INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART III - LIABILITY TO TAXATION  

Division 2A - Calculation of taxable income  

Subdivision B - Calculation of taxable income where disqualifying event occurs  

SECTION 50B   INTERPRETATION  

50B(1)   [Definitions]  

For the purposes of the application of this Subdivision in relation to a company in relation to a year of income:

"excepted amount"
means an amount that is a full-year amount or a divisible amount in relation to the company in relation to the year of income;

"excepted deduction"
means an allowable deduction that is a full-year deduction or a divisible deduction in relation to the company in relation to the year of income;

"full-year amount"
means so much of any amount that is included in the assessable income of the company of the year of income under section 97 or 98A as is not a divisible amount in relation to the company in relation to the year of income but does not include any part of a capital gain that forms part of a net capital gain;

"income period"
means a relevant period in respect of which the company is deemed to have a notional taxable income;

"loss period"
means a relevant period in respect of which the company is deemed to have a notional loss;

"natural person"
means a person other than a company;

"relevant period"
means any of the following periods:

(a) where only one disqualifying event is deemed to have occurred in relation to the company during the year of income:

(i) the period commencing at the commencement of the year of income and ending immediately before the time when the disqualifying event is deemed to have occurred; and

(ii) the period commencing at the time when the disqualifying event is deemed to have occurred and ending at the end of the year of income;

(b) where 2 or more disqualifying events are deemed to have occurred in relation to the company during the year of income:

(i) the period commencing at the commencement of the year of income and ending immediately before the time when the first of those disqualifying events is deemed to have occurred;

(ii) the period commencing at the time when the last of those disqualifying events is deemed to have occurred and ending at the end of the year of income; and

(iii) each period commencing at the time when one of those disqualifying events (not being the last of those disqualifying events) is deemed to have occurred and ending immediately before the time when the next of those disqualifying events is deemed to have occurred;

"whole day"
means a period of 24 hours.

50B(2)   [Deemed notional taxable income]  

For the purposes of this Subdivision, a company shall be deemed to have a notional taxable income in respect of a relevant period if the assessable income of the company in respect of that relevant period exceeds the allowable deductions of the company in respect of that relevant period and the amount of the excess shall be deemed to be the amount of that notional taxable income.

50B(3)   [Deemed notional loss]  

For the purposes of this Subdivision, a company shall be deemed to have a notional loss in respect of a relevant period if the allowable deductions of the company in respect of that relevant period exceed the assessable income of the company in respect of that relevant period and the amount of the excess shall be deemed to be the amount of that notional loss.

50B(4)   [Assessable income and allowable deductions]  

For the purposes of subsections (2) and (3):

(a) the assessable income of a company in respect of a relevant period in relation to the company in relation to a year of income is the sum of:

(i) any amounts (other than excepted amounts and any net capital gain) that would be included in the assessable income of the company of the year of income if the year of income were constituted by that relevant period; and

(ii) any amount that is, or the sum of any amounts that are, by section 50E , deemed to be included in the assessable income of the company of that relevant period; and

(b) the following amounts are allowable deductions of a company in respect of a relevant period in relation to a year of income:

(i) deductions (other than excepted deductions) that would be allowable to the company under this Act in relation to the year of income if the year of income were constituted by the relevant period;

(ii) any amount that is deemed by section 50G to be an allowable deduction in respect of the relevant period.

50B(5)   [Deemed assessable income and allowable deductions]  

For the purposes of this Subdivision:

(a) an amount shall be deemed to be an amount that is included in the assessable income of a company of a year of income if, were the taxable income of the company of the year of income to be calculated in accordance with section 48 , that amount would be included in the assessable income of the company of the year of income; and

(b) a deduction shall be deemed to be a deduction allowable to a company under this Act in relation to a year of income if, were the taxable income of the company to be calculated in accordance with section 48 , the deduction would be a deduction allowable to the company under this Act in relation to the year of income.

50B(6)   [Deemed notional income and loss of partnership]  

For the purposes of this Subdivision:

(a) subject to subsection (7), a partnership shall be deemed to have a notional net income in respect of a period that is a relevant period in relation to a company if the assessable income of the partnership in respect of that period exceeds the allowable deductions of the partnership in respect of that period and the amount of the excess shall be deemed to be the amount of that notional net income; and

(b) subject to subsection (7), a partnership shall be deemed to have a notional partnership loss in respect of a period that is a relevant period in relation to a company if the allowable deductions of the partnership in respect of that period exceed the assessable income of the partnership in respect of that period and the amount of the excess shall be deemed to be the amount of that notional partnership loss.

50B(7)   [Exclusion of notional income and loss of partnership]  

A partnership shall not be deemed for the purposes of this Subdivision to have a notional net income or a notional partnership loss in respect of a period that is a relevant period in relation to a company in relation to a year of income unless the period that constitutes the year of income of the partnership is the same period as the period that constitutes the year of income of the company.

50B(8)   [Partnership income and deductions]  

For the purposes of subsection (6):

(a) the assessable income of a partnership of a period that is a relevant period in relation to a company in relation to a year of income of the company is the sum of:

(i) any amounts (other than excepted amounts) that would be included in the assessable income of the partnership of the year of income of the partnership that corresponds with the year of income of the company if that corresponding year of income of the partnership were constituted by the period that constitutes the relevant period; and

(ii) any amount that is, or the sum of any amounts that are, by section 50E (as that section applies by reason of subsection (9) of this section), deemed to be included in the assessable income of the partnership of the period that constitutes the relevant period; and

(b) the following amounts are allowable deductions of a partnership in respect of a period that is a relevant period in relation to a company in relation to a year of income of the company:

(i) deductions (other than divisible deductions or deductions that, for the purposes of section 50F , are full-year partnership deductions in relation to the partnership) that would be allowable to the partnership under this Act in respect of income of the year of income of the partnership that corresponds with the year of income of the company if that corresponding year of income of the partnership were constituted by the period that constitutes the relevant period;

(ii) any amount that is deemed by section 50G (as that section applies by reason of subsection (9) of this section) to be an allowable deduction of the partnership in respect of the period that constitutes the relevant period.

50B(9)   [Relevant period in relation to partnership]  

The provisions of this section (other than this subsection) and of sections 50E and 50G apply for the purposes of determining for the purposes of subsection (8):

(a) whether an amount is an excepted amount, or whether a deduction is a divisible deduction, in relation to a partnership in respect of a period that is a relevant period in relation to a company; or

(b) whether an amount is to be deemed to be included in the assessable income, or whether an amount is to be deemed to be an allowable deduction, of a partnership in respect of a period that is a relevant period in relation to a company,

as if that period were a relevant period in relation to the partnership and the reference in any of those provisions to a company were a reference to the partnership.

50B(10)   [Method of ascertaining days in nominated period]  

For the purposes of this Subdivision:

(a) where a nominated period consists of more than 12 hours and less than 24 hours, that nominated period shall be deemed to consist of one whole day; and

(b) where a nominated period consists of:

(i) one whole day and a part of another whole day, being a part that consists of more than 12 hours; or

(ii) 2 or more whole days and a part of another whole day, being a part that consists of more than 12 hours,

the number of whole days in that nominated period shall be deemed to be the number ascertained by increasing by 1 the number that, apart from this subsection, would be the number of whole days in that nominated period.

50B(11)   [Meaning of ``nominated period'']  

In subsection (10), ``nominated period'' means any of the following periods:

(a) a relevant period in relation to a company;

(b) a period commencing at the time during a relevant period in relation to a company when a particular event occurred and ending at the end of the relevant period;

(c) a period commencing at the time during a year of income when a particular event occurred and ending at the end of the year of income;

(d) a period commencing at the beginning of a year of income and ending at the end of a period that is a relevant period in relation to a company in relation to the year of income.

50B(12)   [Number of days in income year]  

For the purposes of the application of this Subdivision in relation to a company in relation to a year of income of the company that is not constituted by 365 days, a reference in this Subdivision to 365 shall be read as a reference to the number of days in that year of income.

50B(13)   [Part debt deemed entire debt]  

Where a part of a debt is an allowable deduction in an assessment, this Subdivision (other than subsection (14) of this section) applies as if the part were an entire debt that is an allowable deduction in the assessment.

50B(14)   [Deduction re debt/equity swaps]  

This Subdivision has the same effect in relation to an allowable deduction under section 63E in respect of the whole or part of a debt that is extinguished as it has in relation to an allowable deduction under section 51 or 63 in respect of the whole or part of a debt that is written off as bad.