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 50G   DIVISIBLE DEDUCTIONS  

50G(1)   [Divisible deductions]  

For the purposes of this Subdivision, the following deductions are divisible deductions in relation to a company in relation to a year of income:

(a) any deduction allowable to the company in relation to the year of income under section 54 (including any deduction calculated in accordance with section 57AK or 57AM ), 67 , 70 or 70A (as in force at any time after the commencement of section 41 of the Taxation Laws Amendment Act (No. 4) 1988 ), subsection 73A(2) , subsection 73B(15) or (17) , section 75A , 77F , 82BB , 88 or 92 , Division 10AAA (other than section 123C ), Division 10A (other than section 124G or 124JB ), Division 10B (other than section 124N ), section 124ZAF or 124ZAFA , Division 10C (other than section 124ZE ) or Division 10D (other than section 124ZK );

(b) where the company has made an election in relation to the year of income under section 122D , 122DB , 122DD or 122DF - any deduction allowable to the company under that section in relation to the year of income;

(ba) where the company has made an election in relation to the year of income in relation to expenditure of a particular kind under section 122DG , 122J , 122JE, 122JF, 124ADH or 124AH - any deduction allowable to the company under that section, or, in the case of an election under section 124ADH , under Division 10AA , in relation to the year of income in relation to an amount of expenditure of that kind.

50G(2)   [Divisible deductions in relation to a relevant period]  

For the purposes of the application of subparagraph 50B(4)(b)(ii) in relation to a relevant period in relation to a company in relation to a year of income -

(a) where a divisible deduction is allowable to the company in relation to the year of income under section 54 (not being a deduction calculated in accordance with section 57AM ) in respect of property that, during the whole or a part of the relevant period, was owned by the company and used by the company for the purpose of producing assessable income or installed ready for use for that purpose and held in reserve, so much of the amount of that divisible deduction as bears to the amount of that divisible deduction the same proportion as the number of whole days (if any) in that relevant period during which the property was owned by the company and used by the company for the purpose of producing assessable income or installed ready for use for that purpose and held in reserve bears to the number of whole days during the year of income during which the property was owned by the company and used by the company for the purpose of producing assessable income or installed ready for use and held in reserve shall be deemed to be an allowable deduction in respect of that relevant period;

(b) (Omitted by No 107 of 1989)

(ba) where -

(i) a divisible deduction is allowable to the company in relation to the year of income in accordance with section 57AM in respect of property that, during the whole or a part of the relevant period, was owned by the company and used by the company for the purpose of producing assessable income or installed ready for use for that purpose and held in reserve; and

(ii) the year of income is the first year of income in which a deduction is allowable to the company in respect of that property in accordance with section 57AM ,

so much of the amount of that divisible deduction as bears to the amount of that divisible deduction the same proportion as the number of whole days (if any) in that relevant period during which the property was owned by the company and used by the company for the purpose of producing assessable income or installed ready for use for that purpose and held in reserve bears to the number of whole days during the year of income during which the property was owned by the company and used by the company for the purpose of producing assessable income or installed ready for use and held in reserve shall be deemed to be an allowable deduction in respect of that relevant period;

(bb) where a divisible deduction is allowable to the company in relation to the year of income in accordance with section 57AM in respect of property and the year of income is not the first year of income in which a deduction is allowable to the company in respect of that property in accordance with that section, so much of the amount of that divisible deduction as bears to the amount of that divisible deduction the same proportion as the number of whole days (if any) in that relevant period bears to 365 shall be deemed to be an allowable deduction in respect of that relevant period;

(c) where a divisible deduction is allowable to the company in relation to the year of income under section 67 in respect of expenditure incurred by the company in borrowing money for a period, so much of the amount of that divisible deduction as bears to the amount of that divisible deduction the same proportion as the number of whole days (if any) in the relevant period that are within the period for which the money was borrowed bears to the number of whole days in the year of income that are within the period for which the money was borrowed shall be deemed to be an allowable deduction in respect of that relevant period;

(d) where -

(i) a divisible deduction is allowable to the company in relation to the year of income under section 70 in respect of expenditure of a capital nature incurred by the company on a telephone line;

(ii) the year of income is the first year of income in which the company incurred expenditure of a capital nature on that telephone line; and

(iii) before the commencement of, or during, the relevant period, the company incurred expenditure of a capital nature on that telephone line,

so much of the amount of that divisible deduction as bears to the amount of that divisible deduction the same proportion as the number of whole days (if any) in the relevant period, being whole days occurring after the time when the company first incurred expenditure of a capital nature on that telephone line, bears to the number of whole days in the year of income, being whole days occurring after the time when the company first incurred expenditure of a capital nature on that telephone line, shall be deemed to be an allowable deduction in respect of that relevant period;

(e) where a divisible deduction is allowable to the company in relation to the year of income under section 70 in respect of expenditure of a capital nature incurred by the company on a telephone line and the year of income is not the first year of income in which the company incurred expenditure of a capital nature on that telephone line, so much of the amount of that divisible deduction as bears to the amount of that divisible deduction the same proportion as the number of whole days (if any) in that relevant period bears to 365 shall be deemed to be an allowable deduction in respect of that relevant period;

(ea) where:

(i) a divisible deduction is allowable to the company in relation to the year of income under section 70A in respect of expenditure of a capital nature incurred by the company on the connection of mains electricity facilities;

(ii) the year of income is the first year of income in which the company incurred expenditure of a capital nature on that connection; and

(iii) before the commencement of, or during, the relevant period, the company incurred expenditure of a capital nature on that connection;

a proportion of that divisible deduction equal to the proportion that the number of whole days (if any) in the relevant period (being whole days occurring after the time when the company first incurred expenditure of a capital nature on that connection) bears to the number of whole days in the year of income (being whole days occurring after the time when the company first incurred expenditure of a capital nature on that connection) shall be deemed to be an allowable deduction in respect of that relevant period;

(eb) where:

(i) a divisible deduction is allowable to the company in relation to the year of income under section 70A in respect of expenditure of a capital nature incurred by the company on the connection of mains electricity facilities; and

(ii) the year of income is not the first year of income in which the company incurred expenditure of a capital nature on that connection;

a proportion of that divisible deduction equal to the proportion that the number of whole days (if any) in that relevant period bears to 365 shall be deemed to be an allowable deduction in respect of that relevant period;

(f) where -

(i) a divisible deduction is allowable to the company in relation to the year of income under section 73A in respect of expenditure of a capital nature incurred by the company in the construction or acquisition of a building, or a part of a building, or in making any alteration or addition to a building;

(ii) the year of income is the first year of income in which the company incurred expenditure of a capital nature in the construction or acquisition of the building, in the construction or acquisition of the part of the building, or in making the alteration or addition to the building, as the case may be; and

(iii) the company incurred expenditure of a capital nature in the construction or acquisition of the building, in the construction or acquisition of the part of the building, or in making the alteration or addition to the building, as the case may be, before the commencement of, or during, the relevant period,

so much of the amount of that divisible deduction as bears to the amount of that divisible deduction the same proportion as the number of whole days (if any) in the relevant period, being whole days occurring after the time when the company first incurred expenditure of a capital nature in the construction or acquisition of the building, in the construction or acquisition of the part of the building, or in making the alteration or addition to the building, as the case may be, bears to the number of whole days in the year of income, being whole days occurring after the time when the company first incurred expenditure of a capital nature in the construction or acquisition of the building, in the construction or acquisition of the part of the building, or in making the alteration or addition to the building, as the case may be, shall be deemed to be an allowable deduction in respect of that relevant period;

(g) where -

(i) a divisible deduction is allowable to the company in relation to the year of income under section 73A in respect of expenditure of a capital nature incurred by the company in the construction or acquisition of a building, or a part of a building, or in making any alteration or addition to a building; and

(ii) the year of income is not the first year of income in which the company incurred expenditure of a capital nature in the construction or acquisition of the building, in the construction or acquisition of the part of the building, or in making the alteration or addition to the building, as the case may be,

so much of the amount of that divisible deduction as bears to the amount of that divisible deduction the same proportion as the number of whole days (if any) in that relevant period bears to 365 shall be deemed to be an allowable deduction in respect of that relevant period;

(ga) where -

(i) a divisible deduction is allowable to the company in relation to the year of income under section 73B in respect of expenditure incurred by the company in the acquisition or construction of a unit of plant or a building or an extension, alteration or improvement to a building;

(ii) the year of income is the first year of income in which a deduction is allowable to the company under section 73B in respect of that expenditure; and

(iii) the company incurred any of the expenditure referred to in subparagraph (i) before the commencement of, or during, the relevant period,

so much of the amount of that divisible deduction as bears to the amount of that divisible deduction the same proportion as the number of whole days (if any) in the relevant period, being whole days occurring after the time when the company first incurred any of the expenditure referred to in subparagraph (i), bears to the number of whole days in the year of income, being whole days occurring after that time, shall be deemed to be an allowable deduction in respect of that relevant period;

(gb) where -

(i) a divisible deduction is allowable to the company in relation to the year of income under section 73B in respect of expenditure incurred by the company in the acquisition or construction of a unit of plant or a building or an extension, alteration or improvement to a building; and

(ii) the year of income is not the first year of income in which a deduction is allowable to the company under section 73B in respect of that expenditure,

so much of the amount of that divisible deduction as bears to the amount of that divisible deduction the same proportion as the number of whole days (if any) in that relevant period bears to 365 shall be deemed to be an allowable deduction in respect of that relevant period;

(h) where -

(i) a divisible deduction is allowable to the company in relation to the year of income under section 75A in respect of expenditure incurred by the company in respect of any land in Australia;

(ii) the year of income is the first year of income in which the company carried on a business of primary production on that land; and

(iii) before the commencement of, or during, the relevant period, the company carried on a business of primary production on that land,

so much of the amount of that divisible deduction as bears to the amount of that divisible deduction the same proportion as the number of whole days (if any) in the relevant period, being whole days occurring after the time when the company commenced to carry on a business of primary production on that land, bears to the number of whole days in the year of income, being whole days occurring after the time when the company commenced to carry on a business of primary production on that land, shall be deemed to be an allowable deduction in respect of that relevant period;

(j) where a divisible deduction is allowable to the company in relation to the year of income under section 75A in respect of expenditure incurred by the company in respect of any land in Australia and the year of income is not the first year of income in which the company carried on a business of primary production on that land, so much of the amount of that divisible deduction as bears to the amount of that divisible deduction the same proportion as the number of whole days (if any) in that relevant period bears to 365 shall be deemed to be an allowable deduction in respect of that relevant period;

(ja) where a divisible deduction is allowable to the company in relation to the year of income under section 77F in respect of moneys paid on shares within the meaning of that section, so much of the amount of that divisible deduction as bears to the amount of that divisible deduction the same proportion as the number of whole days (if any) in that relevant period bears to 365 shall be deemed to be an allowable deduction in respect of that relevant period;

(jb) if:

(i) a divisible deduction is allowable to the company in relation to the year of income under section 82BB in respect of allowable environmental impact expenditure incurred by the company at a particular time (in this paragraph called the ``expenditure time'' ); and

(ii) the expenditure time occurred:

(A) during the year of income; and

(B) before the end of the relevant period;

the amount worked out using the following formula is taken to be an allowable deduction in respect of that relevant period:

Divisible   deduction

×

Post-expenditure days   in relevant period   Post-expenditure days       in year

where:

``Divisible deduction'' means the amount of the divisible deduction;

``Post-expenditure days in relevant period'' means the number of whole days in the relevant period that occurred after the expenditure time;

``Post-expenditure days in year'' means the number of whole days in the year of income that occurred after the expenditure time;

(jc) if:

(i) a divisible deduction is allowable to the company in relation to the year of income under section 82BB in respect of allowable environmental impact expenditure incurred by the company; and

(ii) the year of income is not the year of income in which the expenditure was incurred;

the amount worked out using the following formula is taken to be an allowable deduction in respect of that relevant period:

Divisible   deduction

×

Days in relevant period           365

where:

``Divisible deduction'' means the amount of the divisible deduction;

``Days in relevant period'' means the number of whole days in the relevant period;

(k) where a divisible deduction is allowable to the company in relation to the year of income under subsection 88(1) in respect of a premium paid by the company or under subsection 88(2) in respect of expenditure incurred by the company, so much of the amount of that divisible deduction as bears to the amount of that divisible deduction the same proportion as the number of whole days (if any) in that relevant period bears to 365 shall be deemed to be an allowable deduction in respect of that relevant period;

(m) where -

(i) a divisible deduction is allowable to the company in relation to the year of income under subsection 88(4) by reason of the death of a person; and

(ii) the person died during the year of income and before the commencement of, or during, the relevant period,

so much of the amount of that divisible deduction as bears to the amount of that divisible deduction the same proportion as the number of whole days (if any) in the relevant period, being whole days occurring after the time when the person died, bears to the number of whole days in the year of income, being whole days occurring after the time when the person died, shall be deemed to be an allowable deduction in respect of that relevant period;

(n) where a divisible deduction is allowable to the company in relation to the year of income under subsection 88(4) by reason of the death of a person and the year of income is not the year of income in which the person died, so much of the amount of that divisible deduction as bears to the amount of that divisible deduction the same proportion as the number of whole days (if any) in that relevant period bears to 365 shall be deemed to be an allowable deduction in respect of that relevant period;

(o) where, during the whole or a part of the relevant period, the company was a partner in a partnership that had a notional partnership loss in respect of the relevant period -

(i) where, for the purposes of section 92 , the partnership had a net income of the year of income of the partnership - so much of the amount of the notional partnership loss as bears to the amount of that notional partnership loss the same proportion as the individual interest of the company in the net income of the partnership of that year of income of the partnership bears to the amount of the net income of the partnership of that year of income shall be deemed to be an allowable deduction to the company in respect of the relevant period;

(ii) where, for the purposes of section 92 , the partnership incurred a partnership loss in the year of income of the partnership - so much of the amount of the notional partnership loss as bears to the amount of that notional partnership loss the same proportion as the individual interest of the company in the partnership loss for that year of income bears to the amount of that partnership loss shall be deemed to be an allowable deduction to the company in respect of the relevant period; and

(iii) in any other case - so much of the notional partnership loss as the Commissioner considers fair and reasonable having regard to the extent of the interest of the company in the partnership shall be deemed to be an allowable deduction to the company in respect of the relevant period;

(p) where a divisible deduction is allowable to the company in relation to the year of income under section 92 in respect of the individual interest of the company in a partnership loss incurred by a partnership in a year of income and the period that constitutes that year of income of the partnership is not the same period as the period that constitutes the year of income of the company, so much of that divisible deduction as the Commissioner considers fair and reasonable having regard to all the relevant circumstances shall be deemed to be an allowable deduction in respect of the relevant period;

(q) where a divisible deduction is allowable to the company in relation to the year of income under section 122D , 122DB , 122DD , 122DF , 122DG , 122J , 122JE , 122JF or 124AH or under Division 10AA , so much of the amount of that divisible deduction as bears to the amount of that divisible deduction the same proportion as the number of whole days (if any) in that relevant period bears to 365 shall be deemed to be an allowable deduction in respect of that relevant period;

(r) where -

(i) a divisible deduction is allowable to the company in relation to the year of income under Division 10AAA in respect of a facility;

(ii) the year of income is the first year of income in which the facility was used primarily and principally for a purpose referred to in section 123A or 123BD ; and

(iii) the facility was used primarily and principally for a purpose referred to in section 123A or 123BD before the commencement of, or during, the relevant period,

so much of the amount of that divisible deduction as bears to the amount of that divisible deduction the same proportion as the number of whole days (if any) in the relevant period, being whole days occurring after the time when the facility commenced to be used primarily and principally for that purpose, bears to the number of whole days in the year of income, being whole days occurring after the time when the facility commenced to be used primarily and principally for that purpose, shall be deemed to be an allowable deduction in respect of that relevant period;

(s) where a divisible deduction is allowable to the company in relation to the year of income under Division 10AAA in respect of a facility and the year of income is not the first year of income in which the facility was used primarily and principally for a purpose referred to in section 123A or 123BD , so much of the amount of that divisible deduction as bears to the amount of that divisible deduction the same proportion as the number of whole days (if any) in that relevant period bears to 365 shall be deemed to be an allowable deduction in respect of that relevant period;

(t) where -

(i) a divisible deduction is allowable to the company in relation to the year of income under section 124F in respect of expenditure of a capital nature incurred by the company on an access road, or under section 124JA in respect of expenditure of a capital nature incurred by the company in respect of a building;

(ii) the year of income is the first year of income in which the company incurred expenditure of a capital nature on that access road or building, as the case may be; and

(iii) the company incurred expenditure of a capital nature on that access road or building, as the case may be, before the commencement of, or during, the relevant period,

so much of the amount of that divisible deduction as bears to the amount of that divisible deduction the same proportion as the number of whole days (if any) in the relevant period, being whole days occurring after the time when the company first incurred expenditure of a capital nature on that access road or building, as the case may be, bears to the number of whole days in the year of income, being whole days occurring after the time when the company first incurred expenditure of a capital nature on the access road or building, as the case may be, shall be deemed to be an allowable deduction in respect of that relevant period;

(u) where a divisible deduction is allowable to the company in relation to the year of income under section 124F in respect of expenditure of a capital nature incurred by the company on an access road, or under section 124JA in respect of expenditure of a capital nature incurred by the company in respect of a building, and the year of income is not the first year of income in which the company incurred expenditure of a capital nature on that access road or building, as the case may be, so much of the amount of that divisible deduction as bears to the amount of that divisible deduction the same proportion as the number of whole days (if any) in that relevant period bears to 365 shall be deemed to be an allowable deduction in respect of that relevant period;

(v) where -

(i) a divisible deduction is allowable to the company in relation to the year of income under section 124M (other than subsection (3) of that section) in respect of a unit of industrial property;

(ii) the year of income is the first year of income in which the unit was used by the company for the purpose of producing assessable income; and

(iii) the unit was used by the company for the purpose of producing assessable income before the commencement of, or during, the relevant period,

so much of the amount of that divisible deduction as bears to the amount of that divisible deduction the same proportion as the number of whole days (if any) in the relevant period, being whole days occurring after the time when the unit commenced to be used by the company for the purpose of producing assessable income, bears to the number of whole days in the year of income, being whole days occurring after the time when the unit commenced to be used by the company for the purpose of producing assessable income, shall be deemed to be an allowable deduction in respect of the relevant period;

(w) where a divisible deduction is allowable to the company in relation to the year of income under section 124M (other than subsection (3) of that section) in respect of a unit of industrial property and the year of income is not the first year of income in which the unit was used by the company for the purpose of producing assessable income, so much of the amount of that divisible deduction as bears to the amount of that divisible deduction the same proportion as the number of whole days (if any) in the relevant period bears to 365 shall be deemed to be an allowable deduction in respect of the relevant period;

(x) where a divisible deduction is allowable to the company in relation to the year of income under subsection 124M(3) in respect of the residual value of a unit of industrial property and, in ascertaining that residual value, the whole or part of expenditure incurred by the company during the relevant period was included in the cost of that unit, an amount equal to the amount of that expenditure, or of that part of that expenditure, as the case may be, shall be deemed to be an allowable deduction in respect of the relevant period;

(xa) where a divisible deduction is allowable to the company in relation to the year of income under section 124ZAF or 124ZAFA , so much of the amount of the divisible deduction as bears to the amount of the divisible deduction the same proportion as the number of whole days (if any) in the relevant period bears to 365 shall be deemed to be an allowable deduction in respect of the relevant period; and

(y) where a divisible deduction is allowable to the company in relation to the year of income under Division 10C or 10D and the Commissioner considers that the whole or a part of that divisible deduction may appropriately be related to the relevant period, the whole of that divisible deduction or that part of that divisible deduction, as the case may be, shall be deemed to be an allowable deduction in respect of the relevant period.