Income Tax Assessment Act 1936

PART III - LIABILITY TO TAXATION  

Division 3 - Deductions  

Subdivision H - Period of deductibility of certain advance expenditure  

SECTION 82KZM   EXPENDITURE BY SMALL AND MEDIUM BUSINESS ENTITIES AND INDIVIDUALS INCURRING NON-BUSINESS EXPENDITURE  

82KZM(1)    
Where:

(a)    

a taxpayer incurs expenditure under an agreement entered into after 25 May 1988; and

(aa)    

at least one of the following applies:

(i) the taxpayer is a small business entity, or is covered by subsection (1A), for the year of income and has not chosen to apply section 82KZMD to the expenditure;

(ii) the taxpayer is an individual and the expenditure is not incurred in carrying on a business;

(iii) the expenditure meets a pre-RBT obligation (see subsection 82KZL(1) ); and

(b)    

the expenditure is not excluded expenditure; and

(ba)    

either:

(i) the eligible service period for the expenditure is longer than 12 months; or

(ii) the eligible service period for the expenditure is 12 months or shorter but ends after the last day of the year of income after the one in which the expenditure was incurred; and

(c)    

apart from this section, a deduction under:

(i) section 8-1 ; or

(ii) section 355-205 (R & D expenditure) or 355-480 (earlier year associate R & D expenditure);

of the Income Tax Assessment Act 1997 , in respect of the expenditure, would be allowable from the taxpayer ' s assessable income for the year of income in which the expenditure is incurred;

then, for the purposes of this Act, instead of the deduction being allowable as mentioned in paragraph (c), a proportion of the deduction is allowable from the assessable income of the taxpayer of each year of income during which the whole or part of the eligible service period in relation to the expenditure occurs, being a proportion ascertained in accordance with the formula:

Period in year             Eligible service period

where:

Period in year is the number of days in the whole or the part of the eligible service period that occurs in the year of income.

Eligible service period is the number of days in the eligible service period.

82KZM(1A)    

A taxpayer is covered by this subsection for a year of income if:

(a)    the taxpayer is not a small business entity for the year of income; and

(b)    the taxpayer would be a small business entity for the year of income if:

(i) each reference in Subdivision 328-C (about what is a small business entity) of the Income Tax Assessment Act 1997 to $10 million were instead a reference to $50 million; and

(ii) the reference in paragraph 328-110(5)(b) of that Act to a small business entity were instead a reference to a taxpayer covered by this subsection.

82KZM(2)    

Subsection (1) has effect subject to Division 245 of the Income Tax Assessment Act 1997 .