INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART III - LIABILITY TO TAXATION  

Division 3 - Deductions  

Subdivision A - General  

SECTION 59AB   NOTIONAL INCOME WHERE ASSESSABLE INCOME INCLUDES CONSIDERATION RECEIVABLE ON DISPOSAL, LOSS OR DESTRUCTION OF DEPRECIATED PROPERTY  

59AB(1)   [Application]  

This section applies to a taxpayer where -

(a) assets of a business carried on by -

(i) the taxpayer;

(ii) a partnership in which the taxpayer is a partner; or

(iii) the trustee of a trust estate to a share of the net income of which the taxpayer (not being a person under a legal disability) is presently entitled,

are disposed of, lost or destroyed and, in consequence of their disposal, loss or destruction, that business ceases to be so carried on;

(b) those assets include units of property in respect of which depreciation has been allowed or is allowable under this Act or the previous Act; and

(c) an amount (in this section referred to as ``the balancing charge'' ) is included in the assessable income of the year of income of the taxpayer, partnership or trust estate, as the case may be, under subsection 59(2) in consequence of the disposal, loss or destruction of those assets,

but does not apply in relation to an assessment of the taxpayer in accordance with section 99A or where -

(d) the taxpayer is a company, except where, in respect of the whole or a part of the balancing charge, it is assessable as a trustee;

(e) the provisions of Division 16 are applied in the assessment of the taxpayer; or

(f) the taxpayer has, in relation to that disposal, loss or destruction, made a request in pursuance of subsection 59(2A) or (2D) .

59AB(2)   [Abnormal income]  

For the purposes of this section, a part of the assessable income of a taxpayer to whom this section applies shall be deemed to be abnormal income, and that part shall be ascertained as follows: -

(a) where the assets disposed of, lost or destroyed were assets of a business carried on by a taxpayer otherwise than in partnership or as the trustee of a trust estate, the abnormal income is the amount of the balancing charge;

(b) where the assets disposed of, lost or destroyed were assets of a business carried on by a partnership of which the taxpayer is a partner, the abnormal income is so much of the balancing charge as is included in the individual interest of the taxpayer in the net income of the partnership; and

(c) where the assets disposed of, lost or destroyed were assets of a business carried on by the trustee of a trust estate, the abnormal income is -

(i) for the purposes of an assessment of the trustee under any of the provisions of Division 6 - so much of the balancing charge as is included in the amount of the net income of the trust estate to which the assessment relates; and

(ii) for the purposes of the assessment of a taxpayer who is a beneficiary in the trust estate - so much of the balancing charge as is included in the share of the net income of the trust estate to which he is presently entitled.

59AB(3)   [Application in writing]  

A taxpayer to whom this section applies may, on or before the date of lodgment of his return of income in respect of the year of income or within such further time as the Commissioner allows, apply in writing to the Commissioner for the determination under this section of a notional income in respect of the year of income.

59AB(4)   [Notional income for Rating Act purposes]  

Where a taxpayer makes an application to the Commissioner in accordance with subsection (3), the succeeding provisions of this section apply for the determination of a notional income for the purpose of any Act that fixes a rate or rates of income tax by reference to a notional income.

59AB(5)   [Taxable income greater than abnormal income]  

Subject to subsection (7), where the taxable income of the taxpayer is greater than his abnormal income, the notional income is the amount ascertained by deducting from the taxable income an amount equal to two-thirds of the abnormal income.

59AB(6)   [Taxable income not greater than abnormal income]  

Subject to subsection (7), where the taxable income of the taxpayer is not greater than his abnormal income, the notional income is an amount equal to one-third of the taxable income.

59AB(7)   [Notional income under other provisions]  

Where section 86 applies in respect of the taxpayer, the notional income is, in lieu of the notional income determined in accordance with that section -

(a) where the notional income determined in accordance with that section is greater than the abnormal income of the taxpayer - the amount ascertained by deducting from the notional income so determined an amount equal to two-thirds of the abnormal income; or

(b) where the notional income determined in accordance with that section is not greater than the abnormal income of the taxpayer - an amount equal to one-third of the notional income so determined.