INCOME TAX ASSESSMENT ACT 1936

PART III - LIABILITY TO TAXATION  

Division 1 - General  

SECTION 18   18   ACCOUNTING PERIOD  


Any person may, with the leave of the Commissioner, adopt an accounting period being the 12 months ending on some date other than 30 June. For the purposes of this Act, the person's accounting period in each succeeding year shall end on the corresponding date of that year, unless:


(a) with the leave of the Commissioner some other date is adopted; or


(b) the accounting period ends earlier under section 18A .

SECTION 18A   ACCOUNTING PERIODS FOR VCLPs, ESVCLPs, AFOFs AND VCMPs  

18A(1)  


If a partnership becomes, or ceases to be, a VCLP, an ESVCLP, an AFOF or a VCMP on a particular day:


(a) the accounting period during which that day occurs (the first accounting period ) is taken to have ended immediately before that day; and


(b) another accounting period is taken to have commenced at the beginning of that day.

The other accounting period ends on the day on which the first accounting period would have ended if this section did not apply.

Example:

A partnership whose accounting periods ended on 30 June becomes a VCLP on 1 October 2002, and ceases to be a VCLP on 1 April 2003.

The effect of becoming a VCLP: the accounting period that commenced on 1 July 2002 is taken under this section to end on 30 September 2002, and a second accounting period commences on 1 October 2002. The second accounting period is scheduled to end on 30 June 2003.

The effect of ceasing to be a VCLP: the second accounting period is now taken under this section to end on 31 March 2003, and a third accounting period commences on 1 April 2003. The third accounting period is to end on 30 June 2003.

18A(2)  


This section does not apply in relation to a partnership becoming, or ceasing to be, a VCLP, an ESVCLP, an AFOF or a VCMP on the day on which an accounting period commences.

FORMER SECTION 20   20   INCOME ETC, TO BE EXPRESSED IN AUSTRALIAN CURRENCY  
(Repealed by No 133 of 2003)

SECTION 21   WHERE CONSIDERATION NOT IN CASH  

21(1)   [Non-cash consideration]  

Where, upon any transaction, any consideration is paid or given otherwise than in cash, the money value of that consideration shall, for the purposes of this Act, be deemed to have been paid or given.

21(2)   [Effect of section]  

This section has effect subject to section 21A .

SECTION 21A   NON-CASH BUSINESS BENEFITS  

21A(1)  
For the purposes of this Act, in determining the income derived by a taxpayer, a non-cash business benefit that is not convertible to cash shall be treated as if it were convertible to cash.

21A(2)  
For the purposes of this Act, if a non-cash business benefit (whether or not convertible to cash) is income derived by a taxpayer:


(a) the benefit shall be brought into account at its arm ' s length value reduced by the recipient ' s contribution (if any); and


(b) if the benefit is not convertible to cash - in determining the arm ' s length value of the benefit, any conditions that would prevent or restrict the conversion of the benefit to cash shall be disregarded.

21A(3)  
Where:


(a) a non-cash business benefit is income derived by a taxpayer in a year of income; and


(b) if the taxpayer had, at the time the benefit was provided, incurred and paid unreimbursed expenditure in respect of the provision of the benefit equal to the amount of the arm ' s length value of the benefit - a once-only deduction would, or would but for section 82A , and Subdivisions F, GA and G of Division 3 of this Part , of this Act, and Divisions 28 and 900 of the Income Tax Assessment Act 1997 , have been allowable to the taxpayer in respect of a percentage (in this subsection called the deductible percentage ) of the expenditure;

the amount that, apart from this subsection, would be applicable under subsection (2) of this section in respect of the benefit shall be reduced by the deductible percentage.

21A(4)  
Where:


(a) a non-cash business benefit is income derived by a taxpayer in a year of income; and


(b) a percentage (in this subsection called the non-deductible entertainment percentage ) of any expenditure incurred by the provider in respect of the provision of the benefit is non-deductible entertainment expenditure;

the amount that, apart from this subsection, would be applicable under subsection (2) in respect of the benefit shall be reduced by the non-deductible entertainment percentage.

21A(5)  


In this section:

arm ' s length value
, in relation to a non-cash business benefit, means:


(a) the amount that the recipient could reasonably be expected to have been required to pay to obtain the benefit from the provider under a transaction where the parties to the transaction are dealing with each other at arm ' s length in relation to the transaction; or


(b) if such an amount cannot be practically determined - such amount as the Commissioner considers reasonable.

income derived by a taxpayer
means income derived by a taxpayer in carrying on a business for the purpose of gaining or producing assessable income.

non-cash business benefit
means property or services provided after 31 August 1988:


(a) wholly or partly in respect of a business relationship; or


(b) wholly or partly for or in relation directly or indirectly to a business relationship.

non-deductible entertainment expenditure
means expenditure to the extent to which:


(a) section 32-5 of the Income Tax Assessment Act 1997 applies to the expenditure; and


(b) but for that section, the expenditure would be deductible under section 8-1 of the Income Tax Assessment Act 1997 .

once-only deduction
(Repealed by No 75 of 2010 )

provide
:


(a) in relation to property - includes dispose of (whether by assignment, declaration of trust or otherwise); and


(b) in relation to services - includes allow, confer, give, grant or perform.

recipient ' s contribution
, in relation to a non-cash business benefit, means the amount of any consideration paid to the provider by the recipient in respect of the provision of the benefit, reduced by the amount of any reimbursement paid to the recipient in respect of that consideration.

services
includes any benefit, right (including a right in relation to, and an interest in, real or personal property), privilege or facility and, without limiting the generality of the foregoing, includes a right, benefit, privilege, service or facility that is, or is to be, provided under:


(a) an arrangement for or in relation to:


(i) the performance of work (including work of a professional nature), whether with or without the provision of property;

(ii) the provision of, or of the use of facilities for, entertainment, recreation or instruction; or

(iii) the conferring of rights, benefits or privileges for which remuneration is payable in the form of a royalty, tribute, levy or similar exaction;


(b) a contract of insurance; or


(c) an arrangement for or in relation to the lending of money.

21A(6)  
Notwithstanding section 21 , the consideration referred to in the definition of recipient ' s contribution in subsection (5) of this section is consideration in money.

21A(7)  


This section does not apply to an ESS interest (within the meaning of the Income Tax Assessment Act 1997 ) to which Subdivision 83A-B or 83A-C of that Act (about employee share schemes) applies.

SECTION 23AA   INCOME OF PERSONS CONNECTED WITH CERTAIN PROJECTS OF UNITED STATES GOVERNMENT  

23AA(1)  


In this section, unless the contrary intention appears:

approved project
means the establishment, maintenance or operation of the North West Cape naval communication station, of the Joint Defence Space Research Facility, of the Sparta project, of the Joint Defence Space Communications Station or of a Force Posture Initiative.

Australia
(Repealed by No 2 of 2015)

civilian accompanying the United States Forces
means a person (not being a member of the United States Forces, an Australian citizen or a person ordinarily resident in Australia) who:


(a) is an employee:


(i) of the United States Forces; or

(ii) of, or of a body conducting, a club or other facility established for the benefit or welfare of members of the United States Forces or of persons accompanying those Forces and which is recognized by the Government of the United States of America as a non-appropriated fund activity; or


(b) is serving with an organization that, with the approval of the Government of the Commonwealth, accompanies the United States Forces in Australia;

dependant
, in relation to a person, means:


(a) the spouse of that person; or


(b) a relative, other than the spouse, of that person who is wholly or mainly dependent for support on that person;

but, in the case of a person who, immediately before becoming such a spouse or relative, was ordinarily resident in Australia, does not include that person so long as that person continues to be ordinarily resident in Australia.

Force Posture Agreement
means the Force Posture Agreement between the Government of Australia and the Government of the United States of America done at Sydney on 12 August 2014, as amended and in force for Australia from time to time.

Note:

The Treaty could in 2014 be viewed in the Australian Treaties Library on the AustLII website (http://www.austlii.edu.au).

Force Posture Initiative
has the same meaning as in the Force Posture Agreement.

Note:

As well as some announced initiatives, this includes future initiatives that Australia and the United States mutually decide to be Force Posture Initiatives for the purposes of that Agreement.

foreign contractor
means a person who is a party to a prescribed contract and is not:


(a) a company incorporated in Australia;


(b) an Australian citizen; or


(c) a person, other than a company, who is ordinarily resident in Australia.

foreign employee
means a person who:


(a) is an employee of a foreign contractor; or


(b) is a director of a company that is a foreign contractor;

and is not an Australian citizen or ordinarily resident in Australia.

prescribed contract
means:


(a) a contract to which the Government of the United States of America is a party in connexion with an approved project; or


(b) a contract made for purposes connected with the performance of a contract referred to in paragraph (a).

prescribed purposes
means:


(a) in relation to a foreign contractor or foreign employee - purposes relating to the performance of a prescribed contract;


(aa) in relation to a United States employee - purposes relating to an approved project; and


(b) in relation to a member of the United States Forces or a civilian accompanying the United States Forces - purposes relating to the carrying on of activities agreed upon between the Government of the Commonwealth and the Government of the United States of America.

the Joint Defence Space Communications Station
means the undertaking the establishment of which is provided for by an agreement dated 10 November 1969 between the Government of the Commonwealth and the Government of the United States of America.

the Joint Defence Space Research Facility
means the undertaking the establishment of which is provided for by an agreement dated 9 December 1966 between the Government of the Commonwealth and the Government of the United States of America.

the North West Cape naval communication station
means the naval communication station the establishment of which is provided for by the agreement approved by the United States Naval Communication Station Agreement Act 1963 .

the Sparta project
means the undertaking the establishment of which is provided for by a memorandum of arrangement dated 30 March 1966 between the Government of the Commonwealth, the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the United States of America.

the United States Forces
means the armed forces of the Government of the United States of America.

United States employee
means a person who is employed by the Government of the United States of America and is not:


(a) a member of the United States Forces;


(b) a civilian accompanying the United States Forces;


(c) an Australian citizen; or


(d) a person ordinarily resident in Australia.

23AA(2)  


For the purposes of this section, a foreign contractor, foreign employee or United States employee who is in Australia, or is carrying on business in Australia, solely for prescribed purposes does not cease to be in Australia solely for those purposes, or to be carrying on business in Australia solely for those purposes, by reason of anything undertaken or done by him or her in connexion with an undertaking in Australia of the Government of the United States of America, other than an approved project, agreed upon between the Government of the Commonwealth and the Government of the United States of America.

23AA(3)  


Where a person:


(a) has been in Australia, or has carried on business in Australia, solely for prescribed purposes during a period when the person was a foreign contractor or foreign employee;


(b) has been in Australia solely for prescribed purposes during a period when the person was a member of the United States Forces, a civilian accompanying the United States Forces or a United States employee; or


(c) has been in Australia during a period when the person was a dependant of such a contractor, employee, member or civilian who was in Australia solely for prescribed purposes;

that person shall, for the purposes of the provisions of this Act other than Subdivision A of Division 17, be deemed not to have been a resident of Australia during that period, and the presence of that person in Australia during that period shall be disregarded in determining, for the purposes of those provisions, whether the person was a resident of Australia at any other time.

23AA(4)  


Subsection (3) does not apply in respect of, or of a part of, a period when a person was, or was a dependant of, a foreign contractor, a foreign employee, a civilian accompanying the United States Forces or a United States employee if the person:


(a) being a company - was not a domestic corporation for the purposes of the law of the United States of America relating to income tax; or


(b) not being a company - was not a resident of the United States of America for the purposes of that law or a citizen of the United States of America;

during that period or that part of that period, as the case may be.

23AA(5)  
Where:


(a) a foreign contractor or a foreign employee has derived income wholly and exclusively from, or from employment in connexion with, the performance in Australia of a prescribed contract;


(b) the income is not exempt from income tax imposed by Chapter One of Subtitle A of the Internal Revenue Code of 1986 of the United States of America; and


(c) the foreign contractor or foreign employee was, at the time the income was derived, in Australia, or carrying on business in Australia, solely for prescribed purposes;

the income shall, for the purposes of this Act, be deemed to have been derived from sources out of Australia.

23AA(6)  
Where:


(a) a person has derived income in respect of service as a civilian accompanying the United States Forces or as a United States employee during a period when the person was in Australia solely for prescribed purposes; and


(b) the income is not exempt from income tax imposed by Chapter One of Subtitle A of the Internal Revenue Code of 1986 of the United States of America;

the income shall, for the purposes of this Act, be deemed to have been derived from sources out of Australia.

SECTION 23AB   INCOME OF CERTAIN PERSONS SERVING WITH AN ARMED FORCE UNDER THE CONTROL OF THE UNITED NATIONS  

23AB(1)  


In this section:

prescribed taxpayer
means a taxpayer who, being a resident of Australia, is, or is included in a class of persons that is, prescribed by the regulations for the purposes of this section.

tax deductions unapplied
, in relation to a deceased person, means any amounts withheld under Part 2-5 in Schedule 1 to the Taxation Administration Act 1953 from work and income support related withholding payments and benefits derived by the deceased person in respect of United Nations service:


(a) that have not been credited in payment of income tax; and


(b) in respect of which a payment has not been made by the Commissioner.

the prescribed area
has the same meaning as in section 79A .

United Nations service
means service, other than service as a member of the Defence Force, performed, at the direction or with the approval of the Commonwealth, outside Australia with an armed force under the control of the United Nations, at a time when the person performing the service was a prescribed taxpayer.

23AB(2)  


The regulations may prescribe a person or a class of persons for the purposes of this section but shall not so prescribe a person or class of persons unless the salary, wages and allowances received by the person or by all the persons in that class, as the case may be, in respect of his, her or their United Nations service are paid, given or granted by the Commonwealth or by the United Nations for and on behalf of the Commonwealth.

23AB(3)  
A succeeding provision of this section does not apply in relation to a person if the regulations provide that that provision does not apply in relation to that person or in relation to a class of persons in which that person is included.

23AB(4)  


Regulations made for the purposes of subsection (2) or (3) may provide that the regulations shall be deemed to have taken effect on a date specified in the regulations, being a date before the date on which the regulations are notified in the Gazette, and, in that case, the regulations shall be deemed to have taken effect on the date so specified.

23AB(5)  
Where:


(a) a payment of compensation under the Safety, Rehabilitation and Compensation Act 1988 is made in respect of the incapacity, impairment or death of a taxpayer; and


(b) the incapacity, impairment or death of the taxpayer resulted from an occurrence that happened during the performance by the taxpayer of United Nations service; and


(c) if the taxpayer had, at the time of the happening of the occurrence, been a member of the Defence Force rendering continuous full-time service outside Australia while the taxpayer was allotted for duty in an operational area described in item 4, 5, 6, 7, 8, 9, 10, 11, 12, 13 or 14 of Column 1 of Schedule 2 to the Veterans ' Entitlements Act 1986, the Commonwealth would be liable to pay a pension under that Act in respect of the incapacity, impairment or death of the taxpayer;

the payment of compensation is exempt from income tax.

23AB(6)  


For the purposes of section 15-2 of the Income Tax Assessment Act 1997 , the total value of all allowances, gratuities, compensations, benefits, bonuses and premiums (in this subsection referred to as " living allowances " ) allowed, given or granted in meals, sustenance or the use of premises or quarters (including payment in lieu of one or more of those living allowances) to a taxpayer in respect of, or for or in relation directly or indirectly to, United Nations service shall be deemed to be an amount calculated at the rate of $2 for each week of that service in which any of those living allowances were so allowed, given or granted, or in which payment in lieu of any of those living allowances was made, to the taxpayer.

23AB(7)  


Subject to subsections (8), (8A) and (9A) and subsection 79B(4) , a taxpayer is entitled to a rebate of tax in his or her assessment in respect of income of a year of income in which he or she has performed United Nations service and derived income byway of salary, wages or other allowances in respect of that service. The amount of the rebate is:


(a) where the total period of that service performed by the taxpayer during the year of income is more than one-half of the year of income or where the taxpayer dies while performing that service during the year of income - an amount equal to the sum of:


(i) $338; and

(ii) the amount worked out using subsection (7A); or


(b) in any other case - such amount as, in the opinion of the Commissioner, is reasonable in the circumstances, being an amount not greater than the amount of the rebate to which the taxpayer would have been entitled under this subsection if paragraph (a) had applied to him or her in respect of the year of income.

23AB(7A)  


For the purposes of subparagraph (7)(a)(ii), the amount is equal to 50% of the sum of the following rebates (if any) in respect of the year of income:


(a) any tax offset to which the taxpayer is entitled under Subdivision 61-A of the Income Tax Assessment Act 1997 ;


(b) any notional tax offset to which the taxpayer is entitled under Subdivision 961-A of the Income Tax Assessment Act 1997 .

23AB(8)  


For the purposes of subsection (7), but subject to subsection (8A), the total period of United Nations service of a taxpayer in any year of income shall be deemed to include any period in that year of income during which the taxpayer has resided, or has actually been, in the prescribed area.

23AB(8A)  


For the purposes of subsection (7), United Nations service does not include any period of service of the taxpayer in respect of which an exemption from income tax applies under section 23AG .

23AB(9)  


Where a rebate is allowable under subsection (7) in the assessment of a taxpayer in respect of income of a year of income and, but for this subsection, a rebate of a lesser amount would be allowable in that assessment under section 79A , a rebate under section 79A is not allowable in that assessment.

23AB(9A)  


Where a rebate is allowable under section 79A in the assessment of a taxpayer in respect of income of a year of income and, but for this subsection, a rebate of the same or a lesser amount would be allowable in that assessment under subsection (7), a rebate under subsection (7) is not allowable in that assessment.

23AB(9B)  


Subsection 79B(4) shall be disregarded in determining for the purposes of subsections (9) and (9A) of this section the amount of a rebate allowable to a taxpayer under subsection (7) of this section or under section 79A .

23AB(10)  
Where:


(a) the trustee of the estate of a deceased person who has performed United Nations service is liable to pay income tax, in respect of a year of income, upon income that consists of or includes salary, wages or allowances derived by the deceased person in respect of that service; or


(b) the death of the person resulted from an occurrence that happened during that service; and


(c) if the person had, at the time of the happening of the occurrence, been a member of the Defence Force rendering continuous full-time service outside Australia while the taxpayer was allotted for duty in an operational area described in item 4, 5, 6, 7 or 8 of Column 1 of Schedule 2 to the Veterans ' Entitlements Act 1986 , the Commonwealth would be liable to pay a pension under that Act in respect of the death of the person;

the trustee is, by force of this subsection, released from the payment of so much of that tax as remains after deducting any tax deductions unapplied:


(d) if the assessable income of the deceased person of the year of income consists solely of the salary, wages or allowances derived in respect of that service - from the amount of income tax so payable by the trustee; or


(e) if the assessable income of the deceased person of the year of income includes income other than the salary, wages or allowances derived in respect of that service:


(i) from the amount of income tax so payable by the trustee; or

(ii) from the amount by which the income tax payable in respect of the income of the year of income has been increased by the inclusion of the salary, wages or allowances so derived in the assessable income of the deceased person of the year of income;
whichever is the less.

23AB(11)  


Nothing in subsection (10) shall be construed as authorizing or requiring the Commissioner to refund any amount paid as or for income tax by or on behalf of the deceased person or the trustee of his or her estate.

FORMER SECTION 23AC   23AC   EXEMPTION OF PAY AND ALLOWANCES OF MEMBERS OF DEFENCE FORCE SERVING IN OPERATIONAL AREAS  
(Repealed by No 2 of 2015)

SECTION 23AD   EXEMPTION OF PAY AND ALLOWANCES OF DEFENCE FORCE MEMBERS PERFORMING CERTAIN OVERSEAS DUTY  

Requirements for exemption

23AD(1)  


The pay and allowances earned by a person serving as a member of the Defence Force are exempt from tax if:


(a) they are earned while there is in force a certificate in writing issued by the Chief of the Defence Force to the effect that the person is on eligible duty with a specified organisation in a specified area outside Australia; and


(b) the eligible duty is not as, or under, an attache at an Australian embassy or legation. Eligible duty

23AD(2)  


The regulations may declare that duty with a specified organisation, in a specified area outside Australia and after a specified day, is eligible duty for the purposes of this section. Where paragraph (1)(a) certificate in force

23AD(3)  
A certificate under paragraph (1)(a):


(a) comes into force at the later of:


(i) the time specified in the certificate (which may be before the time when it is issued, but not before the end of the specified day under the regulations); and

(ii) the time when the person arrives for duty in the specified area concerned; and


(b) subject to paragraph (c), continues in force until the earliest of:


(i) the time of the person's departure from the specified area; and

(ii) the time when, in accordance with a certificate of revocation signed by the Chief of the Defence Force, it ceases to be in force; and

(iii) any time prescribed by the regulations in relation to the eligible duty for the purposes of this subparagraph; and


(c) is in force during any period of hospital treatment resulting from an illness contracted, or injuries sustained, during the person's eligible duty.

Review of paragraph (1)(a) certificate

23AD(4)  


An application may be made to the Tribunal for review of a decision of the Chief of the Defence Force under paragraph (1)(a). Delegation of paragraph (1)(a) power

23AD(5)  
The Chief of the Defence Force may, by signed instrument, delegate to an officer of the Defence Force the power conferred by paragraph (1)(a). Revocation certificate is legislative instrument

23AD(6)  


A certificate of revocation referred to in subparagraph (3)(b)(ii) is a legislative instrument.

SECTION 23AF   EXEMPTION OF CERTAIN INCOME DERIVED IN RESPECT OF APPROVED OVERSEAS PROJECTS  

23AF(1)  


Where a taxpayer, being a natural person, has been engaged on qualifying service on a particular approved project for a continuous period of not less than 91 days, any eligible foreign remuneration derived by the person that is attributable to that qualifying service is exempt from tax.

23AF(2)  


(Omitted by No 100 of 1991)

23AF(3)  
Subject to subsections (4) and (5), a person shall be taken for the purposes of this section to be engaged on qualifying service on an approved project during any period during which:


(a) the person is outside Australia and is engaged in the performance of personal services in connection with the approved project;


(b) the person is travelling between Australia and the site of the approved project;


(c) by reason of an incapacity for work due to accident or illness occurring while the person was, by virtue of paragraph (a) or (b), to be taken to be engaged on qualifying service on the approved project, the person is absent from work; or


(d) the person is on eligible leave, being leave that accrued in respect of a period during which the person was, by virtue of any of the preceding paragraphs, to be taken to be engaged on qualifying service on the approved project.

23AF(4)  


A person shall not be taken to have been engaged on qualifying service on a particular approved project while the person was travelling between Australia and the site of the approved project unless the Commissioner is satisfied that the time taken for the journey is reasonable.

23AF(5)  


A person shall not be taken to have been engaged on qualifying service on a particular approved project by virtue of paragraph (3)(c) during a period of incapacity for work unless the person is taken to have been engaged on qualifying service on that approved project by virtue of paragraph (3)(a), (b) or (d) during a period that commenced immediately after the incapacity ceased.

23AF(6)  
Where:


(a) a person was engaged on qualifying service on a particular approved project; and


(b) due to unforeseen circumstances, the person ceased to be engaged on qualifying service on that approved project,

the period during which the person is to be taken to have been engaged on qualifying service on that approved project shall, except for the purpose of determining whether income derived by the person is eligible foreign remuneration, be taken to include the additional period after the person ceased to be engaged on qualifying service on that approved project during which the person would, in the opinion of the Commissioner, have continued to be engaged on qualifying service on that approved project but for those unforeseen circumstances.

23AF(7)  
Where:


(a) a person (in this subsection referred to as the original person ) was engaged on qualifying service on a particular approved project;


(b) due to unforeseen circumstances, the original person ceased to be engaged on qualifying service on that approved project; and


(c) as soon as practicable after the time when the original person ceased to be engaged on qualifying service on that approved project, another person (in this subsection referred to as the substituted person ) commenced to be engaged on qualifying service on that approved project in lieu of the original person;

the period during which the substituted person is to be taken to have been engaged on qualifying service on that approved project shall, except for the purpose of determining whether income derived by the substituted person is eligible foreign remuneration, be taken to include a period that ended immediately before the substituted person commenced to be engaged on qualifying service on that approved project in lieu of the original person and was of the same duration as the continuous period during which the original person was, immediately before the original person ceased to be engaged on qualifying service on that approved project, taken to have been engaged on qualifying service on that approved project.

23AF(8)  
Where:


(a) during the period (in this subsection referred to as the total project period ) commencing at the time when a person was first engaged on qualifying service on an approved project and ending at the time when the person was last engaged on qualifying service on that approved project, the person was in Australia during a period or periods (in this subsection referred to as the intervening period or intervening periods ) during which the person was not engaged on qualifying service on that approved project;


(b) the total number of days in the intervening period or intervening periods does not exceed one-sixth of the total number of days during the total project period during which the person was engaged on qualifying service on the approved project; and


(c) at all times during the total project period, the person was engaged on qualifying service on the approved project or was in Australia;

the periods during the total project period during which the person was engaged on qualifying service on the approved project shall together be taken to constitute a continuous period during which the person was engaged on qualifying service on the approved project.

23AF(9)  
Where, immediately before a person commences to take eligible leave, leave of the same kind as the eligible leave has accrued in relation to the person but has not been used and that unused leave consists of:


(a) leave that accrued in respect of a period or periods when the person was engaged on qualifying service on an approved project and leave that accrued in respect of a period or periods when the person was not engaged on qualifying service on an approved project;


(b) leave that accrued in respect of 2 or more periods when the person was engaged on qualifying service on 2 or more different approved projects; or


(c) leave that accrued in respect of 2 or more periods when the person was engaged on qualifying service on 2 or more different approved projects and leave that accrued in respect of a period or periods when the person was not engaged on qualifying service on an approved project;

the following provisions apply for the purposes of determining the extent to which the eligible leave taken by the person was eligible leave that accrued in respect of a period when the person was engaged on qualifying service on a particular approved project:


(d) in a case to which paragraph (a) applies - the person shall be deemed first to have taken leave that accrued in respect of the periodwhen the person was engaged on qualifying service on the approved project referred to in that paragraph;


(e) in a case to which paragraph (b) applies - the leave shall be deemed to have been taken in the order that is reverse to the order in which it accrued;


(f) in a case to which paragraph (c) applies -


(i) the person shall be deemed not to have taken any of the leave that accrued in respect of a period or periods when the person was not engaged on qualifying service on an approved project until the person had taken leave for a number of days equal to the number of days of leave referred to in that paragraph that had accrued in respect of periods when the person was engaged on qualifying service on approved projects; and

(ii) the leave that had accrued in respect of periods when the person was engaged in qualifying service on approved projects shall be deemed to have been taken by the person in the order that is reverse to the order in which that leave accrued.

23AF(10)  
Where the amount of income derived by a person that:


(a) is attributable to qualifying service on an approved project; and


(b) would, apart from this subsection, be eligible foreign remuneration;

exceeds the amount of income that the Commissioner considers would be reasonable remuneration in respect of that qualifying service, the amount of the excess is not eligible foreign remuneration for the purposes of this section.

23AF(11)  


Where the Trade Minister is satisfied that the undertaking of an eligible project that was commenced, or is proposed to be commenced, after 19 August 1980 is, or will be, in the national interest, that Minister may, by writing signed by that Minister, approve that eligible project for the purposes of this section.

23AF(12)  


The Trade Minister may, either generally or as otherwise provided by the instrument of delegation, by writing signed by that Minister, delegate to a person that Minister's power under subsection (11).

23AF(13)  


The power so delegated, when exercised by the delegate shall, for the purposes of this section, be deemed to have been exercised by the Trade Minister.

23AF(14)  


A delegation under subsection (12) does not prevent the exercise of a power by the Trade Minister.

23AF(15)  
Where:


(a) a person has derived eligible foreign remuneration during a year of income; and


(b) at the time of making an assessment in respect of income of the person of the year of income, the Commissioner is of the opinion that, at a later time, circumstances will exist by reason of which that eligible foreign remuneration will be exempt from tax by virtue of this section;

the Commissioner may apply the provisions of this section as if those circumstances existed at the time of making the assessment.

23AF(16)  
Where, in the making of an assessment, this section has been applied on the basis that a circumstance that did not exist at the time of making the assessment would exist at a later time and the Commissioner, after making the assessment, becomes satisfied that that circumstance will not exist, then, notwithstanding anything contained in section 170 , the Commissioner may amend the assessment at any time for the purposes of ensuring that this section shall be taken always to have applied on the basis that that circumstance did not exist.

23AF(17)  
For the purposes of this section, income is excluded income if:


(a) the income is income to which section 23AG applies; or


(aa) the income is a payment, consideration or amount that:


(i) is included in assessable income under Division 82 , section 83-295 or Division 301 , 302 , 304 or 305 of the Income Tax Assessment Act 1997 ; or

(ii) is included in assessable income under Division 82 of the Income Tax (Transitional Provisions) Act 1997 ;or

(iii) is mentioned in paragraph 82-135(e) , (f), (g), (i) or (j) of the Income Tax Assessment Act 1997 ; or

(iv) is an amount transferred to a fund, if the amount is included in the assessable income of the fund under section 295-200 of the Income Tax Assessment Act 1997 ; or


(b) the income is derived from sources in a country other than Australia and:


(i) is exempt from income tax in that country; and

(ii) would not be exempt from income tax in that country apart from the operation of an agreement applying to Australia and that other country relating to the avoidance of double taxation or of a law of that other country giving effect to such an agreement; or


(c) the income consists of:


(i) payments in lieu of long service leave; or

(ii) payments by way of superannuation or pension.

23AF(17A)  


If the income of a taxpayer of a year of income consists of an amount that is exempt from tax under this section (in this section called the exempt amount ) and other income, the amount of tax (if any) payable in respect of the other income is calculated using the formula:


                      Notional gross tax                      
Notional gross taxable income
×   Other taxable income

where:

Notional gross tax means the number of whole dollars in the amount of income tax that would be assessed under this Act in respect of the taxpayer ' s taxable income of the year of income if:


(a) the exempt amount were not exempt income; and


(aa) if the exempt amount is a payment covered by section 83-240 or 305-65 of the Income Tax Assessment Act 1997 - the exempt amount (excluding any part of that amount that represented contributions made by the taxpayer) were assessable income of the taxpayer; and


(b) the taxpayer were not entitled to any rebate of tax.

Notional gross taxable income means the number of whole dollars in the amount that would have been the taxpayer ' s taxable income of the year of income if the exempt amount were not exempt income.

Other taxable income means the amount (if any) remaining after deducting from so much of the other income as is assessable income:


(d) any deductions allowable to the taxpayer in relation to the year of income that relate exclusively to that assessable income; and


(e) so much of any other deductions (other than apportionable deductions) allowable to the taxpayer in relation to the year of income as, in the opinion of the Commissioner, may appropriately be related to that assessable income; and


(f) the amount calculated using the formula in subsection (17B).

23AF(17B)  


The formula referred to in paragraph (17A)(f) is:
Graphic
      

where:

Apportionable deductions means the number of whole dollars in the apportionable deductions allowable to the taxpayer in relation to the year of income.

Other taxable income means the amount that, apart from paragraph (17A)(f), would be represented by the component Other taxable income in subsection (17A).

Notional gross taxable income means the number of whole dollars in the amount that would have been the taxpayer ' s taxable income of the year of income if the exempt amount were not exempt income.

23AF(17C)  


Subsection (17A) applies to a taxpayer in respect of income of a year of income as if any payment covered by section 83-240 or 305-65 of the Income Tax Assessment Act 1997 in relation to qualifying service that was made in respect of the taxpayer during that year of income were income of the taxpayer of that year of income that is exempt from tax under this section.

23AF(17D)  
(Repealed by No 83 of 1999)

23AF(17E)  
(Repealed by No 83 of 1999)

23AF(18)  


In this section, unless the contrary intention appears:

approved project
means a project in respect of which there is in force an approval granted under subsection (11).

eligible contractor
means:


(a) a resident of Australia;


(b) the Commonwealth, a State, a Territory, the government of a country other than Australia or an authority of the Commonwealth, of a State, of a Territory or of the government of a country other than Australia;


(c) an organization:


(i) of which Australia and a country or countries other than Australia are members; or

(ii) that is constituted by a person or persons representing Australia and a person or persons representing a country or countries other than Australia; or


(d) an agency of an organization to which paragraph (c) applies.

eligible foreign remuneration ,
in relation to a person, means income (not being excluded income) that is derived by the person at a time when the person is a resident, being:


(a) income consisting of salary, wages, commission, bonuses or allowances, or of amounts included in a person ' s assessable income under Division 83A of the Income Tax Assessment Act 1997 (about employee share schemes), derived by the person in his or her capacity as an employee of an eligible contractor; or


(b) income, or amounts included in a person ' s assessable income under that Division, derived by the person under a contract with an eligible contractor, being a contract that is wholly or substantially for the personal services of the person;

that is directly attributable to qualifying service by the person on an approved project and includes any payments received in lieu of eligible leave that accrued in respect of a period during which the person was a resident and was engaged on qualifying service on an approved project.

eligible leave
means leave other than long service leave.

eligible project
means:


(a) a project for the design, supply or installation of any equipment or facilities; or


(b) a project for the construction of works; or


(c) a project for the development of an urban area or a regional area; or


(d) a project for the development of agriculture; or


(e) a project consisting of giving advice or assistance relating to the management or administration of a government department or of a public utility; or


(f) a project included in a class of projects approved in writing for the purposes of this section by the Trade Minister.

employee
includes:


(a) a person employed by the Commonwealth, by a State, by a Territory, by the government of a country other than Australia or by an authority of the Commonwealth, of a State, of a Territory or of the government of a country other than Australia; and


(b) a member of the Defence Force.

long service leave
means long leave, furlough, extended leave or leave of a similar kind (however described).

SECTION 23AG   EXEMPTION OF INCOME EARNED IN OVERSEAS EMPLOYMENT  

23AG(1)  


Where a resident, being a natural person, has been engaged in foreign service for a continuous period of not less than 91 days, any foreign earnings derived by the person from that foreign service are exempt from tax.

23AG(1AA)  
However, those foreign earnings are not exempt from tax under this section unless the continuous period of foreign service is directly attributable to any of the following:


(a) the delivery of Australian official development assistance by the person ' s employer (except if that employer is an Australian government agency (within the meaning of the Income Tax Assessment Act 1997 ));


(b) the activities of the person ' s employer in operating a public fund that:


(i) is covered by item 9.1.1 or 9.1.2 of the table in subsection 30-80(1) of the Income Tax Assessment Act 1997 (international affairs deductible gift recipients); and

(ii) meets the special conditions mentioned in that item;


(c) the activities of the person ' s employer, if the employer is exempt from income tax because of paragraph 50-50(1)(c) or (d) of the Income Tax Assessment Act 1997 (prescribed institutions located or pursuing objectives outside Australia);


(d) the person ' s deployment outside Australia as a member of a disciplined force by:


(i) the Commonwealth, a State or a Territory; or

(ii) an authority of the Commonwealth, a State or a Territory;


(e) an activity of a kind specified in the regulations.

23AG(1A)  


A person is taken, for the purposes of subsection (1), to have been engaged in foreign service for a continuous period of 91 days if:


(a) the person died at a time when he or she was engaged in foreign service for a continuous period of less than 91 days; and


(b) he or she would have otherwise continued to be engaged in the foreign service; and


(c) his or her continuous period of engagement in the foreign service would have otherwise been a period of at least 91 days.

23AG(2)  


An amount of foreign earnings derived in a foreign country is not exempt from tax under this section if the amount is exempt from income tax in the foreign country only because of any of the following:


(a) a law of the foreign country giving effect to a double tax agreement;


(b) a double tax agreement;


(c) provisions of a law of the foreign country under which income covered by any of the following categories is generally exempt from income tax:


(i) income derived in the capacity of an employee;

(ii) income from personal services;

(iii) similar income;


(d) the law of the foreign country does not provide for the imposition of income tax on one or more of the categories of income mentioned in paragraph (c);


(e) a law of the foreign country corresponding to the International Organisations (Privileges and Immunities) Act 1963 or to the regulations under that Act;


(f) an international agreement to which Australia is a party and that deals with:


(i) diplomatic or consular privileges and immunities; or

(ii) privileges and immunities in relation to persons connected with international organisations;


(g) a law of the foreign country giving effect to an agreement covered by paragraph (f).

23AG(2A)  


Subsection (2) does not apply in relation to foreign earnings to the extent that the person derived them from foreign service in Iraq after 31 December 2002 but before 1 May 2004.

23AG(3)  


If the income of a taxpayer of a year of income consists of an amount that is exempt from tax under this section (in this section called the exempt amount ) and other income, the amount of tax (if any) payable in respect of the other income is calculated using the formula:


    Notional gross tax    
Notional gross
taxable income
×   Other taxable income

where:

Notional gross tax means the number of whole dollars in the amount of income tax that would be assessed under this Act in respect of the taxpayer ' s taxable income of the year of income if:


(a) the exempt amount were not exempt income; and


(aa) if the exempt amount is a payment covered by section 83-240 or 305-65 of the Income Tax Assessment Act 1997 - the exempt amount (excluding any part of that amount that represented contributions made by the taxpayer) were assessable income of the taxpayer; and


(b) the taxpayer were not entitled to any rebate of tax.

Notional gross taxable income means the number of whole dollars in the amount that would have been the taxpayer ' s taxable income of the year of income if the exempt amount were not exempt income.

Other taxable income means the amount (if any) remaining after deducting from so much of the other income as is assessable income:


(d) any deductions allowable to the taxpayer in relation to the year of income that relate exclusively to that assessable income; and


(e) so much of any other deductions (other than apportionable deductions) allowable to the taxpayer in relation to the year of income as, in the opinion of the Commissioner, may appropriately be related to that assessable income; and


(f) the amount calculated using the formula in subsection (4).

23AG(4)  


The formula referred to in paragraph (3)(f) is:
Graphic
      

where:

Apportionable deductions means the number of whole dollars in the apportionable deductions allowable to the taxpayer in relation to the year of income.

Other taxable income means the amount that, apart from paragraph (3)(f), would be represented by the component Other taxable income in subsection (3).

Notional gross taxable income means the number of whole dollars in the amount that would have been the taxpayer ' s taxable income of the year of income if the exempt amount were not exempt income.

23AG(5)  


Subsection (3) applies to a taxpayer in respect of income of a year of income as if any payment covered by section 83-240 or 305-65 of the Income Tax Assessment Act 1997 that related to the termination of employment that was made in respect of the taxpayer during that year of income were income of the taxpayer of that year of income that is exempt from tax under this section.

23AG(5A)  
(Repealed by No 83 of 1999)

23AG(5B)  
(Repealed by No 83 of 1999)

23AG(6)  
For the purposes of this section, a period during which a person is engaged in foreign service includes any period during which the person is, in accordance with the terms and conditions of that service:


(a) absent on recreation leave, other than:


(i) leave wholly or partly attributable to a period of service or employment other than that foreign service;

(ii) long service leave, furlough, extended leave or leave of a similar kind (however described); or

(iii) leave without pay or on reduced pay; or


(b) absent from work because of accident or illness.

23AG(6A)  


2 or more periods in which a person has been engaged in foreign service are together taken to constitute a continuous period of foreign service until:


(a) the end of the last of the 2 or more periods; or


(b) a time (if any), since the start of the first of the 2 or more periods, when the person ' s total period of absence exceeds 1/6 of the person ' s total period of foreign service;

whichever happens sooner.

Example:

Kate is engaged in foreign service for 20 days, is absent for 2 days and is then engaged in foreign service for 10 days. These 2 periods of foreign service constitute a continuous period of foreign service, because the total period of absence is never more than 1/10 of the total period of foreign service.

Kate is then absent for 5 days before commencing a further period of foreign service. No matter how long the further period lasts, it can never constitute a continuous period of foreign service with the first 2 periods of foreign service, because on the fourth day of the second absence the total period of absence is 1/5 of the total period of foreign service.

23AG(6B)  


In subsection (6A):

total period of absence
, in relation to a particular time, means the number of days, in the period starting at the start of the first of the 2 or more periods and ending at that time, for which the person was not engaged in foreign service.

total period of foreign service
, in relation to a particular time, means the number of days, in the period starting at the start of the first of the 2 or more periods and ending at that time, for which the person was engaged in foreign service.

23AG(6C)  
(Repealed by No 162 of 2005)

23AG(6D)  
(Repealed by No 162 of 2005)

23AG(6E)  
(Repealed by No 162 of 2005)

23AG(6F)  


Where:


(a) a person has derived foreign earnings during a year of income; and


(b) at the time of making an assessment in respect of income of the person of the year of income, the Commissioner is of the opinion that, at a later time, circumstances will exist because of which those foreign earnings will be exempted from tax by this section;

the Commissioner may apply the provisions of this section as if those circumstances existed at the time of making the assessment.

23AG(6G)  
(Repealed by No 75 of 2010 )

23AG(6H)  
(Omitted by No 100 of 1991)

23AG(6J)  
(Repealed by No 162 of 2005)

23AG(7)  


In this section:

double tax agreement
means:


(a) double tax agreement within the meaning of Part X ; or


(b) the Timor Sea Treaty.

employee
includes:


(a) a person employed by a government or an authority of a government or by an international organisation; or


(b) a member of a disciplined force.

foreign earnings
means income consisting of earnings, salary, wages, commission, bonuses or allowances, or of amounts included in a person ' s assessable income under Division 83A of the Income Tax Assessment Act 1997 (about employee share schemes), but does not include any payment, consideration or amount that:


(a) is included in assessable income under Division 82 or Subdivision 83-295 or Division 301 , 302 , 304 or 305 of the Income Tax Assessment Act 1997 ; or


(b) is included in assessable income under Division 82 of the Income Tax (Transitional Provisions) Act 1997 ; or


(c) is mentioned in paragraph 82-135(e) , (f), (g), (i) or (j) of the Income Tax Assessment Act 1997 ; or


(d) is an amount transferred to a fund, if the amount is included in the assessable income of the fund under section 295-200 of the Income Tax Assessment Act 1997 .

foreign service
means service in a foreign country as the holder of an office or in the capacity of an employee.

income tax
, in relation to a foreign country:


(a) in all cases - does not include a municipal incometax; and


(b) in the case of a federal foreign country - does not include a State income tax.

SECTION 23AH   FOREIGN BRANCH INCOME OF AUSTRALIAN COMPANIES NOT ASSESSABLE  

Objects

23AH(1)  
The objects of this section are:


(a) to ensure that active foreign branch income derived by a resident company, and capital gains made by a resident company in disposing of non-tainted assets used in deriving foreign branch income, (except income and capital gains from the operation of ships or aircraft in international traffic) are not assessable income or exempt income of the company; and


(b) to include in the assessable income of a resident company that part of its income and capital gains derived through a branch in a foreign country that is comparable to the amounts that would be included in an attributable taxpayer's assessable income for income and capital gains derived by a CFC resident in the same foreign country; and


(c) to get the same outcomes where one or more partnerships or trusts are interposed between a resident company and a foreign branch.

Foreign branch income not assessable

23AH(2)  


Subject to this section, foreign income derived by a company, at a time when the company is a resident in carrying on a business, at or through a PE of the company in a listed country or unlisted country is not assessable income, and is not exempt income, of the company. Foreign capital gains and losses disregarded

23AH(3)  


Subject to this section, a capital gain from a CGT event happening to a CGT asset is disregarded for the purposes of Part 3-1 of the Income Tax Assessment Act 1997 if:


(a) the gain is made by a company that is a resident; and


(b) the company used the asset wholly or mainly for the purpose of producing foreign income in carrying on a business at or through a PE of the company in a listed country or unlisted country; and


(c) the asset is not taxable Australian property.

23AH(4)  


Subject to this section, a capital loss from a CGT event happening to a CGT asset is disregarded for the purposes of Part 3-1 of the Income Tax Assessment Act 1997 if:


(a) the loss is made by a company that is a resident; and


(b) the company used the asset wholly or mainly for the purpose of producing foreign income in carrying on a business at or through a PE of the company in a listed country or unlisted country; and


(c) had the loss been a gain, it would be disregarded under subsection (3). Exceptions: listed country PE

23AH(5)  
Subsection (2) does not apply to foreign income derived by the company if:


(a) the PE is in a listed country; and


(b) the PE does not pass the active income test (see subsection (12)); and


(c) the foreign income is both:


(i) adjusted tainted income (see subsection (13)); and

(ii) eligible designated concession income in relation to a listed country.

23AH(6)  
Subsection (3) or (4) does not apply to a capital gain or capital loss if:


(a) the PE is in a listed country; and


(b) for a capital gain - the gain is from a tainted asset and is eligible designated concession income in relation to a listed country; and


(c) for a capital loss - the loss is from a tainted asset and would be eligible designated concession income in relation to a listed country if it were a capital gain.

Exceptions: unlisted country PE

23AH(7)  
Subsection (2) does not apply to foreign income derived by the company if:


(a) the PE is in an unlisted country; and


(b) the PE does not pass the active income test (see subsection (12)); and


(c) the foreign income is adjusted tainted income (see subsection (13)).

23AH(8)  
Subsection (3) or (4) does not apply to a capital gain or capital loss if:


(a) the PE is in an unlisted country; and


(b) the gain or loss is from a tainted asset. Income derived in disposing of a business

23AH(9)  


This section applies to foreign income derived by an entity in the course of disposing, in whole or in part, of a business carried on in a listed country or unlisted country at or through a PE of the entity in the listed country or unlisted country as if the foreign income had been derived in carrying on that business. Interposed partnerships or trusts

23AH(10)  


This section applies to any indirect interest (through one or more partnerships or trust estates) of a company in foreign income derived by a partnership or trustee through a PE of the partnership or trustee in a listed country or unlisted country as if that indirect interest were foreign income derived by the company through a PE of the company in that country.

23AH(11)  
This section applies to any indirect interest (through one or more partnerships or trust estates) of a company in a capital gain or capital loss made in relation to an asset of a partnership, or made by a trustee, in carrying on a business at or through a PE of the partnership or trustee in a listed country or unlisted country as if that indirect interest were a capital gain or capital loss made by the company through a PE of the company in that country. Active income test

23AH(12)  


A PE of an entity passes the active income test for a year of income if the entity would have passed the active income test in section 432 if:


(a) the assumptions in subsection (14) were made; and


(b) subsection 432(3) and 446(2) and paragraphs 432(1)(b) and (e) and 447(1)(b), (d) and (f) had not been enacted.

Adjusted tainted income

23AH(13)  
For the purposes of this section, the adjusted tainted income of a PE of an entity is income or other amounts that would be adjusted tainted income of the entity for the purposes of Part X if:


(a) the assumptions in subsection (14) were made; and


(b) subsection 446(2) and paragraphs 447(1)(b), (d) and (f) had not been enacted. Assumptions for subsections (12) and (13)

23AH(14)  
The assumptions referred to in paragraphs (12)(a) and (13)(a) are:


(a) except in applying paragraphs 447(1)(a), (c) and (e) and 450(6)(c) , (7)(d) and (8)(b) , the only income or other amounts derived by the entity were the income derived in carrying on business at or through the PE; and


(b) the entity's statutory accounting periods were the same as the entity's years of income; and


(c) in applying paragraphs 447(1)(a), (c) and (e) and 450(6)(c) , (7)(d) and (8)(b) :


(i) the part of the entity's operations that consists of the business carried on at or through the PE were a company (the PE company ); and

(ii) the remaining part of the entity's operations were a separate company (the HQ company ); and

(iii) the PE company and the HQ company had carried out the transactions that they would have carried out if the PE company were engaged in the same or similar activities as the PE under the same or similar conditions as the PE and were dealing wholly independently with the HQ company; and

(iv) any income derived by the HQ company were disregarded; and


(d) if the entity is an AFI entity (within the meaning of subsection 326(2) ) - the entity were an AFI subsidiary; and


(e) in applying paragraphs 447(1)(a), (c) and (e) , the HQ company were an associate of the PE company.

23AH(14A)  


This section does not apply to foreign income, or to a capital gain or capital loss, of a company to the extent that the income, gain or loss is from:


(a) the operation of ships or aircraft in international traffic at or through a PE of the company in a listed country or unlisted country; or


(b) things that are ancillary to that operation.

23AH(14B)  


A company operates a ship or aircraft in international traffic if the company operates it for transporting passengers or goods between a place in one country and a place in another country. Definitions

23AH(15)  
In this section:

company
does not include a company in the capacity of a trustee.

double tax agreement
has the same meaning as in Part X .

eligible designated concession income
has the same meaning as in Part X .

foreign income
includes an amount that:


(a) apart from this section, would be included in assessable income under a provision of this Act other than Part 3-1 or 3-3 of the Income Tax Assessment Act 1997 (CGT); and


(b) is derived from sources in a listed country or unlisted country.

listed country
has the same meaning as in Part X .

permanent establishment , or PE
, in relation to a listed country or unlisted country:


(a) if there is a double tax agreement in relation to that country - has the same meaning as in the double tax agreement; or


(b) in any other case - has the meaning given by subsection 6(1) .

statutory accounting period
has the same meaning as in Part X .

tainted asset
has the same meaning as in Part X .

unlisted country
has the same meaning as in Part X .

SECTION 23AI   AMOUNTS PAID OUT OF ATTRIBUTED INCOME NOT ASSESSABLE  

23AI(1)   [Attribution account payments]  

Where:


(a) either:


(i) an attribution account payment of a kind referred to in paragraph 365(1)(a) , (b), (c) or (e) is made to a taxpayer (other than a partnership or taxpayer in the capacity of trustee of a trust); or

(ii) an attribution account payment of a kind referred to in paragraph 365(1)(d) is made to a taxpayer; and


(b) on the making of the payment, an attribution debit arises, for the entity making the payment, in relation to the taxpayer;

the following provisions have effect:


(c) if the payment is of a kind referred to in paragraph 365(1)(a) - the payment is not assessable income, and is not exempt income, to the extent of the debit;


(d) if the payment is of a kind referred to in paragraph 365(1)(b) and, apart from this section, an amount would be included in the taxpayer's assessable income under section 92 in respect of an individual interest in the net income of the partnership of the year of income referred to in that paragraph - that amount is not assessable income, and is not exempt income, to the extent of the debit;


(e) if the payment is of a kind referred to in paragraph 365(1)(c) and, apart from this section, an amount would be included in the taxpayer's assessable income under section 97 , 98A or 100 in respect of a share of the net income of the trust of the year of income referred to in that paragraph - that amount is not assessable income and is not exempt income, to the extent of the debit;


(ea) if the payment is of a kind referred to in paragraph 365(1)(c) and, apart from this section, an amount would be assessable to the trustee of the trust referred to in that paragraph under section 98 in respect of a share of the net income of the trust of the year of income referred to in that paragraph - that amount is not so assessable to the extent of the debit;


(f) if the payment is of a kind referred to in paragraph 365(1)(d) - the payment is not, to the extent of the debit, assessable to the taxpayer as mentioned in that paragraph;


(g) if the payment is of a kind referred to in paragraph 365(1)(e) and, apart from this section, an amount would be included in the taxpayer's assessable income, of the year of income referred to in that paragraph, under section 99B in respect of the trust property referred to in that paragraph - that amount is not assessable income, and is not exempt income to the extent of the debit.

23AI(2)   [ Other provisions]  

This section is to be disregarded for the purposes of applying any other provision of this Act to determine allowable deductions.

23AI(3)   [Definitions]  

In this section:

attribution account payment
has the same meaning as in Part X .

attribution debit
has the same meaning as in Part X .

company
has the same meaning as in Part X .

trust
has the same meaning as in Part X , but does not include a trust covered by subsection 371(7) .

FORMER SECTION 23AJ   23AJ   CERTAIN NON-PORTFOLIO DIVIDENDS FROM FOREIGN COUNTRIES NOT ASSESSABLE  
(Repealed by No 110 of 2014)

SECTION 23AK   AMOUNTS PAID OUT OF ATTRIBUTED FOREIGN INVESTMENT FUND INCOME NOT ASSESSABLE  

When this section applies

23AK(1)  
This section applies if:


(a) either:


(i) a FIF attribution account payment of a kind referred to in former paragraph 603(1)(a), (b), (c), (d), (f), (g) or (h) is made to a taxpayer (other than a partnership or taxpayer in the capacity of trustee of a trust); or

(ii) a FIF attribution account payment of a kind referred to in former paragraph 603(1)(e) is made to a taxpayer; and


(b) on the making of the payment, a post FIF abolition debit arises, for the FIF attribution account entity making the payment, in relation to the taxpayer. Post FIF abolition debit arises

23AK(2)  


A post FIF abolition debit arises for a FIF attribution account entity (the eligible entity ) in relation to a taxpayer if:


(a) the eligible entity makes a FIF attribution account payment to the taxpayer or to a FIF attribution account entity; and


(b) immediately before the eligible entity makes the FIF attribution account payment, there is a post FIF abolition surplus for the eligible entity in relation to the taxpayer. Amount of post FIF abolition debit

23AK(3)  


The amount of the post FIF abolition debit is the lesser of:


(a) the post FIF abolition surplus; and


(b) whichever of the following is applicable:


(i) if the attribution account payment is made to the taxpayer - the FIF attribution account payment;

(ii) in any other case - the taxpayer ' s FIF attribution account percentage (for the FIF attribution account entity to which the payment is made) of the FIF attribution account payment;
reduced by any attribution debit that arises under section 372 for the entity in relation to the taxpayer as a result of the making of the payment. When the post FIF abolition debit arises

23AK(4)  
The post FIF abolition debit arises when the FIF attribution account payment is made. When a post FIF abolition surplus exists

23AK(5)  
A post FIF abolition surplus for a FIF attribution account entity in relation to a taxpayer exists at a particular time (the relevant time ) if the sum of:


(a) the entity ' s total FIF attribution credits (within the meaning of former section 605 ) that arose before the commencement of Schedule 1 to the Tax Laws Amendment (Foreign Source Income Deferral) Act (No. 1) 2010 ; and


(b) the entity ' s total post FIF abolition credits arising before the relevant time in relation to the taxpayer;

exceeds the sum of:


(c) the entity ' s total FIF attribution debits (within the meaning of former section 606 ) that arose before that commencement in relation to the taxpayer; and


(d) the entity ' s total post FIF abolition debits arising before the relevant time in relation to the taxpayer. Post FIF abolition credit arises

23AK(6)  
A post FIF abolition credit arises for a FIF attribution account entity (the eligible entity ) in relation to a taxpayer if a FIF attribution account payment that requires a post FIF abolition debit for another entity in relation to the taxpayer is made to the eligible entity. Amount of post FIF abolition credit

23AK(7)  
The amount of the post FIF abolition credit is equal to the amount of the post FIF abolition debit for the other entity. When the post FIF abolition credit arises

23AK(8)  
The post FIF abolition credit arises when the FIF attribution account payment referred to in subsection (6) is made. Effect of this section applying

23AK(9)  
If this section applies, the following provisions have effect:


(a) if the payment is of a kind referred to in former paragraph 603(1)(a) or (b) - the payment is not assessable income, and is not exempt income, to the extent of the debit;


(b) if the payment is of a kind referred to in former paragraph 603(1)(c) and, apart from this section, an amount would be included in the taxpayer ' s assessable income under section 92 in respect of an individual interest in the net income of the partnership of the year of income referred to in that paragraph - that amount is not assessable income, and is not exempt income, to the extent of the debit;


(c) if the payment is of a kind referred to in former paragraph 603(1)(d) and, apart from this section, an amount would be included in the taxpayer ' s assessable income under section 97 , 98A or 100 in respect of a share of the net income of the trust of the year of income referred to in that paragraph - that amount is not assessable income, and is not exempt income, to the extent of the debit;


(d) if the payment is of a kind referred to in former paragraph 603(1)(d) and, apart from this section, an amount would be assessable to the trustee of the trust referred to in that paragraph under section 98 in respect of a share of the net income of the trust of the year of income referred to in that paragraph - that amount is not so assessable to the extent of the debit;


(e) if the payment is of a kind referred to in former paragraph 603(1)(e) - the payment is not, to the extent of the debit, assessable to the taxpayer as mentioned in that paragraph;


(f) if the payment is of a kind referred to in former paragraph 603(1)(f) and, apart from this section, an amount would be included in the taxpayer ' s assessable income, of the year of income referred to in that paragraph, under section 99B in respect of the trust property referred to in that paragraph - that amount is not assessable income, and is not exempt income, to the extent of the debit;


(g) if the payment is of a kind referred to in former paragraph 603(1)(g) - the payment is not assessable income, and is not exempt income, to the extent of the debit;


(h) if the payment is of a kind referred to in former paragraph 603(1)(h) - the payment is not assessable income, and is not exempt income, to the extent of the debit.

23AK(10)   [ Other deduction provisions]  

This section is to be disregarded for the purposes of applying any other provision of this Act to determine allowable deductions.

23AK(11)   [ Interpretation]  

In this section:

FIF attribution account entity
has the same meaning as in former Part XI .

FIF attribution account payment
has the same meaning as in former Part XI .

FIF attribution account percentage
has the same meaning as in former Part XI .

trust
has the same meaning as in former Part XI , but does not include a trust covered by former subsection 605(11) .


Note:

A remade version of section 23AL is included in the Income Tax Assessment Act 1997 by item 748 of Schedule 2 to this Act.

FORMER SECTION 23A   23A   PARTIAL EXEMPTION OF INCOME FROM CERTAIN MINING OPERATIONS  
(Repealed by No 126 of 1974)

SECTION 23B   REDUCTION OF DISPOSAL CONSIDERATION IF FIF ATTRIBUTED INCOME NOT DISTRIBUTED  

23B(1)  
If:


(a) it is necessary, for the purposes of applying a provision of this Act in the assessment of a taxpayer for a year of income, to take into account:


(i) the amount of consideration received, entitled to be received or taken to have been received, by the taxpayer in respect of the disposal of an asset; or

(ii) the capital proceeds from a CGT event happening in relation to a CGT asset;
being an asset that is an interest in a FIF attribution account entity; and


(b) immediately before the disposal or CGT event takes place there is a post FIF abolition surplus for the FIF attribution account entity in relation to the taxpayer;

then, for the purposes of this Act:


(c) the consideration or capital proceeds that, apart from this section, would be taken into account under the provision referred to in paragraph (a) in respect of the disposal or CGT event is taken to be reduced by so much of the amount of the post FIF abolition surplus as does not exceed the consideration or capital proceeds; and


(d) a post FIF abolition debit arises at the time of the disposal or the CGT event under this paragraph, in relation to the taxpayer, for the FIF attribution account entity; and


(e) the amount of the post FIF abolition debit is equal to so much of the surplus as is taken into account under paragraph (c).

23B(2)  
For the purposes of paragraph (1)(c), if the disposal of the asset or the CGT event causes the taxpayer ' s FIF attribution account percentage for the FIF attribution account entity to be reduced by a proportion, then only that proportion of the post FIF abolition surplus for the entity is to be taken into account under that paragraph.

23B(3)  
In this section:

FIF attribution account entity
entity has the same meaning as in former Part XI .

FIF attribution account percentage
has the same meaning as in former Part XI .


SECTION 23E   23E   REDEMPTION OF SPECIAL BONDS REDEEMABLE AT A PREMIUM  
(Repealed by No 47 of 2016)

FORMER SECTION 23F   23F   EXEMPTION OF INCOME OF CERTAIN SUPERANNUATION FUNDS ESTABLISHED FOR BENEFIT OF EMPLOYEES  
(Repealed by No 138 of 1987)

FORMER SECTION 23FA   23FA   EXEMPTION OF INCOME OF CERTAIN APPROVED DEPOSIT FUNDS  
(Repealed by No 138 of 1987)

FORMER SECTION 23FB   23FB   EXEMPTION OF INCOME OF CERTAIN SUPERANNUATION FUNDS  
(Repealed by No 138 of 1987)

FORMER SECTION 23FC   23FC   EXEMPTION OF INCOME OF CERTAIN SUPERANNUATION FUNDS  
(Repealed by No 97 of 1989)

FORMER SECTION 23FD   23FD   EXEMPTION OF INCOME OF CERTAIN APPROVED DEPOSIT FUNDS  
(Repealed by No 97 of 1989)

SECTION 23G   EXEMPTION OF INTEREST RECEIVED BY CREDIT UNIONS  

23G(1)   [Interpretation]  

In this section:

credit union
means a company in relation to which the following conditions are satisfied:


(a) the company is an ADI (authorised deposit-taking institution) for the purposes of the Banking Act 1959 ;


(b) the company has a consent under section 66 of that Act that allows it to assume or use the expression " credit union " or " credit society " , or another expression (whether or not in English) that is of like import to either of those expressions.

23G(2)   [Exempt interest]  

Income derived during a year of income by a credit union that is an approved credit union in relation to that year of income, being interest paid to the credit union by members of the credit union not being companies in respect of loans made to those members, is exempt from income tax.

23G(2A)   [When subsection (2) not applicable]  

Subsection (2) does not apply to a credit union in relation to a year of income if:


(a) the credit union is a recognised medium credit union in relation to the year of income; or


(b) the credit union is a recognised large credit union in relation to the year of income.

23G(3)   [Approved credit union]  

For the purposes of this section, a credit union is an approved credit union in relation to a year of income if, and only if, the Commissioner is satisfied that:


(a) during that year of income the credit union did not enter into any transactions of a kind not ordinarily entered into by a company of a kind referred to in paragraph (a) of the definition of credit union in subsection (1); and


(b) by comparison with the profits of other credit unions for that year of income and the amounts transferred by those credit unions out of those profits to reserves, and after making due allowance for differences in the numbers of transactions entered into by other credit unions and the first-mentioned credit union and the amounts to which the respective transactions related, the profit of the first-mentioned credit union for that year of income was not excessive and the first-mentioned credit union did not transfer an unreasonable part of that profit to a reserve.

23G(4)   [Factors to be taken into account for para (3)(a)]  

In determining for the purposes of paragraph (3)(a) whether any transactions entered into by a credit union during a year of income were transactions of a kind referred to in that paragraph, the Commissioner may have regard to:


(a) the circumstances in which, and the terms and conditions upon which, during that year of income:


(i) moneys were lent to, invested with, or otherwise obtained by, the credit union;

(ii) moneys were lent or otherwise made available by the credit union to its members or to other persons; and

(iii) moneys were invested by the credit union;


(b) the nature of the connexion (if any) between:


(i) the credit union or any of its members and any of the persons by whom moneys were lent to, invested with, or otherwise made available to, the credit union during that year of income;

(ii) the credit union or any of its members and any of the persons who owed moneys to the credit union at any time during that year of income; or

(iii) any of the persons by whom moneys were lent to, invested with, or otherwise made available to, the credit union during that year of income and any of the persons who owed moneys to the credit union at any time during that year of income; and


(c) any other relevant matters.

FORMER SECTION 23GA   23GA   INTEREST ON JUDGMENT DEBT RELATING TO PERSONAL INJURY  
(Repealed by No 143 of 2007 )