Income Tax Assessment Act 1936
PART III
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LIABILITY TO TAXATION
Division 1
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General
SECTION 18
18
ACCOUNTING PERIOD
Any person may, with the leave of the Commissioner, adopt an accounting period being the 12 months ending on some date other than 30 June. For the purposes of this Act, the person's accounting period in each succeeding year shall end on the corresponding date of that year, unless:
(a) with the leave of the Commissioner some other date is adopted; or
(b) the accounting period ends earlier under section 18A .
SECTION 18A
ACCOUNTING PERIODS FOR VCLPs, ESVCLPs, AFOFs AND VCMPs
18A(1)
If a partnership becomes, or ceases to be, a VCLP, an ESVCLP, an AFOF or a VCMP on a particular day:
(a) the accounting period during which that day occurs (the first accounting period ) is taken to have ended immediately before that day; and
(b) another accounting period is taken to have commenced at the beginning of that day.
18A(2)
This section does not apply in relation to a partnership becoming, or ceasing to be, a VCLP, an ESVCLP, an AFOF or a VCMP on the day on which an accounting period commences.
FORMER SECTION 20
20
INCOME ETC, TO BE EXPRESSED IN AUSTRALIAN CURRENCY
(Repealed by No 133 of 2003)
SECTION 21
WHERE CONSIDERATION NOT IN CASH
21(1)
[Non-cash consideration]
SECTION 21A
NON-CASH BUSINESS BENEFITS
21A(1)
For the purposes of this Act, in determining the income derived by a taxpayer, a non-cash business benefit that is not convertible to cash shall be treated as if it were convertible to cash.
21A(2)
For the purposes of this Act, if a non-cash business benefit (whether or not convertible to cash) is income derived by a taxpayer: (a) the benefit shall be brought into account at its arm ' s length value reduced by the recipient ' s contribution (if any); and (b) if the benefit is not convertible to cash - in determining the arm ' s length value of the benefit, any conditions that would prevent or restrict the conversion of the benefit to cash shall be disregarded.
21A(3)
Where: (a) a non-cash business benefit is income derived by a taxpayer in a year of income; and (b) if the taxpayer had, at the time the benefit was provided, incurred and paid unreimbursed expenditure in respect of the provision of the benefit equal to the amount of the arm ' s length value of the benefit - a once-only deduction would, or would but for Subdivisions F , GA and G of Division 3 of this Part , and Divisions 28 and 900 of the Income Tax Assessment Act 1997 , have been allowable to the taxpayer in respect of a percentage (in this subsection called the deductible percentage ) of the expenditure;
21A(4)
Where: (a) a non-cash business benefit is income derived by a taxpayer in a year of income; and (b) a percentage (in this subsection called the non-deductible entertainment percentage ) of any expenditure incurred by the provider in respect of the provision of the benefit is non-deductible entertainment expenditure;
21A(5)
In this section:
(a) the amount that the recipient could reasonably be expected to have been required to pay to obtain the benefit from the provider under a transaction where the parties to the transaction are dealing with each other at arm ' s length in relation to the transaction; or
(b) if such an amount cannot be practically determined - such amount as the Commissioner considers reasonable.
(a) wholly or partly in respect of a business relationship; or
(b) wholly or partly for or in relation directly or indirectly to a business relationship.
(a) section 32-5 of the Income Tax Assessment Act 1997 applies to the expenditure; and
(b) but for that section, the expenditure would be deductible under section 8-1 of the Income Tax Assessment Act 1997 .
(a) in relation to property - includes dispose of (whether by assignment, declaration of trust or otherwise); and
(b) in relation to services - includes allow, confer, give, grant or perform.
(a) an arrangement for or in relation to:
(b) a contract of insurance; or
(c) an arrangement for or in relation to the lending of money.
21A(6)
Notwithstanding section 21 , the consideration referred to in the definition of recipient ' s contribution in subsection (5) of this section is consideration in money.
21A(7)
This section does not apply to an ESS interest (within the meaning of the Income Tax Assessment Act 1997 ) to which Subdivision 83A-B or 83A-C of that Act (about employee share schemes) applies.
SECTION 23AA
INCOME OF PERSONS CONNECTED WITH CERTAIN PROJECTS OF UNITED STATES GOVERNMENT
23AA(1)
In this section, unless the contrary intention appears:
(a) is an employee:
(b) is serving with an organization that, with the approval of the Government of the Commonwealth, accompanies the United States Forces in Australia.
(a) the spouse of that person; or
(b) a relative, other than the spouse, of that person who is wholly or mainly dependent for support on that person;
(a) a company incorporated in Australia;
(b) an Australian citizen; or
(c) a person, other than a company, who is ordinarily resident in Australia.
(a) is an employee of a foreign contractor; or
(b) is a director of a company that is a foreign contractor;
(a) a contract to which the Government of the United States of America is a party in connexion with an approved project; or
(b) a contract made for purposes connected with the performance of a contract referred to in paragraph (a).
(a) in relation to a foreign contractor or foreign employee - purposes relating to the performance of a prescribed contract;
(aa) in relation to a United States employee - purposes relating to an approved project; and
(b) in relation to a member of the United States Forces or a civilian accompanying the United States Forces - purposes relating to the carrying on of activities agreed upon between the Government of the Commonwealth and the Government of the United States of America.
(a) a member of the United States Forces;
(b) a civilian accompanying the United States Forces;
(c) an Australian citizen; or
(d) a person ordinarily resident in Australia.
23AA(2)
For the purposes of this section, a foreign contractor, foreign employee or United States employee who is in Australia, or is carrying on business in Australia, solely for prescribed purposes does not cease to be in Australia solely for those purposes, or to be carrying on business in Australia solely for those purposes, by reason of anything undertaken or done by him or her in connexion with an undertaking in Australia of the Government of the United States of America, other than an approved project, agreed upon between the Government of the Commonwealth and the Government of the United States of America.
23AA(3)
Where a person:
(a) has been in Australia, or has carried on business in Australia, solely for prescribed purposes during a period when the person was a foreign contractor or foreign employee;
(b) has been in Australia solely for prescribed purposes during a period when the person was a member of the United States Forces, a civilian accompanying the United States Forces or a United States employee; or
(c) has been in Australia during a period when the person was a dependant of such a contractor, employee, member or civilian who was in Australia solely for prescribed purposes;
23AA(4)
Subsection (3) does not apply in respect of, or of a part of, a period when a person was, or was a dependant of, a foreign contractor, a foreign employee, a civilian accompanying the United States Forces or a United States employee if the person:
(a) being a company - was not a domestic corporation for the purposes of the law of the United States of America relating to income tax; or
(b) not being a company - was not a resident of the United States of America for the purposes of that law or a citizen of the United States of America;
23AA(5)
Where:
(a) a foreign contractor or a foreign employee has derived income wholly and exclusively from, or from employment in connexion with, the performance in Australia of a prescribed contract;
(b) the income is not exempt from income tax imposed by Chapter One of Subtitle A of the Internal Revenue Code of 1986 of the United States of America; and
(c) the foreign contractor or foreign employee was, at the time the income was derived, in Australia, or carrying on business in Australia, solely for prescribed purposes;
23AA(6)
Where:
(a) a person has derived income in respect of service as a civilian accompanying the United States Forces or as a United States employee during a period when the person was in Australia solely for prescribed purposes; and
(b) the income is not exempt from income tax imposed by Chapter One of Subtitle A of the Internal Revenue Code of 1986 of the United States of America;
SECTION 23AB INCOME OF CERTAIN PERSONS SERVING WITH AN ARMED FORCE UNDER THE CONTROL OF THE UNITED NATIONS 23AB(1)
In this section:
(a) that have not been credited in payment of income tax; and
(b) in respect of which a payment has not been made by the Commissioner.
23AB(2)
The regulations may prescribe a person or a class of persons for the purposes of this section but shall not so prescribe a person or class of persons unless the salary, wages and allowances received by the person or by all the persons in that class, as the case may be, in respect of his, her or their United Nations service are paid, given or granted by the Commonwealth or by the United Nations for and on behalf of the Commonwealth.
23AB(3)
A succeeding provision of this section does not apply in relation to a person if the regulations provide that that provision does not apply in relation to that person or in relation to a class of persons in which that person is included.
23AB(4)
Subsection 12(2) (retrospective commencement of legislative instruments) of the Legislation Act 2003 does not apply to regulations made for the purposes of subsection (2) or (3) of this section.
23AB(5)
Where:
(a) a payment of compensation under the Safety, Rehabilitation and Compensation Act 1988 is made in respect of the incapacity, impairment or death of a taxpayer; and
(b) the incapacity, impairment or death of the taxpayer resulted from an occurrence that happened during the performance by the taxpayer of United Nations service; and
(c) if the taxpayer had, at the time of the happening of the occurrence, been a member of the Defence Force rendering continuous full-time service outside Australia while the taxpayer was allotted for duty in an operational area described in item 4, 5, 6, 7, 8, 9, 10, 11, 12, 13 or 14 of Column 1 of Schedule 2 to the Veterans ' Entitlements Act 1986, the Commonwealth would be liable to pay a pension under that Act in respect of the incapacity, impairment or death of the taxpayer;
23AB(6)
For the purposes of section 15-2 of the Income Tax Assessment Act 1997 , the total value of all allowances, gratuities, compensations, benefits, bonuses and premiums (in this subsection referred to as " living allowances " ) allowed, given or granted in meals, sustenance or the use of premises or quarters (including payment in lieu of one or more of those living allowances) to a taxpayer in respect of, or for or in relation directly or indirectly to, United Nations service shall be deemed to be an amount calculated at the rate of $ 2 for each week of that service in which any of those living allowances were so allowed, given or granted, or in which payment in lieu of any of those living allowances was made, to the taxpayer.
23AB(7)
Subject to subsections (8), (8A) and (9A) and subsection 79B(4) , a taxpayer is entitled to a rebate of tax in his or her assessment in respect of income of a year of income in which he or she has performed United Nations service and derived income by way of salary, wages or other allowances in respect of that service. The amount of the rebate is:
(a) where the total period of that service performed by the taxpayer during the year of income is more than one-half of the year of income or where the taxpayer dies while performing that service during the year of income - an amount equal to the sum of:
(b) in any other case - such amount as, in the opinion of the Commissioner, is reasonable in the circumstances, being an amount not greater than the amount of the rebate to which the taxpayer would have been entitled under this subsection if paragraph (a) had applied to him or her in respect of the year of income.
23AB(7A)
For the purposes of subparagraph (7)(a)(ii), the amount is equal to 50% of the sum of the following rebates (if any) in respect of the year of income:
(a) any tax offset to which the taxpayer is entitled under Subdivision 61-A of the Income Tax Assessment Act 1997 ;
(b) any notional tax offset to which the taxpayer is entitled under Subdivision 961-A of the Income Tax Assessment Act 1997 .
23AB(8)
For the purposes of subsection (7), but subject to subsection (8A), the total period of United Nations service of a taxpayer in any year of income shall be deemed to include any period in that year of income during which the taxpayer has resided, or has actually been, in the prescribed area.
23AB(8A)
For the purposes of subsection (7), United Nations service does not include any period of service of the taxpayer in respect of which an exemption from income tax applies under section 23AG .
23AB(9)
Where a rebate is allowable under subsection (7) in the assessment of a taxpayer in respect of income of a year of income and, but for this subsection, a rebate of a lesser amount would be allowable in that assessment under section 79A , a rebate under section 79A is not allowable in that assessment.
23AB(9A)
Where a rebate is allowable under section 79A in the assessment of a taxpayer in respect of income of a year of income and, but for this subsection, a rebate of the same or a lesser amount would be allowable in that assessment under subsection (7), a rebate under subsection (7) is not allowable in that assessment.
23AB(9B)
Subsection 79B(4) shall be disregarded in determining for the purposes of subsections (9) and (9A) of this section the amount of a rebate allowable to a taxpayer under subsection (7) of this section or under section 79A .
23AB(10)
Where:
(a) the trustee of the estate of a deceased person who has performed United Nations service is liable to pay income tax, in respect of a year of income, upon income that consists of or includes salary, wages or allowances derived by the deceased person in respect of that service; or
(b) the death of the person resulted from an occurrence that happened during that service; and
(c) if the person had, at the time of the happening of the occurrence, been a member of the Defence Force rendering continuous full-time service outside Australia while the taxpayer was allotted for duty in an operational area described in item 4, 5, 6, 7 or 8 of Column 1 of Schedule 2 to the Veterans ' Entitlements Act 1986 , the Commonwealth would be liable to pay a pension under that Act in respect of the death of the person;
(d) if the assessable income of the deceased person of the year of income consists solely of the salary, wages or allowances derived in respect of that service - from the amount of income tax so payable by the trustee; or
(e) if the assessable income of the deceased person of the year of income includes income other than the salary, wages or allowances derived in respect of that service:
23AB(11)
Nothing in subsection (10) shall be construed as authorizing or requiring the Commissioner to refund any amount paid as or for income tax by or on behalf of the deceased person or the trustee of his or her estate.
FORMER SECTION 23AC
23AC
EXEMPTION OF PAY AND ALLOWANCES OF MEMBERS OF DEFENCE FORCE SERVING IN OPERATIONAL AREAS
(Repealed by No 2 of 2015)
SECTION 23AD
EXEMPTION OF PAY AND ALLOWANCES OF DEFENCE FORCE MEMBERS PERFORMING CERTAIN OVERSEAS DUTY
Requirements for exemption
23AD(1)
The pay and allowances earned by a person serving as a member of the Defence Force are exempt from tax if:
(a) they are earned while there is in force a certificate in writing issued by the Chief of the Defence Force to the effect that the person is on eligible duty with a specified organisation in a specified area outside Australia; and
(b) the eligible duty is not as, or under, an attache at an Australian embassy or legation.
Eligible duty
23AD(2)
The regulations may declare that duty with a specified organisation, in a specified area outside Australia and after a specified day, is eligible duty for the purposes of this section.
Where paragraph (1)(a) certificate in force
23AD(3)
A certificate under paragraph (1)(a):
(a) comes into force at the later of:
(b) subject to paragraph (c), continues in force until the earliest of:
(c) is in force during any period of hospital treatment resulting from an illness contracted, or injuries sustained, during the person's eligible duty.
Review of paragraph (1)(a) certificate
23AD(4)
An application may be made to the Tribunal for review of a decision of the Chief of the Defence Force under paragraph (1)(a).
Delegation of paragraph (1)(a) power
23AD(5)
The Chief of the Defence Force may, by signed instrument, delegate to an officer of the Defence Force the power conferred by paragraph (1)(a).
Revocation certificate is legislative instrument
23AD(6)
A certificate of revocation referred to in subparagraph (3)(b)(ii) is a legislative instrument.
SECTION 23AF
EXEMPTION OF CERTAIN INCOME DERIVED IN RESPECT OF APPROVED OVERSEAS PROJECTS
23AF(1)
Where a taxpayer, being a natural person, has been engaged on qualifying service on a particular approved project for a continuous period of not less than 91 days, any eligible foreign remuneration derived by the person that is attributable to that qualifying service is exempt from tax.
23AF(2)
(Omitted by No 100 of 1991)
23AF(3)
Subject to subsections (4) and (5), a person shall be taken for the purposes of this section to be engaged on qualifying service on an approved project during any period during which:
(a) the person is outside Australia and is engaged in the performance of personal services in connection with the approved project;
(b) the person is travelling between Australia and the site of the approved project;
(c) by reason of an incapacity for work due to accident or illness occurring while the person was, by virtue of paragraph (a) or (b), to be taken to be engaged on qualifying service on the approved project, the person is absent from work; or
(d) the person is on eligible leave, being leave that accrued in respect of a period during which the person was, by virtue of any of the preceding paragraphs, to be taken to be engaged on qualifying service on the approved project.
23AF(4)
A person shall not be taken to have been engaged on qualifying service on a particular approved project while the person was travelling between Australia and the site of the approved project unless the Commissioner is satisfied that the time taken for the journey is reasonable.
23AF(5)
A person shall not be taken to have been engaged on qualifying service on a particular approved project by virtue of paragraph (3)(c) during a period of incapacity for work unless the person is taken to have been engaged on qualifying service on that approved project by virtue of paragraph (3)(a), (b) or (d) during a period that commenced immediately after the incapacity ceased.
23AF(6)
Where:
(a) a person was engaged on qualifying service on a particular approved project; and
(b) due to unforeseen circumstances, the person ceased to be engaged on qualifying service on that approved project,
23AF(7)
Where:
(a) a person (in this subsection referred to as the original person ) was engaged on qualifying service on a particular approved project;
(b) due to unforeseen circumstances, the original person ceased to be engaged on qualifying service on that approved project; and
(c) as soon as practicable after the time when the original person ceased to be engaged on qualifying service on that approved project, another person (in this subsection referred to as the substituted person ) commenced to be engaged on qualifying service on that approved project in lieu of the original person;
23AF(8)
Where:
(a) during the period (in this subsection referred to as the total project period ) commencing at the time when a person was first engaged on qualifying service on an approved project and ending at the time when the person was last engaged on qualifying service on that approved project, the person was in Australia during a period or periods (in this subsection referred to as the intervening period or intervening periods ) during which the person was not engaged on qualifying service on that approved project;
(b) the total number of days in the intervening period or intervening periods does not exceed one-sixth of the total number of days during the total project period during which the person was engaged on qualifying service on the approved project; and
(c) at all times during the total project period, the person was engaged on qualifying service on the approved project or was in Australia;
23AF(9)
Where, immediately before a person commences to take eligible leave, leave of the same kind as the eligible leave has accrued in relation to the person but has not been used and that unused leave consists of:
(a) leave that accrued in respect of a period or periods when the person was engaged on qualifying service on an approved project and leave that accrued in respect of a period or periods when the person was not engaged on qualifying service on an approved project;
(b) leave that accrued in respect of 2 or more periods when the person was engaged on qualifying service on 2 or more different approved projects; or
(c) leave that accrued in respect of 2 or more periods when the person was engaged on qualifying service on 2 or more different approved projects and leave that accrued in respect of a period or periods when the person was not engaged on qualifying service on an approved project;
(d) in a case to which paragraph (a) applies - the person shall be deemed first to have taken leave that accrued in respect of the period when the person was engaged on qualifying service on the approved project referred to in that paragraph;
(e) in a case to which paragraph (b) applies - the leave shall be deemed to have been taken in the order that is reverse to the order in which it accrued;
(f) in a case to which paragraph (c) applies -
23AF(10)
Where the amount of income derived by a person that:
(a) is attributable to qualifying service on an approved project; and
(b) would, apart from this subsection, be eligible foreign remuneration;
23AF(11)
Where the Trade Minister is satisfied that the undertaking of an eligible project that was commenced, or is proposed to be commenced, after 19 August 1980 is, or will be, in the national interest, that Minister may, by writing signed by that Minister, approve that eligible project for the purposes of this section.
23AF(12)
The Trade Minister may, either generally or as otherwise provided by the instrument of delegation, by writing signed by that Minister, delegate to a person that Minister's power under subsection (11).
23AF(13)
The power so delegated, when exercised by the delegate shall, for the purposes of this section, be deemed to have been exercised by the Trade Minister.
23AF(14)
A delegation under subsection (12) does not prevent the exercise of a power by the Trade Minister.
23AF(15)
Where:
(a) a person has derived eligible foreign remuneration during a year of income; and
(b) at the time of making an assessment in respect of income of the person of the year of income, the Commissioner is of the opinion that, at a later time, circumstances will exist by reason of which that eligible foreign remuneration will be exempt from tax by virtue of this section;
23AF(16)
Where, in the making of an assessment, this section has been applied on the basis that a circumstance that did not exist at the time of making the assessment would exist at a later time and the Commissioner, after making the assessment, becomes satisfied that that circumstance will not exist, then, notwithstanding anything contained in section 170 , the Commissioner may amend the assessment at any time for the purposes of ensuring that this section shall be taken always to have applied on the basis that that circumstance did not exist.
23AF(17)
For the purposes of this section, income is excluded income if:
(a) the income is income to which section 23AG applies; or
(aa) the income is a payment, consideration or amount that:
(b) the income is derived from sources in a country other than Australia and:
(c) the income consists of:
23AF(17A)
If the income of a taxpayer of a year of income consists of an amount that is exempt from tax under this section (in this section called the exempt amount ) and other income, the amount of tax (if any) payable in respect of the other income is calculated using the formula:
(a) the exempt amount were not exempt income; and
(aa) if the exempt amount is a payment covered by section 83-240 or 305-65 of the Income Tax Assessment Act 1997 - the exempt amount (excluding any part of that amount that represented contributions made by the taxpayer) were assessable income of the taxpayer; and
(b) the taxpayer were not entitled to any rebate of tax.
(d) any deductions allowable to the taxpayer in relation to the year of income that relate exclusively to that assessable income; and
(e) so much of any other deductions (other than apportionable deductions) allowable to the taxpayer in relation to the year of income as, in the opinion of the Commissioner, may appropriately be related to that assessable income; and
(f) the amount calculated using the formula in subsection (17B).
23AF(17B)
The formula referred to in paragraph (17A)(f) is:
23AF(17C)
Subsection (17A) applies to a taxpayer in respect of income of a year of income as if any payment covered by section 83-240 or 305-65 of the Income Tax Assessment Act 1997 in relation to qualifying service that was made in respect of the taxpayer during that year of income were income of the taxpayer of that year of income that is exempt from tax under this section.
23AF(17D)
(Repealed by No 83 of 1999)
23AF(17E)
(Repealed by No 83 of 1999)
23AF(18)
In this section, unless the contrary intention appears:
(a) a resident of Australia;
(b) the Commonwealth, a State, a Territory, the government of a country other than Australia or an authority of the Commonwealth, of a State, of a Territory or of the government of a country other than Australia;
(c) an organization:
(d) an agency of an organization to which paragraph (c) applies.
(a) income consisting of salary, wages, commission, bonuses or allowances, or of amounts included in a person ' s assessable income under Division 83A of the Income Tax Assessment Act 1997 (about employee share schemes), derived by the person in his or her capacity as an employee of an eligible contractor; or
(b) income, or amounts included in a person ' s assessable income under that Division, derived by the person under a contract with an eligible contractor, being a contract that is wholly or substantially for the personal services of the person;
(a) a project for the design, supply or installation of any equipment or facilities; or
(b) a project for the construction of works; or
(c) a project for the development of an urban area or a regional area; or
(d) a project for the development of agriculture; or
(e) a project consisting of giving advice or assistance relating to the management or administration of a government department or of a public utility; or
(f) a project included in a class of projects approved in writing for the purposes of this section by the Trade Minister.
(a) a person employed by the Commonwealth, by a State, by a Territory, by the government of a country other than Australia or by an authority of the Commonwealth, of a State, of a Territory or of the government of a country other than Australia; and
(b) a member of the Defence Force.
SECTION 23AG
EXEMPTION OF INCOME EARNED IN OVERSEAS EMPLOYMENT
23AG(1)
Where a resident, being a natural person, has been engaged in foreign service for a continuous period of not less than 91 days, any foreign earnings derived by the person from that foreign service are exempt from tax.
23AG(1AA)
However, those foreign earnings are not exempt from tax under this section unless the continuous period of foreign service is directly attributable to any of the following:
(a) the delivery of Australian official development assistance by the person ' s employer (except if that employer is an Australian government agency (within the meaning of the Income Tax Assessment Act 1997 ));
(b) the activities of the person ' s employer in operating a public fund that:
(c) the activities of the person ' s employer, if the employer is exempt from income tax because of paragraph 50-50(1)(c) or (d) of the Income Tax Assessment Act 1997 (prescribed institutions located or pursuing objectives outside Australia);
(d) the person ' s deployment outside Australia as a member of a disciplined force by:
(e) an activity of a kind specified in the regulations.
23AG(1A)
A person is taken, for the purposes of subsection (1), to have been engaged in foreign service for a continuous period of 91 days if:
(a) the person died at a time when he or she was engaged in foreign service for a continuous period of less than 91 days; and
(b) he or she would have otherwise continued to be engaged in the foreign service; and
(c) his or her continuous period of engagement in the foreign service would have otherwise been a period of at least 91 days.
23AG(2)
An amount of foreign earnings derived in a foreign country is not exempt from tax under this section if the amount is exempt from income tax in the foreign country only because of any of the following:
(a) a law of the foreign country giving effect to a double tax agreement within the meaning of Part X ;
(b) a double tax agreement within the meaning of Part X ;
(c) provisions of a law of the foreign country under which income covered by any of the following categories is generally exempt from income tax:
(d) the law of the foreign country does not provide for the imposition of income tax on one or more of the categories of income mentioned in paragraph (c);
(e) a law of the foreign country corresponding to the International Organisations (Privileges and Immunities) Act 1963 or to the regulations under that Act;
(f) an international agreement to which Australia is a party and that deals with:
(g) a law of the foreign country giving effect to an agreement covered by paragraph (f).
23AG(2A)
Subsection (2) does not apply in relation to foreign earnings to the extent that the person derived them from foreign service in Iraq after 31 December 2002 but before 1 May 2004.
23AG(3)
If the income of a taxpayer of a year of income consists of an amount that is exempt from tax under this section (in this section called the exempt amount ) and other income, the amount of tax (if any) payable in respect of the other income is calculated using the formula:
(a) the exempt amount were not exempt income; and
(aa) if the exempt amount is a payment covered by section 83-240 or 305-65 of the Income Tax Assessment Act 1997 - the exempt amount (excluding any part of that amount that represented contributions made by the taxpayer) were assessable income of the taxpayer; and
(b) the taxpayer were not entitled to any rebate of tax.
(d) any deductions allowable to the taxpayer in relation to the year of income that relate exclusively to that assessable income; and
(e) so much of any other deductions (other than apportionable deductions) allowable to the taxpayer in relation to the year of income as, in the opinion of the Commissioner, may appropriately be related to that assessable income; and
(f) the amount calculated using the formula in subsection (4).
23AG(4)
The formula referred to in paragraph (3)(f) is:
23AG(5)
Subsection (3) applies to a taxpayer in respect of income of a year of income as if any payment covered by section 83-240 or 305-65 of the Income Tax Assessment Act 1997 that related to the termination of employment that was made in respect of the taxpayer during that year of income were income of the taxpayer of that year of income that is exempt from tax under this section.
23AG(5A)
(Repealed by No 83 of 1999)
23AG(5B)
(Repealed by No 83 of 1999)
23AG(6)
For the purposes of this section, a period during which a person is engaged in foreign service includes any period during which the person is, in accordance with the terms and conditions of that service:
(a) absent on recreation leave, other than:
(b) absent from work because of accident or illness.
23AG(6A)
2 or more periods in which a person has been engaged in foreign service are together taken to constitute a continuous period of foreign service until:
(a) the end of the last of the 2 or more periods; or
(b) a time (if any), since the start of the first of the 2 or more periods, when the person ' s total period of absence exceeds ⅙ of the person ' s total period of foreign service;
23AG(6B)
In subsection (6A):
23AG(6C)
(Repealed by No 162 of 2005)
23AG(6D)
(Repealed by No 162 of 2005)
23AG(6E)
(Repealed by No 162 of 2005)
23AG(6F)
Where:
(a) a person has derived foreign earnings during a year of income; and
(b) at the time of making an assessment in respect of income of the person of the year of income, the Commissioner is of the opinion that, at a later time, circumstances will exist because of which those foreign earnings will be exempted from tax by this section;
23AG(6G)
(Repealed by No 75 of 2010 )
23AG(6H)
(Omitted by No 100 of 1991)
23AG(6J)
(Repealed by No 162 of 2005)
23AG(7)
In this section:
(a) a person employed by a government or an authority of a government or by an international organisation; or
(b) a member of a disciplined force.
(a) is included in assessable income under Division 82 or Subdivision 83-295 or Division 301 , 302 , 304 or 305 of the Income Tax Assessment Act 1997 ; or
(b) is included in assessable income under Division 82 of the Income Tax (Transitional Provisions) Act 1997 ; or
(c) is mentioned in paragraph 82-135(e) , (f), (g), (i) or (j) of the Income Tax Assessment Act 1997 ; or
(d) is an amount transferred to a fund, if the amount is included in the assessable income of the fund under section 295-200 of the Income Tax Assessment Act 1997 .
(a) in all cases - does not include a municipal income tax; and
(b) in the case of a federal foreign country - does not include a State income tax.
SECTION 23AH FOREIGN BRANCH INCOME OF AUSTRALIAN COMPANIES NOT ASSESSABLE
Objects
23AH(1)
The objects of this section are:
(a) to ensure that active foreign branch income derived by a resident company, and capital gains made by a resident company in disposing of non-tainted assets used in deriving foreign branch income, (except income and capital gains from the operation of ships or aircraft in international traffic) are not assessable income or exempt income of the company; and
(b) to include in the assessable income of a resident company that part of its income and capital gains derived through a branch in a foreign country that is comparable to the amounts that would be included in an attributable taxpayer's assessable income for income and capital gains derived by a CFC resident in the same foreign country; and
(c) to get the same outcomes where one or more partnerships or trusts are interposed between a resident company and a foreign branch; and
(d) to limit the effect mentioned in paragraph (a) where there is a branch hybrid mismatch for the purposes of Division 832 of the Income Tax Assessment Act 1997 .
Foreign branch income not assessable
23AH(2)
Subject to this section, foreign income derived by a company, at a time when the company is a resident, in carrying on a business at or through a PE of the company in a listed country or unlisted country is not assessable income, and is not exempt income, of the company.
Foreign capital gains and losses disregarded
23AH(3)
Subject to this section, a capital gain from a CGT event happening to a CGT asset is disregarded for the purposes of Part 3-1 of the Income Tax Assessment Act 1997 if:
(a) the gain is made by a company that is a resident; and
(b) the company used the asset wholly or mainly for the purpose of producing foreign income in carrying on a business at or through a PE of the company in a listed country or unlisted country; and
(c) the asset is not taxable Australian property.
23AH(4)
Subject to this section, a capital loss from a CGT event happening to a CGT asset is disregarded for the purposes of Part 3-1 of the Income Tax Assessment Act 1997 if:
(a)the loss is made by a company that is a resident; and
(b) the company used the asset wholly or mainly for the purpose of producing foreign income in carrying on a business at or through a PE of the company in a listed country or unlisted country; and
(c) had the loss been a gain, it would be disregarded under subsection (3).
Exception relating to hybrid mismatch rules
23AH(4A)
Subsection (2) does not apply to foreign income derived by the company if the foreign income is branch hybrid mismatch income (see subsection ( 14C )).
Exceptions: listed country PE
23AH(5)
Subsection (2) does not apply to foreign income derived by the company if:
(a) the PE is in a listed country; and
(b) the PE does not pass the active income test (see subsection (12)); and
(c) the foreign income is both:
23AH(6)
Subsection (3) or (4) does not apply to a capital gain or capital loss if:
(a) the PE is in a listed country; and
(b) for a capital gain - the gain is from a tainted asset and is eligible designated concession income in relation to a listed country; and
(c) for a capital loss - the loss is from a tainted asset and would be eligible designated concession income in relation to a listed country if it were a capital gain.
Exceptions: unlisted country PE
23AH(7)
Subsection (2) does not apply to foreign income derived by the company if:
(a) the PE is in an unlisted country; and
(b) the PE does not pass the active income test (see subsection (12)); and
(c) the foreign income is adjusted tainted income (see subsection (13)).
23AH(8)
Subsection (3) or (4) does not apply to a capital gain or capital loss if:
(a) the PE is in an unlisted country; and
(b) the gain or loss is from a tainted asset.
Income derived in disposing of a business
23AH(9)
This section applies to foreign income derived by an entity in the course of disposing, in whole or in part, of a business carried on in a listed country or unlisted country at or through a PE of the entity in the listed country or unlisted country as if the foreign income had been derived in carrying on that business.
Interposed partnerships or trusts
23AH(10)
This section applies to any indirect interest (through one or more partnerships or trust estates) of a company in foreign income derived by a partnership or trustee through a PE of the partnership or trustee in a listed country or unlisted country as if that indirect interest were foreign income derived by the company through a PE of the company in that country.
23AH(11)
This section applies to any indirect interest (through one or more partnerships or trust estates) of a company in a capital gain or capital loss made in relation to an asset of a partnership, or made by a trustee, in carrying on a business at or through a PE of the partnership or trustee in a listed country or unlisted country as if that indirect interest were a capital gain or capital loss made by the company through a PE of the company in that country.
Active income test
23AH(12)
A PE of an entity passes the active income test for a year of income if the entity would have passed the active income test in section 432 if:
(a) the assumptions in subsection (14) were made; and
(b) subsection 432(3) and 446(2) and paragraphs 432(1)(b) and (e) and 447(1)(b) , (d) and (f) had not been enacted.
Adjusted tainted income
23AH(13)
For the purposes of this section, the adjusted tainted income of a PE of an entity is income or other amounts that would be adjusted tainted income of the entity for the purposes of Part X if:
(a) the assumptions in subsection (14) were made; and
(b) subsection 446(2) and paragraphs 447(1)(b) , (d) and (f) had not been enacted.
Assumptions for subsections (12) and (13)
23AH(14)
The assumptions referred to in paragraphs (12)(a) and (13)(a) are:
(a) except in applying paragraphs 447(1)(a) , (c) and (e) and 450(6)(c) , (7)(d) and (8)(b) , the only income or other amounts derived by the entity were the income derived in carrying on business at or through the PE; and
(b) the entity's statutory accounting periods were the same as the entity's years of income; and
(c)in applying paragraphs 447(1)(a) , (c) and (e) and 450(6)(c) , (7)(d) and (8)(b) :
(d) if the entity is an AFI entity (within the meaning of subsection 326(2) ) - the entity were an AFI subsidiary; and
(e) in applying paragraphs 447(1)(a) , (c) and (e), the HQ company were an associate of the PE company.
23AH(14A)
This section does not apply to foreign income, or to a capital gain or capital loss, of a company to the extent that the income, gain or loss is from:
(a) the operation of ships or aircraft in international traffic at or through a PE of the company in a listed country or unlisted country; or
(b) things that are ancillary to that operation.
23AH(14B)
A company operates a ship or aircraft in international traffic if the company operates it for transporting passengers or goods between a place in one country and a place in another country.
Branch hybrid mismatch income
23AH(14C)
For the purposes of this section, if foreign income derived by the company is an amount that, for the purposes of Division 832 of the Income Tax Assessment Act 1997 , is a payment:
(a) received by the company; and
(b) that, apart from subsection (4A) of this section, would give rise to a branch hybrid mismatch;
23AH(14D)
For the purposes of this section, PE , when it is used in Division 832 of the Income Tax Assessment Act 1997 , does not have the meaning it has in that Act but instead has the same meaning as in this section.
Definitions
23AH(15)
In this section:
(a) apart from this section, would be included in assessable income under a provision of this Act other than Part 3-1 or 3-3 of the Income Tax Assessment Act 1997 (CGT); and
(b) is derived from sources in a listed country or unlisted country.
(a) if there is a double tax agreement in relation to that country - has the same meaning as in the double tax agreement; or
(b) in any other case - has the meaning given by subsection 6(1) .
SECTION 23AI AMOUNTS PAID OUT OF ATTRIBUTED INCOME NOT ASSESSABLE 23AI(1) [Attribution account payments]
(a) either:
(b) on the making of the payment, an attribution debit arises, for the entity making the payment, in relation to the taxpayer;
(c) if the payment is of a kind referred to in paragraph 365(1)(a) - the payment is not assessable income, and is not exempt income, to the extent of the debit;
(d) if the payment is of a kind referred to in paragraph 365(1)(b) and, apart from this section, an amount would be included in the taxpayer's assessable income under section 92 in respect of an individual interest in the net income of the partnership of the year of income referred to in that paragraph - that amount is not assessable income, and is not exempt income, to the extent of the debit;
(e) if the payment is of a kind referred to in paragraph 365(1)(c) and, apart from this section, an amount would be included in the taxpayer's assessable income under section 97 , 98A or 100 in respect of a share of the net income of the trust of the year of income referred to in that paragraph - that amount is not assessable income and is not exempt income, to the extent of the debit;
(ea) if the payment is of a kind referred to in paragraph 365(1)(c) and, apart from this section, an amount would be assessable to the trustee of the trust referred to in that paragraph under section 98 in respect of a share of the net income of the trust of the year of income referred to in that paragraph - that amount is not so assessable to the extent of the debit;
(f) if the payment is of a kind referred to in paragraph 365(1)(d) - the payment is not, to the extent of the debit, assessable to the taxpayer as mentioned in that paragraph;
(g) if the payment is of a kind referred to in paragraph 365(1)(e) and, apart from this section, an amount would be included in the taxpayer's assessable income, of the year of income referred to in that paragraph, under section 99B in respect of the trust property referred to in that paragraph - that amount is not assessable income, and is not exempt income to the extent of the debit.
23AI(2)
[Other provisions]
23AI(3)
[Definitions]
FORMER SECTION 23AJ
23AJ
CERTAIN NON-PORTFOLIO DIVIDENDS FROM FOREIGN COUNTRIES NOT ASSESSABLE
(Repealed by No 110 of 2014)
SECTION 23AK
AMOUNTS PAID OUT OF ATTRIBUTED FOREIGN INVESTMENT FUND INCOME NOT ASSESSABLE
When this section applies
23AK(1)
This section applies if:
(a) either:
(b) on the making of the payment, a post FIF abolition debit arises, for the FIF attribution account entity making the payment, in relation to the taxpayer.
Post FIF abolition debit arises
23AK(2)
A post FIF abolition debit arises for a FIF attribution account entity (the eligible entity ) in relation to a taxpayer if:
(a) the eligible entity makes a FIF attribution account payment to the taxpayer or to a FIF attribution account entity; and
(b) immediately before the eligible entity makes the FIF attribution account payment, there is a post FIF abolition surplus for the eligible entity in relation to the taxpayer.
Amount of post FIF abolition debit
23AK(3)
The amount of the post FIF abolition debit is the lesser of:
(a) the post FIF abolition surplus; and
(b) whichever of the following is applicable:
When the post FIF abolition debit arises
23AK(4)
The post FIF abolition debit arises when the FIF attribution account payment is made.
When a post FIF abolition surplus exists
23AK(5)
A post FIF abolition surplus for a FIF attribution account entity in relation to a taxpayer exists at a particular time (the relevant time ) if the sum of:
(a) the entity ' s total FIF attribution credits (within the meaning of former section 605 ) that arose before the commencement of Schedule 1 to the Tax Laws Amendment (Foreign Source Income Deferral) Act (No. 1) 2010 ; and
(b) the entity ' s total post FIF abolition credits arising before the relevant time in relation to the taxpayer;
(c) the entity ' s total FIF attribution debits (within the meaning of former section 606 ) that arose before that commencement in relation to the taxpayer; and
(d) the entity ' s total post FIF abolition debits arising before the relevant time in relation to the taxpayer.
Post FIF abolition credit arises
23AK(6)
A post FIF abolition credit arises for a FIF attribution account entity (the eligible entity ) in relation to a taxpayer if a FIF attribution account payment that requires a post FIF abolition debit for another entity in relation to the taxpayer is made to the eligible entity.
Amount of post FIF abolition credit
23AK(7)
The amount of the post FIF abolition credit is equal to the amount of the post FIF abolition debit for the other entity.
When the post FIF abolition credit arises
23AK(8)
The post FIF abolition credit arises when the FIF attribution account payment referred to in subsection (6) is made.
Effect of this section applying
23AK(9)
If this section applies, the following provisions have effect:
(a) if the payment is of a kind referred to in former paragraph 603(1)(a) or (b) - the payment is not assessable income, and is not exempt income, to the extent of the debit;
(b) if the payment is of a kind referred to in former paragraph 603(1)(c) and, apart from this section, an amount would be included in the taxpayer ' s assessable income under section 92 in respect of an individual interest in the net income of the partnership of the year of income referred to in that paragraph - that amount is not assessable income, and is not exempt income, to the extent of the debit;
(c) if the payment is of a kind referred to in former paragraph 603(1)(d) and, apart from this section, an amount would be included in the taxpayer ' s assessable income under section 97 , 98A or 100 in respect of a share of the net income of the trust of the year of income referred to in that paragraph - that amount is not assessable income, and is not exempt income, to the extent of the debit;
(d) if the payment is of a kind referred to in former paragraph 603(1)(d) and, apart from this section, an amount would be assessable to the trustee of the trust referred to in that paragraph under section 98 in respect of a share of the net income of the trust of the year of income referred to in that paragraph - that amount is not so assessable to the extent of the debit;
(e) if the payment is of a kind referred to in former paragraph 603(1)(e) - the payment is not, to the extent of the debit, assessable to the taxpayer as mentioned in that paragraph;
(f) if the payment is of a kind referred to in former paragraph 603(1)(f) and, apart from this section, an amount would be included in the taxpayer ' s assessable income, of the year of income referred to in that paragraph, under section 99B in respect of the trust property referred to in that paragraph - that amount is not assessable income, and is not exempt income, to the extent of the debit;
(g) if the payment is of a kind referred to in former paragraph 603(1)(g) - the payment is not assessable income, and is not exempt income, to the extent of the debit;
(h) if the payment is of a kind referred to in former paragraph 603(1)(h) - the payment is not assessable income, and is not exempt income, to the extent of the debit.
23AK(10) [Other deduction provisions]
(Repealed by No 126 of 1974)
SECTION 23B
REDUCTION OF DISPOSAL CONSIDERATION IF FIF ATTRIBUTED INCOME NOT DISTRIBUTED
23B(1)
If:
(a) it is necessary, for the purposes of applying a provision of this Act in the assessment of a taxpayer for a year of income, to take into account:
(b) immediately before the disposal or CGT event takes place there is a post FIF abolition surplus for the FIF attribution account entity in relation to the taxpayer;
(c) the consideration or capital proceeds that, apart from this section, would be taken into account under the provision referred to in paragraph (a) in respect of the disposal or CGT event is taken to be reduced by so much of the amount of the post FIF abolition surplus as does not exceed the consideration or capital proceeds; and
(d) a post FIF abolition debit arises at the time of the disposal or the CGT event under this paragraph, in relation to the taxpayer, for the FIF attribution account entity; and
(e) the amount of the post FIF abolition debit is equal to so much of the surplus as is taken into account under paragraph (c).
23B(2)
For the purposes of paragraph (1)(c), if the disposal of the asset or the CGT event causes the taxpayer ' s FIF attribution account percentage for the FIF attribution account entity to be reduced by a proportion, then only that proportion of the post FIF abolition surplus for the entity is to be taken into account under that paragraph.
23B(3)
In this section:
FORMER SECTION 23E
23E
REDEMPTION OF SPECIAL BONDS REDEEMABLE AT A PREMIUM
(Repealed by No 47 of 2016)
FORMER SECTION 23F
23F
EXEMPTION OF INCOME OF CERTAIN SUPERANNUATION FUNDS ESTABLISHED FOR BENEFIT OF EMPLOYEES
(Repealed by No 138 of 1987)
FORMER SECTION 23FA
23FA
EXEMPTION OF INCOME OF CERTAIN APPROVED DEPOSIT FUNDS
(Repealed by No 138 of 1987)
FORMER SECTION 23FB
23FB
EXEMPTION OF INCOME OF CERTAIN SUPERANNUATION FUNDS
(Repealed by No 138 of 1987)
FORMER SECTION 23FC
23FC
EXEMPTION OF INCOME OF CERTAIN SUPERANNUATION FUNDS
(Repealed by No 97 of 1989)
FORMER SECTION 23FD
23FD
EXEMPTION OF INCOME OF CERTAIN APPROVED DEPOSIT FUNDS
(Repealed by No 97 of 1989)
SECTION 23G
EXEMPTION OF INTEREST RECEIVED BY CREDIT UNIONS
23G(1)
[Interpretation]
(a) the company is an ADI (authorised deposit-taking institution) for the purposes of the Banking Act 1959 ;
(b) the company has a consent under section 66 of that Act that allows it to assume or use the expression " credit union " or " credit society " , or another expression (whether or not in English) that is of like import to either of those expressions.
23G(2)
[Exempt interest]
(a) the credit union is a recognised medium credit union in relation to the year of income; or
(b) the credit union is a recognised large credit union in relation to the year of income.
23G(3)
[Approved credit union]
(a) during that year of income the credit union did not enter into any transactions of a kind not ordinarily entered into by a company of a kind referred to in paragraph (a) of the definition of credit union in subsection (1); and
(b) by comparison with the profits of other credit unions for that year of income and the amounts transferred by those credit unions out of those profits to reserves, and after making due allowance for differences in the numbers of transactions entered into by other credit unions and the first-mentioned credit union and the amounts to which the respective transactions related, the profit of the first-mentioned credit union for that year of income was not excessive and the first-mentioned credit union did not transfer an unreasonable part of that profit to a reserve. 23G(4) [Factors to be taken into account for para (3)(a)]
(a) the circumstances in which, and the terms and conditions upon which, during that year of income:
(b) the nature of the connexion (if any) between:
(c) any other relevant matters.
FORMER SECTION 23GA
23GA
INTEREST ON JUDGMENT DEBT RELATING TO PERSONAL INJURY
(Repealed by No 143 of 2007 )
FORMER SECTION 23J
23J
SALE OF SECURITIES PURCHASED AT A DISCOUNT
(Repealed by No 47 of 2016)
SECTION 23K
SUBSTITUTION OF CERTAIN SECURITIES
23K(1)
[Definitions]
(a) the New South Wales Treasury Corporation;
(b) the Victorian Public Authorities Finance Agency;
(c) the Victoria Transport Borrowing Agency;
(d) the Queensland Government Development Authority;
(e) the Treasurer of the State of Western Australia;
(f) the South Australian Government Financing Authority;
(g) the Local Government Finance Authority of South Australia;
(h) any other public authority of a State, being a public authority that is empowered to issue securities in the manner referred to in paragraph (2)(a).
(a) the substituted security was issued by the person to the taxpayer in exchange for the surrender or transfer of, or otherwise in replacement or substitution for, the original security; and
(b) the terms and conditions provided for by the substituted security were identical in all material respects to those provided for by the original security. 23K(3) [No issue of substituted security]
(a) but for this subsection, a person would be taken to have issued a security (in this subsection referred to as the substituted security ) to a taxpayer in substitution for another security (in this subsection referred to as the original security ) held by the taxpayer; and
(b) either or both of the following conditions is or are satisfied:
(a) under terms and conditions provided for by a security, the day on which interest is payable in respect of a period is different from that on which interest is payable in respect of the same period under another security; and
(b) the terms and conditions provided for by the securities are otherwise identical in all material respects;
(c) if the days on which the interest is payable are separated by an interval not exceeding 31 days - the terms and conditions provided for by the 2 securities shall, for the purposes of paragraph (2)(b), be taken to be identical in all material respects; and
(d) in any other case - the terms and conditions provided for by the 2 securities shall, for the purposes of paragraph (2)(b), be taken not to be identical in all material respects. 23K(5) [Security issued on or after 8 August 1984]
(a) the substituted security shall, for the purposes of this Act, be deemed to be a continuation of the original security on the terms and conditions provided for by the substituted security; and
(b) no amount shall, in respect of the issue of the substituted security or the surrender, transfer, replacement or substitution of the original security, be included in, allowable as a deduction from or taken into account in ascertaining any amount included in or allowable as a deduction from, the assessable income of any taxpayer in respect of any year of income.
SECTION 23L
CERTAIN BENEFITS IN THE NATURE OF INCOME NOT ASSESSABLE
23L(1)
Income derived by a taxpayer by way of the provision of a fringe benefit is not assessable income and is not exempt income of the taxpayer.
23L(1A)
Income derived by a taxpayer by way of the provision of a benefit (other than a benefit to which section 15-70 of the Income Tax Assessment Act 1997 applies) that, but for paragraph (g) of the definition of fringe benefit in subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986 , would be a fringe benefit is exempt income of the taxpayer.
23L(2)
Where:
(a) in a year of income, a taxpayer derives income consisting of one or more non-cash business benefits (within the meaning of section 21A ); and
(b) the total amount that is applicable under section 21A in respect of those benefits does not exceed $ 300;
FORMER SECTION 23M 23M REIMBURSEMENT ETC. IN RESPECT OF FRINGE BENEFITS TAX NOT ASSESSABLE INCOME
(Repealed by No 223 of 1992)
FORMER SECTION 24
24
LIMITATION OF EXEMPTION
(Repealed by No 121 of 1997) FORMER SECTION 24AA 24AA INCOME OF VISITING EXPERTS
(Repealed by No 107 of 1989)
FORMER SECTION 24A
24A
COMMONWEALTH TRADING BANK OF AUSTRALIA
(Repealed by No 76 of 1984)
Division 1AB
-
Certain State/Territory bodies exempt from income tax
Subdivision A
-
Exemption for certain State/Territory bodies
SECTION 24AK
24AK
KEY PRINCIPLE
SECTION 24AL
24AL
DIAGRAM
-
GUIDE TO WORK OUT IF BODY IS EXEMPT UNDER THIS DIVISION
The following diagram is a guide to help work out whether a body is exempt from income tax under this Division:
SECTION 24AM
24AM
CERTAIN STBs EXEMPT FROM TAX
The income of a State/Territory body (an STB ) is exempt from income tax unless section 24AN applies to the STB.
SECTION 24AN
24AN
CERTAIN STBs NOT EXEMPT FROM TAX UNDER THIS DIVISION
Income derived by an STB is not exempt from income tax under this Division if, at the time that it is derived, the STB is an excluded STB.1. For the definition of
excluded STB
see section
24AT
.
2. Even though an excluded STB is not exempt from income tax under this Division, it may still be exempt under another provision of this Act.
SECTION 24AO
24AO
FIRST WAY INWHICH A BODY CAN BE AN STB
A body is an STB if:
(a) it is a company limited solely by shares; and
(b) all the shares in it are beneficially owned by one or more government entities.
SECTION 24AP
24AP
SECOND WAY IN WHICH A BODY CAN BE AN STB
A body is an STB if:
(a) it is established by State or Territory legislation; and
(b) it is not a company limited solely by shares; and
(c) the legislation provides that it must distribute all of its profits (if any) only to one or more government entities; and
(d) if the legislation makes provision as to the way its net assets may be distributed if it is dissolved or wound up - the provision is that, if it is dissolved, all of its net assets (if any) must be distributed only to one or more government entities.
SECTION 24AQ
24AQ
THIRD WAY IN WHICH A BODY CAN BE AN STB
A body is an STB if:
(a) it is established by State or Territory legislation; and
(b) it is not a company limited solely by shares; and
(c) the legislation gives the power to appoint or dismiss its governing person or body only to one or more government entities.
SECTION 24AR
24AR
FOURTH WAY IN WHICH A BODY CAN BE AN STB
A body is an STB if:
(a) it is established by State or Territory legislation; and
(b) it is not a company limited solely by shares; and
(c) the legislation gives the power to direct its governing person or body as to the conduct of its affairs only to one or more government entities.
SECTION 24AS
24AS
FIFTH WAY IN WHICH A BODY CAN BE AN STB
A body is an STB if:
(a) it is not a company limited solely by shares; and
(b) it is not established by State or Territory legislation; and
(c) all the legal and beneficial interests (including, but not limited to, interests as to income, profits, dividends, capital and distributions of capital) in it are held only by one or more government entities; and
(d) all the rights or powers (if any) to vote, appoint or dismiss its governing person or body and direct its governing person or body as to the conduct of its affairs are held only by one or more government entities.
SECTION 24AT
24AT
WHAT DO
EXCLUDED STB
,
GOVERNMENT ENTITY
AND
TERRITORY
MEAN
?
In this Division:
(a) at a particular time, is prescribed as an excluded STB in relation to that time; or
(b) is a municipal corporation or other local governing body (within the meaning of section 50-25 of the Income Tax Assessment Act 1997 ); or
(c) is a public educational institution to which any of paragraphs 50-55(1)(a) to (c) of the Income Tax Assessment Act 1997 applies; or
(d) is a public hospital to which any of paragraphs 50-55(1)(a) to (c) of the Income Tax Assessment Act 1997 applies; or
(e) is a superannuation fund.
(a) a State; or
(b) a Territory; or
(ba) a municipal corporation or other local governing body (within the meaning of section 50-25 of the Income Tax Assessment Act 1997 ); or
(c) another STB that is not an excluded STB.
SECTION 24AU
24AU
GOVERNOR, MINISTER AND DEPARTMENT HEAD TAKEN TO BE A GOVERNMENT ENTITY
For the purposes of sections 24AQ , 24AR and 24AS , if the power to appoint, dismiss or direct the governing body is given to, or is held by:
(a) a Governor of a State; or
(b) a Minister of the Crown of a State; or
(c) a Minister of a Territory; or
(d) the head of a Department of a State or a Territory; or
(e) any combination of paragraphs (a) to (d);
SECTION 24AV
REGULATIONS PRESCRIBING EXCLUDED STBs
States and Territories to consent to STBs being excluded STBs
24AV(1)
The regulations may prescribe that an STB is an excluded STB only if all States and Territories consent to the STB being so prescribed.
Retrospective application of regulations prescribing excluded STBs
24AV(2)
Subsection 12(2) (retrospective application of legislative instruments) of the Legislation Act 2003 does not apply to a regulation prescribing an STB as an excluded STB.
Subdivision B - Body ceasing to be an STB SECTION 24AW 24AW BODY CEASING TO BE AN STB
If a body ceases to be an STB in a year of income (the cessation year ), this Act applies to the body as if:
(a) the cessation were a change which requires a company to calculate its taxable income and tax loss under Subdivision 165-B of the Income Tax Assessment Act 1997; and
(b) the references in that Subdivision to ``company'' were references to ``body''; and
(c) if the body is not a company - there were no further requirement for the body to calculate its taxable income for the year of income under that Subdivision; and
(d) the amount of any notional loss of the body calculated under section 165-50 of that Act for the period before the cessation were nil; and
(e) the body's deductions for tax losses were attributed under section 165-55 of that Act to the period before the cessation and not to any other period; and
(f) those deductions were taken not to be full year deductions under section 165-55 of that Act; and
(g) the application of Parts 3-1and 3-3 of the Income Tax Assessment Act 1997 were modified, for the purposes of that Subdivision, in accordance with section 24AX of this Act.
SECTION 24AX
SPECIAL PROVISIONS RELATING TO CAPITAL GAINS AND LOSSES
24AX(1)
Period after cessation date
-
prior net capital losses to be disregarded.
24AX(2)
Special cases where net capital gain before cessation and net capital loss after cessation.
(a) a net capital gain accrued in the period before the cessation; and
(b) if the period from the cessation until the end of the year of income were treated as a year of income - a net capital loss would have accrued in that period. 24AX(3) Special case 1 - gain exceeds loss.
(a) the amount that is to be included in the assessable income of the body for the period that occurred before the cessation as a result of the net capital gain accruing to the body is taken to be the amount by which the net capital gain exceeds the net capital loss; and
(b) no net capital gain is taken to have accrued, and no net capital loss is taken to have been incurred, in any period in the cessation year after the cessation; and
(c) in determining if a net capital gain accrued to, or a net capital loss was incurred by, the body for the year following the cessation year, no net capital loss is taken to have been incurred by the body in the cessation year. 24AX(4) Special case 2 - loss equal to or exceeds gain.
(a) no amount is to be included in the assessable income of the body for any period in the cessation year as a result of a net capital gain accruing to the body; and
(b) in determining if a net capital gain accrued to, or a net capital loss was incurred by, the body for the year following the cessation year, the net capital loss that the body incurred in the cessation year is taken to be the amount (if any) by which the net capital loss exceeds the net capital gain.
SECTION 24AY
LOSSES FROM STB YEARS NOT CARRIED FORWARD
24AY(1)
[Prior tax losses not deductible]
24AY(2)
[Application to income years]
SECTION 24AYA
EFFECT OF UNFUNDED SUPERANNUATION LIABILITIES
24AYA(1)
[Application to deductible superannuation contributions]
24AYA(2)
[Allowable deductions]
(a) accrued after 30 June 1995 and before the time when the body ceased to be an STB; and
(b) were, according to actuarial principles, unfunded at that time.
24AYA(4)
[Form of certificate]
(a) before the date of lodgment of its return of income of the year of income in which the body ceased to be an STB; or
(b) within such further time as the Commissioner allows. 24AYA(5) [Deductions less than or equal to unfunded liability limit]
(a) if the year of income is the one in which the body ceases to be an STB
-
the actuarial value of the liabilities set out in the actuary
'
s certificate; or
(b) in any other case
-
that actuarial value as reduced by the total amount of deductions to which this section applies that, because of subsection (5), have not been allowable to the body for all previous years of income.
24AYA(7)
[Expressions used as in s 290-60 of ITAA 1997]
SECTION 24AZ
24AZ
MEANING OF
PERIOD
AND
PRESCRIBED EXCLUDED STB
In this Subdivision:
Repealed Division 1A
-
Provisions relating to certain External Territories
24B
REPEALED SECTION 24B INTERPRETATION
(Repealed by No 53 of 2015)
24C
REPEALED SECTION 24C TERRITORY RESIDENT
(Repealed by No 53 of 2015)
24D
REPEALED SECTION 24D TERRITORY COMPANY
(Repealed by No 53 of 2015)
24E
REPEALED SECTION 24E TERRITORY TRUSTS
(Repealed by No 53 of 2015)
24F
REPEALED SECTION 24F EXEMPTION FROM TAX OF CERTAIN INCOME DERIVED FROM SOURCES OUTSIDE AUSTRALIA
(Repealed by No 53 of 2015)
24G
REPEALED SECTION 24G EXEMPTION FROM TAX OF CERTAIN INCOME DERIVED FROM SOURCES IN A PRESCRIBED TERRITORY
(Repealed by No 53 of 2015)
24H
REPEALED SECTION 24H WHEN INCOME TO BE TAKEN TO BE APPLIED FOR BENEFIT OF A PERSON
(Repealed by No 53 of 2015)
24J
REPEALED SECTION 24J SOURCE OF DIVIDENDS
(Repealed by No 53 of 2015)
24K
REPEALED SECTION 24K SOURCE OF INCOME FROM EMPLOYMENT
(Repealed by No 53 of 2015)
24L
REPEALED SECTION 24L SOURCE OF INTEREST OR ROYALTY
(Repealed by No 53 of 2015)
24M
REPEALED SECTION 24M CERTAIN INCOME DEEMED NOT TO BE DERIVED FROM SOURCES IN A PRESCRIBED TERRITORY OR OUTSIDE AUSTRALIA
(Repealed by No 53 of 2015)
24P
REPEALED SECTION 24P TRANSITIONAL CAPITAL GAINS TAX PROVISIONS FOR CERTAIN COCOS (KEELING) ISLANDS ASSETS
(Repealed by No 53 of 2015)
Division 2
-
Income
Subdivision A
-
Assessable income generally
SECTION 25A
ASSESSABLE INCOME TO INCLUDE CERTAIN PROFITS
25A(1A)
This section does not apply in respect of the sale of property acquired on or after 20 September 1985.
25A(1B)
This section does not apply to a profit arising in the 1997-98 year of income or a later year of income from the carrying on or carrying out of a profit-making undertaking or scheme, even if the undertaking or scheme was entered into, or began to be carried on or carried out, before the 1997-98 year of income.
25A(1)
The assessable income of a taxpayer shall include profit arising from the sale by the taxpayer of any property acquired by the taxpayer for the purpose of profit-making by sale, or from the carrying on or carrying out of any profit-making undertaking or scheme.
25A(2)
Subject to subsection (3), where:
(a) after 23 August 1983, a taxpayer sold or sells property (in this subsection referred to as the relevant property ) being:
(b) at the time of sale of the relevant property:
25A(3)
Subsection (2) does not apply in relation to the sale by a taxpayer of property where the Commissioner, having regard to:
(a) the extent to which the assets of the company, partnership or trust estate, as the case may be, referred to in paragraph (2)(a), immediately before the time of sale, consisted of the property referred to in subparagraph (2)(b)(i) or the interest referred to in subparagraph (2)(b)(ii), as the case may be;
(b) the nature and extent, immediately before the time of sale, of the taxpayer's control of the company, partnership or trust estate, as the case may be, referred to in paragraph (2)(a) including, in the case of a company, the nature and extent of the taxpayer's shareholding in the company;
(c) the circumstances surrounding any other sale, whether or not by the taxpayer, of shares in the company, or an interest in the partnership or trust estate, as the case may be, referred to in paragraph (2)(a), being a sale at a time when the property of that company, partnership or trust estate included the property referred to in subparagraph (2)(b)(i) or the interest referred to in subparagraph (2)(b)(ii), as the case may be; and
(d) such other matters as the Commissioner considers relevant;
25A(4)
Where:
(a) a taxpayer acquired or acquires property, being shares in a company, for the purpose of profit-making by sale; and
(b) after 23 August 1983:
25A(5)
Where, after 23 August 1983, property was or is acquired by a taxpayer as a result of a transfer in the prescribed manner by a person who acquired the property for the purpose of profit-making by sale, the taxpayer shall, for the purposes of the application of this Act (including any other application of this subsection and any application of any other provision of this section), be deemed to have acquired the property for the purpose of profit-making by sale.
25A(6)
Where:
(a) after 23 August 1983, a taxpayer sold or sells property; and
(b) the property sold was:
25A(7)
For the purposes of subsection (2), where a company, partnership or trustee of a trust estate holds or held property (in this subsection referred to as the underlying property ) consisting of:
(a) an interest in property, being property acquired by the company, partnership or trustee for the purpose of profit-making by sale; or
(b) property, or an interest in property, in which was merged an interest in property, being an interest acquired by the company, partnership or trustee for the purpose of profit-making by sale;
25A(8)
Where:
(a) property (in this subsection referred to as the acquired property ) was or is acquired for the purpose of profit-making by sale; and
(b) after 23 August 1983, property (in this subsection referred to as the transferred property ) being:
25A(9)
Where a taxpayer sold or sells property that, by virtue of any of the preceding provisions of this section, is deemed to have been acquired by the taxpayer for the purpose of profit-making by sale, so much (if any) of the proceeds of sale as, in the opinion of the Commissioner, is appropriate shall, for the purposes of this Act, be deemed to be profit arising from the sale by the taxpayer of the property.
25A(10)
For the purposes of the application of subsection (9) in relation to the sale of property (in this subsection referred to as the relevant property ) by a taxpayer:
(a) if:
(b) if the relevant property is deemed by subsection (5) to have been acquired by the taxpayer for the purpose of profit-making by sale and the relevant property was actually acquired for the purpose of profit-making by sale by the person (in this paragraph referred to as the transferor ) who transferred the relevant property to the taxpayer in the prescribed manner - the Commissioner shall have regard to the extent to which the amount (if any) that would have been included in the assessable income of the transferor if the transferor had sold the relevant property at the time when it was sold by the taxpayer for an amount of consideration equal to the amount of the consideration received or receivable by the taxpayer in respect of the sale of the relevant property by the taxpayer exceeds the sum of:
(c) if the relevant property is deemed to have been acquired by the taxpayer by virtue of the application of this section (either directly or indirectly) in relation to property (in this paragraph referred to as the related property ) that was actually acquired by the taxpayer or by another person or other persons for the purpose of profit-making by sale - the Commissioner shall have regard to the extent to which the relevant property consists of, or is attributable to, the related property;
(d) if the relevant property consists of rights to acquire shares in a company, being rights that the taxpayer is deemed by subsection (4) to have acquired for the purpose of profit-making by sale - the relevant property shall be deemed to have been acquired by the taxpayer at no cost; and
(e) if the relevant property consists of bonus shares that the taxpayer is deemed by subsection (4) to have acquired for the purpose of profit-making by sale - the cost to the taxpayer of the relevant property shall be ascertained in accordance with section 6BA.
25A(11)
For the purposes of this section, property shall be taken to have been transferred to a person (in this subsection referred to as the transferee ) in the prescribed manner if:
(a) the following conditions are satisfied:
(b) the property:
25A(12)
In this section:
(a) a reference to excepted property of a company, partnership or trust estate is a reference to:
(b) a reference to a private company is a reference to a company other than a company the shares in which are listed for quotation in the official list of a stock exchange in Australia or elsewhere;
(c) a reference to a private trust estate is a reference to a trust estate other than a unit trust the units in which are listed for quotation in the official list of a stock exchange in Australia or elsewhere or are ordinarily available for subscription or purchase by the public; and
(d) a reference to property generally or to a particular kind of property includes a reference to an estate or interest in property or in that kind of property, as the case may be.
FORMER SECTION 26AAC
26AAC
SHARES AND RIGHTS ACQUIRED UNDER SCHEMES FOR THE ACQUISITION OF SHARES BY EMPLOYEES
(Repealed by No 133 of 2009)
FORMER SECTION 26AAD
26AAD
THE EFFECT OF 100% TAKEOVERS AND RESTRUCTURES ON THE OPERATION OF SECTION 26AAC
(Repealed by No 133 of 2009)
FORMER SECTION 26AA
26AA
ASSESSABLE INCOME
-
ANNUITIES
(Repealed by No 47 of 1984)
SECTION 26AB
ASSESSABLE INCOME
-
PREMIUM FOR LEASE
26AB(1A)
For the purposes of assessments for the 1997-98 year of income and later years of income, this section applies only in relation to assignments of leases granted before 20 September 1985.•
granting leases; and
•
assigning leases granted on or after 20 September 1985.
26AB(1)
In this section, premium means a consideration payable in one amount, or each amount of a consideration payable in more than one amount, where the consideration is:
(a) in the nature of a premium, fine or foregift payable for or in connexion with the grant or assignment of a lease; or
(b) for or in connexion with an assent to the grant or assignment of a lease;
26AB(2)
Where, in the year of income, a taxpayer receives a premium that relates to the grant or assignment of a lease of property that was not, at the date on which the agreement to grant or assign the lease was made, or the assent to the grant or assignmentof the lease was given, as the case may be, intended by the grantee or assignee to be used by the grantee or the assignee or some other person wholly or partly for the purpose of gaining or producing assessable income, the assessable income of the taxpayer shall include the premium.
26AB(3)
Where, in the year of income, a taxpayer receives a premium that relates to the grant or assignment of a lease of property that was, at the date on which the agreement to grant or assign the lease was made, or the assent to the grant or assignment of the lease was given, as the case may be, intended by the grantee or assignee to be used by the grantee or assignee or some other person partly for the purpose of gaining or producing assessable income and partly for other purposes, the assessable income of the taxpayer shall include such part of the premium as the Commissioner considers may reasonably be attributed to the intended use of the property for purposes other than gaining or producing assessable income.
26AB(4)
Where, in a case referred to in subsection (2) or (3), the taxpayer satisfies the Commissioner that, at the date on which the agreement to grant or assign the lease was made, or the assent to the grant or assignment of the lease was given, as the case may be, the taxpayer believed on reasonable grounds that the grantee or assignee intended a particular use of the property by the grantee or assignee or some other person for the purpose of gaining or producing assessable income, the Commissioner may apply this section on the basis that that intention existed.
26AB(5)
This section does not apply in relation to:
(a) (Repealed by No 101 of 2006 )
(b) a premium received in connexion with the assignment of a lease of land granted under a law of a State or Territory relating to mining;
(c) a premium received in connexion with the grant or assignment of a lease that was, for the purposes of former section 88B , a grant or assignment for mining purposes; or
(d) a premium received in connexion with the assignment from the Commonwealth or a State of a lease:
FORMER SECTION 26AC 26AC AMOUNTS RECEIVED ON RETIREMENT OR TERMINATION OF EMPLOYMENT IN LIEU OF ANNUAL LEAVE
(Repealed by No 15 of 2007)
FORMER SECTION 26AD
26AD
AMOUNTS RECEIVED ON RETIREMENT OR TERMINATION OF EMPLOYMENT IN LIEU OF LONG SERVICE LEAVE
(Repealed by No 15 of 2007)
FORMER SECTION 26AE
26AE
ASSESSABLE INCOME TO INCLUDE 5% OF CERTAIN SUPERANNUATION BENEFITS
(Repealed by No 47 of 1984)
SECTION 26AF
ASSESSABLE INCOME TO INCLUDE VALUE OF BENEFITS RECEIVED FROM OR IN CONNECTION WITH FORMER PARAGRAPH 23(ja) FUNDS OR FORMER SECTION 23FB FUNDS
26AF(1)
[Unauthorised payment of benefits]
(a) in a year of income and after 19 August 1980, a taxpayer receives or obtains a benefit of any kind out of, or attributable to assets of, a paragraph 23(ja) fund or a section 23FB fund;
(aa) if the fund is an exempt fund within the meaning of section 26AFB (as in force just before the commencement of Schedule 1 to the Superannuation Legislation Amendment (Simplification) Act 2007 ) - the benefit was received or obtained by the taxpayer before the proclaimed superannuation standards day;
(b) the benefit is received or obtained otherwise than in accordance with approved terms and conditions applicable to the fund at the time when the benefit is received or obtained; and
(c) the Commissioner is satisfied that the taxpayer received or obtained the benefit:
26AF(2)
[Transfer of right to receive benefit]
26AF(3)
[Definitions]
(a) in the case of a paragraph 23(ja) fund - terms and conditions approved by the Commissioner under subparagraph 23(ja)(ii) as in force at any time before the commencement of section 1 of the Taxation Laws Amendment Act (No. 4) 1987 ; or
(b) in the case of a section 23FB fund - terms and conditions approved by the Commissioner under subsection 23FB(2) as in force at any time before the commencement of section 1 of the Taxation Laws Amendment Act (No. 4) 1987 .
(a) a fund the income of which of any year of income is or has been exempt from tax by virtue of section 23FB as in force at any time before the commencement of section 1 of the Taxation Laws Amendment Act (No. 4) 1987 or would, but for the provisions of Division 9C, be, or have been, exempt from tax by virtue of that section; and
(b) a fund that was a section 79 fund for the purposes of this section as in force at any time before the commencement of the Income Tax Assessment Amendment Act (No. 3) 1984.
26AF(4)
[Continued application of former s 23(ja) and 23FB]
(a) the year of income ended before the proclaimed superannuation standards day and the income of the fund of the year of income would, but for the amendments made by the Taxation Laws Amendment Act (No. 4) 1987 , have been exempt from tax under paragraph 23(ja) or section 23FB of this Act, as in force at any time before the commencement of section 1 of that Act;
(b) the proclaimed superannuation standards day occurred during the year of income and, if the year of income had ended on the proclaimed superannuation standards day, the income of the fund of the year of income would have been exempt from tax under paragraph 23(ja) or section 23FB of this Act, as in force at any time before the commencement of section 1 of that Act;
SECTION 26AFA
ASSESSABLE INCOME TO INCLUDE VALUE OF CERTAIN BENEFITS RECEIVED FROM OR IN CONNECTION WITH FORMER SECTION 23F FUNDS
26AFA(1)
[Assessable income to include value of benefit]
(a) in a year of income and on or after 7 December 1983, a taxpayer receives or obtains a benefit of any kind out of, or attributable to assets of, a section 23F fund;
(aa) if the fund is an exempt fund within the meaning of section 26AFB (as in force just before the commencement of Schedule 1 to the Superannuation Legislation Amendment (Simplification) Act 2007 ) - the benefit was received or obtained by the taxpayer before the proclaimed superannuation standards day;
(b) the benefit:
(c) the Commissioner is satisfied that the taxpayer received or obtained the benefit:
26AFA(2)
[Excessive benefits]
(a) subsection (1) would, but for this subsection, apply to the amount or value of an excessive benefit received or obtained by a taxpayer out of, or attributable to assets of, a section 23F fund; and
(b) the Commissioner, having regard to:
26AFA(4)
[Definitions]
26AFA(5)
[Continued application of former s 23F]
(a) the year of income ended before the proclaimed superannuation standards day and section 23F of this Act, as in force immediately before the commencement of section 1 of the Taxation Laws Amendment Act (No. 4) 1987 , would, but for the amendments made by that Act, have applied in relation to the fund in relation to the year of income;
(b) the proclaimed superannuation standards day occurred during the year of income and, if the year of income had ended on the proclaimed superannuation standards day, section 23F of this Act, as in force immediately before the commencement of section 1 of that Act, would, but for the amendments made by that Act, have applied in relation to the fund in relation to the year of income;
FORMER SECTION 26AFB
26AFB
ASSESSABLE INCOME TO INCLUDE CERTAIN BENEFITS
(Repealed by No 15 of 2007)
SECTION 26AG
CERTAIN FILM PROCEEDS INCLUDED IN ASSESSABLE INCOME
26AG(1)
Where:
(a) under a contract entered into on or after 1 October 1980, a taxpayer has expended, or is deemed by former section 124ZAP to have expended, capital moneys in producing, or by way of contribution to the cost of producing, a film;
(b) by reason of the moneys having been expended, the taxpayer became the owner of an interest in the copyright in the film; and
(c) a deduction has been allowed, or is allowable, to the taxpayer under former section 124ZAF or 124ZAFA in respect of some or all of those moneys;
(d) any amount derived by the taxpayer in the year of income from sources in or out of Australia as consideration for the use of, or the right to use, the copyright or the film, to the extent to which the amount derived is attributable to the interest referred to in paragraph (b); and
(e) any amount (other than an amount to which paragraph (d) applies) receivable by the taxpayer from sources in or out of Australia as consideration in respect of the disposal, in the year of income, of the whole or a part of the interest referred to in paragraph (b).
26AG(2)
The assessable income of a taxpayer of a year of income shall include amounts to which this section applies in relation to the taxpayer in relation to the year of income.
26AG(3)
Where:
(a) for any reason, including:
(b) the person, or one or more of the persons, who owned the copyright before the change has or have an interest in the copyright after the change; and
(c) any person (in this subsection referred to as the relevant person ) who had an interest in the copyright before the change:
(d) if the relevant person did not have an interest in the copyright after the change, the relevant person shall be deemed, for the purposes of subsection (1), to have disposed of the whole of his or her interest in the copyright at the time when the change occurred for an amount of consideration equal to:
(e) if the relevant person had a lesser interest in the copyright after the change, the relevant person shall be deemed, for the purposes of subsection (1), to have disposed of a part of his or her interest in the copyright at the time when the change occurred for an amount of consideration equal to:
26AG(4)
For the purposes of this section, where, in pursuance of a judgment of a court or otherwise, an amount is paid to a taxpayer in respect of an infringement, or an alleged infringement, of a copyright in a film, the taxpayer shall be deemed to have disposed of a part of his or her interest in the copyright, at the time of payment, in consideration of the payment of that amount.
26AG(5)
Subject to subsections (3) and (6), a reference in this section to the consideration receivable by a taxpayer in respect of the disposal of the whole or a part of the taxpayer ' s interest in a copyright (which whole or part is in this subsection referred to as the unit ) is a reference to:
(a) where the unit is disposed of for a specified price - that price less:
(b) where the unit is disposed of together with other property and no separate price is allocated to the unit - such amount as the Commissioner determines.
26AG(6)
Where:
(a) a taxpayer disposes of the whole or a part of the taxpayer ' s interest in a copyright (which whole or part is in this subsection referred to as the unit ) to another person;
(b) the Commissioner is satisfied, having regard to any connection between the taxpayer and that other person or to any other relevant circumstances, that the taxpayer and that other person were not dealing with each other at arm ' s length in relation to the disposal; and
(c) there was no amount receivable by the taxpayer in respect of the disposal or the amount receivable by the taxpayer in respect of the disposal was less than the value of the unit at the time of the disposal;
26AG(7)
(Omitted by No 51 of 1986)
26AG(8)
If:
(a) a non-resident taxpayer derives, from sources outside Australia, income in respect of a film; and
(b) but for this subsection, subsection (2) would include the amount in the taxpayer ' s assessable income of a year of income;
(c) is attributable to the exhibition of the film in the country from sources in which the income was derived; and
(d) is not exempt from income tax in the country from sources in which the income was derived.
26AG(9)
Where:
(a) an amount (in this subsection referred to as the relevant amount ) is derived by a partnership in a year of income; and
(b) if the relevant amount were derived by a partner in the partnership, the relevant amount, or a part of the relevant amount, would, by virtue of paragraph (1)(d), be an amount to which this section applies in relation to that partner in relation to the year of income,
(c) the relevant amount shall not be taken into account, for the purposes of any provision of this Act, in calculating the net income of the partnership, or the partnership loss, of any year of income in accordance with section 90 ; and
(d) for the purposes of the application of this Act in relation to a taxpayer being a partner in the partnership, an amount equal to:
26AG(10)
Where:
(a) a partnership has disposed of the whole or a part of the copyright or of an interest in the copyright in a film;
(b) an amount (in this subsection referred to as the relevant amount ) is receivable by the partnership as consideration in respect of that disposal; and
(c) if the relevant amount were receivable by a partner in the partnership, the relevant amount or a part of the relevant amount would, by virtue of paragraph (1)(e), be an amount to which this section applies in relation to that partner in relation to the year of income;
(d) the relevant amount shall not be taken into account, for the purposes of any provision of this Act, in calculating the net income of the partnership, or the partnership loss, of any year of income in accordance with section 90 ;
(e) for the purposes of the application of this Act in relation to a taxpayer being a partner in the partnership, an amount equal to:
(f) where the taxpayer had an interest in the copyright before the disposal and did not have an interest in the copyright after the disposal or had a lesser interest in the copyright after the disposal, the amount deemed to be receivable by the taxpayer shall be deemed to be receivable in respect of the disposal by the taxpayer of his or her interest in the copyright or of a part of his or her interest in the copyright, as the case may be;
(g) where the disposal is deemed to have occurred by virtue of subsection (4) or is a disposal to which paragraph (13)(a) applies, the amount deemed to be receivable by the taxpayer shall be deemed to be receivable, in respect of the disposal by the taxpayer of a part of his or her interest in the copyright.
26AG(11)
In determining for the purposes of subsection (10) whether a partnership has disposed of the whole or part of a copyright or of an interest in a copyright and in determining the amount of consideration receivable by the partnership in respect of the disposal, subsections (4), (5), (6) and (13) apply as if the partnership were a taxpayer.
26AG(12)
Where:
(a) a taxpayer has disposed of the whole or a part of the taxpayer ' s interest in a copyright;
(b) by reason of that disposal, an amount would, but for former subsection 124T(3) , be included in the assessable income of the taxpayer of a year of income under former section 124P or would be applied, under former section 124N or 124S , in reducing the residual value, for the purposes of former Division 10B , of a unit of industrial property owned by the taxpayer; and
(c) but for this subsection, this section would apply, in relation to a year of income, to the amount of the consideration receivable by the taxpayer in respect of the disposal;
26AG(13)
In this section:
(a) a reference to a disposal by a taxpayer of the whole or a part of the taxpayer ' s interest in a copyright in a film includes a reference to the assignment by the taxpayer of a right to receive amounts as consideration for the use of, or the right to use, the copyright or the film;
(b) a reference to an amount derived by a taxpayer as consideration for the use of, or the right to use, a copyright in a film includes a reference to an amount derived as consideration for the granting of a licence in respect of copyright in the film that is to come into existence at a future time or upon the happening of a future event;
(c) a reference to the value of property at a particular time shall, if there is insufficient evidence of the value of the property at that time, be read as a reference to such amount as, in the opinion of the Commissioner, is fair and reasonable;
(d) a reference to the expenditure of capital moneys is a reference to the expenditure of moneys that is expenditure of a capital nature;
(e) a reference to a taxpayer becoming the owner of an interest in copyright includes a reference to the taxpayer becoming the owner of the copyright; and
(f) a reference to copyright, in relation to a film, is a reference to the copyright subsisting in the film by virtue of Part IV of the Copyright Act 1968 and includes a reference to copyright subsisting in, or in relation to, the film or in any work comprised in the film, under the law of a country other than Australia.
SECTION 26AH
BONUSES AND OTHER AMOUNTS RECEIVED IN RESPECT OF CERTAIN SHORT-TERM LIFE ASSURANCE POLICIES
26AH(1)
In this section, unless the contrary intention appears:
26AH(2)
Where a paid-up life assurance policy is issued to a taxpayer in lieu of an eligible policy:
(a) the paid-up policy shall, for the purposes of this section, be deemed to be a continuation of the eligible policy; and
(b) no amount shall be taken for the purposes of subsection (4) to have been re-invested or otherwise dealt with on behalf of the taxpayer or as he or she directs in connection with the issue of the paid-up policy to the taxpayer in lieu of the eligible policy.
26AH(3)
This section applies to any amount received after 27 August 1982 under an eligible policy.
26AH(4)
For the purposes of this section, but subject to subsection (5), a taxpayer shall be taken to have received an amount under or in relation to an eligible policy although the amount is not actually paid to the taxpayer but is re-invested or otherwise dealt with on his or her behalf or as he or she directs.
26AH(5)
Subsection (4) does not apply in relation to an amount in relation to an eligible policy if the amount is re-invested or otherwise dealt with on behalf of the taxpayer or as the taxpayer directs so as to increase the amount that might reasonably be expected to be received under the eligible policy on a surrender or maturity of the eligible policy.
26AH(6)
Where, during the eligible period in relation to an eligible policy, a taxpayer receives an amount (in this subsection referred to as the relevant amount ) under the policy as or by way of a bonus, being an amount that, but for this section, would not be included in the assessable income of the taxpayer of any year of income, the assessable income of the taxpayer of the year of income in which the relevant amount is received shall include:
(a) if the relevant amount is received during the first 8 years of the eligible period - an amount equal to the relevant amount;
(b) if the relevant amount is received during the ninth year of the eligible period - an amount equal to two-thirds of the relevant amount; or
(c) if the relevant amount is received during the tenth year of the eligible period - an amount equal to one-third of the relevant amount.
26AH(6A)
If, during the year of income, an amount referred to in subsection (6) is received during the eligible period in relation to an eligible policy held by the trustee of a non-complying superannuation fund:
(a) subsection (6) does not apply to the amount; and
(b) the amount is included in the assessable income of the fund of the year of income.
26AH(7)
Subsection (6) does not apply to any amount received by a taxpayer in a year of income under an eligible policy where:
(a) the amount is received in consequence of:
(aa) the eligible policy is an RSA; or
(b) the eligible policy is held by the trustee of:
(ba) the eligible policy is issued by a life assurance company and the company ' s liabilities under the policy are to be discharged out of:
(c) except where the policy was effected, purchased or taken on assignment with a view to it being forfeited, surrendered or otherwise terminated, or to it maturing, within 10 years - the amount was received by the taxpayer by reason of the forfeiture, surrender or other termination of the whole or a part of the policy in circumstances arising out of serious financial difficulties of the taxpayer.
26AH(8)
Where:
(a) subsection (6) would, but for this subsection, apply to an amount (in this subsection referred to as the relevant amount ) received by a taxpayer by reason of the forfeiture, surrender or other termination of the whole or a part of an eligible policy; and
(b) the Commissioner, having regard to:
26AH(9)
Where:
(a) otherwise than as or by way of a bonus, a taxpayer receives an amount (in this subsection referred to as the relevant amount ) under an eligible policy; and
(b) the Commissioner is of the opinion that the relevant amount or a part of the relevant amount represents the whole or part of:
26AH(10)
Where:
(a) subsection (9) applies by reason that the Commissioner has formed an opinion under paragraph (9)(b) that the whole or a part of an amount received by a taxpayer represents the whole or a part of a bonus; and
(b) the taxpayer subsequently receives an amount (in this subsection referred to as the actual bonus ), being the whole or a part of the bonus, or of the part of the bonus, as the case may be, referred to in paragraph (a) of this subsection;
(c) the operation of subsection (9) is not affected by the receipt of the actual bonus; and
(d) no part of the actual bonus shall be included in the assessable income of the taxpayer.
26AH(11)
Where, in relation to an eligible policy, a taxpayer receives an amount from the assurer, or from another person at the request of, or under an agreement with, the assurer, by way of an advance or loan in respect of which interest is not payable or in respect of which interest is payable at a rate less than the rate of interest that could reasonably be expected to be payable in respect of a loan of the same amount made on similar terms and conditions by the assurer or the other person, as the case may be, to a person with whom the assurer or that other person was dealing at arm ' s length, the amount shall, for the purposes of subsection (9), be deemed to be an amount to which paragraph (9)(a) applies.
26AH(12)
Where an eligible policy, or any right to receive any benefits that have accrued, or will or may reasonably be expected to accrue, under an eligible policy, is sold or assigned in whole or in part by a taxpayer during the eligible period in relation to the policy:
(a) the amount of any consideration received by the taxpayer in respect of that sale or assignment shall be deemed to be an amount to which paragraph (9)(a) applies; and
(b) subsections (9) and (10) apply in relation to that consideration as if " represents " were omitted from paragraphs (9)(b) and (10)(a) and " is attributable to " were substituted.
26AH(13)
Where the amount of the premiums payable under an eligible policy in relation to an assurance year (in this subsection referred to as the premium increase year ) exceeds by more than 25% the amount of the premiums payable under the policy in relation to the immediately preceding assurance year, the eligible period in relation to the policy shall, for the purposes of:
(a) the application of subsection (6) in relation to any amount received under the policy after the date of commencement of the premium increase year and before the first subsequent eligible reckoning date (if any) in relation to the eligible policy; and
(b) the application of subsection (12) in relation to any sale or assignment of the policy after the date ofcommencement of the premium increase year and before the first subsequent eligible reckoning date (if any) in relation to the eligible policy;
26AH(14)
This section has effect in relation to an eligible policy in relation to which the date of commencement of risk is on or before 7 December 1983 as if:
(a) " 10 years " were omitted from the definition of eligible period in subsection (1) and " 4 years " were substituted;
(b) " 8 years " , " ninth year " and " tenth year " were omitted from subsection (6) and " 2 years " , " third year " and " fourth year " respectively were substituted; and
(c) " 10 years " were omitted from paragraph (7)(c) and " 4 years " were substituted.
SECTION 26AJ
INVESTMENT-RELATED LOTTERY WINNINGS TO BE INCLUDED IN ASSESSABLE INCOME
26AJ(1)
If: (a) either:
26AJ(2)
If: (a) apart from this subsection, an amount (in this subsection called the gross assessable amount ) is included in a taxpayer ' s assessable income of a year of income under paragraph (1)(h) in respect of a loan benefit; and (b) assuming that:
where:
26AJ(3)
If: (a) apart from this subsection, an amount (in this subsection called the gross assessable amount ) is included in a taxpayer ' s assessable income of a year of income under paragraph (1)(j) in respect of the provision of property or services; and (b) assuming that:
26AJ(4)
For the purposes of the application of this section to a taxpayer, if a person (in thissubsection called the provider ) makes a loan to another person (who may be the taxpayer) (in this subsection called the recipient ): (a) the making of the loan is taken to constitute a loan benefit provided by the provider to the recipient; and (b) that loan benefit is taken to be provided in respect of each year of income of the taxpayer during the whole or part of which the recipient is under an obligation to repay the whole or any part of the loan.
26AJ(5)
For the purposes of this section, if a person (in this subsection called the provider ) makes a deferred interest loan (in this subsection called the principal loan ) to another person (in this subsection called the recipient ): (a) the provider is taken, at the end of:
26AJ(6)
For the purposes of this section, if no interest is payable in respect of a loan, a nil rate of interest is taken to be payable in respect of the loan.
26AJ(7)
For the purposes of this section, a person is taken to be under an obligation to pay or repay an amount even though the amount is not due for payment or repayment.
26AJ(8)
For the purposes of this section, if a person does anything that results in the creation of property in another person, the first-mentioned person is taken to have provided that property to the other person at the time when the property comes into existence.
26AJ(9)
For the purposes of this section, if: (a) a particular mode of application of money by a taxpayer in relation to another person (in this subsection called the investment body ) would not, apart from this subsection, be an investment; and (b) a chance to participate in:
26AJ(10)
If a ballot is held to determine the order in which loans are to be made by a Starr-Bowkett building society to its members, then the making of a loan in accordance with the ballot is not covered by paragraph (1)(b) .
26AJ(11)
In this section:
(a) the amount that the recipient could reasonably have been expected to have been required to pay to obtain the property or services from the provider under a transaction where the parties to the transaction are dealing with each other at arm ' s length in relation to the transaction; or
(b) if such an amount cannot be practically determined - such amount as represents a reasonable valuation of the property or services;
(a) any agreement, arrangement, understanding, promise or undertaking, whether express or implied, and whether or not enforceable, or intended to be enforceable, by legal proceedings; and
(b) any scheme, plan, proposal, action, course of action or course of conduct, whether unilateral or otherwise;
(a) a loan where the whole of the interest is due for payment within 6 months after the loan is made; or
(b) a loan where:
(a) an advance of money; and
(b) the provision of credit or any other form of financial accommodation; and
(c) the payment of an amount for, on account of, on behalf of or at the request of a person where there is an obligation (whether express or implied) to repay the amount; and
(d) a transaction (whatever its terms or form) which in substance effects a loan of money;
(a) a company;
(b) a partnership;
(c) a person in the capacity of trustee;
(d) any other person;
(a) in relation to property - includes dispose of (whether by assignment, declaration of trust or otherwise); and
(b) in relation to services - includes allow, confer, give, grant or perform;
(a) an arrangement for or in relation to:
(b) a contract of insurance; or
(c) an arrangement for or in relation to the lending of money;
FORMER SECTION 26A
26A
ASSESSABLE INCOME TO INCLUDE REPAYMENT OF TAX PAID ABROAD IN RESPECT OF DIVIDENDS
(Repealed by No 143 of 2007 )
SECTION 26BB
ASSESSABILITY OF GAIN ON DISPOSAL OR REDEMPTION OF TRADITIONAL SECURITIES
26BB(1)
In this section:
(a) is or was acquired by the taxpayer after 10 May 1989;
(b) either:
(c) (Repealed by No 47 of 2016)
(d) is not trading stock of the taxpayer.
26BB(2)
Where a taxpayer disposes of a traditional security or a traditional security of a taxpayer is redeemed, the amount of any gain on the disposal or redemption shall be included in the assessable income of the taxpayer of the year of income in which the disposal or redemption takes place.
26BB(3)
Where the Commissioner, having regard to any connection between the parties to the transaction by which the taxpayer disposed of the traditional security or by which it was redeemed, or by which the taxpayer acquired the traditional security, is satisfied that the parties were not dealing with each other at arm ' s length in relation to the transaction, then, for the purposes of determining under subsection (2) the amount of any gain on the disposal or redemption, the consideration for the transaction shall be taken to be:
(a) the amount that might reasonably be expected for the transaction if the parties were independent parties dealing at arm ' s length with each other; or
(b) where, for any reason it is not possible or practicable for the Commissioner to ascertain that amount - such amount as the Commissioner determines.
26BB(4)
Subsection (2) does not apply to a gain on the disposal or redemption of a traditional security if:
(a) the disposal or redemption occurs because the traditional security is converted into ordinary shares in a company that is:
(b) the traditional security was issued on the basis that it will or may convert into ordinary shares in:
26BB(5)
Subsection (2) does not apply to a gain on the disposal or redemption of a traditional security if:
(a) the disposal or redemption is in exchange for ordinary shares in a company that is neither:
(b) in the case of a disposal - the disposal is to:
(c) the traditional security was issued on the basis that it will or may be:
SECTION 26BC SECURITIES LENDING ARRANGEMENTS 26BC(1)
In this section:
(a) in relation to a company - has the same meaning as in Division 3A ; or
(b) in relation to a unit trust - means a note issued by the trustee of the unit trust, being a note that, if the unit trust were a company, would be a convertible note issued by the company, and includes a note that would be a convertible note within the meaning of Division 3A if:
(a) interest; or
(b) a dividend; or
(c) a share issued by a company to a shareholder in the company where the share is issued:
(d) an amount credited by the trustee of a unit trust to a unit holder as a unit holder; or
(e) a unit issued by the trustee of a unit trust to which section 130-20 of the Income Tax Assessment Act 1997 applies (apart from subsection (4) of that section).
(a) a share, bond, debenture, convertible note, right, option or similar financial instrument issued by a public company; or
(b) a unit, bond, debenture, convertible note, right, option or similar financial instrument issued by the trustee of:
(c) a bond, debenture, right, option or similar financial instrument issued by a government or by an authority of a government;
(a) the Commonwealth, a State or a Territory; or
(b) the government of, or of a part of, a foreign country;
(a) in relation to a company - means an option to acquire shares in the company; or
(b) in relation to a unit trust - means an option to acquire units in the unit trust; or
(c) in relation to a government or an authority of a government - means an option to acquire a bond, debenture or similar financial instrument issued by the government or by the authority;
(a) a listed company; or
(b) a mutual life assurance company; or
(c) a company in which a government or an authority of a government has a controlling interest; or
(d) a company that is a 100% subsidiary of a company covered by paragraph (a), (b) or (c);
(a) in relation to a company - means a right to acquire shares in the company or to acquire an option; or
(b) in relation to a unit trust - means a right to acquire units in the unit trust or to acquire an option; or
(c) in relation to a government or an authority of a government - means a right to acquire a bond, debenture or similar financial instrument issued by the government or by the authority or to acquire an option.
26BC(2)
If an eligible security is held by a person as trustee for another person who is absolutely entitled to the eligible security as against the trustee, this section applies as if the eligible security were vested in the other person and any acts of the trustee were the acts of that other person.
26BC(3)
This section applies where:
(a) under a written agreement of the kind known as a securities lending arrangement, being an agreement that was entered into after 9 May 1990:
(b) both the borrower and the lender were dealing with each other at arm's length in relation to each of the transactions mentioned in paragraph (a); and
(c) if any of the following events occurred during the period (in this section called the borrowing period ) commencing at the original disposal time and ending at the re-acquisition time:
(d) if the total consideration payable or to be given by the borrower under the agreement consists of:
(e) the lender does not dispose of (by transfer, declaration of trust or otherwise) the right to receive any part of the total consideration payable or to be given by the borrower under the agreement.
26BC(3A)
For the purposes of paragraph (3)(c), if, apart from this subsection, either of the following events occurred after the commencement of the borrowing period:
(a) the making or payment of a distribution (whether in property or money) in respect of the borrowed security;
(b) the issue, by the company, trustee, government or government authority concerned, of a right or option in respect of the borrowed security;
26BC(4)
In determining:
(a) whether an amount (other than a fee payable under the securities lending arrangement) is included in the assessable income of the lender under a provision of this Act other than Part 3-1 or 3-3 of the Income Tax Assessment Act 1997 (about CGT); or
(b) whether an amount is allowable as a deduction to the lender;
(c) neither of those transactions had been entered into; and
(d) the lender had held the borrowed security at all times during the borrowing period; and
(e) if the replacement security is not the borrowed security - the replacement security were the borrowed security.
26BC(4A)
If the lender receives a compensatory payment covered by sub-subparagraph (3)(c)(v)(C), then, in determining whether an amount is included in the assessable income of the lender under a provision of this Act other than Part 3-1 or 3-3 of the Income Tax Assessment Act 1997 , the lender is to be treated as if:
(a) the lender had held the borrowed security at all relevant times during the borrowing period; and
(b) the right or option had been issued directly to the lender in respect of the borrowed security; and
(c) the lender had disposed of the right or option immediately after its issue for a consideration equal to the compensatory payment.
26BC(4B)
If the lender receives a compensatory payment covered by sub-subparagraph (3)(c)(vi)(C), then, in determining whether an amount is included in the assessable income of the lender under a provision of this Act other than Part 3-1 or 3-3 of the Income Tax Assessment Act 1997 , the lender is to be treated as if:
(a) the lender had held the right or option at all relevant times during the borrowing period; and
(b) the lender had exercised the right or option; and
(c) the lender had immediately disposed of the shares, units, bonds, debentures or financial instruments that resulted from exercising the right or option for a consideration equal to the compensatory payment.
26BC(5)
In determining:
(a) whether an amount is included in the assessable income of the borrower under a provision of this Act other than Part 3-1 or 3-3 of the Income Tax Assessment Act 1997 ; or
(b) an amount (other than a fee payable under the securities lending arrangement) is allowable as a deduction to the borrower;
(c) if the borrowed security was disposed of by the borrower to a third party:
(d) in any other case - the borrower is to be treated as if neither of the transactions referred to in paragraph (3)(a) had been entered into.
26BC(6)
Any capital gain or capital loss from the disposal of the borrowed security by the lender is disregarded.
26BC(6A)
If the lender acquired the borrowed security before 20 September 1985, the lender is taken (for the purposes of Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 ) to have acquired the replacement security before that day.
26BC(6B)
If the lender acquired the borrowed security on or after 20 September 1985, the first element of the cost base of the replacement security is the cost base of the borrowed security just before the acquisition of the replacement security. The reduced cost base of the replacement security is worked out similarly.
26BC(7)
If:
(a) the borrowed security was acquired on or after 20 September 1985; and
(b) a CGT event (other than one involving a transaction covered by subsection (3)) happens in relation to the replacement security at least 12 months after the lender acquired a paired security in relation to the replacement security (otherwise than under a transaction covered by subsection (3));
26BC(8)
For the purposes of subsection (7):
(a) if CGT event A1 happens (involving a transaction covered by subsection (3)) by the lender disposing of an eligible security to the borrower, that security is a paired security in relation to the replacement security subsequently acquired or re-acquired by the lender; and
(b) a security is a paired security in relation to a second security if the first security is a paired security in relation to a third security that is a paired security in relation to the second security (including a pairing with the second security by another application or other applications of this paragraph).
26BC(9)
For the purpose of applying Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 to the borrower:
(a) if the borrower disposes of the borrowed security to a third party:
(b) if no third party is involved - the transactions referred to in paragraph (3)(a) are ignored.
26BC(9A)
For the purpose of applying Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 to the borrower, the incidental costs to the borrower of the acquisition of an eligible security covered by sub-subparagraph (3)(a)(ii)(B) include a compensatory payment incurred by the borrower (to the extent that the borrower has not deducted and cannot deduct it).
26BC(9B)
For the purposes of the application of Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 to a right or option received by the lender as mentioned in subparagraph (3)(c)(v), the borrower and lender are to be treated as if the eligible security in respect of which the right or option was issued had been held by the lender at the time of the acquisition of the right or option.
26BC(9C)
For the purposes of the application of Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 to a share, unit, bond, debenture or financial instrument received by the lender as mentioned in subparagraph (3)(c)(vi), the borrower and the lender are to be treated as if:
(a) the share, unit, bond, debenture or financial instrument had been received as the result of the exercise of the borrowed security; and
(b) the borrowed security had been held by the lender at the time of the exercise; and
(c) the lender had exercised the borrowed security; and
(d) the lender had exercised the borrowed security at the time the direction concerned was given; and
(e) the amount of the contribution (if any) made by the lender to the borrower in respect of the carrying out of the direction were an amount paid as consideration by the lender in respect of the exercise.
26BC(9D)
If a distribution covered by subparagraph (3)(c)(i) consists of one or more shares issued by a company to the borrower or to a third party in the circumstances mentioned in subsection 6BA(1) , then, for the purposes of the application of Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 to a share (in this subsection called the notional bonus share ) received by the lender in relation to the distribution in the circumstances mentioned in sub-subparagraph (3)(c)(iv)(A) or (B), the borrower and the lender are to be treated as if:
(a) the company had issued the notional bonus share to the lender instead of the borrower or the third party, as the case requires; and
(b) the notional bonus share had been issued in the circumstances mentioned in subsection 6BA(1) ; and
(c) the notional bonus share had been issued in respect of the borrowed security; and
(d) the lender had held the borrowed security at the time the notional bonus share was issued.
26BC(9E)
If a distribution covered by subparagraph (3)(c)(i) consists of one or more units issued by the trustee of a unit trust to the borrower or to a third party in the circumstances covered by section 130-20 of the Income Tax Assessment Act 1997 , then, for the purposes of the application of Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 to a unit (in this subsection called the notional bonus unit ) received by the lender in relation to the distribution in the circumstances mentioned in sub-subparagraph (3)(c)(iv)(A) or (B), the borrower and the lender are to be treated as if:
(a) the trustee had issued the notional bonus unit to the lender instead of the borrower or the third party, as the case requires; and
(b) the notional bonus unit had been issued in the circumstances covered by section 130-20 of the Income Tax Assessment Act 1997 ; and
(c) the notional bonus unit had been issued in respect of the borrowed security; and
(d) the lender had held the borrowed security at the time the notional bonus unit was issued.
26BC(9F)
If the lender receives a compensatory payment covered by sub-subparagraph (3)(c)(v)(C), then, for the purposes of the application of Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 to the lender, the lender is to be treated as if:
(a) the lender had held the borrowed security at all relevant times during the borrowing period; and
(b) the right or option had been issued directly to the lender in respect of the borrowed security; and
(c) the lender had disposed of the right or option immediately after its issue and had received capital proceeds of an amount equal to the compensatory payment.
26BC(9G)
If the lender receives a compensatory payment covered by sub-subparagraph (3)(c)(vi)(C), then, for the purposes of the application of Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 to the lender, the lender is to be treated as if:
(a) the lender had held the right or option at all relevant times during the borrowing period; and
(b) the lender had exercised the right or option; and
(c) the lender had immediately disposed of the shares, units, bonds, debentures or financial instruments that resulted from exercising the right or option and had received capital proceeds of an amount equal to the compensatory payment.
26BC(10)
(Repealed by No 46 of 1998)
26BC(11)
(Repealed by No 46 of 1998)
26BC(11A)
If:
(a) the lender receives from the borrower a distribution or identical property covered by subparagraph (3)(c)(iv); and
(b) assuming that the borrowed security had continued to be held by the lender, an amount (in this subsection called the otherwise assessable amount ) would have been included in the lender's assessable income of a year of income in respect of the distribution concerned;
26BC(11B)
If:
(a) the lender receives from the borrower a compensatory payment covered by sub-subparagraph (3)(c)(iv)(C); and
(b) assuming that the borrowed security had continued to be held by the lender, an amount (in this subsection called the otherwise assessable amount ) would have been included in the lender's assessable income of a year of income in respect of the distribution concerned;
26BC(12)
Where:
(a) a taxpayer has entered into a transaction of a kind referred to in subparagraph (3)(a)(i); and
(b) at the time of making an assessment in respect of income of the taxpayer of the year of income in which the transaction occurred, the Commissioner is of the opinion that, at a later time, circumstances will exist because of which this section will apply in connection with that transaction;
26BC(13)
Where:
(a) in the making of an assessment, this section has been applied on the basis that a circumstance that did not exist at the time of making the assessment would exist at a later time; and
(b) after the making of the assessment, the Commissioner becomes satisfied that the circumstance will not exist;
FORMER SECTION 26C
26C
DISPOSAL OF CERTAIN SECURITIES
(Repealed by No 47 of 2016)
FORMER SECTION 26D
26D
ASSESSABLE INCOME OF TAXPAYER TO INCLUDE FOREIGN TAX IN CERTAIN CIRCUMSTANCES
(Repealed by No 143 of 2007 )
SECTION 26E
INCOME FROM RSAs
26E(1)
[Deemed Australian source]
FORMER SECTION 27
27
INTEREST ON LOANS RAISED IN AUSTRALIA BY GOVERNMENTS OUTSIDE AUSTRALIA
(Repealed by No 49 of 2019)
Subdivision AA
-
Non-superannuation annuities etc.
FORMER SECTION 27A
27A
INTERPRETATION
(Repealed by No 15 of 2007)
FORMER SECTION 27AAAA
27AAAA
UNDEDUCTED PURCHASE PRICE
-
INTERPRETATION
(Repealed by No 15 of 2007)
FORMER SECTION 27AAA
27AAA
SPECIAL RULES FOR DEATH BENEFITS
(Repealed by No 15 of 2007)
FORMER SECTION 27AAB
27AAB
INTERDEPENDENCY RELATIONSHIP
(Repealed by No 15 of 2007)
FORMER SECTION 27AA
27AA
COMPONENTS OF AN ETP
(Repealed by No 15 of 2007)
FORMER SECTION 27AB
27AB
TAXED AND UNTAXED ELEMENTS OF POST-JUNE 83 COMPONENT
(Repealed by No 15 of 2007)
FORMER SECTION 27AC
27AC
ETP
-
RETAINED AMOUNTS
(Repealed by No 15 of 2007)
FORMER SECTION 27ACA
27ACA
EFFECT OF PAYMENT SPLIT UNDER THE
FAMILY LAW ACT 1975
ON ELIGIBLE TERMINATION PAYMENTS
(Repealed by No 15 of 2007)
FORMER SECTION 27ACB
27ACB
INTEREST SPLITS WHILE A PAYMENT SPLIT UNDER THE
FAMILY LAW ACT 1975
APPLIES
(Repealed by No 15 of 2007)
FORMER SECTION 27B
27B
ASSESSABLE INCOME TO INCLUDE CERTAIN SUPERANNUATION AND SIMILAR PAYMENTS
(Repealed by No 15 of 2007)
FORMER SECTION 27C
27C
ASSESSABLE INCOME TO INCLUDE 5% OF CERTAIN AMOUNTS
(Repealed by No 15 of 2007)
FORMER SECTION 27CAA
27CAA
ASSESSABLE INCOME TO INCLUDE COMPONENT OF LUMP SUM PAYMENT FROM AN ELIGIBLE NON-RESIDENT NON-COMPLYING SUPERANNUATION FUND
(Repealed by No 15 of 2007)
FORMER SECTION 27CAB
27CAB
WORKING OUT THE PREVIOUSLY EXEMPT AMOUNTS FOR THE PURPOSES OF A RELEVANT PAYMENT UNDER SECTION 27CAA
(Repealed by No 15 of 2007)
FORMER SECTION 27CA
27CA
ANTI-DETRIMENT PROVISION FOR SERVICE MISMATCH CASES
(Repealed by No 15 of 2007)
FORMER SECTION 27CB
27CB
EXEMPTION FROM TAX
-
POST-JUNE 1994 INVALIDITY COMPONENT AND TAX-FREE AMOUNT OF BONA FIDE REDUNDANCY PAYMENT OR APPROVED EARLY RETIREMENT SCHEME PAYMENT
(Repealed by No 15 of 2007)
FORMER SECTION 27CC
27CC
EXEMPTION FROM TAX
-
PAYMENT OF UNCLAIMED MONEY TO COMMISSIONER ETC. BY SUPERANNUATION FUND OR APPROVED DEPOSIT FUND
(Repealed by No 15 of 2007)
FORMER SECTION 27CD
27CD
EXEMPTION FROM TAX
-
EXEMPT RESIDENT FOREIGN TERMINATION PAYMENT
(Repealed by No 15 of 2007)
FORMER SECTION 27CE
27CE
EXEMPTION FROM TAX
-
PAYMENT FROM ELIGIBLE RESIDENT NON-COMPLYING SUPERANNUATION FUND
(Repealed by No 15 of 2007)
FORMER SECTION 27D
27D
ROLL-OVER OF ETPs
(Repealed by No 15 of 2007)
FORMER SECTION 27E
27E
APPROVED EARLY RETIREMENT SCHEME PAYMENTS
(Repealed by No 15 of 2007)
FORMER SECTION 27F
27F
BONA FIDE REDUNDANCY PAYMENTS
(Repealed by No 15 of 2007)
FORMER SECTION 27G
27G
INVALIDITY PAYMENTS
(Repealed by No 15 of 2007)
FORMER SECTION 27GA
27GA
DEPARTING AUSTRALIA SUPERANNUATION PAYMENT
(Repealed by No 15 of 2007)
SECTION 27H
ASSESSABLE INCOME TO INCLUDE ANNUITIES AND SUPERANNUATION PENSIONS
27H(1)
[Assessable income]
(a) the amount of any annuity derived by the taxpayer during the year of income excluding, in the case of an annuity that has been purchased, any amount that, in accordance with the succeeding provisions of this section, is the deductible amount in relation to the annuity in relation to the year of income; and
(b) the amount of any payment made to the taxpayer during the year of income as a supplement to an annuity, whether the payment is made voluntarily, by agreement or by compulsion of law and whether or not the payment is one of a series of recurrent payments.
27H(1A)
(Repealed by No 15 of 2007)
27H(2) [ " deductible amount " ]
(a) if there is a residual capital value in relation to the annuity and that residual capital value is specified in the agreement by virtue of which the annuity is payable or is capable of being ascertained from the terms of that agreement at the time when the annuity is first derived
-
that residual capital value; or
(b) in any other case
-
nil; and
27H(3)
[Commissioner may determine deductible amount]
(a) the terms and conditions applying to the annuity; and
(b) such other matters as the Commissioner considers relevant,
(c) the terms and conditions applying to the annuity;
(d) any certificate or certificates of an actuary or actuaries stating the extent to which, in the opinion of the actuary or actuaries, the amount of the annuity derived by the taxpayer during the year of income represents the undeducted purchase price; and
(e) such other matters as the Commissioner considers relevant.
27H(3A)
[Where annuity commuted]
(a) (Repealed by No 15 of 2007)
(b) (Repealed by No 15 of 2007)
(c) any deductible amount ascertained under this section in relation to the annuity in relation to a preceding year of income; and
(d) such other matters as the Commissioner considers relevant.
27H(4)
[Definitions]
(a) an annuity that is a qualifying security for the purposes of Division 16E ; or
(b) a superannuation income stream (within the meaning of the Income Tax Assessment Act 1997 ).
(a) in relation to a pension - the sum of:
(b) in relation to an annuity other than a pension - the sum of:
(a) where the annuity is payable for a term of years certain - the number of years in the term;
(b) where the annuity is payable during the lifetime of a person and not thereafter - the life expectation factor of the person; and
(c) in any other case - the number that the Commissioner considers appropriate having regard to the number of years in the total period during which the annuity will be, or may reasonably be expected to be, payable.
(a) in a case where the annuity derived by the taxpayer is a share of an annuity (which annuity is in this paragraph referred to as the total annuity ) payable to the taxpayer and another person or other persons - the fraction ascertained by dividing the number of whole dollars in the amount of the annuity derived by the taxpayer during the year of income by the number of whole dollars in the amount of the total annuity derived during the year of income by the taxpayer and the other person or persons; or
(b) in any other case - the number 1.
27H(5)
[
"
purchase price
"
]
(a) a reference to contributions made by any person to a foreign superannuation fund to obtain a pension does not include a reference to contributions made to a foreign superannuation fund by an employer, or by another person under an agreement to which the employer is a party, for the purpose of providing superannuation benefits for, or for dependants of, an employee of the employer; and
(b) a reference to payments made to purchase, or solely to purchase, an annuity (other than a pension) does not include a reference to payments made by an employer, or by another person under an agreement to which the employer is a party, to purchase, or solely to purchase, the annuity for, or for dependants of, an employee of the employer.
27H(6)
[Meaning of employer of another person]
FORMER SECTION 27HA
27HA
INFORMATION ABOUT CONTRIBUTIONS-SPLITTING ETPs
(Repealed by No 15 of 2007)
FORMER SECTION 27J
27J
AMENDMENT OF ASSESSMENTS
(Repealed by No 15 of 2007)
Former Subdivision B
-
Trading Stock
FORMER SECTION 36AAA
36AAA
ALTERNATIVE ELECTION IN CASE OF DISPOSAL, DEATH OR COMPULSORY DESTRUCTION OF LIVE STOCK
(Repealed by No 101 of 2006)
Subdivision D
-
Dividends
SECTION 43A
43A
SUBDIVISION HAS EFFECT SUBJECT TO PROVISIONS OF DIVISION 216 OF THE
INCOME TAX ASSESSMENT ACT 1997
This Subdivision has effect subject to the provisions of Division 216 of the Income Tax Assessment Act 1997 (which describes cum dividend sales in which a distribution to a member of a corporate tax entity is treated as having been made to someone else).
SECTION 43B
APPLICATION OF SUBDIVISION TO NON-SHARE DIVIDENDS
43B(1)
[Applications]
(a) applies to a non-share equity interest in the same way as it applies to a share; and
(b) applies to an equity holder in the same way as it applies to a shareholder; and
(c) applies to a non-share dividend in the same way as it applies to a dividend. 43B(2) [Section 47A not covered]
SECTION 44
DIVIDENDS
44(1)
The assessable income of a shareholder in a company (whether the company is a resident or a non-resident) includes:
(a) if the shareholder is a resident:
(b) if the shareholder is a non-resident:
(c) if the shareholder is a non-resident carrying on business in Australia at or through a permanent establishment of the shareholder in Australia, and the company is a resident:
44(1A)
For the purposes of this Act, a dividend paid out of an amount other than profits is taken to be a dividend paid out of profits.
44(1B)
Where:
(a) the amount of the moneys or of the value of other property of which a dividend paid by a company consists is debited against an amount standing to the credit of a share capital account of the company; or
(b) a dividend paid by a company is a repayment by the company of an amount paid-up on a share,
44(2)
Subsections (3) and (4) apply to a demerger dividend unless the head entity elects in writing, within one month after it decides which of its shareholders will receive ownership interests in the demerged entity under the demerger, that those subsections do not apply to the total demerger dividend for all shareholders.
44(2A) - (2C)
(Omitted by No 165 of 1973)
44(2D)
(Omitted by No 62 of 1987)
44(2E)
(Omitted by No 46 of 1986)
44(3)
This section applies to the demerger dividend as if it had not been paid out of profits.
44(4)
A demerger dividend is not assessable income or exempt income.
44(5)
However, subsections (3) and (4) do not apply to a demerger dividend unless, just after the demerger, CGT assets owned by the demerged entity or a demerger subsidiary representing at least 50% by market value of all the CGT assets (or a reasonable approximation of market value) owned by the demerged entity and its demerger subsidiaries are used, directly or indirectly, in one or more businesses carried on by one or more of those entities.
44(6)
In applying subsection (5), disregard any assets that are ownership interests in a demerger subsidiary unless they are used in a business referred to in that subsection.
44(7)
In this section:
(a) has the same meaning as in a double tax agreement (as defined in Part X ) that relates to a foreign country and affects the person; or
(b) has the meaning given by subsection 6(1) , if there is no such agreement.
FORMER SECTION 44A 44A CERTAIN DIVIDENDS PAID BY COMPANIES INCORPORATED IN PAPUA NEW GUINEA
(Repealed by No 80 of 1975)
SECTION 45
STREAMING OF BONUS SHARES AND UNFRANKED DIVIDENDS
Application of section
45(1)
This section applies in respect of a company that, whether in the same year of income or in different years of income, streams the provision of shares (other than shares to which subsection 6BA(5) applies) and the payment of minimally franked dividends to its shareholders in such a way that:
(a) the shares are received by some shareholders but not all shareholders; and
(b) some or all of the shareholders who do not receive the shares receive or will receive minimally franked dividends.
45(2)
The value of the share at the time that the shareholder is provided with the share is taken, for the purposes of this Act, to be a dividend that is unfrankable (within the meaning of subsection 995-1(1) of the Income Tax Assessment Act 1997 ) and that is paid by the company, out of profits of the company, to the shareholder at that time.
45(3)
A dividend is minimally franked if it is not franked, or is franked to less than 10%, in accordance with section 202-5 or 208-60 of the Income Tax Assessment Act 1997 .
SECTION 45A
STREAMING OF DIVIDENDS AND CAPITAL BENEFITS
Application of section
45A(1)
This section applies in respect of a company that, whether in the same year of income or in different years of income, streams the provision of capital benefits and the payment of dividends to its shareholders in such a way that:
(a) the capital benefits are, or apart from this section would be, received by shareholders (the advantaged shareholders ) who would, in the year of income in which the capital benefits are provided, derive a greater benefit from the capital benefits than other shareholders; and
(b) it is reasonable to assume that the other shareholders (the disadvantaged shareholders ) have received, or will receive, dividends.
Commissioner to determine that section 45C applies
45A(2)
The Commissioner may make, in writing, a determination that section 45C applies in relation to the whole, or a part, of the capital benefits. A determination does not form part of an assessment.
Meaning of provision of capital benefit
45A(3)
A reference to the provision of a capital benefit to a shareholder in a company is a reference to any of the following:
(a) the provision to the shareholder of shares in the company;
(b) the distribution to the shareholder of share capital or share premium;
(c) something that is done in relation to a share that has the effect of increasing the value of a share (which may or may not be the same share) held by the shareholder.
45A(3A)
For the purposes of this section, a non-share distribution to an equity holder is taken to be the distribution to the equity holder of share capital to the extent to which it is a non-share capital return.
Meaning of greater benefit from capital benefits
45A(4)
The circumstances in which a shareholder would, in a year of income, derive a greater benefit from capital benefits than another shareholder include, but are not limited to, any of the following circumstances existing in relation to the first shareholder and not in relation to the other shareholder:
(a) some or all of the shares in the company held by the shareholder were acquired, or are taken to have been acquired, before 20 September 1985;
(b) the shareholder is a non-resident;
(c) the cost base (for the purposes of Part IIIA ) of the relevant share is not substantially less than the value of the applicable capital benefit;
(d) the shareholder has a net capital loss for the year of income in which this capital benefit is provided;
(e) the shareholder is a private company who would not have been entitled to a rebate under former section 46F if the shareholder had received the dividend that was paid to the disadvantaged shareholder;
(f) the shareholder has income tax losses.
Certain capital benefits not covered
45A(5)
This section does not apply where the capital benefit provided to the advantaged shareholders is the provision of shares and it is reasonable to assume that the disadvantaged shareholders have received, or will receive, fully franked dividends.
Determination limited in certain cases
45A(6)
If the capital benefit provided to the advantaged shareholders is the provision of shares and it is reasonable to assume that the disadvantaged shareholders have received, or will receive, partly franked dividends, the Commissioner may only make a determination under subsection (2) in relation to so much of the capital benefit as the Commissioner considers relates to the unfranked part of the dividend.
SECTION 45B SCHEMES TO PROVIDE CERTAIN BENEFITS
Purpose of section
45B(1)
The purpose of this section is to ensure that relevant amounts are treated as dividends for taxation purposes if:
(a) components of a demerger allocation as between capital and profit do not reflect the circumstances of a demerger; or
(b) certain payments, allocations and distributions are made in substitution for dividends.
Application of section
45B(2)
This section applies if:
(a) there is a scheme under which a person is provided with a demerger benefit or a capital benefit by a company; and
(b) under the scheme, a taxpayer (the relevant taxpayer ), who may or may not be the person provided with the demerger benefit or the capital benefit, obtains a tax benefit; and
(c) having regard to the relevant circumstances of the scheme, it would be concluded that the person, or one of the persons, who entered into or carried out the scheme or any part of the scheme did so for a purpose (whether or not the dominant purpose but not including an incidental purpose) of enabling a taxpayer (the relevant taxpayer ) to obtain a tax benefit.
Commissioner to determine that section 45BA or 45C applies
45B(3)
The Commissioner may make, in writing, a determination that:
(a) section 45BA applies in relation to the whole, or a part, of the demerger benefit; or
(b) section 45C applies in relation to the whole, or a part, of the capital benefit.
Meaning of provided with a demerger benefit
45B(4)
A person is provided with a demerger benefit if in relation to a demerger:
(a) a company provides the person with ownership interests in that or another company; or
(b) something is done in relation to an ownership interest owned by the person that has the effect of increasing the value of an ownership interest (which may or may not be the same ownership interest) owned by the person.
Meaning of provided with a capital benefit
45B(5)
A reference to a person being provided with a capital benefit is a reference to any of the following:
(a) the provision of ownership interests in a company to the person;
(b) the distribution to the person of share capital or share premium;
(c) something that is done in relation to an ownership interest that has the effect of increasing the value of an ownership interest (which may or may not be the same interest) that is held by the person.
45B(6)
However, a person is not provided with a capital benefit to the extent that the provision of interests, the distribution or the thing done referred to in subsection (5) involves the person receiving a demerger dividend.
45B(7)
For the purposes of this section, a non-share distributionto an equity holder is taken to be the distribution to the equity holder of share capital to the extent to which it is a non-share capital return.
Meaning of relevant circumstances of scheme
45B(8)
The relevant circumstances of a scheme include the following:
(a) the extent to which the demerger benefit or capital benefit is attributable to capital or the extent to which the demerger benefit or capital benefit is attributable to profits (realised and unrealised) of the company or of an associate (within the meaning in section 318 ) of the company;
(b) the pattern of distributions of dividends, bonus shares and returns of capital or share premium by the company or by an associate (within the meaning in section 318 ) of the company;
(c) whether the relevant taxpayer has capital losses that, apart from the scheme, would be unutilised (within the meaning of the Income Tax Assessment Act 1997 ) at the end of the relevant year of income;
(d) whether some or all of the ownership interests in the company or in an associate (within the meaning in section 318 ) of the company held by the relevant taxpayer were acquired, or are taken to have been acquired, by the relevant taxpayer before 20 September 1985;
(e) whether the relevant taxpayer is a non-resident;
(f) whether the cost base (for the purposes of the Income Tax Assessment Act 1997 ) of the relevant ownership interest is not substantially less than the value of the applicable demerger benefit or capital benefit;
(g) (Repealed by No 101 of 2006 )
(h) if the scheme involves the distribution of share capital or share premium - whether the interest held by the relevant taxpayer after the distribution is the same as the interest would have been if an equivalent dividend had been paid instead of the distribution of share capital or share premium;
(i) if the scheme involves the provision of ownership interests and the later disposal of those interests, or an increase in the value of ownership interests and the later disposal of those interests:
(j) for a demerger only:
(k) any of the matters referred to in subsection 177D(2) .
Meaning of obtaining a tax benefit
45B(9)
A relevant taxpayer obtains a tax benefit if an amount of tax payable, or any other amount payable under this Act, by the relevant taxpayer would, apart from this section, be less than the amount that would have been payable, or would be payable at a later time than it would have been payable, if the demerger benefit had been an assessable dividend or the capital benefit had been an assessable dividend.
45B(10)
In this section:
SECTION 45BA EFFECT OF DETERMINATIONS UNDER SECTION 45B FOR DEMERGER BENEFITS 45BA(1) [Demerger benefit when provided]
(a) if the benefit is the provision of an ownership interest - the market value of the interest at the time that it is provided; or
(b) if the benefit is an increase in the value of an ownership interest - the increase in the market value of the interest as a result of the change; or
(c) if the benefit is a distribution to the shareholder of share capital or share premium - the amount debited to the share capital account or share premium account of the company in connection with the provision of the benefit.
SECTION 45C
EFFECT OF DETERMINATIONS UNDER SECTIONS 45A AND 45B FOR CAPITAL BENEFITS
45C(1)
If the Commissioner makes a determination under subsection 45A(2) or 45B(3) , the amount of the capital benefit, or the part of the benefit, is taken, for the purposes of this Act, to be an unfranked dividend that is paid by the company to the shareholder or relevant taxpayer at the time that the shareholder or relevant taxpayer is provided with the capital benefit.
45C(2)
The dividend is taken to have been paid out of profits of the company.
45C(3)
If the Commissioner has made a determination under section 45B in respect of the whole or a part of a capital benefit and the Commissioner makes a further written determination that the capital benefit, or the part of the capital benefit, was paid under a scheme for which a purpose, other than an incidental purpose, was to avoid franking debits arising in relation to the distribution from the company:
(a) on the day on which notice of the determination is served in writing on the company, a franking debit of the company arises in respect of the capital benefit; and
(b) the amount of the franking debit is the amount that, if the company had:
45C(4)
The amount of the capital benefit is:
(a) if the benefit is the provision of an ownership interest - the market value of the interest at the time that it is provided; or
(b) if the benefit is an increase in the market value of an ownership interest - the increase in the market value of the interest as a result of the change; or
(c) if the benefit is a distribution to the shareholder of share capital or share premium - the amount debited to the share capital account or share premium account of the company in connection with the provision of the benefit.
45C(4A)
For the purposes of this section:
(a) a non-share distribution to an equity holder is taken to be the distribution to the equity holder of share capital to the extent to which it is a non-share capital return; and
(b) the debit to the company's non-share capital account, in respect of the non-share distribution, is taken to be a debit to the company's share capital account.
45C(5)
(Repealed by No 41 of 2011)
45C(6)
(Repealed by No 41 of 2011)
SECTION 45D DETERMINATIONS UNDER SECTIONS 45A, 45B AND 45C
Notice by Commissioner of determination
45D(1)
If the Commissioner makes a determination under section 45A , 45B or 45C , the Commissioner must give a copy of the determination to the company concerned (which, in the case of a demerger benefit referred to in section 45B , is the head entity of the demerger group).
Notice by company of determination
45D(1A)
That company must, in the case of a determination under section 45A or 45B , give a copy of the notice to: (a) the advantaged shareholder referred to in section 45A ; or (b) the relevant taxpayer referred to in section 45B .
Publication of determination in relation to listed public company
45D(2)
If the Commissioner makes a determination under section 45A , in respect of a dividend paid by a listed public company, the Commissioner is taken to have served notice in writing of the determination on the advantaged shareholder if the Commissioner causes the notice to be published in a manner that results in the notice being accessible to the public and reasonably prominent. The notice is taken to have been served on the day on which the publication takes place.
Evidence of determination
45D(3)
The production of: (a) a notice of a determination; or (b) a document signed by the Commissioner, a Second Commissioner or a Deputy Commissioner purporting to be a copy of a determination;
Objections
45D(4)
If a taxpayer to whom a determination relates is dissatisfied with the determination, the taxpayer may object against it in the manner set out in Part IVC of the Taxation Administration Act 1953 .
FORMER SECTION 46A 46A REBATE ON DIVIDENDS PAID AS PART OF DIVIDEND STRIPPING OPERATION
(Repealed by No 101 of 2006)
FORMER SECTION 46B
46B
REBATE NOT ALLOWABLE IN CERTAIN CIRCUMSTANCES
(Repealed by No 101 of 2006)
FORMER SECTION 46D
46D
DIVIDENDS PAID INSTEAD OF INTEREST
(Repealed by No 163 of 2001)
FORMER SECTION 46E
46E
DIVIDENDS PAID OUT OF PROFITS ARISING FROM THE RE-VALUATION OF CERTAIN ASSETS
(Repealed by No 101 of 2006)
SECTION 46FA
DEDUCTION FOR DIVIDENDS ON-PAID TO NON-RESIDENT OWNER
Allowable deduction
46FA(1)
An amount is allowable as a deduction from the assessable income of a company (the resident company ) if:
(a) the resident company is paid a dividend (the original dividend ) that:
(b) the resident company is not a group company in relation to the company that paid the original dividend in relation to the year of income in which the dividend is paid; and
(ba) neither the resident company, nor the company that pays the dividend, is a prescribed dual resident; and
(c) ignoring the amendments made by Schedule 1 to the Tax Laws Amendment (Repeal of Inoperative Provisions) Act 2006 , but for subsection 46AB(1) or 46AC(2) or subparagraph 46F(2)(a)(i) of this Act as in force just before the commencement of those amendments, the resident company would have been entitled to a rebate under section 46 of this Act as so in force in respect of the unfranked amount of the original dividend; and
(d) the resident company pays a dividend (the flow-on dividend ) to a company that is not a resident (the non-resident company ); and
(e) the flow-on dividend is not a fully-franked dividend; and
(f) the resident company declares that the unfranked amount of the flow-on dividend is an on-payment of the unfranked amount of the original dividend to the extent of a specified percentage (not exceeding 100%); and
(g) when the original dividend is paid, when the declaration is made and when the flow-on dividend is paid, the resident company is:
46FA(2)
The flow-on amount is:
Flow-on declarations
46FA(3)
The declaration under paragraph (1)(f) (the flow-on declaration ) must be made:
(a) in writing; and
(b) before the flow-on dividend is paid.
46FA(4)
The flow-on declaration is effective only to the extent to which the flow-on amount does not exceed the surplus in the resident company's unfranked non-portfolio dividend account immediately before the declaration is made.
Unfranked amount of flow-on dividend unfrankable
46FA(5)
Part 3-6 of the Income Tax Assessment Act 1997 (the imputation system) applies to the unfranked amount of the flow-on dividend as if it were an unfrankable distribution within the meaning of section 202-45 of that Act if a deduction is allowed to the resident company in relation to the flow-on dividend.
Wholly owned by non-resident company.
46FA(6)
The resident company is wholly owned by the non-resident company if all the shares in the resident company are held by and beneficially owned by the non-resident company.
46FA(7)
However, the company is not wholly owned by the non-resident company if a person is in a position to affect rights, in relation to the resident company, of the non-resident company.
46FA(8)
The resident company is also not wholly owned by the non-resident company if at some future time a person will be in a position to affect rights as described in subsection (7).
A person in a position to affect rights
46FA(9)
A person is in a position to affect rights of a company in relation to another company if the person has a right, power or option:
(a) to acquire those rights from one or other of those companies; or
(b) to do something that would prevent one or other of those companies from exercising its rights for its own benefit, or from receiving any benefit arising from having those rights.
46FA(10)
It does not matter whether the person has the right, power or option because of the constitution of one or other of those companies, any agreement or otherwise.
Definitions
46FA(11)
In this section:
SECTION 46FB UNFRANKED NON-PORTFOLIO DIVIDEND ACCOUNT
Company may establish account
46FB(1)
A company may establish an unfranked non-portfolio dividend account.
Account surplus
46FB(2)
An unfranked non-portfolio dividend account surplus exists for a company at a particular time if the company's total unfranked non-portfolio dividend credits arising before that time exceed its total unfranked non-portfolio dividend debits arising before that time.
46FB(3)
The amount of the surplus is equal to the amount of the excess.
Credits
46FB(4)
An unfranked non-portfolio dividend credit arises for a company if:
(a) the company is paid an unfranked non-portfolio dividend; and
(b) the company is not a group company in relation to the company that paid the dividend in relation to the year of income in which the dividend is paid; and
(c) ignoring the amendments made by Schedule 1 to the Tax Laws Amendment (Repeal of Inoperative Provisions) Act 2006 , but for subsection 46AB(1) or 46AC(2) or subparagraph 46F(2)(a)(i) of this Act as in force just before the commencement of those amendments, the company would have been entitled to a rebate under section 46 of this Act as so in force in respect of the unfranked amount of the dividend.
Debits
46FB(5)
An unfranked non-portfolio dividend debit arises for a company if the company makes a declaration under paragraph 46FA(1)(f) in relation to a dividend paid on a particular day. The amount of the debit is the flow-on amount under subsection 46FA(2) . The debit arises when the declaration is made.
Definitions
46FB(6)
In this section:
FORMER SECTION 46G 46G REBATE NOT ALLOWABLE FOR DIVIDENDS DEBITED AGAINST CERTAIN ACCOUNTS
(Repealed by No 79 of 2007 )
FORMER SECTION 46H
46H
MEANING OF
DISQUALIFYING ACCOUNT
AND
NON-DISQUALIFYING ACCOUNT
(Repealed by No 79 of 2007 )
FORMER SECTION 46I
46I
MEANING OF
NOTIONAL DISQUALIFYING ACCOUNT
(Repealed by No 79 of 2007 )
FORMER SECTION 46J
46J
EXCLUDED TRANSFERS
(Repealed by No 79 of 2007 )
FORMER SECTION 46K
46K
DEBIT FOR DEEMED DIVIDENDS
(Repealed by No 79 of 2007 )
FORMER SECTION 46L
46L
APPORTIONMENT OF DEBITS FOR DIVIDENDS PAID ON THE SAME DAY
(Repealed by No 79 of 2007 )
FORMER SECTION 46M
46M
SPLITTING OF FRANKABLE DIVIDENDS
(Repealed by No 79 of 2007 )
SECTION 47
DISTRIBUTIONS BY LIQUIDATOR
47(1)
[Distributions of income deemed dividends]
47(1A)
[Income derived by a company]
(a) an amount (except a net capital gain) included in the company's assessable income for a year of income; or
(b) a net capital gain that would be included in the company's assessable income for a year of income if the Income Tax Assessment Act 1997 required a net capital gain to be worked out as follows: Method statement
Step 1.
Step 2.
47(2)
[Distributions deemed wholly from profits or income]
(a) the business of a company has been, or is in the course of being, discontinued otherwise than in the course of a winding up of the company under any law relating to companies;
(b) in connexion with the discontinuance, any moneys of the company have been or other property of the company has been, on or after 19 October 1967, distributed, otherwise than by the company, to shareholders of the company; and
(c) the moneys or other property so distributed are not, for the purposes of this Act, dividends;
47(2B)
[Dissolution not within three years]
(a) subsection (2A) would, but for this subsection, apply in relation to any moneys or other property of a company distributed to shareholders of the company; and
(b) the company does not cease to exist within a period of 3 years after the distribution, or within such further period as the Commissioner allows;
47(3)
[
"
paid-up share capital
"
]
SECTION 47A
DISTRIBUTION BENEFITS
-
CFCs
47A(1)
Subject to subsection (2), if:
(a) a company (in this section called the first company ) has profits immediately before a distribution time for a distribution benefit in relation to the first company; and
(b) the distribution time occurred after 3 June 1990; and
(c) the first company is a CFC at the distribution time; and
(d) the first company is a resident of an unlisted country at the distribution time;
(e) to the recipient of the benefit as a shareholder in the first company; and
(f) out of profits derived by the first company; and
(g) at the distribution time.
47A(2)
If:
(a) any of the following subparagraphs applies:
(b) both of the following subparagraphs apply:
47A(3)
Subject to subsections (9) and (12), a reference in this section to a distribution benefit in relation to the first company is a reference to an eligible benefit where the following conditions are satisfied:
(a) the eligible benefit was provided to:
(b) the eligible benefit was provided by:
(c) if subparagraph (b)(ii) applies - the first company made, or entered into an undertaking to make, one or more transfers of property or services to the arranger or to another entity (which transfers are in this section called the arrangement transfers ) that are attributable, in whole or in part, to the provision of the eligible benefit.
47A(4)
Where the first company entered into an undertaking to make one or more arrangement transfers , the time of the arrangement transfers is the time the undertaking was entered into.
47A(5)
Where, at a particular time, an entity (in this subsection called the provider ) waives or releases the obligation of another entity (in this subsection called the recipient ) to pay or repay to the provider an amount:
(a) the waiver or release is taken to constitute an eligible benefit provided at that time by the provider to the recipient; and
(b) if the eligible benefit is a distribution benefit in relation to the first company - each of the following times is a distribution time for the eligible benefit:
(c) if the eligible benefit is a distribution benefit in relation to the first company - the distribution payment in relation to the distribution time is:
47A(6)
For the purposes of subsection (5), an entity is taken to be under an obligation to pay or repay an amount even if the amount is not due for payment or repayment.
47A(7)
Where, at a particular time, an entity (in this subsection called the provider ) makes a loan to another entity (in this subsection called the recipient ), where:
(a) the parties to the loan are not at arm ' s length with each other in relation to the loan; or
(b) the purpose, or one of the purposes, of the making of the loan was to facilitate, directly or indirectly (through one or more interposed companies, partnerships or trusts), the payment of a dividend that is, or would be, non-assessable non-exempt income under section 768-5 of the Income Tax Assessment Act 1997 (in whole or in part); or
(c) the purpose, or one of the purposes, of the making of the loan was to facilitate, directly or indirectly, the provision of an eligible benefit by the recipient, being an eligible benefit that is a distribution benefit in relation to any company;
(d) the making of the loan is taken to constitute an eligible benefit provided by the provider to the recipient at that time;
(e) if the eligible benefit is a distribution benefit in relation to the first company - each of the following times is a distribution time for the eligible benefit:
(f) if the eligible benefit is a distribution benefit in relation to the first company - the distribution payment in relation to the distribution time is:
47A(8)
Where, at a particular time:
(a) an entity (in this subsection called the provider ) acquires from a company (in this subsection called the recipient ):
(b) an entity (in this subsection also called the provider ) acquires from the trustee of a unit trust (in this subsection also called the recipient ):
(c) the acquisition is taken to constitute an eligible benefit provided by the provider to the recipient at that time;
(d) if the eligible benefit is a distribution benefit in relation to the first company - each of the following is a distribution time for the eligible benefit:
(e) if the eligible benefit is a distribution benefit in relation to the first company - the distribution payment in relation to the distribution time is:
(f) if:
47A(9)
An eligible benefit that is covered by subsection (8) and provided at a particular time is not a distribution benefit in relation to the first company if, at that time, there is no entity (other than the provider referred to in that subsection) who is:
(a) either:
(b) the holder of an eligible equity interest in the recipient referred to in that subsection.
47A(10)
Where:
(a) an entity (in this subsection called the provider ) transfers property or services to another entity (in this subsection called the recipient ); and
(b) the property or services are transferred:
(c) in the case of a transfer of services - the services do not consist of the making of a loan; and
(d) in any case - the property or services are not transferred by way of consideration for the acquisition from a company of:
(e) in any case - the property or services are not transferred in respect of the acquisition from the trustee of a unit trust of:
(f) in the case of a transfer of property - the property does not consist of a payment in respect of a call on a share ina company;
(g) the transfer is taken to constitute an eligible benefit provided by the provider to the recipient at that time;
(h) if the eligible benefit is a distribution benefit in relation to the first company - each of the following is a distribution time for the eligible benefit:
(j) if the eligible benefit is a distribution benefit in relation to the first company - the distribution payment in relation to the distribution time is:
(k) if the eligible benefit is a distribution benefit in relation to the first company - in determining the profits of the company immediately before a distribution time for the distribution benefit, the following assumptions are to be made:
47A(10A)
Subsection (10) does not apply to a transfer that is taken by section 70-30 or 70-110 of the Income Tax Assessment Act 1997 to have occurred.
47A(11)
Where, at a particular time, an entity (in this subsection called the provider ) makes a payment to another entity, being a company (in this subsection called the recipient ), in respect of a call on a share in the recipient:
(a) the making of the payment is taken to constitute an eligible benefit provided by the provider to the recipient at that time; and
(b) if the eligible benefit is a distribution benefit in relation to the first company - each of the following is a distribution time for the eligible benefit:
(c) if the eligible benefit is a distribution benefit in relation to the first company - the distribution payment in relation to the distribution time is:
47A(12)
An eligible benefit that is covered by subsection (11) and provided at a particular time is not a distribution benefit in relation to the first company if, at that time, there is no entity (other than the provider referred to in that subsection) who is:
(a) either:
(b) the holder of an eligible equity interest in the recipient referred to in that subsection.
47A(13)
If:
(a) apart from this subsection, a particular eligible benefit that is covered by subsection (8) or (11) and provided at a particular time is not a distribution benefit in relation to the first company only because of subsection (9) or (12); and
(b) at a later time, there is an entity (other than the provider referred to in subsection (8) or (11), as the case may be) who is:
(ba) if the eligible benefit consists of the acquisition of a share or unit - at that later time, the share or unit has not been redeemed or bought back by the recipient mentioned in subsection (8) for a consideration equal to or greater than the arm ' s length value of the share or unit;
(c) this section has effect as if subsection (9) or (12), as the case requires, had never applied in relation to that eligible benefit;
(d) section 170 does not prevent the amendment of an assessment at any time for the purposes of giving effect to this subsection.
47A(14)
If:
(a) apart from this subsection, a particular eligible benefit (in this subsection called the first eligible benefit ) that is covered by subsection (8) or (11) and provided at a particular time is not a distribution benefit in relation to the first company only because of subsection (9) or (12); and
(b) the recipient referred to in whichever of subsections (8) and (11) is applicable provides an eligible benefit (in this subsection called the second eligible benefit ) to:
(c) the provision of the first eligible benefit facilitated, directly or indirectly, the provision of the second eligible benefit; and
(ca) if the second eligible benefit is covered by subsection (8) or (11):
(d) this section has effect as if subsection (9) or (12), as the case requires, had never applied in relation to the first eligible benefit;
(e) section 170 does not prevent the amendment of an assessment at any time for the purposes of giving effect to this subsection.
47A(15)
In determining whether a company has profits at a particular time, it is to be assumed that the accounts of the company had been drawn up immediately before that time.
47A(16)
For the purposes of this section, where:
(a) the first company has profits (in this subsection called the original profits ) immediately before a distribution time for a distribution benefit in relation to the first company; and
(b) by virtue of subsection (1), an amount (in this subsection called the original assessable amount ) is included in the assessable income of a taxpayer (in this subsection called the original taxpayer ) of a year of income (in this subsection called the original year of income ) under section 44 in respect of the distribution payment in relation to the distribution time; and
(c) any of the following subparagraphs applies:
47A(17)
For the purposes of this section, where:
(a) the first company has profits (in this subsection called the original profits ) immediately before a distribution time for a distribution benefit in relation to the first company; and
(b) by virtue of subsection (1), an amount (in this subsection called the original assessable amount ) is included in the assessable income of a taxpayer (in this subsection called the original taxpayer ) of a year of income (in this subsection called the original year of income ) under section 44 in respect of the distribution payment in relation to the distribution time; and
(c) all of the following conditions are satisfied:
47A(18)
For the purposes of this section, where:
(a) the first company has profits (in this subsection called the original profits ) immediately before a distribution time for a distribution benefit in relation to the first company; and
(b) by virtue of subsection (1), an amount (in this subsection called the original assessable amount ) is included in the assessable income of a taxpayer (in this subsection called the original taxpayer ) of a year of income (in this subsection called the original year of income ) under section 44 in respect of the distribution payment in relation to the distribution time; and
(c) the original taxpayer is the trustee of a trust estate or a partnership; and
(d) the following conditions are satisfied in relation to another taxpayer (in this subsection called the actual taxpayer ):
47A(18A)
An assessment may be made of a taxpayer on the assumption that subsection (2) will not be applicable in relation to a particular distribution payment made during a year of income of the taxpayer.
47A(18B)
Where:
(a) the assessment mentioned in subsection (18A) is made; and
(b) after the making of the assessment, the Commissioner becomes aware that subsection (2) was applicable in relation to the distribution payment concerned;
47A(19)
The provisions of section 102AAJ apply for the purposes of this section in like manner as they apply for the purposes of Division 6AAA .
47A(20)
For the purposes of this section, the question whether a company is a resident of an unlisted country is to be determined in the same manner in which that question is determined for the purposes of Part X .
47A(21)
In this section:
(a) any agreement, arrangement, understanding, promise or undertaking, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings; and
(b) any scheme, plan, proposal, action, course of action or course of conduct, whether there are 2 or more parties or only one party involved.
(a) a shareholder in the company;
(b) an entity who is an associate of a shareholder in the company.
(a) in relation to a company, means any of the following:
(b) in relation to a unit trust, means any of the following:
(a) an advance of money; and
(b) the provision of credit or any other form of financial accommodation; and
(c) the payment of an amount for, on account of, on behalf or at the request of an entity where there is an obligation (whether expressed or implied) to repay the amount; and
(d) a transaction (whatever its terms or form) which in substance effects a loan of money.
Division 3 - Deductions
Subdivision A
-
General
SECTION 51AAA
51AAA(1)
DEDUCTIONS NOT ALLOWABLE IN CERTAIN CIRCUMSTANCES
Where:
(a) an amount is included in the assessable income of a taxpayer of a year of income by section 102-5 of the Income Tax Assessment Act 1997 (about net capital gains) or subsection 124ZZB(1) of this Act (about notional capital gains of PDFs);
(b) a deduction would, but for this section, be allowable under a provision listed in the table in subsection (2) to the taxpayer; and
(c) if the amount had not been included in the assessable income the deduction would not be allowable;
51AAA(2)
The table lists provisions allowing deductions that are affected by subsection (1). 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 .
SECTION 51AD DEDUCTIONS NOT ALLOWABLE IN RESPECT OF PROPERTY USED UNDER CERTAIN LEVERAGED ARRANGEMENTS 51AD(1)
In this section:
(a) any agreement, arrangement, understanding, promise or undertaking, whether express or implied, and whether or not enforceable, or intended to be enforceable, by legal proceedings; and
(b) any scheme, plan, proposal, action, course of action or course of conduct, whether unilateral or otherwise.
(a) any arrangement under which a right to use the property is granted by the owner to another person; and
(b) any arrangement under which a right to use the property, being a right derived directly or indirectly from a right referred to in paragraph (a), is granted by a person to another person;
51AD(1A)
This section does not apply to property that is put to a tax preferred use (within the meaning of the Income Tax Assessment Act 1997 ) if the tax preferred use:
(a) starts on or after 1 July 2007; and
(b) does not occur under a legally enforceable arrangement entered into before 1 July 2007.
51AD(1B)
This section does not apply to property that is put to a tax preferred use (within the meaning of the Income Tax Assessment Act 1997 ) if:
(a) the tax preferred use starts on or after 1 July 2007; and
(b) the tax preferred use occurs under a legally enforceable arrangement that was entered into before 1 July 2007; and
(c) an election is made under item 71 of Schedule 1 to the Tax Laws Amendment (2007 Measures No. 5) Act 2007 to have subitem 71(2) of that Schedule apply to the property.
51AD(1C)
This section does not apply to property on or after 1 July 2007 if:
(a) Division 16D applied to the property immediately before 1 July 2007; or
(b) this section did not apply to the property immediately before 1 July 2007 and Division 16D would apply to the property on or after 1 July 2007 but for subsection 159GH(2) .
51AD(1D)
Subparagraph (4)(a)(iii) and sub-subparagraph (4)(b)(ii)(D) do not apply to property acquired by a taxpayer if:
(a) the property is acquired by the taxpayer on or after 1 July 2007; and
(b) the property is not acquired under a legally enforceable arrangement entered into before 1 July 2007.
51AD(2)
In this section, a reference to the acquisition of property by a person is a reference to:
(a) the person becoming the owner of the property; or
(b) the construction of the property for the person by another person or other persons on premises of the first-mentioned person.
51AD(3)
In this section, a reference to property being held for use includes a reference to property that is installed ready for use and held in reserve.
51AD(3A)
(Repealed by No 77 of 2001)
51AD(3B)
For the purpose of this section, disregard an acquisition or disposal of property by way of the transfer of the property for the provision or redemption of a security. Consequently this section applies as if the person who was the owner of the property before the transfer continues to be the owner after the transfer.
51AD(4)
Subject to subsections (1A), (1B), (1C), (1D) and (8), this section applies, in relation to a taxpayer, to property acquired or constructed by the taxpayer, being property acquired by the taxpayer under a contract entered into after the prescribed time or property constructed by the taxpayer, construction having commenced after that time, if:
(a) at a time when the property is owned by the taxpayer, a person (which person is in this section referred to as the end-user ) holds rights as lessee under a lease of the property, and:
(b) in a case to which paragraph (a) does not apply:
51AD(5)
In subparagraph (4)(a)(iii) and sub-subparagraph (4)(b)(ii)(D), a reference to the end-user is a reference to the end-user, any of the end-users (where there are 2 or more end-users), any associate of the end-user or of any of those end-users, or any 2 or more such persons.
51AD(6)
For the purposes of subsection (4), property shall be taken not to have been, prior to its acquisition by the taxpayer, owned, and used or held for use, by a person if:
(a) the property was first used or held for use by the person at a time within 6 months before the acquisition of the property by the taxpayer; and
(b) at that time there was in existence an arrangement that the property would be sold to another person and leased by that person to the first-mentioned person.
51AD(7)
Where:
(a) the end-user consists of all or any of the partnersin a partnership; and
(b) a condition of paragraph (4)(a) or (b), as the case may be, is satisfied in relation to any of the partners in the partnership;
51AD(8)
This section does not apply to property, in relation to a taxpayer, unless the whole or a predominant part of the cost of the acquisition or construction, as the case may be, of the property by the taxpayer is financed directly or indirectly by a debt or debts (which debt is, or debts are, referred to in this subsection as the non-recourse debt ) and the rights of the creditor or creditors as against the taxpayer in the event of default in the repayment of principal or payment of interest:
(a) are limited wholly or predominantly to any or all of the following:
(b) are in the opinion of the Commissioner capable of being so limited, having regard to either or both of the following:
(c) where paragraphs (a) and (b) do not apply - are limited by reason that not all of the assets of the taxpayer (not being assets that are security for debts of the taxpayer other than the non-recourse debt) would be available for the purpose of the discharge of the whole of the non-recourse debt (including the payment of interest) in the event of any action or actions by the creditor or creditors against the taxpayer arising out of that debt.
51AD(9)
Where:
(a) property has been financed by a debt or debts as mentioned in subsection (8); and
(b) the rights of the creditor or creditors as against the taxpayer are, or are capable of being, limited as mentioned in that subsection;
51AD(10)
Subject to subsections (11), (12), (13) and (15), where this section has applied to property, in relation to a taxpayer, at any time, the taxpayer shall be deemed not to have occupied or used the property, or held the property for use, at that time, for the purpose of producing assessable income or in carrying on a business for that purpose.
51AD(11)
Where this section has applied to property, in relation to a taxpayer, at any time during a year of income by reason of subparagraph (4)(a)(ii) or sub-subparagraph (4)(b)(ii)(B), and for any part of that time the end-user held, occupied or used the property referred to in that subparagraph, or held it for use, or used any goods or services referred to in that sub-subparagraph, as the case may be, partly for the purpose of producing assessable income, the taxpayer shall be deemed, for the whole of the time during the year of income when this section applied to the property, to have held, occupied or used the property, or held it for use, for the purpose of producing assessable income, or in carrying on a business for that purpose, to the extent thatthe Commissioner considers appropriate.
51AD(12)
Where this section has applied to property, in relation to a taxpayer, at any time during a year of income by reason of sub-subparagraph (4)(b)(ii)(C), and for any part of that time the end-user derived assessable income in relation to the production, supply, carriage, transmission or delivery of goods, or the provision of services, as mentioned in subparagraph (4)(b)(i), the taxpayer shall be deemed, for the whole of the time during the year of income when this section applied to the property, to have held, occupied or used the property, or held it for use, for the purpose of producing assessable income, or in carrying on a business for that purpose, to the extent that the Commissioner considers appropriate.
51AD(13)
Where:
(a) this section has applied to property, in relation to a taxpayer, at any time during a year of income by reason of subparagraph (4)(a)(ii) or sub-subparagraph (4)(b)(ii)(B) or (C);
(b) the end-user referred to in that subparagraph or sub-subparagraph, as the case may be, consisted of all or any of the partners in a partnership; and
(c) for any part of that time one or more of the partners in the partnership was a person in respect of whom, but for the operation of subsection (7), that subparagraph or sub-subparagraph, as the case may be, would not have applied;
51AD(14)
In considering, for the purposes of subsection (13), the extent to which the taxpayer shall be deemed to have held, occupied or used property, or held it for use, for the purpose of producing assessable income, or in carrying on a business for that purpose, the Commissioner shall have regard:
(a) to the interest or interests of the partner or partners referred to in paragraph (13)(c) in the net income, or the partnership loss, of the partnership of the year of income corresponding to the year of income referred to in paragraph (13)(a);
(b) the extent to which, for any part of the time referred to in paragraph (13)(a), a partner or partners other than the partner or partners referred to in paragraph (13)(c) held, occupied or used the property, or held it for use, or used the goods or services referred to in sub-subparagraph (4)(b)(ii)(B), as the case may be, for the purpose of producing assessable income; and
(c) the extent to which, for any part of the time referred to in paragraph (13)(a), a partner or partners other than the partner or partners referred to in paragraph (13)(c) derived assessable income in relation to the production, supply, carriage, transmission or delivery of goods, or the provision of services, as mentioned in subparagraph (4)(b)(i).
51AD(15)
Notwithstanding anything contained in subsections (10), (11) and (13), at any time when this section applies to property by reason of subparagraph (4)(a)(ii), the property shall be deemed not to be held, occupied or used, or held for use, by the taxpayer for the purpose of producing assessable income, or in carrying on a business for that purpose, if, at that time:
(a) 2 or more end-users hold rights as lessees under the lease of the property;
(b) one or more of the end-users (which end-user is, or end-users are, referred to in this subsection as the exempt end-user ) is a company, or are companies, the income of which is ordinarily exempt from income tax;
(c) the property is, or is to be, used wholly or principally in or in connection with the conduct of operations or transactions of a kind that the exempt end-user ordinarily engages in;
(d) the exempt end-user controls, will control, or is or will be able to control, directly or indirectly, that use of the property; and
(e) in relation to those operations or transactions, the exempt end-user derives, or is to derive, no income or income that is exempt from income tax.
51AD(16)
Where a taxpayer has incurred expenditure for repairs to property to which this section applies or has applied in relation to the taxpayer and, but for this section, a deduction would be allowable under section 25-10 (Repairs) of the Income Tax Assessment Act 1997 in respect of that expenditure, so much of the expenditure as the Commissioner considers appropriate shall be deemed not to be allowable, having regard to:
(a) the period for which the taxpayer owned the property before the repairs were commenced and any part of that period during which this section applies or applied to the property in relation to the taxpayer; and
(b) in a case to which subsection (11), (12) or (13) of this section applies or applied - the extent to which, for the time during the part of the period referred to in paragraph (a), the taxpayer was deemed to have held, occupied or used the property, or held it for use, for the purpose of producing assessable income, or in carrying on a business for that purpose.
51AD(17)
Where a taxpayer has incurred expenditure in borrowing money to finance the acquisition or construction of property to which this section applies or has applied in relation to the taxpayer and a deduction has been allowed, or would but for this section be allowable, under section 25-25 (Borrowing expenses) of the Income Tax Assessment Act 1997 in relation to that expenditure, so much of the deduction as the Commissioner considers appropriate shall be deemed not to have been, or not to be, allowable, as the case may be, having regard to:
(a) the period for which the money was borrowed or, by the operation of subsection 25-25(6) of that Act, is deemed to have been borrowed and any part of that period during which this section applies, applied or, in the opinion of the Commissioner, will apply to the property; and
(b) in a case to which subsection (11), (12) or (13) of this section applies or applied - the extent to which, for the time during the part of the period referred to in paragraph (a), the taxpayer is, or in the opinion of the Commissioner will be, deemed to have held, occupied or used the property, or held it for use, for the purpose of producing assessable income, or in carrying on a business for that purpose.
51AD(18)
Where a taxpayer has incurred expenditure for the preparation, registration and stamping of a lease, or of an assignment or surrender of a lease, of property to which this section applies or has applied in relation to the taxpayer and a deduction has been allowed, or would but for this section be allowable, under section 25-20 (Lease document expenses) of the Income Tax Assessment Act 1997 in respect of that expenditure, so much of the deduction as the Commissioner considers appropriate shall be deemed not to have been, or not to be, allowable, as the case may be, having regard to:
(a) the period of the lease and any part of that period during which this section applies, applied or, in the opinion of the Commissioner, will apply to the property; and
(b) in a case to which subsection (11), (12) or (13) of this section applies or applied - the extent to which, for the time during the part of the period mentioned in paragraph (a), the taxpayer is, or in the opinion of the Commissioner will be, deemed to have held, occupied or used the property, or held it for use, for the purpose of producing assessable income, or in carrying on a business for that purpose.
51AD(19)
Where:
(a) the individual interest of a taxpayer in the net income of a partnership has been or is to be included in the assessable income of the taxpayer of a year of income (in this subsection referred to as the relevant year of income ), or the individual interest of a taxpayer in a partnership loss has been allowed or is allowable as a deduction from the assessable income of the taxpayer of a year of income (in this subsection also referred to as the relevant year of income );
(b) a deduction was taken into account in calculating that net income or partnership loss;
(c) the deduction or a part of the deduction (which deduction or part of the deduction, as the case may be, is referred to in this subsection as the relevant deduction ) would not have been taken into account for the purpose of that calculation if this section applied in relation to particular property acquired or constructed by the partnership;
(d) this section does not apply in relation to the property by reason only that the property was acquired by the partnership under a contract entered into at or before the prescribed time or was constructed by the partnership, construction having commenced at or before that time; and
(e) the taxpayer became a partner in the partnership under a contract entered into by the taxpayer after the prescribed time;
51AD(20)
Where:
(a) the individual interest of a taxpayer in the net income of a partnership has been or is to be included in the assessable income of the taxpayer of a year of income (in this subsection referred to as the relevant year of income ), or the individual interest of a taxpayer in a partnership loss has been allowed or is allowable as a deduction from the assessable income of the taxpayer of a year of income (in this subsection also referred to as the relevant year of income );
(b) a deduction was taken into account in calculating that net income or partnership loss;
(c) the deduction or a part of the deduction (which deduction or part of the deduction, as the case may be, is referred to in this subsection as the relevant deduction ) would not have been taken into account for the purpose of that calculation if this section applied in relation to particular property acquired or constructed by the partnership;
(d) this section does not apply in relation to the property by reason only that the property was acquired by the partnership under a contract entered into at or before the prescribed time or was constructed by the partnership, construction having commenced at or before that time;
(e) the taxpayer became a partner in the partnership under a contract entered into by the taxpayer before the prescribed time; and
(f) after the prescribed time, the taxpayer made or agreed to make a contribution or contributions (which contribution is or contributions are in this subsection referred to as the additional contribution ) to the capital of the partnership in addition to any contribution or contributions to the capital of the partnership that, under a contract or contracts entered into at or before that time, the taxpayer had made or agreed to make; and
(g) by reason of making or agreeing to make the additional contribution, the individual interest of the taxpayer in that net income or partnership loss, being that individual interest expressed as a fraction of the aggregate of the individual interests of the partners in that net income or partnership loss, is greater than it would otherwise have been;
51AD(21)
For the purposes of determining if this section applies to property, the income of a prescribed excluded STB (within the meaning of Division 1AB ) is taken to be exempt.
SECTION 51AEA MEAL ENTERTAINMENT - ELECTION UNDER SECTION 37AA OF FRINGE BENEFITS TAX ASSESSMENT ACT 1986 TO USE 50/50 SPLIT METHOD 51AEA(1) [Allowable deductions]
(a) for each expense incurred in the FBT year by the taxpayer in providing meal entertainment, a deduction equal to 50% of that expense is allowable to the taxpayer for the year of income in which it is incurred; and
(b) no other deduction under any provision of this Act is allowable to the taxpayer for the expense. 51AEA(2) [Meaning of expressions used]
SECTION 51AEB
MEAL ENTERTAINMENT
-
ELECTION UNDER SECTION 37CA OF
FRINGE BENEFITS TAX ASSESSMENT ACT 1986
TO USE THE 12 WEEK REGISTER METHOD
51AEB(1)
If a taxpayer has made an election under section 37CA of the Fringe Benefits Tax Assessment Act 1986 :
(a) for each expense incurred in the FBT year by the taxpayer in providing meal entertainment, a deduction equal to the amount worked out using the following formula is allowable to the taxpayer for the year of income in which it is incurred:
(b) no other deduction under any provision of this Act is allowable to the taxpayer for the expense.
51AEB(2)
The register percentage is the percentage worked out using the formula:
51AEB(3)
Expressions used in this section have the same meaning as in the Fringe Benefits Tax Assessment Act 1986 .
SECTION 51AEC ENTERTAINMENT FACILITY - ELECTION UNDER SECTION 152B OF FRINGE BENEFITS TAX ASSESSMENT ACT 1986 TO USE 50/50 SPLIT METHOD 51AEC(1) [Allowable deductions]
(a) for each entertainment facility leasing expense incurred in the FBT year by the taxpayer, a deduction equal to 50% of that expense is allowable to the taxpayer for the year of income in which it is incurred; and
(b) no other deduction under any provision of this Act is allowable to the taxpayer for entertainment facility leasing expenses incurred in the FBT year. 51AEC(2) [Meaning of expressions used]
SECTION 51AF
CAR EXPENSES INCURRED BY EMPLOYEE
51AF(1)
Where:
(a) during a particular period, an employer provides a car for the exclusive use of a person who is, or of persons any of whom is, an employee of the employer or a relative of such an employee; and
(b) at any time during that period, the employee or a relative of the employee is entitled to use the car for private purposes;
(c) is incurred by the employee during that period; or
(d) is incurred by the employee and is wholly or partly attributable to that period.
51AF(2)
In this section:
(a) in the case of an unincorporate body of persons other than a partnership - the manager or other principal officer of that body; and
(b) in the case of a partnership - each partner; and
(c) an Australian government agency as defined in subsection 995-1(1) of the Income Tax Assessment Act 1997 .
SECTION 51AGA NO DEDUCTION TO EMPLOYEE FOR CERTAIN CAR PARKING EXPENSES 51AGA(1) No deduction.
(a) on that day, the employee has a primary place of employment; and
(b) on that day, the car is parked for one or more daylight periods exceeding 4 hours in total at, or in the vicinity of, that primary place of employment; and
(c) the expenditure is in respect of the provision of the parking facilities to which that parking relates; and
(d) on that day, the car was used in connection with travel by the employee between:
(e) the provision of parking facilities for the car during the period or periods is not taken, under the regulations, to be excluded from this section; and
(f) the day is on or after 1 July 1993. 51AGA(2) Definitions.
FORMER SECTION 51AGB
51AGB
NO DEDUCTIONS FOR CERTAIN SELF-EMPLOYED PERSONS, PARTNERSHIPS AND TRUSTS FOR CERTAIN CAR PARKING EXPENSES
(Repealed by No 16 of 1999)
SECTION 51AH
DEDUCTIONS NOT ALLOWABLE WHERE EXPENSES INCURRED BY EMPLOYEE ARE REIMBURSED
51AH(1)
Where:
(a) either of the following subparagraphs applies:
(b) the payment or reimbursement, as the case may be, constitutes:
(c) in the case of a reimbursement - the amount of the reimbursement is not included in the taxpayer's assessable income under section 15-70 of the Income Tax Assessment Act 1997 ;
(d) if it would be concluded that the amount of the payment or reimbursement would have been the same even if the loss or outgoing were not incurred in producing assessable income of the taxpayer - calculated as if the loss or outgoing were reduced by the amount of the payment or reimbursement; or
(e) in any other case - reduced by the amount of the payment or reimbursement.
51AH(2)
Expressions (other than " fringe benefit " ) used in this section and in the Fringe Benefits Tax Assessment Act 1986 have the same respective meanings in this section as they have in that Act.
51AH(3)
This section does not apply to deductions under Division 40 of the Income Tax Assessment Act 1997 (about capital allowances).
SECTION 51AJ DEDUCTIONS NOT ALLOWABLE FOR PRIVATE COMPONENT OF CONTRIBUTIONS FOR FRINGE BENEFITS ETC. 51AJ(1)
Where:
(a) any of the following benefits is provided in respect of the employment of an employee of an employer:
(b) the benefit is:
(c) in the case of a loan benefit - the taxpayer, being the recipient or the employee, incurs interest (in this section called the recipients interest ) in respect of the loan;
(d) in the case of a benefit other than a loan benefit - the taxpayer, being the recipient or the employee, incurs consideration (in this section called the recipients contribution ) to the provider or to the employer in respect of the provision of the recipients transport, the recipients meal, the recipients property or the recipients benefit, as the case may be;
(e) it would be concluded that, in calculating the amount of the recipients interest, or the amount of the recipients contribution, as the case may be, the provider or the employer made an allowance for a particular level of application or use of the benefit in producing assessable income of the taxpayer; and
(f) it would be concluded that the amount of the recipients interest, or the amount of the recipients contribution, as the case may be, would have been greater if it had been calculated without making that allowance;
(g) if the extent of the application or use of the benefit concerned in producing assessable income of the taxpayer is equal to, or less than, that level - a deduction is not allowable to the taxpayer under this Act in respect of the recipients interest or the recipients contribution;
(h) if the extent of the application or use of the benefit concerned in producing assessable income of the taxpayer exceeds that level - the amount of the deduction that, but for this section, has been allowed or would be allowable to the taxpayer under this Act in respect of the recipients interest or the recipients contribution shall not exceed the amount calculated in accordance with the formula:
where:
51AJ(2)
Expressions (other than " recipients contribution " and " fringe benefit " ) used in this section and in the Fringe Benefits Tax Assessment Act 1986 have the same respective meanings in this section as they have in that Act.
SECTION 51AK AGREEMENTS FOR THE PROVISION OF NON-DEDUCTIBLE NON-CASH BUSINESS BENEFITS 51AK(1)
Subject to this section, where:
(a) under an agreement:
(b) that benefit is not exclusively for use or application for the purpose of producing assessable income of the taxpayer;
51AK(2)
This section does not apply so as to treat particular expenditure, or the cost of particular property, to be a particular amount for a particular purpose if there is another provision of this Act that deems that expenditure, or the cost of that property, to be a lesser amount for that purpose.
51AK(3)
A reference in this section to producing assessable income includes a reference to:
(a) gaining assessable income; or
(b) carrying on a business for the purpose of gaining or producing assessable income.
51AK(4)
Expressions used in this section and in section 21A have the same respective meanings in this section as they have in that section.
51AK(5)
In this section:
FORMER SECTION 51A 51A DEDUCTION IN RESPECT OF LIVING-AWAY-FROM-HOME ALLOWANCES
(Repealed by No 41 of 1986)
SECTION 52
LOSS ON PROPERTY ACQUIRED FOR PROFIT-MAKING
52(1AA)
This section does not apply to a loss arising in the 1997-98 year of income or a later year of income from the carrying on or carrying out of a profit-making undertaking or scheme, even if the undertaking or scheme was entered into, or began to be carried on or carried out, before the 1997-98 year of income.
52(1A)
This section does not apply in respect of the sale of property acquired on or after 20 September 1985.
52(1)
Any loss incurred by the taxpayer in the year of income upon the sale of any property or from the carrying on or carrying out of any undertaking or scheme, the profit (if any) from which sale, undertaking or scheme would have been included in the taxpayer's assessable income, shall be an allowable deduction:
52(2)
Where:
(a) a taxpayer sells property (in this subsection referred to as the relevant property ) that is deemed by subsection 25A(5) or (8) to have been acquired by the taxpayer for the purpose of profit-making by sale;
(b) the Commissioner is satisfied that the relevant property has not been held or used by the taxpayer in a manner inconsistent with such a purpose; and
(c) the Commissioner, having regard to:
52(3)
Except as provided by subsection (2), a deduction is not allowable to a taxpayer under this section in respect of a loss incurred upon a sale of property to which paragraph (2)(a) applies.
52(4)
Where:
(a) a loss is incurred by a taxpayer upon the sale of property (in this subsection referred to as the relevant property ); and
(b) the taxpayer is deemed to have acquired the relevant property for the purpose of profit-making by sale by virtue of the application of subsection 25A(6) in accordance with subparagraph (b)(ii) of that subsection,
52(5)
A deduction is not allowable to a taxpayer under subsection (1) in respect of a loss incurred by the taxpayer upon the sale of property if:
(a) the sale is a transfer in the prescribed manner by the taxpayer for the purposes of section 25A ; or
(b) the property is deemed by subsection 25A(2) to have been acquired by the taxpayer for the purposes of profit-making by sale and was not actually acquired by the taxpayer for that purpose.
SECTION 52A CERTAIN AMOUNTS DISREGARDED IN ASCERTAINING TAXABLE INCOME 52A(1)
Notwithstanding section 8-1 of the Income Tax Assessment Act 1997 , losses or outgoings consisting of expenditure incurred by a taxpayer in the purchase or acquisition, after 7 April 1978, of any prescribed property as trading stock of the taxpayer shall, if the Commissioner considers that it would be unreasonable that a deduction be allowable to the taxpayer in respect of the whole of those losses or outgoings, be allowable as a deduction to the taxpayer to theextent only that the Commissioner considers that it is reasonable in the circumstances that a deduction be allowable to the taxpayer in respect of those losses or outgoings.
52A(2)
Where:
(a) expenditure incurred by a taxpayer in the purchase or acquisition, after 7 April 1978, of any prescribed property that was purchased or acquired in the carrying on or carrying out of any profit-making undertaking or scheme would, but for this subsection, be taken into account for the purpose of ascertaining whether any profit arose, or any loss was incurred, from the carrying on or carrying out of the undertaking or scheme and for the purpose of ascertaining the amount of any such profit or loss; and
(b) the Commissioner considers that it would be unreasonable that the whole of that expenditure be taken into account for those purposes;
52A(2A)
Where:
(a) prescribed property that was acquired by a taxpayer after 24 September 1978 and before the commencement of this subsection or is acquired after the commencement of this subsection was or is treated or used by the taxpayer as an asset of a business carried on by the taxpayer;
(b) but for this subsection, a deduction would be allowable to the taxpayer in respect of the value of that property; and
(c) the Commissioner considers that it would be unreasonable that a deduction be allowable to the taxpayer in respect of the value of the property to the extent to which, but for this subsection, a deduction would be allowable to the taxpayer in respect of the value of the property;
52A(2B)
Where:
(a) the value of any prescribed property that:
(b) the Commissioner considers that it would be unreasonable that the value of the property be taken into account for those purposes to the extent to which the value would, but for this subsection, be taken into account for those purposes;
52A(3)
In forming an opinion for the purposes of subsection (1) or (2A) as to the extent to which it is reasonable that a deduction be allowable to a taxpayer in respect of expenditure incurred in the purchase or acquisition of prescribed property or in respect of the value of prescribed property, as the case may be, or in forming an opinion for the purposes of subsection (2) or (2B) as to the extent to which it is reasonable that expenditure incurred by a taxpayer in the purchase or acquisition of prescribed property should be taken into account for the purposes referred to in subsection (2) or that the value of prescribed property should be taken into account for the purposes referred to in subsection (2B), as the case may be:
(a) if the taxpayer expended moneys in purchasing or acquiring the prescribed property - the Commissioner shall have regard to the circumstances in which, and the person or persons from whom, the taxpayer obtained moneys:
(b) if the taxpayer borrowed from another person (in this paragraph referred to as the lender ) moneys that were expended by the taxpayer in purchasing or acquiring the prescribed property or moneys that, in the opinion of the Commissioner, were obtained by, or paid to, the taxpayer to enable the taxpayer to expend moneys in purchasing or acquiring the prescribed property - the Commissioner shall have regard to:
(c) if, either before or after the purchase or acquisition of the prescribed property by the taxpayer, an agreement or arrangement (whether or not enforceable by legal proceedings and whether or not intended to be so enforceable) was entered into, or an understanding was reached, as a result of which there has been, or there could reasonably be expected to be, a substantial reduction in the value of the prescribed property - the Commissioner shall have regard to that agreement, arrangement or understanding;
(d) if the purchase or acquisition of the prescribed property by the taxpayer arose out of, or was made in the course of, a transaction, operation, undertaking, scheme or arrangement that was entered into or carried out for the purpose, or for purposes that included the purpose, of securing that a person who, if the transaction, operation, undertaking, scheme or arrangement, had not been entered into or carried out, would have been liable to pay income tax in respect of a year of income would not be liable to pay income tax in respect of that year of income or would be liable to pay less income tax in respect of that year of income than that person would have been liable to pay if the transaction, operation, undertaking, scheme or arrangement had not been entered into or carried out - the Commissioner shall have regard to that transaction, operation, undertaking, scheme or arrangement;
(e) if the purchase or acquisition of the prescribed property by the taxpayer arose out of, or was made in the course of, a transaction, operation, undertaking, scheme or arrangement that the Commissioner is satisfied was by way of dividend stripping or was similar to a transaction, operation, undertaking, scheme or arrangement by way of dividend stripping - the Commissioner shall have regard to that transaction, operation, undertaking, scheme or arrangement;
(f) if:
(g) if the purchase or acquisition of the prescribed property by the taxpayer arose out of, or was made in the course of, a transaction, operation, undertaking, scheme or arrangement under which, or in the course of which, other prescribed property was to be issued or allotted by a company (whether to the taxpayer or any other person or persons) and it could reasonably be expected that, as a result of the issue or allotment of that other prescribed property, the value of the prescribed property purchased or acquired by the taxpayer would be substantially reduced - the Commissioner shall have regard to that transaction, operation, undertaking, scheme or arrangement;
(h) if the purchase or acquisition of the prescribed property by the taxpayer arose out of, or was made in the course of, a transaction, operation, undertaking, scheme or arrangement under which, or in the course of which, rights in respect of the prescribed property or in respect of other prescribed property (whether that other prescribed property had been issued or allotted before the time of the purchase or acquisition by the taxpayer of the first-mentioned prescribed property or was to be issued or allotted at a later time) were to be withdrawn or varied and it could reasonably be expected that, as a result of a withdrawal or variation of those rights, the value of the prescribed property purchased or acquired by the taxpayer would be substantially reduced - the Commissioner shall have regard to that transaction, operation, undertaking, scheme or arrangement; and
(j) the Commissioner shall have regard to any other matters that he or she considers relevant.
52A(4)
In this section, prescribed property means any chose in action.
52A(4A)
In the preceding provisions of this section, references to the value of any prescribed property shall, unless the contrary intention appears, be read as including references to part of the value of that prescribed property.
52A(5)
For the purposes of this section:
(a) a person to whom prescribed property is issued or allotted by a company shall be taken to have acquired that prescribed property;
(b) a person upon whom prescribed property devolves by reason of the death of a person shall be taken to have acquired that prescribed property; and
(c) a person in whom prescribed property vests by the operation of any trust or the exercise of any power under a trust shall be taken to have acquired that prescribed property.
52A(6)
The reference in paragraph (3)(b) to terms and conditions shall be read as including a reference to implied terms and conditions and to terms and conditions that are not enforceable by legal proceedings whether or not they were intended to be so enforceable.
52A(7)
Where, by virtue of the application of the preceding provisions of this section, the amount (in this subsection referred to as the relevant amount ) of the deduction that is allowable to a taxpayer in respect of losses or outgoings incurred by the taxpayer in the purchase or acquisition of prescribed property is less than the amount of those losses and outgoings, the cost of that prescribed property shall, for the purposes of the application of Divisions 70 (Trading Stock) and 385 (Primary production) of the Income Tax Assessment Act 1997 in relation to that property in relation to the taxpayer, be taken to be an amount that is the same as the relevant amount.
52A(8)
References in this section to expenditure incurred by a taxpayer in the purchase or acquisition of any prescribed property shall, in the case of prescribed property being a share or stock in the capital of a company, be read as including references to any payment made or other consideration given by the taxpayer to the company in respect of the prescribed property, whether as a payment of unpaid capital in respect of the prescribed property or otherwise and whether on application for or allotment of the prescribed property, to meet calls or otherwise.
52A(9)
Subsection (8) applies to a non-share equity interest in the same way as it applies to a share.
SECTION 63 63 BAD DEBTS
Where a debt in respect of the whole or a part of a payment that has, or will, become liable to be made under a qualifying security within the meaning of Division 16E is written off as a bad debt by a taxpayer during a year of income, then, for the purposes of paragraph 25-35(1)(a) of the Income Tax Assessment Act 1997 , there is taken to have been included in the taxpayer's assessable income of a year of income so much of the debt as equals the amount (if any) ascertained in accordance with the formula
SECTION 63D
BAD DEBTS ETC. OF MONEY-LENDERS NOT ALLOWABLE DEDUCTIONS WHERE ATTRIBUTABLE TO LISTED COUNTRY OR UNLISTED COUNTRY BRANCHES
63D(1)
[Allowable deductions]
(a) apart from this section and section 63F , a deduction would be allowable to a taxpayer:
(b) the debt was created or acquired in the ordinary course of a money-lending business of the taxpayer who carries on that business; and
(c) during any part or parts (the foreign country branch period ) of the period since the debt was so created or acquired (the debt holding period ), it is the case that, if income had been derived by the taxpayer in respect of the debt, the income would not, because of section 23AH of this Act, have been included in the assessable income of the taxpayer;
(a) where the debt was acquired from a person other than an associate, within the meaning of section 318 of this Act - the number of days in the debt holding period; or
(b) in any other case - the number of days in the period beginning on the day on which the debt was created (whether by the taxpayer or another person) and ending at the end of the day on which it was written off.
63D(2)
[Debt acquired from another person]
63D(3)
[Part debt write-offs]
SECTION 63E
DEBT/EQUITY SWAPS
Meaning of debt/equity swap
63E(1)
For the purposes of this section, a debt/equity swap occurs if:
(a) under an arrangement (defined in subsection (6)), a taxpayer discharges, releases or otherwise extinguishes the whole or part of a debt owed to the taxpayer in return for the issue by the debtor to the taxpayer of shares (other than redeemable preference shares), or units, in the debtor; and
(b) the debtor is:
(c) the debt either:
Meaning of equity value and swap loss
63E(2)
For the purposes of this section:
(a) the equity value of the shares or units is the greater of:
(b) a swap loss occurs if the amount of the whole or the part of the debt that is extinguished is greater than the equity value of the shares or units.
Swap loss is deductible etc
63E(3)
If a debt/equity swap occurs:
(a) subject to section 63F , any swap loss is allowable as a deduction from the taxpayer's assessable income of the year of income in which the shares or units are issued; and
(b) no amount is allowable as a deduction from the assessable income of the taxpayer of any year of income under section 8-1 or 25-35 of the Income Tax Assessment Act 1997 in respect of the writing off of the whole or part of the debt as bad in connection with the debt/equity swap; and
(c) for the purposes of any application of Subdivision 20-A of the Income Tax Assessment Act 1997 in relation to the issue of the shares or units to the taxpayer, the amount received in respect of the issue is taken to be the same as the equity value of the shares or units.
Effect of debt/equity swap on later equity disposal etc
63E(4)
If a debt/equity swap occurs and the taxpayer later disposes of any of the shares or units or they are cancelled or redeemed:
(a) except in accordance with paragraph (b), no amount is included in, or allowable as a deduction from, the taxpayer's assessable income of any year of income under this Act in respect of the later disposal, cancellation or redemption; and
(b) if the consideration received or receivable by the taxpayer in respect of the disposal, cancellation or redemption is different from the equity value of the shares or units:
Consideration of a nil amount
63E(5)
For the purposes of subsection (4), if no consideration is received or receivable by the taxpayer in respect of the disposal, cancellation or redemption, then consideration of a nil amount is taken to have been so received or receivable.
63E(5A)
Subdivisions 165-C , 166-C and 175-C of the Income Tax Assessment Act 1997 apply to an allowable deduction under this section in respect of the whole or part of a debt that is extinguished, in the same way as they apply to a debt (or part of a debt) that is written off as bad.
Meaning of arrangement
63E(6)
In this section:
SECTION 63F
LIMIT ON DEDUCTIONS WHERE DEBT WRITE OFFS AND DEBT/EQUITY SWAPS OCCUR
Situations where limit is to be applied
63F(1)
If:
(a) apart from this section, a deduction ( the current deduction ) would be allowable to a taxpayer:
(b) a deduction ( a previous deduction ) was allowed or allowable to the taxpayer under any of those sections, under former section 51 of this Act or under section 63 of this Act in respect of any number of occurrences of either or both of the following:
(c) the current deduction or at least one previous deduction is a deduction allowable under section 63E of this Act in respect of a debt/equity swap;
Calculation of limit
63F(2)
The limit is worked out as follows:
SECTION 63G 63G BAD DEBTS, ETC. OF TRUST NOT ALLOWABLE IN CERTAIN CIRCUMSTANCES
If:
(a) a deduction is allowable from a trust's assessable income of any year of income:
(b) the debt was incurred as well as written off or extinguished on the last day of the year of income;
SECTION 65
PAYMENTS TO ASSOCIATED PERSONS AND RELATIVES
65(1B)
Where, by virtue of section 26-35 (Reduction of deduction for amounts paid to related entities) of the Income Tax Assessment Act 1997 , an amount is not allowable as a deduction in calculating in accordance with section 90 of this Act the net income, or a partnership loss, of a partnership in which a company, being a private company in relation to the year of income of the company to which the individual interest of the company in the net income of the partnership or in the partnership loss relates, is a partner:
(a) the company shall, for the purposes of this Act other than Division 11A , be deemed to have paid, on the last day of that year of income, a dividend of an amount ascertained in accordance with subsection (1C); and
(b) subsection 26-35(4) of the Income Tax Assessment Act 1997 does not apply in relation to so much of the amount that is not so allowable as a deduction as is equal to the amount of the dividend that the company is to be so deemed to have paid.
65(1C)
For the purposes of subsection (1B), the amount of the dividend that the company is to be deemed to have paid is:
(a) where the effect of the disallowance of the deduction has been to increase the net income of the partnership - an amount equal to the difference between the amount of the individual interest of the company in the net income of the partnership and the amount that would have been the individual interest of the company in the net income of the partnership if the deduction had been allowed;
(b) where the effect of the disallowance of the deduction has been to reduce the partnership loss - an amount equal to the difference between the amount of the individual interest of the company in the partnership loss and the amount that would have been the individual interest of the company in the partnership loss if the deduction had been allowed;
(c) where there is net income of the partnership and the amount of the deduction that was disallowed is equal to that net income - an amount equal to the individual interest of the company in the net income of the partnership;
(d) where there is net income of the partnership and, but for the disallowance of the deduction, there would have been a partnership loss - an amount equal to the sum of the amount of the individual interest of the company in the net income of the partnership and the amount that would have been the individual interest of the company in the partnership loss if the deduction had been allowed; and
(e) where there is no net income of the partnership and, but for the disallowance of the deduction, there would have been a partnership loss - an amount equal to the amount that would have been the individual interest of the company in the partnership loss if the deduction had been allowed.
FORMER SECTION 67AAA
67AAA
DEDUCTIONS NOT ALLOWABLE FOR INTEREST ETC. ON LOANS OBTAINED TO FINANCE CERTAIN SUPERANNUATION CONTRIBUTIONS AND LIFE ASSURANCE PREMIUMS
(Repealed by No 15 of 2007)
SECTION 70B
DEDUCTION FOR LOSS ON DISPOSAL OR REDEMPTION OF TRADITIONAL SECURITIES
70B(1)
Expressions used in this section that are also used in section 26BB have the same meanings in this section as in section 26BB .
70B(2)
Where a taxpayer disposes of a traditional security or a traditional security of a taxpayer is redeemed, the amount of any loss on the disposal or redemption is allowable as a deduction from the assessable income of the taxpayer of the year of income in which the disposal or redemption takes place.
70B(2A)
A deduction is not allowable under subsection (2) for a loss on the disposal or redemption of traditional securities that are:
(a) segregated exempt assets (for the purposes of the Income Tax Assessment Act 1997 ) of a life assurance company; or
(b) segregated current pension assets (as defined in the Income Tax Assessment Act 1997 ) of a complying superannuation fund.
70B(2B)
A deduction is not allowable under subsection (2) for a loss on the disposal or redemption of a traditional security if:
(a) the disposal or redemption occurs because the traditional security is converted into ordinary shares in a company that is:
(b) the traditional security was issued on the basis that it will or may convert into ordinary shares in:
70B(2C)
A deduction is not allowable under subsection (2) for a loss on the disposal or redemption of a traditional security if:
(a) the disposal or redemption is in exchange for ordinary shares in a company that is neither:
(b) in the case of a disposal - the disposal is to:
(c) the traditional security was issued on the basis that it will or may be:
70B(3)
Where the Commissioner, having regard to any connection between the parties to the transaction by which the taxpayer disposed of the traditional security or by which it was redeemed, or by which the taxpayer acquired the traditional security, is satisfied that the parties were not dealing with each other at arm's length in relation to the transaction, then, for the purposes of determining under subsection (2) the amount of any loss on the disposal or redemption, the consideration for the transaction shall be taken to be:
(a) the amount that might reasonably be expected for the transaction if the parties were independent parties dealing at arm's length with each other; or
(b) where, for any reason it is not possible or practicable for the Commissioner to ascertain that amount - such amount as the Commissioner determines.
70B(4)
If:
(a) a taxpayer disposes of a traditional security or a traditional security of a taxpayer is redeemed; and
(b) there is a loss on the disposal or redemption; and
(c) in the case of a disposal or redemption of a marketable security:
(d) in the case of a disposal of a marketable security - the disposal did not take place in the ordinary course of trading on a securities market; and
(e) having regard to:
70B(5)
A reference in this section to the disposal by a taxpayer of a security, or to the redemption of a security of a taxpayer, does not include a reference to the waiver or release by the taxpayer of:
(a) the whole or a part of the debt the subject of the security; or
(b) any other right of the taxpayer under the security.
70B(6)
Subsection (5) does not, by implication, affect the meaning of an expression used in:
(a) a provision of this Act other than this section; or
(b) any other law of the Commonwealth.
70B(7)
In this section:
SECTION 73A EXPENDITURE ON SCIENTIFIC RESEARCH 73A(1A)
This section has effect subject to Division 245 of the Income Tax Assessment Act 1997 .
73A(1)
The following payments made, and expenditure incurred, during the year of income (other than any amount which is allowable as a deduction under any other section of this Act) by a person carrying on a business for the purpose of gaining or producing assessable income shall be allowable deductions:
(a) Payments to:
(b) Expenditure of a capital nature on scientific research related to that business (except to the extent that it is expenditure on plant, machinery, land or buildings or on alterations, additions or extensions to buildings or in the acquisition of rights in or arising out of scientific research).
73A(2)
Where, on or after the first day of the year of income ending on 30 June 1946, a taxpayer carrying on a business for the purpose of gaining or producing assessable income incurs expenditure of a capital nature in the construction or acquisition of a building, or part of a building, or in making any alteration or addition to a building, in which scientific research related to that business is to be carried on by or on behalf of the taxpayer, and the building, part of a building, alteration or addition, as the case may be, is of use for scientific research purposes only, an amount equal to one-third of that expenditure shall be an allowable deduction:
(a) from the assessable income of the year of income in which the building, part of a building, alteration or addition is first used by or on behalf of the taxpayer for such scientific research; and
(b) from the assessable income of each of the 2 years of income next succeeding that year of income, if the taxpayer continues to carry on that business during the year in which that assessable income was derived.
73A(2A)
Subsection (2) does not apply to expenditure incurred by a taxpayer in the construction of a building or part of a building, in the making of an alteration or addition to a building or in the acquisition of a building or part of a building unless:
(a) either of the following subparagraphs applies:
(b) if the expenditure was incurred after 20 November 1987 - the taxpayer intended, on 20 November 1987, that:
73A(3)
Where any expenditure or payment to which this section refers is incurred or made outside Australia and the business in relation to which it is so incurred or made is carried on partly in and partly out of Australia, the deduction allowable under this section shall be such part of the amount which would otherwise be allowable as the Commissioner considers reasonable in the circumstances.
73A(4)
Where any expenditure has been allowed or is allowable as a deduction under subsection (2) and:
(a) the taxpayer sells, transfers or otherwise disposes of the building or any part thereof; or
(b) the building or any part thereof is destroyed,
73A(4A)
If:
(a) a person has purchased from another person a building, or part of a building, where the vendor had incurred capital expenditure of a kind in respect of which deductions are or have been allowable under subsection (2); and
(b) it would be concluded that, having regard to any connection between the vendor and the purchaser or to any other relevant circumstances, those persons were not dealing with each other at arm ' s length; and
(c) the purchase price is greater or lesser than the market value of the building, or the part of the building, at the time of the purchase;
73A(5)
If the purchase of the building is a creditable acquisition by the vendor, references in subsection (4A) to the purchase price are taken to be references to that price reduced by the amount of the net input tax credit to which the purchaser is entitled for the acquisition.
73A(6)
In this section:
73A(7)
An approval for the purposes of subsection (6) may:
(a) operate as from a date, whether before or after the date of the approval, specified in the instrument of approval; and
(b) be withdrawn at any time.
73A(8)
In this section, any reference to scientific research related to a business or class of business shall be read as including a reference to:
(i) any scientific research which may lead to or facilitate an extension, or an improvement in the technical efficiency, of that business, or, as the case may be, of businesses of that class; and
(ii) any scientific research of a medical nature which is of special relation to the welfare of workers employed in that business or, as the case may be, in businesses of that class.
73A(9)
This section does not apply in relation to payments made, or expenditure incurred, after 30 June 1995.
SECTION 73AA
SECTION 73A ROLL-OVER RELIEF IN THE CASE OF CERTAIN CGT ROLL-OVERS
73AA(1)
Roll-over relief where CGT roll-over relief allowed.
(a) (Omitted by No 46 of 1998)
(b) subject to subsection (7), deductions have been allowed or are allowable under subsection 73A(2) to the transferor in respect of the building or the part of the building; and
(c) the disposal involves a CGT event; and
(d) the conditions in an item in the table are satisfied.
73AA(2)
No balancing charges.
(a) the transferee had acquired the building or the part of the building for a consideration equal to the cost of the building or the part of the building to the transferor; and
(b) deductions were not allowable to the transferee under subsection 73A(2) in respect of:
(c) deductions were not allowable to the transferor under subsection 73A(2) in respect of the building or the part of the building for the year of income in which the disposal took place or for a subsequent year of income. 73AA(4) Subsection 73A(2A) - special rules.
(a) after the disposal of the building or the part of the building to the transferee, the building or the part of the building is lost or destroyed or the transferee disposes of the building or the part of the building; and
(b) in the case of a disposal by the transferee - this section does not apply to the disposal;
(c) the deductions allowed or allowable to the transferor under subsection 73A(2) in relation to the building or the part of the building; and
(d) if there have been 2 or more prior successive applications of this section - the deductions allowed or allowable to the prior successive transferors under subsection 73A(2) in relation to the building or the part of the building;
(a) the transferee; or
(b) one or more subsequent successive transferees;
FORMER SECTION 73B
73B
CERTAIN EXPENDITURE ON RESEARCH AND DEVELOPMENT ACTIVITIES
(Repealed by No 93 of 2011)
FORMER SECTION 73BAA
73BAA
EFFECT OF CONSOLIDATION
(Repealed by No 93 of 2011)
FORMER SECTION 73BAB
73BAB
HEAD COMPANY TREATED AS REGISTERED
(Repealed by No 93 of 2011)
FORMER SECTION 73BABA
73BABA
HISTORY FOR PURPOSES OF ELIGIBILITY FOR TAX OFFSET: JOINING ENTITY
(Repealed by No 93 of 2011)
FORMER SECTION 73BAC
73BAC
EXPENDITURE HISTORY FOR PURPOSES OF SECTIONS 73P TO 73Z: JOINING ENTITY
(Repealed by No 93 of 2011)
FORMER SECTION 73BACA
73BACA
HISTORY FOR PURPOSES OF ELIGIBILITY FOR TAX OFFSET: LEAVING ENTITY
(Repealed by No 93 of 2011)
FORMER SECTION 73BAD
73BAD
EXPENDITURE FOR PURPOSES OF SECTIONS 73P TO 73Z HISTORY: LEAVING ENTITY
(Repealed by No 93 of 2011)
FORMER SECTION 73BAE
73BAE
RECOUPMENT WHERE ENTITY LEAVES GROUP
(Repealed by No 93 of 2011)
FORMER SECTION 73BAF
73BAF
PREVENTING DOUBLE DEDUCTIONS
(Repealed by No 93 of 2011)
FORMER SECTION 73BAG
73BAG
BALANCING ADJUSTMENTS FOR CERTAIN ASSETS OF CONSOLIDATED GROUPS
(Repealed by No 93 of 2011)
FORMER SECTION 73BA
73BA
DEDUCTION FOR CERTAIN ASSETS ETC. USED FOR THE PURPOSE OF CARRYING ON RESEARCH AND DEVELOPMENT ACTIVITIES
(Repealed by No 93 of 2011)
FORMER SECTION 73BB
73BB
MEANING OF
SECTION 73BA DEPRECIATING ASSET
(Repealed by No 93 of 2011)
FORMER SECTION 73BC
73BC
MEANING OF
NOTIONAL DIVISION 40 DEDUCTION
(Repealed by No 93 of 2011)
FORMER SECTION 73BD
73BD
TREATMENT OF CERTAIN EXPENDITURE FOR THE PURPOSES OF SECTION 73BC ETC.
(Repealed by No 93 of 2011)
FORMER SECTION 73BE
73BE
TREATMENT OF CERTAIN PARTNERSHIP EXPENDITURE FOR THE PURPOSES OF SECTION 73BC ETC.
(Repealed by No 93 of 2011)
FORMER SECTION 73BF
73BF
BALANCING ADJUSTMENTS: SECTION 73BA DEPRECIATING ASSETS
(Repealed by No 93 of 2011)
FORMER SECTION 73BG
73BG
EFFECTIVE LIFE CALCULATION UNDER DIVISION 40 OF
INCOME TAX ASSESSMENT ACT 1997
TO TAKE INTO ACCOUNT USE FOR PURPOSE OF CARRYING ON RESEARCH AND DEVELOPMENT ACTIVITIES
(Repealed by No 93 of 2011)
FORMER SECTION 73BH
73BH
DEDUCTION FOR PLANT ETC. USED FOR PURPOSE OF CARRYING ON RESEARCH AND DEVELOPMENT ACTIVITIES
(Repealed by No 93 of 2011)
FORMER SECTION 73BI
73BI
MEANING OF
SECTION 73BH PLANT
(Repealed by No 93 of 2011)
FORMER SECTION 73BJ
73BJ
MEANING OF
NOTIONAL DIVISION 42 DEDUCTION
(Repealed by No 93 of 2011)
FORMER SECTION 73BK
73BK
TREATMENT OF CERTAIN EXPENDITURE FOR THE PURPOSES OF SECTION 73BJ ETC.
(Repealed by No 93 of 2011)
FORMER SECTION 73BL
73BL
TREATMENT OF CERTAIN PARTNERSHIP EXPENDITURE FOR THE PURPOSES OF SECTION 73BJ ETC.
(Repealed by No 93 of 2011)
FORMER SECTION 73BM
73BM
BALANCING ADJUSTMENTS: SECTION 73BH PLANT
(Repealed by No 93 of 2011)
FORMER SECTION 73BN
73BN
EFFECTIVE LIFE CALCULATION UNDER DIVISION 42 OF
INCOME TAX ASSESSMENT ACT 1997
TO TAKE INTO ACCOUNT USE FOR PURPOSE OF CARRYING ON RESEARCH AND DEVELOPMENT ACTIVITIES
(Repealed by No 93 of 2011)
FORMER SECTION 73C
73C
RECOUPED EXPENDITURE ON RESEARCH AND DEVELOPMENT ACTIVITIES
(Repealed by No 93 of 2011)
FORMER SECTION 73CA
73CA
GUARANTEED RETURNS TO INVESTORS
(Repealed by No 93 of 2011)
FORMER SECTION 73CB
73CB
EXPENDITURE INCURRED TO TAX-EXEMPT BODIES
(Repealed by No 93 of 2011)
FORMER SECTION 73E
73E
SECTION 73B ROLL-OVER RELIEF ON DISPOSAL OF UNIT OF PLANT TO ANOTHER MEMBER OF SAME WHOLLY-OWNED GROUP
(Repealed by No 93 of 2011)
FORMER SECTION 73EA
73EA
SECTION 73BF ROLL-OVER RELIEF ON DISPOSAL OF ASSET TO ANOTHER MEMBER OF WHOLLY-OWNED GROUP
(Repealed by No 93 of 2011)
FORMER SECTION 73EB
73EB
SECTION 73BM ROLL-OVER RELIEF ON DISPOSAL OF PLANT TO ANOTHER MEMBER OF WHOLLY-OWNED GROUP
(Repealed by No 93 of 2011)
FORMER SECTION 73G
73G
SECTION 73B ROLL-OVER RELIEF ON DISPOSAL OF ITEM OF INTELLECTUAL PROPERTY TO ANOTHER MEMBER OF SAME WHOLLY-OWNED GROUP
(Repealed by No 93 of 2011)
FORMER SECTION 73H
73H
INTERPRETATION
(Repealed by No 93 of 2011)
FORMER SECTION 73I
73I
TAX OFFSET INSTEAD OF DEDUCTION UNDER SECTION 73B, 73BA, 73BH OR 73QA
(Repealed by No 93 of 2011)
FORMER SECTION 73IA
73IA
OBJECTIONS
(Repealed by No 93 of 2011)
FORMER SECTION 73J
73J
ELIGIBILITY FOR TAX OFFSET
(Repealed by No 93 of 2011)
FORMER SECTION 73K
73K
MEANING OF
R
&
D GROUP TURNOVER
(Repealed by No 93 of 2011)
FORMER SECTION 73L
73L
GROUPED TAXPAYERS
(Repealed by No 93 of 2011)
FORMER SECTION 73M
73M
MEANING OF
AFFILIATE
(Repealed by No 93 of 2011)
FORMER SECTION 73P
73P
INTERPRETATION
(Repealed by No 93 of 2011)
FORMER SECTION 73Q
73Q
ELIGIBILITY TO CLAIM ADDITIONAL DEDUCTION
View history note
Hide history noteAny person may, with the leave of the Commissioner, adopt an accounting period being the 12 months ending on some date other than 30 June. For the purposes of this Act, the person's accounting period in each succeeding year shall end on the corresponding date of that year, unless:
(a) with the leave of the Commissioner some other date is adopted; or
(b) the accounting period ends earlier under section 18A .
If a partnership becomes, or ceases to be, a VCLP, an ESVCLP, an AFOF or a VCMP on a particular day:
(a) the accounting period during which that day occurs (the first accounting period ) is taken to have ended immediately before that day; and
(b) another accounting period is taken to have commenced at the beginning of that day.
The other accounting period ends on the day on which the first accounting period would have ended if this section did not apply.
Example:
A partnership whose accounting periods ended on 30 June becomes a VCLP on 1 October 2002, and ceases to be a VCLP on 1 April 2003.
The effect of becoming a VCLP: the accounting period that commenced on 1 July 2002 is taken under this section to end on 30 September 2002, and a second accounting period commences on 1 October 2002. The second accounting period is scheduled to end on 30 June 2003.
The effect of ceasing to be a VCLP: the second accounting period is now taken under this section to end on 31 March 2003, and a third accounting period commences on 1 April 2003. The third accounting period is to end on 30 June 2003.
18A(2)
This section does not apply in relation to a partnership becoming, or ceasing to be, a VCLP, an ESVCLP, an AFOF or a VCMP on the day on which an accounting period commences.
(Repealed by No 133 of 2003)
Where, upon any transaction, any consideration is paid or given otherwise than in cash, the money value of that consideration shall, for the purposes of this Act, be deemed to have been paid or given.
21(2) [Effect of section]This section has effect subject to section 21A .
For the purposes of this Act, in determining the income derived by a taxpayer, a non-cash business benefit that is not convertible to cash shall be treated as if it were convertible to cash.
21A(2)
For the purposes of this Act, if a non-cash business benefit (whether or not convertible to cash) is income derived by a taxpayer: (a) the benefit shall be brought into account at its arm ' s length value reduced by the recipient ' s contribution (if any); and (b) if the benefit is not convertible to cash - in determining the arm ' s length value of the benefit, any conditions that would prevent or restrict the conversion of the benefit to cash shall be disregarded.
21A(3)
Where: (a) a non-cash business benefit is income derived by a taxpayer in a year of income; and (b) if the taxpayer had, at the time the benefit was provided, incurred and paid unreimbursed expenditure in respect of the provision of the benefit equal to the amount of the arm ' s length value of the benefit - a once-only deduction would, or would but for Subdivisions F , GA and G of Division 3 of this Part , and Divisions 28 and 900 of the Income Tax Assessment Act 1997 , have been allowable to the taxpayer in respect of a percentage (in this subsection called the deductible percentage ) of the expenditure;
the amount that, apart from this subsection, would be applicable under subsection (2) of this section in respect of the benefit shall be reduced by the deductible percentage.
21A(4)
Where: (a) a non-cash business benefit is income derived by a taxpayer in a year of income; and (b) a percentage (in this subsection called the non-deductible entertainment percentage ) of any expenditure incurred by the provider in respect of the provision of the benefit is non-deductible entertainment expenditure;
the amount that, apart from this subsection, would be applicable under subsection (2) in respect of the benefit shall be reduced by the non-deductible entertainment percentage.
21A(5)
In this section:
arm
'
s length value
, in relation to a non-cash business benefit, means:
(a) the amount that the recipient could reasonably be expected to have been required to pay to obtain the benefit from the provider under a transaction where the parties to the transaction are dealing with each other at arm ' s length in relation to the transaction; or
(b) if such an amount cannot be practically determined - such amount as the Commissioner considers reasonable.
income derived by a taxpayer
means income derived by a taxpayer in carrying on a business for the purpose of gaining or producing assessable income.
non-cash business benefit
means property or services provided after 31 August 1988:
(a) wholly or partly in respect of a business relationship; or
(b) wholly or partly for or in relation directly or indirectly to a business relationship.
non-deductible entertainment expenditure
means expenditure to the extent to which:
(a) section 32-5 of the Income Tax Assessment Act 1997 applies to the expenditure; and
(b) but for that section, the expenditure would be deductible under section 8-1 of the Income Tax Assessment Act 1997 .
once-only deduction
(Repealed by
No 75 of 2010
)
(a) in relation to property - includes dispose of (whether by assignment, declaration of trust or otherwise); and
(b) in relation to services - includes allow, confer, give, grant or perform.
recipient
'
s contribution
, in relation to a non-cash business benefit, means the amount of any consideration paid to the provider by the recipient in respect of the provision of the benefit, reduced by the amount of any reimbursement paid to the recipient in respect of that consideration.
services
includes any benefit, right (including a right in relation to, and an interest in, real or personal property), privilege or facility and, without limiting the generality of the foregoing, includes a right, benefit, privilege, service or facility that is, or is to be, provided under:
(a) an arrangement for or in relation to:
(i) the performance of work (including work of a professional nature), whether with or without the provision of property;
(ii) the provision of, or of the use of facilities for, entertainment, recreation or instruction; or
(iii) the conferring of rights, benefits or privileges for which remuneration is payable in the form of a royalty, tribute, levy or similar exaction;
(b) a contract of insurance; or
(c) an arrangement for or in relation to the lending of money.
21A(6)
Notwithstanding section 21 , the consideration referred to in the definition of recipient ' s contribution in subsection (5) of this section is consideration in money.
21A(7)
This section does not apply to an ESS interest (within the meaning of the Income Tax Assessment Act 1997 ) to which Subdivision 83A-B or 83A-C of that Act (about employee share schemes) applies.
In this section, unless the contrary intention appears:
approved project
means the establishment, maintenance or operation of the North West Cape naval communication station, of the Joint Defence Space Research Facility, of the Sparta project, of the Joint Defence Space Communications Station or of a Force Posture Initiative.
Australia
(Repealed by No 2 of 2015)
civilian accompanying the United States Forces
means a person (not being a member of the United States Forces, an Australian citizen or a person ordinarily resident in Australia) who:
(a) is an employee:
(i) of the United States Forces; or
(ii) of, or of a body conducting, a club or other facility established for the benefit or welfare of members of the United States Forces or of persons accompanying those Forces and which is recognized by the Government of the United States of America as a non-appropriated fund activity; or
(b) is serving with an organization that, with the approval of the Government of the Commonwealth, accompanies the United States Forces in Australia.
dependant
, in relation to a person, means:
(a) the spouse of that person; or
(b) a relative, other than the spouse, of that person who is wholly or mainly dependent for support on that person;
but, in the case of a person who, immediately before becoming such a spouse or relative, was ordinarily resident in Australia, does not include that person so long as that person continues to be ordinarily resident in Australia.
Force Posture Agreement
means the Force Posture Agreement between the Government of Australia and the Government of the United States of America done at Sydney on 12 August 2014, as amended and in force for Australia from time to time.
Note:
The Treaty could in 2014 be viewed in the Australian Treaties Library on the AustLII website (http://www.austlii.edu.au).
Force Posture Initiative
has the same meaning as in the Force Posture Agreement.
Note:
As well as some announced initiatives, this includes future initiatives that Australia and the United States mutually decide to be Force Posture Initiatives for the purposes of that Agreement.
foreign contractor
means a person who is a party to a prescribed contract and is not:
(a) a company incorporated in Australia;
(b) an Australian citizen; or
(c) a person, other than a company, who is ordinarily resident in Australia.
foreign employee
means a person who:
(a) is an employee of a foreign contractor; or
(b) is a director of a company that is a foreign contractor;
and is not an Australian citizen or ordinarily resident in Australia.
(a) a contract to which the Government of the United States of America is a party in connexion with an approved project; or
(b) a contract made for purposes connected with the performance of a contract referred to in paragraph (a).
(a) in relation to a foreign contractor or foreign employee - purposes relating to the performance of a prescribed contract;
(aa) in relation to a United States employee - purposes relating to an approved project; and
(b) in relation to a member of the United States Forces or a civilian accompanying the United States Forces - purposes relating to the carrying on of activities agreed upon between the Government of the Commonwealth and the Government of the United States of America.
the Joint Defence Space Communications Station
means the undertaking the establishment of which is provided for by an agreement dated 10 November 1969 between the Government of the Commonwealth and the Government of the United States of America.
the Joint Defence Space Research Facility
means the undertaking the establishment of which is provided for by an agreement dated 9 December 1966 between the Government of the Commonwealth and the Government of the United States of America.
the North West Cape naval communication station
means the naval communication station the establishment of which is provided for by the agreement approved by the
United States Naval Communication Station Agreement Act 1963
.
the Sparta project
means the undertaking the establishment of which is provided for by a memorandum of arrangement dated 30 March 1966 between the Government of the Commonwealth, the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the United States of America.
the United States Forces
means the armed forces of the Government of the United States of America.
United States employee
means a person who is employed by the Government of the United States of America and is not:
(a) a member of the United States Forces;
(b) a civilian accompanying the United States Forces;
(c) an Australian citizen; or
(d) a person ordinarily resident in Australia.
23AA(2)
For the purposes of this section, a foreign contractor, foreign employee or United States employee who is in Australia, or is carrying on business in Australia, solely for prescribed purposes does not cease to be in Australia solely for those purposes, or to be carrying on business in Australia solely for those purposes, by reason of anything undertaken or done by him or her in connexion with an undertaking in Australia of the Government of the United States of America, other than an approved project, agreed upon between the Government of the Commonwealth and the Government of the United States of America.
23AA(3)
Where a person:
(a) has been in Australia, or has carried on business in Australia, solely for prescribed purposes during a period when the person was a foreign contractor or foreign employee;
(b) has been in Australia solely for prescribed purposes during a period when the person was a member of the United States Forces, a civilian accompanying the United States Forces or a United States employee; or
(c) has been in Australia during a period when the person was a dependant of such a contractor, employee, member or civilian who was in Australia solely for prescribed purposes;
that person shall, for the purposes of the provisions of this Act other than Subdivision A of Division 17, be deemed not to have been a resident of Australia during that period, and the presence of that person in Australia during that period shall be disregarded in determining, for the purposes of those provisions, whether the person was a resident of Australia at any other time.
23AA(4)
Subsection (3) does not apply in respect of, or of a part of, a period when a person was, or was a dependant of, a foreign contractor, a foreign employee, a civilian accompanying the United States Forces or a United States employee if the person:
(a) being a company - was not a domestic corporation for the purposes of the law of the United States of America relating to income tax; or
(b) not being a company - was not a resident of the United States of America for the purposes of that law or a citizen of the United States of America;
during that period or that part of that period, as the case may be.
23AA(5)
Where:
(a) a foreign contractor or a foreign employee has derived income wholly and exclusively from, or from employment in connexion with, the performance in Australia of a prescribed contract;
(b) the income is not exempt from income tax imposed by Chapter One of Subtitle A of the Internal Revenue Code of 1986 of the United States of America; and
(c) the foreign contractor or foreign employee was, at the time the income was derived, in Australia, or carrying on business in Australia, solely for prescribed purposes;
the income shall, for the purposes of this Act, be deemed to have been derived from sources out of Australia.
23AA(6)
Where:
(a) a person has derived income in respect of service as a civilian accompanying the United States Forces or as a United States employee during a period when the person was in Australia solely for prescribed purposes; and
(b) the income is not exempt from income tax imposed by Chapter One of Subtitle A of the Internal Revenue Code of 1986 of the United States of America;
the income shall, for the purposes of this Act, be deemed to have been derived from sources out of Australia.
SECTION 23AB INCOME OF CERTAIN PERSONS SERVING WITH AN ARMED FORCE UNDER THE CONTROL OF THE UNITED NATIONS 23AB(1)
In this section:
prescribed taxpayer
means a taxpayer who, being a resident of Australia, is, or is included in a class of persons that is, prescribed by the regulations for the purposes of this section.
tax deductions unapplied
, in relation to a deceased person, means any amounts withheld under Part 2-5 in Schedule 1 to the
Taxation Administration Act 1953
from work and income support related withholding payments and benefits derived by the deceased person in respect of United Nations service:
(a) that have not been credited in payment of income tax; and
(b) in respect of which a payment has not been made by the Commissioner.
the prescribed area
has the same meaning as in section
79A
.
United Nations service
means service, other than service as a member of the Defence Force, performed, at the direction or with the approval of the Commonwealth, outside Australia with an armed force under the control of the United Nations, at a time when the person performing the service was a prescribed taxpayer.
23AB(2)
The regulations may prescribe a person or a class of persons for the purposes of this section but shall not so prescribe a person or class of persons unless the salary, wages and allowances received by the person or by all the persons in that class, as the case may be, in respect of his, her or their United Nations service are paid, given or granted by the Commonwealth or by the United Nations for and on behalf of the Commonwealth.
23AB(3)
A succeeding provision of this section does not apply in relation to a person if the regulations provide that that provision does not apply in relation to that person or in relation to a class of persons in which that person is included.
23AB(4)
Subsection 12(2) (retrospective commencement of legislative instruments) of the Legislation Act 2003 does not apply to regulations made for the purposes of subsection (2) or (3) of this section.
23AB(5)
Where:
(a) a payment of compensation under the Safety, Rehabilitation and Compensation Act 1988 is made in respect of the incapacity, impairment or death of a taxpayer; and
(b) the incapacity, impairment or death of the taxpayer resulted from an occurrence that happened during the performance by the taxpayer of United Nations service; and
(c) if the taxpayer had, at the time of the happening of the occurrence, been a member of the Defence Force rendering continuous full-time service outside Australia while the taxpayer was allotted for duty in an operational area described in item 4, 5, 6, 7, 8, 9, 10, 11, 12, 13 or 14 of Column 1 of Schedule 2 to the Veterans ' Entitlements Act 1986, the Commonwealth would be liable to pay a pension under that Act in respect of the incapacity, impairment or death of the taxpayer;
the payment of compensation is exempt from income tax.
23AB(6)
For the purposes of section 15-2 of the Income Tax Assessment Act 1997 , the total value of all allowances, gratuities, compensations, benefits, bonuses and premiums (in this subsection referred to as " living allowances " ) allowed, given or granted in meals, sustenance or the use of premises or quarters (including payment in lieu of one or more of those living allowances) to a taxpayer in respect of, or for or in relation directly or indirectly to, United Nations service shall be deemed to be an amount calculated at the rate of $ 2 for each week of that service in which any of those living allowances were so allowed, given or granted, or in which payment in lieu of any of those living allowances was made, to the taxpayer.
23AB(7)
Subject to subsections (8), (8A) and (9A) and subsection 79B(4) , a taxpayer is entitled to a rebate of tax in his or her assessment in respect of income of a year of income in which he or she has performed United Nations service and derived income by way of salary, wages or other allowances in respect of that service. The amount of the rebate is:
(a) where the total period of that service performed by the taxpayer during the year of income is more than one-half of the year of income or where the taxpayer dies while performing that service during the year of income - an amount equal to the sum of:
(i) $ 338; and
(ii) the amount worked out using subsection (7A); or
(b) in any other case - such amount as, in the opinion of the Commissioner, is reasonable in the circumstances, being an amount not greater than the amount of the rebate to which the taxpayer would have been entitled under this subsection if paragraph (a) had applied to him or her in respect of the year of income.
23AB(7A)
For the purposes of subparagraph (7)(a)(ii), the amount is equal to 50% of the sum of the following rebates (if any) in respect of the year of income:
(a) any tax offset to which the taxpayer is entitled under Subdivision 61-A of the Income Tax Assessment Act 1997 ;
(b) any notional tax offset to which the taxpayer is entitled under Subdivision 961-A of the Income Tax Assessment Act 1997 .
23AB(8)
For the purposes of subsection (7), but subject to subsection (8A), the total period of United Nations service of a taxpayer in any year of income shall be deemed to include any period in that year of income during which the taxpayer has resided, or has actually been, in the prescribed area.
23AB(8A)
For the purposes of subsection (7), United Nations service does not include any period of service of the taxpayer in respect of which an exemption from income tax applies under section 23AG .
23AB(9)
Where a rebate is allowable under subsection (7) in the assessment of a taxpayer in respect of income of a year of income and, but for this subsection, a rebate of a lesser amount would be allowable in that assessment under section 79A , a rebate under section 79A is not allowable in that assessment.
23AB(9A)
Where a rebate is allowable under section 79A in the assessment of a taxpayer in respect of income of a year of income and, but for this subsection, a rebate of the same or a lesser amount would be allowable in that assessment under subsection (7), a rebate under subsection (7) is not allowable in that assessment.
23AB(9B)
Subsection 79B(4) shall be disregarded in determining for the purposes of subsections (9) and (9A) of this section the amount of a rebate allowable to a taxpayer under subsection (7) of this section or under section 79A .
23AB(10)
Where:
(a) the trustee of the estate of a deceased person who has performed United Nations service is liable to pay income tax, in respect of a year of income, upon income that consists of or includes salary, wages or allowances derived by the deceased person in respect of that service; or
(b) the death of the person resulted from an occurrence that happened during that service; and
(c) if the person had, at the time of the happening of the occurrence, been a member of the Defence Force rendering continuous full-time service outside Australia while the taxpayer was allotted for duty in an operational area described in item 4, 5, 6, 7 or 8 of Column 1 of Schedule 2 to the Veterans ' Entitlements Act 1986 , the Commonwealth would be liable to pay a pension under that Act in respect of the death of the person;
the trustee is, by force of this subsection, released from the payment of so much of that tax as remains after deducting any tax deductions unapplied:
(d) if the assessable income of the deceased person of the year of income consists solely of the salary, wages or allowances derived in respect of that service - from the amount of income tax so payable by the trustee; or
(e) if the assessable income of the deceased person of the year of income includes income other than the salary, wages or allowances derived in respect of that service:
(i) from the amount of income tax so payable by the trustee; or
whichever is the less.
(ii) from the amount by which the income tax payable in respect of the income of the year of income has been increased by the inclusion of the salary, wages or allowances so derived in the assessable income of the deceased person of the year of income;
23AB(11)
Nothing in subsection (10) shall be construed as authorizing or requiring the Commissioner to refund any amount paid as or for income tax by or on behalf of the deceased person or the trustee of his or her estate.
(Repealed by No 2 of 2015)
Requirements for exemption
23AD(1)
The pay and allowances earned by a person serving as a member of the Defence Force are exempt from tax if:
(a) they are earned while there is in force a certificate in writing issued by the Chief of the Defence Force to the effect that the person is on eligible duty with a specified organisation in a specified area outside Australia; and
(b) the eligible duty is not as, or under, an attache at an Australian embassy or legation.
Eligible duty
23AD(2)
The regulations may declare that duty with a specified organisation, in a specified area outside Australia and after a specified day, is eligible duty for the purposes of this section.
Where paragraph (1)(a) certificate in force
23AD(3)
A certificate under paragraph (1)(a):
(a) comes into force at the later of:
(i) the time specified in the certificate (which may be before the time when it is issued, but not before the end of the specified day under the regulations); and
(ii) the time when the person arrives for duty in the specified area concerned; and
(b) subject to paragraph (c), continues in force until the earliest of:
(i) the time of the person's departure from the specified area; and
(ii) the time when, in accordance with a certificate of revocation signed by the Chief of the Defence Force, it ceases to be in force; and
(iii) any time prescribed by the regulations in relation to the eligible duty for the purposes of this subparagraph; and
(c) is in force during any period of hospital treatment resulting from an illness contracted, or injuries sustained, during the person's eligible duty.
Review of paragraph (1)(a) certificate
23AD(4)
An application may be made to the Tribunal for review of a decision of the Chief of the Defence Force under paragraph (1)(a).
Delegation of paragraph (1)(a) power
23AD(5)
The Chief of the Defence Force may, by signed instrument, delegate to an officer of the Defence Force the power conferred by paragraph (1)(a).
Revocation certificate is legislative instrument
23AD(6)
A certificate of revocation referred to in subparagraph (3)(b)(ii) is a legislative instrument.
Where a taxpayer, being a natural person, has been engaged on qualifying service on a particular approved project for a continuous period of not less than 91 days, any eligible foreign remuneration derived by the person that is attributable to that qualifying service is exempt from tax.
23AF(2)
(Omitted by No 100 of 1991)
23AF(3)
Subject to subsections (4) and (5), a person shall be taken for the purposes of this section to be engaged on qualifying service on an approved project during any period during which:
(a) the person is outside Australia and is engaged in the performance of personal services in connection with the approved project;
(b) the person is travelling between Australia and the site of the approved project;
(c) by reason of an incapacity for work due to accident or illness occurring while the person was, by virtue of paragraph (a) or (b), to be taken to be engaged on qualifying service on the approved project, the person is absent from work; or
(d) the person is on eligible leave, being leave that accrued in respect of a period during which the person was, by virtue of any of the preceding paragraphs, to be taken to be engaged on qualifying service on the approved project.
23AF(4)
A person shall not be taken to have been engaged on qualifying service on a particular approved project while the person was travelling between Australia and the site of the approved project unless the Commissioner is satisfied that the time taken for the journey is reasonable.
23AF(5)
A person shall not be taken to have been engaged on qualifying service on a particular approved project by virtue of paragraph (3)(c) during a period of incapacity for work unless the person is taken to have been engaged on qualifying service on that approved project by virtue of paragraph (3)(a), (b) or (d) during a period that commenced immediately after the incapacity ceased.
23AF(6)
Where:
(a) a person was engaged on qualifying service on a particular approved project; and
(b) due to unforeseen circumstances, the person ceased to be engaged on qualifying service on that approved project,
the period during which the person is to be taken to have been engaged on qualifying service on that approved project shall, except for the purpose of determining whether income derived by the person is eligible foreign remuneration, be taken to include the additional period after the person ceased to be engaged on qualifying service on that approved project during which the person would, in the opinion of the Commissioner, have continued to be engaged on qualifying service on that approved project but for those unforeseen circumstances.
23AF(7)
Where:
(a) a person (in this subsection referred to as the original person ) was engaged on qualifying service on a particular approved project;
(b) due to unforeseen circumstances, the original person ceased to be engaged on qualifying service on that approved project; and
(c) as soon as practicable after the time when the original person ceased to be engaged on qualifying service on that approved project, another person (in this subsection referred to as the substituted person ) commenced to be engaged on qualifying service on that approved project in lieu of the original person;
the period during which the substituted person is to be taken to have been engaged on qualifying service on that approved project shall, except for the purpose of determining whether income derived by the substituted person is eligible foreign remuneration, be taken to include a period that ended immediately before the substituted person commenced to be engaged on qualifying service on that approved project in lieu of the original person and was of the same duration as the continuous period during which the original person was, immediately before the original person ceased to be engaged on qualifying service on that approved project, taken to have been engaged on qualifying service on that approved project.
23AF(8)
Where:
(a) during the period (in this subsection referred to as the total project period ) commencing at the time when a person was first engaged on qualifying service on an approved project and ending at the time when the person was last engaged on qualifying service on that approved project, the person was in Australia during a period or periods (in this subsection referred to as the intervening period or intervening periods ) during which the person was not engaged on qualifying service on that approved project;
(b) the total number of days in the intervening period or intervening periods does not exceed one-sixth of the total number of days during the total project period during which the person was engaged on qualifying service on the approved project; and
(c) at all times during the total project period, the person was engaged on qualifying service on the approved project or was in Australia;
the periods during the total project period during which the person was engaged on qualifying service on the approved project shall together be taken to constitute a continuous period during which the person was engaged on qualifying service on the approved project.
23AF(9)
Where, immediately before a person commences to take eligible leave, leave of the same kind as the eligible leave has accrued in relation to the person but has not been used and that unused leave consists of:
(a) leave that accrued in respect of a period or periods when the person was engaged on qualifying service on an approved project and leave that accrued in respect of a period or periods when the person was not engaged on qualifying service on an approved project;
(b) leave that accrued in respect of 2 or more periods when the person was engaged on qualifying service on 2 or more different approved projects; or
(c) leave that accrued in respect of 2 or more periods when the person was engaged on qualifying service on 2 or more different approved projects and leave that accrued in respect of a period or periods when the person was not engaged on qualifying service on an approved project;
the following provisions apply for the purposes of determining the extent to which the eligible leave taken by the person was eligible leave that accrued in respect of a period when the person was engaged on qualifying service on a particular approved project:
(d) in a case to which paragraph (a) applies - the person shall be deemed first to have taken leave that accrued in respect of the period when the person was engaged on qualifying service on the approved project referred to in that paragraph;
(e) in a case to which paragraph (b) applies - the leave shall be deemed to have been taken in the order that is reverse to the order in which it accrued;
(f) in a case to which paragraph (c) applies -
(i) the person shall be deemed not to have taken any of the leave that accrued in respect of a period or periods when the person was not engaged on qualifying service on an approved project until the person had taken leave for a number of days equal to the number of days of leave referred to in that paragraph that had accrued in respect of periods when the person was engaged on qualifying service on approved projects; and
(ii) the leave that had accrued in respect of periods when the person was engaged in qualifying service on approved projects shall be deemed to have been taken by the person in the order that is reverse to the order in which that leave accrued.
23AF(10)
Where the amount of income derived by a person that:
(a) is attributable to qualifying service on an approved project; and
(b) would, apart from this subsection, be eligible foreign remuneration;
exceeds the amount of income that the Commissioner considers would be reasonable remuneration in respect of that qualifying service, the amount of the excess is not eligible foreign remuneration for the purposes of this section.
23AF(11)
Where the Trade Minister is satisfied that the undertaking of an eligible project that was commenced, or is proposed to be commenced, after 19 August 1980 is, or will be, in the national interest, that Minister may, by writing signed by that Minister, approve that eligible project for the purposes of this section.
23AF(12)
The Trade Minister may, either generally or as otherwise provided by the instrument of delegation, by writing signed by that Minister, delegate to a person that Minister's power under subsection (11).
23AF(13)
The power so delegated, when exercised by the delegate shall, for the purposes of this section, be deemed to have been exercised by the Trade Minister.
23AF(14)
A delegation under subsection (12) does not prevent the exercise of a power by the Trade Minister.
23AF(15)
Where:
(a) a person has derived eligible foreign remuneration during a year of income; and
(b) at the time of making an assessment in respect of income of the person of the year of income, the Commissioner is of the opinion that, at a later time, circumstances will exist by reason of which that eligible foreign remuneration will be exempt from tax by virtue of this section;
the Commissioner may apply the provisions of this section as if those circumstances existed at the time of making the assessment.
23AF(16)
Where, in the making of an assessment, this section has been applied on the basis that a circumstance that did not exist at the time of making the assessment would exist at a later time and the Commissioner, after making the assessment, becomes satisfied that that circumstance will not exist, then, notwithstanding anything contained in section 170 , the Commissioner may amend the assessment at any time for the purposes of ensuring that this section shall be taken always to have applied on the basis that that circumstance did not exist.
23AF(17)
For the purposes of this section, income is excluded income if:
(a) the income is income to which section 23AG applies; or
(aa) the income is a payment, consideration or amount that:
(i) is included in assessable income under Division 82 , section 83-295 or Division 301 , 302 , 304 or 305 of the Income Tax Assessment Act 1997 ; or
(ii) is included in assessable income under Division 82 of the Income Tax (Transitional Provisions) Act 1997 ; or
(iii) is mentioned in paragraph 82-135(e) , (f), (g), (i) or (j) of the Income Tax Assessment Act 1997 ; or
(iv) is an amount transferred to a fund, if the amount is included in the assessable income of the fund under section 295-200 of the Income Tax Assessment Act 1997 ; or
(b) the income is derived from sources in a country other than Australia and:
(i) is exempt from income tax in that country; and
(ii) would not be exempt from income tax in that country apart from the operation of an agreement applying to Australia and that other country relating to the avoidance of double taxation or of a law of that other country giving effect to such an agreement; or
(c) the income consists of:
(i) payments in lieu of long service leave; or
(ii) payments by way of superannuation or pension.
23AF(17A)
If the income of a taxpayer of a year of income consists of an amount that is exempt from tax under this section (in this section called the exempt amount ) and other income, the amount of tax (if any) payable in respect of the other income is calculated using the formula:
|
Notional gross tax
Notional gross taxable income |
× Other taxable income |
where:
Notional gross tax means the number of whole dollars in the amount of income tax that would be assessed under this Act in respect of the taxpayer ' s taxable income of the year of income if:
(a) the exempt amount were not exempt income; and
(aa) if the exempt amount is a payment covered by section 83-240 or 305-65 of the Income Tax Assessment Act 1997 - the exempt amount (excluding any part of that amount that represented contributions made by the taxpayer) were assessable income of the taxpayer; and
(b) the taxpayer were not entitled to any rebate of tax.
Notional gross taxable income means the number of whole dollars in the amount that would have been the taxpayer' s taxable income of the year of income if the exempt amount were not exempt income.
Other taxable income means the amount (if any) remaining after deducting from so much of the other income as is assessable income:
(d) any deductions allowable to the taxpayer in relation to the year of income that relate exclusively to that assessable income; and
(e) so much of any other deductions (other than apportionable deductions) allowable to the taxpayer in relation to the year of income as, in the opinion of the Commissioner, may appropriately be related to that assessable income; and
(f) the amount calculated using the formula in subsection (17B).
23AF(17B)
The formula referred to in paragraph (17A)(f) is:
where:
Apportionable deductions means the number of whole dollars in the apportionable deductions allowable to the taxpayer in relation to the year of income.
Other taxable income means the amount that, apart from paragraph (17A)(f), would be represented by the component Other taxable income in subsection (17A).
Notional gross taxable income means the number of whole dollars in the amount that would have been the taxpayer ' s taxable income of the year of income if the exempt amount were not exempt income.
23AF(17C)
Subsection (17A) applies to a taxpayer in respect of income of a year of income as if any payment covered by section 83-240 or 305-65 of the Income Tax Assessment Act 1997 in relation to qualifying service that was made in respect of the taxpayer during that year of income were income of the taxpayer of that year of income that is exempt from tax under this section.
23AF(17D)
(Repealed by No 83 of 1999)
23AF(17E)
(Repealed by No 83 of 1999)
23AF(18)
In this section, unless the contrary intention appears:
approved project
means a project in respect of which there is in force an approval granted under subsection (11).
(a) a resident of Australia;
(b) the Commonwealth, a State, a Territory, the government of a country other than Australia or an authority of the Commonwealth, of a State, of a Territory or of the government of a country other than Australia;
(c) an organization:
(i) of which Australia and a country or countries other than Australia are members; or
(ii) that is constituted by a person or persons representing Australia and a person or persons representing a country or countries other than Australia; or
(d) an agency of an organization to which paragraph (c) applies.
eligible foreign remuneration
,
in relation to a person, means income (not being excluded income) that is derived by the person at a time when the person is a resident, being:
(a) income consisting of salary, wages, commission, bonuses or allowances, or of amounts included in a person ' s assessable income under Division 83A of the Income Tax Assessment Act 1997 (about employee share schemes), derived by the person in his or her capacity as an employee of an eligible contractor; or
(b) income, or amounts included in a person ' s assessable income under that Division, derived by the person under a contract with an eligible contractor, being a contract that is wholly or substantially for the personal services of the person;
that is directly attributable to qualifying service by the person on an approved project and includes any payments received in lieu of eligible leave that accrued in respect of a period during which the person was a resident and was engaged on qualifying service on an approved project.
eligible leave
means leave other than long service leave.
(a) a project for the design, supply or installation of any equipment or facilities; or
(b) a project for the construction of works; or
(c) a project for the development of an urban area or a regional area; or
(d) a project for the development of agriculture; or
(e) a project consisting of giving advice or assistance relating to the management or administration of a government department or of a public utility; or
(f) a project included in a class of projects approved in writing for the purposes of this section by the Trade Minister.
(a) a person employed by the Commonwealth, by a State, by a Territory, by the government of a country other than Australia or by an authority of the Commonwealth, of a State, of a Territory or of the government of a country other than Australia; and
(b) a member of the Defence Force.
long service leave
means long leave, furlough, extended leave or leave of a similar kind (however described).
Where a resident, being a natural person, has been engaged in foreign service for a continuous period of not less than 91 days, any foreign earnings derived by the person from that foreign service are exempt from tax.
23AG(1AA)
However, those foreign earnings are not exempt from tax under this section unless the continuous period of foreign service is directly attributable to any of the following:
(a) the delivery of Australian official development assistance by the person ' s employer (except if that employer is an Australian government agency (within the meaning of the Income Tax Assessment Act 1997 ));
(b) the activities of the person ' s employer in operating a public fund that:
(i) is covered by item 9.1.1 or 9.1.2 of the table in subsection 30-80(1) of the Income Tax Assessment Act 1997 (international affairs deductible gift recipients); and
(ii) meets the special conditions mentioned in that item;
(c) the activities of the person ' s employer, if the employer is exempt from income tax because of paragraph 50-50(1)(c) or (d) of the Income Tax Assessment Act 1997 (prescribed institutions located or pursuing objectives outside Australia);
(d) the person ' s deployment outside Australia as a member of a disciplined force by:
(i) the Commonwealth, a State or a Territory; or
(ii) an authority of the Commonwealth, a State or a Territory;
(e) an activity of a kind specified in the regulations.
23AG(1A)
A person is taken, for the purposes of subsection (1), to have been engaged in foreign service for a continuous period of 91 days if:
(a) the person died at a time when he or she was engaged in foreign service for a continuous period of less than 91 days; and
(b) he or she would have otherwise continued to be engaged in the foreign service; and
(c) his or her continuous period of engagement in the foreign service would have otherwise been a period of at least 91 days.
23AG(2)
An amount of foreign earnings derived in a foreign country is not exempt from tax under this section if the amount is exempt from income tax in the foreign country only because of any of the following:
(a) a law of the foreign country giving effect to a double tax agreement within the meaning of Part X ;
(b) a double tax agreement within the meaning of Part X ;
(c) provisions of a law of the foreign country under which income covered by any of the following categories is generally exempt from income tax:
(i) income derived in the capacity of an employee;
(ii) income from personal services;
(iii) similar income;
(d) the law of the foreign country does not provide for the imposition of income tax on one or more of the categories of income mentioned in paragraph (c);
(e) a law of the foreign country corresponding to the International Organisations (Privileges and Immunities) Act 1963 or to the regulations under that Act;
(f) an international agreement to which Australia is a party and that deals with:
(i) diplomatic or consular privileges and immunities; or
(ii) privileges and immunities in relation to persons connected with international organisations;
(g) a law of the foreign country giving effect to an agreement covered by paragraph (f).
23AG(2A)
Subsection (2) does not apply in relation to foreign earnings to the extent that the person derived them from foreign service in Iraq after 31 December 2002 but before 1 May 2004.
23AG(3)
If the income of a taxpayer of a year of income consists of an amount that is exempt from tax under this section (in this section called the exempt amount ) and other income, the amount of tax (if any) payable in respect of the other income is calculated using the formula:
|
Notional gross tax
Notional gross taxable income |
× Other taxable income |
where:
Notional gross tax means the number of whole dollars in the amount of income tax that would be assessed under this Act in respect of the taxpayer ' s taxable income of the year of income if:
(a) the exempt amount were not exempt income; and
(aa) if the exempt amount is a payment covered by section 83-240 or 305-65 of the Income Tax Assessment Act 1997 - the exempt amount (excluding any part of that amount that represented contributions made by the taxpayer) were assessable income of the taxpayer; and
(b) the taxpayer were not entitled to any rebate of tax.
Notional gross taxable income means the number of whole dollars in the amount that would have been the taxpayer ' s taxable income of the year of income if the exempt amount were not exempt income.
Other taxable income means the amount (if any) remaining after deducting from so much of the other income as is assessable income:
(d) any deductions allowable to the taxpayer in relation to the year of income that relate exclusively to that assessable income; and
(e) so much of any other deductions (other than apportionable deductions) allowable to the taxpayer in relation to the year of income as, in the opinion of the Commissioner, may appropriately be related to that assessable income; and
(f) the amount calculated using the formula in subsection (4).
23AG(4)
The formula referred to in paragraph (3)(f) is:
where:
Apportionable deductions means the number of whole dollars in the apportionable deductions allowable to the taxpayer in relation to the year of income.
Other taxable income means the amount that, apart from paragraph (3)(f), would be represented by the component Other taxable income in subsection (3).
Notional gross taxable income means the number of whole dollars in the amount that would have been the taxpayer ' s taxable income of the year of income if the exempt amount were not exempt income.
23AG(5)
Subsection (3) applies to a taxpayer in respect of income of a year of income as if any payment covered by section 83-240 or 305-65 of the Income Tax Assessment Act 1997 that related to the termination of employment that was made in respect of the taxpayer during that year of income were income of the taxpayer of that year of income that is exempt from tax under this section.
23AG(5A)
(Repealed by No 83 of 1999)
23AG(5B)
(Repealed by No 83 of 1999)
23AG(6)
For the purposes of this section, a period during which a person is engaged in foreign service includes any period during which the person is, in accordance with the terms and conditions of that service:
(a) absent on recreation leave, other than:
(i) leave wholly or partly attributable to a period of service or employment other than that foreign service;
(ii) long service leave, furlough, extended leave or leave of a similar kind (however described); or
(iii) leave without pay or on reduced pay; or
(b) absent from work because of accident or illness.
23AG(6A)
2 or more periods in which a person has been engaged in foreign service are together taken to constitute a continuous period of foreign service until:
(a) the end of the last of the 2 or more periods; or
(b) a time (if any), since the start of the first of the 2 or more periods, when the person ' s total period of absence exceeds ⅙ of the person ' s total period of foreign service;
whichever happens sooner.
Example:
Kate is engaged in foreign service for 20 days, is absent for 2 days and is then engaged in foreign service for 10 days. These 2 periods of foreign service constitute a continuous period of foreign service, because the total period of absence is never more than 1/10 of the total period of foreign service.
Kate is then absent for 5 days before commencing a further period of foreign service. No matter how long the further period lasts, it can never constitute a continuous period of foreign service with the first 2 periods of foreign service, because on the fourth day of the second absence the total period of absence is ⅕ of the total period of foreign service.
23AG(6B)
In subsection (6A):
total period of absence
, in relation to a particular time, means the number of days, in the period starting at the start of the first of the 2 or more periods and ending at that time, for which the person was not engaged in foreign service.
total period of foreign service
, in relation to a particular time, means the number of days, in the period starting at the start of the first of the 2 or more periods and ending at that time, for which the person was engaged in foreign service.
23AG(6C)
(Repealed by No 162 of 2005)
23AG(6D)
(Repealed by No 162 of 2005)
23AG(6E)
(Repealed by No 162 of 2005)
23AG(6F)
Where:
(a) a person has derived foreign earnings during a year of income; and
(b) at the time of making an assessment in respect of income of the person of the year of income, the Commissioner is of the opinion that, at a later time, circumstances will exist because of which those foreign earnings will be exempted from tax by this section;
the Commissioner may apply the provisions of this section as if those circumstances existed at the time of making the assessment.
23AG(6G)
(Repealed by No 75 of 2010 )
23AG(6H)
(Omitted by No 100 of 1991)
23AG(6J)
(Repealed by No 162 of 2005)
23AG(7)
In this section:
double tax agreement
(Repealed by No 59 of 2019)
(a) a person employed by a government or an authority of a government or by an international organisation; or
(b) a member of a disciplined force.
foreign earnings
means income consisting of earnings, salary, wages, commission, bonuses or allowances, or of amounts included in a person
'
s assessable income under Division
83A
of the
Income Tax Assessment Act 1997
(about employee share schemes), but does not include any payment, consideration or amount that:
(a) is included in assessable income under Division 82 or Subdivision 83-295 or Division 301 , 302 , 304 or 305 of the Income Tax Assessment Act 1997 ; or
(b) is included in assessable income under Division 82 of the Income Tax (Transitional Provisions) Act 1997 ; or
(c) is mentioned in paragraph 82-135(e) , (f), (g), (i) or (j) of the Income Tax Assessment Act 1997 ; or
(d) is an amount transferred to a fund, if the amount is included in the assessable income of the fund under section 295-200 of the Income Tax Assessment Act 1997 .
foreign service
means service in a foreign country as the holder of an office or in the capacity of an employee.
income tax
, in relation to a foreign country:
(a) in all cases - does not include a municipal income tax; and
(b) in the case of a federal foreign country - does not include a State income tax.
SECTION 23AH FOREIGN BRANCH INCOME OF AUSTRALIAN COMPANIES NOT ASSESSABLE
Objects
23AH(1)
The objects of this section are:
(a) to ensure that active foreign branch income derived by a resident company, and capital gains made by a resident company in disposing of non-tainted assets used in deriving foreign branch income, (except income and capital gains from the operation of ships or aircraft in international traffic) are not assessable income or exempt income of the company; and
(b) to include in the assessable income of a resident company that part of its income and capital gains derived through a branch in a foreign country that is comparable to the amounts that would be included in an attributable taxpayer's assessable income for income and capital gains derived by a CFC resident in the same foreign country; and
(c) to get the same outcomes where one or more partnerships or trusts are interposed between a resident company and a foreign branch; and
(d) to limit the effect mentioned in paragraph (a) where there is a branch hybrid mismatch for the purposes of Division 832 of the Income Tax Assessment Act 1997 .
Foreign branch income not assessable
23AH(2)
Subject to this section, foreign income derived by a company, at a time when the company is a resident, in carrying on a business at or through a PE of the company in a listed country or unlisted country is not assessable income, and is not exempt income, of the company.
Foreign capital gains and losses disregarded
23AH(3)
Subject to this section, a capital gain from a CGT event happening to a CGT asset is disregarded for the purposes of Part 3-1 of the Income Tax Assessment Act 1997 if:
(a) the gain is made by a company that is a resident; and
(b) the company used the asset wholly or mainly for the purpose of producing foreign income in carrying on a business at or through a PE of the company in a listed country or unlisted country; and
(c) the asset is not taxable Australian property.
23AH(4)
Subject to this section, a capital loss from a CGT event happening to a CGT asset is disregarded for the purposes of Part 3-1 of the Income Tax Assessment Act 1997 if:
(a)the loss is made by a company that is a resident; and
(b) the company used the asset wholly or mainly for the purpose of producing foreign income in carrying on a business at or through a PE of the company in a listed country or unlisted country; and
(c) had the loss been a gain, it would be disregarded under subsection (3).
Exception relating to hybrid mismatch rules
23AH(4A)
Subsection (2) does not apply to foreign income derived by the company if the foreign income is branch hybrid mismatch income (see subsection ( 14C )).
Exceptions: listed country PE
23AH(5)
Subsection (2) does not apply to foreign income derived by the company if:
(a) the PE is in a listed country; and
(b) the PE does not pass the active income test (see subsection (12)); and
(c) the foreign income is both:
(i) adjusted tainted income (see subsection (13)); and
(ii) eligible designated concession income in relation to a listed country.
23AH(6)
Subsection (3) or (4) does not apply to a capital gain or capital loss if:
(a) the PE is in a listed country; and
(b) for a capital gain - the gain is from a tainted asset and is eligible designated concession income in relation to a listed country; and
(c) for a capital loss - the loss is from a tainted asset and would be eligible designated concession income in relation to a listed country if it were a capital gain.
Exceptions: unlisted country PE
23AH(7)
Subsection (2) does not apply to foreign income derived by the company if:
(a) the PE is in an unlisted country; and
(b) the PE does not pass the active income test (see subsection (12)); and
(c) the foreign income is adjusted tainted income (see subsection (13)).
23AH(8)
Subsection (3) or (4) does not apply to a capital gain or capital loss if:
(a) the PE is in an unlisted country; and
(b) the gain or loss is from a tainted asset.
Income derived in disposing of a business
23AH(9)
This section applies to foreign income derived by an entity in the course of disposing, in whole or in part, of a business carried on in a listed country or unlisted country at or through a PE of the entity in the listed country or unlisted country as if the foreign income had been derived in carrying on that business.
Interposed partnerships or trusts
23AH(10)
This section applies to any indirect interest (through one or more partnerships or trust estates) of a company in foreign income derived by a partnership or trustee through a PE of the partnership or trustee in a listed country or unlisted country as if that indirect interest were foreign income derived by the company through a PE of the company in that country.
23AH(11)
This section applies to any indirect interest (through one or more partnerships or trust estates) of a company in a capital gain or capital loss made in relation to an asset of a partnership, or made by a trustee, in carrying on a business at or through a PE of the partnership or trustee in a listed country or unlisted country as if that indirect interest were a capital gain or capital loss made by the company through a PE of the company in that country.
Active income test
23AH(12)
A PE of an entity passes the active income test for a year of income if the entity would have passed the active income test in section 432 if:
(a) the assumptions in subsection (14) were made; and
(b) subsection 432(3) and 446(2) and paragraphs 432(1)(b) and (e) and 447(1)(b) , (d) and (f) had not been enacted.
Adjusted tainted income
23AH(13)
For the purposes of this section, the adjusted tainted income of a PE of an entity is income or other amounts that would be adjusted tainted income of the entity for the purposes of Part X if:
(a) the assumptions in subsection (14) were made; and
(b) subsection 446(2) and paragraphs 447(1)(b) , (d) and (f) had not been enacted.
Assumptions for subsections (12) and (13)
23AH(14)
The assumptions referred to in paragraphs (12)(a) and (13)(a) are:
(a) except in applying paragraphs 447(1)(a) , (c) and (e) and 450(6)(c) , (7)(d) and (8)(b) , the only income or other amounts derived by the entity were the income derived in carrying on business at or through the PE; and
(b) the entity's statutory accounting periods were the same as the entity's years of income; and
(c)in applying paragraphs 447(1)(a) , (c) and (e) and 450(6)(c) , (7)(d) and (8)(b) :
(i) the part of the entity's operations that consists of the business carried on at or through the PE were a company (the PE company ); and
(ii) the remaining part of the entity's operations were a separate company (the HQ company ); and
(iii) the PE company and the HQ company had carried out the transactions that they would have carried out if the PE company were engaged in the same or similar activities as the PE under the same or similar conditions as the PE and were dealing wholly independently with the HQ company; and
(iv) any income derived by the HQ company were disregarded; and
(d) if the entity is an AFI entity (within the meaning of subsection 326(2) ) - the entity were an AFI subsidiary; and
(e) in applying paragraphs 447(1)(a) , (c) and (e), the HQ company were an associate of the PE company.
23AH(14A)
This section does not apply to foreign income, or to a capital gain or capital loss, of a company to the extent that the income, gain or loss is from:
(a) the operation of ships or aircraft in international traffic at or through a PE of the company in a listed country or unlisted country; or
(b) things that are ancillary to that operation.
23AH(14B)
A company operates a ship or aircraft in international traffic if the company operates it for transporting passengers or goods between a place in one country and a place in another country.
Branch hybrid mismatch income
23AH(14C)
For the purposes of this section, if foreign income derived by the company is an amount that, for the purposes of Division 832 of the Income Tax Assessment Act 1997 , is a payment:
(a) received by the company; and
(b) that, apart from subsection (4A) of this section, would give rise to a branch hybrid mismatch;
then so much of the foreign income as does not exceed the amount of the branch hybrid mismatch is branch hybrid mismatch income .
23AH(14D)
For the purposes of this section, PE , when it is used in Division 832 of the Income Tax Assessment Act 1997 , does not have the meaning it has in that Act but instead has the same meaning as in this section.
Definitions
23AH(15)
In this section:
company
does not include a company in the capacity of a trustee.
double tax agreement
has the same meaning as in Part
X
.
eligible designated concession income
has the same meaning as in Part
X
.
foreign income
includes an amount that:
(a) apart from this section, would be included in assessable income under a provision of this Act other than Part 3-1 or 3-3 of the Income Tax Assessment Act 1997 (CGT); and
(b) is derived from sources in a listed country or unlisted country.
listed country
has the same meaning as in Part
X
.
permanent establishment
, or
PE
, in relation to a listed country or unlisted country:
(a) if there is a double tax agreement in relation to that country - has the same meaning as in the double tax agreement; or
(b) in any other case - has the meaning given by subsection 6(1) .
statutory accounting period
has the same meaning as in Part
X
.
tainted asset
has the same meaning as in Part
X
.
unlisted country
has the same meaning as in Part
X
.
SECTION 23AI AMOUNTS PAID OUT OF ATTRIBUTED INCOME NOT ASSESSABLE 23AI(1) [Attribution account payments]
(a) either:
(i) an attribution account payment of a kind referred to in paragraph 365(1)(a) , (b), (c) or (e) is made to a taxpayer (other than a partnership or taxpayer in the capacity of trustee of a trust); or
(ii) an attribution account payment of a kind referred to in paragraph 365(1)(d) is made to a taxpayer; and
(b) on the making of the payment, an attribution debit arises, for the entity making the payment, in relation to the taxpayer;
the following provisions have effect:
(c) if the payment is of a kind referred to in paragraph 365(1)(a) - the payment is not assessable income, and is not exempt income, to the extent of the debit;
(d) if the payment is of a kind referred to in paragraph 365(1)(b) and, apart from this section, an amount would be included in the taxpayer's assessable income under section 92 in respect of an individual interest in the net income of the partnership of the year of income referred to in that paragraph - that amount is not assessable income, and is not exempt income, to the extent of the debit;
(e) if the payment is of a kind referred to in paragraph 365(1)(c) and, apart from this section, an amount would be included in the taxpayer's assessable income under section 97 , 98A or 100 in respect of a share of the net income of the trust of the year of income referred to in that paragraph - that amount is not assessable income and is not exempt income, to the extent of the debit;
(ea) if the payment is of a kind referred to in paragraph 365(1)(c) and, apart from this section, an amount would be assessable to the trustee of the trust referred to in that paragraph under section 98 in respect of a share of the net income of the trust of the year of income referred to in that paragraph - that amount is not so assessable to the extent of the debit;
(f) if the payment is of a kind referred to in paragraph 365(1)(d) - the payment is not, to the extent of the debit, assessable to the taxpayer as mentioned in that paragraph;
(g) if the payment is of a kind referred to in paragraph 365(1)(e) and, apart from this section, an amount would be included in the taxpayer's assessable income, of the year of income referred to in that paragraph, under section 99B in respect of the trust property referred to in that paragraph - that amount is not assessable income, and is not exempt income to the extent of the debit.
This section is to be disregarded for the purposes of applying any other provision of this Act to determine allowable deductions.
In this section:
attribution account payment
has the same meaning as in Part
X
.
attribution debit
has the same meaning as in Part
X
.
company
has the same meaning as in Part
X
.
trust
has the same meaning as in Part
X
, but does not include a trust covered by subsection
371(7)
.
(Repealed by No 110 of 2014)
When this section applies
23AK(1)
This section applies if:
(a) either:
(i) a FIF attribution account payment of a kind referred to in former paragraph 603(1)(a), (b), (c), (d), (f), (g) or (h) is made to a taxpayer (other than a partnership or taxpayer in the capacity of trustee of a trust); or
(ii) a FIF attribution account payment of a kind referred to in former paragraph 603(1)(e) is made to a taxpayer; and
(b) on the making of the payment, a post FIF abolition debit arises, for the FIF attribution account entity making the payment, in relation to the taxpayer.
Post FIF abolition debit arises
23AK(2)
A post FIF abolition debit arises for a FIF attribution account entity (the eligible entity ) in relation to a taxpayer if:
(a) the eligible entity makes a FIF attribution account payment to the taxpayer or to a FIF attribution account entity; and
(b) immediately before the eligible entity makes the FIF attribution account payment, there is a post FIF abolition surplus for the eligible entity in relation to the taxpayer.
Amount of post FIF abolition debit
23AK(3)
The amount of the post FIF abolition debit is the lesser of:
(a) the post FIF abolition surplus; and
(b) whichever of the following is applicable:
(i) if the attribution account payment is made to the taxpayer - the FIF attribution account payment;
reduced by any attribution debit that arises under section 372 for the entity in relation to the taxpayer as a result of the making of the payment.
(ii) in any other case - the taxpayer ' s FIF attribution account percentage (for the FIF attribution account entity to which the payment is made) of the FIF attribution account payment;
When the post FIF abolition debit arises
23AK(4)
The post FIF abolition debit arises when the FIF attribution account payment is made.
When a post FIF abolition surplus exists
23AK(5)
A post FIF abolition surplus for a FIF attribution account entity in relation to a taxpayer exists at a particular time (the relevant time ) if the sum of:
(a) the entity ' s total FIF attribution credits (within the meaning of former section 605 ) that arose before the commencement of Schedule 1 to the Tax Laws Amendment (Foreign Source Income Deferral) Act (No. 1) 2010 ; and
(b) the entity ' s total post FIF abolition credits arising before the relevant time in relation to the taxpayer;
exceeds the sum of:
(c) the entity ' s total FIF attribution debits (within the meaning of former section 606 ) that arose before that commencement in relation to the taxpayer; and
(d) the entity ' s total post FIF abolition debits arising before the relevant time in relation to the taxpayer.
Post FIF abolition credit arises
23AK(6)
A post FIF abolition credit arises for a FIF attribution account entity (the eligible entity ) in relation to a taxpayer if a FIF attribution account payment that requires a post FIF abolition debit for another entity in relation to the taxpayer is made to the eligible entity.
Amount of post FIF abolition credit
23AK(7)
The amount of the post FIF abolition credit is equal to the amount of the post FIF abolition debit for the other entity.
When the post FIF abolition credit arises
23AK(8)
The post FIF abolition credit arises when the FIF attribution account payment referred to in subsection (6) is made.
Effect of this section applying
23AK(9)
If this section applies, the following provisions have effect:
(a) if the payment is of a kind referred to in former paragraph 603(1)(a) or (b) - the payment is not assessable income, and is not exempt income, to the extent of the debit;
(b) if the payment is of a kind referred to in former paragraph 603(1)(c) and, apart from this section, an amount would be included in the taxpayer ' s assessable income under section 92 in respect of an individual interest in the net income of the partnership of the year of income referred to in that paragraph - that amount is not assessable income, and is not exempt income, to the extent of the debit;
(c) if the payment is of a kind referred to in former paragraph 603(1)(d) and, apart from this section, an amount would be included in the taxpayer ' s assessable income under section 97 , 98A or 100 in respect of a share of the net income of the trust of the year of income referred to in that paragraph - that amount is not assessable income, and is not exempt income, to the extent of the debit;
(d) if the payment is of a kind referred to in former paragraph 603(1)(d) and, apart from this section, an amount would be assessable to the trustee of the trust referred to in that paragraph under section 98 in respect of a share of the net income of the trust of the year of income referred to in that paragraph - that amount is not so assessable to the extent of the debit;
(e) if the payment is of a kind referred to in former paragraph 603(1)(e) - the payment is not, to the extent of the debit, assessable to the taxpayer as mentioned in that paragraph;
(f) if the payment is of a kind referred to in former paragraph 603(1)(f) and, apart from this section, an amount would be included in the taxpayer ' s assessable income, of the year of income referred to in that paragraph, under section 99B in respect of the trust property referred to in that paragraph - that amount is not assessable income, and is not exempt income, to the extent of the debit;
(g) if the payment is of a kind referred to in former paragraph 603(1)(g) - the payment is not assessable income, and is not exempt income, to the extent of the debit;
(h) if the payment is of a kind referred to in former paragraph 603(1)(h) - the payment is not assessable income, and is not exempt income, to the extent of the debit.
23AK(10) [Other deduction provisions]
This section is to be disregarded for the purposes of applying any other provision of this Act to determine allowable deductions.
23AK(11) [Interpretation]In this section:
FIF attribution account entity
has the same meaning as in former Part
XI
.
FIF attribution account payment
has the same meaning as in former Part
XI
.
FIF attribution account percentage
has the same meaning as in former Part
XI
.
trust
has the same meaning as in former Part
XI
, but does not include a trust covered by former subsection
605(11)
.
Note:
A remade version of section 23AL is included in the Income Tax Assessment Act 1997 by item 748 of Schedule 2 to this Act.
FORMER SECTION 23A 23A PARTIAL EXEMPTION OF INCOME FROM CERTAIN MINING OPERATIONS(Repealed by No 126 of 1974)
If:
(a) it is necessary, for the purposes of applying a provision of this Act in the assessment of a taxpayer for a year of income, to take into account:
(i) the amount of consideration received, entitled to be received or taken to have been received, by the taxpayer in respect of the disposal of an asset; or
being an asset that is an interest in a FIF attribution account entity; and
(ii) the capital proceeds from a CGT event happening in relation to a CGT asset;
(b) immediately before the disposal or CGT event takes place there is a post FIF abolition surplus for the FIF attribution account entity in relation to the taxpayer;
then, for the purposes of this Act:
(c) the consideration or capital proceeds that, apart from this section, would be taken into account under the provision referred to in paragraph (a) in respect of the disposal or CGT event is taken to be reduced by so much of the amount of the post FIF abolition surplus as does not exceed the consideration or capital proceeds; and
(d) a post FIF abolition debit arises at the time of the disposal or the CGT event under this paragraph, in relation to the taxpayer, for the FIF attribution account entity; and
(e) the amount of the post FIF abolition debit is equal to so much of the surplus as is taken into account under paragraph (c).
23B(2)
For the purposes of paragraph (1)(c), if the disposal of the asset or the CGT event causes the taxpayer ' s FIF attribution account percentage for the FIF attribution account entity to be reduced by a proportion, then only that proportion of the post FIF abolition surplus for the entity is to be taken into account under that paragraph.
23B(3)
In this section:
FIF attribution account entity
entity has the same meaning as in former Part
XI
.
FIF attribution account percentage
has the same meaning as in former Part
XI
.
(Repealed by No 47 of 2016)
(Repealed by No 138 of 1987)
(Repealed by No 138 of 1987)
(Repealed by No 138 of 1987)
(Repealed by No 97 of 1989)
(Repealed by No 97 of 1989)
In this section:
credit union
means a company in relation to which the following conditions are satisfied:
(a) the company is an ADI (authorised deposit-taking institution) for the purposes of the Banking Act 1959 ;
(b) the company has a consent under section 66 of that Act that allows it to assume or use the expression " credit union " or " credit society " , or another expression (whether or not in English) that is of like import to either of those expressions.
Income derived during a year of income by a credit union that is an approved credit union in relation to that year of income, being interest paid to the credit union by members of the credit union not being companies in respect of loans made to those members, is exempt from income tax.
23G(2A) [When subsection (2) not applicable]Subsection (2) does not apply to a credit union in relation to a year of income if:
(a) the credit union is a recognised medium credit union in relation to the year of income; or
(b) the credit union is a recognised large credit union in relation to the year of income.
For the purposes of this section, a credit union is an approved credit union in relation to a year of income if, and only if, the Commissioner is satisfied that:
(a) during that year of income the credit union did not enter into any transactions of a kind not ordinarily entered into by a company of a kind referred to in paragraph (a) of the definition of credit union in subsection (1); and
(b) by comparison with the profits of other credit unions for that year of income and the amounts transferred by those credit unions out of those profits to reserves, and after making due allowance for differences in the numbers of transactions entered into by other credit unions and the first-mentioned credit union and the amounts to which the respective transactions related, the profit of the first-mentioned credit union for that year of income was not excessive and the first-mentioned credit union did not transfer an unreasonable part of that profit to a reserve. 23G(4) [Factors to be taken into account for para (3)(a)]
In determining for the purposes of paragraph (3)(a) whether any transactions entered into by a credit union during a year of income were transactions of a kind referred to in that paragraph, the Commissioner may have regard to:
(a) the circumstances in which, and the terms and conditions upon which, during that year of income:
(i) moneys were lent to, invested with, or otherwise obtained by, the credit union;
(ii) moneys were lent or otherwise made available by the credit union to its members or to other persons; and
(iii) moneys were invested by the credit union;
(b) the nature of the connexion (if any) between:
(i) the credit union or any of its members and any of the persons by whom moneys were lent to, invested with, or otherwise made available to, the credit union during that year of income;
(ii) the credit union or any of its members and any of the persons who owed moneys to the credit union at any time during that year of income; or
(iii) any of the persons by whom moneys were lent to, invested with, or otherwise made available to, the credit union during that year of income and any of the persons who owed moneys to the credit union at any time during that year of income; and
(c) any other relevant matters.
(Repealed by No 143 of 2007 )
(Repealed by No 47 of 2016)
In this section:
central borrowing authority
means:
(a) the New South Wales Treasury Corporation;
(b) the Victorian Public Authorities Finance Agency;
(c) the Victoria Transport Borrowing Agency;
(d) the Queensland Government Development Authority;
(e) the Treasurer of the State of Western Australia;
(f) the South Australian Government Financing Authority;
(g) the Local Government Finance Authority of South Australia;
(h) any other public authority of a State, being a public authority that is empowered to issue securities in the manner referred to in paragraph (2)(a).
public authority
includes a Minister of the Crown in right of a State, a municipal corporation and any other local government body.
security
means stock, a bond or debenture, or any other document evidencing the indebtedness of a person, whether or not the debt is secured.
For the purposes of this section, a person shall be taken to have issued a security (in this subsection referred to as the substituted security ) to a taxpayer in substitution for another security (in this subsection referred to as the original security ) held by the taxpayer if and only if:
(a) the substituted security was issued by the person to the taxpayer in exchange for the surrender or transfer of, or otherwise in replacement or substitution for, the original security; and
(b) the terms and conditions provided for by the substituted security were identical in all material respects to those provided for by the original security. 23K(3) [No issue of substituted security]
(a) but for this subsection, a person would be taken to have issued a security (in this subsection referred to as the substituted security ) to a taxpayer in substitution for another security (in this subsection referred to as the original security ) held by the taxpayer; and
(b) either or both of the following conditions is or are satisfied:
(i) an amount was payable by the taxpayer by way of consideration for the issue of the substituted security; or
(ii) an amount was payable to the taxpayer by way of consideration for the surrender, transfer, replacement or substitution of the original security;
the person shall not be taken for the purposes of this section to have issued the substituted security in substitution for the original security.
23K(4) [Where day interest payable different](a) under terms and conditions provided for by a security, the day on which interest is payable in respect of a period is different from that on which interest is payable in respect of the same period under another security; and
(b) the terms and conditions provided for by the securities are otherwise identical in all material respects;
the following provisions have effect:
(c) if the days on which the interest is payable are separated by an interval not exceeding 31 days - the terms and conditions provided for by the 2 securities shall, for the purposes of paragraph (2)(b), be taken to be identical in all material respects; and
(d) in any other case - the terms and conditions provided for by the 2 securities shall, for the purposes of paragraph (2)(b), be taken not to be identical in all material respects. 23K(5) [Security issued on or after 8 August 1984]
Where, on or after 8 August 1984, a central borrowing authority issued or issues a security (in this subsection referred to as the substituted security ) to a taxpayer in substitution for another security (in this subsection referred to as the original security ) held by the taxpayer that was issued by a public authority other than the central borrowing authority:
(a) the substituted security shall, for the purposes of this Act, be deemed to be a continuation of the original security on the terms and conditions provided for by the substituted security; and
(b) no amount shall, in respect of the issue of the substituted security or the surrender, transfer, replacement or substitution of the original security, be included in, allowable as a deduction from or taken into account in ascertaining any amount included in or allowable as a deduction from, the assessable income of any taxpayer in respect of any year of income.
Income derived by a taxpayer by way of the provision of a fringe benefit is not assessable income and is not exempt income of the taxpayer.
23L(1A)
Income derived by a taxpayer by way of the provision of a benefit (other than a benefit to which section 15-70 of the Income Tax Assessment Act 1997 applies) that, but for paragraph (g) of the definition of fringe benefit in subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986 , would be a fringe benefit is exempt income of the taxpayer.
23L(2)
Where:
(a) in a year of income, a taxpayer derives income consisting of one or more non-cash business benefits (within the meaning of section 21A ); and
(b) the total amount that is applicable under section 21A in respect of those benefits does not exceed $ 300;
the income is exempt income.
FORMER SECTION 23M 23M REIMBURSEMENT ETC. IN RESPECT OF FRINGE BENEFITS TAX NOT ASSESSABLE INCOME
(Repealed by No 223 of 1992)
(Repealed by No 121 of 1997) FORMER SECTION 24AA 24AA INCOME OF VISITING EXPERTS
(Repealed by No 107 of 1989)
(Repealed by No 76 of 1984)
A body that is a State/Territory body (an STB ) is exempt from income tax under this Division unless it is an excluded STB. There are 5 different ways in which a body can be an STB.
The following diagram is a guide to help work out whether a body is exempt from income tax under this Division:
The income of a State/Territory body (an STB ) is exempt from income tax unless section 24AN applies to the STB.
Income derived by an STB is not exempt from income tax under this Division if, at the time that it is derived, the STB is an excluded STB.
Notes:
A body is an STB if:
(a) it is a company limited solely by shares; and
(b) all the shares in it are beneficially owned by one or more government entities.
Note:
For the definition of government entity see section 24AT . Note that an excluded STB is not a government entity.
A body is an STB if:
(a) it is established by State or Territory legislation; and
(b) it is not a company limited solely by shares; and
(c) the legislation provides that it must distribute all of its profits (if any) only to one or more government entities; and
(d) if the legislation makes provision as to the way its net assets may be distributed if it is dissolved or wound up - the provision is that, if it is dissolved, all of its net assets (if any) must be distributed only to one or more government entities.
A body is an STB if:
(a) it is established by State or Territory legislation; and
(b) it is not a company limited solely by shares; and
(c) the legislation gives the power to appoint or dismiss its governing person or body only to one or more government entities.
A body is an STB if:
(a) it is established by State or Territory legislation; and
(b) it is not a company limited solely by shares; and
(c) the legislation gives the power to direct its governing person or body as to the conduct of its affairs only to one or more government entities.
A body is an STB if:
(a) it is not a company limited solely by shares; and
(b) it is not established by State or Territory legislation; and
(c) all the legal and beneficial interests (including, but not limited to, interests as to income, profits, dividends, capital and distributions of capital) in it are held only by one or more government entities; and
(d) all the rights or powers (if any) to vote, appoint or dismiss its governing person or body and direct its governing person or body as to the conduct of its affairs are held only by one or more government entities.
In this Division:
excluded STB
means an STB that:
(a) at a particular time, is prescribed as an excluded STB in relation to that time; or
(b) is a municipal corporation or other local governing body (within the meaning of section 50-25 of the Income Tax Assessment Act 1997 ); or
(c) is a public educational institution to which any of paragraphs 50-55(1)(a) to (c) of the Income Tax Assessment Act 1997 applies; or
(d) is a public hospital to which any of paragraphs 50-55(1)(a) to (c) of the Income Tax Assessment Act 1997 applies; or
(e) is a superannuation fund.
(a) a State; or
(b) a Territory; or
(ba) a municipal corporation or other local governing body (within the meaning of section 50-25 of the Income Tax Assessment Act 1997 ); or
Note:
The effect of this paragraph is that some bodies owned or controlled by a municipal corporation or other local governing body may be an STB even though the municipal corporation or other local governing body is an excluded STB.
(c) another STB that is not an excluded STB.
Territory
means the Northern Territory or the Australian Capital Territory.
For the purposes of sections 24AQ , 24AR and 24AS , if the power to appoint, dismiss or direct the governing body is given to, or is held by:
(a) a Governor of a State; or
(b) a Minister of the Crown of a State; or
(c) a Minister of a Territory; or
(d) the head of a Department of a State or a Territory; or
(e) any combination of paragraphs (a) to (d);
the power is taken to be given to, or held by, a government entity.
States and Territories to consent to STBs being excluded STBs
24AV(1)
The regulations may prescribe that an STB is an excluded STB only if all States and Territories consent to the STB being so prescribed.
Retrospective application of regulations prescribing excluded STBs
24AV(2)
Subsection 12(2) (retrospective application of legislative instruments) of the Legislation Act 2003 does not apply to a regulation prescribing an STB as an excluded STB.
Subdivision B - Body ceasing to be an STB SECTION 24AW 24AW BODY CEASING TO BE AN STB
If a body ceases to be an STB in a year of income (the cessation year ), this Act applies to the body as if:
(a) the cessation were a change which requires a company to calculate its taxable income and tax loss under Subdivision 165-B of the Income Tax Assessment Act 1997; and
(b) the references in that Subdivision to ``company'' were references to ``body''; and
(c) if the body is not a company - there were no further requirement for the body to calculate its taxable income for the year of income under that Subdivision; and
(d) the amount of any notional loss of the body calculated under section 165-50 of that Act for the period before the cessation were nil; and
(e) the body's deductions for tax losses were attributed under section 165-55 of that Act to the period before the cessation and not to any other period; and
(f) those deductions were taken not to be full year deductions under section 165-55 of that Act; and
(g) the application of Parts 3-1and 3-3 of the Income Tax Assessment Act 1997 were modified, for the purposes of that Subdivision, in accordance with section 24AX of this Act.
In determining if an amount is to be included in the assessable income of the body under Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 for a period that occurred after the cessation, any net capital losses incurred before the cessation are to be disregarded.
Subsections (3) and (4) apply if:
(a) a net capital gain accrued in the period before the cessation; and
(b) if the period from the cessation until the end of the year of income were treated as a year of income - a net capital loss would have accrued in that period. 24AX(3) Special case 1 - gain exceeds loss.
If this subsection applies and the net capital gain exceeds the net capital loss:
(a) the amount that is to be included in the assessable income of the body for the period that occurred before the cessation as a result of the net capital gain accruing to the body is taken to be the amount by which the net capital gain exceeds the net capital loss; and
(b) no net capital gain is taken to have accrued, and no net capital loss is taken to have been incurred, in any period in the cessation year after the cessation; and
(c) in determining if a net capital gain accrued to, or a net capital loss was incurred by, the body for the year following the cessation year, no net capital loss is taken to have been incurred by the body in the cessation year. 24AX(4) Special case 2 - loss equal to or exceeds gain.
If this subsection applies and the net capital gain does not exceed the net capital loss:
(a) no amount is to be included in the assessable income of the body for any period in the cessation year as a result of a net capital gain accruing to the body; and
(b) in determining if a net capital gain accrued to, or a net capital loss was incurred by, the body for the year following the cessation year, the net capital loss that the body incurred in the cessation year is taken to be the amount (if any) by which the net capital loss exceeds the net capital gain.
If a body is an STB on the last day of a year of income in which it incurs a tax loss, the tax loss is not allowable as a deduction from the body's assessable income of a later year of income unless the body is an STB on the first day of that later year of income.
Note:
This section prevents losses from years prior to the cessation year from being carried forward to years after the cessation year.
This section only applies to a tax loss incurred in the 1995-96 year of income or a later year of income.
This section applies to a deduction under section 290-60 of the Income Tax Assessment Act 1997 in respect of a contribution made in relation to a person who was an employee of a prescribed excluded STB when it ceased to be an STB.
A deduction to which this section applies is not allowable to the body for any year of income unless the requirements of subsections (3) and (4) are complied with.
24AYA(3) [Actuarial certificate required]For the deduction to be allowable, the body must obtain a certificate by an authorised actuary stating the actuarial value, as at the time the body ceases to be an STB, of liabilities of the STB to provide superannuation benefits for, or for SIS dependants of, employees of the body, where the liabilities:
(a) accrued after 30 June 1995 and before the time when the body ceased to be an STB; and
(b) were, according to actuarial principles, unfunded at that time.
The certificate must be in a form approved in writing by the Commissioner. The body must obtain the certificate:
(a) before the date of lodgment of its return of income of the year of income in which the body ceased to be an STB; or
(b) within such further time as the Commissioner allows. 24AYA(5) [Deductions less than or equal to unfunded liability limit]
If the body obtains the certificate, a deduction to which this section applies is nevertheless not allowable for a year of income if the sum of all deductions to which this section applies for the year of income is less than or equal to the unfunded liability limit (see subsection (6)) for the year of income.
24AYA(6) [Deductions greater than unfunded liability limit]If the sum is greater than that limit, so much of the deduction as is worked out using the following formula is not allowable:
|
Amount of deduction
Sum of all deductions to which this section applies for the year of income |
× |
Unfunded liability limit
for the year of income |
where:
Unfunded liability limit for a year of income is:
Expressions used in this section that are also used in section 290-60 of the Income Tax Assessment Act 1997 have the same respective meanings as in that section.
In this Subdivision:
period
means any of the periods into which the cessation year is divided under section
165-45
of the
Income Tax Assessment Act 1997
.
prescribed excluded STB
means an STB that is an excluded STB as a result of regulations made for the purposes of paragraph (a) of the definition of
excluded STB
in section
24AT
.
(Repealed by No 53 of 2015)
(Repealed by No 53 of 2015)
(Repealed by No 53 of 2015)
(Repealed by No 53 of 2015)
(Repealed by No 53 of 2015)
(Repealed by No 53 of 2015)
(Repealed by No 53 of 2015)
(Repealed by No 53 of 2015)
(Repealed by No 53 of 2015)
(Repealed by No 53 of 2015)
(Repealed by No 53 of 2015)
(Repealed by No 53 of 2015)
Archived:
S 25 repealed as inoperative by No 101 of 2006 , s 3 and Sch 1 item 52, effective 14 September 2006. For application and savings provisions and for former wording see the CCH Australian Income Tax Legislation archive .
This section does not apply in respect of the sale of property acquired on or after 20 September 1985.
25A(1B)
This section does not apply to a profit arising in the 1997-98 year of income or a later year of income from the carrying on or carrying out of a profit-making undertaking or scheme, even if the undertaking or scheme was entered into, or began to be carried on or carried out, before the 1997-98 year of income.
Note:
Section 15-15 (Profit-making undertaking or plan) of the Income Tax Assessment Act 1997 deals with such a profit.
25A(1)
The assessable income of a taxpayer shall include profit arising from the sale by the taxpayer of any property acquired by the taxpayer for the purpose of profit-making by sale, or from the carrying on or carrying out of any profit-making undertaking or scheme.
25A(2)
Subject to subsection (3), where:
(a) after 23 August 1983, a taxpayer sold or sells property (in this subsection referred to as the relevant property ) being:
(i) shares in a private company;
(ii) an interest in a partnership; or
(iii) an interest in a private trust estate; and
(b) at the time of sale of the relevant property:
(i) the company, partnership or trustee of the trust estate, as the case may be, held property that:
(A) was acquired for the purpose of profit-making by sale by the company, partnership or trustee, as the case may be; and
(B) was not excepted property of the company, partnership or trust estate, as the case may be; or
(ii) the company, partnership or trustee of the trust estate, as the case may be, held an interest, through one or more interposed companies, partnerships or trusts, in property that:
(A) was acquired for the purpose of profit-making by sale by another private company, partnership or trustee of a private trust estate; and
(B) was not excepted property of that other company, partnership or trust estate, as the case may be;
the taxpayer shall, for the purposes of the application of this Act (including any application of any other provision of this section), be deemed to have acquired the relevant property for the purpose of profit-making by sale.
25A(3)
Subsection (2) does not apply in relation to the sale by a taxpayer of property where the Commissioner, having regard to:
(a) the extent to which the assets of the company, partnership or trust estate, as the case may be, referred to in paragraph (2)(a), immediately before the time of sale, consisted of the property referred to in subparagraph (2)(b)(i) or the interest referred to in subparagraph (2)(b)(ii), as the case may be;
(b) the nature and extent, immediately before the time of sale, of the taxpayer's control of the company, partnership or trust estate, as the case may be, referred to in paragraph (2)(a) including, in the case of a company, the nature and extent of the taxpayer's shareholding in the company;
(c) the circumstances surrounding any other sale, whether or not by the taxpayer, of shares in the company, or an interest in the partnership or trust estate, as the case may be, referred to in paragraph (2)(a), being a sale at a time when the property of that company, partnership or trust estate included the property referred to in subparagraph (2)(b)(i) or the interest referred to in subparagraph (2)(b)(ii), as the case may be; and
(d) such other matters as the Commissioner considers relevant;
considers that it is not appropriate that that subsection should apply in relation to the sale of the property by the taxpayer.
25A(4)
Where:
(a) a taxpayer acquired or acquires property, being shares in a company, for the purpose of profit-making by sale; and
(b) after 23 August 1983:
(i) the company issued or issues other shares (in this subsection referred to as the bonus shares ) to the taxpayer in satisfaction of a dividend (including an amount debited against an amount standing to the credit of a share premium account) payable to the taxpayer in respect of the shares referred to in paragraph (a); or
(ii) by reason that the taxpayer was the owner of the shares referred to in paragraph (a), the company issued or issues to the taxpayer rights to acquire other shares in the company;
the taxpayer shall, for the purposes of the application of this Act (including any other application of this subsection and any application of any other provision of this section), be deemed to have acquired the bonus shares or the rights, as the case may be, for the purpose of profit-making by sale.
25A(5)
Where, after 23 August 1983, property was or is acquired by a taxpayer as a result of a transfer in the prescribed manner by a person who acquired the property for the purpose of profit-making by sale, the taxpayer shall, for the purposes of the application of this Act (including any other application of this subsection and any application of any other provision of this section), be deemed to have acquired the property for the purpose of profit-making by sale.
25A(6)
Where:
(a) after 23 August 1983, a taxpayer sold or sells property; and
(b) the property sold was:
(i) an interest in property, being property acquired by the taxpayer for the purpose of profit-making by sale; or
(ii) property, or an interest in property, in which was merged an interest in property, being an interest acquired by the taxpayer for the purpose of profit-making by sale;
the taxpayer shall, for the purposes of the application of this Act (including any application of any other provision of this section), be deemed to have acquired the property sold for the purpose of profit-making by sale.
25A(7)
For the purposes of subsection (2), where a company, partnership or trustee of a trust estate holds or held property (in this subsection referred to as the underlying property ) consisting of:
(a) an interest in property, being property acquired by the company, partnership or trustee for the purpose of profit-making by sale; or
(b) property, or an interest in property, in which was merged an interest in property, being an interest acquired by the company, partnership or trustee for the purpose of profit-making by sale;
the company, partnership or trustee, as the case may be, shall be deemed to have acquired the underlying property for the purpose of profit-making by sale.
25A(8)
Where:
(a) property (in this subsection referred to as the acquired property ) was or is acquired for the purpose of profit-making by sale; and
(b) after 23 August 1983, property (in this subsection referred to as the transferred property ) being:
(i) an interest in the acquired property; or
was or is transferred to a taxpayer in the prescribed manner;
(ii) property, or an interest in property, in which was merged an interest in the acquired property;
the taxpayer shall, for the purposes of the application of this Act (including any other application of this subsection and any application of any other provision of this section), be deemed to have acquired the transferred property for the purpose of profit-making by sale.
25A(9)
Where a taxpayer sold or sells property that, by virtue of any of the preceding provisions of this section, is deemed to have been acquired by the taxpayer for the purpose of profit-making by sale, so much (if any) of the proceeds of sale as, in the opinion of the Commissioner, is appropriate shall, for the purposes of this Act, be deemed to be profit arising from the sale by the taxpayer of the property.
25A(10)
For the purposes of the application of subsection (9) in relation to the sale of property (in this subsection referred to as the relevant property ) by a taxpayer:
(a) if:
(i) the relevant property is deemed by subsection (2) to have been acquired by the taxpayer for the purpose of profit-making by sale;
(ii) the property (in this paragraph referred to as the underlying property ) to which sub-subparagraph (2)(b)(i)(A) or (2)(b)(ii)(A), as the case may be, applies was actually acquired for the purpose of profit-making by sale by the company, partnership or trustee referred to in that sub-subparagraph (which company, partnership or trustee is in this paragraph referred to as the underlying owner ); and
the Commissioner shall have regard to the extent to which, in the Commissioner's opinion, the proceeds of sale of the relevant property are attributable to the amount of any increase in the value of the underlying property during the period (in this paragraph referred to as the relevant period ) when the underlying property was held by the underlying owner and the relevant property was held by the taxpayer reduced by the amount of any capital expenditure incurred by the underlying owner in respect of the underlying property during the relevant period (not including expenditure in respect of which a deduction has been allowed, or is allowable, to the underlying owner);
(iii) the relevant property was not transferred to the taxpayer in the prescribed manner;
(b) if the relevant property is deemed by subsection (5) to have been acquired by the taxpayer for the purpose of profit-making by sale and the relevant property was actually acquired for the purpose of profit-making by sale by the person (in this paragraph referred to as the transferor ) who transferred the relevant property to the taxpayer in the prescribed manner - the Commissioner shall have regard to the extent to which the amount (if any) that would have been included in the assessable income of the transferor if the transferor had sold the relevant property at the time when it was sold by the taxpayer for an amount of consideration equal to the amount of the consideration received or receivable by the taxpayer in respect of the sale of the relevant property by the taxpayer exceeds the sum of:
(i) any expenditure incurred by the taxpayer in respect of the relevant property, not including:
(A) any consideration given by the taxpayer in respect of the transfer of the relevant property to the taxpayer; or
(B) expenditure to which subparagraph (ii) applies;
(ii) where the taxpayer incurred expenditure of a capital nature in respect of the relevant property otherwise than:
(A) in acquiring property for the purpose of profit-making by sale; oran amount equal to so much of the consideration received or receivable by the taxpayer in respect of the sale of the relevant property by the taxpayer as exceeds the amount that, in the opinion of the Commissioner, would have been the consideration received or receivable by the taxpayer if the taxpayer had not incurred that capital expenditure; and
(B) as part of a profit-making undertaking or scheme;
(iii) the amount of any profit included in the assessable income of the transferor in respect of the transfer of the relevant property to the taxpayer;
(c) if the relevant property is deemed to have been acquired by the taxpayer by virtue of the application of this section (either directly or indirectly) in relation to property (in this paragraph referred to as the related property ) that was actually acquired by the taxpayer or by another person or other persons for the purpose of profit-making by sale - the Commissioner shall have regard to the extent to which the relevant property consists of, or is attributable to, the related property;
(d) if the relevant property consists of rights to acquire shares in a company, being rights that the taxpayer is deemed by subsection (4) to have acquired for the purpose of profit-making by sale - the relevant property shall be deemed to have been acquired by the taxpayer at no cost; and
(e) if the relevant property consists of bonus shares that the taxpayer is deemed by subsection (4) to have acquired for the purpose of profit-making by sale - the cost to the taxpayer of the relevant property shall be ascertained in accordance with section 6BA.
25A(11)
For the purposes of this section, property shall be taken to have been transferred to a person (in this subsection referred to as the transferee ) in the prescribed manner if:
(a) the following conditions are satisfied:
(i) the property is transferred by way of gift or for consideration the amount or value of which is less than the amount that, in the opinion of the Commissioner, is the value of the property immediately before the time of transfer;
(ii) the property is transferred otherwise than as a result of:
(A) a will, a codicil or an order of a court that varied or modified the provisions of a will or a codicil; or
(B) an intestacy or an order of a court that varied or modified the application, in relation to the estate of a deceased person, of the provisions of the law relating to the distribution of the estates of persons who die intestate; and
(iii) the Commissioner is satisfied that the transferee and the person who transferred the property were not dealing with each other at arm's length in relation to the transfer of the property; or
(b) the property:
(i) is transferred by way of a distribution of property of a private company or private trust estate made (whether in the course of the winding up of the company or trust estate or otherwise) to the transferee in the transferee ' s capacity as a shareholder in the company or a beneficiary of the trust estate, as the case may be; and
(ii) is not excepted property of the company or trust estate, as the case may be.
25A(12)
In this section:
(a) a reference to excepted property of a company, partnership or trust estate is a reference to:
(i) trading stock of the company, partnership or trustee; or
(ii) property being plant within the meaning of section 45-40 of the Income Tax Assessment Act 1997 purchased for use by the company, partnership or trustee of the trust estate for the purpose of producing assessable income;
(b) a reference to a private company is a reference to a company other than a company the shares in which are listed for quotation in the official list of a stock exchange in Australia or elsewhere;
(c) a reference to a private trust estate is a reference to a trust estate other than a unit trust the units in which are listed for quotation in the official list of a stock exchange in Australia or elsewhere or are ordinarily available for subscription or purchase by the public; and
(d) a reference to property generally or to a particular kind of property includes a reference to an estate or interest in property or in that kind of property, as the case may be.
(Repealed by No 133 of 2009)
(Repealed by No 133 of 2009)
(Repealed by No 47 of 1984)
For the purposes of assessments for the 1997-98 year of income and later years of income, this section applies only in relation to assignments of leases granted before 20 September 1985.
Note:
The Income Tax Assessment Act 1997 does not contain a rewritten version of this section.
For the 1998-99 year of income and later years of income, Parts 3-1 and 3-3 (about CGT) deal with the income tax treatment of premiums for:
For the 1997-98 year of income, former Part IIIA of this Act (about CGT) dealt with the income tax treatment of such premiums.
26AB(1)
In this section, premium means a consideration payable in one amount, or each amount of a consideration payable in more than one amount, where the consideration is:
(a) in the nature of a premium, fine or foregift payable for or in connexion with the grant or assignment of a lease; or
(b) for or in connexion with an assent to the grant or assignment of a lease;
but does not include an amount in respect of goodwill or a licence.
26AB(2)
Where, in the year of income, a taxpayer receives a premium that relates to the grant or assignment of a lease of property that was not, at the date on which the agreement to grant or assign the lease was made, or the assent to the grant or assignmentof the lease was given, as the case may be, intended by the grantee or assignee to be used by the grantee or the assignee or some other person wholly or partly for the purpose of gaining or producing assessable income, the assessable income of the taxpayer shall include the premium.
26AB(3)
Where, in the year of income, a taxpayer receives a premium that relates to the grant or assignment of a lease of property that was, at the date on which the agreement to grant or assign the lease was made, or the assent to the grant or assignment of the lease was given, as the case may be, intended by the grantee or assignee to be used by the grantee or assignee or some other person partly for the purpose of gaining or producing assessable income and partly for other purposes, the assessable income of the taxpayer shall include such part of the premium as the Commissioner considers may reasonably be attributed to the intended use of the property for purposes other than gaining or producing assessable income.
26AB(4)
Where, in a case referred to in subsection (2) or (3), the taxpayer satisfies the Commissioner that, at the date on which the agreement to grant or assign the lease was made, or the assent to the grant or assignment of the lease was given, as the case may be, the taxpayer believed on reasonable grounds that the grantee or assignee intended a particular use of the property by the grantee or assignee or some other person for the purpose of gaining or producing assessable income, the Commissioner may apply this section on the basis that that intention existed.
26AB(5)
This section does not apply in relation to:
(a) (Repealed by No 101 of 2006 )
(b) a premium received in connexion with the assignment of a lease of land granted under a law of a State or Territory relating to mining;
(c) a premium received in connexion with the grant or assignment of a lease that was, for the purposes of former section 88B , a grant or assignment for mining purposes; or
(d) a premium received in connexion with the assignment from the Commonwealth or a State of a lease:
(i) granted in perpetuity or for a term not less than 99 years; or
(ii) with a right of purchase; or
(iii) effecting improvements to be used for residential purposes only.
FORMER SECTION 26AC 26AC AMOUNTS RECEIVED ON RETIREMENT OR TERMINATION OF EMPLOYMENT IN LIEU OF ANNUAL LEAVE
(Repealed by No 15 of 2007)
(Repealed by No 15 of 2007)
(Repealed by No 47 of 1984)
(a) in a year of income and after 19 August 1980, a taxpayer receives or obtains a benefit of any kind out of, or attributable to assets of, a paragraph 23(ja) fund or a section 23FB fund;
(aa) if the fund is an exempt fund within the meaning of section 26AFB (as in force just before the commencement of Schedule 1 to the Superannuation Legislation Amendment (Simplification) Act 2007 ) - the benefit was received or obtained by the taxpayer before the proclaimed superannuation standards day;
(b) the benefit is received or obtained otherwise than in accordance with approved terms and conditions applicable to the fund at the time when the benefit is received or obtained; and
(c) the Commissioner is satisfied that the taxpayer received or obtained the benefit:
(i) by reason that the taxpayer was, or had been, a member of the fund;
(ii) by reason that the taxpayer was, or had been, a dependant of a person who was, or had been, a member of the fund; or
(iii) by reason that the taxpayer was, or had been, associated with a person who was, or had been, a member of the fund;
the assessable income of the taxpayer of the year of income shall include the amount or value of that benefit.
[ CCH Note: The " proclaimed superannuation standards day " has been proclaimed to be 1 July 1990 (see Special Gazette No S174 of 29 June 1990).]
Where, in a year of income and after 19 August 1980, a taxpayer receives valuable consideration in respect of the transfer by the taxpayer to another person (whether by assignment, by declaration of trust or by any other means) of a right (whether vested or contingent) to receive a benefit from a fund, being a paragraph 23(ja) fund or a section 23FB fund and not being an exempt fund within the meaning of section 26AFB (as in force just before the commencement of Schedule 1 to the Superannuation Legislation Amendment (Simplification) Act 2007 ), the assessable income of the taxpayer of the year of income shall include the amount or value of that consideration.
In this section:
approved terms and conditions
, in relation to a fund, means:
(a) in the case of a paragraph 23(ja) fund - terms and conditions approved by the Commissioner under subparagraph 23(ja)(ii) as in force at any time before the commencement of section 1 of the Taxation Laws Amendment Act (No. 4) 1987 ; or
(b) in the case of a section 23FB fund - terms and conditions approved by the Commissioner under subsection 23FB(2) as in force at any time before the commencement of section 1 of the Taxation Laws Amendment Act (No. 4) 1987 .
paragraph
23(ja)
fund
means a fund the income of which of any year of income is or has been exempt from tax by virtue of paragraph
23(ja)
as in force at any time before the commencement of section 1 of the
Taxation Laws Amendment Act (No. 4) 1987
or would, but for the provisions of section
121C
as in force at any time before the commencement of section 21 of the
Taxation Laws Amendment Act 1985
and Division 9C, be, or have been, exempt from tax by virtue of that paragraph.
(a) a fund the income of which of any year of income is or has been exempt from tax by virtue of section 23FB as in force at any time before the commencement of section 1 of the Taxation Laws Amendment Act (No. 4) 1987 or would, but for the provisions of Division 9C, be, or have been, exempt from tax by virtue of that section; and
(b) a fund that was a section 79 fund for the purposes of this section as in force at any time before the commencement of the Income Tax Assessment Amendment Act (No. 3) 1984.
For the purposes of this section, where either of the following paragraphs applies in relation to an exempt fund within the meaning of section 26AFB of this Act (as in force just before the commencement of Schedule 1 to the Superannuation Legislation Amendment (Simplification) Act 2007 ) in relation to the year of income of the fund commencing on 1 July 1986 or a subsequent year of income:
(a) the year of income ended before the proclaimed superannuation standards day and the income of the fund of the year of income would, but for the amendments made by the Taxation Laws Amendment Act (No. 4) 1987 , have been exempt from tax under paragraph 23(ja) or section 23FB of this Act, as in force at any time before the commencement of section 1 of that Act;
(b) the proclaimed superannuation standards day occurred during the year of income and, if the year of income had ended on the proclaimed superannuation standards day, the income of the fund of the year of income would have been exempt from tax under paragraph 23(ja) or section 23FB of this Act, as in force at any time before the commencement of section 1 of that Act;
paragraph 23(ja) or section 23FB of this Act, as in force immediately before the commencement of section 1 of that Act, shall be taken to have continued to apply in relation to the fund in relation to the year of income of the fund.
[ CCH Note: The " proclaimed superannuation standards day " has been proclaimed to be 1 July 1990 (see Special Gazette No S174 of 29 June 1990).]
(a) in a year of income and on or after 7 December 1983, a taxpayer receives or obtains a benefit of any kind out of, or attributable to assets of, a section 23F fund;
(aa) if the fund is an exempt fund within the meaning of section 26AFB (as in force just before the commencement of Schedule 1 to the Superannuation Legislation Amendment (Simplification) Act 2007 ) - the benefit was received or obtained by the taxpayer before the proclaimed superannuation standards day;
(b) the benefit:
(i) is not a benefit that the taxpayer has a right to receive from the fund; or
(ii) is an excessive benefit; and
(c) the Commissioner is satisfied that the taxpayer received or obtained the benefit:
(i) by reason that the taxpayer was, or had been, a member of the fund;
(ii) by reason that the taxpayer was, or had been, a dependant of a person who was, or had been, a member of the fund;
(iii) by reason that the taxpayer was, or had been, associated with a person who was, or had been, a member of the fund; or
(iv) by reason that the taxpayer was, or had been, associated with a person who had made contributions to the fund, being contributions to which Subdivision AA of Division 3 applied;
the assessable income of the taxpayer of the year of income shall include the amount or value of that benefit.
[ CCH Note: The " proclaimed superannuation standards day " has been proclaimed to be 1 July 1990 (see Special Gazette No S174 of 29 June 1990).]
(a) subsection (1) would, but for this subsection, apply to the amount or value of an excessive benefit received or obtained by a taxpayer out of, or attributable to assets of, a section 23F fund; and
(b) the Commissioner, having regard to:
(i) the nature of the fund;
(ii) the circumstances by reason of which the benefit is an excessive benefit; and
is satisfied that it would be unreasonable for subsection (1) to apply to the whole or part of the benefit;
(iii) such other matters relating to the receiving or obtaining of the benefit by the taxpayer as the Commissioner considers relevant;
that subsection does not apply to the benefit, or to that part of the benefit, as the case may be.
26AFA(3) [Transfer of right to receive benefit]Where, in a year of income and on or after 7 December 1983, a taxpayer receives valuable consideration in respect of the transfer by the taxpayer to another person (whether by assignment, by declaration of trust or by any other means) of a right (whether vested or contingent) to receive a benefit from a fund, being a section 23F fund and not being an exempt fund within the meaning of section 26AFB (as in force just before the commencement of Schedule 1 to the Superannuation Legislation Amendment (Simplification) Act 2007 ), the assessable income of the taxpayer of the year of income shall include the amount or value of that consideration.
In this section:
dependant
, in relation to a taxpayer, includes the spouse and any child of the taxpayer.
excessive benefit
means a benefit of any kind that is excessive in amount or value having regard to the matters mentioned in subparagraphs 23F(2)(h)(i), (ii), (iii) and (iv) as in force at any time before the commencement of section
1
of the
Taxation Laws Amendment Act (No. 4) 1987
.
section 23F fund
means a fund to which section 23F (as in force at any time before the commencement of section 1 of the
Taxation Laws Amendment Act (No. 4) 1987
) applies, or has applied, in relation to any year of income.
For the purposes of this section, where either of the following paragraphs applies in relation to an exempt fund within the meaning of section 26AFB of this Act (as in force just before the commencement of Schedule 1 to the Superannuation Legislation Amendment (Simplification) Act 2007 ) in relation to the year of income of the fund commencing on 1 July 1986 or a subsequent year of income:
(a) the year of income ended before the proclaimed superannuation standards day and section 23F of this Act, as in force immediately before the commencement of section 1 of the Taxation Laws Amendment Act (No. 4) 1987 , would, but for the amendments made by that Act, have applied in relation to the fund in relation to the year of income;
(b) the proclaimed superannuation standards day occurred during the year of income and, if the year of income had ended on the proclaimed superannuation standards day, section 23F of this Act, as in force immediately before the commencement of section 1 of that Act, would, but for the amendments made by that Act, have applied in relation to the fund in relation to the year of income;
section 23F of this Act, as in force immediately before the commencement of section 1 of that Act, shall be taken to have continued to apply in relation to the fund in relation to the year of income of the fund.
[ CCH Note: The " proclaimed superannuation standards day " has been proclaimed to be 1 July 1990 (see Special Gazette No S174 of 29 June 1990).]
(Repealed by No 15 of 2007)
Where:
(a) under a contract entered into on or after 1 October 1980, a taxpayer has expended, or is deemed by former section 124ZAP to have expended, capital moneys in producing, or by way of contribution to the cost of producing, a film;
(b) by reason of the moneys having been expended, the taxpayer became the owner of an interest in the copyright in the film; and
(c) a deduction has been allowed, or is allowable, to the taxpayer under former section 124ZAF or 124ZAFA in respect of some or all of those moneys;
this section applies, and shall be deemed always to have applied, in relation to the taxpayer in relation to a year of income (whether commencing before or after the commencement of this section), to:
(d) any amount derived by the taxpayer in the year of income from sources in or out of Australia as consideration for the use of, or the right to use, the copyright or the film, to the extent to which the amount derived is attributable to the interest referred to in paragraph (b); and
(e) any amount (other than an amount to which paragraph (d) applies) receivable by the taxpayer from sources in or out of Australia as consideration in respect of the disposal, in the year of income, of the whole or a part of the interest referred to in paragraph (b).
26AG(2)
The assessable income of a taxpayer of a year of income shall include amounts to which this section applies in relation to the taxpayer in relation to the year of income.
26AG(3)
Where:
(a) for any reason, including:
(i) the formation or dissolution of a partnership; or
a change has occurred in the ownership of, or in the interests of persons in, a copyright in a film;
(ii) a variation in the constitution of a partnership or in the interests of the partners;
(b) the person, or one or more of the persons, who owned the copyright before the change has or have an interest in the copyright after the change; and
(c) any person (in this subsection referred to as the relevant person ) who had an interest in the copyright before the change:
(i) did not have an interest in the copyright after the change; or
(ii) had a lesser interest in the copyright after the change;
the following provisions have effect:
(d) if the relevant person did not have an interest in the copyright after the change, the relevant person shall be deemed, for the purposes of subsection (1), to have disposed of the whole of his or her interest in the copyright at the time when the change occurred for an amount of consideration equal to:
(i) if the change occurred in pursuance of an agreement and the agreement specified, as the value of the copyright for the purposes of the agreement, an amount greater than the value of the copyright at the time when the change occurred - so much of the amount specified in the agreement as bears to that amount the same proportion as the value, at the time when the change occurred, of the interest deemed to have been disposed of bears to the value of the copyright at the time when the change occurred; and
(ii) in any other case - the value, at the time when the change occurred, of the interest disposed of;
(e) if the relevant person had a lesser interest in the copyright after the change, the relevant person shall be deemed, for the purposes of subsection (1), to have disposed of a part of his or her interest in the copyright at the time when the change occurred for an amount of consideration equal to:
(i) if the change occurred in pursuance of an agreement and the agreement specified, as the value of the copyright for the purposes of the agreement, an amount greater than the value of the copyright at the time when the change occurred - so much of the amount specified in the agreement as bears to that amount the same proportion as the value, at the time when the change occurred, of the part of the interest deemed to have been disposed of bears to the value of the copyright at the time when the change occurred; and
(ii) in any other case - the value, at the time when the change occurred, of the part of the interest disposed of.
26AG(4)
For the purposes of this section, where, in pursuance of a judgment of a court or otherwise, an amount is paid to a taxpayer in respect of an infringement, or an alleged infringement, of a copyright in a film, the taxpayer shall be deemed to have disposed of a part of his or her interest in the copyright, at the time of payment, in consideration of the payment of that amount.
26AG(5)
Subject to subsections (3) and (6), a reference in this section to the consideration receivable by a taxpayer in respect of the disposal of the whole or a part of the taxpayer ' s interest in a copyright (which whole or part is in this subsection referred to as the unit ) is a reference to:
(a) where the unit is disposed of for a specified price - that price less:
(i) the expenses of the disposal; and
(ii) if the disposal is a taxable supply - an amount equal to the GST payable on the supply; or
(b) where the unit is disposed of together with other property and no separate price is allocated to the unit - such amount as the Commissioner determines.
26AG(6)
Where:
(a) a taxpayer disposes of the whole or a part of the taxpayer ' s interest in a copyright (which whole or part is in this subsection referred to as the unit ) to another person;
(b) the Commissioner is satisfied, having regard to any connection between the taxpayer and that other person or to any other relevant circumstances, that the taxpayer and that other person were not dealing with each other at arm ' s length in relation to the disposal; and
(c) there was no amount receivable by the taxpayer in respect of the disposal or the amount receivable by the taxpayer in respect of the disposal was less than the value of the unit at the time of the disposal;
the amount of the consideration receivable by the taxpayer in respect of the disposal shall be taken, for the purposes of this section, to be the amount that was the value of the unit at the time of the disposal.
26AG(7)
(Omitted by No 51 of 1986)
26AG(8)
If:
(a) a non-resident taxpayer derives, from sources outside Australia, income in respect of a film; and
(b) but for this subsection, subsection (2) would include the amount in the taxpayer ' s assessable income of a year of income;
that subsection does not include in the taxpayer ' s assessable income so much of the amount as:
(c) is attributable to the exhibition of the film in the country from sources in which the income was derived; and
(d) is not exempt from income tax in the country from sources in which the income was derived.
26AG(9)
Where:
(a) an amount (in this subsection referred to as the relevant amount ) is derived by a partnership in a year of income; and
(b) if the relevant amount were derived by a partner in the partnership, the relevant amount, or a part of the relevant amount, would, by virtue of paragraph (1)(d), be an amount to which this section applies in relation to that partner in relation to the year of income,
the following provisions have effect:
(c) the relevant amount shall not be taken into account, for the purposes of any provision of this Act, in calculating the net income of the partnership, or the partnership loss, of any year of income in accordance with section 90 ; and
(d) for the purposes of the application of this Act in relation to a taxpayer being a partner in the partnership, an amount equal to:
(i) so much of the relevant amount as the partners have agreed is derived for the benefit of the taxpayer; or
shall be taken to have been derived by the taxpayer.
(ii) if the partners have not agreed as mentioned in subparagraph (i) - so much of the relevant amount as bears to the relevant amount the same proportion as the individual interest of the taxpayer in the net income of the partnership of the year of income in which the relevant amount was derived by the partnership bears to that net income or, as the case requires, the individual interest of the taxpayer in the partnership loss for that year of income bears to that partnership loss;
26AG(10)
Where:
(a) a partnership has disposed of the whole or a part of the copyright or of an interest in the copyright in a film;
(b) an amount (in this subsection referred to as the relevant amount ) is receivable by the partnership as consideration in respect of that disposal; and
(c) if the relevant amount were receivable by a partner in the partnership, the relevant amount or a part of the relevant amount would, by virtue of paragraph (1)(e), be an amount to which this section applies in relation to that partner in relation to the year of income;
the following provisions have effect:
(d) the relevant amount shall not be taken into account, for the purposes of any provision of this Act, in calculating the net income of the partnership, or the partnership loss, of any year of income in accordance with section 90 ;
(e) for the purposes of the application of this Act in relation to a taxpayer being a partner in the partnership, an amount equal to:
(i) so much of the relevant amount as the partners have agreed is receivable for the benefit of the taxpayer; or
shall be taken to be receivable by the taxpayer;
(ii) if the partners have not agreed as mentioned in subparagraph (i) - so much of the relevant amount as bears to the relevant amount the same proportion as the individual interest of the taxpayer in the net income of the partnership of the year of income in which the disposal mentioned in paragraph (a) occurred bears to that net income, or, as the case requires, the individual interest of the taxpayer in the partnership loss for that year of income bears to that partnership loss;
(f) where the taxpayer had an interest in the copyright before the disposal and did not have an interest in the copyright after the disposal or had a lesser interest in the copyright after the disposal, the amount deemed to be receivable by the taxpayer shall be deemed to be receivable in respect of the disposal by the taxpayer of his or her interest in the copyright or of a part of his or her interest in the copyright, as the case may be;
(g) where the disposal is deemed to have occurred by virtue of subsection (4) or is a disposal to which paragraph (13)(a) applies, the amount deemed to be receivable by the taxpayer shall be deemed to be receivable, in respect of the disposal by the taxpayer of a part of his or her interest in the copyright.
26AG(11)
In determining for the purposes of subsection (10) whether a partnership has disposed of the whole or part of a copyright or of an interest in a copyright and in determining the amount of consideration receivable by the partnership in respect of the disposal, subsections (4), (5), (6) and (13) apply as if the partnership were a taxpayer.
26AG(12)
Where:
(a) a taxpayer has disposed of the whole or a part of the taxpayer ' s interest in a copyright;
(b) by reason of that disposal, an amount would, but for former subsection 124T(3) , be included in the assessable income of the taxpayer of a year of income under former section 124P or would be applied, under former section 124N or 124S , in reducing the residual value, for the purposes of former Division 10B , of a unit of industrial property owned by the taxpayer; and
(c) but for this subsection, this section would apply, in relation to a year of income, to the amount of the consideration receivable by the taxpayer in respect of the disposal;
the amount to which this section applies by virtue of the disposal is the amount of the consideration referred to in paragraph (c) reduced by the amount that would be included in the assessable income of the taxpayer, or would be applied under former section 124N or 124S , as mentioned in paragraph (b).
26AG(13)
In this section:
(a) a reference to a disposal by a taxpayer of the whole or a part of the taxpayer ' s interest in a copyright in a film includes a reference to the assignment by the taxpayer of a right to receive amounts as consideration for the use of, or the right to use, the copyright or the film;
(b) a reference to an amount derived by a taxpayer as consideration for the use of, or the right to use, a copyright in a film includes a reference to an amount derived as consideration for the granting of a licence in respect of copyright in the film that is to come into existence at a future time or upon the happening of a future event;
(c) a reference to the value of property at a particular time shall, if there is insufficient evidence of the value of the property at that time, be read as a reference to such amount as, in the opinion of the Commissioner, is fair and reasonable;
(d) a reference to the expenditure of capital moneys is a reference to the expenditure of moneys that is expenditure of a capital nature;
(e) a reference to a taxpayer becoming the owner of an interest in copyright includes a reference to the taxpayer becoming the owner of the copyright; and
(f) a reference to copyright, in relation to a film, is a reference to the copyright subsisting in the film by virtue of Part IV of the Copyright Act 1968 and includes a reference to copyright subsisting in, or in relation to, the film or in any work comprised in the film, under the law of a country other than Australia.
In this section, unless the contrary intention appears:
agreement
means any agreement, arrangement or understanding, whether formal or informal, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings.
assurance year
, in relation to an eligible policy, means the period of 12 months commencing on, or on any anniversary of, the date of commencement of risk of the policy.
date of commencement of risk
, in relation to an eligible policy, means the date of commencement of the period in respect of which the first or only premium paid under the policy was paid or, if the first or only premium was not paid in respect of a period, the date on which that premium was paid.
eligible period
, in relation to an eligible policy, means the period of 10 years commencing on the date of commencement of risk of the policy.
eligible policy
means a life assurance policy in relation to which the date of commencement of risk is after 27 August 1982, other than a funeral policy (as defined in the
Income Tax Assessment Act 1997
) issued on or after 1 January 2003.
eligible reckoning date
, in relation to an eligible policy, means the date of commencement of an assurance year that, for the purposes of an application of subsection (13), is the premium increase year referred to in that subsection.
26AH(2)
Where a paid-up life assurance policy is issued to a taxpayer in lieu of an eligible policy:
(a) the paid-up policy shall, for the purposes of this section, be deemed to be a continuation of the eligible policy; and
(b) no amount shall be taken for the purposes of subsection (4) to have been re-invested or otherwise dealt with on behalf of the taxpayer or as he or she directs in connection with the issue of the paid-up policy to the taxpayer in lieu of the eligible policy.
26AH(3)
This section applies to any amount received after 27 August 1982 under an eligible policy.
26AH(4)
For the purposes of this section, but subject to subsection (5), a taxpayer shall be taken to have received an amount under or in relation to an eligible policy although the amount is not actually paid to the taxpayer but is re-invested or otherwise dealt with on his or her behalf or as he or she directs.
26AH(5)
Subsection (4) does not apply in relation to an amount in relation to an eligible policy if the amount is re-invested or otherwise dealt with on behalf of the taxpayer or as the taxpayer directs so as to increase the amount that might reasonably be expected to be received under the eligible policy on a surrender or maturity of the eligible policy.
26AH(6)
Where, during the eligible period in relation to an eligible policy, a taxpayer receives an amount (in this subsection referred to as the relevant amount ) under the policy as or by way of a bonus, being an amount that, but for this section, would not be included in the assessable income of the taxpayer of any year of income, the assessable income of the taxpayer of the year of income in which the relevant amount is received shall include:
(a) if the relevant amount is received during the first 8 years of the eligible period - an amount equal to the relevant amount;
(b) if the relevant amount is received during the ninth year of the eligible period - an amount equal to two-thirds of the relevant amount; or
(c) if the relevant amount is received during the tenth year of the eligible period - an amount equal to one-third of the relevant amount.
26AH(6A)
If, during the year of income, an amount referred to in subsection (6) is received during the eligible period in relation to an eligible policy held by the trustee of a non-complying superannuation fund:
(a) subsection (6) does not apply to the amount; and
(b) the amount is included in the assessable income of the fund of the year of income.
26AH(7)
Subsection (6) does not apply to any amount received by a taxpayer in a year of income under an eligible policy where:
(a) the amount is received in consequence of:
(i) the death of the person on whose life the policy was effected; or
(ii) an accident, illness or other disability suffered by the person on whose life the policy was effected; or
(aa) the eligible policy is an RSA; or
(b) the eligible policy is held by the trustee of:
(i) a complying superannuation fund; or
(ii) a complying approved deposit fund; or
(iii) a pooled superannuation trust; or
(ba) the eligible policy is issued by a life assurance company and the company ' s liabilities under the policy are to be discharged out of:
(i) complying superannuation assets within the meaning of the Income Tax Assessment Act 1997 ; or
(ii) segregated exempt assets within the meaning of that Act; or
(c) except where the policy was effected, purchased or taken on assignment with a view to it being forfeited, surrendered or otherwise terminated, or to it maturing, within 10 years - the amount was received by the taxpayer by reason of the forfeiture, surrender or other termination of the whole or a part of the policy in circumstances arising out of serious financial difficulties of the taxpayer.
26AH(8)
Where:
(a) subsection (6) would, but for this subsection, apply to an amount (in this subsection referred to as the relevant amount ) received by a taxpayer by reason of the forfeiture, surrender or other termination of the whole or a part of an eligible policy; and
(b) the Commissioner, having regard to:
(i) the total amount of premiums paid under the eligible policy;
(ii) the total amounts received by the taxpayer or by any other person under the eligible policy and the total amounts of bonuses included in the amounts so received;
(iii) the amount of the surrender value of the eligible policy at the time when the forfeiture, surrender or other termination occurred; and
(iv) such other matters as the Commissioner considers relevant, is of the opinion that it would be unreasonable for subsection (6) to apply to the relevant amount or to a part of the relevant amount;
subsection (6) does not apply to the relevant amount, or to that part of the relevant amount, as the case may be.
26AH(9)
Where:
(a) otherwise than as or by way of a bonus, a taxpayer receives an amount (in this subsection referred to as the relevant amount ) under an eligible policy; and
(b) the Commissioner is of the opinion that the relevant amount or a part of the relevant amount represents the whole or part of:
(i) a bonus that has accrued or has been declared in respect of the policy; or
(ii) a bonus that can reasonably be expected to accrue in respect of the policy;
the relevant amount or the part of the relevant amount, as the case may be, shall, for the purposes of subsection (6), be deemed to have been received by the taxpayer under the policy as or by way of a bonus.
26AH(10)
Where:
(a) subsection (9) applies by reason that the Commissioner has formed an opinion under paragraph (9)(b) that the whole or a part of an amount received by a taxpayer represents the whole or a part of a bonus; and
(b) the taxpayer subsequently receives an amount (in this subsection referred to as the actual bonus ), being the whole or a part of the bonus, or of the part of the bonus, as the case may be, referred to in paragraph (a) of this subsection;
the following provisions have effect:
(c) the operation of subsection (9) is not affected by the receipt of the actual bonus; and
(d) no part of the actual bonus shall be included in the assessable income of the taxpayer.
26AH(11)
Where, in relation to an eligible policy, a taxpayer receives an amount from the assurer, or from another person at the request of, or under an agreement with, the assurer, by way of an advance or loan in respect of which interest is not payable or in respect of which interest is payable at a rate less than the rate of interest that could reasonably be expected to be payable in respect of a loan of the same amount made on similar terms and conditions by the assurer or the other person, as the case may be, to a person with whom the assurer or that other person was dealing at arm ' s length, the amount shall, for the purposes of subsection (9), be deemed to be an amount to which paragraph (9)(a) applies.
26AH(12)
Where an eligible policy, or any right to receive any benefits that have accrued, or will or may reasonably be expected to accrue, under an eligible policy, is sold or assigned in whole or in part by a taxpayer during the eligible period in relation to the policy:
(a) the amount of any consideration received by the taxpayer in respect of that sale or assignment shall be deemed to be an amount to which paragraph (9)(a) applies; and
(b) subsections (9) and (10) apply in relation to that consideration as if " represents " were omitted from paragraphs (9)(b) and (10)(a) and " is attributable to " were substituted.
26AH(13)
Where the amount of the premiums payable under an eligible policy in relation to an assurance year (in this subsection referred to as the premium increase year ) exceeds by more than 25% the amount of the premiums payable under the policy in relation to the immediately preceding assurance year, the eligible period in relation to the policy shall, for the purposes of:
(a) the application of subsection (6) in relation to any amount received under the policy after the date of commencement of the premium increase year and before the first subsequent eligible reckoning date (if any) in relation to the eligible policy; and
(b) the application of subsection (12) in relation to any sale or assignment of the policy after the date ofcommencement of the premium increase year and before the first subsequent eligible reckoning date (if any) in relation to the eligible policy;
be reckoned from the date of commencement of the premium increase year.
26AH(14)
This section has effect in relation to an eligible policy in relation to which the date of commencement of risk is on or before 7 December 1983 as if:
(a) " 10 years " were omitted from the definition of eligible period in subsection (1) and " 4 years " were substituted;
(b) " 8 years " , " ninth year " and " tenth year " were omitted from subsection (6) and " 2 years " , " third year " and " fourth year " respectively were substituted; and
(c) " 10 years " were omitted from paragraph (7)(c) and " 4 years " were substituted.
If: (a) either:
(i) a loan benefit is provided to a taxpayer, or to another person, in respect of a year of income (in this subsection called the current year of income ); or
(ii) an amount (other than loan principal) is paid or credited to a taxpayer, or to another person, during a year of income (in this subsection also called the current year of income ); or
(b) the making of a loan, the payment or crediting of the amount, or the provision of the property or services, as the case may be, is by way of winnings from:
(iii) other property or services are provided to a taxpayer, or to another person, during a year of income (in this subsection also called the current year of income ); and
(i) betting (including pool betting); or
(ii) a lottery or other form of gambling; or
(c) the chance to participate in the betting, lottery, gambling or game (in this subsection called the betting chance ) was provided:
(iii) a game with prizes; and
(i) wholly or partly in respect of an investment held by the taxpayer in or with a third person (who may be an associate of the taxpayer) (in this subsection called the investment body ); or
(d) the betting, lottery, gambling or game was organised by, or on behalf of:
(ii) wholly or partly in relation directly or indirectly to such an investment; and
(i) the investment body (either acting alone or together with one or more other persons); or
(e) if the recipient of the loan benefit, amount or property or services, as the case may be, is a person other than the taxpayer - either:
(ii) an associate of the investment body (either acting alone or together with one or more other persons); and
(i) the other person is an associate of the taxpayer; or
(f) no part of the value of the betting chance is included in the assessable income of the taxpayer of any year of income; and (g) the provision of the betting chance is neither:
(ii) the loan benefit, amount or property or services, as the case may be, is provided under an arrangement to which the taxpayer, or an associate of the taxpayer, is a party; and
(i) a fringe benefit; nor
(ii) a benefit that, apart from paragraph (g) of the definition of fringe benefit in subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986 , would be a fringe benefit;
then:
(h) if subparagraph (a)(i) applies - the taxpayer ' s assessable income of the current year of income includes the amount (if any) by which the benchmark amount of interest in relation to the loan in respect of the current year of income exceeds the amount of interest that has accrued on the loan in respect of the current year of income; or (i) if subparagraph (a)(ii) applies - the taxpayer ' s assessable income of the current year of income includes the amount paid or credited; or (j) if subparagraph (a)(iii) applies - the taxpayer ' s assessable income of the current year of income includes the arm ' s length value of the property or services, reduced by the recipient ' s contribution (if any).26AJ(2)
If: (a) apart from this subsection, an amount (in this subsection called the gross assessable amount ) is included in a taxpayer ' s assessable income of a year of income under paragraph (1)(h) in respect of a loan benefit; and (b) assuming that:
(i) the recipient of the loan benefit had, on the last day of the period (in this subsection called the loan period ) during the year of income when the recipient was under an obligation to repay the whole or any part of the loan, incurred and paid unreimbursed interest (in this subsection called the gross interest ), in respect of the loan, in respect of the loan period; and
a once-only deduction (in this subsection called the gross deduction ) would, or would apart from Subdivisions F and GA of Division 3 of this Part, and Divisions 28 and 900 of the Income Tax Assessment Act 1997 , have been allowable to the recipient in respect of the gross interest;
(ii) the amount of the gross interest was equal to the benchmark amount of interest in relation to the loan in respect of the year of income;
the gross assessable amount is reduced by:
(c) if no interest accrued on the loan in respect of the loan period - the amount of the gross deduction; or (d) in any other case - the amount worked out using the formula:
| Gross deduction − Reducing amount |
where:
Gross deduction means the amount of the gross deduction. Reducing amount means the amount (if any) that would, or that would apart from Subdivisions F and GA of Division 3 of this Part, and Divisions 28 and 900 of the Income Tax Assessment Act 1997 , have been allowable as a once-only deduction to the recipient in respect of the interest that accrued on the loan in respect of the loan period if that interest had been incurred and paid by the recipient on the last day of the loan period.
26AJ(3)
If: (a) apart from this subsection, an amount (in this subsection called the gross assessable amount ) is included in a taxpayer ' s assessable income of a year of income under paragraph (1)(j) in respect of the provision of property or services; and (b) assuming that:
(i) the recipient of the property or services had, at the time the property or services were provided, incurred and paid unreimbursed expenditure in respect of the provision of the property or services; and
a once-only deduction would, or would apart from Subdivisions F and GA of Division 3 of this Part, and Divisions 28 and 900 of the Income Tax Assessment Act 1997 , have been allowable to the recipient in respect of a percentage (in this subsection called the deductible percentage ) of the expenditure;
(ii) the expenditure was equal to the amount of the arm ' s length value of the property or services;
the gross assessable amount is reduced by the deductible percentage.
26AJ(4)
For the purposes of the application of this section to a taxpayer, if a person (in thissubsection called the provider ) makes a loan to another person (who may be the taxpayer) (in this subsection called the recipient ): (a) the making of the loan is taken to constitute a loan benefit provided by the provider to the recipient; and (b) that loan benefit is taken to be provided in respect of each year of income of the taxpayer during the whole or part of which the recipient is under an obligation to repay the whole or any part of the loan.
26AJ(5)
For the purposes of this section, if a person (in this subsection called the provider ) makes a deferred interest loan (in this subsection called the principal loan ) to another person (in this subsection called the recipient ): (a) the provider is taken, at the end of:
(i) the period of 6 months commencing on the day on which the principal loan was made; and
(being in either case a period during the whole of which the recipient is under an obligation to repay the whole or any part of the principal loan) to have made a loan (in this subsection called the deemed loan ) to the recipient; and (b) the amount of the deemed loan is equal to the amount by which the interest (in this subsection called the accrued interest ) that has accrued on the principal loan in respect of that period exceeds the amount (if any) paid in respect of the accrued interest before the end of that period; and (c) if any part of the accrued interest becomes payable or is paid after the time when the deemed loan is taken to have been made, the deemed loan is to be reduced accordingly; and (d) the deemed loan is taken to have been made at a nil rate of interest.
(ii) each subsequent period of 6 months;
26AJ(6)
For the purposes of this section, if no interest is payable in respect of a loan, a nil rate of interest is taken to be payable in respect of the loan.
26AJ(7)
For the purposes of this section, a person is taken to be under an obligation to pay or repay an amount even though the amount is not due for payment or repayment.
26AJ(8)
For the purposes of this section, if a person does anything that results in the creation of property in another person, the first-mentioned person is taken to have provided that property to the other person at the time when the property comes into existence.
26AJ(9)
For the purposes of this section, if: (a) a particular mode of application of money by a taxpayer in relation to another person (in this subsection called the investment body ) would not, apart from this subsection, be an investment; and (b) a chance to participate in:
(i) betting (including pool betting); or
(ii) a lottery or other form of gambling; or
is provided to the taxpayer or a third person:
(iii) a game with prizes;
(iv) wholly or partly in respect of the mode of application of money by the taxpayer; or
(c) if a cash payment had been provided by the investment body to the taxpayer instead of that chance, the payment would constitute, to any extent, a return on an investment held by the taxpayer in or with the investment body;
(v) wholly or partly in relation directly or indirectly to the mode of application of money by the taxpayer; and
the mode of application of money is taken to be an investment held by the taxpayer with the investment body.
26AJ(10)
If a ballot is held to determine the order in which loans are to be made by a Starr-Bowkett building society to its members, then the making of a loan in accordance with the ballot is not covered by paragraph (1)(b) .
26AJ(11)
In this section:
arm
'
s length value
, in relation to property or services, means:
(a) the amount that the recipient could reasonably have been expected to have been required to pay to obtain the property or services from the provider under a transaction where the parties to the transaction are dealing with each other at arm ' s length in relation to the transaction; or
(b) if such an amount cannot be practically determined - such amount as represents a reasonable valuation of the property or services;
(a) any agreement, arrangement, understanding, promise or undertaking, whether express or implied, and whether or not enforceable, or intended to be enforceable, by legal proceedings; and
(b) any scheme, plan, proposal, action, course of action or course of conduct, whether unilateral or otherwise;
associate
has the same meaning in relation to a person as that expression has in relation to a person in section
318
;
benchmark amount of interest
, in relation to a loan, in relation to a year of income, means the amount of interest that would have accrued on the loan in respect of the year of income if the interest was calculated on the daily balance of the loan at the benchmark interest rate in relation to the year of income;
benchmark interest rate
, in relation to a year of income, means the predominant per cent per annum interest rate on new, variable interest rate housing loans to individuals for owner-occupation that is specified, for the June immediately preceding the financial year to which the year of income relates, in the
"
Interest Rates and Yields: Banks
"
table in the Statistical Directory of the
Reserve Bank of Australia Bulletin
dated July in that financial year;
deferred interest loan
means a loan in respect of which interest is payable at a rate exceeding nil, other than:
(a) a loan where the whole of the interest is due for payment within 6 months after the loan is made; or
(b) a loan where:
(i) the interest is payable by instalments; and
(ii) the intervals between instalments do not exceed 6 months; and
(iii) the first instalment is due for payment within 6 months after the loan is made;
investment
means any mode of application of money for the purpose of gaining a return;
(a) an advance of money; and
(b) the provision of credit or any other form of financial accommodation; and
(c) the payment of an amount for, on account of, on behalf of or at the request of a person where there is an obligation (whether express or implied) to repay the amount; and
(d) a transaction (whatever its terms or form) which in substance effects a loan of money;
loan benefit
has the meaning given by subsection (4);
once-only deduction
(Repealed by
No 75 of 2010
)
person
means any of the following:
(a) a company;
(b) a partnership;
(c) a person in the capacity of trustee;
(d) any other person;
(a) in relation to property - includes dispose of (whether by assignment, declaration of trust or otherwise); and
(b) in relation to services - includes allow, confer, give, grant or perform;
recipient
'
s contribution
, in relation to property or services, means the amount of any consideration paid to the provider by the recipient in respect of the provision of the property or services, reduced by the amount of any reimbursement paid to the recipient in respect of that consideration;
return
, in relation to an investment, includes interest, income or profit;
services
includes any benefit, right (including a right in relation to, and an interest in, real or personal property), privilege or facility and, without limiting the generality of the foregoing, includes a right, benefit, privilege, service or facility that is, or is to be, provided under:
(a) an arrangement for or in relation to:
(i) the performance of work (including work of a professional nature), whether with or without the provision of property; or
(ii) the provision of, or the use of facilities for, entertainment, recreation or instruction; or
(iii) the conferring of rights, benefits or privileges for which remuneration is payable in the form of a royalty, tribute, levy or similar exaction; or
(b) a contract of insurance; or
(c) an arrangement for or in relation to the lending of money;
unreimbursed expenditure
means expenditure no part of which has been reimbursed;
unreimbursed interest
means interest no part of which has been reimbursed.
(Repealed by No 143 of 2007 )
Archived:
S 26B and 26BA repealed as inoperative by No 101 of 2006 , s 3 and Sch 1 item 56, effective 14 September 2006. For application and savings provisions and for former wording see the CCH Australian Income Tax Legislation archive .
In this section:
acquire
, in relation to a security, means acquire, on issue, purchase, transfer, assignment or otherwise, the security or the right to receive payment of the amount or amounts payable under the security.
connected entity
has the same meaning as in the
Income Tax Assessment Act 1997
.
dispose
, in relation to a security, means sell, transfer, assign or dispose of in any way the security or the right to receive payment of the amount or amounts payable under the security.
eligible return
has the same meaning as in Division
16E
.
periodic interest
has the same meaning as in Division
16E
.
security
has the same meaning as in Division
16E
.
traditional security
, in relation to a taxpayer, means a security held by the taxpayer that:
(a) is or was acquired by the taxpayer after 10 May 1989;
(b) either:
(i) does not have an eligible return; or
(ii) has an eligible return, where:
(A) the precise amount of the eligible return is able to be ascertained at the time of issue of the security; and
(B) that amount is not greater than 1 ½ % of the amount calculated in accordance with the formula:
Payments × Term
where: Payments is the amount of the payment or of the sum of the payments (excluding any periodic interest) liable to be made under the security when held by any person; and Term is the number (including any fraction) of years in the term of the security;
(c) (Repealed by No 47 of 2016)
(d) is not trading stock of the taxpayer.
26BB(2)
Where a taxpayer disposes of a traditional security or a traditional security of a taxpayer is redeemed, the amount of any gain on the disposal or redemption shall be included in the assessable income of the taxpayer of the year of income in which the disposal or redemption takes place.
26BB(3)
Where the Commissioner, having regard to any connection between the parties to the transaction by which the taxpayer disposed of the traditional security or by which it was redeemed, or by which the taxpayer acquired the traditional security, is satisfied that the parties were not dealing with each other at arm ' s length in relation to the transaction, then, for the purposes of determining under subsection (2) the amount of any gain on the disposal or redemption, the consideration for the transaction shall be taken to be:
(a) the amount that might reasonably be expected for the transaction if the parties were independent parties dealing at arm ' s length with each other; or
(b) where, for any reason it is not possible or practicable for the Commissioner to ascertain that amount - such amount as the Commissioner determines.
26BB(4)
Subsection (2) does not apply to a gain on the disposal or redemption of a traditional security if:
(a) the disposal or redemption occurs because the traditional security is converted into ordinary shares in a company that is:
(i) the issuer of the traditional security; or
(ii) a connected entity of the issuer of the traditional security; and
(b) the traditional security was issued on the basis that it will or may convert into ordinary shares in:
(i) the issuer of the traditional security; or
(ii) the connected entity.
26BB(5)
Subsection (2) does not apply to a gain on the disposal or redemption of a traditional security if:
(a) the disposal or redemption is in exchange for ordinary shares in a company that is neither:
(i) the issuer of the traditional security; nor
(ii) a connected entity of the issuer of the traditional security; and
(b) in the case of a disposal - the disposal is to:
(i) the issuer of the traditional security; or
(ii) a connected entity of the issuer of the traditional security; and
(c) the traditional security was issued on the basis that it will or may be:
(i) disposed of to the issuer of the traditional security or to the connected entity; or
in exchange for ordinary shares in the company.
(ii) redeemed;
SECTION 26BC SECURITIES LENDING ARRANGEMENTS 26BC(1)
In this section:
(a) in relation to a company - has the same meaning as in Division 3A ; or
(b) in relation to a unit trust - means a note issued by the trustee of the unit trust, being a note that, if the unit trust were a company, would be a convertible note issued by the company, and includes a note that would be a convertible note within the meaning of Division 3A if:
(i) references in that Division to a company were references to a unit trust, or to the trustee of the unit trust, as the context requires; and
(ii) references in that Division to shares were references to units;
debenture
, in relation to a unit trust, means an instrument issued by the trustee of the unit trust, being an instrument that, if the unit trust were a company, would be a debenture issued by the company;
(a) interest; or
(b) a dividend; or
(c) a share issued by a company to a shareholder in the company where the share is issued:
(i) as a bonus share; or
(ii) in the circumstances mentioned in subsection 6BA(1) ; or
(d) an amount credited by the trustee of a unit trust to a unit holder as a unit holder; or
(e) a unit issued by the trustee of a unit trust to which section 130-20 of the Income Tax Assessment Act 1997 applies (apart from subsection (4) of that section).
(a) a share, bond, debenture, convertible note, right, option or similar financial instrument issued by a public company; or
(b) a unit, bond, debenture, convertible note, right, option or similar financial instrument issued by the trustee of:
(i) a listed unit trust; or
(ii) a unit trust any of the units of which were offered to the public; or
(c) a bond, debenture, right, option or similar financial instrument issued by a government or by an authority of a government;
(a) the Commonwealth, a State or a Territory; or
(b) the government of, or of a part of, a foreign country;
listed company
means a company any of the shares of which are listed for quotation in the official list of a stock exchange in Australia or elsewhere;
listed unit trust
means a unit trust any of the units of which are listed for official quotation in the official list of a stock exchange in Australia or elsewhere;
(a) in relation to a company - means an option to acquire shares in the company; or
(b) in relation to a unit trust - means an option to acquire units in the unit trust; or
(c) in relation to a government or an authority of a government - means an option to acquire a bond, debenture or similar financial instrument issued by the government or by the authority;
(a) a listed company; or
(b) a mutual life assurance company; or
(c) a company in which a government or an authority of a government has a controlling interest; or
(d) a company that is a 100% subsidiary of a company covered by paragraph (a), (b) or (c);
(a) in relation to a company - means a right to acquire shares in the company or to acquire an option; or
(b) in relation to a unit trust - means a right to acquire units in the unit trust or to acquire an option; or
(c) in relation to a government or an authority of a government - means a right to acquire a bond, debenture or similar financial instrument issued by the government or by the authority or to acquire an option.
subsidiary
(Repealed by No 46 of 1998)
26BC(2)
If an eligible security is held by a person as trustee for another person who is absolutely entitled to the eligible security as against the trustee, this section applies as if the eligible security were vested in the other person and any acts of the trustee were the acts of that other person.
26BC(3)
This section applies where:
(a) under a written agreement of the kind known as a securities lending arrangement, being an agreement that was entered into after 9 May 1990:
(i) at a particular time (in this section called the original disposal time ), a taxpayer (in this section called the lender ) disposed of an eligible security (in this section called the borrowed security ) to another taxpayer (in this section called the borrower ); and
(ii) at a later time (in this section called the re-acquisition time ), being less than 12 months after the original disposal time, the lender:
(A) re-acquired the borrowed security (which re-acquired security is in this section called the replacement security ) from the borrower; or
(B) acquired an identical security (which acquired security is in this section also called the replacement security ) from the borrower; and
(b) both the borrower and the lender were dealing with each other at arm's length in relation to each of the transactions mentioned in paragraph (a); and
(c) if any of the following events occurred during the period (in this section called the borrowing period ) commencing at the original disposal time and ending at the re-acquisition time:
(i) the making or payment of a distribution (whether in property or money) in respect of the borrowed security;
(ii) the issue, by the company, trustee, government or government authority concerned, of a right or option in respect of the borrowed security;
then (even if the event occurred after the borrowed security was disposed of by the borrower to a third party), the lender receives from the borrower, under the agreement:
(iii) if the borrowed security is a right or option:
(A) the giving of a direction by the lender to the borrower to exercise the right or option; or
(B) the giving of a direction by the lender to the borrower to exercise an identical right or option;
(iv) if subparagraph (i) applies:
(A) the distribution; or
(B) if the distribution is in property - identical property; or
(C) a payment (in this section called the compensatory payment ) equal to the value to the lender of the distribution; or
(v) if subparagraph (ii) applies:
(A) the right or option; or
(B) an identical right or option; or
(C) a payment (in this section also called the compensatory payment ) equal to the value to the lender of the right or option; or
(vi) if subparagraph (iii) applies:
(A) the shares, units, bonds, debentures or financial instruments that resulted from exercising the right or option; or
(B) shares, units, bonds, debentures or financial instruments that are identical to those that resulted from, or that would have resulted from, exercising the right or option; or
(C) a payment (in this section also called the compensatory payment ) equal to the value to the lender of the shares, units, bonds, debentures or financial instruments that resulted from, or would have resulted from, exercising the right or option; and
(d) if the total consideration payable or to be given by the borrower under the agreement consists of:
(i) the transfer of, or the promise to transfer, the replacement security or replacement securities concerned; and
the agreement contains:
(ii) other consideration (in this paragraph called the notifiable consideration );
(iii) if the notifiable consideration is wholly covered by one of the following categories:
(A) a fee;
(B) an adjustment for variations in the market value of eligible securities;a statement specifying the category concerned and setting out such information as will enable the amount or value of the notifiable consideration to be readily ascertained; or
(C) other consideration;
(iv) if the notifiable consideration is covered by 2 or more of the following categories:
(A) a fee;
(B) an adjustment for variations in the market value of eligible securities;a statement dissecting the notifiable consideration into those categories in such a manner as will enable the amount or value of each category to be readily ascertained; and
(C) other consideration;
(e) the lender does not dispose of (by transfer, declaration of trust or otherwise) the right to receive any part of the total consideration payable or to be given by the borrower under the agreement.
26BC(3A)
For the purposes of paragraph (3)(c), if, apart from this subsection, either of the following events occurred after the commencement of the borrowing period:
(a) the making or payment of a distribution (whether in property or money) in respect of the borrowed security;
(b) the issue, by the company, trustee, government or government authority concerned, of a right or option in respect of the borrowed security;
(even if the event occurred after the borrowed security was disposed of by the borrower to a third party), the event is taken to have occurred during the borrowing period if, and only if, (assuming that the borrower had held the borrowed security at all times during the borrowing period) the entitlement to the distribution or issue would have been attributable to the borrower's holding of the borrowed security at a particular time during the borrowing period.
26BC(4)
In determining:
(a) whether an amount (other than a fee payable under the securities lending arrangement) is included in the assessable income of the lender under a provision of this Act other than Part 3-1 or 3-3 of the Income Tax Assessment Act 1997 (about CGT); or
(b) whether an amount is allowable as a deduction to the lender;
in respect of either or both of the transactions covered by paragraph (3)(a), the lender is to be treated as if:
(c) neither of those transactions had been entered into; and
(d) the lender had held the borrowed security at all times during the borrowing period; and
(e) if the replacement security is not the borrowed security - the replacement security were the borrowed security.
26BC(4A)
If the lender receives a compensatory payment covered by sub-subparagraph (3)(c)(v)(C), then, in determining whether an amount is included in the assessable income of the lender under a provision of this Act other than Part 3-1 or 3-3 of the Income Tax Assessment Act 1997 , the lender is to be treated as if:
(a) the lender had held the borrowed security at all relevant times during the borrowing period; and
(b) the right or option had been issued directly to the lender in respect of the borrowed security; and
(c) the lender had disposed of the right or option immediately after its issue for a consideration equal to the compensatory payment.
26BC(4B)
If the lender receives a compensatory payment covered by sub-subparagraph (3)(c)(vi)(C), then, in determining whether an amount is included in the assessable income of the lender under a provision of this Act other than Part 3-1 or 3-3 of the Income Tax Assessment Act 1997 , the lender is to be treated as if:
(a) the lender had held the right or option at all relevant times during the borrowing period; and
(b) the lender had exercised the right or option; and
(c) the lender had immediately disposed of the shares, units, bonds, debentures or financial instruments that resulted from exercising the right or option for a consideration equal to the compensatory payment.
26BC(5)
In determining:
(a) whether an amount is included in the assessable income of the borrower under a provision of this Act other than Part 3-1 or 3-3 of the Income Tax Assessment Act 1997 ; or
(b) an amount (other than a fee payable under the securities lending arrangement) is allowable as a deduction to the borrower;
in respect of either or both of the transactions covered by paragraph (3)(a):
(c) if the borrowed security was disposed of by the borrower to a third party:
(i) the borrower is to be treated as if the borrower had acquired the borrowed security from the lender for a consideration equal to the market value of the borrowed security at the time of its acquisition; and
(ii) the borrower is to be treated as if the borrower had disposed of the replacement security to the lender for a consideration equal to the market value of the borrowed security at the time of its acquisition from the lender; or
(d) in any other case - the borrower is to be treated as if neither of the transactions referred to in paragraph (3)(a) had been entered into.
26BC(6)
Any capital gain or capital loss from the disposal of the borrowed security by the lender is disregarded.
26BC(6A)
If the lender acquired the borrowed security before 20 September 1985, the lender is taken (for the purposes of Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 ) to have acquired the replacement security before that day.
26BC(6B)
If the lender acquired the borrowed security on or after 20 September 1985, the first element of the cost base of the replacement security is the cost base of the borrowed security just before the acquisition of the replacement security. The reduced cost base of the replacement security is worked out similarly.
26BC(7)
If:
(a) the borrowed security was acquired on or after 20 September 1985; and
(b) a CGT event (other than one involving a transaction covered by subsection (3)) happens in relation to the replacement security at least 12 months after the lender acquired a paired security in relation to the replacement security (otherwise than under a transaction covered by subsection (3));
section 114-10 of the Income Tax Assessment Act 1997 (about the requirement for 12 months ownership) does not apply to the CGT event.
26BC(8)
For the purposes of subsection (7):
(a) if CGT event A1 happens (involving a transaction covered by subsection (3)) by the lender disposing of an eligible security to the borrower, that security is a paired security in relation to the replacement security subsequently acquired or re-acquired by the lender; and
(b) a security is a paired security in relation to a second security if the first security is a paired security in relation to a third security that is a paired security in relation to the second security (including a pairing with the second security by another application or other applications of this paragraph).
26BC(9)
For the purpose of applying Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 to the borrower:
(a) if the borrower disposes of the borrowed security to a third party:
(i) the first element of the cost base and reduced cost base of the borrowed security (in the hands of the borrower) is taken to be its market value when the borrower acquired it; and
(ii) when the borrower disposes of a replacement security to the lender, the capital proceeds from that CGT event are taken to be that market value; and
(b) if no third party is involved - the transactions referred to in paragraph (3)(a) are ignored.
26BC(9A)
For the purpose of applying Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 to the borrower, the incidental costs to the borrower of the acquisition of an eligible security covered by sub-subparagraph (3)(a)(ii)(B) include a compensatory payment incurred by the borrower (to the extent that the borrower has not deducted and cannot deduct it).
26BC(9B)
For the purposes of the application of Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 to a right or option received by the lender as mentioned in subparagraph (3)(c)(v), the borrower and lender are to be treated as if the eligible security in respect of which the right or option was issued had been held by the lender at the time of the acquisition of the right or option.
26BC(9C)
For the purposes of the application of Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 to a share, unit, bond, debenture or financial instrument received by the lender as mentioned in subparagraph (3)(c)(vi), the borrower and the lender are to be treated as if:
(a) the share, unit, bond, debenture or financial instrument had been received as the result of the exercise of the borrowed security; and
(b) the borrowed security had been held by the lender at the time of the exercise; and
(c) the lender had exercised the borrowed security; and
(d) the lender had exercised the borrowed security at the time the direction concerned was given; and
(e) the amount of the contribution (if any) made by the lender to the borrower in respect of the carrying out of the direction were an amount paid as consideration by the lender in respect of the exercise.
26BC(9D)
If a distribution covered by subparagraph (3)(c)(i) consists of one or more shares issued by a company to the borrower or to a third party in the circumstances mentioned in subsection 6BA(1) , then, for the purposes of the application of Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 to a share (in this subsection called the notional bonus share ) received by the lender in relation to the distribution in the circumstances mentioned in sub-subparagraph (3)(c)(iv)(A) or (B), the borrower and the lender are to be treated as if:
(a) the company had issued the notional bonus share to the lender instead of the borrower or the third party, as the case requires; and
(b) the notional bonus share had been issued in the circumstances mentioned in subsection 6BA(1) ; and
(c) the notional bonus share had been issued in respect of the borrowed security; and
(d) the lender had held the borrowed security at the time the notional bonus share was issued.
26BC(9E)
If a distribution covered by subparagraph (3)(c)(i) consists of one or more units issued by the trustee of a unit trust to the borrower or to a third party in the circumstances covered by section 130-20 of the Income Tax Assessment Act 1997 , then, for the purposes of the application of Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 to a unit (in this subsection called the notional bonus unit ) received by the lender in relation to the distribution in the circumstances mentioned in sub-subparagraph (3)(c)(iv)(A) or (B), the borrower and the lender are to be treated as if:
(a) the trustee had issued the notional bonus unit to the lender instead of the borrower or the third party, as the case requires; and
(b) the notional bonus unit had been issued in the circumstances covered by section 130-20 of the Income Tax Assessment Act 1997 ; and
(c) the notional bonus unit had been issued in respect of the borrowed security; and
(d) the lender had held the borrowed security at the time the notional bonus unit was issued.
26BC(9F)
If the lender receives a compensatory payment covered by sub-subparagraph (3)(c)(v)(C), then, for the purposes of the application of Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 to the lender, the lender is to be treated as if:
(a) the lender had held the borrowed security at all relevant times during the borrowing period; and
(b) the right or option had been issued directly to the lender in respect of the borrowed security; and
(c) the lender had disposed of the right or option immediately after its issue and had received capital proceeds of an amount equal to the compensatory payment.
26BC(9G)
If the lender receives a compensatory payment covered by sub-subparagraph (3)(c)(vi)(C), then, for the purposes of the application of Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 to the lender, the lender is to be treated as if:
(a) the lender had held the right or option at all relevant times during the borrowing period; and
(b) the lender had exercised the right or option; and
(c) the lender had immediately disposed of the shares, units, bonds, debentures or financial instruments that resulted from exercising the right or option and had received capital proceeds of an amount equal to the compensatory payment.
26BC(10)
(Repealed by No 46 of 1998)
26BC(11)
(Repealed by No 46 of 1998)
26BC(11A)
If:
(a) the lender receives from the borrower a distribution or identical property covered by subparagraph (3)(c)(iv); and
(b) assuming that the borrowed security had continued to be held by the lender, an amount (in this subsection called the otherwise assessable amount ) would have been included in the lender's assessable income of a year of income in respect of the distribution concerned;
the lender's assessable income of the year of income includes an amount equal to the otherwise assessable amount.
26BC(11B)
If:
(a) the lender receives from the borrower a compensatory payment covered by sub-subparagraph (3)(c)(iv)(C); and
(b) assuming that the borrowed security had continued to be held by the lender, an amount (in this subsection called the otherwise assessable amount ) would have been included in the lender's assessable income of a year of income in respect of the distribution concerned;
the lender's assessable income of the year of income includes an amount equal to the otherwise assessable amount.
26BC(12)
Where:
(a) a taxpayer has entered into a transaction of a kind referred to in subparagraph (3)(a)(i); and
(b) at the time of making an assessment in respect of income of the taxpayer of the year of income in which the transaction occurred, the Commissioner is of the opinion that, at a later time, circumstances will exist because of which this section will apply in connection with that transaction;
the Commissioner may apply the provisions of this section as if those circumstances existed at the time of making the assessment.
26BC(13)
Where:
(a) in the making of an assessment, this section has been applied on the basis that a circumstance that did not exist at the time of making the assessment would exist at a later time; and
(b) after the making of the assessment, the Commissioner becomes satisfied that the circumstance will not exist;
then, in spite of anything in section 170 , the Commissioner may amend the assessment at any time for the purpose of ensuring that this section is to be taken always to have applied on the basis that the circumstance did not exist.
(Repealed by No 47 of 2016)
(Repealed by No 143 of 2007 )
All benefits provided in respect of, and amounts that are paid from, an RSA (including amounts taken to be paid from an RSA under subsection (2)) are taken to have an Australian source.
26E(2) [Deemed benefits of RSA]If the premiums of an insurance policy are paid from an RSA, any amounts paid by the insurer under the policy are taken to be paid by the RSA provider as a benefit of the RSA.
(Repealed by No 49 of 2019)
(Repealed by No 15 of 2007)
(Repealed by No 15 of 2007)
(Repealed by No 15 of 2007)
(Repealed by No 15 of 2007)
(Repealed by No 15 of 2007)
(Repealed by No 15 of 2007)
(Repealed by No 15 of 2007)
(Repealed by No 15 of 2007)
(Repealed by No 15 of 2007)
(Repealed by No 15 of 2007)
(Repealed by No 15 of 2007)
(Repealed by No 15 of 2007)
(Repealed by No 15 of 2007)
(Repealed by No 15 of 2007)
(Repealed by No 15 of 2007)
(Repealed by No 15 of 2007)
(Repealed by No 15 of 2007)
(Repealed by No 15 of 2007)
(Repealed by No 15 of 2007)
(Repealed by No 15 of 2007)
(Repealed by No 15 of 2007)
(Repealed by No 15 of 2007)
(Repealed by No 15 of 2007)
Subject to Division 54 of the Income Tax Assessment Act 1997 , the assessable income of a taxpayer of a year of income shall include:
(a) the amount of any annuity derived by the taxpayer during the year of income excluding, in the case of an annuity that has been purchased, any amount that, in accordance with the succeeding provisions of this section, is the deductible amount in relation to the annuity in relation to the year of income; and
(b) the amount of any payment made to the taxpayer during the year of income as a supplement to an annuity, whether the payment is made voluntarily, by agreement or by compulsion of law and whether or not the payment is one of a series of recurrent payments.
Note:
Division 54 of the Income Tax Assessment Act 1997 provides a tax exemption for certain payments under structured settlements and structured orders.
(Repealed by No 15 of 2007)
27H(2) [ " deductible amount " ]
Subject to subsections (3) and (3A), the deductible amount in relation to an annuity derived by a taxpayer during a year of income is the amount (if any) ascertained in accordance with the formula
|
A (B
−
C)
,
D |
where:
A is the relevant share in relation to the annuity in relation to the taxpayer in relation to the year of income.
B is the amount of the undeducted purchase price of the annuity.
C is:
D is the relevant number in relation to the annuity.
Subject to subsection (3A), where the Commissioner is of the opinion that the deductible amount ascertained in accordance with subsection (2) is inappropriate having regard to:
(a) the terms and conditions applying to the annuity; and
(b) such other matters as the Commissioner considers relevant,
the deductible amount in relation to the annuity derived by the taxpayer during the year of income is so much of the annuity as, in the opinion of the Commissioner, represents the undeducted purchase price having regard to:
(c) the terms and conditions applying to the annuity;
(d) any certificate or certificates of an actuary or actuaries stating the extent to which, in the opinion of the actuary or actuaries, the amount of the annuity derived by the taxpayer during the year of income represents the undeducted purchase price; and
(e) such other matters as the Commissioner considers relevant.
For the purposes of this section, where the annuity derived by a taxpayer during a year of income is part of an annuity of which a part has been commuted in the year of income or a preceding year of income, the deductible amount ascertained under subsection (2) or (3) shall be reduced by such amount as, in the opinion of the Commissioner, is appropriate having regard to:
(a) (Repealed by No 15 of 2007)
(b) (Repealed by No 15 of 2007)
(c) any deductible amount ascertained under this section in relation to the annuity in relation to a preceding year of income; and
(d) such other matters as the Commissioner considers relevant.
In this section:
actuary
means a Fellow or Accredited Member of the Institute of Actuaries of Australia.
agreement
means any agreement, arrangement or understanding whether formal or informal, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings.
annuity
means an annuity, a pension paid from a foreign superannuation fund (within the meaning of the
Income Tax Assessment Act1997
) or a pension paid from a scheme mentioned in paragraph
290-5(c)
of that Act, but does not include:
(a) an annuity that is a qualifying security for the purposes of Division 16E ; or
(b) a superannuation income stream (within the meaning of the Income Tax Assessment Act 1997 ).
approved actuary
(Omitted by No 35 of 1990)
life expectation factor
, in relation to a person in relation to an annuity, means the number of years in the complete expectation of life of the person as ascertained by reference to the prescribed Life Tables at the time at the beginning of the period to which the first payment of the annuity relates.
(a) in relation to a pension - the sum of:
(i) contributions made by any person to a foreign superannuation fund to obtain the pension; and
(ii) so much as the Commissioner considers reasonable of contributions made by any person to a foreign superannuation fund to obtain superannuation benefits including the pension; and
(b) in relation to an annuity other than a pension - the sum of:
(i) payments made solely to purchase the annuity; and
(ii) so much as the Commissioner considers reasonable of payments made to purchase the annuity and to obtain other benefits.
relevant number
, in relation to an annuity in relation to a year of income, means:
(a) where the annuity is payable for a term of years certain - the number of years in the term;
(b) where the annuity is payable during the lifetime of a person and not thereafter - the life expectation factor of the person; and
(c) in any other case - the number that the Commissioner considers appropriate having regard to the number of years in the total period during which the annuity will be, or may reasonably be expected to be, payable.
relevant share
, in relation to an annuity derived by a taxpayer during a year of income, means:
(a) in a case where the annuity derived by the taxpayer is a share of an annuity (which annuity is in this paragraph referred to as the total annuity ) payable to the taxpayer and another person or other persons - the fraction ascertained by dividing the number of whole dollars in the amount of the annuity derived by the taxpayer during the year of income by the number of whole dollars in the amount of the total annuity derived during the year of income by the taxpayer and the other person or persons; or
(b) in any other case - the number 1.
residual capital value
, in relation to an annuity, means the capital amount payable on the termination of the annuity.
undeducted purchase price
, in relation to an annuity, has the meaning given by section
27A
immediately before the commencement of Schedule 1 to the
Superannuation Legislation Amendment (Simplification) Act 2007
.
In the definition of purchase price in subsection (4):
(a) a reference to contributions made by any person to a foreign superannuation fund to obtain a pension does not include a reference to contributions made to a foreign superannuation fund by an employer, or by another person under an agreement to which the employer is a party, for the purpose of providing superannuation benefits for, or for dependants of, an employee of the employer; and
(b) a reference to payments made to purchase, or solely to purchase, an annuity (other than a pension) does not include a reference to payments made by an employer, or by another person under an agreement to which the employer is a party, to purchase, or solely to purchase, the annuity for, or for dependants of, an employee of the employer.
For the purposes of subsection (5), in determining whether a person is an employer of another person, treat the holding of an office by the other person as employment of that person.
(Repealed by No 15 of 2007)
(Repealed by No 15 of 2007)
Archived:
S 28 to 36 repealed as inoperative by No 101 of 2006 , s 3 and Sch 1 item 57, effective 14 September 2006. For application and savings provisions and for former wording see the CCH Australian Income Tax Legislation archive .
(Repealed by No 101 of 2006)
Archived:
S 36AA to 37 and Subdiv C repealed as inoperative by No 101 of 2006 , s 3 and Sch 1 item 57, effective 14 September 2006. For application and savings provisions and for former wording see the CCH Australian Income Tax Legislation archive .
This Subdivision has effect subject to the provisions of Division 216 of the Income Tax Assessment Act 1997 (which describes cum dividend sales in which a distribution to a member of a corporate tax entity is treated as having been made to someone else).
(a) applies to a non-share equity interest in the same way as it applies to a share; and
(b) applies to an equity holder in the same way as it applies to a shareholder; and
(c) applies to a non-share dividend in the same way as it applies to a dividend. 43B(2) [Section 47A not covered]
Subsection (1) does not apply to section 47A .
43B(3) [Section 44(1) not covered]Paragraph (1)(c) does not apply to subsection 44(1) .
43B(4) [Effect of s 44(1)]Subsection (1) has effect subject to the special provision that is made for non-share dividends in subsection 44(1) .
The assessable income of a shareholder in a company (whether the company is a resident or a non-resident) includes:
(a) if the shareholder is a resident:
(i) dividends (other than non-share dividends) that are paid to the shareholder by the company out of profits derived by it from any source; and
(ii) all non-share dividends paid to the shareholder by the company; and
(b) if the shareholder is a non-resident:
(i) dividends (other than non-share dividends) paid to the shareholder by the company to the extent to which they are paid out of profits derived by it from sources in Australia; and
(ii) non-share dividends paid to the shareholder by the company to the extent to which they are derived from sources in Australia; and
(c) if the shareholder is a non-resident carrying on business in Australia at or through a permanent establishment of the shareholder in Australia, and the company is a resident:
(i) dividends (other than non-share dividends) that are paid to the shareholder by the company and are attributable to the permanent establishment, to the extent to which they are paid out of profits derived by the company from sources outside Australia; and
(ii) non-share dividends that are paid to the shareholder by the company and are attributable to the permanent establishment, to the extent to which they are derived from sources outside Australia.
This subsection does not apply to a dividend (or non-share dividend) to the extent to which another provision of this Act that expressly deals with dividends includes some or all of the dividend (or non-share dividend) in, or excludes some or all of the dividend (or non-share dividend) from, the shareholder ' s assessable income.
Note 1:
Some other provisions that expressly deal with dividends are sections 23AI , 23AK and 128D of this Act and section 768-5 of the Income Tax Assessment Act 1997 .
Note 2:
An amount declared to be conduit foreign income is not included in assessable income under paragraph (1)(b) or (c): see section 802-15 of the Income Tax Assessment Act 1997 .
44(1A)
For the purposes of this Act, a dividend paid out of an amount other than profits is taken to be a dividend paid out of profits.
44(1B)
Where:
(a) the amount of the moneys or of the value of other property of which a dividend paid by a company consists is debited against an amount standing to the credit of a share capital account of the company; or
(b) a dividend paid by a company is a repayment by the company of an amount paid-up on a share,
the dividend shall, for the purposes of this section, be deemed to have been paid by the company out of profits derived by it.
44(2)
Subsections (3) and (4) apply to a demerger dividend unless the head entity elects in writing, within one month after it decides which of its shareholders will receive ownership interests in the demerged entity under the demerger, that those subsections do not apply to the total demerger dividend for all shareholders.
44(2A) - (2C)
(Omitted by No 165 of 1973)
44(2D)
(Omitted by No 62 of 1987)
44(2E)
(Omitted by No 46 of 1986)
44(3)
This section applies to the demerger dividend as if it had not been paid out of profits.
44(4)
A demerger dividend is not assessable income or exempt income.
44(5)
However, subsections (3) and (4) do not apply to a demerger dividend unless, just after the demerger, CGT assets owned by the demerged entity or a demerger subsidiary representing at least 50% by market value of all the CGT assets (or a reasonable approximation of market value) owned by the demerged entity and its demerger subsidiaries are used, directly or indirectly, in one or more businesses carried on by one or more of those entities.
44(6)
In applying subsection (5), disregard any assets that are ownership interests in a demerger subsidiary unless they are used in a business referred to in that subsection.
44(7)
In this section:
permanent establishment
of a person:
(a) has the same meaning as in a double tax agreement (as defined in Part X ) that relates to a foreign country and affects the person; or
(b) has the meaning given by subsection 6(1) , if there is no such agreement.
FORMER SECTION 44A 44A CERTAIN DIVIDENDS PAID BY COMPANIES INCORPORATED IN PAPUA NEW GUINEA
(Repealed by No 80 of 1975)
Application of section
45(1)
This section applies in respect of a company that, whether in the same year of income or in different years of income, streams the provision of shares (other than shares to which subsection 6BA(5) applies) and the payment of minimally franked dividends to its shareholders in such a way that:
(a) the shares are received by some shareholders but not all shareholders; and
(b) some or all of the shareholders who do not receive the shares receive or will receive minimally franked dividends.
45(2)
The value of the share at the time that the shareholder is provided with the share is taken, for the purposes of this Act, to be a dividend that is unfrankable (within the meaning of subsection 995-1(1) of the Income Tax Assessment Act 1997 ) and that is paid by the company, out of profits of the company, to the shareholder at that time.
45(3)
A dividend is minimally franked if it is not franked, or is franked to less than 10%, in accordance with section 202-5 or 208-60 of the Income Tax Assessment Act 1997 .
Application of section
45A(1)
This section applies in respect of a company that, whether in the same year of income or in different years of income, streams the provision of capital benefits and the payment of dividends to its shareholders in such a way that:
(a) the capital benefits are, or apart from this section would be, received by shareholders (the advantaged shareholders ) who would, in the year of income in which the capital benefits are provided, derive a greater benefit from the capital benefits than other shareholders; and
(b) it is reasonable to assume that the other shareholders (the disadvantaged shareholders ) have received, or will receive, dividends.
However, it does not apply if section 45 applies in relation to the streaming or in the circumstances set out in subsection (5).
Commissioner to determine that section 45C applies
45A(2)
The Commissioner may make, in writing, a determination that section 45C applies in relation to the whole, or a part, of the capital benefits. A determination does not form part of an assessment.
Note:
Subsection (6) limits the determination to a part of the capital benefit in certain cases.
Meaning of provision of capital benefit
45A(3)
A reference to the provision of a capital benefit to a shareholder in a company is a reference to any of the following:
(a) the provision to the shareholder of shares in the company;
(b) the distribution to the shareholder of share capital or share premium;
(c) something that is done in relation to a share that has the effect of increasing the value of a share (which may or may not be the same share) held by the shareholder.
45A(3A)
For the purposes of this section, a non-share distribution to an equity holder is taken to be the distribution to the equity holder of share capital to the extent to which it is a non-share capital return.
Meaning of greater benefit from capital benefits
45A(4)
The circumstances in which a shareholder would, in a year of income, derive a greater benefit from capital benefits than another shareholder include, but are not limited to, any of the following circumstances existing in relation to the first shareholder and not in relation to the other shareholder:
(a) some or all of the shares in the company held by the shareholder were acquired, or are taken to have been acquired, before 20 September 1985;
(b) the shareholder is a non-resident;
(c) the cost base (for the purposes of Part IIIA ) of the relevant share is not substantially less than the value of the applicable capital benefit;
(d) the shareholder has a net capital loss for the year of income in which this capital benefit is provided;
(e) the shareholder is a private company who would not have been entitled to a rebate under former section 46F if the shareholder had received the dividend that was paid to the disadvantaged shareholder;
(f) the shareholder has income tax losses.
Certain capital benefits not covered
45A(5)
This section does not apply where the capital benefit provided to the advantaged shareholders is the provision of shares and it is reasonable to assume that the disadvantaged shareholders have received, or will receive, fully franked dividends.
Determination limited in certain cases
45A(6)
If the capital benefit provided to the advantaged shareholders is the provision of shares and it is reasonable to assume that the disadvantaged shareholders have received, or will receive, partly franked dividends, the Commissioner may only make a determination under subsection (2) in relation to so much of the capital benefit as the Commissioner considers relates to the unfranked part of the dividend.
SECTION 45B SCHEMES TO PROVIDE CERTAIN BENEFITS
Purpose of section
45B(1)
The purpose of this section is to ensure that relevant amounts are treated as dividends for taxation purposes if:
(a) components of a demerger allocation as between capital and profit do not reflect the circumstances of a demerger; or
(b) certain payments, allocations and distributions are made in substitution for dividends.
Application of section
45B(2)
This section applies if:
(a) there is a scheme under which a person is provided with a demerger benefit or a capital benefit by a company; and
(b) under the scheme, a taxpayer (the relevant taxpayer ), who may or may not be the person provided with the demerger benefit or the capital benefit, obtains a tax benefit; and
(c) having regard to the relevant circumstances of the scheme, it would be concluded that the person, or one of the persons, who entered into or carried out the scheme or any part of the scheme did so for a purpose (whether or not the dominant purpose but not including an incidental purpose) of enabling a taxpayer (the relevant taxpayer ) to obtain a tax benefit.
Commissioner to determine that section 45BA or 45C applies
45B(3)
The Commissioner may make, in writing, a determination that:
(a) section 45BA applies in relation to the whole, or a part, of the demerger benefit; or
(b) section 45C applies in relation to the whole, or a part, of the capital benefit.
A determination does not form part of an assessment.
Note:
If section 45BA applies in relation to the whole, or a part, of a demerger benefit, this benefit may be a capital benefit.
Meaning of provided with a demerger benefit
45B(4)
A person is provided with a demerger benefit if in relation to a demerger:
(a) a company provides the person with ownership interests in that or another company; or
(b) something is done in relation to an ownership interest owned by the person that has the effect of increasing the value of an ownership interest (which may or may not be the same ownership interest) owned by the person.
Meaning of provided with a capital benefit
45B(5)
A reference to a person being provided with a capital benefit is a reference to any of the following:
(a) the provision of ownership interests in a company to the person;
(b) the distribution to the person of share capital or share premium;
(c) something that is done in relation to an ownership interest that has the effect of increasing the value of an ownership interest (which may or may not be the same interest) that is held by the person.
45B(6)
However, a person is not provided with a capital benefit to the extent that the provision of interests, the distribution or the thing done referred to in subsection (5) involves the person receiving a demerger dividend.
45B(7)
For the purposes of this section, a non-share distributionto an equity holder is taken to be the distribution to the equity holder of share capital to the extent to which it is a non-share capital return.
Meaning of relevant circumstances of scheme
45B(8)
The relevant circumstances of a scheme include the following:
(a) the extent to which the demerger benefit or capital benefit is attributable to capital or the extent to which the demerger benefit or capital benefit is attributable to profits (realised and unrealised) of the company or of an associate (within the meaning in section 318 ) of the company;
(b) the pattern of distributions of dividends, bonus shares and returns of capital or share premium by the company or by an associate (within the meaning in section 318 ) of the company;
(c) whether the relevant taxpayer has capital losses that, apart from the scheme, would be unutilised (within the meaning of the Income Tax Assessment Act 1997 ) at the end of the relevant year of income;
(d) whether some or all of the ownership interests in the company or in an associate (within the meaning in section 318 ) of the company held by the relevant taxpayer were acquired, or are taken to have been acquired, by the relevant taxpayer before 20 September 1985;
(e) whether the relevant taxpayer is a non-resident;
(f) whether the cost base (for the purposes of the Income Tax Assessment Act 1997 ) of the relevant ownership interest is not substantially less than the value of the applicable demerger benefit or capital benefit;
(g) (Repealed by No 101 of 2006 )
(h) if the scheme involves the distribution of share capital or share premium - whether the interest held by the relevant taxpayer after the distribution is the same as the interest would have been if an equivalent dividend had been paid instead of the distribution of share capital or share premium;
(i) if the scheme involves the provision of ownership interests and the later disposal of those interests, or an increase in the value of ownership interests and the later disposal of those interests:
(i) the period for which the ownership interests are held by the holder of the interests; and
(ii) when the arrangement for the disposal of the ownership interests was entered into;
(j) for a demerger only:
(i) whether the profits of the demerging entity and demerged entity are attributable to transactions between the entity and an associate (within the meaning in section 318 ) of the entity; and
(ii) whether the assets of the demerging entity and demerged entity were acquired under transactions between the entity and an associate (within the meaning in section 318 ) of the entity;
(k) any of the matters referred to in subsection 177D(2) .
Meaning of obtaining a tax benefit
45B(9)
A relevant taxpayer obtains a tax benefit if an amount of tax payable, or any other amount payable under this Act, by the relevant taxpayer would, apart from this section, be less than the amount that would have been payable, or would be payable at a later time than it would have been payable, if the demerger benefit had been an assessable dividend or the capital benefit had been an assessable dividend.
45B(10)
In this section:
scheme
has the meaning given by subsection
995-1(1)
of the
Income Tax Assessment Act 1997
.
SECTION 45BA EFFECT OF DETERMINATIONS UNDER SECTION 45B FOR DEMERGER BENEFITS 45BA(1) [Demerger benefit when provided]
If the Commissioner makes a determination under subsection 45B(3) , the amount of the demerger benefit, or the part of the benefit, is taken not to be a demerger dividend for the purposes of this Act for the owner of the ownership interest or the relevant taxpayer at the time when the owner or relevant taxpayer is provided with the demerger benefit.
45BA(2) [Amount of benefit]The amount of the demerger benefit is:
(a) if the benefit is the provision of an ownership interest - the market value of the interest at the time that it is provided; or
(b) if the benefit is an increase in the value of an ownership interest - the increase in the market value of the interest as a result of the change; or
(c) if the benefit is a distribution to the shareholder of share capital or share premium - the amount debited to the share capital account or share premium account of the company in connection with the provision of the benefit.
If the Commissioner makes a determination under subsection 45A(2) or 45B(3) , the amount of the capital benefit, or the part of the benefit, is taken, for the purposes of this Act, to be an unfranked dividend that is paid by the company to the shareholder or relevant taxpayer at the time that the shareholder or relevant taxpayer is provided with the capital benefit.
45C(2)
The dividend is taken to have been paid out of profits of the company.
45C(3)
If the Commissioner has made a determination under section 45B in respect of the whole or a part of a capital benefit and the Commissioner makes a further written determination that the capital benefit, or the part of the capital benefit, was paid under a scheme for which a purpose, other than an incidental purpose, was to avoid franking debits arising in relation to the distribution from the company:
(a) on the day on which notice of the determination is served in writing on the company, a franking debit of the company arises in respect of the capital benefit; and
(b) the amount of the franking debit is the amount that, if the company had:
(i) paid a dividend of an amount equal to the amount of the capital benefit, or the part of the capital benefit, at the time when it was provided; and
would have been the amount of the franking credit of the company that would have arisen as a result of the dividend.
(ii) fully franked the dividend;
45C(4)
The amount of the capital benefit is:
(a) if the benefit is the provision of an ownership interest - the market value of the interest at the time that it is provided; or
(b) if the benefit is an increase in the market value of an ownership interest - the increase in the market value of the interest as a result of the change; or
(c) if the benefit is a distribution to the shareholder of share capital or share premium - the amount debited to the share capital account or share premium account of the company in connection with the provision of the benefit.
45C(4A)
For the purposes of this section:
(a) a non-share distribution to an equity holder is taken to be the distribution to the equity holder of share capital to the extent to which it is a non-share capital return; and
(b) the debit to the company's non-share capital account, in respect of the non-share distribution, is taken to be a debit to the company's share capital account.
45C(5)
(Repealed by No 41 of 2011)
45C(6)
(Repealed by No 41 of 2011)
SECTION 45D DETERMINATIONS UNDER SECTIONS 45A, 45B AND 45C
Notice by Commissioner of determination
45D(1)
If the Commissioner makes a determination under section 45A , 45B or 45C , the Commissioner must give a copy of the determination to the company concerned (which, in the case of a demerger benefit referred to in section 45B , is the head entity of the demerger group).
Notice by company of determination
45D(1A)
That company must, in the case of a determination under section 45A or 45B , give a copy of the notice to: (a) the advantaged shareholder referred to in section 45A ; or (b) the relevant taxpayer referred to in section 45B .
Publication of determination in relation to listed public company
45D(2)
If the Commissioner makes a determination under section 45A , in respect of a dividend paid by a listed public company, the Commissioner is taken to have served notice in writing of the determination on the advantaged shareholder if the Commissioner causes the notice to be published in a manner that results in the notice being accessible to the public and reasonably prominent. The notice is taken to have been served on the day on which the publication takes place.
Evidence of determination
45D(3)
The production of: (a) a notice of a determination; or (b) a document signed by the Commissioner, a Second Commissioner or a Deputy Commissioner purporting to be a copy of a determination;
is conclusive evidence of:
(c) the due making of the determination; and (d) except in proceedings under Part IVC of the Taxation Administration Act 1953 on an appeal or review relating to the determination, that the determination is correct.Objections
45D(4)
If a taxpayer to whom a determination relates is dissatisfied with the determination, the taxpayer may object against it in the manner set out in Part IVC of the Taxation Administration Act 1953 .
FORMER SECTION 46A 46A REBATE ON DIVIDENDS PAID AS PART OF DIVIDEND STRIPPING OPERATION
(Repealed by No 101 of 2006)
(Repealed by No 101 of 2006)
(Repealed by No 163 of 2001)
(Repealed by No 101 of 2006)
Allowable deduction
46FA(1)
An amount is allowable as a deduction from the assessable income of a company (the resident company ) if:
(a) the resident company is paid a dividend (the original dividend ) that:
(i) is paid by a company that is a resident; and
(ii) is a non-portfolio dividend; and
(iii) is not a fully-franked dividend; and
(b) the resident company is not a group company in relation to the company that paid the original dividend in relation to the year of income in which the dividend is paid; and
(ba) neither the resident company, nor the company that pays the dividend, is a prescribed dual resident; and
(c) ignoring the amendments made by Schedule 1 to the Tax Laws Amendment (Repeal of Inoperative Provisions) Act 2006 , but for subsection 46AB(1) or 46AC(2) or subparagraph 46F(2)(a)(i) of this Act as in force just before the commencement of those amendments, the resident company would have been entitled to a rebate under section 46 of this Act as so in force in respect of the unfranked amount of the original dividend; and
(d) the resident company pays a dividend (the flow-on dividend ) to a company that is not a resident (the non-resident company ); and
(e) the flow-on dividend is not a fully-franked dividend; and
(f) the resident company declares that the unfranked amount of the flow-on dividend is an on-payment of the unfranked amount of the original dividend to the extent of a specified percentage (not exceeding 100%); and
(g) when the original dividend is paid, when the declaration is made and when the flow-on dividend is paid, the resident company is:
(i) a resident; and
(ii) wholly owned by the non-resident company.
The deduction is from assessable income of the year of income in which the flow-on dividend is paid. The amount of the deduction is equal to the flow-on amount worked out using subsection (2).
46FA(2)
The flow-on amount is:
| Percentage specified under
paragraph (1)(f) |
× | Unfranked amount of
the flow-on dividend |
Flow-on declarations
46FA(3)
The declaration under paragraph (1)(f) (the flow-on declaration ) must be made:
(a) in writing; and
(b) before the flow-on dividend is paid.
The declaration cannot be revoked or varied.
46FA(4)
The flow-on declaration is effective only to the extent to which the flow-on amount does not exceed the surplus in the resident company's unfranked non-portfolio dividend account immediately before the declaration is made.
Note:
See section 46FB for the unfranked non-portfolio dividend account.
Unfranked amount of flow-on dividend unfrankable
46FA(5)
Part 3-6 of the Income Tax Assessment Act 1997 (the imputation system) applies to the unfranked amount of the flow-on dividend as if it were an unfrankable distribution within the meaning of section 202-45 of that Act if a deduction is allowed to the resident company in relation to the flow-on dividend.
Wholly owned by non-resident company.
46FA(6)
The resident company is wholly owned by the non-resident company if all the shares in the resident company are held by and beneficially owned by the non-resident company.
46FA(7)
However, the company is not wholly owned by the non-resident company if a person is in a position to affect rights, in relation to the resident company, of the non-resident company.
46FA(8)
The resident company is also not wholly owned by the non-resident company if at some future time a person will be in a position to affect rights as described in subsection (7).
A person in a position to affect rights
46FA(9)
A person is in a position to affect rights of a company in relation to another company if the person has a right, power or option:
(a) to acquire those rights from one or other of those companies; or
(b) to do something that would prevent one or other of those companies from exercising its rights for its own benefit, or from receiving any benefit arising from having those rights.
46FA(10)
It does not matter whether the person has the right, power or option because of the constitution of one or other of those companies, any agreement or otherwise.
Definitions
46FA(11)
In this section:
fully-franked dividend
means a dividend whose franking percentage (within the meaning of section
203-35
of the
Income Tax Assessment Act 1997
) is 100%.
group company
has the same meaning as in former section
160AFE
as in force immediately before 1 July 2002.
non-portfolio dividend
has the same meaning as in section
317.
non-resident company
means a company that is not a resident.
unfranked amount
of a dividend (including an unfrankable distribution within the meaning of section
202-45
of the
Income Tax Assessment Act 1997
) means the amount of the dividend less the franked part.
SECTION 46FB UNFRANKED NON-PORTFOLIO DIVIDEND ACCOUNT
Company may establish account
46FB(1)
A company may establish an unfranked non-portfolio dividend account.
Account surplus
46FB(2)
An unfranked non-portfolio dividend account surplus exists for a company at a particular time if the company's total unfranked non-portfolio dividend credits arising before that time exceed its total unfranked non-portfolio dividend debits arising before that time.
46FB(3)
The amount of the surplus is equal to the amount of the excess.
Credits
46FB(4)
An unfranked non-portfolio dividend credit arises for a company if:
(a) the company is paid an unfranked non-portfolio dividend; and
(b) the company is not a group company in relation to the company that paid the dividend in relation to the year of income in which the dividend is paid; and
(c) ignoring the amendments made by Schedule 1 to the Tax Laws Amendment (Repeal of Inoperative Provisions) Act 2006 , but for subsection 46AB(1) or 46AC(2) or subparagraph 46F(2)(a)(i) of this Act as in force just before the commencement of those amendments, the company would have been entitled to a rebate under section 46 of this Act as so in force in respect of the unfranked amount of the dividend.
The amount of the credit is the unfranked amount of the dividend. The credit arises when the dividend is paid to the company.
Debits
46FB(5)
An unfranked non-portfolio dividend debit arises for a company if the company makes a declaration under paragraph 46FA(1)(f) in relation to a dividend paid on a particular day. The amount of the debit is the flow-on amount under subsection 46FA(2) . The debit arises when the declaration is made.
Definitions
46FB(6)
In this section:
group company
has the same meaning as in former section
160AFE
as in force immediately before 1 July 2002.
non-portfolio dividend
has the same meaning as in section
317
.
unfranked amount
of a dividend (including an unfrankable distribution within the meaning of section
202-45
of the
Income Tax Assessment Act 1997
) means the amount of the dividend less the franked part.
FORMER SECTION 46G 46G REBATE NOT ALLOWABLE FOR DIVIDENDS DEBITED AGAINST CERTAIN ACCOUNTS
(Repealed by No 79 of 2007 )
(Repealed by No 79 of 2007 )
(Repealed by No 79 of 2007 )
(Repealed by No 79 of 2007 )
(Repealed by No 79 of 2007 )
(Repealed by No 79 of 2007 )
(Repealed by No 79 of 2007 )
Distributions to shareholders of a company by a liquidator in the course of winding up the company, to the extent to which they represent income derived by the company (whether before or during liquidation) other than income which has been properly applied to replace a loss of paid-up share capital, shall, for the purposes of this Act, be deemed to be dividends paid to the shareholders by the company out of profits derived by it.
A reference in subsection (1) to income derived by a company includes a reference to:
(a) an amount (except a net capital gain) included in the company's assessable income for a year of income; or
(b) a net capital gain that would be included in the company's assessable income for a year of income if the Income Tax Assessment Act 1997 required a net capital gain to be worked out as follows: Method statement
Step 1.
Work out each capital gain (except a capital gain that is disregarded) that the company made during that year of income. Do so without indexing any amount used to work out the cost base of a CGT asset.
Step 2.
Total the capital gain or gains worked out under Step 1. The result is the net capital gain for that year of income.
Those distributions shall, to the extent to which they are made out of any profits or income, be deemed to have been paid wholly and exclusively out of those profits or that income.
47(2A) [Informal winding up](a) the business of a company has been, or is in the course of being, discontinued otherwise than in the course of a winding up of the company under any law relating to companies;
(b) in connexion with the discontinuance, any moneys of the company have been or other property of the company has been, on or after 19 October 1967, distributed, otherwise than by the company, to shareholders of the company; and
(c) the moneys or other property so distributed are not, for the purposes of this Act, dividends;
the distribution shall, subject to subsection (2B), be deemed to be, for the purposes of this section, a distribution to the shareholders by a liquidator in the course of winding up the company.
(a) subsection (2A) would, but for this subsection, apply in relation to any moneys or other property of a company distributed to shareholders of the company; and
(b) the company does not cease to exist within a period of 3 years after the distribution, or within such further period as the Commissioner allows;
subsection (2A) shall not apply, and shall be deemed never to have applied, in relation to those moneys or that other property, and those moneys or that other property so distributed shall, for the purposes of this Act, be deemed to be dividends paid by the company to the shareholders out of profits derived by it.
For the purposes of this section, paid-up share capital includes capital which has been paid up in money or by other valuable consideration and which has been cancelled and has not been repaid by the company to the shareholders.
Subject to subsection (2), if:
(a) a company (in this section called the first company ) has profits immediately before a distribution time for a distribution benefit in relation to the first company; and
(b) the distribution time occurred after 3 June 1990; and
(c) the first company is a CFC at the distribution time; and
(d) the first company is a resident of an unlisted country at the distribution time;
so much of the distribution payment in relation to the distribution time as would not otherwise be a dividend and does not exceed the amount of those profits is taken, for the purposes of this Act, to be a dividend paid by the first company:
(e) to the recipient of the benefit as a shareholder in the first company; and
(f) out of profits derived by the first company; and
(g) at the distribution time.
47A(2)
If:
(a) any of the following subparagraphs applies:
(i) by virtue of subsection (1), the whole or a part of the distribution payment is included in the assessable income of a taxpayer of the year of income in which the distribution time occurred under section 44 ;
(ii) by virtue of subsection (1), the whole or a part of the distribution payment would, apart from section 23AI or section 768-5 of the Income Tax Assessment Act 1997 , be included in the assessable income of a taxpayer of the year of income in which the distribution time occurred under section 44 ; and
(iii) (Repealed by No 96 of 2004)
(iv) (Repealed by No 96 of 2004)
(b) both of the following subparagraphs apply:
(i) the taxpayer ' s return of income for the year of income was not prepared on the basis that the distribution payment had the consequence specified in subsection (1);
(ii) the taxpayer has not notified the Commissioner, in writing, within 12 months after the end of the year of income, that the distribution payment had the consequence specified in subsection (1);
that subsection has effect in relation to the taxpayer and in relation to that distribution payment as if the reference in that subsection to the purposes of this Act were a reference to the purposes of this Act (other than section 365 of this Act and Division 770 of the Income Tax Assessment Act 1997 ).
47A(3)
Subject to subsections (9) and (12), a reference in this section to a distribution benefit in relation to the first company is a reference to an eligible benefit where the following conditions are satisfied:
(a) the eligible benefit was provided to:
(i) an associated entity in relation to the first company; or
(ii) another entity that, immediately after the time of the provision of the eligible benefit, was an associated entity in relation to the first company;
(b) the eligible benefit was provided by:
(i) the first company; or
(ii) an entity (in this subsection called the arranger ) other than the first company under an arrangement between:
(A) the first company; and
(B) the arranger or another entity;
(c) if subparagraph (b)(ii) applies - the first company made, or entered into an undertaking to make, one or more transfers of property or services to the arranger or to another entity (which transfers are in this section called the arrangement transfers ) that are attributable, in whole or in part, to the provision of the eligible benefit.
47A(4)
Where the first company entered into an undertaking to make one or more arrangement transfers , the time of the arrangement transfers is the time the undertaking was entered into.
47A(5)
Where, at a particular time, an entity (in this subsection called the provider ) waives or releases the obligation of another entity (in this subsection called the recipient ) to pay or repay to the provider an amount:
(a) the waiver or release is taken to constitute an eligible benefit provided at that time by the provider to the recipient; and
(b) if the eligible benefit is a distribution benefit in relation to the first company - each of the following times is a distribution time for the eligible benefit:
(i) if the eligible benefit was provided by the first company - the time of the provision of the eligible benefit; or
(ii) in any other case - the time, or each of the times, of the arrangement transfers concerned;
(c) if the eligible benefit is a distribution benefit in relation to the first company - the distribution payment in relation to the distribution time is:
(i) if the benefit was provided by the first company - the amount the payment or repayment of which is waived or released; or
(ii) in any other case - so much of the amount or market value of the arrangement transfer as is attributable to the provision of the eligible benefit.
47A(6)
For the purposes of subsection (5), an entity is taken to be under an obligation to pay or repay an amount even if the amount is not due for payment or repayment.
47A(7)
Where, at a particular time, an entity (in this subsection called the provider ) makes a loan to another entity (in this subsection called the recipient ), where:
(a) the parties to the loan are not at arm ' s length with each other in relation to the loan; or
(b) the purpose, or one of the purposes, of the making of the loan was to facilitate, directly or indirectly (through one or more interposed companies, partnerships or trusts), the payment of a dividend that is, or would be, non-assessable non-exempt income under section 768-5 of the Income Tax Assessment Act 1997 (in whole or in part); or
(c) the purpose, or one of the purposes, of the making of the loan was to facilitate, directly or indirectly, the provision of an eligible benefit by the recipient, being an eligible benefit that is a distribution benefit in relation to any company;
the following provisions have effect:
(d) the making of the loan is taken to constitute an eligible benefit provided by the provider to the recipient at that time;
(e) if the eligible benefit is a distribution benefit in relation to the first company - each of the following times is a distribution time for the eligible benefit:
(i) if the benefit was provided by the first company - the time of the provision of the benefit; or
(ii) in any other case - the time, or each of the times, of the arrangement transfers concerned;
(f) if the eligible benefit is a distribution benefit in relation to the first company - the distribution payment in relation to the distribution time is:
(i) if the benefit was provided by the first company - the amount of the loan; or
(ii) in any other case - so much of the amount or market value of the arrangement transfer as is attributable to the provision of the eligible benefit.
47A(8)
Where, at a particular time:
(a) an entity (in this subsection called the provider ) acquires from a company (in this subsection called the recipient ):
(i) a share in the recipient;
(ii) a right to acquire a share in the recipient;
(iii) an option to acquire a share in the recipient; or
(b) an entity (in this subsection also called the provider ) acquires from the trustee of a unit trust (in this subsection also called the recipient ):
(i) a unit in the recipient;
(ii) a right to acquire a unit in the recipient;
(iii) an option to acquire a unit in the recipient;
the following provisions have effect:
(c) the acquisition is taken to constitute an eligible benefit provided by the provider to the recipient at that time;
(d) if the eligible benefit is a distribution benefit in relation to the first company - each of the following is a distribution time for the eligible benefit:
(i) if the benefit was provided by the first company - the time of the provision of the benefit; or
(ii) in any other case - the time, or each of the times, of the arrangement transfers concerned;
(e) if the eligible benefit is a distribution benefit in relation to the first company - the distribution payment in relation to the distribution time is:
(i) if the benefit was provided by the first company - the amount or market value of the consideration paid or given by the first company in respect of the acquisition; or
(ii) in any other case - so much of the amount or market value of the arrangement transfer as is attributable to the provision of the eligible benefit;
(f) if:
(i) the eligible benefit is a distribution benefit in relation to the first company; and
in determining the profits of the company immediately before the distribution time, or the first distribution time, as the case requires, for the distribution benefit, the following assumptions are to be made:
(ii) the provider transferred property or services to the recipient in respect of the acquisition;
(iii) if the benefit was provided by the first company - the assumption that, immediately before the distribution time, the company had:
(A) disposed of the property or services to an entity other than the recipient; and
(B) received, in respect of that disposal, consideration equal to the market value of the property or services;
(iv) if subparagraph (iii) does not apply - the assumption that, immediately before the distribution time, the company had:
(A) disposed of equivalent property or services to an entity other than the recipient or the entity who provided the eligible benefit; and
(B) received, in respect of that disposal, consideration equal to the market value of the property or services.
47A(9)
An eligible benefit that is covered by subsection (8) and provided at a particular time is not a distribution benefit in relation to the first company if, at that time, there is no entity (other than the provider referred to in that subsection) who is:
(a) either:
(i) the holder of an eligible equity interest in the first company; or
(ii) an associate of an entity who is the holder of an eligible equity interest in the first company; and
(b) the holder of an eligible equity interest in the recipient referred to in that subsection.
47A(10)
Where:
(a) an entity (in this subsection called the provider ) transfers property or services to another entity (in this subsection called the recipient ); and
(b) the property or services are transferred:
(i) for no consideration; or
(ii) for a consideration less than the market value of the property or services; and
(c) in the case of a transfer of services - the services do not consist of the making of a loan; and
(d) in any case - the property or services are not transferred by way of consideration for the acquisition from a company of:
(i) a share in the company; or
(ii) a right to acquire a share in the company; or
(iii) an option to acquire a share in the company; and
(e) in any case - the property or services are not transferred in respect of the acquisition from the trustee of a unit trust of:
(i) a unit in the unit trust; or
(ii) a right to acquire a unit in the unit trust; or
(iii) an option to acquire a unit in the unit trust; and
(f) in the case of a transfer of property - the property does not consist of a payment in respect of a call on a share ina company;
the following provisions have effect:
(g) the transfer is taken to constitute an eligible benefit provided by the provider to the recipient at that time;
(h) if the eligible benefit is a distribution benefit in relation to the first company - each of the following is a distribution time for the eligible benefit:
(i) if the benefit was provided by the first company - the time of the provision of the benefit; or
(ii) in any other case - the time, or each of the times, of the arrangement transfers concerned;
(j) if the eligible benefit is a distribution benefit in relation to the first company - the distribution payment in relation to the distribution time is:
(i) if the benefit was provided by the first company - the amount by which the amount or market value of the property or services exceeds the consideration (including nil consideration) mentioned in paragraph (b); or
(ii) if subparagraph (i) does not apply and there is only one arrangement transfer - so much of the amount or market value of the arrangement transfer as is attributable to the provision of the eligible benefit; or
(iii) if subparagraph (i) does not apply and there are 2 or more arrangement transfers - the amount worked out in relation to the arrangement transfer using the following formula:
Total Excess × Arrangement transfer
Total arrangement transfers
where:
Total Excess means so much of the total amount or market value of all the arrangement transfers as is attributable to the provision of the eligible benefit. Arrangement transfer means the amount or market value of the arrangement transfer concerned. Total arrangement transfers means the total amount or market value of all of the arrangement transfers.
(k) if the eligible benefit is a distribution benefit in relation to the first company - in determining the profits of the company immediately before a distribution time for the distribution benefit, the following assumptions are to be made:
(i) if the benefit was provided by the first company - the assumption that, immediately before the distribution time, the company had:
(A) disposed of the property or services to an entity other than the recipient; and
(B) received, in respect of that disposal, consideration equal to the market value of the property or services;
(ii) if subparagraph (i) does not apply and there is only one arrangement transfer - the assumption that, immediately before the distribution time, the company had:
(A) disposed of the property or services covered by the arrangement transfer to an entity other than the entity who provided the eligible benefit; and
(B) received, in respect of that disposal, consideration equal to the market value of the property or services;
(iii) if subparagraph (i) does not apply and there are 2 or more arrangement transfers - the assumption that, immediately before each distribution time, the company had:
(A) disposed of the property or services covered by the arrangement transfer concerned to an entity other than the entity who provided the eligible benefit; and
(B) received, in respect of that disposal, consideration equal to the market value of the property or services.
47A(10A)
Subsection (10) does not apply to a transfer that is taken by section 70-30 or 70-110 of the Income Tax Assessment Act 1997 to have occurred.
47A(11)
Where, at a particular time, an entity (in this subsection called the provider ) makes a payment to another entity, being a company (in this subsection called the recipient ), in respect of a call on a share in the recipient:
(a) the making of the payment is taken to constitute an eligible benefit provided by the provider to the recipient at that time; and
(b) if the eligible benefit is a distribution benefit in relation to the first company - each of the following is a distribution time for the eligible benefit:
(i) if the benefit was provided by the first company - the time of the provision of the benefit; or
(ii) in any other case - the time, or each of the times, of the arrangement transfers concerned;
(c) if the eligible benefit is a distribution benefit in relation to the first company - the distribution payment in relation to the distribution time is:
(i) if the benefit was provided by the first company - the amount of the payment; or
(ii) in any other case - so much of the amount or market value of the arrangement transfer as is attributable to the provision of the eligible benefit.
47A(12)
An eligible benefit that is covered by subsection (11) and provided at a particular time is not a distribution benefit in relation to the first company if, at that time, there is no entity (other than the provider referred to in that subsection) who is:
(a) either:
(i) the holder of an eligible equity interest in the first company; or
(ii) an associate of an entity who is the holder of an eligible equity interest in the first company; and
(b) the holder of an eligible equity interest in the recipient referred to in that subsection.
47A(13)
If:
(a) apart from this subsection, a particular eligible benefit that is covered by subsection (8) or (11) and provided at a particular time is not a distribution benefit in relation to the first company only because of subsection (9) or (12); and
(b) at a later time, there is an entity (other than the provider referred to in subsection (8) or (11), as the case may be) who is:
(i) either:
(A) the holder of an eligible equity interest in the first company; or
(B) an associate of an entity who is the holder of an eligible equity interest in the firstcompany; and
(ii) the holder of an eligible equity interest in the recipient referred to in whichever of subsections (8) and (11) is applicable; and
(ba) if the eligible benefit consists of the acquisition of a share or unit - at that later time, the share or unit has not been redeemed or bought back by the recipient mentioned in subsection (8) for a consideration equal to or greater than the arm ' s length value of the share or unit;
the following provisions have effect:
(c) this section has effect as if subsection (9) or (12), as the case requires, had never applied in relation to that eligible benefit;
(d) section 170 does not prevent the amendment of an assessment at any time for the purposes of giving effect to this subsection.
47A(14)
If:
(a) apart from this subsection, a particular eligible benefit (in this subsection called the first eligible benefit ) that is covered by subsection (8) or (11) and provided at a particular time is not a distribution benefit in relation to the first company only because of subsection (9) or (12); and
(b) the recipient referred to in whichever of subsections (8) and (11) is applicable provides an eligible benefit (in this subsection called the second eligible benefit ) to:
(i) the first company; or
(ii) the provider referred to in whichever of those subsections is applicable; or
(iii) an associated entity in relation to:
(A) the first company; or
(B) that provider; and
(c) the provision of the first eligible benefit facilitated, directly or indirectly, the provision of the second eligible benefit; and
(ca) if the second eligible benefit is covered by subsection (8) or (11):
(i) the second eligible benefit is provided on or after 13 September 1990; or
(ii) both:
(A) the second eligible benefit was provided before 13 September 1990; and
(B) the Commissioner is of the opinion that the provision of the second eligible benefit had, or would be likely to have, the effect of enabling any taxpayer to avoid tax;
the following provisions have effect:
(d) this section has effect as if subsection (9) or (12), as the case requires, had never applied in relation to the first eligible benefit;
(e) section 170 does not prevent the amendment of an assessment at any time for the purposes of giving effect to this subsection.
47A(15)
In determining whether a company has profits at a particular time, it is to be assumed that the accounts of the company had been drawn up immediately before that time.
47A(16)
For the purposes of this section, where:
(a) the first company has profits (in this subsection called the original profits ) immediately before a distribution time for a distribution benefit in relation to the first company; and
(b) by virtue of subsection (1), an amount (in this subsection called the original assessable amount ) is included in the assessable income of a taxpayer (in this subsection called the original taxpayer ) of a year of income (in this subsection called the original year of income ) under section 44 in respect of the distribution payment in relation to the distribution time; and
(c) any of the following subparagraphs applies:
(i) the original taxpayer is:
(A) a resident at any time during the original year of income; and
(B) a company or a natural person (other than a company or a natural person in the capacity of a trustee);
(ii) (Repealed by No 53 of 2016)
(iii) the original taxpayer is the trustee of a public trading trust in relation to the original year of income;
(iv) the original taxpayer is the trustee of a complying superannuation fund, a non-complying superannuation fund, a complying approved deposit fund, a non-complying approved deposit fund or a pooled superannuation trust in relation to the original year of income;
(v) the original taxpayer is the trustee of a resident trust estate (within the meaning of Division 6 ) in relation to the year of income who is liable to be assessed and pay tax under section 99 or 99A in respect of a part of the net income of the trust estate;
then, in determining the profits that the first company has at a later time, no account is to be taken of so much of the original profits as is equal to the original assessable amount.
47A(17)
For the purposes of this section, where:
(a) the first company has profits (in this subsection called the original profits ) immediately before a distribution time for a distribution benefit in relation to the first company; and
(b) by virtue of subsection (1), an amount (in this subsection called the original assessable amount ) is included in the assessable income of a taxpayer (in this subsection called the original taxpayer ) of a year of income (in this subsection called the original year of income ) under section 44 in respect of the distribution payment in relation to the distribution time; and
(c) all of the following conditions are satisfied:
(i) the original taxpayer is the trustee of a trust estate who is liable to be assessed and pay tax under section 98 in respect of a share in the net income of the trust estate of the original year of income;
(ii) the beneficiary who was entitled to that share was a resident at any time during the original year of income;
(iii) the whole or a part (which whole or part is in this subsection called the beneficiary ' s portion of the original assessable amount ) of the share of the net income is attributable to the original assessable amount;
then, in determining the profits that the first company has at a later time, no account is to be taken of so much of the original profits as is equal to the beneficiary ' s portion of the original assessable amount.
47A(18)
For the purposes of this section, where:
(a) the first company has profits (in this subsection called the original profits ) immediately before a distribution time for a distribution benefit in relation to the first company; and
(b) by virtue of subsection (1), an amount (in this subsection called the original assessable amount ) is included in the assessable income of a taxpayer (in this subsection called the original taxpayer ) of a year of income (in this subsection called the original year of income ) under section 44 in respect of the distribution payment in relation to the distribution time; and
(c) the original taxpayer is the trustee of a trust estate or a partnership; and
(d) the following conditions are satisfied in relation to another taxpayer (in this subsection called the actual taxpayer ):
(i) an amount is included in the assessable income of the actual taxpayer of a year of income (in this subsection called the assessment year of income ) under subsection 92(1) or section 97 or 100 ;
(ii) the actual taxpayer is:
(A) a resident at any time during the assessment year of income, being a company or a natural person (other than a company or a natural person in the capacity of a trustee); or
(B) (Repealed by No 53 of 2016)
(C) the trustee of a public trading trust in relation to the assessment year of income; or
(D) the trustee of a complying superannuation fund, a non-complying superannuation fund, a complying approved deposit fund, a non-complying approved deposit fund or a pooled superannuation trust in relation to the assessment year of income; or
(E) the trustee of a trust estate who is liable to be assessed and pay tax under section 98 in respect of a share in the net income of a trust estate; or
(F) the trustee of a trust estate who is liable to be assessed and pay tax under section 99 or 99A in respect of a part of the net income of a trust estate; or
(G) the trustee of a trust estate where trustee beneficiary non-disclosure taxis payable under Division 6D on the whole or part of the net income of the trust estate;
(iii) if sub-subparagraph (ii)(A), (B), (C) or (D) applies - the whole or a part of the amount so included in the actual taxpayer ' s assessable income (which whole or part is in this subsection called the actual taxpayer ' s portion of the original assessable amount ) is attributable (either directly or indirectly through one or more interposed partnerships or trusts) to the original assessable amount;
(iv) if sub-subparagraph (ii)(E) applies:
(A) the beneficiary who was entitled to the share concerned was a resident at any time during the assessment year of income; and
(B) the whole or a part (which whole or part is in this subsection also called the actual taxpayer ' s portion of the original assessable amount ) of the share of the net income is attributable (either directly or indirectly through one or more interposed partnerships or trusts) to the original assessable amount;
(v) if sub-subparagraph (ii)(F) applies:
(A) the trust estate was a resident trust estate (within the meaning of Division 6 ) in relation to the assessment year of income; and
(B) the whole or a part (which whole or part is in this subsection also called the actual taxpayer ' s portion of the original assessable amount ) of the part of the net income is attributable (either directly or indirectly through one or more interposed partnerships or trusts) to the original assessable amount;
(vi) if sub-subparagraph (ii)(G) applies:
(A) the trust estate was a resident trust estate (within the meaning of Division 6 ) in relation to the assessment year of income; and
(B) the whole or a part (which whole or part is in this subsection also called the actual taxpayer ' s portion of the original assessable amount ) of the whole or the part of the share of the net income is attributable (either directly or indirectly through one or more interposed partnerships or trusts) to the original assessable amount;
then, in determining the profits that the first company has at a later time, no account is to be taken of so much of the original profits as is equal to the actual taxpayer ' s portion of the original assessable amount.
47A(18A)
An assessment may be made of a taxpayer on the assumption that subsection (2) will not be applicable in relation to a particular distribution payment made during a year of income of the taxpayer.
47A(18B)
Where:
(a) the assessment mentioned in subsection (18A) is made; and
(b) after the making of the assessment, the Commissioner becomes aware that subsection (2) was applicable in relation to the distribution payment concerned;
then, in spite of anything in section 170 , the Commissioner may amend the assessment at any time for the purposes of ensuring that the assessment is made as if subsection (18A) of this section were disregarded.
47A(19)
The provisions of section 102AAJ apply for the purposes of this section in like manner as they apply for the purposes of Division 6AAA .
47A(20)
For the purposes of this section, the question whether a company is a resident of an unlisted country is to be determined in the same manner in which that question is determined for the purposes of Part X .
47A(21)
In this section:
arm
'
s length value
, in relation to the redemption or buy-back of a share in a company or a unit in a unit trust, means the amount that the company or trustee could reasonably be expected to have been required to pay to obtain the redemption or buy-back of the share or unit under a transaction where the parties to the transaction are dealing with each other at arm
'
s length in relation to the transaction.
(a) any agreement, arrangement, understanding, promise or undertaking, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings; and
(b) any scheme, plan, proposal, action, course of action or course of conduct, whether there are 2 or more parties or only one party involved.
associate
has the same meaning as in Part
X
.
associated entity
, in relation to a company, means either of the following entities:
(a) a shareholder in the company;
(b) an entity who is an associate of a shareholder in the company.
CFC
has the same meaning as in PartX
.
distribution benefit
has the meaning given by subsection (3) of this section.
(a) in relation to a company, means any of the following:
(i) a share, or an interest in a share, in the company;
(ii) a right to acquire a share, or an interest in a share, in the company;
(iii) an option to acquire a share, or an interest in a share, in the company; or
(b) in relation to a unit trust, means any of the following:
(i) a unit, or an interest in a unit, in the unit trust;
(ii) a right to acquire a unit, or an interest in a unit, in the unit trust;
(iii) an option to acquire a unit, or an interest in a unit, in the unit trust.
entity
has the same meaning as in Part
X
.
(a) an advance of money; and
(b) the provision of credit or any other form of financial accommodation; and
(c) the payment of an amount for, on account of, on behalf or at the request of an entity where there is an obligation (whether expressed or implied) to repay the amount; and
(d) a transaction (whatever its terms or form) which in substance effects a loan of money.
property
has the same meaning as in Division
6AAA
.
services
has the same meaning as in Division
6AAA
.
statutory accounting period
has the same meaning as in Part
X
.
transfer
has the same meaning as in Division
6AAA
.
Division 3 - Deductions
Where:
(a) an amount is included in the assessable income of a taxpayer of a year of income by section 102-5 of the Income Tax Assessment Act 1997 (about net capital gains) or subsection 124ZZB(1) of this Act (about notional capital gains of PDFs);
(b) a deduction would, but for this section, be allowable under a provision listed in the table in subsection (2) to the taxpayer; and
(c) if the amount had not been included in the assessable income the deduction would not be allowable;
the deduction is not allowable.
The table lists provisions allowing deductions that are affected by subsection (1). 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 .
| Deduction provisions affected by net capital gains limit | ||
| Item | Provision | Description |
| 1 | Subdivision A of Division 3 of Part III | General |
| . | ||
| 2 | section 8-1 | General deductions |
| . | ||
| 3 | Division 25 | Some expenses you can deduct |
| . | ||
| 4 | Division 30 | Gifts or contributions |
| . | ||
| 5 | Division 34 | Non-compulsory uniforms |
| . | ||
| 6 | Division 36 | Tax losses of earlier income years |
| . | ||
| 7 | Subdivision 40-F | Facilities to conserve or convey water |
| . | ||
| 8 | Subdivision 40-F | Establishing grapevines |
| . | ||
| 9 | Subdivision 40-G | Landcare operations |
| . | ||
| 10 | Subdivision 40-G | Mains electricity supply |
| . | ||
| 11 | Subdivision 40-G | Telephone lines |
| . | ||
| 12 | Division 165 | Income tax consequences of changing ownership or control of a company |
| . | ||
| 13 | Subdivision 170-A | Transfer of tax losses within wholly-owned groups of companies |
| . | ||
| 14 | Division 230 | Financial arrangements |
SECTION 51AD DEDUCTIONS NOT ALLOWABLE IN RESPECT OF PROPERTY USED UNDER CERTAIN LEVERAGED ARRANGEMENTS 51AD(1)
In this section:
(a) any agreement, arrangement, understanding, promise or undertaking, whether express or implied, and whether or not enforceable, or intended to be enforceable, by legal proceedings; and
(b) any scheme, plan, proposal, action, course of action or course of conduct, whether unilateral or otherwise.
associate
has the same meaning in relation to a person as that expression has in relation to a person in section
318
.
construction
includes manufacture.
control
means effectively control.
goods
includes whatever is capable of being owned or used.
hire-purchase agreement
means a hire purchase agreement to which Division
240
of the
Income Tax Assessment Act 1997
applies.
lease
, in relation to property, includes:
(a) any arrangement under which a right to use the property is granted by the owner to another person; and
(b) any arrangement under which a right to use the property, being a right derived directly or indirectly from a right referred to in paragraph (a), is granted by a person to another person;
but does not include a hire-purchase agreement.
owner
, in relation to property, includes a person who has taken, and holds, the property on hire under a hire-purchase agreement.
person
includes a person in the capacity of a trustee.
prescribed time
means one o
'
clock in the afternoon, by standard time in the Australian Capital Territory, on 24 June 1982.
Note:
This section applies to deductions under Division 40 (Capital allowances) and Division 43 (Capital works) of the Income Tax Assessment Act 1997 as if you were the owner of an asset you hold (under that Division) instead of any other person: see section 40-135 of that Act.
51AD(1A)
This section does not apply to property that is put to a tax preferred use (within the meaning of the Income Tax Assessment Act 1997 ) if the tax preferred use:
(a) starts on or after 1 July 2007; and
(b) does not occur under a legally enforceable arrangement entered into before 1 July 2007.
51AD(1B)
This section does not apply to property that is put to a tax preferred use (within the meaning of the Income Tax Assessment Act 1997 ) if:
(a) the tax preferred use starts on or after 1 July 2007; and
(b) the tax preferred use occurs under a legally enforceable arrangement that was entered into before 1 July 2007; and
(c) an election is made under item 71 of Schedule 1 to the Tax Laws Amendment (2007 Measures No. 5) Act 2007 to have subitem 71(2) of that Schedule apply to the property.
51AD(1C)
This section does not apply to property on or after 1 July 2007 if:
(a) Division 16D applied to the property immediately before 1 July 2007; or
(b) this section did not apply to the property immediately before 1 July 2007 and Division 16D would apply to the property on or after 1 July 2007 but for subsection 159GH(2) .
For the purposes of applying paragraph (b), disregard the operation of section 159GL .
51AD(1D)
Subparagraph (4)(a)(iii) and sub-subparagraph (4)(b)(ii)(D) do not apply to property acquired by a taxpayer if:
(a) the property is acquired by the taxpayer on or after 1 July 2007; and
(b) the property is not acquired under a legally enforceable arrangement entered into before 1 July 2007.
51AD(2)
In this section, a reference to the acquisition of property by a person is a reference to:
(a) the person becoming the owner of the property; or
(b) the construction of the property for the person by another person or other persons on premises of the first-mentioned person.
51AD(3)
In this section, a reference to property being held for use includes a reference to property that is installed ready for use and held in reserve.
51AD(3A)
(Repealed by No 77 of 2001)
51AD(3B)
For the purpose of this section, disregard an acquisition or disposal of property by way of the transfer of the property for the provision or redemption of a security. Consequently this section applies as if the person who was the owner of the property before the transfer continues to be the owner after the transfer.
51AD(4)
Subject to subsections (1A), (1B), (1C), (1D) and (8), this section applies, in relation to a taxpayer, to property acquired or constructed by the taxpayer, being property acquired by the taxpayer under a contract entered into after the prescribed time or property constructed by the taxpayer, construction having commenced after that time, if:
(a) at a time when the property is owned by the taxpayer, a person (which person is in this section referred to as the end-user ) holds rights as lessee under a lease of the property, and:
(i) in a case where the end-user is not a resident of Australia - while the lease is in force, the property is, or is to be, used by a person other than the taxpayer wholly or principally outside Australia;
(ii) while the lease is in force, the property is, or is to be, used by a person other than the taxpayer otherwise than wholly and exclusively for the purpose of producing assessable income; or
(iii) in a case where the property was acquired by the taxpayer - the property was, prior to its acquisition by the taxpayer, owned, and used or held for use, by the end-user; or
(b) in a case to which paragraph (a) does not apply:
(i) at a time when the property is owned by the taxpayer, the property is, or is to be, used (whether or not by the taxpayer) wholly or partly in or in connection with the production, supply, carriage, transmission or delivery of goods or the provision of services; and
(ii) a person other than the taxpayer (which person is in this section also referred to as the end-user ) controls, will control, or is or will be able to control, directly or indirectly, that use of the property, and:
(A) in a case where the end-user is not a resident of Australia - that use of the property takes place, or is to take place, wholly or principally outside Australia;
(B) in a case where some or all of the goods are, or are to be, produced for the end-user or supplied, carried, transmitted or delivered to or for the end-user, or some or all of the services are, or are to be, provided to or for the end-user - any of those goods or services are, or are to be, used by the end-user otherwise than wholly and exclusively for the purpose of producing assessable income;
(C) in relation to the production, supply, carriage, transmission or delivery of goods, or the provision of services, as mentioned in subparagraph (i), the end-user derives, or is to derive, no income or income that is wholly or partly exempt from income tax; or
(D) in a case where the property was acquired by the taxpayer - the property was, prior to its acquisition by the taxpayer, owned, and used or held for use, by the end-user.
51AD(5)
In subparagraph (4)(a)(iii) and sub-subparagraph (4)(b)(ii)(D), a reference to the end-user is a reference to the end-user, any of the end-users (where there are 2 or more end-users), any associate of the end-user or of any of those end-users, or any 2 or more such persons.
51AD(6)
For the purposes of subsection (4), property shall be taken not to have been, prior to its acquisition by the taxpayer, owned, and used or held for use, by a person if:
(a) the property was first used or held for use by the person at a time within 6 months before the acquisition of the property by the taxpayer; and
(b) at that time there was in existence an arrangement that the property would be sold to another person and leased by that person to the first-mentioned person.
51AD(7)
Where:
(a) the end-user consists of all or any of the partnersin a partnership; and
(b) a condition of paragraph (4)(a) or (b), as the case may be, is satisfied in relation to any of the partners in the partnership;
that condition shall be taken to be satisfied in relation to all the partners in the partnership.
51AD(8)
This section does not apply to property, in relation to a taxpayer, unless the whole or a predominant part of the cost of the acquisition or construction, as the case may be, of the property by the taxpayer is financed directly or indirectly by a debt or debts (which debt is, or debts are, referred to in this subsection as the non-recourse debt ) and the rights of the creditor or creditors as against the taxpayer in the event of default in the repayment of principal or payment of interest:
(a) are limited wholly or predominantly to any or all of the following:
(i) rights (including the right to moneys payable) in relation to any or all of the following:
(A) the property or the use of the property;
(B) goods produced, supplied, carried, transmitted or delivered, or services provided, by means of the property;
(C) the loss or disposal of the whole or a part of the property or of the taxpayer ' s interest in the property;
(ii) rights in respect of a mortgage or other security over the property;
(iii) rights arising out of any arrangement relating to the financial obligations of the end-user of the property towards the taxpayer, being financial obligations in relation to the property;
(b) are in the opinion of the Commissioner capable of being so limited, having regard to either or both of the following:
(i) the assets of the taxpayer;
(ii) any arrangement to which the taxpayer is a party; or
(c) where paragraphs (a) and (b) do not apply - are limited by reason that not all of the assets of the taxpayer (not being assets that are security for debts of the taxpayer other than the non-recourse debt) would be available for the purpose of the discharge of the whole of the non-recourse debt (including the payment of interest) in the event of any action or actions by the creditor or creditors against the taxpayer arising out of that debt.
51AD(9)
Where:
(a) property has been financed by a debt or debts as mentioned in subsection (8); and
(b) the rights of the creditor or creditors as against the taxpayer are, or are capable of being, limited as mentioned in that subsection;
the Commissioner may treat those rights as not being, or capable of being, so limited if the Commissioner is of the opinion, having regard to the circumstances in which the debt was, or debts were, incurred and any other matters that the Commissioner thinks relevant, that it would be reasonable to do so.
51AD(10)
Subject to subsections (11), (12), (13) and (15), where this section has applied to property, in relation to a taxpayer, at any time, the taxpayer shall be deemed not to have occupied or used the property, or held the property for use, at that time, for the purpose of producing assessable income or in carrying on a business for that purpose.
51AD(11)
Where this section has applied to property, in relation to a taxpayer, at any time during a year of income by reason of subparagraph (4)(a)(ii) or sub-subparagraph (4)(b)(ii)(B), and for any part of that time the end-user held, occupied or used the property referred to in that subparagraph, or held it for use, or used any goods or services referred to in that sub-subparagraph, as the case may be, partly for the purpose of producing assessable income, the taxpayer shall be deemed, for the whole of the time during the year of income when this section applied to the property, to have held, occupied or used the property, or held it for use, for the purpose of producing assessable income, or in carrying on a business for that purpose, to the extent thatthe Commissioner considers appropriate.
51AD(12)
Where this section has applied to property, in relation to a taxpayer, at any time during a year of income by reason of sub-subparagraph (4)(b)(ii)(C), and for any part of that time the end-user derived assessable income in relation to the production, supply, carriage, transmission or delivery of goods, or the provision of services, as mentioned in subparagraph (4)(b)(i), the taxpayer shall be deemed, for the whole of the time during the year of income when this section applied to the property, to have held, occupied or used the property, or held it for use, for the purpose of producing assessable income, or in carrying on a business for that purpose, to the extent that the Commissioner considers appropriate.
51AD(13)
Where:
(a) this section has applied to property, in relation to a taxpayer, at any time during a year of income by reason of subparagraph (4)(a)(ii) or sub-subparagraph (4)(b)(ii)(B) or (C);
(b) the end-user referred to in that subparagraph or sub-subparagraph, as the case may be, consisted of all or any of the partners in a partnership; and
(c) for any part of that time one or more of the partners in the partnership was a person in respect of whom, but for the operation of subsection (7), that subparagraph or sub-subparagraph, as the case may be, would not have applied;
the taxpayer shall be deemed, for the whole of the time during the year of income when this section applied to the property, to have held, occupied or used the property, or held it for use, for the purpose of producing assessable income, or in carrying on a business for that purpose, to the extent that the Commissioner considers appropriate.
51AD(14)
In considering, for the purposes of subsection (13), the extent to which the taxpayer shall be deemed to have held, occupied or used property, or held it for use, for the purpose of producing assessable income, or in carrying on a business for that purpose, the Commissioner shall have regard:
(a) to the interest or interests of the partner or partners referred to in paragraph (13)(c) in the net income, or the partnership loss, of the partnership of the year of income corresponding to the year of income referred to in paragraph (13)(a);
(b) the extent to which, for any part of the time referred to in paragraph (13)(a), a partner or partners other than the partner or partners referred to in paragraph (13)(c) held, occupied or used the property, or held it for use, or used the goods or services referred to in sub-subparagraph (4)(b)(ii)(B), as the case may be, for the purpose of producing assessable income; and
(c) the extent to which, for any part of the time referred to in paragraph (13)(a), a partner or partners other than the partner or partners referred to in paragraph (13)(c) derived assessable income in relation to the production, supply, carriage, transmission or delivery of goods, or the provision of services, as mentioned in subparagraph (4)(b)(i).
51AD(15)
Notwithstanding anything contained in subsections (10), (11) and (13), at any time when this section applies to property by reason of subparagraph (4)(a)(ii), the property shall be deemed not to be held, occupied or used, or held for use, by the taxpayer for the purpose of producing assessable income, or in carrying on a business for that purpose, if, at that time:
(a) 2 or more end-users hold rights as lessees under the lease of the property;
(b) one or more of the end-users (which end-user is, or end-users are, referred to in this subsection as the exempt end-user ) is a company, or are companies, the income of which is ordinarily exempt from income tax;
(c) the property is, or is to be, used wholly or principally in or in connection with the conduct of operations or transactions of a kind that the exempt end-user ordinarily engages in;
(d) the exempt end-user controls, will control, or is or will be able to control, directly or indirectly, that use of the property; and
(e) in relation to those operations or transactions, the exempt end-user derives, or is to derive, no income or income that is exempt from income tax.
51AD(16)
Where a taxpayer has incurred expenditure for repairs to property to which this section applies or has applied in relation to the taxpayer and, but for this section, a deduction would be allowable under section 25-10 (Repairs) of the Income Tax Assessment Act 1997 in respect of that expenditure, so much of the expenditure as the Commissioner considers appropriate shall be deemed not to be allowable, having regard to:
(a) the period for which the taxpayer owned the property before the repairs were commenced and any part of that period during which this section applies or applied to the property in relation to the taxpayer; and
(b) in a case to which subsection (11), (12) or (13) of this section applies or applied - the extent to which, for the time during the part of the period referred to in paragraph (a), the taxpayer was deemed to have held, occupied or used the property, or held it for use, for the purpose of producing assessable income, or in carrying on a business for that purpose.
51AD(17)
Where a taxpayer has incurred expenditure in borrowing money to finance the acquisition or construction of property to which this section applies or has applied in relation to the taxpayer and a deduction has been allowed, or would but for this section be allowable, under section 25-25 (Borrowing expenses) of the Income Tax Assessment Act 1997 in relation to that expenditure, so much of the deduction as the Commissioner considers appropriate shall be deemed not to have been, or not to be, allowable, as the case may be, having regard to:
(a) the period for which the money was borrowed or, by the operation of subsection 25-25(6) of that Act, is deemed to have been borrowed and any part of that period during which this section applies, applied or, in the opinion of the Commissioner, will apply to the property; and
(b) in a case to which subsection (11), (12) or (13) of this section applies or applied - the extent to which, for the time during the part of the period referred to in paragraph (a), the taxpayer is, or in the opinion of the Commissioner will be, deemed to have held, occupied or used the property, or held it for use, for the purpose of producing assessable income, or in carrying on a business for that purpose.
51AD(18)
Where a taxpayer has incurred expenditure for the preparation, registration and stamping of a lease, or of an assignment or surrender of a lease, of property to which this section applies or has applied in relation to the taxpayer and a deduction has been allowed, or would but for this section be allowable, under section 25-20 (Lease document expenses) of the Income Tax Assessment Act 1997 in respect of that expenditure, so much of the deduction as the Commissioner considers appropriate shall be deemed not to have been, or not to be, allowable, as the case may be, having regard to:
(a) the period of the lease and any part of that period during which this section applies, applied or, in the opinion of the Commissioner, will apply to the property; and
(b) in a case to which subsection (11), (12) or (13) of this section applies or applied - the extent to which, for the time during the part of the period mentioned in paragraph (a), the taxpayer is, or in the opinion of the Commissioner will be, deemed to have held, occupied or used the property, or held it for use, for the purpose of producing assessable income, or in carrying on a business for that purpose.
51AD(19)
Where:
(a) the individual interest of a taxpayer in the net income of a partnership has been or is to be included in the assessable income of the taxpayer of a year of income (in this subsection referred to as the relevant year of income ), or the individual interest of a taxpayer in a partnership loss has been allowed or is allowable as a deduction from the assessable income of the taxpayer of a year of income (in this subsection also referred to as the relevant year of income );
(b) a deduction was taken into account in calculating that net income or partnership loss;
(c) the deduction or a part of the deduction (which deduction or part of the deduction, as the case may be, is referred to in this subsection as the relevant deduction ) would not have been taken into account for the purpose of that calculation if this section applied in relation to particular property acquired or constructed by the partnership;
(d) this section does not apply in relation to the property by reason only that the property was acquired by the partnership under a contract entered into at or before the prescribed time or was constructed by the partnership, construction having commenced at or before that time; and
(e) the taxpayer became a partner in the partnership under a contract entered into by the taxpayer after the prescribed time;
there shall be included in the assessable income of the taxpayer of the relevant year of income an amount that bears to the amount of the relevant deduction the same proportion as the individual interest of the taxpayer in that net income bears to that net income or, as the case requires, as the individual interest of the taxpayer in that partnership loss bears to that partnership loss.
51AD(20)
Where:
(a) the individual interest of a taxpayer in the net income of a partnership has been or is to be included in the assessable income of the taxpayer of a year of income (in this subsection referred to as the relevant year of income ), or the individual interest of a taxpayer in a partnership loss has been allowed or is allowable as a deduction from the assessable income of the taxpayer of a year of income (in this subsection also referred to as the relevant year of income );
(b) a deduction was taken into account in calculating that net income or partnership loss;
(c) the deduction or a part of the deduction (which deduction or part of the deduction, as the case may be, is referred to in this subsection as the relevant deduction ) would not have been taken into account for the purpose of that calculation if this section applied in relation to particular property acquired or constructed by the partnership;
(d) this section does not apply in relation to the property by reason only that the property was acquired by the partnership under a contract entered into at or before the prescribed time or was constructed by the partnership, construction having commenced at or before that time;
(e) the taxpayer became a partner in the partnership under a contract entered into by the taxpayer before the prescribed time; and
(f) after the prescribed time, the taxpayer made or agreed to make a contribution or contributions (which contribution is or contributions are in this subsection referred to as the additional contribution ) to the capital of the partnership in addition to any contribution or contributions to the capital of the partnership that, under a contract or contracts entered into at or before that time, the taxpayer had made or agreed to make; and
(g) by reason of making or agreeing to make the additional contribution, the individual interest of the taxpayer in that net income or partnership loss, being that individual interest expressed as a fraction of the aggregate of the individual interests of the partners in that net income or partnership loss, is greater than it would otherwise have been;
there shall be included in the assessable income of the taxpayer of the relevant year of income an amount ascertained in accordance with the formula A ( B − C ), where:
A is the amount of the relevant deduction;
B is the individual interest of the taxpayer in that net income or partnership loss, being that individual interest expressed as a fraction of the aggregate of the individual interests of the partners in that net income or partnership loss; and
C is the fraction that would be B if another partner, and not the taxpayer, had made or agreed to make the additional contribution.
51AD(21)
For the purposes of determining if this section applies to property, the income of a prescribed excluded STB (within the meaning of Division 1AB ) is taken to be exempt.
SECTION 51AEA MEAL ENTERTAINMENT - ELECTION UNDER SECTION 37AA OF FRINGE BENEFITS TAX ASSESSMENT ACT 1986 TO USE 50/50 SPLIT METHOD 51AEA(1) [Allowable deductions]
If a meal entertainment fringe benefit arises for a taxpayer for an FBT year and the taxpayer elects that Division 9A of Part III of the Fringe Benefits Tax Assessment Act 1986 applies to the taxpayer for the FBT year, and has not elected that Subdivision C of that Division applies:
(a) for each expense incurred in the FBT year by the taxpayer in providing meal entertainment, a deduction equal to 50% of that expense is allowable to the taxpayer for the year of income in which it is incurred; and
(b) no other deduction under any provision of this Act is allowable to the taxpayer for the expense. 51AEA(2) [Meaning of expressions used]
Expressions used in this section have the same meaning as in the Fringe Benefits Tax Assessment Act 1986 .
If a taxpayer has made an election under section 37CA of the Fringe Benefits Tax Assessment Act 1986 :
(a) for each expense incurred in the FBT year by the taxpayer in providing meal entertainment, a deduction equal to the amount worked out using the following formula is allowable to the taxpayer for the year of income in which it is incurred:
| Amount of expense × Register percentage |
(b) no other deduction under any provision of this Act is allowable to the taxpayer for the expense.
51AEB(2)
The register percentage is the percentage worked out using the formula:
|
Total deductions for register meal entertainment
Total register meal entertainment expenses |
× | 100% |
where:
Total deductions for register meal entertainment means the total of deductions that would (but for this section and section 51AEA ) be allowable to the taxpayer for expenses incurred by the taxpayer in providing meal entertainment in the 12 week period covered by the register kept by the employer under Subdivision C of Division 9A of the Fringe Benefits Tax Assessment Act 1986 .
Total register meal entertainment expenses means the total of expenses incurred by the taxpayer in providing meal entertainment during that 12 week period.
51AEB(3)
Expressions used in this section have the same meaning as in the Fringe Benefits Tax Assessment Act 1986 .
SECTION 51AEC ENTERTAINMENT FACILITY - ELECTION UNDER SECTION 152B OF FRINGE BENEFITS TAX ASSESSMENT ACT 1986 TO USE 50/50 SPLIT METHOD 51AEC(1) [Allowable deductions]
If a taxpayer has made an election under section 152B of the Fringe Benefits Tax Assessment Act 1986 :
(a) for each entertainment facility leasing expense incurred in the FBT year by the taxpayer, a deduction equal to 50% of that expense is allowable to the taxpayer for the year of income in which it is incurred; and
(b) no other deduction under any provision of this Act is allowable to the taxpayer for entertainment facility leasing expenses incurred in the FBT year. 51AEC(2) [Meaning of expressions used]
Expressions used in this section have the same meaning as in the Fringe Benefits Tax Assessment Act 1986 .
Where:
(a) during a particular period, an employer provides a car for the exclusive use of a person who is, or of persons any of whom is, an employee of the employer or a relative of such an employee; and
(b) at any time during that period, the employee or a relative of the employee is entitled to use the car for private purposes;
a deduction is not allowable under this Act in respect of a car expense that relates to the car and:
(c) is incurred by the employee during that period; or
(d) is incurred by the employee and is wholly or partly attributable to that period.
51AF(2)
In this section:
car
has the meaning given by section
995-1
of the
Income Tax Assessment Act 1997
, but does not include a car covered by section
28-165
of that Act.
car expense
has the meaning given by section
28-13
of the
Income Tax Assessment Act 1997
, but does not include a car expense covered by section
28-165
of that Act.
employee
means a person who receives, or is entitled to receive, work and income support related withholding payments and benefits.
employer
means a person who pays or is liable to pay work and income support related withholding payments and benefits, and includes:
(a) in the case of an unincorporate body of persons other than a partnership - the manager or other principal officer of that body; and
(b) in the case of a partnership - each partner; and
(c) an Australian government agency as defined in subsection 995-1(1) of the Income Tax Assessment Act 1997 .
SECTION 51AGA NO DEDUCTION TO EMPLOYEE FOR CERTAIN CAR PARKING EXPENSES 51AGA(1) No deduction.
A deduction is not allowable to an employee under this Act in respect of expenditure to the extent to which it is incurred in respect of the provision of car parking facilities for a car on a day if:
(a) on that day, the employee has a primary place of employment; and
(b) on that day, the car is parked for one or more daylight periods exceeding 4 hours in total at, or in the vicinity of, that primary place of employment; and
(c) the expenditure is in respect of the provision of the parking facilities to which that parking relates; and
(d) on that day, the car was used in connection with travel by the employee between:
(i) the place of residence of the employee; and
(ii) that primary place of employment; and
(e) the provision of parking facilities for the car during the period or periods is not taken, under the regulations, to be excluded from this section; and
(f) the day is on or after 1 July 1993. 51AGA(2) Definitions.
In this section:
car
has the same meaning as in the
Fringe Benefits Tax Assessment Act 1986
.
daylight period
has the same meaning as in the
Fringe Benefits Tax Assessment Act 1986
.
employee
has the same meaning as in the
Fringe Benefits Tax Assessment Act 1986
.
place of residence
has the same meaning as in the
Fringe Benefits Tax Assessment Act 1986
.
primary place of employment
has the same meaning as in the
Fringe Benefits Tax Assessment Act 1986
.
(Repealed by No 16 of 1999)
Where:
(a) either of the following subparagraphs applies:
(i) a person makes a payment in discharge, in whole or in part, of an obligation of the taxpayer to pay an amount to a third person in respect of an amount of a loss or outgoing incurred by the taxpayer;
(ii) a person reimburses the taxpayer, in whole or in part, in respect of an amount of a loss or outgoing incurred by the taxpayer;
(b) the payment or reimbursement, as the case may be, constitutes:
(i) a fringe benefit; or
(ii) a benefit that, but for paragraph (g) of the definition of fringe benefit in subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986 , would be a fringe benefit; and
(c) in the case of a reimbursement - the amount of the reimbursement is not included in the taxpayer's assessable income under section 15-70 of the Income Tax Assessment Act 1997 ;
the amount of the deduction that, but for this section, has been allowed or would be allowable in respect of the loss or outgoing shall be:
(d) if it would be concluded that the amount of the payment or reimbursement would have been the same even if the loss or outgoing were not incurred in producing assessable income of the taxpayer - calculated as if the loss or outgoing were reduced by the amount of the payment or reimbursement; or
(e) in any other case - reduced by the amount of the payment or reimbursement.
51AH(2)
Expressions (other than " fringe benefit " ) used in this section and in the Fringe Benefits Tax Assessment Act 1986 have the same respective meanings in this section as they have in that Act.
51AH(3)
This section does not apply to deductions under Division 40 of the Income Tax Assessment Act 1997 (about capital allowances).
SECTION 51AJ DEDUCTIONS NOT ALLOWABLE FOR PRIVATE COMPONENT OF CONTRIBUTIONS FOR FRINGE BENEFITS ETC. 51AJ(1)
Where:
(a) any of the following benefits is provided in respect of the employment of an employee of an employer:
(i) an airline transport benefit;
(ii) a board benefit;
(iii) a loan benefit;
(iv) a property benefit;
(v) a residual benefit;
(b) the benefit is:
(i) a fringe benefit; or
(ii) a benefit that, but for paragraph (g) of the definition of fringe benefit in subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986 , would be a fringe benefit;
(c) in the case of a loan benefit - the taxpayer, being the recipient or the employee, incurs interest (in this section called the recipients interest ) in respect of the loan;
(d) in the case of a benefit other than a loan benefit - the taxpayer, being the recipient or the employee, incurs consideration (in this section called the recipients contribution ) to the provider or to the employer in respect of the provision of the recipients transport, the recipients meal, the recipients property or the recipients benefit, as the case may be;
(e) it would be concluded that, in calculating the amount of the recipients interest, or the amount of the recipients contribution, as the case may be, the provider or the employer made an allowance for a particular level of application or use of the benefit in producing assessable income of the taxpayer; and
(f) it would be concluded that the amount of the recipients interest, or the amount of the recipients contribution, as the case may be, would have been greater if it had been calculated without making that allowance;
the following provisions have effect:
(g) if the extent of the application or use of the benefit concerned in producing assessable income of the taxpayer is equal to, or less than, that level - a deduction is not allowable to the taxpayer under this Act in respect of the recipients interest or the recipients contribution;
(h) if the extent of the application or use of the benefit concerned in producing assessable income of the taxpayer exceeds that level - the amount of the deduction that, but for this section, has been allowed or would be allowable to the taxpayer under this Act in respect of the recipients interest or the recipients contribution shall not exceed the amount calculated in accordance with the formula:
| D − A |
where:
D is the amount of the deduction that, but for this section, would have been allowable to the taxpayer under this Act in respect of the amount of the recipients interest or the amount of the recipients contribution if it had been calculated without making that allowance; and A is the amount of that allowance.
51AJ(2)
Expressions (other than " recipients contribution " and " fringe benefit " ) used in this section and in the Fringe Benefits Tax Assessment Act 1986 have the same respective meanings in this section as they have in that Act.
SECTION 51AK AGREEMENTS FOR THE PROVISION OF NON-DEDUCTIBLE NON-CASH BUSINESS BENEFITS 51AK(1)
Subject to this section, where:
(a) under an agreement:
(i) a taxpayer incurs expenditure; and
(ii) a non-cash business benefit is provided to the taxpayer or another person; and
(b) that benefit is not exclusively for use or application for the purpose of producing assessable income of the taxpayer;
the taxpayer shall be treated, for the purposes of this Act, as if so much of the expenditure as does not exceed the arm's length value of the benefit had been incurred by the taxpayer exclusively in respect of that benefit.
51AK(2)
This section does not apply so as to treat particular expenditure, or the cost of particular property, to be a particular amount for a particular purpose if there is another provision of this Act that deems that expenditure, or the cost of that property, to be a lesser amount for that purpose.
51AK(3)
A reference in this section to producing assessable income includes a reference to:
(a) gaining assessable income; or
(b) carrying on a business for the purpose of gaining or producing assessable income.
51AK(4)
Expressions used in this section and in section 21A have the same respective meanings in this section as they have in that section.
51AK(5)
In this section:
agreement
means any agreement, arrangement or understanding, whether formal or informal, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings.
expenditure
includes a loss or outgoing.
FORMER SECTION 51A 51A DEDUCTION IN RESPECT OF LIVING-AWAY-FROM-HOME ALLOWANCES
(Repealed by No 41 of 1986)
This section does not apply to a loss arising in the 1997-98 year of income or a later year of income from the carrying on or carrying out of a profit-making undertaking or scheme, even if the undertaking or scheme was entered into, or began to be carried on or carried out, before the 1997-98 year of income.
Note:
Section 25-40 (Loss from profit-making scheme) of the Income Tax Assessment Act 1997 deals with such a loss.
52(1A)
This section does not apply in respect of the sale of property acquired on or after 20 September 1985.
52(1)
Any loss incurred by the taxpayer in the year of income upon the sale of any property or from the carrying on or carrying out of any undertaking or scheme, the profit (if any) from which sale, undertaking or scheme would have been included in the taxpayer's assessable income, shall be an allowable deduction:
Provided that, in respect of property acquired by the taxpayer after the date of the commencement of this proviso, no deduction shall be allowable under this section (except where the Commissioner, being satisfied that the property was acquired by the taxpayer for the purpose of profit-making by sale or for the carrying on or carrying out of any profit-making undertaking or scheme, otherwise directs) unless the taxpayer, not later than the date upon which he or she lodges his or her first return under this Act after having acquired the property, notifies the Commissioner that the property has been acquired by the taxpayer for the purpose of profit-making by sale or for the carrying on or carrying out of any profit-making undertaking or scheme.
52(2)
Where:
(a) a taxpayer sells property (in this subsection referred to as the relevant property ) that is deemed by subsection 25A(5) or (8) to have been acquired by the taxpayer for the purpose of profit-making by sale;
(b) the Commissioner is satisfied that the relevant property has not been held or used by the taxpayer in a manner inconsistent with such a purpose; and
(c) the Commissioner, having regard to:
(i) the amount of the consideration paid by the person who transferred the relevant property or, in a case to which subsection 25A(8) applies, the property referred to in paragraph 25A(8)(b) , to the taxpayer in respect of the purchase of the property so transferred; and
considers that it is appropriate that a loss be deemed to be incurred by the taxpayer upon the sale of the relevant property;
(ii) such other matters as the Commissioner considers relevant;
the taxpayer shall be deemed, for the purposes of this section, to have incurred a loss upon the sale of the relevant property of such amount as the Commissioner considers appropriate.
52(3)
Except as provided by subsection (2), a deduction is not allowable to a taxpayer under this section in respect of a loss incurred upon a sale of property to which paragraph (2)(a) applies.
52(4)
Where:
(a) a loss is incurred by a taxpayer upon the sale of property (in this subsection referred to as the relevant property ); and
(b) the taxpayer is deemed to have acquired the relevant property for the purpose of profit-making by sale by virtue of the application of subsection 25A(6) in accordance with subparagraph (b)(ii) of that subsection,
the deduction that would, but for this subsection, be allowable to the taxpayer under subsection (1) in respect of the loss shall be reduced by such amount (if any) as the Commissioner considers reasonable having regard to the extent to which the relevant property is attributable to the interest in property that was acquired by the taxpayer for the purpose of profit-making by sale as mentioned in that subparagraph.
52(5)
A deduction is not allowable to a taxpayer under subsection (1) in respect of a loss incurred by the taxpayer upon the sale of property if:
(a) the sale is a transfer in the prescribed manner by the taxpayer for the purposes of section 25A ; or
(b) the property is deemed by subsection 25A(2) to have been acquired by the taxpayer for the purposes of profit-making by sale and was not actually acquired by the taxpayer for that purpose.
SECTION 52A CERTAIN AMOUNTS DISREGARDED IN ASCERTAINING TAXABLE INCOME 52A(1)
Notwithstanding section 8-1 of the Income Tax Assessment Act 1997 , losses or outgoings consisting of expenditure incurred by a taxpayer in the purchase or acquisition, after 7 April 1978, of any prescribed property as trading stock of the taxpayer shall, if the Commissioner considers that it would be unreasonable that a deduction be allowable to the taxpayer in respect of the whole of those losses or outgoings, be allowable as a deduction to the taxpayer to theextent only that the Commissioner considers that it is reasonable in the circumstances that a deduction be allowable to the taxpayer in respect of those losses or outgoings.
52A(2)
Where:
(a) expenditure incurred by a taxpayer in the purchase or acquisition, after 7 April 1978, of any prescribed property that was purchased or acquired in the carrying on or carrying out of any profit-making undertaking or scheme would, but for this subsection, be taken into account for the purpose of ascertaining whether any profit arose, or any loss was incurred, from the carrying on or carrying out of the undertaking or scheme and for the purpose of ascertaining the amount of any such profit or loss; and
(b) the Commissioner considers that it would be unreasonable that the whole of that expenditure be taken into account for those purposes;
that expenditure shall be taken into account for those purposes to the extent only that the Commissioner considers that it is reasonable in the circumstances that the expenditure be taken into account for those purposes.
52A(2A)
Where:
(a) prescribed property that was acquired by a taxpayer after 24 September 1978 and before the commencement of this subsection or is acquired after the commencement of this subsection was or is treated or used by the taxpayer as an asset of a business carried on by the taxpayer;
(b) but for this subsection, a deduction would be allowable to the taxpayer in respect of the value of that property; and
(c) the Commissioner considers that it would be unreasonable that a deduction be allowable to the taxpayer in respect of the value of the property to the extent to which, but for this subsection, a deduction would be allowable to the taxpayer in respect of the value of the property;
a deduction shall be allowable to the taxpayer in respect of the value of the property to the extent only that the Commissioner considers that it is reasonable in the circumstances that a deduction be allowable to the taxpayer in respect of that value.
52A(2B)
Where:
(a) the value of any prescribed property that:
(i) was acquired by a taxpayer after 24 September 1978 and before the commencement of this subsection or is acquired after the commencement of this subsection; and
would, but for this subsection, be taken into account for the purpose of ascertaining whether or not any profit arose, or any loss was incurred, from the carrying on or the carrying out of the undertaking or scheme and for the purpose of ascertaining the amount of any such profit or loss; and
(ii) was or is used by the taxpayer in the carrying on or carrying out of any profit-making undertaking or scheme,
(b) the Commissioner considers that it would be unreasonable that the value of the property be taken into account for those purposes to the extent to which the value would, but for this subsection, be taken into account for those purposes;
the value of the property shall be taken into account for those purposes to the extent only that the Commissioner considers that it is reasonable in the circumstances that that value be taken into account for those purposes.
52A(3)
In forming an opinion for the purposes of subsection (1) or (2A) as to the extent to which it is reasonable that a deduction be allowable to a taxpayer in respect of expenditure incurred in the purchase or acquisition of prescribed property or in respect of the value of prescribed property, as the case may be, or in forming an opinion for the purposes of subsection (2) or (2B) as to the extent to which it is reasonable that expenditure incurred by a taxpayer in the purchase or acquisition of prescribed property should be taken into account for the purposes referred to in subsection (2) or that the value of prescribed property should be taken into account for the purposes referred to in subsection (2B), as the case may be:
(a) if the taxpayer expended moneys in purchasing or acquiring the prescribed property - the Commissioner shall have regard to the circumstances in which, and the person or persons from whom, the taxpayer obtained moneys:
(i) that were expended by the taxpayer in purchasing or acquiring the prescribed property; or
(ii) that, in the opinion of the Commissioner, were obtained by, or paid to, the taxpayer to enable the taxpayer to expend moneys in purchasing or acquiring the prescribed property;
(b) if the taxpayer borrowed from another person (in this paragraph referred to as the lender ) moneys that were expended by the taxpayer in purchasing or acquiring the prescribed property or moneys that, in the opinion of the Commissioner, were obtained by, or paid to, the taxpayer to enable the taxpayer to expend moneys in purchasing or acquiring the prescribed property - the Commissioner shall have regard to:
(i) the circumstances in which, and the terms and conditions on which, the taxpayer borrowed those moneys from the lender; and
(ii) whether, in the opinion of the Commissioner, the taxpayer and the lender were dealing with each other at arm ' s length in connexion with the borrowing of those moneys by the taxpayer;
(c) if, either before or after the purchase or acquisition of the prescribed property by the taxpayer, an agreement or arrangement (whether or not enforceable by legal proceedings and whether or not intended to be so enforceable) was entered into, or an understanding was reached, as a result of which there has been, or there could reasonably be expected to be, a substantial reduction in the value of the prescribed property - the Commissioner shall have regard to that agreement, arrangement or understanding;
(d) if the purchase or acquisition of the prescribed property by the taxpayer arose out of, or was made in the course of, a transaction, operation, undertaking, scheme or arrangement that was entered into or carried out for the purpose, or for purposes that included the purpose, of securing that a person who, if the transaction, operation, undertaking, scheme or arrangement, had not been entered into or carried out, would have been liable to pay income tax in respect of a year of income would not be liable to pay income tax in respect of that year of income or would be liable to pay less income tax in respect of that year of income than that person would have been liable to pay if the transaction, operation, undertaking, scheme or arrangement had not been entered into or carried out - the Commissioner shall have regard to that transaction, operation, undertaking, scheme or arrangement;
(e) if the purchase or acquisition of the prescribed property by the taxpayer arose out of, or was made in the course of, a transaction, operation, undertaking, scheme or arrangement that the Commissioner is satisfied was by way of dividend stripping or was similar to a transaction, operation, undertaking, scheme or arrangement by way of dividend stripping - the Commissioner shall have regard to that transaction, operation, undertaking, scheme or arrangement;
(f) if:
(i) the purchase or acquisition of the prescribed property by the taxpayer arose out of, or was made in the course of, a transaction, operation, undertaking, scheme or arrangement under which, or in the course of which, money was to be paid, or other property was to be transferred or made available by a person other than the taxpayer, whether before or after the purchase or acquisition of the prescribed property, to the taxpayer, to the taxpayer and a person or persons other than the taxpayer or to a person or persons other than the taxpayer;
the Commissioner shall have regard to the fact that the purchase or acquisition of the prescribed property by the taxpayer arose out of, or was made in the course of such a transaction, operation, undertaking, scheme or arrangement;
(ii) the Commissioner is satisfied that the amount of money so to be paid, or the value of the property so to be transferred or made available, as the case may be, was to be not less than, or not substantially less than, the amount expended by the taxpayer in the purchase or acquisition of the prescribed property;
(g) if the purchase or acquisition of the prescribed property by the taxpayer arose out of, or was made in the course of, a transaction, operation, undertaking, scheme or arrangement under which, or in the course of which, other prescribed property was to be issued or allotted by a company (whether to the taxpayer or any other person or persons) and it could reasonably be expected that, as a result of the issue or allotment of that other prescribed property, the value of the prescribed property purchased or acquired by the taxpayer would be substantially reduced - the Commissioner shall have regard to that transaction, operation, undertaking, scheme or arrangement;
(h) if the purchase or acquisition of the prescribed property by the taxpayer arose out of, or was made in the course of, a transaction, operation, undertaking, scheme or arrangement under which, or in the course of which, rights in respect of the prescribed property or in respect of other prescribed property (whether that other prescribed property had been issued or allotted before the time of the purchase or acquisition by the taxpayer of the first-mentioned prescribed property or was to be issued or allotted at a later time) were to be withdrawn or varied and it could reasonably be expected that, as a result of a withdrawal or variation of those rights, the value of the prescribed property purchased or acquired by the taxpayer would be substantially reduced - the Commissioner shall have regard to that transaction, operation, undertaking, scheme or arrangement; and
(j) the Commissioner shall have regard to any other matters that he or she considers relevant.
52A(4)
In this section, prescribed property means any chose in action.
52A(4A)
In the preceding provisions of this section, references to the value of any prescribed property shall, unless the contrary intention appears, be read as including references to part of the value of that prescribed property.
52A(5)
For the purposes of this section:
(a) a person to whom prescribed property is issued or allotted by a company shall be taken to have acquired that prescribed property;
(b) a person upon whom prescribed property devolves by reason of the death of a person shall be taken to have acquired that prescribed property; and
(c) a person in whom prescribed property vests by the operation of any trust or the exercise of any power under a trust shall be taken to have acquired that prescribed property.
52A(6)
The reference in paragraph (3)(b) to terms and conditions shall be read as including a reference to implied terms and conditions and to terms and conditions that are not enforceable by legal proceedings whether or not they were intended to be so enforceable.
52A(7)
Where, by virtue of the application of the preceding provisions of this section, the amount (in this subsection referred to as the relevant amount ) of the deduction that is allowable to a taxpayer in respect of losses or outgoings incurred by the taxpayer in the purchase or acquisition of prescribed property is less than the amount of those losses and outgoings, the cost of that prescribed property shall, for the purposes of the application of Divisions 70 (Trading Stock) and 385 (Primary production) of the Income Tax Assessment Act 1997 in relation to that property in relation to the taxpayer, be taken to be an amount that is the same as the relevant amount.
52A(8)
References in this section to expenditure incurred by a taxpayer in the purchase or acquisition of any prescribed property shall, in the case of prescribed property being a share or stock in the capital of a company, be read as including references to any payment made or other consideration given by the taxpayer to the company in respect of the prescribed property, whether as a payment of unpaid capital in respect of the prescribed property or otherwise and whether on application for or allotment of the prescribed property, to meet calls or otherwise.
52A(9)
Subsection (8) applies to a non-share equity interest in the same way as it applies to a share.
SECTION 63 63 BAD DEBTS
Where a debt in respect of the whole or a part of a payment that has, or will, become liable to be made under a qualifying security within the meaning of Division 16E is written off as a bad debt by a taxpayer during a year of income, then, for the purposes of paragraph 25-35(1)(a) of the Income Tax Assessment Act 1997 , there is taken to have been included in the taxpayer's assessable income of a year of income so much of the debt as equals the amount (if any) ascertained in accordance with the formula
| A − B |
where:
A is the amount (if any) or the sum of the amounts (if any) included in the assessable income of the taxpayer of any year or years of income under section 159GQ that is or are attributable to the payment or to the part of the payment, as the case requires; and
B is the amount (if any) or the sum of the amounts (if any) allowable as a deduction or deductions from the assessable income of the taxpayer of any year or years of income under section 159GQ that is or are attributable to the payment or to the part of the payment, as the case requires.
Subject to section 63F , if:
(a) apart from this section and section 63F , a deduction would be allowable to a taxpayer:
(i) under section 8-1 or 25-35 of the Income Tax Assessment Act 1997 in respect of the writing off of a debt as bad; or
(ii) under section 63E of this Act in respect of a debt/equity swap in relation to a debt; and
(b) the debt was created or acquired in the ordinary course of a money-lending business of the taxpayer who carries on that business; and
(c) during any part or parts (the foreign country branch period ) of the period since the debt was so created or acquired (the debt holding period ), it is the case that, if income had been derived by the taxpayer in respect of the debt, the income would not, because of section 23AH of this Act, have been included in the assessable income of the taxpayer;
then only a proportion of the deduction is allowable, being the proportion calculated using the formula:
|
Debt holding period
−
Foreign country branch period
Eligible debt term |
where:
debt holding period
means the number of days in the debt holding period.
(a) where the debt was acquired from a person other than an associate, within the meaning of section 318 of this Act - the number of days in the debt holding period; or
(b) in any other case - the number of days in the period beginning on the day on which the debt was created (whether by the taxpayer or another person) and ending at the end of the day on which it was written off.
foreign country branch period
means the number of days in the foreign country branch period.
Where a debt that is written off, or in respect of which there is a debt/equity swap (within the meaning of section 63E ), was acquired from another person, the creation, and any previous acquisition, of the debt is to be disregarded for the purposes of applying subsection (1), other than paragraph (b) of the definition of eligible debt term in subsection (1).
Where a part of a debt is written off as bad, this section applies as if the part were an entire debt that is written off as bad.
Meaning of debt/equity swap
63E(1)
For the purposes of this section, a debt/equity swap occurs if:
(a) under an arrangement (defined in subsection (6)), a taxpayer discharges, releases or otherwise extinguishes the whole or part of a debt owed to the taxpayer in return for the issue by the debtor to the taxpayer of shares (other than redeemable preference shares), or units, in the debtor; and
(b) the debtor is:
(i) a company; or
(ii) a trading trust (within the meaning of section 102N ), or a public unit trust (within the meaning of section 102P ), in relation to the year of income in which the units are issued; and
(c) the debt either:
(i) has been brought to account by the taxpayer as assessable income of any year of income; or
(ii) is in respect of money lent in the ordinary course of the business of the lending of money by the taxpayer who carries on that business.
Meaning of equity value and swap loss
63E(2)
For the purposes of this section:
(a) the equity value of the shares or units is the greater of:
(i) their market value at the time of their issue to the taxpayer; and
(ii) their value shown in the accounts of the taxpayer as at the time of their issue to the taxpayer; and
(b) a swap loss occurs if the amount of the whole or the part of the debt that is extinguished is greater than the equity value of the shares or units.
Swap loss is deductible etc
63E(3)
If a debt/equity swap occurs:
(a) subject to section 63F , any swap loss is allowable as a deduction from the taxpayer's assessable income of the year of income in which the shares or units are issued; and
(b) no amount is allowable as a deduction from the assessable income of the taxpayer of any year of income under section 8-1 or 25-35 of the Income Tax Assessment Act 1997 in respect of the writing off of the whole or part of the debt as bad in connection with the debt/equity swap; and
(c) for the purposes of any application of Subdivision 20-A of the Income Tax Assessment Act 1997 in relation to the issue of the shares or units to the taxpayer, the amount received in respect of the issue is taken to be the same as the equity value of the shares or units.
Effect of debt/equity swap on later equity disposal etc
63E(4)
If a debt/equity swap occurs and the taxpayer later disposes of any of the shares or units or they are cancelled or redeemed:
(a) except in accordance with paragraph (b), no amount is included in, or allowable as a deduction from, the taxpayer's assessable income of any year of income under this Act in respect of the later disposal, cancellation or redemption; and
(b) if the consideration received or receivable by the taxpayer in respect of the disposal, cancellation or redemption is different from the equity value of the shares or units:
(i) if the consideration is greater - the difference is included in the taxpayer's assessable income of the year of income in which the disposal, cancellation or redemption occurs; or
(ii) if it is less - the difference is allowable as a deduction from that assessable income.
Consideration of a nil amount
63E(5)
For the purposes of subsection (4), if no consideration is received or receivable by the taxpayer in respect of the disposal, cancellation or redemption, then consideration of a nil amount is taken to have been so received or receivable.
63E(5A)
Subdivisions 165-C , 166-C and 175-C of the Income Tax Assessment Act 1997 apply to an allowable deduction under this section in respect of the whole or part of a debt that is extinguished, in the same way as they apply to a debt (or part of a debt) that is written off as bad.
Meaning of arrangement
63E(6)
In this section:
arrangement
means any agreement, arrangement, understanding, promise, undertaking or scheme, whether express or implied, and whether or not enforceable, or intended to be enforceable, by legal proceedings.
Situations where limit is to be applied
63F(1)
If:
(a) apart from this section, a deduction ( the current deduction ) would be allowable to a taxpayer:
(i) under section 8-1 or 25-35 of the Income Tax Assessment Act 1997 in respect of the writing off of the whole or part of a debt as bad; or
(ii) under section 63E of this Act in respect of a debt/equity swap relating to the whole or part of a debt; and
(b) a deduction ( a previous deduction ) was allowed or allowable to the taxpayer under any of those sections, under former section 51 of this Act or under section 63 of this Act in respect of any number of occurrences of either or both of the following:
(i) a previous writing off as bad of the whole or part of a debt ( a previous debt ) that was the same as, or included, the debt mentioned in subparagraph (a)(i) or (ii);
(ii) a previous debt/equity swap relating to a part of a debt ( a previous debt ) that was the same as, or included, the debt mentioned in subparagraph (a)(i) or (ii); and
(c) the current deduction or at least one previous deduction is a deduction allowable under section 63E of this Act in respect of a debt/equity swap;
then the current deduction is only allowable to the extent that it does not exceed the limit worked out under subsection (2).
Calculation of limit
63F(2)
The limit is worked out as follows:
| Step 1: | Take the amount of the previous debt in respect of the earliest or only writing off or debt/equity swap to which paragraph (1)(b) applies. |
| Step 2: | Reduce the amount by the previous deduction in respect of that writing off or debt/equity swap. |
| Step 3: | If one or more of the following events occur after the writing off or debt/equity swap, progressively reduce the balance of the amount in the way set out below and in the order in which the events occur: |
| Event | How balance reduced | |
| A writing off or debt/equity swap in respect of which there is a previous deduction. | Reduce the balance by the amount of that previous deduction. If the reduced balance is higher than the level of the debt owing after the event, further reduce the balance to that lower level. | |
| Any other event (e.g. a repayment) that reduces the amount of debt owing, being an event that occurs before the writing off or debt/equity swap in respect of the current deduction. | If the balance at the time of the event is higher than the level of the debt owing after the event occurs, reduce the balance to that lower level. |
The limit is the resulting balance.
SECTION 63G 63G BAD DEBTS, ETC. OF TRUST NOT ALLOWABLE IN CERTAIN CIRCUMSTANCES
If:
(a) a deduction is allowable from a trust's assessable income of any year of income:
(i) under former section 51 of this Act, under section 63 of this Act or under section 8-1 or 25-35 of the Income Tax Assessment Act 1997 in respect of the writing off of the whole or part of a debt as bad; or
(ii) under subsection 63E(3) or (4) in respect of the extinguishment of the whole or part of a debt; and
(b) the debt was incurred as well as written off or extinguished on the last day of the year of income;
the deduction is not allowable.
Schedule 2F may also prevent a taxpayer deducting an amount in respect of a debt in other circumstances.
Where, by virtue of section 26-35 (Reduction of deduction for amounts paid to related entities) of the Income Tax Assessment Act 1997 , an amount is not allowable as a deduction in calculating in accordance with section 90 of this Act the net income, or a partnership loss, of a partnership in which a company, being a private company in relation to the year of income of the company to which the individual interest of the company in the net income of the partnership or in the partnership loss relates, is a partner:
(a) the company shall, for the purposes of this Act other than Division 11A , be deemed to have paid, on the last day of that year of income, a dividend of an amount ascertained in accordance with subsection (1C); and
(b) subsection 26-35(4) of the Income Tax Assessment Act 1997 does not apply in relation to so much of the amount that is not so allowable as a deduction as is equal to the amount of the dividend that the company is to be so deemed to have paid.
65(1C)
For the purposes of subsection (1B), the amount of the dividend that the company is to be deemed to have paid is:
(a) where the effect of the disallowance of the deduction has been to increase the net income of the partnership - an amount equal to the difference between the amount of the individual interest of the company in the net income of the partnership and the amount that would have been the individual interest of the company in the net income of the partnership if the deduction had been allowed;
(b) where the effect of the disallowance of the deduction has been to reduce the partnership loss - an amount equal to the difference between the amount of the individual interest of the company in the partnership loss and the amount that would have been the individual interest of the company in the partnership loss if the deduction had been allowed;
(c) where there is net income of the partnership and the amount of the deduction that was disallowed is equal to that net income - an amount equal to the individual interest of the company in the net income of the partnership;
(d) where there is net income of the partnership and, but for the disallowance of the deduction, there would have been a partnership loss - an amount equal to the sum of the amount of the individual interest of the company in the net income of the partnership and the amount that would have been the individual interest of the company in the partnership loss if the deduction had been allowed; and
(e) where there is no net income of the partnership and, but for the disallowance of the deduction, there would have been a partnership loss - an amount equal to the amount that would have been the individual interest of the company in the partnership loss if the deduction had been allowed.
(Repealed by No 15 of 2007)
Expressions used in this section that are also used in section 26BB have the same meanings in this section as in section 26BB .
70B(2)
Where a taxpayer disposes of a traditional security or a traditional security of a taxpayer is redeemed, the amount of any loss on the disposal or redemption is allowable as a deduction from the assessable income of the taxpayer of the year of income in which the disposal or redemption takes place.
70B(2A)
A deduction is not allowable under subsection (2) for a loss on the disposal or redemption of traditional securities that are:
(a) segregated exempt assets (for the purposes of the Income Tax Assessment Act 1997 ) of a life assurance company; or
(b) segregated current pension assets (as defined in the Income Tax Assessment Act 1997 ) of a complying superannuation fund.
70B(2B)
A deduction is not allowable under subsection (2) for a loss on the disposal or redemption of a traditional security if:
(a) the disposal or redemption occurs because the traditional security is converted into ordinary shares in a company that is:
(i) the issuer of the traditional security; or
(ii) a connected entity of the issuer of the traditional security; and
(b) the traditional security was issued on the basis that it will or may convert into ordinary shares in:
(i) the issuer of the traditional security; or
(ii) the connected entity.
70B(2C)
A deduction is not allowable under subsection (2) for a loss on the disposal or redemption of a traditional security if:
(a) the disposal or redemption is in exchange for ordinary shares in a company that is neither:
(i) the issuer of the traditional security; nor
(ii) a connected entity of the issuer of the traditional security; and
(b) in the case of a disposal - the disposal is to:
(i) the issuer of the traditional security; or
(ii) a connected entity of the issuer of the traditional security; and
(c) the traditional security was issued on the basis that it will or may be:
(i) disposed of to the issuer of the traditional security or to the connected entity; or
in exchange for ordinary shares in the company.
(ii) redeemed;
70B(3)
Where the Commissioner, having regard to any connection between the parties to the transaction by which the taxpayer disposed of the traditional security or by which it was redeemed, or by which the taxpayer acquired the traditional security, is satisfied that the parties were not dealing with each other at arm's length in relation to the transaction, then, for the purposes of determining under subsection (2) the amount of any loss on the disposal or redemption, the consideration for the transaction shall be taken to be:
(a) the amount that might reasonably be expected for the transaction if the parties were independent parties dealing at arm's length with each other; or
(b) where, for any reason it is not possible or practicable for the Commissioner to ascertain that amount - such amount as the Commissioner determines.
70B(4)
If:
(a) a taxpayer disposes of a traditional security or a traditional security of a taxpayer is redeemed; and
(b) there is a loss on the disposal or redemption; and
(c) in the case of a disposal or redemption of a marketable security:
(i) the taxpayer did not acquire the security in the ordinary course of trading on a securities market; and
(ii) at the time the taxpayer acquired the security, it was not open to the taxpayer to acquire an identical security in the ordinary course of trading on a securities market; and
(d) in the case of a disposal of a marketable security - the disposal did not take place in the ordinary course of trading on a securities market; and
(e) having regard to:
(i) the financial position of the issuer of the security; and
(ii) perceptions of the financial position of the issuer of the security; and
it would be concluded that the disposal or redemption took place for the reason, or for reasons that included the reason, that there was an apprehension or belief that the issuer was, or would be likely to be, unable or unwilling to discharge all liability to pay amounts under the security;
(iii) other relevant matters;
a deduction is not allowable to the taxpayer under this section in respect of so much of the amount of the loss as is a loss of capital or a loss of a capital nature.
70B(5)
A reference in this section to the disposal by a taxpayer of a security, or to the redemption of a security of a taxpayer, does not include a reference to the waiver or release by the taxpayer of:
(a) the whole or a part of the debt the subject of the security; or
(b) any other right of the taxpayer under the security.
70B(6)
Subsection (5) does not, by implication, affect the meaning of an expression used in:
(a) a provision of this Act other than this section; or
(b) any other law of the Commonwealth.
70B(7)
In this section:
issuer
, in relation to a security at a particular time, means the person who, if the amount or amounts payable under the security were due and payable at that time, would be liable to pay the amount or amounts.
marketable security
means a traditional security that is covered by paragraph (a) of the definition of
security
in subsection
159GP(1)
.
securities market
means a market, exchange or other place at which, or a facility by means of which, offers to sell, purchase or exchange marketable securities are regularly made or accepted.
SECTION 73A EXPENDITURE ON SCIENTIFIC RESEARCH 73A(1A)
This section has effect subject to Division 245 of the Income Tax Assessment Act 1997 .
73A(1)
The following payments made, and expenditure incurred, during the year of income (other than any amount which is allowable as a deduction under any other section of this Act) by a person carrying on a business for the purpose of gaining or producing assessable income shall be allowable deductions:
(a) Payments to:
(i) an approved research institute for scientific research related to that business; or
(ii) an approved research institute, the object of which is the undertaking of scientific research related to the class of business to which that business belongs; and
(b) Expenditure of a capital nature on scientific research related to that business (except to the extent that it is expenditure on plant, machinery, land or buildings or on alterations, additions or extensions to buildings or in the acquisition of rights in or arising out of scientific research).
73A(2)
Where, on or after the first day of the year of income ending on 30 June 1946, a taxpayer carrying on a business for the purpose of gaining or producing assessable income incurs expenditure of a capital nature in the construction or acquisition of a building, or part of a building, or in making any alteration or addition to a building, in which scientific research related to that business is to be carried on by or on behalf of the taxpayer, and the building, part of a building, alteration or addition, as the case may be, is of use for scientific research purposes only, an amount equal to one-third of that expenditure shall be an allowable deduction:
(a) from the assessable income of the year of income in which the building, part of a building, alteration or addition is first used by or on behalf of the taxpayer for such scientific research; and
(b) from the assessable income of each of the 2 years of income next succeeding that year of income, if the taxpayer continues to carry on that business during the year in which that assessable income was derived.
73A(2A)
Subsection (2) does not apply to expenditure incurred by a taxpayer in the construction of a building or part of a building, in the making of an alteration or addition to a building or in the acquisition of a building or part of a building unless:
(a) either of the following subparagraphs applies:
(i) that construction or making commenced, or that acquisition occurred, before 21 November 1987;
(ii) any contract in respect of that construction, making or acquisition was entered into before 21 November 1987; and
(b) if the expenditure was incurred after 20 November 1987 - the taxpayer intended, on 20 November 1987, that:
(i) scientific research, being research related to a business carried on by the taxpayer for the purpose of gaining or producing assessable income, would be carried on by or on behalf of the taxpayer in the building; and
(ii) the building, part of the building, alteration or addition, as the case may be, would be of use for scientific research purposes only.
73A(3)
Where any expenditure or payment to which this section refers is incurred or made outside Australia and the business in relation to which it is so incurred or made is carried on partly in and partly out of Australia, the deduction allowable under this section shall be such part of the amount which would otherwise be allowable as the Commissioner considers reasonable in the circumstances.
73A(4)
Where any expenditure has been allowed or is allowable as a deduction under subsection (2) and:
(a) the taxpayer sells, transfers or otherwise disposes of the building or any part thereof; or
(b) the building or any part thereof is destroyed,
the termination value of the building or part shall, to the extent of the expenditure so allowed or allowable as a deduction, be included in the assessable income of the year of income in which the disposal or destruction occurs:
73A(4A)
If:
(a) a person has purchased from another person a building, or part of a building, where the vendor had incurred capital expenditure of a kind in respect of which deductions are or have been allowable under subsection (2); and
(b) it would be concluded that, having regard to any connection between the vendor and the purchaser or to any other relevant circumstances, those persons were not dealing with each other at arm ' s length; and
(c) the purchase price is greater or lesser than the market value of the building, or the part of the building, at the time of the purchase;
the purchase price is, for all purposes of the application of this Act in relation to the vendor, taken to have been the amount of the market value of the property at the time of the purchase.
73A(5)
If the purchase of the building is a creditable acquisition by the vendor, references in subsection (4A) to the purchase price are taken to be references to that price reduced by the amount of the net input tax credit to which the purchaser is entitled for the acquisition.
73A(6)
In this section:
an approved research institute
means the Commonwealth Scientific and Industrial Research Organization, or any university, college, institute, association or organization which is approved in writing for the purposes of this section by that Organization, by the Chief Executive Officer of the NHMRC or by the Research Secretary, as an institution, association or organization for undertaking scientific research which is or may prove to be of value to Australia.
NHMRC
means the National Health and Medical Research Council established by section 5B of the
National Health and Medical Research Council Act 1992
.
Research Secretary
means the Secretary of the Department administered by the Minister administering the
Australian Research Council Act 2001
.
scientific research
means any activities in the fields of natural or applied science for the extension of knowledge.
termination value
has the meaning given by subsection
995-1(1)
of the
Income Tax Assessment Act 1997
.
73A(7)
An approval for the purposes of subsection (6) may:
(a) operate as from a date, whether before or after the date of the approval, specified in the instrument of approval; and
(b) be withdrawn at any time.
73A(8)
In this section, any reference to scientific research related to a business or class of business shall be read as including a reference to:
(i) any scientific research which may lead to or facilitate an extension, or an improvement in the technical efficiency, of that business, or, as the case may be, of businesses of that class; and
(ii) any scientific research of a medical nature which is of special relation to the welfare of workers employed in that business or, as the case may be, in businesses of that class.
73A(9)
This section does not apply in relation to payments made, or expenditure incurred, after 30 June 1995.
This section applies to the disposal of a building, or part of a building, by a taxpayer (in this section called the transferor ) to another taxpayer (in this section called the transferee ) if:
(a) (Omitted by No 46 of 1998)
(b) subject to subsection (7), deductions have been allowed or are allowable under subsection 73A(2) to the transferor in respect of the building or the part of the building; and
(c) the disposal involves a CGT event; and
(d) the conditions in an item in the table are satisfied.
| CGT roll-overs that qualify transferor for relief | ||
| Item | Type of CGT roll-over | Conditions |
| 1 | Disposal of asset to wholly-owned company | There is a roll-over under Subdivision 122-A of the Income Tax Assessment Act 1997 for the CGT event. |
| . | ||
| 2 | Disposal of asset by partnership to wholly-owned company | The transferor is a partnership, the building or part is partnership property, and there is a roll-over under Subdivision 122-B of the Income Tax Assessment Act 1997 for the disposal by the partners of the CGT assets consisting of their interests in the building or part. |
| . | ||
| 3 | Marriage or relationship breakdown | There is a roll-over under Subdivision 126-A of the Income Tax Assessment Act 1997 for the CGT event. |
| . | ||
| 4 | Disposal of asset to another member of the same wholly-owned group | There is a roll-over under Subdivision 126-B of the Income Tax Assessment Act 1997 for the CGT event. |
Subsection 73A(4) (which deals with balancing charges) does not apply to the disposal of the building or the part of the building by the transferor.
73AA(3) Transferee to inherit certain characteristics from transferor.Section 73A applies as if:
(a) the transferee had acquired the building or the part of the building for a consideration equal to the cost of the building or the part of the building to the transferor; and
(b) deductions were not allowable to the transferee under subsection 73A(2) in respect of:
(i) so much of the cost of the building or the part of the building to the transferor as was allowed or allowable as a deduction to the transferor under that subsection in respect of the building or the part of the building; or
(ii) if there have been 2 or more prior successive applications of this section - so much of the cost of the building or the part of the building to the transferor as was allowed or allowable as a deduction to the prior successive transferors under that subsection in respect of the building or the part of the building; and
(c) deductions were not allowable to the transferor under subsection 73A(2) in respect of the building or the part of the building for the year of income in which the disposal took place or for a subsequent year of income. 73AA(4) Subsection 73A(2A) - special rules.
If subsection 73A(2A) applies to the transferor and in relation to the building or the part of the building, that subsection applies in relation to the transferee and in relation to the building or the part of the building.
73AA(5) Disposal by transferee where no roll-over relief - inheritance of deductions.(a) after the disposal of the building or the part of the building to the transferee, the building or the part of the building is lost or destroyed or the transferee disposes of the building or the part of the building; and
(b) in the case of a disposal by the transferee - this section does not apply to the disposal;
then, for the purposes of the application of subsection 73A(4) in relation to the loss, destruction or disposal, the total of:
(c) the deductions allowed or allowable to the transferor under subsection 73A(2) in relation to the building or the part of the building; and
(d) if there have been 2 or more prior successive applications of this section - the deductions allowed or allowable to the prior successive transferors under subsection 73A(2) in relation to the building or the part of the building;
are taken to have been deductions allowed or allowable to the transferee under subsection 73A(2) in relation to the building or the part of the building.
73AA(6) Meaning of " cost " .A reference in this section to the cost of a building or of a part of a building to the transferor is a reference to expenditure of a capital nature incurred by the transferor in the construction or acquisition of the building or the part of the building, or in making any alteration or addition to the building or to the part of the building.
73AA(7) Second or subsequent application of section - paragraph (1)(b) does not apply.If, apart from this subsection, this section has applied to the disposal of the building or the part of the building to the transferee, then, in working out whether this section applies to a subsequent disposal of the building or the part of the building by:
(a) the transferee; or
(b) one or more subsequent successive transferees;
this section has effect as if paragraph (1)(b) (which deals with deductions) had not been enacted.
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In this section:
agreement
includes any agreement, arrangement or understanding, whether formal or informal or express or implied, and whether or not enforceable by legal proceedings (whether or not the agreement, arrangement or understanding was intended to be so enforceable).
associate
, in relation to the donor of a gift, means:
(a) in the case of a donor being a natural person:
(i) a relative of the donor;
(ii) a partner of the donor;
(iii) if a partner of the donor is a natural person - the spouse of that partner;
(iv) a trustee of a trust estate where the donor or a person who is an associate of the donor by virtue of subparagraph (i), (ii), (iii) or (v) benefits or is capable (whether by the exercise of a power of appointment or otherwise) of benefiting under the trust, either directly or through any interposed companies, partnerships or trusts; or
(v) a company where:
(A) the company is, or its directors are, accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the donor, of a person who is an associate of the donor by virtue of subparagraph (i), (ii), (iii) or (iv) or of a company that is an associate of the donor by virtue of another application of this subparagraph; or
(B) the donor is, the persons who are associates of the donor by virtue of subparagraphs (i), (ii), (iii) and (iv) are, or the donor and the persons who are associates of the donor by virtue of those paragraphs are, in a position to cast, or control the casting of, more than 50% of the maximum number of votes that might be cast at a general meeting of the company; or
(b) in the case of a donor being a company:
(i) a partner of the donor company;
(ii) if a partner of the donor company is a natural person - the spouse of that partner;
(iii) another person where:
(A) the donor company is, or its directors are, accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of that person, whether those directions, instructions or wishes are communicated directly to the donor company or its directors, or through any interposed companies; or,
(B) that person is, or that person and the persons who, if that person were the donor, would be associates of that person by virtue of paragraph (a) or by virtue of another subparagraph of this paragraph are, in a position to cast, or control the casting of, more than 50% of the maximum number of votes that might be cast at a general meeting of the donor company;
(iv) a trustee of a trust estate where the donor company or a person who is an associate of the donor company by virtue of subparagraph (i), (ii), (iii), (v) or (vi) benefits, or is capable (whether by the exercise of a power of appointment or otherwise) of benefiting under the trust, either directly or through any interposed companies, partnerships or trusts;
(v) another company where:
(A) the other company is, or its directors are, accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the donor company, of a person who is an associate of the donor company by virtue of subparagraph (i), (ii), (iii), (iv) or (vi) or of a company that is an associate of the donor company by virtue of another application of this subparagraph; or
(B) the donor company is, the persons who are associates of the donor company by virtue of subparagraphs (i), (ii), (iii), (iv) and (vi) are, or the donor company and the persons who are associates of the donor company by virtue of those subparagraphs are, in a position to cast, or control the casting of, more than 50% of the maximum number of votes that might be cast at a general meeting of the other company; or
(vi) another person who, if a third person who is an associate of the donor company by virtue of subparagraph (iii) were the donor, would be an associate of that third person by virtue of paragraph (a) or by virtue of another subparagraph of this paragraph.
78A(2)
Subject to this section, a gift of money, or of property other than money, made by a person (in this section referred to as the donor ) to a fund, authority, institution or person is not an allowable deduction under Division 30 of the Income Tax Assessment Act 1997 where:
(a) by reason of any act, transaction or circumstance that has occurred, will occur, or may reasonably be expected to occur, being an act, transaction or circumstance occurring as part of, in connexion with or as a result of:
(i) the making or receipt of the gift; or
the amount or value of the benefit derived by the fund, authority, institution or person as a consequence of the gift is, will be, or may reasonably be expected to be, less than the amount or value at the time when the gift was made of the property comprising the gift;
(ii) any agreement or scheme entered into in association with the making or receipt of the gift,
(b) by reason of any act, transaction or circumstance of a kind referred to in paragraph (a), any fund, authority, institution or person other than the fund, authority, institution or person to which the gift was made, makes, becomes liable to make, or may reasonably be expected to make or to become liable to make, a payment, or transfers, becomes liable to transfer, or may reasonably be expected to transfer or to become liable to transfer, any property, to any person or incurs, becomes liable to incur, or may reasonably be expected to incur or to become liable to incur, any other detriment, disadvantage, liability or obligation;
(c) by reason of any act, transaction or circumstance of a kind referred to in paragraph (a), the donor or an associate of the donor has obtained, will obtain or may reasonably be expected to obtain any benefit, advantage, right or privilege other than the benefit of any deduction that, but for this section, would be allowable from the assessable income of the donor under Division 30 of the Income Tax Assessment Act 1997 ; or
(d) by reason of any agreement or scheme entered into as part of or in association with the making of the gift, any property, other than property comprising the gift, has been acquired or will be acquired, whether directly or indirectly, from the donor or an associate of the donor by that fund, authority, institution or person or by another fund, authority, institution or person.
78A(3)
Without limiting the application of subsection (2), where the terms and conditions on which a gift of property other than money is made are such that the fund, authority, institution or person to which the gift is made does not receive immediate custody and control of the property, does not have the unconditional right to retain custody and control of the property in perpetuity to the exclusion of the donor or an associate of the donor or does not obtain an immediate, indefeasible and unencumbered legal and equitable title to the property, paragraph (2)(c) shall be deemed to apply in relation to that gift.
78A(4)
Paragraph (2)(a) does not prevent a deduction under Division 30 of the Income Tax Assessment Act 1997 from being allowed from the assessable income of the donor where the amount or value of the benefit derived by the fund, authority, institution or person as a consequence of the gift is, will be, or may reasonably be expected to be, less than the amount or value at the time when the gift was made of the property comprising the gift by reason only that the fund, authority, institution or person has incurred, will incur, or may reasonably be expected to incur, expenses for the purpose of obtaining or soliciting the gift, being expenses that, in the opinion of the Commissioner, are reasonable in relation to the value of the gift.
78A(5)
This section does not prevent a deduction under section 30-15 of the Income Tax Assessment Act 1997 (because of item 4, 5 or 6 of the table in that section) from being allowed from the assessable income of the donor in respect of a gift of property other than money by reason only that the terms and conditions on which the gift was made are such, or the effect of any arrangement (within the meaning of that Act) entered into in association with the making or receipt of the gift is such, that the value of the gift may be reduced in accordance with section 30-220 of that Act.
FORMER SECTION 79 79 FIVE PER CENTUM OF COST OF ASSETS OF SUPERANNUATION FUND ESTABLISHED FOR BENEFIT OF EMPLOYEES AND OTHER PERSONS TO BE ALLOWABLE DEDUCTION
(Repealed by No 47 of 1984)
For the purpose of granting to residents of the prescribed area an income tax concession in recognition of the disadvantages to which they are subject because of the uncongenial climatic conditions, isolation and high cost of living in Zone A and, to a lesser extent, in Zone B, in comparison with parts of Australia not included in the prescribed area, a taxpayer (not being a company or a taxpayer in the capacity of a trustee) who is a resident of the prescribed area in the year of income is entitled, in the taxpayer ' s assessment in respect of income of that year of income, to a rebate of tax ascertained in accordance with this section.
79A(2)
Subject to subsections (2A) and 79B(4) , the rebate allowable under this section in the assessment of a taxpayer in respect of income of the year of income is:
(a) if the taxpayer is a resident of the special area in Zone A, or of the special area in Zone B, in the year of income - an amount equal to the sum of:
(i) $ 1,173; and
(ii) an amount equal to 50% of the relevant rebate amount in relation to the taxpayer in relation to the year of income; or
(b) if the taxpayer is a resident of Zone A (but not of the special area in Zone A or of the special area in Zone B) in the year of income - an amount equal to the sum of:
(i) $ 338; and
(ii) an amount equal to 50% of the relevant rebate amount in relation to the taxpayer in relation to the year of income; or
(c) if the taxpayer is a resident of Zone B (but not of Zone A or of the special area in Zone B) in the year of income - an amount equal to the sum of:
(i) $ 57; and
(ii) an amount equal to 20% of the relevant rebate amount in relation to the taxpayer in relation to the year of income; or
(d) - (e) (Repealed by No 70 of 2015)
(f) in any other case - such amount as, in the opinion of the Commissioner, is reasonable in the circumstances, being an amount not greater than the amount of the rebate to which the taxpayer would have been entitled under this section if paragraph (a) had applied to the taxpayer in respect of the year of income and not less than the amount of rebate to which the taxpayer would have been so entitled if paragraph (c) had so applied to the taxpayer.
79A(2A)
The amount of any rebate that would, but for this subsection, be allowable to a taxpayer under this section in the taxpayer ' s assessment in respect of income of a year of income shall be reduced by the amount of any prescribed allowance paid to the taxpayer in respect of the year of income.
79A(3)
Any alteration of the boundaries of any area referred to in Schedule 2 made (otherwise than by an amendment of this Act) after the commencement of this section shall not affect the operation of this section.
79A(3A)
This section has effect subject to section 23AB .
79A(3B)
For the purposes of this section, a taxpayer is a resident of a particular area, being the prescribed area, Zone A, Zone B, the special area in Zone A or the special area in Zone B (in this subsection referred to as the relevant area ) in a year of income if:
(a) the taxpayer had his or her usual place of residence in the relevant area in the year of income for a period of more than one-half of the year of income; or
(b) (Repealed by No 162 of 2015)
(c) the taxpayer died during the year of income and at the date of his or her death had his or her usual place of residence in the relevant area; or
(d) the following conditions are satisfied:
(i) the taxpayer had his or her usual place of residence in the relevant area in the year of income for a period of not more than one-half of the year of income;
(ii) the taxpayer had his or her usual place of residence in the relevant area in the next preceding year of income for a period of not more than one-half of the next preceding year of income;
(iii) for the purposes of this section, the taxpayer was not a resident of the relevant area in the next preceding year of income;
(iv) the sum of:
(A) the number of days in the period mentioned in subparagraph (i); andexceeds 182; or
(B) the number of days in the period mentioned in subparagraph (ii), other than days included in a period to which subsection 23AB(8) or 79B (3) applied in relation to the taxpayer in relation to the next preceding year of income;
(e) the following conditions are satisfied:
(i) the taxpayer had his or her usual place of residence in the relevant area in the year of income for a period of not more than one-half of the year of income, being a period that included the first day of the year of income;
(ii) the taxpayer had his or her usual place of residence in the relevant area, in a relevant preceding year of income, for a period of not more than one-half of that relevant preceding year of income;
(iii) for the purposes of this section, the taxpayer was not a resident of the relevant area in that relevant preceding year of income;
(iv) the sum of:
(A) the number of days in the period mentioned in subparagraph (i); andexceeds 182;
(B) the number of days in the period mentioned in subparagraph (ii), other than days included in a period to which subsection 23AB(8) or 79B (3) applied in relation to the taxpayer in relation to that relevant preceding year of income;
(v) the taxpayer had his or her usual place of residence in the relevant area continuously from the commencement of the period mentioned in subparagraph (ii) until the end of the period mentioned in subparagraph (i).
79A(3C)
In subsection (3B), a reference to a taxpayer having his or her usual place of residence in a particular area in a year of income for a period of more than, or not more than, one-half of the year of income is a reference to the taxpayer:
(a) having his or her usual place of residence in that area in the year of income for one period of more than, or not more than, as the case may be, one-half of the year of income; or
(b) having his or her usual place of residence in that area in the year of income for 2 or more periods the aggregate of the lengths of which is more than, or not more than, as the case may be, one-half of the year of income.
79A(3D)
For the purposes of this section:
(a) the special area within Zone A or Zone B is constituted by:
(i) the points in that Zone that were not, as at 1 November 1981, situated at a distance of 250 kilometres or less by the shortest practicable surface route, from the centre point of the nearest urban centre (whether or not within that Zone) with a census population of not less than 2,500; and
(ii) the points in that Zone that were within the special area in that Zone for the purposes of this section as in force immediately before the commencement of the Income Tax Assessment Amendment Act (No 4) 1984 ; and
(b) the distance, by the shortest practicable surface route, between a point in Zone A or Zone B and the centre point of an urban centre is:
(i) where there is only one location within that urban centre from which distances between the urban centre and other places are usually measured - the distance, by the shortest practicable surface route, between that point in Zone A or Zone B and that location; and
(ii) where there are 2 or more locations within that urban centre from which distances between parts of the urban centre and other places are usually measured - the distance, by the shortest practicable surface route, between that point in Zone A or Zone B and the one of those locations that is in the principal one of those parts.
79A(3E)
For the purposes of this section other than this subsection, the Commissioner may, if he or she considers it appropriate having regard to all the circumstances, treat a point in Zone A or Zone B that is not in the special area in that Zone but is adjacent to or in close proximity to the special area in that Zone as being a point in the special area in that Zone.
79A(3F)
For the purposes of this section, the census population of Nhulunbuy is taken to be less than 2,500.
79A(4)
In this section:
census population
, in relation to an urban centre, means the population of that urban centre specified in the results of the Census of Population and Housing taken by the Australian Statistician on 30 June 1981, being the results published by the Australian Bureau of Statistics in the documents entitled
"
Persons and Dwellings in Local Government Areas and Urban Centres
"
.
dependent spouse relevant rebate amount
(Repealed by No 70 of 2015)
prescribed allowance
means so much of a payment under the
Social Security Act 1991
or the
Veterans
'
Entitlements Act 1986
as was included in the payment by way of remote area allowance.
relevant preceding year of income
, in relation to a year of income, means any of the next 4 preceding years of income other than the immediately preceding year of income.
relevant rebate amount
, in relation to a taxpayer in relation to a year of income, means the sum of the following rebates (if any):
(a) any tax offset to which the taxpayer is entitled under Subdivision 61-A of the Income Tax Assessment Act 1997 ;
(b) any notional tax offset to which the taxpayer is entitled under Subdivision 961-A of the Income Tax Assessment Act 1997 ;
(c) any notional tax offset to which the taxpayer is entitled under Subdivision 961-B of the Income Tax Assessment Act 1997 .
surface route
means a route other than an air route.
the prescribed area
means the area comprised in Zone A and Zone B.
urban centre
means an area that is described as an urban centre or bounded locality in the results of the Census of Population and Housing taken by the Australian Statistician on 30 June 1981, being the results published by the Australian Bureau of Statistics in the documents entitled
"
Persons and Dwellings in Local Government Areas and Urban Centres
"
.
Zone A
means the area described in Part I of Schedule 2.
Zone B
means the area described in Part II of Schedule 2.
SECTION 79B REBATES FOR MEMBERS OF DEFENCE FORCE SERVING OVERSEAS 79B(1)
Subject to this section, a taxpayer who, during the year of income, serves as a member of the Defence Force at an overseas locality is entitled, in his or her assessment in respect of income of the year of income, to a rebate of tax ascertained in accordance with this section.
79B(1A)
A taxpayer is not entitled to a rebate under this section in relation to service:
(a) as or under an attach é at an Australian Embassy or Legation in an overseas locality at a time as at which that locality was, or is deemed to have been, a specified locality for the purposes of this subsection; or
(b) with the South-East Asia Treaty Organization Military Planning Office.
79B(1B)
Where the Chief of the Defence Force or a person authorized by the Chief of the Defence Force to give certificates under this subsection certifies, and the Minister is satisfied, that any service of a taxpayer in any locality was or will be performed in circumstances similar to those in which any service referred to in subsection (1A) is performed, the taxpayer is not entitled to a rebate under this section in relation to that service.
79B(2)
Subject to the succeeding provisions of this section, the rebate allowable under this section in the assessment of a taxpayer in respect of income of the year of income is:
(a) where the total period of service of the taxpayer at overseas localities during the year of income is more than one-half of the year of income, or where the taxpayer dies at an overseas locality during the year of income - an amount equal to the sum of:
(i) $ 338; and
(ii) an amount equal to 50% of the concessional rebate amount; or
(iii) (Repealed by No 70 of 2015)
(b) in any other case - such amount as, in the opinion of the Commissioner, is reasonable in the circumstances, being an amount not greater than the amount of the rebate to which the taxpayer would have been entitled under this section if paragraph (a) had applied to him or her in respect of the year of income.
79B(3)
For the purposes of subsection (2), the total periods of service of the taxpayer in any year of income at overseas localities shall be deemed to include any period of service of the taxpayer as a member of the Defence Force in that year of income in the prescribed area.
79B(3A)
For the purposes of subsection (2), the total periods of service of the taxpayer in any year of income at overseas localities shall be deemed not to include any period of service of the taxpayer in respect of which an exemption from income tax applies under section 23AD or 23AG .
79B(4)
The aggregate of the rebates allowable under this section and section 23AB or under this section and section 79A in the assessment of a taxpayer in respect of income of a year of income shall not exceed an amount equal to the sum of:
(a) $ 338; and
(b) an amount equal to 50% of the concessional rebate amount.
(c) (Repealed by No 70 of 2015)
79B(4A)
Where:
(a) but for subsection (4) and this subsection, a rebate would be allowable under this section and a rebate would be allowable under section 79A in the assessment of a taxpayer in respect of income of a year of income; and
(b) the rebate allowable under section 79A exceeds an amount equal to the sum of:
(i) $ 338; and
(ii) an amount equal to 50% of the concessional rebate amount;
(iii) (Repealed by No 70 of 2015)
the taxpayer is not entitled to a rebate under this section in that assessment and subsection (4) does not apply in relation to that assessment.
79B(5)
For the purposes of this section the Minister may, by writing signed by the Minister and deposited with the Commissioner, declare that a locality outside Australia specified in the declaration shall:
(a) by reason of the uncongenial nature of service in that locality and the isolation of the locality, be, or be deemed to have been, as from a date, or during a period, (whether before or after the date of the declaration) specified in the declaration, a locality in relation to which this section applies; or
(b) as from a date (whether before or after the date of the declaration) specified in the declaration, cease, or be deemed to have ceased, to be such a locality;
and this section shall apply, or be deemed to have applied, and shall cease to apply, or be deemed to have ceased to apply, in relation to any such locality accordingly.
79B(5A)
The Minister may, by writing signed by the Minister and deposited with the Commissioner, declare that an overseas locality specified in the declaration shall become, or be deemed to have become, on a specified date, or shall cease, or be deemed to have ceased, on a specified date, to be, a specified locality for the purposes of subsection (1A).
79B(5B)
Nothing in section 170 prevents the amendment of an assessment at any time for the purpose of allowing a rebate to which the taxpayer has become entitled under this section after the making of the assessment.
79B(6)
For the purpose of this section:
concessional rebate amount
, in relation to a taxpayer in relation to a year of income, means the sum of the following rebates (if any):
(a) any tax offset to which the taxpayer is entitled under Subdivision 61-A of the Income Tax Assessment Act 1997 ;
(b) any notional tax offset to which the taxpayer is entitled under Subdivision 961-A of the Income Tax Assessment Act 1997 ;
(c) any notional tax offset to which the taxpayer is entitled under Subdivision 961-B of the Income Tax Assessment Act 1997 .
dependent spouse concessional rebate amount
(Repealed by No 70 of 2015)
locality
means an area of land or waters or an area of land and waters.
overseas locality
means, in relation to service during any period or death at any time, a locality in relation to which, during that period or at that time, this section applies or is deemed to have applied; and
the prescribed area
has the same meaning as that expression has in section
79A
.
(Repealed by No 143 of 2007 )
(Repealed by No 143 of 2007 )
Where the profit arising from the sale of any property is included in the assessable income of any person, or where the loss arising from the sale is an allowable deduction, and any expenditure incurred by the person in connexion with that property has been allowed or is allowable as a deduction under this Act, that expenditure shall not be deducted in ascertaining the amount of the profit or loss.
(Repealed by No 84 of 2022)
(Repealed by No 15 of 2007)
(Repealed by No 97 of 1989)
(Repealed by No 15 of 2007)
(Repealed by No 15 of 2007)
(Repealed by No 15 of 2007)
(Repealed by No 89 of 2001)
(Repealed by No 15 of 2007)
(Repealed by No 97 of 1989)
(Repealed by No 97 of 1989)
(Repealed by No 97 of 1989)
(Repealed by No 97 of 1989)
(Repealed by No 97 of 1989)
(Repealed by No 97 of 1989)
(Repealed by No 97 of 1989)
(Repealed by No 97 of 1989)
(Repealed by No 103 of 1965) FORMER SECTION 82AAP 82AAP ASCERTAINMENT OF PART OF AMOUNT IN FUND APPLIED FOR EACH EMPLOYEE WHERE LUMP SUM APPLIED FOR TWO OR MORE EMPLOYEES
(Repealed by No 97 of 1989)
(Repealed by No 15 of 2007)
(Repealed by No 15 of 2007)
(Repealed by No 15 of 2007)
(Repealed by No 15 of 2007)
(Repealed by No 15 of 2007)
(Repealed by No 15 of 2007)
(Repealed by No 47 of 2016)
(Repealed by No 47 of 2016)
(Repealed by No 47 of 2016)
(Repealed by No 47 of 2016)
(Repealed by No 47 of 2016)
(Repealed by No 47 of 2016)
In this Subdivision, unless the contrary intention appears:
additional benefit
, in relation to an amount of eligible relevant expenditure, means the additional benefit, or the aggregate of the additional benefits, as the case may be, referred to in paragraph (1F)(b) in relation to that eligible relevant expenditure.
agreement
means any agreement, arrangement, understanding or scheme, whether formal or informal, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings.
associate
, in relation to a taxpayer, means:
(a) in the case of a taxpayer who is a natural person, other than a taxpayer in the capacity of a trustee:
(i) a relative of the taxpayer;
(ii) a partner of the taxpayer;
(iii) if a person who is an associate of the taxpayer by virtue of subparagraph (ii) is a natural person - the spouse or a child of that person;
(iv) a trustee of a trust estate where the taxpayer or another person who is an associate of the taxpayer by virtue of another subparagraph of this paragraph benefits or is capable (whether by the exercise of a power of appointment or otherwise) of benefiting under the trust, either directly or through any interposed companies, partnerships or trusts; or
(v) a company where:
(A) the company is, or its directors are, accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the taxpayer, of another person who is an associate of the taxpayer by virtue of another subparagraph of this paragraph, of a company that is an associate of the taxpayer by virtue of another application of this subparagraph or of any 2 or more such persons; or
(B) the taxpayer is, the persons who are associates of the taxpayer by virtue of sub-subparagraph (A) and the preceding subparagraphs of this paragraph are, or the taxpayer and the persons who are associates of the taxpayer by virtue of that sub-subparagraph and those subparagraphs are, in a position to cast, or control the casting of, more than 50% of the maximum number of votes that might be cast at a general meeting of the company;
(b) in the case of a taxpayer being a company, other than a taxpayer in the capacity of a trustee:
(i) a partner of the taxpayer;
(ii) if a person who is an associate of the taxpayer by virtue of subparagraph (i) is a natural person - the spouse or a child of that person;
(iii) a trustee of a trust estate where the taxpayer or another person who is an associate of the taxpayer by virtue of another subparagraph of this paragraph benefits or is capable (whether by the exercise of a power of appointment or otherwise) of benefiting under the trust, either directly or through any interposed companies, partnerships or trusts;
(iv) another person where:
(A) the taxpayer company is, or its directors are, accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of that person, or of that person and another person or other persons, whether those directions, instructions or wishes are communicated directly to the taxpayer company or its directors, or through any interposed companies, partnerships or trusts; or
(B) that person is, or that person and the persons who, if that person were the taxpayer, would be associates of that person by virtue of paragraph (a), by virtue of sub-subparagraph (A), by virtue of another subparagraph of this paragraph or by virtue of paragraph (c) are, in a position to cast, or control the casting of, more than 50% of the maximum number of votes that might be cast at a general meeting of the taxpayer company;
(v) another company where:
(A) the other company is, or its directors are, accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the taxpayer company, of a person who is an associate of the taxpayer company by virtue of another subparagraph of this paragraph, of a company that is an associate of the taxpayer company by virtue of another application of this subparagraph or of any 2 or more such persons; or
(B) the taxpayer company is, the persons who are associates of the taxpayer company by virtue of sub-subparagraph (A) and the other subparagraphs of this paragraph are, or the taxpayer company and the persons who are associates of the taxpayer company by virtue of that sub-subparagraph and those subparagraphs are, in a position to cast, or control the casting of, more than 50% of the maximum number of votes that might be cast at a general meeting of the other company; or
(vi) any other person who, if a third person who is an associate of the taxpayer company by virtue of subparagraph (iv) were the taxpayer, would be an associate of that third person by virtue of paragraph (a), by virtue of another subparagraph of this paragraph or by virtue of paragraph (c);
(c) in the case of a taxpayer in the capacity of a trustee of a trust estate:
(i) any person who benefits or is capable (whether by the exercise of a power of appointment or otherwise) of benefiting under the trust estate, either directly or through any interposed companies, partnerships or trusts;
(ii) where a person who is an associate of the taxpayer by virtue of subparagraph (i) is a natural person - any person who, if that natural person were the taxpayer, would be an associate of that natural person by virtue of paragraph (a) or this paragraph; or
(iii) where a person who is an associate of the taxpayer by virtue of subparagraph (i) or (ii) is a company - any person who, if that company were the taxpayer, would be an associate of that company by virtue of paragraph (b) or this paragraph; or
(d) in the case of a taxpayer being a partnership:
(i) a partner in the partnership;
(ii) where any partner in the partnership is a natural person - any person who, if that natural person were the taxpayer, would be an associate of that natural person by virtue of paragraph (a) or (c); or
(iii) where any partner in the partnership is a company - any person who, if the company were the taxpayer, would be an associate of the company by virtue of paragraph (b) or (c).
consumable supplies
means property other than:
(a) trading stock; or
(b) choses in action.
"exempt business"
(Omitted by No 107 of 1989)
expected tax saving
, in relation to an amount of eligible relevant expenditure incurred by a taxpayer, means:
(a) where only one amount is, under subsection (1B), a tax saving amount for the purposes of the application of this definition in relation to the eligible relevant expenditure - that tax saving amount; and
(b) where 2 or more amounts are, under subsection (1B), tax saving amounts for the purposes of the application of this definition in relation to the eligible relevant expenditure - the sum of those tax saving amounts.
film
means an aggregate of images, or of images and sounds, embodied in any material.
(a) the undertaking of research to ascertain the location, extent, value or other characteristics of the market, or the potential market, for goods or services; and
(b) the provision of information, advice or assistance in connection with the marketing of particular goods or services or of goods or services generally.
moneys paid on shares
(Omitted by No 107 of 1989)
property
includes a chose in action and also includes any estate, interest, right or power, whether at law or in equity, in or over property.
relevant expenditure
, in relation to a taxpayer, means:
(a) expenditure in respect of which a deduction would, apart from section 82KL , be allowable to the taxpayer under section 25-25 (Borrowing expenses) of the Income Tax Assessment Act 1997 ;
(b) expenditure in respect of which a deduction would, apart from section 82KL , be allowable to the taxpayer under section 25-30 (Expenses of discharging a mortgage) of the Income Tax Assessment Act 1997 ;
(c) a loss or outgoing incurred by the taxpayer in the purchase by the taxpayer of property (not being a chose in action) that, for the purposes of the application of this Act in relation to the taxpayer, is trading stock, to the extent to which a deduction would, apart from section 82KL , be allowable to the taxpayer under section 8-1 of the Income Tax Assessment Act 1997 in respect of the loss or outgoing;
(d) a loss or outgoing incurred by the taxpayer in respect of interest to the extent to which a deduction would, apart from section 82KL , be allowable to the taxpayer under section 8-1 of the Income Tax Assessment Act 1997 in respect of the loss or outgoing;
(e) a loss or outgoing incurred by the taxpayer in respect of rent to the extent to which a deduction would, apart from section 82KL , be allowable to the taxpayer under section 8-1 of the Income Tax Assessment Act 1997 in respect of the loss or outgoing;
(f) a bad debt incurred by the taxpayer in respect of money lent by the taxpayer in the course of carrying on a business to the extent to which a deduction would, apart from section 82KL , be allowable to the taxpayer under section 8-1 or section 25-35 of the Income Tax Assessment Act 1997 in respect of the bad debt;
(g) a loss or outgoing incurred by the taxpayer in respect of:
(i) the production, marketing or distribution of a film; or
to the extent to which a deduction would, apart from section 82KL , be allowable to the taxpayer under section 8-1 of the Income Tax Assessment Act 1997 in respect of the loss or outgoing;
(ii) the acquisition of a copyright subsisting in a film;
(h) expenditure incurred by the taxpayer in respect of a unit of industrial property, being a unit of industrial property that relates to copyright subsisting in a film, to the extent to which the amount of that expenditure is taken into account, or would, apart from former subsections 124R(2) and (3) , be taken into account, in calculating the residual value of the unit of industrial property in ascertaining whether, apart from section 82KL , a deduction would be allowable to the taxpayer under former section 124M or 124N in respect of the residual value of the unit of industrial property;
(j) (Omitted by No 107 of 1989)
(ka) expenditure incurred by the taxpayer in respect of an item of intellectual property (as defined in the Income Tax Assessment Act 1997 ) that relates to copyright subsisting in a film, but only to the extent described at the end of this definition;
(k) a loss or outgoing incurred by the taxpayer in the purchase of consumable supplies to the extent to which a deduction would, apart from section 82KL , be allowable to the taxpayer under section 8-1 of the Income Tax Assessment Act 1997 in respect of the loss or outgoing;
(m) a loss or outgoing incurred by the taxpayer in respect of market research to the extent to which a deduction would, apart from section 82KL , be allowable to the taxpayer under section 8-1 of the Income Tax Assessment Act 1997 in respect of the loss or outgoing;
(n) expenditure incurred by the taxpayer in respect of the acquisition of a unit of industrial property, being a licence under a copyright subsisting in computer software, to the extent to which the amount of that expenditure is taken into account, or would, apart from former subsection 124R(3) be taken into account, in calculating the residual value of the unit of industrial property in ascertaining whether, apart from section 82KL , a deduction would be allowable to the taxpayer under former section 124M or 124N in respect of the residual value of the unit of industrial property;
(oa) expenditure incurred by the taxpayer in respect of acquiring an item of intellectual property (as defined in the Income Tax Assessment Act 1997 ) that is a licence under a copyright subsisting in computer software, but only to the extent described at the end of this definition;
(o) a loss or outgoing or expenditure incurred by the taxpayer by way of commission for collecting assessable income of the taxpayer to the extent to which a deduction would, apart from section 82KL , be allowable to the taxpayer under section 8-1 of the Income Tax Assessment Act 1997 in respect of the loss or outgoing or the expenditure;
(p) a loss or outgoing incurred by the taxpayer in respect of the growing, care or supervision of trees on behalf of the taxpayer to the extent to which a deduction would, apart from section 82KL , be allowable to the taxpayer under section 8-1 of the Income Tax Assessment Act 1997 in respect of the loss or outgoing;
(pa) a loss or outgoing incurred by the taxpayer in respect of the establishment and tending of trees for felling on behalf of the taxpayer to the extent to which a deduction would, apart from section 82KL , be allowable to the taxpayer under section 394-10 of the Income Tax Assessment Act 1997 in respect of the loss or outgoing;
(q) a loss or outgoing incurred by the taxpayer for the purpose of increasing the value of shares in a company, being shares held or beneficially owned by the taxpayer as trading stock, to the extent to which a deduction would, apart from section 82KL , be allowable to the taxpayer under section 8-1 of the Income Tax Assessment Act 1997 in respect of the loss or outgoing;
(r) a loss or outgoing incurred by the taxpayer in respect of:
(i) the production by another person of a master sound recording; or
to the extent to which a deduction would, apart from section 82KL , be allowable to the taxpayer under section 8-1 of the Income Tax Assessment Act 1997 in respect of the loss or outgoing;
(ii) the procuration of the production by another person of a master sound recording,
(s) calls paid by the taxpayer on shares owned by the taxpayer in respect of which a deduction would, apart from section 82KL , be allowable to the taxpayer under Division 30 (which is about gifts) of the Income Tax Assessment Act 1997 ;
(t) (Omitted by No 123 of 1985)
(u) (Omitted by No 107 of 1989)
(v) expenditure (other than expenditure to which a preceding paragraph of this definition applies) incurred by the taxpayer in respect of a unit of industrial property to the extent to which the amount of that expenditure is taken into account, or would, apart from former subsections 124R(2) and (3) , be taken into account, in calculating the residual value of the unit of industrial property in ascertaining whether, apart from section 82KL , a deduction would be allowable to the taxpayer under former section 124M or 124N in respect of the residual value of the unit of industrial property; or
(wa) expenditure (unless covered by an earlier paragraph of this definition) incurred by the taxpayer in respect of an item of intellectual property (as defined in the Income Tax Assessment Act 1997 ), but only to the extent described at the end of this definition;
(w) a loss or outgoing (other than a loss or outgoing referred to in subsection 52A(1) or to which a preceding paragraph of this definition applies) incurred by the taxpayer to the extent to which a deduction would, apart from section 82KL , be allowable to the taxpayer under section 8-1 of the Income Tax Assessment Act 1997 in respect of the loss or outgoing.
However, paragraph (ka), (oa) or (wa) only covers expenditure to the extent that:
(x) it is taken into account in working out under Division 40 of the Income Tax Assessment Act 1997 the adjustable value of the item to the taxpayer in determining whether, apart from section 82KL of this Act, the taxpayer could deduct an amount under that Division for the item for a year of income; or
(y) it would be so taken into account apart from item 8 in the table in subsection 40-180(2) , or item 1 in the table in subsection 40-190(3) (both about non-arm ' s length transactions).
rent
means rent in respect of land or premises.
tax avoidance agreement
means an agreement that was entered into or carried out for the purpose, or for purposes that included the purpose, of securing that a person who, if the agreement had not been entered into or carried out, would have been liable to pay incometax in respect of a year of income would not be liable to pay income tax in respect of that year of income or would be liable to pay less income tax in respect of that year of income than that person would have been liable to pay if the agreement had not been entered into or carried out.
unit of industrial property
has the same meaning as in former Division
10B
.
82KH(1A)
In determining for the purposes of this Subdivision whether an agreement is a tax avoidance agreement, no regard shall be had to a purpose that is a merely incidental purpose.
82KH(1AA)
A reference in this Subdivision to the incurring by a taxpayer of a bad debt shall be read as a reference to a debt, or a part of a debt, owed to the taxpayer becoming a bad debt.
82KH(1AB)
A reference in:
(a) subsection 82KL(2) ; or
(b) former section 80 in relation to this Subdivision;
to the incurring by a taxpayer of a loss or outgoing shall be read as including a reference to the incurring by a taxpayer of a bad debt.
82KH(1ABA)
This section has the same effect in relation to an allowable deduction under section 63E in respect of the extinguishing of the whole or part of a debt as it has in respect of an allowable deduction under section 8-1 or 25-35 of the Income Tax Assessment Act 1997 in respect of the writing off of the whole or part of a debt as bad.
82KH(1AC)
In this Subdivision:
(a) a reference to a copyright subsisting in a film shall be read as including a reference to:
(i) a licence under a copyright subsisting in a film; and
(ii) an interest, whether at law or in equity, in respect of a copyright, or in respect of a licence under a copyright, subsisting in a film; and
(b) a reference to a licence under a copyright subsisting in computer software shall be read as including a reference to an interest, whether at law or in equity, in a licence under a copyright subsisting in computer software.
82KH(1AD)
A reference in this Subdivision to a tax benefit being allowed or allowable or not being allowed or allowable in respect of relevant expenditure incurred by a taxpayer shall be read as a reference to:
(a) in a case where the relevant expenditure is relevant expenditure to which paragraph (h), (n) or (v) of the definition of relevant expenditure in subsection (1) applies - a deduction being allowed or allowable or not being allowed or allowable, as the case may be, to the taxpayer under former section 124M or 124N in respect of the residual value of a unit of industrial property where that residual value would be calculated by reference to the relevant expenditure; and
(b) if paragraph (ka), (oa) or (wa) of the definition of relevant expenditure in subsection (1) covers the expenditure - the taxpayer deducting or being able to deduct, or not deducting or not being able to deduct, as appropriate, an amount under Division 40 of the Income Tax Assessment Act 1997 for an item of intellectual property for a year of income because the taxpayer ' s adjustable value of the item would be calculated under that Division by reference to the relevant expenditure; and
(c) (Omitted by No 107 of 1989)
(d) in any other case - a deduction being allowed or allowable or not being allowed or allowable, as the case may be, to the taxpayer in respect of the relevant expenditure.
82KH(1B)
For the purposes of the application of the definition of expected tax saving in subsection (1) in relation to an amount of eligible relevant expenditure incurred by a taxpayer:
(a) where:
(i) if a tax benefit were not allowable in respect of any part of that eligible relevant expenditure, a person (whether the taxpayer or another person and whether in the capacity of a trustee of a trust estate or otherwise) would be liable to pay income tax in respect of a year of income; and
the amount by which the amount of the tax referred to in subparagraph (i) exceeds the amount of the tax referred to in subparagraph (ii) is a tax saving amount; and
(ii) if a tax benefit or tax benefits were allowable under this Act in respect of that eligible relevant expenditure, that person would be liable to pay a lesser amount of income tax in respect of that year of income;
(b) where:
(i) if a tax benefit were not allowable in respect of any part of that eligible relevant expenditure, a person (whether the taxpayer or another person and whether in the capacity of a trustee of a trust estate or otherwise) would be liable to pay income tax in respect of a year of income; and
the amount of the tax referred to in subparagraph (i) is a tax saving amount.
(ii) if a tax benefit or tax benefits were allowable under this Act in respect of that eligible relevant expenditure, that person would not be liable to pay income tax in respect of that year of income;
82KH(1BA)
In the application of subsection (1B) in determining whether there is a tax saving amount in relation to an amount of eligible relevant expenditure incurred by a taxpayer in a case where, if a tax benefit or tax benefits were allowable in respect of that eligible relevant expenditure, a person (whether the taxpayer or another person and whether in the capacity of a trustee of a trust estate or otherwise) would:
(a) have a tax loss for a year of income that the person would not have; or
(b) have a greater tax loss for a year of income than the person would have;
if a tax benefit were not allowable in respect of any part of that eligible relevant expenditure, apply Division 36 and former Subdivision 375-G of the Income Tax Assessment Act 1997 as if the amount were relevant expenditure but not eligible relevant expenditure.
82KH(1D)
Subject to subsection (1E), where, in respect of any 2 or more amounts of eligible relevant expenditure (whether incurred by one taxpayer or by 2 or more taxpayers and whether incurred in one year of income or in 2 or more years of income), the following conditions are satisfied, namely:
(a) if subsection (1B) were applied in relation to one of those amounts of eligible relevant expenditure in relation to a person (whether or not that person is the person or one of the persons who incurred the eligible relevant expenditure) in relation to a year of income on the assumption that no tax benefit is or was allowable in respect of any part of the other amount of eligible relevant expenditure, or in respect of any part of any of the other amounts of eligible relevant expenditure, as the case may be, the tax saving amount determined in accordance with that subsection would be greater than the tax saving amount that would be determined in accordance with that subsection in relation to that amount of eligible relevant expenditure in relation to that person in relation to that year of income if that subsection were applied on the assumption that a tax benefit or tax benefits were allowable under this Act in respect of the other amount of eligible relevant expenditure, or in respect of each of the other amounts of eligible relevant expenditure, as the case may be; and
(b) if paragraph (a) of this subsection were applied in relation to that person in relation to that year of income in relation to the other amount of eligible relevant expenditure, or in relation to each of the other amounts of eligible relevant expenditure, as the case may be, the condition specified in that paragraph would be satisfied in relation to that other amount or in relation to each of those other amounts, as the case may be;
then, in the application of subsection (1B) in calculating the tax saving amount in relation to that person in relation to the year of income in relation to any one of the amounts of eligible relevant expenditure first referred to in this subsection, it shall be assumed that no tax benefit is or was allowable in respect of any part of the other of those amounts or in respect of any part of any of the other of those amounts, as the case may be.
82KH(1E)
Where:
(a) but for this subsection, subsection (1D) would apply to require it to be assumed, for the purposes of the application of subsection (1B) in relation to an amount of eligible relevant expenditure, that no tax benefit is or was allowable in respect of any part of another amount of eligible relevant expenditure (in this subsection referred to as the allowable relevant expenditure ); and
(b) section 82KL does not and will not operate to deem a tax benefit not to be allowable and never to have been allowable in respect of any part of the allowable relevant expenditure;
subsection (1D) shall not apply and shall be taken never to have applied so as to require it to be assumed, in the application of subsection (1B) in relation to an amount of eligible relevant expenditure other than the allowable relevant expenditure, that no tax benefit is or was allowable in respect of any part of the allowable relevant expenditure.
82KH(1F)
For the purposes of this Subdivision, an amount of relevant expenditure incurred by a taxpayer shall be taken to be an amount of eligible relevant expenditure if:
(a) that amount of relevant expenditure was incurred after 24 September 1978 by reason of, as a result of or as part of a tax avoidance agreement entered into after that date;
(b) by reason of, as a result of or as part of the tax avoidance agreement the taxpayer has obtained, in relation to that relevant expenditure being incurred, a benefit or benefits in addition to:
(i) in a case to which subparagraph (ii) does not apply:
(A) the benefit in respect of which the relevant expenditure was incurred; and
(B) any benefit that resulted directly or indirectly from the benefit in respect of which the relevant expenditure was incurred and is a benefit that, in the opinion of the Commissioner, might reasonably be expected to have resulted if the benefit in respect of which the relevant expenditure was incurred had been obtained otherwise than by reason of, as a result of or as part of a tax avoidance agreement; or
(ii) in a case where the relevant expenditure is relevant expenditure to which paragraph (w) of the definition of relevant expenditure in subsection (1) applies - any benefit that resulted directly or indirectly from the incurring of the relevant expenditure and is a benefit that, in the opinion of the Commissioner, might reasonably be expected to have resulted if the relevant expenditure had been incurred otherwise than by reason of, as a result of or as part of a tax avoidance agreement; and
(c) in a case where the relevant expenditure is relevant expenditure to which paragraph (s), (v) or (w) of the definition of relevant expenditure in subsection (1) applies - that amount of relevant expenditure was incurred by reason of, as a result of or as part of a tax avoidance agreement entered into before 28 May 1981.
82KH(1FA)
For the purposes of the application of subsection (1F) in relation to an amount of relevant expenditure to which paragraph (f) of the definition of relevant expenditure in subsection (1) applies, any benefit obtained by the taxpayer in relation to the making of the loan in respect of which the bad debt is incurred shall be taken to be a benefit obtained by the taxpayer in relation to that relevant expenditure being incurred.
82KH(1FB)
(Omitted by No 107 of 1989)
82KH(1G)
The reference in subsection (1F) to the benefit in respect of which relevant expenditure was incurred by a taxpayer shall be read as a reference to:
(a) in a case where the relevant expenditure is expenditure incurred by the taxpayer in borrowing money, being expenditure in respect of which a deduction would, apart from section 82KL , be allowable to the taxpayer under section 25-25 (Borrowing expenses) of the Income Tax Assessment Act 1997 - the making available to the taxpayer of the money borrowed by the taxpayer;
(b) in a case where the relevant expenditure is expenditure incurred by the taxpayer in connection with the discharge of a mortgage, being expenditure in respect of which a deduction would, apart from section 82KL , be allowable to the taxpayer under section 25-30 (Expenses of discharging a mortgage) of the Income Tax Assessment Act 1997 - the discharge of the mortgage;
(c) in a case where the relevant expenditure was incurred by the taxpayer in the purchase of property that, for the purposes of the application of this Act in relation to the taxpayer, is or was trading stock - the acquisition of that property by the taxpayer;
(d) in a case where the relevant expenditure was incurred by the taxpayer in respect of interest - the availability to the taxpayer of the money borrowed by the taxpayer;
(e) in a case where the relevant expenditure was incurred by the taxpayer in respect of rent - the use of the property in respect of which the rent was paid;
(f) in a case where the relevant expenditure incurred by the taxpayer was in respect of a bad debt - any interest received or receivable by the taxpayer in respect of the loan in respect of which the bad debt was incurred;
(g) in a case where the relevant expenditure was incurred by the taxpayer in respect of the production, marketing or distribution of a film or the acquisition of a copyright subsisting in a film and is relevant expenditure to which paragraph (g) of the definition of relevant expenditure in subsection (1) applies - the production, marketing or distribution of the film, or the acquisition of the copyright by the taxpayer, as the case may be;
(h) in a case where the relevant expenditure was incurred by the taxpayer in respect of a unit of industrial property, being a unit of industrial property that relates to copyright subsisting in a film, and is relevant expenditure to which paragraph (h) of the definition of relevant expenditure in subsection (1) applies - the ownership by the taxpayer of the unit of industrial property;
(j) (Omitted by No 107 of 1989)
(k) in a case where the relevant expenditure was incurred by the taxpayer in the purchase of consumable supplies - the acquisition of those consumable supplies by the taxpayer;
(m) in a case where the relevant expenditure was incurred by the taxpayer in respect of market research - the undertaking of the research, or the provision of the information, advice or assistance, in respect of which the relevant expenditure was incurred;
(n) in a case where the relevant expenditure was incurred by the taxpayer in respect of the acquisition of a unit of industrial property, being a licence under a copyright subsisting in computer software - the acquisition by the taxpayer of the unit of industrial property;
(o) in a case where the relevant expenditure was incurred by the taxpayer by way of commission for collecting assessable income of the taxpayer - the collection on behalf of the taxpayer of assessable income of the taxpayer;
(p) in a case where the relevant expenditure was incurred by the taxpayer in respect of the growing, care or supervision of trees on behalf of the taxpayer - the growing, care or supervision of the trees on behalf of the taxpayer;
(pa) in a case where the relevant expenditure was incurred by the taxpayer in respect of the establishment and tending of trees for felling on behalf of the taxpayer - the establishment and tending of trees for felling on behalf of the taxpayer;
(q) in a case where the relevant expenditure was incurred by the taxpayer for the purpose of increasing the value of shares in a company, being shares held or beneficially owned by the taxpayer as trading stock - the increase in the value of those shares;
(r) in a case where the relevant expenditure was incurred by the taxpayer in respect of the production of, or the procuration of the production of, a master sound recording - any amount payable to the taxpayer in respect of the master sound recording, being an amount that, in the opinion of the Commissioner, would be payable to the taxpayer as a result of the incurring by the taxpayer of the relevant expenditure if that expenditure had been incurred by reason of, as a result of or as part of an agreement other than a tax avoidance agreement;
(s) in a case where the relevant expenditure consists of calls paid by the taxpayer on shares owned by the taxpayer and is relevant expenditure to which paragraph (s) of the definition of relevant expenditure in subsection (1) applies - the satisfaction of any liability of the taxpayer to pay the calls and the taxpayer ' s continuing ownership of the shares; and
(t) (Omitted by No 100 of 1991)
(u) in a case where the relevant expenditure was incurred by the taxpayer in respect of a unit of industrial property and is relevant expenditure to which paragraph (v) of the definition of relevant expenditure in subsection (1) applies - the ownership by the taxpayer of the unit of industrial property.
82KH(1H)
For the purposes of paragraph (1F)(b), but without limiting the generality of that paragraph, where:
(a) an amount of relevant expenditure is incurred by a taxpayer by reason of, as a result of or as part of a tax avoidance agreement;
(b) in relation to that relevant expenditure being incurred and by reason of, as a result of or as part of the tax avoidance agreement or by reason of an act, transaction or circumstance occurring as part of, in connection with or as a result of the tax avoidance agreement, the taxpayer or an associate of the taxpayer acquires from another person the right to recover the amount of a debt that was owed to that other person; and
(c) by reason of, as a result of or as part of the tax avoidance agreement or by reason of an act, transaction or circumstance occurring as part of, in connection with or as a result of the tax avoidance agreement, no consideration was paid or given by the taxpayer or the associate of the taxpayer, as the case may be, in respect of the acquisition of that right or the amount or value of the consideration paid or given by the taxpayer or the associate of the taxpayer, as the case may be, in respect of the acquisition of that right was less than the amount of the debt,
the taxpayer shall be deemed to have obtained, by reason of the tax avoidance agreement and in relation to the relevant expenditure being incurred by the taxpayer, a benefit having a value equal to:
(d) in a case where no consideration was paid or given by the taxpayer or the associate of the taxpayer, as the case may be, in respect of the acquisition of the right to recover the amount of the debt - the amount of the debt; and
(e) in any other case - the amount by which the amount of the debt exceeds the amount or value of the consideration paid or given by the taxpayer or the associate of the taxpayer, as the case may be, in respect of the acquisition of the right to recover the amount of the debt.
82KH(1J)
For the purposes of paragraph (1F)(b), but without limiting the generality of that paragraph, where:
(a) an amount of relevant expenditure is incurred by a taxpayer by reason of, as a result of or as part of a tax avoidance agreement;
(b) in relation to that relevant expenditure being incurred and by reason of, as a result of or as part of the tax avoidance agreement or by reason of an act, transaction or circumstance occurring as part of, in connection with or as a result of the tax avoidance agreement:
(i) a debt becomes owing by the taxpayer or an associate of the taxpayer; or
(ii) a debt became owing, before or at the time of the incurring of the relevant expenditure, by the taxpayer or an associate of the taxpayer; and
(c) it may reasonably be expected that, by reason of, as a result of or as part of the tax avoidance agreement or by reason of an act, transaction or circumstance occurring as part of, in connection with or as a result of the tax avoidance agreement, the person to whom the debt is owed will release, abandon or fail to demand repayment of the debt or of a part of the debt,
the taxpayer shall be deemed to have obtained, by reason of the tax avoidance agreement and in relation to the relevant expenditure being incurred by the taxpayer, a benefit of an amount equal to the amount of the debt or that part of the debt, as the case may be.
82KH(1JA)
For the purposes of the application of subsection (1H) in relation to an amount of relevant expenditure incurred by a taxpayer, being relevant expenditure to which paragraph (f) of the definition of relevant expenditure in subsection (1) applies, a reference in paragraph (1H)(b) to the acquisition by the taxpayer or an associate of the taxpayer, in relation to that relevant expenditure being incurred, of the right to recover a debt shall be read as including a reference to the acquisition by the taxpayer or an associate of the taxpayer, in relation to the making by the taxpayer of the loan in respect of which the relevant expenditure was incurred, of such a right.
82KH(1JB)
For the purposes of the application of subsection (1J) in relation to an amount of relevant expenditure incurred by a taxpayer, being relevant expenditure to which paragraph (f) of the definition of relevant expenditure in subsection (1) applies, a reference in paragraph (1J)(b) to a debt becoming owing, or having become owing, by the taxpayer or an associate of the taxpayer in relation to that relevant expenditure being incurred, shall be read as including a reference to a debt becoming owing, or having become owing, by the taxpayer or an associate of the taxpayer, in relation to the making by the taxpayer of the loan in respect of which the relevant expenditure was incurred.
82KH(1JC)
(Omitted by No 107 of 1989)
82KH(1JD)
(Omitted by No 107 of 1989)
82KH(1JE)
For the purposes of paragraph (1F)(b), but without limiting the generality of that paragraph, where:
(a) an amount of relevant expenditure is incurred by a taxpayer by reason of, as a result of or as part of a tax avoidance agreement;
(b) that relevant expenditure consists of calls paid by the taxpayer on shares owned by the taxpayer and is relevant expenditure to which paragraph (s) of the definition of relevant expenditure in subsection (1) applies; and
(c) in relation to that relevant expenditure being incurred and by reason of, as a result of or as part of the tax avoidance agreement or by reason of an act, transaction or circumstance occurring as part of, in connection with or as a result of the tax avoidance agreement, consideration (in this subsection referred to as the relevant consideration ) is paid or given to the taxpayer or an associate of the taxpayer in respect of the acquisition by any person from the taxpayer of:
(i) all or any of those shares;
(ii) the right to purchase all or any of those shares; or
(iii) the right to require a person to vote, in a meeting of shareholders of the company, in favour of a resolution to vary the rights attached to all or any of those shares;
the taxpayer shall be deemed to have obtained, by reason of the tax avoidance agreement and in relation to the relevant expenditure being incurred by the taxpayer, a benefit in addition to the benefits referred to in subparagraphs (1F)(b)(i) and (ii) having a value equal to the amount or value of the relevant consideration reduced by the amount or value of the part (if any) of that relevant consideration that, in the opinion of the Commissioner, is attributable to expenditure (other than the relevant expenditure) incurred by the taxpayer in respect of the shares.
82KH(1K)
Where:
(a) 2 or more amounts of relevant expenditure are incurred by a taxpayer (whether in the same year of income or in different years of income) by reason of, as a result of or as part of the same tax avoidance agreement;
(b) the same paragraph of the definition of relevant expenditure in subsection (1) applies in relation to each of those amounts; and
(c) those amounts were incurred in respect of the same benefit;
those amounts shall, for the purposes of this Subdivision, be treated as together constituting one amount of relevant expenditure.
82KH(1L)
For the purposes of subsection (1K), 2 or more amounts of relevant expenditure shall be taken to have been incurred in respect of the same benefit if:
(a) in a case where paragraph (a) of the definition of relevant expenditure in subsection (1) applies in relation to each of those amounts - those amounts were incurred in respect of the same loan;
(b) in a case where paragraph (b) of the definition of relevant expenditure in subsection (1) applies in relation to each of those amounts - those amounts were incurred in respect of the discharge of the same mortgage;
(c) in a case where paragraph (c) of the definition of relevant expenditure in subsection (1) applies in relation to each of those amounts - those amounts were incurred in the purchase of the same property;
(d) in a case where paragraph (d) of the definition of relevant expenditure in subsection (1) applies in relation to each of those amounts - those amounts were incurred in respect of the same loan;
(e) in a case where paragraph (e) of the definition of relevant expenditure in subsection (1) applies in relation to each of those amounts - those amounts were incurred in respect of the same property;
(f) in a case where paragraph (f) of the definition of relevant expenditure in subsection (1) applies in relation to each of those amounts - those amounts were incurred in respect of the same loan;
(g) in a case where paragraph (g) of the definition of relevant expenditure in subsection (1) applies in relation to each of those amounts - those amounts were incurred in respect of the same film;
(h) in a case where paragraph (h) of the definition of relevant expenditure in subsection (1) applies in relation to each of those amounts - those amounts were incurred in respect of the same film;
(j) (Omitted by No 107 of 1989)
(k) in a case where paragraph (k) of the definition of relevant expenditure in subsection (1) applies in relation to each of those amounts - those amounts were incurred in the purchase of the same property;
(m) in a case where paragraph (m) of the definition of relevant expenditure in subsection (1) applies in relation to each of those amounts - those amounts were incurred in respect of the same market research;
(n) in a case where paragraph (n) of the definition of relevant expenditure in subsection (1) applies in relation to each of those amounts - those amounts were incurred in respect of the same unit of industrial property;
(o) in a case where paragraph (o) of the definition of relevant expenditure in subsection (1) applies in relation to each of those amounts - those amounts were incurred in respect of the same source of assessable income;
(p) in a case where paragraph (p) or paragraph (pa) of the definition of relevant expenditure in subsection (1) applies in relation to each of those amounts - those amounts were incurred in respect of trees on the same parcel of land;
(q) in a case where paragraph (q) of the definition of relevant expenditure in subsection (1) applies in relation to each of those amounts - those amounts were incurred in respect of the same shares;
(r) in a case where paragraph (r) of the definition of relevant expenditure in subsection (1) applies in relation to each of those amounts - those amounts were payable to the same person;
(s) in a case where paragraph (s) of the definition of relevant expenditure in subsection (1) applies in relation to each of those amounts - those amounts were calls paid on shares in the same company;
(t) (Omitted by No 100 of 1991)
(u) (Omitted by No 107 of 1989)
(v) in a case where paragraph (v) of the definition of relevant expenditure in subsection (1) applies in relation to each of those amounts - those amounts were incurred in respect of the same unit of industrial property; and
(w) in a case where paragraph (w) of the definition of relevant expenditure in subsection (1) applies in relation to each of those amounts - those amounts were incurred in respect of the same source of assessable income or in carrying on the same business.
82KH(1M)
For the purposes of this Subdivision, a person who obtains a benefit by reason of an act, transaction or circumstance that occurs as part of, in connection with or as a result of a tax avoidance agreement shall be deemed to have obtained that benefit by reason of the tax avoidance agreement.
82KH(1N)
Where, for the purposes of the application of any provision of this Subdivision, it is required to be assumed that a tax benefit is not or was not allowable in respect of any part of an amount of eligible relevant expenditure and that expenditure is expenditure that was incurred in the acquisition of property that, for the purposes of the application of this Act in relation to the person who incurred the expenditure, is or was trading stock, it shall also be assumed, for the purposes of the application of that provision, that, for the purposes of the application of Division 70 (Trading stock) or 385 (Primary production) of the Income Tax Assessment Act 1997 in relation to that property in relation to the person who incurred the expenditure, that the cost of that property is, and at all times was, nil.
82KH(1P)
For the purposes of this Subdivision, any benefit that has been obtained by an associate of a taxpayer by reason of, as a result of or as part of a tax avoidance agreement, being a benefit that was obtained in relation to the incurring by the taxpayer, by reason of, as a result of or as part of that tax avoidance agreement, of relevant expenditure, not being relevant expenditure to which subsection (1Q) applies, shall be taken to be a benefit that was obtained by the taxpayer by reason of that tax avoidance agreement and in relation to that relevant expenditure being incurred by the taxpayer.
82KH(1Q)
For the purposes of this Subdivision, any benefit that has been obtained by an associate of a taxpayer by reason of, as a result of or as part of a tax avoidance agreement, being a benefit that was obtained in relation to:
(a) the incurring by the taxpayer, by reason of, as a result of or as part of that tax avoidance agreement, of relevant expenditure to which paragraph (f) of the definition of relevant expenditure in subsection (1) applies; or
(b) the making by the taxpayer, by reason of, as a result of or as part of that tax avoidance agreement, of the loan in respect of which relevant expenditure to which that paragraph applies was incurred;
shall be taken to be a benefit that was obtained by the taxpayer by reason of that tax avoidance agreement and in relation to the relevant expenditure being incurred by the taxpayer or that loan being made by the taxpayer, as the case may be.
82KH(1R)
(Omitted by No 107 of 1989)
82KH(1S)
For the purposes of the application of this section in determining the amount of any additional benefit obtained by a taxpayer in relation to an amount of relevant expenditure to which paragraph (h) of the definition of relevant expenditure in subsection (1) applies being incurred, being expenditure that, by virtue of the expenditure of moneys (in this subsection referred to as the partnership moneys ) by a partnership, is deemed by former section 124KA to have been incurred by the taxpayer:
(a) the partnership shall be taken to be an associate of the taxpayer;
(b) a reference to the relevant expenditure being incurred by the taxpayer shall be read as including a reference to the partnership moneys being expended by the partnership; and
(c) any benefit obtained by the partnership in relation to the partnership moneys being expended by the partnership shall be taken to have been obtained by the taxpayer in relation to the relevant expenditure being incurred by the taxpayer to such extent only as the Commissioner considers fair and reasonable.
82KH(1T)
Where:
(a) a taxpayer expends moneys (in this subsection referred to as the film moneys ) in producing, or by way of contribution to the cost of producing, a film; and
(b) by virtue of the operation of former subsection 124K(2) , a part only of the film moneys is taken to be an amount of relevant expenditure to which paragraph (h) of the definition of relevant expenditure in subsection (1) applies,
for the purposes of the application of this section in determining the amount of any additional benefit obtained by the taxpayer in relation to the relevant expenditure being incurred:
(c) a reference to the relevant expenditure being incurred by the taxpayer shall read as including a reference to the film moneys being expended by the taxpayer; and
(d) any benefit obtained by the taxpayer in relation to the film moneys being expended by the taxpayer shall be taken to have been obtained by the taxpayer in relation to the relevant expenditure being incurred by the taxpayer to such extent only as the Commissioner considers fair and reasonable.
82KH(2)
A reference in this Subdivision to the supply of goods or the provision of services shall be read as not including a reference to the making available of money by way of loan.
82KH(3)
For the purposes of this Subdivision, an agreement shall be taken to have been entered into or carried out for a particular purpose, or for purposes that included a particular purpose, if any of the parties to the agreement entered into or carried out the agreement for that purpose, or for purposes that included that purpose, as the case may be.
82KH(4)
A reference in this Subdivision to a person shall be read as including a reference to a person in the capacity of a trustee.
82KH(5)
A reference in this Subdivision to a provision of the Income Tax Assessment Act 1997 includes a reference to the corresponding provision of the Income Tax Assessment Act 1936.
SECTION 82KJ 82KJ DEDUCTION NOT ALLOWABLE IN RESPECT OF CERTAIN PRE-PAID OUTGOINGS
Where:
(a) a loss or outgoing in respect of which a deduction would, but for this Subdivision, be allowable, was incurred by a taxpayer after 19 April 1978 by reason of, as a result of or as part of a tax avoidance agreement;
(b) having regard to the benefit in respect of which the loss or outgoing was incurred (but without regard to any benefit relating to the acquisition or possible acquisition of the property referred to in paragraph (c)), the amount of the loss or outgoing was greater than the amount (if any) that might reasonably be expected to have been incurred, at the time when the loss or outgoing was incurred, in respect of that benefit if the loss or outgoing had not been incurred by reason of, as a result of or as part of a tax avoidance agreement;
(c) property has been, will be, or may reasonably be expected to be, acquired by the taxpayer or by an associate of the taxpayer as a result of, by reason of, or as part of the tax avoidance agreement; and
(d) the consideration (if any) that was payable in respect of the acquisition of that property was less, or the consideration that may reasonably be expected to be payable in respect of the acquisition of that property is less, than the consideration that might reasonably be expected to have been payable, or to be payable, as the case may be, in respect of the acquisition of that property if the loss or outgoing had not been incurred,
notwithstanding any other provision of this Act, a deduction is not allowable to the taxpayer in respect of the loss or outgoing.
This section applies to a loss or outgoing incurred by a taxpayer if:
(a) the loss or outgoing was incurred after 19 April 1978 and was incurred to an associate of the taxpayer;
(b) a deduction is allowable to the taxpayer in respect of that loss or outgoing; and
(c) the deduction allowable in respect of that loss or outgoing would, but for this section, be allowable to the taxpayer in the year of income in which the loss or outgoing was incurred and:
(i) in a case where the loss or outgoing is in respect of interest that, if it had actually been paid, would be subject to withholding tax under Division 11A - the withholding tax payable in respect of the whole or a part of the interest is not payable until a time occurring in a subsequent year of income; and
82KK(2) [Where no provision of goods, services]
(ii) in any other case - the whole or a part of the amount incurred to the associate will not be included in the assessable income of the associate until a subsequent year of income.
Notwithstanding any other provision of this Act, where:
(a) a taxpayer incurs in a year of income (in this subsection referred to as the relevant year of income ) a loss or outgoing (not being a loss or outgoing in respect of the supply of goods or the provision of services at a time that occurs after, or during a period that occurs after or extends beyond, the end of the relevant year of income) and the loss or outgoing is a loss or outgoing to which this section applies; and
(b) the loss or outgoing was incurred by reason of, as a result of, as part of or in connection with an agreement, course of conduct or course of business that was entered into or carried out for the purpose, or for purposes that included the purpose, of securing that -
(i) in a case where the loss or outgoing is in respect of interest that, if it had actually been paid, would be subject to withholding tax under Division 11A - the withholding tax payable in respect of the whole or a part of the interest will not be payable until a time occurring in a subsequent year of income; and
(ii) in any other case - the whole or a part of the amount incurred to the associate would not be included in the assessable income of the associate until a subsequent year of income,
the loss or outgoing shall, for the purposes of this Act, be deemed to have been incurred by the taxpayer in the relevant year of income and in any subsequent year of income only to the extent to which the loss or outgoing represents an amount actually paid during the relevant year of income or that subsequent year of income by the taxpayer to the person to whom the loss or outgoing is incurred.
82KK(3) [Where goods or services provided]Notwithstanding any other provision of this Act but subject to subsection (4), where:
(a) a taxpayer incurs in a year of income a loss or outgoing in respect of the supply of goods or the provision of services at a time that occurs after, or during a period that occurs after or extends beyond, the end of the year of income and the loss or outgoing is a loss or outgoing to which this section applies; and
(b) the loss or outgoing was incurred by reason of, as a result of or as part of an agreement that was entered into or carried out for the purpose, or for purposes that included the purpose, of securing that:
(i) a deduction would be allowable to the taxpayer in a year of income in respect of the loss or outgoing; and
(ii) the whole or a part of the amount of the loss or outgoing would not be included in the assessable income of the person to whom the loss or outgoing was incurred until a subsequent year of income,
that loss or outgoing shall, for the purposes of this Act, be deemed to have been incurred by the taxpayer in the year of income in which, or in the years of income in which, goods to which the loss or outgoing relates are supplied or services to which the loss or outgoing relates are provided.
82KK(4) [Provision of goods, services in two or more years]Where, by virtue of subsection (3), a loss or outgoing incurred by a taxpayer in respect of the supply of goods or the provision of services is deemed to have been incurred by the taxpayer in each of 2 or more years of income, there shall be allowable as a deduction to the taxpayer in each such year of income so much only of the amount that, apart from this section, would be allowable as a deduction in respect of the loss or outgoing as the Commissioner considers reasonable having regard to the extent to which the goods in respect of which the loss or outgoing was incurred were supplied or the services in respect of which the loss or outgoing was incurred were provided, in each of those years of income.
82KK(5) [Incidental purpose]In determining whether paragraph (2)(b) or (3)(b) applies in relation to a loss or outgoing, no regard shall be had to a purpose that is a merely incidental purpose.
Where the sum of the amount or value of the additional benefit in relation to an amount of eligible relevant expenditure incurred by a taxpayer and the expected tax saving in relation to that amount of eligible relevant expenditure is equal to or greater than the amount of the eligible relevant expenditure, notwithstanding any other provision of this Act but subject to this section, a tax benefit is not and shall be deemed never to have been, allowable in respect of any part of that amount of eligible relevant expenditure.
82KL(2)
Where, at any time, the Commissioner is of the opinion that, apart from this subsection, subsection (1) might reasonably be expected, at a later time, to operate to deem a tax benefit not to be allowable and never to have been allowable in respect of expenditure or a loss or outgoing incurred by a taxpayer then, notwithstanding any other provision of this Act but subject to this section, a tax benefit is not allowable and shall be deemed never to have been allowable in respect of that expenditure or that loss or outgoing, as the case may be.
82KL(3)
Where, in the making of an assessment, subsection (2) has been applied by reason that the Commissioner was of the opinion that a particular circumstance would exist and the Commissioner later becomes satisfied that that circumstance will not exist, then, notwithstanding anything contained in section 170 , the Commissioner may amend the assessment at any time for the purposes of ensuring that this Subdivision shall be taken always to have applied on the basis that that circumstance did not, and would not, exist.
82KL(4)
Where:
(a) an amount of eligible relevant expenditure is incurred by a partnership;
(b) apart from this subsection, this section would not operate to deem a tax benefit not to be allowable and never to have been allowable in respect of any part of that amount of eligible relevant expenditure; and
(c) the Commissioner is satisfied that any partner in the partnership became a partner in the partnership by reason of or as a result of an agreement (whether or not that agreement was the agreement by virtue of which the partner became a partner in the partnership) that was entered into by any of the parties to the agreement for the purpose, or primarily for the purpose, of ensuring that this section would not operate to deem a tax benefit not to be allowable and never to have been allowable in respect of any part of the amount of the eligible relevant expenditure;
then, notwithstanding any other provision of this Act, a tax benefit is not allowable and shall be deemed never to have been allowable in respect of any part of that amount of eligible relevant expenditure.
82KL(5)
Where:
(a) in the making of an assessment, this section has been applied on the basis that a taxpayer was to be taken to have obtained a benefit by reason that it was reasonable to expect that a person to whom a debt was owed by the taxpayer or an associate of the taxpayer would release, abandon or fail to demand repayment of the debt or of a part of the debt; and
(b) the whole or a part of that debt or of that part of the debt is repaid;
then, notwithstanding anything contained in section 170 , the Commissioner may amend the assessment at any time for the purposes of ensuring that this Subdivision shall be taken never to have applied on the basis that it was reasonable to expect that the person to whom the debt was owed would release, abandon or fail to demand repayment of the amount that was repaid.
82KL(6)
Where subsection (1), (2) or (4) deems a tax benefit not to be and never to have been allowable in respect of a loss or outgoing incurred by a taxpayer in the purchase of property that, for the purposes of the application of this Act and the Income Tax Assessment Act 1997 in relation to the taxpayer is or was trading stock, then, notwithstanding any other provision of this Act or that Act, the cost or cost price of that property, for the purposes of the application of Subdivision B of Division 2 of Part III of this Act or Division 70 (Trading stock) or 385 (Primary production) of the Income Tax Assessment Act 1997 in relation to that property in relation to the taxpayer, shall be taken to be, and at all times to have been, nil.
82KL(7)
Where, at any time after the making of an assessment in relation to a taxpayer, the taxpayer considers that the Commissioner ought to amend the assessment in accordance with subsection (3) or (5), the taxpayer may post to or lodge with the Commissioner a request in writing for an amendment of the assessment in accordance with subsection (3) or (5) or in accordance with subsections (3) and (5).
82KL(8)
The Commissioner shall consider the request and shall serve on the taxpayer, by post or otherwise, a written notice of the Commissioner's decision on the request.
82KL(9)
If the taxpayer is dissatisfied with the Commissioner ' s decision on the request, the taxpayer may object against it in the manner set out in Part IVC of the Taxation Administration Act 1953 .
82KL(10)
(Omitted by No 216 of 1991)
Subdivision H - Period of deductibility of certain advance expenditure
In this Subdivision, unless the contrary intention appears:
agreement
means any agreement, arrangement, understanding or scheme, whether formal or informal, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings.
approved stock exchange
(Repealed by No 114 of 2010)
associate
has the meaning given by section
318
.
eligible service period
, in relation to an amount of expenditure incurred under an agreement, means the period from the beginning of:
(a) the day, or the first day, on which the thing to be done under the agreement in return for the amount of expenditure is required, or permitted, as the case may be, to commence being done; or
(b) if the expenditure is incurred on a later day - the day on which the expenditure is incurred;
until the end of:
(c) the day, or the last day, on which the thing to be done under the agreement in return for the amount of expenditure is required, or permitted, as the case may be, to cease being done; or
(d) if that day or last day ends more than 10 years after the beginning of the period - 10 years after the beginning of the period.
excluded expenditure
means an amount of expenditure:
(a) less than $ 1,000; or
(b) required to be incurred by a law, or by an order of a court, of the Commonwealth, a State or a Territory; or
(c) under a contract of service; or
(d) to the extent that it is of a capital nature and cannot be deducted under:
(i) section 355-205 (R & D expenditure); or
of the Income Tax Assessment Act 1997 ; or
(ii) section 355-480 (earlier year associate R & D expenditure);
(da) to the extent that it is of a private or domestic nature; or
(e) that has been or is incurred after 21 September 1999 by a general insurance company in connection with the issue of a general insurance policy and was related or relates to the gross premiums derived by the company in respect of the policy; or
(f) that has been or is incurred after 21 September 1999 by a general insurance company in payment of reinsurance premiums in respect of the reinsurance of risks covered by general insurance policies, other than reinsurance premiums that were or are paid in respect of a particular class of insurance business where, under the contract of reinsurance, the reinsurer agrees, in respect of a loss incurred by the company that is covered by the relevant policy, to pay only some or all of the excess over an agreed amount.
pre-RBT obligation
means a contractual obligation that:
(a) exists under an agreement at or before 11.45 am (by legal time in the Australian Capital Territory) on 21 September 1999; and
(b) requires the payment of an amount for the doing of a thing under the agreement; and
(c) requires the payment to be made before the doing of the thing; and
(d) cannot be escaped by unilateral action by the party bound by the obligation to make the payment.
R
&
D activities
has the same meaning as in the
Income Tax Assessment Act 1997
.
research and development activities
(Repealed by No 93 of 2011)
small business taxpayer
(Repealed by
No 80 of 2007
)
STS taxpayer
(Repealed by
No 80 of 2007
)
82KZL(2)
Without otherwise limiting the generality of references in this Subdivision to expenditure being incurred under an agreement in return for the doing of a thing under the agreement:
(a) where expenditure incurred under an agreement consists of a payment of loan interest or a payment of a similar kind, the expenditure shall, for the purposes of this Subdivision, be taken to be incurred in return for the making available or continued making available, as the case requires, of the loan principal, or other amount of a similar kind, under the agreement during the period to which the payment relates; and
(b) where expenditure incurred under an agreement consists of a payment of rent, a lease payment or a payment of a similar kind, the expenditure shall, for the purposes of this Subdivision, be taken to be incurred in return for the making available or continued making available, as the case requires, of the thing rented or leased, or other thing of a similar kind, under the agreement during the period to which the payment relates; and
(c) where expenditure incurred under an agreement consists of a payment of an insurance premium or a payment of a similar kind, the expenditure shall, for the purposes of this Subdivision, be taken to be incurred in return for the provision or continued provision, as the case requires, of insurance against the risk concerned, or of a thing of a similar kind, under the agreement during the period to which the payment relates.
82KZL(3)
This Subdivision has effect as if conducting R & D activities were carrying on a business.
SECTION 82KZLA 82KZLA SUBDIVISION DOES NOT APPLY TO FINANCIAL ARRANGEMENTS TO WHICH SUBDIVISION 250-E APPLIES
To avoid doubt, this Subdivision does not apply to:
(a) a Division 230 financial arrangement (within the meaning of the Income Tax Assessment Act 1997 ); or
(b) a financial benefit (within the meaning of that Act) that is provided or received in relation to such an arrangement.
Note:
See section 250-210 of the Income Tax Assessment Act 1997 .
In addition to its application apart from this section, this Subdivision applies to expenditure deductible under section 355-480 of the Income Tax Assessment Act 1997 as if:
(a) references in this Subdivision to incurring the expenditure were references to paying the expenditure; and
(b) references in this Subdivision to the expenditure year were references to the payment year.
Where: (a) a taxpayer incurs expenditure under an agreement entered into after 25 May 1988; and (aa) at least one of the following applies:
(i) the taxpayer is a small business entity, or is covered by subsection (1A), for the year of income and has not chosen to apply section 82KZMD to the expenditure;
(ii) the taxpayer is an individual and the expenditure is not incurred in carrying on a business;
(b) the expenditure is not excluded expenditure; and (ba) either:
(iii) the expenditure meets a pre-RBT obligation (see subsection 82KZL(1) ); and
(i) the eligible service period for the expenditure is longer than 12 months; or
(c) apart from this section, a deduction under:
(ii) the eligible service period for the expenditure is 12 months or shorter but ends after the last day of the year of income after the one in which the expenditure was incurred; and
(i) section 8-1 ; or
of the Income Tax Assessment Act 1997 , in respect of the expenditure, would be allowable from the taxpayer ' s assessable income for the year of income in which the expenditure is incurred;
(ii) section 355-205 (R & D expenditure) or 355-480 (earlier year associate R & D expenditure);
then, for the purposes of this Act, instead of the deduction being allowable as mentioned in paragraph (c), a proportion of the deduction is allowable from the assessable income of the taxpayer of each year of income during which the whole or part of the eligible service period in relation to the expenditure occurs, being a proportion ascertained in accordance with the formula:
|
Period in year
Eligible service period |
where:
Period in year is the number of days in the whole or the part of the eligible service period that occurs in the year of income.
Eligible service period is the number of days in the eligible service period.
82KZM(1A)
A taxpayer is covered by this subsection for a year of income if: (a) the taxpayer is not a small business entity for the year of income; and (b) the taxpayer would be a small business entity for the year of income if:
(i) each reference in Subdivision 328-C (about what is a small business entity) of the Income Tax Assessment Act 1997 to $ 10 million were instead a reference to $ 50 million; and
(ii) the reference in paragraph 328-110(5)(b) of that Act to asmall business entity were instead a reference to a taxpayer covered by this subsection.
82KZM(2)
Subsection (1) has effect subject to Division 245 of the Income Tax Assessment Act 1997 .
Section 82KZMD sets the amount and timing of deductions for expenditure that a taxpayer incurs in a year of income (the expenditure year ), if:
(a) apart from that section, the taxpayer could deduct the expenditure for the expenditure year under:
(i) section 8-1 ; or
of the Income Tax Assessment Act 1997 ; and (b) the requirements in subsections (2), (3), (4) and (5) are met.
(ii) section 355-205 (R & D expenditure) or 355-480 (earlier year associate R & D expenditure);
The taxpayer:
(a) must:
(i) carry on a business; or
(b) if the taxpayer is a small business entity, or is covered by subsection (2A), for the expenditure year - must, before lodging its return of income for that year or within such further time as the Commissioner allows, choose to apply section 82KZMD to the expenditure.
(ii) be a taxpayer that is not an individual and that does not carry on a business; and
A taxpayer is covered by this subsection for the expenditure year if: (a) the taxpayer is not a small business entity for the expenditure year; and (b) the taxpayer would be a small business entity for the expenditure year if:
(i) each reference in Subdivision 328-C (about what is a small business entity) of the Income Tax Assessment Act 1997 to $ 10 million were instead a reference to $ 50 million; and
(ii) the reference in paragraph 328-110(5)(b) of that Act to a small business entity were instead a reference to a taxpayer covered by this subsection.
82KZMA(3)
The expenditure must be: (a) either:
(i) incurred in carrying on a business; or
(b) incurred under an agreement (see subsection 82KZL(1) ); and (c) incurred in return for the doing of a thing under the agreement that is not to be wholly done within the expenditure year.
(ii) incurred otherwise than in carrying on a business by a taxpayer that is not an individual; and
82KZMA(4) Requirement for expenditure not to be excluded expenditure.
The expenditure must not be excluded expenditure (see subsection 82KZL(1) ).
82KZMA(5) Requirement for expenditure not to meet pre-RBT obligation.The expenditure must not meet a pre-RBT obligation (see subsection 82KZL(1) ).
82KZMA(6) Relationship with other provisions.Section 82KZMD has effect:
(a) despite section 8-1 of the Income Tax Assessment Act 1997 ; and (b) subject to Division 245 of that Act.(Repealed by No 169 of 1999)
(Repealed by No 169 of 1999)
(Repealed by No 169 of 1999)
82KZMD(2)
For each year of income containing all or part of the eligible service period for the expenditure, the taxpayer may deduct the amount worked out using the formula:
| Expenditure × |
Number of days of eligible service period
in the year of income Total number of days of eligible service period |
Note:
This section does not apply to expenditure incurred by a small or medium business entity unless the entity chooses to apply this section to the expenditure: see paragraph 82KZMA(2)(b) .
Section 82KZMF applies to set the amount and timing of deductions for expenditure that a taxpayer incurs in a year of income (the expenditure year ) if:
(a) apart from that section, the taxpayer could deduct the expenditure for the expenditure year under:
(i) section 8-1 ; or
of the Income Tax Assessment Act 1997 ; and
(ii) section 355-205 (R & D expenditure) or 355-480 (earlier year associate R & D expenditure);
(b) (Repealed by No 78 of 2001)
(c) the requirements of subsections (2) and (3) are met.
Note:
There are some exceptions: see subsections (5), (7), (8) and (9).
82KZME(2) General requirements for expenditure.
The expenditure must be incurred:
(a) after 1 pm (by legal time in the Australian Capital Territory) on 11 November 1999 under an agreement; and
(b) in return for the doing of a thing under the agreement that is not to be wholly done within the expenditure year. 82KZME(3) Requirements for agreement.
There are these requirements for the agreement:
(a) the taxpayer ' s allowable deductions for the expenditure year that are attributable to the agreement must exceed the taxpayer ' s assessable income (if any) for the expenditure year that is attributable to the agreement; and
(b) the taxpayer does not have day to day control over the operation of the agreement (whether or not the taxpayer has the right to be consulted or give directions); and
(c) at least one of these must be satisfied:
(i) there is more than one participant in the agreement in the same capacity as the taxpayer;
82KZME(4) Activities that relate to the agreement.
(ii) the person who manages, arranges or promotes the agreement, or an associate of that person, manages, arranges or promotes similar agreements for other taxpayers.
Without affecting the operation of any other section in this Subdivision, an agreement referred to in this section includes all activities that relate to the agreement, including those that give rise to deductions or assessable income.
82KZME(5) Exception 1: certain negatively geared investments.(a) a premium for building insurance, contents insurance or rent protection insurance; or
(b) interest on money borrowed to acquire:
(i) real property or an interest in real property; or
(ii) shares that are listed for quotation in the official list of an approved stock exchange; or
(iii) units in a trust that has at least 300 beneficiaries and is a widely held unit trust as defined in section 272-105 in Schedule 2F ;
where:
(c) the taxpayer has obtained, or can reasonably be expected to obtain, rent, dividends or trust income from the agreement; and
(d) the taxpayer has not obtained and will not obtain any other kind of assessable income from the agreement (except a capital gain or an insurance receipt); and
(e) all aspects of the agreement have been conducted at arm ' s length. 82KZME(6)
(Repealed by No 4 of 2018)
82KZME(7) Exception 3: expenditure is excluded expenditure.
The expenditure must not be excluded expenditure (see subsection 82KZL(1) ).
82KZME(8) Exception 4: expenditure meets a pre-existing obligation.The expenditure by the taxpayer must not meet a contractual obligation that:
(a) exists under an agreement at or before 1 pm (by legal time in the Australian Capital Territory) on 11 November 1999; and
(b) requires the payment of an amount for the doing of a thing under the agreement; and
(c) requires the payment to be made before the doing of the thing; and
(d) cannot be escaped by unilateral action by the taxpayer. 82KZME(9) Exception 5: agreement to which a product ruling applies.
The expenditure must not be under an agreement to which a product ruling applies, describing expenditure under the agreement as being allowable as a deduction.
82KZME(10)The product ruling must be made:
(a) on or before 1 pm (by legal time in the Australian Capital Territory) on 11 November 1999; or
(b) in response to an application for a product ruling where:
(i) the application was received by the Commissioner on or before the time specified in paragraph (a); and
(ii) the Commissioner acknowledged receiving the application.
82KZME(11)
In this section:
product ruling
means a public ruling made under Part
IVAAA
of the
Taxation Administration Act 1953
about a particular investment product.
SECTION 82KZMF PROPORTIONAL DEDUCTION 82KZMF(1)
If this section applies to expenditure incurred by a taxpayer in a year of income:
(a) the taxpayer cannot deduct all of the expenditure for the expenditure year; and
(b) instead, the taxpayer can deduct, for each year of income during which part of the eligible service period for the expenditure occurs, an amount worked out using this formula:
| Expenditure | × |
Number of days of eligible service
period in the year of income |
|
| Total number of days of eligible
service period |
82KZMF(2)
This section has effect:
(a) despite section 8-1 of the Income Tax Assessment Act 1997 ; and
(b) subject to Division 245 of the Income Tax Assessment Act 1997 .
Note:
Deductions under section 355-205 or 355-480 of the Income Tax Assessment Act 1997 for R & D expenditure are subject to this section (see subsection 8-5(2) and section 355-105 of that Act).
82KZMF(3)
(Repealed by No 90 of 2000)
Sections 82KZMD and 82KZMF do not affect the timing of a deduction for expenditure incurred by a taxpayer in a year of income (the expenditure year ) to the extent that the requirements of this section are met.
There are these requirements for the expenditure:
(a) it must be incurred on or after 2 October 2001 and on or before 30 June 2008 under an agreement; and
(b) the eligible service period for the expenditure must be 12 months or shorter and must end on or before the last day of the year of income after the expenditure year; and
(c) it must be incurred in return for the doing of a thing under the agreement that is not to be wholly done within the expenditure year.
There are these requirements for the agreement:
(a) the agreement must be for planting and tending trees for felling; and
(b) the taxpayer must not have day to day control over the operation of the agreement (whether or not the taxpayer has the right to be consulted or give directions); and
(c) at least one of these must be satisfied:
(i) there is more than one participant in the agreement in the same capacity as the taxpayer;
82KZMG(4) Requirements for expenditure.
(ii) the person (the manager ) who manages, arranges or promotes the agreement, or an associate of that person, manages, arranges or promotes similar agreements for other taxpayers.
The expenditure incurred by the taxpayer must be paid for seasonally dependent agronomic activities undertaken by the manager during the establishment period for the relevant planting of trees for felling.
Example:82KZMG(5) [Establishment period]
Examples of seasonally dependent agronomic activities include:
• tending the seedlings prior to planting, and planting them; • ripping and mounding the site where the planting is to occur; • applying fertiliser, herbicide or pesticide in conjunction with the planting.
The establishment period for a particular planting of trees starts on the day when the first seasonally dependent agronomic activity for that planting is done and ends on the later of:
(a) the day when the last seedling is planted as part of that planting, not including replacement of seedlings already planted; and
(b) the day when any fertiliser, herbicide or pesticide is applied to the seedlings in conjunction with that planting.
A taxpayer cannot deduct expenditure in relation to which the requirements in section 82KZMG (apart from paragraph 82KZMG(2)(a) ) are met if:
(a) the taxpayer holds the taxpayer ' s interest in the agreement mentioned in section 82KZMG as an initial participant in the agreement; and
(b) a CGT event happens in relation to that interest within 4 years after the end of the year of income in which the taxpayer first incurred expenditure under the agreement; and
(c) the expenditure is incurred on or before 30 June 2008.
Paragraph (1)(b) does not apply to a CGT event if:
(a) the CGT event happens because of circumstances outside the taxpayer ' s control; and
Example:
The interest is compulsorily acquired.
(b) when the taxpayer acquired the interest, the taxpayer could not reasonably have foreseen the CGT event happening.
Despite section 170 , the Commissioner may amend the taxpayer ' s assessment at any time within 2 years after the end of the year of income in which the CGT event happens, for the purpose of giving effect to this section.
(a) a taxpayer holds an interest in an agreement mentioned in section 82KZMG as an initial participant in the agreement; and
(b) at least one of these conditions is satisfied:
(i) the taxpayer can deduct or has deducted an amount for a year of income in relation to the interest;
(ii) the condition in subparagraph (i) would be satisfied if section 82KZMGA were disregarded; and
(c) subsection 82KZMG(1) applies to the timing of the deduction (or would apply if section 82KZMGA were disregarded); and
(d) a CGT event happens in relation to the interest, other than a CGT event that happens in respect of thinning. 82KZMGB(2) [Determining income]
The taxpayer's assessable income for the year of income in which the CGT event happens includes:
(a) if, as a result of the CGT event, the taxpayer no longer holds the interest - the market value of the interest (worked out as at the time of the event); or
(b) otherwise - the decrease (if any) in the market value of the interest as a result of the CGT event. 82KZMGB(3) [Amounts received]
Any amount that the taxpayer actually receives because of the CGT event is not included in the taxpayer's assessable income (nor is it exempt income).
Where:
(a) under an agreement entered into either before or after the commencement of this section, a taxpayer (in this section called the original taxpayer ) incurs expenditure in return for the doing of a thing during a period after the incurring of the expenditure; and
(b) either:
(i) the original taxpayer transfers to another taxpayer (in this section called the recipient taxpayer ) all of his or her rights under the agreement in relation to the doing of the thing during the remainder of the period; or
(ii) the agreement is discharged (whether by performance or otherwise) in so far as it relates to the doing of the thing during the remainder of the period;
the following provisions have effect for the purpose of this Subdivision:
(c) if the whole or part of a deduction under former section 51 of this Act or section 8-1 of the Income Tax Assessment Act 1997 in respect of the expenditure is, because of this Subdivision, allowable from the assessable income of the original taxpayer of any year of income occurring after the year of income in which the transfer or discharge occurs - that deduction is instead allowable from the assessable income of the year of income in which the transfer, assignment or discharge occurs;
(d) if the recipient taxpayer incurs expenditure in return for the transfer - the recipient taxpayer shall be taken to have incurred, under an agreement entered into at the time of the transfer, so much of that expenditure as is not of a capital, private or domestic nature in return for the doing of the thing during the remainder of the period.
Where:
(a) under an agreement entered into after 25 May 1988, a person (in this section called the original person ), or the partners in a partnership (in this section called the original partnership ), incurs or incur expenditure in return for the doing of a thing during a period after the incurring of the expenditure;
(b) either of the following (in this section called a partnership change ) happens:
(i) a partnership is formed or the original partnership is dissolved, or both; or
with the result that, after the partnership change:
(ii) the constitution of the original partnership, or the interests of the partners in the original partnership, is or are varied;
(iii) a person (in this section called the later person ), or the partners in a partnership (in this section called the later partnership ), holds or hold all of any rights under the agreement to have the thing done during the period after the partnership change; and
(iv) the original person, or one or more of the partners in the original partnership, has an interest in the rights after the partnership change; and
(c) the whole or part of a deduction under former section 51 of this Act or section 8-1 of the Income Tax Assessment Act 1997 in respect of the expenditure (which whole or part is in this section called a spread deduction ) is, because of the application of this Subdivision, allowable from the assessable income of the original person or the original partnership of the year of income in which the partnership change happens or a subsequent year of income;
the following provisions have effect:
(d) if a spread deduction is allowable in relation to the year of income in which the partnership change occurs - the entitlement to the deduction shall, for the purposes of this Act but subject to any later application of this section, be apportioned between the original person or original partnership and the later person or later partnership according to the portions of the eligible service period in the year of income (or, if the case requires, of so much of the period as occurs after a partnership change resulting from a previous application of this section) that occur before and after the partnership change;
(e) if a spread deduction relates to a subsequent year of income - the later person or later partnership, instead of the original person or original partnership, shall, for the purposes of this Act but subject to any later application of this section, be entitled to the deduction;
(f) for the purposes of any later application of this section or section 82KZN , the later person or later partnership, instead of the original person or original partnership, shall be taken to have incurred the expenditure under the agreement.
This Division applies only for the purposes of:
(a) calculating an eligible CFC's attributable income for the purposes of Part X ; and
(b) defining convertible note . 82LA(2) [Similar term]
A term used in paragraph (1)(a) has the same meaning as it has when used in Part X .
In this Division, unless the contrary intention appears:
attributable income
has the meaning given by Division
7
of Part
X
.
CFC
or
controlled foreign company
has the meaning given by section
340
.
convertible note
includes a note issued by a company that provides, whether in pursuance of or by virtue of a trust deed or otherwise:
(a) that the amount of the loan to the company that is evidenced, acknowledged or created by the note or to which the note relates:
(i) whether with or without interest;
(ii) (Repealed by Act No 63 of 1998)
(iii) whether at the option of the holder or owner of the note or of some other person or not;
(iv) whether in whole or in part; or
is to be or may be converted into shares in the capital of the company or of another company or is to be or may be redeemed, repaid or satisfied by:
(v) whether exclusively or otherwise;
(vi) the allotment or transfer of shares in the capital of the company or of some other company, whether to the holder or owner of the note or to some other person;
(vii) the acquisition of such shares, whether by the holder or owner or by some other person, otherwise than as mentioned in subparagraph (vi); or
(viii) application in or towards paying-up, in whole or in part, the balance unpaid on shares issued or to be issued by the company or by some other company, whether to the holder or owner or to some other person; or
(b) that the holder or owner of the note is to have, or may have, any right or option to have allotted or transferred to him or her or to some other person, or for him or her or some other person otherwise to acquire, shares in the capital of the company or of some other company.
foreign loan
means a loan to a company raised outside Australia in a currency other than the currency of Australia.
instrument
includes debenture, bond, certificate, receipt or any other document or writing.
issued
includes given and executed, and
"
issue
"
has a corresponding meaning.
loan
, in relation to a company, means:
(a) a loan, advance or deposit of money to or with the company;
(b) money subscribed to the company; or
(c) any other form of debt or liability of the company;
whether secured or unsecured and whenever redeemable, repayable or to be satisfied.
notemeans a note or other instrument issued by a company that evidences, acknowledges, creates or relates to a loan to the company.
prescribed stock exchange
means an approved stock exchange (within the meaning of the
Income Tax Assessment Act 1997
) operating in Australia.
qualified person
, in relation to the valuing of a share in the capital of a company, means a person registered as a company auditor under a law in force in a State or a Territory, but does not include:
(a) a director, secretary or employee of the company;
(b) a partner, employer or employee of a person referred to in paragraph (a); or
(c) a partner or employee of an employee of a person so referred to.
the date of offer
, in relation to a loan to a company means the earliest date on which, by any relevant prospectus, notice, circular, advertisement or other written invitation, any person was or persons were invited to subscribe to the loan:
(a) in the case of a new loan - by the payment of money to the company; or
(b) in the case of an approved replacement loan - by converting, in whole or in part, an earlier loan, or by converting, in whole or in part, an earlier loan and the payment of money to the company.
the maturity date
, in relation to a loan to which a convertible note applies, means the date by which the whole of the loan is, under the terms applicable to the note, to be repaid, redeemed or satisfied.
the relevant valuation period
, in relation to a share, means:
(a) where neither paragraph (b) nor (c) applies in relation to the share - the period of one month ending on the date that is the valuation date in relation to the share;
(b) where:
(i) the share is included in a class of shares that, during the whole of the period of 2 months ending on the valuation date, was listed for quotation in the official list of a stock exchange that was a prescribed stock exchange during the whole of that period of 2 months, or in the official lists of 2 or more stock exchanges each of which was a prescribed stock exchange during the whole of that period of 2 months; and
that preceding period of one month; or
(ii) fully paid shares included in that class of shares were not recorded by that stock exchange or by any of those stock exchanges, as the case may be, as having been sold during the period of one month specified in paragraph (a) but were recorded by that stock exchange or by one or more of those stock exchanges, as the case may be, as having been sold during the period of one month immediately preceding the commencement of the period of one month so specified;
(c) where:
(i) the share is included in a class of shares that, during the whole of the period of 3 months ending on the valuation date, was listed for quotation in the official list of a stock exchange that was a prescribed stock exchange during the whole of that period of 3 months, or in the official lists of 2 or more stock exchanges each of which was a prescribed stock exchange during the whole of that period of 3 months; and
that preceding period of one month.
(ii) fully paid shares included in that class of shares were not recorded by that stock exchange or by any of those stock exchanges, as the case may be, as having been sold during the period of 2 months ending on the valuation date but were recorded by that stock exchange or by one or more of those stock exchanges, as the case may be, as having been sold during the period of one month immediately preceding the commencement of that period of 2 months;
the valuation date
, in relation to a share, means the date that is earlier by 6 weeks than the date that is the date of offer in relation to the loan in respect of which the value of the share is to be ascertained.
82L(2)
Where the combined effect or operation of 2 or more related instruments, whether issued at the same time or not, would have the effect or operation of a convertible note, those instruments shall, for the purposes of this Division, be deemed to be together a convertible note.
82L(3)
Where:
(a) a company issues a note that provides that the amount of the loan to the company that is evidenced, acknowledged or created by the note or to which the note relates:
(i) whether with or without interest;
(ii) (Repealed by Act No 63 of 1998)
(iii) whether at the option of the holder or owner of the note or of some other person or not;
(iv) whether in whole or in part; or
is to be or may be redeemed, repaid or satisfied by the issue, whether by the same company or by another company, of an instrument or a series of instruments; and
(v) whether exclusively or otherwise;
(b) that instrument, or any instrument in that series of instruments, is to provide, whether in pursuance of or by virtue of a trust deed or otherwise, as mentioned in paragraph (a) or (b) of the definition of convertible note in subsection (1),
that note and the instrument, or that note and each of the instruments in the series of instruments, shall, for the purposes of this Division, be deemed to be a convertible note.
82L(4)
For the purposes of this Division, a convertible note issued by a company applies to a loan to a company if it evidences, acknowledges or creates the loan.
82L(5)
A reference in this Division to the terms, or a term, applicable to a convertible note shall be read as including a reference to terms, or a term, that so apply or applies in pursuance of or by virtue of a trust deed or otherwise.
SECTION 82M NEW LOANS AND REPLACEMENT LOANS 82M(1)
Where:
(a) a loan to a company is made, and is wholly made, by money being paid to the company at the time when the loan is made; and
(b) the loan is not part of or related to a transaction, or is not one of a series of related transactions, under which the person making the loan is to receive or has received, for the purpose of enabling him or her to make, or of assisting him or her in making, the loan, any money or other property from the company, or from another company or person as a result of arrangements made with that other company or person by the first-mentioned company;
the loan shall, for the purposes of this Division, be treated as a new loan.
82M(2)
Where:
(a) a loan to a company is, under subsection (1), to be treated as a new loan for the purposes of this Division;
(b) the loan is not evidenced, acknowledged or created by a convertible note or is not a loan to which a convertible note otherwise applies;
(c) the loan is for a fixed period;
(d) the rate of interest payable in respect of the loan is the same in respect of all periods occurring before the date by which the whole of the loan is to be repaid, redeemed or satisfied; and
(e) the loan is, in whole or in part, converted into another loan to the company or to another company, or the loan is, in whole or in part, converted into a part of another loan to the company or to another company and the remainder of the other loan:
(i) is made by money being paid to the company or other company at the time when the loan is made; and
(ii) would, if it were a separate loan, be a loan that, under subsection (1), is to be treated as a new loan for the purposes of this Division;
that other loan shall, for the purposes of this Division, be treated as an approved replacement loan.
FORMER SECTION 82N 82N PRESCRIBED STOCK EXCHANGES
(Repealed by No 2 of 2015)
For the purposes of this section, the making of a bonus share allotment by a company is the allotment by the company of shares (in this section referred to as bonus shares ) in the capital of the company (being shares all of which are of the same class as each other) to persons who are the holders of other shares (in this section referred to as qualifying shares ) in the capital of the company or in the capital of another company (being shares all of which are of the same class as each other but which are not necessarily of the same class as the bonus shares), being an allotment made to the holders of all shares of the same class as the qualifying shares or an allotment made in pursuance of applications for the allotment of the bonus shares by the holders of the qualifying shares in accordance with an invitation to apply for the allotment of shares given to the holders of the qualifying shares and the holders of all other shares of the same class as the qualifying shares.
82P(2)
Where:
(a) the option to convert that exists under a convertible note is an option to have shares allotted to the holder or owner of the note; and
(b) the terms applicable to the note are such that, if a bonus share allotment is made by the company that issued the note or by another company in respect of qualifying shares that are of the same class as the shares that are to be allotted to the holder or owner of the note upon the exercise of the option to convert, the holder or owner of the note is to have the right to have allotted to him or her shares in the capital of the company or of that other company, as the case may be, of the same class as the bonus shares on terms and conditions that are the same as or correspond with, or are no more favourable to him or her than, the terms and conditions on which bonus shares are allotted to any holder of qualifying shares;
that right shall, for the purposes of subparagraph 82SA(1)(d)(ii) , be deemed to be an approved right relating to the allotting or transfer of bonus shares to the holder or owner of the convertible note.
82P(3)
Where:
(a) the option to convert that exists under a convertible note is an option to have shares transferred to the holder or owner of the note; and
(b) the terms applicable to the note are such that, if a bonus share allotment is made by the company that issued the note or by another company, being an allotment the qualifying shares relating to which include the shares that are to be transferred to the holder or owner of the note upon the exercise of the option to convert, and bonus shares allotted in respect of the qualifying shares to be so transferred are allottedto the holder of those shares on terms and conditions that are the same as or correspond with, or are no more favourable to him or her than, the terms and conditions on which bonus shares are allotted to any other holder of qualifying shares, the holder or owner of the note is to have the right to have the bonus shares allotted to that person transferred to him or her upon the payment by him or her, where a consideration was paid or is payable in respect of the allotment of the bonus shares to the other person, of a consideration not less than that consideration;
that right shall, for the purposes of sub-paragraphs 82S(1)(d)(ii) and 82SA(1)(d)(ii), be deemed to be an approved right relating to the allotting or transfer of bonus shares to the holder or owner of the convertible note.
SECTION 82Q CLASSES OF SHARES 82Q(1) [Included rights]
Shares in the capital of a company to which there are attached the same rights, including the following rights:
(a) rights in respect of voting;
(b) rights in respect of dividends;
(c) rights in respect of distribution of share capital in consequence of a reduction of share capital;
(d) rights in respect of distribution of the property of the company in the event of the winding up of the company;
constitute a class of shares for the purposes of this Division, and no other shares in the capital of the company constitute a class of shares for such purposes.
Notwithstanding anything contained in sub-section (1), a share in the capital of a company to be allotted upon the exercise of the option to convert given under the terms applicable to a convertible note shall not, for the purposes of this Division, be deemed to be a share of a different class from a share in the capital of the company already allotted by reason only that during the period of one year after the allotment of the first-mentioned share, any dividend payable in respect of the share will or may be less than any dividend payable in respect of the second-mentioned share.
Subject to section 82SA , this section applies to a convertible note issued by a company, not being:
(a) a convertible note issued on or before 15 November 1960; or
(b) a convertible note:
(i) the terms of the issue of which were announced by the company on or before that date; or
(ii) that the company was, in pursuance of an agreement made on or before that date, bound to issue.
82R(2)
Where, in pursuance of the terms upon which any convertible notes were issued by a company, a person was entitled to have a convertible note issued to him or her by that company, the company shall, for the purposes of sub-section (1), be deemed to have issued the convertible note to that person at the time when the person first became entitled to have the convertible note issued to him or her.
82R(3)
An outgoing consisting of interest, or a payment in the nature of interest, under a convertible note to which this section applies shall be deemed not to be an allowable deduction from the assessable income of the company.
82R(4)
Where a payment has been made by a person (whether under a guarantee or otherwise) that represents, in effect, a payment of interest under a convertible note to which this section applies and the company has incurred an outgoing by way of making good the first-mentioned payment to that person, whether by way of indemnification or otherwise, the amount of that outgoing shall, for the purposes of this section, be deemed to be an outgoing consisting of interest under the convertible note.
82R(5)
Section 25-25 (Borrowing expenses) of the Income Tax Assessment Act 1997 does not apply to the expenditure incurred by the company in borrowing money by means of convertible notes to which this section applies.
Subject to the succeeding provisions of this section, section 82R does not apply in relation to a convertible note issued by a company where:
(a) the loan to the company to which the note applies is, under section 82M , to be treated as a new loan or an approved replacement loan for the purposes of this Division;
(b) the loan was made on or after 1 January 1976;
(c) the convertible note was issued before the expiration of 2 months after the loan was made; and
(d) the terms applicable to the convertible note are, at the time the note was issued and at all subsequent times, such that:
(i) an option is given to the holder or owner of the convertible note (in this Division referred to as the option to convert ) to have allotted or transferred to him or her shares in the capital of the company or of another company;
(ii) no provision is made for the allotting or transferring of shares in the capital of the company or of another company to the holder or owner of the convertible note except in pursuance of the exercise of the option to convert or except in pursuance of a right that, under section 82P , is an approved right relating to the allotting or transfer of bonus shares to the holder or owner of the note;
(iii) the convertible note would not, but for the option to convert and any right of the kind referred to in subparagraph (ii), be a convertible note;
(iv) the earliest date on which the option to convert may be exercised is a date not later than 2 years after the date of offer;
(v) the latest date on which the option to convert may be exercised is a date not later than the maturity date of the loan or, if the date of offer is more than 10 years earlier than the maturity date, a date not later than 10 years after the date of offer;
(vi) the rate of interest payable in respect of the loan is, subject to subsection (5), the same in respect of all periods occurring before the maturity date of the loan;
(vii) subject to subsection (6), the obligations and rights of the holder or owner of the convertible note (including, but without limiting the generality of the foregoing, obligations and rights with respect to the amount payable on repayment, redemption or satisfaction of the loan and the terms on which shares are to be allotted or transferred in pursuance of the exercise of the option to convert) do not vary in his or her favour by reason that he or she exercises the option, or he, she or the company exercises any other right in relation to the note, at a later rather than at an earlier time after the issue of the note;
(viii) the rights of the holder or owner of the convertible note with respect to the amount payable on repayment, redemption or satisfaction of the loan do not vary according to whether or not he or she exercises the option to convert;
(ix) the shares to be allotted or transferred upon the exercise of the option to convert:
(A) are to be allotted or transferred within 2 months after the exercise of the option;
(B) in the case of shares to be allotted, are, upon payment of the amount payable in respect of the allotment, to be fully paid shares or, in the case of shares to be transferred, are, at the time of transfer, to be fully paid shares; and
(C) are to be shares of the same class as shares in the capital of the company that, not later than 6 weeks before the date that is the date of offer in relation to the loan, had been allotted and were fully paid;
(x) the shares to be allotted or transferred upon the exercise of the option to convert are to be shares with respect to which no provision is made (whether by the memorandum, or memorandum and articles, of the company, or other instrument constituting or defining the constitution of the company, or otherwise) for changing or converting them into shares of another class, except for the purpose of enabling, in accordance with any law relating to companies, the consolidation and division of all or any of the share capital of the company or of another company or the subdivision of all or any of the shares in the capital of the company or of another company; and
(xi) the amount payable in respect of the allotment or transfer of a share in pursuance of the exercise of the option to convert is to be paid not later than 1 month after the allotment or transfer, and is to be not less than 90% of the amount that, in accordance with section 82T , is the value as at the valuation date of a fully paid share included in the class of shares in which the share to be allotted or transferred will be, or is, included.
82SA(2)
Where subsection (1) ceases to have effect in relation to a convertible note by reason of a change in the terms applicable to the note (not being a change resulting from a compromise or arrangement approved by a court), subsection (1) shall be deemed never to have had effect in relation to the note.
82SA(3)
Where a note is a convertible note in relation to which subsection (1) has effect and the right to exercise the option to convert relating to the note becomes exercisable by a person other than the holder or owner of the note by reason of an assignment of that right, the assignment shall, for the purposes of this section, be disregarded.
82SA(4)
Where, in relation to a convertible note issued by a company, the company or a director of the company does any act or thing for the purpose of, or purposes that include the purpose of, and having the effect of, causing the amount that, for the purposes of subsection (1), is the minimum amount applicable to a share to be allotted or transferred in pursuance of the exercise of the option to convert relating to the note, to be less than it would otherwise have been, subsection (1) does not have effect in relation to the note.
82SA(5)
Where, under the terms applicable to a convertible note, the rate of interest payable in respect of the loan to which the note applies is to be varied from time to time (otherwise than with retrospective effect) in accordance with changes, or changes exceeding a specified percentage, in the rate of interest prevailing from time to time:
(a) where the loan is a foreign loan, at a specified place outside Australia in respect of a specified class of transactions; or
(b) where the loan is not a foreign loan, in respect of a specified class of securities issued under an Act;
the term shall, for the purposes of subparagraph (1)(d)(vi), be deemed not to be a term providing for a variation in the rate of interest payable in respect of the loan.
82SA(6)
For the purposes of subparagraph (1)(d)(vii), the obligations and rights of the holder or owner of a convertible note shall not be deemed to vary in a manner referred to in that subparagraph by reason only that any dividend payable in respect of a share in the capital of a company to be allotted upon the exercise of the option to convert relating to the note, being a dividend payable during the period of 1 year after the allotment of the share, will or may vary according to the time when, in relation to the period to which the dividend relates, the option to convert is exercised.
SECTION 82T VALUE OF SHARES 82T(1)
For the purposes of section 82SA , the value of a fully paid share as at the valuation date is:
(a) where:
(i) the share is included in a class of shares that, during the whole of the relevant valuation period, was listed for quotation in the official list of a stock exchange that was a prescribed stock exchange during the whole of that period, or in the official lists of 2 or more stock exchanges each of which was a prescribed stock exchange during the whole of that period; and
an amount ascertained by dividing the total consideration paid or payable in respect of those sales by the total number of shares so recorded as having been sold; and
(ii) fully paid shares included in that class of shares were recorded by that stock exchange, or by one or more of those stock exchanges, as the case may be, as having been sold during that period;
(b) in any other case - the amount that a person who is a qualified person in relation to the valuing of the share certifies that, on a true and fair view of the state of the company ' s affairs, would, in respect of a sale at the end of the relevant valuation period between a willing but not anxious seller and a willing but not anxious buyer, be expected to be the consideration paid for the share, on the assumption, in a case where the class of shares in which that share is included was not, at the end of the relevant valuation period, listed for quotation in the official list of a stock exchange that, at that time, was a prescribed stock exchange, that the memorandum, or memorandum and articles, of the company, or other instrument constituting or defining the constitution of the company, satisfied, at that time, such of the requirements of a stock exchange that, at that time, was a prescribed stock exchange as it would have been necessary to satisfy to enable that class of shares to be listed for quotation in the official list of that stock exchange.
82T(2)
(Omitted by No 123 of 1984)
Former Division 3B - Foreign currency exchange gains and losses
Archived:
Div 4 repealed as inoperative by No 101 of 2006 , s 3 and Sch 1 item 96, effective 14 September 2006. For application and savings provisions and for former wording see the CCH Australian Income Tax Legislation archive . Div 4A was repealed in 1999 and has also been archived.
In this Division:
exempt income
, in relation to a partnership, means the exempt income of the partnership calculated as if the partnership were a taxpayer who was a resident.
net income
, in relation to a partnership, means the assessable income of the partnership, calculated as if the partnership were a taxpayer who was a resident, less all allowable deductions except deductions allowable under section
290-150
or Division
36
of the
Income Tax Assessment Act 1997
.
non-assessable non-exempt income
, in relation to a partnership, means the non-assessable non-exempt income of the partnership calculated as if the partnership were a taxpayer who was a resident.
partnership loss
, in relation to a partnership, means the excess (if any) of the allowable deductions, other than deductions allowable under section
290-150
or Division
36
of the
Income Tax Assessment Act 1997
, over the assessable income of the partnership calculated as if the partnership were a taxpayer who was a resident.
A partnership shall furnish a return of the income of the partnership, but shall not be liable to pay tax thereon.
The assessable income of a partner in a partnership shall include:
(a) so much of the individual interest of the partner in the net income of the partnership of the year of income as is attributable to a period when the partner was a resident; and
(b) so much of the individual interest of the partner in the net income of the partnership of the year of income as is attributable to a period when the partner was not a resident and is also attributable to sources in Australia.
92(2)
Subject to section 830-45 of the Income Tax Assessment Act 1997 , if a partnership loss is incurred by a partnership in a year of income, there shall be allowable as a deduction to a partner in the partnership:
(a) so much of the individual interest of the partner in the partnership loss as is attributable to a period when the partner was a resident; and
(b) so much of the individual interest of the partner in the partnership loss as is attributable to a period when the partner was not a resident and is also attributable to sources in Australia.
92(2AA)
However, if:
(a) the partner is a limited partner in a partnership; and
(b) the partnership is a VCLP, an ESVCLP, an AFOF or a VCMP during the year of income;
the amount allowable under subsection (2), in respect of the year of income, as a deduction must not exceed the amount worked out as follows:
Method statementStep 1.
Work out the sum of the amounts that the partner has contributed (the partner ' s contribution ) to the partnership.
Step 2.
Subtract the sum of all the amounts (if any) of the partner ' s contribution that are repaid to the partner.
Step 3.
Subtract the sum of all deductions allowed to the partner for losses of the partnership in previous years of income.
Step 4.
Subtract the sum of the amounts of all the debt interests issued by the partner to the extent that they are secured by the partner ' s interest in the partnership.
Example:
A limited partner contributes $ 100,000 to a VCLP, having borrowed $ 80,000. Because the lender values the partner ' s interest in the partnership at $ 70,000, the partner also provides, as additional security, other assets valued at $ 10,000.
If none of the partner ' s contribution has been repaid and the partner has not been allowed deductions for partnership losses in previous years of income, the amount allowable to the partner for a partnership loss cannot exceed $ 30,000.
92(2A)
Subsection (2) does not apply to a partnership loss if the partner ' s interest in the partnership at the end of the year of income is:
(a) a segregated exempt asset (as defined in the Income Tax Assessment Act 1997 ) of a life assurance company; or
(b) a segregated current pension asset (as defined in the Income Tax Assessment Act 1997 ) of a complying superannuation fund.
(c) (Repealed by No 58 of 2006).
92(3)
The exempt income of a partner in a partnership shall include:
(a) so much of the individual interest of the partner in the exempt income of the partnership of the year of income as is attributable to a period when the partner was a resident; and
(b) so much of the individual interest of the partner in the exempt income of the partnership of the year of income as is attributable to a period when the partner was not a resident and is also attributable to sources in Australia.
92(4)
The non-assessable non-exempt income of a partner in a partnership shall include:
(a) so much of the individual interest of the partner in the non-assessable non-exempt income of the partnership of the year of income as is attributable to a period when the partner was a resident; and
(b) so much of the individual interest of the partner in the non-assessable non-exempt income of the partnership of the year of income as is attributable to a period when the partner was not a resident and is also attributable to sources in Australia.
SECTION 92A DEDUCTIONS IN RESPECT OF OUTSTANDING SUBSECTION 92(2AA) AMOUNTS 92A(1)
If: (a) the partner is a limited partner in a partnership; and (b) the partnership is a VCLP, an ESVCLP, an AFOF or a VCMP duringthe year of income; and (c) the amount allowable under subsection 92(2) as a deduction to the partner for partnership losses incurred by the partnership in the year of income is not reduced because of subsection 92(2AA) ; and (d) the partner has an outstanding subsection 92(2AA) amount for the year of income;
there is allowable as a deduction to the partnership an amount worked out as follows:
Method statementStep 1.
Subtract the amount allowable under subsection 92(2) as a deduction to the partner for partnership losses incurred by the partnership in the year of income from the amount worked out using the method statement in subsection 92(2AA) .
Step 2.
If the amount worked out under step 1 is greater than or equal to the outstanding subsection 92(2AA) amount for the year of income, the amount of the deduction allowable under this section is the outstanding subsection 92(2AA) amount.
Step 3.
If the amount worked out under step 1 is less than the outstanding subsection 92(2AA) amount for the year of income, the amount of the deduction allowable under this section is the amount worked out under step 1.
92A(2)
The partner has an outstanding subsection 92(2AA) amount for a year of income if: (a) an amount allowable under subsection 92(2) as a deduction to the partner for partnership losses incurred by the partnership in a previous year of income was reduced because of subsection 92(2AA) ; and (b) the difference between:
(i) the sum of all reductions made under subsection 92(2AA) to amounts allowable under subsection 92(2) as deductions to the partner for partnership losses incurred by the partnership in previous years of income; and
is greater than zero.
(ii) the sum of all amounts allowable under this section, in respect of previous years of income, as deductions to the partner in relation to those reductions;
The amount of that difference is the partner ' s outstanding subsection 92(2AA) amount for the year of income.
92A(3)
To avoid doubt, a partner ' s outstanding subsection 92(2AA) amount for a year of income cannot form part of a tax loss for the purposes of Division 36 or 160 of the Income Tax Assessment Act 1997 .
(Repealed by No 48 of 1950) SECTION 94 PARTNER NOT HAVING CONTROL AND DISPOSAL OF SHARE IN PARTNERSHIP INCOME 94(1)
Subject to this section, where:
(a) a share in the net income of a partnership of a year of income is included in the assessable income of a partner in the partnership, not being:
(i) a company;
(ii) a person in the capacity of a trustee; or
(iii) a person who was under the age of 18 years on the last day of the year of income of the person that corresponds with the year of income of the partnership; and
(b) the partnership is so constituted or controlled, or its operations are so conducted, that the partner has not the real and effective control and disposal of that share or of a part of that share;
this section applies to that share or that part of that share, as the case may be.
94(2)
Subject to the succeeding provisions of this section, where:
(a) a partnership is so constituted or controlled, or its operations are so conducted, that a partner in the partnership, being a trustee of a trust estate, has not the real and effective control and disposal of his or her share in the net income of the partnership of a year of income or of a part of that share (which share or part of a share, as the case may be, is in this subsection referred to as uncontrolled partnership income ); and
(b) in calculating in accordance with section 95 the net income of that trust estate or of any other trust estate, there is included in the assessable income of the trust estate any uncontrolled partnership income,
then:
(c) if:
(i) a beneficiary, not being a company or a person who was under the age of 18 years on the last day of the year of income of the person that corresponds with the year of income of the partnership, is presently entitled to the whole of the income of the trust estate otherwise than in the capacity of a trustee; or
this section applies to the portion of the net income of the trust estate that was derived from uncontrolled partnership income;
(ii) there is no part of the net income of the trust estate that is included in the assessable income of a beneficiary in pursuance of section 97 or in respect of which the trustee is assessed and liable to pay tax in pursuance of section 98 ;
(d) if a beneficiary, not being a company or a person who was under the age of 18 years on the last day of the year of income of the person that corresponds with the year of income of the partnership, is presently entitled to a share of the income of the trust estate otherwise than in the capacity of a trustee, this section applies to so much of that share of the net income of the trust estate as bears to that share the same proportion as the portion of the net income of the trust estate that was derived from uncontrolled partnership income bears to the net income of the trust estate; and
(e) if there is a part of the net income of the trust estate that is not included in the assessable income of the beneficiary in pursuance of section 97 and in respect of which the trustee is not assessed and is not liable to pay tax in pursuance of section 98 , this section applies to so much of that part of the net income of the trust estate as bears to that part the same proportion as the portion of the net income of the trust estate that was derived from uncontrolled partnership income bears to the net income of the trust estate.
94(3)
(Omitted by No 19 of 1980)
94(4)
(Omitted by No 19 of 1980)
94(5)
For the purposes of this section:
(a) where:
(i) the assessable income of a trust estate includes the net income or a share of the net income of another trust estate; and
the assessable income of the first-mentioned trust estate shall be deemed to include income of that class of an amount equal to so much of the net income or share of the net income of the other trust estate that is included in the assessable income of the first-mentioned trust estate as bears to that net income or share of that net income the same proportion as the portion of the net income of the other trust estate that was derived from income of that class bears to the net income of the other trust estate; and
(ii) the assessable income of the other trust estate by reference to which that net income is calculated included income of a particular class (including an amount that is to be deemed by an application or applications of this paragraph to be income of a particular class);
(b) the portion of the net income of a trust estate that is derived from income of a particular class that is included in the assessable income of the trust estate is the amount remaining after deducting from the income of that class that is included in the assessable income of the trust estate:
(i) any prescribed deductions that relate exclusively to that income of that class;
(ii) so much of any other prescribed deductions (other than apportionable deductions) as, in the opinion of the Commissioner, may appropriately be related to that income of that class; and
(iii) the amount that bears to the prescribed deductions (being apportionable deductions) the same proportion as the amount that, but for this subparagraph, would be the portion of the net income of the trust estate that is derived from that income of that class bears to the sum of the net income of the trust estate and those last-mentioned prescribed deductions.
94(6)
Where the assessable income of a trust estate includes, or, by virtue of paragraph (5)(a), is to be deemed to include, income of a particular class but the Commissioner is of the opinion that it would be unreasonable to treat each part or share of the net income of the trust estate that is included in the assessable income of a beneficiary, or on or in respect of which the trustee is assessed and liable to pay tax, as including a proportionate part of the portion of the net income of the trust estate that is derived from income of that class, the amount:
(a) that is the amount of a part or share of the net income of the trust estate to which this section applies by virtue of paragraph (2)(d) or (e); or
(b) that is, by virtue of paragraph (5)(a), the amount of the income of that class that is to be deemed to be included in the assessable income of another trust estate;
is, in lieu of the amount that, but for this subsection, would be the amount of that part or share of that net income or the amount of that income of that class, as the case may be, such amount as the Commissioner considers reasonable in the circumstances.
94(7)
(Omitted by No 19 of 1980)
94(8)
Where the Commissioner is of the opinion that, by reason of special circumstances, it would be unreasonable that this section should apply to any income, this section does not apply to that income.
94(8A)
In forming an opinion for the purposes of subsection (8) as to whether it is unreasonable that this section should apply in relation to any of the net income of a trust estate, the Commissioner shall take into consideration the extent (if any) to which that net income represents income to which a beneficiary is presently entitled that is attributable to a period when the beneficiary was not a resident and is also attributable to sources out of Australia.
94(9)
Where the assessable income of a taxpayer, other than a taxpayer in the capacity of a trustee, includes income to which this section applies, the taxpayer shall be assessed and is liable to pay further tax, in accordance with subsection (10A) or (10B), upon the portion (in this section referred to as the eligible portion ) of his or her taxable income that is derived from income to which this section applies.
94(10)
For the purposes of subsection (9), the portion of the taxable income of a taxpayer that is derived from income to which this section applies is the amount remaining after deducting from the income to which this section applies that is included in his or her assessable income:
(a) any deductions allowed or allowable in his or her assessment that relate exclusively to the income to which this section applies that is included in his or her assessable income;
(b) so much of any other deductions allowed or allowable in his or her assessment (other than apportionable deductions) as, in the opinion of the Commissioner, may appropriately be related to the income to which this section applies that is included in his or her assessable income; and
(c) the amount that bears to the apportionable deductions allowed or allowable in his or her assessment the same proportion as the amount that, but for this paragraph, would be the portion of his or her taxable income that is derived from income to which this section applies bears to the sum of his or her taxable income and those apportionable deductions.
94(10A)
Where Division 392 (Long-term averaging of primary producers ' tax liability) of the Income Tax Assessment Act 1997 does not apply in relation to the income of a taxpayer of the year of income, the taxpayer is liable to pay further tax upon the eligible portion of his or her taxable income at the rate declared by the Parliament to be the rate of further tax payable in pursuance of subsection (9) in respect of the relevant part of the taxable income.
94(10B)
Where Division 392 (Long-term averaging of primary producers ' tax liability) of the Income Tax Assessment Act 1997 applies in relation to the income of a taxpayer of the year of income, the taxpayer is liable to pay further tax upon the relevant part of the eligible portion of his or her taxable income at the rate declared by the Parliament to be the rate of further tax payable in pursuance of subsection (9) in respect of the relevant part of the taxable income and is, in addition, liable to pay further tax upon the prescribed part of the eligible portion of his or her taxable income at the rate declared by the Parliament to be the rate of further tax payable in pursuance of subsection (9) inrespect of the prescribed part of the taxable income.
94(10C)
For the purposes of subsections (10A) and (10B):
(a) the prescribed part of the eligible portion of the taxable income of a taxpayer of a year of income is:
(i) in a case to which subparagraph (ii) does not apply - the sum of:
(A) the amount ascertained by deducting from so much of the assessable primary production income of the taxpayer as is also income to which this section applies so much of the deductions allowable in his or her assessment as constitutes primary production deductions and is also deductible in accordance with subsection (10) from income to which this section applies; and
(B) the amount (if any) ascertained in accordance with the formula
AB C
where:
A is the amount shown in the following table:
Value of A for formula Item Taxpayer ' s taxable non-primary production income Value of A 1 Nil Nil . 2 Not more than $ 5,000 (but more than nil) Difference between basic taxable income and taxable primary production income . 3 Between $ 5,000 and $ 10,000 $ 10,000 taxable non-primary production income . 4 At least $ 10,000 Nil B is the number of whole dollars in the amount ascertained by deducting from the eligible portion the amount calculated in accordance with sub-subparagraph (A); and C is the number of whole dollars in the amount ascertained by deducting from the taxable income of the taxpayer of the year of income the taxable primary production income of the taxpayer of the year of income; and
(ii) in a case where the taxpayer ' s primary production deductions for the year of income exceed the taxpayer ' s assessable primary production income for that year - the amount ascertained in accordance with the formula
AB
C + D
where:
A is the amount shown in the following table:
Value of A for formula Item Taxpayer ' s taxable non-primary production income Value of A 1 Nil Nil . 2 Not more than $ 5,000 (but more than nil) Basic taxable income . 3 Between $ 5,000 and $ 10,000 Non-primary production shade-out amount worked out under subsection 392-90(3) of the Income Tax Assessment Act 1997 . 4 At least $ 10,000 Nil B is the number of whole dollars in the eligible portion; C is the number of whole dollars in the taxable income of the taxpayer of the year of income; and D is the number of whole dollars in the difference between the taxpayer ' s primary production deductions for the year of income and the taxpayer ' s assessable primary production income for that year; and
(b) the relevant part of the eligible portion of the taxable income of the taxpayer is the amount ascertained by deducting from the amount of that eligible portion so much of that eligible portion as is the prescribed part of that eligible portion.
94(11)
Where:
(a) section 98 applies in relation to the net income of a trust estate or a share of that net income; and
(b) this section applies to a portion (in this subsection referred to as the relevant portion ) of that net income or of that share of that net income, as the case may be,
the trustee of the trust estate shall be assessed and is liable to pay further tax, in accordance with subsection (12A) or (12B), upon the relevant portion of that net income or of that share of that net income, as the case may be.
94(12)
Where:
(a) section 99 applies in relation to the net income of a trust estate or a part of that net income; and
(b) this section applies to a portion (in this section referred to as the eligible trust portion ) of that net income or of that part of that net income, as the case may be,
the trustee of the trust estate shall be assessed and is liable to pay further tax, in accordance with subsection (12A) or (12B), upon the eligible trust portion.
94(12A)
Where Division 16 does not apply in respect of the net income of a trust estate of which the eligible trust portion is a portion, the trustee is liable to pay further tax upon the eligible trust portion at the rate declared by the Parliament to be the rate of further tax payable in pursuance of subsection (11) or (12) in respect of the relevant part of the net income of a trust estate.
94(12B)
Where Division 16 applies in respect of the net income of a trust estate of which the eligible trust portion is a portion, the trustee is liable to pay further tax upon the relevant part of the eligible trust portion at the rate declared by the Parliament to be the rate of further tax payable in pursuance of subsection (11) or (12) in respect of the relevant part of the net income of a trust estate and is, in addition, liable to pay further tax upon the prescribed part of the eligible trust portion at the rate declared by the Parliament to be the rate of further tax payable in pursuance of subsection (11) or (12) in respect of the prescribed part of the net income of a trust estate.
94(12C)
For the purposes of subsections (12A) and (12B):
(a) the prescribed part of the eligible trust portion in relation to a trust estate in relation to a year of income is:
(i) in a case to which subparagraph (ii) does not apply - the sum of:
(A) the amount ascertained by deducting from so much of the assessable primary production income of the trust estate of the year of income as is also income that was taken into account in determining the amount of the eligible trust portion so much of the deductions allowable in the assessment of the trustee of the trust estate as constitutes relevant primary production deductions and was also deductible in accordance with subsection (5) in determining the amount of the eligible trust portion; and
(B) the amount (if any) ascertained in accordance with the formula
AB
C
where:
A is the amount of the notional net income from primary production of the trust estate of the year of income; B is the number of whole dollars in the amount ascertained by deducting from the eligible trust portion the amount calculated in accordance with sub-subparagraph (A); and C is the number of whole dollars in the amount ascertained by deducting from the net income of the trust estate of which the eligible trust portion is a portion the actual net income from primary production of the trust estate of the year of income; and
(ii) in a case where the aggregate of the relevant primary production deductions allowable in calculating the net income of the trust estate of the year of income exceeds the assessable primary production income of the trust estate of the year of income - the amount ascertained in accordance with the formula
AB
C + D
where:
A is the amount of the notional net income from primary production of the trust estate of the year of income; B is the number of whole dollars in the eligible trust portion; C is the number of whole dollars in the net income of the trust estate of which the eligible trust portion is a portion; and D is the number of whole dollars in the amount by which the net income of the trust estate of which the eligible trust portion is a portion would have been increased if the aggregate of the relevant primary production deductions allowable in calculating the net income of the trust estate of the year of income had been equal to the assessable primary production income of the trust estate of the year of income; and
(b) the relevant part of the eligible trust portion in relation to a trust estate is the amount ascertained by deducting from that eligible trust portion so much of that eligible trust portion as is the prescribed part of that eligible trust portion.
94(13)
In this section:
prescribed deductions
, in relation to a trust estate, means the deductions that are allowable in calculating in accordance with section
95
the net income of the trust estate.
share in the net income of a partnership
, in relation to a partner, means:
(a) so much of the individual interest of the partner in the net income of the partnership and of any income derived by the partner from the partnership otherwise than as a partner as is attributable to a period when the partner was a resident; and
(b) so much of the individual interest of the partner in the net income of the partnership and of any income derived by the partner from the partnership otherwise than as a partner as is attributable to a period when the partner was not a resident and is also attributable to sources in Australia.
94(14)
In this section, actual net income from primary production , assessable primary production income , notional net income from primary production and relevant primary production deductions have the same respective meanings as in section 156 .
94(15)
In this section, the following terms have the same meanings that they have in Division 392 (Long-term averaging of primary producers ' tax liability) of the Income Tax Assessment Act 1997 :
(a) assessable primary production income;
(b) basic taxable income;
(c) non-primary production shade-out amount;
(d) primary production deductions;
(e) taxable non-primary production income;
(f) taxable primary production income.
Division 5A - Income of certain limited partnerships
The object of this Division is to provide for certain limited partnerships to be treated as companies for tax purposes.
In this Division:
corporate limited partnership
(Repealed by
No 75 of 2010
)
(a) this Act (other than this Division and Division 830 of the Income Tax Assessment Act 1997 ); and
(b) an Act that imposes any tax payable under this Act; and
(c) the Income Tax Rates Act 1986 ; and
(d) the Taxation Administration Act 1953 , so far as it relates to an Act covered by paragraph (a), (b) or (c); and
(e) any other Act, so far as it relates to an Act covered by paragraph (a), (b), (c) or (d); and
(f) regulations under an Act covered by any of the preceding paragraphs.
"limited partnership"
(Repealed by No 136 of 2002)
year of income
means (except in paragraph 94L(b)) the year of income in which 19 August 1992 occurred or a later year of income.
For the purposes of this Division, a change in the composition of a limited partnership does not affect the continuity of the partnership.
For the purposes of this Division, a limited partnership is a corporate limited partnership in relation to a year of income of the partnership if:
(a) the year of income is the 1995-96 year of income or a later year of income; or
(b) the partnership was formed on or after 19 August 1992; or
(c) both:
(i) the partnership was formed before 19 August 1992; and
(ii) the partnership does not pass the continuity of business test set out in section 94E ; or
(d) all of the following apply:
(i) the partnership was formed before 19 August 1992;
(ii) a change in the composition of the partnership occurs during the period:
(A) beginning on 19 August 1992; and
(B) ending at the end of the year of income;
(iii) the partners do not elect, in accordance with section 94F , that the partnership is not to be treated as a corporate limited partnership in relation to the year of income.
94D(2)
However, a partnership that is a VCLP, an ESVCLP, an AFOF or a venture capital management partnership cannot be a corporate limited partnership.
Note 1:
This subsection can apply without the partnership meeting the applicable registration requirements under the Venture Capital Act 2002 . It must be registered under that Act in order to be a VCLP, an ESVCLP or an AFOF, but it is possible for it to remain registered while the requirements are not met.
Note 2:
VCLPs, ESVCLPs, AFOFs and VCMPs are taxed as ordinary partnerships under Division 5 .
Note 3:
If the partnership ' s registration as a VCLP, ESVCLP or AFOF is unconditional, some partners ' share in capital gains and losses from CGT events relating to some investments may be disregarded: see Subdivision 118-F of the Income Tax Assessment Act 1997 .
94D(3)
A venture capital management partnership is a limited partnership that:
(a) is a general partner of one or more of the following:
(i) one or more VCLPs;
(ia) one or more ESVCLPs;
(ii) one or more AFOFs; and
(b) only carries on activities that are related to being such a general partner.
A limited partnership ceases to be a venture capital management partnership if it ceases to meet the requirements of paragraphs (a) and (b).
Note:
In this Act, the term " venture capital management partnership " is usually abbreviated to " VCMP " .
94D(4)
The place of residence of a VCMP is the place at which the partnership has its central management and control.
94D(4) †
(Repealed by No 58 of 2006 )
94D(5)
A limited partnership that is a foreign hybrid limited partnership in relation to a year of income because of subsection 830-10(1) of the Income Tax Assessment Act 1997 is not a corporate limited partnership in relation to the year of income.
Note:
As result, both the normal partnership provisions and special provisions relating to foreign hybrid limited partnerships will apply to the entity.
94D(6)
If, for the purpose of applying this Act and the Income Tax Assessment Act 1997 in relation to a partner ' s interest in a limited partnership, the partnership is a foreign hybrid limited partnership in relation to a year of income because of subsection 830-10(2) of that Act, the partnership is not a corporate limited partnership in relation to the partner ' s interest in relation to the year of income.
Note:
As result, both the normal partnership provisions and special provisions relating to foreign hybrid limited partnerships will apply to the entity, but only in relation to the partner ' s interest.
SECTION 94E 94E CONTINUITY OF BUSINESS TEST
In determining whether a limited partnership is a corporate limited partnership in relation to a year of income, the partnership passes the continuity of business test if, and only if:
(a) at all times during the period:
(i) beginning on 19 August 1992; and
the partnership carried on the same business as it carried on immediately before the beginning of that period; and
(ii) ending at the end of the year of income;
(b) the partnership did not, at any time during that period, derive income from a business of a kind that it did not carry on, or from a transaction of a kind that it had not entered into in the course of its business operations, before that period.
An election referred to in paragraph 94D(1)(d) in relation to a limited partnership and in relation to a year of income has no effect unless:
(a) the partnership passes the continuity of ownership test set out in section 94G ; and
(b) the election is made:
(i) within 6 months after the end of the later of the following years of income:
(A) the year of income to which the election relates;
(B) the year of income in which the Taxation Laws Amendment Act (No. 6) 1992 received the Royal Assent; or
(ii) within such further period as the Commissioner allows.
In determining whether a limited partnership is a corporate limited partnership in relation to a year of income, the partnership passes the continuity of ownership test if, and only if:
(a) at all times during the period:
(i) beginning on 19 August 1992; and
more than 50% of the interests in the partnership were held by persons who, immediately before that period, held more than 50% of the interests in the partnership; or
(ii) ending at the end of the year of income;
(b) the condition set out in paragraph (a) is not satisfied only because of the acquisition during so much of that period as occurred before 1 July 1993 of interests in the partnership, where the acquisitions are in response to, and in accordance with the terms of:
(i) a prospectus, offer or invitation issued before 19 August 1992; or
(ii) if that prospectus, offer or invitation was varied before 19 August 1992 - that prospectus, offer or invitation as so varied.
If a partnership is a corporate limited partnership in relation to a year of income, the income tax law has effect, in relation to the partnership and in relation to the year of income, subject to the changes set out in the following provisions of this Subdivision.
A reference in the income tax law (other than the definitions of dividend , and resident or resident of Australia , in section 6 of this Act and other than Division 355 of the Income Tax Assessment Act 1997 ) to a company or to a body corporate includes a reference to the partnership.
A reference in the income tax law to a partnership does not include a reference to the partnership.
A reference in the income tax law (other than subsection 44(1A) of this Act) to a dividend or to a dividend within the meaning of section 6 :
(a) includes a reference to a distribution made by the partnership, whether in money or in other property, to a partner in the partnership; and
(b) does not include a reference to a distribution to the extent to which the distribution is attributable to profits or gains arising during a year of income in relation to which the partnership was not a corporate limited partnership.
If the partnership pays or credits an amount to a partner in the partnership:
(a) against the profits or anticipated profits of the partnership; or
(b) otherwise in anticipation of the profits of the partnership;
(whether or not the amount of the profits or anticipated profits is ascertainable), the amount paid or credited is taken, for the purposes of the income tax law, to be a dividend paid by the partnership to the partner out of profits derived by the partnership.
94M(2) [Commissioner's duty to avoid double taxation]If the partnership makes a subsequent distribution, the Commissioner must take such steps (if any) as are necessary to ensure that the partner is not subject to double taxation.
A reference in the income tax law to a private company in relation to the year of income does not include a reference to the partnership.
Note:
Division 7A (Distributions to entities connected with a private company) applies to certain corporate limited partnerships in the same way as it applies to private companies: see section 109BB .
A reference in the income tax law to a share includes a reference to an interest in the partnership.
A reference in the income tax law to a shareholder includes a reference to a partner in the partnership.
For the purposes of the income tax law:
(a) a reference to the liquidator of the partnership includes a reference to a partner in the partnership who carries out the winding-up of the partnership; and
(b) a reference to distributions made by a liquidator in the course of winding up the partnership includes a reference to distributions made by such a partner to himself or herself in the course of winding-up the partnership.
For the purposes of the income tax law, a change in the composition of the partnership does not affect the continuity of the partnership.
For the purposes of the income tax law, the partnership is:
(a) a resident; and
(b) a resident within the meaning of section 6 ; and
(c) a resident of Australia; and
(d) a resident of Australia within the meaning of section 6 ;
if and only if:
(e) the partnership was formed in Australia; or
(f) either:
(i) the partnership carries on business in Australia; or
(ii) the partnership's central management and control is in Australia.
94T(2)
In determining whether the partnership carries on business in Australia for the purposes of subparagraph (1)(f)(i), if, for the year of income, the partnership is an IMR entity (within the meaning of the Income Tax Assessment Act 1997 , but disregarding paragraph 842-220(a) of that Act), disregard business that:
(a) is carried on by the partnership (either by itself directly or by another entity on its behalf); and
(b) solely relates to IMR financial arrangements (within the meaning of that Act).
SECTION 94U 94U INCORPORATION
For the purposes of the income tax law, the partnership is taken to have been incorporated:
(a) in the place where it was formed; and
(b) under a law in force in that place.
The application of the income tax law to the partnership as if the partnership were a company is subject to the following changes:
(a) obligations that would be imposed on the partnership are imposed instead on each partner, but may be discharged by any of the partners;
(b) the partners are jointly and severally liable to pay any amount that would be payable by the partnership;
(c) any offence against the income tax law that would otherwise be committed by the partnership is taken to have been committed by each of the partners.
94V(2)
In a prosecution of a person for an offence that the person is taken to have committed because of paragraph (1)(c), it is a defence if the person proves thatthe person:
(a) did not aid, abet, counsel or procure the relevant act or omission; and
(b) was not in any way knowingly concerned in, or party to, the relevant act or omission (whether directly or indirectly and whether by any act or omission of the person).
Subdivisions 165-A and 165-B of the Income Tax Assessment Act 1997 apply in relation to the partnership as if the provisions relating to voting power had not been enacted.
The following is a simplified outline of the relationship between this Division, Division 6E and Subdivisions 115-C and 207-B of the Income Tax Assessment Act 1997 .
This Division sets out the basic income tax treatment of the net income of the trust estate. Generally:
If the trust estate has capital gains, franked distributions or franking credits, this basic treatment is modified as described below.
Division 6E modifies the operation of this Division for the purpose of excluding amounts relevant to capital gains, franked distributions and franking credits from the calculations of assessable amounts under sections 97 , 98 , 99 , 99A and 100 .
Division 6E does not modify the operation of this Division (or any other provision of this Act) for any other purpose. For example:
Subdivisions 115-C and 207-B of the Income Tax Assessment Act 1997 provide the corresponding taxation treatment for those capital gains, franked distributions and franking credits. Specifically:
Subsection (2) applies if an amount is included in the assessable income of a beneficiary of a trust estate because of Subdivision 115-C or 207-B of the Income Tax Assessment Act 1997 .
95AAB(2)
For the purposes of a provision of this Act (other than a provision mentioned in subsection (3)), treat the amount as being included in the beneficiary ' s assessable income in relation to the net income of the trust estate under section 97 , 98A or 100 (as the case requires).
95AAB(3)
The provisions are as follows:
(a) sections 97 , 98A (other than subsection 98A(2) ) and 100 (other than subsections 100(2) and (3) );
(b) sections 98 , 99 and 99A ;
(c) Subdivisions 115-C and 207-B of the Income Tax Assessment Act 1997 .
95AAB(4)
To avoid doubt, subsection (2) applies despite subsection 6(1AA) .
Subsection (2) applies if an amount in respect of which a trustee of a trust estate is liable to be assessed (and pay tax) under section 98 in respect of the beneficiary is increased because of Subdivision 115-C or 207-B of the Income Tax Assessment Act 1997 .
95AAC(2)
For the purposes of a provision of this Act (other than a provision mentioned in subsection (5)), treat the amount of the increase as being an amount in respect of which the trustee is liable to be assessed (and pay tax) under section 98 in respect of the beneficiary ' s interest in or share of the net income of the trust estate.
95AAC(3)
Subsection (4) applies if an amount in respect of which a trustee of a trust estate is liable to be assessed (and pay tax) under section 99 or 99A is increased because of Subdivision 115-C or 207-B of the Income Tax Assessment Act 1997 .
95AAC(4)
For the purposes of a provision of this Act (other than a provision mentioned in subsection (5)), treat the amount of the increase as being an amount in respect of which the trustee is liable to be assessed (and pay tax) under section 99 or 99A in respect of the net income of the trust estate.
95AAC(5)
The provisions are as follows:
(a) sections 97 , 98A (other than subsection 98A(2) ) and 100 (other than subsections 100(2) and (3) );
(b) sections 98 , 99 and 99A ;
(c) Subdivisions 115-C and 207-B of the Income Tax Assessment Act 1997 .
95AAC(6)
To avoid doubt, subsections (2) and (4) apply despite subsection 6(1AA) .
This Division does not apply in relation to a trust estate that is an AMIT.
In this Division:
adjusted Division 6 percentage
,
of an entity that is a beneficiary or trustee of a trust estate, means the entity
'
s Division 6 percentage of the income of the trust estate calculated on the assumption that the amount of a capital gain or franked distribution to which any beneficiary or the trustee of the trust estate is specifically entitled were disregarded in working out the income of the trust estate.
adjusted net income
,
in relation to a trust estate, has the meaning given by subsection
100AB(4)
.
(a) a beneficiary of a trust estate has a Division 6 percentage of the income of the trust estate equal to the share (expressed as a percentage) of the income of the trust estate to which the beneficiary is presently entitled; and
(b) the trustee of a trust estate has a Division 6 percentage of the income of the trust estate equal to the share (expressed as a percentage) of the income of the trust estate to which no beneficiary is presently entitled.
However, if the income of a trust estate is nil:
(c) a beneficiary of a trust estate has a Division 6 percentage of the income of the trust estate of 0%; and
(d) the trustee of a trust estate has a Division 6 percentage of the income of the trust estate of 100%.
exempt income
, in relation to a trust estate, means the exempt income of the trust estate calculated as if the trustee were a taxpayer who was a resident.
Note:
See also Division 54 of the Income Tax Assessment Act 1997 (in particular, the provisions in section 54-70 about trusts), which provides a tax exemption for certain payments under structured settlements and structured orders.
net income
,
in relation to a trust estate, means the total assessable income of the trust estate calculated under this Act as if the trustee were a taxpayer in respect of that income and were a resident, less all allowable deductions, except deductions under Division
393
of the
Income Tax Assessment Act 1997
(Farm management deposits) and except also, in respect of any beneficiary who has no beneficial interest in the corpus of the trust estate, or in respect of any life tenant, the deductions allowable under Division
36
of the
Income Tax Assessment Act 1997
in respect of such of the tax losses of previous years as are required to be met out of corpus.
A trust may be required to work out its net income in a special way by Division 266 or 267 in Schedule 2F to this Act or Division 275 of the Income Tax Assessment Act 1997 .
non-assessable non-exempt income
, in relation to a trust estate, means the non-assessable non-exempt income of the trust estate calculated as if the trustee were a taxpayer who was a resident.
specifically entitled
has the same meaning as in the
Income Tax Assessment Act 1997
.
95(2)
For the purposes of this Division, a trust estate shall be taken to be a resident trust estate in relation to a year of income if:
(a) a trustee of the trust estate was a resident at any time during the year of income; or
(b) the central management and control of the trust estate was in Australia at any time during the year of income.
95(3)
In this Division, a trust estate that is not a resident trust estate in relation to a year of income is referred to as a non-resident trust estate in relation to that year of income.
FORMER SECTION 95AA 95AA DIVISION DOES NOT APPLY IN RELATION TO FHSA TRUST
(Repealed by No 70 of 2015)
This Division applies with the modifications set out in this section in relation to a year of income in relation to a trust estate that is a special disability trust at the end of the year of income.
95AB(2) [Principal beneficiary presently entitled]Treat the principal beneficiary of the trust estate as being presently entitled to all of the income of the trust estate of the year of income.
95AB(3) [Residency]If the principal beneficiary of the trust estate is a resident of Australia at the end of the year of income treat that person as being under a legal disability throughout the year of income.
95AB(4) [No income of trust estate]If there is no income of the trust estate assume that:
(a) there is income of the trust estate of the year of income; and
(b) the principal beneficiary of the trust estate is presently entitled to all of the income of the trust estate of the year of income. 95AB(5) [Assessment of deductions]
If the amount to be deducted under subsection
100(2)
from the income tax assessed against the principal beneficiary is greater than the amount of the income tax assessed against the principal beneficiary, the Commissioner must pay to the principal beneficiary an amount equal to the difference between those 2 amounts.
Note:
The tax offset is subject to the refundable tax offset rules: see section 67-23 of the Income Tax Assessment Act 1997 .
For the purposes of this Act, where a beneficiary of a trust estate is presently entitled to any income of the trust estate, the beneficiary shall be taken to continue to be presently entitled to that income notwithstanding that the income is paid to, or applied for the benefit of, the beneficiary.
For the purposes of this Act, where a beneficiary has a vested and indefeasible interest in any of the income of a trust estate but is not presently entitled to that income, the beneficiary shall be deemed to be presently entitled to that income of the trust estate.
For the purposes of this Act, a beneficiary of a trust estate who is presently entitled to a share of the income of the trust estate in the capacity of a trustee of another trust estate shall, in respect of his or her present entitlement to that share, be deemed not to be under a legal disability.
Except as provided in this Act, a trustee shall not be liable as trustee to pay income tax upon the income of the trust estate. FORMER SECTION 96A 96A APPLICATION OF DIVISION IN RESPECT OF INTERESTS IN NON-RESIDENT TRUST ESTATES TO WHICH PART XI APPLIES
(Repealed by No 114 of 2010)
(Repealed by No 114 of 2010)
(Repealed by No 114 of 2010)
Subject to Division 6D , where a beneficiary of a trust estate who is not under any legal disability is presently entitled to a share of the income of the trust estate:
(a) the assessable income of the beneficiary shall include:
(i) so much of that share of the net income of the trust estate as is attributable to a period when the beneficiary was a resident; and
(ii) so much of that share of the net income of the trust estate as is attributable to a period when the beneficiary was not a resident and is also attributable to sources in Australia; and
(b) the exempt income of the beneficiary shall include:
(i) so much of the individual interest of the beneficiary in the exempt income of the trust estate as is attributable to a period when the beneficiary was a resident; and
except to the extent to which the exempt income to which that individual interest relates was taken into account in calculating the net income of the trust estate; and
(ii) so much of the individual interest of the beneficiary in the exempt income of the trust estate as is attributable to a period when the beneficiary was not a resident and is also attributable to sources in Australia;
(c) the non-assessable non-exempt income of the beneficiary shall include:
(i) so much of the individual interest of the beneficiary in the non-assessable non-exempt income of the trust estate as is attributable to a period when the beneficiary was a resident; and
(ii) so much of the individual interest of the beneficiary in the non-assessable non-exempt income of the trust estate as is attributable to a period when the beneficiary was not a resident and is also attributable to sources in Australia.
97(2)
A reference in this section to income of a trust estate to which a beneficiary is presently entitled shall be read as not including a reference to income of a trust estate:
(a) to which a beneficiary is deemed to be presently entitled by virtue of the operation of subsection 95A(2) where the beneficiary:
(i) is a natural person;
(ii) is a resident at the end of the year of income;
(iii) is not, in respect of that income, a beneficiary in the capacity of a trustee of another trust estate; and
(iv) is not a beneficiary to whom subsection 97A(1) or ( 1A ) applies in relation to the year of income; or
(b) to which a beneficiary is presently entitled where the beneficiary:
(i) is a non-resident at the end of the year of income;
(ii) is not a beneficiary to whom subsection (3) of this section or subsection 97A(1) or (1A) applies in relation to the year of income; and
(iii) is not, in respect of that income, a beneficiary in the capacity of a trustee of another trust estate.
97(3)
Where:
(a) a beneficiary of a trust estate is presently entitled to a share of the income of the trust estate;
(b) the beneficiary is a non-resident at the end of the year of income; and
(c) the beneficiary is:
(i) a body, association, fund or organization the income of which is exempt from tax by virtue of the operation of Subdivision 50-A or section 51-5 , 51-10 or 51-30 of the Income Tax Assessment Act 1997 ; or
(ii) an organization the income of which is exempt from tax by virtue of a regulation in force under the International Organisations (Privileges and Immunities) Act 1963 ;
that beneficiary is, for the purposes of the application of this Division in relation to that beneficiary in relation to that year of income, a beneficiary to whom this subsection applies.
SECTION 97A BENEFICIARIES WHO ARE OWNERS OF FARM MANAGEMENT DEPOSITS 97A(1)
Where a beneficiary who is under a legal disability:
(a) is presently entitled to a share of the income of a trust estate derived during a year of income of the beneficiary; and
(b) is the owner of a farm management deposit made during the year of income;
(c) (Repealed by of 79 of 2010)
this Division applies in relation to the beneficiary in relation to the year of income as if the beneficiary were not under any legal disability.
97A(1A)
Where a beneficiary who is deemed by subsection 95A(2) to be presently entitled to any income of a trust estate derived during a year of income of the beneficiary:
(a) is not under a legal disability; and
(b) is the owner of a farm management deposit made during the year of income;
(c) (Repealed by No 79 of 2010 )
the beneficiary is, for the purposes of the application of this Division in relation to that beneficiary in relation to that year of income, a beneficiary to whom this subsection applies.
97A(2)
(Repealed by No 79 of 2010 )
Note:
This section applies to certain beneficiaries as if they were individuals who are carrying on a primary production business: see subsections 393-25(3) , (4) , (5) and (6) of the Income Tax Assessment Act 1997 .
Where a beneficiary of a trust estate who is under a legal disability is presently entitled to a share of the income of the trust estate, the trustee of the trust estate shall be assessed and liable to pay tax in respect of:
(a) so much of that share of the net income of the trust estate as is attributable to a period when the beneficiary was a resident; and
(b) so much of that share of the net income of the trust estate as is attributable to a period when the beneficiary was not a resident and is also attributable to sources in Australia;
as if it were the income of an individual and were not subject to any deduction.
98(2) [Beneficiary presently entitled by virtue of s 95A(2)]
Where a beneficiary of a trust estate:
(a) is deemed to be presently entitled to a share of the income of the trust estate of a year of income by virtue of the operation of subsection 95A(2) ;
(aa) is a natural person and is not, in respect of that share of the income of the trust estate, a beneficiary in the capacity of a trustee of another trust estate;
(b) is not a beneficiary to whom subsection 97A(1) or (1A) applies in relation to the year of income; and
(c) is not under a legal disability;
the trustee of the trust estate shall be assessed and liable to pay tax in respect of:
(d) so much of that share of the net income of the trust estate as is attributable to a period when the beneficiary was a resident; and
(e) so much of that share of the net income of the trust estate as is attributable to a period when the beneficiary was not a resident and is also attributable to sources in Australia;
as if it were the income of an individual and were not subject to any deduction.
(a) a beneficiary of a trust estate who is presently entitled to a share of the income of the trust estate:
(i) is a non-resident at the end of the year of income; and
(ii) is not, in respect of that share of the income of the trust estate, a beneficiary in the capacity of a trustee of another trust estate; and
(iii) is not a beneficiary to whom section 97A applies in relation to the year of income; and
(iv) is not a beneficiary to whom subsection 97(3) applies; and
(b) the trustee of the trust estate is not assessed and is not liable to pay tax under subsection (1) or (2) in respect of any part of that share of the net income of the trust estate;
subsection (3) applies to the trustee in respect of:
(c) so much of that share of the net income of the trust estate as is attributable to a period when the beneficiary was a resident; and
(d) so much of that share of the net income of the trust estate as is attributable to a period when the beneficiary was not a resident and is also attributable to sources in Australia.
A trustee to whom this subsection applies in respect of an amount of net income is to be assessed and is liable to pay tax:
(a) if the beneficiary is not a company - in respect of the amount of net income as if it were the income of an individual and were not subject to any deduction; or
(b) if the beneficiary is a company - in respect of the amount of net income at the rate declared by the Parliament for the purposes of this paragraph.
Note:
If the trust estate's net income includes a net capital gain, and the beneficiary is a company, Subdivision 115-C of the Income Tax Assessment Act 1997 affects the assessment of the trustee.
(a) a beneficiary of a trust estate (the first trust estate ) who is presently entitled to a share of the income of the first trust estate:
(i) is, in respect of that share of the income of the first trust estate, a beneficiary in the capacity of a trustee of another trust estate; and
(ii) is not a beneficiary to whom subsection 97(3) applies; and
(b) a trustee of the other trust estate is a non-resident at the end of the year of income;
the trustee of the first trust estate is to be assessed and is liable to pay tax in respect of so much of that share of the net income of the first trust estate as is attributable to sources in Australia at the rate declared by the Parliament for the purposes of this subsection.
Note:
If the trust estate's net income includes a net capital gain, Subdivision 115-C of the Income Tax Assessment Act 1997 affects the assessment of the trustee.
Where the trustee of a trust estate is assessed and is liable to pay tax in respect of the whole or a part of a share of the net income of a trust estate of a year of income in pursuance of subsection 98(3) , the assessable income of the beneficiary who is presently entitled to that share of the income of the trust estate shall include:
(a) so much of the individual interest of the beneficiary in the net income of the trust estate as is attributable to a period when the beneficiary was a resident; and
(b) so much of the individual interest of the beneficiary in the net income of the trust estate as is attributable to a period when the beneficiary was not a resident and is also attributable to sources in Australia.
98A(2)
Where the trustee of a trust estate is assessed and is liable to pay tax in respect of the whole or a part of a share of the net income of a trust estate of a year of income in pursuance of subsection 98(3) :
(a) there shall be deducted from the income tax assessed against the beneficiary the amount (in this subsection referred to as the relevant amount ) of the tax paid by the trustee in respect of the beneficiary's interest in the net income of the trust estate; and
(b) if the relevant amount is greater than the amount of the income tax assessed against the beneficiary - the Commissioner shall pay to the beneficiary an amount equal to the difference between those 2 amounts.
Note:
See Division 3A of Part IIB of the Taxation Administration Act 1953 for the rules about how the Commissioner must pay the entity. Division 3 of Part IIB allows the Commissioner to apply the amount owing as a credit against tax debts that the entity owes to the Commonwealth.
98A(3)
If a beneficiary of a trust estate who is presently entitled to a share of the income of the trust estate:
(a) is not, in respect of that share of the income of the trust estate, a beneficiary in the capacity of a trustee of another trust estate; and
(b) is a non-resident at the end of the year of income;
the assessable income of the beneficiary includes so much of the individual interest of the beneficiary in the net income of the trust estate as is reasonably attributable to a part of the net income of another trust estate in respect of which the trustee of the other trust estate is assessed and is liable to pay tax under subsection 98(4) .
98A(4)
To the extent that subsection (3) includes an amount in the assessable income of a beneficiary of a trust estate, the amount is not included by subsection (1) or section 100 .
SECTION 98B DEDUCTION FROM BENEFICIARY ' S TAX 98B(1)
This section applies to a beneficiary of a trust estate for a year of income if the assessable income of the beneficiary of the year of income includes an amount covered by subsection (2).
98B(2)
This subsection covers an amount (the assessable amount ) if:
(a) the amount is included in the assessable income of the beneficiary under one of the following:
(i) section 97 ;
(ii) subsection 98A(3) ;
(iii) section 100 ; and
(b) the amount does not represent income of the trust estate to which the beneficiary is presently entitled in the capacity of a trustee of another trust estate; and
(c) the amount is reasonably attributable to:
(i) an amount (the taxed net income ) in respect of which the trustee of another trust estate is assessed and liable to pay tax (the subsection 98(4) tax ) under subsection 98(4) ; or
(ii) an amount (the taxed component ) in respect of which the trustee of an AMIT is assessed and liable to pay tax (the paragraph 276-105(2)(c) tax ) because of paragraph 276-105(2)(c) of the Income Tax Assessment Act 1997 .
98B(3)
A proportion of the subsection 98(4) tax or of the paragraph 276-105(2)(c) tax (as applicable) is to be deducted from the income tax assessed against the beneficiary of the year of income. That proportion is the same as the proportion of the taxed net income or of the taxed component (as applicable) that gave rise to the assessable amount.
Note:
To work out the proportion of the taxed net income that gives rise to assessable income for a beneficiary of another trust estate, you would have regard to the share of the income of each interposed trust estate to which a beneficiary (including a beneficiary in the capacity of a trustee) is presently entitled.
Example:
The P Trust has two non-resident trustee beneficiaries, the trustees of the S Trust and the H Trust. Each trustee is presently entitled to a ½ share of the income of the P Trust. The net income of the P Trust is $ 100,000. The trustee of the P Trust pays tax of $ 22,500 under subsection 98(4) in respect of the trustee of the S Trust ' s interest and $ 22,500 under subsection 98(4) in respect of the trustee of the H Trust ' s interest.
The S Trust has a non-resident beneficiary, G, who is presently entitled to a ⅓ share of the income of the S Trust. The net income of the S Trust is $ 30,000. Subsection 98A(3) includes $ 10,000 in G ' s assessable income.
The taxed net income of the P trust is $ 50,000. The proportion of that taxed net income that gave rise to the $ 10,000 being included in G ' s assessable income is ⅓ . This is because G had a ⅓ share of the income of the S Trust. $ 7,500 ( ⅓ × $ 22,500) is deducted from the income tax assessed against G.
If section 97 , subsection 98A(3) or section 100 also includes amounts in the assessable income of any beneficiaries of the H Trust, each of those beneficiaries also works out the amount of the deduction against the income tax assessed against them in the same way.
98B(4)
If the amount to be deducted under subsection (3) is greater than the amount of the income tax assessed against the beneficiary, the Commissioner must pay to the beneficiary an amount equal to the difference between those 2 amounts.
Note:
See Division 3A of Part IIB of the Taxation Administration Act 1953 for the rules about how the Commissioner must pay the entity. Division 3A of Part IIB allows the Commissioner to apply the amount owing as a credit against tax debts that the entity owes to the Commonwealth.
This section applies in relation to a trust estate in relation to a year of income only if section 99A does not apply in relation to that trust estate in relation to that year of income.
Where there is no part of the net income of a resident trust estate:
(a) that is included in the assessable income of a beneficiary of the trust estate in pursuance of section 97 ;
(b) in respect of which the trustee of the trust estate is assessed and liable to pay tax in pursuance of section 98 ; or
(c) that represents income to which a beneficiary is presently entitled that is attributable to a period when the beneficiary was not a resident and is also attributable to sources out of Australia;
the trustee shall be assessed and is liable to pay tax on the net income of the trust estate as if it were the income of an individual who was a resident and were not subject to any deduction.
Where there is a part of the net income of a resident trust estate:
(a) that is not included in the assessable income of a beneficiary of the trust estate in pursuance of section 97 ;
(b) in respect of which the trustee is not assessed and is not liable to pay tax in pursuance of section 98 ; and
(c) that does not represent income to which a beneficiary is presently entitled that is attributable to a period when the beneficiary was not a resident and is also attributable to sources out of Australia;
the trustee shall be assessed and is liable to pay tax on that part of the net income of the trust estate as if it were the income of an individual who was a resident and were not subject to any deduction.
Where there is no part of the net income of a trust estate that is not a resident trust estate:
(a) that is included in the assessable income of a beneficiary of the trust estate in pursuance of section 97 ;
(b) in respect of which the trustee of the trust estate is assessed and liable to pay tax in pursuance of section 98 ; or
(c) that is attributable to sources out of Australia;
the trustee shall be assessed and is liable to pay tax on the net income of the trust estate as if it were the income of an individual and were not subject to any deduction.
Where there is a part of the net income of a trust estate that is not a resident trust estate:
(a) that is attributable to sources in Australia;
(b) that is not included in the assessable income of a beneficiary of the trust estate in pursuance of section 97 ; and
(c) in respect of which the trustee of the trust estate is not assessed and is not liable to pay tax in pursuance of section 98 ;
the trustee shall be assessed and is liable to pay tax on that part of the net income of the trust estate as if it were the income of an individual and were not subject to any deduction.
(Omitted by No 126 of 1977)
99A(2)
This section does not apply in relation to a trust estate in relation to a year of income, being a trust estate:
(a) that resulted from:
(i) a will, a codicil or an order of a court that varied or modified the provisions of a will or a codicil; or
(ii) an intestacy or an order of a court that varied or modified the application, in relation to the estate of a deceased person, of the provisions of the law relating to the distribution of the estates of persons who die intestate;
(b) that consists of the property of a person who has become bankrupt, being property that has vested in The Official Receiver in Bankruptcy, or in a registered trustee, under the Bankruptcy Act 1966 ;
(c) that is administered under Part XI of the Bankruptcy Act 1966 ; or
(d) that consists of property of a kind referred to in paragraph 102AG(2)(c) ;
if the Commissioner is of the opinion that it would be unreasonable that this section should apply in relation to that trust estate in relation to that year of income.
99A(3)
In forming an opinion for the purposes of subsection (2):
(a) the Commissioner shall have regard to the circumstances in which and the conditions, if any, upon which, at any time, property (including money) was acquired by or lent to the trust estate, income was derived by the trust estate, benefits were conferred on the trust estate or special rights or privileges were conferred on or attached to property of the trust estate, whether or not the rights or privileges have been exercised;
(b) if a person who has, at any time, directly or indirectly:
(i) transferred or lent any property (including money) to, or conferred any benefits on, the trust estate; or
has not, at any time, directly or indirectly:
(ii) conferred or attached any special right or privilege, or done any act or thing, either alone or together with another person or persons, that has resulted in the conferring or attaching of any special right or privilege, on or to property of the trust estate whether or not the right or privilege has been exercised;
(iii) transferred or lent any property (including money) to, or conferred any benefits on, another trust estate; or
the Commissioner shall have regard to that fact; and
(iv) conferred or attached any special right or privilege, or done any act or thing, either alone or together with another person or persons, that has resulted in the conferring or attaching of any special right or privilege, on or to property of another trust estate, whether or not the right or privilege has been exercised;
(c) the Commissioner shall have regard to such other matters, if any, as he or she thinks fit.
99A(3A)
For the purposes of the application of paragraph (3)(a) in relation to a trust estate of the kind referred to in paragraph (2)(a), a reference in that first-mentioned paragraph to the trust estate shall be read as including a reference to the person as a result of whose death the trust estate arose.
99A(4)
Where there is no part of the net income of a resident trust estate:
(a) that is included in the assessable income of a beneficiary of the trust estate in pursuance of section 97 ;
(b) in respect of which the trustee of the trust estate is assessed and liable to pay tax in pursuance of section 98 ; or
(c) that represents income to which a beneficiary is presently entitled that is attributable to a period when the beneficiary was not a resident and is also attributable to sources out of Australia;
the trustee shall be assessed and is liable to pay tax on the net income of the trust estate at the rate declared by the Parliament for the purposes of this section.
Note:
If the trust estate's net income includes a net capital gain, Subdivision 115-C of the Income Tax Assessment Act 1997 affects the assessment of the trustee.
99A(4A)
Where there is a part of the net income of a resident trust estate:
(a) that is not included in the assessable income of a beneficiary of the trust estate in pursuance of section 97 ;
(b) in respect of which the trustee is not assessed and is not liable to pay tax in pursuance of section 98 ; and
(c) that does not represent income to which a beneficiary is presently entitled that is attributable to a period when the beneficiary was not a resident and is also attributable to sources out of Australia;
the trustee shall be assessed and is liable to pay tax on that part of the net income of the trust estate at the rate declared by the Parliament for the purposes of this section.
Note:
If the trust estate's net income includes a net capital gain, Subdivision 115-C of the Income Tax Assessment Act 1997 affects the assessment of the trustee.
99A(4B)
Where there is no part of the net income of a trust estate that is not a resident trust estate:
(a) that is included in the assessable income of a beneficiary of the trust estate in pursuance of section 97 ;
(b) in respect of which the trustee of the trust estate is assessed and liable to pay tax in pursuance of section 98 ; or
(c) that is attributable to sources out of Australia;
the trustee shall be assessed and is liable to pay tax on the net income of the trust estate at the rate declared by the Parliament for the purposes of this section.
Note:
If the trust estate's net income includes a net capital gain, Subdivision 115-C of the Income Tax Assessment Act 1997 affects the assessment of the trustee.
99A(4C)
Where there is a part of the net income of a trust estate that is not a resident trust estate:
(a) that is attributable to sources in Australia;
(b) that is not included in the assessable income of a beneficiary of the trust estate in pursuance of section 97 ; and
(c) in respect of which the trustee of the trust estate is not assessed and is not liable to pay tax in pursuance of section 98 ;
the trustee shall be assessed and is liable to pay tax on that part of the net income of the trust estate at the rate declared by the Parliament for the purposes of this section.
Note:
If the trust estate's net income includes a net capital gain, Subdivision 115-C of the Income Tax Assessment Act 1997 affects the assessment of the trustee.
99A(5)
(Omitted by No 19 of 1980)
SECTION 99B RECEIPT OF TRUST INCOME NOT PREVIOUSLY SUBJECT TO TAX 99B(1) [Amounts paid to, or applied for benefit of, beneficiary]
Where, at any time during a year of income, an amount, being property of a trust estate, is paid to, or applied for the benefit of, a beneficiary of the trust estate who was a resident at any time during the year of income, the assessable income of the beneficiary of the year of income shall, subject to subsection (2), include that amount.
99B(2) [Amounts not included in assessable income]The amount that, but for this subsection, would be included in the assessable income of a beneficiary of a trust estate under subsection (1) by reason that an amount, being property of the trust estate, was paid to, or applied for the benefit of, the beneficiary shall be reduced by so much (if any) of the amount, as represents:
(a) corpus of the trust estate (except to the extent to which it is attributable to amounts derived by the trust estate that, if they had been derived by a taxpayer being a resident, would have been included in the assessable income of that taxpayer of a year of income);
(b) an amount that, if it had been derived by a taxpayer being a resident, would not have been included in the assessable income of that taxpayer of a year of income;
(ba) an amount that is non-assessable non-exempt income of the beneficiary because of section 802-17 of the Income Tax Assessment Act 1997 ;
(c) an amount:
(i) that is or has been included in the assessable income of the beneficiary in pursuance of section 97 ; or
(ii) in respect of which the trustee of the trust estate is or has been assessed andliable to pay tax in pursuance of section 98 , 99 or 99A ; or
(iii) that is reasonably attributable to a part of the net income of another trust estate in respect of which the trustee of the other trust estate is assessed and is liable to pay tax under subsection 98(4) ;
(d) an amount that is or has been included in the assessable income of any taxpayer (other than a company) under section 102AAZD ; or
(e) if the beneficiary is a company - an amount that is or has been included in the assessable income of the beneficiary under section 102AAZD .
An amount that is not included in a beneficiary's assessable income because of paragraph (2)(d) or (e) is not assessable income and is not exempt income.
In paragraphs (2)(d) and (e):
company
means a company other than a company in the capacity of a trustee.
In determining for the purposes of section 99B whether any amount has been applied for the benefit of a beneficiary of a trust estate, regard shall be had to all benefits that have accrued at any time to the beneficiary (whether or not the beneficiary had rights at law or in equity in or to those benefits) as a result of the derivation of, or in relation to, that amount, irrespective of the nature or form of the benefits.
99C(2)
Without limiting the generality of subsection (1), an amount shall be taken, for the purposes of section 99B , to have been applied for the benefit of a beneficiary if:
(a) whether by re-investment, accumulation, capitalization or otherwise, and whether directly or indirectly, the amount has been so dealt with that it will, at a future time, and whether in the form of income or not, enure for the benefit of the beneficiary;
(b) the derivation of the amount has operated to increase the value to the beneficiary of any property or rights of any kind held by or for the benefit of the beneficiary;
(c) the beneficiary has received or become entitled to receive any benefit (including a loan or a repayment, in whole or in part, of a loan, or any other payment of any kind) provided directly or indirectly out of that amount or out of property or money that was available for the purpose by reason of the derivation of the amount;
(d) the beneficiary has power, by means of the exercise by the beneficiary of any power of appointment or revocation or otherwise, to obtain, whether with or without the consent of any other person, the beneficial enjoyment of the amount; or
(e) the beneficiary has directly or indirectly assigned to another person his or her interest in the amount or is able, in any manner whatsoever, and whether directly or indirectly, to control the application of that interest.
SECTION 99D REFUND OF TAX TO NON-RESIDENT BENEFICIARY 99D(1) [Prerequisites to obtaining refund]
(a) a trustee of a trust estate has been assessed and was liable to pay tax in pursuance of subsection 99(2) or (3) or subsection 99A(4) or (4A) in respect of the net income or a part of the net income of the trust estate of a year of income (in this subsection referred to as the relevant year of income ), being the year of income that commenced on 1 July 1978 or a subsequent year of income;
(b) the amount (in this subsection referred to as the relevant tax amount ) of the tax so assessed in respect of that net income or that part of that net income has been paid;
(c) the trustee of the trust estate has, in accordance with the terms of the trust, paid an amount (in this subsection referred to as the distributed amount ) of the income of the trust estate of the relevant year of income to a beneficiary of the trust estate;
(d) before the expiration of 60 days after the date on which the payment was made, or within such further period as the Commissioner allows, the beneficiary, by writing signed by or on behalf of the beneficiary, makes an application to the Commissioner for a refund under this section in relation to the distributed amount; and
(e) the beneficiary satisfies the Commissioner that the whole or a part (which whole or part, as the case may be, is in this subsection referred to as the non-Australian distributed amount ) of the distributed amount:
(i) is attributable to a period when the beneficiary was not a resident and is also attributable to sources out of Australia;
(ii) was taken into account in calculating the net income of the trust estate of the relevant year of income; and
(iii) is not income that, by the operation of section 100A , is deemed not to have been paid to or applied for the benefit of the beneficiary or to be income to which the beneficiary is not presently entitled;
the Commissioner shall, subject to subsection (2), refund to the beneficiary so much (if any) of the relevant tax amount as is attributable to the non-Australian distributed amount, reduced by so much of any refund or credit to which the trustee is or was entitled in respect of the relevant tax amount as is attributable to the non-Australian distributed amount.
The Commissioner may refuse to make a refund of tax in relation to an amount paid to a beneficiary of a trust estate if the Commissioner considers that the whole or a part of that amount was paid to the beneficiary by the trustee for the purpose or for purposes that included the purpose of enabling the beneficiary to become entitled to a refund of tax under this section in relation to that amount.
Sections 98 , 99 and 99A do not apply to so much of the net income of a trust estate of a year of income as is reasonably attributable to a part of the net income of another trust estate in respect of which the trustee of the other trust estate is assessed and is liable to pay tax under subsection 98(4) .
(Repealed by No 32 of 2008 )
Subsection 98(4) does not apply to so much of the net income of a trust estate as represents income to which a beneficiary is presently entitled and gives rise to an amount from which an entity is required to withhold an amount under Subdivision 12-H in Schedule 1 to the Taxation Administration Act 1953 .
Subsection 98(3) does not apply to so much of the net income of a trust estate as represents income to which a beneficiary is presently entitled and gives rise to an amount that is non-assessable non-exempt income because of:
(a) Division 880 of the Income Tax Assessment Act 1997 ; or
(b) Division 880 of the Income Tax (Transitional Provisions) Act 1997 .
(a) a beneficiary of a trust estate that is a managed investment trust is presently entitled to a share of the income of the trust estate of a year of income; and
(b) the beneficiary is a non-resident at the end of the year of income; and
(c) all or part of that share of the net income of the trust estate (the late amount ) has not been paid to the beneficiary by the end of the period applicable under subsection 12-405(4) in Schedule 1 to the Taxation Administration Act 1953 ; and
Note:
That subsection requires payments to be made before the end of 3 months after the end of the relevant year of income or within a longer period allowed by the Commissioner.
(d) if the late amount had been paid to the beneficiary within that period, the payment would have been a fund payment made by the trustee of the managed investment trust.
This Division applies as if that portion of the beneficiary ' s income that represents the late amount were income to which no beneficiary was presently entitled.
99H(3) [Excluded amounts]In working out the net income of the trust estate for the year of income for the purposes of subsection (1), disregard these amounts ( excluded amounts ):
(a) a dividend (as defined in Division 11A of Part III ) that is subject to, or exempted from, a requirement to withhold under Subdivision 12-F in Schedule 1 to the Taxation Administration Act 1953 ;
(b) interest (as so defined) that is subject to, or exempted from, such a requirement;
(c) a royalty that is subject to, or exempted from, such a requirement;
(d) a capital gain or capital loss from a CGT event that happens in relation to a CGT asset that is not taxable Australian property;
(e) amounts that are not from a source in Australia;
and disregard deductions relating to excluded amounts.
The assessable income of any beneficiary who:
(a) is under a legal disability or is deemed to be presently entitled to any of the income of a trust estate by virtue of the operation of subsection 95A(2) ; and
(b) is a beneficiary in more than one trust estate or derives income from any other source;
shall include:
(c) so much of the individual interest of the beneficiary in the net income of the trust estate or of each of the trust estates as is attributable to a period when the beneficiary was a resident; and
(d) so much of the individual interest of the beneficiary in the net income of the trust estate or of each of the trust estates as is attributable to a period when the beneficiary was not a resident and is also attributed to sources in Australia.
Note:
An amount is not included in assessable income under this section to the extent that subsection 98A(3) already includes it: see subsection 98A(4) .
100(1AA)
If an amount is included in the assessable income of a beneficiary of a trust estate because of Subdivision 115-C or 207-B of the Income Tax Assessment Act 1997 , for the purposes of paragraph (1)(b), treat the beneficiary as deriving income from another source.
100(1A)
If:
(a) a beneficiary in a trust estate is under a legal disability or is deemed to be presently entitled to any of the income of the trust estate by virtue of the operation of subsection 95A(2) ; and
(b) the beneficiary is not a beneficiary in any other trust estate and does not derive income from any other source; and
(c) the beneficiary would receive a refund of tax offsets under Division 67 of the Income Tax Assessment Act 1997 for a particular year of income if the following amounts were included in the assessable income of the beneficiary for that year:
(i) so much of the individual interest of the beneficiary in the net income of the trust estate for that year as is attributable to a period when the beneficiary was a resident;
(ii) so much of the individual interest of the beneficiary in the net income of the trust estate for that year as is attributable to a period when the beneficiary was not a resident and is also attributable to sources in Australia;
then those amounts are included in the assessable income of the beneficiary for that year.
100(1B)
If a beneficiary in a trust estate who is under a legal disability or is deemed to be presently entitled to any of the income of the trust estate by virtue of the operation of subsection 95A(2) :
(a) is a resident at the end of the year of income; and
(b) is not a beneficiary in any other trust estate and does not derive income from any other source;
the assessable income of the beneficiary includes so much of the individual interest of the beneficiary in the net income of the trust estate as is reasonably attributable to a part of the net income of another trust estate in respect of which the trustee of the other trust estate is assessed and is liable to pay tax under subsection 98(4) .
Note 2:
A credit is available under section 98B for an appropriate part of the subsection 98(4) tax.
Note 3:
An amount is not included in assessable income under this section to the extent that subsection 98A(3) already includes it: see subsection 98A(4) .
100(1C)
If a beneficiary in a trust estate who is under a legal disability or is deemed to be presently entitled to any of the income of the trust estate by virtue of the operation of subsection 95A(2) :
(a) is a resident at the end of the year of income; and
(b) is not a beneficiary in any other trust estate and does not derive income from any other source;
the assessable income of the beneficiary includes so much of the individual interest of the beneficiary in the net income of the trust estate as is represented by or reasonably attributable to a payment from which an entity was required to withhold an amount under Subdivision 12-H in Schedule 1 to the Taxation Administration Act 1953 .
Note:
A credit is available under section 18-50 in Schedule 1 to the Taxation Administration Act 1953 for an appropriate part of the amount withheld.
100(2)
There shall be deducted from the income tax assessed against a beneficiary to whom subsection (1) or (1A) applies (or a beneficiary under a legal disability whose assessable income is increased as a result of Subdivision 115-C or 207-B of the Income Tax Assessment Act 1997 ) the tax paid or payable by any trustee in respect of that beneficiary's interest in the net income of the trust estate.
100(3)
However, an amount of tax is not to be deducted under subsection (2) from the income tax assessed against a beneficiary to the extent that the amount is deducted under section 98B from the income tax assessed against the beneficiary.
SECTION 100AA FAILURE TO PAY OR NOTIFY PRESENT ENTITLEMENT OF EXEMPT ENTITY 100AA(1)
Subsection (3) applies if:
(a) an exempt entity is presently entitled to an amount of the income of a trust estate; and
(b) the exempt entity is not an exempt Australian government agency (within the meaning of the Income Tax Assessment Act 1997 ); and
(c) at the end of 2 months after the end of the relevant income year, the trustee has failed to notify the exempt entity in writing of the present entitlement.
100AA(2)
For the purposes of this section, treat the trustee as giving the exempt entity notice in writing of the present entitlement at a time to the extent that the trustee pays the exempt entity the amount of the present entitlement at that time.
100AA(3)
For the purposes of this Act, treat the exempt entity as not being presently entitled, and having never been presently entitled, to the amount mentioned in paragraph (1)(a) of the income of the trust estate, to the extent that the trustee failed to notify the exempt entity of that amount as mentioned in paragraph (1)(c).
100AA(4)
However, subsection (3) does not apply if the Commissioner decides that the failure mentioned in paragraph (1)(c) of the trustee should be disregarded.
100AA(5)
In making a decision under subsection (4) (or refusing to make such a decision), the Commissioner must have regard to the following:
(a) the circumstances that led to the failure mentioned in paragraph (1)(c);
(b) the extent to which the trustee has taken action to try to correct the failure and if so, how quickly that action was taken;
(c) whether this section has operated previously in relation to the trustee, and if so, the circumstances in which this occurred;
(d) any other matters that the Commissioner considers relevant.
100AA(6)
If subsection (3) applies, for the purposes of any application of section 99A in relation to the trust estate in relation to the relevant year of income, treat the trust estate as a resident trust estate.
100AA(7)
This section does not apply in relation to a trust estate that is a managed investment trust (within the meaning of the Income Tax Assessment Act 1997 ) in relation to a year of income.
Subsection (2) applies if:
(a) an exempt entity is presently entitled to an amount of the income of a trust estate; and
(b) the exempt entity is not an exempt Australian government agency (within the meaning of the Income Tax Assessment Act 1997 ); and
(c) the exempt entity ' s adjusted Division 6 percentage of the income of the trust estate exceeds the benchmark percentage determined under subsection (3).
100AB(2)
Subject to subsection 100AA(3) , for the purposes of this Act, treat the exempt entity as not being presently entitled, and having never been presently entitled, to the amount of the income of the trust estate mentioned in paragraph (1)(a) of this section, to the extent that ensures that the exempt entity ' s adjusted Division 6 percentage of the income of the trust estate equals the benchmark percentage determined under subsection (3) of this section.
100AB(3)
Determine the benchmark percentage by working out the following fraction (expressed as a percentage):
| The amount to which the exempt entity is presently entitled from the trust estate, to the extent that the amount forms part of the trust estate ' s adjusted net income for the year of income | ||
| The trust estate ' s adjusted net income for the year of income | ||
100AB(4)
A trust estate ' s adjusted net income for a year of income is its net income for that year of income, with the following adjustments:
(a) firstly, in determining that net income, disregard any capital gain or franked distribution to the extent to which a beneficiary of the trust estate or the trustee is specifically entitled to that gain or distribution;
(b) next, in determining the net capital gain (if any) of the trust for the year of income, disregard steps 3 and 4 of the method statement in subsection 102-5(1) (CGT discount and small business concessions);
(c) next, reduce that net income by amounts (if any) that do not represent net accretions of value to the trust estate in that year of income (other than amounts included in that net income under Part IVA ).
100AB(5)
Subsection (2) does not apply in relation to a trust estate in relation to a year of income if the Commissioner is of the opinion that it would be unreasonable that the subsection should apply in relation to that trust estate in relation to that year of income.
100AB(6)
In forming an opinion for the purposes of subsection (5), the Commissioner must consider the following matters:
(a) the circumstances that led to the exempt entity ' s adjusted Division 6 percentage exceeding the benchmark percentage determined under subsection (3);
(b) the extent to which the exempt entity ' s adjusted Division 6 percentage exceeds that benchmark percentage;
(c) the extent to which the exempt entity actually received distributions from the trust estate in respect of the year of income;
(d) the extent to which other beneficiaries of the trust estate were entitled to receive distributions of, or otherwise benefit from, amounts representing the adjusted net income of the trust estate;
(e) any other matters that the Commissioner considers relevant.
100AB(7)
If subsection (2) applies, for the purposes of any application of section 99A in relation to the trust estate in relation to the relevant year of income, treat the trust estate as a resident trust estate.
100AB(8)
This section does not apply in relation to a trust estate that is a managed investment trust (within the meaning of the Income Tax Assessment Act 1997 ) in relation to a year of income.
(a) apart from this section, a beneficiary of a trust estate who is not under any legal disability is presently entitled to a share of the income of the trust estate; and
(b) the present entitlement of the beneficiary to that share or to a part of that share of the income of the trust estate (which share or part, as the case may be, is in this subsection referred to as the relevant trust income ) arose out of a reimbursement agreement or arose by reason of any act, transaction or circumstance that occurred in connection with, or as a result of, a reimbursement agreement;
the beneficiary shall, for the purposes of this Act, be deemed not to be, and never to have been, presently entitled to the relevant trust income.
100A(2) [Where amount paid or applied](a) apart from this section, a beneficiary of a trust estate who is not under any legal disability would, by reason that income of the trust estate was paid to, or applied for the benefit of, the beneficiary, be deemed to be presently entitled to income of the trust estate; and
(b) that income or a part of that income (which income or part, as the case may be, is in this subsection referred to as the relevant trust income ) was paid to, or applied for the benefit of, the beneficiary as a result of a reimbursement agreement or as a result of any act, transaction or circumstance that occurred in connection with, or as a result of, a reimbursement agreement;
the relevant trust income shall, for the purposes of this Act, be deemed not to have been paid to, or applied for the benefit of, the beneficiary.
100A(3) [Application and exclusion of trustee beneficiary]In the preceding provisions of this section:
(a) a reference to income of a trust estate to which a beneficiary is, apart from this section, presently entitled shall be read as not including a reference to:
(i) income of the trust estate to which the beneficiary is presently entitled in the capacity of a trustee of another trust estate, being income that was paid to, or applied for the benefit of, the beneficiary before 6 March 1980; or
(ii) income that was paid to, or applied for the benefit of, the beneficiary before 12 June 1978; and
(b) a reference to income of a trust estate that was paid to, or applied for the benefit of, a beneficiary of the trust estate shall be read as not including a reference to:
(i) income of the trust estate that, before 6 March 1980, was paid to, or applied for the benefit of, the beneficiary in the capacity of a trustee of another trust estate; or
(ii) income of the trust estate that was paid to, or applied for the benefit of, the beneficiary before 12 June 1978.
(a) apart from this section, a beneficiary (in this subsection referred to as the trustee beneficiary ) of a trust estate is presently entitled to a share of the income of the trust estate in the capacity of a trustee of another trust estate (in this subsection referred to as the interposed trust estate );
(b) apart from this subsection, the trustee beneficiary would, by virtue of subsection (1), be deemed not to be, and never to have been, presently entitled to that share or a part of that share of the income of the first-mentioned trust estate (which share or part is in this subsection referred to as the relevant trust income ); and
(c) apart from this section, a beneficiary of the interposed trust estate is or was, or beneficiaries of the interposed trust estate are or were, presently entitled, or deemed to be presently entitled, to any income of the interposed trust estate (in this subsection referred to as the distributable trust income ) that is attributable to the relevant trust income;
subsection (1) does not apply, and shall be deemed never to have applied, in relation to the trustee beneficiary, in relation to any part of the relevant trust income to which the distributable trust income is attributable.
(a) apart from this section, a beneficiary (in this subsection referred to as the trustee beneficiary ) of a trust estate would, by reason that income of the trust estate was paid to, or applied for the benefit of, the trustee beneficiary, be deemed to be presently entitled to income of the trust estate in the capacity of a trustee of another trust estate (in this subsection referred to as the interposed trust estate );
(b) apart from this subsection, that income or a part of that income (which income or part is in this subsection referred to as the relevant trust income ) would, by virtue of subsection (2), be deemed not to have been paid to, or applied for the benefit of, the trustee beneficiary; and
(c) apart from this section, a beneficiary of the interposed trust estate is or was, or beneficiaries of the interposed trust estate are or were, presently entitled, or deemed to be presently entitled, to any income of the interposed trust estate (in this subsection referred to as the distributable trust income ) that is attributable to the relevant trust income;
subsection (2) does not apply, and shall be deemed never to have applied, in relation to the trustee beneficiary, in relation to any part of the relevant trust income to which the distributable trust income is attributable.
A reference in paragraph (3A)(c) or (3B)(c) to a beneficiary of a trust estate shall be read as not including a reference to a beneficiary who is under a legal disability.
Where subsection (1) or (2) applies in relation to any income of a trust estate of a year of income:
(a) in the application of this Division in relation to the trust estate in relation to the year of income, section 99A shall be read as if subsections (2), (3) and (3A) of that section were omitted; and
(b) for the purposes of any application of section 99A in relation to the trust estate in relation to the year of income, the trust estate shall be deemed to be a resident trust estate.
For the purposes of subsection (1), but without limiting the generality of that subsection, where:
(a) a reimbursement agreement was entered into at or after the time when a person became a beneficiary of a trust estate (whether the person became a beneficiary of the trust estate before or after the commencement of this section); and
(b) the amount (in this subsection referred to as the increased amount ) of the share of the income of the trust estate to which the beneficiary is presently entitled exceeds the amount (in this subsection referred to as the original amount ) of the income of the trust estate to which the beneficiary would have been, or could reasonably be expected to have been, presently entitled if the reimbursement agreement had not been entered into or if an act, transaction or circumstance that occurred in connection with, or as a result of, the reimbursement agreement had not occurred;
the present entitlement of the beneficiary to so much of the increased amount as exceeds the original amount shall be taken to have arisen out of the reimbursement agreement.
100A(6) [Amount paid or applied as result of reimbursement agreement]For the purposes of subsection (2), but without limiting the generality of that subsection, where:
(a) a reimbursement agreement was entered into at or after the time when a person became a beneficiary of a trust estate (whether the person became a beneficiary of the trust estate before or after the commencement of this section); and
(b) income of the trust estate was paid to, or applied for the benefit of, the beneficiary and the amount (in this subsection referred to as the increased amount ) of that income exceeds the amount (in this subsection referred to as the original amount ) that would have been, or could reasonably be expected to have been, paid to, or applied for the benefit of, the beneficiary if the reimbursement agreement had not been entered into or if an act, transaction or circumstance that occurred in connection with, or as a result of, the reimbursement agreement had not occurred;
so much of the increased amount as exceeds the original amount shall be taken to be income of the trust estate that was paid to, or applied for the benefit of, the beneficiary as a result of the reimbursement agreement.
100A(6A) [Deduction deemed not allowable](a) subsection (1) or (2) applies, or would but for subsection (3A) or (3B) apply, in relation to a beneficiary of a trust estate in relation to a reimbursement agreement in relation to any income of the trust estate; and
(b) as part of, under or in connection with the reimbursement agreement, the beneficiary incurred or incurs a loss or outgoing after 5 March 1980 in respect of which a deduction has been allowed or would, but for this subsection, be allowable;
then, notwithstanding any other provision of this Act, a deduction shall be deemed not to have been, or not to be, allowable, as the case may be, in respect of that loss or outgoing.
Where subsection (6A) deems a deduction not to have been, or not to be, allowable in respect of a loss or outgoing incurred by a taxpayer in the acquisition of property that, for the purposes of the application of this Act and the Income Tax Assessment Act 1997 in relation to the taxpayer is or was trading stock, then, notwithstanding any other provision of this Act or that Act, the cost or cost price of that property, for the purposes of the application of Subdivision B of Division 2 of Part III of this Act or Division 70 (Trading stock) or 385 (Primary production) of the Income Tax Assessment Act 1997 in relation to that property in relation to the taxpayer, shall be taken to be, and at all times to have been, nil.
Subject to subsection (8), a reference in this section, in relation to a beneficiary of a trust estate, to a reimbursement agreement shall be read as a reference to an agreement, whether entered into before or after the commencement of this section, that provides for the payment of money or the transfer of property to, or the provision of services or other benefits for, a person or persons other than the beneficiary or the beneficiary and another person or other persons.
100A(8) [Purpose with which agreement must be entered into]A reference in subsection (7) to an agreement shall be read as not including a reference to an agreement that was not entered into for the purpose, or for purposes that included the purpose, of securing that a person who, if the agreement had not been entered into, would have been liable to pay income tax in respect of a year of income would not be liable to pay income tax in respect of that year of income or would be liable to pay less income tax in respect of that year of income than that person would have been liable to pay if the agreement had not been entered into.
100A(9) [Purpose of any party to agreement relevant]For the purposes of subsection (8), an agreement shall be taken to have been entered into for a particular purpose, or for purposes that included a particular purpose, if any of the parties to the agreement entered into the agreement for that purpose, or for purposes that included that purpose, as the case may be.
100A(10) [Payment of money by loan]A reference in subsection (7) to the payment of money to a person or persons shall be read as including a reference to the payment of money to a person or persons by way of loan.
100A(11) [ " Person " includes " trustee " ]A reference in this section to a person shall be read as including a reference to a person in the capacity of a trustee.
100A(12) [Release, etc, of debt a payment of money]For the purposes of this section, an agreement that provides for a person to release, abandon, fail to demand payment of or postpone payment of, a debt owed by another person shall be deemed to be an agreement that provides for the payment of money to that other person.
100A(13) [Definitions]In this section:
agreement
means any agreement, arrangement or understanding, whether formal or informal, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings, but does not include an agreement, arrangement or understanding entered into in the course of ordinary family or commercial dealing.
Note:
Section 960-255 of the Income Tax Assessment Act 1997 may be relevant to determining family relationships for the purposes of the definition of agreement .
property
includes a chose in action and also includes an estate, interest, right or power, whether at law or in equity, in or over property.
For the purposes of this Act, where a trustee has a discretion to pay or apply income of a trust estate to or for the benefit of specified beneficiaries, a beneficiary in whose favour the trustee exercises the trustee's discretion shall be deemed to be presently entitled to the amount paid to the beneficiary or applied for the beneficiary's benefit by the trustee in the exercise of that discretion.
Where in the year of income, the trustee of the estate of a deceased person receives any amount which would have been assessable income in the hands of the deceased person if it had been received by him or her during his or her lifetime, that amount shall be included in the assessable income of that year of the trust estate and shall be deemed to be income to which no beneficiary is presently entitled.
101A(2)
Subsection (1) does not apply in relation to an amount received by the trustee of the estate of a deceased person to the extent to which, if it had been received by the deceased person during his or her lifetime, it would have been included in the assessable income of that person by virtue of section 83-10 or 83-80 of the Income Tax Assessment Act 1997 .
101A(3)
To avoid doubt, if in the year of income an amount is included in the assessable income of a deceased taxpayer under Division 82 or 302 of the Income Tax Assessment Act 1997 in respect of a payment received by the trustee of the estate of the deceased taxpayer, that amount shall be included in the assessable income of that year of income of the trust estate.
101A(4)
This section does not apply in relation to any amount received by the trustee of the estate of a deceased person if the amount is a farm management deposit, of which the deceased person was the owner, that has become repayable.
Where a person has created a trust in respect of any income or property (including money) and:
(a) the person has power, whenever exercisable, to revoke or alter the trusts so as to acquire a beneficial interest in the income derived by the trustee during the year of income, or the property producing that income, or any part of that income or property; or
(b) income is, under that trust, in the year of income, payable to or accumulated for, or applicable for the benefit of a child or children of that person who is or are under the age of 18 years;
the Commissioner may assess the trustee to pay income tax, under this section, and the trustee shall be liable to pay the tax so assessed.
102(2)
The amount of the tax payable in pursuance of this section shall be the amount by which the tax actually payable on the person's own taxable income by the person who created the trust is less than the tax which would have been payable by the person if he or she had received, in addition to any other income derived by the person, so much of the net income of the trust estate as:
(a) is attributable to the property in which he or she has power to acquire the beneficial interest;
(b) represents the income, or the part of the income, in which he or she has power to acquire the beneficial interest; or
(c) is payable to or accumulated for, or applicable for the benefit of, a child or children of that person who is or are under the age of 18 years.
102(2A)
Where any property the subject of a trust has been converted into other property, this section shall apply in the same way as if the trust had originally been created in respect of that other property.
102(2B)
In the application of subsection (2) in determining the amount of tax that is payable by a trustee of a trust estate in pursuance of this section, the reference in that subsection to the net income of the trust estate shall be read as a reference to that net income reduced by:
(a) so much (if any) of that net income as is attributable to a period when the person who created the trust was not a resident and is also attributable to sources out of Australia; and
(b) so much (if any) of that net income as is not covered by paragraph (a) and represents an amount included in the assessable income of any taxpayer under section 102AAZD .
102(3)
Where this section is applied to the assessment of the income of a trust estate or part thereof derived in the year of income, no beneficiary shall be assessed in his or her individual capacity in respect of his or her individual interest in the income or part to which this section has been so applied, and the trustee shall not be assessed in respect of that income or part otherwise than under this section.
Division 6AAA - Special provisions relating to non-resident trust estates etc.
The object of this Division is to set out rules relating to the following:
(a) the payment of interest on distributions from certain non-resident trust estates (Subdivision B);
(b) the winding-up of certain non-resident trust estates in existence on 12 April 1989 (Subdivision C);
(c) an accruals system of taxation of certain non-resident trust estates (Subdivision D).
In this Division, unless the contrary intention appears:
1 July 1990 net worth
, in relation to a trust estate, means the market value, as at the beginning of 1 July 1990, of the assets of the trust estate, reduced by the liabilities of the trust estate as at the beginning of that day.
accounts
has the same meaning as in Part
X
.
actual transfer
, in relation to property or services, means a transfer of the property or services other than a transfer that is taken to have been made because of subsection
102AAK(1)
,
(2)
,
(5)
,
(6)
,
(8)
,
(10)
or
(11)
.
approved form
(Repealed by No 4 of 2007)
arm
'
s length amount
, in relation to an actual transfer of property or services to a trust estate, means the amount that the trustee could reasonably be expected to have been required to pay to obtain the property or the services concerned from the transferor under a transaction where the parties to the transaction are dealing with each other at arm
'
s length in relation to the transaction.
associate
has the same meaning as in Part
X
.
attributable income
, in relation to a trust estate, has the meaning given by section
102AAU
.
attributable taxpayer
has the meaning given by section
102AAT
.
attribution account payment
has the same meaning as in Part
X
.
attribution debit
has the same meaning as in Part
X
.
Australian entity
has the same meaning as in Part
X
.
Australian trust
has the same meaning as in Part
X
.
base interest rate
for a day has the same meaning as in section
8AAD
of the
Taxation Administration Act 1953
.
Broad-exemption listed country
(Repealed by No 96 of 2004)
broad-exemption listed country trust estate
(Repealed by No 96 of 2004)
CFC
has the same meaning as in Part
X
.
controlled foreign trust
has the same meaning as in Part
X
.
corporate unit trust
(Repealed by No 53 of 2016)
de facto marriage
(Repealed by No 144 of 2008)
(a) a relationship between 2 persons (whether of the same sex or different sexes) that is registered under a law of a State or Territory prescribed for the purposes of section 2E of the Acts Interpretation Act 1901 as a kind of relationship prescribed for the purposes of that section; or
(b) a relationship between 2 persons (whether of the same sex or different sexes) who, although not legally married to each other, live with each other on a genuine domestic basis in a relationship as a couple.
(a) any provision of Division 40 of the Income Tax Assessment Act 1997 (other than Subdivision 40-E ); or
(b) any provision of Division 43 of that Act.
designated concession income
has the same meaning as in Part
X
.
discretionary trust estate
means a trust estate where:
(a) both of the following conditions are satisfied:
(i) a person (who may include the trustee) is empowered (either unconditionally or on the fulfilment of a condition) to exercise any power of appointment or other discretion;
(ii) the exercise of the power or discretion, or the failure to exercise the power or discretion, has the effect of determining, to any extent, either or both of the following:
(A) the identities of those who may benefit under the trust;
(B) how beneficiaries are to benefit, as between themselves, under the trust; or
(b) one or more of the beneficiaries under the trust have a contingent or defeasible interest in some or all of the corpus or income of the trust estate; or
(c) the trustee of another trust estate, being a trust estate where both of the conditions in paragraph (a) are satisfied, benefits, or is capable (whether by the exercise of a power of appointment or otherwise) of benefiting, under the first-mentioned trust estate.
eligible designated concession income
has the same meaning as in Part
X
.
entity
means any of the following:
(a) a company;
(b) a partnership;
(c) a person in the capacity of trustee;
(d) any other person.
exempt income
, in relation to a trust estate, means the exempt income of the trust estate calculated as if the trustee were a taxpayer who was a resident.
IP time
means 7.30 p.m., by standard time in the Australian Capital Territory, on 12 April 1989.
listed country
has the same meaning as in Part
X
.
listed country
(Omitted by No 155 of 1997)
listed country trust estate
has the meaning given by section
102AAE
.
listed country trust estate
(Omitted by No 155 of 1997)
net income
, in relation to a trust estate, in relation to a year of income, means:
(a) (Repealed by No 53 of 2016)
(b) if the trust estate is a public trading trust in relation to the year of income - the net income (within the meaning of Division 6C ) of the public trading trust of the year of income; or
(c) in any other case - the net income (within the meaning of Division 6 ) of the trust estate.
non-attributable year of income
, in relation to a trust estate, means a non-resident year of income of the trust estate where no amount calculated by reference to the attributable income of the trust estate of that year of income is included in the assessable income of any taxpayer under subsection
102AAZD(1)
.
non-broad-exemption listed country
(Repealed by No 96 of 2004)
non-discretionary trust estate
means a trust estate other than a discretionary trust estate.
non-resident family trust
has the meaning given by section
102AAH
.
non-resident trust estate
(except in section
102AAA
), in relation to a year of income, means a trust estate that is not a resident trust estate in relation to the year of income.
non-resident year of income
, in relation to a trust estate, means a year of income in relation to which the trust estate is a non-resident trust estate.
profits
includes gains, whether of an income or capital nature.
public trading trust
, in relation to a year of income, means a unit trust that is a public trading trust in relation to the year of income for the purposes of Division
6C
.
public unit trust
has the meaning given by section
102AAF
.
resident trust estate
, in relation to a year of income, means:
(a) a resident trust estate in relation to the year of income within the meaning of Division 6 ; or
(b) a unit trust that is a public trading trust, in relation to the year of income; or
(c) a complying superannuation fund, a non-complying superannuation fund, a complying approved deposit fund, a non-complying approved deposit fund or a pooled superannuation trust in relation to the year of income.
(a) any agreement, arrangement, understanding, promise or undertaking, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings; and
(b) any scheme, plan, proposal, action, course of action or course of conduct, whether there are 2 or more parties or only one party involved.
services
includes any benefit, right (including a right in relation to, and an interest in, real or personal property), privilege or facility and, without limiting the generality of the foregoing, includes a benefit, right, privilege, service or facility that is, or is to be, provided under:
(a) an arrangement for or in relation to:
(i) the performance of work (including work of a professional nature), whether with or without the provision of property; or
(ii) the provision of, or of the use of facilities for, entertainment, recreation or instruction; or
(iii) the conferring of benefits, rights or privileges for which remuneration is payable in the form of a royalty, tribute, levy or similar exaction; or
(b) a contract of insurance; or
(c) an arrangement for or in relation to the lending of money.
spouse
(Omitted by No 135 of 1990)
subject to tax
has the same meaning as in Part
X
.
tax accounting period
has the same meaning as in Part
X
.
tax law
, in relation to a listed country or an unlisted country, has the same meaning as in Part
X
.
tax offset
has the same meaning as in the
Income Tax Assessment Act 1997
.
(a) in relation to property - includes dispose of (whether by assignment, declaration of trust or otherwise) or provide; and
(b) in relation to services - includes allow, confer, give, grant, perform or provide.
trust estate
, in relation to a transfer of property or services, means the trust estate or, as the case requires, the trustee of the trust estate.
underlying transfer
, in relation to a transfer of property or services to a trust estate, means:
(a) if that transfer was an actual transfer - the actual transfer; or
(b) if that transfer was taken to have been made because of subsection 102AAK(1) - the actual transfer referred to in that subsection; or
(c) if that transfer was taken to have been made because of subsection 102AAK(2) - the actual transfer referred to in paragraph 102AAK(2)(d) ; or
(d) if that transfer was taken to have been made because of subsection 102AAK(5) - the actual transfer referred to in paragraph 102AAK(5)(b) ; or
(e) if that transfer was taken to have been made because of the application of subsection 102AAK(6) or (8) to an actual transfer - the actual transfer; or
(f) if that transfer was taken to have been made because of the application of subsection 102AAK(6) or (8) to a transfer that was taken to have been made because of subsection 102AAK(1) - the actual transfer referred to in subsection 102AAK(1) ; or
(g) if that transfer was taken to have been made because of the application of subsection 102AAK(6) or (8) to a transfer that was taken to have been made because of subsection 102AAK(5) - the actual transfer referred to in paragraph 102AAK(5)(b) ; or
(h) if that transfer was taken to have been made because of subsection 102AAK(10) - the actual transfer referred to in paragraph 102AAK(10)(b) ; or
(j) if that transfer was taken to have been made because of one or more applications of subsection 102AAK(11) to an actual transfer - the actual transfer; or
(k) if that transfer was taken to have been made because of one or more applications of subsection 102AAK(11) to a transfer (in this paragraph called the deemed transfer ) that was taken to have been made because of subsection 102AAK(1) , (2), (5), (6), (8) or (10) - the actual transfer that, under a preceding paragraph of this definition, is the underlying transfer in relation to the deemed transfer.
underlying transferor
, in relation to a transfer of property or services to a trust estate, means the entity who made the underlying transfer concerned.
unlisted country
has the same meaning as in Part
X
.
weighted statutory interest rate
, in relation to a year of income, means:
(a) if there is only one base interest rate in relation to the year of income - that rate; or
(b) if there are 2 or more base interest rates in relation to the year of income - the weighted average of the base rates for the year of income.
For the purposes of the application of section 6AB to this Division, each listed country and each unlisted country is to be treated as a separate foreign country.
Subsection 324(2) applies in relation to this Division in a corresponding way to the way in which it applies in relation to Part X .
For the purposes of this Division, a trust estate is taken to be a listed country trust estate in relation to a year of income if, and only if, either of the following paragraphs applies to each item of income or profit derived by the trust estate in the year of income:
(a) the income or profit is either:
(i) subject to tax in a listed country in a tax accounting period ending before the end of the year of income or commencing during the year of income; or
(ii) designated concession income in relation to any listed country;
(b) both of the following conditions are satisfied:
(i) a part of the income or profit is either:
(A) subject to tax in a listed country in a tax accounting period ending before the end of the year of income or commencing during the year of income; or
(B) designated concession income in relation to any listed country;
(ii) the remaining part, or each of the remaining parts, of the income or profit:
(A) is subject to tax in another listed country or in different listed countries, as the case may be, in a tax accounting period ending before the end of the year of income or commencing during the year of income; or
(B) is designated concession income in relation to any listed country.
102AAE(2)
For the purposes of the application of subparagraph (1)(b)(ii) to a trust estate, if a particular part of an item of income or profit (which part is in this subsection called the item part ) derived by the trust estate is included, or would apart from Subdivision 50-A or section 51-5 , 51-10 or 51-30 of the Income Tax Assessment Act 1997 be included, in the assessable income of the trust estate of a year of income (in this subsection called the trust ' s year of income ) and one of the following paragraphs applies:
(a) both of the following conditions are satisfied:
(i) the trustee of the trust estate is liable to be assessed and pay tax under section 98 , 99 or 99A in respect of a part of, or a share in, the net income of the trust estate of the trust ' s year of income;
(ii) the whole or a part of the part or share of the net income is attributable to the item part;
(b) all of the following conditions are satisfied:
(i) an amount is included in the assessable income of another taxpayer of the trust ' s year of income or the next following year of income (which taxpayer is in this subsection called the actual taxpayer ) under subsection 92(1) or section 97 , 98A or 100 ;
(ii) the actual taxpayer is:
(A) a company or a natural person (other than a company or a natural person in the capacity of a trustee); or
(B) the trustee of a complying superannuation fund, a non-complying superannuation fund, a complying approved deposit fund, a non-complying approved deposit fund or a pooled superannuation trust in relation to the year of income concerned; or
(C) (Repealed by No 53 of 2016)
(D) the trustee of a public trading trust in relation to the year of income concerned; or
(E) the trustee of a trust estate who is liable to be assessed and pay tax under section 98 , 99 or 99A in respect of a part of, or a share in, the net income of a trust estate;
(iii) if sub-subparagraph (ii)(A), (B), (C) or (D) applies - the whole or a part of the amount so included in the actual taxpayer ' s assessable income is attributable (either directly or indirectly through one or more interposed partnerships or trusts) to the item part;
(iv) if sub-subparagraph (ii)(E) applies - the whole or a part of the part or share of the net income is attributable (either directly or indirectly through one or more interposed partnerships or trusts) to the item part;
(c) both of the following conditions are satisfied:
(i) trustee beneficiary non-disclosure tax is payable under Division 6D on the whole or part (the net income amount ) of a share of the net income of the trust estate of the trust ' s year of income;
(ii) the whole or part of the net income amount is attributable to the item part;
the item part is to be treated as if it were subject to tax in a listed country in a tax accounting period ending before the end of the trust ' s year of income.
102AAE(3)
For the purposes of this section, where a part of a particular item of income or profits derived by an entity would, if it were a separate item of income or profits, be taken to be subject to tax in a listed country in a particular tax accounting period, that part is taken to be subject to tax in that listed country in that tax accounting period.
SECTION 102AAF PUBLIC UNIT TRUSTS 102AAF(1)
Subject to this section, for the purposes of this Division, a unit trust is a public unit trust at all times during a year of income if either of the following conditions are satisfied:
(a) at any time during the year of income:
(i) any of the units in the unit trust were listed for quotation in the official list of a stock exchange in Australia or elsewhere; or
(ii) any of the units in the unit trust were offered to the public;
(b) at all times during the year of income, the units in the unit trust were held by not fewer than 50 persons.
102AAF(2)
In determining whether a unit trust is a public unit trust at all times during a year of income for the purposes of this Division, subsections 102P(3) to (9) (inclusive) and (11) apply as if:
(a) a reference in those subsections to Division 6C were a reference to this Division; and
(b) a reference in those subsections to subsection 102P(1) were a reference to subsection (1) of this section; and
(c) a reference in those subsections to a public unit trust in relation to a year of income were a reference to a public unit trust at all times during a year of income.
102AAF(3)
In determining whether a unit trust (in this subsection called the first unit trust ) is a public unit trust at all times during a year of income for the purposes of this Division, the following provisions have effect:
(a) the following entities are taken to be one person:
(i) an entity, whether or not it holds units in the first unit trust; and
(ii) the entity or entities who are the associate or associates of the entity;
(b) where any units in the first unit trust are held by the trustee of another trust that, apart from this paragraph, is a public unit trust at all times during the year of income - a person who has a beneficial interest in property of that other trust that consists of those units is taken to hold those units;
(c) where any units in the first unit trust are held by the trustee of another trust that:
(i) apart from paragraph (b); or
is a public unit trust at all times during the year of income - a person who has a beneficial interest in the property of that other trust that consists of those units (whether or not that beneficial interest is taken to be held by virtue of the application of this paragraph) is taken to hold those units.
(ii) by virtue of the application of paragraph (b);
For the purposes of this Division, an entity is taken to be in a position to control a trust estate if, and only if:
(a) a group in relation to the entity had the power by means of the exercise by the group of any power of appointment or revocation or otherwise, to obtain, with or without the consent of any other entity, the beneficial enjoyment of the corpus or income of the trust estate; or
(b) a group in relation to the entity was able in any manner whatsoever, whether directly or indirectly, to control the application of the corpus or income of the trust estate; or
(c) a group in relation to the entity was capable under a scheme of gaining the enjoyment or the control referred to in paragraph (a) or (b); or
(d) a trustee of the trust estate was accustomed or under an obligation (whether formally or informally) or might reasonably be expected to act in accordance with the directions, instructions or wishes of a group in relation to the entity; or
(e) a group in relation to the entity was able to remove or appoint the trustee, or any of the trustees, of the trust estate. 102AAG(2) [Group in relation to an entity]
In subsection (1), a reference to a group in relation to an entity is a reference to:
(a) the entity acting alone; or
(b) an associate of the entity acting alone; or
(c) the entity and one or more associates of the entity acting together; or
(d) 2 or more associates of the entity acting together.
Subject to subsections (4) and (5), for the purposes of this Division, a trust estate is a non-resident family trust in relation to a natural person at a particular time if, and only if, at that time:
(a) the trust estate is either:
(i) a post-marital or post-relationship family trust in relation to the natural person; or
(ii) a family relief trust in relation to the natural person; and
(b) the trust is constituted by:
(i) a deed of trust or other instrument; or
(ii) an order or declaration of a court.
For the purposes of this section, a trust estate is a post-marital or post-relationship family trust in relation to a natural person at a particular time if:
(a) either of the following conditions is satisfied:
(i) the trust was created pursuant to:
(A) a decree or order of dissolution or annulment of marriage, being a dissolution or annulment that, because of the Family Law Act 1975 , has effect, or continues to have effect in Australia or is recognised as valid in Australia; or
(B) a decree or order of judicial separation or a similar decree or order;
(ii) the trust was created in consequence of the break-down of a de facto relationship; and
(b) at that time, the only persons who benefit, or are capable (whether by the exercise of a power of appointment or otherwise) of benefiting, under the trust (which persons are in subsections (4) and (5) called the primary potential beneficiaries ) are natural persons who:
(i) are non-residents at that time; and
(ii) are covered by any of the following categories:
(A) the spouse or former spouse of the natural person;
(B) a child of the natural person;
(C) a child of the former spouse of the natural person, being a child who was such a child at a time when the former spouse was the spouse of the natural person;
(D) a child of the spouse of the natural person.
For the purposes of this section, a trust estate is a family relief trust in relation to a natural person at a particular time (in this subsection called the test time ) if:
(a) the only persons who benefit, or are capable (whether by the exercise of a power of appointment or otherwise) of benefiting, under the trust (which persons are in subsections (4) and (5) called the primary potential beneficiaries ) are natural persons who:
(i) are identified by name in the trust deed or instrument, or in the court order or declaration, constituting the trust; and
(ii) are non-residents at that time; and
(iii) are covered by any of the following categories:
(A) the spouse or former spouse of the natural person;
(B) a parent of the natural person or of the natural person's spouse or former spouse;
(C) a child of the natural person or of the natural person's spouse or former spouse;
(D) a grandparent of the natural person;
(E) a grandchild of the natural person;
(F) a brother or sister of the natural person or of the natural person's spouse or former spouse;
(G) a child of a brother or sister mentioned in sub-subparagraph (F); and
(b) the trust was established, and is operated, for the relief of persons who are in necessitous circumstances; and
(c) any of the following conditions is satisfied:
(i) at the test time, the assets of the trust are not excessive having regard to the requirements, or likely requirements, of the primary potential beneficiaries;
(ii) no transfers of property or services to the trust estate were made during the period (in this paragraph called the test period ) commencing at the IP time and ending at the test time;
(iii) immediately after each transfer of property or services to the trust estate made during the test period, the assets of the trust were not excessive having regard to the requirements, or likely requirements, of the beneficiaries at the time of the transfer.
Note:
Section 960-255 of the Income Tax Assessment Act 1997 may be relevant to determining relationships for the purposes of subparagraph (3)(a)(iii).
Subsection (1) does not prevent a trust estate from being a non-resident family trust in relation to a natural person at a particular time if, in the event of the death of a particular primary potential beneficiary at that time, one or more natural persons (which persons are in subsection (5) called the secondary potential beneficiaries ) who:
(a) are non-residents at that time; and
(b) are children of the primary potential beneficiary;
would benefit, or be capable (whether by the exercise of a power of appointment or otherwise) of benefiting, under the trust.
102AAH(5) [Death of primary and secondary potential beneficiaries]Subsections (1) and (4) do not prevent a trust estate from being a non-resident family trust in relation to a natural person at a particular time if, in the event of the death of all of the primary potential beneficiaries and all of the secondary potential beneficiaries at that time, there are one or more deductible gift recipients covered by an item in any of the tables in Subdivision 30-B of the Income Tax Assessment Act 1997 , or item 2 of the table in section 30-15 of that Act, that would benefit, or be capable (whether by the exercise of a power of appointment or otherwise) of benefiting, under the trust.
For the purposes of this section, if, at a particular time, an entity holds an interest in, or right to benefit under, a trust that is dependent on the death of one or more natural persons, then, the entity is taken to be an entity who, in the event of the death of that natural person or those natural persons immediately after that time, would benefit under the trust.
102AAH(7) [Natural person]A reference in this section to a natural person does not include a reference to a natural person in the capacity of a trustee.
A reference in this Division to the transfer of property or services to a trust estate includes a reference to the transfer of such property or services by way of the creation of the trust estate.
102AAJ(2) [Property did not previously exist]For the purposes of this Division, where an entity acquires property that did not previously exist, the property is taken to have existed immediately before the acquisition and to have been transferred by the entity who created the property.
102AAJ(3) [Property applied for benefit of entity]For the purposes of this Division, property or services are taken to have been transferred to an entity if the property or services have been applied for the benefit of, or in accordance with the directions of, the entity.
102AAJ(4) [Property applied to discharge debt]Without limiting the generality of subsection (3), a reference in that subsection to the application of property or services for the benefit of an entity includes a reference to the application of property or services in the discharge, in whole or in part, of a debt due by the entity.
102AAJ(5) [Transfer before 8/1/91]Unless the contrary intention appears, a reference in this Division to a transfer of property or services includes a reference to a transfer made before the commencement of this Division.
102AAJ(6) [Transfer at IP time]A reference in this Division to a transfer of property or services made before the IP time includes a reference to a transfer made at the IP time.
For the purposes of this Division, where an entity (in this subsection called the prime entity ) causes another entity to actually transfer property or services to a trust estate, the prime entity is taken to have transferred the property or services (instead of the other entity).
102AAK(2)
For the purposes of this Division, where:
(a) the trustee of a trust estate issues units in the trust to an entity (in this subsection called the first entity ) in the first entity's capacity as a manager, underwriter or dealer in relation to the marketing or placement of the units; and
(b) in the course of the marketing or placement of the units, the units are disposed of by the first entity to another entity (in this subsection called the second entity ); and
(c) at a particular time (in this subsection called the second entity's transfer time ), the second entity transfers property or services to the first entity as consideration for the acquisition of the units; and
(d) the first entity has actually transferred, or actually transfers, property or services (in this subsection called the original property or services ) to the trust estate for the sole purpose of acquiring the units;
the second entity is taken to have transferred the original property or services (instead of the first entity) at the second entity's transfer time.
102AAK(3)
A reference in subsection (2) to a unit in a trust estate is a reference to an interest (however described) in any of the income or property of the trust estate.
102AAK(4)
Subsections (1) and (2) do not limit the operation of subsection (5).
102AAK(5)
Where, under a scheme:
(a) an entity (in this subsection called the scheme entity ) actually transfers property or services to another entity; and
(b) property or services are actually transferred to a trust estate at a particular time otherwise than by the scheme entity;
the Commissioner may, for the purposes of this Division, treat the property or services mentioned in paragraph (b) as having been transferred by the scheme entity to the trust estate (instead of by any other entity) at that time to such extent as the Commissioner considers reasonable.
102AAK(6)
For the purposes of this Division, if (apart from subsections (8), (10) and (11)) an entity, being a partnership, transfers property or services to a trust estate at a particular time:
(a) each partner in the partnership is taken to have transferred a part of the property or services to the trust estate at that time; and
(b) the market value of the part transferred by a particular partner is calculated using the formula:
| Market value × Partner's interest |
where:
Market value means the market value, immediately before the transfer, of the property or services transferred by the partnership. Partner's interest means:
(i) the partner's percentage interest in the profits of the partnership as at that time; or (ii) the partner's percentage interest in the property of the partnership as at that time;
or, if they are different, whichever is the higher.
102AAK(7)
Nothing in paragraph (6)(a) affects the application of this Division to the transfer made by the partnership concerned.
102AAK(8)
For the purposes of this Division, if:
(a) apart from this subsection, subsections (6), (10) and (11), an entity being the trustee of a trust estate (in this subsection called the transferor trust estate ) transfers property or services (in this subsection called the transferred property or services ) to another trust estate (in this subsection called the transferee trust estate ) at a particular time (in this subsection called the transfer time ); and
(b) the transferor trust estate was an Australian trust, or a controlled foreign trust, at the transfer time; and
(c) the transferor trust estate was a discretionary trust estate at the transfer time; and
(d) apart from this subsection, subsections (6), (10) and (11), one or more other entities transferred property or services to the transferor trust estate at or before the transfer time;
each of those other entities is taken to have transferred the transferred property or services to the transferee trust estate at the transfer time.
102AAK(9)
Nothing in subsection (8) affects the application of this Division to the transfer mentioned in paragraph (8)(a).
102AAK(10)
For the purposes of this Division, where:
(a) any of the following subparagraphs applies:
(i) any of the following events occurs in relation to a company (which company is in this subsection called the transferor ):
(A) the company passes a resolution for its winding-up;
(B) an order is made for the winding-up of the company;
(C) any similar event;
(ii) a partnership (in this subsection also called the transferor ) ceases to exist for the purposes of this Act;
(iii) either of the following sub-subparagraphs applies in relation to the trustee of a trust estate (in this subsection also called the transferor );
(A) the trust estate commences to be wound-up;
(B) the trust estate ceases to exist for the purposes of this Act; and
(b) an actual transfer of property or services is made to a trust estate (in this subsection called the transferee ) as a consequence of the transferor being wound-up or ceasing to exist;
the transferor is taken to have transferred to the transferee the property or services concerned.
102AAK(11)
For the purposes of this Division, where:
(a) the following subparagraphs apply to an entity (in this subsection called the defunct entity ):
(i) the defunct entity is a company, a partnership or the trustee of a trust estate;
(ii) the defunct entity transferred property or services to a trust estate (including a transfer that was taken to have been made because of another application or other applications of this subsection) at a particular time;
(iii) if the defunct entity is a company - any of the following events occurs:
(A) the company passes a resolution for its winding-up;
(B) an order is made for the winding-up of the company;
(C) any similar event;
(iv) if the defunct entity is a partnership - the partnership ceases to exist for the purposes of this Act;
(v) if the defunct entity is a trustee of a trust estate - either of the following sub-subparagraphs applies:
(A) the trust estate commences to be wound-up;
(B) the trust estate ceases to exist for the purposes of this Act; and
(b) the Commissioner is satisfied that another entity (in this subsection called the successor entity ) has benefited or is capable (whether by the exercise of a power of appointment or otherwise) of benefiting (either directly or indirectly through one or more interposed companies, partnerships or trusts) by, or as a result of:
(i) a transfer of property or services made by the defunct entity; or
(ii) a transfer of property or services made as a consequence of the defunct entity being wound-up or ceasing to exist; and
(c) the Commissioner is of the opinion that it is appropriate to apply this subsection to the successor entity;
the assessable income of the successor entity of the year of income in which the event, or the earliest event, mentioned in subparagraph (a)(iii), (iv) or (v) occurred and of each subsequent year of income is to be determined as if the successor entity had transferred to the trust estate mentioned in subparagraph (a)(ii), at the time mentioned in that subparagraph:
(d) the whole of the property or services mentioned in that subparagraph; or
(e) if the Commissioner thinks it appropriate - a part of the property or services referred to in that subparagraph.
A reference in this Division to a transfer of property or services to a trust estate does not include a reference to a transfer made by the trustee of the estate of a deceased person under:
(a) the terms of the deceased person's will or codicil; or
(b) an order of a court that varied or modified the provisions of the deceased person's will or codicil;
unless:
(c) the transfer was made in or as the result of the exercise (by the trustee or any other person) of a power of appointment or any other discretion; or
(d) under subsection 102AAK(1) , the property or services are taken to have been transferred by an entity other than the trustee, instead of by the trustee; or
(e) under subsection 102AAK(5) , the Commissioner treats the property or services as having been (to any extent) transferred by an entity other than the trustee, instead of by the trustee.
For the purposes of this section, if:
(a) an amount is included in the assessable income of a taxpayer of a year of income (which year of income is in this section called the current year of income ), being the year of income commencing on 1 July 1990 or a subsequent year of income, under section 99B in relation to a trust estate; and
(b) the whole or a part of the amount so included in the taxpayer ' s assessable income (which whole or part is in this section called the distributed amount ) is attributable to:
(i) if the trust estate was a listed country trust estate in relation to a particular non-resident year of income of the trust estate (in this section called the non-resident trust ' s year of income ) - so much of the income and profits of the trust estate of the non-resident trust ' s year of income as represents eligible designated concession income in relation to any listed country in relation to the non-resident trust ' s year of income; or
(ii) if the trust estate was not a listed country trust estate in relation to a particular non-resident year of income of the trust estate (in this section also called the non-resident trust ' s year of income ) - so much of the income and profits of the trust estate of the non-resident trust ' s year of income as has not been subject to tax in any listed country in a tax accounting period:
(A) ending before the end of the non-resident trust ' s year of income; or
(B) commencing during the non-resident trust ' s year of income;
then:
(c) the distributed amount is the distributed amount of the non-resident trust ' s year of income; and
(d) the taxpayer is the original taxpayer in relation to the distributed amount of the non-resident trust ' s year of income.
102AAM(1A)
For the purposes of subsection (1), unless the contrary is established by the taxpayer:
(a) a distributed amount in relation to a listed country trust estate in relation to a non-resident trust ' s year of income is taken to be wholly attributable to income and profits of the trust estate of that year of income that represent eligible designated concession income in relation to a listed country; and
(b) a distributed amount in relation to a trust estate that was not a listed country trust estate in relation to a non-resident trust ' s year of income is taken to be wholly attributable to income and profits of the trust estate of that year of income that have not been subject to tax in any listed country in a tax accounting period.
102AAM(1B)
This section does not apply to a distributed amount that is attributable to income or profits of the estate of a deceased person if the amount was paid to, or applied for the benefit of, the taxpayer within 3 years after the death of that person.
102AAM(1C)
This section does not apply to a distributed amount that was included in the assessable income of a taxpayer of a year of income under section 99B in relation to a trust estate if, at all times during the year of income, the trust:
(a) was a public unit trust; and
(b) was not a controlled foreign trust.
102AAM(2)
Subject to this section, if the original taxpayer in relation to the distributed amount of the non-resident trust ' s year of income is:
(a) a company or a natural person (other than a company or a natural person in the capacity of a trustee); or
(b) (Repealed by No 53 of 2016)
(c) the trustee of a public trading trust in relation to the current year of income; or
(d) the trustee of a complying superannuation fund, a non-complying superannuation fund, a complying approved deposit fund, a non-complying approved deposit fund or a pooled superannuation trust in relation to the current year of income;
the taxpayer is liable to pay interest to the Commissioner in respect of the distributed amount of the non-resident trust ' s year of income, calculated under subsection (5), on the amount calculated using the formula:
| [Distributed amount × Applicable rate of tax] − FITO |
where:
Distributed amount means the distributed amount of the non-resident trust ' s year of income.
Applicable rate of tax has the meaning given by subsection (10).
FITO (Foreign income tax offset) means so much of any tax offset under Division 770 of the Income Tax Assessment Act 1997 to which the taxpayer is entitled as is attributable to the distributed amount of the non-resident trust ' s year of income.
102AAM(3)
Subject to this section, if:
(a) the original taxpayer in relation to the distributed amount of the non-resident trust ' s year of income is the trustee of a trust estate who is liable to be assessed and pay tax under section 98 , 99 or 99A in respect of a part of, or a share in, the net income of the trust estate; and
(b) the whole or a part (which whole or part is in this subsection called the taxpayer ' s portion of the distributed amount of the non-resident trust ' s year of income ) of the part or share of the net income is attributable to the distributed amount of the non-resident trust ' s year of income;
the taxpayer is liable to pay interest to the Commissioner in respect of the taxpayer ' s portion of the distributed amount of the non-resident trust ' s year of income, calculated under subsection (5), on the amount calculated using the formula:
where:
Taxpayer ' s portion of the distributed amount means the taxpayer ' s portion of the distributed amount of the non-resident trust ' s year of income.
Applicable rate of tax has the meaning given by subsection (10).
FITO (Foreign income tax offset) means so much of any tax offset under Division 770 of the Income Tax Assessment Act 1997 to which the taxpayer is entitled as is attributable to the taxpayer ' s portion of the distributed amount of the non-resident trust ' s year of income.
102AAM(4)
Subject to this section, if:
(a) the original taxpayer in relation to the distributed amount of the non-resident trust ' s year of income is the trustee of a trust estate or a partnership; and
(b) the following conditions are satisfied in relation to another taxpayer (in this subsection called the actual taxpayer ):
(i) an amount is included in the assessable income of the actual taxpayer of a year of income under subsection 92(1) or section 97 , 98A or 100 ;
(ii) the actual taxpayer is:
(A) a company or a natural person (other than a company or a natural person in the capacity of a trustee); or
(B) the trustee of a complying superannuation fund, a non-complying superannuation fund, a complying approved deposit fund, a non-complying approved deposit fund or a pooled superannuation trust in relation to the year of income; or
(C) (Repealed by No 53 of 2016)
(D) the trustee of a public trading trust in relation to the year of income; or
(E) the trustee of a trust estate who is liable to be assessed and pay tax under section 98 , 99 or 99A in respect of a part of, or a share in, the net income of a trust estate;
(iii) if sub-subparagraph (ii)(A), (B), (C) or (D) applies - the whole or a part of the amount so included in the actual taxpayer ' s assessable income (which whole or part is in this subsection called the taxpayer ' s portion of the distributed amount of the non-resident trust ' s year of income ) is attributable (either directly or indirectly through one or more interposed partnerships or trusts) to the distributed amount of the non-resident trust ' s year of income;
(iv) if sub-subparagraph (ii)(E) applies - the whole or a part (which whole or part is in this subsection also called the taxpayer ' s portion of the distributed amount of the non-resident trust ' s year of income ) of the part or share of the net income is attributable (either directly or indirectly through one or more interposed partnerships or trusts) to the distributed amount of the non-resident trust ' s year of income;
the actual taxpayer is liable to pay interest to the Commissioner in respect of the taxpayer ' s portion of the distributed amount of the non-resident trust ' s year of income, calculated under subsection (5), on the amount calculated using the formula:
where:
Taxpayer ' s portion of the distributed amount means the taxpayer ' s portion of the distributed amount of the non-resident trust ' s year of income.
Applicable rate of tax has the meaning given by subsection (10).
FITO (Foreign income tax offset) means so much of any tax offset under Division 770 of the Income Tax Assessment Act 1997 to which the taxpayer is entitled as is attributable to the taxpayer ' s portion of the distributed amount of the non-resident trust ' s year of income.
102AAM(4A)
If:
(a) paragraph 102UK(2)(b) or 102UM(2)(b) has the effect that the whole or a part of a share of the net income of a trust estate (the first trustestate ) is not included in the assessable income of the trustee of another trust estate (the second trust estate ); and
(b) the whole or the part of the share (which whole or part is in this subsection called the taxpayer ' s portion of the distributed amount of the non-resident trust ' s year of income ) is attributable (either directly or indirectly through one or more interposed partnerships or trusts) to the distributed amount of the non-resident trust ' s year of income; and
(c) if paragraph 102UK(2)(b) or 102UM(2)(b) were ignored, the second trust estate would be an interposed trust mentioned in applying subparagraph (4)(b)(iii) or (iv) of this section; and
(d) this subsection does not also apply to the trustee of a trust interposed between the first trust estate and the non-resident trust;
the trustee of the first trust estate is liable to pay interest to the Commissioner in respect of the taxpayer ' s portion of the distributed amount of the non-resident trust ' s year of income, calculated under subsection (5), on the amount calculated using the formula:
where:
applicable rate of tax
has the meaning given by subsection (10).
FITO
(Foreign income tax offset) means so much of any tax offset under Division
770
of the
Income Tax Assessment Act 1997
to which the trustee of the first trust would be entitled, in respect of the taxpayer
'
s portion of the distributed amount of the non-resident trust
'
s year of income, if the taxpayer
'
s portion of the distributed amount of the non-resident trust
'
s income were an amount in respect of which the trustee were liable to be assessed and to pay tax under section
99A
.
taxpayer
'
s portion of the distributed amount
means the taxpayer
'
s portion of the distributed amount of the non-resident trust
'
s year of income.
102AAM(5)
Interest payable by a taxpayer under this section is to be calculated:
(a) in respect of the period commencing at whichever of the following times is the latest:
(i) the beginning of the first year of income of the taxpayer that begins after the end of the non-resident trust ' s year of income;
(ii) the beginning of the year of income of the taxpayer commencing on 1 July 1990;
and ending at the end of the assessment year of income; and
(iii) if the taxpayer is a natural person (other than a natural person in the capacity of a trustee) who first commenced to be a resident of Australia at a time (in this subparagraph called the first residence time ) on or after 1 July 1990 - the beginning of the year of income of the taxpayer next following the year of income of the taxpayer in which the first residence time occurred;
(b) at the base interest rate.
102AAM(6)
Where the assessable income of a taxpayer of a year of income includes one or more of the following amounts in relation to one or more non-resident years of income of a particular trust estate (which amounts are in this subsection called the principal amounts ):
(a) the distributed amount of the non-resident trust ' s year of income;
(b) the taxpayer ' s portion of the distributed amount of the non-resident trust ' s year of income;
the aggregate of the interest payable by the taxpayer in respect of the principal amounts is not to exceed the difference between:
(c) the aggregate of the principal amounts; and
(d) so much of the tax payable in respect of the year of income as is attributable to the aggregate of the principal amounts (ignoring any tax offset under Part 3-6 of the Income Tax Assessment Act 1997 ).
102AAM(7)
For the purposes of this section, the extent to which an amount (in this subsection called the section 99B amount ) included in the assessable income of a taxpayer of a year of income under section 99B in relation to a trust estate is attributable to an amount (in this subsection called the trust amount ) covered by subparagraph (1)(b)(i) or (ii) is to be determined in accordance with the following paragraphs:
(a) in all cases - distributions of income and profits of the trust estate are to be taken to have been made in the following order:
(i) first, from income and profits of the earliest non-resident year of income;
(ii) then, successively from income and profits of successive subsequent years of income;
(b) if subparagraph (1)(b)(i) applies - the extent to which the amount (in this paragraph called the adjusted section 99B amount ), being so much of the section 99B amount as is attributable to the income and profits of the trust estate of the non-resident trust ' s year of income, represents eligible designated concession income in relation to any listed country in relation to the non-resident trust ' s year of income is calculated using the formula:
|
Adjusted
section 99B amount |
× |
Eligible designated concession income
Total income |
where:
Adjusted section 99B amount means the adjusted section 99B amount.
Eligible designated concession income means the number of dollars in the amount, being so much of the income and profits of the trust estate of the non-resident trust ' s year of income as represents eligible designated concession income in relation to any listed country in relation to the non-resident trust ' s year of income.
Total income means the number of dollars in the income and profits of the trust estate of the non-resident trust ' s year of income.
(c) if subparagraph (1)(b)(ii) applies - the extent to which the amount (in this paragraph called the adjusted section 99B amount ), being so much of the section 99B amount as is attributable to the income and profits of the trust estate of the non-resident trust ' s year of income, represents income and profits that have not been subject to tax in a listed country in a tax accounting period mentioned in that subparagraph is calculated using the formula:
|
Adjusted
section 99B amount |
× |
Untaxed income
Total income |
where:
Adjusted section 99B amount means the adjusted section 99B amount.
Untaxed income means the number of dollars in the amount, being so much of the income and profits of the trust estate of the non-resident trust ' s year of income as is not subject to tax in any listed country in a tax accounting period mentioned in that subparagraph.
Total income means the number of dollars in the income and profits of the trust estate of the non-resident trust ' s year of income.
102AAM(8)
For the purposes of subsection (7), an amount of income or profits of a trust estate is to be taken to be distributed if the amount is paid to, or applied for the benefit of (within the meaning of section 99B ), a beneficiary of the trust estate.
102AAM(9)
Where, apart from this subsection, the amount of interest that would be payable under this section by a taxpayer in respect of the distributed amount of a non-resident trust ' s year of income, or in respect of the taxpayer ' s portion of the distributed amount of a non-resident trust ' s year of income, is less than 50 cents, interest is not payable by the taxpayer underthis section.
102AAM(10)
For the purposes of this section, the applicable rate of tax in relation to a taxpayer is:
(a) if the taxpayer is a company (other than a company in the capacity of a trustee) - the corporate tax rate for the year of tax to which the assessment year of income relates; or
(b) in any other case - the maximum rate specified in the table in Part I of Schedule 7 of the Income Tax Rates Act 1986 that applies for the assessment year of income.
102AAM(10A)
Paragraph (10)(b) has effect as if the maximum rate specified as mentioned in that paragraph was increased by 2 percentage points for assessment years of income that correspond to the temporary budget repair levy years (within the meaning of section 4-11 of the Income Tax (Transitional Provisions) Act 1997 ).
102AAM(11)
For the purposes of the application of this section to a taxpayer, the assessment year of income is:
(a) if subsection (2) or (3) applies - the current year of income; or
(b) if subsection (4) applies - the year of income referred to in subparagraph (4)(b)(i).
102AAM(12)
For a taxpayer who is not a full self-assessment taxpayer for the assessment year of income, the Commissioner must make an assessment of the interest payable by the taxpayer under this section.
102AAM(13)
(Repealed by No 81 of 2016)
102AAM(13A)
If:
(a) a taxpayer is a full self-assessment taxpayer for the assessment year of income; and
(b) the taxpayer lodges a return for that year;
then:
(c) the Commissioner is taken to have made an assessment of the interest payable by the taxpayer under this section for the year, equal to the amount specified in the return as the interest so payable; and
Note:
If any interest is so payable, the return must specify the amount: see section 161AA .
(d) the assessment is taken to have been made on the day on which the return is lodged; and
(e) the return is taken to be a notice of that assessment given to the taxpayer by the Commissioner on that day.
102AAM(14)
(Repealed by No 79 of 2010 )
Sections 170 , 172 , 174 , 254 and 255 of this Act, and Division 5 of the Income Tax Assessment Act 1997 (How to work out when to pay your income tax), apply to interest payable under section 102AAM in the same way as they apply to income tax.
The object of this Subdivision is to set out rules relating to the following:
(a) the determination of attributable taxpayer status (section 102AAT );
(b) the calculation of the attributable income of a trust estate (sections 102AAU to 102AAZC (inclusive));
(c) the inclusion of amounts in assessable income (sections 102AAZD , 102AAZE and 102AAZF );
(d) the keeping of associated records (section 102AAZG ).
Subject to this Division, for the purposes of this Division, an entity is an attributable taxpayer in relation to a year of income of the entity (which year of income is in this section called the entity's current year of income ) and in relation to a particular trust estate if, and only if:
(a) either of the following subparagraphs applies:
(i) all of the following conditions are satisfied:
(A) the trust estate was a discretionary trust estate at any time during the entity's current year of income;
(B) the trust estate was not a public unit trust at all times during the entity's current year of income;
(C) the entity has transferred property or services to the trust estate at a time (in this subparagraph called the transfer time ) before or during the entity's current year of income;
(D) if the underlying transfer was made in the course of carrying on a business - it is not the case that, at or about the time of the underlying transfer, identical or similar property or services were transferred by the underlying transferor in the ordinary course of business to ordinary clients or customers under arm's length transactions and in similar circumstances and subject to identical or similar terms and conditions as those that applied in relation to the underlying transfer of the property or services concerned;
(E) if the underlying transfer was made under an arm's length transaction otherwise than in the course of carrying on a business - the entity was in a position, at any time after the transfer time and before the end of the entity's current year of income, to control the trust estate;
(F) if the transfer was made before the IP time and the trust estate was in existence, and was a discretionary trust estate, at the IP time - the entity was in a position, at any time after the IP time and before the end of the entity's current year of income, to control the trust estate;
(ii) all of the following conditions are satisfied:
(A) the trust estate was a non-discretionary trust estate, or a public unit trust, at all times during the entity's current year of income when the trust estate was in existence;
(B) the entity has transferred property or services to the trust estate after the IP time and before or during the entity's current year of income;
(C) the underlying transfer was made for no consideration or for a consideration less than the arm's length amount in relation to the underlying transfer;
(D) it is not the case that the sole purpose of the underlying transfer was the acquisition of units in the trust estate where the parties to the underlying transfer were at arm's length with each other in relation to the underlying transfer and the trust estate was a public unit trust at all times during the entity's current year of income when the trust estate was in existence; and
(b) if the entity is a natural person (other than a natural person in the capacity of a trustee):
(i) if:
(A) the natural person first commenced to be a resident of Australia at a time (in this subparagraph called the first residence time ) after the IP time and before the end of the entity's current year of income; andthe trust estate was not a non-resident family trust in relation to the natural person at all times:
(B) the transfer, or each of the transfers, covered by paragraph (a) was made before the first residence time;
(C) after the beginning of the first year of income of the natural person after the first residence time; andwhen the trust estate was in existence; or
(D) before the end of the entity's current year of income;
(ii) in any other case - the trust estate was not a non-resident family trust in relation to the natural person at all times after the beginning of the year of income of the taxpayer commencing on 1 July 1990 and before the end of the entity's current year of income when the trust estate was in existence; and
(c) it is not the case that:
(i) the entity is a natural person (other than a natural person in the capacity of a trustee) who first commenced to be a resident of Australia at a time (in this paragraph called the first residence time ) after the IP time and before the end of the entity's current year of income; and
(ii) the transfer was made before the first residence time; and
102AAT(2) [Partnerships and trust estates]
(iii) the entity was not in a position to control the trust estate at any time during the period:
(A) commencing at the beginning of the first year of income of the entity after the first residence time; and
(B) ending at the end of the entity's current year of income.
For the purposes of this section, if:
(a) an entity (in this subsection called the transferor ) being a partnership is an attributable taxpayer in relation to the entity's current year of income and in relation to a particular trust estate (in this subsection called the transferee trust estate ) because of one or more transfers (being actual transfers or transfers taken to have been made because of subsection 102AAK(1) , (2) or (5)) of property or services made by the transferor to the transferee trust estate; or
(b) an entity (in this subsection also called the transferor ) being a trust estate is an attributable taxpayer in relation to the entity's current year of income and in relation to another trust estate (in this subsection also called the transferee trust estate ) because of one or more transfers (being actual transfers or transfers taken to have been made because of subsection 102AAK(1) , (2) or (5)) of property or services made by the transferor to the transferee trust estate;
the question whether any other entity is an attributable taxpayer in relation to the same year of income and in relation to the transferee trust estate is to be determined as if:
(c) if paragraph (a) applies - subsection 102AAK(6) did not apply in relation to any of the transfers mentioned in that paragraph; or
(d) if paragraph (b) applies - subsection 102AAK(8) did not apply in relation to any of the transfers mentioned in that paragraph. 102AAT(3) [Natural persons]
(a) apart from this subsection, an entity, being a natural person (other than a natural person in the capacity of a trustee), is not an attributable taxpayer in relation to the entity's current year of income and in relation to a trust estate; and
(b) apart from paragraph (1)(b), the entity would have been such an attributable taxpayer; and
(c) apart from subparagraph 102AAH(2)(b)(i) or (3)(a)(ii) , the trust estate was not a non-resident family trust in relation to the natural person at some time after the entity's current year of income when the natural person was alive and the trust estate was in existence;
the following provisions have effect:
(d) subsection (1) has effect as if paragraph (1)(b) had applied;
(e) section 170 does not prevent the amendment of an assessment at any time for the purposes of giving effect to this subsection. 102AAT(4) [Entity deemed an attributable taxpayer]
(a) apart from this subsection, an entity is not an attributable taxpayer in relation to the entity's current year of income and in relation to a trust estate; and
(b) apart from sub-subparagraph (1)(a)(i)(E) or (F) or paragraph (1)(c), the entity would have been such an attributable taxpayer; and
(c) the entity was in a position to control the trust estate at some time after the entity's current year of income when the trust estate was in existence;
the following provisions have effect:
(d) subsection (1) has effect as if sub-subparagraph (1)(a)(i)(E) or (F) or paragraph (1)(c), as the case may be, had applied;
(e) section 170 does not prevent the amendment of an assessment at any time for the purposes of giving effect to this subsection.
Subject to this Subdivision, the attributable income of a non-resident trust estate of a year of income is:
(a) if the non-resident trust estate is not a listed country trust estate in relation to the year of income - the net income of the non-resident trust estate of the year of income; or
(b) if the non-resident trust estate is a listed country trust estate in relation to the year of income - the amount that would have been the net income of the non-resident trust estate of the year of income if the exempt income of the trust estate included all income and profits of the trust estate, other than eligible designated concession income in relation to any listed country in relation to the year of income;
reduced by:
(c) so much (if any) of the amount covered by paragraph (a) or (b) as represents:
(i) an amount:
(A) that is or has been included in the assessable income of a beneficiary under section 97 ; or
(B) in respect of which the trustee of the non-resident trust estate is or has been assessed and liable to pay tax under section 98 , 99 or 99A ; or
(C) on which trustee beneficiary non-disclosure tax is payable under Division 6D; or
(ii) an amount:
(A) that is paid to a beneficiary, being a resident of a listed country, during the period of 13 months commencing at the beginning of the year of income; and
(B) subject to tax in a listed country in a tax accounting period ending before the end of the year of income or commencing during the year of income; or
(iii) an amount that consists of, or is attributable to, the franked part of a distribution, or the part of a distribution that has been franked with an exempting credit; or
(iv) (Repealed by No 62 of 2011)
(v) if an amount is or has been included in the assessable income of any taxpayer under section 102AAZD because the taxpayer is an attributable taxpayer in relation to any year of income (in this subparagraph called the taxpayer ' s year of income ) and in relation to a trust estate other than the non-resident trust estate - so much of an amount paid to the trustee of the non-resident trust estate as represents the attributable income of that other trust estate of the taxpayer ' s year of income; or
(vi) (Repealed by No 96 of 2004)
(vii) if:
(A) an attribution account payment is made to the trustee of the trust estate during the year of income; andthe amount of the attribution debit; or
(B) the making of the attribution account payment gives rise to an attribution debit, in relation to any taxpayer, for the entity making the payment;
(viii) an amount of income or profits of the trust estate:
(A) that is subject to tax in any listed country in a tax accounting period ending before the end of the year of income or commencing during the year of income; and
(B)that is not eligible designated concession income in relation to any listed country in relation to the year of income; and
(ix) (Repealed by No 114 of 2010)
(d) so much of any foreign tax or Australian tax paid by the trustee or a beneficiary as is attributable to so much of the amount covered by paragraph (a) or (b), as the case requires, as remains after the reduction or reductions covered by paragraph (c).
102AAU(2)
The attributable income of a resident trust estate of a year of income is 0.
102AAU(3)
For the purposes of sub-subparagraph (1)(c)(ii)(A), a beneficiary is to be taken to be a resident of a listed country if, and only if, the beneficiary is treated as a resident of the listed country for the purposes of the tax law of the listed country.
102AAU(4)
If the tax law of a listed country adopts some criterion other than treatment as a resident as the criterion for applying a worldwide source tax base to a beneficiary, then, subsection (3) has effect, in relation to that tax law, as if that criterion were the same as treatment as a resident of the listed country for the purposes of that tax law.
102AAU(5)
For the purposes of this section, where, because of section 101 , a beneficiary is presently entitled to a particular amount, the amount is taken to have been paid to the beneficiary.
102AAU(6)
For the purposes of this section, the extent to which an amount referred to in subparagraph (1)(c)(i) or (ii) (in this subsection called the taxed amount ) represents the amount covered by paragraph (1)(b) (in this subsection called the listed country trust amount ) is calculated using the formula:
| Taxed amount | × |
Listed country trust amount
Net income |
where:
Listed country trust amount means the number of dollars in the listed country trust amount.
Taxed amount means the taxed amount.
Net income means the number of dollars in the net income of the non-resident trust estate concerned of the year of income concerned.
102AAU(7)
(Repealed by No 114 of 2010)
102AAU(8)
(Repealed by No 114 of 2010)
102AAU(9)
(Repealed by No 114 of 2010)
SECTION 102AAV 102AAV DOUBLE TAX AGREEMENTS TO BE DISREGARDED
In calculating the attributable income of a trust estate, the International Tax Agreements Act 1953 is to be disregarded, except for the purpose of references in this Act to that Act.
For the purpose of applying this Act in calculating the attributable income of a trust estate, sections 23AI , 128D , 456 , 457 , and 459A of this Act and section 802-15 of the Income Tax Assessment Act 1997 are to be disregarded.
102AAW(2)
For the purpose of applying this Act in calculating the attributable income of a trust estate:
(aa) Division 230 of the Income Tax Assessment Act 1997 ; and
(a) Division 974 of the Income Tax Assessment Act 1997 ; and
(b) the operation of any provision of this Act to the extent to which that operation depends on an expression whose meaning is given by a Division mentioned in paragraph (aa) or (a);
are to be disregarded.
(Repealed by No 133 of 2003)
When applying this Act and the Income Tax Assessment Act 1997 in calculating the attributable income of the trust estate, Division 70 of the Income Tax Assessment Act 1997 has effect as if the cost of the item of trading stock were the value to be taken into account at the start of the year of income.
For the purpose of determining the attributable income of a trust estate of a year of income (in this section called the attributable year of income ), where property has been held by the trustee of the trust estate in a non-attributable year of income before the attributable year of income, then, in relation to the application of a depreciation provision to the property, subsection (2) applies.
102AAZ(2)
Such amount as the Commissioner considers appropriate to take account of the holding of the property as mentioned in subsection (1) is, under the depreciation provision:
(a) an allowable deduction to the trustee of the trust estate; or
(b) included in the assessable income of the trust estate;
as the case requires, for the attributable year of income in substitution for any amount that would otherwise be so included or allowable.
102AAZ(4)
For the purpose of exercising the Commissioner's power under subsection (2) in relation to deductions allowable under Division 40 of the Income Tax Assessment Act 1997 , the Commissioner must assume that the property was used by the trustee of the trust estate during any non-attributable year of income wholly and exclusively for a taxable purpose (within the meaning of that Division).
FORMER SECTION 102AAZA 102AAZA MODIFIED APPLICATION OF DIVISION 13 OF PART III
(Repealed by No 101 of 2013)
For the purposes of applying this Act in calculating the attributable income of a trust estate, Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 (about CGT) apply as if:
(a) sections 118-12 (about assets used to produce non-assessable income) and 855-50 (about a trust becoming a resident trust) were disregarded; and
(b) the trust estate were a resident trust for CGT purposes.
For the purposes of applying this Act in calculating the attributable income of a trust estate of a year of income (in this section called the attributable income year ), where:
(a) disregarding the assumption in paragraph 102AAZB(b) , at any time (in this section called the residence-change time ) during the attributable income year or an earlier year of income, the trust estate ceased to be a resident trust for CGT purposes and became a non-resident trust estate; and
(b) the trust estate owned a CGT asset at the residence-change time; and
(c) a CGT event happens in relation to the asset during the attributable income year; and
(d) section 104-170 of the Income Tax Assessment Act 1997 (CGT event I2) applies to the asset in respect of the change of residence for the purposes of the application of this Act apart from this Subdivision;
then sections 411 to 414 (inclusive) apply to the asset as if:
(e) those sections had effect for the purposes of calculating attributable income under this Subdivision instead of Part X ; and
(f) any reference in those sections to an eligible CFC were a reference to the trust estate; and
(g) any reference in those sections to a commencing day asset were a reference to the asset; and
(h) any reference in those sections relating to the eligible CFC's commencing day or the day following the eligible CFC's commencing day were a reference relating respectively to the residence-change time or a time immediately after the residence-change time; and
(j) subsections 412(2) and (3) , and paragraphs 414(3)(b) and (4)(b) , referred only to the market value of the asset concerned.
In calculating the attributable income of a trust estate of a year of income, no deductions are allowable under Division 36 of the Income Tax Assessment Act 1997 in respect of tax losses of a year of income earlier than the year of income commencing on 1 July 1990.
(Repealed by No 143 of 2007 )
SECTION 102AAZD ASSESSABLE INCOME OF ATTRIBUTABLE TAXPAYER TO INCLUDE ATTRIBUTABLE INCOME OF TRUST ESTATE TO WHICH TAXPAYER HAS TRANSFERRED PROPERTY OR SERVICES 102AAZD(1) [Assessable income]
Subject to section 102AAZE and to this section, if:
(a) an entity is an attributable taxpayer:
(i) in relation to the year of income of the taxpayer commencing on 1 July 1990 (which year of income is in this section called the taxpayer's current year of income ) or in relation to a subsequent year of income of the taxpayer (which year of income is in this section also called the taxpayer's current year of income ); and
(ii) in relation to a trust estate; and
(b) any part of a non-resident year of income of the trust estate occurs during the taxpayer's current year of income; and
(c) the taxpayer is a resident at any time during the taxpayer's current year of income;
the assessable income of the taxpayer of the taxpayer's current year of income includes:
(d) if the taxpayer is a resident at all times during the taxpayer's current year of income - the whole of the notional attributable income of the trust estate of the taxpayer's current year of income; or
(e) if the taxpayer is a resident for only part of the taxpayer's current year of income - the amount calculated using the formula:
| Notional attributable income | × |
Days in residency period
Days in year of income |
where:
Notional attributable income means the notional attributable income of the trust estate of the taxpayer's current year of income.
Days in residency period means the number of whole days during the taxpayer's current year of income when the taxpayer was a resident.
Days in year of income means the number of whole days in the taxpayer's current year of income.
102AAZD(2) [Notional attributable income]A reference in subsection (1) to the notional attributable income of the trust estate of the taxpayer's current year of income is a reference to:
(a) if there is a year of income of the trust estate that begins at the same time as the beginning of the taxpayer's current year of income - the attributable income of the trust estate of that year of income; or
(b) in any other case - the amount obtained:
(i) by calculating, for each year of income of the trust estate (in this paragraph called the trust's year of income ) any part of which occurs during the taxpayer's current year of income, the amount calculated using the formula:
Attributable income × Days in overlapping period
Days in trust's year of income
where:
Attributable income means the attributable income of the trust estate of the trust's year of income.
Days in overlapping period means the number of whole days in the trust's year of income that occurred during the taxpayer's current year of income.
Days in trust's year of income means the number of whole days in the trust's year of income; and
102AAZD(3) [Reduction of assessable income]
(ii) by adding together the amounts calculated under subparagraph (i).
(a) an amount is included in the assessable income of an attributable taxpayer of the taxpayer's current year of income under subsection (1); and
(b) before or during the taxpayer's current year of income, one or more entities other than the taxpayer have transferred property or services to the trust estate concerned; and
(c) the taxpayer gives to the Commissioner, in accordance with the approved form, such information in connection with the operation of this Division as is required by the form to be set out;
the Commissioner may reduce the amount included in the taxpayer's assessable income of the taxpayer's current year of income under subsection (1) having regard to:
(d) the extent to which the attributable income of the trust estate is, in the opinion of the Commissioner, attributable to property or services transferred by the taxpayer; and
(e) such other matters as the Commissioner considers relevant. 102AAZD(4) [No information to determine attributable income]
(a) apart from this subsection, an amount would be included in the assessable income of an attributable taxpayer of the taxpayer's current year of income under subsection (1) in relation to a particular trust estate; and
(b) the taxpayer could not reasonably be expected to obtain the information required to determine the attributable income of the trust estate;
the following provisions have effect:
(c) no amount is to be included in the assessable income of the taxpayer of the taxpayer's current year of income under subsection (1) in relation to the trust estate;
(d) the assessable income of the taxpayer of the taxpayer's current year of income includes the amount obtained:
(i) if any of the transfers that were taken into account in determining whether the taxpayer was an attributable taxpayer in relation to the taxpayer's current year of income and in relation to the trust estate were made by the taxpayer to the trust estate after the IP time - by calculating, for each such transfer, the amount calculated using the formula:
where:
Adjusted value of the transfer has the meaning given by subsection (5).
Weighted statutory interest rate means the weighted statutory interest rate in relation to the taxpayer's current year of income; and
(ii) if any of the transfers that were taken into account in determining whether the taxpayer was an attributable taxpayer in relation to the taxpayer's current year of income and in relation to the trust estate were made by the taxpayer to the trust estate before the IP time - the amount calculated using the formula:
where:
Adjusted net worth of trust estate has the meaning given by subsection (6);
Weighted statutory interest rate means the weighted statutory interest rate in relation to the taxpayer's current year of income; and
102AAZD(5) [Adjusted value of transfer]
(iii) by adding together the amounts calculated under subparagraphs (i) and (ii).
For the purposes of subsection (4), the adjusted value of a transfer of property or services made by an attributable taxpayer to a trust estate is:
(a) if the transfer occurred during the taxpayer's current year of income - the amount calculated using the formula:
|
Market value of transferred
property or services |
× |
Days after transfer
Days in year of income |
where:
Market value of transferred property or services means the market value, immediately before the transfer, of the property or services.
Days after transfer means the number of whole days in the taxpayer's current year of income after the day on which the transfer took place.
Days in year of income means the number of whole days in the taxpayer's current year of income; or
(b) if the transfer of the property or services occurred before the taxpayer's current year of income - the sum of:
(i) the market value, immediately before the transfer, of the property or services; and
102AAZD(6) [Adjusted net worth of trust estate]
(ii) the amount obtained:
(A) by calculating, in respect of the transfer, for each year of income preceding the taxpayer's current year of income, the amount ascertained using the formula in subparagraph (4)(d)(i); and
(B) by adding together the amounts calculated under sub-subparagraph (A).
For the purposes of the application of subsection (4) in relation to a transfer of property or services made by an attributable taxpayer to a trust estate, the adjusted net worth of the trust estate is:
(a) if the taxpayer's current year of income is the year of income commencing on 1 July 1990 - the 1 July 1990 net worth of the trust estate; or
(b) in any other case - the sum of:
(i) the 1 July 1990 net worth of the trust estate; and
102AAZD(7) [Transfer made on or before 12/4/89]
(ii) the amount obtained:
(A) by calculating, in respect of the transfer, for each year of income preceding the taxpayer's current year of income, the amount ascertained using the formula in subparagraph (4)(d)(ii); and
(B) by adding together the amounts calculated under sub-subparagraph (A).
(a) subsection (4) applies to an attributable taxpayer in relation to the taxpayer's current year of income; and
(b) any of the transfers taken into account in determining whether the taxpayer was an attributable taxpayer in relation to the taxpayer's year of income and in relation to the trust estate concerned were made before the IP time; and
(c) the taxpayer gives to the Commissioner, in accordance with the approved form, such information in connection with the operation of this Division as is required by the form to be set out;
the Commissioner may reduce the amount included in the taxpayer's assessable income of the taxpayer's current year of income under subsection (4) having regard to:
(d) the extent to which the market value, as at the beginning of the taxpayer's current year of income, of the assets of the trust estate is, in the opinion of the Commissioner, attributable to property or services transferred by the taxpayer before the IP time; and
(e) such other matters as the Commissioner considers relevant.
An amount is not to be included in the assessable income of the taxpayer of a year of income under section 102AAZD in relation to a trust estate that is a listed country trust estate in relation to the year of income if the amount obtained by:
(a) identifying each trust estate in relation to which the taxpayer is an attributable taxpayer in relation to the year of income; and
(b) calculating the attributable income of the year of income of each such trust estate; and
(c) adding the amounts calculated under paragraph (b);
does not exceed the lesser of the following amounts:
(d) $ 20,000;
(e) 10% of the total of the net incomes of each of those trust estates of the year of income.
Section 460 applies to an amount included in the assessable income of a taxpayer under section 102AAZD in a corresponding way to the way in which section 460 applies to an amount included in the assessable income of a taxpayer under section 456 or 457 and, for the purposes of that corresponding application, references in sections 336 , 338 and 460 to a Part X Australian resident are to be read as references to a resident within the meaning of section 6 .
Subject to this section, a person who is an attributable taxpayer:
(a) in relation to the year of income of the person commencing on 1 July 1990 or in relation to a subsequent year of income of the person; and
(b) in relation to a particular trust estate;
must keep records (in Australia or elsewhere) containing particulars of:
(c) the acts, transactions and other circumstances that resulted in the person being an attributable taxpayer in relation to that year of income and in relation to that trust estate; and
(d) except where subsection 102AAZD(4) applies in relation to the trust estate and in relation to the year of income of the person - the basis of the calculation of the attributable income of the trust estate for each year of income of the trust estate any part of which occurred during the year of income of the person; and
(e) the basis of the calculation of the amounts (including nil amounts) included in the assessable income of the person of the year of income of the person under section 102AAZD .
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 .
102AAZG(2)
A person who contravenes subsection (1) commits an offence punishable on conviction by a fine not exceeding 30 penalty units.
Note:
See section 4AA of the Crimes Act 1914 for the current value of a penalty unit.
102AAZG(2A)
An offence under subsection (2) is an offence of strict liability.
Note:
For strict liability , see section 6.1 of the Criminal Code .
102AAZG(3)
A person who is required by this section to keep records must:
(a) keep the records in writing in the English language or so as to enable the records to be readily accessible and convertible into writing in the English language; and
(b) keep the records so as to enable the person ' s liability under this Act to be readily ascertained.
102AAZG(4)
This section does not require a person to keep a record of information if:
(a) the person did not know, and had no reasonable grounds to suspect, that the person was an attributable taxpayer of the kind mentioned in subsection (1); or
(b) the person did not know that, and made all reasonable efforts to ascertain whether, the person was an attributable taxpayer as mentioned in subsection (1); or
(c) the person did not know, and made all reasonable efforts to obtain, the information.
Note:
A defendant bears an evidential burden in relation to the matters in subsection (4), see subsection 13.3(3) of the Criminal Code .
102AAZG(5)
Subject to subsections (6) and (7), the following provisions apply to a partnership as if the partnership were a person:
(a) subsections (1) to (4) (inclusive) of this section;
(b) subsections 262A(4) and (5) , in so far as those subsections apply to records kept under or for the purposes of this section;
(c) Part III of the Taxation Administration Act 1953 ,in so far as that Part of that Act relates to the provisions covered by paragraph (a) or (b) of this subsection.
102AAZG(6)
Where, by virtue of subsection (5), an offence is taken to have been committed by a partnership, that offence is taken to have been committed by each of the partners.
102AAZG(7)
In a prosecution of a person for an offence by virtue of subsection (6), it is a defence if the person proves that the person:
(a) did not aid, abet, counsel or procure the act or omission by virtue of which the offence was taken to have been committed; and
(b) was not in any way, by act or omission, directly or indirectly, knowingly concerned in, or party to, an act or omission by virtue of which the offence is taken to have been committed.
Note 1:
The defence under subsection (7) does not apply in relation to offences under Part 2.4 of the Criminal Code .
Note 2:
A defendant bears a legal burden in relation to the matters in subsection (7), see section 13.4 of the Criminal Code .
Division 6AA - Income of certain children
In this Division, unless the contrary intention appears:
agreement
means any agreement, arrangement, understanding or scheme, whether formal or informal, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings.
occupation
includes any office, employment, trade, business, profession, vocation or calling, but does not include a course of education at a school, college, university or similar institution.
property
means property whether real or personal, and includes money.
(a) a reference to the derivation by a person of assessable income shall be read as including a reference to the inclusion of an amount in the assessable income of the person; and
(b) a reference to the derivation by a person of any assessable income from particular property shall be read as including a reference to the inclusion of an amount in the assessable income of the person in respect of that property. 102AA(3) [Share of a beneficiary of net income of trust]
In this Division, a reference to the share of a beneficiary of the net income of a trust estate shall be read as a reference to a share of the beneficiary of the net income of a trust estate:
(a) that is included in the assessable income of the beneficiary under section 97 or 100 ; or
(b) in respect of which the trustee of the trust estate is liable to be assessed and to pay tax in pursuance of section 98 . 102AA(4) [Income derived from property]
A reference in this Division to income that is derived from particular property shall be read as including a reference to income that is derived from property that, in the opinion of the Commissioner, represents that property.
This Division applies in relation to the year of income that commenced on 1 July 1979 and in relation to all subsequent years of income. SECTION 102AC PERSONS TO WHOM DIVISION APPLIES 102AC(1) [Prescribed person]
For the purposes of this Division, a person is a prescribed person in relation to a year of income if:
(a) the person is less than 18 years of age on the last day of the year of income; and
(b) the person is not an excepted person in relation to the year of income. 102AC(2) [Excepted person]
Subject to this section, a person (in this subsection referred to as the minor ) is an excepted person in relation to a year of income for the purposes of this Division if, and only if:
(a) (Omitted by No 135 of 1990)
(b) the minor was engaged in a full-time occupation on the last day of the year of income;
(c) the minor is a person:
(i) in respect of whom a carer allowance under the Social Security Act 1991 was payable in respect of a period that included the last day of the year of income; or
(ii) to whom a disability support pension under that Act was payable in respect of a period that included the last day of the year of income; or
(iii) (Repealed by No 33 of 2010)
(d) the Commissioner:
(i) has received a certificate issued by a legally qualified medical practitioner certifying that the minor is:
(A) a disabled child, or a disabled adult, within the meaning of Part 2.19 of the Social Security Act 1991 ; or
(B) a person who has a continuing inability to work within the meaning of Part 2.3 of the Social Security Act 1991 or is permanently blind; and
(ii) is satisfied that, on the last day of the year of income, the minor was a person of the kind mentioned in sub-subparagraph (i)(A) or (B);
(da) the minor is the principal beneficiary of a special disability trust;
(e) a double orphan pension was payable in respect of the minor under the Social Security Act 1991 in respect of a period that included the last day of the year of income;
(f) but for section 1003 of the Social Security Act 1991 , a double orphan pension would have been payable in respect of the minor under that Act in respect of a period that included the last day of the year of income; or
(g) the Commissioner:
(i) has received a certificate issued by a legally qualified medical practitioner certifying that the minor is a person who, by reason of a permanent disability, is unlikely to be able to engage in a full-time occupation; and
(ii) is satisfied that, on the last day of the year of income, the minor was such a person.
(a) a double orphan pension was payable, or would, but for section 1003 of the Social Security Act 1991 , have been payable, in respect of a person under that Act in respect of a period during a year of income, being a period that included the last day of the year of income; and
(b) during the whole of the period referred to in paragraph (a), the person was wholly or substantially dependent for support on a relative or relatives of the person,
that person shall not be taken by virtue of paragraph (2)(e) or (f) to be an excepted person in relation to the year of income.
(a) the Commissioner is of the opinion that, during a period during a year of income, being a period that included the last day of the year of income, a person was a person who, by reason of a permanent disability, was unlikely to be able to engage in a full-time occupation; and
(b) during the whole of the period referred to in paragraph (a), the person was wholly or substantially dependent for support on a relative or relatives of the person;
that person shall not be taken, by virtue of paragraph (2)(g), to be an excepted person in relation to the year of income.
For the purposes of subsections (3) and (4), a person shall be taken to have been wholly or substantially dependent for support on a relative or relatives of the person during any period during which that person resided with a relative or relatives of the person unless the contrary is established to the satisfaction of the Commissioner.
102AC(6) [Full-time occupation]Subject to this section, a person shall be taken, for the purposes of subsection (2), to have been engaged in a full-time occupation on the last day of a year of income if, and only if:
(a) the person was, on the last day of the year of income, a person engaged in a full-time occupation; or
(b) in a case to which paragraph (a) does not apply - the person was engaged in a full-time occupation during the year of income for a period of not less than 3 months or for periods the aggregate of which is not less than 3 months. 102AC(7) [Full-time education during income year]
(a) during a period during a year of income, a person was engaged in a full-time occupation; and
(b) during the year of income and after the expiration of that period, the person was engaged in a course of full-time education at a school, college, university or similar institution,
no regard shall be had to that period in determining whether the person is to be taken, by virtue of paragraph (6)(b), to have been engaged in a full-time occupation on the last day of the year of income.
A person shall not be taken to have been engaged in a full-time occupation on the last day of a year of income unless the Commissioner is satisfied that, on that day:
(a) the person had the intention of engaging in a full-time occupation or full-time occupations during the whole or a substantial part of the next succeeding year of income; and
(b) the person did not have the intention of engaging in a course of full-time education at a school, college, university or similar institution at any time during the next succeeding year of income. SECTION 102AD 102AD TAXABLE INCOME TO WHICH DIVISION APPLIES
The eligible taxable income of a year of income of a person who is a prescribed person in relation to the year of income is the amount (if any) remaining after deducting from the eligible assessable income of the person of the year of income:
(a) any deductions allowable to the person in relation to the year of income that relate exclusively to that eligible assessable income;
(b) so much of any other deductions (other than apportionable deductions) allowable to the person in relation to the year of income as, in the opinion of the Commissioner, may appropriately be related to that eligible assessable income; and
(c) the amount that bears to the apportionable deductions allowable to the person in relation to the year of income the same proportion as the amount that, but for this paragraph, would be the eligible taxable income of the person of the year of income bears to the sum of:
(i) the taxable income of the person of the year of income; and
SECTION 102AE ELIGIBLE ASSESSABLE INCOME 102AE(1) [Eligible assessable income]
(ii) the apportionable deductions allowable to the person in relation to the year of income.
For the purposes of this Division, the eligible assessable income of a year of income of a person is so much of the assessable income of the person of the year of income as is not excepted assessable income.
102AE(2) [Excepted assessable income]Subject to this section, an amount included in the assessable income of a person (in this subsection referred to as the minor ) is excepted assessable income to the extent to which the amount:
(a) is employment income or business income;
(b) is derived by the minor from the investment of any property transferred to the minor:
(i) by way of, or in satisfaction of a claim for, damages in respect of:
(A) loss by the minor of parental support; or
(B) personal injury to the minor, any disease suffered by the minor or any impairment of the minor's physical or mental condition;
(ii) pursuant to any law relating to worker's compensation;
(iii) pursuant to any law relating to the payment of compensation in respect of criminal injuries;
(iv) directly as the result of the death of another person and under the terms of a life assurance policy;
(v) directly as the result of the death of another person and out of a provident, benefit, superannuation or retirement fund;
(vi) directly as the result of the death of another person by an employer of the deceased person;
(vii) out of a public fund established and maintained exclusively for the relief of persons in necessitous circumstances; or
(viii) as the result of a family breakdown (see section 102AGA );
(c) is derived by the minor from the investment of any property:
(i) that devolved upon the minor from the estate of a deceased person;
(ii) that was transferred to the minor by another person out of property that devolved upon that other person from the estate of a deceased person and was so transferred within 3 years after the date of the death of the deceased person; or
(iii) that was acquired by the minor as the beneficial owner of a verifiable prize in a legally authorized and conducted lottery;
(d) not being business income, is included in the assessable income of the minor under section 92 ;
(e) is included in the assessable income of the minor under section 97 or 100 ; or
(f) is derived by the minor from the investment of any property that, in the opinion of the Commissioner, represents accumulations of:
(i) excepted assessable income derived by the minor during a year of income in relation to which this Division applies;
(ii) assessable income derived by the minor during a year of income in relation to which this Division does not apply, being assessable income that would, in the opinion of the Commissioner, have been excepted assessable income if this Division were applicable in relation to the year of income during which the assessable income was derived; or
(iii) exempt income derived by the minor to which subparagraph (i) or (ii) would, in the opinion of the Commissioner, apply if that exempt income had been assessable income.
A reference in paragraph (2)(d) to an amount (not being business income) that is included in the assessable income of a person under section 92 in respect of the individual interest of the person in the net income of a partnership shall be read as a reference to so much of an amount so included in that assessable income as, in the opinion of the Commissioner, is attributable to so much of the assessable income of the partnership as would, in the opinion of the Commissioner, have been excepted assessable income if the assessable income of the partnership had been derived by that person.
A reference in paragraph (2)(e) to an amount included in the assessable income of a person under section 97 or 100 shall be read as not including a reference to any part to which this Division applies of an amount included in that assessable income under either of those sections.
Subject to subsections (6) and (7), a reference in paragraph (2)(a), in relation to a person (in this subsection referred to as the minor ), to business income shall, in relation to any business income derived by the minor during a year of income from the carrying on of a business, be read as a reference to:
(a) in a case where during the year of income, the business was carried on by the minor either alone or in partnership with another person who was, or other persons each of whom was, under the age of 18 years on the first day of the year of income - so much of that business income as the Commissioner considers fair and reasonable having regard to:
(i) the extent to which, during the year of income, the minor had the real and effective conduct and control of the business and participated in the operations and activities of the business;
(ii) the extent to which the minor had the real and effective control over the disposal of income derived by the minor from the business during the year of income;
(iii) the extent to which the capital of the business consisted of property contributed by the minor, being property the income from which would, in the opinion of the Commissioner, be excepted assessable income in relation to the minor; and
(iv) such other matters (if any) as the Commissioner thinks fit; and
(b) in any other case - the amount that, in the opinion of the Commissioner, is reasonable remuneration by way of salary or wages for any services rendered by the minor during the year of income in the production of assessable income of the business increased by such amount (if any) as, in the opinion of the Commissioner, is reasonable, having regard to the extent to which the capital of the business consisted of property contributed by the minor the income from which would, in the opinion of the Commissioner, be excepted assessable income in relation to the minor.
Subject to subsection (7), if any 2 or more parties to:
(a) the derivation of the excepted assessable income mentioned in subsection (2); or
(b) any act or transaction directly or indirectly connected with the derivation of that excepted assessable income;
were not dealing with each other at arm's length in relation to the derivation, or in relation to the act or transaction, the excepted assessable income is only so much (if any) of that income as would have been derived if they had been dealing with each other at arm's length in relation to the derivation, or in relation to the act or transaction.
Subsection (2) does not apply in relation to assessable income derived by a person directly or indirectly under or as a result of an agreement that was entered into or carried out by any person (whether before or after the commencement of this subsection) for the purpose, or for purposes that included the purpose, of securing that that assessable income would not be eligible assessable income.
102AE(8) [Incidental purpose disregarded]In determining whether subsection (7) applies in relation to an agreement, no regard shall be had to a purpose that is a merely incidental purpose.
102AE(9) [Interpretation - subsection (2)(b)](a) any assessable income is derived by a person from the investment of any property transferred to the person by way of, or in satisfaction of a claim for, damages in respect of:
(i) loss by the person of parental support; or
(ii) personal injury to the person, any disease suffered by the person or any impairment of the person's physical or mental condition; and
(b) that property was transferred to that person otherwise than in pursuance of an order of a court;
paragraph (2)(b) applies only to so much (if any) of that assessable income as the Commissioner considers fair and reasonable.
(a) the assessable income of a person (in this subsection referred to as the minor ) of a year of income:
(i) includes an amount derived by the minor from property that:
(A) was transferred to the minor by another person out of property that devolved upon that other person from the estate of a deceased person; andbut does not include any amount that:
(B) was so transferred within 3 years after the date of the death of the deceased person;
(C) was derived by the minor from property that devolved upon the minor from the estate of that deceased person; or
(D) is included in the assessable income of the minor under section 97 or 100 in respect of the share of the minor of the net income of a trust estate that resulted from a will or codicil of that deceased person, an order of a court that varied or modified the provisions of a will or codicil of that deceased person, a partial intestacy of that deceased person or an order of a court that varied or modified the application, in relation to the estate of that deceased person, of the provisions of the law relating to the distribution of the estates of persons who die intestate; or
(ii) includes an amount derived by the minor from property that:
(A) was transferred to the minor by another person out of property that devolved upon that other person from the estate of a deceased person; andand also includes an amount or amounts to which sub-subparagraph (i)(C) or (D) applies; and
(B) was so transferred within 3 years after the date of death of the deceased person;
(b) the amount to which subparagraph (a)(i) applies or the sum of the amounts to which subparagraph (a)(ii) applies, as the case may be, exceeds the amount that, in the opinion of the Commissioner, would have been included in the assessable income of the minor of the year of income in respect of an amount or amounts derived by the minor from property that, in the opinion of the Commissioner, would have devolved upon or for the benefit of the minor from the estate of that deceased person if that deceased person had died intestate;
the amount of the assessable income of the minor of the year of income that would, apart from this subsection, have been excepted assessable income by virtue of subparagraph (2)(c)(ii) shall be reduced by the amount of that excess.
