INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)
Subject to this Act, income tax at the rates declared by the Parliament is levied, and shall be paid, for the financial year that commenced on 1 July 1965 and for each succeeding financial year, upon the taxable income derived during the year of income by any person, whether a resident or a non-resident.
17(2) [No operation from 1997/98 year onwards]This section does not apply to the 1997-98 year of income or a later year of income.
Note:
Section 4-10 of the Income Tax Assessment Act 1997 sets out how an entity works out the amount of income tax payable on its taxable income for the 1997-98 year of income and later years of income.
View history note
Hide history noteCCH Note:
Below is material repealed as inoperative in s 18 by No 101 of 2006.
Where the Commissioner has accepted returns from any person based on an accounting period as defined in the previous Act for the purposes of assessment for the last financial year to which that Act applied, that person shall be deemed to have adopted a corresponding accounting period under this section. SECTION 19 MONEY CREDITED, REINVESTED ETC, TO BE DEEMED TO BE DERIVED 19(1) [When deemed to be derived]
Income or money shall be deemed to have been derived by a person although it is not actually paid over to him but is reinvested, accumulated, capitalized, carried to any reserve, sinking fund or insurance fund however designated, or otherwise dealt with on his behalf or as he directs.
19(2) [No operation from 1997/98 year onwards]This section does not apply to the 1997-98 year of income or a later year of income.
Note:
Subsections 6-5(4) and 6-10(3) of the Income Tax Assessment Act 1997 treat an entity as having received an amount if the amount has been applied or dealt with on the entity's behalf in the 1997-98 year of income or later years of income.
Where any income is received in the year of income as a result of a transaction entered into prior to the commencement of this Act, and that income would have been assessable income under the previous Act if that Act had continued in force and had applied to the assessment of the income derived in the year of income, that income shall be assessable under this Act notwithstanding that the transaction was entered into prior to that commencement. SECTION 22A LIMITS ON APPLICATION OF CERTAIN EXEMPT INCOME PROVISIONS 22A(1) [No application 1997/98 onwards]
A provision of this Act set out in the second column of the table does not apply to an assessment for the 1997-98 year of income or a later year of income.
Note:
The last column of the table shows the provision of the Income Tax Assessment Act 1997 that applies instead.
| Old exempt income provisions that no longer apply | ||
| Item | Provision of this Act | Corresponding provision of the Income Tax Assessment Act 1997 |
| 1 | Subparagraph 23(a)(i) | section 51-15 |
| . | ||
| 2 | Paragraph 23(d) | section 50-25 |
| . | ||
| 3 | Paragraph 23(e) | items 1.1, 1.2, 1.3 and 1.4 of the table in section 50-5 |
| . | ||
| 4 | Paragraph 23(ea) | items 6.1 and 6.2 of the table in section 50-30 |
| . | ||
| 5 | Paragraph 23(eb) | item 6.3 of the table in section 50-30 |
| . | ||
| 6 | Paragraph 23(f) | section 50-15 |
| . | ||
| 7 | Paragraph 23(g) | item 1.7 of the table in section 50-5; section 50-10; and items 9.1 and 9.2 of the table in section 50-45 |
| . | ||
| 8 | Paragraph 23(h) | section 50-40 |
| . | ||
| 9 | Paragraph 23(j) | items 1.5 and 1.6 of the table in section 50-5 |
| . | ||
| 10 | Paragraph 23(jc) | item 2.2 of the table in section 51-10 |
| . | ||
| 11 | Paragraph 23(je) | item 7.1 of the table in section 50-35 |
| . | ||
| 12 | Paragraph 23(jf) | item 7.2 of the table in section 50-35 |
| . | ||
| 13 | Paragraph 23(k) | item 9.3 of the table in section 50-45 |
| . | ||
| 14 | Paragraph 23(kba) | item 5.3 of the table in section 51-30 |
| . | ||
| 15 | Paragraph 23(ke) | item 5.2 of the table in section 51-30 |
| . | ||
| 16 | Paragraph 23(l) | item 5.1 of the table in section 51-30 |
| . | ||
| 17 | Paragraph 23(s) | item 1.4 of the table in section 51-5 |
| . | ||
| 18 | Paragraph 23(sa) | item 1.3 of the table in section 51-5 |
| . | ||
| 19 | Paragraph 23(t) | items 1.1 and 1.2 of the table in section 51-5 |
| . | ||
| 20 | Paragraph 23(za) | item 2.1 of the table in section 51-10 |
A provision of this Act set out in the second column of the table does not apply to an assessment for the 1998-99 year of income or a later year of income.
Note:
The last column of the table shows the provision of the Income Tax Assessment Act 1997 that applies instead.
| Old exempt income provisions that no longer apply | ||
| Item | Provision of this Act | Corresponding provision of the Income Tax Assessment Act 1997 |
| 1 | Paragraph 23(z) | table item 2.1A in section 51-10 |
| . | ||
| 2 | Paragraph 23(zaa) | table item 2.1B in section 51-10 |
Subject to section 22A , the following income shall be exempt from income tax: (a)
[Official salary and ex-Australian income of Governor-General, Governor, representatives of other countries, etc]
the official salary of, and the income derived from sources out of Australia by, any person being -
(i) the Governor-General or the Governor of a State;
(ii) a representative in Australia of the government of any country (not being a person in relation to whom any of the provisions of the Vienna Convention on Diplomatic Relations, as having the force of law by virtue of the Diplomatic Privileges and Immunities Act 1967, apply or a person in relation to whom any of the provisions of the Vienna Convention on Consular Relations, as having the force of law by virtue of the Consular Privileges and Immunities Act 1972 , apply), or a member of the official staff of such a representative, if the representative or member, as the case may be, is not an Australian citizen and is not ordinarily resident in Australia and that country grants in relation to Australia exemptions from taxes upon income corresponding with the exemptions having effect in relation to that country by virtue of this subparagraph; or
(iii)(Omitted by No 19 of 1967)
(vi) an officer of the government of a Commonwealth country, who is temporarily in Australia to render service on behalf of that country or the Commonwealth or a State in accordance with any arrangement between the governments of that country and of the Commonwealth or of a State, if the salaries of officers of the government of the Commonwealth temporarily in that country for similar purposes in accordance with a similar arrangement are exempted from income tax by that country;
(Repealed by No 30 of 1956)
[Government remuneration to overseas expert]
the remuneration paid by the government of the Commonwealth or of a State to a non-resident for expert advice to that government or as a member of a Royal Commission;
(c)[Income of certain persons visiting Australia]
income derived -
(i)(Repealed by No 114 of 2000)
(ii)(Repealed by No 114 of 2000)
(iii) by the representative of any government, visiting Australia on behalf of that government, or by any member of the entourage of that representative, in his official capacity as such representative or member;
(iv) in the capacity of representative of any society or association established for educational, scientific, religious or philanthropic purposes, by any person visiting Australia in that capacity for the purpose of attending international or Commonwealth conferences or for the purpose of carrying on investigation or research for such society or association; and
(v) in the capacity of representative of the press outside Australia, by any person visiting Australia in that capacity for the purpose of reporting the proceedings relating to any matters referred to in the preceding subparagraphs;
(vi)(Omitted by No 107 of 1989)
[Income of local governing bodies and public authorities]
the revenue of a municipal corporation or other local governing body or of a public authority (other than an STB within the meaning of Division 1AB) constituted under any Act or State Act, or under any law in force in a Territory being part of Australia;
[Income of religious, scientific, etc, institutions]
the income of a religious, scientific, charitable or public educational institution which:
(i) has a physical presence in Australia and, to that extent, incurs its expenditure and pursues its objectives principally in Australia; or
(ii) is an institution to which a gift by a taxpayer is an allowable deduction because the institution is referred to in a table in subsection 78(4) ; or
(iii) is a prescribed institution which is located outside Australia and is exempt from income tax in the country in which it is resident; or
(iv) is a prescribed charitable or religious institution that has a physical presence in Australia but which incurs its expenditure and pursues it objects principally outside Australia;
[Income of public or non-profit hospitals]
the income of a public hospital, or of a hospital which is carried on by a society or association otherwise than for the purposes of profit or gain to the individual members of that society or association and which:
(i) has a physical presence in Australia and, to that extent, incurs its expenditure and pursues its objectives principally in Australia; or
(ii) is an institution to which a gift by a taxpayer is an allowable deduction because the institution is referred to in a table in subsection 78(4) ; or
(iii) is a prescribed institution which is located outside Australia and is exempt from income tax in the country in which it is resident;
[Income of a registered medical, health benefits or hospital benefits organisation]
the income of an organization which -
(i) is a registered health benefits organization, a registered medical benefits organization or a registered hospital benefits organization for the purposes of the National Health Act 1953 , or of that Act as amended; and
(ii) is an organization carried on otherwise than for the purposes of profit or gain to the individual members of the organization;
(Omitted by No 121 of 1997)
[Income of trade unions and employer associations]
the income of a trade union and the income of an association of employers or employees registered under any Act or State Act, or under any law in force in a Territory being part of Australia relating to the settlement of industrial disputes, and which is located in Australia and incurs its expenditure and pursues its objectives principally in Australia;
[Income of non-profit society, association or club promoting certain activities]
the income of a society, association or club that:
(i) is a friendly society, not being a friendly society dispensary; or
(ii) is established for musical purposes, or for the encouragement of music, art, science or literature; or
(iii) is established for the encouragement or promotion of a game or sport; or
(iv) is established for the encouragement or promotion of animal races; or
(v) is established for community service purposes (not being political purposes or lobbying purposes);
and is a society, association or club not carried on for the purposes of profit or gain to its individual members which:
(vi) has a physical presence in Australia and, to that extent, incurs its expenditure and pursues its objectives principally in Australia; or
(vii) is a society, association or club to which a gift by a taxpayer is an allowable deduction because the society, association or club is referred to in a table in subsection 78(4) ; or
(viii) is a prescribed society, association or club which is located outside Australia and is exempt from income tax in the country in which it is resident;
[Income of non-profit aviation, tourism, agricultural and manufacturing associations]
the income of a society or association not carried on for the purposes of profit or gain to the individual members thereof, established for the purpose of promoting the development of aviation or tourism, or of the agricultural, pastoral, horticultural, viticultural, manufacturing or industrial resources of Australia;
(Omitted by No 56 of 1994)
[Income of public charitable and scientific research funds]
the incomes of the following funds, provided that the particular fund is being applied for the purpose for which it was established -
(i) (Omitted by No 110 of 1964)
(ii) a fund established by will before 1 July 1997 for public charitable purposes; and
(iia) a fund established in Australia by will or instrument of trust for public charitable purposes which:
(A) incurs, and has at all times since 1 July 1997 incurred, its expenditure principally in Australia and pursues, and has at all times since 1 July 1997, pursued its charitable purpose solely in Australia; or
(B) is a fund to which a gift by a taxpayer is an allowable deduction because it is referred to in a table in subsection 78(4) or is an ancillary fund as defined in subsection 78(5) ; or
(C) distributes solely, and has at all times since 1 July 1997 distributed solely, to a charitable fund, foundation or institution which, to the best of the trustee's knowledge, is located in Australia and incurs its expenditure principally in Australia and pursues its objects solely in Australia; or
(D) distributes solely, and has at all times since 1 July 1997 distributed solely, to a charitable fund, foundation or institution which, to the best of the trustee's knowledge, is a charitable fund, foundation or institution to which a gift by a taxpayer is an allowable deduction because it is referred to in a table in subsection 78(4) or is an ancillary fund as defined in subsection 78(5) ; and
(iii) a fund that is located in, and which incurs its expenditure principally in, Australia and that is established for the purpose of enabling scientific research to be conducted principally in Australia by or in conjunction with a public university or public hospital; or
(iv) a scientific research fund that is referred to in subsection 78(4) or 78(5) ;
(Omitted by No 97 of 1989)
(Omitted by No 138 of 1987)
[Interest or dividends received by foreign superannuation, etc, funds]
the income of a provident, benefit, superannuation or retirement fund that, at all times during the year of income, was a foreign superannuation fund, being income that consists of -
(i) interest; or
(ii) dividends or non-share dividends paid by a company that is a resident;
[Income derived under CRAFT scheme]
income derived under the scheme known as the Commonwealth Rebate for Apprentice Full-Time Training by a person as an employer;
(Omitted by No 100 of 1991)
(Repealed by No 66 of 2003)
[Income derived by Phosphate Mining Company of Christmas Island Ltd]
income derived by the Phosphate Mining Company of Christmas Island Limited, a company incorporated in the Australian Capital Territory;
[Income of Banaba Contingency Fund]
income of The British Phosphate Commissioners Banaba Contingency Fund that was established on 1 June 1981;
[Income of Australian Film Finance Corporation]
income of Australian Film Finance Corporation Pty. Limited, being a company incorporated under the Companies Act 1981 on 12 July 1988;
(Omitted by No 165 of 1973)
(Omitted by No 165 of 1973)
(Omitted by No 165 of 1973)
(Repealed by No 118 of 1999)
[Employment incentive]
payments by way of an open employment incentive bonus under Part VIIIA of the Handicapped Persons Assistance Act 1974 ;
[Pensions, etc, paidby a State of the Federal German Republic]
pensions, annuities and allowances paid as or by way of compensation by a State of the Federal Republic of Germany under the laws of that Republic relating to compensation of victims of National Socialist persecution;
(kca)[Pensions for resistance fighters and victims of wartime persecution]
payments of pensions, annuities and allowances -
(i) that are made under a law of the Federal Republic of Germany, being payments the entitlement to which depends in whole or in part upon the treatment as a period of contribution of a period during which the recipient or another person was a victim of, or a fugitive from, National Socialist persecution;
(ii) that are made under a law of the Kingdom of the Netherlands as or by way of compensation in respect of -
(A) the persecution, during the Second World War, of the recipient or another person by forces of an enemy of the Commonwealth, being forces occupying the Kingdom of the Netherlands or the former Dutch East Indies; or
(B) a disability arising out of the participation of the recipient or another person in the Dutch resistance movement in the Kingdom of the Netherlands during its occupation during the Second World War by forces of an enemy of the Commonwealth; or
(iii) that, not being payments to which subparagraph (i) or (ii) applies, are made under a law (including a law of the Federal Republic of Germany or of the Kingdom of the Netherlands) other than a law of the Commonwealth, a State or a Territory and, in the opinion of the Commissioner, are related to, or take into account -
(A) the persecution, during the Second World War, of the recipient or another person by forces of an enemy of the Commonwealth, or flight from such persecution; or
(B) a disability arising out of the participation of the recipient or another person in a resistance movement during the Second World War against forces of an enemy of the Commonwealth;
[Pension derived by PNG resident]
income derived by way of pension by a person who is a resident of Papua New Guinea and is not a resident of Australia if income derived by way of pension by a person who is a resident of Australia and is not a resident of Papua New Guinea is exempt from income tax under the income tax laws of Papua New Guinea;
[Mortgage and Rent Relief Scheme]
payments by way of rent subsidy made by, or by an authority of, the Commonwealth, a State or a Territory pursuant to the scheme known as the Mortgage and Rent Relief Scheme, where the payment is made to a person by reason that the person pays, or is liable to pay, rent;
[Franchise fees windfall tax]
taxable amounts on which tax is imposed by the Franchise Fees Windfall Tax (Imposition) Act 1997 ;
[Commonwealth places windfall tax]
taxable amounts on which tax is imposed by the Commonwealth Places Windfall Tax (Imposition) Act 1998 ;
[Maintenance payments]
periodic payments (in this paragraph called ``maintenance payments'' ) in the nature of maintenance made by, or attributable to payments made by, a person (in this paragraph called the ``maintenance payer'' ), where:
(i) the maintenance payments are made:
(A) to a person who is or has been a spouse of the maintenance payer;
(B) to or for the benefit of a person who is or has been a child of the maintenance payer; or
(C) to or for the benefit of a person who is or has been a child of another person at a time when that other person is or was a spouse of the maintenance payer; and
(ii) the maintenance payer has not, for the purpose of making the maintenance payments or the payments to which they are attributable, as the case may be, divested himself or herself of any income producing assets or diverted from himself or herself income upon which he or she would otherwise have been liable to tax;
(Omitted by No 90 of 1952)
(Omitted by No 80 of 1975)
[Income from gold-mining]
subject to Division 16H , income, other than income from the production, treatment or sale of pyrites, derived from the working of a mining property in Australia, where the working of the mining property by the taxpayer for the period from the commencement by him of mining operations on that property to the end of the year of income has been principally for the purpose of obtaining gold, or gold and copper, and where, in the latter case, the value of the gold obtained from that property by the taxpayer in that period is not less than two-fifths of the value of the output of that property in that period, other than the value of pyrites;
[Sale, etc, by bona fide prospector of rights to mine]
subject to Division 16H , income derived by a person before the 1997-98 year of income from the sale, transfer or assignment by the person of his rights to mine, in a particular area in Australia, for gold or for any prescribed metal or prescribed mineral, where:
(i) those rights to mine were acquired by the person before 7.30 pm, by legal time in the Australian Capital Territory, on 20 August 1996; and
(ia) the income was derived before 20 August 2001; and
(ib) the person, on or before 20 August 1996 was a bona fide prospector, that is to say:
(A) a person (other than a company) who has personally carried out the whole or the major part of the field work of prospecting for gold or for the prescribed metal or prescribed mineral, as the case may be, in that area, or has contributed to the expenditure incurred in the work of prospecting and development in that area; or
(B) a company which has itself carried out the whole or the major part of such field work;
except that:
(ii) where the income was derived under a contract for the sale, transfer or assignment of the rights to mine entered into after 7.30 pm, by legal time in the Australian Capital Territory, on 20 August 1996, this paragraph only applies to so much of the income derived as would have been derived if those rights had been sold for their market value at that time; and
(iii) where, under Division 10, or under the Division for which that Division was substituted, a deduction has been allowed or is allowable from the assessable income of the taxpayer of any year of income in respect of expenditure on exploration or prospecting in a particular area, this paragraph applies to so much only of the income of the taxpayer derived from the sale, transfer or assignment by him of rights to mine in that area as exceeds the sum of any deductions so allowed or allowable; and
(iv) this paragraph does not apply in respect of a sale, transfer or assignment of any right to mine for a metal or mineral, other than gold, if -
(A) any party or parties of the one part to the sale, transfer or assignment has or have the power (whether under the terms of the transaction or otherwise) to control, directly or indirectly, the entry into the transaction by, or the activities in connexion with the mining rights of, a party of the other part; or
(B) any person or persons has or have the power (whether under the terms of the transaction or otherwise) to control, directly or indirectly, the entry into the transaction by, or the activities in connexion with the mining rights of, a party of the one part and a party of the other part to the sale, transfer or assignment;
Note:
Subdivision 330-B of the Income Tax Assessment Act 1997 gives a genuine prospector an exemption from paying income tax on income derived in the 1997-98 year of income or a later year of income from the sale, transfer or assignment of rights to mine on a mining tenement in Australia.
(Omitted by No 165 of 1973)
(Omitted by No 51 of 1986)
(Omitted by No 51 of 1986)
[Foreign source income of non-resident]
income derived by a non-resident from sources wholly out of Australia (except income that a provision of this Act includes in a taxpayer's assessable income on some basis other than having an Australian source);
[Pay, etc, of member of Reserve Forces]
in the case of a member of the Australian Naval Reserve, the Australian Army Reserve or the Australian Air Force Reserve, the pay and allowances paid to him as such a member, other than pay and allowances in respect of continuous full time service;
[Pay, etc, of member of Emergency Reserve Forces]
in the case of amember of the Naval Emergency Reserve Forces, the Regular Army Emergency Reserve or the Air Force Emergency Force, the pay and allowances paid to him as such a member (other than pay and allowances in respect of continuous full time service) and any gratuity paid to him by reason of a calling out for continuous service of, or a part of, the Forces or Force of which he is a member;
[Serviceman's allowances]
in the case of a member of the Defence Force -
(i)(Omitted by No 26 of 1974)
(ii)(Omitted by No 123 of 1978)
(iii) payments of any allowance or bounty of a prescribed kind payable to or in respect of the member; and
(iv) the value to the member of rations and quarters supplied without charge to him.
[Pay, etc, of member of Forces of other countries]
in the case of any person enlisted in or appointed to the Naval, Military or Air Forces of the Government of any country outside Australia, the pay and allowances earned in Australia by him as a member of those Forces, if the pay and allowances are not paid, given or granted by the Commonwealth;
(v)[Remuneration of visitors assisting in defence of Australia]
income derived, by any person visiting Australia, from an occupation carried on by him while in Australia, if, in the opinion of the Treasurer, the visit and occupation are primarily and principally directed to assisting the Commonwealth government in the defence of Australia and the Treasurer is satisfied that the income is not exempt from income tax in the country where the person is ordinarily resident;
(w)(Omitted by No 85 of 1959)
(Omitted by No 78 of 1988)
(Omitted by No 78 of 1988)
[Commonwealth scholarships, bursaries, etc, provided to foreign students]
income derived by way of a scholarship, bursary or other educational allowance (being a scholarship, bursary or allowance provided by the Commonwealth) by a person who -
(i) is pursuing in Australia a course of study or training; and
(z)
(ii) is in Australia for the sole purpose of pursuing that course;
[Scholarships, bursaries, etc, received by full-time students]
income derived by way of a scholarship, bursary or other educational allowance or educational assistance (other than assistance provided by the Commonwealth for secondary education or assistance provided by the Commonwealth in connection with the education of isolated children) by a student receiving full-time education at a school, college or university, but not including -
(i) an amount received by a student from a person or authority upon condition that the student will (or will if required) become, or continue to be, an employee of the person or authority;
(ia) an amount received by a student from a person or authority upon condition that the student will(or will if required) enter into, or continue to be a party to, a contract with the person or authority that is wholly or principally for the labour of the student;
(ib) an amount received by a student under a scholarship where the scholarship is not provided principally for educational purposes;
(ii) a Commonwealth education or training payment (see subsection 6(1) ); or
Note:
Although the payment is not exempt from income tax under this paragraph, the whole or part of the payment may be exempt under section 24ABZF .
(iii) an education entry payment received under Part 2.13A of the Social Security Act 1991 ;
[Commonwealth secondary education assistance]
income derived by way of payments made to or in respect of a student under a scheme for the provision by the Commonwealth of assistance for secondary education or assistance in connection with the education of isolated children, but not including -
(i) a Commonwealth education or training payment (see subsection 6(1) ); or
Note:
Although the payment is not exempt from income tax under this paragraph, the whole or part of the payment may be exempt under section 24ABZF .
(ii) an education entry payment received under Part 2.13A of the Social Security Act 1991 ;
[Grant by the Australian-American Educational Foundation]
income derived by way of payments under a grant made by the Australian-American Educational Foundation, being payments from funds made available to the Foundation under the Agreement dated 28 August 1964 between the Government of the United States of America and the Government of the Commonwealth under which the Foundation was established.
In determining for the purposes of paragraphs 23(e), (ea), (f), (g) or subparagraph 23(j)(iii) whether an institution, fund or other body incurs its expenditure or pursues its objectives principally in Australia, distributions of any amount received by the institution as a gift whether of money or other property or by way of government grant are to be disregarded.
23AAAA(2) [Amounts received from certain funds disregarded re objectives]In determining for the purposes of paragraph 23(e), (ea) or (g) whether an institution or other body incurs its expenditure or pursues its objectives principally in Australia, distributions of any amount from a fund that is referred to in subsection 78(4) and operated by the institution or other body are to be disregarded.
23AAAA(3) [Government grants disregarded re expenditure and distributions]In determining for the purposes of subparagraph 23(j)(iia) whether a fund:
(a) incurs, and has at all times since 1 July 1997 incurred, its expenditure principally in Australia and pursues, and has at all times since 1 July 1997, pursued its charitable purpose solely in Australia; or
(b) distributes solely, and has at all times since 1 July 1997 distributed solely, to a charitable fund, foundation or institution described in sub-subparagraph 23(j)(iia)(C) or (D) ;
distributions of any amount received by the fund as a gift (whether of money or property) or by way of government grant are to be disregarded.
(a) a trust (the existing trust ) covered by subparagraph 23(j)(ii) is in existence immediately before 1 July 1997; and
(b) on or after 1 July 1997 one or more assets are given to the existing trust (other than in return for valuable consideration) or become part of the trust property under a will;
then, for the purposes of subparagraphs 23(j)(ii) and (iia) , the existing trust is taken to be 2 separate trusts (the new trust and the old trust ) where:
(c) the new trust is taken to be a trust created after the start of 1 July 1997 that consists of so much of the trust property as consists of those assets together with any income derived from those assets; and
(d) the old trust is taken to be a trust created before 1 July 1997 that consists of the remainder of the trust property. 23AAAB(2) [Application of s 23(j)(iia) to new trust]
In relation to the new trust, subparagraph 23(j)(iia) applies as if the words ``in Australia'' (first occurring) were omitted from the subparagraph.
23AAAB(3) [Substituted assets]Where an asset is received in substitution for another asset, subsection (1) applies as if the substituted asset were the other asset.
Subject to subsection (2), the assessable income of a taxpayer who was employed under Part II of the Papua New Guinea (Staffing Assistance) Act 1973 and whose employment was terminated under section 13 or 14 of that Act does not include an amount received under section 19 of that Act by way of compensation, contingencies allowance, resettlement grant, fares or removal expenses.
23AAA(2) [Extent of exclusion]Subsection (1) excludes from the assessable income of a taxpayer an amount by way of compensation, contingencies allowance, resettlement grant, fares or removal expenses only to the extent that the amount is of a kind prescribed by the Papua New Guinea (Staffing Assistance) (Termination of Employment) Regulations as in force on 1 December 1973.
23AAA(3) [Termination of employment before 1 December 1973]The assessable income of a taxpayer whose employment in Papua New Guinea was terminated before 1 December 1973 and who, at the time of the termination of that employment -
(a) was an overseas officer within the meaning of the Public Service (Papua and New Guinea) Ordinance 1963 ;
(b) was, by virtue of section 4B of the Superannuation (Papua and New Guinea) Ordinance 1951 , deemed to be an employee within the meaning of section 4 of that Ordinance;
(c) was an overseas member within the meaning of the Royal Papua and New Guinea Constabulary Ordinance 1965 ; or
(d) was an officer of the Papua New Guinea Electricity Commission and was contributing to the Papua New Guinea Superannuation Fund or the Papua New Guinea Provident Account established under the Superannuation (Papua and New Guinea) Ordinance 1951 ,
does not include an amount received by the taxpayer on the termination of that employment if the amount was of a kind referred to in subsection (1).
CCH Note:
Below is material substituted or repealed as inoperative in s 23AB by No 101 of 2006.
tax deductions unapplied
, in relation to a deceased person, means the amount of:
(a) any deductions made in pursuance of Division 2 of Part VI from salary, wages or allowances derived by the deceased person in respect of United Nations service; or
(b) any amounts withheld under Part 2-5 in Schedule 1 to the Taxation Administration Act 1953 from work and income support related withholding payments and benefits derived by the deceased person in respect of United Nations service;
that have not been credited in payment of income tax and in respect of which a payment has not been made by the Commissioner.
work and income support related withholding payments and benefits
has the meaning given by subsection
221A(1)
.
For the purposes of subsection (6), United Nations service does not include any period of service in respect of which an exemption from income tax applies under section 23ADA .
(a)
SECTION 23ADA EXEMPTION OF PAY AND ALLOWANCES OF AFP MEMBERS SERVING WITH THE UNITED NATIONS TRANSITIONAL AUTHORITY IN CAMBODIA 23ADA(1) Requirements for exemption.
(ii)
(A) any rebate to which the taxpayer would be entitled under section 159K , apart from subsection 159K(1A) ;
The pay and allowances earned by a person serving as a member of the Australian Federal Police are exempt from income tax if they are earned while there is in force a certificate in writing issued by the Commissioner of Police of the Australian Federal Police to the effect that the person is on duty with the group called the United Nations Transitional Authority in Cambodia (``UNTAC'').
23ADA(2) When subsection (1) certificate in force.A certificate under subsection (1):
(a) comes into force at the later of:
(i) the time specified in the certificate (which may be before the time when it is issued, but not before 18 May 1992); and
(ii) the time when the member arrives in Cambodia for duty with UNTAC; and
(b) subject to paragraph (c), continues in force until the earliest of:
(i) the time of the person's departure from Cambodia; and
(ii) the time when, in accordance with a certificate of revocation signed by the Commissioner of Police, it ceases to be in force; and
(iii) any time prescribed by the regulations for the purposes of this subparagraph; and
(c) is in force during any period of hospital treatment resulting from an illness contracted, or injuries sustained, during the person's duty with UNTAC. 23ADA(3) Review of subsection (1) certificate.
An application may be made to the Tribunal for review of a decision of the Commissioner of Police under subsection (1).
23ADA(4) Delegation of subsection (1) power.The Commissioner of Police may, by signed instrument, delegate to a member of the Australian Federal Police the power to issue a certificate under subsection (1).
23ADA(5) Revocation certificate is legislative instrument.A certificate of revocation referred to in subparagraph (2)(b)(ii) is a legislative instrument.
This section does not apply to an assessment for the 1997-98 year of income or a later year of income.
Note:
Section 59-15 of the Income Tax Assessment Act 1997 applies instead.
In this section, ``Aboriginal'' , ``distributing body'' and ``mining payment'' have the same respective meanings as in section 128U .
23AE(2) [Mining payment made to distributing body]Where a mining payment is made to a distributing body, no part of the amount of the payment shall be included in the assessable income of that distributing body.
23AE(3) [Mining payment made direct to Aboriginal]Where a mining payment is made to, or applied for the benefit of, an Aboriginal or Aboriginals, no part of that amount shall be included in the assessable income of that Aboriginal or of those Aboriginals, as the case may be.
23AE(4) [Payments made by distributing body]Where a distributing body has received a mining payment and expends the whole or a part of the amount of that payment (which whole or part is in this subsection referred to as the ``relevant amount'' ) in making a payment to or for the benefit of an Aboriginal or Aboriginals or in making a payment to another distributing body, the relevant amount shall not be included in the assessable income of that Aboriginal or those Aboriginals or of that other distributing body, as the case may be.
23AE(5) [Mining payment made by one distributing body to another]Where a distributing body has received a mining payment and expends the whole or a part of the amount of that payment in making a payment to another distributing body, the amount of the payment received by the other distributing body shall, for the purposes of any subsequent application or applications of subsection (4) and for the purposes of any other application of this subsection, be taken to be a mining payment received by that other distributing body.
23AE(6) [Administrative costs of distributing body]The reference in subsection (4) to the expenditure by a distributing body of the whole or a part of a mining payment shall be read as not including a reference to any amount expended by the distributing body for the purposes of meeting its administrative costs (whether in respect of remuneration or allowances or otherwise).
23AE(7) [Remuneration for services, etc]This section does not operate to exclude from the assessable income of a person an amount that is paid to, or applied for the benefit of, the person if the amount is paid to, or applied for the benefit of, the person by way of remuneration or as consideration for goods or services provided by the person.
A payment is exempt from income tax if:
(a) the payment is received by an individual who is a resident of Australia; and
(b) the payment is received from a source in a foreign country; and
(c) the payment is not received directly or indirectly from an associate (within the meaning of section 318 ) of the recipient; and
(d) the payment is in connection with:
(i) any wrong or injury; or
(ii) any loss of, or damage to, property; or
that is suffered by the recipient or another individual as a result of:
(iii) any other detriment;
(iv) persecution by the National Socialist regime of Germany during the National Socialist period; or
(v) persecution by any other enemy of the Commonwealth during the Second World War; or
(vi) persecution by an enemy-associated regime during the Second World War; or
(vii) flight from persecution mentioned in subparagraph (iv), (v) or (vi); or
(viii) participation in a resistance movement during the Second World War against forces of the National Socialist regime of Germany; or
23AL(2) Duration of Second World War.
(ix) participation in a resistance movement during the Second World War against forces of any other enemy of the Commonwealth.
For the purposes of subsection (1), the duration of the Second World War includes:
(a) the period immediately before the Second World War; and
(b) the period immediately after the Second World War. 23AL(3) Enemy-associated regime.
For the purposes of subsection (1), a regime is an enemy-associated regime if, and only if, it was:
(a) in alliance with; or
(b) occupied by; or
(c) effectively controlled by; or
(d) under duress from; or
(e) surrounded by;
either or both of the following:
(f) the National Socialist regime of Germany;
(g) any other enemy of the Commonwealth. 23AL(4) Legal personal representative etc.
Subsection (1) applies to a payment received by the legal personal representative of an individual in a corresponding way to the way in which that subsection would have applied if the payment had been received by the individual.
23AL(5) [Deceased individuals]Subsection (1) applies to a payment received by:
(a) the legal personal representative of a deceased individual; or
(b) the trustee of a trust established by the will of a deceased individual;
in a corresponding way to the way in which that subsection would have applied if:
(c) the individual had not died; and
(d) the payment had been received by the individual.
Subject to Division 16H , income derived by a company from the sale of gold produced in Australia shall be exempt from income tax where:
(a) all the shareholders of the company are carrying on, or have carried on, mining operations in Australia wholly or partly for the purpose of obtaining gold;
(b) the company is, on the last day of the year of income, a company approved by the Treasurer for the purposes of this section; and
(c) the gold was purchased by the company from the Reserve Bank of Australia.
For the purposes of paragraph 23(o) , a dividend paid to a person wholly and exclusively out of income which is exempt from income tax by virtue of this section shall be deemed to be income derived by that person from the sale of gold obtained from the working of the mining property in Australia on which that person is carrying on, or has carried on, mining operations.
This section applies where, before the end of the year of income that ends on 30 June 1968 -
(a) a taxpayer being a resident of Australia or a resident of Papua New Guinea, derives income from -
(i) the working of a mining property in Australia or in Papua New Guinea for the purpose of obtaining uranium-bearing ore; or
(ii) the treatment in Australia or in Papua New Guinea of uranium-bearing ore so obtained by the taxpayer, being treatment for the purpose of recovering uranium concentrates; and
(b) the Commissioner is satisfied that all uranium recoverable from ore obtained in the year of income from the mining property is or will become (either before or after recovery) the property of the Commonwealth or has been or will be (whether before or after recovery) sold or disposed of to a person approved by the Commonwealth.
So much of the income referred to in subsection (1) as, in the opinion of the Commissioner, is attributable to uranium shall be exempt from tax.
Where a taxpayer carries on operations for purposes which include the gaining or producing of income that is exempt under this section and the gaining or producing of income that is assessable income, the deductions allowable from the assessable income of the taxpayer shall be such part only as the Commissioner considers just of the deductions allowable, but for this subsection, in relation to those operations.
Where the amount of the net assessable income of a taxpayer in relation to a film in relation to a year of income is equal to or less than the amount of the unrecouped capital expenditure of the taxpayer in relation to the film as at the end of the year of income, so much of the amount that, but for this section, would be included in the assessable income of the taxpayer of the year of income in relation to the film by virtue of subsection 26AG(2) as is equal to the amount of that net assessable income is exempt from tax.
23H(2) [Exempt income - unrecouped capital expenditure]Where the amount of the net assessable income of a taxpayer in relation to a film in relation to a year of income exceeds the amount of the unrecouped capital expenditure of the taxpayer in relation to the film as at the end of the year of income, so much of the amount that, but for this section, would be included in the assessable income of the taxpayer of the year of income in relation to the film by virtue of subsection 26AG(2) as is equal to the amount of that unrecouped capital expenditure is exempt from tax.
23H(3) [Net assessable income]For the purposes of this section, the net assessable income of a taxpayer in relation to a film in relation to a year of income is the amount, or the sum of the amounts, that, but for this section, would be included in the assessable income of the taxpayer of the year of income in relation to the film under subsection 26AG(2) reduced by any deductions allowable to the taxpayer in respect of the year of income that are deductions to which section 124ZAO applies in relation to the taxpayer in relation to the film in relation to the year of income.
23H(4) [Unrecouped capital expenditure]For the purposes of this section, the unrecouped capital expenditure of a taxpayer in relation to a film as at the end of a year of income is:
(a) in a case where the sum of:
(i) 50% of so much (if any) of the deductible moneys as are deductible 150% moneys;
(ii) 33% of so much (if any) of the deductible moneys as are deductible 133% moneys; and
exceeds the previously recouped amount - the amount of the excess; or
(iii) 20% of so much (if any) of the deductible moneys as are deductible 120% moneys,
(b) in any other case - a nil amount.
For the purposes of the application of subsection (4) in ascertaining the amount of the unrecouped capital expenditure of a taxpayer in relation to a film as at the end of a year of income (in this subsection referred to as the ``relevant year of income'' ):
"deductible moneys"
means capital moneys expended by the taxpayer, in the relevant year of income or a preceding year of income, in producing, or by way of contribution to the cost of producing, the film, being moneys in respect of which a deduction has been allowed or is allowable, or deductions have been allowed or are allowable, to the taxpayer under former section
124ZAF
or under section
124ZAFA
;
"deductible 120% moneys"
means deductible moneys in respect of which the deduction allowed or allowable under former section
124ZAF
or under section
124ZAFA
is an amount equal to 120% of the deductible moneys;
"deductible 133% moneys"
means deductible moneys in respect of which the deduction allowed or allowable under former section
124ZAF
or under section
124ZAFA
is an amount equal to 133% of the deductible moneys;
"deductible 150% moneys"
means deductible moneys in respect of which the deduction allowed or allowable under former section
124ZAF
or under section
124ZAFA
is an amount equal to 150% of the deductible moneys;
"previously recouped amount"
means the amount, or the sum of the amounts, to which section
26AG
applies in relation to the taxpayer in relation to the film in relation to any year of income preceding the relevant year of income, to the extent to which that amount or those amounts are exempt from tax by virtue of this section.
For the purposes of subsections (4) and (4A), where:
(a) a deduction has been allowed or is allowable, or deductions have been allowed or are allowable, to a taxpayer under former section 124ZAF or under section 124ZAFA in a year of income in respect of capital moneys expended by the taxpayer in producing, or by way of contribution to the cost of producing, a film; and
(b) section 26AG first applied to an amount in relation to the taxpayer in relation to the film in relation to a year of income (in this subsection referred to as the ``preceding year of income'' ) preceding the year of income referred to in paragraph (a);
the capital moneys referred to in paragraph (a) shall be taken to be capital moneys expended by the taxpayer, in the preceding year of income, in respect of which a deduction has been allowed or deductions have been allowable to the taxpayer under former section 124ZAF or section 124ZAFA of the same amount, or the same respective amounts, as the deduction or deductions referred to in paragraph (a).
For the purposes of this Act, any expenditure (not being expenditure in respect of which a deduction is allowable under section 124ZAFA ) that would, but for this section, be taken to have been incurred by a taxpayer in gaining or producing assessable income shall, notwithstanding this section, be taken to have been incurred by the taxpayer in gaining or producing assessable income.
In this section, a reference to the expenditure of capital moneys is a reference to the expenditure of moneys that is expenditure of a capital nature.
This Division (except Subdivision
BA
) does not apply to an assessment for the 1997-98 year of income or a later year of income.
Note:
For the law applying to the 1997-98 year of income and later years of income, see Divisions 52 , 53 and 55 of the Income Tax Assessment Act 1997 .
24(2) [Provisions cut off from 1998/99]Subdivision
BA
does not apply to an assessment for the 1998-99 year of income or a later year of income.
Note:
For the law applying to the 1998-99 year of income and later years of income, see Subdivision 52-F of the Income Tax Assessment Act 1997 .
In this Division:
"bereavement Subdivision"
means:
(a) any of the following Subdivisions of the Social Security Act 1991 :
(i) Subdivision A of Division 9 of Part 2.2;
(ii) Subdivision A of Division 10 of Part 2.3;
(iii) Subdivision B of Division 9 of Part 2.5;
(iv) Subdivision B of Division 9 of Part 2.6;
(v) Subdivision A of Division 10 of Part 2.9;
(vi) Subdivision A of Division 9 of Part 2.10;
(via) (Omitted by No 1 of 1996)
(vib) Subdivision AA of Division 9 of Part 2.12;
(viba) Subdivision A of Division 11 of Part 2.12A;
(vibb) Subdivision C of Division 11 of Part 2.12B;
(vic) Subdivision AA of Division 9 of Part 2.14;
(vid) Subdivision AA of Division 9 of Part 2.15;
(vii) Subdivision A of Division 10 of Part 2.16; or
(b) any of the following Subdivisions of the Veterans' Entitlements Act 1986 :
(i) Subdivision F of Division 3 of Part III;
(ii) Subdivision F of Division 4 of Part III;
(iii) Subdivision G of Division 6 of Part III;
(Subdivisions providing for bereavement payments);
(a) paragraph 82(1)(e), 146F(1)(e), 237(1)(e), 303(1)(e), 469(1)(e), 501(1)(e), 660LA(1)(f), 660XKA(1)(e), 660YKC(1)(e), 728PA(1)(f), 768A(1)(f) or 822(1)(e) of the Social Security Act 1991 ; or
(b) paragraph 36P(1)(e), 37P(1)(e) or 39R(1)(e) of the Veterans' Entitlements Act 1986 ;
(paragraphs excluding payments to a person under bereavement Subdivision if person's pension or allowance after partner's death is not less than those payments);
"exempt"
means exempt from income tax;
"not exempt"
means not exempt from income tax under this Division.
For the purposes of the application of this Division to a payment derived by a taxpayer, the payment is taken to have been derived on the day on which the payment became due.
24AA(2) [Payments derived in particular circumstances]For the purposes of the application of this Division to a payment that would have been derived by a taxpayer in particular circumstances, the payment is taken to have been derived on the day on which the payment would have become due in those circumstances.
The following is an index of payments covered by this Division:
| Type of payment | Subdivision | Sections |
| Payments under the Social Security Act 1991 | Subdivision B | 24AB-24ABZB |
| Commonwealth education or training payments | Subdivision BA | 24ABZE-24ABZF |
| Payments under the Veterans' Entitlements Act 1986 | Subdivision C | 24AC-24ACX |
| Payments under the Seamen's War Pensions and Allowances Act 1940 | Subdivision D | 24AD-24ADA |
| Payments by virtue of the Veterans' Entitlements (Transitional Provisions and Consequential Amendments) Act 1986 | Subdivision E | 24AE |
| Allowances under Part III of the Disability Services Act 1986 | Subdivision F | 24AF |
| Payments of domiciliary nursing care benefit under Part VB of the National Health Act 1953 | Subdivision G | 24AG |
| Similar Australian and United Kingdom veterans' payments | Subdivision H | 24AH |
| Wounds and disability pensions | Subdivision I | 24AI |
| Drought relief payment under the Farm Household Support Act 1992 | Subdivision IA | 24AIA-24AIB |
The following is an index of payments under the Social Security Act 1991 covered by this Subdivision:
| Type of payment | Section |
| Advance pharmaceutical supplement | 24ABDB |
| Age pension | 24ABC |
| Bereavement allowance | 24ABH |
| Carer payment | 24ABF |
| Child disability allowance | 24ABY |
| Disability support pension | 24ABD |
| Disability wage supplement | 24ABJA |
| Disaster relief payment | 24ABDC |
| Double orphan pension | 24ABZ |
| Education entry payment | 24ABNA |
| Employment entry payment | 24ABN |
| Family payment | 24ABW |
| Family payment advance | 24ABX |
| Family tax payment | 24ABXAB |
| Home child care allowance | 24ABXA |
| Maternity allowance | 24ABXAA |
| Maternity immunisation allowance | 24ABXAAA |
| Mature age allowance (Part 2.12A) | 24ABMA |
| Mature age partner allowance | 24ABMB |
| Mature age allowance (Part 2.12B) | 24ABMC |
| Mobility allowance | 24ABZA |
| Newstart allowance | 24ABM |
| Parenting allowance | 24ABXB |
| Partner allowance | 24ABPA |
| Rehabilitation allowance | 24ABK |
| Sickness allowance | 24ABO |
| Sole parent pension | 24ABG |
| Special benefit | 24ABP |
| Special needs age pension | 24ABQ |
| Special needs disability support pension | 24ABR |
| Special needs sole parent pension | 24ABT |
| Special needs widow B pension | 24ABU |
| Special needs wife pension | 24ABS |
| Telephone allowance | 24ABZAA |
| Widow allowance | 24ABJ |
| Widow B pension | 24ABI |
| Wife pension | 24ABE |
For the purpose of applying this Subdivision to a payment derived by a taxpayer, the supplementary amounts are as follows:
| Type of payment | Supplementary amounts | |
| Age pension
Disability support pension Disability wage supplement Wife pension |
(a) | so much of the payment as was included in the payment because the taxpayer or the partner of the taxpayer paid rent; |
| Carer payment | (aa) | so much of the payment as was included in the payment by way of pharmaceutical allowance; |
| Sole parent pension | (b) | (Omitted by No 169 of 1995); |
| Bereavement allowance
Widow B pension Special needs age pension |
(c) | so much of the payment as was included in the payment by way of remote area allowance; |
| Special needs disability support pension
Special needs wife pension Special needs sole parent pension Special needs widow B pension Mature age allowance (Part 2.12A) Mature age partner allowance |
(d) | so much of the payment as was included in the payment by way of incentive allowance. |
| Newstart allowance
Widow allowance Partner allowance Sickness allowance |
(a) | so much of the payment as was included in the payment because the taxpayer or the partner of the taxpayer paid rent; |
| Special benefit
Mature age allowance (Part 2.12B) Parenting allowance |
(aa) | so much of the payment as was included in the payment by way of pharmaceutical allowance; |
| (b) | (Omitted by No 69 of 1992) | |
| (c) | so much of the payment as was included in the payment by way of remote area allowance. |
A reference in subsection (1) to a partner, child or other person includes a reference to adeceased partner, deceased child or deceased other person.
24ABA(3) [Payment under s 186 of Social Security Act]For the purposes of this section, a payment under section 186 of the Social Security Act 1991 is taken to be a payment of a wife pension.
24ABA(4) [Payment under s 660XKH of Social Security Act]For the purposes of this section, a payment under section 660XKH of the Social Security Act 1991 is taken to be a payment of a mature age partner allowance.
Expressions used in this Subdivision that are also used in the Social Security Act 1991 have the same respective meanings as in that Act.
24ABB(2) [Payments under Social Security Act]Expressions used in a section in this Subdivision that relates to payments under a particular provision of the Social Security Act 1991 that are also used in that provision have the same respective meanings as in that provision.
The treatment of payments of age pension under Part 2.2 of the Social Security Act 1991 is as follows:
(a) the supplementary amount is exempt;
(b) the balance is not exempt. 24ABC(2) [Operation of subsec (1)]
Subsection (1) has effect subject to subsection (4) (which deals with taxpayers who derive bereavement lump sum payments under section 84 of the Social Security Act 1991 ).
24ABC(3) [Exempt bereavement payments]Payments under sections 83, 86 and 91 of the Social Security Act 1991 (which deal with bereavement payments) are exempt.
If a taxpayer derives a payment under section 84 of the Social Security Act 1991 :
(a) so much of the sum of that payment and other payments under the Social Security Act 1991 derived by the taxpayer on pension paydays that occurred during the bereavement lump sum period as does not exceed the tax-free amount calculated using the exempt bereavement payment calculator A in section 24ABZB is exempt; and
(b) the balance of the sum is not exempt. 24ABC(5) [Pension payments after death of partner]
(a) a taxpayer's partner died; and
(b) the taxpayer would have been qualified for payments under a bereavement Subdivision but for an exclusion provision (taxpayer's pension or allowance increased on partner's death to such an extent that no bereavement payments); and
(c) the taxpayer derives payments of age pension under Part 2.2 of the Social Security Act 1991 on one or more of the 7 pension paydays after the death;
then those payments on that payday or each of those paydays are not treated under subsection (1) but as follows:
(d) the supplementary amounts are exempt;
(e) so much of the balance as exceeds what would have been the balance (payments less supplementary amounts) if the partner had not died is exempt;
(f) the rest of the balance is not exempt.
The treatment of payments of disability support pension under Part 2.3 of the Social Security Act 1991 is as follows:
| Item | Category | Supplementary amounts | Balance of payment |
| 1 | Taxpayer not under pension age | Exempt | Not exempt |
| 2 | Taxpayer under pension age | Exempt | Exempt |
Subsection (1) has effect subject to subsection (4) (which deals with taxpayers who derive bereavement lump sum payments under section 146H of the Social Security Act 1991 ) and subsection (5) (which deals with certain payments after the death of a taxpayer's partner).
24ABD(3) [Exempt payments]Payments under sections 146G, 146K and 146Q of the Social Security Act 1991 (which deal with bereavement payments) are exempt.
24ABD(4) [Payment eligible for partial exemption only]If a taxpayer derives a payment under section 146H of the Social Security Act 1991 :
(a) so much of the sum of that payment and other payments under the Social Security Act 1991 derived by the taxpayer on pension paydays that occurred during the bereavement lump sum period as does not exceed the tax-free amount calculated using the exempt bereavement payment calculator A in section 24ABZB is exempt; and
(b) the balance of the sum is not exempt. 24ABD(5) [Disability support pensions after death of partner]
(a) a taxpayer's partner died; and
(b) the taxpayer is not under pension age; and
(c) the taxpayer would have been qualified for payments under a bereavement Subdivision but for an exclusion provision (taxpayer's pension or allowance increased on partner's death to such an extent that no bereavement payments); and
(d) the taxpayer derives payments of disability support pension under Part 2.3 of the Social Security Act 1991 on one or more of the 7 pension paydays after the death;
then those payments on that payday or each of those paydays are not treated under subsection (1) but are treated as follows:
(e) the supplementary amounts are exempt;
(f) so much of the balance as exceeds what would have been the balance (payments less supplementary amounts) if the partner had not died is exempt;
(g) the rest of the balance is not exempt.
(Repealed by No 120 of 1995)
(Repealed by No 169 of 1995)
Payments of advance pharmaceutical supplement under Part 2.23 of the Social Security Act 1991 are exempt.
Payments of disaster relief payment under Part 2.24 of the Social Security Act 1991 are exempt.
The treatment of payments of wife pension under Part 2.4 of the Social Security Act 1991 is as follows:
| Item | Category | Supplementary amounts | Balance of payment |
| 1 | Taxpayer not under pension age | Exempt | Not exempt |
| 2 | Partner not under pension age | Exempt | Not exempt |
| 3 | Both taxpayer and partner under pension age | Exempt | Exempt |
| 4 | (a) Taxpayer under pension age; and
(b) Partner deceased |
Exempt | Exempt |
Subsection (1) has effect subject to subsection (4) (which deals with taxpayers who derive bereavement lump sum payments under section 190 of the Social Security Act 1991 ).
24ABE(3) [Exempt bereavement payments]Payments under sections 189 and 191 of the Social Security Act 1991 (which deal with bereavement payments) are exempt.
If a taxpayer derives a payment under section 190 of the Social Security Act 1991 :
(a) so much of the sum of that payment and other payments under the Social Security Act 1991 derived by the taxpayer on pension paydays that occurred during the bereavement lump sum period as does not exceed the tax-free amount calculated using the exempt bereavement payment calculator A in section 24ABZB is exempt; and
(b) the balance of the sum is not exempt. 24ABE(5) [Payment under s 186 of Social Security Act]
For the purposes of this section, a payment under section 186 of the Social Security Act 1991 is taken to be a payment of a wife pension.
The treatment of payments of carer payment under Part 2.5 of the Social Security Act 1991 is as follows:
| Item | Category | Supplementary amounts | Balance of payment |
| 1 | Taxpayer not under pension age | Exempt | Not exempt |
| 2 | Severely handicapped person not under pension age | Exempt | Not exempt |
| 3 | Both taxpayer and severely handicapped person under pension age | Exempt | Exempt |
| 4 | (a) Taxpayer under pension age; and
(b) Severely handicapped person deceased |
Exempt | Exempt |
Subsection (1) has effect subject to:
(a) subsection (4) (which deals with taxpayers who derive bereavement lump sum payments under section 239 of the Social Security Act 1991 ); and
(b) subsection (4A) (which deals with taxpayers who derive bereavement lump sum payments under section 236A of the Social Security Act 1991 ).
Payments under sections 238, 241 and 246 of the Social Security Act 1991 (which deal with bereavement payments) are exempt.
If a taxpayer derives a payment under section 239 of the Social Security Act 1991 :
(a) so much of the sum of that payment and other payments under the Social Security Act 1991 derived by the taxpayer on pension paydays that occurred during the bereavement lump sum period as does not exceed the tax-free amount calculated using the exempt bereavement payment calculator A in section 24ABZB is exempt; and
(b) the balance of the sum is not exempt. 24ABF(4A) [Bereavement sums under s 236A of Social Security Act]
If a taxpayer derives a payment under section 236A of the Social Security Act 1991 :
(a) so much of the sum of that payment and other payments under the Social Security Act 1991 derived by the taxpayer on pension paydays that occurred during the bereavement lump sum period as does not exceed the tax-free amount calculated using the exempt bereavement payment calculator AA in section 24ABZC is exempt; and
(b) the balance of the sum is not exempt.
(a) a taxpayer's partner died; and
(b) the taxpayer would have been qualified for payments under a bereavement Subdivision but for an exclusion provision (taxpayer's pension or allowance increased on partner's death to such an extent that no bereavement payments); and
(c) the taxpayer derives payments of carer pension under Part 2.5 of the Social Security Act 1991 on one or more of the 7 pension paydays after the death;
then those payments on that payday or each of those paydays are not treated under subsection (1) but as follows:
(d) the supplementary amounts are exempt;
(e) so much of the balance as exceeds what would have been the balance (payments less supplementary amounts) if the partner had not died is exempt;
(f) the rest of the balance is not exempt.
Subsection (5) does not apply to a payday on which item 3 or 4 of subsection (1) applies to the taxpayer (payments exempt).
The treatment of payments of sole parent pension under Part 2.6 of the Social Security Act 1991 is as follows:
(a) the supplementary amount is exempt;
(b) the balance is not exempt. 24ABG(2) [Operation of subsec (1)]
Subsection (1) has effect subject to subsection (4) (which deals with taxpayers who derive bereavement lump sum payments under section 305 of the Social Security Act 1991 ).
24ABG(3) [Exempt bereavement payments]Payments under sections 304, 307 and 312 of the Social Security Act 1991 (which deal with bereavement payments) are exempt.
If a taxpayer derives a payment under section 305 of the Social Security Act 1991 :
(a) so much of the sum of that payment and other payments under the Social Security Act 1991 derived by the taxpayer on pension paydays that occurred during the bereavement lump sum period as does not exceed the tax-free amount calculated using the exempt bereavement payment calculator A in section 24ABZB is exempt; and
(b) the balance of the sum is not exempt. 24ABG(5) [Pension payments after death of partner]
(a) a taxpayer's partner died; and
(b) the taxpayer would have been qualified for payments under a bereavement Subdivision but for an exclusion provision (taxpayer's pension or allowance increased on partner's death to such an extent that no bereavement payments); and
(c) the taxpayer derives payments of sole parent pension under Part 2.6 of the Social Security Act 1991 on one or more of the 7 pension paydays after the death;
then those payments on that payday or each of those paydays are not treated under subsection (1) but as follows:
(d) the supplementary amounts are exempt;
(e) so much of the balance as exceeds what would have been the balance (payments less supplementary amounts) if the partner had not died is exempt;
(f) the rest of the balance is not exempt.
The treatment of payments of bereavement allowance under Part 2.7 of the Social Security Act 1991 is as follows:
(a) the supplementary amount is exempt;
(b) the balance is not exempt.
Payments under section 359 of the Social Security Act 1991 (which deal with bereavement payments) are exempt.
The treatment of payments of widow B pension under Part 2.8 of the Social Security Act 1991 is as follows:
(a) the supplementary amount is exempt;
(b)the balance is not exempt. 24ABI(2) [Exempt bereavement payments]
Payments under section 407 of the Social Security Act 1991 (which deal with bereavement payments) are exempt.
The treatment of payments of disability wage supplement under Part 2.9 of the Social Security Act 1991 is as follows:
| Item | Category | Supplementary amounts | Balance of payment |
| 1 | Taxpayer not under pension age | Exempt | Not exempt |
| 2 | Taxpayer under pension age | Exempt | Exempt |
Subsection (1) has effect subject to subsection (4) (which deals with taxpayers who derive bereavement lump sum payments under section 471 of the Social Security Act 1991 ) and subsection (5) (which deals with certain payments after the death of a taxpayer's partner).
24ABJA(3) [Exempt disability wage supplements]Payments under sections 470, 473, 475 and 476 of the Social Security Act 1991 (which deal with bereavement payments) are exempt.
24ABJA(4) [Taxpayers deriving disability lump sum wage supplements]If a taxpayer derives a payment under section 471 of the Social Security Act 1991 :
(a) so much of the sum of that payment and other payments under the Social Security Act 1991 derived by the taxpayer on pension paydays that occurred during the bereavement lump sum period as does not exceed the tax-free amount calculated using the exempt bereavement payment calculator A in section 24ABZB is exempt; and
(b) the balance of the sum is not exempt. 24ABJA(5) [Disability wage supplements after death of partner]
(a) a taxpayer's partner died; and
(b) the taxpayer is not under pension age; and
(c) the taxpayer would have been qualified for payments under a bereavement Subdivision but for an exclusion provision (taxpayer's pension or allowance increased on partner's death to such an extent that no bereavement payments); and
(d) the taxpayer derives payments of disability wage supplement under Part 2.9 of the Social Security Act 1991 on one or more of the 7 pension paydays after the death;
then those payments on that payday or each of those paydays are not treated under subsection (1) but are treated as follows:
(e) the supplementary amounts are exempt;
(f) so much of the balance as exceeds what would have been the balance (payments less supplementary amounts) if the partner had not died is exempt;
(g) the rest of the balance is not exempt.
The treatment of payments of widow allowance under Part 2.8A of the Social Security Act 1991 is as follows:
(a) the supplementary amount is exempt;
(b) the balance is not exempt.
(Omitted by No 69 of 1992)
(Repealed by No 1 of 1996)
The treatment of payments of newstart allowance under Part 2.12 of the Social Security Act 1991 is as follows:
(a) the supplementary amount is exempt;
(b) the balance is not exempt. 24ABM(2) [Bereavement payments]
Payments under section 660LB of the Social Security Act 1991 (which deals with bereavement payments) are exempt.
If a taxpayer derives a payment under section 660LC of the Social Security Act 1991 :
(a) so much of the sum of that payment and other payments under the Social Security Act 1991 derived by the taxpayer during the bereavement lump sum period as does not exceed the tax-free amount calculated using the exempt bereavement payment calculator AB in section 24ABZD is exempt; and
(b) the balance of the sum is not exempt.
(a) a taxpayer's partner died; and
(b) the taxpayer would have been qualified for payments under a bereavement Subdivision but for an exclusion provision (taxpayer's pension or allowance increased on partner's death to such an extent that no bereavement payments); and
(c) the taxpayer derives payments of newstart allowance during the bereavement period;
then those payments are not treated under subsection (1) but as follows:
(d) the supplementary amounts are exempt;
(e) so much of the balance as exceeds what would have been the balance (payments less supplementary amounts) if the partner had not died is exempt;
(f) the rest of the balance is not exempt.
The treatment of payments of mature age allowance under Part 2.12A of the Social Security Act 1991 is as follows:
(a) the supplementary amount is exempt;
(b) the balance is not exempt. 24ABMA(2) [Limitation]
Subsection (1) has effect subject to subsection (4) (which deals with taxpayers who derive bereavement lump sum payments under section 660XKC of the Social Security Act 1991 ).
24ABMA(3) [Certain bereavement payments exempt]Payments under sections 660XKB, 660XKE and 660XKG of the Social Security Act 1991 (which deal with bereavement payments) are exempt.
24ABMA(4) [Payments under s 660XKC of Social Security Act]If a taxpayer derives a payment under section 660XKC of the Social Security Act 1991 :
(a) so much of the sum of that payment and other payments under the Social Security Act 1991 derived by the taxpayer on pension paydays that occurred during the bereavement lump sum period as do not exceed the tax-free amount calculated using the exempt bereavement payment calculator A in section 24ABZB is exempt; and
(b) the balance of the sum is not exempt. 24ABMA(5) [Exception]
(a) a taxpayer's partner died; and
(b) the taxpayer would have been qualified for payments under a bereavement Subdivision but for an exclusion provision (taxpayer's pension or allowance increased on partner's death to such an extent that no bereavement payments); and
(c) the taxpayer derives payments of mature age allowance under Part 2.12A of the Social Security Act 1991 on one or more of the 7 pension paydays after the death;
then those payments on that payday or each of those paydays are not treated under subsection (1) but as follows:
(d) supplementary amounts are exempt;
(e) so much of the balance as exceeds what would have been the balance (payments less supplementary amounts) if the partner had not died is exempt;
(f) the rest of the balance is not exempt.
The treatment of payments of mature age partner allowance under Part 2.12A of the Social Security Act 1991 is as follows:
(a) the supplementary amount is exempt;
(b) the balance is not exempt.
Subsection (1) has effect subject to subsection (4) (which deals with taxpayers who derive bereavement lump sum payments under section 660XKL of the Social Security Act 1991 ).
24ABMB(3) [Bereavement payments]Payments under sections 660XKK and 660XKM of the Social Security Act 1991 (which deal with bereavement payments) are exempt.
24ABMB(4) [Payment under s 660XKL of Social Security Act]If a taxpayer derives a payment under section 660XKL of the Social Security Act 1991 :
(a) so much of the sum of that payment and other payments under the Social Security Act 1991 derived by the taxpayer on pension paydays that occurred during the bereavement lump sum period as do not exceed the tax-free amount calculated using the exempt bereavement payment calculator A in section 24ABZB is exempt; and
(b) the balance of the sum is not exempt. 24ABMB(5) [Mature age partner allowance]
For the purposes of this section, a payment under section 660XKH of the Social Security Act 1991 is taken to be a payment of a mature age partner allowance.
The treatment of payments of mature age allowance under Part 2.12B of the Social Security Act 1991 is as follows:
(a) the supplementary amount is exempt;
(b) the balance is not exempt. 24ABMC(2) [Limitation]
Subsection (1) has effect subject to subsection (4) (which deals with taxpayers who derive bereavement lump sum payments under section 660YKE of the Social Security Act 1991 ).
24ABMC(3) [Continuation of deceased partner's entitlement]Payments under section 660YKD of the Social Security Act 1991 (which deals with continued payment of deceased partner's previous entitlement) are exempt.
24ABMC(4) [Payment under s 660YKE of Social Security Act]If a taxpayer derives a payment under section 660YKE of the Social Security Act 1991 :
(a) so much of the sum of that payment and other payments under the Social Security Act 1991 derived by the taxpayer during the bereavement lump sum period as do not exceed the tax-free amount calculated using the Exempt Bereavement Payment Calculator AB in section 24ABZD is exempt; and
(b) the balance of the sum is not exempt. 24ABMC(5) [Exception]
(a) a taxpayer's partner died; and
(b) the taxpayer would have been qualified for payments under a bereavement Subdivision except for an exclusion provision (taxpayer's pension or allowance increased on partner's death to such an extent that there are no bereavement payments); and
(c) the taxpayer derives payments of mature age allowance under Part 2.12B of the Social Security Act 1991 during the bereavement period;
then those payments are not treated under subsection (1) but are treated as follows:
(d) supplementary amounts are exempt;
(e) so much of the balance as exceeds what would have been the balance (payments less supplementary amounts) if the partner had not died is exempt;
(f) the rest of the balance is not exempt.
Payments of employment entry payment under Part 2.13 of the Social Security Act 1991 are exempt.
Payments of education entry payment under Part 2.13A of the Social Security Act 1991 are not exempt.
The treatment of payments of sickness allowance under Part 2.14 of the Social Security Act 1991 is as follows:
(a) the supplementary amount is exempt;
(b) the balance is not exempt. 24ABO(2) [Bereavement payments]
Payments under section 728PB of the Social Security Act 1991 (which deals with bereavement payments) are exempt.
If a taxpayer derives a payment under section 728PC of the Social Security Act 1991 :
(a) so much of the sum of that payment and other payments under the Social Security Act 1991 derived by the taxpayer during the bereavement lump sum period as does not exceed the tax-free amount calculated using the exempt bereavement payment calculator AB in section 24ABZD is exempt; and
(b) the balance of the sum is not exempt.
(a) a taxpayer's partner died; and
(b) the taxpayer would have been qualified for payments under a bereavement Subdivision but for an exclusion provision (taxpayer's pension or allowance increased on partner's death to such an extent that no bereavement payments); and
(c) the taxpayer derives payments of sickness allowance during the bereavement period;
then those payments are not treated under subsection (1) but as follows:
(d) the supplementary amounts are exempt;
(e) so much of the balance as exceeds what would have been the balance (payments less supplementary amounts) if the partner had not died is exempt;
(f) the rest of the balance is not exempt.
The treatment of payments of special benefit under Part 2.15 of the Social Security Act 1991 is as follows:
(a) the supplementary amount is exempt;
(b) the balance is not exempt. 24ABP(2) [Bereavement payments]
Payments under section 768B of the Social Security Act 1991 (which deals with bereavement payments) are exempt.
If a taxpayer derives a payment under section 768C of the Social Security Act 1991 :
(a) so much of the sum of that payment and other payments under the Social Security Act 1991 derived by the taxpayer on pension paydays that occurred during the bereavement lump sum period as does not exceed the tax-free amount calculated using the exempt bereavement payment calculator AB in section 24ABZD is exempt; and
(b) the balance of the sum is not exempt.
(a) a taxpayer's partner died; and
(b) the taxpayer would have been qualified for payments under a bereavement Subdivision but for an exclusion provision (taxpayer's pension or allowance increased on partner's death to such an extent that no bereavement payments); and
(c) the taxpayer derives payments of special benefit during the bereavement period;
then those payments are not treated under subsection (1) but as follows:
(d) the supplementary amounts are exempt;
(e) so much of the balance as exceeds what would have been the balance (payments less supplementary amounts) if the partner had not died is exempt;
(f) the rest of the balance is not exempt.
The treatment of payments of partner allowance under Part 2.15A of the Social Security Act 1991 is as follows:
(a) the supplementary amount is exempt;
(b) the balance is not exempt. 24ABPA(2) [Bereavement payments]
Payments under section 771NW of the Social Security Act 1991 (which deals with bereavement payments) are exempt.
24ABPA(3) [Payment under s 771NX of Social Security Act]If a taxpayer derives a payment under section 771NX of the Social Security Act 1991 :
(a) so much of the sum of that payment and other payments under the Social Security Act 1991 derived by the taxpayer during the bereavement lump sum period as does not exceed the tax-free amount calculated using the exempt bereavement payment calculator AB in section 24ABZD is exempt; and
(b) the balance of the sum is not exempt.
The treatment of payments of special needs age pension under section 772 of the Social Security Act 1991 is as follows:
(a) the supplementary amount is exempt;
(b) the balance is not exempt. 24ABQ(2) [Operation of subsec (1)]
Subsection (1) has effect subject to section 24ABV (which deals with bereavement payments).
24ABQ(3) [Pension payments after death of partner](a) a taxpayer's partner died; and
(b) the taxpayer would have been qualified for payments under a bereavement Subdivision but for an exclusion provision (taxpayer's pension or allowance increased on partner's death to such an extent that no bereavement payments); and
(c) the taxpayer derives payments of special needs age pension under section 772 of the Social Security Act 1991 on one or more of the 7 pension paydays after the death;
then those payments on that payday or each of those paydays are not treated under subsection (1) but as follows:
(d) the supplementary amounts are exempt;
(e) so much of the balance as exceeds what would have been the balance (payments less supplementary amounts) if the partner had not died is exempt;
(f) the rest of the balance is not exempt.
The treatment of payments of special needs disability support pension under section 773 of the Social Security Act 1991 is as follows:
| Item | Category | Supplementary amounts | Balance of payment |
| 1 | Taxpayer not under pension age | Exempt | Not exempt |
| 2 | Taxpayer under pension age | Exempt | Exempt |
Subsection (1) has effect subject to section 24ABV (which deals with bereavement payments) and subsection (3) of this section (which deals with certain payments after the death of the taxpayer's partner).
24ABR(3) [Disability support pension payments after death of partner](a) a taxpayer's partner died; and
(b) the taxpayer is not under pension age; and
(c) the taxpayer would have been qualified for payments under a bereavement Subdivision but for an exclusion provision (taxpayer's pension or allowance increased on partner's death to such an extent that no bereavement payments); and
(d) the taxpayer derives payments of special needs disability support pension under section 773 of the Social Security Act 1991 on one or more of the 7 pension paydays after the death;
then those payments on that payday or each of those paydays are not treated under subsection (1) but are treated as follows:
(e) the supplementary amounts are exempt;
(f) so much of the balance as exceeds what would have been the balance (payments less supplementary amounts) if the partner had not died is exempt;
(g) the rest of the balance is not exempt.
(Repealed by No 120 of 1995)
The treatment of payments of special needs wife pension under section 774 of the Social Security Act 1991 is as follows:
| Item | Category | Supplementary amounts | Balance of payment |
| 1 | Taxpayer not under pension age | Exempt | Not exempt |
| 2 | Partner not under pension age | Exempt | Not exempt |
| 3 | Both taxpayer and partner under pension age | Exempt | Exempt |
| 4 | (a) Taxpayer under pension age; and
(b) Partner deceased |
Exempt | Exempt |
Subsection (1) has effect subject to section 24ABV (which deals with bereavement payments).
24ABS(3) [Pension payments after death of partner](a) a taxpayer's partner died; and
(b) the taxpayer would have been qualified for payments under a bereavement Subdivision but for an exclusion provision (taxpayer's pension or allowance increased on partner's death to such an extent that no bereavement payments); and
(c) the taxpayer derives payments of special needs wife pension under section 774 of the Social Security Act 1991 on one or more of the 7 pension paydays after the death;
then those payments on that payday or each of those paydays are not treated under that subsection but as follows:
(d) the supplementary amounts are exempt;
(e) so much of the balance as exceeds what would have been the balance (payments less supplementary amounts) if the partner had not died is exempt;
(f) the rest of the balance is not exempt.
Subsection (3) does not apply to a payday on which item 4 of subsection (1) applies to the taxpayer (payments exempt).
The treatment of payments of special needs sole parent pension under section 775 of the Social Security Act 1991 is as follows:
(a) the supplementary amount is exempt;
(b) the balance is not exempt.
The treatment of payments of special needs widow B pension under section 778 of the Social Security Act 1991 is as follows:
(a) the supplementary amount is exempt;
(b) the balance is not exempt.
Payments under sections 823, 826 and 830 of the Social Security Act 1991 (which deal with bereavement payments) are exempt.
24ABV(2) [Taxpayers deriving bereavement lump sum payments]If a taxpayer derives a payment under section 824 of the Social Security Act 1991 :
(a) so much of the sum of that payment and other payments under the Social Security Act 1991 derived by the taxpayer on pension paydays that occurred during the bereavement lump sum period as does not exceed the tax-free amount calculated using the exempt bereavement payment calculator A in section 24ABZB is exempt; and
(b) the balance of the sum is not exempt.
Payments of family payment under Part 2.17, or the Family Payment Rate Calculator in section 1069, of the Social Security Act 1991 are exempt.
Payments of family payment advance under Part 2.17, or the Family Payment Rate Calculator in section 1069 , of the Social Security Act 1991 , are exempt.
Payments of maternity allowance under Part 2.17A of the Social Security Act 1991 are exempt.
Payments of maternity immunisation allowance under Part 2.17A of the Social Security Act 1991 are exempt.
Payments of family tax payment under Part 2.17AA, or the Family Tax Payment Rate Calculator in section 1070, of the Social Security Act 1991 are exempt.
Payments of home child care allowance under Part 2.18 of the Social Security Act 1991 , as in force immediately before the commencement of Schedule 1 to the Social Security (Parenting Allowance and Other Measures) Legislation Amendment Act 1994 , are exempt.
Payments of non-benefit parenting allowance under Part 2.18 of the Social Security Act 1991 are exempt.
24ABXB(2) [Treatment of payments]The treatment of payments of benefit parenting allowance under Part 2.18 of the Social Security Act 1991 is as follows:
(a) the supplementary amount of each payment is exempt;
(b) so much of each payment as:
(i) was included in the payment by way of provisional rate of parenting allowance in accordance with the Method statement in point 1068A-A3 of the Social Security Act 1991 ; and
is exempt;
(ii) does not exceed the maximum basic component of parenting allowance;
(c) the balance of each payment is not exempt. 24ABXB(3) [Bereavement payments and parenting allowance]
Payments under sections 951Y and 951ZB of the Social Security Act 1991 (which deal with bereavement payments) are exempt.
24ABXB(4) [Where lump sum payable]If a taxpayer derives a payment under section 951ZC of the Social Security Act 1991 :
(a) so much of the sum of that payment and other payments under the Social Security Act 1991 derived by the taxpayer during the bereavement lump sum period as does not exceed the tax-free amount calculated using the exempt bereavement payment calculator AB in section 24ABZD is exempt; and
(b) the balance of the sum is not exempt.
Payments of child disability allowance under Part 2.19 of the Social Security Act 1991 are exempt.
24ABY(2) [Exempt bereavement payments]Payments under sections 992 and 992A of the Social Security Act 1991 (which deals with bereavement payments) are exempt.
Payments of double orphan pension under Part 2.20 of the Social Security Act 1991 are exempt.
24ABZ(2) [Exempt bereavement payments]Payments under sections 1034 and 1034A of the Social Security Act 1991 (which deals with bereavement payments) are exempt.
Payments of mobility allowance under Part 2.21 of the Social Security Act 1991 are exempt.
Payments of telephone allowance under Part 2.25 of the Social Security Act 1991 are exempt.
The exempt bereavement payment calculator A is as follows:
| EXEMPT BEREAVEMENT PAYMENT CALCULATOR A | ||
| This is how to work out the tax-free amount: | ||
| Method statement | ||
| Step 1. | Work out the pension paydays that are in the bereavement lump sum period: the result is called the relevant pension paydays . | |
| Step 2. | Work out the amount of payments under the Social Security Act 1991 that would have been derived by the taxpayer on each of the relevant pension paydays and which would have been exempt if: | |
| (a) | the partner had not died; and | |
| (b) | the partner had been under pension age; and | |
| (c) | if immediately before the partner's death the couple were an illness separated couple or a respite care couple - they were not such a couple; | |
| the result for each relevant pension payday is called the pension payday exempt notional taxpayer amount . | ||
| Step 3. | Sum the pension payday exempt notional taxpayer amounts: the result is called the exempt notional taxpayer amount . | |
| Step 4. | Work out the amount of payments under the Social Security Act 1991 or Part III of the Veterans' Entitlements Act 1986 that would have been derived by the partner on each of the relevant pension paydays if: | |
| (a) | the partner had not died; and | |
| (b) | if immediately before the partner's death the couple were an illness separated couple or a respite care couple - they were not such a couple; | |
| the result for each relevant pension payday is called the pension payday notional partner amount . | ||
| Step 5. | Sum the pension payday notional partner amounts: the result is called the notional partner amount . | |
| Step 6. | Sum the exempt notional taxpayer amount and the notional partner amount: the result is the tax-free amount . |
The exempt bereavement payment calculator AA is as follows:
| EXEMPT BEREAVEMENT PAYMENT CALCULATOR AA | ||
| This is how to work out the tax-free amount: | ||
| Method statement | ||
| Step 1: | Work out the amount of payments under the Social Security Act 1991 that would have been derived by the taxpayer during the bereavement lump sum period and that would have been exempt if: | |
| (a) | the severely handicapped person had not died; and | |
| (b) | the severely handicapped person had been under pension age; | |
| the result is called the notional exempt amount for the taxpayer . | ||
| Step 2: | Work out the amount of payments under the Social Security Act 1991 that would have been derived by the severely handicapped person during the bereavement lump sum period if the severely handicapped person had not died: the result is called the notional amount for the caree . | |
| Step 3: | Add up the notional exempt amount for the taxpayer and the notional amount for the caree: the result is the tax-free amount . |
The exempt bereavement payment calculator AB is as follows:
| EXEMPT BEREAVEMENT PAYMENT CALCULATOR AB | ||
| This is how to work out the tax-free amount: | ||
| Method statement | ||
| Step 1: | Work out the amount of payments under the Social Security Act 1991 that would have been derived by the taxpayer during the bereavement lump sum period and that would have been exempt if: | |
| (a) | the partner had not died; and | |
| (b) | the partner had been under pension age; and | |
| (c) | if immediately before the partner's death the couple were an illness separated couple or a respite care couple - they were not such a couple; | |
| the result is called the notional exempt amount for the taxpayer . | ||
| Step 2: | Work out the amount of payments (if any) under the Social Security Act 1991 that would have been derived by the partner during the bereavement lump sum period if the partner had not died; the result is called the notional amount for the partner . | |
| Step 3: | Add up the notional exempt amount for the taxpayer and the notional partner amount: the result is the tax-free amount . |
For the purpose of applying this Subdivision to a Commonwealth education or training payment (see subsection 6(1) ) derived by a taxpayer, there are 2 kinds of supplementary amount.
24ABZE(2) [Amounts to assist with or reimburse costs]One kind of supplementary amount is so much of the payment as was included in the payment to assist with, or to reimburse, the costs of any one or more of the following:
(a) rent;
(b) living in a remote area;
(c) commencing employment;
(d) travel to, or participation in, courses, interviews, education or training;
(e) a child or children wholly or substantially dependent on the taxpayer;
(f) telephone bills;
(g) living away from the taxpayer's usual residence;
(h) maintaining the taxpayer's usual residence while living away from that residence;
(i) accommodation, books or equipment;
(j) discharging a HEC assessment debt (within the meaning of Chapter 4 of the Higher Education Funding Act 1988 );
(ja) discharging a compulsory repayment amount (within the meaning of the Higher Education Support Act 2003 );
(k) transport in travelling to undertake education or training, or to visit the taxpayer's usual residence when undertaking education or training away from that residence;
(l) if the taxpayer is disabled - acquiring any special equipment, services or transport as a result of the disability;
(m) anything that would otherwise prevent the taxpayer from beginning, continuing or completing any education or training.
The other kind of supplementary amount is so much of the payment as was included in the payment by way of pharmaceutical allowance.
24ABZE(4)(Repealed by No 45 of 1998) 24ABZE(5)
(Repealed by No 45 of 1998)
The treatment of a Commonwealth education or training payment is as follows:
(a) the supplementary amounts are exempt;
(b) the balance is not exempt. 24ABZF(2)
(Repealed by No 45 of 1998)
(Repealed by No 45 of 1998)
(Repealed by No 45 of 1998)
(Repealed by No 45 of 1998)
The following is an index of payments under the Veterans' Entitlements Act 1986 covered by this Subdivision:
| Type of payment | Section |
| Age service pension | 24ACE |
| Attendant allowance | 24ACK |
| Carer service pension | 24ACH |
| Clothing allowance | 24ACJ |
| Decoration allowance | 24ACO |
| Income support supplement | 24ACHA |
| Invalidity service pension | 24ACF |
| Loss of earnings allowance | 24ACU |
| Partner service pension | 24ACG |
| Pharmaceutical allowance | 24ACW |
| Recreation transport allowance | 24ACQ |
| Section 13 pension | 24ACD |
| Section 70 pension | 24ACI |
| Section 98A bereavement payment | 24ACL |
| Section 99 funeral benefit | 24ACM |
| Section 100 funeral benefit | 24ACN |
| Special assistance | 24ACS |
| Telephone allowance | 24ACWA |
| Temporary incapacity allowance | 24ACT |
| Travelling expenses | 24ACV |
| Vehicle Assistance Scheme | 24ACR |
| Victoria Cross allowance | 24ACP |
For the purpose of applying this Subdivision to a payment derived by a taxpayer, the supplementary amounts are as follows:
(a) so much of the payment as was included in the payment because the taxpayer or the partner of the taxpayer paid rent; and
(aa) (Repealed by No 114 of 1997)
(b) so much of the payment as represents an increase in the rate of the payment concerned that is calculated by reference to another person or other persons; and
(c) so much of the payment as was included in the payment by way of remote area allowance.
(Omitted by No 146 of 1995)
Expressions (other than pension age ) used in this Subdivision that are also used in the Veterans' Entitlements Act 1986 have the same respective meanings as in that Act.
24ACB(2) [Payments under Veterans' Entitlements Act]Expressions (other than pension age ) used in a section in this Subdivision that relates to payments under a particular provision of the Veterans' Entitlements Act 1986 that are also used in that provision have the same respective meanings as in that provision.
In this Subdivision:
pension age
has the same meaning as in the
Social Security Act 1991
.
Payments of pension under section 13 of the Veterans' Entitlements Act 1986 are exempt.
The treatment of payments of age service pension under Division 3 of Part III of the Veterans' Entitlements Act 1986 is as follows:
(a) the supplementary amount is exempt;
(b) a bereavement payment is exempt;
(c) the balance is not exempt.
The treatment of payments of invalidity service pension under Division 3 of Part III of the Veterans' Entitlements Act 1986 is as set out in this section:
24ACF(2) [Supplementary amount]The supplementary amount is exempt.
24ACF(3) [Bereavement payment]A bereavement payment is exempt.
24ACF(4) [Balance of payment]The balance is treated in accordance with the following Table:
| Item | Category | Balance of payment |
| 1 | Taxpayer not under pension age | Not exempt |
| 2 | Taxpayer under pension age | Exempt |
The treatment of payments of partner service pension under Division 5 of Part III of the Veterans' Entitlements Act 1986 is as set out in this section.
24ACG(2) [Supplementary amount]The supplementary amount is exempt.
24ACG(3) [Bereavement payment]A bereavement payment is exempt.
24ACG(4) [Balance of payment]The balance is treated in accordance with the following Table:
| Item | Category | Balance of payment | |
| 1 | (a) | Both taxpayer and veteran under pension age; and | Exempt |
| (b) | Veteran receiving invalidity service pension | ||
| 2 | (a) | Taxpayer under pension age; and | Exempt |
| (b) | Veteran deceased; and | ||
| (c) | Veteran was receiving an invalidity service pension immediately before death | ||
| 3 | Neither of the categories in items 1 and 2 applies | Not exempt |
The treatment of payments of carer service pension under Division 6 of Part III of the Veterans' Entitlements Act 1986 is as set out in this section.
24ACH(2) [Supplementary amount]The supplementary amount is exempt.
24ACH(3) [Bereavement payment]A bereavement payment is exempt.
24ACH(4) [Balance of payment]The balance is treated in accordance with the following Table:
| Item | Category | Balance of payment | |
| 1 | (a) | Both taxpayer and veteran under pension age; and | Exempt |
| (b) | Veteran receiving invalidity service pension | ||
| 2 | (a) | Taxpayer under pension age; and | Exempt |
| (b) | Veteran deceased; and | ||
| (c) | Veteran was receiving an invalidity service pension immediately before death | ||
| 3 | Neither of the categories in items 1 and 2 applies | Not exempt |
The treatment of payments of income support supplement under Part IIIA of the Veterans' Entitlements Act 1986 is as set out in this section.
24ACHA(2) [Supplementary amount]The supplementary amount is exempt.
24ACHA(3) [Bereavement payment]A bereavement payment is exempt.
24ACHA(4) [Balance of payment]The balance is treated in accordance with the following Table:
| Item | Category | Balance of payment | ||
| 1 | Taxpayer is: | Exempt | ||
| (a) | permanently incapacitated for work; and | |||
| (b) | under pension age | |||
| 2 | (a) | Taxpayer personally provides constant care for a severely handicapped person; and | Exempt | |
| (b) | Both taxpayer and severely handicapped person are under pension age | |||
| 3 | (a) | Either of the following subparagraphs applies; | Exempt | |
| (i) | taxpayer's partner is an invalidity service pensioner or a disability support pensioner; | |||
| (ii) | taxpayer's partner is receiving income support supplement and is permanently incapacitated for work; and | |||
| (b) | Both taxpayer and taxpayer's partner are under pension age | |||
| 4 | None of the categories in items 1, 2 and 3 applies | Not exempt |
Payments of pension under section 70 of the Veterans' Entitlements Act 1986 are exempt.
Payments of clothing allowance under section 97 of the Veterans' Entitlements Act 1986 are exempt.
Payments of attendant allowance under section 98 of the Veterans' Entitlements Act 1986 are exempt.
Payments under section 98A of the Veterans' Entitlements Act 1986 are exempt.
Payments under section 99 of the Veterans' Entitlements Act 1986 are exempt.
Payments under section 100 of the Veterans' Entitlements Act 1986 are exempt.
Payments of decoration allowance under section 102 of the Veterans' Entitlements Act 1986 are exempt.
Payments of Victoria Cross allowance under section 103 of the Veterans' Entitlements Act 1986 are exempt.
Payments of recreation transport allowance under section 104 of the Veterans' Entitlements Act 1986 are exempt.
Payments under the Vehicle Assistance Scheme established under section 105 of the Veterans' Entitlements Act 1986 are exempt.
Payments of special assistance under section 106 of the Veterans' Entitlements Act 1986 are exempt.
Payments of temporary incapacity allowance under section 107 of the Veterans' Entitlements Act 1986 are exempt.
Payments of loss of earnings allowance under section 108 of the Veterans' Entitlements Act 1986 are exempt.
Payments of travelling expenses under section 110 of the Veterans' Entitlements Act 1986 are exempt.
Payments under Part VIIA of the Veterans' Entitlements Act 1986 are exempt.
Payments under Part VIIB of the Veterans' Entitlements Act 1986 are exempt.
(Repealed by No 146 of 1995)
The treatment of a payment made in accordance with Table A in Schedule 3 to the Repatriation Act 1920 (including that Table as applying by virtue of the Repatriation (Far East Strategic Reserve) Act 1956, the Repatriation (Special Overseas Service) Act 1962 or the Interim Forces Benefits Act 1947) , as in force by virtue of subsection 4(6) of the Veterans' Entitlements (Transitional Provisions and Consequential Amendments) Act 1986 , to the extent that the payment:
(a) is payable because the taxpayer is either:
(i) the mother of a deceased member of the Forces (being a woman who is a widow or is divorced or has been deserted by her husband) within the meaning of the Act concerned or the relevant Part of that Act; or
(ii) a parent of a deceased member of the Forces (other than a woman who is a widow or is divorced or who has been deserted by her husband) within the meaning of the Act concerned or the relevant Part of that Act, being a parent who:
(A) in the case of a woman - is not under the age of 60 years; or
(B) in the case of a man - is not under the age of 65 years; and
(b) is payable in the circumstances constituting a prescribed case for the purposes of that Table; and
(c) exceeds the amount that would have been assessed if the requirement in that Table to have regard to the maximum rate of age pension under subsection 33(1) of the Social Security Act 1947 were disregarded;
is as follows:
(d) so much of the payment as was included in the payment because the taxpayeror the spouse of the taxpayer paid rent is exempt;
(e) so much of the payment, being a payment of a pension, allowance or benefit, as represents an increase in the rate of that pension, allowance or benefit that is calculated by reference to another person or other persons is exempt;
(f) so much of the payment as was included in the payment by way of remote area allowance is exempt;
(g) the balance of the payment is not exempt. 24AE(2) [Exempt other payments]
Other payments payable by virtue of subsection 4(6) of the Veterans' Entitlements (Transitional Provisions and Consequential Amendments) Act 1986 are exempt.
Payments of allowances under Part III of the Disability Services Act 1986 are exempt.
Payments of domiciliary nursing care benefit under Part VB of the National Health Act 1953 are exempt.
Payments of pensions and allowances, and other payments, made by the Government of Australia or the Government of the United Kingdom, are exempt if they are of a similar nature to payments that are exempt under Subdivision C, D or E.
Payments are exempt if:
(a) the payments are of wounds and disability pensions of the kinds specified in subsection 315(2) of the Income and Corporation Taxes Act 1988 of the United Kingdom; and
(b) the payments are not of a similar nature to payments that are not exempt under other Subdivisions of this Division.
For the purpose of applying this Subdivision to an instalment of drought relief payment under the Farm Household Support Act 1992 derived by a taxpayer, the supplementary amounts are as follows:
(a) so much of the instalment as was included in the instalment because the taxpayer or the partner of the taxpayer paid rent;
(b) so much of the instalment as is equal to the amount (if any) that would have been included in the instalment by way of remote area allowance if it were assumed that the instalment had been an instalment of newstart allowance under the Social Security Act 1991 instead of an instalment of drought relief payment;
(c) so much of the instalment as was included in the instalment because of paragraph 24A(1)(c) of the Farm Household Support Act 1992 .
A reference in subsection (1) to a partner includes a reference to a deceased partner.
24AIA(3) [``partner'']In this section:
"partner"
has the same meaning as in the
Farm Household Support Act 1992
.
The treatment of instalments of drought relief payment under the Farm Household Support Act 1992 is as follows:
(a) the supplementary amount is exempt;
(b) the balance is not exempt. 24AIB(2) [Exempt payments]
Payments under paragraph 49(b) of the Farm Household Support Act 1992 are exempt to the extent to which they are attributable to an instalment of drought relief payment under that Act.
An amount of farm household support that was, before or at the commencement of this section, converted into a grant under the Farm Household Support Act 1992 is exempt, and is taken always to have been exempt.
24AIC(2) [No application from 1997/98 year onwards]Subsection (1) does not apply to the 1997-98 year of income or any subsequent year of income.
Note:
Section 53-25 of the Income Tax Assessment Act 1997 applies instead.
The following payments are not covered by this Division:
(a) any payment made under the Superannuation Act 1922 ;
(b) any payment of a pension or benefit to which subsection 8(1) of the Superannuation Act 1948 applies;
(c) any payment of a pension made in accordance with section 9 or 14 of the Superannuation Act (No 2) 1956 ;
(d) any payment of a pension made under section 10 of the Superannuation (Pension Increases) Act 1971 ;
(e) any payment made under the Superannuation Act 1976 ;
(f) any payment made under the Defence Forces Retirement Benefits Act 1948 ;
(g) any payment made under the Defence Forces Retirement and Death Benefits Act 1973 ;
(h) any payment made under the Parliamentary Contributory Superannuation Act 1948 ;
(i) any payment made under the Papua New Guinea (Staffing Assistance) Act 1973 ;
(j) any payment made under a scheme established by or under the Superannuation Act 1990 ;
(k) any payment made under a scheme established by or under the Military Superannuation and Benefits Act 1991 ;
(l) any payment made under a scheme established by or under the Superannuation Act 2005 .
Subsection (1) has effect in spite of anything contained in any other provision of this Division.
CCH Note:
Below is material substituted in s 24B by No 101 of 2006.
prescribed Territory
means Norfolk Island, the Territory of Cocos (Keeling) Islands or the Territory of Christmas Island.
This Division applies to assessments in respect of income of the year of income commencing on 1 July 1985 and of all subsequent years of income preceding the year of income commencing on 1 July 1991 as if -
(a) the definition of prescribed Territory in subsection 24B(1) were omitted and the following definition were substituted:
`` prescribed Territory means Norfolk Island or the Territory of Cocos (Keeling) Islands.''; and
(b) subsection 24L(5) were omitted and the following subsection were substituted:
``(5) In subsections (1), (3), (4), (4A), (4B) and (4C), Australia , resident and non-resident have the meanings that those expressions would have if subsection 7A(2) did not refer to Norfolk Island or the Territory of Cocos (Keeling) Islands.''
This Division applies to assessments in respect of income of the 1991-92 year of income and of all subsequent years of income as if:
(a) the definition of prescribed Territory in subsection 24B(1) were omitted and the following definition were substituted:
`` prescribed Territory means Norfolk Island.''; and
(b) subsection 24L(5) were omitted and the following subsection were substituted:
``(5) In subsections (1), (3), (4), (4A), (4B) and (4C), Australia , resident and non-resident have the meanings that those expressions would have if subsection 7A(2) did not refer to Norfolk Island.''.
CCH Note:
Below is material substituted in s 24L by No 101 of 2006.
In subsections (1), (3), (4), (4A), (4B) and (4C), ``Australia'' , ``resident'' and ``non-resident'' have the meanings that those expressions would have if subsection 7A(2) had not been enacted.
In this section -
prescribed company
means a company that would be a Territory company in relation to the period of 6 months ending on 30 June 1974 if that period were a year of income.
year of income to which this section applies
means the year of income ending on 30 June 1974 or either of the 2 immediately preceding years of income.
Where a prescribed company is not a Territory company in relation to a year of income to which this section applies, the Commissioner may, if he considers it reasonable in the circumstances to do so, treat the company, for the purposes of sections 24F , 24G , 24J and 24L , as being a Territory company in relation to that year of income, but, in that case, so much only of any income derived by the company during that year of income that is income to which section 24F or 24G applies is exempt from income tax as the Commissioner considers reasonable having regard to the extent to which Territory residents were the beneficial owners of shares in the company at the time when the income was derived.
CCH Note:
Below is material substituted or repealed as inoperative in s 24P by No 101 of 2006.
(b) if the asset had been disposed of by the taxpayer on 1 July 1991, Part IIIA would, or would, apart from section 160ZZF and Divisions 5A , 7A and 17 of that Part, have applied in respect of that disposal; 24P(7)
An expression used in this section and in PartIIIA has the same meaning in this section as it has in that Part. Division 2 - Income Subdivision A - Assessable income generally SECTION 25 GROSS INCOME FROM CERTAIN SOURCES 25(1A) [No operation from 1997/98 year onwards]
Subsection (1) does not apply to the 1997-98 year of income or a later year of income.
Note:
Sections 6-5 , 6-10 and 6-15 of the Income Tax Assessment Act 1997 set out rules for working out what amounts are included in an entity's assessable income for the 1997-98 year of income and later years of income.
The assessable income of a taxpayer shall include -
(a) where the taxpayer is a resident -
the gross income derived directly or indirectly from all sources whether in or out of Australia; and
(b) where the taxpayer is a non-resident -
the gross income derived directly or indirectly from all sources in Australia,
which is not exempt income, an amount to which section 26AC or 26AD applies or an eligible termination payment within the meaning of Subdivision AA .
Interest (except interest paid outside Australia to a non-resident on debentures issued outside Australia by a company or an eligible unit trust within the meaning of section 128FA ) upon money secured by mortgage of any property in Australia shall be deemed to be derived from a source in Australia.
A paragraph of section 26 does not apply to what is shown in the following table.
Note:
The last column of the table shows the provision of the Income Tax Assessment Act 1997 that applies instead.
| Limits on application of section 26 | ||||
| Item | Paragraph of section 26 | What the paragraph does not apply to | Provision of Income Tax Assessment Act 1997 that applies instead | |
| 1 | 26(eb) | Amount paid in the 1997 - 98 year of income or a later year of income (regardless of when the agreement, arrangement or understanding that was the basis for the payment was entered into) | section 15-3 | |
| . | ||||
| 2 | 26(ec) | Amount received in the 1997 - 98 year of income or a later year of income (regardless of when the leave accrued that the amount relates to) | section 15-5 | |
| . | ||||
| 3 | 26(f) | Amount received in the 1997 - 98 year of income or a later year of income | section 15-20 | |
| . | ||||
| 4 | 26(g) | Bounty or subsidy received in the 1997 - 98 year of income or a later year of income | section 15-10 | |
| . | ||||
| 5 | 26(h) | Amount received in the 1997 - 98 year of income or a later year of income | section 6-5 | |
| . | ||||
| • | section 15-30 (for loss of assessable income) | |||
| . | ||||
| • | Subdivision 20-A (for deductible loss or outgoing) | |||
| 6 | 26(j) | Amount received in the 1997 - 98 year of income or a later year of income (regardless of when the loss occurred, or the loss or outgoing was incurred, that led to payment of the amount) | • | section 70-115 (for loss of trading stock) |
| . | ||||
| 7 | 26(ja) | Amount received in the 1997 - 98 year of income or a later year of income | none | |
| . | ||||
| 8 | 26(jb) | Amount of interest paid or applied in the 1997 - 98 year of income or a later year of income (regardless of when the interest became payable) | section 15-35 | |
| . | ||||
| 9 | 26(k) | Amount received in the 1997 - 98 year of income or a later year of income (regardless of when the loss occurred) | Subdivision 20-A | |
| . | ||||
| 10 | 26(l) | Amount received in the 1997 - 98 year of income or a later year of income | section 15-25 |
Subject to section 25B , the assessable income of a taxpayer shall include - (a)
(Omitted by No 47 of 1984)
[Interest under will, etc]
beneficial interests in income derived under any will, settlement, deed of gift or instrument of trust, not being -
(i) amounts that are included in the assessable income of a beneficiary of a trust estate in pursuance of section 97 or 99B ; or
(ii) amounts in respect of which a trustee of a trust estate is assessed and liable to pay tax in pursuance of section 98 , 99 or 99A ; or
(iii) amounts on which ultimate beneficiary non-disclosure tax is payable under Division 6D; and
(Repealed by No 43 of 1954)
(Omitted by No 47 of 1984)
[Allowances in relation to employment]
the value to the taxpayer of all allowances, gratuities, compensations, benefits, bonuses and premiums allowed, given or granted to him in respect of, or for or in relation directly or indirectly to, any employment of or services rendered by him, whether so allowed, given or granted in money, goods, land, meals, sustenance, the use of premises or quarters or otherwise, not being -
(i) an eligible termination payment within the meaning of Subdivision AA;
(ii) an amount to which section 26AC or 26AD applies;
(iii) an amount that, under any provision of this Act, is deemed to be a dividend or non-share dividend paid to the recipient;
(iv) a fringe benefit within the meaning of the Fringe Benefits Tax Assessment Act 1986 ; or
(v) a benefit that, but for paragraph (g) of the definition of fringe benefit in subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986 , would be a fringe benefit within the meaning of that Act; and
[Reimbursed car expense]
in a case where the taxpayer is provided with a benefit that, but for section 22 of the Fringe Benefits Tax Assessment Act 1986 , would be an expense payment fringe benefit within the meaning of that Act the amount of the reimbursement referred to in that section; and
[Rations and quarters as member of Defence Force]
the value to any taxpayer who is a member of the Defence Force of all allowances given or granted in respect of his service as such a member, whether so given or granted in money, goods, meals, sustenance, the use of premises or quarters, or otherwise, not being -
(i) a fringe benefit within the meaning of the Fringe Benefits Tax Assessment Act 1986 ; or
(ii) a benefit that, but for paragraph (g) of the definition of fringe benefit in subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986 , would be a fringe benefit within the meaning of that Act; and
[Return to work payments]
any amount paid to the taxpayer pursuant to an agreement, arrangement or understanding (whether formal or informal, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings) that was entered into by any of the parties to the agreement, arrangement or understanding for the purpose, or for purposes that included the purpose, of achieving the result that the taxpayer would, or would, unless prevented by special circumstances, resume performing work for, or rendering services to, a person who is or was an employer of the taxpayer or to whom the taxpayer renders or rendered services, whether or not the amount is paid to the taxpayer by that person; and
[Accrued leave transfer payments]
an amount received by way of an accrued leave transfer payment; and
[Royalty]
any amount received as or by way of royalty other than an amount that:
(i) but for the definition of royalty in subsection 6(1) would not be such an amount; and
(ii) is not income within the ordinary meaning of that expression; and
[Bounty or subsidy]
any bounty or subsidy received in or in relation to the carrying on of a business (other than subsidy received under an agreement entered into under an Act relating to the search for petroleum), and such bounty or subsidy shall be deemed to be part of the proceeds of that business; and
[Loan procurement fee]
the amount of any fee or commission received for procuring a loan of money; and
[Bonus]
any amount received as or by way of bonus other than a reversionary bonus on a life assurance policy; and
[Insurance or indemnity for trading loss]
any amount received by way of insurance or indemnity for or in respect of any loss:
(i) of trading stock which would have been taken into account in computing taxable income; or
(ii) of profit or income which would have been assessable income;
if the loss had not occurred, and any amount so received for or in respect of any loss or outgoing which is an allowable deduction; and
[Decimal currency compensation]
any amount received in pursuance of the Decimal Currency Board Act 1963-1965 in respect of trading stock; and
[Interest on overpayments of tax]
the amount of any interest payable to the taxpayer under the Taxation (Interest on Overpayments and Early Payments) Act 1983 , being interest that has been paid to the taxpayer or applied by the Commissioner in discharge or partial discharge of a liability of the taxpayer to the Commonwealth; and
[Recovery of embezzlement, etc, loss]
any amount received by the taxpayer by way of insurance, indemnity, recoupment, recovery or reimbursement in respect of the whole or part of a loss that has been allowed or is allowable under section 71 as a deduction from the assessable income of the taxpayer of any year of income; and
[Payment for non-compliance with covenant to repair]
any amount referred to in section 53AA received by a person who is or was the grantor, or a successor in title of the grantor, of a lease; and
[Private health insurance incentive]
an amount paid under section 8-3 of the Private Health Insurance Incentives Act 1996 to a health fund (within the meaning of that Act).
(Repealed by No 41 of 1986)
(Repealed by No 41 of 1986)
This section does not apply to a meal provided in the 1997-98 year of income or a later year of income.
Note:
Section 32-70 of the Income Tax Assessment Act 1997 is about when amounts are included in your assessable income for meals provided to persons in an in-house dining facility.
(a) the taxpayer incurs a loss or outgoing in a year of income in respect of the provision of entertainment, being a loss or outgoing in respect of the provision of a meal (not being a meal provided at a party, reception or other social function) on a working day to a person other than:
(i) in any case - an employee of the taxpayer; or
in an in-house dining facility of the taxpayer;
(ii) if the taxpayer is a company - an employee of the taxpayer or of a company that is related to the taxpayer;
(b) the loss or outgoing is deductible under section 51 ; and
(c) but for subparagraph 51AE(5)(f)(i) , the loss or outgoing would not be deductible under section 51 ,
the assessable income of the taxpayer of the year of income shall include, in respect of the meal, $30.
26AAAC(2) [Interpretation]An expression used in this section and in section 51AE has the same meaning in this section as in that section.
(Repealed by No 138 of 1994)
This section applies to a unit of property being a motor vehicle (including a vehicle known as a four wheel drive vehicle) that is a motor car or station wagon where:
(a) the unit of property has been leased under an agreement (in this section referred to as the ``relevant lease agreement'' );
(b) all or any of the charges paid or payable by the lessee under the relevant lease agreement have been allowed or are allowable in whole or in part as a deduction or deductions from the assessable income of the lessee or of any other person of any year of income;
(c) on or after 22 August 1979, and whether during or after the period of the relevant lease agreement, the lessor disposed of the unit of property to the lessee, to an associate of the lessee or to persons including the lessee or an associate of the lessee otherwise than under a contract between the lessor and the lessee, the lessor and the associate or the lessor and those persons, as the case may be, that was entered into before that date; and
(d) before the 1997-98 year of income, a person (in this section referred to as a ``relevant taxpayer'' ), being the lessee or an associate of the lessee, disposed of the unit of property or of an interest in the unit of property and the consideration receivable by the relevant taxpayer in respect of the disposal exceeded:
(i) in a case where the unit of property was disposed of - the cost of the unit of property to the relevant taxpayer; or
(ii) in a case where an interest in the unit of property was disposed of - the amount that, in the opinion of the Commissioner, was the cost of the interest to the relevant taxpayer.
Note:
Subdivision 20-B of the Income Tax Assessment Act 1997 applies to the disposal of a car, or of an interest in a car, by a relevant taxpayer in the 1997-98 year of income or a later year of income.
Subject to this section, the amount of the excess referred to in paragraph (1)(d) in relation to the disposal by a relevant taxpayer of a unit of property to which this section applies shall be included in the assessable income of that relevant taxpayer of the year of income in which the disposal occurred to the extent that that amount does not exceed the lower or the lowest, as the case requires, of the amounts respectively applicable in accordance with the following paragraphs:
(a) the amount of depreciation that is deemed in accordance with subsection (6) to have been allowable to the lessee in respect of the unit of property in respect of the period of the relevant lease agreement;
(b) the amount, or the sum of the amounts, of the charges paid or payable under the relevant lease agreement that have been allowed or are allowable as a deduction or deductions in respect of the unit of property from the assessable income of the lessee or of any other person of any year of income;
(c) if the unit of property was disposed of by the lessor to 2 or more persons (whether or not the relevant taxpayer was one of those persons) or to a person other than the relevant taxpayer - the amount by which the consideration receivable by the relevant taxpayer in respect of the disposal of the unit of property by the relevant taxpayer exceeded:
(i) in a case to which subparagraph (ii) does not apply - the cost of the unit of property to the persons, or to the person, as the case may be, to whom the lessor disposed of the property; or
(ii) in a case where, after the property was disposed of by the lessor and before the disposal by the relevant taxpayer, expenditure (in this subparagraph referred to as the ``relevant capital expenditure'' ) of a capital nature was incurred in respect of the property by any person, being expenditure that is not, by virtue of subsection (17), deemed to be expenditure that is directly attributable to the acquisition of the property by the persons or the person, as the case may be, to whom the lessor disposed of the property - the cost of the unit of property to the persons or to the person, as the case may be, to whom the lessor disposed of the property increased by the amount of the relevant capital expenditure.
Subject to this section, so much (if any) as the Commissioner determines of the amount of the excess referred to in paragraph (1)(d) in relation to the disposal by a relevant taxpayer of an interest in a unit of property to which this section applies shall be included in the assessable income of that relevant taxpayer of the year of income in which the disposal occurred.
In making a determination for the purposes of subsection (3) in relation to a disposal of an interest in a unit of property, the Commissioner shall have regard to the manner in which this section would operate in relation to that disposal if it were a disposal of a unit of property.
26AAB(5) [Prior disposal]Where, in relation to a unit of property to which this section applies:
(a) by reason of a disposal of the unit of property by a relevant taxpayer, an amount is required to be included in the assessable income of that relevant taxpayer of a year of income by the application of this section in relation to a relevant lease agreement; and
(b) by any application or applications of this section, in relation to that relevant lease agreement, in relation to a previous disposal or previous disposals of the unit of property or of an interest in the unit of property, an amount or amounts has or have been included, is or are required to be included, or would but for subsection (9), (10) or (12) have been or be required to be included, in the assessable income of any relevant taxpayer of any year of income in accordance with subsection (2) or (3);
then, in determining the amount to be so included in the assessable income of the first-mentioned relevant taxpayer as mentioned in paragraph (a) of this subsection, each of the amounts respectively applicable in accordance with paragraphs (2)(a), (b) and (c) shall be reduced by an amount equal to the amount, or the sum of the amounts, referred to in paragraph (b) of this subsection.
For the purposes of the operation of paragraph (2)(a) in relation to a disposal of a unit of property to which this section applies, the depreciation that is deemed to have been allowable to the lessee in respect of the unit of property in respect of the period of the relevant lease agreement is an amount calculated in accordance with the formula
|
AB
C |
, |
where:
A is the amount of depreciation that would have been allowed or allowable to the lessee in respect of the unit of property under section 54 if:
B is the number of whole days in the period of the relevant lease agreement;
C is the number of whole days in the lessor's period of ownership.
Where, under section 59 , an amount would be included in the assessable income of the lessee if:
(a) the lessee were entitled to a deduction or deductions in respect of the unit of property as mentioned in subsection (6);
(b) the cost of the property to the lessee had been the amount that, for the purposes of the application of the provisions of this Act relating to depreciation, is the cost (ascertained without regard to subsections 59(2A) and (2D) ) of the property to the lessor;
(c) the lessee had disposed of the property at the time when the lessor disposed of the property and had not made a request under subsection 59(2A) or (2D) in respect of the disposal; and
(d) the lessee had, in respect of that disposal, received:
(i) where subsection 59(3) applies for the purpose of ascertaining the amount of the consideration receivable by the lessor in respect of the disposal of the property by the lessor - the amount ascertained in accordance with that subsection;
(ii) where subsection 59(4) applies for the purpose of ascertaining the amount of the consideration receivable by the lessor in respect of the disposal of the property by the lessor - the amount that would be applicable under subparagraph (i) of this paragraph if that subparagraph were applicable in relation to the disposal of the property by the lessor;
(iii) where subsections 59(3) and (6) apply for the purpose of ascertaining the amount of the consideration receivable by the lessor in respect of the disposal of the property by the lessor - the amount ascertained in accordance with those subsections; or
(iv) where subsections 59(4) and (6) apply for the purpose of ascertaining the amount of the consideration receivable by the lessor in respect of the disposal of the property by the lessor - the amount that would be applicable under subparagraph (iii) of this paragraph if that subparagraph were applicable in relation to the disposal of the property by the lessor;
the component A for the purposes of the formula in subsection (6) shall be reduced by the amount that would have been so included in the assessable income of the lessee.
Where, under section 59 , a deduction would have been allowable to the lessee if:
(a) the lessee were entitled to a deduction or deductions in respect of the unit of property as mentioned in subsection (6);
(b) the cost of the property to the lessee had been the amount that, for the purposes of the application of the provisions of this Act relating to depreciation, is the cost (ascertained without regard to subsections 59(2A) and (2D) ) of the property to the lessor;
(c) the lessee had disposed of the property at the time when the lessor disposed of the property; and
(d) the lessee had, in respect of that disposal, received:
(i) where subsection 59(3) applies for the purpose of ascertaining the amount of the consideration receivable by the lessor in respect of the disposal of the property by the lessor - the amount ascertained in accordance with that subsection;
(ii) where subsection 59(4) applies for the purpose of ascertaining the amount of the consideration receivable by the lessor in respect of the disposal of the property by the lessor - the amount that would be applicable under subparagraph (i) of this paragraph if that subparagraph were applicable in relation to the disposal of the property by the lessor;
(iii) where subsections 59(3) and (6) apply for the purpose of ascertaining the amount of the consideration receivable by the lessor in respect of the disposal of the property by the lessor - the amount ascertained in accordance with those subsections; or
(iv) where subsections 59(4) and (6) apply for the purpose of ascertaining the amount of the consideration receivable by the lessor in respect of the disposal of the property by the lessor - the amount that would be applicable under subparagraph (iii) of this paragraph if that subparagraph were applicable in relation to the disposal of the property by the lessor;
the component A for the purposes of the formula in subsection (6) shall be increased by the amount of the deduction that would have been so allowable to the lessee.
Any amount that, apart from this subsection, would, by reason of the disposal of a unit of property, or of an interest in a unit of property, by a relevant taxpayer, be included in the assessable income of the relevant taxpayer under this section shall be reduced by any amount that has been or will be, or the sum of any amounts that have been or will be, included in the assessable income of the relevant taxpayer of any year of income in respect of that disposal in accordance with another provision of this Act other than section 59.
26AAB(10) [Successive lease agreements](a) by reason of the operation of this section in relation to a relevant lease agreement, an amount would, apart from this subsection and subsection (9), be included in the assessable income of a relevant taxpayer in relation to the disposal of a unit of property, or of an interest in a unit of property, by the relevant taxpayer; and
(b) by reason of the operation of this section in relation to another relevant lease agreement or in relation to other relevant lease agreements, an amount is, or amounts are, also required to be included in the assessable income of the relevant taxpayer in relation to that disposal;
the greater, or the greatest, as the case requires, of the amounts so required to be included in that assessable income shall be included in that assessable income and the other amount, or the other amounts, as the case requires, shall not be included in that assessable income under this section.
26AAB(11) [Earlier disposal at market value](a) by reason of the operation of this section in relation to a relevant lease agreement, an amount would, apart from this subsection and subsections (9) and (10), be included in the assessable income of a relevant taxpayer in relation to the disposal of a unit of property by the relevant taxpayer;
(b) after the property was disposed of by the lessor as mentioned in paragraph (1)(c) and before the disposal by the relevant taxpayer, the property was disposed of by another person (in this subsection referred to as the previous seller ), being the lessee or an associate of the lessee; and
(c) in relation to the disposal of the property by the previous seller, either of the following conditions is satisfied, namely:
(i) the consideration receivable in respect of the disposal by the previous seller was not less than the market value of the unit of property at the time of that disposal; or
(ii) an amount has been or will be included in the assessable income of the previous seller by reason of that disposal, being an amount that is, or is calculated by reference to, the value or market value of the unit of property at the time of that disposal;
no amount shall be included in the assessable income of the relevant taxpayer under this section in relation to the disposal of the unit of property by the relevant taxpayer.
(a) apart from this subsection and subsections (9), (10) and (11), an amount would be included in the assessable income of a relevant taxpayer under this section by reason of a disposal by the relevant taxpayer of a unit of property to which this section applies or of an interest in a unit of property to which this section applies; and
(b) the relevant taxpayer acquired the unit of property or the interest, as the case may be, under or by reason of:
(i) a will, a codicil or an order of a court that varied or modified the provisions of a will or a codicil; or
(ii) an intestacy or an order of a court that varied or modified the application, in relation to the estate of a deceased person, of the provisions of the law relating to the distribution of the estates of persons who die intestate;
no amount shall be included in the assessable income of the relevant taxpayer under this section in relation to the disposal of the unit of property or of the interest in the unit of property by the relevant taxpayer.
26AAB(13) [Substitute lease agreement](a) this section applies in relation to a unit of property in relation to a relevant lease agreement that came into operation on or after 22 August 1979;
(b) at any time before the relevant lease agreement came into operation another lease agreement (in this subsection referred to as the ``earlier lease agreement'' ) had been in operation in relation to the unit of property;
(c) the earlier lease agreement came into operation before 22 August 1979 and was in operation on that date or came into operation on or after that date;
(d) the lessor under the relevant lease agreement, or an associate of that lessor, was the lessor under the earlier lease agreement;
(e) the lessee under the relevant lease agreement, or an associate of that lessee, was the lessee under the earlier lease agreement; and
(f) by reason of a disposal of the unit of property by a relevant taxpayer, an amount is required to be included in the assessable income of that relevant taxpayer of a year of income in accordance with subsection (2) by virtue of the application of that subsection in relation to the relevant lease agreement;
then, in determining the amount to be so included in the assessable income of that relevant taxpayer as mentioned in paragraph (f), the amounts respectively applicable in accordance with paragraphs (2)(a) and (b)shall be increased by any amounts that would be respectively applicable in accordance with those paragraphs if the earlier lease agreement were the relevant lease agreement.
In this section, unless the contrary intention appears:
associate
, in relation to a person (in this definition referred to as the
taxpayer
) means:
(a) where the taxpayer is a natural person, other than a taxpayer in the capacity of a trustee:
(i) a relative of the taxpayer;
(ii) a partner of the taxpayer or a partnership in which the taxpayer is a partner;
(iii) if a person who is an associate of the taxpayer by virtue of subparagraph (ii) is a natural person - the spouse or a child of that person;
(iv) a trustee of a trust estate where the taxpayer or another person who is an associate of the taxpayer by virtue of another subparagraph of this paragraph benefits or is capable (whether by the exercise of a power of appointment or otherwise) of benefiting under the trust, either directly or through any interposed companies, partnerships or trusts; or
(v) a company where:
(A) the company is, or its directors are, accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the taxpayer, of another person who is an associate of the taxpayer by virtue of another subparagraph of this paragraph, of a company that is an associate of the taxpayer by virtue of another application of this subparagraph or of any 2 or more such persons; or
(B) the taxpayer is, the persons who are associates of the taxpayer by virtue of sub-subparagraph (A) and the preceding subparagraphs of this paragraph are, or the taxpayer and the persons who are associates of the taxpayer by virtue of that sub-subparagraph and those subparagraphs are, in a position to cast, or control the casting of, more than 50% of the maximum number of votes that might be cast at a general meeting of the company;
(b) where the taxpayer is a company, other than a taxpayer in the capacity of a trustee:
(i) a partner of the taxpayer or a partnership in which the taxpayer is a partner;
(ii) if a person who is an associate of the taxpayer by virtue of subparagraph (i) is a natural person - the spouse or a child of that person;
(iii) a trustee of a trust estate where the taxpayer or another person who is an associate of the taxpayer by virtue of another subparagraph of this paragraph benefits or is capable (whether by the exercise of a power of appointment or otherwise) of benefiting under the trust, either directly or through any interposed companies, partnerships or trusts;
(iv) another person where:
(A) the taxpayer company is, or its directors are, accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of that person, or of that person and another person or other persons, whether those directions, instructions or wishes are communicated directly to the taxpayer company or its directors, or through any interposed companies, partnerships or trusts; or
(B) that person is, or that person and the persons who, if that person were the taxpayer, would be associates of that person by virtue of paragraph (a), by virtue of sub-subparagraph (A), by virtue of another subparagraph of this paragraph or by virtue of paragraph (c) are, in a position to cast, or control the casting of, more than 50% of the maximum number of votes that might be cast at a general meeting of the taxpayer company;
(v) another company where:
(A) the other company is, or its directors are, accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the taxpayer company, of a person who is an associate of the taxpayer company by virtue of another subparagraph of this paragraph, of a company that is an associate of the taxpayer company by virtue of another application of this subparagraph or of any 2 or more such persons; or
(B) the taxpayer company is, the persons who are associates of the taxpayer company by virtue of sub-subparagraph (A) and the other subparagraphs of this paragraph are, or the taxpayer company and the persons who are associates of the taxpayer company by virtue of that sub-subparagraph and those subparagraphs are, in a position to cast, or control the casting of, more than 50% of the maximum number of votes that might be cast at a general meeting of the other company; or
(vi) any other person who, if a third person who is an associate of the taxpayer company by virtue of subparagraph (iv) were the taxpayer, would be an associate of that third person by virtue of paragraph (a), by virtue of another subparagraph of this paragraph or by virtue of paragraph (c);
(c) where the taxpayer is a trustee of a trust estate:
(i) any person who benefits or is capable (whether by the exercise of a power of appointment or otherwise) of benefiting under the trust estate, either directly or through any interposed companies, partnerships or trusts;
(ii) where a person who is an associate of the taxpayer by virtue of subparagraph (i) is a natural person - any person who, if that natural person were the taxpayer, would be an associate of that natural person by virtue of paragraph (a) or this paragraph; or
(iii) where a person who is an associate of the taxpayer by virtue of subparagraph (i) or (ii) is a company - any person who, if that company were the taxpayer, would be an associate of that company by virtue of paragraph (b) or this paragraph; or
(d) where the taxpayer is a partnership:
(i) a partner in the partnership;
(ii) where any partner in the partnership is a natural person - any person who, if that natural person were the taxpayer, would be an associate of that natural person by virtue of paragraph (a) or (c); or
(iii) where any partner in the partnership is a company - any person who, if the company were the taxpayer, would be an associate of the company by virtue of paragraph (b) or (c).
casual hiring agreement
means an agreement for taking a unit of property on hire where the agreement is of a kind ordinarily entered into by persons taking property on hire intermittently as the occasion requires on an hourly, daily, weekly or monthly basis.
consideration receivable
, in relation to a disposal by a person of a unit of property or of an interest in a unit of property, means:
(a) in a case where the unit of property or the interest, as the case may be, is sold by the person otherwise than as mentioned in paragraph (b) - the consideration for the sale less the expenses of the sale;
(b) in the case where the unit of property or the interest, as the case may be, is traded-in by the person in connection with the acquisition by the person of another unit of property or is disposed of by the person in connection with the acquisition by another person of another unit of property - the amount by which the cost of the acquisition of that other unit of property was reduced by reason of the disposal of the first-mentioned unit of property or the interest, as the case may be or, if any consideration other than that reduction in the cost of acquisition of the other unit of property was received or receivable in respect of the disposal of the first-mentioned unit of property, the sum of the amount of the reduction and that other consideration; and
(c) in the case where the unit of property or the interest, as the case may be, is sold by the person with other assets and no separate value is allocated to the unit of property or the interest, as the case may be - the amount determined by the Commissioner.
leased
means let on hire (including a letting on hire that is described in the relevant agreement as a lease) under an agreement other than:
(a) a hire-purchase agreement; or
(b) a casual hiring agreement.
For the purposes of this section, where:
(a) a person (in this subsection referred to as the ``transferor'' ) acquires property from the person who is the lessor in relation to the relevant lease agreement; and
(b) the transferor acquires the property under an agreement, arrangement or understanding entered into for the purpose, or for purposes that included the purpose, of securing that the property would, directly or indirectly, be acquired by the person who is the lessee in relation to the relevant lease agreement or by an associate of that lessee;
the transferor shall be deemed to be an associate of that lessee.
26AAB(16) [Meaning of terms]In this section, unless the contrary intention appears:
(a) a reference to the cost of a unit of property or of an interest in a unit of property to a person shall be read as a reference to expenditure incurred by that person that is directly attributable to his acquiring ownership of the unit of property or of the interest, as the case may be;
(b) a reference to a person shall be read as including a reference to a partnership;
(c) a reference to the period of an agreement shall be read as including a reference to any period or periods for which the term of the agreement is extended;
(d) a reference to the lessee under a lease agreement, in relation to a time after the expiration of the lease agreement, shall be read as a reference to a person who had been the lessee under that lease agreement;
(e) if 2 or more persons constitute or constituted the lessee under a lease agreement, a reference to the lessee shall be read as a reference to those persons or to either or any of them; and
(f) a reference to an associate of a person shall be read as a reference to a person who was such an associate at any relevant time. 26AAB(17) [Capital expenditure]
For the purposes of paragraph (16)(a), expenditure of a capital nature incurred by a person in respect of property acquired by the person, being expenditure incurred after the time of acquisition, shall be taken to be expenditure that is directly attributable to the person's acquiring ownership of the property.
In this section, a reference to the market value of property at a particular time shall, if there is insufficient evidence of the market value at that time, be read as a reference to such amount as, in the opinion of the Commissioner, is fair and reasonable.
CCH Note:
Below is s 26AAC(10) repealed as inoperative by No 101 of 2006.
For the purposes of paragraph 26(e) , the acquisition by a taxpayer of a share in a company, or of a right to acquire a share in a company, under a scheme for the acquisition of shares by employees shall be deemed not to be an allowance, gratuity, compensation, benefit, bonus or premium allowed, given or granted to him.
SECTION 26AB ASSESSABLE INCOME - PREMIUM FOR LEASECCH Note:
Below is material substituted or repealed as inoperative in s 26AB by No 101 of 2006.
(a) a premium in relation to which Division 4 applies;
(d) a premium received in connexion with the assignment of a lease referred to in section 89. SECTION 26AG
CCH Note:
Below is material substituted in s 26AG by No 101 of 2006.
Where, but for this subsection, paragraph 23(r) would apply to exempt from tax an amount of income derived by a taxpayer in respect of a film from sources wholly out of Australia, being an amount that would, but for that paragraph, be included in the assessable income of the taxpayer by the operation of subsection (2) of this section, paragraph 23(r) applies only to so much of the amount as -
(a) is attributable to the exhibition of the film in the country from sources in which the income was derived; and
(b) is not exempt from income tax in the country from sources in which the income was derived. SECTION 26B INSURANCE RECOVERIES ON LOSSES OF LIVE STOCK AND TREES 26B(1) [Amounts to which section applies]
This section applies to an amount (in this section referred to as an insurance recovery) received, by a taxpayer or a partnership carrying on in Australia a business of primary production, by way of insurance for or in respect of a loss of live stock or a loss by fire of trees.
Where a taxpayer receives an insurance recovery which is included in his assessable income of a year of income before the 1997-98 year of income, he may elect that that assessable income shall be reduced by an amount equal to four-fifths of the insurance recovery.
Note:
Subdivision 385-F (Insurance for loss of live stock or trees) of the Income Tax Assessment Act 1997 allows an election to reduce the amount of an insurance recovery received in or after the 1997-98 year of income.
Where an insurance recovery is received by a partnership, each partner in the partnership may make an election under subsection (2) in relation to that part of the insurance recovery which is included in his individual interest in the net income of the partnership.
Where an insurance recovery is received by the trustee of a trust estate -
(a) the trustee may make an election under subsection (2) in relation only to that part of the insurance recovery which is included in the net income of the trust estate in respect of which he is liable to be assessed and to pay tax under the provisions of Division 6 ; and
(b) each beneficiary in the trust estate who is not under a legal disability and is presently entitled to a share of the net income of the trust estate, being a share which includes a part of the insurance recovery, may make an election under subsection (2) in relation to that part.
The election which a taxpayer may make under subsection (2) must be made on or before the date of lodgment of the return of income of the year of income in which the insurance recovery is received, or within such further time as the Commissioner allows.
Where a taxpayer has made an election under subsection (2), his assessable income of the year in which the insurance recovery is received shall be reduced by an amount equal to four-fifths of the insurance recovery, or of the part of the insurance recovery to which his election relates, and there shall be included in his assessable income of each of the next 4 succeeding years an amount equal to one-fifth of the insurance recovery, or of that part of the insurance recovery, as the case may be.
Where, in a year of income, a taxpayer who has made an election under subsection (2) -
(a) appears to the Commissioner to be about to leave Australia;
(b) dies;
(c) becomes bankrupt or insolvent, applies to take the benefit of a law for the relief of bankrupt or insolvent debtors, compounds with his creditors, or makes an assignment of any of his property for their benefit; or
(d) being a company, commences to be wound up,
there shall, if the Commissioner so determines, be included in the assessable income of the taxpayer of that year of income any amount which would otherwise be included, in pursuance of this section, in the assessable income of any subsequent year of income.
An amount which, in accordance with subsection (6) or (7) is included in the assessable income of a taxpayer of any year shall, for all purposes of this Act, be deemed to be assessable income derived by him during that year from the carrying on by him in Australia, during that year, of a business of primary production.
(Omitted by No 76 of 1967)
A taxpayer cannot make an election under subsection (3) relating to the 1997-98 year of income or a later year of income. However, this does not limit the effect of paragraph (6)(b) or subsection (7) in relation to an election that relates to the 1996-97 year of income.
Note:
Subdivision 385-G (Double wool clips) of the Income Tax Assessment Act 1997 provides for elections for the 1997-98 year of income and later years of income.
(a) during a year of income, a taxpayer carried on a business of primary production in Australia;
(b) the assessable income of the taxpayer of that year of income includes -
(i) proceeds of the sale of wool that was shorn in that year of income from sheep being assets of that business;
(ii) proceeds of the sale of wool that was shorn in the last preceding year of income from sheep being assets of that business but was on hand at the beginning of the first-mentioned year of income and the value of which is taken into account for the purposes of section 28 at the beginning of the first-mentioned year of income at its cost price; or
(iii) an amount in respect of wool shorn in the last preceding year of income, being an amount included in the assessable income of the taxpayer of the first-mentioned year of income by reason of the operation of this section;
(c) by reason of fire, drought or flood in an area in Australia in which the taxpayer carried on that business, another shearing of any sheep being assets of that business took place at a time earlier than the time at which, but for the fire, drought or flood, that shearing would ordinarily have taken place; and
(d) the assessable income of the taxpayer of the first-mentioned year of income includes proceeds of the sale of wool that was shorn at that other shearing,
the succeeding subsections of this section have effect.
The taxpayer may elect that this section shall apply in relation to the profit on the sale of the wool that was shorn at that other shearing and the proceeds of the sale of which are included in the assessable income of the taxpayer of the year of income first referred to in subsection (2) (in the succeeding subsections of this section referred to as ``the year of income to which the election relates'' ).
Where any sheep were assets of a partnership and, if the sheep had been owned by a partner in the partnership, that partner would be entitled to make an election under subsection (3) in relation to the profit on the sale of wool shorn from the sheep, that partner may make an election under that subsection in relation to the part of the profit on the sale of the wool that is included in his individual interest in the net income of the partnership.
Where any sheep referred to in paragraph (2)(c) were assets of a business carried on by the trustee of a trust estate -
(a) the trustee may make an election under subsection (3) in relation only to the part of the profit on sale of the wool that is included in the net income of the trust estate in respect of which the trustee is liable to be assessed and to pay tax under the provisions of Division 6; and
(b) any beneficiary in the trust estate who -
(i) is not under a legal disability;
(ii) is presently entitled to a share of the net income of the trust estate, being a share that includes a part of the profit on the sale of the wool; and
(iii) would, if the sheep had been owned by him, be entitled to make an election under subsection (3) in relation to the profit on the sale of the wool,
may make an election under subsection (3) in relation to that part of that profit.
Where a taxpayer makes an election under subsection (3) -
(a) the assessable income of the taxpayer of the year of income to which the election relates shall be reduced by an amount equal to the profit on the sale of the wool, or the part of the profit on the sale of the wool, to which his election relates; and
(b) there shall be included in the assessable income of the taxpayer of the next succeeding year of income an amount equal to that profit or that part of that profit, and the amount so included shall, for the purposes of this Act, be deemed to be derived by the taxpayer during that succeeding year of income from the carrying on by him in Australia, during that year of income, of a business of primary production.
Where a taxpayer, other than a trustee, who would have been entitled to make an election under subsection (3) in relation to a year of income has died before the end of that year of income, the election may be made by the trustee of his estate and, where such an election is made, paragraph (6)(b) does not apply but there shall be included in the assessable income of the estate of the deceased taxpayer of the next succeeding year of income an amount equal to the profit on the sale of the wool, or the part of the profit on the sale of the wool, to which the election relates, and, for the purposes of this Act, the amount so included shall be deemed to be derived by the trustee during that next succeeding year of income from the carrying on by him in Australia, during that year of income, of a business of primary production and shall be deemed to be income to which no beneficiary is presently entitled.
An election under subsection (3) must be made on or before the date of lodgment of the return of income of the taxpayer to which the election relates, or, if the taxpayer has died and the election is made under subsection (7) by the trustee of his estate, the date of lodgment of the return of income of the deceased taxpayer of the year of income to which the income relates, or on or before such later date as the Commissioner allows.
In this section, a reference to the profit on the sale of any wool shall be read as a reference to the amount remaining after deducting from the proceeds of the sale of the wool the expenses directly attributable to the shearing and sale of the wool that were incurred by the taxpayer in the year of income in which those proceeds were included in the assessable income of the taxpayer.
26BA(10) [Amendment of assessment]Notwithstanding anything in any other provision of this Act, the Commissioner may amend an assessment for the purpose of giving effect to this section.
This section does not apply to the 1997-98 year of income or a later year of income.
Note:
Subdivision 70-C (Accounting for trading stock you hold at the start or end of the income year) of the Income Tax Assessment Act 1997 applies to those years of income.
Where a taxpayer carries on any business, the value, ascertained under this subdivision, of all trading stock on hand at the beginning of the year of income, and of all trading stock on hand at the end of that year shall be taken into account in ascertaining whether or not the taxpayer has a taxable income.
28(2) [Excess of closing over opening value assessable]Where the value of all trading stock on hand at the end of the year of income exceeds the value of all trading stock on hand at the beginning of that year, the assessable income of the taxpayer shall include the amount of the excess.
28(3) [Excess of opening over closing value deductible]Where the value of all trading stock on hand at the beginning of the year of income exceeds the value of all trading stock on hand at the end of that year, the amount of the excess shall be an allowable deduction.
SECTION 29 VALUE AT BEGINNING OF YEAR OF INCOME 29(1) [Ascertaining value]The value of live stock and of each article of other trading stock to be taken into account at the beginning of the year of income shall be its value as ascertained under this or the previous Act at the end of the year immediately preceding the year of income.
29(2) [No application from 1997/98 income year onwards]This section does not apply to the valuation of live stock or other trading stock at the beginning of the 1997-98 year of income or at the beginning of a later year of income.
Note:
Section 70-40 (Value of trading stock at start of income year) of the Income Tax Assessment Act 1997 applies to the valuation of trading stock at the beginning of those years of income. Section 70-40 (Value of trading stock at the start of the 1997-98 income year) of the Income Tax (Transitional Provisions) Act 1997 is also relevant.
(Repealed by No 44 of 1951)
This section does not apply to the valuation of trading stock at the end of the 1997-98 year of income or at the end of a later year of income.
Note:
Section 70-45 (Value of trading stock at end of income year) of the Income Tax Assessment Act 1997 deals with the valuation of trading stock at the end of those years of income. Section 70-70 (Valuing interests in FIFs) of that Act provides special rules for valuing interests in FIFs for those years of income.
Subject to this section, the value of each article of trading stock (not being live stock) to be taken into account at the end of the year of income shall be, at the option of the taxpayer, its cost price or market selling value or the price at which it can be replaced.
31(2) [Value in special circumstances or obsolescence]Where the Commissioner is satisfied, in relation to any trading stock of a taxpayer, that, by reason of obsolescence of, or any other special circumstances relating to, the trading stock, the value of the trading stock to be taken into account at the end of the year of income should be an amount, being less than the amount that is the lowest value that could be applicable under subsection (1), determined by the Commissioner to be the fair and reasonable value of the trading stock having regard to -
(a) the quantity of the trading stock on hand at the end of the year of income;
(b) the quantity of the trading stock sold, exchanged or used in manufacture by the taxpayer after the end of the year of income and the prospects of sale, exchange or use in manufacture of further quantities of that trading stock;
(c) the quantity of trading stock of the same kind sold, exchanged or used in manufacture by the taxpayer during the year of income and preceding years of income; and
(d) such other matters as the Commissioner considers relevant,
the value of the trading stock to be so taken into account shall, notwithstanding any exercise of the option of the taxpayer under that subsection, be the value so determined by the Commissioner.
Subsection (2) does not apply in relation to a taxpayer unless, by written notice signed by or on behalf of the taxpayer and lodged with the Commissioner on or before the last day for the furnishing of the return of income of the taxpayer for the year of income, or within such further time as the Commissioner allows, the taxpayer notifies the Commissioner that he wishes that subsection to apply.
Subject to the following provisions of this section, the value to be taken into account at the end of the 1991-92 year of income, and at the end of each later year of income, of an article of trading stock that consists of an interest in a FIF is to be its cost price.
Subject to subsection (6), if the taxpayer elects that this subsection is to apply to the taxpayer in relation to all the taxpayer's interests in FIFs, the value to be taken into account at the end of the year of income of every article of trading stock that is an interest in a FIF is to be its market value.
Subsection (5) does not apply to the taxpayer unless the election is made before the taxpayer furnishes a return in respect of income of the first year of income in which any notional accounting period of a FIF in which the taxpayer has an interest ends but, if the election is so made, that subsection applies to the taxpayer in respect of that first year of income and in respect of all later years of income.
(a) subsection (4) would, apart from this subsection, apply to the taxpayer in respect of the 1991-92 year of income; and
(b) an article of trading stock was on hand at the beginning of that year of income; and
(c) the value of that article of trading stock that was taken into account at the beginning of that year of income was greater or less than its cost price;
then:
(d) subsection (4) does not apply in relation to that article of trading stock; and
(e) the value of that article of trading stock that is to be taken into account at the end of that year of income, or at the end of any later year of income to which subsection (5) does not apply, is the value referred to in paragraph (c) of this subsection.
In this section:
"FIF"
has the same meaning as in Part XI;
"notional accounting period"
, in relation to a FIF, has the same meaning as in Part XI.
(Repealed by No 165 of 1973)
(Repealed by No 107 of 1989)
This section applies only to a purchase that takes place before 1 July 1997.
Note:
Section 70-20 (Non-arm's length transactions) of the Income Tax Assessment Act 1997 deals with purchases taking place on or after 1 July 1997.
(a) a person (in this section referred to as the purchaser ) has, on or after 21 April 1977, purchased from another person (in this section referred to as the vendor ) an article (in this subsection referred to as the relevant article ) that, for the purposes of the application of this Act in relation to the purchaser, was an article of trading stock;
(b) the Commissioner is satisfied that, having regard to any connexion between the vendor and the purchaser or to any other relevant circumstances, those persons were not dealing with each other at arm's length in relation to the transaction; and
(c) the Commissioner is satisfied -
(i) that the purchase price is greater than the amount (in this section referred to as the arm's length price ) that, in the opinion of the Commissioner, would have been the purchase price if the vendor and purchaser had been dealing with each other at arm's length in relation to the transaction; or
(ii) that -
(A) the purchaser could have purchased an identical article from another person and obtained delivery of the identical article at or about the time when the purchaser obtained delivery of the relevant article;
(B) the cost to the purchaser of purchasing the relevant article from the vendor was greater than the amount that, in the opinion of the Commissioner, would have been the cost to the purchaser of purchasing the identical article; and
(C) the purchase price of the relevant article is greater than the amount (in this section referred to as the alternative price ) that, in the opinion of the Commissioner, would have been the purchase price of the identical article,
the amount paid by the purchaser to the vendor in respect of the relevant article shall, for all purposes of the application of this Act in relation to the purchaser and the vendor, be deemed to be an amount ascertained in accordance with subsection (2).
31C(2) [Ascertainment of deemed purchase price]The amount ascertained in relation to an article for the purposes of subsection (1) is -
(a) if the Commissioner is satisfied as to the matter mentioned in subparagraph (1)(c)(i) but not as to the matters mentioned in subparagraph (1)(c)(ii) - an amount equal to the arm's length price of the article;
(b) if the Commissioner is satisfied as to the matters mentioned in subparagraph (1)(c)(ii) but not as to the matter mentioned in subparagraph (1)(c)(i) - an amount equal to the alternative price of the article increased, if the purchaser would have incurred expenditure (apart from payment of the purchase price) in obtaining delivery of an identical article from another person as mentioned in subparagraph (1)(c)(ii) in excess of the expenditure (apart from payment of the purchase price) that the purchaser incurred in obtaining delivery of the relevant article, by such amount as the Commissioner considers fair and reasonable; and
(c) if the Commissioner is satisfied as to the matter mentioned in subparagraph (1)(c)(i) and also as to the matters mentioned in subparagraph (1)(c)(ii) - whichever of the following amounts is the lesser amount:
(i) the arm's length price of the article;
(ii) the amount that would be determined in relation to the article in accordance with paragraph (b) if that paragraph were applicable.
A reference in this section to the purchase by a person of an article of trading stock from another person shall be construed as including a reference to an acquisition of that article by the first-mentioned person from that other person that is deemed to have occurred for the purposes of section 36 by reason of the operation of section 36A or that would be so deemed to have occurred if sections 36 and 36A applied in relation to a disposal of trading stock in the ordinary course of carrying on a business.
31C(4) [``Cost'' defined]In this section, a reference to the cost to a person of purchasing an article shall be construed as a reference to expenditure incurred by the person that is directly attributable to purchasing or obtaining delivery of the article.
31C(5) [Purchase in ordinary course of family, etc, dealing]This section applies in relation to the purchase of an article of trading stock notwithstanding that the purchase was in the course of ordinary family or commercial dealing.
This section does not apply to the valuation of live stock at the end of the 1997-98 year of income or at the end of a later year of income.
Note:
Section 70-45 (Value of trading stock at end of income year) of the Income Tax Assessment Act 1997 applies to the valuation of live stock at the end of those years of income. Section 70-60 (Valuation of horse breeding stock) of the Income Tax Assessment Act 1997 also applies to the valuation of horse breeding stock at the end of those years.
Subject to subsections (2) and (3), the value of live stock to be taken into account at the end of the year of income is to be, at the option of the taxpayer:
(a) the cost price of the live stock; or
(b) the market selling value of the live stock. 32(2) Adoption of other value.
If the Commissioner is satisfied that there are circumstances which justify the adoption by the taxpayer of some other value, the taxpayer may adopt that other value.
32(3) Option not exercised - value is cost price.If the taxpayer does not exercise the option within the time prescribed, the value of the live stock to be taken into account at the end of the year of income is to be the cost price of the live stock.
32(4) This section does not apply to horse breeding stock.This section does not apply in determining the value of live stock to be taken into account at the end of the year of income if the live stock is horse breeding stock (within the meaning of section 32A ) at the end of the year of income.
This section applies in determining the value of live stock to be taken into account at the end of the year of income if the live stock is horse breeding stock of the taxpayer at the end of the year of income.
32A(1A) [Application ceases]This section does not apply to the valuation of horse breeding stock at the end of the 1997-98 year of income or at the end of a later year of income.
Note:
Section 70-45 (Value of trading stock at end of year) or 70-60 (Valuation of horse breeding stock) of the Income Tax Assessment Act 1997 applies to such a valuation.
Subject to subsections (3) and (4), the value of live stock to be taken into account at the end of the year of income is to be, at the option of the taxpayer:
(a) the special closing value of the live stock in relation to the year of income; or
(b) the cost price of the live stock; or
(c) the market selling value of the live stock. 32A(3) Adoption of other value.
If the Commissioner is satisfied that there are circumstances which justify the adoption by the taxpayer of some other value, the taxpayer may adopt that other value.
32A(4) Option not exercised - value is cost price.If the taxpayer does not exercise the option within the time prescribed, the value of the live stock to be taken into account at the end of the year of income is to be the cost price of the live stock.
32A(5) What is horse breeding stock.For the purposes of this section, live stock is horse breeding stock of a taxpayer at the end of the year of income if, and only if:
(a) the live stock is a horse acquired by the taxpayer under a contract; and
(b) the horse has attained the age of 3 years before the end of the year of income; and
(c) at the end of the year of income, the horse is held by the taxpayer for breeding purposes. 32A(6) Special closing value.
The special closing value of a horse in relation to a year of income is:
(a) if the horse is a female horse which has attained the age of 12 years before the end of the year of income - $1; or
(b) if the reduction amount in relation to the horse in relation to the year of income is equal to or greater than the opening value of the horsein relation to the year of income - $1; or
(c) in any other case - the amount worked out using the formula:
| Opening value - Reduction amount |
where:
For the purposes of this section, the opening value in relation to a horse in relation to a year of income (the ``current year of income'' ) is:
(a) if:
(i) the horse was live stock of the taxpayer at the end of the year of income immediately preceding the current year of income; and
the value of the horse taken into account at the end of the preceding year of income; or
(ii) the horse was live stock of the taxpayer during the whole of the current year of income;
(b) if the horse became live stock of the taxpayer at a time during the current year of income - whichever is the lesser of:
(i) the cost price of the horse; or
32A(8) Reduction amount - male horse.
(ii) the depreciated value of the horse, within the meaning of section 62 , at that time.
For the purposes of this section, the reduction amount in relation to a male horse in relation to the year of income is the amount worked out using the formula:
| Base amount × Nominated percentage × |
Holding days in
year of income Total days in year of income |
where:
``Base amount'' means whichever is the lesser of:
``Nominated percentage'' means the percentage, not exceeding 25%, nominated by the taxpayer at the same time as the taxpayer selects the option referred to in paragraph (2)(a);
``Holding days in year of income'' means:
``Total days in year of income'' means the number of days in the year of income.
32A(9) Reduction amount - female horse less than 12 years old.If a female horse has not attained the age of 12 years before the end of the year of income, then, for the purposes of this section, the reduction amount in relation to the horse in relation to the year of income is worked out using the formula:
|
Base amount
Reducing factor |
× |
Holding days in year of income
Total days in year of income |
where:
``Base amount'' means whichever is the lesser of:
``Reducing factor'' means whichever is the greater of:
``Holding days in year of income'' means:
``Total days in year of income'' means the number of days in the year of income.
32A(10) Age of horse.For the purposes of this section, the time when a horse attains a particular age expressed in years is the commencement of the relevant anniversary of the birth date of the horse.
32A(11) Horse becoming live stock more than once before end of year of income.For the purposes of this section, if a horse becomes live stock of the taxpayer more than once before the end of the year of income, the horse is taken to have become live stock of the taxpayer on the last occasion before the end of the year of income on which it became live stock of the taxpayer.
32A(12) Horse commencing to be held for breeding purposes more than once before end of year of income.For the purposes of this section, if the taxpayer commences to hold a horse for breeding purposes more than once before the end of the year of income, the taxpayer is taken to have commenced to hold the horse for breeding purposes on the last occasion before the end of the year of income on which the taxpayer commenced to hold the horse for breeding purposes.
32A(13) Definitions.In this section:
(a) in relation to a horse foaled on or after 1 August in a calendar year - means 1 August in that year; and
(b) in relation to a horse foaled before 1 August in a calendar year - means 1 August in the preceding year;
"horse breeding stock"
has the meaning given by subsection (5);
"opening value"
has the meaning given by subsection (7);
"reduction amount"
has the meaning given by whichever of subsections (8) and (9) is applicable;
"special closing value"
has the meaning given by subsection (6).
A taxpayer shall not, except with the leave of the Commissioner, adopt a basis of valuation of his live stock taken into account at the end of the year of income different from the basis on which the valuation of his live stock was made when it was last taken into account at the end of a previous year, whether under this or the previous Act.
33(2) [Application ceases]This section does not apply to the valuation of live stock at the end of the 1997-98 year of income or at the end of a later year of income.
Note:
For those income years, the Income Tax Assessment Act 1997 does not prevent a change in the basis for valuing your live stock.
This section does not apply to animals acquired by natural increase in the 1997-98 year of income or a later year of income.
Note:
Section 70-55 (Working out the cost of natural increase of live stock) of the Income Tax Assessment Act 1997 applies to live stock acquired by natural increase in those years of income.
If a minimum cost price is prescribed in respect of live stock, the cost price per head of natural increase of that class of live stock of a taxpayer is:
(a) where the cost price of natural increase of that class has previously been taken into account under this Act by the taxpayer:
(i) the greater of:
(A) the cost price per head at which natural increase of that class was last taken into account; and
(B) the minimum cost price prescribed in respect of live stock of that class;
(ii) if the taxpayer, with the leave of the Commissioner, selects another cost price that is not less than the minimum cost price prescribed in respect of live stock of that class - that other cost price; or
(iii) if:
(A) the taxpayer elects that this subparagraph apply in relation to live stock of that class; andthe actual cost price; and
(B) the actual cost price per head of natural increase of that class is less than the minimum cost price prescribed in respect of live stock of that class;
(b) where the cost price of natural increase of that class has not been previously taken into account under this Act by the taxpayer:
(i) the cost price selected by the taxpayer, not being less than the minimum cost price prescribed in respect of live stock of that class; or
(ii) if:
(A) the taxpayer elects that this subparagraph apply in relation to live stock of that class; andthe actual cost price.
(B) the actual cost price per head of natural increase of that class is less than the minimum cost price prescribed in respect of live stock of that class;
For the purposes of paragraph (1)(b), where:
(a) a taxpayer does not select, as mentioned in subparagraph (1)(b)(i), within the time prescribed; and
(b) subparagraph (1)(b)(ii) does not apply;
the taxpayer shall be taken to have selected, as the cost price, the prescribed minimum cost price.
An election by a taxpayer under subparagraph (1)(a)(iii) or (b)(ii) must be made on or before the date of lodgment of the return of income of the taxpayer for the year of income to which the election relates, or before such later date as the Commissioner allows.
If no minimum cost price is prescribed in respect of live stock of a class, the cost price per head of natural increase of that class of live stock of a taxpayer is the actual cost price per head of natural increase of that class.
(a) after 19 August 1986, a taxpayer has incurred a service fee the whole or a part (which whole or part is in this subsection referred to as the ``attributable amount'' ) of which is attributable to the acquisition of a horse by the taxpayer by natural increase; and
(b) the attributable amount exceeds the amount that, but for this subsection, would be the cost price of the horse,
the cost price of the horse shall be the attributable amount.
For the purposes of this section, where:
(a) under an agreement:
(i) a taxpayer incurs a loss or outgoing; and
(ii) a female horse is inseminated; and
(b) as a result of the insemination, thetaxpayer acquires a horse by natural increase,
the Commissioner may, to such an extent as the Commissioner considers reasonable:
(c) in a case to which paragraph (d) does not apply - treat the loss or outgoing as a service fee incurred by the taxpayer and as attributable to that acquisition; or
(d) where the amount of the loss or outgoing incurred under the agreement would have been the same irrespective of the number of inseminations performed on the horse under the agreement - treat so much of the loss or outgoing as, in the Commissioner's opinion, relates to inseminations performed on the horse under the agreement as a service fee incurred by the taxpayer and as attributable to that acquisition.
In this section:
"agreement"
means an agreement, arrangement or understanding, whether formal or informal, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings;
"insemination"
includes artificial insemination;
"service fee"
means a fee for the insemination of a female horse.
(Repealed by No 44 of 1951)
Subsection (1) applies to a disposal of property only if the disposal takes place before 1 July 1997.
Note:
Sections 70-90 (Assessable income on disposal of trading stock outside the ordinary course of business) and 70-95 (Purchase price is taken to be market value) of the Income Tax Assessment Act 1997 deal with a disposal occurring on or after 1 July 1997.
Subject to this section, where:
the value of that property shall be included in the assessable income of the taxpayer, and the person acquiring that property shall be deemed to have purchased it at a price equal to that value. If subsection (1) applies to a disposal in the 1997-98 year of income of an item that is trading stock, but not trading stock as defined in the
Income Tax Assessment Act 1997
, you can deduct the item's value as taken into account at the end of the 1996-97 income year under Subdivision
B
(Trading stock) of Division
2
of Part
III
of this Act: see subsection
70-10(4)
of the
Income Tax (Transitional Provisions) Act 1997
.
(a)
a taxpayer disposes by sale, gift, or otherwise of property being trading stock, standing or growing crops, crop-stools, or trees which have been planted and tended for the purpose of sale;
(b)
that property constitutes or constituted the whole or part of the assets of a business which is or was carried on by the taxpayer; and
(c)
the disposal was not in the ordinary course of carrying on that business;
Note:
Subsection (3) does not apply to a disposal of live stock that takes place on or after 1 July 1997.
Note:
Subdivision 385-E (Primary producer can elect to spread or defer tax on profit from forced disposal or death of live stock) of the Income Tax Assessment Act 1997 deals with such a disposal.
(Omitted by No 90 of 1952) 36(3) [Election in case of expropriation, natural disaster, and tick control]
(a) in consequence of:
(i) the acquisition or resumption of land under the provisions of an Act, a State Act or an Ordinance of a Territory that contains provisions for the compulsory acquisition or resumption of land;
(ii) the loss or destruction of pastures or fodder by reason of fire, drought or flood; or
(iii) the taking of a lease of land by a State for the purposes of a campaign for the eradication of cattle tick;
a taxpayer, in a year of income, disposes, by sale or otherwise, of live stock being assets of a business of primary production carried on by him in Australia; and
(b) the value of that live stock is, by virtue of subsection (1), included in the taxpayer's assessable income of that year;
the taxpayer may elect that that assessable income shall be reduced by an amount equal to four-fifths of the profit on the disposal of that live stock.
Subject to subsection (3B), where a taxpayer has made an election under subsection (3):
(a) his assessable income of the year to which the election relates shall be reduced by an amount equal to four-fifths of the profit on the disposal of the live stock; and
(b) there shall be included in his assessable income of each of the next 4 succeeding years an amount equal to one-fifth of that profit, and the amount so included in the assessable income of any year shall, for all purposes of this Act, be deemed to be assessable income derived by the taxpayer during that year from the carrying on by him in Australia, during that year, of a business of primary production.
Where the disposal is in consequence of the loss or destruction of pastures or fodder by reason of fire, drought or flood, subsection (3A) applies only if the taxpayer establishes to the satisfaction of the Commissioner that the proceeds (if any) of the disposal have been or will be applied by the taxpayer wholly or principally to the purchase of live stock, or to the maintenance of breeding stock, for the purpose of replacing the live stock disposed of.
Where live stock to which subsection (3) applies is disposed of by a partnership, each partner in the partnership shall be entitled to make an election under that subsection in relation to that part of the profit on the disposal of the live stock which is included in his individual interest in the net income of the partnership.
Where live stock to which subsection (3) applies is disposed of by the trustee of a trust estate:
(a) the trustee shall be entitled to make an election under that subsection in relation only to that part of the profit on the disposal of the live stock included in the net income of the trust estate in respect of which the trustee is liable to beassessed and to pay tax under the provisions of Division 6; and
(b) each beneficiary in the trust estate who is not under a legal disability and who is presently entitled to a share of the net income of the trust estate, which share includes a part of the profit on the disposal of the live stock, shall be entitled to make an electionunder that subsection in relation to that part.
Where, in any year of income, a taxpayer who has made an election under subsection (3):
(a) appears to the Commissioner to be about to leave Australia;
(b) dies;
(c) becomes bankrupt, or applies to take the benefit of any law for the relief of bankrupt or insolvent debtors, or compounds with his creditors, or makes an assignment of any of his property for their benefit; or
(d) being a company, commences to be wound up;
there shall, if the Commissioner so determines, be included, in the assessable income of the taxpayer of that year of income, any amount which would otherwise be included, in pursuance of this section, in the assessable income of any subsequent year of income, and the amount so included shall be deemed, for all purposes of this Act, to be assessable income derived by the taxpayer during that first-mentioned year of income from the carrying on by him in Australia, during that year, of a business of primary production.
The election which a taxpayer may make under subsection (3) must be made on or before the date of lodgment of the return of income of the year in which the disposal occurred, or within such further time as the Commissioner may allow.
Subsection (7A) does not allow a deduction for the 1997-98 year of income or a later year of income.
Note:
Paragraph 70-120(2)(c) and subsection 70-120(5) of the Income Tax Assessment Act 1997 allow you to deduct the price you paid for trees on land, and associated capital expenditure, if you dispose of the trees in one of those years of income outside the ordinary course of carrying on a business.
(a) a taxpayer has acquired land carrying trees; and
(b) part of the price paid for the land was attributable to the trees; and
(c) the taxpayer tended the trees for the purposes of sale; and
(d) the trees were held by the taxpayer in connection with timber operations (within the meaning of Division 10A ) for the purpose of gaining or producing assessable income; and
(e) after 9 May 1995, the taxpayer disposed of the trees (by sale, gift or otherwise); and
(f) the trees were assets of a business which is or was carried on by the taxpayer; and
(g) the disposal was not in the ordinary course of carrying on that business;
the sum of the following amounts is allowable as a deduction to the taxpayer for the year of income in which the disposal occurred:
(h) so much of the price paid by the taxpayer for the land as is attributable to the trees;
(i) so much of any other expenditure of a capital nature incurred by the taxpayer as is attributable to the acquisition of the trees.
Paragraph (7A)(i) does not apply to an amount that has been allowed, or is allowable, as a deduction to the taxpayer for any year of income under a provision of this Act other than subsection (7A).
For the purposes of subsection (7A), if:
(a) the taxpayer acquired the land in a transaction where the parties did not deal with each other at arm's length in relation to the transaction; and
(b) the price paid by the taxpayer for the land was greater than was reasonable;
the price paid by the taxpayer for the land is taken to be the amount that would have been reasonable if the parties had dealt with each other at arm's length.
For the purposes of subsection (7A), if:
(a) the taxpayer has incurred expenditure covered by paragraph (7A)(i) in connection with a transaction where the parties did not deal with each other at arm's length in relation to the transaction; and
(b) the amount of the expenditure was greater than was reasonable;
the amount of the expenditure is taken to be the amount that would have been reasonable if the parties had dealt with each other at arm's length.
For the purposes of this section and section 36AAA :
(a) the value of any property or live stock shall be:
(i) the market value of the property or live stock on the day of the disposal; or
(ii) if, in the opinion of the Commissioner, there is insufficient evidence of the market value on that day - the value which in his opinion is fair and reasonable;
(b) the profit on the disposal of live stock shall be the amount remaining after deducting from the proceeds of the sale of the live stock or, where the live stock was disposed of together with any other assets or the disposal was otherwise than by sale, from the value of the live stock, the total of the following amounts:
(i) in respect of such of the live stock as was on hand at the beginning of the year of income - the value at which that live stock was, for the purposes of this Act, taken into account at the beginning of that year;
(ii) in respect of such of the live stock as was not on hand at the beginning of that year:
(1) in the case of live stock acquired by purchase - the purchase price of that live stock; and
(2) in the case of live stock acquired otherwise than by purchase, but not including natural increase bred by the taxpayer during that year - the amount which, under this Act, is deemed to be the purchase price of that live stock.
Notwithstanding subsection (8), the value for the purposes of this section of any property disposed of by the taxpayer after 7 April 1978 shall, if the Commissioner so determines, be such value as the Commissioner considers reasonable, having regard to:
(a) the cost to the taxpayer of the property;
(b) if, in any agreement entered into in connexion with the disposal of the property, an amount was specified as the value of the property or as the consideration received or receivable in respect of the disposal - the amount so specified;
(c) if, before the property was disposed of, an agreement or arrangement (whether or not enforceable by legal proceedings and whether or not intended to be so enforceable) was entered into, or an understanding was reached, as a result of which, at any time after the disposal took place, there has been, or there could reasonably be expected to be, a substantial reduction in the value of the property - that agreement, arrangement or understanding;
(ca) if, before the property was disposed of by the taxpayer, an agreement or arrangement (whether or not enforceable by legal proceedings and whether or not intended to be so enforceable) was entered into, or an understanding was reached, under which, or by reason of which, the person or persons who acquired the property from the taxpayer was or were under an obligation, or could reasonably be expected, to dispose of the property to another person or other persons (whether or not that other person was, or those other persons included, the taxpayer) for a consideration less than the market value of the property at the time when it was disposed of by the taxpayer - that agreement, arrangement or understanding;
(d) if the disposal of the property by the taxpayer or the acquisition of the property by the person or persons who acquired the property arose out of, or was made in the course of, a transaction, operation, undertaking, scheme or arrangement that was entered into or carried out for the purpose, or for purposes that included the purpose, of securing that a person who, if the transaction, operation, undertaking, scheme or arrangement had not been entered into or carried out, would have been liable to pay income tax in respect of a year of income would not be liable to pay income tax in respect of that year of income or would be liable to pay less income tax in respect of that year of income than that person would have been liable to pay if the transaction, operation, undertaking, scheme or arrangement had not been entered into or carried out - that transaction, operation, undertaking, scheme or arrangement;
(e) if the disposal of the property by the taxpayer or the acquisition of the property by the person or persons who acquired the property arose out of, or was made in the course of, a transaction, operation, undertaking, scheme or arrangement that the Commissioner is satisfied was by way of dividend stripping or was similar to a transaction, operation, undertaking, scheme or arrangement by way of dividend stripping - that transaction, operation, undertaking, scheme or arrangement; and
(f) any other matters that the Commissioner considers relevant.
A reference in subsection (9) to property shall be read as a reference to property being trading stock, standing or growing crops, crop-stools or trees which have been planted and tended for the purposes of sale.
This section does not apply to a disposal or death of live stock on or after 1 July 1997.
Note:
Subdivision 385-E (Primary producer can elect to spread or defer tax on profit from forced disposal or death of live stock) of the Income Tax Assessment Act 1997 deals with such a disposal or death.
(a) live stock being assets of a business of primary production carried on by a taxpayer in Australia -
(i) dies by reason of a disease for the purpose of controlling or eradicating which provision is made by a law of the Commonwealth, of a State or of a Territory for or in relation to the compulsory destruction of live stock; or
(ii) is destroyed in pursuance of a law of the Commonwealth, of a State or of a Territory that makes provision for or in relation to the compulsory destruction of live stock for the purpose of controlling or eradicating a disease;
(b) the proceeds of the death of the live stock would, apart from this section, be included in the assessable income of the taxpayer of a year or years of income; and
(c) there is a profit arising in respect of the death of the live stock,
the taxpayer may elect that this section shall apply in relation to the profit arising in respect of the death of the live stock.
(a) live stock, being assets of a business of primary production carried on by a taxpayer in Australia are disposed of, by sale or otherwise, by the taxpayer in consequence of an official notification under a law of the Commonwealth, a State or a Territory dealing with contamination of land, live stock or other property; and
(b) the proceeds of the disposal of the live stock would, apart from this section, be included in the assessable income of the taxpayer of a year or years of income; and
(c) there is a profit arising in respect of the disposal of the live stock;
the taxpayer may elect that this section is to apply in relation to the profit arising in respect of the disposal of the live stock.
Where a taxpayer makes an election under subsection (1) or (1A) -
(a) the whole of the proceeds of the death or disposal of the live stock to which the election relates (whenever received) shall be included in the assessable income of the taxpayer of the year of income in which the live stock died or was destroyed or disposed of and no part of those proceeds shall be included in the assessable income of the taxpayer of any other year of income;
(b) the assessable income of the taxpayer of the year of income in which the live stock died or was destroyed or disposed of shall be reduced by an amount equal to four-fifths of the profit in relation to which the election is made; and
(c) there shall be included in the assessable income of the taxpayer of each of the next 4 succeeding years of income an amount equal to one-fifth of the profit in relation to which the election is made, and the amount so included in the assessable income of the taxpayer of any year of income shall, for the purposes of this Act, be deemed to be derived by the taxpayer during that year of income from the carrying on by him in Australia, during that year of income, of a business of primary production.
Where live stock is an asset of a partnership and, if that live stock were owned by a person other than as a partner or a trustee of a trust estate, that person would be entitled to make an election under subsection (1) or (1A) in relation to the live stock -
(a) any partner in the partnership may make an election under that subsection in relation to the part of the profit arising in respect of the death or disposal of the live stock that is included in his individual interest in the net income of the partnership; and
(b) where a partner makes such an election, paragraph (2)(a) does not apply but, for the purpose of assessments in respect of that partner, the net income of the partnership shall be ascertained as if the proceeds of the death or disposal of the live stock to which the election relates (whenever received) had been received by the partnership in the year of income in which the live stock died or was destroyed or disposed of.
Where live stock referred to in subsection (1) or (1A) is owned by the trustee of a trust estate -
(a) the trustee may make an election under that subsection in relation only to the part of the profit arising in respect of the death or disposal of the live stock that is included in the net income of the trust estate in respect of which the trustee is liable to be assessed and to pay tax under the provisions of Division 6 ; and
(b) each beneficiary in the trust estate who is not under a legal disability and is presently entitled to a share of the net income of the trust estate, being a share that includes a part of the profit arising in respect of the death or disposal of the live stock, may make an election under that subsection in relation to that part and, where a beneficiary makes such an election, paragraph (2)(a) does not apply but, for the purpose of assessments in respect of that beneficiary, the net income of the trust estate shall be ascertained as if the proceeds of the death or disposal of the live stock to which the election relates (whenever received) had been received by the trustee in the year of income in which the live stock died or was destroyed or disposed of.
Where, in a year of income, a taxpayer who has made an election under subsection (1) or (1A) -
(a) appears to the Commissioner to be about to leave Australia;
(b) dies;
(c) becomes bankrupt, applies to take the benefit of any law for the relief of bankrupt or insolvent debtors, compounds with his creditors or makes an assignment of any of his property for their benefit;
(d) being a company, commences to be wound up; or
(e) both of the following conditions are satisfied:
(i) the taxpayer has made an election under subsection (1A);
(ii) the taxpayer ceases to carry on the business of primary production of which the live stock that were disposed of were assets;
there shall, if the Commissioner so determines, be included in the assessable income of the taxpayer of that year of income any amount that would otherwise be included, in pursuance of this section and in consequence of the election, in the assessable income of any subsequent year of income, and the amount so included shall be deemed, for the purposes of this Act, to be derived by the taxpayer during that first-mentioned year of income from the carrying on by him in Australia, during that year of income, of a business of primary production.
An election by a taxpayer under subsection (1) or (1A) must be made on or before -
(a) the date of lodgment of the return of income of the taxpayer of the year of income in which the proceeds of the death or disposal of the live stock to which the election relates were received; or
(b) if the whole of those proceeds was not received in one year of income - the date of lodgment of the return of income of the taxpayer of the latest year of income in which any part of those proceeds was received,
or on or before such later date as the Commissioner allows.
In this section, a reference to the proceeds of the death of any live stock shall be read as a reference to the sum of -
(a) any amount received by the person who owned the live stock from the Commonwealth, from a State, from the Administration of a Territory or from an authority constituted by or under a law of the Commonwealth, of a State or of a Territory by way of compensation for the death or destruction of the live stock; and
(b) any amount received by the person who owned the live stock as payment for the carcases, or any part of the carcases, of the live stock.
In this section, a reference to profit arising in respect of the death of any live stock shall be read as a reference to the amount remaining after deducting from the proceeds of the death of the live stock the sum of -
(a) in respect of any of the live stock that was on hand at the beginning of the year of income in which the live stock died or was destroyed - the value at which that live stock is, for the purposes of this Act, to be taken into account at the beginning of that year of income; and
(b) in respect of any of the live stock that was not on hand at the beginning of that year of income -
(i) in the case of live stock acquired by purchase - the purchase price of that live stock; and
36AA(9) [``Proceeds of the disposal of any live stock'']
(ii) in the case of live stock acquired otherwise than by purchase, but not including natural increase bred during that year of income by the person who owned the live stock at the time of its death or destruction - the amount that, under this Act, is deemed to be the purchase price of that live stock.
In this section, a reference to the proceeds of the disposal of any live stock is to be read as a reference to the sum of:
(a) any amount received by the person who owned the live stock by way of compensation for:
(i) the condemnation of the live stock; or
resulting from an official notification under a law of the Commonwealth, a State or a Territory dealing with contamination of land, live stock or other property; and
(ii) the loss or diminution of the value of the live stock;
(b) any amount received by the person who owned the live stock as payment for:
(i) the live stock; or
(ii) the carcases, or any part of the carcases, of the live stock.
In this section, a reference to profit arising in respect of the disposal of any live stock is to be read as a reference to the amount remaining after deducting from the proceeds of the disposal of the live stock the sum of:
(a) in respect of any of the live stock that were on hand at the beginning of the year of income in which the live stock were disposed of - the value at which the live stock is, for the purposes of this Act, to be taken into account at the beginning of that year of income; and
(b) in respect of any of the live stock that were not on hand at the beginning of the year of income:
(i) in the case of live stock acquired by purchase - the purchase price of that live stock; and
(ii) in the case of live stock acquired otherwise than by purchase, but not including natural increase bred during that year of income by the person who owned the live stock at the time of the disposal - the amount that, under this Act, is taken to be the purchase price of that live stock.
In this section:
"official notification"
includes a declaration, direction, instruction or order.
Subsection (1) applies to a change of ownership of, or interests in, property only if the change takes place before 1 July 1997.
Note:
Section 70-100 (Notional disposal when you stop holding an item as trading stock) of the Income Tax Assessment Act 1997 deals with a change taking place on or after 1 July 1997.
Where, for any reason, including:
(a) the formation or dissolution of a partnership; or
(b) a variation in the constitution of a partnership, or in the interests of the partners,
a change has occurred in the ownership of, or in the interests of persons in, property constituting the whole or part of the assets of a business and being trading stock, standing or growing crops, crop-stools, or trees which have been planted and tended for the purpose of sale, and the person, or one or more of the persons, who owned the property before the change has or have an interest in the property after the change, section 36 applies as if the person or persons who owned the property before the change had, on the day on which the change occurred, disposed of the whole of the property to the person, or all the persons, by whom the property is owned after the change.
(a) property in relation to which subsection (1) applies has become, upon the change in ownership or interests, an asset of a business carried on by the person or persons by whom the property is owned after the change;
(b) the person or persons by whom the property was owned before the change holds or hold, after the change, an interest or interests in the property of a value equal to not less than one-quarter of the value of the property;
(c) the value of the property as ascertained in accordance with paragraph 36(8)(a) is greater than the value (if any) that would have been taken into account at the end of the year of income if no disposal had taken place and the year of income had ended on the date of the change; and
(d) the person or persons by whom the property was owned before the change together with the person or persons by whom the property is owned after the change agree that this subsection shall apply in respect of the property,
the value of the property, for the purposes of section 36 , shall be, instead of the value specified in paragraph 36(8)(a) , the value (if any) that would have been taken into account at the end of the year of income if no disposal had taken place and the year of income had ended on the date of the change.
An agreement under paragraph (2)(d) must be:
(a) in writing and signed by, or on behalf of, each party to the agreement; and
(b) made on or before 31 August next succeeding the end of the financial year in which the change in ownership or interests occurred or on or before such later date as the Commissioner determines.
Where subsection (1) applies in relation to property in consequence of the death of a member of a partnership, the persons by whom a notice in pursuance of subsection (2) may be given shall include, in lieu of the deceased person, the trustee of his estate and the beneficiaries (if any) who are liable to be assessed in respect of the whole or a share in the income of the business of which the property becomes an asset.
A notice for the purposes of subsection (2) given on or after 24 May 1977, to the extent to which the notice is in respect of a change in the ownership of, or in the interests of persons in, property, being:
(a) a share or stock in the capital of a company;
(b) a debenture, note or other security issued in respect of a loan to a company; or
(c) any other chose in action,
does not have any effect unless the persons giving the notice establish to the satisfaction of the Commissioner that the change in ownership or interests occurred before that date.
A notice for the purposes of subsection (2) given after 10 May 1979, to the extent to which the notice is in respect of a change in the ownership of, or in the interests of persons in, property, being a chose in action that is not of a kind referred to in subsection (5), does not have any effect unless the persons giving the notice establish to the satisfaction of the Commissioner that the change in ownership or interests occurred on or before that date.
Notwithstanding subsection (2), a notice for the purposes of that subsection given after 10 May 1979 does not have any effect to the extent to which the notice is in respect of a change in the ownership of, or in the interests of persons in, property:
(a) that is not a chose in action;
(b) the value of which for the purposes of section 36 is determined by the Commissioner under subsection (9) of that section; and
(c) the value of which determined under subsection (9) of that section is less than or equal to the value of the property applicable in accordance with subsection (2) of this section,
unless the persons giving the notice establish to the satisfaction of the Commissioner that the change in ownership or interests occurred on or before that date.
(a) a change has occurred, otherwise than in the course of ordinary family or commercial dealing, in the ownership of, or in the interests of persons in, property that is not a chose in action and is not property to which paragraphs (7)(b) and (c) apply;
(b) a notice for the purposes of subsection (2) in respect of the change in ownership or interests was given to the Commissioner after 30 January 1981 and before the commencement of this subsection or is given to the Commissioner after the commencement of this subsection;
(c) consideration was received or receivable in connection with the change in ownership or interests by the person, or by any one of more of the persons, who owned the property before the change; and
(d) the amount or value of that consideration substantially exceeds the amount or value of the consideration that might reasonably be expected to have been received or receivable by the person or persons referred to in paragraph (c) in connection with the change in ownership or interests if the value of the property, immediately before the change, had been the value applicable in accordance with subsection (2),
then, notwithstanding subsection (2), the notice does not have any effect to the extent to which the notice is in respect of that change in ownership or interests unless the persons giving the notice establish to the satisfaction of the Commissioner that the change in ownership or interests occurred on or before 30 January 1981.
For the purposes of the application of subsection (8) in relation to a change in the ownership of, or in the interests of persons in, property, so much of any consideration received or receivable by any person in connection with the change in ownership or interests as, in the opinion of the Commissioner, may appropriately be regarded as consideration received or receivable by the person or persons who owned the property before the change in ownership or interests shall be deemed to be consideration received or receivable by that person or by those persons, as the case may be, in connection with the change in ownership or interests.
In forming an opinion for the purposes of subsection (9) whether it is appropriate that consideration received or receivable by a person (in this section referred to as the ``relevant person'' ) in connection with a change in the ownership of, or in the interests of persons in, property should be regarded, in whole or in part, as consideration received or receivable in connection with the change in ownership or interests by the person or persons who owned the property before the change in ownership or interests, the Commissioner shall have regard to:
(a) any agreement entered into in connection with the change in ownership or interests;
(b) any agreement entered into in connection with the payment of the consideration to, or the receipt of the consideration by, the relevant person where, as a result of, or in connection with, the agreement, the person or any of the persons, who owned the property before the change in ownership or interests or any other person (other than the relevant person) will benefit from the giving of the consideration to, or the receipt of the consideration by, the relevant person;
(c) the nature of any connection (whether of a business, family or other nature) between the relevant person and the person, or any of the persons, who owned the property before the change in ownership or interests; and
(d) any other matters that the Commissioner considers relevant.
In subsection (10), ``agreement'' means any agreement, arrangement or understanding, whether formal or informal, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings.
In subsections (8), (9) and (10), a reference to consideration received or receivable by a person in connection with a change in the ownership of, or in the interests of persons in, property includes a reference to the amount or value of any benefit obtained, or that may reasonably be expected to be obtained, by the person in connection with that change in ownership or interests.
Subsection (1) applies only to property devolving as a result of a person dying before 1 July 1997.
Note:
Section 70-105 (Death of owner) of the Income Tax Assessment Act 1997 applies to property devolving as a result of a person dying on or after 1 July 1997.
Where the assets of a business carried on by a taxpayer devolve by reason of his death, and those assets include any property being trading stock, standing or growing crops, crop-stools, or trees which have been planted and tended for the purpose of sale, the value of that property shall, subject to this Act, be included in the assessable income derived by the deceased up to the date of his death, and the person upon whom the property devolves shall be deemed to have purchased it at that value.
For the purpose of subsection (1), the value of the property is the amount which, under section
36
, would have been included in respect of that property in the assessable income of the deceased person if he had not died but had disposed of the property, otherwise than in the ordinary course of his business, on the day of his death:
An agreement under subsection (2) must be in writing and signed by or on behalf of, each party to the agreement.
Where goods manufactured out of Australia are imported into Australia and the goods are, either before or after importation, sold in Australia by the manufacturer of the goods, the profit deemed to be derived in Australia from the sale shall be ascertained by deducting from the sale price of the goods:
(a) the amount for which, at the date the goods were shipped to Australia, goods of the same nature and quality could be purchased by a wholesale buyer in the country of manufacture; and
(b) the expenses incurred in transporting them to and selling them in Australia; and
(c) if the sale is a taxable supply - an amount equal to the net GST payable on the supply.
Where goods which are imported into Australia are, either before or after importation, sold in Australia by a person not being the manufacturer of the goods, the profit deemed to be derived in Australia from the sale shall be ascertained by deducting from the sale price of the goods:
(a) their purchase price; and
(b) the expenses incurred in transporting them to and selling them in Australia;and
(c) if the sale is a taxable supply - an amount equal to the net GST payable on the supply.
Where the profit cannot be ascertained under section 38 or 39 to the satisfaction of the Commissioner, it shall be deemed to be such amount as the Commissioner determines.
Where a person sells goods by means of anything done by himself when in Australia, or by means of an agent or representative in Australia, and those goods are in Australia or are to be brought into Australia for the purpose, or in pursuance or in consequence, of such sale, he shall be deemed to have sold them in Australia. A sale is deemed to be made by means of a person or of something done when such person or thing done is instrumental in bringing about the sale. SECTION 42 42 EX-AUSTRALIAN PROFITS
In any case, not specified in the preceding sections of this subdivision, where -
(a) by reason of the manufacture, production, or purchase of goods in one country and their sale in another;
(b) by reason of successive steps of production or manufacture in different countries; or
(c) by reason of the making of contracts in one country and their performance in another,
or for any other reason whatever, a question arises whether the whole or any part (and, if a part, what part) of any profit is derived by a person from sources in Australia, the question shall be determined in accordance with the regulations, or if there is no regulation applying to the case, shall be determined by the Commissioner.
The assessable income of a taxpayer shall include any profit derived by him in the year of income which, under the provisions of this subdivision, is derived or deemed to be derived in Australia and the proceeds of any sale to which this subdivision applies shall not otherwise be included in his assessable income.
43(2) [Expenditure not deductible]No amount taken into account in ascertaining any such profit, and no expenditure incurred directly or indirectly in or in relation to any such sale, shall be an allowable deduction.
Subdivision D - Dividends SECTION 45 STREAMING OF BONUS SHARES AND UNFRANKED DIVIDENDSCCH Note:
Below is s 45(4) repealed as inoperative by No 101 of 2006.
Expressions used in this section that are defined in Part IIIAA have the same meanings as in that Part.
CCH Note:
Below is s 45B(8)(g) repealed as inoperative by No 101 of 2006.
(g) whether the relevant taxpayer or an associate (within the meaning in section 318 ) of the taxpayer is a private company that would not have been entitled to a rebate under section 46F if the taxpayer had been paid an equivalent dividend instead of the demerger benefit or capital benefit; SECTION 45Z ENTITLEMENT TO INTERCORPORATE DIVIDEND REBATE WHERE SHAREHOLDER IS A TRUSTEE OR PARTNERSHIP 45Z(1A) Application of section.
(a) does not apply to a dividend that is paid in respect of a non-equity share in a company; and
(b) has effect subject to section 45ZA .
(a) a share in a company (in this subsection called the ``first company'' ) is held by a shareholder as trustee for another company (in this subsection called the ``second company'' ) who is absolutely entitled to the share as against the trustee; and
(b) the second company is not a taxpayer in the capacity of trustee; and
(c) a dividend is paid to the trustee in respect of the share; and
(ca) the second company is a qualified person in relation to the dividend for the purposes of Division 1A of Part IIIAA ; and
(d) the whole or a part of an amount included in the second company's assessable income under section 97 (which whole or part is in this subsection called the ``assessable amount'' ) is attributable to that dividend;
sections 46 to 46F (inclusive) apply as if:
(e) the second company were a shareholder in the first company; and
(f) the dividend were paid by the first company to the second company instead of to the trustee; and
(g) the amount of the dividend were equal to the assessable amount; and
(h) the second company's interest in the share were the share in respect of which the dividend was paid; and
(i) a reference to the year of income in which the dividend was paid to the second company were a reference to the year of income to which the assessable amount relates; and
(j) a reference to a specified date or specified time before, on, at or after which the dividend was paid to the second company were a reference to the date or time before, on, at or after which the dividend was paid to the trustee; and
(k) the question of when the share was issued to the second company were answered by reference to the time when the share was issued to the trustee; and
(l) the question of when the share was issued to a person other than the second company were answered by reference to the time when the share was issued to the other person; and
(m) the question whether the payment of the dividend to the second company may reasonably be regarded as equivalent to the payment of interest on a loan were answered by reference to matters relating to the payment of the dividend to the trustee; and
(n) the question of the extent to which the dividend was paid by the first company to the second company out of particular profits were answered by reference to the dividend paid to the trustee; and
(o) the question of the extent to which the dividend paid to the second company was franked were answered by reference to the dividend paid to the trustee; and
(p) the question of when the dividend paid to the second company was declared were answered by reference to the dividend paid to the trustee.
(a) a share in a company (in this subsection called the ``first company'' ) is held by a shareholder as trustee of a trust estate; and
(b) a dividend is paid to the trustee in respect of the share; and
(c) the following conditions are satisfied in relation to a taxpayer, being a company (in this subsection called the ``second company'' ):
(i) the second company is not a taxpayer in the capacity of trustee;
(ii) the second company is not absolutely entitled to the share as against the trustee;
(iia) the second company is a qualified person in relation to the dividend for the purposes of Division 1A of Part IIIAA ;
(iii) an amount is included in the assessable income of the second company of a year of income under subsection 92(1) or section 97 or 100 ;
(iv) the whole or a part of the amount so included in the second company's assessable income (which whole or part is in this subsection called the ``assessable amount'' ) is either:
(A) directly attributable to that dividend; or
(B) indirectly attributable to that dividend, through one or more interposed trusts or partnerships;
sections 46 to 46F (inclusive) apply as if:
(d) the second company were a shareholder in the first company; and
(e) the dividend were paid by the first company to the second company instead of to the trustee; and
(f) the amount of the dividend were equal to the assessable amount; and
(g) if the second company has an interest in the share (whether that interest is held directly or indirectly through one or more interposed trusts or partnerships) - that interest were the share in respect of which the dividend was paid; and
(h) if the second company does not have an interest in the share (including an interest held directly or indirectly through one or more interposed trusts or partnerships):
(i) the second company had an interest in the share; and
(ii) that interest had been acquired by the second company at the time when the share was acquired by the trustee; and
(iii) that interest were the share in respect of which the dividend was paid; and
(i) a reference to the year of income in which the dividend was paid to the second company were a reference to the year of income to which the assessable amount relates; and
(j) a reference to a specified date or specified time before, on, at or after which the dividend was paid to the second company were a reference to the date or time before, on, at or after which the dividend was paid to the trustee; and
(k) the question of when the share was issued to the second company were answered by reference to the time when the share was issued to the trustee; and
(l) the question of when the share was issued to a person other than the second company were answered by reference to the time when the share was issued to the other person; and
(m) the question whether the payment of the dividend to the second company may reasonably be regarded as equivalent to the payment of interest on a loan were answered by reference to matters relating to the payment of the dividend to the trustee; and
(n) the question of the extent to which the dividend was paid by the first company to the second company out of particular profits were answered by reference to the dividend paid to the trustee; and
(o) the question of the extent to which the dividend paid to the second company was franked were answered by reference to the dividend paid to the trustee; and
(p) the question of when the dividend paid to the second company was declared were answered by reference to the dividend paid to the trustee.
(a) a share in a company (in this subsection called the ``first company'' ) is held by a partnership in which another company (in this subsection called the ``second company'' ) is a partner; and
(b) the second company is not a taxpayer in the capacity of trustee; and
(c) a dividend is paid to the partnership in respect of the share; and
(ca) the second company is a qualified person in relation to the dividend for the purposes of Division 1A of Part IIIAA ; and
(d) the whole or a part of an amount included in the second company's assessable income under section 92 (which whole or part is in this subsection called the ``assessable amount'' ) is attributable to that dividend;
sections 46 to 46F (inclusive) apply as if:
(e) the second company were a shareholder in the first company; and
(f) the dividend were paid by the first company to the second company instead of to the partnership; and
(g) the amount of the dividend were equal to the assessable amount; and
(h) the second company's interest in the share were the share in respect of which the dividend was paid; and
(i) a reference to the year of income in which the dividend was paid to the second company were a reference to the year of income to which the assessable amount relates; and
(j) a reference to a specified date or specified time before, on, at or after which the dividend was paid to the second company were a reference to the date or time before, on, at or after which the dividend was paid to the partnership; and
(k) the question of when the share was issued to the second company were answered by reference to the time when the share was issued to the partnership; and
(l) the question of when the share was issued to a person other than the second company were answered by reference to the time when the share was issued to the other person; and
(m) the question whether the payment of the dividend to the second company may reasonably be regarded as equivalent to the payment of interest on a loan were answered by reference to matters relating to the payment of the dividend to the partnership; and
(n) the question of the extent to which the dividend was paid by the first company to the second company out of particular profits were answered by reference to the dividend paid to the partnership; and
(o) the question of the extent to which the dividend paid to the second company was franked were answered by reference to the dividend paid to the partnership; and
(p) the question of when the dividend paid to the second company was declared were answered by reference to the dividend paid to the partnership.
(a) a share in a company (in this subsection called the ``first company'' ) is held by a partnership; and
(b) a dividend is paid to the partnership in respect of the share; and
(c) the following conditions are satisfied in relation to a taxpayer, being a company (in this subsection called the ``second company'' ):
(i) the second company is not a taxpayer in the capacity of trustee;
(ii) the second company is not a partner in the partnership;
(iia) the second company is a qualified person in relation to the dividend for the purposes of Division 1Aof Part IIIAA ;
(iii) an amount is included in the assessable income of the second company of a year of income under subsection 92(1) or section 97 or 100 ;
(iv) the whole or a part of the amount so included in the second company's assessable income (which whole or part is in this subsection called the ``assessable amount'' ) is either:
(A) directly attributable to that dividend; or
(B) indirectly attributable to that dividend, through one or more interposed trusts or partnerships;
sections 46 to 46F (inclusive) apply as if:
(d) the second company were a shareholder in the first company; and
(e) the dividend were paid by the first company to the second company instead of to the partnership; and
(f) the amount of the dividend were equal to the assessable amount; and
(g) if the second company has an interest in the share (whether that interest is held directly or indirectly through one or more interposed trusts or partnerships) - that interest were the share in respect of which the dividend was paid; and
(h) if the second company does not have an interest in the share (including an interest held directly or indirectly through one or more interposed trusts or partnerships):
(i) the second company had an interest in the share; and
(ii) that interest had been acquired by the second company at the time when the share was acquired by the partnership; and
(iii) that interest were the share in respect of which the dividend was paid; and
(i) a reference to the year of income in which the dividend was paid to the second company were a reference to the year of income to which the assessable amount relates; and
(j) a reference to a specified date or specified time before, on, at or after which the dividend was paid to the second company were a reference to the date or time before, on, at or after which the dividend was paid to the partnership; and
(k) the question of when the share was issued to the second company were answered by reference to the time when the share was issued to the partnership; and
(l) the question of when the share was issued to a person other than the second company were answered by reference to the time when the share was issued to the other person; and
(m) the question whether the payment of the dividend to the second company may reasonably be regarded as equivalent to the payment of interest on a loan were answered by reference to matters relating to the payment of the dividend to the partnership; and
(n) the question of the extent to which the dividend was paid by the first company to the second company out of particular profits were answered by reference to the dividend paid to the partnership; and
(o) the question of the extent to which the dividend paid to the second company was franked were answered by reference to the dividend paid to the partnership; and
(p) the question of when the dividend paid to the second company was declared were answered by reference to the dividend paid to the partnership.
A reference in paragraphs (1)(a) and (b), (2)(a) and (c), (3)(b) and (4)(c) to a trustee does not include a reference to the trustee of:
(a) a corporate unit trust within the meaning of Division 6B; or
(b) a public trading trust within the meaning of Division 6C. 45Z(6) [Assumed unfranked dividend]
If a determination under paragraph 177EA(5)(b) is made in respect of the assessable amount referred to in subsection (1), (2), (3) or (4), assume that the dividend referred to in paragraph (1)(f), (2)(e), (3)(f) or (4)(e), as the case may be, was an unfranked dividend.
(a) an amount (the distributed amount ) is included in the assessable income of a taxpayer that:
(i) is a company; and
(ii) is a beneficiary in a trust estate or a partner in a partnership; and
(b) an amount (the attributable amount ) that is the whole or a part of the distributed amount was attributable to the payment of a dividend by a company; and
(c) the attributable amount was paid to the taxpayer:
(i) in respect of an interest in the trust or partnership that was created before the commencing time and either was acquired on or after 2 July 1998 or was created or acquired for a term that was extended at or after the commencing time; or
(ii) in respect of an interest in the trust or partnership that was created at or after the commencing time; or
(iii) under a finance arrangement (including an arrangement extending an earlier arrangement) to which the trustee of the trust, or the partnership, is a party and which was or is entered into at or after the commencing time; and
(d) the payment to the taxpayer of the attributable amount or the distributed amount may reasonably be regarded as equivalent to the payment of interest on a loan. 45ZA(2) [Reasonably regarded as equivalent]
In determining whether the payment of the attributable amount or the distributed amount may reasonably be regarded as equivalent to the payment of interest on a loan, regard is to be had to:
(a) the way in which the amount was calculated; and
(b) the conditions applying to the payment of the amount; and
(c) any other relevant matters. 45ZA(3) [No rebate under s 46 or 46A]
The taxpayer is not entitled to a rebate of tax under section 46 or 46A (as the section concerned has effect under section 45Z ) in respect of the attributable amount.
45ZA(4) [Definitions]In this section:
arrangement
means any agreement, arrangement or understanding, whether formal or informal, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings.
associate
has the meaning given by section
318
but includes:
(a) in relation to a trustee - the controller of the trust; and
(b) in relation to a company that is a member of a wholly-owned group (determined in accordance with Subdivision 975-W of the Income Tax Assessment Act 1997 ) - any other company that is a member of the group.
commencing time
means 7.30 pm by legal time in the Australian Capital Territory on 13 May 1997.
controller
, in relation to a trust, means a person:
(a) who beneficially owns, or is able in any way, whether directly or indirectly, to control the application of, more than 50% of the interests in the trust property or in the trust income; or
(b) who has power to appoint or remove the trustee of the trust; or
(c) according to whose directions, instructions or wishes the trustee of the trust is accustomed or under an obligation, whether formal or informal, to act.
finance
includes money (including money in the currency of a foreign country) raised by the issue of shares or the creation of an interest in a trust or partnership.
finance arrangement
, in relation to a trustee or a partnership, means an arrangement entered into or carried out by any of the parties to the arrangement for the purpose, or for purposes that include the purpose:
(a) of enabling the trustee or partnership, or the company referred to in paragraph (1)(b), or an associate of the trustee, partnership or company, to obtain finance (whether by way of renewal or otherwise); or
(b) of enabling the trustee or partnership, or the company referred to in paragraph (1)(b), or an associate of the trustee, partnership or company, to obtain an extension of the period for which finance was obtained under an earlier arrangement.
interest
, in relation to a trust that is a discretionary trust, includes a right to receive, at the discretion of the trustee of the trust, benefits under the trust.
loan
includes the provision of credit or any other form of financial accommodation.
paid
: an attributable amount or distributed amount is taken to have been paid to a taxpayer if it is included in the taxpayer's assessable income.
(a) a partnership or the trustee of a trust has made an election under section 160APHR in relation to shares, or interests in shares, held by the partnership or trustee and managed by or on behalf of the partnership or trust as or in a discrete fund; and
(b) dividends (the relevant dividends ) are paid on the shares during the year of income. 45ZB(2) [Interpretation]
For the purposes of this section:
(a) a notional dividend rebate is taken to apply in relation to the partnership or trust in respect of the relevant dividends, and the amount of the notional dividend rebate is the amount of the rebate under section 46 or 46A to which the partnership or trust would be entitled if:
(i) the partnership or trustee were a company (other than a life assurance company) and a resident of Australia; and
(ii) the average rate of tax payable by the partnership or trust were the general company tax rate; and
(iii) the amounts (the included amounts ) included in the net income of the partnership or trust estate, or in the partnership loss, as the case may be, that are, or are attributable to, the relevant dividends were dividends paid to the company and included in its assessable income; and
(b) a notional ceiling amount is taken to apply in relation to the fund in relation to the year of income, and the notional ceiling amount is the amount that would be the ceiling amount in relation to the fund in relation to the year of income for the purposes of section 160AQZF if subparagraphs (a)(i) and (ii) of this subsection applied. 45ZB(3) [Excess rebate amount]
If the notional dividend rebate exceeds the notional ceiling amount, the excess is an excess rebate amount in respect of the included amounts.
45ZB(4) [Share of partner]Each partner in the partnership or beneficiary of the trust estate who is entitled to a share in the included amounts is taken to have a share in the excess rebate amount in proportion to the share of the partner or beneficiary in the included amounts.
45ZB(5) [Share in excess rebate amount]Any person who has an interest in the included amounts acquired indirectly through a partner or beneficiary referred to in subsection (4), or through one or more partnerships or trusts interposed between such a partner or beneficiary and the person, is also taken to have a share in the excess rebate amount corresponding to the person's indirect interest in the included amounts.
45ZB(6) [Reduction of company rebate](a) there is, in relation to a company, an assessable amount referred to in section 45Z that is directly or indirectly attributable to the included amounts; and
(b) the company has a share in the excess rebate amount;
the rebate to which the company is entitled (because of section 45Z ) under section 46 or 46A in respect of an amount attributable to the relevant dividends is reduced by:
(c) unless paragraph (d) applies - the amount of the company's share in the excess rebate amount; or
(d) if the company's average rate of tax is not the general company tax rate - the amount worked out by using the formula:
| The amount of the
company's share in the excess rebate amount |
× |
The company's average rate of tax
General company tax rate |
In this section:
general company tax rate
has the meaning given by section
160APA
.
Sections 46 and 46A do not apply to the franked part of a dividend paid to a taxpayer after 30 June 2002.
46AA(2)(Repealed by No 16 of 2003)
Sections 46 and 46A do not apply to the unfranked part of a dividend paid to a taxpayer after 30 June 2003.
46AB(2) [Application for members of certain groups]This section does not apply in relation to a taxpayer to which section 46AC applies.
This section applies to a taxpayer if:
(a) the taxpayer becomes a member of a consolidated group or MEC group on the day (the consolidation day ) the group comes into existence; and
(b) the consolidation day either is before 1 July 2003 or is both:
(i) the first day of the first year of income starting after 30 June 2003 of the group's head company (for a consolidated group) or provisional head company (for a MEC group) on the consolidation day; and
(ii) before 1 July 2004; and
(c) the taxpayer was not a member of a consolidated group or MEC group before the consolidation day.
Sections 46 and 46A do not apply to the unfranked part of a dividend paid to the taxpayer on or after the consolidation day.
46AC(3) [Interpretation]In this section:
consolidated group
has the same meaning as in the
Income Tax Assessment Act 1997
.
head company
has the same meaning as in the
Income Tax Assessment Act 1997
.
MEC group
has the same meaning as in the
Income Tax Assessment Act 1997
.
provisional head company
has the same meaning as in the
Income Tax Assessment Act 1997
.
(Repealed by No 16 of 2003)
This section applies to dividends paid after 30 June 2002.
46AE(2) [Qualified person]For the purposes of subsections 46(2B) and 46A(5B) , a shareholder is taken to be a qualified person in relation to a dividend for the purposes of Division 1A of Part IIIAA of the Income Tax Assessment Act 1936 , if the person would have been a qualified person in relation to the dividend under that Division if that Division applied to the dividend.
In this section:
(a) means a dividend paid by a company that is a resident but, except in paragraph (3)(a) or (b), does not include a dividend in relation to which section 46A applies; and
(b) does not include a dividend paid in respect of a non-equity share in the company.
(Repealed by No 89 of 2000)
(Repealed by No 62 of 1997)
PDF dividend
means a dividend paid to a shareholder that is a PDF.
private company dividend
, in relation to a shareholder that is a private company in relation to the year of income, means a dividend paid to the shareholder by another company, being a company that is a resident and is a private company in relation to the year of income of that other company in which the dividend was paid.
SME income component
has the same meaning as in Subdivision
B
of Division
10E
.
(Repealed by No 89 of 2000)
(Repealed by No 89 of 2000)
A reference in this section to the taxable income of a year of income of a shareholder that is a life assurance company is a reference to that part of the life assurance company's taxable income that is attributable to shareholders' funds income of the life assurance company for that year of income.
This section does not apply to a PDF dividend if the dividend is paid in respect of an unregulated investment (within the meaning of the Pooled Development Funds Act 1992 ).
(a) are paid to a shareholder in the year of income commencing on 1 July 1986 or a subsequent year of income; and
(b) apart from this subsection, would be private company dividends;
shall be taken for the purposes of this section to be private company dividends only to the extent of the amount of phasing-out dividends included in the distributable income of the shareholder of the year of income concerned for the purposes of Division 7 .
Subject to this section, a shareholder, being a company that is a resident, is entitled to a rebate in its assessment in respect of income of the year of income of the amount obtained by applying the average rate of tax payable by the shareholder:
(a) if the shareholder is a private company in relation to the year of income, to the sum of:
(i) one-half of the part of any private company dividends (other than PDF dividends) that is included in its taxable income; and
(ii) the part of any other dividends (other than PDF dividends) that is included in its taxable income; and
(b) if the shareholder is not a private company in relation to the year of income, to the part of any dividends (other than PDF dividends) that is included in its taxable income.
(a) one or more PDF dividends were paid in a year of income to a shareholder; and
(b) the shareholder is a resident;
the shareholder is entitled to a rebate in its assessment in respect of income of the year of income. The amount of the rebate is obtained by applying the rate of tax payable by the shareholder in respect of the SME income component of its taxable income to the part of any PDF dividends that is included in its taxable income.
A shareholder is not entitled to a rebate under subsection (2) or (2A) in respect of a dividend unless the shareholder is a qualified person in relation to the dividend for the purposes of Division 1A of Part IIIAA .
Subject to the succeeding provisions of this section, the Commissioner may allow a shareholder, being a company that is a private company in relation to the year of income and is a resident, a further rebate in its assessment of the amount obtained by applying the average rate of tax payable by the shareholder to one-half of the part of any private company dividends that is included in its taxable income if the Commissioner is satisfied that:
(a) the shareholder has not paid, and will not pay, a dividend during the period commencing at the beginning of the year of income of the shareholder and ending at the expiration of 10 months after that year of income to another private company;
(b) where the shareholder has paid, or may pay, a dividend during the period:
(i) commencing at the beginning of the year of income of the shareholder; and
to a company, being a private company in relation to the year of income of the company in which the dividend was, or may be, paid, the company has not paid, and will not pay, a dividend during the period:
(ii) ending at the expiration of 10 months after that year of income,
(iii) commencing at the beginning of the year of income of the company in which the dividend has been, or may be, paid by the shareholder; and
to another private company; or
(iv) ending at the expiration of 10 months after that year of income,
(c) having regard to all the circumstances, it would be reasonable to allow the further rebate.
Where, after the Commissioner has allowed a shareholder, being a company that is a private company in relation to a year of income and is a resident, a further rebate in its assessment in pursuance of subsection (3), the Commissioner becomes satisfied that, having regard to all the circumstances, the rebate ought not to have been allowed, the shareholder shall be deemed not to have been entitled to the rebate.
(Omitted by No 46 of 1986)
For the purposes of subsection (2) and subsection (3), but subject to subsection (6AA), the average rate of tax payable by a shareholder for a year of tax shall be deemed to be an amount per dollar being the amount ascertained by dividing the amount of income tax that would be assessed in respect of the taxable income derived by the shareholder in the year of income if:
(a) the shareholder was not entitled to any rebate of tax or credit against its liability to tax; and
(b) the shareholder was not liable to pay any tax under Division 7;
by a number equal to the number of whole dollars in that taxable income.
For the purposes of subsections (2) and (3), the average rate of tax payable for a year of tax by a shareholder that is a life assurance company is the rate of tax applicable under sections 23A and 23B of the Income Tax Rates Act 1986 for the year of income in respect of the ordinary class of the life assurance company's taxable income.
(Repealed by No 39 of 1997)
For the purposes of subsections (2) and (3), the part of any dividends that is included in the taxable income of a shareholder of the year of income is:
(a) if the taxable income is equal to or less than the amount of the dividends included in the assessable income of the shareholder of the year of income - the whole of the taxable income; or
(b) in any other case - so much of the taxable income as equals the amount (if any) of the dividends included in the assessable income of the shareholder of the year of income.
For the purposes of subsection (2A), the part of any PDF dividends that is included in the taxable income of a shareholder of the year of income is:
(a) if the SME income component of the taxable income is equal to or less than the amount of the PDF dividends included in the shareholder's assessable income of the year of income - the whole of the SME income component of the taxable income; or
(b) in any other case - so much of the SME income component of the taxable income as equals the amount (if any) of the PDF dividends included in the shareholder's assessable income of the year of income.
(a) a shareholder that is a company elects to value an item of trading stock in a particular way under section 70-45 of the Income Tax Assessment Act 1997 ; and
(b) that value is greater than it would have been if the shareholder had elected to value the item in a different way; and
(c) the shareholder made the actual election for the purpose, or for purposes including the purpose, of increasing the rebate to which the shareholder would be entitled under subsection (2) or (2A), or the rebate that might be allowed to the shareholder under subsection (3).
In calculating the rebate, the following are determined as if the shareholder had instead elected to value the item at the lowest amount at which the shareholder could have elected to value it under section 70-45 of the Income Tax Assessment Act 1997 :
(a) the part of any dividends (except PDF dividends) included in the shareholder's taxable income;
(b) the part of any private company dividends included in the shareholder's taxable income;
(c) the part of any PDF dividends included in the shareholder's taxable income.
A shareholder in a company that is a co-operative company within the meaning of Division 9 is not entitled to a rebate under this section in its assessment in respect of dividends paid to it by that company.
A shareholder in a company is not entitled to a rebate under this section in its assessment in respect of dividends paid to it by the company if the income of the company is exempt from tax under:
(a) Division 1AB of this Part; or
(b) item 1.1, 1.2, 1.3 or 1.4 of the table in section 50-5 , section 50-15 , or 50-25 or item 6.1 or 6.2 of the table in section 50-30 of the Income Tax Assessment Act 1997 .
(a) a dividend is paid by the company to a shareholder that is a life assurance company; and
(b) the assets of the life assurance company from which the dividend was derived were included in the insurance funds of the life assurance company at any time during the period that:
(i) starts at the beginning of the year of income of the life assurance company in which the dividend was paid; and
(ii) ends at the time when the dividend was paid;
the life assurance company is not entitled to a rebate under this section in its assessment in respect of the dividend unless at all times when those assets were included in the insurance funds of the life assurance company during that period they were held on behalf of the life assurance company's shareholders.
(Omitted by No 120 of 1995)
A shareholder in a capacity of trustee is not, and is taken never to have been, entitled to a rebate under this section.
Subsection (12) does not apply to the trustee of:
(a) a corporate unit trust within the meaning of Division 6B ; or
(b) a public trading trust within the meaning of Division 6C .
CCH Note:
Below is s 46A(13) repealed as inoperative by No 101 of 2006.
In considering whether it is reasonable to attribute the whole or any part of a deduction referred to in paragraph (10)(b) to any dividends, the Commissioner shall disregard the operation of section 50 .
In this section, unless the contrary intention appears -
arrangement
means any agreement, arrangement or understanding, whether formal or informal, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings.
associate
has the same meaning as in section
26AAB
.
commencing time
means 5 o'clock in the afternoon, by Australian Eastern Standard Time, on 7 April 1986.
debt dividend
, in relation to a shareholder, means a dividend (not being a debt dividend for the purposes of section 46D) paid to the shareholder after the commencing time in respect of a share in a company (whether the company is a resident or a non-resident) where
-
(a) the following subparagraphs apply:
(i) the share was issued to the shareholder after the commencing time;
(ii) if the share was issued before 8 May 1986 - the share was not issued pursuant to an obligation:
(A) that was in existence at the commencing time; and
(B) a breach of which would result in a substantial liability for damages;
(iii) the dividend was paid under a short-term finance arrangement in relation to the company (whenever entered into);
(b) the following subparagraphs apply:
(i) the share was acquired (otherwise than at the time of its issue) by the shareholder after the commencing time;
(ii) the dividend was paid under a short-term finance arrangement in relation to the company (whenever entered into);
(iii) if the short-term finance arrangement was entered into after the commencing time - the arrangement was a short-term finance arrangement only because of paragraph (a) of the definition of short-term finance arrangement ;
(iv) if the short-term finance arrangement was entered into at or before the commencing time - the share was not issued under the arrangement at or before the commencing time; or
(c) the following subparagraphs apply:
(i) the share was issued to, or acquired by, the shareholder at or before the commencing time;
(ii) the dividend was paid under a short-term finance arrangement that:
(A) was entered into after the commencing time; and
(B) was a short-term finance arrangement only because of paragraph (a) of the definition of short-term finance arrangement ;
and, having regard to -
(d) the manner in which the amount of dividends in respect of the share was to be calculated;
(e) the conditions applicable to the payment of dividends in respect of the share; and
(f) any other relevant matters,
the payment of the dividend may reasonably be regarded as equivalent to the payment of interest on a loan.
finance
includes money raised by the issue of shares.
loan
includes the provision of credit or any other form of financial accommodation.
short-term finance arrangement
, in relation to a company, means an arrangement entered into or carried out by any of the parties to the arrangement for the purpose, or for purposes that included the purpose
-
(a) of enabling the company or an associate of the company to obtain finance (whether by way of renewal or otherwise) for a period that is not to exceed, or is reasonably likely not to exceed, 2 years; or
(b) of enabling the company or an associate of the company to obtain an extension of the period for which finance was obtained under an earlier arrangement, being an extension for a period that is not to exceed, or is reasonably likely not to exceed, 2 years. 46C(2) [Mere payment of a call]
For the purposes of this section, the mere payment of a call in respect of a share after the commencing time does not, of itself, constitute the entering into of a short-term finance arrangement after that time.
46C(3) [Mere transfer of share; obtaining letter of credit]For the purposes of this section, the mere transfer of a share, or the mere obtaining of a letter of credit, or both, after the commencing time does not, of itself, constitute the entering into of a short-term finance arrangement after that time.
46C(4) [Avoidance of doubt]Subsections (2) and (3) are enacted for the avoidance of doubt.
46C(5) [Rebate re debt dividend]A shareholder is not entitled to, and shall not be allowed, a rebate under section 46 or 46A in respect of a debt dividend.
In this section:
exempting entity
has the same meaning as in the
Income Tax Assessment Act 1997
.
group company
has the same meaning as in section
160AFE
of this Act as in force immediately before 1 July 2002.
unfranked part
of a dividend includes a dividend that is unfrankable under the
Income Tax Assessment Act 1997
.
Subject to this section, a shareholder is not entitled to, and must not be allowed, a rebate under section 46 or 46A in respect of:
(a) if a dividend was paid to the shareholder by a company other than an exempting entity, or by an exempting entity and item 6 or 7 of the table in section 208-130 of the Income Tax Assessment Act 1997 applied in relation to the dividend:
(i) the unfranked part of the dividend; or
(ii) any part of the dividend in respect of which a determination is made under Subdivision 204-D of the Income Tax Assessment Act 1997 , or under paragraph 177EA(5)(b) of this Act; or
(b) if a dividend was made to the shareholder by an exempting entity and item 6 or 7 of the table in section 208-130 of the Income Tax Assessment Act 1997 does not apply to the dividend - any part of the dividend. 46F(3) [Application]
Subject to subsection (4), subsection (2) does not apply if:
(a) the shareholder is a group company in relation to the company paying the dividend in relation to the year of income in which the dividend is paid; or
(b) were the tests in section 160AFE for working out relationships between companies to apply to a particular time rather than in relation to a year of income - the shareholder would have been a group company in relation to the company paying the dividend at all times during the period of 12 months ending on the day on which the dividend was paid. 46F(4) [Prescribed dual resident]
Subsection (3) does not affect the application of subsection (2) to the extent that subsection (2) deals with the payment of the unfranked part of a dividend (whether or not under subparagraph (a)(i) of that subsection):
(a) to a shareholder that is a prescribed dual resident at the time the dividend is paid; or
(b) by a company that is a prescribed dual resident at the time the dividend is paid.
CCH Note:
Below is material substituted in s 46FA by No 101 of 2006.
(c) but for subsection 46AB(1) or 46AC (2) or subparagraph 46F(2)(a)(i) , the resident company would be entitled to a rebate under section 46 in respect of the unfranked amount of the original dividend; and 46FA(4)
SECTION 46FB UNFRANKED NON-PORTFOLIO DIVIDEND ACCOUNT
CCH Note:
Below is material substituted in s 46FB by No 101 of 2006.
(c) but for subsection 46AB(1) or 46AC(2) or subparagraph 46F(2)(a)(i) , the company would be entitled to a rebate under section 46 in respect of the unfranked amount of the dividend. Division 2A - Calculation of taxable income
In calculating the taxable income of a taxpayer, the total assessable income derived by him during the year of income shall be taken as a basis, and from it there shall be deducted all allowable deductions.
48(2) [No operation from 1997/98 year onwards]This section does not apply to the 1997-98 year of income or a later year of income.
Note:
Section 4-15 of the Income Tax Assessment Act 1997 sets out rules for working out an entity's taxable income for the 1997-98 year of income and later years of income.
Where by this Act it is provided that any deduction shall be made successively from 2 or more classes of income, the deduction shall be set off against the income of the first of those classes, and if it exceeds the income of that class the excess shall be set off against the income of the second class, and so on until either the deduction or the income of the last of those classes is exhausted.
Where the assessable income is derived from more than one of the following classes of income, that is to say, income from personal exertion, income from property other than dividends, and income from dividends, the following provisions shall apply to all allowable deductions: -
(a) where a deduction or part of a deduction relates directly to income from dividends (whether of the year of income or of a previous year of income) the deduction or part of the deduction, as the case requires, shall be made successively from income from dividends, from income from property other than dividends and from income from personal exertion;
(b) where a deduction or part of a deduction relates directly to the income from property other than dividends (whether of the year of income or of a previous year of income) the deduction or part of the deduction, as the case requires, shall be made successively from income from property other than dividends, from income from dividends and from income from personal exertion; and
(c) in all other cases, the deduction or part of the deduction shall be made successively from income from personal exertion, from income from property other than dividends and from income from dividends. 50(2) [Application to non-share dividend]
This section applies to a non-share dividend in the same way as it applies to a dividend.
This Subdivision applies in relation to a taxpayer in relation to the 1996-97 year of income or an earlier year of income if, and only if, the taxpayer is a company and, by reason of section
50H
, a disqualifying event is deemed to have occurred, or disqualifying events are deemed to have occurred, in relation to the company during the year of income.
Note:
Subdivision 165-B of the Income Tax Assessment Act 1997 sets out special rules for working out a company's taxable income and tax loss for the 1997-98 year of income and later years of income. Those rules may apply if there has been a change in the ownership or control of the company in those years of income.
Notwithstanding subsection 50H(1) :
(a) a disqualifying event shall not be deemed to have occurred in relation to a company on or before 7 April 1978; and
(b) a disqualifying event shall not be deemed to have occurred in relation to a company at a time during a year of income if -
(i) the company is not a private company in relation to the year of income; and
(ii) the Commissioner considers that it is unreasonable that a disqualifying event should be deemed to have occurred in relation to the company at that time.
For the purposes of the application of this Subdivision in relation to a company in relation to a year of income:
"excepted amount"
means an amount that is a full-year amount or a divisible amount in relation to the company in relation to the year of income;
"excepted deduction"
means an allowable deduction that is a full-year deduction or a divisible deduction in relation to the company in relation to the year of income;
"full-year amount"
means so much of any amount that is included in the assessable income of the company of the year of income under section
97
or
98A
as is not a divisible amount in relation to the company in relation to the year of income but does not include any part of a capital gain that forms part of a net capital gain;
"income period"
means a relevant period in respect of which the company is deemed to have a notional taxable income;
"loss period"
means a relevant period in respectof which the company is deemed to have a notional loss;
"natural person"
means a person other than a company;
"relevant period"
means any of the following periods:
(a) where only one disqualifying event is deemed to have occurred in relation to the company during the year of income:
(i) the period commencing at the commencement of the year of income and ending immediately before the time when the disqualifying event is deemed to have occurred; and
(ii) the period commencing at the time when the disqualifying event is deemed to have occurred and ending at the end of the year of income;
(b) where 2 or more disqualifying events are deemed to have occurred in relation to the company during the year of income:
(i) the period commencing at the commencement of the year of income and ending immediately before the time when the first of those disqualifying events is deemed to have occurred;
(ii) the period commencing at the time when the last of those disqualifying events is deemed to have occurred and ending at the end of the year of income; and
(iii) each period commencing at the time when one of those disqualifying events (not being the last of those disqualifying events) is deemed to have occurred and ending immediately before the time when the next of those disqualifying events is deemed to have occurred;
"whole day"
means a period of 24 hours.
For the purposes of this Subdivision, a company shall be deemed to have a notional taxable income in respect of a relevant period if the assessable income of the company in respect of that relevant period exceeds the allowable deductions of the company in respect of that relevant period and the amount of the excess shall be deemed to be the amount of that notional taxable income.
50B(3) [Deemed notional loss]For the purposes of this Subdivision, a company shall be deemed to have a notional loss in respect of a relevant period if the allowable deductions of the company in respect of that relevant period exceed the assessable income of the company in respect of that relevant period and the amount of the excess shall be deemed to be the amount of that notional loss.
50B(4) [Assessable income and allowable deductions]For the purposes of subsections (2) and (3):
(a) the assessable income of a company in respect of a relevant period in relation to the company in relation to a year of income is the sum of:
(i) any amounts (other than excepted amounts and any net capital gain) that would be included in the assessable income of the company of the year of income if the year of income were constituted by that relevant period; and
(ii) any amount that is, or the sum of any amounts that are, by section 50E , deemed to be included in the assessable income of the company of that relevant period; and
(b) the following amounts are allowable deductions of a company in respect of a relevant period in relation to a year of income:
(i) deductions (other than excepted deductions) that would be allowable to the company under this Act in relation to the year of income if the year of income were constituted by the relevant period;
(ii) any amount that is deemed by section 50G to be an allowable deduction in respect of the relevant period.
For the purposes of this Subdivision:
(a) an amount shall be deemed to be an amount that is included in the assessable income of a company of a year of income if, were the taxable income of the company of the year of income to be calculated in accordance with section 48 , that amount would be included in the assessable income of the company of the year of income; and
(b) a deduction shall be deemed to be a deduction allowable to a company under this Act in relation to a year of income if, were the taxable income of the company to be calculated in accordance with section 48 , the deduction would be a deduction allowable to the company under this Act in relation to the year of income. 50B(6) [Deemed notional income and loss of partnership]
For the purposes of this Subdivision:
(a) subject to subsection (7), a partnership shall be deemed to have a notional net income in respect of a period that is a relevant period in relation to a company if the assessable income of the partnership in respect of that period exceeds the allowable deductions of the partnership in respect of that period and the amount of the excess shall be deemed to be the amount of that notional net income; and
(b) subject to subsection (7), a partnership shall be deemed to have a notional partnership loss in respect of a period that is a relevant period in relation to a company if the allowable deductions of the partnership in respect of that period exceed the assessable income of the partnership in respect of that period and the amount of the excess shall be deemed to be the amount of that notional partnership loss. 50B(7) [Exclusion of notional income and loss of partnership]
A partnership shall not be deemed for the purposes of this Subdivision to have a notional net income or a notional partnership loss in respect of a period that is a relevant period in relation to a company in relation to a year of income unless the period that constitutes the year of income of the partnership is the same period as the period that constitutes the year of income of the company.
50B(8) [Partnership income and deductions]For the purposes of subsection (6):
(a) the assessable income of a partnership of a period that is a relevant period in relation to a company in relation to a year of income of the company is the sum of:
(i) any amounts (other than excepted amounts) that would be included in the assessable income of the partnership of the year of income of the partnership that corresponds with the year of income of the company if that corresponding year of income of the partnership were constituted by the period that constitutes the relevant period; and
(ii) any amount that is, or the sum of any amounts that are, by section 50E (as that section applies by reason of subsection (9) of this section), deemed to be included in the assessable income of the partnership of the period that constitutes the relevant period; and
(b) the following amounts are allowable deductions of a partnership in respect of a period that is a relevant period in relation to a company in relation to a year of income of the company:
(i) deductions (other than divisible deductions or deductions that, for the purposes of section 50F , are full-year partnership deductions in relation to the partnership) that would be allowable to the partnership under this Act in respect of income of the year of income of the partnership that corresponds with the year of income of the company if that corresponding year of income of the partnership were constituted by the period that constitutes the relevant period;
50B(9) [Relevant period in relation to partnership]
(ii) any amount that is deemed by section 50G (as that section applies by reason of subsection (9) of this section) to be an allowable deduction of the partnership in respect of the period that constitutes the relevant period.
The provisions of this section (other than this subsection) and of sections 50E and 50G apply for the purposes of determining for the purposes of subsection (8):
(a) whether an amount is an excepted amount, or whether a deduction is a divisible deduction, in relation to a partnership in respect of a period that is a relevant period in relation to a company; or
(b) whether an amount is to be deemed to be included in the assessable income, or whether an amount is to be deemed to be an allowable deduction, of a partnership in respect of a period that is a relevant period in relation to a company,
as if that period were a relevant period in relation to the partnership and the reference in any of those provisions to a company were a reference to the partnership.
50B(10) [Method of ascertaining days in nominated period]For the purposes of this Subdivision:
(a) where a nominated period consists of more than 12 hours and less than 24 hours, that nominated period shall be deemed to consist of one whole day; and
(b) where a nominated period consists of:
(i) one whole day and a part of another whole day, being a part that consists of more than 12 hours; or
the number of whole days in that nominated period shall be deemed to be the number ascertained by increasing by 1 the number that, apart from this subsection, would be the number of whole days in that nominated period. 50B(11) [Meaning of ``nominated period'']
(ii) 2 or more whole days and a part of another whole day, being a part that consists of more than 12 hours,
In subsection (10), ``nominated period'' means any of the following periods:
(a) a relevant period in relation to a company;
(b) a period commencing at the time during a relevant period in relation to a company when a particular event occurred and ending at the end of the relevant period;
(c) a period commencing at the time during a year of income when a particular event occurred and ending at the end of the year of income;
(d) a period commencing at the beginning of a year of income and ending at the end of a period that is a relevant period in relation to a company in relation to the year of income. 50B(12) [Number of days in income year]
For the purposes of the application of this Subdivision in relation to a company in relation to a year of income of the company that is not constituted by 365 days, a reference in this Subdivision to 365 shall be read as a reference to the number of days in that year of income.
50B(13) [Part debt deemed entire debt]Where a part of a debt is an allowable deduction in an assessment, this Subdivision (other than subsection (14) of this section) applies as if the part were an entire debt that is an allowable deduction in the assessment.
This Subdivision has the same effect in relation to an allowable deduction under section 63E in respect of the whole or part of a debt that is extinguished as it has in relation to an allowable deduction under section 51 or 63 in respect of the whole or part of a debt that is written off as bad.
Where this Subdivision applies in relation to a company in relation to a year of income, the taxable income of the company of the year of income shall, notwithstanding section 48 , be calculated in accordance with this section.
50C(2) [Taxable income of company]Subject to subsection (3), the taxable income of the company of the year of income shall be the amount (if any) remaining after deducting from the sum (in this section referred to as the ``income amount'' ) of -
(a) if the company has a notional taxable income in respect of a relevant period, or has notional taxable incomes in respect of relevant periods, in relation to the year of income -the amount of that notional taxable income or the sum of the amounts of those notional taxable incomes, as the case may be; and
(b) if a full-year amount is included or full-year amounts are included in the assessable income of the company of the year of income - that full-year amount or the sum of those full-year amounts, as the case may be; and
(ba) any net capital gain that accrued to the company in respect of the year of income;
the sum (in this section referred to as the ``deductible amount'' ) of -
(c) the amount of any eligible notional loss of the company in relation to the year of income;
(d) if a full-year deduction is, or full-year deductions are, allowable to the company in relation to the year of income, being a full-year deduction or full-year deductions:
(i) allowable under section 51 in respect of a bad debt or under section 63 ; or
the amount of that full-year deduction or the sum of the amounts of those full-year deductions, as the case may be; and
(ii) to which paragraph 50F(1)(aa) applies;
(e) if, by reason of subsection 50F(3) , there is a partnership deduction, or there are partnership deductions, in relation to the company in relation to the year of income - the amount of that partnership deduction or the sum of the amounts of those partnership deductions, as the case may be.
(a) in the application of subsection (2) in relation to a company in relation to a year of income, the income amount exceeds the deductible amount; and
(b) a full-year deduction is, or full-year deductions are, allowable to the company in relation to the year of income, not being a full-year deduction or full-year deductions:
(i) allowable under section 51 in respect of a bad debt or under section 63 ; or
(ii) to which paragraph 50F(1)(aa) applies,
the taxable income of the company of the year of income shall be -
(c) in a case where there is only one full-year deduction to which paragraph (b) applies - the amount (if any) remaining after deducting from the amount of the excess referred to in paragraph (a) so much of the amount of that full-year deduction as does not exceed the amount of that excess; and
(d) in any other case - the amount (if any) remaining after deducting successively from the amount of the excess referred to in paragraph (a) the amounts of any full-year deductions included in the following classes of full-year deductions that are allowable to the company in relation to the year of income:
(i) full-year deductions allowable under section 78 or 78B ;
(ii) full-year deductions allowable under Subdivision B or BA of Division 3 or under Part XII ;
(iii) (Omitted by No 107 of 1989)
(iv) full-year deductions allowable under section 79E , 79F , 80 , 80AAA or 80AA ;
(v) full-year deductions allowable under section 122D , 122DB , 122DD , 122DF , 122DG , 122JE , 124AD , 124ADB , 124ADD , 124ADF , 124ADG or 124AF ;
(vi) full-year deductions allowable under section 122J , 122JF or 124AH ;
(vii) full-year deductions allowable under Division 16C .
Where, in the application of subsection (3) in relation to a company in relation to a year of income, deductions included in 2 or more of the classes of full-year deductions specified in paragraph (3)(d) are required to be deducted successively from the amount by which the income amount exceeds the deductible amount (in this subsection referred to as the ``excess amount''), deductions included in the first of those classes shall be set off against that excess amount and, if the excess amount exceeds the amount of the deductions included in that class, the deductions included in the next of those classes shall be set off against the excess amount reduced by the amount of the deductions of the first of those classes and so on until either the deductions included in the classes of deductions referred to in paragraph (3)(d) are exhausted or the excess amount is exhausted.
For the purposes of this Subdivision, the eligible notional loss of a company in relation to a year of income is the amount that is, or the sum of the amounts that are, by reason of subsections (2), (4) and (6), to be taken into account in ascertaining the eligible notional loss of the company in relation to the year of income.
50D(2) [Ascertainment of eligible notional loss]Where a company satisfies the Commissioner that, at all times during a loss period, shares in the company carrying between them -
(a) the right to exercise more than one-half of the voting power in the company;
(b) the right to receive more than one-half of any dividends that might be paid by the company; and
(c) the right to receive more than one-half of any distribution of capital of the company,
were beneficially owned by a natural person or natural persons who beneficially owned shares in the company carrying between them rights of those kinds -
(d) at all times during an income period; or
(e) at all times during 2 or more income periods,
so much of the amount ascertained by deducting from the amount of the notional loss in respect of the loss period so much (if any) of that notional loss as, by the previous application of subsection (4) or (6), is to be taken into account in determining the eligible notional loss of the company in relation to the year of income as does not exceed -
(f) in a case to which paragraph (d) applies - the amount of the notional taxable income in respect of the income period referred to in that paragraph reduced by so much (if any) of that notional taxable income as has previously been taken into account for the purposes of this paragraph or paragraph (g), for the purposes of paragraph (4)(c) or (d) or for the purposes of paragraph (6)(c), (d) or (e); and
(g) in a case to which paragraph (e) applies - the sum of the amounts of the notional taxable incomes in respect of the income periods referred to in that paragraph reduced by so much (if any) of those notional taxable incomes as has previously been taken into account for the purposes of paragraph (f) or this paragraph, for the purposes of paragraph (4)(c) or (d) or for the purposes of paragraph (6)(c), (d) or (e),
shall be taken into account in determining the amount of the eligible notional loss of the company in relation to the year of income.
(a) a reference to a loss period in relation to a company shall be read as not including a reference to a loss period at the commencement of which a disqualifying event is deemed to have occurred in relation to the company by reason of the operation of paragraph 50H(1)(d) , (e), (f), (g) or (h); and
(b) a reference to an income period in relation to a company shall be read as not including a reference to an income period at the commencement of which a disqualifying event is deemed to have occurred in relation to the company by reason of the operation of paragraph 50H(1)(d) , (e), (f), (g) or (h).
Where a company did not, at any time during a period that is a subsequent continuous business period in relation to a loss period -
(a) derive income from a business of a kind that it did not carry on, or from a transaction of a kind that it had not entered into in the course of its business operations, before the end of the loss period; or
(b) incur expenditure in carrying on a business of a kind that it did not carry on, or as a result of a transaction of a kind that it had not entered into in the course of its business operations, before the end of the loss period,
so much of the amount ascertained by deducting from the amount of the notional loss in respect of the loss period so much (if any) of that notional loss as, by the previous application of subsection (2) or (6), is to be taken into account in determining the eligible notional loss of the company in relation to the year of income as does not exceed -
(c) in a case where there is only one income period within that subsequent continuous business period - the notional taxable income of that income period reduced by so much of that notional taxable income as has been taken into account for the purposes of paragraph (2)(f) or (g), for the purposes of this paragraph or paragraph (d) or for the purposes of paragraph (6)(c), (d) or (e); or
(d) in a case where there are 2 or more income periods within that subsequent continuous business period - the sum of the notional taxable incomes of those income periods reduced by so much of those notional taxable incomes as has been taken into account for the purposes of paragraph (2)(f) or (g), for the purposes of paragraph (c) or this paragraph or for the purposes of paragraph (6)(c), (d) or (e),
shall be taken into account in determining the eligible notional loss of the company in relation to the year of income.
Subsection (4) does not apply in relation to the notional loss in respect of a loss period in relation to a company if -
(a) before the end of that loss period, the company commenced to carry on a business that it had not previously carried on or the company entered into, in the course of its business operations, a transaction of a kind that it had not previously entered into; and
(b) the company commenced to carry on that business or entered into that transaction for the purpose, or for purposes that included the purpose, of enabling that subsection to apply in relation to that notional loss or of enabling the notional taxable income of an income period to be taken into account, in the application of that subsection, in determining the amount of that notional loss that is to be taken into account in determining the eligible notional loss of the company in relation to the year of income. 50D(6) [No income, or no expenditure, in prior period]
Where a company did not, at any time during a period that is a prior continuous business period in relation to a loss period -
(a) derive income from a business of a kind that it did not carry on, or from a transaction of a kind that it had not entered into in the course of its business operations, before the commencement of that prior continuous business period; or
(b) incur expenditure in carrying on a business of a kind that it did not carry on, or as a result of a transaction of a kind that it had not entered into in the course of its business operations, before the commencement of that prior continuous business period,
so much of the amount ascertained by deducting from the amount of the notional loss in respect of the loss period so much (if any) of that notional loss as, by the previous application of subsection (2) or (4), has been taken into account in determining the eligible notional loss of the company of the year of income as does not exceed -
(c) if there are no income periods within that prior continuous business period - the notional taxable income in respect of the income period at the end of which the prior continuous business period commenced reduced by so much (if any) of that notional taxable income as has been taken into account for the purposes of paragraph (2)(f) or (g), for the purposes of paragraph (4)(c) or (d), or for the purposes of this paragraph, paragraph (d) or paragraph (e);
(d) in a case where there is only one income period within that prior continuous business period - the sum of the notional taxable income in respect of that income period and the notional taxable income in respect of the income period referred to in paragraph (c) reduced by so much (if any) of those notional taxable incomes as has been taken into account for the purposes of paragraph (2)(f) or (g), for the purposes of paragraph (4)(c) or (d), or for the purposes of paragraph (c), this paragraph or paragraph (e); and
(e) in a case where there are 2 or more income periods within the prior continuous business period - the sum of the notional taxable incomes in respect of those income periods and the income period referred to in paragraph (c) reduced by so much of those notional taxable incomes as has been taken into account for the purposes of paragraph (2)(f) or (g), for the purposes of paragraph (4)(c) or (d), or for the purposes of paragraph (c), paragraph (d) or this paragraph,
shall be taken into account in determining the eligible notional loss of the company in relation to the year of income.
Subsection (6) does not apply in relation to the notional loss in respect of a loss period in relation to a company if -
(a) before the commencement of that loss period, the company commenced to carry on a business that it had not previously carried on or the company entered into, in the course of its business operations, a transaction of a kind that it had not previously entered into; and
(b) the company commenced to carry on that business or entered into that transaction for the purpose, or for purposes that included the purpose, of enabling that subsection to apply in relation to that notional loss or of enabling the notional taxable income of an income period to be taken into account, in the application of that subsection, in determining the amount of that notional loss that is to be taken into account in determining the eligible notional loss of the company in relation to the year of income. 50D(8) [Definitions]
In this section -
"prior continuous business period"
, in relation to a loss period in relation to a company, means a period commencing at the end of an income period and ending at the end of the loss period, being a period at all times during which the company carried on the same business as it carried on at the end of the income period;
"subsequent continuous business period"
, in relation to a loss period in relation to a company, means a period commencing at the end of the loss period and ending at the end of an income period, being a period at all times during which the company carried on the same business as it carried on at the end of the loss period.
(a) a reference to a loss period in relation to a company shall be read as not including a reference to a loss period at the commencement of which a disqualifying event is deemed to have occurred in relation to the company by reason of the operation of paragraph 50H(1)(e) , (f), (g) or (h); and
(b) a reference to an income period in relation to a company shall be read as not including a reference to an income period at the commencement of which a disqualifying event is deemed to have occurred in relation to the company by reason of the operation of paragraph 50H(1)(e) , (f), (g) or (h).
Where subsection (2), (4) or (6) is applicable in relation to 2 or more loss periods, that subsection shall apply successively in relation to those loss periods in such order as the Commissioner, subject to subsection (13), determines.
50D(11) [Order of application of subsections]Where 2 or more of subsections (2), (4) and (6) are applicable in relation to a loss period, those subsections shall apply in relation to that loss period in such order as the Commissioner, subject to subsection (13), determines.
50D(12) [Order of notional taxable incomes]Where subsection (2), (4) or (6) is applicable in relation to a loss period and, in the application of that subsection in relation to that loss period, regard may be had to the notional taxable income of 2 or more income periods, regard shall be had to the notional taxable incomes of those income periods in such order as the Commissioner, subject to subsection (13), determines.
50D(13) [Determination to benefit company]The Commissioner shall not make a determination or determinations for the purposes of the application of subsections (2), (4) and (6) in relation to a company in relation to a year of income if the effect of that determination or of those determinations would be less beneficial to the company in relation to the application of this Act in relation to the company in relation to the year of income than the effect of a different determination or determinations that could have been made for the purposes of those subsections.
SECTION 50E DIVISIBLE AMOUNTS OF ASSESSABLE INCOME 50E(1) [Calculation of divisible amounts]For the purposes of this Subdivision, the following amounts are divisible amounts in relation to a company in relation to a year of income:
(a) any amount included in the assessable income of the company of the year of income in respect of an insurance recovery received by the company in any year of income, being an insurance recovery to which section 26B applies;
(b) any amount included in the assessable income of the company of the year of income under paragraph 26BA(6)(b) ;
(c) where an amount is included in the assessable income of the company of the year of income under subsection 36(1) in respect of a disposal of live stock by the company and the company has made an election under subsection 36(3) in respect of any profit arising on the disposal - so much of the amount included in the assessable income of the company as is equal to the amount of that profit;
(d) any amount included in the assessable income of the company of the year of income under paragraph 36(3A)(b) ;
(e) any amount included in the assessable income of the company of the year of income under paragraph 36AAA(2)(c) or (d) or (2A)(g) or (h);
(f) where an amount is included in the assessable income of the company of the year of income under paragraph 36AA(2)(a) by reason that the company has made an election under subsection 36AA(1) in relation to the profit arising in respect of the death or destruction of live stock - so much of the amount included in the assessable income of the company as is equal to the amount of that profit;
(g) any amount included in the assessable income of the company of the year of income under paragraph 36AA(2)(c) ;
(ga) any amount included in the assessable income of the company of the year of income under subsection 70A(5) ;
(h) any amount included in the assessable income of the company of the year of income under section 92 ;
(j) where an amount is included in the assessable income of the company of the year of income under section 97 or 98A in respect of a share of the net income of a trust estate and the Commissioner considers that the whole or a part of that share of the net income was derived from income that was derived during a period that is a relevant period in relation to the company in relation to the year of income - that share of the net income, or that part of the share of the net income, as the case may be.
For the purposes of this Subdivision, so much of any amount included in a company's assessable income of a year of income under section 97 or 98A as is a capital gain that forms part of a net capital gain is not a divisible amount in relation to the company in relation to the year of income.
For the purposes of the application of subparagraph 50B(4)(a)(ii) in relation to a relevant period in relation to a company in relation to a year of income -
(a) where -
(i) the assessable income of the company of the year of income includes a divisible amount in respect of an insurance recovery received by the company in the year of income, being an insurance recovery to which section 26B applies;
(ii) the amount is included in the assessable income of the company of the year of income otherwise than under subsection (6) or (7) of that section; and
so much of that divisible amount as bears to that divisible amount the same proportion as the number of whole days (if any) in the relevant period, being whole days occurring after the time when the insurance recovery was received, bears to the number of whole days in the year of income, being whole days occurring after the time when the insurance recovery was received, shall be deemed to be included in the assessable income of the company of the relevant period;
(iii) the insurance recovery was received by the company before the commencement of, or during, the relevant period,
(b) where a divisible amount is included in the assessable income of the company of the year of income under subsection 26B(6) or (7) , so much of that divisible amount as bears to that divisible amount the same proportion as the number of whole days (if any) in the relevant period bears to 365 shall be deemed to be included in the assessable income of the company of the relevant period;
(c) where -
(i) a divisible amount is included in the assessable income of the company of the year of income under paragraph 26BA(6)(b) by reason that an election was made by the company in relation to the shearing of sheep that, by reason of fire, drought or flood, took place at a time earlier than the time at which, but for that fire, drought or flood, that shearing would ordinarily have taken place; and
the assessable income of the company of the relevant period shall be deemed to include that divisible amount;
(ii) that shearing would ordinarily have taken place during the relevant period,
(d) where a divisible amount is included in the assessable income of the company of the year of income under subsection 36(1) in respect of a disposal of live stock by the company during the year of income and before the commencement of, or during, the relevant period, there shall be deemed to be included in the assessable income of the company of the relevant period an amount equal to so much of that divisible amount as bears to one-fifth of that divisible amount the same proportion as the number of whole days (if any) in the relevant period, being whole days occurring after the time when the disposal took place, bears to the number of whole days in the year of income, being whole days occurring after the time when the disposal took place;
(e) where a divisible amount is included in the assessable income of the company of the year of income under paragraph 36(3A)(b) , so much of that divisible amount as bears to that divisible amount the same proportion as the number of whole days (if any) in the relevant period bears to 365 shall be deemed to be included in the assessable income of the company of the relevant period;
(f) where a divisible amount is included in the assessable income of the company of the year of income under paragraph 36AAA(2)(c) or (d) or (2A)(g) or (h), so much of that divisible amount as bears to that divisible amount the same proportion as the number of whole days (if any) in the relevant period bears to 365 shall be deemed to be included in the assessable income of the company of the relevant period;
(g) where a divisible amount is included in the assessable income of the company of the year of income under paragraph 36AA(2)(a) by reason that the company has made an election under subsection 36AA(1) in relation to the profit arising in respect of the death or destruction of live stock during the year of income and before the commencement of, or during, the relevant period, there shall be deemed to be included in the assessable income of the company of the relevant period an amount equal to so much of that divisible amount as bears to one-fifth of that divisible amount the same proportion as the number of whole days (if any) in the relevant period, being whole days occurring after the time when the death or destruction took place, bears to the number of whole days in the year of income, being whole days occurring after the time when the death or destruction took place;
(h) where the assessable income of the company of the year of income includes a divisible amount that is included in the assessable income of the company under paragraph 36AA(2)(c) or under subsection 36AA(5) , so much of that divisible amount as bears to that divisible amount the same proportion as the number of whole days (if any) in the relevant period bears to 365 shall be deemed to be included inthe assessable income of the company of that relevant period;
(ha) where:
(i) a divisible amount is included in the assessable income of the company of the year of income under subsection 70A(5) by virtue of a recoupment or recoupments in respect of expenditure of a capital nature incurred by the company on the connection of mains electricity facilities;
(ii) the year of income is the first year of income in which the company incurred expenditure of a capital nature on that connection; and
a proportion of that divisible amount equal to the proportion that the number of whole days (if any) in the relevant period (being whole days occurring after the time when the company first incurred expenditure of a capital nature on that connection) bears to the number of whole days in the year of income (being whole days occurring after the time when the company first incurred expenditure of a capital nature on that connection) shall be deemed to be included in the assessable income of the company of the relevant period;
(iii) before the commencement of, or during, the relevant period, the company incurred expenditure of a capital nature on that connection;
(hb) where:
(i) a divisible amount is included in the assessable income of the company of the year of income under subsection 70A(5) by virtue of a recoupment or recoupments in respect of expenditure of a capital nature incurred by the company on the connection of mains electricity facilities; and
a proportion of that divisible amount equal to the proportion that the number of whole days (if any) in the relevant period bears to 365 shall be deemed to be included in the assessable income of the company of the relevant period;
(ii) the year of income is not the first year of income in which the company incurred expenditure of a capital nature on that connection;
(j) where, during the whole or a part of the relevant period, the company was a partner in a partnership that had a notional net income in respect of the relevant period, the assessable income of the company of the relevant period shall be deemed to include -
(i) where, for the purposes of section 92 , the partnership had a net income of the year of income of the partnership - so much of the amount of the notional net income of the partnership in respect of the relevant period as bears to the amount of that notional net income the same proportion as the individual interest of the company in the net income of the partnership of that year of income of the partnership bears to the amount of the net income of the partnership of that year of income;
(ii) where, for the purposes of section 92 , the partnership incurred a partnership loss in the year of income of the partnership - so much of the amount of the notional net income of the partnership of the relevant period as bears to the amount of that notional net income the same proportion as the individual interest of the company in the partnership loss of the partnership bears to the amount of that partnership loss; and
(iii) in any other case - so much of the notional net income of the partnership in respect of that relevant period as the Commissioner considers fair and reasonable having regard to the extent of the interest of the company in the partnership;
(k) where the assessable income of the company of the year of income includes a divisible amount that is included in the assessable income of the company of the year of income under section 92 in respect of the individual interest of the company in the net income of a partnership of a year of income and the period that constitutes that year of income of the partnership is not the same period as the period that constitutes the year of income of the company, so much of that divisible amount as the Commissioner considers fair and reasonable having regard to all the relevant circumstances shall be deemed to be included in the assessable income of the company of the relevant period; and
(m) there shall be deemed to be included in the assessable income of the company of the relevant period any amount that, by reason of paragraph (1)(j), is a divisible amount in relation to that relevant period.
For the purposes of this Subdivision, the following deductions are full-year deductions in relation to a company in relation to a year of income:
(a) any deduction allowable to the company in relation to the year of income under section 51 in respect of a bad debt;
(aa) the whole or part of any deduction under section 51 , where that whole or part is, because Subdivision H of Division 3 applies, allowable to the company in relation to the year of income;
(b) if the company is a leasing company, any deduction allowable to the company under Subdivision B or BA of Division 3 in relation to the year of income in respect of a unit of eligible property leased by the company to another person or other persons;
(ba) if the company is a leasing company, any deduction allowable to the company under Part XII , in relation to the year of income, in respect of an item of drought mitigation property leased by the company to another person or other persons;
(c) any deduction allowable to the company under section 63 , 78 , 78B , 79E , 79F , 80 , 80AAA or 80AA or under Division 16C ;
(d) subject to subsection (2), any deduction allowable to the company under Division 10 (other than section 122K ) or under Division 10A A (other than section 124AM ).
Where a company has made an election -
(a) in relation to a year of income under section 122D , 122DB , 122DD or 122DF ; or
(b) in relation to a year of income in relation to expenditure of a particular kind under section 122DG , 122J , 122JE , 122JF , 124ADH or 124AH ,
a deduction allowable to the company -
(c) where paragraph (a) applies - under the section referred to in that paragraph; or
(d) where paragraph (b) applies - under the section referred to in that paragraph, or, in the case of an election under section 124ADH , under Division 10AA , in relation to an amount of expenditure of the kind to which the election relates,
in relation to the year of income shall be deemed not to be a full-year deduction in relation to the company in relation to the year of income.
For the purposes of the application of this Subdivision in relation to a company in relation to a year of income -
(a) where -
(i) at any time during the year of income the company was a partner in a partnership;
(ii) a full-year partnership deduction has been allowed or is allowable, or full-year partnership deductions have been allowed or are allowable, to the partnership in relation to the year of income of the partnership that corresponds with the year of income of the company;
(iii) the period that constitutes that corresponding year of income of the partnership is the same period as the period that constitutes the year of income of the company; and
so much of the amount of that full-year partnership deduction or of the sum of the amounts of those full-year partnership deductions, as the case may be, as bears to that amount or sum, as the case may be, the same proportion as the individual interest of the company in that net income bears to the amount of that net income shall be deemed to be a partnership deduction in relation to the company in relation to the year of income;
(iv) for the purposes of section 92 , the partnership had a net income of that year of income of the partnership,
(b) where -
(i) at any time during the year of income the company was a partner in a partnership;
(ii) a full-year partnership deduction has been allowed or is allowable, or full-year partnership deductions have been allowed or are allowable, to the partnership in relation to the year of income of the partnership that corresponds with the year of income of the company;
(iii) the period that constitutes that corresponding year of income of the partnership is the same period as the period that constitutes the year of income of the company; and
so much of the amount of that full-year partnership deduction or of the sum of the amounts of those full-year partnership deductions, as the case may be, as bears to that amount or sum, as the case may be, the same proportion as the individual interest of the company in that partnership loss bears to the amount of that partnership loss shall be deemed to be a partnership deduction in relation to the company in relation to the year of income;
(iv) for the purposes of section 92 , a partnership loss was incurred by the partnership in that year of income of the partnership,
(c) where -
(i) at any time during the year of income the company was a partner in a partnership;
(ii) a full-year partnership deduction has been allowed or is allowable, or full-year partnership deductions have been allowed or are allowable, to the partnership in relation to the year of income of the partnership that corresponds with the year of income of the company;
(iii) the period that constitutes that corresponding year of income of the partnership is the same period as the period that constitutes the year of income of the company; and
so much of the amount of that full-year partnership deduction or of the sum of the amounts of those full-year partnership deductions, as the case may be, as the Commissioner considers fair and reasonable having regard to the extent of the interest of the company in the partnership shall be deemed to be a partnership deduction in relation to the company in relation to the year of income, and
(iv) for the purposes of section 92 , the partnership did not have a net income of that year of income of the partnership and did not incur a partnership loss in that year of income of the partnership,
(d) where -
(i) at any time during the year of income the company was a partner in a partnership;
(ii) a full-year partnership deduction has been allowed or is allowable, or full-year partnership deductions have been allowed or are allowable, to the partnership in relation to the year of income of the partnership that corresponds with the year of income of the company; and
so much of the amount of that full-year partnership deduction or of the sum of the amounts of those full-year partnership deductions, as the case may be, as the Commissioner considers fair and reasonable having regard to all the relevant circumstances shall be deemed to be a partnership deduction in relation to the company in relation to the year of income. 50F(4) [Full-year partnership deductions]
(iii) the period that constitutes that corresponding year of income of the partnership is not the same period as the period that constitutes the year of income of the company,
For the purposes of this section, the following deductions are full-year partnership deductions in relation to a partnership in relation to a year of income:
(a) any deduction allowable to the partnership under section 78 ;
(b)subject to subsection (5), any deduction allowable to the partnership under Division 10 (other than section 122K ) or under Division 10AA (other than section 124AM ).
Where a partnership has made an election -
(a) in relation to a year of income under section 122D , 122DB , 122DD or 122DF ; or
(b) in relation to a year of income in relation to expenditure of a particular kind under section 122DG , 122J , 122JE , 122JF , 124ADH or 124AH ,
a deduction allowable to the partnership -
(c) where paragraph (a) applies - under the section referred to in that paragraph; or
(d) where paragraph (b) applies - under the section referred to in that paragraph, or, in the case of an election under section 124ADF , under Division 10AA , in relation to an amount of expenditure of the kind to which the election relates,
in relation to the year of income shall be deemed not to be a full-year partnership deduction in relation to the partnership in relation to the year of income.
For the purposes of this Subdivision, the following deductions are divisible deductions in relation to a company in relation to a year of income:
(a) any deduction allowable to the company in relation to the year of income under section 54 (including any deduction calculated in accordance with section 57AK or 57AM ), 67 , 70 or 70A (as in force at any time after the commencement of section 41 of the Taxation Laws Amendment Act (No. 4) 1988 ), subsection 73A(2) , subsection 73B(15) or (17) , section 75A , 77F , 82BB , 88 or 92 , Division 10AAA (other than section 123C ), Division 10A (other than section 124G or 124JB ), Division 10B (other than section 124N ), section 124ZAF or 124ZAFA , Division 10C (other than section 124ZE ) or Division 10D (other than section 124ZK );
(b) where the company has made an election in relation to the year of income under section 122D , 122DB , 122DD or 122DF - any deduction allowable to the company under that section in relation to the year of income;
(ba) where the company has made an election in relation to the year of income in relation to expenditure of a particular kind under section 122DG , 122J , 122JE, 122JF, 124ADH or 124AH - any deduction allowable to the company under that section, or, in the case of an election under section 124ADH , under Division 10AA , in relation to the year of income in relation to an amount of expenditure of that kind.
For the purposes of the application of subparagraph 50B(4)(b)(ii) in relation to a relevant period in relation to a company in relation to a year of income -
(a) where a divisible deduction is allowable to the company in relation to the year of income under section 54 (not being a deduction calculated in accordance with section 57AM ) in respect of property that, during the whole or a part of the relevant period, was owned by the company and used by the company for the purpose of producing assessable income or installed ready for use for that purpose and held in reserve, so much of the amount of that divisible deduction as bears to the amount of that divisible deduction the same proportion as the number of whole days (if any) in that relevant period during which the property was owned by the company and used by the company for the purpose of producing assessable income or installed ready for use for that purpose and held in reserve bears to the number of whole days during the year of income during which the property was owned by the company and used by the company for the purpose of producing assessable income or installed ready for use and held in reserve shall be deemed to be an allowable deduction in respect of that relevant period;
(b) (Omitted by No 107 of 1989)
(ba) where -
(i) a divisible deduction is allowable to the company in relation to the year of income in accordance with section 57AM in respect of property that, during the whole or a part of the relevant period, was owned by the company and used by the company for the purpose of producing assessable income or installed ready for use for that purpose and held in reserve; and
so much of the amount of that divisible deduction as bears to the amount of that divisible deduction the same proportion as the number of whole days (if any) in that relevant period during which the property was owned by the company and used by the company for the purpose of producing assessable income or installed ready for use for that purpose and held in reserve bears to the number of whole days during the year of income during which the property was owned by the company and used by the company for the purpose of producing assessable income or installed ready for use and held in reserve shall be deemed to be an allowable deduction in respect of that relevant period;
(ii) the year of income is the first year of income in which a deduction is allowable to the company in respect of that property in accordance with section 57AM ,
(bb) where a divisible deduction is allowable to the company in relation to the year of income in accordance with section 57AM in respect of property and the year of income is not the first year of income in which a deduction is allowable to the company in respect of that property in accordance with that section, so much of the amount of that divisible deduction as bears to the amount of that divisible deduction the same proportion as the number of whole days (if any) in that relevant period bears to 365 shall be deemed to be an allowable deduction in respect of that relevant period;
(c) where a divisible deduction is allowable to the company in relation to the year of income under section 67 in respect of expenditure incurred by the company in borrowing money for a period, so much of the amount of that divisible deduction as bears to the amount of that divisible deduction the same proportion as the number of whole days (if any) in the relevant period that are within the period for which the money was borrowed bears to the number of whole days in the year of income that are within the period for which the money was borrowed shall be deemed to be an allowable deduction in respect of that relevant period;
(d) where -
(i) a divisible deduction is allowable to the company in relation to the year of income under section 70 in respect of expenditure of a capital nature incurred by the company on a telephone line;
(ii) the year of income is the first year of income in which the company incurred expenditure of a capital nature on that telephone line; and
so much of the amount of that divisible deduction as bears to the amount of that divisible deduction the same proportion as the number of whole days (if any) in the relevant period, being whole days occurring after the time when the company first incurred expenditure of a capital nature on that telephone line, bears to the number of whole days in the year of income, being whole days occurring after the time when the company first incurred expenditure of a capital nature on that telephone line, shall be deemed to be an allowable deduction in respect of that relevant period;
(iii) before the commencement of, or during, the relevant period, the company incurred expenditure of a capital nature on that telephone line,
(e) where a divisible deduction is allowable to the company in relation to the year of income under section 70 in respect of expenditure of a capital nature incurred by the company on a telephone line and the year of income is not the first year of income in which the company incurred expenditure of a capital nature on that telephone line, so much of the amount of that divisible deduction as bears to the amount of that divisible deduction the same proportion as the number of whole days (if any) in that relevant period bears to 365 shall be deemed to be an allowable deduction in respect of that relevant period;
(ea) where:
(i) a divisible deduction is allowable to the company in relation to the year of income under section 70A in respect of expenditure of a capital nature incurred by the company on the connection of mains electricity facilities;
(ii) the year of income is the first year of income in which the company incurred expenditure of a capital nature on that connection; and
a proportion of that divisible deduction equal to the proportion that the number of whole days (if any) in the relevant period (being whole days occurring after the time when the company first incurred expenditure of a capital nature on that connection) bears to the number of whole days in the year of income (being whole days occurring after the time when the company first incurred expenditure of a capital nature on that connection) shall be deemed to be an allowable deduction in respect of that relevant period;
(iii) before the commencement of, or during, the relevant period, the company incurred expenditure of a capital nature on that connection;
(eb) where:
(i) a divisible deduction is allowable to the company in relation to the year of income under section 70A in respect of expenditure of a capital nature incurred by the company on the connection of mains electricity facilities; and
a proportion of that divisible deduction equal to the proportion that the number of whole days (if any) in that relevant period bears to 365 shall be deemed to be an allowable deduction in respect of that relevant period;
(ii) the year of income is not the first year of income in which the company incurred expenditure of a capital nature on that connection;
(f) where -
(i) a divisible deduction is allowable to the company in relation to the year of income under section 73A in respect of expenditure of a capital nature incurred by the company in the construction or acquisition of a building, or a part of a building, or in making any alteration or addition to a building;
(ii) the year of income is the first year of income in which the company incurred expenditure of a capital nature in the construction or acquisition of the building, in the construction or acquisition of the part of the building, or in making the alteration or addition to the building, as the case may be; and
so much of the amount of that divisible deduction as bears to the amount of that divisible deduction the same proportion as the number of whole days (if any) in the relevant period, being whole days occurring after the time when the company first incurred expenditure of a capital nature in the construction or acquisition of the building, in the construction or acquisition of the part of the building, or in making the alteration or addition to the building, as the case may be, bears to the number of whole days in the year of income, being whole days occurring after the time when the company first incurred expenditure of a capital nature in the construction or acquisition of the building, in the construction or acquisition of the part of the building, or in making the alteration or addition to the building, as the case may be, shall be deemed to be an allowable deduction in respect of that relevant period;
(iii) the company incurred expenditure of a capital nature in the construction or acquisition of the building, in the construction or acquisition of the part of the building, or in making the alteration or addition to the building, as the case may be, before the commencement of, or during, the relevant period,
(g) where -
(i) a divisible deduction is allowable to the company in relation to the year of income under section 73A in respect of expenditure of a capital nature incurred by the company in the construction or acquisition of a building, or a part of a building, or in making any alteration or addition to a building; and
so much of the amount of that divisible deduction as bears to the amount of that divisible deduction the same proportion as the number of whole days (if any) in that relevant period bears to 365 shall be deemed to be an allowable deduction in respect of that relevant period;
(ii) the year of income is not the first year of income in which the company incurred expenditure of a capital nature in the construction or acquisition of the building, in the construction or acquisition of the part of the building, or in making the alteration or addition to the building, as the case may be,
(ga) where -
(i) a divisible deduction is allowable to the company in relation to the year of income under section 73B in respect of expenditure incurred by the company in the acquisition or construction of a unit of plant or a building or an extension, alteration or improvement to a building;
(ii) the year of income is the first year of income in which a deduction is allowable to the company under section 73B in respect of that expenditure; and
so much of the amount of that divisible deduction as bears to the amount of that divisible deduction the same proportion as the number of whole days (if any) in the relevant period, being whole days occurring after the time when the company first incurred any of the expenditure referred to in subparagraph (i), bears to the number of whole days in the year of income, being whole days occurring after that time, shall be deemed to be an allowable deduction in respect of that relevant period;
(iii) the company incurred any of the expenditure referred to in subparagraph (i) before the commencement of, or during, the relevant period,
(gb) where -
(i) a divisible deduction is allowable to the company in relation to the year of income under section 73B in respect of expenditure incurred by the company in the acquisition or construction of a unit of plant or a building or an extension, alteration or improvement to a building; and
so much of the amount of that divisible deduction as bears to the amount of that divisible deduction the same proportion as the number of whole days (if any) in that relevant period bears to 365 shall be deemed to be an allowable deduction in respect of that relevant period;
(ii) the year of income is not the first year of income in which a deduction is allowable to the company under section 73B in respect of that expenditure,
(h) where -
(i) a divisible deduction is allowable to the company in relation to the year of income under section 75A in respect of expenditure incurred by the company in respect of any land in Australia;
(ii) the year of income is the first year of income in which the company carried on a business of primary production on that land; and
so much of the amount of that divisible deduction as bears to the amount of that divisible deduction the same proportion as the number of whole days (if any) in the relevant period, being whole days occurring after the time when the company commenced to carry on a business of primary production on that land, bears to the number of whole days in the year of income, being whole days occurring after the time when the company commenced to carry on a business of primary production on that land, shall be deemed to be an allowable deduction in respect of that relevant period;
(iii) before the commencement of, or during, the relevant period, the company carried on a business of primary production on that land,
(j) where a divisible deduction is allowable to the company in relation to the year of income under section 75A in respect of expenditure incurred by the company in respect of any land in Australia and the year of income is not the first year of income in which the company carried on a business of primary production on that land, so much of the amount of that divisible deduction as bears to the amount of that divisible deduction the same proportion as the number of whole days (if any) in that relevant period bears to 365 shall be deemed to be an allowable deduction in respect of that relevant period;
(ja) where a divisible deduction is allowable to the company in relation to the year of income under section 77F in respect of moneys paid on shares within the meaning of that section, so much of the amount of that divisible deduction as bears to the amount of that divisible deduction the same proportion as the number of whole days (if any) in that relevant period bears to 365 shall be deemed to be an allowable deduction in respect of that relevant period;
(jb) if:
(i) a divisible deduction is allowable to the company in relation to the year of income under section 82BB in respect of allowable environmental impact expenditure incurred by the company at a particular time (in this paragraph called the ``expenditure time'' ); and
the amount worked out using the following formula is taken to be an allowable deduction in respect of that relevant period:
(ii) the expenditure time occurred:
(A) during theyear of income; and
(B) before the end of the relevant period;
|
Divisible
deduction |
× |
Post-expenditure days
in relevant period Post-expenditure days in year |
where:
(jc) if:
(i) a divisible deduction is allowable to the company in relation to the year of income under section 82BB in respect of allowable environmental impact expenditure incurred by the company; and
the amount worked out using the following formula is taken to be an allowable deduction in respect of that relevant period:
(ii) the year of income is not the year of income in which the expenditure was incurred;
|
Divisible
deduction |
× |
Days in relevant period
365 |
where:
(k) where a divisible deduction is allowable to the company in relation to the year of income under subsection 88(1) in respect of a premium paid by the company or under subsection 88(2) in respect of expenditure incurred by the company, so much of the amount of that divisible deduction as bears to the amount of that divisible deduction the same proportion as the number of whole days (if any) in that relevant period bears to 365 shall be deemed to be an allowable deduction in respect of that relevant period;
(m) where -
(i) a divisible deduction is allowable to the company in relation to the year of income under subsection 88(4) by reason of the death of a person; and
so much of the amount of that divisible deduction as bears to the amount of that divisible deduction the same proportion as the number of whole days (if any) in the relevant period, being whole days occurring after the time when the person died, bears to the number of whole days in the year of income, being whole days occurring after the time when the person died, shall be deemed to be an allowable deduction in respect of that relevant period;
(ii) the person died during the year of income and before the commencement of, or during, the relevant period,
(n) where a divisible deduction is allowable to the company in relation to the year of income under subsection 88(4) by reason of the death of a person and the year of income is not the year of income in which the person died, so much of the amount of that divisible deduction as bears to the amount of that divisible deduction the same proportion as the number of whole days (if any) in that relevant period bears to 365 shall be deemed to be an allowable deduction in respect of that relevant period;
(o) where, during the whole or a part of the relevant period, the company was a partner in a partnership that had a notional partnership loss in respect of the relevant period -
(i) where, for the purposes of section 92 , the partnership had a net income of the year of income of the partnership - so much of the amount of the notional partnership loss as bears to the amount of that notional partnership loss the same proportion as the individual interest of the company in the net income of the partnership of that year of income of the partnership bears to the amount of the net income of the partnership of that year of income shall be deemed to be an allowable deduction to the company in respect of the relevant period;
(ii) where, for the purposes of section 92 , the partnership incurred a partnership loss in the year of income of the partnership - so much of the amount of the notional partnership loss as bears to the amount of that notional partnership loss the same proportion as the individual interest of the company in the partnership loss for that year of income bears to the amount of that partnership loss shall be deemed to be an allowable deduction to the company in respect of the relevant period; and
(iii) in any other case - so much of the notional partnership loss as the Commissioner considers fair and reasonable having regard to the extent of the interest of the company in the partnership shall be deemed to be an allowable deduction to the company in respect of the relevant period;
(p) where a divisible deduction is allowable to the company in relation to the year of income under section 92 in respect of the individual interest of the company in a partnership loss incurred by a partnership in a year of income and the period that constitutes that year of income of the partnership is not the same period as the period that constitutes the year of income of the company, so much of that divisible deduction as the Commissioner considers fair and reasonable having regard to all the relevant circumstances shall be deemed to be an allowable deduction in respect of the relevant period;
(q) where a divisible deduction is allowable to the company in relation to the year of income under section 122D , 122DB , 122DD , 122DF , 122DG , 122J , 122JE , 122JF or 124AH or under Division 10AA , so much of the amount of that divisible deduction as bears to the amount of that divisible deduction the same proportion as the number of whole days (if any) in that relevant period bears to 365 shall be deemed to be an allowable deduction in respect of that relevant period;
(r) where -
(i) a divisible deduction is allowable to the company in relation to the year of income under Division 10AAA in respect of a facility;
(ii) the year of income is the first year of income in which the facility was used primarily and principally for a purpose referred to in section 123A or 123BD ; and
so much of the amount of that divisible deduction as bears to the amount of that divisible deduction the same proportion as the number of whole days (if any) in the relevant period, being whole days occurring after the time when the facility commenced to be used primarily and principally for that purpose, bears to the number of whole days in the year of income, being whole days occurring after the time when the facility commenced to be used primarily and principally for that purpose, shall be deemed to be an allowable deduction in respect of that relevant period;
(iii) the facility was used primarily and principally for a purpose referred to in section 123A or 123BD before the commencement of, or during, the relevant period,
(s) where a divisible deduction is allowable to the company in relation to the year of income under Division 10AAA in respect of a facility and the year of income is not the first year of income in which the facility was used primarily and principally for a purpose referred to in section 123A or 123BD , so much of the amount of that divisible deduction as bears to the amount of that divisible deduction the same proportion as the number of whole days (if any) in that relevant period bears to 365 shall be deemed to be an allowable deduction in respect of that relevant period;
(t) where -
(i) a divisible deduction is allowable to the company in relation to the year of income under section 124F in respect of expenditure of a capital nature incurred by the company on an access road, or under section 124JA in respect of expenditure of a capital nature incurred by the company in respect of a building;
(ii) the year of income is the first year of income in which the company incurred expenditure of a capital nature on that access road or building, as the case may be; and
so much of the amount of that divisible deduction as bears to the amount of that divisible deduction the same proportion as the number of whole days (if any) in the relevant period, being whole days occurring after the time when the company first incurred expenditure of a capital nature on that access road or building, as the case may be, bears to the number of whole days in the year of income, being whole days occurring after the time when the company first incurred expenditure of a capital nature on the access road or building, as the case may be, shall be deemed to be an allowable deduction in respect of that relevant period;
(iii) the company incurred expenditure of a capital nature on that access road or building, as the case may be, before the commencement of, or during, the relevant period,
(u) where a divisible deduction is allowable to the company in relation to the year of income under section 124F in respect of expenditure of a capital nature incurred by the company on an access road, or under section 124JA in respect of expenditure of a capital nature incurred by the company in respect of a building, and the year of income is not the first year of income in which the company incurred expenditure of a capital nature on that access road or building, as the case may be, so much of the amount of that divisible deduction as bears to the amount of that divisible deduction the same proportion as the number of whole days (if any) in that relevant period bears to 365 shall be deemed to be an allowable deduction in respect of that relevant period;
(v) where -
(i) a divisible deduction is allowable to the company in relation to the year of income under section 124M (other than subsection (3) of that section) in respect of a unit of industrial property;
(ii) the year of income is the first year of income in which the unit was used by the company for the purpose of producing assessable income; and
so much of the amount of that divisible deduction as bears to the amount of that divisible deduction the same proportion as the number of whole days (if any) in the relevant period, being whole days occurring after the time when the unit commenced to be used by the company for the purpose of producing assessable income, bears to the number of whole days in the year of income, being whole days occurring after the time when the unit commenced to be used by the company for the purpose of producing assessable income, shall be deemed to be an allowable deduction in respect of the relevant period;
(iii) the unit was used by the company for the purpose of producing assessable income before the commencement of, or during, the relevant period,
(w) where a divisible deduction is allowable to the company in relation to the year of income under section 124M (other than subsection (3) of that section) in respect of a unit of industrial property and the year of income is not the first year of income in which the unit was used by the company for the purpose of producing assessable income, so much of the amount of that divisible deduction as bears to the amount of that divisible deduction the same proportion as the number of whole days (if any) in the relevant period bears to 365 shall be deemed to be an allowable deduction in respect of the relevant period;
(x) where a divisible deduction is allowable to the company in relation to the year of income under subsection 124M(3) in respect of the residual value of a unit of industrial property and, in ascertaining that residual value, the whole or part of expenditure incurred by the company during the relevant period was included in the cost of that unit, an amount equal to the amount of that expenditure, or of that part of that expenditure, as the case may be, shall be deemed to be an allowable deduction in respect of the relevant period;
(xa) where a divisible deduction is allowable to the company in relation to the year of income under section 124ZAF or 124ZAFA , so much of the amount of the divisible deduction as bears to the amount of the divisible deduction the same proportion as the number of whole days (if any) in the relevant period bears to 365 shall be deemed to be an allowable deduction in respect of the relevant period; and
(y) where a divisible deduction is allowable to the company in relation to the year of income under Division 10C or 10D and the Commissioner considers that the whole or a part of that divisible deduction may appropriately be related to the relevant period, the whole of that divisible deduction or that part of that divisible deduction, as the case may be, shall be deemed to be an allowable deduction in respect of the relevant period.
Subject to this section and section 50HA , a disqualifying event in relation to a company shall be deemed to have occurred at a time during a year of income (in this subsection referred to as the ``relevant time'' ) if the Commissioner is satisfied that:
(a) immediately after the relevant time, there was no natural person, and there were no natural persons, who beneficially owned shares in the company carrying between them the right to exercise more than one-half of the voting power in the company who, immediately before the relevant time, beneficially owned shares in the company carrying between them the right to exercise more than one-half of the voting power in the company;
(b) immediately after the relevant time there was no natural person, and there were no natural persons, who beneficially owned shares in the company carrying between them the right to receive more than one-half of any dividend that might be paid by the company who, immediately before the relevant time, beneficially owned shares in the company carrying between them the right to receive more than one-half of any dividend that might be paid by the company;
(c) immediately after the relevant time there was no natural person, and there were no natural persons, who beneficially owned shares in the company carrying between them the right to receive more than one-half of any distribution of capital of the company who, immediately before the relevant time, beneficially owned shares in the company carrying between them the right to receive more than one-half of any distribution of capital of the company;
(d) at the relevant time, the voting power in the company was controlled, or became capable of being controlled, either directly or through one or more interposed companies, trustees or partnerships, by a person or persons who did not control the voting power in the company and was not or were not, as the case may be, capable of controlling the voting power in the company, either directly or through one or more interposed companies, trustees or partnerships, at any time before the relevant time, being a time during the year of income, and that person or those persons acquired the control of that voting power or became capable of acquiring the control of that voting power, as the case may be, for the purpose, or for purposes that included the purpose, of receiving any benefit or obtaining any advantage in relation to the application of this Act or securing that another person or other persons would receive such a benefit or obtain such an advantage;
(e) immediately before the relevant time, the company had an available loss and, at the relevant time, the company derived income that would not have been derived by the company, or a capital gain accrued to the company that would not have accrued to the company, if the company had not had an available loss immediately before the relevant time;
(f) immediately before the relevant time, the company had an available profit and, at the relevant time, the company incurred a loss or outgoing that would not have been incurred by the company if the company had not had an available profit immediately before the relevant time;
(g) immediately before the relevant time, the company had an available loss or an available profit and a person other than the company will, either directly or indirectly, receive a benefit, or obtain an advantage, in relation to the application of this Act as a result of the operation of any agreement, scheme, arrangement, understanding, transaction, course of conduct or course of business that:
(i) was entered into or commenced to be carried out at the relevant time; and
(ii) would not have been entered into or carried out if the company had not had an available loss or an available profit, as the case may be, immediately before the relevant time; or
(h) at the relevant time, the affairs or business operations of the company were managed or conducted without proper regard to the rights, powers or interests of a natural person or natural persons who controlled the voting power in the company at the relevant time or who was or were, as the case may be, capable of controlling the voting power in the company at the relevant time, either directly or through one or more interposed companies, trustees or partnerships.
(a) the taxable income of a company is required by subsection 50C(1) to be calculated in accordance with section 50C ; and
(b) the company satisfies the requirements of subsections 50HA(2) and (4);
then:
(c) for the purpose of applying section 50C to calculate the taxable income, subsection (1) of this section applies as if paragraphs (a), (b) and (c) were omitted and the paragraphs set out in subsection (1B) were substituted; and
(d) in the substituted paragraphs, the expressions control a non-fixed trust, directly or indirectly, excepted trust, fixed entitlement, group, more than a 50% stake and non-fixed trust have the same meanings as in Schedule 2F .
For the purposes of paragraph (1A)(c), the substituted paragraphs are as follows:
(a) immediately after the relevant time, the persons having fixed entitlements to shares of the income or shares of the capital of:
(i) if the company satisfied the requirements of paragraph 50HA(2)(a) - the company; or
or the percentages of those shares, were different from immediately before the relevant time;
(ii) if the company satisfied the requirements of paragraph 50HA(2)(b) - the holding entity mentioned in that paragraph;
(b) immediately after the relevant time, there were no individuals who had more than a 50% stake in either the income or capital of a non-fixed trust (other than an excepted trust) that held directly or indirectly a fixed entitlement to a share of the income or capital of the company at any time during the year of income who, immediately before the relevant time, had more than a 50% stake in the income or capital, respectively, of the non-fixed trust;
(c) at the relevant time, a group began to control a non-fixed trust (other than an excepted trust) that held directly or indirectly a fixed entitlement to a share of the income or capital of the company at any time during the year of income.
For the purposes of subsection (1):
(a) a company shall be taken to have had an available loss immediately before a time during the year of income if, had the year of income ended immediately before that time, the assessable income of the company of the year of income would have been less than the allowable deductions (other than deductions under section 79E , 79F , 80 , 80AAA or 80AA ) of the company of the year of income; and
(b) a company shall be taken to have had an available profit immediately before a time during a year of income if, had the year of income ended immediately before that time, the assessable income of the company of the year of income would have exceeded the allowable deductions (other than deductions under section 79E , 79F , 80 , 80AAA or 80AA ) of the company of the year of income.
Paragraph (1)(e) applies notwithstanding that the income referred to in that paragraph was derived by the company in the course of ordinary family or commercial dealing, but that paragraph does not apply in a case where the natural person or natural persons who had a shareholding interest or shareholding interests in the company immediately before, and immediately after, the time when the income was derived will benefit from the derivation of the income to an extent that the Commissioner considers to be fair and reasonable having regard to voting, dividend or capital rights attached to the shares in respect of which that person or those persons had a shareholding interest or shareholding interests in the company immediately after the time when the income was derived.
Paragraph (1)(e) applies even though the capital gain referred to in that paragraph accrued to the company in the course of ordinary family or commercial dealing, but:
(a) that paragraph does not apply if the natural person or natural persons who had a shareholding interest or shareholding interests in the company immediately before, and immediately after, the time when the capital gain accrued will benefit from the accrual of the capital gain to an extent that the Commissioner considers to be fair and reasonable; and
(b) in determining whether the extent to which that person or those persons will benefit is fair and reasonable, the Commissioner is to have regard to voting, dividend or capital rights attached to the shares in respect of which that person or those persons had a shareholding interest or shareholding interests in the company immediately after the time when the capital gain accrued.
Paragraph (1)(f) applies notwithstanding that the loss or outgoing referred to in that paragraph was incurred by the company in the course of ordinary family or commercial dealing, but that paragraph does not apply in a case where the natural person or natural persons who had a shareholding interest or shareholding interests in the company immediately before, and immediately after, the time when the loss or outgoing was incurred will benefit from any profit or advantage that has, or might, arise, directly or indirectly, from the incurring of the loss or outgoing to an extent that the Commissioner considers to be fair and reasonable having regard to voting, dividend or capital rights attached to the shares in respect of which that person or those persons had a shareholding interest or shareholding interests in the company immediately after the time when the loss or outgoing was incurred.
Without limiting the generality of paragraph (1)(g), a person shall be deemed, for the purposes of that paragraph, to receive a benefit or obtain an advantage in relation to the application of this Act if the person is not liable to pay income tax in respect of a year of income, or the liability of the person to pay income tax in respect of a year of income is reduced, by reason that the person has not derived income that the person would have derived, or a capital gain that has not accrued to the person would have accrued to the person, if the agreement, scheme, arrangement, understanding, transaction, course of conduct or course of business referred to in that paragraph had not been entered into or carried out.
Paragraph (1)(g) applies notwithstanding that the agreement, scheme, arrangement, understanding, transaction, course of conduct or course of business referred to in that paragraph was entered into or carried out in the course of ordinary family or commercial dealing but that paragraph does not apply in relation to a benefit or advantage that is received or obtained by a person who had a shareholding interest in the company in the year of income, being a benefit or advantage that the Commissioner considers to be fair and reasonable having regard to voting, dividend or capital rights attached to the shares in respect of which that person had that shareholding interest in the company.
For the purposes of this section:
(a) a person has a shareholding interest in a company if:
(i) the person is the beneficial owner of, or of an interest in, any shares in the company; or
(ii) the person is the trustee of a family trust (within the meaning of section 272-75 of Schedule 2F ) who is the owner of, or of an interest in, any shares in the company; and
(b) where a person has a shareholding interest in a company that has a shareholding interest in another company (including a shareholding interest that the company has in that other company by any other application or applications of this paragraph) that person shall be deemed to have a shareholding interest in that other company.
In determining for the purposes of this section whether the affairs or business operations of a company were managed or conducted as mentioned in paragraph (1)(h), regard shall be had to any act or thing done in the course of the management or conduct of those affairs or business operations, irrespective of the purpose or purposes for which the act or thing was done and notwithstanding that the act or thing was done in the course of ordinary family or commercial dealing.
For the purposes of this section, it shall be taken that:
(a) income would not have been derived, or a loss or outgoing would not have been incurred, by a company if a particular act had not been done;
(b) income would have been derived by a person if a particular act had not been done; or
(c) an agreement, scheme, arrangement, understanding, transaction, course of conduct or course of business would not have been entered into or carried out if a particular act had not been done,
if the income would not have been derived or the loss or outgoing would not have been incurred by the company, the income would have been derived by the person or the agreement, scheme, arrangement, understanding, transaction, course of conduct or course of business would not have been entered into or carried out, as the case may be, if none of 2 or more acts (including that act) had been done.
50H(10) [Interpretation of subsec (9)](a) a reference to the non-derivation, or to the derivation, of income includes a reference to the non-accrual, or to the accrual, as the case may be, of a capital gain; and
(b) a reference to the doing of an act includes a reference to the happening of an event or the existence of a matter or circumstance.
Paragraphs 50H(1)(a), (b) and (c) do not apply if the company satisfies the conditions in this section.
50HA(2) First condition.At all times during the year of income:
(a) both:
(i) persons must have held fixed entitlements (see subsection (6)) to all of the income and capital of the company; and
(ii) non-fixed trusts (see subsection (6)), other than family trusts (see subsection (6)), must have held fixed entitlements to a 50% or greater share of the income or a 50% or greater share of the capital of the company; or
(b) both:
(i) a fixed trust (see subsection (6)) or a company (which trust or company is the holding entity ) must have held, directly or indirectly (see subsection (6)), fixed entitlements to all of the income and capital of the company; and
50HA(3) Second condition.
(ii) non-fixed trusts, other than family trusts, must have held fixed entitlements to a 50% or greater share of the income or a 50% or greater share of the capital of the holding entity.
The persons holding fixed entitlements to shares of the income, and the persons holding fixed entitlements to shares of the capital, of:
(a) in a paragraph (2)(a) case - the company; or
(b) in a paragraph (2)(b) case - the holding entity;
at the beginning of the year of income must have held those entitlements to those shares at all times during the year of income.
50HA(4) Third condition.At the beginning of the year of income:
(a) individuals must not have had (between them), directly or indirectly, and for their own benefit, fixed entitlements to a greater than 50% share of the income of the company; or
(b) individuals must not have had (between them), directly or indirectly, and for their own benefit, fixed entitlements to a greater than 50% share of the capital of the company. 50HA(5) Fourth condition.
It must be the case that, for each non-fixed trust (other than an excepted trust as defined in subsection (6)) that, at any time in the year of income, held directly or indirectly a fixed entitlement to a share of the income or capital of the company, section 267-60 of Schedule 2F does not require the non-fixed trust to work out its net income and loss for the income year under Division 268 of Schedule 2F .
50HA(6) Meaning of expressions.The expressions directly or indirectly, excepted trust, family trust, fixed entitlement, fixed trust and non-fixed trust have the same meanings as in Schedule 2F .
The Commissioner may give the company a notice in accordance with section 50HC if the requirements of subsections (2) to (5) of this section are met.
50HB(2) First requirement.In its return of income for the year of income, the company must not have calculated its taxable income and loss for the year of income under section 50C where it would be required to calculate its taxable income and loss under that section unless it met the conditions in section 50HA .
50HB(3) Second requirement.In order to determine whether it meets the conditions in that section, the Commissioner must need information about a non-fixed trust mentioned in subsection 50HA(5) .
50HB(4) Third requirement.When the Commissioner gives the notice:
(a) a trustee of the non-fixed trust must be a non-resident; or
(b) the central management and control of the non-fixed trust must be outside Australia. 50HB(5) Fourth requirement.
The Commissioner must give the notice before the later of:
(a) 5 years after the year of income; and
(b) the end of the period during which the company is required by section 262A to retain records in relation to that year of income.
The notice that the Commissioner may give if the requirements of subsections 50HB(2) to (5) are met must require the company to give the Commissioner specified information that is relevant in determining whether the requirements of subsection 50HA(5) are satisfied in relation to the non-fixed trust mentioned in subsections 50HB(3) and (4).
50HC(2) Company knowledge.The information need not be within the knowledge of the company at the time the notice is given.
50HC(3) Period for giving information.The notice must specify a period within which the company is to give the information. The period must not end earlier than 21 days after the day on which the Commissioner gives the notice.
50HC(4) Consequence of not giving the information.If the company does not give the information within the period or within such further period as the Commissioner allows, the company is taken not to meet, and never to have met, the conditions in section 50HA .
50HC(5) Application of section 50C .If, because of subsection (4), the company is required to calculate its taxable income and loss for the year of income in accordance with section 50C , that section is to be applied as if it required the year of income to be divided into such relevant periods as would result in the highest possible taxable income for the year of income.
50HC(6) No offences or penalties.To avoid doubt, subsections (4) and (5) do not cause the company to commit any offence or be liable to any penalty under Part VII for not calculating its taxable income and loss in accordance with section 50C in its return.
This section applies for the purposes of determining, for the purposes of section 50D or section 50H , whether a natural person was, at any time, the beneficial owner of shares in a company.
50J(2) [Voting interest of company in another company]Where, at any time, whether before or after the commencement of this section, a person had, or has, a voting interest in a company and at that time that company had, or has, a voting interest in another company, that person shall be deemed to have had, or to have, at that time a voting interest in that other company (in addition to any other voting interest that that person may have had, or may have, at that time in that other company) that bears to the voting interest that the first-mentioned company had, or has, at that time in that other company the same proportion as the voting interest that that person had, or has, at that time in the first-mentioned company bears to the total of the voting interests that persons had, or have, at that time, apart from this subsection, in the first-mentioned company.
50J(3) [Extent of voting interest]In ascertaining for the purposes of subsection (2) the extent of the voting interest that a company had, or has, at any time in another company, there shall be taken into account any voting interest that the first-mentioned company is to be deemed to have had, or to have, at that time in that other company by any other application or applications of that subsection.
50J(4) [Dividend and capital interests]In addition to the operation of subsections (2) and (3) in relation to voting interests, those subsections have effect in relation to dividend interests and capital interests in like manner as they have effect in relation to voting interests.
50J(5) [Meaning of voting dividend and capital interests]For the purposes of this section:
(a) a reference to a person having had, or having, at any time a voting interest in a company shall be read as a reference to the person having been, or being, at that time the beneficial owner of shares in the company that carried, or carry, at that time the right to exercise any of the voting power in the company and the extent of the voting interest shall be taken to have been, or to be, the fraction of the total voting power in the company the right to exercise which was, or is, carried by those shares;
(b) a reference to a person having had, or having, at any time a dividend interest in a company shall be read as a reference to the person having been, or being, at that time the beneficial owner of shares in the company that carried, or carry, at that time any right to receive dividends that might have been, or may be, paid by the company and the extent of the dividend interest shall be taken to have been, or to be, the fraction of any dividends that might have been, or may be, paid by the company that would have been, or would be, received in respect of those shares;
(c) a reference to a person having had, or having, at any time a capital interest in a company shall be read as a reference to the person having been, or being, at that time the beneficial owner of shares in the company that carried, or carry, at that time the right to receive any distribution of capital in the company in the event of the winding-up, or of a reduction in the capital, of the company and the extent of the capital interest shall be taken to have been, or to be, the fraction of any distribution of capital of the company in such an event that would have been, or would be, received in respect of those shares; and
(d) where at any time 2 or more persons jointly had, or have, a voting interest, a dividend interest or a capital interest in a company, each of those persons shall be taken to have had, or to have, at that time a separate voting interest, dividend interest or capital interest, as the case may be, in the company equal to his share in the first-mentioned voting interest, dividend interest or capital interest. 50J(6) [Person deemed to be beneficial owner of shares]
For the purposes of this section, section 50D and section 50H , where a person is deemed by this section to have had or to have, at any time, a voting interest, a dividend interest or a capital interest in a company, the person shall be deemed to have been or to be, at that time, the beneficial owner of shares carrying the right to exercise voting power in the company, the right to receive the whole or a part of any dividends that might be paid by the company or the right to receive the whole or a part of any distribution of capital of the company, as the case may be, and the extent of that right shall be deemed to be the same as the extent of the voting interest, the dividend interest or the capital interest, as the case may be.
SECTION 50K SPECIAL PROVISIONS RELATING TO BENEFICIAL OWNERSHIP OF, OR RIGHTS ATTACHED TO, SHARES 50K(1) [Effect of section]The succeeding provisions of this section have effect where:
(a) for the purposes of the application of subsection 50D(2) , it is necessary to determine whether, at any time, a person beneficially owned shares in a company or whether certain rights were attached to shares in a company;
(b) for the purposes of determining, in accordance with section 50H , whether a disqualifying event is deemed to have occurred in relation to a company at a time during a year of income, it is necessary to determine whether a person beneficially owned shares in any company, or whether certain rights were attached to shares in any company, at any time during that year of income; or
(c) for the purposes of the application of section 50J , it is necessary to determine whether a person at any time beneficially owned shares in a company otherwise than by the operation of that section, or whether certain rights were attached at any time to shares in a company that were beneficially owned by a person otherwise than by the operation of that section.
If the trustee of a family trust (within the meaning of section 272-75 of Schedule 2F ) owns shares in a company, the trustee is taken to be the beneficial owner of the shares.
Shares in a company that were beneficially owned at any time by a natural person shall be deemed to have been beneficially owned by the same person at a later time if the person has died and, at that later time, the shares were owned by the trustee of his estate in his capacity as trustee of that estate or were beneficially owned by a person who received the shares as a beneficiary in that estate.
50K(3) [Redeemable shares]Redeemable shares beneficially owned by a person at any time shall be taken not to have been owned by the person at that time.
50K(4) [Shares deemed to be redeemable]For the purposes of subsection (3), a share issued by a company shall be deemed to be a redeemable share if -
(a) the share is, or at the option of the company is to be, liable to be redeemed; or
(b) the share was issued in pursuance of, or as part of, an agreement, whether oral or in writing and whether entered into before or after the commencement of this subsection, that had the purpose, or purposes that included the purpose, of enabling the company, by means of the redemption, purchase or cancellation, or of a reduction in the paid-up value, of that share or of any other share in the company, to pay, transfer or apply to, on behalf of or at the direction of the person to whom the share was issued or any other person, whether upon the exercise of an option by the company or by any other person or not, any money or other property other than shares in the company. 50K(5) [Agreement relating to beneficial ownership]
(a) a person beneficially owned shares in a company, or a company claims that a person beneficially owned shares in a company, at a time (in this subsection referred to as the ``relevant time'') during a year of income;
(b) before or during the year of income, an agreement was entered into, or a right, power or option (including a contingent right, power or option) was granted, being an agreement, right, power or option that, in any way, directly or indirectly, related to, affected or depended for its operation on -
(i) the beneficial interest of the person in the shares, or the value of that interest;
(ii) the right of that person to sell, or otherwise dispose of, that interest, or any such sale or other disposition;
(iii) any rights carried by the shares, or the exercise of any such rights; or
(iv) any dividends that might be paid, or any distribution of capital that might be made, in respect of the shares, or the payment of any such dividends or the making of any such distribution of capital; and
(c) the agreement was entered into or the right, power or option was granted or acquired, for the purpose, or for purposes that included the purpose of securing that a person who, if the agreement had not been entered into or the right, power or option had not been granted or acquired, would have been liable to pay income tax in respect of a year of income would not be liable to pay income tax in respect of that year of income or would be liable to pay less income tax in respect of that year of income than the person would have been liable to pay if the agreement had not been entered into, or the right, power or option had not been granted, as the case may be,
the Commissioner may treat the shares as not having been beneficially owned by the person at the relevant time.
50K(6) [Shares deemed to carry rights]Where the Commissioner is satisfied that, by virtue of a provision in the constituent document of a company as in force at any time during the year of income or by virtue of an agreement made before the end of the year of income, shares in the company have commenced, or will or may commence at any time, to carry certain rights (whether or not any of those rights had previously been carried by those shares), those shares shall be deemed to have carried those rights at all times during the year of income when the provision in the constituent document was in force, or after the time when the agreement was entered into, as the case may be.
50K(7) [Shares deemed not to have carried rights]Where the Commissioner is satisfied that, by virtue of a provision in the constituent document of a company as in force at any time during the year of income or by virtue of an agreement made before the end of the year of income, shares in the company have ceased, or will or may cease, at any time, to carry rights that those shares carried at any time during the year of income, those shares shall be deemed not to have carried those rights at any time when the provision in the constituent document was in force, or at any time after the time the agreement was entered into, as the case may be.
50K(8) [Agreement, etc, need not be enforceable]A reference in this section to an agreement, right, power or option shall be read as including a reference to an agreement, right, power or option that is not enforceable by legal proceedings whether or not it was intended to be so enforceable.
50K(9) [Arrangement need not be formal]For the purposes of this section, an arrangement or understanding, whether formal or informal and whether express or implied, shall be deemed to be an agreement.
SECTION 50KA 50KA SPECIAL PROVISION RELATING TO CAPACITY IN WHICH FAMILY TRUST BENEFICIALLY OWNS SHARESFor the purposes of sections 50D and 50H , if:
(a) the trustee of a family trust (within the meaning of section 272-75 of Schedule 2F ) is taken by subsection 50K(1A) , or by that subsection and subsection 50J(6) , to be the beneficial owner of shares; and
(b) the trustee is a company;
the trustee is taken to be a natural person.
For the purposes of the application of this Subdivision in relation to a company (in this subsection referred to as the ``relevant company'') in relation to a year of income, where -
(a) during the year of income, a payment was made to the relevant company, or a liability was incurred to the relevant company, by a partnership in which another company was a partner; and
(b) by reason of the making of that payment, or the incurring of that liability, as the case may be, a dividend is deemed by section 65 to have been paid to the relevant company by that other company on the last day of a year of income of that other company,
that dividend shall be taken to have been received by the relevant company at the time when the payment referred to in paragraph (a) was made, or the liability referred to in that paragraph was incurred, as the case may be.
50L(2) [Time dividends deemed to have been received]For the purposes of the application of this Subdivision in relation to a company (in this subsection referred to as the ``relevant company'') in relation to a year of income, where, by reason of the making or crediting of a payment or the transfer of property by another company during the year of income, that other company is deemed by section 108 to have paid dividends to the relevant company on the last day of a year of income of that other company, those dividends shall be deemed to have been received by the relevant company at the time when the payment, credit or transfer was made.
For the purposes of the application of this Subdivision in relation to a company (in this subsection referred to as the ``relevant company'') in relation to a year of income, where, by reason that a sum was paid or credited, or property was transferred, to the relevant company by another company, a dividend is deemed by section 109 to have been paid to the relevant company on the last day of a year of income of that other company, that dividend shall be deemed to have been received by the relevant company at the time when the sum was paid or credited, or the property was transferred, as the case may be.
(Repealed by No 107 of 1989)
Where, for the purposes of any provision of this Act (other than this section), it is necessary to ascertain the extent to which the taxable income of a company of a year of income, being a company in relation to which this Subdivision applies in relation to the year of income, consists of one or more of the following classes of income, that is to say, income from private company dividends, income from dividends other than private company dividends, income from property other than dividends and income from personal exertion, then, notwithstanding the provisions of Subdivision A, this section applies for that purpose.
50N(2) [Income from varied sources]Where the assessable income of the company in respect of a relevant period in relation to the company in relation to a year of income is derived from income included in more than one of the following classes of income, that is to say, income from private company dividends, income from dividends other than private company dividends, income from property other than dividends and income from personal exertion, the provisions of subsections (3), (4), (5) and (6) shall apply to all allowable deductions of the company in respect of the relevant period.
50N(3) [Deductions where income from varied sources]Where an allowable deduction or part of an allowable deduction in respect of the relevant period relates directly to income from private company dividends (whether of the relevant period, another relevant period or another year of income), the deduction or part of the deduction, as the case may be, shall be made successively from income from private company dividends, from income from dividends other than private company dividends, from income from property other than dividends and from income from personal exertion.
50N(4) [Deduction relating to income from dividends]Where an allowable deduction or part of an allowable deduction in respect of the relevant period relates directly to income from dividends other than private company dividends (whether of the relevant period, another relevant period or another year of income), the deduction or part of the deduction, as the case may be, shall be made successively from income from dividends other than private company dividends, from income from private company dividends, from income from property other than dividends and from income from personal exertion.
50N(5) [Deduction relating to income from property]Where an allowable deduction or part of an allowable deduction in respect of the relevant period relates directly to income from property other than dividends (whether of the relevant period, another relevant period, or another year of income), the deduction or part of the deduction, as the case may be, shall be made successively from income from property other than dividends, from income from private company dividends, from income from dividends other than private company dividends and from income from personal exertion.
50N(6) [Deduction relating to income other than from property]Where an allowable deduction or part of an allowable deduction in respect of the relevant period does not relate directly to income from property, the deduction or part of the deduction, as the case may be, shall be made successively from income from personal exertion, from income from property other than dividends, from income from private company dividends and from income from dividends other than private company dividends.
50N(7) [Excess to be set off against other classes of income]Where, by subsections (3), (4), (5) or (6), it is provided that any deduction shall be made successively from income of 2 or more classes of income, the deduction shall be set off against the income of the first of those classes, and, if it exceeds the income of that class, the excess shall be set off against the income of the second class, and so on until either the deduction or the income of the last of those classes is exhausted.
50N(8) [Notional taxable income]The notional taxable income of a company in respect of a relevant period shall be deemed to consist of -
(a) where the assessable income of the company in respect of the relevant period consists of or includes income from private company dividends - so much (if any) of the amount of that income from private company dividends as remains after deducting in accordance with subsections (3), (4), (5) and (6) any allowable deductions or parts of allowable deductions that, by virtue of any of those subsections, are to be deducted from income from private company dividends;
(b) where the assessable income of the company in respect of the relevant period consists of or includes income from dividends other than private company dividends - so much (if any) of the amount of that income from dividends other than private company dividends as remains after deducting in accordance with subsections (3), (4), (5) and (6) any allowable deductions or parts of allowable deductions that, by virtue of any of those subsections, are to be deducted from income from dividends other than private company dividends;
(c) where the assessable income of the company in respect of the relevant period consists of or includes income from property other than dividends - so much (if any) of the amount of that income from property other than dividends as remains after deducting in accordance with subsections (3), (4), (5) and (6) any allowable deductions or parts of allowable deductions that, by virtue of any of those subsections, are to be deducted from income from property other than dividends; and
(d) where the assessable income of the company in respect of the relevant period consists of or includes income from personal exertion - so much (if any) of the amount of that income from personal exertion as remains after deducting in accordance with subsections (3), (4), (5) and (6) any allowable deductions or parts of any allowable deductions that, by virtue of any of those subsections, are to be deducted from income from personal exertion. 50N(9) [Notional loss]
The notional loss of a company in respect of a relevant period shall be deemed to consist of -
(a) so much of the allowable deductions (if any) in respect of the relevant period as relates directly to income from private company dividends as has not been deducted, in accordance with subsection (3), from assessable income of the company in respect of the relevant period;
(b) so much of the allowable deductions (if any) in respect of the relevant period as relates directly to income from dividends other than private company dividends as has not been deducted, in accordance with subsection (4), from assessable income of the company in respect of the relevant period;
(c) so much of the allowable deductions (if any) in respect of the relevant period as relates directly to income from property other than dividends as has not been deducted, in accordance with subsection (5), from assessable income of the company in respect of the relevant period; and
(d) so much of the allowable deductions (if any) in respect of the relevant period as does not relate directly to income from property as has not been deducted, in accordance with subsection (6), from assessable income of the company in respect of the relevant period. 50N(10) [Whole of notional loss to be taken into account]
Where the whole of a notional loss of a company in respect of a relevant period is to be taken into account in determining the amount of the eligible notional loss in relation to the company in relation to the year of income -
(a) so much of allowable deductions that relate directly, in whole or in part, to income from private company dividends (whether of the relevant period, another relevant period or another year of income) as is deemed by subsection (9) to be included in the notional loss shall be deemed to be included in the eligible notional loss;
(b) so much of allowable deductions that relate directly, in whole or in part, to income from dividends other than private company dividends (whether of the relevant period, another relevant period or another year of income) as is deemed by subsection (9) to be included in the notional loss shall be deemed to be included in the eligible notional loss;
(c) so much of allowable deductions that relate directly, in whole or in part, to income from property other than dividends (whether of the relevant period, another relevant period or another year of income) as is deemed by subsection (9) to be included in the notional loss shall be deemed to be included in the eligible notional loss; and
(d) so much of allowable deductions that do not relate directly, in whole or in part, to income from property as is deemed by subsection (9) to be included in the notional loss shall be deemed to be included in the eligible notional loss. 50N(11) [Part of notional loss to be taken into account]
Where a part of a notional loss of a company in respect of a relevant period is to be taken into account in determining the amount of the eligible notional loss in relation to the company in relation to the year of income -
(a) so much of the amount of allowable deductions that relate directly, in whole or in part, to income from private company dividends (whether of the relevant period, another relevant period or another year of income) that is deemed by subsection (9) to be included in the notional loss as bears to that amount the same proportion as the part of that notional loss that is to be taken into account in determining the amount of the eligible notional loss bears to the whole of the notional loss shall be deemed to be included in the eligible notional loss;
(b) so much of the amount of allowable deductions that relate directly, in whole or in part, to income from dividends other than private company dividends (whether of the relevant period, another relevant period or another year of income) that is deemed by subsection (9) to be included in the notional loss as bears to that amount the same proportion as the part of that notional loss that is to be taken into account in determining the amount of the eligible notional loss bears to the whole of the notional loss shall be deemed to be included in the eligible notional loss;
(c) so much of the amount of allowable deductions that relate directly, in whole or in part, to income from property other than dividends (whether of the relevant period, another relevant period or another year of income) that is deemed by subsection (9) to be included in the notional loss as bears to that amount the same proportion as the part of that notional loss that is to be taken into account in determining the amount of the eligible notional loss bears to the whole of the notional loss shall be deemed to be included in the eligible notional loss; and
(d) so much of the amount of allowable deductions that do not relate directly, in whole or in part, to income from property that is deemed by subsection (9) to be included in the notional loss as bears to that amount the same proportion as the part of that notional loss that is to be taken into account in determining the amount of the eligible notional loss bears to the whole of the notional loss shall be deemed to be included in the eligible notional loss. 50N(12) [Income from private company dividends]
Subject to subsection (13), the amount of income from private company dividends included in the taxable income of the company of the year of income shall be deemed to be the amount (if any) ascertained by deducting from the sum (in this subsection referred to as the ``income amount'' ) of -
(a) any amount, or the sum of any amounts, of income from private company dividends included in the notional taxable income of a relevant period or included in the notional taxable incomes of relevant periods, as the case may be, by subsection (8); and
(b) any amount, or the sum of any amounts, of income from private company dividends included in a full-year amount or included in full-year amounts, as the case may be, in relation to the company in relation to the year of income,
the sum (in this subsection referred to as the ``deduction amount'' ) of -
(c) so much of allowable deductions that relate directly, in whole or in part, to income from private company dividends (whether of the year of income or of a previous year of income) as is deemed by this section to be included in the eligible notional loss of the company in relation to the year of income;
(d) so much of any full-year deduction or full-year deductions as relates directly to income from private company dividends; and
(e) so much of any partnership deduction or partnership deductions as relates directly to income from private company dividends. 50N(13) [Amount of private company dividends]
Where, apart from this subsection, an amount (in this subsection referred to as the ``excess income amount'' ) of income from private company dividends would, by subsection (12), be included in the taxable income of the company of the year of income and -
(a) the deduction amount referred to in subsection (14) exceeds the income amount referred to in that subsection;
(b) the deduction amount referred to in subsection (16) exceeds the income amount referred to in that subsection; or
(c) the deduction amount referred to in subsection (18) exceeds the income amount referred to in that subsection,
the amount of income from private company dividends included in the taxable income of the company of the year of income shall be deemed to be -
(d) in a case where only one of paragraphs (a), (b) and (c) is applicable - the amount (if any) remaining after deducting from the excess income amount the amount of the excess referred to in the paragraph that is applicable; and
(e) in a case where 2 or more of paragraphs (a), (b) and (c) are applicable - the amount (if any) remaining after deducting successively from the excess income amount the amounts of the excesses referred to in the paragraphs that are applicable. 50N(14) [Amount of other dividends]
Subject to subsection (15), the amount of income from dividends other than private company dividends included in the taxable income of the company of the year of income shall be deemed to be the amount (if any) ascertained by deducting from the sum (in this subsection referred to as the ``income amount'' ) of -
(a) any amount, or the sum of any amounts, of income from dividends other than private company dividends included in the notional taxable income of a relevant period or included in the notional taxable incomes of relevant periods, as the case may be, by subsection (8); and
(b) any amount, or the sum of any amounts, of income from dividends other than private company dividends included in a full-year amount or included in full-year amounts, as the case may be, in relation to the company in relation to the year of income,
the sum (in this subsection referred to as the ``deduction amount'' ) of -
(c) so much of allowable deductions that relate directly, in whole or in part, to income from dividends other than private company dividends (whether of the year of income or of a previous year of income) as is deemed by this section to be included in the eligible notional loss of the company in relation to the year of income;
(d) so much of any full-year deduction or full-year deductions as relates directly to income from dividends other than private company dividends; and
(e) so much of any partnership deduction or partnership deductions as relates directly to income from dividends other than private company dividends. 50N(15) [Deemed amount of other dividends]
Where, apart from this subsection, an amount (in this subsection referred to as the ``excess income amount'' ) of income from dividends other than private company dividends would, by subsection (14), be included in the taxable income of the company of the year of income and -
(a) the deduction amount referred to in subsection (12) exceeds the income amount referred to in that subsection;
(b) the deduction amount referred to in subsection (16) exceeds the income amount referred to in that subsection; or
(c) the deduction amount referred to in subsection (18) exceeds the income amount referred to in that subsection,
the amount of income from dividends other than private company dividends included in the taxable income of the company of the year of income shall be deemed to be -
(d) in a case where only one of paragraphs (a), (b) and (c) is applicable - the amount (if any) remaining after deducting from the excess income amount the amount of the excess referred to in the paragraph that is applicable; and
(e) in a case where 2 or more of paragraphs (a), (b) and (c) are applicable - the amount (if any) remaining after deducting successively from the excess income amount the amounts of the excesses referred to in the paragraphs that are applicable. 50N(16) [Amount of income from property]
Subject to subsection (17), the amount of income from property other than dividends included in the taxable income of the company of the year of income shall be deemed to be the amount (if any) ascertained by deducting from the sum (in this subsection referred to as the ``income amount'' ) of -
(a) any amount, or the sum of any amounts, of income from property other than dividends included in the notional taxable income of a relevant period or included in the notional taxable incomes of relevant periods, as the case may be, by subsection (8); and
(b) any amount, or the sum of any amounts, of income from property other than dividends included in a full-year amount or included in full-year amounts, as the case may be, in relation to the company in relation to the year of income,
the sum (in this subsection referred to as the ``deduction amount'' ) of -
(c) so much of allowable deductions that relate directly, in whole or in part, to income from property other than dividends (whether of the year of income or of a previous year of income) as is deemed by this section to be included in the eligible notional loss of the company in relation to the year of income;
(d) so much of any full-year deduction or full-year deductions as relates directly to income from property other than dividends; and
(e) so much of any partnership deduction or partnership deductions as relates directly to income from property other than dividends. 50N(17) [Deemed amount of income from property]
Where, apart from this subsection, an amount (in this subsection referred to as the ``excess income amount'' ) of income from property other than dividends would, by subsection (16), be included in the taxable income of the company of the year of income and -
(a) the deduction amount referred to in subsection (12) exceeds the income amount referred to in that subsection;
(b) the deduction amount referred to in subsection (14) exceeds the income amount referred to in that subsection; or
(c) the deduction amount referred to in subsection (18) exceeds the income amount referred to in that subsection,
the amount of income from property other than dividends included in the taxable income of the company of the year of income shall be deemed to be -
(d) in a case where only one of paragraphs (a), (b) and (c) is applicable - the amount (if any) remaining after deducting from the excess income amount the amount of the excess referred to in the paragraph that is applicable; and
(e) in a case where 2 or more of paragraphs (a), (b) and (c) are applicable - the amount (if any) remaining after deducting successively from the excess income amount the amounts of the excesses referred to in the paragraphs that are applicable. 50N(18) [Amount of income from personal exertion]
Subject to subsection (19), the amount of income from personal exertion included in the taxable income of the company of the year of income shall be deemed to be the amount (if any) ascertained by deducting from the sum (in this subsection referred to as the ``income amount'' ) of -
(a) any amount, or the sum of any amounts, of income from personal exertion included in the notional taxable income of a relevant period or included in the notional taxable incomes of relevant periods, as the case may be, by subsection (8); and
(b) any amount, or the sum of any amounts, of income from personal exertion included in a full-year amount or included in full-year amounts, as the case may be, in relation to the company in relation to the year of income,
the sum (in this subsection referred to as the ``deduction amount'' ) of -
(c) so much of allowable deductions that do not relate directly, in whole or in part, to income from property as is deemed by this section to be included in the eligible notional loss of the company in relation to the year of income;
(d) so much of any full-year deduction or full-year deductions as does not relate directly to income from property; and
(e) so much of any partnership deduction or partnership deductions as does not relate directly to income from property. 50N(19) [Deemed amount of income from personal exertion]
Where, apart from this subsection, an amount (in this subsection referred to as the ``excess income amount'' ) of income from personal exertion would, by subsection (18), be included in the taxable income of the company of the year of income and -
(a) the deduction amount referred to in subsection (16) exceeds the income amount referred to in that subsection;
(b) the deduction amount referred to in subsection (12) exceeds the income amount referred to in that subsection; or
(c) the deduction amount referred to in subsection (14) exceeds the income amount referred to in that subsection,
the amount of income from personal exertion included in the taxable income of the company of the year of income shall be deemed to be -
(d) in a case where only one of paragraphs (a), (b) and (c) is applicable - the amount (if any) remaining after deducting from the excess income amount the amount of the excess referred to in the paragraph that is applicable; and
(e) in a case where 2 or more of paragraphs (a), (b) and (c) are applicable - the amount (if any) remaining after deducting successively from the excess income amount the amounts of the excesses referred to in the paragraphs that are applicable. 50N(20) [Set off of deductible amounts]
Where, in the application of subsection (13), (15), (17) or (19), 2 or more amounts (in this subsection referred to as ``deductible amounts'' ) are required to be deducted successively from another amount (in this subsection referred to as the ``initial amount'' ), the first of those deductible amounts shall be set off against that initial amount and, if the initial amount exceeds that deductible amount, the next of those deductible amounts shall be set off against the amount by which the initial amount exceeds the first deductible amount and so on until either the deductible amounts are exhausted or the initial amount is exhausted.
50N(21) [Deduction relating to non-private company dividends]For the purposes of this section, where an allowable deduction or part of an allowable deduction relates directly to income from dividends but does not relate directly to income from private company dividends or to income from dividends other than private company dividends -
(a) so much (if any) of that deduction or part, as the case may be, as, in the opinion of the Commissioner, may appropriately be related to income from private company dividends shall be deemed to relate directly to income from private company dividends; and
(b) so much (if any) of that deduction or part, as the case may be, as, in the opinion of the Commissioner, may not appropriately be related to income from private company dividends shall be deemed to relate directly to income from dividends other than private company dividends. 50N(22) [Deemed private company dividends]
Subject to subsection (23), dividends paid to a company (in this subsection referred to as the ``relevant company'' ) by another company during a year of income of the relevant company shall, for the purposes of this section, be deemed to be private company dividends if, and only if -
(a) the relevant company was a private company in relation to that year of income; and
(b) the other company was a private company in relation to the year of income of that other company during which the dividends were paid. 50N(23) [Determination of rebate entitlement]
In the application of this section for the purposes of determining the amount of any rebate to which a company is entitled, or that may be allowed to a company, under section 46 or 46A in relation to a year of income, a reference in this section, in relation to the company in relation to the year of income, to private company dividends shall be read as not including a reference to so much of any dividends paid to the company by another company that is a non-resident as was paid out of profits derived from sources out of Australia.
50N(24) [Application of s 45Z]Section 45Z applies for the purposes of subsection (23) of this section in a corresponding way to the way in which it applies for the purposes of sections 46 and 46A .
The Commissioner may give a company a notice in accordance with section 50Q if the requirements of subsections (2) to (5) of this section are met.
50P(2) First requirement.In its return of income for a year of income:
(a) the company must not have calculated its taxable income in accordance with section 50C ; or
(b) the company must have calculated its taxable income in accordance with that section and in doing so must have taken into account an amount, by reason of subsection 50D(2) , in ascertaining the eligible notional loss of the company. 50P(3) Second requirement.
The Commissioner must be satisfied that:
(a) if paragraph (2)(a) applies - the company was not required to calculate its taxable income in accordance with section 50C but it would have been if one or more trusts had not been family trusts (see subsection (6)); or
(b) if paragraph (2)(b) applies - the company was required to calculate its taxable income in accordance with section 50C and in doing so was entitled to take into account the amount by reason of subsection 50D(2) , but it would not have been so entitled unless one or more trusts had been family trusts (see subsection (6)). 50P(4) Third requirement.
When the Commissioner gives the notice, for at least one of the family trusts:
(a) a trustee of the trust must be a non-resident; or
(b) the central management and control of the trust must be outside Australia. 50P(5) Fourth requirement.
The Commissioner must give the notice before the later of:
(a) 5 years after the year of income to which the return relates; and
(b) the end of the period during which the company is required by section 262A to retain records in relation to that year of income. 50P(6) Family trust.
The expression family trust has the same meaning as in section 272-75 of Schedule 2F .
The notice that the Commissioner may give if the requirements of subsections 50P(2) to (5) are met must require the company to give the Commissioner specified information about conferrals of present entitlements to, and distributions (within the meaning of Subdivision 272-B of Schedule 2F ) of, income and capital, since the start of the income year to which the return relates, by all of the family trusts meeting the requirements of paragraph 50P(4)(a) or (b).
50Q(2) Company knowledge.The information need not be within the knowledge of the company at the time the notice is given.
50Q(3) Period for giving information.The notice must specify a period within which the company is to give the information. The period must not end earlier than 21 days after the day on which the Commissioner gives the notice.
50Q(4) Consequence of not giving the information.If the company does not give the information within the period or within such further period as theCommissioner allows:
(a) if paragraph 50P(2)(a) applies - the company is required, and is taken always to have been required, to calculate its taxable income of the year of income in accordance with section 50C ; or
(b) if paragraph 50P(2)(b) applies - the company is not entitled, and is taken never to have been entitled, to take into account the amount by reason of subsection 50D(2) . 50Q(5) [Calculations in accordance with s 50C]
If, because of paragraph (4)(a), the company is required to calculate its taxable income for the year of income in accordance with section 50C , that section is to be applied as if it required the year of income to be divided into such relevant periods as would result in the highest possible taxable income for the year of income.
50Q(6) No offences or penalties.To avoid doubt, subsections (4) and (5) do not cause the company to commit any offence or be liable to any penalty under Part VII for not calculating its taxable income in accordance with section 50C , or for taking into account the amount by reason of subsection 50D(2) , in the company's return.
Subsection (1) does not apply to the 1997-98 year of income or a later year of income.
Note:
Section 8-1 of the Income Tax Assessment Act 1997 sets out rules for working out what losses or outgoings an entity can deduct for the 1997-98 year of income and later years of income.
All losses and outgoings to the extent to which they are incurred in gaining or producing the assessable income, or are necessarily incurred in carrying on a business for the purpose of gaining or producing such income, shall be allowable deductions except to the extent to which they are losses or outgoings of capital, or of a capital, private or domestic nature, or are incurred in relation to the gaining or production of exempt income.
51(1A) [Reduction of subsec (1) deduction]A deduction otherwise allowable under subsection (1) to a creditor in respect of a debt is reduced to the extent mentioned in subparagraph 245-90(3)(b)(i) of Schedule 2C if an agreement between the debtor and the creditor is made as mentioned in paragraph 245-90(3)(a) of Schedule 2C .
Subsection (2) does not apply to an assessment for the 1997-98 year of income or a later year of income.
Note:
Section 70-25 (Cost of trading stock is not a capital outgoing) of the Income Tax Assessment Act 1997 applies instead.
Expenditure incurred or deemed to have been incurred in the purchase of stock used by the taxpayer as trading stock shall be deemed not to be an outgoing of capital or of a capital nature.
51(2AA) [No application to 1997/98 and later years expenditure]Subsection (2A) does not apply to expenditure incurred in the 1997-98 year of income or a later year of income.
Note:
Section 70-15 (In which income year do you deduct an outgoing for trading stock?) of the Income Tax Assessment Act 1997 deals with deduction of expenditure incurred in those years of income.
(a) a taxpayer incurs expenditure in a year of income in connection with the acquisition of stock that will become trading stock on hand of the taxpayer; and
(b) as at the end of the year of income, a part of the stock is not, and has not been, trading stock on hand of the taxpayer; and
(c) a deduction under subsection (1) in respect of the expenditure would, apart from this subsection and subsection (1A), be allowable from the assessable income of the taxpayer of the year of income;
then, instead of the deduction under subsection (1) being allowable as mentioned in paragraph (c), a deduction under subsection (1) or section 8-1 of the Income Tax Assessment Act 1997 (as appropriate) in relation to each part of the stock, equal to so much of the expenditure as is attributable to that part, is allowable from the assessable income of the taxpayer of:
(d) the year of income in which that part of the stock first becomes trading stock on hand of the taxpayer; or
(e) if an amount is included in the assessable income of the taxpayer of an earlier year of income in connection with the disposal of that part of the stock - that earlier year of income.
Where a taxpayer derives assessable income as a result of the surrender of an item of trading stock under firearms surrender arrangements, the excess, if any, of the amount of that income over the acquisition cost is an allowable deduction in the year of income in which that income is derived.
Note:
Firearms surrender arrangements has the meaning given by subsection 6(1) .
Subsection (3) does not apply to the 1997-98 year of income or a later year of income.
Note:
Section 26-10 (Leave payments) of the Income Tax Assessment Act 1997 deals with the deductibility of leave payments.
A deduction is not allowable under subsection (1) in respect of long service leave, annual leave, sick leave or other leave except in respect of:
(a) an accrued leave transfer payment; or
(b) an amount paid to the person to whom the leave relates or, if that person is dead, to a dependant or personal representative of that person;
and, for the purposes of that subsection, the amount paid is taken to be a loss or outgoing incurred at the time when the payment is made.
Subsection (4) does not apply to the 1997-98 year of income or a later year of income.
Note:
Section 26-5 (Penalties) of the Income Tax Assessment Act 1997 denies a deduction for penalties.
A deduction is not allowable under subsection (1) in respect of:
(a) an amount, however described, payable, or expressed to be payable, by way of penalty under a law of the Commonwealth, a State, a Territory or a foreign country; or
(b) an amount ordered by a court, upon the conviction of a person for an offence against a law of the Commonwealth, a State, a Territory or a foreign country, to be paid by the person.
Subsection (5) does not apply to the 1997-98 year of income or a later year of income.
Note:
Section 25-5 (Tax-related expenses) of the Income Tax Assessment Act 1997 deals with the deductibility of interest.
Expenditure incurred in the year of income that consists of interest under section 163C , 170AA or 207A is an allowable deduction.
Subsection (6) does not apply to the 1997-98 year of income or a later year of income.
Note:
Section 26-20 (Assistance to students) of the Income Tax Assessment Act 1997 denies a deduction for certain amounts paid under the Higher Education Funding Act 1988 , the Higher Education Support Act 2003 , the Social Security Act 1991 and the Student Assistance Act 1973 .
A deduction is not allowable under subsection (1) in respect of:
(a) a contribution imposed under Chapter 4 of the Higher Education Funding Act 1988 ; or
(ab) a basic charge within the meaning of Chapter 5 of that Act; or
(b) a payment made in respect of, or in respect of the reduction or discharge of, any indebtedness to the Commonwealth under Chapter 5A of that Act; or
(c) a payment made in respect of, or in respect of the reduction or discharge of, any indebtedness to the Commonwealth or to a participating corporation under Part 4a of the Student Assistance Act 1973 .
The rule in subsection (6) does not apply to expenditure incurred by the provider of a fringe benefit (within the meaning of the Fringe Benefits Tax Assessment Act 1986 ), if the expenditure is in respect of the provision of the fringe benefit.
A deduction is not allowable under subsection (1) in respect of charge imposed by the Training Guarantee Act 1990.
(Renumbered as s 78(1B) by No 224 of 1992)
A deduction is not allowable under section 8-1 of the Income Tax Assessment Act 1997 in respect of so much of levy imposed by the Superannuation Supervisory Levy Act 1991 as represents the late lodgment amount within the meaning of section 6 of that Act.
A deduction is not allowable under section 8-1 of the Income Tax Assessment Act 1997 in respect of charge imposed by the Superannuation Guarantee Charge Act 1992 .
A deduction is not allowable under subsection (1) in respect of tax imposed by the Franchise Fees Windfall Tax (Imposition) Act 1997 .
A deduction is not allowable under subsection (1) in respect of tax imposed by the Commonwealth Places Windfall Tax (Imposition) Act 1998 .
(Repealed by No 107 of 1989)
This section does not apply to the 1997-98 year of income or a later year of income.
Note 1:
Section 26-45 (Club expenses) of the Income Tax Assessment Act 1997 deals with the deductibility of club expenses.
Note 2:
Section 26-50 (Expenses for a leisure facility or boat) of the Income Tax Assessment Act 1997 deals with the deductibility of leisure facility and boat expenses.
In this section -
"building"
includes a part of a building;
"club"
means a company that was established, or is carried on, solely or principally for the purpose of providing facilities for the use or benefit of its members in relation to any one or more of the following, namely, drinking, dining, recreation, entertainment, amusement or sport;
"excepted facility"
, in relation to a year of income, means
-
(a) a boat that, at all times during the year of income, is held for sale by the taxpayer as trading stock in the ordinary course of a business carried on by the taxpayer;
(b) a boat that, at all times during the year of income, is used, or held for use, by the taxpayer principally for any one or more of the following purposes -
(i) for the purpose of being let on hire in the ordinary course of a business of letting boats on hire carried on by the taxpayer;
(ii) for the purpose of transporting for reward members of the public, goods (including live stock) or substances in the ordinary course of a business carried on by the taxpayer;
(iii) for any other purpose in the ordinary course of a business carried on by the taxpayer if the taxpayer satisfies the Commissioner that the use of such a boat for that purpose is essential to the efficient conduct of that business;
(c) land that, at all times during the year of income, is held for sale by the taxpayer in the ordinary course of a business of selling land carried on by the taxpayer;
(d) a building or other structure that, at all times during the year of income, is held for sale by the taxpayer in the ordinary course of a business of selling such buildings or other structures carried on by the taxpayer; or
(e) land or a building or other structure that, at all times during the year of income, is used or held for use by the taxpayer principally for any one or more of the following purposes: -
(i) the derivation by the taxpayer of income in the nature of rents, lease premiums, licence fees or similar charges;
(ii) the provision for reward of facilities for holidays, or for sport, recreation or similar leisure-time pursuits, in the ordinary course of a business of providing such facilities;
(iii) the provision, for use principally by employees of the taxpayer or for the care of children of those employees or, where the taxpayer is a company, for use principally by employees of the company who are not members or directors of the company or for the care of children of those employees, of facilities for holidays or for sport, recreation or similar leisure-time pursuits;
"land"
includes land to which improvements have been made or upon which improvements have been erected;
(a) a boat, other than a boat that is an excepted facility in relation to the year of income;
(b) land, other than land that is an excepted facility in relation to the year of income, used, or held for use, for or in connexion with holidays or sport, recreation or similar leisure-time pursuits; or
(c) a building or other structure, other than a building or other structure that is an excepted facility in relation to the year of income, used, or held for use, for or in connexion with holidays or sport, recreation or similar leisure-time pursuits. 51AB(2) [Excepted facility - Commissioner's discretion where scheme, etc]
Where, but for this subsection, a boat, land or a building or other structure would be an excepted facility in relation to the year of income as a result of any agreement, scheme, arrangement, understanding, transaction, course of conduct or course of business that, in the opinion of the Commissioner, would not have been entered into or carried out, or would not have been entered into in the same form or carried out in the same way, if this section had not been enacted, then that boat, land or building or other structure shall be deemed not to be an excepted facility in relation to the year of income.
51AB(3) [Application of scheme]This section applies to a loss or outgoing to the extent to which it is incurred by a taxpayer -
(a) to secure or maintain, for the taxpayer or any other person, membership of a club or rights to enjoy, otherwise than as a member, facilities provided by a club for the use or benefit of its members; or
(b) for or in connexion with -
(i) the acquisition of ownership of, or of rights to use, a leisure facility;
(ii) the retention of ownership of, or of rights to use, a leisure facility;
(iii) any obligation associated with ownership of, or with rights to use, a leisure facility; or
51AB(4) [Loss or outgoing not deductible]
(iv) the use, operation, maintenance or repair of a leisure facility.
Subject to subsections (5) and (5A), notwithstanding anything in any other provision of this Act, a loss or outgoing to which this section applies is not an allowable deduction.
(a)a boat, land or a building or other structure is held for sale, or used or held for use, as mentioned in the definition of ``excepted facility'' in subsection (1) at all times during part only of the year of income; and
(b) this section would, but for this subsection, prevent a loss or outgoing, or a part of a loss or outgoing, incurred by the taxpayer in relation to the boat, land or building or other structure from being an allowable deduction from the assessable income of the taxpayer of the year of income but would not prevent that loss or outgoing or that part of that loss or outgoing from so being an allowable deduction if the boat, land or building or other structure were held for sale, or used or held for use, as referred to in paragraph (a) at all times during the whole of the year of income,
the Commissioner may determine that this section shall not prevent so much of that loss or outgoing or of that part of that loss or outgoing, as the case may be, as he considers reasonable having regard to the circumstances of the case from so being an allowable deduction.
51AB(5A) [When subsec (4) not applicable]The rule in subsection (4) does not apply to expenditure incurred by the provider of a fringe benefit (within the meaning of the Fringe Benefits Tax Assessment Act 1986 ), if the expenditure is in respect of the provision of the fringe benefit.
Where the taxpayer owned, or had rights to use, a boat, land or a building or other structure during part of the year of income and neither owned, nor had rights to use, the boat, land or building or other structure during the remainder of the year of income, this section applies in relation to the boat, land or building or other structure as if that part of the year of income were the whole of the year of income.
(Repealed by No 107 of 1989)
This section does not apply to an assessment for the 1997-98 year of income or a later year of income.
Note:
Division 32 of the Income Tax Assessment Act 1997 deals with the deductibility of entertainment expenses.
In this section, unless the contrary intention appears -
"agreement"
means any agreement, arrangement or understanding, whether formal or informal, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings;
"business"
includes a prospective business;
"eligible dining facility"
, in relation to a taxpayer, means
-
(a) a canteen, dining room or similar facility; or
(b) a cafe, restaurant or similar facility,
that is located on premises of the taxpayer or, if the taxpayer is a company, of the taxpayer or of a company that is related to the taxpayer;
(Omitted by No 135 of 1990)
"eligible seminar"
means a seminar that has a continuous duration of not less than 4 hours, but does not include
-
(a) a seminar (other than an exempt training seminar) where it would be concluded that the sole or dominant purpose of the seminar was to enable participants, or prospective participants, in a particular business to -
(i) give information relating to the business to;
(ii) receive information relating to the business from; or
other participants, or prospective participants, in the business or other persons;
(iii) discuss matters relating to the business with,
(b) a seminar where it would be concluded that the sole or dominant purpose of the seminar was the promotion or advertising of a business or of goods or services provided by a business; or
(c) a seminar where, having regard to -
(i) the content and location of the seminar; and
it would be concluded that the sole or dominant purpose of the seminar was the provision of entertainment at, or in connection with, the seminar;
(ii) any food, drink, accommodation, travel or opportunities for recreation connected with the seminar,
"employee"
, in relation to a company, includes a director of the company;
"exempt training seminar"
means a seminar that
-
(a) is organised by, or on behalf of, an employer solely for either or both of the following purposes:
(i) training -
(A) the employer and employees of the employer; orin matters relevant to the employer's business;
(B) employees of the employer,
(ii) enabling -
(A) the employer and employees of the employer; orto discuss general policy issues relevant to the internal management of the employer's business; and
(B) employees of the employer,
(b) is conducted on premises that -
(i) are not premises of the employer or, if the employer is a company, of the employer or of a company that is related to the employer; and
(ii) are premises of a person whose business consists of or includes organising seminars or making available premises for the purposes of the conduct of seminars;
"industrial instrument"
means a law of the Commonwealth or of a State or Territory or an award, order, determination or industrial agreement in force under any such law;
"in-house dining facility"
, in relation to a taxpayer, means a canteen, dining room or similar facility that is
-
(a) located on premises of the taxpayer or, if the taxpayer is a company, of the taxpayer or of a company that is related to the taxpayer;
(b) operated wholly or principally for providing food and drink on working days -
(i) in any case - to employees of the taxpayer; or
(ii) if the taxpayer is a company - to employees of the taxpayer or of a company that is related to the taxpayer; and
(c) not open to the public at any time;
"in-house recreational facility"
, in relation to a taxpayer, means a recreational facility that is
-
(a) located on premises of the taxpayer or, if the taxpayer is a company, of the taxpayer or of a company that is related to the taxpayer; and
(b) operated wholly or principally for use on working days by -
(i) in any case - employees of the taxpayer; or
(ii) if the taxpayer is a company - employees of the taxpayer or of a company that is related to the taxpayer;
"participant"
, in relation to a business, means a person involved in, or associated with, the carrying on of the business, whether as an agent, employee, partner, shareholder, provider of finance, adviser or otherwise;
"premises"
includes a vessel or floating structure;
(a) amusement;
(b) sport or similar leisure-time pursuits; and
(c) recreation or amusement provided on, or by means of, a vehicle, vessel or aircraft;
"recreational facility"
means a facility for recreation, but does not include a facility for accommodation or a facility (other than a food or drink vending machine) for drinking or dining;
"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.
For the purposes of the definition of eligible seminar in subsection (1), any part of a seminar that occurs during a meal, and any break during a seminar for the purpose of a meal, rest or recreation -
(a) shall not be taken to affect the continuity of the seminar; and
(b) shall not be taken to form part of the seminar. 51AE(3) [``Provision of entertainment'']
A reference in this section to the provision of entertainment is a reference to the provision (whether to the taxpayer or to another person and whether gratuitously, pursuant to an agreement or otherwise) of:
(a) entertainment by way of food, drink or recreation; or
(b) accommodation or travel in connection with, or for the purpose of facilitating, entertainment to which paragraph (a) applies (whether or not the accommodation or travel is also in connection with something else or for another purpose),
whether or not -
(c) business discussions or business transactions occur;
(d) in connection with the working of overtime or otherwise in connection with the performance of the duties of any office or employment;
(e) for the purposes of promotion or advertising; or
(f) at or in connection with a seminar. 51AE(4) [Non-deductible losses and outgoings]
A deduction is not allowable under section 51 in respect of losses or outgoings incurred after 19 September 1985 to the extent to which they are in respect of the provision of entertainment.
51AE(5) [Deductible losses and outgoings]Subsection (4) does not apply to a loss or outgoing incurred by the taxpayer in a year of income to the extent to which:
(a) in a case where the taxpayer carries on a business that consists of, or includes, the provision for payment of entertainment to clients or customers of that business - the loss or outgoing is in respect of the provision of that entertainment by the taxpayer for payment in the ordinary course of that business;
(b) the loss or outgoing is incurred by the taxpayer:
(i) in respect of the provision of entertainment to another person under a contract between the taxpayer and that other person for the supply of goods or services to that other person in the ordinary course of a business carried on by the taxpayer; and
(ii) for the purpose of promoting or advertising to the public:
(A) a business carried on by the taxpayer; or
(B) goods or services provided by a business carried on by the taxpayer;
(c) the loss or outgoing is incurred by the taxpayer for the purpose of promoting or advertising to the public goods or services provided by a business carried on by the taxpayer, being a loss or outgoing incurred in providing or exhibiting those goods or services;
(d) the loss or outgoing is in respect of entertainment provided by the taxpayer:
(i) for the purpose of promoting or advertising to the public:
(A) a business carried on by the taxpayer or another person; or
(B) goods or services provided by a business carried on by the taxpayer or another person; and
(ii) on the basis that the opportunities available to any of the following:
(A) clients, customers or suppliers of the taxpayer or the other person;
(B) employees of the taxpayer or the other person;
(C) any other associates of the taxpayer or the other person;
(D) journalists;
(E) dignitaries;to obtain the benefits of the entertainment are not greater than those of ordinary members of the public;
(F) any other special class of persons,
(e) the loss or outgoing is incurred by the taxpayer by way of an allowance to an employee of the taxpayer, being an allowance that is included in the assessable income of the employee;
(f) the loss or outgoing is incurred by the taxpayer in respect of:
(i) the provision of food and drink (not being food or drink provided at a party, reception or other social function) on working days to persons in an in-house dining facility of the taxpayer in respect of which the taxpayer has not made an election under subparagraph (ii) in relation to the year of income;
(ii) in a case where the taxpayer elects that this subparagraph shall apply to the taxpayer in relation to an in-house dining facility of the taxpayer in relation to the year of income, the provision of food and drink (not being food or drink provided at a party, reception or other social function) on working days:
(A) in any case - to employees of the taxpayer; orin that in-house dining facility of the taxpayer;
(B) if the taxpayer is a company - to employees of the taxpayer or of a company that is related to the taxpayer,
(iii) the provision, in an eligible dining facility of the taxpayer, of food and drink (not being food or drink provided at a party, reception or other social function) on working days:
(A) in any case - to employees of the taxpayer; orbeing employees the duties of whose employment consist of, or consist principally of, duties to be performed in, or in connection with:
(B) if the taxpayer is a company - to employees of the taxpayer or of a company that is related to the taxpayer;
(C) that eligible dining facility; or
(D) a facility for the provision of accommodation, recreation or travel of which the eligible dining facility forms part;
(iv) the provision of entertainment to a person (including thetaxpayer) that:
(A) is reasonably incidental to the person's attendance at an eligible seminar; and
(B) is not by way of, or in connection with, the recreation of the person;
(v) the provision of an in-house recreational facility of the taxpayer; or
(vi) the provision of food or drink to an employee of the taxpayer pursuant to the provisions of an industrial instrument relating to overtime;
(g) the loss or outgoing is incurred by the taxpayer in respect of the provision of entertainment to a person (in this paragraph referred to as the ``recipient'' ) being:
(i) the taxpayer;
(ii) an employee of the taxpayer; or
where:
(iii) a person who, although not employed by the taxpayer, is performing services for the taxpayer;
(iv) in a case to which subparagraph (ii) or (iii) applies - a deduction would, but for this section, be allowable to the recipient under section 51 in respect of the loss or outgoing if it were incurred by the recipient; and
(v) in any case - it would not be concluded that a purpose of the taxpayer or, in a case to which subparagraph (ii) or (iii) applies, of the taxpayer or the recipient, in relation to the provision of the entertainment, is to enable or facilitate the provision of entertainment to a person other than the recipient;
(h) in a case where:
(i) the taxpayer is an employee and the duties of the taxpayer's employment consist of, or include, the provision of entertainment; and
the loss or outgoing is incurred by the taxpayer in respect of the provision of that entertainment in the performance of those duties;
(ii) the employer of the taxpayer carries on a business that consists of, or includes, the provision for payment of that entertainment to clients or customers of that business,
(j) in a case where the taxpayer is an employee and receives an allowance pursuant to the provisions of an industrial instrument for the purpose of enabling the taxpayer to purchase food and drink in connection with overtime worked by the taxpayer - the loss or outgoing is incurred by the taxpayer in respect of the purchase of food or drink in connection with that overtime; or
(k) the loss or outgoing is incurred by the taxpayer in providing gratuitous entertainment to members of the public who are sick, disabled, poor or otherwise disadvantaged. 51AE(5AA) [When subsec (4) not applicable]
Subject to subsection (5AB), the rule in subsection (4) does not apply to expenditure incurred by the provider of a fringe benefit (within the meaning of the Fringe Benefits Tax Assessment Act 1986 ), if the expenditure is in respect of the provision of the fringe benefit.
For the purposes of subsection (5AA), if the taxable value of the fringe benefit mentioned in that subsection is reduced by a percentage under section 63A of the Fringe Benefits Tax Assessment Act 1986 , that percentage of the expenditure mentioned in subsection (5AA) is to be disregarded in applying that subsection.
Subsection (4) does not apply to a loss or outgoing incurred by the taxpayer to the extent to which it is incurred in respect of -
(a) the provision of a meal where the provision of the meal constitutes a board fringe benefit within the meaning of the Fringe Benefits Tax Assessment Act 1986 ;
(b) the provision of food or drink where the provision of the food or drink would, but for section 54 , 58 , 58N , 58S or 58T of the Fringe Benefits Tax Assessment Act 1986 , constitute a fringe benefit within the meaning of that Act;
(c) the provision of a living-away-from-home food fringe benefit within the meaning of the Fringe Benefits Tax Assessment Act 1986 ;
(d) the provision of a meal where the provision of the meal would, but for section 58A , 58F , 58L , 58LA or 58M of the Fringe Benefits Tax Assessment Act 1986 , constitute a fringe benefit within the meaning of that Act;
(e) the provision of a fringe benefit, within the meaning of the Fringe Benefits Tax Assessment Act 1986 , where section 61D or 65A of that Act applies in relation to the fringe benefit;
(f) the provision of a remote area holiday fringe benefit within the meaning of the Fringe Benefits Tax Assessment Act 1986 ; or
(g) the provision of a fringe benefit, within the meaning of the Fringe Benefits Tax Assessment Act 1986 , where the fringe benefit is in respect of overseas employment holiday transport within the meaning of that Act.
A reference in subsection (5A) to a fringe benefit within the meaning of the Fringe Benefits Tax Assessment Act 1986 includes a reference to a benefit that would be a fringe benefit within the meaning of that Act if the period after 19 September 1985 and before 1 July 1986 were a period in a year of tax within the meaning of that Act.
Section 58P of the Fringe Benefits Tax Assessment Act 1986 shall be disregarded in applying paragraphs (5A)(a), (b), (c) and (d).
Paragraph (5)(a) or (b) does not apply in relation to a loss or outgoing incurred by a taxpayer in respect of the provision of entertainment to another person for payment or under a contract, as the case may be, if the Commissioner is satisfied that the entertainment was provided instead of entertainment that the taxpayer could reasonably be expected to have provided to that other person, otherwise than for payment or otherwise than under a contract, as the case may be, if this section had not been enacted.
51AE(7) [Entertainment allowance provided to relative](a) a relative of an employee of an employer provides or facilitates the provision of, or is expected by the employer to provide or facilitate the provision of, entertainment in connection with the employee's employment;
(b) the employer provides an allowance to the relative in respect of the provision or facilitation of the provision of that entertainment; and
(c) the allowance is provided by the employer to the relative in the capacity of an employee of the employer,
the allowance shall not be taken, for the purposes of paragraph (5)(e), to be an allowance provided to an employee of the employer.
For the purposes of calculating, in accordance with section 90 , the net income, or partnership loss, of a partnership, subsection (7) and the definition of exempt training seminar in subsection (1) apply as if each partner in the partnership were an employee of the partnership.
51AE(9) [Election re in-house dining facility]An election for the purposes of subparagraph (5)(f)(ii) in respect of an in-house dining facility in relation to a year of income must be made on or before the date of lodgment of the return of income of the taxpayer for the year of income, or before such later date as the Commissioner allows.
Paragraphs (5)(g) and (h) do not apply in relation to -
(a) a loss or outgoing incurred by the taxpayer to the extent to which the loss or outgoing is -
(i) in respect of the provision of entertainment to a person (including the taxpayer) that is in respect of, or incidental to, the person's attendance, while undertaking deductible travel, at a seminar other than -
(A) an exempt training seminar; ornot being the provision of entertainment consisting of -
(B) a seminar to which paragraph (a) of the definition of eligible seminar in subsection (1) applies (whether or not the seminar has a continuous duration of not less than 4 hours),
(C)accommodation or travel; or
(D) entertainment by way of food or drink otherwise than at a meal during which, or during part of which, the whole or a part of the seminar occurs; or
(ii) in respect of the provision of entertainment to a person (including the taxpayer) that is in respect of, or incidental to, the person's attendance, otherwise than while undertaking deductible travel, at a seminar; or
(b) a loss or outgoing incurred by the taxpayer to the extent to which the loss or outgoing is in respect of the purchase of food or drink in connection with overtime worked by the taxpayer as an employee. 51AE(11) [``deductible travel'']
A reference in subsection (10) to deductible travel is a reference to travel undertaken by a person in circumstances where, if the person incurred expenditure in taking meals by himself or herself in the course of undertaking that travel, a deduction would, but for this section, be allowable to the person under section 51 in respect of that expenditure.
51AE(12) [Deductible losses or outgoings]Nothing in subsection (5) shall be taken, by implication, to extend the class of losses or outgoings that are deductible under section 51 .
51AE(13) [Commissioner's discretion re outgoings](a) a taxpayer incurs a loss or outgoing; and
(b) non-deductible entertainment is provided to the taxpayer or another person,
the Commissioner may, for the purposes of this section, treat the loss or outgoing as having been incurred by the taxpayer in respect of the provision of that entertainment to such extent as the Commissioner considers reasonable.
51AE(14) [Use of property for provision of non-deductible entertainment]Where property is used by the taxpayer after 19 September 1985 for the purpose of providing, or in connection with the provision of, non-deductible entertainment (whether or not the property is also used for another purpose), that use of the property by the taxpayer shall be taken, for the purposes of this Act, not to be for the purpose of producing assessable income or in carrying on a business for that purpose.
For the purposes of subsections (13) and (14), the provision of entertainment shall be taken to be the provision of non-deductible entertainment if, by virtue of subsection (4), had a loss or outgoing been incurred by the taxpayer after 19 September 1985 in respect of the provision of the entertainment, the loss or outgoing would not be deductible.
51AE(16) [Related companies]For the purposes of this section, a company shall be taken to be related to another company if -
(a) one of the companies is a subsidiary of the other company; or
(b) each of the companies is a subsidiary of the same company. 51AE(17) [``subsidiary companies'']
For the purposes of this section, a company (in this subsection referred to as the ``subsidiary company'' ) shall be taken to be the subsidiary of another company (in this subsection referred to as the ``holding company'' ) if -
(a) all the shares in the subsidiary company are beneficially owned by -
(i) the holding company;
(ii) a company that is, or 2 or more companies each of which is, a subsidiary of the holding company; or
(iii) the holding company and a company that is, or 2 or more companies each of which is, a subsidiary of the holding company; and
(b) there is no agreement in force by virtue of which any person is in a position to affect rights of the holding company or of a subsidiary of the holding company in relation to the subsidiary company. 51AE(18) [Subsidiary of a subsidiary]
For the purposes of this section, where a company is a subsidiary of another company (including a company that is such a subsidiary by virtue of another application or other applications of this subsection), every company that is a subsidiary of the first-mentioned company shall be taken to be a subsidiary of that other company.
51AE(19) [Person affecting rights of company]For the purposes of subsection (17), a person shall be taken to be in a position to affect any rights of a company in relation to another company if that person has a right, power or option (whether by virtue of any provision in the constituent document of either of those companies or by virtue of any agreement or instrument or otherwise) to acquire those rights or do an act or thing that would prevent the first-mentioned company from exercising those rights for its own benefit or receiving any benefits accruing by reason of those rights.
CCH Note:
Below is material substituted in s 51AF by No 101 of 2006.
employee
has the meaning given by section
221A
.
employer
has the meaning given by section
221A
.
This section does not apply to travel on or after 1 July 1997.
Note:
Section 26-30 (Relative's travel expenses) of the Income Tax Assessment Act 1997 deals with the deductibility of relatives' travel expenses.
Where a person, while undertaking travel in the course of:
(a) performing duties as an employee of an employer; or
(b) a business carried on by the person for the purpose of gaining or producing assessable income;
is accompanied during a particular period by a relative of the person in circumstances where:
(c) the relative is not an employee of the employer of the person, or is not an employee of the person, as the case may be;
(d) the relative is an employee of the employer of the person, or is an employee of the person, as the case may be, and during that period performs no substantial duties as such an employee; or
(e) the relative is an employee of the employer of the person, or is an employee of the person, as the case may be, and:
(i) the duties performed during that period by the relative as such an employee are incidental to the duties, or business, as the case may be, of the person; and
(ii) it is reasonable to conclude that, but for the personal relationship between the person and the relative, the relative would not have accompanied the person during that period;
a deduction is not allowable to the person, and, in a case where paragraph (a) applies, is not allowable to the employer of the person, under section 8-1 of the Income Tax Assessment Act 1997 in respect of a loss or outgoing incurred in respect of the travel, to the extent to which the loss or outgoing is attributable to the relative.
The rule in subsection (1) does not apply to expenditure incurred by the provider of a fringe benefit (within the meaning of the Fringe Benefits Tax Assessment Act 1986 ), if the expenditure is in respect of the provision of the fringe benefit.
In this section:
"employee"
and
``employer''
have the meanings given by section
221A
.
This section does not apply to the 1997-98 year of income or a later year of income.
Note:
Division 34 (Non-compulsory uniforms) of the Income Tax Assessment Act 1997 deals with the deductibility of expenditure incurred on non-compulsory uniforms.
A deduction is not allowable under this Act to an employee for a non-compulsory uniform/wardrobe expense incurred on or after 1 September 1993.
[ CCH Note: S 5 of No 227 of 1992, as amended by No 82 of 1994, s 125, effective 24 December 1992, provides for the following transitional provision:
``Transitional - `no deduction' rule does not apply if expense incurred before 1 July 1995 and clothing designs approved by Commissioner
5
The rule in subsection 51AL(1) of the Principal Act as amended by this Act does not apply if:
(a) the expense is incurred before 1 July 1995; and
(b) before that day and whether before or after the expense is incurred, the Commissioner, on application by the employer of an employee, gives the employer a written statement to the effect that the Commissioner is of the opinion that the designs of the set of one or more items of clothing to which the expense relates were a `corporate uniform' or a `corporate wardrobe' within the meaning of Taxation Ruling IT 2641; and
(c) if the application for the statement is made after 31 August 1993 - sets of one or more items of clothing having those designs were available for purchase by employees of the employer on or before 31 August 1993.'']
The rule in subsection (1) does not apply if:
(a) at the time the expense was incurred by the employee, the designs of the set of one or more items of clothing to which the expense relates were entered on the Register of Approved Occupational Clothing kept under subsection (5); and
(b) the applicant for the entry of the designs was the employer of the employee. 51AL(3) Meaning of ``non-compulsory uniform/wardrobe expense''.
For the purposes of this section, a non-compulsory uniform/wardrobe expense is expenditure to the extent to which it is incurred in connection with a non-compulsory uniform/wardrobe and includes, but is not limited to, expenditure incurred:
(a) in acquiring an item of clothing included in a non-compulsory uniform/wardrobe; or
(b) in repairing, cleaning or maintaining an item of clothing included in a non-compulsory uniform/wardrobe; or
(c) in upgrading or improving an item of clothing included in a non-compulsory uniform/wardrobe; or
(d) in connection with borrowing money for the purposes of acquiring an item of clothing included in a non-compulsory uniform/wardrobe. 51AL(4) Meaning of ``non-compulsory uniform/wardrobe''.
For the purposes of the application of this section to an employee, a non-compulsory uniform/wardrobe is a set of one or more items of clothing (other than occupation specific clothing or protective clothing), where:
(a) the items of clothing, when considered as a set, distinctively identify the wearer as a person associated, directly or indirectly, with:
(i) the employer of the employee; or
(ii) a group consisting of:
(A) the employer of the employee; and
(B) one or more associates of the employer (within the meaning of section 26AAB ); and
(b) either:
(i) the employer of the employee does not have an express policy to the effect that, except in special circumstances:
(A) the employee is not allowed to substitute an item of clothing not included in the set for an item of clothing included in the set when the employee is performing duties of his or her employment; and
(B) all of the other employees of the employer belonging to the same class as the employee (other than employees engaged for temporary or relief purposes) are not allowed to substitute an item of clothing not included in the set for an item of clothing included in the set when they are performing duties of their employment; or
(ii) the employer has such a policy but does not consistently enforce it.
The Industry Secretary must keep a register, to be known as the Register of Approved Occupational Clothing, listing such designs as are required to be on the register because of this section.
The Industry Secretary must cause the Register of Approved Occupational Clothing to be made available for inspection at any reasonable time by any person on request.
The Treasurer must, as soon as practicable after the commencement of this section, formulate written guidelines ( ``approved occupational clothing guidelines'' ) setting out criteria that must be met by designs of sets of one or more items of clothing if the designs are to be entered on the Register of Approved Occupational Clothing.
51AL(8) Guidelines to be published etc.The Treasurer must cause the approved occupational clothing guidelines to be:
(a) published in the Gazette ; and
(b) made available, without charge, to any interested person. 51AL(9) Matters to be taken into account in making guidelines.
In making approved occupational clothing guidelines about the entry of the designs of particular kinds of sets of one or more items of clothing, the matters to which the Treasurer is to have regard include, but are not limited to:
(a) the extent to which the designs of the items of clothing, when considered as a set, distinctively identify the wearer as a person associated, directly or indirectly, with:
(i) the applicant for the entry of the designs; or
(ii) a group consisting of:
(A) the applicant for the entry of the designs; and
(B) one or more associates of the applicant for the entry of the designs (within the meaning of section 26AAB ); and
(b) the nature of the business or activities carried on bythe applicant for the entry of the designs. 51AL(10) Guidelines to be disallowable.
An instrument formulating approved occupational clothing guidelines is a disallowable instrument for the purposes of section 46A of the Acts Interpretation Act 1901 .
51AL(11) Applications for entry on the Register of Approved Occupational Clothing.An employer may apply to the Industry Secretary for the designs of a set of one or more items of clothing (other than protective clothing) to be entered on the Register of Approved Occupational Clothing.
(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.
After considering the application, the Industry Secretary must decide to:
(a) grant the application; or
(b) refuse the application.
If the Industry Secretary has not made a decision under subsection (13) before whichever time ( ``eligible time'' ) is the later of the following times:
(a) the end of the period ( ``original 90-day period'' ) of 90 days after the day on which the application was received by the Industry Secretary;
(b) if the Industry Secretary, by written notice given to the applicant within the original 90-day period, requests the applicant to give further information about the application - the end of the period of 90 days after the Industry Secretary receives the further information;
then, at the eligible time, the Industry Secretary is taken to have made a decision under subsection (13) to refuse the application.
If the Industry Secretary makes a decision under subsection (13) before the eligible time, the Industry Secretary must give written notice of the decision to the applicant.
A notice under subsection (15) relating to a refusal must set out the reasons for the refusal.
51AL(17) When entry takes effect.If the Industry Secretary decides to grant the application, the entry takes effect on:
(a) the day on which the decision is made; or
(b) if the applicant requests - such earlier date as the Industry Secretary specifies.
The Industry Secretary must not grant an application unless the Industry Secretary is satisfied that the designs meet the criteria set out in the approved occupational clothing guidelines.
The Industry Secretary must remove an entry from the Register of Approved Occupational Clothing if requested to do so by the employer who applied for the entry.
The Industry Secretary may correct a clerical error or an obvious mistake in an entry in the Register of Approved Occupational Clothing and, if the Industry Secretary does so, the correction takes effect on the day on which the entry took effect.
Applications may be made to the Tribunal for review of decisions of the Industry Secretary under subsection (13) or (17).
If the Industry Secretary makes a decision under subsection (13) or (17) and gives to a person whose interests are affected by the decision written notice of the decision, that notice must:
(a) in all cases - include a statement to the effect that, subject to the Administrative Appeals Tribunal Act 1975 , application may be made to the Tribunal, by or on behalf of any person whose interests are affected by the decision, for review of the decision; and
(b) except where subsection 28(4) of that Act applies - include a statement to the effect that a request may be made under section 28 of that Act by or on behalf of such a person for a statement setting out the findings on material questions of fact, referring to the evidence or the material on which those findings were based and giving the reasons for the decision;
but a failure to comply with this subsection does not affect the validity of the decision.
The Industry Secretary may, by writing, delegate any or all of his or her functions and powers under this section to a person in the Industry Department:
(a) who is an SES employee or an acting SES employee; or
(b) whose classification level appears in Group 7 or 8of 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).
The Industry Secretary must give the Commissioner information about entries on the Register of Approved Occupational Clothing if requested to do so by the Commissioner.
For the purposes of this section, the definition of salary or wages in section 221A applies as if paragraph (q) of that definition had not been enacted.
51AL(26) Definitions.In this section:
approved occupational clothing guidelines
means guidelines made under subsection (7).
class of employees
means a class of employees based on the level or category of work.
clothing
includes accessories (for example: belts, ties, scarves and hats).
design
, in relation to an item of clothing, includes features of colour, construction, durability, ornamentation, pattern and shape.
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.
employee
has the same meaning as in section
221A
.
employer
has the same meaning as in section
221A
.
employment
, in relation to a person, means the holding of any office or appointment, the performance of any functions or duties, the engaging in of any work, or the doing of any acts or things that results in the person being treated as an employee.
Industry Department
means the Department of Industry, Science and Technology.
Industry Secretary
means the Secretary to the Industry Department.
occupation specific clothing
, in relation to an employee, means clothing that, disregarding any feature of the clothing that distinctively identifies the employee as a person associated, directly or indirectly, with:
(a) the employer of the employee; or
(b) a group consisting of:
(i) the employer of the employee; and
(ii) one or more associates of the employer (within the meaning of section 26AAB );
distinctively identifies the employee as a member of a particular profession, trade, vocation, occupation or calling.
protective clothing
means clothing of a kind that is for use wholly or principally:
(a) to protect the wearer or another person from, or from risk of:
(i) death; or
(ii) the contraction, aggravation, acceleration or recurrence of a disease; or
(b) to protect the wearer from, or from risk of:
(i) injury (including the aggravation, acceleration or recurrence of an injury); or
(ii) the loss or destruction of, or damage to:
(A) other clothing worn by the wearer; or
(B) an artificial limb or other artificial substitute, or a medical, surgical or other similar aid or appliance, used by the wearer.
Register of Approved Occupational Clothing
means the Register of Approved Occupational Clothing required by subsection (5).
Senior Executive Service office
(Repealed by No 146 of 1999)
(Omitted by No 171 of 1995)
This section does not apply to the 1997-98 year of income or a later year of income.
Note:
Section 25-10 (Repairs) of the Income Tax Assessment Act 1997 deals with the deductibility of expenditure incurred on repairs.
Expenditure incurred by the taxpayer in the year of income for repairs, not being expenditure of a capital nature, to any premises, or part of premises, plant, machinery, implements, utensils, rolling stock, or articles held, occupied or used by him for the purpose of producing assessable income, or in carrying on a business for that purpose, shall be an allowable deduction.
53(2) [Deduction not allowable]Expenditure incurred upon repairs to any premises or part of premises not so held, occupied or used shall not be an allowable deduction.
53(3) [Extent of allowable deduction]Where the premises, part of premises, plant, machinery, implements, utensils, rolling stock or articles referred to in subsection (1) were held, occupied or used by the taxpayer only partly for the purpose of producing assessable income, or only partly in carrying on a business for that purpose, so much only of the expenditure that, but for this subsection, would be an allowable deduction under subsection (1) as, in the opinion of the Commissioner, is reasonable in the circumstances shall be an allowable deduction.
(a) a taxpayer (in this section referred to as ``the lessee'' ) holds or has held a lease of land that is or was used by him for the purpose of producing assessable income or carrying on a business for that purpose;
(b) under the lease, the lessee is or was under an obligation to make repairs (including repairs by way of painting) to any improvements on the leased land;
(c) by reason of non-performance of that obligation the lessee has become liable to pay to the person, or a successor in title of the person, who granted the lease (in this section referred to as ``the lessor'' ) an amount of money by way of indemnity, compensation or damages; and
(d) that amount, or a part of that amount, is paid to the lessor by, or recovered by the lessor from, the lessee,
the amount so paid or recovered shall be an allowable deduction to the lessee in respect of the year of income in which it is paid or recovered.
53AA(2) [No application 1997/98 income year onwards]This section does not apply to the 1997-98 year of income or a later year of income.
Note:
Section 25-15 (Amount paid for lease obligation to repair) of the Income Tax Assessment Act 1997 deals with the deductibility of amounts paid pursuant to lease obligations to repair premises.
(Repealed by No 216 of 1973)
In this section -
"conversion costs"
, in relation to a unit of property, means expenditure incurred by the taxpayer in converting or adapting the unit for use in connexion with the system of currency provided for by Part II of the
Currency Act
1965; and
"unit of property"
means a unit of property not being trading stock of the taxpayer.
Conversion costs incurred by the taxpayer in the year of income in respect of a unit of property used by him for the purpose of producing assessable income or carrying on a business for that purpose shall, subject to this section, be an allowable deduction.
53F(3) [Conversion costs deductible only under s 53F]For the purposes of this Act -
(a) no part of any conversion costs shall be an allowable deduction, or be taken into account in ascertaining the amount of an allowable deduction, under a provision of this Act other than this section in the assessment of the taxpayer in respect of income of any year of income; and
(b) conversion costs shall be deemed not to be capital expenditure or expenditure of a capital nature. 53F(4) [Amendment of assessment]
Notwithstanding anything in any other provision of this Act, the Commissioner may amend an assessment in respect of income of any year of income before the year of income that commenced on 1 July 1965 for the purpose of giving effect to this section.
In this section -
conversion costs
, in relation to a unit of property, means expenditure incurred by the taxpayer in converting or adapting the unit for use in connexion with the metric system of measurement as defined by section 3 of the
Metric Conversion Act 1970-1971
.
unit of property
means a unit of property not being trading stock of the taxpayer.
Conversion costs incurred by the taxpayer in the year of income in respect of a unit of property used by him for the purpose of producing assessable income or carrying on a business for that purpose shall, subject to this section, be an allowable deduction.
53G(3) [Conversion costs deductible only under s 53G]For the purposes of this Act -
(a) no part of any conversion costs shall be an allowable deduction, or be taken into account in ascertaining the amount of an allowable deduction, under a provision of this Act other than this section in the assessment of the taxpayer in respect of income of any year of income; and
(b) conversion costs shall be deemed not to be capital expenditure or expenditure of a capital nature. 53G(4) [Amendment of assessments]
Notwithstanding anything in any other provision of this Act, the Commissioner may amend an assessment in respect of income of the year of income that commenced on 1 July 1971 for the purpose of giving effect to this section.
(Repealed by No 107 of 1989)
Sections 54 to 62AAV (inclusive) do not apply to the 1997-98 year of income or later years of income except to the extent they are applied under the
Income Tax (Transitional Provisions) Act 1997
.
Note:
The provisions of Division 42 of the Income Tax Assessment Act 1997 apply instead.
53I(2) [Continuing application re special depreciation on trading ships]However, the provisions mentioned in subsection (1) continue to apply for the purposes of the operation of section 57AM for the 1997-98 year of income and later years of income.
53I(3) [Firearms surrender arrangements]Also, the provisions mentioned in subsection (1) continue to apply for the operation of subsection
59(2AAA)
for the 1997-98 year of income and for later years of income in which proceeds are derived as a result of firearms surrender arrangements.
Note:
Firearms surrender arrangements has the meaning given by subsection 6(1) .
This section has effect subject to Division 245 of Schedule 2C .
Depreciation during the year of income of any property, being plant or articles owned by a taxpayer and used by him during that year for the purpose of producing assessable income, and of any property being plant or articles owned by the taxpayer which has been installed ready for use for that purpose and is during that year held in reserve by him shall, subject to this Act, be an allowable deduction.
In this section, ``plant'' includes:
(a) animals used as beasts of burden or working beasts in a business other than a business of primary production, and machinery, implements, utensils and rolling stock;
(b) any of the following:
(i) fences, dams and other structural improvements on land which is used for the purposes of agricultural or pastoral pursuits;
(ii) structural improvements (not including an improvement that is an access road as defined by section 124E ) completed after the year of income that ended on 30 June 1963 on land that is used for the purposes of forest operations;
other than structural improvements used for domestic or residential purposes except where the improvements are provided for the accommodation of employees, tenants or sharefarmers engaged in or in connection with those pursuits or operations, as the case may be; and
(iii) structural improvements completed after 30 June 1958 which are used wholly and exclusively for the purposes of pearling operations and are situated at or in the vicinity of a port or harbour from which those operations are conducted;
(c) plumbing fixtures and fittings, including wall and floor tiling, in premises acquired after 30 June 1938, or installed in premises after that date, by a person (the ``primary person'' ) carrying on a business for the purpose of producing assessable income, where those fixtures and fittings are provided principally for:
(i) the use, for personal purposes, of persons of either or both of the following kinds:
(A) persons employed in that business by the primary person;
(B) persons employed in a business, carried on for the purpose of producing assessable income, by a company that is related (within the meaning of section 5 lAE) to the primary person; or
(ii) the care of children of any of those persons.
If the annual depreciation percentage fixed under section 55 for a unit of property owned by a taxpayer is 100%, depreciation is only allowable for the year of income in which the property is first used, or first installed and held in reserve, as mentioned in subsection (1).
Depreciation of any property that is a leisure facility for the purposes of section 51AB is not an allowable deduction.
The rule in subsection (3) does not apply in relation to property to the extent (if any) to which a fringe benefit (within the meaning of the Fringe Benefits Tax Assessment Act 1986 ) is constituted by the use of the property.
Subsection (3) does not prevent depreciation of any property from being an allowable deduction to the extent, if any, to which the depreciation took place during a part of the year of income referred to in paragraph 51AB(5)(a) .
Subject to subsection (6), depreciation of a unit of property is not an allowable deduction to a taxpayer in respect of any year of income if expenditure incurred by the taxpayer or another person in respect of the unit of property:
(a) has been allowed, or is allowable, as a deduction under section 75B from the assessable income of the taxpayer or that other person of any year of income; or
(b) would have been allowed, or would be allowable, as a deduction under that section from the assessable income of any year of income of the taxpayer or that other person but for subsection (4) of that section.
Subsection (5) does not operate to prevent depreciation being allowed to a taxpayer in respect of expenditure incurred in respect of a unit of property to the extent to which a deduction has not been allowed, and is not allowable, under section 75B (otherwise than by reason of the operation of subsection (4) of that section) to any taxpayer in respect of that expenditure.
(Omitted by No 107 of 1989)
(Omitted by No 107 of 1989)
Subject to subsection (10), depreciation of a unit of property is not an allowable deduction to a taxpayer in respect of any year of income if expenditure incurred by the taxpayer or another person in respect of the unit of property:
(a) has been allowed, or is allowable, as a deduction under section 75D from the assessable income of the taxpayer or that other person of any year of income; or
(b) would have been allowed, or would be allowable, as a deduction under that section from the assessable income of any year of income of the taxpayer or that other person but for subsection (4) of that section.
Subsection (9) does not operate to prevent depreciation being allowed to a taxpayer in respect of expenditure incurred in respect of a unit of property to the extent to which a deduction has not been allowed, and is not allowable, under section 75D (otherwise than by reason of the operation of subsection (4) of that section) to any taxpayer in respect of that expenditure.
Depreciation of a unit of property, not being a unit in respect of which an election has been made under subsection 73B(18) , that has been installed ready for use exclusively for the purpose of the carrying on of research and development activities within the meaning of section 73B and that is held in reserve for that purpose is not an allowable deduction to a taxpayer under this section.
[ CCH Note: With reference to s 53I(1) and (2), s 54to 62AAV have limited continued application for the purposes of the operation of s 57AM.]
The expressions ``Crown lease'', ``lessee'' and ``lessor'' are given extended meanings for the purposes of this section (see subsection (8)).
(a) a taxpayer is the lessee of land under a Crown lease; and
(b) a unit of property is affixed to the land; and
(c) apart from this section, the taxpayer is not the owner of the property; and
(d) if the property was not already affixed to the land at the time when the taxpayer acquired the Crown lease:
(i) the taxpayer acquired or constructed the property and affixed it to the land; and
(ii) at the time when the property was first affixed to the land as mentioned in subparagraph (i), the taxpayer had not entered into a scheme:
(A) under which a person other than the lessor would become the owner of the property at a later time; or
(B) where it would be concluded that a purpose of the scheme was to provide finance to enable a person other than the taxpayer or the lessor to become the end-user of the property for the whole, or a substantial part of, the effective life of the property; and
(e) if the property was already affixed to the land at the time when the taxpayer acquired the Crown lease:
(i) the taxpayer acquired the Crown lease from a prior holder of the Crown lease; and
(ii) either:
(A) the prior holder acquired or constructed the property and affixed the property to the land; or
(B) if there have been 2 or more prior successive holders of the Crown lease - one of those prior successive holders acquired or constructed the property and affixed the property to the land; and
(iii) at the time when the taxpayer acquired the Crown lease, the taxpayer had not entered into a scheme:
(A) under which a person other than the lessor would become the owner of the property at a later time; or
(B) where it would be concluded that a purpose of the scheme was to provide finance to enable a person other than the taxpayer or the lessor to become the end-user of the property for the whole, or a substantial part of, the remainder of the effective life of the property; and
(f) section 54AB does not apply.
The provisions of this Act relating to depreciation apply as if:
(a) the taxpayer were the owner of the property instead of any other person; and
(b) if the taxpayer acquired the Crown lease from a prior holder of the Crown lease and the property was already affixed to the land at the time when the taxpayer acquired the Crown lease:
(i) the cost to the taxpayer of the property were equal to so much of the consideration paid or given by the taxpayer for the acquisition of the Crown lease as is attributable to the property; and
(ii) the taxpayer had acquired the property under a contract entered into at the time the taxpayer acquired the Crown lease; and
(c) if:
(i) the Crown lease expires or is surrendered; and
the taxpayer had disposed of the property to the lessor, and the lessor had acquired the property from the taxpayer, for:
(ii) the expiry or surrender is not followed by the grant to the taxpayer, or to an associate of the taxpayer, of:
(A) one or more fresh Crown leases of the land; or
(B) an estate in fee simple in the land;
(iii) if the taxpayer receives, or is entitled to receive, consideration in respect of the expiry or surrender - a consideration equal to so much of the consideration received or receivable by the taxpayer as is attributable to the property; or
(iv) in any other case - no consideration; and
(d) if:
(i) the Crown lease expires or is surrendered; and
the taxpayer had disposed of the property to the lessor, and the lessor had acquired the property from the taxpayer, for a consideration equal to the amount that would have been the market value of the property immediately before the expiry or surrender if the taxpayer had held an estate in fee simple in the land instead of the Crown lease; and
(ii) the expiry or surrender is followed by the grant to an associate of the taxpayer of:
(A) one or more fresh Crown leases of the land; or
(B) an estate in fee simple in the land;
(e) if:
(i) the lessor terminates the Crown lease; and
the taxpayer had disposed of the property to the lessor, and the lessor had acquired the property from the taxpayer, for:
(ii) the termination is not followed by the grant to the taxpayer, or to an associate of the taxpayer, of:
(A) one or more fresh Crown leases of the land; or
(B) an estate in fee simple in the land;
(iii) if the taxpayer receives, or is entitled to receive, consideration in respect of the termination - a consideration equal to so much of the consideration received or receivable by the taxpayer as is attributable to the property; or
(iv) in any other case - no consideration; and
(f) if:
(i) the lessor terminates the Crown lease; and
the taxpayer had disposed of the property to the lessor, and the lessor had acquired the property from the taxpayer, for a consideration equal to the amount that would have been the market value of the property immediately before the termination if the taxpayer had held an estate in fee simple in the land instead of the Crown lease; and
(ii) the termination is followed by the grant to an associate of the taxpayer of:
(A) one or more fresh Crown leases of the land; or
(B) an estate in fee simple in the land;
(g) if the taxpayer disposes of the Crown lease to another person - the taxpayer had disposed of the property to the other person for a consideration equal to so much of the consideration paid or given by the other person for the acquisition of the Crown lease as is attributable to the property.
In working out the following amounts in relation to the property:
(a) the value mentioned in paragraph 59(3)(d) ;
(b) the market value mentioned in subsection 59(4) ;
(c) the market value mentioned in subsection 59AA(2) ;
it is to be assumed that the taxpayer had held an estate in fee simple in the land instead of the Crown lease.
Section 51AD , and Division 16D , to the extent to which that section and that Division relate to depreciation, apply as if the taxpayer were the owner of the property instead of any other person.
For the purposes of the application of this section to a unit of property affixed to land, if:
(a) a taxpayer is the lessee of the land under a Crown lease; and
(b) the Crown lease expires or is surrendered or terminated; and
(c) one or more fresh Crown leases of the land are granted to the taxpayer;
the Crown lease or leases mentioned in paragraph (c) are taken to be a continuation of the Crown lease mentioned in paragraph (b).
For the purposes of this section, but without limiting the meaning of the expression ``associate'':
(a) the Commonwealth is taken to be an associate of each authority of the Commonwealth; and
(b) an authority of the Commonwealth is taken to be an associate of each other authority of the Commonwealth; and
(c) a State is taken to be an associate of each authority of the State; and
(d) an authority of a State is taken to be an associate of each other authority of the State; and
(e) a Territory is taken to be an associate of each authority of the Territory; and
(f) an authority of a Territory is taken to be an associate of each other authority of the Territory. 54AA(7) Extended meaning of ``associate'' - former partnerships.
For the purposes of this section, the definition of ``associate'' in section 26AAB has effect as if:
(a) subparagraph (a)(ii) of that definition were omitted and the following subparagraph were substituted:
``(ii) a partner of the taxpayer or a partnership in which the taxpayer is or was a partner (whether or not the partnership still exists);''; and
(b) subparagraph (b)(i) of that definition were omitted and the following subparagraph were substituted:
54AA(7A) Meaning of ``eligible government body''.
``(i) a partner of the taxpayer or a partnership in which the taxpayer is or was a partner (whether or not the partnership still exists);''.
For the purposes of this section, a person is an eligible government body at a particular time if:
(a) the person is the Commonwealth, a State or a Territory; or
(b) both:
(i) the person is an authority of the Commonwealth, a State or a Territory; and
(ii) assuming that the authority had derived income at that time, that income would be exempt from tax because the authority is an exempt entity.
(c) the person is the government of, or of a part of, a foreign country; or
(d) both:
(i) the person is an authority of the government of a foreign country or an authority of the government of a part of a foreign country; and
(ii) the authority is of a similar nature to an authority covered by paragraph (b).
In this section:
"associate"
has the same meaning as in section
26AAB
;
(a) a lease of land granted by an eligible government body; or
(b) an easement in connection with land, where the easement was granted by an eligible government body; or
(c) any other right, power or privilege over, or in connection with, land, where the right, power or privilege was granted by an eligible government body;
"effective life"
has the same meaning as in section
54A
;
"eligible government body"
has the meaning given by subsection (7A);
"lessee"
, in relation to a Crown lease, means the holder of the Crown lease;
"lessor"
, in relation to a Crown lease, means:
(a) the eligible government body which granted the Crown lease; or
(b) if the interests of the grantor in relation to the Crown lease are held by another person - that other person;
(a) any agreement, arrangement, understanding, promise or undertaking:
(i) whether expressed or implied; or
(ii) whether or not enforceable, or intended to be enforceable, by legal proceedings; and
(b) any scheme, plan, proposal, action, course of action or course of conduct, whether unilateral or otherwise.
(a) a taxpayer (the lessor ) enters into a lease with another person (the lessee ) under which a right to use a unit of property that is plant or articles within the meaning of section 54 is granted to the lessee; and
(b) the property is a fixture on the land of a person other than the lessor and therefore the lessor is not the owner of the property; and
(c) if the property were not a fixture, the lessor would be the owner of the property; and
(d) under sections 54AC and 54AD , the lessor is an eligible lessor in relation to the property. 54AB(2) [Depreciation provisions]
If this section applies, the provisions of this Act relating to depreciation apply as if the lessor were the owner of the property instead of any other person.
54AB(3) [Provisions apply as if lessor were owner]Also, section 51AD , Subdivision B of Division 3 , Division 16D and Part XII apply in relation to property to which this section applies as if the lessor were the owner of the property instead of any other person.
For the purposes of this section and sections 54AC and 54AD :
hire purchase agreement
means a contract for the hire of goods under which the hirer has a right or obligation to purchase the goods where the charge that is or may be made for hiring the goods, together with any other amount payable under the contract (including an amount to purchase the goods or to exercise an option to do so) exceeds the price of the goods.
(a) any arrangement to let a unit of property (other than realty) on hire under which a right to use the property is granted by the owner to another person for a monetary or other consideration; or
(b) a renewal of such an arrangement;
but does not include a hire purchase agreement.
Where a unit of property is a fixture on land owned by the lessee of the property, then, for the purposes of subsection 54AB(1) , the lessor is an eligible lessor in relation to that property if:
(a) the lessor has a right, in addition to any other right, to sever and remove the property from the land in the event of default under, or termination of, the lease (a right to remove ); and
(b) the property can be removed without causing substantial damage to the property or to the land. 54AC(2) Effective right of removal .
Where the property is a fixture on land owned by a person other than the lessee, then, for the purposes of subsection 54AB(1) , the lessor is an eligible lessor in relation to the property if:
(a) the lessee has a right to sever and remove the property from the land; and
(b) the property can be removed without causing substantial damage to the property or to the land; and
(c) under the lease, the lessor has a right against the lessee to recover the property (an effective right to remove ). 54AC(3) Lessor not an eligible lessor if right to remove, or effective right to remove, is lost .
The lessor is not an eligible lessor in relation to the property if:
(a) although the lessor has a right to remove, or an effective right to remove, the property, the lease expires or is otherwise terminated without the lessor exercising that right; or
(b) there is an event of default under the lease and the lessor ceases to have a right to remove, or an effective right to remove, the property; or
(c) the lessor disposes of his or her interest in the lease, including the residual interest in the property; or
(d) the lessee discharges his or her obligations under the lease and the property is not returned to the lessor; or
(e) the property is lost or destroyed.
Subject to subsection (2), a lessor is not an eligible lessor in relation to a unit of property for the purposes of subsection 54AB(1) if, at any time before the lease was entered into, the lessee or an associate of the lessee owned the property and used it or held it for use.
54AD(2) [Immediately preceding 6 months]Subsection (1) does not apply if:
(a) the property was first owned and used or held for use by the lessee or an associate of the lessee no more than 6 months before the lessor acquired the property; and
(b) the lessor acquired the property from the lessee or an associate of the lessee; and
(c) the property was not a fixture at the time that it was first owned and used or held for use by the lessee or an associate of the lessee; and
(d) at the time the property was first owned and used or held for use by the lessee or an associate of the lessee, there was an arrangement in existence providing for the property to be sold to the lessor or another person and then leased to the lessee.
For the purposes of subsections (1) and (2), a person (the seller ) is taken to have sold property and another person (the purchaser ) is taken to have acquired property where the seller purports to sell the property to the purchaser but does not because the property is a fixture on land.
54AD(4) [Depreciated value calculation]If the conditions in subsection (2) are satisfied, the cost of the property to the lessor, for the purposes of working out the property's depreciated value under section 62 , is taken to be the lesser of:
(a) the sum of:
(i) the amount that would have been the depreciated value of the property of the lessee or an associate of the lessee at the time the lessor acquired it; and
(ii) any amount included in the assessable income of the lessee or associate under section 59 as a result of the sale; or
(b) the consideration paid by the lessor for the property. 54AD(5) [Definition]
For the purposes of this section:
associate
has the same meaning as in section
318
.
A lessor who is not an eligible lessor in relation to a unit of property under section 54AB because one or more of the conditions in subsection 54AC(3) is satisfied, is taken to have disposed of the property for the purposes of section 59 or 59AA for the amount of consideration set out in this section.
54AE(2) [Calculation of consideration](a) the lease expires or is otherwise terminated without the lessor exercising his or her right to remove, or effective right to remove, the property; or
(b) there is an event of default under the lease and the lessor ceases to have a right to remove, or an effective right to remove, the property; or
(c) the lessee discharges his or her obligations under the lease and the property is not returned to the lessor;
the lessor is taken to have disposed of the property for a consideration equal to:
(d) if the parties to the lease are dealing at arm's length and there is any termination or residual amount received or receivable under the lease in respect of the property - that termination or residual amount; or
(e) if the parties to the lease are dealing at arm's length and there is no termination or residual amount received or receivable under the lease in respect of the property - any amount received or receivable by way of compensation in lieu of recovery of the property; or
(f) if the parties to the lease are not dealing at arm's length - the market value of the property immediately before the time of disposal referred to in paragraph (a), (b) or (c) worked out as if it were removed from the land. 54AE(3) [Disposal by lessor]
If the lessor disposes of his or her interest in the lease including the residual interest in the property, the lessor is taken to have disposed of the property for a consideration equal to:
(a) if the parties to the disposal are dealing at arm's length - the part of the disposal price that is reasonably attributable to the property; or
(b) if the parties to the disposal are not dealing at arm's length - the market value immediately before the time of disposal worked out as if the property were removed from the land. 54AE(4) [Loss or destruction]
If the property is lost or destroyed, the lessor is taken to have disposed of the property for the sum of any amounts received or receivable in relation to its loss or destruction.
For the purposes of section 55 , the effective life of a unit of property owned by a taxpayer is whichever of the following periods is applicable:
(a) if:
(i) there is in force a determination by the Commissioner under subsection (2) which specifies a period that the taxpayer may elect to adopt as the effective life of the property; and
(ii) the taxpayer elects to adopt that period;
that period;
(b) if paragraph (a) does not apply - the period, worked out as at the time when the property is first used for assessable income-producing purposes by the taxpayer, during which it would be reasonable to conclude that the property would be held by the taxpayer assuming:
(i) if the property was not new at that time - that the property was new at that time; and
(ii) that the taxpayer was to hold the property until it was no longer reasonably capable of being used, by the taxpayer or by any other person, for:
(A) assessable income-producing purposes; or
(B) exempt income-producing purposes; and
(iii) if, at the time the property was first used for assessable income-producing purposes by the taxpayer, it may reasonably be expected that the property will be subject to wear and tear by the taxpayer at a particular rate - that that rate were the rate of wear and tear to which the property will be subject; and
(iv)that the property were to be maintained in reasonably good order and condition;
(c) if:
(i) paragraph (a) does not apply; and
(ii) the property was new at the time when the property was first used by the taxpayer for assessable income-producing purposes; and
(iii) at the time of that first use, it would be reasonable to conclude that the property is likely to be:
(A) scrapped; or
(B) sold for scrap; orby the taxpayer at a later time; and
(C) abandoned;
that shorter period;
(iv) the period beginning at the time of that first use and ending at that later time is shorter than the period mentioned in paragraph (b);
(d) if:
(i) paragraph (a) does not apply; and
(ii) the property was not new at the time when the property was first used by the taxpayer for assessable income-producing purposes; and
(iii) assuming that the property was new at the time of that first use, it would be reasonable to conclude at that time that the property would be likely to be:
(A) scrapped; or
(B) sold for scrap; orby the taxpayer at a later time; and
(C) abandoned;
that shorter period.
(iv) the period beginning at the time of that first use and ending at that later time is shorter than the period mentioned in paragraph (b);
The Commissioner may, by writing:
(a) make a determination specifying periods that taxpayers may elect to adopt as the effective lives of units of property owned by them; and
(b) revoke or vary such a determination. 54A(3) Period may be specified unconditionally.
A period may be specified unconditionally.
54A(4) Specification of period may be conditional.A period, or 2 or more different periods, may be specified in relation to property of a particular kind subject to one or more specified conditions being satisfied as at the time when the property is first used by the taxpayer for assessable income-producing purposes.
54A(5) Conditions may relate to use.The conditions may include, but are not limited to, conditions relating to:
(a) if the property is installed ready for use for the purpose of producing assessable income and held in reserve by the taxpayer - the particular use or uses for which the property has been installed and held in reserve; or
(b) in any other case - the particular use or uses of the property by the taxpayer. 54A(6) Criteria for specifying periods.
The matters to which the Commissioner may have regard in specifying periods include, but are not limited to, the periods that, apart from paragraph (1)(a), would be applicable under paragraph (1)(b) to property owned by particular groups of taxpayers who use similar property in a similar manner.
54A(7) Taxpayer may require the Commissioner to vary a determination so that it specifies a period in relation to property.If, at the time when the property was first used by the taxpayer for assessable income-producing purposes:
(a) a determination is in force under subsection (2); and
(b) the determination does not specify a period that the taxpayer may elect to adopt as the effective life of the property;
the taxpayer may lodge with the Commissioner a written notice requiring the Commissioner to vary the determination in accordance with paragraph (2)(b) so that the determination specifies such a period.
54A(8) Time within which Commissioner must vary determination.The Commissioner must comply with the requirement to vary a determination by whichever is the latest of the following times:
(a) the end of the period of 60 days (in this subsection called the `` original 60-day period '') after the notice requiring the Commissioner to vary the determination is lodged;
(b) if the Commissioner, by written notice served on the taxpayer within the original 60-day period, requests the taxpayer to give information relating to the variation sought by the taxpayer - the end of 60 days after the Commissioner receives that information;
(c) if the Commissioner, by written notice served under section 264 within the original 60-day period, requires a person other than the taxpayer to give information relating to the variation sought by the taxpayer - the end of 60 days after the Commissioner receives that information. 54A(9) Determination etc. to be available for sale to public.
A determination, or a variation or revocation of a determination, must be made available for sale to the public.
54A(10) When determination etc. may be retrospective.A determination, or a variation or revocation of a determination, may be expressed to apply in relation to property first used by taxpayers for assessable income-producing purposes before the determination, variation or revocation, as the case may be, was made if, and only if:
(a) in the case of a determination or a variation of a determination - the specified period is the first period applicable to property of that kind; or
(b) in any case - the retrospectivity works to the advantage of taxpayers in calculating the effective lives of property of that kind. 54A(11) Election to adopt period specified in determination as effective life.
An election under paragraph (1)(a) is irrevocable and must be made:
(a) within 6 months after the later of the following:
(i) the end of the year of income in which the property is first used by the taxpayer for assessable income-producing purposes;
(ii) the commencement of this section; or
(b) within such further period as the Commissioner allows. 54A(12) Commissioner to make first determination within 28 days.
The Commissioner must make a determination under subsection (2) within 28 days after the commencement of this section.
54A(13) Meaning of ``use for assessable income-producing purposes''.For the purposes of this section, a unit of property is taken to be used for assessable income-producing purposes by a taxpayer if, and only if, the property is:
(a) used by the taxpayer for the purpose of producing assessable income; or
(b) installed ready for use for that purpose and held in reserve by the taxpayer. 54A(14) Meaning of ``use for exempt income-producing purposes''.
For the purposes of this section, a unit of property is taken to be used for exempt income-producing purposes by a person if, and only if, the property is:
(a) used by the person for the purpose of producing exempt income; or
(b) installed ready for use for that purpose and held in reserve by the person.
The annual depreciation percentage for a unit of property owned by a taxpayer is worked out as follows.
55(2) Step 1: 100% depreciation .(a) either:
(i) the cost of the property does not exceed $300 or such higher amount as is prescribed; or
(ii) the effective life of the property is less than 3 years; and
(b) the taxpayer does not nominate, in accordance with subsection (8), an annual depreciation percentage less than 100%;
the annual depreciation percentage is 100%.
55(3) Step 2: scientific research .(a) step 1 does not apply; and
(b) the property is used by the taxpayer for the purposes of scientific research only; and
(c) either:
(i) the effective life of the property is 5 years or more; or
(ii) the property is an eligible motor vehicle or an eligible artwork; and
(d) the property was acquired by the taxpayer before 1 July 1995; and
(e) the taxpayer does not nominate, in accordance with subsection (8), an annual depreciation percentage less than 50%;
the annual depreciation percentage is 50%.
55(4) Step 3: employee amenities .(a) neither step 1 nor 2 applies; and
(b) the property is used by the taxpayer principally for the purpose of providing clothing cupboards, first aid, rest-room or recreational facilities, or meals or facilities for meals:
(i) for persons of either or both of the following kinds:
(A) persons employed by the taxpayer in a business carried on by the taxpayer for the purpose of producing assessable income;
(B) persons employed by a company that is related (within the meaning of section 51AE ) to the taxpayer in a business carried on by the company for the purpose of producing assessable income; or
(ii) for the care of children of those persons; and
(c) either:
(i) the effective life of the property is 5 years or more; or
(ii) the property is an eligible motor vehicle or an eligible artwork; and
(d) the taxpayer does not nominate, in accordance with subsection (8), an annual depreciation percentage less than 50%;
the annual depreciation percentage is 50%.
(a) none of steps 1, 2 and 3 apply; and
(b) the property is not an eligible motor vehicle; and
(c) the property is not an eligible artwork; and
(d) the taxpayer does not nominate, in accordance with subsection (8), an annual depreciation percentage less than the percentage worked out using the following table;
the annual depreciation percentage is worked out using the following table:
| Years in effective life | Annual depreciation percentage |
| 3 to fewer than 5 | 60% |
| 5 to fewer than 6 | 40% |
| 6 to fewer than 10 | 30% |
| 10 to fewer than 13 | 25% |
| 13 to fewer than 30 | 20% |
| 30 or more | 10% |
(a) none of steps 1, 2, 3 and 4 apply; and
(b) the property is an eligible motor vehicle; and
(c) the taxpayer does not nominate, in accordance with subsection (8), an annual depreciation percentage less than the percentage worked out using the following table;
the annual depreciation percentage is worked out using the following table:
| Years in effective life | Annual depreciation percentage |
| 3 to fewer than 5 | 50% |
| 5 to fewer than 6 | 30% |
| 6 to fewer than 10 | 22.5% |
| 10 to fewer than 13 | 15% |
| 13 to fewer than 20 | 11.25% |
| 20 to fewer than 40 | 7.5% |
| 40 or more | 3.75% |
(a) none of steps 1, 2, 3, 4 and 5 apply; and
(b) the property is an eligible artwork; and
(c) the taxpayer does not nominate, in accordance with subsection (8), an annual depreciation percentage less than the percentage calculated (to 2 decimal places) using the following formula;
the annual depreciation percentage is the percentage calculated (to 2 decimal places) using the formula:
|
1.8
No. of years in effective life |
× 100 |
where:
``No. of years in effective life'' means the number (calculated to 2 decimal places) of years in the effective life of the property.
55(8) [Taxpayer's option]A taxpayer may nominate a percentage as the annual depreciation percentage for a specified unit of property in respect of which depreciation is first allowable to the taxpayer for a year of income if the nominated percentage is:
(a) less than the percentage that would otherwise be that annual depreciation percentage; and
(b) equal to or greater than the percentage calculated (to 2 decimal places) using the formula:
|
1.5
No. of years in effective life |
× 100 |
where:
``No. of years in effective life'' means the number (calculated to 2 decimal places) of years in the effective life of the property.
A nomination under subsection (8) has effect for the purposes of determining the depreciation allowable to the taxpayer in respect of the unit of property for the year of income mentioned in that subsection and for all later years of income.
In this section:
(a) a painting, sculpture, drawing, engraving or photograph; or
(b) a reproduction of any such thing; or
(c) property of a description, or of a use, similar to anything covered by paragraph (a) or (b);
"eligible motor vehicle"
means a motor vehicle (including a vehicle known as a four wheel drive vehicle) that is:
(a) a motor car, station wagon, panel van, utility truck or similar vehicle, other than a panel van or utility truck designed to carry a load of one tonne or more; or
(b) a motor cycle or similar vehicle; or
(c) any other road vehicle designed to carry a load of less than one tonne or fewer than 9 passengers;
"scientific research"
has the same meaning as in section
73A
.
This section has effect subject to Division 245 of Schedule 2C .
Subject to this section, the depreciation allowable under this Act in respect of a unit of property in relation to a year of income is:
(a) the annual depreciation percentage fixed under section 55 of the depreciated value of that unit at the beginning of the year of income; or
(b) if the taxpayer has elected under subsection (1AA) that this paragraph be applied to the unit of property:
(i) if the annual depreciation percentage fixed under section 55 is less than 100% - the percentage worked out using the following formula (rounded to the nearest whole percentage, with 0.5% rounded up) of the cost of the unit:
Annual
depreciation
percentage× 2
3
where:
``Annual depreciation percentage'' is the annual depreciation percentage fixed under section 55 ; or
(ii) if the annual depreciation percentage fixed under section 55 is 100% - 100% of the cost of the unit.
A taxpayer may elect that paragraph (1)(b) be applied to all the units of property in respect of which depreciation is first allowable to the taxpayerin a particular year of income.
An election under subsection (1AA):
(a) must be made on or before the date of lodgment of the return of income of the taxpayer for the year of income in which depreciation is first allowable to the taxpayer in respect of those units, or within such further time as the Commissioner allows; and
(b) has effect for the purposes of determining the depreciation allowable to the taxpayer in respect of each of those units for the year of income referred to in paragraph (a) and for all subsequent years of income.
Where the annual depreciation percentage fixed under section 55 for a unit of property is less than 100% and the unit of property is dealt with by the taxpayer in the prescribed manner during part only of the year of income, the depreciation allowable to the taxpayer in accordance with subsection (1) in respect of the property in relation to the year of income shall be reduced by so much of the amount of the depreciation applicable in accordance with subsection (1) as bears to that amount the same proportion as the number of days during the year of income during which the property was not dealt with by the taxpayer in the prescribed manner bears to the number of days in the year of income.
For the purposes of the application of subsections (1) and (1A) in a case where the unit of property is not dealt with by the taxpayer in the prescribed manner on the first day of the year of income, the reference in paragraph (1)(a) to the depreciated value of the unit of property at the beginning of the year of income shall be read as a reference to the depreciated value of the unit of property at the time during the year of income when it is first dealt with by the taxpayer in the prescribed manner.
For the purposes of subsections (1A) and (1B), a unit of property shall be taken to be dealt with by a taxpayer in the prescribed manner at a particular time if:
(a) the property is used by the taxpayer at that time for the purpose of producing assessable income; or
(b) the property is, at that time, installed ready for use for the purpose of producing assessable income and held in reserve by the taxpayer.
The deduction allowable in respect of any unit of property shall not exceed the depreciated value of that unit.
56(3) [No double deductions]Where, in respect of any unit of property, any amount which would, but for this subsection, be part of the cost of the unit has been allowed or is allowable under this Act or the previous Act as a deduction (otherwise than on account of depreciation or under section 70 , section 73B , Subdivision B or BA of Division 3 or Part XII ) from the assessable income of the taxpayer of any year of income, the cost of the unit shall be deemed to be the amount remaining after deducting from the cost of the unit to that taxpayer, as ascertained apart from this subsection, the sum of any amounts so allowed or allowable.
For the purposes of the application of paragraph (1)(b) in calculating the depreciation allowable to a taxpayer in respect of a unit of property in a case where -
(a) section 60 does not apply in relation to the unit of property in relation to the taxpayer;
(b) the amount that, but for this subsection and section 57AF , would be the cost of the unit for the purposes of that paragraph is attributable, in whole or in part, to a transaction to which the taxpayer was a party;
(c) the Commissioner is satisfied that, having regard to any connection between any 2 or more of the parties to the transaction and to any other relevant circumstances, those parties were not dealing with each other at arm's length in relation to the transaction; and
(d) the Commissioner is satisfied that the amount that, but for this subsection and section 57AF , would be the cost of the unit for the purposes of paragraph (1)(b) is greater than the amount (in this subsection referred to as the ``arm's length amount'' ) that would have been the cost of the unit if the parties to the transaction had dealt with each other at arm's length in relation to the transaction,
the arm's length amount shall, subject to section 57AF , be deemed to be the cost of that unit for the purposes of paragraph (1)(b).
(Repealed by No 95 of 1988)
(Repealed by No 95 of 1988)
(Repealed by No 107 of 1989)
(Repealed by No 107 of 1989)
(Repealed by No 107 of 1989)
(Repealed by No 107 of 1989)
(Repealed by No 95 of 1988)
This section applies in relation to a unit of property (other than an excluded unit of property) being:
(a) a unit of property in respect of which depreciation is allowable under this Act; and
(b) a motor vehicle (including a vehicle known as a four wheel drive vehicle) that is a motor car or station wagon. 57AF(2) Limit on cost for depreciation purposes.
For the purpose of calculating the depreciation allowable to a taxpayer in respect of a unit of property to which this section applies, if:
(a) the cost of the unit;
is more than:
(b) the motor vehicle depreciation limit (see subsection (3) or (4)) for the financial year ( ``the first-use year'' ) when the taxpayer first used it for any purpose;
then its costis taken to be equal to the motor vehicle depreciation limit for the first-use year.
The motor vehicle depreciation limit for the 1992-93 first-use year is $47,280.
For any later first-use year, the motor vehicle depreciation limit for the first-use year is calculated by:
(a) taking the motor vehicle depreciation limit for the financial year before it (ignoring any increase that may have resulted from applying paragraph (d)); and
(b) multiplying the amount under (a) by the indexation factor for the first-use year (see subsection (5)); and
(c) rounding the result to the nearest whole dollar (rounding up an amount ending in 50 cents); and
(d) if the result is less than $18,000 - increasing it to $18,000.
[ CCH Note: The indexed motor vehicle cost price limits for financial years from 1993/94 to 1997/98 are provided below - for later years see ITAA'97 s 42-80(4).
| Financial year | Indexation factor | Depreciation limit |
| 1997/98 | [ 1.0 ] | $55,134 |
| 1996/97 | 1.042 | $55,134 |
| 1995/96 | 1.032 | $52,912 |
| 1994/95 | 1.059 | $51,271 |
| 1993/94 | 1.024 | $48,415 |
The following table sets out the indexation factors and motor vehicle depreciation limits for the income years 1990/91 to 1992/93:
| Income year | Indexation factor | Motor vehicle depreciation limit | Gazette |
| 1990/91 | 1.050 | $45,056 | S 163, 22 June 1990 |
| 1991/92 | 1.009 | $45,462 | S 168, 25 June 1991 |
| 1992/93 | 1.040 | $47,280 | GN 25, 24 June 1992 ] |
The indexation factor for the first-use year is calculated using the following formula (and then rounded under subsection (6)):
|
sum of index numbers for quarters in first March year
sum of index numbers for quarters in second March year |
where:
``first March year'' means the period of 12 months ending on 31 March immediately before the first-use year;
``index number'' , for a quarter, means the index number for the motor vehicle purchase sub-group of the Consumer Price Index, being the weighted average of the 8 capital cities, published by the Australian Statistician in respect of the quarter (ignoring any later number that may be published by the Australian Statistician in substitution for it);
``second March year'' means the period of 12 months immediately before the first March year.
Despite subsection (5), the indexation factor for the 1997-98 financial year is 1.
The result under subsection (5) must be rounded up or down to 3 decimal places (rounding up in the case exactly half-way between).
For the purposes of applying the formula component ``index number'' in subsection (5), if:
(a) at any time, whether before or after the commencement of this subsection, the Australian Statistician has changed or changes the reference base for the motor vehicle purchase sub-group of the Consumer Price Index;
then:
(b) after the change, only index numbers published in terms of the new base are to be used.
Before the beginning of each financial year, the Commissioner must publish by written notice the indexation factor and the motor vehicle depreciation limit for the financial year.
A typical example of how the motor vehicle depreciation limit is worked out for a first-use year is as follows:
(a) start with the limit for the previous financial year - assume it is $56,477;
(b) next, work out the indexation factor for the first-use year. This involves:
(i) adding the 4 index numbers for the year ending on March 31 in the previous financial year (assume they come to 132) and doing the same for the year before that (assume they come to 128);
(ii) dividing the first sum by the second:
132
128= 1.03125
(iii) rounding the result down to 3 decimal places, giving an indexation factor of 1.031 (if the number under (ii) had instead been exactly half-way between 1.031 and 1.032 (i.e. 1.0315), or had been more than half-way, it would have been rounded up to 1.032);
(c) finally, multiply the previous financial year's limit (the amount in (a)) by the indexation factor:
| $56,477 × 1.031 = $58,227.787 |
The result is then rounded up to $58,228, which is the motor vehicle depreciation limit for the first-use year .
(a) a taxpayer disposes of a unit of property (in this subsection referred to as the ``first unit of property'' ) by sale for a consideration the amount or value of which (in this subsection referred to as the ``reduced disposal price'' ) is, in the opinion of the Commissioner, less than the market value of the first unit of property immediately before the time of disposal;
(b) depreciation under this Act has been allowed or is allowable to the taxpayer in relation to the first unit of property;
(c) the cost to the taxpayer or another person (in this subsection referred to as the ``discounted cost'' ) of acquiring ownership of another unit of property (in this subsection referred to as the ``second unit of property'' ), being a unit of property to which this section applies, is less than the amount that would otherwise have been the cost to the taxpayer or that other person of acquiring ownership of the second unit of property by reason of the allowance of a discount (in this subsection referred to as the ``cost price discount'' );
(d) the Commissioner is satisfied, having regard to all the circumstances, that the whole or a part of the cost price discount (which whole or part, as the case may be, is in this subsection referred to as the ``relevant discount amount'' ) was based on, directly or indirectly referable to, or fixed by reason of, the reduced disposal price of the first unit of property being less than the market value of the first unit of property immediately before the time of disposal; and
(e) the sum of the discounted cost and the relevant discount amount is greater than the motor vehicle depreciation limit in relation to the financial year in which the second unit of property was first used by the taxpayer or that other person (whether for the purpose of producing assessable income or otherwise),
the discounted cost in relation to the second unit of property for the purposes of the application of the provisions of this Act relating to depreciation and the sale price of the first unit of property for the purposes of section 59 shall each be deemed to be increased by the relevant discount amount.
In this section, a reference to the market value of property at a particular time shall, if there is insufficient evidence of the market value at that time, be read as a reference to such amount as, in the opinion of the Commissioner, is fair and reasonable.
In this section:
"discount"
, in relation to the acquisition of a unit of property, includes any allowance that has the effect of reducing the price payable for the acquisition of the unit of property;
"excluded unit of property"
, in relation to a taxpayer, means
-
(a) a unit of property that was acquired by the taxpayer on or before 21 August 1979 or under a contract entered into on or before that date;
(b) a unit of property that was constructed by the taxpayer where the construction commenced on or before 21 August 1979; or
(c) a unit of property that was acquired by the taxpayer after 21 August 1979 where -
(i) the unit of property had been acquired by a person on or before that date or under a contract entered into on or before that date; and
(ii) at all times after the unit of property was acquired by that person and before it was acquired by the taxpayer, the owner for the time being of the unit of property held the unit of property as trading stock; or
(d) a unit of property, being a motor vehicle that, immediately before it was first used by the taxpayer for any purpose, was specially fitted out for transporting disabled persons seated in wheelchairs (except if, at that time, the motor vehicle met the description in subitem 96(1) or 97(1) of Schedule 1 to the Sales Tax (Exemptions and Classifications) Act 1992 ).
(Omitted by No 17 of 1993)
(Omitted by No 17 of 1993)
(Renumbered by No 17 of 1993)
(Renumbered by No 17 of 1993)
(Renumbered by No 17 of 1993)
(Repealed by No 35 of 1992)
(Repealed by No 95 of 1988)
(Repealed by No 107 of 1989)
This section has effect subject to Division 245 of Schedule 2C .
Subject to subsections (3) and (8), this section applies to a unit of property in relation to a taxpayer in relation to a year of income if:
(a) depreciation is allowable to the taxpayer under section 54 in respect of the unit of property in relation to the year of income;
(b) the unit of property:
(i) was acquired by the taxpayer under a contract entered into after 18 August 1981 and before 20 July 1982; or
(ii) was constructed by the taxpayer and commenced to be constructed after 18 August 1981 and before 20 July 1982;
(c) the unit of property was first used, or installed ready for use and held in reserve, before 1 July 1992; and
(d) the unit of property is:
(i) property that, during the relevant period in the year of income when it was owned by the taxpayer, was, primarily and principally, used, or installed ready for use and held in reserve for use, by a producer of basic iron or steel products, directly in basic iron or steel production or related activities; or
(ii) a wharf, or plant located on a wharf, being a wharf or plant that, during the relevant period in the year of income when it was owned by the taxpayer:
(A) was, primarily and principally, used or installed ready for use and held in reserve, by a producer of basic iron or steel products, directly in connection with basic iron or steel production or related activities; and
(B) was, at all times when it was used, or installed ready for use and held in reserve, in connection with that basic iron or steel production or those related activities, situated within premises on which that basic iron or steel production takes place or within premises contiguous to those premises.
A reference in paragraph (1)(d), in relation to property owned by a taxpayer during a year of income, to the relevant period in the year of income is a reference to the period in that year of income when:
(a) the property was owned by the taxpayer; and
(b) the property was used, or installed ready for use and held in reserve, for the purpose of producing assessable income. 57AK(3) [Exclusions]
This section does not apply in relation to a unit of property:
(a) that is a road vehicle, wherever or however used, of a kind ordinarily used for the transport of persons or the delivery of goods (including the delivery of goods of a particular kind); or
(b) that is used for the transport of persons or the delivery of goods between premises on which basic iron or steel production takes place. 57AK(4) [Depreciation allowable]
Notwithstanding anything contained in sections 55 and 56 , but subject to subsections 56(2) and (3) , the depreciation allowable under this Act in respect of a unit of property to which this section applies shall be ascertained in accordance with this section.
The depreciation allowable to a taxpayer under this Act in relation to a year of income in respect of a unit of property to which this section applies in relation to the year of income is -
(a) where, but for this section, the annual depreciation percentage fixed under section 55 , as in force immediately before the commencement of section 1 of the Taxation Laws Amendment Act (No. 2) 1992, would be 20% or less - 20% of the cost of the unit; and
(b) in any other case - 33 1/3 % of the cost of the unit.
Subsections 56(1A), (1B), (1C) and (4) apply for the purposes of this section in like manner as those subsections apply for the purposes of section 56 .
57AK(7) [Reference to sections]Subsection 330-590(3) of the Income Tax Assessment Act 1997 applies in relation to a unit of property to which this section applies as if a reference in that subsection to section 56 included a reference to this section.
A taxpayer may elect, for the purpose of the calculation of depreciation allowable as a deduction to him under this Act, that this section shall not apply in relation to a unit of property to which this section would otherwise apply and, where an election is so made, this section does not apply in relation to that unit of property in relation to the taxpayer in relation to any year of income.
57AK(9) [Time of election]An election referred to in subsection (8) in respect of a unit of property must be made on or before the date of lodgment of the return of income of the taxpayer for the first year of income in which depreciation calculated in accordance with this section would, but for subsection (8), be allowable to the taxpayer in respect of the unit of property, or before such later date as the Commissioner allows.
Where the Commissioner is satisfied that:
(a) on or before 18 August 1981 a taxpayer:
(i) entered into a contract or arrangement for the acquisition of a unit of property (in this subsection referred to as the ``original unit'' ); or
(ii) commenced the construction of a unit of property (in this subsection also referred to as the ``original unit'' );
(b) after that date:
(i) the taxpayer entered into a contract (whether with the same person or another person in a case to which subparagraph (a)(i) applies) for the acquisition (whether with or without the acquisition of other property) of the original unit or of another unit of property (in this subsection referred to as the ``substituted unit'' ) identical with, or having a purpose similar to that of, the original unit and intended by the taxpayer to be in lieu of the original unit; or
(ii) the taxpayer commenced the construction of a unit of property (in this subsection also referred to as the ``substituted unit'' ) identical with, or having a purpose similar to that of, the original unit and intended by the taxpayer to be in lieu of the original unit; and
(c) the taxpayer entered into the contract for the acquisition of the original unit or substituted unit, or commenced the construction of the substituted unit, for the purpose, or for purposes that included the purpose, of obtaining a deduction for depreciation ascertained in accordance with this section,
the Commissioner may refuse to allow a deduction for depreciation ascertained in accordance with this section:
(d) in a case to which subparagraph (b)(i) applies - in relation to the original unit or the substituted unit, as the case may be; or
(e) in a case to which subparagraph (b)(ii) applies - in relation to the substituted unit. 57AK(11) [Reference to unit of property]
A reference in subsection (10) to a unit of property shall be read as including a reference to a portion of a unit of property.
57AK(12) [Acquisition includes construction for taxpayer]A reference in this section to the acquisition by a taxpayer of property shall be read as including a reference to the construction of the property for the taxpayer by another person or persons.
57AK(13) [Definitions]In this section:
"basic iron or steel production"
means any part of the operations involved in the production of basic iron or steel products, other than:
(a) in a case where an iron-making furnace and a steel-making furnaceare used in that production - operations that take place before the iron-making furnace is used in that production;
(b) in a case where an iron-making furnace is used in that production but a steel-making furnace is not used - operations that take place before the iron-making furnace is used in that production; and
(c) in a case where a steel-making furnace is used in that production but an iron-making furnace is not used - operations that take place before the steel-making furnace is used in that production;
"basic iron or steel products"
means
-
(a) goods that, if imported, would fall within item 73.01, 73.06, 73.07, 73.08, 73.09, 73.11 or 73.16 of Schedule 1 to the Customs Tariff Act 1966 , as in force on 18 August 1981;
(b) goods that, if imported, would fall within item 73.10 of that Schedule, other than goods that, if imported, would fall within sub-item 73.10.1 of that Schedule;
(c) goods that, if imported, would fall within item 73.12 or 73.13 of that Schedule, being goods that are -
(i) hot-rolled; and
(ii) unworked or simply polished;
(d) low alloy or high carbon steel goods that, if imported, would fall within item 73.15 of that Schedule, being goods that are in a form mentioned in item 73.06, 73.07, 73.08, 73.09 or 73.11 of that Schedule;
(e) low alloy or high carbon steel goods that, if imported, would fall within item 73.15 of that Schedule (other than goods that, if imported, would fall within paragraph (a) of sub-item 73.15.2 of that Schedule), being goods that are in a form mentioned in item 73.10 of that Schedule;
(f) low alloy or high carbon steel goods that, if imported, would fall within item 73.15 of that Schedule, being goods that are in a form mentioned in item 73.12 or 73.13 of that Schedule and are -
(i) hot-rolled; and
(ii) unworked or simply polished; or
(g) goods, being sponge iron that, if imported, would fall within item 73.05 of that Schedule;
"goods"
includes electric current, hydraulic power, steam, compressed air, a liquid, a gas or a substance;
"iron-making furnace"
includes a direct reduction furnace or kiln;
"plant"
means plant or articles within the meaning of section
54
;
"related activities"
means any of the following activities that are carried on by a producer of basic iron or steel products within premises in which the basic iron or steel production from which those products result takes place:
(a) the production, preparation or treatment of goods for use primarily and principally, and directly, in basic iron or steel production;
(b) the production or maintenance of plant, or components of plant, for use primarily and principally, and directly, in -
(i) basic iron or steel production; or
(ii) activities that are related activities by virtue of this paragraph or any of the other paragraphs of this definition;
(c) the trimming, cutting, packing, placing in containers, labelling, transport or storage of -
(i) basic iron or steel products;
(ii) goods referred to in paragraph (a) of this definition; or
(iii) plant, or components of plant, referred to in paragraph (b) of this definition;
(d) the disposal of waste substances resulting from basic iron or steel production or activities that are related activities by virtue of paragraph (a), (b), (c) or (e) of this definition;
(e) the training of apprentices in skills of a kind used in basic iron or steel production or in activities that are related activities by virtue of paragraph (a), (b), (c) or (d) of this definition. 57AK(14) [Amendments to Customs Tariff Act]
In determining whether goods fall within the definition of basic iron or steel products in subsection (13), no regard shall be had to any amendment of the Customs Tariff Act 1966 made by an Act that received or receives the Royal Assent after 18 August 1981.
(Repealed by No 95 of 1988)
In this section:
"commission"
, in relation to a trading ship, means put the ship into service, or hold the ship in reserve for the purpose of being put into service;
"commissioning date"
, in relation to a trading ship, means the date on which the ship is first commissioned;
"eligible date"
, in relation to an eligible Australian ship, means:
(a) in the case of a new ship:
(i) if the ship becomes an eligible Australian ship before the expiration of 90 days after the commissioning date of the ship - the commissioning date of the ship; or
(ii) in any other case - the day on which the ship becomes an eligible Australian ship;
(b) in the case of a post-July 1982 ship:
(i) if the ship becomes an eligible Australian ship before the expiration of 90 days after the commencement of this section - the commissioning date of the ship; or
(ii) in any other case - the day on which the ship becomes an eligible Australian ship; and
(c) in the case of a pre-July 1982 ship:
(i) if the ship becomes an eligible Australian ship before the expiration of 90 days after the commencement of this section - 29 July 1982; or
(ii) in any other case - the day on which the ship becomes an eligible Australian ship;
"Government ship"
means a ship that is owned by the Commonwealth or a State or Territory;
"Grants Act ship"
, in relation to a taxpayer, means a ship in respect of which the taxpayer is or was entitled to a grant under subsection 8(1) of the
Ships (Capital Grants) Act 1987
;
"harbour"
has the same meaning as in the
Navigation Act 1912
;
"lease"
, in relation to a trading ship, includes:
(a) any scheme under which a right to use the ship is granted by the owner to another person; and
(b) any scheme under which a right to use the ship, being a right derived directly or indirectly from a right referred to in paragraph (a), is granted by a person to another person,
but does not include a hire-purchase agreement;
"manning notice"
means a notice given by the Secretary under subsection (22) in relation to a ship;
"new"
means not having previously been either used by any person or acquired or held by any person for use by that person, but does not include reconditioned or wholly or mainly reconstructed;
"new ship"
means a trading ship the commissioning date of which occurs after the commencement of this section;
"officer"
includes the master of a ship;
"passenger"
has the same meaning as in the
Navigation Act 1912
;
"person"
includes a partnership and a person in the capacity of the trustee of a trust estate;
"post-July 1982 ship"
means a trading ship the commissioning date of which occurred on or after 29 July 1982 and before the commencement of this section;
"pre-December 1986 manning notice"
means:
(a) a manning notice given before 22 December 1986; or
(b) a manning notice given on or after that date where the request for the manning notice was made before that date;
or, if that notice is varied, that notice as varied;
"pre-July 1982 ship"
means a tradingship the commissioning date of which occurred on or after 29 July 1977 and before 29 July 1982;
"Secretary"
means the Secretary to the Department administered by the Minister for the time being administering the
Navigation Act 1912
;
"ship"
has the same meaning as in the
Navigation Act 1912
;
"trading ship"
means a ship that is used, or is held in reserve for use, for, or in connection with, any business or commercial activity and, without limiting the generality of the foregoing, includes a ship that is used, or is held in reserve for use, wholly or principally for the carriage of passengers or cargo for hire or reward, but does not include:
(a) a ship that is used, or is held in reserve for use, wholly or principally for the provision of services to ships or shipping, whether for reward or otherwise;
(b) a Government ship or ship that is, within the meaning of the Navigation Act 1912, a fishing vessel, an inland waterways vessel, a pleasure craft, an off-shore industry vessel or an off-shore industry mobile unit;
(c) a small craft within the meaning of the Shipping Registration Act 1981 ; or
(d) a ship that is used, or is held in reserve for use, wholly or principally within a harbour. 57AM(2) [Ship used for private or domestic purpose]
For the purposes of this section, a ship that is owned or is leased by a private company and is used at any time for a private or domestic purpose by:
(a) an employee of the company;
(b) a director of the company;
(c) a member of the company; or
(d) a relative of a person referred to in paragraph (a), (b) or (c);
shall be taken to have been used at that time by the company for a purpose other than the purpose of producing assessable income.
57AM(3) [Interpretation of ``acquisition'' and ``depreciated value''](a) a reference to the acquisition of a ship by a person shall be read as including a reference to the construction of the ship for the person by another person or persons; and
(b) a reference to the depreciated value of a ship at the beginning of a year of income shall, if the depreciated value of the ship cannot be ascertained at that time, be read as a reference to the depreciated value of the ship at the first time during that year of income at which that value can be ascertained. 57AM(4) [``Eligible Australian ship'' defined]
For the purposes of this section, a pre-July 1982 ship, a post-July 1982 ship or a new ship owned by a taxpayer shall be taken to be an eligible Australian ship if:
(a) the taxpayer is a resident;
(b) the ship was constructed by, or acquired new by, the taxpayer and is for use by the taxpayer wholly and exclusively for the purpose of producing assessable income;
(ba) in the case of a ship that is a Grants Act ship of the taxpayer - the ship is delivered to the taxpayer, and registered under the Shipping Registration Act 1981, before 1 July 1997;
(c) depreciation is allowable to the taxpayer under section 54 in respect of the ship;
(d) in the case of a ship that is not a Grants Act ship of the taxpayer, the ship, when manned, is manned by persons each of whom is either a resident or a person in relation to whom a certificate issued under subsection (26) is in force;
(e) in the case of a pre-July 1982 ship, the ship:
(i) was, on 29 July 1982, registered under the Shipping Registration Act 1981 and that registration has, at all times since that date, remained in force;
(ii) has not, at any time since that date, been registered in a country other than Australia; and
(iii) has, at all times since the commissioning date of the ship, been owned by the taxpayer;
(f) in the case of a post-July 1982 ship or a new ship, the ship:
(i) was, on the commissioning date of the ship, registered under the Shipping Registration Act 1981 and that registration has, at all times since that date, remained in force;
(ii) has not, at any time since that date, been registered in a country other than Australia; and
(iii) has, at all times since that date, been owned by the taxpayer;
(g) where the ship is on lease to another person:
(i) the other person is a resident; and
(ii) the ship is for use by the other person wholly and exclusively for the purpose of producing assessable income; and
(h) either of the following conditions is satisfied:
(i) the ship is a Grants Act ship of the taxpayer;
(ii) the ship is used, or is held in reserve for use, in operations of a kind specified in a pre-December 1986 manning notice in force in relation to the ship and is not, when manned, manned at a level that exceeds the level specified in the notice for operations of that kind.
For the purposes of this section, but without limiting the generality of subsection (4), where:
(a) a taxpayer has been paid a grant under subsection 8(1) of the Ships (Capital Grants) Act 1987 in respect of a ship;
(b) either of the following conditions is satisfied:
(i) the taxpayer has become liable, under subsection 26(1) of that Act, to pay an amount in respect of the grant;
(ii) before the end of the last year of income in respect of which depreciation ascertained in accordance with this section would, apart from this subsection, be allowable to the taxpayer in respect of the ship, the taxpayer has become liable, under subsection 26(2) of that Act, to repay the amount of the grant; and
(c) the ship was an eligible Australian ship immediately before that liability was incurred;
the ship shall be taken to have ceased to be an eligible Australian ship:
(d) if subparagraph (b)(i) applies - when that liability was incurred; or
(e) if subparagraph (b)(ii) applies - before the end of 12 months after the day on which the ship became an eligible Australian ship.
This section has effect subject to Division 245 of Schedule 2C .
Notwithstanding anything contained in sections 55 and 56 , but subject to subsections 56(2) and (3) and to the provisions of this section, the depreciation allowable under this Act in respect of a ship that is an eligible Australian ship owned by a taxpayer in respect of the year of income in which the eligible date in relation to the ship occurred or a subsequent year of income shall be ascertained in accordance with this section.
A deduction is not allowable pursuant to this section to a taxpayer in respect of a ship unless:
(a) the taxpayer makes an election under subsection (29) in respect of the ship on or before the date of lodgment of his return of income for:
(i) in a case where a deduction would be allowable to the taxpayer in respect of a year of income pursuant to subsection (9) - that year of income; or
(ii) in any other case - the year of income in which the ship became an eligible Australian ship; and
(b) where the ship is on lease to another person - the other person makes an election under subsection (29) in respect of the ship on or before the date of lodgment of his return of income for the year of income:
(i) in a case where the lease was in force on the day on which the ship became an eligible Australian ship - in which that day occurred; or
(ii) in any other case - in which the lease was entered into,
or before such later date as the Commissioner allows.
57AM(7) [Rate of depreciation]The depreciation allowable to a taxpayer under this Act in respect of an eligible Australian ship in respect of the year of income in which the eligible date in relation to the ship occurred or in respect of a subsequent year of income is:
(a) in the case of a new ship, or a post-July 1982 ship, the eligible date in relation to which is the commissioning date of the ship - 20% of the cost of the ship; or
(b) in any other case - 20% of the depreciated value of the ship at the beginning of the year of income in which the eligible date in relation to the ship occurred. 57AM(8) [Loss of eligibility]
If, at any time, an eligible Australian ship ceases to be an eligible Australian ship, depreciation ascertained in accordance with this section is not allowable in respect of the ship in respect of the year of income in which the ship ceases to be an eligible Australian ship or in respect of any subsequent year of income.
57AM(9) [Deduction where ship not yet commissioned](a) a taxpayer is, or is to be, the owner of a ship that has not yet been commissioned (including a ship in the course of construction);
(b) the taxpayer is a resident;
(c) the taxpayer has lodged with the Commissioner a declaration signed by the taxpayer on or before the date of lodgment of his return of income in respect of the year of income (in this subsection referred to as the ``relevant year of income'' ) immediately preceding the year of income in which the taxpayer predicts that the ship will be commissioned (in this subsection referred to as the ``succeeding year of income'' ):
(i) specifying the amount that the taxpayer estimates will be the costof the ship (in this subsection referred to as the ``estimated cost of the ship'' );
(ii) specifying the year of income which will be the succeeding year of income; and
(iii) stating that the taxpayer will take all possible steps to ensure that the ship will become an eligible Australian ship before the expiration of 90 days after the commissioning date of the ship and to ensure that depreciation ascertained in accordance with paragraph (7)(a) will be allowable to the taxpayer in respect of the succeeding year of income and of each of the 3 next succeeding years of income;
(d) the estimated cost of the ship does not exceed the amount that, in the opinion of the Commissioner, will be the cost of the ship;
(e) the Commissioner is satisfied that depreciation ascertained in accordance with paragraph (7)(a) will be allowable to the taxpayer in respect of the ship in respect of the succeeding year of income and of each of the 3 next succeeding years of income; and
(f) the taxpayer has, before the expiration of the relevant year of income, expended moneys in acquiring or constructing the ship,
an amount equal to:
(g) in a case where the amount of the moneys so expended equals or exceeds an amount equal to 20% of the estimated cost of the ship - 20% of the estimated cost of the ship; or
(h) in any other case - the moneys so expended,
is allowable as a deduction to the taxpayer in respect of the relevant year of income.
57AM(10) [Deduction for expenditure in year preceding eligible date](a) a deduction has not been allowed and is not allowable to a taxpayer pursuant to subsection (9) in respect of an eligible Australian ship owned by the taxpayer;
(b) the ship is a new ship the eligible date in respect of which is the commissioning date of the ship; and
(c) the taxpayer had, before the expiration of the year of income (in this subsection referred to as the ``relevant year of income'' ) immediately preceding the year of income (in this subsection referred to as the ``succeeding year of income'' ) during which the eligible date in relation to the ship occurred, expended moneys in acquiring or constructing the ship,
an amount equal to:
(d) in a case where the amount of the moneys so expended equals or exceeds an amount equal to 20% of the cost of the ship - 20% of the cost of the ship; or
(e) in any other case - the moneys so expended,
is allowable as a deduction to the taxpayer in respect of the relevant year of income.
57AM(11) [Deduction for expenditure in year preceding eligible date on ship commissioned before 1 July 1983](a) the eligible date in respect of a post-July 1982 ship owned by a taxpayer is the commissioning date of the ship;
(b) the ship (being a ship the commissioning date of which occurred before 1 July 1983) is not a ship:
(i) the construction of which by the taxpayer commenced before 29 July 1982; or
(ii) that was acquired by the taxpayer under a contract entered into before 29 July 1982; and
(c) the taxpayer had, before the expiration of the year of income (in this subsection referred to as the ``relevant year of income'' ) immediately preceding the year of income (in this subsection referred to as the ``succeeding year of income'' ) during which the eligible date in relation to the ship occurred, expended moneys in acquiring or constructing the ship,
an amount equal to:
(d) in a case where the amount of the moneys so expended equals or exceeds an amount equal to 20% of the cost of the ship - 20% of the cost of the ship; or
(e) in any other case - the moneys so expended,
is allowable as a deduction to the taxpayer in respect of the relevant year of income.
57AM(12) [Deduction deemed to be depreciation]A deduction allowed or allowable to a taxpayer in respect of a ship pursuant to subsection (9), (10) or (11) shall, for the purposes of this Act other than subsection (7), be taken to be an amount of depreciation allowed or allowable to the taxpayer in respect of the ship.
57AM(13) [No deduction under subsec (9) where depreciation not allowable](a) a deduction (in this subsection referred to as the ``relevant deduction'' ) has been allowed or would, but for this subsection, be allowable to a taxpayer pursuant to subsection (9) in respect of a ship in respect of a year of income; and
(b) depreciation ascertained in accordance with paragraph (7)(a) is not allowable to the taxpayer in respect of the ship in respect of the next succeeding year of income,
the relevant deduction shall be taken not to be allowable and never to have been allowable to the taxpayer.
57AM(14) [Variation to deduction under subsec (9) where estimate of cost incorrect]Where a deduction (in this subsection referred to as the ``relevant deduction'' ) has been allowed or would, but for this subsection, be allowable to a taxpayer pursuant to subsection (9) in respect of a ship in respect of a year of income (in this subsection referred to as ``the relevant year of income'' ) and:
(a) in a case where the relevant deduction was allowed or would be allowable pursuant to paragraph (9)(g):
(i) the amount that the taxpayer estimated, for the purposes of subsection (9), would be the cost of the ship (in this subsection referred to as the ``estimated cost of the ship'' ) exceeds the cost of the ship; or
(ii) the estimated cost of the ship is less than the cost of the ship and the amount of the moneys expended referred to in that paragraph is greater than an amount equal to 20% of that estimated cost; or
(b) in a case where the relevant deduction was allowed or would be allowable pursuant to paragraph (9)(h) - the estimated cost of the ship exceeds the cost of the ship and the amount of the moneys expended referred to in that paragraph exceeds an amount equal to 20% of the cost of the ship,
the relevant deduction shall be taken not to be allowable and never to have been allowable to the taxpayer and an amount equal to:
(c) in a case to which subparagraph (a)(i) applies - 20% of the cost of the ship;
(d) in a case to which subparagraph (a)(ii) applies - 20% of the cost of the ship or the amount of the moneys expended, whichever is the less; or
(e) in a case to which paragraph (b) applies - 20% of the cost of the ship,
shall be taken to be allowable as a deduction to the taxpayer pursuant to subsection (9) in respect of the ship in respect of the relevant year of income.
57AM(15) [Loss of eligibility within 12 months]This section does not apply, and shall be taken never to have applied, in relation to an eligible Australian ship owned by a taxpayer if, before the expiration of 12 months after the day on which the ship became an eligible Australian ship, the ship ceased to be an eligible Australian ship.
57AM(16) [Depreciation where taxpayer intends ship to become ineligible](a) depreciation ascertained in accordance with this section has been allowed, or would but for this subsection be allowable, in respect of an eligible Australian ship owned by a taxpayer;
(b) after the expiration of 12 months after the day on which the ship became an eligible Australian ship and before the expiration of the last year of income in respect of which depreciation ascertained in accordance with this section would, but for this subsection, be allowable to the taxpayer in respect of the ship, the ship ceased to be an eligible Australian ship; and
(c) the Commissioner is satisfied that, at the time when the ship became an eligible Australian ship, the taxpayer intended that the ship would cease to be an eligible Australian ship during the period referred to in paragraph (b),
any depreciation ascertained in accordance with this section shall, if the Commissioner so determines, be taken not to have been, or not to be, allowable, as the case may be.
57AM(17) [No loss of eligibility where disposal to related company]Subsection (15) does not apply in relation to a ship ceasing to be an eligible Australian ship by reason of the disposal of the ship by a taxpayer being a company, being a disposal occurring before the expiration of the period of 12 months after the day on which the ship became an eligible Australian ship, if -
(a) the disposal by the taxpayer was to another company (in this subsection referred to as the ``transferee'' ) that was, at the time of the disposal, related to the taxpayer;
(b) the ship was not, at any time (in this paragraph referred to as the ``relevant time'' ) during that period of 12 months, owned by a person other than -
(i) in a case where the transferee was the holding company of the taxpayer - the transferee or a company related to the transferee at the relevant time;
(ii) in a case where the transferee was a wholly-owned subsidiary of the taxpayer - the taxpayer or a company related to the taxpayer at the relevant time;
(iii) in a case where the transferee was a wholly-owned subsidiary of another company (in this subparagraph referred to as the ``holding company'' ) of which the taxpayer was also a wholly-owned subsidiary - the holding company or a company related to the holding company at the relevant time; or
(iv) in a case where the transferee was a wholly-owned subsidiary of other companies (in this subparagraph referred to as the ``parent companies'' ) of which the taxpayer was also a wholly-owned subsidiary - a company that, at the relevant time, was a wholly-owned subsidiary of the parent companies; and
(c) at any time during that period of 12 months when the ship was owned by -
(i) in a case where the transferee was the holding company of the taxpayer - the transferee;
(ii) in a case where the transferee was a wholly-owned subsidiary of the taxpayer - the taxpayer; or
the transferee, the taxpayer, or that other company, as the case may be, was an eligible public company in relation to the year of income in which that time occurred. 57AM(18) [Eligibility where court dissolves company]
(iii) in a case where the transferee was a wholly-owned subsidiary of another company of which the taxpayer was also a wholly-owned subsidiary - that other company,
(a) pursuant to an order of a court made under the law of a State or Territory relating to companies -
(i) the whole of the undertaking, property and liabilities of a company (in this subsection referred to as the ``relevant company'' ) is vested in another company (in this subsection referred to as the ``substituted company'' );
(ii) the persons who beneficially owned shares in the relevant company become the beneficial owners of all of the shares in the substituted company without reduction in their respective interests; and
(iii) the relevant company is dissolved; and
(b) for the purpose of the application of subsection (17), the relevant company is the transferee referred to in subparagraph (17)(b)(i), the taxpayer referred to in subparagraph (17)(b)(ii), the holding company referred to in subparagraph (17)(b)(iii) or one of the parent companies referred to in subparagraph (17)(b)(iv),
paragraphs (17)(b) and (c) apply, in relation to any time after the time when the conditions specified in paragraph (a) of this subsection were satisfied, as if the substituted company were the transferee, the taxpayer, that holding company or that parent company, as the case may be.
57AM(19) [Interpretation]Subsections 82AJA(3), (4), (5), (6), (7) and (8) apply for the purposes of the interpretation of subsections (17) and (18).
57AM(20) [Request for manning notice]A person who is, or is to be, the owner of a ship (including a ship in the course of construction or a ship the construction of which has not yet commenced), or a person authorized for the purpose by the first-mentioned person may, by notice in writing given to the Secretary, request the Secretary to give a manning notice in relation to the ship.
57AM(21) [Details to be included in request]A request pursuant to subsection (20) or (23) in relation to a ship shall include a statement setting out -
(a) the specifications of the ship (including a plan of the accommodation layout of the ship);
(b) details of the kinds of operations in which the ship is, or is to be, engaged; and
(c) the number of officers of specified designations and the number of members of the crew of specified designations with which the ship is being, or is proposed to be, manned while engaged in each of the kinds of operations referred to in paragraph (b). 57AM(22) [Secretary to give opinion on manning]
The Secretary shall, after receiving a request made pursuant to subsection (20) in relation to a ship, give a notice in writing by post to the person who made the request setting out, in relation to each kind of operations in which the ship is, or is to be, engaged, the number of officers and members of the crew with which the ship should, in the opinion of the Secretary, be manned to enable the ship to be operated in a safe and efficient manner while engaged in operations of that kind.
A person who is, or is to be, the owner of a ship (including a ship in the course of construction or a ship the construction of which has not yet commenced) in relation to which a manning notice is in force, or a person authorized for the purpose by the first-mentioned person, may, by notice in writing given to the Secretary, request the Secretary to vary the manning notice and, where the Secretary receives such a request and is satisfied that the manning notice in force in relation to the ship is no longer appropriate by reason of -
(a) a proposed change in the operations in which the ship is, or is to be, engaged; or
(b) a proposed modification of the ship,
the Secretary shall give a notice in writing by post to the person who made the request varying the manning notice.
A manning notice or notice of a variation of a manning notice shall be given by the Secretary before the expiration of 70 days after -
(a) in a case where notice of the request pursuant to subsection (20) or (23), as the case may be, is given to the Secretary before the commissioning date of the ship - the commissioning date of the ship; or
(b) in any other case - the day on which notice of the request pursuant to subsection (20) or (23), as the case may be, is given to the Secretary. 57AM(25) [Operative date of manning notice]
A manning notice or a variation of a manning notice comes into force on the day on which the notice or notice of the variation, as the case may be, is given.
57AM(26) [Certificate authorising employment of non-resident]Where the Secretary is satisfied that -
(a) a person possessing particular skills is required to be employed or engaged on a trading ship at a particular time; and
(b) a resident possessing those skills is not available to be employed or engaged on the ship at that time,
the Secretary may, on application in writing made to him by the owner or lessee of the ship or by a person authorized for the purpose by the owner or lessee, being an application that specifies a particular person (not being a resident) who possesses those skills, issue to the person who made the application a certificate authorizing the employment or engagement on the ship of that person for a specified period.
57AM(27) [Expiration of certificate]A certificate issued under subsection (26) ceases to be in force at the expiration of the period specified for the purpose in the certificate.
57AM(28) [Period of certificate]In specifying a period in a certificate issued under subsection (26), the Secretary shall have regard to the likelihood of a resident with the particular skills required becoming available to be employed or engaged on the ship concerned.
57AM(29) [Election that income assessable]A taxpayer may make an election that all income derived by the taxpayer from the use by the taxpayer of a particular ship will be assessable income for the purposes of this Act.
57AM(30) [Section 23(r) not to apply]Where a taxpayer makes an election under subsection (29), paragraph 23(r) shall be taken not to apply and never to have applied in relation to income derived by the taxpayer from the use by the taxpayer of the ship during any year of income in respect of which depreciation ascertained in accordance with this section has been allowed or is allowable to the taxpayer or to another person in respect of the ship.
In subsections (29) and (30), a reference to income derived by a taxpayer from the use of a ship shall be read as including a reference to income derived by the taxpayer from the granting of a lease of the ship.
57AM(32)(Omitted by No 101 of 1992)
(a) a taxpayer leases to another person (in this subsection referred to as the ``lessee'' ) a trading ship acquired by the taxpayer from the lessee;
(b) the commissioning date of the ship occurred on or after 29 July 1977;
(c) the ship was constructed or acquired new by the lessee and had, since its commissioning date and prior to its being acquired by the taxpayer, been owned by the lessee;
(d) the period between the commissioning date of the ship and the date on which it was acquired by the taxpayer did not exceed 6 months;
(e) the Commissioner is satisfied that the acquisition or construction of the ship by the lessee, the acquisition of the ship by the taxpayer from the lessee and the leasing of the ship by the taxpayer to the lessee occurred in pursuance of a contract or arrangement entered into at arm's length;
(f) in the case of a pre-July 1982 ship, the ship -
(i) was, on 29 July 1982, registered under the Shipping Registration Act 1981 and that registration has, at all times since that date, remained in force;
(ii) has not, at any time since that date been registered in a country other than Australia; and
(iii) has, at all times since it was acquired by the taxpayer, been owned by the taxpayer; and
(g) in the case of a post-July 1982 ship or a new ship, the ship -
(i) was, on the commissioning date of the ship, registered under the Shipping Registration Act 1981 and that registration has, at all times since that date, remained in force;
(ii) has not, at any time since that date been registered in a country other than Australia; and
(iii) has, at all times since it was acquired by the taxpayer, been owned by the taxpayer,
then -
(h) for the purposes of this section, the ship shall be taken to have been acquired new by the taxpayer and the commissioning date of the ship shall be taken to be the date on which the taxpayer acquired the ship from the lessee;
(ha) if the lessee is or was entitled to a grant in respect of the ship under subsection 8(1) of the Ships (Capital Grants) Act 1987 :
(i) the ship shall be treated, for the purposes of this section, as if it were a Grants Act ship of the taxpayer;
(ii) paragraph (4)(ba) applies in relation to the ship as if the second referencein that paragraph to the taxpayer were a reference to the lessee; and
(iii) subsection (4A) applies in relation to the ship as if a reference in paragraph (a) of that subsection to the taxpayer were a reference to the lessee; and
(j) a deduction pursuant to subsection (9), (10) or (11) is not allowable in respect of the ship.
For the purpose of ascertaining the depreciation allowable to a taxpayer pursuant to this section in respect of an eligible Australian ship, where -
(a) the amount that, but for this subsection, would be the cost of the ship for the purposes of this section is attributable, in whole or in part, to a transaction to which the taxpayer was a party; and
(b) the Commissioner is satisfied that -
(i) having regard to any connection between any 2 or more of the parties to the transaction and to any other relevant circumstances, those parties were not dealing with each other at arm's length in relation to the transaction; and
(ii) the amount that, but for this subsection, would be the cost of the ship for the purposes of this section is greater than the amount (in this subsection referred to as the ``arm's length amount'' ) that would have been the cost of the ship for the purposes of this section if the parties to the transaction had dealt with each other at arm's length in relation to the transaction,
the arm's length amount shall be taken to be the cost of the ship for the purposes of this section.
[ CCH Note: With reference to s 53I(1) and (2), s 54 to 62AAV have limited continued application for the purposes of the operation of s 57AM.]
(Repealed by No 28 of 1952)
This section applies to the disposal of a unit of property by a taxpayer (in this section called the ``transferor'' ) to another taxpayer (in this section called the ``transferee'' ) if:
(a) either:
(i) in a case where the transferor is not a partnership - section 160ZZM , 160ZZMA , 160ZZN or 160ZZO applies to the disposal of the property by the transferor; or
(ii) if the transferor is a partnership - the property is partnership property of the partnership and section 160ZZNA applies to the corresponding disposal, by all of the partners in the partnership, of their interests in the property; and
(b) subject to subsection (7A), depreciation has been allowed, or is allowable, to the transferor in respect of the property.
This section also applies if a joint election for roll-over relief is made under section 59AA by both the transferor and the transferee referred to in that section in relation to the disposal of a unit of property.
58(3) No balancing charges or deductions.Section 59 (which deals with balancing charges and deductions) does not apply to the disposal of the property by the transferor.
58(4) Transferee to inherit certain characteristics from transferor.The provisions of this Act relating to depreciation apply as if:
(a) if the depreciation allowable to the transferor in respect of the property for the year of income in which the disposal occurred was calculated in accordance with paragraph 56(1)(a) :
(i) the transferee were not entitled to make an election under subsection 56(1AA) in relation to the property; and
(ii) the transferee had acquired the unit of property for a consideration equal to the depreciated value of the property immediately before the time of disposal (worked out on the assumption that subsection 60(2) had not been enacted); and
(b) if:
(i) the depreciation allowable to the transferor in respect of the property for the year of income in which the disposal occurred was calculated in accordance with paragraph 56(1)(b) ; or
then:
(ii) both:
(A) the depreciation allowable to the transferor in respect of the property for the year of income in which the disposal occurred was calculated in accordance with section 57AK or 57AM ; and
(B) neither section 57AK nor 57AM applied to the transferee in respect of the property;
(iii) the transferee had made an election under subsection 56(1AA) in relation to the property; and
(iv) the transferee had acquired the unit of property for a consideration equal to the cost of the unit to the transferor; and
(v) depreciation were not allowable to the transferee in respect of:
(A) so much of the cost of the property as was allowed or allowable to the transferor in respect of depreciation in relation to the property (worked out as if section 61 had not been enacted); or
(B) if there have been 2 or more prior successive applications of this section - so much of the cost of the property as was allowed or allowable to the prior successive transferors in respect of depreciation in relation to the property (worked out as if section 61 had not been enacted); and
(vi) the depreciated value of the property at a time when the property was owned by the transferee were worked out as if the total of:
(A) the amounts allowed or allowable to the transferor in respect of depreciation in relation to the property; andwere taken to have been amounts allowed or allowable to the transferee in respect of depreciation in relation to the property; and
(B) if there have been 2 or more prior successive applications of this section - the amounts allowed or allowable to the prior successive transferors in respect of depreciation in relation to the property;
(c) the effective life of the property worked out under section 54A in relation to the transferor were the effective life of the property worked out under that section in relation to the transferee; and
(d) if step 2 in section 55 applied to the transferor in relation to the property in relation to the year of income in which the disposal occurred - that step has effect, in relation to the transferee in relation to the property, as if the transferee had acquired the property before 1 July 1995.
If section 57AK (which deals with iron or steel production) applied to the transferor in relation to the property in relation to the year of income of the transferor in which the time of the disposal occurred, then:
(a) section 57AK has effect, in relation to the transferee and in relation to the property, as if:
(i) the conditions set out in paragraphs 57AK(1)(b) and (c) that were satisfied in relation to the transferor were satisfied in relation to the transferee; and
(ii) subsection 57AK(8) had not been enacted; and
(b) if section 57AK applies to the transferee in relation to the property - the provisions of this Act relating to depreciation apply as if:
(i) the transferee had acquired the unit of property for a consideration equal to the cost of the unit to the transferor; and
(ii) depreciation were not allowable to the transferee in respect of:
(A) so much of the cost of the property as was allowed or allowable to the transferor in respect of depreciation in relation to the property (worked out as if section 61 had not been enacted); or
(B) if there have been 2 or more prior successive applications of this section - so much of the cost of the property as was allowed or allowable to the prior successive transferors in respect of depreciation in relation to the property (worked out as if section 61 had not been enacted); and
58(6) Pro-rating of depreciation.
(iii) the depreciated value of the property at a time when the property was owned by the transferee were worked out as if the total of:
(A) the amounts allowed or allowable to the transferor in respect of depreciation in relation to the property; andwere taken to have been amounts allowed or allowable to the transferee in respect of depreciation in relation to the property.
(B) if there have been 2 or more prior successive applications of this section - the amounts allowed or allowable to the prior successive transferors in respect of depreciation in relation to the property;
Subsection 56(1A) (which deals with pro-rating) applies to the transferor and transferee in relation to the year of income in which the disposal occurred as if a reference to depreciation allowable in accordance with subsection 56(1) in respect of the property included a reference to depreciation allowable otherwise than in accordance with subsection 56(1) .
58(7) Disposal by transferee where no roll-over relief - inheritance of deductions.(a) after the disposal of the property to the transferee, the property is lost or destroyed or the transferee disposes of the property; and
(b) in the case of a disposal by the transferee - this section does not apply to the disposal;
then, for the purposes of the application of subsection 59(2) in relation to the loss, destruction or disposal, the total of:
(c) the amounts allowed or allowable to the transferor in respect of depreciation in relation to the property; and
(d) if there have been 2 or more prior successive applications of this section - the amounts allowed or allowable to the prior successive transferors in respect of depreciation in relation to the property;
are taken to have been amounts allowed or allowable to the transferee in respect of depreciation in relation to the property.
58(7A) Second or subsequent application of section - paragraph (1)(b) does not apply.If, apart from this subsection, this section has applied to the disposal of the property to the transferee, then, in working out whether this section applies to a subsequent disposal of the property by:
(a) the transferee; or
(b) one or more subsequent successive transferees;
this section has effect as if paragraph (1)(b) (which deals with deductions for depreciation) had not been enacted.
For the purposes of this section, in addition to the effect that sections 160ZZM , 160ZZMA , 160ZZN , 160ZZNA and 160ZZO have apart from this subsection, those sections also have the effect that they would have if a reference in those sections to an asset included a reference to a motor vehicle of a kind covered by paragraph 82AF(2)(a) .
This section has effect subject to Division 245 of Schedule 2C .
Where any property of a taxpayer, in respect of which depreciation has been allowed or is allowable under this or the previous Act, is disposed of, lost or destroyed at any time in the year of income, the depreciated value of the property at that time, less the amount of any consideration receivable in respect of the disposal, loss or destruction, shall be an allowable deduction.
59(2) [Consideration exceeds depreciated value]If that consideration exceeds that depreciated value, the excess, to the extent of the sum of the amounts allowed and allowable in assessments for income tax under this Act and any previous law of the Commonwealth in respect of depreciation, shall, subject to the succeeding provisions of this section, be included in his assessable income of that year.
For the purposes of the application of subsection (2), any amount by which consideration receivable under firearms surrender arrangements exceeds the depreciated value of a surrendered item of property is not assessable income and not exempt income of the taxpayer.
Note:
Firearms surrender arrangements has the meaning given by subsection 6(1) .
Subject to subsection (2AB), for the purposes of the application of subsection (2) to property of a taxpayer in respect of which a deduction or deductions has or have been allowed to the taxpayer under section 73B :
(a) except in a case to which paragraph (b) applies - the difference between the cost of that property for the purposes of that section and the written-down value of that property for the purposes of that section shall be deemed to be an amount allowed under this Act in respect of depreciation; or
(b) in a case where subsection 73B(6) applied to the property - the difference between the amount that would, apart from that subsection, have been the cost of the property for the purposes of that section and the written-down value of the property for the purposes of that section shall be deemed to be an amount allowed under this Act in respect of depreciation,
but the amount of that difference shall not be taken into account in determining the depreciated value of the property.
(a) property of a taxpayer was acquired as the result of a disposal to which section 58 or 73E applied; and
(b) either:
(i) a deduction or deductions has or have been allowed or allowable to the transferor concerned under section 73B in relation to the property; or
(ii) if the disposal of the property to the taxpayer was the last of a series of 2 or more successive transfers of the property to which either one of section 58 or 73E has applied (whether alternately or otherwise) - a deduction or deductions has or have been allowed or allowable to any of the prior successive transferors under section 73B in relation to the property;
then, for the purposes of the application of subsection (2) of this section to the property, the amount worked out using the following formula is taken to have been an amount allowed to the taxpayer in respect of depreciation in relation to the property:
|
Transferor's
original cost |
- |
Modified written-
down value |
where:
``Transferor's original cost'' means:
``Modified written-down value'' means the amount that would have been the written-down value of the property to the taxpayer for the purposes of section 73B if:
Where an amount, being the whole or a part of the consideration receivable in respect of the disposal, loss or destruction of a unit of property in the year of income (in this subsection referred to as ``the balancing charge'' ) would, but for this subsection, be included in the assessable income of the taxpayer under subsection (2), the taxpayer may elect, on or before the date of lodgment of the return of income of the year of income, or within such further time as the Commissioner allows, in lieu of including the balancing charge in the assessable income, successively to reduce -
(a) the cost, for the purpose of calculating depreciation allowable under this Act, of any unit of property acquired by the taxpayer during the year of income to replace the unit of property so disposed of, lost or destroyed;
(b) the cost, for the purpose of calculating depreciation allowable under this Act, of any other unit of property acquired by the taxpayer during the year of income; and
(c) the depreciated values, at the beginning of the year of income, of other units of property,
by such amounts as do not exceed, in the aggregate, the balancing charge.
The cost or depreciated value of a unit of property shall not be reduced under subsection (2A) unless -
(a) at the end of the year of income the unit is used wholly for the purpose of producing assessable income or has been installed ready for use wholly for that purpose and is held in reserve; and
(b) depreciation under this Act is allowable to the taxpayer in respect of the unit.
Where an amount which would, but for subsection (2A), be included in the assessable income of the taxpayer of the year of income under subsection (2) exceeds the sum of reductions made under subsection (2A), the amount of that excess shall be included in his assessable income of the year of income.
Where, during a year of income not later than the second year of income after the year of income in which a unit of property is disposed of, lost or destroyed, a taxpayer acquires, to replace that unit, a unit of property which, at the end of the year of income, is used wholly for the purpose of producing assessable income, or has been installed ready for use wholly for that purpose and is held in reserve, and the taxpayer has not made a request under subsection (2A) in relation to that disposal, loss or destruction, the taxpayer may elect not later than the date of lodgment of the return of income of the first-mentioned year or within such further time as the Commissioner allows, to:
(a) exclude from the assessable income of the year of income in which the property was disposed of, lost or destroyed so much of the amount that would otherwise be included in that assessable income under subsection (2) by reason of the disposal, loss or destruction as does not exceed the cost of the unit of property so acquired; and
(b) reduce by an amount equal to the amount so excluded the cost, for the purpose of calculating depreciation allowable under this Act, of the unit of property so acquired.
An amount by which the cost or depreciated value of a unit of property has been reduced in pursuance of subsection (2A) or (2D) shall, for all purposes of this Act, be deemed to be depreciation which has been allowed in respect of that unit in the assessment in which the reduction was made.
Subject to subsections (4) and (6), the consideration receivable in respect of the disposal, loss or destruction means:
(a) in the case of a sale of the property - the sale price less the expenses of the sale of the property;
(b) in the case of loss or destruction of the property - the amount or value received or receivable under a policy of insurance or otherwise in respect of the loss or destruction;
(c) in the case where the property is sold with other assets and no separate value is allocated to the property - the amount determined by the Commissioner;
(d) in the case where property is disposed of otherwise than by sale - the value, if any, of the property at the date of disposal.
Where, in a case where the property is disposed of by the taxpayer by sale to another person:
(a) it would be concluded that, having regard to any connection between the taxpayer and that other person and to any other relevant circumstances, the taxpayer and that other person were not dealing with each other at arm's length in relation to the disposal; and
(b) the amount receivable by the taxpayer in respect of the disposal was less than the market value of the property immediately before the time of disposal;
the consideration receivable by the taxpayer in respect of the disposal of the property shall be deemed to be the market value of the property immediately before the time of disposal.
(Omitted by No 35 of 1992)
For the purposes of the application of subsection (4) in relation to property disposed of by a taxpayer:
(a) the reference in that subsection to the amount receivable by the taxpayer in respect of the disposal shall be read as a reference to:
(i) in the case of a sale of the property to which subparagraph (ii) does not apply - the sale price less the expenses of the sale of the property; or
(ii) in the case where the property is sold with other assets and no separate value is allocated to the property - the amount determined by the Commissioner; and
(b) a reference to the market value of the property at a particular time shall, if there is insufficient evidence of the market value at that time, be read as a reference to such amount as, in the opinion of the Commissioner, is fair and reasonable.
Where section 57AF has applied for the purpose of calculating the depreciation allowable in respect of a unit of property owned by a taxpayer that is disposed of, lost or destroyed, the consideration receivable in respect of the disposal, loss or destruction of the unit of property for the purposes of this section shall be deemed to be the amount calculated in accordance with the formula
|
AB
,
C |
where:
A is the consideration receivable, as ascertained in accordance with subsection (3) of this section (as affected by subsection 57AF(10) ) or subsection (4) of this section or in accordance with section 59AA , as the case requires, in respect of that disposal, loss or destruction;
B is the motor vehicle depreciation limit applicable in relation to the property in accordance with section 57AF ;
C is:
(a) depreciation of a car has been allowed, or is allowable, as a deduction to a taxpayer in respect of a period, or each of 2 or more periods; and
(b) the taxpayer has chosen a relevant method (see subsection (7)) for the car for a year of income or each of 2 or more years of income; and
(c) the car is disposed of, lost or destroyed at a particular time ( ``the disposal time'' ). 59AAA(1A) [Commercial debt forgiveness]
This section has effect subject to Division 245 of Schedule 2C .
For the purposes of section 59 (Disposal, loss or destruction of depreciated property), the car's depreciated value at the disposal time is the amount ( ``the notional amount'' ) that, in the Commissioner's opinion, would have been that depreciated value at that time if:
(a) the taxpayer had not chosen a relevant method for the car for the year of income, or any of the years of income, referred to in paragraph (1)(b); and
(b) the car expense deduction and substantiation rules (see subsection (8)) did not apply, and had never applied, in relation to depreciation of the car in respect of that year of income or any of those years of income. 59AAA(3) [Deemed use for purpose of producing assessable income]
In applying section 56 (Calculation of depreciation) to determine the notional amount, the taxpayer's use of the car during the year of income, or any of the years of income, referred to in paragraph (1)(b) is taken to have been for the purpose of producing the taxpayer's assessable income.
59AAA(4) [Use of car]In applying section 61 (Property used partly for producing assessable income) to determine the notional amount, the taxpayer's use of the car during the year of income, or any of the years of income, referred to in paragraph (1)(b) is taken to have been:
(a) if the taxpayer used the cents per kilometre method of deducting car expenses for the car for the year of income concerned - to the extent of 20%; or
(b) if the taxpayer used the 12% of original value method - to the extent of one-third; or
(c) if the taxpayer elected that subsection 82KW(3) apply in relation to the car in relation to the year of income concerned - to the extent of one-third; or
(d) if the taxpayer elected that subsection 82KX(1) apply - to the extent of 20%;
for the purpose of producing the taxpayer's assessable income.
59AAA(5) [Balancing amount]The amount ( ``the balancing amount'' ) that, under section 59 (Disposal, loss or destruction of depreciated property), is allowable as a deduction to the taxpayer, or is included in the taxpayer's assessable income, as appropriate, must be reduced if the Commissioner considers it reasonable to do so. The amount may be reduced to zero.
59AAA(6) [Reduction of balancing amount]In deciding whether to reduce the balancing amount, or by how much to reduce it, the Commissioner must have regard to the proportion that the period, or the total of the periods, referred to in paragraph (1)(a) bears to the total of:
(a) that period or those periods; and
(b) the year or years of income referred to in paragraph(1)(b). 59AAA(7) [Election of relevant method]
A taxpayer chooses a relevant method for a car for a year of income if the taxpayer:
(a) uses the cents per kilometre method of deducting car expenses for the car for that year of income; or
(b) uses the 12% of original value method; or
(c) elects that subsection 82KW(3) apply in relation to the car in relation to the year of income; or
(d) elects that subsection 82KX(1) apply. 59AAA(8) [Deduction and substantiation rules]
The car expense deduction and substantiation rules are:
(a) Divisions 28 and 900 of the Income Tax Assessment Act 1997 ; or
(b) Subdivision GA of this Division and Schedules 2A and 2B to this Act; or
(c) Subdivision F of this Division;
as appropriate.
If, for any reason, including:
(a) the formation or dissolution of a partnership; or
(b) a variation in the constitution of a partnership, or in the interests of the partners;
a change has occurred in the ownership of, or in the interests of persons in, property in respect of which depreciation has been allowed or is allowable under this Act or the previous Act, and the person, or one or more of the persons, who owned the property before the change has or have an interest in the property after the change, the provisions of this Act relating to depreciation apply as if the person or persons who owned the property before the change (in this section called the ``transferor'' ) had, on the day on which the change occurred, disposed of the whole of the property to the person, or all the persons, by whom the property is owned after the change (in this section called the ``transferee'' ).
Unless a joint election for roll-over relief is made by both the transferor and the transferee, the provisions of this Act relating to depreciation apply as if the consideration for the disposal were equal to the market value of the property immediately before the time when the change occurred.
If a joint election for roll-over relief is made by both the transferor and the transferee, section 58 applies to the disposal.
[ CCH Note: S 71(12) of No 35 of 1992 provides that a reference in s 59AA to s 58 includes a reference to s 71 of that Act. For s 71 of No 35 of 1992, see note under s 58.]
A joint election for roll-over relief has no effect unless it:
(a) is in writing; and
(b) is made:
(i) within 6 months after the later of the following:
(A) the end of the year of income of the transferee in which the disposal occurred;
(B) the commencement of this subsection; or
(ii) within such further period as the Commissioner allows; and
(c) contains such information about the transferor's holding of the property as will enable the transferee to work out how section 58 will apply to the transferee's holding of the property.
[ CCH Note: S 71(12) of No 35 of 1992 provides that a reference in s 59AA to s 58 includes a reference to s 71 of that Act. For s 71 of No 35 of 1992, see note under s 58.]
If a person dies before the end of the period allowed for making a joint election for roll-over relief, the trustee of the deceased person's estate may be a party to the election on the deceased person's behalf.
A reference in subsection (2) to the market value of property at a particular time shall, if there is insufficient evidence of the market value of the property at that time, be read as a reference to such amount as, in the opinion of the Commissioner, is fair and reasonable.
Subsection (2) has effect subject to section 57AF .
This section applies to a taxpayer where -
(a) assets of a business carried on by -
(i) the taxpayer;
(ii) a partnership in which the taxpayer is a partner; or
are disposed of, lost or destroyed and, in consequence of their disposal, loss or destruction, that business ceases to be so carried on;
(iii) the trustee of a trust estate to a share of the net income of which the taxpayer (not being a person under a legal disability) is presently entitled,
(b) those assets include units of property in respect of which depreciation has been allowed or is allowable under this Act or the previous Act; and
(c) an amount (in this section referred to as ``the balancing charge'' ) is included in the assessable income of the year of income of the taxpayer, partnership or trust estate, as the case may be, under subsection 59(2) in consequence of the disposal, loss or destruction of those assets,
but does not apply in relation to an assessment of the taxpayer in accordance with section 99A or where -
(d) the taxpayer is a company, except where, in respect of the whole or a part of the balancing charge, it is assessable as a trustee;
(e) the provisions of Division 16 are applied in the assessment of the taxpayer; or
(f) the taxpayer has, in relation to that disposal, loss or destruction, made a request in pursuance of subsection 59(2A) or (2D) .
For the purposes of this section, a part of the assessable income of a taxpayer to whom this section applies shall be deemed to be abnormal income, and that part shall be ascertained as follows: -
(a) where the assets disposed of, lost or destroyed were assets of a business carried on by a taxpayer otherwise than in partnership or as the trustee of a trust estate, the abnormal income is the amount of the balancing charge;
(b) where the assets disposed of, lost or destroyed were assets of a business carried on by a partnership of which the taxpayer is a partner, the abnormal income is so much of the balancing charge as is included in the individual interest of the taxpayer in the net income of the partnership; and
(c) where the assets disposed of, lost or destroyed were assets of a business carried on by the trustee of a trust estate, the abnormal income is -
(i) for the purposes of an assessment of the trustee under any of the provisions of Division 6 - so much of the balancing charge as is included in the amount of the net income of the trust estate to which the assessment relates; and
(ii) for the purposes of the assessment of a taxpayer who is a beneficiary in the trust estate - so much of the balancing charge as is included in the share of the net income of the trust estate to which he is presently entitled.
A taxpayer to whom this section applies may, on or before the date of lodgment of his return of income in respect of the year of income or within such further time as the Commissioner allows, apply in writing to the Commissioner for the determination under this section of a notional income in respect of the year of income.
59AB(4) [Notional income for Rating Act purposes]Where a taxpayer makes an application to the Commissioner in accordance with subsection (3), the succeeding provisions of this section apply for the determination of a notional income for the purpose of any Act that fixes a rate or rates of income tax by reference to a notional income.
Subject to subsection (7), where the taxable income of the taxpayer is greater than his abnormal income, the notional income is the amount ascertained by deducting from the taxable income an amount equal to two-thirds of the abnormal income.
Subject to subsection (7), where the taxable income of the taxpayer is not greater than his abnormal income, the notional income is an amount equal to one-third of the taxable income.
Where section 86 applies in respect of the taxpayer, the notional income is, in lieu of the notional income determined in accordance with that section -
(a) where the notional income determined in accordance with that section is greater than the abnormal income of the taxpayer - the amount ascertained by deducting from the notional income so determined an amount equal to two-thirds of the abnormal income; or
(b) where the notional income determined in accordance with that section is not greater than the abnormal income of the taxpayer - an amount equal to one-third of the notional income so determined.
(Repealed by No 65 of 1957)
Where, either before or after the commencement of this Act, a person has acquired any property in respect of which depreciation has been allowed or is allowable under this or the previous Act, he shall not be entitled to any greater deduction for depreciation than that which would have been allowed to the person from whom the property was acquired if that person had retained it:
For the purposes of subsection (1), an amount that would, but for subsection 59(2A) or (2D) , be included in the assessable income of the person selling the property shall be deemed to have been so included.
This section does not apply where the Commissioner is of the opinion that the circumstances are such that depreciation in respect of the property should be calculated without regard to this section.
Where the use of any property by the taxpayer has been only partly for the purpose of producing assessable income, only such part of the deduction otherwise allowable under section 54 or section 59 in respect of that property as in the opinion of the Commissioner is proper shall be an allowable deduction.
61(2) [Tax exempt entities]This section has effect subject to section 61A .
(a) at a particular time, all of the income of a taxpayer is wholly exempt from income tax; and
(b) immediately after that time, the taxpayer's income becomes to any extent assessable income;
then:
(c) the taxpayer is a transition taxpayer ; and
(d) the time when the taxpayer's income becomes to that extent assessable is the transition time ; and
(e) the year of income in which the transition time occurs is the transition year for the taxpayer. 61A(2) Deduction for depreciation.
A deduction allowable to the transition taxpayer for any period after the transition time for depreciation under this Subdivision in respect of a unit of property that was owned by the transition taxpayer at the transition time is to be worked out in accordance with subsections (3) to (9).
61A(3) Ownership of unit.If the unit was acquired by the transition taxpayer from an exempt government entity:
(a) assume that the transition taxpayer acquired the unit at the time when it was acquired or constructed by the entity; or
(b) where the unit had, before its acquisition by the transition taxpayer, been successively owned by 2 or more exempt government entities - assume that the transition taxpayer acquired the unit at the time when it was acquired or constructed by the first of those entities that owned the unit. 61A(4) Cost of the unit.
If the unit was acquired by the transition taxpayer from an exempt government entity, assume that the cost of the unit to the transition taxpayer is:
(a) subject to paragraph (b) - the amount that was the cost of the unit to the other entity; or
(b) where the unit had, before its acquisition by the transition taxpayer, been successively owned by 2 or more exempt government entities - the amount that was the cost of the unit to the first of those entities that owned the unit. 61A(5) Effective life of unit.
Assume that the effective life of the unit is the period that would have been calculated to be its effective life at the time:
(a) if subsection (3) does not apply - when the unit was acquired or constructed by the transition taxpayer; or
(b) if subsection (3) applies - when the unit is assumed under that subsection to have been acquired by the transition taxpayer. 61A(6) Elections under section 54A .
For the purpose of calculating the assumed effective life of the unit under subsection (5), if the transition taxpayer could have made an election under subsection 54A(1) at a particular time during the period for which the transition taxpayer owned, or is to be assumed to have owned, the unit, assume that the transition taxpayer made the election at that time.
61A(7) Use of unit for producing assessable income.Assume that the unit had, at all times during the period beginning when it was acquired or constructed, or is assumed to have been acquired, by the transition taxpayer and ending immediately before the transition time, been used wholly for the purpose of producing assessable income by the transition taxpayer, and assume that deductions for depreciation in respect of the unit had been allowed to the transition taxpayer during that period.
61A(8) Method of depreciation.Assume that the method of depreciation selected by the transition taxpayer in relation to the unit in:
(a) the transition year; or
(b) if the transition taxpayer does not claim depreciation for the transition year - the first year of income after the transition year in which the transition taxpayer claims depreciation;
was also used in each year of income before the transition year by the transition taxpayer.
61A(9) Application of other sections in calculating depreciation rates.In calculating the rate of depreciation in relation to the unit in each year of income before the transition year:
(a) if section 57AG of this Act as in force at any time before its repeal had applied in respect of that year of income - that section is to be taken into account; and
(b) if section 57AL of this Act as in force at any time before its repeal had applied in respect of that year of income - that section is to be disregarded. 61A(10) Balancing adjustments on disposal.
If the transition taxpayer disposes of a unit of property that was owned by the transition taxpayer at the transition time, subsections (11) and (12) apply but subsections 59(1) and (2) do not apply.
61A(11) Including an amount in assessable income.If the consideration receivable in respect of the disposal exceeds the unit's depreciated value, the transition taxpayer's assessable income is to include the lesser of:
(a) the sum of the amounts that have been allowed or are allowable as deductions for depreciation of the unit; and
(b) the amount by which that consideration exceeds the unit's depreciated value. 61A(12) Deducting an amount.
If the consideration receivable in respect of the disposal is less than the unit's notional depreciated value, an amount worked out by using the following formula is an allowable deduction to the transition taxpayer:
| Difference × |
Actual deductions
Actual deductions + Notional deductions |
where:
actual deductions
means the sum of the amounts that have been allowed or are allowable to the transition taxpayer as deductions for depreciation of the unit.
difference
means the difference between the consideration receivable in respect of the disposal of the unit and the unit's notional depreciated value.
notional deductions
means the sum of:
(a) the amounts in respect of which deductions for depreciation are assumed under subsection (7) to have been allowed to the transition taxpayer in respect of the unit; and
Note:
Subsections (3) to (6), (8) and (9) have effect for the purpose of determining the amounts referred to in paragraph (a) (for example, section 57AG as previously in force at any time is to be taken into account in calculating the rate of depreciation at that time).
(b) if there was any period after the transition time in which the unit was used, or installed ready for use, but was not used wholly for the purpose of producing assessable income - the further amounts in respect of which deductions for depreciation could have been allowed to the transition taxpayer in respect of the unit if it had been used wholly for the purpose of producing assessable income during that period.
Note:
If neither subsection (11) nor (12) applies in respect of the unit, no amount is to be included in the transition taxpayer's assessable income, and no deduction is allowable to the transition taxpayer, as a result of the disposal.
61A(13) Definitions.In this section:
consideration receivable in respect of the disposal
of a unit of property has the same meaning as in section
59
.
depreciated value
of a unit of property is:
(a) if the unit was acquired by the transition taxpayer from a person other than an exempt government entity or was constructed by the transition taxpayer - its cost to the transition taxpayer; or
(b) if the unit was acquired by the transition taxpayer from an exempt government entity - the amount assumed under subsection (4) to be its cost to the transition taxpayer;
less the sum of the amounts in respect of which deductions for depreciation have been allowed or are allowable to the transition taxpayer in respect of the unit.
exempt government entity
means:
(a) the Commonwealth, a State or a Territory; or
(b) an STB, within the meaning of Division 1AB , that is exempt from tax under that Division; or
(c) any municipal corporation or other local governing body, or any public authority, to which paragraph 23(d) applies.
method of depreciation
means the way of working out the depreciation allowable under this Act in respect of a unit of property set out in paragraph
56(1)(a)
or (b).
notional depreciated value
of a unit of property is:
(a) if the unit was acquired by the transition taxpayer from a person other than an exempt government entity or was constructed by the transition taxpayer - its cost to the transition taxpayer; or
(b) if the unit was acquired by the transition taxpayer from an exempt government entity - the amount assumed under subsection (4) to be its cost to the transition taxpayer;
less the sum of:
(c) the amounts in respect of which deductions for depreciation are assumed under subsection (7) to have been allowed to the transition taxpayer in respect of the unit; and
Note:
Subsections (3) to (6), (8) and (9) have effect for the purpose of determining the amounts referred to in paragraph (c) (for example, section 57AG as previously in force at any time is to be taken into account in calculating the rate of depreciation at that time).
(d) the amounts in respect of which deductions for depreciation have been allowed or are allowable to the transition taxpayer in respect of the unit; and
(e) if there was any period after the transition time in which the unit was used, or installed ready for use, but was not used wholly for the purpose of producing assessable income - the further amounts in respect of which deductions for depreciation could have been allowed to the transition taxpayer in respect of the unit if it had been used wholly for the purpose of producing assessable income during that period.
This section has effect subject to Division 245 of Schedule 2C .
In this Division, ``depreciated value'' of any unit of property at any time means the cost of the unit to the person who owns or owned the property at that time less the total amount of depreciation (if any) allowed or allowable in respect of that unit in assessments of the income of that person, for any period prior to that time, under this Act or any previous law of the Commonwealth.
62(2) [Cost where acquisition of depreciated property]For the purposes of subsection (1), in any case in which section 60 , or the corresponding provision of the previous Act, applied or applies in relation to any unit of property, the person who acquired or acquires the unit shall be deemed to have acquired or to acquire it at a cost equal to the depreciated value of the unit immediately prior to the time of the acquisition, or, if the case is one in which the proviso to subsection (1) of that section applied or applies, the sum of that depreciated value and the amount required to be added to that depreciated value for the purposes of that proviso.
For the purposes of the application of subsection (1) in relation to a person in relation to a unit of property in a case where:
(a) subsection (2) does not apply in relation to that person in relation to that unit;
(b) the amount that, but for this subsection and section 57AF , would be the cost of the unit for the purposes of subsection (1) is attributable, in whole or in part, to a transaction to which that person was a party;
(c) the Commissioner is satisfied that, having regard to any connection between any 2 or more of the parties to the transaction and to any other relevant circumstances, those parties were not dealing with each other at arm's length in relation to the transaction; and
(d) the Commissioner is satisfied that the amount that, but for this subsection and section 57AF , would be the cost of the unit for the purposes of subsection (1) is greater than the amount (in this subsection referred to as the ``arm's length amount'' ) that would have been the cost of the unit if the parties to the transaction had dealt with each other at arm's length in relation to the transaction,
the arm's length amount shall, subject to section 57AF , be deemed to be the cost of that unit to that person for the purposes of subsection (1).
In this section -
"compensation payment"
, in relation to a unit of property, meansa payment received by the taxpayer in respect of the unit in pursuance of the
Decimal Currency Board Act 1963-1965
; and
"unit of property"
means a unit of property not being trading stock of the taxpayer.
For the purpose of calculating the depreciation allowable under this Act in respect of a unit of property in respect of which a compensation payment has been, or is, or compensation payments have been, or are, received by the taxpayer during a year of income, the depreciated value of the unit at the end of that year of income shall be deemed to have been, or to be, as the case may be, reduced by so much of the amount of that payment, or of the sum of the amounts of those payments, as does not exceed the amount that, but for this subsection, would have been, or would be, as the case may be, the depreciated value of the unit at the end of that year of income.
62AAA(3) [Where compensation exceeds depreciated value]Where the amount of a compensation payment that has been, or is, or the sum of the amounts of any compensation payments that have been, or are, received by a taxpayer during a year of income in respect of a unit of property exceeds the amount that, but for subsection (2), would have been, or would be, as the case may be, the depreciated value of the unit at the end of that year of income, the Commissioner shall successively reduce the respective depreciated values, at the end of that year of income, of -
(a) any unit of property acquired by the taxpayer during that year of income to replace the first-mentioned unit of property;
(b) any other unit of property acquired by the taxpayer during that year of income, being a unit of property of a description, or having a use, similar to that of the first-mentioned unit of property;
(c) any other unit of property acquired by the taxpayer during that year of income;
(d) any other unit of property owned by the taxpayer, being a unit of property of a description, or having a use, similar to that of the first-mentioned unit of property; and
(e) any other units of property owned by the taxpayer,
by such amounts as are not, in the aggregate, greater than the amount of the excess.
An amount equal to so much, if any, of the amount of the excess referred to in subsection (3) as is greater than the sum of the reductions made under that subsection shall be included in the assessable income of the taxpayer of the year of income referred to in that subsection.
Where a unit of property of the taxpayer has been, or is, disposed of, lost or destroyed and the taxpayer has received, or receives, a compensation payment in respect of the unit in the year of income in which the disposal, loss or destruction took place or takes place -
(a) the depreciated value of the unit immediately before the disposal, loss or destruction shall be deemed to have been reduced by so much of the amount of the compensation payment as does not exceed the amount that, but for this paragraph, would have been, or would be, as the case may be, that depreciated value; and
(b) if the compensation payment exceeds that last-mentioned amount -
(i) the Commissioner shall successively reduce the respective depreciated values, at the end of that year of income, of the units of property referred to in paragraphs (3)(a) to (e), inclusive, by such amounts as are not, in the aggregate, greater than the amount of the excess; and
(ii) an amount equal to so much, if any, of the amount of the excess as is greater than the sum of the reductions made under subparagraph (i) shall be included in the assessable income of the taxpayer of that year of income.
Where a unit of property of the taxpayer has been, or is, disposed of, lost or destroyed and the taxpayer has received, or receives, a compensation payment in respect of the unit in a year of income succeeding the year of income in which the disposal, loss or destruction took place or takes place, subsections (3) and (4) do not apply in relation to that payment but -
(a) the Commissioner shall successively reduce the respective depreciated values, at the end of the year of income in which the payment was, or is, received, of -
(i) any unit of property acquired by the taxpayer during that year of income to replace the first-mentioned unit of property;
(ii) any other unit of property acquired by the taxpayer during that year of income, being a unit of property of a description, or having a use, similar to that of the first-mentioned unit of property;
(iii) any other unit of property acquired by the taxpayer during that year of income;
(iv) any other unit of property owned by the taxpayer, being a unit of property of a description, or having a use, similar to that of the first-mentioned unit of property; and
(v) any other units of property owned by the taxpayer,
by such amounts as are not, in the aggregate, greater than the amount of the payment; and
(b) an amount equal to so much, if any, of the amount of the payment as is greater than the sum of the reductions made under paragraph (a) shall be included in the assessable income of the taxpayer of the year of income in which the payment was, or is, received.
The depreciated value of a unit of property shall not be reduced under subsection (3), paragraph (5)(b) or subsection (6) unless -
(a) at the end of the year of income, the unit was used exclusively for the purpose of producing assessable income or had been installed ready for use exclusively for that purpose and was held in reserve; and
(b) depreciation under this Act is allowable to the taxpayer in respect of the unit.
An amount by which the depreciated value of a unit of property has been reduced in pursuance of this section shall, for the purposes of this Act, be deemed to be depreciation that has been allowed in respect of that unit in the assessment in which the reduction was made.
The object of pooling is to provide taxpayers with a simplified method of quantifying the annual depreciation allowable in respect of 2 or more units of property which are depreciable at the same rate.
A taxpayer may, by written notice:
(a) create a pool to which depreciable property may be allocated; and
(b) specify a year of income as the earliest year of income for which property may be allocated to the pool; and
(c) specify a percentage as the pool percentage for the pool. 62AAC(2) [Period for notice]
A notice under subsection (1) is irrevocable and must be made:
(a) within 6 months after the later of the following:
(i) the end of the specified year of income;
(ii) the commencement of this section; or
(b) within such further period as the Commissioner allows.
For the purposes of this Act, the pool percentage for a pool is the pool percentage specified in the notice creating the pool.
A taxpayer may, by written notice, allocate a unit of property to a specified pool for a specified year of income and for subsequent years of income if:
(a) depreciation is allowable to the taxpayer under this Act in respect of the property in relation to the specified year of income; and
(b) at all times during the period:
(i) commencing at the time the taxpayer's ownership of the property began; and
the property was:
(ii) ending immediately after the beginning of the specified year of income;
(iii) used by the taxpayer exclusively for the purpose of producing assessable income; or
(iv) installed ready for exclusive use for that purpose and held in reserve by the taxpayer; and
(c) the annual depreciation percentage fixed under section 55 for the property in relation to the specified year of income equals the pool percentage for the pool; and
(d) the taxpayer has not allocated the property to any other pool for the specified year of income or a subsequent year of income; and
(e) each amount of depreciation allowed or allowable to the taxpayer in respect of the property in relation to a year of income earlier than the specified year of income was calculated in accordance with subsection 56(1) or section 62AAP ; and
(f) apart from that allocation, the depreciation allowable to the taxpayer in respect of the property in relation to the specified year of income would have been calculated in accordance with subsection 56(1) ; and
(g) the specified year of income is not earlier than the earliest year of income for which property may be allocated to the pool. 62AAE(2) [Period for notice]
A notice under subsection (1) is irrevocable and must be made:
(a) within 6 months after the later of the following:
(i) the end of the specified year of income;
(ii) the commencement of this section; or
(b) within such further period as the Commissioner allows.
A taxpayer may, by written notice, cancelthe allocation of specified property to a pool insofar as the allocation applies for a specified year of income and for subsequent years of income.
62AAF(2) [Period for notice]A notice under subsection (1) is irrevocable and must be made:
(a) within 6 months after the later of the following:
(i) the end of the specified year of income;
(ii) the commencement of this section; or
(b) within such further period as the Commissioner allows. 62AAF(3) [Re-allocation of property to pool]
If, under this section, a taxpayer cancels the allocation of property to a pool for a year of income, this Act does not prevent the taxpayer from re-allocating the property to the pool for the year of income in accordance with section 62AAE .
(a) property is allocated by a taxpayer to a pool for a year of income; and
(b) during the year of income, the taxpayer ceased to use the property exclusively for assessable income-producing purposes; and
(c) that cessation was not by way of the disposal, loss or destruction of the property;
the allocation is cancelled insofar as it applies for that year of income and for subsequent years of income.
62AAG(2) [Property used for assessable income-producing purposes]For the purposes of this section, a unit of property is taken to be used for assessable income-producing purposes by a taxpayer if, and only if, the property is:
(a) used by the taxpayer for the purpose of producing assessable income; or
(b) installed ready for use for that purpose and held in reserve by the taxpayer.
If:
(a) property is allocated by a taxpayer to a pool for a year of income; and
(b) the annual depreciation percentage fixed under section 55 for the property in relation to the year of income does not equal the pool percentage for the pool;
the allocation is cancelled insofar as it applies for that year of income and for subsequent years of income.
If:
(a) property is allocated by a taxpayer to a pool for a year of income; and
(b) apart from that allocation, the depreciation allowable to the taxpayer in respect of the property in relation to the year of income would have been calculated otherwise than in accordance with subsection 56(1) ;
the allocation is cancelled insofar as it applies for that year of income and for subsequent years of income.
If:
(a) property is allocated by a taxpayer to a pool for a year of income; and
(b) the property is disposed of during the year of income; and
(c) section 58 applies to that disposal;
the allocation is cancelled insofar as it applies for that year of income and for subsequent years of income.
If the allocation of property to a pool for a year of income is cancelled, the property is taken never to have been allocated to the pool for the year of income.
This section has effect subject to Division 245 of Schedule 2C .
If property is allocated by a taxpayer to a pool for a year of income, the reconstruction assumptions applicable to the property for the year of income are as follows:
(a) the assumption that the property had not been allocated to the pool for the year of income;
(b) the assumption that the depreciation allowable to the taxpayer in relation to the year of income in respect of the property had been calculated in accordance with paragraph 56(1)(a) ;
(c) the assumption that the percentage specified in that paragraph was equal to the pool percentage for the pool. 62AAM(2) [Reconstructed depreciated value]
The reconstructed depreciated value of property allocated to a pool for a year of income is the amount that would have been the depreciated value of the property if the reconstruction assumptions had applied to the property for each year of income for which the property was allocated to the pool.
The opening balance of a pool for a year of income (in this section called the ``current year of income'' ) is calculated using the formula:
where:
``Closing balance for preceding year'' means the closing balance of the pool for the preceding year of income;
``Depreciated value of new property'' means the amount obtained by:
``Reconstructed depreciated value of cancelled property'' means the amount obtained by:
Subsection (1) has effect subject to Division 245 of Schedule 2C .
The closing balance of a pool for a year of income is worked out using the formula:
| Opening balance - Total depreciation |
where:
``Opening balance'' means the opening balance of the pool for the year of income;
``Total depreciation'' means the total depreciation allowable to the taxpayer under this Act in relation to the year of income in respect of all the units of property allocated to the pool for the year of income.
This section has effect subject to Division 245 of Schedule 2C .
The total depreciation allowable to a taxpayer under this Act in relation to a year of income in respect of all the units of property allocated to a pool for the year of income is worked out using the formula:
| 1.5 × Pool percentage × Opening balance |
where:
``Pool percentage'' means the pool percentage for the pool;
``Opening balance'' means the opening balance of the pool for the year of income.
62AAP(2) [Application]This section applies in spite of section 56 .
If the allocation of a unit of property to a pool is cancelled, the provisions of this Act relating to depreciation apply, in relation to each year of income to which the cancellation applies and any subsequent year of income, as if the reconstruction assumptions had applied for each year of income for which the property was allocated to the pool.
(a) the allocation of a unit of property to a pool for a year of income (in this section called the ``current year of income'' ) is cancelled; and
(b) the property is allocated to the pool for the preceding year of income;
then, in calculating the depreciation (if any) allowable to the taxpayer in respect of the property in accordance with subsection 56(1) for the current year of income or a subsequent year of income, this Act has effect as if paragraph 56(1)(b) had not been enacted.
62AAR(2) [Commercial debt forgiveness]Subsection (1) has effect subject to Division 245 of Schedule 2C .
If property is allocated to a pool for a year of income, subsections 59(1) and (2) do not apply to the disposal, loss or destruction of the property during the year of income.
(a) property is allocated by a taxpayer to a pool for a year of income; and
(b) the property is disposed of, lost or destroyed during the year of income;
then:
(c) an amount equal to so much of the consideration receivable in respect of the disposal, loss or destruction (within the meaning of section 59 ) as does not exceed the cost of the property is included in the taxpayer's assessable income of the year of income; and
(d) the disposal, loss or destruction does not affect the allocation of the property to the pool for a subsequent year of income; and
(e) so long as the property remains allocated to the pool for a subsequent year of income, section 62AAP applies to the subsequent year of income as if depreciation were allowable to the taxpayer under this Act in relation to the subsequent year of income in respect of the property. 62AAT(2) [Application of s 59(2A)-(2E)]
Subsections 59(2A) to (2E) (inclusive) apply to the taxpayer and in relation to the property as if a reference in each of those subsections to subsection 59(2) included a reference to subsection (1) of this section.
62AAT(3) [Allowable depreciation](a) property owned by a taxpayer is disposed of to another person; and
(b) an amount (in this subsection called the ``assessable amount'' ):
(i) is included in the taxpayer's assessable income under subsection (1) of this section in respect of the disposal; or
(ii) would, apart from subsection 59(2A) or (2D) , be included in the taxpayer's assessable income under subsection (1) of this section in respect of the disposal; and
(c) section 60 applies to the acquisition of the property by the other person;
then:
(d) in spite of anything in subsection 60(1) , the person acquiring the property is to be allowed depreciation calculated on the assessable amount; and
(e) in spite of anything in subsection 62(2) , for the purposes of subsection 62(1) , the person acquiring the property is taken to have acquired the property at a cost equal to the assessable amount.
If:
(a) property is allocated by a taxpayer to a pool for a year of income (in this section called the ``current year of income'' ); and
(b) the property is disposed of (within the meaning of Part IIIA );
section 160ZK applies to the disposal of the property as if the reconstruction assumptions had applied for each year of income for which the property was allocated to the pool.
If:
(a) subsection 62AAC(1) , 62AAE(1) or 62AAF(1) expresses an idea in a particular form of words; and
(b) a notice made by a taxpayer under the subsection concerned appears to have expressed the same idea in a different form of words for the purpose of convenience;
the ideas are not taken to be different merely because different forms of words were used.
(Repealed by No 107 of 1989)
(Repealed by No 107 of 1989)
(Repealed by No 107 of 1989)
CCH Note:
Below is material repealed as inoperative in s 63 by No 101 of 2006.
This section (other than subsection (1A)) does not apply to the 1997-98 year of income or a later year of income.
Note:
Section 25-35 of the Income Tax Assessment Act 1997 deals with the deductibility of bad debts in those income years.
Debts which are bad debts and are written off as such during the year of income, and:
(a) have been brought to account by the taxpayer as assessable income of any year; or
(b) are in respect of money lent in the ordinary course of the business of the lending of money by a taxpayer who carries on that business;
shall be allowable deductions.
A deduction otherwise allowable under subsection (1) to a creditor in respect of a debt is reduced to the extent mentioned in subparagraph 245-90(3)(b)(i) of Schedule 2C if an agreement between the debtor and the creditor is made as mentioned in paragraph 245-90(3)(a) of Schedule 2C .
If any debts relating to lease payments that have, or will, become liable to be made under a lease of a motor car to which Division 42A in Schedule 2E applies are written off as bad debts by a taxpayer, the maximum amount that the taxpayer can deduct under subsection (1) for those debts is the amount of the finance charge for the notional loan that the taxpayer is taken under that Division to have made to the lessee.
Expressions used in subsection (1B) that are defined in Division 42A in Schedule 2E have the same meanings as in that Division.
If a debtor, after incurring a debt so brought to account, or in respect of money so lent, becomes a bankrupt, or executes a deed of assignment or arrangement for the benefit of his creditors, the debt (where, in the opinion of the Commissioner, no amount will be paid on account of the debt) or the amount by which, in his opinion, the amount which will be received on account of the debt will be less than the debt, shall be deemed to be a bad debt.
Subsection (3) does not apply to an amount received in the 1997-98 year of income or in a later year of income if the amount is received as recoupment as defined by section
20-25
of the
Income Tax Assessment Act 1997
.
Note:
Subdivision 20-A of the Income Tax Assessment Act 1997 applies instead.
Where in the year of income, a taxpayer receives an amount in respect of a debt for which a deduction has been allowed to the taxpayer under section 51 or this section, the taxpayer's assessable income shall include the lesser of:
(a) the amount received; and
(b) the deduction, as reduced by any amount previously included in the taxpayer's assessable income under this subsection in respect of the debt.
Where a part of a debt is bad, this section applies as if the part were an entire debt that is bad.
This section does not apply to the 1998-99 year of income or a later year of income.
Note:
Subdivisions 165-C , 166-C and 175-C of the Income Tax Assessment Act 1997 deal with a company deducting bad debts for those income years.
This section has effect despite sections 8-1 and 25-35 of the Income Tax Assessment Act 1997 .
Subject to the following provisions of this section and to sections 63AA , 63B , 63C and 63CB , a debt owed to a taxpayer that is a company, being a debt that was incurred during a year before the year of income, is not an allowable deduction in the assessment of the company in respect of income of the year of income unless the debt is written off asa bad debt during the year of income and:
(a) the company satisfies the Commissioner; or
(b) in the case of a company that is not a private company in relation to the year of income, the Commissioner considers that it is reasonable to assume;
that, at all times during the year of income, shares in the company carrying between them:
(c) the right to exercise more than one-half of the voting power in the company;
(d) the right to receive more than one-half of any dividends that may be paid by the company; and
(e) the right to receive more than one-half of any distribution of the capital of the company;
were beneficially owned by persons who, at all times during the year in which the debt was incurred, beneficially owned shares in the company carrying between them rights of those kinds.
(a) subsection (2) would, but for this subsection, apply for the purpose of determining whether a debt owed to a company is an allowable deduction in the assessment of the company in respect of income of the year of income;
(b) during the whole or any part of the year in which the debt was incurred, or during the whole or any part of the year of income, another company or other companies beneficially owned all or any of the shares in the first-mentioned company or an interest or interests in all or any of those shares; and
(c) the first-mentioned company requests the Commissioner at the time when it furnishes to him a return (or, if more than one return is furnished, the first return) of its income of the year of income, or within such further period as the Commissioner allows, that subsection (4) should apply for the purpose referred to in paragraph (a) or the Commissioner considers it reasonable that that subsection should apply for that purpose;
then subsection (4) applies for that purpose in lieu of subsection (2).
63A(4) [Tracing of interests]Where, by virtue of subsection (3), this subsection applies for the purpose of determining whether a debt owed to a company (in this subsection referred to as the ``relevant company'' ) is an allowable deduction in the assessment of the company in respect of income of the year of income, then, subject to the following provisions of this section and to sections 63AA , 63B , 63C and 63CB , that debt is not an allowable deduction in that assessment unless the debt is written off as a bad debt during the year of income and the Commissioner is satisfied, or considers that it is reasonable to assume, that:
(a) at all times during the year of income the voting power in the relevant company was, either directly or through one or more interposed companies, trustees or partnerships, controlled, or capable of being controlled, by a person not being a company, or by 2 or more persons not being companies, who, either directly or through one or more interposed companies, trustees or partnerships, controlled, or was or were capable of controlling, the voting power in the relevant company at all times during the year in which the debt was incurred;
(b) a person not being a company who had, or 2 or more persons not being companies who had between them, at all times during the year of income a right to receive, directly or indirectly, for his or their own benefit more than one-half of any dividends that might be paid by the relevant company would, if the relevant company had paid a dividend at any time during the year in which the debt was incurred, have had, or have had between them, as the case may be, a right to receive, directly or indirectly, for his or their own benefit more than one-half of that dividend; and
(c) a person not being a company who had, or 2 or more persons not being companies who had between them, at all times during the year of income a right to receive, directly or indirectly, for his or their own benefit more than one-half of any distribution of capital of the relevant company would, if the relevant company had made a distribution of capital at any time during the year in which the debt was incurred, have had, or have had between them, as the case may be, a right to receive, directly or indirectly, for his or their own benefit more than one-half of that distribution of capital.
Where a debt owed to a taxpayer being a company was incurred during a year before the year of income and that debt is not, by virtue of subsection (2) or subsection (4), as the case may be, an allowable deduction but the company satisfies the Commissioner that that subsection would not have prevented the debt from being an allowable deduction if, in relation to the year in which the debt was incurred, regard were had, for the purposes of that subsection, only to the part of that year that commenced on the day on which the debt was incurred, that subsection does not prevent the debt from being an allowable deduction.
63A(6) [Debt written off in year incurred]Subject to the following provisions of this section and to sections 63AB , 63B , 63C and 63CB , a debt owed to a taxpayer that is a company, being a debt that was incurred during the year of income but not being a debt that was incurred on the last day of the year of income, is not an allowable deduction in the assessment of the company in respect of income of the year of income unless the debt is written off as a bad debt during the year of income and:
(a) the company satisfies the Commissioner; or
(b) in the case of a company that is not a private company in relation to the year of income, the Commissioner considers that it is reasonable to assume,
that, at all times during the part of the year of income that followed the day on which the debt was incurred, shares in the company carrying between them rights of the kinds referred to in subsection (2) were beneficially owned by persons who, at all times during the part of the year of income that commenced on the first day of the year of income and ended on the day on which the debt was incurred, beneficially owned shares in the company carrying between them rights of those kinds.
For the purposes of subsection (2) or (4), if a family trust (within the meaning of section 272-75 of Schedule 2F ) owns a share in a company, the trustee is taken to own the share beneficially.
(a) subsection (6) would, but for this subsection, apply for the purpose of determining whether a debt owed to a company is an allowable deduction in the assessment of the company in respect of income of the year of income;
(b) at any time during the year of income another company or other companies beneficially owned all or any of the shares in the first-mentioned company or an interest or interests in all or any of those shares; and
(c) the first-mentioned company requests the Commissioner at the time when it furnishes to him a return (or, if more than one return is furnished, the first return) of its income of the year of income, or within such further period as the Commissioner allows, that subsection (8) should apply for the purpose referred to in paragraph (a) or the Commissioner considers is reasonable that that subsection should apply for that purpose,
then subsection (8) applies for that purpose in lieu of subsection (6).
63A(8) [Tests where tracing of interests]Where, by virtue of subsection (7), this subsection applies for the purpose of determining whether a debt owed to a company (in this subsection referred to as the ``relevant company'' ) is an allowable deduction in the assessment of the company in respect of income of the year of income, then, subject to the following provisions of this section and to sections 63AB , 63B , 63C and 63CB , that debt is not an allowable deduction in that assessment unless the debt is written off as a bad debt during the year of income and the Commissioner is satisfied, or considers that it is reasonable to assume, that:
(a) at all times during the part of the year of income that followed the day on which the debt was incurred, the voting power in the relevant company was, either directly or through one or more interposed companies, trustees or partnerships, controlled, or capable of being controlled, by a person not being a company, or by 2 or more persons not being companies, who, either directly or through one or more interposed companies, trustees or partnerships, controlled, or was or were capable of controlling, the voting power in the relevant company at all times during the part of the year of income that commenced on the first day of the year of income and ended on the day on which the debt was incurred;
(b) a person not being a company who had, or 2 or more persons not being companies who had between them, at all times during the part of the year of income that followed the day on which the debt was incurred a right to receive, directly or indirectly, for his or their own benefit more than one-half of any dividends that might be paid by the relevant company would, if the relevant company had paid a dividend at any time during the part of the year of income that commenced on the first day of the year of income and ended on the day on which the debt was incurred, have had, or have had between them, as the case may be, a right to receive, directly or indirectly, for his or their own benefit more than one-half of that dividend; and
(c) a person not being a company who had, or 2 or more persons not being companies who had between them, at all times during the part of the year of income that followed the day on which the debt was incurred, a right to receive, directly or indirectly, for his or their own benefit more than one-half of any distribution of capital of the relevant company would, if the relevant company had made a distribution of capital at any time during the part of the year of income that commenced on the first day of the year of income and ended on the day on which the debt was incurred, have had, or have had between them, as the case may be, a right to receive, directly or indirectly, for his or their own benefit more than one-half of that distribution of capital.
For the purposes of this section, a person shall be deemed to be a person who had, or would have had, a right to receive indirectly for his own benefit the whole or a particular fraction of a dividend that might be, or might have been, paid by a company or of a distribution of capital of a company, or 2 or more persons shall be deemed to be persons who had, or would have had, between them a right to receive indirectly for their own benefit the whole or a particular fraction of such a dividend or distribution of capital, if, in the event of a payment of a dividend by the company, or of a distribution of capital of the company, the person or persons would, otherwise than as a shareholder or shareholders of the company or as a trustee or trustees, receive or have received the whole or that fraction, as the case may be, of that dividend, or of that distribution of capital, if there had been successive distributions of the relative parts of that dividend, or of that distribution of capital, to and by each of any companies or trustees interposed between the company paying the dividend, or making the distribution of capital, and that person or those persons.
For the purposes of applying subsection (9) to the whole or a fraction of a dividend or of a distribution of capital that a person who is the trustee of a family trust (within the meaning of section 272-75 of Schedule 2F ) would receive or would have received in the event of a payment as mentioned in that subsection, the requirement in that subsection that the person would do so or have done so otherwise than as a trustee is to be disregarded.
For the purpose of paragraph (4)(b) or (c) or (8)(b) or (c), if the trustee of a family trust (within the meaning of section 272-75 of Schedule 2F ) has a right to receive, directly or (as a result of applying subsection (9) in accordance with subsection (9A)) indirectly, the whole or part of a dividend or of a distribution of capital, the trustee is taken:
(a) to have that right for his or her own benefit; and
(b) if the trustee is a company - not to be a company.
Section 80B applies for the purposes of the application of the preceding provisions of this section in determining whether a debt owed to a company and written off as a bad debt during the year of income is an allowable deduction in the assessment of the company in respect of income of the year of income in like manner as that section applies for the purposes of the application of section 80A in determining whether a loss incurred by a company is to be taken into account in the 1996-97 year of income for the purposes of section 79E , 79F, 80, 80AAA or 80AA but, for the purposes of section 80B as so applying:
(a) a reference in that section to the year in which the loss was incurred shall be read as a reference:
(i) in the case of the application of that section in relation to subsections (2) and (4) - to the year in which the debt was incurred;
(ii) in the case of the application of that section in relation to subsection (5) - to the part of the year in which the debt was incurred that commenced on the day on which the debt was incurred and ended at the expiration of that year; and
(iii) in the case of the application of that section in relation to subsections (6) and (8) - to the part of the year of income that commenced on the first day of the year of income and ended on the day on which the debt was incurred;
(b) a reference in that section to the year of income shall, in the case of the application of that section in relation to subsections (6) and (8), be read as a reference to the part of the year of income that followed the day on which the debt was incurred; and
(c) the reference in paragraph 80B(5)(c) to the purpose of enabling the company to take into account for the purposes of section 79E , 79F , 80 , 80AAA or 80AA a loss that the company had incurred, or might incur, shall be read as a reference to the purpose of securing that a deduction would be allowable in respect of a debt that the company had written off, or might write off, as a bad debt.
A debt owed to a taxpayer that is a company, being a debt that was incurred, and is written off as a bad debt, on the last day of the year of income, is not an allowable deduction.
63A(12) [Commissioner's discretion]This section does not apply in relation to a debt if the Commissioner considers that, having regard to the persons who were the beneficial owners of the shares in the company at the time when in his opinion the debt became a bad debt, it would be unreasonable for this section to apply in relation to that debt.
63A(13) [Part debt write offs]Where a part of a debt is an allowable deduction in an assessment, the preceding provisions of this section apply as if the part were an entire debt that is an allowable deduction in the assessment.
This section has the same effect in relation to an allowable deduction under section 63E in respect of the whole or part of a debt that is extinguished as it has in relation to an allowable deduction under section 8-1 or 25-35 of the Income Tax Assessment Act 1997 in respect of the whole or part of a debt that is written off as bad.
Section 63A does not prevent an amount in respect of a debt incurred in an earlier year of income being an allowable deduction in the year of income if the company satisfies the conditions in this section.
63AA(2) First condition.(a) the part (the eligible earlier year period ) of the earlier year of income occurring after the beginning of the day on which the debt was incurred; and
(b) during the year of income;
either:
(c) non-fixed trusts (see subsection (6)), other than family trusts (see subsection (6)), must have held fixed entitlements (see subsection (6)) to a 50% or greater share of the income or a 50% or greater share of the capital of the company; or
(d) both:
(i) a fixed trust (see subsection (6)) or a company (which trust or company is the holding entity ) must have held, directly or indirectly (see subsection (6)), fixed entitlements to all of the income and capital of the company; and
63AA(3) Second condition.
(ii) non-fixed trusts, other than family trusts, must have held fixed entitlements to a 50% or greater share of the income or a 50% or greater share of the capital of the holding entity.
The persons holding fixed entitlements to shares of the income, and the persons holding fixed entitlements to shares of the capital, of:
(a) in a paragraph (2)(c) case - the company; or
(b) in a paragraph (2)(d) case - the holding entity;
at the beginning of the eligible earlier year period must have held those entitlements to those shares at all times during the eligible earlier year period and the year of income.
63AA(4) Third condition.At the beginning of the eligible earlier year period:
(a) individuals must not have had (between them), directly or indirectly, and for their own benefit, fixed entitlements to a greater than 50% share of the income of the company; or
(b) individuals must not have had (between them), directly or indirectly, and for their own benefit, fixed entitlements to a greater than 50% share of the capital of the company. 63AA(5) Fourth condition.
It must be the case that, for each non-fixed trust (other than an excepted trust as defined in subsection (6)) that, at any time in the eligible earlier year period or the year of income, held directly or indirectly a fixed entitlement to a share of the income or capital of the company, section 267-25 of Schedule 2F would not have prevented the non-fixed trust from deducting the amount in respect of the debt if it, rather than the company, would otherwise be entitled to deduct the amount.
63AA(6) Meaning of expressions.The expressions directly or indirectly, excepted trust, family trust, fixed entitlement, fixed trust and non-fixed trust have the same meanings as in Schedule 2F .
Section 63A does not prevent an amount in respect of a debt incurred in the year of income being an allowable deduction if the company satisfies the conditions in this section.
63AB(2) First condition.At all times during the year of income:
(a) both:
(i) persons must have held fixed entitlements (see subsection (6)) to all of the income and capital of the company; and
(ii) non-fixed trusts (see subsection (6)), other than family trusts (see subsection (6)), must have held fixed entitlements to a 50% or greater share of the income or a 50% or greater share of the capital of the company; or
(b) both:
(i) a fixed trust (see subsection (6)) or a company (which trust or company is the holding entity ) must have held, directly or indirectly (see subsection (6)), fixed entitlements to all of the income and capital of the company; and
63AB(3) Second condition.
(ii) non-fixed trusts, other than family trusts, must have held fixed entitlements to a 50% or greater share of the income or a 50% or greater share of the capital of the holding entity.
The persons holding fixed entitlements to shares of the income, and the persons holding fixed entitlements to shares of the capital, of:
(a) in a paragraph (2)(a) case - the company; or
(b) in a paragraph (2)(b) case - the holding entity;
at the beginning of the year of income must have held those entitlements to those shares at all times during the year of income.
63AB(4) Third condition.At the beginning of the year of income:
(a) individuals must not have had (between them), directly or indirectly, and for their own benefit, fixed entitlements to a greater than 50% share of the income of the company; or
(b) individuals must not have had (between them), directly or indirectly, and for their own benefit, fixed entitlements to a greater than 50% share of the capital of the company. 63AB(5) Fourth condition.
It must be the case that, for each non-fixed trust (other than an excepted trust as defined in subsection (6)) that, at any time in the year of income, held directly or indirectly a fixed entitlement to a share of the income or capital of the company, section267-65 of Schedule 2F would not have prevented the non-fixed trust from deducting the amount in respect of the debt if it, rather than the company, would otherwise be entitled to deduct the amount.
63AB(6) Meaning of expressions.The expressions directly or indirectly, excepted trust, family trust, fixed entitlement, fixed trust and non-fixed trust have the same meanings as in Schedule 2F .
The Commissioner may give the company a notice in accordance with section 63AD if the requirements of subsections (2) to (5) of this section are met.
63AC(2) First requirement.In its return of income for the year of income, the company must have deducted an amount in respect of a debt where it would not be allowed to deduct the amount unless it met the conditions in section 63AA or 63AB .
63AC(3) Second requirement.In order to determine whether it meets the conditions in that section, the Commissioner must need information about a non-fixed trust mentioned in subsection 63AA(5) or 63AB (5).
63AC(4) Third requirement.When the Commissioner gives the notice:
(a) a trustee of the non-fixed trust must be a non-resident; or
(b) the central management and control of the non-fixed trust must be outside Australia. 63AC(5) Fourth requirement.
The Commissioner must give the notice before the later of:
(a) 5 years after the year of income; and
(b) the end of the period during which the company is required by section 262A to retain records in relation to that year of income.
The notice that the Commissioner may give if the requirements of subsections 63AC(2) to (5) are met must require the company to give the Commissioner specified information that is relevant in determining whether the requirements of subsection 63AA(5) or 63AB (5) are satisfied in relation to the non-fixed trust mentioned in subsections 63AC(3) and (4).
63AD(2) Company knowledge.The information need not be within the knowledge of the company at the time the notice is given.
63AD(3) Period for giving information.The notice must specify a period within which the company is to give the information. The period must not end earlier than 21 days after the day on which the Commissioner gives the notice.
63AD(4) Consequence of not giving the information.If the company does not give the information within the period or within such further period as the Commissioner allows, the company is taken not to meet, and never to have met, the conditions in section 63AA or 63AB .
63AD(5) No offences or penalties.To avoid doubt, subsection (4) does not cause the company to commit any offence or be liable to any penalty under Part VII for deducting the amount in respect of the debt in its return.
This section does not apply to the 1998-99 year of income or a later year of income.
Note:
Subdivisions 165-C , 166-C and 175-C of the Income Tax Assessment Act 1997 deal with a company deducting bad debts for those income years.
(a) despite sections 8-1 and 25-35 of the Income Tax Assessment Act 1997 and section 63A of this Act; but
(b) subject to section 63C of this Act.
A debt owed to a taxpayer that is a company, being a debt that is written off as a bad debt during the year of income, is not an allowable deduction if:
(a) during the year of income the company derived income that the company would not have derived, or a capital gain accrued to the company that would not have accrued to the company, if the debt had not been incurred and written off, or capable of being written off, as a bad debt;
(b) a person other than the company will, either directly or indirectly, receive any benefit or obtain any advantage in relation to the application of this Act as a result of the operation of any agreement, scheme, arrangement, understanding, transaction, course of conduct or course of business that would not have been entered into or carried out if the debt had not been incurred and written off, or capable of being written off, as a bad debt;
(c) the affairs or business operations of the company were managed or conducted -
(i) where the debt was incurred before the year of income - during the year of income; or
without proper regard to the rights, powers or interests of continuing shareholders in the company;
(ii) where the debt was incurred during the year of income - during the part of the year of income that followed the day on which the debt was incurred,
(d) where the debt was incurred before the year of income - during the whole or any part of the year of income the voting power in the company was, either directly or through one or more interposed companies, trustees or partnerships, controlled by a person who did not, either directly or through one or more interposed companies, trustees or partnerships, control the voting power in the company during the whole of the year in which the debt was incurred or, in a case to which subsection 63A(5) applies, during the part of that year that commenced on the day on which the debt was incurred, and that person acquired the control of that voting power for the purpose, or for purposes that included the purpose, of receiving any benefit or obtaining any advantage in relation to the application of this Act or securing that another person would receive such a benefit or obtain such an advantage; or
(e) where the debt was incurred during the year of income - at any time during the part of the year of income that followed the day on which the debt was incurred the voting power in the company was, either directly or through one or more interposed companies, trustees or partnerships, controlled by a person who did not, either directly or through one or more interposed companies, trustees or partnerships, control the voting power in the company at all times during the part of the year of income that commenced on the first day of the year of income and ended on the day on which the debt was incurred, and that person acquired the control of that voting power for the purpose, or for purposes that included the purpose, referred to in paragraph (d).
Paragraph (1)(a) applies notwithstanding that the income was derived by the company, or the capital gain accrued to the company, in the course of ordinary family or commercial dealing but that paragraph does not apply where the continuing shareholders will benefit from the derivation of the income, or the accrual of the capital gain, to an extent that the Commissioner considers to be fair and reasonable having regard to their rights and interests in the company.
Without limiting the generality of paragraph (1)(b), a person shall be deemed, for the purposes of that paragraph, to receive a benefit or obtain an advantage in relation to the application of this Act if the person is not liable to pay income tax in respect of a year of income, or the liability of the person to pay income tax in respect of a year of income is reduced, by reason that the person has not derived income that the person would have derived, or a capital gain did not accrue to the person that would have accrued to the person, if the agreement, scheme, arrangement, understanding, transaction, course of conduct or course of business had not been entered into or carried out.
Paragraph (1)(b) applies notwithstanding that the agreement, scheme, arrangement, understanding, transaction, course of conduct or course of business was entered into or carried out in the course of ordinary family or commercial dealing but that paragraph does not apply in relation to a benefit or advantage that is received or obtained by a person who had a shareholding interest in the company in the year of income, being a benefit or advantage that the Commissioner considers to be fair and reasonable having regard to that shareholding interest.
For the purposes of this section:
(a) a person has a shareholding interest in a company if:
(i) the person is the beneficial owner of, or of an interest in, any shares in the company; or
(ii) the person is the trustee of a family trust (within the meaning of section 272-75 of Schedule 2F ) who is the owner of, or of an interest in, any shares in the company; and
(b) where a person has a shareholding interest in a company that has a shareholding interest in another company (including a shareholding interest that the company has in that other company by any other application or applications of this paragraph) that person shall be deemed to have a shareholding interest in that other company.
For the purposes of the application of this section in relation to a debt owed to a company, a reference in this section to continuing shareholders in the company shall be read as a reference to persons referred to in whichever of the following subsections of section 63A , namely, subsections (2), (4), (6) and (8), applies for the purpose of determining whether the debt is an allowable deduction.
63B(7) [Management or conduct of affairs for s 63B(1)(c) purposes]In determining for the purposes of this section whether the affairs or business operations of a company were managed or conducted as mentioned in paragraph (1)(c), regard shall be had to any act or thing done in the course of the management or conduct of those affairs or business operations, irrespective of the purpose or purposes for which that act or thing was done and notwithstanding that the doing of that act or thing took place in the course of ordinary family or commercial dealing.
For the purposes of this section, it shall be taken that:
(a) income would not have been derived by, or a capital gain would not have accrued to, a company if a particular act had not been done;
(b) income would have been derived by, or a capital gain would have accrued to, a person if a particular act had not been done; or
(c) an agreement, scheme, arrangement, understanding, transaction, course of conduct or course of business would not have been entered into or carried out if a particular act had not been done,
if the income would not have been derived by, or the capital gain would not have accrued to, the company, the income would have been derived by, or the capital gain would have accrued to, the person, or the agreement, scheme, arrangement, understanding, transaction, course of conduct or course of business would not have been entered into or carried out, as the case may be, if none of 2 or more acts (including that act) had been done.
A reference in subsection (8) to the doing of an act includes a reference to the happening of an event or the existence of a matter or circumstance.
63B(10) [Part debt write offs]Where a part of a debt is an allowable deduction in an assessment, the preceding provisions of this section apply as if the part were an entire debt that is an allowable deduction in the assessment.
This section has the same effect in relation to an allowable deduction under section 63E in respect of the whole or part of a debt that is extinguished as it has in relation to an allowable deduction under section 8-1 or 25-35 of the Income Tax Assessment Act 1997 in respect of the whole or part of a debt that is written off as bad.
This section does not apply to the 1998-99 year of income or a later year of income.
Note:
Subdivisions 165-C , 166-C and 175-C of the Income Tax Assessment Act 1997 deal with a company deducting bad debts for those income years.
Subject to subsection (2), where -
(a) a debt that is written off by a company as a bad debt during the year of income would not, but for this section, by reason of a change that has taken place in the beneficial ownership of shares in the company or in any other company, be an allowable deduction;
(b) the first-mentioned company carried on -
(i) if the debt was incurred before the year of income - at all times during the year of income; or
the same business as it carried on immediately before the change referred to in paragraph (a) took place; and
(ii) if the debt was incurred during the year of income - at all times during the part of the year of income that followed the day on which the debt was incurred,
(c) the first-mentioned company did not derive income -
(i) if the debt was incurred before the year of income - at any time during the year of income; or
from a business of a kind that it did not carry on, or from a transaction of a kind that it had not entered into in the course of its business operations, before the change took place,
(ii) if the debt was incurred during the year of income - at any time during the part of the year of income that followed the day on which the debt was incurred,
sections 63A and 63B do not prevent the debt being an allowable deduction.
63C(2) [New business before ownership change]Subsection (1) does not apply in respect of a debt that is written off by a company as a bad debt during the year of income if -
(a) before the change referred to in that subsection took place, the company commenced to carry on a business that it had not previously carried on, or entered into, in the course of its business operations, a transaction of a kind that it had not previously entered into; and
(b) the company commenced to carry on that business or entered into that transaction for the purpose, or for purposes that included the purpose, of securing that a deduction would be allowable by virtue of subsection (1) in respect of a debt that the company had written off, or might write off, as a bad debt. 63C(3) [Part debt write offs]
Where a part of a debt is written off by a company as bad, the preceding provisions of this section apply as if the part were an entire debt that is written off by the company as bad.
This section has the same effect in relation to an allowable deduction under section 63E in respect of the whole or part of a debt that is extinguished as it has in relation to an allowable deduction under section 8-1 or 25-35 of the Income Tax Assessment Act 1997 in respect of the whole or part of a debt that is written off as bad.
This section does not apply to the 1998-99 year of income or a later year of income.
Note:
Section 165-120 of the Income Tax Assessment Act 1997 deals with a company deducting in those income years a tax loss resulting from a bad debt.
(a) a company can deduct a debt that is written off as bad in a year of income; and
(b) because of a change in the beneficial ownership of shares in the company or another company, the debt would not have been deductible in the year of income apart from subsection 63C(1) ; and
(c) the change occurred before the debt was written off as bad; and
(d) because the debt was deductible, the company has a tax loss, or there was an increase in the amount of its tax loss, for the year of income; and
(e) the Commissioner is satisfied that the company carried on a business during the year of income for the purpose (or for purposes including the purpose) of securing a deduction for the debt because of subsection 63C(1) ;
the company cannot deduct the tax loss, or cannot deduct it to the extent of the increase in the amount of the tax loss, in a later year of income unless:
(f) the company carried on, at all times during the later year of income, the same business as it carried on immediately before the change; and
(g) the company did not, at any time during the later year of income, derive income from a business of a kind that it did not carry on before the change, or from a transaction of a kind that it had not entered into in the course of business operations before the change. 63CA(2) [Where part of debt is written off]
If a part of a debt is written off as bad, subsection (1) applies as if the part were an entire debt that is written off as bad.
63CA(3) [Where whole of debt is written off]This section has the same effect in relation to an allowable deduction under section 63E for the whole or part of a debt that is extinguished as it has in relation to an allowable deduction under section 63 of this Act or section 8-1 or 25-35 of the Income Tax Assessment Act 1997 for the whole or part of a debt that is written off as bad.
The Commissioner may give a company a notice in accordance with section 63CC if the requirements of subsections (2) to (4) of this section are met.
In its return of income for a year of income, the company must have deducted an amount in respect of a debt incurred in the year of income or an earlier year of income, where it was allowed to do so but would not have been unless one or more trusts had been family trusts (see subsection (5)).
63B(3) Second requirement.When the Commissioner gives the notice, for at least one of the family trusts:
(a) a trustee of the trust must be a non-resident; or
(b) the central management and control of the trust must be outside Australia. 63CB(4) Third requirement.
The Commissioner must give the notice before the later of:
(a) 5 years after the year of income to which the return relates; and
(b) the end of the period during which the company is required by section 262A to retain records in relation to that year of income. 63CB(5) Family trust.
The expression family trust has the same meaning as in section 272-75 of Schedule 2F .
The notice that the Commissioner may give if the requirements of subsections 63CB(2) to (4) are met must require the company to give the Commissioner specified information about conferrals of present entitlements to, and distributions (within the meaning of Subdivision 272-B of Schedule 2F ) of, income and capital, since:
(a) if the debt was incurred in an earlier year of income - the start of the day on which the debt was incurred; or
(b) if the debt was incurred in the year of income - the start of the year of income;
by all of the family trusts meeting the requirements of paragraph 63CB(3)(a) or (b).
63CC(2) Company knowledge.The information need not be within the knowledge of the company at the time the notice is given.
63CC(3) Period for giving information.The notice must specify a period within which the company is to give the information. The period must not end earlier than 21 days after the day on which the Commissioner gives the notice.
63CC(4) Consequence of not giving the information.If the company does not give the information within the period or within such further period as the Commissioner allows, the company is not entitled, and is taken never to have been entitled, to deduct the amount in respect of the debt.
63CC(5) No offences or penalties.To avoid doubt, subsection (4) does not cause the company to commit any offence or be liable to any penalty under Part VII for deducting the amount in respect of the debt in the company's return.
Expenditure incurred by the taxpayer in the year of income by way of commission for collecting his assessable income shall be an allowable deduction.
64(2) [No application 1997/98 income year onwards]This section does not apply to the 1997-98 year of income or a later year of income.
This section does not apply to the 1997-98 year of income or a later year of income.
Note:
This section has no equivalent in the Income Tax Assessment Act 1997 . Legal expenses may be deductible under section 8-1 of that Act (about general deductions) or under other provisions.
In this section, ``legal expenses'' means expenditure incurred by the taxpayer -
(a) for the services of a barrister or solicitor;
(b) for the registration or deposit in a public register or a public office, or the stamping, of a document; or
(c) in connection with proceedings before a court, board, commission or similar tribunal,
not being expenditure to which section 67 , section 67A , section 68 , section 68A or section 69 applies.
Legal expenses incurred in the year of income in carrying on a business for the purpose of gaining or producing assessable income shall, except to the extent to which they are expenses of a private or domestic nature, be allowable deductions.
64A(3) [Maximum deduction]The deduction allowable under this section shall not be greater than the amount (if any) by which $50 exceeds any amount allowable as a deduction under section 51 in respect of legal expenses.
CCH Note:
Below is material repealed as inoperative in s 65 by No 101 of 2006.
This section (other than subsections (1B) and (1C)) does not apply to the 1997-98 year of income or a later year of income.
Note 1:
Section 26-35 (Reduction of deduction for amounts paid to related entities) of the Income Tax Assessment Act 1997 deals with the deductibility of payments made to relatives or other related entities.
Note 2:
Section 26-40 (Maintaining your family) of the Income Tax Assessment Act 1997 deals with the deductibility of expenditure incurred on certain relatives.
Subject to this section, the amount, or a part of the amount, of any payment made or liability incurred in the year of income by a taxpayer to an associated person that would, but for this subsection, be an allowable deduction is allowable as a deduction only to the extent to which, in the opinion of the Commissioner, it is reasonable.
Subject to subsection (1B), where, by virtue of subsection (1), any amount is not an allowable deduction, that amount shall, for the purposes of this Act, be deemed not to be income of the associated person.
A reference in subsection (1) or subsection (1A) to an associated person shall be read as a reference:
(a) in the application of this section to a taxpayer, to:
(i) a relative of the taxpayer; or
(ii) a partnership a partner in which is a relative of the taxpayer; and
(b) in the application of this section to a partnership for the purpose of calculating in accordance with section 90 the net income of the partnership or a partnership loss, to:
(i) a relative (not being a partner in the partnership) of a partner in the partnership;
(ii) another partnership a partner in which is a relative of a partner in the first-mentioned partnership;
(iii) a person (not being a partner in the partnership) who is or has been, or is a relative of a person who is or has been, a shareholder in, or a director of, a company, being a private company, in relation to the year of income, that is a partner in the partnership; or
(iv) a person (not being a partner in the partnership) who is, or is a relative of, a beneficiary in a trust estate the trustee of which is, in his capacity as trustee of the trust estate, a partner in the partnership.
Nothing in any other provision of this Act prevents the amendment of an assessment at any time for the purpose of giving effect to the provisions of subsection (1A).
Where there is allowed as a deduction an amount that, in pursuance of subsection (1), was not previously allowed as a deduction, nothing in any other provision of this Act prevents the amendment of any assessment at any time to give effect to the inclusion in the income of a taxpayer of an amount that, in pursuance of subsection (1A), was treated, by virtue of the disallowance of the deduction, as not being so included for the purposes of the assessment.
Expenditure incurred, and payments becoming due, by the taxpayer in the year of income in or for the maintenance of the taxpayer's spouse, or of any member of the taxpayer's family under the age of 16 years, shall not, whether or not the expenditure was incurred in the production of assessable income, be an allowable deduction.
In subsection (2), a reference to the spouse of a person (in this subsection called the ``first person'' ) does not include a reference to a person who is legally married to the first person but is living separately and apart from the first person on a permanent basis.
(Repealed by No 110 of 1964)
This section does not apply to expenditure incurred in the 1997-98 year of income or a later year of income.
Note:
Section 25-25 (Borrowing expenses) of the Income Tax Assessment Act 1997 deals with the deductibility of borrowing expenses.
This section has effect subject to Division 245 of Schedule 2C .
Subject to this section, so much of the expenditure incurred by the taxpayer in borrowing money used by him for the purpose of producing assessable income as bears to the whole of that expenditure the same proportion as the part of the period for which the money was borrowed that is in the year of incomebears to the whole of that period shall be an allowable deduction.
67(2) [Period of borrowing]Where the period for which the money was borrowed is not fixed, or exceeds 5 years, the period of 5 years from the date on which the money was borrowed shall, for the purposes of subsection (1), be deemed to be the period for which the money was borrowed.
Where the total expenditure incurred in the year of income by the taxpayer in borrowing money used by him for the purpose of producing assessable income does not exceed $100, the whole of that expenditure shall be an allowable deduction in the year of income.
Where a taxpayer incurs expenditure in the year of income in borrowing money used by the taxpayer only partly for the purpose of producing assessable income, the taxpayer shall be deemed, for the purposes of the preceding provisions of this section, to have incurred only so much of that expenditure as, in the opinion of the Commissioner, is reasonable in the circumstances.
For the purposes of this section, a dividend paid by a company is a debt dividend if the shareholder to whom the dividend is paid is not entitled to a rebate under section 46 or 46A in respect of the dividend but would be entitled to such a rebate but for subsection 46C(5) , but such a dividend shall not be taken to be a debt dividend to the extent to which it is paid in respect of finance obtained by an associate (within the meaning of section 46C ) of the company.
67AA(2) [Deduction of debt dividend]A debt dividend paid by a company in a year of income is an allowable deduction to the company in respect of the year of income to the same extent as it would have been an allowable deduction under section 8-1 of the Income Tax Assessment Act 1997 if:
(a) the payment of the dividend had been the incurring by the company of a liability to pay the same amount as interest; and
(b) that interest had been incurred in respect of the finance that was obtained by the company and in respect of which the debt dividend was paid.
Section 45Z applies for the purposes of this section in a corresponding way to the way in which it applies for the purposes of sections 46 , 46A and 46C .
Where a taxpayer incurs expenditure (not including payments of principal or interest) in the year of income in connexion with the discharge of a mortgage given by him as security for the repayment of money borrowed by him or the payment by him of the whole or a part of the purchase price of property purchased by him:
(a) if the money or property was used by him wholly for the purpose of producing assessable income - the whole of the expenditure; or
(b) if the money or property was used by him only partly for that purpose - such part of the expenditure as the Commissioner determines,
shall be an allowable deduction.
67A(2) [No application 1997/98 income year onwards]This section does not apply to the 1997-98 year of income or a later year of income.
Note:
Section 25-30 (Expenses of discharging a mortgage) of the Income Tax Assessment Act 1997 deals with the deductibility of expenses related to discharging mortgages.
Where a taxpayer incurs expenditure in the year of income for the preparation, registration and stamping of a lease, or of an assignment or surrender of a lease, of property that is to be, or has been, held by the taxpayer for the purpose of producing assessable income:
(a) if the property is to be, or has been, held by the taxpayer wholly for that purpose - the whole of the expenditure shall be an allowable deduction; or
(b) if the property is to be, or has been, held by the taxpayer only partly for that purpose -so much only of the expenditure as, in the opinion of the Commissioner, is reasonable in the circumstances shall be an allowable deduction. 68(2) [No application 1997/98 income year onwards]
This section does not apply to the 1997-98 year of income or a later year of income.
Note:
Section 25-20 (Lease document expenses) of the Income Tax Assessment Act 1997 deals with the deductibility of expenses related to lease documents.
Where a taxpayer incurs expenditure (whether by payment of fees or otherwise) in the year of income in obtaining, or seeking to obtain, for the purpose of producing assessable income:
(a) the grant, or the extension of the term, of a patent for an invention;
(b) the registration, or the extension of the period of registration, of a design; or
(c) the registration of a copyright,
the following provisions have effect:
(d) if the expenditure was incurred in obtaining, or seeking to obtain, the grant, extension or registration wholly for the purpose of producing assessable income - the whole of the expenditure shall be an allowable deduction;
(e) if the expenditure was incurred in obtaining, or seeking to obtain, the grant, extension or registration only partly for the purpose of producing assessable income - so much only of the expenditure as, in the opinion of the Commissioner, is reasonable in the circumstances shall be an allowable deduction.
This section (other than subsection (7)) does not apply to the 1997-98 year of income or a later year of income. Subsection (9) does not apply to the use of property in the 1997-98 year of income or a later year of income.
Note:
Section 25-5 (Tax-related expenses) of the Income Tax Assessment Act 1997 deals with the deductibility of tax-related expenses.
Subject to this section, expenditure (other than expenditure of a capital nature) incurred by the taxpayer on or after 1 July 1989, to the extent to which the expenditure is in respect of a tax-related matter, is an allowable deduction for the year of income in which the expenditure is incurred.
69(2) [Reference to tax-related matter]For the purposes of the application of this section to a taxpayer, a reference in this section to a tax-related matter is a reference to:
(a) the management or administration of the income tax affairs of the taxpayer; or
(b) compliance with an obligation imposed on the taxpayer by a law of the Commonwealth, insofar as that obligation relates to the income tax affairs of another taxpayer;
but does not include a reference to an offence-related matter.
69(3) [Deemed not expenditure of capital nature]For the purposes of this section, expenditure incurred by the taxpayer in respect of a tax-related matter is not to be taken to be expenditure of a capital nature only because the income tax affairs concerned relate to matters of a capital nature.
69(4) [Fees or commissions for professional advice]A deduction is not allowable under subsection (1) in respect of a fee or commission for professional advice concerning the operation of a law relating to taxation unless the advice is provided by a recognised professional tax adviser.
69(5) [Expenditure not deductible]A deduction is not allowable under subsection (1) for expenditure that consists of:
(a) income tax; or
(b) an amount payable under Part VI ; or
(c) a financing cost in relation to an amount covered by paragraph (a) or (b). 69(6) [Restriction on operation of section]
A provision of this Act (including a provision of section 51 , other than subsection 51(1) ) that expressly prevents or restricts the operation of section 51 applies in the same way to this section.
For the purposes of 25-5 (Tax-related expenses) of the Income Tax Assessment Act 1997 , where:
(a) a taxpayer dies during a year of income; and
(b) the trustee of the estate of the deceased taxpayer incurs expenditure on or after 1 July 1989 that, if it had been incurred by the taxpayer during his or her lifetime, would have been an allowable deduction to the taxpayer under that section;
then, in the assessment of the trustee upon the assessable income derived by the deceased taxpayer, the expenditure is to be taken to be expenditure incurred by the taxpayer during that year of income.
Subsection (8) does not apply to an amount received in the 1997-98 year of income or in a later year of income if the amount is received as recoupment as defined by section
20-25
of the
Income Tax Assessment Act 1997
.
Note:
Subdivision 20-A of the Income Tax Assessment Act 1997 applies instead.
(a) a deduction has been allowed or is allowable under subsection (1) to a taxpayer for any expenditure; and
(b) that expenditure, or any part of it, is:
(i) reimbursed to the taxpayer; or
(ii) paid for the taxpayer by another person; or
(iii) recouped by the taxpayer from another person;
the assessable income of the taxpayer of the year of income in which the amount is so reimbursed, paid for or recouped includes that amount.
69(9) [Property used on or after 1 July 1989]For the purposes of this Act, where property is used by the taxpayer on or after 1 July 1989 for a tax-related matter, that use of the property by the taxpayer is to be taken to be for the purpose of producing assessable income of the taxpayer.
69(10) [Operation of subsec (9)]Subsection (9) has effect subject to a provision of this Act that expressly provides that a particular use of property is not to be taken to be for the purpose of producing assessable income.
69(11) [Definitions]In this section:
"financing cost"
, in relation to an amount (in this definition called the
``financed amount''
), means expenditure incurred by the taxpayer to the extent to which it is incurred in respect of obtaining finance for the financed amount and, without limiting the generality of the foregoing, includes:
(a) interest or a payment in the nature of interest; and
(b) expenses of borrowing;
"income tax"
means tax (however described) that is:
(a) imposed by an Act other than this Act; and
(b) payable under this Act;
"offence-related matter"
means a matter relating to the commission, or possible commission, of an offence against a law of the Commonwealth, of a State, of a Territory or of a foreign country and, without limiting the generality of the foregoing, includes a matter relating to:
(a) the investigation of such an offence; and
(b) a prosecution for, or other proceedings in relation to, such an offence;
"recognised professional tax adviser"
means:
(a) a registered tax agent (within the meaning of section 251A ); or
(b) a person exempted under subsection 251L(2) from the operation of section 251L ; or
(c) a person who is enrolled as a barrister, a solicitor or a barrister and solicitor of a federal court or a court of a State or Territory;
"tax-related matter"
has the meaning given by subsection (2).
A deduction is not allowable under this section for the 1997-98 year of income or a later year of income.
Note:
Subdivision 387-F of the Income Tax Assessment Act 1997 provides for deductions for the cost of a telephone line for the 1997-98 year of income and later years of income (even if the cost was incurred before the 1997-98 year of income - see SubDivision 387-F of the Income Tax (Transitional Provisions) Act 1997 ).
In this section:
"telephone line"
does not include any part of a telephone line the cost of which part has been allowed or is allowable as a deduction, or has been or is to be taken into account in ascertaining the amount of an allowable deduction, under a provision of this Act other than this section, in any assessment in respect of any taxpayer or in calculating in accordance with section
90
the net income of any partnership or any partnership loss in respect of any year of income; and
"the cost of a telephone line"
means capital expenditure incurred after the year of income that ended on 30 June 1963 on a telephone line extending to or situated on land on which a person was, at the time when the expenditure was incurred, carrying on a business of primary production, being expenditure incurred by:
(a) the owner of the land;
(b) a lessee, tenant or other person having an interest in the land; or
(c) a share-farmer carrying on a business of primary production on the land.
This section has effect subject to Division 245 of Schedule 2C .
An amount equal to one-tenth of the cost of a telephone line shall be an allowable deduction from the assessable income of the taxpayer of the year of income in which the relevant expenditure was incurred and of each of the succeeding 9 years of income.
This section does not apply in relation to the calculation of the net income of a partnership, or a partnership loss, in accordance with section 90 , but where a partnership has incurred the cost of a telephone line, then, for the purposes of the application of subsection (2) in respect of a partner in the partnership, the cost of the telephone line shall be taken to be:
(a) so much of the amount that would be the cost of the telephone line in relation to the partnership if the partnership were a taxpayer as the partners have agreed is to be borne by that partner; or
(b) if the partners have not agreed as to the part of that amount that is to be borne by that partner - so much of that amount as bears to that amount the same proportion as the individual interest of the partner in the net income of the partnership of the year of income in which the relevant expenditure was incurred bears to that net income or, as the case requires, as the individual interest of the partner in the partnership loss for that year of income bears to that partnership loss.
Where any part of the cost of a telephone line has been allowed or is allowable as a deduction under this section in an assessment of a taxpayer of any year of income, no amount shall, in respect of that telephone line, be an allowable deduction, or be taken into account in ascertaining the amount of an allowable deduction, under a provision of this Act other than this section in any assessment of any taxpayer or in calculating in accordance with section 90 the net income of any partnership or any partnership loss in respect of any year of income.
A deduction is not allowable under this section for the 1997-98 year of income or a later year of income.
Note:
Subdivision 387-E of the Income Tax Assessment Act 1997 provides for deductions for the 1997-98 year of income and later years of income for capital expenditure on the connection of mains electricity facilities (including expenditure incurred before the 1997-98 year of income - see Subdivision 387-E of the Income Tax (Transitional Provisions) Act 1997 ).
This section has effect subject to Division 245 of Schedule 2C .
Subject to this section, this section applies to expenditure of a capital nature incurred, after 25 May 1988 (other than under a contract entered into on or before that day) by a taxpayer being:
(a) the owner of land in Australia; or
(b) a lessee, tenant or other person having an interest in land in Australia,
on the connection of mains electricity facilities to that land where:
(c) at the time when the expenditure was incurred, the property in respect of which the expenditure was incurred was used, or installed ready for use and held in reserve, by the taxpayer or another person for, or in connection with, the provision of electricity for use, wholly or partly, in carrying on an assessable business on the land; or
(d) in a case to which paragraph (c) does not apply - the Commissioner is satisfied that, at the time when the expenditure was incurred, the taxpayer or another person intended to use the property in respect of which the expenditure was incurred for, or in connection with, the provision of electricity for use, wholly or partly, in carrying on an assessable business on the land at a time when the taxpayer was the owner, lessee or tenant or had an interest in the land, as the case may be.
This section does not apply to expenditure of a capital nature incurred by a taxpayer in providing, or by way of contribution to the cost of providing, water, light or power for use on or access to or communication with the site of prescribed mining operations within the meaning of Division 10 or prescribed petroleum operations within the meaning of Division 10AA .
70A(3) [Deduction allowable]Subject to this section, where a taxpayer incurs expenditure to which this section applies, an amount equal to 10% of that expenditure is an allowable deduction in the assessment of the taxpayer in respect of income of:
(a) the year of income in which the expenditure is incurred; and
(b) each of the succeeding 9 years of income.
(a) a deduction has been allowed, or would but for this subsection be allowable, under this section from the assessable income of a taxpayer of a year of income in respect of expenditure incurred on the connection of mains electricity facilities to land, being expenditure in relation to which this section would not apply but for paragraph (1)(d); and
(b) at no time during the period of 12 months after the time when the property in respect of which the expenditure was incurred is first used for, or in connection with, the provision of electricity to the land, is that property used, or installed ready for use and held in reserve, for, or in connection with, the provision of electricity for use in the carrying on of an assessable business on the land,
the deduction shall be deemed not to have been allowable, or not to be allowable, as the case may be.
70A(4A) [Application of para (5)(a) limited]Paragraph (5)(a) does not apply to an amount by which a taxpayer is recouped in the 1997-98 or a later year of income (including an amount by which the taxpayer is taken because of paragraph (5)(b) to be recouped in that year of income).
Note:
Subdivision 20-A of the Income Tax Assessment Act 1997 applies instead.
Where the taxpayer is recouped (whether by a government body or otherwise) in a year of income in respect of the whole or part of an amount of expenditure to which this section applies, the following provisions have effect:
(a) the assessable income of the taxpayer of the year of income shall include so much of the total amount (in this subsection called the ``year's recoupment amount'' ) by which the taxpayer is recouped in that year (including by virtue of any application of paragraph (b)) as does not exceed the amount (in this subsection called the ``overall net deduction'' ) ascertained in accordance with the formula:
| Total deductions - Total assessments |
where:
(b) if the year's recoupment amount exceeds the overall net deduction - the amount of the excess shall, for the purposes of this section, be taken to be an amount in respect of which the taxpayer is recouped (whether by a government body or otherwise) in the next following year of income in respect of a part of an amount of expenditure to which this section applies.
For the purposes of subsection (5), any consideration received by a taxpayer in respect of the disposal or transfer of the taxpayer's right to be recouped in respect of any expenditure to which this section applies shall be taken to be an amount recouped by the taxpayer in respect of that expenditure.
70A(7) [Recoupment - interests of partners]The reference in subsection (6) to the taxpayer's right to be recouped in respect of any expenditure to which this section applies includes a reference to the interest of the taxpayer in a partnership to the extent to which the interest includes a right to be recouped in respect of any such expenditure.
Where a taxpayer receives an amount that constitutes to an unspecified extent a recoupment of expenditure to which this section applies, the Commissioner may, for the purposes of subsection (5), determine the extent to which the amount constitutes a recoupment of that expenditure.
70A(9) [No double deduction]Where the whole or part of any expenditure to which this section applies has been allowed or is allowable as a deduction under this section in an assessment of a taxpayer of any year of income, no amount shall, in respect of the whole or any part of that expenditure, be an allowable deduction or be taken into account in ascertaining the amount of an allowable deduction, under a provision of this Act other than this section, in any assessment of any taxpayer or in calculating in accordance with section 90 the net income of any partnership or any partnership loss in respect of any year of income.
For the purposes of this Act, where a partnership has incurred expenditure to which this section would apply if the partnership were a taxpayer:
(a) each partner, instead of the partnership, shall be taken to have incurred:
(i) so much of that expenditure as the partners have agreed is to be borne by that partner; or
(ii) if the partners have not so agreed - a proportion of that expenditure equal to the proportion of the net income or partnership loss of the partnership of the year of income in which the expenditure was incurred that is represented by the individual interest of that partner in the net income or partnership loss; and
(b) if the partnership is recouped in respect of the whole or part of the expenditure that a partner was taken by paragraph (a) to have incurred - the partner, instead of the partnership, shall be taken to have been so recouped.
(a) a reference to the connection to any land of mains electricity facilities is a reference to -
(i) the connection of mains electricity cables from a point on the land or outside the land to a point on the land at which the consumption of electricity supplied through those cables to the land is to be metered;
(ii) the provision or installation of mains electricity metering equipment for use in connection with the supply of electricity to the land through mains electricity cables;
(iii) the provision or installation of equipment that is for use directly in connection with the supply of electricity to the land through mains electricity cables to a point on the land at which the consumption of electricity supplied through those cables to the land is metered; and
but does not include a reference to the connection of mains electricity cables, the provision or installation of equipment or any work undertaken in the course of replacing or re-locating mains electricity cables or any equipment unless the connection of the mains electricity cables, the provision or installation of the equipment or the undertaking of the work is for the purpose of obtaining an increase in the amount of electricity that can be supplied to a point on the land;
(iv) any work undertaken to increase the amount of electricity that may be supplied to the land through mains electricity cables to a point on the land at which the consumption of electricity supplied through those cables is metered and any consequential modification or replacement of mains electricity metering equipment or other equipment that is for use directly in connection with the supply of electricity to that point,
(b) a reference to expenditure incurred on the connection to any land of mains electricity facilities includes a reference to expenditure incurred by way of contribution to the cost of a project consisting of the connection of mains electricity facilities to that land and to other land;
(c) a reference to mains electricity metering equipment is a reference to equipment designed to measure the amount of electricity supplied to any place through mains electricity cables;
(d) a reference, in relation to expenditure incurred on the connection to any land of mains electricity facilities, to the property in respect of which the expenditure was incurred is a reference to the mains electricity cables or the equipment, or the mains electricity cables and the equipment, as the case requires, in respect of which the expenditure was incurred;
(e) a reference to the carrying on of an assessable business is a reference to the carrying on of a business for the purpose of producing assessable income; and
(f) a reference to a person having an interest in land includes a reference to a share-farmer carrying on a business on the land.
Where a loss incurred by the taxpayer through embezzlement, larceny, defalcation or misappropriation by a person, including an agent, employed by the taxpayer, not being a person employed solely for private or domestic purposes, of, or in respect of, money that is or has been included in the assessable income of the taxpayer is ascertained in the year of income, that loss shall be an allowable deduction.
71(2) [No application 1997/98 income year onwards]This section does not apply to a loss ascertained in the 1997-98 year of income or a later year of income.
Note:
Section 25-45 (Loss by theft etc.) of the Income Tax Assessment Act 1997 deals with the deductibility of losses caused by theft.
This section does not apply to the 1997-98 year of income or a later year of income.
Note:
Rates and land tax may be deductible under section 8-1 of the Income Tax Assessment Act 1997 . Section 25-75 (Rates and land taxes) of that Act deals with the deductibility of rates and land taxes paid for premises used to produce mutual receipts.
Sums for which the taxpayer is personally liable and which are paid in Australia by him in the year of income for -
(a) rates which are annually assessed; or
(b) land tax imposed under any law of a State or of a Territory being part of Australia (other than taxes which are deductible under section 17 of the Estate Duty Assessment Act 1914-1940 ),
shall be allowable deductions.
Where, in the year of income, a taxpayer, being a person who has, under a sub-divided residence scheme, a proprietary right in respect of a flat or home unit, makes, in accordance with the scheme, a payment which, or a part of which, the Commissioner is satisfied is in respect of, or of a share of, an amount of rates or land tax of a kind to which subsection (1) applies that has been paid or will be paid, in respect of, or of a part of, the sub-divided residence or the parcel of land on which the sub-divided residence is erected, by a person other than the taxpayer -
(a) that payment, or that part of that payment, as the case may be, is an allowable deduction; and
(b) any deduction that would, but for this subsection, have been allowable under subsection (1), in an assessment of the income of any person of any year of income, in respect of the payment of that amount of rates or land tax shall be reduced by the amount of the deduction allowable under paragraph (a).
A deduction is not allowable under this section in respect of an amount paid by a taxpayer unless -
(a) the amount is paid in respect of land that is, or premises that are, used by the taxpayer during the year of income for the purpose of gaining or producing income or carrying on a business for the purpose of gaining or producing income; or
(b) subject to subsection (1G), the amount is paid in respect of a dwelling, flat or home unit that is used by the taxpayer during the year of income as his sole or principal residence.
If an amount referred to in paragraph (1B)(a) is paid in respect of land that is, or premises that are, used by the taxpayer during the year of income partly for the purpose of gaining or producing income and partly for another purpose, so much only of that amount is allowable as a deduction by virtue of that paragraph as, in the opinion of the Commissioner, is reasonable in the circumstances.
The amount allowable as a deduction, or the sum of the amounts allowable as deductions, to a taxpayer under this section in respect of any one year of income by reason that a dwelling, flat or home unit was used by the taxpayer during that year of income as his sole or principal residence shall not exceed $300.
Where, in a year of income, 2 or more taxpayers pay amounts for rates or land tax, or amounts in respect of, or of a share of, an amount of rates or land tax, in respect of the same dwelling, flat or home unit, being a dwelling, flat or home unit used concurrently by them during that year of income as their sole or principal residence, the deductions to which those taxpayers are entitled under this section in respect of those amounts in respect of that year of income are such respective amounts, not exceeding in the aggregate $300, as, in the opinion of the Commissioner, are reasonable in the circumstances.
For the purposes of subsections (1B) and (1E), an amount paid in respect of a parcel of land on which a dwelling is situated shall be deemed to be an amount paid in respect of the dwelling.
Where the taxpayer is a resident, a deduction is not allowable under this section in respect of an amount paid by the taxpayer in the year of income that commenced on 1 July 1975, or in a subsequent year of income, in respect of a dwelling, flat or home unit that is used by the taxpayer during the relevant year of income as his sole or principal residence except to the extent that the amount is allowable as a deduction under subsection (1C) by reason that the amount is an amount of the kind referred to in paragraph (1B)(a).
In relation to assessments in respect of income of the year of income that commenced on 1 July 1975, the reference in subsection (1G) to a taxpayer who is a resident shall be read as including a reference to a taxpayer who is a resident of Papua New Guinea.
So far as it relates to a refund of an amount allowed or allowable as a deduction, subsection (2) does not apply to an amount received in the 1997-98 year of income or in a later year of income if the amount is received as recoupment as defined by section
20-25
of the
Income Tax Assessment Act 1997
.
Note:
Subdivision 20-A of the Income Tax Assessment Act 1997 applies instead.
Where a taxpayer receives in the year of income a refund of an amount paid for rates or taxes which has been allowed or is allowable as a deduction, or in respect of which a rebate of tax has been allowed or is allowable, in an assessment for income tax under this Act or a previous law of the Commonwealth, his assessable income shall include that amount.
Where a refund is made by a government or authority of an amount paid for rates or land tax and a deduction has been allowed or is allowable, or in respect of which a rebate of tax has been allowed or is allowable, in an assessment of a person by reason of a payment made by that person in respect of the whole or a part of that amount of rates or land tax -
(a) the assessable income of that person of the year of income of that person in which the refund is made shall include so much of the amount of the refund as the Commissioner considers to be reasonable in the circumstances; and
(b) any amount that would, but for this subsection, have been included under subsection (2) in the assessable income of any other person of the year of income of that other person in which the refund is made shall be reduced by the amount included under paragraph (a) in the assessable income of the first-mentioned person in respect of the refund.
In this section -
"proprietary right"
, in relation to a flat or home unit, includes rights of occupancy arising by virtue of the holding of shares or by virtue of a contract to purchase shares in a company that owns the sub-divided residence that contains the flat or home unit;
"sub-divided residence"
means a building in respect of which there is a sub-divided residence scheme; and
"sub-divided residence scheme"
means a scheme or arrangement having the purpose of enabling or facilitating the holding or employment of proprietary rights by different persons in respect of different flats or home units contained in the one building in Australia.
A deduction is not allowable under subsection (1) for the 1997-98 year of income or any later year of income.
Note:
Section 330-350 of the Income Tax Assessment Act 1997 gives a taxpayer a deduction for petroleum resource rent tax, or an instalment of petroleum resource rent tax, paid in the 1997-98 year of income or a later year of income.
Subject to subsection (2), where in a year of income a taxpayer pays an amount of petroleum resource rent tax, or an instalment of petroleum resource rent tax, for which the taxpayer is personally liable, the amount of the payment is an allowable deduction from the assessable income of the taxpayer of the year of income.
A deduction is not allowable under subsection (2) for the 1997-98 year of income or any later year of income.
Note:
Section 330-350 of the Income Tax Assessment Act 1997 gives a taxpayer as agent or trustee a deduction for petroleum resource rent tax, or an instalment of petroleum resource rent tax, paid in the 1997-98 year of income or a later year of income.
Where in a year of income a taxpayer as agent or trustee pays an amount of petroleum resource rent tax, or an instalment of petroleum resource rent tax, for which the taxpayer is liable as agent or trustee, the amount of the payment is an allowable deduction from the assessable income of the taxpayer, as agent or trustee, of the year of income.
A reference in subsections (1) and (2) to a payment of an amount of petroleum resource rent tax does not include a reference to a payment under paragraph 99(c) of the Petroleum Tax Act.
Subject to subsection (4), where in a year of income -
(a) a taxpayer receives a refund of an amount paid for petroleum resource rent tax, or instalment of petroleum resource rent tax, that has been allowed or is allowable, or would apart from subsection (2A) have been allowable, as a deduction from the assessable income of the taxpayer of a year of income; or
(aa) under paragraph 99(d) of the Petroleum Tax Act, the Commissioner credits an amount paid by a taxpayer in respect of an instalment of petroleum resource rent tax, where a deduction for that amount has been allowed or is allowable to the taxpayer for a year of income; or
(b) the Commissioner:
(i) pays an amount to a taxpayer in total or partial discharge of a debt under sub-section 47(1) of the Petroleum Tax Act; or
(ii) applies an amount under subsection 47(2) of that Act in total or partial discharge of a liability of a taxpayer,
the amount shall be included in the assessable income of the taxpayer of the year of income in which it is received, credited, paid or applied, as the case may be.
(a) a taxpayer receives as agent or trustee a refund of an amount paid for petroleum resource rent tax, or instalment of petroleum resource rent tax, that has been allowed or is allowable, or would apart from subsection (2A) have been allowable, as a deduction from the assessable income of the taxpayer of a year of income; or
(aa) under paragraph 99(d) of the Petroleum Tax Act, the Commissioner credits an amount paid by a taxpayer as agent or trustee in respect of an instalment of petroleum resource rent tax, where a deduction for that amount has been allowed or is allowable to the taxpayer for a year of income; or
(b) the Commissioner:
(i) pays an amount to a taxpayer as agent or trustee in total or partial discharge of a debt under subsection 47(1) of the Petroleum Tax Act; or
(ii) applies an amount under subsection 47(2) of that Act in total or partial discharge of a liability of a taxpayer as agent or trustee,
the amount shall be included in the assessable income of the taxpayer, as agent or trustee, of the year of income in which it is received, credited, paid or applied, as the case may be.
In this section:
"instalment of petroleum resource rent tax"
means an instalment of tax payable under Division 2 of Part VIII of the Petroleum Tax Act;
"petroleum resource rent tax"
means tax imposed by the
Petroleum Resource Rent Tax Act 1987
, as assessed under the Petroleum Tax Act;
"Petroleum Tax Act"
means the
Petroleum Resource Rent Tax Assessment Act 1987
.
(Repealed by No 85 of 1959)
This section does not apply to the 1997-98 year of income or a later year of income.
Note:
Section 25-55 (Payments to associations) of the Income Tax Assessment Act 1997 deals with the deductibility of payments made for membership of a trade, business or professional association.
Where the carrying on of a business from which assessable income is derived by the taxpayer is conditional upon membership of any association, any periodical subscription paid by him in the year of income in respect of that membership shall be an allowable deduction.
73(2) [Maximum deduction]Where an association carries out, on behalf of its members, in the year of income, any activity of such a nature that, if carried out by the taxpayer on his own behalf, its expense would be an allowable deduction to him, any subscriptions, levies or contributions, not exceeding in the aggregate $42, paid by him in that year in respect of membership of that association, shall be an allowable deduction, and any such subscriptions, levies or contributions exceeding in the aggregate that amount, shall be an allowable deduction to the extent only of the greater of the 2 following amounts:
(a) $42;
(b) so much, if any, of the subscriptions, levies or contributions as has been, or will be, applied by the association to meet losses or outgoings incurred in carrying out that activity other than losses or outgoings of capital or of a capital nature.
Any periodical subscription, to which the foregoing provisions of this section do not apply, paid by the taxpayer in the year of income in respect of his membership of any trade, business or professional association, shall be an allowable deduction:
CCH Note:
Below is material repealed as inoperative in s 73A by No 101 of 2006.
consideration received or receivable in respect of the disposal, loss or destruction
has the same meaning as that given to the expression ``the consideration receivable in respect of the disposal, loss or destruction'' by subsection
59(3)
.
CCH Note:
Below is material repealed as inoperative in s 73B by No 101 of 2006.
aggregate research and development amount
…
(c) one-third of the total qualifying building expenditure of the company in relation to the year of income; and
building expenditure
, in relation to an eligible company, means expenditure of a capital nature incurred bythe company in:
(a) the acquisition, or the construction, under a contract entered into on or after 1 July 1985, of a building, or of an extension, alteration or improvement to a building owned or leased by the company; or
(b) the construction by the company, being construction that commenced on or after 1 July 1985, of a building, or of an extension, alteration or improvement to a building owned or leased by the company,
being a building, or an extension, alteration or improvement to a building, for use by the company exclusively for the purpose of the carrying on by or on behalf of the company of research and development activities.
undeducted building expenditure
, in relation to an eligible company in relation to a building or an extension, alteration or improvement to a building, means the amount (if any) ascertained by deducting from the amount of building expenditure in relation to that building or that extension, alteration or improvement, as the case may be, the amount or the sum of the amounts allowed or allowable as a deduction or deductions under subsection (17) in relation to that building or that extension, alteration or improvement, as the case may be.
Subject to subsection (5), where, during a year of income:
(a) an eligible company commences to use a unit of plant in respect of which the company has incurred an amount of plant expenditure exclusively for the purpose of the carrying on by or on behalf of the company of research and development activities; or
(b) an eligible company commences to use a building, or an extension, alteration or improvement to a building, in respect of which the company has incurred an amount of building expenditure exclusively for the purpose of the carrying on by or on behalf of the company of research and development activities,
that amount shall, in relation to that unit of plant, that building or that extension, alteration or improvement, as the case may be, be taken to be an amount of qualifying plant expenditure or qualifying building expenditure, as the case may be, in relation to the company in relation to the year of income and in relation to each of the 2 succeeding years of income.
(a) apart from this subsection, there would be an amount of qualifying plant expenditure in relation to a unit of plant owned by an eligible company in relation to a year of income or an amount of qualifying building expenditure in relation to a building, or an extension, alteration or improvement to a building, owned by an eligible company in relation to a year of income; and
(b) at any time during the year of income, the company ceases to use that unit of plant, that building or that extension, alteration or improvement, as the case may be, exclusively for the purpose of the carrying on by or on behalf of the company of research and development activities,
there shall be no amount of qualifying plant expenditure in relation to that unit of plant or no amount of qualifying building expenditure in relation to that building, or that extension, alteration or improvement, as the case may be, in relation to the year of income or any succeeding year of income.
73B(5A) [Commitment to building before 21 November 1987]This section does not apply to expenditure incurred by an eligible company in the acquisition or construction of a building or of an extension, alteration or improvement to a building unless:
(a) in the case of acquisition - any contract in respect of that acquisition was entered into before 21 November 1987;
(b) in the case of construction - either of the following subparagraphs applies:
(i) that construction commenced before 21 November 1987;
(ii) any contract in respect of that construction was entered into before 21 November 1987; and
(c) if the expenditure was incurred after 20 November 1987 - the company intended, on 20 November 1987, that the building, or the extension, alteration or improvement to the building, as the case may be, would be for use by the company exclusively for the purpose of the carrying on by or on behalf of the company of research and development activities.
For the purposes of this section, a building shall not be taken not to have been used exclusively for the purpose of the carrying on of research and development activities at a particular time if:
(a) its use for that purpose had, at that time, ceased by reason only of a temporary cessation of use of the building by reason of the construction of an extension, alteration or improvement, or the making of repairs, to the building; or
(b) it was, at that time:
(i) maintained ready for use for that purpose; and
and its use or intended use for that purpose had not been abandoned. 73B(17) [Amount of allowable deduction: buildings]
(ii) not used or for use for any other purpose,
Subject to this section, where, in a year of income, there is an amount of qualifying building expenditure in relation to an eligible company in relation to a building or an extension, alteration or improvement to a building, one-third of that expenditure is allowable as a deduction from the assessable income of the company of the year of income.
73B(25) [Destruction of building, extension, alteration or improvement](a) a deduction has been allowed or is allowable to an eligible company under subsection (17) in respect of expenditure incurred by the company in the acquisition or construction of a building or of an extension, alteration or improvement to a building; and
(b) while the building is owned by the company or, if the building was leased by the company at the time when that expenditure was incurred, while the building is leased by the company, the building or the extension, alteration or improvement, as the case may be, is destroyed,
then:
(c) in a case where there is an amount of undeducted building expenditure in relation to the company in relation to the building or the extension, alteration or improvement, as the case may be, and that amount exceeds the consideration receivable by the company in respect of the destruction - an amount equal to that excess is allowable as a deduction from the assessable income of the company of the year of income in which the destruction occurred;
(d) in a case where there is an amount of undeducted building expenditure in relation to the company in relation to the building or the extension, alteration or improvement, as the case may be, and the consideration receivable by the company in respect of the destruction exceeds that amount - the assessable income of the company of the year of income in which the destruction occurred shall include so much of that excess as does not exceed the sum of the deductions allowed or allowable from the assessable income of the company under subsection (17) in relation to the building or the extension, alteration or improvement, as the case may be; or
(e) in a case where there is no amount of undeducted building expenditure in relation to the company in relation to the building or the extension, alteration or improvement, as the case may be - the assessable income of the company of the year of income in which the destruction occurred shall include so much of the consideration receivable by the company in respect of the destruction as does not exceed the sum of the deductions allowed or allowable from the assessable income of the company under subsection (17) in relation to the building or the extension, alteration or improvement, as the case may be. 73B(26) [Destruction of part of building, etc]
(a) a deduction has been allowed or is allowable to an eligible company under subsection (17) in respect of expenditure incurred by the company in the acquisition or construction of a building or an extension, alteration or improvement to a building; and
(b) while the building is owned by the company or, if the building was leased by the company at the time when that expenditure was incurred, while the building is leased by the company, a part (in this subsection referred to as the destroyed part ) of the building or of the extension, alteration or improvement, as the case may be, is destroyed,
then:
(c) in a case where there is an amount of undeducted building expenditure in relation to the company in relation to the building or the extension, alteration or improvement, as the case may be, and so much of that amount as is attributable to the destroyed part exceeds the consideration receivable by the company in respect of the destruction of the destroyed part - an amount equal to that excess is allowable as a deduction from the assessable income of the company of the year of income in which the destruction occurred;
(d) in a case where there is an amount of undeducted building expenditure in relation to the company in relation to the building or the extension, alteration or improvement, as the case may be, and the consideration receivable by the company in respect of the destruction of the destroyed part exceeds so much of that amount as is attributable to the destroyed part - the assessable income of the company of the year of income in which the destruction occurred shall include so much of that excess as does not exceed so much of the sum of the deductions allowed or allowable from the assessable income of the company under subsection (17) in relation to the building or the extension, alteration or improvement, as the case may be, as is attributable to the destroyed part; or
(e) in a case where there is no amount of undeducted building expenditure in relation to the company in relation to the building or the extension, alteration or improvement, as the case may be - the assessable income of the company of the year of income in which the destruction occurred shall include so much of the consideration receivable by the company in respect of the destruction of the destroyed part as does not exceed so much of the sum of the deductions allowed or allowable from the assessable income of the company under subsection (17) in relation to the building or the extension, alteration or improvement, as the case may be, as is attributable to the destroyed part. 73B(27)
(b) after the end of the period referred to in paragraph (28)(b), the company sells or otherwise disposes of the building or the extension, alteration or improvement, as the case may be, 73B(28) [Sale, disposal, change of use within five years]
(a) a deduction is allowed from the assessable income of an eligible company under subsection (17) in respect of expenditure incurred by the company in the acquisition or construction of a building or of an extension, alteration or improvement to a building; and
(b) before the end of the period of 5 years commencing on the day on which the company commenced to use the building or the extension, alteration or improvement, as the case may be, exclusively for the purpose of the carrying on by or on behalf of the company of research and development activities, the company:
(i) sells or otherwise disposes of the building or the extension, alteration or improvement, as the case may be; or
(ii) ceases to use the building or the extension, alteration or improvement, as the case may be, exclusively for that purpose,
any deduction allowed from the assessable income of the company under subsection (17) in respect of the expenditure referred to in paragraph (a) shall, for the purposes of this section other than subsection (20), be deemed never to have been allowable, and the expenditure incurred by the company in the acquisition or construction of the building or of the extension, alteration or improvement, as the case may be, shall be deemed never to have been qualifying building expenditure.
73B(29) [Commissioner's discretion re subsec (28)](a) subsection (28) would, apart from this subsection, apply to expenditure incurred by an eligible company in the acquisition or construction of a building or of an extension, alteration or improvement to a building; and
(b) the Commissioner, having regard to:
(i) the nature of the use by the company of the building or of the extension, alteration or improvement, as the case may be, both before and after the occurrence of the event referred to in paragraph (28)(b);
(ii) the circumstances by reason of which that event occurred;
(iii) the period during which the company carried on research and development activities and any period during which it is reasonable to expect that the company will continue to carry on those activities; and
is satisfied that it would be unreasonable for subsection (28) to apply to that expenditure,
(iv) such other matters relating to the use of the building or the extension, alteration or improvement, as the case may be, or to the activities carried on by the company as the Commissioner considers relevant,
that subsection does not apply to that expenditure.
73B(30) [Deductions under other provisions where sale, etc, within five years](a) subsection (28) applies to expenditure incurred by an eligible company in the acquisition or construction of a building or an extension, alteration or improvement to a building; and
(b) deductions would, apart from this section, have been allowable to the company under section 75B or 124JA of this Act, or Division 10 , 10AAA , 10AA or 10D of this Part, or Division 43 or the former Subdivision 330-A, 330-C or 330-H of the Income Tax Assessment Act 1997 , or under section 40-730 , or 40-830 (because of subsection 40-840(1) ) of that Act, under the former Subdivision 387-B or 387-G of that Act, under section 40-515 of that Act (for a water facility) or under SubDivision 40-B of that Act (for a timber mill building or forestry road) in respect of that expenditure;
section 75B or 124JA of this Act, or Division 10 , 10AAA , 10AA or 10D of this Part, or Division 43 or the former Subdivision 330-A, 330-C or 330-H of the Income Tax Assessment Act 1997 , or under section 40-730 , or 40-830 (because of subsection 40-840(1) ) of that Act, under the former Subdivision 387-B or 387-G of that Act, under section 40-515 of that Act (for a water facility) or under SubDivision 40-B of that Act (for a timber mill building or forestry road) as the case may be, applies to that expenditure as if this section had never applied to that expenditure.
Where the Commissioner is satisfied that:
(a) before 1 July 1985, an eligible company:
(i) owned a unit of plant or a building;
(ii) entered into a contract or arrangement for the acquisition of a unit of plant or a building; or
(which unit of plant or building is in this subsection referred to as the ``original unit'' or ``original building'' , as the case may be);
(iii) commenced the construction of a unit of plant or a building,
(b) on or after 1 July 1985 and at a time when:
(i) in a case to which subparagraph (a)(i) applies - the company was the owner of the original unit or the original building;
(ii) in a case to which subparagraph (a)(ii) applies - the company was a party to the contract or arrangement or was the owner of the original unit or the original building; or
the company entered into a scheme under which:
(iii) in a case to which subparagraph (a)(iii) applies - the company had yet to complete the construction of the original unit or the original building or was the owner of the original unit or the original building,
(iv) the company became the owner of the original unit or the original building (otherwise than under the contract or arrangement referred to in subparagraph (a)(ii) or, in a case to which subparagraph (a)(iii) applies, by reason of the original unit or the original building having been constructed by the company); or
(v) the company became the owner of a unit of plant or a building (in this subsection referred to as the ``substituted unit'' or ``substituted building'' , as the case may be) identical with, or having a purpose similar to that of, the original unit or the original building and intended by the company to be in lieu of the original unit or the original building;
(c) a deduction under this section would, apart from this subsection, be allowable from the assessable income of the company in respect of expenditure incurred by the company in the acquisition or construction of:
(i) in a case to which subparagraph (b)(iv) applies - the original unit or the original building; or
(ii) in a case to which subparagraph (b)(v) applies - the substituted unit or the substituted building; and
(d) the company entered into the scheme for the purpose, or for purposes that included the purpose, of obtaining a deduction under this section in respect of that expenditure;
the Commissioner may refuse to apply this section to that expenditure.
73B(38) [``Acquisition of plant or building'']A reference in subsection (37) to the acquisition by a company of a unit of plant or a building shall be read as including a reference to the construction of the unit or building for the company by another person.
SECTION 73D REDUCTION OF DEDUCTIONS 73D(1A) [Limited application]This section does not apply to an amount received in the 1997-98 year of income or a later year of income if the amount is received as recoupment as defined by section
20-25
of the
Income Tax Assessment Act 1997
.
Note:
Subdivision 20-A of the Income Tax Assessment Act 1997 applies instead.
For the purposes of interpretation, this section is to be read and construed as if it were part of section 73B .
73D(2) [Calculation of deduction](a) an eligible company has, on or after 21 November 1987, incurred expenditure on research and development activities that formed or form part of a particular project carried on by or on behalf of the company; and
(b) the company has, whether before or after the commencement of this section, received, or become entitled to receive, as a recoupment of, or as a grant in respect of, any of that expenditure an amount or amounts that has not or have not been, and will not be, included in the assessable income of the company of any year of income;
the deduction, or the sum of the deductions, that, but for this subsection, would be allowable under section 73B (as affected by sections 73C and 73CA ) in respect of the expenditure referred to in paragraph (a) in the assessment or assessments of the company in respect of income of any year or years of income is reduced by an amount equal to so much of that deduction or sum as does not exceed the amount or the total of the amounts referred to in paragraph (b).
A reference in this section to a recoupment of, or a grant in respect of, any of the expenditure incurred by an eligible company on research and development activities that formed or form part of a particular project carried on by or on behalf of the company does not include a reference to a recoupment or grant where the recoupment or grant is made:
(a) by or from the Commonwealth; and
(b) under the program known as the Co-operative Research Centres Program.
(a) subject to paragraph (b), regard is to be had to the years of income of the company in the following order:
(i) the year of income, or, in chronological order, each year of income, in which the company received, or became entitled to receive, an amount referred to in paragraph (2)(b);
(ii) in reverse chronological order, each year of income before the year, or the earliest year, of income referred to in subparagraph (i);
(iii) in chronological order, each year of income to which regard has not been had under subparagraph (i) or (ii); and
(b) if the company did not receive, or become entitled to receive, any amount referred to in paragraph (2)(b) until after the last year of income in which any of the expenditure referred to in paragraph (2)(a) was incurred, regard is to be had first to the latest year of income in respect of which a deduction was allowed, or is allowable, under section 73B in respect of any of that expenditure and then, in reverse chronological order, to each of the earlier years of income.
In this section:
"unit"
means a building or an extension, alteration or improvement to a building.
This section applies to the disposal of a unit by an eligible company (in this section called the ``transferor'' ) to another eligible company (in this section called the ``transferee'' ) if:
(a) the disposal involves a CGT event for which there is a roll-over under Subdivision 126-B of the Income Tax Assessment Act 1997 , as in force before the amendments made to that Subdivision by the New Business Tax System (Consolidation) Act (No 1) 2002 ; and
(b) subject to subsection (14), a deduction or deductions have been allowed or are allowable under subsection 73B(17) to the transferor in respect of the unit or would have been allowed or allowable if the company had not chosen a tax offset under section 73I .
Subsection 73B(27) does not apply in respect of the disposal of the unit by the transferor.
73F(4) 5-year deduction disallowance rule does not apply.Subsection 73B(28) does not apply in respect of the disposal of the unit by the transferor.
73F(5) Subsection 73B(4) definition of ``qualifying building expenditure'' not applicable to transferee.Subsection 73B(4) does not apply to the transferee in relation to the unit.
73F(6) Transferee to inherit transferor's qualifying building expenditure.(a) immediately after the disposal took place, the transferee commences to use the unit exclusively for the purpose of the carrying on by or on behalf of the transferee of research and development activities; and
(b) apart from the disposal, there would have been an amount of qualifying building expenditure in relation to the transferor in relation to:
(i) the year of income of the transferor in which the disposal took place; or
(ii) the first subsequent year of income of the transferor;
then, subject to subsection 73B(5) , section 73B and this section have effect as if an amount equal to that amount were taken:
(c) to have been incurred by the transferee in the acquisition of the unit; and
(d) to be an amount of qualifying building expenditure in relation to the transferee in relation to:
(i) if subparagraph (b)(i) applies - the year of income of the transferee in which the disposal took place; and
73F(7) Pre-21 November 1987 rule not applicable to transferee.
(ii) if subparagraph (b)(ii) applies - the first subsequent year of income of the transferee.
Subsection 73B(5A) does not apply in relation to the acquisition of the unit by the transferee.
73F(8) Modification of 5-year deduction disallowance rule.A reference in subsection 73B(28) to the day on which the transferee commenced to use the unit exclusively for the purpose of the carrying on by or on behalf of the transferee of research and development activities is to be read as a reference to:
(a) the day on which the transferor first used the unit exclusively for the purpose of the carrying on by or on behalf of the transferor of research and development activities; or
(b) if there have been 2 or more prior successive applications of this section - the earliest day on which a prior successive transferor first used the unit exclusively for the purpose of the carrying on by or on behalf of the prior successive transferor of research and development activities. 73F(9) Deemed cessation of use by transferee - 5-year deduction disallowance rule.
For the purposes of the application of subsection 73B(28) and subsection (10) of this section to the transferee, if, immediately after the disposal of the property to the transferee took place, the transferee did not commence to use the unit exclusively for the purpose of the carrying on by or on behalf of the transferee of research and development activities, the transferee is taken to have ceased to use the unit for that purpose immediately after the disposal took place.
73F(10) Adjustments where 5-year deduction disallowance rule applies.(a) after the disposal of the unit to the transferee, the transferee:
(i) disposes of the unit; or
(ii) ceases to use the unit exclusively for the purpose of the carrying on by or on behalf of the transferee of research and development activities; and
(b) subsection 73B(28) applies in relation to the disposal of the unit by the transferee or in relation to the cessation of use by the transferee;
then:
(c) the transferee's assessable income of the year of income in which the acquisition of the unit by the transferee took place includes:
(i) the total amount allowed or allowable as deductions to the transferor under subsection 73B(17) in relation to the unit; or
(ii) if there have been 2 or more prior successive applications of this section - the total amount allowed or allowable as deductions to the prior successive transferors under subsection 73B(17) in relation to the unit; and
(d) the following amounts are allowable deductions to the transferee for the year of income in which the acquisition of the unit by the transferee took place:
(i) the total amount of the deductions (if any) that would have been allowable to the transferor under section 75B or 124JA of this Act, or Division 10 , 10AAA , 10AA or 10D of this Part, or Division 43 or the former Subdivision 330-A, 330-C or 330-H of the Income Tax Assessment Act 1997 , or under section 40-730 , or 40-830 (because of subsection 40-840(1) ) of that Act, in relation to the unit if section 73B had not been enacted; or
(ii) if there have been 2 or more prior successive applications of this section - the total amount of the deductions (if any) that would have been allowable to the prior successive transferors under section 75B or 124JA of this Act, or Division 10 , 10AAA , 10AA or 10D of this Part, or Division 43 or the former Subdivision 330-A, 330-C or 330-H of the Income Tax Assessment Act 1997 , or under section 40-730 , or 40-830 (because of subsection 40-840(1) ) of that Act, in relation to the unit if section 73B had not been enacted; and
(e) for the purposes of the application of section 75B or 124JA of this Act, or Division 10 , 10AAA , 10AA or 10D of this Part, or Division 43 or the former Subdivision 330-A, 330-C or 330-H of the Income Tax Assessment Act 1997 , or under section 40-730 , or 40-830 (because of subsection 40-840(1) ) of that Act to the transferee in relation to the unit:
(i) whichever of the following is applicable:
(A) the expenditure incurred by the transferor in the acquisition or construction of the unit;is taken to have been expenditure incurred by the transferee in the acquisition of the unit; and
(B) if there have been 2 or more prior successive applications of this section - the expenditure incurred by the earliest prior successive transferor in the acquisition or construction of the unit;
(ii) a deduction allowable to the transferee under paragraph (d) of this subsection in relation to the unit is taken to be a deduction allowable to the transferee in relation to the unit under section 75B or 124JA of this Act, or Division 10 , 10AAA , 10AA or 10D of this Part, or Division 43 or the former Subdivision 330-A, 330-C or 330-H of the Income Tax Assessment Act 1997 , or under section 40-730 , or 40-830 (because of subsection 40-840(1) ) of that Act, as the case requires.
(a) after the disposal of the unit to the transferee, the transferee disposes of the unit; and
(b) this section does not apply to the disposal by the transferee; and
(c) subsection 73B(27) applies to the disposal by the transferee;
then, for the purposes of the application of subsection 73B(27) in relation to the disposal:
(d) which of the following is applicable:
(i) the expenditure incurred by the transferor in the acquisition or construction of the unit;
is taken to have been expenditure incurred by the transferee in the acquisition of the unit; and
(ii) if there have been 2 or more prior successive applications of this section - the expenditure incurred by the earliest prior successive transferor in the acquisition or construction of the unit;
(e) the total of:
(i) the amounts that would, apart from section 73B , have been allowed or allowable as deductions to the transferor under Division 10D of this Part, or Division 43 of the Income Tax Assessment Act 1997 , in respect of the expenditure of the transferor in the acquisition or construction of the unit; and
are taken to have been amounts that would, apart from section 73B , have been allowed or allowable as deductions to the transferee under Division 10D of this Part, or Division 43 of the Income Tax Assessment Act 1997 , in respect of expenditure incurred by the transferee in the acquisition of the unit.
(ii) if there have been 2 or more prior successive applications of this section - the amounts that would, apart from section 73B , have been allowed or allowable as deductions to the prior successive transferors under Division 10D of this Part, or Division 43 of the Income Tax Assessment Act 1997 , in respect of the expenditure incurred by the earliest prior successive transferor in the acquisition or construction of the unit;
If, after the disposal of the unit to the transferee, the unit, or a part of the unit, is destroyed, then, for the purposes of the application of subsection 73B(25) or (26) , as the case may be, in relation to the destruction:
(a) whichever of the following is applicable:
(i) the expenditure incurred by the transferor in the acquisition or construction of the unit;
is taken to have been expenditure incurred by the transferee in the acquisition of the unit; and
(ii) if there have been 2 or more prior successive applications of this section - the expenditure incurred by the earliest prior successive transferor in the acquisition or construction of the unit;
(b) the total of:
(i) the amounts allowed or allowable as deductions to the transferor under subsection 73B(17) in relation to the unit; or
are taken to have been amounts allowed or allowable to the transferee as deductions under subsection 73B(17) in relation to the unit. 73F(13) Recoupment of expenditure - consequential amendment of assessments.
(ii) if there have been 2 or more prior successive applications of this section - the amounts allowed or allowable as deductions to the prior successive transferors under subsection 73B(17) in relation to the unit;
Section 170 does not prevent the amendment at any time of an assessment of the transferee where section 73C or 73D has applied to:
(a) the transferor in respect of the unit; or
(b) if there have been 2 or more prior successive applications of this section - any of the prior successive transferors in respect of the unit. 73F(14) Second or subsequent application of section - paragraph (2)(b) does not apply.
If, apart for this subsection, this section has applied to the disposal of the unit to the transferee, then, in working out whether this section applies to a subsequent disposal of the unit by:
(a) the transferee; or
(b) one or more subsequent successive transferees;
this section has effect as if paragraph (2)(b) (which deals with deductions) had not been enacted.
73F(15) Interpretation.For the purposes of interpretation, this section is to be construed as if it were part of section 73B .
This section does not apply to the 1997-98 year of income or a later year of income.
Note:
Section 25-60 (Parliament election expenses) of the Income Tax Assessment Act 1997 deals with the deductibility of election expenses of candidates for the Parliament of the Commonwealth, State or Territory.
Expenditure incurred in the year of income by the taxpayer in being elected as a member, or in contesting an election for membership, of the Parliament, of the Parliament of a State, of the Legislative Assembly for the Australian Capital Territory or of the Legislative Assembly of the Northern Territory of Australia shall be an allowable deduction.
Subsection (2) does not apply to an amount received in the 1997-98 year of income or in a later year of income if the amount is received as recoupment as defined by section
20-25
of the
Income Tax Assessment Act 1997
.
Note:
Subdivision 20-A of the Income Tax Assessment Act 1997 applies instead.
When a deduction has been allowed or is allowable under subsection (1) in respect of any expenditure and that expenditure or any part of it is reimbursed to the taxpayer or paid for him by any other person or by any organization the assessable income of the taxpayer of the year in which the amount is so reimbursed or paid shall include that amount.
In this section -
eligible election expenditure
, in relation to a taxpayer, means expenditure incurred by the taxpayer, in the year of income that commenced on 1 July 1985 or a subsequent year of income
-
(a) in being elected as a member; or
(b) in contesting an election for membership,
of a local governing body.
local governing body
means a local governing body established by or under a law of a State or Territory.
non-deductible amount
, in relation to a taxpayer in respect of an election as at the end of a year of income, means the total eligible election expenditure incurred by the taxpayer before the end of the year of income in respect of the election (including any such expenditure incurred in any preceding year of income) reduced by
-
(a) all deductions allowed or allowable to the taxpayer under this section, in the year of income or a preceding year of income, in respect of that expenditure; and
(b) all amounts that have been applied under subsection (5) in preceding years of income in reduction of amounts that would otherwise have been included in the assessable income of the taxpayer in respect of the election.
unused deduction limit
, in relation to a taxpayer in respect of an election as at the end of a year of income, means
-
(a) where neither paragraph (b) nor (c) applies - $1,000;
(b) where -
(i) in a preceding year of income or preceding years of income, a deduction or deductions are allowable or have been allowed to the taxpayer under this section in respect of the election; and
$1,000 reduced by the amount of that deduction or the sum of the amounts of those deductions; or
(ii) paragraph (c) does not apply,
(c) where -
(i) in a preceding year of income or preceding years of income, a deduction or deductions are allowable or have been allowed to the taxpayer under this section in respect of the election; and
$1,000 reduced by the amount (if any) by which the amount of the deduction, or the sum of the amounts of the deductions, referred to in subparagraph (i) exceeds the amount, or the sum of the amounts, included in assessable income as mentioned in subparagraph (ii). 74A(2) [Allowable deductions]
(ii) an amount or amounts have been included in the assessable income of the taxpayer of a preceding year of income or preceding years of income under subsection (4) in respect of the election,
Subject to subsection (3), eligible election expenditure incurred by a taxpayer in a year of income is an allowable deduction.
74A(3) [Maximum deduction allowable]The deduction allowable to a taxpayer under this section in a year of income in respect of expenditure incurred in respect of an election shall not exceed the unused deduction limit in respect of the election as at the end of the year of income.
74A(4) [Expenditure reimbursed or paid by others]Subject to subsection (5), where in a year of income the whole or any part of eligible election expenditure incurred by a taxpayer -
(a) is reimbursed to the taxpayer; or
(b) is paid for the taxpayer by any other person or by an organisation,
the assessable income of the taxpayer of the year of income shall include the amount reimbursed or paid.
74A(5) [Amount included in assessable income]The amount to be included under subsection (4) in the assessable income of a taxpayer of a year of income in respect of an election shall be reduced by the non-deductible amount (if any) in relation to the taxpayer in respect of the election as at the end of the year of income.
Expenditure incurred by a taxpayer after 19 September 1985 is not an allowable deduction under section 74 or 74A to the extent to which the expenditure is in respect of the provision of entertainment other than entertainment that is available to the public generally.
74B(2) [Expenditure on food and drink for taxpayer]Subsection (1) does not prevent a deduction being allowable to the taxpayer in respect of expenditure incurred by the taxpayer in respect of the provision of entertainment to the taxpayer by way of the provision of food or drink to the taxpayer if it would notbe concluded that a purpose of the taxpayer in relation to the provision of the food or drink was to enable or facilitate the provision of entertainment to another person.
74B(3) [``Provision of entertainment'']A reference in this section to the provision of entertainment has the same meaning as in section 51AE .
(Repealed by No 107 of 1989)
This section applies to expenditure incurred by a taxpayer who carries on a business of primary production on any land in Australia, being expenditure incurred in -
(a) (Omitted by No 159 of 1980)
(b) the destruction and removal of timber, scrub or undergrowth indigenous to the land;
(c) (Omitted by No 159 of 1980)
(d) the preparation of the land for agriculture;
(e) ploughing and grassing the land for grazing purposes;
(f) the draining of swamp or low-lying lands where that operation improves the agricultural or grazing value of the land; or
(g) preventing or combating flooding on the land otherwise than by way of an operation of the kind referred to in paragraph 75D(1)(e) or (f).
(h) (Omitted by No 58 of 1980)
This section does not apply to expenditure incurred by a taxpayer where:
(a) a deduction has been allowed, or is allowable, in respect of the expenditure under any other provision of this Act from the assessable income of the taxpayer or of any other person of any year of income; or
(b) the taxpayer has been recouped, or is entitled to be recouped, in respect of the expenditure by the Commonwealth, by a State, by the Administration of a Territory, by an authority constituted by or under a law of the Commonwealth or of a State or Territory or by any other person and the amount recouped or to be recouped is not and will not be included in assessable income of the taxpayer of any year of income.
This section has effect subject to Division 245 of Schedule 2C .
Where a taxpayer incurs expenditure to which this section applies, an amount equal to one-tenth of that expenditure is, subject to subsection (4), an allowable deduction in the assessment of the taxpayer in respect of income of the year of income in which the expenditure is incurred and in respect of each of the 9 succeeding years of income.
A deduction in respect of expenditure incurred by a taxpayer in relation to land is not allowable under this section in the assessment of the taxpayer in respect of income of a year of income unless the taxpayer carried on a business of primary production on that land in that year of income or derived in that year of income assessable income from that land by reason of his having granted a lease of that land to a person who carried on a business of primary production on that land in that year of income.
75A(5) [Where partnership incurs expenditure]This section does not apply in relation to the calculation of the net income of a partnership, or a partnership loss, in accordance with section 90 , but, where a partnership has incurred expenditure to which this section would apply if the partnership were a taxpayer, then, for the purposes of the application of subsection (3) in respect of a partner in the partnership, that partner shall be deemed to have incurred:
(a) so much of the amount of that expenditure as the partners have agreed is to be borne by that partner; or
(b) if the partners have not agreed as to the part of that amount that is to be borne by that partner - so much of that amount as bears to that amount the same proportion as the individual interest of the partner in the net income of the partnership of the year of income in which the relevant expenditure was incurred bears to that net income or, as the case requires, as the individual interest of the partner in the partnership loss for that year of income bears to that partnership loss. 75A(6) [Expenditure after 23 August 1983]
This section does not apply in relation to expenditure incurred by a taxpayer after 23 August 1983 unless the expenditure was incurred in pursuance of a contract entered into on or before that date.
A deduction is not allowable under this section for the 1997-98 year of income or a later year of income.
Note:
Subdivision 387-D of the Income Tax Assessment Act 1997 provides for deductions for the 1997-98 year of income and later years of income for expenditure in respect of the establishment of a grape vine (including expenditure incurred before the 1997-98 year of income - see Subdivision 387-D of the Income Tax (Transitional Provisions) Act 1997 ).
This section has effect subject to Division 245 of Schedule 2C .
(a) there is an amount of qualifying expenditure in respect of the establishment of a grape vine; and
(b) at any time during a year of income, a taxpayer was the owner of the vine and used it in a business of primary production for the purpose of gaining or producing assessable income;
the amount worked out using the formula set out in subsection (2) is allowable as a deduction to the taxpayer for the year of income.
75AA(2) Subsection (1) formula.The formula mentioned in subsection (1) is:
| 0.25 × |
Qualifying days in year of income
Days in year of income |
× |
Qualifying
expenditure |
where:
``Qualifying days in year of income'' means the number of whole days in the year of income when the taxpayer owned the vine and used it in a business of primary production for the purpose of gaining or producing assessable income;
``Days in year of income'' means the number of days in the year of income;
``Qualifying expenditure'' means the amount of qualifying expenditure.
75AA(3) 4-year limit for write-off.For the purposes of determining the amount of the deduction allowable to a taxpayer under subsection (1) in respect of an amount of qualifying expenditure in respect of the establishment of a grape vine, the taxpayer is taken not to have used the vine for the purpose of gaining or producing assessable income at any time after the end of the period of 4 years beginning on the day on which the vine was established.
75AA(4) Qualifying expenditure.(a) a person has incurred expenditure of a capital nature wholly or partly in respect of the establishment of a grape vine in Australia for use in a business of primary production; and
(b) the expenditure was incurred on or after 1 July 1993;
then, for the purposes of this section, so much of the amount of the expenditure as is attributable to the establishment of the vine is taken to be an amount of qualifying expenditure in respect of the establishment of the vine.
75AA(5) Exclusion of expenditure incurred in draining or clearing land.A reference in this section to capital expenditure in respect of the establishment of a grape vine does not include a reference to expenditure incurred in:
(a) draining swamp or low-lying land; or
(b) clearing land. 75AA(6) Destruction of grape vine.
(a) there is an amount of qualifying expenditure in respect of the establishment of a grape vine; and
(b) during a year of income, the vine is destroyed; and
(c) immediately before the destruction, a taxpayer owned the vine and used it in a business of primary production for the purpose of gaining or producing assessable income;
then:
(d) if an amount (the ``recoverable amount'' ) was or is received or receivable by the taxpayer (under a policy of insurance or otherwise) in respect of the destruction - so much of the amount worked out using the formula set out in subsection (7) as exceeds the recoverable amount is allowable as a deduction to the taxpayer for the year of income; or
(e) in any other case - the amount worked out using the formula set out in subsection (7) is allowable as a deduction to the taxpayer for the year of income. 75AA(7) Subsection (6) formula.
The formula mentioned in subsection (6) is:
| Qualifying expenditure - Notional deductions |
where:
``Qualifying expenditure'' means the amount of the qualifying expenditure in respect of the establishment of the grape vine;
``Notional deductions'' means the deduction, or the total of the deductions; that would have been allowable to the taxpayer under subsection (1) in respect of the qualifying expenditure if it were assumed, that at all times during the period:
(a) beginning at the time when the vine was established; and
(b) ending at the time when the vine was destroyed;
the taxpayer had owned the vine and had used it in a business of primary production for the purpose of gaining or producing assessable income.
75AA(7A) [Subsec (8) application limited]Subsection (8) does not apply to an amount received in the 1997-98 year of income or a later year of income if the amount is received as recoupment as defined by section
20-25
of the
Income Tax Assessment Act 1997
.
Note:
Subdivision 20-A of the Income Tax Assessment Act 1997 applies instead.
This section does not apply, and is taken never to have applied, to expenditure incurred by a person if:
(a) the person, whether before or after the commencement of this subsection, receives, or becomes entitled to receive a recoupment of, or grant in respect of, the expenditure; and
(b) the amount of the recoupment or the grant is not, and will not be, included in the person's assessable income of any year of income. 75AA(9) Dissection of recoupment.
For the purposes of subsection (8), if a person receives, or becomes entitled to receive, an amount that constitutes to an unspecified extent a recoupment of, or a grant in respect of, expenditure, then so much of that amount as is reasonable is taken to be a recoupment of, or grant in respect of, that expenditure, as the case requires.
75AA(10) Amendment of assessments.Section 170 does not prevent the amendment of an assessment at any time for the purpose of giving effect to subsection (8) or (9).
75AA(11) Crown leases - lessees deemed to own vines.For the purposes of this section, if:
(a) a taxpayer is the lessee of land under a Crown lease (within the meaning of section 54AA ); and
(b) a grape vine is affixed to the land; and
(c) the taxpayer, or a prior holder of the Crown lease, planted the grape vine; and
(d) apart from this section, the taxpayer is not the owner of the vine;
the taxpayer is taken to be the owner of the grape vine instead of any other person.
75AA(12) ``Person'' includes a partnership or trustee.A reference in this section to a person includes a reference to a partnership or a person in the capacity of a trustee.
A deduction is not allowable under this section for the 1997-98 year of income or a later year of income.
Note:
Subdivision 387-B of the Income Tax Assessment Act 1997 provides for deductions for the 1997-98 year of income and later years of income for expenditure on plant or a structural installation for conserving or conveying water (including expenditure incurred before the 1997-98 year of income - see Subdivision 387-B of the Income Tax (Transitional Provisions) Act 1997 ).
In this section:
"construction"
includes manufacture;
"extension"
includes an alteration or addition;
"plant or a structural improvement"
includes a dam, earth tank, underground tank, concrete tank, metal tank, stand for a tank, bore, well, irrigation channel or similar improvement, pipe, pump, water tower and windmill.
This section has effect subject to Division 245 of Schedule 2C .
Subject to this section, this section applies to expenditure of a capital nature incurred on or after 14 April 1980 and before 20 September 1985 by a taxpayer who carries on a business of primary production on land in Australia, being expenditure incurred:
(a) on the construction, acquisition or installation of plant or a structural improvement for the purpose of conserving or conveying water for use in carrying on that business on that land; or
(b) on the construction, acquisition or installation of an extension to plant or to a structural improvement for the purpose of conserving or conveying water for use in carrying on that business on that land.
Subject to the succeeding provisions of this section, where a taxpayer incurs expenditure to which this section applies by virtue of subsection (2), the amount of that expenditure is an allowable deduction to the taxpayer in respect of the year of income in which the expenditure is incurred.
Subject to this section, this section also applies to expenditure of a capital nature incurred on or after 20 September 1985 by a taxpayer who carries on a business of primary production on land in Australia, being expenditure incurred:
(a) on the construction, acquisition or installation of plant or a structural improvement primarily and principally for the purpose of conserving or conveying water for use in carrying on that business on that land; or
(b) on the construction, acquisition or installation of an extension to plant or to a structural improvement primarily and principally for the purpose of conserving or conveying water for use in carrying on that business on that land.
Subject to the succeeding provisions of this section, where a taxpayer incurs expenditure to which this section applies by virtue of subsection (3A), an amount equal to one-third of that expenditure is an allowable deduction to the taxpayer in respect of the year of income in which the expenditure is incurred and in respect of each of the 2 succeeding years of income.
For the purposes of this section:
(a) expenditure incurred on or after 20 September 1985 in pursuance of a contract entered into by a taxpayer on or after 14 April 1980 and before 20 September 1985; or
(b) expenditure incurred on or after 20 September 1985 on the construction or installation by a taxpayer of plant or a structural improvement or of an extension to plant or to a structural improvement where that construction or installation by the taxpayer commenced on or after 14 April 1980 and before 20 September 1985,
shall be deemed to have been incurred on or after 14 April 1980 and before 20 September 1985.
Subsection (4) does not apply to an amount received in the 1997-98 year of income or a later year of income if the amount is received as recoupment as defined by section
20-25
of the
Income Tax Assessment Act 1997
.
Note:
Subdivision 20-A of the Income Tax Assessment Act 1997 applies instead.
This section does not apply, and shall be deemed never to have applied, to expenditure incurred by a taxpayer where -
(a) the taxpayer is recouped, or becomes entitled to be recouped, in respect of the expenditure by the Commonwealth, by a State, by a Territory, by an authority constituted by or under a law of the Commonwealth, of a State or of a Territory, or by any other person; and
(b) the amount recouped or to be recouped is not, and will not be, included in the assessable income of the taxpayer of any year of income. 75B(5) [Extent of recoupment]
Where a taxpayer receives, or becomes entitled to receive, an amount that constitutes to an unspecified extent a recoupment of expenditure to which this section would, apart from subsection (4), apply, the Commissioner may, for the purposes of subsection (4), determine the extent to which the amount constitutes a recoupment of that expenditure.
75B(6) [Pre-14 April 1980 contract, etc]This section does not apply, and shall be deemed never to have applied, in relation to a taxpayer, to:
(a) expenditure incurred in pursuance of a contract entered into by the taxpayer before 14 April 1980; or
(b) expenditure incurred on the construction or installation by the taxpayer of plant or a structural improvement or of an extension to plant or to a structural improvement where that construction or installation by the taxpayer commenced before 14 April 1980. 75B(7) [Deduction reduced in certain circumstances]
(a) apart from this subsection, a deduction would be allowable to a taxpayer under this section in respect of expenditure incurred on the construction, acquisition or installation of plant or a structural improvement or of an extension to plant or to a structural improvement; and
(b) the plant or structural improvement or the extension, as the case may be, was not wholly for use in carrying on a business of primary production on land in Australia or was not wholly for use for the purpose of producing assessable income,
the amount of that deduction shall be reduced by such amount as, in the opinion of the Commissioner, is fair and reasonable.
75B(8) [Deduction previously allowed on acquisition of plant]A deduction is not allowable under this section to a taxpayer in respect of a year of income in relation to expenditure incurred by the taxpayer on the acquisition of plant or a structural improvement if, in relation to expenditure incurred by the taxpayer or another person on the construction of the plant or structural improvement or on a previous acquisition of the plant or structural improvement:
(a) (Omitted by No 107 of 1989)
(b) a deduction has been allowed or is allowable under section 75A to the taxpayer or that other person in respect of any year of income or would have been so allowed or be so allowable but for paragraph (2)(b) of that section; or
(c) a deduction has been allowed or is allowable under this section to the taxpayer or that other person in respect of any year of income or would have been so allowed or be so allowable but for subsection (4) of this section.
A deduction is not allowable under this section to a taxpayer in respect of a year of income in relation to expenditure incurred by the taxpayer on the acquisition of an extension to plant or to a structural improvement if, in relation to expenditure incurred by the taxpayer or another person on the construction of the extension or on a previous acquisition of the extension:
(a) (Omitted by No 107 of 1989)
(b) a deduction has been allowed or is allowable under section 75A to the taxpayer or that other person in respect of any year of income or would have been so allowed or be so allowable but for paragraph (2)(b) of that section; or
(c) a deduction has been allowed or is allowable under this section to the taxpayer or that other person in respect of any year of income or would have been so allowed or be so allowable but for subsection (4) of this section.
This section does not apply in relation to the calculation of the net income of a partnership, or a partnership loss, in accordance with section 90 , but, where a partnership has incurred expenditure to which this section would apply if the partnership were a taxpayer, then, for the purposes of the application of subsection (3) or (3B) in respect of a partner in the partnership, that partner shall be deemed to have incurred:
(a) so much of the amount of that expenditure as the partners have agreed is to be borne by that partner; or
(b) if the partners have not agreed as to the part of that amount that is to be borne by that partner - so much of that amount as bears to that amount the same proportion as the individual interest of the partner in the net income of the partnership of the year of income in which the relevant expenditure was incurred bears to that net income or, as the case requires, as the individual interest of the partner in the partnership loss for that year of income bears to that partnership loss.
Where the Commissioner is satisfied that -
(a) a contract or arrangement was entered into by a taxpayer before 14 April 1980 for the acquisition of plant or a structural improvement (in this subsection referred to as the original unit );
(b) on or after that date:
(i) the taxpayer entered into a contract (whether with the same or another person) for the acquisition (whether with or without the acquisition of other property) of the original unit or of other plant or another structural improvement (in this subsection referred to as the substituted unit ) identical with, or having a purpose similar to that of, the original unit and intended by the taxpayer to be in lieu of the original unit; or
(ii) the taxpayer commenced the construction of other plant or another structural improvement (in this subsection also referred to as the substituted unit ) identical with, or having a purpose similar to that of, the original unit and intended by the taxpayer to be in lieu of the original unit; and
(c) the taxpayer entered into the contract for the acquisition of the original unit or substituted unit, or commenced the construction of the substituted unit, for the purpose, or for purposes that included the purpose, of obtaining a deduction under this section,
the Commissioner may refuse to allow a deduction under this section:
(d) in a case to which subparagraph (b)(i) applies - in relation to the original unit or the substituted unit; or
(e) in a case to which subparagraph (b)(ii) applies - in relation to the substituted unit.
Where the Commissioner is satisfied that -
(a) a taxpayer commenced construction of plant or a structural improvement (in this subsection referred to as the original unit ) before 14 April 1980;
(b) on or after that date:
(i) the taxpayer commenced the construction of other plant or another structural improvement (in this subsection referred to as the substituted unit ) identical with, or having a purpose similar to that of, the original unit and intended by the taxpayer to be in lieu of the original unit; or
(ii) the taxpayer entered into a contract for the acquisition (whether with or without the acquisition of other property) of the original unit or of other plant or another structural improvement (in this subsection also referred to as the substituted unit ) identical with, or having a purpose similar to that of, the original unit and intended by the taxpayer to be in lieu of the original unit; and
(c) the taxpayer commenced the construction of the substituted unit, or entered into the contract for the acquisition of the original unit or of the substituted unit, for the purpose, or for purposes that included the purpose, of obtaining a deduction under this section,
the Commissioner may refuse to allow a deduction under this section:
(d) in a case to which subparagraph (b)(i) applies - in relation to the substituted unit; or
(e) in a case to which subparagraph (b)(ii) applies - in relation to the original unit or the substituted unit.
In subsections (11) and (12), a reference to the acquisition by a taxpayer of plant or a structural improvement shall be read as including a reference to the construction of the plant or structural improvement for the taxpayer by another person or other persons.
75B(14) [Parties not at arm's length](a) in a year of income, a taxpayer has incurred expenditure (in this subsection referred to as the ``relevant expenditure'' ) on the construction, acquisition or installation of plant or a structural improvement;
(b) that expenditure is attributable, in whole or in part, to a transaction to which the taxpayer was a party;
(c) the Commissioner is satisfied that, having regard to any connection between any 2 or more of the parties to the transaction and to any other relevant circumstances, those parties were not dealing with each other at arm's length in relation to the transaction; and
(d) the Commissioner is satisfied that the amount of the relevant expenditure is greater than the amount (in this subsection referred to as the ``arm's length amount'' ) that would have been the amount of expenditure incurred by the taxpayer in that year of income in respect of the construction, acquisition or installation of that plant or structural improvement if the parties to the transaction had dealt with each other at arm's length in relation to the transaction,
the arm's length amount shall, for the purposes of this section, be deemed to be the amount of the expenditure incurred by the taxpayer in that year of income in respect of the construction, acquisition or installation of that plant or structural improvement.
75B(15) [Reference to plant or structural improvement]A reference in subsections (11), (12), (13) and (14) to plant or a structural improvement shall be read as including a reference to -
(a) a portion of plant or a structural improvement; and
(b) an extension to plant or to a structural improvement.
(Repealed by No 107 of 1989)
A deduction is not allowable under this section for the 1997-98 year of income or a later year of income.
Note:
Subdivision 387-A of the Income Tax Assessment Act 1997 provides for deductions for the 1997-98 year of income and later years of income for capital expenditure on operations of the kind described in subsection (1B).
Subject to this section, this section applies to expenditure of a capital nature that meets the requirements set out in subsections (1A) and (1B).
The expenditure must be incurred by a taxpayer:
(a) who carries on a business of primary production on any land (in this section called the ``subject land'' ) in Australia; or
(b) who carries on a business, other than one of primary production or of mining or quarrying, for the purpose of gaining or producing assessable income from the use of any rural land (in this section also called the ``subject land'' ) in Australia.
The expenditure must also be incurred in, or in an extension of, any of the following operations:
(a) an operation primarily and principally for the purpose of the eradication or extermination of animal or vegetable pests from the subject land;
(b) an operation primarily and principally for the purpose of the destruction of weed or plant growth detrimental to the subject land;
(c) an operation primarily and principally for the purpose of preventing or combating land degradation otherwise than by the erection of fences on the subject land;
(d) an operation consisting of the erection of fences (including any extension, alteration or addition to fences) on the subject land primarily and principally for the purpose of excluding live-stock or vermin from areas affected by land degradation in order to prevent or limit any extension or aggravation of land degradation in those areas and to assist in the reclamation of those areas;
(e) an operation consisting of the erection of fences (including any extension, alteration or addition to fences) to separate different land classes on the subject land in accordance with an approved land management plan in respect of the whole or part of the subject land;
(f) an operation consisting of the construction on the subject land of levee banks or similar improvements having like uses;
(g) an operation (not being an operation consisting of the draining of swamp or low-lying land) consisting of the construction on the subject land, primarily and principally for the purpose of controlling salinity or assisting in drainage control, of surface drainage works or sub-surface drainage works.
Subject to the succeeding provisions of this section, where a taxpayer incurs expenditure to which this section applies, the amount of that expenditure is an allowable deduction to the taxpayer in respect of the year of income in which that expenditure is incurred.
75D(3) [Exclusions]This section does not apply to expenditure on property that is plant or an article for the purposes of section 54 other than -
(a) fences erected for the purposes mentioned in paragraph (1B)(d) or (e) of this section; and
(b) dams or other structural improvements (not being fences), being dams or structural improvements that are plant for the purposes of section 54 by virtue of the operation of paragraph (2)(b) of that section.
Subsection (4) does not apply to an amount received in the 1997-98 year of income or a later year of income if the amount is received as recoupment as defined by section
20-25
of the
Income Tax Assessment Act 1997
.
Note:
Subdivision 20-A of the Income Tax Assessment Act 1997 applies instead.
This section does not apply, and shall be deemed never to have applied, to expenditure incurred by a taxpayer where -
(a) the taxpayer is recouped, or becomes entitled to be recouped, in respect of the expenditure by the Commonwealth, by a State, by a Territory, by an authority constituted by or under a law of the Commonwealth, of a State or of a Territory, or by any other person; and
(b) the amount recouped or to be recouped is not, and will not be, included in the assessable income of the taxpayer of any year of income. 75D(5) [Determination of amount of recoupment]
Where a taxpayer receives, or becomes entitled to receive, an amount that constitutes to an unspecified extent a recoupment of expenditure to which this section would, apart from subsection (4), apply, the Commissioner may, for the purposes of subsection (4), determine the extent to which the amount constitutes a recoupment of that expenditure.
75D(6) [Commencement of operation]This section does not apply, in relation to a taxpayer, to -
(a) expenditure incurred in pursuance of a contract entered into by the taxpayer before 1 October 1980; or
(b)expenditure incurred by the taxpayer in respect of an operation or extension referred to in subsection (1B) where that operation or that extension, as the case may be, was commenced before 1 October 1980.
(a) apart from this subsection, a deduction would be allowable to a taxpayer under this section in relation to a year of income in respect of expenditure incurred in respect of land in respect of an operation or extension of a kind referred to in subsection (1B); and
(b) the land in respect of which the expenditure was incurred was, at any time during the year of income after the expenditure was incurred, used by the taxpayer otherwise than for the purpose of carrying on a business of a kind referred to in paragraph (1A)(a) or (b),
the amount of that deduction shall be reduced by such amount as, in the opinion of the Commissioner, is fair and reasonable.
This section does not apply in relation to the calculation of the net income of a partnership, or a partnership loss, in accordance with section 90 , but, where a partnership has incurred expenditure to which this section would apply if the partnership were a taxpayer, then, for the purposes of the application of subsection (2) in respect of a partner in the partnership, that partner shall be deemed to have incurred -
(a) so much of the amount of that expenditure as the partners have agreed is to be borne by that partner; or
(b) if the partners have not agreed as to the part of that amount that is to be borne by that partner - so much of that amount as bears to that amount the same proportion as the individual interest of the partner in the net income of the partnership of the year of income in which the relevant expenditure was incurred bears to that net income or, as the case requires, as the individual interest of the partner in the partnership loss for that year of income bears to that partnership loss. 75D(9) [Non-arm's length transactions]
(a) a taxpayer has incurred expenditure to which this section applies (in this subsection referred to as the ``relevant expenditure'' ) in respect of an operation of a kind referred to in subsection (1B);
(b) the relevant expenditure is attributable, in whole or in part, to a transaction to which the taxpayer was a party;
(c) the Commissioner is satisfied that, having regard to any connection between any 2 or more of the parties to the transaction and to any other relevant circumstances, those parties were not dealing with each other at arm's length in relation to the transaction; and
(d) the Commissioner is satisfied that the amount of the relevant expenditure is greater than the amount (in this subsection referred to as the ``arm's length amount'' ) that would have been the amount of expenditure incurred by the taxpayer in respect of that operation if the parties to the transaction had dealt with each other at arm's length in relation to the transaction,
the arm's length amount shall, for the purposes of this section, be deemed to be the amount of expenditure incurred by the taxpayer in respect of that operation.
Where the Commissioner is satisfied that -
(a) a contract or arrangement was entered into by a taxpayer before 1 October 1980 for the carrying out of an operation of a kind mentioned in subsection (1B) (in this subsection referred to as the ``original operation'' );
(b) on or after that date -
(i) the taxpayer entered into a contract or arrangement (whether with the same or another person) for the carrying out of the original operation (whether or not the contract or arrangement also relates to other matters) or of another operation (in this subsection referred to as the ``substituted operation'' ) identical with, or having a purpose similar to that of, the original operation and intended by the taxpayer to be in lieu of the original operation; or
(ii) the taxpayer commenced the carrying out of an operation (in this subsection also referred to as the ``substituted operation'' ) identical with, or having a purpose similar to that of, the original operation and intended by the taxpayer to be in lieu of the original operation; and
(c) the taxpayer entered into the contract or arrangement for the carrying out of the original operation or substituted operation, or commenced the carrying out of the substituted operation, for the purpose, or for purposes that included the purpose, of obtaining a deduction under this section,
the Commissioner may refuse to allow a deduction under this section -
(d) in a case to which subparagraph (b)(i) applies - in relation to the original operation or the substituted operation, as the case may be; or
(e) in a case to which subparagraph (b)(ii) applies - in relation to the substituted operation.
Where the Commissioner is satisfied that -
(a) a taxpayer commenced the carrying out of an operation of a kind referred to in subsection (1B) (in this subsection referred to as the ``original operation'' ) before 1 October 1980;
(b) on or after that date -
(i) the taxpayer commenced the carrying out of another operation (in this subsection referred to as the ``substituted operation'' ) identical with, or having a purpose similar to that of, the original operation and intended by the taxpayer to be in lieu of the original operation; or
(ii) the taxpayer entered into a contract or arrangement (whether or not the contract or arrangement also relates to other matters) for the carrying out of the original operation or of another operation (in this subsection also referred to as the ``substituted operation'' ) identical with, or having a purpose similar to that of, the original operation and intended by the taxpayer to be in lieu of the original operation; and
(c) the taxpayer commenced the carrying out of the substituted operation, or entered into the contract or arrangement for the carrying out of the original operation or of the substituted operation, for the purpose, or for purposes that included the purpose, of obtaining a deduction under this section,
the Commissioner may refuse to allow a deduction under this section -
(d) in a case to which subparagraph (b)(i) applies - in relation to the substituted operation; or
(e) in a case to which subparagraph (b)(ii) applies - in relation to the original operation or the substituted operation, as the case may be.
In subsections (10) and (11) -
(a) a reference to the carrying out by the taxpayer of an operation shall be read as including a reference to the carrying out of the operation for the taxpayer by another person or other persons; and
(b) a reference to a contract or arrangement entered into by a taxpayer for the carrying out of an operation shall be read as including a reference to a contract or arrangement for the supply of goods or the provision of services in connection with such an operation. 75D(13) [References to an operation]
A reference in subsections (10), (11) and (12) to an operation shall be read as including a reference to -
(a) a part of an operation; and
(b) an extension of an operation. 75D(14) [Approved land management plan]
In this section, a reference to an approved land management plan, in relation to land, is a reference to a land management plan in relation to the land that:
(a) has been prepared by:
(i) an officer of a land conservation agency having authority for the preparation of such plans; or
(ii) an approved farm consultant; or
(b) has been approved in writing by:
(i) an officer of a land conservation agency with authority to do so; or
as being a suitable land management plan for the land.
(ii) an approved farm consultant;
For the purposes of subsection (14), a person is an approved farm consultant only if an approval under this section of the person as a farm consultant is in force.
The following persons may, in writing, approve a person as a farm consultant for the purposes of this section:
(a) the Secretary to the Department of Primary Industries and Energy;
(b) an officer of that Department authorised in writing by its Secretary for the purpose of giving such approvals.
In deciding whether to approve a person as a farm consultant, the following matters are to be taken into account:
(a) the qualifications, experience and knowledge of the person in relation to land conservation and farm management;
(b) the standing of the person in the professional community;
(c) any other relevant matters.
Subject to the Administrative Appeals Tribunal Act 1975 , applications may be made to the Tribunal by a person for review of a decision under subsection (16):
(a) to refuse approval of the person as a farm consultant; or
(b) to revoke the approval of the person as a farm consultant.
In this section:
"decision"
has the same meaning as in the
Administrative Appeals Tribunal Act 1975
;
"land conservation agency"
means a State or Territory Government department, or authority, that has responsibility for land conservation;
"land management plan"
means a plan for an area of land indicating:
(a) different land classes comprising the land; and
(b) the location of any fencing that would be required to separate any of the land classes primarily and principally in order to prevent land degradation;
together with, or including, a description of the kind of fencing and how it would prevent land degradation.
(Repealed by No 107 of 1989)
(Repealed by No 107 of 1989)
(Repealed by No 93 of 1969)
(Repealed by No 93 of 1969)
(Repealed by No 107 of 1989)
(Repealed by No 107 of 1989)
(Repealed by No 107 of 1989)
(Repealed by No 107 of 1989)
In this section:
"Act"
means the
Management and Investment Companies Act 1983
;
(a) any agreement, arrangement, understanding, promise or undertaking, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings; or
(b) any scheme, plan, proposal, action, course of action or course of conduct, whether unilateral or otherwise;
"approved capital"
has the same meaning as in the Act;
"Board"
means the Management and Investment Companies Licensing Board established by section 5 of the Act;
"licence"
has the same meaning as in the Act;
"licensee"
means a company holding a licence;
"owner"
includes a beneficial owner;
(Omitted by No 11 of 1988)
"private company"
means a company other than one whose shares are listed for quotation in the official list of a stock exchange in Australia or elsewhere;
"private trust estate"
means a trust estate, other than a unit trust whose units are:
(a) listed for quotation in the official list of a stock exchange in Australia or elsewhere; or
(b) ordinarily available for subscription or purchase by the public;
(a) a reference to a fully paid-up share, in the case of a share issued at a premium, is a reference to a share the nominal value of which and the premium on which have been paid;
(b) a reference to moneys paid on shares, in relation to a company, is a reference to moneys that were or are paid to the company after 13 September 1983 and before 1 July 1991 in respect of shares in the company (whether on account of the nominal values of the shares or by way of premiums) by the owners of the shares, but does not include moneys paid to the company:
(i) in respect of shares issued on or before 13 September 1983; or
(ii) in respect of shares issued after 13 September 1983, if the terms of the issue were announced on or before, or the shares were issued pursuant to an agreement (other than the constituent document of the company) entered into on or before, that day;
(c) a reference to moneys unpaid on a share, in the case of a share issued at a premium, includes a reference to any amount of the premium that is unpaid;
(d) a reference to paying off a share, in the case of a share issued at a premium, includes a reference to paying off money paid as a premium on the share;
(e) a reference to a share in a licensee is a reference to a share in the share capital of the licensee; and
(f) a reference to the sale, or the disposal, of a share in a licensee includes a reference to the sale, or the disposal, of a share in a former licensee.
Where moneys paid on a share in a company (whether on application for or allotment of the share, to meet calls or otherwise) were not or are not applied by the company towards the paid-up value of the share or as a premium on the share, the moneys shall, for the purposes of this section, be deemed not to have been paid on the share.
77F(4) [Deduction]The amount of any moneys paid on shares by a taxpayer in a year of income to a licensee is, subject to this section, an allowable deduction to the taxpayer in respect of the year of income.
77F(5) [Reduced deduction]Where under this section a deduction in respect of moneys paid on a share in a licensee by a taxpayer in a year of income has been allowed or would, but for this subsection, be allowable, to the taxpayer in respect of the year of income and:
(a) the taxpayer sells or otherwise disposes of the share before the expiration of 2 years after the day that is the prescribed day in relation to the sale or disposal;
(b) the taxpayer sells or otherwise disposes of the share on the expiration of 2 years, or after the expiration of 2 years and before the expiration of 3 years, after the day that is the prescribed day in relation to the sale or disposal; or
(c) the taxpayer sells or otherwise disposes of the share on the expiration of 3 years, or after the expiration of 3 years and before the expiration of 4 years, after the day that is the prescribed day in relation to the sale or disposal;
the amount of the deduction in respect of the moneys paid on the share so allowed or allowable, as the case may be, to the taxpayer in respect of the year of income shall be reduced by an amount equal to:
(d) if paragraph (a) applies in relation to the share - the amount of the deduction;
(e) if paragraph (b) applies in relation to the share - one-half of the amount of the deduction; or
(f) if paragraph (c) applies in relation to the share - one-quarter of the amount of the deduction. 77F(6) [Prescribed day]
A reference in subsection (5) to the prescribed day, in relation to the sale or disposal by a taxpayer of a share in a licensee, is a reference to:
(a) where, immediately before the day on which the licence was granted, the share was a fully paid-up share - the day on which the licence was granted; or
(b) where paragraph (a) does not apply:
(i) if, immediately before the sale or disposal, the share was a fully paid-up share - the day on which the share became fully paid-up; or
77F(7) [Disposal pursuant to an option]
(ii) if, immediately before the sale or disposal, the share was not a fully paid-up share - the latest day before the sale or disposal on which money was paid on the share.
Where shares are sold or otherwise disposed of pursuant to an option or agreement, this section has effect as if the shares had been sold or otherwise disposed of, as the case may be, on the day on which the option was granted or the agreement was entered into.
77F(8) [Deemed disposal]For the purposes of subsection (5):
(a) where a company redeems shares in the company, the owner of the shares shall be deemed to have disposed of the shares on the day on which the shares were redeemed;
(b) where a company reduces its share capital and, by reason of the reduction, shares are cancelled or wholly paid-off, the owner of the shares shall be deemed to have disposed of the shares on the day on which the shares were cancelled or wholly paid-off;
(c) where a company reduces its share capital and, by reason of the reduction, shares are partly paid-off, the owner of the shares shall be deemed to have disposed of, on the day on which the shares were partly paid-off, so many of the shares as bears to the total number of the shares the same proportion as the amount of moneys paid-off on the shares bears to the amount of moneys paid on the shares; and
(d) where a share in a company is forfeited by reason of a failure to pay a call on the share, the owner of the share shall be deemed to have disposed of the share on the day on which the share was forfeited. 77F(9) [Deemed disposal]
For the purposes of subsection (5), where the Board:
(a) revokes a licence pursuant to section 23 of the Act; or
(b) refuses to renew a licence pursuant to section 25 of the Act;
every owner of shares in the licensee shall be deemed to have disposed of his shares on such day as is determined by the Board in writing for the purposes of the application of this subsection in relation to the revocation of, or refusal to renew, the licence, being a day:
(c) not earlier than the earliest day on which an event occurred, or a state of affairs came into existence, constituting the ground, or one of the grounds, for the revocation of, or refusal to renew, the licence; and
(d) not later than the day on which the licence is revoked or expires, as the case may be. 77F(10) [Disposal where interposed entity]
(a) under this section a deduction in respect of moneys paid on shares in a licensee in a year of income has been allowed or would, but for this subsection, be allowable, to a private company, a partnership or the trustee of a private trust estate in respect of the year of the income; and
(b) on a day (in this subsection referred to as the ``relevant day'' ) after those moneys were paid, a person (in this subsection referred to as the ``vendor'' ) who, at the time when those moneys were paid, was the owner of shares, or of an interest in shares, in the private company, or was the owner of an interest in the partnership or trust estate, sells or otherwise disposes of all or any of his shares or the whole or a part of his interest in the shares, or in the partnership or trust estate, as the case may be;
then, for the purposes of subsection (5), the private company, the partnership or the trustee, as the case requires, shall be deemed to have disposed of, on the relevant day, so many of the shares in the licensee referred to in paragraph (a) as the Commissioner considers appropriate, having regard to:
(c) the period during which the vendor was the owner of the shares, or of the interest, sold or disposed of by him;
(d) the nature and extent, both before and after that sale or other disposition, of the vendor's ownership of, and of any interest in, shares in the private company, or interest in the partnership or trust estate, as the case requires;
(e) any benefit derived, or that would be derived, directly or indirectly, by the vendor by reason of the allowing of the deduction referred to in paragraph (a);
(f) the extent to which, on the relevant day, the assets of the private company, partnership or trust estate, as the case requires, consisted of shares in the licensee, or former licensee, as the case requires; and
(g) such other matters as the Commissioner considers relevant.
A reference in subsection (10) to an interest in a share or in a partnership or trust estate includes an interest that is held indirectly through one or more interposed companies, partnerships or trusts.
77F(12) [Change of ownership on death]Where, by reason of the death of a person, a change in the ownership of a share or an interest occurs, the person shall not, for the purposes of this section, be taken to have disposed of the share or the interest.
77F(13) [No deduction]Notwithstanding any other provision of this section:
(a) where, immediately before moneys were paid on shares in a licensee by a taxpayer, the aggregate of the amount of paid-up share capital of the licensee and of all the amounts paid as premiums on shares in the licensee (and not paid-off by the licensee by way of a reduction of share capital) exceeded the approved capital of the licensee, a deduction in respect of those moneys is not allowable, and shall be deemed not to have been allowable, under this section to the taxpayer in respect of any year of income; and
(b) where, by reason of the payment of moneys on shares in a licensee by a taxpayer, the aggregate of the amount of paid-up share capital of the licensee and of all the amounts paid as premiums on shares in the licensee (and not paid-off by the licensee by way of a reduction of share capital) exceeds the approved capital of the licensee, so much of the amount of the moneys paid on the shares as is equal to the amount of that excess is not allowable, and shall be deemed not to have been allowable, as a deduction under this section to the taxpayer in respect of any year of income.
(a) a deduction in respect of moneys paid on a share in a licensee has been allowed, or is allowable, under this section to a taxpayer in respect of any year of income; and
(b) the taxpayer sells or otherwise disposes of the share;
a deduction under this section is not allowable in respect of any moneys paid on the share by a person who becomes the owner of the share by reason of that or any subsequent sale or disposal.
77F(15) [Moneys paid before grant of licence](a) at a time before a company is granted a licence under section 21 of the Act, moneys were paid on a share in the company;
(aa) the company is granted a licence before 1 July 1991; and
(b) after the grant of the licence, the Board notifies the Commissioner in writing that, in the opinion of the Board, the moneys were paid in anticipation of, or to ensure that the company would be eligible for, the grant of a licence;
this section has effect as if the moneys had been paid on a share in a licensee.
In forming an opinion for the purposes of subsection (15) with respect to moneys paid on a share in a company, the Board shall haveregard to:
(a) the date or dates on which the moneys were paid;
(b) the date on which an application for a licence by the company was made under subsection 20(1) of the Act;
(c) the business or businesses in which the company was engaged on the dates referred to in paragraphs (a) and (b); and
(d) such other matters as the Board considers relevant. 77F(17) [Year deduction allowable]
(a) by reason of subsection (15), a deduction is allowable under this section in respect of moneys paid by a taxpayer on a share in a company at a time before the company was granted a licence under section 21 of the Act; and
(b) the moneys were paid in any year of income of the taxpayer (in this subsection referred to as the ``payment year'' ) preceding the year of income of the taxpayer in which the licence was granted (in this subsection referred to as the ``licence year'' );
the deduction is not allowable to the taxpayer in respect of the payment year but is allowable to the taxpayer in respect of the licence year.
The object of this section is to provide for the deductibility of certain gifts, contributions, pensions, gratuities and retiring allowances.
78(2) Outline.The following table sets out an outline of this section:
| Type of deduction | Entitlement to deduction | Valuation rules | Ancillary provisions |
| Gifts to certain funds, authorities or institutions | (4), (5) | (12) | - |
| Gifts to The Australiana Fund, libraries, museums, or art galleries | (6), (6A) | (13), (14), (15), (15A) | (16), (16A) |
| Gifts to Artbank | (7) | (13), (14), (15) | (16) |
| Gifts of heritage properties to National Trust | (8) | (13), (14), (15) | (16) |
| Contributions to registered political parties | (9), (10) | (17) | - |
| Pensions, gratuities or retiring allowances for ex-employees etc. | (11) | - | - |
The following is an index to this section:
| AAP Mawson's Huts Foundation Limited | (4)-Table 6, item 6.2.23 | |
| Academies - professional | (4)-Table 2 | |
| Academy of the Social Sciences in Australia Incorporated | (4)-Table 2, item 2.2.1 | |
| Amnesty International Australia | (4)-Table 4, item 4.2.1 | |
| Ancillary funds | (5) | |
| Antarctic research | (4)-Table 3, item 3.2.3 | |
| Apportionment of deductions under subsection (6), (7) or (8) | (16) | |
| Approved research institutes - section 73A | (4)-Table 3, item 3.1.1 | |
| Ararat War Memorial Restoration Trust Fund | (4)-Table 5, item 5.2.4 | |
| Armed forces, auxiliaries | (4)-Table 5, item 5.1.2 | |
| Artbank | (7) | |
| Art galleries | (4)-Table 12, items 12.1.4 and 12.1.5; (6) | |
| Australia Foundation for Culture and the Humanities Ltd. | (4)-Table 12, item 12.2.2 | |
| Australian Academy of Science | (4)-Table 2, item 2.2.2 | |
| Australian Academy of Technological Sciences and Engineering Limited | (4)-Table 2, item 2.2.4 | |
| Australian Academy of the Humanities for the Advancement of Scholarship in Language, Literature, History, Philosophy and the Fine Arts | (4)-Table 2, item 2.2.3 | |
| Australiana Fund | (4)-Table 12, item 12.2.1; (6) | |
| Australian and New Zealand Association for the Advancement of Science | (4)-Table 2, item 2.2.6 | |
| Australian and New Zealand College of Anaesthetists | (4)-Table 1, item 1.2.13 | |
| Australian College of Obstetricians and Gynaecologists | (4)-Table 1, item 1.2.1 | |
| Australian College of Occupational Medicine | (4)-Table 1, item 1.2.2 | |
| Australian Conservation Foundation Incorporated | (4)-Table 6, item 6.2.1 | |
| Australian Games Uniform Company Limited | (4)-Table 10, item 10.2.6 | |
| Australian Institute of International Affairs | (4)-Table 9, item 9.2.1 | |
| Australian Ireland Fund | (4)-Table 2, item 2.2.7 | |
| Australian National Korean War Memorial Trust Fund | (4)-Table 5, item 5.2.10 | |
| Australian National Travel Association | (4)-Table 9, item 9.2.2 | |
| Australian Postgraduate Federation in Medicine | (4)-Table 1, item 1.2.3 | |
| Australian Regional Council of the Royal College of Obstetricians and Gynaecologists | (4)-Table 1, item 1.2.11 | |
| Australian Sports Foundation | (4)-Table 10, item 10.2.1 | |
| Borneo Memorials Trust Fund | (4)-Table 5, item 5.2.9 | |
| Brisbane RAAF Memorial Fund | (4)-Table 5, item 5.2.5 | |
| Central Synagogue Restoration Fund | (4)-Table 5, item 5.2.8 | |
| Centre for Independent Studies | (4)-Table 3, item 3.2.1 | |
| Child Accident Prevention Foundation of Australia | (4)-Table 4, item 4.2.2 | |
| Cobram and District War Memorial Incorporated Fund | (4)-Table 5, item 5.2.7 | |
| College buildings | (4)-Table 2, item 2.1.10 | |
| College of Radiologists in Australasia | (4)-Table 1, item 1.2.4 | |
| Conditional gifts - subsection (6), (7) or (8) | (15) | |
| Connellan Airways Trust | (4)-Table 11, item 11.2.1 | |
| Conservation bodies | (4)-Table 6 | |
| Constitutional Centenary Foundation Incorporated | (4)-Table 2, item 2.2.15 | |
| Council for Christian Education in Schools | (4)-Table 2, item 2.2.10 | |
| Council for Jewish Education in Schools | (4)-Table 2, item 2.2.11 | |
| Cultural organisations | (4)-Table 12 | |
| Defence organisations | (4)-Table 5 | |
| Definitions | (26) | |
| Diseases - institutions researching causes, prevention or cure | (4)-Table 1, items 1.1.4 and 1.1.5 | |
| Diseases - charitable institutions whose principal activity is to promote the prevention or the control of diseases in human beings | (4)-Table 1, item 1.1.6 | |
| Education bodies | (4)-Table 2 | |
| Employees - pensions etc. | (11) | |
| Environmental organisations | (4)-Table 6 | |
| Family organisations | (4)-Table 8 | |
| Foundation for Development Cooperation Ltd | (4)-Table 9, item 9.2.3 | |
| Friends of the Duke of Edinburgh's Award in Australia Incorporated | (4)-Table 11, item 11.2.2 | |
| Gratuities for ex-employees | (11) | |
| Greening Australia Limited | (4)-Table 6, item 6.2.2 | |
| Guides Australia Incorporated | (4)-Table 10, items 10.2.2 and 10.2.3 | |
| Health organisations | (4)-Table 1 | |
| Herbert Vere Evatt Memorial Foundation Incorporated | (4)-Table 11, item 11.2.3 | |
| Heritage properties | (8) | |
| Hospitals | (4)-Table 1, items 1.1.1 and 1.1.2 | |
| H.R.H. The Duke of Edinburgh's Commonwealth Study Conferences (Australia) Incorporated | (4)-Table 2, item 2.2.12 | |
| Ian Clunies Ross Memorial Foundation | (4)-Table 3, item 3.2.2 | |
| Industrial Design Council of Australia | (4)-Table 7, item 7.2.1 | |
| Industry, trade and design | (4)-Table 7 | |
| International affairs | (4)-Table 9 | |
| Joint ownership of property - subsection (6), (7) or (8) | (16) | |
| Landcare Australia Limited | (4)-Table 6, item 6.2.3 | |
| Libraries | (4)-Table 12, items 12.1.2 and 12.1.5; (6) | |
| Life Education Centre | (4)-Table 2, item 2.2.8 | |
| Lionel Murphy Foundation | (4)-Table 2, item 2.2.13 | |
| Marcus Oldham Farm Management College | (4)-Table 2, item 2.2.14 | |
| Marriage guidance organisations | (4)-Table 8, item 8.1.1 | |
| Medical colleges | (4)-Table 1 | |
| Medical research | (4)-Table 1 | |
| Monash Mt Eliza Graduate School of Business and Government Limited | (4)-Table 2, item 2.2.5 | |
| Mount Macedon Memorial Cross Restoration, Development and Maintenance Trust | (4)-Table 5, item 5.2.6 | |
| Museums | (4)-Table 12, items 12.1.3 and 12.1.5; (6) | |
| National Foundation for Australian Women Limited | (4)-Table 4, item 4.2.3 | |
| National Parks associations | (4)-Table 6 | |
| National Safety Council of Australia Limited | (4)-Table 4, item 4.2.4 | |
| National Trust bodies | (4)-Table 6; (8) | |
| Nature organisations | (4)-Table 6 | |
| Necessitous circumstances - funds for relief of persons in | (4)-Table 4, item 4.1.3 | |
| New South Wales College of Nursing | (4)-Table 1, item 1.2.5 | |
| Nursing Mothers' Association of Australia | (4)-Table 8, item 8.2.1 | |
| Overseas aid funds | (4)-Table 9, item 9.1.1 | |
| Pearl Watson Foundation Limited | (4)-Table 4, item 4.2.5 | |
| Pensions for ex-employees | (11) | |
| Philanthropic trusts | (4)-Table 11 | |
| Playford Memorial Trust | (4)-Table 11, item 11.2.4 | |
| Political contributions | (9), (10) | |
| Political parties | (9), (10) | |
| Polly Farmer Foundation (Inc) | (4)-Table 2, item 2.2.16 | |
| Prevention of cruelty to animals | (4)-Table 4 | |
| Productivity | (4)-Table 7 | |
| Productivity Promotion Council of Australia | (4)-Table 7, item 7.2.2 | |
| Property - gifts of | (4)-(10) | |
| - valuations of | (12)-(17) | |
| Public benevolent institutions | (4)-Table 4, item 4.1.1 | |
| Queen Elizabeth II Silver Jubilee Trust for Young Australians | (4)-Table 11, item 11.2.6 | |
| Queen Elizabeth the Second Coronation Gift Fund | (4)-Table 11, item 11.2.8 | |
| Religious instruction/education | (4)-Table 2 | |
| Research institutions | (4)-Table 3 | |
| Residential education institutions | (4)-Table 2 | |
| Retiring allowances for ex-employees | (11) | |
| Royal Australian and New Zealand College of Psychiatrists | (4)-Table 1, item 1.2.6 | |
| Royal Australian College of General Practitioners | (4)-Table 1, item 1.2.7 | |
| Royal Australasian College of Physicians | (4)-Table 1, item 1.2.8 | |
| Royal Australasian College of Surgeons | (4)-Table 1, item 1.2.9 | |
| Royal College of Nursing, Australia | (4)-Table 1, item 1.2.12 | |
| Royal College of Pathologists of Australasia | (4)-Table 1, item 1.2.10 | |
| Rural school hostels | (4)-Table 2, item 2.1.11 | |
| Sandakan Memorials Trust Fund | (4)-Table 5, item 5.2.2 | |
| School buildings | (4)-Table 2, item 2.1.10 | |
| Schools | (4)-Table 2 | |
| Scouts | (4)-Table 10, items 10.2.4 and 10.2.5 | |
| Shrine of Remembrance Restoration and Development Trust | (4)-Table 5, item 5.2.1 | |
| Sir Robert Menzies Memorial Trust Foundation Limited | (4)-Table 11, 11.2.5 | |
| Sports and recreation | (4)-Table 10 | |
| Tax incentives for the arts | See ``Property'' | |
| Tertiary education/TAFE | (4)-Table 2 | |
| Trusts - philanthropic | (4)-Table 11 | |
| - ancillary | (5) | |
| Universities - general | (4)-Table 2 | |
| - research | (4)-Table 3 | |
| Valuations | (12)-(17) | |
| Valuers | (18) | |
| Victoria Conservation Trust | (4)-Table 6, item 6.2.6 | |
| ``Weary'' Dunlop Statue Appeal | (4)-Table 5, item 5.2.3 | |
| Welfare and rights | (4)-Table 4 | |
| Wills | (5) | |
| Winston Churchill Memorial Trust | (4)-Table 11, item 11.2.7 | |
| Work Skill Australia Foundation Incorporated | (4)-Table 7, item 7.2.3 | |
| Works of art | See ``Property'' | |
| World Wide Fund for Nature Australia | (4)-Table 6, item 6.2.22 |
A gift by a taxpayer in the 1996-97 income year or an earlier income year to a fund, authority or institution mentioned in any of the following tables is an allowable deduction for the year of income in which the gift was made if:
(a) the fund, authority or institution is in Australia; and
(b) the gift is:
(i) money; or
(ii) property that was purchased by the taxpayer during the 12 months before the gift was made; or
(iii) property that is trading stock of the taxpayer to which subsection 36(1) applies, where the taxpayer has not made, and does not make, an election under subsection 36(3) or section 36AAA in relation to the property; and
(c) the value of the gift is $2 or more; and
(d) the gift is not a testamentary gift; and
(e) if one or more special conditions are set out in the table opposite the name of the fund, authority or institution - those conditions are satisfied; and
(f) if the gift is property - a deduction is not allowable to the taxpayer under subsection (6), (6A), (7) or (8) in respect of the gift.
Note:
Division 30 of the Income Tax Assessment Act 1997 deals with the deductibility of gifts made in the 1997-98 year of income or a later year of income.
Each item is independent of every other item.
| GUIDE TO TABLES |
| 1. Health |
| 2. Education |
| 3. Research |
| 4. Welfare and Rights |
| 5. Defence |
| 6. The Environment |
| 7. Industry, Trade and Design |
| 8. The Family |
| 9. International Affairs |
| 10. Sports and Recreation |
| 11. Philanthropic Trusts |
| 12. Cultural Organisations |
| TABLE 1 - HEALTH |
| Item | Fund, authority or institution | Special conditions | |
| 1. General | 1.1.1 | a public hospital | |
| 1.1.2 | a hospital carried on by a society or association otherwise than for the purposes of profit or gain to the individual members of the society or association | ||
| 1.1.3 | a public fund established before 23 October 1963 and maintained for the purpose of providing money for hospitals covered by items 1.1.1 or 1.1.2 or for the establishment of such hospitals | ||
| 1.1.4 | a public authority engaged in research into the causes, prevention or cure of disease in human beings, animals or plants | the gift must be for such research | |
| 1.1.5 | a public institution engaged solely in research into the causes, prevention or cure of disease in human beings, animals or plants | ||
| 1.1.6 | a charitable institution whose principal activity is to promote the prevention or the control of diseases in human beings | ||
| 2. Specific | 1.2.1 | The Australian College of Obstetricians and Gynaecologists | |
| 1.2.2 | the Australian College of Occupational Medicine | ||
| 1.2.3 | the Australian Postgraduate Federation in Medicine | the gift must be made for education or research in medical knowledge or science | |
| 1.2.4 | the College of Radiologists in Australasia | the gift must be made for education or research in medical knowledge or science | |
| 1.2.5 | the New South Wales College of Nursing | ||
| 1.2.6 | the Royal Australian and New Zealand College of Psychiatrists | ||
| 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 | ||
| 1.2.9 | the Royal Australasian College of Surgeons | ||
| 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 | the Australian Regional Council of the Royal College of Obstetricians and Gynaecologists | ||
| 1.2.12 | the Royal College of Nursing, Australia | ||
| 1.2.13 | the Australian and New Zealand College of Anaesthetists | the gift must be made after 26 October 1994 |
| TABLE 2 - EDUCATION |
| Item | Fund, authority or institution | Special conditions | |||
| 1. General | 2.1.1 | a public university | |||
| 2.1.2 | a public fund for the establishment of a public university | ||||
| 2.1.3 | a higher education institution within the meaning of the Employment, Education and Training Act 1988 | ||||
| 2.1.4 | a residential educational institution affiliated under statutory provisions with a public university | ||||
| 2.1.5 | a residential educational institution established by the Commonwealth | ||||
| 2.1.6 | a residential educational institution that is affiliated with a higher education institution within the meaning of the Employment, Education and Training Act 1988 | ||||
| 2.1.7 | an institution that is certified by the Minister for Employment, Education and Training, by signed instrument, to be a technical and further education institution within the meaning of the Employment, Education and Training Act 1988 | the gift must be for certified purposes of the institution or for the provision of certified facilities for the institution (see subsection (26)) | |||
| 2.1.8 | a public fund established and maintained exclusively for the purpose of providing religious instruction in government schools in Australia | ||||
| 2.1.9 | a public fund established and maintained by a Roman Catholic archdiocesan or diocesan authority exclusively for the purpose of providing religious instruction in government schools in Australia | ||||
| 2.1.10 | a public fund established and maintained exclusively 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 | ||||
| 2.1.11 | a public fund established and maintained exclusively for providing money for the acquisition, construction or maintenance of an eligible rural school hostel building (see subsection (26)) | ||||
| 2. Specific | 2.2.1 | The Academy of the Social Sciences in Australia Incorporated | |||
| 2.2.2 | the Australian Academy of Science | ||||
| 2.2.3 | the Australian Academy of the Humanities for the Advancement of Scholarship in Language, Literature, History, Philosophy and the Fine Arts | ||||
| 2.2.4 | the Australian Academy of Technological Sciences and Engineering Limited | ||||
| 2.2.5 | the Monash Mt Eliza Graduate School of Business and Government Limited | ||||
| 2.2.6 | the Australian and New Zealand Association for the Advancement of Science | ||||
| 2.2.7 | the Australian Ireland Fund | ||||
| 2.2.8 | the Life Education Centre | ||||
| 2.2.9 | a company that conducts life education programs under the auspices of the Life Education Centre | (a) | the gift must be for the conduct of such programs; and | ||
| (b) | the company must not be carried on for the purposes of profit or gain to its individual members; and | ||||
| (c) | the company must, by the terms of the company's constituent document, be prohibited from making any distribution, whether in money, property or otherwise, to its members | ||||
| 2.2.10 | the Council for Christian Education in Schools | ||||
| 2.2.11 | the Council for Jewish Education in Schools | ||||
| 2.2.12 | H.R.H. The Duke of Edinburgh's Commonwealth Study Conferences (Australia) Incorporated | ||||
| 2.2.13 | the Lionel Murphy Foundation | ||||
| 2.2.14 | the Marcus Oldham Farm Management College | the gift must be for certified purposes of the college or for the provision of certified facilities for the college (see subsection (26)) | |||
| 2.2.15 | the Constitutional Centenary Foundation Incorporated | the gift must be made after 27 June 1994 | |||
| 2.2.16 | the Polly Farmer Foundation (Inc) | the gift must be made after 6 September 1995 |
| TABLE 3 - RESEARCH |
| Item | Fund, authority or institution | Special conditions | |
| 1. General | 3.1.1 | a university, college, institute, association or organisation which is an approved research institute for the purposes of section 73A | the gift must be for purposes of scientific research as defined in section 73A |
| 2. Specific | 3.2.1 | the Centre for Independent Studies | |
| 3.2.2 | the Ian Clunies Ross Memorial Foundation | ||
| 3.2.3 | the Commonwealth | the gift must be made for purposes of research in the Australian Antarctic Territory |
| TABLE 4 - WELFARE AND RIGHTS |
| Item | Fund, authority or institution | Special conditions | |
| 1. General | 4.1.1 | a public benevolent institution | |
| 4.1.2 | a public fund established before 23 October 1963 and maintained for the purpose of providing money for public benevolent institutions or for the establishment of public benevolent institutions | ||
| 4.1.3 | a public fund established and maintained for the relief of persons in Australia who are in necessitous circumstances | ||
| 2. Specific | 4.2.1 | Amnesty International Australia | |
| 4.2.2 | the Child Accident Prevention Foundation of Australia | ||
| 4.2.3 | the National Foundation for Australian Women Limited | ||
| 4.2.4 | the National Safety Council of Australia Limited | ||
| 4.2.5 | the Pearl Watson Foundation Limited | ||
| 4.2.6 | the Royal Society for the Prevention of Cruelty to Animals New South Wales | ||
| 4.2.7 | the Royal Society for the Prevention of Cruelty to Animals (Victoria) Inc. | ||
| 4.2.8 | the Royal Queensland Society for the Prevention of Cruelty | ||
| 4.2.9 | the Royal Society for the Prevention of Cruelty to Animals (South Australia) Incorporated | ||
| 4.2.10 | the Royal Society for the Prevention of Cruelty to Animals Western Australia (Incorporated) | ||
| 4.2.11 | the R.S.P.C.A. (Tasmania) Incorporated | ||
| 4.2.12 | the Society for the Prevention of Cruelty to Animals (Northern Territory) | ||
| 4.2.13 | the Royal Society for the Prevention of Cruelty to Animals (A.C.T.) Incorporated | ||
| 4.2.14 | the R.S.P.C.A. Australia Incorporated |
| TABLE 5 - DEFENCE |
| Item | Fund, authority or institution | Special conditions | |
| 1. General | 5.1.1 | the Commonwealth or a State | 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 the armed forces of any part of Her Majesty's dominions, or of any allied or other foreign force serving in association with Her Majesty's armed forces | ||
| 2. Specific | 5.2.1 | the Shrine of Remembrance Restoration and Development Trust | the gift must be made after 24 November 1992 and before 1 July 1999 |
| 5.2.2 | The Sandakan Memorials Trust Fund | the gift must be made after 29 July 1993 and before 30 July 1997 | |
| 5.2.3 | The ``Weary'' Dunlop Statue Appeal | the gift must be made after 15 July 1993 and before 16 July 1994 | |
| 5.2.4 | the Ararat War Memorial Restoration Trust Fund | the gift must be made after 3 April 1994 and before 4 April 1996 | |
| 5.2.5 | The Brisbane RAAF Memorial Fund | the gift must be made after 16 June 1994 and before 17 June 1996 | |
| 5.2.6 | the Mount Macedon Memorial Cross Restoration, Development and Maintenance Trust | the gift must be made after 23 April 1994 and before 25 April 1996 | |
| 5.2.7 | the Cobram and District War Memorial Incorporated Fund | the gift must be made after 18 October 1995 and before 19 October 1997 | |
| 5.2.8 | The Central Synagogue Restoration Fund | the gift must be made after 22 December 1995 and before 23 December 1997 | |
| 5.2.9 | The Borneo Memorials Trust Fund | the gift must be made after 22 December 1995 and before 23 December 1997 | |
| 5.2.10 | Australian National Korean War Memorial Trust Fund | the gift must be made after 1 September 1996 and before 2 September 1998 |
| TABLE 6 - THE ENVIRONMENT |
| Item | Fund, authority or institution | Special conditions | |
| 1. General | 6.1.1 | a fund that, when the gift is made, is on the Register of Environmental Organisations kept under section 78AB | |
| 2. Specific | 6.2.1 | the Australian Conservation Foundation Incorporated | special conditions set out in subsection (25) |
| 6.2.2 | Greening Australia Limited | special conditions set out in subsection (25) | |
| 6.2.3 | Landcare Australia Limited | special conditions set out in subsection (25) | |
| 6.2.4 | the National Parks Association of New South Wales | special conditions set out in subsection (25) | |
| 6.2.5 | the Victorian National Parks Association Incorporated | special conditions set out in subsection (25) | |
| 6.2.6 | the Victoria Conservation Trust | special conditions set out in subsection (25) | |
| 6.2.7 | the National Parks Association of Queensland | special conditions set out in subsection (25) | |
| 6.2.8 | The Nature Conservation Society of South Australia Incorporated | special conditions set out in subsection (25) | |
| 6.2.9 | the National Parks Foundation of South Australia Incorporated | special conditions set out in subsection (25) | |
| 6.2.10 | the Western Australian National Parks and Reserves Association Incorporated | special conditions set out in subsection (25) | |
| 6.2.11 | the Tasmanian Conservation Trust Incorporated | special conditions set out in subsection (25) | |
| 6.2.12 | the National Parks Association of the Australian Capital Territory Incorporated | special conditions set out in subsection (25) | |
| 6.2.13 | the National Trust of Australia (New South Wales) | ||
| 6.2.14 | the National Trust of Australia (Victoria) | ||
| 6.2.15 | The National Trust of Queensland | ||
| 6.2.16 | The National Trust of South Australia | ||
| 6.2.17 | The National Trust of Australia (W.A.) | ||
| 6.2.18 | the National Trust of Australia (Tasmania) | ||
| 6.2.19 | The National Trust of Australia (Northern Territory) | ||
| 6.2.20 | the National Trust of Australia (A.C.T.) | ||
| 6.2.21 | the Australian Council of National Trusts | ||
| 6.2.22 | the World Wide Fund for Nature Australia | special conditions set out in subsection (25) | |
| 6.2.23 | AAP Mawson's Huts Foundation Limited | the gift must be made after 17 March 1997 |
| TABLE 7 - INDUSTRY, TRADE AND DESIGN |
| Item | Fund, authority or institution | Special conditions | |
| 1. General | 7.1.1 | - | - |
| 2. Specific | 7.2.1 | the Industrial Design Council of Australia | |
| 7.2.2 | the Productivity Promotion Council of Australia | ||
| 7.2.3 | the Work Skill Australia Foundation Incorporated |
| TABLE 8 - THE FAMILY |
| Item | Fund, authority or institution | Special conditions | |
| 1. General | 8.1.1 | a public fund established and maintained exclusively for the purpose of providing money to be used in giving marriage guidance to persons in Australia through a voluntary organisation or through a branch or section of such an organisation | the organisation, branch or section, as the case may be, must be approved by the Attorney-General (see subsection (24)) |
| 2. Specific | 8.2.1 | the Nursing Mothers' Association of Australia |
| TABLE 9 - INTERNATIONAL AFFAIRS |
| Item | Fund, authority or institution | Special conditions | |
| 1. General | 9.1.1 | a public fund in respect of which there is in force, at the time when the gift is made, a declaration under subsection (21) that the fund is an eligible fund for the purposes of this item | |
| 2. Specific | 9.2.1 | the Australian Institute of International Affairs | |
| 9.2.2 | the Australian National Travel Association | ||
| 9.2.3 | The Foundation for Development Cooperation Ltd |
| TABLE 10 - SPORTS AND RECREATION |
| Item | Fund, authority or institution | Special conditions | |
| 1. General | 10.1.1 | - | - |
| 2. Specific | 10.2.1 | the Australian Sports Foundation | |
| 10.2.2 | Guides Australia Incorporated | ||
| 10.2.3 | an institution that is known as a State or Territory branch of Guides Australia Incorporated | ||
| 10.2.4 | the Scout Association of Australia | ||
| 10.2.5 | an institution that is known as a State or Territory branch of the Scout Association of Australia | ||
| 10.2.6 | the Australian Games Uniform Company Limited | the gift must be made after 6 September 1995 |
| TABLE 11 - PHILANTHROPIC TRUSTS |
| Item | Fund, authority or institution | Special conditions | |
| 1. General | 11.1.1 | - | - |
| 2. Specific | 11.2.1 | the Connellan Airways Trust | |
| 11.2.2 | The Friends of the Duke of Edinburgh's Award in Australia Incorporated | ||
| 11.2.3 | the Herbert Vere Evatt Memorial Foundation Incorporated | ||
| 11.2.4 | the Playford Memorial Trust | ||
| 11.2.5 | The Sir Robert Menzies Memorial Foundation Limited | ||
| 11.2.6 | the Queen Elizabeth II Silver Jubilee Trust for Young Australians | ||
| 11.2.7 | the Winston Churchill Memorial Trust | ||
| 11.2.8 | the Queen Elizabeth the Second Coronation Gift Fund |
| TABLE 12 - CULTURAL ORGANISATIONS |
| Item | Fund, authority or institution | Special conditions | |
| 1. General | 12.1.1 | a fund that, when the gift is made, is on the Register of Cultural Organisations kept under section 78AA | |
| 12.1.2 | a public library | ||
| 12.1.3 | a public museum | ||
| 12.1.4 | a public art gallery | ||
| 12.1.5 | an institution consisting of a public library, public museum and public art gallery or of any 2 of them | ||
| 2. Specific | 12.2.1 | The Australiana Fund | |
| 12.2.2 | Australia Foundation for Culture and the Humanities Ltd. | the gift must be made after 8 November 1996 |
A gift by a taxpayer in the 1996-97 income year or an earlier income year to a fund is an allowable deduction for the year of income in which the gift was made if:
(a) the fund is a public fund established and maintained under a will or instrument of trust exclusively for:
(i) the purpose of providing money, property or benefits to or for funds, authorities or institutions referred to, and for the purposes (if any) referred to, in any of the items in the tables in subsection (4); or
(ii) the establishment of such funds, authorities or institutions; and
(b) the Commissioner is satisfied that the terms of the will or instrument of trust are such that any money (including income derived from investments and proceeds of the realisation of investments):
(i) paid or accrued to the fund as a direct or indirect result of the gift; and
may not be invested by the trustee otherwise than in a manner in which trustees are permitted by an Act, a State Act or a law of a Territory to invest trust money without special authorisation; and
(ii) not applied for the purposes of the fund;
(c) the gift is:
(i) money; or
(ii) property that was purchased by the taxpayer during the 12 months before the gift was made; or
(iii) property that is trading stock of the taxpayer to which subsection 36(1) applies, where the taxpayer has not made, and does not make, an election under subsection 36(3) or section 36AAA in relation to the property; and
(d) the value of the gift is $2 or more; and
(e) the gift is not a testamentary gift; and
(f) if the gift is property - a deduction is not allowable to the taxpayer under subsection (6), (6A), (7) or (8) in respect of the gift.
Note:
Division 30 of the Income Tax Assessment Act 1997 deals with the deductibility of gifts made in the 1997-98 year of income or a later year of income.
A gift by a taxpayer in the 1996-97 income year or an earlier income year to:
(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;
is an allowable deduction for the year of income in which the gift was made if:
(f) the gift is property (other than an estate or interest in land or in a building or part of a building); and
(g) the value of the gift is $2 or more; and
(h) the property is given to, and accepted by, The Australiana Fund or the authority or institution concerned for inclusion in the collection, or any of the collections, maintained or being established by that Fund, authority or institution; and
(i) the gift is not a testamentary gift; and
(j) the special valuation conditions set out in subsection (13) are complied with.
Note:
Division 30 of the Income Tax Assessment Act 1997 deals with the deductibility of gifts made in the 1997-98 year of income or a later year of income.
Subject to subsection (6F), a testamentary gift made by a taxpayer in the 1996-97 income year or an earlier income year under the scheme formulated by the Australian Government and known as the Cultural Bequests Program to:
(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;
is an allowable deduction if:
(f) the gift is property (other than an estate or interest in land or in a building or part of a building); and
(g) the property is given to, and accepted by, The Australiana Fund or the authority or institution concerned for inclusion in the collection, or any of the collections, maintained or being established by that Fund, authority or institution; and
(h) the Minister for Communications and the Arts has given the taxpayer a certificate under subsection (6B) approving the gift and specifying the value of the gift for the purposes of this subsection; and
(i) the value of the gift, as specified in the certificate, is $2 or more.
Note:
Division 30 of the Income Tax Assessment Act 1997 deals with the deductibility of testamentary gifts made in the 1997-98 year of income or a later year of income.
Subject to subsections (6C) and (6E), the Minister for Communications and the Arts may, on written application by a taxpayer, give the taxpayer a certificate:
(a) approving a gift for the purposes of subsection (6A); and
(b) specifying the value of the gift for the purposes of that subsection; and
(c) containing such other information as the Commissioner, in writing, requires.
A decision of the Minister for Communications and the Arts:
(a) to approve a gift for the purposes of subsection (6A); or
(b) to specify a particular value for a gift for the purposes of that subsection;
must be made in accordance with written guidelines made by that Minister under this subsection.
The guidelines made under subsection (6C) may require the Minister for Communications and the Arts, in approving gifts and specifying values, to take into account:
(a) specified criteria; or
(b) recommendations of particular bodies; or
(c) any other factors.
The Minister for Communications and the Arts:
(a) must determine, in writing, an amount as the maximum approval amount for certificates given under subsection (6B) for each financial year; and
(b) must not give any certificates under that subsection in a financial year before specifying the maximum approval amount for that financial year; and
(c) must not give a certificate under that subsection if the value specified in the certificate, when added to the values specified in all certificates previously given under that subsection in that financial year, would exceed the maximum approval amount for certificates given in that financial year.
[ CCH Note: The maximum approval amount for each of the 1995/96 and 1996/97 financial years is $5m ( Gazette No GN 7 of 21 February 1996).]
Subject to subsection (6G), a deduction to which subsection (6A) applies is allowable in the assessment of the taxpayer in respect of income of the year of income in which the taxpayer died and not otherwise.
(a) an amount (the ``section 79C amount'' ) of the deduction to which subsection (6A) applies is not allowable because of section 79C in the assessment of the taxpayer in respect of income of the year of income in which the taxpayer died; and
(b) the taxpayer died before the last day of a year of income;
the section 79C amount is allowable in the assessment of the taxpayer's estate in respect of income of the remainder ofthat year of income.
A gift by a taxpayer in the 1996-97 income year or an earlier income year to the Commonwealth is an allowable deduction for the year of income in which the gift was made if:
(a) the gift is property (other than an estate or interest in land or in a building or part of a building); and
(b) the property is given to, and accepted by the Commonwealth for inclusion in the collection, or any of the collections, maintained or being established for the purposes of Artbank; and
(c) the gift is not a testamentary gift; and
(d) the special valuation conditions set out in subsection (13) are complied with.
Note:
Division 30 of the Income Tax Assessment Act 1997 deals with the deductibility of gifts made in the 1997-98 year of income or a later year of income.
A gift by a taxpayer in the 1996-97 income year or an earlier income year to:
(a) the National Trust of Australia (New South Wales); or
(b) the National Trust of Australia (Victoria); or
(c) The National Trust of Queensland; 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;
is an allowable deduction for the year of income in which the gift was made if:
(j) the gift is property; and
(k) the value of the gift is $2 or more; and
(l) the property consists of a place within the meaning of the Australian Heritage Commission Act 1975 as in force when the gift was made; and
(m) at the time when the gift was made, the place was listed in the Register of the National Estate kept under the Australian Heritage Commission Act 1975 as in force when the gift was made; and
(n) the property was accepted by the National Trust body concerned for the purpose of preserving the property for the benefit of the public; and
(o) the gift is not a testamentary gift; and
(p) the special valuation conditions set out in subsection (13) are complied with.
Note:
Division 30 of the Income Tax Assessment Act 1997 deals with the deductibility of gifts made in the 1997-98 year of income or a later year of income.
A contribution by a taxpayer in the 1996-97 income year or an earlier income year to a registered political party (within the meaning of the Commonwealth Electoral Act 1918 ) is an allowable deduction for the year of income in which the contribution was made if:
(a) the contribution is:
(i) money; or
(ii) property that was purchased by the taxpayer during the 12 months before the contribution was made; and
(b) the value of the contribution is $2 or more; and
(c) the taxpayer is not a company; and
(d) the contribution is not a testamentary contribution.
Note:
Division 30 of the Income Tax Assessment Act 1997 deals with the deductibility of contributions made in the 1997-98 year of income or a later year of income.
The total deductions allowable to a taxpayer under subsection (9) in respect of a year of income must not exceed $100.
78(11) Deductions for pensions, gratuities or retiring allowances to ex-employees etc.An amount paid by a taxpayer in the 1996-97 income year or an earlier income year as a pension, gratuity or retiring allowance to a person who is or was an employee or a dependant of an employee is an allowable deduction for the year of income in which it was paid. However:
(a) it is an allowable deduction under this subsection only to the extent that, in the Commissioner's opinion, it is paid in good faith in consideration of the past services of the employee in any business operations that were carried on by the taxpayer for the purpose of gaining or producing assessable income; and
(b) it is not an allowable deduction under this subsection if it is an allowable deduction under any other provision of this Act.
Note:
Section 25-50 of the Income Tax Assessment Act 1997 deals with the deductibility of amounts paid as pensions, gratuitiesor retiring allowances in the 1997-98 year of income or a later year of income.
For the purposes of subsections (4) and (5), the value of a gift of property is:
(a) if:
(i) the property is trading stock of the taxpayer to which subsection 36(1) applies; and
the value of the property that is, because of subsection 36(1) , included in the taxpayer's assessable income; or
(ii) the taxpayer has not made, and does not make, an election under subsection 36(3) or section 36AAA in relation to the property;
(b) in any other case - whichever is the lesser of:
(i) the value of the property at the time of the making of the gift; or
78(13) Gifts of property covered by subsections (6), (7) and (8) - special valuation conditions.
(ii) the amount paid by the taxpayer for the property.
For the purposes of subsections (6), (7) and (8), a taxpayer complies with the special valuation conditions in relation to a gift of property if:
(a) both:
(i) assuming that the taxpayer had sold the property instead of making the gift, any profits or proceeds from the sale would have been included in the taxpayer's assessable income; and
(ii) the making of the gift does not result in an amount being included in the taxpayer's assessable income; or
(b) all of the following conditions are satisfied:
(i) the taxpayer gives the Commissioner 2 or more written valuations stating the amount that, in the opinion of the person making the valuation, was:
(A) the value of the property at the time when the gift was made; or
(B) if the valuation was made not earlier than 90 days (or such longer period as the Commissioner allows) before, and not later than 90 days (or such longer period as the Commissioner allows) after, the day on which the gift was made - the value of the property at the time when the valuation was made;
(ii) the valuations are by persons each of whom was, at the time of making the valuation, an approved valuer in relation to property of the kind concerned;
78(14) Value of gift - subsections (6), (7) and (8).
(iii) the written valuations are given to the Commissioner:
(A) with the taxpayer's return of income for the year of income in which the gift was made; or
(B) if more than one such return is given - with the first return; or
(C) within such further period as the Commissioner allows.
Subject to subsection (15) (which deals with conditional gifts), for the purposes of subsections (6), (7) and (8), the value of a gift of property is as follows:
(a) if both:
(i) assuming that the taxpayer had sold the property instead of making the gift, any profits or proceeds from the sale would have been included in the taxpayer's assessable income; and
the value of the gift is:
(ii) the making of the gift does not result in an amount being included in the taxpayer's assessable income;
(iii) if the taxpayer purchased the property - the amount paid by the taxpayer for the property; or
(iv) if the taxpayer created or produced the property - the amount equal to so much of the cost of creating or producing the property as would have been allowed as a deduction to the taxpayer if the property had been sold by the taxpayer;
(b) if paragraph (a) does not apply and the taxpayer:
(i) acquired the property within 12 months before the making of the gift otherwise than as a result of:
(A) a will, a codicil or an order of a court that varied or modified the provisions of a will or codicil; or
(B) an intestacy or an order of a court that varied or modified the application, in relation to the estate of a deceased person, of the provisions of the law relating to the distribution of the estates of persons who died intestate; or
the value of the gift is whichever is the lesser of:
(ii) acquired the property for the purpose of making a gift of the property to, or subject to an eligible agreement that the property would be gifted to:
(A) a Fund, authority or institution mentioned in subsection (6) for inclusion in its collection, or any of its collections; or
(B) the Commonwealth for inclusion in the collection, or any of the collections, of Artbank; or
(C) a body mentioned in subsection (8);
(iii) the amount (if any) paid by the taxpayer for the property; or
(iv) the amount that, assuming that this paragraph and subsection (15) had not been enacted, would be the value of the gift;
(c) if neither paragraph (a) nor paragraph (b) applies:
(i) if the Commissioner is of the opinion that an amount equal to the average of the values specified in the valuations given to the Commissioner under subsection (13) in relation to the property fairly represents the value of the property as at the time when the gift was made - the value of the gift is that amount; or
78(15) Value of conditional gift - subsections (6), (7) and (8).
(ii) in any other case - the value of the gift is the amount that the Commissioner considers was the value of the property as at the time when the gift was made.
For the purposes of subsections (6), (7) and (8), if:
(a) the terms and conditions on which a gift of property is made are such that the recipient does not:
(i) receive immediate custody and control of the property; or
(ii) have the unconditional right to retain custody and control of the property in perpetuity; or
(iii) obtain an immediate, indefeasible and unencumbered legal and equitable title to the property; or
(b) the Commissioner is satisfied that the custody, control or use of the property by the recipient is affected by an eligible agreement entered into in association with the making or receipt of the gift;
the value of the gift is the value worked out under subsection (14), reduced by such amount as the Commissioner considers reasonable having regard to the effect on the value of the gift of those terms and conditions or of that eligible agreement.
78(15A) Value of gift - subsection (6A).For the purposes of subsection (6A), the value of a gift of property is the amount specified in the certificate given by the Minister for Communications and the Arts undersubsection (6B) in relation to the gift.
(a) a taxpayer (the ``first taxpayer'' ) owns property jointly with one or more other taxpayers; and
(b) the owners make a gift of the property; and
(c) assuming that:
(i) the property had been owned by the first taxpayer alone; and
the gift would have been an allowable deduction under subsection (6), (7) or (8);
(ii) the gift had been made by the first taxpayer;
the first taxpayer is entitled to an allowable deduction of so much of the amount of the deduction that would have been allowable as mentioned in paragraph (c) as the Commissioner considers reasonable having regard to the interest of the taxpayer in the property.
78(16A) Testamentary gifts made at time of death.To avoid doubt, a testamentary gift is taken to be made at the time of death of the taxpayer who made the gift.
For the purposes of subsection (9), the value of a contribution of property is whichever is the lesser of:
(a) the value of the property at the time of the contribution; or
(b) the amount paid by the taxpayer for the property. 78(18) Approval of valuer.
The Secretary to the Department of the Arts and Administrative Services may, by signed instrument, approve a person as a valuer in relation to a particular kind of property. In deciding whether to give an approval, the Secretary to that Department must have regard to:
(a) the person's qualifications, experience and knowledge in relation to the valuation of property of that kind; and
(b) the person's knowledge of current market values of property of that kind; and
(c) the person's standing in the professional community; and
(d) any other matters that the Secretary to that Department considers relevant. 78(19) Approval of organisations for the purposes of eligible funds declaration.
The Minister for Foreign Affairs may, by signed instrument, approve an organisation as an approved organisation for the purposes of subsection (21).
78(20) Certification of country for the purposes of eligible funds declaration.The Minister for Foreign Affairs may, by signed instrument, certify a country to be a developing country for the purposes of subsection (21).
78(21) Declaration of eligible funds.If the Treasurer is satisfied that a fund:
(a) is a fund established by an approved organisation (whether or not the organisation was an approved organisation at the time when the fund was established); and
(b) is exclusively for the relief of persons in a certified country or certified countries (whether or not that country was a certified country, or those countries were certified countries, at the time when the fund was established);
the Treasurer may, by notice in the Gazette , declare it to be an eligible fund for the purposes of item 9.1.1 of table 9 in subsection (4).
78(22) Eligible funds declaration - effective date.A notice under subsection (21) must specify the date on which the notice has effect. The date must not be earlier than the date on which the notice is published in the Gazette .
78(23) Revocation of eligible funds declaration.The Treasurer may, by notice in the Gazette , revoke a declaration under subsection (21). The notice of revocation must specify the date on which it has effect. The date of effect must not be earlier than the date on which the notice of revocation is published in the Gazette .
78(24) Approval of marriage guidance organisations.If the Attorney-General is satisfied that:
(a) an organisation, or a branch or a section of an organisation, is willing and able to engage in marriage guidance; and
(b) marriage guidance constitutes, or will constitute, the whole or the major part of the activities of the organisation, branch or section, as the case may be;
the Attorney-General may, by signed instrument, approve the organisation, branch or section, as the case may be, for the purposes of item 8.1.1 of table 8 in subsection (4).
78(25) Special conditions applicable to gifts made to certain environmental bodies.The following are the special conditions mentioned in various items in table 6 in subsection (4):
(a) at the time the gift is made, the institution must have agreed to give to the Department of the Environment, Sport and Territories, within a reasonable period after the end of the financial year in which the gift was made, statistical data about gifts made to the institution during the financial year;
(b) at the time the gift is made, the institution must have a policy of not acting as a mere conduit for the donation of money or property to other institutions, bodies or persons. 78(25A) Disallowable instruments.
The following are disallowable instruments for the purposes of section 46A of the Acts Interpretation Act 1901 :
(a) guidelines made under subsection (6C); and
(b) determinations under paragraph (6E)(a).
In this section:
"approved organisation"
means an organisation approved under subsection (19);
"approved valuer"
, in relation to a particular kind of property, means a person in respect of whom there is in force under subsection (18) an approval of the person as a valuer in relation to that kind of property;
"certified country"
means a country certified under subsection (20) to be a developing country for the purposes of this section;
"certified facilities"
, in relation to a college or institution, means facilities (including residential accommodation) in respect of which the Minister for Employment, Education and Training has certified, by signed instrument, that he or she is satisfied are, or are to be, used wholly or principally for certified purposes of the college or institution;
"certified purposes"
, in relation to a college or institution, means purposes of the college or institution that have been certified by the Minister for Employment, Education and Training, by signed instrument, to relate exclusively to tertiary education;
"eligible agreement"
means an agreement, arrangement or understanding:
(a) whether formal or informal; and
(b) whether express or implied; and
(c) whether or not enforceable by legal proceedings (whether or not the agreement, arrangement or understanding was intended to be so enforceable);
"eligible rural school hostel building"
means a building where:
(a) the building is used, or to be used, solely or principally as a residential accommodation for students whose usual place of residence is in a rural area and who are undertaking:
(i) primary or secondary education courses; or
at a school or schools in the same locality as the residential accommodation; and
(ii) special education programs for children with disabilities;
(b) the capital or recurrent costs of the school or schools are funded (in whole or in part) by the Commonwealth, a State or a Territory; and
(c) the residential accommodation is provided by:
(i) the Commonwealth, a State or a Territory; or
(ii) a public authority; or
(iii) a company that:
(A) is not carried on for the purposes of profit or gain to its individual members; and
(B) is, by the terms of the company's constituent document, prohibited from making any distribution, whether in money, property or otherwise, to its members;
"property"
does not include money;
"value"
, in relation to money, means the amount of money.
In this section:
"Arts Department"
means the Department of the Arts, Sport, the Environment and Territories;
"Arts Minister"
means the Minister for the Arts and Territories;
(a) a body corporate (including an incorporated association); or
(b) a trust established by a deed or will; or
(c) an unincorporated body established for a public purpose by the Commonwealth, a State or a Territory;
"cultural organisation"
means a body with all of the following characteristics:
(a) its principal purpose, or each of its principal purposes, is a cultural purpose;
(b) it does not pay any of its profits or financial surplus, or give any of its property, to its shareholders, members, beneficiaries, controllers or owners, as the case requires;
(c) it has a public fund:
(i) to which gifts of money or property for its cultural purpose or purposes are to be made; and
(ii) to which any interest on money in the fund is to be credited; and
(iii) to which any money derived from the property given to the fund is to be paid; and
(iv) that does not receive any other money or property; and
(v) that is used only to support the body's cultural purpose or purposes;
(d) it has agreed to give the Arts Department, at 6 monthly intervals, statistical data about gifts to that fund during the last 6 months;
(e) it complies with any rules made from time to time by the Treasurer and the Arts Minister to ensure that gifts to that fund are used only to support its cultural purpose or purposes;
"cultural purpose"
means the promotion of any of the following:
(a) literature;
(b) music;
(c) one or more of the performing arts;
(d) one or more of the visual arts;
(e) one or more crafts;
(f) design;
(g) film;
(h) video;
(i) television;
(j) radio;
(k) community arts;
(l) Aboriginal arts;
(m) movable cultural heritage;
"gift fund"
, in relation to a cultural organisation, means the organisation's fund described in paragraph (c) of the definition of
cultural organisation
;
"promotion"
, in relation to an activity or other matter listed in the definition of cultural purpose, includes:
(a) production, presentation, publication or preservation in relation to the matter; and
(b) the provision of accommodation for the purpose of the matter; and
(c) training in relation to the matter;
"register"
means the Register of Cultural Organisations required by subsection (2).
The Arts Department must keep a register, to be known as the Register of Cultural Organisations, listing such cultural organisations and their gift funds as are required to be on the register because of this section.
78AA(3) [Certification by Arts Minister]If the Arts Minister is satisfied that a body has all the characteristics of a cultural organisation, he or she is to certify to the Treasurer in writing that the body is a cultural organisation.
78AA(4) [Direction by Treasurer and Arts Minister]If the Arts Minister has certified to the Treasurer that a body is a cultural organisation, they may, in their discretion, direct the Arts Department in writing to enter the organisation and its gift fund on the register on a specified day on or after the day on which the direction is given.
78AA(5) [Policies and budgetary priorities to be taken into account]In considering whether to give a direction, the Treasurer and the Arts Minister are to take into account the policies and budgetary priorities of the Australian Government.
78AA(6) [Deemed registered on specified day](a) before the commencement of this section, the Treasurer and the Arts Minister, or the Arts Minister, announced that a specified body would be entered on the register with effect from a specified day after 24 March 1991 (however the announcement was expressed); and
(b) the Arts Minister is satisfied that, on that commencement, the body had all the characteristics of a cultural organisation (whether or not it had them when the announcement was made);
then:
(c) the Arts Minister is to certify to the Treasurer in writing that the body is a cultural organisation; and
(d) the Treasurer and the Arts Minister are to direct the Arts Department in writing to enter the organisation and its gift fund on the register; and
(e) for the purposes of the application of this Act in relation to the organisation:
(i) the register is taken to have been established on the specified day; and
(ii) the organisation and its gift fund are taken to have been entered on the register on the specified day; and
78AA(7) [Deemed removed from register]
(iii) if the gift fund was created after the specified day - gifts made to the organisation before the fund's creation are taken to have been made to that fund.
(a) before the commencement of this section, the Treasurer and the Arts Minister, or the Arts Minister, announced that a specified body would be entered on the register with effect from a specified day after 24 March 1991 (however the announcement was expressed); and
(b) the Arts Minister is not satisfied that, on that commencement, the body had all the characteristics of a cultural organisation (whether or not it had them when the announcement was made);
then, for the purposes of the application of this Act in relation to the body:
(c) the register is taken to have been established on the specified day; and
(d) the body is taken to have been, on the specified day, a cultural organisation with a gift fund; and
(e) the body and its gift fund are taken to have been:
(i) entered on the register on the specified day; and
(ii) removed from the register on the commencement of this section; and
(f) gifts to the body are taken to have been gifts to its gift fund. 78AA(8) [Removal from register]
The Treasurer and the Arts Minister may, in their discretion, direct the Arts Department in writing to remove a cultural organisation and its gift fund from the register on a specified day on or after the day on which the direction is given.
If the Environment Minister is satisfied that a body meets all of the eligibility criteria for registration as an environmental organisation set out in subsection (2), the Environment Minister must give a written certificate to the Treasurer stating that the body is eligible for registration under this section.
78AB(2) Eligibility criteria for registration.The eligibility criteria for registration of a body as an environmental organisation are as follows:
(a) its principal purpose, or each of its principal purposes, must be an environmental purpose;
(b) it must not pay any of its profits or financial surplus, or give any of its property, to its shareholders, members, beneficiaries, controllers or owners, as the case requires;
(c) it must have a public fund (the ``gift fund'' ):
(i) to which gifts of money or property for its environmental purpose or purposes are to be made; and
(ii) to which any interest on money in the fund is to be credited; and
(iii) to which money derived from the property given to the fund is to be paid; and
(iv) that does not receive any other money or property; and
(v) that is used only to support the body's environmental purpose or purposes;
(d) it must have rules relating to its gift fund which provide that, in the event of the winding up of that fund, any surplus assets are to be transferred to another fund that is on the Register of Environmental Organisations;
(e) it must agree to give to the Environment Department, within a reasonable period after the end of each financial year, statistical data about gifts to its gift fund during the financial year;
(f) it must agree to comply with any rules made from time to time by the Environment Minister and the Treasurer to ensure that gifts to its gift fund are used only to support its environmental purpose or purposes;
(g) it must have a policy of not acting as a mere conduit for the donation of money or property to other organisations, bodies or persons;
(h) if the body is a body corporate (other than a statutory authority) or a co-operative society:
(i) the membership of the body must consist wholly or principally of bodies corporate; or
(ii) there must be at least 50 members of the body who are:
(A) natural persons; and
(B) regarded as financial members; and
(C) entitled to vote at a general meeting of the body; or
78AB(3) Environment Minister and Treasurer may direct registration of certified body.
(iii) the Environment Minister determines that, because of special circumstances, the body does not have to meet either of the criteria set out in subparagraph (i) or (ii).
If the Environment Minister has given a certificate to the Treasurer stating that a body is eligible for registration under this section, the Environment Minister and the Treasurer may direct the Environment Department in writing to enter the body and its gift fund on the Register of Environmental Organisations on a specified day on or after the day on which the direction is given.
78AB(4) Government policies and budgetary priorities to be taken into account.In considering whether to give a direction, the Environment Minister and the Treasurer are to take into account the policies and budgetary priorities of the Commonwealth Government.
78AB(5) Register of Environmental Organisations to be kept.The Environment Department must keep a register, to be known as the Register of Environmental Organisations, listing such bodies and their gift funds as are required to be on the register because of this section.
78AB(6) Removal from Register of Environmental Organisations.The Environment Minister and the Treasurer may direct the Environment Department in writing to remove a body and its gift fund from the Register of Environmental Organisations on a specified day on or after the day on which the direction is given.
78AB(7) Definitions.In this section:
(a) a body corporate; or
(b) a co-operative society; or
(c) a trust established by a deed or will; or
(d) an unincorporated body established for a public purpose by the Commonwealth, a State or a Territory;
"environment"
means natural environment, and includes all aspects of the natural surroundings of humans, whether affecting them as individuals or in social groupings;
"environmental purpose"
means:
(a) the protection and enhancement of the environment or of a significant aspect of the environment; or
(b) a purpose relating to the dissemination of information, the provision of education, or the carrying on of research, about the environment or about a significant aspect of the environment;
whether the environment concerned is in Australia or elsewhere;
"Environment Department"
means the Department of the Arts, Sport, the Environment and Territories;
"Environment Minister"
means the Minister for the Arts, Sport, the Environment and Territories;
"gift fund"
has the meaning given by paragraph (2)(c);
"Register of Environmental Organisations"
means the Register of Environmental Organisations required by subsection (5).
Where a taxpayer who is included in an eligible promoters class in relation to a promoters taxable amount -
(a) has paid to the Commissioner an amount of promoters recoupment tax payable on that promoters taxable amount; or
(b) has paid an amount to another person by way of contribution in respect of promoters recoupment tax payable on that promoters taxable amount,
a deduction is allowable in the assessment of the taxpayer in respect of income of the year of income in which the last purchase time in relation to the scheme to which the promoters taxable amount relates occurred of an amount equal to -
(c) in a case to which paragraph (a) applies - the amount paid by the taxpayer reduced by any amount or amounts received by the taxpayer by way of contribution in respect of promoters recoupment tax payable on that promoters taxable amount; or
(d) in a case to which paragraph (b) applies - the amount paid by the taxpayer. 78B(2) [Deemed receipt]
For the purposes of paragraph (1)(c), an amount shall be deemed to have been received by the taxpayer by way of contribution although it is not actually paid over to the taxpayer, but is re-invested, accumulated, capitalized, carried to any reserve, sinking fund or insurance fund, however designated, or otherwise dealt with on behalf of the taxpayer or as the taxpayer directs.
78B(3) [Request for amended assessment]Where, at any time after the making of an assessment in relation to a taxpayer, the taxpayer considers that the Commissioner ought to amend the assessment to allow a deduction under this section, the taxpayer may post to or lodge with the Commissioner a request in writing for an amendment of the assessment to allow the deduction.
78B(4) [Commissioner's decision]The Commissioner shall consider the request and shall serve on the taxpayer, by post or otherwise, a written notice of his decision on the request.
78B(5) [Taxpayer's objection]If the taxpayer is dissatisfied with the Commissioner's decision on the request, the taxpayer may object against it in the manner set out in Part IVC of the Taxation Administration Act 1953 .
(Repealed by No 216 of 1991)
For the purposes of this section, expressions that are used in this section to which particular meanings were assigned by section 3 of the Taxation (Unpaid Company Tax) Assessment Act 1982 have the respective meanings that were so assigned to them.
The aggregate of the deductions allowable under sections 78 , 78B and 82AAT shall not exceed the amount of income remaining after deducting from the assessable income all other allowable deductions except deductions allowable under section 79E , 79F , 80 , 80AAA or 80AA in respect of losses of previous years and any deduction allowable under Division 10 , Division 10AA or Division 16C .
79C(2) [No operation from 1997/98 year onwards]This section does not apply to the 1997-98 year of income or a later year of income.
Note:
Section 26-55 of the Income Tax Assessment Act 1997 sets out a limit on the total amount deductible under the following provisions of this Act:
This section does not apply to the 1997-98 year of income or a later year of income.
Note 1:
To work out the amount of a tax loss for the 1997-98 year of income or a later year of income: see Division 36 of the Income Tax Assessment Act 1997 .
Note 2:
To find out how much of a loss incurred in a post-1989 year of income you can deduct for the 1997-98 year of income or a later year of income: see section 36-105 of the Income Tax (Transitional Provisions) Act 1997 .
Note 3:
For the rules about deducting tax losses from assessable foreign income for the 1997-98 year of income or a later year of income: see section 79DA .
For the purposes of this section, a taxpayer incurs a loss in a post-1989 year of income equal to the amount (if any) by which the taxpayer's non-loss deductions for the year of income exceed the sum of the taxpayer's assessable income and net exempt income for that year.
79E(2) [Where taxpayer subject to Subdiv B of Div 2A]In spite of subsection (1), if Subdivision B of Division 2A applies in relation to a taxpayer in relation to a post-1989 year of income, then, for the purposes of this section, the taxpayer incurs a loss in the year of income if, and only if, the taxpayer's current year loss amount for the year exceeds the taxpayer's net exempt income for the year, and the amount of the loss is equal to the excess.
79E(2A) [Where Sch 2F applies]In spite of subsection (1), if Schedule 2F applies in relation to a taxpayer for a post-1989 year of income, then, for the purposes of this section, the loss incurred by the taxpayer in the year of income is worked out under section 268-50 of that Schedule.
Subject to this section, so much of a taxpayer's losses incurred in any of the post-1989 years of income before a particular year of income as has not been allowed as a deduction from the taxpayer's income of any of those years is allowable as a deduction in accordance with the following provisions:
(a) where the taxpayer has not derived exempt income in the particular year of income, the deduction is to be made from the taxpayer's assessable income of that year;
(b) where the taxpayer has derived exempt income in that year, the deduction is to be made successively from the taxpayer's net exempt income and from the taxpayer's assessable income of that year;
(c) where a deduction is allowable under this section in respect of 2 or more losses, the losses are to be taken into account in the order in which they were incurred. 79E(3A) [Reduced loss under commercial debt forgiveness provisions]
If a loss referred to in subsection (3) is taken to be reduced under Subdivision 245-E of Schedule 2C in its application to the year of income or a previous year of income, any reference to that loss in this section is to be treated as a reference to that loss as so taken to be reduced.
Where a taxpayer has incurred a loss in a post-1989 year of income for the purposes of this section and has also incurred a loss in that year for the purposes of section 79F , only the excess (if any) of the former loss over the latter loss is to be taken into account for the purposes of subsection (3).
79E(5) [Deduction from assessable foreign income]The losses referred to in subsection (3) are not allowable as a deduction from assessable foreign income of a taxpayer except to the extent provided in an election under subsection (6).
A taxpayer who has derived assessable foreign income in a year of income may elect that the whole or a part of the losses referred to in subsection (3) be allowable as a deduction from the taxpayer's assessable foreign income of that year.
An election under subsection (6) must be made on or before the date of lodgment of the return of income of the taxpayer for the year of income to which the election relates or within such further period as the Commissioner allows.
In spite of any other provision of this section, if, before a year of income, a taxpayer:
(a) has become a bankrupt; or
(b) not having become a bankrupt, has been released from any debts by the operation of an Act relating to bankruptcy;
then no loss incurred by the taxpayer before the day on which the taxpayer became a bankrupt or was so released is an allowable deduction in respect of the year of income under subsection (3).
79E(8A) [Annulment of bankruptcy to be disregarded](a) a taxpayer becomes a bankrupt, but the bankruptcy is later annulled; and
(b) disregarding the annulment, subsection (8) applies to the bankruptcy; and
(c) the annulment occurred under section 74 of the Bankruptcy Act 1966 ; and
(d) under the composition or scheme of arrangement concerned, the taxpayer has been, will be or may be, released from any debts, from which he or she would have been released if he or she had been instead discharged from the bankruptcy;
then, for the purposes of subsection (8), the annulment is disregarded.
(a) in a year of income (in this section called the ``payment year'' ), a taxpayer pays an amount in respect of a debt incurred by the taxpayer in a preceding year of income; and
(b) that preceding year of income (in this section called the ``loss year'' ) is a year in which the taxpayer incurred a loss to which subsection (8) applies;
then, subject to subsection (10), the amount paid by the taxpayer is an allowable deduction for the payment year, but only to the extent (if any) 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 loss.
79E(10) [Maximum deduction allowable]The total deductions allowable to the taxpayer for the payment year under subsection (9) are not to exceed the amount of the loss reduced by the sum of:
(a) the deductions (if any) allowed under subsection (9) from the taxpayer's income of a year or years of income before the payment year in relation to the payment of other amounts in respect of debts incurred by the taxpayer in the loss year; and
(b) so much (if any) of the loss as has been allowed under subsection (3) as a deduction or deductions from the taxpayer's income (including the taxpayer's net exempt income) of a year or years of income before the payment year; and
(c) so much (if any) of the loss as, but for subsection (8), would have been allowed or allowable under subsection (3) as a deduction or deductions from the taxpayer's net exempt income of the payment year or of a year or years of income before the payment year. 79E(11) [Effect of s 80(5), (6) and (7)]
Subsections 80(5), (6) and (7) have the same effect in relation to deductions under subsection (3) of this section as they do in relation to deductions under subsection 80(2) .
79E(12) [Definitions]In this section:
"assessable foreign income"
has the same meaning as in section
160AFD
;
"class of assessable foreign income"
has the same meaning as in section
160AFD
;
(Omitted by No 5 of 1991)
"current year loss amount"
, in relation to a taxpayer to whom Subdivision B of Division
2A
applies in relation to a year of income, means the amount calculated using the formula:
| Excess notional loss + Excess deductible amount |
where:
``Excess notional loss'' means the amount (if any) by which the sum of the taxpayer's notional losses in respect of relevant periods (within the meaning of that Subdivision) in relation to the year of income exceeds the eligible notional loss (within the meaning of that Subdivision) of the taxpayer in relation to the year of income;
``Excess deductible amount'' means the amount (if any) by which the deductible amount referred to in the application of subsection 50C(2) in relation to the taxpayer in relation to the year of income exceeds the income amount referred to in that subsection;
"exempt income"
does not include income to which paragraph
23(jd)
, section
23AH
,
23AI
,
23AJ
or
23AK
, subsection
59(2AAA)
or paragraph
99B(2)(d)
or (e) applies;
"foreign income deduction"
has the same meaning as in section
160AFD
;
(Omitted by No 5 of 1991.)
"net exempt income"
, in relation to a taxpayer, means:
(a) where the taxpayer is a resident - the amount by which the taxpayer's exempt income derived from all sources exceeds the sum of the expenses (not being expenses of a capital nature) incurred in deriving that income and any taxes payable in respect of that income in any country or place outside Australia; and
(b) where the taxpayer is a non-resident - the amount by which the taxpayer's exempt income derived from sources in Australia (other than income, if any, to which section 128D applies) exceeds the sum of the expenses (not being expenses of a capital nature) incurred in deriving that income;
"non-loss deduction"
means an allowable deduction other than one allowable under this section or section
79F
,
80
,
80AAA
or
80AA
;
"post-1989 year of income"
means the year of income commencing on 1 July 1989 or any later year of income.
In applying the definition of net exempt income in subsection (12) in relation to a taxpayer:
(a) if the taxpayer is a resident, there is to be disregarded so much of any net exempt income from petroleum (within the meaning of Division 10AA ) derived by the taxpayer in a year of income as does not exceed the amount that would be the unrecouped capital expenditure of the taxpayer (within the meaning of that Division) as at the end of the year of income if the taxpayer had not derived that net exempt income from petroleum; and
(b) for the purposes of paragraph (b) of the definition, exempt income to which subsection 26AG(1) applies is to be taken to be derived from sources in Australia and any taxes payable in respect of that income in any country or place outside Australia are to be taken to be expenses incurred in deriving that income. 79E(14) [``non-loss deduction'']
For the purposes of the definition of non-loss deduction in subsection (12), where:
(a) there are one or more foreign income deductions of a taxpayer in relation to a class of assessable foreign income in relation to a year of income; and
(b) either:
(i) the taxpayer did not derive any assessable foreign income of that class in the year of income; or
(ii) the taxpayer derived assessable foreign income of that class in the year of income and its amount is exceeded by the sum of the foreign income deductions;
then:
(c) where subparagraph (b)(i) of this subsection applies - the foreign income deductions are to be disregarded; and
(d) where subparagraph (b)(ii) of this subsection applies - the foreign income deductions are to be disregarded to the extent of the excess referred to in that subparagraph.
If a company has a taxable income for the 1996-97 year of income or an earlier year of income because of paragraph (c) of the definition oftaxable income
in subsection
6(1)
, this section applies for the purposes of section
79E
despite subsections 79E(1) and (2).
Note:
To work out whether a PDF can deduct a tax loss in the 1997-98 year of income or a later year of income: see Subdivision 195-A of the Income Tax Assessment Act 1997 .
The company incurs a loss in that year of income equal to the loss (if any) that, if:
(a) the period beginning at the start of that year of income and ending immediately before the company became a PDF were a year of income of the company; and
(b) the period ( ``the PDF notional year'' ) beginning when the company became a PDF and ending at the end of the first-mentioned year of income were a year of income of the company;
the company would be taken because of section 79E to incur in the PDF notional year.
This section does not apply to the 1997-98 year of income or a later year of income.
Note:
To work out whether a PDF can deduct a tax loss in the 1997-98 year of income or a later year of income: see Subdivision 195-A of the Income Tax Assessment Act 1997 .
If a company is a PDF throughout the last day of a year of income in which it incurs a loss, the loss is not allowable as a deduction from the company's assessable income of a later year of income unless the company is a PDF throughout the later year of income.
79EB(2) [Non-PDF losses](a) a company becomes a PDF during a year of income and is still a PDF at the end of the year of income; and
(b) the company incurs a loss in that year of income otherwise than because of section 79EA ;
subsection (1) of this section does not apply to so much of the loss as does not exceed the loss (if any) that, if the period ( ``the notional year'' ) beginning at the start of the year of income and ending immediately before the company becomes a PDF were a year of income of the company, the company would be taken to incur in the notional year.
79EB(3) [Interpretation]An expression has in this section the same meaning as in section 79E .
This section does not apply to the 1997-98 year of income or a later year of income.
Note 1:
To work out the amount of a film loss for the 1997-98 or a later income year: see Subdivision 375-G of the Income Tax Assessment Act 1997 .
Note 2:
To find out how much of a film loss incurred in a post-1989 year of income you can deduct for the 1997-98 or a later year of income: see section 36-105 of the Income Tax (Transitional Provisions) Act 1997 .
For the purposes of this section, a taxpayer incurs a film loss in a post-1989 year of income if:
(a) the amount of the taxpayer's film deductions for the year exceeds the sum of the taxpayer's assessable film income and net exempt film income for the year; and
(b) the taxpayer incurs a loss for the year for the purposes of section 79E . 79F(2) [Amount of loss]
The amount of the film loss is so much of the excess referred to in paragraph (1)(a) as does not exceed the amount of the loss referred to in paragraph (1)(b).
79F(3) [Where taxpayer subject to Subdiv B of Div 2A]In spite of subsection (1), if Subdivision B of Division 2A applies in relation to a taxpayer in relation to a post-1989 year of income, then, for the purposes of this section, the taxpayer incurs a film loss in the year of income if, and only if:
(a) the taxpayer's current year loss amount for the year exceeds the taxpayer's net exempt film income of the year; and
(b) the taxpayer incurs a loss in the year of income for the purposes of section 79E . 79F(4) [Amount of loss under subsec (3)]
The amount of the film loss is so much of the excess referred to in paragraph (3)(a) as does not exceed the amount of the loss referred to in paragraph (3)(b).
79F(5) [Determination re current year loss amount]In determining for the purposes of subsection (3) whether a taxpayer has a current year loss amount, the only assessable income of the taxpayer to be taken into account is assessable film income and the only allowable deductions of the taxpayer to be taken into account are film deductions.
79F(5A) [Where Sch 2F applies]In spite of subsection (1), if Schedule 2F applies in relation to a taxpayer for a post-1989 year of income, then, for the purposes of this section the film loss incurred by the taxpayer in the year of income is worked out under section 268-55 of that Schedule.
Subject to this section, so much of a taxpayer's film losses incurred in any of the post-1989 years of income before a particular year of income as has not been allowed as a deduction from the taxpayer's income of any of those years is allowable as a deduction in accordance with the following provisions:
(a) where the taxpayer has not derived exempt income in the particular year of income, the deduction is to be made from the taxpayer's assessable income of that year;
(b) where the taxpayer has derived exempt income in that year, the deduction is to be made successively from the taxpayer's net exempt income and from the taxpayer's assessable income of that year;
(c) where a deduction is allowable under this section in respect of 2 or more losses, the losses are to be taken into account in the order in which they were incurred. 79F(6A) [Reduced loss under commercial debt forgiveness provisions]
If a loss referred to in subsection (6) is taken to be reduced under Subdivision 245-E of Schedule 2C in its application to the year of income or a previous year of income, any reference to that loss in this section is to be treated as a reference to that loss as so taken to be reduced.
For the purposes of applying subsection (6) in relation to a taxpayer in relation to a year of income:
(a) the amount of the deduction to be made from the taxpayer's net exempt income of the year of income is not to exceed the amount of the taxpayer's net exempt film income of the year of income; and
(b) the amount of the deduction to be made from the taxpayer's assessable income of the year of income is not to exceed the amount of the taxpayer's net assessable film income of the year of income. 79F(8) [Bankruptcy, etc]
In spite of any other provision of this section, if, before a year of income, a taxpayer:
(a) has become a bankrupt; or
(b) not having become a bankrupt, has been released from any debts by the operation of an Act relating to bankruptcy;
then no film loss incurred by the taxpayer before the day on which the taxpayer became a bankrupt or was so released is an allowable deduction in respect of the year of income under subsection (6).
79F(8A) [Annulment of bankruptcy to be disregarded](a) a taxpayer becomes a bankrupt, but the bankruptcy is later annulled; and
(b) disregarding the annulment, subsection (8) applies to the bankruptcy; and
(c) the annulment occurred under section 74 of the Bankruptcy Act 1966 ; and
(d) under the composition or scheme of arrangement concerned, the taxpayer has been, will be or may be, released from any debts, from which he or she would have been released if he or she had been instead discharged from the bankruptcy;
then, for the purposes of subsection (8), the annulment is disregarded.
(a) in a year of income (in this section called the ``payment year'' ), a taxpayer pays an amount in respect of a debt incurred by the taxpayer in a preceding year of income; and
(b) that preceding year of income (in this section called the ``loss year'' ) is a year in which the taxpayer incurred a loss to which subsection (8) applies; and
(c) the debt was incurred in the course of deriving or gaining amounts to which section 26AG applies in relation to the taxpayer in relation to any year of income;
then, subject to subsection (10), the amount paid by the taxpayer is an allowable deduction for the payment year, but only to the extent (if any) 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 loss.
79F(10) [Limit on subsec (9) deductions]The total deductions allowable to the taxpayer for the payment year under subsection (9) are not to exceed the amount of the film loss reduced by the sum of:
(a) the deductions (if any) allowed under subsection (9) from the taxpayer's income of a year or years of income before the payment year in relation to the payment of other amounts in respect of debts incurred by the taxpayer in the loss year; and
(b) so much (if any) of the loss as has been allowed under subsection (6) as a deduction or deductions from the taxpayer's income (including the taxpayer's net exempt income) of a year or years of income before the payment year; and
(c) so much (if any) of the film loss as, but for subsection (8), would have been allowed or allowable under subsection (6) as a deduction or deductions from the taxpayer's net exempt income of the payment year or of a year or years of income before the payment year. 79F(11) [Effect of s 80AAA(12)]
Subsection 80AAA(12) has the same effect in relation to deductions under subsection (6) of this section as it does in relation to deductions under subsection 80AAA(7) .
79F(12) [Definitions]In this section:
"assessable film income"
, in relation to a taxpayer in relation to a year of income, means so much of the amount, or the sum of the amounts, to which section
26AG
applies in relation to the taxpayer in relation to the year of income as is assessable income;
"current year loss amount"
has the same meaning as in section
79E
;
"exempt film income"
, in relation to a taxpayer in relation to a year of income, means so much of the amount, or the sum of the amounts, to which section
26AG
applies in relation to the taxpayer inrelation to the year of income as is exempt income;
"film deductions"
, in relation to a taxpayer in relation to a year of income, means:
(a) deductions allowable to the taxpayer in respect of the year of income under sections 124ZAF and 124ZAFA ; and
(b) deductions allowable to the taxpayer in respect of the year of income that are deductions to which section 124ZAO applies in relation to the taxpayer in relation to the year of income;
"net assessable film income"
, in relation to a taxpayer in relation to a year of income, means the amount of the assessable film income of the taxpayer of the year of income as reduced by the film deductions of the taxpayer of the year of income;
"net exempt film income"
, in relation to a taxpayer in relation to a year of income, means the amount of the exempt film income of the taxpayer of the year of income as reduced by the sum of:
(a) any taxes payable in respect of that exempt film income in any country or place outside Australia; and
(b) any expenses (not being expenses of a capital nature) to the extent to which they were incurred in the year of income in deriving that exempt film income;
"net exempt income"
has the same meaning as in section
79E
;
"post-1989 year of income"
means the year of income commencing on 1 July 1989 or any later year of income.
This section does not apply to a loss incurred in the year of income commencing on 1 July 1989 or any later year of income.
For the purposes of this section, a loss shall be deemed to be incurred in any year when the allowable deductions (other than the deductions allowable under this section or section 80AAA or 80AA ) from the assessable income of that year exceed the sum of that income and the net exempt income of that year, and the amount of the loss shall be deemed to be the amount of such excess.
Notwithstanding subsection (1), if Subdivision B of Division 2A applies in relation to a taxpayer being a company in relation to a year of income, a loss shall, for the purposes of this section, be deemed to be incurred by the taxpayer in the year of income if, and only if, the sum (in this subsection referred to as the ``loss amount'' ) of:
(a) if, for the purposes of that Subdivision, the taxpayer has a notional loss in respect of a relevant period, or notional losses in respect of relevant periods, in relation to the year of income and the amount of that notional loss or the sum of the amounts of those notional losses, as the case may be, exceeds the amount (if any) that is the eligible notional loss of the company in relation to the year of income - the amount of the excess; and
(b) if, in the application of subsection 50C(2) in relation to the taxpayer in relation to the year of income, the deductible amount referred to in that subsection exceeds the income amount referred to in that subsection - the amount of the excess;
exceeds the amount of any net exempt income of the company of the year income, and the amount of the loss for the purposes of this section shall be deemed to be the amount by which the loss amount exceeds the amount of that net exempt income.
Subject to subsections (2B), (5), (6) and (7), so much of the losses incurred by a taxpayer in any of the 7 years next preceding the year of income as has not been allowed as a deduction from his income of any of those years shall be allowable as a deduction in accordance with the following provisions:
(a) where he has not in the year of income derived exempt income, the deduction shall be made from the assessable income;
(b) where he has in that year derived exempt income, the deduction shall be made successively from the net exempt income and from the assessable income;
(c) where a deduction is allowable under this section in respect of 2 or more losses, the losses shall be taken into account in the order in which they were incurred.
If a loss referred to in subsection (2) is taken to be reduced under Subdivision 245-E of Schedule 2C in its application to the year of income or a previous year of income, any reference to that loss in this section is to be treated as a reference to that loss as so taken to be reduced.
Where a taxpayer has incurred a loss in any of the 7 years next preceding the year of income and:
(a) the taxpayer is deemed, for the purposes of section 80AAA , to have incurred a film loss in that preceding year; or
(b) the taxpayer is deemed, for the purposes of section 80AA , to have incurred a loss in engaging in primary production in that preceding year;
so much only of the first-mentioned loss as exceeds:
(c) in a case where the taxpayer is deemed to have incurred both a film loss for the purposes of section 80AAA and a loss in engaging in primary production for the purposes of section 80AA - the sum of the amounts of those losses;
(d) in a case where the taxpayer is deemed to have incurred a film loss for the purposes of section 80AAA and is not deemed to have incurred a loss in engaging in primary production for the purposes of section 80AA - the amount of the loss deemed to have been incurred by the taxpayer for the purposes of section 80AAA ; or
(e) in a case where the taxpayer is deemed to have incurred a loss in engaging in primary production for the purposes of section 80AA and is not deemed to have incurred a film loss for the purposes of section 80AAA - the amount of the loss deemed to have been incurred by the taxpayer for the purposes of section 80AA ;
shall be taken into account for the purposes of subsection (2).
The losses referred to in subsection (2) shall not be allowable as a deduction from assessable foreign income of a taxpayer except to the extent provided in an election under subsection (2C).
A taxpayer who has derived assessable foreign income in a year of income may elect that the whole or a part of the losses referred to in subsection (2) shall be allowable as a deduction from the taxpayer's assessable foreign income of that year.
An election referred to in subsection (2C) must be made on or before the date of lodgment of the return of income of the taxpayer for the year of income to which the election relates or within such further period as the Commissioner allows.
In this section:
"assessable foreign income"
has the same meaning as in section
160AFD
;
"exempt income"
does not include income to which section
23AH
,
23AI
,
23AJ
or
23AK
or paragraph
99B(2)(d)
or (e) applies;
(a) where the taxpayer is a resident - the amount by which the taxpayer's exempt income derived from all sources exceeds the sum of the expenses (not being expenses of a capital nature) incurred in deriving that income, and any taxes payable in respect of that income in any country or place outside Australia; and
(b) where the taxpayer is a non-resident - the amount by which the taxpayer's exempt income derived from sources in Australia (other than income, if any, to which section 128D applies) exceeds the sum of the expenses (not being expenses of a capital nature) incurred in deriving that income.
(Omitted by No 62 of 1987)
For the purposes of subsection (3), the net exempt income of a taxpayer, being a resident, of a year of income does not include so much of any net exempt income from petroleum within the meaning of Division 10AA derived by the taxpayer in that year of income as does not exceed the amount that would be the unrecouped capital expenditure of the taxpayer within the meaning of that Division as at the end of that year of income if the taxpayer had not derived that net exempt income from petroleum.
For the purposes of paragraph (3)(b), exempt income to which subsection 26AG(1) applies shall be deemed to be derived from sources in Australia and any taxes payable in respect of that income in any country or place outside Australia shall be deemed to be expenses incurred in deriving that income.
Notwithstanding any other provision of this section, where, prior to the year of income, a taxpayer has become a bankrupt, or, not having become a bankrupt, has been released from any debts by the operation of an Act relating to bankruptcy, no loss incurred by him prior to the date on which he became a bankrupt or the date on which he was so released, as the case may be, shall be an allowable deduction.
80(4AA) [Annulment of bankruptcy to to disregarded](a) a taxpayer becomes a bankrupt, but the bankruptcy is later annulled; and
(b) disregarding the annulment, subsection (4) applies to the bankruptcy; and
(c) the annulment occurred under section 74 of the Bankruptcy Act 1966 ; and
(d) under the composition or scheme of arrangement concerned, the taxpayer has been, will be or may be, released from any debts, from which he or she would have been released if he or she had been instead discharged from the bankruptcy;
then, for the purposes of subsection (4), the annulment is disregarded.
Where, in the year of income, a taxpayer pays an amount in respect of a debt incurred by him in one of the 7 years next preceding the year of income, being a year in which the taxpayer incurred a loss to which subsection (4) applies, the amount paid by the taxpayer in respect of the debt shall, subject to subsection (4B), be an allowable deduction to the extent that it does not exceed so much of the debt as the Commissioner is satisfied was taken into account in ascertaining the amount of the loss.
The aggregate of the deductions allowable under subsection (4A) from the income of the taxpayer of the year of income in relation to the payment of amounts in respect of debts incurred by the taxpayer in a year in which he incurred a loss (in this subsection referred to as ``the year of loss'' ) shall not exceed the amount of that loss less the sum of:
(a) the deductions, if any, allowed under subsection (4A) from his income of a year or years of income before the year of income in relation to the payment of other amounts in respect of debts incurred by the taxpayer in the year of loss;
(b) so much, if any, of the loss as has been allowed under subsection (2) as a deduction or deductions from his income (including his net exempt income) of a year or years of income before the year of income;
(c) so much, if any, of the loss, as, but for subsection (4), would have been allowed or allowable under subsection (2) as a deduction or deductions from his net exempt income of the year of income or of a year or years of income before the year of income;
(d) so much, if any, of a loss that, for the purposes of section 80AA , is to be deemed to have been incurred by him in the year of loss as has been allowed under subsection (4) of that section as a deduction or deductions from his income (including his net exempt income) of a year or years of income before the year of income; and
(e) so much, if any, of a loss that, for the purposes of section 80AA , is to be deemed to have been incurred by him in the year of loss as, but for subsection (6) of that section, would have been allowed or allowable under subsection (4) of that section as a deduction or deductions from his net exempt income of the year of income or of a year or years of income before the year of income.
For the purposes of determining whether a deduction is allowable to a taxpayer under subsection (2) in respect of the year of income that commenced on 1 July 1978 or in respect of a subsequent year of income and for the purposes of ascertaining the amount of any such deduction, there shall be disregarded so much of the amount of any loss deemed to have been incurred by the taxpayer as would not have been deemed, for the purposes of this section, to have been incurred by the taxpayer if:
(a) section 6BA of this Act, as in force immediately after the commencement of the Income Tax Assessment Amendment Act (No. 4) 1979 , were applicable in all cases where the shares referred to in that section as bonus shares were issued before the commencement of the Income Tax Assessment Amendment Act 1978 and in all cases where the shares so referred to in that section were issued after the commencement of that last-mentioned Act;
(b) section 36 of this Act, as in force immediately after the commencement of the Income Tax Assessment Amendment Act (No. 4) 1979 , were amended by omitting from subsection (9) ``after 7 April 1978'';
(c) subsection 36(9) of this Act, as in force immediately after the commencement of the Income Tax Assessment Amendment Act (No. 4) 1979 and as taken to be amended by paragraph (b) of this subsection, and subsection 36(10) of this Act as in force at that time, were applicable in relation to property disposed of at any time, whether before or after the commencement of the Income Tax Assessment Amendment Act 1978 ;
(d) section 6 of the Income Tax Assessment Amendment Act 1977 were amended by omitting subsection (2) and substituting the following subsection:
``(2) Section 36A of the Principal Act is amended by adding at the end thereof the following subsection:
`(5) A notice for the purposes of subsection (2) given on or after 24 May 1977 in respect of a change in the ownership of, or in the interests of persons in, property, being a chose in action, does not have any effect unless the persons giving the notice establish to the satisfaction of the Commissioner that the change in ownership or interests occurred before that date.'.'';
(e) section 36A of this Act, as in force immediately after the commencement of the Income Tax Assessment Amendment Act (No. 4) 1979 , were amended by omitting subsections (6) and (7) and substituting the following subsection:
``(6) Notwithstanding subsection (2), a notice for the purposes of that subsection does not have any effect to the extent to which the notice is in respect of a change (whether occurring before or after the commencement of the Income Tax Assessment Amendment Act (No. 4) 1979 ) in the ownership of, or in the interests of persons in, property -
(a) that is not a chose in action;
(b) the value of which for the purposes of section 36 is determined by the Commissioner under subsection (9) of that section; and
(c) the value of which determined under subsection (9) of that section is less than or equal to the value of the property applicable in accordance with subsection (2) of this section.'';
(f) section 52A of this Act, as in force immediately after the commencement of the Income Tax Assessment Amendment Act (No. 4) 1979 , were amended by omitting ``, after 7 April 1978,'' from subsection (1) and from paragraph (2)(a);
(g) section 52A of this Act, as in force immediately after the commencement of the Income Tax Assessment Amendment Act (No. 4) 1979 , were amended by omitting ``after 24 September 1978 and'' from paragraph (2A)(a) and from subparagraph (2B)(a)(i);
(h) section 52A of this Act, as in force immediately after the commencement of the Income Tax Assessment Amendment Act (No. 4) 1979 , and as taken to be amended by paragraphs (f) and (g) of this subsection, were applicable in relation to property purchased or acquired at any time, whether before or after the commencement of the Income Tax Assessment Amendment Act 1978 ;
(ha) subsections 6(4) and (5) of the Income Tax Laws Amendment Act 1979 were omitted and the following subsection were substituted:
``(4) The amendment made by paragraph (1)(b) applies in relation to a taxpayer in relation to property acquired or constructed by the taxpayer at any time, whether before or after the commencement of this section.'';
(hb) ``after 12 June 1979 otherwise than under a contract entered into on or before that date'' were omitted from subsections 8(2) and 10(2) of the Income Tax Laws Amendment Act 1979 and ``at any time, whether before or after the commencement of this section'' were substituted;
(hc) ``after 12 June 1979 other than a change occurring in consequence of an agreement entered into on or before that date'' were omitted from subsection 9(2) of the Income Tax Laws Amendment Act 1979 and ``at any time, whether before or after the commencement of this section'' were substituted;
(hd) subsections 11(2) and (3) of the Income Tax Laws Amendment Act 1979 were omitted and the following subsection were substituted:
``(2) The amendment made by subsection (1) applies in relation to a taxpayer in relation to property acquired or constructed by the taxpayer at any time, whether before or after the commencement of this section.''
(j) section 82KH of this Act, as in forceimmediately after the commencement of the Income Tax Assessment Amendment Act (No. 5) 1979 , were amended by omitting paragraph (1F)(a) and substituting the following paragraph:
``(a) that amount of relevant expenditure was incurred by reason of, as a result of or as part of a tax avoidance agreement; and'';
(k) section 82KJ of this Act, as in force immediately after the commencement of the Income Tax Assessment Amendment Act (No. 5) 1979 , were amended by omitting from paragraph (a) ``after 19 April 1978'';
(m) Subdivision D (other than section 82KK ) of Division 3 of Part III of this Act, as in force immediately after the commencement of the Taxation Laws Amendment Act 1985 , and as taken to be amended by paragraphs (j) and (k) of this subsection, were applicable in relation to losses, outgoings or expenditure incurred at any time, whether before or after the commencement of the Income Tax Assessment Amendment Act 1979 ; and
(n) ``after 12 June 1979 other than a change occurring in consequence of an agreement entered into on or before that date'' were omitted from subsections 16(2), 17(2) and 18(2) of the Income Tax Laws Amendment Act 1979 and ``at any time, whether before or after the commencement of this section'' were substituted.
For the purpose of determining whether a deduction is allowable to a taxpayer under subsection (2) in respect of the year of income that commenced on 1 July 1980 or in respect of a subsequent year of income and for the purpose of ascertaining the amount of any such deduction, there shall be disregarded so much of the amount of any loss deemed to have been incurred by the taxpayer as would not have been deemed, for the purposes of this section, to have been incurred by the taxpayer if section 36A of this Act, as in force immediately after the commencement of the Income Tax Laws Amendment Act 1981 , were amended by omitting subsection (8) and substituting the following section:
``(8) Where -
(a) at any time, whether before or after the commencement of the Income Tax Laws Amendment Act 1981 , a change has occurred, otherwise than in the course of ordinary family or commercial dealing, in the ownership of, or in the interests of persons in, property;
(b) consideration was received or receivable in connection with the change in ownership or interests by the persons, or by any one or more of the persons, who owned the property before the change;
(c) a notice for the purposes of subsection (2) in respect of the change in ownership or interests was at any time, whether before or after the commencement of the Income Tax Laws Amendment Act 1981 , given to the Commissioner; and
then, notwithstanding subsection (2), the notice does not have any effect to the extent to which the notice is in respect of that change in ownership or interests.''
(d) the amount of value of that consideration substantially exceeds the amount or value of the consideration that might reasonably be expected to have been received or receivable by the person or persons referred to in paragraph (b) in connection with the change in ownership or interests if the value of the property, immediately before the change, had been the value applicable in accordance with subsection (2),
For the purpose of determining whether a deduction is allowable to a taxpayer under subsection (2) in respect of the year of income that commenced on 1 July 1980 or in respect of a subsequent year of income and for the purpose of ascertaining the amount of any such deduction, there shall be disregarded so much of the amount of any loss deemed to have been incurred by the taxpayer as would not have been deemed to have been incurred by the taxpayer if Part IVA extended to schemes entered into or carried out on or before 27 May 1981.
For the purposes of subsection (1), where the amount of a class of income derived by a taxpayer in a year of income from a foreign source is exceeded by the sum of:
(a) any deductions allowed or allowable from the assessable income of the taxpayer of the year of income that relate exclusively to income of that class derived from that source; and
(b) so much of any other deductions allowed or allowable from that assessable income (other than apportionable deductions) as, in the opinion of the Commissioner, may appropriately be related to income of that class derived from that source;
the amount of the excess shall be disregarded.
In subsection (8), ``class of income'' and ``foreign source'' have the same meanings as in section 160AFD , as in force immediately before the commencement of the Taxation Laws Amendment (Foreign Income) Act 1990 .
(a) a reference to the exempt film income of a taxpayer of a year of income is a reference to so much of the amount, or the sum of the amounts, to which section 26AG applies in relation to the taxpayer in relation to the year of income as is exempt income;
(b) a reference to the assessable film income of a taxpayer of a year of income is a reference to so much of the amount, or the sum of the amounts, to which section 26AG applies in relation to the taxpayer in relation to the year of income as is assessable income;
(c) a reference to the film deductions of a taxpayer of a year of income is a reference to:
(i) deductions allowable to the taxpayer in respect of the year of income under sections 124ZAF and 124ZAFA ; and
(ii) deductions allowable to the taxpayer in respect of the year of income that are deductions to which section 124ZAO applies in relation to the taxpayer in relation to the year of income;
(d) a reference to the net exempt film income of a taxpayer of a year of income is a reference to the amount of the exempt film income of the taxpayer of the year of income as reduced by the aggregate of:
(i) any taxes payable in respect of that exempt film income in any country or place outside Australia; and
(ii) any expenses (not being expenses of a capital nature) to the extent to which they were incurred in the year of income in deriving that exempt film income; and
(e) a reference to the net assessable film income of a taxpayer of a year of income is a reference to the amount of the assessable film income of the taxpayer of the year of income as reduced by the film deductions of the taxpayer of the year of income.
In this section, ``exempt income'' and ``net exempt income'' have the same respective meanings as in section 80 .
This section does not apply to a film loss incurred in the year of income commencing on 1 July 1989 or any later year of income.
For the purposes of this section, a taxpayer shall be deemed to have incurred a film loss in a year of income if:
(a) the amount of the film deductions of the taxpayer of the year of income exceeds the sum of the assessable film income of the taxpayer of the year of income and the net exempt film income of the taxpayer of the year of income;
(b) for the purposes of section 80 , a loss is deemed to have been incurred by the taxpayer in the year of income; and
(c) where the taxpayer is deemed to have incurred a loss in the year of income for the purposes of section 80AA , the amount of that loss is less than the amount of the loss referred to in paragraph (b);
and the amount of the film loss that the taxpayer is deemed to have incurred in the year of income is:
(d) if the taxpayer is not deemed to have incurred a loss in the year of income for the purposes of section 80AA and the amount of the excess referred to in paragraph (a) is equal to the amount of the loss referred to in paragraph (b) - the amount of the excess referred to in paragraph (a);
(e) if the taxpayer is not deemed to have incurred a loss in the year of income for the purposes of section 80AA and paragraph (d) does not apply - the amount of the excess referred to in paragraph (a) or the amount of the loss referred to in paragraph (b), whichever is the less;
(f) if the taxpayer is deemed to have incurred a loss in the year of income for the purposes of section 80AA and the amount of the excess referred to in paragraph (a) is equal to the amount by which the amount of the loss referred to in paragraph (b) exceeds the amount of the loss that the taxpayer is deemed to have incurred for the purposes of section 80AA - the amount of the excess referred to in paragraph (a); and
(g) if the taxpayer is deemed to have incurred a loss in the year of income for the purposes of section 80AA and paragraph (f) does not apply - the amount of the excess referred to in paragraph (a) or the amount by which the amount of the loss referred to in paragraph (b) exceeds the amount of the loss that the taxpayer is deemed to have incurred for the purposes of section 80AA , whichever is the less. 80AAA(4) [Calculation of loss]
Notwithstanding subsection (3), if Subdivision B of Division 2A applies, in relation to a year of income, to a taxpayer which, but for this subsection, would be deemed to have incurred a film loss in the year of income, a film loss shall, for the purposes of this section, be deemed to be incurred by the taxpayer in the year of income if, and only if:
(a) for the purposes of section 80 , a loss was incurred by the taxpayer in the year of income;
(b) where the taxpayer is deemed to have incurred a loss in the year of income for the purposes of section 80AA , the amount of that loss is less than the amount of the loss referred to in paragraph (a); and
(c) the sum of:
(i) if, for the purposes of that Subdivision, the taxpayer has a notional loss in respect of a relevant period, or notional losses in respect of relevant periods, in relation to the year of income and the amount of that notional loss or the sum of the amounts of those notional losses, as the case may be, exceeds the amount (if any) that is the eligible notional loss of the taxpayer in relation to the year of income - the amount of the excess; and
exceeds the amount of any net exempt film income of the taxpayer of the year of income;
(ii) if, in the application of subsection 50C(2) in relation to the taxpayer in relation to the year of income, the deductible amount referred to in that subsection exceeds the income amount referred to in that subsection - the amount of the excess;
and the amount of the film loss that the taxpayer is to be deemed to have incurred in the year of income is:
(d) if the taxpayer is not deemed to have incurred a loss in the year of income for the purposes of section 80AA and the notional film loss of the taxpayer is equal to the amount of the loss that the taxpayer is deemed to have incurred for the purposes of section 80 - the amount of the notional film loss;
(e) if the taxpayer is not deemed to have incurred a loss in the year of income for the purposes of section 80AA and paragraph (d) does not apply - the amount of the notional film loss of the taxpayer or the amount of the loss that the taxpayer is deemed to have incurred for the purposes of section 80 , whichever is the less;
(f) if the taxpayer is deemed to have incurred a loss in the year of income for the purposes of section 80AA and the amount of the notional film loss of the taxpayer is equal to the amount by which the amount of the loss that the taxpayer is deemed to have incurred for the purposes of section 80 exceeds the amount of the loss that the taxpayer is deemed to have incurred for the purposes of section 80AA - the amount of the notional film loss; and
(g) if the taxpayer is deemed to have incurred a loss in the year of income for the purposes of section 80AA and paragraph (f) does not apply - the amount of the notional film loss of the taxpayer or the amount by which the amount of the loss that the taxpayer is deemed to have incurred for the purposes of section 80 exceeds the amount of the loss that the taxpayer is deemed to have incurred for the purposesof section 80AA , whichever is the less. 80AAA(5) [``notional film loss'']
For the purposes of the application of subsection (4) in relation to a taxpayer in relation to a year of income, ``notional film loss'' means the amount by which the sum of the excess to which subparagraph (4)(c)(i) applies and the excess to which subparagraph (4)(c)(ii) applies exceeds the amount of any net exempt film income of the taxpayer of the year of income.
80AAA(6) [Calculation of loss - Subdiv B of Div 2A]In the application of Subdivision B of Division 2A in relation to a taxpayer in relation to a year of income in determining, for the purposes of subsection (4):
(a) whether the taxpayer has a notional loss in respect of a relevant period for the purposes of that Subdivision and the amount of any such notional loss;
(b) whether the taxpayer has an eligible notional loss in relation to the year of income for the purposes of that Subdivision and the amount of any such eligible notional loss; and
(c) the amount that, for the purposes of subsection 50C(2) , is the deductible amount or the income amount in relation to the taxpayer in relation to the year of income;
regard shall not be had to assessable income of the taxpayer other than assessable film income and regard shall not be had to allowable deductions other than film deductions.
80AAA(7) [Conditions for allowance of loss]Subject to this section, so much of the film losses incurred by a taxpayer in any of the 7 years next preceding the year of income as has not been allowed as a deduction from his income of any of those years under this section is allowable as a deduction in accordance with the following provisions:
(a) where the taxpayer has not in the year of income derived exempt income, the deduction shall be made from the assessable income;
(b) where the taxpayer has in that year derived exempt income, the deduction shall be made successively from the net exempt income and from the assessable income;
(c) where a deduction is allowable under this section in respect of 2 or more film losses, the losses shall be taken into account in the order in which they were incurred. 80AAA(7A) [Reduced loss under commercial debt forgiveness provisions]
If a loss referred to in subsection (7) is taken to be reduced under Subdivision 245-E of Schedule 2C in its application to the year of income or a previous year of income, any reference to that loss in this section is to be treated as a reference to that loss as so taken to be reduced.
For the purposes of the application of subsection (7) in relation to a taxpayer in relation to a year of income:
(a) the amount of the deduction to be made from the net exempt income of the taxpayer of the year of income shall not exceed the amount of the net exempt film income of the taxpayer of the year of income; and
(b) the amount of the deduction to be made from the assessable income of the taxpayer of the year of income shall not exceed the amount of the net assessable film income of the taxpayer of the year of income. 80AAA(9) [Bankruptcy, etc]
Notwithstanding any other provision of this section, where, before the year of income, a taxpayer has become a bankrupt, or, not having become a bankrupt, has been released from any debts by the operation of an Act relating to bankruptcy, no film loss that was incurred by him before the date on which he became a bankrupt or the date on which he was so released, as the case may be, is an allowable deduction.
80AAA(9A) [Annulment of bankruptcy to be disregarded](a) a taxpayer becomes a bankrupt, but the bankruptcy is later annulled; and
(b) disregarding the annulment, subsection (9) applies to the bankruptcy; and
(c) the annulment occurred under section 74 of the Bankruptcy Act 1966 ; and
(d) under the composition or scheme of arrangement concerned, the taxpayer has been, will be or may be, released from any debts, from which he or she would have been released if he or she had been instead discharged from the bankruptcy;
then, for the purposes of subsection (9), the annulment is disregarded.
(a) in a year of income (in this subsection referred to as the ``relevant year of income'' ) a taxpayer pays an amount in respect of a debt;
(b) the debt was incurred by the taxpayer in one of the 7 years next preceding the relevant year of income;
(c) the debt was incurred in the course of deriving or gaining amounts to which section 26AG applies in relation to the taxpayer in relation to any year of income; and
(d) the year of income in which the debt was incurred by the taxpayer is a year in which he incurred a loss to which subsection (9) applies;
the amount paid by the taxpayer in respect of the debt is, subject to subsection (11), an allowable deduction from the assessable income of the taxpayer of the relevant year of income to the extent to which it does not exceed so much of the debt as the Commissioner is satisfied was taken into account in ascertaining the amount of the loss.
80AAA(11) [Maximum deductions under s 80AAA(10)]The aggregate of the deductions allowable under subsection (10) from the income of the taxpayer of the year of income in relation to the payment of amounts in respect of debts incurred by the taxpayer in a year of income in which he incurred a film loss (in this subsection referred to as ``the year of loss'' ) shall not exceed the amount of that film loss less the sum of:
(a) the deduction (if any) allowed under subsection (10) from his income of a year or years of income before the year of income in relation to the payment of other amounts in respect of debts incurred by the taxpayer in the year of loss;
(b) so much (if any) of the film loss as has been allowed under subsection (7) as a deduction or deductions from his income (including his net exempt income) of a year or years of income before the year of income; and
(c) so much (if any) of the film loss as, but for subsection (9), would have been allowed or allowable under subsection (7) as a deduction or deductions from his net exempt income of the year of income or of a year or years of income before the year of income. 80AAA(12) [Losses referable to certain tax avoidance schemes disregarded]
For the purpose of determining whether a deduction is allowable to a taxpayer under subsection (7) and for the purpose of ascertaining the amount of any such deduction, there shall be disregarded so much of the amount of any film loss deemed to have been incurred by the taxpayer as would not have been deemed, for the purposes of this section, to have been incurred by the taxpayer if:
(a) the condition specified in subsection 80(6) were applicable for the purpose of determining whether the taxpayer is deemed, in any year of income, to have incurred a film loss and in determining the amount of any such loss; and
(b) Part IVA extended to schemes entered into or carried out on or before 27 May 1981.
This section does not apply to the 1997-98 year of income or a later year of income.
Note:
To find out how much of a primary production loss incurred before the 1989-90 year of income you can deduct for the 1997-98 or a later year of income: see section 36-110 of the Income Tax (Transitional Provisions) Act 1997 .
This section applies to losses incurred by a taxpayer in engaging in primary production in the year of income that commenced on 1 July 1957 and subsequent years before the year of income commencing on 1 July 1989.
This section also applies to a loss incurred by a taxpayer in engaging in primary production in the Northern Territory in any of the 7 years immediately preceding the year of income that commenced on 1 July 1957 and, for the purposes of the application of this section in relation to such a year, a reference in this section to engaging in primary production in that year shall be read as a reference to engaging in primary production in the Northern Territory in that year.
For the purposes of this section, a taxpayer who has engaged in primary production in any year shall be deemed to have incurred a loss in engaging in primary production in that year if:
(a) the deductions (other than the deductions allowable under this section or section 80 ) allowable from so much of the assessable income of that year as was derived from engaging in primary production exceed that assessable income; and
(b) for the purposes of section 80 , a loss was incurred by the taxpayer in that year;
and the amount of the loss that the taxpayer is to be deemed to have incurred in engaging in primary production in that year shall be deemed to be:
(c) if the amount of the excess referred to in paragraph (a) is equal to the amount of the loss referred to in paragraph (b) - the amount of that excess; or
(d) in any other case - the amount of the excess referred to in paragraph (a) or the amount of the loss referred to in paragraph (b), whichever is the less.
The reference in subsection (2) to the deductions allowable from so much of the assessable income of a year as was derived from engaging in primary production shall be read as a reference to:
(a) any deductions allowable from the assessable income of that year that relate exclusively to engaging in primary production; and
(b) any other deductions allowable from the assessable income of that year to the extent to which they relate to engaging in primary production.
Notwithstanding subsection (2), if Subdivision B of Division 2A applies in relation to a taxpayer being a company in relation to a year of income, being a taxpayer who has engaged in primary production in the year of income, a loss shall, for the purposes of this section, be deemed to be incurred by the taxpayer in the year of income if, and only if, for the purposes of section 80 , a loss was incurred by the taxpayer in the year of income and:
(a) for the purposes of that Subdivision, the company has a notional loss in respect of a relevant period, or notional losses in respect of relevant periods, in relation to the year of income and the amount of that notional loss or the sum of the amounts of those notional losses, as the case may be, exceeds the amount (if any) that is the eligible notional loss of the company in relation to the year of income; or
(b) in the application of subsection 50C(2) in relation to the taxpayer in relation to the year of income, the deductible amount referred to in that subsection exceeds the income amount referred to in that subsection;
and the amount of the loss that the taxpayer is to be deemed to have incurred in engaging in primary production in that year of income shall be deemed to be:
(c) if the amount of the loss that, for the purposes of section 80 , was incurred by the taxpayer in the year of income is equal to the notional primary production loss of the taxpayer - the amount of the notional primary production loss; and
(d) in any other case - the amount of the loss that, for the purposes of section 80 , was incurred by the taxpayer in the year of income or the amount of the notional primary production loss of the taxpayer, whicheveris the less.
For the purposes of the application of subsection (3A) in relation to a taxpayer in relation to a year of income, ``notional primary production loss'' means:
(a) in a case where paragraph (3A)(a) applies but paragraph (3A)(b) does not apply - the amount of the excess referred to in paragraph (3A)(a);
(b) in a case where paragraph (3A)(b) applies but paragraph (3A)(a) does not apply - the amount of the excess referred to in paragraph (3A)(b); and
(c) in any other case - the sum of the amount of the excess referred to in paragraph (3A)(a) and the amount of the excess referred to in paragraph (3A)(b).
In the application of Subdivision B of Division 2A in relation to a company in relation to a year of income for the purposes of subsection (3A), regard shall not be had to assessable income of the company other than assessable income derived from engaging in primary production and regard shall not be had to allowable deductions other than deductions allowable from assessable income derived from engaging in primary production.
Subject to subsections (9), (10) and (11), so much of the losses to which this section applies incurred by a taxpayer in any of the years preceding the year of income as has not been allowed as a deduction from his income of any of those years under this section is allowable as a deduction in accordance with the following provisions:
(a) where he has not in the year of income derived exempt income, the deduction shall be made from the assessable income;
(b) where he has in that year derived exempt income, the deduction shall be made successively from the net exempt income and from the assessable income;
(c) where a deduction is allowable under this section in respect of 2 or more losses, the losses shall be taken into account in the order in which they were incurred.
If a loss referred to in subsection (4) is taken to be reduced under Subdivision 245-E of Schedule 2C in its application to the year of income or a previous year of income, any reference to that loss in this section is to be treated as a reference to that loss as so taken to be reduced.
In this section, ``exempt income'' and ``net exempt income'' have the same respective meanings as in section 80 .
The losses referred to in subsection (4) are not allowable as a deduction from assessable foreign income of a taxpayer except to the extent provided in an election under subsection (5B).
A taxpayer who has derived assessable foreign income in a year of income may elect that the whole or a specified part of the losses referred to in subsection (5A) be allowable as a deduction from the taxpayer's assessable foreign income of that year.
In subsections (5A) and (5B):
"assessable foreign income"
has the same meaning as in section
160AFD
.
An election under subsection (5B) must be made:
(a) before whichever is the later of the following:
(i) the end of the period of 6 months after the commencement of this subsection;
(ii) the day after the day of lodgment of the taxpayer's return of income of the year of income to which the election relates; or
(b) within such further period as the Commissioner allows.
Notwithstanding any other provision of this section, where, before the year of income, a taxpayer has become a bankrupt, or, not having become a bankrupt, has been released from any debts by the operation of an Act relating to bankruptcy, no loss to which this section applies that was incurred by him before the date on which he became a bankrupt or the date on which he was so released, as the case may be, is an allowable deduction.
80AA(6A) [Annulment of bankruptcy to be disregarded](a) a taxpayer becomes a bankrupt, but the bankruptcy is later annulled; and
(b) disregarding the annulment, subsection (6) applies to the bankruptcy; and
(c) the annulment occurred under section 74 of the Bankruptcy Act 1966 ; and
(d) under the composition or scheme of arrangement concerned, the taxpayer has been, will be or may be, released from any debts, from which he or she would have been released if he or she had been instead discharged from the bankruptcy;
then, for the purposes of subsection (6), the annulment is disregarded.
Where, in the year of income, a taxpayer pays an amount in respect of a debt incurred by him in the course of engaging in primary production in a year in which he incurred a loss to which subsection (6) applies, being a year not later than the eighth year next preceding the year of income, the amount paid by the taxpayer in respect of the debt is, subject to subsection (8), an allowable deduction to the extent to which it does not exceed so much of the debt as the Commissioner is satisfied was taken into account in ascertaining the amount of the loss.
The aggregate of the deductions allowable under subsection (7) from the income of the taxpayer of the year of income in relation to the payment of amounts in respect of debts incurred by the taxpayer in a year in which he incurred a loss to which this section applies (in this subsection referred to as ``the year of loss'' ) shall not exceed the amount of that loss less the sum of:
(a) the deductions, if any, allowed under subsection (7) of this section or subsection 80(4A) from his income of a year or years of income before the year of income in relation to the payment of other amounts in respect of debts incurred by the taxpayer in the course of engaging in primary production in the year of loss;
(b) so much, if any, of the loss as has been allowed under subsection (4) as a deduction or deductions from his income (including his net exempt income) of a year or years of income before the year of income;
(c) so much, if any, of the loss as, but for subsection (6), would have been allowed or allowable under subsection (4) as a deduction or deductions from his net exempt income of the year of income or of a year or years of income before the year of income; and
(d) the amount, if any, by which the sum of:
(i) the deductions, if any, allowed under subsection 80(4A) from his income of a year or years of income before the year of income in relation to the payment of amounts in respect of debts (other than debts incurred in the course of engaging in primary production) incurred by the taxpayer in the year of loss;
(ii) the deductions, if any, allowed under subsection 80(2) from his income (including his net exempt income) of a year or years of income before the year of income in respect of a loss that, for the purposes of section 80 , is to be deemed to have been incurred by him in the year of loss; and
exceeds the difference, if any, between the amount of the loss that, for the purposes of section 80 , is to be deemed to have been incurred by him in the year of loss and the amount of the loss to which this section applies that was incurred by him in that year.
(iii) the deductions, if any, that, but for subsection 80(4) , would have been allowed or allowable in respect of that loss under subsection 80(2) from his net exempt income of the year of income or of a year or years of income before the year of income,
For the purposes of determining whether a deduction is allowable to a taxpayer under subsection (4) in respect of the year of income that commenced on 1 July 1978 or in respect of a subsequent year of income and for the purposes of ascertaining the amount of any such deduction, there shall be disregarded so much of the amount of any loss deemed to have been incurred by the taxpayer in engaging in primary production as would not have been deemed, for the purposes of this section, to have been incurred by the taxpayer in engaging in primary production if the conditions specified in the paragraphs of subsection 80(5) were applicable for the purpose of determining whether the taxpayer is deemed, in any year of income, to have incurred a loss in engaging in primary production and in determining the amount of any such loss.
For the purpose of determining whether a deduction is allowable to a taxpayer under subsection (4) in respect of the year of income that commenced on 1 July 1980 or in respect of a subsequent year of income and for the purpose of ascertaining the amount of any such deduction, there shall be disregarded so much of the amount of any loss deemed to have been incurred by the taxpayer in engaging in primary production as would not have been deemed, for the purposes of this section, to have been incurred by the taxpayer in engaging in primary production if the condition specified in subsection 80(6) were applicable for the purpose of determining whether the taxpayer is deemed, in any year of income, to have incurred a loss in engaging in primary production and in determining the amount of any such loss.
For the purpose of determining whether a deduction is allowable to a taxpayer under subsection (4) in respect of the year of income that commenced on 1 July 1980 or in respect of a subsequent year of income and for the purpose of ascertaining the amount of any such deduction, there shall be disregarded so much of the amount of any loss deemed to have been incurred by the taxpayer in engaging in primary production as would not have been deemed to have been incurred by the taxpayer in engaging in primary production if Part IVA extended to schemes entered into or carried out on or before 27 May 1981.
Where deductions are allowable from the assessable income of a taxpayer of a year of income under any 2 or more of the following subsections:
(a) subsection 79E(3) ;
(b) subsection 79F(6) ;
(c) subsection 80(2) ;
(d) subsection 80AAA(7) ;
(e) subsection 80AA(4) ;
the deductions allowable under the subsections are to be taken into account in the following order:
(f) first, any deduction allowable under subsection 80AAA(7) ;
(g) second, any deduction allowable under subsection 80(2) ;
(h) third, any deduction allowable under subsection 79F(6) ;
(j) fourth, any deduction allowable under subsection 80AA(4) ;
(k) fifth, any deduction allowable under subsection 79E(3) .
Where, but for this section, a taxpayer's net exempt income (within the meaning of sections 79E and 80 ) of a year of income would be taken into account for the purposes of any 2 or more of the following paragraphs:
(a) paragraph 79E(3)(b) ;
(b) paragraph 79F(6)(b) ;
(c) paragraph 80(2)(b) ;
(d) paragraph 80AAA(7)(b) ;
(e) paragraph 80AA(4)(b) ;
then the net exempt income is to be so taken into account in accordance with the following principles:
(f) first, the amount is to be taken into account to the extent (if any) necessary for the purposes of paragraph 80AAA(7)(b) ;
(g) the amount, to the extent (if any) not so taken into account, is then to be taken into account to the extent (if any) necessary for the purposes of paragraph 80(2)(b) ;
and so on successively for the purposes of paragraphs 79F(6)(b) , 80AA(4)(b) and 79E(3)(b) .
80AC(2) [Net exempt income applied against debts paid]Where, but for this section, a taxpayer's net exempt income (within the meaning of sections 79E and 80 ) of a year of income would be taken into account for the purposes of any 2 or more of the following paragraphs:
(a) paragraph 79E(10)(c) ;
(b) paragraph 79F(10)(c) ;
(c) paragraph 80(4B)(c) ;
(d) paragraph 80AAA(11)(c) ;
(e) paragraph 80AA(8)(c) ;
then the net exempt income is to be so taken into account in accordance with the following principles:
(f) first, the amount is to be taken into account to the extent (if any) necessary for the purposes of paragraph 80AAA(11)(c) ;
(g) the amount, to the extent (if any) not so taken into account, is then to be taken into account to the extent (if any) necessary for the purposes of paragraph 80(4B)(c) ;
and so on successively for the purposes of paragraphs 79F(10)(c) , 80AA(8)(c) and 79E(10)(c) .
Notwithstanding sections 79E , 79F , 80 , 80AAA and 80AA but subject to this section and sections 80B , 80DA and 80E , a loss incurred by a company in a year before the year of income shall not be taken into account for the purposes of section 79E , 79F , 80 , 80AAA or 80AA unless -
(a) the company satisfies the Commissioner; or
(b) in the case of a company that is not a private company in relation to the year of income, the Commissioner considers that it is reasonable to assume,
that, at all times during the year of income, shares in the company carrying between them -
(c) the right to exercise more than one-half of the voting power in the company;
(d) the right to receive more than one-half of any dividends that may be paid by the company; and
(e) the right to receive more than one-half of any distribution of capital of the company,
were beneficially owned by persons who, at all times during the year in which the loss was incurred, beneficially owned shares in the company carrying between them rights of those kinds.
(a) subsection (1) would,but for this subsection, apply for the purpose of determining whether a loss incurred by a company in a year before the year of income is to be taken into account for the purposes of section 79E , 79F , 80 , 80AAA or 80AA ;
(b) during the whole or any part of the year in which the loss was incurred, or during the whole or any part of the year of income, another company or other companies beneficially owned all or any of the shares in the first-mentioned company or an interest or interests in all or any of those shares; and
(c) the first-mentioned company requests the Commissioner at the time when it furnishes to him a return (or, if more than one return is furnished, the first return) of its income of the year of income, or within such further period as the Commissioner allows, that subsection (3) should apply for the purpose referred to in paragraph (a) or the Commissioner considers it reasonable that that subsection should apply for that purpose,
then subsection (3) applies for that purpose in lieu of subsection (1).
Where, by virtue of subsection (2), this subsection applies for the purpose of determining whether a loss incurred by a company (in this subsection referred to as the loss company ) in a year before the year of income is to be taken into account for the purposes of section 79E , 79F , 80 , 80AAA or 80AA , then, notwithstanding those sections but subject to subsection (5) and sections 80B , 80DA and 80E, that loss shall not be taken into account for the purposes of section 79E , 79F , 80 , 80AAA or 80AA unless the Commissioner is satisfied, or considers that it is reasonable to assume, that -
(a) at all times during the year of income the voting power in the loss company was, either directly or through one or more interposed companies, trustees or partnerships, controlled, or capable of being controlled, by a person not being a company, or by 2 or more persons not being companies, who, either directly or through one or more interposed companies, trustees or partnerships, controlled, or was or were capable of controlling, the voting power in the loss company at all times during the year in which the loss was incurred;
(b) a person not being a company who had, or 2 or more persons not being companies who had between them, at all times during the year of income a right to receive, directly or indirectly, for his or their own benefit more than one-half of any dividends that might be paid by the loss company would, if the loss company had paid a dividend at any time during the year in which the loss was incurred, have had, or have had between them, as the case may be, a right to receive, directly or indirectly, for his or their own benefit more than one-half of that dividend; and
(c) a person not being a company who had, or 2 or more persons not being companies who had between them, at all times during the year of income a right to receive, directly or indirectly, for his or their own benefit more than one-half of any distribution of capital of the loss company would, if the loss company had made a distribution of capital at any time during the year in which the loss was incurred, have had, or have had between them, as the case may be, a right to receive, directly or indirectly, for his or their own benefit more than one-half of that distribution of capital.
For the purposes of this section, a person shall be deemed to be a person who had, or would have had, a right to receive indirectly for his own benefit the whole or a particular fraction of a dividend that might be, or might have been, paid by a company or of a distribution of capital of a company, or 2 or more persons shall be deemed to be persons who had, or would have had, between them a right to receive indirectly for their own benefit the whole or a particular fraction of such a dividend or distribution of capital, if, in the event of a payment of a dividend by the company, or of a distribution of capital of the company, the person or persons would, otherwise than as a shareholder or shareholders of the company or as a trustee or trustees, receive or have received the whole or that fraction, as the case may be, of that dividend, or of that distribution of capital, if there had been successive distributions of the relative parts of that dividend, or of that distribution of capital, to and by each of any companies or trustees interposed between the company paying the dividend, or making the distribution of capital, and that person or those persons.
Subject to sections 80B , 80DA and 80E , where a loss incurred by a company in a year before the year of income is not, by virtue of subsection (1) or subsection (3), as the case may be, to be taken into account for the purposes of section 79E , 79F , 80 , 80AAA or 80AA but the company satisfies the Commissioner that that subsection would not have prevented the loss from being so taken into account if regard were had, for the purposes of that subsection, to part only of the year in which the loss was incurred, the Commissioner may take into account for the purposes of section 79E , 79F , 80 , 80AAA or 80AA such part of the loss as he considers to be the amount of the loss that was incurred during that part of that year.
For the purposes of the application of section 80A in determining whether a loss or part of a loss incurred by a company in a year before the year of income is to be taken into account, the succeeding provisions of this section have effect.
(Omitted by No 51 of 1973)
Shares in the company that were beneficially owned by a person at any time shall be deemed to have been beneficially owned by the same person at a later time if the person has died and, at that later time, the shares were owned by the trustee of his estate in his capacity as trustee of that estate or were beneficially owned by a person who received the shares as a beneficiary in that estate.
80B(4)(Omitted by No 51 of 1973)
(a) the company claims that a person beneficially owned shares in the company at a time during the year in which the loss was incurred and also beneficially owned shares in the company at a time (in this subsection referred to as the relevant time ) during the year of income;
(b) before or during the year of income, an agreement was entered into, or a right, power or option (including a contingent right, power or option) was granted, being an agreement, right, power or option that, in any way, directly or indirectly, related to, affected, or depended for its operation on -
(i) the beneficial interest of that person in the last-mentioned shares, or the value of that interest;
(ii) the right of that person to sell, or otherwise dispose of, that interest, or any such sale or other disposition;
(iii) any rights carried by those shares, or the exercise of any such rights; or
(iv) any dividends that might be paid, or any distribution of capital that might be made, in respect of those shares, or the payment of any such dividends or the making of any such distribution of capital; and
(c) the agreement was entered into, or the right, power or option was granted or acquired, for the purpose, or for purposes that included the purpose, of enabling the company to take into account for the purposes of section 79E , 79F , 80 , 80AAA or 80AA a loss that the company had incurred in a year before the year in which the agreement was entered into or the right, power or option was granted or a loss that the company might incur in that last-mentioned year,
the Commissioner may, subject to the succeeding provisions of this section, treat those shares as not having been beneficially owned by that person at the relevant time.
Where the Commissioner is satisfied that, by virtue of a provision in the constituent document of the company as in force at any time during the year of income or by virtue of an agreement made before the end of the year of income between persons who at the time when the agreement was made were, or since that time have become, beneficial owners of shares in the company, shares in the company that -
(a) were beneficially owned at any time during the year of income by persons who beneficially owned any shares in the company at all times during the year in which the loss was incurred; and
(b) carried any rights at all times during the year of income,
have ceased, or will or may cease, at any time after the end of the year of income, to carry those rights, the shares shall be deemed not to have carried those rights at any time during the year of income.
Where the Commissioner is satisfied that, by virtue of a provision in the constituent document of the company as in force at any time during the year of income or by virtue of an agreement made before the end of the year of income between persons who at the time when the agreement was made were, or since that time have become, beneficial owners of shares in the company, shares in the company have commenced, or will or may commence, at any time after the end of the year of income, to carry rights that those shares did not carry at a time during the year of income -
(a) if the shares were not beneficially owned at any time during the year of income by persons who beneficially owned any shares in the company at all times during the year in which the loss was incurred - the shares shall be deemed to have carried those rights at all times during the year of income; and
(b) in any other case - the Commissioner may, if he considers that, having regard to all the circumstances, it is reasonable to do so, treat the shares as having carried those rights at all times during the year of income.
In ascertaining whether a person, being a person who beneficially owned shares in the company at all times during the year in which the loss was incurred, beneficially owned any shares in the company at all times during the year of income, any shares (other than shares allotted by the company before the year in which the loss was incurred) that are, or at the option of the company are to be, liable to be redeemed shall be disregarded.
80B(8A) [Shareholder rights after certain changes in company status]A person is not prevented from:
(a) beneficially owning shares in a company; or
(b) having the right to exercise voting power in a company; or
(c) having the right to receive any dividends that may be paid by a company; or
(d) having the right to receive any distribution of capital of a company;
merely because:
(e) the company is or becomes:
(i) an externally-administered body corporate within the meaning of the Corporations Law (as set out in section 82 of the Corporations Act 1989 ); or
(ii) a body with a similar status, under the Companies Code of the relevant State or a foreign law, to an externally-administered body corporate; or
(f) either:
(i) a provisional liquidator is appointed to the company under section 472 of the Corporations Law (as set out in section 82 of the Corporations Act 1989 );
(ii) a person with a similar status, under the Companies Code of the relevant State or a foreign law, to a provisional liquidator is appointed to the company.
A company (the stakeholding company ) is not prevented from:
(a) beneficially owning shares, or any other interests in shares, in another company; or
(b) having the right to exercise voting power in another company either directly or indirectly; or
(c) having the right to receive, either directly or indirectly, any dividends that may be paid by another company; or
(d) having the right to receive, either directly or indirectly, any distribution of capital of another company;
merely because:
(e) the stakeholding company is or becomes:
(i) an externally-administered body corporate within the meaning of the Corporations Law (as set out in section 82 of the Corporations Act 1989 ); or
(ii) a body with a similar status, under the Companies Code of the relevant State or a foreign law, to an externally-administered body corporate; or
(f) either:
(i) a provisional liquidator is appointed to the stakeholding company under section 472 of the Corporations Law (as set out in section 82 of the Corporations Act 1989 ); or
(ii) a person with a similar status, under the Companies Code of the relevant State or a foreign law, to a provisional liquidator is appointed to the stakeholding company.
In so far as subsections (5), (6), (7) and (8) have effect for the purposes of the application of subsection 80A(5) in determining whether a part of a loss incurred by a company in a year before the year of income is to be taken into account, a reference in those subsections to the year in which the loss was incurred shall be read as a reference to the part of that year referred to in subsection 80A(5) .
A reference in this section to an agreement, right, power or option shall be read as including a reference to an agreement, right, power or option that is not enforceable by legal proceedings whether or not it was intended to be so enforceable.
For the purposes of this section, an arrangement or understanding, whether formal or informal and whether express or implied, shall be deemed to be an agreement.
(Repealed by No 51 of 1973)
(Repealed by No 51 of 1973)
Notwithstanding sections 79E , 79F , 80 , 80AAA and 80AA but subject to section 80E , a loss, or a part of a loss, incurred by a company in a year (in this section referred to as the year of loss ), before the year of income shall not be taken into account for the purposes of section 79E , 79F , 80 , 80AAA or 80AA if -
(a) during the year of income the company derived income that the company would not have derived, or a capital gain accrued to the company that would not have accrued to the company, if the loss, or the part of the loss, had not been available to be taken into account for the purposes of section 79E , 79F , 80 , 80AAA or 80AA ;
(b) a person other than the company will, either directly or indirectly, receive any benefit or obtain any advantage in relation to the application of this Act as a result of the operation of any agreement, scheme, arrangement, understanding, transaction, course of conduct or course of business that would not have been entered into or carried out if the loss, or the part of the loss, had not been available to be taken into account for the purposes of section 79E , 79F , 80 , 80AAA or 80AA ;
(c) the affairs or business operations of the company were managed or conducted during the year of income without proper regard to the rights, powers or interests of continuing shareholders in the company; or
(d) during the whole or any part of the year of income the voting power in the company was, either directly or through one or more interposed companies, trustees or partnerships, controlled by a person who did not, either directly or through one or more interposed companies, trustees or partnerships, control the voting power in the company during the whole of the year of loss or, in a case to which subsection 80A(5) applies, during the part of the year of loss referred to in that subsection, and that person acquired the control of that voting power for the purpose, or for purposes that included the purpose, of receiving any benefit or obtaining any advantage in relation to the application of this Act or securing that another person would receive such a benefit or obtain such an advantage.
Paragraph (1)(a) applies notwithstanding that the income was derived by the company, or the capital gain accrued to the company in the course of ordinary family or commercial dealing but that paragraph does not apply where the continuing shareholders will benefit from the derivation of the income, or the accrual of the capital gain, to an extent that the Commissioner considers to be fair and reasonable having regard to their rights and interests in the company.
Without limiting the generality of paragraph (1)(b), a person shall be deemed, for the purposes of that paragraph, to receive a benefit or obtain an advantage in relation to the application of this Act if the person is not liable to pay income tax in respect of a year of income, or the liability of the person to pay income tax in respect of a year of income is reduced, by reason that the person has not derived income that the person would have derived, or a capital gain did not accrue to the person that would have accrued, if the agreement, scheme, arrangement, understanding, transaction, course of conduct or course of business had not been entered into or carried out.
Paragraph (1)(b) applies notwithstanding that the agreement, scheme, arrangement, understanding, transaction, course of conduct or course of business was entered into or carried out in the course of ordinary family or commercial dealing but that paragraph does not apply in relation to a benefit or advantage that is received or obtained by a person who had a shareholding interest in the company in the year of income, being a benefit or advantage that the Commissioner considers to be fair and reasonable having regard to that shareholding interest.
For the purposes of this section -
(a) a person has a shareholding interest ina company if he is the beneficial owner of, or of an interest in, any shares in the company; and
(b) where a person has a shareholding interest in a company that has a shareholding interest in another company (including a shareholding interest that the company has in that other company by any other application or applications of this paragraph) that person shall be deemed to have a shareholding interest in that other company. 80DA(6) [Continuing shareholders defined]
For the purposes of the application of this section in relation to a loss, or a part of a loss, incurred by a company, a reference in this section to continuing shareholders in the company shall -
(a) if subsection 80A(1) applies for the purpose of determining whether the loss, or the part of the loss, is to be taken into account for the purposes of section 79E , 79F , 80 , 80AAA or 80AA - be read as a reference to persons referred to in subsection 80A(1) ; and
(b) if subsection 80A(3) applies for the purpose of determining whether the loss, or the part of the loss, is to be so taken into account - be read as a reference to persons referred to in subsection 80A(3) .
In determining for the purposes of this section whether the affairs or business operations of a company were managed or conducted as mentioned in paragraph (1)(c), regard shall be had to any act or thing done in the course of the management or conduct of those affairs or business operations, irrespective of the purpose or purposes for which that act or thing was done and notwithstanding that the doing of that act or thing took place in the course of ordinary family or commercial dealing.
For the purposes of this section, it shall be taken that:
(a) income would not have been derived by, or a capital gain would not have accrued to, a company if a particular act had not been done;
(b) income would have been derived by, or a capital gain would have accrued to, a person if a particular act had not been done; or
(c) an agreement, scheme, arrangement, understanding, transaction, course of conduct or course of business would not have been entered into or carried out if a particular act had not been done,
if the income would not have been derived by, or the capital gain would not have accrued to, the company, the income would have been derived by, or the capital gain would have accrued to, the person, or the agreement, scheme, arrangement, understanding, transaction, course of conduct or course of business would not have been entered into or carried out, as the case may be, if none of 2 or more acts (including that act) had been done.
A reference in subsection (8) to the doing of an act includes a reference to the happening of an event or the existence of a matter or circumstance.
Subject to subsection (2), where -
(a) the whole or a part of a loss incurred by a taxpayer, being a company, in a year before the year of income would not, but for this section, by reason of a change that has taken place in the beneficial ownership of shares in the company or in any other company, be taken into account for the purposes of section 79E , 79F , 80, 80AAA or 80AA;
(b) the first-mentioned company carried on at all times during the year of income the same business as it carried on immediately before the change referred to in paragraph (a) took place; and
(c) the first-mentioned company did not, at any time during the year of income, derive income from a business of a kind that it did not carry on, or from a transaction of a kind that it had not entered into in the course of its business operations, before the change took place,
sections 80A and 80DA do not prevent the whole of the loss being so taken into account.
Subsection (1) does not apply in respect of a loss incurred by a taxpayer being a company in a year before the year of income if -
(a) before the change took place, the company commenced to carry on a business that it had not previously carried on or entered into, in the course of its business operations, a transaction of a kind that it had not previously entered into; and
(b) the company commenced to carry on that business or entered into that transaction for the purpose, or for purposes that included the purpose, of enabling the company to take into account, by virtue of subsection (1), for the purposes of section 79E , 79F , 80 , 80AAA or 80AA a loss that the company had incurred in a year before the first-mentioned year or might incur in the first-mentioned year.
This section does not apply to the 1997-98 year of income or a later year of income.
Note:
To work out the deductibility of a tax loss that results from a debt being written off as bad in the 1997-98 year of income or a later year of income: see section 63CA .
(a) a debt that is written off by a taxpayer, being a company, as a bad debt during a year of income is an allowable deduction;
(b) the debt would not, but for subsection 63C(1) , be an allowable deduction by reason of a change that has taken place in the beneficial ownership of shares in the company or in any other company;
(c) the change referred to in paragraph (b) occurred before the debt was written off as a bad debt;
(d) by reason that the debt is an allowable deduction -
(i) the company incurred in that year of income a loss for the purposes of section 79E , 79F , 80 , 80AAA or 80AA that the company would not otherwise have incurred; or
(ii) a loss for the purposes of section 79E , 79F , 80 , 80AAA or 80AA that the company would otherwise have incurred in that year of income has been increased; and
(e) the Commissioner is satisfied that the company carried on a business during that year of income for the purpose, or for purposes that included the purpose, of securing that a deduction would be allowable in respect of the debt by virtue of subsection 63C(1) ,
the loss, or the increase in the amount of the loss, as the case may be, shall not be taken into account for the purposes of section 79E , 79F , 80 , 80AAA or 80AA in relation to a later year of income unless -
(f) the company carried on at all times during that later year of income the same business as it carried on immediately before the change referred to in paragraph (b) took place; and
(g) the company did not, at any time during that later year of income, derive income from a business of a kind that it did not carry on, or from a transaction of a kind that it had not entered into in the course of its business operations, before the change referred to in paragraph (b) took place. 80F(2) [Part debt write offs]
Where a part of a debt is written off as bad, subsection (1) applies as if the part were an entire debt that is written off as bad.
This section has the same effect in relation to an allowable deduction under section 63E in respect of the whole or part of a debt that is extinguished as it has in relation to an allowable deduction under section 51 or 63 in respect of the whole or part of a debt that is written off as bad.
The right to a deduction for an amount of a loss cannot be transferred under this section in the 1997-98 year of income or a later year of income.
Note:
To work out whether a company can transfer its tax loss to another company in the 1997-98 year of income or a later year of income: see Subdivision 170-A of the Income Tax Assessment Act 1997 .
For the purposes of this section, a company shall be taken to be a group company in relation to another company in relation to a year of income if -
(a) one of the companies was a subsidiary of the other company; or
(b) each of the companies was a subsidiary of the same company,
during the whole of the year of income or, if either or both of those companies was not or were not in existence during part of the year of income, during that part of the year of income during which both companies were in existence.
80G(2) [``subsidiary company'']For the purposes of this section, a company (in this subsection referred to as the subsidiary company ) shall be taken to be the subsidiary of another company (in this subsection referred to as the holding company ) during a period (in this subsection referred to as the relevant period ), being the whole or a part of a year of income, if -
(a) at all times during the relevant period, all the shares in the subsidiary company were beneficially owned by -
(i) the holding company;
(ii) a company that is, or 2 or more companies each of which is, a subsidiary of the holding company; or
(iii) the holding company and a company that is, or 2 or more companies each of which is, a subsidiary of the holding company; and
(b) there was no agreement, arrangement or understanding in force during any part of the relevant period by virtue of which any person was in a position, or would become in a position after the relevant period, to affect rights of the holding company or of a subsidiary of the holding company in relation to the subsidiary company. 80G(3) [``Subsidiary company'']
For the purposes of this section, where a company is a subsidiary of another company (including a company that is such a subsidiary by virtue of another application or other applications of this subsection), every company that is a subsidiary of the first-mentioned company shall be taken to be a subsidiary of that other company.
80G(4) [When person in a position to affect rights of company]For the purposes of subsection (2), a person shall be taken to be in a position during a year of income, or a part of a year of income, to affect any rights of a company in relation to another company if, during the year of income, or that part of the year of income, that person has a right, power or option (whether by virtue of any provision in the constituent document of either of those companies or by virtue of any agreement or instrument or otherwise) to acquire those rights or do an act or thing that would prevent the first-mentioned company from exercising those rights for its own benefit or receiving any benefits accruing by reason of those rights.
80G(5) [Existence of company]Subject to subsections (5A) and (5B), for the purposes of this section, a company shall be taken to be in existence if it has been incorporated and has not been dissolved.
For the purposes of subsection (1), where:
(a) at a time (in this subsection called the ``acquisition time'' ) in the year of income commencing on 1 July 1984 or in a subsequent year of income, one or more companies acquired all the shares in another company (in this subsection called the ``shelf company'' ) from the shareholders in the shelf company; and
(b) the shelf company was dormant, within the meaning of Part VI of the Companies Act 1981 , throughout the period (in this subsection called the ``dormant period'' ) commencing on the day on which the shelf company was incorporated and ending at the acquisition time;
the shelf company shall be taken not to have been in existence during the dormant period.
For the purposes of subsection (1), where:
(a) at a time (in this subsection called the ``issue time'' ) in the year of income commencing on 1 July 1984 or in a subsequent year of income, a company (in this subsection called the ``shelf company'' ) issued shares (in this subsection called the ``newly issued shares'' ) to another company or companies;
(b) immediately before the issue time, a person or persons held other shares in the shelf company;
(c) immediately after the issue time, the shelf company redeemed all the shares in the shelf company other than the newly issued shares; and
(d) the shelf company was dormant, within the meaning of Part VI of the Companies Act 1981 , throughout the period (in this subsection called the ``dormant period'' ) commencing on the day on which the shelf company was incorporated and ending immediately before the issue time;
the shelf company shall be taken not to have been in existence during the dormant period.
Subject to this section, where:
(a) a resident company other than a prescribed dual resident (in this section referred to as the ``loss company'' ) is deemed to have incurred a loss for the purposes of section 79E or 80 in the year of income that commenced on 1 July 1984 or in a subsequent year of income (in this section referred to as the ``loss year'' );
(b) a resident company other than a prescribed dual resident (in this section referred to as the ``income company'' ) has, or would but for the operation of this section have, a taxable income in the year of income that commenced on 1 July 1984 or in a subsequent year of income (in this section referred to as the ``income year'' );
(ba) the loss company is not a dual resident investment company in relation to the loss year nor in relation to the income year;
(c) the loss company and the income company agree that the right to an allowable deduction under subsection 79E(3) , 79F(6) , 80(2) , 80AAA(7) or 80AA(4) , as the case requires, in respect of so much of the whole or part of the loss as has not been allowed as a deduction should be transferred to the income company in the income year;
(d) in a case where the loss year is the same year of income as the income year:
(i) the loss company is a group company in relation to the income company in relation to the loss year; and
(ii) if the loss company had incurred the loss in the year of income immediately preceding the loss year and had derived sufficient assessable income (including film income) in the loss year, the loss or that part of the loss, as the case may be, would, but for this section, be allowable as a deduction from the assessable income of the loss company in the loss year (ignoring any exempt income derived by the loss company in the loss year or in that preceding year); and
(e) in a case where the income year is a year of income subsequent to the loss year:
(i) the loss company is a group company in relation to the income company in relation to the loss year and the income year and in relation to any year of income commencing after the end of the loss year and ending before the commencement of the income year; and
(ii) if the loss company had derived sufficient assessable income (including film income) in the income year, the loss or that part of the loss, as the case may be, would, but for this section, be allowable as a deduction from the assessable income of the loss company in the income year (ignoring any exempt income derived by the loss company in the income year),
the amount of the loss or of that part of the loss, as the case may be, shall, for the purposes of the application of the provisions of this Act other than this section in relation to the income company in relation to the income year, be deemed to be a loss incurred by the income company for the purposes of section 79E , 79F , 80 , 80AAA or 80AA , as the case requires, in:
(f) a case to which paragraph (d) applies - the year of income immediately preceding the loss year; or
(g) a case to which paragraph (e) applies - the loss year.
An agreement under paragraph (6)(c) must be:
(a) in writing and signed by the public officer of each of the loss company and the income company; and
(b) made before the date of lodgment of the return of income of the income company for the income year or within such further time as the Commissioner allows.
An agreement under paragraph (6)(c) relating to the transfer to the income company of a right to an allowable deduction under subsection 79E(3) , 80(2) or 80AA(4) from the assessable income of the income company of the income year in respect of a loss or a part of a loss has no effect to the extent that the sum of the amount specified in the agreement and any amount specified in an agreement previously made under paragraph (6)(c) and any amounts specified in notices given under paragraph (6)(c) of this Act as in force immediately before 1 July 1992 or the commencement of the Taxation Laws Amendment (Self Assessment) Act 1992 , whichever is later by any company in relation to allowable deductions under subsection 79E(3) , 79F(6) , 80(2) , 80AAA(7) or 80AA(4) from that assessable income exceeds:
(a) in a case where the income company has not in the income year derived exempt income - the amount by which the assessable income of the income company of that year exceeds the allowable deductions (other than deductions allowable by virtue of this section) from that assessable income; or
(b) in a case where the income company has in the income year derived exempt income - the amount by which the sum of the assessable income of the income company of that year and the net exempt income of the income company of that year exceeds the allowable deductions (other than deductions allowable by virtue of this section) from that assessable income.
An agreement under paragraph (6)(c) relating to the transfer to the income company of a right to an allowable deduction under subsection 79F(6)or 80AAA(7) from the assessable income of the income company of the income year in respect of a loss or part of a loss has no effect to the extent that the sum of the amount specified in the agreement and any amount specified in an agreement previously made under paragraph (6)(c) and any amounts specified in notices given under paragraph (6)(c) of this Act as in force immediately before 1 July 1992 or the commencement of the Taxation Laws Amendment (Self Assessment) Act 1992 , whichever is later by any company in relation to allowable deductions under that subsection from that assessable income exceeds the sum of the net assessable film income within the meaning of section 79F or 80AAA , as the case requires, of the income company of that year and the net exempt film income within the meaning of that section of the income company of that year.
Where Subdivision B of Division 2A applies in relation to the loss company in relation to the loss year, the right to an allowable deduction in respect of any part of the loss incurred by the loss company in the loss year shall not be transferred to the income company in the loss year.
80G(9A) [Losses incurred by PDF]If the loss company was a PDF throughout the last day of the loss year, the right to an allowable deduction in respect of any part of the loss incurred by the loss company in the loss year must not be transferred.
(a) the loss company became a PDF during the loss year and was still a PDF at the end of the loss year; and
(b) the loss company incurred a loss in the loss year otherwise than because of section 79EA ;
subsection (9A) does not apply to so much of the loss as does not exceed the loss (if any) that, if the period ( ``the notional year'' ) beginning at the start of the loss year and ending immediately before the loss company became a PDF were a year of income of the loss company, the loss company would be taken to incur in the notional year.
Where the sum of the assessable income of the loss company of the income year and the net exempt income (if any) of the loss company of that year exceeds the allowable deductions, other than:
(a) deductions from that assessable income under section 79E , 79F , 80 , 80AAA , 80AA , 124AD , 124ADB , 124ADD , 124ADF or 159GC ;
(b) deductions from that assessable income under section 122D , 122DB , 122DD or 122DF where the loss company has not made an election under that section in relation to the year of income; or
(c) deductions from that assessable income under section 122DG , 122J , 122JE or 122JF or Division 10AA in respect of expenditure in relation to which the loss company has not made an election under section 122DG , 122J , 122JE , 122JF , 124ADH or 124AH , as the case requires, in relation to the year of income,
subsection (6) applies in relation to so much (if any) of the amount of a loss that is deemed to have been incurred by the loss company for the purposes of section 79E or 80 as is not allowable as a deduction from that assessable income under subsection 79E(3) , 79F(6) , 80(2) , 80AAA(7) or 80AA(4) .
Where the rights to allowable deductions in respect of 2 or more losses (other than film losses for the purposes of section 79F or 80AAA ) incurred by the loss company are able to be transferred under subsection (6), the rights to those deductions may be transferred under that subsection only in the order in which the losses were incurred.
Where the right to an allowable deduction in respect of a loss or a part of a loss is transferred to the income company under subsection (6), that loss or that part of that loss shall, for the purposes of the provisions of this Act other than this section, be deemed not to have been incurred by the loss company.
80G(13) [Further agreement to transfer]Where the loss company makes an agreement in accordance with paragraph (6)(c) in relation to a part of a loss incurred by the loss company, that company must not make a further agreement in accordance with that paragraph in relation to that loss that purports to transfer to a company the right to an allowable deduction in respect of an amount that exceeds the amount obtained by deducting from the amount of that loss the amount of that part of that loss or the sum of the amounts of those parts of that loss specified in the first-mentioned agreement.
Where the right to an allowable deduction in respect of a loss or a part of a loss incurred by the loss company is transferred to the income company in the year of income in which the loss was incurred, sections 80A , 80B , 80DA and 80E do not apply in relation to -
(a) the loss company for the purposes of the operation of subparagraph (6)(d)(ii) in relation to that company; or
(b) the income company. 80G(15) [Amendment of assessments]
(a) the right to an allowable deduction in respect of a loss or a part of a loss incurred by the loss company is transferred to the income company pursuant to subsection (6); and
(b) that loss or a part of that loss was not deemed to have been incurred by the loss company,
nothing in section 170 prevents the amendment of an assessment of the income of the income company to disallow the whole or a part of the deduction referred to in paragraph (a).
80G(16) [Retention of right to deduction]If, as a result of the amendment of an assessment or for any other reason, a deduction is not allowable from the assessable income of the income company in respect of the whole of an amount specified in an agreement under paragraph (6)(c) or specified in a notice given under paragraph (6)(c) of this Act as in force immediately before 1 July 1992 or before the commencement of the Taxation Laws Amendment (Self Assessment) Act 1992 , whichever is later, this section applies as if only that part of the amount specified in that agreement or that notice in respect of which a deduction is allowable to the company were so specified.
If the loss company is a shareholder in the income company and receives any consideration from the income company for the transfer of the right to an allowable deduction to the income company under subsection (6):
(a) so much of the consideration as, in the opinion of the Commissioner, is given for the transfer of the right is not taken to be income derived by the loss company; and
(b) a capital gain does not accrue to the loss company because of the receipt of the consideration.
If the income company gives any consideration to the loss company for the transfer of the right to an allowable deduction to the income company under subsection (6):
(a) the consideration is not an allowable deduction to the income company; and
(b) the income company does not incur a capital loss because of the giving of the consideration.
In this section, ``exempt income'' and ``net exempt income'' have the same respective meanings as in section 80 .
Notwithstanding anything contained in this Division, a deduction shall not be allowed under this Division in respect of an amount paid as contribution under the Social Services Contribution Act 1945 , or under that Act as amended.
(Repealed by No 30 of 1956)
CCH Note:
Below is material repealed as inoperative in s 82 by No 101 of 2006.
Subsection (1) does not apply to the 1997-98 year of income or a later year of income.
Note 1:
Section 8-10 of the Income Tax Assessment Act 1997 prevents you from getting double deductions for any of the years of income after 1996-97.
Note 2:
Section 8-10 of the Income Tax (Transitional Provisions) Act 1997 prevents you from getting double deductions for a year of income before 1997-98 and a year of income after 1996-97.
Where in respect of any amount, a deduction would but for this section be allowable under more than one provision of this Act, and whether it would be so allowable from the assessable income of the same or different years, the deduction shall be allowable only under that provision which in the opinion of the Commissioner is most appropriate.
Subdivision B - Development allowanceThe object of this Subdivision and the Development Allowance Authority Act 1992 is to provide tax incentives for investment in large Australian projects which cost $50 million or more and meet certain other criteria.
82AAAA(2) [Development allowance]The tax incentive takes the form of an allowable deduction, which may be referred to as development allowance.
82AAAA(3) [Deduction provision]The main deduction provision is section 82AB .
Subject to the following provisions of this Subdivision, this Subdivision applies in relation to a unit of eligible property acquired or constructed by the taxpayer that is -
(a) in the case of any taxpayer, for use by the taxpayer wholly and exclusively -
(i) in Australia; and
(ii) for the purpose of producing assessable income otherwise than by -
(A) the leasing of the eligible property;
(B) the letting of the eligible property on hire under a hire-purchase agreement; or
(C) the granting to other persons of rights to use the eligible property; or
(b) in the case of a taxpayer being a leasing company, for use wholly and exclusively -
(i) in Australia; and
by another person to whom the taxpayer has, on or after 27 February 1992, leased the eligible property under a long-term lease agreement that was entered into by the taxpayer in the course of carrying on business in Australia and was so entered into by the taxpayer and the other person at arm's length.
(ii) for the purpose of producing assessable income,
Sub-subparagraphs (1)(a)(ii)(A) and (C) do not apply if the taxpayer leases the property, or grants rights to use the property, in the taxpayer's capacity as an eligible entertainment/tourism operator.
(a) sub-subparagraph (1)(a)(ii)(A) does not apply to the leasing of eligible property to a related company for use wholly and exclusively in Australia; and
(b) sub-subparagraph (1)(a)(ii)(C) does not apply to the granting of rights to a related company to use eligible property wholly and exclusively in Australia;
if the use is to take place while the related company remains a related company and is to be wholly and exclusively for the purpose of producing assessable income other than by leasing the property or otherwise granting a right to another person to use the property.
(Omitted by No 98 of 1992)
Subject to this Subdivision, if:
(a) after 26 February 1992, a taxpayer incurs expenditure of a capital nature in respect of the acquisition or construction by the taxpayer of a new unit of eligible property to which this Subdivision applies; and
(b) the expenditure has pre-qualified under the Development Allowance Authority Act 1992 ; and
(c) the expenditure was incurred:
(i) in respect of a unit of property acquired by the taxpayer under a contract entered into after 26 February 1992; or
(ii) in respect of a unit of property that was constructed by the taxpayer where the construction commenced after 26 February 1992; and
(d) the unit of property was first used or installed ready for use before 1 July 2002;
a deduction equal to 10% of the expenditure is allowable to the taxpayer for the first year of income during which that unit was either used for the purpose of producing assessable income or installed ready for use for that purpose.
(Omitted by No 98 of 1992)
(Omitted by No 98 of 1992)
(Omitted by No 98 of 1992)
(Omitted by No 98 of 1992)
(Omitted by No 98 of 1992)
(Omitted by No 98 of 1992)
(Omitted by No 98 of 1992)
A reference in subsection (1) to use, or to the installation ready for use, of a unit of property shall, in the case of a unit of property to which paragraph 82AA(1)(b) applies, be construed as a reference to use, or to installation ready for use, of the unit of property by the lessee.
(Omitted by No 98 of 1992)
(Omitted by No 98 of 1992)
(a) a leasing company leases to another person (in this subsection referred to as the lessee ) property acquired by the leasing company from that other person;
(b) the leasing company would not, but for this subsection, be entitled to a deduction under this Subdivision in respect of the property by reason only that, before the property was acquired by the leasing company, it was used, or held for use, by the lessee;
(c) the period during which the property was used, or held for use, by the lessee before the property was acquired by the leasing company did not exceed 6 months; and
(d) the Commissioner is satisfied that the acquisition or construction of the property by the lessee, the acquisition of the property by the leasing company from the lessee and the leasing of the property by the leasing company to the lessee occurred in pursuance of a contract or arrangement entered into on or after 27 February 1992 and that the leasing company and the lessee entered into the contract or arrangement at arm's length;
then, for the purposes of this Subdivision, the expenditure by the leasing company in respect of its acquisition of the property shall be deemed to have been incurred in respect of the acquisition of a new unit of property and, if the lease of the property by the leasing company to the lessee was entered into after the property was first used, or installed ready for use, by the lessee, the property shall be deemed to have been first used, or installed ready for use, by the lessee on the date on which the lease agreement was entered into.
A deduction is not allowable under this Subdivision in respect of expenditure incurred by a taxpayer in respect of the acquisition or construction of a unit of property that is leased by the taxpayer to another person (in this subsection referred to as the lessee ) if, before 27 February 1992, the taxpayer entered into a contract or arrangement to lease the property to the lessee or to a third person.
(Omitted by No 98 of 1992)
(Omitted by No 98 of 1992)
This Subdivision has effect subject to Division 245 of Schedule 2C .
The amount of the deduction, or the total of the amounts of the deductions, allowable under this Subdivision to a taxpayer, being a leasing company, in respect of a year of income, in relation to a unit of eligible property that is, or units of eligible property that are, leased to another person or other persons, shall not exceed the amount (if any) that remains after deducting from the assessable income of the taxpayer of the year of income all allowable deductions other than:
(a) deductions allowable under this Subdivision or Subdivision BA in relation to a unit or units of property leased by the taxpayer to another person or other persons; or
(aa) deductions allowable under Part XII in relation to an item or items of drought mitigation property leased by the taxpayer to another person or persons; or
(b) deductions allowable under section 79E , 79F , 80 , 80AAA or 80AA .
This section does not apply to the 1997-98 year of income or a later year of income.
Where a leasing company that would, but for this section, be entitled to a deduction under this Subdivision from the assessable income of the company of a year of income (in this subsection referred to as the relevant deduction ) in respect of property leased to another person (in this subsection referred to as the lessee ) has, before the prescribed date, lodged with the lessee:
(a) a declaration in writing, signed by the public officer of the company, stating that the company transfers to the lessee the benefit of the whole, or of a specified fraction, of the relevant deduction, or the benefit of so much of the relevant deduction as does not exceed an amount specified in the declaration; and
(b) a statement, signed by the public officer of the company, containing the following particulars:
(i) a description of the property;
(ii) the date on which the property was acquired or the construction of the property was commenced;
(iii) the amount of expenditure incurred by the company in respect of the acquisition or construction of the property;
(iv) the date on which the company entered into the relevant lease agreement;
(v) the name and address of the lessee; and
(vi) the period for which the lessee agreed to take the property on lease;
there shall be allowed as a deduction from the assessable income of the lessee of the year of income during which the property was either first used, or installed ready for use, by the lessee:
(c) if the declaration by the company stated that the company transferred to the lessee the benefit of the whole of the relevant deduction - an amount equal to the relevant deduction;
(d) if the declaration by the company stated that the company transferred to the lessee a specified fraction of the relevant deduction - an amount equal to that fraction of the relevant deduction; or
(e) if the declaration by the company stated that the company transferred to the lessee the benefit of so much of the relevant deduction as does not exceed an amount specified in the declaration - an amount equal to so much of the relevant deduction as does not exceed the amount so specified.
(Omitted by No 98 of 1992)
For the purposes of subsection (1), the prescribed date, in relation to property leased by a leasing company to another person, is -
(a) if the agreement for the lease was entered into before 1 January 1993 - 8 January 1993; or
(b) in any other case - the 8th day after the end of the month in which the agreement for the lease is entered into;
or, if the Commissioner has agreed to an extension of the period for lodgment of a declaration by the leasing company in relation to that property, the last day of the extended period.
(a) a deduction would, but for this section, be allowable to a leasing company under this Subdivision from its assessable income of a year of income in respect of property leased to another person (in this subsection referred to as the lessee ); and
(b) by virtue of subsection (1), a deduction has been allowed or is allowable in respect of the property from the assessable income of the lessee,
the amount of the deduction that would, but for this section, be allowable to the leasing company under this Subdivision in respect of that property shall be reduced by the amount of the deduction so allowed or allowable to the lessee.
82AD(4) [Section 26-55 of 1997 Act disregarded]In determining for the purposes of this section whether a deduction would, but for this section, be allowable to a leasing company under this Subdivision from its assessable income of a year of income in respect of a unit of property and the amount of any such deduction, section 26-55 of the Income Tax Assessment Act 1997 shall be disregarded.
This Subdivision does not apply in relation to structural improvements other than -
(aa) structural improvements that, apart from section 45-40 of the Income Tax Assessment Act 1997 , are plant within the meaning of that Act; or
(a) plumbing fixtures and fittings to which subsection (2) of the definition of plant in section 45-40 of the Income Tax Assessment Act 1997 applies; or
(b) structural improvements of the following kinds that are on land used for the purpose of carrying on a business of primary production:
(i) fences to exclude live stock from areas affected by soil erosion, where the purpose of excluding the live stock is to prevent or limit any extension or aggravation of soil erosion in those areas and to assist in the reclamation of those areas;
(ii) fences enclosing or partly enclosing areas affected by naturally occurring deposits of mineral salt;
(iii) fences to subdivide the land for the purpose of carrying on primary production on the land, other than boundary fences, fences enclosing yards or fences along public roads, public stock routes or other public rights of way;
(iv) structural improvements for the purpose of conserving water for use in carrying on primary production on the land (including dams, earth tanks, underground tanks, concrete tanks and stands for tanks), irrigation channels or similar improvements for the purpose of conveying water for such use and bores or wells for water for such use;
(v) pipes placed underground for the purpose of conveying water for use in carrying on primary production on the land; and
(vi) buildings or other structural improvements for the purpose of the storage of grain, hay or fodder in the course of carrying on primary production on the land.
This Subdivision does not apply in relation to -
(a) appliances (including wireless receivers and television receivers and antennae) of a kind ordinarily used for household purposes, other than such appliances that are -
(ia) for use in a business carried on by the taxpayer which consists principally of the provision by the taxpayer of either or both of the following:
(A) entertainment;
(B) accommodation for tourists or travellers; or
(i) for use in a business carried on by the taxpayer a substantial part of which consists of the provision by the taxpayer of accommodation for tourists or travellers; or
(ii) for use in premises used or held for use by the taxpayer principally for the purpose of deriving income in the nature of rent by the provision of accommodation for tourists or travellers; or
(b) furniture and furnishings, light fittings, partitions, fitting rooms, signs (including neon signs), shelving, cupboards, counters, display models, display cases, display stands and articles of a description, or having a use, similar to that of any of those articles, other than articles that are -
(ia) for use in a business carried on by the taxpayer which consists principally of the provision by the taxpayer of either or both of the following:
(A) entertainment;
(B) accommodation for tourists or travellers; or
(i) for use in a business carried on by the taxpayer a substantial part of which consists of the provision by the taxpayer of accommodation for tourists or travellers;
(ii) for use in premises used or held for use by the taxpayer principally for the purpose of deriving income in the nature of rent by the provision of accommodation for tourists or travellers; or
(iii) for use by the taxpayer principally for the purpose of providing clothing cupboards, first-aid or rest-room facilities, or meals or facilities for meals, for persons employed by the taxpayer in a business carried on by him or for the care of children of those persons.
This Subdivision does not apply in relation to -
(a) motor vehicles (including vehicles known as four wheel drive vehicles) that are:
(i) motor cars, station wagons, panel vans, utility trucks or similar vehicles, other than panel vans or utility trucks designed to carry loads of 1 tonne or more;
(ii) motor cycles or similar vehicles; or
(iii) other road vehicles designed to carry loads of less than 1 tonne or fewer than 9 passengers;
(b) articles being, or being reproductions of, paintings, sculptures, drawings, engravings or photographs, or articles of a description, or having a use, similar to that of any of those articles;
(c) books;
(d) films, tapes, discs or other similar devices in which images or sounds are, or information is, stored or that are designed to be used for the storage of images, sounds or information;
(e) musical instruments and equipment for use in conjunction with musical instruments;
(f) (Omitted by No 159 of 1980)
(g) (Omitted by No 107 of 1989)
(h) (Omitted by No 98 of 1992)
(j) wearing apparel (other than wearing apparel designed principally for protective purposes) and accessories to such apparel; or
(k) aircraft; or
(l) ships other than ships covered by any of the following subparagraphs:
(i) ships that are:
(A) capable of navigating the high seas; and
(B) registered under the Shipping Registration Act 1981 ; and
(C) wholly and exclusively for use in trade or commerce within Australia;
(ii) ships that are:
(A) incapable of navigating the high seas; and
(B) wholly and exclusively for use in trade or commerce within Australia;
(iii) ships that are off-shore industry vessels, or off-shore industry mobile units, within the meaning of the Navigation Act 1912.
Except in a case to which subsection 82AB(7) applies, this Subdivision does not apply in relation to property leased by a leasing company as mentioned in paragraph 82AA(1)(b) if, before the property was so leased, it was used by the leasing company or by any other person.
(Omitted by No 98 of 1992)
This Subdivision does not apply in relation to property acquired by a taxpayer from another person, being property that was not trading stock of that other person, if that other person acquired the property under a contract entered into before 27 February 1992 or commenced construction of the property before that date.
This Subdivision does not apply, and shall be deemed never to have applied, in relation to property acquired or constructed by a taxpayer, not being property that, in the case of a taxpayer being a leasing company, the taxpayer has leased to another person, if, before the expiration of 12 months after the property was first used, or installed ready for use, by the taxpayer:
(a) the taxpayer disposed of the property or the property was lost or destroyed;
(b) the taxpayer:
(i) leased the property; or
(ii) let the property on hire under a hire-purchase agreement; or
(iii) otherwise granted a right to another person to use the property; or
(c) the taxpayer used the property outside Australia or for a purpose other than the purpose of producing assessable income.
Subparagraphs (1)(b)(i) and (iii) do not apply if the taxpayer leased the property, or granted rights to use the property, in the taxpayer's capacity as an eligible entertainment/tourism operator.
(a) subparagraph (1)(b)(i) does not apply to the leasing of property to a related company; and
(b) subparagraph (1)(b)(iii) does not apply to the granting of rights to a related company to use property;
if, at all times during the period ending at the earlier of:
(c) the end of the term of the lease or period of the grant; and
(d) the end of the period of 12 months mentioned in subsection (1);
the related company remains a related company and uses the property wholly and exclusively both in Australia and for the purpose of producing assessable income other than by leasing the property or otherwise granting a right to another person to use the property.
(a) a deduction has been allowed, or would but for this subsection be allowable, under this Subdivision from the assessable income of a taxpayer of a year of income in relation to property acquired or constructed by the taxpayer, not being property that, in the case of a taxpayer being a leasing company, the taxpayer has leased to another person; and
(b) before the expiration of 12 months after the property was first used, or installed ready for use, by the taxpayer, the taxpayer disposed of a part of his interest in the property,
so much of the deduction as the Commissioner considers appropriate shall be deemed not to have been, or not to be, allowable, as the case may be.
(Omitted by No 98 of 1992)
(Omitted by No 98 of 1992)
This Subdivision does not apply, and shall be deemed never to have applied, in relation to property leased by a leasing company to another person (in this subsection referred to as the lessee ) if, before the expiration of 12 months after the property was first used, or installed ready for use, by the lessee -
(a) the property was disposed of by the leasing company to a person other than the lessee or was lost or destroyed;
(b) the lessee used the property outside Australia or for a purpose other than the purpose of producing assessable income;
(c) the lease was terminated otherwise than by the acquisition of the property by the lessee;
(d) while the lease was in force the lessee entered into a contract or arrangement with another person for the use of the property by that other person;
(e) the lessee acquired the property and disposed of it; or
(f) the lessee acquired the property and entered into a contract or arrangement with another person for the use of the property by that other person.
Paragraphs (3)(d) and (f) do not apply if the lessee entered into the contract or arrangement concerned in the lessee's capacity as an eligible entertainment/tourism operator.
Paragraph (3)(d) or (f) does not apply if:
(a) the lessee is a company; and
(b) the other person is a related company of the lessee; and
(c) at all times during the period ending at the earlier of:
(i) the end of the term of the contract or arrangement; and
the other person was a related company of the lessee and used the property wholly and exclusively both in Australia and for the purpose of producing assessable income other than by leasing the property or otherwise granting a right to another person to use the property.
(ii) the end of the.12 months mentioned in subsection (3);
This Subdivision does not apply, and shall be deemed never to have applied, in relation to property leased by a leasing company to another person (in this subsection referred to as the lessee ) if, before the property was leased to the lessee by the leasing company, the lessee entered into a contract or arrangement with another person for the use of the property by that other person.
Subsection (4) does not apply if the lessee entered into the contract or arrangement concerned in the lessee's capacity as an eligible entertainment/tourism operator.
Subsection (4) does not apply if:
(a) the lessee is a company; and
(b) the other person is a related company of the lessee; and
(c) the use of the property under the contract or arrangement was to take place while the other person remained a related company of the lessee and was to be wholly and exclusively both in Australia and for the purpose of producing assessable income other than by leasing the property or otherwise granting a right to another person to use the property; and
(d) at all times during the period ending at the earlier of:
(i) the end of the term of the contract or arrangement; and
the requirements of paragraph (c) were satisfied in relation to the use of the property.
(ii) the end of the 12 months after the property was first used, or installed ready for use, by the lessee;
(a) a deduction has been allowed, or would but for this subsection be allowable, under this Subdivision from the assessable income of a taxpayer of a year of income in relation to property acquired or constructed by the taxpayer, not being property that, in the case of a taxpayer being a leasing company, the taxpayer has leased to another person;
(b) after the expiration of 12 months after the property was first used, or installed ready for use, by the taxpayer -
(i) the taxpayer disposed of the property;
(ii) the taxpayer:
(A) leased the property; or
(B) let the property on hire under a hire-purchase agreement; or
(C) otherwise granted a right to another person to use the property; or
(iii) the taxpayer used the property outside Australia or for a purpose other than the purpose of producing assessable income; and
(c) the Commissioner is satisfied that, at the time the property was acquired or constructed by the taxpayer, the taxpayer intended to dispose of the property, to lease the property, let the property on hire under a hire-purchase agreement or otherwise grant a right to another person to use the property, or to use the property as mentioned in subparagraph (b)(iii), after becoming entitled to a deduction under this Subdivision in respect of the property,
the deduction shall, if the Commissioner so determines, be deemed not to have been, or not to be, allowable, as the case may be.
Sub-subparagraphs (1)(b)(ii)(A) and (C) do not apply if the taxpayer leased the property, or granted rights to use the property, in the taxpayer's capacity as an eligible entertainment/tourism operator.
(a) sub-subparagraph (1)(b)(ii)(A) does not apply to the leasing of property to a related company; and
(b) sub-subparagraph (1)(b)(ii)(C) does not apply to the granting of rights to a related company to use property;
if the use of the property under the lease or grant was to take place while the related company remained a related company and was to be wholly and exclusively both in Australia and for the purpose of producing assessable income other than by leasing the property or otherwise granting a right to another person to use the property.
(a) a deduction has been allowed, or would but for this subsection be allowable, under this Subdivision from the assessable income of a taxpayer of a year of income in relation to property acquired or constructed by the taxpayer, not being property that, in the case of a taxpayer being a leasing company, the taxpayer has leased to another person;
(b) after the expiration of 12 months after the property was first used, or installed ready for use, by the taxpayer, the taxpayer disposed of a part of his interest in the property; and
(c) the Commissioner is satisfied that, at the time the property was acquired or constructed by the taxpayer, the taxpayer intended to dispose of the whole or a part of his interest in the property after becoming entitled to a deduction under this Subdivision in respect of the property;
then, if the Commissioner so determines, so much of the deduction as the Commissioner considers appropriate shall be deemed not to have been, or not to be, allowable, as the case may be.
(Omitted by No 98 of 1992)
(Omitted by No 98 of 1992)
(a) a deduction has been allowed, or would but for this subsection be allowable, under this Subdivision from the assessable income of a taxpayer being a leasing company of a year of income in relation to property leased by the taxpayer to another person (in this subsection referred to as the lessee );
(b) after the expiration of 12 months after the property was first used, or installed ready for use, by the lessee and before the expiration of the term of the lease:
(i) the taxpayer disposed of the property to a person other than the lessee;
(ii) the lessee used the property outside Australia or for a purpose other than the purpose of producing assessable income;
(iii) the lease was terminated otherwise than by the acquisition of the property by the lessee;
(iv) while the lease was in force the lessee entered into a contract or arrangement with another person for the use of the property by that other person;
(v) the lessee acquired the property and disposed of it; or
(vi) the lessee acquired the property and entered into a contract or arrangement with another person for the use of the property by that other person; and
(c) the Commissioner is satisfied that, at the time when the lessee took the property on lease:
(i) in a case to which subparagraph (b)(i) applies - the leasing company intended to dispose of the property to a person other than the lessee before the expiration of the term of the lease; or
(ii) in a case to which subparagraph (b)(ii), (iii), (iv), (v) or (vi) applies - the lessee intended to use the property as mentioned in subparagraph (b)(ii), to cause the lease to be terminated as mentioned in subparagraph (b)(iii), to enter into a contract or arrangement as mentioned in subparagraph (b)(iv), to acquire and dispose of the property or to acquire the property and enter into a contract or arrangement as mentioned in subparagraph (b)(vi);
the deduction shall, if the Commissioner so determines, be deemed not to have been, or not to be, allowable, as the case may be.
Subparagraphs (3)(b)(iv) and (vi) do not apply if the lessee entered into the contract or arrangement concerned in the lessee's capacity as an eligible entertainment/tourism operator.
Subparagraph (3)(b)(iv) or (vi) does not apply if:
(a) the lessee is a company; and
(b) the other person is a related company of the lessee; and
(c) the use of the property under the contract or arrangement was to take place while the other person remained a related company of the lessee and was to be wholly and exclusively both in Australia and for the purpose of producing assessable income other than by 1easing the property or otherwise granting a right to another person to use the property.
(a) a deduction has been allowed, or would but for this subsection be allowable, under this Subdivision from the assessable income of a taxpayer of a year of income in relation to property taken on lease by the taxpayer;
(b) after the expiration of 12 months after the property was first used, or installed ready for use, by the taxpayer -
(i) the taxpayer used the property outside Australia or for a purpose other than the purpose of producing assessable income;
(ii) the lease was terminated otherwise than by the expiration of the term of the lease or the acquisition of the property by the taxpayer;
(iii) while the lease was in force the taxpayer entered into a contract or arrangement with another person for the use of the property by that other person;
(iv) the taxpayer acquired the property and disposed of it; or
(v) the taxpayer acquired the property and entered into a contract or arrangement with another person for the use of the property by that other person; and
(c) the Commissioner is satisfied that, at the time when the taxpayer took the property on lease, the taxpayer intended to use the property as mentioned in subparagraph (b)(i), to cause the lease to be terminated as mentioned in subparagraph (b)(ii), to enter into a contract or arrangement as mentioned in subparagraph (b)(iii), to acquire and dispose of the property or to acquire the property and enter into a contract or arrangement as mentioned in subparagraph (b)(v),
the deduction shall, if the Commissioner so determines, be deemed not to have been, or not to be, allowable, as the case may be.
Subparagraphs (4)(b)(iii) and (v) do not apply if the taxpayer entered into the contract or arrangement concerned in the taxpayer's capacity as an eligible entertainment/tourism operator.
Subparagraph (4)(b)(iii) or (v) does not apply if:
(a) the taxpayer is a company; and
(b) the other person is a related company of the taxpayer; and
(c) the use of the property under the contract or arrangement was to take place while the other person remained a related company of the taxpayer and was to be wholly and exclusively both in Australia and for the purpose of producing assessable income other than by leasing the property or otherwise granting a right to another person to use the property.
In this section:
control
means effectively control.
goods
includes whatever is capable of being owned or used.
person
includes a person in the capacity of a trustee.
(Repealed by No 72 of 2001)
For the purposes of this Subdivision, a taxpayer shall be deemed to have granted a right to another person to use property (not being property that, in the case of a taxpayer being a leasing company, the taxpayer has leased to a person) if:
(a) the property was acquired by the taxpayer under a contract entered into after 26 February 1992 or was constructed by the taxpayer, construction having commenced after that date;
(b) at a time when the property is owned by the taxpayer, the property is, or is to be, used (whether or not by the taxpayer) wholly or partly in or in connection with the production, supply, carriage, transmission or delivery of goods or the provision of services;
(c) a person other than the taxpayer (which person is in this subsection referred to as the end-user ) controls, will control, or is or will be able to control, directly or indirectly, that use of the property; and
(d) either:
(i) in a case where some or all of the goods are, or are to be, produced for the end-user or supplied, carried, transmitted or delivered to or for the end-user, or some or all of the services are, or are to be, provided to or for the end-user - any of those goods or services are, or are to be, used by the end-user otherwise than wholly and exclusively for the purpose of producing assessable income; or
(ii) in relation to the production, supply, carriage, transmission or delivery of goods, or the provision of services, as mentioned in paragraph (b), the end-user derives, or is to derive, no income or income that is wholly or partly exempt from income tax.
For the purposes of this Subdivision, a lessee of property shall be deemed to have entered into a contract or arrangement with another person for the use of the property by that other person if:
(a) the property was acquired by the lessor under a contract entered into after 26 February 1992 or was constructed by the lessor, construction having commenced after that date;
(b) while the lease is in force the property is, or is to be, used (whether or not by the lessee) wholly or partly in or in connection with the production, supply, carriage, transmission or delivery of goods or the provision of services;
(c) a person other than the lessee (which person is in this subsection referred to as the end-user ) controls, will control, or is or will be able to control, directly or indirectly, that use of the property; and
(d) either:
(i) in a case where some or all of the goods are, or are to be, produced for the end-user or supplied, carried, transmitted or delivered to or for the end-user, or some or all of the services are, or are to be, provided to or for the end-user - any of those goods or services are, or are to be, used by the end-user otherwise than wholly and exclusively for the purpose of producing assessable income; or
(ii) in relation to the production, supply, carriage, transmission or delivery of goods, or the provision of services, as mentioned in paragraph (b), the end-user derives, or is to derive, no income or income that is wholly or partly exempt from income tax.
(a) the individual interest of a taxpayer in the net income of a partnership has been or is to be included in the assessable income of the taxpayer of a year of income (in this subsection referred to as the relevant year of income ), or the individual interest of a taxpayer in a partnership loss has been allowed or is allowable as a deduction from the assessable income of the taxpayer of a year of income (in this subsection also referred to as the relevant year of income );
(b) a deduction (in this subsection referred to as the relevant deduction ) under this Subdivision in respect of a unit of eligible property was taken into account in calculating that net income or partnership loss;
(c) the relevant deduction would not have been taken into account for the purpose of that calculation if this section applied in relation to the property;
(d) this section does not apply in relation to the property by reason only that the property was acquired by the partnership under a contract entered into on or before 26 February 1992 or was constructed by the partnership, construction having commenced on or before that date; and
(e) the taxpayer became a partner in the partnership under a contract entered into by the taxpayer after that date;
there shall be included in the assessable income of the taxpayer of the relevant year of income an amount that bears to the amount of the relevant deduction the same proportion as the individual interest of the taxpayer in that net income bears to that net income or, as the case requires, as the individual interest of the taxpayer in that partnership loss bears to that partnership loss.
(a) the individual interest of a taxpayer in the net income of a partnership has been or is to be included in the assessable income of the taxpayer of a year of income (in this subsection referred to as the relevant year of income ), or the individual interest of a taxpayer in a partnership loss has been allowed or is allowable as a deduction from the assessable income of the taxpayer of a year of income (in this subsection also referred to as the relevant year of income );
(b) a deduction (in this subsection referred to as the relevant deduction ) under this Subdivision in respect of a unit of eligible property was taken into account in calculating that net income or partnership loss;
(c) the relevant deduction would not have been taken into account for the purpose of that calculation if this section applied in relation to the property;
(d) this section does not apply in relation to the property by reason only that the property was acquired by the partnership under a contract entered into on or before 26 February 1992 or was constructed by the partnership, construction having commenced on or before that date;
(e) the taxpayer became a partner in the partnership under a contract entered into by the taxpayer before that date;
(f) after that date, the taxpayer made or agreed to make a contribution or contributions (which contribution is or contributions are in this subsection referred to as the additional contribution ) to the capital of the partnership in addition to any contribution or contributions to the capital of the partnership that, under a contract or contracts entered into on or before that date, he had made or agreed to make; and
(g) by reason of making or agreeing to make the additional contribution, the individual interest of the taxpayer in that net income or partnership loss, being that individual interest expressed as a fraction of the aggregate of the individual interests of the partners in that net income or partnership loss, is greater than it would otherwise have been;
there shall be included in the assessable income of the taxpayer of the relevant year of income an amount ascertained in accordance with the formula
| A (B - C), |
where -
A is the amount of the relevant deduction;
B is the individual interest of the taxpayer in that net income or partnership loss being that individual interest expressed as a fraction of the aggregate of the individual interests of the partners in that net income or partnership loss; and
C is the fraction that would be B if another partner, and not the taxpayer, had made or agreed to make the additional contribution.
Subsections (3) and (4) do not limit the circumstances in which a person shall, for the purposes of other provisions of this Subdivision, be taken to have granted a right to another person to use property or to have entered into a contract or arrangement with another person for the use of property by that other person.
For the purposes of sections 82AG and 82AH , if a taxpayer who took property on hire under a hire-purchase agreement does or omits to do any act or thing that results in the person (in this section referred to as the owner ) from whom the taxpayer took the property on hire under that agreement obtaining possession of the property:
(a) the taxpayer is taken to have disposed of the property; and
(b) the disposal is taken to have occurred at the time when possession of the property was so obtained by the owner.
For the purpose of this Subdivision, disregard an acquisition or disposal of property by way of the transfer of the property for the provision or redemption of a security. Consequently this Subdivision applies as if the person who was the owner of the property before the transfer continues to be the owner after the transfer.
(a) the individual interest of a taxpayer in the net income of a partnership has been or is to be included in the assessable income of the taxpayer of a year of income (in this subsection and in subsection (3) in its application in relation to this subsection referred to as the relevant year of income ), or the individual interest of a taxpayer in a partnership loss has been allowed or is allowable as a deduction from the assessable income of the taxpayer of a year of income (in this subsection and in subsection (3) in its application in relation to this subsection also referred to as the relevant year of income );
(b) a deduction (in this subsection and in subsection (3) in its application in relation to this subsection referred to as the relevant deduction ) under this Subdivision in respect of a unit of eligible property was taken into account in calculating the net income of the partnership, or the partnership loss, as the case may be; and
(c) before the end of 12 months after the property was first used or installed ready for use by the partnership, the taxpayer disposed of the whole or a part of the taxpayer's interest in the partnership or in the property;
there shall be included in the assessable income of the taxpayer of the relevant year of income:
(d) where the taxpayer disposed of the whole of his interest in the partnership or in the property - the prescribed amount; or
(e) in any other case - so much of the prescribed amount as the Commissioner considers appropriate.
(a) the individual interest of a taxpayer in the net income of a partnership has been or is to be included in the assessable income of the taxpayer of a year of income (in this subsection and in subsection (3) in its application in relation to this subsection referred to as the relevant year of income ), or the individual interest of a taxpayer in a partnership loss has been allowed or is allowable as a deduction from the assessable income of the taxpayer of a year of income (in this subsection and in subsection (3) in its application in relation to this subsection also referred to as the relevant year of income );
(b) a deduction (in this subsection and in subsection (3) in its application in relation to this subsection referred to as the relevant deduction ) under this Subdivision in respect of a unit of eligible property was taken into account in calculating the net income of the partnership, or the partnership loss, as the case may be;
(c) after the end of 12 months after the property was first used or installed ready for use by the partnership, the taxpayer disposed of the whole or a part of the taxpayer's interest in the partnership or in the property; and
(d) the Commissioner is satisfied that, at the time the property was acquired or constructed by the partnership, the taxpayer intended to dispose of the whole or a part of the taxpayer's interest in the partnership or in the property after the partnership became entitled to a deduction under this Subdivision;
there shall, if the Commissioner so determines, be included in the assessable income of the taxpayer of the relevant year of income:
(e) where the taxpayer disposed of the whole of his interest in the partnership or in the property - the prescribed amount; or
(f) in any other case - so much of the prescribed amount as the Commissioner considers appropriate.
For the purposes of subsections (1) and (2), the prescribed amount is:
(a) where the relevant deduction related to expenditure by the partnership in respect of the acquisition or construction of the relevant property and the partners have agreed as to the amount of that expenditure to be borne by the taxpayer - an amount that bears to the amount of the relevant deduction the same proportion as so much of the amount of that expenditure as the partners agreed was to be borne by the taxpayer bears to the amount of that expenditure; or
(b) in any other case - an amount that bears to the amount of the relevant deduction the same proportion as the individual interest of the taxpayer in the net income of the partnership of the year of income of the partnership that corresponds to the relevant year of income bears to that net income or, as the case requires, as the individual interest of the taxpayer in the partnership loss for that corresponding year of income of the partnership bears to that partnership loss. 82AJ(4) [Partner a leasing company]
In calculating the net income of a partnership, or a partnership loss, in accordance with section 90 , regard shall not be had to the provisions of this Subdivision in so far as they apply to expenditure incurred in respect of the acquisition or construction by the partnership of a unit of property that is leased by the partnership to another person, but, where a partnership in which any one or more of the partners is a leasing company has incurred such expenditure, then, for the purposes of the application of this Subdivision in respect of such a partner, that partner shall be deemed to have incurred:
(a) so much of the amount of that expenditure as the partners have agreed is to be borne by that partner; or
(b) if the partners have not agreed as to the part of that amount that is to be borne by that partner - so much of that amount as bears to that amount the same proportion as the individual interest of the partner in the net income of the partnership of the year of income in which the relevant expenditure was incurred bears to that net income or, as the case requires, as the individual interest of the partner in the partnership loss for that year of income bears to that partnership loss. 82AJ(5) [Disposal by leasing company within 12 months]
(a) a deduction has been allowed, or would but for this subsection be allowable, under this Subdivision from the assessable income of a taxpayer being a leasing company in relation to property acquired or constructed by a partnership in which the taxpayer is a partner, being property that is leased by the partnership to another person (in this subsection referred to as the lessee ); and
(b) before the expiration of 12 months after the property was first used or installed ready for use by the lessee, the taxpayer disposed of the whole or a part of his interest in the partnership or in the property otherwise than to the lessee,
then -
(c) where the taxpayer disposed of the whole of his interest in the partnership or in the property - the deduction shall be deemed not to have been, or not to be, allowable, as the case may be; or
(d) in any other case - so much of the deduction as the Commissioner considers appropriate shall be deemed not to have been, or not to be, allowable, as the case may be.
(Omitted by No 98 of 1992)
(a) a deduction has been allowed, or would but for this subsection be allowable, under this Subdivision from the assessable income of a taxpayer being a leasing company in relation to property acquired or constructed by a partnership in which the taxpayer is a partner, being property that is leased by the partnership to another person (in this subsection referred to as the lessee );
(b) after the expiration of 12 months after the property was first used or installed ready for use by the lessee, the taxpayer disposed of the whole or a part of his interest in the partnership or in the property otherwise than to the lessee; and
(c) the Commissioner is satisfied that, at the time when the lessee took the property on lease, the taxpayer intended to dispose of the whole or a part of his interest in the partnership or in the property after becoming entitled to a deduction under this Subdivision in relation to the property;
then, if the Commissioner so determines:
(d) where the taxpayer disposed of the whole of his interest in the partnership or in the property - the deduction shall, if the Commissioner so determines, be deemed not to have been, or not to be, allowable, as the case may be; or
(e) in any other case - so much of the deduction as the Commissioner considers appropriate shall be deemed not to have been, or not to be, allowable, as the case may be.
(Omitted by No 98 of 1992)
This Subdivision does not apply, and shall be deemed never to have applied, in relation to property leased by a partnership to another person (in this subsection referred to as the lessee ) if, before the expiration of 12 months after the property was first used, or installed ready for use, by the lessee:
(a) the property was disposed of by the partnership to a person other than the lessee or was lost or destroyed;
(b) the lessee used the property outside Australia or for a purpose other than the purpose of producing assessable income;
(c) the lease was terminated otherwise than by the acquisition of the property by the lessee;
(d) while the lease was in force the lessee entered into a contract or arrangement with another person for the use of the property by that other person;
(e) the lessee acquired the property and disposed of it; or
(f) the lessee acquired the property and entered into a contract or arrangement with another person for the use of the property by that other person.
Paragraphs (7)(d) and (f) do not apply if the lessee entered into the contract or arrangement concerned in the lessee's capacity as an eligible entertainment/tourism operator.
Paragraph (7)(d) or (f) does not apply if:
(a) the lessee is a company; and
(b) the other person is a related company of the lessee; and
(c) at all times during the period ending at the earlier of:
(i) the end of the term of the contract or arrangement; and
the other person was a related company of the lessee and used the property wholly and exclusively both in Australia and for the purpose of producing assessable income other than by leasing the property or otherwise granting a right to another person to use the property.
(ii) the end of the 12 months mentioned in subsection (7);
This SubDivision does not apply, and shall be deemed never to have applied, in relation to property leased by a partnership to another person (in this subsection referred to as the lessee ) if, before the property was leased by the partnership to the lessee, the lessee entered into a contract or arrangement with another person for the use of the property by that other person.
Subsection (7A) does not apply if the lessee entered into the contract or arrangement concerned in the lessee's capacity as an eligible entertainment/tourism operator.
Subsection (7A) does not apply if:
(a) the lessee is a company; and
(b) the other person is a related company of the lessee; and
(c) the use of the property under the contract or arrangement was to take place while the other person remained a related company of the lessee and was to be wholly and exclusively both in Australia and for the purpose of producing assessable income other than by leasing the property or otherwise granting a right to another person to use the property; and
(d) at all times during the period ending at the earlier of:
(i) the end of the term of the contract or arrangement; and
the requirements of paragraph (c) were satisfied in relation to the use of the property.
(ii) the end of the 12 months after the property was first used, or installed ready for use, by the lessee;
(a) a deduction has been allowed, or would but for this subsection be allowable, under this Subdivision from the assessable income of a taxpayer being a leasing company in relation to property acquired or constructed by a partnership in which the taxpayer is a partner, being property that is leased by the partnership to another person (in this subsection referred to as the lessee );
(b) after the expiration of 12 months after the property was first used, or installed ready for use, by the lessee and before the expiration of the term of the lease -
(i) the property was disposed of by the partnership to a person other than the lessee;
(ii) the lessee used the property outside Australia or for a purpose other than the purpose of producing assessable income;
(iii) the lease was terminated otherwise than by the acquisition of the property by the lessee;
(iv) while the lease was in force the lessee entered into a contract or arrangement with another person for the use of the property by that other person;
(v) the lessee acquired the property and disposed of it; or
(vi) the lessee acquired the property and entered into a contract or arrangement with another person for the use of the property by that other person; and
(c) the Commissioner is satisfied that, at the time when the lessee took the property on lease -
(i) in a case to which subparagraph (b)(i) applies - the partnership intended to dispose of the property to a person other than the lessee before the expiration of the term of the lease; or
(ii) in a case to which subparagraph (b)(ii), (iii), (iv), (v) or (vi) applies - the lessee intended to use the property as mentioned in subparagraph (b)(ii), to cause the lease to be terminated as mentioned in subparagraph (b)(iii), to enter into a contract or arrangement as mentioned in subparagraph (b)(iv), to acquire and dispose of the property or to acquire the property and enter into a contract or arrangement as mentioned in subparagraph (b)(vi),
the deduction shall, if the Commissioner so determines, be deemed not to have been, or not to be, allowable, as the case may be.
Subparagraphs (8)(b)(iv) and (vi) do not apply if the lessee entered into the contract or arrangement concerned in the lessee's capacity as an eligible entertainment/tourism operator.
Subparagraph (8)(b)(iv) or (vi) does not apply if:
(a) the lessee is a company; and
(b) the other person is a related company of the lessee; and
(c) the use of the property under the contract or arrangement was to take place while the other person remained a related company of the lessee and was to be wholly and exclusively both in Australia and for the purpose of producing assessable income other than by leasing the property or otherwise granting a right to another person to use the property.
Paragraph 82AG(1)(a) does not apply in relation to a disposal of property by a taxpayer being a company, being a disposal occurring before the expiration of a particular period of 12 months, if:
(a) the disposal by the taxpayer was to another company (in this subsection referred to as the transferee ) that was, at the time of the disposal, related to the taxpayer;
(b) the property was not, at any time (in this paragraph referred to as the relevant time ) during that period of 12 months, owned by a person other than:
(i) in a case where the transferee was the holding company of the taxpayer - the transferee or a company related to the transferee at the relevant time;
(ii) in a case where the transferee was a wholly-owned subsidiary of the taxpayer - the taxpayer or a company related to the taxpayer at the relevant time;
(iii) in a case where the transferee was a wholly-owned subsidiary of another company (in this subparagraph referred to as the holding company ) of which the taxpayer was also a wholly-owned subsidiary - the holding company or a company related to the holding company at the relevant time; or
(iv) in a case where the transferee was a wholly-owned subsidiary of other companies (in this subparagraph referred to as the parent companies ) of which the taxpayer was also a wholly-owned subsidiary - a company that, at the relevant time, was a wholly-owned subsidiary of the parent companies;
(c) at any time during that period of 12 months when the property was owned by:
(i) in a case where the transferee was the holding company of the taxpayer - the transferee;
(ii) in a case where the transferee was a wholly-owned subsidiary of the taxpayer - the taxpayer; or
the transferee, the taxpayer, or that other company, as the case may be, was an eligible public company in relation to the year of income in which that time occurred; and
(iii) in a case where the transferee was a wholly-owned subsidiary of another company of which the taxpayer was also a wholly-owned subsidiary - that other company,
(d) at no time during that period of 12 months did a person who owned the property -
(i) lease the property; or
(ia) let the property on hire under a hire-purchase agreement; or
(ib) otherwise grant a right to another person to use the property; or
(ii) use the property outside Australia or for a purpose other than the purpose of producing assessable income.
Subparagraphs (1)(d)(i) and (ib) do not apply if the person leased the property, or granted rights to use the property, in the person's capacity as an eligible entertainment/tourism operator.
For the purposes of subsection (1), if the requirements set out in subsection (1C) are satisfied:
(a) subparagraph (1)(d)(i) does not apply to the leasing of the property to a company (the related company ) that is related to the person who owned the property and is an eligible public company in relation to the year of income in which the leasing occurs; or
(b) subparagraph (1)(d)(ib) does not apply to the granting of rights to use the property to a company (also the related company ) that is related to the person who owned the property and is an eligible public company in relation to the year of income in which the granting of rights occurs.
For the purposes of subsection (1B), the requirements are:
(a) that, if the time (the test time ) when the earlier of:
(i) the end of the term of the lease or period of the grant; and
occurs is in a year of income after the one in which the leasing or the granting of rights occurs, the related company is also an eligible public company in relation to that later year of income; and
(ii) the end of the period of 12 months mentioned in paragraph (1)(d);
(b) that, at all times during the period ending at the test time, the related company remains related to the person who owned the property and uses the property wholly and exclusively both in Australia and for the purpose of producing assessable income other than by leasing the property or otherwise granting a right to another person to use the property.
(a) pursuant to an order of a court made under the law of a State or Territory relating to companies:
(i) the whole of the undertaking, property and liabilities of a company (in this subsection referred to as the relevant company ) is vested in another company (in this subsection referred to as the substituted company );
(ii) the persons who beneficially owned shares in the relevant company become the beneficial owners of all of the shares in the substituted company without reduction in their respective interests; and
(iii) the relevant company is dissolved; and
(b) for the purpose of the application of subsection (1), the relevant company is the transferee referred to in subparagraph (1)(b)(i), the taxpayer referred to in subparagraph (1)(b)(ii), the holding company referred to in subparagraph (1)(b)(iii) or one of the parent companies referred to in subparagraph (1)(b)(iv);
paragraphs (b) and (c) of that subsection apply, in relation to any time after the time when the conditions specified in paragraph (a) of this subsection were satisfied, as if the substituted company were the transferee, the taxpayer, that holding company or that parent company, as the case may be.
For the purposes of this section, a company (in this subsection referred to as the first company ) shall be taken to be related to another company (in this subsection referred to as the second company ) at a particular time if, at that time:
(a) the first company is the holding company of the second company;
(b) the first company is a wholly-owned subsidiary of the second company;
(c) the first company is a wholly-owned subsidiary of another company of which the second company is also a wholly-owned subsidiary; or
(d) the first company is a wholly-owned subsidiary of other companies of which the second company is also a wholly-owned subsidiary. 82AJA(4) [Holding company]
For the purposes of this section, a company (in this subsection referred to as the holding company ) shall be taken to have been the holding company of another company (in this subsection referred to as the relevant subsidiary ) at a particular time (in this subsection referred to as the relevant time ) if:
(a) the holding company is an eligible public company in relation to its year of income in which the relevant time occurred;
(b) the relevant subsidiary is an eligible subsidiary in relation to its year of income in which the relevant time occurred;
(c) at the relevant time, all of the shares in the relevant subsidiary were beneficially owned by:
(i) the holding company;
(ii) another company that is an eligible subsidiary in relation to its year of income in which the relevant time occurred; or
(iii) 2 or more companies of the kind referred to in subparagraph (ii) or the holding company and a company or companies of the kind referred to in that subparagraph; and
(d) where, at the relevant time, any of the shares in the relevant subsidiary were beneficially owned by a company other than the holding company - if the relevant subsidiary had declared a dividend at the relevant time and there had been successive distributions of the relative parts of that dividend to and by each company and any trustee interposed between the relevant subsidiary and the holding company, the holding company would have had a right to receive, indirectly, or directly and indirectly, for its own benefit, the whole of the amount of that dividend. 82AJA(5) [Wholly-owned subsidiary of one company]
For the purposes of this section, a company shall be taken to be a wholly-owned subsidiary of another company at a particular time if, at that time, the other company is the holding company of the first-mentioned company.
82AJA(6) [Wholly-owned subsidiary of two or more companies]For the purposes of this section, a company (in this subsection referred to as the relevant subsidiary ) shall be taken to have been a wholly-owned subsidiary of 2 or more other companies (in this subsection referred to as the parent companies ) at a particular time (in this subsection referred to as the relevant time ) if:
(a) the relevant subsidiary is an eligible subsidiary in relation to its year of income in which the relevant time occurred;
(b) each of the parent companies is an eligible public company in relation to its year of income in which the relevant time occurred;
(c) at the relevant time, all of the shares in the relevant subsidiary were beneficially owned by:
(i) the parent companies;
(ii) another company that is an eligible subsidiary in relation to its year of income in which the relevant time occurred; or
(iii) 2 or more companies of the kind referred to in subparagraph (ii) or any one or more of the parent companies and a company or companies of the kind referred to in that subparagraph; and
(d) where, at the relevant time, any of the shares in the relevant subsidiary were beneficially owned by a company other than one of the parent companies - if the relevant subsidiary had declared a dividend at the relevant time and there had been successive distributions of the relative parts of that dividend to and by each company and any trustee interposed between the relevant subsidiary and the parent companies, the parent companies would have had rights between them to receive, indirectly, or directly and indirectly, for their own benefit, the whole of the amount of that dividend. 82AJA(7) [Eligible subsidiary]
For the purposes of this section, a company shall be taken to be an eligible subsidiary in relation to a year of income if, by virtue of subsection 103A(4) , the company is a subsidiary of a public company in relation to the year of income for the purposes of subparagraph 103A(2)(d)(v) .
For the purposes of this section, a company shall be taken to be an eligible public company in relation to a year of income if, by virtue of paragraph 103A(2)(a) , the company is a public company in relation to the year of income for the purposes of subsection 103A(1) .
Where property that was acquired or constructed, or taken on lease, by a taxpayer being a private company is used at any time for a private or domestic purpose by -
(a) an employee of the company;
(b) a director of the company;
(c) a member of the company; or
(d) a relative of a person referred to in paragraph (a), (b) or (c),
the property shall be deemed for the purposes of this Subdivision to have been used at that time by the company for a purpose other than the purpose of producing assessable income.
SECTION 82AL PROPERTY ACQUIRED ETC. IN SUBSTITUTION FOR OTHER PROPERTY 82AL(1) [Pre-27 February 1992 contract for acquisition, etc, of property]Where the Commissioner is satisfied that:
(a) a contract or arrangement was entered into by a taxpayer before 27 February 1992 for the acquisition, or taking on lease, by the taxpayer of a unit of property (in this subsection referred to as the original unit );
(b) on or after that date:
(i) the taxpayer entered into a contract (whether with the same or another person) for the acquisition or taking on lease (whether with or without the acquisition or taking on lease of other property) of the original unit or of another unit of property (in this subsection referred to as the substituted unit ) identical with, or having a purpose similar to that of, the original unit and intended by the taxpayer to be in lieu of the original unit; or
(ii) the taxpayer commenced the construction of a unit of property (in this subsection also referred to as the substituted unit ) identical with, or having a purpose similar to that of, the original unit and intended by the taxpayer to be in lieu of the original unit; and
(c) the taxpayer entered into the contract for acquisition or taking on lease of the original unit or of the substituted unit, or commenced the construction of the substituted unit, for the purpose, or for purposes that included the purpose, of obtaining:
(i) a deduction under this Subdivision; or
(ii) a benefit related directly or indirectly to a deduction under this Subdivision;
the Commissioner may refuse to allow a deduction under this Subdivision:
(d) in a case to which subparagraph (b)(i) applies - in relation to the original unit or the substituted unit; or
(e) in a case to which subparagraph (b)(ii) applies - in relation to the substituted unit.
Where the Commissioner is satisfied that:
(a) a taxpayer commenced construction of a unit of property (in this subsection referred to as the original unit ) before 27 February 1992;
(b) on or after that date:
(i) the taxpayer commenced the construction of a unit of property (in this subsection referred to as the substituted unit ) identical with, or having a purpose similar to that of, the original unit and intended by the taxpayer to be in lieu of the original unit; or
(ii) the taxpayer entered into a contract for the acquisition or taking on lease (whether with or without the acquisition or taking on lease of other property) of the original unit or of another unit of property (in this subsection also referred to as the substituted unit ) identical with, or having a purpose similar to that of, the original unit and intended by the taxpayer to be in lieu of the original unit; and
(c) the taxpayer commenced the construction of the substituted unit, or entered into the contract for the acquisition or taking on lease of the original unit or of the substituted unit, for the purpose, or for purposes that included the purpose, of obtaining:
(i) a deduction under this Subdivision; or
(ii) a benefit related directly or indirectly to a deduction under this Subdivision;
the Commissioner may refuse to allow a deduction under this Subdivision:
(d) in a case to which subparagraph (b)(i) applies - in relation to the substituted unit; or
(e) in a case to which subparagraph (b)(ii) applies - in relation to the original unit or the substituted unit.
A reference in this section to a unit of property includes a reference to a portion of a unit of property.
SECTION 82AM DEDUCTION UNDER SUBDIVISION TO BE IN ADDITION TO CERTAIN OTHER DEDUCTIONS 82AM(1) [Deduction additional to other deductions]Notwithstanding the provisions of section 8-10 of the Income Tax Assessment Act 1997 , but subject to subsections (2), (3) and (4), the deduction allowable under this Subdivision in respect of expenditure in respect of a unit of property is allowable in addition to any deduction that is allowable in respect of that unit of property under any other provision of this Act or the Income Tax Assessment Act 1997 .
A deduction under this Subdivision is not allowable in respect of expenditure in respect of a unit of property where a deduction in respect of the expenditure has been allowed or is allowable under section 73B , 73BA or 73BH of this Act or the former section 330-15 or Subdivision 387-A, 387-B or 387-E or paragraph 40-515(1)(a), section 40-630, section 40-645 or section 40-730 of the Income Tax Assessment Act 1997 .
A deduction under this Subdivision is not allowable in respect of expenditure in respect of a unit of property where a deduction in respect of the expenditure would have been allowed or allowable under section 73B , 73BA , 73BH or 73Y if a company had not chosen a tax offset under section 73I .
A deduction under this Subdivision is not allowable for expenditure in relation to a unit of property if:
(a) the property is a depreciating asset; and
(b) a deduction is allowable for it under Division 40 of the Income Tax Assessment Act 1997 ; and
(c) the taxpayer could have deducted the property's cost under that Act for the year of income in which the taxpayer first used it for a taxable purpose (within the meaning of that Act).
A deduction under this Subdivision is not allowable for expenditure in relation to a unit of property if a deduction is allowable in accordance with section 57AM in respect of the property (section 57AM deals with special depreciation on trading ships).
Where, under a contract for the acquisition or construction of property that includes a unit of eligible property, an amount (in this subsection referred to as the total cost ) is expressed to be payable in respect of the acquisition or construction of the whole of the property and no separate amount is allocated to the eligible property, the amount payable in respect of the acquisition or construction of the unit of eligible property shall, for the purposes of this Subdivision, be taken to be such part of the total cost as the Commissioner determines.
82AN(2) [Commissioner's power to reduce excessive costs]Where, under a contract for the acquisition or construction of eligible property or under a contract for the acquisition of materials for use in the construction of eligible property, an amount is expressed to be payable in respect of the acquisition or construction of the property or in respect of the acquisition of the materials, as the case may be, but the Commissioner is satisfied that that amount exceeds -
(a) in the case of a contract for the construction of eligible property for the taxpayer by another person or persons on premises of the taxpayer - the market value of the property at the time of completion of the construction; or
(b) in any other case - the market value of the eligible property or materials at the date of the contract,
the amount payable in respect of the acquisition or construction of the eligible property or in respect of the acquisition of the materials, as the case may be, shall, if the Commissioner so determines, be deemed, for the purposes of this Subdivision, to be the market value referred to in paragraph (a) or (b), whichever is applicable.
SECTION 82AO RECOUPMENT OF EXPENDITURE 82AO(1A) [Limited operation]This section does not apply to an amount received in the 1997-98 year of income or a later year of income if the amount is received as recoupment as defined by section
20-25
of the
Income Tax Assessment Act 1997
.
Note:
Subdivision 20-A of the Income Tax Assessment Act 1997 applies instead.
This Subdivision does not apply, and shall be deemed never to have applied, in relation to a taxpayer, to expenditure in respect of which the taxpayer is recouped, or becomes entitled to be recouped, by the Commonwealth, by a State, by the Administration of a Territory, by an authority constituted by or under a law of the Commonwealth, of a State or of a Territory or by any other person.
82AO(2) [Commissioner's power to dissect]Where a taxpayer receives, or becomes entitled to receive, an amount that constitutes to an unspecified extent a recoupment of expenditure of a capital nature in respect of a unit of property in relation to which this Subdivision applies, the Commissioner may, for the purposes of subsection (1), determine the extent to which the amount constitutes a recoupment of that expenditure.
SECTION 82AP 82AP TRANSITIONAL(Repealed by No 98 of 1992)
For the purposes of this Subdivision, if:
(a) an entity:
(i) leases property; or
(ii) grants a right to another person to use property; or
(iii) enters into a contract or arrangement with another person for the use of the property by that other person; and
(b) the property is:
(i) for use in a business carried on by the entity which consists principally of the provision by the entity of either or both of the following:
(A) entertainment;
(B) accommodation for tourists or travellers; or
(ii) for use in a business carried on by the entity a substantial part of which consists of the provision by the entity of accommodation for tourists or travellers; or
(iii) for use in premises used or held for use by the entity principally for the purpose of deriving income in the nature of rent by the provision of accommodation for tourists or travellers;
the entity is taken to have leased the property, granted rights to use the property, or entered into a contract or arrangement with the other person for the use of the property by that other person, as the case requires, in the entity's capacity as an eligible entertainment/tourism operator.
82APA(2) [``entity'']In this section:
(a) a company; or
(b) a partnership; or
(c) a person in a particular capacity of trustee; or
(d) any other person.
In this Subdivision -
aircraft
means a machine or apparatus that derives support in the atmosphere from the reactions of the air or from buoyancy, but does not include an air-cushion vehicle.
(Repealed by No 34 of 2000)
Australian space object
has the same meaning as in the
Radiocommunications Act 1992
.
"commissioning date"
(Omitted by No 98 of 1992)
construction
includes manufacture and
constructed
has a corresponding meaning.
"eligible Australian ship"
(Omitted by No 98 of 1992)
"eligible date"
(Omitted by No 98 of 1992)
eligible property
means plant within the meaning of section
45-40
of the
Income Tax Assessment Act 1997
and includes earth tanks constructed for the purpose of conserving water for use in carrying on a business of primary production.
hire-purchase agreement
means a hire purchase agreement to which Division
240
of the
Income Tax Assessment Act 1997
applies.
lease
, in relation to property, means grant a lease of the property or let the property on hire otherwise than under a hire-purchase agreement, and cognate expressions have corresponding meanings.
leasing company
means a corporation that carries on in Australia as its sole or principal business
-
(a) the business of banking; or
(b) the business of borrowing money and providing finance,
not being a business the whole of the income from which is exempt income.
long-term lease agreement
, in relation to property, means an agreement under which a person agrees to take the property on lease for a period of not less than 4 years.
new
means not having previously been either used by any person or acquired or held by any person for use by that person, but does not include reconditioned or wholly or mainly reconstructed.
"new ship"
(Omitted by No 98 of 1992)
related company
, in relation to a company (the
first company
), means another company to which the first company is related within the meaning of section
51AE
(see subsections 51AE(16) to (19)).
ship
means a vessel or boat of any description, and includes an air-cushion vehicle, but does not include a floating structure.
"subsection
82AA(1)
property"
(Omitted by No 98 of 1992)
"subsection
82AA(2)
ship"
(Omitted by No 98 of 1992)
The reference in the definition of leasing company in subsection (1) to providing finance is a reference to:
(a) lending money, with or without security;
(b) letting property on hire under a hire-purchase agreement; or
(c) leasing property. 82AQ(3) [Meaning of acquisition of property]
(a) a reference to the acquisition of property by a person is a reference to:
(i) the person becoming the owner of the property or taking the property on hire under a hire-purchase agreement; or
(ii) the construction of the property for the person by another person or other persons on premises of the first-mentioned person;
(b) a reference to property being installed ready for use is a reference to property being installed ready for use and held in reserve; and
(c) a reference to taking property on lease is a reference to taking property on lease or on hire otherwise than under a hire-purchase agreement. 82AQ(3A) [Application]
(a) a unit of property is attached to land that a taxpayer holds under a quasi-ownership right granted by an exempt Australian government agency or an exempt foreign government agency; and
(b) the taxpayer is the holder of the property for the purposes of Division 40 of the Income Tax Assessment Act 1997 ;
this Subdivision applies as if the taxpayer were the owner of the property instead of any other person.
(Repealed by No 77 of 2001)
In subsection (3A), exempt Australian government agency , exempt foreign government agency and quasi-ownership right have the same meanings as in the Income Tax Assessment Act 1997 .
For the purposes of this Subdivision, an Australian space object is taken to be in Australia.
The object of this Subdivision is to provide a tax incentive for investment in plant or articles before 1 July 1994.
82AR(2) Incentive called general investment allowance.The tax incentive takes the form of an allowable deduction, which may be referred to as general investment allowance.
This Subdivision has effect subject to Division 245 of Schedule 2C .
The entitlement to general investment allowance, and other features of the new tax incentive, are worked out by applying the provisions of Subdivision B with some changes, which are set out below.
The most important change is that, for the purposes of this Subdivision, subsection 82AB(1) (which is the main deduction provision) is to be replaced by the following:
``(1) Subject to this Subdivision, if:
(a) after 8 February 1993, a taxpayer incurs expenditure of a capital nature in respect of the acquisition or construction by the taxpayer of a new unit of eligible property to which this Subdivision applies; and
(b) the expenditure was $3,000 or more; and
(c) the expenditure was incurred:
(i) in respect of a unit of property acquired by the taxpayer under a contract entered into after 8 February 1993 and before 1 July 1994; or
(ii) in respect of a unit of property that was constructed by the taxpayer, where the construction commenced after 8 February 1993 and before 1 July 1994; and
(d) the unit of property was first used or installed ready for use before 1 July 1995;
a deduction equal to 10% of the expenditure is allowable to the taxpayer for the first year of income during which that unit was either used for the purpose of producing assessable income or installed ready for use for that purpose.''
For the purposes of this Subdivision, references in provisions of Subdivision B to dates must also be changed as follows:
(a) references to 26 February 1992 become references to 8 February 1993;
(b) references to 27 February 1992 become references to 9 February 1993. 82AU(2) Location of 26 February 1992 references.
The references to 26 February 1992 are in paragraphs 82AHA(3)(a), (4)(a), (5)(d) and (6)(d) .
82AU(3) Location of 27 February 1992 references.The references to 27 February 1992 are in the following provisions:
(a) paragraph 82AA(1)(b) ;
(b) paragraph 82AB(7)(d) ;
(c) subsection 82AB(8) ;
(d) subsection 82AF(4) ;
(e) paragraphs 82AL(1)(a) and (2)(a) .
Paragraph 82AC(a) refers to deductions allowable under this Subdivision or Subdivision BA .
82AV(2) [Deemed reference to Subdiv B]For the purposes of this Subdivision, the paragraph must be taken to refer to deductions allowable under either Subdivision B or Subdivision BA.
(Repealed by No 82 of 1994)
Section 82AAAA (which states the object of Subdivision B) does not apply for the purposes of this Subdivision.
The objects of this Subdivision are:
(a) to provide for the deductibility of allowable environmental impact expenditure (section 82BB ); and
(b) to allow property used for eligible environmental impact activities to be treated as if it were used for the purpose of producing assessable income (section 82BG ).
In this Subdivision:
allowable environmental impact expenditure
has the meaning given by section
82BC
.
eligible environmental impact activity
has the meaning given by section
82BD
.
environment
includes all aspects of the surroundings of humans, whether affecting them as individuals or in social groupings.
income-producing project
, in relation to a taxpayer, means a project that is, or is to be, carried out for the purpose, or for purposes that include the purpose, of producing assessable income (other than assessable income attributable to section
160Z
) of the taxpayer of any year of income.
project
includes a proposed project.
This Subdivision has effect subject to Division 245 of Schedule 2C .
This section does not allow a deduction for the 1998-99 year of income or a later year of income.
Note:
Subdivision 400-A of the Income Tax Assessment Act 1997 allows deductions for the 1998-99 year of income and later years of income for allowable environmental impact expenditure.
Subject to this Subdivision, if a taxpayer incurs allowable environmental impact expenditure during a year of income (in this section called the current year of income ) in connection with an income-producing project of the taxpayer, then:
(a) if:
(i) a decision is made before the end of the current year of income to abandon the project; or
the expenditure is an allowable deduction for the current year of income; or
(ii) the project ends before the end of the current year of income;
(b) if it is not practicable to readily estimate, as at the end of the current year of income, the time when the project will end - 10% of the expenditure is an allowable deduction for:
(i) the current year of income; and
(ii) each of the 9 subsequent years of income; or
(c) if:
(i) none of the above paragraphs apply; and
(ii) it is practicable to readily estimate, as at the end of the current year of income, the year of income (in this paragraph called the final year of income ) in which the end of the project will occur; and
equal parts of the expenditure are respectively allowable deductions for:
(iii) the final year of income is one of the 9 years of income subsequent to the current year of income;
(iv) the current year of income; and
(v) the final year of income; and
(vi) each of the intervening years of income (if any); or
(d) if:
(i) none of the above paragraphs apply; and
(ii) it is practicable to readily estimate, as at the end of the current year of income, the year of income (in this paragraph called the final year of income ) in which the end of the project will occur; and
10% of the expenditure is an allowable deduction for:
(iii) the final year of income is later than the 9th year of income subsequent to the current year of income;
(iv) the current year of income; and
82BB(2) [Restriction of operation]
(v) each of the 9 subsequent years of income.
A provision of this Act that expressly prevents or restricts the operation of section 8-1 of the Income Tax Assessment Act 1997 applies in the same way to this section.
A reference in this Subdivision to allowable environmental impact expenditure of a taxpayer in connection with an income-producing project of the taxpayer is a reference to expenditure (whether of a capital nature or otherwise) incurred by the taxpayer on or after 12 March 1991 to the extent that the expenditure is in respect of eligible environmental impact activities in relation to the project.
82BC(2) [Allowable deductions under other provisions]Expenditure is taken not to be allowable environmental impact expenditure to the extent to which a deduction is allowable in respect of that expenditure under a provision of this Act other than section 82BB .
82BC(3) [Depreciation allowable as deduction]Expenditure is taken not to be allowable environmental impact expenditure to the extent to which the expenditure is taken into account in calculating the decline in value of a depreciating asset that is allowable as a deduction.
A reference in this Subdivision to an eligible environmental impact activity in relation to an income-producing project is a reference to:
(a) undertaking a study; or
(b) preparing or obtaining a report or other documentation; or
(c) carrying out any other activity;
for the sole or dominant purpose of evaluating the impact, or likely impact, of the project on the environment.
This section does not apply to an amount received in the 1997-98 year of income or a later year of income if the amount is received as recoupment as defined by section
20-25
of the
Income Tax Assessment Act 1997
.
Note:
Subdivision 20-A of the Income Tax Assessment Act 1997 applies instead.
Section 82BB does not apply, and is to be taken never to have applied, to expenditure if:
(a) the taxpayer, whether before or after the commencement of this subsection, receives, or becomes entitled to receive, a recoupment of, or grant in respect of, the expenditure; and
(b) the amount of the recoupment or the grant is not, and will not be, included in the assessable income of the taxpayer of any year of income. 82BE(2) [Deemed amount of recoupment]
For the purposes of subsection (1), if a taxpayer receives, or becomes entitled to receive, an amount that constitutes to an unspecified extent a recoupment of, or a grant in respect of, expenditure, then so much of that amount as is reasonable is taken to be a recoupment of, or grant in respect of, that expenditure, as the case requires.
82BE(3) [Amendment of assessments]Section 170 does not prevent the amendment of an assessment at any time for the purpose of giving effect to this section.
If:
(a) a person has incurred expenditure in connection with a transaction where the parties to the transaction are not dealing with each other at arm's length in relation to the transaction; and
(b) deductions are or have been allowable under this Subdivision in respect of the expenditure; and
(c) the amount of the expenditure is greater or less than is reasonable;
the amount of the expenditure is taken, for all purposes of the application of this Act in relation to the parties to the transaction, to be the amount that would have been reasonable if the parties were dealing with each other at arm's length.
For the purposes of this Act, if property is used by a taxpayer on or after 12 March 1991 and before the taxpayer's 1998-99 year of income for eligible environmental impact activities in relation to an income-producing project of the taxpayer, that use of the property by the taxpayer is taken to be for the purpose of producing assessable income of the taxpayer.
Note:
Subdivision 400-C of the Income Tax Assessment Act 1997 treats property used for eligible environmental impact activities in the 1998-99 year of income or a later year of income as if it were used for the purpose of producing assessable income.
Subsection (1) has effect subject to a provision of this Act that expressly provides that a particular use of property is not taken to be for the purpose of producing assessable income.
The objects of this Subdivision are:
(a) to provide for the deductibility of allowable environment protection expenditure (section 82BK ); and
(b) to allow property used for eligible environment protection activities to be treated as if it were used for the purpose of producing assessable income (section 82BR ).
In this Subdivision:
allowable environment protection expenditure
has the meaning given by section
82BL
.
eligible environment protection activity
has the meaning given by section
82BM
.
environment
includes all aspects of the surroundings of humans, whether affecting them as individuals or in social groupings.
income-producing activity
, in relation to a taxpayer, means an activity (including an investment activity) carried on for the purpose, or for purposes that include the purpose, of producing assessable income (other than assessable income attributable to section
160Z
) of the taxpayer of any year of income.
site
includes a part of a site.
This section does not allow a deduction for the 1998-99 year of income or a later year of income.
Note:
Subdivision 400-B of the Income Tax Assessment Act 1997 allows deductions for the 1998-99 year of income and later years of income for allowable environment protection expenditure.
Subject to this Subdivision, allowable environment protection expenditure incurred by a taxpayer on or after 19 August 1992 is an allowable deduction for the year of income in which the expenditure is incurred.
82BK(2) Section 51 limits apply.A provision of this Act that expressly prevents or restricts the operation of section 8-1 of the Income Tax Assessment Act 1997 applies in the same way to this section.
For the purposes of this Subdivision, if:
(a) a taxpayer incurs expenditure (whether of a capital nature or otherwise) for the sole or dominant purpose of carrying on one or more eligible environment protection activities;
then:
(b) the expenditure, to the extent that the expenditure is in respect of eligible environment protection activities in relation to the taxpayer, is allowable environment protection expenditure of the taxpayer. 82BL(2) Allowable environment protection expenditure does not include allowable environmental impact expenditure.
Expenditure is taken not to be allowable environment protection expenditure to the extent to which it is allowable environmental impact expenditure (within the meaning of section 82BC ).
82BL(3) Deduction of last resort.Expenditure is taken not to be allowable environment protection expenditure to the extent to which a deduction is allowable in respect of that expenditure under a provision of this Act other than section 82BK .
A reference in this Subdivision to an eligible environment protection activity in relation to a taxpayer is a reference to any of the following activities carried on by or on behalf of the taxpayer:
(a) preventing, combating or rectifying pollution of the environment, where:
(i) the pollution has resulted, or is likely to result, from an income-producing activity that was, is, or is proposed to be, carried on by the taxpayer; or
(ii) the pollution is of a site on which the taxpayer carried on, carries on, or proposes to carry on, an income-producing activity; or
(iii) the source of the pollution is a site on which the taxpayer carried on, carries on, or proposes to carry on, an income-producing activity; or
(iv) the pollution is of a siteon which the predecessor of the taxpayer carried on a business activity; or
(v) the source of the pollution is a site on which the predecessor of the taxpayer carried on a business activity;
(b) treating, cleaning up, removing or storing waste, where:
(i) the waste has resulted, or is likely to result, from an income-producing activity that was, is, or is proposed to be, carried on by the taxpayer; or
(ii) the waste is on a site on which the taxpayer carried on, carries on, or proposes to carry on, an income-producing activity; or
(iii) the source of the waste is a site on which the taxpayer carried on, carries on, or proposes to carry on, an income-producing activity; or
(iv) the waste is on a site on which the predecessor of the taxpayer carried on a business activity; or
82BM(2) Site on which investment activities carried on.
(v) the source of the waste is a site on which the predecessor of the taxpayer carried on a business activity.
For the purposes of this section, if a taxpayer carried on, carries on, or proposes to carry on, an income-producing activity consisting of:
(a) the leasing of a site owned by the taxpayer; or
(b) the granting of rights to use a site owned by, or under the control of, the taxpayer; or
(c) any similar thing;
the taxpayer is taken to have carried on, to carry on, or to propose to carry on, the income-producing activity on that site, as the case requires.
82BM(3) Site on which predecessor of taxpayer carried on a business activity.For the purposes of this section, a site ( old site ) is a site on which the predecessor of a taxpayer carried on a business activity, if, and only if:
(a) the taxpayer carries on an income-producing activity on another site ( new site ); and
(b) the taxpayer's income-producing activity consists of the carrying on of a business; and
(c) the taxpayer acquired the business from another person who, or whose predecessor (whether immediate or otherwise), carried on the business on the old site; and
(d) apart from the change of site, the taxpayer's business is the same, or substantially the same, as the business carried on by the other person, or by the other person's predecessor, as the case requires, on the old site.
A deduction is not allowable under section 82BK for:
(a) expenditure in respect of acquiring land; or
(b) expenditure of a capital nature in respect of constructing a building, structure or structural improvement; or
(c) expenditure of a capital nature in respect of constructing an extension, alteration or improvement to a building, structure or structural improvement; or
(d) expenditure in respect of a bond or security, however described, for the performance of eligible environment protection activities. 82BN(2) No deduction for depreciable plant.
A deduction is not allowable under section 82BK for expenditure to the extent to which it is taken into account in calculating an amount of depreciation that is allowable as a deduction.
This section does not apply to an amount received in the 1997-98 year of income or a later year of income if the amount is received as recoupment as defined by section
20-25
of the
Income Tax Assessment Act 1997
.
Note:
Subdivision 20-A of the Income Tax Assessment Act 1997 applies instead.
Section 82BK does not apply, and is taken never to have applied, to expenditure if:
(a) the taxpayer, whether before or after the commencement of this subsection, receives, or becomes entitled to receive, a recoupment of, or grant in respect of, the expenditure; and
(b) the amount of the recoupment or the grant is not, and will not be, included in the taxpayer's assessable income of any year of income. 82BP(2) Dissection of amounts.
For the purposes of subsection (1), if a taxpayer receives, or becomes entitled to receive, an amount that constitutes to an unspecified extent a recoupment of, or a grant in respect of, expenditure, then so much of that amount as is reasonable is taken to be a recoupment of, or grant in respect of, that expenditure, as the case requires.
82BP(3) Amendment of assessments.Section 170 does not prevent the amendment of an assessment at any time for the purpose of giving effect to this section.
If:
(a) a person has incurred expenditure in connection with a transaction where the parties to the transaction are not dealing with each other at arm's length in relation to the transaction; and
(b) deductions are or have been allowable under this SubDivision in respect of the expenditure; and
(c) the amount of the expenditure is greater or less than is reasonable;
the amount of the expenditure is taken, for all purposes of the application of this Act in relation to the parties to the transaction, to be the amount that would have been reasonable if the parties were dealing with each other at arm's length.
For the purposes of this Act, if property is used by a taxpayer on or after 19 August 1992 and before the taxpayer's 1998-99 year of income for eligible environment protection activities, that use of the property by the taxpayer is taken to be for the purpose of producing assessable income of the taxpayer.
Note:
Subdivision 400-C of the Income Tax Assessment Act 1997 treats property used for eligible environment protection activities in the 1998-99 year of income or a later year of income as if it were used for the purpose of producing assessable income.
Subsection (1) has effect subject to a provision of this Act that expressly provides that a particular use of property is not taken to be for the purpose of producing assessable income.
CCH Note:
Below is material repealed as inoperative in s 82KH by No 101 of 2006.
A reference in subsection (1B) to income tax does not include a reference to any additional tax payable under section 104 .
This Subdivision applies only to years of income up to and including the 1993-94 year of income.
82KS(2) [Further application]For the law applying to the 1994-95, 1995-96 and 1996-97 years of income, see Subdivision GA and Schedules 2A and 2B.
In this Subdivision, unless the contrary intention appears:
applicable log book period
, in relation to a car held by a taxpayer during a period (in this definition called the
holding period
) in a year of income, means:
(a) if the holding period is a period of less than 12 weeks - the holding period;
(b) if the holding period is a period of not less than 12 weeks and there is a continuous period (in this paragraph called a concurrent holding period ) of not less than 12 weeks in the year of income during which the taxpayer held both:
(i) the car; and
a continuous period of not less than 12 weeks that:
(ii)one or more other log book cars;
(iii) begins and ends:
(A) if there is a continuous period (in this sub-subparagraph called the sole holding period ) of not less than 12 weeks in the year of income during which the taxpayer held the car and no other log book cars and the sole holding period commenced after the end of the concurrent holding period or, if there are 2 or more concurrent holding periods, the last of those concurrent holding periods - during the sole holding period; and
(B) in any other case - during the concurrent holding period or, if there are 2 or more concurrent holding periods, during the last of those concurrent holding periods;
(iv) in a case to which sub-subparagraph (iii)(B) applies - is the same as the applicable log book period for the other log book car, or each of the other log book cars, so held during the concurrent holding period concerned; and
(v) in all cases - is specified by the taxpayer in the taxpayer's car records for the year of income; or
(c) in any other case - a continuous period of not less than 12 weeks that:
(i) begins and ends during the holding period; and
(ii) is specified by the taxpayer in the taxpayer's car records for the year of income.
car
means a motor vehicle, being:
(a) a motor car, station wagon, panel van, utility truck or similar vehicle; or
(b) any other road vehicle designed to carry a load of less than 1 tonne or fewer than 9 passengers;
but does not include:
(c) a motor cycle or similar vehicle;
(d) a taxi taken on hire; or
(e) a motor vehicle taken on hire under an agreement of a kind ordinarily entered into by persons taking motor vehicles on hire intermittently as occasion requires on an hourly, daily, weekly or other short-term basis unless the motor vehicle has been or may reasonably be expected to be taken on hire under successive agreements of a kind that result in substantial continuity of the taking of the motor vehicle on hire.
car expense
means an outgoing incurred in connection with a car and, without limiting the generality of the foregoing, includes:
(a) an outgoing incurred in connection with the operation of a car;
(b) expenditure incurred in connection with borrowing money for the purpose of acquiring a car;
(c) expenditure (other than a payment of principal or interest) incurred in connection with the discharge of a mortgage given as security for:
(i) the repayment of money borrowed for the purpose of acquiring a car; or
(ii) the payment of the whole or a part of the cost of acquiring a car;
(d) in a case where a car is leased:
(i) expenditure incurred by the lessee in connection with the lease; and
(ii) without limiting the generality of subparagraph (i), expenditure incurred by the lessee for the preparation, registration and stamping of the lease, or of an assignment or surrenderof the lease;
(e) a payment of interest on money borrowed for the purpose of acquiring a car or on the outstanding balance of the cost of acquiring a car;
(f) expenditure incurred for repairs to a car; and
(g) depreciation in respect of a car,
but does not include -
(h) such an outgoing incurred, such expenditure incurred, or such a payment made, in respect of travel outside Australia; or
(j) a taxi fare or similar expense.
car expense reimbursement payment
means a payment by way of a reimbursement to which paragraph 26(eaa) applies, being a reimbursement that:
(a) is in respect of the whole part of a car expense; and
(b) is paid by an employer to an employee in respect of travel by the employee in the course of performing duties as an employee of the employer.
car records
, in relation to a taxpayer in relation to a year of income, means records that are maintained by the taxpayer in relation to the year of income for the purposes of the provisions of this Subdivision that refer to car records and that:
(a) in the case of the year of income commencing on 1 July 1988 or an earlier year of income - are in writing in the English language or are in a form that enables them to be readily accessible and convertible into writing in the English language; or
(b) in the case of a later year of income - are maintained in a form approved by the Commissioner.
depreciation
means depreciation that is, or would but for this Subdivision be, allowable under this Act.
elect
means elect in accordance with this Subdivision.
(a) in relation to a meal allowance - an outgoing incurred, by a taxpayer to whom the allowance was paid or is payable, in respect of the purchase of food or drink to which the allowance relates;
(b) in relation to a travel allowance - an outgoing incurred, by a taxpayer to whom the allowance was paid or is payable, in respect of the travel to which the allowance relates, being an outgoing in respect of accommodation, in respect of the purchase of food or drink, or in respect of expenditure incidental to the travel; or
(c) in relation to an eligible transport payment - a transport expense to the extent that it is related to the eligible transport payment, being an expense that was incurred by a taxpayer to whom the eligible transport payment was paid or is payable.
"eligible relative"
(Omitted by No 135 of 1990)
eligible transport payment
means a payment (in this definition called the
current payment
) in respect of which all of the following conditions are satisfied:
(a) the current payment is a transport allowance payment, or a car expense reimbursement payment, paid in respect of particular travel (in this definition called the current travel ) of an employee;
(b) the current payment was paid under an industrial instrument that was in force on 29 October 1986;
(c) the aggregate of:
(i) the current payment; and
does not exceed the total amount of transport allowance payments or car expense reimbursement payments, as the case may be, that would have been payable in respect of the current travel under the industrial instrument if no alterations had been made to the industrial instrument after 29 October 1986;
(ii) any other transport allowance payments or car expense reimbursement payments, as the case may be, payable under the industrial instrument in respect of the current travel;
(d) if the aggregate of:
(i) the current payment; and
exceeds the total amount of transport allowance payments or car expense reimbursement payments, as the case may be, that would have been payable in respect of the current travel if the amounts had been determined at the rates applicable on 29 October 1986 - the whole of the excess is attributable to increases determined solely by reference to matters contained in the industrial instrument on 29 October 1986.
(ii) any other transport allowance payments or car expense reimbursement payments, as the case may be, payable under the industrial instrument in respect of the current travel;
employee
means an employee as defined in section
221A
.
employer
means an employer as defined in section
221A
.
employment-related expense
means an outgoing incurred by a taxpayer in producing salary or wages of the taxpayer, and, without limiting the generality of the foregoing, includes:
(a) in a case where, during a year of income, a taxpayer:
(i) incurred an outgoing by way of a periodical subscription to a trade, business or professional association; and
that outgoing;
(ii) derived salary or wages;
(b) expenditure incurred by a taxpayer in connection with borrowing money used by the taxpayer wholly or partly for the purpose of producing salary or wages of the taxpayer;
(c) expenditure (other than a payment of principal or interest) incurred by a taxpayer in connection with the discharge of a mortgage given by the taxpayer as security for:
(i) the repayment of money borrowed by the taxpayer; or
where that money or property was used by the taxpayer wholly or partly for the purpose of producing salary or wages of the taxpayer;
(ii) the payment by the taxpayer of the whole or a part of the purchase price of property purchased by the taxpayer;
(d) in a case where property leased to a taxpayer was used by the taxpayer wholly or partly for the purpose of producing salary or wages of the taxpayer:
(i) expenditure incurred by the taxpayer in connection with the lease; and
(ii) without limiting the generality of subparagraph (i), expenditure incurred by the taxpayer for the preparation, registration and stamping of the lease, or of an assignment or surrender of the lease;
(e) a payment of interest on money borrowed by a taxpayer where that money was used by the taxpayer wholly or partly for the purpose of producing salary or wages of the taxpayer;
(f) expenditure incurred by a taxpayer for repairs to any premises, or part of premises, plant, machinery, implements, utensils, or articles held, occupied or used by the taxpayer wholly or partly for the purpose of producing salary or wages of the taxpayer;
(g) depreciation in respect of property owned by a taxpayer and:
(i) used by the taxpayer; or
wholly or partly for the purpose of producing salary or wages of the taxpayer; and
(ii) installed ready for use;
(h) expenditure incurred by a taxpayer in respect of which a deduction is, or would but for this Subdivision be, allowable under section 74 or 74A ,
but does not include a car expense, a travel expense or an eligible expense in relation to a meal allowance or in relation to a travel allowance.
exclusive business use deduction
, in relation to a car expense incurred by a taxpayer in a year of income in relation to a car held by the taxpayer during a period (in this definition called the
holding period
) in the year of income, means the deduction that, apart from this Subdivision, would have been allowable to the taxpayer under this Act in respect of the car expense if all use of the car by the taxpayer during the holding period had been exclusively in the course of producing assessable income of the taxpayer.
(a) a car expense, an employment-related expense, or a travel expense, incurred by a taxpayer; or
(b) an eligible expense incurred by a taxpayer in relation to a meal allowance or in relation to a travel allowance.
industrial instrument
means a law of the Commonwealth or of a State or Territory or an award, order, determination or industrial agreement in force under any such law.
log book car
, in relation to a taxpayer, in relation to a year of income, means a car held by the taxpayer during a period (in this definition called the
holding period
) in the year of income where:
(a) the car was used, at any time during the holding period, in the course of producing assessable income of the taxpayer; and
(b) the taxpayer did not elect that subsection 82KW(2) or (3) or 82KX (1) apply in relation to the car in relation to the year of income.
log book records
, in relation to a car held by a taxpayer, in relation to a period, means a daily log book or similar document in which, in respect of each journey:
(a) that is undertaken in the car during the period in the course of producing assessable income of the taxpayer; and
(b) that the taxpayer, or a person acting on behalf of the taxpayer, chooses to record in the document for the purposes of demonstrating the pattern of use of the car during the period;
an entry setting out particulars of:
(c) the date on which the journey began and the date on which it ended;
(d) the respective odometer readings of the car at the beginning and end of the journey;
(e) the number of kilometres travelled by the car in the course of the journey;
(f) the purpose or purposes of the journey;
(g) the name of the person, or the names of the persons, driving the car on that journey;
(h) the date on which the entry is made; and
(j) the name of the person by whom the entry is made;
is made in the English language at, or as soon as reasonably practicable after, the end of the journey, and that, in relation to each such entry so made, is signed, at the time when the entry is made, by the person who made the entry.
long-term log book car
, in relation to a taxpayer, in relation to a year of income, means a log book car in relation to the taxpayer in relation to the year of income other than a car while it is held by the taxpayer pending its replacement, for use in the course of producing assessable income of the taxpayer, by another car.
low business kilometre car
, in relation to a taxpayer, in relation to a year of income, means a car held by the taxpayer during a period (in this definition called the ``holding period'') in the year of income where the number calculated in accordance with the formula:
| BK × |
DY
DHP |
where:
DHP is the number of days in the holding period;
DY is the number of days in the year of income; and
BK is the number of whole kilometres travelled by the car during the holding period in the course of producing assessable income of the taxpayer;
does not exceed 5,000.
meal allowance
means an allowance paid or payable to an employee for the purpose of enabling the employee to purchase food and drink, but does not include any part of a travel allowance.
motor vehicle
includes a vehicle known as a four wheel drive vehicle.
nominated business percentage
, in relation to a car held by a taxpayer during a period (in this definition called the
holding period
) in a year of income, means a percentage that represents an estimate made by the taxpayer of the underlying business percentage applicable to the car in relation to the taxpayer for the holding period, having regard to all relevant matters including, but without limiting the generality of the foregoing:
(a) any log book records, odometer records or other records maintained by or on behalf of the taxpayer; and
(b) any variations in the pattern of use of the car.
odometer records
, in relation to a motor vehicle, in relation to a period, means a document:
(a) in which particulars of:
(i) the odometer reading of the motor vehicle at the commencement of the period or, if the first use of the motor vehicle in the course of producing assessable income of the taxpayer occurred during the period, at the commencement of that use;
(ii) the odometer reading of the motor vehicle at the end of the period or, if the last use of the motor vehicle in the course of producing assessable income of the taxpayer occurred during the period, at the end of that use;
(iii) if paragraph 82KTJ(1)(b) applies with effect from a particular date - the odometer readings of both the replacement car and of the original car referred to in that paragraph, as at that date;
(iv) the respective dates on which the entries are made; and
are entered in the English language, and that is signed by the person or persons referred to in subparagraph (v), at, or as soon as reasonably practicable after, the respective times to which those odometer readings relate; and
(v) the name of the person, or the names of the respective persons, by whom the entries are made;
(b) in which particulars of the make, model and, if the motor vehicle has an internal combustion engine, the engine capacity (expressed in cubic centimetres) of the motor vehicle or, if paragraph 82KTJ(1)(b) applies, of both the replacement car and the original car referred to in that paragraph, are entered in the English language.
overtime meal allowance
means a meal allowance paid or payable to an employee, pursuant to the provisions of an industrial instrument, for the purpose of enabling the employee to purchase food and drink in connection with overtime worked by the employee.
person
includes a partnership.
"relevant car documents"
(Omitted by No 62 of 1987)
"rental log book car"
(Omitted by No 11 of 1989)
retention period
, in relation to an expense incurred by a taxpayer during a year of income, means the period that:
(a) commences on:
(i) in the case of an expense:
(A) that is in respect of fuel or oil and that was incurred in respect of a motor vehicle when owned or leased by the taxpayer at a time during the year of income; andwhichever of the following times is applicable:
(B) where documentary evidence of the expense was not obtained by or on behalf of the taxpayer;
(C) if the taxpayer elects that subsection 82KW(2) apply in relation to the motor vehicle in relation to the year of income - the commencement of the holding period within the meaning of that subsection or, if the first use of the motor vehicle in the course of producing assessable income of the taxpayer occurred during that holding period, the commencement of that use;
(D) in any other case - the commencement of the holding period within the meaning of section 82KUA or of the period referred to in subparagraph 82KZ(1)(c)(i) or, if the first use of the motor vehicle in the course of producing assessable income of the taxpayer occurred during that holding period or period, the commencement of that use; or
(ii) in any other case - the day on which documentary evidence of the expense was obtained by or on behalf of the taxpayer; and
(b) ends:
(i) in a case to which subparagraph (ii) does not apply - at the end of the period of:
(A) if the expense is a car expense and, at any time during the year of income, the car to which the expense relates is used in the course of producing assessable income of the taxpayer, not being salary or wages - 7 years;
(B) if the expense is a travel expense and, while undertaking the travel to which the expense relates, the taxpayer engages in an activity in the course of producing assessable income of the taxpayer, not being salary or wages - 7 years; orthat commences on the day on which the taxpayer lodges a return of income of the taxpayer of the year of income; or
(C) in any other case - 3 years and 6 months;
(ii) if, at the end of that period of 7 years, or 3 years and 6 months, as the case may be, an objection, or a request for amendment of an assessment (not being an objection), relating to the expense or to matters including the expense, or a review or appeal arising out of such an objection, has not been determined or otherwise finally disposed of - on the day on which the objection (and any review or appeal arising out of it), the request, or the review or appeal (and any appeal or further appeal arising out of it), as the case may be, has or have been determined or so disposed of.
salary or wages
means assessable income, being salary or wages as defined by section
221A
.
substantiation sections
means sections
82KUA
,
82KUB
,
82KUC
,
82KUD
,
82KW
(other than subsection (3)),
82KZ
and
82KZA
.
taxpayer
does not include a company or a person in the capacity of a trustee.
transport allowance payment
means:
(a) a payment by way of an allowance paid or payable by an employer to an employee for the sole purpose of enabling the employee to incur transport expenses in respect of travel in the course of performing duties as an employee of the employer; or
(b) so much of a payment by way of an allowance paid or payable by an employer to an employee for the principal purpose of enabling the employee to incur such expenses as is paid or payable for that purpose;
but does not include any part of any payment by way of a travel allowance.
transport expense
means an outgoing incurred in connection with transport and includes depreciation in respect of property used in connection with transport, but does not include an outgoing in respect of accommodation, in respect of the purchase of food or drink or in respect of expenditure incidental to transport.
travel allowance
means an allowance paid by an employer to an employee for the purpose of enabling the employee to incur, in respect of travel away from the employee's ordinary place of residence undertaken in the course of performing duties as an employee of the employer, outgoings in respect of accommodation, in respect of the purchase of food and drink, and in respect of expenditure incidental to the travel.
travel diary
in relation to particular travel undertaken by a taxpayer, means a diary or similar document in which the taxpayer has made, as mentioned in subsection
82KZ(2)
, entries relating to activities engaged in by the taxpayer while undertaking the travel.
travel expense
means an outgoing incurred by a person in respect of:
(a) travel by the person outside Australia; or
(b) travel by the person within Australia that involves the person being away from the person's ordinary place of residence for a continuous period including more than 5 nights;
but does not include a car expense or an eligible expense in relation to a travel allowance.
underlying business percentage
, in relation to a car held by a taxpayer during a period (in this definition called the
holding period
) in a year of income, means the percentage calculated in accordance with the formula:
| 100 × |
BK
TK |
where:
BK is the number of whole kilometres travelled by the car during the holding period in the course of producing assessable income of the taxpayer; and
TK is the number of whole kilometres travelled by the car during the holding period.
For the purposes of the definition of eligible transport payment in subsection (1):
(a) where an industrial instrument (in this paragraph called the substituted instrument ) has come into force in substitution for another industrial instrument (in this paragraph called the original instrument ), the substituted instrument shall be taken to be a continuation of the original instrument;
(b) alterations made to an industrial instrument after 29 October 1986 shall be taken to have been made on 29 October 1986 if:
(i) the alterations were made pursuant to an application made on or before 29 October 1986 that sought increases in transport allowance payments or car expense reimbursement payments; and
(ii) if the application was amended after 29 October 1986 - the alterations made to the industrial instrument did not result in increases in transport allowance payments or car expense reimbursement payments that were greater than increases in those payments sought by the application as at 29 October 1986;
(c) where, as a result of alterations after 29 October 1986 to an industrial instrument (not being alterations that are deemed by paragraph (b) to have been made on 29 October 1986), an additional amount is paid to an employee under the instrument as a car expense reimbursement payment in respect of travel undertaken before the date on which the alterations were made:
(i) the additional amount is not an eligible transport payment; and
(ii) the question of whether any other car expense reimbursement payment in respect of that travel, or any transport allowance payment in respect of that travel, is an eligible transport payment shall be determined as if the additional amount had not been paid or payable in respect of the travel; and
(d) where, as a result of alterations after 29 October 1986 to an industrial instrument (not being alterations that are taken by paragraph (b) to have been made on 29 October 1986), an additional amount is paid to an employee under the instrument as a transport allowance payment in respect of travel:
(i) the additional amount is not an eligible transport payment; and
(ii) the question of whether any other transport allowance payment in respect of that travel, or any car expense reimbursement payment in respect of that travel, is an eligible transport payment shall be determined as if the additional amount had not been paid or payable in respect of the travel.
For the purposes of this Subdivision, where:
(a) during a particular period during a day, 2 or more journeys are undertaken in a car; and
(b) each of the journeys undertaken in the car during that period is undertaken in the course of producing assessable income of a particular taxpayer;
the journeys referred to in paragraph (b) shall be deemed to constitute a single journey.
82KT(3) [Time depreciation expenses incurred]For the purposes of this Subdivision, where a car expense, an employment-related expense or a transport expense is constituted by depreciation of property, being depreciation that is, or would but for this Subdivision be, an allowable deduction to a taxpayer in respect of a particular year of income, the expense shall be taken to be incurred by the taxpayer on the last day of the year of income.
Except so far as the contrary intention appears, a reference in this Subdivision to producing assessable income, or assessable income of a particular kind, includes a reference to:
(a) gaining assessable income, or assessable income of that kind, as the case may be; or
(b) except in the case of salary or wages - carrying on a business for the purpose of gaining or producing assessable income, or assessable income of that kind, as the case may be. 82KT(5) [Business of a particular kind]
A reference in this Subdivision to a business of a particular kind that is carried on by a person includes a reference to a business of that kind that is carried on by the person as part of, or in conjunction with, any other business.
82KT(5A) [Application of s 82KUD]A reference in this Subdivision to section 82KUD being applied includes a reference to that section being applied by virtue of subparagraph 82KZBA(1)(e)(iii) .
For the avoidance of doubt, it is declared that:
(a) nothing in this Subdivision shall be taken by implication to affect the interpretation or application of this Act as in force at any time before the commencement of this Subdivision; and
(b) nothing in this Subdivision (other than section 82KUD and paragraphs 82KW(2)(a) and (3)(a) and (b) and 82KX(1)(a)) entitles a taxpayer to a deduction to which the taxpayer would not have been entitled if this Subdivision had not been enacted.
For the purposes of the definition of eligible expense in subsection 82KT(1) , where:
(a) a taxpayer incurs a transport expense in a year of income; and
(b) the transport expense relates partly to the travel to which a particular eligible transport payment relates and partly to other travel;
the transport expense shall be taken to relate to the eligible transport payment to the same extent to which it would, apart from this Subdivision, have been allowable to the taxpayer as a deduction in respect of the year of income if none of that other travel had been travel in the course of producing assessable income of the taxpayer.
