Income Tax Assessment Act 1997

CHAPTER 1 - INTRODUCTION AND CORE PROVISIONS  

PART 1-1 - PRELIMINARY  

Division 1 - Preliminary  

SECTION 1-1  

1-1   Short title  
This Act may be cited as the Income Tax Assessment Act 1997 .

SECTION 1-2  

1-2   Commencement  
This Act commences on 1 July 1997.

SECTION 1-3   Differences in style not to affect meaning  

1-3(1)    
This Act contains provisions of the Income Tax Assessment Act 1936 in a rewritten form.

1-3(2)    
If:


(a) that Act expressed an idea in a particular form of words; and


(b) this Act appears to have expressed the same idea in a different form of words in order to use a clearer or simpler style;

the ideas are not to be taken to be different just because different forms of words were used.

Note:

A public or private ruling about a provision of the Income Tax Assessment Act 1936 is taken also to be a ruling about the corresponding provision of this Act, so far as the 2 provisions express the same ideas: see section 357-85 in Schedule 1 to the Taxation Administration Act 1953 .


SECTION 1-4  

1-4   Application  


This Act extends to every external Territory referred to in the definition of Australia .

SECTION 1-7  

1-7   Administration of this Act  


The Commissioner has the general administration of this Act.
Note:

An effect of this provision is that people who acquire information under this Act are subject to the confidentiality obligations and exceptions in Division 355 in Schedule 1 to the Taxation Administration Act 1953 .

PART 1-2 - A GUIDE TO THIS ACT  

Division 2 - How to use this Act  

Subdivision 2-A - How to find your way around  

SECTION 2-1  

2-1   The design  
This Act is designed to help you identify accurately and quickly the provisions that are relevant to your purpose in reading the income tax law.

The Act contains tables, diagrams and signposts to help you navigate your way.

You can start at Division 3 (What this Act is about) and follow the signposts as far into the Act as you need to go. You may also encounter signposts to several areas of the law that are relevant to you. Each one should be followed.

Sometimes they will lead down through several levels of detail. At each successive level, the rules are structured in a similar way. They will often be preceded by a Guide to the rules at that level. The rules themselves will usually deal first with the general or most common case and then with the more particular or special cases.

Subdivision 2-B - How the Act is arranged  

SECTION 2-5  

2-5   The pyramid  


This Act is arranged in a way that reflects the principle of moving from the general case to the particular.

In this respect, the conceptual structure of the Act is something like a pyramid. The pyramid shape illustrates the way the income tax law is organised, moving down from the central or core provisions at the top of the pyramid, to general rules of wide application and then to the more specialised topics.


Note:

The Taxation Administration Act 1953 contains the provisions on collection and recovery of tax and provisions on administration.

Subdivision 2-C - How to identify defined terms and find the definitions  

SECTION 2-10   When defined terms are identified  

2-10(1)    
Many of the terms used in the income tax law are defined.

2-10(2)    
Most defined terms in this Act are identified by an asterisk appearing at the start of the term: as in `` * business''. The footnote that goes with the asterisk contains a signpost to the Dictionary definitions starting at section 995-1 .

SECTION 2-15   When terms are not identified  

2-15(1)    
Once a defined term has been identified by an asterisk, later occurrences of the term in the same subsection are not usually asterisked.

2-15(2)    
Terms are not asterisked in the non-operative material contained in this Act.

Note:

The non-operative material is described in Subdivision 2-E .


2-15(3)    


The following basic terms used throughout the Act are not identified with an asterisk. They fall into 2 groups:


Key participants in the income tax system


Item This term: is defined in:
1. Australian resident section 995-1
.
2. Commissioner section 995-1
.
3. company section 995-1
.
4. entity section 960-100
.
4A. foreign resident section 995-1
.
5. individual section 995-1
.
6. partnership section 995-1
.
7. person section 995-1
.
8. trustee section 995-1
.
9. you section 4-5


Core concepts


Item This term: is defined in:
1. amount section 995-1
.
2. assessable income Division 6
.
3. assessment section 995-1
.
3A. Australia Subdivision 960-T
.
4. deduct, deduction Division 8
.
5. income tax section 995-1
.
6. income year section 995-1
.
7. taxable income section 4-15
.
8. this Act section 995-1


SECTION 2-20  

2-20   Identifying the defined term in a definition  
Within a definition, the defined term is identified by bold italics .

Subdivision 2-D - The numbering system  

SECTION 2-25  

2-25   Purposes  
Two main purposes of the numbering system in this Act are:


To indicate the relationship between units at different levels.

For example, the number of Part 2-15 indicates that the Part is in Chapter 2. Similarly, the number of section 165-70 indicates that the section is in Division 165 .


To allow for future expansion of the Act. The main technique here is leaving gaps between numbers.

SECTION 2-30  

2-30   Gaps in the numbering  


There are gaps in the numbering system to allow for the insertion of new Divisions and sections.

Subdivision 2-E - Status of Guides and other non-operative material  

SECTION 2-35  

2-35   Non-operative material  
In addition to the operative provisions themselves, this Act contains other material to help you identify accurately and quickly the provisions that are relevant to you and to help you understand them.

This other material falls into 2 main categories.

SECTION 2-40  

2-40   Guides  
The first is the ``Guides''. A Guide consists of sections under a heading indicating that what follows is a Guide to a particular Subdivision, Division etc.

Guides form part of this Act but are kept separate from the operative provisions. In interpreting an operative provision, a Guide may only be considered for limited purposes. These are set out in section 950-150 .

SECTION 2-45  

2-45   Other material  
The other category consists of material such as notes and examples. These also form part of the Act. They are distinguished by type size from the operative provisions, but are not kept separate from them.

Division 3 - What this Act is about  

3-1   (Repealed) SECTION 3-1 What this Act is about  
(Repealed by No 41 of 2011)

SECTION 3-5   Annual income tax  

3-5(1)    
Income tax is payable for each year by each individual and company, and by some other entities.

Note 1:

Individuals who are Australian residents, and some trustees, are also liable to pay Medicare levy for each year. See the Medicare Levy Act 1986 and Part VIIB of the Income Tax Assessment Act 1936 .

Note 2:

Income tax is imposed by the Income Tax Act 1986 and the other Acts referred to in the definition of income tax in section 995-1 .


3-5(2)    
Most entities have to pay instalments of income tax before the income tax they actually have to pay can be worked out.

3-5(3)    


This Act answers these questions:


1. What instalments of income tax do you have to pay? When and how do you pay them?

See Schedule 1 to the Taxation Administration Act 1953 .


2. How do you work out how much income tax you must pay?

See Division 4 , starting at section 4-1 .


3. What happens if your income tax is more than the instalments you have paid? When and how must you pay the rest?

See Division 5 of this Act and Part 4-15 in Schedule 1 to the Taxation Administration Act 1953 .


4. What happens if your income tax is less than the instalments you have paid? How do you get a refund?

See Division 3A of Part IIB of the Taxation Administration Act 1953 .


5. What are your other obligations as a taxpayer, besides paying instalments and the rest of your income tax?

See section 3-10 .


6. Do you have any other obligations under the income tax law?

See section 3-15 .


7. If a dispute between you and the Commissioner of Taxation cannot be settled by agreement, what procedures for objection, review and appeal are available?

See Part IVC (sections 14ZL to 14ZZS ) of the Taxation Administration Act 1953 .


SECTION 3-10   Your other obligations as a taxpayer  

3-10(1)    
Besides paying instalments and the rest of your income tax, your main obligations as a taxpayer are:


(a) to keep records and provide information as required by:

  • • the Income Tax Assessment Act 1936 ; and
  • • Division 900 (which sets out substantiation rules) of this Act; and

  • (b) to lodge income tax returns as required by:

  • • the Income Tax Assessment Act 1936 .


  • Tax file numbers

    3-10(2)    
    Under Part VA of the Income Tax Assessment Act 1936 , a tax file number can be issued to you. You are not obliged to apply for a tax file number. However, if you do not quote one in certain situations:

  • • you may become liable for instalments of income tax that would not otherwise have been payable;
  • • the amount of certain of your instalments of income tax may be increased.

  • SECTION 3-15  

    3-15   Your obligations other than as a taxpayer  
    Your main obligations under the income tax law, other than as a taxpayer are:

  • • in certain situations, to deduct from money you owe to another person, and to remit to the Commissioner, instalments of income tax payable by that person.
  • See Part 4-5 (Collection of income tax instalments), starting at section 750-1.

    PART 1-3 - CORE PROVISIONS  

    Division 4 - How to work out the income tax payable on your taxable income  

    SECTION 4-1  

    4-1   Who must pay income tax  
    Income tax is payable by each individual and company, and by some other entities.

    Note:

    The actual amount of income tax payable may be nil.

    For a list of the entities that must pay income tax, see Division 9 , starting at section 9-1 .

    SECTION 4-5  

    4-5   Meaning of you  
    If a provision of this Act uses the expression you , it applies to entities generally, unless its application is expressly limited.

    Note 1:

    The expression you is not used in provisions that apply only to entities that are not individuals.

    Note 2:

    For circumstances in which the identity of an entity that is a managed investment scheme for the purposes of the Corporations Act 2001 is not affected by changes to the scheme, see Subdivision 960-E of the Income Tax (Transitional Provisions) Act 1997 .

    SECTION 4-10   How to work out how much income tax you must pay  

    4-10(1)    


    You must pay income tax for each *financial year.

    4-10(2)    
    Your income tax is worked out by reference to your taxable income for the income year . The income year is the same as the *financial year, except in these cases:


    (a) for a company, the income year is the previous financial year;


    (b) if you have an accounting period that is not the same as the financial year, each such accounting period or, for a company, each previous accounting period is an income year.

    Note 1:

    The Commissioner can allow you to adopt an accounting period ending on a day other than 30 June. See section 18 of the Income Tax Assessment Act 1936 .

    Note 2:

    An accounting period ends, and a new accounting period starts, when a partnership becomes, or ceases to be, a VCLP, an ESVCLP, an AFOF or a VCMP. See section 18A of the Income Tax Assessment Act 1936 .


    4-10(3)    


    Work out your income tax for the *financial year as follows:


    Income tax   =   (Taxable income   ×   Rate)   −   Tax offsets

    Method statement

    Step 1.

    Work out your taxable income for the income year.

    To do this, see section 4-15 .


    Step 2.

    Work out your basic income tax liability on your taxable income using:

  • (a) the income tax rate or rates that apply to you for the income year; and
  • (b) any special provisions that apply to working out that liability.
  • See the Income Tax Rates Act 1986 and section 4-25 .


    Step 3.

    Work out your tax offsets for the income year. A tax offset reduces the amount of income tax you have to pay.

    For the list of tax offsets, see section 13-1 .


    Step 4.

    Subtract your *tax offsets from your basic income tax liability. The result is how much income tax you owe for the *financial year.

    Note 1:

    Division 63 explains what happens if your tax offsets exceed your basic income tax liability. How the excess is treated depends on the type of tax offset.

    Note 2:

    Section 4-11 of the Income Tax (Transitional Provisions) Act 1997 (which is about the temporary budget repair levy) may increase the amount of income tax worked out under this section.


    4-10(3A)    
    (Repealed by No 58 of 2006 )



    Income tax worked out on another basis

    4-10(4)    
    For some entities, some or all of their income tax for the * financial year is worked out by reference to something other than taxable income for the income year.

    See section 9-5 .


    SECTION 4-15   How to work out your taxable income  

    4-15(1)    
    Work out your taxable income for the income year like this:


    Taxable income   =   Assessable income   −   Deductions

    Method statement

    Step 1.

    Add up all your assessable income for the income year.

    To find out about your assessable income, see Division 6 .


    Step 2.

    Add up your deductions for the income year.

    To find out what you can deduct, see Division 8 .


    Step 3.

    Subtract your deductions from your assessable income (unless they exceed it). The result is your taxable income. (If the deductions equal or exceed the assessable income, you don ' t have a taxable income.)

    Note:

    If the deductions exceed the assessable income, you may have a tax loss which you may be able to utilise in that or a later income year: see Division 36 .


    4-15(2)    


    There are cases where taxable income is worked out in a special way:


    Item For this case … See:
    1. A company does not maintain continuity of ownership and control during the income year and does not satisfy the business continuity test Subdivision 165-B
    1A. (Repealed by No 80 of 2007 )  
    1B. An entity is a *member of a *consolidated group at any time in the income year Part 3-90
    2. A company becomes a PDF (pooled development fund) during the income year, and the PDF component for the income year is a nil amount section 124ZTA of the Income Tax Assessment Act 1936
    3. A shipowner or charterer:
    • has its principal place of business outside Australia; and
    section 129 of the Income Tax Assessment Act 1936
      • carries passengers, freight or mail shipped in Australia  
    4. An insurer who is a foreign resident enters into insurance contracts connected with Australia sections 142 and 143 of the Income Tax Assessment Act 1936
    5. The Commissioner makes a default or special assessment of taxable income sections 167 and 168 of the Income Tax Assessment Act 1936
    6. The Commissioner makes a determination of the amount of taxable income to prevent double taxation in certain treaty cases section 24 of the International Tax Agreements Act 1953

    Note:

    A life insurance company can have a taxable income of the complying superannuation class and/or a taxable income of the ordinary class for the purposes of working out its income tax for an income year: see Subdivision 320-D .


    SECTION 4-25  

    4-25   Special provisions for working out your basic income tax liability  


    Subsection 392-35(3) may increase your basic income tax liability beyond the liability worked out simply by applying the income tax rates to your taxable income.
    Note:

    Subsection 392-35(3) increases some primary producers ' tax liability by requiring them to pay extra income tax on their averaging components worked out under Subdivision 392-C .

    Division 5 - How to work out when to pay your income tax  

    Guide to Division 5  

    SECTION 5-1   What this Division is about  


    If your assessed income tax liability exceeds the credits available to you under the PAYG system, this Division explains when you must pay the excess to the Commissioner.

    If your assessment is amended so that you must pay income tax, or pay more income tax than under the previous assessment, this Division explains:

  • (a) when you must pay the additional tax; and
  • (b) when any associated interest charges must be paid.
  • Note:

    For provisions about the collection and recovery of income tax and other tax-related liabilities, see Part 4-15 in Schedule 1 to the Taxation Administration Act 1953 .

    Subdivision 5-A - How to work out when to pay your income tax  

    SECTION 5-5   When income tax is payable  


    Scope

    5-5(1)    
    This section tells you when income tax you must pay for a *financial year is due and payable.

    Note:

    The Commissioner may defer the time at which the income tax is due and payable: see section 255-10 in Schedule 1 to the Taxation Administration Act 1953 .


    5-5(2)    
    The income tax is only due and payable if the Commissioner makes an *assessment of your income tax for the year.

    5-5(3)    
    However, if the Commissioner does make an *assessment of your income tax for the year, the tax may be taken to have been due and payable at a time before your assessment was made.

    Note:

    This is to ensure that general interest charge begins to accrue from the same date for all like entities. General interest charge on unpaid income tax is calculated from when the tax is due and payable, not from when the assessment is made: see section 5-15 .



    Original assessments - self-assessment entities

    5-5(4)    
    If you are a *self-assessment entity, the income tax is due and payable on the first day of the sixth month after the end of the income year.

    Example:

    If your income year is the same as the financial year, your income tax would be due and payable on 1 December.



    Original assessments - other entities

    5-5(5)    
    If you are not a *self-assessment entity, the income tax is due and payable 21 days after the day (the return day ) on or before which you are required to lodge your *income tax return with the Commissioner.

    Note:

    For rules about income tax returns and when they are due, see Part IV of the Income Tax Assessment Act 1936 .


    5-5(6)    
    However, if you lodge your return on or before the return day and the Commissioner gives you a notice of *assessment (other than an amended assessment) after the return day, the income tax is due and payable 21 days after the Commissioner gives you the notice.

    Amended assessments

    5-5(7)    
    If the Commissioner amends your *assessment, any extra income tax resulting from the amendment is due and payable 21 days after the day on which the Commissioner gives you notice of the amended assessment.

    Note:

    Shortfall interest charge may be payable, on any amount of extra income tax payable as a result of the amended assessment, for each day in the period that:

  • (a) starts at the time income tax was due and payable on your original assessment; and
  • (b) ends the day before the day on which the Commissioner gives you notice of the amended assessment.

  • SECTION 5-10  

    5-10   When shortfall interest charge is payable  


    An amount of *shortfall interest charge that you are liable to pay is due and payable 21 days after the day on which the Commissioner gives you notice of the charge.
    Note:

    Shortfall interest charge is imposed if the Commissioner amends an assessment and the amended assessment results in an increase in some tax payable. For provisions about liability for shortfall interest charge, see Division 280 in Schedule 1 to the Taxation Administration Act 1953 .

    SECTION 5-15  

    5-15   General interest charge payable on unpaid income tax or shortfall interest charge  


    If an amount of income tax or *shortfall interest charge that you are liable to pay remains unpaid after the time by which it is due to be paid, you are liable to pay the *general interest charge on the unpaid amount for each day in the period that:


    (a) starts at the beginning of the day on which the amount was due to be paid; and


    (b) finishes at the end of the last day on which, at the end of the day, any of the following remains unpaid:


    (i) the income tax or shortfall interest charge;

    (ii) general interest charge on any of the income tax or shortfall interest charge.
    Note 1:

    The general interest charge is worked out under Part IIA of the Taxation Administration Act 1953 .

    Note 2:

    Shortfall interest charge is worked out under Division 280 in Schedule 1 to that Act.

    Division 6 - Assessable income and exempt income  

    Guide to Division 6  

    SECTION 6-1   Diagram showing relationships among concepts in this Division  



    6-1(1)    
    Assessable income consists of ordinary income and statutory income.

    6-1(2)    
    Some ordinary income, and some statutory income, is exempt income.

    6-1(3)    
    Exempt income is not assessable income.

    6-1(4)    
    Some ordinary income, and some statutory income, is neither assessable income nor exempt income.

    For the effect of the GST in working out assessable income, see Division 17 .


    6-1(5)    
    An amount of ordinary income or statutory income can have only one status (that is, assessable income, exempt income or non-assessable non-exempt income) in the hands of a particular entity.

    Operative provisions

    SECTION 6-5   Income according to ordinary concepts ( ordinary income )  

    6-5(1)    
    Your assessable income includes income according to ordinary concepts, which is called ordinary income .

    Note:

    Some of the provisions about assessable income listed in section 10-5 may affect the treatment of ordinary income.


    6-5(2)    
    If you are an Australian resident, your assessable income includes the * ordinary income you * derived directly or indirectly from all sources, whether in or out of Australia, during the income year.

    6-5(3)    


    If you are a foreign resident, your assessable income includes:


    (a) the * ordinary income you * derived directly or indirectly from all * Australian sources during the income year; and


    (b) other * ordinary income that a provision includes in your assessable income for the income year on some basis other than having an * Australian source.


    6-5(4)    
    In working out whether you have derived an amount of * ordinary income, and (if so) when you derived it, you are taken to have received the amount as soon as it is applied or dealt with in any way on your behalf or as you direct.


    SECTION 6-10   Other assessable income ( statutory income )  

    6-10(1)    
    Your assessable income also includes some amounts that are not * ordinary income.

    Note:

    These are included by provisions about assessable income. For a summary list of these provisions, see section 10-5 .


    6-10(2)    
    Amounts that are not * ordinary income, but are included in your assessable income by provisions about assessable income, are called statutory income .

    Note 1:

    Although an amount is statutory income because it has been included in assessable income under a provision of this Act, it may be made exempt income or non-assessable non-exempt income under another provision: see sections 6-20 and 6-23 .

    Note 2:

    Many provisions in the summary list in section 10-5 contain rules about ordinary income. These rules do not change its character as ordinary income.


    6-10(3)    
    If an amount would be * statutory income apart from the fact that you have not received it, it becomes statutory income as soon as it is applied or dealt with in any way on your behalf or as you direct.

    6-10(4)    
    If you are an Australian resident, your assessable income includes your * statutory income from all sources, whether in or out of Australia.

    6-10(5)    


    If you are a foreign resident, your assessable income includes:


    (a) your * statutory income from all * Australian sources; and


    (b) other * statutory income that a provision includes in your assessable income on some basis other than having an * Australian source.


    SECTION 6-15   What is not assessable income  

    6-15(1)    
    If an amount is not * ordinary income, and is not * statutory income, it is not assessable income (so you do not have to pay income tax on it).

    6-15(2)    
    If an amount is * exempt income, it is not assessable income .

    Note:

    If an amount is exempt income, there are other consequences besides it being exempt from income tax. For example:

  • • the amount may be taken into account in working out the amount of a tax loss (see section 36-10 );
  • • you cannot deduct as a general deduction a loss or outgoing incurred in deriving the amount (see Division 8 );
  • • capital gains and losses on assets used solely to produce exempt income are disregarded (see section 118-12 ).

  • 6-15(3)    


    If an amount is * non-assessable non-exempt income, it is not assessable income .
    Note 1:

    You cannot deduct as a general deduction a loss or outgoing incurred in deriving an amount of non-assessable non-exempt income (see Division 8 ).

    Note 2:

    Capital gains and losses on assets used to produce some types of non-assessable non-exempt income are disregarded (see section 118-12 ).


    SECTION 6-20   Exempt income  

    6-20(1)    


    An amount of * ordinary income or * statutory income is exempt income if it is made exempt from income tax by a provision of this Act or another * Commonwealth law.

    For summary lists of provisions about exempt income, see sections 11-5 and 11-15 .


    6-20(2)    
    * Ordinary income is also exempt income to the extent that this Act excludes it (expressly or by implication) from being assessable income.


    6-20(3)    


    By contrast, an amount of * statutory income is exempt income only if it is made exempt from income tax by a provision of this Act outside this Division or another * Commonwealth law.

    6-20(4)    


    If an amount of * ordinary income or * statutory income is * non-assessable non-exempt income, it is not exempt income .
    Note:

    An amount of non-assessable non-exempt income is not taken into account in working out the amount of a tax loss.


    SECTION 6-23  

    6-23   Non-assessable non-exempt income  


    An amount of * ordinary income or * statutory income is non-assessable non-exempt income if a provision of this Act or of another * Commonwealth law states that it is not assessable income and is not * exempt income.
    Note:

    Capital gains and losses on assets used to produce some types of non-assessable non-exempt income are disregarded (see section 118-12 ).

    For a summary list of provisions about non-assessable non-exempt income, see Subdivision 11-B .

    SECTION 6-25   Relationships among various rules about ordinary income  

    6-25(1)    
    Sometimes more than one rule includes an amount in your assessable income:

  • • the same amount may be * ordinary income and may also be included in your assessable income by one or more provisions about assessable income; or
  • • the same amount may be included in your assessable income by more than one provision about assessable income.
  • For a summary list of the provisions about assessable income, see section 10-5 .

    However, the amount is included only once in your assessable income for an income year, and is then not included in your assessable income for any other income year.


    6-25(2)    
    Unless the contrary intention appears, the provisions of this Act (outside this Part) prevail over the rules about * ordinary income.

    Note:

    This Act contains some specific provisions about how far the rules about ordinary income prevail over the other provisions of this Act.


    Division 8 - Deductions  

    SECTION 8-1   General deductions  

    8-1(1)    
    You can deduct from your assessable income any loss or outgoing to the extent that:


    (a) it is incurred in gaining or producing your assessable income; or


    (b) it is necessarily incurred in carrying on a * business for the purpose of gaining or producing your assessable income.

    Note:

    Division 35 prevents losses from non-commercial business activities that may contribute to a tax loss being offset against other assessable income.


    8-1(2)    
    However, you cannot deduct a loss or outgoing under this section to the extent that:


    (a) it is a loss or outgoing of capital, or of a capital nature; or


    (b) it is a loss or outgoing of a private or domestic nature; or


    (c) it is incurred in relation to gaining or producing your * exempt income or your * non-assessable non-exempt income; or


    (d) a provision of this Act prevents you from deducting it.

    For a summary list of provisions about deductions, see section 12-5 .


    8-1(3)    
    A loss or outgoing that you can deduct under this section is called a general deduction .

    For the effect of the GST in working out deductions, see Division 27 .

    Note:

    If you receive an amount as insurance, indemnity or other recoupment of a loss or outgoing that you can deduct under this section, the amount may be included in your assessable income: see Subdivision 20-A .


    SECTION 8-5   Specific deductions  

    8-5(1)    
    You can also deduct from your assessable income an amount that a provision of this Act (outside this Division) allows you to deduct.

    8-5(2)    
    Some provisions of this Act prevent you from deducting an amount that you could otherwise deduct, or limit the amount you can deduct.

    8-5(3)    
    An amount that you can deduct under a provision of this Act (outside this Division) is called a specific deduction .

    Note:

    If you receive an amount as insurance, indemnity or other recoupment of a deductible expense, the amount may be included in your assessable income: see Subdivision 20-A .

    For a summary list of provisions about deductions, see section 12-5 .


    SECTION 8-10  

    8-10   No double deductions  
    If 2 or more provisions of this Act allow you deductions in respect of the same amount (whether for the same income year or different income years), you can deduct only under the provision that is most appropriate.

    PART 1-4 - CHECKLISTS OF WHAT IS COVERED BY CONCEPTS USED IN THE CORE PROVISIONS  

    Division 9 - Entities that must pay income tax  

    SECTION 9-1A  

    9-1A   Effect of this Division  


    This Division is a * Guide.

    SECTION 9-1  

    9-1   List of entities  


    Income tax is payable by the entities listed in the table.

    Provisions of the Income Tax Assessment Act 1997 are identified in normal text. The other provisions, in bold , are provisions of the Income Tax Assessment Act 1936 .


    Item Income tax is payable by this kind of entity: because of this provision:
      1 An individual section 4-1
      2 A company, that is: section 4-1
        • a body corporate; or  
        • an unincorporated body (except a
      partnership)
     
      3 A company that was a member of a wholly-owned group if a former subsidiary in the group is treated as having disposed of leased plant and does not pay all of the income tax resulting from that treatment section 45-25
      3A A company that is a corporate collective investment vehicle (CCIV) Subdivision 195-C
      3B The trustee of an attribution managed investment trust (AMIT) sections 276-405 to 276-425
      4 A superannuation provider in relation to a complying superannuation fund sections 295-5 and 295-605
      5 A superannuation provider in relation to a non-complying superannuation fund sections 295-5 and 295-605
      6 A superannuation provider in relation to a complying approved deposit fund section 295-5
      7 A superannuation provider in relation to a non-complying approved deposit fund section 295-5
      8 The trustee of a pooled superannuation trust section 295-5
      8A A sovereign entity section 880-55
      9 A corporate limited partnership section 94J
    10 A mutual insurance association (as described in section 121) section 121
    11 A trustee (except one covered by another item in this table), but only in respect of some kinds of income of the trust sections 98 , 99 , 99A and 102
    12 (Repealed by No 53 of 2016)  
    13 The trustee of a public trading trust section 102S

    SECTION 9-5   Entities that work out their income tax by reference to something other than taxable income  

    9-5(1)    


    For some entities, some or all of their income tax for the * financial year is worked out as described in the table.

    Provisions of the Income Tax Assessment Act 1997 are identified in normal text. The other provisions, in bold , are provisions of the Income Tax Assessment Act 1936 .


    Item This kind of entity is liable to pay income tax worked out by reference to: See:
    1 A company that was a member of a wholly-owned group is jointly and severally liable to pay an amount of income tax if a former subsidiary in the group is treated as having disposed of leased plant and does not pay all of the income tax resulting from that treatment. section 45-25
    .
    1A The trustee of an attribution managed investment trust (AMIT) is liable to pay income tax on certain amounts reflecting under-attribution of income or over-attribution of tax offsets sections 276-405 to 276-425
    .
    2 A superannuation provider in relation to a complying superannuation fund is to be assessed and is liable to pay income tax on no-TFN contributions income as well as on taxable income. sections 295-5 and 295-605
    .
    3 A superannuation provider in relation to a non-complying superannuation fund is to be assessed and is liable to pay income tax on no-TFN contributions income as well as on taxable income. sections 295-5 and 295-605
    .
    4 An RSA provider is to be assessed and is liable to pay income tax on no-TFN contributions income as well as on taxable income. sections 295-5 , 295-605 and 320-155
    .
    4A (Repealed by No 92 of 2020)  
    .
    5 An Australian resident individual with:
    • eligible foreign remuneration under section 23AF; or
    • foreign earnings under section 23AG;
    (from working in a foreign country) is liable to pay income tax worked out by reference to his or her assessable income less some of his or her deductions.
    section 23AF or 23AG
    .
    6 A trustee covered by item 11 in the table in section 9-1 is liable to pay income tax worked out by reference to the net income of the trust for the income year. sections 98 , 99 and 99A
    .
    7 (Repealed by No 53 of 2016)  
    .
    8 The trustee of a public trading trust is liable to pay income tax worked out by reference to the net income of the trust for the income year. section 102S
    .
    9 An entity that is liable to pay income tax (worked out by reference to taxable income or otherwise) is also liable to pay income tax worked out by reference to diverted income or diverted trust income for the income year. section 121H
    .
    10 An Australian insurer that re-insures overseas can elect to pay, as agent for the re-insurer, income tax worked out by reference to the amount of the re-insurance premiums. section 148


    9-5(2)    
    For entities covered by an item in the table in subsection (1) , the income year is the same as the * financial year, except in these cases:

    (a)    for a company, or an entity covered by item 2 or 3 in the table, the income year is the previous financial year;

    (b)    

    if an entity has an accounting period that is not the same as the financial year, each such accounting period or, for a company, each previous accounting period is an income year.
    Note 1:

    The Commissioner can allow an entity to adopt an accounting period ending on a day other than 30 June. See section 18 of the Income Tax Assessment Act 1936 .

    Note 2:

    An accounting period ends, and a new accounting period starts, when a partnership becomes, or ceases to be, a VCLP, an ESVCLP, an AFOF or a VCMP. See section 18A of the Income Tax Assessment Act 1936 .


    Division 10 - Particular kinds of assessable income  

    SECTION 10-1  

    10-1   Effect of this Division  


    This Division is a * Guide.

    SECTION 10-5  

    10-5   List of provisions about assessable income  


    The provisions set out in the table:
  • • include in your assessable income amounts that are not * ordinary income; and
  • • vary or replace the rules that would otherwise apply for certain kinds of * ordinary income.
  • Provisions of the Income Tax Assessment Act 1997 are identified in normal text. The other provisions, in bold , are provisions of the Income Tax Assessment Act 1936 .


    Accrued leave transfer payments 15-5
    alienated personal services income 86-15
    allowances  
      see employment  
    annual leave  
      see leave payments  
    annuities 27H
    approved deposit fund (ADFs)  
      see superannuation  
    attributable income  
      see controlled foreign corporations  
    avoidance of tax  
      general 177F
      diversion of income 121H
      see also transfers of income  
    bad debts  
      see recoupment  
    balancing adjustment  
      see capital allowances, investments, R & D, scientific research and tax exempt entities  
    banking  
      offshore banking unit, deemed interest on payments to by owner 121EK
    barter transactions 21 , 21A , 15-2
    beneficiaries  
      see trusts  
    benefits  
      business, non-cash 21A
      consideration, non-cash 21
      meals you provide in an in-house dining facility 32-70
      see also employment and superannuation  
    bonus shares  
      see shares  
    bounties 15-10
    capital allowances  
      excess of termination value over adjustable value  
        generally 40-285
        for some cars 40-370
      depreciating asset in low-value pool 40-445(2)
      expenditure in software development pool 40-460
      recovery of petroleum resource rent tax 40-750(3)
    capital gains 102-5
      see also insurance  
    car expenses  
      cents per kilometres reimbursement of 15-70
    carried interests  
      carried interests, not ordinary income 118-21
    CFCs  
      see controlled foreign corporations  
    charters  
      see shipping  
    child  
      non-trust income of, unearned 102AE
      trust income of, unearned 102AG
    collecting societies  
      payments of royalties by copyright collecting societies 15-22
      payments of royalties by resale royalty collecting society 15-23
    company  
      see controlled foreign corporations, co-operative company, directors, dividends, liquidation, shareholders and shares  
    compensation  
      live stock or trees, recoveries for loss of 385-130
      profits or income, insurance or indemnity for loss of 15-30
      received by lessor for lessee ' s non-compliance with lease obligation to repair 15-25
      trading stock, insurance or indemnity for loss of 70-115
      see also insurance, live stock, recoupment and scientific research  
    consideration  
      see benefits  
    consolidated groups and MEC groups  
      Assets in relation to Division 230 financial arrangement 701-61(3)
    controlled foreign corporations (CFCs)  
      attributable income of 456 to 459A
      see also dividends and taxes  
    co-operative company  
      receipts of 119
    credit union  
      see co-operative company  
    currency gains  
      see foreign exchange  
    currency losses  
      see recoupment  
    death  
      see trusts  
    debt/equity swap  
      see shares and units  
    defence forces  
      allowances and benefits for service as a member of 15-2
    depreciation  
      see capital allowances  
    directors  
      excessive remuneration or retirement payment from company 109
    distributions  
      see dividends  
    dividends  
      benefit of LIC capital gain through a trust or partnership 115-280
      general 44(1)
      distribution from a controlled foreign corporation 47A(1)
      franked dividends, credits on 207-20(1) , 207-35(1) , 207-35(3)
      see also liquidation  
    elections  
      local government, reimbursement of expenses of 25-65
      see also recoupment  
    electricity connections  
      see recoupment  
    [ eligible termination payments (ETPs)] (Repealed by No 15 of 2007)  
    employees  
      see shares  
    employment  
      allowances and benefits in relation to employment or rendering services 15-2
      employment termination payment 82-10
    82-65
    82-70
      other payments for employment termination 83-295
      return to work payments 15-3
      see accrued leave transfer payments, leave payments, superannuation and sections 82-10A and 82-10C of the Income Tax (Transitional Provisions) Act 1997  
    environment  
      see recoupment  
    farm management deposits  
      repayments of 393-10
    [ FIFs] (Repealed by No 114 of 2010)  
    films  
      Australian, proceeds of investment in 26AG
    financial arrangements  
      gains from 230-15(1)
    [ first home saver accounts] (Repealed by No 70 of 2015)  
    foreign exchange  
      gains 775-15
      see also recoupment  
    foreign income tax deduction for franked distributions  
      Additional Tier 1 capital exception 15-80
    foreign investment funds (FIFs) (Repealed by No 114 of 2010)  
    forestry agreement  
      amount where section 82KZMG of the 1936 Act applies 15-45
      CGT event in relation to forestry interest in agreement 82KZMGB
    forestry managed investment schemes  
      forestry manager ' s receipts under scheme 15-46
      CGT event in relation to forestry interest in scheme for initial participant 394-25(2)
      CGT event in relation to forestry interest in scheme for subsequent participant 394-30(2)
    franked dividends  
      see dividends  
    funeral policy  
      benefit under 15-55
    general insurance companies and companies that self insure  
      gross premiums 321-45
      reduction in value of adjusted liability for incurred claims 321-10
      reduction in value of adjusted liability for remaining coverage 321-50
     reduction in value of outstanding claims liability 321-80
    geothermal energy  
      providing geothermal exploration information 15-40
    grapevines  
      see recoupment  
    horticultural plants  
      see recoupment  
    improvements  
      see leases  
    imputation  
      see dividends  
    indemnity  
      see compensation and recoupment  
    [ industrial property] (Repealed by No 88 of 2013)  
    [ infrastructure borrowings] (Repealed by No 4 of 2018)  
    insurance  
      bonuses 26AH , 15-75
      company, demutualisation of 121AT
      life insurance, transfer of contributions by superannuation fund or approved deposit fund to 295-260
      payments from a non-resident reinsurer in respect of a loss 148
      premiums in respect of Australian business received by non-resident insurers 143
      premiums paid to a non-resident for reinsurance 148
      premiums paid to mutual insurance association 121
      premiums payable to a non-resident for insurance of property in Australia 142(1)
      premiums payable to a non-resident for insuring an event that can only happen in Australia 142(1)
      premiums payable to a non-resident under an insurance contract with a resident 142(2)
      rebates and premiums refunded to a superannuation fund trustee 295-320 (table item 4)
      see also compensation, life insurance companies and recoupment  
    [ intellectual property] (Repealed by No 77 of 2001)  
    interest  
      overpaid tax, on 15-35
      qualifying securities, on 159GQ , 159GW(1)
      see also co-operative companies and leases  
    investments  
      prizes from investment-related lotteries 26AJ
      qualifying securities, payments to partial residents made under 159GW(2)
      qualifying securities, amount assessable to issuer of 159GT(1B)
      qualifying securities, balancing adjustment on the transfer of 159GS
      securities, variation in terms of 159GV(2)
      securities lending arrangements 26BC
      traditional securities, gains on the disposal or redemption of 26BB
      see also films and interest  
    landcare operations  
      see recoupment  
    leased plant Division 45
    leases  
      amounts received by lessor from lessee for non-compliance with lease obligation to repair 15-25
      interest component of payments under non-leveraged finance leases 159GK
      partnership leasing property under non-leveraged finance lease, new partner or contribution of capital since 14 May 1985 159GO
      premiums relating to assignment of a lease granted before 20 September 1985 26AB
      profit on disposal of previously leased motor vehicles Subdivision 20-B
    leases of luxury cars  
      accrual amounts 242-35
      adjustment amounts (lessee) 242-70
      adjustment amounts (lessor) 242-65
    leave payments  
      accrued leave transfer payment 15-5
      unused annual leave payment 83-10
      unused long service leave payment 83-80
      see employment  
    [ life assurance companies ] (Repealed by No 89 of 2000)  
    life insurance companies Subdivision 320-B
    limited recourse debt  
      excessive deduction amount (debtor) 243-40
      excessive deduction amount (partner) 243-65
    liquidation  
      distribution to a shareholder in winding up a company 47(1)
    live stock  
      death or destruction of Subdivision 385-E
      departing Australia and 385-160 , 385-163
      insolvency, and 385-160 , 385-163
      profits on death or disposal of Subdivision 385-E , 385-160
      see also compensation and trading stock  
    long service leave  
      see leave payments  
    losses  
      see compensation  
    lotteries  
      see investments  
    managed investment trusts  
      gains etc. from carried interests 275-200(2)
    meals  
      see benefits  
    [ minerals resource rent tax] (Repealed by No 96 of 2014)  
    Mining  
      providing mining, quarrying or prospecting information 15-40
    minors  
      see child  
    motor vehicles  
      see car expenses and leases  
    mutual insurance  
      see insurance  
    non-cash benefits  
      see benefits and employment  
    notional sales and loans  
      adjustment amounts (lessee) 240-110(2)
      adjustment amounts (lessor) 240-105(2)
      notional interest 240-35(1)
      profit on actual sale 240-35(3)
      profit on notional sale 240-35(2)
    offshore banking units  
      see banking  
    partnerships  
      net income of, partner ' s interest in 92(1)
      uncontrolled partnership income, effect of 94
      see also leases  
    [ payments to members of copyright collecting societies] (Repealed by No 126 of 2009)  
    petroleum  
      resource rent tax, recovery of 20-30(1)
      see also capital allowances  
    [ pooled depreciated property] (Repealed by No 77 of 2001)  
    [ pooled software] (Repealed by No 77 of 2001)  
    premiums  
      see insurance, leases and superannuation  
    primary production  
      see recoupment  
    prizes  
      see investments  
    profits  
      cross-border transfer pricing 815-30
      profit-making undertaking or plan 15-15
      sale of property acquired before 20 September 1985 for profit-making by sale 25A
      see also avoidance of tax  
    Project pools  
      An amount received for the abandonment, sale or other disposal of a project 40-830 , 40-832
    property  
      see profits and trusts  
    quarrying  
      see mining and recoupment  
    R & D  
      balancing adjustment 40-292 , 40-293 , 355-315 and 355-525
      disposal of R & D results 355-410
      recoupments and feedstock adjustments 355-450
    rates  
      see recoupment  
    recoupment  
      insurance or indemnity for deductible losses or outgoings Subdivision 20-A
      other recoupment for certain deductible losses or outgoings Subdivision 20-A
      see also car expenses, compensation, elections and petroleum  
    registered emissions units  
      disposal of 420-25
      disposal for a non-commercial purpose 420-40
      difference between opening and closing value of 420-45
    reimbursements  
      see car expenses, dividends, elections, petroleum and recoupment  
    reinsurance  
      see insurance  
    [ repayments] (Repealed by No 66 of 2003)  
    [ research & development] (Repealed by No 93 of 2011)  
    [ residual value] (Repealed by No 88 of 2013)  
    retirement payments  
      see directors, leave payments and shareholders  
    rights to income  
      see transfers of income  
    roads  
      see timber  
    royalties 15-20
    schemes  
      see avoidance of tax  
    scholarship plan  
      benefit under 15-60
    scientific research  
      consideration for disposal or destruction of buildings acquired for scientific research 73A(4)
    securities  
      see investments  
    services  
      see co-operative companies, employment, loans and trusts  
    shareholders  
      excessive remuneration or retirement payment from company 109
      loans, payments and credits from company Division 7A of Part III
      see also dividends  
    shares  
      acquired in a debt/equity swap, profit on the disposal cancellation or redemption of 63E(4)
      bonus shares, cost of 6BA
      buy-backs 159GZZZJ to 159GZZZT
      employee share schemes Subdivisions 83A-B and 83A-C
      holding company shares held by a subsidiary, cancellation of 159GZZZC to 159GZZZI
      see also dividends  
    shipping  
      goods shipped in Australia, amounts paid to foreign shipowners and charterers for 129
    [ small-medium enterprises (SMEs)] (Repealed by No 23 of 2018)  
    [ software] (Repealed by No 77 of 2001)  
    [ spectrum licences] (Repealed by No 77 of 2001)  
    subsidies 15-10
    [ sugar industry exit grants] (Repealed by No 109 of 2014)  
    superannuation  
      associated earnings on non-concessional contributions Subdivision 292-B
      benefits generally Divisions 301 to 306
      benefits in breach of legislative requirements Division 304
      benefits received from older superannuation funds 26AF , 26AFA
      complying fund becomes non-complying, effect of 295-320 (table item 2)
      contributions to an approved deposit fund Subdivisions 295-C and 295-D
      contributions to an RSA Subdivision 295-C
      contributions to a superannuation fund Subdivisions 295-C and 295-D
      death benefits 302-75 , 302-85 , 302-90 , 302-145
      excess concessional contributions 291-15(a)
      first home super saver scheme 313-20
      foreign superannuation funds and schemes, benefits from 305-70
      member benefits 301-20 , 301-25 , 301-35 , 301-40 , Subdivision 301-C
      foreign fund becoming Australian, effect of 295-320 (table item 3)
      no-TFN contributions income 295-605
      release authorities, payments from 304-20
      returned contributions 290-100
      trustee ' s liability to pay tax 295-5(2) and (3)
      see insurance  
    tax avoidance  
      see avoidance of tax and transfers of income  
    tax exempt entities  
      treatment of income and gains on becoming taxable Schedule 2D
    taxes  
      see dividends, foreign investment funds, interest and recoupment  
    termination of employment  
      see directors, eligible termination payments, leave payments and shareholders  
    theft  
      see recoupment  
    [ timber] (Repealed by No 77 of 2001)  
    trading stock  
      change in interests in 70-100
      death of trader and 70-105
      difference between opening and closing value of 70-35
      disposal not at arm ' s length 70-20
      disposal of outside ordinary course of business 70-90 , 70-95
      see also compensation and tax exempt entities  
    transfer pricing  
      arm ' s length principle for cross-border conditions between entities Subdivision 815-B
      arm ' s length principle for permanent establishments Subdivision 815-C
    transfers of income  
      consideration for transfer of right to income 102CA
      payments for transfer or disposal of property 262
      transferee, effect on of transfer of right to income 102C
      transferor, effect on of transfer of right to income 102B
    travel expenses  
      see car expenses  
    trusts  
      beneficiary under legal disability or with a vested and indefeasible interest in trust income 100
      deceased estates, income of 101A
      discretionary trusts 101
      net income of a trust estate, your present entitlement to 97 , 101
      non-resident beneficiaries, liability to tax of 98A
      non-resident trust estates to which you have transferred property or services, income of 102AAZD
      property of applied for benefit of beneficiaries 99B
      trust estate includes income from another trust estate 94(5)
      trustees ' liability to tax 98 , 99 , 99A , 102 , 102S
      see also avoidance of tax and superannuation  
    unearned income  
      see child  
    units  
      acquired in a debt/equity swap, profit on the disposal, cancellation or redemption of 63E(4)
    water conservation  
      see recoupment  
    winding-up  
      see insurance and liquidation  
    wool clips  
      double wool clips, treatment of 385-135 , 385-155
    work in progress  
      receipt of a work in progress amount 15-50

    Division 11 - Particular kinds of non-assessable income  

    Subdivision 11-A - Lists of classes of exempt income  

    SECTION 11-1A  

    11-1A   Effect of this Subdivision  


    This Subdivision is a * Guide.

    SECTION 11-1  

    11-1   Overview  


    Ordinary income or statutory income which is exempt from income tax can be divided into 2 main classes:


    (a) ordinary or statutory income of entities that are exempt, no matter what kind of ordinary or statutory income they have (see table in section 11-5 );


    (b) ordinary or statutory income of a kind that is exempt (see table in section 11-15 ).


    (c) (Repealed by No 12 of 2012)

    SECTION 11-5  

    11-5   Entities that are exempt, no matter what kind of ordinary or statutory income they have  


    Provisions of the Income Tax Assessment Act 1997 are identified in normal text. The other provisions, in bold , are provisions of the Income Tax Assessment Act 1936 .
    Note:

    Special rules apply to entities that cease to be exempt. See Schedule 2D to the Income Tax Assessment Act 1936 .


    charity, education or science  
      educational institution, public 50-5
      registered charity 50-5
      scientific institution 50-5
      scientific research fund 50-5
      scientific society etc. 50-5
    community service  
      community service society etc. 50-10
    employees and employers  
      employee association 50-15
      employer association 50-15
      trade union 50-15
    [ film] (Repealed by No 41 of 2011)  
    [ funds established by will or trust] (Repealed by No 96 of 2013)  
    [ finance] (Repealed by No 101 of 2004)  
    government  
      constitutionally protected fund 50-25
      local governing body 50-25
      municipal corporation 50-25
      public authority 50-25
      state/territory bodies 24AK to 24AZ
    health  
      health benefits organisation 50-30
      hospital 50-30
      medical benefits organisation 50-30
    HIH rescue package  
      HIH Claims Support Trust 322-10
    mining  
      British Phosphate Commissioners Banaba Contingency Fund 50-35
    primary or secondary resources, and tourism  
      agricultural society etc. 50-40
      aviation society etc. 50-40
      Global Infrastructure Hub Ltd 50-40
      horticultural society etc. 50-40
      industrial society etc. 50-40
      manufacturing society etc. 50-40
      pastoral society etc. 50-40
      tourism society etc. 50-40
      viticultural society etc. 50-40
    sports, culture or recreation  
      animal racing society etc. 50-45
      art society etc. 50-45
      F é d é ration Internationale de Football Association 50-45
      FWWC2023 Pty Ltd 50-45
      game society etc. 50-45
      ICC Business Corporation FZ-LLC 50-45
      literature society etc. 50-45
      music society etc. 50-45
      sport society etc. 50-45

    11-10   (Repealed) SECTION 11-10 Ordinary or statutory income which is exempt, no matter whose it is  
    (Repealed by No 12 of 2012)

    SECTION 11-15  

    11-15   Ordinary or statutory income which is exempt  


    Provisions of the Income Tax Assessment Act 1997 are identified in normal text. The other provisions, in bold , are provisions of the Income Tax Assessment Act 1936 .


    acute support packages for veterans and their families  
      acute support packages for veterans and their families 52-185
    agricultural industry exit grants  
      tobacco industry exit grants 53-10
    copyright collecting societies 51-43
    Coronavirus economic response payment  
      certain payments in accordance with the Coronavirus Economic Response Package (Payments and Benefits) Act 2020 53-25
    credit unions  
      interest 23G
    defence  
      Defence Force member, allowances 51-5
      Defence Force member, compensation payments for loss of deployment allowance for warlike service 51-5
      Defence Force Ombudsman recommendation, reparation payments and additional payments in relation to 51-5
      F-111 Deseal/Reseal Ex-gratia Lump Sum Payments 51-5
      Former Reserve Defence Force member, compensation payments for loss of pay and/or allowances 51-5
      Reserve Defence Force member, pay and allowances 51-5
    disasters  
      2018 storms - relief payments 51-125
    dividends or shares  
      pooled development fund company dividend 124ZM
      pooled development fund company shares, income from sale of 124ZN
    education and training  
      Apprenticeship Wage Top-Up payment, recipient of 51-10
      bursary, educational allowance etc. 51-10 and 51-35
      Commonwealth Trade Learning Scholarship, recipient of 51-10
      CRAFT scheme, employer ' s income from 51-10
      early completion bonuses for apprentices 51-10 and 51-42
      Endeavour Awards, research fellowship under 51-10
      Endeavour Executive Award 51-10
      foreign student, scholarship and bursary to 842-105
      full-time student, income from a scholarship, bursary, other educational allowance or educational assistance 51-10 and 51-35
      isolated child, income for the provision of education of 51-10 and 51-40
      secondary student, income for the provision of education of 51-10 and 51-40
      Skills for Sustainability for Australian Apprentices payment, recipient of 51-10
      Tools for Your Trade payment (under the program known as the Australian Apprenticeships Incentives Program), recipient of 51-10
    family assistance  
      additional child care subsidy 52-150
      additional economic support payment 2020 or additional economic support payment 2021 52-150
      back to school bonus or single income family bonus 52-150
      child care subsidy 52-150
      clean energy advance 52-150
      economic security strategy payment to families 52-150
      economic support payment, first or second 2020 payment 52-150
      ETR payment 52-150
      ETR payment, payments under the scheme determined under Part 2 of Schedule 1 to the Family Assistance and Other Legislation Amendment (Schoolkids Bonus Budget Measures) Act 2012 52-162
      families, payments to, under the scheme determined under Schedule 4 to the Social Security and Other Legislation Amendment (Economic Security Strategy) Act 2008 52-160
      family tax benefit 52-150
      Household Stimulus Package Act (No. 2) 2009 , payments under scheme determined under Schedule 4 to the 52-165
      single income family supplement 52-150
      stillborn baby payment 52-150
    financial arrangements  
      gains related to exempt income 230-30
    financial transactions  
      pooled development fund company dividends 124ZM
      pooled development fund company shares, income from sale of 124ZN
    foreign aspects of income taxation  
      approved overseas project, income from 23AF
      Australian-American Education Foundation, grant from 51-10
      Commonwealth of Nations country officer, official salary and foreign income 768-100
      consul and official staff member, official salary and foreign income 768-100
      Defence Force member, foreign resident, pay and allowances of 842-105
      Defence Force member, pay and allowances from being on eligible duty 23AD
      defence of Australia, overseas person ' s income from assisting in Australia ' s defence 842-105
      diplomat and official staff member, official salary and foreign income 768-100
      educational, scientific, religious or philanthropic society, income of a visiting representative of 842-105
      expert, foreign resident, remuneration of 842-105
      foreign society or association representative, income of 842-105
      forex realisation gains, certain 775-20
      government representative and members of the entourage, foreign resident, income of 842-105
      OBU investment trusts for overseas charitable institutions 121EL(2)
      OBU off-shore investment trusts, income to which subsection 121D(6) applies 121EL
      overseas charitable institutions, income from OBUs 121ELA(1)
      overseas employment income, resident, income of 23AG
      persecution victim, payments to 768-105
      press representative, foreign, income of 842-105
      resistance fighter and victim of wartime persecution, payments to 768-105
      United Nations, income from service with 23AB
      United States projects, income from approved overseas projects 23AA
    [ foreign investment] (Repealed by No 78 of 2007 )  
    health  
      Continence Aids Payment Scheme, payments under 52-175
    interest  
      judgement debt, personal injury 51-57
      unclaimed money and property 51-120
    [ life assurance ] (Repealed by No 89 of 2000)  
    life insurance companies Subdivision 320-B
    National Disability Insurance Scheme  
      NDIS amounts 52-180
    non-cash benefits  
      business benefit 23L(2)
      exempt fringe benefit 23L(1A)
    prizes  
      Prime Minister ' s Literary Awards 51-60
      Prime Minister ' s Prize for Australian History 51-60
      Prime Minister ' s Prize for Science 51-60
    resale royalty collecting societies 51-45
    shipping  
      income from shipping activities 51-100
    [ mining] (Repealed by No 66 of 2003)  
    [ small business retirement exemption] (Repealed by No 56 of 2010)  
    social security or like payments  
      ABSTUDY scheme, payment under Subdivision 52-E
      additional economic support payment 2020 or additional economic support payment 2021 under the Social Security Act 1991 52-10
      additional economic support payment 2020 or additional economic support payment 2021 under the Veterans ' Entitlements Act 1986 52-65
      Australian Victim of Terrorism Overseas Payment 52-10
      Better Start for Children with Disability initiative, Outer Regional and Remote payment under 52-172
      carer adjustment payment 53-10
      carers, 2005 one-off payment to, (carer payment related), 2005 one-off payment to carers (carer service pension related) or 2005 one-off payment to carers (carer allowance related) 52-10
      carers, 2006 one-off payment to, (carer payment related), 2006 one-off payment to carers (wife pension related), 2006 one-off payment to carers (partner service pension related), 2006 one-off payment to carers (carer service pension related) or 2006 one-off payment to carers (carer allowance related) 52-10
      carers, 2007 one-off payment to, (carer payment related), 2007 one-off payment to carers (wife pension related), 2007 one-off payment to carers (partner service pension related), 2007 one-off payment to carers (carer service pension related) or 2007 one-off payment to carers (carer allowance related) 52-10
      carers, 2008 one-off payment to, (carer payment related), 2008 one-off payment to carers (wife pension related), 2008 one-off payment to carers (partner service pension related), 2008 one-off payment to carers (carer service pension related) or 2008 one-off payment to carers (carer allowance related) 52-10
      carers, one-off payment to, (carer allowance related) or one-off payment to carers (carer payment related) 52-10
      carers, payments to, under the scheme determined under Schedule 3 to the Family Assistance Legislation Amendment (More Help for Families - One-off Payments) Act 2004 52-10
      carer supplement 52-10
      child disability assistance Subdivision 52-A
      clean energy payment under the Social Security Act 1991 52-10
      clean energy payment under the Veterans ' Entitlements Act 1986 52-65
      clean energy payment under the scheme prepared under Part VII of the Veterans ' Entitlements Act 1986 52-65
      clean energy payment under the Military Rehabilitation and Compensation Act 2004 52-114
      clean energy payment under the scheme determined under section 258 of the Military Rehabilitation and Compensation Act 2004 52-114
      Commonwealth education or training payment Subdivision 52-F
      cost of living payment 2022 under the Social Security Act 1991 52-10
      cost of living payment 2022 under the Veterans ' Entitlements Act 1986 52-65
      disability services payment 53-10
      economic security strategy payment under the Social Security Act 1991 52-10
      economic support payment, first or second 2020 payment under the Social Security Act 1991 52-10
      economic support payment, first or second 2020 payment under the Veterans ' Entitlements Act 1986 52-65
      education entry payment supplement under the Social Security Act 1991 52-10
      energy assistance payment, one-off payment under the Social Security Act 1991 52-10
      energy assistance payment, one-off payment under the Veterans ' Entitlements Act 1986 52-65
      ETR payment, payments under the scheme determined under Part 2 of Schedule 1 to the Family Assistance and Other Legislation Amendment (Schoolkids Bonus Budget Measures) Act 2012 52-162
      farm household allowance under the Farm Household Support Act 2014 Subdivision 52-A
      Helping Children with Autism package, Outer Regional and Remote payment under 52-170
      Household Stimulus Package Act (No. 2) 2009 , payments under the scheme determined under Schedule 4 to the 52-165
      pension bonus and pension bonus bereavement payment 52-10 and 52-65
      persecution victim, payments to 768-105
      pharmaceutical supplement for Australian participants in British nuclear tests or in the British Commonwealth Occupation Force Subdivision 52-CB
      pharmaceutical supplement for Australian surgical-medical team members Subdivision 52-CC
      resistance fighter and victim of wartime persecution, payments to 768-105
      Social Security and Other Legislation Amendment (Economic Security Strategy) Act 2008 , payments under the scheme determined under Schedule 4 to the 52-160
      Social Security and Veterans ' Affairs Legislation Amendment (One-off Payments and Other 2007 Budget Measures) Act 2007 , payments under a scheme determined under item 1 of Schedule 2 to the 52-10
      Social Security and Veterans ' Affairs Legislation Amendment (One-off Payments and Other 2007 Budget Measures) Act 2007 , payments under the scheme determined under Schedule 4 to the 52-10
      Social Security and Veterans ' Entitlements Legislation Amendment (One-off Payments and Other Budget Measures) Act 2008 , payments under a scheme determined under item 1 of Schedule 2 to the 52-10
      Social Security and Veterans ' Entitlements Legislation Amendment (One-off Payments and Other Budget Measures) Act 2008 , payments under the scheme determined under Schedule 4 to the 52-10
      Social Security and Veterans ' Entitlements Legislation Amendment (One-off Payments to Increase Assistance for Older Australians and Carers and Other Measures) Act 2006 , payments under the scheme determined under item 1 of Schedule 2 to the 52-10
      Social Security and Veterans ' Entitlements Legislation Amendment (One-off Payments to Increase Assistance for Older Australians and Carers and Other Measures) Act 2006 , payments under the scheme determined under Schedule 4 to the 52-10
      Social Security Legislation Amendment (One-off Payments for Carers) Act 2005 , payments under the scheme determined under Schedule 2 to the 52-10
      social security payments Subdivision 52-A
      training and learning bonus under the Social Security Act 1991 52-10
      travelling expenses for Australian participants in British nuclear tests or in the British Commonwealth Occupation Force Subdivision 52-CB
      travelling expenses for Australian surgical-medical team members Subdivision 52-CC
      veteran, Australian and United Kingdom, payment to 53-20
      veteran, payment to Subdivisions 52-B and 52-C
      Veterans ' Entitlements Act 1986 , lump sum payment under section 198N of the 52-65
      wounds and disability pension 53-10
      see also welfare  
    structured settlements and structured orders  
      annuities and lump sums Subdivisions 54-B , 54-C and 54-D
    student  
      see education and training  
    superannuation and related business  
      approved deposit fund, continuously complying fixed interest, income from 25 May 1988 deposits 295-390 of the Income Tax (Transitional Provisions) Act 1997
      approved deposit fund, income from a grant of financial assistance under Part 23 of the Superannuation Industry (Supervision) Act 1993 295-405 (table item 1)
      approved deposit fund, non-reversionary bonuses on policies of life assurance 295-335 (table item 1)
      benefits from non-complying funds 305-5
      pooled superannuation trust, income from constitutionally protected funds 295-335 (table item 2)
      pooled superannuation trust, income from current pension liabilities of complying superannuation funds 295-400
      pooled superannuation trust, non-reversionary bonuses on policies of life assurance 295-335 (table item 1)
      superannuation fund, income from other assets used to meet current pension liabilities 295-390
      superannuation fund, income from segregated current pensions assets 295-385
      superannuation fund, non-reversionary bonuses on policies of life assurance 295-335 (table item 1)
      superannuation fund, regulated, income from a grant of financial assistance under Part 23 of the Superannuation Industry (Supervision) Act 1993 295-405 (table item 1)
    Territories Stolen Generations Redress Scheme  
      Territories Stolen Generations Redress Scheme payments 53-30
    United Nations  
      United Nations Service, income from 23AB
    venture capital  
      eligible venture capital investments, gain or profit from realisation of 51-54
      eligible venture capital investments by ESVCLPs, income derived from 51-52
      venture capital equity, gain or profit from realisation of 51-55
    [ vice regal] (Repealed by No 97 of 2008 )  
    welfare  
      Disaster recovery payments to special category visa (subclass 444) holders 51-30
      maintenance payment 51-30 and 51-50
      thalidomide payment - payment under the Support for Australia ' s Thalidomide Survivors program 51-30
      thalidomide payment - payment by the Thalidomide Australia Fixed Trust 51-30
      see also social security or like payments  

    Note:

    The following provisions of the Income Tax Assessment Act 1936 give rise to notional exempt income and not exempt income. For this reason the provisions do not appear in the lists of kinds of exempt income.

    The provisions are: paragraphs 384(1)(b) and 385(1)(b) , subsection 402(2) and section 403 .

    Subdivision 11-B - Particular kinds of non-assessable non-exempt income  

    SECTION 11-50  

    11-50   Effect of this Subdivision  


    This Subdivision is a * Guide.

    SECTION 11-55  

    11-55   List of non-assessable non-exempt income provisions  


    The provisions set out in the list make amounts non-assessable non-exempt income.

    Provisions of the Income Tax Assessment Act 1997 are identified in normal text. The other provisions, in bold , are provisions of the Income Tax Assessment Act 1936 .


    alienated personal services income  
      associate, non-deductible payment or obligation to 85-20(3)
      entitlements to a share of net income that is personal services income already assessable to an individual 86-35(2)
      payments by personal services entity or associate of personal services income already assessable to an individual 86-35(1)
      personal services entity, amounts of personal services income assessable to an individual 86-30
    bonds  
      see securities  
    capital gains tax  
      small business retirement exemption, payments made directly or indirectly to CGT concession stakeholder so company or trust complies with section 152-325 152-310
    cash flow boost  
      payments in accordance with the Boosting Cash Flow for Employers (Coronavirus Economic Response Package) Act 2020 59-90
    Coronavirus economic response  
      certain payments in accordance with the Coronavirus Economic Response Package (Payments and Benefits) Act 2020 59-95
      State and Territory grants to small business relating to the recovery from the coronavirus 59-97
      Commonwealth small business support payments relating to the coronavirus 59-98
      COVID-19 disaster payment 59-96
    demutualisation of friendly society health or life insurers  
      amounts related to issue, or transfer from lost policy holders trust, of demutualisation assets 316-255
      payments received directly, or from lost policy holders trust, in exchange for cancellation or variation of interests under the demutualisation 316-255
    demutualisation of private health insurers  
      market value of shares and rights at time of issue 315-310
      payments received in exchange for cancellation or variation of interests under the demutualisation 315-310
    disasters  
      2019-20 bushfires - payments for volunteer work with fire services 59-55
      2019-20 bushfires - disaster relief payments and non - cash benefits 59-60
      2019 floods - recovery grants 59-85
      2019 floods - on-farm grant program 59-86
      2021 floods and storms - recovery grants 59-99
      Cyclone Seroja - recovery grants 59-105
    dividends  
      demerger dividends 44(4)
      later dividend set off against amount taken to be dividend 109ZC(3) , 109ZCA(4)
    electricity generation  
      refund of large-scale generation shortfall charge 59-100
    employment  
      early retirement scheme payment, tax free amount of 83-170
      employment termination payment 82-10 , 82-65 , 82-70
      foreign termination payment 83-235 , 83-240
      genuine redundancy payment, tax free amount of 83-170
      unused long service leave payment, pre-16/8/78 period 83-80
      see superannuation and sections 82-10A and 82-10C of the Income Tax (Transitional Provisions) Act 1997  
    environment  
      water infrastructure improvement payments 59-65
    farm-in farm-out arrangements  
      rewards for providing exploration benefits 40-1135
    financial arrangements  
      gains related to non-assessable non-exempt income 230-30
    firearms surrender arrangements  
      compensation under 59-10
    [ first home saver accounts] (Repealed by No 70 of 2015)  
    foreign aspects of income taxation  
      attributed controlled foreign company income, amounts paid out of 23AI
      attributed foreign investment fund income, amounts paid out of 23AK
      certain forex realisation gains 775-25
      branch profits of Australian companies 23AH
      distributions of conduit foreign income 802-20
      income derived by foreign residents in exclusive economic zone or on or above continental shelf 768-110
      foreign equity distributions on participation interests 768-5
      income derived by temporary residents 768-910
      interest paid by temporary residents 768-980
      managed investment trust withholding tax, amount subject to 840-815
      labour mobility program withholding tax, amount subject to 840-915
      superannuation fund, foreign, interest and dividend income of 128B(3)(jb)
      withholding tax, dividend royalty or interest subject to 128D
    GST  
      GST payable on a taxable supply 17-5(a)
      increasing adjustments 17-5(b) and (c)
    investment manager regime  
      IMR concessions 842-215
    life insurance companies Subdivision 320-B
    mining  
      withholding tax, payments to Indigenous persons and distributing bodies subject to 59-15
    mutual receipts  
      amounts that would be mutual receipts but for prohibition on distributions to members or issue of MCIs 59-35
    National Rental Affordability Scheme  
      payments made, and non-cash benefits provided, by a State or Territory governmental body in relation to participation in the National Rental Affordability Scheme 380-35
    native title benefits  
      native title benefits 59-50
    non-cash benefits  
      fringe benefits 23L(1)
    notional sale and loan  
      arrangement payments a notional seller receives or is entitled to receive 240-40
      luxury car leases, lease payments that the lessor receives or is entitled to receive 242-40
      deemed loan treatment for financial benefits provided for tax preferred use of asset 250-160
    [ offshore banking units] (Repealed by No 110 of 2021)  
    related entities  
      amounts from, where deduction reduced for 26-35(4)
    repayable amounts  
      previously assessable amounts 59-30
    rights to acquire shares or units  
      market value of at time of issue 59-40
    [ securities] (Repealed by No 47 of 2016)  
    small business assets  
      income arising from CGT event, company or trust owned asset continuously for 15 years 152-110(2)
    sovereign entities Subdivision 880-C
    [social security or like payments] (Repealed by No 145 of 2010)  
    superannuation  
      benefits generally Divisions 301 to 306
      commutation of income stream, under 25 years 303-5
      death benefits 302-60 , 302-65 , 302-70 , 302-140
      departing Australia superannuation benefits 301-175
      foreign superannuation funds, lump sum benefits 305-60 , 305-65 , 305-70
      KiwiSaver schemes, contributions to complying superannuation funds from 312-10
      KiwiSaver schemes, superannuation benefits paid from complying superannuation funds to 312-15
      KiwiSaver schemes, superannuation benefits paid by Commissioner to 312-20
      member benefits 301-10 , 301-15 , 301-30 , 301-225
      release authorities, payments from 303-15
    303-20
      roll-over superannuation benefits 306-5
      superannuation lump sum for recipient having terminal medical condition 303-10
      unclaimed money payment to government 306-20
    [ tax bonus] (Repealed by No 32 of 2014)  
    tax loss transfers  
      consideration received by loss company from income company, generally 170-25(1)
      consideration received by loss company from income company, net capital loss 170-125(1)
      consideration received for transfer of tax losses relating to transitioned petroleum activities 417-70
    temporary residents  
      see foreign aspects of income taxation  
    trading stock  
      disposal outside ordinary course of business, amounts received upon 70-90(2)
    transfer of entitlements to deductions  
      consideration received for transfer of entitlements to deductions relating to transitioned petroleum activities 417-70
    trusts  
      attributable income, amounts representing 99B(2A)
      family trust distribution tax, amounts subject to 271-105(3) in Schedule 2F
    windfall amounts  
      business franchise fees, refund of when invalid 59-20
      State tax on Commonwealth place, refund of when invalid 59-25
    withholding taxes  
      see foreign aspects of income taxation and mining  

    Division 12 - Particular kinds of deductions  

    SECTION 12-1  

    12-1   Effect of this Division  


    This Division is a * Guide.

    SECTION 12-5  

    12-5   List of provisions about deductions  


    The provisions set out in the table contain rules about specific types of deduction.

    Provisions of the Income Tax Assessment Act 1997 are identified in normal text. The other provisions, in bold , are provisions of the Income Tax Assessment Act 1936 .


     
    accrued leave transfer payments 26-10
    advance expenditure  
      generally 82KZL to 82KZO
      avoidance arrangements 82KJ
      when deductible 82KZM to 82KZN
    Australian apprenticeship support loan  
      payment made to reduce a debt to the Commonwealth under the Australian Apprenticeship Support Loans Act 2014 , no deduction unless provided as fringe benefit 26-20
    [ averaging of incomes] (Omitted by No 46 of 1998)  
    bad debts  
      deduction reduced because of forgiveness of debt if debtor and creditor are companies under common ownership and agree on the reduction 245-90
      general 25-35 , 63F
      companies Subdivisions 165-C , 166-C and 175-C
      debt/equity swaps 63E , 63F , 709-220
      deduction of a debt that used to be owed to a member of a consolidated group or MEC group by an entity that used to be a member of the group Subdivisions 709-D and 719-I
      money lenders, listed country branches, no deduction for 63D
      see also losses  
    balancing adjustment  
      see buildings, capital allowances, industrial property, R & D and tax exempt entities  
    banks  
      foreign banks, Australian branches of 160ZZVA to 160ZZZJ
    boats  
      deferral of deductions 26-47
    borrowing expenses 25-25
    bribes to foreign public officials 26-52
    bribes to public officials 26-53
    buildings  
      income producing buildings, capital allowances Division 43
      see also heritage conservation work  
    capital allowances  
      generally Division 40
      balancing adjustments 40-285(2) , 40-370
      business related costs 40-880
      electricity and telephone lines 40-645
      environmental protection activities 40-755
      exploration or prospecting 40-80(1) , 40-730
      in-house software 40-335 , 40-455
      intellectual property Subdivisions 40-B and 40-I
      IRUs Subdivision 40-B
      landcare operations 40-630
      low-value and software development pools Subdivision 40-E
      mining and quarrying Subdivision 40-H and Subdivision 40-I
      new business investment, additional deduction Division 41
      Petroleum Resource Rent Tax 40-750
      project pools 40-830 , 40-832
      reducing deductions 40-25 , 40-27 , 40-290 and 40-291
      spectrum licences Subdivision 40-B
      tax preferred use of asset Division 250
      telecommunications site access rights Subdivision 40-B
      trees in carbon sink forests Subdivision 40-J
      water facilities, horticultural plants, fodder storage assets and fencing assets Subdivision 40-F
    capital gains  
      no deduction for an amount that would otherwise be deductible only because a net capital gain is included in assessable income 51AAA
      small business retirement exemption, no deduction for payments made directly or indirectly to CGT concession stakeholder so company or trust complies with section 152-325 152-310
      see also foreign residents  
    capital loss  
      net capital loss, no deduction for 102-10
      net capital loss, transfer within company group Subdivision 170-B
    car disposal  
      see capital allowances  
    car expenses
      generally Division 28
      " cents per kilometre " method Subdivision 28-C
      " log book " method Subdivisions 28-F and 28-G
      substantiation of car expenses Division 900
      see also transport expenses  
    car expenses of employee  
      employee ' s car expenses where car provided by employer can be used for private purposes, no deduction for 51AF
    carried interests  
      carried interests, no deduction for 118-21
    car parking  
      employee ' s car parking expenses, no deduction for 51AGA
    children ' s income  
      generally 102AA to 102AH
      taxable income of a child, deductions taken into consideration in calculating 102AD
    [ clean energy] (Repealed by No 83 of 2014)  
    club fees  
      club fees, no deduction for 26-45
      see also subscriptions to associations  
    Commonwealth places windfall tax 26-17
    companies, co-operative and mutual  
      generally 117 to 121
      distributions of assessable income 120
    companies, private  
      excessive payments to shareholders directors and associates, reduced deduction 109
    conservation covenants Division 31
    consolidated groups and MEC groups  
      assets in relation to Division 230 financial arrangement 701-61(4)
    controlled foreign companies  
      generally 316 to 468
      bad debts 399A
      decline in value of depreciating assets 398
      finance share dividends 394
      taxes paid 393
    convertible notes  
      see interest  
    copyrights  
      expenditure in obtaining registration Subdivisions 40-B and 40-I
    COVID-19  
      expenditure on COVID-19 tests 25-125
    cross staple arrangements  
      rent from land investment 25-115 , 25-120
    currency exchange gains and losses  
      see foreign exchange  
    death of timber owner  
      see timber  
    debt interests  
      certain returns in respect of debt interests 25-85
    depreciation  
      see capital allowances  
    designs  
      expenditure in obtaining or extending registration Subdivisions 40-B and 40-I
    disposal of depreciating assets  
      see capital allowances  
    dividends  
      dividends including LIC capital gain component 115-280
      franking credits, companies and foreign residents 207-95(2) , 207-95(3) , 220-405(3)
      franking credits, pooled development funds (PDFs) 124ZM
      non-share equity interests, no deduction for return in respect of 26-26
      unfranked non-portfolio dividends 46FA
    education expenses  
      Higher Education Contribution Scheme, no deduction unless provided as fringe benefit 26-20
      see also overseas debtors repayment levy  
      see also student start-up loans  
      see also VET student loans  
    election expenses  
      Federal and State Parliament election expenses 25-60 , 25-70
      local government election expenses, limited deduction for 25-65 , 25-70
    electricity connections  
      see capital allowances  
    embezzlement  
      see theft  
    employees  
      labour mobility programs, delayed deduction for salary, wages etc. paid to employees under program until labour mobility program withholding tax payable has been paid 26-25A
      pensions, gratuities or retiring allowances for ex-employees 25-50
      see also shares  
    entertainment  
      expenditure, no deduction for some Division 32
      meal entertainment, calculation of deductible amount 51AEA to 51AEC
    environment  
      see capital allowances  
    excess non-concessional contributions tax  
      no deduction 26-75
    exploration and prospecting  
      see capital allowances  
    family  
      no deduction for maintaining spouse or child 26-40
    [ family tax benefit] (Repealed by No 56 of 2010)  
    farm management deposits  
      see primary production  
    [ film income] (Repealed by No 164 of 2007)  
    film licensed investment companies (FLICs)  
      see shares  
    financial arrangements  
      losses from 230-15(2) and (3)
      see also borrowing expenses, interest, leases and securities  
    foreign exchange  
      losses 775-30
    foreign financial entities ' Australian permanent establishments  
      generally Part IIIB
      thin capitalisation Subdivision 820-FB
      transfer of losses Subdivisions 170-A and 170-B
    [ foreign income] (Repealed by No 143 of 2007 )  
    [ foreign investment funds (FIFs)] (Repealed by No 114 of 2010)  
    [ foreign life assurance policies] (Repealed by No 114 of 2010)  
    [ foreign residents] (Repealed by No 79 of 2007 )  
    [ foreign tax credits] (Repealed by No 143 of 2007 )  
    forestry managed investment schemes  
      payments under scheme 394-10(1)
    franchise fees windfall tax 26-15
    freight  
      freight for shipped goods 135A
    fringe benefits  
      contributions for private component, no deduction for 51AJ
      employee ' s car expenses where car provided by employer can be used for private purposes, no deduction for 51AF
      employee ' s car parking expenses, no deduction for 51AGA
      expense payment fringe benefits, reduced deduction 51AH
    general insurance companies and companies that self insure  
      claims paid 321-25 and 321-95
      increase in value of adjusted liability for incurred claims 321-15
      increase in value of adjusted liability for remaining coverage 321-55
      increase in value of outstanding claims liability 321-85
    gifts  
      general Division 30
      limit on deduction 26-55
      see also tax avoidance schemes  
    [ grape vines] (Repealed by No 129 of 2004)  
    [ GST - acquiring or upgrading plant to meet GST obligations etc] (Repealed by No 77 of 2001)  
    horticultural plants  
      see capital allowances  
    higher education assistance 26-20
    hybrid mismatch rules  
      disallowing of deductions Division 832
    illegal activities 26-54
    income equalisation deposits  
      see primary production  
    industrial property  
      see intellectual property and R & D  
    infrastructure  
      see tax losses  
    [ insurance and annuity business] (Repealed by No 101 of 2004)  
    insurance with non-residents  
      generally 141 to 148
      insurance premiums, no deduction unless arrangement to pay tax 145
      reinsurance, no deduction for resident carrying on insurance business in Australia for reinsurance premiums paid to a non-resident 148
    intellectual property  
      see capital allowances  
    interest  
      convertible notes, interest on, generally 82L to 82T
      foreign residents, debt creation involving, generally 159GZY to 159GZZF
      foreign residents, delayed deduction for interest paid to until withholding tax payable has been paid 26-25
      life assurance premiums, interest etc. on loans to finance, no deduction for 26-85
      superannuation contributions, interest etc. on loans to finance, no deduction for 26-80
      underpayment or late payment of tax, interest for 25-5
    international agreements  
      see transfer pricing  
    international profit shifting  
      see transfer pricing  
    investment company  
      see shares  
    IRUs  
      see capital allowances  
    land  
      land degradation, see primary production vacant land, limit on deduction 26-102
    [ land degradation] (Repealed by No 95 of 2019)  
    lease document expenses 25-20
    lease, authority, licence, permit or quota  
      expenditure to terminate 25-110
    leases  
      finance leases and arrangements, use of property if end-user an exempt public body or use outside Australia to produce exempt income 159GE to 159GO
      leases of assets being put to tax preferred use Division 250
      leveraged arrangements, property used:
        • other than to produce assessable income; or
        • by a non-resident outside Australia; or
        • by a previous owner
    51AD
      payment for failure to comply with lease obligation to repair premises 25-15
    leases of luxury cars  
      accrual amounts 242-35
      adjustment amounts (lessee) 242-70
      adjustment amounts (lessor) 242-65
      lease payments not deductible 242-55
      payments to acquire car not deductible 242-85
    leave payments  
      accrued leave transfer payments 26-10
      no deduction for leave payments until paid 26-10
    leisure facilities  
      no deduction for 26-50
    [ life assurance companies ] (Repealed by No 89 of 2000)  
    life insurance companies Subdivision 320-C
    limited recourse debt  
      later payments 243-45
      later payments (replacement debt) 243-50
    loans  
      see borrowing expenses, interest and securities  
    losses  
      foreign exchange 775-30
      profit-making undertaking or scheme 25-40
      property sale 25-40
      traditional securities, loss on disposal or redemption of 70B
      see also tax losses  
    managed investment trusts  
      losses from carried interests 275-200(4)
    management and investment company shares  
      see shares  
    membership of associations  
      see subscriptions to associations  
    mining  
      Laminaria and Corallina decommissioning levy 26-96
      see also capital allowances  
    misappropriation  
      by employee or agent 25-47
    mortgage  
      expenses of discharging a mortgage 25-30
    motor vehicles  
      see car expenses and leases  
    National Disability Insurance Scheme  
      National Disability Insurance Scheme expenditure 26-97
    non-cash transactions  
      non-cash business benefits 51AK
      non-cash consideration, money value deemed to have been paid or given 21
    non-commercial business activities  
      deferral of non-commercial losses Division 35
    non-resident trust estates  
      generally 102AAA to 102AAZG
      modified application of depreciation provisions 102AAY
      modified application of trading stock provisions 102AAZ
      no deductions allowable under Division 36 102AAZC
    notional sales and loans  
      adjustment amounts (lessee) 240-110(1)
      adjustment amounts (lessor) 240-105(3)
      arrangement payments, no deduction for 240-55
      notional interest 240-50 , 250-155
      deemed loan treatment for financial benefits provided for tax preferred use of asset Subdivision 250-C
      payments to acquire property, no deduction for 240-85
    offshore banking units  
      generally 121B to 121EL
    overseas debtors repayment levy  
      payment made to reduce a liability to overseas debtors repayment levy under the Student Loans (Overseas Debtors Repayment Levy) Act 2015 , no deduction unless provided as fringe benefit 26-20
    partnerships  
      foreign hybrid loss exposure adjustment 830-50
      losses, partner ' s share of partnership loss 90 , 92
    patents  
      expenditure relating to grant of patents, etc. Subdivisions 40-B and 40-I
    penalties  
      no deduction for penalties 26-5
    personal services income  
      alienated personal services income Subdivision 86-B
      general Division 85
    [ petroleum prospecting and mining] (Repealed by No 77 of 2001)  
    [ plant and articles] (Repealed by No 77 of 2001)  
    political contributions and gifts  
      denial of certain deductions 26-22
      deductions for individuals Subdivision 30-DA
    pooled development funds (PDFs) 124ZM to 124ZZD
    [ pooled software] (Repealed by No 77 of 2001)  
    prepaid expenditure  
      see advance expenditure  
    primary production  
      farm management deposits Division 393
      see also capital allowances and timber  
    property  
      arrangements relating to assets being put to tax preferred use Division 250
      arrangements relating to use of property if end-user an exempt public body or use outside Australia to produce exempt income 159GE to 159GO
      leveraged arrangements, property used:
        • other than to produce assessable income; or
        • by a non-resident outside Australia; or
        • by a previous owner
    51AD
      sale of property, profit or loss 82(2)
      see also capital allowances and losses  
    public trading trusts  
      generally 102M to 102T
    qualifying securities  
      see securities  
    [ quarrying] (Repealed by No 77 of 2001)  
    R & D Division 355
    rates and land taxes  
      premises used to produce mutual receipts 25-75
    rebatable benefits  
      no deduction for 26-19
    [ regional headquarters (RHQs)] (Repealed by No 47 of 2016)  
    registered emissions units  
      expenditure incurred in becoming the holder of 420-15
      expenditure incurred in ceasing to hold 420-42
      excess of opening over closing value of 420-45
    reimbursements  
      expense payment fringe benefits, reduced deduction 51AH
    reinsurance  
      see insurance with non-residents  
    related entities (including relatives)  
      reduction of deduction for payment or liability to 26-35 , 65(1B) and (1C)
    repairs  
      general 25-10
      repair covenants, payment for non-compliance with covenant to repair under lease 25-15
    [ research & development] (Repealed by No 93 of 2011)  
    roads  
      see timber  
    royalties  
      royalty, no deduction for royalty paid to a foreign resident until the withholding tax payable has been paid 26-25
    scientific research  
      see R & D  
    securities  
      qualifying securities 159GP to 159GZ
      substituted securities 23K
      traditional securities, loss on disposal or redemption of 70B
    shares  
      buy-backs 159GZZZJ to 159GZZZT
      cancellation of subsidiary ' s shares in holding company 159GZZZC to 159GZZZI
      employee share schemes, deduction for provider of ESS interests Subdivision 83A-D
       
      see also dividends and securities  
    [ small-medium enterprises (SMEs)] (Repealed by No 23 of 2018)  
    Software  
      see capital allowances  
    spectrum licences  
      see capital allowances  
    State or Territory bodies (STBs)  
      body ceasing to be STB, some deductions not allowed 24AW to 24AYA
    student start-up loans  
      payment made to reduce a debt to the Commonwealth under Chapter 2AA of the Social Security Act 1991 (student start-up loans), no deduction unless provided as fringe benefit 26-20
      payment made to reduce a debt to the Commonwealth under Part 2 of the Student Assistance Act 1973 (ABSTUDY student start-up loans), no deduction unless provided as fringe benefit 26-20
    subscriptions to associations 25-55
    substantiation  
      work, travel and car expenses Division 900
    superannuation  
      see insurance and annuity business and interest  
    superannuation and related business  
      generally Part 3-30
      asset disposals 295-85
      death or disability benefits, deduction for future service element 295-470
      death or disability cover, premiums for 295-465
      financial assistance levy 295-490(1) (table item 3)
      financial product advice subsection 295-490(1) (table item 5)
    superannuation contributions surcharge  
      no deduction 26-60
    superannuation - deductibility of contributions  
      generally Division 290
      contributions for employees etc. Subdivision 290-B
      contributions to non-complying funds sections 290-10 and 290-75
      first home super saver scheme re-contribution section 290-168
      limit on deduction 26-55
      no deduction under any other provision of the Act section 290-10
      personal contributions Subdivision 290-C
    [ superannuation - employer contributions] (Repealed by No 15 of 2007)  
    superannuation guarantee charge  
      no deduction for 26-95
      late contribution offset, no deduction for 290-95
    superannuation supervisory levy  
      late lodgment amount, no deduction for 26-90
    tax agent ' s fees  
      see tax related expenses  
    tax avoidance schemes  
      companies, use of tax losses or deductions to avoid tax Division 175
      diverted assessable income 121F to 121L
      dividend stripping 177E
      gifts 78A
      imputation, manipulation of 207-150(2) , 207-150(3)
      prepaid outgoings to avoid tax 82KJ
      recouped expenditure 82KH to 82KL
      tax avoidance scheme, no deduction allowable where deduction the result of 177A to 177G
      trading stock 70-20 , 52A
    tax exempt entities  
      treatment of losses and outgoings on becoming taxable Schedule 2D
    tax losses  
      bad debts, companies 165-120
      change of ownership or control of a company
        generally
    Division 165
          for earlier income years Subdivision 165-A
          for income year of the change Subdivision 165-B
      designated infrastructure project entities Division 415
      earlier income years Division 36
      life insurance companies Subdivision 320-D
      pooled development funds Subdivision 195-A
      transfer between companies in same wholly-owned group Subdivision 170-A
    tax preferred asset financing  
      generally Division 250
      denial of capital allowance deductions in relation to asset being put to tax preferred use 250-145
      reduction in capital allowance deductions in relation to asset being put to tax preferred use 250-150
    tax related expenses 25-5
    telecommunications site access rights  
      see capital allowances  
    telephone lines  
      see primary production  
    [ termination payments surcharge] (Repealed by No 23 of 2018)  
    theft  
      by employee or agent 25-45
    thin capitalisation  
      disallowing of deductions Division 820
      previously FRT disallowed amounts 820-56
    timber  
      death of owner of land carrying trees, deduction of the part of land cost attributable to trees 70-120
      disposal of land carrying trees, deduction of the part of land cost attributable to trees 70-120
      felling trees, deduction of cost of land attributable to trees felled or of cost of right to fell trees 70-120
      see also capital allowances  
    [ trade support loan] (Repealed by No 61 of 2023)  
    trading ships  
      see capital allowances  
    trading stock  
      Commissioner may determine whether consideration paid for chose in action is reasonable 52A
      excess of opening stock over closing value 70-35(3)
      expenditure deemed not to be of a capital nature 70-25
      prepayments, when stock becomes trading stock on hand 70-15
      see also tax avoidance schemes and timber  
    traditional securities  
      see securities  
    training guarantee  
      training guarantee charge, no deduction for 51(7)
    transfer pricing  
      arm ' s length principle for cross-border conditions between entities Subdivision 815-B
      arm ' s length principle for permanent establishments Subdivision 815-C
    transport expenses  
      incurred in travel between workplaces 25-100
    travel expenses  
      accompanying relatives, no deduction for some travel expenses 26-30
      travel related to the use of residential premises as residential accommodation 26-31
      see also substantiation  
    trees in carbon sink forests  
      see capital allowances  
    trusts  
      trust income, deductions considered in calculating 95 to 102
      see also foreign residents , non-resident trust estates and public trading trusts  
    uniforms  
      non-compulsory uniforms Division 34
    [ United Medical Protection Limited support payments] (Repealed by No 105 of 2019)  
    uranium mining  
      see mining  
    VET student loans  
      payment made to reduce a debt to the Commonwealth under Part 3A of the VET Student Loans Act 2016 (VETSL debts), no deduction unless provided as fringe benefit 26-20
    water facilities  
      improvements 26-100
      see also capital allowances  
    work expenses  
      see substantiation  
    work in progress  
      payment of a work in progress amount 25-95

    Division 13 - Tax offsets  

    SECTION 13-1A  

    13-1A   Effect of this Division  


    This Division is a * Guide.

    SECTION 13-1  

    13-1   List of tax offsets  


    The provisions set out in the list allow you a tax offset.

    Provisions of the Income Tax Assessment Act 1997 are identified in normal text. The other provisions, in bold , are provisions of the Income Tax Assessment Act 1936 .


    Aboriginal study assistance
      see social security and other benefit payments
    annual leave
      see leave payments
    annuity
      see superannuation
    approved deposit funds (ADFs)
      see dividends
    attribution managed investment trusts
      non-resident beneficiary 276-110
    averaging
      see primary production
    bonuses
      see life assurance
    child
      increased tax payable under Part III Division 6AA, unreasonable 102AH
    trust income 100(2)
    [ child/housekeeper] (Repealed by No 70 of 2015)
    corporate unit trusts
      see dividends
    Cyclone Larry or Cyclone Monica income support payment
      see social security and other benefit payments
    defence force
      members serving overseas 79B
    dependants
      invalid relative, invalid spouse or carer in receipt of carer benefit Subdivision 61-A
    dividends
      general 207-20(2) , 207-45 , 207-110(2) (c), 210-170(1)
    early stage venture capital limited partnerships
      contributions to ESVCLPs Subdivision 61-P
    [ education expenses] (Repealed by No 50 of 2012)
    [ drought relief] (Repealed by No 179 of 1997)
    employment termination
      employment termination payments 82-10 , 82-70
    see leave payments, superannuation and sections 82-10A and 82-10C of the Income Tax (Transitional Provisions) Act 1997
    [ entrepreneurs ' tax offset] (Repealed by No 23 of 2012)
    Equine Workers Hardship Wage Supplement Payment
      see social security and other benefit payments
    [ exceptional circumstances relief] (Repealed by No 13 of 2014)
    exploration for minerals
      junior minerals exploration incentive Subdivision 418-B
    [ farm help income support] (Repealed by No 13 of 2014)
    [ farm household support] (Repealed by No 97 of 2008 )
    film
      Division 376
    [ films] (Repealed by No 143 of 2007 )
    foreign income tax
      foreign income tax paid, tax offset for Division 770
    franking deficit tax
      liabilities to pay 205-70
    franked dividends
      see dividends
    hardship
      see child
    [ housekeeper] (Repealed by No 70 of 2015)
    housing
      National Rental Affordability Scheme Division 380
    imputation
      see dividends and franking deficit tax
    [ infrastructure] (Repealed by No 4 of 2018)
    innovation companies
      certain shares issued to early stage investors Subdivision 360-A
    inter-corporate dividends
      see dividends
    interest
      tax paid on by company 127
    interim income support payment
      see social security and other benefit payments
    invalid relative
      see dependants
    [ land transport facilities borrowings] (Repealed by No 41 of 2011)
    leave payments
      unused annual leave payment 83-15
    unused long service leave payment 83-85
    see employment termination
    legal disability
      see trusts
    life assurance
      bonus, receipt of 160AAB
    life insurance company
      subsidiary joining consolidated group 713-545(5)
    long service leave
      see leave payments
    losses
      loss carry back Division 160
    low income earner
      aged or pensioner beneficiary, trustee liable to be assessed for beneficiary ' s share of net income of trust estate 160AAAB
    aged person or pensioner 160AAAA
    general Subdivision 61-D
    lump sum income arrears
      receipt of 159ZRA , 159ZRB , Subdivision 61-L
    [ mature age workers] (Repealed by No 20 of 2015)
    [ medical expenses] (Repealed by No 11 of 2014)
    non-resident beneficiary
      see trusts
    non-resident trust estate
      see trusts
    overseas defence force service
      see defence force
    [ overseas tax] (Repealed by No 143 of 2007 )
    [ parent/parent-in-law] (Repealed by No 70 of 2015)
    partnerships
      see dividends , housing and small business entities
    pension
      see social security and other benefit payments
    pooled superannuation trusts (PSTs)
      see dividends
    primary production
     
    averaging of income, trustees 156
    averaging of tax liability, individuals 392-35(2)
    farm household allowance
      see social security and other benefit payments
    interim income support payments
      see social security and other benefit payments
    private health insurance Subdivision 61-G
    public trading trust
      see dividends
    public unit trust
      see dividends
    R & D Division 355
    [ rebatable ETP annuity] (Repealed by No 15 of 2007)
    [ research and development] (Repealed by No 93 of 2011)
    residents of isolated areas
      see zone
    [ restart income support] (Repealed by No 144 of 2000)
    [ savings and investment income] (Repealed by No 60 of 1999)
    [ shipping income] (Repealed by No 143 of 2007 )
    [ sickness benefits] (Repealed by No 26 of 2018)
    small business
      small business income Subdivision 328-F
    [ small business entities] (Repealed by No 23 of 2012)
    social security and other benefit payments
      Aboriginal study assistance scheme 160AAA(3)
    children, assistance for isolated 160AAA(3)
    Cyclone Larry or Cyclone Monica income support payment 160AAA(3)
    Disaster income support allowance for special category visa (subclass 444) holders 160AAA(3)
    Equine Workers Hardship Wage Supplement Payment 160AAA(3)
    farm household allowance under the Farm Household Support Act 2014
    see unemployment and other benefit payments under the Social Security Act 1991
    interim income support payment 160AAA(3)
    pension, social security pension and veteran ' s pension 160AAAA
    textile, clothing and footwear allowance 160AAA(3)
    unemployment and other benefit payments under the Social Security Act 1991 160AAA(3)
    [ sole parent] (Repealed by No 83 of 1999)
    [ spouse] (Repealed by No 70 of 2015)
    superannuation
      generally Divisions 301 and 302
    associated earnings on non-concessional contributions Subdivision 292-B
    spouse contributions Subdivision 290-D
    death benefits 302-75 , 302-85 , 302-145
    excess concessional contributions 291-15(b)
    first home super saver scheme 313-25
    member benefits 301-20 , 301-25 , 301-35 , 301-40 , 301-95 , 301-100 , 301-105 , 301-115
    TFN quoted to superannuation or RSA provider after no-TFN contributions tax paid 295-675
    veterans ' invalidity pensions Subdivision 301-F
    [ superannuation funds] (Repealed by No 15 of 2007)
    [ tax credit] (Repealed by No 143 of 2007 )
    termination payments
      see employment termination, leave payments and superannuation
    trustee
      see dividends , low income earner and trusts
    trusts
      beneficiary in a foreign trust 98B
    non-resident beneficiary 98A(2)(a)
    trust income of beneficiary with legal disability 100(2)
    trust income (modifications for special disability trusts) 95AB(5)
    see also dividends , housing and small business entities
    United Nations forces
      salary, wages and allowances from service as a member of 23AB(7)
    unemployment benefits
     
    see social security and other benefit payments
    unit trusts
      see dividends
    [ water] (Repealed by No 84 of 2013)
    winding-up of non-resident trust estates
      see trusts
    withholding payments
      made by companies to Australian seafarers Subdivision 61-N
    zone
      residents of isolated areas 79A