CHAPTER 3
-
SPECIALIST LIABILITY RULES
PART 3-10
-
FINANCIAL TRANSACTIONS
History
Part 3-10 inserted by No 72 of 2001.
Division 250
-
Assets put to tax preferred use
History
Div 250 inserted by
No 164 of 2007
, s 3 and Sch 1 item 1, effective 25 September 2007.
No 164 of 2007
, s 3 and Sch 1 item 71 contains the following application provision:
Application
(1)
Subject to subitems (4), (6) and (8), Division 250 applies in relation to a tax preferred use of an asset if, and only if, the tax preferred use:
(a)
starts on or after 1 July 2007; and
(b)
does not occur under a legally enforceable arrangement that was entered into before 1 July 2007.
(2)
This subitem applies to an asset that is put to a tax preferred use if:
(a)
the tax preferred use starts on or after 1 July 2007; and
(b)
the tax preferred use occurs under a legally enforceable arrangement that was entered into before 1 July 2007; and
(c)
but for this subitem:
(i)
section
51AD
would apply to the asset in relation to a taxpayer; or
(ii)
Division
16D
would apply to the asset; and
(d)
you elect to have this subitem apply to the asset.
(3)
An election under paragraph (2)(d) in relation to an asset that is put to a tax preferred use:
(a)
must be made by the day you lodge your income tax return for the income year in which the tax preferred use starts; and
(b)
must be made for the whole of the arrangement period for the tax preferred use of the asset; and
(c)
must extend to all assets that are, or are to be, put to a tax preferred use under the arrangement under which the asset is put to that use; and
(d)
is irrevocable.
(4)
If subitem (2) applies:
(a)
section
51AD
and Division
16D
do not apply to the asset; and
(b)
Division 250 applies to the tax preferred use of the asset.
(5)
This subitem applies to an asset that is put to a tax preferred use if:
(a)
the tax preferred use starts on or after 1 July 2007; and
(b)
the tax preferred use occurs under a legally enforceable arrangement that was entered into before 1 July 2007; and
(c)
immediately before 1 July 2007:
(i)
section
51AD
did not apply to the asset in relation to a taxpayer; and
(ii)
Division
16D
did not apply to the asset; and
(d)
the arrangement referred to in paragraph (b) is materially altered on or after 1 July 2007; and
(e)
but for this subitem and subitem (6):
(i)
section
51AD
would apply to the asset in relation to a taxpayer immediately after the alteration; or
(ii)
Division
16D
would apply to the asset immediately after the alteration.
For the purposes of applying paragraph (c), assume that the asset was in existence and was being put to the tax preferred use immediately before 1 July 2007.
(6)
If subitem (5) applies:
(a)
section
51AD
and Division
16D
do not apply to the asset; and
(b)
Division 250 applies to the tax preferred use of the asset after the alteration instead.
(7)
This subitem applies to an asset that is put to a tax preferred use if:
(a)
the tax preferred use started before 1 July 2007; and
(b)
immediately before 1 July 2007:
(i)
section
51AD
did not apply to the asset in relation to a taxpayer; and
(ii)
Division
16D
did not apply to the asset; and
(c)
the arrangement under which the tax preferred use of the asset occurs is materially altered on or after 1 July 2007; and
(d)
but for this subitem and subitem (8):
(i)
section
51AD
would apply to the asset in relation to a taxpayer immediately after the alteration; or
(ii)
Division
16D
would apply to the asset immediately after the alteration.
(8)
If subitem (7) applies:
(a)
section
51AD
and Division
16D
do not apply to the asset; and
(b)
Division 250 applies to the tax preferred use of the asset after the alteration instead.
(9)
For the purposes of applying subparagraphs (5)(c)(ii) and (e)(ii) and (7)(b)(ii) and (d)(ii), disregard the operation of section
159GL
of the
Income Tax Assessment Act 1936
.
(10)
For the purposes of applying Division 250 to the tax preferred use of an asset in accordance with subitem (6) or (8), the
arrangement period
for the tax preferred use of the asset is taken to start on the day on which the alteration referred to in paragraph (5)(d) or (7)(c) occurs.
(11)
Section
51AD
does not apply to an asset for the income year commencing on 1 July 2007, or a later income year, if:
(a)
the asset is put to a tax preferred use under a legally enforceable arrangement; and
(b)
the arrangement was entered into before 1 July 2007; and
(c)
the tax preferred use of the asset starts on or after 1 July 2003 and before 1 July 2007.
…
(13)
In this item:
arrangement
has the same meaning as in the
Income Tax Assessment Act 1997
.
asset
includes property (within the meaning of section
51AD
and Division
16D
).
Division 16D
means Division
16D
of Part
III
of the
Income Tax Assessment Act 1936
.
Division 250
means Division 250 of the
Income Tax Assessment Act 1997
.
section 51AD
means section
51AD
of the
Income Tax Assessment Act 1936
.
tax preferred use
has the same meaning as in the
Income Tax Assessment Act 1997
.
Subdivision 250-B
-
When this Division applies to you and an asset
History
Subdiv 250-B inserted by
No 164 of 2007
, s 3 and Sch 1 item 1, effective 25 September 2007. For application provision, see note under Div
250
heading.
Predominant economic interest
SECTION 250-140
When to retest predominant economic interest under section 250-135
Purpose for applying section
250-140(1)
This section applies for the purposes of working out whether this Division applies to you and to an asset that is *put to a tax preferred use.
No need to keep retesting if section 250-135 does not apply at start of tax preferred use of asset
250-140(2)
If section
250-135
does not apply to you and the asset at the time when the *tax preferred use of the asset starts, that section is taken, subject to subsection (4), to continue not to apply to you and the asset.
Note:
This subsection means that if section
250-135
does not apply to the arrangement when the tax preferred use of the asset starts, the arrangement does not need to be retested against section
250-135
until a change of the kind referred to in subsection (4) occurs.
No need to keep retesting if section 250-135 does not apply when you do something to increase value of expected financial benefits
250-140(3)
If:
(a)
you (or a *connected entity), or a *member of the tax preferred sector, do something, or omit to do something, at a particular time that increases the value of the *expected financial benefits in relation to the *tax preferred use of the asset; and
(b)
section
250-135
does not apply to the asset at that time;
that section is taken, subject to subsection (4), to continue not to apply to you and the asset.
Note:
This subsection means that if the arrangement is retested against section
250-135
at a particular time and section
250-135
does not apply to the arrangement on that retesting, the arrangement does not need to be again retested against section
250-135
until a change of the kind referred to in subsection (4) occurs.
Retesting when you do something to increase the value of expected financial benefits
250-140(4)
Subsection (2) or (3) ceases to apply to you and the asset if you (or a *connected entity), or a *member of the tax preferred sector, do something, or omit to do something, that increases the value of the *expected financial benefits in relation to the *tax preferred use of the asset.
Certain financial benefits ignored when retesting
250-140(5)
For the purposes of reapplying section
250-135
to the asset, disregard *financial benefits provided before subsection (2) or (3) of this section ceased to apply to the asset.
Note:
If:
(a) subsection (2) or (3) ceases to apply to the asset at a particular time under this subsection; and
(b) the asset is retested at that time against section
250-135
; and
(c) on the retesting, that section is found to apply to the asset at that time;
subsection (3) will start to apply to the asset again from that time because paragraph (3)(b) will have been satisfied.
Clarification that retesting only required if you do something to increase value of expected benefits
250-140(6)
To avoid doubt, subsection (2) or (3) does not cease to apply merely because the value of the *expected financial benefits in relation to the asset increase because of something other than action taken, or an omission made, by you (or a *connected entity) or a *member of the tax preferred sector.
Note:
This subsection means that retesting under subsection (4) is not triggered by an increase in the value of expected financial benefits that happens because of external circumstances (circumstances external to activities and omissions of yours, your connected entities and members of the tax preferred sector).
History
S 250-140 inserted by
No 164 of 2007
, s 3 and Sch 1 item 1, effective 25 September 2007. For application provision, see note under Div
250
heading.
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