Tax Laws Amendment (2006 Measures No. 1) Act 2006 (32 of 2006)

Schedule 2   Business related costs

Part 1   Capital allowances amendments

Income Tax Assessment Act 1997

5   After subsection 35-10(2)

Insert:

(2A) You cannot deduct an amount under section 40-880 (business related costs) for expenditure in relation to a *business activity you used to *carry on if you are an individual, either alone or in partnership (whether or not some other entity is a member of the partnership) unless:

(a) one of the tests set out in section 35-30 (assessable income test), 35-35 (profits test), 35-40 (real property test) or 35-45 (other assets test) was satisfied for the business activity; or

(b) the Commissioner has exercised the discretion set out in section 35-55 for the business activity; or

(c) the exception in subsection (4) applied;

for the income year in which the business activity ceased to be carried on or an earlier income year.

(2B) If you are an individual, either alone or in partnership (whether or not some other entity is a member of the partnership), you cannot deduct an amount under section 40-880 (business related costs) for expenditure in relation to a *business activity:

(a) you propose to *carry on; or

(b) another entity proposes to carry on if the other entity is not an individual, either alone or in partnership;

for an income year before the one in which the business activity starts to be carried on.

(2C) This section applies to an amount that you could have deducted, apart from paragraph (2B)(a), as if it were an amount attributable to the *business activity that you can deduct from assessable income from the activity for the income year in which the business activity starts to be *carried on.

(2D) You can deduct expenditure covered by paragraph (2B)(b) for the income year in which the *business activity starts to be *carried on.