INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART III - LIABILITY TO TAXATION  

Division 10C - Deductions for capital expenditure on traveller accommodation  

SECTION 124ZA   INTERPRETATION  

124ZA(1)   [Definitions]  

In this Division, unless the contrary intention appears:

construct
includes make.

eligible apartment building
means a building in respect of which there is an amount, or there are amounts, of qualifying apartment expenditure.

eligible building
means a building that is an eligible apartment building or an eligible hotel building.

eligible hotel building
means a building in respect of which there is an amount, or there are amounts, of qualifying hotel expenditure.

exempt body
means:


(a) a body, association or fund to which paragraph 23(d), (e), (ea), (eb), (ec), (f), (g), (h), (i), (j) or (k) applies; or


(b) an STB (within the meaning of Division 1AB ) the income of which is wholly exempt from tax.

post-26 February 1992 qualifying apartment expenditure
means qualifying apartment expenditure 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 after 26 February 1992.

post-26 February 1992 qualifying hotel expenditure
means qualifying hotel expenditure 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 after 26 February 1992.

pre-18 July 1985 qualifying apartment expenditure
means qualifyingapartment expenditure 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 before 18 July 1985.

pre-18 July 1985 qualifying hotel expenditure
means qualifying hotel expenditure 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 before 18 July 1985.

qualifying expenditure
means qualifying hotel expenditure or qualifying apartment expenditure.

124ZA(2)   [Meaning of ``hotel part'']  

For the purposes of the application of this Division in determining the amount of a deduction allowable under section 124ZC or 124ZE , or the amount of the residual capital expenditure, in respect of an amount of qualifying hotel expenditure in respect of a building, a reference in this Division, in relation to that amount of qualifying expenditure, to the hotel part shall be read as a reference to the part of the building to which that amount of qualifying hotel expenditure is attributable.

124ZA(3)   [Meaning of ``apartment part'']  

For the purposes of the application of this Division in determining the amount of a deduction allowable under section 124ZC or 124ZE , or the amount of the residual capital expenditure, in respect of an amount of qualifying apartment expenditure in respect of a building, a reference in this Division, in relation to that amount of qualifying expenditure, to the apartment part shall be read as a reference to the part of the building to which that amount of qualifying apartment expenditure is attributable.

124ZA(4)   [Use of hotel part in prescribed manner]  

For the purposes of the application of this Division in determining the amount of any deduction allowable under section 124ZC and 124ZE , or the amount of the residual capital expenditure, in respect of an amount of qualifying hotel expenditure, a person who owned the hotel part or a part of the hotel part at a particular time (in this subsection referred to as the relevant time ) shall be taken to have dealt with the hotel part or that part of the hotel part, as the case may be, in the prescribed manner at the relevant time if, at the relevant time:


(a) the person used the hotel part or that part of the hotel part, as the case may be, for the purpose of producing assessable income; and


(b) the whole or a part of the hotel part or of that part of the hotel part, as the case may be, was used (whether by that person or by another person or persons) wholly or principally for the purpose of operating a hotel, motel or guest house and not fewer than 10 bedrooms contained in that hotel, motel or guest house were used, or available for use, wholly for the provision of short-term accommodation for travellers.

124ZA(5)   [Use of apartment part in prescribed manner]  

For the purposes of the application of this Division in determining the amount of a deduction allowable under section 124ZC or 124ZE , or the amount of the residual capital expenditure, in respect of an amount of qualifying apartment expenditure incurred in respect of an eligible apartment building, a person who owned the apartment part or a part (in this subsection referred to as the relevant part ) of the apartment part at a particular time (in this subsection referred to as the relevant time ) shall be taken to have dealt with the apartment part or the relevant part, as the case may be, in the prescribed manner at the relevant time if, at the relevant time, the person used the apartment part or the relevant part, as the case may be, for the purpose of producing assessable income and, at the relevant time:


(a) the apartment part or the relevant part, as the case may be, was or was part of, or contained, an apartment, unit or flat that was used or made available for use (whether by that person or by another person or persons) wholly for the provision of short-term accommodation for travellers and the person owned or leased not fewer than 9 other apartments, units or flats contained in the eligible apartment building that were used or made available for use (whether by that person or by another person or persons) wholly for the provision of short-term accommodation for travellers; or


(b) the apartment part or the relevant part, as the case may be, was or was part of, or contained, a facility that was used or made available for use (whether by that person or by another person or persons) wholly or principally in association with the provision of short-term accommodation in eligible apartments, units or flats contained in the eligible apartment building.

124ZA(6)   [Eligible apartment, unit or flat]  

For the purposes of paragraph (5)(b), an apartment, unit or flat contained in an eligible apartment building shall be taken to be an eligible apartment, unit or flat at a particular time if the whole or a part of an amount of qualifying apartment expenditure is attributable to the whole or a part (which whole or part, as the case may be, is in this subsection referred to as the relevant part ) of the apartment, unit or flat, as the case may be, and:


(a) where the relevant part is the apartment part in relation to that amount of qualifying apartment expenditure - the owner of the apartment part at that time is taken to have dealt with the apartment part in the prescribed manner at that time or would, but for the operation of subsection 124ZC(5) , be taken to have dealt with the apartment part in the prescribed manner at that time; and


(b) where the relevant part is a part of the apartment part in relation to that amount of qualifying apartment expenditure - the owner of that part of the apartment part at that time is taken to have dealt with that part of the apartment part in the prescribed manner at that time or would, but for the operation of subsection 124ZC(5) , be taken to have dealt with that part of the apartment part in the prescribed manner at that time.

124ZA(7)   [Temporary cessation of use of building]  

For the purposes of this Division, an eligible building or part of an eligible building shall not be taken not to have been dealt with by a taxpayer in the prescribed manner, or not to have been used, at a particular time by reason only of a temporary cessation of use of any part of the building by reason of:


(a) the construction of an extension, alteration or improvement to that building or the making of repairs to that building; or


(b) seasonal or climatic factors.

124ZA(8)   [Eligible lessee]  

For the purposes of this Division, a person shall be taken to be an eligible lessee in relation to an amount of qualifying hotel expenditure or qualifying apartment expenditure in respect of an eligible building at a particular time (in this subsection referred to as the relevant time ) if:


(a) the person:


(i) was, at the relevant time, the lessee of the whole, or a part, of the part of the building to which the expenditure is attributable;

(ii) incurred that amount of qualifying hotel expenditure or qualifying apartment expenditure, as the case may be, in respect of the eligible building; and

(iii) was, at all times after the completion of the relevant construction, and before the relevant time, the lessee of the whole, or of a part, of the part of the building to which that expenditure is attributable; or


(b) the person was, at the relevant time, the lessee of the whole, or of a part, of the part of the building to which the qualifying expenditure is attributable and obtained the lease of that part of the building, or of a part of that part of the building, by assignment from a person who, immediately before the assignment, was an eligible lessee in relation to that amount of qualifying hotel expenditure or qualifying apartment expenditure, as the case may be, by virtue of the application of paragraph (a) or by virtue of a previous application of this paragraph.

124ZA(9)   [Suite of rooms]  

Where 2 or more rooms, being bedrooms or including a bedroom or bedrooms, are for use together as a suite of rooms, that suite of rooms shall, for the purposes of this Division, be taken to constitute one bedroom.

124ZA(10)   [Facility not commonly provided by hotel, etc]  

For the purposes of this Division, any part of a building that is for use, or is used, in the provision of a facility of a kind not commonly provided in a hotel, motel or guest house in Australia, shall be taken not to be for use, or used, as the case may be, for the purpose of operating a hotel, motel or guest house.

124ZA(11)   [Facility deemed not provided in apartments, etc]  

For the purposes of this Division, any facility of a kind that is not commonly provided in a hotel, motel or guest house in Australia shall be taken not to be a facility for use in association with the provision of accommodation for travellers in apartments, units or flats.

124ZA(12)   [Complex of buildings]  

Where a group of buildings constitutes a complex of buildings:


(a) the group of buildings shall, for the purposes of this Division, other than this subsection, be taken to be one building; and


(b) none of the buildings in the group shall be taken, for the purposes of this Division, other than this subsection, to be a building.

124ZA(13)   [Extension]  

Where a building is constructed and, after the completion of construction, that building and another building or other buildings are, by virtue of subsection (12), to be taken together to constitute one building, the construction of the first-mentioned building shall be taken to be the construction of an extension to a building.

124ZA(14)   [References to ``person'']  

References in this Division to a person shall be read as including references to a partnership or a person in the capacity of a trustee.

124ZA(15)   [Deduction available when construction completed]  

For the purposes of the application of this Division in determining the amount of a deduction allowable under section 124ZC or 124ZE , in respect of an amount of qualifying hotel expenditure or qualifying apartment expenditure, a person who owned the whole or a part of the hotel part or of the apartment part, as the case may be, shall not be taken 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 before the date on which the relevant construction was completed.

124ZA(16)   [Residual capital expenditure]  

For the purposes of this Division, the residual capital expenditure in relation to an amount of pre-18 July 1985 qualifying hotel expenditure or pre-18 July 1985 qualifying apartment expenditure in respect of an eligible building at any time (in this subsection referred to as the relevant time ) is the amount (if any) ascertained by deducting from that amount of qualifying hotel expenditure or qualifying apartment expenditure, as the case may be, the amount or the sum of the amounts that, in respect of the period commencing on the day on which the hotel part or apartment part, as the case may be, was first used by any person for any purpose after completion of the relevant construction and ending at the relevant time, would have been allowed, or would be allowable, to a taxpayer as a deduction or deductions under section 124ZC if:


(a) the taxpayer were the owner of the eligible building during the whole of that period;


(b) the taxpayer had dealt with the hotel part or apartment part, as the case may be, in the prescribed manner during the whole of that period; and


(c) section 124ZD were not applicable in relation to that deduction or any of those deductions, as the case may be.

124ZA(16A)   [Post-26 February 1992 qualifying hotel expenditure]  

For the purposes of this Division, if there is an amount of post-26 February 1992 qualifying hotel expenditure in respect of an eligible building, the amount of so much of the residual capital expenditure at a particular time ( relevant time ) in relation to that qualifying hotel expenditure as is attributable to the hotel part or a part ( relevant part ) of the hotel part is the amount (if any) worked out by:


(a) identifying the period:


(i) commencing on the day on which the hotel part or relevant part was first used by any person for any purpose after completion of the relevant construction; and

(ii) ending at the relevant time; and


(b) calculating, for each day (if any) in that period during the whole of which any part ( 4% part ) of the hotel part or relevant part, as the case may be, was dealt with in the prescribed manner by a taxpayer who owned that part of the hotel part or relevant part, 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 financial year in which that day occurred; and

  • (c) calculating, for each day (if any) in that period during any part of which any part ( 2.5% part ) of the hotel part or relevant part, as the case may be, was not dealt with in the prescribed manner by a taxpayer who owned that part of the hotel part or relevant part, 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 financial year in which that day occurred; and

  • (d) adding the amounts calculated under paragraphs (b) and (c); and


    (e) deducting the result of the addition mentioned in paragraph (d) from so much of the amount of that qualifying hotel expenditure as is attributable to the hotel part or relevant part, as the case requires.

    124ZA(16B)   [Post-26 February 1992 qualifying apartment expenditure]  

    For the purposes of this Division, if there is an amount of post-26 February 1992 qualifying apartment expenditure in respect of an eligible building, the amount of so much of the residual capital expenditure at a particular time ( relevant time ) in relation to that qualifying apartment expenditure as is attributable to the apartment part or a part ( relevant part ) of the apartment part is the amount (if any) worked out by:


    (a) identifying the period:


    (i) commencing on the day on which the apartment part or relevant part was first used by any person for any purpose after completion of the relevant construction; and

    (ii) ending at the relevant time; and


    (b) calculating, for each day (if any) in that period during the whole of which any part ( 4% part ) of the apartment part or relevant part, as the case may be, was dealt with in the prescribed manner by a taxpayer who owned that part of the apartment part or relevant part, 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 financial year in which that day occurred; and

  • (c) calculating, for each day (if any) in that period during any part of which any part ( 2.5% part ) of the apartment part or relevant part, as the case may be, was not dealt with in the prescribed manner by a taxpayer who owned that part of the apartment part or relevant part, 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 financial year in which that day occurred; and

  • (d) adding the amounts calculated under paragraphs (b) and (c); and


    (e) deducting the result of the addition mentioned in paragraph (d) from so much of the amount of that qualifying apartment expenditure as is attributable to the apartment part or relevant part, as the case requires.

    124ZA(17)   [Occupancy rights]  

    For the purposes of this Division, a bedroom, apartment, unit or flat contained in a building shall be taken not to have been used, and not to have been for use, for any purpose at a particular time if:


    (a) a right to use or occupy the bedroom, apartment, unit or flat was, at that time, vested in a person; and


    (b) that right was vested in that person by reason that the person was, at that time, a shareholder in a company, a beneficiary of a trust estate or a partner in a partnership.

    124ZA(18)   [Bedroom, etc, reserved for owner's use]  

    For the purposes of this Division, where, at any time, a bedroom, apartment, unit or flat in a building is owned or leased by a person (in this subsection referred to as the relevant person ) and that bedroom, apartment, unit or flat is used, or reserved for use, by:


    (a) in a case to which paragraph (b) does not apply - the relevant person; or


    (b) in a case where the relevant person is a partnership - any of the partners in the partnership,

    no part of that bedroom, apartment, unit or flat shall be taken to have been used, at that time, by the relevant person for the purpose of producing assessable income.

    124ZA(19)   [Hotel bedroom used principally for short-term accommodation]  

    For the purposes of determining whether a deduction is allowable under this Division in respect of an amount of qualifying hotel expenditure in respect of a building to a taxpayer who, during the whole or a part of a year of income (which whole or part, as the case may be, is in this subsection referred to as the relevant period ) was the owner of the whole or a part of the hotel part, where:


    (a) during the whole or a part of the relevant period, a bedroom was contained in the building; and


    (b) during the relevant period or that part of the relevant period, as the case may be, that bedroom was used, or made available for use, principally for the provision of short-term accommodation for travellers,

    that bedroom shall be taken to have been used, or made available for use, wholly for the provision of short-term accommodation for travellers during the whole of the relevant period or during the whole of that part of the relevant period, as the case may be.

    124ZA(20)   [Apartment, etc, used principally for short-term accommodation]  

    For the purposes of determining whether a deduction is allowable under this Division in respect of an amount of qualifying apartment expenditure in respect of a building to a taxpayer who, during the whole or a part of a year of income (which whole or part, as the case may be, is in this subsection referred to as the relevant period ) was the owner of the whole or a part of the apartment part, where:


    (a) during the whole or a part of the relevant period, the taxpayer owned or leased an apartment, unit or flat in the building; and


    (b) during the relevant period or that part of the relevant period, as the case may be, that apartment, unit or flat was used, or made available for use, principally for the provision of short-term accommodation for travellers,

    that apartment, unit or flat shall be taken to have been used, or made available for use, wholly for the provision of short-term accommodation for travellers during the whole of the relevant period or during the whole of that part of the relevant period, as the case may be.

    124ZA(21)   [Lessee deemed to be owner]  

    For the purposes of the application of this Division in determining the amount of a deduction allowable under section 124ZC or 124ZE in respect of an amount of qualifying expenditure in respect of a building, a person who, at a particular time (in this subsection referred to as the relevant time ), is an eligible lessee in relation to that amount of qualifying expenditure shall, subject to subsection (24), be taken at the relevant time to be the owner of so much of the building as satisfies the following conditions, namely:


    (a) is leased by the person at that time;


    (b) is a part of the building to which the whole or a part of the amount of qualifying expenditure is attributable; and


    (c) was, at all times after the completion of the relevant construction and before the relevant time, leased and was not, at any time after completion of the relevant construction and before the relevant time, leased by a person who was not an eligible lessee in relation to that amount of qualifying expenditure.

    124ZA(22)   [Lessee deemed owner to exclusion of all others]  

    Where, for the purposes of the application of this Division in determining the amount of a deduction allowable under section 124ZC or 124ZE , in respect of an amount of qualifying expenditure, a person is deemed by subsection (21) to be the owner of a building or of a part of a building at a particular time, no other person shall be taken to be the owner of the building or of that part of the building, as the case may be, at that time, for the purposes of the application of the provisions of this Division, other than paragraph (5)(a), in determining the amount of a deduction allowable under section 124ZC or 124ZE in respect of that amount of qualifying expenditure.

    124ZA(23)   [Reference to relevant construction]  

    In this Division, a reference, in relation to an amount of qualifying expenditure, to the relevant construction shall be read as a reference to the construction of the building, or of the extension, alteration or improvement, as the case may be, to which the amount of qualifying expenditure is attributable.

    124ZA(24)   [Acquisition or disposal of part]  

    Where:


    (a) during the whole or a part of a year of income (which whole or part, as the case may be, is in this subsection referred to as the relevant period ) a taxpayer was the owner of a particular part (in this subsection referred to as the relevant part ) of the hotel part or apartment part in relation to an amount of qualifying expenditure; and


    (b) during a part only of the relevant period the taxpayer was also the owner of another part of that hotel part or apartment part, as the case may be,

    then, for the purposes of the application of this Division in relation to the taxpayer in relation to the relevant part (other than an application of this Division in relation to the whole of the hotel part or apartment part, as the case may be, or in relation to a part of the hotel part or apartment part, as the case may be, of which the relevant part is only a part), the taxpayer shall not be taken to have been the owner of the relevant part at any time during the part of the relevant period referred to in paragraph (b).

    124ZA(25)   [Holder of new lease under s 160ZSA]  

    For the purposes of the application of this Division, other than paragraph (5)(a), in determining the amount of a deduction allowable under section 124ZC or 124ZE in respect of an amount of qualifying expenditure in respect of a building, where:


    (a) because of section 160ZSA , a person is taken for the purposes of Part IIIA to have disposed of an asset, being:


    (i) a building or a part of a building; or

    (ii) the whole or a part of an estate in fee simple; or

    (iii) the whole or a part of a lease or sublease; and


    (b) immediately before the grant of the new lease mentioned in section 160ZSA , the person is the owner for the first-mentioned purposes (whether because of one or more previous applications of this subsection or otherwise) of whichever of the following is applicable:


    (i) if subparagraph (a)(i) of this subsection applies - the building or the part of the building, as the case may be;

    (ii) if subparagraph (a)(ii) or (iii) of this subsection applies - any building or part of a building that is in the area to which the asset relates;

    then, subject to any subsequent application of this subsection, the following provisions have effect:


    (c) the holder of the new lease is to be taken to be and to have been, at all times during the subsistence of the new lease, the owner of the building or the part of the building mentioned in paragraph (b) of this subsection;


    (d) no other person is to be taken to be the owner of that building or that part of that building at any time during the subsistence of the new lease.


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