INCOME TAX ASSESSMENT ACT 1936

PART III - LIABILITY TO TAXATION  

Division 3 - Deductions  

Subdivision D - Losses and outgoings incurred under certain tax avoidance schemes  

SECTION 82KH   INTERPRETATION  

82KH(1)  


In this Subdivision, unless the contrary intention appears:

additional benefit
, in relation to an amount of eligible relevant expenditure, means the additional benefit, or the aggregate of the additional benefits, as the case may be, referred to in paragraph (1F)(b) in relation to that eligible relevant expenditure.

agreement
means any agreement, arrangement, understanding or scheme, whether formal or informal, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings.

associate
, in relation to a taxpayer, means:


(a) in the case of a taxpayer who is a natural person, other than a taxpayer in the capacity of a trustee:


(i) a relative of the taxpayer;

(ii) a partner of the taxpayer;

(iii) if a person who is an associate of the taxpayer by virtue of subparagraph (ii) is a natural person - the spouse or a child of that person;

(iv) a trustee of a trust estate where the taxpayer or another person who is an associate of the taxpayer by virtue of another subparagraph of this paragraph benefits or is capable (whether by the exercise of a power of appointment or otherwise) of benefiting under the trust, either directly or through any interposed companies, partnerships or trusts; or

(v) a company where:

(A) the company is, or its directors are, accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the taxpayer, of another person who is an associate of the taxpayer by virtue of another subparagraph of this paragraph, of a company that is an associate of the taxpayer by virtue of another application of this subparagraph or of any 2 or more such persons; or

(B) the taxpayer is, the persons who are associates of the taxpayer by virtue of sub-subparagraph (A) and the preceding subparagraphs of this paragraph are, or the taxpayer and the persons who are associates of the taxpayer by virtue of that sub-subparagraph and those subparagraphs are, in a position to cast, or control the casting of, more than 50% of the maximum number of votes that might be cast at a general meeting of the company;


(b) in the case of a taxpayer being a company, other than a taxpayer in the capacity of a trustee:


(i) a partner of the taxpayer;

(ii) if a person who is an associate of the taxpayer by virtue of subparagraph (i) is a natural person - the spouse or a child of that person;

(iii) a trustee of a trust estate where the taxpayer or another person who is an associate of the taxpayer by virtue of another subparagraph of this paragraph benefits or is capable (whether by the exercise of a power of appointment or otherwise) of benefiting under the trust, either directly or through any interposed companies, partnerships or trusts;

(iv) another person where:

(A) the taxpayer company is, or its directors are, accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of that person, or of that person and another person or other persons, whether those directions, instructions or wishes are communicated directly to the taxpayer company or its directors, or through any interposed companies, partnerships or trusts; or

(B) that person is, or that person and the persons who, if that person were the taxpayer, would be associates of that person by virtue of paragraph (a), by virtue of sub-subparagraph (A), by virtue of another subparagraph of this paragraph or by virtue of paragraph (c) are, in a position to cast, or control the casting of, more than 50% of the maximum number of votes that might be cast at a general meeting of the taxpayer company;

(v) another company where:

(A) the other company is, or its directors are, accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the taxpayer company, of a person who is an associate of the taxpayer company by virtue of another subparagraph of this paragraph, of a company that is an associate of the taxpayer company by virtue of another application of this subparagraph or of any 2 or more such persons; or

(B) the taxpayer company is, the persons who are associates of the taxpayer company by virtue of sub-subparagraph (A) and the other subparagraphs of this paragraph are, or the taxpayer company and the persons who are associates of the taxpayer company by virtue of that sub-subparagraph and those subparagraphs are, in a position to cast, or control the casting of, more than 50% of the maximum number of votes that might be cast at a general meeting of the other company; or

(vi) any other person who, if a third person who is an associate of the taxpayer company by virtue of subparagraph (iv) were the taxpayer, would be an associate of that third person by virtue of paragraph (a), by virtue of another subparagraph of this paragraph or by virtue of paragraph (c);


(c) in the case of a taxpayer in the capacity of a trustee of a trust estate:


(i) any person who benefits or is capable (whether by the exercise of a power of appointment or otherwise) of benefiting under the trust estate, either directly or through any interposed companies, partnerships or trusts;

(ii) where a person who is an associate of the taxpayer by virtue of subparagraph (i) is a natural person - any person who, if that natural person were the taxpayer, would be an associate of that natural person by virtue of paragraph (a) or this paragraph; or

(iii) where a person who is an associate of the taxpayer by virtue of subparagraph (i) or (ii) is a company - any person who, if that company were the taxpayer, would be an associate of that company by virtue of paragraph (b) or this paragraph; or


(d) in the case of a taxpayer being a partnership:


(i) a partner in the partnership;

(ii) where any partner in the partnership is a natural person - any person who, if that natural person were the taxpayer, would be an associate of that natural person by virtue of paragraph (a) or (c); or

(iii) where any partner in the partnership is a company - any person who, if the company were the taxpayer, would be an associate of the company by virtue of paragraph (b) or (c).

consumable supplies
means property other than:


(a) trading stock; or


(b) choses in action.

"exempt business"
(Omitted by No 107 of 1989)

expected tax saving
, in relation to an amount of eligible relevant expenditure incurred by a taxpayer, means:


(a) where only one amount is, under subsection (1B), a tax saving amount for the purposes of the application of this definition in relation to the eligible relevant expenditure - that tax saving amount; and


(b) where 2 or more amounts are, under subsection (1B), tax saving amounts for the purposes of the application of this definition in relation to the eligible relevant expenditure - the sum of those tax saving amounts.

film
means an aggregate of images, or of images and sounds, embodied in any material.

market research
means:


(a) the undertaking of research to ascertain the location, extent, value or other characteristics of the market, or the potential market, for goods or services; and


(b) the provision of information, advice or assistance in connection with the marketing of particular goods or services or of goods or services generally.

moneys paid on shares
(Omitted by No 107 of 1989)

property
includes a chose in action and also includes any estate, interest, right or power, whether at law or in equity, in or over property.

relevant expenditure
, in relation to a taxpayer, means:


(a) expenditure in respect of which a deduction would, apart from section 82KL , be allowable to the taxpayer under section 25-25 (Borrowing expenses) of the Income Tax Assessment Act 1997 ;


(b) expenditure in respect of which a deduction would, apart from section 82KL , be allowable to the taxpayer under section 25-30 (Expenses of discharging a mortgage) of the Income Tax Assessment Act 1997 ;


(c) a loss or outgoing incurred by the taxpayer in the purchase by the taxpayer of property (not being a chose in action) that, for the purposes of the application of this Act in relation to the taxpayer, is trading stock, to the extent to which a deduction would, apart from section 82KL , be allowable to the taxpayer under section 8-1 of the Income Tax Assessment Act 1997 in respect of the loss or outgoing;


(d) a loss or outgoing incurred by the taxpayer in respect of interest to the extent to which a deduction would, apart from section 82KL , be allowable to the taxpayer under section 8-1 of the Income Tax Assessment Act 1997 in respect of the loss or outgoing;


(e) a loss or outgoing incurred by the taxpayer in respect of rent to the extent to which a deduction would, apart from section 82KL , be allowable to the taxpayer under section 8-1 of the Income Tax Assessment Act 1997 in respect of the loss or outgoing;


(f) a bad debt incurred by the taxpayer in respect of money lent by the taxpayer in the course of carrying on a business to the extent to which a deduction would, apart from section 82KL , be allowable to the taxpayer under section 8-1 or section 25-35 of the Income Tax Assessment Act 1997 in respect of the bad debt;


(g) a loss or outgoing incurred by the taxpayer in respect of:


(i) the production, marketing or distribution of a film; or

(ii) the acquisition of a copyright subsisting in a film;
to the extent to which a deduction would, apart from section 82KL , be allowable to the taxpayer under section 8-1 of the Income Tax Assessment Act 1997 in respect of the loss or outgoing;


(h) expenditure incurred by the taxpayer in respect of a unit of industrial property, being a unit of industrial property that relates to copyright subsisting in a film, to the extent to which the amount of that expenditure is taken into account, or would, apart from former subsections 124R(2) and (3) , be taken into account, in calculating the residual value of the unit of industrial property in ascertaining whether, apart from section 82KL , a deduction would be allowable to the taxpayer under former section 124M or 124N in respect of the residual value of the unit of industrial property;


(j) (Omitted by No 107 of 1989)


(ka) expenditure incurred by the taxpayer in respect of an item of intellectual property (as defined in the Income Tax Assessment Act 1997 ) that relates to copyright subsisting in a film, but only to the extent described at the end of this definition;


(k) a loss or outgoing incurred by the taxpayer in the purchase of consumable supplies to the extent to which a deduction would, apart from section 82KL , be allowable to the taxpayer under section 8-1 of the Income Tax Assessment Act 1997 in respect of the loss or outgoing;


(m) a loss or outgoing incurred by the taxpayer in respect of market research to the extent to which a deduction would, apart from section 82KL , be allowable to the taxpayer under section 8-1 of the Income Tax Assessment Act 1997 in respect of the loss or outgoing;


(n) expenditure incurred by the taxpayer in respect of the acquisition of a unit of industrial property, being a licence under a copyright subsisting in computer software, to the extent to which the amount of that expenditure is taken into account, or would, apart from former subsection 124R(3) be taken into account, in calculating the residual value of the unit of industrial property in ascertaining whether, apart from section 82KL , a deduction would be allowable to the taxpayer under former section 124M or 124N in respect of the residual value of the unit of industrial property;


(oa) expenditure incurred by the taxpayer in respect of acquiring an item of intellectual property (as defined in the Income Tax Assessment Act 1997 ) that is a licence under a copyright subsisting in computer software, but only to the extent described at the end of this definition;


(o) a loss or outgoing or expenditure incurred by the taxpayer by way of commission for collecting assessable income of the taxpayer to the extent to which a deduction would, apart from section 82KL , be allowable to the taxpayer under section 8-1 of the Income Tax Assessment Act 1997 in respect of the loss or outgoing or the expenditure;


(p) a loss or outgoing incurred by the taxpayer in respect of the growing, care or supervision of trees on behalf of the taxpayer to the extent to which a deduction would, apart from section 82KL , be allowable to the taxpayer under section 8-1 of the Income Tax Assessment Act 1997 in respect of the loss or outgoing;


(pa) a loss or outgoing incurred by the taxpayer in respect of the establishment and tending of trees for felling on behalf of the taxpayer to the extent to which a deduction would, apart from section 82KL , be allowable to the taxpayer under section 394-10 of the Income Tax Assessment Act 1997 in respect of the loss or outgoing;


(q) a loss or outgoing incurred by the taxpayer for the purpose of increasing the value of shares in a company, being shares held or beneficially owned by the taxpayer as trading stock, to the extent to which a deduction would, apart from section 82KL , be allowable to the taxpayer under section 8-1 of the Income Tax Assessment Act 1997 in respect of the loss or outgoing;


(r) a loss or outgoing incurred by the taxpayer in respect of:


(i) the production by another person of a master sound recording; or

(ii) the procuration of the production by another person of a master sound recording,
to the extent to which a deduction would, apart from section 82KL , be allowable to the taxpayer under section 8-1 of the Income Tax Assessment Act 1997 in respect of the loss or outgoing;


(s) calls paid by the taxpayer on shares owned by the taxpayer in respect of which a deduction would, apart from section 82KL , be allowable to the taxpayer under Division 30 (which is about gifts) of the Income Tax Assessment Act 1997 ;


(t) (Omitted by No 123 of 1985)


(u) (Omitted by No 107 of 1989)


(v) expenditure (other than expenditure to which a preceding paragraph of this definition applies) incurred by the taxpayer in respect of a unit of industrial property to the extent to which the amount of that expenditure is taken into account, or would, apart from former subsections 124R(2) and (3) , be taken into account, in calculating the residual value of the unit of industrial property in ascertaining whether, apart from section 82KL , a deduction would be allowable to the taxpayer under former section 124M or 124N in respect of the residual value of the unit of industrial property; or


(wa) expenditure (unless covered by an earlier paragraph of this definition) incurred by the taxpayer in respect of an item of intellectual property (as defined in the Income Tax Assessment Act 1997 ), but only to the extent described at the end of this definition;


(w) a loss or outgoing (other than a loss or outgoing referred to in subsection 52A(1) or to which a preceding paragraph of this definition applies) incurred by the taxpayer to the extent to which a deduction would, apart from section 82KL , be allowable to the taxpayer under section 8-1 of the Income Tax Assessment Act 1997 in respect of the loss or outgoing.

However, paragraph (ka), (oa) or (wa) only covers expenditure to the extent that:


(x) it is taken into account in working out under Division 40 of the Income Tax Assessment Act 1997 the adjustable value of the item to the taxpayer in determining whether, apart from section 82KL of this Act, the taxpayer could deduct an amount under that Division for the item for a year of income; or


(y) it would be so taken into account apart from item 8 in the table in subsection 40-180(2) , or item 1 in the table in subsection 40-190(3) (both about non-arm ' s length transactions).

rent
means rent in respect of land or premises.

tax avoidance agreement
means an agreement that was entered into or carried out for the purpose, or for purposes that included the purpose, of securing that a person who, if the agreement had not been entered into or carried out, would have been liable to pay income tax in respect of a year of income would not be liable to pay income tax in respect of that year of income or would be liable to pay less income tax in respect of that year of income than that person would have been liable to pay if the agreement had not been entered into or carried out.

unit of industrial property
has the same meaning as in former Division 10B .

82KH(1A)  


In determining for the purposes of this Subdivision whether an agreement is a tax avoidance agreement, no regard shall be had to a purpose that is a merely incidental purpose.

82KH(1AA)  


A reference in this Subdivision to the incurring by a taxpayer of a bad debt shall be read as a reference to a debt, or a part of a debt, owed to the taxpayer becoming a bad debt.

82KH(1AB)  


A reference in:


(a) subsection 82KL(2) ; or


(b) former section 80 in relation to this Subdivision;

to the incurring by a taxpayer of a loss or outgoing shall be read as including a reference to the incurring by a taxpayer of a bad debt.

82KH(1ABA)  


This section has the same effect in relation to an allowable deduction under section 63E in respect of the extinguishing of the whole or part of a debt as it has in respect of an allowable deduction under section 8-1 or 25-35 of the Income Tax Assessment Act 1997 in respect of the writing off of the whole or part of a debt as bad.

82KH(1AC)  


In this Subdivision:


(a) a reference to a copyright subsisting in a film shall be read as including a reference to:


(i) a licence under a copyright subsisting in a film; and

(ii) an interest, whether at law or in equity, in respect of a copyright, or in respect of a licence under a copyright, subsisting in a film; and


(b) a reference to a licence under a copyright subsisting in computer software shall be read as including a reference to an interest, whether at law or in equity, in a licence under a copyright subsisting in computer software.

82KH(1AD)  


A reference in this Subdivision to a tax benefit being allowed or allowable or not being allowed or allowable in respect of relevant expenditure incurred by a taxpayer shall be read as a reference to:


(a) in a case where the relevant expenditure is relevant expenditure to which paragraph (h), (n) or (v) of the definition of relevant expenditure in subsection (1) applies - a deduction being allowed or allowable or not being allowed or allowable, as the case may be, to the taxpayer under former section 124M or 124N in respect of the residual value of a unit of industrial property where that residual value would be calculated by reference to the relevant expenditure; and


(b) if paragraph (ka), (oa) or (wa) of the definition of relevant expenditure in subsection (1) covers the expenditure - the taxpayer deducting or being able to deduct, or not deducting or not being able to deduct, as appropriate, an amount under Division 40 of the Income Tax Assessment Act 1997 for an item of intellectual property for a year of income because the taxpayer ' s adjustable value of the item would be calculated under that Division by reference to the relevant expenditure; and


(c) (Omitted by No 107 of 1989)


(d) in any other case - a deduction being allowed or allowable or not being allowed or allowable, as the case may be, to the taxpayer in respect of the relevant expenditure.

82KH(1B)  


For the purposes of the application of the definition of expected tax saving in subsection (1) in relation to an amount of eligible relevant expenditure incurred by a taxpayer:


(a) where:


(i) if a tax benefit were not allowable in respect of any part of that eligible relevant expenditure, a person (whether the taxpayer or another person and whether in the capacity of a trustee of a trust estate or otherwise) would be liable to pay income tax in respect of a year of income; and

(ii) if a tax benefit or tax benefits were allowable under this Act in respect of that eligible relevant expenditure, that person would be liable to pay a lesser amount of income tax in respect of that year of income;
the amount by which the amount of the tax referred to in subparagraph (i) exceeds the amount of the tax referred to in subparagraph (ii) is a tax saving amount; and


(b) where:


(i) if a tax benefit were not allowable in respect of any part of that eligible relevant expenditure, a person (whether the taxpayer or another person and whether in the capacity of a trustee of a trust estate or otherwise) would be liable to pay income tax in respect of a year of income; and

(ii) if a tax benefit or tax benefits were allowable under this Act in respect of that eligible relevant expenditure, that person would not be liable to pay income tax in respect of that year of income;
the amount of the tax referred to in subparagraph (i) is a tax saving amount.

82KH(1BA)  


In the application of subsection (1B) in determining whether there is a tax saving amount in relation to an amount of eligible relevant expenditure incurred by a taxpayer in a case where, if a tax benefit or tax benefits were allowable in respect of that eligible relevant expenditure, a person (whether the taxpayer or another person and whether in the capacity of a trustee of a trust estate or otherwise) would:


(a) have a tax loss for a year of income that the person would not have; or


(b) have a greater tax loss for a year of income than the person would have;

if a tax benefit were not allowable in respect of any part of that eligible relevant expenditure, apply Division 36 and former Subdivision 375-G of the Income Tax Assessment Act 1997 as if the amount were relevant expenditure but not eligible relevant expenditure.

82KH(1D)  


Subject to subsection (1E), where, in respect of any 2 or more amounts of eligible relevant expenditure (whether incurred by one taxpayer or by 2 or more taxpayers and whether incurred in one year of income or in 2 or more years of income), the following conditions are satisfied, namely:


(a) if subsection (1B) were applied in relation to one of those amounts of eligible relevant expenditure in relation to a person (whether or not that person is the person or one of the persons who incurred the eligible relevant expenditure) in relation to a year of income on the assumption that no tax benefit is or was allowable in respect of any part of the other amount of eligible relevant expenditure, or in respect of any part of any of the other amounts of eligible relevant expenditure, as the case may be, the tax saving amount determined in accordance with that subsection would be greater than the tax saving amount that would be determined in accordance with that subsection in relation to that amount of eligible relevant expenditure in relation to that person in relation to that year of income if that subsection were applied on the assumption that a tax benefit or tax benefits were allowable under this Act in respect of the other amount of eligible relevant expenditure, or in respect of each of the other amounts of eligible relevant expenditure, as the case may be; and


(b) if paragraph (a) of this subsection were applied in relation to that person in relation to that year of income in relation to the other amount of eligible relevant expenditure, or in relation to each of the other amounts of eligible relevant expenditure, as the case may be, the condition specified in that paragraph would be satisfied in relation to that other amount or in relation to each of those other amounts, as the case may be;

then, in the application of subsection (1B) in calculating the tax saving amount in relation to that person in relation to the year of income in relation to any one of the amounts of eligible relevant expenditure first referred to in this subsection, it shall be assumed that no tax benefit is or was allowable in respect of any part of the other of those amounts or in respect of any part of any of the other of those amounts, as the case may be.

82KH(1E)  


Where:


(a) but for this subsection, subsection (1D) would apply to require it to be assumed, for the purposes of the application of subsection (1B) in relation to an amount of eligible relevant expenditure, that no tax benefit is or was allowable in respect of any part of another amount of eligible relevant expenditure (in this subsection referred to as the allowable relevant expenditure ); and


(b) section 82KL does not and will not operate to deem a tax benefit not to be allowable and never to have been allowable in respect of any part of the allowable relevant expenditure;

subsection (1D) shall not apply and shall be taken never to have applied so as to require it to be assumed, in the application of subsection (1B) in relation to an amount of eligible relevant expenditure other than the allowable relevant expenditure, that no tax benefit is or was allowable in respect of any part of the allowable relevant expenditure.

82KH(1F)  


For the purposes of this Subdivision, an amount of relevant expenditure incurred by a taxpayer shall be taken to be an amount of eligible relevant expenditure if:


(a) that amount of relevant expenditure was incurred after 24 September 1978 by reason of, as a result of or as part of a tax avoidance agreement entered into after that date;


(b) by reason of, as a result of or as part of the tax avoidance agreement the taxpayer has obtained, in relation to that relevant expenditure being incurred, a benefit or benefits in addition to:


(i) in a case to which subparagraph (ii) does not apply:

(A) the benefit in respect of which the relevant expenditure was incurred; and

(B) any benefit that resulted directly or indirectly from the benefit in respect of which the relevant expenditure was incurred and is a benefit that, in the opinion of the Commissioner, might reasonably be expected to have resulted if the benefit in respect of which the relevant expenditure was incurred had been obtained otherwise than by reason of, as a result of or as part of a tax avoidance agreement; or

(ii) in a case where the relevant expenditure is relevant expenditure to which paragraph (w) of the definition of relevant expenditure in subsection (1) applies - any benefit that resulted directly or indirectly from the incurring of the relevant expenditure and is a benefit that, in the opinion of the Commissioner, might reasonably be expected to have resulted if the relevant expenditure had been incurred otherwise than by reason of, as a result of or as part of a tax avoidance agreement; and


(c) in a case where the relevant expenditure is relevant expenditure to which paragraph (s), (v) or (w) of the definition of relevant expenditure in subsection (1) applies - that amount of relevant expenditure was incurred by reason of, as a result of or as part of a tax avoidance agreement entered into before 28 May 1981.

82KH(1FA)  


For the purposes of the application of subsection (1F) in relation to an amount of relevant expenditure to which paragraph (f) of the definition of relevant expenditure in subsection (1) applies, any benefit obtained by the taxpayer in relation to the making of the loan in respect of which the bad debt is incurred shall be taken to be a benefit obtained by the taxpayer in relation to that relevant expenditure being incurred.

82KH(1FB)  
(Omitted by No 107 of 1989)

82KH(1G)  


The reference in subsection (1F) to the benefit in respect of which relevant expenditure was incurred by a taxpayer shall be read as a reference to:


(a) in a case where the relevant expenditure is expenditure incurred by the taxpayer in borrowing money, being expenditure in respect of which a deduction would, apart from section 82KL , be allowable to the taxpayer under section 25-25 (Borrowing expenses) of the Income Tax Assessment Act 1997 - the making available to the taxpayer of the money borrowed by the taxpayer;


(b) in a case where the relevant expenditure is expenditure incurred by the taxpayer in connection with the discharge of a mortgage, being expenditure in respect of which a deduction would, apart from section 82KL , be allowable to the taxpayer under section 25-30 (Expenses of discharging a mortgage) of the Income Tax Assessment Act 1997 - the discharge of the mortgage;


(c) in a case where the relevant expenditure was incurred by the taxpayer in the purchase of property that, for the purposes of the application of this Act in relation to the taxpayer, is or was trading stock - the acquisition of that property by the taxpayer;


(d) in a case where the relevant expenditure was incurred by the taxpayer in respect of interest - the availability to the taxpayer of the money borrowed by the taxpayer;


(e) in a case where the relevant expenditure was incurred by the taxpayer in respect of rent - the use of the property in respect of which the rent was paid;


(f) in a case where the relevant expenditure incurred by the taxpayer was in respect of a bad debt - any interest received or receivable by the taxpayer in respect of the loan in respect of which the bad debt was incurred;


(g) in a case where the relevant expenditure was incurred by the taxpayer in respect of the production, marketing or distribution of a film or the acquisition of a copyright subsisting in a film and is relevant expenditure to which paragraph (g) of the definition of relevant expenditure in subsection (1) applies - the production, marketing or distribution of the film, or the acquisition of the copyright by the taxpayer, as the case may be;


(h) in a case where the relevant expenditure was incurred by the taxpayer in respect of a unit of industrial property, being a unit of industrial property that relates to copyright subsisting in a film, and is relevant expenditure to which paragraph (h) of the definition of relevant expenditure in subsection (1) applies - the ownership by the taxpayer of the unit of industrial property;


(j) (Omitted by No 107 of 1989)


(k) in a case where the relevant expenditure was incurred by the taxpayer in the purchase of consumable supplies - the acquisition of those consumable supplies by the taxpayer;


(m) in a case where the relevant expenditure was incurred by the taxpayer in respect of market research - the undertaking of the research, or the provision of the information, advice or assistance, in respect of which the relevant expenditure was incurred;


(n) in a case where the relevant expenditure was incurred by the taxpayer in respect of the acquisition of a unit of industrial property, being a licence under a copyright subsisting in computer software - the acquisition by the taxpayer of the unit of industrial property;


(o) in a case where the relevant expenditure was incurred by the taxpayer by way of commission for collecting assessable income of the taxpayer - the collection on behalf of the taxpayer of assessable income of the taxpayer;


(p) in a case where the relevant expenditure was incurred by the taxpayer in respect of the growing, care or supervision of trees on behalf of the taxpayer - the growing, care or supervision of the trees on behalf of the taxpayer;


(pa) in a case where the relevant expenditure was incurred by the taxpayer in respect of the establishment and tending of trees for felling on behalf of the taxpayer - the establishment and tending of trees for felling on behalf of the taxpayer;


(q) in a case where the relevant expenditure was incurred by the taxpayer for the purpose of increasing the value of shares in a company, being shares held or beneficially owned by the taxpayer as trading stock - the increase in the value of those shares;


(r) in a case where the relevant expenditure was incurred by the taxpayer in respect of the production of, or the procuration of the production of, a master sound recording - any amount payable to the taxpayer in respect of the master sound recording, being an amount that, in the opinion of the Commissioner, would be payable to the taxpayer as a result of the incurring by the taxpayer of the relevant expenditure if that expenditure had been incurred by reason of, as a result of or as part of an agreement other than a tax avoidance agreement;


(s) in a case where the relevant expenditure consists of calls paid by the taxpayer on shares owned by the taxpayer and is relevant expenditure to which paragraph (s) of the definition of relevant expenditure in subsection (1) applies - the satisfaction of any liability of the taxpayer to pay the calls and the taxpayer ' s continuing ownership of the shares; and


(t) (Omitted by No 100 of 1991)


(u) in a case where the relevant expenditure was incurred by the taxpayer in respect of a unit of industrial property and is relevant expenditure to which paragraph (v) of the definition of relevant expenditure in subsection (1) applies - the ownership by the taxpayer of the unit of industrial property.

82KH(1H)  


For the purposes of paragraph (1F)(b), but without limiting the generality of that paragraph, where:


(a) an amount of relevant expenditure is incurred by a taxpayer by reason of, as a result of or as part of a tax avoidance agreement;


(b) in relation to that relevant expenditure being incurred and by reason of, as a result of or as part of the tax avoidance agreement or by reason of an act, transaction or circumstance occurring as part of, in connection with or as a result of the tax avoidance agreement, the taxpayer or an associate of the taxpayer acquires from another person the right to recover the amount of a debt that was owed to that other person; and


(c) by reason of, as a result of or as part of the tax avoidance agreement or by reason of an act, transaction or circumstance occurring as part of, in connection with or as a result of the tax avoidance agreement, no consideration was paid or given by the taxpayer or the associate of the taxpayer, as the case may be, in respect of the acquisition of that right or the amount or value of the consideration paid or given by the taxpayer or the associate of the taxpayer, as the case may be, in respect of the acquisition of that right was less than the amount of the debt,

the taxpayer shall be deemed to have obtained, by reason of the tax avoidance agreement and in relation to the relevant expenditure being incurred by the taxpayer, a benefit having a value equal to:


(d) in a case where no consideration was paid or given by the taxpayer or the associate of the taxpayer, as the case may be, in respect of the acquisition of the right to recover the amount of the debt - the amount of the debt; and


(e) in any other case - the amount by which the amount of the debt exceeds the amount or value of the consideration paid or given by the taxpayer or the associate of the taxpayer, as the case may be, in respect of the acquisition of the right to recover the amount of the debt.

82KH(1J)  


For the purposes of paragraph (1F)(b), but without limiting the generality of that paragraph, where:


(a) an amount of relevant expenditure is incurred by a taxpayer by reason of, as a result of or as part of a tax avoidance agreement;


(b) in relation to that relevant expenditure being incurred and by reason of, as a result of or as part of the tax avoidance agreement or by reason of an act, transaction or circumstance occurring as part of, in connection with or as a result of the tax avoidance agreement:


(i) a debt becomes owing by the taxpayer or an associate of the taxpayer; or

(ii) a debt became owing, before or at the time of the incurring of the relevant expenditure, by the taxpayer or an associate of the taxpayer; and


(c) it may reasonably be expected that, by reason of, as a result of or as part of the tax avoidance agreement or by reason of an act, transaction or circumstance occurring as part of, in connection with or as a result of the tax avoidance agreement, the person to whom the debt is owed will release, abandon or fail to demand repayment of the debt or of a part of the debt,

the taxpayer shall be deemed to have obtained, by reason of the tax avoidance agreement and in relation to the relevant expenditure being incurred by the taxpayer, a benefit of an amount equal to the amount of the debt or that part of the debt, as the case may be.

82KH(1JA)  


For the purposes of the application of subsection (1H) in relation to an amount of relevant expenditure incurred by a taxpayer, being relevant expenditure to which paragraph (f) of the definition of relevant expenditure in subsection (1) applies, a reference in paragraph (1H)(b) to the acquisition by the taxpayer or an associate of the taxpayer, in relation to that relevant expenditure being incurred, of the right to recover a debt shall be read as including a reference to the acquisition by the taxpayer or an associate of the taxpayer, in relation to the making by the taxpayer of the loan in respect of which the relevant expenditure was incurred, of such a right.

82KH(1JB)  


For the purposes of the application of subsection (1J) in relation to an amount of relevant expenditure incurred by a taxpayer, being relevant expenditure to which paragraph (f) of the definition of relevant expenditure in subsection (1) applies, a reference in paragraph (1J)(b) to a debt becoming owing, or having become owing, by the taxpayer or an associate of the taxpayer in relation to that relevant expenditure being incurred, shall be read as including a reference to a debt becoming owing, or having become owing, by the taxpayer or an associate of the taxpayer, in relation to the making by the taxpayer of the loan in respect of which the relevant expenditure was incurred.

82KH(1JC)  
(Omitted by No 107 of 1989)

82KH(1JD)  
(Omitted by No 107 of 1989)

82KH(1JE)  


For the purposes of paragraph (1F)(b), but without limiting the generality of that paragraph, where:


(a) an amount of relevant expenditure is incurred by a taxpayer by reason of, as a result of or as part of a tax avoidance agreement;


(b) that relevant expenditure consists of calls paid by the taxpayer on shares owned by the taxpayer and is relevant expenditure to which paragraph (s) of the definition of relevant expenditure in subsection (1) applies; and


(c) in relation to that relevant expenditure being incurred and by reason of, as a result of or as part of the tax avoidance agreement or by reason of an act, transaction or circumstance occurring as part of, in connection with or as a result of the tax avoidance agreement, consideration (in this subsection referred to as the relevant consideration ) is paid or given to the taxpayer or an associate of the taxpayer in respect of the acquisition by any person from the taxpayer of:


(i) all or any of those shares;

(ii) the right to purchase all or any of those shares; or

(iii) the right to require a person to vote, in a meeting of shareholders of the company, in favour of a resolution to vary the rights attached to all or any of those shares;

the taxpayer shall be deemed to have obtained, by reason of the tax avoidance agreement and in relation to the relevant expenditure being incurred by the taxpayer, a benefit in addition to the benefits referred to in subparagraphs (1F)(b)(i) and (ii) having a value equal to the amount or value of the relevant consideration reduced by the amount or value of the part (if any) of that relevant consideration that, in the opinion of the Commissioner, is attributable to expenditure (other than the relevant expenditure) incurred by the taxpayer in respect of the shares.

82KH(1K)  


Where:


(a) 2 or more amounts of relevant expenditure are incurred by a taxpayer (whether in the same year of income or in different years of income) by reason of, as a result of or as part of the same tax avoidance agreement;


(b) the same paragraph of the definition of relevant expenditure in subsection (1) applies in relation to each of those amounts; and


(c) those amounts were incurred in respect of the same benefit;

those amounts shall, for the purposes of this Subdivision, be treated as together constituting one amount of relevant expenditure.

82KH(1L)  


For the purposes of subsection (1K), 2 or more amounts of relevant expenditure shall be taken to have been incurred in respect of the same benefit if:


(a) in a case where paragraph (a) of the definition of relevant expenditure in subsection (1) applies in relation to each of those amounts - those amounts were incurred in respect of the same loan;


(b) in a case where paragraph (b) of the definition of relevant expenditure in subsection (1) applies in relation to each of those amounts - those amounts were incurred in respect of the discharge of the same mortgage;


(c) in a case where paragraph (c) of the definition of relevant expenditure in subsection (1) applies in relation to each of those amounts - those amounts were incurred in the purchase of the same property;


(d) in a case where paragraph (d) of the definition of relevant expenditure in subsection (1) applies in relation to each of those amounts - those amounts were incurred in respect of the same loan;


(e) in a case where paragraph (e) of the definition of relevant expenditure in subsection (1) applies in relation to each of those amounts - those amounts were incurred in respect of the same property;


(f) in a case where paragraph (f) of the definition of relevant expenditure in subsection (1) applies in relation to each of those amounts - those amounts were incurred in respect of the same loan;


(g) in a case where paragraph (g) of the definition of relevant expenditure in subsection (1) applies in relation to each of those amounts - those amounts were incurred in respect of the same film;


(h) in a case where paragraph (h) of the definition of relevant expenditure in subsection (1) applies in relation to each of those amounts - those amounts were incurred in respect of the same film;


(j) (Omitted by No 107 of 1989)


(k) in a case where paragraph (k) of the definition of relevant expenditure in subsection (1) applies in relation to each of those amounts - those amounts were incurred in the purchase of the same property;


(m) in a case where paragraph (m) of the definition of relevant expenditure in subsection (1) applies in relation to each of those amounts - those amounts were incurred in respect of the same market research;


(n) in a case where paragraph (n) of the definition of relevant expenditure in subsection (1) applies in relation to each of those amounts - those amounts were incurred in respect of the same unit of industrial property;


(o) in a case where paragraph (o) of the definition of relevant expenditure in subsection (1) applies in relation to each of those amounts - those amounts were incurred in respect of the same source of assessable income;


(p) in a case where paragraph (p) or paragraph (pa) of the definition of relevant expenditure in subsection (1) applies in relation to each of those amounts - those amounts were incurred in respect of trees on the same parcel of land;


(q) in a case where paragraph (q) of the definition of relevant expenditure in subsection (1) applies in relation to each of those amounts - those amounts were incurred in respect of the same shares;


(r) in a case where paragraph (r) of the definition of relevant expenditure in subsection (1) applies in relation to each of those amounts - those amounts were payable to the same person;


(s) in a case where paragraph (s) of the definition of relevant expenditure in subsection (1) applies in relation to each of those amounts - those amounts were calls paid on shares in the same company;


(t) (Omitted by No 100 of 1991)


(u) (Omitted by No 107 of 1989)


(v) in a case where paragraph (v) of the definition of relevant expenditure in subsection (1) applies in relation to each of those amounts - those amounts were incurred in respect of the same unit of industrial property; and


(w) in a case where paragraph (w) of the definition of relevant expenditure in subsection (1) applies in relation to each of those amounts - those amounts were incurred in respect of the same source of assessable income or in carrying on the same business.

82KH(1M)  


For the purposes of this Subdivision, a person who obtains a benefit by reason of an act, transaction or circumstance that occurs as part of, in connection with or as a result of a tax avoidance agreement shall be deemed to have obtained that benefit by reason of the tax avoidance agreement.

82KH(1N)  


Where, for the purposes of the application of any provision of this Subdivision, it is required to be assumed that a tax benefit is not or was not allowable in respect of any part of an amount of eligible relevant expenditure and that expenditure is expenditure that was incurred in the acquisition of property that, for the purposes of the application of this Act in relation to the person who incurred the expenditure, is or was trading stock, it shall also be assumed, for the purposes of the application of that provision, that, for the purposes of the application of Division 70 (Trading stock) or 385 (Primary production) of the Income Tax Assessment Act 1997 in relation to that property in relation to the person who incurred the expenditure, that the cost of that property is, and at all times was, nil.

82KH(1P)  


For the purposes of this Subdivision, any benefit that has been obtained by an associate of a taxpayer by reason of, as a result of or as part of a tax avoidance agreement, being a benefit that was obtained in relation to the incurring by the taxpayer, by reason of, as a result of or as part of that tax avoidance agreement, of relevant expenditure, not being relevant expenditure to which subsection (1Q) applies, shall be taken to be a benefit that was obtained by the taxpayer by reason of that tax avoidance agreement and in relation to that relevant expenditure being incurred by the taxpayer.

82KH(1Q)  


For the purposes of this Subdivision, any benefit that has been obtained by an associate of a taxpayer by reason of, as a result of or as part of a tax avoidance agreement, being a benefit that was obtained in relation to:


(a) the incurring by the taxpayer, by reason of, as a result of or as part of that tax avoidance agreement, of relevant expenditure to which paragraph (f) of the definition of relevant expenditure in subsection (1) applies; or


(b) the making by the taxpayer, by reason of, as a result of or as part of that tax avoidance agreement, of the loan in respect of which relevant expenditure to which that paragraph applies was incurred;

shall be taken to be a benefit that was obtained by the taxpayer by reason of that tax avoidance agreement and in relation to the relevant expenditure being incurred by the taxpayer or that loan being made by the taxpayer, as the case may be.

82KH(1R)  
(Omitted by No 107 of 1989)

82KH(1S)  


For the purposes of the application of this section in determining the amount of any additional benefit obtained by a taxpayer in relation to an amount of relevant expenditure to which paragraph (h) of the definition of relevant expenditure in subsection (1) applies being incurred, being expenditure that, by virtue of the expenditure of moneys (in this subsection referred to as the partnership moneys ) by a partnership, is deemed by former section 124KA to have been incurred by the taxpayer:


(a) the partnership shall be taken to be an associate of the taxpayer;


(b) a reference to the relevant expenditure being incurred by the taxpayer shall be read as including a reference to the partnership moneys being expended by the partnership; and


(c) any benefit obtained by the partnership in relation to the partnership moneys being expended by the partnership shall be taken to have been obtained by the taxpayer in relation to the relevant expenditure being incurred by the taxpayer to such extent only as the Commissioner considers fair and reasonable.

82KH(1T)  


Where:


(a) a taxpayer expends moneys (in this subsection referred to as the film moneys ) in producing, or by way of contribution to the cost of producing, a film; and


(b) by virtue of the operation of former subsection 124K(2) , a part only of the film moneys is taken to be an amount of relevant expenditure to which paragraph (h) of the definition of relevant expenditure in subsection (1) applies,

for the purposes of the application of this section in determining the amount of any additional benefit obtained by the taxpayer in relation to the relevant expenditure being incurred:


(c) a reference to the relevant expenditure being incurred by the taxpayer shall read as including a reference to the film moneys being expended by the taxpayer; and


(d) any benefit obtained by the taxpayer in relation to the film moneys being expended by the taxpayer shall be taken to have been obtained by the taxpayer in relation to the relevant expenditure being incurred by the taxpayer to such extent only as the Commissioner considers fair and reasonable.

82KH(2)  
A reference in this Subdivision to the supply of goods or the provision of services shall be read as not including a reference to the making available of money by way of loan.

82KH(3)  
For the purposes of this Subdivision, an agreement shall be taken to have been entered into or carried out for a particular purpose, or for purposes that included a particular purpose, if any of the parties to the agreement entered into or carried out the agreement for that purpose, or for purposes that included that purpose, as the case may be.

82KH(4)  
A reference in this Subdivision to a person shall be read as including a reference to a person in the capacity of a trustee.

82KH(5)  


A reference in this Subdivision to a provision of the Income Tax Assessment Act 1997 includes a reference to the corresponding provision of the Income Tax Assessment Act 1936.

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