Income Tax Assessment Act 1997
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Hide history noteYou can only deduct reasonable amounts paid to related entities
26-35(1)
If, under another provision of this Act, you can deduct an amount for a payment you make, or for a liability you incur, to a * related entity, then you can only deduct so much of the amount as the Commissioner considers reasonable.
Note:
This section has a special operation if the payment is made, or the liability is incurred, by a partnership in which a private company is a partner: see section 65 (Payments to associated persons and relatives) of the Income Tax Assessment Act 1936 .
Meaning of related entity
26-35(2)
A related entity is any of the following:
(a) your * relative; or
(b) a partnership in which your relative is a partner.
26-35(3)
In the case of a partnership, a related entity is any of the following:
(a) a * relative of a partner in the partnership;
(b) an individual who is or has been a director of a company that is a partner in the partnership and is a * private company for the income year;
(c) an entity that is or has been a shareholder in a company of that kind;
(d) a * relative of an individual who is or has been a director or shareholder of a company of that kind;
(e) a beneficiary of a trust if the trustee is a partner in the partnership;
(f) a * relative of a beneficiary of a trust if the trustee is a partner in the partnership;
(g) another partnership, if a partner in the other partnership is a * relative of a partner in the first partnership.
However, a partner in a partnership is not a related entity of the partnership.
If you can ' t deduct, then related entity doesn ' t include amount as income
26-35(4)
To the extent that subsection (1) stops you deducting an amount, the amount is neither assessable income, nor exempt income, of the * related entity.
26-35(5)
(Repealed by No 75 of 2010 )
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