Taxation Laws Amendment Act (No. 4) 1995 (171 of 1995)

SCHEDULE 4   VARIOUS AMENDMENTS OF THE INCOME TAX ASSESSMENT ACT 1936

PART 2   FORESTRY

2.   After subsection 36(7)

Insert:

"(7A) If:

(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.

"(7B) 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).

"(7C) 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.

"(7D) 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.".