INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART III - LIABILITY TO TAXATION  

Division 2A - Calculation of taxable income  

Subdivision B - Calculation of taxable income where disqualifying event occurs  

SECTION 50N   COMPOSITION OF TAXABLE INCOME  

50N(1)   [Application of section]  

Where, for the purposes of any provision of this Act (other than this section), it is necessary to ascertain the extent to which the taxable income of a company of a year of income, being a company in relation to which this Subdivision applies in relation to the year of income, consists of one or more of the following classes of income, that is to say, income from private company dividends, income from dividends other than private company dividends, income from property other than dividends and income from personal exertion, then, notwithstanding the provisions of Subdivision A, this section applies for that purpose.

50N(2)   [Income from varied sources]  

Where the assessable income of the company in respect of a relevant period in relation to the company in relation to a year of income is derived from income included in more than one of the following classes of income, that is to say, income from private company dividends, income from dividends other than private company dividends, income from property other than dividends and income from personal exertion, the provisions of subsections (3), (4), (5) and (6) shall apply to all allowable deductions of the company in respect of the relevant period.

50N(3)   [Deductions where income from varied sources]  

Where an allowable deduction or part of an allowable deduction in respect of the relevant period relates directly to income from private company dividends (whether of the relevant period, another relevant period or another year of income), the deduction or part of the deduction, as the case may be, shall be made successively from income from private company dividends, from income from dividends other than private company dividends, from income from property other than dividends and from income from personal exertion.

50N(4)   [Deduction relating to income from dividends]  

Where an allowable deduction or part of an allowable deduction in respect of the relevant period relates directly to income from dividends other than private company dividends (whether of the relevant period, another relevant period or another year of income), the deduction or part of the deduction, as the case may be, shall be made successively from income from dividends other than private company dividends, from income from private company dividends, from income from property other than dividends and from income from personal exertion.

50N(5)   [Deduction relating to income from property]  

Where an allowable deduction or part of an allowable deduction in respect of the relevant period relates directly to income from property other than dividends (whether of the relevant period, another relevant period, or another year of income), the deduction or part of the deduction, as the case may be, shall be made successively from income from property other than dividends, from income from private company dividends, from income from dividends other than private company dividends and from income from personal exertion.

50N(6)   [Deduction relating to income other than from property]  

Where an allowable deduction or part of an allowable deduction in respect of the relevant period does not relate directly to income from property, the deduction or part of the deduction, as the case may be, shall be made successively from income from personal exertion, from income from property other than dividends, from income from private company dividends and from income from dividends other than private company dividends.

50N(7)   [Excess to be set off against other classes of income]  

Where, by subsections (3), (4), (5) or (6), it is provided that any deduction shall be made successively from income of 2 or more classes of income, the deduction shall be set off against the income of the first of those classes, and, if it exceeds the income of that class, the excess shall be set off against the income of the second class, and so on until either the deduction or the income of the last of those classes is exhausted.

50N(8)   [Notional taxable income]  

The notional taxable income of a company in respect of a relevant period shall be deemed to consist of -

(a) where the assessable income of the company in respect of the relevant period consists of or includes income from private company dividends - so much (if any) of the amount of that income from private company dividends as remains after deducting in accordance with subsections (3), (4), (5) and (6) any allowable deductions or parts of allowable deductions that, by virtue of any of those subsections, are to be deducted from income from private company dividends;

(b) where the assessable income of the company in respect of the relevant period consists of or includes income from dividends other than private company dividends - so much (if any) of the amount of that income from dividends other than private company dividends as remains after deducting in accordance with subsections (3), (4), (5) and (6) any allowable deductions or parts of allowable deductions that, by virtue of any of those subsections, are to be deducted from income from dividends other than private company dividends;

(c) where the assessable income of the company in respect of the relevant period consists of or includes income from property other than dividends - so much (if any) of the amount of that income from property other than dividends as remains after deducting in accordance with subsections (3), (4), (5) and (6) any allowable deductions or parts of allowable deductions that, by virtue of any of those subsections, are to be deducted from income from property other than dividends; and

(d) where the assessable income of the company in respect of the relevant period consists of or includes income from personal exertion - so much (if any) of the amount of that income from personal exertion as remains after deducting in accordance with subsections (3), (4), (5) and (6) any allowable deductions or parts of any allowable deductions that, by virtue of any of those subsections, are to be deducted from income from personal exertion.

50N(9)   [Notional loss]  

The notional loss of a company in respect of a relevant period shall be deemed to consist of -

(a) so much of the allowable deductions (if any) in respect of the relevant period as relates directly to income from private company dividends as has not been deducted, in accordance with subsection (3), from assessable income of the company in respect of the relevant period;

(b) so much of the allowable deductions (if any) in respect of the relevant period as relates directly to income from dividends other than private company dividends as has not been deducted, in accordance with subsection (4), from assessable income of the company in respect of the relevant period;

(c) so much of the allowable deductions (if any) in respect of the relevant period as relates directly to income from property other than dividends as has not been deducted, in accordance with subsection (5), from assessable income of the company in respect of the relevant period; and

(d) so much of the allowable deductions (if any) in respect of the relevant period as does not relate directly to income from property as has not been deducted, in accordance with subsection (6), from assessable income of the company in respect of the relevant period.

50N(10)   [Whole of notional loss to be taken into account]  

Where the whole of a notional loss of a company in respect of a relevant period is to be taken into account in determining the amount of the eligible notional loss in relation to the company in relation to the year of income -

(a) so much of allowable deductions that relate directly, in whole or in part, to income from private company dividends (whether of the relevant period, another relevant period or another year of income) as is deemed by subsection (9) to be included in the notional loss shall be deemed to be included in the eligible notional loss;

(b) so much of allowable deductions that relate directly, in whole or in part, to income from dividends other than private company dividends (whether of the relevant period, another relevant period or another year of income) as is deemed by subsection (9) to be included in the notional loss shall be deemed to be included in the eligible notional loss;

(c) so much of allowable deductions that relate directly, in whole or in part, to income from property other than dividends (whether of the relevant period, another relevant period or another year of income) as is deemed by subsection (9) to be included in the notional loss shall be deemed to be included in the eligible notional loss; and

(d) so much of allowable deductions that do not relate directly, in whole or in part, to income from property as is deemed by subsection (9) to be included in the notional loss shall be deemed to be included in the eligible notional loss.

50N(11)   [Part of notional loss to be taken into account]  

Where a part of a notional loss of a company in respect of a relevant period is to be taken into account in determining the amount of the eligible notional loss in relation to the company in relation to the year of income -

(a) so much of the amount of allowable deductions that relate directly, in whole or in part, to income from private company dividends (whether of the relevant period, another relevant period or another year of income) that is deemed by subsection (9) to be included in the notional loss as bears to that amount the same proportion as the part of that notional loss that is to be taken into account in determining the amount of the eligible notional loss bears to the whole of the notional loss shall be deemed to be included in the eligible notional loss;

(b) so much of the amount of allowable deductions that relate directly, in whole or in part, to income from dividends other than private company dividends (whether of the relevant period, another relevant period or another year of income) that is deemed by subsection (9) to be included in the notional loss as bears to that amount the same proportion as the part of that notional loss that is to be taken into account in determining the amount of the eligible notional loss bears to the whole of the notional loss shall be deemed to be included in the eligible notional loss;

(c) so much of the amount of allowable deductions that relate directly, in whole or in part, to income from property other than dividends (whether of the relevant period, another relevant period or another year of income) that is deemed by subsection (9) to be included in the notional loss as bears to that amount the same proportion as the part of that notional loss that is to be taken into account in determining the amount of the eligible notional loss bears to the whole of the notional loss shall be deemed to be included in the eligible notional loss; and

(d) so much of the amount of allowable deductions that do not relate directly, in whole or in part, to income from property that is deemed by subsection (9) to be included in the notional loss as bears to that amount the same proportion as the part of that notional loss that is to be taken into account in determining the amount of the eligible notional loss bears to the whole of the notional loss shall be deemed to be included in the eligible notional loss.

50N(12)   [Income from private company dividends]  

Subject to subsection (13), the amount of income from private company dividends included in the taxable income of the company of the year of income shall be deemed to be the amount (if any) ascertained by deducting from the sum (in this subsection referred to as the ``income amount'' ) of -

(a) any amount, or the sum of any amounts, of income from private company dividends included in the notional taxable income of a relevant period or included in the notional taxable incomes of relevant periods, as the case may be, by subsection (8); and

(b) any amount, or the sum of any amounts, of income from private company dividends included in a full-year amount or included in full-year amounts, as the case may be, in relation to the company in relation to the year of income,

the sum (in this subsection referred to as the ``deduction amount'' ) of -

(c) so much of allowable deductions that relate directly, in whole or in part, to income from private company dividends (whether of the year of income or of a previous year of income) as is deemed by this section to be included in the eligible notional loss of the company in relation to the year of income;

(d) so much of any full-year deduction or full-year deductions as relates directly to income from private company dividends; and

(e) so much of any partnership deduction or partnership deductions as relates directly to income from private company dividends.

50N(13)   [Amount of private company dividends]  

Where, apart from this subsection, an amount (in this subsection referred to as the ``excess income amount'' ) of income from private company dividends would, by subsection (12), be included in the taxable income of the company of the year of income and -

(a) the deduction amount referred to in subsection (14) exceeds the income amount referred to in that subsection;

(b) the deduction amount referred to in subsection (16) exceeds the income amount referred to in that subsection; or

(c) the deduction amount referred to in subsection (18) exceeds the income amount referred to in that subsection,

the amount of income from private company dividends included in the taxable income of the company of the year of income shall be deemed to be -

(d) in a case where only one of paragraphs (a), (b) and (c) is applicable - the amount (if any) remaining after deducting from the excess income amount the amount of the excess referred to in the paragraph that is applicable; and

(e) in a case where 2 or more of paragraphs (a), (b) and (c) are applicable - the amount (if any) remaining after deducting successively from the excess income amount the amounts of the excesses referred to in the paragraphs that are applicable.

50N(14)   [Amount of other dividends]  

Subject to subsection (15), the amount of income from dividends other than private company dividends included in the taxable income of the company of the year of income shall be deemed to be the amount (if any) ascertained by deducting from the sum (in this subsection referred to as the ``income amount'' ) of -

(a) any amount, or the sum of any amounts, of income from dividends other than private company dividends included in the notional taxable income of a relevant period or included in the notional taxable incomes of relevant periods, as the case may be, by subsection (8); and

(b) any amount, or the sum of any amounts, of income from dividends other than private company dividends included in a full-year amount or included in full-year amounts, as the case may be, in relation to the company in relation to the year of income,

the sum (in this subsection referred to as the ``deduction amount'' ) of -

(c) so much of allowable deductions that relate directly, in whole or in part, to income from dividends other than private company dividends (whether of the year of income or of a previous year of income) as is deemed by this section to be included in the eligible notional loss of the company in relation to the year of income;

(d) so much of any full-year deduction or full-year deductions as relates directly to income from dividends other than private company dividends; and

(e) so much of any partnership deduction or partnership deductions as relates directly to income from dividends other than private company dividends.

50N(15)   [Deemed amount of other dividends]  

Where, apart from this subsection, an amount (in this subsection referred to as the ``excess income amount'' ) of income from dividends other than private company dividends would, by subsection (14), be included in the taxable income of the company of the year of income and -

(a) the deduction amount referred to in subsection (12) exceeds the income amount referred to in that subsection;

(b) the deduction amount referred to in subsection (16) exceeds the income amount referred to in that subsection; or

(c) the deduction amount referred to in subsection (18) exceeds the income amount referred to in that subsection,

the amount of income from dividends other than private company dividends included in the taxable income of the company of the year of income shall be deemed to be -

(d) in a case where only one of paragraphs (a), (b) and (c) is applicable - the amount (if any) remaining after deducting from the excess income amount the amount of the excess referred to in the paragraph that is applicable; and

(e) in a case where 2 or more of paragraphs (a), (b) and (c) are applicable - the amount (if any) remaining after deducting successively from the excess income amount the amounts of the excesses referred to in the paragraphs that are applicable.

50N(16)   [Amount of income from property]  

Subject to subsection (17), the amount of income from property other than dividends included in the taxable income of the company of the year of income shall be deemed to be the amount (if any) ascertained by deducting from the sum (in this subsection referred to as the ``income amount'' ) of -

(a) any amount, or the sum of any amounts, of income from property other than dividends included in the notional taxable income of a relevant period or included in the notional taxable incomes of relevant periods, as the case may be, by subsection (8); and

(b) any amount, or the sum of any amounts, of income from property other than dividends included in a full-year amount or included in full-year amounts, as the case may be, in relation to the company in relation to the year of income,

the sum (in this subsection referred to as the ``deduction amount'' ) of -

(c) so much of allowable deductions that relate directly, in whole or in part, to income from property other than dividends (whether of the year of income or of a previous year of income) as is deemed by this section to be included in the eligible notional loss of the company in relation to the year of income;

(d) so much of any full-year deduction or full-year deductions as relates directly to income from property other than dividends; and

(e) so much of any partnership deduction or partnership deductions as relates directly to income from property other than dividends.

50N(17)   [Deemed amount of income from property]  

Where, apart from this subsection, an amount (in this subsection referred to as the ``excess income amount'' ) of income from property other than dividends would, by subsection (16), be included in the taxable income of the company of the year of income and -

(a) the deduction amount referred to in subsection (12) exceeds the income amount referred to in that subsection;

(b) the deduction amount referred to in subsection (14) exceeds the income amount referred to in that subsection; or

(c) the deduction amount referred to in subsection (18) exceeds the income amount referred to in that subsection,

the amount of income from property other than dividends included in the taxable income of the company of the year of income shall be deemed to be -

(d) in a case where only one of paragraphs (a), (b) and (c) is applicable - the amount (if any) remaining after deducting from the excess income amount the amount of the excess referred to in the paragraph that is applicable; and

(e) in a case where 2 or more of paragraphs (a), (b) and (c) are applicable - the amount (if any) remaining after deducting successively from the excess income amount the amounts of the excesses referred to in the paragraphs that are applicable.

50N(18)   [Amount of income from personal exertion]  

Subject to subsection (19), the amount of income from personal exertion included in the taxable income of the company of the year of income shall be deemed to be the amount (if any) ascertained by deducting from the sum (in this subsection referred to as the ``income amount'' ) of -

(a) any amount, or the sum of any amounts, of income from personal exertion included in the notional taxable income of a relevant period or included in the notional taxable incomes of relevant periods, as the case may be, by subsection (8); and

(b) any amount, or the sum of any amounts, of income from personal exertion included in a full-year amount or included in full-year amounts, as the case may be, in relation to the company in relation to the year of income,

the sum (in this subsection referred to as the ``deduction amount'' ) of -

(c) so much of allowable deductions that do not relate directly, in whole or in part, to income from property as is deemed by this section to be included in the eligible notional loss of the company in relation to the year of income;

(d) so much of any full-year deduction or full-year deductions as does not relate directly to income from property; and

(e) so much of any partnership deduction or partnership deductions as does not relate directly to income from property.

50N(19)   [Deemed amount of income from personal exertion]  

Where, apart from this subsection, an amount (in this subsection referred to as the ``excess income amount'' ) of income from personal exertion would, by subsection (18), be included in the taxable income of the company of the year of income and -

(a) the deduction amount referred to in subsection (16) exceeds the income amount referred to in that subsection;

(b) the deduction amount referred to in subsection (12) exceeds the income amount referred to in that subsection; or

(c) the deduction amount referred to in subsection (14) exceeds the income amount referred to in that subsection,

the amount of income from personal exertion included in the taxable income of the company of the year of income shall be deemed to be -

(d) in a case where only one of paragraphs (a), (b) and (c) is applicable - the amount (if any) remaining after deducting from the excess income amount the amount of the excess referred to in the paragraph that is applicable; and

(e) in a case where 2 or more of paragraphs (a), (b) and (c) are applicable - the amount (if any) remaining after deducting successively from the excess income amount the amounts of the excesses referred to in the paragraphs that are applicable.

50N(20)   [Set off of deductible amounts]  

Where, in the application of subsection (13), (15), (17) or (19), 2 or more amounts (in this subsection referred to as ``deductible amounts'' ) are required to be deducted successively from another amount (in this subsection referred to as the ``initial amount'' ), the first of those deductible amounts shall be set off against that initial amount and, if the initial amount exceeds that deductible amount, the next of those deductible amounts shall be set off against the amount by which the initial amount exceeds the first deductible amount and so on until either the deductible amounts are exhausted or the initial amount is exhausted.

50N(21)   [Deduction relating to non-private company dividends]  

For the purposes of this section, where an allowable deduction or part of an allowable deduction relates directly to income from dividends but does not relate directly to income from private company dividends or to income from dividends other than private company dividends -

(a) so much (if any) of that deduction or part, as the case may be, as, in the opinion of the Commissioner, may appropriately be related to income from private company dividends shall be deemed to relate directly to income from private company dividends; and

(b) so much (if any) of that deduction or part, as the case may be, as, in the opinion of the Commissioner, may not appropriately be related to income from private company dividends shall be deemed to relate directly to income from dividends other than private company dividends.

50N(22)   [Deemed private company dividends]  

Subject to subsection (23), dividends paid to a company (in this subsection referred to as the ``relevant company'' ) by another company during a year of income of the relevant company shall, for the purposes of this section, be deemed to be private company dividends if, and only if -

(a) the relevant company was a private company in relation to that year of income; and

(b) the other company was a private company in relation to the year of income of that other company during which the dividends were paid.

50N(23)   [Determination of rebate entitlement]  

In the application of this section for the purposes of determining the amount of any rebate to which a company is entitled, or that may be allowed to a company, under section 46 or 46A in relation to a year of income, a reference in this section, in relation to the company in relation to the year of income, to private company dividends shall be read as not including a reference to so much of any dividends paid to the company by another company that is a non-resident as was paid out of profits derived from sources out of Australia.

50N(24)   [Application of s 45Z]  

Section 45Z applies for the purposes of subsection (23) of this section in a corresponding way to the way in which it applies for the purposes of sections 46 and 46A .