country outside Papua New Guinea at or through a permanent establishment of the State, the authority of the State or public authority, Provincial Government, Local-level Government or local government body or those persons in that country,
Subsection (3) has effect in relation to so much only of the income as is attributed to so much of the royalty as is not an outgoing so incurred.
(5) Where–
(a) income to which this section applies is paid or credited to the non-resident by whom it is derived by a person who, or by persons each of whom, is a non-resident; and
(b) the royalty of which the income consists is, in part only, an outgoing incurred by the person or persons by whom it is paid in carrying on business in Papua New Guinea at or through a permanent establishment of that person or those persons in Papua New Guinea,
Subsection (3) has effect in relation to so much only of the income as is attributable to so much of the royalty as is an outgoing so incurred.
(6) In Subsection (7), a reference to a relevant person is a reference to the State, an authority of the State, a public authority constituted by or under an Act, a Provincial Government, Local-level Government or local government body, a local level government body, by whatever name known established by a provincial law, or a person who is, or persons at least one of whom is, a resident.
(7) For the purposes of Subsections (1)(a) and (4)(b), where–
(a) royalty is paid or credited, after the commencement of this subsection, to a non-resident by a relevant person carrying on business in a country outside Papua New Guinea; and
(b) the royalty or a part of the royalty–
(i) is incurred by the relevant person in gaining or producing income that is derived by the relevant person otherwise than in carrying on business in a country outside Papua New Guinea at or through a permanent establishment of the relevant person in that country or is incurred by the relevant person for the purpose of gaining or producing income to be so derived; or
(ii) is incurred by the relevant person in carrying on business for the purpose of gaining or producing income and is reasonably attributable to income that is derived, or may be derived, by the relevant person otherwise than in so carrying on business at or through a permanent establishment of the relevant person in a country outside Papua New Guinea,
the royalty or the part of the royalty, as the case may be, is not an outgoing incurred by the relevant person in carrying on business in a country outside Papua New Guinea at or through a permanent establishment of the relevant person in that country.
(8) For the purposes of Subsections (1)(b) and (5)(b), where–
(a) royalty is paid or credited, after the commencement of this subsection, to a non-resident by another person or other persons (in this subsection referred to as “the payer”) being–
(i) another person who is carrying on business in Papua New Guinea and is a non-resident; or
(ii) other persons who are carrying on business in Papua New Guinea and each of whom is a non-resident; and
(b) the royalty or a part of the royalty–
(i) is incurred by the payer in gaining or producing income that is derived by the payer in carrying on business in Papua New Guinea through a permanent establishment of the payer in Papua New Guinea or is incurred by the payer for the purpose of gaining or producing income to be so derived; or
(ii) is incurred by the payer in carrying on a business for the purpose of gaining or producing income and is reasonably attributable to income that is derived, or may be derived, by the payer in so carrying on business at or through a permanent establishment of the payer in Papua New Guinea,
the royalty, or the part of the royalty, as the case may be is an outgoing incurred by the payer in carrying on business in Papua New Guinea at or through a permanent establishment of the payer in Papua New Guinea.
5. [REPEALED.]
PART II. – ADMINISTRATION.
6. COMMISSIONER GENERAL OF INTERNAL REVENUE.
(a) be appointed by the Head of State, acting on advice, by notice in the National Gazette; and
(b) be appointed for such period, of not less than five years or more than seven years, as the Head of State, acting on advice, determines; and
(c) be eligible for re-appointment; and
(d) subject to this Act, not otherwise be subject to the direction and control of any person.
(2) The office of Commissioner General of Internal Revenue is hereby declared to be an office to and in relation to which Division III.2 (leadership code) of the Constitution applies.
(3) The salary, allowances and benefits (financial and otherwise) of the Commissioner General shall be fixed by the National Parliament following consideration of a recommendation by the Salaries and Remuneration Commission in accordance with Section 216A (The Salaries and Remuneration Commission) of the Constitution.
6A. REMOVAL OF COMMISSIONER GENERAL FROM OFFICE.
(a) the Head of State, acting with or in accordance with the recommendation of an independent tribunal established under the Organic Law on the Duties and Responsibilities of Leadership; or
(b) the Head of State, acting on advice, in accordance with the provisions of this section.
(2) The Head of State, acting on advice, shall remove the Commissioner General from office 21 days after a determination of the National Executive Council that the Commissioner General should be removed from office where the determination is reached after the process and procedure specified in Subsections (4), (5) and (6).
(3) In this section, “Committee” means the Committee formed for the purpose of this section comprising–
(a) the Chief Secretary to Government, who shall be chairman; and
(b) the Departmental Head of the Department responsible for personnel management matters; and
(c) the Departmental Head of the Department responsible for planning matters; and
(d) the Attorney–General.
(4) Where, in the reasonable opinion of the Committee, the Commissioner General is guilty of conduct prejudicial to the performance of his duties under this Act, the Committee may make a recommendation (which recommendation shall contain full reasons for the recommendation), to the Minister that the Commissioner General be removed from office.
(5) The Minister upon receiving the recommendation and reasons of the Committee pursuant to Subsection (4) shall–
(a) place the recommendation of the Committee and reasons before the National Executive Council; and
(b) advise the Commissioner General that the Commissioner General may by a particular date (such date being not less than 21 days from the date the Commissioner General is advised of the recommendation of the Committee and reasons) submit reasons to the National Executive Council why the Commissioner General should not be removed from office; and
(c) provide the Commissioner General with full copies of the recommendation of the Committee and the reasons for the recommendation.
(6) The National Executive Council shall on the earlier of the date it receives the submission of the Commissioner General or the date stipulated for such submission–
(a) consider the reasons for the recommendation of the Committee and the submission of the Commissioner General, if any; and
(b) where, in the reasonable opinion of the National Executive Council–
(i) the Commissioner General is not guilty of conduct prejudicial to the performance of his duties under this Act; or
(ii) the Commissioner General should not be removed from office,
the National Executive Council shall notify the Commissioner General in writing and the Commissioner General shall continue in office; and
(c) where in the reasonable opinion of the National Executive Council–
(i) the Commissioner General is guilty of conduct prejudicial to the performance of his duties under this Act; and
(ii) the Commissioner General should be removed from office,
the National Executive Council shall–
(iii) give the Commissioner General written notice of its decision as soon as possible; and
(iv) not earlier than 21 days thereafter, or where, within such 21 days, a decision of the National Executive Council is reviewed or appealed under Subsection (7), until a decision is handed down, advise the Head of State to remove the Commissioner General from office.
(7) A decision by the Committee or the National Executive Council is a decision that may be fully reviewed (including on its merits) by any competent court.
6B. COMMISSIONER OF TAXATION.
(a) be appointed by notice in the National Gazette by the National Executive Council after considering a recommendation from the Commissioner General; and
(b) be appointed for such period, being not less than five years or more than seven years, as the National Executive Council determines; and
(c) be eligible for re-appointment.
(2) The office of Commissioner of Taxation is hereby declared to be an office to and in relation to which Division III.2 (leadership code) of the Constitution applies.
7. DELEGATION.
(2) A power or function delegated under Subsection (1) may be exercised or performed by the delegate in accordance with the instrument of delegation.
(3) Where under this Act or any other Act that is an Act relating to taxation, the exercise of a power or the performance of a function by the Commissioner General is dependent upon the opinion, belief or state of mind of the Commissioner General in relation to a matter and that power or function has been delegated under this section, that power or function may be exercised or performed by the delegate upon the opinion, belief or state of mind of the delegate in relation to the matter.
(4) A delegation under this section is revocable at will and does not prevent the exercise of a power or performance of a function by the Commissioner General.
(5) A delegation under this section may be made subject to a power of review and alteration by the Commissioner General, within a period specified in the instrument of delegation, of acts done under the delegation and a decision given upon such a review or alteration shall be deemed to be a decision of the Commissioner General.
8. REPORT BY COMMISSIONER GENERAL.
(2) In the report referred to in Subsection (1), the Commissioner General shall draw attention to any breaches or evasions of this Act that have come to his notice.
9. OFFICERS TO OBSERVE SECRECY.
(2) Subject to this section, an officer shall not, either directly or indirectly except in the performance of a duty as an officer, and either while he is or after he ceases to be an officer, make a record of, or divulge or communicate to any person, any such information so acquired by him.
(3) An officer shall not be required to produce in any court a return, assessment or notice of assessment, or to divulge or communicate to any court any matter or thing coming under his notice in the performance of his duties as an officer, except when it is necessary to do so for the purpose of carrying into effect the provisions of this Act.
(4) Nothing in this section prevents the Commissioner General or an Assistant Commissioner, or a person authorized by the Commissioner General or an Assistant Commissioner, from communicating any information to–
(a) a person performing, in pursuance of any appointment or employment in the Public Service, any duty arising under any Act administered by the Commissioner General, for the purpose of enabling that person to carry out that duty; or
(b) the Review Tribunal constituted under Section 240; or
(c) the Board referred to in Section 367; or
(d) the Commissioner of Taxation for Australia, a Second Commissioner of Taxation for Australia and any Deputy Commissioner of Taxation for Australia if the Commissioner, Second Commissioner and any Deputy Commissioner is authorized by a law of Australia to afford similar information to the Commissioner General; or
(e) the person, known as the Controller of Foreign Exchange, acting under and in accordance with Section 61 or 61A of the Central Banking Act 2000; or
(f) a Review Tribunal appointed under Section 12(1) of the Industrial Development (Wage Subsidy) Act 1984; or
(g) the Tribunal established under Section 69.
(h)[28] the Bank of Papua New Guinea, or any officer thereof, exercising powers and functions of the Bank of Papua New Guinea pursuant to Section 7 of the Superannuation (General Provision) Act 2000.
(5) A person to whom information is communicated under Subsection (4), and any person or employee under his control, is, in respect of that information, subject to the same rights, privileges obligations and liabilities under Subsection (2) and (3), as if he were an officer.
(6) For the purposes of Subsections (2) and (5), an officer or other person shall be deemed to have communicated the information referred to in those subsections to another person in contravention of those subsections if he communicates that information to any Minister.
(7) An officer shall, if and when required by the Commissioner General or an Assistant Commissioner to do so, make an oath or declaration, in the manner and form prescribed, to maintain secrecy in conformity with the provisions of this section.
Penalty: [29]For the breach of any of the provisions of this section, a fine of K10,000.00 or imprisonment for a term of 12 months.
9A. COMMUNICATION OF INFORMATION WHERE TAXPAYER HAS ENGAGED IN TRANSFER PRICING MANIPULATION.
(2) Notwithstanding any other provision in this Act, where the Commissioner General has reasonable grounds to believe that a taxpayer has deliberately engaged in transfer pricing manipulation, which has or is likely to have the effect of evading liability for taxation under this Act, he may, at his absolute discretion, make a record of, or divulge or communicate only such information acquired or obtained under the provisions of this Act as the Commissioner General is satisfied is necessary to enable any officer, who has responsibility for the administration of any other Act that has application to the taxpayer, to take any action that is required to be taken against the taxpayer under such other Act.
(3) Whenever it is practical to do so, the communication of such information under Subsection (2) shall be made only to the Departmental Head of the relevant Department.
(4) The provision of Section 9 shall have no application to any recipient of information under Subsection (2).
(5) If no action is taken under any other Act, the recipient of information under Subsection (2) shall take all reasonable precautions to ensure such information received from the Commissioner General remains confidential.
10. OFFICERS NOT TO ASSIST IN PREPARATION OF TAX RETURNS, ETC.
(2) An officer shall not, except in the performance of a duty as an officer–
(a) prepare a return or objection under this Act for any other person; or
(b) advise or assist any person in relation to the preparation of such a return or objection.
Penalty: [30]A fine of not less than K200.00 and not exceeding K2,000.00.
PART III. – LIABILITY TO TAXATION.
Division 1.
General.
11. IMPOSITION OF INCOME TAX.
(2) Notwithstanding anything in this Act, income tax is not imposed on a taxable income that does not exceed K4,000.00 derived by–
(a) a resident person other than a company; or
(b) a non-profit company.
12. ACCOUNTING PERIOD.
(a) with the leave of the Commissioner General adopted an accounting period ending on a date other than 31 December; and
(b) the taxable income of any year of income was decreased or increased by the Commissioner General for a reason connected with the adoption of that accounting period; and
(c) the Commissioner General is of the opinion that, by reason of the repeal of the provisions which allowed the adoption of an accounting period other than the year ended 31 December, the taxable incomes of that person as assessed total a greater or lesser amount than they would have totalled had that person used an accounting period ended 31 December at all times,
the Commissioner General may make such adjustments to the taxable incomes or assessments of any of the years of income ending not later than 31 December 1986 as, in his opinion, are required to ensure that neither a greater nor a lesser amount of income is assessed to that person than would have been assessed had that person used an accounting period ended 31 December at all times.
12A. ACCOUNTING PERIODS.
(2) Where a person adopts an accounting period under Subsection (1), his accounting period in each succeeding year shall end on the corresponding date of that year, unless with the leave of the Commissioner General some other date is adopted.
(3) Where the Commissioner General is of the opinion that, by reason of the adoption of an accounting period by a person, his taxable income of a year of income is liable to be greater or less than the amount that it otherwise would have been, the conditions on which the Commissioner General grants leave to him to adopt the accounting period may include a condition that his taxable income of the year of income shall be decreased or increased by an amount to be determined in accordance with the terms of the condition.
13. MONEY CREDITED, REINVESTED, ETC., TO BE INCOME.
14. INCOME TO BE EXPRESSED IN PAPUA NEW GUINEA CURRENCY.
(2) The Commissioner General may by notice in writing consent to a person reporting income and expenses in a currency other than Papua New Guinea currency subject to any conditions that the Commissioner General considers appropriate.
(3) A notice issued under Subsection (2) shall specify the currency or currencies in which the income and expenses are to be reported, and may apply to all or to any specified activities of that person.
(4) The Commissioner General may at any time cancel a notice under Subsection (2), but such cancellation is effective only from the year next following that in which the cancellation is made.
(5) A notice issued under Subsection (2) does not affect the liability of the person granted consent to pay income tax in Papua New Guinea currency or in any other currency as prescribed by law.
15. WHERE CONSIDERATION NOT IN CASH.
16. NON-PROFIT COMPANIES.
17. MINIMUM TAX.
18[32]. [REPEALED.]
19. EXEMPTION OF CERTAIN OFFICIAL SALARIES.
(a) the representative in Papua New Guinea of the government of any country (not being a person in relation to whom any of the provisions of the Vienna Conventions on Diplomatic and Consular Relations, as having the force of law by virtue of the Diplomatic and Consular Privileges and Immunities Act 1975, apply) or a member of the official staff of such a representative if the representative or member, as the case may be, is domiciled in the country represented by the representative, is temporarily resident in Papua New Guinea by direction of the government of the country so represented for the purposes of performing his official duties and that country grants exemptions from taxes upon income, corresponding to the exemptions granted to that country’s representative by virtue of this paragraph, to officials of the State temporarily resident in that country for similar purposes;
(b) any officer of the government of a Commonwealth country, who is temporarily in Papua New Guinea to render service on behalf of that country or the State in accordance with an arrangement between the government of that country and the State, if the salaries of officers of the State in that country for similar purposes in accordance with a similar arrangement are exempted from income tax by that country.
19A. EXEMPTION OF PRESCRIBED PERSONNEL.
(a) official emoluments; and
(b) income derived from a source or sources outside Papua New Guinea,
of a person who is in Papua New Guinea, are, to the prescribed extent and subject to the prescribed conditions, exempt from income tax or salary or wages tax where–
(c) that person is an employee or an officer of a government of a country, which is a prescribed donor of agreed international aid; and
(d) the official emoluments and income of that person are not exempt from income tax or salary or wages tax in the country where that person is ordinarily resident.
19B. EXEMPTION OF PEACE CORPS PERSONNEL.
19C. EXEMPTION OF NON PAPUA NEW GUINEA INCOME.
(a) is in Papua New Guinea solely to render assistance to a prescribed aid organisation; and
(b) derives no remuneration for rendering that service; and
(c) derives no income from a source in Papua New Guinea,
is exempt from income tax.
20. EXEMPTION OF REMUNERATION PAID TO NON-RESIDENT MEMBER OF COMMISSION OF INQUIRY.
21. EXEMPTION OF INCOME OF REPRESENTATIVES OF CLUBS, ETC.
(a) in the capacity of representative of an association or club established in any country for the control of any out-door athletic sport or game in that country by any person visiting Papua New Guinea in that capacity for the purpose of engaging in contests in Papua New Guinea in that sport or game; or
(b) by any association or club in any Commonwealth country as its share of the proceeds of cricket, football or similar matches played in Papua New Guinea by a team controlled by that association or club visiting Papua New Guinea from that Commonwealth country and recognised by the authority controlling that class of match in Papua New Guinea as being representative of that Commonwealth country; or
(c) by the representative of any government, visiting Papua New Guinea on behalf of that government, or by any member of the entourage of that representative, in his official capacity as such a representative or member; or
(d) in the capacity of representative of any society or association established for educational, scientific, religious or philanthropic purposes, by any person visiting Papua New Guinea in that capacity for the purpose of attending international conferences or for the purpose of carrying on investigation or research for that society or association; or
(e) in the capacity of representative of the press outside Papua New Guinea, by any person visiting Papua New Guinea in that capacity for the purpose of reporting the proceedings relating to any matters referred to in the preceding paragraphs of this section,
is exempt from income tax or salary or wages tax.
22. EXEMPTION OF INCOME OF PERSONS UNDER TECHNICAL CO-OPERATION AGREEMENT.
(a) the income is derived from work carried out under a prescribed technical assistance agreement and paid wholly under that agreement from a source outside Papua New Guinea from funds which do not require repayment from within Papua New Guinea; and
(b) that person is carrying on that occupation or that company is carrying on business in Papua New Guinea in accordance with the terms of a prescribed technical assistance agreement.
(2) For the purposes of this section, where the Commissioner General is satisfied in accordance with Subsection (1), the provisions of Part III.14A relating to Overseas Construction Contractors shall not apply.
22A. EXEMPTION OF INSTITUTIONS.
(a) Kula Fund Limited, a company incorporated in Vanuatu; and
(b) Pacific Capital Partners (PNG) Pty Ltd, a company incorporated under the Companies Act 1997,
shall be exempt from income tax.
23. EXEMPTION OF THE DISCIPLINED FORCES INSTITUTIONAL HOUSING PROJECT.
24. EXEMPTION OF PUBLIC AUTHORITIES, ETC.
(2)[33] [34]All income of a Provincial Government or of a Local-level Government received pursuant to the Organic Law on Provincial Governments and Local-level Governments is exempt from income tax, except income received from a commercial enterprise conducted by a Provincial Government or a Local-level Government.
(3) In respect of–
(a) Papua New Guinea Electricity Commission; and
(b) Papua New Guinea Harbours Board; and
(c) Papua New Guinea Banking Corporation; and
(d) Niugini Insurance Corporation,
prescribed in the Regulations as being taxable, income tax is payable on income derived from 1 January 1979 and–
(e) Papua New Guinea Defence Force Retirement Fund; and
(f) Papua New Guinea Retirement Benefits Fund; and
(g) Public Officers Superannuation Fund; and
(h) National Provident Fund,
prescribed in the Regulations as being taxable, income tax is payable on income derived from 1 January 1981 and–
(i) Post and Telecommunication Corporation,
prescribed in the Regulations as being taxable, income tax is payable on income derived from 1 January 1984; and
(j) Investment Corporation of Papua New Guinea,
prescribed in the Regulations as being taxable, income tax is payable on income derived from 1 January 1985; and
(k) State Services and Statutory Authorities Superannuation Fund,
prescribed in the Regulations as being taxable, income tax is payable on income derived from 1 January 1991; and
(l) Motor Vehicles Insurance Fund,
prescribed in the Regulations as being taxable, income tax is payable on income derived from 1 January 1997.
25. EXEMPTION OF RELIGIOUS INSTITUTIONS, HOSPITALS, ETC.
(a) a religious, scientific or public educational institution; or
(b) a public hospital or a hospital that is carried on by a society or association otherwise than for the purposes of profit or gain to the individual members of that society or association,
(c) [Repealed.]
is exempt from income tax.
25A. EXEMPTION OF CHARITABLE BODIES.
(2) The income of an approved body or institution established for charitable purposes is exempt from income tax.
(3) An institution or body may be approved by the Commissioner General by a notice in the National Gazette where–
(a) it is evidenced by an irrevocable trust deed duly executed; and
(b) no benefit accrues to the settlor of the trust or the trustee; and
(c) not less than 80% of its income is utilized for the purpose for which the trust was established; and
(d) regular books of account are maintained.
(4) The Commissioner General may allow accumulation of income for a specified period where he is satisfied that the accumulation is necessary for achieving the main object for which the trust was established.
(5) An institution or body shall be allowed exemption under Subsection (2) for a period of five years.
(6) The Commissioner General may extend exemption to an institution or body from time to time for further periods of not more than five years at a time.
(7) The exemption granted to an already prescribed institution or body shall cease to have effect on expiry of five years from the date of exemption or on 31 December 2000 whichever is later, except where the institution has applied for the extension of exemption before the expiry of five years or before the specified date.
26. EXEMPTION OF TRADE UNIONS, ETC.
27. EXEMPTION OF CERTAIN NON-PROFIT BODIES.
(a) a society, association or club established for musical purposes, or for the encouragement of music, art, science or literature; or
(b) a society, association or club established for the encouragement or promotion of an athletic game or athletic sport in which human beings are the sole participants; or
(c) a society, association or club established for the purpose of promoting the development of aviation or of the agricultural, pastoral, horticultural, viticultural, manufacturing, human or industrial resources of Papua New Guinea,
is exempt from income tax.
28. EXEMPTION OF CERTAIN FUNDS.
29. EXEMPTION OF PENSION, ETC.
(a) pensions and attendants’ allowances paid, and payments of a like nature made by the Government of Australia, under the Repatriation Act 1920-1958, the Repatriation (Far East Strategic Reserve) Act 1956 or the Seamen’s War Pensions and Allowances Act 1940-1958;
(b) pensions and allowances paid, and payments made, by the Government of Australia or by the Government of the United Kingdom, being pensions, allowances or payments that, in the opinion of the Commissioner General, are of a similar nature to pensions, allowances or payments specified in Paragraph (a);
(c) wounds and disability pensions of the kinds specified in Section 380(2) of the United Kingdom Income Tax Act 1952;
(d) pensions, allowances, endowments or benefits paid by the Government of Australia under the Social Services Act 1947-1958;
(e) allowances paid by the Government of Australia under the Tuberculosis Act 1948;
(f) allowances under Part III of the Public Service (Overseas Officers’ Allowances) Determination 1968 and child allowances paid by the State, a public authority or the Government of Australia which, in the opinion of the Commissioner General, are substantially analogous to such allowances;
(g) allowances and expenses to disabled persons paid by the Government of Australia under Part IV of the Re-establishment and Employment Act 1945-1958;
(h) re-employment allowances under Division VI.2 of the Re-establishment and Employment Act 1945-1958;
(i) any allowance or other amount provided by the State, a public authority or the Government of Australia in connection with the education of a person referred to in Section 213A(1), whether provided voluntarily, by agreement or by compulsion of law;
(j) pensions paid from 1 July 1974 to a person resident in Australia and who is not a resident of Papua New Guinea;
(k)[36] [Repealed.]
(l) allowances or expenses paid to meet the annual fees imposed by a school or college for the purpose of educating a student child of an employee but not including expenses of tertiary studies;
(m) pensions, benefits and lump sum payments paid under the Parliamentary Members’ Retirement Benefits Act 1997;
(n)[37] [Repealed.]
(o) distributions by a unit trust or property unit trust;
(p) benefits paid in cash as a substitute for benefits otherwise provided in kind (being benefits that, had they been provided in kind would not have been convertible into cash) pursuant to a determination of the Parliamentary Salaries and Remuneration Commission but not including, where there is a value prescribed for such benefit provided in kind or as an allowance for the purposes of Section 65E, the value so prescribed;
(q) benefits by way of a subsidy provided by an employer to an employee (being a citizen) towards the capital cost of purchasing a residential dwelling under a low cost housing scheme approved by the Commissioner General;
(r)[38] repayable amounts advanced to a first home owner for the purpose of purchasing property used for housing the cost of which was K75,000.00 or less where these advances have been debited against amounts owed in respect of recreation leave, furlough, superannuation or gratuity entitlements; and
(s)[39] distribution of an employee’s own contributions from an authorized superannuation fund from 1 January 1993.
(t)[40] income derived from investments held by a retirement savings account, to the extent prescribed;
(u)[41] amounts not exceeding the prescribed sum, drawn from a retirement savings account.
(2) The exemptions provided for in Subsection (1)(a) to (i), inclusive, apply only if such income is exempt from income tax, under the income tax laws of the country making the payment, when paid to a resident of that country.
30. ALIMONY EXEMPT IN CERTAIN CASES.
31. EXEMPTION OF INTERNATIONAL TRADE FINANCIAL INSTITUTIONS.
(a) Multilateral Investment Guarantee Agency;
(b) Export Finance Insurance Corporation of Australia;
(c) European Investment Bank.
32 - 34[42]. [REPEALED.]
35. EXEMPTION OF CERTAIN INTEREST INCOME.
[44][45]“financial institution” means the Bank of Papua New Guinea and a bank or financial institution licensed under the Banks and Financial Institutions Act 2000;
[46]“long term bond” means a fixed interest security approved by the Central Bank issued by the State or a resident corporation or society with a maturity date not less than five years from the date of issue.
(2) Interest income credited to a person shall be exempt from income tax to the following extent:–
(a)[47] interest income derived by any person from a long term bond issued on or before 16 November 2004;
(b)[48] [Repealed.]
(c) interest income derived by any person from a foreign currency deposit where–
(i) the Bank of Papua New Guinea has given its authority under the Central Banking (Foreign Exchange and Gold) Regulation 1973 for the placing of that deposit in a foreign currency with a financial institution appointed as an authorized dealer under Section 2(1) of that Regulation; and
(ii)[49] [Repealed.]
(d) interest derived by the New Ireland Trust Fund from Mineral Resources Development Corporation Pty Limited pursuant to a European Investment Bank Loan Agreement dated 28 December 1995;
(e)[50] interest derived by a non-resident lender from a company engaged in mining, petroleum or gas operations in Papua New Guinea, to the extent such interest is payable under a financial arrangement approved by the Bank of Papua New Guinea.
(3) Interest paid on an amount deposited on behalf of a person subject to a legal disability where the amount deposited was paid pursuant to an order of a court and the interest is not paid over to the person by reason of the person remaining under a legal disability is exempt from income tax.
35A. EXEMPTION OF CERTAIN INCOME FROM FISHING OPERATIONS.
(2) Subsection (1) applies only to fishing operations or other activities in relation to such fishing operations carried out by a non-resident company under an Agreement with the State where the Agreement was signed on or before 25 May 1992 and the State receives or is entitled to receive fees in relation to the company’s operations in accordance with the Treaty on Fisheries between the State and the United States of America.
(3) The exemption under this section shall extend to income by way of fees from the charter of vessels to another person where the charterer is a person exempt under Subsections (1) and (2) and the Agreement referred to in Subsection (2) makes provision for such charter.
36. EXEMPTION OF INCOME DERIVED BY NON-RESIDENT OUT OF PAPUA NEW GUINEA.
36A[51]. [REPEALED.]
36B. EXEMPTION OF INCOME FROM SALE OF SHARES ON PORT MORESBY STOCK EXCHANGE.
37. EXEMPTION OF CERTAIN PAY AND ALLOWANCES OF MEMBERS OF DEFENCE FORCE, ETC.
(2) . . . [Omitted]
(3) . . . [Omitted]
38. EXEMPTION OF INCOME OF PERSONS ASSISTING IN DEFENCE OF AUSTRALIA OR PAPUA NEW GUINEA.
39. EXEMPTION OF INTERNATIONAL ORGANIZATIONS, ETC.
(2) The official salary and emoluments of an official of a prescribed organisation of which Papua New Guinea and one or more other countries are members are, to the prescribed extent and subject to the prescribed conditions, exempt from income tax or salary or wages tax.
40. EXEMPTION OF SCHOLARSHIPS, ETC.
(2) Income derived by way of an educational allowance in respect of a student, being an allowance paid by the State (other than an allowance paid upon condition that the student will, or will, if required, render or continue to render, services to the State), is exempt from income tax or salary or wages tax.
(3) Income derived by way of an education allowance (other than an allowance paid upon condition that the student shall, or shall if required, render or continue to render service to the person paying or incurring the allowance), being the cost of annual fees imposed by a school or college, other than for tertiary studies, to the extent that the allowance does not exceed the cost incurred, is exempt from income tax or salary or wages tax.
(4) Income derived by way of a scholarship, bursary or educational or living or other allowance (being a scholarship, bursary or allowance provided by the government of a country outside Papua New Guinea) by a person who is pursuing in a country outside Papua New Guinea a course of study or training, and who is in that country substantially for the purpose of pursuing that course, is exempt from income tax or salary or wages tax.
40AA. EXEMPTION OF CERTAIN TRAVEL BENEFITS.
(a)
(i) one annual leave fare for himself and his family paid from his place of employment to the employee’s place of origin or recruitment; and
(ii) additional leave fares for travel within Papua New Guinea to a person employed solely in, or in connection with a mining lease, special mining lease or mining project or prospecting authority granted under the Mining Act 1992, or a pipeline licence or a petroleum development licence granted under the Oil and Gas Act 1998; and
(iii) additional leave fares, where due to remoteness, or hardship as a result of being located in a remote area away from urban centres, and the Commissioner General is satisfied that the conditions warrant additional leave fares due to remoteness or hardship; or
(b) recreational fares and accommodation within Papua New Guinea, to a value not exceeding the total value of the benefit allowable under Paragraph (a),
is exempt from income tax or salary and wages tax provided that the income or benefit is applied exclusively for the purposes referred to in Paragraph (a) or (b).
40A. EXEMPTION OF SAVINGS AND LOAN SOCIETIES.
40B - 41[54]. [REPEALED.]
42. EXEMPTION OF CERTAIN DIVIDENDS.
(2) For the purposes of Subsection (1), a share issued by a company shall be deemed to be a redeemable share if–
(a) the share is, or at the option of the company is to be, liable to be redeemed; or
(b) the share was issued in pursuance of, or as part of, an agreement or arrangement, whether oral or in writing and whether entered into before or after the commencement of this subsection, that had the purpose, or purposes that included the purpose, of enabling the company, by means of the redemption, purchase or cancellation, or of a reduction in the paid-up value, of that share or of any other share in the company, to pay, transfer or apply to, on behalf of or at the direction of the person to whom the share was issued or any other person, whether upon the exercise of an option by the company or by any other person or not, any money or other property other than shares in the company.
(3) The assessable income of a shareholder does not include the amount of any dividends paid directly or indirectly out of income that was assessable income from petroleum operations or assessable income from gas operations, but only to the extent that the Commissioner General is satisfied that they were so paid.
(4)[55] [Repealed.]
43[56]. [REPEALED.]
43A. REDEMPTION OF PREMIUM SECURITIES REDEEMABLE AT A PREMIUM.
(2) Subsection (1) does not affect the operation of this Act in relation to the redemption of a Territory Premium Security owned by a person where, if the bond had been sold by that person at the time of the redemption–
(a) the proceeds of the sale; or
(b) any profit arising from the sale,
would have been included in the assessable income of that person.
(3) In this section, “Territory Premium Security” means a security of Papua New Guinea issued under the Loan Securities Act 1960 and bearing on its face the words “Territory Premium Bond” or any other such security redeemable at a premium and declared by the Treasurer, by notice in the Gazette, to be a Territory Premium Security for the purposes of this section.
44. LIMITATION OF EXEMPTION.
45. LIABILITY TO FURNISH RETURNS NOT AFFECTED BY EXEMPTION.
Division 1A.
Export Incentives.
45A. INTERPRETATION.
“allowable deductions” means all deductions that would be allowable under this Act if no part of the income of the taxpayer was exempted from tax by the operation of this Division;
“average export sales” means an amount equal to the export sales of the base period divided by three;
“base period” means the three years of income immediately preceding the year of income in respect of which an exemption under this Division is claimed;
“consideration receivable”, in relation to a sale or other disposal of export goods, means–
(a) in the case of a sale or disposal other than one to which Paragraph (b) applies–the amount or value of the consideration for the sale or disposal; or
(b) where the sale or disposal is part of or is connected with a transaction in which any other assets are sold or disposed of–such part of the amount or value of the consideration as the Commissioner General is satisfied is attributable to the sale or disposal of the export goods,
reduced by any amounts paid or payable (otherwise than as an agent) by the person selling or disposing of the goods, by way of freight for carriage of the goods outside Papua New Guinea or by way of insurance or other outgoings in relation to the goods attributable to events or contingencies occurring or arising, or services performed, after the placing of the goods upon a ship or aircraft for export from Papua New Guinea;
“declared year of income” means the year in respect of which the taxpayer became entitled to the exemption offered under Section 45B;
“export goods” means goods exported from Papua New Guinea by the taxpayer, being goods–
(a) which were manufactured by the taxpayer in Papua New Guinea; and
(b) which were sold or disposed of by the taxpayer; and
(c) of which the taxpayer was the owner at the time of the sale or disposal; and
(d) which are not non-qualifying goods; and
(e) which are qualifying goods;
“export sales” means the consideration received by the taxpayer in relation to the sale or other disposal of export goods;
“new manufactured product” has the meaning ascribed to it in Section 1 of the Industrial Development (Wage Subsidy) Act 1984;
“non-qualifying goods”, in relation to export goods means–
(a) goods exported by way of gift; and
(b) goods taken or sent out of Papua New Guinea with the intention that they will at some later time be returned to Papua New Guinea otherwise than for repair or replacement;
(c) goods which are sold by retail to persons departing from Papua New Guinea; and
(d) such other goods as are prescribed as non-qualifying goods for the purposes of this Division; and
(e) goods (except new manufactured products) not prescribed as qualifying goods;
“qualifying goods”, in relation to export goods, means such goods, or goods included in such classes of goods, as are prescribed for the purposes of this Division, or new manufactured products.
(2) For the purposes of calculating the average export sales of a taxpayer, where during a year of income the taxpayer acquired, by purchase or otherwise, an existing business, the export sales of the taxpayer for the base period shall be deemed to be an amount equal to the sum of the export sales derived by the taxpayer during the base period and the export sales derived by each other person who owned that business during that period.
45B. EXEMPTION RELATED TO EXPORT SALES.
(a) 100% of the amount of the export sales made prior to the last day of the third year of income following the year in which export sales commenced; and
(b) 100% of the amount by which the export sales for each subsequent year exceeds the average export sales,
shall be exempt income.
(2) Subject to Subsection (3) and Section 45C, where a taxpayer derives income from export sales before 1 September 1984–
(a) in any year of income which commenced prior to 1 January 1982 or any approved substituted accounting period in lieu thereof, 50% of the amount by which the export sales for the year of income exceeds the average export sales; or
(b) in any year of income which commenced on or after 1 January 1982, but prior to 1 January 1984, or any approved substituted accounting period in lieu thereof, 100% of the amount by which the export sales for the year of income exceeds the average export sales; or
(c) in any year of income which commenced on or after 1 January 1984, or any approved substituted accounting period in lieu thereof–
(i) 100% of the amount by which the export sales made prior to 1 September 1984 exceed 75% of the average export sales; and
(ii) 100% of the amount derived from export sales made after 1 September 1984 but prior to the end of the third year of income following the date of the commencement of export sales; and
(iii) 100% of the amount by which the export sales for each subsequent year exceeds the average export sales,
shall be exempt income.
(3) The provisions of Subsections (1) and (2) shall apply to income derived from export sales during each of the seven years commencing with the declared year of income.
45C. EXEMPTION IN RESPECT OF RESTRICTED PERIOD.
45D. CALCULATION WHERE GOODS QUALIFY FOR PART PERIOD ONLY.
(2) Where, during a year of income, goods that were not qualifying goods became qualifying goods, calculation of export sales for the base period shall be adjusted by including those goods, for the purpose of calculating any increase in export sales in accordance with this Division.
45E. ARRANGEMENTS TO INCREASE EXEMPTIONS.
45F. MODIFICATION OF TAX INFORMATION.
(2) Where, in a case where Subsection (1) would otherwise apply, the Commissioner General is satisfied that the amount of export sales of the taxpayer for the year of income or the base period does not exceed a particular amount, but he is not satisfied that it is less than that particular amount, that particular amount shall be deemed to be the amount of the relevant export sales for the purpose of determining the exempt income of the taxpayer under this Division.
(3) Where, within the time within which he is required to furnish a return of his income for a year of income, or within such further time as the Commissioner General permits, a taxpayer makes application in writing to the Commissioner General for a reduction of the amount that would otherwise be the amount of his export sales for the base period for the purpose of determining exempt income under this Division, on the grounds that, by reasons of abnormal trading conditions or other extraordinary circumstances during the base period the amount of export sales for the base period is greater than it would otherwise have been and that he is, by reason of that fact, under an unfair disadvantage, the Commissioner General may, for the purposes of this Division, make such adjustments in respect of the amount of those export sales as he thinks fit.
45G. DEDUCTIONS IN CALCULATING EXEMPTION.
(2) The amount to be excluded under Subsection (1) from a taxpayer’s allowable deductions shall not exceed the amount of exempt income referred to in that subsection.
45H. GAINING IMPROPER ADVANTAGES, ETC.
Penalty: [57]A fine of not less than K1,000.00 and not exceeding K50,000.00.
(2) In addition to any fine imposed under Subsection (1), the Court before which the action is brought may order the person or company, as the case may be, to pay to the Commissioner General a sum not exceeding double the amount of tax that, in the opinion of the court, was avoided or attempted to be avoided.
(3) Without derogating the provisions of any other law, where the court is satisfied that the commission of an offence against this section was counselled or assisted in any way by any other person (whether in a professional or other capacity) the court may order that person to be liable, or jointly and severally liable with any other person, for the payment of the additional tax under Subsection (2).
Division 1B.
Rural Development Incentive.
45I. INTERPRETATION.
“existing business” means a business or enterprise which, in the opinion of the Commissioner General, was carried on by the taxpayer or any other person at any time prior to 1 January 1988 and includes a business or enterprise which formed part of an existing business;
“rural development area” means a prescribed rural area but not including any such area in which is situated a Petroleum Development Licence issued under the Oil and Gas Act 1998 or a Special Mining Lease issued under the Mining Act 1992;
“rural development income” means the income, as defined in Section 45J, derived from carrying on a rural development industry in a rural development area;
“rural development industry” means a prescribed industry, which may include a service, primary or other industry but shall not include–
(a) an industry engaged in the exploitation, extraction, processing or transportation of the non-renewable natural resources of Papua New Guinea; or
(b) an industry that does not, through a fixed base located in the rural development area, carry on business on an ongoing basis in that rural development area.
(2) Notwithstanding Subsection (1), where the Commissioner General is satisfied that a business was established in a prescribed rural area prior to the later of–
(a) 7 November 1989; or
(b) the date of issue of a Special Mining Lease or a Petroleum Development Licence in the prescribed rural area,
this Division shall apply to the taxpayer as if the Special Mining Lease or Petroleum Development Licence had not been issued.
45J. RURAL DEVELOPMENT INCOME.
(2) Where the Commissioner General–
(a) having regard to any connection between a taxpayer carrying on a rural development industry and to a taxpayer carrying on any other industry or business, is satisfied that the parties were not dealing at arm’s length; or
(b) is satisfied that the rural development income derived by a taxpayer carrying on a rural development industry and any other industry or business is greater or less than would have been the case had that other industry or business not been carried on; or
(c) is of the opinion that arrangements have been made between the taxpayer and any other person with a view to the affairs of the taxpayer being so conducted as to have the effect of obtaining for the taxpayer an improper advantage under this Division, that he would not, but for those arrangements, have otherwise obtained,
then the amount of rural development income calculated under this Division in respect of that taxpayer shall not exceed the amount that, in the opinion of the Commissioner General, would have been calculated had–
(d) those dealings been at arm’s length; or
(e) the rural development industry been carried on as a separate and distinct enterprise; or
(f) those arrangements not been made,
and the Commissioner General may, for the purposes of this Act, make such adjustments to any rural development income or taxable income declared, or which should have been declared, by any taxpayer as, in his view, are necessary to give effect to that correction.
45K. GAINING IMPROPER ADVANTAGE, ETC.
Penalty: [58]A fine of not less than K1,000.00 and not exceeding K50,000.00.
(2) In addition to any fine imposed under Subsection (1), the Court may order the person or company, as the case may be, to pay to the Commissioner General a sum not exceeding double the amount of tax that, in the opinion of the Court, was avoided or attempted to be avoided.
(3) Without derogating the provisions of any other law, where the Court is satisfied that the commission of an offence against this section was counselled or assisted in any way by another person (whether in a professional or other capacity) the Court may order that person to be liable, or jointly and severally liable with any other person, for payment of the additional tax under Subsection (2).
45L. TAX EXEMPTION PERIOD.
(2) Where a business qualifying for exemption under this Division is sold, the period of exemption available to the purchaser of that business shall be limited to the unexpired period of exemption available to the previous owner.
45M. LOSSES INCURRED DURING THE TAX EXEMPTION PERIOD.
Division 1C.
Bougainville Incentive.
45N. INTERPRETATION.
“business enterprise” means any sole trader, company or other economic entity which, in the opinion of the Commissioner General, is based in and carries on all or the majority of its business in Bougainville Province;
“income” means the assessable income derived from a business enterprise less the allowable deductions relating to that income, but does not include salary or wages income;
“tax” means tax on income imposed under this Act and includes tax imposed under Part III.14D, but does not include taxes imposed under Parts III.2B, III.13A, III.14, III.14A, III.14B, III.14C, III.14E, III.17 and VI.2.
45O. TAX EXEMPTION PERIOD.
45P. LOSSES INCURRED DURING THE TAX EXEMPTION PERIOD.
45Q. GAINING IMPROPER ADVANTAGE.
45R. OFFENCE.
Penalty: [59]A fine of not less than K1,000.00 and not exceeding K50,000.00.
(2) In addition to any fine imposed under Subsection (1), the Court before which the action is brought may order the person or company, as the case may be, to pay to the Commissioner General a sum not exceeding double the amount of tax that, in the opinion of the Court, was avoided or attempted to be avoided.
(3) Without derogating the provisions of any other law, where the Court is satisfied that the commission of an offence against this section was counselled or assisted in any way by any other person (whether in a professional or other capacity) the Court may order that person to be liable, or jointly and severally liable with any other person, for the payment of the additional tax under Subsection (2).
Division 1D.
Volcano Affected Area Incentive.
46AA. INTERPRETATION.
“forestry operations” means any operations, other than subsistence activities, of or pertaining to forestry;
“tax” means tax on income imposed under this Act and includes tax imposed under Part III.14D, but does not include taxes imposed under Parts III.2B, III.13A, III.14, III.14A, III.14C, III.14E, III.17 and VI.2;
“Volcano Affected Area” means–
(a) all that area of the Gazelle Peninsula north of a line 4 degrees 30 minutes south of the equator and east of the line 152 degrees east of Greenwich; and
(b) the area known as and forming the town of the Palmalmal;
“Volcano Affected Area Business Enterprise” means that part of a person’s business, trading or manufacturing operation or activity, (other than forestry operations or mining operations) whether comprising the entire or part only of that person’s operations or activities in Papua New Guinea, which the Commissioner General is satisfied, is based in and carried on in a Volcano Affected Area;
“Volcano Affected Area net assessable income” or “Volcano Affected Area net loss” (as the context requires) means the net assessable income or the net loss (assessable income less allowable deductions) incurred or suffered by a Volcano Affected Area Business Enterprise as if it were a separate taxpayer entity, but in this computation income shall exclude salary or wages income and income that is not substantially sourced in a Volcano Affected Area.
46AB. TAX EXEMPTION AND LOSSES.
46AC. SUITABLE BUSINESS AND ACCOUNTING RECORDS.
(2) The Commissioner General shall have full and absolute discretion in determining whether the relevant income of a Rabaul Business Enterprise is substantially sourced in Rabaul.
46AD. GAINING IMPROPER ADVANTAGE.
46AE. OFFENCE.
Penalty: [60]A fine of not less than K1,000.00 and not exceeding K50,000.00.
(2) In addition to any fine imposed under Subsection (1), the Court before which the action is brought may order the person or company, as the case may be, to pay to the Commissioner General a sum not exceeding double the amount of tax that, in the opinion of the Court, was avoided or attempted to be avoided.
(3) Without derogating the provisions of any other law, where the Court is satisfied that the commission of an offence against this section was counselled or assisted in any way by any other person (whether in a professional or other capacity) the Court may order that person to be liable, or jointly and severally liable with any other person, for the payment of the additional tax under Subsection (2).
Division 1E.
Lihir Incentive.
46BA. INTERPRETATION.
“business enterprise” means a business carried on by a Lihirian corporation, which in the opinion of the Commissioner General is–
(a) based on and operates in the Lihir District; and
(b) derives its primary income from doing business related to the mining operation on Lihir; and
(c) commenced after 17 March 1995;
“Lihir District” means the administrative district defined by the New Ireland Provincial Authority;
“Lihirian” means a citizen who belongs to the Lihir District and has matrilineal rights;
“Lihirian Corporation” means–
(a) a business group registered under the Business Groups Incorporation Act 1974; or
(b) an incorporated land group recognised under the Land Groups Incorporation Act 1974; or
(c) a corporation incorporated under the Companies Act 1997,
and which was registered or incorporated after 17 March 1995 and is 100% Lihirian.
46BB. TAX EXEMPTION PERIOD.
46BC. LOSSES INCURRED DURING THE EXEMPTION PERIOD.
46BD. GAINING IMPROPER ADVANTAGE, ETC.
Penalty: [61]A fine of not less than K1,000.00 and not exceeding K50,000.00.
(2) In addition to any fine imposed under Subsection (1), the Court before which the action is brought may order the person or company, as the case may be, to pay to the Commissioner General a sum not exceeding double the amount of tax that, in the opinion of the Court, was avoided or attempted to be avoided.
(3) Without derogating the provisions of any other law, where the court is satisfied that the commission of an offence against this section was counselled or assisted in any way by another person (where in a professional or other capacity) the court may order that person to be liable, or jointly and severally liable with any other person, for payment of the additional tax under Subsection (2).
Division 2.
Income.
Subdivision A. – Assessable income generally.
46A. NON-APPLICATION OF SUBDIVISION.
(a)[62] [Repealed.]
(b) a gratuity, as defined in Section 65A and Section 65CB; or
(c) subject to Sections 46B and 46C salary or wages in respect of which salary or wages tax has been deducted.
46B. CAPITAL AMOUNT OF ALLOWANCE, ETC, DEEMED SALARY OR WAGES.
(2) Income referred to in Subsection (1) to the extent that it relates to a payment accrued before 1 January 1993 and does not exceed the total value of–
(a) payments in respect of annual accrued leave (provided that the annual leave entitlement does not exceed six weeks and the payment, being part of a termination payment, is made before 1 January 1994); and
(b) payments in respect of long service leave accrued before 1 January 1993 at a rate not exceeding six months per 15 years of service with an employer or an associated person of that employer where the employee had completed a minimum of six years’ continuous service; and
(c)[63] distribution from an authorized superannuation fund being a prescribed sum, and the amount accrued before 1 January 1993; and
(d)[64] [Repealed.]
shall be deemed to be salary or wages income taxable at the rate declared by Section 1 of the Income Tax (Salary or Wages Tax) (Rates) Act 1979.
(2A)[65] [66]Income referred to in Subsection (1), except where it relates to income covered by Subsection (2), to the extent it is a distribution from an authorised superannuation fund being a prescribed sum and –
(a) is made in respect of contributions made on behalf of that employee, where –
(i) the contributions have been made for not less than 15 years; or
(ii) the contributions have been made for not less than 7 years and the employee is either not less than 50 years of age or is subject to enforced early retirement; or
(iii) the distribution is made as the result of the death or permanent disablement of the employer,
shall be deemed to be salary or wages income taxable at the rate declared by Section 1(2) of the Income Tax (Salary or Wages Tax) (Rates) Act 1979; or
(b) in any other case, shall be deemed to be salary or wages income taxable at the rate declared by Section 1(3) of the Income Tax (Salary or Wages Tax) (Rates) Act 1979.
(3) Income referred to in Subsection (1) to the extent it exceeds income referred to in Subsections (2) and (2A) shall be deemed to be salary or wages paid in respect of a period of 26 fortnights preceding the date on which the payment was made.
(4) Income referred to in Subsections (1), (2) and (3) to the extent that it relates to a payment accrued from 1 January 1993 shall be deemed to be salary or wages paid in respect of a period of 26 fortnights preceding the date on which the payment was made.
46C. INCOME OTHER THAN SALARY OR WAGES TAXABLE.
46. ASSESSABLE INCOME.
(a) where the taxpayer is a resident–the gross income derived directly or indirectly from all sources whether in or out of Papua New Guinea; and
(b) where the taxpayer is a non-resident–the gross income derived directly or indirectly from all sources in Papua New Guinea,
but shall not include exempt income.
(2) Interest (except interest paid outside Papua New Guinea to a non-resident on debentures issued outside Papua New Guinea by a company) upon money secured by mortgage of any property in Papua New Guinea shall be deemed to be derived from a source in Papua New Guinea.
(3 - 4)[67] [Repealed.]
47. CERTAIN ITEMS OF ASSESSABLE INCOME.
(a) profit arising from the sale by the taxpayer of any property acquired by him for the purpose of profit-making by sale, or from the carrying on or carrying out of any profit-making undertaking or scheme; and
(b) beneficial interests in income derived under a will, settlement, deed of gift or instrument of trust; and
(c)[68] [Repealed.]
(d) allowances, gratuities, compensations, benefits, bonuses and premiums allowed, given or granted to him in respect of or for or in relation directly or indirectly to, any employment or services rendered by him where such benefit so allowed, given or granted would be a taxable benefit under Division III.2B; and
(e) any distribution made to a taxpayer from a superannuation fund being an amount in excess of the prescribed sum, except to the extent that the excess constitutes the return of the employee’s own contribution; and
(f) any amount received as or by way of royalty or royalties other than an amount that–
(i) but for the definition of “royalty” or “royalties” in Section 4(1) would not be such an amount; and
(ii) is not “income” within the ordinary meaning of that expression; and
(g) any bounty or subsidy received in or in relation to the carrying on of a business (which bounty or subsidy shall be deemed to be part of the proceeds of that business); and
(h) the amount of any fee or commission received for procuring a loan of money; and
(i) any amount received as or by way of bonus other than a reversionary bonus on a policy of life assurance; and
(j) any amount received by way of insurance or indemnity for or in respect of any loss–
(i) of trading stock that would have been taken into account in computing taxable income; or
(ii) of profit or income that would have been assessable income,
if the loss had not occurred, and any amount so received for or in respect of any loss or outgoing that is an allowable deduction; and
(k) realised foreign exchange gains, derived from debts incurred or borrowings made in a currency other than Papua New Guinea currency which debts were incurred or borrowings made on or after 11 November 1986 or, in the case of debts incurred or borrowings entered into for the purpose of reafforestation in Papua New Guinea, at any time.
(2)[69] [70]The assessable income of a taxpayer shall not include so much of the income referred to in Sections 155A(6)(c), 155B(3), 155G(4) or 157B(8) as is applied to reduce the relevant expenditure.
47A. ASSESSABLE INCOME–PREMIUM FOR LEASE.
(a) in the nature of a premium, fine or foregift payable for or in connection with the grant or assignment of a lease; or
(b) for or in connection with an assent to the grant or assignment of a lease,
but does not include an amount in respect of goodwill or a licence.
(2) Where, in the year of income, a taxpayer receives a premium that relates to the grant or assignment of a lease of property that was not, at the date on which the agreement to grant or assign the lease was made or the assent to the grant or assignment of the lease was given, as the case may be, intended by the grantee or assignee to be used by the grantee or assignee or some other person wholly or partly for the purpose of gaining or producing assessable income, the assessable income of the taxpayer includes the premium.
(3) Where, in the year of income, a taxpayer receives a premium that relates to the grant or assignment of a lease of property that was, at the date on which the agreement to grant or assign the lease was made, or the assent to the grant or assignment of the lease was given, as the case may be, intended by the grantee or assignee to be used by the grantee or assignee or some other person partly for the purpose of gaining or producing assessable income and partly for other purposes, the assessable income of the taxpayer includes such part of the premium as the Commissioner General considers may reasonably be attributed to the intended use of the property for purposes other than gaining or producing assessable income.
(4) Where, in a case referred to in Subsection (2) or (3) the taxpayer satisfies the Commissioner General that, at the date on which the agreement to grant or assign the lease was made, or the assent to the grant or assignment of the lease was given, as the case may be, he believed on reasonable grounds that the grantee or assignee intended a particular use of the property by the grantee or assignee or some other person for the purpose of gaining or producing assessable income, the Commissioner General may apply this section on the basis that that intention existed.
(5) This section does not apply to–
(a) a premium received in consequence of the assignment of a mining lease; or
(b) a premium received in connection with the grant or assignment of a lease that is a grant or assignment for mining purposes; or
(c) a premium received in connection with the assignment of–
(i) a lease from the State of land used for primary production; or
(ii) a lease from the State, being a lease granted in perpetuity or for a term of not less than 99 years, a lease with a right of purchase or a lease granted for the purpose of effecting improvements to be used for residential purposes only; or
(iii) a development licence, a retention licence or a petroleum prospecting licence; or
(d) A premium received, to the extent that it is deemed to be expenditure incurred in the purchase of property by virtue of Section 78A.
(6) For the purpose of Subsection (5), a lease shall be deemed not to have been granted or assigned for mining purposes unless there appears, in a document signed by the parties before or at the time the grant or assignment was made, or before such later time as the Commissioner General determines, a statement to the effect that the purpose of the grant or assignment is to enable the person to whom the grant or assignment is made to carry on mining operations upon the land.
47B. ASSESSABLE INCOMES–SUPERANNUATION FUND CONTRIBUTIONS.
[72][73]“contribution” means any amount paid to a superannuation fund;
“dependants” in relation to an employee, includes the spouse and any child of the employee;
“employee” in relation to a company includes a director of the company;
“person” includes a partnership.
(2) Where a superannuation fund receives contributions from an employer in respect of employees or, where contributions were not received but were due and payable within the year of income by the employer, such contributions shall be deemed to be assessable income of the superannuation fund to the extent that those contributions exceed the amount for which a deduction under Part III.3A is allowable to the employer.
47C. ASSESSABLE INCOME–DEDUCTION OF PAYMENTS UNDER LEASE.
(a) a taxpayer leased, rented, or hired any asset, being any plant or machinery (including a motor vehicle) or other equipment or temporary building and the Commissioner General has allowed a deduction in calculating the assessable income of the taxpayer in any income year for the consideration paid or given in respect of that lease, rental or hire; and
(b) either–
(i) that taxpayer at any time purchased or otherwise acquired that asset and sold or otherwise disposed of it for a consideration in excess of the consideration for which that person purchased or otherwise acquired it; or
(ii) any other person, where the taxpayer and that other person are associated persons, at any time purchased or otherwise acquired that asset, whether or not from the taxpayer, and that other person sold or otherwise disposed of it for a consideration in excess of the consideration for which that other person purchased or otherwise acquired it,
the Commissioner General may include in the assessable income of the taxpayer derived in the year of income in which the asset was sold or otherwise disposed of an amount equal to the excess or the total amount of the deductions so allowed, whichever is the lesser.
(2) Subsection (1) shall apply whether or not there was any clause or condition in the lease, contract, agreement, or arrangement under which the asset was leased, rented, or hired, whereby that taxpayer or that other person was required to purchase or otherwise acquire that asset.
(3) For the purpose of this section–
(a) where any asset to which this section relates has been purchased or otherwise acquired, or sold or otherwise disposed of, together with other assets, the consideration attributable to that asset shall be determined by the Commissioner General, and the part of the consideration so determined shall be deemed to be the consideration for which that asset was purchased or otherwise acquired or, as the case may be, was sold or otherwise disposed of; and
(b) where any asset to which this section relates has been sold or otherwise disposed of without consideration or for a consideration which, in the opinion of the Commissioner General, is less than the market price of that asset at the date of the sale or other disposition, that asset shall be deemed to have been sold at or to have realised that market price or, if there is no market price, shall be deemed to have been sold and have realised such price as the Commissioner General determined.
47D. ASSESSABLE INCOME–ACCOUNTING FOR VALUE ADDED TAX.
(a) any amount of value added tax, including additional tax and further additional tax charged, levied or calculated under the Value Added Tax Act 1998 in respect of a supply of goods and services made by that person; and
(b) any amount of value added tax refundable by the Commissioner General to that person.
(2) Subject to Subsection (3), no deduction shall be allowed to any person registered under the Value Added Tax Act 1998 for–
(a) any amount of value added tax, including additional tax and further additional tax charged, levied or calculated under the Value Added Tax Act 1998 in respect of a supply of goods and services made to that person; and
(b) any amount of value added tax payable by that person to the Commissioner General.
(3) Where a person registered under the Value Added Tax Act 1998 supplies exempt goods or services, he shall be entitled to a deduction of the value added tax paid by him on the purchase of goods or services, other than capital goods, to the extent he is not entitled to claim input credit for those purchases under the Value Added Tax Act 1998.
(4) For the purposes of this Act, where any deduction, including deductions for depreciation for any property, is calculated by reference to the cost price of that property, the cost price shall be reduced by the amount of input credit allowed to that person under the Value Added Tax Act 1998.
48. DIVIDENDS.
(a) if he is a resident–dividends received by him directly or indirectly from a company (whether the company is a resident or non-resident) out of profits derived by it from any source; and
(b) if he is a non-resident–
(i) dividends received by him directly or indirectly from a company which is a resident out of profits derived by it from any source; and
(ii) dividends which have been received by him directly or indirectly from a company which is a non-resident out of profits derived by it from a Papua New Guinea source that are not profits upon which Papua New Guinea dividend (withholding) tax has been directly or indirectly paid.
(1A) Where–
(a) the amount of the moneys or of the value of other property of which a dividend paid by a company consists is debited against an amount standing to the credit of a share premium account of the company; or
(b) a dividend paid by a company is a repayment by the company of moneys paid upon a share,
the dividend shall, for the purposes of this section, be deemed to have been paid by the company out of profits derived by it.
(2) Distributions to shareholders of a company by the company, or by a liquidator in the course of winding up the company, to the extent to which they represent–
(a) income derived by the company; or
(b) amounts that have been included in the assessable income of the company,
whether before or during liquidation, other than income that has been properly applied to replace a loss of paid-up capital, shall, for the purposes of this Act, be deemed to be dividends paid to the shareholders by the company out of profits derived by it.
(3) Those distributions shall, to the extent to which they are made out of any profits or income, be deemed to have been paid wholly and exclusively out of those profits or that income.
(3A) Where–
(a) the business of the company has been or is in the course of being discontinued otherwise than in the course of a winding-up of the company under any law relating to companies; and
(b) in connection with the discontinuance any moneys of the company have been, or other property of the company has been, distributed, otherwise than by the company, to shareholders of the company; and
(c) the moneys or other property so distributed are or is not, for the purposes of this Act, dividends,
the distribution shall, subject to Subsection (3B), be deemed to be, for the purpose of this section, a distribution to the shareholders by a liquidator in the course of winding-up the company.
(3B) Where–
(a) Subsection (3A) would, but for this subsection, apply in relation to any moneys or other property of a company distributed to shareholders of the company; and
(b) the company is not dissolved within a period of three years after the distribution, or within such further period as the Commissioner General allows,
Subsection (3A) does not apply, and shall be deemed never to have applied, in relation to those moneys or that other property, and those moneys or that other property so distributed shall, for the purposes of this Act, be deemed to be dividends paid by the company to the shareholders out of profits derived by it.
(3C) Where a resident company–
(a) has not lodged a return of income for three consecutive years; and
(b) has more than 75% of the assets which were listed in the accounts forming part of the last return of income lodged by the company located or invested outside the country; and
(c) is not carrying on business in the country,
the company shall,
(d) on the expiry of three years after the date of lodgement of the last return of income; or
(e) on commencement of this subsection,
whichever is the later, be deemed to have been dissolved, and the shareholders of the company as at that date shall, for the purposes of this section, be deemed to have received a distribution from a liquidator in the course of the winding up of the company.
(3D) For the purposes of Subsection (3C), the company is not carrying on business where–
(a) the only income it derives in the country is income from investments or property; or
(b) the Commissioner General is not satisfied that the business purported to be carried on by the company is a bona fide business carried on by the company for the purpose of earning a profit.
(3E) Where there has been a deemed distribution by a liquidator under this section to more than one shareholder, the distribution shall be deemed to be apportioned rateably among those shareholders in proportion to the paid-up value of the interest of each in the share capital of the company.
(4) For the purposes of Subsection (2), “paid up capital” does not include the paid-up value of shares that have been issued by the company in satisfaction of dividends that have been paid out of profits arising from the revaluation of assets not acquired for the purposes of re-sale at a profit, but includes capital that has been paid up in money or by other valuable consideration and that has been cancelled and has not been repaid by the company to the shareholders.
(5) Where–
(a) a dividend or a part of a dividend is or has been included in the assessable income of a taxpayer of the year of income or of any previous year; and
(b) under the law of any country outside Papua New Guinea, the company paying the dividend deducted or was authorized to deduct from the dividend income tax that the taxpayer was not personally liable to pay; and
(c) the taxpayer, in the year of income, receives a payment or is allowed a credit of an amount in respect of the income tax that the company deducted or was authorized to deduct,
his assessable income of the year of income shall include that amount, and that amount shall, for all purposes of this Act, be deemed to be a dividend.
49. ASSESSABLE INCOME–ANNUITIES.
(2) Subject to Subsection (3), the amount to be excluded under Subsection (1) from the amount of an annuity derived by a taxpayer during a year of income is–
(a) in the case of an annuity payable until the death of the taxpayer or for a term that will not end before his death–an amount ascertained by dividing the undeducted purchase price of the annuity by the number of years in the complete expectation of life of the taxpayer, as ascertained by reference to the prescribed Life Tables, at the time when the annuity first commenced to be derived; and
(b) in the case of an annuity payable for a term of years certain–an amount ascertained by dividing the undeducted purchase price of the annuity by the number of years in the term.
(3) Where the amount of an annuity derived by the taxpayer during a year of income is more than, or less than, the amount payable for a whole year, the amount to be excluded from the amount so derived is the amount that bears to the amount that, but for this subsection, would be the amount to be so excluded the same proportion as the amount so derived bears to the amount payable for a whole year.
(4) For the purposes of this section, “the undeducted purchase price”, in relation to an annuity, means so much of the purchase price of the annuity paid by the taxpayer as has not been allowed and is not allowable as a deduction under this Act and has not been allowed as a deduction, and in respect of which a rebate of income tax has not been allowed, in assessments for income tax under an Act relating to income tax.
50. INSURANCE RECOVERIES ON LOSSES OF LIVESTOCK AND TREES.
(2) Where a taxpayer receives an insurance recovery that is included in his assessable income of a year of income, he may elect that that assessable income shall be reduced by an amount equal to four-fifths of the insurance recovery.
(3) Where an insurance recovery is received by a partnership, each partner in the partnership may make an election under Subsection (2) in relation to that part of the insurance recovery that is included in his individual interest in the net income of the partnership.
(4) Where an insurance recovery is received by the trustee of a trust estate–
(a) the trustee may make an election under Subsection (2) in relation only to that part of the insurance recovery that is included in the net income of the trust estate in respect of which he is liable to be assessed and to pay tax under the provisions of Section 130; and .
(b) each resident beneficiary in the trust estate who is not under a legal disability and is presently entitled to a share of the net income of the trust estate, being a share that includes a part of the insurance recovery, may make an election under Subsection (2) in relation to that part.
(5) The election that a taxpayer may make under Subsection (2) shall be made in writing and lodged with the Commissioner General on or before the date of lodgment of the return of income of the year of income in which the insurance recovery is received, or within such further time as the Commissioner General allows.
(6) Where a taxpayer has made an election under Subsection (2), his assessable income of the year in which the insurance recovery is received shall be reduced by an amount equal to four-fifths of the insurance recovery, or the part of the insurance recovery to which his election relates, and there shall be included in his assessable income of each of the next four succeeding years an amount equal to one-fifth of the insurance recovery, or of that part of the insurance recovery, as the case may be.
(7) Where, in a year of income, a taxpayer who has made an election under Subsection (2)–
(a) appears to the Commissioner General to be about to leave Papua New Guinea; or
(b) dies; or
(c) is adjudicated insolvent, applies to take the benefit of a law for the relief of insolvent debtors, compounds with, or makes an assignment of any of his property for the benefit of, his creditors or has his affairs liquidated by arrangement; or
(d) being a company, commences to be wound up,
there shall, if the Commissioner General so determines, be included in the assessable income of the taxpayer of that year of income any amount that would otherwise be included, in pursuance of this section, in the assessable income of any subsequent year of income.
(8) An amount that, in accordance with either Subsection (6) or (7), is included in the assessable income of a taxpayer of any year shall, for all purposes of this Act, be deemed to be assessable income derived by him during that year from the carrying on by him in Papua New Guinea, during that year, of a business of primary production.
Subdivision B. – Trading Stock.
51. TRADING STOCK TO BE TAKEN INTO ACCOUNT.
(2) Where the value of all trading stock on hand at the end of the year of income exceeds the value of all trading stock on hand at the beginning of that year, the assessable income of the taxpayer shall include the amount of the excess.
(3) Where the value of all trading stock on hand at the beginning of the year of income exceeds the value of all trading stock on hand at the end of that year, the amount of the excess is an allowable deduction.
52. VALUE AT BEGINNING OF YEAR OF INCOME.
(2) The value of trading stock to be taken into account at the beginning of the first year of income to which this Act applies shall be–
(a) in the case of livestock–the market selling value of that livestock; and
(b) in the case of any other article of trading stock–the cost price of that article or such other value as is approved by the Commissioner General in a particular case.
(3) The regulations may prescribe the manner in which the cost price of an article shall be determined for the purposes of this section.
53. VALUE OF TRADING STOCK AT END OF YEAR OF INCOME.
(2) The option referred to in Subsection (1) shall be exercisable by the taxpayer–
(a) in respect of the year of income commencing 1 January 1981; or
(b) in respect of the first year of income for which a return is lodged,
whichever is the later, and shall not be varied at any time thereafter unless with the leave of the Commissioner General.
(3) Where no election is made by the taxpayer, the value of each article of trading stock to be adopted in the first return of income lodged after 31 December 1981 shall be the cost price of the stock.
(4) In respect of any return lodged disclosing income which is either fully or partially free from tax under the provisions of this Act, no variation of the method of valuation of trading stock shall be allowed in the last three years of income to which those provisions apply.
(5) Where the Commissioner General is satisfied in relation to any trading stock of a taxpayer, that by reason of obsolescence of or any other special circumstances relating to the trading stock, the value of the trading stock to be taken into account at the end of the year of income should be an amount, being less than the amount which is the lowest value that could be applicable under Subsection (1) determined by the Commissioner General to be the fair and reasonable value of the trading stock having regard to–
(a) the quantity of the trading stock on hand at the end of the year of income; and
(b) the quantity of the trading stock, exchanged or used in manufacture by the taxpayer after the end of the year of income and the prospects of sale, exchange or use in manufacture of further quantities of that trading stock; and
(c) the quantity of trading stock of the same kind sold, exchanged or used in manufacture by the taxpayer during the year of income and preceding years of income; and
(d) such other matters as the Commissioner General considers relevant,
the value of the trading stock to be so taken into account shall, notwithstanding any exercise of the option of the taxpayer under Subsection (1), be the value so determined by the Commissioner General.
(6) Subsection (5) does not apply in relation to a taxpayer unless, by a written notice designed by or on behalf of the taxpayer and lodged with the Commissioner General on or before the last day for the furnishing of the return of income of the taxpayer for the year of income, or within such further time as the Commissioner General allows, the taxpayer notifies the Commissioner General that he wishes that subsection to apply.
53A. PURCHASE OF TRADING STOCK NOT AT ARM’S LENGTH.
(a) a person (in this section referred to as the “purchaser”) has, on or after the date of coming into operation of the Income Tax (Amendment No 3) Act 1979, purchased from another person (in this section referred to as the “vendor”) an article (in this subsection referred to as the “relevant article”) that, for the purposes of the application of this Act, in relation to the purchaser, was an article of trading stock; and
(b) the Commissioner General is satisfied that, having regard to any connection between the vendor and the purchaser or to any other relevant circumstances, those persons were not dealing with each other at arm’s length in relation to the transaction; and
(c) the Commissioner General is satisfied–
(i) that the purchase price is greater than the amount (in this section referred to as the “arm’s length price”) that, in the opinion of the Commissioner General, would have been the purchase price if the vendor and the purchaser had been dealing with each other at arm’s length in relation to the transaction; or
(ii) that–
(A) the purchaser could have purchased an identical article from another person and obtained delivery of the identical article at or about the time when the purchaser obtained delivery of the relevant article; and
(B) the cost to the purchaser of purchasing the relevant article from the vendor was greater than the amount that, in the opinion of the Commissioner General, would have been the cost to the purchaser of purchasing the identical article; and
(C) the purchase price of the relevant article is greater than the amount (in this section referred to as the “alternative price”) that, in the opinion of the Commissioner General, would have been the purchase price of the identical article,
the amount paid by the purchaser to the vendor in respect of the relevant article shall, for all purposes of the application of this Act in relation to the purchaser and the vendor, be deemed to be an amount ascertained in accordance with Subsection (2).
(2) The amount ascertained in relation to an article for the purpose of Subsection (1) is where the Commissioner General is satisfied as to the matter mentioned in–
(a) Subsection (1)(c)(i) but not as to the matters mentioned in Subsection (1)(c)(ii) an amount equal to the arm’s length price of the article; and
(b) Subsection (1)(c)(ii) but not as to the matter mentioned in Subsection (1)(c)(i)-an amount equal to the alternative price of the article increased, if the purchaser would have incurred expenditure (apart from payment of the purchase price) in obtaining delivery of an identical article from another person as mentioned in Subsection (1)(c)(ii) in excess of the expenditure (apart from payment of the purchase price) that the purchaser incurred in obtaining delivery of the relevant article, by such amount as the Commissioner General considers fair and reasonable; and
(c) Subsection (1)(c)(i) and also as to the matters mentioned in Subsection (1)(c)(ii) whichever of the following amounts is the lesser amount:–
(i) the arm’s length price of the article;
(ii) the amount that would be determined in relation to the article in accordance with Paragraph (b) if that paragraph were applicable.
(3) A reference in this section to the purchase by a person of an article of trading stock from another person shall be construed as including a reference to an acquisition of that article by the first-mentioned person from that other person that is deemed to have occurred for the purposes of Section 57 by reason of the operating of Section 58 or that would be so deemed to have occurred if Sections 57 and 58 applied in relation to a disposal of trading stock in the ordinary course of carrying on a business.
(4) In this section, a reference to the cost to a person of purchasing an article shall be construed as a reference to expenditure incurred by the person that is directly attributable to purchasing or obtaining delivery of the article.
(5) This section applies in relation to the purchase of an article of trading stock notwithstanding that the purchase was in the course of ordinary family or commercial dealing.
54. VALUE OF LIVESTOCK AT END OF YEAR OF INCOME.
(2) Where, by virtue of–
(a) the exercise by a taxpayer of his option under Subsection (1); or
(b) the failure of a taxpayer to exercise that option,
the value of any livestock that was taken into account at the commencement of the first year of income to which this Act applies and is to be taken into account at the end of any year of income is the cost price of that livestock, the cost price of that livestock shall, for the purposes of this Subdivision, be deemed to be the value at which that livestock was taken into account at the commencement of that first year of income.
(3) Where a taxpayer satisfies the Commissioner General that there are circumstances that justify the adoption by him of a value other than cost price or market selling value for the whole or part of his livestock, he may, with the leave of the Commissioner General, adopt that other value.
55. CHANGES IN BASIS OF VALUATION OF LIVESTOCK.
56. COST PRICE OF NATURAL INCREASE.
(a) where the cost price of natural increase of that class has been previously taken into account under this Act by the taxpayer–the cost price per head at which natural increase of that class was last taken into account unless, with the leave of the Commissioner General, the taxpayer selects another cost price; and
(b) where the cost price of natural increase of that class has not been previously taken into account under this Act by the taxpayer–the cost price selected by him, not being less than the minimum cost price prescribed in respect of livestock of that class.
(2) Where a taxpayer does not so select within the time and in the manner prescribed, he shall be deemed to have selected, as the cost price, the prescribed minimum cost price.
57. DISPOSAL OF TRADING STOCK.
(a) a taxpayer disposes, by sale, gift, or otherwise, of property being trading stock, standing or growing crops, crop-stools, or trees that have been planted and tended for the purpose of sale; and
(b) that property constitutes or constituted the whole or part of the assets of a business that is or was carried on by the taxpayer; and
(c) the disposal was not in the ordinary course of carrying on that business,
the value of that property shall be included in the assessable income of the taxpayer and the person acquiring that property shall be deemed to have purchased it at a price equal to that value.
(2) Where, in consequence of–
(a) the acquisition or resumption of land under the provisions of an Ordinance or Act that contains provisions for the compulsory acquisition or resumption of land; or
(b) the loss or destruction of pastures or fodder by reason of fire, drought or flood; or
(c) the taking of a lease of land by the State for the purposes of a campaign for the eradication of cattle tick,
a taxpayer, in a year of income, disposes, by sale or otherwise, of livestock being assets of a business of primary production carried on by him in Papua New Guinea, the taxpayer may elect that his assessable income of that year shall be reduced by an amount equal to four-fifths of the profit on the disposal of that livestock.
(3) Subject to Subsection (4), where a taxpayer has made an election under Subsection (2)–
(a) his assessable income of the year to which the election relates shall be reduced by an amount equal to four-fifths of the profit on the disposal of the livestock; and
(b) there shall be included in his assessable income of each of the next four succeeding years an amount equal to one-fifth of that profit, and the amount so included in the assessable income of any year shall, for the purposes of this Act, be deemed to be assessable income derived by the taxpayer during that year from the carrying on by him in Papua New Guinea, during that year, of a business of primary production.
(4) Where the disposal is in consequence of the loss or destruction of pastures or fodder by reason of fire, drought or flood, Subsection (3) applies only if the taxpayer establishes to the satisfaction of the Commissioner General that the proceeds (if any) of the disposal have been or will be applied by the taxpayer wholly or principally to the purchase of livestock in replacement of the livestock disposed of.
(5) Where livestock to which Subsection (2) applies is disposed of by a partnership, each partner in the partnership is entitled to make an election under that subsection in relation to that part of the profit on the disposal of the livestock that is included in his individual interest in the net income of the partnership.
(6) Where livestock to which Subsection (2) applies is disposed of by the trustee of a trust estate–
(a) the trustee is entitled to make an election under that subsection in relation only to that part of the profit on the disposal of the livestock included in the net income of the trust estate in respect of which the trustee is liable to be assessed and to pay tax under the provisions of Section 130; and
(b) each resident beneficiary in the trust estate who is not under a legal disability and who is presently entitled to a share of the net income of the trust estate, being a share that includes a part of the profit on the disposal of the livestock, is entitled to make an election under that subsection in relation to that part.
(7) Where, in any year of income, a taxpayer who has made an election under Subsection (2)–
(a) appears to the Commissioner General to be about to leave Papua New Guinea; or
(b) dies; or
(c) is adjudicated insolvent, applies to take the benefit of a law for the relief of insolvent debtors, compounds with, or makes an assignment of any of his property for the benefit of, his creditors or has his affairs liquidated by arrangement; or
(d) being a company, commences to be wound up,
there shall, if the Commissioner General so determines, be included in the assessable income of the taxpayer of that year of income any amount that would otherwise be included, in pursuance of this section, in the assessable income of any subsequent year of income.
(8) The election that a taxpayer may make under Subsection (2) shall be made in writing on or before the date of lodgment of the return of income of the year in which the disposal occurred or within such further time as the Commissioner General may allow.
(9) For the purposes of this section, the value of any property or livestock shall be–
(a) the market value of the property or livestock on the day of the disposal; or
(b) if, in the opinion of the Commissioner General, there is insufficient evidence of the market value on that day–the value that in his opinion is fair and reasonable.
(10) For the purposes of this section, the profit on the disposal of livestock shall be the amount remaining after deducting from the proceeds of the sale of the livestock or, where the livestock was disposed of together with any other assets or the disposal was otherwise than by sale, from the value of the livestock, the total of the following amounts:–
(a) In respect of such of the livestock as was on hand at the beginning of the year of income–the value at which that livestock was, for the purposes of this Act, taken into account at the beginning of that year;
(b) In respect of such of the livestock as was not on hand at the beginning of that year–
(i) in the case of livestock acquired by purchase–the purchase price of that livestock; and
(ii) in the case of livestock acquired otherwise than by purchase, but not including natural increase bred by the taxpayer during that year–the amount that, under this Act, is deemed to be the purchase price of that livestock.
(11) Notwithstanding Subsections (9) and (10), the value for the purposes of this section of any property disposed of by the taxpayer after the date of coming into operation of the Income Tax (Amendment No 3) Act 1979, shall, if the Commissioner General so determines, be such value as the Commissioner General considers reasonable, having regard to–
(a) the cost to the taxpayer of the property; and
(b) where, in any agreement entered into in connection with the disposal of the property, an amount was specified as the value of the property or as the consideration received or receivable in respect of the disposal–the amount so specified; and
(c) where, before the property was disposed of, an agreement or arrangement (whether or not enforceable by legal proceedings and whether or not intended to be so enforceable) was entered into, or an understanding was reached, as a result of which, at any time after the disposal took place, there has been, or there could reasonably be expected to be, a substantial reduction in the value of the property–that agreement, arrangement or understanding; and
(d) where, before the property was disposed of by the taxpayer, an agreement or arrangement (whether or not enforceable by legal proceedings and whether or not intended to be so enforceable) was entered into, or an understanding was reached, under which, or by reason of which, the person or persons who acquired the property from the taxpayer was or were under an obligation, or could reasonably be expected, to dispose of the property to another person or other persons (whether or not that other person was, or those other persons included, the taxpayer) for a consideration less than the market value of the property at the time when it was disposed of by the taxpayer–that agreement, arrangement or understanding; and
(e) where the disposal of the property by the taxpayer or the acquisition of the property by the person or persons who acquired the property arose out of, or was made in the course of, a transaction, operation, undertaking, scheme or arrangement that was entered into or carried out for the purpose, or for purposes that included the purpose, of securing that a person who, if the transaction, operation, undertaking, scheme or arrangement had not been entered into or carried out would have been liable to pay income tax in respect of a year of income would not be liable to pay income tax in respect of that year of income, or would be liable to pay less income tax in respect of that year of income than that person would have been liable to pay if the transaction, operation, undertaking, scheme or arrangement had not been entered into or carried out–that transaction, operation, undertaking, scheme or arrangement; and
(f) where the disposal of the property by the taxpayer or the acquisition of the property by the person or persons who acquired the property arose out of, or was made in course of, a transaction, operation, undertaking, scheme or arrangement that the Commissioner General is satisfied was by way of dividend stripping or was similar to a transaction, operation, undertaking, scheme or arrangement by way of dividend stripping–that transaction, operation, undertaking, scheme or arrangement; and
(g) any other matters that the Commissioner General considers relevant.
(12) A reference in Subsection (11) to property shall be read as a reference to property being trading stock, standing or growing crops, crop-stools or trees which have been planted and tended for the purposes of sale.
57A. COMPENSATION FOR DEATH OR COMPULSORY DESTRUCTION OF LIVESTOCK.
(a) livestock being assets of a business of primary production carried on by a taxpayer in Papua New Guinea–
(i) dies by reason of a disease for the purpose of controlling or eradicating which provision is made by a law of Papua New Guinea for or in relation to the compulsory destruction of livestock; or
(ii) is destroyed in pursuance of a law of Papua New Guinea that makes provision for or in relation to the compulsory destruction of livestock for the purpose of controlling or eradicating a disease; and
(b) the proceeds of the death of the livestock would, apart from this section, be included in the assessable income of the taxpayer of a year or years of income; and
(c) there is a profit arising in respect of the death of the livestock,
the taxpayer may elect that this section shall apply in relation to the profit arising in respect of the death of the livestock.
(2) Where a taxpayer makes an election under Subsection (1)–
(a) the whole of the proceeds of the death of the livestock to which the election relates (whenever received) shall be included in the assessable income of the taxpayer of the year of income in which the livestock died or was destroyed, and no part of those proceeds shall be included in the assessable income of the taxpayer of any other year of income; and
(b) the assessable income of the taxpayer of the year of income in which the livestock died or was destroyed shall be reduced by an amount equal to four-fifths of the profit in relation to which the election is made; and
(c) there shall be included in the assessable income of the taxpayer of each of the next four succeeding years of income an amount equal to one-fifth of the profit in relation to which the election is made, and the amount so included in the assessable income of the taxpayer of any year of income shall, for the purposes of this Act, be deemed to be derived by the taxpayer during that year of income from the carrying on by him in Papua New Guinea, during that year of income, of a business of primary production.
(3) Where livestock is an asset of a partnership and, if that livestock were owned by a person other than as a partner or a trustee of a trust estate, that person would be entitled to make an election under Subsection (1) in relation to the livestock–
(a) any partner in the partnership may make an election under that subsection in relation to the part of the profit arising in respect of the death of the livestock that is included in his individual interest in the net income of the partnership; and
(b) where a partner makes such an election, Subsection (2)(a) does not apply, but for the purpose of assessments in respect of that partner the net income of the partnership shall be ascertained as if the proceeds of the death of the livestock to which the election relates (whenever received) had been received by the partnership in the year of income in which the livestock died or was destroyed.
(4) Where livestock referred to in Subsection (1) is owned by the trustee of a trust estate–
(a) the trustee may make an election under that subsection in relation only to that part of the profit arising in respect of the death of the livestock that is included in the net income of the trust estate in respect of which the trustee is liable to be assessed and to pay tax under the provisions of Section 130; and
(b) each resident beneficiary in the trust estate who is not under a legal disability and is presently entitled to a share of the net income of the trust estate, being a share that includes a part of the profit arising in respect of the death of the livestock, may make an election under that subsection in relation to that part and, where a beneficiary makes such an election, Subsection (2)(a) does not apply, but for the purpose of assessments in respect of that beneficiary the net income of the trust estate shall be ascertained as if the proceeds of the death of the livestock to which the election relates (whenever received) had been received by the trustee in the year of income in which the livestock died or was destroyed.
(5) Where, in a year of income, a taxpayer who has made an election under Subsection (1)–
(a) appears to the Commissioner General to be about to leave Papua New Guinea; or
(b) dies; or
(c) becomes bankrupt, applies to take the benefit of any law for the relief of bankrupt or insolvent debtors, compounds with his creditors or makes an assignment of any of his property for their benefit; or
(d) being a company, commences to be wound up,
there shall, if the Commissioner General so determines, be included in the assessable income of the taxpayer of that year of income any amount that would otherwise be included, in pursuance of this section, in the assessable income of any subsequent year of income, and the amount so included shall be deemed, for the purposes of this Act, to be derived by the taxpayer during that first-mentioned year of income from the carrying on by him in Papua New Guinea, during that year of income, of a business of primary production.
(6) An election by a taxpayer under Subsection (1) shall be made in writing and lodged with the Commissioner General on or before–
(a) the date of lodgment of the return of income of the taxpayer of the year of income in which the proceeds of the death of the livestock to which the election relates were received; or
(b) if the whole of those proceeds was not received in one year of income–the date of lodgment of the return of income of the taxpayer of the latest year of income in which any part of those proceeds was received,
or on or before such later date as the Commissioner General allows.
(7) In this section, a reference to the proceeds of the death of any livestock shall be read as a reference to the sum of–
(a) any amount received by the person who owned the livestock from the State, or from an authority constituted by or under a law of Papua New Guinea, by way of compensation for the death or destruction of the livestock; and
(b) any amount received by the person who owned the livestock as payment for the carcasses, or any part of the carcasses, of the livestock.
(8) In this section, a reference to profit arising in respect of the death of any livestock shall be read as a reference to the amount remaining after deducting from the proceeds of the death of the livestock the sum of–
(a) in respect of any of the livestock that was on hand at the beginning of the year of income in which the livestock died or was destroyed–the value at which that livestock is, for the purposes of this Act, to be taken into account at the beginning of that year of income; and
(b) in respect of any of the livestock that was not on hand at the beginning of that year of income–
(i) in the case of livestock acquired by purchase–the purchase price of that livestock; and
(ii) in the case of livestock acquired otherwise than by purchase, but not including natural increase bred during that year of income by the person who owned the livestock at the time of its death or destruction–the amount that, under this Act, is deemed to be the purchase price of that livestock
58. DISPOSAL OF CHANGE OF OWNERSHIP OR INTERESTS.
(a) the formation or dissolution of a partnership; or
(b) a variation in the constitution of a partnership, or in the interests of the partners,
a change has occurred in the ownership of, or in the interests of persons, in, property constituting the whole or part of the assets of a business and being trading stock, standing or growing crops, crop-stools, or trees which have been planted and tended for the purposes of sale, and the person, or one or more of the persons, who owned the property before the change has or have an interest in the property after the change, Section 57 applies as if the person or persons who owned the property before the change had, on the day on which the change occurred, disposed of the whole of the property to the person, or all the persons, by whom the property is owned after the change.
(2) Where–
(a) property in relation to which Subsection (1) applies has become, upon the change in ownership or interests, an asset of a business carried on by the person or persons by whom the property is owned after the change; and
(b) the person or persons by whom the property was owned before the change holds or hold, after the change, an interest or interests in the property of a value equal to not less than one-quarter of the value of the property; and
(c) the value of the property as ascertained in accordance with Section 57(9)(a) is greater than the value (if any) that would have been taken into account at the end of the year of income if no disposal had taken place and the year of income had ended on the date of the change; and
(d) the person or persons by whom the property was owned before the change together with the person or persons by whom the property is owned after the change give notice to the Commissioner General, in accordance with this section, that they have agreed that this subsection shall apply in respect of the property,
the value of the property, for the purposes of Section 57, shall be, instead of the value specified in Section 57(9)(a), the value (if any) that would have been taken into account at the end of the year of income if no disposal had taken place and the year of income had ended on the date of the change.
(3) A notice in pursuance of Subsection (2) shall be in writing, signed by all the persons giving it, and lodged with the Commissioner General on or before the 28 February next succeeding the end of the fiscal year in which the change in ownership or interests occurred or on or before such later date as the Commissioner General determines.
(4) Where Subsection (1) applies in relation to property in consequence of the death of a member of a partnership the persons by whom a notice in pursuance of Subsection (2) may be given shall include, in lieu of the deceased person, the trustee of his estate and the beneficiaries (if any) who are liable to be assessed in respect of the whole or a share in the income of the business of which the property becomes an asset.
(5) A notice for the purposes of Subsection (2) given after the date of coming into operation of the Income Tax (Amendment No 3) Act 1979 in respect of a change in the ownership of, or in the interests of persons in, property, being a chose in action, does not have any effect unless the persons giving the notice establish to the satisfaction of the Commissioner General that the change in ownership or interests occurred on or before that date.
(6) Notwithstanding Subsection (2), a notice for the purposes of that subsection given after the date of coming into operation of the Income Tax (Amendment No 3) Act 1979 in respect of a change in the ownership of, or in the interests of persons in, property, not being a chose in action, does not have any effect if the value of the property for the purposes of Section 57 is determined by the Commissioner General under Section 57(11) unless–
(a) the value of the property applicable in accordance with Subsection (2) is less than the value determined by the Commissioner General in accordance with Section 57(11); or
(b) the persons giving the notice establish to the satisfaction of the Commissioner General that the change in ownership or interests occurred on or before that date.
59. DEVOLUTION ON DEATH.
(2) For the purpose of Subsection (1), the value of the property is, subject to Subsection (3), the amount that, under Section 57, would have been included in respect of that property in the assessable income of the deceased taxpayer if he had not died but had disposed of the property, otherwise than in the ordinary course of his business, on the day of his death.
(3) Where–
(a) the property referred to in Subsection (1) has, immediately after its devolution by reason of the death of the taxpayer, become an asset of a business carried on by the trustee of the estate of the deceased taxpayer or by the persons who are beneficially entitled to that estate; and
(b) the trustee and the beneficiaries (if any) who are liable to be assessed in respect of the income of the business, or of a share in that income, unanimously so agree and give notice of their agreement to the Commissioner General at the time and in the manner prescribed,
the value of the property shall be, for the purpose of Subsection (1), the value, if any, at which that property would have been taken into account at the date of the death of the deceased taxpayer if he had not died and an assessment had been made in respect of the income derived by him up to that date.
Subdivision C. – Business Carried on Partly in and Partly out of Papua New Guinea.
60. SALES BY MANUFACTURERS.
61. SALES BY MERCHANTS.
62. DETERMINATION OF PROFIT BY COMMISSIONER GENERAL.
63. GOODS DEEMED TO BE SOLD IN PAPUA NEW GUINEA.
(a) a person sells goods by means of anything done by himself when in Papua New Guinea or by means of an agent or representative in Papua New Guinea; and
(b) those goods are in Papua New Guinea or are to be brought into Papua New Guinea for the purpose, or in pursuance or in consequence, of the sale,
he shall be deemed to have sold them in Papua New Guinea.
(2) For the purpose of Subsection (1), a sale is deemed to be made by means of a person or of something done when that person or thing done is instrumental in bringing about the sale.
64. SOURCE OF PROFITS.
(a) by reason of the manufacture, production or purchase of goods in one country and their sale in another; or
(b) by reason of successive steps of production or manufacture in different countries; or
(c) by reason of the making of contracts in one country and their performance in another,
or for any other reason, a question arises whether the whole or any part (and, if a part, what part) of any profit is derived by a person from sources in Papua New Guinea, the question shall be determined in accordance with the regulations, or, if there is no regulation applying to the case, shall be determined by the Commissioner General.
65. ASSESSABLE INCOME TO INCLUDE CERTAIN PROFITS.
(2) An amount taken into account in ascertaining such a profit, or the amount of any expenditure incurred directly or indirectly in or in relation to such a sale, is not an allowable deduction.
Division 2A.
Gratuities and Transitional Payments to Non-Citizen Public Servants.
65A. INTERPRETATION.
“gratuity” means a payment of a kind referred to as such in Part III of the document entitled ‘Summary of Terms and Conditions of Employment and Transitional Arrangements for Contract Employment of Non-citizens by the Independent State of Papua New Guinea’ published by the Public Services Commission in September 1977, or in any document from time to time amending or in substitution of that document, whether the payment is paid as a lump sum payment or by instalments;
“public servant” means an officer or employee of the Public Service who is entitled to receive a salary, wages or allowances under a contract of employment entered into in accordance with Section 8 of the Public Employment (Non-Citizens) Act