INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART III - LIABILITY TO TAXATION  

Division 3 - Deductions  

Subdivision A - General  

SECTION 72   RATES AND TAXES  

72(1AA)   [No application 1997/98 income year onwards]  

This section does not apply to the 1997-98 year of income or a later year of income.

Note:

Rates and land tax may be deductible under section 8-1 of the Income Tax Assessment Act 1997 . Section 25-75 (Rates and land taxes) of that Act deals with the deductibility of rates and land taxes paid for premises used to produce mutual receipts.

72(1)   [Allowable deductions]  

Sums for which the taxpayer is personally liable and which are paid in Australia by him in the year of income for -

(a) rates which are annually assessed; or

(b) land tax imposed under any law of a State or of a Territory being part of Australia (other than taxes which are deductible under section 17 of the Estate Duty Assessment Act 1914-1940 ),

shall be allowable deductions.

72(1A)   [Sub-divided residence scheme]  

Where, in the year of income, a taxpayer, being a person who has, under a sub-divided residence scheme, a proprietary right in respect of a flat or home unit, makes, in accordance with the scheme, a payment which, or a part of which, the Commissioner is satisfied is in respect of, or of a share of, an amount of rates or land tax of a kind to which subsection (1) applies that has been paid or will be paid, in respect of, or of a part of, the sub-divided residence or the parcel of land on which the sub-divided residence is erected, by a person other than the taxpayer -

(a) that payment, or that part of that payment, as the case may be, is an allowable deduction; and

(b) any deduction that would, but for this subsection, have been allowable under subsection (1), in an assessment of the income of any person of any year of income, in respect of the payment of that amount of rates or land tax shall be reduced by the amount of the deduction allowable under paragraph (a).

72(1B)   [Conditions for deduction]  

A deduction is not allowable under this section in respect of an amount paid by a taxpayer unless -

(a) the amount is paid in respect of land that is, or premises that are, used by the taxpayer during the year of income for the purpose of gaining or producing income or carrying on a business for the purpose of gaining or producing income; or

(b) subject to subsection (1G), the amount is paid in respect of a dwelling, flat or home unit that is used by the taxpayer during the year of income as his sole or principal residence.

72(1C)   [Part revenue use]  

If an amount referred to in paragraph (1B)(a) is paid in respect of land that is, or premises that are, used by the taxpayer during the year of income partly for the purpose of gaining or producing income and partly for another purpose, so much only of that amount is allowable as a deduction by virtue of that paragraph as, in the opinion of the Commissioner, is reasonable in the circumstances.

72(1D)   [Deduction for residence limited]  

The amount allowable as a deduction, or the sum of the amounts allowable as deductions, to a taxpayer under this section in respect of any one year of income by reason that a dwelling, flat or home unit was used by the taxpayer during that year of income as his sole or principal residence shall not exceed $300.

72(1E)   [Two or more payers]  

Where, in a year of income, 2 or more taxpayers pay amounts for rates or land tax, or amounts in respect of, or of a share of, an amount of rates or land tax, in respect of the same dwelling, flat or home unit, being a dwelling, flat or home unit used concurrently by them during that year of income as their sole or principal residence, the deductions to which those taxpayers are entitled under this section in respect of those amounts in respect of that year of income are such respective amounts, not exceeding in the aggregate $300, as, in the opinion of the Commissioner, are reasonable in the circumstances.

72(1F)   [Rates paid in respect of dwelling]  

For the purposes of subsections (1B) and (1E), an amount paid in respect of a parcel of land on which a dwelling is situated shall be deemed to be an amount paid in respect of the dwelling.

72(1G)   [No deductions from 1975/76 in certain circumstances]  

Where the taxpayer is a resident, a deduction is not allowable under this section in respect of an amount paid by the taxpayer in the year of income that commenced on 1 July 1975, or in a subsequent year of income, in respect of a dwelling, flat or home unit that is used by the taxpayer during the relevant year of income as his sole or principal residence except to the extent that the amount is allowable as a deduction under subsection (1C) by reason that the amount is an amount of the kind referred to in paragraph (1B)(a).

72(1H)   [PNG resident]  

In relation to assessments in respect of income of the year of income that commenced on 1 July 1975, the reference in subsection (1G) to a taxpayer who is a resident shall be read as including a reference to a taxpayer who is a resident of Papua New Guinea.

72(1J)   [Limited application]  

So far as it relates to a refund of an amount allowed or allowable as a deduction, subsection (2) does not apply to an amount received in the 1997-98 year of income or in a later year of income if the amount is received as recoupment as defined by section 20-25 of the Income Tax Assessment Act 1997 .

Note:

Subdivision 20-A of the Income Tax Assessment Act 1997 applies instead.

72(2)   [Refunds assessable]  

Where a taxpayer receives in the year of income a refund of an amount paid for rates or taxes which has been allowed or is allowable as a deduction, or in respect of which a rebate of tax has been allowed or is allowable, in an assessment for income tax under this Act or a previous law of the Commonwealth, his assessable income shall include that amount.

72(3)   [Refund - home units and flats]  

Where a refund is made by a government or authority of an amount paid for rates or land tax and a deduction has been allowed or is allowable, or in respect of which a rebate of tax has been allowed or is allowable, in an assessment of a person by reason of a payment made by that person in respect of the whole or a part of that amount of rates or land tax -

(a) the assessable income of that person of the year of income of that person in which the refund is made shall include so much of the amount of the refund as the Commissioner considers to be reasonable in the circumstances; and

(b) any amount that would, but for this subsection, have been included under subsection (2) in the assessable income of any other person of the year of income of that other person in which the refund is made shall be reduced by the amount included under paragraph (a) in the assessable income of the first-mentioned person in respect of the refund.

72(4)   [Definitions]  

In this section -

"proprietary right"
, in relation to a flat or home unit, includes rights of occupancy arising by virtue of the holding of shares or by virtue of a contract to purchase shares in a company that owns the sub-divided residence that contains the flat or home unit;

"sub-divided residence"
means a building in respect of which there is a sub-divided residence scheme; and

"sub-divided residence scheme"
means a scheme or arrangement having the purpose of enabling or facilitating the holding or employment of proprietary rights by different persons in respect of different flats or home units contained in the one building in Australia.