Income Tax Assessment Act 1936

SCHEDULE 2  

Section 79A

PART II  

Zone B  


1. All that portion of the mainland of Australia lying south of the southern boundary of Zone A and north of a line commencing at the northeastern corner of the shire of Broadsound in the State of Queensland thence generally westerly and southerly by the boundaries dividing the Shires of Broadsound Belyando Jericho Bauhinia Booringa and Balonne from the Shires of Sarina Nebo Wangaratta Dalrymple Aramac Barcaldine Blackall Tambo Murweh and Paroo to the boundary dividing the States of Queensland and New South Wales thence east by that boundary to its junction with the Barwon River at the northeastern corner of the Western Division in the State of New South Wales thence generally southwesterly by part of the boundary dividing the Central and Western Divisions of the State of New South Wales to the northernmost corner of the County of Mouramba and by the boundaries dividing the Counties of Mouramba Mossgiel Waljeers Kilfera Taila Wentworth and Tara from the Counties of Robinson Booroondarra Woore Manara Perry and Windeyer to the boundary dividing the States of New South Wales and South Australia thence south by that boundary to the northeast corner of the County of Hamley in the State of South Australia thence by the north boundaries of the Counties of Hamley and Young part of the north boundary of the County of Burra part of the east boundary of the District Council District of Hallett the east and a north boundary of the District Council District of Peterborough east and north boundaries of the District Council District of Carrieton to the southeast corner of the District Council District of Hawker the eastern north and west boundaries of that District Council District a western boundary of the District Council District of Kanyaka to the north boundary of the County of Frome thence west by part of that boundary and its prolongation west to the west boundary of the County of Manchester thence by the boundaries dividing the Counties of Manchester York and Buxton from the County of Hore-Ruthven part of the west boundary of the County of Buxton and part of the western boundary of the District Council District of Kimba to the easternmost corner of the District Council District of Le Hunte thence generally northwesterly by the east and north boundaries of the District Council Districts of Le Hunte and Streaky Bay and the east north and west boundaries of the District Council District of Murat Bay to the southern coastline thence by that coastline westerly to the southwestern corner of the Road District of Phillips River in the State of Western Australia thence generally northwesterly by the boundaries dividing the Road Districts of Gnowangerup Kent Lake Grace Kulin Kondinin Narembeen Merredin and Nungarin from the Road Districts of Phillips River Yilgarn and Westonia to the northeast corner of the Road District of Nungarin thence westerly and northwesterly by the boundaries dividing the Road Districts of Nungarin Kununoppin-Trayning Wyalkatchem Dowerin and Wongan-Ballidu from the Road Districts of Mukinbudin Mt Marshall Koorda and Dalwallinu to the No. 2 rabbit proof fence by that fence to the north boundary of the Road District of Perenjori and thence by the boundaries dividing the Road Districts of Perenjori Morawa Mingenew Irwin Greenough and Geraldton from the Road Districts of Yalgoo Mullewa and Upper Chapman to the western coastline.


2. All that portion of Tasmania lying south and west of a line commencing on the west coast at the southwest corner of the County of Wellington and thence generally easterly and southerly by the boundaries dividing the counties of Wellington Devon and Westmorland from the counties of Russell Lincoln and Cumberland to the point on the River Shannon where the hydro-electric transmission line from Waddamana to Launceston crosses that river thence in a straight line in a general southwesterly direction to the trigonometrical station known as Fishers Sugar Loaf thence by a straight line in a general southwesterly direction to the point where the Lyell Highway crosses the Dee River thence by a straight line in a general southwesterly direction to the confluence of the Derwent and Florentine Rivers thence by a straight line in a general southerly direction passing through the trigonometrical station on South East Cape to the southern coastline.


3. All the islands forming part of Australia lying adjacent to the coastline of either of the portions of Australia described in paragraphs 1 and 2.


4. King Island, Tasmania.


5. All the islands in the group of islands known as the Furneaux Group, Tasmania.


FORMER SCHEDULE 2C - FORGIVENESS OF COMMERCIAL DEBTS  

(Repealed by No 79 of 2010)

SCHEDULE 2D - TAX EXEMPT ENTITIES THAT BECOME TAXABLE  

Division 57 - Tax exempt entities that become taxable  

Guide to Division 57  

SECTION 57-1   WHAT THIS DIVISION IS ABOUT  


This Division is about the income tax treatment of a taxpayer whose income ceases to be wholly exempt. Broadly, income, outgoings, gains and losses are attributed to the periods before and after the loss of full exemption.

Subdivision 57-A - Key concepts  

SECTION 57-5   57-5   ENTITIES TO WHICH THIS DIVISION APPLIES  


If:


(a) at a particular time, all of the income of a taxpayer is wholly exempt from income tax; and


(b) immediately after that time, the taxpayer ' s income becomes to any extent assessable income;

then:


(c) the taxpayer is a transition taxpayer ; and


(d) the time when the taxpayer ' s income becomes to that extent assessable is the transition time ; and


(e) the year of income in which the transition time occurs is the transition year for the taxpayer.

Subdivision 57-B - Predecessors of the transition taxpayer  

SECTION 57-10   ACTIVITIES OF TRANSITION TAXPAYER ' S PREDECESSOR ATTRIBUTED TO TRANSITION TAXPAYER  

57-10(1)  
If:


(a) at the transition time, the transition taxpayer performs particular functions or carries on particular activities; and


(b) during any period before the transition taxpayer first began to perform the functions or carry on the activities, an exempt government entity performed those same functions or carried on those same activities; and


(c) at the end of the period, responsibility for performing the functions or carrying on the activities was transferred, either directly or through one or more other exempt government entities, to the transition taxpayer;

this Division applies as if, during that period, anything done by or to the exempt government entity in performing those functions or carrying on those activities had instead been done by or to the transition taxpayer.

Note:

As a result of this provision, the transition taxpayer may for example be able to deduct after the transition time, under Division 40 of the Income Tax Assessment Act 1997 as modified by Subdivision 57-J of this Schedule, a portion of allowable capital expenditure incurred before the transition time by an exempt government entity whose functions were transferred to the transition taxpayer.

57-10(2)  
An exempt government entity is:


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


(b) an STB, within the meaning of Division 1AB of Part III , that is exempt from tax under that Division.

Subdivision 57-C - Time when income derived  

SECTION 57-15   TIME WHEN INCOME DERIVED  

57-15(1)  
To the extent that income derived by the transition taxpayer before the transition time is in respect of:


(a) services rendered; or


(b) goods provided; or


(c) the doing of any other thing;

at or after the transition time, the income is treated for the purposes of this Act as having been derived at the time the services were rendered, the goods were provided or the thing was done, as the case requires.

57-15(2)  
To the extent that income derived by the transition taxpayer at or after the transition time is in respect of:


(a) services rendered; or


(b) goods provided; or


(c) the doing of any other thing;

before the transition time, the income is treated for the purposes of this Act as having been derived before that time.

Subdivision 57-D - Time when losses and outgoings incurred  

SECTION 57-20   TIME WHEN LOSSES AND OUTGOINGS INCURRED  

57-20(1)  
To the extent that a loss or outgoing (within the meaning of section 51 of this Act or section 8-1 of the Income Tax Assessment Act 1997 , as appropriate) incurred by the transition taxpayer before the transition time is in respect of:


(a) services rendered; or


(b) goods provided; or


(c) the doing of any other thing;

at or after the transition time, the loss or outgoing is treated for the purposes of this Act as having been incurred at the time the services were rendered, the goods were provided or the thing was done, as the case requires.

57-20(2)  
To the extent that a loss or outgoing (within the meaning of section 51 of this Act or section 8-1 of the Income Tax Assessment Act 1997 , as appropriate) incurred by the transition taxpayer at or after the transition time is in respect of:


(a) services rendered; or


(b) goods provided; or


(c) the doing of any other thing;

before the transition time, the loss or outgoing is treated for the purposes of this Act as having been incurred before that time.

Subdivision 57-E - Assets and liabilities  

SECTION 57-25   DEEMED DISPOSAL AND RE-ACQUISITION OF ASSETS  

57-25(1)  
This section applies to:


(a) the disposal of an asset by the transition taxpayer after the transition time; and


(b) a CGT event that happens after the transition time in relation to an asset owned by the transition taxpayer;

where the transition taxpayer owned the asset at all times from the transition time until the disposal or the CGT event.

57-25(2)   Deemed disposal and re-purchase.  

Subject to subsection (5), in determining for the purposes of this Act (other than the excluded provisions mentioned in subsection (4)) whether an amount is included in, or allowable as a deduction from, the assessable income of the transition taxpayer in respect of the disposal, the transition taxpayer is taken:


(a) to have sold, immediately before the transition time, each of its assets; and


(b) to have purchased each of its assets again at the transition time for consideration equal to the asset ' s adjusted market value at the transition time.

57-25(2A)  
For the purposes of Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 (about CGT), in determining whether the transition taxpayer makes a capital gain or capital loss from a CGT event that happens after the transition time in relation to an asset referred to in subsection (1), the cost base and reduced cost base of the asset (at the transition time) is its adjusted market value at that time.

57-25(3)  
An asset ' s adjusted market value at the transition time is the asset ' s market value at that time:


(a) reduced by any amount of income received or receivable by the transition taxpayer in respect of the asset at or after the transition time that:


(i) because of subsection 57-15(2) ; or

(ii) because all of the income of the transition taxpayer was wholly exempt from income tax before the transition time;
is not included in the transition taxpayer ' s assessable income; and


(b) increased by any amount of income received or receivable by the transition taxpayer in respect of the asset before the transition time that:


(i) because of subsection 57-15(1) ; or

(ii) because the transition taxpayer ' s income ceased to be exempt from income tax at the transition time;
is included in the transition taxpayer ' s assessable income.
Note:

If the asset is, or is part of, a Division 230 financial arrangement, section 57-32 may affect how the market value of the asset is worked out.

57-25(4)   Excluded provisions.  

For the purposes of subsection (2), the excluded provisions are:


(a) - (d) (Repealed by No 101 of 2006 )


(e) former Division 10B of Part III of this Act (about industrial property); and


(f) former Division 10BA of Part III of this Act (about Australian films); and


(g) (Repealed by No 101 of 2006 )


(ga) Division 40 of the Income Tax Assessment Act 1997 (about capital allowances); and


(h) (Repealed by No 101 of 2006 )


(i) Division 43 of the Income Tax Assessment Act 1997 (about deductions for capital works); and


(j) section 70-120 of the Income Tax Assessment Act 1997 (about deducting capital costs of acquiring trees);


(k) (Repealed by No 101 of 2006 )


(la) Division 373 of the Income Tax Assessment Act 1997 (about intellectual property).


(l) (Repealed by No 101 of 2006 )

57-25(5)   Listed provisions not affected.  

If the transition taxpayer:


(a) acquired an asset (whether before the transition time or otherwise) before the commencement of a provision listed in subsection (6); and


(b) after acquiring the asset, owned the asset at all times before the transition time;

the deemed acquisition of the asset under subsection (2) does not affect the operation of the listed provision.

57-25(6)   Listed provisions.  

The provisions are listed in the table below. Provisions of the Income Tax Assessment Act 1997 are identified in normal text. The other provisions, in bold , are provisions of the Income Tax Assessment Act 1936 .


Listed provisions
Item Provision
1 section 26BB
2 (Repealed by No 47 of 2016)
3 section 70B
4 the former Division 3B of Part III
5 Division 16E of Part III
6 Subdivision 20-A, so far as it applies to an amount that may be an assessable recoupment because a deduction has been allowed or is allowable under the former subsection 82Z(1) .
6A Division 230
7 Division 775
8 Subdivision 20-A, so far as it applies to an amount that may be an assessable recoupment because a deduction has been allowed or is allowable under section 775-30.

57-25(6A)  


For the purposes of the application of subsection (5) to the transition taxpayer, a provision covered by item 7 or 8 of the table in subsection (6) is taken to have commenced at the start of the taxpayer ' s applicable commencement date (within the meaning of Division 775 of the Income Tax Assessment Act 1997 ).
Note:

For applicable commencement date , see section 775-155 of the Income Tax Assessment Act 1997 .

57-25(6B)  


The rule in subsection (5) does not apply, and is taken never to have applied, to the transition taxpayer in relation to a provision covered by item 7 or 8 of the table in subsection (6) if the taxpayer makes an election under section 775-150 of the Income Tax Assessment Act 1997 .

57-25(7)   Avoidance of doubt - debt write-off.  

To avoid doubt, an effect of subsection (2) is that the sum of all allowable deductions (if any) in respect of the writing off as bad of the whole or part of a debt to which that subsection applies will not exceed the market value of the debt at the transition time.

57-25(8)   Avoidance of doubt - disposal need not involve an alienation.  

To avoid doubt, an asset may be disposed of for the purposes of this section whether or not the disposal involves alienating the asset.

SECTION 57-30   DEEMED CESSATION AND RE-ASSUMPTION OF LIABILITIES  

57-30(1)  
Subject to subsection (3), for the purposes of determining a deduction allowable to, or an amount included in the assessable income of, the transition taxpayer after the transition time in respect of the satisfaction of a liability owed by the transition taxpayer immediately before the transition time, the transition taxpayer is taken:


(a) to have ceased immediately before the transition time to have any liabilities; and


(b) to have assumed each of its liabilities again at the transition time in return for consideration equal to the adjusted market value (see subsection (2)) at that time of the right or other asset, corresponding to the liability, that was held by the person to whom the liability was owed.

57-30(2)  
The adjusted market value of the corresponding right or other asset is the market value of that right or asset at the transition time:


(a) reduced by any amount paid or that becomes payable by the transition taxpayer in respect of the liability at or after the transition time, where:


(i) because of subsection 57-20(2) ; or

(ii) because all of the transition taxpayer ' s income was wholly exempt from income tax before the transition time;
the amount is not an allowable deduction; and


(b) increased by any amount paid or that became payable by the transition taxpayer in respect of the liability before the transition time, where:


(i) because of subsection 57-20(1) ; or

(ii) because the transition taxpayer ' s income ceased to be exempt from income tax at the transition time;
the amount is an allowable deduction.
Note:

If the liability is, or is part of, a Division 230 financial arrangement, section 57-32 may affect how the market value of the corresponding right or other asset is worked out.

57-30(3)  
A provision listed in subsection (4) only applies to a liability of the transition taxpayer at the transition time if the liability first came into existence after the day on which Division 3B of Part III commenced.

57-30(4)  


The provisions are listed in the table below. Provisions of the Income Tax Assessment Act 1997 are identified in normal text. The other provisions, in bold , are provisions of the Income Tax Assessment Act 1936 .


Listed provisions
Item Provision
1 the former Division 3B of Part III
2 Subdivision 20-A, so far as it applies to an amount that may be an assessable recoupment because a deduction has been allowed or is allowable under the former subsection 82Z(1) .

57-30(5)  


A provision listed in subsection (6) only applies to a liability of the transition taxpayer at the transition time if the taxpayer first assumed the liability on or after the taxpayer ' s applicable commencement date (within the meaning of Division 775 of the Income Tax Assessment Act 1997 ).
Note:

For applicable commencement date , see section 775-155 of the Income Tax Assessment Act 1997 .

57-30(6)  


The provisions are listed in the table below. Provisions of the Income Tax Assessment Act 1997 are identified in normal text.


Listed provisions
Item Provision
1 Division 775
2 Subdivision 20-A, so far as it applies to an amount that may be an assessable recoupment because a deduction has been allowed or is allowable under section 775-30.

57-30(7)  


The rule in subsection (5) does not apply, and is taken never to have applied, to the transition taxpayer if the taxpayer makes an election under section 775-150 of the Income Tax Assessment Act 1997 .

SECTION 57-32   DIVISION 230 FINANCIAL ARRANGEMENTS - MARKET VALUE OF ASSETS AND RIGHTS  

57-32(1)  
This section applies in relation to an asset (the subject asset ) held by an entity (the holder ) if:


(a) the subject asset is:


(i) covered by subsection 57-25(1) ; or

(ii) a right, or other asset, corresponding to a liability covered by subsection 57-30(1) ; and


(b) the subject asset, or the corresponding liability for the subject asset, is or is part of a Division 230 financial arrangement at the transition time; and


(c) when the arrangement was entered into:


(i) the parties to the arrangement were not dealing at arm ' s length (within the meaning of the Income Tax Assessment Act 1997 ) in relation to the subject asset; or

(ii) if the subject asset gives rise to an interest that is not an equity interest in an entity - the return on the interest would reasonably be expected to be less than the benchmark rate of return (within the meaning of that Act) for the interest.

57-32(2)  
For the purposes mentioned in subsection (3), assume at the transition time that the market value of the subject asset is the total amount (the initial amount ) of the financial benefits (within the meaning of the Income Tax Assessment Act 1997 ) that the holder provided in relation to the subject asset before the transition time:


(a) reduced by:


(i) repayments of principal made in relation to the subject asset before the transition time; and

(ii) the amount of any impairment (within the meaning of the accounting principles (within the meaning of that Act)) of the subject asset at the transition time; and


(b) increased by the amount of the cumulative amortisation (worked out using the effective interest method recognised by the accounting principles (within the meaning of that Act)) of any difference at the transition time between:


(i) the initial amount; and

(ii) the amount payable on the maturity of the subject asset.

57-32(3)  
Subsection (2) has effect for the purposes of working out the subject asset ' s adjusted market value under section 57-25 or 57-30 for use when applying Division 230 of the Income Tax Assessment Act 1997 to the subject asset or the corresponding liability for the subject asset.

SECTION 57-33   DIVISION 230 FINANCIAL ARRANGEMENTS - TRANSITION TAXPAYER ' S RIGHT TO RECEIVE OR OBLIGATION TO PROVIDE PAYMENT  

57-33(1)  
This section applies in relation to the following:


(a) an asset covered by subsection 57-25(1) to which section 57-32 applies;


(b) the corresponding liability for a right, or other asset, covered by subsection 57-30(1) to which section 57-32 applies.

Note:

Section 57-32 applies if the asset or liability is or is part of a Division 230 financial arrangement.

57-33(2)  
For the purposes of section 230-60 of the Income Tax Assessment Act 1997 , assume the following:


(a) in the case of an asset - that the transition taxpayer acquired the asset at the transition time in return for the transition taxpayer starting to have an obligation to provide one or more financial benefits in relation to the Division 230 financial arrangement;


(b) in the case of a liability - that the transition taxpayer started to have the liability at the transition time in return for the transition taxpayer starting to have a right to receive one or more financial benefits under the Division 230 financial arrangement.

SECTION 57-35   57-35   INTERPRETATION  


In this Subdivision:

asset
means property, or a right, of any kind, and includes:


(a) any legal or equitable estate or interest (whether present or future, vested or contingent, tangible or intangible, in real or personal property) of any kind; and


(b) any chose in action; and


(c) any right, interest or claim of any kind including rights, interests or claims in or in relation to property (whether arising under an instrument or otherwise, and whether liquidated or unliquidated, certain or contingent, accrued or accruing); and


(d) (Repealed by No 101 of 2006 )


(e) a CGT asset;

but does not include trading stock.

liability
includes a duty or obligation of any kind (whether arising under an instrument or otherwise, and whether actual, contingent or prospective).

Subdivision 57-F - Superannuation deductions  

SECTION 57-40   CONTRIBUTIONS UNDER DEFINED BENEFIT SUPERANNUATION SCHEMES  

57-40(1)  


This section applies to a deduction allowable apart from this Subdivision to the transition taxpayer under section 290-60 of the Income Tax Assessment Act 1997 for a contribution made to a fund in relation to a person if:


(a) the person was an employee of the transition taxpayer at any time before or after the transition time; and


(b) the contribution was made under a defined benefit superannuation scheme (within the meaning of section 6A of the Superannuation Guarantee (Administration) Act 1992 ).