Income Tax Assessment Act 1936

PART III - LIABILITY TO TAXATION  

Division 1 - General  

SECTION 21A   NON-CASH BUSINESS BENEFITS  

21A(1)    
For the purposes of this Act, in determining the income derived by a taxpayer, a non-cash business benefit that is not convertible to cash shall be treated as if it were convertible to cash.

21A(2)    
For the purposes of this Act, if a non-cash business benefit (whether or not convertible to cash) is income derived by a taxpayer:

(a)    the benefit shall be brought into account at its arm ' s length value reduced by the recipient ' s contribution (if any); and

(b)    if the benefit is not convertible to cash - in determining the arm ' s length value of the benefit, any conditions that would prevent or restrict the conversion of the benefit to cash shall be disregarded.

21A(3)    
Where:

(a)    a non-cash business benefit is income derived by a taxpayer in a year of income; and

(b)    

if the taxpayer had, at the time the benefit was provided, incurred and paid unreimbursed expenditure in respect of the provision of the benefit equal to the amount of the arm ' s length value of the benefit - a once-only deduction would, or would but for Subdivisions F , GA and G of Division 3 of this Part , and Divisions 28 and 900 of the Income Tax Assessment Act 1997 , have been allowable to the taxpayer in respect of a percentage (in this subsection called the deductible percentage ) of the expenditure;

the amount that, apart from this subsection, would be applicable under subsection (2) of this section in respect of the benefit shall be reduced by the deductible percentage.

21A(4)    
Where:

(a)    a non-cash business benefit is income derived by a taxpayer in a year of income; and

(b)    a percentage (in this subsection called the non-deductible entertainment percentage ) of any expenditure incurred by the provider in respect of the provision of the benefit is non-deductible entertainment expenditure;

the amount that, apart from this subsection, would be applicable under subsection (2) in respect of the benefit shall be reduced by the non-deductible entertainment percentage.

21A(5)    

In this section:

arm ' s length value
, in relation to a non-cash business benefit, means:

(a) the amount that the recipient could reasonably be expected to have been required to pay to obtain the benefit from the provider under a transaction where the parties to the transaction are dealing with each other at arm ' s length in relation to the transaction; or

(b) if such an amount cannot be practically determined - such amount as the Commissioner considers reasonable.

income derived by a taxpayer
means income derived by a taxpayer in carrying on a business for the purpose of gaining or producing assessable income.

non-cash business benefit
means property or services provided after 31 August 1988:

(a) wholly or partly in respect of a business relationship; or

(b) wholly or partly for or in relation directly or indirectly to a business relationship.

non-deductible entertainment expenditure
means expenditure to the extent to which:

(a) section 32-5 of the Income Tax Assessment Act 1997 applies to the expenditure; and

(b) but for that section, the expenditure would be deductible under section 8-1 of the Income Tax Assessment Act 1997 .

once-only deduction
(Repealed by No 75 of 2010 )

provide
:

(a) in relation to property - includes dispose of (whether by assignment, declaration of trust or otherwise); and

(b) in relation to services - includes allow, confer, give, grant or perform.

recipient ' s contribution
, in relation to a non-cash business benefit, means the amount of any consideration paid to the provider by the recipient in respect of the provision of the benefit, reduced by the amount of any reimbursement paid to the recipient in respect of that consideration.

services
includes any benefit, right (including a right in relation to, and an interest in, real or personal property), privilege or facility and, without limiting the generality of the foregoing, includes a right, benefit, privilege, service or facility that is, or is to be, provided under:

(a) an arrangement for or in relation to:

(i) the performance of work (including work of a professional nature), whether with or without the provision of property;

(ii) the provision of, or of the use of facilities for, entertainment, recreation or instruction; or

(iii) the conferring of rights, benefits or privileges for which remuneration is payable in the form of a royalty, tribute, levy or similar exaction;

(b) a contract of insurance; or

(c) an arrangement for or in relation to the lending of money.

21A(6)    
Notwithstanding section 21 , the consideration referred to in the definition of recipient ' s contribution in subsection (5) of this section is consideration in money.

21A(7)    

This section does not apply to an ESS interest (within the meaning of the Income Tax Assessment Act 1997 ) to which Subdivision 83A-B or 83A-C of that Act (about employee share schemes) applies.