INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART III - LIABILITY TO TAXATION  

Division 10C - Deductions for capital expenditure on traveller accommodation  

SECTION 124ZC   DEDUCTIONS IN RESPECT OF CAPITAL EXPENDITURE  

124ZC(1)   [Full year deduction: hotel]  

Subject to this section and section 124ZD , where:

(a) there is an amount of pre-18 July 1985 qualifying hotel expenditure in respect of a building; and

(b) during the whole of a year of income, a taxpayer:

(i) was the owner of the hotel part and dealt with the hotel part in the prescribed manner; or

(ii) was the owner of a part of the hotel part and dealt with that part of the hotel part in the prescribed manner,

the taxpayer is entitled to a deduction, in his assessment in respect of income of that year of income, of an amount equal to:

(c) in a case to which subparagraph (b)(i) applies:

(i) where the building, or the extension, alteration or improvement, in respect of the construction of which the qualifying hotel expenditure was incurred commenced to be constructed on or before 21 August 1984 - 2 ½ % of the amount of qualifying hotel expenditure; and

(ii) in any other case - 4% of the amount of qualifying hotel expenditure; and

(d) in a case to which subparagraph (b)(ii) applies - so much of the amount calculated in accordance with paragraph (c) as the Commissioner determines, having regard to the extent to which the amount of qualifying hotel expenditure is attributable to the part of the hotel part referred to in that subparagraph.

124ZC(2)   [Part year deduction: hotel]  

Subject to this section and section 124ZD , where:

(a) there is an amount of pre-18 July 1985 qualifying hotel expenditure in respect of a building; and

(b) during a part only of a year of income, a taxpayer:

(i) was the owner of the hotel part and dealt with the hotel part in the prescribed manner; or

(ii) was the owner of a part of the hotel part and dealt with that part of the hotel part in the prescribed manner,

the taxpayer is entitled to a deduction, in his assessment in respect of income of that year of income, of an amount equal to:

(c) in a case to which subparagraph (b)(i) applies:

(i) where the building, or the extension, alteration or improvement, in respect of the construction of which the qualifying hotel expenditure was incurred commenced to be constructed on or before 21 August 1984 - 2 ½ %; and

(ii) in any other case - 4%,

of so much of that amount of qualifying hotel expenditure as bears to that amount the same proportion as the number of whole days in that part of the year of income bears to the number of days in the year of income; and

(d) in a case to which subparagraph (b)(ii) applies - so much of the amount calculated in accordance with paragraph (c) as the Commissioner determines, having regard to the extent to which the amount of qualifying hotel expenditure is attributable to the part of the hotel part referred to in that subparagraph.

124ZC(2A)   [Post-26 February 1992 qualifying hotel expenditure]  

Subject to this section and section 124ZD , if:

(a) there is an amount of post-26 February 1992 qualifying hotel expenditure in respect of a building; and

(b) during a period in a year of income, a taxpayer:

(i) was the owner of the hotel part and used any part of the hotel part for the purpose of producing assessable income; or

(ii) was the owner of a part of the hotel part and used any part of that part of the hotel part for the purpose of producing assessable income;

a deduction is allowable to the taxpayer for the year of income equal to the amount worked out by:

(c) calculating, for each day (if any) in that period during the whole of which any part ( 4% part ) of the hotel part owned by the taxpayer was dealt with by the taxpayer in the prescribed manner, the amount worked out using the formula:

Portion of qualifying expenditure Days in year

×

0.04

where:

Portion of qualifying expenditure means so much of the qualifying hotel expenditure as is attributable to the 4% part;

Days in year means the number of days in the year of income; and

(d) calculating, for each day (if any) in that period during any part of which any part ( 2.5% part ) of the hotel part owned by the taxpayer was not dealt with by the taxpayer in the prescribed manner but was used by the taxpayer for the purpose of producing assessable income, the amount worked out using the formula:

Portion of qualifying expenditure Days in year

×

0.025

where:

Portion of qualifying expenditure means so much of the qualifying hotel expenditure as is attributable to the 2.5% part;

Days in year means the number of days in the year of income; and

(e) by adding the amounts calculated under paragraphs (c) and (d).

124ZC(3)   [Full year deduction: apartment]  

Subject to this section and section 124ZD , where:

(a) there is an amount of pre-18 July 1985 qualifying apartment expenditure in respect of a building; and

(b) during the whole of a year of income, a taxpayer:

(i) was the owner of the apartment part and dealt with the apartment part in the prescribed manner; or

(ii) was the owner of a part of the apartment part and dealt with that part of the apartment part in the prescribed manner,

the taxpayer is entitled to a deduction, in his assessment in respect of income of that year of income, of an amount equal to:

(c) in a case to which subparagraph (b)(i) applies:

(i) where the building, or the extension, alteration or improvement, in respect of the construction of which the qualifying apartment expenditure was incurred commenced to be constructed on or before 21 August 1984 - 2 ½ % of the amount of qualifying apartment expenditure; and

(ii) in any other case - 4% of the amount of qualifying apartment expenditure; and

(d) in a case to which subparagraph (b)(ii) applies - so much of the amount calculated in accordance with paragraph (c) as the Commissioner determines, having regard to the extent to which the amount of qualifying apartment expenditure is attributable to the part of the apartment part referred to in that subparagraph.

124ZC(4)   [Part year deduction: apartment]  

Subject to this section and section 124ZD , where:

(a) there is an amount of pre-18 July 1985 qualifying apartment expenditure in respect of a building; and

(b) during a part only of a year of income, a taxpayer:

(i) was the owner of the apartment part and dealt with the apartment part in the prescribed manner; or

(ii) was the owner of a part of the apartment part and dealt with that part of the apartment part in the prescribed manner,

the taxpayer is entitled to a deduction, in his assessment in respect of income of that year of income, of an amount equal to:

(c) in a case to which subparagraph (b)(i) applies:

(i) where the building, or the extension, alteration or improvement, in respect of the construction of which the qualifying apartment expenditure was incurred commenced to be constructed on or before 21 August 1984 - 2 ½ %; and

(ii) in any other case - 4%,

of so much of that amount of qualifying apartment expenditure as bears to that amount the same proportion as the number of whole days in that part of the year of income bears to the number of days in the year of income; and

(d) in a case to which subparagraph (b)(ii) applies - so much of the amount calculated in accordance with paragraph (c) as the Commissioner determines, having regard to the extent to which the amount of qualifying apartment expenditure is attributable to the part of the apartment part referred to in that subparagraph.

124ZC(4A)   [Post-26 February 1992 qualifying apartment expenditure]  

Subject to this section and section 124ZD , if:

(a) there is an amount of post-26 February 1992 qualifying apartment expenditure in respect of a building; and

(b) during a period in a year of income, a taxpayer:

(i) was the owner of the apartment part and used any part of the apartment part for the purpose of producing assessable income; or

(ii) was the owner of a part of the apartment part and used any part of that part of the apartment part for the purpose of producing assessable income;

a deduction is allowable to the taxpayer for the year of income equal to the amount worked out by:

(c) calculating, for each day (if any) in that period during the whole of which any part ( 4% part ) of the apartment part owned by the taxpayer was dealt with by the taxpayer in the prescribed manner, the amount worked out using the formula:

Portion of qualifying expenditure Days in year

×

0.04

where:

Portion of qualifying expenditure means so much of the qualifying apartment expenditure as is attributable to the 4% part;

Days in year means the number of days in the year of income; and

(d) calculating, for each day (if any) in that period during any part of which any part ( 2.5% part ) of the apartment part owned by the taxpayer was not dealt with by the taxpayer in the prescribed manner but was used by the taxpayer for the purpose of producing assessable income, the amount worked out using the formula:

Portion of qualifying expenditure Days in year

×

0.025

where:

Portion of qualifying expenditure means so much of the qualifying apartment expenditure as is attributable to the 2.5% part;

Days in year means the number of days in the year of income; and

(e) by adding the amounts calculated under paragraphs (c) and (d).

124ZC(5)   [Time limits for deductions]  

For the purposes of determining the amount of a deduction allowable to a taxpayer under subsection (1), (2), (3) or (4) in respect of an amount of qualifying hotel expenditure or qualifying apartment expenditure in respect of an eligible building, the taxpayer shall be taken not to have dealt with any part of the hotel part or apartment part, as the case may be, in the prescribed manner at any time after the expiration of the period of:

(a) where the building, or the extension, alteration or improvement, in respect of the construction of which the qualifying hotel expenditure or the qualifying apartment expenditure, as the case may be, was incurred commenced to be constructed on or before 21 August 1984 - 40 years; and

(b) in any other case - 25 years,

commencing on the day on which the hotel part, or the apartment part, as the case may be, was first used by any person for any purpose after completion of the relevant construction.

124ZC(5A)   [Deduction limit re qualifying hotel expenditure]  

A deduction allowable to a taxpayer under subsection (2A) in relation to a year of income in respect of so much of an amount of qualifying hotel expenditure as is attributable to the hotel part, or the part of the hotel part, mentioned in paragraph (2A)(b) must not exceed so much of the residual capital expenditure at whichever of the following times is applicable:

(a) if the taxpayer's ownership of the hotel part, or the part of the hotel part, as the case may be, commenced during the year of income - immediately after the time when that ownership commenced; or

(b) in any other case - the beginning of the year of income;

in relation to the amount of the qualifying hotel expenditure as is attributable to the hotel part or the part of the hotel part, as the case may be.

124ZC(5B)   [Deduction limit re qualifying apartment expenditure]  

A deduction allowable to a taxpayer under subsection (4A) in relation to a year of income in respect of so much of an amount of qualifying apartment expenditure as is attributable to the apartment part, or the part of the apartment part, mentioned in paragraph (4A)(b) must not exceed so much of the residual capital expenditure at whichever of the following times is applicable:

(a) if the taxpayer's ownership of the apartment part, or the part of the apartment part, as the case may be, commenced during the year of income - immediately after the time when that ownership commenced; or

(b) in any other case - the beginning of the year of income;

in relation to the amount of the qualifying partnership expenditure as is attributable to the apartment part or the part of the apartment part, as the case may be.

124ZC(6)   [Arrangement with tax-exempt body]  

Where:

(a) apart from this subsection, a deduction (in this subsection referred to as the relevant deduction ) would be allowable to a taxpayer in respect of income of a year of income in respect of an amount of qualifying expenditure;

(b) the Commissioner is satisfied that, after 1 May 1980, the taxpayer entered into an agreement, arrangement or understanding with an exempt body under which the taxpayer was to pay an amount, or transfer property, directly or indirectly, to the exempt body, being an amount which, or property the value of which, was to be calculated by reference to the amount of any deduction allowable to the taxpayer under this Division in respect of that qualifying expenditure in relation to that year of income; and

(c) the Commissioner is satisfied that the agreement, arrangement or understanding was entered into for the purpose, or for purposes that included the purpose (not being a merely incidental purpose), of securing that the benefit of any reduction in the liability to tax of the taxpayer that would, but for this subsection, result from the allowance of the relevant deduction would pass wholly or substantially to the exempt body, whether directly or indirectly,

the relevant deduction shall not be allowed to the taxpayer.