INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART III - LIABILITY TO TAXATION  

Division 3 - Deductions  

Subdivision G - Limitation on deductions for interest on money borrowed to finance rental property investments  

SECTION 82KZF   TRANSFER OF EXCESS RENTAL PROPERTY LOAN INTEREST WITHIN COMPANY GROUP  

82KZF(1)   [Time excess deemed incurred by transferee]  

Where:

(a) the rental property loan interest of a company that is a resident (in this section referred to as the transferor ) in relation to a year of income exceeds the sum of:

(i) the amount (if any) of the deduction allowable to the transferor under section 51 in the year of income in respect of that rental property loan interest; and

(ii) the amount (if any) by which a capital gain or capital gains that, but for subsection 160ZA(1) , would be deemed by Part IIIA to have accrued to the transferor during the year of income in respect of the disposal of a prescribed asset or prescribed assets (within the meaning of section 160ZA ) is reduced by virtue of subsection 160ZA(1) ; and

(b) the transferor and another resident company (in this section referred to as the transferee ) that is a group company in relation to the transferor in relation to the year of income give to the Commissioner, on or before the date of lodgment of the return of income of the transferor for the year of income or within such further time as the Commissioner allows, a notice in writing signed by the public officer of each of the companies stating that the whole or a specified part of the excess referred to in paragraph (a) should be transferred to the transferee,

the amount to which the notice relates shall be deemed, for the purposes of section 51 , this Subdivision and Part IIIA :

(c) to be rental property loan interest incurred by the transferee:

(i) in a case where the year of income is the transitional year of income - in that year of income and immediately after the commencement date; and

(ii) in any other case - at the beginning of the year of income, in gaining or producing assessable income; and

(d) not to have been incurred by the transferor.

82KZF(2)   [``Group company'']  

For the purposes of this section, a company shall be taken to be a group company in relation to another company in relation to a year of income if the company is a group company in relation to that other company in relation to the year of income for the purposes of section 80G .

82KZF(3)   [Limit on excess to be transferred]  

A notice under paragraph (1)(b) purporting to transfer an amount specified in the notice to a transferee in relation to a year of income has no effect to the extent that the sum of:

(a) the amount so specified; and

(b) any amounts specified in notices previously given under paragraph (1)(b) by any transferor and deemed by subsection (1) to be rental property loan interest incurred by the transferee in the year of income,

exceeds the amount by which the sum of the rental property income of the transferee of that year of income and the amount (if any) of the capital gain or capital gains that, but for subsection 160ZA(1) , would be deemed by Part IIIA to have accrued to the transferee during the year of income in respect of the disposal of a prescribed asset or prescribed assets (within the meaning of section 160ZA ) exceeds the sum of:

(c) the eligible rental property deductions of the transferee in relation to the year of income; and

(d) the rental property loan interest of the transferee in relation to the year of income (other than amounts deemed by subsection (1) to be rental property loan interest incurred by the transferee in the year of income).

82KZF(4)   [Transfers exceeding transferor's excess]  

A notice by the transferor under paragraph (1)(b) in relation to a year of income has no effect if the sum of:

(a) the amount specified in the notice under that paragraph; and

(b) any amounts specified in notices previously given under that paragraph by the transferor and deemed by subsection (1) to be rental property loan interest incurred by any transferee in the year of income,

exceeds the amount of the excess referred to in paragraph (1)(a) in relation to the transferor in relation to the year of income.

82KZF(5)   [Amendment of assessments]  

Where:

(a) the whole or a part of an excess is transferred to the transferee pursuant to subsection (1); and

(b) that excess, or a part of that excess, was not available to be transferred by the transferor,

nothing in section 170 prevents the amendment of an assessment in respect of the transferee to disallow the whole or a part of a deduction in respect of the excess or part, as the case may be.