INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART III - LIABILITY TO TAXATION  

Division 3 - Deductions  

Subdivision B - Development allowance  

SECTION 82AJ   SPECIAL PROVISIONS RELATING TO PARTNERSHIPS  

82AJ(1)   [Disposal of partnership interest within 12 months]  

Where:


(a) the individual interest of a taxpayer in the net income of a partnership has been or is to be included in the assessable income of the taxpayer of a year of income (in this subsection and in subsection (3) in its application in relation to this subsection referred to as the relevant year of income ), or the individual interest of a taxpayer in a partnership loss has been allowed or is allowable as a deduction from the assessable income of the taxpayer of a year of income (in this subsection and in subsection (3) in its application in relation to this subsection also referred to as the relevant year of income );


(b) a deduction (in this subsection and in subsection (3) in its application in relation to this subsection referred to as the relevant deduction ) under this Subdivision in respect of a unit of eligible property was taken into account in calculating the net income of the partnership, or the partnership loss, as the case may be; and


(c) before the end of 12 months after the property was first used or installed ready for use by the partnership, the taxpayer disposed of the whole or a part of the taxpayer's interest in the partnership or in the property;

there shall be included in the assessable income of the taxpayer of the relevant year of income:


(d) where the taxpayer disposed of the whole of his interest in the partnership or in the property - the prescribed amount; or


(e) in any other case - so much of the prescribed amount as the Commissioner considers appropriate.

82AJ(2)   [Disposal of partnership interest after 12 months]  

Where:


(a) the individual interest of a taxpayer in the net income of a partnership has been or is to be included in the assessable income of the taxpayer of a year of income (in this subsection and in subsection (3) in its application in relation to this subsection referred to as the relevant year of income ), or the individual interest of a taxpayer in a partnership loss has been allowed or is allowable as a deduction from the assessable income of the taxpayer of a year of income (in this subsection and in subsection (3) in its application in relation to this subsection also referred to as the relevant year of income );


(b) a deduction (in this subsection and in subsection (3) in its application in relation to this subsection referred to as the relevant deduction ) under this Subdivision in respect of a unit of eligible property was taken into account in calculating the net income of the partnership, or the partnership loss, as the case may be;


(c) after the end of 12 months after the property was first used or installed ready for use by the partnership, the taxpayer disposed of the whole or a part of the taxpayer's interest in the partnership or in the property; and


(d) the Commissioner is satisfied that, at the time the property was acquired or constructed by the partnership, the taxpayer intended to dispose of the whole or a part of the taxpayer's interest in the partnership or in the property after the partnership became entitled to a deduction under this Subdivision;

there shall, if the Commissioner so determines, be included in the assessable income of the taxpayer of the relevant year of income:


(e) where the taxpayer disposed of the whole of his interest in the partnership or in the property - the prescribed amount; or


(f) in any other case - so much of the prescribed amount as the Commissioner considers appropriate.

82AJ(3)   [``Prescribed amount'']  

For the purposes of subsections (1) and (2), the prescribed amount is:


(a) where the relevant deduction related to expenditure by the partnership in respect of the acquisition or construction of the relevant property and the partners have agreed as to the amount of that expenditure to be borne by the taxpayer - an amount that bears to the amount of the relevant deduction the same proportion as so much of the amount of that expenditure as the partners agreed was to be borne by the taxpayer bears to the amount of that expenditure; or


(b) in any other case - an amount that bears to the amount of the relevant deduction the same proportion as the individual interest of the taxpayer in the net income of the partnership of the year of income of the partnership that corresponds to the relevant year of income bears to that net income or, as the case requires, as the individual interest of the taxpayer in the partnership loss for that corresponding year of income of the partnership bears to that partnership loss.

82AJ(4)   [Partner a leasing company]  

In calculating the net income of a partnership, or a partnership loss, in accordance with section 90 , regard shall not be had to the provisions of this Subdivision in so far as they apply to expenditure incurred in respect of the acquisition or construction by the partnership of a unit of property that is leased by the partnership to another person, but, where a partnership in which any one or more of the partners is a leasing company has incurred such expenditure, then, for the purposes of the application of this Subdivision in respect of such a partner, that partner shall be deemed to have incurred:


(a) so much of the amount of that expenditure as the partners have agreed is to be borne by that partner; or


(b) if the partners have not agreed as to the part of that amount that is to be borne by that partner - so much of that amount as bears to that amount the same proportion as the individual interest of the partner in the net income of the partnership of the year of income in which the relevant expenditure was incurred bears to that net income or, as the case requires, as the individual interest of the partner in the partnership loss for that year of income bears to that partnership loss.

82AJ(5)   [Disposal by leasing company within 12 months]  

Where:


(a) a deduction has been allowed, or would but for this subsection be allowable, under this Subdivision from the assessable income of a taxpayer being a leasing company in relation to property acquired or constructed by a partnership in which the taxpayer is a partner, being property that is leased by the partnership to another person (in this subsection referred to as the lessee ); and


(b) before the expiration of 12 months after the property was first used or installed ready for use by the lessee, the taxpayer disposed of the whole or a part of his interest in the partnership or in the property otherwise than to the lessee,

then -


(c) where the taxpayer disposed of the whole of his interest in the partnership or in the property - the deduction shall be deemed not to have been, or not to be, allowable, as the case may be; or


(d) in any other case - so much of the deduction as the Commissioner considers appropriate shall be deemed not to have been, or not to be, allowable, as the case may be.

82AJ(5A)  

82AJ(6)   [Disposal by leasing company after 12 months]  

Where:


(a) a deduction has been allowed, or would but for this subsection be allowable, under this Subdivision from the assessable income of a taxpayer being a leasing company in relation to property acquired or constructed by a partnership in which the taxpayer is a partner, being property that is leased by the partnership to another person (in this subsection referred to as the lessee );


(b) after the expiration of 12 months after the property was first used or installed ready for use by the lessee, the taxpayer disposed of the whole or a part of his interest in the partnership or in the property otherwise than to the lessee; and


(c) the Commissioner is satisfied that, at the time when the lessee took the property on lease, the taxpayer intended to dispose of the whole or a part of his interest in the partnership or in the property after becoming entitled to a deduction under this Subdivision in relation to the property;

then, if the Commissioner so determines:


(d) where the taxpayer disposed of the whole of his interest in the partnership or in the property - the deduction shall, if the Commissioner so determines, be deemed not to have been, or not to be, allowable, as the case may be; or


(e) in any other case - so much of the deduction as the Commissioner considers appropriate shall be deemed not to have been, or not to be, allowable, as the case may be.

82AJ(6A)  

82AJ(7)   [Leasing company partner - disposal, etc, within 12 months]  

This Subdivision does not apply, and shall be deemed never to have applied, in relation to property leased by a partnership to another person (in this subsection referred to as the lessee ) if, before the expiration of 12 months after the property was first used, or installed ready for use, by the lessee:


(a) the property was disposed of by the partnership to a person other than the lessee or was lost or destroyed;


(b) the lessee used the property outside Australia or for a purpose other than the purpose of producing assessable income;


(c) the lease was terminated otherwise than by the acquisition of the property by the lessee;


(d) while the lease was in force the lessee entered into a contract or arrangement with another person for the use of the property by that other person;


(e) the lessee acquired the property and disposed of it; or


(f) the lessee acquired the property and entered into a contract or arrangement with another person for the use of the property by that other person.

82AJ(7AA)   [Application of subsec (7)(d) and (f)]  

Paragraphs (7)(d) and (f) do not apply if the lessee entered into the contract or arrangement concerned in the lessee's capacity as an eligible entertainment/tourism operator.

82AJ(7AB)   [Application of subsec (7)(d) and (f) where other person related company]  

Paragraph (7)(d) or (f) does not apply if:


(a) the lessee is a company; and


(b) the other person is a related company of the lessee; and


(c) at all times during the period ending at the earlier of:


(i) the end of the term of the contract or arrangement; and

(ii) the end of the 12 months mentioned in subsection (7);
the other person was a related company of the lessee and used the property wholly and exclusively both in Australia and for the purpose of producing assessable income other than by leasing the property or otherwise granting a right to another person to use the property.

82AJ(7A)   [Agreement for use made before lease commenced]  

This SubDivision does not apply, and shall be deemed never to have applied, in relation to property leased by a partnership to another person (in this subsection referred to as the lessee ) if, before the property was leased by the partnership to the lessee, the lessee entered into a contract or arrangement with another person for the use of the property by that other person.

82AJ(7B)   [Application of subsec (7A)]  

Subsection (7A) does not apply if the lessee entered into the contract or arrangement concerned in the lessee's capacity as an eligible entertainment/tourism operator.

82AJ(7C)   [Application of subsec (7A) where other person related company]  

Subsection (7A) does not apply if:


(a) the lessee is a company; and


(b) the other person is a related company of the lessee; and


(c) the use of the property under the contract or arrangement was to take place while the other person remained a related company of the lessee and was to be wholly and exclusively both in Australia and for the purpose of producing assessable income other than by leasing the property or otherwise granting a right to another person to use the property; and


(d) at all times during the period ending at the earlier of:


(i) the end of the term of the contract or arrangement; and

(ii) the end of the 12 months after the property was first used, or installed ready for use, by the lessee;
the requirements of paragraph (c) were satisfied in relation to the use of the property.

82AJ(8)   [Leasing company partner - disposal, etc, after 12 months]  

Where -


(a) a deduction has been allowed, or would but for this subsection be allowable, under this Subdivision from the assessable income of a taxpayer being a leasing company in relation to property acquired or constructed by a partnership in which the taxpayer is a partner, being property that is leased by the partnership to another person (in this subsection referred to as the lessee );


(b) after the expiration of 12 months after the property was first used, or installed ready for use, by the lessee and before the expiration of the term of the lease -


(i) the property was disposed of by the partnership to a person other than the lessee;

(ii) the lessee used the property outside Australia or for a purpose other than the purpose of producing assessable income;

(iii) the lease was terminated otherwise than by the acquisition of the property by the lessee;

(iv) while the lease was in force the lessee entered into a contract or arrangement with another person for the use of the property by that other person;

(v) the lessee acquired the property and disposed of it; or

(vi) the lessee acquired the property and entered into a contract or arrangement with another person for the use of the property by that other person; and


(c) the Commissioner is satisfied that, at the time when the lessee took the property on lease -


(i) in a case to which subparagraph (b)(i) applies - the partnership intended to dispose of the property to a person other than the lessee before the expiration of the term of the lease; or

(ii) in a case to which subparagraph (b)(ii), (iii), (iv), (v) or (vi) applies - the lessee intended to use the property as mentioned in subparagraph (b)(ii), to cause the lease to be terminated as mentioned in subparagraph (b)(iii), to enter into a contract or arrangement as mentioned in subparagraph (b)(iv), to acquire and dispose of the property or to acquire the property and enter into a contract or arrangement as mentioned in subparagraph (b)(vi),

the deduction shall, if the Commissioner so determines, be deemed not to have been, or not to be, allowable, as the case may be.

82AJ(9)   [Application of subsec (8)(b)(iv) and (vi)]  

Subparagraphs (8)(b)(iv) and (vi) do not apply if the lessee entered into the contract or arrangement concerned in the lessee's capacity as an eligible entertainment/tourism operator.

82AJ(10)   [Application of subsec (8)(b)(iv) and (vi) where other person related company]  

Subparagraph (8)(b)(iv) or (vi) does not apply if:


(a) the lessee is a company; and


(b) the other person is a related company of the lessee; and


(c) the use of the property under the contract or arrangement was to take place while the other person remained a related company of the lessee and was to be wholly and exclusively both in Australia and for the purpose of producing assessable income other than by leasing the property or otherwise granting a right to another person to use the property.


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