Income Tax Assessment Act 1997

CHAPTER 2 - LIABILITY RULES OF GENERAL APPLICATION  

PART 2-1 - ASSESSABLE INCOME  

Division 15 - Some items of assessable income  

SECTION 15-1   What this Division is about  

Operative provisions  

SECTION 15-2   Allowances and other things provided in respect of employment or services  

15-2(1)    
Your assessable income includes the value to you of all allowances, gratuities, compensation, benefits, bonuses and premiums *provided to you in respect of, or for or in relation directly or indirectly to, any employment of or services rendered by you (including any service as a member of the Defence Force).

15-2(2)    
This is so whether the things were *provided in money or in any other form.

15-2(3)    
However, the value of the following are not included in your assessable income under this section:

(a) a *superannuation lump sum or an *employment termination payment;

(b) an *unused annual leave payment or an *unused long service leave payment;

(c) a *dividend or *non-share dividend;

(d) an amount that is assessable as *ordinary income under section 6-5 ;

(e) *ESS interests to which Subdivision 83A-B or 83A-C (about employee share schemes) applies.

Note:

Section 23L of the Income Tax Assessment Act 1936 provides that fringe benefits are non-assessable non-exempt income.

SECTION 15-3  

15-3   Return to work payments  

Your assessable income includes an amount you receive under an ^* arrangement that an entity enters into for a purpose of inducing you to resume working for, or providing services to, any entity.

SECTION 15-5  

15-5   Accrued leave transfer payments  

Your assessable income includes an ^* accrued leave transfer payment that you receive.

To find out if the payment is deductible to the payer, see section 26-10.

SECTION 15-10  

15-10   Bounties and subsidies  

Your assessable income includes a bounty or subsidy that:

(a) you receive in relation to carrying on a ^* business; and

(b) is not assessable as ^* ordinary income under section 6-5 .

SECTION 15-15   Profit-making undertaking or plan  

15-15(1)    
Your assessable income includes profit arising from the carrying on or carrying out of a profit-making undertaking or plan.

15-15(2)    
This section does not apply to a profit that:

(a) is assessable as ^* ordinary income under section 6-5 ; or

(b) arises in respect of the sale of property acquired on or after 20 September 1985.

Note:

If you sell property you acquired before 20 September 1985 for profit-making by sale, your assessable income includes the profit: see section 25A of the Income Tax Assessment Act 1936 .

SECTION 15-20   Royalties  

15-20(1)    
Your assessable income includes an amount that you receive as or by way of royalty within the ordinary meaning of " royalty " (disregarding the definition of royalty in subsection 995-1(1) ) if the amount is not assessable as ^* ordinary income under section 6-5 .

15-20(2)    

Subsection (1) does not apply to an amount of a payment to which section 15-22 or 15-23 applies.

SECTION 15-22   Payments made to members of a copyright collecting society  

15-22(1)    
This section, instead of Division 6 of Part III of the Income Tax Assessment Act 1936 , applies to a payment that a ^* copyright collecting society, to which section 51-43 applies, makes to you as a ^* member of the society.

15-22(2)    

Your assessable income includes the amount of the payment, except to the extent that the payment represents an amount on which the directors of the society are or have been assessed, and are liable to pay ^* tax, under section 98 , 99 or 99A of the Income Tax Assessment Act 1936 .

Note:

Section 410-5 of this Act requires a copyright collecting society to give you a notice at the time of payment.

SECTION 15-23   Payments of resale royalties by resale royalty collecting society  

15-23(1)    
This section, instead of Division 6 of Part III of the Income Tax Assessment Act 1936 , applies to a payment that the *resale royalty collecting society makes to you under section 26 of the Resale Royalty Right for Visual Artists Act 2009 .

15-23(2)    
Your assessable income includes the amount of the payment, except to the extent that the payment represents an amount on which the directors of the society are or have been assessed, and are liable to pay *tax, under section 98 , 99 or 99A of the Income Tax Assessment Act 1936 .

Note:

Section 410-50 of this Act requires the resale royalty collecting society to give you a notice at the time of payment.

SECTION 15-25  

15-25   Amount received for lease obligation to repair  

Your assessable income includes an amount you receive from an entity if:

(a) you receive it as a lessor or former lessor of premises; and

(b) the entity pays you the amount for failing to comply with a lease obligation to make repairs to the premises; and

(c) the entity uses or has used the premises for the ^* purpose of producing assessable income; and

(d) the amount is not assessable as ^* ordinary income under section 6-5 .

Note:

The entity can deduct the amount: see section 25-15 .

SECTION 15-30  

15-30   Insurance or indemnity for loss of assessable income  

Your assessable income includes an amount you receive by way of insurance or indemnity for the loss of an amount (the lost amount ) if:

(a) the lost amount would have been included in your assessable income; and

(b) the amount you receive is not assessable as ^* ordinary income under section 6-5 .

SECTION 15-35  

15-35   Interest on overpayments and early payments of tax  

Your assessable income includes interest payable to you under the Taxation (Interest on Overpayments and Early Payments) Act 1983 . The interest becomes assessable when it is paid to you or applied to discharge a liability you have to the Commonwealth.

SECTION 15-40   Providing mining, quarrying or prospecting information or geothermal exploration information  

15-40(1)    
Your assessable income includes an amount you receive for providing ^* mining, quarrying or prospecting information to another entity if:

(a) you continue to ^* hold the information; and

(b) the amount you receive is not assessable as ^* ordinary income under section 6-5 .

15-40(2)    

Your assessable income includes an amount you receive for providing *geothermal exploration information you have to another entity if:

(a) you continue to have the information; and

(b) the information is, and continues to be, relevant to:

(i) *geothermal energy extraction that you carry on or propose to carry on; or

(ii) a *business that you carry on that includes *exploration or prospecting for *geothermal energy resources from which energy can be extracted by geothermal energy extraction; and

(c) the amount you receive is not assessable as *ordinary income under section 6-5 .

It does not matter whether the information is generally available or not.

15-40(3)    

Geothermal exploration information
is geological, geophysical or technical information that:

(a) relates to the presence, absence or extent of *geothermal energy resources in an area; or

(b) is likely to help in determining the presence, absence or extent of such resources in an area.

15-40(4)    

Geothermal energy extraction
means operations that are for:

(a) the extraction of energy from *geothermal energy resources; and

(b) the *purpose of producing assessable income.

SECTION 15-45   Amounts paid under forestry agreements  

15-45(1)    
Your assessable income includes an amount you receive under an agreement for the planting and tending of trees for felling if:

(a) you are the manager of the agreement as mentioned in section 82KZMG of the Income Tax Assessment Act 1936 ; and

(b) the amount satisfies, for the entity that paid it, the requirements of that section.

The amount is included for the income year in which the entity can claim a deduction for the amount.

15-45(2)    
No part of an amount included under subsection (1) is included in your assessable income for a later income year.

SECTION 15-46   Amounts paid under forestry managed investment schemes  

15-46(1)    
Your assessable income includes an amount you receive under a *forestry managed investment scheme if:

(a) you are the *forestry manager of the scheme, or an *associate of the forestry manager; and

(b) the entity that paid the amount can deduct or has deducted the amount under section 394-10 in relation to the scheme (disregarding subsection 394-10(5) ).

The amount is included for the income year for which the entity that paid the amount can or has claimed a deduction for it (disregarding subsection 394-10(5) ).

15-46(2)    
No part of an amount included under subsection (1) is included in your assessable income for a later income year.

SECTION 15-50  

15-50   Work in progress amounts  
Your assessable income includes a ^* work in progress amount that you receive.

Note:

To find out whether the amount is deductible to the payer, see section 25-95 .

SECTION 15-55   Certain amounts paid under funeral policy  

15-55(1)    
Your assessable income includes the amount of a benefit provided to you by a ^* life insurance company under a ^* funeral policy issued after 31 December 2002 to pay for the funeral of the insured person, reduced by:

(a) the amount of the premium or premiums of the policy that is reasonably related to the benefit; and

(b) the amount of the fees and charges included in the company ' s assessable income for any income year under paragraph 320-15(1)(k) that is reasonably related to the benefit.

15-55(2)    
This section does not apply if the benefit is included in your assessable income as:

(a) ^* ordinary income under section 6-5 ; or

(b) ^* statutory income under a section of this Act other than this section.

SECTION 15-60   Certain amounts paid under scholarship plan  

15-60(1)    
Your assessable income includes the amount of a benefit provided to you, or on your behalf, by a ^* life insurance company under a ^* scholarship plan covered by subsection (2) or (3), reduced by the amount worked out under subsection (4), if:

(a) the benefit is provided on or after 1 January 2003; and

(b) you are nominated in the plan as a beneficiary whose education is to be helped by the benefit.

15-60(2)    
This subsection covers a ^* scholarship plan issued by the ^* life insurance company after 31 December 2002.

15-60(3)    
This subsection covers a ^* scholarship plan if:

(a) the plan was issued by the ^* life insurance company before 1 January 2003; and

(b) no amount received by the company on or after 1 January 2003 and attributable to the plan is ^* non-assessable non-exempt income of the company under paragraph 320-37(1)(d) .

15-60(4)    
The amount of the reduction is the sum of:

(a) the amount of the premium or premiums of the plan that is reasonably related to the benefit; and

(b) the amount of the fees and charges included in the company ' s assessable income for any income year under paragraph 320-15(1)(k) that is reasonably related to the benefit.

15-65   (Repealed) SECTION 15-65 Sugar industry exit grants  
(Repealed by No 109 of 2014)

SECTION 15-70  

15-70   Reimbursed car expenses  

Your assessable income includes a reimbursement mentioned in section 22 of the Fringe Benefits Tax Assessment Act 1986 (about exempt car expense payment benefits) that, but for that section, would be a *fringe benefit *provided to you.

SECTION 15-75  

15-75   Bonuses  

Your assessable income includes any amount you receive as or by way of bonus on a *life insurance policy, other than a reversionary bonus.

Note:

Reversionary bonuses are covered by section 6-5 of this Act if they are ordinary income and, if not, by section 26AH of the Income Tax Assessment Act 1936 .

SECTION 15-80   Franked distributions entitled to a foreign income tax deduction - Additional Tier 1 capital exception  

15-80(1)    
If section 207-158 would, apart from subsection 207-158(2) , apply to a *franked distribution, then an amount equal to the *foreign income tax deduction referred to in subsection (1) of that section is included in the assessable income of the entity that made the distribution for the income year mentioned in subsection (2) of this section.

15-80(2)    
The income year is:

(a) if the *foreign tax period in which the *foreign income tax deduction arises falls wholly within an income year of the entity - that income year; or

(b) if the foreign tax period in which the foreign income tax deduction arises straddles 2 income years of the entity - the later of those income years.

15-85   (Repealed) SECTION 15-85 Refunded excess rehabilitation tax offset  
(Repealed by No 96 of 2014)

Division 17 - Effect of GST etc. on assessable income  

SECTION 17-1   What this Division is about  

SECTION 17-5  

17-5   GST and increasing adjustments  

An amount is not assessable income, and is not ^* exempt income, to the extent that it includes an amount relating to:

(a) ^* GST payable on a ^* taxable supply; or

(b) an ^* increasing adjustment that relates to a ^* supply; or

(c) an ^* increasing adjustment that:

(i) relates to an ^* acquisition; and

(ii) arises in circumstances that also give rise to a ^* recoupment that is included in assessable income.

SECTION 17-10   Certain decreasing adjustments  

17-10(1)    
An amount of a ^* decreasing adjustment that arises under Division 129 or 132 of the ^* GST Act is assessable income , unless the entity that has the adjustment is an ^* exempt entity.

17-10(2)    

However, the amount is not assessable income to the extent that, because it becomes a component of a ^* net input tax credit, a reduction is made under section 103-30 (reduction of cost base etc. by net input tax credits).

SECTION 17-15  

17-15   Elements in calculation of amounts  

In calculating an amount that may be included in assessable income:

(a) an element in the calculation that is an amount received or receivable is treated as not including an amount equal to any ^* GST payable on a ^* taxable supply related to the amount received or receivable, or any ^* increasing adjustment related to that amount; and

(b) an element in the calculation that is an amount paid or payable is treated as not including an amount equal to any ^* input tax credit for an ^* acquisition related to the amount paid or payable, or any ^* decreasing adjustment related to that amount.

SECTION 17-20   GST groups and GST joint ventures  

17-20(1)    
A ^* member of a ^* GST group is to be treated, for the purposes of this Division, as if Subdivision 48-B of the ^* GST Act (other than paragraph 48-40(2)(a) and subsection 48-40(3) ) did not apply to that member.

17-20(2)    
A ^* participant in a ^* GST joint venture is to be treated, for the purposes of this Division, as if Subdivision 51-B of the ^* GST Act (other than subsections 51-30(2) and (3)) did not apply to that participant.

SECTION 17-30  

17-30   Special credits because of indirect tax transition  

A special credit under section 19A of the A New Tax System (Goods and Services Tax Transition) Act 1999 is assessable income at the time it is attributed to a *tax period (for a credit under section 19A ).

SECTION 17-35  

17-35   Certain sections not to apply to certain assets or expenditure  

Sections 17-5 , 17-10 and 17-15 do not apply to assets, or to expenditure, for which you can deduct amounts under Division 40 or Division 328 .

Note:

See instead Subdivision 27-B .

Division 20 - Amounts included to reverse the effect of past deductions  

Guide to Division 20  

SECTION 20-1   What this Division is about  

TABLE OF SECTIONS

TABLE OF SECTIONS

20-5	Other provisions that reverse the effect of deductions

SECTION 20-5  

20-5   Other provisions that reverse the effect of deductions  

The table lists other provisions that reverse the effect of certain kinds of deductions.

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 .

Provisions that adjust your tax position in respect of deductions
Item	In this situation:	See:
1	A balancing adjustment for a depreciating asset is included in your assessable income.	40-285(1) and 40-445(2)
.
2	An amount you receive by way of insurance or indemnity for a loss of trading stock is included in your assessable income.	70-115
.
2A	Limited recourse debt that was used to finance expenditure deductible under a capital allowance (or on property for which you have deducted or can deduct amounts under a capital allowance) terminates: an amount is included in your assessable income.	243-40
.
3	Because of:	40-750(3)
		• petroleum resource rent tax; or
		• an instalment of petroleum resource rent tax;
	that you have deducted or can deduct, an amount is refunded, credited, paid or applied: the amount is included in your assessable income.
.
3A	(Repealed by No 77 of 2001)
.
4	You receive a fringe benefit by way of reimbursement or payment of a loss or outgoing you incurred: your deduction for the loss or outgoing is reduced.	51AH
.
5	(Repealed by No 93 of 2011)
.
6	(Repealed by No 93 of 2011)
.
7	You receive an amount as recoupment for your local governing body election expenses: an amount is included in your assessable income.	74A(4)
.
8	You receive superannuation benefits as a result of someone ' s deductible contributions: the benefits are included in your assessable income.	290-100
.
9	An R & D entity receives or becomes entitled to receive an amount:	355-410
		• for, or relating to, the results of R & D activities; or
		• attributable to it incurring expenditure on R & D activities or to its use of a depreciating asset for the purpose of conducting R & D activities;
	and the entity is entitled under Division 355 to a tax offset relating to those R & D activities. The amount is included in its assessable income.
.
10	An R & D entity:	Subdivision 355-G
	•	receives, or becomes entitled to receive, a recoupment from government relating to R & D activities; or
	•	can deduct, under Division 355 , expenditure on goods, materials or energy used during R & D activities to produce marketable products or products applied to the R & D entity ' s own use;
	and the entity is entitled under Division 355 to a tax offset relating to those R & D activities. An amount is included in its assessable income.

Subdivision 20-A - Insurance, indemnity or other recoupment for deductible expenses  

SECTION 20-10   What this Subdivision is about  

SECTION 20-15   How to use this Subdivision  

If you incurred the deductible loss or outgoing

20-15(1)    
First, read sections 20-20 to 20-30 to work out whether you have received an assessable recoupment. If not, you do not need to read the rest of the Subdivision.

20-15(2)    
If you have received one or more assessable recoupments, sections 20-35 to 20-55 tell you how much is included in your assessable income for an income year.

If another entity incurred a loss or outgoing you can deduct

20-15(3)    
Sections 20-60 and 20-65 tell you how to apply this Subdivision.

What is an assessable recoupment ?

SECTION 20-20   Assessable recoupments  

Exclusion

20-20(1)    
An amount is not an assessable recoupment to the extent that it is ^* ordinary income, or it is ^* statutory income because of a provision outside this Subdivision.

Insurance or indemnity

20-20(2)    

An amount you have received as ^* recoupment of a loss or outgoing is an assessable recoupment if:

(a) you received the amount by way of insurance or indemnity; and

(b) you can deduct an amount for the loss or outgoing for the ^* current year, or you have deducted or can deduct an amount for it for an earlier income year, under any provision of this Act.

Other recoupment

20-20(3)    

An amount you have received as ^* recoupment of a loss or outgoing ( except by way of insurance or indemnity) is an assessable recoupment if:

(a) you can deduct an amount for the loss or outgoing for the ^* current year; or

(b) you have deducted or can deduct an amount for the loss or outgoing for an earlier income year;

under a provision listed in section 20-30 .

SECTION 20-25   What is recoupment ?  

General

20-25(1)    
Recoupment of a loss or outgoing includes:

(a) any kind of recoupment, reimbursement, refund, insurance, indemnity or recovery, however described; and

(b) a grant in respect of the loss or outgoing.

Amount paid for you

20-25(2)    
If some other entity pays an amount for you in respect of a loss or outgoing that you incur, you are taken to receive the amount as recoupment of the loss or outgoing.

Remission of general interest charge or shortfall interest charge

20-25(2A)    

If:

(a) you have incurred expenditure that consists of ^* general interest charge or ^* shortfall interest charge; and

(b) the Commissioner remits any of that charge;

then you are taken to receive the remitted amount as recoupment of that expenditure.

Amount for disposing of right to recoupment

20-25(3)    
If you dispose of your right to receive an amount as ^* recoupment of a loss or outgoing you are taken to receive as recoupment of the loss or outgoing any amount you receive for disposing of that right. (The disposal need not be to another entity.)

Amount received that is recoupment to an unspecified extent

20-25(4)    
If you receive an amount that is, to an unspecified extent, ^* recoupment of a loss or outgoing, the amount is taken to be recoupment of the loss or outgoing to whatever extent is reasonable.

Balancing adjustments not covered

20-25(5)    
If a balancing adjustment is required for property on which you incurred a loss or outgoing, no part of the ^* termination value of the property is an amount you receive as recoupment of the loss or outgoing.

Note:

The termination value is usually the amount you receive because of disposal, loss or destruction of the property.

SECTION 20-30   Tables of deductions for which recoupments are assessable  

20-30(1)    

This table shows the deductions under the Income Tax Assessment Act 1997 for which recoupments are assessable.

Note:

References are to section numbers except where otherwise indicated.

Provisions of the Income Tax Assessment Act 1997
Item	Provision	Description of expense
1.1	8-1 (so far as it allows you to deduct a bad debt, or part of a debt that is bad)	bad debts
.
1.2	8-1 (so far as it allows you to deduct rates or taxes)	rates or taxes
.
1.3	25-5	tax-related expenses
.
1.4	25-35	bad debts
.
1.5	25-45	embezzlement or larceny by an employee
.
1.5A	25-47	misappropriation by an employee or agent
.
1.6	25-60	election expenses, Commonwealth and State elections
1.6A	25-65	election expenses, local governing body
.
1.7	25-75	rates and land taxes on premises used to produce mutual receipts
.
1.8	The former 25-80	upgrading assets to meet GST obligations etc.
.
1.8A	25-95	work in progress amount
.
1.8B	item 7 of the table in section 30-15	contributions relating to fund-raising events
.
1.8C	item 8 of the table in section 30-15	contributions relating to fund-raising auctions
.
1.9	Division 40	capital allowances
.
1.10	The former Division 42 (as it applied to *software because of the former Subdivision 46-B)	expenditure on software
.
1.11	The former Subdivision 46-C	expenditure on software
.
1.12	The former Subdivision 46-D	expenditure on software, pooled
.
1.13	The former Division 42 (as it applied to *IRUs because of Division 44)	expenditure on IRUs
.
1.14	The former 330-15	exploration or prospecting expenditure
.
1.15	The former 330-80	allowable capital expenditure relating to mining or quarrying
.
1.16	The former 330-350	petroleum resource rent tax
.
1.17	The former 330-370	transport capital expenditure relating to mining or quarrying
.
1.18	The former 330-435	rehabilitation expenditure relating to mining or quarrying
.
1.19	The former 330-485	balancing adjustment deduction for expenditure relating to mining or quarrying
.
1.19A	Division 355	R & D
.
1.20	The former Subdivisions 380-A and 380-C	capital expenditure incurred in obtaining a spectrum licence
.
1.21	The former Subdivision 387-A	landcare operations expenditure
.
1.22	The former Subdivision 387-B	expenditureon facilities to conserve or convey water
.
1.23	The former Subdivision 387-D	grapevine establishment expenditure
.
1.24	The former Subdivision 387-C	horticultural plant establishment expenditure
.
1.25	The former Subdivision 387-E	mains electricity connection expenditure
.
1.26	The former Subdivision 400-A	expenditure on environmental impact assessment
.
1.27	The former Subdivision 400-B	expenditure on environmental protection activities
.
1.27A	420-15	registered emissions unit
.
1.28	775-30	forex realisation loss

20-30(2)    

This table shows the deductions under the Income Tax Assessment Act 1936 for which recoupments are assessable.

Note:

References are to section numbers except where otherwise indicated.

Provisions of the Income Tax Assessment Act 1936
Item	Provision	Description of expense
2.1	Former 51(1) (so far as it allowed you to deduct a bad debt, or part of a debt that is bad)	bad debts
.
2.2	Former 51(1) (so far as it allowed you to deduct rates or taxes)	rates or taxes
.
2.3	63	bad debts
.
2.4	Former 69	tax-related expenses
.
2.5	Former 70A(3)	mains electricity connection expenditure
.
2.6	Former 71	embezzlement or larceny by an employee
.
2.7	Former 72	rates and land tax
.
2.7A	Former 72A	a payment of petroleum resource rent tax, or an instalment of petroleum resource rent tax, or a credit under paragraph 99(d) of the Petroleum Resource Rent Tax Assessment Act 1987 in respect of a payment of such an instalment
.
2.8	Former 73B, 73BA or 73BH	research and development activity expenditure
.
2.9	Former 74	election expenses, Commonwealth and State elections
.
2.9A	Former 74A	election expenses, local governing body
.
2.10	Former 75AA(1) or (6)	grape vine establishment expenditure
.
2.11	Former 75B(2) or (3A)	water conservation or conveyance expenditure
.
2.12	Former 75D(2)	land degradation prevention expenditure
.
2.13	Former 82AB	development allowance expenditure
.
2.14	Former 82BB	environmental impact study expenditure
.
2.15	Former 82BK	environmental protection expenditure
.
2.16	(Repealed by No 133 of 2003)
.
2.17	Former Division 10 of Part III	mining and quarrying expenditure
.
2.18	Former Division 10AAA of Part III	expenditure on transport of minerals and quarry materials
.
2.19	Former Division 10AA of Part III	expenditure on prospecting and mining for petroleum
.
2.20	Former 124BA	expenditure on rehabilitating mining, quarrying and petroleum sites
.
2.21	Former 124ZZF	horticultural plant establishment expenditure (effective life of the plant less than 3 years)
.
2.22	Former 124ZZG	horticultural plant establishment expenditure (effective life of the plant more than 3 years)
.
2.23	Former 628	drought mitigation property expenditure by a primary producer
.
2.24	Former 636	drought mitigation property expenditure by a leasing company

How much is included in your assessable income?

SECTION 20-35   If the expense is deductible in a single income year  

20-35(1)    
Your assessable income includes an ^* assessable recoupment of a loss or outgoing if:

(a) you can deduct the whole of the loss or outgoing for the ^* current year; or

(b) you have deducted or can deduct the whole of the loss or outgoing for an earlier income year.

Note 1:

The operation of this section may be affected if a balancing charge has been included in your assessable income because of a deduction for the loss or outgoing: see section 20-45 .

Note 2:

Recoupment of a loss or outgoing for which you can deduct amounts over more than one income year is covered by section 20-40 .

Note 3:

Recoupment of a loss or outgoing that is only partially deductible is covered by section 20-50 .

Total assessed not to exceed the loss or outgoing

20-35(2)    
The total of all amounts that subsection (1) includes in your assessable income for one or more income years in respect of a loss or outgoing cannot exceed the amount of the loss or outgoing.

Recoupment received before income year of the deduction

20-35(3)    
If:

(a) you can deduct the whole of a loss or outgoing for the ^* current year; and

(b) before the current year you received an ^* assessable recoupment of the loss or outgoing;

your assessable income for the current year includes so much of the recoupment as subsection (1) would have included if you had instead received the recoupment at the start of the current year.

SECTION 20-40   If the expense is deductible over 2 or more income years  

20-40(1)    
This section includes an amount in your assessable income if:

(a) you receive in the ^* current year an ^* assessable recoupment of a loss or outgoing for which you can deduct amounts over 2 or more income years; or

(b) you received in an earlier income year an ^* assessable recoupment of a loss or outgoing of that kind (unless all of the recoupment has already been included in your assessable income for one or more earlier income years by this section or a ^* previous recoupment law).

(This section applies even if the recoupment was received before the first of those income years.)

Note:

Recoupment of a loss or outgoing that is only partially deductible is covered by section 20-50 .

20-40(2)    
Work out as follows how much is included in your assessable income for the ^* current year because of one or more ^* assessable recoupments of the loss or outgoing.

Note:

The method statement ensures that assessable recoupments are included:

• only so far as they have not already been included for an earlier income year; and

• only to the extent of your total deductions to date for the loss or outgoing.

Method statement

Example:

At the start of the 2002-03 income year, a company incurs $100,000 to start to hold a depreciating asset. The company uses the prime cost method, and the effective life is 10 years. $10,000 is deductible for the 2002-03 income year and for each of the following 9 income years under section 40-25 .

In the 2002-03 income year, the company receives $20,000 as recoupment. How much is assessable for the 2002-03 income year?

Applying the method statement:

After step 1: the total assessable recoupment is $20,000.

After step 2: the recoupment already assessed is nil.

After step 3: the unassessed recoupment is:

total assessable recoupment minus recoupment already assessed, i.e. $20,000 minus 0 = $20,000.

After step 4: the total deductions for the loss or outgoing are $10,000.

After step 5: the outstanding deductions are:

total deductions for the loss or outgoing minus recoupment already assessed, i.e. $10,000 minus 0 = $10,000.

After step 6: the unassessed recoupment (step 3) is greater than outstanding deductions (step 5), so the amount of the outstanding deductions is included in assessable income, i.e. $10,000.

Applying the method statement to the 2003-04 income year: a further $10,000 is included in the company's assessable income.

SECTION 20-45   Effect of balancing charge  

20-45(1)    
This section may affect the operation of section 20-35 or 20-40 (as appropriate) if:

(a) a balancing adjustment is required for the ^* current year (or for an earlier income year) because you have deducted or can deduct an amount for an income year for the loss or outgoing; and

(b) an amount (the balancing charge ) is included in your assessable income for the ^* current year (or for the earlier income year) because of the balancing adjustment.

To find out about balancing adjustments, see Subdivision 40-D .

Effect on section 20-35

20-45(2)    
In applying section 20-35 , treat each of the following as reduced by the balancing charge:

(a) the amount of the loss or outgoing;

(b) the total of what you can deduct for the loss or outgoing for the ^* current year, or have deducted or can deduct for an earlier income year.

Effect on section 20-40

20-45(3)    
In applying the method statement in subsection 20-40(2) , reduce the total deductions for the loss or outgoing by the balancing charge.

Example:

Continuing the example in subsection 20-40(2) : at the start of the 2005-06 income year, the company:

• receives a further $10,000 as recoupment; and

• sells the depreciating asset for $75,000.

As a result of the sale, a balancing adjustment of $5,000 is included under section 40-285 in the company's assessable income for that income year.

How much of the recoupment amount received in the 2005-06 income year is assessable for that income year?

Applying the method statement in subsection 20-40(2) :

After step 1: the total assessable recoupment is $30,000 (received during 2002-03 and 2005-06).

After step 2: the recoupment already assessed is $20,000 (for 2002-03 and 2003-04).

After step 3: the unassessed recoupment is:

total assessable recoupment minus recoupment already assessed, i.e. $30,000 minus $20,000 = $10,000.

After step 4: the total deductions for the loss or outgoing are $30,000 ($10,000 for each of 2002-03, 2004-04 and 2004-05), reduced by $5,000 (the amount included in assessable income for the balancing adjustment), i.e. $25,000.

After step 5: the outstanding deductions are:

total deductions for the loss or outgoing minus recoupment already assessed, i.e. $25,000 minus $20,000 = $5,000.

After step 6: the unassessed recoupment (step 3) is greater than outstanding deductions (step 5), so the amount of the outstanding deductions is included in assessable income, i.e. $5,000.

SECTION 20-50   If the expense is only partially deductible  

20-50(1)    
This section extends the operation of section 20-35 or 20-40 (as appropriate) to a case where the total of what you can deduct under a provision (the deduction provision ) for a loss or outgoing is limited to a proportion of the loss or outgoing.

20-50(2)    
If you receive an ^* assessable recoupment of the loss or outgoing, section 20-35 or 20-40 applies as if:

(a) you had incurred only that proportion of the loss or outgoing, but could deduct the whole of that proportion under the deduction provision; and

(b) you had received only that proportion of the recoupment.

Example:

You incur expenditure of $500. A provision listed in section 20-30 entitles you to deduct 10% of the expenditure ($50) over 5 years. This means you can deduct $10 in each of the 5 years.

You recoup $300 of the expenditure. This section treats you as receiving only 10% of the recoupment. Therefore, $30 is dealt with by section 20-40 .

SECTION 20-55   Meaning of previous recoupment law  

20-55(1)    

Previous recoupment law means a provision of the Income Tax Assessment Act 1936 listed in this table.

Previous recoupment law
Item	Provision	What kind of expense the provision relates to:
1	Former 26(j) (so far as it relates to an amount received for or in respect of a loss or outgoing that is a deduction)	a loss or outgoing that is a deduction
.
2	Former 26(k)	embezzlement or larceny by an employee
.
3	Former 63(3)	bad debts
.
4	Former 69(8)	tax-related expenses
.
5	Former 70A(5)	mains electricity connection expenditure
.
6	Former 72(2) (so far as it relates to a refund of an amount you have deducted or can deduct)	rates or taxes
.
6A	Former 72A(4)(a) and (aa)	petroleum resource rent tax
.
7	Former 74(2)	election expenses, Commonwealth and State elections

20-55(2)    

Former section 330-350 of this Act is also a previous recoupment law .

What if you can deduct a loss or outgoing incurred by another entity?

SECTION 20-60  

20-60   If you are the only entity that can deduct an amount for the loss or outgoing  
This Subdivision applies in a different way if:

(a) an entity (other than you) incurs a loss or outgoing; and

(b) you can deduct the whole of the loss or outgoing for an income year, or you can deduct amounts for the loss or outgoing over 2 or more income years; and

(c) no other entity can deduct an amount for the loss or outgoing; and

(d) the entity that incurred the loss or outgoing receives one or more amounts as ^* recoupment of the loss or outgoing.

This Subdivision (except this section and section 20-65 ) applies as if you had incurred the loss or outgoing and had also received the ^* recoupment.

SECTION 20-65   If 2 or more entities can deduct amounts for the loss or outgoing  

20-65(1)    
Special rules apply if:

(a) an entity (the first entity ) incurs a loss or outgoing; and

(b) 2 or more entities (the deducting entities , which may include the first entity) have deducted or can deduct amounts for the loss or outgoing (whether for the same income year or for different income years); and

(c) the first entity receives one or more amounts as ^* recoupment of the loss or outgoing.

20-65(2)    
This Subdivision (except this section and section 20-60 ) applies as if the first entity and the deducting entities together constituted a single entity (the notional entity ) that had:

(a) incurred the loss or outgoing; and

(b) received the amount or amounts as ^* recoupment; and

(c) included in its assessable income any amount included in the assessable income of any of the deducting entities under a ^* previous recoupment law or this Subdivision (except this section).

20-65(3)    
If because of subsection (2) the notional entity's assessable income for an income year (the assessment year ) would include an amount under this Subdivision (the assessable amount ), the amount reverses in the assessment year the deductions for the loss or outgoing, in accordance with the rules in subsection (5).

20-65(4)    
The assessable income of each deducting entity for the assessment year includes the total amounts (if any) by which that entity's actual deductions for the loss or outgoing are reversed in that income year.

20-65(5)    
Deductions for the loss or outgoing are reversed in the assessment year as follows:

(a) the amounts by which deductions are reversed total the assessable amount (unless all the deductions have been reversed);

(b) a deduction for an income year is not reversed until all deductions for earlier income years have been reversed;

(c) a deduction is not reversed in the assessment year to the extent that it has already been reversed in an earlier year;

(d) if each of 2 or more entities can deduct an amount for the loss or outgoing for the same income year, those deductions are reversed in the assessment year by amounts proportionate to the amounts of the deductions.

Subdivision 20-B - Disposal of a car for which lease payments have been deducted  

SECTION 20-100   What this Subdivision is about  

SECTION 20-105   Map of this Subdivision  

20_105 Map of this Subdivision
        

The usual case

SECTION 20-110   Disposal of a leased car for profit  

20-110(1)    
Your assessable income includes the ^* profit you make on disposing of a ^* car if:

(a) the car was designed mainly for carrying passengers; and

(b) the car was leased to you and has been leased to no-one else; and

(c) you or another entity can deduct for the income year any of the lease payments paid or payable by you, or have deducted or can deduct any of them for an earlier income year, under this Act; and

(d) you acquired the car from the lessor.

Note 1:

Even if subsection (1) does not apply, an amount may still be included in your assessable income:

• under section 20-125 (which deals with more complicated cases that may involve your associate); or

• if you disposed of an interest in a car (rather than the car itself): see section 20-160 .

Note 2:

In some cases you do not include an amount in your assessable income:

• if there has been an earlier disposal of the car for market value: see section 20-135 ; or

• if you inherited the car: see section 20-145 ; or

• if the car was let on hire in the circumstances set out in section 20-155 .

20-110(2)    
However, the amount included cannot exceed the smaller of these limits:

(a) the total lease payments for the lease that you or another entity have deducted or can deduct under this Act for an income year;

(b) the amount of ^* notional depreciation for the lease period.

Note 1:

If, because of more than one lease of the car, there is more than one way to work out the amount to be included, you only include the largest amount: see section 20-130 .

Note 2:

In some cases you reduce the amount to be included:

• if there has been an earlier disposal of the car, or of an interest in it: see section 20-140 ; or

• if another provision requires you to include an amount because of the disposal: see section 20-150 .

20-110(3)    
You increase those limits if you have previously leased the ^* car from the same lessor, or from an ^* associate of that lessor.

You increase the first limit by the total lease payments for each previous lease of that kind that you or another entity have deducted or can deduct under this Act for an income year.

You increase the second limit by the amount of ^* notional depreciation for the period of each previous lease of that kind.

SECTION 20-115   Working out the profit on the disposal  

20-115(1)    
The profit on the disposal is the amount by which the ^* consideration receivable for the disposal exceeds:

• the amount it cost you to acquire the ^* car;

plus:

• any capital expenditure you incurred on the car after acquiring it.

20-115(2)    

The consideration receivable is worked out using this table:

Consideration receivable for the disposal of the car
Item	In this situation:	the consideration receivable is:
1	you sell the *car for an amount specific to it	the proceeds of the sale, less the expenses of the sale
.
2	you sell the *car with other property without a specific amount being allocated to it	the part of the total proceeds of the sale that is reasonably attributable to the car less the part of the reasonably attributable expenses of the sale
.
3	you trade the *car in and buy another car	the value of the trade-in, plus any other consideration you receive
.
4	you sell the *car and another entity buys another car	the amount by which the cost of the other car is reduced by the sale, plus any other consideration you receive
.
5	you dispose of the *car to an insurer because it is lost or destroyed	the amount or value received or receivable under the insurance policy

20-115(3)    

However, if the disposal of the ^* car is a ^* taxable supply, the consideration receivable does not include an amount equal to the ^* GST payable on the supply.

SECTION 20-120  

20-120   Meaning of notional depreciation  

This is how to work out the notional depreciation for a lease period: Method statement

Note 1:

The notional depreciation for the lease period represents:

• the amount you could have deducted for the car ' s decline in value if, instead of leasing it, you had owned it and used it solely for the purpose of producing assessable income for that period;

adjusted by:

• the balancing adjustment you would have made if you had disposed of the car at the end of that period.

Note 2:

The car ' s cost to the lessor is worked out differently if the lessor acquired it in the 1996-97 income year or an earlier income year: see section 20-105 of the Income Tax (Transitional Provisions) Act 1997 .

Note 3:

The car ' s termination value is worked out differently if the lessor disposed of it in the 1996-97 income year or an earlier income year: see section 20-110 of the Income Tax (Transitional Provisions) Act 1997 .

The associate case

SECTION 20-125   Disposal of a leased car for profit  

20-125(1)    
Your assessable income includes the ^* profit you make on disposing of a ^* car if:

(a) section 20-110 does not include an amount in your assessable income because of the disposal; and

(b) the car was designed mainly for carrying passengers; and

(c) the car was leased to you or your ^* associate; and

(d) you, your associate or another entity can deduct for the income year any of the lease payments paid or payable by the lessee, or have deducted or can deduct any of them for an earlier income year, under this Act; and

(e) either:

(i) you, your associate, or entities including you or your associate, acquired the car from the lessor; or

(ii) another entity acquired the car from the lessor under an ^* arrangement that enabled you or your associate to acquire the car.

Note 1:

Even if subsection (1) does not apply, an amount may be included in your assessable income if you disposed of an interest in a car (rather than the car itself): see section 20-160 .

Note 2:

In some cases you do not include an amount in your assessable income:

• if there has been an earlier disposal of the car for market value: see section 20-135 ; or

• if you inherited the car: see section 20-145 ; or

• if the car was let on hire in the circumstances set out in section 20-155 .

20-125(2)    
However, the amount included cannot exceed the smallest of these limits:

(a) the total lease payments for the lease that you, your ^* associate or another entity have deducted or can deduct under this Act for an income year;

(b) the amount of ^* notional depreciation for the lease period;

(c) if an entity other than you, or if entities including you, acquired the ^* car from the lessor - the amount by which the ^* consideration receivable for the disposal of the car by you exceeds the total of:

(i) the car ' s cost to that entity, or those entities; and

(ii) any capital expenditure that entity, or any of those entities, incurred on the car after that acquisition and before you acquired it.

Note 1:

If, because of more than one lease of the car, there is more than one way to work out the amount to be included, you only include the largest amount: see section 20-130 .

Note 2:

In some cases you reduce the amount to be included:

• if there has been an earlier disposal of the car, or of an interest in it: see section 20-140 ; or

• if another provision requires you to include an amount because of the disposal: see section 20-150 .

Example:

Your associate leases a car for 5 years and then acquires it from the lessor for $4,000. Your associate sells it to you for $3,000. You sell it for $10,000.

Your profit is $10,000 (the consideration receivable) less $3,000 (the car ' s cost to you) = $7,000.

The first 2 limits on the amount to be included in your assessable income are $9,000 (total deductible lease payments for the lease) and $8,000 (notional depreciation for the lease period).

Since your associate acquired the car from the lessor, the third limit is $10,000 (the consideration receivable by you) less $4,000 (the car ' s cost to the associate) = $6,000.

The amount you include in your assessable income cannot exceed the smallest of the limits. So, you do not include your profit of $7,000. Instead, you include $6,000 (the smallest of the limits).

20-125(3)    
You increase the first 2 limits if you, or your associate, have previously leased the ^* car from the same lessor, or from an associate of that lessor.

You increase the first limit by the total lease payments for each previous lease of that kind that you, your ^* associate or another entity have deducted or can deduct under this Act for an income year.

You increase the second limit by the amount of ^* notional depreciation for the period of each previous lease of that kind.

Successive leases

SECTION 20-130  

20-130   Successive leases  

If, because of 2 or more leases of the ^* car, there are different amounts that could be included in your assessable income because of the disposal, only the largest of those amounts is included.

Previous disposals of the car

SECTION 20-135  

20-135   No amount included if earlier disposal for market value  
You do not include an amount in your assessable income because of the disposal if, after the lessor disposed of the ^* car and before you disposed of it, an entity other than you disposed of the car and:

(a) the ^* consideration receivable for that disposal was at least the ^* market value of the car at the time of that disposal; or

(b) because of that disposal, that market value was included, or an amount worked out using that market value was included, in the entity's assessable income under this Act.

SECTION 20-140  

20-140   Reducing the amount to be included if there has been an earlier disposal  

Each limit on the amount to be included in your assessable income because of your disposal of the ^* car is reduced if, after the lease period began and before your disposal, the car, or an interest in it, was disposed of in one of these situations:

Reducing each limit on the amount to be included
Item	In this situation:	reduce each limit by:
1	Section 20-110 or 20-125 included an amount in your assessable income in respect of such an earlier disposal by you	that amount
.
2	Section 20-110 or 20-125 included an amount in another entity's assessable income in respect of such an earlier disposal by the other entity	that amount
.
3	Section 20-110 or 20-125 would have included an amount in your assessable income in respect of such an earlier disposal by you but for the operation of section 20-145	that amount
.
4	Section 20-110 or 20-125 would have included an amount in another entity's assessable income in respect of such an earlier disposal by the other entity but for the operation of section 20-145	that amount
.
5	Section 20-150 reduced the amount to be included in your assessable income in respect of such an earlier disposal by you	the amount of the reduction
.
6	Section 20-150 reduced the amount to be included in another entity's assessable income in respect of such an earlier disposal by the other entity	the amount of the reduction

Examples:

Your associate leases a car for 5 years and then acquires it. Your associate disposes of it to you and section 20-110 includes $500 in your associate's assessable income.

You later dispose of the car.

In working out the amount to include in your assessable income for your disposal, you can reduce each limit in subsection 20-125(2) by $500 because the disposal by your associate occurred after the lease period began.

Contrast this case:

You lease a car for 5 years and then acquire it. You dispose of it to another entity and section 20-110 includes $1,000 in your assessable income.

You lease the car from that entity for 2 years and then acquire it. You later dispose of it.

In working out the amount to include in your assessable income in respect of the second lease, you cannot reduce each limit in subsection 20-110(2) by $1,000 because the first disposal did not occur after the start of that lease.

Note:

If the earlier disposal occurred in the 1996-97 income year or an earlier income year, each limit may be able to be reduced by a further amount: see section 20-115 of the Income Tax (Transitional Provisions) Act 1997 .

Miscellaneous rules

SECTION 20-145  

20-145   No amount included if you inherited the car  

You do not include an amount in your assessable income because of the disposal if you inherited the ^* car.

SECTION 20-150  

20-150   Reducing the amount to be included if another provision requires you to include an amount for the disposal  

The amount to be included in your assessable income because of the disposal is reduced by any amount that another provision of this Act (except sections 40-285 and 40-370 ) requires you to include in your assessable income because of the disposal.

Note:

Sections 40-285 and 40-370 are about including an amount after making a balancing adjustment on the disposal of a car.

SECTION 20-155  

20-155   Exception for particular cars taken on hire  

This Subdivision does not apply to these kinds of leases:

(a) letting a ^* car on hire under a ^* hire purchase agreement; or

(b) letting a ^* car on hire under an agreement of a kind ordinarily entered into by people who take cars on hire intermittently on an hourly, daily, weekly or monthly basis.

SECTION 20-157  

20-157   Exception for small business entities  

This Subdivision does not apply to you if, at any time in the income year in which you disposed of the ^* car, it was allocated to a pool of yours under Division 328 .

Disposals of interests in a car: special rules apply

SECTION 20-160   Disposal of an interest in a car  

20-160(1)    
This Subdivision applies to the disposal of an interest in a ^* car in almost the same way as it does to the disposal of the car itself. The differences are set out below.

20-160(2)    
Your assessable income includes so much of your ^* profit on the disposal as is reasonable. The limits in subsections 20-110(2) and 20-125(2) do not apply.

20-160(3)    
The cost of the interest to you is taken to be a reasonable amount.

20-160(4)    
Sections 20-135 and 20-140 do not apply to the disposal.

Note 1:

Section 20-135 says that you do not include an amount if there has been an earlier disposal of the car for market value.

Note 2:

Section 20-140 allows you to reduce the amount to be included if there has been an earlier disposal of the car.

20-160(5)    
Section 20-145 applies to the disposal if you inherited either the interest or the ^* car itself.

Note:

Section 20-145 says that you do not include an amount if you inherited the car.

(Repealed) Division 22 - Amounts you must repay are not assessable income  

PART 2-5 - RULES ABOUT DEDUCTIBILITY OF PARTICULAR KINDS OF AMOUNTS  

Division 25 - Some amounts you can deduct  

SECTION 25-1   What this Division is about  

Operative provisions  

SECTION 25-5   Tax-related expenses  

25-5(1)    

You can deduct expenditure you incur to the extent that it is for:

(a) managing your *tax affairs; or

(b) complying with an obligation imposed on you by a *Commonwealth law, insofar as that obligation relates to the *tax affairs of an entity; or

(c) the *general interest charge or the *shortfall interest charge; or

(ca) a penalty under Subdivision 162-D of the *GST Act; or

(cb) levy under the Major Bank Levy Act 2017 ; or

(d) obtaining a valuation in accordance with section 30-212 or 31-15 .

Note 1:

To find out whether a trustee of a deceased estate can deduct expenditure under this section, see subsection 69(7) of the Income Tax Assessment Act 1936 .

Note 2:

If you receive an amount as recoupment of the expenditure, the amount may be included in your assessable income: see Subdivision 20-A .

No deduction for certain expenditure

25-5(2)    
You cannot deduct under subsection (1):

(a) *tax; or

(b) an amount withheld or payable under Part 2-5 or Part 2-10 in Schedule 1 to the Taxation Administration Act 1953 ; or

(c) expenditure for *borrowing money (including payments of interest) to pay an amount covered by paragraph (a) or (b); or

(d) expenditure for a matter relating to the commission (or possible commission) of an offence against an *Australian law or a *foreign law; or

(e) a fee or commission for advice about the operation of a *Commonwealth law relating to taxation, unless that advice is provided by a *recognised tax adviser.

No deduction for expenditure excluded from general deductions

25-5(3)    
You cannot deduct expenditure under subsection (1) to the extent that a provision of this Act (except section 8-1 ) expressly prevents or limits your deducting it under section 8-1 (about general deductions). It does not matter whether the provision specifically refers to section 8-1 .

No deduction for capital expenditure

25-5(4)    
You cannot deduct capital expenditure under subsection (1). However, for this purpose, expenditure is not capital expenditure merely because the *tax affairs concerned relate to matters of a capital nature.

Example:

Under this section, you can deduct expenditure you incur in applying for a private ruling on whether you can depreciate an item of property.

Use of property taken to be for income producing purpose

25-5(5)    
Under some provisions of this Act it is important to decide whether you used property for the *purpose of producing assessable income. For provisions of that kind, your use of property is taken to be for that purpose insofar as you use the property for:

(a) managing your *tax affairs; or

(b) complying with an obligation imposed on you by a *Commonwealth law, insofar as that obligation relates to the *tax affairs of another entity.

Example:

You buy a computer to prepare your tax returns. The expenditure you incur in buying the computer is capital expenditure and cannot be deducted under this section.

However, to the extent that you use the computer in preparing your income tax return, you will be able to deduct the decline in value of your computer under Division 40 . That is because, under this subsection, the computer is property that you are taken to use for the purpose of producing assessable income.

25-5(6)    
If another provision of this Act expressly provides that a particular use of property is not taken to be for the *purpose of producing assessable income, that provision overrides subsection (5).

No double deduction for general interest charge on a running balance account

25-5(7)    

If you deduct *general interest charge that applies to an RBA deficit debt, you can ' t also deduct the corresponding general interest charge on *tax debts that have been allocated to the RBA.

Note:

RBAs (running balance accounts) are dealt with in Part IIB of the Taxation Administration Act 1953 .

Expenditure by trustee of deceased estate

25-5(8)    

If:

(a) after you die, the trustee of your deceased estate incurs expenditure; and

(b) had you incurred the expenditure before you died, you could have deducted it under subsection (1);

for the purposes of assessing the trustee for the income year in which you died, the expenditure is a deduction under that subsection.

25-7   (Repealed) SECTION 25-7 Advice about family tax benefit  
(Repealed by No 56 of 2010)

SECTION 25-10   Repairs  

25-10(1)    

You can deduct expenditure you incur for repairs to premises (or part of premises) or a ^* depreciating asset that you held or used solely for the ^* purpose of producing assessable income.

Property held or used partly for that purpose

25-10(2)    
If you held or used the property only partly for that purpose, you can deduct so much of the expenditure as is reasonable in the circumstances.

No deduction for capital expenditure

25-10(3)    
You cannot deduct capital expenditure under this section.

SECTION 25-15  

25-15   Amount paid for lease obligation to repair  

You can deduct an amount that you pay for failing to comply with a lease obligation to make repairs to premises if you use or have used the premises for the ^* purpose of producing assessable income.

Note:

The amount is assessable income of the entity to which you pay it: either as ordinary income under section 6-5 or because it is included by section 15-25 .

SECTION 25-20   Lease document expenses  

25-20(1)    
You can deduct expenditure you incur for preparing, registering or stamping:

(a) a lease of property; or

(b) an assignment or surrender of a lease of property;

if you have used or will use the property solely for the ^* purpose of producing assessable income.

Property used partly for that purpose

25-20(2)    
If you have used, or will use, the leased property only partly for that purpose, you can deduct the expenditure to the extent that you have used, or will use, the leased property for that purpose.

SECTION 25-25   Borrowing expenses  

25-25(1)    
You can deduct expenditure you incur for ^* borrowing money, to the extent that you use the money for the ^* purpose of producing assessable income. In most cases the deduction is spread over the ^* period of the loan.

For the cases where the deduction is not spread, see subsection (6).

Note:

Your deductions under this section may be reduced if any of your commercial debts have been forgiven in the income year: see Subdivision 245-E .

Income year when money used solely for the purpose of producing assessable income

25-25(2)    
You can deduct for an income year the maximum amount worked out under subsection (4) if you use the ^* borrowed money during that income year solely for the ^* purpose of producing assessable income.

Example:

In 1997-98 you borrow $100,000 and incur expenditure of $1,500 for the borrowing. You use the money to buy a house. Throughout 1998-99 you rent the house to a tenant. You can deduct for the expenditure for 1998-99 the maximum amount worked out under subsection (4).

Income year when borrowed money used partly for that purpose

25-25(3)    
If you use the money only partly for that purpose during that income year, you can deduct the proportion of that maximum amount that is appropriate having regard to the extent that youused the *borrowed money for that purpose.

Note:

You cannot deduct anything for that income year if you do not use the money for that purpose at all during that income year.

Maximum deduction for an income year

25-25(4)    

You work out as follows the maximum amount that you can deduct for the expenditure for an income year: Method statement

Example:

To continue the example in subsection (2): suppose the original period of the loan is 4 years starting on 1 September 1997. What is the maximum amount you can deduct for the expenditure for 1997-98?

Applying the method statement:

After Step 1: the remaining expenditure is $1,500 (the amount of the expenditure).

After Step 2: the remaining loan period is 4 years from 1 September 1997 (1,461 days).

After Step 3: the result is $1,500 divided by 1,461 = $1.03.

After Step 4: the result is $1.03 multiplied by 302 days = $310.06.

Suppose you repay the loan early, on 31 December 1998. What is the maximum amount you can deduct for the expenditure for 1998-99?

Applying the method statement:

After Step 1: the remaining expenditure is $1,500 (the amount of the expenditure) reduced by $310.06 (the maximum amount you can deduct for 1997-98) = $1,189.94.

After Step 2: the remaining loan period is the period from 1 July 1998 to 31 December 1998 (183 days).

After Step 3: the result is $1,189.94 divided by 183 days = $6.50.

After Step 4: the result is $6.50 multiplied by 183 days = $1,189.94.

Meaning of period of the loan

25-25(5)    
The period of the loan is the shortest of these periods:

(a) the period of the loan as specified in the original loan contract;

(b) the period starting on the first day on which the money was borrowed and ending on the day the loan is repaid;

(c) 5 years starting on the first day on which the money was borrowed.

When deduction not spread

25-25(6)    
If the total of the following is $100 or less:

(a) each amount of expenditure you incur in an income year for ^* borrowing money you use during that income year solely for the ^* purpose of producing assessable income;

(b) for each amount of expenditure you incur in that income year for borrowing money you use during that income year only partly for that purpose - the proportion of that amount that is appropriate having regard to the extent that you use the money during that income year for that purpose;

you can deduct for the income year:

(c) each amount covered by paragraph (a); and

(d) each proportion covered by paragraph (b).

SECTION 25-30   Expenses of discharging a mortgage  

Mortgage for borrowed money

25-30(1)    

You can deduct expenditure you incur to discharge a mortgage that you gave as security for the repayment of money that you ^* borrowed if you used the money solely for the ^* purpose of producing assessable income.

Mortgage for property bought

25-30(2)    
You can deduct expenditure you incur to discharge a mortgage that you gave as security for the payment of the whole or part of the purchase price of property that you bought if you used the property solely for the ^* purpose of producing assessable income.

Money or property used partly for that purpose

25-30(3)    
If you used the money you ^* borrowed, or the property you bought, only partly for the ^* purpose of producing assessable income, you can deduct the expenditure to the extent that you used the money or property for that purpose.

No deduction for payments of principal or interest

25-30(4)    
You cannot deduct payments of principal or interest under this section.

SECTION 25-35   Bad debts  

25-35(1)    
You can deduct a debt (or part of a debt) that you write off as bad in the income year if:

(a) it was included in your assessable income for the income year or for an earlier income year; or

(b) it is in respect of money that you lent in the ordinary course of your ^* business of lending money.

Note:

If a bad debt is in respect of a payment that is required to be made under a qualifying security (within the meaning of Division 16E of Part III of the Income Tax Assessment Act 1936 ): see subsection 63(1A) of that Act.

Writing off a debt you have bought

25-35(2)    
You can deduct a debt that you write off as bad in the income year if you bought the debt in the ordinary course of your ^* business of lending money. However, you cannot deduct more than the expenditure you incurred in buying the debt.

Writing off part of a debt you have bought

25-35(3)    
You can deduct a part of a debt if:

(a) you write off that part as bad in the income year; and

(b) you bought the debt in the ordinary course of your ^* business of lending money.

25-35(4)    
However, the maximum that you can deduct under subsection (3) for one or more income years is the amount (if any) by which:

• the expenditure you incurred in buying the debt;

exceeds:

• so much of the debt as has not yet been written off as bad.

Limit on deductions for bad debts under leases of luxury cars

25-35(4A)    

There is a limit to how much you can deduct under this section for debts you write off that relate to *luxury car lease payments that have become or will become liable to be made under a lease of a ^* car to which Division 242 (about luxury car leases) applies.

25-35(4B)    

The most you can deduct for an income year is:

• the interest for the notional loan you are taken to have made to the lessee;

reduced by:

• each amount that you have deducted, or can deduct, for an earlier income year under this section (or section 63 of the Income Tax Assessment Act 1936 ) for debts relating to *luxury car lease payments that have become or will become liable to be made under the lease.

25-35(4C)    
(Repealed by No 79 of 2010 )

Special rules affecting deductions under this section

25-35(5)    

The rules described in the table may affect your entitlement to deductions under this section, or may result in a deduction being reversed.

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 .

Rules affecting deductions for bad debts
Item	For the rules about this situation:	See:
1	A company cannot deduct a bad debt if there has been a change in ownership or control of the company and the company has not satisfied the business continuity test.	Subdivisions 165-C and 166-C
.
2	A company cannot deduct a bad debt in various other cases that may involve trafficking in bad debts.	Subdivision 175-C and section 63D
.
3	A deduction under this section is reduced if the debt is forgiven and the debtor and creditor are companies under common ownership and agree for the creditor to forgo the deduction to a specified extent.	section 245-90
.
4	If you receive an amount as recoupment of a bad debt that you can deduct under this section, the amount may be included in your assessable income.	Subdivision 20-A
.
5	Certain trusts cannot deduct a bad debt if there has been a change in ownership or control or an abnormal trading in their units	Divisions 266 and 267 in Schedule 2F
.
6	An entity that used to be a member of a consolidated group or MEC group can deduct a bad debt that used to be owed to a member of the group only if certain conditions are met	Subdivisions 709-D and 719-I

Note:

Subsections 230-180(3) , (5) and (6) and 230-195(3) , (5) and (6) provide that in certain circumstances a deduction for a loss in relation to a financial arrangement is to be treated, for the purposes of this Act, as a deduction of a bad debt. The rules referred to in this subsection apply to that deduction.

SECTION 25-40   Loss from profit-making undertaking or plan  

25-40(1)    
You can deduct a loss arising from the carrying on or carrying out of a profit-making undertaking or plan if any profit from that plan would have been included in your assessable income by section 15-15 (which is about profit-making undertakings and plans).

When section does not apply

25-40(2)    
You cannot deduct a loss under subsection (1) if the loss arises in respect of the sale of property acquired on or after 20 September 1985.

Note:

If you sell property you acquired before 20 September 1985 for profit-making by sale, you may be able to deduct a loss on the sale: see section 52 of the Income Tax Assessment Act 1936 .

Notice to Commissioner

25-40(3)    
You can deduct a loss under subsection (1), insofar as it arises in respect of property, only if:

(a) you notified the Commissioner that you acquired the property for the purpose of profit-making by sale or for the carrying on or carrying out of any profit-making undertaking or plan (however described); or

(b) the Commissioner is satisfied that you acquired the property for either of those purposes.

When notice must have been given

25-40(4)    
The notice must have been given at or before the time you lodged your ^* income tax return:

(a) for the income year in which you acquired the property; or

(b) if you were not required to lodge an income tax return for that income year - for the first income year after that income year for which you were required to lodge one.

SECTION 25-45  

25-45   Loss by theft etc.  

You can deduct a loss in respect of money if:

(a) you discover the loss in the income year; and

(b) the loss was caused by theft, stealing, embezzlement, larceny, defalcation or misappropriation by your employee or ^* agent (other than an individual you employ solely for private purposes); and

(c) the money was included in your assessable income for the income year, or for an earlier income year.

Note:

If you receive an amount as recoupment of the loss, the amount may be included in your assessable income: see Subdivision 20-A .

SECTION 25-47   Misappropriation where a balancing adjustment event occurs  

25-47(1)    
You can deduct an amount if:

(a) a *balancing adjustment event occurs for a *depreciating asset you *held; and

(b) your employee or *agent misappropriates (whether by theft, embezzlement, larceny or otherwise) all or part of the amount applicable to you under:

(i) item 8 of the table in subsection 40-300(2) ; or

(ii) item 1, 3, 4 or 6 of the table in subsection 40-305(1) ;

in relation to the balancing adjustment event.

Note 1:

The amount applicable to you under subsection 40-300(2) or 40-305(1) may be the market value of an asset or of a non-cash benefit.

Note 2:

If you receive an amount as recoupment of the amount misappropriated, the amount may be included in your assessable income: see Subdivision 20-A .

25-47(2)    
The amount you can deduct is so much of the amount misappropriated as represents an amount applicable to you under item 8 of the table in subsection 40-300(2) or item 1, 3, 4 or 6 of the table in subsection 40-305(1) in relation to the *balancing adjustment event.

25-47(3)    
You can deduct the amount for the income year in which the misappropriation happens.

25-47(4)    
You must reduce the amount you can deduct under this section if your deductions for the asset have been reduced under section 40-25 because of use for a purpose other than a *taxable purpose. The reduction is by the same proportion you reduce the balancing adjustment amount for the asset under section 40-290 .

25-47(4A)    

You must further reduce the amount you can deduct under this section if your deductions for the asset have been reduced under section 40-27 (about second-hand assets in residential property). The reduction is by the same proportion you reduce the balancing adjustment amount for the asset under section 40-291 .

25-47(5)    
Section 170 of the Income Tax Assessment Act 1936 does not prevent the amendment of an assessment for the purposes of giving effect to this section for an income year if:

(a) you discover the misappropriation after you lodged your *income tax return for the income year; and

(b) the amendment is made at any time during the period of 4 years starting immediately after you discover the misappropriation.

SECTION 25-50   Payments of pensions, gratuities or retiring allowances  

25-50(1)    
You can deduct a payment of a pension, gratuity or retiring allowance that you make to:

(a) an employee; or

(b) a former employee; or

(c) a dependant of an employee or a former employee.

25-50(2)    
However, you can deduct it only to the extent that it is made in good faith in consideration of the past services of the employee, or former employee, in any ^* business that you carried on for the purpose of gaining or producing assessable income.

25-50(3)    
You cannot deduct a payment under this section if you can deduct it under any other provision of this Act.

SECTION 25-55   Payments to associations  

25-55(1)    
You can deduct a payment you make for membership of a trade, business or professional association.

Note:

Alternatively, you can deduct the expense under section 8-1 (which is about general deductions) if you satisfy the requirements of that section.

Maximum amount - $42

25-55(2)    
However, $42 is the maximum amount you can deduct under this section for the payments that you make in the income year to any one association.

If you deduct under section 8-1

25-55(3)    
If you deduct a payment under section 8-1 (which is about general deductions) instead of this section:

(a) the payment does not count towards the $42 limit; and

(b) the amount that you can deduct for the payment is not limited to $42.

SECTION 25-60   Parliament election expenses  

25-60(1)    
You can deduct expenditure you incur in contesting an election for membership of:

(a) the Parliament of the Commonwealth; or

(b) the Parliament of a State; or

(c) the Legislative Assembly for the Australian Capital Territory; or

(d) the Legislative Assembly of the Northern Territory of Australia.

Note 1:

Entertainment expenses are excluded: see section 25-70 .

Note 2:

If you receive an amount as recoupment of the expenditure, the amount may be included in your assessable income: see Subdivision 20-A .

25-60(2)    
(Repealed by No 47 of 1998)

SECTION 25-65   Local government election expenses  

25-65(1)    
You can deduct expenditure you incur in contesting an election for membership of a *local governing body, but you cannot deduct more than $1,000 per election. You deduct the expenditure for the income year in which you incur it.

25-65(2)    
However, you can deduct more than the $1,000 limit if:

(a) you have received an amount as *recoupment of the expenditure; and

(b) some or all of that amount is included in your assessable income for an income year; and

(c) the total of your deductions for the election would be less than the $1,000 limit if you disregarded so much (the assessed recoupment ) of the expenditure as equals the amount so included in your assessable income.

In that case:

(d) the assessed recoupment is disregarded in applying the $1,000 limit; and

(e) the further amount that you can deduct because of paragraph (d) is deducted for the income year referred to in paragraph (b).

Example:

Chris is elected to the Bunyip Shire Council. In the 2007-08 income year he incurs expenditure of $1,200 in contesting the election, of which he deducts $1,000 (the limit under subsection (1)).

In 2008-09, Chris receives $360 as an assessable recoupment of the expenditure. $300 of that is included in his assessable income by section 20-35 (as extended by section 20-50 ).

Because of the assessable recoupment, $300 of the expenditure is disregarded under paragraph (2)(d) in applying the $1,000 limit. As a result, Chris's deductions are treated as being only $700, which is less than the limit. This does not affect his original deduction for 2007-2008, but it means he can deduct the previously undeducted $200, for 2008-09 (see paragraph (2)(e)).

This triggers a further application of section 20-35 (as extended by section 20-50 ) to include the remaining $60 of the assessable recoupment in Chris's assessable income for 2008-09. His total deductions (net of recoupment included in assessable income) come to $840, which is the same as his original expenditure (net of recoupment).

Note:

An amount you receive as recoupment of expenditure may be included in your assessable income as an assessable recoupment under Subdivision 20-A , as ordinary income under section 6-5 or as statutory income under some other provision.

SECTION 25-70   Deduction for election expenses does not extend to entertainment  

25-70(1)    

To the extent that you incur expenditure in respect of providing ^* entertainment, you cannot deduct it under section 25-60 or 25-65 .

25-70(2)    
However, subsection (1) does not stop you deducting expenditure to the extent that you incur it in respect of:

(a) providing ^* entertainment that is available to the public generally; or

(b) providing food or drink to yourself, unless it would be concluded that you have a purpose of enabling or facilitating ^* entertainment to be provided to someone else.

SECTION 25-75   Rates and land taxes on premises used to produce mutual receipts  

25-75(1)    
An entity can deduct these amounts it pays for premises:

(a) rates which are annually assessed;

(b) land tax imposed under a ^* State law or ^* Territory law.

But only if it uses the premises:

(c) for the purpose of producing mutual receipts; or

(d) in carrying on a ^* business for the purpose of producing mutual receipts; or

(e) for the purpose of producing amounts to which section 59-35 applies (amounts that would be mutual receipts but for prohibition on distributions to members or issue of MCIs); or

(f) in carrying on a ^* business for the purpose of producing amounts to which section 59-35 applies.

Note:

If the entity receives an amount as recoupment of the rates or land tax, the amount may be included in its assessable income: see Subdivision 20-A

When premises used only for deductible purposes

25-75(2)    
The entity can deduct the whole of the rates or land tax if it uses the premises only in one or more of these ways:

(a) for the purpose of producing mutual receipts;

(b) in carrying on a ^* business for the purpose of producing mutual receipts;

(c) for the ^* purpose of producing assessable income.

When premises used partly for deductible purposes

25-75(3)    
If the entity uses the premises partly in one or more of the ways referred to in subsection (2) and partly in some other way, it can deduct the rates or land tax to the extent that it uses the premises in one or more of the ways referred to in that subsection.

No deduction under section 8-1

25-75(4)    
The entity cannot deduct the rates or land tax under section 8-1 (which is about general deductions).

SECTION 25-85   Certain returns in respect of debt interests  

25-85(1)    
This section deals with a *return that an entity pays or provides on a *debt interest.

25-85(2)    
The *return is not prevented from being a *general deduction for an income year under section 8-1 merely because:

(a) the return is *contingent on aspects of the economic performance (whether past, current or future) of:

(i) the entity or a part of the entity's activities; or

(ii) a ^* connected entity of the entity or a part of the activities of a connected entity of the entity; or

(b) the return secures a permanent or enduring benefit for the entity or a connected entity of the entity.

25-85(3)    
If the *return is a *dividend, the entity can deduct the return to the extent to which it would have been a *general deduction under section 8-1if:

(a) the payment of the return were the incurring by the entity of a liability to pay the same amount as interest; and

(b) that interest were incurred in respect of the finance raised by the entity and in respect of which the return was paid or provided; and

(c) the *debt interest retained its character as a debt interest for the purposes of subsection (2).

25-85(4)    
Subsections (2) and (3) do not apply to a *return to the extent to which it would be a ^* general deduction under section 8-1 apart from this section.

25-85(4A)    

Subsections (2) and (3) do not apply to a *return on a *debt interest that is a *Division 230 financial arrangement.

25-85(5)    
Subject to regulations made for the purposes of subsection (6), subsections (2) and (3) do not apply to the return to the extent to which the annually compounded internal rate of return exceeds the *benchmark rate of return for the interest increased by 150 basis points.

25-85(6)    
The regulations may provide that subsection (5) applies in the circumstances specified in the regulations as if the reference to 150 basis points were a reference to a greater or lesser number of basis points.

SECTION 25-90  

25-90   Deduction relating to foreign non-assessable non-exempt income  

An ^* Australian entity can deduct an amount of loss or outgoing from its assessable income for an income year if:

(a) the amount is incurred by the entity in deriving income from a foreign source; and

(b) the income is *non-assessable non-exempt income under section 768-5 , or section 23AI or 23AK of the Income Tax Assessment Act 1936 ; and

(c) the amount is a cost in relation to a ^* debt interest issued by the entity that is covered by paragraph (1)(a) of the definition of debt deduction .

Note:

This section does not apply to a Division 230 financial arrangement.

SECTION 25-95   Deduction for work in progress amounts  

25-95(1)    
You can deduct a ^* work in progress amount that you pay for the income year in which you pay it to the extent that, as at the end of that income year:

(a) a recoverable debt has arisen in respect of the completion or partial completion of the work to which the amount related; or

(b) you reasonably expect a recoverable debt to arise in respect of the completion or partial completion of that work within the period of 12 months after the amount was paid.

25-95(2)    
You can deduct the remainder (if any) of the ^* work in progress amount for the following income year.

25-95(3)    
An amount is a work in progress amount to the extent that:

(a) an entity agrees to pay the amount to another entity (the recipient ); and

(b) the amount can be identified as being in respect of work (but not goods) that has been partially performed by the recipient for a third entity but not yet completed to the stage where a recoverable debt has arisen in respect of the completion or partial completion of the work.

25-95(4)    
An amount does not stop being a work in progress amount merely because it is paid after a recoverable debt has arisen in respect of the completion or partial completion of the work to which the amount related.

SECTION 25-100   Travel between workplaces  

When a deduction is allowed

25-100(1)    
If you are an individual, you can deduct a ^* transport expense to the extent that it is incurred in your ^* travel between workplaces.

Travel between workplaces

25-100(2)    
Your travel between workplaces is travel directly between 2 places, to the extent that:

(a)while you were at the first place, you were:

(i) engaged in activities to gain or produce your assessable income; or

(ii) engaged in activities in the course of carrying on a ^* business for the purpose of gaining or producing your assessable income; and

(b) the purpose of your travel to the second place was to:

(i) engage in activities to gain or produce your assessable income; or

(ii) engage in activities in the course of carrying on a business for the purpose of gaining or producing your assessable income;

and you engaged in those activities while you were at the second place.

25-100(3)    
Travel between 2 places is not travel between workplaces if one of the places you are travelling between is a place at which you reside.

25-100(4)    
Travel between 2 places is not travel between workplaces if, at the time of your travel to the second place:

(a) the arrangement under which you gained or produced assessable income at the first place has ceased; or

(b) the ^* business in respect of which you engaged in activities at the first place has ceased.

No deduction for capital expenditure

25-100(5)    
You cannot deduct expenditure under subsection (1) to the extent that the expenditure is capital, or of a capital nature.

25-105   (Repealed) SECTION 25-105 Deductions for United Medical Protection Limited support payments  
(Repealed by No 105 of 2019)

SECTION 25-110   Capital expenditure to terminate lease etc.  

25-110(1)    
You can deduct an amount for capital expenditure you incur to terminate a lease or licence (including an authority, permit or quota) that results in the termination of the lease or licence if the expenditure is incurred:

(a) in the course of carrying on a ^* business; or

(b) in connection with ceasing to carry on a business.

25-110(2)    
The amount you can deduct is 20% of the expenditure:

(a) for the income year in which the lease or licence is terminated; and

(b) for each of the next 4 income years.

Exceptions

25-110(3)    
You cannot deduct any amount for expenditure you incur to terminate a lease that, in accordance with ^* accounting standards, or statements of accounting concepts made by the Australian Accounting Standards Board, is classified as a finance lease.

25-110(4)    
If you incurred the expenditure under an ^* arrangement and:

(a) there is at least one other party to the arrangement with whom you did not deal at ^* arm ' s length; and

(b) apart from this subsection, the amount of the expenditure would be more than the ^* market value of what it was for (assuming the termination did not occur and was never proposed to occur);

the amount of expenditure you take into account is that market value.

25-110(5)    
You cannot deduct any amount for expenditure you incur to terminate a lease or licence if:

(a) after the termination, you or an ^* associate of yours enters into another lease or licence with the same party or an associate of that party; and

(b) the other lease or licence is of the same kind as the original one.

25-110(6)    
You cannot deduct any amount for expenditure you incur to terminate a lease or licence to the extent that the expenditure is for the granting or receipt of another lease or licence in relation to the asset that was the subject of the original lease or licence.

SECTION 25-115   Deduction for payment of rent from land investment by operating entity to asset entity in relation to approved economic infrastructure facility  

25-115(1)    
An entity that is an *operating entity in relation to a *cross staple arrangement can deduct an amount, for an income year, of *rent from land investment if:

(a) another entity derives or receives the amount from the operating entity:

(i) in the income year; and

(ii) on or after 27 March 2018; and

(b) the cross staple arrangement was entered into in relation to:

(i) a facility that is covered by section 12-439 in Schedule 1 to the Taxation Administration Act 1953 at a time in the income year; or

(ii) an improvement to a facility that is covered by that section at a time in the income year; and

(c) the other entity is an *asset entity in relation to the cross staple arrangement; and

(d) apart from this subsection, the operating entity could otherwise deduct the amount under this Act; and

(e) the amount is *excepted MIT CSA income of the asset entity for the income year; and

(f) each entity that is a *stapled entity in relation to the cross staple arrangement has made a choice in accordance with subsection (3).

25-115(2)    
If the *asset entity is not a *managed investment trust in relation to the income year, for the purposes of paragraph (1)(e), treat it as a managed investment trust in relation to the income year.

25-115(3)    
An entity makes a choice in accordance with this subsection if:

(a) the entity makes the choice in the *approved form; and

(b) the entity makes the choice before:

(i) the start of the income year in which the asset is first put to use; or

(ii) a later time allowed by the Commissioner; and

(c) the entity gives the choice to the Commissioner within 60 days after the entity makes the choice.

25-115(4)    
The choice cannot be revoked.

SECTION 25-120   Transitional - deduction for payment of rent from land investment by operating entity to asset entity  

25-120(1)    
This section applies if the requirements in subsection 12-440(1) or (2) in Schedule 1 to the Taxation Administration Act 1953 are satisfied in relation to a *cross staple arrangement.

25-120(2)    
An entity that is an *operating entity in relation to the *cross staple arrangement can deduct, for an income year, an amount of *rent from land investment if:

(a) another entity derives or receives the amount from the operating entity at a time that:

(i) is in the income year; and

(ii) is on or after 27 March 2018; and

(iii) meets the requirements in subsection 12-440(4) of Schedule 1 to the Taxation Administration Act 1953 ; and

(b) the other entity is an *asset entity in relation to the cross staple arrangement; and

(c) apart from this subsection, the operating entity could otherwise deduct the amount under this Act; and

(d) the amount is *excepted MIT CSA income of the asset entity for the income year.

25-120(3)    
If the *asset entity is not a *managed investment trust in relation to the income year, for the purposes of paragraph (2)(d), treat it as a managed investment trust in relation to the income year.

SECTION 25-125   COVID-19 tests  

25-125(1)    
You can deduct a loss or outgoing to the extent it is incurred in gaining or producing your assessable income if:

(a)    you are an individual; and

(b)    the loss or outgoing is incurred in respect of testing you for the novel coronavirus SARS-CoV-2 that causes COVID-19 using a test covered by subsection (3) ; and

(c)    the purpose of testing you is to determine whether you may attend or remain at a place where you:

(i) engage in activities to gain or produce your assessable income; or

(ii) engage in activities in the course of carrying on a *business for the purpose of gaining or producing your assessable income.

25-125(2)    
However, you cannot deduct a loss or outgoing under this section to the extent that it is a loss or outgoing of capital, or of a capital nature.

25-125(3)    
This subsection covers a test that:

(a)    is a polymerase chain reaction test; or

(b)    is a therapeutic good (within the meaning of the Therapeutic Goods Act 1989 ) that:

(i) is included in the Australian Register of Therapeutic Goods maintained under section 9A of that Act; and

(ii) has an intended purpose, accepted in relation to that inclusion, that relates to the detection of the novel coronavirus SARS-CoV-2 that causes COVID-19.

Division 26 - Some amounts you cannot deduct, or cannot deduct in full  

Guide to Division 26  

SECTION 26-1   What this Division is about  

TABLE OF SECTIONS

TABLE OF SECTIONS

Operative provisions
26-5	Penalties
26-10	Leave payments
26-15	Franchise fees windfall tax
26-17	Commonwealth places windfall tax
26-18	(Repealed by No 83 of 2014)
26-19	Rebatable benefits
26-20	Assistance to students
26-22	Political contributions and gifts
26-25	Interest or royalty
26-25A	Payments to employees - labour mobility programs
26-26	Non-share distributions and dividends
26-30	Relative ' s travel expenses
26-31	Travel related to use of residential premises as residential accommodation
26-35	Reducing deductions for amounts paid to related entities
26-40	Maintaining your family
26-45	Recreational club expenses
26-47	Non-business boating activities
26-50	Expenses for a leisure facility
26-52	Bribes to foreign public officials
26-53	Bribes to public officials
26-54	Expenditure relating to illegal activities
26-55	Limit on deductions
26-60	Superannuation contributions surcharge
26-65	(Repealed by No 23 of 2018)
26-68	Loss from disposal of eligible venture capital investments
26-70	Loss from disposal of venture capital equity
26-74	(Repealed by No 45 of 2021)
26-75	Excess non-concessional contributions tax cannot be deducted
26-80	Financing costs on loans to pay superannuation contribution
26-85	Borrowing costs on loans to pay life insurance premiums
26-90	Superannuation supervisory levy
26-95	Superannuation guarantee charge
26-96	Laminaria and Corallina decommissioning levy cannot be deducted
26-97	National Disability Insurance Scheme expenditure
26-98	Division 293 tax cannot be deducted
26-99	Excess transfer balance tax cannot be deducted
26-100	Expenditure attributable to water infrastructure improvement payments
26-102	Expenses associated with holding vacant land
26-105	Non-compliant payments for work and services

Operative provisions  

SECTION 26-5   Penalties  

26-5(1)    
You cannot deduct under this Act:

(a) an amount (however described) payable, by way of penalty, under an ^* Australian law or a ^* foreign law; or

(b) an amount ordered by a court to be paid on the conviction of an entity for an offence against an ^* Australian law or a ^* foreign law.

26-5(2)    

This section does not apply to an amount payable, by way of penalty, under Subdivision 162-D of the ^* GST Act.

Note:

See paragraph 25-5(1)(ca) for the deductibility of penalties that arise under Subdivision 162-D of the GST Act.

SECTION 26-10   Leave payments  

26-10(1)    
You cannot deduct under this Act a loss or outgoing for long service leave, annual leave, sick leave or other leave except:

(a) an amount paid in the income year to the individual to whom the leave relates (or, if that individual has died, to that individual's dependant or ^* legal personal representative); or

(b) an ^* accrued leave transfer payment that is made in the income year.

26-10(2)    
An accrued leave transfer payment is a payment that an entity makes:

(a) in respect of an individual's leave (some or all of which accrued while the entity was required to make payments in respect of the individual's leave, or leave the individual might take); and

(b) when the entity is no longer required (or is about to stop being required) to make payments in respect of such leave; and

(c) to another entity when the other entity has begun (or is about to begin) to be required to make payments in respect of such leave; and

(d) under (or for the purposes of facilitating the provisions of) an ^* Australian law, or an award, order, determination or industrial agreement under an ^* Australian law.

It does not matter whether the leave accrues to the individual as an employee or for some other reason.

Example:

Your employee goes to a new employer. You pay the new employer $2,000 for the employee's unused long service leave because an industrial agreement requires you to make that payment.

Note:

An accrued leave transfer payment is included in the assessable income of the entity to which it is made: see section 15-5 .

SECTION 26-15  

26-15   Franchise fees windfall tax  

You cannot deduct under this Act any tax that is imposed by the Franchise Fees Windfall Tax (Imposition) Act 1997 .

SECTION 26-17  

26-17   Commonwealth places windfall tax  

You cannot deduct under this Act any tax that is imposed by the Commonwealth Places Windfall Tax (Imposition) Act 1998 .

26-18   (Repealed) SECTION 26-18 Unit shortfall charge - clean energy  
(Repealed by No 83 of 2014)

SECTION 26-19   Rebatable benefits  

26-19(1)    
You cannot deduct under this Act a loss or outgoing to the extent that the loss or outgoing is incurred in gaining or producing a rebatable benefit (within the meaning of section 160AAA of the Income Tax Assessment Act 1936 ).

26-19(2)    
To the extent that you use property in gaining or producing a rebatable benefit, your use of the property is taken not to be for the * purpose of producing assessable income if subsection (1) would stop you deducting a loss or outgoing if you incurred it in the income year in gaining or producing the rebatable benefit.

Note:

Under some provisions of this Act, in order to deduct an amount for your property, you must have used the property for the purpose of producing assessable income.

SECTION 26-20   Assistance to students  

26-20(1)    
You cannot deduct under this Act:

(a) - (c) (Repealed by No 56 of 2010)

(ca)    

a student contribution amount within the meaning of the Higher Education Support Act 2003 paid to a higher education provider (within the meaning of that Act); or

(cb)    

a payment made to reduce a debt to the Commonwealth under Chapter 4 of that Act; or

(cba)    

a payment made to reduce a debt to the Commonwealth under Part 3A of the VET Student Loans Act 2016 ; or

(cc)    

a payment made to reduce a debt to theCommonwealth under Chapter 2AA of the Social Security Act 1991 or Part 2 of the Student Assistance Act 1973 ; or

(cd)    

a payment made to reduce a debt to the Commonwealth under Chapter 3 of the Australian Apprenticeship Support Loans Act 2014 ; or

(ce)    

a payment made to reduce a liability to overseas debtors repayment levy under the Student Loans (Overseas Debtors Repayment Levy) Act 2015 ; or

(d)    a payment made to reduce a debt to the Commonwealth, or to a participating corporation, under Chapter 2B of the Social Security Act 1991 or Part 4A of the Student Assistance Act 1973 .

Exception when you provide a fringe benefit

26-20(2)    
Subsection (1) does not stop you deducting expenditure you incur in ^* providing a ^* fringe benefit.

SECTION 26-22   Political contributions and gifts  

You cannot deduct political contributions or gifts

26-22(1)    
You cannot deduct under this Act (other than Subdivision 30-DA ):

(a) a contribution (including a membership fee) or gift to a political party that is registered under Part XI of the Commonwealth Electoral Act 1918 or under corresponding State or Territory legislation; or

(b) a contribution or gift to an individual when the individual is a candidate in an election for members of:

(i) an *Australian legislature; or

(ii) a *local governing body; or

(c) a contribution or gift to an individual who is a member of:

(i) an Australian legislature; or

(ii) a local governing body.

Exception for employees and office holders

26-22(2)    
However, subsection (1) does not apply to a loss or outgoing incurred in gaining or producing assessable income from which an amount is required to be withheld under section 12-35 or 12-45 in Schedule 1 to the Taxation Administration Act 1953 .

Note:

These provisions of the Taxation Administration Act 1953 require amounts to be withheld from income of employees and office holders.

Starting and stopping being a candidate

26-22(3)    
For the purposes of this section, an individual:

(a) starts being a candidate when the individual ' s intention to be or to attempt to be a candidate for the election is publicly available; and

(b) stops being a candidate at the earlier of:

(i) the time when the result of the election is declared or otherwise publicly announced by an entity (an electoral official ) authorised under the relevant electoral legislation; and

(ii) the time (if any) when the individual ' s intention to no longer be a candidate for the election is publicly available.

Starting being a member

26-22(4)    
An individual who becomes a member as a result of an election (including an election that is later declared void) is taken to start being a member when the individual ' s election as a member is declared or otherwise publicly announced by an electoral official.

SECTION 26-25   Interest or royalty  

26-25(1)    

You cannot deduct under this Act interest (within the meaning of Division 11A of Part III of the Income Tax Assessment Act 1936 ) or a ^* royalty if:

(a) Subdivision 12-F in Schedule 1 to the Taxation Administration Act 1953 requires you to withhold an amount from the interest or royalty; and

(b) either:

(i) you fail to withhold the amount; or

(ii) after withholding the amount, you fail to comply with section 16-70 in that Schedule in relation to that amount.

26-25(2)    

You cannot deduct under this Act interest (within the meaning of Division 11A of Part III of the Income Tax Assessment Act 1936 ), or a ^* royalty, that is in the form of a ^* non-cash benefit if:

(a) section 14-5 or 14-10 in Schedule 1 to the Taxation Administration Act 1953 requires you to pay an amount to the Commissioner before providing the benefit, because of Subdivision 12-F in that Schedule; and

(b) you fail to pay the amount as required by that section.

26-25(3)    
If:

(a) apart from subsection (1) or (2), you can deduct interest (within the meaning of Division 11A of Part III of the Income Tax Assessment Act 1936 ) or a ^* royalty for an income year; and

(b) the ^* withholding tax payable for the interest or the royalty is paid;

you can deduct the interest or royalty for that income year.

SECTION 26-25A   Payments to employees - labour mobility programs  

No deduction to extent amount not withheld

26-25A(1)    

You cannot deduct under this Act salary, wages, commission, bonuses or allowances from which Subdivision 12-FC in Schedule 1 to the Taxation Administration Act 1953 (about labour mobility programs) requires you to withhold an amount, to the extent that:

(a)    you fail to withhold the amount; or

(b)    after withholding the amount, you fail to comply with section 16-70 in that Schedule in relation to that amount.

Note:

Section 16-70 in that Schedule requires you to pay the amount to the Commissioner.

Deduction to extent amount not withheld but withholding tax paid

26-25A(2)    
You can deduct, for an income year, salary, wages, commission, bonuses or allowances to the extent that:

(a)    you cannot deduct the salary, wages, commission, bonuses or allowances for that income year only because of subsection (1) of this section; and

(b)    

the *labour mobility program withholding tax payable for the salary, wages, commission, bonuses or allowance is paid.

SECTION 26-26   Non-share distributions and dividends  

26-26(1)    
A company cannot deduct under this Act:

(a) a ^* non-share distribution; or

(b) a return that has accrued on a ^* non-share equity interest.

26-26(2)    
A company cannot deduct a ^* dividend paid on an ^* equity interest in the company as a ^* general deduction under this Act.

SECTION 26-30   Relative ' s travel expenses  

26-30(1)    
You cannot deduct under this Act a loss or outgoing you incur, insofar as it is attributable to your ^* relative ' s travel, if:

(a) you travelled in the course of performing your duties as an employee, or in the course of carrying on a ^* business for the purpose of gaining or producing your assessable income; and

(b) your relative accompanied you while you travelled.

Exception to subsection (1)

26-30(2)    
Subsection (1) does not stop you deducting a loss or outgoing if:

(a) your ^* relative, while accompanying you, performed substantial duties as your employer ' s employee, or as your employee; and

(b) it is reasonable to conclude that your relative would still have accompanied you even if he or she had not had a personal relationship with you.

Exception when you provide a fringe benefit

26-30(3)    
Subsection (1) does not stop you deducting expenditure you incur in ^* providing a ^* fringe benefit.

This section also applies to individuals who are not employees

26-30(4)    

If an individual is not an employee, but receives, or is entitled to receive, ^* withholding payments covered by subsection (6), this section applies to the individual as if:

(a) he or she were an employee; and

(b) the entity, who pays (or is liable to pay) ^* withholding payments covered by subsection (6) that result in the individual being in receipt of, or entitled to receive, such payments, were the individual ' s employer; and

(c) any other individual who receives (or is entitled to receive) ^* withholding payments covered by subsection (6):

(i) that result in that other individual being in receipt of, or entitled to receive, such payments; and

(ii) that the entity pays (or is liable to pay) to that other individual;

were an employee of the entity.

This section also applies to entities who are not employers

26-30(5)    

If an entity is not an employer, but pays (or is liable to pay) ^* withholding payments covered by subsection (6), this section applies to the entity as if:

(a) it were an employer; and

(b) an individual to whom the entity pays (or is liable to pay) such withholding payments were the entity ' s employee.

Withholding payments covered

26-30(6)    

This subsection covers:

(a) a ^* withholding payment covered by any of the provisions in Schedule 1 to the Taxation Administration Act 1953 listed in the table; and

(b) a withholding payment covered by section 12-47 in Schedule 1 to the Taxation Administration Act 1953 where:

(i) the payment is made to a religious practitioner by a religious institution; and

(ii) the activity, or series of activities, for which the payment is made is done by the religious practitioner as a member of the religious institution.

Withholding payments covered
Item	Provision	Subject matter
1	Section 12-40	Payment to company director
.
2	Section 12-45	Payment to office holder
.
3	Section 12-50	Return to work payment
.
4	Subdivision 12-D	Benefit, training and compensation payments

SECTION 26-31   Travel related to use of residential premises as residential accommodation  

26-31(1)    
You cannot deduct under this Act a loss or outgoing you incur, insofar as it is related to travel, if:

(a) it is incurred in gaining or producing your assessable income from the use of *residential premises as residential accommodation; and

(b) it is not necessarily incurred in carrying on a *business for the purpose of gaining or producing your assessable income.

Exception - kind of entity

26-31(2)    
Subsection (1) does not stop you deducting a loss or outgoing if, at any time during the income year in which the loss or outgoing is incurred, you are:

(a) a *corporate tax entity; or

(b) a *superannuation plan that is not a *self managed superannuation fund; or

(c) a *managed investment trust; or

(d) a public unit trust (within the meaning of section 102P of the Income Tax Assessment Act 1936 ); or

(e) a unit trust or partnership, if each *member of the trust or partnership is covered by a paragraph of this subsection at that time during the income year.

SECTION 26-35   Reducing deductions for amounts paid to related entities  

You can only deduct reasonable amounts paid to related entities

26-35(1)    
If, under another provision of this Act, you can deduct an amount for a payment you make, or for a liability you incur, to a ^* related entity, then you can only deduct so much of the amount as the Commissioner considers reasonable.

Note:

This section has a special operation if the payment is made, or the liability is incurred, by a partnership in which a private company is a partner: see section 65 (Payments to associated persons and relatives) of the Income Tax Assessment Act 1936 .

Meaning of related entity

26-35(2)    
A related entity is any of the following:

(a) your ^* relative; or

(b) a partnership in which your relative is a partner.

26-35(3)    
In the case of a partnership, a related entity is any of the following:

(a) a ^* relative of a partner in the partnership;

(b) an individual who is or has been a director of a company that is a partner in the partnership and is a ^* private company for the income year;

(c) an entity that is or has been a shareholder in a company of that kind;

(d) a ^* relative of an individual who is or has been a director or shareholder of a company of that kind;

(e) a beneficiary of a trust if the trustee is a partner in the partnership;

(f) a ^* relative of a beneficiary of a trust if the trustee is a partner in the partnership;

(g) another partnership, if a partner in the other partnership is a ^* relative of a partner in the first partnership.

However, a partner in a partnership is not a related entity of the partnership.

If you can ' t deduct, then related entity doesn ' t include amount as income

26-35(4)    
To the extent that subsection (1) stops you deducting an amount, the amount is neither assessable income, nor exempt income, of the ^* related entity.

26-35(5)    
(Repealed by No 75 of 2010 )

SECTION 26-40  

26-40   Maintaining your family  

You cannot deduct under this Act expenditure you incur for maintaining:

(a) your ^* spouse (except a spouse permanently living separately and apart from you); or

(b) your ^* child who is under 16 years.

Example:

A farmer cannot deduct an amount for food or lodgings that the farmer provides to his or her child who is under 16 years for the work the child performs on the farm.

SECTION 26-45   Recreational club expenses  

26-45(1)    
You cannot deduct under this Act a loss or outgoing to the extent you incur it to obtain or maintain:

(a) membership of a ^* recreational club; or

(b) rights to enjoy (otherwise than as a ^* member) facilities provided by a ^* recreational club for the use or benefit of its ^* members;

whether for yourself or someone else.

Meaning of recreational club

26-45(2)    
A recreational club is a company that was established or is carried on mainly to provide facilities, for the use or benefit of its ^* members, for drinking, dining, ^* recreation or entertainment.

Exception when you provide a fringe benefit

26-45(3)    
Subsection (1) does not stop you deducting expenditure you incur in ^* providing a ^* fringe benefit.

SECTION 26-47   Non-business boating activities  

Object

26-47(1)    
The object of this section is to improve the integrity of the taxation system by preventing deductions from boating activities that are not carried on as a *business being offset against other assessableincome.

Rule

26-47(2)    
This Act applies to you as if so much of the amounts relating to using or *holding boats that you could otherwise deduct for an income year as exceeds your assessable income from using or holding boats for that year:

(a) were not deductible for that income year; and

(b) were an amount (a quarantined amount ) relating to using or holding boats that you can deduct for the next income year.

Note:

A quarantined amount may be reduced under subsection (5) (for boat capital gains), reduced under subsection (7) (where you deduct part of a quarantined amount under subsection (6) for boat business profits), reduced under subsection (8) (about exempt income) or affected by subsection (10) (about bankruptcy).

Example:

Ian does not use his boat in a business. In Year 1, Ian would be able to claim $100,000 in deductions for the boat (but for this subsection), including interest, depreciation and running costs. He earns only $40,000 of income from the boat. He can only deduct $40,000. He carries the remaining $60,000 forward to Year 2 (the quarantined amount).

In Year 2, Ian has $95,000 of expenses and $30,000 of income for the boat. He can deduct $30,000. The quarantined amount is now $125,000: the quarantined amount from Year 1 plus the excess of expenses over income from Year 2.

In Year 3, Ian has $60,000 of expenses and $150,000 of income from the boat. The expenses from Year 3 plus the quarantined amount is $185,000. Therefore, Ian claims a deduction of $150,000 and carries forward $35,000 to Year 4.

Exception: business use

26-47(3)    
The rule in subsection (2) does not apply to amounts that are attributable to one or more of the following:

(a) *holding a boat as your *trading stock;

(b) using a boat (or holding it) mainly for letting it on hire in the ordinary course of a *business that you carry on;

(c) using a boat (or holding it) mainly for transporting the public or goods for payment in the ordinary course of a business that you carry on;

(d) using a boat for a purpose that is essential to the efficient conduct of a business that you carry on.

Note:

Even if this exception applies to you, you may still have to quarantine losses under Division 35 (deferral of losses from non-commercial business activities).

Exception: fringe benefits

26-47(4)    
The rule in subsection (2) does not apply to so much of an amount you incur in *providing a *fringe benefit.

Modification if you have boat capital gains

26-47(5)    
You reduce a quarantined amount you have for an income year by so much of that amount as is applied under section 118-80 to reduce a *capital gain you have for the year in relation to a boat. You make this reduction before you deduct an amount under subsection (6).

Deduction if you have boat business profits

26-47(6)    
You can deduct all or part of your remaining quarantined amount for an income year if your assessable income for the year from activities of a kind referred to in subsection (3) exceeds your deductions for the year relating to those activities. The amount you can deduct is the lesser of that excess and that remaining quarantined amount.

26-47(7)    
You reduce your quarantined amount for the year by the amount you deduct. You make this reduction before a reduction under subsection (8).

Modification if you have exempt income

26-47(8)    

You reduce any remaining quarantined amount you have for an income year by your * net exempt income for that year (after * utilising the net exempt income under section 35-15 (about non-commercial business activities) or section 36-10 or 36-15 (about tax losses)).

Modification if you become bankrupt

26-47(9)    
The modification in subsection (10) has effect if:

(a) in an income year (the current year ) you become bankrupt or are released from a debt by the operation of an Act relating to bankruptcy; or

(b) you became bankrupt before the current year and:

(i) the bankruptcy is annulled in the current year under section 74 of the Bankruptcy Act 1966 because your creditors have accepted a proposal for a composition or scheme of arrangement; and

(ii) under the composition or scheme of arrangement, you have been, will be or may be released from some or all of the debts from which you would have been released if you had instead been discharged from the bankruptcy.

26-47(10)    
This Act applies to you as if any amount that:

(a) is a quarantined amount for you for the current year or was a quarantined amount for you for an earlier year; and

(b) has not been applied under section 118-80 and that you have not yet deducted;

were not an amount relating to using or holding boats that you can deduct for the current year or a later year.

SECTION 26-50   Expenses for a leisure facility  

26-50(1)    

You cannot deduct under this Act a loss or outgoing to the extent you incur it:

(a) to acquire ownership of a ^* leisure facility; or

(b) to retain ownership of a leisure facility; or

(c) to acquire rights to use a leisure facility; or

(d) to retain rights to use a leisure facility; or

(e) to use, operate, maintain or repair a leisure facility; or

(f) in relation to any obligation associated with your ownership of a leisure facility; or

(g) in relation to any obligation associated with your rights to use a leisure facility.

However, there are exceptions (see subsections (3), (4) and (8)).

What is a leisure facility ?

26-50(2)    
A leisure facility is land, a building, or part of a building or other structure, that is used (or held for use) for holidays or ^* recreation.

Exception - leisure facilities

26-50(3)    
Subsection (1) does not stop you deducting a loss or outgoing for a ^* leisure facility if at all times in the income year:

(a) you hold the leisure facility for sale in the ordinary course of your business of selling leisure facilities; or

(b) you use the leisure facility (or hold it for use) mainly to provide it:

(i) in the ordinary course of your ^* business of providing leisure facilities for payment; or

(ii) to produce your assessable income in the nature of rents, lease premiums, licence fees or similar charges; or

(iii) for your employees to use; or

(iv) for the care of your employees ' *children.

In the case of a company, subparagraphs (b)(iii) and (iv) do not apply to employees who are ^* members or directors of the company.

Exception - part year use of leisure facilities

26-50(4)    
If you use a ^* leisure facility (or hold it) as described in subsection (3) at all times during part of the income year, then subsection (1) does not stop you deducting so much of the loss or outgoing as is reasonable in the circumstances.

26-50(5)    
(Repealed by No 78 of 2007 )

26-50(6)    
(Repealed by No 78 of 2007 )

Anti-avoidance - when exceptions do not apply

26-50(7)    

A ^* leisure facility is taken not to be used (or held) as described in subsection (3) if:

(a) apart from this subsection, the leisure facility would be used (or held) in that way because of a ^* scheme; and

(b) in the Commissioner's opinion, the scheme would not have been entered into or carried out if this section had not been enacted.

Exception when you provide a fringe benefit

26-50(8)    
Subsection (1) does not stop you deducting expenditure you incur in ^* providing a ^* fringe benefit.

SECTION 26-52   Bribes to foreign public officials  

26-52(1)    
You cannot deduct under this Act a loss or outgoing you incur that is a ^* bribe to a foreign public official.

26-52(2)    

An amount is a bribe to a foreign public official to the extent that:

(a)    you incur the amount in, or in connection with:

(i) providing a benefit to another person; or

(ii) causing a benefit to be provided to another person; or

(iii) offering to provide, or promising to provide, a benefit to another person; or

(iv) causing an offer of the provision of a benefit, or a promise of the provision of a benefit, to be made to another person; and

(b)    you incur the amount with the intention of improperly influencing a *foreign public official (who may be the other person) in order to obtain or retain business or a business or personal advantage (whether or not for yourself).

The benefit may be any advantage and is not limited to property.

26-52(2A)    

For the purposes of subsection (2) , disregard whether business, or a business or personal advantage, was actually obtained or retained.

Payments that written law of foreign public official ' s country requires or permits

26-52(3)    

An amount is not a bribe to a foreign public official if, assuming the benefit had been provided, and all related acts had been done, in the *foreign public official ' s country, a written law of that country would have required or permitted the provision of the benefit.

Facilitation payments

26-52(4)    

An amount is not a bribe to a foreign public official if:

(a)    the value of the benefit is of a minor nature; and

(b)    the amount is incurred for the sole or dominant purpose of expediting or securing the performance of a routine government action of a minor nature.

26-52(5)    
For the purposes of this section, a routine government action is an action of a ^* foreign public official that:

(a)    is ordinarily and commonly performed by the official; and

(b)    is covered by any of the following subparagraphs:

(i) granting a permit, licence or other official document that qualifies a person to do business in a foreign country or in a part of a foreign country;

(ii) processing government papers such as a visa or work permit;

(iii) providing police protection or mail collection or delivery;

(iv) scheduling inspections associated with contract performance or related to the transit of goods;

(v) providing telecommunications services, power or water;

(vi) loading and unloading cargo;

(vii) protecting perishable products, or commodities, from deterioration;

(viii) any other action of a similar nature; and

(c)    does not involve a decision about:

(i) whether to award new business; or

(ii) whether to continue existing business with a particular person; or

(iii) the terms of new business or existing business; and

(d)    does not involve encouraging a decision about:

(i) whether to award new business; or

(ii) whether to continue existing business with a particular person; or

(iii) the terms of new business or existing business.

Improper influence

26-52(6)    

In determining whether influence is improper, disregard the following:

(a)    

the fact that the benefit, or the offer or promise to provide the benefit, may be, or be perceived to be, customary, necessary or required in the situation;

(b)    any official tolerance of the benefit;

(c)    if particular business or a particular business or personal advantage is relevant to determining whether influence is improper - the following:

(i) if the value of the business or advantage is insignificant - that fact;

(ii) in the case of an advantage - any official tolerance of the advantage;

(iii) in the case of an advantage - the fact that the advantage may be customary, or perceived to be customary, in the situation.

26-52(7)    
(Repealed by No 5 of 2024)

Duties of foreign public official

26-52(8)    
The duties of a ^* foreign public official are any authorities, duties, functions or powers that:

(a)    are conferred on the official; or

(b)    the official holds himself or herself out as having.

SECTION 26-53   Bribes to public officials  

26-53(1)    
You cannot deduct under this Act a loss or outgoing you incur that is a ^* bribe to a public official.

26-53(2)    
An amount is a bribe to a public official to the extent that:

(a) you incur the amount in, or in connection with:

(i) providing a benefit to another person; or

(ii) causing a benefit to be provided to another person; or

(iii) offering to provide, or promising to provide, a benefit to another person; or

(iv) causing an offer of the provision of a benefit, or a promise of the provision of a benefit, to be made to another person; and

(b) the benefit is not legitimately due to the other person (see subsection (3)); and

(c) you incur the amount with the intention of influencing a ^* public official (who may or may not be the other person) in the exercise of the official's duties as a public official in order to:

(i)obtain or retain business; or

(ii) obtain or retain an advantage in the conduct of business that is not legitimately due to you, or another person, as the recipient, or intended recipient, of the advantage in the conduct of business (see subsection (4)).

The benefit may be any advantage and is not limited to property.

Benefit not legitimately due

26-53(3)    
In working out if a benefit is not legitimately due to another person in a particular situation, disregard the following:

(a) the fact that the benefit may be customary, or perceived to be customary, in the situation;

(b) the value of the benefit;

(c) any official tolerance of the benefit.

Advantage in the conduct of business that is not legitimately due

26-53(4)    
In working out if an advantage in the conduct of business is not legitimately due in a particular situation, disregard the following:

(a) the fact that the advantage may be customary, or perceived to be customary, in the situation;

(b) the value of the advantage;

(c) any official tolerance of the advantage.

Duties of public official

26-53(5)    
The duties of a ^* public official are any authorities, duties, functions or powers that:

(a) are conferred on the official; or

(b) the official holds himself or herself out as having.

SECTION 26-54   Expenditure relating to illegal activities  

26-54(1)    
You cannot deduct under this Act a loss or outgoing to the extent that it was incurred in the furtherance of, or directly in relation to, a physical element of an offence against an ^* Australian law of which you have been convicted if the offence was, or could have been, prosecuted on indictment.

26-54(2)    
Despite section 170 of the Income Tax Assessment Act 1936 , the Commissioner may amend your assessment at any time within 4 years after you are convicted of the relevant offence for the purpose of giving effect to subsection (1) of this section.

SECTION 26-55   Limit on deductions  

26-55(1)    

There is a limit on the total of the amounts you can deduct for the income year under these provisions:

(a) section 25-50 (which is about payments of pensions, gratuities or retiring allowances) of this Act;

(ba) Division 30 (which is about deductions for gifts or contributions) of this Act;

(bb) Division 31 (which is about deductions for conservation covenants) of this Act;

(b) - (c) (Repealed by No 101 of 2006 )

(d) section 290-150 (which is about deductions for personal superannuation contributions).

(e) (Repealed by No 101 of 2006 )

Do not include in the total an amount that you could also deduct under another provision of this Act, apart from section 8-10 (which prevents double deductions).

26-55(2)    
The limit is worked out by subtracting from your assessable income all your deductions except:

(a) ^* tax losses; and

See Division 36 (which is about tax losses of earlier income years).

(b) (Repealed by No 169 of 1999)

(c) the amount you can deduct for the income year under section 393-5 (which provides for deductions for making *farm management deposits).

SECTION 26-60  

26-60   Superannuation contributions surcharge  
You cannot deduct under this Act:

(a) a superannuation contributions surcharge within the meaning of the Superannuation Contributions Tax (Assessment and Collection) Act 1997 ; or

(b) a superannuation contributions surcharge within the meaning of the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997 .

26-65   (Repealed) SECTION 26-65 Termination payments surcharge  
(Repealed by No 23 of 2018)

SECTION 26-68   Loss from disposal of eligible venture capital investments  

Partners in VCLPs and ESVCLPs

26-68(1)    
You cannot deduct under this Act your share of a loss made from the disposal or other realisation of an ^* eligible venture capital investment if:

(a) it is made by a ^* VCLP, or an *ESVCLP, that is ^* unconditionally registered; and

(b) were that disposal or other realisation to be a ^* disposal of a ^* CGT asset, your share of any ^* capital gain or ^* capital loss would be disregarded under section 118-405 or 118-407 .

Partners in AFOFs

26-68(2)    
You cannot deduct under this Act your share of a loss made from the disposal or other realisation of an ^* eligible venture capital investment if:

(a) it is made by:

(i) an ^* AFOF that is ^* unconditionally registered; or

(ii) a ^* VCLP, or an *ESVCLP, that is unconditionally registered and in which an AFOF that is ^* unconditionally registered is a partner; and

(b) were that disposal or other realisation to be a ^* disposal of a ^* CGT asset, your share of any ^* capital gain or ^* capital loss would be disregarded under section 118-410 .

Eligible venture capital investors

26-68(3)    
You cannot deduct under this Act a loss made from the disposal or other realisation of an ^* eligible venture capital investment if:

(a) you are an ^* eligible venture capital investor; and

(b) were that disposal or other realisation to be a ^* disposal of a ^* CGT asset, any ^* capital gain or ^* capital loss would be disregarded under section 118-415 .

SECTION 26-70  

26-70   Loss from disposal of venture capital equity  

You cannot deduct under this Act a loss made from the disposal or other realisation of ^* venture capital equity in a ^* resident investment vehicle if:

(a) it is made by a ^* venture capital entity or a ^* limited partnership referred to in subsection 118-515(2) ; and

(b) if that disposal or other realisation were a ^* disposal of a ^* CGT asset, any ^* capital gain or ^* capital loss would be disregarded under Subdivision 118-G .

26-74   (Repealed) SECTION 26-74 Excess concessional contributions charge cannot be deducted  
(Repealed by No 45 of 2021)

SECTION 26-75  

26-75   Excess non-concessional contributions tax cannot be deducted  

You cannot deduct under this Act an amount of * excess non-concessional contributions tax that you pay.

SECTION 26-80   Financing costs on loans to pay superannuation contribution  

26-80(1)    
You can only deduct under this Act a *financing cost connected with a contribution you make to a *superannuation plan if you can deduct the contribution under Subdivision 290-B .

26-80(2)    
A financing cost connected with a contribution is expenditure incurred to the extent that it relates to obtaining finance to make the contribution, including:

(a) interest, and payments in the nature of interest; and

(b) expenses of borrowing.

SECTION 26-85   Borrowing costs on loans to pay life insurance premiums  

26-85(1)    
You can only deduct under this Act interest on, or other expenses associated with, money you borrow to pay a premium for a *life insurance policy if:

(a) the *risk component of the premium received by the insurer is the entire amount of the premium; and

(b) each amount the insurer is liable to pay under the policy would be included in your assessable income if it were paid.

26-85(2)    
The risk component of a premium for a *life insurance policy means the amount of the premium worked out on the basis specified in the regulations.

SECTION 26-90  

26-90   Superannuation supervisory levy  

You cannot deduct under this Act so much of a levy imposed by the Superannuation (Self Managed Superannuation Funds) Supervisory Levy Imposition Act 1991 as represents the late lodgment amount (within the meaning of section 6 of that Act).

SECTION 26-95   Superannuation guarantee charge  

26-95(1)    
You cannot deduct under this Act a charge imposed by the Superannuation Guarantee Charge Act 1992 .

26-95(2)    

However, if the charge relates to a *superannuation guarantee shortfall for which you qualify for an amnesty under section 74 of the Superannuation Guarantee (Administration) Act 1992 , this section does not apply to a payment that:

(a) is made, under that Act, during the amnesty period (within the meaning of subsection 74(3) of that Act); and

(b) is made in relation to the charge, whether or not the Commissioner applies the payment to satisfy your liability to pay the charge;

except to the extent that the payment, when taken together with any other such payments made in relation to the charge, exceeds the amount paid as a result of a disclosure to which paragraph 74(1)(a) of that Act applies in relation to the shortfall.

SECTION 26-96  

26-96   Laminaria and Corallina decommissioning levy cannot be deducted  

You cannot deduct under this Act an amount of *Laminaria and Corallina decommissioning levy that you pay.

SECTION 26-97  

26-97   National Disability Insurance Scheme expenditure  

A participant (within the meaning of the National Disability Insurance Scheme Act 2013 ) cannot deduct under this Act a loss or outgoing to the extent the loss or outgoing is funded (including funded by way of reimbursement) by an *NDIS amount the participant *derives.

SECTION 26-98  

26-98   Division 293 tax cannot be deducted  

You cannot deduct under this Act any of the following:

(a) an amount of * Division 293 tax that you pay;

(b) an amount of * debt account discharge liability that you pay.

SECTION 26-99  

26-99   Excess transfer balance tax cannot be deducted  

You cannot deduct under this Act an amount of *excess transfer balance tax that you pay.

SECTION 26-100   Expenditure attributable to water infrastructure improvement payments  

26-100(1)    
You cannot deduct under this Act * SRWUIP expenditure if the matching * SRWUIP payment is, or is reasonably expected to be, * non-assessable non-exempt income (whether for you or for another entity) under section 59-65.

26-100(2)    
SRWUIP expenditure , in respect of a * SRWUIP program, is expenditure that:

(a) you incur that satisfies an obligation under an * arrangement under the program; and

(b) is, or is reasonably expected to be, matched by a * SRWUIP payment in respect of the program.

26-100(3)    
However, treat the expenditure as if it had never been SRWUIP expenditure if it is no longer reasonable to expect that the expenditure will be matched by a * SRWUIP payment in respect of the program.

SECTION 26-102   Expenses associated with holding vacant land  

Limit on deduction

26-102(1)    
If:

(a) at a particular time, you incur a loss or outgoing relating to holding land (including interest or any other ongoing costs of borrowing to acquire the land); and

(b) at the earlier of the following (the critical time ):

(i) that time;

(ii) if you have ceased to hold the land - the time just before you ceased to hold the land;

there is no substantial and permanent structure in use or available for use on the land having a purpose that is independent of, and not incidental to, the purpose of any other structure or proposed structure;

you can only deduct under this Act the loss or outgoing to the extent that the land is in use, or available for use, in carrying on a business covered by subsection (2) at the time applying under subsection (3).

Note 1:

The ordinary meaning of structure includes a building and anything else built or constructed.

Note 2:

The land need not be all of the land under a land title.

26-102(2)    
A *business is covered by this subsection if the business is carried on for the purpose of gaining or producing the assessable income of one or more of the following entities:

(a) you;

(b) your *affiliate, or an entity of which you are an affiliate;

(c) if you are an individual - your *spouse, or any of your *children who is under 18 years of age;

(d) an entity *connected with you.

26-102(3)    
The time applying under this subsection is the critical time unless:

(a) the business referred to in subsection (1) ceases before the critical time; and

(b) the loss or outgoing is otherwise deductible because of the use or availability for use of the land at an earlier time or during an earlier period; and

(c) at that earlier time or during that earlier period the land was in use or available for use in carrying on that business;

in which case the time applying under this subsection is that earlier time or the end of that earlier period.

Disregard certain residential premises if not rented etc.

26-102(4)    
For the purposes of paragraph (1)(b), treat a building as not being a substantial and permanent structure if it is *residential premises constructed, or *substantially renovated, while you hold the land unless:

(a) the residential premises are lawfully able to be occupied; and

(b) the residential premises are:

(i) leased, hired or licensed; or

(ii) available for lease, hire or licence.

Note:

If all of the structures on the land are disregarded under this subsection, then subsection (1) may deny you a deduction for a loss or outgoing relating to the land.

Exception - kind of entity

26-102(5)    
Subsection (1) does not stop you deducting a loss or outgoing if, at any time during the income year in which the loss or outgoing is incurred, you are:

(a) a *corporate tax entity; or

(b) a *superannuation plan that is not a *self managed superannuation fund; or

(c) a *managed investment trust; or

(d) a public unit trust (within the meaning of section 102P of the Income Tax Assessment Act 1936 ); or

(e) a unit trust or partnership, if each *member of the trust or partnership is covered by a paragraph of this subsection at that time during the income year.

Exception - structures affected by natural disasters or other exceptional circumstances

26-102(6)    
Subsection (1) does not stop you deducting a loss or outgoing relating to holding land if:

(a) had an earlier time been the critical time (see paragraph (1)(b)), paragraph (1)(b) would not have applied to you for the land because of the existence at that earlier time of a substantial and permanent structure on the land; and

(b) after that earlier time, paragraph (1)(b):

(i) began to apply to you for the land wholly or mainly because of a circumstance affecting that structure; and

(ii) continued to do so at the critical time; and

(c) the circumstance was exceptional and beyond the reasonable control of you, and of all the entities referred to in paragraphs (2)(b), (c) and (d); and

(d) the critical time happened before:

(i) the third anniversary of the time paragraph (1)(b) began to apply to you for the land as described in subparagraph (b)(i) of this subsection; or

(ii) such later time as the Commissioner allows.

26-102(7)    
If subsection (6) applies to you and you deduct the loss or outgoing, you must keep written records of:

(a) the circumstance; and

(b) the circumstance ' s effect on the affected structure;

until the fifth anniversary of the end of the income year in which you incurred the loss or outgoing.

Note:

There is an administrative penalty if you fail to keep these records (see section 288-25 in Schedule 1 to the Taxation Administration Act 1953 ).

Exception - land held by primary producers

26-102(8)    
Subsection (1) does not stop you deducting a loss or outgoing relating to holding land if, at the critical time (see paragraph (1)(b)):

(a) the land is under lease, hire or licence to another entity; and

(b) you are, or an entity referred to in paragraph (2)(b), (c) or (d) is, carrying on a *primary production business; and

(c) the land does not contain *residential premises; and

(d) residential premises are not being constructed on the land.

Exception - land in use or available for use in carrying on a business

26-102(9)    
Subsection (1) does not stop you deducting a loss or outgoing relating to holding land if, at the critical time (see paragraph (1)(b)):

(a) the land is under lease, hire or licence to another entity as a result of a dealing at *arm ' s length; and

(b) the land is in use, or available for use, in carrying on a *business; and

(c) the land does not contain *residential premises; and

(d) residential premises are not being constructed on the land.

SECTION 26-105   Non-compliant payments for work and services  

No deduction if amount not withheld or Commissioner not notified

26-105(1)    
You cannot deduct under this Act a payment if:

(a) any of the following provisions in Schedule 1 to the Taxation Administration Act 1953 require you to withhold an amount from the payment:

(i) section 12-35 (about payments to employees);

(ii) section 12-40 (about payments to directors);

(iii) section 12-47 (about payments to *religious practitioners);

(iv) section 12-60 (about payments under labour hire and certain other arrangements);

(v) in relation to a *supply, other than a supply referred to in subsection (3) of this section - section 12-190 (about quoting of *ABN); and

(b) either:

(i) you fail to withhold an amount (whether or not that amount is the amount required to be withheld as mentioned in paragraph (a)) from the payment; or

(ii) after withholding the amount from the payment, you fail to comply, or purportedly comply, with section 16-150 or 389-5 (as the case requires) in that Schedule, in relation to the amount.

26-105(2)    
You cannot deduct under this Act a *non-cash benefit if:

(a) section 14-5 in Schedule 1 to the Taxation Administration Act 1953 requires you to pay an amount to the Commissioner before providing the benefit, because of any of the following provisions in that Schedule:

(i) section 12-35 (about payments to employees);

(ii) section 12-40 (about payments to directors);

(iii) section 12-47 (about payments to *religious practitioners);

(iv) section 12-60 (about payments under labour hire and certain other arrangements);

(v) in relation to a *supply, other than a supply referred to in subsection (3) of this section - section 12-190 (about quoting of *ABN); and

(b) you fail to comply, or purportedly comply, with section 16-150 in that Schedule in relation to the amount.

26-105(3)    
For the purposes of subparagraphs (1)(a)(v) and (2)(a)(v), the supplies are supplies that are wholly a *supply of either or both of the following:

(a) a supply of goods (within the meaning of section 195-1 of the *GST Act);

(b) a supply of real property (within the meaning of that section of that Act).

Exception - nil amounts

26-105(4)    
Subsection (1) or (2) does not apply if the amount required to be withheld, or the amount required to be paid to the Commissioner, (as the case requires) is a nil amount.

Exception - ABN quoted

26-105(5)    
Subsection (1) does not apply in relation to an amount required to be withheld from a payment under section 12-35 in Schedule 1 to the Taxation Administration Act 1953 , if:

(a) when the payment is made, you have been given:

(i) an *invoice or some other document that relates to the payment that *quotes the individual ' s *ABN; or

(ii) if the payment relates to a *supply that has been made through an *agent - an invoice or some other document that relates to the payment that quotes the agent ' s ABN; or

(b) when the payment is made:

(i) you have been given an invoice or some other document that relates to the payment that purports to quote the individual ' s ABN; and

(ii) the individual does not have an ABN, or the invoice or other document does not in fact quote the individual ' s ABN; and

(iii) you have no reasonable grounds to believe that the individual does not have an ABN, or that the invoice or other document does not quote the individual ' s ABN; or

(c) if the payment relates to a supply that has been made through an agent - when the payment is made:

(i) you have been given an invoice or some other document that relates to the payment that purports to quote the agent ' s ABN; and

(ii) the agent does not have an ABN, or the invoice or other document does not in fact quote the agent ' s ABN; and

(iii) you have no reasonable grounds to believe that the agent does not have an ABN, or that the invoice or other document does not quote the agent ' s ABN.

26-105(6)    
Subsection (2) does not apply in relation to a *non-cash benefit that requires an amount to be paid to the Commissioner, if:

(a) when the non-cash benefit is provided, you have been given:

(i) an *invoice or some other document that relates to the non-cash benefit that *quotes the individual ' s *ABN; or

(ii) if the non-cash benefit relates to a *supply that has been made through an *agent - an invoice or some other document that relates to the non-cash benefit that quotes the agent ' s ABN; or

(b) when the non-cash benefit is provided:

(i) you have been given an invoice or some other document that relates to the non-cash benefit that purports to quote the individual ' s ABN; and

(ii) the individual does not have an ABN, or the invoice or other document does not in fact quote the individual ' s ABN; and

(iii) you have no reasonable grounds to believe that the individual does not have an ABN, or that the invoice or other document does not quote the individual ' s ABN; or

(c) if the non-cash benefit relates to a supply that has been made through an agent - when the non-cash benefit is provided:

(i) you have been given an invoice or some other document that relates to the non-cash benefit that purports to quote the agent ' s ABN; and

(ii) the agent does not have an ABN, or the invoice or other document does not in fact quote the agent ' s ABN; and

(iii) you have no reasonable grounds to believe that the agent does not have an ABN, or that the invoice or other document does not quote the agent ' s ABN.

Exception - voluntarily tell the Commissioner about a mistake

26-105(7)    
Subsection (1) does not apply if, before the Commissioner tells you that an examination is to be made of your affairs relating to a *taxation law for a relevant period, you voluntarily tell the Commissioner, in the *approved form, that you have failed to:

(a) withhold an amount; or

(b) comply with section 16-150 or 389-5 (as the case requires) in Schedule 1 to the Taxation Administration Act 1953 in relation to the amount.

26-105(8)    
Subsection (2) does not apply if, before the Commissioner tells you that an examination is to be made of your affairs relating to a *taxation law for a relevant period, you voluntarily tell the Commissioner, in the *approved form, that you have failed to comply with section 16-150 in Schedule 1 to the Taxation Administration Act 1953 in relation to the amount.

Division 27 - Effect of input tax credits etc. on deductions  

SECTION 27-1   What this Division is about  

Subdivision 27-A - General  

SECTION 27-5  

27-5   Input tax credits and decreasing adjustments  

You cannot deduct under this Act a loss or outgoing you incur, to the extent that the loss or outgoing includes an amount relating to an ^* input tax credit to which you are entitled or a ^* decreasing adjustment that you have.

SECTION 27-10   Certain increasing adjustments  

27-10(1)    

You can deduct an amount of an ^* increasing adjustment that arises under Division 129 of the ^* GST Act.

27-10(2)    
However, you cannot deduct the amount to the extent (if any) that the adjustment arises from an increase in the extent to which the activity giving rise to the adjustment is of a private or domestic nature.

27-10(3)    
If:

(a) you have an ^* increasing adjustment under Division 138 of the ^* GST Act in respect of an asset as a result of the cancellation of your registration under Part 2-5 of the GST Act; and

(b) immediately after the cancellation, you held the asset for the purpose of gaining or producing assessable income;

you can deduct the amount of the increasing adjustment.

27-10(4)    

However, you cannot deduct an amount under subsection (1) or (3) to the extent that, because it becomes a component of a ^* net input tax credit, a reduction is made under section 103-30 (reduction of cost base etc. by net input tax credits).

SECTION 27-15   GST payments  

27-15(1)    
You cannot deduct under this Act a loss or outgoing consisting of a payment under Division 33 of the ^* GST Act.

27-15(2)    
This section does not apply to the payment:

(a) to the extent (if any) that the ^* net amount to which the payment relates was increased under section 21-5 of the *Wine Tax Act (which allows for such increases to take account of wine equalisation tax); and

(b) to the extent (if any) that the ^* net amount was increased under section 13-5 of the *Luxury Car Tax Act (which allows for such increases to take account of luxury car tax); and

(c) to the extent (if any) that the ^* net amount was increased under paragraph 13-10(1)(a) of the Luxury Car Tax Act (which allows for such alterations to take account of increasing luxury car tax adjustments under that Act).

27-15(3)    

This section does not apply to the payment of *assessed GST (under section 33-15 of the ^* GST Act) on a ^* taxable importation that:

(a) was not a ^* creditable importation; or

(b) was ^* partly creditable;

but only to the extent that that payment of assessed GST exceeds the ^* input tax credit (if any) to which you are entitled for that importation.

SECTION 27-20  

27-20   Elements in calculation of amounts  

In calculating an amount that you may be able to deduct:

(a) an element in the calculation that is an amount paid or payable is treated as not including an amount equal to any ^* input tax credit for an ^* acquisition related to the amount paid or payable, or any ^* decreasing adjustment related to that amount; and

(b) an element in the calculation that is an amount received or receivable is treated as not including an amount equal to any ^* GST payable on a ^* taxable supply related to the amount received or receivable, or any ^* increasing adjustment related to that amount.

SECTION 27-25   GST groups and GST joint ventures  

27-25(1)    
A ^* member of a ^* GST group is to be treated, for the purposes of this Division, as if Subdivision 48-B of the ^* GST Act (other than subsections 48-45(3) and (4)) did not apply to that member.

27-25(2)    
A ^* participant in a ^* GST joint venture is to be treated, for the purposes of this Division, as if Subdivision 51-B of the ^* GST Act did not apply to that participant.

SECTION 27-35  

27-35   Certain sections not to apply to certain assets or expenditure  

Sections 27-5 , 27-10 , 27-15 and 27-20 do not apply to assets, or to expenditure, for which you can deduct amounts under Division 40 or 328 .

Note:

See instead Subdivision 27-B .

Subdivision 27-B - Effect of input tax credits etc. on capital allowances  

SECTION 27-80   Cost or opening adjustable value of depreciating assets reduced for input tax credits  

27-80(1)    
A ^* depreciating asset ' s ^* cost is reduced if:

(a) an entity ' s acquisition or importation of the asset constitutes a ^* creditable acquisition or ^* creditable importation; and

(b) the entity is or becomes entitled to an ^* input tax credit for the acquisition or importation; and

(c) the entity can deduct amounts for the asset under Division 40 or 328 .

The reduction is the amount of the input tax credit.

27-80(2)    
A ^* depreciating asset ' s ^* cost is also reduced if:

(a) the entity that ^* holds the asset incurs expenditure that is included in the second element of the asset ' s cost for the income year in which the asset ' s ^* start time occurs; and

(b) the entity is or becomes entitled to an ^* input tax credit for the ^* creditable acquisition or ^* creditable importation to which the expenditure relates; and

(c) the entity can deduct amounts for the asset under Division 40 or 328 .

The reduction is the amount of the input tax credit.

27-80(3)    
However, subsections (1) and (2) do not apply if the ^* cost of the ^* depreciating asset is modified under Division 40 to be its ^* market value.

27-80(3A)    

A ^* depreciating asset ' s ^* opening adjustable value for an income year and its ^* cost is reduced if:

(a) an entity ' s acquisition or importation of the asset constitutes a ^* creditable acquisition or ^* creditable importation; and

(b) the entity is or becomes entitled to an ^* input tax credit in an income year (the credit year ) for the acquisition or importation and the credit year occurs after the income year in which the acquisition or importation occurred; and

(c) the income year is after the one in which the asset ' s ^* start time occurs; and

(d) the entity can deduct amounts for the asset under Division 40 or 328 .

The reduction is the amount of the input tax credit.

27-80(4)    

A ^* depreciating asset ' s ^* opening adjustable value for an income year and its ^* cost is reduced if:

(a) the entity that ^* holds the asset incurs expenditure that is included in the second element of the asset ' s cost for that income year; and

(b) that income year is after the one in which the asset ' s ^* start time occurs; and

(c) the entity is or becomes entitled to an ^* input tax credit for the ^* creditable acquisition or ^* creditable importation to which the expenditure relates for the income year in which the expenditure was incurred; and

(d) the entity can deduct amounts for the asset under Division 40 or 328 .

The reduction is the amount of the input tax credit.

27-80(5)    

If the reduction under subsection (2), (3A) or (4) is more than:

(a) for a subsection (2) case - the ^* depreciating asset ' s ^* cost; or

(b) for a subsection (3A) or (4) case - the depreciating asset ' s ^* opening adjustable value;

the excess is included in the entity ' s assessable income unless the entity is an ^* exempt entity.

Exception: pooling

27-80(6)    
This section does not apply to:

(a) a depreciating asset allocated to a low-value pool or a pool under Division 328 for or in the ^* current year; or

(b) ^* in-house software if expenditure on the software is allocated to a software development pool for the current year; or

(c) a project pool.

SECTION 27-85   Cost or opening adjustable value of depreciating assets reduced: decreasing adjustments  

27-85(1)    
This section applies to an entity if:

(a) the entity can deduct amounts for a ^* depreciating asset under Division 40 or 328 ; and

(b) the entity has a ^* decreasing adjustment in an income year that relates directly or indirectly to the asset.

27-85(1A)    
However, this section does not apply to a ^* decreasing adjustment that arises under Division 129 or 132 of the ^* GST Act.

Note:

See instead section 27-87 .

27-85(2)    
The asset ' s ^* cost is reduced by an amount equal to the ^* decreasing adjustment if the adjustment arises in the income year in which the asset ' s ^* start time occurs.

27-85(3)    

The asset ' s ^* opening adjustable value for an income year and its ^* cost is reduced by an amount equal to the ^* decreasing adjustment if the adjustment arises in that year and that year is after the one in which the asset ' s ^* start time occurs.

27-85(4)    
If the reduction under subsection (2) or (3) is more than:

(a) for a subsection (2) case - the ^* depreciating asset ' s ^* cost; or

(b) for a subsection (3) case - the depreciating asset ' s ^* opening adjustable value;

the excess is included in the entity ' s assessable income unless the entity is an ^* exempt entity.

Exception: pooling

27-85(5)    
This section does not apply to:

(a) a depreciating asset allocated to a low-value pool or a pool under Division 328 for or in the ^* current year; or

(b) ^* in-house software if expenditure on the software is allocated to a software development pool for the current year; or

(c) a project pool.

SECTION 27-87   Certain decreasing adjustments included in assessable income  

27-87(1)    
This section applies to an entity if:

(a) the entity can deduct amounts for a ^* depreciating asset under Division 40 or 328 ; and

(b) the entity has a ^* decreasing adjustment that arises under Division 129 or 132 of the ^* GST Act in an income year that relates directly or indirectly to the asset; and

(c) section 27-95 does not apply to the entity in relation to the asset.

27-87(2)    
The amount of the ^* decreasing adjustment is included in the entity ' s assessable income for the income year unless the entity is an ^* exempt entity.

SECTION 27-90   Cost or opening adjustable value of depreciating assets increased: increasing adjustments  

27-90(1)    
This section applies to an entity if:

(a) the entity can deduct amounts for a ^* depreciating asset under Division 40 or 328 ; and

(b) the entity has an ^* increasing adjustment in an income year that relates directly or indirectly to the asset.

27-90(1A)    
However, this section does not apply to an ^* increasing adjustment that arises under Division 129 or 132 of the ^* GST Act.

Note:

See instead section 27-92 .

27-90(2)    
The asset ' s ^* cost is increased by an amount equal to the ^* increasing adjustment if the adjustment arises in the income year in which the asset ' s ^* start time occurs.

27-90(3)    

The asset ' s ^* opening adjustable value for an income year and its ^* cost is increased by an amount equal to the ^* increasing adjustment if the adjustment arises in that year and that year is after the one in which the asset ' s ^* start time occurs.

Exception: pooling

27-90(4)    
This section does not apply to:

(a) a depreciating asset allocated to a low-value pool or a pool under Division 328 for or in the ^* current year; or

(b) ^* in-house software if expenditure on the software is allocated to a software development pool for the current year; or

(c) a project pool.

SECTION 27-92   Certain increasing adjustments can be deducted  

27-92(1)    
This section applies to an entity if:

(a) the entity can deduct amounts for a ^* depreciating asset under Division 40 or 328 ; and

(b) the entity has an ^* increasing adjustment that arises under Division 129 or 132 of the ^* GST Act in an income year that relates directly or indirectly to the asset.

27-92(2)    
The entity can deduct the amount of the ^* increasing adjustment for the income year.

27-92(3)    
However, the entity cannot deduct the amount to the extent (if any) that the adjustment arises from an increase in the extent to which the activity giving rise to the adjustment is of a private or domestic nature.

SECTION 27-95   Balancing adjustment events  

27-95(1)    
The ^* termination value of a ^* depreciating asset is reduced if the relevant ^* balancing adjustment event is a ^* taxable supply. The reduction is an amount equal to the ^* GST payable on the supply.

27-95(2)    
However, subsection (1) does not apply if the ^* termination value of the ^* depreciating asset is modified under Division 40 to be its ^* market value.

27-95(3)    
The ^* termination value of a ^* depreciating asset is increased if the entity that ^* held the asset has a ^* decreasing adjustment that relates directly or indirectly to that ^* taxable supply in the income year in which the ^* balancing adjustment event occurred. The increase is the amount of the decreasing adjustment.

27-95(4)    
The ^* termination value of a ^* depreciating asset is decreased if the entity that ^* held the asset has an ^* increasing adjustment that relates directly or indirectly to that ^* taxable supply in the income year in which the ^* balancing adjustment event occurred. The decrease is the amount of the increasing adjustment.

27-95(5)    
An amount is included in the assessable income of the entity that ^* held the asset if the entity has a ^* decreasing adjustment that relates directly or indirectly to that ^* taxable supply in a later income year. The amount included is the amount of the decreasing adjustment.

27-95(6)    
The entity that ^* held the asset can deduct an amount if the entity has an ^* increasing adjustment that relates directly or indirectly to that ^* taxable supply in a later income year. The amount it can deduct is the amount of the increasing adjustment.

SECTION 27-100   Pooling  

27-100(1)    
This section contains special rules for expenditure (the pooled expenditure ) incurred by an entity:

(a) on a ^* depreciating asset allocated to a low-value pool; or

(b) on a depreciating asset allocated to a pool under Division 328 for or in an income year; or

(c) on ^* in-house software if the expenditure on the software is allocated to a software development pool; and

(d) on ^* project amounts if the amounts are allocated to a project pool.

Reduction to pools etc.

27-100(2)    
There is a reduction under subsection (3) or (5) if:

(a) the pooled expenditure relates directly or indirectly to a ^* creditable acquisition or ^* creditable importation; and

(b) the entity is or becomes entitled to an ^* input tax credit in an income year (the credit year ) for the acquisition or importation and the credit year occurs after the income year in which the acquisition or importation occurred.

27-100(2A)    
There is a reduction under subsection (4) if:

(a) the pooled expenditure relates directly or indirectly to a ^* creditable acquisition or ^* creditable importation; and

(b) the entity is or becomes entitled to an ^* input tax credit in an income year (the credit year ) for the acquisition or importation.

Reduced cost of assets allocated to a pool

27-100(2B)    
A ^* depreciating asset's ^* cost is reduced if:

(a) an entity's acquisition or importation of the asset constitutes a ^* creditable acquisition or ^* creditable importation; and

(b) the entity is or becomes entitled to an ^* input tax credit for the acquisition or importation and the income year in which the acquisition or importation occurred is the same as the one in which the input tax credit arose; and

(c) the asset is allocated to a low-value pool or a pool under Division 328 for or in that year.

The reduction is the amount of the input tax credit.

Low-value pools

27-100(3)    
For a low-value pool, the ^* closing pool balance of the pool for:

(a) if the credit year is later than the first income year for which ^* depreciating assets were allocated to the pool - the income year before the credit year; or

(b) if the credit year is the first income year for which ^* depreciating assets were allocated to the pool - the credit year;

is reduced by an amount equal to the input tax credit.

Software development pools and project pools

27-100(4)    
For a software development pool or a project pool, the expenditure in the pool for the credit year, or the ^* pool value for the credit year, is reduced by an amount equal to the ^* input tax credit.

Small business pools

27-100(5)    
For a pool under Division 328 , the ^* opening pool balance of the pool for the credit year is reduced by an amount equal to the input tax credit.

No reduction if market value

27-100(5A)    
However, there is no reduction to the ^* cost of a ^* depreciating asset if its cost is modified under Division 40 to be its ^* market value.

Second element of cost

27-100(6)    
There is a reduction under subsection (7) if:

(a) the entity incurs expenditure in an income year (also the credit year ) that is included in the second element of the ^* cost of a ^* depreciating asset allocated to a low-value pool or a pool under Division 328 for or in the credit year; and

(b) the entity is or becomes entitled, after the credit year, to an ^* input tax credit for the expenditure.

27-100(7)    
An amount equal to the amount of the ^* input tax credit is applied in reduction of:

(a) for a low-value pool:

(i) if the credit year is later than the first income year for which ^* depreciating assets were allocated to the pool - the ^* closing pool balance of the pool for the income year before the credit year; or

(ii) if the credit year is the first income year for which ^* depreciating assets were allocated to the pool - the ^* closing pool balance of the pool for the credit year; or

(b) for a pool under Division 328 - the ^* opening pool balance of the pool for the credit year.

27-100(7A)    
There is a reduction to an amount of expenditure included in the second element of the ^* cost of a ^* depreciating asset if:

(a) the asset is allocated to a low-value pool or a pool under Division 328 for or in the income year in which the expenditure was incurred; and

(b) the entity that incurred the expenditure is or becomes entitled to an ^* input tax credit for the expenditure; and

(c) the entitlement arises in the income year in which the expenditure was incurred.

The reduction is the amount of the input tax credit.

Increasing adjustments

27-100(8)    
There is an increase under subsection (9) if the entity has an ^* increasing adjustment (except one that arises under Division 129 or 132 of the ^* GST Act) in an income year (the adjustment year ) that relates directly or indirectly to a ^* creditable acquisition or ^* creditable importation to which the pooled expenditure relates.

Note:

For an increasing adjustment that arises under Division 129 or 132 of the GST Act, see section 27-92 .

27-100(9)    
An amount equal to the amount of that ^* increasing adjustment is added to:

(a) for a low-value pool:

(i) if the adjustment year is later than the first income year for which ^* depreciating assets were allocated to the pool - the ^* closing pool balance of the pool for the income year before the adjustment year; or

(ii) if the adjustment year is the first income year for which ^* depreciating assets were allocated to the pool - the ^* closing pool balance of the pool for the adjustment year; or

(b) for a pool under Division 328 - the ^* opening pool balance of the pool for the adjustment year; or

(c) for ^* in-house software - the amount of expenditure allocated to the software development pool for the adjustment year; or

(d) for a project pool - the ^* pool value for the adjustment year.

Decreasing adjustments

27-100(10)    
There is a decrease under subsection (11) if the entity has a ^* decreasing adjustment (except one that arises under Division 129 or 132 of the ^* GST Act) in an income year (also the adjustment year ) that relates directly or indirectly to a ^* creditable acquisition or ^* creditable importation to which the pooled expenditure relates.

Note:

For a decreasing adjustment that arises under Division 129 or 132 of the GST Act, see section 27-87 .

27-100(11)    
An amount equal to the amount of the ^* decreasing adjustment is applied in reduction of:

(a) for a low-value pool:

(i) if the adjustment year is later than the first income year for which ^* depreciating assets were allocated to the pool - the ^* closing pool balance of the pool for the income year before the adjustment year; or

(ii) if the adjustment year is the first income year for which ^* depreciating assets were allocated to the pool - the ^* closing pool balance of the pool for the adjustment year; or

(b) for a pool under Division 328 - the ^* opening pool balance of the pool for the adjustment year; or

(c) for ^* in-house software - the amount of expenditure allocated to the software development pool for the adjustment year; or

(d) for a project pool - the ^* pool value for the adjustment year.

27-100(12)    
If the amount available for reduction under subsection (11) is more than the amount referred to in paragraph (11)(a), (b), (c) or (d) (whichever is applicable), the excess is included in the entity's assessable income unless the entity is an ^* exempt entity.

SECTION 27-105   Other Division 40 expenditure  

27-105(1)    
This section applies to expenditure for which an entity can deduct amounts under Division 40 (but not under Subdivision 40-B or 40-E , or Subdivision 40-I to the extent that that Subdivision relates to project pools).

27-105(2)    
The amount of the expenditure is reduced if the entity is or becomes entitled to an ^* input tax credit for a ^* creditable acquisition or ^* creditable importation to which the expenditure directly or indirectly relates. The reduction is the amount of the input tax credit that relates to that expenditure.

27-105(3)    
If the entity has a ^* decreasing adjustment in an income year that relates directly or indirectly to the expenditure, an amount equal to the decreasing adjustment is included in the entity ' s assessable income for that income year.

27-105(4)    
If the entity has an ^* increasing adjustment in an income year that relates directly or indirectly to the expenditure, the entity can deduct an amount equal to the increasing adjustment for that income year.

27-105(5)    

If the entity is a partnership and partners in that partnership can deduct amounts under Division 40 because section 40-570 or 40-665 applies, an amount equal to the ^* input tax credit, the ^* decreasing adjustment or the ^* increasing adjustment is apportioned to each of the partners as set out in subsection 40-570(2) or 40-665(2) .

27-105(6)    
However, this section does not apply to an ^* exempt entity.

SECTION 27-110  

27-110   Input tax credit etc. relating to 2 or more things  

This Subdivision applies to an ^* input tax credit, or an ^* increasing adjustment or ^* decreasing adjustment, that relates directly or indirectly to 2 or more things of which at least one is a ^* depreciating asset as if a reasonable proportion of the input tax credit or adjustment related directly or indirectly to each of those depreciating assets and each of those other things.

Division 28 - Car expenses  

SECTION 28-1   What this Division is about  

SECTION 28-5   Map of this Division  

28_5 Map of this Division
        

Subdivision 28-A - Deductions for car expenses  

SECTION 28-10   Application of Division 28  

28-10(1)    
This Division applies to an individual.

28-10(2)    
It also applies to a partnership that includes at least one individual, as if the partnership were an individual.

28-10(3)    
It does not apply to any other entity.

SECTION 28-12   Car expenses  

28-12(1)    

If you owned or leased a *car, you can deduct for the car ' s expenses an amount or amounts worked out using one of 2 methods.

Note 1:

For particular types of cars taken on hire you cannot use one of the 2 methods: see section 28-165 .

Note 2:

In certain circumstances the lessee of a luxury car is taken to be its owner (see subsection 242-15(2) ).

Note 3:

In certain circumstances (for example, under a hire purchase agreement) the notional buyer of property is taken to be its owner (see subsection 240-20(2) ).

28-12(2)    

You must use one of the 2 methods unless an exception applies. If you can ' t use either of the methods, you can ' t deduct anything for the *car expenses.

SECTION 28-13   Meaning of car expense  

28-13(1)    
A car expense is a loss or outgoing to do with a ^* car.

28-13(2)    
In addition, any of the following is a car expense:

(a) a loss or outgoing to do with operating a ^* car;

(b) the decline in value of a car.

28-13(3)    
None of the following is a car expense:

(a) a loss or outgoing incurred, or a payment made, in respect of travel outside Australia;

(b) a taxi fare or similar loss or outgoing.

Subdivision 28-B - Choosing which method to use  

SECTION 28-14   What this Subdivision is about  

SECTION 28-15   Choosing between the 2 methods  

28-15(1)    
Below is a diagram giving information about the 2 methods of calculating car expense deductions.

28-15(2)    
The 2 methods give you the choice of which method best suits your situation and needs. For instance, one method may involve more paperwork than the other, but could give you bigger deductions.

Operative provision

SECTION 28-20   Rules governing choice of method  

28-20(1)    

You can choose only one method for all the *car expenses for the *car for the income year. Choosing one method precludes the other method.

28-20(2)    
However, you can change your choice for the income year.

Example:

You choose the " log book " method and deduct $1,000. On audit, the Commissioner finds that your claim is too high and should be reduced to $500. You would have been able to deduct $700 if you had chosen the " cents per kilometre " method. This rule lets you change your choice and deduct the $700.

28-20(3)    
You can also choose different methods for the same *car for different income years and different methods for different cars for the same year.

Subdivision 28-C - The " cents per kilometre " method  

SECTION 28-25   How to calculate your deduction  

28-25(1)    

To calculate your deduction using the " cents per kilometre " method, use this formula:

Number of *business kilometres travelled by the *car in the income year

×

Rate of cents/kilometre determined under subsection (4) for the car for the income year

28-25(2)    
But you can use this formula for the first 5,000 *business kilometres only. If the *car travelled more than 5,000 business kilometres, you must discard the kilometres in excess of 5,000.

Example:

If the car travelled 5,085 business kilometres, you could claim for 5,000, and would lose the extra 85.

28-25(3)    

Business kilometres are kilometres the *car travelled in the course of:

(a) producing your assessable income; or

(b) your *travel between workplaces.

You calculate the number of business kilometres by making a reasonable estimate.

28-25(4)    

For the purposes of subsection (1), the Commissioner may, by legislative instrument, determine rates of cents per kilometre for cars for an income year.

28-25(5)    

In determining a rate, the Commissioner must have regard to the average operating costs for the cars to be covered by that rate.

Note:

Examples of operating costs include fixed costs such as registration, insurance and depreciation, and variable costs such as fuel and maintenance.

SECTION 28-30  

28-30   Capital allowances  

If a ^* balancing adjustment event occurs for the ^* car, you will need to refer to the capital allowances rules in Division 40 to find out how using this method affects the operation of those rules. See section 40-370 (about balancing adjustments for some cars).

SECTION 28-35  

28-35   Substantiation  
To use this method, you do not need to substantiate the ^* car expenses for the ^* car.

(Repealed) Subdivision 28-D - The " 12% of original value " method  

28-45   (Repealed) SECTION 28-45 How to calculate your deduction  
(Repealed by No 162 of 2015)

28-50   (Repealed) SECTION 28-50 Eligibility  
(Repealed by No 162 of 2015)

28-55   (Repealed) SECTION 28-55 Capital allowances  
(Repealed by No 162 of 2015)

28-60   (Repealed) SECTION 28-60 Substantiation  
(Repealed by No 162 of 2015)

(Repealed) Subdivision 28-E - The " one-third of actual expenses " method  

28-70   (Repealed) SECTION 28-70 How to calculate your deduction  
(Repealed by No 162 of 2015)

28-75   (Repealed) SECTION 28-75 Eligibility  
(Repealed by No 162 of 2015)

28-80   (Repealed) SECTION 28-80 Substantiation  
(Repealed by No 162 of 2015)

Subdivision 28-F - The " log book " method  

SECTION 28-90   How to calculate your deduction  

28-90(1)    
To use the " log book " method, you multiply the amount of each ^* car expense by the ^* business use percentage.

The expense

28-90(2)    
The expense must qualify as a deduction under some provision of this Act outside this Division (or would qualify if, while you ^* held the ^* car, you had used it only in producing your assessable income). If only part of the expense would qualify, you multiply that part by the ^* business use percentage.

Example:

You borrow money to buy a car. You make repayments of principal and payments of interest.

You cannot deduct the repayments of principal because they are capital expenses.

The interest payments would be deductible in full if, throughout the income year, you had used the car only in producing your assessable income.

Using the " log book " method:

• if you held the car for the whole income year - multiply the interest payments by the business use percentage;

• if you held the car for only 6 months of the income year - multiply the interest payments for those 6 months by the business use percentage.

To find out whether an expense qualifies as a deduction under this Act, see Division 8 (Deductions).

The percentage

28-90(3)    
The business use percentage is calculated by dividing:

• the number of ^* business kilometres that the ^* car travelled in the period when you ^* held it during the income year;

by

• the total number of kilometres that the car travelled in that period;

and expressing the result as a percentage.

28-90(4)    

Business kilometres are kilometres the ^* car travelled in the course of:

(a) producing your assessable income; or

(b) your ^* travel between workplaces.

28-90(5)    
You calculate the number of business kilometres by making a reasonable estimate. The estimate must take into account all relevant matters, including:

(a) any log books, odometer records or other records you have; and

(b) any variations in the pattern of use of the ^* car; and

(c) any changes in the number of cars you used in the course of producing your assessable income.

28-90(6)    

You hold a ^* car while you own it, or it is leased to you, for use in the course of producing your assessable income, even if it is also used for some other purpose.

Note 1:

In certain circumstances the lessee of a luxury car is taken to be its owner (see subsection 242-15(2) ).

Note 2:

In certain circumstances the notional buyer of property is taken to be its owner (see subsection 240-20(2) ).

SECTION 28-95  

28-95   Eligibility  
You can use this method only if you ^* held the ^* car for some or all of the income year.

SECTION 28-100   Substantiation  

28-100(1)    
To use this method, you must substantiate the ^* car expenses under Subdivision 900-C .

28-100(2)    
You must also keep a log book. Subdivision 28-G explains:

• how often you need to keep a log book;

• how to keep a log book.

The log book is relevant to estimating the number of business kilometres the ^* car travelled in the period when you ^* held it during the income year.

28-100(3)    
You must keep odometer records for the period when you ^* held the ^* car during the income year. Subdivision 28-H tells you about odometer records, which document the total number of kilometres the car travelled in that period.

28-100(4)    
You must record the following information, in writing, before you lodge your ^* income tax return:

(a) your estimate of the number of ^* business kilometres; and

(b) the ^* business use percentage.

However, the Commissioner may allow you to record the information later.

28-100(5)    
You must retain the log book and the odometer records. Subdivision 28-I has the rules about this.

Subdivision 28-G - Keeping a log book  

SECTION 28-105   What this Subdivision is about  

SECTION 28-110  

28-110   Steps for keeping a log book  
There are 3 steps you need to follow in keeping a log book:

• identify an income year for which to keep a log book;

• choose a period of at least 12 weeks for the log book to cover;

• record journeys made in the car during the log book period in the course of producing your assessable income.

Operative provisions

SECTION 28-115   Income years for which you need to keep a log book  

28-115(1)    
You need to keep a log book for the first income year for which you use this method for the ^* car.

28-115(2)    
Having kept a log book for one income year, you don't need to keep a new one for the next 4 or more income years unless subsection (3) or (4) requires it. If you haven't kept a new log book for 4 income years in a row, you must keep one for the next income year.

Example:

If you keep a log book in 1997-98, you would need to keep the next one in 2002-2003, unless subsection (3) or (4) requires one sooner.

28-115(3)    
You must keep a log book for an income year if the Commissioner sends you a notice before the year directing you to keep a log book for the ^* car for that year.

28-115(4)    
You must keep a log book for an income year if, during that year, you get one or more additional ^* cars for which you want to use the ``log book'' method for that year.

28-115(5)    
When you replace one ^* car with another, you might have a period when you ^* hold both the new car and the old car, or a period when you no longer ^* hold the old car but do not yet hold the new car. In both these cases, you are treated for the purposes of subsection (4) as if you held the one car continuously.

28-115(6)    
You may choose to keep a log book for an income year even if you don't need to; for example, because you want to establish a higher ^* business use percentage.

SECTION 28-120   Choosing the 12 week period for a log book  

28-120(1)    
The log book must cover a continuous period of at least 12 weeks throughout which you ^* held the ^* car. If you hold the car for less than 12 weeks, the period must be the entire period for which you held the car.

28-120(2)    
The period may overlap the start or end of the income year, so long as it includes part of the year.

28-120(3)    
If you want to use the ``log book'' method for 2 or more ^* cars for the same income year, the log books for those cars must cover periods that are concurrent.

SECTION 28-125   How to keep a log book  

28-125(1)    
It is in your interests to record in the log book any journey made in the ^* car during the log book period in the course of producing your assessable income. If a journey is not recorded, the log book will indicate a lower ^* business use percentage than is actually the case.

28-125(2)    
A journey is recorded by making in the log book an entry specifying:

(a) the day the journey began and the day it ended;

(b) the ^* car's odometer readings at the start and end of the journey;

(c) how many kilometres the car travelled on the journey;

(d) why the journey was made.

The record must be made at the end of the journey or as soon as possible afterwards.

28-125(3)    
If 2 or more journeys in a row are made in the ^* car on the same day in the course of producing your assessable income, they can be recorded as a single journey.

28-125(4)    
The following must be entered in the log book:

(a) when the log book period begins and ends;

(b) the ^* car's odometer readings at the start and the end of the period;

(c) the total number of kilometres that the car travelled during the period;

(d) the number of kilometres that the car travelled, in the course of producing your assessable income, on journeys recorded in the log book;

(e) the number of kilometres referred to in paragraph (d), expressed as a percentage of the total number referred to in paragraph (c).

Each of the entries must be made at or as soon as possible after the start or end of the period, as appropriate.

28-125(5)    
Each entry in the log book must be in English.

SECTION 28-130   Replacing one car with another  

28-130(1)    
For the purposes of using the ``log book'' method, you may nominate one ^* car as having replaced another car with effect from a day specified in the nomination.

28-130(2)    
After the nomination takes effect, the replacement ^* car is treated as the original car, and the original car is treated as a different car. This means that you do not need to repeat for the replacement car the steps you have already taken for the original car under this Subdivision.

28-130(3)    
You must record the nomination in writing before you lodge your ^* income tax return for the income year in which the nomination takes effect. However, the Commissioner may allow you to do it later.

28-130(4)    
You must retain the nomination document until the end of the period for which you must retain the last log book that you began to keep for the original ^* car before the day of effect of the nomination.

28-130(5)    
Section 28-150 (which is about retaining log books) applies to the nomination document in the same way as it applies to that last log book.

Subdivision 28-H - Odometer records for a period  

SECTION 28-135   What this Subdivision is about  

Operative provision

SECTION 28-140   How to keep odometer records for a car for a period  

28-140(1)    
Odometer records for a period are kept in the form of a document in which the following are entered:

(a) the ^* car's odometer readings at the start and the end of the period;

(b) if there is a nomination under section 28-130 to replace the car with another ^* car with effect from a day in that period - the odometer readings, at the end of that day, of both cars affected by the nomination.

28-140(2)    
Each entry under subsection (1) must be in English and must be made at or as soon as possible after the start or end of the period, or the end of the specified day, as appropriate.

28-140(3)    
The following must also be entered in the document:

(a) the ^* car's make, model and registration number (if any);

(b) if the car has an internal combustion engine - its engine capacity expressed in cubic centimetres;

(c) if there is a nomination under section 28-130 to replace the car with another ^* car - the corresponding details for the other car affected by the nomination.

28-140(4)    
Each entry under subsection (3) must be made in English and must be made before you lodge your ^* income tax return.

28-140(5)    
The Commissioner may allow you to make an entry under this section after you lodge your ^* income tax return.

Subdivision 28-I - Retaining the log book and odometer records  

SECTION 28-150   Retaining the log book for the retention period  

28-150(1)    
You must retain the log book:

(a) first, until the end of the latest income year for which you rely on the log book to support your calculation of the ^* business use percentage for the ^* car; and

(b) then for another 5 years.

The period for which you must retain the log book is called the retention period .

28-150(2)    
The 5 years start on the due day for lodging your ^* income tax return for that latest income year. If you lodge your return later, the 5 years start on the day you lodge it.

28-150(3)    
However, the ^* retention period is extended if, when the 5 years end, you are involved in a dispute with the Commissioner that relates to a deduction worked out using a ^* business use percentage that you are relying on the log book to support. See section 900-170 .

28-150(4)    
If you do not retain the log book for the ^* retention period, you cannot deduct any amount worked out using a ^* business use percentage that you are relying on the log book to support. If you have already deducted such an amount, your assessment may be amended to disallow the deduction.

28-150(5)    
For the purposes of the rules about retaining and producing records of expenses (see Subdivision 900-G ), the log book is treated as a record of the ^* car expenses for each year for which you use a ^* business use percentage that you are relying on the log book to support.

28-150(6)    
If you lose the log book, there are rules that might help you in section 900-205. For the purposes of the rules about relief from the effects of failing to substantiate (see Subdivision 900-H), not doing something required by this Division is treated in the same way as not doing something necessary to follow the rules in Division 900 .

SECTION 28-155   Retaining odometer records  

28-155(1)    
You must retain your odometer records relating to the period when you ^* held the ^* car in the income year.

28-155(2)    
If you keep a log book for the income year, you must retain the odometer records for the same period as the log book, and section 28-150 applies to them in the same way as it applies to the log book.

28-155(3)    
If you don't keep a log book for the income year, you must retain the odometer records for the same period as written evidence of a ^* car expense for the ^* car for the income year, and section 900-75 applies to them in the same way as it applies to written evidence of an expense.

Note:

Section 900-75 is about retaining written evidence of a car expense.

Subdivision 28-J - Situations where you cannot use, or do not need to use, one of the 2 methods  

SECTION 28-160   What this Subdivision is about  

Operative provisions

SECTION 28-165   Exception for particular cars taken on hire  

28-165(1)    

For particular types of ^* cars taken on hire you cannot use one of the 2 methods to calculate your deductions for *car expenses.

28-165(2)    
Instead, you must calculate the deductions under the normal principles governing deductions, including the rules for apportioning a loss or outgoing that is only partly attributable to producing assessable income.

28-165(3)    
This section applies to a taxi taken on hire.

28-165(4)    
It also applies to a *motor vehicle taken on hire under an agreement of a kind ordinarily entered into by people who take motor vehicles on hire intermittently, as the occasion requires, on an hourly, daily, weekly or short term basis, except if the motor vehicle:

(a) has been taken on hire under successive agreements of a kind that result in substantial continuity of the motor vehicle being taken on hire; or

(b) it is reasonable to expect that the motor vehicle will be taken on hire under successive agreements of a kind that will so result.

SECTION 28-170   Exception for particular cars used in particular ways  

28-170(1)    

For particular types of *cars used in particular ways you don ' t need to use one of the 2 methods to calculate your deductions for *car expenses.

28-170(2)    

You may use one of the 2 methods, or you may instead calculate the deductions under the normal principles governing deductions, including the rules for apportioning a loss or outgoing that is only partly attributable to producing assessable income.

28-170(3)    

This section applies if, whenever you used the *car in the income year:

(a) the car was covered by the description in column 2 of an item in the table below; and

(b) you used the car as described in column 3 of that item.

Item	Column 2 Particular car	Column 3 Exempt use
1.	The *car was:	You used the car only in one or more of the following ways:
	(a)	a panel van or utility truck; or	(a)	in the course of producing your assessable income;
	(b)	any other road vehicle designed to carry a load of less than 1 tonne (other than a vehicle designed principally to carry passengers); or	(b)	to go between your residence and a place where you use the car in the course of producing your assessable income;
	(c)	a taxi.	(c)	by providing the car to someone else to drive between his or her residence and a place where the car is used in the course of producing your assessable income;
			(d)	for the purpose of travel that is incidental to using the car in the course of producing your assessable income;
			(e)	for your own or someone else's private use that was minor, infrequent and irregular.
.
2.	The *car was part of the *trading stock of a *business of selling cars that you carried on.	You used the car in the course of the business.
.
3.	The *car was any type of car.	You let the car on lease or hire in the course of a *business of letting cars on lease or hire that you carry on.
.
4.	The *car was any type of car.	As an employer, you provided the car for the exclusive use of one or more of the following: (a) your employees; (b) their *relatives; in circumstances where one or more of them was entitled to use the car for private purposes.
			Note:	This Subdivision also applies to entities that are not employers, but pay (or are liable to pay) withholding payments covered by subsection 28-185(3).

SECTION 28-175   Further miscellaneous exceptions  

28-175(1)    

This section lists some miscellaneous cases where you don't need to use one of the 2 methods to calculate your deductions for *car expenses.

28-175(2)    

You may use one of the 2 methods, or you may instead calculate the deductions under the normal principles governing deductions, including the rules for apportioning a loss or outgoing that is only partly attributable to producing assessable income.

28-175(3)    
The cases are as follows:

(a) the *car was unregistered throughout the period when you *held it during the income year, and during that period you used it principally in the course of producing your assessable income; or

(b) at some time during the income year the *car was part of the *trading stock of a *business of selling cars that you carried on, and you didn ' t use the car at any time during that year; or

(c) the expense is to do with repairs to or other work on the *car, and you incurred it in the course of a *business that you carried on of doing repairs or other work on cars.

In applying paragraph (a), the car is taken to be registered in a particular place while it is lawful to drive the car on a public road there.

SECTION 28-180   Car expenses related to award transport payments  

28-180(1)    

Subdivision 900-I (Award transport payments) allows certain losses or outgoings to be deducted without getting written evidence. The losses or outgoings are *transport expenses related to an allowance or reimbursement paid or payable to you by your employer under an *industrial instrument that was in force on 29 October 1986.

Note:

This Subdivision also applies to entities that are not employers, but pay (or are liable to pay) withholding payments covered by subsection 28-185(3).

28-180(2)    

If that Subdivision lets you deduct *car expenses, or parts of *car expenses, without getting written evidence, you don't need to use any of the 2 methods to calculate your deductions for those expenses or parts of expenses.

28-180(3)    

However, your use of the 2 methods for other *car expenses you incur for the *car for the income year is affected, unless you elect not to rely on Subdivision 900-I . Section 900-250 deals with this matter.

SECTION 28-185   Application of Subdivision 28-J to recipients and payers of certain withholding payments  

Application to recipients

28-185(1)    
If an individual receives, or is entitled to receive, ^* withholding payments covered by subsection (3), this Subdivision applies to him or her:

(a) in the same way as it applies to an employee; and

(b) as if an entity (a notional employer ) that makes (or is liable to make) such payments to him or her were his or her employer; and

(c) as if any other individual who receives, or is entitled to receive, such payments from a notional employer were also an employee of the notional employer.

Application to payers

28-185(2)    
This Division applies to an entity that makes, or is liable to make, ^* withholding payments covered by subsection (3):

(a) in the same way as it applies to an employer; and

(b) as if an individual to whom the entity makes (or is liable to make) such payments were the entity's employee.

Withholding payments covered

28-185(3)    

This subsection covers a ^* withholding payment covered by any of the provisions in Schedule 1 to the Taxation Administration Act 1953 listed in the table.

Withholding payments covered
Item	Provision	Subject matter
1	Section 12-35	Payment to employee
.
2	Section 12-40	Payment to company director
.
3	Section 12-45	Payment to office holder
.
3A	Section 12-47	Payment to *religious practitioner
.
4	Section 12-50	Return to work payment
.
5	Subdivision 12-C	Payments for retirement or because of termination of employment
.
6	Subdivision 12-D	Benefit and compensation payments

Division 30 - Gifts or contributions  

Guide to Division 30  

SECTION 30-1   What this Division is about  

TABLE OF SECTIONS

TABLE OF SECTIONS

30-5	How to find your way around this Division
30-10	Index

SECTION 30-5   How to find your way around this Division  

30-5(1)    

You should start at Subdivision 30-A unless you are making a contribution or gift to a political party, independent candidate or member.

Note:

Subdivision 30-DA deals with the deductibility of contributions and gifts to political parties, independentcandidates and members.

30-5(2)    
Subdivision 30-A contains a table of all the gifts and contributions that you can deduct. You need to look at the table to see whether the type of gift or contribution you are making is covered by it.

30-5(3)    
In some cases, the table sends you off to Subdivision 30-B . It has a number of tables that list particular funds, authorities or institutions that deductible gifts can be made to.

30-5(4)    
In other cases, the table sends you off to Subdivision 30-C . It contains rules that apply to particular gifts of property.

30-5(4AA)    

Subdivision 30-BA provides for the Commissioner to endorse as a deductible gift recipient an entity that is, or operates, a fund, authority or institution. The relevance of the Subdivision to you is that generally you can deduct only a gift you make to a recipient that is endorsed or named in:

(a)    this Division; or

(b)    regulations made for the purposes of this Division.

Note:

The fact that gifts to a recipient registered in the Australian Business Register are deductible will be shown in the Register.

30-5(4AB)    

Subdivision 30-CA sets out administrative rules which do not directly affect whether you can deduct a gift you make. The rules require:

(a)    a receipt issued by an entity for a gift to the entity or to a fund, authority or institution operated by the entity to show the entity ' s ABN; and

(b)    the Australian Business Registrar to enter in the Australian Business Register a statement in relation to an entity entered in the Register if:

(i) gifts to the entity are deductible; or

(ii) gifts to a fund, authority or institution operated by the entity are deductible.

30-5(4B)    

Subdivision 30-DB allows you to spread deductions for certain gifts and covenants over up to 5 income years.

30-5(5)    
(Repealed by No 40 of 2023)

SECTION 30-10  

30-10   Index  

There is an index to this Division in Subdivision 30-G .

Subdivision 30-A - Deductions for gifts or contributions  

SECTION 30-15   Table of gifts or contributions that you can deduct  

30-15(1)    
You can deduct a gift or contribution that you make in the situations set out in the following table. It tells you:

• who the recipient of the gift or contribution can be; and

• the type of gift or contribution that you can make; and

• how much you can deduct for the gift or contribution; and

• any special conditions that apply.

30-15(2)    

A testamentary gift or contribution is not deductible under this section.

Note:

Subdivision 30-DA deals with the deductibility of contributions and gifts to political parties, independent candidates and members.

Deductible gifts or contributions
Recipient	Type of gift or contribution	How much you can deduct	Special conditions
1	A fund, authority or institution covered by an item in any of the tables in Subdivision 30-B.	A gift of: (a) money; or (b) property (including *trading stock) that you purchased during the 12 months before making the gift; or (c) an item of your trading stock if: • the gift is a disposal of the item outside the ordinary course of your *business; and • no election has been made, oris made, in relation to the item under Subdivision 385-E (about electing to spread or defer profit from the forced disposal or death of *live stock); or (d) property valued by the Commissioner at more than $5,000; or (e) *shares that you have acquired in a *listed public company if: • the shares are listed for quotation in the official list of a stock exchange that is listed under the heading " Australia " in regulations made for the purposes of the definition of *approved stock exchange; and • the *market value of the shares on the day you made the gift is $5,000 or less; and • you acquire the shares at least 12 months before making the gift.	(a) if the gift is money - the amount you are giving; or (b) if the gift is property (except trading stock covered by paragraph (c), property covered by paragraph (d) or shares covered by paragraph (e)) - the lesser of the market value of the property on the day you made the gift and the amount you paid for the property; or (c) if the gift is an item of your trading stock: • that you disposed of outside the ordinary course of your business; and • for which no election has been made, or is made, in relation to the item under Subdivision 385-E; the market value of the item on the day you made the gift; or (d) if the gift is property valued by the Commissioner at more than $5,000 and you did not purchase the property during the 12 months before making the gift - the value of the property as determined by the Commissioner; or (e) if the gift is shares described in paragraph (e) of the previous column - the market value of the shares on the day you made the gift.	(a) the fund, authority or institution must be in Australia; and (aa) the fund, authority or institution must either meet the requirements of section 30-17 or be mentioned by name in the relevant table item in Subdivision 30-B; and (b) the value of the gift must be $2 or more; and (c) any conditions set out in the relevant table item in Subdivision 30-B must be satisfied; and (d) if the property is to be valued by the Commissioner - the requirements of section 30-212 are satisfied.
2	An *ancillary fund established and maintained under a will or instrument of trust solely for: (a) the purpose of providing money, property or benefits: • to a fund, authority or institution gifts to which are deductible under item 1 of this table; and • for any purposes set out in the item of the table in Subdivision 30-B that covers the fund, authority or institution; or (b) the establishment of such a fund, authority or institution.	A gift of: (a) money; or (b) property (including *trading stock) that you purchased during the 12 months before making the gift; or (c) an item of your trading stock if: • the gift is a disposal of the item outside the ordinary course of your *business; and • no election has been made, or is made, in relation to the item under Subdivision 385-E (about electing to spread or defer profit from the forced disposal or death of *live stock); or (d) property valued by the Commissioner at more than $5,000; or (e) *shares that you have acquired in a *listed public company if: • the shares are listed for quotation in the official list of a stock exchange that is listed under the heading " Australia " in regulations made for the purposes of the definition of *approved stock exchange; and • the *market value of the shares on the day you made the gift is $5,000 or less; and • you acquire the shares at least 12 months before making the gift.	(a) if the gift is money - the amount you are giving; or (b) if the gift is property (except trading stock covered by paragraph (c), property covered by paragraph (d) or shares covered by paragraph (e)) - the lesser of the market value of the property on the day you made the gift and the amount you paid for the property; or (c) if the gift is an item of your trading stock: • that you disposed of outside the ordinary course of your business; and • for which no election has been made, or is made, in relation to the item under Subdivision 385-E; the market value of the item on the day you made the gift; or (d) if the gift is property valued by the Commissioner at more than $5,000 and you did not purchase the property during the 12 months before making the gift - the value of the property as determined by the Commissioner; or (e) if the gift is shares described in paragraph (e) of the previous column - the market value of the shares on the day you made the gift.	(a) the value of the gift must be $2 or more; and (b) the terms of the will or trust must allow the trustee to invest money that the ancillary fund receives because of the gift only in a way that an *Australian law allows trustees to invest trust money; and (c) the ancillary fund must meet the requirements of section 30-17; and (d) if the property is to be valued by the Commissioner - the requirements of section 30-212 are satisfied.
3	(Repealed by No 65 of 2006)
4	(a) the Australiana Fund; or (b) a public library in Australia; or (c) a public museum in Australia; or (d) a public art gallery in Australia; or (e) an institution in Australia consisting of a public library, a public museum and a public art gallery or any 2 of them.	A gift of property (except an estate or interest in land or in a building or part of a building).	The general rule is that you can deduct the average of the *GST inclusive market values (as reduced under subsection (3) if that subsection applies) specified in the written valuations you get from approved valuers. Subdivision 30-C sets out: (a) how a person becomes an approved valuer; and (b) the exceptions to the general rule; and (c) the situations when the amount you can deduct is reduced. If the property is jointly owned, see section 30-225 to work out how much of the gift you can deduct.	(a) the property must be accepted by the recipient for inclusion in a collection itis maintaining or establishing; and (b) the value of the gift must be $2 or more; and (ba) the institution must meet the requirements of section 30-17, unless it is the Australiana Fund; and (c) you must satisfy the valuation requirements in section 30-200, unless section 30-205 (about the proceeds of the sale being assessable) applies.
5	The Commonwealth (for the purposes of Artbank).	A gift of property (except an estate or interest in land or in a building or part of a building).	The general rule is that you can deduct the average of the *GST inclusive market values (as reduced under subsection (3) if that subsection applies) specified in the written valuations you get from approved valuers. Subdivision 30-C sets out: (a) how a person becomes an approved valuer; and (b) the exceptions to the general rule; and (c) the situations when the amount you can deduct is reduced. If the property is jointly owned, see section 30-225 to work out how much of the gift you can deduct.	(a) the property must be accepted by the Commonwealth for inclusion in a collection maintained, or being established, for the purposes of Artbank; and (b) you must satisfy the valuation requirements in section 30-200, unless section 30-205 (about the proceeds of the sale being assessable) applies.
6	(a) the National Trust of Australia (New South Wales); or (b) the National Trust of Australia (Victoria); or (c) National Trust of Australia (Queensland) Limited; or (d) the National Trust of South Australia; or (e) the National Trust of Australia (W.A.); or (f) the National Trust of Australia (Tasmania); or (g) the National Trust of Australia (Northern Territory); or (h) the National Trust of Australia (A.C.T.); or (i) the Australian Council of National Trusts.	A gift of a place included in: (a) the National Heritage List, or the Commonwealth Heritage List, under the Environment Protection and Biodiversity Conservation Act 1999 ; or (b) the Register of the National Estate under the Australian Heritage Council Act 2003 .	The general rule is that you can deduct the average of the *GST inclusive market values (as reduced under subsection (3) if that subsection applies) specified in the written valuations you get from approved valuers. Subdivision 30-C sets out: (a) how a person becomes an approved valuer; and (b) the exceptions to the general rule; and (c) the situations when the amount you can deduct is reduced. If the place is jointly owned, see section 30-225 to work out how much of the gift you can deduct.	(a) the place must be accepted by the recipient for the purpose of preserving it for the benefit of the public; and (b) the value of the gift must be $2 or more; and (c) you must satisfy the valuation requirements in section 30-200, unless section 30-205 (about the proceeds of the sale being assessable) applies.
7	A *deductible gift recipient that is a fund, authority or institution covered by item 1 or 2 of this table.	A contribution of: (a) money, if the amount is more than $150; or (b) property that you purchased during the 12 months before making the contribution, if the lesser of: • the *market value of the property on the day you made the contribution; and • the amount you paid for the property; is more than $150; or (c) property valued by the Commissioner at more than $5,000, if you did not purchase the property during the 12 months before making the contribution; or (ca) *shares that you have acquired in a *listed public company if: • the shares are listed for quotation in the official list of a stock exchange that is listed under the heading " Australia " in regulations made for the purposes of the definition of *approved stock exchange; and • the market value of the shares on the day you made the contribution is more than $150 and less than or equal to $5,000; and	(a) if the contribution is money - the amount of the contribution, reduced by the *GST inclusive market value, on the day you made the contribution, of the right to attend, or participate in, the fund-raising event; or (b) if the contribution is property that you purchased during the 12 months before making the contribution - the lesser of: • the market value of the property on the day you made the contribution; and • the amount you paid for the property; reduced by the GST inclusive market value, on the day you made the contribution, of the right to attend, or participate in, the fund-raising event; or (c) if the contribution is property valued by the Commissioner at more than $5,000 and you did not purchase the property during the 12 months before making the contribution - the value of the property as determined by the Commissioner, reduced by the GST inclusive market value, on the day you made the contribution, of the right to attend, or participate in, the fund-raising event; or	(a) if the contribution is money - the GST inclusive market value, on the day you made the contribution, of the right to attend, or participate in, the fund-raising event must not exceed the lesser of: • 20% of the amount of the contribution; and • $150; and (b) if the contribution is property that you purchased during the 12 months before making the contribution - the GST inclusive market value, on the day you made the contribution, of the right to attend, or participate in, the fund-raising event must not exceed the lesser of: • 20% of the lesser of the market value of the property on the day you made the contribution and the amount you paid for the property; and • $150; and (c) if the contribution is property valued by the Commissioner at more than $5,000 and you did not purchase the property during the 12 months before making the contribution - the GST inclusive market value, on the day you made the contribution, of the right to attend, or participate in, the fund-raising event must not exceed $150; and
		• you acquire the shares at least 12 months before making the contribution; where: (d) the contribution is not a gift; and (e) either: • the contribution is made in return for a right permitting you to attend, or participate in, a particular *fund-raising event in Australia; or • the contribution is made in return for a right permitting an individual (other than you) to attend, or participate in, a particular fund-raising event in Australia.	(ca) if the contribution is shares described in paragraph (ca) of the previous column - the market value of the shares on the day you made the contribution, reduced by the GST inclusive market value, on the day you made the contribution, of the right to attend, or participate in, the fund-raising event.	(ca) if the contribution is shares described in paragraph (ca) of the column headed " Type of gift or contribution " - the GST inclusive market value, on the day you made the contribution, of the right to attend, or participate in, the fund-raising event must not exceed the lesser of: • 20% of the market value of the shares on the day you made the contribution; and • $150; and (d) if, instead of making the contribution, you had made a gift of money to the fund, authority or institution, and: • the amount of the gift had been more than $2; and • the gift had been made for the same purpose for which funds were to be raised by the fund-raising event; you could have deducted the gift under item 1 or 2 of this table; and (e) you must be an individual; and (f) you cannot deduct more than 2 contributions in relation to the same fund-raising event; and (g) if the property is to be valued by the Commissioner - the requirements of section 30-212 are satisfied.
8	A *deductible gift recipient that is a fund, authority or institution covered by item 1 or 2 of this table.	A contribution of money, if: (a) the amount is more than $150; and (b) the contribution is not a gift; and (c) you made the contribution by way of consideration for the supply of goods or services; and (d) you made the contribution because you were the successful bidder at an auction that: • was a particular *fund-raising event in Australia; or • was held at a particular fund-raising event in Australia; and (e) the amount of the contribution exceeds the *GST inclusive market value, on the day you made the contribution, of the goods or services.	The amount of the contribution, reduced by the GST inclusive market value, on the day you made the contribution, of the goods or services.	(a) the GST inclusive market value, on the day you made the contribution, of the goods or services must not exceed the lesser of: • 20% of the amount of the contribution; and • $150; and (b) if, instead of making the contribution, you had made a gift of money to the fund, authority or institution, and: • the amount of the gift had been more than $2; and • the gift had been made for the same purpose for which funds were to be raised by the fund-raising event; you could have deducted the gift under item 1 or 2 of this table; and (c) you must be an individual.

30-15(3)    

For the purposes of items 4, 5 and 6 of the table in subsection (2), the ^* GST inclusive market values of the property or place in question are reduced by 1/11 if you would have been entitled to an ^* input tax credit if:

(a) you had ^* acquired the property or place at the time you made the gift; and

(b) your acquisition had been for a ^* creditable purpose.

30-15(4)    

For the purposes of item 7 of the table in subsection (2), in working out the ^* GST inclusive market value of the right in question, disregard anything that would prevent or restrict conversion of the right to money.

30-15(5)    

For the purposes of item 8 of the table in subsection (2), in working out the ^* GST inclusive market value of the goods or services in question, disregard anything that would prevent or restrict conversion of the goods or services to money.

SECTION 30-17   Requirements for certain recipients  

30-17(1)    
This section sets out requirements to be met for you to be able to deduct a gift you make to a fund, authority or institution described in the column headed " Recipient " of item 1, 2 or 4 of the table in section 30-15 . However, this section does not apply to:

(a) a fund, authority or institution that is mentioned by name in an item of a table in Subdivision 30-B ; or

(b) (Repealed by No 88 of 2009)

(c) the Australiana Fund.

30-17(2)    
The fund, authority or institution must:

(a) be an entity or ^* government entity that is endorsed under Subdivision 30-BA as a ^* deductible gift recipient; or

(b) in the case of a fund - either:

(i) be owned legally by an entity that is endorsed under Subdivision 30-BA as a ^* deductible gift recipient for the operation of the fund; or

(ii) be under the control of one or more persons who constitute a ^* government entity that is endorsed under Subdivision 30-BA as a ^* deductible gift recipient for the operation of the fund; or

(c) in the case of an authority or institution - be part of an entity or ^* government entity that is endorsed under Subdivision 30-BA as a ^* deductible gift recipient for the operation of the authority or institution.

Example:

A public fund that is established and maintained for constructing a building to be used by a State school and is controlled by the principal of the school would be an example of a fund under the control of one or more persons who constitute a government entity that is endorsed as a deductible gift recipient for the operation of the fund, if the school were so endorsed.

Subdivision 30-B - Tables of recipients for deductible gifts  

Health

SECTION 30-20   Health  

30-20(1)    

This table sets out general categories of health recipients.

Health - General
Item	Fund, authority or institution	Special conditions - fund, authority or institution	Special conditions - gift
1.1.1	a public hospital	the public hospital must be:	none
		(a)	an *Australian government agency; or
		(b)	a *registered charity
1.1.2	a hospital carried on by a society or association	the society or association must be a *registered charity	none
1.1.3	a public fund maintained for:	(a)	the public fund must have been established before 23 October 1963; and	none
	(a)	the purpose of providing money for hospitals covered by item 1.1.1 or 1.1.2; or
	(b)	the establishment of such hospitals	(b)	the public fund must be, or be operated by, an *Australian government agency or a *registered charity; and
		(c)	the hospitals must satisfy the special conditions set out in item 1.1.1 or 1.1.2 (as applicable)
1.1.4	a public authority engaged in research into the causes, prevention or cure of disease in human beings, animals or plants	the public authority must be:	the gift must be made for such research
		(a)	an *Australian government agency; or
		(b)	a *registered charity
1.1.5	a public institution engaged solely in research into the causes, prevention or cure of disease in human beings, animals or plants	the public institution must be:	none
		(a)	an *Australian government agency; or
		(b)	a *registered charity
1.1.6	a *registered health promotion charity	none	none
1.1.7	a public ambulance service	the public ambulance service must be:	none
			(a)	an *Australian government agency; or
			(b)	a *registered charity
1.1.8	a public fund established and maintained for the purpose of providing money for public ambulance services covered by item 1.1.7	(a)	the public fund must be, or be operated by, an *Australian government agency or a *registered charity; and	none
			(b)	the public ambulance services must satisfy the special conditions set out in item 1.1.7
1.1.9	a *community shed	the community shed must be a *registered charity	none

30-20(2)    

This table sets out specific health recipients.

Health - Specific
Item	Fund, authority or institution	Special conditions
1.2.1	The Royal Australian and New Zealand College of Obstetricians and Gynaecologists	none
.
1.2.2	(Repealed by No 41 of 2011)
.
1.2.3	(Repealed by No 41 of 2011)
.
1.2.4	The Royal Australian and New Zealand College of Radiologists	the gift must be made for education or research in medical knowledge or science
.
1.2.5	the New South Wales College of Nursing	none
.
1.2.6	the Royal Australian and New Zealand College of Psychiatrists	none
.
1.2.7	the Royal Australian College of General Practitioners	the gift must be made for education or research in medical knowledge or science
.
1.2.8	the Royal Australasian College of Physicians	none
.
1.2.9	the Royal Australasian College of Surgeons	none
.
1.2.10	the Royal College of Pathologists of Australasia	the gift must be made for education or research in medical knowledge or science
.
1.2.11	(Repealed by No 41 of 2011)
.
1.2.12	the Royal College of Nursing, Australia	none
.
1.2.13	the Australian and New Zealand College of Anaesthetists	none
.
1.2.14	SouthCare Helicopter Fund	the gift must be made after 11 September 2000
.
1.2.15	(Repealed by No 41 of 2011)
.
1.2.16	(Repealed by No 129 of 2011)
.
1.2.17	(Repealed by No 129 of 2011)
.
1.2.18	The Australasian College for Emergency Medicine	the gift must be made after 2 February 2009
.
1.2.19	Cancer Australia	the gift must be made: (a) after 8 June 2011; and (b) for improving outcomes for Australians affected by breast cancer
.
1.2.20	The Australasian College of Dermatologists	the gift must be made for education or research in medical knowledge or science
.
1.2.21	College of Intensive Care Medicine of Australia and New Zealand	the gift must be made for education or research in medical knowledge or science
.
1.2.22	The Royal Australian and New Zealand College of Ophthalmologists	the gift must be made for education or research in medical knowledge or science

Education

SECTION 30-25   Education  

30-25(1)    

This table sets out general categories of education recipients.

Education - General
Item	Fund, authority or institution	Special conditions - fund, authority or institution	Special conditions - gift
2.1.1	a public university	the public university must be: (a) an *Australian government agency; or (b) a *registered charity	none
.
2.1.2	a public fund for the establishment of a public university	(a) the public fund must be:     (i) an *Australian government       agency; or     (ii) a *registered charity; or     (iii) operated by an Australian       government agency or       registered charity; and (b) the public university must satisfy the special conditions set out in item 2.1.1	none
.
2.1.3	an institution that is a higher education provider within the meaning of the Higher Education Support Act 2003	the institution must be: (a) an *Australian government agency; or (b) a *registered charity	none
.
2.1.4	a residential educational institution affiliated under statutory provisions with a public university	(a) the residential educational institution must be a *registered charity; and (b) the public university must satisfy the special conditions set out in item 2.1.1	none
.
2.1.5	a residential educational institution established by the Commonwealth	none	none
.
2.1.6	a residential educational institution that is affiliated with an institution that is a higher education provider within the meaning of the Higher Education Support Act 2003	(a) the residential educational institution must be:   (i) an *Australian government     agency; or   (ii) a *registered charity; and (b) the higher education provider must satisfy the special conditions set out in item 2.1.3	none
.
2.1.7	an institution that the *Student Assistance Minister has determined to be a technical and further education institution under the Student Assistance Act 1973	the institution must be: (a) an *Australian government agency; or (b) a *registered charity	see section 30-30
.
2.1.8	a public fund established and maintained solely for the purpose of providing religious instruction in government schools in Australia	the public fund must be: (a) an *Australian government agency; or (b) a *registered charity; or (c) operated by an Australian government agency or a registered charity	none
.
2.1.9	a public fund established and maintained by a Roman Catholic archdiocesan or diocesan authority solely for the purpose of providing religious instruction in government schools in Australia	the public fund must be: (a) an *Australian government agency; or (b) a *registered charity; or (c) operated by an Australian government agency or a registered charity	none
.
2.1.9A	a public fund established and maintained solely for the purpose of providing education in ethics: (a) in government schools in Australia; and (b) as an alternative to religious instruction, in accordance with *State law or *Territory law	the public fund must be: (a) a *registered charity; or (b) operated by a registered charity	none
.
2.1.10	a public fund established and maintained solely for providing money for the acquisition, construction or maintenance of a building used, or to be used, as a school or college by: (a) a government; or (b) a public authority; or (c) a society or association which is carried on otherwise than for the purposes of profit or gain to the individual members of the society or association	the public fund must be: (a) an *Australian government agency; or (b) a *registered charity; or (c) operated by an Australian government agency or a registered charity	none
.
2.1.11	a public fund established and maintained solely for providing money for the acquisition, construction or maintenance of a rural school hostel building to which section 30-35 applies	the public fund must be: (a) an *Australian government agency; or (b) a *registered charity; or (c) operated by an Australian government agency or a registered charity	none
.
2.1.12	a government school that: (a) provides special education for students each of whom has a disability that is permanent or is likely to be permanent; and (b) does not provide education for other students	none	none
.
2.1.13	a public fund that is established and maintained solely for providing money for scholarships, bursaries or prizes to which section 30-37 applies	the public fund must be: (a) a *registered charity; or (b) operated by a registered charity	none

30-25(2)    

This table sets out specific education recipients.

Education - Specific
Item	Fund, authority or institution	Special conditions
2.2.1	The Academy of the Social Sciences in Australia Incorporated	none
.
2.2.2	the Australian Academy of Science	none
.
2.2.3	the Australian Academy of the Humanities for the Advancement of Scholarship in Language, Literature, History, Philosophy and the Fine Arts	none
.
2.2.4	the Australian Academy of Technological Sciences and Engineering Limited	none
.
2.2.5	Aurora Education Foundation Limited	the gift must be made after 30 June 2013
.
2.2.6	the Australian and New Zealand Association for the Advancement of Science	none
.
2.2.7	(Repealed by No 49 of 2019)
.
2.2.8	the Life Education Centre	none
.
2.2.9	a company that conducts life education programs under the auspices of the Life Education Centre if the company:	the gift must be for the conduct of such programs
	(a)	is not carried on for the purposes of profit or gain to its individual members; and
	(b)	is prohibited by its *constitution from making any distribution of money or property to its members
.
2.2.10	the Council for Christian Education in Schools	none
.
2.2.11	the Council for Jewish Education in Schools	none
.
2.2.12	(Repealed by No 101 of 2006 )
.
2.2.13	the Lionel Murphy Foundation	none
.
2.2.14	the Marcus Oldham Farm Management College	see section 30-30
.
2.2.15	(Repealed by No 41 of 2011)
.
2.2.16	the Polly Farmer Foundation (Inc)	none
.
2.2.17	The Australian Council of Christians and Jews	the gift must be made after 6 December 1998
.
2.2.18	Sir William Tyree Foundation	the gift must be made after 28 February 1999
.
2.2.19	(Repealed by No 41 of 2011)
.
2.2.20	Australian Nuffield Farming Scholars Association	the gift must be made after 16 April 2001
.
2.2.21	Dymocks Children ' s Charities Limited	the gift must be made after 4 January 2001
.
2.2.22	Australian Primary Principals Association Education Foundation	the gift must be made after 1 October 2001
.
2.2.23	Commonwealth Study Conferences (Australia) Incorporated	the gift must be made after 19 February 2001
.
2.2.24	Mt Eliza Graduate School of Business and Government Limited	the gift must be made after 4 April 2000 and before 1 January 2023
.
2.2.25	Australian Human Rights Education Fund	the gift must be made after 24 September 2001
.
2.2.26	Aboriginal Education Council (N.S.W.) Incorporated	the gift must be made after 6 May 2002
.
2.2.27	General Sir John Monash Foundation	the gift must be made after 16 June 2002
.
2.2.28	Australian-American Educational Foundation	the gift must be made after 30 April 2003
.
2.2.29	The Australian Literacy and Numeracy Foundation Limited	the gift must be made after 11 October 2002
.
2.2.30	The Constitution Education Fund	the gift must be made after 20 June 2003
.
2.2.31	Country Education Foundation of Australia Limited	the gift must be made on or after 20 August 2003
.
2.2.32	Clontarf Foundation	the gift must be made after 30 August 2004
.
2.2.33	International Specialised Skills Institute Incorporated	the gift must be made after 11 August 2005
.
2.2.34	(Repealed by No 127 of 2021)
.
2.2.35	(Repealed by No 155 of 2008)
2.2.36	The Spirit of Australia Foundation	the gift must be made after 10 September 2007
2.2.37	The Royal Institution of Australia Incorporated	the gift must be made after 16 April 2009
2.2.38	(Repealed by No 127 of 2021)
2.2.39	The Charlie Perkins Scholarship Trust	the gift must be made after 1 August 2010
2.2.40	Roberta Sykes Indigenous Education Foundation	the gift must be made after 1 August 2010
2.2.41	Teach for Australia	the gift must be made after 31 December 2012
2.2.42	The Conversation Trust	the gift must be made after 21 November 2012
2.2.43	Australian Schools Plus Ltd	the gift must be made on or after 1 April 2014
2.2.44	Australian Science Innovations Incorporated	the gift must be made on or after 1 January 2016
2.2.45	Smile Like Drake Foundation Limited	the gift must be made after 8 March 2018 and before 9 March 2023
2.2.46	The Q Foundation Trust	the gift must be made after 31 December 2017 and before 1 January 2023
2.2.47	Governor Phillip International Scholarship Trust	the gift must be made after 30 June 2018 and before 1 July 2025
2.2.48	High Resolves	the gift must be made after 30 June 2018 and before 1 July 2025
2.2.49	Australian Academy of Law	the gift must be made after 30 June 2019 and before 1 July 2025
2.2.50	Superannuation Consumers ' Centre Ltd	the gift must be made after 30 June 2019 and before 1 July 2025
2.2.51	The Andy Thomas Space Foundation Limited	the gift must be made after 30 June 2020
2.2.52	The Judith Neilson Institute for Journalism and Ideas	the gift must be made after 30 June 2020
2.2.53	SU Australia Ministries Limited	the gift must be made on or after 1 July 2021 and before 1 July 2023
2.2.54	The Australian Future Leaders Foundation Limited	the gift must be made after 30 June 2021
2.2.55	The Ramsay Centre for Western Civilisation Limited	the gift must be made after 30 June 2021
2.2.56	Australian Education Research Organisation Limited	the gift must be made after 30 June 2021
.
2.2.57	Jewish Education Foundation (Vic) Ltd	the gift must be made after 30 June 2021 and before 1 July 2026
.
2.2.58	Melbourne Business School Limited	the gift must be made after 30 June 2022

30-25(3)    
(Repealed by No 155 of 2008)

SECTION 30-30   Gifts that must be for certain purposes  

30-30(1)    
You can deduct a gift that you make to:

(a) a technical and further education institution covered by item 2.1.7 of the table in subsection 30-25(1) ; or

(b) the Marcus Oldham Farm Management College;

only if the gift is for:

(c) purposes of the institution, or of the College, that have been declared by the *Student Assistance Minister to relate solely to tertiary education; or

(d) the provision of facilities for the institution, or the College, if the Student Assistance Minister has declared that he or she is satisfied the facilities are to be used principally for such purposes.

30-30(2)    
A declaration under subsection (1) must be in writing, signed by the Minister.

SECTION 30-35   Rural schools hostel buildings  

30-35(1)    

For the purposes of item 2.1.11 of the table in subsection 30-25(1) , a rural school hostel building is one to which this section applies if it meets the conditions in subsections (2), (3) and (4).

30-35(2)    
The rural school hostel building must be used, or going to be used, principally as residential accommodation for students:

(a) whose usual place of residence is in a rural area; and

(b) who are undertaking primary or secondary education, or special education programs for children with disabilities, at a school in the same area as the building.

30-35(3)    
The costs of the school must be solely or partly funded by the Commonwealth, a State or a Territory.

30-35(4)    
The residential accommodation must be provided by:

(a) the Commonwealth, a State or a Territory; or

(b) a public authority; or

(c) a company that:

(i) is not carried on for the purposes of profit or gain to its individual members; and

(ii) is prohibited by its ^* constitution from making any distribution of money or property to its members.

SECTION 30-37  

30-37   Scholarship etc. funds  

For the purposes of item 2.1.13 of the table in subsection 30-25(1) , a scholarship, bursary or prize is one to which this section applies if:

(a) it may only be awarded to Australian citizens, or permanent residents of Australia, within the meaning of the Australian Citizenship Act 2007 ; and

(b) it is open to individuals or groups of individuals throughout a region of at least 200,000 people, or throughout at least an entire State or Territory; and

(c) it promotes recipients ' education in either or both of the following:

(i) *pre-school courses, *primary courses, *secondary courses or *tertiary courses;

(ii) educational institutions overseas, by way of study of a component of a course covered by subparagraph (i); and

(d) it is awarded on merit or for reasons of equity.

Research

SECTION 30-40   Research  

30-40(1)    

This table sets out general categories of research recipients.

Research - General
Item	Fund, authority or institution	Special conditions - fund, authority or institution	Special conditions - gift
3.1.1	a university, college, institute, association or organisation which is an approved research institute for the purposes of section 73A (Expenditure on scientific research) of the Income Tax Assessment Act 1936	the approved research institute must be: (a) an *Australian government agency; or (b) a *registered charity; or (c) operated by an Australian government agency or a registered charity	the gift must be made for purposes of scientific research in the field of natural or applied science

30-40(2)    

This table sets out specific research recipients.

Research - Specific
Item	Fund, authority or institution	Special conditions
3.2.1	the Centre for Independent Studies	none
.
3.2.2	the Ian Clunies Ross Memorial Foundation	none
.
3.2.3	(Repealed by No 41 of 2011)
.
3.2.4	The Menzies Research Centre Public Fund	the gift must be made after 2 April 1998
.
3.2.5	The Sir Earl Page Memorial Trust	the gift must be made after 6 May 2001
.
3.2.6	Research Australia Limited	the gift must be made after 26 June 2001
.
3.2.7	The Page Research Centre Limited	the gift must be made after 12 January 2005
.
3.2.8	The Chifley Research Centre Limited	the gift must be made after 19 May 2005
.
3.2.9	Don Chipp Foundation Ltd	the gift must be made after 26 June 2006
.
3.2.10	Lingiari Policy Centre	the gift must be made after 25 July 2006
.
3.2.11	(Repealed by No 127 of 2021)
.
3.2.12	The Green Institute Limited	the gift must be made after 23 June 2009
.
3.2.13	United States Studies Centre	the gift must be made after 26 July 2009
.
3.2.14	The Ethics Centre Limited	the gift must be made on or after 24 February 2016
.
3.2.15	Centre For Entrepreneurial Research and Innovation Limited	the gift must be made after 1 January 2017
.
3.2.16	The Samuel Griffith Society Inc.	the gift must be made after 30 June 2019

Welfare and rights

SECTION 30-45   Welfare and rights  

30-45(1)    

This table sets out general categories of welfare and rights recipients.

Welfare and rights - General
Item	Fund, authority or institution	Special conditions - fund, authority or institution	Special conditions - gift
4.1.1	a *registered public benevolent institution	none	none
4.1.2	a public fund maintained for the purpose of providing money for: (a) *registered public benevolent institutions; or (b) the establishment of registered public benevolent institutions	the public fund must: (a) have been established before 23 October 1963; and (b) be:   (i) a *registered charity; or   (ii) operated by a registered     charity	none
4.1.3	a public fund established and maintained for the purpose of relieving the necessitous circumstances of one or more individuals who are in Australia	the public fund must be: (a) an *Australian government agency; or (b) a *registered charity; or (c) operated by an Australian government agency or a registered charity	none
4.1.4	an institution whose principal activity is the promotion of the prevention or the control of *behaviour that is harmful or abusive to human beings	the institution must: (a) be a *registered charity; and (b) meet the requirements of section 30-130 ; and (c) have a policy of not acting as a mere conduit for the donation of money or property to other organisations, bodies or persons	the gift must be received by the institution ' s gift fund (mentioned in section 30-130 )
4.1.5	a public fund (including a public fund established and maintained by a public benevolent institution) that is established and maintained solely for providing money for the relief (including relief by way of assistance to re-establish a community) of people in Australia in distress as a result of a disaster to which subsection 30-45A(1) or 30-46(1) applies	the public fund must: (a) be:   (i) an *Australian government     agency; or   (ii) a *registered charity; or (b) be operated by:   (i) an Australian government     agency; or   (ii) a registered charity	see subsections 30-45A(4) and 30-46(2)
4.1.6	an institution whose principal activity is one or both of the following: (a) providing short-term direct care to animals (but not only native wildlife) that have been lost or mistreated or are without owners; (b) rehabilitating orphaned, sick or injured animals (but not only native wildlife) that have been lost or mistreated or are without owners	the institution must be a *registered charity	none
4.1.7	an institution that would be a public benevolent institution, but for one or both of the following: (a) it also promotes the prevention or the control of diseases in human beings (but not as a principal activity); (b) it also promotes the prevention or the control of *behaviour that is harmful or abusive to human beings (but not as a principal activity)	the institution must be a *registered charity	none

30-45(2)    

This table sets out specific welfare and rights recipients.

Welfare and rights - Specific
Item	Fund, authority or institution	Special conditions
4.2.1	Amnesty International Australia	none
.
4.2.2	the Child Accident Prevention Foundation of Australia	none
.
4.2.3	the National Foundation for Australian Women Limited	none
.
4.2.4	the National Safety Council of Australia Limited	none
.
4.2.5	United Way Australia	the gift must be made after 25 April 2013
.
4.2.6	the Royal Society for the Prevention of Cruelty to Animals New South Wales	none
.
4.2.7	the Royal Society for the Prevention of Cruelty to Animals (Victoria) Inc.	none
.
4.2.8	Australian Neighbourhood Houses & Centres Association (ANHCA) Inc.	the gift must be made after 30 June 2013
.
4.2.9	the Royal Society for the Prevention of Cruelty to Animals (South Australia) Incorporated	none
.
4.2.10	the Royal Society for the Prevention of Cruelty to Animals, Western Australia	none
.
4.2.11	Royal Society for the Prevention of Cruelty to Animals Tasmania	none
.
4.2.12	the Society for the Prevention of Cruelty to Animals (Northern Territory)	none
.
4.2.13	the Royal Society for the Prevention of Cruelty to Animals (A.C.T.) Incorporated	none
.
4.2.14	RSPCA Australia	none
.
4.2.15	the Australian Council of Social Service Incorporated	the gift must be made after 30 June 2013
.
4.2.16	(Repealed by No 101 of 2006 )
.
4.2.17	(Repealed by No 101 of 2006 )
.
4.2.18	(Repealed by No 101 of 2006 )
.
4.2.19	Reconciliation Australia Limited	the gift must be made after 6 December 2000
.
4.2.20	Royal Society for the Prevention of Cruelty to Animals, Queensland Incorporated	the gift must be made after 22 December 1999
.
4.2.21	Crime Stoppers Western Australia Limited	the gift must be made after 31 October 2002
.
4.2.22	New South Wales Crime Stoppers Limited	the gift must be made after 31 October 2002
.
4.2.23	Crime Stoppers Tasmania	the gift must be made after 28 November 2002
.
4.2.24	Crime Stoppers Queensland Limited	the gift must be made after 23 January 2003
.
4.2.25	Crime Stoppers Australia Ltd	the gift must be made after 4 June 2003
.
4.2.26	Alcohol Education and Rehabilitation Foundation Limited	the gift must be made after 5 June 2003
.
4.2.27	Crime Stoppers South Australia Limited	the gift must be made on or after 19 September 2003
.
4.2.28	International Social Service - Australian Branch	the gift must be made after 17 March 2004
.
4.2.29	the Victorian Crime Stoppers Program	the gift must be made after 22 April 2004
.
4.2.30	(Repealed by No 101 of 2006)
.
4.2.31	Crime Stoppers Northern Territory Program	the gift must be made after 13 March 2005
.
4.2.31A	ACT Region Crime Stoppers Limited	the gift must be made after 12 February 2009
.
4.2.32	Kidsafe ACT (Inc.)	the gift must be made after 2 August 2007
.
4.2.33	Kidsafe New South Wales (Inc.)	the gift must be made after 2 August 2007
.
4.2.34	Kidsafe NT (Inc.)	the gift must be made after 2 August 2007
.
4.2.35	Kidsafe Qld (Inc.)	the gift must be made after 2 August 2007
.
4.2.36	Kidsafe SA Incorporated	the gift must be made after 2 August 2007
.
4.2.37	Kidsafe Tasmania (Inc)	the gift must be made after 2 August 2007
.
4.2.38	Kidsafe Vic (Inc.)	the gift must be made after 2 August 2007
.
4.2.39	Kidsafe Western Australia (Inc)	the gift must be made after 2 August 2007
.
4.2.40	Ian Thorpe ' s Fountain for youth Limited	the gift must be made after 28 February 2008
.
4.2.41	(Repealed by No 118 of 2009)
.
4.2.42	National Congress of Australia ' s First Peoples Limited	the gift must be made after 30 June 2013
.
4.2.43	2017 Bourke Street Fund Trust Account	the gift must be made: (a) after 20 January 2017; and (b) before 21 January 2022
.
4.2.44	Victorian Pride Centre Ltd	the gift must be made after 8 March 2018 and before 9 March 2028
.
4.2.45	Australian Volunteers Support Trust	the gift must be made after 30 June 2019
.
4.2.46	Community Rebuilding Trust	the gift must be made after 30 June 2019
.
4.2.47	Motherless Daughters Australia Limited	the gift must be made after 30 June 2019 and before 1 July 2025
.
4.2.48	Neighbourhood Watch Australasia Limited	the gift must be made after 30 June 2019
.
4.2.49	Alliance for Journalists ' Freedom Ltd	the gift must be made after 30 June 2020
.
4.2.50	Youthsafe	the gift must be made after 30 June 2020

SECTION 30-45A   Australian disaster relief funds - declarations by Minister  

30-45A(1)    
For the purposes of item 4.1.5 of the table in subsection 30-45(1) , an event is a disaster to which this subsection applies if the Minister has declared it to be a disaster. The Minister may do so if satisfied that:

(a)    

the event developed rapidly and resulted in:

(i) the death, serious injury or other physical suffering of a large number of people; or

(ii) widespread damage to property or the natural environment; or

(b)    

if a national emergency declaration (within the meaning of the National Emergency Declaration Act 2020 ) is in force - the event is the subject of the national emergency declaration.

30-45A(2)    
The Minister ' s declaration of an event as a disaster:

(a) must be in writing; and

(b) must specify the day (or the first day) of the event; and

(c) must be published on the internet or by another method determined by the Minister.

30-45A(3)    
The Minister ' s declaration of an event as a disaster is not a legislative instrument.

30-45A(4)    
You can deduct a gift that you make to a public fund covered by item 4.1.5 of the table in subsection 30-45(1) , in relation to a disaster to which subsection (1) of this section applies, only within the 2 years beginning on the day specified in the declaration as the day (or the first day) of the event for which the fund is to provide relief.

Note:

Public funds under item 4.1.5 of the table in subsection 30-45(1) are for disaster relief of people in Australia. Public funds may also be established for disaster relief of people in other countries. See items 9.1.1 (which is not limited to disaster relief) and 9.1.2 of the table in section 30-80 .

SECTION 30-46   Australian disaster relief funds - declarations under State and Territory law  

30-46(1)    
For the purposes of item 4.1.5 of the table in subsection 30-45(1) , a disaster is one to which this subsection applies if:

(a) it is declared to be a disaster, or it gives rise to a declaration of a state of emergency, by or with the approval of a Minister of a State or Territory under the law of the State or Territory; and

(b) it developed rapidly; and

(c) it resulted in the death, serious injury or other physical suffering of a large number of people, or in widespread damage to property or the natural environment; and

(d) subsection 30-45A(1) does not apply to it.

30-46(2)    
You can deduct a gift that you make to a public fund covered by item 4.1.5 of the table in subsection 30-45(1) , in relation to a disaster to which subsection (1) of this section applies, only within the 2 years beginning:

(a) if the day (or the first day) on which the event occurred is specified in the declaration mentioned in paragraph (1)(a) - on that day; or

(b) otherwise - on the day of the declaration.

Note:

Public funds under item 4.1.5 of the table in subsection 30-45(1) are for disaster relief of people in Australia. Public funds may also be established for disaster relief of people in other countries. See items 9.1.1 (which is not limited to disaster relief) and 9.1.2 of the table in section 30-80 .

Defence

SECTION 30-50   Defence  

30-50(1)    

This table sets out general categories of defence recipients.

Defence - General
Item	Fund, authority or institution	Special conditions - fund, authority or institution	Special conditions - gift
5.1.1	the Commonwealth or a State	none	the gift must be made for purposes of defence
5.1.2	a public institution or public fund established and maintained for the comfort, recreation or welfare of members of: (a) the armed forces of any part of Her Majesty ' s dominions; or (b) any allied or other foreign force serving in association with Her Majesty ' s armed forces	the public institution or public fund must be: (a) an *Australian government agency; or (b) a *registered charity; or (c) in the case of a public fund - operated by an Australian government agency or registered charity	none
5.1.3	a public fund established and maintained solely for providing money to reconstruct, or make critical repairs to, a particular war memorial that: (a) is located in Australia; and (b) commemorates events in a conflict in which Australia was involved, or people who are mainly Australians and who participated on Australia ' s behalf in a conflict; and (c) is a focus for public commemoration of the events or people mentioned in paragraph (b); and (d) is solely or mainly used for that public commemoration	the public fund must be: (a) an *Australian government agency; or (b) a *registered charity; or (c) operated by an Australian government agency or registered charity	the gift must be made within the 2 years beginning on the day on which: (a) the fund; or (b) if the fund is legally owned by an entity that is endorsed for the operation of the fund - the entity; is endorsed as a *deductible gift recipient under Subdivision 30-BA

30-50(2)    

This table sets out specific defence recipients.

Defence - Specific
Item	Fund, authority or institution	Special conditions
5.2.1	(Repealed by No 101 of 2006)
.
5.2.2 to 5.2.10	(Repealed by No 101 of 2006 )
.
5.2.11	The RSL Foundation	the gift must be made after 20 September 2000
.
5.2.12 to 5.2.15	(Repealed by No 101 of 2006 )
.
5.2.16	(Repealed by No 41 of 2011)
.
5.2.17 to 5.2.20	(Repealed by No 101 of 2006 )
.
5.2.21	(Repealed by No 101 of 2006)
.
5.2.22	(Repealed by No 101 of 2006)
.
5.2.23	(Repealed by No 101 of 2006 )
.
5.2.24	(Repealed by No 41 of 2011)
.
5.2.25	(Repealed by No 41 of 2011)
.
5.2.26	(Repealed by No 127 of 2021)
.
5.2.27	(Repealed by No 41 of 2011)
.
5.2.28	(Repealed by No 127 of 2021)
.
5.2.29	(Repealed by No 127 of 2021)
.
5.2.30	(Repealed by No 127 of 2021)
.
5.2.31	(Repealed by No 85 of 2013)
.
5.2.32	(Repealed by No 127 of 2021)
.
5.2.33	(Repealed by No 127 of 2021)
5.2.34	Melbourne Korean War Memorial Committee Incorporated	the gift must be made after 31 December 2017 and before 1 January 2020
5.2.35	The Headstone Project (Tas) Inc.	the gift must be made after 30 June 2019 and before 1 July 2025
5.2.36	Virtual War Memorial Limited	the gift must be made on or after 1 July 2021 and before 1 July 2026
5.2.37	Perth Korean War Memorial Committee Incorporated	the gift must be made after 30 June 2021 and before 1 July 2024

Environment

SECTION 30-55   The environment  

30-55(1)    

This table sets out general categories of environment recipients.

The environment - General
Item	Fund, authority or institution	Special conditions - fund, authority or institution	Special conditions - gift
6.1.1	an institution or *Australian government agency whose principal purpose is: (a) the protection and enhancement of the natural environment or of a significant aspect of the natural environment; or (b) the provision of information or education, or the carrying on of research, about the natural environment or a significant aspect of the natural environment	the institution or Australian government agency must: (a) if it is not an Australian government agency - be a *registered charity; and (b) meet the requirements of section 30-130 ; and (c) have a policy of not acting as a mere conduit for the donation of money or property to other organisations, bodies or persons	the gift must be received by the gift fund (mentioned in section 30-130 ) of the institution or Australian government agency

30-55(2)    

This table sets out specific environment recipients.

The environment - Specific
Item	Fund, authority or institution	Special conditions
6.2.1	the Australian Conservation Foundation Incorporated	see section 30-60
.
6.2.2	Greening Australia Limited	see section 30-60
.
6.2.3	Landcare Australia Limited	see section 30-60
.
6.2.4	the National Parks Association of New South Wales	see section 30-60
.
6.2.5	the Victorian National Parks Association Incorporated	see section 30-60
.
6.2.6	Trust for Nature (Victoria)	see section 30-60
.
6.2.7	the National Parks Association of Queensland	see section 30-60
.
6.2.8	The Nature Conservation Society of South Australia Incorporated	see section 30-60
.
6.2.9	Nature Foundation Limited	see section 30-60
.
6.2.10	the Western Australian National Parks and Reserves Association Incorporated	see section 30-60
.
6.2.11	the Tasmanian Conservation Trust Incorporated	see section 30-60
.
6.2.12	the National Parks Association of the Australian Capital Territory Incorporated	see section 30-60
.
6.2.13	the National Trust of Australia (New South Wales)	none
.
6.2.14	the National Trust of Australia (Victoria)	none
.
6.2.15	National Trust of Australia (Queensland) Limited	none
.
6.2.16	The National Trust of South Australia	none
.
6.2.17	The National Trust of Australia (W.A.)	none
.
6.2.18	the National Trust of Australia (Tasmania)	none
.
6.2.19	The National Trust of Australia (Northern Territory)	none
.
6.2.20	the National Trust of Australia (A.C.T.)	none
.
6.2.21	the Australian Council of National Trusts	none
.
6.2.22	the World Wide Fund for Nature	see section 30-60
.
6.2.23	Mawson ' s Huts Foundation Limited	the gift must be made after 17 March 1997

SECTION 30-60  

30-60   Gifts to a National Parks body or conservation body must satisfy certain requirements  

You can deduct a gift that you make to an environmental institution covered by any of table items 6.2.1 to 6.2.12 or 6.2.22 in subsection 30-55(2) only if, at the time of making the gift, the institution has a policy of not acting as a mere conduit for the donation of money or property to other entities.

(a) (Repealed by No 40 of 2023)

(b) (Repealed by No 40 of 2023)

Industry, trade and design

SECTION 30-65  

30-65   Industry, trade and design  

This table sets out specific industry, trade and design recipients.

Industry, trade and design - Specific
Item	Fund, authority or institution	Special conditions
7.2.1	(Repealed by No 41 of 2011)
.
7.2.2	(Repealed by No 41 of 2011)
.
7.2.3	WorldSkills Australia	none
.
7.2.4	(Repealed by No 41 of 2011)
.
7.2.5	Australian Business Week Limited	the gift must be made after 8 December 2003

The family

SECTION 30-70   The family  

30-70(1)    

This table sets out general categories of family recipients.

The family - General
Item	Fund, authority or institution	Special conditions - fund, authority or institution	Special conditions - gift
8.1.1	a public fund established and maintained: (a) by a *non-profit company to which section 30-75 applies; and (b) solely for the purpose of providing money to be used in giving or providing marriage education under the Marriage Act 1961 to individuals in Australia	the public fund must be: (a) a *registered charity; or (b) operated by a registered charity	none
8.1.2	a public fund that is established and maintained: (a) by a *non-profit company which receives funding from the Commonwealth to provide family counselling or family dispute resolution within the meaning of the Family Law Act 1975 ; and (b) solely for the purpose of providing money to be used in providing family counselling or family dispute resolution within the meaning of the Family Law Act 1975 to individuals in Australia	the public fund must be: (a) a *registered charity; or (b) operated by a registered charity	none

30-70(2)    

This table sets out specific family recipients.

The family - Specific
Item	Fund, authority or institution	Special conditions
8.2.1	(Repealed by No 101 of 2006 )
.
8.2.2	(Repealed by No 101 of 2006 )
.
8.2.3	Australian Breastfeeding Association	the gift must be made after 31 July 2001
.
8.2.4	Playgroup NSW (Inc).	the gift must be made after 14 April 2005
.
8.2.5	Playgroup WA (Inc)	the gift must be made after 13 March 2005
.
8.2.6	Playgroup Queensland Ltd	the gift must be made after 14 April 2005
.
8.2.7	Playgroup Tasmania Inc.	the gift must be made after 14 April 2005
.
8.2.8	Playgroup Association Northern Territory Incorporated	the gift must be made after 24 May 2005
.
8.2.9	ACT Playgroups Association Incorporated	the gift must be made after 14 April 2005
8.2.10	Playgroup Victoria Inc.	the gift must be made after 23 February 2006
8.2.11	Playgroup SA Inc	the gift must be made after 5 August 2006
.
8.2.12	Playgroup Australia Limited	the gift must be made after 2 August 2006

SECTION 30-75  

30-75   Marriage education organisations must be approved  

For the purposes of item 8.1.1 of the table in subsection 30-70(1) , this section applies to a company if the company has been approved by the *Families Minister under section 9C of the Marriage Act 1961 .

International affairs

SECTION 30-80   International affairs  

30-80(1)    

This table sets out general categories of international affairs recipients.

International affairs - General
Item	Fund, authority or institution	Special conditions - fund, authority or institution	Special conditions - gift
9.1.1	a public fund, institution or *Australian government agency whose principal purpose is delivering development or humanitarian assistance activities (or both): (a) in a country covered by section 30-85 ; and (b) in partnership with entities in the country, based on principles of cooperation, mutual respect and shared accountability	the public fund, institution or Australian government agency must: (a) if it is a public fund - be operated by a *registered charity; and (b) if it is an institution - be a registered charity; and (c) if it is not a public fund - meet the requirements of section 30-130	if the gift is made to an institution or Australian government agency - the gift must be received by the gift fund (mentioned in section 30-130 ) of the institution or Australian government agency
9.1.2	a public fund established and maintained by a *registered public benevolent institution solely for providing money for the relief (including relief by way of assistance to re-establish a community) of people in a country other than: (a) Australia; and (b) a country declared by the *Foreign Affairs Minister to be a developing country; who are in distress as a result of a disaster to which subsection 30-86(1) applies	none	see subsection 30-86(4)

30-80(2)    

This table sets out specific international affairs recipients.

International affairs - Specific
Item	Fund, authority or institution	Special conditions
9.2.1	the Australian Institute of International Affairs	none
.
9.2.2	(Repealed by No 127 of 2021)
.
9.2.3	The Foundation for Development Cooperation Ltd	none
.
9.2.4	Australian American Education Leadership Foundation Limited	the gift must be made after 26 January 1998
.
9.2.5	Sydney Talmudical College Association Refugees Overseas Aid Fund	the gift must be made after 29 January 1998
.
9.2.6	United Israel Appeal Refugee Relief Fund Limited	the gift must be made after 29 January 1998
.
9.2.7	the Asia Society AustralAsia Centre	the gift must be made after 6 December 1998
.
9.2.8	The Global Foundation	the gift must be made after 2 November 1999
.
9.2.9	(Repealed by No 127 of 2021)
.
9.2.10	Australia for UNHCR	the gift must be made after 27 June 2007
.
9.2.11	The Australia Foundation in support of Human Rights Watch Limited	the gift must be made after 30 June 2013
.
9.2.12	Lowy Institute for International Policy	the gift must be made after 13 August 2003
.
9.2.13	(Repealed by No 127 of 2021)
.
9.2.14	Make a Mark Australia Incorporated	the gift must be made after 30 June 2013
9.2.15	(Repealed by No 8 of 2022)
9.2.16	(Repealed by No 41 of 2011)
9.2.17	(Repealed by No 127 of 2021)
9.2.18	American Australian Association Limited	the gift must be made after 13 November 2006
9.2.19	(Repealed by No 127 of 2021)
9.2.20	(Repealed by No 41 of 2011)
9.2.21	Diplomacy Training Program Limited	the gift must be made after 16 April 2009
9.2.22	(Repealed by No 127 of 2021)
9.2.23	(Repealed by No 11 of 2014)
9.2.24	(Repealed by No 129 of 2011)
9.2.25	Rhodes Trust in Australia	the gift must be made after 21 October 2011
9.2.26	International Jewish Relief Limited	the gift must be made on or after 1 January 2015
9.2.27	Cambridge Australia Scholarships Limited	the gift must be made on or after 1 July 2021 and before 1 July 2026

SECTION 30-85   Developing country relief funds  

30-85(1)    
For the purposes of item 9.1.1 of the table in subsection 30-80(1) , a country is covered by this section if:

(a)    it is included in the list of official development assistance recipients published from time to time by the Organisation for Economic Co-operation and Development ' s Development Assistance Committee; or

(b)    it is specified in a declaration under subsection (2) of this section.

30-85(2)    

For the purposes of paragraph (1)(b) , the *Foreign Affairs Minister may, by legislative instrument, make a declaration specifying a country as a developing country.

SECTION 30-86   Developed country disaster relief funds  

30-86(1)    
For the purposes of item 9.1.2 of the table in subsection 30-80(1) , a disaster is one to which this subsection applies if the Minister has recognised it as a disaster. The Minister may do so if satisfied that:

(a) it developed rapidly; and

(b) it resulted in the death, serious injury or other physical suffering of a large number of people, or in widespread damage to property or the natural environment.

30-86(2)    
The Minister ' s recognition of an event as a disaster:

(a) must be by notifiable instrument; and

(b) must specify the day (or the first day) of the event.

30-86(3)    
(Repealed by No 64 of 2020)

30-86(4)    

You can deduct a gift that you make to a public fund covered by item 9.1.2 of the table in subsection 30-80(1) only within the 2 years beginning on the day specified in the recognition as the day (or the first day) of the event for which the fund is to provide relief.

Note:

A public fund may also be established for disaster relief of people in Australia (see item 4.1.5 of the table in section 30-45 ).

Sports and recreation

SECTION 30-90  

30-90   Sports and recreation  

This table sets out specific sports and recreation recipients.

Sports and recreation - Specific
Item	Fund, authority or institution	Special conditions
10.2.1	the Australian Sports Foundation	none
.
10.2.2	Girl Guides Australia	none
.
10.2.3	an institution that is known as a State or Territory branch of Girl Guides Australia	none
.
10.2.4	the Scout Association of Australia	none
.
10.2.5	an institution that is known as a State or Territory branch of the Scout Association of Australia	none
.
10.2.6	(Repealed by No 41 of 2011)
.
10.2.7	The Bradman Memorial Fund	the gift must be made after 24 February 2001
.
10.2.8	Amy Gillett Foundation	the gift must be made after 13 September 2007
.
10.2.9	Australian Sports Foundation Charitable Fund	the gift must be made after 30 June 2018

Philanthropic trusts

SECTION 30-95  

30-95   Philanthropic trusts  

This table sets out specific philanthropic trusts.

Philanthropic trusts - Specific
Item	Fund, authority or institution	Special conditions
11.2.1	the Connellan Airways Trust	none
.
11.2.2	The Friends of the Duke of Edinburgh ' s Award in Australia Incorporated	none
.
11.2.3	(Repealed by No 160 of 2005)
.
11.2.4	the Playford Memorial Trust	none
.
11.2.5	The Sir Robert Menzies Memorial Foundation Limited	none
.
11.2.6	(Repealed by No 101 of 2006 )
.
11.2.7	the Winston Churchill Memorial Trust	none
.
11.2.8	The Foundation for Young Australians	the gift must be made after 6 May 2001
.
11.2.9	Visy Cares	the gift must be made after 19 June 2001
.
11.2.10	Australian Philanthropic Services Limited	the gift must be made after 30 June 2016
.
11.2.11	Australian Women Donors Network	the gift must be made after 8 March 2018 and before 9 March 2028
.
11.2.12	the Australian Ireland Fund Limited	none
.
11.2.13	Foundation Broken Hill Limited	the gift must be made after 30 June 2019 and before 1 July 2025

Cultural organisations

SECTION 30-100   Cultural organisations  

30-100(1)    

This table sets out general categories of cultural recipients.

Cultural organisations - General
Item	Fund, authority or institution	Special conditions - fund, authority or institution	Special conditions - gift
12.1.1	an institution or *Australian government agency whose principal purpose is the promotion of literature, music, a performing art, a visual art, a craft, design, film, video, television, radio, community arts, arts or languages of *Indigenous persons or movable cultural heritage	the institution or Australian government agency must: (a) if it is not an Australian government agency - be a *registered charity; and (b) meet the requirements of section 30-130	the gift must be received by the gift fund (mentioned in section 30-130 ) of the institution or Australian government agency
12.1.2	a public library	the public library must: (a) be:   (i) an *Australian government     agency; or   (ii) a *registered charity; or (b) be operated by:   (i) an Australian government     agency; or   (ii) a registered charity	none
12.1.3	a public museum	the public museum must: (a) be:   (i) an *Australian government     agency; or   (ii) a *registered charity; or (b) be operated by:   (i) an Australian government     agency; or   (ii) a registered charity	none
12.1.4	a public art gallery	the public art gallery must: (a) be:   (i) an *Australian government     agency; or   (ii) a *registered charity; or (b) be operated by:   (i) an Australian government     agency; or   (ii) a registered charity	none
12.1.5	an institution consisting of a public library, public museum and public art gallery or of any 2 of them	the institution must: (a) be:   (i) an *Australian government     agency; or   (ii) a *registered charity; or (b) be operated by:   (i) an Australian government     agency; or   (ii) a registered charity	none

30-100(2)    

This table sets out specific cultural recipients.

Cultural organisations - Specific
Item	Fund, authority or institution	Special conditions
12.2.1	The Australiana Fund	none
.
12.2.2	(Repealed by No 15 of 2023)
.
12.2.3	The Ranfurly Library Service Incorporated	the gift must be made after 2 May 2006
.
12.2.4	National Arboretum Canberra Fund	the gift must be made after 30 June 2013
.
12.2.5	Sydney Chevra Kadisha	the gift must be made after 31 December 2017 and before 1 July 2024
.
12.2.6	C E W Bean Foundation	the gift must be made after 30 June 2018 and before 1 July 2025

Fire and emergency services

SECTION 30-102  

30-102   Fire and emergency services  

This table sets out general categories of fire and emergency services recipients.

Fire and emergency services - General
Item	Fund, authority or institution	Special conditions
12A.1.1	an *Australian government agency that has statutory responsibility for the coordination of volunteer fire brigades or State Emergency Services	the gift or contribution must be made for the purposes of supporting the coordination of volunteer fire brigades or State Emergency Services
12A.1.2	a public fund which satisfies all of the following requirements: (a) the fund is established and maintained by an *Australian government agency covered by item 12A.1.1; (b) the fund is established and maintained solely for the purpose of supporting the volunteer based emergency service activities of non-profit entities or of Australian government agencies; (c) the principal activity of the entities mentioned in paragraph (b) is the provision of volunteer based emergency services that are regulated by a * State law or a * Territory law	none
12A.1.3	a public fund which satisfies all of the following requirements: (a) the fund is established and maintained by a *registered charity or an *Australian government agency; (b) the principal activity of the entity is the provision of volunteer based emergency services that are regulated by a * State law or a * Territory law; (c) the fund is established and maintained solely for the purpose of supporting the volunteer based emergency service activities of the entity	none

Other recipients

SECTION 30-105   Other recipients  

30-105(1)    
This table sets out general categories of other recipients.

Other recipients - General
Item	Fund, authority or institution	Special conditions - fund, authority or institution	Special conditions - gift
13.1.1	a *community charity trust to which section 30-110 applies	the community charity trust must be a *registered charity	none
13.1.2	a *community charity corporation to which section 30-110 applies	the community charity corporation must be a *registered charity	none

30-105(2)    

This table sets out specific other recipients.

Other recipients - specific
Item	Fund, authority or institution	Special conditions
13.2.1	(Repealed by No 101 of 2006 )
.
13.2.1	the Council for Jewish Community Security	the gift must be made after 9 August 2007
.
13.2.2	the Foundation for Rural and Regional Renewal Public Fund	the gift must be made after 28 March 2000
.
13.2.3	Young Endeavour Youth Scheme Public Fund	the gift must be made after 24 September 2001
.
13.2.3A	Leeuwin Ocean Adventure Foundation Limited	the gift must be made after 16 April 2009
.
13.2.4	Layne Beachley - Aim for the Stars Foundation Limited	the gift must be made after 30 June 2013
.
13.2.5	Social Traders Ltd	the gift must be made after 30 June 2013
.
13.2.6	(Repealed by No 41 of 2011)
.
13.2.7	Lord Somers Camp and Power House	the gift must be made after 4 March 2004
.
13.2.8	(Repealed by No 127 of 2021)
.
13.2.9	(Repealed by No 101 of 2006)
.
13.2.10	(Repealed by No 101 of 2006)
.
13.2.11	(Repealed by No 41 of 2011)
.
13.2.12	(Repealed by No 41 of 2011)
.
13.2.13	(Repealed by No 41 of 2011)
.
13.2.14	(Repealed by No 41 of 2011)
.
13.2.14A	(Repealed by No 127 of 2021)
.
13.2.15	(Repealed by No 85 of 2013)
.
13.2.16	Social Ventures Australia Limited	the gift must be made after 3 May 2007
.
13.2.17	(Repealed by No 127 of 2021)
.
13.2.18	(Repealed by No 127 of 2021)
.
13.2.19	Philanthropy Australia Inc.	the gift must be made after 27 February 2013
.
13.2.20	The Prince ' s Trust Australia Limited	the gift must be made after 31 December 2013
13.2.21	The Minderoo Foundation Trust	the gift must be made on or after 1 January 2014
13.2.22	National Apology Foundation Ltd	the gift must be made on or after 1 January 2015
13.2.23	Foundation 1901 Limited	the gift must be made on or after 1 September 2021 and before 1 September 2026
13.2.24	Paul Ramsay Foundation Limited	the gift must be made after 30 June 2018 and before 1 July 2020
13.2.25	Friends of Myall Creek Memorial Incorporated	the gift must be made after 30 June 2019
13.2.26	Toy Libraries Australia Inc.	the gift must be made after 30 June 2019
13.2.27	RAS Foundation Limited	the gift must be made after 30 June 2020
13.2.28	The Great Synagogue Foundation	the gift must be made after 30 June 2020 and before 1 July 2025
.
13.2.29	Australian Associated Press Ltd	the gift must be made on or after 1 July 2021 and before 1 July 2026
.
13.2.30	The Greek Orthodox Community Of New South Wales Ltd	the gift must be made on or after 1 July 2019
.
13.2.31	Greek Orthodox Archdiocese of Australia Consolidated Trust Cathedral of the Annunciation of our Lady Restoration Fund	the gift must be made after 30 June 2021 and before 1 July 2024
.
13.2.32	Lord Mayor ' s Charitable Foundation	the gift must be made after 30 June 2021
.
13.2.33	Royal Humane Society of New South Wales Incorporated	the gift must be made after 30 June 2020
.
13.2.34	Australians for Indigenous Constitutional Recognition Ltd	the gift must be made after 30 June 2022 and before 1 July 2025
.
13.2.35	Leaders Institute of South Australia Incorporated	the gift must be made after 30 June 2022 and before 1 July 2027
.
13.2.36	St Patrick ' s Cathedral Melbourne Restoration Fund	the gift must be made after 30 June 2022 and before 1 July 2027
.
13.2.37	Australians for Unity Ltd	the gift must be made after 31 May 2023 and before 1 July 2024
.
13.2.38	Justice Reform Initiative Limited	the gift must be made after 30 June 2023 and before 1 July 2028
.
13.2.39	Transparency International Australia	the gift must be made after 30 June 2023

SECTION 30-110   Community charities  

30-110(1)    
For the purposes of item 13.1.1 of the table in subsection 30-105(1) , this section applies to a *community charity trust if the trust is established and maintained under a will or instrument of trust:

(a)    for the purposes covered by:

(i) subsections (3) and (4) of this section; or

(ii) subsections (3) , (4) and (5) of this section; and

(b)    for no other purposes.

30-110(2)    
For the purposes of item 13.1.2 of the table in subsection 30-105(1) , this section applies to a *community charity corporation if the corporation is operated:

(a)    for the purposes covered by:

(i) subsections (3) and (4) of this section; or

(ii) subsections (3) , (4) and (5) of this section; and

(b)    for no other purposes.

Mandatory purposes

30-110(3)    
This subsection covers the purpose of providing money, property or benefits to a fund, authority or institution if:

(a)    gifts to the fund, authority or institution are deductible under item 1 of the table in section 30-15 ; and

(b)    the fund, authority or institution is described (whether or not by name) in an item of a table in this Subdivision (other than item 13.1.1 or 13.1.2 of the table in subsection 30-105(1) ); and

(c)    the money, property or benefits are so provided to the fund, authority or institution for any purposes set out in the item of that table in which the fund, authority or institution is described.

30-110(4)    
This subsection covers the purpose of engaging in an activity that:

(a)    is the principal activity of a fund, authority or institution described (but not by name) in an item of a table in this Subdivision (other than item 13.1.1 or 13.1.2 of the table in subsection 30-105(1) ); or

(b)    involves pursuing the principal purpose of a fund, authority or institution described (but not by name) in an item of a table in this Subdivision (other than item 13.1.1 or 13.1.2 of the table in subsection 30-105(1) ).

Permitted purpose

30-110(5)    
This subsection covers the purpose of establishing a fund, authority or institution described (whether or not by name) in an item of a table in this Subdivision (other than item 13.1.1 or 13.1.2 of the table in subsection 30-105(1) ).

Subdivision 30-BA - Endorsement of deductible gift recipients  

SECTION 30-115   What this Subdivision is about  

Endorsement as a deductible gift recipient

SECTION 30-120  

30-120   Endorsement by Commissioner  

If an entity applies for endorsement in accordance with Division 426 in Schedule 1 to the Taxation Administration Act 1953 , the Commissioner must endorse the entity:

(a) as a ^* deductible gift recipient, if the entity is entitled to be endorsed as a deductible gift recipient; or

(b) as a ^* deductible gift recipient for the operation of a fund, authority or institution, if the entity is entitled to be endorsed as a deductible gift recipient for the operation of the fund, authority or institution.

Note:

For procedural rules relating to endorsement, see Division 426 in Schedule 1 to the Taxation Administration Act 1953 .

SECTION 30-125   Entitlement to endorsement  

Endorsement of an entity that is a fund, authority or institution

30-125(1)    

An entity is entitled to be endorsed as a *deductible gift recipient if:

(a)    the entity has an *ABN; and

(b)    the entity is a fund, authority or institution that:

(i) is described (but not by name) in item 1, 2 or 4 of the table in section 30-15 ; and

(ii) is not described by name in Subdivision 30-B if it is described in item 1 of that table; and

(iii) meets the relevant conditions (if any) identified in the column headed " Special conditions " of the item of that table in which it is described; and

(c)    

the entity meets the requirements of subsection (6) , unless:

(i) the entity is established by an Act; and

(ii) the Act (or another Act) does not provide for the winding up or termination of the entity; and

(d)    

in the case of an *ancillary or community charity trust fund - the fund and all of its trustees comply with the rules in the *applicable trust fund guidelines; and

(e)    

in the case of a *community charity corporation - the corporation and all of its directors comply with the rules in the *community charity corporation guidelines.

Endorsement of an entity for operating a fund, authority etc.

30-125(2)    
An entity is entitled to be endorsed as a ^* deductible gift recipient for the operation of a fund, authority or institution that is described (but not by name) in item 1, 2 or 4 of the table in section 30-15 and is not described by name in Subdivision 30-B if:

(a)    the entity has an ^* ABN; and

(b)    the entity:

(i) legally owns the fund; or

(ii) includes the authority or institution; and

(c)    the fund, authority or institution meets the relevant conditions (if any) identified in the column headed " Special conditions " of that item; and

(d)    

the entity meets the requirements of subsection (6) , unless:

(i) the entity is established by an Act; and

(ii) the Act (or another Act) does not provide for the winding up or termination of the entity; and

(e)    

the entity meets the requirements of section 30-130 , unless the entity is endorsed as a deductible gift recipient under paragraph 30-120(a) .

Relevant special conditions in table in section 30-15

30-125(3)    

To avoid doubt:

(a)    a condition requiring the fund, authority or institution to meetthe requirements of section 30-17 is not a relevant condition for the purposes of subparagraph (1)(b)(iii) or paragraph (2)(c) of this section; and

Note:

Section 30-17 requires the entity to be endorsed under this Subdivision as a deductible gift recipient.

(b)    in the case of a fund, authority or institution that is described in item 1 of the table in section 30-15 - a condition set out in the relevant table item in Subdivision 30-B , including a condition identified in the column headed " Special conditions - fund, authority or institution " of that item (if any), is a relevant condition for the purposes of subparagraph (1)(b)(iii) or paragraph (2)(c) of this section.

Note:

Paragraph (c) of the column headed " Special conditions " of item 1 of the table in section 30-15 requires any conditions set out in the relevant table item in Subdivision 30-B to be satisfied.

30-125(4)    
(Repealed by No 58 of 2006 )

30-125(4A)    
(Repealed by No 58 of 2006 )

30-125(5)    
(Repealed by No 58 of 2006 )

Transfer of assets from fund, authority or institution

30-125(6)    

A law (outside this Subdivision), a document constituting the entity or rules governing the entity ' s activities must require the entity, at the first occurrence of an event described in subsection (7) , to transfer to a fund, authority or institution gifts to which can be deducted under this Division:

(a)    any surplus assets of the gift fund (see section 30-130 ); or

(b)    if the entity is not required by this section to meet the requirements of section 30-130 - any surplus:

(i) gifts of money or property for the principal purpose of the fund, authority or institution; and

(ii) contributions described in item 7 or 8 of the table in section 30-15 in relation to a *fund-raising event held for that purpose; and

(iii) money received by the entity because of such gifts or contributions.

Events requiring transfer

30-125(7)    
The events are:

(a)    

the winding up of the fund, authority or institution; and

(b)    if the entity is endorsed because of a fund, authority or institution - the revocation of the entity ' s endorsement under this Subdivision relating to the fund, authority or institution.

Note 1:

There are 2 ways an entity can be endorsed because of a fund, authority or institution. An entity can be endorsed either because it is a fund, authority or institution or because it operates a fund, authority or institution.

Note 2:

Section 426-55 in Schedule 1 to the Taxation Administration Act 1953 deals with revocation of endorsement.

Note 3:

The entity is also required to keep appropriate records: see section 382-15 of the Taxation Administration Act 1953 .

SECTION 30-130   Maintaining a gift fund  

30-130(1)    
The entity must maintain for the principal purpose of the fund, authority or institution a fund (the gift fund ):

(a) to which gifts of money or property for that purpose are to be made; and

(b) to which contributions described in item 7 or 8 of the table in section 30-15 in relation to a *fund-raising event held for that purpose are to be made; and

(c) to which any money received by the entity because of such gifts or contributions is to be credited; and

(d) that does not receive any other money or property.

30-130(2)    
The entity must use the gift fund only for the principal purpose of the fund, authority or institution.

Exception - only one gift fund required per entity

30-130(3)    

An entity that operates 2 or more funds, authorities or institutions also meets the requirements of this section for 2 or more of those funds, authorities or institutions by maintaining a single gift fund if:

(a) the gift fund meets the requirements in paragraphs (1)(a), (b) and (c) in respect of each of the funds, authorities or institutions for which the gift fund is maintained; and

(b) the gift fund does not receive any other money or property.

30-130(4)    

The entity must use a gift or contribution made to the fund and any money credited to the fund only for the principal purpose of the fund, authority or institution to which the gift, contribution or money relates.

Note:

The entity is also required to keep appropriate records for each of the funds, authorities or institutions: see section 382-15 of the Taxation Administration Act 1953.

30-135   (Repealed) SECTION 30-135 Dealing with an application for endorsement  
(Repealed by No 95 of 2004)

30-140   (Repealed) SECTION 30-140 Notifying outcome of application for endorsement  
(Repealed by No 95 of 2004)

30-145   (Repealed) SECTION 30-145 Date of effect of endorsement  
(Repealed by No 95 of 2004)

30-150   (Repealed) SECTION 30-150 Review of refusal of endorsement  
(Repealed by No 95 of 2004)

30-155   (Repealed) SECTION 30-155 Checking entitlement to endorsement  
(Repealed by No 95 of 2004)

30-160   (Repealed) SECTION 30-160 Telling Commissioner of loss of entitlement to endorsement  
(Repealed by No 95 of 2004)

30-165   (Repealed) SECTION 30-165 Partnerships and unincorporated bodies  
(Repealed by No 95 of 2004)

30-170   (Repealed) SECTION 30-170 Revoking endorsement  
(Repealed by No 95 of 2004)

30-175   (Repealed) SECTION 30-175 Review of revocation of endorsement  
(Repealed by No 95 of 2004)

Government entities treated like entities

SECTION 30-180   How this Subdivision applies to government entities  

30-180(1)    
The other sections of this Subdivision apply in relation to a ^* government entity in the same way as they apply in relation to an entity.

30-180(2)    
Subparagraph 30-125(2)(b) (i) (as applied by this section) operates as if it referred to the ^* government entity consisting of persons, one or more of whom controlled the fund (instead of referring to the entity legally owning the fund).

30-180(3)    
(Repealed by No 95 of 2004)

30-180(4)    
(Repealed by No 95 of 2004)

Subdivision 30-C - Rules applying to particular gifts of property  

Valuation requirements

SECTION 30-200   Getting written valuations  

30-200(1)    
You satisfy the valuation requirements if you get 2 or more written valuations of the gift you made.

Note 1:

In most cases, you need to get these written valuations to be able to deduct a gift of property that you make to a recipient covered by item 4, 5 or 6 of the table in section 30-15 .

Note 2:

You do not need to get written valuations in the circumstances set out in section 30-205 .

30-200(2)    
The valuations must be by different individuals, each of whom is an approved valuer of the kind of property you are giving away.

Note:

Section 30-210 deals with how an individual becomes an approved valuer.

30-200(3)    
Each valuation must state the amount that, in the opinion of the valuer, was:

(a) the ^* GST inclusive market value of the property on the day you made the gift; or

(b) the ^* GST inclusive market value of the property on the day the valuation was made.

30-200(4)    

If a valuation states the ^* GST inclusive market value of the property on the day the valuation was made, it must have been made within 90 days before or after the gift was made. However, the Commissioner may allow a longer period than this.

SECTION 30-205   Proceeds of the sale would have been assessable  

30-205(1)    
You do not need to get written valuations of the gift you made if:

(a) no amount is included in your assessable income in respect of the gift you made; but

(b) an amount would have been included in your assessable income if you had sold the property instead of making the gift.

30-205(2)    

However, this section does not apply if, apart from the operation of subsection 118-60(2) , an amount would have been included in your assessable income in respect of the gift you made.

SECTION 30-210   Approved valuers  

30-210(1)    

The *Arts Secretary may approve an individual as a valuer of a particular kind of property. The approval must be in writing, signed by the Secretary.

30-210(2)    
The Secretary must, in deciding whether to approve an individual, have regard to:

(a) the individual's qualifications, experience and knowledge in valuing that kind of property; and

(b) the individual's knowledge of the current ^* GST inclusive market value of that kind of property; and

(c) the individual's standing in the professional community.

SECTION 30-212   Valuations by the Commissioner  

30-212(1)    

If you make a gift or contribution that is covered by a provision of this Division that refers to the value of property as determined by the Commissioner, you must seek the valuation from the Commissioner.

30-212(2)    
The Commissioner may charge you the amount worked out in accordance with the regulations for making the valuation.

Working out the amount you can deduct for a gift of property

SECTION 30-215   How much you can deduct  

30-215(1)    
This section contains the rules for working out how much you can deduct for a gift of property that you make to a recipient covered by item 4, 5 or 6 of the table in section 30-15 .

30-215(2)    

The general rule is that the amount you can deduct for a gift of this kind is the average of the ^* GST inclusive market values (as reduced under subsection 30-15(3) if that subsection applies) specified in the written valuations you got from the approved valuers.

Note:

In some situations you must reduce the amount you can deduct: see section 30-220 .

30-215(3)    

The exceptions to the general rule are set out in this table:

Amount you can deduct for a gift of property
Item	In this case:	The amount you can deduct is:
1	Section 30-205 (which is about the proceeds of the sale being assessable) applies, and you bought the property	the amount you paid for the property, reduced by the amount of any *input tax credit to which you are or were entitled for your *acquisition of the property
.
2	Section 30-205 (which is about the proceeds of the sale being assessable) applies, and you created or produced the property	so much of the cost of creation or production as you would have been able to deduct if you had sold the property, reduced by the amount of any *input tax credit to which you are or were entitled for your *acquisitions to the extent that they were made for the purpose of creating or producing the property
.
3	Neither of cases 1 and 2 applies, and you acquired the property:	the lesser of the amount you paid for the property and:
	(a)	less than one year before making the gift (otherwise than by inheriting it); or	(a)	if the average of the written valuations you got fairly represents the *GST inclusive market value (as reduced under subsection (4) if that subsection applies) of the property on the day you made the gift - that average; or
	(b)	for the purpose of giving it away; or	(b)	if it does not - the *GST inclusive market value (as reduced under subsection (4) if that subsection applies) of the property on the day you made the gift
	(c)	subject to an *arrangement that the property would be given away
.
4	None of cases 1 to 3 applies, and the average of the written valuations you got does not fairly represent the *market value of the property on the day you made the gift	the *GST inclusive market value (as reduced under subsection (4) if that subsection applies) of the property on the day you made the gift

30-215(4)    

For the purposes of items 3 and 4 of the table in subsection (3), the ^* GST inclusive market values of the property in question are reduced by 1/11 if you would have been entitled to an ^* input tax credit if:

(a) you had ^* acquired the property at the time you made the gift; and

(b) your acquisition had been for a ^* creditable purpose.

SECTION 30-220   Reducing the amount you can deduct  

30-220(1)    
The amount you can deduct is reduced by a reasonable amount if:

(a) the terms and conditions on which the gift is made are such that the recipient:

(i) does not receive immediate custody and control of the property; or

(ii) does not have the unconditional right to retain custody and control of the property in perpetuity; or

(iii) does not obtain an immediate, indefeasible and unencumbered legal and equitable title to the property; or

(b) the custody, control or use of the property by the recipient is affected by an ^* arrangement entered into in respect of the making of the gift.

30-220(2)    

In deciding what is a reasonable amount, have regard to the effect of those terms and conditions, or that ^* arrangement, on the ^* GST inclusive market value of the gift.

Joint ownership of property

SECTION 30-225  

30-225   Gift of property by joint owners  

If:

(a) you own property jointly with one or more other entities; and

(b) you and the other entities make a gift of the property; and

(c) you would have been able to deduct the gift under section 30-15 because of item 4, 5 or 6 of the table in that section if you had made a gift of the property as sole owner of it;

you can deduct so much of the gift as is reasonable, having regard to your interest in the property.

Subdivision 30-CA - Administrative requirements relating to ABNs  

SECTION 30-226   What this Subdivision is about  

Requirements

SECTION 30-227   Entities to which this Subdivision applies  

30-227(1)    
This Subdivision sets out requirements relating to a ^* deductible gift recipient.

30-227(2)    
A deductible gift recipient is an entity or ^* government entity that:

(a) is a fund, authority or institution described in item 1, 2, 4, 5 or 6 of the table in section 30-15 and is:

(i) endorsed under Subdivision 30-BA as a deductible gift recipient; or

(ii) mentioned by name in that table or in Subdivision 30-B ; or

(iii) (Repealed by No 88 of 2009)

(b) is endorsed as a deductible gift recipient for the operation of a fund, authority or institution described in item 1, 2 or 4 of the table in section 30-15 .

SECTION 30-228   Content of receipt for gift or contribution  

30-228(1)    
If a ^* deductible gift recipient issues a receipt for a gift described in the relevant item of the table in section 30-15 to the fund, authority or institution, the deductible gift recipient must ensure that the receipt states:

(a) the name of the fund, authority or institution; and

(b) the ^* ABN (if any) of the deductible gift recipient; and

(c) the fact that the receipt is for a gift.

Note:

If the deductible gift recipient is endorsed as a deductible gift recipient and it contravenes this section, the Commissioner may revoke its endorsement: see section 426-55 in Schedule 1 to the Taxation Administration Act 1953 .

30-228(2)    

If a ^* deductible gift recipient issues a receipt for a contribution described in item 7 of the table in section 30-15 , the deductible gift recipient must ensure that the receipt states:

(a) the name of the deductible gift recipient; and

(b) the ^* ABN (if any) of the deductible gift recipient; and

(c) the fact that the receipt is for a contribution made in return for a right to attend, or participate in, a specified ^* fund-raising event; and

(d) if the contribution is money - the amount of the contribution; and

(e) the amount of the ^* GST inclusive market value, on the day the contribution was made, of the right to attend, or participate in, the fund-raising event.

30-228(3)    

For the purposes of paragraph (2)(e), in working out the ^* GST inclusive market value of the right in question, disregard anything that would prevent or restrict conversion of the right to money.

30-228(4)    

If a ^* deductible gift recipient issues a receipt for a contribution described in item 8 of the table in section 30-15 , the deductible gift recipient must ensure that the receipt states:

(a) the name of the deductible gift recipient; and

(b) the ^* ABN (if any) of the deductible gift recipient; and

(c) the fact that the receipt is for a contribution made by way of consideration for the supply of goods or services; and

(d) the fact that the contribution was made because the contributor was the successful bidder at an auction that:

(i) was a specified ^* fund-raising event; or

(ii) was held at a specified fund-raising event; and

(e) if the contribution is money - the amount of the contribution; and

(f) the ^* GST inclusive market value, on the day the contribution was made, of the goods or services.

30-228(5)    

For the purposes of paragraph (4)(f), in working outthe ^* GST inclusive market value of the goods or services in question, disregard anything that would prevent or restrict conversion of the goods or services to money.

SECTION 30-229   Australian Business Register must show deductibility of gifts to deductible gift recipient  

30-229(1)    
If a *deductible gift recipient has an *ABN, the *Australian Business Registrar must enter in the *Australian Business Register in relation to the deductible gift recipient a statement that it is a deductible gift recipient for a specified period.

Note 1:

An entry (or lack of entry) of a statement required by this section does not affect whether you can deduct a gift to the fund, authority or institution.

Note 2:

This section will apply to all entities and government entities that are endorsed as deductible gift recipients under Subdivision 30-BA , because they must have ABNs to be endorsed. It will also apply to other entities described or named in Subdivision 30-A if they have ABNs.

30-229(2)    
If the ^* deductible gift recipient is a deductible gift recipient only because it is endorsed under Subdivision 30-BA as a deductible gift recipient for the operation of a fund, authority or institution, the statement must name the fund, authority or institution.

30-229(2A)    

If:

(a)    the *deductible gift recipient is:

(i) a fund, authority or institution; or

(ii) a deductible gift recipient only because it is endorsed under Subdivision 30-BA as a deductible gift recipient for the operation of a fund, authority or institution; and

(b)    the fund, authority or institution is covered by item 1, 2 or 4 of the table in section 30-15 ;

the statement must specify that the fund, authority or institution is covered by that item.

30-229(3)    
The *Australian Business Registrar may remove the statement from the *Australian Business Register after the end of the period.

30-229(4)    
The *Australian Business Registrar must take reasonable steps to ensure that a statement appearing in the *Australian Business Register under this section is true. For this purpose, the Registrar may:

(a)    change the statement; or

(b)    remove the statement from the Register if the statement is not true; or

(c)    remove the statement from the Register and enter another statement in the Register under this section.

30-229(5)    
(Repealed by No 145 of 2010)

(Repealed) Subdivision 30-D - Testamentary gifts under the Cultural Bequests Program  

Subdivision 30-DA - Donations to political parties and independent candidates and members  

Guide to Subdivision 30-DA

SECTION 30-241   What this Subdivision is about  

TABLE OF SECTIONS

TABLE OF SECTIONS

Operative provisions
30-242	Deduction for political contributions and gifts
30-243	Amount of the deduction
30-244	When an individual is an independent candidate
30-245	When an individual is an independent member

Operative provisions

SECTION 30-242   Deduction for political contributions and gifts  

30-242(1)    
You can deduct any of the following for the income year in which they are made:

(a) a contribution or gift to a political party that is registered under Part XI of the Commonwealth Electoral Act 1918 or under corresponding State or Territory legislation;

(b) a contribution or gift to an individual when the individual is an *independent candidate for a Commonwealth, State, Northern Territory or Australian Capital Territory election;

(c) a contribution or gift to an individual who is, or was, an *independent member of the Commonwealth Parliament, a State Parliament, the Legislative Assembly of the Northern Territory or the Legislative Assembly for the Australian Capital Territory.

30-242(2)    

The contribution or gift must be of:

(a) money; or

(b) property that you purchased during the 12 months before making the contribution or gift.

30-242(3)    
The value of the contribution or gift must be at least $2.

30-242(3A)    

You can deduct the contribution or gift only if:

(a) you are an individual; and

(b) you do not make the gift or contribution in the course of carrying on a *business.

30-242(4)    
You cannot deduct a testamentary contribution or gift under this Subdivision.

30-242(5)    
A contribution or gift to an individual who is, or was, an *independent member must be made:

(a) when the individual is an independent member; or

(b) if the individual ceases to be an independent member because:

(i) a Parliament, a House of a Parliament or a Legislative Assembly is dissolved or has reached its maximum duration; or

(ii) the individual comes up for election;

after the individual ceases to be a member but before candidates for the resulting election are declared or otherwise publicly announced by an entity authorised under the relevant electoral legislation.

SECTION 30-243   Amount of the deduction  

30-243(1)    
If the contribution or gift is money, the amount of the deduction is the amount of money.

30-243(2)    

If the contribution or gift is property, the amount of the deduction is the lesser of:

(a) the market value of the property on the day that you made the contribution or gift; and

(b) the amount that you paid for the property.

$1,500 limit on deductions

30-243(3)    
You cannot deduct more than $1,500 under this Subdivision for an income year for contributions and gifts to political parties.

30-243(4)    
You cannot deduct more than $1,500 under this Subdivision for an income year for contributions and gifts to *independent candidates or *independent members.

SECTION 30-244   When an individual is an independent candidate  

30-244(1)    
An individual is an independent candidate if:

(a) the individual is a candidate in an election (including an election that is later declared void) for members of the Commonwealth Parliament, a State Parliament, the Legislative Assembly of the Northern Territory or the Legislative Assembly for the Australian Capital Territory; and

(b) the individual ' s candidature is not endorsed by a political party that is registered under Part XI of the Commonwealth Electoral Act 1918 or under corresponding State or Territory legislation.

30-244(2)    
However, an individual does not start being an *independent candidate until the candidates for the election are declared or otherwise publicly announced by an entity authorised under the relevant electoral legislation.

30-244(3)    
An individual stops being an *independent candidate when the result of the election is declared or otherwise publicly announced by an entity authorised under the relevant electoral legislation.

30-244(4)    
If:

(a) the election is taken to have wholly failed under the relevant electoral legislation; and

(b) the result of the election has not been declared or otherwise publicly announced by an entity authorised under the relevant electoral legislation;

the individual stops being an *independent candidate in that election when candidates for the replacement election are declared or otherwise publicly announced by an entity authorised under the relevant electoral legislation.

SECTION 30-245   When an individual is an independent member  

30-245(1)    
An individual is an independent member of the Commonwealth Parliament, a State Parliament, the Legislative Assembly of the Northern Territory or the Legislative Assembly for the Australian Capital Territory if the individual:

(a) is a member of that Parliament or Legislative Assembly; and

(b) the individual is not a member of a political party that is registered under Part XI of the Commonwealth Electoral Act 1918 or under corresponding State or Territory legislation.

30-245(2)    
An individual who becomes a member as a result of an election (including an election that is later declared void) is taken to start being a member of the Parliament or Legislative Assembly when the individual ' s election as a member is declared or otherwise publicly announced by an entity authorised under the relevant electoral legislation.

Subdivision 30-DB - Spreading certain gift and covenant deductions over up to 5 income years  

SECTION 30-246   What this Subdivision is about  

Operative provisions

SECTION 30-247   Gifts and covenants for which elections can be made  

30-247(1)    
An election under this Subdivision may be made for a gift, made on or after 1 July 2003, that is:

(a) a gift of:

(i) money; or

(ii) property valued by the Commissioner at more than $5,000;

made to a fund, authority or institution covered by item 1 or 2 of the table in section 30-15 ; or

(b) a gift that is covered by item 4, 5 or 6 of the table in section 30-15 .

30-247(2)    
An election under this Subdivision may also be made for entering into a ^* conservation covenant, under Division 31 , on or after 1 July 2003.

SECTION 30-248   Making an election  

30-248(1)    
If you can deduct an amount:

(a) under this Division for a gift covered by subsection 30-247(1) ; or

(b) under Division 31 for entering into a ^* conservation covenant covered by subsection 30-247(2) ;

you may make a written election to spread that deduction over the current income year and up to 4 of the immediately following income years.

30-248(2)    
In the election, you must specify the percentage (if any) of the deduction that you will deduct in each of the income years.

30-248(3)    
You must make the election before you lodge your ^* income tax return for the income year in which you made the gift or entered into the covenant.

30-248(4)    
You may vary an election at any time. However, the variation can only change the percentage that you will deduct in respect of income years for which you have not yet lodged an ^* income tax return.

30-248(5)    
Unless section 30-249A or 30-249B applies, the election and any variation must be in the ^* approved form.

Note:

Sections 30-249A and 30-249B provide for the form of elections and variations for gifts covered by those sections.

SECTION 30-249   Effect of election  

30-249(1)    
In each of the income years you specified in the election, you can deduct the amount corresponding to the percentage you specified for that year.

30-249(2)    
You cannot deduct the amount that you otherwise would have been able to deduct for the gift in the income year in which you made the gift or entered into the covenant.

SECTION 30-249A   Requirements - environmental property gifts  

30-249A(1)    
This section applies if you make an election for a gift of property made to a fund, authority or institution covered by section 30-55 .

30-249A(2)    
You must give a copy of the election to the ^* Environment Secretary before you lodge your ^* income tax return for the income year in which you made the gift.

30-249A(3)    
If you vary the election, you must give a copy of the variation to the ^* Environment Secretary before you lodge your *income tax return for the first income year to which the variation applies.

30-249A(4)    
The election and any variation must be in a form approved in writing by the ^* Environment Secretary.

SECTION 30-249B   Requirements - heritage property gifts  

30-249B(1)    
This section applies if you make an election for a gift of property made to a fund, authority or institution covered by item 6 of the table in section 30-15 .

30-249B(2)    
You must give a copy of the election to the ^* Heritage Secretary before you lodge your ^* income tax return for the income year in which you made the gift.

30-249B(3)    
If you vary the election, you must give a copy of the variation to the ^* Heritage Secretary before you lodge your ^* income tax return for the first income year to which the variation applies.

30-249B(4)    
The election and any variation must be in a form approved in writing by the ^* Heritage Secretary.

30-249C   (Repealed) SECTION 30-249C Requirements - certain cultural property gifts  
(Repealed by No 64 of 2020)

SECTION 30-249D   Requirements - conservation covenants  

30-249D(1)    
This section applies if you make an election for a ^* conservation covenant.

30-249D(2)    
You must give a copy of the election to the ^* Environment Secretary before you lodge your ^* income tax return for the income year in which you entered the covenant.

30-249D(3)    
If you vary the election, you must give a copy of the variation to the ^* Environment Secretary before you lodge your ^* income tax return for the first income year to which the variation applies.

(Repealed) Subdivision 30-E - Register of environmental organisations  

(Repealed) SECTION 30-250 What this Subdivision is about  

(Repealed) Operative provisions

30-255   (Repealed) SECTION 30-255 Establishing the register  
(Repealed by No 40 of 2023)

30-260   (Repealed) SECTION 30-260 Meaning of environmental organisation  
(Repealed by No 40 of 2023)

30-265   (Repealed) SECTION 30-265 Its principal purpose must be protecting the environment  
(Repealed by No 40 of 2023)

30-270   (Repealed) SECTION 30-270 Other requirements it must satisfy  
(Repealed by No 40 of 2023)

30-275   (Repealed) SECTION 30-275 Further requirement for a body corporate or a co-operative society  
(Repealed by No 40 of 2023)

30-280   (Repealed) SECTION 30-280 What must be on the register  
(Repealed by No 40 of 2023)

30-285   (Repealed) SECTION 30-285 Removal from the register  
(Repealed by No 40 of 2023)

(Repealed) Subdivision 30-EA - Register of harm prevention charities  

(Repealed) Guide to Subdivision 30-EA

(Repealed) SECTION 30-286 What this Subdivision is about  

(Repealed) Operative provisions

30-287   (Repealed) SECTION 30-287 Establishing the register  
(Repealed by No 40 of 2023)

30-288   (Repealed) SECTION 30-288 Meaning of harm prevention charity  
(Repealed by No 40 of 2023)

30-289   (Repealed) SECTION 30-289 Principal activity - promoting the prevention or control of harm or abuse  
(Repealed by No 40 of 2023)

30-289A   (Repealed) SECTION 30-289A Other requirements  
(Repealed by No 40 of 2023)

30-289B   (Repealed) SECTION 30-289B What must be on the register  
(Repealed by No 40 of 2023)

30-289C   (Repealed) SECTION 30-289C Removal from the register  
(Repealed by No 40 of 2023)

(Repealed) Subdivision 30-F - Register of cultural organisations  

(Repealed) SECTION 30-290 What this Subdivision is about  

(Repealed) Operative provisions

30-295   (Repealed) SECTION 30-295 Establishing the register  
(Repealed by No 40 of 2023)

30-300   (Repealed) SECTION 30-300 Meaning of cultural organisation  
(Repealed by No 40 of 2023)

30-305   (Repealed) SECTION 30-305 What must be on the register  
(Repealed by No 40 of 2023)

30-310   (Repealed) SECTION 30-310 Removal from the register  
(Repealed by No 40 of 2023)

Subdivision 30-G - Index to this Division  

SECTION 30-315   Index  

30-315(1)    
The table in this section gives you an index to this Division.

30-315(2)    

It tells you:

• each topic covered by this Division; and

• where in this Division you can find the detail about each topic. 27AAAB

Note:

In the last column there are many references in this form: item 2.2.1. These refer to items in the tables in Subdivision 30-B .

(Repealed by No 127 of 2021)

Index
Topic		Provision
1A	2009 Victorian Bushfire Appeal Trust Account	item 4.2.41
.
1AAA	2017 Bourke Street Fund Trust Account	item 4.2.43
.
1AA	Aboriginal Education Council (N.S.W.) Incorporated	item 2.2.26
.
1	Academies - professional	section 30-25
.
2	Academy of the Social Sciences in Australia Incorporated	item 2.2.1
.
2AA	(Repealed by No 101 of 2006 )
.
2AAA	ACT Playgroups Association Incorporated	item 8.2.9
.
2AAB	ACT Region Crime Stoppers Limited	item 4.2.31A
.
2AAC	(Repealed by No 127 of 2021)
.
2AB	(Repealed by No 136 of 2010 )
.
2AC	(Repealed by No 136 of 2010 )
.
2ACA	(Repealed by No 127 of 2021)
.
2ACB	Alliance for Journalists ' Freedom Ltd	item 4.2.49
.
2AD	American Australian Association Limited	item 9.2.18
.
2A	(Repealed by No 101 of 2006 )
.
3	Amnesty International Australia	item 4.2.1
.
3A	Amy Gillett Foundation	item 10.2.8
.
4	Ancillary funds	item 2 of the table in section 30-15
.
4AA	Andy Thomas Space Foundation Limited	item 2.2.51
.
4A	Animal welfare	item 4.1.6
.
5	(Repealed by No 85 of 2013)
.
6	Approved research institutes	item 3.1.1
.
7	Armed forces, auxiliaries	item 5.1.2
.
8	Artbank	item 5 of the table in section 30-15
.
9	Art galleries	items 12.1.4 and 12.1.5; item 4 of the table in section 30-15
.
9AA	Asia Society AustralAsia Centre	item 9.2.7
.
9AAA	Aurora Education Foundation Limited	item 2.2.5
.
9AB	Australasian College for Emergency Medicine	item 1.2.18
.
9AC	Australasian College of Dermatologists	item 1.2.20
.
9A	Australia for UNHCR	item 9.2.10
.
9B	Australia Foundation in support of Human Rights Watch Limited	item 9.2.11
.
9C	Australian Academy of Law	item 2.2.49
.
10	Australian Academy of Science	item 2.2.2
.
11	Australian Academy of Technological Sciences and Engineering Limited	item 2.2.4
.
12	Australian Academy of the Humanities for the Advancement of Scholarship in Language, Literature, History, Philosophy and the Fine Arts	item 2.2.3
.
13	(Repealed by No 57 of 2002)
.
13A	Australian American Education Leadership Foundation Limited	item 9.2.4
.
14	Australiana Fund	item 12.2.1; item 4 of the table in section 30-15
.
15	Australian and New Zealand Association for the Advancement of Science	item 2.2.6
.
16	Australian and New Zealand College of Anaesthetists	item 1.2.13
.
17	Australian Antarctic Territory, payment to Commonwealth for research	item 3.2.3
.
17AAAA	Australian Associated Press Ltd	item 13.2.29
.
17AAA	Australian Breastfeeding Association	item 8.2.3
.
17AA	(Repealed by No 127 of 2021)
.
17A	Australian Business Register	section 30-229
.
17B	Australian Business Week Limited	item 7.2.5
.
18	(Repealed by No 101 of 2006 )
.
19	(Repealed by No 41 of 2011)
.
20	Australian Conservation Foundation Incorporated	item 6.2.1
.
20AA	(Repealed by No 41 of 2011)
.
20A	Australian Council of Christians and Jews	item 2.2.17
.
20B	(Repealed by No 101 of 2006 )
.
21	Australian Council of Social Service Incorporated	item 4.2.15
.
21AAA	Australian Education Research Organisation Limited	item 2.2.56
.
21AA	Australian Future Leaders Foundation Limited	item 2.2.54
.
21A	Australian Human Rights Education Fund	item 2.2.25
.
22	Australian Institute of International Affairs	item 9.2.1
.
23	Australian Ireland Fund Limited	item 11.2.11
.
23A	(Repealed by No 101 of 2006 )
.
24	Australian Neighbourhood Houses & Centres Association (ANHCA) Inc.	item 4.2.8
.
24A	Australian Nuffield Farming Scholars Association	item 2.2.20
.
24B	(Repealed by No 127 of 2021)
.
24C	Australian Philanthropic Services Limited	item 11.2.10
.
25	(Repealed by No 41 of 2011)
.
25A	Australian Primary Principals Association Education Foundation	item 2.2.22
.
25B	Australian Schools Plus Ltd	item 2.2.43
.
26	Australian Science Innovations Incorporated	item 2.2.44
.
26A	Australians for Indigenous Constitutional Recognition Ltd	item 13.2.34
.
26B	Australians for Unity Ltd	item 13.2.37
.
25C	(Repealed by No 41 of 2011)
.
26	(Repealed by No 41 of 2011)
.
27	Australian Sports Foundation	item 10.2.1
.
27AAAA	Australian Sports Foundation Charitable Fund	item 10.2.9
.
27AAA	Australian Volunteers Support Trust	item 4.2.45
.
27AAB	Australian Women Donors Network	item 11.2.11
.
27AAA	(Repealed by No 11 of 2014)
.
27AA	(Repealed by No 127 of 2021)
.
27A	(Repealed by No 129 of 2011)
.
28	(Repealed by No 101 of 2006 )
.
28AAA	(Repealed by No 41 of 2011)
.
28AA	Bradman Memorial Fund	item 10.2.7
.
28A	(Repealed by No 41 of 2011)
.
28ABA	(Repealed by No 127 of 2021)
.
28AC	Cambridge Australia Scholarships Limited	item 9.2.27
.
28AB	(Repealed by No 41 of 2011)
.
28B	(Repealed by No 101 of 2006 )
.
29	Cancer Australia	item 1.2.19
.
29A	Centre For Entrepreneurial Research and Innovation Limited	item 3.2.15
.
30	Centre for Independent Studies	item 3.2.1
.
30AA	C E W Bean Foundation	item 12.2.6
.
30A	Charlie Perkins Scholarship Trust	item 2.2.39
.
30B	Chifley Research Centre Limited	item 3.2.8
.
31	Child Accident Prevention Foundation of Australia	item 4.2.2
.
31AA	(Repealed by No 129 of 2011)
.
31A	(Repealed by No 41 of 2011)
.
31B	Clontarf Foundation	item 2.2.32
.
32	(Repealed by No 101 of 2006 )
.
33	College buildings	item 2.1.10
.
34	College of Intensive Care Medicine of Australia and New Zealand	item 1.2.21
.
34	(Repealed by No 41 of 2011)
.
34AA	Commonwealth Study Conferences (Australia) Incorporated	item 2.2.23
.
34AAA	Community charity corporations	item 13.1.2
.
34AAB	Community charity trusts	item 13.1.1
.
34A	Community Rebuilding Trust	item 4.2.46
.
34AB	Community sheds	section 30-20
.
35	Conditional gifts	section 30-220
.
36	Connellan Airways Trust	item 11.2.1
.
37	Conservation bodies	section 30-55
.
38	Conversation Trust	item 2.2.42
.
38A	(Repealed by No 101 of 2006)
.
39	Council for Christian Education in Schools	item 2.2.10
.
39A	Council for Jewish Community Security	item 13.2.1
.
40	Council for Jewish Education in Schools	item 2.2.11
.
40A	Country Education Foundation of Australia Limited	item 2.2.31
.
40AA	(Repealed by No 15 of 2023)
.
40B	Crime Stoppers South Australia Limited	item 4.2.27
.
40C	Crime Stoppers Northern Territory Program	item 4.2.31
.
41	(Repealed by No 12 of 2012)
.
42	Cultural organisations	section 30-100
.
43	(Repealed by No 40 of 2023)
.
44	Defence organisations	section 30-50
.
44AAAA	(Repealed by No 127 of 2021)
.
44AAA	Diplomacy Training Program Limited	item 9.2.21
.
44AA	Disaster relief - public fund for relief of people in Australia	item 4.1.5
.
44AB	Disaster relief - public fund for relief of people in developing countries	item 9.1.1
.
44AC	Disaster relief - public fund for relief of people in developed countries	item 9.1.2
.
44A	Diseases - charitable institutions whose principal activity is to promote the prevention or the control of diseases in human beings	items 1.1.6 and 4.1.7
.
45	Diseases - institutions researching causes, prevention or cure	items 1.1.4 and 1.1.5
.
45AAA	Don Chipp Foundation Ltd	item 3.2.9
.
45AA	(Repealed by No 41 of 2011)
.
45A	Dymocks Children ' s Charities Limited	item 2.2.21
45B	(Repealed by No 8 of 2022)
.
46	Education - education bodies	section 30-25
.
46AA	Education - public fund for scholarships, bursaries and prizes	item 2.1.13
.
46A	Endorsement as a deductible gift recipient	Subdivision 30-BA
.
47	Environmental organisations	section 30-55
.
48	(Repealed by No 40 of 2023)
.
48AAA	Ethics Centre Limited	item 3.2.14
.
48AA	Ethics education	section 30-25
.
48A	Family and child mediation and counselling	item 8.1.1
.
49	Family organisations	section 30-70
.
49A	(Repealed by No 41 of 2011)
.
49B	Fire and emergency services	section 30-102
.
49C	Foundation 1901 Limited	item 13.2.23
.
49D	Foundation Broken Hill Limited	item 11.2.13
.
50	Foundation for Development Cooperation Ltd	item 9.2.3
.
50A	(Repealed by No 41 of 2011)
.
50B	Foundation for Rural and Regional Renewal Public Fund	item 13.2.2
.
50C	Foundation for Young Australians	item 11.2.8
.
50D	Friends of Myall Creek Memorial Incorporated	item 13.2.25
.
51	Friends of the Duke of Edinburgh ' s Award in Australia Incorporated	item 11.2.2
.
51AA	Fund-raising events - contributions	items 7 and 8 of the table in section 30-15
.
51A	General Sir John Monash Foundation	item 2.2.27
.
52	Global Foundation	item 9.2.8
.
52AA	Governor Phillip International Scholarship Trust	item 2.2.47
.
52A	(Repealed by No 127 of 2021)
.
52B	Great Synagogue Foundation	item 13.2.28
.
52BA	Greek Orthodox Archdiocese of Australia Consolidated Trust Cathedral of the Annunciation of our Lady Restoration Fund	item 13.2.31
.
52C	Greek Orthodox Community Of New South Wales Ltd	item 13.2.30
.
53	Greening Australia Limited	item 6.2.2
.
53AA	Green Institute Limited	item 3.2.12
.
53A	Girl Guides Australia	items 10.2.2 and 10.2.3
.
53B	Harm prevention charities	items 4.1.4 and 4.1.7
.
53C	Headstone Project (Tas) Inc.	item 5.2.35
.
54	Health organisations	section 30-20
.
55	(Repealed by No 160 of 2005)
.
56	Heritage properties	item 6 of the table in section 30-15
.
56A	High Resolves	item 2.2.48
.
57	Higher education institutions	item 2.1.3
.
58	Hospitals	items 1.1.1, 1.1.2 and 1.1.3
.
59	(Repealed by No 101 of 2006 )
.
60	Ian Clunies Ross Memorial Foundation	item 3.2.2
.
60A	(Repealed by No 41 of 2011)
.
61	(Repealed by No 41 of 2011)
.
62	Industry, trade and design	section 30-65
.
63	International affairs	section 30-80
.
63AA	International Jewish Relief Limited	item 9.2.26
.
63A	International Social Service - Australian Branch	item 4.2.28
.
63B	International Specialised Skills Institute Incorporated	item 2.2.33
.
63C	Jewish Education Foundation (Vic) Ltd	item 2.2.57
.
64	Joint ownership of property	section 30-225
.
64AA	Judith Neilson Institute for Journalism and Ideas	item 2.2.52
.
64AB	Justice Reform Initiative Limited	item 13.2.38
.
64A	Kidsafe	items 4.2.32 to 4.2.39 (inclusive)
.
64A	(Repealed by No 101 of 2006 )
.
65	Landcare Australia Limited	item 6.2.3
.
65AA	Layne Beachley - Aim for the Stars Foundation Limited	item 13.2.4
.
65AB	Leaders Institute of South Australia Incorporated	item 13.2.35
.
65A	Leeuwin Ocean Adventure Foundation Limited	item 13.2.3A
.
66	Libraries	items 12.1.2 and 12.1.5; item 4 of the table in section 30-15
.
67	Life Education Centre	items 2.2.8 and 2.2.9
.
67A	Lingiari Policy Centre	item 3.2.10
.
67A	(Repealed by No 101 of 2006 )
.
68	Lionel Murphy Foundation	item 2.2.13
.
68A	Lord Mayor ' s Charitable Foundation	item 13.2.32
.
68AA	Lord Somers Camp and Power House	item 13.2.7
.
68AB	Lowy Institute for International Policy	item 9.2.12
.
68A	(Repealed by No 101 of 2006 )
.
68B	Make a Mark Australia Incorporated	item 9.2.14
.
69	Marcus Oldham Farm Management College	item 2.2.14
.
70	Marriage education organisations	item 8.1.1
.
70AA	(Repealed by No 127 of 2021)
70A	Mawson ' s Huts Foundation Limited	item 6.2.23
71	Medical colleges	section 30-20
72	Medical research	section 30-20
.
72AAAA	Melbourne Business School Limited	item 2.2.58
72AAA	Melbourne Korean War Memorial Committee Incorporated	item 5.2.34
72AA	(Repealed by No 127 of 2021)
72A	Menzies Research Centre Public Fund	item 3.2.4
72B	Minderoo Foundation Trust	item 13.2.21
.
72BA	Motherless Daughters Australia Limited	item 4.2.47
.
72BB	(Repealed by No 101 of 2006 )
.
72C	Mt Eliza Graduate School of Business and Government Limited	item 2.2.24
.
73	Museums	items 12.1.3 and 12.1.5; item 4 of the table in section 30-15
.
73AAAA	National Apology Foundation Ltd	item 13.2.22
.
73AAA	National Arboretum Canberra Fund	item 12.2.4
.
73AA	(Repealed by No 127 of 2021)
.
73A	(Repealed by No 129 of 2011)
.
73B	National Congress of Australia ' s First Peoples Limited	item 4.2.42
.
74	National Foundation for Australian Women Limited	item 4.2.3
.
74A	(Repealed by No 101 of 2006 )
.
75	National Parks associations	section 30-55
.
75A	(Repealed by No 101 of 2006)
.
76	National Safety Council of Australia Limited	item 4.2.4
.
77	National Trust bodies	section 30-55 ; item 6 of the table in section 30-15
.
77A	Nature Foundation Limited	item 6.2.9
.
78	Nature organisations	section 30-55
.
79	Necessitous circumstances - funds for relief of	item 4.1.3
.
79A	Neighbourhood Watch Australasia Limited	item 4.2.48
.
80	New South Wales College of Nursing	item 1.2.5
.
81	(Repealed by No 41 of 2011)
.
81A	(Repealed by No 127 of 2021)
.
82	Overseas relief funds	item 9.1.1
.
82A	Page Research Centre Limited	item 3.2.7
.
83	Paul Ramsay Foundation Limited	item 13.2.24
.
84	People in need, fund for	item 4.1.3
.
84A	Perth Korean War Memorial Committee Incorporated	item 5.2.37
.
85	Philanthropic trusts	section 30-95
.
85A	Philanthropy Australia Inc.	item 13.2.19
.
86	Playford Memorial Trust	item 11.2.4
.
86A	Playgroup Association Northern Territory Incorporated	item 8.2.8
.
86AA	Playgroup Australia Limited	item 8.2.12
.
86B	Playgroup NSW (Inc)	item 8.2.4
.
86C	Playgroup Queensland Ltd	item 8.2.6
.
86CA	Playgroup SA Inc	item 8.2.11
.
86D	Playgroup Tasmania Inc	item 8.2.7
.
86DA	Playgroup Victoria Inc.	item 8.2.10
.
86E	Playgroup WA (Inc)	item 8.2.5
.
86F	(Repealed by No 41 of 2011)
.
87	Political parties and independent candidates and members	Subdivision 30-DA
.
88	Polly Farmer Foundation (Inc)	item 2.2.16
.
89	Prevention of cruelty to animals	section 30-45
.
89A	Prince ' s Trust Australia Limited	item 13.2.20
.
90	Productivity	section 30-65
.
91	(Repealed by No 41 of 2011)
.
92	Property, rules for valuing gifts	section 30-15 and Subdivision 30-C
.
92A	Public ambulance services	items 1.1.7 and 1.1.8
.
93	Public benevolent institutions	items 4.1.1, 4.1.2 and 4.1.7
.
94	(Repealed by No 127 of 2021)
.
94AA	Q Foundation Trust	item 2.2.46
.
94AAA	Ramsay Centre for Western Civilisation Limited	item 2.2.55
.
94AB	Ranfurly Library Service Incorporated	item 12.2.3
.
94AC	RAS Foundation Limited	item 13.2.27
.
94A	Receipts for gifts	Subdivision 30-CA
.
94B	Reconciliation Australia Limited	item 4.2.19
.
95	Religious instruction/education	section 30-25
.
95A	Research Australia Limited	item 3.2.6
.
96	Research institutions	items 1.1.4 and 1.1.5
.
97	Residential education institutions	section 30-25
.
97AAAA	(Repealed by No 101 of 2006)
.
97AAA	Rhodes Trust in Australia	item 9.2.25
.
97AA	Roberta Sykes Indigenous Education Foundation	item 2.2.40
.
97A	Royal Australian and New Zealand College of Obstetricians and Gynaecologists	item 1.2.1
.
97B	Royal Australian and New Zealand College of Ophthalmologists	item 1.2.22
.
98	Royal Australian and New Zealand College of Psychiatrists	item 1.2.6
.
98A	Royal Australian and New Zealand College of Radiologists	item 1.2.4
.
99	Royal Australian College of General Practitioners	item 1.2.7
.
100	Royal Australasian College of Physicians	item 1.2.8
.
101	Royal Australasian College of Surgeons	item 1.2.9
.
102	Royal College of Nursing, Australia	item 1.2.12
.
103	Royal College of Pathologists of Australasia	item 1.2.10
.
103AA	Royal Humane Society of New South Wales Incorporated	item 13.2.33
.
103A	Royal Institution of Australia Incorporated	item 2.2.37
.
104	Royal Societies for the Prevention of Cruelty to Animals	section 30-45
.
104A	(Repealed by No 101 of 2006 )
.
104B	RSL Foundation	item 5.2.11
.
104C	(Repealed by No 101 of 2006 )
.
105	Rural school hostel buildings	item 2.1.11
.
105A	(Repealed by No 101 of 2006)
.
105B	(Repealed by No 41 of 2011)
.
106	Samuel Griffith Society Inc.	item 3.2.16
.
107	School building funds	item 2.1.10
.
108	Schools	section 30-25
.
109	Scouts	items 10.2.4 and 10.2.5
.
110	(Repealed by No 127 of 2021)
.
110AA	(Repealed by No 101 of 2006)
.
110A	Sir Earl Page Memorial Trust	item 3.2.5
.
110B	(Repealed by No 101 of 2006 )
.
111	Sir Robert Menzies Memorial Trust Foundation Limited	item 11.2.5
.
111AA	Sir William Tyree Foundation	item 2.2.18
.
111AB	Smile Like Drake Foundation Limited	item 2.2.45
.
111AC	Social Traders Ltd	item 13.2.5
.
111A	Social Ventures Australia Limited	item 13.2.16
.
111B	SouthCare Helicopter Fund	item 1.2.14
.
111C	Spirit of Australia Foundation	item 2.2.36
.
112	Sports and recreation	section 30-90
.
112AA	Spreading deductions over income years	Subdivision 30-DB
.
112AB	St Patrick ' s Cathedral Melbourne Restoration Fund	item 13.2.36
.
112AC	(Repealed by No 136 of 2010 )
.
112AD	(Repealed by No 136 of 2010 )
.
112AE	(Repealed by No 136 of 2010 )
.
112AF	(Repealed by No 127 of 2021)
.
112AFA	SU Australia Ministries Limited	item 2.2.53
.
112AG	Superannuation Consumers ' Centre Ltd	item 2.2.50
.
112B	Sydney Chevra Kadisha	item 12.2.5
.
112AFA	(Repealed by No 41 of 2011)
.
112AG	(Repealed by No 41 of 2011)
.
112A	(Repealed by No 101 of 2006 )
.
112B	(Repealed by No 101 of 2006 )
.
112BA	(Repealed by No 41 of 2011)
.
112C	Sydney Talmudical College Association Refugees Overseas Aid Fund	item 9.2.5
.
112D	(Repealed by No 101 of 2006 )
.
112E	(Repealed by No 136 of 2010 )
.
113	Tasmanian Conservation Trust Incorporated	item 6.2.11
.
114	Taxation incentives for the Arts scheme	items 4 and 5 of the table in section 30-15
.
114A	Teach for Australia	item 2.2.41
.
115	Technical and further education institution	item 2.1.7
.
116	Tertiary education/TAFE	section 30-25
.
116AA	Toy Libraries Australia Inc.	item 13.2.26
.
116AB	Transparency International Australia	item 13.2.39
.
116A	Trust for Nature (Victoria)	item 6.2.6
.
117	Trusts - ancillary	item 2 of the table in section 30-15
.
118	Trusts - philanthropic	section 30-95
.
118AA	(Repealed by No 101 of 2006 )
.
118A	United Israel Appeal Refugee Relief Fund Limited	item 9.2.6
.
118B	United States Studies Centre	item 3.2.13
.
118C	United Way Australia	item 4.2.5
.
119	Universities - general	section 30-25
.
120	Universities - research	section 30-40
.
120A	Valuations by Commissioner	section 30-212
.
121	Valuers	section 30-210
.
121A	Victorian Crime Stoppers Program	item 4.2.29
.
121B	Victorian Pride Centre Ltd	item 4.2.44
.
121C	Virtual War Memorial Limited	item 5.2.36
.
121C	(Repealed by No 41 of 2011)
.
122	Visy Cares	item 11.2.9
.
122A	(Repealed by No 78 of 2007 )
.
123	War Memorials	section 30-50
.
123A	(Repealed by No 101 of 2006 )
.
124	Welfare and rights	section 30-45
.
124A	(Repealed by No 127 of 2021)
.
125	Winston Churchill Memorial Trust	item 11.2.7
.
126	WorldSkills Australia	item 7.2.3
.
127	World Wide Fund for Nature Australia	item 6.2.22
.
127AA	(Repealed by No 41 of 2011)
.
127A	(Repealed by No 127 of 2021)
.
127B
.
128	Young Endeavour Youth Scheme Public Fund	item 13.2.3
.
129	Youthsafe	item 4.2.50

SECTION 30-320  

30-320   Effect of this Subdivision  

This Subdivision is a ^* Guide.

Note:

In interpreting an operative provision, a Guide may be considered only for limited purposes: see section 950-150 .

Division 31 - Conservation covenants  

SECTION 31-1   What this Division is about  

Operative provisions  

SECTION 31-5   Deduction for entering into conservation covenant  

31-5(1)    
You can deduct an amount if:

(a) you enter into a ^* conservation covenant over land you own; and

(b) the conditions set out in subsection (2) are met.

31-5(2)    
These conditions must be satisfied:

(a) the covenant must be perpetual;

(b) you must not receive any money, property or other material benefit for entering into the covenant;

(c) the ^* market value of the land must decrease as a result of your entering into the covenant;

(d) one or both of these must apply:

(i) the change in the market value of the land as a result of entering into the covenant must be more than $5,000;

(ii) you must have entered into a contract to acquire the land not more than 12 months before you entered into the covenant;

(e) the covenant must have been entered into with:

(i) a fund, authority or institution that meets the requirements of section 31-10 ; or

(ii) the Commonwealth, a State, a Territory or a ^* local governing body; or

(iii) an authority of the Commonwealth, a State or a Territory.

Note:

You must seek a valuation of the change in market value from the Commissioner: see section 31-15 .

31-5(3)    
The amount you can deduct is the difference between the ^* market value of the land just before you entered the covenant and its decreased market value just after that time, but only to the extent that the decrease is attributable to your entering into the covenant.

Note:

You can spread the deduction over a 5 year period: see Subdivision 30-DB .

31-5(4)    
For the purposes of paragraph (2)(a), a covenant is treated as being perpetual even if a Minister of a State or Territory has a power to rescind it.

31-5(5)    
A conservation covenant over land is a covenant that:

(a) restricts or prohibits certain activities on the land that could degrade the environmental value of the land; and

(b) is permanent and registered on the title to the land (if registration is possible); and

(c) is approved in writing by, or is entered into under a program approved in writing by, the *Environment Minister.

SECTION 31-10   Requirements for fund, authority or institution  

31-10(1)    
The fund, authority or institution:

(a) must be covered by an item in any of the tables in Subdivision 30-B and must meet any conditions set out in the relevant table item; or

(b) must be an *ancillary fund established under a will or instrument of trust solely for:

(i) the purpose of providing money, property or benefits to a fund, authority or institution mentioned in paragraph (a) and for any purposes set out in the item of the table in Subdivision 30-B that covers the fund, authority or institution; or

(ii) the establishment of such a fund, authority or institution.

31-10(2)    
If the fund, authority or institution is not listed specifically in Subdivision 30-B , it must also:

(a) be in Australia; and

(b) meet the requirements of section 30-17 (about the endorsement of deductible gift recipients).

SECTION 31-15   Valuations by the Commissioner  

31-15(1)    
You must seek a valuation of the change in the ^* market value of the land from the Commissioner for the purposes of this Division.

31-15(2)    
The Commissioner may charge you the amount worked out in accordance with the regulations for making the valuation.

Division 32 - Entertainment expenses  

SECTION 32-1   What this Division is about  

Subdivision 32-A - No deduction for entertainment expenses  

SECTION 32-5  

32-5   No deduction for entertainment expenses  

To the extent that you incur a loss or outgoing in respect of providing ^* entertainment, you cannot deduct it under section 8-1 . However, there are exceptions, which are set out in Subdivision 32-B .

Note 1:

Under section 8-1 you can deduct a loss or outgoing that you incur for the purpose of producing assessable income.

Note 2:

If you have used your property in providing entertainment, you may not be able to deduct an amount for the property: see section 32-15.

Note 3:

Section 32-75 deals with arrangements to avoid the operation of this section.

SECTION 32-10   Meaning of entertainment  

32-10(1)    
Entertainment means:

(a) entertainment by way of food, drink or ^* recreation; or

(b) accommodation or travel to do with providing entertainment by way of food, drink or ^* recreation.

32-10(2)    
You are taken to provide entertainment even if business discussions or transactions occur.

Note:

These are some examples of what is entertainment:

• business lunches

• social functions.

These are some examples of what is not entertainment:

• meals on business travel overnight

• theatre attendance by a critic

• a restaurant meal of a food writer.

SECTION 32-15  

32-15   No deduction for property used for providing entertainment  

To the extent that you use property in providing ^* entertainment, your use of the property is taken not to be for the ^* purpose of producing assessable income if section 32-5 would stop you deducting a loss or outgoing if you incurred it in the income year in providing the entertainment.

Note:

Under some provisions of this Act, in order to deduct an amount for your property, you must have used the property for the purpose of producing assessable income.

Subdivision 32-B - Exceptions  

SECTION 32-20  

32-20   The main exception - fringe benefits  

Section 32-5 does not stop you deducting a loss or outgoing to the extent that you incur it in respect of providing ^* entertainment by way of ^* providing a ^* fringe benefit.

But this exception does not apply to the extent that the taxable value of the ^* fringe benefit is reduced under section 63A of the Fringe Benefits Tax Assessment Act 1986.

Note 1:

You may be able to deduct losses or outgoings that are fringe benefits under section 51AEA , 51AEB or 51AEC of the Income Tax Assessment Act 1936 . If you do, then you cannot deduct them under section 8-1 (about general deductions) and so this section is not relevant.

Note 2:

There are other exceptions for a loss or outgoing you incur in providing a benefit that would be a fringe benefit if it were not an exempt benefit: see items 1.6 and 1.7 of the table in section 32-30.

SECTION 32-25  

32-25   The tables set out the other exceptions  

Section 32-5 does not stop you deducting a loss or outgoing to the extent that you incur it in respect of providing ^* entertainment as described in column 2 of an item of a table in this Subdivision.

However, if column 3 of that item applies, the exception in column 2 of that item does not.

SECTION 32-30   Employer expenses  

Employer expenses
Item	Section 32-5 does not stop you deducting a loss or outgoing for …	But the exception does not apply if …
1.1	providing food or drink to your employees in an *in-house dining facility.	the food or drink is provided at a party, reception or other social function.
1.2	providing food or drink to individuals (other than your employees) in an *in-house dining facility.	(a)	you choose (under section 32-70) not to include in your assessable income $30 for each meal you provide in the *in-house dining facility in the income year to an individual (other than your employee); or
			(b)	the food or drink is provided at a party, reception or other social function.
1.3	providing food or drink in a *dining facility to your employees who perform most of their duties in connection with:	the food or drink is provided at a party, reception or other social function.
	(a)	the dining facility; or
	(b)	a facility (of which the dining facility forms a part) for providing accommodation, *recreation or travel.
1.4	providing food or drink to your employee under an *industrial instrument relating to overtime.
1.5	providing a facility for *recreation on property you occupy, if the facility is mainly operated for your employees to use.	the facility is for:
		(a)	accommodation; or
		(b)	dining or drinking (unless it is a food or drink vending machine).
1.6	providing food or drink which would be a *fringe benefit apart from sections 54, 58, 58N, 58S and 58T of the Fringe Benefits Tax Assessment Act 1986 (disregarding section 58P of that Act).
1.7	providing a meal which would be a *fringe benefit apart from sections 58A, 58F, 58L, 58LA and 58M of the Fringe Benefits Tax Assessment Act 1986 (disregarding section 58P of that Act).
1.8	giving your employee an allowance that is included in his or her assessable income.	(a)	the employee is a *relative of another employee of yours; and
			(b)	you give the allowance to the relative, as your employee, because:
				(i)	he or she provides, or facilitates providing, *entertainment to do with the other employee's employment; and
				(ii)	you expect the relative to do so.

Note 1:

In the case of a company, items 1.1, 1.2, 1.3, 1.5 and 1.8 cover directors of the company as if they were employees: see section 32-80.

Note 2:

In the case of a company, items 1.1, 1.2, 1.3 and 1.5 cover directors, employees and property of another company that is a member of the same wholly-owned group: see section 32-85.

Note 3:

Item 1.8 has a special operation for partnerships: see section 32-90.

SECTION 32-35   Seminar expenses  

Seminar expenses
Item	Section 32-5 does not stop you deducting a loss or outgoing for …	But the exception does not apply if …
2.1	providing food, drink, accommodation or travel to an individual (including yourself) that is reasonably incidental to the individual attending a *seminar that *goes for at least 4 hours.	(a)	the seminar is a *business meeting; or
		(b)	the *seminar's main purpose is to promote or advertise a *business (or prospective *business) or its goods or services; or
		(c)	the *seminar's main purpose is to provide *entertainment at, or in connection with, the seminar.

SECTION 32-40   Entertainment industry expenses  

Entertainment industry expenses
Item	Section 32-5 does not stop you deducting a loss or outgoing for …	But the exception does not apply if …
3.1	providing *entertainment for payment in the ordinary course of a *business that you carry on.
3.2	providing *entertainment in performing your duties to your employer who carries on a *business that includes providing that entertainment for payment.

SECTION 32-45   Promotion and advertising expenses  

Promotion and advertising expenses
Item	Section 32-5 does not stop you deducting a loss or outgoing for …	But the exception does not apply if …
4.1	providing *entertainment if:
	(a)	you provide it to an individual under a contract to supply him or her with goods or services in the ordinary course of your *business; and
	(b)	you incur the loss or outgoing to promote or advertise to the public your business or its goods or services.
4.2	providing or exhibiting your *business ' s goods or services if you incur the loss or outgoing to promote or advertise those goods or services to the public.
4.3	providing *entertainment to promote or advertise to the public a *business or its goods or services.	some people have a greater opportunity to get the benefits of the entertainment than ordinary members of the public have.

SECTION 32-50   Other expenses  

Other expenses
Item	Section 32-5 does not stop you deducting a loss or outgoing for …	But the exception does not apply if …
5.1	buying food or drink to do with overtime that you work, if you receive an allowance under an *industrial instrument to buy the food or drink.
5.2	providing *entertainment free to members of the public who are sick, disabled, poor or otherwise disadvantaged.

Subdivision 32-C - Definitions relevant to the exceptions  

SECTION 32-55  

32-55   In-house dining facility (employer expenses table items 1.1 and 1.2)  

An in-house dining facility is a canteen, dining room or similar facility that:

(a) is on property you occupy; and

(b) is operated mainly for providing food and drink to your employees; and

(c) is not open to the public.

Note 1:

In the case of a company, this definition also covers directors of the company as if they were employees: see section 32-80 .

Note 2:

In the case of a company, this definition also covers directors, employees and property of another company that is a member of the same wholly-owned group: see section 32-85 .

SECTION 32-60  

32-60   Dining facility (employer expenses table item 1.3)  

A dining facility is:

(a) a canteen, dining room or similar facility; or

(b) a cafe, restaurant or similar facility;

that is on property you occupy.

Note:

In the case of a company, this definition also covers property of another company that is a member of the same wholly-owned group: see section 32-85 .

SECTION 32-65   Seminars (seminar expenses table item 2.1)  

32-65(1)    
Seminar includes a conference, convention, lecture, meeting (including a meeting for the presentation of awards), speech, " question and answer session " , training session or educational course.

32-65(2)    
In working out whether a ^* seminar goes for at least 4 hours the following are taken not to affect the seminar ' s continuity, nor to form part of it:

(a) any part of the seminar that occurs during a meal;

(b) any break during the seminar for the purpose of a meal, rest or ^* recreation.

32-65(3)    
A ^* seminar is a business meeting if its main purpose is for individuals who are (or will be) associated with the carrying on of a particular ^* business to give or receive information, or discuss matters, relating to the business.

However, the ^* seminar is not a business meeting if it:

(a) is organised by (or on behalf of) an employer solely for either or both of these purposes:

(i) training the employer and the employer ' s employees (or just those employees) in matters relevant to the employer ' s ^* business (or prospective ^* business);

(ii) enabling the employer and the employer ' s employees (or just those employees) to discuss general policy issues relevant to the internal management of the employer ' s ^* business; and

(b) is conducted on property that is occupied by a person (other than the employer) whose ^* business includes organising seminars or making property available for conducting seminars.

Note 1:

In the case of a company, subsection (3) covers directors of the company as if they were employees: see section 32-80 .

Note 2:

In the case of a company, paragraph (3)(b) also covers property of another company that is a member of the same wholly-owned group: see section 32-85 .

Note 3:

Subsection (3) has a special operation for partnerships: see section 32-90.

Subdivision 32-D - In-house dining facilities (employer expenses table item 1.2)  

SECTION 32-70   $30 is assessable for each meal provided to non-employee in an in-house dining facility  

32-70(1)    
Your assessable income includes $30 for a meal you provide in an ^* in-house dining facility in the income year to an individual other than your employee, but only if:

(a) you incur a loss or outgoing in respect of providing the meal; and

(b) because of item 1.2 of the table in section 32-30 , section 32-5 does not stop you deducting the loss or outgoing under section 8-1 (which deals with general deductions); and

(c) the loss or outgoing is one that you can deduct under section 8-1 for the income year or some other income year.

32-70(2)    
However, you can choose not to include in your assessable income $30 for each meal you provide in the ^* in-house dining facility in the income year to an individual other than your employee.

Note:

If you do choose, you cannot rely on item 1.2 of the table in section 32-30 as a basis for deducting a loss or outgoing you incur in respect of providing a meal.

32-70(3)    
You must choose by the day you lodge your ^* income tax return for the income year, or within a further time allowed by the Commissioner.

Subdivision 32-E - Anti-avoidance  

SECTION 32-75  

32-75   Commissioner may treat you as having incurred entertainment expense  

If:

(a) you incur a loss or outgoing under an ^* arrangement; and

(b) someone provides ^* entertainment under the arrangement to you or someone else; and

(c) section 32-5 would have stopped you deducting the loss or outgoing under section 8-1 (which deals with general deductions) if you had incurred it in respect of providing that entertainment;

this Division applies to you as if you had incurred the loss or outgoing in providing that entertainment, to the extent (if any) that the Commissioner thinks reasonable.

Note:

This means that section 32-5 will prevent you from deducting the loss or outgoing under section 8-1 unless an exception applies.

Example:

A company pays $1,000 to sponsor a football game. Under the same arrangement, the company is given a viewing box at the game. To the extent the Commissioner thinks reasonable, he or she can treat the company as having incurred the $1,000 in providing entertainment.

Subdivision 32-F - Special rules for companies and partnerships  

SECTION 32-80  

32-80   Company directors  

In the case of a company, these provisions cover directors of the company as if they were the company's employees:

• item 1.1 (exception for ^* in-house dining facilities) of the table in section 32-30 ;

• item 1.2 (exception for ^* in-house dining facilities) of the table in section 32-30 ;

• item 1.3 (exception for ^* dining facilities) of the table in section 32-30 ;

• item 1.5 (exception for recreational facilities) of the table in section 32-30 ;

• item 1.8 (exception for providing your employee with an allowance) of the table in section 32-30 ;

• section 32-55 (which defines in-house dining facility );

• subsection 32-65(3) (which defines business meeting ).

SECTION 32-85   Directors, employees and property of wholly-owned group company  

Employees and directors of group company

32-85(1)    
In the case of a company, these provisions cover directors and employees of another company that is a member of the same ^* wholly-owned group as if they were the company's own directors and employees:

• item 1.1 (exception for ^* in-house dining facilities) of the table in section 32-30 ;

• item 1.2 (exception for ^* in-house dining facilities) of the table in section 32-30 ;

• item 1.3 (exception for ^* dining facilities) of the table in section 32-30 ;

• item 1.5 (exception for recreational facilities) of the table in section 32-30 ;

• section 32-55 (which defines in-house dining facility );

• subsection 32-60(1) (which defines dining facility );

• paragraph 32-65(3)(b) .

Property occupied by group company

32-85(2)    
Those provisions also cover property occupied by that other company as if the company occupied that property.

SECTION 32-90  

32-90   Partnerships  

In the case of a partnership:

• item 1.8 (exception for providing employee with an allowance) of the table in section 32-30 ; and

• subsection 32-65(3) (which defines business meeting );

apply to a partner in the same way as they apply to an employee of the partnership, but only for the purposes of calculating, in accordance with section 90 of the Income Tax Assessment Act 1936 , the partnership's net income or partnership loss.

Division 34 - Non-compulsory uniforms  

Guide to Division 34  

SECTION 34-1   What this Division is about  

TABLE OF SECTIONS

TABLE OF SECTIONS

34-3	What you need to read

SECTION 34-3   What you need to read  

Employees

34-3(1)    
If you incur expenditure for your non-compulsory uniform, you need to read Subdivision 34-B (which is about deductions for your non-compulsory uniform), starting at section 34-10 .

Employers

34-3(2)    
If you have people working for you who want to deduct expenditure of that kind, you need to read:

• Subdivision 34-C (which is about registering the design of a non-compulsory uniform), starting at section 34-25 ; and

• Subdivision 34-D (which is about appeals from Industry Secretary's decision), starting at section 34-40 .

Subdivision 34-A - Application of Division 34  

SECTION 34-5   This Division applies to employees and others  

34-5(1)    
This Division applies not only to an individual who is an employee. It also applies to an individual who is not an employee, but who receives, or is entitled to receive, ^* withholding payments covered by subsection (3).

34-5(2)    
If an individual is not an employee, but is covered by subsection (1), this Division applies to the individual as if:

(a) he or she were an employee; and

(b) the entity, who pays (or is liable to pay) ^* withholding payments covered by subsection (3) that result in the individual being in receipt of, or entitled to receive, such payments, were the individual's employer; and

(c) any other individual who receives (or is entitled to receive) ^* withholding payments covered by subsection (3):

(i) that result in that other individual being in receipt of, or entitled to receive, such payments; and

(ii) that the entity pays (or is liable to pay) to that other individual;

were an employee of the entity.

34-5(3)    
This subsection covers a ^* withholding payment covered by any of the provisions in Schedule 1 to the Taxation Administration Act 1953 listed in the table.

Withholding payments covered
Item	Provision	Subject matter
1	Section 12-40	Payment to company director
.
2	Section 12-45	Payment to office holder
.
3	Section 12-50	Return to work payment
.
4	Subdivision 12-D	Benefit, training and compensation payments

SECTION 34-7  

34-7   This Division applies to employers and others  

If an entity is not an employer, but pays (or is liable to pay) ^* withholding payments covered by subsection 34-5(3), this Division applies to the entity as if:

(a) it were an employer; and

(b) an individual to whom the entity pays (or is liable to pay) such withholding payments were the entity's employee.

Subdivision 34-B - Deduction for your non-compulsory uniform  

SECTION 34-10  What you can deduct  

34-10(1)    

If you are an employee, you can deduct expenditure you incur in respect of your ^* non-compulsory ^* uniform if:

(a) you can deduct the expenditure under another provision of this Act; and

(b) the ^* design of the uniform is registered under this Division when you incur the expenditure.

Note 1:

This Division also applies to individuals who are not employees: see Subdivision 34-A .

Note 2:

Employers apply to register designs of uniforms: see Subdivision 34-C .

34-10(2)    
You cannot deduct the expenditure under this Act if the ^* design is not registered at the time you incur the expenditure.

34-10(3)    
However, this Division does not stop you deducting expenditure you incur in respect of your ^* occupation specific clothing or ^* protective clothing.

SECTION 34-15   What is a non-compulsory uniform?  

What is a uniform ?

34-15(1)    
A uniform is one or more items of clothing (including accessories) which, when considered as a set, distinctively identify you as a person associated (directly or indirectly) with:

(a) your employer; or

(b) a group consisting of your employer and one or more of your employer's ^* associates.

When is a uniform non-compulsory ?

34-15(2)    
Your uniform is non-compulsory unless your employer consistently enforces a policy that requires you and the other employees (except temporary or relief employees) who do the same type of work as you:

(a) to wear the uniform when working for your employer; and

(b) not to substitute an item of clothing not included in the uniform for an item of clothing included in the uniform when working for your employer;

except in special circumstances.

SECTION 34-20   What are occupation specific clothing and protective clothing ?  

34-20(1)    
Occupation specific clothing is clothing that distinctively identifies you as belonging to a particular profession, trade, vocation, occupation or calling. To determine this, disregard any feature of the clothing that distinctively identifies you as a person associated (directly or indirectly) with:

(a) your employer; or

(b) a group consisting of your employer and one or more of your employer's ^* associates.

Example:

Occupation specific clothing includes a nurse's uniform, a chef's checked pants and a religious cleric's ceremonial robes.

34-20(2)    
Protective clothing is clothing of a kind that you mainly use to protect yourself, or someone else, from risk of:

(a) death; or

(b) ^* disease (including the contraction, aggravation, acceleration or recurrence of a disease); or

(c) injury (including the aggravation, acceleration or recurrence of an injury); or

(d) damage to clothing; or

(e) damage to an artificial limb or other artificial substitute, or to a medical, surgical or other similar aid or appliance.

Example:

Protective clothing includes overalls, aprons, goggles, hard hats and safety boots, when worn to protect the wearer.

Meaning of disease

34-20(3)    
Disease includes any mental or physical ailment, disorder, defect or morbid condition, whether of sudden onset or gradual development and whether of genetic or other origin.

Subdivision 34-C - Registering the design of a non-compulsory uniform  

SECTION 34-25   Application to register the design  

34-25(1)    

The employer of an employee who has, or will have, a ^* non-compulsory ^* uniform can apply to the *Industry Secretary for the ^* design of the uniform to be registered.

Note:

This Division also applies to entities that are not employers: see Subdivision 34-A .

Meaning of design of a uniform

34-25(2)    
The design of a ^* uniform includes features such as its colouring, construction, durability, ornamentation, pattern and shape.

Form of application

34-25(3)    
The application must be:

(a) in writing; and

(b) in a form approved in writing by the ^* Industry Secretary; and

(c) accompanied by such information as the Industry Secretary requires.

SECTION 34-30   Industry Secretary's decision on application  

Industry Secretary must decide to grant or refuse application

34-30(1)    
After considering the application, the ^* Industry Secretary must decide to either grant or refuse the application.

Criteria for grant of application

34-30(2)    
The ^* Industry Secretary must not decide to grant an application unless he or she is satisfied that the design meets the criteria set out in the ^* approved occupational clothing guidelines.

Note:

The approved occupational clothing guidelines are created under section 34-55 .

When Industry Secretary taken to have refused application

34-30(3)    
The ^* Industry Secretary is taken to have refused an application if he or she does not make a decision by the later of the following times (the deadline ):

(a) the end of 90 days (the 90-day period ) after the day the Industry Secretary receives the application;

(b) if the Industry Secretary, by written notice given to the applicant within the 90-day period, requests the applicant to give further information about the application - the end of 90 days after the Industry Secretary receives the further information.

SECTION 34-33   Written notice of decision  

34-33(1)    
If the ^* Industry Secretary makes a decision to grant or refuse an application under subsection 34-30(1) before the ^* deadline, the Industry Secretary must give the applicant written notice of the decision.

Reasons for refusal

34-33(2)    
If the notice is a notice of a decision to refuse the application, it must also set out the reasons for the refusal.

Statements to accompany notice of decision

34-33(3)    
The notice of the decision is to include the statements set out in subsections (4) and (5) .

34-33(4)    

There must be a statement to the effect that, subject to the Administrative Review Tribunal Act 2024 , an application may be made to the *ART, by (or on behalf of) any entity whose interests are affected by the decision, for review of the decision.

34-33(5)    

There must also be a statement to the effect that a request may be made under section 268 of that Act by (or on behalf of) such an entity for a statement of reasons.

Failure does not affect validity

34-33(6)    
If the ^* Industry Secretary fails to comply with subsection (4) or (5) , that failure does not affect the validity of his or her decision.

SECTION 34-35  

34-35   When uniform becomes registered  

If the ^* Industry Secretary decides to grant the application, the ^* design of the ^* uniform becomes registered on:

(a) the day the decision is made; or

(b) if the applicant requests - such earlier day as the Industry Secretary specifies.

Note:

When the design becomes registered, an entry for the design is made on the Register of Approved Occupational Clothing. Subdivision 34-E is about the Register.

Subdivision 34-D - Appeals from Industry Secretary's decision  

SECTION 34-40  

34-40   Review of decisions by the Administrative Review Tribunal  

Applications may be made to the *ART for review of a decision made by the ^* Industry Secretary under subsection 34-30(1) .

Subdivision 34-E - The Register of Approved Occupational Clothing  

SECTION 34-45   Keeping of the Register  

34-45(1)    
The ^* Industry Secretary must keep the Register of Approved Occupational Clothing, listing the designs that are required to be entered on the Register because of this Division.

Register to be open for inspection

34-45(2)    
The ^* Industry Secretary must arrange for the Register to be available for inspection at any reasonable time by any person on request.

SECTION 34-50   Changes to the Register  

Removal of registration

34-50(1)    
The ^* Industry Secretary must remove an entry for a ^* design from the Register of Approved Occupational Clothing if requested to do so by the employer who applied for the design to be registered.

Correcting errors and mistakes

34-50(2)    
The ^* Industry Secretary may correct a clerical error or an obvious mistake in an entry for a design in the Register and, if the Industry Secretary does so, the correction takes effect on the day on which the design to which the entry relates was registered.

Subdivision 34-F - Approved occupational clothing guidelines  

SECTION 34-55   Approved occupational clothing guidelines  

34-55(1)    

The Minister must, by legislative instrument, formulate written guidelines (the approved occupational clothing guidelines ) setting out criteria that ^* designs of uniforms must meet if the designs are to be registered.

Matters to be taken into account in making guidelines

34-55(2)    

In making ^* approved occupational clothing guidelines, the matters to which the Minister is to have regard include:

(a) how distinctively a ^* uniform ' s ^* design identifies the wearer as a person associated (directly or indirectly) with:

(i) the applicant for registering the uniform ' s design; or

(ii) a group consisting of the applicant and one or more of the applicant ' s ^* associates; and

(b) the nature of the ^* business or activities the applicant carries on.

34-55(3)    
(Repealed by No 58 of 2006 )

Subdivision 34-G - The Industry Secretary  

SECTION 34-60  

34-60   Industry Secretary to give Commissioner information about entries  

The ^* Industry Secretary must give the Commissioner information about entries of ^* designs on the Register of Approved Occupational Clothing if the Commissioner requests him or her to do so.

SECTION 34-65  

34-65   Delegation of powers by Industry Secretary  

The ^* Industry Secretary may, by writing, delegate any or all of his or her functions and powers under this Division to a person in the *Industry Department:

(a) who holds or performs the duties of a ^* Senior Executive Service office; or

(b) whose classification level appears in Group 7 or 8 of Schedule 1 to the Classification Rules under the Public Service Act 1999 ; or

(c) who is acting in a position usually occupied by a person with a classification level of the kind mentioned in paragraph (b).

Division 35 - Deferral of losses from non-commercial business activities  

SECTION 35-1   What this Division is about  

Operative provisions  

SECTION 35-5   Object  

35-5(1)    
The object of this Division is to improve the integrity of the taxation system by:

(a) preventing losses from non-commercial activities that are carried on as ^* businesses by individuals (alone or in partnership) being offset against other assessable income; and

(b) preventing pre-business capital expenditure and post-business capital expenditure by individuals (alone or in partnership) in relation to non-commercial activities being deductible under section 40-880 (business related costs);

unless certain exceptions apply.

35-5(2)    

This Division is not intended to apply to activities that do not constitute carrying on a ^* business (for example, the receipt of income from passive investments).

SECTION 35-10   Deferral of deductions from non-commercial business activities  

35-10(1)    
The rule in subsection (2) applies for an income year to each ^* business activity you carried on in that year if you are an individual, either alone or in partnership (whether or not some other entity is a member of the partnership), unless:

(a) you satisfy subsection (2E) for that year, and one of the tests set out in any of the following provisions is satisfied for the business activity for that year:

(i) section 35-30 (assessable income test);

(ii) section 35-35 (profits test);

(iii) section 35-40 (real property test);

(iv) section 35-45 (other assets test); or

(b) the Commissioner has exercised the discretion set out in section 35-55 for the business activity for that year; or

(c) the exception in subsection (4) applies for that year.

Note:

This section covers individuals carrying on a business activity as partners, but not individuals merely in receipt of income jointly. Compare the definition of partnership in subsection 995-1(1) .

Rules

35-10(2)    
If the amounts attributable to the ^* business activity for that income year that you could otherwise deduct under this Act for that year exceed your assessable income (if any) from the business activity for that year, or your share of it, this Act applies to you as if the excess:

(a) were not incurred in that income year; and

(b) were an amount attributable to the activity that you can deduct from assessable income from the activity for the next income year in which the activity is carried on.

Note 1:

There are modifications of this rule if you have exempt income (see section 35-15 ) or you become bankrupt (see section 35-20 ).

Note 2:

This rule does not apply if your excess is solely due to deductions under Division 41 (see section 35-10 of the Income Tax (Transitional Provisions) Act 1997 ).

Example:

Jennifer has a salaried job, and she also carries on a business activity consisting of selling lingerie.

Jennifer starts that activity on 1 July 2002, and for the 2002-03 income year, the activity produces assessable income of $8,000 and deductions of $10,000. The activity does not pass any of the tests and the discretion is not exercised so the $2,000 excess is carried over to the next income year in which the activity is carried on.

For the 2003-04 income year, the activity produces assessable income of $9,000 and deductions of $10,000 (excluding the $2,000 excess from 2002-03). Again, no tests passed and no exercise of discretion.

$3,000 is carried over to the next income year (comprising the $1,000 excess for the current year, plus the previous year ' s $2,000 excess) when the activity is carried on.

35-10(2A)    

You cannot deduct an amount under section 40-880 (business related costs) for expenditure in relation to a ^* business activity you used to carry on if you are an individual, either alone or in partnership (whether or not some other entity is a member of the partnership) unless:

(a) you satisfied subsection (2E), and one of the tests set out in any of the following provisions was satisfied for the business activity:

(i) section 35-30 (assessable income test);

(ii) section 35-35 (profits test);

(iii) section 35-40 (real property test);

(iv) section 35-45 (other assets test); or

(b) the Commissioner has exercised the discretion set out in section 35-55 for the business activity; or

(c) the exception in subsection (4) applied;

for the income year in which the business activity ceased to be carried on or an earlier income year.

35-10(2B)    

If you are an individual, either alone or in partnership (whether or not some other entity is a member of the partnership), you cannot deduct an amount under section 40-880 (business related costs) for expenditure in relation to a ^* business activity:

(a) you propose to carry on; or

(b) another entity proposes to carry on if the other entity is not an individual, either alone or in partnership;

for an income year before the one in which the business activity starts to be carried on.

35-10(2C)    

This section applies to an amount that you could have deducted, apart from paragraph (2B)(a), as if it were an amount attributable to the ^* business activity that you can deduct from assessable income from the activity for the income year in which the business activity starts to be carried on.

35-10(2D)    

You can deduct expenditure covered by paragraph (2B)(b) for the income year in which the ^* business activity starts to be carried on.

Income requirement

35-10(2E)    

You satisfy this subsection for an income year if the sum of the following is less than $250,000:

(a) your taxable income for that year, disregarding your *assessable FHSS released amount for that year;

(b) your *reportable fringe benefits total for that year;

(c) your *reportable superannuation contributions for that year;

(d) your *total net investment losses for that year.

For the purposes of paragraph (a), when working out your taxable income, disregard any excess mentioned in subsection (2) for any *business activity for that year that you could otherwise deduct under this Act for that year.

Grouping business activities

35-10(3)    
In applying this Division, you may group together ^* business activities of a similar kind.

Exceptions

35-10(4)    

The rule in subsection (2), (2A) or (2B) does not apply to a ^* business activity for an income year if:

(a) the activity is a ^* primary production business, or a ^* professional arts business; and

(b) your assessable income for that year (except any ^* net capital gain) from other sources that do not relate to that activity is less than $40,000.

35-10(5)    
A professional arts business is a ^* business you carry on as:

(a) the author of a literary, dramatic, musical or artistic work; or

Note:

The expression " author " is a technical term from copyright law. In general, the " author " of a musical work is its composer and the " author " of an artistic work is the artist, sculptor or photographer who created it.

(b) a ^* performing artist; or

(c) a ^* production associate.

SECTION 35-15   Modification if you have exempt income  

35-15(1)    

The rule in subsection 35-10(2) may be modified for an income year if you ^* derived ^* exempt income in that year.

35-15(2)    

Any amount to which paragraph 35-10(2)(b) would otherwise apply for an income year for you is reduced by your * net exempt income for that year (after * utilising the net exempt income under section 36-10 or 36-15 (about tax losses)). This reduction is made before you apply the paragraph 35-10(2)(b) amount against assessable income from the ^* business activity.

SECTION 35-20   Modification if you become bankrupt  

35-20(1)    

The rule in subsection 35-10(2) or (2A) is modified as set out in subsection (3) for an income year if in that year (the current year ) you become bankrupt or are released from a debt by the operation of an Act relating to bankruptcy.

35-20(2)    
The rule is also modified as set out in subsection (3) if:

(a) you became bankrupt before the current year; and

(b) the bankruptcy is annulled in the current year under section 74 of the Bankruptcy Act 1966 because your creditors have accepted a proposal for a composition or scheme of arrangement; and

(c) under the composition or scheme of arrangement, you have been, will be or may be released from some or all of the debts from which you would have been released if you had instead been discharged from the bankruptcy.

35-20(3)    
This Act applies to you as if any amount that:

(a) paragraph 35-10(2)(b) had applied to for an income year before the current year for you; and

(b) you have not yet deducted;

were not an amount attributable to the ^* business activity that you can deduct for the current year or a later income year.

SECTION 35-25  

35-25   Application of Division to certain partnerships  

For the purpose of applying the tests in sections 35-30 , 35-40 and 35-45 where you carry on a ^* business activity in an income year as a partner, ignore:

(a) any part of the assessable income from the business activity for the year that is attributable to the interest of a partner that is not an individual in the partnership net income or partnership loss for the year; and

(b) any part of the assessable income from the business activity for the year that is *derived from the activity by another partner otherwise than as a member of the partnership; and

(c) any part of the ^* reduced cost bases or other values of assets of the partnership used in carrying on the activity in that year that is attributable to the interest of a partner that is not an individual in those assets; and

(d) any part of the reduced cost bases or other values of assets owned or leased by another partner that are not partnership assets and used in carrying on the activity in that year.

SECTION 35-30  

35-30   Assessable income test  

The rules in section 35-10 do not apply to a ^* business activity for an income year if:

(a) the amount of assessable income from the business activity for the year; or

(b) you started to carry on the business activity, or stopped carrying it on, during the year - a reasonable estimate of what would have been the amount of that assessable income if you had carried on that activity throughout the year;

is at least $20,000.

SECTION 35-35   Profits test  

35-35(1)    

The rules in section 35-10 do not apply to a ^* business activity (except an activity carried on by one or more individuals as partners, whether or not some other entity is a member of the partnership) for an income year (the current year ) if, for each of at least 3 of the past 5 income years (including the current year) the sum of the deductions attributable to that activity for that year (apart from the operation of subsections 35-10(2) and (2C) ) is less than the assessable income from the activity for that year.

35-35(2)    

For a ^* business activity you carried on with one or more others as partners, the rules in section 35-10 do not apply to you for the current year if, for each of at least 3 of the past 5 income years (including the current year) the sum of your deductions (including your share of the partnership deductions) attributable to that activity for that year (apart from the operation of subsections 35-10(2) and (2C) ) is less than your assessable income (including your share of the partnership ' s assessable income) from the activity for that year.

SECTION 35-40   Real property test  

35-40(1)    

The rules in section 35-10do not apply to a ^* business activity for an income year if the total ^* reduced cost bases of real property or interests in real property used on a continuing basis in carrying on the activity in that year is at least $500,000.

35-40(2)    

You may use the *market value of the real property or interest if that value is more than its ^* reduced cost base.

35-40(3)    

The ^* reduced cost base or *market value is worked out:

(a) as at the end of the income year; or

(b) if you stopped carrying on the ^* business activity during the year:

(i) as at the time you stopped; or

(ii) if you disposed of the asset before that time in the course of stopping carrying on the activity - as at the time you disposed of it.

35-40(4)    
However, these assets are not counted for this test:

(a) a ^* dwelling, and any adjacent land used in association with the dwelling, that is used mainly for private purposes;

(b) fixtures owned by you as a tenant.

SECTION 35-45   Other assets test  

35-45(1)    

The rules in section 35-10 do not apply to a ^* business activity for an income year if the total values of assets that are counted for this test (see subsections (2) and (4)) and that are used on a continuing basis in carrying on the activity in that year is at least $100,000.

35-45(2)    

The assets counted for this test, and their values for this test, are set out in this table:

Assets counted for this test and their values
Item	Asset	Value
1	An asset whose decline in value you can deduct under Division 40	The asset ' s *written down value
.
2	An item of *trading stock	Its value under subsection 70-45(1)
.
3	An asset that you lease from another entity	The sum of the amounts of the future lease payments for the asset to which you are irrevocably committed, less an appropriate amount to reflect any interest component for those lease payments
.
4	Trade marks, patents, copyrights and similar rights	Their *reduced cost base

35-45(3)    
The value of such an asset is worked out:

(a) as at the end of the income year; or

(b) if you stopped carrying on the ^* business activity during the year:

(i) as at the time you stopped; or

(ii) if you disposed of the asset before that time in the course of stopping carrying on the activity - as at the time you disposed of it.

35-45(4)    
However, these assets are not counted for this test:

(a) assets that are real property or interests in real property that are taken into account for that year under section 35-40 ;

(b) ^* cars, motor cycles and similar vehicles.

SECTION 35-50  

35-50   Apportionment  

If an asset that is being taken into account under section 35-40 or 35-45 is used during an income year partly in carrying on the relevant ^* business activity and partly for other purposes, only that part of its ^* reduced cost base, *market value or other value that is attributable to its use in carrying on the business activity in that year is taken into account for that section.

SECTION 35-55   Commissioner ' s discretion  

35-55(1)    

The Commissioner may, on application, decide that the rule in subsection 35-10(2) does not apply to a ^* business activity for one or more income years (the excluded years ) if the Commissioner is satisfied that it would be unreasonable to apply that rule because:

(a) the business activity was or will be affected in the excluded years by special circumstances outside the control of the operators of the business activity, including drought, flood, bushfire or some other natural disaster; or

Note:

This paragraph is intended to provide for a case where a business activity would have satisfied one of the tests if it were not for the special circumstances.

(b) for an applicant who carries on the business activity who satisfies subsection 35-10(2E) (income requirement) for the most recent income year ending before the application is made - the business activity has started to be carried on and, for the excluded years:

(i) because of its nature, it has not satisfied, or will not satisfy, one of the tests set out in section 35-30 , 35-35 , 35-40 or 35-45 ; and

(ii) there is an objective expectation, based on evidence from independent sources (where available) that, within a period that is commercially viable for the industry concerned, the activity will either meet one of those tests or will produce assessable income for an income year greater than the deductions attributable to it for that year (apart from the operation of subsections 35-10(2) and (2C) ); or

(c) for an applicant who carries on the business activity who does not satisfy subsection 35-10(2E) (income requirement) for the most recent income year ending before the application is made - the business activity has started to be carried on and, for the excluded years:

(i) because of its nature, it has not produced, or will not produce, assessable income greater than the deductions attributable to it; and

(ii) there is an objective expectation, based on evidence from independent sources (where available) that, within a period that is commercially viable for the industry concerned, the activity will produce assessable income for an income year greater than the deductions attributable to it for that year (apart from the operation of subsections 35-10(2) and (2C) ).

Note:

Paragraphs (b) and (c) are intended to cover a business activity that has a lead time between the commencement of the activity and the production of any assessable income. For example, an activity involving the planting of hardwood trees for harvest, where many years would pass before the activity could reasonably be expected to produce income.

35-55(2)    

The Commissioner may, on application, decide that the rule in subsection 35-10(2B) does not apply to a ^* business activity for an income year if the Commissioner is satisfied that it would be unreasonable to apply that rule because special circumstances of the kind referred to in paragraph (1)(a) of this section prevented the activity from starting.

Note:

This subsection is intended to provide for a case where a business activity would have begun to be carried on and satisfied one of the tests if it were not for the special circumstances.

35-55(3)    

An application for a decision by the Commissioner under this section must be made in the *approved form.

Division 36- Tax losses of earlier income years  

SECTION 36-1   What this Division is about  

Note:

You may be able to utilise the tax loss in that or a later income year.

Subdivision 36-A - Deductions for tax losses of earlier income years  

SECTION 36-10   How to calculate a tax loss for an income year  

36-10(1)    
Add up the amounts you can deduct for an income year (except ^* tax losses for earlier income years).

36-10(2)    
Subtract your total assessable income.

36-10(3)    
If you ^* derived ^* exempt income, also subtract your ^* net exempt income (worked out under section 36-20 ).

36-10(4)    
Any amount remaining is your tax loss for the income year, which is called a loss year .

Note 1:

Some deductions are limited so that they cannot contribute to a tax loss. See section 26-55 (Limit on certain deductions).

Note 2:

The meanings of tax loss and loss year are modified by section 36-55 for a corporate tax entity that has an amount of excess franking offsets.

36-10(5)    

For subsection (3), if you have *exempt income under section 51-100 (about shipping), disregard 90% of so much of your *net exempt income as directly relates to that exempt income.

SECTION 36-15   How to deduct tax losses of entities other than corporate tax entities  

36-15(1)    

Your ^* tax loss for a ^* loss year is deducted in a later income year as follows if you are not a ^* corporate tax entity at any time during the later income year.

Note 1:

See section 36-17 for the deduction of a tax loss of an entity that is a corporate tax entity at any time during the later income year.

Note 2:

A tax loss can be deducted only to the extent that it has not already been utilised: see subsection 960-20(1) .

If you have no net exempt income

36-15(2)    
If your total assessable income for the later income year exceeds your total deductions (other than ^* tax losses), you deduct the tax loss from that excess.

If you have net exempt income

36-15(3)    
If you have ^* net exempt income for the later income year and your total assessable income (if any) for the later income year exceeds your total deductions (except ^* tax losses), you deduct the tax loss:

(a) first, from your net exempt income; and

(b) secondly, from the part of your total assessable income that exceeds those deductions.

36-15(4)    
However, if you have ^* net exempt income for the later income year and those deductions exceed your total assessable income, then:

(a) subtract that excess from your net exempt income; and

(b) deduct the tax loss from any net exempt income that remains.

To work out your net exempt income: see section 36-20 .

General

36-15(5)    
If you have 2 or more ^* tax losses, you deduct them in the order in which you incurred them.

36-15(6)    
(Repealed by No 88 of 2013)

36-15(7)    
(Repealed by No 88 of 2013)

SECTION 36-17   How to deduct tax losses of corporate tax entities  

36-17(1)    
A *tax loss of an entity for a *loss year is deducted in a later income year as follows if the entity is a *corporate tax entity at any time during the later income year.

Note 1:

A tax loss can be deducted under this section only to the extent that it has not already been utilised: see subsection 960-20(1) .

Note 2:

A corporate tax entity may also, in the 2020-21, 2021-22 or 2022-23 income year, be able to carry a loss back to the 2018-19, 2019-20, 2020-21 or 2021-2022 income year: see Division 160 .

If the entity has no net exempt income

36-17(2)    
If the entity ' s total assessable income for the later income year exceeds the entity ' s total deductions (except *tax losses), the entity is to deduct from that excess so much of the tax loss as the entity chooses. The entity may choose a nil amount.

If the entity has net exempt income

36-17(3)    
If the entity has ^* net exempt income for the later income year and the entity ' s total assessable income (if any) for that year exceeds the entity ' s total deductions (except ^* tax losses), the entity is to:

(a)    first, deduct the tax loss from the net exempt income; and

(b)    secondly, deduct from the part of the total assessable income that exceeds those deductions so much of the undeducted amount of the tax loss (if any) as the entity chooses.

The entity may choose a nil amount under paragraph (b) .

Note:

To work out the corporate tax entity ' s net exempt income: see section 36-20 .

36-17(4)    
However, if the entity has *net exempt income for the later income year and those deductions exceed the entity ' s total assessable income, the entity is to:

(a)    subtract that excess from the net exempt income; and

(b)    deduct the *tax loss from any net exempt income that remains.

Note:

This means there is no choice available under this subsection.

36-17(4A)    

For subsection (3) or (4) , if the entity has *exempt income under section 51-100 (about shipping) for the later income year, disregard 90% of so much of the entity ' s *net exempt income for the later income year as directly relates to that exempt income.

Limit to how much the entity can choose

36-17(5)    

The choice that the entity has under subsection (2) or (3) for the later income year is subject to both of the following:

(a)    the entity must choose a nil amount if, disregarding the ^* tax loss and other tax losses of the entity, the entity would have an amount of ^* excess franking offsets for that year;

(b)    if, disregarding the tax loss and other tax losses of the entity, the entity would not have an amount of excess franking offsets for that year - the entity must not choose an amount that would result in the entity having an amount of excess franking offsets for that year.

Example:

For the 2017-18 income year, Company A (which is not a base rate entity) has:

• a tax loss of $150 from a previous income year; and

• assessable income of $200 (franked distribution of $70, franking credit of $30 and $100 of income from other sources); and

• no deductions; and

• no net exempt income.

The tax offset of $30 from the franking credit is not stated in Division 67 to be subject to the refundable tax offset rules.

Company A would not have an amount of excess franking offsets for that year if the tax loss were disregarded (see section 36-55 ). This is because the tax offset of $30 is less than $60, the amount of income tax that Company A would have to pay if it did not have the tax offset and the tax loss. Paragraph (a) therefore does not apply.

If Company A chooses to deduct the full amount of the tax loss, it would have an amount of excess franking offsets of $15:

Company A therefore cannot make this choice because of paragraph (b) .

However, if Company A chooses to deduct $100 of the tax loss, it would not have an amount of excess franking offsets:

Company A therefore can choose to deduct $100 of the tax loss.

36-17(6)    
The entity must state its choice under subsection (2) or (3) in its *income tax return for the later income year.

General

36-17(7)    
If the entity has 2 or more *tax losses, the entity is to deduct them in the order in which the entity incurred them.

36-17(8)    
(Repealed by No 88 of 2013)

36-17(9)    
(Repealed by No 88 of 2013)

Recalculation of amounts resulting in a choice or a change of a choice

36-17(10)    
Subsection (11) or (12) applies if at least one of the following amounts is recalculated after an entity has lodged its *income tax return for an income year:

(a)    

the amount of a *tax loss that the entity can * utilise in that year;

(b)    the amount of the difference between the entity ' s total assessable income for that year and the entity ' s total deductions (other than *tax losses) for that year;

(c)    the amount of the entity ' s *net exempt income for that year;

whether or not the amount is recalculated in an amendment of the entity ' s assessment for that year, and whether or not the amount was a nil amount before the recalculation (or has become a nil amount after the recalculation).

36-17(11)    
If:

(a)    before the recalculation, a choice under subsection (2) or (3) for the income year was not available to the entity; but

(b)    as a result of the recalculation, the choice has (apart from subsection (6) ) become available to the entity;

the entity can make that choice by written notice given to the Commissioner.

36-17(12)    
If:

(a)    the entity made a choice under subsection (2) or (3) for the income year; but

(b)    as a result of the recalculation, the entity wishes to change that choice;

the entity can do so by written notice given to the Commissioner.

36-17(13)    
Subsections (10) to (12) have effect subject to section 170 of the Income Tax Assessment Act 1936 (about amendment of assessments).

SECTION 36-20   Net exempt income  

36-20(1)    

If you are an Australian resident, your net exempt income is the amount by which your total ^* exempt income from all sources exceeds the total of:

(a) the losses and outgoings (except capital losses and outgoings) you incurred in deriving that exempt income; and

(b) any taxes payable outside Australia on that exempt income.

36-20(2)    

If you are a foreign resident, your net exempt income is the amount (if any) by which the total of:

(a) your ^* exempt income ^* derived from sources in Australia; and

(b) your exempt income to which section 26AG (Certain film proceeds included in assessable income) of the Income Tax Assessment Act 1936 applies;

exceeds the total of:

(c) the losses and outgoings (except capital losses and outgoings) you incurred in deriving exempt income covered by paragraph (a) or (b); and

(d) any taxes payable outside Australia on income covered by paragraph (b).

36-20(3)    
(Repealed by No 66 of 2003)

36-20(3A)    
(Repealed by No 66 of 2003)

36-20(4)    
(Repealed by No 66 of 2003)

SECTION 36-25  

36-25   Special rules about tax losses  

Tax losses of individuals

Item	For the special rules about this situation …	See:
1.	You go bankrupt, or you are released from debts under a bankruptcy law: your right to deduct tax losses of an earlier income year may be affected.	Subdivision 36-B

Tax losses of companies

Item	For the special rules about this situation …	See:
1.	A company has had a change of ownership or control during the income year, and has not satisfied the business continuity test: it works out its taxable income and its tax loss in a special way.	Subdivision 165-B
2.	A company wants to deduct a tax loss. It cannot do so unless:	Subdivision 165-A
	•	the same people owned the company during the loss year, the income year and any intervening year; and
	•	no person controlled the company ' s voting power at any time during the income year who did not also control it during the whole of the loss year and any intervening year;
	or the company has satisfied the business continuity test.
3.	One or more of these things happen:	Division 175
	•	income is injected into a company;
	•	a tax benefit is obtained from available losses or deductions;
	•	a deduction is injected into a company;
	•	a tax benefit is obtained because of available income.
	The Commissioner can disallow tax losses or current year deductions.
4.	A company can transfer a surplus amount of its tax loss to another company so that the other company can deduct the amount in the income year of the transfer. (Both companies must be members of the same wholly-owned group.)	Subdivision 170-A
	See also: Tax losses of pooled development funds (PDFs) below
5.	A life insurance company	Subdivision 320-D
6.	A company is a designated infrastructure project entity.	Subdivision 415-B

Tax losses of corporate tax entities

Item	For the special rules about this situation …	See:
1.	A corporate tax entity that has an amount of excess franking offsets for an income year: it works out its tax loss in a special way.	Subdivision 36-C
	See also Division 160 (loss carry back tax offset for 2020-21, 2021-22 or 2022-23 for businesses with turnover under $5 billion)

Tax losses of entities generally

Item	For the special rules about this situation …	See:
1.	(Repealed by No 143 of 2007 )
2.	(Repealed by No 143 of 2007 )
3.	You have deductions in relation to deriving income under section 26AG of the Income Tax Assessment Act 1936 from the proceeds of a film: your tax loss may have a film component, which is deductible from your film income only.	Former Subdivision 375-G

Tax losses of pooled development funds (PDFs)

Item	For the special rules about this situation …	See:
1.	A company is a pooled development fund (PDF) at the end of an income year for which it has a tax loss: it can only: (a) deduct the loss while it is a PDF; or (b) carry back the loss to an income year in which it was a PDF.	Sections 195-5 and 195-37
2.	A company becomes a PDF during an income year: special rules affect how it works out a tax loss and how the loss is utilised.	Section 195-15

Tax losses of VCLPs, ESVCLPs, AFOFs and VCMPs

Item	For the special rules about this situation …	See:
1.	A limited partnership that has a tax loss becomes a VCLP, an ESVCLP, an AFOF or a VCMP: it cannot: (a) deduct the loss while it is a VCLP, an ESVCLP, an AFOF or a VCMP; or (b) carry back the loss to an income year in which it was not a VCLP, an ESVCLP, an AFOF or a VCMP.	Subdivision 195-B

Tax losses of entities that become foreign hybrids

Item	For the special rules about this situation …	See:
1.	An entity that has a tax loss becomes a foreign hybrid: it cannot deduct the loss while it is a foreign hybrid.	Section 830-115

Tax losses of trusts

Item	For the special rules about this subsection …	See:
1.	A trust has had a change of ownership or control or there has been an abnormal trading in its units:	Divisions 266 , 267 and 268 in Schedule 2F to the Income Tax Assessment Act 1936
	•	if this happens in the income year, it works out its net income and tax loss in a special way; or
	•	if this happens at any time from the start of a loss year until the end of the income year, it cannot deduct a tax loss from the loss year.
	This will not be the case if the trust is an excepted trust. However, if it became one by making a family trust election, a special tax may be payable on certain distributions and other amounts.
2.	A trust is involved in a scheme to take advantage of deductions. The trust may be prevented from making full use of them.	Division 270 in Schedule 2F to the Income Tax Assessment Act 1936
3.	A trust is a designated infrastructure project entity.	Subdivision 415-B

Tax losses of greenfields minerals explorers

Item	For the special rules about this situation …	See:
1.	A greenfields minerals explorer creates exploration credits.	Section 418-95

Subdivision 36-B - Effect of you becoming bankrupt  

SECTION 36-30   What this Subdivision is about  

Operative provisions

SECTION 36-35   No deduction for tax loss incurred before bankruptcy  

36-35(1)    
If:

(a) you became bankrupt; or

(b) you were released from a debt by the operation of an Act relating to bankruptcy;

before the income year, you cannot deduct a ^* tax loss that you incurred before the day on which you either became bankrupt or were released.

36-35(2)    
If:

(a) you became bankrupt before the income year; and

(b) the bankruptcy is later annulled under section 74 of the Bankruptcy Act 1966 because your creditors have accepted your proposal for a composition or scheme of arrangement; and

(c) under the composition or scheme of arrangement, you have been, will be or may be released from some or all of the debts from which you would have been released if you had instead been discharged from the bankruptcy;

you cannot deduct a ^* tax loss that you incurred before the day on which you became bankrupt.

SECTION 36-40   Deduction for amounts paid for debts incurred before bankruptcy  
Tax losses generally

36-40(1)    
If:

(a) you pay an amount in the income year for a debt that you incurred in an earlier income year; and

(b) you have a ^* tax loss covered by section 36-35 for that earlier income year;

you can deduct the amount paid, but only to the extent that it does not exceed so much of the debt as the Commissioner is satisfied was taken into account in calculating the amount of the tax loss.

Film losses

36-40(2)    
If:

(a) you pay an amount in the income year for a debt that you incurred in an earlier income year; and

(b) you incurred the debt in the course of deriving or gaining ^* assessable film income or ^* exempt film income; and

(c) you also incurred a ^* film loss covered by section 36-35 in that earlier income year;

you can deduct the amount paid, but only to the extent that it does not exceed so much of the debt as the Commissioner is satisfied was taken into account in calculating the amount of the film loss.

36-40(3)    

A film loss is the *film component (if any) of a *tax loss.

36-40(4)    

Your *tax loss for an income year has a film component if your *film deductions for the year exceed the sum of:

(a) your *assessable film income for the year; and

(b) your *net exempt film income for the year.

The amount of the film component is the excess or the tax loss, whichever is lesser.

36-40(5)    

However, if your *tax loss worked out under a provision listed in the table, the film component is what that tax loss would have been if:

(a) your *film deductions for the *loss year had been your only deductions; and

(b) your *assessable film income for the loss year had been your only assessable income; and

(c) your *net exempt film income for the loss year had been your only *net exempt income.

However, the film component cannot exceed the actual tax loss.

Working out film component of tax loss
Item	Provision	Type of entity
1	165-70	Company - income year when ownership or control changed
2	175-35	Company - deductions that have been used to obtain a tax benefit disallowed
3	268-60 in Schedule 2F to the Income Tax Assessment Act 1936	Trust - income year when ownership or control changed

SECTION 36-45   Limit on deductions for amounts paid  
Tax losses generally

36-45(1)    
The total of your deductions under subsection 36-40(1) for amounts paid in the income year for debts incurred in the ^* loss year cannot exceed the amount of the ^* tax loss reduced by the sum of:

(a) your deductions under that subsection for amounts paid in earlier income years for debts incurred in the loss year; and

(b) any amounts of the tax loss * utilised in earlier income years; and

(c) any amounts of the tax loss that, apart from section 36-35, would have been deductible from your ^* net exempt income for the income year or earlier income years.

Film losses

36-45(2)    
The total of your deductions under subsection 36-40(2) for amounts paid in the income year for debts incurred in the ^* loss year cannot exceed the amount of the ^* film loss reduced by the sum of:

(a) your deductions under that subsection for amounts paid in earlier income years for debts incurred in the loss year; and

(b) any amounts of the film loss deducted in earlier income years; and

(c) any amounts of the film loss that, apart from section 36-35, would have been deductible from your ^* net exempt film income for the income year or earlier income years.

Subdivision 36-C - Excess franking offsets  

SECTION 36-50   What this Subdivision is about  

Operative provision

SECTION 36-55   Converting excess franking offsets into tax loss  

Excess franking offsets

36-55(1)    

An entity that is a *corporate tax entity at any time during an income year has an amount of excess franking offsets for that year if:

(a) the total amount of *tax offsets to which the entity is entitled for that year under Division 207 and Subdivision 210-H (except those that are subject to the refundable tax offset rules because of section 67-25 );

exceeds:

(b) the amount of income tax that the entity would have to pay on its taxable income for that year if:

(i) it did not have those tax offsets; and

(ii) it did not have any tax offsets that are subject to the tax offset carry forward rules or the refundable tax offset rules; and

(iii) it did not have any tax offset under section 205-70 ;

but had all its other tax offsets.

The excess is the amount of excess franking offsets .

Note:

Division 65 sets out the tax offset carry forward rules. Division 67 sets out which tax offsets are subject to the refundable tax offset rules.

Example:

For the 2017-18 income year, Company E (which is not a base rate entity) has:

• assessable income of $200 (franked distribution of $140 and franking credit of $60); and

• $100 of deductions that are allowable.

The tax offset of $60 from the franking credit is not stated in Division 67 to be subject to the refundable tax offset rules.

Disregarding the tax offset of $60 from the franking credit, the amount of income tax that Company E would have to pay is $30:

This amount is $30 less than the tax offset of $60. Company E therefore has an amount of excess franking offsets of $30 for that year.

How to work out the amount of the tax loss

36-55(2)    

For the purposes of this Act, if:

(a) an entity has an amount of *excess franking offsets for an income year; and

(b) the result of applying the following method statement is a positive amount;

then:

(c) the entity is taken to have a *tax loss for that year equal to that positive amount (instead of an amount of tax loss worked out under section 36-10 , 165-70 , 175-35 or 701-30 ); and

(d) that year is taken to be a *loss year for the entity if the entity would not otherwise have a tax loss for that year. Method statement

Example:

Assume that company E did not derive any exempt income for the 2017-2018 income year and that it would not otherwise have any tax loss for that year under section 36-10 , 165-70 , 175-35 or 701-30 .

Applying the method statement, the amount of excess franking offsets of $30 generates a tax loss of $100 for that year, which can be deducted in a later income year under section 36-15 or 36-17 .

PART 2-10 - CAPITAL ALLOWANCES: RULES ABOUT DEDUCTIBILITY OF CAPITAL EXPENDITURE  

Division 40 - Capital allowances  

SECTION 40-1   What this Division is about  

SECTION 40-10  

40-10   Simplified outline of this Division  

The key concepts about depreciating assets and certain other capital expenditure are outlined below (in bold italics ).

Simplified outline of this Division
Item	Major topic Subordinate topics Rules	Provisions
1	Rules about depreciating assets
1.1	Core provisions	Subdivision 40-B
	Depreciating assets are assets with a limited effective life that are reasonably expected to decline in value.
	Broadly, the effective life of a depreciating asset is the period it can be used to produce income.
	The decline in value is based on the cost and effective life of the depreciating asset, not its actual change in value. It begins at start time , when you begin to use the asset (or when you have it installed ready for use). It continues while you use the asset (or have it installed).
	Usually, the owner of a depreciating asset holds the asset and can therefore claim deductions for its decline in value. Sometimes the economic owner will be different to the legal owner and the economic owner will be the holder.
.
1.2	Cost	Subdivision 40-C
	The cost of a depreciating asset includes both:
	•	expenses you incur to start holding the asset; and
	•	additional expenses that contribute to its present condition and location (eg. improvements).
.
1.3	Balancing adjustments	Subdivision 40-D
	When you stop holding a depreciating asset you may have to include an amount in your assessable income, or deduct an amount under a balancing adjustment . The adjustment reconciles the decline with the actual change in value.
.
1.4	Low-value and software development pools	Subdivision 40-E
	Low-cost assets and assets depreciated to a low value may be placed in a low value pool , which is treated as a single depreciating asset. You can also pool in-house software expenditure in a software development pool .
.
1.5	Primary production depreciating assets	Subdivision 40-F
	You can deduct amounts for capital expenditure on:
	•	water facilities immediately; or
	•	horticultural plants over a period that relates to the effective life of the plant; or
	•	fodder storage assets immediately; or
	•	fencing assets immediately.
2	Rules about other capital expenditure
2.1	Capital expenditure of primary producers and other landholders	Subdivision 40-G
	You can deduct amounts for capital expenditure on:
	•	landcare operations immediately; or
	•	electricity and telephone lines over 10 income years.
.
2.2	Capital expenditure that is immediately deductible	Subdivision 40-H
	You can get an immediate deduction for certain capital expenditure on:
	•	exploration or prospecting ; and
	•	rehabilitation of mine and quarry sites ; and
	•	paying petroleum taxes ; and
	•	environmental protection activities .
.
2.3	Capital expenditure that is deductible over time	Subdivision 40-I
	You can deduct amounts for certain capital expenditure associated with projects you carry on. You deduct the amount over the life of the project using a project pool .
	You can also deduct amounts for certain business related costs over 5 years where the amounts are not otherwise taken into account and are not denied a deduction.
.
2.4	Capital expenditure for establishing trees in carbon sink forests	Subdivision 40-J
	You can deduct amounts for capital expenditure for the establishment of trees in carbon sink forests.

Subdivision 40-A - Objects of Division  

SECTION 40-15  

40-15   Objects of Division  

The objects of this Division are:

(a) to allow you to deduct the *cost of a *depreciating asset; and

(b) to spread the deduction over a period that reflects the time for which the asset can be used to obtain benefits; and

(c) to provide deductions for certain other capital expenditure that is not otherwise deductible.

Note 1:

This Division does not apply to some depreciating assets: see section 40-45 .

Note 2:

The application of this Division to a life insurance company is affected by sections 320-200 and 320-255 .

Subdivision 40-B - Core provisions  

SECTION 40-20   What this Subdivision is about  

Operative provisions

SECTION 40-25   Deducting amounts for depreciating assets  

You deduct the decline in value

40-25(1)    
You can deduct an amount equal to the decline in value for an income year (as worked out under this Division) of a *depreciating asset that you *held for any time during the year.

Note 1:

Sections 40-70 , 40-72 and 40-75 show you how to work out the decline for most depreciating assets. There is a limit on the decline: see subsections 40-70(3) , 40-72(3) and 40-75(7) .

Note 2:

Small business entities can choose to both deduct and work out the amount they can deduct under Division 328 .

Note 3:

Generally, only one taxpayer can deduct amounts for a depreciating asset. However, if you and another taxpayer jointly hold the asset, each of you deduct amounts for it: see section 40-35 .

Reduction of deduction

40-25(2)    

You must reduce your deduction by the part of the asset ' s decline in value that is attributable to your use of the asset, or your having it *installed ready for use, for a purpose other than a *taxable purpose.

Example:

Ben holds a depreciating asset that he uses for private purposes for 30% of his total use in the income year.

If the asset declines by $1,000 for the year, Ben would have to reduce his deduction by $300 (30% of $1,000).

Note:

You may have to make a further reduction under subsections (3) and (4) or section 40-27 .

Further reduction: leisure facilities

40-25(3)    

You may have to make a further reduction for a *depreciating asset that is a *leisure facility attributable to your use of it, or your having it *installed ready for use, for a *taxable purpose.

40-25(4)    

That reduction is the part of the *leisure facility ' s decline in value that is attributable to your use of it, or your having it *installed ready for use, at a time when:

(a) its use did not constitute a *fringe benefit; or

(b) you did not use it or *hold it for use as mentioned in paragraph 26-50(3)(b) (about using it in the course of your business or for your employees).

Exception: low-value pools

40-25(5)    

Subsections (2), (3) and (4) do not apply to *depreciating assets allocated to a low-value pool.

Despite subsection (1), you can continue to deduct an amount equal to the decline in value for an income year (as worked out under this Division) of such an asset even though you do not continue to *hold that asset.

Note:

See Subdivision 40-E for low-value pools.

40-25(6)    
(Repealed by No 162 of 2015)

Meaning of taxable purpose

40-25(7)    

Subject to subsection (8), a taxable purpose is:

(a) the *purpose of producing assessable income; or

(b) the purpose of *exploration or prospecting; or

(c) the purpose of *mining site rehabilitation; or

(d) *environmental protection activities.

Note 1:

Where you have had a deduction under this Division an amount may be included in your assessable income if the expenditure was financed by limited recourse debt that has terminated: see Division 243 .

Note 2:

When this Division notionally applies under section 355-310 (about depreciating assets used for R & D activities), the taxable purpose is sometimes only the purpose of conducting R & D activities.

40-25(8)    

If Division 250 applies to you and an asset that is a *depreciating asset:

(a) if section 250-150 applies - you are taken not to be using the asset for a *taxable purpose to the extent of the *disallowed capital allowance percentage; or

(b) otherwise - you are taken not to be using the asset for such a purpose.

SECTION 40-27   Further reduction of deduction for second-hand assets in residential property  

40-27(1)    
In addition to subsections 40-25(2) to (4) , you may have to further reduce your deduction for a *depreciating asset for the income year.

40-27(2)    
Reduce your deduction by any part of the asset ' s decline in value that is attributable to your use of it, or your having it *installed ready for use, for the *purpose of producing assessable income:

(a) from the use of *residential premises to provide residential accommodation; but

(b) not in the course of carrying on a *business;

if:

(c) you did not *hold the asset when it was first used, or first installed ready for use, (other than as trading stock) by any entity; or

(d) at any time during the income year or an earlier income year, the asset was used, or installed ready for use, either:

(i) in residential premises that were one of your residences at that time; or

(ii) for a purpose that was not a *taxable purpose, and in a way that was not occasional.

Note:

Your deduction could be reduced to nil if the purpose to which paragraphs (a) and (b) relate is your only taxable purpose for using the asset or having the asset installed ready for use.

Exception - kind of entity

40-27(3)    
Subsection (2) does not apply to you for the asset if, at any time during the income year, you are:

(a) a *corporate tax entity; or

(b) a *superannuation plan that is not a *self managed superannuation fund; or

(c) a *managed investment trust; or

(d) a public unit trust (within the meaning of section 102P of the Income Tax Assessment Act 1936 ); or

(e) a unit trust or partnership, if each *member of the trust or partnership is covered by a paragraph of this subsection at that time during the income year.

Exception - certain assets in new residential premises

40-27(4)    
Paragraph (2)(c) does not apply to you for the asset if:

(a) the *residential premises referred to in paragraph (2)(a) (the current premises ) are supplied to you as new residential premises on a particular day (the current supply day ); and

(b) the asset is supplied to you as part of that supply of the current premises; and

(c) at the time you first *hold the asset as a result of that supply, the asset is used, or *installed ready for use, in:

(i) the current premises; or

(ii) any other real property in which an interest was supplied to you as part of that supply of the current premises; and

(d) at any earlier time, no entity was residing in any residential premises in which the asset was used, or installed ready for use, at that earlier time; and

(e) no amount can be deducted under this Division, or under Subdivision 328-D , for the asset for any income year by any previous holder of the asset.

Note:

An entity residing at an earlier time in other residential premises in the same complex will not cause paragraph (d) to prevent this subsection from applying.

40-27(5)    
However, disregard paragraph (4)(d) for an earlier time if:

(a) the asset was used, or installed ready for use, in the current premises at that time; and

(b) both that time, and the current supply, happen during the 6-month period starting on the day the current premises became new residential premises.

Exception - low-value pools

40-27(6)    
Subsection (2) does not apply to *depreciating assets allocated to a low-value pool.

Note:

See Subdivision 40-E for low-value pools.

SECTION 40-30   What a depreciating asset is  

40-30(1)    

A depreciating asset is an asset that has a limited ^* effective life and can reasonably be expected to decline in value over the time it is used, except:

(a)    land; or

(b)    an item of ^* trading stock; or

(c)    an intangible asset, unless it is mentioned in subsection (2) .

40-30(2)    

These intangible assets are depreciating assets if they are not ^* trading stock:

(a)    ^* mining, quarrying or prospecting rights;

(b)    ^* mining, quarrying or prospecting information;

(ba) (Repealed by No 96 of 2014)

(bb) (Repealed by No 96 of 2014)

(c)    items of ^* intellectual property;

(d)    ^* in-house software;

(e)    ^* IRUs;

(f)    ^* spectrum licences;

(g) (Repealed by No 151 of 2020)

(h)    

^* telecommunications site access rights.

40-30(3)    
This Division applies to an improvement to land, or a fixture on land, whether the improvement or fixture is removable or not, as if it were an asset separate from the land.

Note 1:

Whether such an asset is a depreciating asset depends on whether it falls within the definition in subsection (1) .

Note 2:

This Division does not apply to capital works for which you can deduct amounts under Division 43 : see subsection 40-45(2) .

40-30(4)    
Whether a particular composite item is itself a depreciating asset or whether its components are separate depreciating assets is a question of fact and degree which can only be determined in the light of all the circumstances of the particular case.

Example 1:

A car is made up of many separate components, but usually the car is a depreciating asset rather than each component.

Example 2:

A floating restaurant consists of many separate components (like the ship itself, stoves, fridges, furniture, crockery and cutlery), but usually these components are treated as separate depreciating assets.

40-30(5)    
This Division applies to a renewal or extension of a ^* depreciating asset that is a right as if the renewal or extension were a continuation of the original right.

40-30(6)    

This Division applies to a ^* mining, quarrying or prospecting right (the new right ) as if it were a continuation of another mining, quarrying or prospecting right you ^* held if:

(a)    the other right ends; and

(b)    

any of the following conditions are satisfied:

(i) the new right and the other right relate to the same area, or any difference in area is not significant;

(ii) the new right relates to an area that is a part of the area that the other right relates to.

Note:

If the other right does not end, it may be taken to be split into 2 assets: see section 40-122 .

40-30(7)    

For the purposes of subsection (6) , it does not matter whether the new right begins immediately after the other right ends or later (including in a later income year).

SECTION 40-35   Jointly held depreciating assets  

40-35(1)    

This Division and the provisions referred to in subsection (3) apply to a ^* depreciating asset (the underlying asset ) that you ^* hold, and that is also held by one or more other entities, as if your interest in the underlying asset were itself the underlying asset.

Note:

Partners do not hold partnership assets: see section 40-40 .

40-35(2)    
As a result, the decline in value of the underlying asset is not itself taken into account.

Example:

Buford Corp owns an office block that it leases to 2 companies, Smokey Pty Ltd and Bandit Pty Ltd. Smokey and Bandit decide to install a fountain in front of the building.

They discuss it with Buford who agrees to pay half the cost (because the fountain won't be removable at the end of the lease). Smokey and Bandit split the rest of the cost between them.

Smokey and Bandit would each hold the asset under item 3 of the table in section 40-40 and Buford would hold it under item 10. They would be joint holders, so each would write-off its interest in the fountain.

40-35(3)    

The provisions are:

(a) Divisions 41 , 328 and 775 of this Act; and

(b) Divisions 40 and 328 of the Income Tax (Transitional Provisions) Act 1997 .

SECTION 40-40  

40-40   Meaning of hold a depreciating asset  

Use this table to work out who holds a ^* depreciating asset. An entity identified in column 3 of an item in the table as not holding a depreciating asset cannot hold the asset under another item.

Identifying the holder of a depreciating asset
Item	This kind of depreciating asset:	Is held by this entity:
1	A *car in respect of which a lease has been granted that was a *luxury car when the lessor first leased it	The lessee (while the lessee has the *right to use the car) and not the lessor
.
2	A *depreciating asset that is fixed to land subject to a *quasi-ownership right (including any extension or renewal of such a right) where the owner of the right has a right to remove the asset	The owner of the quasi-ownership right (while the right to remove exists)
.
3	An improvement to land (whether a fixture or not) subject to a *quasi-ownership right (including any extension or renewal of such a right) made, or itself improved, by any owner of the right for the owner ' s own use where the owner of the right has no right to remove the asset	The owner of the quasi-ownership right (while it exists)
.
4	A *depreciating asset that is subject to a lease where the asset is fixed to land and the lessor has the right to recover the asset	The lessor (while the right to recover exists)
.
5	A right that an entity legally owns but which another entity (the economic owner ) exercises or has a right to exercise immediately, where the economic owner has a right to become its legal owner and it is reasonable to expect that:	The economic owner and not the legal owner
	(a)	the economic owner will become its legal owner; or
	(b)	it will be disposed of at the direction and for the benefit of the economic owner
.
6	A *depreciating asset that an entity (the former holder ) would, apart from this item, hold under this table (including by another application of this item) where a second entity (also the economic owner ):	The economic owner and not the former holder
	(a)	possesses the asset, or has a right as against the former holder to possess the asset immediately; and
	(b)	has a right as against the former holder the exercise of which would make the economic owner the holder under any item of this table;
	and it is reasonable to expect that the economic owner will become its holder by exercising the right, or that the asset will be disposed of at the direction and for the benefit of the economic owner
.
7	A *depreciating asset that is a partnership asset	The partnership and not any particular partner
.
8	*Mining, quarrying or prospecting information that an entity has and that is relevant to:	The entity
	(a)	*mining and quarrying operations carried on, or proposed to be carried on by the entity; or
	(b)	a *business carried on by the entity that includes *exploration or prospecting for *minerals or quarry materials obtainable by such operations;
	whether or not it is generally available
.
9	Other *mining quarrying or prospecting information that an entity has and that is not generally available	The entity
.
9A	(Repealed by No 96 of 2014)
.
10	Any *depreciating asset	The owner, or the legal owner if there is both a legal and equitable owner

Example 1:

Power Finance leases a luxury car to Kris who subleases it to Rachael. As lessee, item 1 makes Rachael the holder of the car. Power, as the legal owner, would normally hold the car under item 10.

However, item 1 makes it clear that Power, as lessor, does not hold the car. As the lessee, item 1 would normally mean that Kris held the car but, again, she is also a lessor and so is not the holder (she also doesn ' t have the right to use the car during the sublease).

Example 2:

Sandra sells a packing machine to Jenny under a hire purchase agreement. Jenny holds the machine under item 6 because, although she is not the legal owner until she exercises her option to purchase, she possesses the machine now and can exercise an option to become its legal owner.

Jenny is reasonably expected to exercise that option because the final payment will be well below the expected market value of the machine at the end of the agreement. Sandra, as the machine ' s legal owner, would normally be its holder under item 10 but item 6 makes it clear that the legal owner is not the holder.

Note 1:

Some assets may have holders under more than one item in the table.

Note 2:

As well as hire purchase agreements, items 5 and 6 cover cases like assets subject to chattel mortgages, sales subject to retention of title clauses and assets subject to bare trusts.

SECTION 40-42   When mining, quarrying or prospecting rights are used  

40-42(1)    
This Division and Subdivision 328-D (capital allowances for small business entities) apply to a *depreciating asset you *hold that is a *mining, quarrying or prospecting right as if a reference to using the asset were a reference to engaging in activity that involves exercising rights conferred on you by the asset.

40-42(2)    
If the asset is an interest covered by paragraph (c) of the definition of mining, quarrying or prospecting right in subsection 995-1(1) , the reference in subsection (1) of this section to rights conferred on you by the asset is taken to be a reference to rights conferred on you by the authority, licence, permit, right or lease referred to in paragraph (c) of that definition.

SECTION 40-45   Assets to which this Division does not apply  

Eligible work related items

40-45(1)    

This Division does not apply to an asset that is an eligible work related item for the purposes of section 58X of the Fringe Benefits Tax Assessment Act 1986 where the relevant benefit provided by the employer is an expense payment benefit or a property benefit (within the meaning of that Act).

Capital works

40-45(2)    

This Division does not apply to capital works for which you can deduct amounts under Division 43 , or for which you could deduct amounts under that Division:

(a) but for expenditure being incurred, or capital works being started, before a particular day; or

(b) had you used the capital works for a purpose relevant to those capital works under section 43-140 .

Note:

Section 43-20 lists the capital works to which that Division applies.

40-45(3)    
(Repealed by No 78 of 2005)

40-45(4)    
(Repealed by No 78 of 2005)

Films

40-45(5)    
This Division does not apply to a ^* depreciating asset if you or another taxpayer has deducted or can deduct amounts for it under:

(a) former Division 10BA of Part III of the Income Tax Assessment Act 1936 (about Australian films); or

(b) former Division 10B of Part III of that Act if the depreciating asset relates to a copyright in an Australian film within the meaning of that Division.

40-45(6)    

This Division applies to a *depreciating asset that is copyright in a *film where a company is entitled to a *tax offset under section 376-55 in respect of the film as if the asset ' s *cost were reduced by the amount of that offset.

SECTION 40-50   Assets for which you deduct under another Subdivision  

40-50(1)    

You cannot deduct an amount, or work out a decline in value, for a ^* depreciating asset under this Subdivision if you or another taxpayer has deducted or can deduct amounts for it under Subdivision 40-F (about primary production depreciating assets), 40-G (about capital expenditure of primary producers and other landholders) or 40-J (about capital expenditure for the establishment of trees in carbon sink forests).

40-50(2)    

You cannot deduct an amount, or work out a decline in value, for ^* in-house software under this Subdivision if you have allocated expenditure on the software to a software development pool under Subdivision 40-E .

SECTION 40-53   Alterations etc. to certain depreciating assets  

40-53(1)    
These things are not the same ^* depreciating asset for the purposes of section 40-50 and Subdivision 40-F :

(a) a depreciating asset; and

(b) a repair of a capital nature, or an alteration, addition or extension, to that asset that would, if it were a separate depreciating asset, be a ^* water facility, *fodder storage asset or *fencing asset.

40-53(2)    
These things are not the same ^* depreciating asset for the purposes of section 40-50 and Subdivision 40-G :

(a) a depreciating asset; and

(b) a repair of a capital nature, or an alteration, addition or extension, to that asset that would, if it were a separate depreciating asset, be a ^* landcare operation.

SECTION 40-55  

40-55   Use of the " cents per kilometre " car expense deduction method  

You cannot deduct any amount for the decline in value of a *car for an income year if you use the " cents per kilometre " method for the car for that year.

Note:

See Subdivision 28-C for that method.

SECTION 40-60   When a depreciating asset starts to decline in value  

40-60(1)    
A ^* depreciating asset you ^* hold starts to decline in value from when its ^* start time occurs.

40-60(2)    
The start time of a ^* depreciating asset is when you first use it, or have it ^* installed ready for use, for any purpose.

Note:

Previous use by a transition entity is ignored: see section 58-70 .

40-60(3)    
However, there is another start time for a ^* depreciating asset you ^* hold if a ^* balancing adjustment event referred to in paragraph 40-295(1)(b) occurs for the asset and you start to use the asset again. Its second start time is when you start using it again.

SECTION 40-65   Choice of methods to work out the decline in value  

40-65(1)    
You have a choice of 2 methods to work out the decline in value of a ^* depreciating asset. You must choose to use either the ^* diminishing value method or the ^* prime cost method.

Note 1:

Once you make the choice for an asset, you cannot change it: see section 40-130 .

Note 2:

For the diminishing value method, see sections 40-70 and 40-72 . For the prime cost method, see section 40-75 .

Note 3:

In some cases you do not have to make the choice because you can deduct the asset ' s cost: see sections 40-80 and 40-82 .

Note 4:

Subdivisions 40-BA and 40-BB of the Income Tax (Transitional Provisions) Act 1997 may affect the operation of this section.

Exception: asset acquired from associate

40-65(2)    
For a ^* depreciating asset that you acquire from an ^* associate of yours where the associate has deducted or can deduct an amount for the asset under this Division, you must use the same method that the associate was using.

Note:

You can require the associate to tell you which method the associate was using: see section 40-140 .

Exception: holder changes but user same or associate of former user

40-65(3)    
For a ^* depreciating asset that you acquire from a former ^* holder of the asset, you must use the same method that the former holder was using for the asset if:

(a) the former holder or another entity (each of which is the former user ) was using the asset at a time before you became the holder; and

(b) while you hold the asset, the former user or an ^* associate of the former user uses the asset.

40-65(4)    
However, you must use the ^* diminishing value method if:

(a) you do not know, and cannot readily find out, which method the former holder was using; or

(b) the former holder did not use a method.

Exception: low-value pools

40-65(5)    
You work out the decline in value of a ^* depreciating asset in a low-value pool under Subdivision 40-E rather than under this Subdivision.

Exception: also notionally deductible under R & D provisions

40-65(6)    

If:

(a) only one of the following events has happened:

(i) you have deducted one or more amounts under this Division for an asset;

(ii) you have been entitled under section 355-100 (about R & D) to one or more *tax offsets because you can deduct one or more amounts under section 355-305 for an asset; but

(b) later, the other event happens for the asset;

then, for the purposes of working out the deduction for the later event, you must choose the same method that you chose for the first event.

Note 1:

Deductions under section 355-305 (about decline in value of tangible depreciating assets used for R & D activities) are worked out using a notional application of this Division.

Note 2:

This subsection applies with changes if you have or could have deducted an amount under former section 73BA of the Income Tax Assessment Act 1936 for the asset (see section 40-67 of the Income Tax (Transitional Provisions) Act 1997 ).

40-65(7)    

If:

(a) the events in paragraph (6)(a) could both arise for the same period for an asset; and

(b) neither event has already arisen for the asset;

then you must choose the same method for the purposes of working out the deduction for each event.

SECTION 40-70   Diminishing value method  

40-70(1)    
You work out the decline in value of a ^* depreciating asset for an income year using the diminishing value method in this way:

Base value

×

Days held 365

×

150%                               Asset ' s *effective life

where:

base value is:

(a)    for the income year in which the asset ' s ^* start time occurs - its ^* cost; or

(b)    for a later year - the sum of its ^* opening adjustable value for that year and any amount included in the second element of its cost for that year.

days held is the number of days you ^* held the asset in the income year from its ^* start time, ignoring any days in that year when you did not use the asset, or have it ^* installed ready for use, for any purpose.

Note 1:

If you recalculate the effective life of a depreciating asset, you use that recalculated life in working out your deduction.

You can choose to recalculate effective life because of changed circumstances: see section 40-110 . That section also requires you to recalculate effective life in some cases.

Note 2:

The effective life of a vessel can change in some cases: see subsection 40-103(2) .

Exception: intangibles

40-70(2)    
You cannot use the ^* diminishing value method to work out the decline in value of:

(a)    ^* in-house software; or

(b)    

an item of ^* intellectual property (except copyright in a ^* film); or

(c)    a ^* spectrum licence; or

(d) (Repealed by No151 of 2020)

(e)    

a ^* telecommunications site access right.

Limit on decline

40-70(3)    

The decline in value of a ^* depreciating asset under this section for an income year cannot be more than the amount that is the asset ' s *base value for that income year.

SECTION 40-72   Diminishing value method for post-9 May 2006 assets  

40-72(1)    

You work out the decline in value of a *depreciating asset for an income year using the diminishing value method in this way if you started to *hold the asset on or after 10 May 2006:

	*Base value	×	Days held	×	200%
			365		Asset ' s *effective life

where:

days held
has the same meaning as in subsection 40-70(1) .

Note:

If you recalculate the effective life of a depreciating asset, you use that recalculated life in working out your deduction.

You can choose to recalculate effective life because of changed circumstances: see section 40-110 . That section also requires you to recalculate effective life in some cases.

Exception: intangibles

40-72(2)    
You cannot use the *diminishing value method to work out the decline in value of:

(a)    *in-house software; or

(b)    an item of *intellectual property (except copyright in a *film); or

(c)    a *spectrum licence; or

(d) (Repealed by No 151 of 2020)

(e)    a *telecommunications site access right.

Limit on decline

40-72(3)    

The decline in value of a *depreciating asset under this section for an income year cannot be more than the amount that is the asset ' s *base value for that income year.

SECTION 40-75   Prime cost method  

40-75(1)    
You work out the decline in value of a ^* depreciating asset for an income year using the prime cost method in this way:

where:

Asset ' s *cost

×

Days held 365

×

100%                             Asset ' s *effective life

where:

days held has the same meaning as in subsection 40-70(1) .

Example:

Greg acquires an asset for $3,500 and first uses it on the 26th day of the income year. If the effective life of the asset is 3 ⅓ years, the asset would decline in value in that year by:

$3,500

×

[ 365 − 25 ] 365

×

100%   3 ⅓

=   $978

The asset ' s adjustable value at the end of the income year is:

$3,500   −   $978   =   $2,522

40-75(2)    
However, you must adjust the formula in subsection (1) for an income year (the change year ):

(a) for which you recalculate the ^* depreciating asset ' s ^* effective life; or

(b) after the year in which the asset ' s start time occurs and in which an amount is included in the second element of the asset ' s ^* cost; or

(c) for which the asset ' s ^* opening adjustable value is reduced under section 40-90 (about debt forgiveness); or

(d) in which the *remaining effective life of the asset is calculated under section 40-103 ; or

(e) for which there is a reduction to the asset ' s opening adjustable value under paragraph 40-365(5)(b) (about involuntary disposals) where you are using the prime cost method; or

(f) for which the opening adjustable value of the asset is modified under subsection 27-80(3A) or (4) , 27-85(3) or 27-90(3) ; or

(g) for which there is a reduction in the asset ' s opening adjustable value under section 775-70 ; or

(h) for which there is an increase in the asset ' s opening adjustable value under section 775-75 .

The adjustments apply for the change year and later years.

Note 1:

For recalculating a depreciating asset ' s effective life: see section 40-110 .

Note 2:

You may also adjust the formula for an income year if you had undeducted core technology expenditure for the asset at the end of your last income year commencing before 1 July 2011 (see section 355-605 of the Income Tax (Transitional Provisions) Act 1997 ).

Note 3:

Subdivision 40-BA or 40-BB of the Income Tax (Transitional Provisions) Act 1997 may also require you to adjust the formula: see subsections 40-135(3) and 40-180(2) of that Act.

40-75(3)    
The adjustments are:

(a) instead of the asset ' s ^* cost, you use its ^* opening adjustable value for the change year plus the amounts (if any) included in the second element of its cost for that year; and

(b) instead of the asset ' s ^* effective life, you use its ^* remaining effective life.

40-75(4)    

The remaining effective life of a ^* depreciating asset is any period of its ^* effective life that is yet to elapse as at:

(a) the start of the change year; or

(b) in the case of a roll-over under section 40-340 - the time when the ^* balancing adjustment event occurs for the transferor.

Note:

Effective life is worked out in years and fractions of years.

40-75(5)    
You must also adjust the formula in subsection (1) for an intangible ^* depreciating asset that:

(a) is mentioned in an item in the table in subsection 40-95(7) (except item 5, 7 or 8); and

(b) you acquire from a former ^* holder of the asset.

The adjustment applies for the income year in which you acquire the asset and later income years.

40-75(6)    
Instead of the asset ' s ^* effective life under the table in subsection 40-95(7) , you use the number of years remaining in that effective life as at the start of the income year in which you acquire the asset.

Limit on decline

40-75(7)    
The decline in value of a ^* depreciating asset under this section for an income year cannot be more than:

(a) for the income year in which the asset ' s ^* start time occurs - its ^* cost; or

(b) for a later year - the sum of its ^* opening adjustable value for that year and any amount included in the second element of its cost for that year.

SECTION 40-80   When you can deduct the asset ' s cost  

Exploration or prospecting

40-80(1)    
The decline in value of a ^* depreciating asset you ^* hold is the asset ' s ^* cost if:

(a) you first use the asset for ^* exploration or prospecting for ^* minerals, or quarry materials, obtainable by ^* mining and quarrying operations; and

(b) when you first use the asset, you do not use it for:

(i) development drilling for ^* petroleum; or

(ii) operations in the course of working a mining property, quarrying property or petroleum field; and

(c) you satisfy one or more of these subparagraphs at the asset ' s ^* start time:

(i) you carry on mining and quarrying operations;

(ii) it would be reasonable to conclude you proposed to carry on such operations;

(iii) you carry on a ^* business of, or a business that included, exploration or prospecting for minerals or quarry materials obtainable by such operations, and expenditure on the asset was necessarily incurred in carrying on that business; and

(d) in a case where the asset is a *mining, quarrying or prospecting right - you acquired the asset from an *Australian government agency or a *government entity; and

(e) in a case where the asset is *mining, quarrying or prospecting information:

(i) you acquired the asset from an Australian government agency or a government entity; or

(ii) the asset is a geophysical or geological data package you acquired from an entity to which subsection (1AA) applies; or

(iii) you created the asset, or contributed to the cost of its creation; or

(iv) you caused the asset to be created, or contributed to the cost of it being created, by an entity to which subsection (1AA) applies.

40-80(1A)    
(Repealed by No 96 of 2014)

40-80(1AA)    

This subsection applies to an entity if, at the time of the acquisition referred to in subparagraph (1)(e)(ii) or the creation referred to in subparagraph (1)(e)(iv), the entity predominantly carries on a *business of providing *mining, quarrying or prospecting information to other entities that:

(a) carry on *mining and quarrying operations; or

(b) it would be reasonable to conclude propose to carry on such operations; or

(c) carry on a business of, or a business that included, *exploration or prospecting for *minerals or quarry materials obtainable by such operations.

40-80(1AB)    

If an amount is included in the second element of the *cost of a *depreciating asset, subsection (1) applies in relation to that amount only if:

(a) your first use of the asset, after the inclusion of the amount in the second element, is for *exploration or prospecting for *minerals, or quarry materials, obtainable by *mining and quarrying operations; and

(b) at the time of that first use:

(i) you satisfy paragraph (1)(b) as if that first use was your first use of the asset; and

(ii) you satisfy paragraph (1)(c) as if the time of that first use was the asset ' s *start time; and

(c) if the amount relates to a *mining, quarrying or prospecting right - after the inclusion of the amount in the second element, you satisfy paragraph (1)(d) in relation to the right; and

(d) if the amount relates to *mining, quarrying or prospecting information - after the inclusion of the amount in the second element:

(i) you satisfy paragraph (1)(e) in relation to the information; or

(ii) you would satisfy that paragraph, in relation to the economic benefit that resulted in the inclusion of the amount in the second element, if that economic benefit were the asset referred to in that paragraph.

40-80(1AC)    

If subsection (1) does not apply to a *depreciating asset:

(a) the fact that subsection (1) does not apply to the asset does not prevent the application of subsection (1AB) to an amount included in the second element of the *cost of the asset; but

(b) subsection (1) only affects the asset ' s decline in value to the extent that the asset ' s cost consists of that amount.

Depreciating assets used for certain purposes

40-80(2)    
The decline in value of a ^* depreciating asset you start to ^* hold in an income year is the asset ' s ^* cost if:

(a) that cost does not exceed $300; and

(b) you use the asset predominantly for the ^* purpose of producing assessable income that is not income from carrying on a ^* business; and

(c) the asset is not one that is part of a set of assets that you started to hold in that income year where the total cost of the set of assets exceeds $300; and

(d) the total cost of the asset and any other identical, or substantially identical, asset that you start to hold in that income year does not exceed $300.

SECTION 40-82   Assets costing less than $150,000 - medium sized businesses - assets first acquired between 2 April 2019 and 31 December 2020  

Year in which asset first used, or installed ready for use, for a taxable purpose

40-82(1)    
The decline in value of a *depreciating asset you *hold for the income year (the current year ) in which you start to use the asset, or have it *installed ready for use, for a *taxable purpose is the amount worked out under subsection (2) if:

(a) you are an entity covered by subsection (4) (about medium sized businesses) for:

(i)the current year; and

(ii) the income year in which you started to hold the asset; and

(b) you first acquired the asset:

(i) at or after 7.30 pm, by legal time in the Australian Capital Territory, on 2 April 2019; and

(ii) before 12 March 2020; and

(c) the current year ends on or after 2 April 2019; and

(d) you start to use the asset, or have it installed ready for use, for a taxable purpose before 12 March 2020; and

(e) the asset is a depreciating asset whose *cost as at the end of the current year is less than $30,000.

Note:

The amount you can deduct may be reduced by other provisions, such as subsection 40-25(2) (about taxable purpose) and section 40-215 (about double deductions).

40-82(2)    
The amount is:

(a) unless paragraph (b) applies - the asset ' s *cost as at the end of the current year; or

(b) if the asset ' s *start time occurred in an earlier income year - the sum of the asset ' s *opening adjustable value for the current year and any amount included in the second element of its cost for the current year.

40-82(2A)    
The decline in value of a *depreciating asset you *hold for the income year (the current year ) in which you start to use the asset, or have it *installed ready for use, for a *taxable purpose is the amount worked out under subsection (2B) if:

(a) you are an entity covered by subsection (4) (about medium sized businesses), or by subsection (4A) (about medium sized businesses and certain assets) in relation to the asset, for:

(i) the current year; and

(ii) the income year in which you started to hold the asset; and

(b) you first acquired the asset:

(i) at or after 7.30 pm, by legal time in the Australian Capital Territory, on 2 April 2019; and

(ii) on or before 31 December 2020; and

(c) the current year ends on or after 12 March 2020; and

(d) you start to use the asset, or have it installed ready for use, for a taxable purpose:

(i) on or after 12 March 2020; and

(ii) on or before 30 June 2021; and

(e) the asset is a depreciating asset whose *cost as at the end of the earlier of:

(i) the end of the current year; and

(ii) 31 December 2020;

is less than $150,000.

Note 1:

The amount you can deduct may be reduced by other provisions, such as subsection 40-25(2) (about taxable purpose) and section 40-215 (about double deductions).

Note 2:

This subsection does not apply if Subdivision 40-BB of the Income Tax (Transitional Provisions) Act 1997 applies: see section 40-145 of that Act.

40-82(2B)    
The amount is:

(a) unless paragraph (b) applies - the asset ' s *cost as at the earlier of:

(i) the end of the current year; and

(ii) 31 December 2020; or

(b) if the asset ' s *start time occurred in an earlier income year - the sum of:

(i) the asset ' s *opening adjustable value for the current year; and

(ii) any amount included in the second element of the asset ' s cost for the current year, other than an amount included after 31 December 2020.

Later year

40-82(3)    
The decline in value of a *depreciating asset you *hold for an income year (the later year ) is the first amount included in the second element of the asset ' s *cost for the later year if:

(a) you are an entity covered by subsection (4) (about medium sized businesses) for the later year; and

(aa) the amount is included before 12 March 2020; and

(b) the amount included is less than $30,000; and

(c) you worked out the decline in value of the asset for an earlier income year under subsection (1); and

(d) the later year ends on or after 2 April 2019.

Note:

The amount you can deduct may be reduced by other provisions, such as subsection 40-25(2) (about taxable purpose) and section 40-215 (about double deductions).

40-82(3A)    
The decline in value of a *depreciating asset you *hold for an income year (the later year ) is the first amount included in the second element of the asset ' s *cost for the later year if:

(a) you are an entity covered by subsection (4) (about medium sized businesses), or by subsection (4B) (about medium sized businesses and certain amounts) in relation to the amount, for the later year; and

(b) the amount is included:

(i) on or after 12 March 2020; and

(ii) on or before 31 December 2020; and

(c) the amount included is less than $150,000; and

(d) you worked out the decline in value of the asset for an earlier income year under subsection (1) or (2A); and

(e) the later year ends on or after 12 March 2020.

Note 1:

The amount you can deduct may be reduced by other provisions, such as subsection 40-25(2) (about taxable purpose) and section 40-215 (about double deductions).

Note 2:

This subsection does not apply if Subdivision 40-BB of the Income Tax (Transitional Provisions) Act 1997 applies: see section 40-145 of that Act.

Medium sized business

40-82(4)    
An entity is covered by this subsection for an income year if:

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

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

(i) each reference in Subdivision 328-C (about what is a small business entity) to $10 million were instead a reference to $50 million; and

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

40-82(4A)    

An entity is covered by this subsection for an income year in relation to an asset mentioned in subsection (2A) if:

(a) the entity starts to use the asset, or has the asset *installed ready for use, for a *taxable purpose in the period beginning on 12 March 2020 and ending on 30 June 2021; and

(b) the entity is not a *small business entity for the income year; and

(c) the entity would be a small business entity for the income year if:

(i) each reference in Subdivision 328-C (about what is a small business entity) to $10 million were instead a reference to $500 million; and

(ii) the reference in paragraph 328-110(5)(b) to a small business entity were instead a reference to an entity covered by this subsection in relation to the asset.

40-82(4B)    

An entity is covered by this subsection for an income year in relation to an amount included as mentioned in subsection (3A) if:

(a) the amount is so included in the period beginning on 12 March 2020 and ending on 31 December 2020; and

(b) the entity is not a *small business entity for the income year; and

(c) the entity would be a small business entity for the income year if:

(i) each reference in Subdivision 328-C (about what is a small business entity) to $10 million were instead a reference to $500 million; and

(ii) the reference in paragraph 328-110(5)(b) to a small business entity were instead a reference to an entity covered by this subsection in relation to the amount.

Assets you start to use, or have installed ready for use, after 30 June 2021

40-82(5)    

The decline in value of a *depreciating asset you start to use, or have *installed ready for use, for a *taxable purpose after 30 June 2021 is worked out under the other provisions of this Division.

Amounts included in second element of cost after 31 December 2020

40-82(6)    
The effect on the value of a *depreciating asset of an amount included in the second element of the asset ' s *cost after 31 December 2020 is worked out under the other provisions of this Division.

SECTION 40-85   Meaning of adjustable value and opening adjustable value of a depreciating asset  

40-85(1)    
The adjustable value of a ^* depreciating asset at a particular time is:

(a) if you have not yet used it or had it ^* installed ready for use for any purpose - its ^* cost; or

(b) for a time in the income year in which you first use it, or have it installed ready for use, for any purpose - its cost less its decline in value up to that time; or

(c) for a time in a later income year - the sum of its ^* opening adjustable value for that year and any amount included in the second element of its cost for that year up to that time, less its decline in value for that year up to that time.

Note:

The adjustable value of a depreciating asset may be modified by section 250-285 .

40-85(2)    
The opening adjustable value of a ^* depreciating asset for an income year is its ^* adjustable value to you at the end of the previous income year.

Note:

The opening adjustable value of a depreciating asset may be modified by one of these provisions:

(a) Subdivision 27-B ;

(b) subsection 40-90(3) ;

(c) subsection 40-285(4) ;

(d) paragraph 40-365(5)(b) ;

(e) section 775-70 ;

(f) section 775-75 ;

(g) section 355-605 of the Income Tax (Transitional Provisions) Act 1997 .

SECTION 40-90   Debt forgiveness  

40-90(1)    

This section applies if an amount (the debt forgiveness amount ) is applied in reduction of expenditure for a ^* depreciating asset in an income year under section 245-155 or 245-157 .

40-90(2)    
The asset ' s ^* cost is reduced for that income year by the debt forgiveness amount.

40-90(3)    
The asset ' s ^* opening adjustable value for that income year is reduced by the debt forgiveness amount if that income year is later than the one in which its ^* start time occurs.

SECTION 40-95   Choice of determining effective life  

40-95(1)    
You must choose either:

(a)    to use an ^* effective life determined by the Commissioner for a ^* depreciating asset under section 40-100 ; or

(b)    to work out the effective life of the asset yourself under section 40-105 .

Note:

If you choose to use an effective life determined by the Commissioner for a depreciating asset, a capped life may apply to the asset under section 40-102 .

40-95(2)    
Your choice of an ^* effective life determined by the Commissioner for a ^* depreciating asset is limited to one in force as at:

(a)    the time when you entered into a contract to acquire the asset, you otherwise acquired it or you started to construct it if its ^* start time occurs within 5 years of that time; or

(b)    for ^* plant that you entered into a contract to acquire, you otherwise acquired or you started to construct before 11.45 am, by legal time in the Australian Capital Territory, on 21 September 1999 - the time when you entered into the contract to acquire it, otherwise acquired it or started to construct it; or

(c)    otherwise - its ^* start time.

40-95(3)    
You must make the choice for the income year in which the asset ' s ^* start time occurs.

Note:

For rules about choices: see section 40-130 .

Exception: asset acquired from associate

40-95(4)    
For a ^* depreciating asset that you start to ^* hold where the former holder is an ^* associate of yours and the associate has deducted or can deduct an amount for the asset under this Division, you must use:

(a)    if the associate was using the ^* diminishing value method for the asset - the same ^* effective life that the associate was using; or

(b)    if the associate was using the ^* prime cost method - an effective life equal to any period of the asset ' s effective life the associate was using that is yet to elapse at the time you started to hold it.

Note:

You can require the associate to tell you which effective life the associate was using: see section 40-140 .

40-95(4A)    

Subsection (4) does not apply to a ^* depreciating asset if subsection (4B) or (4C) applies to the asset.

40-95(4B)    

For a ^* depreciating asset that you start to ^* hold if:

(a)    the former holder is an ^* associate of yours; and

(b)    the associate has deducted or can deduct an amount for the asset under this Division; and

(c)    section 40-102 applied to the asset immediately before you started to hold it because an item in the tables in subsections 40-102(4) and (5) applied to it at the relevant time (the relevant time for the associate ) that applied to the associate under subsection 40-102(3) ; and

(d)    a different item in the tables in subsections 40-102(4) and (5) applies to the asset when you start to hold it; and

(e)    the item referred to in paragraph (d) would have applied to the asset at the relevant time for the associate if the use to which the asset were put at that time were the use (the new use ) to which it is put when you start to hold it;

you must use:

(f)    if the associate was using the ^* diminishing value method for the asset - an ^* effective life equal to the ^* capped life that would have applied to the asset under subsection 40-102(4) or (5) at the relevant time for the associate if the use to which the asset were put at that time were the new use; or

(g)    if the associate was using the ^* prime cost method - an effective life equal to the capped life that:

(i) would have applied to the asset under subsection 40-102(4) or (5) at the relevant time for the associate if the use to which the asset were put at that time were the new use; and

(ii) is yet to elapse at the time you start to hold it.

Note 1:

If paragraph (e) is not satisfied, subsection (4C) may apply to the depreciating asset.

Note 2:

You can require the associate to tell you the relevant time that applied to the associate under subsection 40-102(3) : see section 40-140 .

40-95(4C)    

For a ^* depreciating asset that you start to ^* hold if:

(a)    the former holder is an ^* associate of yours; and

(b)    the associate has deducted or can deduct an amount for the asset under this Division; and

(c)    section 40-102 applied to the asset immediately before you started to hold it; and

(d)    one of the following applies:

(i) no item in the tables in subsections 40-102(4) and (5) applies to the asset when you start to hold it;

(ii) subsection (4B) would apply to the asset but for paragraph (e) of that subsection not being satisfied;

you must use:

(e)    if the associate was using the ^* diminishing value method for the asset - the ^* effective life determined by the Commissioner for the asset under section 40-100 that the associate would have used if section 40-102 had not applied to the asset; or

(f)    if the associate was using the ^* prime cost method - an effective life equal to any period of the effective life determined by the Commissioner for the asset under section 40-100 that:

(i) the associate would have used if section 40-102 had not applied to the asset; and

(ii) is yet to elapse at the time you start to hold it.

Note:

You can require the associate to tell you which effective life the associate would have used if section 40-102 had not applied to the asset: see section 40-140 .

Exception: holder changes but user same or associate of former user

40-95(5)    
For a ^* depreciating asset that you start to ^* hold where:

(a)    the former holder or another entity (each of which is the former user ) was using the asset at a time before you became the holder; and

(b)    while you hold the asset, the former user or an ^* associate of the former user uses the asset;

you must use:

(c)    if the former holder was using the ^* diminishing value method for the asset - the same ^* effective life that the former holder was using; or

(d)    if the former holder was using the ^* prime cost method - an effective life equal to any period of the asset ' s effective life the former holder was using that is yet to elapse at the time you started to hold it.

40-95(5A)    

Subsection (5) does not apply to a ^* depreciating asset if subsection (5B) or (5C) applies to the asset.

40-95(5B)    

For a ^* depreciating asset that you start to ^* hold if:

(a)    paragraphs (5)(a) and (b) apply; and

(b)    section 40-102 applied to the asset immediately before you started to hold it because an item in the tables in subsections 40-102(4) and (5) applied to it at the relevant time (the relevant time for the former holder ) that applied to the former holder under subsection 40-102(3) ; and

(c)    a different item in the tables in subsections 40-102(4) and (5) applies to the asset when you start to hold it; and

(d)    the item referred to in paragraph (c) would have applied to the asset at the relevant time for the former holder if the use to which the asset were put at that time were the use (the new use ) to which it is put when you start to hold it;

you must use:

(e)    if the former holder was using the ^* diminishing value method for the asset - an ^* effective life equal to the ^* capped life that would have applied to the asset under subsection 40-102(4) or (5) at the relevant time for the former holder if the use to which the asset were put at that time were the new use; or

(f)    if the former holder was using the ^* prime cost method - an effective life equal to the capped life that:

(i) would have applied to the asset under subsection 40-102(4) or (5) at the relevant time for the former holder if the use to which the asset were put at that time were the new use; and

(ii) is yet to elapse at the time you start to hold it.

Note:

If paragraph (d) is not satisfied, subsection (5C) may apply to the depreciating asset.

40-95(5C)    

For a ^* depreciating asset that you start to ^* hold if:

(a)    paragraphs (5)(a) and (b) apply; and

(b)    section 40-102 applied to the asset immediately before you started to hold it; and

(c)    one of the following applies:

(i) no item in the tables in subsections 40-102(4) and (5) applies to the asset when you start to hold it;

(ii) subsection (5B) would apply to the asset but for paragraph (d) of that subsection not being satisfied;

you must use:

(d)    if the former holder was using the ^* diminishing value method for the asset - the ^* effective life determined by the Commissioner for the asset under section 40-100 that the former holder would have used if section 40-102 had not applied to the asset; or

(e)    if the former holder was using the ^* prime cost method - an effective life equal to any period of the effective life determined by the Commissioner for the asset under section 40-100 that:

(i) the former holder would have used if section 40-102 had not applied to the asset; and

(ii) is yet to elapse at the time you start to hold it.

40-95(6)    
However, you must use an ^* effective life determined by the Commissioner if:

(a)    

you do not know, and cannot readily find out, which effective life the former holder was using and, if subsection (5B) or (5C) applied to the asset, either of the following matters:

(i) the effective life the former holder would have used if section 40-102 had not applied to the asset;

(ii) the relevant time that applied to the former holder under subsection 40-102(3) ; or

(b)    the former holder did not use an effective life.

Exception: intangible depreciating assets

40-95(7)    

The effective life of an intangible ^* depreciating asset mentioned in this table is the period applicable to that asset under the table.

Effective life of certain intangible depreciating assets
Item	For this asset:	The effective life is:
1	Standard patent	20 years
.
2	Innovation patent	8 years
.
3	Petty patent	6 years
.
4	Registered design	15 years
.
5	Copyright (except copyright in a *film)	The shorter of: (a) 25 years from when you acquire the copyright; or (b) the period until the copyright ends
.
6	A licence (except one relating to a copyright or *in-house software)	The term of the licence
.
7	A licence relating to a copyright (except copyright in a *film)	The shorter of: (a) 25 years from when you become the licensee; or (b) the period until the licence ends
.
8	*In-house software	5 years
.
9	*Spectrum licence	The term of the licence
.
10	(Repealed by No 151 of 2020)
.
11	(Repealed by No 78 of 2007 )
.
12	(Repealed by No 78 of 2007 )
.
13	(Repealed by No 78 of 2007 )
.
14	*Telecommunications site access right	The term of the right

40-95(8)    

The effective life of an intangible ^* depreciating asset that is not mentioned in the table in subsection (7) and is not an ^* IRU or a *mining, quarrying or prospecting right cannot be longer than the term of the asset as extended by any reasonably assured extension or renewal of that term.

40-95(9)    

The effective life of an ^* IRU is the ^* effective life of the telecommunications cable over which the IRU is granted.

Exceptions: mining, quarrying or prospecting rights and mining, quarrying or prospecting information

40-95(10)    

Subject to subsection (12) , the effective life of:

(a)    a *mining, quarrying or prospecting right; or

(b)    *mining, quarrying or prospecting information;

is the period you work out yourself by estimating the period (in years, including fractions of years) set out in column 2 of this table:

Effective life of certain mining, quarrying or prospecting rights and mining, quarrying or prospecting information
Item	Column 1 For this asset:	Column 2 Estimate the period until the end of:
1	A *mining, quarrying or prospecting right, or *mining, quarrying or prospecting information, relating to *mining and quarrying operations (except obtaining *petroleum or quarry materials)	The life of the mine or proposed mine to which the right or information relates or, if there is more than one, the life of the mine that has the longest estimated life
2	A *mining, quarrying or prospecting right, or *mining, quarrying or prospecting information, relating to *mining and quarrying operations to obtain *petroleum	The life of the petroleum field or proposed petroleum field to which the right or information relates or, if there is more than one, the life of the petroleum field that has the longest estimated life
3	A *mining, quarrying or prospecting right, or *mining, quarrying or prospecting information, relating to *mining and quarrying operations to obtain quarry materials	The life of the quarry or proposed quarry to which the right or information relates or, if there is more than one, the life of the quarry that has the longest estimated life

40-95(10A)    

However, if the only reason that subsection 40-80(1) does not apply to the *mining, quarrying or prospecting right, or *mining, quarrying or prospecting information, is that the right or information does not meet the requirements of paragraph 40-80(1)(d) or (e) , the effective life of the right or information is the shorter of:

(a)    the period that would, apart from this subsection, be the effective life of the information or right under subsection (10); and

(b)    15 years.

40-95(11)    
You work out the period in subsection (10):

(a)    

as from the *start time of the *mining, quarrying or prospecting right or *mining, quarrying or prospecting information; and

(b)    

by reference only to the period of time over which the reserves, reasonably estimated using an appropriate accepted industry practice, are expected to be extracted from the mine, *petroleum field or quarry.

40-95(12)    

The effective life of a *mining, quarrying or prospecting right, or *mining, quarrying or prospecting information, is 15 years if the right or information does not relate to:

(a)    a mine or proposed mine; or

(b)    a petroleum field or proposed petroleum field; or

(c)    a quarry or proposed quarry.

SECTION 40-100   Commissioner ' s determination of effective life  

40-100(1)    
The Commissioner may make a written determination specifying the effective life of ^* depreciating assets. The determination may specify conditions for particular depreciating assets.

40-100(2)    
A determination may specify a day from which it takes effect for ^* depreciating assets specified in the determination.

40-100(3)    

A determination may operate retrospectively to a day specified in the determination if:

(a) there was no applicable determination at that day for the ^* depreciating asset covered by the determination; or

(b) the determination specifies a shorter ^* effective life for the depreciating asset covered by the determination than was previously applicable.

Criteria for making a determination

40-100(4)    

The Commissioner is to make a determination of the effective life of a *depreciating asset in accordance with subsections (5) and (6).

40-100(5)    

Firstly, estimate the period (in years, including fractions of years) the asset can be used by any entity for one or more of the following purposes:

(a) a *taxable purpose;

(b) the purpose of producing *exempt income or *non-assessable non-exempt income;

(c)the purpose of conducting *R & D activities, assuming that this is reasonably likely.

40-100(6)    

Secondly, if relevant for the asset:

(a) assume the asset will be subject to wear and tear at a rate that is reasonable for the Commissioner to assume; and

(b) assume the asset will be maintained in reasonably good order and condition; and

(c) have regard to the period within which the asset is likely to be scrapped, sold for no more than scrap value or abandoned.

However, for paragraph (c), disregard reasons attributable to the technical risk in conducting *R & D activities if it is reasonably likely that the asset will be used for such activities.

SECTION 40-102   Capped life of certain depreciating assets  

40-102(1)    
If this section applies to a ^* depreciating asset, the effective life of the asset is the period (the capped life ) that applies to the asset under subsection (4) or (5) at the relevant time (which is worked out using subsection (3)).

Working out if this section applies

40-102(2)    
This section applies to a ^* depreciating asset if:

(a) you choose, under paragraph 40-95(1)(a) , to use an ^* effective life determined by the Commissioner for the asset under section 40-100 ; and

(b) your choice is limited to a determination in force at the time mentioned in paragraph 40-95(2)(a) or (c); and

(c) a ^* capped life applies to the asset under subsection (4) or (5) at the relevant time (which is worked out using subsection (3)); and

(d) the capped life is shorter than the effective life mentioned in paragraph (a).

40-102(3)    
For the purposes of this section, the relevant time is:

(a) the ^* start time of the ^* depreciating asset if:

(i) paragraph 40-95(2)(c) applies to you; or

(ii) paragraph 40-95(2)(a) applies to you and a ^* capped life does not apply to the asset under subsection (4) or (5) at the time mentioned in that paragraph; or

(iii) paragraph 40-95(2)(a) applies to you and the capped life that applies to the asset under subsection (4) or (5) at the time mentioned in that paragraph is longer than the capped life that applies to the asset at its start time; or

(b) if paragraph (a) does not apply - the time mentioned in paragraph 40-95(2)(a) .

Capped life

40-102(4)    

If the ^* depreciating asset corresponds exactly to the description in column 2 of the table, the capped life of the asset is the period specified in column 3 of the table.

Table

Table

Capped life of certain depreciating assets
Item	Kind of depreciating asset	Period
1	Aeroplane used predominantly for agricultural spraying or agricultural dusting	8 years
2	Aeroplane to which item 1 does not apply	10 years
3	Helicopter used predominantly for mustering, agricultural spraying or agricultural dusting	8 years
4	Helicopter to which item 3 does not apply	10 years
5	Bus with a *gross vehicle mass of more than 3.5 tonnes	7.5 years
6	Light commercial vehicle with a *gross vehicle mass of 3.5 tonnes or less and designed to carry a load of 1 tonne or more	7.5 years
7	Minibus with a *gross vehicle mass of 3.5 tonnes or less and designed to carry 9 or more passengers	7.5 years
8	Trailer with a *gross vehicle mass of more than 4.5 tonnes	10 years
9	Truck with a *gross vehicle mass of more than 3.5 tonnes (other than a truck that is used in *mining and quarrying operations and that is not of a kind that can be registered to be driven on a public road in the place in which the truck is operated)	7.5 years
10	Vessel for which you have a certificate under Part 2 of the Shipping Reform (Tax Incentives) Act 2012	10 years

40-102(4A)    

Item 10 of the table in subsection 40-102(4) does not apply to a vessel if:

(a) *ordinary income that you *derive, or your *statutory income, in relation to the vessel; or

(b) ordinary income that your *associate derives, or your associate ' s statutory income, in relation to the vessel;

is exempt from income tax under section 51-100 for the income year for which you are working out the vessel ' s decline in value.

40-102(5)    

If the ^* depreciating asset is of a kind described in column 2 of the table and is used in the industry specified in column 3 of the table for the asset, the capped life of the asset is the period specified in column 4 of the table.

Table

Table

Capped life of certain depreciating assets used in specified industries
Item	Kind of depreciating asset	Industry in which the asset is used	Period
1	Gas transmission asset	Gas supply	20 years
2	Gas distribution asset	Gas supply	20 years
3	Oil production asset (other than an electricity generation asset or an offshore platform)	Oil and gas extraction	15 years
4	Gas production asset (other than an electricity generation asset or an offshore platform)	Oil and gas extraction	15 years
5	Offshore platform	Oil and gas extraction	20 years
6	Asset (other than an electricity generation asset) used to manufacture condensate, crude oil, domestic gas, liquid natural gas or liquid petroleum gas but not if the manufacture occurs in an oil refinery	Petroleum refining	15 years
7	Harvester	Primary production sector	6 ⅔ years
8	Tractor	Primary production sector	6 ⅔ years

SECTION 40-103   Effective life and remaining effective life of certain vessels  

40-103(1)    
If, at a particular time, item 10 of the table in subsection 40-102(4):

(a) starts to apply to a vessel (whether or not that item has previously applied to the vessel); or

(b) ceases to apply to a vessel (whether or not that item subsequently applies to the vessel);

at that time the effective life of the vessel changes accordingly.

40-103(2)    
If subsection (1) applies and the decline in value of the vessel is worked out using the * prime cost method, the remaining effective life of the vessel just after that time is:

Unadjusted remaining effective life	×	Alternative effective life
		Unadjusted effective life

where:

alternative effective life
is:

(a) if that item starts to apply to the vessel at that time - what would have been the * effective life of the vessel just before that time if that item had applied to the vessel; or

(b) if that item ceases to apply to the vessel at that time - what would have been the effective life of the vessel just before that time if that item had not applied to the vessel.

unadjusted effective life
is what was the * effective life of the vessel just before that time.

unadjusted remaining effective life
is what was the * remaining effective life of the vessel just before that time.

Example:

Assume that item 10 of the table in subsection 40-102(4) ceases to apply to a vessel after having applied to the vessel for 7 years, and again starts to apply after another 4 years. Assume further that the effective life of a vessel of that kind has been determined under section 40-100 to be 20 years.

The remaining effective life of the vessel just before that item ceases to apply to the vessel is 3 years. Its alternative effective life is 20 years, and its unadjusted effective life is 10 years. Its remaining effective life just after that time is therefore 6 years.

The remaining effective life of the vessel just before that item again starts to apply to the vessel is 2 years. Its alternative effective life is 10 years, and its unadjusted effective life is 20 years. Its remaining effective life just after that time is therefore 1 year.

SECTION 40-105   Self-assessing effective life  

40-105(1)   

You work out the effective life of a *depreciating asset yourself in accordance with this section.

40-105(1A)    

Firstly, estimate the period (in years, including fractions of years) the asset can be used by any entity for one or more of the following purposes:

(a) a *taxable purpose;

(b) the purpose of producing *exempt income or *non-assessable non-exempt income;

(c) the purpose of conducting *R & D activities, assuming that this is reasonably likely.

40-105(1B)    

Secondly, if relevant for the asset:

(a) have regard to the wear and tear you reasonably expect from your expected circumstances of use; and

(b) assume that the asset will be maintained in reasonably good order and condition.

40-105(2)    

If, in working out that period, you decide that the asset would be likely to be:

(a) scrapped; or

(b) sold for no more than scrap value or abandoned;

before the end of that period, its effective life ends at the earlier time. However, when making your decision, disregard reasons attributable to the technical risk in conducting *R & D activities if it is reasonably likely that the asset will be used for such activities.

40-105(3)    

You work out the period mentioned in subsection (1A) or (2) beginning at the *start time of the *depreciating asset.

Exception: intangibles

40-105(4)    

This section does not apply to the following intangible *depreciating assets:

(a) assets to which an item in the table in subsection 40-95(7) applies;

(b) *mining, quarrying or prospecting rights;

(c) *mining, quarrying or prospecting information.

SECTION 40-110   Recalculating effective life  

40-110(1)    
You may choose to recalculate the ^* effective life of a ^* depreciating asset from a later income year if the effective life you have been using is no longer accurate because of changed circumstances relating to the nature of the use of the asset.

Example:

Some examples of changes in circumstances that may result in your recalculating the effective life of a depreciating asset are:

• your use of the asset turns out to be more or less rigorous than you expected (or was anticipated by the Commissioner ' s determination);

• there is a downturn in demand for the goods or services the asset is used to produce that will result in the asset being scrapped;

• legislation prevents the asset ' s continued use;

• changes in technology make the asset redundant;

• there is an unexpected demand, or lack of success, for a film.

40-110(2)    
You must recalculate a ^* depreciating asset ' s ^* effective life from a later income year if:

(a) you:

(i) self-assessed its effective life; or

(ii) are using an effective life worked out under section 40-100 (about the Commissioner ' s determination), or 40-102 (about the capped life of certain depreciating assets), and the ^* prime cost method; or

(iii) are using an effective life because of subsection 40-95(4), (4B), (4C), (5), (5B) or (5C) ; and

(b) its ^* cost is increased in that year by at least 10%.

Note 1:

You may conclude that the effective life is the same.

Note 2:

For the elements of the cost of a depreciating asset, see Subdivision 40-C .

Example 1:

Paul purchases a photocopier and self-assesses its effective life at 6 years. In a later year he incurs expenditure to increase the quality of the reproductions it makes. He recalculates its effective life, but concludes that it remains the same.

Example 2:

Fiona also purchases a photocopier and self-assesses its effective life at 6 years. In a later year she incurs expenditure to incorporate a more robust paper handling system. She recalculates its effective life, and concludes that it is increased to 7 years.

40-110(3)    
You must recalculate a ^* depreciating asset ' s ^* effective life for the income year in which you started to ^* hold it if:

(a) you are using an effective life because of subsection 40-95(4) , (4B), (4C), (5), (5B) or (5C); and

(b) the asset ' s ^* cost is increased after you started to hold it in that year by at least 10%.

40-110(3A)    

Subsections (1), (2) and (3) do not apply to a *depreciating asset that is a *mining, quarrying or prospecting right or *mining, quarrying or prospecting information.

40-110(3B)    

You may choose to recalculate the *effective life of a *mining, quarrying or prospecting right, or *mining, quarrying or prospecting information, from a later income year if the effective life you have been using is no longer accurate:

(a) because of changed circumstances relating to an existing or proposed mine, petroleum field or quarry to which that right or information relates; or

(b) because that right or information now relates to an existing or proposed mine, petroleum field or quarry; or

(c) because that right or information no longer relates to an existing or proposed mine, petroleum field or quarry.

40-110(4)    

A recalculation under this section must be done using:

(a) if paragraph (b) does not apply - section 40-105 (about self-assessing effective life); or

(b) if the *depreciating asset is a *mining, quarrying or prospecting right or *mining, quarrying or prospecting information:

(i) subsections 40-95(10) and (11) (if the right or information relates to an existing or proposed mine, petroleum field or quarry); or

(ii) subsection 40-95(12) (if the right or information no longer relates to an existing or proposed mine, petroleum field or quarry).

Exception: intangibles

40-110(5)    

This section does not apply to an intangible ^* depreciating asset to which an item in the table in subsection 40-95(7) applies.

SECTION 40-115   Splitting a depreciating asset  

40-115(1)    
If a ^* depreciating asset you ^* hold is split into 2 or more assets, this Division applies as if you had stopped holding the original asset and started holding the assets into which it is split.

Note 1:

For the cost of the split assets, see section 40-205 .

Note 2:

A balancing adjustment event does not occur just because you split a depreciating asset: see section 40-295 .

40-115(2)    
If you stop ^* holding part of a ^* depreciating asset, this Division applies as if, just before you stopped holding that part, you had split the original asset into the part you stopped holding and the rest of the original asset. (The rest of the original asset is then taken to be a different asset from the original asset.)

Example:

Bronwyn sells Tim a part interest in a depreciating asset she owns. They become joint holders under section 40-35 . She is taken to have split the underlying asset into the interest she retains and the interest Tim buys. She now holds an interest (a new depreciating asset) in the underlying asset and is taken to have stopped holding the interest sold.

40-115(3)    
If you grant or assign an interest in an item of ^* intellectual property, subsection (2) applies to you as if you had stopped ^* holding part of the item.

SECTION 40-120   Replacement spectrum licences  

40-120(1)    

If:

(a)    some (but not all) of a ^* spectrum licence you ^* hold is assigned or resumed; and

(b)    your original licence is replaced by one or more other spectrum licences (possibly including a modified version of your original licence); and

(c)    the replacement licences together cover exactly the same rights as were covered by your original licence just after the assignment or resumption;

this Division applies as if your original licence (as it existed just after the assignment or resumption) had been split into the replacement licences.

Example:

MGP Communications Ltd buys a spectrum licence on 1 July 2003 for $5 million. The licence specifies areas A, B, C and D. The company assigns the spectrum relating to area C. Area C represents 20% of the market value of the overall licence. $1m of the adjustable value is allocated to it and $4m is allocated to the remaining licence.

The Australian Communications and Media Authority adjusts the licence to specify only areas A and B, and issues a new licence specifying area D.

Area D represents 25% of the market value of the spectrum remaining in the licence. The adjustable value of the new licence is therefore $1m and the adjustable value of the original (modified) licence is $3m.

40-120(2)    
If a ^* spectrum licence you ^* hold is replaced by 2 or more spectrum licences (possibly including a modified version of your original licence) that together cover exactly the same rights as your original licence, this Division applies as if the original licence had been split into the replacement licences.

SECTION 40-122   Partial conversions of mining, quarrying or prospecting rights  

40-122(1)    
This section applies if:

(a)    a *depreciating asset you *hold is a *mining, quarrying or prospecting right (the old right ) that relates to an area; and

(b)    you begin to hold another depreciating asset (the partial new right ) that:

(i) is a mining, quarrying or prospecting right; and

(ii) relates to an area that is a part of the area that the old right relates to; and

(c)    the old right does not end when you begin to hold the partial new right.

40-122(2)    
This Division applies as if:

(a)    when you begin to hold the partial new right, the old right is split into:

(i) an asset that is the partial new right; and

(ii) an asset that is the old right; and

(b)    the assets mentioned in subparagraphs (a)(i) and (ii) are both continuations of the old right.

Note:

For the cost of the split assets, see section 40-205 .

SECTION 40-125  

40-125   Merging depreciating assets  

If a ^* depreciating asset or assets that you ^* hold is or are merged into another depreciating asset, this Division applies as if you had stopped holding the original asset or assets and started holding the merged asset.

Note 1:

For the cost of the merged asset, see section 40-210 .

Note 2:

A balancing adjustment event does not occur just because you merge depreciating assets: see section 40-295 .

SECTION 40-130   Choices  

40-130(1)    
A choice you can make under this Division about a ^* depreciating asset must be made:

(a) by the day you lodge your ^* income tax return for the income year to which the choice relates; or

(b) within a further time allowed by the Commissioner.

40-130(2)    
Your choice, once made, applies to that income year and all later income years.

Exception: recalculating effective life

40-130(3)    
However, subsection (2) does not apply to a choice to recalculate the ^* effective life of a ^* depreciating asset under section 40-110 .

SECTION 40-135  

40-135   Certain anti-avoidance provisions  

These anti-avoidance provisions:

(a) section 51AD (Deductions not allowable in respect of property under certain leveraged arrangements) of the Income Tax Assessment Act 1936 ;

(b) Division 16D (Certain arrangements relating to the use of property) of Part III of that Act;

apply to your deductions under this Division for a ^* depreciating asset you ^* hold as if you were the owner of the asset instead of any other person.

SECTION 40-140   Getting tax information from associates  

40-140(1)    
If you acquire a ^* depreciating asset from an ^* associate of yours where the associate has deducted or can deduct an amount for the asset under this Division, you may give the associate a written notice requiring the associate to tell you:

(a) the method the associate was using to work out the decline in value of the asset; and

(b) the ^* effective life the associate was using; and

(c) if section 40-102 applied to the asset at any time:

(i) the effective life that the associate would have used if section 40-102 had not applied to the asset; and

(ii) the relevant time that applied to the associate under subsection 40-102(3) .

40-140(2)    
The notice must:

(a) be given within 60 days of your acquiring the asset; and

(b) specify a period of at least 60 days within which the information must be given; and

(c) set out the effect of subsection (3).

Note:

Subsections (4) and (5) explain how this subsection operates if the associate is a partnership.

Requirement to comply with notice

40-140(3)    
The ^* associate must not intentionally refuse or fail to comply with the notice.

Penalty: 10 penalty units.

Giving the notice to a partnership

40-140(4)    
If the ^* associate is a partnership:

(a) you may give it to the partnership by giving it to any of the partners (this does not limit how else you can give it); and

(b) the obligation to comply with the notice is imposed on each of the partners (not on the partnership), but may be discharged by any of them.

40-140(5)    
A partner must not intentionally refuse or fail to comply with that obligation, unless another partner has already complied with it.

Penalty: 10 penalty units.

Limits on giving a notice

40-140(6)    
Only one notice can be given in relation to the same ^* depreciating asset.

40-145   (Repealed) SECTION 40-145 Application of Criminal Code  
(Repealed by No 4 of 2007 )

Subdivision 40-C - Cost  

SECTION 40-170   What this Subdivision is about  

Operative provisions

SECTION 40-175  

40-175   Cost  

The cost of a *depreciating asset you *hold consists of 2 elements.

Note:

The cost of a depreciating asset may be modified by one of these provisions:

• Subdivision 27-B ;

• subsection 40-90(2) ;

• paragraph 40-362(3)(c) ;

• paragraph 40-365(5)(a) ;

• section 40-1110 ;

• section 775-70 ;

• section 775-75 .

SECTION 40-180   First element of cost  

40-180(1)    

The first element is worked out as at the time when you began to *hold the *depreciating asset (except for a case to which item 3, 4 or 14 of the table in subsection (2) applies). It is:

(a) if an item in that table applies - the amount specified in that item; or

(b) otherwise - the amount you are taken to have paid to hold the asset under section 40-185 .

Note 1:

The first element of the cost may be modified by a later provision in this Subdivision.

Note 2:

Section 230-505 provides special rules for working out the amount of consideration for an asset if the asset is a Division 230 financial arrangement or a Division 230 financial arrangement is involved in that consideration.

40-180(2)    

If more than one item in this table covers the asset, apply the last item that covers it.

First element of the cost of a depreciating asset
Item	In this case:	The cost is:
1	A *depreciating asset you *hold is split into 2 or more assets	For each of the assets into which it is split, the amount worked out under section 40-205
.
2	A *depreciating asset or assets that you *hold is or are merged into another depreciating asset	For the other asset, the amount worked out under section 40-210
.
3	A *balancing adjustment event happens to a *depreciating asset you *hold because you stop using it for any purpose expecting never to use it again, and you continue to hold it	The *termination value of the asset at the time of the event
.
4	A *balancing adjustment event happens to a *depreciating asset you *hold but have not used because you expect never to use it, and you continue to hold it	The *termination value of the asset at the time of the event
.
5	A partnership asset that was *held, just before it became a partnership asset, by one or more partners (whether or not any other entity was a joint holder) or a partnership asset to which subsection 40-295(2) applies	The *market value of the asset when the partnership started to hold it or when the change referred to in subsection 40-295(2) occurred
.
6	There is roll-over relief under section 40-340 for a *balancing adjustment event happening to a *depreciating asset	The *adjustable value of the asset to the transferor just before the balancing adjustment event occurred
.
7	You are the legal owner of a *depreciating asset that is hired under a *hire purchase agreement and you start *holding it because the entity to whom it is hired does not become the legal owner	The *market value of the asset when you started to hold it
.
8	You started to *hold the asset under an *arrangement and:	The market value of the asset when you started to hold it
	(a)	there is at least one other party to the arrangement with whom you did not deal at *arm ' s length; and
	(b)	apart from this item, the first element of the asset ' s cost would exceed its *market value
.
9	You started to *hold the asset under an *arrangement that was private or domestic in nature to you (for example, a gift)	The *market value of the asset when you started to hold it
.
10	The *Finance Minister has determined a cost for you under section 49A, 49B, 50A, 50B, 51A or 51B of the Airports (Transitional) Act 1996	The cost so determined
.
11	To which Division 58 (which deals with assets previously owned by an *exempt entity) applies	The amount applicable under subsections 58-70(3) and (5)
.
12	A *balancing adjustment event happens to a *depreciating asset because a person dies and the asset devolves to you as the person ' s *legal personal representative	The asset ' s *adjustable value on the day the person died or, if the asset is allocated to a low-value pool, so much of the *closing pool balance for the income year in which the person died as is reasonably attributable to the asset
.
13	You started to *hold a *depreciating asset because it *passed to you as the beneficiary or a joint tenant	The *market value of the asset when you started to hold it reduced by any *capital gain that was disregarded under section 128-10 or subsection 128-15(3), whether by the deceased or by the *legal personal representative
.
14	A *balancing adjustment event happens to a *depreciating asset you *hold because of subsection 40-295(1B)	What would, apart from subsection 40-285(3), be the asset ' s *adjustable value on the day the *balancing adjustment event occurs

40-180(3)    

The first element of *cost includes an amount you paid or are taken to have paid in relation to starting to *hold the *depreciating asset if that amount is directly connected with holding the asset.

40-180(4)    

The first element of *cost of a *depreciating asset does not include an amount that forms part of the second element of cost of another depreciating asset.

Note:

The first element of cost may be reduced under section 40-1130 to account for exploration benefits received under farm-in farm-out arrangements.

SECTION 40-185   Amount you are taken to have paid to hold a depreciating asset or to receive a benefit  

40-185(1)    
This Division applies to you as if you had paid, to ^* hold a ^* depreciating asset or for an economic benefit for such an asset, the greater of these amounts:

(a) the sum of the amounts that would have been included in your assessable income because you started to hold the asset or received the benefit, or because you gave something to start holding the asset or receive the benefit, if you ignored the value of anything you gave that reduced the amount actually included; or

(b) the sum of the applicable amounts set out in this table in relation to holding the asset or receiving the benefit.

Example 1:

Gold Medals Ltd manufactures some medals for a local sporting association ' s annual meeting in return for a die cut stamping machine. The medals have a market value of $20,000. The machine has an arm ' s length value of $100,000 but Gold Medals has to contribute $75,000 towards acquiring it from the association. Gold Medals will have to include:

($100,000 − $75,000) = $25,000

in its assessable income because of section 21A of the Income Tax Assessment Act 1936 .

The first element of the machine ' s cost will be the greater of:

• the amount it paid ($75,000) plus the market value of the non-cash benefits it provided ($20,000), which comes to $95,000; and

• the amount that was assessable income from receiving the machine ($25,000) plus the amount by which that assessable income was reduced because of the payment Gold Medals made ($75,000), which comes to $100,000.

So, in this case, the first element of the machine ' s cost to Gold Medals is $100,000.

Example 2:

Laura travels overseas to purchase a purpose-built vehicle for use in her trade. The purchase of the vehicle is the sole reason for the trip. Laura incurs expenses for airfares and accommodation. These expenses are included in the cost of the vehicle because they are " in relation to starting to hold " the vehicle.

Amount you are taken to have paid to hold a depreciating asset or to receive a benefit
Item	In this case:	The amount is:
1	You pay an amount	The amount
.
2	You incur or increase a liability to pay an amount	The amount of the liability or increase when you incurred or increased it
.
3	All or part of a liability to pay an amount owed to you by another entity is terminated	The amount of the liability or part when it is terminated
.
4	You provide a *non-cash benefit	The *market value of the non-cash benefit when it is provided
.
5	You incur or increase a liability to provide a *non-cash benefit	The *market value of the non-cash benefit or the increase when you incurred or increased the liability
.
6	All or part of a liability to provide a *non-cash benefit (except the *depreciating asset) owed to you by another entity is terminated	The *market value of the non-cash benefit when the liability is terminated

Note 1:

Item 1 includes not only amounts actually paid but also amounts taken to have been paid. Examples include the price of the notional purchase made when trading stock is converted to a depreciating asset under section 70-110 , the cost of an asset held under a hire purchase arrangement under section 240-25 and a lessor ' s deemed purchase price when a luxury car lease ends under subsection 242-90(3) .

Note 2:

Section 230-505 provides special rules for working out the amount of consideration for an asset if the asset is a Division 230 financial arrangement or a Division 230 financial arrangement is involved in that consideration.

40-185(2)    
In applying the table in subsection (1) to a liability of yours to pay an amount or provide a ^* non-cash benefit, don ' t count any part of the liability you have already satisfied.

SECTION 40-190   Second element of cost  

40-190(1)    
The second element is worked out after you start to ^* hold the ^* depreciating asset.

40-190(2)    

The second element is:

(a) the amount you are taken to have paid under section 40-185 for each economic benefit that has contributed to bringing the asset to its present condition and location from time to time since you started to ^* hold the asset; and

(b) expenditure you incur that is reasonably attributable to a ^* balancing adjustment event occurring for the asset.

Example 1:

Andrew adds a new tray and canopy to his ute. The materials and labour that go into the addition are economic benefits that Andrew received and that contribute to the ute ' s present condition.

The payments he makes for those economic benefits are included in the second element of the ute ' s cost.

Example 2:

Leonie needed to replace one of her old depreciating assets that was fixed to her land with a new, more efficient one. Leonie paid a contractor a fee to demolish and remove the old asset. This resulted in a balancing adjustment event occurring for the old asset, and the fee forms part of the second element of the cost of the old asset that was demolished.

Note:

The second element of the cost may be modified by a later provision in this Subdivision.

40-190(2A)    

Paragraph (2)(b) does not apply to a ^* balancing adjustment event referred to in item 6 or 11 of the table in subsection 40-300(2) .

40-190(3)    
However, the second element is worked out using this table if an item in it applies. Use the last applicable item.

Second element of the cost of a depreciating asset
Item	In this case:	The second element of cost is:
1	You received the benefit under an *arrangement and:	The market value of the benefit when you received it
	(a)	there is at least one other party to the arrangement with whom you did not deal at *arm ' s length; and
	(b)	apart from this item, the second element of cost for the benefit would exceed its *market value
.
2	You received the benefit under an *arrangement that was private or domestic in nature to you	The *market value of the benefit when you received it

SECTION 40-195  

40-195   Apportionment of cost  

If you pay an amount for 2 or more things that include at least one ^* depreciating asset, or that include a contribution to bringing a depreciating asset to its present condition and location, you take into account as part of its ^* cost only that part of what you paid that is reasonably attributable to the asset.

Example:

Ian buys 3 assets (one depreciating asset and 2 other assets) under the one transaction. He pays $30,000 for the 3 assets. $25,000 of that amount is reasonably attributable to the depreciating asset.

The first element of the depreciating asset's cost is $25,000.

SECTION 40-200  

40-200   Exclusion from cost  

The ^* cost of a ^* depreciating asset that is not ^* plant does not include any amount that was incurred:

(a) before 1 July 2001; or

(b) under a contract entered into before that day.

SECTION 40-205  

40-205   Cost of a split depreciating asset  

If you split a *depreciating asset into separate assets as mentioned in section 40-115 , the first element of the cost of each of the separate assets is a reasonable proportion of the sum of these amounts:

(a) the *adjustable value of the original asset just before it was split; and

(b) the amount you are taken to have paid under section 40-185 for any economic benefit involved in splitting the original asset.

Example:

Barry owns a spectrum licence that covers 3 areas: Area A, area B and area C. The licence has an adjustable value of $160,000. He sells area A to Chris, and his costs of splitting are $10,000. Barry is taken to have split the licence into 2 assets.

On the basis of their relative market values, Barry apportions $170,000 to area A (that he disposed of) and to the licence he still holds for areas B and C.

SECTION 40-210  

40-210   Cost of merged depreciating assets  

If a ^* depreciating asset or assets that you ^* hold is or are merged into another depreciating asset as mentioned in section 40-125 , the first element of the cost of the merged asset is a reasonable proportion of the sum of:

(a) the ^* adjustable value or adjustable values of the original asset or assets just before the merger; and

(b) the amount you are taken to have paid under section 40-185 for any economic benefit involved in merging the original asset or assets.

SECTION 40-215  

40-215   Adjustment: double deduction  

Each element of the ^* cost of a ^* depreciating asset is reduced by any portion of that element of cost that you have deducted or can deduct, or that has been or will be taken into account in working out an amount you can deduct, other than under this Division, Division 41 or Division 328 .

Note:

This section does not apply to notional deductions under section 355-305 or 355-520 (about R & D) because those provisions are about deducting the asset ' s decline in value, not its cost.

40-215(2)    
(Repealed by No 93 of 2011)

SECTION 40-217  

40-217   Cost of partial continuations of mining, quarrying or prospecting rights  

If:

(a)    because of subsection 40-30(6) , this Division applies to a *mining, quarrying or prospecting right (the new right ) as if it were a continuation of another mining, quarrying or prospecting right you *held; and

(b)    the new right satisfies the condition in subparagraph (b)(ii) of that subsection because it relates to an area that is a part of the area that the other right relates to;

the first element of the cost of the new right is a reasonable proportion of the *adjustable value of other right at the time just before the other right ends.

SECTION 40-220  

40-220   Cost reduced by amounts not of a capital nature  

The ^* cost of a ^* depreciating asset is reduced by any portion of it that consists of an amount that is not of a capital nature.

SECTION 40-222  

40-222   Cost reduced by water infrastructure improvement expenditure  

The * cost of a * depreciating asset is reduced by any portion of it that consists of expenditure that you cannot deduct because of section 26-100 .

SECTION 40-225   Adjustment: acquiring a car at a discount  

40-225(1)    
You must increase the first element of the cost of a ^* car designed mainly for carrying passengers you acquire at a discount if:

(a) it is reasonable to conclude that any portion (the discount portion ) of the discount is referable to you or another entity selling another asset for less than its ^* market value; and

(b) you, or another entity, has deducted or can deduct an amount for the other asset for any income year; and

(c) the sum of the cost of the car and the discount portion exceeds the ^* car limit for the ^* financial year in which you first use the car for any purpose.

40-225(2)    
The first element of the cost of the ^* car is increased by the discount portion.

40-225(3)    
This section does not apply to a ^* car that is excluded from the ^* car limit by subsection 40-230(2) .

SECTION 40-230   Adjustment: car limit  

40-230(1)    

The first element of the cost of a ^* car designed mainly for carrying passengers (after applying section 40-225 and Subdivision 27-B ) is reduced to the ^* car limit for the ^* financial year in which you started to ^* hold it if its cost exceeds that limit.

40-230(2)    
However, the ^* car limit does not apply to a ^* car:

(a) fitted out for transporting disabled people in wheelchairs for profit; or

(b) whose first element of ^* cost exceeds that limit only because of modifications made to enable an individual with a disability to use it for a ^* taxable purpose.

40-230(3)    
The car limit for the 2000-01 ^* financial year is $55,134. The limit is indexed annually.

Note:

Subdivision 960-M shows you how to index amounts.

40-230(4)    

If you ^* hold a ^* car that is also held by one or more other entities, subsection (1) applies to the ^* cost of the car despite section 40-35 . Then section 40-35 applies to the cost of the car as reduced under subsection (1).

SECTION 40-235  

40-235   Adjustment: National Disability Insurance Scheme costs  

The *cost of a *depreciating asset does not include an amount to the extent that section 26-97 prevents the amount from being deducted (even if some other provision also prevents it being deducted).

Note:

Section 26-97 denies deductions for National Disability Insurance Scheme expenditure.

Subdivision 40-D - Balancing adjustments  

SECTION 40-280   What this Subdivision is about  

Operative provisions

SECTION 40-285   Balancing adjustments  

40-285(1)    
An amount is included in your assessable income if:

(a) a ^* balancing adjustment event occurs for a ^* depreciating asset you ^* held and:

(i) whose decline in value you worked out under Subdivision 40-B ; or

(ii) whose decline in value you would have worked out under that Subdivision if you had used the asset; and

(b) the asset ' s ^* termination value is more than its ^* adjustable value just before the event occurred.

The amount included is the difference between those amounts, and it is included for the income year in which the balancing adjustment event occurred.

Note 1:

The most common balancing adjustment event is where you sell the depreciating asset.

Note 2:

There is a different calculation if you had used different car expense methods for a car: see section 40-370 .

Note 3:

There is a modification to the calculation in the case of misappropriation by your employee or agent: see section 25-47 .

40-285(2)    
You can deduct an amount if:

(a) a ^* balancing adjustment event occurs for a ^* depreciating asset you ^* held and:

(i) whose decline in value you worked out under Subdivision 40-B ; or

(ii) whose decline in value you would have worked out under that Subdivision if you had used the asset; and

(b) the asset ' s ^* termination value is less than its ^* adjustable value just before the event occurred.

The amount you can deduct is the difference between those amounts, and you can deduct it for the income year in which the balancing adjustment event occurred.

Note 1:

There is a different calculation if you had used different car expense methods for a car: see section 40-370 .

Note 2:

The timing of a deduction allowed under this subsection is determined under Subdivision 170-D where that Subdivision applies to the balancing adjustment event.

Note 3:

There is a modification to the calculation in the case of misappropriation by your employee or agent: see section 25-47 .

40-285(3)    
The ^* adjustable value of a ^* depreciating asset you ^* hold after this section applies to it is then zero.

40-285(4)    

However, subsection (3) does not apply to a ^* depreciating asset for which you have a ^* cost under item 3, 4 or 14 of the table in subsection 40-180(2) . Instead, the asset ' s ^* opening adjustable value for the income year (the later year ) after the one in which the ^* balancing adjustment event occurred is that cost plus any amounts included in the second element of that cost after the event occurred and before the start of the later year.

Note:

Those items deal with a case where a balancing adjustment event happens even though you still hold the asset in question.

40-285(5)    

Despite subsection (1), an amount included in your assessable income under that subsection is included for the second income year after the income year in which the *balancing adjustment event occurs if:

(a) the *depreciating asset is a vessel; and

(b) you have a certificate for the vessel under Part 2 of the Shipping Reform (Tax Incentives) Act 2012 that:

(i) applies to the day that the balancing adjustment event occurs; and

(ii) is not a *shipping exempt income certificate.

Note:

An amount will not be included in your assessable income in relation to the balancing adjustment event if you choose roll-over relief under section 40-362 .

SECTION 40-290   Reduction for non-taxable use  

40-290(1)    
You must reduce the amount (the balancing adjustment amount ) included in your assessable income, or the amount you can deduct, under section 40-285 for a ^* depreciating asset if your deductions for the asset have been reduced under section 40-25 .

40-290(2)    
The reduction is:

Sum of reductions Total decline

×

Balancing adjustment amount

where:

sum of reductions
is the sum of:

(a) the reductions in your deductions for the asset under section 40-25 ; and

(b) if there has been roll-over relief for the asset under section 40-340 - the reductions in deductions for the asset for the transferor or an earlier successive transferor under section 40-25 ; and

(c) if you ^* hold the asset as the ^* legal personal representative of an individual - the reductions in deductions for the asset for the individual under section 40-25 .

total decline
is the sum of:

(a) the decline in value of the ^* depreciating asset since you started to ^* hold it; and

(b) if there has been roll-over relief for the asset under section 40-340 - the decline in value of the asset for the transferor or an earlier successive transferor; and

(c) if you ^* hold the asset as the ^* legal personal representative of an individual - the decline in value of the asset for the individual.

40-290(3)    
You must further reduce the amount included in your assessable income, or the amount you can deduct, under section 40-285 for a ^* depreciating asset (the current asset ) if:

(a) the asset ' s ^* cost (for you) was worked out under section 40-205 (Cost of a split depreciating asset) or 40-210 (Cost of merged depreciating assets); and

(b) you used the depreciating asset from which the current asset was split, or a depreciating asset that was merged into the current asset, or had it ^* installed ready for use, for a purpose other than a ^* taxable purpose.

40-290(4)    
The further reduction is such amount as is reasonable having regard to the extent of the use referred to in paragraph (3)(b).

Exception: mining, quarrying or prospecting information

40-290(5)    

This section does not apply to *mining, quarrying or prospecting information.

SECTION 40-291   Reduction for second-hand assets used in residential property  

40-291(1)    
In addition to section 40-290 , you must reduce the amount (the balancing adjustment amount ) included in your assessable income, or that you can deduct, under section 40-285 for a *depreciating asset if your deductions for the asset have been reduced under section 40-27 .

40-291(2)    
The reduction is the following, as increased under subsection (3) if applicable:

Sum of section 40-27 reductions Total decline

×

Balancing adjustment amount

where:

sum of section 40-27 reductions
is the sum of:

(a) the reductions in your deductions for the asset under section 40-27 ; and

(b) if there has been roll-over relief for the asset under section 40-340 - the reductions in deductions for the asset for the transferor or an earlier successive transferor under section 40-27 ; and

(c) if you *hold the asset as the *legal personal representative of an individual - the reductions in deductions for the asset for the individual under section 40-27 .

total decline
is the sum of:

(a) the decline in value of the *depreciating asset since you started to *hold it; and

(b) if there has been roll-over relief for the asset under section 40-340 - the decline in value of the asset for the transferor or an earlier successive transferor; and

(c) if you hold the asset as the *legal personal representative of an individual - the decline in value of the asset for the individual.

40-291(3)    
If:

(a) the *cost (for you) of the asset (the current asset ) was worked out under section 40-205 (Cost of a split depreciating asset) or 40-210 (Cost of merged depreciating assets); and

(b) you used the *depreciating asset from which the current asset was split, or a depreciating asset that was merged into the current asset, or had it *installed ready for use, for the purpose to which paragraphs 40-27(2)(a) and (b) relate;

the reduction includes an increase equal to such amount as is reasonable having regard to the extent of the use referred to in paragraph (b) of this subsection.

SECTION 40-292   Adjustments - assets used for both general tax purposes and R & D activities  

40-292(1)    
This section applies if:

(a) a *balancing adjustment event happens in an income year (the event year ) for an asset you *held and for which:

(i) you can deduct, for an income year, an amount under section 40-25 , as that section applies apart from Division 355 and former section 73BC of the Income Tax Assessment Act 1936 ; or

(ii) you could have deducted, for an income year, an amount as described in subparagraph (i) if you had used the asset; and

(b) you are entitled under section 355-100 to *tax offsets for one or more income years for deductions (the R & D deductions ) under section 355-305 for the asset.

Note 1:

This section applies in a modified way if you have deductions for the asset under former section 73BA or 73BH of the Income Tax Assessment Act 1936 (see section 40-292 of the Income Tax (Transitional Provisions) Act 1997 ).

Note 2:

To the extent that any amount is included in your assessable income under section 40-285 in relation to R & D activities, you may have an additional amount included in your assessable income (see section 355-447 ).

Note 3:

To the extent any amount that you are entitled to as a deduction under section 40-285 relates to R & D activities, you may have an additional amount you can deduct (see section 355-466 ).

Section 40-290 to be applied as if use for conducting R & D activities were use for a taxable purpose

40-292(2)    
In applying section 40-290 (including references in that section to the reduction of deductions under section 40-25 ) in relation to the asset, assume that using the asset for a *taxable purpose includes using it for the purpose of conducting the *R & D activities to which the R & D deductions relate.

40-292(3)    
(Repealed by No 92 of 2020)

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