INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART III - LIABILITY TO TAXATION  

Division 2 - Income  

Subdivision B - Trading Stock  

SECTION 36AA   COMPENSATION FOR DEATH, DISPOSAL OR COMPULSORY DESTRUCTION OF LIVE STOCK  

36AA(1AA)   [No application 1 July 1997 onwards]  

This section does not apply to a disposal or death of live stock on or after 1 July 1997.

Note:

Subdivision 385-E (Primary producer can elect to spread or defer tax on profit from forced disposal or death of live stock) of the Income Tax Assessment Act 1997 deals with such a disposal or death.

36AA(1)   [Election]  

Where -

(a) live stock being assets of a business of primary production carried on by a taxpayer in Australia -

(i) dies by reason of a disease for the purpose of controlling or eradicating which provision is made by a law of the Commonwealth, of a State or of a Territory for or in relation to the compulsory destruction of live stock; or

(ii) is destroyed in pursuance of a law of the Commonwealth, of a State or of a Territory that makes provision for or in relation to the compulsory destruction of live stock for the purpose of controlling or eradicating a disease;

(b) the proceeds of the death of the live stock 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 live stock,

the taxpayer may elect that this section shall apply in relation to the profit arising in respect of the death of the live stock.

36AA(1A)   [Disposal on official notification re contamination]  

Where:

(a) live stock, being assets of a business of primary production carried on by a taxpayer in Australia are disposed of, by sale or otherwise, by the taxpayer in consequence of an official notification under a law of the Commonwealth, a State or a Territory dealing with contamination of land, live stock or other property; and

(b) the proceeds of the disposal of the live stock 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 disposal of the live stock;

the taxpayer may elect that this section is to apply in relation to the profit arising in respect of the disposal of the live stock.

36AA(2)   [Consequences of election]  

Where a taxpayer makes an election under subsection (1) or (1A) -

(a) the whole of the proceeds of the death or disposal of the live stock 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 live stock died or was destroyed or disposed of and no part of those proceeds shall be included in the assessable income of the taxpayer of any other year of income;

(b) the assessable income of the taxpayer of the year of income in which the live stock died or was destroyed or disposed of 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 4 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 Australia, during that year of income, of a business of primary production.

36AA(3)   [Election where live stock owned by partnership]  

Where live stock is an asset of a partnership and, if that live stock 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) or (1A) in relation to the live stock -

(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 or disposal of the live stock that is included in his individual interest in the net income of the partnership; and

(b) where a partner makes such an election, paragraph (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 or disposal of the live stock to which the election relates (whenever received) had been received by the partnership in the year of income in which the live stock died or was destroyed or disposed of.

36AA(4)   [Election where live stock owned by trustee]  

Where live stock referred to in subsection (1) or (1A) is owned by the trustee of a trust estate -

(a) the trustee may make an election under that subsection in relation only to the part of the profit arising in respect of the death or disposal of the live stock 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 Division 6 ; and

(b) each 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 or disposal of the live stock, may make an election under that subsection in relation to that part and, where a beneficiary makes such an election, paragraph (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 or disposal of the live stock to which the election relates (whenever received) had been received by the trustee in the year of income in which the live stock died or was destroyed or disposed of.

36AA(5)   [Departure, death, bankruptcy, winding-up]  

Where, in a year of income, a taxpayer who has made an election under subsection (1) or (1A) -

(a) appears to the Commissioner to be about to leave Australia;

(b) dies;

(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;

(d) being a company, commences to be wound up; or

(e) both of the following conditions are satisfied:

(i) the taxpayer has made an election under subsection (1A);

(ii) the taxpayer ceases to carry on the business of primary production of which the live stock that were disposed of were assets;

there shall, if the Commissioner 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 and in consequence of the election, 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 Australia, during that year of income, of a business of primary production.

36AA(6)   [Conditions for making of election]  

An election by a taxpayer under subsection (1) or (1A) must be made 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 or disposal of the live stock 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 allows.

36AA(7)   [Proceeds of death of live stock]  

In this section, a reference to the proceeds of the death of any live stock shall be read as a reference to the sum of -

(a) any amount received by the person who owned the live stock from the Commonwealth, from a State, from the Administration of a Territory or from an authority constituted by or under a law of the Commonwealth, of a State or of a Territory by way of compensation for the death or destruction of the live stock; and

(b) any amount received by the person who owned the live stock as payment for the carcases, or any part of the carcases, of the live stock.

36AA(8)   [Profit in respect of death of live stock]  

In this section, a reference to profit arising in respect of the death of any live stock shall be read as a reference to the amount remaining after deducting from the proceeds of the death of the live stock the sum of -

(a) in respect of any of the live stock that was on hand at the beginning of the year of income in which the live stock died or was destroyed - the value at which that live stock 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 live stock that was not on hand at the beginning of that year of income -

(i) in the case of live stock acquired by purchase - the purchase price of that live stock; and

(ii) in the case of live stock acquired otherwise than by purchase, but not including natural increase bred during that year of income by the person who owned the live stock at the time of its death or destruction - the amount that, under this Act, is deemed to be the purchase price of that live stock.

36AA(9)   [``Proceeds of the disposal of any live stock'']  

In this section, a reference to the proceeds of the disposal of any live stock is to be read as a reference to the sum of:

(a) any amount received by the person who owned the live stock by way of compensation for:

(i) the condemnation of the live stock; or

(ii) the loss or diminution of the value of the live stock;

resulting from an official notification under a law of the Commonwealth, a State or a Territory dealing with contamination of land, live stock or other property; and

(b) any amount received by the person who owned the live stock as payment for:

(i) the live stock; or

(ii) the carcases, or any part of the carcases, of the live stock.

36AA(10)   [Profit arising re disposal of live stock]  

In this section, a reference to profit arising in respect of the disposal of any live stock is to be read as a reference to the amount remaining after deducting from the proceeds of the disposal of the live stock the sum of:

(a) in respect of any of the live stock that were on hand at the beginning of the year of income in which the live stock were disposed of - the value at which the live stock 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 live stock that were not on hand at the beginning of the year of income:

(i) in the case of live stock acquired by purchase - the purchase price of that live stock; and

(ii) in the case of live stock acquired otherwise than by purchase, but not including natural increase bred during that year of income by the person who owned the live stock at the time of the disposal - the amount that, under this Act, is taken to be the purchase price of that live stock.

36AA(11)   [``official notification'']  

In this section:

"official notification"
includes a declaration, direction, instruction or order.