INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART III - LIABILITY TO TAXATION  

Division 3 - Deductions  

Subdivision A - General  

SECTION 51   LOSSES AND OUTGOINGS  

51(1AA)   [No operation from 1997/98 year onwards]  

Subsection (1) does not apply to the 1997-98 year of income or a later year of income.

Note:

Section 8-1 of the Income Tax Assessment Act 1997 sets out rules for working out what losses or outgoings an entity can deduct for the 1997-98 year of income and later years of income.

51(1)   [Deductions for losses and outgoings]  

All losses and outgoings to the extent to which they are incurred in gaining or producing the assessable income, or are necessarily incurred in carrying on a business for the purpose of gaining or producing such income, shall be allowable deductions except to the extent to which they are losses or outgoings of capital, or of a capital, private or domestic nature, or are incurred in relation to the gaining or production of exempt income.

51(1A)   [Reduction of subsec (1) deduction]  

A deduction otherwise allowable under subsection (1) to a creditor in respect of a debt is reduced to the extent mentioned in subparagraph 245-90(3)(b)(i) of Schedule 2C if an agreement between the debtor and the creditor is made as mentioned in paragraph 245-90(3)(a) of Schedule 2C .

51(1B)   [Exception]  

Subsection (2) does not apply to an assessment for the 1997-98 year of income or a later year of income.

Note:

Section 70-25 (Cost of trading stock is not a capital outgoing) of the Income Tax Assessment Act 1997 applies instead.

51(2)   [Expenditure on purchase of trading stock]  

Expenditure incurred or deemed to have been incurred in the purchase of stock used by the taxpayer as trading stock shall be deemed not to be an outgoing of capital or of a capital nature.

51(2AA)   [No application to 1997/98 and later years expenditure]  

Subsection (2A) does not apply to expenditure incurred in the 1997-98 year of income or a later year of income.

Note:

Section 70-15 (In which income year do you deduct an outgoing for trading stock?) of the Income Tax Assessment Act 1997 deals with deduction of expenditure incurred in those years of income.

51(2A)   [Deductions for trading stock purchases involving prepayments]  

If:


(a) a taxpayer incurs expenditure in a year of income in connection with the acquisition of stock that will become trading stock on hand of the taxpayer; and


(b) as at the end of the year of income, a part of the stock is not, and has not been, trading stock on hand of the taxpayer; and


(c) a deduction under subsection (1) in respect of the expenditure would, apart from this subsection and subsection (1A), be allowable from the assessable income of the taxpayer of the year of income;

then, instead of the deduction under subsection (1) being allowable as mentioned in paragraph (c), a deduction under subsection (1) or section 8-1 of the Income Tax Assessment Act 1997 (as appropriate) in relation to each part of the stock, equal to so much of the expenditure as is attributable to that part, is allowable from the assessable income of the taxpayer of:


(d) the year of income in which that part of the stock first becomes trading stock on hand of the taxpayer; or


(e) if an amount is included in the assessable income of the taxpayer of an earlier year of income in connection with the disposal of that part of the stock - that earlier year of income.

51(2B)   [Firearms surrender arrangements]  

Where a taxpayer derives assessable income as a result of the surrender of an item of trading stock under firearms surrender arrangements, the excess, if any, of the amount of that income over the acquisition cost is an allowable deduction in the year of income in which that income is derived.

Note:

Firearms surrender arrangements has the meaning given by subsection 6(1) .

51(3A)   [No application of subsec (3) 1997/98 income year onwards]  

Subsection (3) does not apply to the 1997-98 year of income or a later year of income.

Note:

Section 26-10 (Leave payments) of the Income Tax Assessment Act 1997 deals with the deductibility of leave payments.

51(3)   [Deduction for leave payment]  

A deduction is not allowable under subsection (1) in respect of long service leave, annual leave, sick leave or other leave except in respect of:


(a) an accrued leave transfer payment; or


(b) an amount paid to the person to whom the leave relates or, if that person is dead, to a dependant or personal representative of that person;

and, for the purposes of that subsection, the amount paid is taken to be a loss or outgoing incurred at the time when the payment is made.

51(4A)   [No application of subsec (4) from 1997/98 year of income]  

Subsection (4) does not apply to the 1997-98 year of income or a later year of income.

Note:

Section 26-5 (Penalties) of the Income Tax Assessment Act 1997 denies a deduction for penalties.

51(4)   [Penalties not deductible]  

A deduction is not allowable under subsection (1) in respect of:


(a) an amount, however described, payable, or expressed to be payable, by way of penalty under a law of the Commonwealth, a State, a Territory or a foreign country; or


(b) an amount ordered by a court, upon the conviction of a person for an offence against a law of the Commonwealth, a State, a Territory or a foreign country, to be paid by the person.

51(5A)   [Application of subsec (5) ceases]  

Subsection (5) does not apply to the 1997-98 year of income or a later year of income.

Note:

Section 25-5 (Tax-related expenses) of the Income Tax Assessment Act 1997 deals with the deductibility of interest.

51(5)   [Interest under s 163C, 170AA or 207A]  

Expenditure incurred in the year of income that consists of interest under section 163C , 170AA or 207A is an allowable deduction.

51(6AA)   [Application of subsec (6) ceases]  

Subsection (6) does not apply to the 1997-98 year of income or a later year of income.

Note:

Section 26-20 (Assistance to students) of the Income Tax Assessment Act 1997 denies a deduction for certain amounts paid under the Higher Education Funding Act 1988 , the Higher Education Support Act 2003 , the Social Security Act 1991 and the Student Assistance Act 1973 .

51(6)   [Higher education contribution]  

A deduction is not allowable under subsection (1) in respect of:


(a) a contribution imposed under Chapter 4 of the Higher Education Funding Act 1988 ; or


(ab) a basic charge within the meaning of Chapter 5 of that Act; or


(b) a payment made in respect of, or in respect of the reduction or discharge of, any indebtedness to the Commonwealth under Chapter 5A of that Act; or


(c) a payment made in respect of, or in respect of the reduction or discharge of, any indebtedness to the Commonwealth or to a participating corporation under Part 4a of the Student Assistance Act 1973 .

51(6A)   [When subsec (6) not applicable]  

The rule in subsection (6) does not apply to expenditure incurred by the provider of a fringe benefit (within the meaning of the Fringe Benefits Tax Assessment Act 1986 ), if the expenditure is in respect of the provision of the fringe benefit.

51(7)   [Training guarantee charge]  

A deduction is not allowable under subsection (1) in respect of charge imposed by the Training Guarantee Act 1990.

51(7A)  

51(8)   [Superannuation supervisory levy]  

A deduction is not allowable under section 8-1 of the Income Tax Assessment Act 1997 in respect of so much of levy imposed by the Superannuation Supervisory Levy Act 1991 as represents the late lodgment amount within the meaning of section 6 of that Act.

51(9)   Superannuation guarantee charge.  

A deduction is not allowable under section 8-1 of the Income Tax Assessment Act 1997 in respect of charge imposed by the Superannuation Guarantee Charge Act 1992 .

51(10)   [Franchise fees windfall tax]  

A deduction is not allowable under subsection (1) in respect of tax imposed by the Franchise Fees Windfall Tax (Imposition) Act 1997 .

51(11)   [Commonwealth places windfall tax]  

A deduction is not allowable under subsection (1) in respect of tax imposed by the Commonwealth Places Windfall Tax (Imposition) Act 1998 .


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