Taxation Laws Amendment Act (No. 2) 1996 (76 of 1996)
Schedule 2 Amendment of the Income Tax Assessment Act 1936: forgiveness of commercial debts
Part 1 Insertion of new Schedule 2C
1 After Schedule 2B
Insert:
Schedule 2C-Forgiveness of commercial debts
Division 245-Forgiveness of commercial debts
Guide to Division 245
245-1 What this Division is about
This Division applies if:
(a) a debt or part of a debt ceases to be payable because the obligation to pay the debt or part is released or waived, or is otherwise extinguished (this is referred to as the forgiveness of the debt or part); and
(b) there are amounts (reducible amounts) that would otherwise be taken into account in reducing the debtor's taxable income of the year of income in which the debt is forgiven or a later year of income.
The forgiven amount of the debt is treated as having been used to generate the reducible amounts and is accordingly applied to reduce them in a particular order.
If the debtor is a company that is included in a group of related companies, the forgiven amount of the debt may be treated as having been used to generate reducible amounts of one or more of the other companies.
245-2 Simplified outline of this Division
(1) This Division applies to the forgiveness of the whole or a part of a commercial debt.
(2) The forgiveness of a debt under an Act relating to bankruptcy, by will, or for reasons of natural love and affection, is not affected by the provisions of the Division.
(3) Provision is made for the calculation of the gross forgiven amount in respect of each debt.
(4) The gross forgiven amount may then be reduced by certain amounts that are taken into account in assessing the debtor's taxable income apart from this Division.
(5) If the debt is owed between group companies, the gross forgiven amount may be further reduced in certain circumstances.
(6) The amount remaining after all reductions to the gross forgiven amount is the net forgiven amount in respect of the debt.
(7) The total net forgiven amount of all debts of a particular debtor that are forgiven in the same year of income (the forgiveness year of income) is to be applied in reduction of certain amounts that may otherwise be taken into account in assessing the debtor's taxable income.
(8) The amounts to be reduced are certain revenue losses, net capital losses and other deductible amounts and the cost bases of certain assets.
(9) Special rules apply in respect of debts of partnerships other than corporate limited partnerships.
(10) Special rules apply in respect of debts of a company if the company is included in a group of related companies.
245-3 Map of this Division
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Subdivision 245-A-Debts to which this Division applies
Guide to Subdivision 245-A
245-5 What this Subdivision is about
The purpose of this Subdivision is to identify the debts to which this Division applies.
245-6 Map of this Subdivision
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Operative provisions
245-10 Application of this Division
(1) Subject to subsection (2), this Division applies to a forgiveness of a commercial debt but so applies only if the forgiveness occurs after the commencement day.
(2) This Division does not apply to a forgiveness referred to in subsection (1) if the forgiveness occurs in accordance with the terms of an agreement or arrangement that:
(a) was entered into on or before the commencement day; and
(b) is evidenced in writing otherwise than by a document evidencing the agreement or transaction under which the debt arose.
245-15 What is a debt
(1) Subject to this section, a debt is an enforceable obligation imposed by law on a person to pay an amount to another person.
(2) If such an obligation is waived and the waiver constitutes a fringe benefit within the meaning of the Fringe Benefits Tax Assessment Act 1986, the debt constituted by the obligation is to be disregarded for the purposes of this Division.
(3) An amount that, apart from this subsection, would be an enforceable obligation referred to in subsection (1) is not to be regarded as a debt if the amount has been, or will be, included in the assessable income of any year of income of the person on whom the obligation is imposed.
245-20 Debt includes accrued interest
If there is, in respect of a debt, any interest or amount in the nature of interest that has accrued but has not been paid, the obligation to pay that interest or amount is not a separate debt but the first-mentioned debt includes the obligation to pay the interest or amount.
245-25 What constitutes a commercial debt
(1) A debt is a commercial debt if it falls within any of the following provisions of this section.
Debt on which interest paid is an allowable deduction
(2) A debt is a commercial debt if the whole or any part of interest, or of an amount in the nature of interest, paid or payable in respect of the debt:
(a) is or would be allowable as a deduction to the debtor; or
(b) would be so allowable apart from the operation of an exception provision.
Debt on which no interest is payable
(3) A debt is a commercial debt if interest, or an amount in the nature of interest, is not payable in respect of the debt but, had interest or such an amount been payable, the whole or any part of the interest or amount:
(a) would have been allowable as a deduction to the debtor; or
(b) would have been so allowable apart from the operation of an exception provision.
Amounts paid on shares in respect of which debt dividends are paid
(4) A share issued by a company is taken to be a commercial debt owed by the company to the shareholder if a dividend paid in respect of the share would be a debt dividend within the meaning of subsection 46C(1) or 46D(1).
Meaning of exception provision
(5) In this section:
exception provision means a provision of this Act that has the effect of preventing a deduction that would otherwise be allowable, but does not include an exception contained in subsection 51(1).
245-26 Application to trustees
This Division applies to a person in the capacity of a trustee of a trust estate in respect of the trust estate's debts, and references in this Division to a debtor include a reference to a person in the capacity of a trustee of a trust estate in respect of the trust estate's debts.
Subdivision 245-B-What constitutes forgiveness of a debt
Guide to Subdivision 245-B
245-30 What this Subdivision is about
This Subdivision explains the circumstances in which a debt is taken to have been forgiven for the purposes of this Division.
245-31 Map of this Subdivision
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Operative provisions
245-35 What constitutes forgiveness of a debt
Obligation to pay debt forgiven
(1) A debt is forgiven if the debtor's obligation to pay the debt is released or waived, or is otherwise extinguished.
Right to sue for debt ceases because of statute of limitations
(2) A debt is forgiven if the period within which the creditor is entitled to sue for the recovery of the debt ends because of the operation of a statute of limitations without the debt having been paid.
Agreement to end obligation to pay debt with effect from a future time
(3) If:
(a) the debtor and creditor in relation to a debt enter into an agreement or arrangement (whether or not enforceable by legal proceedings); and
(b) under the agreement or arrangement the debtor's obligation to pay the whole or a part of the debt is to cease at a particular future time; and
(c) the cessation of the obligation is to occur without the debtor incurring any financial or other obligation (other than an obligation that, having regard to the debtor's circumstances, is of a nominal or insignificant amount or kind);
the debt or the part of the debt is taken to be forgiven when the agreement or arrangement is entered into. If, after the agreement or arrangement is entered into, the debt or the part of the debt is forgiven, the last-mentioned forgiveness is disregarded for the purposes of this Division.
Debt parking
(4) If:
(a) the creditor, in relation to a debt, assigns the right to receive payment of the debt to another person (the new creditor); and
(b) either:
(i) the new creditor is an associate of the debtor; or
(ii) the assignment occurred under an agreement or arrangement to which the new creditor and the debtor were parties; and
(c) the right to receive payment of the debt was not acquired by the new creditor in the ordinary course of trading on a securities market;
this Division has effect as if:
(d) the debtor had, at the time of the assignment, been forgiven a debt (the notional debt) equal to the amount of the assigned debt; and
(e) the net forgiven amount of the notional debt were equal to the amount that would have been the net forgiven amount of the assigned debt if that debt had been forgiven instead of being assigned.
Subscription for shares to enable debt to be paid
(5) If:
(a) a person subscribes for shares in a company to enable the company to make a payment in or towards discharge of a debt owed by it to the person; and
(b) the company applies all or any of the money subscribed in or towards payment of the debt;
then:
(c) so much of the debt as is paid out of the money so applied is taken to be forgiven; and
(d) the time of the forgiveness is taken to be the time when the money is so applied.
Definition
(6) In this section:
securities market means a market, exchange or other place on which, or a facility by means of which, offers to sell, buy or exchange securities (within the meaning of Division 16E of Part III) are made or accepted.
245-40 Forgivenesses to which this Division does not apply
This Division does not apply to a forgiveness of a debt if:
(a) the forgiveness is effected under an Act relating to bankruptcy; or
(b) the forgiveness is effected by will; or
(c) the debt is forgiven for reasons of natural love and affection.
Subdivision 245-C-Calculation of gross forgiven amount of a debt
Guide to Subdivision 245-C
245-45 What this Subdivision is about
If a debt is forgiven, this Subdivision sets out the steps to be followed in calculating the gross forgiven amount of the debt.
245-46 Simplified outline of this Subdivision
(a) The first step is to work out the notional value of a debt that has been forgiven
The notional value of the debt is calculated as at the time when the debt was forgiven on the basis that the debt was an asset of the creditor at that time.
The notional value of the debt is worked out for the purpose of calculating the gross forgiven amount of the debt.
A special rule applies for the purpose of working out the notional value of a non-recourse debt.
Another special rule applies for the purpose of working out the notional value of a debt that has been parked.
(b) The second step is to work out the consideration (if any) in respect of the forgiveness of the debt.
(c) If no such consideration was paid or given, the gross forgiven amount of the debt is equal to the notional value of the debt.
(d) If any such consideration was paid or given, the gross forgiven amount of the debt is obtained by deducting the consideration from the notional value of the debt.
245-47 Map of this Subdivision
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Operative provisions
245-50 What constitutes a forgiven debt if consideration is given in respect of the forgiveness
If any consideration is paid or given in respect of the forgiveness of a debt, the debt that is forgiven is taken to be:
(a) the obligation that existed before the forgiveness to pay so much of the debt as is expressed, or is taken, to be forgiven; and
(b) the obligation that existed before the forgiveness to pay any part of the debt to which paragraph (a) does not apply but which ceases to be payable as a result of the payment or giving of the consideration.
245-55 Working out notional value of a debt other than a non-recourse debt
(1) Subject to sections 245-60 and 245-61, the notional value of a debt at the time when it was forgiven is the lesser of the amount worked out under subsection (2) (the first applicable amount) and the amount worked out under subsection (3) (the second applicable amount).
(2) The first applicable amount is the amount that would have been the value of the debt (considered as an asset of the creditor) at the time when it was forgiven if:
(a) except where subsection (4) applies in relation to the debt, at the time when the debt was incurred the debtor was able to pay all the debtor's debts (including the debt concerned) as and when they fell due; and
(b) the debtor's capacity to pay the debt at the time when it was forgiven was the same as the debtor's capacity to pay the debt at the time when it was incurred.
(3) The second applicable amount is the sum of the following amounts:
(a) the amount that would have been the value of the debt (considered as an asset of the creditor) at the time when it was forgiven if:
(i) except where subsection (4) applies in relation to the debt, at the time when the debt was incurred the debtor was able to pay all the debtor's debts (including the debt concerned) as and when they fell due; and
(ii) the debtor's capacity to pay the debt at the time when it was forgiven was the same as the debtor's capacity to pay the debt at the time when it was incurred; and
(iii) no changes occurred, between the time when the debt was incurred and the time when the debt was forgiven, in any market variables; and
(b) the amount or the sum of the amounts of any deduction or deductions that:
(i) have been allowed or are allowable to the debtor as a result of the forgiveness of the debt; and
(ii) are attributable to changes in market variables that occurred between the time when the debt was incurred and the time when the debt was forgiven.
(4) Paragraph (2)(a) and subparagraph (3)(a)(i) do not apply in relation to a debt if both of the following apply:
(a) the debtor and the creditor were not dealing with each other at arm's length in respect of the incurring of the debt;
(b) the debt is not a moneylending debt.
(5) In this section:
market variables, in relation to a debt, means changes in rates of interest, and changes in the rates of exchange between currencies, that affect the value of the debt.
245-60 Special rule for working out notional value of a non-recourse debt
(1) This section applies to a debt (the non-recourse debt) if the debt was incurred directly in respect of the financing of the cost of the acquisition, construction or development of property (but not including the manufacture of goods) by the debtor and the rights of the creditor as against the debtor in the event of default in the payment of the debt or the payment of interest are limited to all or any of the following:
(a) rights (including the right to moneys payable) in relation to all or any of the following:
(i) the property or the use of the property;
(ii) goods produced, supplied, carried, transmitted or delivered, or services provided, by means of the property;
(iii) the loss or disposal of the whole or a part of the property or of the debtor's interest in the property;
(b) rights in respect of a mortgage or other security over the property;
(c) rights arising out of any arrangement relating to the financial obligations, in relation to the property, of the end-user of the property towards the debtor.
(2) The notional value of a non-recourse debt at the time when it was forgiven is the lesser of the following:
(a) the amount of the non-recourse debt outstanding at that time;
(b) the market value at that time of the creditor's rights referred to in subsection (1) of this section.
(3) In this section:
end-user, in relation to property, has the same meaning as in section 51AD.
245-61 Special rule for working out notional value of parked debt
If a debt that has been assigned as mentioned in subsection 245-35(4) is forgiven, the notional value of that debt is:
(a) if the debt was not a moneylending debt and the creditor and the new creditor were not dealing with each other at arm's length in connection with the assignment-the market value of the debt at the time of the assignment; or
(b) in any other case-the sum of:
(i) the amount or value of the consideration (if any) that the debtor has paid or given, or is required to pay or give, to the creditor in respect of the assignment; and
(ii) the amount or value of the consideration (if any) paid or given by the new creditor in respect of the assignment.
245-65 The consideration in respect of forgiveness of a debt
(1) Subject to subsection (2), the consideration in respect of the forgiveness of a debt (other than a debt to which subsection (3) or (4) applies) is:
(a) if the debtor has paid, or is required to pay, an amount or amounts of money as a result of, or in respect of, the forgiveness of the debt:
(i) if the debt is not a moneylending debt-that amount or the sum of those amounts; or
(ii) if the debt is a moneylending debt-the sum of the amount or amounts (if any) that the debtor has paid and the market value, at the time of the forgiveness, of the debtor's obligation to pay an amount or amounts; or
(b) if the debtor has given, or is required to give, property other than money as a result of, or in respect of, the forgiveness of the debt-the market value of the property at the time of the forgiveness; or
(c) if the debtor has paid or given, or is required to pay or give, both an amount or amounts of money and property other than money as a result of, or in respect of, the forgiveness of the debt:
(i) if the debt is not a moneylending debt-the sum of that amount or those amounts and the market value of the property at the time of the forgiveness; or
(ii) if the debt is a moneylending debt-the sum of the amount or amounts (if any) that the debtor has paid, the market value, at the time of the forgiveness, of the property (if any) that the debtor has given and the market value, at the time of the forgiveness, of the debtor's obligation to pay any amount or amounts or to give any property.
(2) If a debt (other than a moneylending debt) to which subsection (1) applies is forgiven and:
(a) there is no consideration in respect of the forgiveness; or
(b) the whole or a part of the consideration in respect of the forgiveness cannot be valued; or
(c) the amount that, apart from this paragraph, would be taken to be the amount or value of the consideration in respect of the forgiveness is greater or less than the market value of the debt at the time of the forgiveness and the debtor and creditor were not dealing with each other at arm's length in connection with the forgiveness;
the debtor is taken to have paid as consideration in respect of the forgiveness of the debt an amount equal to the market value of the debt at the time of the forgiveness.
(3) In calculating for the purposes of paragraph 245-35(4)(e) the amount that would have been the net forgiven amount of an assigned debt referred to in that paragraph if that debt had been forgiven instead of being assigned:
(a) if the debt is not a moneylending debt and the creditor and the new creditor were not dealing with each other at arm's length in connection with the assignment-the consideration in respect of the forgiveness of the debt is taken to be the market value of the debt at the time of the assignment; or
(b) in any other case-the consideration in the respect of the forgiveness of the debt is taken to be the sum of:
(i) the amount or value of the consideration (if any) that the debtor has paid or given, or is required to pay or give, to the creditor in respect of the assignment; and
(ii) the amount or value of the consideration (if any) paid or given by the new creditor in respect of the assignment.
(4) If a debt is forgiven by subscribing for shares in a company as mentioned in subsection 245-35(5), the consideration in respect of the forgiveness of the debt is the amount worked out using the formula:
(Amount applied / Amount subscribed) * Market value of shares subscribed for
where:
amount applied means the amount applied by the company as mentioned in paragraph 245-35(5)(b).
amount subscribed means the amount subscribed as mentioned in paragraph 245-35(5)(a).
market value of shares subscribed for means the market value, of all the shares in the company that were subscribed for as mentioned in paragraph 245-35(5)(a), immediately after those shares were issued.
245-70 Money or other property applied for benefit of creditor
(1) For the purposes of section 245-65:
(a) money or property is taken to have been paid or given to a creditor if the money or property has been applied for the benefit, or in accordance with the directions, of the creditor; and
(b) a debtor is taken to be required to pay money or give property to a creditor if the debtor is required to apply money or property for the benefit, or in accordance with the directions, of the creditor.
(2) For the purposes of section 245-65, a reference in subsection (1) to the application of money or property for the benefit of a creditor includes, without limiting the generality of the expression, a reference to the application of money or property in the discharge, wholly or partly, of a debt due by the creditor.
(3) This section does not limit the operation of section 19.
245-75 Gross forgiven amount of a debt
(1) If no consideration is paid or given, or taken to be paid or given, in respect of the forgiveness of the debt, the gross forgiven amount of the debt is an amount equal to the notional value of the debt at the time when the debt was forgiven.
(2) If any consideration is paid or given, or taken to be paid or given, in respect of the forgiveness of the debt:
(a) where the notional value of the debt at the time when the debt was forgiven exceeds the consideration-the gross forgiven amount of the debt is an amount equal to the excess; or
(b) where the notional value of the debt at the time when the debt was forgiven is equal to or less than the consideration-there is no forgiven amount in respect of the debt and Subdivisions 245-D to 245-G do not apply in respect of the debt.
Subdivision 245-D-Calculation of net forgiven amount of a debt
Guide to Subdivision 245-D
245-80 What this Subdivision is about
This Subdivision provides for the gross forgiven amount of a debt to be reduced in certain circumstances.
If the gross forgiven amount is not reduced under this Subdivision, the gross forgiven amount is also the net forgiven amount of the debt.
If the gross forgiven amount is reduced under this Subdivision, the amount remaining after the reduction is the net forgiven amount of the debt.
245-81 Map of this Subdivision
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Operative provisions
245-85 Reduction of gross forgiven amount
(1) The gross forgiven amount of a debt is reduced by the sum of any of the following amounts that apply in relation to the debtor:
(a) any amount that, under a provision of this Act other than this Division, has been, or will be, included in the debtor's assessable income of any year of income as a result of the forgiveness of the debt;
(b) any amount by which, under a provision of this Act other than this Division, a deduction that would otherwise be allowable from the debtor's assessable income of any year of income has been, or will be, reduced as a result of the forgiveness of the debt;
(c) any amount by which the cost base to the debtor of any asset for the purposes of Part IIIA has been, or will be, reduced under that Part as a result of the forgiveness of the debt.
(2) The amount remaining after reducing the gross forgiven amount under subsection (1) is:
(a) if section 245-90 does not apply-the net forgiven amount of the debt; or
(b) if section 245-90 applies-the provisional net forgiven amount of the debt.
245-90 Agreement between companies under common ownership for creditor to forgo capital loss or deduction under subsection 51(1) or section 63
(1) This section applies if:
(a) a debt owed by a company to another company is forgiven; and
(b) throughout the period from the time when the debt was incurred until the time when the debt is forgiven, the companies were under common ownership.
(2) If, apart from this subsection, the creditor would have incurred a capital loss under paragraph 160Z(1)(b) as a result of the forgiveness of the debt:
(a) the debtor and creditor may agree that the creditor is to forgo so much of the loss as is stated in the agreement and does not exceed the provisional net forgiven amount of the debt; and
(b) if such an agreement is made:
(i) the creditor's capital loss is reduced by the agreed amount; and
(ii) the provisional net forgiven amount of the debt is also reduced by the agreed amount; and
(iii) the amount remaining after the reduction of the provisional net forgiven amount of the debt under subparagraph (ii) is the net forgiven amount of the debt.
(3) If, apart from this subsection, a deduction in respect of the debt would be allowable to the creditor under subsection 51(1) or section 63 in the forgiveness year of income:
(a) the debtor and creditor may agree that the creditor is to forgo so much of the deduction as is stated in the agreement and does not exceed the provisional net forgiven amount of the debt; and
(b) if such an agreement is made:
(i) the deduction otherwise allowable to the creditor is reduced by the agreed amount; and
(ii) the provisional net forgiven amount of the debt is also reduced by the agreed amount; and
(iii) the amount remaining after the reduction of the provisional net forgiven amount of the debt under subparagraph (ii) is the net forgiven amount of the debt.
(4) Neither subsection (2) nor (3) applies in relation to an agreement unless the agreement:
(a) is in writing and signed by the public officer of the company that is the debtor and by the public officer of the company that is the creditor; and
(b) is made before whichever is the earlier of the following:
(i) the date of lodgment of the return of income for the forgiveness year of income of the company that is the creditor;
(ii) the date of lodgment of the return of income for the forgiveness year of income of the company that is the debtor;
or before any later date that the Commissioner determines.
Subdivision 245-E-Application of net forgiven amounts
Guide to Subdivision 245-E
245-95 What this Subdivision is about
This Subdivision provides for the total of the net forgiven amounts (the total net forgiven amount) of all debts of a particular debtor that are forgiven in the same year of income (the forgiveness year of income) to be applied in reduction of amounts that would otherwise be taken into account in assessing the debtor's taxable income of the forgiveness year of income or any later year of income.
This Subdivision does not apply to the calculation of attributable income of a non-resident trust estate or a controlled foreign company.
245-96 Map of this Subdivision
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General operative provisions
245-100 Subdivision not to apply to calculation of attributable income
This Subdivision does not apply to the calculation of:
(a) attributable income of a non-resident trust estate for the purposes of Division 6AAA of Part III; or
(b) attributable income of a controlled foreign company for the purposes of Part X.
245-105 How total net forgiven amount is to be applied
(1) Subject to subsection (2), the total of the net forgiven amounts of all debts of a debtor that are forgiven in the same year of income (the forgiveness year of income) constitutes the total net forgiven amount in relation to the debtor in respect of the forgiveness year of income.
(2) Section 245-215 has effect in calculating the total net forgiven amount of a partner in a partnership.
(3) Subdivision 245-G has effect in calculating the total net forgiven amount of a company that is included in a group of related companies.
(4) The total net forgiven amount is to be applied in accordance with this section before the debtor's return in respect of income of the forgiveness year of income is furnished to the Commissioner.
(5) The total net forgiven amount is to be applied first, in accordance with sections 245-110 to 245-120, in reduction of deductible revenue losses (if any) incurred by the debtor in years of income before the forgiveness year of income.
(6) To the extent to which the total net forgiven amount cannot be applied as mentioned in subsection (5), it is to be applied, in accordance with sections 245-125 to 245-135, in reduction of deductible net capital losses (if any) incurred by the debtor in respect of the year of income immediately preceding the forgiveness year of income.
(7) To the extent to which the total net forgiven amount cannot be applied as mentioned in subsections (5) and (6), it is to be applied, in accordance with sections 245-140 to 245-160, in reduction of deductible expenditures (if any) that are to be taken into account in the assessment of the debtor's taxable income of the forgiveness year of income or any later year of income.
(8) To the extent to which the total net forgiven amount cannot be applied as mentioned in subsections (5), (6) and (7), it is to be applied, in accordance with sections 245-165 to 245-190, in reduction of the relevant cost bases of certain assets of the debtor at the beginning of the forgiveness year of income.
Operative provisions relating to reduction of revenue losses
245-110 Definitions applicable to provisions reducing revenue losses
In sections 245-110 to 245-120:
deductible revenue loss means a loss:
(a) that is of a kind described in the table of deductible revenue losses; and
(b) in respect of which a deduction would, apart from this Subdivision, be allowable to the debtor in the forgiveness year of income or any later year of income if the debtor had derived sufficient assessable income in the year of income concerned (including sufficient assessable income from which the loss could be deducted).
table of deductible revenue losses means the following table:
Table of deductible revenue losses
Column 1 Column 2
General description of losses Provision under which loss
is deductible
General domestic losses of Subsection 79E(3)
post-1989 years of income
Film losses of post-1989 Subsection 79F(6)
years of income
General domestic losses of Subsection 80(2)
pre-1990 years of income
Film losses of pre-1990 Subsection 80AAA(7)
years of income
Primary production losses of Subsection 80AA(4)
pre-1990 years of income
Foreign losses of pre-1990 Subsection 160AFD(1)
years of income
Foreign losses of post-1989 Subsection 160AFD(2)
years of income
245-115 Total net forgiven amount to be applied in reduction of revenue losses
The total net forgiven amount is to be applied, to the maximum extent possible, in reduction, in accordance with section 245-120, of deductible revenue losses (if any).
245-120 Allocation of total net forgiven amount in respect of deductible revenue losses
(1) The debtor may choose:
(a) the order in which the deductible revenue losses are to be reduced; and
(b) the amount by which each of those losses is to be reduced;
provided that the total net forgiven amount is applied, to the maximum extent possible, in reduction of deductible revenue losses.
(2) If the debtor does not make a choice for the purposes of subsection (1), the Commissioner may make the choice on behalf of the debtor in a reasonable way.
Operative provisions relating to reduction of net capital losses
245-125 Definitions applicable to provisions reducing net capital losses
In sections 245-125 to 245-135:
deductible net capital loss means:
(a) a net capital loss (if any) that:
(i) is taken under subsection 160ZC(4), for the purposes of Part IIIA, to have been incurred by the debtor in respect of the year of income immediately preceding the forgiveness year of income; and
(ii) would, apart from this Subdivision, be taken into account in determining whether a net capital gain accrued to the debtor, or the debtor incurred a net capital loss, in respect of the forgiveness year of income; or
(b) a net listed personal-use asset loss (if any):
(i) that is taken under subsection 160ZQ(6), for the purposes of section 160ZQ, to have been incurred by the debtor in respect of the year of income immediately preceding the forgiveness year of income; and
(ii) would, apart from this Subdivision, be taken into account in determining whether a capital gain accrued to the debtor, or the debtor incurred a net listed personal-use asset loss, in respect of the forgiveness year of income.
residual forgiven amount means the total net forgiven amount to the extent to which it has not been applied in making reductions of deductible revenue losses.
245-130 Residual forgiven amount to be applied in reduction of net capital losses
The residual forgiven amount is to be applied, to the maximum extent possible, in reduction, in accordance with section 245-135, of deductible net capital losses (if any).
245-135 Allocation of residual forgiven amount in respect of deductible net capital losses
(1) The debtor may choose:
(a) the order in which the deductible net capital losses are to be reduced; and
(b) the amount by which each of those losses is to be reduced;
provided that the residual forgiven amount is applied, to the maximum extent possible, in reduction of deductible net capital losses.
(2) If the debtor does not make a choice for the purposes of subsection (1), the Commissioner may make the choice on behalf of the debtor in a reasonable way.
Operative provisions relating to reduction of deductible expenditure
245-140 Definitions applicable to provisions reducing deductible expenditure
(1) In sections 245-140 to 245-160:
deductible expenditure means expenditure (other than excluded expenditure):
(a) that is of a kind referred to in the table of deductible expenditure and was incurred before the forgiveness year of income; and
(b) in respect of which a deduction would, apart from this Subdivision, be allowable to the debtor in respect of income of the forgiveness year of income or a later year of income if no event or circumstance (other than a recoupment of the expenditure in the forgiveness year of income) occurred that would affect the allowance of the deduction.
excluded expenditure has the meaning given by subsections (2), (3) and (4).
residual forgiven amount means the total net forgiven amount to the extent to which it has not been applied in making reductions of deductible revenue losses and deductible net capital losses.
table of deductible expenditure means the following table.
Table of deductible expenditure
Column 1 Column 2
General description of expenditure Provision under which a
deduction is allowable in
respect of the expenditure
Cost of plant or articles used Subsections 54(1), 56(1),
(or installed ready for use) to 57AK(4) and 57AM(5),
produce assessable income (7), (9), (10) and (11)
Expenditure incurred in borrowing Subsection 67(1)
money to produce assessable income
Expenditure on a telephone line on Subsection 70(2)
land on which a business of primary
production is carried on
Expenditure in connecting or Subsection 70A(3)
upgrading mains electricity
facilities on land used or
intended for use in producing
assessable income
Expenditure on scientific research Subsection 73A(2)
Expenditure in connection with Subsection 75A(3)
clearing and preparing land
for primary production
Expenditure on establishing Subsection 75AA(1)
a grape vine
Expenditure on plant or Subsection 75B(3B)
structural improvements for
conserving or conveying water
Expenditure on certain kinds Subsections 82AB(1) and 82AT(1)
of plant and equipment for use
in very large development projects
Expenditure on study to evaluate Paragraphs 82BB(1)(b), (c) and (d)
the environmental impact of an
income producing project
Advance revenue expenditure Section 82KZM
Expenditure incurred in relation Sections 122D, 122DB, 122DD,
to mining or quarrying operations 122DF, 122DG, 122JE and 122KA
Expenditure incurred on exploration Section 122J
or prospecting for minerals obtainable
by prescribed mining operations
Expenditure incurred in Subsections 123B(1) and 123BE(1)
transporting minerals or
quarry materials
Expenditure on prospecting Sections 124AD, 124ADB, 124ADD,
and mining for petroleum 124ADE, 124ADF, 124ADG,
124AF, 124AH and 124AMA
Expenditure on access roads Section 124F
to an area of timber operations
Expenditure on timber buildings Subsection 124JA(1)
used for timber milling business,
if the buildings are in a forest
or adjacent to a timber milling
or timber felling area
Expenditure on acquiring a Subsection 124M(1)
unit of industrial property
to produce assessable income
Expenditure on Australian films Section 124ZAF
Construction costs of Section 124ZC
building for short term
traveller accommodation
Construction costs of Subsections 124ZH(1), (2) and (2A)
buildings, structural
improvements etc.
(2) Expenditure is excluded expenditure if:
(a) it was incurred in respect of an asset that has been disposed of by the debtor to a person who was dealing at arm's length with the debtor in respect of the disposal; and
(b) the disposal occurred during the forgiveness year of income before the forgiveness of any debt owed by the debtor, being a forgiveness that resulted in a net forgiven amount; and
(c) no provision of this Act includes an amount in the debtor's assessable income, or allows a deduction to the debtor, as a result of the disposal.
(3) Expenditure is excluded expenditure if the asset in respect of which the expenditure was incurred was disposed of by the debtor, or was lost or destroyed, on or before the commencement day.
(4) Expenditure is excluded expenditure to the extent (if any) to which the expenditure was recouped on or before the commencement day.
245-145 Residual forgiven amount to be applied in reduction of deductible expenditures
The residual forgiven amount is to be applied, to the maximum extent possible, in reduction, in accordance with sections 245-150 and 245-155, of deductible expenditures (if any).
245-150 Allocation of residual forgiven amount in respect of deductible expenditures
(1) The debtor may choose:
(a) the order in which deductible expenditures are to be subject to reduction; and
(b) the amount to be applied in reduction of each of those expenditures;
provided that the residual forgiven amount is applied, to the maximum extent possible, in reduction of deductible expenditures.
(2) If the debtor does not make a choice for the purposes of subsection (1), the Commissioner may make the choice on behalf of the debtor in a reasonable way.
245-155 How a reduction of a deductible expenditure is to be effected
(1) The following paragraphs apply in respect of the reduction of any deductible expenditure if the deduction that would be allowable to the debtor, apart from this Subdivision, in respect of the deductible expenditure is a percentage, fraction or proportion of an amount (the base amount) that is worked out without regard to any amount or amounts previously allowed as a deduction or deductions in respect of the deductible expenditure:
(a) any amount that is to be applied in reduction of the deductible expenditure is taken to reduce the base amount for the purpose of working out the deduction in respect of the forgiveness year of income and later years of income;
(b) the amount of the reduction is taken to have been a deduction allowed to the debtor in respect of the deductible expenditure before the forgiveness year of income for the purposes of the operation of any provision of this Act that includes an amount in the debtor's assessable income or allows a deduction to the debtor:
(i) because of the disposal, loss or destruction of the asset in respect of which the deductible expenditure was incurred; or
(ii) because of the recoupment of any of the expenditure; or
(iii) because use of the asset for a particular purpose has been otherwise terminated;
as the case may be;
(c) the total amount of the deductions allowed or allowable otherwise than under paragraph (b) in respect of the deductible expenditure for all years of income (including years of income before the forgiveness year of income) must not exceed the base amount as reduced under paragraph (a).
(2) If the deduction that would be allowable to the debtor, apart from this Subdivision, in respect of any deductible expenditure is a percentage, fraction or proportion of an amount that is worked out after taking into account any amount or amounts previously allowed as a deduction or deductions in respect of the deductible expenditure, any amount to be applied in reduction of the deductible expenditure is taken to have been a deduction allowed to the debtor in respect of the deductible expenditure before the forgiveness year of income.
245-160 Amount applied in reduction of deductible expenditure to be included in assessable income in certain circumstances
If:
(a) an amount of deductible expenditure is recouped after the forgiveness year of income; and
(b) as a result of the recoupment, this Act applies to disallow any deduction previously allowed to the debtor in respect of the expenditure;
an amount equal to the amount, or the sum of the amounts, applied under this Subdivision in reduction of the deductible expenditure is included in the debtor's assessable income of the year of income in which the expenditure is recouped.
Operative provisions relating to reduction of cost bases of assets
245-165 Definitions applicable to provisions reducing cost bases
(1) In sections 245-165 to 245-190:
excluded asset has the meaning given by section 245-170.
reducible asset means an asset (other than an excluded asset) of the debtor at the beginning of the forgiveness year of income.
relevant cost base, in relation to an asset, means the cost base, the indexed cost base, or the reduced cost base, of the asset.
residual forgiven amount means the total net forgiven amount to the extent to which it has not been applied in making reductions of deductible revenue losses, deductible net capital losses and deductible expenditures.
(2) In sections 245-165 to 245-190, an expression that is used in Part IIIA has the meaning given to that expression by that Part.
245-170 Excluded assets
The following assets of a debtor are excluded assets:
(a) an asset acquired by the debtor before 20 September 1985;
(b) an asset disposed of by the debtor on or before the commencement day;
(c) a non-listed personal-use asset;
(d) a dwelling that was the sole or principal residence of the debtor at any time before the forgiveness year of income;
(e) goodwill;
(f) a right referred to in section 160ZZJ (a right to, or to any part of, an allowance, annuity or capital amount payable out of an asset of a superannuation fund or an approved deposit fund or a right to, or to a part of, an asset of such a fund);
(g) an asset that, throughout the period before the forgiveness year when it was owned by the debtor, constituted trading stock of the debtor for the purposes of this Act;
(h) an asset:
(i) the cost of which is deductible expenditure in relation to the debtor under section 245-140; and
(ii) as a result of the disposal of which an amount would be included in the debtor's assessable income or a deduction would be allowable to the debtor;
(i) if the debtor is a non-resident at the beginning of the forgiveness year of income-an asset that is not a taxable Australian asset.
245-175 Residual forgiven amount to be applied in reduction of cost bases of assets
The residual forgiven amount is to be applied, to the maximum extent possible, in reduction, in accordance with sections 245-180 to 245-190, of the relevant cost bases of reducible assets (if any).
245-180 Allocation of residual forgiven amount among relevant cost bases of assets
(1) Subject to section 245-185, the debtor may choose:
(a) the reducible assets whose relevant cost bases are to be subject to reduction; and
(b) the amount to be applied in reduction of the relevant cost base of each of those assets;
provided that the residual forgiven amount is applied, to the maximum extent possible, in reduction of the relevant cost bases of reducible assets.
(2) If the debtor does not make a choice for the purposes of subsection (1), the Commissioner may make the choice on behalf of the debtor in a reasonable way.
245-185 Relevant cost bases of investments in associated entities to be reduced last
(1) If a debtor's reducible assets include investments in, or in relation to, entities that are associates of the debtor, the relevant cost bases of those investments are not subject to reduction under section 245-175 until the residual forgiven amount has been applied, to the maximum extent possible, in reduction of the relevant cost bases of reducible assets other than such investments.
(2) In this section:
entity means a natural person, a partnership, a trustee of a trust or a company.
investment includes:
(a) in respect of an entity that is a partnership-an interest as a partner in a partnership; and
(b) in respect of an entity that is a trustee of a trust-a beneficial interest under the trust; and
(c) in respect of an entity that is a company-a share in the company; and
(d) in respect of any entity-a debt owed to the debtor by the entity.
245-190 How a reduction of the relevant cost bases of an asset is to be effected
(1) Subject to subsection (3), if the debtor chooses to apply an amount in reduction of the relevant cost bases of a particular asset, each relevant cost base of the asset, as at any time on or after the beginning of the forgiveness year of income, is taken to be reduced by that amount.
(2) The reduction by a particular amount of each of the relevant cost bases of a particular asset is, for the purpose of working out the amount by which the residual forgiven amount is applied in making the reduction, taken to be a reduction in that residual forgiven amount by the particular amount (and not by the sum of the amounts by which those cost bases are reduced).
(3) The maximum amount by which each of the relevant cost bases of an asset may be reduced is the amount that, apart from sections 245-175 to 245-185, would be the reduced cost base of the asset calculated as if:
(a) the asset had been disposed of on the first day of the forgiveness year of income; or
(b) if, after the beginning of the forgiveness year of income, an event occurred that would cause the reduced cost base of the asset to be reduced-the asset had been disposed of on the day on which the event occurred.
Operative provision relating to unapplied total net forgiven amount
245-195 No further consequences if there is any remaining unapplied total net forgiven amount
(1) If any part of the total net forgiven amount remains after the application of that amount in making reductions under the preceding provisions of this Subdivision, the remaining part is disregarded.
(2) This section has effect subject to section 245-215.
Subdivision 245-F-Special rules relating to partnerships
Guide to Subdivision 245-F
245-200 What this Subdivision is about
This Subdivision provides that the preceding Subdivisions apply to a partnership in relation to debts owed by the partnership that are forgiven.
However, if the total net forgiven amount in relation to a partnership is not able to be fully applied under those provisions as they apply to the partnership, the remainder is treated as being net forgiven amounts of debts of the partners in proportion to their respective shares in the net income, or the partnership loss, of the partnership of the forgiveness year of income.
245-201 Map of this Subdivision
MAP OMITTED – SEE PRINTED COPY
Operative provisions
245-205 This Subdivision does not apply to corporate limited partnerships
(1) This Subdivision does not apply to a corporate limited partnership.
(2) This Division, other than this Subdivision, applies to a corporate limited partnership as if the partnership were a company.
(3) In this section:
corporate limited partnership has the meaning given by section 94D.
245-210 Subdivisions 245-A to 245-E to apply to partnerships
(1) Subdivisions 245-A to 245-D apply to a partnership in respect of the partnership's debts, and references in those Subdivisions to a debtor include a reference to a partnership in respect of the partnership's debts.
(2) Subject to section 245-215, Subdivision 245-E applies to a partnership in respect of the total net forgiven amount calculated in relation to the partnership under Subdivisions 245-A to 245-D as they apply under subsection (1).
245-215 Unapplied total net forgiven amount of a partnership to be transferred to partners
(1) This section has effect in relation to a partnership irrespective of any agreement between the partners as to the operation of this section.
(2) This section applies if any part (the residual amount) of the total net forgiven amount in relation to a partnership in respect of the forgiveness year of income remains after the total net forgiven amount has been applied in accordance with Subdivision 245-E.
(3) If there is a net income in relation to the partnership in respect of the forgiveness year of income, each partner is taken to have had a debt forgiven during the forgiveness year of income and there is taken to be, in respect of the debt of each partner, a net forgiven amount worked out in accordance with the following formula:
(Partner's share of net income / Net income) * Residual amount
(4) If there is a partnership loss in relation to the partnership in respect of the forgiveness year of income, each partner is taken to have had a debt forgiven during the forgiveness year of income and there is taken to be, in respect of the debt of each partner, a net forgiven amount worked out in accordance with the following formula:
(5) In the formulas in subsections (3) and (4):
partner's share of net income means the part of the net income of the partnership of the forgiveness year of income that is included in the partner's assessable income.
partner's share of partnership loss means the part of the partnership loss that is allowable as a deduction to the partner.
net income means the net income of the partnership of the forgiveness year of income.
partnership loss means the partnership loss of the forgiveness year of income.
residual amount has the meaning given by subsection (2).
(6) The total net forgiven amount of a partner for the forgiveness year of income as worked out under subsection 245-105(1) includes the net forgiven amount worked out in relation to the partner under this section.
Subdivision 245-G-Special rules affecting related companies
Guide to Subdivision 245-G
245-220 What this Subdivision is about
This Subdivision applies in certain circumstances if, at the time when a debt incurred by a company is forgiven, the company and another company or other companies constituted a group of related companies.
The forgiven amount of the debt is treated in those circumstances as having been used to generate amounts that would otherwise be taken into account in reducing the taxable incomes of the debtor company and other company or companies in the group.
245-221 Map of this Subdivision
MAP OMITTED – SEE PRINTED COPY
Operative provisions
245-225 Application of Subdivision
(1) This Subdivision applies in respect of a debt (the relevant debt) incurred by a company (the debtor company) if, and only if:
(a) the relevant debt has been forgiven; and
(b) there is a net forgiven amount in respect of the relevant debt; and
(c) the debtor company and another company or other companies constitute a group of related companies in respect of the relevant debt.
(2) The debtor company and another company or other companies constitute a group of related companies in respect of the relevant debt for the purposes of this section if the companies concerned were under common ownership:
(a) at the time when the relevant debt was forgiven; and
(b) at any time on the last day of the year of income that immediately preceded the forgiveness year of income in respect of the relevant debt.
(3) If:
(a) the debtor company and another company were not under common ownership at the times mentioned in subsection (2); and
(b) the 2 companies had been under common ownership at any time within:
(i) the 2 years of income that immediately preceded the forgiveness year of income in respect of the relevant debt; or
(ii) the part of the forgiveness year of income that occurred before the relevant debt was forgiven; and
(c) a taxpayer who was a controller of the other company immediately before, and immediately after, the 2 companies ceased to be under common ownership was also:
(i) a controller of the other company at the time when the relevant debt was forgiven; and
(ii) a controller of the debtor company at that time;
the other company is taken to be included in the group of related companies referred to in subsection (2) in respect of the relevant debt.
245-230 If any non-debtor companies in a group of related companies have deductible revenue losses
(1) This section applies in relation to the relevant debt if, and only if, any one or more of the non-debtor companies in the group of related companies in respect of the relevant debt have deductible revenue losses for the purposes of the application of this Division in relation to the forgiveness year of income in respect of the relevant debt (the relevant year of income).
(2) The net forgiven amount of the relevant debt (the disregarded net forgiven amount) is disregarded for the purposes of this Division other than this Subdivision.
(3) However, each company in the group that has deductible revenue losses for the purposes mentioned in subsection (1) (including the debtor company if it has deductible revenue losses for those purposes) is taken to have had a debt forgiven during the relevant year of income and there is taken to be, in respect of each such debt, a net forgiven amount worked out in accordance with the following formula:
(Company's deductible revenue losses / Total deductible revenue losses) * Disregarded net forgiven amount
where:
company's deductible revenue losses means the total of the company's deductible revenue losses for the purposes of the application of this Division in relation to the relevant year of income.
total deductible revenue losses means the total of the deductible revenue losses of all the companies in the group of related companies for the purposes of the application of this Division in relation to the relevant year of income.
245-235 If any non-debtor companies in a group of related companies have deductible net capital losses
(1) This section applies in relation to the relevant debt if, and only if, for the purposes of the application of this Division in relation to the forgiveness year of income in respect of the relevant debt (the relevant year of income):
(a) none of the companies in the group of related companies in respect of the relevant debt have deductible revenue losses; but
(b) any one or more of the non-debtor companies in the group of related companies in respect of the relevant debt have deductible net capital losses.
(2) The net forgiven amount of the relevant debt (the disregarded net forgiven amount) is disregarded for the purposes of this Division other than this Subdivision.
(3) However, each company in the group that has deductible net capital losses for the purposes mentioned in subsection (1) (including the debtor company if it has deductible net capital losses for those purposes) is taken to have had a debt forgiven during the relevant year of income and there is taken to be, in respect of each such debt, a net forgiven amount worked out in accordance with the following formula:
(Company's deductible net capital losses / Total deductible net capital losses) * Disregarded net forgiven amount
where:
company's deductible net capital losses means the total of the company's deductible net capital losses for the purposes of the application of this Division in relation to the relevant year of income.
total deductible net capital losses means the total of the deductible net capital losses of all the companies in the group of related companies for the purposes of the application of this Division in relation to the relevant year of income.
245-240 If neither section 245-230 nor 245-235 applies
If neither section 245-230 nor 245-235 applies in respect of the relevant debt, this Subdivision does not affect the application of the preceding Subdivisions in relation to the net forgiven amount of the debt.
Subdivision 245-H-General
245-245 Definitions
(1) In this Division, unless the contrary intention appears:
associate has the meaning given by section 318.
commencement day means the day on which this Schedule commences.
debt includes a part of a debt.
debtor company, in relation to a group of companies that are related companies in respect of a debt incurred by one of those companies, means the company in the group that incurred the debt.
deductible net capital loss, subject to subsection (2), has the meaning given by section 245-125.
deductible revenue loss, subject to subsection (2), has the meaning given by section 245-110.
extinguished, in relation to a debt, does not include payment of the whole of the debt in cash.
forgive, in relation to a debt, has the meaning given by section 245-35.
forgiveness year of income has the meaning given by subsection 245-105(1).
moneylending debt means a debt resulting from a loan of money to the debtor made by the creditor in the ordinary course of a business of lending money carried on by the creditor.
net forgiven amount, in relation to a debt, has the meaning given by Subdivision 245-D.
non-debtor company, in relation to a group of companies that are related companies in respect of a debt incurred by one of those companies, means a company in the group other than the company that incurred the debt.
pay includes repay.
related group of companies has the meaning given by section 245-225.
total net forgiven amount, in relation to a debtor in respect of a forgiveness year of income, has the meaning given by subsection 245-105(1).
(2) In determining for the purposes of this Division whether a non-debtor company in a group of companies that are related companies in respect of a debt has a deductible revenue loss or a deductible net capital loss, the relevant definitions of those expressions as set out in sections 245-110 and 245-125, respectively, are to be applied as if the company were the debtor company.
245-250 Companies under common ownership
For the purposes of this Division, the question whether 2 companies were under common ownership at a particular time is to be determined in the same way as that question would be determined for the purposes of Division 19A of Part IIIA (see section 160ZZRB).
245-255 Controller of company
For the purposes of this Division, the question whether a taxpayer was a controller of a company at a particular time is to be determined in the same way as that question would be determined under section 160ZZRN.
245-260 Time of incurring debt
(1) Subject to subsection (2), if a debt resulted from the debtor's drawing from time to time on an established line of credit, the debt is taken, for the purposes of this Division, to have been incurred at the time when the debtor first drew on the line of credit.
(2) If, at any time after a debtor made a drawing or drawings on a line of credit, the debtor repaid the only previous drawing or all the previous drawings, as the case may be, the reference in subsection (1) to the time when the debtor first drew on the line of credit is taken to be a reference to the time of the first drawing after the repayment.
245-265 Keeping and retention of records
(1) A person (the debtor) who incurs a commercial debt must keep any records that are necessary to enable the following matters to be readily found out:
(a) the date on which the debt was incurred;
(b) the identity of the creditor;
(c) the amount of the debt;
(d) the terms of repayment of the debt;
(e) if the debt is not a moneylending debt and the debtor and the creditor were not dealing with each other at arm's length in respect of the incurring of the debt-the debtor's capacity at the time when the debt was incurred to pay the debt when it falls due;
(f) if the debtor's obligation to pay the debt is forgiven-the date of the forgiveness and the consideration (if any) in respect of the forgiveness.
(2) If a company and another company that are under common ownership cease to be under common ownership, each company must keep any records that are necessary to enable the following matters to be readily found out:
(a) the date on which the companies ceased to be under common ownership;
(b) the identity of each person who was a controller of the company immediately before the companies ceased to be under common ownership;
(c) the identity of each person who was a controller of the company immediately after the companies ceased to be under common ownership.
(3) A person who is required by subsection (1) or (2) to keep records must keep them in writing in the English language or so as to enable them to be readily accessible and convertible into writing in the English language.
(4) Subject to subsection (5), a person who keeps any records, relating to a debt incurred by the person, as required by subsection (1) must retain the records until:
(a) if paragraph (b) does not apply-the end of 5 years after the debt was forgiven; or
(b) if the period (the assessment period) within which the Commissioner may, under paragraph 170(2)(b), amend an assessment in respect of the person's income of the year of income to which the records relate, or in which a transaction or act to which the records relate was completed, is extended by an order of the Federal Court of Australia made under subsection 170(4A) or by the consent of the person given under subsection 170(4B):
(i) the end of the period of 5 years referred to in paragraph (a); or
(ii) the end of the assessment period as so extended;
whichever is the later.
(5) Subsection (4) does not require records in respect of a debt that has been wholly paid in cash to be retained after the debt was so paid.
(6) Subject to subsection (7), each company referred to in subsection (2) that keeps any records relating to the company as required by subsection (2) must retain the records until the end of the second year of income after the year of income in which the company and the other company referred to in subsection (2) ceased to be under common ownership.
(7) If a debt of one of the companies referred to in subsection (2) was forgiven at any time after the companies ceased to be under common ownership and before the end of the second year of income after the year of income in which the cessation occurred, each of the companies that keeps any records relating to the company as required by that subsection must retain the records until:
(a) if paragraph (b) does not apply-the end of 5 years after the debt was forgiven; or
(b) if the period (the assessment period) within which the Commissioner may, under paragraph 170(2)(b), amend an assessment in respect of the company's income of the year of income to which the records relate, or in which a transaction or act to which the records relate was completed, is extended by an order of the Federal Court of Australia made under subsection 170(4A) or by the consent of the company given under subsection 170(4B):
(i) the end of the period of 5 years referred to in paragraph (a); or
(ii) the end of the assessment period as so extended;
whichever is the later.
(8) A person who, without reasonable excuse, intentionally or recklessly contravenes a provision of this section is guilty of an offence punishable on conviction by a penalty of not more than 30 penalty units.
(9) This section does not limit the application of any other provision of this Act relating to the keeping or retention of records.