INCOME TAX ASSESSMENT ACT 1936

PART III - LIABILITY TO TAXATION  

Division 9 - Co-operative and mutual companies  

SECTION 120   DEDUCTIONS ALLOWABLE TO CO-OPERATIVE COMPANY  

120(1)  


So much of the assessable income of a co-operative company as:


(a) is distributed among its shareholders as rebates or bonuses based on business done by shareholders with the company;


(b) is distributed among its shareholders as interest or dividends on shares; or


(c) in the case of a company having as its primary object that specified in paragraph 117(1)(b) - is applied by the company for or towards the repayment of any moneys loaned to the company by a government of the Commonwealth or a State to enable the company to acquire assets which are required for the purpose of carrying on the business of the company or to pay that government for assets so required which the company has taken over from that government;

shall be an allowable deduction:


120(2)  


No such rebate or bonus based on purchases made by a shareholder from the company shall be included in his or her assessable income except where the amount of such purchases is allowable as a deduction in ascertaining his or her taxable income of any year.

120(3)  


It is hereby declared to be the intention of the Parliament that paragraph (1)(c) applies to loans taken out for the purpose of acquiring assets from:


(a) government sources; or


(b) non-government sources.

120(4)  


No deduction is allowable under subsection (1) to the extent that the assessable income of a co-operative company is distributed as the franked part of a franked distribution.

120(5)  


For the purposes of this section, in determining whether the assessable income of a co-operative company is distributed as the franked part of a franked distribution, if:


(a) an amount is distributed by the co-operative company as a franked distribution; and


(b) the franking percentage (within the meaning of the Income Tax Assessment Act 1997 ) for the distribution is less than 100%; and


(c) a part of the distribution is attributable to sources other than the assessable income of the co-operative company;

it is to be assumed that the franked part of the distribution is attributable, to the greatest extent possible, to those other sources.

120(6)  


If a co-operative company distributes assessable income among its shareholders within the period of 3 months (or such longer period as the Commissioner decides) starting at the end of a year of income, the co-operative company may elect that the distribution is to be taken, for the purposes of this section only, to have been made on the last day of the year of income.

120(7)  


In this section:

franked distribution
has the same meaning as in the Income Tax Assessment Act 1997 .


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