SCHEDULE 2
History
Archived:
Sch 1 repealed as inoperative by
No 101 of 2006
, s 3 and Sch 1 item 184, effective 14 September 2006. For
application and savings provisions
and for former wording see the
CCH Australian Income Tax Legislation archive
.
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.
History
Sch 2 Pt II amended by No 4 of 1991.
Sch 2 amended by No 51 of 1973, No 101 of 1956 and No 62 of 1955 and inserted by No 4 of 1945.
History
Archived:
Sch 2A and 2B repealed as inoperative by
No 101 of 2006
, s 3 and Sch 1 item 185, effective 14 September 2006. For
application and savings provisions
and for former wording see the
CCH Australian Income Tax Legislation archive
.
FORMER SCHEDULE 2C
-
FORGIVENESS OF COMMERCIAL DEBTS
(Repealed by No 79 of 2010)
History
Sch 2C repealed by
No 79 of 2010
, s 3 and Sch 2 item 1, effective 1 July 2010. Sch 2C formerly read:
SCHEDULE 2C
-
FORGIVENESS OF COMMERCIAL DEBTS
Division 245
-
Forgiveness of commercial debts
History
Div 245 inserted by No 76 of 1996.
Guide to Division 245
SECTION 245-1 WHAT THIS DIVISION IS ABOUT
This Division applies if:
(a) a debt or part of a debt ceases to be payable because the obligation to pay the debt or part is released or waived, or is otherwise extinguished (this is referred to as the
forgiveness
of the debt or part); and
(b) there are amounts (
reducible amounts
) that would otherwise be taken into account in reducing the debtor
'
s taxable income of the year of income in which the debt is forgiven or a later year of income.
The forgiven amount of the debt is treated as having been used to generate the reducible amounts and is accordingly applied to reduce them in a particular order.
If the debtor is a company that is included in a group of related companies, the forgiven amount of the debt may be treated as having been used to generate reducible amounts of one or more of the other companies.
History
S 245-1 inserted by No 76 of 1996.
SECTION 245-2 SIMPLIFIED OUTLINE OF THIS DIVISION
245-2(1)
This Division applies to the forgiveness of the whole or a part of a commercial debt.
245-2(2)
The forgiveness of a debt under an Act relating to bankruptcy, by will, or for reasons of natural love and affection, is not affected by the provisions of the Division.
245-2(3)
Provision is made for the calculation of the
gross forgiven amount
in respect of each debt.
245-2(4)
The gross forgiven amount may then be reduced by certain amounts that are taken into account in assessing the debtor
'
s taxable income apart from this Division.
245-2(5)
If the debt is owed between group companies, the gross forgiven amount may be further reduced in certain circumstances.
245-2(6)
The amount remaining after all reductions to the gross forgiven amount is the
net forgiven amount
in respect of the debt.
245-2(7)
The
total net forgiven amount
of all debts of a particular debtor that are forgiven in the same year of income (the
forgiveness year of income
) is to be applied in reduction of certain amounts that may otherwise be taken into account in assessing the debtor
'
s taxable income.
245-2(8)
The amounts to be reduced are certain revenue losses, net capital losses and other deductible amounts and the cost bases of certain assets.
245-2(9)
Special rules apply in respect of debts of partnerships other than corporate limited partnerships.
245-2(10)
Special rules apply in respect of debts of a company if the company is included in a group of related companies.
History
S 245-2 inserted by No 76 of 1996.
SECTION 245-3 MAP OF THIS DIVISION
History
S 245-3 inserted by No 76 of 1996.
Subdivision 245-A
-
Debts to which this Division applies
History
Subdiv 245-A inserted by No 76 of 1996.
Guide to Subdivision 245-A
SECTION 245-5 WHAT THIS SUBDIVISION IS ABOUT
The purpose of this Subdivision is to identify the debts to which this Division applies.
History
245-5 inserted by No 76 of 1996.
SECTION 245-6 MAP OF THIS SUBDIVISION
History
S 245-6 inserted by No 76 of 1996.
Operative provisions
SECTION 245-10 APPLICATION OF THIS DIVISION
245-10(1)
Subject to subsection (2), this Division applies to a forgiveness of a commercial debt but so applies only if the forgiveness occurs after the commencement day.
245-10(2)
This Division does not apply to a forgiveness referred to in subsection (1) if the forgiveness occurs in accordance with the terms of an agreement or arrangement that:
(a)
was entered into on or before the commencement day; and
(b)
is evidenced in writing otherwise than by a document evidencing the agreement or transaction under which the debt arose.
History
S 245-10 inserted by No 76 of 1996.
SECTION 245-15 WHAT IS A
DEBT
245-15(1)
Subject to this section, a
debt
is an enforceable obligation imposed by law on a person to pay an amount to another person.
245-15(2)
If such an obligation is waived and the waiver constitutes a fringe benefit, the debt constituted by the obligation is to be disregarded for the purposes of this Division.
History
S 245-15(2) amended by
No 101 of 2006
, s 3 and Sch 2 item 504, by omitting
"
within the meaning of the
Fringe Benefits Tax Assessment Act 1986
"
after
"
fringe benefit
"
, effective 14 September 2006. For application and savings provisions see the
CCH Australian Income Tax Legislation archive
.
245-15(3)
An amount that, apart from this subsection, would be an enforceable obligation referred to in subsection (1) is not to be regarded as a debt if the amount has been, or will be, included in the assessable income of any year of income of the person on whom the obligation is imposed.
History
S 245-15 inserted by No 76 of 1996.
SECTION 245-20
SECTION 245-20 DEBT INCLUDES ACCRUED INTEREST
245-20
If there is, in respect of a debt, any interest or amount in the nature of interest that has accrued but has not been paid, the obligation to pay that interest or amount is not a separate debt but the first-mentioned debt includes the obligation to pay the interest or amount.
History
S 245-20 inserted by No 76 of 1996.
SECTION 245-25 WHAT CONSTITUTES A
COMMERCIAL DEBT
245-25(1)
A debt is a
commercial debt
if subsection (2), (3) or (4) provides that the debt is a commercial debt.
History
S 245-25(1) amended by No 122 of 1997.
245-25(2)
Debt on which interest paid is an allowable deduction.
Subject to subsection (4A), a debt is a commercial debt if the whole or any part of interest, or of an amount in the nature of interest, paid or payable in respect of the debt:
(a)
is or would be allowable as a deduction to the debtor; or
(b)
would be so allowable apart from the operation of an exception provision.
History
S 245-25(2) amended by No 122 of 1997.
245-25(3)
Debt on which no interest is payable.
A debt is a commercial debt if interest, or an amount in the nature of interest, is not payable in respect of the debt but, had interest or such an amount been payable, the whole or any part of the interest or amount:
(a)would have been allowable as a deduction to the debtor; or
(b)
would have been so allowable apart from the operation of an exception provision.
245-25(4)
A non-equity share issued by a company is taken to be a commercial debt owed by the company to the shareholder.
History
S 245-25(4) substituted by No 163 of 2001.
245-25(4A)
Debt to Commonwealth not a commercial debt.
A debt owed to the Commonwealth that arose under a law relating to taxation is not a commercial debt.
History
S 245-25(4A) inserted by No 122 of 1997.
245-25(5)
Meaning of exception provision.
In this section:
exception provision
means a provision of this Act that has the effect of preventing a deduction that would otherwise be allowable, but does not include paragraphs 8-1(2)(a), (b) and (c) of the
Income Tax Assessment Act 1997
(which prevent deductions for capital, private or domestic outgoings and for outgoings relating to exempt income).
History
S 245-25(5) amended by No 121 of 1997.
History
S 245-25 inserted by No 76 of 1996.
SECTION 245-26
SECTION 245-26 APPLICATION TO TRUSTEES
245-26
This Division applies to a person in the capacity of a trustee of a trust estate in respect of the trust estate
'
s debts, and references in this Division to a debtor include a reference to a person in the capacity of a trustee of a trust estate in respect of the trust estate
'
s debts.
History
S 245-26 inserted by No 76 of 1996.
Subdivision 245-B
-
What constitutes forgiveness of a debt
History
Subdiv 245-B inserted by No 76 of 1996.
Guide to Subdivision 245-B
SECTION 245-30 WHAT THIS SUBDIVISION IS ABOUT
This Subdivision explains the circumstances in which a debt is taken to have been forgiven for the purposes of this Division.
History
S 245-30 inserted by No 76 of 1996.
SECTION 245-31 MAP OF THIS SUBDIVISION
History
S 245-31 inserted by No 76 of 1996.
Operative provisions
SECTION 245-35 WHAT CONSTITUTES
FORGIVENESS
OF A DEBT
245-35(1)
Obligation to pay debt forgiven.
A debt is forgiven if the debtor
'
s obligation to pay the debt is released or waived, or is otherwise extinguished.
245-35(2)
Right to sue for debt ceases because of statute of limitations.
A debt is forgiven if the period within which the creditor is entitled to sue for the recovery of the debt ends because of the operation of a statute of limitations without the debt having been paid.
245-35(3)
Agreement to end obligation to pay debt with effect from a future time.
If:
(a)
the debtor and creditor in relation to a debt enter into an agreement or arrangement (whether or not enforceable by legal proceedings); and
(b)
under the agreement or arrangement the debtor
'
s obligation to pay the whole or a part of the debt is to cease at a particular future time; and
(c)
the cessation of the obligation is to occur without the debtor incurring any financial or other obligation (other than an obligation that, having regard to the debtor
'
s circumstances, is of a nominal or insignificant amount or kind);
the debt or the part of the debt is taken tobe forgiven when the agreement or arrangement is entered into. If, after the agreement or arrangement is entered into, the debt or the part of the debt is forgiven, the last-mentioned forgiveness is disregarded for the purposes of this Division.
245-35(4)
Debt parking.
If:
(a)
the creditor, in relation to a debt, assigns the right to receive payment of the debt to another person (the
new creditor
); and
(b)
either:
(i)
the new creditor is an associate of the debtor; or
(ii)
the assignment occurred under an agreement or arrangement to which the new creditor and the debtor were parties; and
(c)
the right to receive payment of the debt was not acquired by the new creditor in the ordinary course of trading on a securities market;
this Division has effect as if:
(d)
the debtor had, at the time of the assignment, been forgiven a debt (the
notional debt
) equal to the amount of the assigned debt; and
(e)
the net forgiven amount of the notional debt were equal to the amount that would have been the net forgiven amount of the assigned debt if that debt had been forgiven instead of being assigned.
245-35(5)
Subscription for shares to enable debt to be paid.
If:
(a)
a person subscribes for shares in a company to enable the company to make a payment in or towards discharge of a debt owed by it to the person; and
(b)
the company applies all or any of the money subscribed in or towards payment of the debt;
then:
(c)
so much of the debt as is paid out of the money so applied is taken to be forgiven; and
(d)
the time of the forgiveness is taken to be the time when the money is so applied.
245-35(6)
Definition.
In this section:
securities market
means a market, exchange or other place on which, or a facility by means of which, offers to sell, buy or exchange securities (within the meaning of Division
16E
of Part
III
) are made or accepted.
History
S 245-35 inserted by No 76 of 1996.
SECTION 245-40
SECTION 245-40 FORGIVENESSES TO WHICH THIS DIVISION DOES NOT APPLY
245-40
This Division does not apply to a forgiveness of a debt if:
(a)
the forgiveness is effected under an Act relating to bankruptcy; or
(b)
the forgiveness is effected by will; or
(c)
the debt is forgiven for reasons of natural love and affection.
History
S 245-40 inserted by No 76 of 1996.
Subdivision 245-C
-
Calculation of gross forgiven amount of a debt
History
Subdiv 245-C inserted by No 76 of 1996.
Guide to Subdivision 245-C
SECTION 245-45 WHAT THIS SUBDIVISION IS ABOUT
If a debt is forgiven, this Subdivision sets out the steps to be followed in calculating the gross forgiven amount of the debt.
History
S 245-45 inserted by No 76 of 1996.
SECTION 245-46
SECTION 245-46 SIMPLIFIED OUTLINE OF THIS SUBDIVISION
245-46
(a)
The first step is to work out the
notional value
of a debt that has been forgiven
·
The notional value of the debt is calculated as at the time when the debt was forgiven on the basis that the debt was an asset of the creditor at that time.
·
The notional value of the debt is worked out for the purpose of calculating the gross forgiven amount of the debt.
·
A special rule applies for the purpose of working out the notional value of a non-recourse debt.
·
Another special rule applies for the purpose of working out the notional value of a debt that has been parked.
(b)
The second step is to work out the consideration (if any) in respect of the forgiveness of the debt.
(c)
If no such consideration was paid or given, the
gross forgiven amount
of the debt is equal to the notional value of the debt.
(d)
If any such consideration was paid or given, the
gross forgiven amount
of the debt is obtained by deducting the consideration from the notional value of the debt.
History
S 245-46 inserted by No 76 of 1996.
SECTION 245-47 MAP OF THIS SUBDIVISION
History
S 245-47 inserted by No 76 of 1996.
Operative provisions
SECTION 245-50
SECTION 245-50 WHAT CONSTITUTES A FORGIVEN DEBT IF CONSIDERATION IS GIVEN IN RESPECT OF THE FORGIVENESS
245-50
If any consideration is paid or given in respect of the forgiveness of a debt, the debt that is forgiven is taken to be:
(a)
the obligation that existed before the forgiveness to pay so much of the debt as is expressed, or is taken, to be forgiven; and
(b)
the obligation that existed before the forgiveness to pay any part of the debt to which paragraph (a) does not apply but which ceases to be payable as a result of the payment or giving of the consideration.
History
S 245-50 inserted by No 76 of 1996.
SECTION 245-55 WORKING OUT
NOTIONAL VALUE
OF A DEBT OTHER THAN A NON-RECOURSE DEBT
245-55(1)
Subject to sections
245-60
and
245-61
, the
notional value
of a debt at the time when it was forgiven is the lesser of the amount worked out under subsection (2) (the
first applicable amount
) and the amount worked out under subsection (3) (the
second applicable amount
).
245-55(2)
The
first applicable amount
is the amount that would have been the value of the debt (considered as an asset of the creditor) at the time when it was forgiven if:
(a)
except where subsection (4) applies in relation to the debt, at the time when the debt was incurred the debtor was able to pay all the debtor
'
s debts (including the debt concerned) as and when they fell due; and
(b)
the debtor
'
s capacity to pay the debt at the time when it was forgiven was the same as the debtor
'
s capacity to pay the debt at the time when it was incurred.
245-55(3)
The
second applicable amount
is the sum of the following amounts:
(a)
the amount that would have been the value of the debt (considered as an asset of the creditor) at the time when it was forgiven if:
(i)
except where subsection (4) applies in relation to the debt, at the time when the debt was incurred the debtor was able to pay all the debtor
'
s debts (including the debt concerned) as and when they fell due; and
(ii)
the debtor
'
s capacity to pay the debt at the time when it was forgiven was the same as the debtor's capacity to pay the debt at the time when it was incurred; and
(iii)
no changes occurred, between the time when the debt was incurred and the time when the debt was forgiven, in any market variables; and
(b)
the amount or the sum of the amounts of any deduction or deductions that:
(i)
have been allowed or are allowable to the debtor as a result of the forgiveness of the debt; and
(ii)
are attributable to changes in market variables that occurred between the time when the debt was incurred and the time when the debt was forgiven.
245-55(4)
Paragraph (2)(a) and subparagraph (3)(a)(i) do not apply in relation to a debt if:
(a)
either:
(i)
at the time when the debt was forgiven the creditor was a resident; or
(ii)
the forgiveness of the debt was a CGT event involving a CGT asset that was taxable Australian property; and
(b)
the debtor and the creditor were not dealing with each other at arm's length in respect of the incurring of the debt; and
(c)
the debt was not a moneylending debt.
History
S 245-55(4) amended by
No 168 of 2006
, s 3 and Sch 4 item 27, by substituting
"
that was taxable Australian property
"
for
"
having the necessary connection with Australia
"
in para (a)(ii), applicable to CGT events that happen on or after 12 December 2006.
S 245-55(4) substituted by No 122 of 1997; amended by No 46 of 1998.
245-55(5)
In this section:
market variables
, in relation to a debt, means changes in rates of interest, and changes in the rates of exchange between currencies, that affect the value of the debt.
History
S 245-55 inserted by No 76 of 1996.
SECTION 245-60 SPECIAL RULE FOR WORKING OUT NOTIONAL VALUE OF A NON-RECOURSE DEBT
245-60(1)
This section applies to a debt (the
non-recourse debt
) if the debt was incurred directly in respect of the financing of the cost of the acquisition, construction or development of property (but not including the manufacture of goods) by the debtor and the rights of the creditor as against the debtor in the event of default in the payment of the debt or the payment of interest are limited to all or any of the following:
(a)
rights (including the right to moneys payable) in relation to all or any of the following:
(i)
the property or the use of the property;
(ii)
goods produced, supplied, carried, transmitted or delivered, or services provided, by means of the property;
(iii)
the loss or disposal of the whole or a part of the property or of the debtor's interest in the property;
(b)
rights in respect of a mortgage or other security over the property;
(c)
rights arising out of any arrangement relating to the financial obligations, in relation to the property, of the end-user of the property towards the debtor.
245-60(2)
The
notional value
of a non-recourse debt at the time when it was forgiven is the lesser of the following:
(a)
the amount of the non-recourse debt outstanding at that time;
(b)
the market value at that time of the creditor's rights referred to in subsection (1) of this section.
245-60(3)
In this section:
end-user
, in relation to property, has the same meaning as in section 51AD.
History
S 245-60 inserted by No 76 of 1996.
SECTION 245-61
SECTION 245-61 SPECIAL RULE FOR WORKING OUT NOTIONAL VALUE OF PARKED DEBT
245-61
If a debt that has been assigned as mentioned in subsection
245-35(4)
is forgiven, the notional value of that debt is:
(a)
if the debt was not a moneylending debt and the creditor and the new creditor were not dealing with each other at arm's length in connection with the assignment
-
the market value of the debt at the time of the assignment; or
(b)
in any other case
-
the sum of:
(i)
the amount or value of the consideration (if any) that the debtor has paid or given, or is required to pay or give, to the creditor in respect of the assignment; and
(ii)
the amount or value of the consideration (if any) paid or given by the new creditor in respect of the assignment.
History
S 245-61 inserted by No 76 of 1996.
SECTION 245-65 THE
CONSIDERATION
IN RESPECT OF FORGIVENESS OF A DEBT
245-65(1)
Subject to subsection (2), the
consideration
in respect of the forgiveness of a debt (other than a debt to which subsection (3) or (4) applies) is:
(a)
if the debtor has paid, or is required to pay, an amount or amounts of money as a result of, or in respect of, the forgiveness of the debt:
(i)
if the debt is not a moneylending debt
-
that amount or the sum of those amounts; or
(ii)
if the debt is a moneylending debt
-
the sum of the amount or amounts (if any) that the debtor has paid and the market value, at the time of the forgiveness, of the debtor's obligation to pay an amount or amounts; or
(b)
if the debtor has given, or is required to give, property other than money as a result of, or in respect of, the forgiveness of the debt
-
the market value of the property at the time of the forgiveness; or
(c)
if the debtor has paid or given, or is required to pay or give, both an amount or amounts of money and property other than money as a result of, or in respect of, the forgiveness of the debt:
(i)
if the debt is not a moneylending debt
-
the sum of that amount or those amounts and the market value of the property at the time of the forgiveness; or
(ii)
if the debt is a moneylending debt
-
the sum of the amount or amounts (if any) that the debtor has paid, the market value, at the time of the forgiveness, of the property (if any) that the debtor has given and the market value, at the time of the forgiveness, of the debtor's obligation to pay any amount or amounts or to give any property.
245-65(2)
Subject to subsection (2A), if a debt (other than a moneylending debt) to which subsection (1) applies is forgiven and:
(a)
there is no consideration in respect of the forgiveness; or
(b)
the whole or a part of the consideration in respect of the forgiveness cannot be valued; or
(c)
the amount that, apart from this paragraph, would be taken to be the amount or value of the consideration in respect of the forgiveness is greater or less than the market value of the debt at the time of the forgiveness and the debtor and creditor were not dealing with each other at arm's length in connection with the forgiveness;
the debtor is taken to have paid as
consideration
in respect of the forgiveness of the debt an amount equal to the market value of the debt at the time of the forgiveness.
History
S 245-65(2) amended by No 122 of 1997.
245-65(2A)
Subsection (2) does not apply in relation to a debt unless:
(a)
at the time when the debt was forgiven the creditor was a resident; or
(b)
the forgiveness of the debt was a CGT event involving a CGT asset that was taxable Australian property.
History
S 245-65(2A) amended by
No 168 of 2006
, s 3 and Sch 4 item 28, by substituting
"
that was taxable Australian property
"
for
"
having the necessary connection with Australia
"
in para (b), applicable to CGT events that happen on or after 12 December 2006.
S 245-65(2A) amended by No 46 of 1998; inserted by No 122 of 1997.
245-65(3)
In calculating for the purposes of paragraph
245-35(4)(e)
the amount that would have been the net forgiven amount of an assigned debt referred to in that paragraph if that debt had been forgiven instead of being assigned:
(a)
if the debt is not a moneylending debt and the creditor and the new creditor were not dealing with each other at arm's length in connection with the assignment
-
the
consideration
in respect of the forgiveness of the debt is taken to be the market value of the debt at the time of the assignment; or
(b)
in any other case
-
the
consideration
in the respect of the forgiveness of the debt is taken to be the sum of:
(i)
the amount or value of the consideration (if any) that the debtor has paid or given, or is required to pay or give, to the creditor in respect of the assignment; and
(ii)
the amount or value of the consideration (if any) paid or given by the new creditor in respect of the assignment.
245-65(4)
If a debt is forgiven by subscribing for shares in a company as mentioned in subsection
245-35(5)
, the
consideration
in respect of the forgiveness of the debt is the amount worked out using the formula:
Amount applied |
×
Market value of shares subscribed for |
Amount subscribed |
where:
amount applied
means the amount applied by the company as mentioned in paragraph
245-35(5)(b)
.
amount subscribed
means the amount subscribed as mentioned in paragraph
245-35(5)(a)
.
market value of shares subscribed for
means the market value, of all the shares in the company that were subscribed for as mentioned in paragraph
245-35(5)(a)
, immediately after those shares were issued.
History
S 245-65 inserted by No 76 of 1996.
SECTION 245-70 MONEY OR OTHER PROPERTY APPLIED FOR BENEFIT OF CREDITOR
245-70(1)
For the purposes of section
245-65
:
(a)
money or property is taken to have been paid or given to a creditor if the money or property has been applied for the benefit, or in accordance with the directions, of the creditor; and
(b)
a debtor is taken to be required to pay money or give property to a creditor if the debtor is required to apply money or property for the benefit, or in accordance with the directions, of the creditor.
245-70(2)
For the purposes of section
245-65
, a reference in subsection (1) to the application of money or property for the benefit of a creditor includes, without limiting the generality of the expression, a reference to the application of money or property in the discharge, wholly or partly, of a debt due by the creditor.
History
Archived:
S 245-70(3) repealed as inoperative by
No 101 of 2006
, s 3 and Sch 1 item 186, effective 14 September 2006. For
application and savings provisions
and for former wording see the
CCH Australian Income Tax Legislation archive
.
History
S 245-70 inserted by No 76 of 1996.
SECTION 245-75 GROSS FORGIVEN AMOUNT OF A DEBT
245-75(1)
Subject to subsection (3), if no consideration is paid or given, or taken to be paid or given, in respect of the forgiveness of the debt, the
gross forgiven amount
of the debt is an amount equal to the notional value of the debt at the time when the debt was forgiven.
History
S 245-75(1) amended by No 122 of 1997.
245-75(2)
Subject to subsection (3), if any consideration is paid or given, or taken to be paid or given, in respect of the forgiveness of the debt:
(a)
where the notional value of the debt at the time when the debt was forgiven exceeds the consideration
-
the
gross forgiven amount
of the debt is an amount equal to the excess; or
(b)
where the notional value of the debt at the time when the debt was forgiven is equal to or less than the consideration
-
there is no forgiven amount in respect of the debt and Subdivisions
245-D to 245-G
do not apply in respect of the debt.
History
S 245-75(2) amended by No 122 of 1997.
245-75(3)
If 2 or more persons were liable (otherwise than as partners in a partnership) to pay a debt, whether their liability was joint or several, or joint and several, the
gross forgiven amount
of the debt in relation to the person, or each of the persons, in respect of whom the debt was a commercial debt is the amount worked out using theformula:
Overall gross forgiven amount
Number of commercial debtors |
where:
overall gross forgiven amount
means the amount that would be the gross forgiven amount of the debt if all the persons liable to pay the debt were treated as a single person and the debt was a commercial debt in respect of that person.
number of commercial debtors
means the number of persons liable to pay the debt in respect of whom the debt was a commercial debt.
History
S 245-75(3) inserted by No 122 of 1997.
Subdivision 245-D
-
Calculation of net forgiven amount of a debt
History
Subdiv 245-D inserted by No 76 of 1996.
Guide to Subdivision 245-D
SECTION 245-80 WHAT THIS SUBDIVISION IS ABOUT
This Subdivision provides for the gross forgiven amount of a debt to be reduced in certain circumstances.
If the gross forgiven amount is not reduced under this Subdivision, the gross forgiven amount is also the
net forgiven amount
of the debt.
If the gross forgiven amount is reduced under this Subdivision, the amount remaining after the reduction is the
net forgiven amount
of the debt.
History
S 245-80 inserted by No 76 of 1996.
SECTION 245-81 MAP OF THIS SUBDIVISION
History
S 245-81 inserted by No 76 of 1996.
Operative provisions
SECTION 245-85 REDUCTION OF GROSS FORGIVEN AMOUNT
245-85(1)
The gross forgiven amount of a debt is reduced by the sum of any of the following amounts that apply in relation to the debtor:
(a)
any amount that, under a provision of this Act other than this Division, has been, or will be, included in the debtor's assessable income of any year of income as a result of the forgiveness of the debt;
(b)
any amount by which, under a provision of this Act other than this Division, a deduction that would otherwise be allowable from the debtor's assessable income of any year of income has been, or will be, reduced as a result of the forgiveness of the debt (except a reduction under Division
727
(indirect value shifting) of the
Income Tax Assessment Act 1997
);
(c)
any amount by which the cost base to the debtor of any asset for CGT purposes has been, or will be, reduced as a result of the forgiveness of the debt under Part
3-1
or
3-3
of the
Income Tax Assessment Act 1997
(except a reduction under Division
139
of that Act).
Note:
Paragraph (1)(c) does not cover a reduction under Division
727
(indirect value shifting) of the
Income Tax Assessment Act 1997
because that Division is not in Part
3-1
or
3-3
of that Act.
History
S 248-85(1) amended by No 90 of 2002, No 169 of 1999 and No 46 of 1998.
245-85(2)
The amount remaining after reducing the gross forgiven amount under subsection (1) is:
(a)
if section
245-90
does not apply
-
the
net forgiven amount
of the debt; or
(b)
if section
245-90
applies
-
the
provisional net forgiven amount
of the debt.
History
S 245-85 inserted by No 76 of 1996.
SECTION 245-90 AGREEMENT BETWEEN COMPANIES UNDER COMMON OWNERSHIP FOR CREDITOR TO FORGO CAPITAL LOSS OR REVENUE DEDUCTION
245-90(1)
This section applies if:
(a)
a debt owed by a company to another company is forgiven; and
(b)
throughout the period from the time when the debt was incurred until the time when the debt is forgiven, the companies were under common ownership.
245-90(2)
If, apart from this subsection, the creditor would have incurred a capital loss as a result of the forgiveness of the debt:
(a)
the debtor and creditor may agree that the creditor is to forgo so much of the loss as is stated in the agreement and does not exceed the provisional net forgiven amount of the debt; and
(b)
if such an agreement is made:
(i)
the creditor's capital loss is reduced by the agreed amount; and
(ii)
the provisional net forgiven amount of the debt is also reduced by the agreed amount; and
(iii)
the amount remaining after the reduction of the provisional net forgiven amount of the debt under subparagraph (ii) is the
net forgiven amount
of the debt.
History
S 245-90(2) amended by No 46 of 1998.
245-90(3)
If, apart from this subsection, a deduction in respect of the debt would be allowable to the creditor under section
8-1
(about general deductions) or section
25-35
(about bad debts) of the
Income Tax Assessment Act 1997
in the forgiveness year of income:
(a)
the debtor and creditor may agree that the creditor is to forgo so much of the deduction as is stated in the agreement and does not exceed the provisional net forgiven amount of the debt; and
(b)
if such an agreement is made:
(i)
the deduction otherwise allowable to the creditor is reduced by the agreed amount; and
(ii)
the provisional net forgiven amount of the debt is also reduced by the agreed amount; and
(iii)
the amount remaining after the reduction of the provisional net forgiven amount of the debt under subparagraph (ii) is the
net forgiven amount
of the debt.
History
S 245-90(3) amended by No 121 of 1997.
245-90(4)
Neither subsection (2) nor (3) applies in relation to an agreement unless the agreement:
(a)
is in writing and signed by the public officer of the company that is the debtor and by the public officer of the company that is the creditor; and
(b)
is made before whichever is the earlier of the following:
(i)
the date of lodgment of the return of income for the forgiveness year of income of the company that is the creditor;
(ii)
the date of lodgment of the return of income for the forgiveness year of income of the company that is the debtor;
or before any later date that the Commissioner determines.
History
S 245-90 inserted by No 76 of 1996.
Subdivision 245-E
-
Application of net forgiven amounts
History
Subdiv 245-E inserted by No 76 of 1996.
Guide to Subdivision 245-E
SECTION 245-95 WHAT THIS SUBDIVISION IS ABOUT
This Subdivision provides for the total of the net forgiven amounts (the
total net forgiven amount
) of all debts of a particular debtor that are forgiven in the same year of income (the
forgiveness year of income
) to be applied in reduction of amounts that would otherwise be taken into account in assessing the debtor's taxable income of the forgiveness year of income or any later year of income.
This Subdivision does not apply to the calculation of attributable income of a non-resident trust estate or a controlled foreign company.
History
S 245-95 inserted by No 76 of 1996.
SECTION 245-96 MAP OF THIS SUBDIVISION
History
S 245-96 inserted by No 76 of 1996.
General operative provisions
SECTION 245-100
SECTION 245-100 SUBDIVISION NOT TO APPLY TO CALCULATION OF ATTRIBUTABLE INCOME
245-100
This Subdivision does not apply to the calculation of:
(a)
attributable income of a non-resident trust estate for the purposes of Division
6AAA
of Part
III
; or
(b)
attributable income of a controlled foreign company for the purposes of Part X.
History
S 245-100 inserted by No 76 of 1996.
SECTION 245-105 HOW
TOTAL NET FORGIVEN AMOUNT
IS TO BE APPLIED
245-105(1)
Subject to subsection (2), the total of the net forgiven amounts of all debts of a debtor that are forgiven in the same year of income (the
forgiveness year of income
) constitutes the
total net forgiven amount
in relation to the debtor in respect of the forgiveness year of income.
Note:
The total net forgiven amount may be reduced under section
707-415
of the
Income Tax Assessment Act 1997
.
History
S 245-105(1) amended by No 88 of 2009, s 3 and Sch 4 item 1, by inserting the note at the end, applicable on and after 1 July 2002.
245-105(2)
Section 245-215 has effect in calculating the total net forgiven amount of a partner in a partnership.
245-105(3)
Subdivision 245-G has effect in calculating the total net forgiven amount of a company that is included in a group of related companies.
245-105(4)
The total net forgiven amount is to be applied in accordance with this section before the debtor's return in respect of income of the forgiveness year of income is furnished to the Commissioner.
245-105(5)
The total net forgiven amount is to be applied first, in accordance with sections
245-110 to 245-120
, in reduction of deductible revenue losses (if any) incurred by the debtor in years of income before the forgiveness year of income.
245-105(6)
To the extent to which the total net forgiven amount cannot be applied as mentioned in subsection (5), it is to be applied, in accordance with sections
245-125 to 245-135
, in reduction of deductible net capital losses (if any) incurred by the debtor in respect of years of income before the forgiveness year of income.
History
S 245-105(6) amended by No 93 of 1999.
245-105(7)
To the extent to which the total net forgiven amount cannot be applied as mentioned in subsections (5) and (6), it is to be applied, in accordance with sections
245-140 to 245-160
, in reduction of deductible expenditures (if any) that are to be taken into account in the assessment of the debtor's taxable income of the forgiveness year of income or any later year of income.
245-105(8)
To the extent to which the total net forgiven amount cannot be applied as mentioned in subsections (5), (6) and (7), it is to be applied, in accordance with sections
245-165 to 245-190
, in reduction of the relevant cost bases of certain assets of the debtor at the beginning of the forgiveness year of income.
History
S 245-105 inserted by No 76 of 1996.
Operative provisions relating to reduction of revenue losses
SECTION 245-110
SECTION 245-110 DEFINITIONS APPLICABLE TO PROVISIONS REDUCING REVENUE LOSSES
245-110
In sections 245-110 to 245-120:
deductible revenue loss
means a loss:
(a)
that is of a kind described in the table of deductible revenue losses; and
(b)
in respect of which a deduction would, apart from this Subdivision, be allowable to the debtor in the forgiveness year of income or any later year of income if the debtor had derived sufficient assessable income in the year of income concerned (including sufficient assessable income from which the loss could be deducted).
table of deductible revenue losses
means the following table:
Table of deductible revenue losses
|
Item
|
Column 1
General description
of losses
|
Column 2
Provision under which
loss is deductible
|
1 |
Tax losses |
Section 36-15 or 36-17 of the
Income Tax Assessment Act 1997 |
2 |
(Repealed by
No 143 of 2007
) |
3 |
(Repealed by
No 143 of 2007
) |
History
S 245-110 table amended by
No 143 of 2007
, s 3 and Sch 1 item 127, by repealing items 2 and 3, applicable in relation to income years, statutory accounting periods and notional accounting periods starting on or after the first 1 July that occurs after 24 September 2007. For savings provisions, see note under s
559A
. Table items 2 and 3 formerly read:
2 ... Foreign losses of pre-1990 years of income ... Subsection 160AFD(1)
3 ... Foreign losses of post-1989 years of income ... Subsection 160AFD(2)
History
S 245-110 amended by No 142 of 2003, No 121 of 1997 and inserted by No 76 of 1996.
SECTION 245-115 TOTAL NET FORGIVEN AMOUNT TO BE APPLIED IN REDUCTION OF REVENUE LOSSES
245-115
The total net forgiven amount is to be applied, to the maximum extent possible, in reduction, in accordance with section
245-120
, of deductible revenue losses (if any).
History
S 245-115 inserted by No 76 of 1996.
SECTION 245-120 ALLOCATION OF TOTAL NET FORGIVEN AMOUNT IN RESPECT OF DEDUCTIBLE REVENUE LOSSES
245-120(1)
The debtor may choose:
(a)the order in which the deductible revenue losses are to be reduced; and
(b)
the amount by which each of those losses is to be reduced;
provided that the total net forgiven amount is applied, to the maximum extent possible, in reduction of deductible revenue losses.
245-120(2)
If the debtor does not make a choice for the purposes of subsection (1), the Commissioner may make the choice on behalf of the debtor in a reasonable way.
History
S 245-120 inserted by No 76 of 1996.
Operative provisions relating to reduction of net capital losses
SECTION 245-125 DEFINITIONS APPLICABLE TO PROVISIONS REDUCING NET CAPITAL LOSSES
245-125
In sections 245-125 to 245-135:
deductible net capital loss
means a net capital loss that:
(a)
the debtor has for an income year earlier than the forgiveness year of income; and
(b)
apart from this Subdivision, could be applied in working out the debtor's net capital gain for the forgiveness year of income (assuming the debtor had enough capital gains).
History
Definition of
"
deductible net capital loss
"
substituted by No 46 of 1998 and amended by No 95 of 1997.
residual forgiven amount
means the total net forgiven amount to the extent to which it has not been applied in making reductions of deductible revenue losses.
History
S 245-125 inserted by No 76 of 1996.
SECTION 245-130 RESIDUAL FORGIVEN AMOUNT TO BE APPLIED IN REDUCTION OF NET CAPITAL LOSSES
245-130
The residual forgiven amount is to be applied, to the maximum extent possible, in reduction, in accordance with section
245-135
, of deductible net capital losses (if any).
History
S 245-130 inserted by No 76 of 1996.
SECTION 245-135 ALLOCATION OF RESIDUAL FORGIVEN AMOUNT IN RESPECT OF DEDUCTIBLE NET CAPITAL LOSSES
245-135(1)
The debtor may choose:
(a)
the order in which the deductible net capital losses are to be reduced; and
(b)
the amount by which each of those losses is to be reduced;
provided that the residual forgiven amount is applied, to the maximum extent possible, in reduction of deductible net capital losses.
245-135(2)
If the debtor does not make a choice for the purposes of subsection (1), the Commissioner may make the choice on behalf of the debtor in a reasonable way.
History
S 245-135 inserted by No 76 of 1996.
Operative provisions relating to reduction of deductible expenditure
SECTION 245-140 DEFINITIONS APPLICABLE TO PROVISIONS REDUCING DEDUCTIBLE EXPENDITURE
245-140(1)
In sections 245-140 to 245-160:
deductible expenditure
means expenditure (other than excluded expenditure):
(a)
that is of a kind referred to in the table of deductible expenditure and was incurred before the forgiveness year of income; and
(b)
in respect of which a deduction would, apart from this Subdivision, be allowable to the debtor in respect of income of the forgiveness year of income or a later year of income if no event or circumstance (other than a recoupment of the expenditure in the forgiveness year of income) occurred that would affect the allowance of the deduction.
excluded expenditure
has the meaning given by subsections (2), (3) and (4).
residual forgiven amount
means the total net forgiven amount to the extent to which it has not been applied in making reductions of deductible revenue losses and deductible net capital losses.
table of deductible expenditure
means the following table.
Table of deductible expenditure
|
|
Column 1
|
Column 2
|
Item
|
General description of expenditure
|
Provision under which a deduction is allowable in respect of the expenditure
|
1 |
(Repealed by
No 101 of 2006
) |
2 |
Expenditure deductible under Division 40 (capital allowances) of the
Income Tax Assessment Act 1997 |
Division 40 of that Act |
3 |
(Repealed by
No 101 of 2006
) |
4 |
Expenditure incurred in borrowing money to produce assessable income |
Section 25-25 of the
Income Tax Assessment Act 1997 |
5 |
(Repealed by
No 101 of 2006
) |
6 |
(Repealed by
No 101 of 2006
) |
7 |
Expenditure on scientific research |
Subsection 73A(2) |
8 |
Expenditure deductible under Division 355 (R
&
D) of the
Income Tax Assessment Act 1997 |
Division 355 of that Act |
9 to 13 |
(Repealed by
No 101 of 2006
) |
14 |
Advance revenue expenditure |
Subdivision H of Division 3 of Part III |
15 to 19 |
(Repealed by
No 101 of 2006
) |
20 |
Expenditure on acquiring a unit of industrial property to produce assessable income |
Subsection 124M(1) |
21 |
(Repealed by
No 101 of 2006
) |
22 |
Expenditure on Australian films |
Section 124ZAF |
23 |
Expenditure on assessable income producing buildings and other capital
works |
Section 43-10 of the
Income Tax Assessment Act 1997 |
24 and 25 |
(Repealed by
No 101 of 2006
) |
History
Archived:
S 245-140(1) (table items 1, 3, 5, 6, 9 to 13, 15 to 19, 21, 24 and 25) repealed as inoperative by
No 101 of 2006
, s 3 and Sch 1 item 187, effective 14 September 2006. For
application and savings provisions
and for former wording see the
CCH Australian Income Tax Legislation archive
.
History
S 245-140(1) amended by
No 164 of 2007
, s 3 and Sch 11 item 47, by substituting
"
, 73QA and 73QB
"
for
"
and 73Y
"
in column 2, table item 8 of the definition of
"
table of deductible expenditure
"
, effective 25 September 2007. For application provision, see note under s
73B(1AAA)
.
S 245-140(1) (table) amended by No 170 of 2001, No 77 of 2001, No 169, No 54 and No 39 of 1999, No 46 of 1998, No 122 and No 121 of 1997.
History
Archived:
S 245-140(1A) repealed as inoperative by
No 101 of 2006
, s 3 and Sch 1 item 188, effective 14 September 2006. For
application and savings provisions
and for former wording see the
CCH Australian Income Tax Legislation archive
.
245-140(2)
Expenditure is
excluded expenditure
if:
(a)it was incurred in respect of an asset that has been disposed of by the debtor to a person who was dealing at arm's length with the debtor in respect of the disposal; and
(b)
the disposal occurred during the forgiveness year of income before the forgiveness of any debt owed by the debtor, being a forgiveness that resulted in a net forgiven amount; and
(c)
no provision of this Act includes an amount in the debtor's assessable income, or allows a deduction to the debtor, as a result of the disposal.
245-140(3)
Expenditure is
excluded expenditure
if the asset in respect of which the expenditure was incurred was disposed of by the debtor, or was lost or destroyed, on or before the commencement day.
245-140(4)
Expenditure is
excluded expenditure
to the extent (if any) to which the expenditure was recouped on or before the commencement day.
History
S 245-140 inserted by No 76 of 1996.
SECTION 245-145 RESIDUAL FORGIVEN AMOUNT TO BE APPLIED IN REDUCTION OF DEDUCTIBLE EXPENDITURES
245-145
The residual forgiven amount is to be applied, to the maximum extent possible, in reduction, in accordance with sections
245-150
and
245-155
, of deductible expenditures (if any).
History
S 245-145 inserted by No 76 of 1996.
SECTION 245-150 ALLOCATION OF RESIDUAL FORGIVEN AMOUNT IN RESPECT OF DEDUCTIBLE EXPENDITURES
245-150(1)
The debtor may choose:
(a)
the order in which deductible expenditures are to be subject to reduction; and
(b)
the amount to be applied in reduction of each of those expenditures;
provided that the residual forgiven amount is applied, to the maximum extent possible, in reduction of deductible expenditures.
245-150(2)
If the debtor does not make a choice for the purposes of subsection (1), the Commissioner may make the choice on behalf of the debtor in a reasonable way.
History
S 245-150 inserted by No 76 of 1996.
SECTION 245-155 HOW A REDUCTION OF A DEDUCTIBLE EXPENDITURE IS TO BE EFFECTED
245-155(1)
The following paragraphs apply in respect of the reduction of any deductible expenditure if the deduction that would be allowable to the debtor, apart from this Subdivision, in respect of the deductible expenditure is a percentage, fraction or proportion of an amount (the
base amount
) that is worked out without regard to any amount or amounts previously allowed as a deduction or deductions in respect of the deductible expenditure:
(a)
any amount that is to be applied in reduction ofthe deductible expenditure is taken to reduce the base amount for the purpose of working out the deduction in respect of the forgiveness year of income and later years of income;
(b)
the amount of the reduction is taken to have been a deduction allowed to the debtor in respect of the deductible expenditure before the forgiveness year of income for the purposes of the operation of any provision of this Act that includes an amount in the debtor's assessable income or allows a deduction to the debtor:
(i)
because of the disposal, loss or destruction of the asset in respect of which the deductible expenditure was incurred; or
(ii)
because of the recoupment of any of the expenditure; or
(iii)
because use of the asset for a particular purpose has been otherwise terminated,
(iv)
because a balancing adjustment event within the meaning of the former Division 42, or Division
40
of the
Income Tax Assessment Act 1997
occurs for that asset;
as the case may be;
(c)
the total amount of the deductions allowed or allowable otherwise than under paragraph (b) in respect of the deductible expenditure for all years of income (including years of income before the forgiveness year of income) must not exceed the base amount as reduced under paragraph (a).
History
S 245-155(1) amended by No 77 of 2001 and No 121 of 1997.
245-155(2)
If the deduction that would be allowable to the debtor, apart from this Subdivision, in respect of any deductible expenditure is a percentage, fraction or proportion of an amount that is worked out after taking into account any amount or amounts previously allowed as a deduction or deductions in respect of the deductible expenditure, any amount to be applied in reduction of the deductible expenditure is taken to have been a deduction allowed to the debtor in respect of the deductible expenditure before the forgiveness year of income.
History
S 245-155 inserted by No 76 of 1996.
SECTION 245-160 AMOUNT APPLIED IN REDUCTION OF DEDUCTIBLE EXPENDITURE TO BE INCLUDED IN ASSESSABLE INCOME IN CERTAIN CIRCUMSTANCES
245-160
If:
(a)
an amount of deductible expenditure is recouped after the forgiveness year of income; and
(b)
as a result of the recoupment, this Act applies to disallow any deduction previously allowed to the debtor in respect of the expenditure;
an amount equal to the amount, or the sum of the amounts, applied under this Subdivision in reduction of the deductible expenditure is included in the debtor's assessable income of the year of income in which the expenditure is recouped.
History
S 245-160 inserted by No 76 of 1996.
Operative provisions relating to reduction of cost bases of assets
SECTION 245-165 DEFINITIONS APPLICABLE TO PROVISIONS REDUCING COST BASES
245-165(1)
In sections 245-165 to 245-190:
excluded asset
has the meaning given by section
245-170
.
reducible asset
means a CGT asset (other than an excluded asset) of the debtor at the beginning of the forgiveness year of income.
History
Definition of
"
reducible asset
"
amended by No 46 of 1998.
relevant cost base
, in relation to a CGT asset, means the cost base or the reduced cost base, of the asset.
History
Definition of
"
relevant cost base
"
amended by No 46 of 1998.
residual forgiven amount
means the total net forgiven amount to the extent to which it has not been applied in making reductions of deductible revenue losses, deductible net capital losses and deductible expenditures.
245-165(2)
(Repealed by No 46 of 1998)
History
S 245-165 inserted by No 76 of 1996.
SECTION 245-170 EXCLUDED ASSETS
245-170
The following CGT assets of a debtor are excluded assets:
(a)
a CGT asset acquired by the debtor before 20 September 1985;
(b)
a CGT asset that the debtor no longer owned at the end of the commencement day;
(c)
a personal use asset (within the meaning of the
Income Tax Assessment Act 1997
);
(d)
a dwelling (within the meaning of the
Income Tax Assessment Act 1997
) that was the debtor's main residence at any time before the forgiveness year of income;
(e)
goodwill;
(f)
a right covered by section
118-305
of the
Income Tax Assessment Act 1997
(which exempts from CGT certain rights relating to a superannuation fund or approved deposit fund);
(g)
a CGT asset that, throughout the period before the forgiveness year when it was owned by the debtor, constituted trading stock of the debtor;
(h)
a CGT asset:
(i)
the cost of which is deductible expenditure in relation to the debtor under section
245-140
; and
(ii)
a CGT event in relation to which would result in an amount being included in the debtor's assessable income, or in the debtor being able to deduct anamount; and
(i)
if the debtor is a non-resident at the beginning of the forgiveness year of income
-
an asset that is not a taxable Australian asset.
History
S 245-170 amended by No 46 of 1998 and inserted by No 76 of 1996.
SECTION 245-175 RESIDUAL FORGIVEN AMOUNT TO BE APPLIED IN REDUCTION OF COST BASES OF ASSETS
245-175
The residual forgiven amount is to be applied, to the maximum extent possible, in reduction, in accordance with sections
245-180 to 245-190
, of the relevant cost bases of reducible assets (if any).
History
S 245-175 inserted by No 76 of 1996.
SECTION 245-180 ALLOCATION OF RESIDUAL FORGIVEN AMOUNT AMONG RELEVANT COST BASES OF ASSETS
245-180(1)
Subject to section
245-185
, the debtor may choose:
(a)
the reducible assets whose relevant cost bases are to be subject to reduction; and
(b)
the amount to be applied in reduction of the relevant cost base of each of those assets;
provided that the residual forgiven amount is applied, to the maximum extent possible, in reduction of the relevant cost bases of reducible assets.
245-180(2)
If the debtor does not make a choice for the purposes of subsection (1), the Commissioner may make the choice on behalf of the debtor in a reasonable way.
History
S 245-180 inserted by No 76 of 1996.
SECTION 245-185 RELEVANT COST BASES OF INVESTMENTS IN ASSOCIATED ENTITIES TO BE REDUCED LAST
245-185(1)
If a debtor's reducible assets include investments in, or in relation to, entities that are associates of the debtor, the relevant cost bases of those investments are not subject to reduction under section 245-175 until the residual forgiven amount has been applied, to the maximum extent possible, in reduction of the relevant cost bases of reducible assets other than such investments.
245-185(2)
In this section:
entity
means a natural person, a partnership, a trustee of a trust or a company.
investment
includes:
(a)
in respect of an entity that is a partnership
-
an interest as a partner in a partnership; and
(b)
in respect of an entity that is a trustee of a trust
-
a beneficial interest under the trust; and
(c)
in respect of an entity that is a company
-
a share in the company; and
(d)
in respect of any entity
-
a debt owed to the debtor by the entity.
History
S 245-185 inserted by No 76 of 1996.
SECTION 245-190 HOW A REDUCTION OF THE RELEVANT COST BASES OF AN ASSET IS TO BE EFFECTED
245-190(1)
Subject to subsection (3), if the debtor chooses to apply an amount in reduction of the relevant cost bases of a particular CGT asset, each relevant cost base of the asset, as at any time on or after the beginning of the forgiveness year of income, is taken to be reduced by that amount.
History
S 245-190(1) amended by No 46 of 1998.
245-190(2)
The reduction by a particular amount of each of the relevant cost bases of a particular CGT asset is, for the purpose of working out the amount by which the residual forgiven amount is applied in making the reduction, taken to be a reduction in that residual forgiven amount by the particular amount (and not by the sum of the amounts by which those cost bases are reduced).
History
S 245-190(2) amended by No 46 of 1998.
245-190(3)
The maximum amount by which each of the relevant cost bases of a CGT asset may be reduced is the amount that, apart from sections
245-175 to 245-185
, would be the reduced cost base of the asset calculated as if a CGT event had happened to the asset:
(a)
subject to paragraph (b), on the first day of the forgiveness year of income; or
(b)
if, after the beginning of that year of income, an event occurred that would cause the reduced cost base of the asset to be reduced
-
on the day on which the event occurred;
and to have been so disposed of at its market value on the day concerned.
History
S 245-190(3) amended by No 46 of 1998 and substituted by No 122 of 1997.
S 245-190 inserted by No 76 of 1996.
Operative provision relating to unapplied total net forgiven amount
SECTION 245-195 NO FURTHER CONSEQUENCES IF THERE IS ANY REMAINING UNAPPLIED TOTAL NET FORGIVEN AMOUNT
245-195(1)
If any part of the total net forgiven amount remains after the application of that amount in making reductions under the preceding provisions of this Subdivision, the remaining part is disregarded.
245-195(2)
This section has effect subject to section
245-215
.
History
S 245-195 inserted by No 76 of 1996.
Subdivision 245-F
-
Special rules relating to partnerships
History
Subdiv 245-F inserted by No 76 of 1996.
Guide to Subdivision 245-F
SECTION 245-200 WHAT THIS SUBDIVISION IS ABOUT
This Subdivision provides that the preceding Subdivisions apply to a partnership in relation to debts owed by the partnership that are forgiven.
However, if the total net forgiven amount in relation to a partnership is not able to be fully applied under those provisions as they apply to the partnership, the remainder is treated as being net forgiven amounts of debts of the partners in proportion to their respective shares in the net income, or the partnership loss, of the partnership of the forgiveness year of income.
History
S 245-200 inserted by No 76 of 1996.
SECTION 245-201 MAP OF THIS SUBDIVISION
History
S 245-201 inserted by No 76 of 1996.
Operative provisions
SECTION 245-205 THIS SUBDIVISION DOES NOT APPLY TO CORPORATE LIMITED PARTNERSHIPS
245-205(1)
This Subdivision does not apply to a corporate limited partnership.
245-205(2)
This Division, other than this Subdivision, applies to a corporate limited partnership as if the partnership were a company.
245-205(3)
In this section:
corporate limited partnership
has the meaning given by section
94D
.
History
S 245-205 inserted by No 76 of 1996.
SECTION 245-210 SUBDIVISIONS 245-A TO 245-E TO APPLY TO PARTNERSHIPS
245-210(1)
Subdivisions
245-A to 245-D
apply to a partnership in respect of the partnership's debts, and references in those Subdivisions to a debtor include a reference to a partnership in respect of the partnership's debts.
245-210(2)
Subject to section
245-215
, Subdivision
245-E
applies to a partnership in respect of the total net forgiven amount calculated in relation to the partnership under Subdivisions
245-A to 245-D
as they apply under subsection (1).
History
S 245-210 inserted by No 76 of 1996.
SECTION 245-215 UNAPPLIED TOTAL NET FORGIVEN AMOUNT OF A PARTNERSHIP TO BE TRANSFERRED TO PARTNERS
245-215(1)
This section has effect in relation to a partnership irrespective of any agreement between the partners as to the operation of this section.
245-215(2)
This section applies if any part (the
residual amount
) of the total net forgiven amount in relation to a partnership in respect of the forgiveness year of income remains after the total net forgiven amount has been applied in accordance with Subdivision
245-E
.
245-215(3)
If there is a net income in relation to the partnership in respect of the forgiveness year of income, each partner is taken to have had a debt forgiven during the forgiveness year of income and there is taken to be, in respect of the debt of each partner, a net forgiven amount worked out in accordance with the following formula:
Partner
'
s share of net income |
×
Residual amount |
Net income |
245-215(4)
If there is a partnership loss in relation to the partnership in respect of the forgiveness year of income, each partner is taken to have had a debt forgiven during the forgiveness year of income and there is taken to be, in respect of the debt of each partner, a net forgiven amount worked out in accordance with the following formula:
Partner
'
s share of partnership loss |
×
Residual amount |
Partnership loss |
245-215(5)
In the formulas in subsections (3) and (4):
partner's share of net income
means the part of the net income of the partnership of the forgiveness year of income that is included in the partner's assessable income.
partner's share of partnership loss
means the part of the partnership loss that is allowable as a deduction to the partner.
net income
means the net income of the partnership of the forgiveness year of income.
partnership loss
means the partnership loss of the forgiveness year of income.
residual amount
has the meaning given by subsection (2).
245-215(6)
The total net forgiven amount of a partner for the forgiveness year of income as worked out under subsection
245-105(1)
includes the net forgiven amount worked out in relation to the partner under this section.
History
S 245-215 inserted by No 76 of 1996.
Subdivision 245-G
-
Special rules affecting related companies
History
Subdiv 245-G inserted by No 76 of 1996.
Guide to Subdivision 245-G
SECTION 245-220 WHAT THIS SUBDIVISION IS ABOUT
This Subdivision applies in certain circumstances if, at the time when a debt incurred by a company is forgiven, the company and another company or other companies constituted a group of related companies.
The forgiven amount of the debt is treated in those circumstances as having been used to generate amounts that would otherwise be taken into account in reducing the taxable incomes of the debtor company and other company or companies in the group.
History
S 245-220 inserted by No 76 of 1996.
SECTION 245-221 MAP OF THIS SUBDIVISION
History
S 245-221 inserted by No 76 of 1996.
Operative provisions
SECTION 245-225 APPLICATION OF SUBDIVISION
245-225(1)
This Subdivision applies in respect of a debt (the
relevant debt
) incurred by a company (the
debtor company
) if, and only if:
(a)
the relevant debt has been forgiven; and
(b)
there is a net forgiven amount in respect of the relevant debt; and
(c)
the debtor company and another company or other companies constitute a group of related companies in respect of the relevant debt.
245-225(2)
The debtor company and another company or other companies constitute a group of related companies in respect of the relevant debt for the purposes of this sectionif the companies concerned were under common ownership:
(a)
at the time when the relevant debt was forgiven; and
(b)
at any time on the last day of the year of income that immediately preceded the forgiveness year of income in respect of the relevant debt.
245-225(3)
If:
(a)
the debtor company and another company were not under common ownership at the times mentioned in subsection (2); and
(b)
the 2 companies had been under common ownership at any time within:
(i)
the 2 years of income that immediately preceded the forgiveness year of income in respect of the relevant debt; or
(ii)
the part of the forgiveness year of income that occurred before the relevant debt was forgiven; and
the other company is taken to be included in the group of related companies referred to in subsection (2) in respect of the relevant debt if:
(c)
a taxpayer who was a controller of the other company immediately before, and immediately after, the 2 companies ceased to be under common ownership was also:
(i)
a controller of the other company at the time when the relevant debt was forgiven; and
(ii)
a controller of the debtor company at that time; or
(d)
immediately before, and immediately after, the 2 companies ceased to be under common ownership and at the time when the relevant debt was forgiven:
(i)
the debtor company was a controller of the other company; or
(ii)
the other company was a controller of the debtor company.
History
S 245-225(3) amended by No 122 of 1997.
S 245-225 inserted by No 76 of 1996.
SECTION 245-230 IF ANY NON-DEBTOR COMPANIES IN A GROUP OF RELATED COMPANIES HAVE DEDUCTIBLE REVENUE LOSSES
245-230(1)
This section applies in relation to the relevant debt if, and only if, any one or more of the non-debtor companies in the group of related companies in respect of the relevant debt have deductible revenue losses for the purposes of the application of this Division in relation to the forgiveness year of income in respect of the relevant debt (the
relevant year of income
).
245-230(2)
The net forgiven amount of the relevant debt (the
disregarded net forgiven amount
) is disregarded for the purposes of this Division other than this Subdivision.
245-230(3)
However, each company in the group that has deductible revenue losses for the purposes mentioned in subsection (1) (including the debtor company if it has deductible revenue losses for those purposes) is taken to have had a debt forgiven during the relevant year of income and there is taken to be, in respect of each such debt, a net forgiven amount worked out in accordance with the following formula:
Company
'
s deductible
revenue losses |
× |
Disregarded net forgiven
amount |
Total deductible
revenue losses |
where:
company's deductible revenue losses
means the total of the company's deductible revenue losses for the purposes of the application of this Division in relation to the relevant year of income.
total deductible revenue losses
means the total of the deductible revenue losses of all the companies in the group of related companies for the purposes of the application of this Division in relation to the relevant year of income.
245-230(4)
In this section:
deductible revenue loss
of a company does not include an amount of a tax loss transferred to the company by another company if the other company incurred the tax loss in the relevant year of income.
Note:
Subdivision
170-A
of the
Income Tax Assessment Act 1997
provides for the transfer of tax losses within wholly-owned groups of companies.
History
S 245-230(4) substituted by No 16 of 1998 and inserted by No 122 of 1997.
SECTION 245-235 IF ANY NON-DEBTOR COMPANIES IN A GROUP OF RELATED COMPANIES HAVE DEDUCTIBLE NET CAPITAL LOSSES
245-235(1)
This section applies in relation to the relevant debt if, and only if, for the purposes of the application of this Division in relation to the forgiveness year of income in respect of the relevant debt (the
relevant year of income
):
(a)
none of the companies in the group of related companies in respect of the relevant debt have deductible revenue losses; but
(b)
any one or more of the non-debtor companies in the group of related companies in respect of the relevant debt have deductible net capital losses.
245-235(2)
The net forgiven amount of the relevant debt (the
disregarded net forgiven amount
) is disregarded for the purposes of this Division other than this Subdivision.
245-235(3)
However, each company in the group that has deductible net capital losses for the purposes mentioned in subsection (1) (including the debtor company if it has deductible net capital losses for those purposes) is taken to have had a debt forgiven during the relevant year of income and there is taken to be, in respect of each such debt, a net forgiven amount worked out in accordance with the following formula:
Company
'
s deductible
net capital losses |
× |
Disregarded net forgiven
amount |
Total deductible
net capital losses |
where:
company's deductible net capital losses
means the total of the company's deductible net capital losses for the purposes of the application of this Division in relation to the relevant year of income.
total deductible net capital losses
means the total of the deductible net capital losses of all the companies in the group of related companies for the purposes of the application of this Division in relation to the relevant year of income.
History
S 245-235 inserted by No 76 of 1996.
SECTION 245-240 IF NEITHER SECTION 245-230 NOR 245-235 APPLIES
245-240
If neither section
245-230
nor 245-235 applies in respect of the relevant debt, this Subdivision does not affect the application of the preceding Subdivisions in relation to the net forgiven amount of the debt.
History
S 245-240 inserted by No 76 of 1996.
Subdivision 245-H
-
General
History
Subdiv 245-H inserted by No 76 of 1996.
SECTION 245-245 DEFINITIONS
245-245(1)
In this Division, unless the contrary intention appears:
associate
has the meaning given by section
318
.
commencement day
means the day on which this Schedule commences.
debt
includes a part of a debt.
debtor company
, in relation to a group of companies that are related companies in respect of a debt incurred by one of those companies, means the company in the group that incurred the debt.
deductible net capital loss
, subject to subsection (2), has the meaning given by section
245-125
.
deductible revenue loss
, subject to subsection (2), has the meaning given by section
245-110
.
extinguished
, in relation to a debt, does not include payment of the whole of the debt in cash.
forgive
, in relation to a debt, has the meaning given by section
245-35
.
forgiveness year of income
has the meaning given by subsection
245-105(1)
.
moneylending debt
means a debt resulting from a loan of money to the debtor made by the creditor in the ordinary course of a business of lending money carried on by the creditor.
net forgiven amount
, in relation to a debt, has the meaning given by Subdivision
245-D
.
non-debtor company
, in relation to a group of companies that are related companies in respect of a debt incurred by one of those companies, means a company in the group other than the company that incurred the debt.
pay
includes repay.
related group of companies
has the meaning given by section
245-225
.
total net forgiven amount
, in relation to a debtor in respect of a forgiveness year of income, has the meaning given by subsection
245-105(1)
.
245-245(2)
In determining for the purposes of this Division whether a non-debtor company in a group of companies that are related companies in respect of a debt has a
deductible revenue loss
or a
deductible net capital loss
, the relevant definitions of those expressions as set out in sections
245-110
and
245-125
, respectively, are to be applied as if the company were the debtor company.
History
S 245-245 inserted by No 76 of 1996.
SECTION 245-250 COMPANIES UNDER COMMON OWNERSHIP
245-250
For the purposes of this Division, the question whether 2 companies were under common ownership at a particular time is to be determined in the same way as that question would be determined under the definition of
under common ownership
in subsection
995-1(1)
of the
Income Tax Assessment Act 1997
.
History
S 245-250 amended by No 90 of 2002, No 94 of 1999 and inserted by No 76 of 1996.
SECTION 245-255 CONTROLLER OF COMPANY
245-255
For the purposes of this Division, the question whether a taxpayer was a controller of a company at a particular time is to be determined in the same way as the question whether an entity is a controller (for CGT purposes) of a company is determined under section 140-20 of the
Income Tax Assessment Act 1997
.
History
S 245-255 amended by No 46 of 1998 and inserted by No 76 of 1996.
SECTION 245-260 TIME OF INCURRING DEBT
245-260(1)
Subject to subsection (2), if a debt resulted from the debtor's drawing from time to time on an established line of credit, the debt is taken, for the purposes of this Division, to have been incurred at the time when the debtor first drew on the line of credit.
245-260(2)
If, at any time after a debtor made a drawing or drawings on a line of credit, the debtor repaid the only previous drawing or all the previous drawings, as the case may be, the reference in subsection (1) to the time when the debtor first drew on the line of credit is taken to be a reference to the time of the first drawing after the repayment.
History
S 245-260 inserted by No 76 of 1996.
SECTION 245-265 KEEPING AND RETENTION OF RECORDS
245-265(1)
A person (the
debtor
) who incurs a commercial debt must keep any records that are necessary to enable the following matters to be readily found out:
(a)
the date on which the debt was incurred;
(b)
the identity of the creditor;
(c)
the amount of the debt;
(d)
the terms of repayment of the debt;
(e)
if the debt is not a moneylending debt and the debtor and the creditor were not dealing with each other at arm's length in respect of the incurring of the debt
-
the debtor's capacity at the time when the debt was incurred to pay the debt when it falls due;
(f)
if the debtor's obligation to pay the debt is forgiven
-
the date of the forgiveness and the consideration (if any) in respect of the forgiveness.
Note:
There is an administrative penalty if you do not keep or retain records as required by this section: see section
288-25
in Schedule
1
to the
Taxation Administration Act 1953
.
History
S 245-265(1) amended by No 91 of 2000.
245-265(2)
If a company and another company that are under common ownership cease to be under common ownership, each company must keep any records that are necessary to enable the following matters to be readily found out:
(a)
the date on which the companies ceased to be under common ownership;
(b)
the identity of each person who was a controller of the company immediately before the companies ceased to be under common ownership;
(c)
the identity of each person who was a controller of the company immediately after the companies ceased to be under common ownership.
245-265(3)
A person who is required by subsection (1) or (2) to keep records must keep them in writing in the English language or so as to enable them to be readily accessible and convertible into writing in the English language.
245-265(4)
Subject to subsection (5), a person who keeps any records, relating to a debt incurred by the person, as required by subsection (1) must retain the records until:
(a)
if paragraph (b) does not apply
-
the end of 5 years after the debt was forgiven; or
(b)
if the period (the
assessment period
) within which the Commissioner may, under section
170
, amend an assessment in respect of the person's income of the year of income to which the records relate, or in which a transaction or act to which the records relate was completed, is extended under subsection
170(7)
:
(i)
the end of the period of 5 years referred to in paragraph (a); or
(ii)
the end of the assessment period as so extended;
whichever is the later.
History
S 245-265(4) amended by No 161 of 2005.
245-265(5)
Subsection (4) does not require records in respect of a debt that has been wholly paid in cash to be retained after the debt was so paid.
245-265(6)
Subject to subsection (7), each company referred to in subsection (2) that keeps any records relating to the company as required by subsection (2) must retain the records until the end of the second year of income after the year of income in which the company and the other company referred to in subsection (2) ceased to be under common ownership.
245-265(7)
If a debt of one of the companies referred to in subsection (2) was forgiven at any time after the companies ceased to be under common ownership and before the end of the second year of income after the year of income in which the cessation occurred, each of the companies that keeps any records relating to the company as required by that subsection must retain the records until:
(a)
if paragraph (b) does not apply
-
the end of 5 years after the debt was forgiven; or
(b)
if the period (the
assessment period
) within which the Commissioner may, under section
170
, amend an assessment in respect of the company's income of the year of income to which the records relate, or in which a transaction or act to which the records relate was completed, is extended under subsection
170(7)
:
(i)
the end of the period of 5 years referred to in paragraph (a); or
(ii)
the end of the assessment period as so extended;
whichever is the later.
History
S 245-265(7) amended by No 161 of 2005.
245-265(8)
A person who contravenes a provision of this section is guilty of an offence punishable on conviction by a penalty of not more than 30 penalty units.
History
S 245-265(8) amended by No 146 of 2001.
245-265(8A)
Subsection (8) does not apply to the extent that the person has a reasonable excuse.
Note:
A defendant bears an evidential burden in relation to the matters in subsection (8A), see subsection
13.3(3)
of the
Criminal Code
.
History
S 245-265(8A) inserted by No 146 of 2001.
245-265(9)
This section does not limit the application of any other provision of this Act relating to the keeping or retention of records.
History
S 245-265 inserted by No 76 of 1996.
Sch 2C inserted by No 76 of 1996.
SCHEDULE 2D
-
TAX EXEMPT ENTITIES THAT BECOME TAXABLE
Division 57
-
Tax exempt entities that become taxable
History
Div 57 inserted by No 78 of 1996.
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.
History
S 57-1 inserted by No 78 of 1996.
Subdivision 57-A
-
Key concepts
History
Subdiv 57-A inserted by No 78 of 1996.
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.
History
S 57-5 inserted by No 78 of 1996.
Subdivision 57-B
-
Predecessors of the transition taxpayer
History
Subdiv 57-B inserted by No 78 of 1996.
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.
History
S 57-10(1) amended by No 16 of 1998.
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.
History
S 57-10 amended by No 77 of 2001 and inserted by No 78 of 1996.
Subdivision 57-C
-
Time when income derived
History
Subdiv 57-C inserted by No 78 of 1996.
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.
History
S 57-15 inserted by No 78 of 1996.
Subdivision 57-D
-
Time when losses and outgoings incurred
History
Subdiv 57-D inserted by No 78 of 1996.
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.
History
S 57-10(1) amended by No 16 of 1998.
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.
History
S 57-20(2) amended by No 16 of 1998.
S 57-20 inserted by No 78 of 1996.
Subdivision 57-E
-
Assets and liabilities
History
Subdiv 57-E inserted by No 78 of 1996.
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.
History
S 57-25(1) substituted by No 46 of 1998.
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.
History
Archived:
S 57-25(2) substituted by
No 101 of 2006
, s 3 and Sch 2 item 505, effective 14 September 2006. For
application and savings provisions
and for former wording see the
CCH Australian Income Tax Legislation archive
.
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.
History
S 57-25(2A) inserted by No 46 of 1998.
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.
History
S 57-25(3) amended by No 95 of 2019, s 3 and Sch 1 item 1, by inserting the note, effective 1 January 2020 and applicable if the transition time is at or after 7.30 pm, by legal time in the Australian Capital Territory, on 8 May 2018.
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
)
History
Archived:
S 57-25(4)(a) to (d), (g), (h), (k) and (l) repealed as inoperative by
No 101 of 2006
, s 3 and Sch 1 item 189, effective 14 September 2006. For
application and savings provisions
and for former wording see the
CCH Australian Income Tax Legislation archive
.
History
S 57-25(4) amended by No 164 of 2007, s 3 and Sch 10 items 48 and 49, by inserting
"
former
"
before
"
Division 10B
"
in para (e) and before
"
Division 10BA
"
in para (f), effective 1 July 2010.
S 57-25(4) amended by
No 97 of 2008
, s 3 and Sch 3 item 39, by substitituting
"
property).
"
for
"
property); and
"
in para (la), effective 3 October 2008.
S 57-25(4) amended by
No 101 of 2006
, s 3 and Sch 2 item 506, by omitting
"
and
"
from the end of para (j), effective 14 September 2006. For application and savings provisions see the
CCH Australian Income Tax Legislation archive
.
S 57-25(4) substituted by No 16 of 1998; amended by No 77 of 2001, No 46 of 1998.
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. |
History
S 57-25(6) amended by No 47 of 2016, s 3 and Sch 6 item 15, by repealing table item 2, applicable in respect of securities issued on or after 6 May 2016. For savings provisions, see note under Pt III Div 3 Subdiv
CB
heading. Table item 2 formerly read:
S 57-25(6) (table) amended by
No 15 of 2009
, s 3 and Sch 1 item 51, by inserting item 6A, effective 26 March 2009.
S 57-25(6) amended by No 133 of 2003 and substituted by No 16 of 1998.
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
.
History
S 57-25(6A) inserted by No 133 of 2003.
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
.
History
S 57-25(6B) inserted by No 133 of 2003.
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.
History
S 57-25 inserted by No 78 of 1996.
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.
History
S 57-30(2) amended by No 95 of 2019, s 3 and Sch 1 item 2, by inserting the note, effective 1 January 2020 and applicable if the transition time is at or after 7.30 pm, by legal time in the Australian Capital Territory, on 8 May 2018.
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.
History
S 57-30(3) amended by No 16 of 1998.
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)
. |
History
S 57-30(4) amended by No 133 of 2003 and inserted by No 16 of 1998.
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
.
History
S 57-30(5) inserted by No 133 of 2003.
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. |
History
S 57-30(6) inserted by No 133 of 2003.
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
.
History
S 57-30(7) inserted by No 133 of 2003.
S 57-30 inserted by No 78 of 1996.
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.
History
S 57-32 inserted by No 95 of 2019, s 3 and Sch 1 item 3, effective 1 January 2020 and applicable if the transition time is at or after 7.30 pm, by legal time in the Australian Capital Territory, on 8 May 2018.
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.
History
S 57-33 inserted by No 95 of 2019, s 3 and Sch 1 item 3, effective 1 January 2020 and applicable if the transition time is at or after 7.30 pm, by legal time in the Australian Capital Territory, on 8 May 2018.
SECTION 57-35
57-35
INTERPRETATION
In this Subdivisi