Income Tax Assessment Act 1936

PART III - LIABILITY TO TAXATION  

Division 3 - Deductions  

Subdivision D - Losses and outgoings incurred under certain tax avoidance schemes  

SECTION 82KK   SCHEMES DESIGNED TO POSTPONE TAX LIABILITY  

82KK(1)   [Application]  

This section applies to a loss or outgoing incurred by a taxpayer if:

(a) the loss or outgoing was incurred after 19 April 1978 and was incurred to an associate of the taxpayer;

(b) a deduction is allowable to the taxpayer in respect of that loss or outgoing; and

(c) the deduction allowable in respect of that loss or outgoing would, but for this section, be allowable to the taxpayer in the year of income in which the loss or outgoing was incurred and:

(i) in a case where the loss or outgoing is in respect of interest that, if it had actually been paid, would be subject to withholding tax under Division 11A - the withholding tax payable in respect of the whole or a part of the interest is not payable until a time occurring in a subsequent year of income; and

(ii) in any other case - the whole or a part of the amount incurred to the associate will not be included in the assessable income of the associate until a subsequent year of income.

82KK(2)   [Where no provision of goods, services]  

Notwithstanding any other provision of this Act, where:

(a) a taxpayer incurs in a year of income (in this subsection referred to as the relevant year of income ) a loss or outgoing (not being a loss or outgoing in respect of the supply of goods or the provision of services at a time that occurs after, or during a period that occurs after or extends beyond, the end of the relevant year of income) and the loss or outgoing is a loss or outgoing to which this section applies; and

(b) the loss or outgoing was incurred by reason of, as a result of, as part of or in connection with an agreement, course of conduct or course of business that was entered into or carried out for the purpose, or for purposes that included the purpose, of securing that -

(i) in a case where the loss or outgoing is in respect of interest that, if it had actually been paid, would be subject to withholding tax under Division 11A - the withholding tax payable in respect of the whole or a part of the interest will not be payable until a time occurring in a subsequent year of income; and

(ii) in any other case - the whole or a part of the amount incurred to the associate would not be included in the assessable income of the associate until a subsequent year of income,

the loss or outgoing shall, for the purposes of this Act, be deemed to have been incurred by the taxpayer in the relevant year of income and in any subsequent year of income only to the extent to which the loss or outgoing represents an amount actually paid during the relevant year of income or that subsequent year of income by the taxpayer to the person to whom the loss or outgoing is incurred.

82KK(3)   [Where goods or services provided]  

Notwithstanding any other provision of this Act but subject to subsection (4), where:

(a) a taxpayer incurs in a year of income a loss or outgoing in respect of the supply of goods or the provision of services at a time that occurs after, or during a period that occurs after or extends beyond, the end of the year of income and the loss or outgoing is a loss or outgoing to which this section applies; and

(b) the loss or outgoing was incurred by reason of, as a result of or as part of an agreement that was entered into or carried out for the purpose, or for purposes that included the purpose, of securing that:

(i) a deduction would be allowable to the taxpayer in a year of income in respect of the loss or outgoing; and

(ii) the whole or a part of the amount of the loss or outgoing would not be included in the assessable income of the person to whom the loss or outgoing was incurred until a subsequent year of income,

that loss or outgoing shall, for the purposes of this Act, be deemed to have been incurred by the taxpayer in the year of income in which, or in the years of income in which, goods to which the loss or outgoing relates are supplied or services to which the loss or outgoing relates are provided.

82KK(4)   [Provision of goods, services in two or more years]  

Where, by virtue of subsection (3), a loss or outgoing incurred by a taxpayer in respect of the supply of goods or the provision of services is deemed to have been incurred by the taxpayer in each of 2 or more years of income, there shall be allowable as a deduction to the taxpayer in each such year of income so much only of the amount that, apart from this section, would be allowable as a deduction in respect of the loss or outgoing as the Commissioner considers reasonable having regard to the extent to which the goods in respect of which the loss or outgoing was incurred were supplied or the services in respect of which the loss or outgoing was incurred were provided, in each of those years of income.

82KK(5)   [Incidental purpose]  

In determining whether paragraph (2)(b) or (3)(b) applies in relation to a loss or outgoing, no regard shall be had to a purpose that is a merely incidental purpose.